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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Stadium Grp. | LSE:SDM | London | Ordinary Share | GB0008375098 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 121.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSDM
RNS Number : 7900P
Stadium Group PLC
05 September 2017
Stadium Group plc
("Stadium", the "Company" or the "Group")
Half-year Report
Stadium Group plc (AIM: SDM), a leading supplier of design-led technologies including connectivity solutions, power supplies, human machine interface products and electronic assemblies, announces its unaudited interim results for the six months ended 30 June 2017, which are in-line with management expectations.
Financial highlights
-- Group revenues increased by 12.7% to GBP27.4m (H1 2016: GBP24.3m) - Technology Products revenues up 20.9% to GBP16.8m (H1 2016: GBP13.9m) -- Normalised* gross margins of 21.1% (H1 2016: 24.1%) - Increased material costs due to weaker sterling against US dollar - Benefit in 2016 from income from previously written-down electronic assembly inventory -- Normalised* operating profit up 9.1% to GBP2.1m (H1 2016: GBP1.9m) - Technology Products operating profit up 65% -- Normalised* profit before tax up 13.6% to GBP1.8m (H1 2016: GBP1.6m) -- Reported profit before tax up 185% to GBP2.0m (H1 2016: GBP0.7m) -- Normalised* earnings per share of 4.3p (H1 2016: 3.7p) -- Reported earnings per share of 4.6p (H1 2016: 1.7p) -- Net debt of GBP6.5m (2016: GBP3.3m), with cash in the bank of GBP3.3m -- Interim dividend of 1.00p per share, an increase of 5.2% (H1 2016: 0.95p)
* Adjusted for non-recurring costs, amortisation of acquired intangibles and interest charged on the fair value of deferred consideration.
Operational highlights
-- Technology Products division accounted for 61% of total revenues (H1 2016: 57%) -- Record current order book of GBP30.8m, up 19% from GBP25.8m at 31 December 2016 -- New Design Centre for Connectivity division fully operational in Kista, Sweden -- Cable Power acquisition successfully integrated -- Established Stadium Group Inc. to access US market opportunities -- New Group Finance Director appointed
Post-period end highlights
-- Acquired the business and assets of PowerPax UK Ltd.
Commenting on the results and outlook, Chairman Nick Brayshaw OBE said:
"We are very pleased with our performance in the first half of the year and the progress that we've made in establishing our position as a successful design-led technology business. We believe that our operating model, focused around strategically located regional design centres, manufacturing centres of excellence and regional fulfilment centres, will allow us to deliver further accelerated growth going forward. The continued positive momentum seen in the first half is further underpinned by our record order book and strengthening pipeline of new design wins which provides us with confidence in the full year outlook and beyond."
For further information please contact:
Stadium Group plc www.stadiuminvestors.com Charlie Peppiatt, Chief Executive Tel: 0118 931 1199 Officer Winston North, Group Finance Mob: 07774 239 116 Director Walbrook PR Tel: 020 7933 8780 or stadium@walbrookpr.com Paul McManus Mob: 07980 541 893 Helen Cresswell Mob: 07841 917 679 N+1 Singer Richard Lindley Tel: 020 7496 3000
The half-yearly report and this announcement will be available shortly on the Company's investor website: www.stadiuminvestors.com
About Stadium Group plc (www.stadiumgroupplc.com)
Stadium Group plc is a leading supplier of design-led technologies including connectivity solutions, power supplies, human machine interface (HMI) and electronic assemblies with design and manufacturing operations in the UK, Sweden and Asia. The Company consists of two divisions:
1. Technology Products (60% of 2016 revenues)
-- Connectivity solutions - design, integration and manufacture of machine-to-machine ("M2M") and Internet of Things ("IoT") wireless solutions
-- Power supplies (including Stontronics) - custom and standard power products from 1W to 10kW -- Human machine interface (HMI) - intelligent interface and display solutions 2. Electronic Assemblies (40% of 2016 revenues) -- Electronic manufacturing services to global original equipment manufacturers
Chairman's statement
Unaudited interim results for the six months ended 30 June 2017
Overview
I am pleased to report that our half-year results have shown further positive momentum as we deliver on our strategy to establish Stadium as a high growth design-led technology solutions business with an enhanced customer offering, wider market reach and a global footprint. We have successfully delivered incremental growth in revenues and normalised profit before tax during the period, in line with our own expectations for the first half.
We are particularly pleased to see strong growth in our prospects for North America, which has validated our decision to establish Stadium Group Inc. and was originally driven by new customer wins in the US from our newly expanded and now fully operational Swedish design centre in Kista. We expect to see a ramping up in production from these contracts from 2018 onwards.
As anticipated, our operating model focused around strategically located regional design centres, manufacturing centres of excellence and regional fulfilment centres, is proving to be increasingly attractive to existing and potential new customers. This is demonstrated by the positive first half performance and underpinned by the continued expansion in our order book, supporting further growth in the full year and beyond.
Our carefully targeted acquisition strategy remains in place and as recently announced, following the period-end we acquired the business and assets of PowerPax UK Limited, a well-recognised brand serving the industrial power supply market, which we believe offers excellent synergies with our existing Power business.
Financial highlights
Revenues for the first half of the year were 13% ahead of the prior year at GBP27.4m (H1 2016: GBP24.3m). We continue to focus on the growth opportunities for our Technology Products division, which increased its sales by 21% to GBP16.8m (H1 2016: GBP13.9m) and now contributes 61% of the Group's revenue (H1 2016: 57%). Revenues from the Electronic Assemblies division showed a small increase of GBP0.2m over H1 2016, totalling GBP10.6m (H1 2016: GBP10.4m).
Normalised gross margin reduced from 24.1% in H1 2016 to 21.1% in H1 2017. This reflects the impact of increased material costs due to a stronger US dollar and income in 2016 from stock written down in prior years, which enhanced the 2016 gross margin. Those factors significantly impacted the Electronic Assemblies division which delivered lower operating margins in H1 2017 of 7.7% (H1 2016: 12.6%). The Technology Products division's operating margins improved to 13.6% (H1 2016: 10.0%).
Overall operating expenses reduced by GBP0.3m year-on-year. This reflects the benefits from the focus on an improved operating model with the closure of the Warrington and Diss sites in 2016.
The period delivered an increase of 9.1% in normalised operating profit to GBP2.1m (H1 2016: GBP1.9m) and normalised profit before tax grew by 13.6% to GBP1.8m (H1 2016: GBP1.6m).
Statutory reported profit before tax of GBP2.0m was up 185%, GBP1.3m ahead of the prior year (H1 2016: GBP0.7m).
Foreign currency effects
The effect of a stronger Hong Kong dollar against sterling during H1 2017 compared with the H1 2016 average exchange rate, resulted in revenues being higher by GBP0.9m and operating profit being higher by GBP0.1m. There was an adverse transactional foreign exchange impact on operating profit of GBP0.3m resulting from a stronger US dollar against sterling (H1 2016: GBPnil).
