29th Apr 2008 07:00
Superglass Holdings PLC29 April 2008 Immediate Release 29 April 2008 Superglass Holdings Plc Interim Results for the Six Months ended 29 February 2008 Superglass Holdings Plc ("Superglass" or the "Group"), one of the UK's leadingmanufacturers of glass mineral fibre insulation products is pleased to announceits interim results for the six months ended 29 February 2008. Highlights •Good trading results on a like for like basis •EBITA maintained at £4.6m •PBT (pre amortisation) up 27% to £3.3m •EPS of 1.3p (2007: 0.3p) •Maiden interim dividend of 1.7p •CERT implemented on 1 April 2008 •Second phase of capital investment programme completed •Improving trading conditions Tim Ross, Chairman commented:"Our plant is in excellent condition and with greater production capacity thanever before, we are eagerly awaiting the sales opportunities presented by theGovernment's Carbon Emissions Reduction Target ("CERT") programme. Now that theprogramme is officially underway, we expect increasing levels of demand. Againstthis background, we remain confident of the out-turn for the full year." For further information, please contact:Superglass Holdings plcJohn Smellie, Managing Director 01786 451 170Tony Kirkbright, Finance DirectorBuchanan CommunicationsDiane Stewart/Tim Anderson/Nick Melson 0207 466 5000Brewin Dolphin Investment BankingAndrew Kitchingman / Sean Wyndham-Quin 0113 241 0130 Chief Executive's StatementIntroduction I am pleased to present the Group's interim results for the six months ended 29February 2008. The result for the first half was maintained at the level of the comparableperiod for 2007 as we prepared for the implementation of the new CERT which Ican confirm came into effect on 1 April 2008. Interim Results EBITA for the six months was maintained at £4.6m (2007: £4.6m) whilst profitbefore tax and amortisation rose to £3.3 m, up 27 % from £2.6m in 2007. However,this result was based on turnover of £20.5m, down 4.2% from £21.4m in the sixmonths to 28 February 2007. As previously explained in January's Interim Management Statement, sales in thefirst half of the year were affected by a delay in the implementation of CERTwhich had originally been expected to commence in the first quarter of 2008.CERT is important to Superglass as it doubles the targets previously set by theGovernment under its Energy Efficiency Commitment ("EEC2") which completed inMarch 2008. This means that energy suppliers are legally obliged to make twicethe level of energy savings in the residential sector as part of theirregulatory obligations over the next three years. Effective insulation is themost cost effective method of achieving this. I am delighted to say that although sales are reduced due to the lateimplementation of CERT, profit is on track as a result of stringent cost controland our ability to export our product in a weaker home market. Whilst exportmargins are lower in general than the domestic market, they have been higherthan in previous years. Our relationship with our key customers has been built up over 20 years and isfounded on our excellent quality of service and a flexible approach. Thisprovides for good sales visibility. As a result of this we gained a number ofnew contracts during the period without the loss of any existing customers. We sell our product predominantly to the retrofit market via distributors,builders' merchants and contractors. Our exposure to the new build market isrelatively small. Based on our current estimates we believe that only 13% of ourinsulation products reach that market. Production Plant The first phase of the Group's capital investment plan has been completed,commissioned and is now operational as planned. We have spent approximately£11.8m since 2003 on improving the plant to bring it to a current productioncapacity of 60,000 tonnes. We are on target to increase production capacity by16% to 70,000 tonnes by the end of this year and have the potential for furtherincreases beyond that at relatively low capital cost, should that capacity beneeded. Superglass is regulated by both the Scottish Environmental Protection Agency("S.E.P.A.") and Stirling council. The Group has placed particular emphasis onenvironmental issues and ensuring that the plant is run in an environmentallyfriendly manner. In some cases this has the added benefit of reducing coststhrough reduced requirements for water and through lower raw materialrequirements as a result of reduced wastage. We have recently increased the capacity and capability of our environmentalequipment. This has been done to handle our current capacity increase and toensure that future environmental requirements from S.E.P.A. are satisfied. Dividend The Board proposes to pay a first interim dividend of 