TIDMSTTM
Strontium Plc
("Strontium" or the "Company")
Preliminary results for the year ended 30 June 2009
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 2009.
As reported in the Company's last Interim Statement, Strontium has reappraised
its business model and implemented organisational changes to retain cash and
grow the business in what the Board expected to be challenging conditions. As a
result of the changes made, I am pleased to report on a year during which the
Company traded profitably.
Highlights
* Revenues on continuing operations increased year on year by 138% to GBP
1,801,165. (30 June 2008: GBP757,855);
* Profit on continuing ordinary activities before taxation and impairment
charges was GBP22,692 (30 June 2008: GBP374,311 Loss);
* Cash position remains adequate at GBP291,025 (30 June 2008 : GBP586,543);
* Loss-making business Executive Development Consultants Limited has been
sold to its management for nominal consideration;
* The Company has been restructured into two units: MiAD and The Learning
Eye. Strontium retains 100% ownership of both;
* The Learning Eye has established a subsidiary in Sydney; and
* Strontium has restricted the growth in its administrative expenses to 30%
(within the budget set for the financial year).
Michael Metcalfe commented that market conditions into 2010 will remain
difficult, but because of the steps the Company has taken to reduce costs and
to sharpen its focus, he is cautiously optimistic that growth will continue
into 2010.
Enquiries:
Strontium, David Barker, Managing Director Tel: 078 4337 5764
Astaire Securities plc, Aaron Smyth, Nominated Adviser Tel: 020 7448 4400
Yellow Jersey PR, Dominic Barretto, Public Relations Tel: 020 8980 3545
CHAIRMAN'S STATEMENT
As announced in our 2008 report the Company is now 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. During 2009,
this strategy has been further realised and all current business interests
merged into these two companies.
This focus has ensured the effective control of costs and secured a like for
like revenue growth of 86% in a difficult market. The 2009 Group results
reflect turnover for a full financial year from The Learning Eye which was
acquired at the beginning of April 2008.
MiAD grew rapidly during the year. The decline in revenue from The Learning
Eye's historical core automotive business was alleviated by diversification
into new markets and customers, containing the decline in The Learning
Eye's turnover to 28%; a creditable performance in difficult market conditions.
Both MiAD and The Learning Eye are independently profitable and are generating
cash under Strontium's guidance.
Strontium is continuing its overall strategy of identifying high growth
potential SMEs. Strontium's stated strategy is to seek out and acquire SMEs
with rapid growth potential that can be transformed to achieve significant
growth.
Acquisitions and Disposals
Due to market conditions, coupled with the need for our management to maximise
returns from existing businesses, the Board took the view that it would be
highly risky to make any acquisitions in 2009.
As market conditions improve, the Board will continue to seek out and
selectively acquire high growth potential SMEs.
As part of the reappraisal of the business the Board considered the future of
Executive Development Consultants Limited and concluded that significant
investment would be required to enable the business to achieve a scale which
would enable it to trade profitably. Given the success of MiAD and The Learning
Eye it was decided that investment in these businesses would show greater
return. The Company therefore disposed of the business to management for a
nominal consideration. Losses incurred during the year amounted to GBP78,000.
In February 2009, The Learning Eye established a wholly-owned subsidiary, The
Learning Eye International PTY Limited, in Sydney to respond to the increasing
global opportunities with our clients and to take advantage of the strength of
the Australian economy.
The intention is that The Learning Eye International PTY Limited will be 90%
owned by The Learning Eye and 10% by Ian Seggar.
Mindful of MiAD's strong trading performance, the Board has increased the
amount provided for the earn-out to Joanne Parker-Swift as agreed in the
acquisition agreement of April 2007. Accordingly, the amount included as
deferred consideration has been increased by GBP47,000 to the maximum earn-out
possible under the terms of the acquisition agreement.
Business Environment
The business environment for all SMEs continues to be demanding and the Board
expects this situation to continue well into 2010.
Although the Board acknowledges that the Government will be forced to cut
public sector expenditure, we expect growth for the medium term in NHS
non-clinical training and development. Our investment and focus on highly
cost-effective delivery mechanisms for training will assist our revenue growth.
The challenges faced by the corporate clients of The Learning Eye remain.
Although there have been some positive signs of improved market conditions,
rising unemployment and uncertainty will continue to inhibit growth.
The Board believes the streamlined and reduced cost base and the innovative
products designed by The Learning Eye, combined with the operation in
Australia, means The Learning Eye is well positioned to grow.
In the current climate, with cash shortages, squeezed margins and difficulties
with debt renegotiation, many organisations will be weakened. The Board
believes this will lead to the closure of some competitors and afford the
opportunity for business growth and will present some interesting potential
acquisitions.