Earnings per share
At the half year, basic normalised earnings per share from continuing operations were 4.3 pence (H1 2016: 3.7 pence). On a statutory basis, earnings per share from continuing operations were 4.6 pence (H1 2016: 1.7 pence).
Exceptional and other items relating to continuing activities excluded from normalised profit before tax are detailed below:
Hot Features
Premium
Six months ended Six months ended
30 June 2017 30 June 2016
GBP000 GBP000
---------------------------------------------------- ---------------- ----------------
Profit before tax attributable to equity
holders of the parent 1,964 709
---------------------------------------------------- ---------------- ----------------
Adjustments:
Amortisation of acquired intangible assets 445 449
Fiscal taxation provision relating to Asia 300 -
Release of deferred consideration provision
no longer payable (1,269) -
Reorganisation and severance costs 399 383
Net present value financing costs of acquisitions 5 82
---------------------------------------------------- ---------------- ----------------
Normalised profit before tax from continuing
operations 1,844 1,623
---------------------------------------------------- ---------------- ----------------
The release of GBP1.3m of deferred consideration resulting from the performance of the United Wireless business post acquisition which, whilst strong, did not trigger the stretch hurdles required for the payment of the additional consideration. This business continues to perform in line with budgeted expectations.
The fiscal taxation provision of GBP0.3m relating to Asia is our current best estimate of advisory fees and the outcome of a periodic transactional taxes review, typically carried out every five to ten years by the Chinese tax authorities relating to prior years. It is currently anticipated that the review will reach a conclusion by the end of 2017.
Reorganisation costs were incurred due to the completion of the restructuring of the UK businesses including the relocation of the Warrington Wireless business into the Hartlepool facility and the Diss business into the Reading facility. Additionally, following the move of the Head Office, costs were incurred to transform and upgrade the finance function.
Statement of financial position and cash flow
The free cash outflow in the period was GBP1.7m (H1 2016: inflow of GBP1.0m). Free cash flow is stated after capital expenditure, interest, tax and pensions financing, but before acquisitions, financing activities and dividends. The adverse movement was mainly due to an increase in working capital, investment in ERP systems, investment in plant and machinery and the development of new products.
Working capital increased in the period by GBP3.3m, reflecting higher inventories of GBP3.5m, to service the strong order book for the second half of the year and to counter the industrywide impact of extended lead times throughout the global supply chain for electronic components. This was partially offset by lower trade receivables and an increase in trade payables.
In the period, investment in capital expenditure was GBP0.6m (H1 2016: GBP0.5m) to further upgrade our manufacturing facilities and ERP systems. In October this year, the Asia operations will be the first businesses to go live as part of a group-wide ERP implementation plan. Development costs of GBP0.7m (H1 2016: GBP0.3m) were also capitalised reflecting the increased activities at our regional design centres.
The cash balance as at 30 June 2017 was GBP3.3m (H1 2016: GBP4.7m) and, after deducting bank loans of GBP8.0m (H1 2016: GBP7.6m), invoice discounting of GBP1.4m (H1 2016: GBPnil) and finance leases of GBP0.4m (H1 2016: GBP0.6m), net debt was GBP6.5m (H1 2016: GBP3.5m).
At the end of the period, the Group had overdraft facilities across the Group of GBP0.5m (H1 2016: GBP0.5m), which were unused, as well as access to an invoice discount facility of GBP7.0m of which GBP1.4m was being utilised at the balance sheet date.
Six months Six months
ended ended
30 June 2017 30 June 2016
GBP000 GBP000
----------------------------------------------------- -------------- --------------
Operating Profit 2,262 1,049
----------------------------------------------------- -------------- --------------
Depreciation/amortisation/profit on sale of
fixed assets, and other operating cash flow
movements 1,089 1,276
Working capital (3,302) 193
Proceeds from sale of property, plant and equipment - 5
Capital expenditure (635) (503)
Development costs (714) (287)
Pension (51) (60)
Tax (35) (373)
Interest paid (294) (300)
----------------------------------------------------- -------------- --------------
Free cash (out)/inflow (1,680) 1,000
----------------------------------------------------- -------------- --------------
Operating Review
At an operational level the focus has been on utilising our key infrastructure to drive sales growth of Technology Products and ensuring that our manufacturing capabilities continue to be world-class and sufficiently agile to support expected further growth.
As well as the strong performance in the first half detailed above, we currently have a record secured forward order book of GBP30.8m, up from GBP25.8m at the year end. This increased activity and general supply chain pressures in the global electronics market has required Stadium to increase inventories to service our customers' requirements and the strong order book during the second half of the year.
Technology Products
Technology Products revenues continued to show strong growth, increasing by 21% to GBP16.8m (H1 2016: GBP13.9m) and contributed 61% of total revenues. The division comprises our Power, Wireless and Human Machine Interface (HMI) businesses which together contributed GBP2.3m (73.6%) of the overall normalised operating profits of the Group before central and non-recurring costs. This compares to a contribution of GBP1.4m (51%) of normalised operating profits in the same period last year. Operating margins in this division have improved year-on-year having achieved margins of 13.6% in the first half compared to 10.0% in H1 2016.
We have been successful in developing a more customer focused operating model built around establishing strategically located and appropriately staffed regional design centres, manufacturing centres of excellence and regional fulfilment centres. Our four regional design centres are fully operational with one in Zhangjiang Hi-Tech Park in Shanghai, two in the UK, near Southampton and on the research park in Norwich, as well as our newly expanded design centre in Stockholm at Kista Science City, one of the world's leading high-tech clusters and a global hub for wireless technology. Through this we are well positioned to offer our global customers an integrated technology solution which includes turnkey design, manufacture and fulfilment.
We now have a firmly-established leadership team within Technology Products with experienced technical sales and design engineering capability and are seeing the results of this with several OEM new business design wins secured in the first half and record levels in our secured forward order book.
Several of the OEM new business design wins secured in the first half which contribute to our forward order book, have come from US customers and to continue to service this demand we have established a direct presence in North America through the establishment of Stadium Group Inc. We have appointed Tim Taylor, ex- Megmeet USA LCC and XP Power, as VP Sales to focus on the development of new business across the USA and Canada, as well as supporting existing customer relationships in the region. The US sales office is based in Salt Lake City, Utah, and we already have new US business awards confirmed which will see production ramp up in 2018.
Our Connectivity solutions business unit continues to perform well and is benefitting from its newly expanded headquarters at our Swedish design centre. The larger Kista site is now fully operational with 400 m(2) of purpose built laboratory, test facilities, a design and engineering zone and expansive office and meeting space for the current team of around 20 staff. We have a strong pipeline of new business from within the Automotive, Smart Home and Mobile Health markets, and have already secured a number of new OEM customers wins in Europe and the US.
Our Power business unit, operating under the Stadium Stontronics brand and based at our Reading site, has a growing pipeline of demand for custom designed industrial products. The acquisition of Cable Power, which we announced in January, has been completed with the business fully integrated and making a growing contribution to the division. During the first half, we have signed a number of agreements with European distributors and have invested in our Reading facility to create an onsite manufacturing capability for low to medium volume products and prototyping.
