TIDMSTTM
Strontium Plc
("Strontium" or the "Company")
Preliminary results for the year ended 30 June 2010
Profit before Tax up 437% and Revenues up 37%
Strontium, the AIM listed consultancy specialising in the identification and
development of high growth potential SMEs, announces its Preliminary Results
for the year ended 30 June 2010 ("FY10").
HIGHLIGHTS:
* Strontium remains profitable, debt free and cash generative.
* Like-for-like revenues on continuing operations increased by 37% to GBP
2,369,178 (30 June 2009: GBP1,729,588).
* Like-for-like profit on continuing ordinary activities before taxation
increased by 437% to GBP198,461 (30 June 2009: GBP36,957).
* Like-for-like total earnings per share on continuing operations increased
by 429% to 1.48 pence (30 June 2009: 0.28 pence).
* Cash in bank increased by 126% to GBP657,755 (30 June 2009: GBP291,025).
* The Australian subsidiary, The Learning Eye International PTY Limited, was
sold to local management on 30 June 2010 for a net gain of GBP84,444 to the
Group, resulting in an overall profit from this discontinued activity of GBP
63,491.
* In September 2010 the Company launched The Learning Eye (Switzerland) AG,
based in Zurich, to support the Company's growing business in Europe.
Following the sale of the Australian operation on 30 June 2010 the results for
the previous year have been adjusted to excludethe performance of this
operation from thecontinuing business.
Chairman, Michael Metcalfe, commented that he is pleased to report on FY10
during which the Company made a substantial profit. The reorganisation and
concentration of the business into two main units Miad UK Ltd, a leading
NHS-dedicated non-clinical training, development and education consultancy, and
The Learning Eye Holdings, a research, education and communications agency, has
led to continued improved performance.
Strontium is continuing its overall strategy of seeking and acquiring SMEs with
growth potential that can be transformed to achieve significant growth.
ENQUIRIES:
Strontium plc David Barker Tel: +44 (0) 78 4337 5764
Cairn Financial Liam Murray Tel: +44 (0) 20 7148 7903
Advisers
SVS Securities Ian Callaway Tel: +44 (0) 20 7638 5600
Yellow Jersey PR Dominic Tel: +44 (0) 20 8980 3545
Barretto
STRONTIUM PLC
CHAIRMAN'S STATEMENT
The Board is pleased to announce that sales, cash and profitability continued
to grow during the second half of the financial year ending 30 June 2010
("FY10").
Revenues on continuing operations increased year on year by 37% to GBP2,369,178
(30 June 2009: GBP1,729,588) and profit on continuing ordinary activities before
taxation increased year on year by 437% to GBP198,461 (30 June 2009: GBP36,957).
The Australian operation was sold to local management on 30 June 2010 for a net
gain of GBP84,444 to the Group, resulting in an overall profit from this
discontinued activity of GBP63,491. The results for the previous year have been
adjusted to exclude the performance of this operation from the continuing
business.
Total earnings per share on continuing operations up 429% to 1.48 pence (30
June 2009: 0.28 pence).
Cash increased by 126% to GBP657,755 (30 June 2009: GBP291,025).
Strontium is continuing its overall strategy of seeking and acquiring SMEs with
growth potential that can be transformed to achieve significant growth.
Acquisitions and Disposals
Recognising the market conditions and the need for our management to focus on
and maximise returns from existing businesses, the Board took the view that it
would be unwise to make any acquisitions in FY10.
In February 2009, The Learning Eye Holdings Ltd ("The Learning Eye")
established a wholly-owned subsidiary in Sydney, The Learning Eye International
PTY Limited ("TLEIPL"), to respond to the increasing global opportunities with
our clients and within the Australian economy. On 30 November 2009 Ian Seggar,
a director of TLEIPL, purchased 10% of TLEIPL. TLEIPL grew and by May 2010 the
Company had lent TLEIPL GBP124,000. In June 2010, Ian Seggar offered to repay
this loan in full, assume responsibility for all the assets and liabilities of
the business and purchase the remaining 90% of TLEIPL for GBP67,800. In addition
Ian Seggar agreed to renounce his rights under the earn-out agreement of April
2008. After due consideration, the Board accepted this offer and the sale was
completed on 30 June 2010. This sale generated a net gain of GBP84,444 to the
Group, resulting in an overall profit from this discontinued activity of GBP
63,491.
Although this subsidiary has been sold, the Board remains keen to forge
partnerships in Australia and will continue to market its Miad medical training
products in Australia.
As reported to the market on 28 September 2010 The Learning Eye Switzerland Ltd
was formed in Zurich to increase our presence in Europe and to show commitment
to our existing and future Swiss clients.
In April 2010, the Board authorised David Barker to negotiate a full and final
settlement of all the outstanding earn-out obligations to Jo Parker Swift (the
former owner of Miad) under the terms of the purchase agreement of 11 April
2007. These obligations were settled by way of a cash payment of GBP75,000 on 29
May 2010.