1.7p per share. Thedividend will be paid on 11 June 2008 to shareholders on the register on 9 May2008. Outlook Our strategy is to increase our market share by continuing to utilise our plantto its maximum capacity and where appropriate to add additional capacity wherethere is demand at relatively low capital cost. Trading conditions have improved since the start of 2008. Although the initialtake-up of CERT has been slower than originally expected, volumes are nowexpected to increase to the levels planned. We are experiencing some higherenergy costs which we will continue to hedge where it is economic to do so. Taking all factors into account, we remain optimistic of the Group's prospectsfor the second half of the year. John SmellieChief Executive 29 April 2008 Condensed Consolidated Income Statementfor the six months ended 29 February 2008 Unaudited Year ended Six months ended 29.02.08 28.02.07 31.08.07 Note £'000 £'000 £'000 ------ -------- -------- -------- Revenue 3 20,535 21,375 44,029Cost of sales (12,156) (13,081) (25,577)--------------------------------- ------ -------- -------- --------Gross profit 8,379 8,294 18,452 Distribution expenses (2,774) (2,721) (5,538)Administrative expenses - normal (3,400) (3,272) (6,401)- non recurring relating to flotation ofthe group - - (1,675)Other operating income 171 65 272 -------- -------- --------Operating profit before non recurringcosts 2,376 2,366 6,785Non recurring costs - - (1,675)--------------------------------- ------ -------- -------- --------Operating profit 2,376 2,366 5,110 Finance income 199 192 345Finance expenses (1,475) (2,157) (3,893)--------------------------------- ------ -------- -------- --------Profit before tax 1,100 401 1,562 Taxation 4 (328) (231) (934)--------------------------------- ------ -------- -------- --------Profit for the period attributable toequity holders of the parent 772 170 628==================================== ======== ======== ======== Basic earnings per share 1.3p 0.3p 6.4pDiluted earnings per share 1.3p 0.3p 6.4p Consolidated Statement of Recognised Income and Expense Unaudited Six months Year ended ended 29.02.08 28.02.07 31.08.07 Note £'000 £'000 £'000 Cashflow hedge: effective portion on netchanges in fair value 8 1,625Tax on items taken directly to equity (488)--------------------------------- ------ -------- -------- --------Net income recognised directly in equity 1,137Profit for the period 772 170 628--------------------------------- ------ -------- -------- -------- Total recognised income and expense forthe period attributable to equity holdersof the parent 1,909 170 628 Condensed Consolidated Balance Sheetat 29 February 2008 Unaudited As at 29.02.08 As at 28.02.07 As at 31.08.07 Note £'000 £'000 £'000 ---------------------- -------- ---------- ---------- ---------- Non-current assetsProperty, plant andequipment 5 15,476 15,744 15,551Intangible assets 6 25,186 29,573 27,378Derivative financialinstruments 921 - ----------------------- -------- ---------- ---------- ---------- 41,583 45,317 42,929 ---------------------- -------- ---------- ---------- ----------Current assetsInventories 3,147 1,824 3,088Trade and otherreceivables 3,588 2,665 3,920Cash and cashequivalents 1,200 4,351 134Derivative financialinstruments 897 332 395---------------------- -------- ---------- ---------- ---------- 8,832 9,172 7,537 ---------------------- -------- ---------- ---------- ----------Total assets 50,415 54,489 50,466 Current liabilitiesOther interest-bearingloans and borrowings 3,286 2,937 3,286Trade and other 11,434 11,294 11,423payablesDeferred governmentgrants 110 - 110Current tax 4 1,789 908 1,543---------------------- -------- ---------- ---------- ---------- 16,619 15,139 16,362 ---------------------- -------- ---------- ---------- ----------Non-currentliabilitiesOther interest-bearingloans and borrowings 22,345 30,145 23,988Deferred governmentgrants 248 - 321Deferred tax 6,599 7,391 6,824---------------------- -------- ---------- ---------- ---------- 29,192 37,536 31,133 ---------------------- -------- ---------- ---------- ----------Total liabilities 45,811 52,675 47,495---------------------- -------- ---------- ---------- ----------Net assets 4,604 1,814 2,971====================== ======== ========== ========== ========== Equity attributable toequity holders of theparentShare capital 583 4 583Share premium 1,108 380 1,108Hedging reserve 8 1,137 - -Retained earnings 8 1,776 1,430 1,280---------------------- -------- ---------- ---------- ----------Total equity 4,604 1,814 2,971====================== ======== ========== ========== ========== Condensed Consolidated Cash Flow Statementfor the six months ended 29 February 2008 Six months Year ended ended 29.02.08 28.02.07 31.08.07 Note £'000 £'000 £'000 ----------------------- -------- --------- ---------- ---------- Cash flows from operating activities 772 170 628Profit for the period/yearAdjustments for:Depreciation and amortisation 3,343 3,295 6,490Net financial expense 1,276 1,965 3,548Taxation 328 231 934----------------------- -------- --------- ---------- ----------Cash from operating activitiesbefore changes in working capitaland provisions 5,719 5,661 11,600 Decrease/(increase) in trade andother receivables 332 13 (1,242) Increase in stock (59) (288) (1,552)(Decrease)/increase in trade andother payables (125) 1,203 1,640----------------------- -------- --------- ---------- ----------Cash generated from the operations 5,867 6,589 10,446 Interest paid (967) (1,079) (3,020)Tax paid (795) (1,326) (1,914)----------------------- -------- --------- ---------- ----------Net cash from operating activities 4,105 4,184 5,512----------------------- -------- --------- ---------- ---------- Cash flows from investingactivitiesAcquisition of property, plant and (1,072) (2,298) (2,603)equipment ----------------------- -------- --------- ---------- ----------Net cash used in investing (1,072) (2,298) (2,603)activities ----------------------- -------- --------- ---------- ---------- Cash flows from financingactivitiesProceeds from the issue of share - - 9capitalShares repurchased (324) - (37)Proceeds from new loan - - 28,000Repayment of borrowings (1,643) (5,965) (38,338)Payment of finance lease liabilities - (18) (32)Dividends paid on shares classed asa liability - - (825)----------------------- -------- --------- ---------- ----------Net cash absorbed by financing (1,967) (5,983) (11,223)activities ----------------------- -------- --------- ---------- ---------- Net increase/(decrease) in cash andcash equivalents 1,066 (4,097) (8,314)Cash and cash equivalents atbeginning of period 134 8,448 8,448----------------------- -------- --------- ---------- ----------Cash and cash equivalents at end of 1,200 4,351 134period ======================= ======== ========= ========== ========== Notes 1. Basis of preparation These interim financial statements represent the condensed consolidatedfinancial information of the company and its subsidiaries (together referred toas "the Group") for the 6 months ended 29 February 2008. It has been prepared inaccordance with the Disclosure and Transparency Rules of the UK's FinancialServices Authority and the requirements of IAS 34 Interim Financial Reporting asadopted by the EU. The interim financial statements were approved by the Boardof Directors on 29 April 2008. The interim financial statement do notconstitute financial statements as defined in section 240 of the Companies Act1985 and do not include all of the information and disclosures required for fullannual financial statements. They should be read in conjunction with the AnnualReport and Consolidated Financial Statements for the year ended 31 August 2007which are available on request from the company's registered office or todownload from www.superglass.co.uk. The financial information contained in this report in respect of the year ended31 August 2007 has been extracted from the Annual Report and ConsolidatedFinancial Statements for the year ended 31 August 2007 which have been filedwith the Registrar of Companies. The auditors report on these financialstatements was unqualified and did not contain a statement under Section 237(2)or (3) of the Companies Act 1985. The interim financial statements for the current and comparative periods areunaudited. The auditors have carried out a review of the interim financialstatements and their report is set out at the end of this document. 2. Significant accounting policies The interim financial statements are prepared on the historical cost basis(except in relation to derivative financial instruments which are stated at fairvalue) and are presented in pounds sterling, rounded to the nearest thousand. The accounting policies applied by the Group in these condensed consolidatedinterim financial statements are the same as those applied by the Group asdisclosed in its consolidated financial statements as at and for the year ended31 August 2007.During the year the group has entered a cash flow hedge and, as such, disclosesfor the first time its policy in relation to accounting for cash flow hedges.The portion of the gain or loss on the swap that is determined to be aneffective hedge is recognised in the consolidated statement of recognised incomeand expense, with any ineffective portion recognised in the consolidated incomestatement. When hedged cash flows result in the recognition of a non-financialasset or liability, the associated gains or losses previously recognised inshareholders' equity are included in