Stadium IGT, the Company's Human Machine Interface business, remains solid and has again shown steady growth in the first half. The business unit continues to focus on display and lighting products for aircraft interiors, control panels in defence and security settings and also solutions for the luxury automotive market.
Electronic Assemblies
Electronic Assemblies delivered a 1.6% increase in revenues in the first half to GBP10.6m (H1 2016: GBP10.4m) and contributed GBP0.8m to normalised Group operating profits excluding Group charges (H1 2016: GBP1.3m). As already mentioned this Division has faced significant margin headwinds due to increased material costs. There has been a continued focus on supply chain management and operational excellence to offset these material price increases with some success, however overall operating margins in this division dropped to 7.7% compared to the 12.6% margins experienced in the same period last year. This margin reduction has been exacerbated due to the benefit in 2016 of GBP0.2m of income from previously written-down electronic assembly inventory.
The division continues to operate in a challenging environment with pressure on pricing and over-supply in the market. To mitigate this pressure we have accelerated the reconfiguration of our manufacturing capability to provide opportunities for vertical integration for our Technology Products division. We have additional capacity available in both our UK and China manufacturing centres of excellence allowing us to support the manufacturing requirement associated with our growing forward order book. In the coming period, we expect to see a ramp-up of production for recent new business wins secured through the Technology Products division.
During the first half of the year, the level of vertically integrated activity in our Electronics Assemblies factories supplying the Technology Products division increased to 40% from the 25% level seen in 2016. This is expected to further increase to become greater than 50% of their activity going forward.
Pension schemes and retained earnings
Stadium's retained earnings increased in H1 2017 by GBP6.3m to GBP10.6m. The increase resulted from H1 retained profits of GBP1.7m, the transfer of GBP5.3m from the share premium account following Court approval in January 2017, offset by the dividend of GBP0.7m.
In keeping with the practice at previous half-year reports, the Group's two defined benefit pension schemes are revalued only for annual reporting. The triennial valuation is currently underway and will be reflected in the full year 2017 results.
Dividend
In February 2017, the Company carried out a capital reduction to create additional distributable reserves which will provide the Company with further flexibility in relation to the payment of future dividends.
The Board announces an interim dividend of 1.00 pence per share, an increase of 5.3% on the 2016 interim dividend (H1 2016: 0.95 pence). The dividend will be paid on 20 October 2017 to shareholders on the register at the close of business on 22 September 2017. The ex-dividend date is 21 September 2017.
Board changes
Winston North, ACMA, was appointed Group Finance Director and Company Secretary on 15 May 2017, joining Stadium from FTSE 250 engineering group IMI plc, where he was Finance & IT Director at its Hydronic Engineering Division based in Geneva. During the period, we have also made significant progress with the ongoing enhancement of our finance systems and the restructuring of the Group finance function, now headquartered at Reading to support our continuing growth.
Post-period end
On 1 September, we announced the acquisition of the business and assets of PowerPax UK Ltd ("PowerPax"), a well-recognised brand serving the industrial power supply market, for a total consideration of GBP2.8m in cash.
PowerPax is the fifth value-adding acquisition by the Group in the last five years, and strengthens Stadium's Power Division through the addition of complementary products and customers. The Acquisition is expected to be earnings accretive in its first full year of ownership.
PowerPax is based in Theale (Berkshire), within six miles of the Stadium Stontronics Reading site, and is a specialist value-added manufacturer and distributor of a wide range of power supplies, battery chargers and LED products, including AC-DC switch mode power supply units and DC-DC converters. Formed in 2000, the business has well established relationships with suppliers and is recognised as a specialist in the low to medium power space.
The addition of PowerPax augments Stadium's design-led technology strategy and offers cross-selling opportunities along with a wider proven supplier base and an experienced team. For the year ended 31 August 2016, PowerPax recorded sales of GBP3.3 million and profit before interest and tax of GBP0.4 million. The acquisition, which includes all assets associated with the business of PowerPax, excluding the property and some company cars, will be satisfied through a consideration of GBP2.5m cash on completion and a GBP0.3m deferred payment to be made within 12 months. The net assets being acquired have a value of circa GBP0.8 million.
Banking facilities
To support plans for accelerated growth both organically and through acquisition, the Group has agreed increased debt facilities with HSBC. The existing GBP5.0m revolving credit facility has been increased to GBP15.0m on a three-year term with the option for a further two year extension.
Outlook
We are very pleased with the progress that we've made in establishing our position as a successful design-led technology business. We believe that our operating model, focused around strategically located regional design centres, manufacturing centres of excellence and regional fulfilment centres, will allow us to deliver further accelerated growth in the second half and into 2018.
Our design-led offering is already proving popular with new and existing customers and we have developed a strong capability to increase the speed to market of our new designs. Our expansion into the US was largely driven by customer demand, but we now have the platform to convert new opportunities for business wins through a North America footprint.
We continue to target strategic acquisitions that can enhance our overall customer offering, or extend our market reach and global footprint.
The continued positive momentum seen in the first half is further underpinned by our record order book and strengthening pipeline of new design wins which provides us with confidence in the full year outlook and beyond.
