4th Sep 2006 07:03
Stadium Group PLC04 September 2006 Stadium Group plc ("Stadium") Unaudited interim results for the six months ended 30 June 2006 Stadium Group plc, the AIM listed provider of Electronic Manufacturing Services,announces increased sales of £19.18m and profit before taxation of £1.34m forthe six months ended 30 June 2006. The principal activity of Stadium is the production of electronic products andassemblies for original equipment manufacturers from its manufacturingfacilities in China and the UK. Stadium serves customers worldwide, primarily inthe Consumer, Industrial, and Automotive sectors. Financial Highlights • Turnover up by 6% to £19.18m (2005: £18.05m) • Profit before taxation unchanged at £1.34m (2005: £1.34m) • Results include £0.36m gain on relocation of Hong Kong offices • Earnings per share up 14% to 4.1p (2005: 3.6p) • Earnings before goodwill amortisation and property gain down 14% to 3.1p (2005: 3.6p) • Interim dividend increased by 5% to 1.15 pence (2005: 1.10 p) Other Highlights • Strong growth in sales in Consumer and Industrial sectors • Automotive volumes down and withdrawal from the Telecom sector implemented • Gross margins reflect expected increases in material, energy and other costs • Benefit of increased customer prices expected in second half • New business wins for 2007 and beyond • Acquisition of KRP Power Source (UK) Limited announced on 30 August 2006 Nick Brayshaw, Chairman of Stadium Group plc, said, "Some of our customers have experienced softer demand in recent weeks, and areindicating higher inventories relative to sales. Whilst our overall order bookremains strong, the short term sales outlook reflects this weakness, which weexpect to continue in the coming months. Input costs appear to have stabilised, albeit at levels significantly higherthan a year ago. Our customers continue to acknowledge the benefits of ourexceptionally high levels of quality and service, and this is reflected in broadacceptance of increases to pricing, and the award of new business. In addition, we continue to be successful in winning major new customers, whichare expected to contribute towards the end of the year and generate growth in2007." For further information please contact: Stadium Group plc Tel: 01429 852520Nigel Rogers, Chief Executive Mob: 07767 603 362 Parkgreen Communications Tel: 020 7493 3716Paul McManus Mob: 07980 541 893 Copies of the interim financial statements will be sent to all shareholdersshortly Stadium Group Plc Chairman's statement For the six months ended 30 June 2006 I am pleased to report that the business has delivered further growth in sales,and is positioned to recover margins following a period of significant inputcost inflation. We have maintained momentum in developing our facilities inAsia to provide World Class product development and manufacturing services andcontinue to attract significant new customers. Financial results and dividend Group turnover increased by 6% to £19.18m (2005: £18.05m). Sales generated byStadium Asia increased by 12% and exceeded £10m during the first half (2005:£9.61m). Profit before tax of £1.34m was unchanged from the corresponding period lastyear (2005: £1.34m), and earnings per share increased by 14% to 4.1 pence (2005:3.6 pence). These results include a gain on the sale of freehold officepremises in Hong Kong in May 2006 amounting to £0.36m. Profit before taxation,gain on sale of properties and amortisation of goodwill was £1.05m (2005:£1.35m). Net bank borrowings closed at £3.71m (31 December 2005: £ 2.06m) to give gearingof 47% (31 December 2005: 26%). This increase reflects the net investment ofapproximately £0.31m of relocating freehold office premises in Hong Kong,together with dividends and pension contributions of £0.69m and £0.57mrespectively. Net cash flow from continuing operations (excluding the effect ofany acquisition activity) is expected to be positive in the second half of theyear. An interim dividend of 1.15 pence per share (2005: 1.10 pence) will be paid on 2October 2006 to shareholders on the register on 15 September 2006. Electronics 2006 2005 £'000 £'000Turnover - manufactured in Asia 10,742 9,606- manufactured in UK 2,964 