TIDMKETL
RNS Number : 5242M
Strix Group PLC
22 September 2021
22 September 2021
Strix Group Plc
("Strix", the "Group" or the "Company")
Interim results for the six months ended 30 June 2021
"P ositive trends and momentum in H1 provides confidence for
full year"
Financial Summary
Adjusted results (1)
------------------------------------------------------
H1 2021 H1 2020 H1 2019 Change Change
(21 - 20) (21 - 19)
-------- -------- -------- -----------
GBPm GBPm GBPm %(4) %(4)
Revenue 54.7 34.7 43.9 57.6% 24.6%
Gross profit 20.5 13.8 16.7 48.6% 22.8%
EBITDA (2) 17.4 13.6 14.9 27.9% 16.8%
Operating profit 13.9 10.6 12.2 31.1% 13.9%
Profit before tax 13.2 10.1 11.5 30.7% 14.8%
Profit after tax 12.3 9.8 10.9 25.5% 12.8%
Net debt (3) 46.0 36.9 33.4 24.7% 37.7%
Net cash generated from operating activities 13.5 8.3 10.9 62.7% 23.9%
Basic earnings per share (pence) 6.0 4.9 5.7 22.4% 5.3%
Diluted earnings per share (pence) 5.9 4.9 5.4 2.0% -7.4%
Total dividend per share (pence) 2.75 2.6 2.6 5.8% 5.8%
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 (including IFRS 16 ROU depreciation) and
amortisation, is a non-GAAP metric used by management and is not an
IFRS disclosure.
3. Net debt excludes the impact of IFRS 16 lease liabilities,
pension liabilities, deferred tax liabilities and earn-out
provisions on satisfaction of performance conditions. Net debt
including earn-out provisions was GBP51.6m.
4. Figures are calculated from the full numbers as presented in
the consolidated financial statements.
Financial Highlights
-- The Group reported revenue of GBP54.7m, a significant increase
of 57.6%, versus the same period in prior year and an increase
of 24.6% versus the same period in 2019. This was driven
by both organic growth and the acquisition of LAICA which
has delivered strong revenue growth over the period as
the Group bounced back to higher than pre-pandemic levels.
-- Adjusted EBITDA increased to GBP17.4m (2020: GBP13.6m),
representing a 27.9% increase same period in prior year
and an increase of 16.8% versus the same period in 2019.
Adjusted EBITDA margin in H1 was 31.8% (H1 2020: 39.2%),
as a result of LAICA's inclusion alongside a number of
factors including higher outward carriage and freight costs,
advertising and promotional costs and payroll costs as
the Group strengthened its management team in line with
its strategic objectives.
-- Net debt (excluding the impact of IFRS 16 lease liabilities)
has increased to GBP46.0m (H1 2020: GBP36.9m) to fund the
LAICA acquisition, continued investment in compelling growth
opportunities as well as the new manufacturing operations
in China. This represents a n et debt/adjusted EBITDA ratio
( calculated on a trailing twelve month basis) of 1.1 x.
-- Strong free cash flow generation with unique working capital
cycle. Operating free cash flow (before financing and tax
and exceptional factory capex) to EBITDA conversion of
82%.
-- The Group has significant liquidity providing financial
flexibility to continue to deploy capital consistent with
its allocation of capital priorities and is focused on
investing in compelling growth opportunities .
-- Adjusted basic earnings per share and adjusted diluted
earnings per share were 6.0p (H1 2020: 4.9p) and 5.9p (H1
2020: 4.9p) respectively.
-- The Board declares an increase in the interim dividend
to 2.75p per share (H1 2020: 2.6p).
-- Confident of delivering 2021 full year results in line
with market expectations.
Strategic Highlights
-- Remains on track to deliver medium-term targets to double
the Group's revenues over a five year period primarily
through organic growth in its water and appliances categories.
-- Expanded global market share by a further 1% by value of
the kettle controls market.
-- Acquisition of LAICA continues to be successfully integrated
in line with plan to achieve the identified benefits and
the trading performance has been strong over the period
delivering greater than 20% revenue growth.
-- New manufacturing operations within Zengcheng district
in Guangzhou, China are now fully operational and were
delivered on time and to budget and all was executed during
a global pandemic.
-- The HaloPure technology is gaining wider recognition by
the market and, in addition to securing two further contracts,
the Group has reached an agreement with a leading global
company of poultry feeding systems to mutually promote
the product and the Group is confident it will secure 10
systems this financial year, which demonstrates the continued
focus on commercialising this important product.
-- Continue to invest in strengthening its management team
in line with its strategic objectives and has recruited
a new Chief Technology Officer with significant expertise
in project planning and the successful implementation of
commercialisation strategies to bring high quality and
innovative new products to market in a timely and cost
effective manner.
Operational Highlights
-- Production efficiency of core kettle products improved
with 73% of all assembly lines now fully automated.
-- Launching of sustainability report and "Sustainable. Innovative.
Dependable." strategy.
-- Industry leading and ambitious decarbonisation target
- scope 1 & 2 net zero by the end of 2023 demonstrates
commitment to sustainability agenda.
-- Continued compliance with a range of international standards,
solidifying the quality and safety of our products and
internal processes (ISO9001, ISO14001, ISO45001, ISO50001,
ISO17025, ISO13485).
-- Defence of intellectual property and regulatory enforcement
remain core activities of our business and there have
now been 66 in total since 2017.
Mark Bartlett, Chief Executive Officer of Strix Group plc,
said:
"Strix has experienced positive trends and momentum in H1 2021
and achieved significant revenue growth compared to the
COVID-affected prior year and remains confident that it will
deliver revenue growth of circa 30% for the Group in 2021.
