Half-yearly Report

 
TIDMSTTM 
 
STRONTIUM PLC 
 
                        ("Strontium" or the "Company") 
 
         Half yearly report for the six months ended 31 December 2009 
 
 
Strontium the AIM quoted, professional services group specializing in 
developing and acquiring small, professional services businesses with the 
potential for development, announces its interim results for six months to 31 
December 2009 (the "Period"). 
 
 
Key Points: 
 
  * Profit after tax and exceptional items is up 13-fold to GBP97,895 (six months 
    to 31 December 2008: GBP7,510); 
 
  * Revenue from continuing activities has increased by 23% to GBP1,228,777 (six 
    months to 31 December 2008: GBP996,260); 
 
  * Profit on continuing activities before taxation and impairment charges up 
    95% to GBP145,270 (six months to 31 December 2008: GBP74,484); 
 
  * Cash at bank up 33% to GBP358,777 (31 December 2008: GBP269,265); and 
 
  * Total assets up 17% to GBP2,251,447 (31 December 2008: GBP1,922,209). 
 
 
Michael Metcalfe, Chairman, commented: 
 
"Strontium has continued to focus on the growth of its existing businesses by 
expanding its client base during difficult market conditions. As a result of 
this focus, I am pleased to report on six monthsduring which the Company made a 
satisfactory profit in the current difficult climate. 
 
Market conditions in 2010 will remain challenging but,because of the steps that 
the Company has taken to contain its costs and to maintain its focus, I am 
cautiously optimistic that growth will continue through 2010. I congratulate 
everyone in Strontium on an excellent performance given the tough conditions we 
have faced." 
 
 
Enquiries: 
 
Strontium Plc           David Barker, Managing                    078 4337 5764 
                        Director 
 
Astaire Securities Plc  Gavin Burnell, Nominated                  020 7448 4400 
                        Adviser 
 
Yellow Jersey PR        Dominic Barretto, Public                  020 8980 3545 
                        Relations 
 
 
 
Chairman's Statement 
 
During the Period, the Company concentrated on increasing revenue and profits 
in its existing operations. The increase in sales and profit for the Period 
confirms the wisdom of the cautious approach adopted by the Board since early 
2008. 
 
The Company is in a good position to take advantage of gradually improving 
market conditions and is well poised for further growth given that it remains 
debt free and is generating cash. 
 
 
Financial Overview 
 
The Company disposed of the business of Executive Development Consultants 
Limited ("EDC") during the last financial year. In the six months to 31st 
December 2008, EDC generated revenues of GBP101,235 and a loss of GBP67,214. In the 
Financial Overview, the impact of EDC has been excluded from the numbers shown 
for the six months to December 2008, in order to provide a meaningful 
comparison of the performance of the continuing activities. 
 
Revenue during the Period increased by 23% to GBP1,228,777 (six months to 31 
December 2008: GBP996,260). 
 
Gross profit for the Period increased by 49% to GBP1,043,306 (six months to 31 
December 2008: GBP701,244). 
 
The increase in administration expenses for the Period was restricted to 43% at 
GBP898,036 (six months to 31 December 2008: GBP627,610). 
 
Profit before tax for the Period increased by 95% to GBP145,270 (six months to 31 
December 2008: GBP74,484). 
 
Cash at bank increased 33% to GBP358,777 (31 December 2008: GBP269,265) and total 
assets grew by 17% to GBP2,251,447 (31 December 2008: GBP1,922,209). 
 
 
Trading 
 
The Company is organised into two units: 
 
  * Miad UK Ltd ("Miad"), a leading NHS-dedicated non-clinical training, 
    development and education consultancy; and 
 
  * The Learning Eye Holdings Ltd ("The Learning Eye"), a research, education 
    and communications agency. 
 
The revenue for Miad has continued to increase and there are tentative signs of 
the return of automotive business particularly in non-European markets. 
 
The Learning Eye International PTY Limited, established in Sydney in February 
2009 is approaching breakeven and its revenues and expenses are included in the 
results. 
 
Projects have continued to be won overseas with over 20% of revenues during the 
Period being for work delivered to non-UK markets. 
 
 
Strategy 
 
Strontium is a professional services group founded with the objective of 
growing by developing existing businesses and by acquiring small, professional 
services businesses with the potential for development. 
 
The strategy until 2007 had been designed for an expanding market. However, by 
late 2007, it became increasingly clear to the Board that the outlook for the 
UK economy was bleak and a significant downturn was increasingly likely. 
Strontium had to prepare for an extended period of difficult trading conditions 
and: 
 
  * Conserve cash 
 
  * Reduce costs 
 
  * Retrench where necessary. 
 
This change in strategy was set out in the Annual Report for the year ended 30 
June 2008. From early 2008, the Company directed its efforts at maximising 
returns from its two main subsidiaries Miad and The Learning Eye. Other than 
opening an Australian operation in Sydney in February 2009, the Board has 
eschewed making any acquisitions or expanding the Company's operations outside 
the core business. This was done to retain cash and to ensure that, 
post-recession, Strontium would be in a strong position to return to its 
original strategy. 
 