Nick Brayshaw OBE
Chairman
5 September 2017
Consolidated income statement (unaudited)
for the six months ended 30 June 2017
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Note GBP000 GBP000 GBP000
--------------------------------------- ---- ---------- ----------- -------------
Continuing operations
Revenue 2 27,413 24,335 53,069
---------- ----------- -------------
Cost of sales (21,633) (18,477) (39,744)
Cost of sales - non-recurring 3 - (135) (363)
---------- ----------- -------------
Total cost of sales (21,633) (18,612) (40,107)
--------------------------------------- ---- ---------- ----------- -------------
Gross profit 5,780 5,723 12,962
Other operating income - non-recurring 3 1,269 - 500
---------- ----------- -------------
Operating expenses (4,088) (4,426) (9,625)
Operating expenses - non-recurring 3 (699) (248) (1,173)
---------- ----------- -------------
Total operating expenses (4,787) (4,674) (10,798)
--------------------------------------- ---- ---------- ----------- -------------
Operating profit 2 2,262 1,049 2,664
Finance expense 4 (317) (386) (712)
Finance income 4 19 46 249
--------------------------------------- ---- ---------- ----------- -------------
Profit before tax 1,964 709 2,201
Taxation (218) (77) (363)
--------------------------------------- ---- ---------- ----------- -------------
Profit for the period 2 1,746 632 1,838
--------------------------------------- ---- ---------- ----------- -------------
Basic earnings per share (p) 6 4.6 1.7 4.9
Diluted earnings per share (p) 6 4.4 1.6 4.7
--------------------------------------- ---- ---------- ----------- -------------
Consolidated statement of comprehensive income (unaudited)
for the six months ended 30 June 2017
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Note GBP000 GBP000 GBP000
--------------------------------------- ---- ---------- ---------- ------------
Profit for the period attributable
to equity holders of the parent 2 1,746 632 1,838
--------------------------------------- ---- ---------- ---------- ------------
Other comprehensive income
Exchange differences on translating
foreign operations (224) 440 904
Actuarial loss in pension scheme
net of deferred tax (not measured
mid-year) - - (1,715)
--------------------------------------- ---- ---------- ---------- ------------
Other comprehensive (expense)/income
for the period, net of tax (224) 440 (811)
--------------------------------------- ---- ---------- ---------- ------------
Total comprehensive income for the
period attributable to equity holders
of the parent 1,522 1,072 1,027 --------------------------------------- ---- ---------- ---------- ------------
Consolidated statement of financial position (unaudited)
at 30 June 2017
As restated
------------------------------ ---- ------- ----------- -----------
30 June 30 June 31 December
2017 2016 2016
Note GBP000 GBP000 GBP000
------------------------------ ---- ------- ----------- -----------
Assets
Non-current assets
Property, plant and equipment 4,470 4,678 4,379
Goodwill 15,650 15,379 15,379
Other intangible assets 2,652 1,947 2,194
Deferred tax assets 1,141 1,028 1,150
Other receivables 96 159 119
------------------------------ ---- ------- ----------- -----------
24,009 23,191 23,221
------------------------------ ---- ------- ----------- -----------
Current assets
Inventories 11,827 7,337 8,148
Trade and other receivables 13,025 11,617 13,932
Cash and cash equivalents 9 3,264 4,679 4,601
------------------------------ ---- ------- ----------- -----------
28,116 23,633 26,681
------------------------------ ---- ------- ----------- -----------
Total assets 52,125 46,824 49,902
------------------------------ ---- ------- ----------- -----------
Equity
Equity share capital 1,909 1,864 1,909
Share premium 4,373 10,308 9,673
Merger reserve 1,559 924 1,559
Capital redemption reserve 88 88 88
Translation reserve 1,181 941 1,405
Retained earnings 10,604 5,275 4,237
------------------------------ ---- ------- ----------- -----------
Total equity 19,714 19,400 18,871
------------------------------ ---- ------- ----------- -----------
Non-current liabilities
Bank loans 7,9 7,100 7,050 6,713
Finance leases 7 339 440 385
Other non-trade payables 7 505 2,232 1,108
Deferred tax 141 337 215
Gross pension liability 6,716 5,145 6,767
------------------------------ ---- ------- ----------- -----------
Total non-current liabilities 14,801 15,204 15,188
------------------------------ ---- ------- ----------- -----------
Current liabilities
Bank loans and overdrafts 9 913 575 637
Invoice securitisation 9 1,340 26 -
Finance leases 7 110 156 143
Trade payables 11,075 8,417 9,994
Current tax payable 272 346 237
Other payables 3,333 2,385 4,562
Provisions 567 315 270
------------------------------ ---- ------- ----------- -----------
Total current liabilities 17,610 12,220 15,843
------------------------------ ---- ------- ----------- -----------
Total liabilities 32,411 27,424 31,031
------------------------------ ---- ------- ----------- -----------
Total equity and liabilities 52,125 46,824 49,902
------------------------------ ---- ------- ----------- -----------
Consolidated statement of changes in equity (unaudited)
for the six months ended 30 June 2017
Capital
Ordinary Share Merger redemption Translation Retained
shares premium reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31 December
2015 1,826 10,597 - 88 501 5,146 18,158
Prior period adjustment
* - (924) 924 - - - -
--------------------------- -------- -------- --------- ----------- ----------- ---------- ----------
Balance at 31 December
2015 as restated 1,826 9,673 924 88 501 5,146 18,158
Changes in equity
for the first six
months of 2016
Exchange differences
on translating foreign
operations - - - - 440 - 440
Profit for the period - - - - - 632 632
Actuarial gain/(loss)
on defined benefit
plan (not measured
mid-year) - - - - - - -
--------------------------- -------- -------- --------- ----------- ----------- ---------- ----------
Total comprehensive
income for the period - - -- - 440 632 1,072
Transactions with
owners in their capacity
as owners
Equity settled share
based payment
transactions - - - - - 168 168
Issue of share capital 38 635 - - - - 673
Dividends - - - - - (671) (671)
--------------------------- -------- -------- --------- ----------- ----------- ---------- --------
Balance at 30 June
2016 1,864 10,308 924 88 941 5,275 19,400
Changes in equity
for the second six
months of 2016
Exchange differences
on translating foreign
operations - - - - 464 - 464
Profit for the period - - - - - 1,206 1,206
Actuarial gain/(loss)
on defined benefit
plan - - - - - (1,715) (1,715)
--------------------------- -------- -------- --------- ----------- ----------- ---------- --------
Total comprehensive
(loss)/income for
the period - - - - 464 (509) (45)
Transactions with
owners in their capacity
as owners
Equity settled share
based payment
transactions - - - - - (175) (175)
Issue of share capital 45 (635) 635 - - - 45
Dividends - - - - - (354) (354)
--------------------------- -------- -------- --------- ----------- ----------- ---------- --------
Balance at 31 December
2016 1909 9,673 1,559 88 1,405 4,237 18,871
Changes in equity
for the first six
months of 2017
Exchange differences
on translating foreign
operations - - - - (224) - (224)
Profit for the period - - - - - 1,746 1,746
Actuarial gain/(loss)
on defined benefit
plan (not measured
mid-year) - - - - - - -
--------------------------- -------- -------- --------- ----------- ----------- ---------- --------
Total comprehensive
(loss)/income for
the period - - - - (224) 1,746 1,522
Transactions with
owners in their capacity
as owners
Equity settled share
based payment
transactions - - - - - 65 65
Capital reduction - (5,300) - - - 5,300 -
Dividends - - - - - (744) (744)
--------------------------- -------- -------- --------- ----------- ----------- ---------- --------
Balance at 30 June
2017 1,909 4,373 1,559 88 1,181 10,604 19,714
--------------------------- -------- -------- --------- ----------- ----------- ---------- --------
*Restated to reflect the reallocation of GBP924,000 from the share premium account to the merger reserve in relation to shares issued as part of the consideration for the purchase of Stadium United Wireless Ltd in July 2014. The amount is equal to the difference between the fair value on issue and the nominal value.