3,119- Total 13,706 12,725 Operating profit 831 1,183 Operating margin 6.1% 9.3% Sales increased by 8% compared with the corresponding period last year, and mixcontinued to improve as the business continues to focus on higher added valueprojects for European and US customers. Consumer and Industrial sector sales grew by 36% and 16% respectively ascontracts won over the previous year went into full production. Automotive volumes softened, with sales down by £0.93m to £1.88m (2005: £2.80m).There were further reductions also in the sale of charger adaptors for mobiletelephones to £0.19m (2005: £0.81m) reflecting our planned withdrawal from thismarket sector announced last year. The business has responded well to the challenges presented by increases in rawmaterial and energy prices. During the first half of the year there was anadverse movement in the average cost, and at times shortages and uncertainsupply, affecting metals such as copper and steel and components derivedtherefrom. Greater stability, albeit at higher cost, was evident towards theend of the period and this is expected to prevail in coming months. Customershave in the main accepted increases to pricing to reflect underlying inflation,although the benefit of these decisions will be more evident only in the secondhalf. We continue to explore opportunities to expand our service offer and generatehigher margins by providing technical, design, product development and logisticssupport as an extension of our provision of manufacturing services. Inparticular, we are continuing to invest resources in the development of StadiumPower, which provides specialist design and build of custom power supplies. On 30 August 2006 we announced the acquisition of KRP Power Source (UK) Limited("KRP"), a specialist distributor of power supplies and dc-dc converters for thetransport, medical and telecommunications markets. Turnover of KRP for the yearended 30 November 2005 was approximately £1.1m. KRP offers additionalcustomers, sales resources and access to an extensive complementary range ofstandard power conversion products. Branded Plastics 2006 2005 £'000 £'000 Turnover 5,478 5,326 Operating profit 472 473 Operating margin 8.6% 8.9% Our Branded Plastics business generated continued good performance with profitsat the same level as last year despite the significant escalation in rawmaterial and energy costs. In particular, Stadium Building Products deliveredstrong sales growth from an expanding range of products and sharp focus onservicing the requirements of major builders merchants, multiples and buyinggroups. Selective price increases to customers reflecting higher input prices have beenimplemented, and further movement is likely in coming months. Employee incentives Our future success depends upon our continued ability to attract, retain andmotivate employees at all levels in the company. This has particularsignificance in our Asian operations which operate in an extremely competitivelabour market, especially for skilled engineers and senior management. The opportunity to participate in share ownership has a special resonance inthis environment, and for this reason we propose to seek shareholder approval atan Extraordinary General Meeting (EGM) of the company to be held on 31 October2006 for the establishment of a Performance Share Plan under which key employeeswill be given the opportunity to acquire shares in the company, either withoutcost or for a nominal amount, if pre-agreed performance targets are met. Full details of the Performance Share Plan, which will be a successor to the1996 Executive Share Option Scheme (which expired earlier this year), will becirculated in a Notice of EGM that will be sent to shareholders with the interimreport. Outlook Some of our customers have experienced softer demand in recent weeks, and areindicating higher inventories relative to sales. Whilst our overall order bookremains strong, the short term sales outlook reflects this weakness, which weexpect to continue in the coming months. Input costs appear to have stabilised, albeit at levels significantly higherthan a year ago. Our customers continue to acknowledge the benefits of ourexceptionally high levels of