The Board believes that, given the state of its existing businesses, the range 
of its client base across the public and private sectors and the improving 
market conditions (albeit in a rather feeble recovery), Strontium will, with 
caution, revert to its original strategy during 2010. 
 
 
Outlook 
 
The Board believes that Strontium has weathered the worst of the recession and 
is well placed to expand. 
 
The focus for the next 6 months will be on: 
 
  * increasing revenue in the existing businesses; 
 
  * introducing new products (particularly e-learning); 
 
  * strengthening our financial and administrative processes; and 
 
  * seeking new opportunities for investment. 
 
Despite the current market conditions, the Board remains cautiously optimistic. 
 
I would like to thank our Managing Director David Barker, the management team 
and all of our staff for their contributions. 
 
M W Metcalfe 
 
 
 
Consolidated interim statement of comprehensive income 
 
                                   6 months to     6 months to        Year to 
 
                                   31 December     31 December        30 June 
 
                                          2009            2008           2009 
 
                                   (unaudited)     (unaudited)      (audited) 
 
                             Note            GBP               GBP              GBP 
 
Revenue from continuing              1,228,777         996,260      1,801,165 
operations 
 
Cost of sales                        (185,471)       (295,016)      (475,168) 
 
 
 
Gross profit                         1,043,306         701,244      1,325,997 
 
Administrative expenses              (898,036)       (627,610)    (1,305,087) 
 
Other operating income                                                    596 
 
 
 
Operating profit                       145,270          73,634         21,506 
 
Financial income                             -             850          1,186 
 
Financial costs                              -               -              - 
 
Finance costs - net                          -             850          1,186 
 
Profit before tax                      145,270          74,484         22,692 
 
Tax (expense) / credit                (47,375)             240         18,574 
 
 
 
Profit for the Period                   97,895          74,724         41,266 
attributable to continuing 
operations 
 
Discontinued operations 
 
Loss attributable to                         -        (67,214)       (78,364) 
discontinued operations 
 
Profit for the Period and               97,895           7,510       (37,098) 
comprehensive income 
attributable to equity 
holders of the company 
 
Earnings per share from         3        0.73p           0.56p          0.31p 
continuing operations - 
basic and diluted 
 
Loss per share from             3            -         (0.50)p        (0.59)p 
discontinued operations - 
basic and diluted 
 
Earnings / (loss) per share     3        0.73p           0.06p        (0.28)p 
from continuing and 
discontinued operations - 
basic and diluted 
 
 
 
Consolidated statement of changes in equity 
 
                                  Share        Share     Retained 
 
                                capital      premium     earnings        Total 
 
                            (unaudited)  (unaudited)  (unaudited)  (unaudited) 
 
                                      GBP            GBP            GBP            GBP 
 
Balance at 1 July 2008          267,394    1,995,463    (949,325)    1,313,532 
 
Total comprehensive income            -            -        7,510        7,510 
 
Cost of share based awards            -            -       13,725       13,725 
 
 
 
Balance at 31 December          267,394    1,995,463    (928,090)    1,334,767 
2008 
 
Total comprehensive income            -            -     (44,608)     (44,608) 
 
Cost of share based awards            -            -       23,275       23,275 
 
 
 
Balance at 30 June 2009         267,394    1,995,463    (949,423)    1,313,434 
 
Total comprehensive income            -            -       97,895       97,895 
 
Cost of share based awards            -            -       18,000       18,000 
 
Shares issued in the                308        2,233            -        2,541 
Period in respect of 
acquisitions 
 
                                267,702    1,997,696    (833,528)    1,431,870 
 
 
 
Consolidated interim statement of financial position 
 
                                 31 December       31 December          30 June 
 
                                        2009              2008             2009 
 
                                 (unaudited)       (unaudited)        (audited) 
 
                                           GBP                 GBP                GBP 
 
Non-current assets 
 
Goodwill                           1,195,974         1,174,893        1,195,974 
 
Tangible fixed assets                 59,144            40,292           41,455 
 
Total non-current assets           1,255,118         1,215,185        1,237,429 
 
Current assets 
 
Trade and other receivables          637,552           437,759          435,032 
 
Cash at bank                         358,777           269,265          291,025 
 
Total current assets                 996,329           707,024          726,057 
 
Total assets                       2,251,447         1,922,209        1,963,486 
 
Equity 
 
Issued share capital                 267,702           267,394          267,394 
 
Share premium                      1,997,696         1,995,463        1,995,463 
 
Retained earnings                  (833,528)         (928,090)        (949,423) 
 
Total equity                       1,431,870         1,334,767        1,313,434 
 
Liabilities 
 
Non-current liabilities 
 
Deferred tax                          13,042             2,192            3,688 
 
Other payables                             -           128,000          100,000 
 
                                      13,042           130,192          103,688 
 
Current liabilities 
 
Current tax liabilities               40,113             9,270            1,848 
 
Trade and other payables             766,422           447,980          544,516 
 
                                     806,535           457,250          546,364 
 
Total liabilities                    819,577           587,442          650,052 
 
Total equity and liabilities       2,251,447         1,922,209        1,963,486 
 
 
 