Business Review
The Financial Statements for the year ending June 2009 show the results of the
trading activities of Strontium which are concentrated into 2 units as a result
of the Group Reorganisation which took place on 30 June 2009:
* MiAD
* The Learning Eye
The Learning Eye International PTY Limited, in Sydney, is a wholly-owned
Australian subsidiary of The Learning Eye.
MiAD's revenue more than doubled to GBP855,000 (30 June 2008: GBP344,000). This
growth stemmed from improved products, increased marketing and sales efforts
and a focus on expanding our blended learning capability.
The Learning Eye focuses on researching client issues, offering creative
solutions and delivering a seamless training, development and communications
service. This business has also been successful in winning orders from
international clients through its new Sydney office. Revenues were GBP941,000
(including the business of Aspect Information Management Limited which was
transferred to The Learning Eye on 30 June 2009). Turnover for the combined
businesses for the year ended 30 June 2008 recognised in the Group was GBP
413,000, however The Learning Eye was not acquired until April 2008 and like
for like turnover including pre-acquisition revenues for the combined
businesses was GBP974,000.
During the year cash resources reduced from GBP586,000 to GBP291,000. Of this GBP
159,000 was absorbed by expansion of continuing activities, primarily in MiAD
where working capital requirements increased by GBP89,000.
Principal Risks and Uncertainties
Risks are formally reviewed by the Board and appropriate measures put in place
to mitigate them.
The Company's performance depends largely on the organisation and performance
of its staff and is heavily dependent on the continued participation of David
Barker, the Managing Director.
Whilst all key roles are regularly reviewed to ensure that they are filled with
personnel having appropriate skills, there is always the risk that the Company
recruits the wrong individual.
The business in Australia is currently dependent on Ian Seggar. However, we are
currently recruiting staff to underpin the operation.
MiAD's focus on the NHS makes it vulnerable to changes in the government's
budgets and policies, particularly if there is a change of UK government in
2010.
The recession in the UK has already been longer and deeper than many expected
and the outlook for SMEs remains uncertain, particularly with banks restricting
lending to small businesses.
Strontium's ongoing ability to grow relies on being able to identify high
growth potential SMEs. Whilst the current financial situation will provide
possibilities there may not be too many with the potential to provide rapid
growth.
During any phase of rapid growth, investment in people and working capital will
be necessary. The Board will have to match the Company's resources with the
demands generated by the expected growth.
Key Performance Indicators
One of the Company's key objectives is to manage growth without significantly
increasing fixed costs. It manages this through using a network of freelance
consultants engaged to work on specific projects.
The profits on all significant contracts are reviewed on a project by project
basis to ensure anticipated margins are achieved. Contributions from contracts
are shown in the Income Statement as Gross Profit.
At this stage in the Company's development it is not considered meaningful to
provide further analysis.
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.
Ian Segger has relinquished his role as Managing Director of The Learning Eye
and has relocated to Sydney to concentrate on international business.
I would like to thank David Barker, our Managing Director, his very able
management team and all staff for their contributions during this past
challenging year.
Outlook
The order books for The Learning Eye and MiAD look robust compared to the same
time last year.
The Board will continue to focus on the growth of both companies throughout
2010 but expects that opportunities for acquisition will arise during 2010. The
Board will continue to look for these opportunities and consider further
investments.
Market conditions into 2010 remain difficult but, given the steps the Company
has taken to reduce costs and to sharpen its focus, the Board is cautiously
optimistic that growth will continue in both companies into 2010.