Consolidated statement of cash flows (unaudited)
for the six months ended 30 June 2017
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Note GBP000 GBP000 GBP000
------------------------------------------ ---- ---------- ---------- ------------
Net cash flow from operating activities 8 (37) 2,085 4,241
Investing activities
Acquisition of the assets of Cable
Power Limited (749) - -
Purchase of property, plant and
equipment (635) (503) (834)
Sale of property, plant and equipment - 5 -
Development costs (714) (287) (696)
------------------------------------------ ---- ---------- ---------- ------------
Cash flows from investing activities (2,098) (785) (1,530)
------------------------------------------ ---- ---------- ---------- ------------
Financing activities
Equity share capital subscribed - 673 50
Payment of share issue transaction
costs - - -
Interest paid (294) (300) (581)
Non-operating loan payments received 39 22 60
Net proceeds/(repayments) from use
of invoice discounting 1,340 (2,373) (2,399)
Proceeds from new borrowings received 1,000 - -
Repayment of borrowings (337) (250) (525)
Finance lease repayments (89) (84) (182)
Dividends paid on ordinary shares 5 (744) (671) (1,025)
------------------------------------------ ---- ---------- ---------- ------------
Cash flows from financing activities 915 (2,983) (4,602)
------------------------------------------ ---- ---------- ---------- ------------
Net decrease in cash and cash equivalents (1,220) (1,683) (1,891)
Cash and cash equivalents at start
of period 4,601 6,200 6,200
Exchange gains on cash and cash
equivalents (117) 162 292
------------------------------------------ ---- ---------- ---------- ------------
Cash and cash equivalents at end
of period 3,264 4,679 4,601
------------------------------------------ ---- ---------- ---------- ------------
Notes to the financial statements
1. Basis of preparation
The annual financial statements of Stadium Group plc for the year ending 31 December 2017 will be prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as adopted for use by the European Union (EU) effective at 31 December 2017 and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. Accordingly, the interim financial report has been prepared using accounting policies consistent with those which will be adopted by the Group in the financial statements and in compliance with IAS 34 Interim Financial Reporting.
The Group's IFRS accounting policies, set out below, have been consistently applied to all the periods presented. The information has been prepared under the historical cost basis.
The comparative figures for the year ended 31 December 2016 do not constitute statutory accounts for the purposes of Section 435 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2016 has been delivered to the Registrar of Companies and contained an unqualified Auditor's report in accordance with Section 495 of the Companies Act 2006.
Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the Company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the Company considers all relevant facts and circumstances, including:
- the size of the Company's voting rights relative to both the size and dispersion of other parties who hold voting rights;
- substantive potential voting rights held by the Company and by other parties;
- other contractual arrangements; and
- historic patterns in voting attendance.
The consolidated financial statements present the results of the Company and its subsidiaries (the "Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date, based on the probability of a payment being made. Subsequent changes to the fair value of contingent consideration that is deemed to be an asset or liability are recognised in accordance with IAS 39 in profit and loss.
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when declared by the directors. In the case of final dividends, this is when approved by the shareholders at the AGM.
Goodwill
Goodwill arising on consolidation consists of the excess of the fair value of the consideration over the fair value of the Group's interest in the identifiable tangible and intangible assets net of liabilities including contingencies of the business acquired at the date of acquisition.
Goodwill is recognised as an asset at cost less any recognised impairment losses. It is reviewed for impairment at least annually and any impairment is recognised immediately in the income statement.
Revenue
Revenue is measured at the fair value of goods provided to customers net of returns, discounts, value added tax and other sales taxes. Revenue from the sales of goods is recognised when the Group has transferred the significant risks and rewards of ownership to the buyer and it is probable that the Group will receive the previously agreed upon payment. These criteria are considered to be met when the goods are delivered to the buyer. Where warranties are offered to customers, revenue is recognised in the period where the goods are delivered less an appropriate provision for returns based on past experience.
Provided the amount of revenue can be measured reliably and it is probable that the Group will receive any consideration, revenue for services is recognised in the period in which they are rendered.
In addition to the above, revenue from sales may also be recognised on bill and hold transactions. When a customer specifically requests that the Group delays delivery of the goods for a legitimate business reason, revenue on these goods will be recognised before delivery takes place. Revenue on bill and hold sales is recognised when the customer takes legal title of the goods, accepts the invoice and the product is ring-fenced and available for collection.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment losses.
Depreciation is charged at rates calculated to write down the cost of assets (excluding freehold land) over their estimated useful lives by equal instalments at the following rates:
Freehold buildings 2% Plant and machinery 10%-25% Fixtures and equipment 10%-25%
Useful lives and residual values are reviewed annually.
The gain or loss arising on disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in income.
Inventories
Inventories are stated at the lower of cost and estimated net realisable value. Cost is determined on a first-in, first-out basis including transport and handling costs and, in the case of manufactured products, includes all direct expenditure and production overheads based on normal levels of activity.
Deferred taxation
Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the reporting date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the reporting date.
A deferred tax asset is regarded as recoverable and is therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable surpluses from which the future reversal of the underlying temporary differences can be deducted. Deferred tax balances are not discounted.
Other intangible assets
Other intangible assets are shown at historical cost less accumulated amortisation and impairment losses.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of the intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life either in use or under development are tested for impairment at each reporting date. Other intangible assets are amortised from the date they are available for use. The useful lives are as follows:
Internally generated:
Development costs - up to five years, consistent with the revenue generation profile of the product
Externally acquired:
Customer relationships - three to five years
Customer order books - one year
Amortisation periods and methods are reviewed annually and adjusted if appropriate. Amortisation of each of the above classes is charged to Operating expenses in the Consolidated income statement.
Share based payments
Employee share options are measured at fair value at grant date using the Black-Scholes model. The fair value is expensed on a straight-line basis over the vesting period, based on an estimate of the number of options that will eventually vest.
Pension costs
Defined benefit scheme
Assets and liabilities arising from retirement benefit obligations and the related funding are reflected at fair value in the financial statements and operating and finance costs are recognised in the financial periods in which they arise. Gains and losses arising from actuarial experience during the accounting period are recognised in other comprehensive income, but these are not measured at mid-year.
Defined contribution schemes
Contributions payable are charged to the income statement in the accounting period in which they are incurred.
Foreign currencies
Transactions denominated in foreign currencies are recorded at the prevailing rate on the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into Sterling (the Group's presentational currency) at the rate prevailing at the period end. Gains and losses arising on the translation of foreign currencies are dealt with as part of operating profit.
The assets and liabilities of foreign subsidiary undertakings are translated into Sterling, the presentational currency of the Group, at the period end exchange rate.
The income and expenditure of foreign subsidiary undertakings are translated into Sterling at the average exchange rate prevailing during the period on a month by month basis. Exchange differences arising on retranslation of opening assets and liabilities, long term financing denominated in foreign currencies and the trading of foreign subsidiary undertakings are taken directly to the translation reserve using the net investment method.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the date of transition to IFRS as Sterling denominated assets and liabilities.
Provisions
A provision is recognised in the consolidated statement of financial position when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. A warranty provision is recognised when the related goods are sold. The provision is based upon historical customer claims data relative to levels of sales activity.
Non-recurring costs
Certain costs have been classified on the face of the consolidated income statement as "non-recurring". These are material items which individually or, if of a similar type, in aggregate, need to be disclosed by virtue of their size or incidence for the financial statements to give a true and fair view. These transactions are of a nature that will not be ongoing in the ordinary course of trading and the Group has classified in this manner costs incurred in restructuring and reorganising the business, including costs relating to acquisitions made.
Research and development
Research expenditure is charged to the income statement as an expense when incurred in accordance with IAS 38. Development expenditure is capitalised as an internally generated intangible asset once criteria relating to the product's technical and commercial feasibility have been met and the decision to complete the development has been taken and resources have been committed to the completion of the project. Development expenditure is stated at cost less accumulated amortisation and impairment losses. Development costs are amortised over varying periods of up to five years in a profile that matches the revenue generation profile of the product.