Currently, there are no outstanding earn-out obligations in existence in any
Strontium group company.
Business Environment
The business environment for all SMEs continues to be demanding and the Board
expects this situation to continue.
The Board acknowledges that the Government will be cutting public sector
budgets in the immediate future. Although much of healthcare spending has been
ring fenced, the changes in the NHS and the general uncertainty could affect
the performance of Miad during 2011. However, our investment and focus on
cost-effective delivery mechanisms for training will go some way to mitigating
the effects of any cuts.
The challenges faced by the corporate clients of The Learning Eye persist.
However, the enhanced e-learning capability should improve the trading
performance of the business during 2011. Although there have been some positive
signs of improved market conditions, uncertainty could continue to inhibit
growth. Despite this the Board believes that, with the streamlined and reduced
cost base and the innovative products designed by The Learning Eye, combined
with the operation in Switzerland, The Learning Eye is well positioned to grow.
During 2011 the Board will continue the strategy of streamlining its
investments and trimming costs. It will also continue to invest in technology
to increase the product capability of both Miad and The Learning Eye. The Board
will also seek out and hire the highest quality personnel to deliver services
to our clients in the most creative and cost effective manner.
In the current environment, cash shortages, squeezed margins and difficulties
with borrowing have weakened many organisations. The Board believes this will
lead to the closure of some competitors, afford the possibility for business
growth and could present investment opportunities.
Business Review
Strontium has continued to focus on the growth of its client base during
difficult market conditions.
The reorganisation and concentration of the business into two main units Miad,
a leading NHS-dedicated non-clinical training, development and education
consultancy, and The Learning Eye, a research, education and communications
agency has led to continued improved performance.
During FY10 the growth of Miad has continued with revenues up 112% at GBP
1,810,000 (30 June 2009: GBP855,000) and pre tax profit improving 155% to GBP
245,000 (30 June 2009: GBP96,000). Miad sales growth was largely driven by the
increase of `blended learning' products which provide the dual benefit to the
NHS of reduced delivery cost and high quality training.
During FY10, The Learning Eye developed its e--learning capability and designed
and created much of the blended learning sold by Miad. Although sales to 3rd
parties reduced 41% to GBP563,000 (30 June 2009: GBP941,000) trading profit only
reduced 2.5% to GBP78,000 (30 June 2009: GBP80,000).
As the volume of business grew across the group during FY10 the Board took the
decision to increase full time staff and reduce the more expensive external
consultants used on projects. Recruiting internal expertise caused the
administrative costs to grow as a percentage of sales to 73.6% (30 June 2009:
72.0%). However this action during 2010 meant the combined Miad and The
Learning Eye direct costs as a percentage of sales decreased to 20.5% (30 June
2009: 27.1%).
Personnel
In line with the Board's revised strategy, management will be looking to
maintain a small but well focussed business management team. Expert resources
will be employed on a short term basis as and when required.
I would like to thank David Barker, our Managing Director, his very able
management team and all staff for their contributions during another
challenging year.
Outlook
The order books for The Learning Eye and Miad remain robust but it is difficult
to plan further than 6 months ahead when dealing with the NHS.
The Board will continue to focus on the growth of both companies but expects
that opportunities for acquisitions could arise during 2011. The Board will
investigate these opportunities and consider further investments in SMEs with
the potential for rapid growth.
As for the future, market conditions into 2011 remain difficult but given the
steps the Group has taken to control costs and to sharpen its focus, the Board
is cautiously optimistic that growth will continue.
M W Metcalfe
27 October 2010
STRONTIUM PLC
CONSOLIDATED STATEMENTOF COMPREHENSIVE INCOME
for the year ended 30 June 2010
Note 2010 2009
Continuing operations GBP GBP
Revenue 2,369,178 1,729,588
Cost of sales (485,186) (468,588)
Gross Profit 1,883,992 1,261,000
Administrative expenses (1,742,804) (1,246,247)
Other operating income 33,000 596
Operating profit 174,188 15,349
Finance income - 1,186
Profit before tax 174,188 16,535
Tax expense - net credit for the year 24,273 20,422
Profit for the year from continuing 198,461 36,957
operations
Discontinued operations
Profit / (loss) for the year from 63,491 (74,055)
discontinued operations
Profit /(loss)and comprehensive income/ 261,952 (37,098)
(expense) for the yearattributable to
equity holders of the company
Earnings per share from continuing 3 1.48p .28p
operations - basic and diluted
Earnings / (loss) per share from 3 .47p (.55)p
discontinued operations - basic and
diluted
Earnings / (loss) per share from 3 1.96p (.28)p
