Coronavirus Update

Strix Group Plc - Interim Results Ended June 2020

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Strix Group Plc

("Strix" or the "Group")

INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2020

'Another resilient trading performance'

Strix (AIM: KETL), the AIM listed global leader in the design, manufacture and supply of kettle safety controls and other complementary water temperature management components, is pleased to announce its unaudited interim results for the six months ended 30 June 2020.

FINANCIAL SUMMARY

 

Adjusted results1

 

H1 2020

H1 2019

Change

 

£m

£m

%3

Revenue

34.7

43.9

-21.0%

Gross profit

13.8

16.7

-17.6%

EBITDA2

13.6

14.9

-8.6%

Operating profit

10.6

12.2

-12.5%

Profit before tax

10.1

11.5

-12.5%

Profit after tax

9.8

10.9

-9.6%

Net debt?

36.9

33.4

+10.5%

Net cash generated from operating activities

8.3

10.9

-23.8%

Basic earnings per share

4.9p

5.7p

-14.0%

Diluted earnings per share

4.9p

5.4p

-9.3%

Interim dividend per share

2.6p

2.6p

0%

1.      Adjusted results exclude exceptional items, which include share based payment transactions, other reorganisation and strategic project costs. Adjusted results are non-GAAP metrics used by management and are not an IFRS disclosure. A table which shows both Adjusted and Reported results is included in the Chief Financial Officer's review.

2.  EBITDA, which is defined as earnings before finance costs, tax, depreciation and amortisation, is a non-GAAP metric used by management and is not an IFRS disclosure.

3.  Figures are calculated from the full numbers as presented in the consolidated financial statements.

4.  Adjusted net debt excludes lease liabilities recognised in accordance with IFRS 16.

FINANCIAL HIGHLIGHTS

  • Gross profit margin increased to 39.7% (H1 2019: 37.9%) due to cost efficiency measures in excess of £3m delivered during H1
  • Adjusted net debt in line with expectations at £36.9m following additional drawdown in 2020 (H1 2019: £33.4m), 1.08x EBITDA calculated on a trailing twelve month basis
  • Net cash generated from operating activities decreased to £8.3m (H1 2019: £10.9m) due to reduction of sales in H1
  • Refinancing of existing revolving credit facility, increasing headroom to £23.1m, negotiated with favourable terms in line with our previous facility
  • Interim dividend payment of 2.6p (H1 2019: 2.6p) per share to be paid on 30 October 2020 reflecting Board's confidence in current trading
  • Adjusted profit after tax decreased by only 9.6% versus a top line decrease of 21% following stringent cost efficiency measures in H1

FULL YEAR OUTLOOK

  • Another solid performance with profitability remaining flat versus prior year, supported by record sales in Q3 based on replenishment of pipe-line stock and the normal seasonal uplift
  • Aqua Optima business showing full year forecasted double digit growth ahead of 2019, with sales in the UK, Europe, Far East and Latin America all contributing to strong performance
  • 14 new products ready to be launched by the end of 2020
  • New Factory progressing well in Guangzhou, remaining on target to be fully operational by August 2021
  • The Board remains committed to delivering a full year dividend of 7.7p in line with 2019

STRATEGIC HIGHLIGHTS

  • Acquisition of Laica S.p.A, an Italian company focussed on water purification and the sale of small household appliances for personal health and wellness. The Acquisition is subject to approval from the Council of Ministers in Italy
  • Global market share stable despite global pandemic and imposed lockdowns
  • Continued focus on both safety and intellectual property actions resulting in a further kettle being withdrawn from sale and an additional website takedown
  • Strengthened senior management team to support our strategic initiatives with particular emphasis on people development and commercialisation of new products
  • Successfully launched established Halopure technology into sterilisation applications within both Farming (livestock drinking systems) and Dentistry markets to further diversify category

OPERATIONAL HIGHLIGHTS

  • Continued investment in automation with a further 3 lines becoming fully automated in H1 2020 on budget and ahead of schedule
  • New U90 automation line achieved 85% mass production efficiency (in line with original projections)
  • Strix received "Best Co-operation Award" at the annual Supor Supplier Conference
  • Maintained "Benchmark" status following latest ISO audits

Mark Bartlett, Chief Executive Officer of Strix Group plc, said:

"The first half of 2020 has been an extraordinary period with substantial economic challenges inflicted by the COVID-19 pandemic. I am immensely appreciative of the efforts of our people during these uncertain times, who have continued to work diligently to support not only our customers, but also our local Communities and Governments.

"Strix has delivered a solid trading performance in H1 given the continued headwinds faced as a result of the global pandemic. Our performance shows the resilience of our business model, which benefits from geographical and product diversification, and is strengthened further by our prudent control of our balance sheet. Whilst Kettle control volumes were dampened during H1 in line with scenario planning, anticipated record sales in Q3 are expected to contribute to the full year forecasted performance.

 "We have managed our margins with continued focus on operational enhancements and cost improvements in our core business whilst remaining on track with key strategic projects. These include the construction of our new facility in China, integration of assets acquired from HaloSource in 2019, maintained focus on new product development and the acquisition of Laica S.p.A on 22nd September 2020. Our latest acquisition will enhance our geographical coverage and product portfolio significantly.

 "Given the Board's confidence in the future outlook and with profitability remaining on track to achieve a flat performance year on year, an interim dividend of 2.6p will be paid on 30 October in line with our 2019 interim dividend.