the initial measurement of the asset orliability. For all other cash flow hedges, the gains or losses that arerecognised in shareholders' equity are transferred to the consolidated incomestatement in the same period in which the hedged cash flows affect theconsolidated income statement.Hedge accounting is discontinued when the hedging instrument expires or is sold,terminated or exercised, or no longer qualifies for hedge accounting. Anycumulative gain or loss on the hedging instrument recognised in equity remainsin equity until the forecast transaction occurs. If a hedged transaction is nolonger expected to occur, the net cumulative gain or loss recognised in equityis transferred to the consolidated income statement."New IFRS and amendments to IAS The financial statements for the year ended 31 August 2008 are impacted by thefollowing new standards and interpretations: IFRS 7 Financial instruments:Disclosure and IAS 1 Presentation of Financial Statements - Capital disclosureswill increase the amount of disclosure in the full financial statements. Theaccounting, income and net assets will remain unchanged. The Group's financialrisk management objectives and policies are consistent with that disclosed inthe consolidated financial statements as at and for the year ended 31 August2007. 3. Segment information The group has only one class of business - the manufacturing and sale ofinsulation materials. Segmental information is presented in respect of the Group's geographicalsegments by location of customers. The primary format is based on the Group'smanagement and internal reporting structure. Segmental results include itemsdirectly attributable to a segment as well as those that can be allocated on areasonable basis. The directors are of the opinion that the Group has two reportable geographicsegments as defined by IAS 14 Segment Reporting. Geographic segments Revenue Segment Net financing Profits Income tax Profit for £000 result cost before tax expense the period £000 £000 £000 £000 £00029 February2008 U.K.& 19,142 2,071 2,071 2,071IrelandOther Europe 1,393 305 305 305Unallocated (1,276) (1,276) (328) (1,604)Consolidated 20,535 2,376 (1,276) 1,100 (328) 772 28 February2007 U.K.& 18,983 2,039 2,039 2,039IrelandOther Europe 2,392 327 327 327Unallocated (1,965) (1,965) (231) (2,196)Consolidated 21,375 2,366 (1,965) 401 (231) 170 31 August 2007 39,162 4,370 4,370 4,370U.K.& IrelandOther Europe 740 740Unallocated 4,867 740 (3,548) (3,548) (934) (4,482)Consolidated 44,029 5,110 (3,548) 1,562 (934) 628 4. Tax charge Corporation tax for the interim period is charged at 32% (28 February 2007: 57%)representing the estimated annual effective tax rate for the full year. Theunderlying tax rate, after allowing for amortisation of ineligible intangibleassets and flotation cost which are not tax deductible, for the six months ended28 February 2007 was 34% (Year ended 31 August 2007: 60%). 5. Property, plant and equipment Six months Six months Year ended ended ended 29.02.08 28.02.07 31.08.07 £000 £000 £000 ------------------------------ --------- -------- -------- At 31 August 2007 15,551 14,782 14,782Additions 1,072 2,060 2,867Disposals - (1)Depreciation (1,147) (1,098) (2,097)------------------------------ --------- -------- --------At 29 February 2008 15,476 15,744 15,551------------------------------ --------- -------- -------- The closing balance includes £980,000 (28 February 2007: £88,000; 31 August2007: £282,000) of assets under construction. 6. Intangible assets Six months Six months Year ended ended ended 29.02.08 28.02.07 31.08.07 £000 £000 £000 ------------------------------ --------- -------- -------- At 31 August 2007 27,378 31,770 31,770Additions 4 - 1Amortisation (2,196) (2,197) (4,393)------------------------------ --------- -------- --------At 29 February 2008 25,186 29,573 27,378------------------------------ --------- -------- -------- 7. Retirement benefit obligations The Group operates a defined contribution Group Sponsored Personal Pension Plan,membership of which is voluntary. The assets of the scheme are held separatelyfrom those of the company in independently administered funds. Contributions tothe fund are recognised as an employee benefit expense when they are due,contributions made in the period were £84,000 (28 February 2007: £76,000; 31August 2007: £156,000). 