We are benefiting from being a world leading innovative and
sustainable technology business and our continued focus on
efficiency measures and strategic initiatives enables us to
continue to prudently invest in compelling growth
opportunities.
Today represents an important milestone for the Group, as we are
launching our "Sustainable. Innovative. Dependable." strategy. The
next few years will see significant planning and project execution
as we look to advance our KPIs and set ever ambitious goals but
this is a critical aspect of Strix's mission to innovate safety and
design for a sustainable future.
Our strong balance sheet and low leverage provides financial
flexibility for the medium term deploy capital consistent with
allocation of capital priorities.
Strix remains confident of delivering 2021 full year results in
line with market expectations and executing on the medium-term
strategy to deliver against its five year targets.
The Group reaffirms its commitment to its increasing dividend,
in line with its progressive dividend policy that is linked to
underlying earnings, which reflects the Board's confidence in the
outlook for the Group."
For further enquiries, please contact:
Strix Group Plc
Mark Bartlett, CEO
Raudres Wong, CFO +44 (0) 1624 829829
Zeus Capital Limited (Nominated Advisor
and Joint Broker)
Nick Cowles / Jamie Peel / Jordan Warburton
(Corporate Finance) +44 (0) 20 3829 5000
Stifel Nicolaus Europe Limited (Joint
Broker)
Matthew Blawat / Francis North +44 (0) 20 7710 7600
IFC Advisory Limited (Financial PR and
IR)
Graham Herring / Tim Metcalfe / Florence
Chandler +44 (0) 20 3934 6630
ABOUT STRIX GROUP PLC
Isle of Man based Strix, is a global leader in the design,
manufacture and supply of kettle safety controls and other
components and devices involving water heating and temperature
control, steam management and water filtration.
Strix's core product range comprises a variety of safety
controls for small domestic appliances, primarily kettles. Kettle
safety controls require precision engineering and intricate
knowledge of material properties in order to repeatedly function
correctly. Strix has built up market leading capability and
know-how in this field since being founded in 1982.
Strix's ordinary shares are admitted to trading on the AIM
Market of the London Stock Exchange (AIM: KETL).
CEO's report:
Introduction
In the first six months of 2021 we have delivered a solid
trading performance which has strengthened the Group's position
across its three product categories; kettle controls, water, and
appliances.
This performance demonstrates the resilience of Strix's business
model, which benefits from geographical and product
diversification, and is strengthened further by the Group's high
cash generation and prudent control of its balance sheet.
The Group has expanded its market leading value share of the
global kettle controls market whilst significantly expanding the
size of its water category through both organic growth and the
strategically compelling acquisition of LAICA which has delivered
strong revenue growth over the period.
In addition, the Group's medium-term strategies were refreshed
at the Capital Markets Day hosted in November 2020 outlining a path
to double Group revenues over a five year period primarily through
organic growth in its water and appliances categories and strong
progress is being made to deliver against those targets.
Financial performance
In the first six months of 2021, we have delivered a solid
trading performance which is a tribute to 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.
The Group reported revenue of GBP54.7m, a significant increase
of 57.6%, versus the same period in prior year and an increase of
24.6% versus the same period in 2019. This was driven by the
inclusion of LAICA revenues and organic growth as the Group bounced
back to higher than pre-pandemic levels.
Adjusted EBITDA increased to GBP17.4m (2020: GBP13.6m),
representing a 27.9% increase same period in prior year and an
increase of 16.8% versus the same period in 2019. Adjusted EBITDA
margin in H1 was 31.8% (H1 2020: 39.2%), as a result of LAICA's
inclusion alongside a number of factors including higher outward
carriage and freight costs, advertising and promotional costs and
payroll costs as the Group strengthened its management team in line
with its strategic objectives.
Strix's has a highly cash generative model which incorporates a
high ROCE and a high proportion of cash in advance payment terms
limits risk of non-payment and working capital fluctuations.
Net debt (excluding the impact of IFRS 16 lease liabilities and
Laica's earn out provisions) has increased to GBP46.0m (H1 2020:
GBP36.9m) to fund the LAICA acquisition, continued investment in
compelling growth opportunities as well as the new manufacturing
operations in China. This represents a n et debt/adjusted EBITDA
calculated on a trailing twelve month basis ratio of 1.1 x.
This places Strix in a financially strong position and with a
disciplined approach to investment, will emerge from the pandemic
poised to continue to benefit from a sustained market recovery
which is starting to take place.
Given the Group's performance in H1 2021 and confidence in the
continued strength of its cash generation the Board reiterates its
intention to implement a progressive dividend policy that is linked
to underlying earnings at the full year. Therefore, the Board
declares an increase in the interim dividend to 2.75p per share (H1
2020: 2.6p).
New product development
New product development remains a fundamental driver in the
Group's core business strategy, with specific focus on the
identification of cross category opportunities. The Group has made
significant headway having delivered on the targets outlined in the
product development roadmap with the launch of multiple new
products. The Group has also re-focused its commercialisation
strategy, optimising cross category synergies within both our
higher value appliance and water categories.
In the water category, the sales of its new products are
accelerating with additional product launches from LAICA that have
already been implemented during the period.
The Group also continues to see many of the new appliances
starting to penetrate the consumer markets across the world.
