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
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