Leased assets
Leases of property, plant and equipment where the Group assumes substantially all of the risks and rewards of ownership are classified as finance leases. Assets held under finance leases are capitalised at fair value of the leases, unless the present value of the lease payments is lower. The corresponding leasing commitments, net of finance charges, are included in liabilities.
Leasing payments are analysed between capital and interest components so the interest element is charged to the income statement over the period of the lease at the constant periodic rate of interest on the remaining balance of the liability outstanding.
Depreciation on assets held under finance leases is charged to the income statement over the useful life of the asset.
All other leases are treated as operating leases with annual rentals charged to the income statement, net of any incentives granted to the lessee, over the term of the lease.
Financial instruments
The Group's financial instruments comprise borrowings, some cash and liquid resources and items such as trade receivables and trade payables that arise directly from its operations. The main purpose of these financial instruments is to manage the finance of the Group's operations.
Financial assets and financial liabilities are recognised in the Group's Consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal value less appropriate allowances for estimated irrecoverable amounts. Such allowances aim to ensure that receivables are only recognised to the extent to which they are recoverable. Provisions created for irrecoverable amounts are recorded in a separate allowance account with the loss being recognised within the consolidated income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value is written off against the associated provision.
Cash and cash equivalents
Cash includes bank current accounts and petty cash balances, which are subject to insignificant risk of changes in value.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the fair value of proceeds received net of any transaction costs. Such loans are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Trade payables
Trade payables do not carry any interest and are stated at their nominal value.
Invoice discounting
Amounts due in respect of invoice discounting are separately disclosed as current liabilities. The Group can use these facilities to draw down a percentage of the value of certain sales invoices. The management and collection of trade receivables remains with the Group and it therefore retains the risks and rewards of ownership.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received net of direct issue costs.
It has been, throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken. The Group does not consider that it has any obligations or rights under derivative financial instruments.
The main risks arising from the Group's financial instruments are credit risk, interest rate risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and these policies are summarised below.
-- Credit risk
The Group has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Credit evaluations are carried out on all significant prospective customers and all existing customers requiring credit beyond a certain threshold. Credit risk is actively managed. Remedial actions are taken, including the variation of terms of trade under guidance from senior management, where credit risk is deemed to have risen to an unacceptable level.
-- Interest rate risk
The Group finances its operations through a mixture of retained profits and bank borrowings. The Group holds cash and borrowings in various currencies at floating rates of interest.
-- Liquidity risk
As regards liquidity, the Group's policy is to maintain undrawn overdraft borrowing facilities in order to provide flexibility in the management of the Group's liquidity.
-- Foreign currency risk
The Group has transactional and translational currency exposures. Transactional exposures arise from sales or purchases by operating units in currencies other than Sterling, being the Group's functional currency. The Group matches payments and receipts to minimise exposure, and buys the currency when the liability falls due. Translational exposure arises when the results of Stadium Asia, which are reported in Hong Kong Dollars, are translated into Sterling for inclusion in the Group results. Part of this exposure is hedged by entering into loan facilities denominated in US Dollars.
Accounting estimates and judgements
The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are shown below.
-- Key sources of estimation uncertainty
Stock provisions The stock provision is based on average loss rates
- of stock in recent months. The provision makes use
of stock counts performed which is considered to
be representative of all stock items held.
Retirement benefit Obligations under the final salary pension scheme
obligations - are affected by the discount rate applied to future
pension obligations, the expected rate of return
on the scheme's investments, the rate of inflation
in future salaries and pensions and the mortality
rate of scheme members. The assumptions over these
factors are updated annually by the scheme actuary
and the obligation to make future pension payments
is re-evaluated at the annual reporting date.
Goodwill - Goodwill is evaluated for impairment at each reporting
date. The recoverable amounts of cash generating
units have been estimated based on value in use calculations.
Credit risk - Trade and other receivables are recognised to the
extent that, in the opinion of the directors, they
are recoverable in the ordinary course of business.
Risk arises from the potential of any customer failing
to meet their contractual obligations and settle
debts when due. It is Group policy to assess creditworthiness
of new customers, to review and, where necessary,
renegotiate terms of trade from customers with which
it has a good trading history, and to actively monitor
customer compliance, ensuring that trading terms
are adhered to.
Identification of Identified intangibles acquired in business combinations
intangibles on are recognised separately from goodwill. An intangible
business combinations asset is identified if it arises from contractual
- or legal rights or if it is separable. Determining
the fair value of intangible assets acquired requires
estimates of the future cash flows related to the
intangibles and a suitable discount rate to calculate
the present value. No acquired intangibles were recognised
in the period.
Non-recurring items Transactions classified as non-recurring require
- judgement to be exercised in identifying which items
are of a nature that they will not be expected to
recur in the ordinary course of trade and are material
for the financial statements to present a true and
fair view.
2. Segmental reporting analysis
By operating segment
Electronic Group and
Technology Assemblies non-recurring
Products costs Total
Six months ended 30 June GBP000 GBP000
2017 GBP000 GBP000
----------------------------- ---------- ----------- -------------- -------
Revenue - external customers 16,823 10,590 - 27,413
------------------------------ ---------- ----------- -------------- -------
Segment profit before
Group charges 2,289 820 570 3,679
Group charges - - (1,417) (1,417)
------------------------------ ---------- ----------- -------------- -------
Operating profit 2,289 820 (847) 2,262
------------------------------ ---------- ----------- --------------
Net interest expense (298)
Taxation (218)