The Aurora appliance was launched on Amazon under the Aqua
Optima brand in June in the UK and across key European markets
(Italy, France, Germany and Spain) in September. This has reached
number 5 on the hot water dispenser category on Amazon within one
month of launch and 83% of reviews across the UK retail landscape
are above 4 stars (out of 5). A version incorporating Strix's
technology has already been launched in Asia with a leading global
brand and will be in UK, Europe and North America over the coming
months .
Throughout 2021 so far, in line with our medium-term growth
ambitions, we have multiple new product launches. The Group will
continue to focus its highly skilled engineering resource towards
enhancing our core technologies and innovating into new commercial
markets in a sustainable manner.
The arrival of a new Chief Technology Officer, Ceyda Gibson,
brings significant expertise in project planning and the successful
implementation of commercialisation strategies in delivering high
quality and innovative new products to market in a timely and cost
effective manner. This appointment will be an invaluable addition
to support Strix's new product development initiatives which is an
important part of the Group's medium-term growth ambition.
Previously, Ceyda Gibson served a variety of leadership roles
including Global R&D Business Director at Avery Dennison in the
Netherlands and Quality, Operational Excellence & Regulatory
Compliance Director at Philips Consumer Lifestyle. She will join
the Group in November 2021.
Kettle control category
The market has continued to experience strong demand in H1.
Throughout this period, Strix has managed to grow its market
leading position by a further 1% to circa 56% of the global kettle
controls market by value, continuing to grow the number of
specifications using its latest platform ranges and regions.
Regulated segments grew with a strong contribution from the UK,
Mainland Europe and North America. Less regulated segments also
grew with strong growth in Russia offsetting declines in South
Africa. Despite some weakness within the Chinese market last year,
this began to show a marked recovery in 2021 and Strix remains the
leading supplier of controls in that market .
We have also continued to focus product development on
opportunities and design improvements in a sustainable way to
reduce the overall manufactured product footprint within the
Regulated, Less Regulated and China markets that will further
strengthen Strix's position and support our market share
aspirations.
Following the successful launch of the U9 Series during 2017,
the Group has successfully produced over 55 million controls to
date. The Group continues to innovatively develop this series with
new variants launched to target the smaller size and split switch
kettle appliances to further enhance the portfolio of best in class
controls.
Continuous improvement initiatives in our manufacturing,
measurement and testing processes are a key focus to improve
stability of the manufacturing process, enhancing product
performance to help our customers improve their sustainability
ambitions, product quality and reduce costs. Production efficiency
of core kettle products improved with 73% of all assembly lines now
fully automated.
Lifetime energy footprint studies of kettles show that the
energy consumed in "use" is estimated at 95% of the total product
lifecycle energy requirements. Strix's goal is to reduce wastage in
this phase for existing products and to design new, innovative
products which reduce environmental wastage compared to the
incumbent technology or products. As a result, Strix has
successfully developed products and designs to reduce the level of
overfill in traditional kettles as well as new 'over-fill proof'
water heating products.
Water category
2020 was a transformational year for Strix's water filtration
category with the acquisition of LAICA and the Aqua Optima brand
delivering record sales which consolidates the brand's position as
the clear number 2 in the UK market. Overall, the water category
reported a significant growth in revenue in H1 2021 with the
combined contribution of LAICA and HaloPure technology and has
continued to develop its product base and progressed towards our
category growth aspirations.
LAICA has a considerable global presence, an established product
range and an advanced new product roadmap. The acquisition
continues to be successfully integrated in line with plan to
achieve the identified benefits and the trading performance has
been strong over the period delivering greater than 20% revenue
growth. It is already providing some strategic consolidation
opportunities in the water treatment range, driving efficiencies
and a comprehensive portfolio of products for the Group
globally.
The new, expanded, brand portfolio will be used for the planned
geographical expansion in the second half of 2021 for consumer
water. The Group expects many of the new product launches,
including those from LAICA to accelerate this year as the retailers
introduce them to both their in-store and online portfolios.
For professional water, Strix launched the HaloPure technology
and recently announced the HaloPure technology is gaining wider
recognition by the market and, in addition to securing two further
contracts at a regional government owned livestock company in
China, the Group has reached an agreement with a leading global
company of poultry feeding systems to mutually promote the HaloPure
product and any relevant technical support in the Chinese market.
This provides further confidence that the Group will secure 10
systems by then end of this financial year, which demonstrates the
continued focus on commercialising this important product.
Water remains a limited natural resource experiencing ever
greater demand, expected to increase by 40% by 2030. Strix is
focused on enhancing the quality of water and providing sustainable
delivery mechanisms to replace the 7.7 billion plastic water
bottles used every year in the UK alone. LAICA and astrea reusable
filtered water bottles offer significant benefits from purchased
bottled water in terms of re-usability of the container whilst also
significantly reducing transportation costs. To complete the full
product life cycle Aqua Optima has put a recycling agreement in
place in the UK with specialist TerraCycle. The acquisition of
HaloSource has brought new technology, including lead reduction and
patented bromine technology, that kills bacteria and viruses. These
technologies, coupled with the enhanced new product roadmap from
LAICA enable Strix to offer improved quality drinking water to both
the consumer and agriculture markets.
Appliance category
Strix seeks to use its technology and innovation expertise to
develop adjacent products to solve problems in tangential markets
in a sustainable way. The Group looks to develop products offering
meaningful benefits to customers which can then be commercialised
through existing relationships with experienced and trusted OEM's
and consumer appliance specialists.
2021 has seen and will continue to see many of the appliances
created in 2020 penetrate consumer markets across the world with
the most notable being the Aurora (Instant Flow Heater/Chiller) in
the first half, and Dual Flo and the expansion of the Baby Care
technology range in the second half.
