TIDMSTTM
STRONTIUM PLC
(the "Company" or "Strontium")
Half Yearly Report for the Six Months ended 31 December 2010
Strontium, the AIM quoted, professional services group specialising in
developing and acquiring small, professional services businesses with the
potential for development, announces its interim results for six months to 31
December 2010 (the "Period").
Key Points:
* Loss after tax and exceptional items was GBP108,568 (six months to 31
December 2009: GBP97,895 profit);
* Revenue from continuing activities has decreased to GBP1,097,523 (six months
to 31 December 2009: GBP1,131,092);
* Cash at bank was down to GBP269,759 (31 December 2009: GBP358,777); and
* Total assets down to GBP2,123,164 (31 December 2009: GBP2,251,447).
Michael Metcalfe, Chairman, commented:
"Strontium has continued to focus on the growth of its existing businesses by
expanding its client base during continuing difficult market conditions.
Unfortunately,as foreseenin the 2010 Annual Report,uncertainty within the NHS
has caused a reduction in the level of revenue from that sectorin the Period. T
his reduction in sales from the NHS has almost entirely been replaced by
increasedsales to non-NHS clients in the Period.
"With thecombination ofMiad and The Learning Eye into a singleorganisationat
one location and theestablishment of the new Learning Eye subsidiary in
Switzerland,the Board is confident that Strontium is well placed to return to
profitable growth."
Enquiries:
Strontium Plc
David Barker, Managing Director
078 4337 5764
Cairn Financial Advisers
Liam Murray, Nominated Adviser
020 7148 7903
Chairman's Statement
During the Period, the Company faced the challenge of a decline in NHS sales,
especially in the area of training licences. It is encouraging that the loss of
sales to the NHS was largely replaced by increased sales in The Learning Eye.
However, the net loss of sales, lower margins and increased exceptional costs
resulted in a loss in the period.
The Learning Eye Switzerland was formed in September 2010 and has broken even
in its first 3 months of operation.
During November 2010, the Company completed a review of costs and the Board
decided to restructure the 2 businesses into a single organisation, close the
Miad office in Sevenoaks and close The Learning Eye office in Cheltenham. The
restructuring was completed and both businesses relocated to Reading by 28
February 2011. It has been a difficult period of change management but the team
faced up to the challenge and completed it professionally, on time and to
budget.
The Board believes that, with the combination of Miad and The Learning Eye into
a single organisation in one location, Strontium has created an agency that
will ensure a more efficient and cost effective management of the business.
Share Premium Reduction
In a Letter to Shareholders that accompanied the Notice of the 2010 Annual
General Meeting, the Chairman informed shareholders that the Directors proposed
that the Company should reduce its share premium account by GBP1,200,000. At the
Company's Annual General Meeting held on 24 November 2010 the shareholders
passed all resolutions, including the resolution authorising the proposed
reduction of the Company's share premium account.
The High Court sanctioned the Company's share premium reduction at a Court
hearing on 15 December 2010. The Court order for the share premium reduction
together with the applicable statement of capital has been filed and registered
by Companies House on 24 December 2010 and the final advertisement appeared in
The Times on 6 January 2011.
The reduction of share premium account itself did not involve any distribution
or repayment of capital to shareholders and did not reduce the net assets of
the Company
The principal effect of the share premium reduction is to facilitate the
payment of dividends by the Company to shareholders and the purchase of shares
by the Company out of reserves arising from the reduction of the Company's
share premium account and out of distributable profits generated in the future,
which it is the Directors' intention so to do in appropriate circumstances.
Financial Overview
Revenue during the Period decreased by 3.0% to GBP1,097,523 (six months to 31
December 2009: GBP1,131,092).
Gross profit for the Period decreased by 18.3% to GBP795,409 (six months to 31
December 2009: GBP973,543).
The increase in administration expenses for the Period was 8.6% to GBP886,955
(six months to 31 December 2009: GBP816,589).
Loss after tax and exceptional items was GBP108,568 (six months to 31 December
2009 was profit of: GBP97,895);
Cash at Bank was reduced to GBP269,759 (31 December 2009: GBP358,777); and Total
Assets were down to GBP2,123,164 (31 December 2009: GBP2,251,447).
The Company is finding that, since June 2010, clients are paying invoices later
and has increased the working capital required.
Extra-operational activities (relocation & reorganisation, the establishment of
the company in Switzerland, share premium reduction and foreign exchange
hedging) have incurred one-off exceptional costs of about GBP65,000.
Business Review
The Company is currently 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 fallen during this period especially in the previously
buoyant online licensing business. However traditional training workshop
business is broadly in line with the previous period and e-learning has been
expanded into non-NHS clients.
The Learning Eye Switzerland added to the sales figures for The Learning Eye
and contributed to its growth over the period.
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. This strategy was
designed to grow Strontium and create a return for its shareholders.
The focus of management for the next 6 months is to restore growth following
the restructuring and the move to a single location.
The Board is aware that the poor performance of the Company's shares on AIM is
thwarting its ambition to grow through intelligent acquisition, merger and
expansion. As a consequence, the Board is considering how Strontium can best
provide shareholder value in the future.
Outlook
The focus of management for the next 6 months is to restore growth, following
the restructuring and the move to a single location, by:
* growing the client base of the new combined business;
* introducing new products (particularly e-learning);
* expanding the Swiss operation
Following the creation of a leaner and more efficient agency, Strontium is in a
strong position to grow and the Board remains cautiously optimistic on future
performance.