8. Capital and reserves attributable to equity shareholders Share Share Hedging Retained capital premium reserve earnings £000 £000 £000 £000 --------------------- --------- -------- -------- --------- Balance at 1 September 2006 4 379 - 1,260Profit for the period - - - 170 --------- -------- -------- ---------Balance At 28 February 2007 4 379 - 1,430 --------- -------- -------- --------- Profit for period - - - 458Issue of bonus shares 571 - - (571)Redesignation of shares to equitypreviously treated as a liability 7 721 - -Issue of ordinary shares 1 8 - -Redemption of shares - - - (37) --------- -------- -------- ---------Balance at 31 August 2007 583 1,108 - 1,280 --------- -------- -------- --------- Profit for the period - - - 772Current cashflow hedge during theperiod - - 1,625Tax on items taken directly to equity - - (488) -Own shares purchased - - - (324)IFRS 2 charge in relation to equitysettled share based payments - - - 48 --------- -------- -------- ---------Balance At 29 February 2008 583 1,108 1,137 1,776 During the six months to 29 February 2008 the company purchased 221,400 sharesto meet future requirements of the company's employee share schemes (28 February2007: nil) The cashflow hedge relates to the group's forward purchase of a substantialproportion of its electricity requirement to September 2010, under a consortiumarranged contract 9. Earnings per share The calculation of basic and diluted earnings per share at 29 February 2008 wasbased on the profit attributable to ordinary shareholders of £772,000 (sixmonths ended 28 February 2007: £170,000; year ended 31 August 2007: £628,000)Earnings per share for the six months ended 28 February 2007 was based on theweighted average number of shares in 2008 for comparative purposes. Six months Year ended ended 29.02.08 31.08.07Weighted average number of ordinary shares £000 £000------------------------------- --------- --------At 1 September 58,333 383Effect of own shares held (10)Effect of shares issued and redeemed in 2007 - 9,367 --------- --------Weighted average number of ordinary shares 58,323 9,750 --------- --------Effect of share options 71 10 --------- --------Diluted weighted average number of ordinary shares 58,394 9,760 --------- -------- 10. Contingencies and commitments As at As at As at 29.02.08 28.0207 31.08.07 £000 £000 £000 Commitments for the acquisition of plant andequipment, for which no provision has beenmade in the financial statements 1,005 204 413------------------------------ ---------- ---------- --------- 11. Transactions with key management personnelGroup key management personnel receive compensation in the form of salaries,short-term benefits and share based payments. Group key management receivedtotal compensation of £187,000, for the six months ended 29 February 2008 (sixmonths ended 28 February 2007: £175,000). 12. Post balance sheet events The first interim dividend of 1.7p per share was approved by the board on 29April 2008 and will be paid to shareholders on 11 June 2008. The ex-div andrecord dates will be 7 May 2008 and 9 May 2008 respectively. Statement of directors' responsibilities The directors confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 as adopted by the European Union and that theinterim management report herein includes a fair review of the informationrequired by DTR 4.2.7 and DTR 4.2.8. The current directors of Superglass Holdings plc are as listed in the annualreport for the year ended 31 August 2007. By order of the board John Smellie Tony KirkbrightChief Executive Finance Director Independent Review Report to Superglass Holdings plc Introduction We have been engaged by the company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 29February 2008 which comprises the Condensed consolidated income statement, theCondensed consolidated statement of recognised income and expense, the Condensedconsolidated balance sheet, the Condensed consolidated cash flow statement, andthe related explanatory notes. We have read the other information contained inthe half-yearly financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of financial statements. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the Disclosureand Transparency Rules ("the DTR") of the UK's Financial Services Authority("the UK FSA"). Our review has been undertaken so that we might state to thecompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the DTR of the UK FSA. As disclosed in note 1, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the EU. The condensed set offinancial statements included in this half-yearly financial report has beenprepared in accordance with IAS 34 Interim Financial Reporting as adopted by theEU. Our responsibility Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing (UK and Ireland) and consequently does notenable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 29 February 2008 is not prepared, in allmaterial respects, in accordance with IAS 34 as adopted by the EU and the DTR ofthe UK FSA. KPMG Audit PlcChartered Accountants191 West George StreetGlasgowG2 2LJ29 April 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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