There are now multiple agreements in place within the appliances
and baby care categories for exciting new launches across all
regions. Strix will continue to work closely with its key partners
and own brands to bring technological innovation to the markets
delivering core benefits in usability and sustainability to the
consumer.
Operations review
The new manufacturing operations within Zengcheng district in
Guangzhou, China are now fully operational and were delivered on
time and to budget and all was executed during a global pandemic.
The new factory will double the Group's current manufacturing
capacity enabling it to grow the business and deliver its stated
strategy of doubling revenues over a five year period. Efficiencies
and further in-sourcing arising from the new manufacturing facility
are expected to have a positive effect on margins.
A corporate video giving an updated overview of the new factory
is now available via this link:
https://player.vimeo.com/video/605235693 . The decision to invest
in the construction of a new factory was taken by the Board in
2018. The land was successfully purchased in the summer of 2019 and
external construction work began in late 2019 completing in
December 2020. Production and assembly lines were then installed
facilitating the commencement of operations.
Barriers to entry and defence of intellectual property
Strix constantly assesses the risks posed by completive threats
and sees the real benefits of market disruption which drives its
determination to constantly evolve its innovative technologies in a
sustainable way by investing in its portfolio of intellectual
property to protect its new products.
We actively monitor the markets in which we operate for
violation of our intellectual property rights. Strix has unique
relationships with its brands, OEMs and retailers and provides its
support across the value chain and throughout the product
lifecycle, including product design and advice on specification and
manufacturing solutions. These value-added services and existing
strong relationships ensure brands, OEMs and retailers continue to
rely on Strix's components.
We remain committed to consumer safety and continue to prompt
regulatory enforcement authorities to remove unsafe and poor
quality products from our major markets. Nine such actions have
again been undertaken so far in 2021 resulting in product recalls
and withdrawal of kettles from Bulgaria. Defence of intellectual
property and regulatory enforcement remain core activities of our
business and there have now been 66 in total since 2017.
Sustainability
In 2020, the Group reassessed its approach to sustainability
with a view of integrating a sustainability strategy within core
business activities aligning ourselves with the UN's Sustainable
Development Goals (SDGs). Today, Strix is launching its
sustainability report and its "Sustainable. Innovative.
Dependable." strategy.
An internal management and reporting structure has been put in
place to ensure inclusion, responsibility and accountability from
the shop floor to the boardroom. We have developed metrics of
sustainability measures which have been standardised and are being
rolled out across the organisation. Our latest and highly ambitious
step sees the externalisation of our sustainability KPIs as set out
in the sustainability report available via this link:
https://www.strixplc.com/sustainability . Measuring, committing and
reporting on progress will ensure that these factors will be a key
driving force in the direction of the business.
We have focused on climate change and our carbon emissions as a
key KPI for 2021/22. This is despite the complexities that the new
Chinese factory, which will be the biggest energy consumer in the
Group, and assimilating LAICA bring. Our Scope 1&2 emissions
emanate primarily from our manufacturing plants, especially the new
facility in China which is being commissioned in 2021. We have been
developing our pathway to net zero. As a consequence of which we
have set an ambitious target for net zero Scope 1&2 emissions
by the end of 2023. We believe this to be 'best-in-class' and far
in excess of the Paris 1.5degC scenario requirements.
In addition, our goal is to achieve over 95% of this through
reduction of our own emissions with less than 5% from carbon
offsets. To achieve this ambitious target, we are in the process of
investing over GBP0.6m into a solar array at our new Chinese
manufacturing site which will provide over 10% of the required
electricity with the remainder due to be switched to renewable
electricity in 2022.
The Isle of Man has signed an agreement for green power starting
in Q4 2021. LAICA is also targeting a combination of solar and
renewable electricity although with the integration currently at
the fore this is expected to be implemented through 2022. We are
also developing a range of programmes to reduce our Scope 1
emissions, for instance China and now the Isle of Man has started
to move to electric cars. The Isle of Man will take the lead on
alternative offsetting of our 'hard to remove' emissions using the
SBTi mitigation hierarchy.
Our other sustainability KPIs are taken from key operating
practices already embedded into our culture. Promotion of the
sustainability agenda and KPIs is generating renewed emphasis on
these activities. This has included additional planning and
pathways to improvement and, where applicable, setting of ambitious
future targets. We expect to enunciate further on these plans in
the coming year. These KPIs are important but we also remain
committed to other areas of our sustainability agenda. This is
highlighted in our community engagement where we have an aspiration
to increase volunteer hours by 10% a year.
The next few years will see significant planning and project
execution as we look to advance our KPIs and set ever ambitious
goals but this is a critical aspect of Strix's vision to e
stablishing a world leading innovative and sustainable technology
business .
Accreditations
Strix has a strong record for accreditations to ensure that best
practices are adhered to across the Group. Key quality management,
environmental and health & safety are in-place in our key
sites. In addition, other specific accreditations are sought where
necessary, for instance, Ronaldsway ISO17025 accreditation for test
and certification and LAICA ISO13485 accreditation required for
medical instrumentation.
2021 has seen a step change in activity with the new Chinese
factory achieving ISO9001, ISO14001 and ISO45001 with no
non-conformities, a significant achievement in such a short
timescale with the official opening only in August. LAICA is
looking towards ISO14001 and ISO45001 compliance in 2022.
As part of the drive towards improving the Group's environmental
footprint and its aim to reduce energy consumption alongside
decarbonisation the new Chinese facility is expected to achieve
ISO50001, energy management, in 2021 with plans to roll-out this
standard across other key manufacturing sites in 2022/3.