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
2010 2009 2010
(unaudited) (unaudited) (audited)
GBP GBP GBP
Revenue 1,097,523 1,131,092 2,369,178
Cost of sale (302,114) (157,549) (485,186)
Gross profit 795,409 973,543 1,883,992
Administrative expenses (886,955) (816,589) (1,742,804)
Other operating expenses (25,832) - -
Other operating income - - 33,000
Operating (loss) / profit (117,378) 156,954 174,188
Tax credit / (expense) 8,810 (47,375) 24,273
(Loss) / profit for the period (108,568) 109,579 198,461
Discontinued operations
(Loss) / profit attributable to - (11,684) 63,491
discontinued operations
Attributable to:
Equity holders of the Company (108,568) 97,895 261,952
Earnings per share from (.80)p .82p 1.48p
continuing operations - basic
and diluted
Earnings per share from - (.09)p .47p
discontinued operations - basic
and diluted
Earnings per share from (.80)p .73p 1.96p
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 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
Balance at 31 December 2009 267,394 1,995,463 (833,528) 1,429,329
Total comprehensive income - - 164,057 164,057
Cost of share based awards - - 14,500 14,500
Shares issued in the period in 1,087 5,163 - 6,250
respect of services
Shares issued in the period in 3,433 24,108 - 27,541
respect of acquisitions
Balance at 30 June 2010 271,914 2,024,734 (654,971) 1,641,677
Total comprehensive income - - (108,568) (108,568)
Cost of share based awards - - 5,000 5,000
Court-approved reduction in - (1,200,000) 1,200,000 -
share premium
271,914 824,734 441,461 1,538,109
Consolidated interim statement of financial
position
31 December 31 December 30 June
2010 2009 2010
(unaudited) (unaudited) (audited)
GBP GBP GBP
Non-current assets
Goodwill 1,170,974 1,195,974 1,170,974
Tangible fixed assets 61,576 59,144 67,920
Deferred tax asset 53,769 - 59,668
Total non-current assets 1,286,319 1,255,118 1,298,562
Current assets
Trade receivables 559,918 637,552 307,179
Derivative financial 7,168 - 33,000
instruments
Cash at bank 269,759 358,777 657,755
Total current assets 836,845 996,329 997,934
Total assets 2,123,164 2,251,447 2,296,496
Equity
Issued share capital 271,914 267,702 271,914
Share premium 824,734 1,997,696 2,024,734
Retained earnings 441,461 (833,528) (654,971)
Total equity 1,538,109 1,431,870 1,641,677
Liabilities
Non-current liabilities
Deferred tax 4,317 13,042 10,216
4,317 13,042 10,216
Current liabilities
Current tax liabilities 20,404 40,113 28,867
Trade and other payables 560,334 766,422 615,736
580,738 806,535 644,603
Total liabilities 585,055 819,577 654,819
Total equity and 2,123,164 2,251,447 2,296,496
liabilities
Consolidated interim statement of cash flows
6 months to 6 months to Year to
31 December 31 December 30 June
2010 2009 2010
(unaudited) (unaudited) (audited)
GBP GBP GBP
Cash flows from operating
activities
Cash (absorbed by) / 4 (382,653) 216,879 278,060
generated from continuing
operations
Cash (absorbed by) / 4 - (87,660) 112,938
generated from discontinued
operations
Taxation paid - (7,834) (1,848)
Net cash (absorbed by) / (382,653) 121,385 389,150
generated from operating
activities
Cash flows from investing
activities
Payments to acquire - (27,541) (42,600)
subsidiary
Payments to acquire tangible (5,343) (26,092) (47,620)
fixed assets
Proceeds from sale of - - 67,800
subsidiary
Net cash used in investing (5,343) (53,633) (22,420)
activities
Net movement in cash and bank (387,996) 67,752 366,730
balances
Cash at bank at beginning of 657,755 291,025 291,025
period
Cash at bank at end of period 269,759 358,777 657,755
1 GENERAL INFORMATION
STRONTIUM PLC is a company domiciled in England whose registered office address
is Estate House, Pembroke Road, Sevenoaks, Kent, TN13 1XR. The condensed
consolidated interim financial statements of the Company for the six months
ended 31 December 2010 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 2010 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 2011.
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 2010. 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 13,595,684 (2009: 13,374,316; year ended 30 June 2010: 13,374,432).
4 CASH GENERATED FROM / (ABSORBED BY) OPERATIONS
6 months to 6 months to Year to
31 December 31 December 30 June
2010 2009 2010
(unaudited) (unaudited) (audited)
GBP GBP GBP
Continuing activities
Operating (loss) / profit (117,378) 156,954 174,188
Depreciation of tangible fixed 11,687 8,403 21,155
assets
Share based awards 5,000 18,000 32,500
(Increase) / decrease in (226,907) (88,987) 47,697
receivables
(Decrease) / increase in payables (55,055) 122,509 (31,271)
Liabilities discharged by share - - 33,791
issue
Cash (absorbed by) / generated (382,653) 216,879 278,060
from continuing operations
Discontinued activities
Operating loss - (11,684) (20,953)
Profit on disposals - - 84,444
(Increase) / decrease in - (105,699) 47,156
receivables
Increase in payables - 29,723 2,291
Cash (absorbed by) / generated - (87,660) 112,938
from discontinued operations
END
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