M W Metcalfe
18 November 2009
STRONTIUM PLC
CONSOLIDATED INCOME STATEMENT
for the year ended 30 June 2009
2009 2008
GBP GBP
Continuing operations
Revenue 1,801,165 757,855
Cost of sales (475,168) (143,718)
Gross profit 1,325,997 614,137
Administrative expenses (1,304,991) (1,004,565)
Operating profit / (loss) 21,506 (390,428)
Goodwill impairment charge - (153,600)
21,506 (544,028)
Financial income 1,186 16,214
Financial costs - (97)
Finance costs - net 1,186 16,117
Profit / (loss) before tax 22,692 (527,911)
Tax expense -net credit for the year 18,574 27,080
Profit / (loss) for the period from 41,266 (500,831)
continuing activities
Discontinued operations
Loss for year from discontinued (78,364) (218,760)
operations
Loss for the year attributable to the (37,098) (719,591)
equity holders of the Company
(Loss) earnings per share:
Equity holders - continuing activities 0.31p (4.46)p
-basic and diluted
Equity holders - discontinued (0.59)p (1.95)p
activities-basic and diluted
Equity holders - total-basic and (0.28)p (6.41)p
diluted
STRONTIUM PLC
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2009
Share Share Retained Total
Capital Premium Earnings
GBP GBP GBP GBP
Balance at 1 July 2007 182,241 1,118,346 (255,734) 1,044,853
Loss for year to 30 June 2008 - - (719,591) (719,591)
Cost of share based awards - - 26,000 26,000
Issue of shares for cash 52,500 558,750 - 611,250
Issue of shares on acquisition 32,653 318,367 - 351,020
Balance at 30 June 2008 267,394 1,995,463 (949,325) 1,313,532
Loss for year to 30 June 2009 - - (37,098) (37,098)
Cost of share based awards - - 37,000 37,000
Balance at 30 June 2009 267,394 1,995,463 (949,423) 1,313,434
CONSOLIDATED BALANCE SHEET
at 30 June 2009
2009 2008
GBP GBP
Non-current assets
Goodwill 1,195,974 1,148,893
Property, plant and equipment 41,455 44,912
Total non-current assets 1,237,429 1,193,805
Current assets
Trade and other receivables 435,032 320,064
Cash at bank 291,025 586,543
Total current assets 726,057 906,607
Total assets 1,963,486 2,100,412
Equity
Issued share capital 267,394 267,394
Share premium 1,995,463 1,995,463
Retained earnings (949,423) (949,325)
Total equity 1,313,434 1,313,532
Liabilities
Non-current liabilities
Deferred tax 3,688 2,432
Other payables 100,000 102,000
Total non-current liabilities 103,688 104,432
Current liabilities
Current tax liabilities - 9,270
Trade and other payables 546,364 673,178
Total current liabilities 546,364 682,448
Total liabilities 650,052 786,880
Total equity and liabilities 1,963,486 2,100,412
CASH FLOW STATEMENT
for the year ended 30 June 2009
2009 2008
GBP GBP
Cash flows from operating activities
Cash (absorbed by) / generated from operations
- Continuing operations (169,059) 151
- Discontinued operations (108,452) (17,795)
Net interest received 1,186 16,117
Taxation paid - (73,173)
Net cash absorbed by operating activities (276,325) (74,700)
Cash flows from investing activities
Payments to acquire subsidiary - (605,079)
Cash acquired with subsidiary - 10,836
- (594,243)
Payments to acquire property, plant and equipment (28,193) (7,066)
Proceeds from disposal of property, plant and 9,000 -
equipment
Net cash used in investing activities (19,193) (601,309)
Cash flows from financing activities
Proceeds from issue of shares - 611,250
Net cash from financing activities - 611,250
Net decrease in cash and bank balances (295,518) (64,759)
Cash and bank and bank overdrafts at beginning of year
586,543 651,302
Cash at bank and bank overdrafts at end of
year 291,025 586,543
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 18
November 2009. 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 (ABSORBED BY)/GENERATED FROM OPERATIONS
2009 2008
GBP GBP
Continuing operations 21,506 (544,028)
Operating profit / (loss)
Impairment charges - 153,600
Depreciation of property, plant and equipment 18,600 7,545
Losses on disposals of property, plant and 1,267 -
equipment
Share based awards 37,000 26,000
(Increase) / decrease in receivables (111,906) 149,842
(Decrease) / increase in payables (135,526) 207,192
Cash (absorbed by) / generated from continuing (169,059) 151
operations
Discontinued activities
2009 2008
GBP GBP
Operating loss (78,364) (218,760)
Impairment charges - 175,803
Depreciation of tangible fixed assets 2,782 2,075
Decrease in receivables 9,068 19,550
(Decrease) / increase in payables (41,938) 3,537
Cash absorbed by discontinued operations (108,452) (17,795)
3. LOSS PER SHARE
The loss per share is based on the weighted average of ordinary shares in issue
for the year of 13,369,688 (2008: 11,227,481) and the profit / (loss) for the
period as disclosed in the income statement from continuing and discontinued
activities respectively.
The exercise of the outstanding options at 30 June 2008 would have reduced the
loss per share and hence have an anti-dilutive effect. The average market price
of issued share capital during the year ended 30 June 2009 exceeded the
exercise price of all share options in issue and therefore these have no
dilutive affect.
There were potentially 2,090,000 shares that could be issued under the terms of
options 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 2009 today; the
auditors gave an unqualified opinion and their report did not contain a
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 2009
will be sent to shareholders by 23 November 2009, and will be available for
collection from Strontium plc, First Floor, Estate House, 2 Pembroke Road,
Sevenoaks TN13 1XR after 23 November 2009.
END
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