In addition, we place significant importance on our annual OEM
customer survey which helps to define what we can do better. In
2020, despite COVID, our survey witnessed a 21% reduction in
concerns from 2019 (31% from 2018) including quality improving
circa 40% in China and circa 35% in the Isle of Man. Particularly
pleasing was that the quality of Strix people achieving the highest
rating within the survey.
Strix also continues to ensure compliance with a range of
international standards, solidifying the quality and safety of our
products and internal processes including (ISO9001, ISO14001,
ISO45001, ISO50001, ISO17025, ISO13485).
Dividend policy
Given the Group's performance in H1 2021 and confidence in the
continued strength of its cash generation the Board reiterates its
intention to implement a progressive dividend policy that is linked
to underlying earnings at the full year.
Therefore, the Board declares an increase in the interim
dividend to 2.75p per share (H1 2020: 2.6p).
The interim dividend will be paid on 7 October 2021 to
shareholders on the register at 1 October 2021 and the shares will
trade ex-dividend from 30 September 2021.
Financial Position
Strix is in a strong financial position with significant
liquidity providing flexibility to continue to deploy capital
consistent with its allocation of capital priorities and is focused
on investing in compelling growth opportunities, in particular on
new product development and commercialisation strategy that
supports the medium-term growth ambition of the Group.
The Company also continues to seek the acquisition of niche
technologies that will add further value across the Group and has a
pipeline of opportunities that it is tracking closely.
Outlook
The Group has experienced positive trends and momentum in H1
2021 and achieved revenue growth of 57.6%, including the impact of
LAICA, compared to the COVID-affected prior year and remains
confident that it will deliver revenue growth of circa 30% for the
Group in 2021.
Strix has also successfully implemented price increases on some
of its legacy products in both kettle controls and water
categories, alongside a range of other efficiency measures which
will help to minimise the impact of any cost inflation. Gross
profit margin for the 2021 full year remain in line with
management's expectations.
Given the Group's performance in H1 2021 and confidence in the
continued strength of its cash generation the Board reiterates its
intention to implement a progressive dividend policy that is linked
to underlying earnings at the full year. Therefore, the Board
declares an increase in the interim dividend to 2.75p per share (H1
2020: 2.6p).
Notwithstanding the positive demand backdrop, there are still a
number of headwinds including supply chain disruption, foreign
exchange rates and raw material prices which have increased
significantly through the first half of the financial year and
implying the Group will continue to face a challenging operating
environment.
Strix remains confident of delivering 2021 full year results in
line with management's expectations and executing on the
medium-term strategy to deliver against its five year targets.
Chief financial officer's review
Adjusted results (1) Reported results
---------------------------------------------- ----------------------------------------------
H1 2021 H1 2020 H1 2019 Change Change H1 2021 H1 2020 H1 2019 Change Change
(21 - (21 - (21 - (21 -
20) 19) 20) 19)
-------- -------- -------- ------- -------- -------- -------- ------- -------
GBPm GBPm GBPm %(4) %(4) GBPm GBPm GBPm %(4) %(4)
Revenue 54.7 34.7 43.9 57.6% 24.6% 54.7 34.7 43.9 57.6% 24.6%
Gross profit 20.5 13.8 16.7 48.6% 22.8% 18.2 13.8 16.7 31.9% 9.0%
EBITDA (2) 17.4 13.6 14.9 27.9% 16.8% 12.7 11.1 10.9 14.4% 16.5%
Operating profit 13.9 10.6 12.2 31.1% 13.9% 9.1 8.1 8.1 12.3% 12.3%
Profit before tax 13.2 10.1 11.5 30.7% 14.8% 8.5 7.5 7.5 13.3% 13.3%
Profit after tax 12.3 9.8 10.9 25.5% 12.8% 7.6 7.3 6.9 4.1% 10.1%
Net debt (3) 46.0 36.9 33.4 24.7% 37.7% 46.0 36.9 33.4 24.7% 37.7%
Net cash generated
from operating
activities 13.5 8.3 10.9 62.7% 23.9% 13.5 8.3 10.9 62.7% 23.9%
Basic earnings per
share (pence) 6.0 4.9 5.7 22.4% 5.3% 3.7 3.7 3.6 0.0% 2.8%
Diluted earnings per
share
(pence) 5.9 4.9 5.4 2.0% -7.4% 3.6 3.6 3.4 0.0% 5.9%
Total dividend per
share (pence) 2.75 2.6 2.6 5.8% 5.8% 2.75 2.6 2.6 5.8% 7.7%
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. Net debt excludes the impact of IFRS 16 lease liabilities,
pension liabilities, deferred tax liabilities and earn-out
provisions on satisfaction of performance conditions. Net debt
including earn-out provisions was GBP51.6m.
4. Figures are calculated from the full numbers as presented in
the consolidated financial statements.
Financial performance
Revenue increased significantly by 57.6% to GBP54.7m (H1 2020
GBP34.7m). This was partly due to the inclusion of LAICA revenues
of GBP10.1m in H1, with the remaining increase of GBP9.9m
(representing a 28.5% increase from comparative prior period)
realised from organic growth as the Group bounced back to higher
than pre-pandemic levels. Revenue increased by 24.6% in comparison
to H1 2019 period.
Revenue on a constant currency basis and organic basis showed an
increase of 34.6%. This is influenced by weaker foreign currencies
against Pound Sterling in H1 compared to prior comparative period,
which effectively increases the Pound Sterling value of revenues
for products that are priced in foreign currency.