------------------------------ ---------- ----------- -------------- -------
Profit for the period 1,746
------------------------------ ---------- ----------- -------------- -------
Electronic Group and
Technology Assemblies non-recurring
Products costs Total
Six months ended 30 June GBP000 GBP000
2016 GBP000 GBP000
----------------------------- ---------- ----------- -------------- -------
Revenue - external customers 13,908 10,427 - 24,335
------------------------------ ---------- ----------- -------------- -------
Segment profit before
Group charges 1,390 1,309 (383) 2,316
Group charges - - (1,267) (1,267)
------------------------------ ---------- ----------- -------------- -------
Operating profit 1,390 1,309 (1,650) 1,049
------------------------------ ---------- ----------- --------------
Net interest expense (340)
Taxation (77)
------------------------------ ---------- ----------- -------------- -------
Profit for the period 632
------------------------------ ---------- ----------- -------------- -------
Technology Electronic Unallocated
Products Assemblies and adjustments Total
------------------------------ ---------- ----------- ---------------- --------
Six months ended 30 June GBP000
2017 GBP000 GBP000 GBP000
Segment assets 17,639 15,217 19,269 52,125
Segment liabilities (3,844) (11,237) (17,330) (32,411)
------------------------------- ---------- ----------- ---------------- --------
Segment net assets 13,795 3,980 1,939 19,714
------------------------------- ---------- ----------- ---------------- --------
Expenditure on property,
plant and equipment 516 119 - 635
Depreciation and amortisation 585 322 - 907
------------------------------- ---------- ----------- ---------------- --------
Technology Electronic Unallocated
Products Assemblies and adjustments Total
Six months ended 30 June 2016 GBP000 GBP000 GBP000 GBP000
------------------------------- ---------- ----------- ---------------- --------
Segment assets 11,963 13,774 21,087 46,824
Segment liabilities (4,970) (6,810) (15,644) (27,424)
-------------------------------- ---------- ----------- ---------------- --------
Segment net assets 6,993 6,964 5,443 19,400
-------------------------------- ---------- ----------- ---------------- --------
Expenditure on property, plant
and equipment 286 217 - 503
Depreciation and amortisation 621 316 - 937
-------------------------------- ---------- ----------- ---------------- --------
By geographic location
Revenue -
external Capital
customers Net assets expenditure
by location by location by location
of customer of assets of assets
Six months ended 30 June 2017 GBP000 GBP000 GBP000
------------------------------ ------------ ------------ ------------
UK 17,277 16,186 422
Europe 7,015 156 172
North America 2,084 - -
Asia Pacific and other 1,037 3,372 41
------------------------------ ------------ ------------ ------------
27,413 19,714 635
------------------------------ ------------ ------------ ------------
Revenue -
external Capital
customers Net assets expenditure
by location by location by location
of customer of assets of assets
Six months ended 30 June 2016 GBP000 GBP000 GBP000
------------------------------ ------------ ------------ ------------
UK 15,485 15,603 342
Europe 4,741 45 95
North America 3,018 - -
Asia Pacific and other 1,091 3,752 66
------------------------------ ------------ ------------ ============
24,335 19,400 503
------------------------------ ------------ ------------ ------------
3. Operating expenses
Non-recurring items:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------------------------------------------- ---------- ---------- ------------
Included within cost of sales is
the following one-off item, which
is considered material due to its
size and nature:
Technology Products division reorganisation
costs - (135) (363)
Included within other operating
income is the following one-off
items, which are considered material
due to their size and nature:
Release of deferred consideration
no longer payable - Stadium United
Wireless Limited (2016: Stontronics
Limited) 1,269 - 500
Included within operating expenses
are the following one-off items,
which are considered material due
to their size and nature, or a combination
of both:
Fiscal taxation provision relating
to Asia (300) - -
Reorganisation and severance costs (399) - -
Electronic Assemblies division reorganisation
costs - - (156)
Technology Products division reorganisation
costs - (248) (950)
Acquisition costs of subsidiaries - - (67)
---------------------------------------------- ---------- ---------- ------------
4. Finance costs comprises:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Finance cost (net) comprises: GBP000 GBP000 GBP000
--------------------------------------- ---------- ---------- ------------
Interest payable on bank loans,
overdrafts and invoice discounting (106) (105) (189)
Other finance costs (211) (281) (523)
--------------------------------------- ---------- ---------- ------------
(317) (386) (712)
--------------------------------------- ---------- ---------- ------------
Other finance costs comprise:
Net interest on the net defined
benefits pension scheme liabilities (198) (192) (386)
Interest on finance leases - (7) (12)
Interest charge on the fair value
of deferred consideration (5) (82) (125)
Net foreign exchange loss on financing (8) - -
--------------------------------------- ---------- ---------- ------------
(211) (281) (523)
--------------------------------------- ---------- ---------- ------------
Finance income comprises:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
--------------------------------------- ---------- ---------- ------------
Non-operating loan interest income 19 24 46
Net foreign exchange gain on financing - 22 203
--------------------------------------- ---------- ---------- ------------
19 46 249
--------------------------------------- ---------- ---------- ------------
5. Dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------ ---------- ---------- ------------
Ordinary dividends:
Final dividend 2016 of 1.95p (2015:
1.80p) 744 671 671
Interim dividend 2016 of 0.95p - - 354
------------------------------------ ---------- ---------- ------------
744 671 1,025
------------------------------------ ---------- ---------- ------------
An interim dividend of 1.00p per share, an increase of 5.3% on the 2016 interim dividend (2016: 0.95 pence) amounting to GBP384,000 will be paid on 20 October 2017 to shareholders registered at the close of business on 22 September 2017. The ex-dividend date is 21 September 2017.
6. Earnings per share
Six months ended 30 June Year ended 31 December
===================================== ========================
2017 2017 2016 2016 2016 2016
Earnings EPS Earnings EPS Earnings EPS
GBP000 Pence GBP000 Pence GBP000 Pence
----------------------- --------- ------ ---------- ------ -------------- --------
Basic earnings per
ordinary share 1,746 4.6 632 1.7 1,838 4.9
----------------------- --------- ------ ---------- ------ -------------- --------
Fully diluted earnings
per ordinary share 1,746 4.4 632 1.6 1,838 4.7
----------------------- --------- ------ ---------- ------ -------------- --------
All earnings arise from continuing operations.
The calculation of basic earnings per share is based on the profit for the financial period and the weighted average number of ordinary shares in issue (June 2017: 38,178,122 shares; June 2016: 36,944,583 shares; December 2016: 37,226,717 shares).
The fully dilutive weighted average number of shares was 39,276,668 (June 2016: 40,592,449 shares; December 2016: 39,094,262 shares).