quality and service, and this is reflected in broadacceptance of increases to pricing, and the award of new business. In addition, we continue to be successful in winning major new customers, whichare expected to contribute towards the end of the year and generate growth in2007. Nick Brayshaw Chairman 4 September 2006 STADIUM GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED) for the six months ended 30 June 2006 Six months Six months Year ended 30 June 30 June 31 December 2006 2005 2005 Notes £'000 £'000 £'000 Turnover - continuing operations 1 19,184 18,051 36,515Cost of sales (15,094) (13,523) (27,684)Gross profit 4,090 4,528 8,831 Net operating expenses before exceptional itemsand goodwill amortisation (2,936) (3,047) (5,937)Exceptional operating items - - (161)Goodwill amortisation (66) (66) (132) Total net operating expenses (3,002) (3,113) (6,230) Operating profit - continuing operations 2 1,088 1,415 2,601 Profit on sale of fixed assets 362 56 330Net interest payable 3 (99) (60) (144)Net finance cost on pension scheme (10) (73) (150) Profit on ordinary activities before tax 1,341 1,338 2,637Taxation (165) (310) (482)Profit for the financial period 1,176 1,028 2,155 Earnings per share Basic 5 4.1p 3.6p 7.6pDiluted 5 4.1p 3.6p 7.5p Statement of group total recognised gains and losses Profit for the financial period 1,176 1,028 2,155 Exchange adjustments offset in reserves (438) 265 418Share option costs recognised 35 30 60Actuarial gains/(losses) on pension scheme - 2 (331)Total net gains recognised 7 773 1,325 2,302 The financial information in this Interim Report is unaudited and does notconstitute Financial statements within the meaning of section 240 of theCompanies Act 1985. It has been prepared using accounting policies consistentwith those applied in the Audited Financial Statements for the financial yearended 31 December 2005. The report of the auditors on those FinancialStatements was unqualified and did not contain a statement under Section 237(2)or (3) of the Companies Act 1985. Copies can be obtained from the Company'sregistered office at Stephen House, Brenda Road, Hartlepool, TS25 2BQ. STADIUM GROUP PLC CONSOLIDATED BALANCE SHEET (UNAUDITED) At 30 June 2006 30 June 30 June 2005 31 December 2006 2005 Notes £'000 £'000 £'000Fixed assetsIntangible assets 470 603 537Tangible assets 10,262 10,007 9,832 10,732 10,610 10,369 Current assetsStocks 6,074 5,436 5,943Debtors due within one year 7,849 7,443 6,624Cash at bank and in hand 20 281 236 13,943 13,160 12,803 Creditors: amounts falling due within one yearBank overdrafts (3,317) (1,522) (1,758)Creditors (8,696) (10,000) (8,688) (12,013) (11,522) (10,446) Net current assets 1,930 1,638 2,357 Total assets less current liabilities 12,662 12,248 12,726 Creditors: amounts falling due after more than one year 6 (379) - -Provisions for liabilities and charges (26) (367) (28)Net assets excluding net pension liability 12,257 11,881 12,698Net pension liability (4,287) (3,843) (4,858)Net assets including net pension liability 2 7,970 8,038 7,840 Capital and reservesCalled up equity share capital 1,439 1,432 1,432Share premium account 4,225 4,183 4,184Capital redemption reserve 88 88 88Profit and loss account 7 2,218 2,335 2,136 Equity shareholders' funds 7,970 8,038 7,840 STADIUM GROUP PLC CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) for the six months ended 30 June 2006 Six months Six months Year ended 30 June 30 June 31 December 2006 2005 2005 Notes £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities 8 - (297) 604 Net cash outflow from servicing of finance (109) (60) (144) Tax paid (261) (68) (326) Capital ExpenditurePurchase of tangible fixed assets (1,375) (297) (702) Sale of tangible fixed assets 726 278 694 Net cash outflow from capital expenditure (649) (19) (8) DisposalsReceipt of deferred consideration - 313 313 Equity dividends paid (691) (641) (956) Net cash outflow before financing (1,710) (772) (517) FinancingLoans repaid (532) (510) (1,045)Loans drawn down 420 - -Equity share capital subscribed 49 166 166Net cash outflow from financing (63) (344) (879) Decrease in cash in the financial period (1,773) (1,116) (1,396) STADIUM GROUP PLC NOTES: 