Adjusted gross profit increased by 48.6% to GBP20.5m (H1 2020:
GBP13.8m), partly due to LAICA's inclusion of GBP3.0m, and also
driven mainly by kettle controls sales volumes which were 36%
higher up on the prior comparative period due to increased customer
demand linked to the market recovery from 2020. Reported gross
profits increased by 31.9% to GBP18.2m (H1 2020: GBP13.8m).
Adjusted gross profit margin in H1 was 37.5% (H1 2020: 39.8%),
showing a margin dilution of 2.3% attributable mainly to the
inclusion of LAICA product ranges which have lower gross profit
margins.
Adjusted EBITDA was GBP17.4m, an increase of 27.9% (H1 2020:
GBP13.6m), partly due to LAICA which brought in GBP1.7m, with the
remainder of the increase of GBP2.1m resulting from organic growth
of 15%. Adjusted EBITDA is defined as profit before depreciation,
amortisation, finance costs, finance income, taxation, and
exceptional items including share based payments. Reported EBITDA
increased 14.4% to GBP12.7m (H1 2020: GBP11.1m).
Adjusted EBITDA margin in H1 was diluted to 31.8% (H1 2020:
39.2%), representing a dilution of 7.4%. Part of the dilution is as
a result of LAICA's inclusion which had a 3.4% dilutive impact,
leaving an organic dilution of 4.0%. The following factors played a
role in organic dilution: (1) higher outward carriage and freight
costs experienced globally with the recovery from the pandemic, (2)
higher payroll costs as the Group increased its headcount in line
with management expectations and medium-term targets, and (3)
higher advertising and promotional costs as the Group diversifies
its product range with growth in its water and appliances
categories. These cost implications have a similar effect on
dilution of the other adjusted KPI margins of operating profit,
profit before tax and profit after tax.
Adjusted operating profits increased by 31.1% to GBP13.9m (H1
2020: GBP10.6m), an increase of GBP3.3m. LAICA contributed GBP1.4m
to the increase, giving organic growth of GBP1.9m (17.9%). Reported
operating profits were higher by 12.3% to GBP9.1m (H1 2020:
GBP8.1m) after deducting exceptional costs of GBP4.8m (H1 2020:
GBP2.5m) which increased mainly due to the removal and write-off of
assets, and land and factory relocation costs associated with the
move from the old factory to the new manufacturing plant, and LAICA
acquisition-related strategic project costs (see note 6 of the
financial statements).
Adjusted profit before tax was GBP13.2m, an increase of GBP3.1m
(30.7%) from prior comparative period (H1 2020: GBP10.1m), of which
LAICA contributed GBP1.1m. Interest charges were fairly constant,
with a minor increase to reflect the increase in the Net Debt.
Reported profit before tax was GBP8.5m (H1 2020: GBP7.5m).
Adjusted profit after tax was GBP12.3m (H1 2020: GBP9.8m), an
increase of GBP2.5m (25.5%) and this represents an impressive 12.8%
growth to the pre-pandemic performance in 2019 . LAICA adjusted
profit after tax of GBP0.9m contributed to this increase. There was
an increase in the tax expense, partly due to the inclusion of
LAICA. The effective tax rate on adjusted profit before tax in H1
was 6.8%. Excluding the impact of LAICA, the effective tax rate
drops down to 5.9%.
Costs
Costs in the current period increased compared to the prior
period all in support of the increase in the top line as the Group
recovered from impacts of the COVID pandemic.
Cost of sales (excluding exceptional costs) increased to
GBP34.2m (H1 2020: GBP20.9m), driven by the increase in revenues,
however with a dilutive effect on gross margin percentages mainly
due to impact on pricing of adverse foreign exchange movements,
higher commodity prices, and adverse sales mixes particularly
linked to margin dilutions from LAICA's product ranges as the Group
expands its water and appliances categories.
Distributions costs increased to GBP3.9m (H1 2020: GBP2.1m)
mainly due to higher outward carriage and freight costs, higher
payroll costs, and increased advertising and promotional costs,
also taking into consideration the inclusion of LAICA in the
Group.
Administration costs (excluding exceptional costs) were GBP3.0m
(H1 2020: GBP1.4m), increasing mainly due to the inclusion of
LAICA, and also as a result of higher payroll costs as the Group
increased its headcount in line with management expectations and
medium-term targets.
Exceptional costs increased mainly due to LAICA
acquisition-related strategic project costs, the removal and
write-off of assets, and land and factory relocation costs
associated with the move from the old factory to the new Chinese
manufacturing plant as of 27 August 2021, which was completed
within the budget of circa GBP20m.
Cash flow
Net cash generated from operating activities rose to GBP13.5m
(H1 2020: GBP8.3m) mainly due to an increase in operating profits
driven by increases in sales. Net working capital movements in H1
2021 improved, showing an outflow of just GBP0.4m compared the
prior comparative period (H1 2020: GBP2.8m outflow), demonstrating
a continued trend of the Group's continued policy on maximizing its
operating cash resources. Net working capital cash outflows
decreased in H1 2021 mainly due to an increase in stocks held at
period-end to fund the anticipated increase in demand in H2, which
had the consequential effect of increased trade and other payables
due to negotiated payment terms with suppliers to allow leeway for
the Group to realise cash inflows from the anticipated increased
demand in H2.
Cash outflows for investing activities have increased by GBP3.2m
from the prior comparative period mainly due to the capital costs
associated with completion of the new factory, and further
investment in LAICA. The new manufacturing plant in China is now
fully operational as of the 27(th) August 2021, with production and
assembly lines installed, and having been completed on budget and
on time. Total factory construction costs were in line with budget
of circa GBP20m.