continuing and discontinued operations -
basic and diluted
STRONTIUM PLC
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2010
Share Share Retained Total
Capital Premium Earnings
GBP GBP GBP GBP
Balance at 1 July 2008 267,394 1,995,463 (949,325) 1,313,532
Loss for the year ended 30 - - (37,098) (37,098)
June 2009
Cost of share based awards - - 37,000 37,000
Balance at 30 June 2009 267,394 1,995,463 (949,423) 1,313,434
Profit for the year ended - - 261,952 261,952
30 June 2010
Cost of share based awards - - 32,500 32,500
Shares issued in the year 1,087 5,163 - 6,250
for services
Shares issued in the year 3,433 24,108 - 27,541
for acquisitions
Balance at 30 June 2010 271,914 2,024,734 (654,971) 1,641,677
STRONTIUM PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2010
2010 2009
GBP GBP
Non-current assets
Goodwill 1,170,974 1,195,974
Property, plant and equipment 67,920 41,455
Deferred tax asset 59,668 -
Total non-current assets 1,298,562 1,237,429
Current assets
Trade and other receivables 307,179 435,032
Derivative financial 33,000 -
instruments
Cash at bank 657,755 291,025
Total current assets 997,934 726,057
Total assets 2,296,496 1,963,486
Equity
Issued share capital 271,914 267,394
Share premium 2,024,734 1,995,463
Retained earnings (654,971) (949,423)
Total equity 1,641,677 1,313,434
Liabilities
Non-current liabilities
Deferred tax 10,216 3,688
Other payables - 100,000
Totalnon-current liabilities 10,216 103,688
Current liabilities
Current tax liabilities 28,867 1,848
Trade and other payables 615,736 544,516
Total current liabilities 644,603 546,364
Total liabilities 654,819 650,052
Total equity and liabilities 2,296,496 1,963,486
STRONTIUM PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2010
Note 2010 2009
GBP GBP
Cash flows from operating activities
Cash generated/(absorbed by) continuing 2 278,060 (136,124)
operations
Cash generated/(absorbed by) 112,938 (141,387)
discontinued operations
Net interest received - 1,186
Taxation paid (1,848) -
Net cash generated/(absorbed) by 389,150 (276,325)
operating activities
Cash flows from investing activities
Payments to acquire subsidiary (42,600) -
Payments to acquire property, plant and (47,620) (28,193)
equipment
Proceeds from disposal of property, - 9,000
plant and equipment
Proceeds from sales of shares in 67,800 -
subsidiary
Net cash used in investing activities (22,420) (19,193)
Net increase/(decrease)in cash and bank 366,730 (295,518)
balances
Cash at bank and bank overdrafts at 291,025 586,543
beginning of year
Cash at bank and bank overdrafts at 657,755 291,025
end of year
STRONTIUM PLC
NOTES
1. GENERAL INFORMATION
Strontium plc ("the company") and its subsidiaries (together "the group") are
providers of business services.
This preliminary announcement is authorised for issue by the Board on 27
October 2010. The financial information has been prepared in accordance with
International Financial Reporting Standards adopted by the European Union and
applying the same accounting policies and bases of calculation and estimation
as applied in the previous annual financial statements.
2 CASH GENERATED/ (ABSORBED BY)OPERATIONS
2010 2009
GBP GBP
Continuing activities
Operating profit 174,188 15,349
Depreciation of property, plant and 21,155 18,600
equipment
Share based awards 32,500 37,000
Profit on disposals - 1,267
Decrease/(increase) in receivables 47,697 (65,890)
Decrease in payables (31,271) (142,450)
Liabilities discharged by share issue 33,791 -
Cash generated/(absorbed by) continuing 278,060 (136,124)
operations
Discontinued activities
Operating loss (20,953) (74,055)
Profit arising on disposal of subsidiary 84,444 -
Depreciation of property, plant and - 2,782
equipment
Decrease/(increase) in receivables 47,156 (34,822)
Increase/(decrease) in payables 2,291 (35,292)
Cash generated/(absorbed by) discontinued 112,938 (141,387)
operations
3 PROFIT/ (LOSS) PER SHARE
The profit/(loss) per share is based on the profit/(loss) for the year from
continuing and discontinued activities as disclosed in the income statement and
the weighted average number of ordinary shares in issue for the year of
13,374,432 (2009: 13,369,688).
The average market price of issued share capital during the year ended 30 June
2010 and 2009 exceeded the exercise price of all share options in issue and
therefore they have no dilutive affect.
There are potentially 2,150,000 (2009: 2,090,000) shares that could be issued
under the terms of options issued that will potentially reduce future earnings
per share.
4 STATUS OF THIS ANNOUNCEMENT
The financial information is unaudited and does not constitute statutory
accounts within the meaning of Section 435 of the Companies Act 2006 ('the
Act'), but has been extracted there from. The auditors have reported their
opinion on the financial statements for the year ended 30 June 2010 today. The
auditors gave an unqualified opinion, and contain no statement under Sections
498 (2) or (3) of the Act, the financial statements have not yet been filed
with the Registrar of Companies.
Copies of the Report and Financial Statements for the year ended 30 June 2010
will be sent to shareholders by 1 November 2010, and will be available for
collection from Strontium plc, Estate House, Pembroke Road, Sevenoaks, Kent
TN13 1XR after 1 November 2010.
END
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