Adjusted earnings per share from continuing operations is stated before amortisation of acquired intangibles and excluding non-recurring items as follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
-------------------------------------------- ---------- ---------- ------------
Profit attributable to equity holders
of the parent 1,746 632 1,838
Adjustments:
Amortisation of acquired intangibles 445 449 861
Interest charge on the fair value
of deferred consideration 5 82 125
Reorganisation and severance costs 399 - -
Fiscal taxation provision relating
to Asia region 300 - -
UK site rationalisation/ reorganisation
projects - - 1,290
Technology Products division reorganisation
and severance costs - 383 -
Directorate change - - 179
Acquisition costs of subsidiaries - - 67
Release of deferred consideration
no longer payable (1,269) - (500)
Tax effects of above adjustments 23 (183) (466)
-------------------------------------------- ---------- ---------- ------------
Adjusted profit from continuing
operations 1,649 1,363 3,394
-------------------------------------------- ---------- ---------- ------------
Pence Pence Pence
------------------------------------------ ----- ----- -----
Adjusted basic earnings per share
before amortisation of acquired
intangibles and from continuing
operations 4.3 3.7 9.1
Adjusted fully diluted earnings
per share before amortisation of
acquired intangibles and from continuing
operations 4.2 3.4 8.7
------------------------------------------ ----- ----- -----
7. Non-current payables
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
--------------------------------------------- ---------- ---------- ------------
Long term portion of secured bank borrowings
- between one and five years 7,100 7,050 6,713
Finance leases - between one and five years 339 440 385
Deferred consideration - between one and
five years 505 2,232 1,108
--------------------------------------------- ---------- ---------- ------------
7,944 9,722 8,206
--------------------------------------------- ---------- ---------- ------------
8. Net cash inflow from operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------- ---------- ---------- ------------
Profit for the period 1,746 632 1,838
Income tax expense 218 77 363
Finance expense 317 340 712
Finance income (19) - (249)
------------------------------------------- ---------- ---------- ------------
Operating profit 2,262 1,049 2,664
Share option costs 65 168 (7)
Depreciation 338 363 731
Amortisation of intangibles 569 573 1,144
Loss on sale of fixed assets 60 6 36
Effect of exchange rate fluctuations 57 166 550
(Increase)/decrease in inventories (3,523) 180 (630)
Decrease/(increase) in trade and other
receivables 907 2,122 (157)
(Decrease)/increase in trade and other
payables (686) (2,109) 1,101
------------------------------------------- ---------- ---------- ------------
Cash generated from operations 49 2,518 5,432
Difference between pension charge and cash
contributions (51) (60) (317)
Tax paid (35) (373) (874)
------------------------------------------- ---------- ---------- ------------
Net cash (outflow)/inflow from operating
activities (37) 2,085 4,241
------------------------------------------- ---------- ---------- ------------
9. Analysis of changes in net debt
30 June Foreign 31 December
2017 Cash flow exchange 2016
GBP000 GBP000 GBP000 GBP000
-------------------- -------------- ---------- --------- -----------
Cash 3,264 (1,220) (117) 4,601
Overdrafts - - - -
-------------------- --- ---------- ---------- --------- -----------
Total cash & cash
equivalents 3,264 (1,220) (117) 4,601
------------------------- ---------- ---------- --------- -----------
Loans (8,013) (663) - (7,350)
Invoice discounting (1,340) (1,340) - -
Finance leases (449) 79 - (528)
------------------------- ---------- ---------- --------- -----------
Net debt (6,538) (3,144) (117) (3,277)
------------------------- ---------- ---------- --------- -----------
10. Exchange rates
The principal exchange rates used in the translation of the results of overseas subsidiaries were as follows:
Average Closing
----------------- -------------------------------- ---------------------------------
6 months 6 months
to to 12 months
30 June 30 June to At 30 June At 30 June At 31 Dec
2017 2016 31 Dec 2016 2017 2016 2016
----------------- -------- -------- ------------ ---------- ---------- ---------
Euros 1.16 1.27 1.22 1.14 1.20 1.17
Renminbi 8.72 9.28 8.95 8.81 8.88 8.59
Hong Kong Dollar 9.90 11.01 10.45 10.14 10.37 9.58
US Dollar 1.27 1.42 1.35 1.30 1.34 1.23
11. Risk management
The main financial risks faced by the Group are credit risk, foreign currency risk, interest rate risk and liquidity risk. The directors regularly review and agree policies for managing these risks. Further details of the risk management policies are set out in Note 1.
Credit risk
The Group has paid particular attention to managing the credit risk inherent in new customers during a period of revenue growth. Awareness is maintained of any changes in customers' credit requirements, payment habits and the conditions in their own market sectors.
The Group has not incurred any significant bad debts during the period.
Foreign currency risk
There has been no significant change during the period in the nature of the Group's exposure to currency risk. The Group's exposure to currency risk arises from transactions which are not in the functional currency of the operating unit and from the retranslation of the operating unit's results into Sterling, being the Group's presentational currency.
The Group manages its exposure to currency risk by matching the currency of payments and receipts in order to minimise exposure and buys currency when the liability falls due. The directors do not believe that the Group has significant foreign currency exposure on transactions.
The Groups foreign currency risk exposure from recognised assets and liabilities arises primarily from its investment in Stadium Asia Limited denominated in Hong Kong Dollars.
There is no significant impact on the income statement from foreign currency movements associated with these assets and liabilities as the effective portion of foreign currency gains and losses arising are recorded through the translation reserve.
A net loss of GBP224,000 (HY1 2016: gain GBP440,000; 2016 full year: gain GBP904,000) on the translation of the net assets of Stadium Asia, denominated in Hong Kong dollars was recorded through the translation reserve.
At 30 June 2017, the Group had borrowings denominated in Hong Kong Dollars of GBPnil (HY1 2016: GBP61,000) and in Euros of GBP339,000 (HY1 2016: GBP535,000).
Interest rate risk
The Group finances its operations through a mixture of equity, retained earnings and bank borrowings. The Group holds cash and borrows in Sterling, US Dollars and Hong Kong Dollars at floating rates of interest. Fixed rate finance leases are also used, denominated in Hong Kong Dollars and Euros.
The exposure to interest rate risk all relates to the floating rates at which the Group borrows and lends. The risk is monitored continually to ensure that the Group remains able to meet its financing commitments from operational cash flows.
The Group's financial liabilities are denominated in Sterling, US Dollars, Hong Kong Dollars and Euros and have fixed and floating interest rates. The financial liabilities with floating interest rates comprise:
-- loans in Sterling that bear interest at rates based on a floating rate of LIBOR plus 1.9% to 2.3%; and
-- an overdraft availability in Sterling and Hong Kong dollars that bears interest on a floating rate of LIBOR plus 2.0% to 2.3% after offset of Sterling deposits; and
-- invoice securitisation that bears interest on a floating rate of LIBOR plus 1.65%.
Liquidity risk
The Group's policy of managing liquidity risk by maintaining sufficient headroom in its undrawn overdraft facilities has been applied throughout the period.
At the end of the period, the Group had overall net available cash of GBP3,264,000 (H1 2016: GBP4,679,000). In addition, it had overdraft facilities under a cash pooling arrangement across all Group companies of GBP545,000 (H1 2016: GBP537,000) of which GBPnil was being utilised (H1 2016: GBPnil), invoice discounting and factoring facilities offered GBP7,000,000 (H1 2016: GBP3,238,000) of which GBP1,340,000 was being utilised (H1 2016 GBP26,000).
11. Post balance sheet event
On 1 September 2017, the Company announced the acquisition of the business and assets of PowerPax UK Ltd ("PowerPax"), a well-recognised brand serving the industrial power supply market, for a total maximum consideration of GBP2.8m in cash. For the year ended 31 August 2016, PowerPax recorded sales of GBP3.3 million and profit before interest and tax of GBP0.4 million.
The acquisition, which includes all assets associated with the business of PowerPax, excluding the property and some company cars, will be satisfied through a consideration of GBP2.5m cash on completion and a GBP0.3m deferred payment to be made within 12 months. The net assets being acquired have a value of circa GBP0.8 million.
The consideration will be funded from existing cash resources and through an increased debt facility with our existing lender, HSBC. In order to support plans for further accelerated growth both organically and through acquisition, HSBC has agreed to increase the existing GBP5.0m revolving credit facility to GBP15.0m on a three-year term, with the option for a further two-year extension.
12. Going concern and liquidity
The directors confirm that, after having made the appropriate enquiries, they have a reasonable expectation that the Group and the Company have adequate resources and sufficient liquidity to continue operations for the foreseeable future. Accordingly, the directors have adopted the going concern basis in the preparation of this report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSAFWLFWSEEU
(END) Dow Jones Newswires
September 05, 2017 02:00 ET (06:00 GMT)
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