Cash flows for financing activities remained fairly constant
compared to the prior comparative period, driven in both periods by
mainly drawdowns from the revolving credit facility and payment of
final prior year dividends.
Balance Sheet
Property, plant and equipment increased to GBP40.4m (FY 2020:
GBP37.2m), a net increase of GBP3.2m. This net increase was due to:
(1) GBP9.7m (H1 2020: GBP5.6m) of additions attributable mainly to
net capital expenditure of GBP5.1m on the completion new factory in
China, new ROU asset additions worth GBP1.4m, and new plant and
machinery additions of GBP2.5m, (2) partially offset by the
write-off of old assets from the old factory with a net book value
of circa GBP1.6m, the sale of LAICA building with a net book value
of circa GBP1.7m in a leaseback arrangement, and depreciation
charges of GBP2.6m (H1 2020: GBP2.2m).
Intangible assets increased to GBP31.6m (FY 2020: GBP29.7m)
reflecting a net increase of GBP1.9m. The net increase is due to
additions of circa GBP3.2m, the majority of which are capitalised
development costs from the new product development projects of
circa GBP1.6m. The total amortisation charge was GBP1.0m (H1 2020:
GBP0.7m).
Current assets increased to GBP40.8m (FY 2020: GBP35.9m), an
increase of GBP4.9m. Broken down, inventories increased by GBP4.2m
due to higher stock held at period-end to meet demand in H2 and
also due to disruptions in supply chains as the global economy
recovers from the pandemic. LAICA also purchases stocks in bulk to
maximize economies of scale, and holds these in preparation for
anticipated increases in demand of their products in the second
half of the year. Trade debtor and prepayments remained fairly
constant, with a slight increase of GBP0.7m.
Current liabilities (including tax liabilities, but excluding
short-term portions of long-term liabilities) increased to GBP33.7m
(FY 2020: GBP30.2m), and increase of GBP3.5m. Part of the increase
is from LAICA trade creditors, which increased by GBP0.5m evident
from the higher stock purchases and stock levels held at
period-end. Trade and other creditors, and accruals increased
mainly due to increases in purchases and various operational
expenditures keeping in pace with recovery from the pandemic.
Non-current liabilities (including short-term portions)
increased to GBP74.7m (FY 2020: GBP66.0m), an increase of GBP8.7m,
which is mainly driven by the further drawdowns in the period from
the revolving credit facility to fund the completion of the new
manufacturing plant in China.
Net debt
The Group's net debt position, excluding earn-out provisions, as
at 30 June 2021 increased to GBP46.0m (FY 2020: GBP37.2m).
Total committed debt facilities at 30(th) June 2021 amounted to
GBP61.0m, giving a liquidity pool of GBP34.0m. Net debt equated to
1.1 times trailing twelve months' EBITDA, which compares favourably
to our debt covenant of 2.50 times. This continues to underpin the
Group's strong cash generation ability.
Dividend
The Board declares an increase in the interim dividend to 2.75p
per share (H1 2020: 2.6p) and given the Group's performance in H1
2021, confidence in the continued strength of its cash generation
it reiterates its intention to implement a progressive dividend
policy that is linked to underlying earnings at the full year.
The interim dividend will be paid on 7 October 2021 to
shareholders on the register at 1 October 2021 and the shares will
trade ex-dividend from 30 September 2021.
Condensed INTERIM consolidated statement of comprehensive
income
for the period ended 30 June 2021 (unaudited)
(unaudited) (unaudited)
Period Period
ended ended
30 June 30 June
2021 2020
Note GBP000s GBP000s
--------------------------------------- ----- ------------ ------------
Revenue 7 54,666 34,712
---------------------------------------- ----- ------------ ------------
Cost of sales - before exceptional
items (34,206) (20,948)
Cost of sales - exceptional items 6 (2,280) -
---------------------------------------- ----- ------------ ------------
Cost of sales (36,486) (20,948)
---------------------------------------- ----- ------------ ------------
Gross profit 18,180 13,764
---------------------------------------- ----- ------------ ------------
Distribution costs (3,949) (2,121)
---------------------------------------- ----- ------------ ------------
Administrative expenses - before
exceptional items (2,950) (1,416)
Administrative expenses - exceptional
items 6 (2,476) (2,517)
---------------------------------------- ----- ------------ ------------
Administrative expenses (5,426) (3,933)
Share of (losses) / profits from (10) -
joint ventures
Other operating income 355 402
---------------------------------------- ----- ------------ ------------
Operating profit 9,150 8,112
Analysed as:
--------------------------------------- ----- ------------ ------------
Adjusted EBITDA (1) 17,438 13,589
Amortisation 8 (952) (748)
Depreciation (excluding Right-of-use
asset depreciation) 9 (1,772) (1,491)
Right-of-use asset depreciation 9 (808) (721)
Exceptional items 6 (4,756) (2,517)
---------------------------------------- ----- ------------ ------------
Operating profit 9,150 8,112
Finance costs 5 (686) (585)
Finance income 6 8
---------------------------------------- ----- ------------ ------------
Profit before taxation 8,470 7,535
Income tax expense (893) (217)
---------------------------------------- ----- ------------ ------------
Profit after taxation 7,577 7,318
---------------------------------------- ----- ------------
Other comprehensive income:
Exchange differences on translation
of foreign operations (388) 134
---------------------------------------- ----- ------------
Total comprehensive income 7,189 7,452
---------------------------------------- ----- ------------ ------------
Profit for the period attributable
to:
Equity holders of the Company 7,526 7,318
Non-controlling interests 51 -
--------------------------------------- ----- ------------ ------------
7,577 7,318
--------------------------------------- ----- ------------ ------------
Total comprehensive income for
the period attributable to:
Equity holders of the Company 6,993 7,452
Non-controlling interests 196 -
--------------------------------------- ----- ------------ ------------
7,189 7,452
Earnings per share (pence)
--------------------------------------- ----- ------------ ------------
Basic 6 3.7 3.7
Diluted 6 3.6 3.6
---------------------------------------- ----- ------------ ------------
1. Adjusted EBITDA, which is defined as profit before finance
costs, tax, royalty charges, depreciation, amortisation and
exceptional items, is a non-GAAP metric used by management and is
not an IFRS disclosure.