Consolidated interim statement of cash flows 
 
                                 6 months to    6 months to         Year to 
 
                                 31 December    31 December         30 June 
 
                                        2009           2008            2009 
 
                                 (unaudited)    (unaudited)       (audited) 
 
                            Note           GBP              GBP               GBP 
 
Cash flows from operating 
activities 
 
Cash generated from /          4     129,219      (221,786)       (169,059) 
(absorbed by) continuing 
operations 
 
Cash absorbed by               4           -       (94,236)       (108,452) 
discontinued operations 
 
Net interest received                      -            850           1,186 
 
Tax paid net of refund               (7,834)   -                - 
 
Net cash generated from /            121,385      (315,172)       (276,325) 
(absorbed by) operating 
activities 
 
Cash flows from investing 
activities 
 
Payments to acquire                 (26,092)        (2,106)        (28,193) 
tangible fixed assets 
 
Proceeds from disposals of                 -              -           9,000 
fixed assets 
 
Acquisitions-settlement of          (27,541)              -               - 
contingent consideration 
 
Net cash used in investing          (53,633)        (2,106)        (19,193) 
activities 
 
Net increase / (decrease)             67,752      (317,278)       (295,518) 
in cash and bank balances 
 
Cash at bank at beginning of         291,025        586,543         586,543 
Period 
 
Cash at bank at end of Period        358,777        269,265         291,025 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 
 
1 GENERAL INFORMATION 
 
Strontium Plc is a company domiciled in England whose registered office is at 
Estate House, Pembroke Road, Sevenoaks, Kent TN13 1XR. The condensed 
consolidated interim financial statements of the Company for the six months 
ended 31 December 2009 comprise the Company and its subsidiaries. 
 
The condensed consolidated interim financial statements do not constitute 
statutory accounts as defined in Section 434 of the Companies Act 2006. 
 
The financial information for the year ended 30 June 2009 has been extracted 
from the statutory accounts. The auditors' report on the statutory accounts was 
unqualified and did not contain a statement under Section 498 of the Companies 
Act 2006. A copy of those financial statements has been filed with the 
Registrar of Companies. 
 
The condensed consolidated interim financial statements were authorised for 
issue on 2 March 2010. 
 
 
2 SIGNIFICANT ACCOUNTING POLICIES 
 
Basis of accounting 
 
The condensed consolidated financial statements are unaudited and have been 
prepared on the historical cost basis in accordance with IFRS adopted by the EU 
using the same accounting policies and methods of computation as were used in 
the annual financial statements for the year ended 30 June 2009. As permitted, 
the interim report has been prepared in accordance with the AIM Rules for 
Companies and is not compliant in all respects with IAS34 `Interim Financial 
Statements'. The condensed interim financial statements do not include all the 
information required for full annual financial statements and hence cannot be 
construed as in full compliance with IFRS. 
 
 
3 EARNINGS / (LOSS) PER SHARE 
 
The earnings / (loss) per share is based on a profit/ (loss) for the Period 
from continuing and discontinued activities as disclosed in the income 
statement and the weighted average of ordinary shares in issue for the Period 
of 13,374,316 (2008: 13,369,688, year ended 30 June 2009: 13,369,688). 
 
The average market price of issued share capital during the Period ended 30 
December 2009 and the year ended 30 June 2009 exceeded the exercise price of 
all but 100,000 share options issued on 2 November 2009. Calculations show that 
the dilutive effect was so small that the diluted earnings per share were the 
same as the disclosed basic earnings per share to the level of rounding 
applied. There are potentially 2,190,000 shares that could be issued under the 
terms of options issued that will potentially reduce future earnings per share. 
 
 
4 CASH GENERATED FROM / (ABSORBED BY) OPERATIONS 
 
                                   6 months to       6 months to        Year to 
 
                                   31 December       31 December        30 June 
 
                                          2009              2008           2009 
 
                                   (unaudited)       (unaudited)      (audited) 
 
                                             GBP                 GBP              GBP 
 
Continuing activities 
 
Operating profit                       145,270            73,634         21,506 
 
Depreciation of tangible fixed           8,403             5,700         18,600 
assets 
 
Share based awards                      18,000            13,725         37,000 
 
Profit on disposals                          -                 -          1,267 
 
Increase in receivables              (194,686)          (72,605)      (111,906) 
 
Increase / (decrease) in               152,232         (242,240)      (135,526) 
payables 
 
Cash generated from / (absorbed        129,219         (221,786)      (169,059) 
by) continuing operations 
 
Discontinuing activities 
 
Operating loss                               -          (67,214)       (78,364) 
 
Depreciation of tangible fixed               -             1,026          2,782 
assets 
 
(Increase) / decrease in                     -          (45,090)          9,068 
receivables 
 
Increase / (decrease) in                     -            17,042       (41,938) 
payables 
 
Cash absorbed by discontinued                -          (94,236)      (108,452) 
operations 
 
 
 
END