1. Turnover Six months Six months 30 June 2006 30 June 2005 (a) By origin: £'000 £'000 Electronics - manufactured in Asia 10,742 9,606 - manufactured 2,964 3,119in UK 13,706 12,725 Branded Plastics 5,478 5,326 19,184 18,051 Six months Six months 30 June 2006 30 June 2005 Electronics Total Electronics Total (b) By destination: £'000 £'000 £'000 £'000 UK 6,481 11,683 6,652 11,779 Europe 1,471 1,726 1,384 1,575 Asia 2,624 2,624 2,346 2,346 Americas 1,776 1,776 1,495 1,495 Other 1,354 1,375 848 856 13,706 19,184 12,725 18,051 Six months Six months 30 June 2006 30 June 2005 Electronics Total Electronics Total (c) By industry sector: £'000 £'000 £'000 £'000 Consumer 7,519 12,997 5,549 10,875 Industrial 4,119 4,119 3,563 3,563 Automotive 1,875 1,875 2,802 2,802 Telecom 193 193 811 811 13,706 19,184 12,729 18,051 2. Segment information Operating profit Net Assets 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Electronics 831 1,183 8,885 7,666 Branded Plastics 472 473 4,496 4,027 GroupNet pension deficit - - (4,287) (3,843)Goodwill (66) (66) 470 603Share option costs (35) (30) - -Other (including net borrowings) (114) (145) (1,594) (415) (215) (241) (5,411) (3,655)Total 1,088 1,415 7,970 8,038 3. Net interest payable comprises: Six months Six months Year ended 30 June 30 June 31 December 2005 2006 2005 £'000 £'000 £'000 Interest receivable 1 7 8Interest payable on bank loan and overdrafts (100) (67) (152) (99) (60) (144) 4. Dividends Six months Six months Year ended 30 June 30 June 31 December 2005 2006 2005 £'000 £'000 £'000 Ordinary dividends:Final dividend 2005 of 2.4p (2004 : 2.25p) (691) (641) (641)Interim dividend 2005 of 1.1p - - (315) (691) (641) (956) An interim dividend of 1.15 pence per share amounting to £331,000 will be paidon 2 October 2006, to shareholders on the register on 15 September 2006. 5. Earnings per share Six months ended 30 June 2006 2006 2005 2005 Earnings EPS Earnings EPS £'000 Pence £'000 Pence Profit before goodwill amortization andprofit on sale of fixed assets 880 3.1 1,038 3.6Goodwill amortisation (66) (0.2) (66) (0.2)Profit on sale of fixed assets 362 1.2 56 0.2Basic earnings per share 1,176 4.1 1,028 3.6Share option costs 35 - 30 -Fully diluted earnings per share 1,211 4.1 1,058 3.6 The calculation of basic earnings per share is based on the profit for thefinancial period and the weighted average number of ordinary shares in issue(June 2006: 28,716,273 shares, June 2005: 28,537,013 shares, December 2005:28,537,013 shares). Fully diluted earnings per share reflect dilutive options granted resulting inweighted average number of shares of 29,356,916 ordinary shares (June 2005:29,487,199 shares, December 2005: 29,450,658 shares). 6. Creditors : amounts due after more than one year 30 June 30 June 31 December 2005 2006 2005 £'000 £'000 £'000 Bank loans 379 - - 379 - - 7. Profit and loss account The movement on profit and loss account for the financial period is as follows: Six months Six months Year ended 30 June 30 June 31 December 2005 2006 2005 £'000 £'000 £'000 Balance at beginning of period 2,136 (1,100) (1,961)Transfer from merger reserve - 2,751 2,751Total net gains recognised 773 1,325 2,302Dividends paid (Note 4) (691) (641) (956)Balance at end of period 2,218 2,335 2,136 8. Net cash inflow from operating activities Six months Six months Year ended 30 June 30 June 31 December 2005 2006 2005 £'000 £'000 £'000 Operating profit 1,088 1,415 2,601Release of grants received - (23) (45)Goodwill amortisation 66 66 132Share option costs 35 30 60Difference between pension charge and cash contributions (570) (657) (1,237)Depreciation 444 416 841(Profit)/loss on sale of tangible fixed assets - (75) 6Increase in stocks (131) (1,589) (2,096)Increase in debtors (1,225) (1,339) (520)Increase in creditors 293 1,459 862 Net cash (outflow)/ inflow from operating activities - (297) 604 10. Analysis of changes in net debt 31 Dec Cashflow Exchange 30 June 2006 2005 £'000 £'000 £'000 £'000 Cash 236 (216) - 20Overdrafts (1,758) (1,557) (2) (3,317)Loans due within one year (542) 500 10 (32)Loans due after one year - (388) 9 (379)Net debt (2,064) (1,661) 17 (3,708) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Stadium Group PLC