Condensed INTERIM consolidated balance sheet
as at 30 June 2021 (unaudited)
(unaudited) (unaudited)
As at As at
30 June 2021 31 December
Note 2020
ASSETS GBP000s GBP000s
--------------------------------- ----- -------------- -------------
Non-current assets
Intangible assets 8 31,541 29,648
Property, plant and equipment 9 40,447 37,205
Investments in joint ventures 73 92
Total non-current assets 72,061 66,945
--------------------------------- ----- -------------- -------------
Current assets
Inventories 10 19,446 15,224
Trade and other receivables 12 21,391 20,672
Cash and cash equivalents 15,409 15,446
--------------------------------- ----- -------------- -------------
Total current assets 56,246 51,342
Total assets 128,307 118,287
--------------------------------- ----- -------------- -------------
EQUITY AND LIABILITIES
--------------------------------- ----- -------------- -------------
Equity
Share capital and share premium 13,138 13,130
Share based payment reserve 1,425 1,913
Retained earnings 4,435 6,290
Non-controlling interests 912 716
Total equity 19,910 22,049
Current liabilities
Trade and other payables 13 30,820 27,151
Borrowings 14 626 2,220
Future lease liabilities 17 1,241 1,254
Contingent consideration 3,880 -
Current income tax liabilities 13 2,863 3,048
Total current liabilities 39,430 33,673
--------------------------------- ----- -------------- -------------
Non-current liabilities
Future lease liabilities 17 3,079 2,846
Deferred tax liability 2,458 2,558
Borrowings 14 60,823 50,426
Contingent consideration 1,671 5,380
Post-employment benefits 936 1,355
--------------------------------- ----- -------------- -------------
Total non-current liabilities 68,967 62,565
--------------------------------- ----- -------------- -------------
Total liabilities 108,397 96,238
Total equity and liabilities 128,307 118,287
--------------------------------- ----- -------------- -------------
Condensed INTERIM consolidated statement of changes in
equity
as at 30 June 2021 (unaudited)
Share Share-based Retained Total Non-controlling Total
capital payment (deficit)/ equity interests equity
and reserve earnings attributable
share to owners
premium
(unaudited) GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
--------- ------------ ------------ -------------- ---------------- ---------
Balance at 1 January 2020 1,900 13,063 (14,052) 911 - 911
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Profit for the period - - 7,318 7,318 - 7,318
Other comprehensive income - - 134 134 - 134
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Total comprehensive income for
the period - - 7,452 7,452 - 7,452
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Dividends paid (note 16) - - (10,126) (10,126) - (10,126)
Share-based payment transactions 89 480 - 569 - 569
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Total transactions with owners
recognised directly in equity 89 480 (10,126) (9,557) - (9,557)
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Other transactions recognised - - - - - -
directly
in equity
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Balance at 30 June 2020 1,989 13,543 (16,726) (1,194) - (1,194)
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
(unaudited)
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Balance at 1 January 2021 13,130 1,913 6,290 21,333 716 22,049
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Profit for the period - - 7,526 7,526 51 7,577
Other comprehensive income - - (533) (533) 145 (388)
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Total comprehensive income for
the period - - 6,993 6,993 196 7,189
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Dividends paid (note 16) - - (10,831) (10,831) - (10,831)
Transfers between reserves 8 (975) 967 - - -
Share-based payment transactions - 487 - 487 - 487
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Total transactions with owners
recognised directly in equity 8 (488) (9,864) (10,344) - (10,344)
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Other transactions recognised
directly
in equity (note 11) - - 1,016 1,016 - 1,016
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Balance at 30 June 2021 13,138 1,425 4,435 18,998 912 19,910
---------------------------------- --------- ------------ ------------ -------------- ---------------- ---------
Condensed INTERIM consolidated cash flow statement
for the PERIOD ended 30 June 2021 (unaudited)
(unaudited) (unaudited)
Period Period
ended ended
30 June 30 June
2021 2020
Note GBP000s GBP000s
-------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Cash generated from operations 18(a) 14,620 8,988
Tax paid (1,109) (676)
-------------------------------------------- ------ ------------ ------------
Net cash generated from operating
activities 13,511 8,312
-------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Purchase of property, plant and equipment (8,137) (4,294)
Capitalised development costs 8 (1,529) (1,231)
Consideration paid in relation to (1,605) -
the purchase of LAICA S.p.A
Purchase of intangibles 8 (627) (1,458)
Proceeds on sale of property, plant
and equipment 9 1,750 -
Finance income 6 7
-------------------------------------------- ------ ------------ ------------
Net cash used in investing activities (10,142) (6,976)
-------------------------------------------- ------ ------------ ------------
Cash flows from financing activities
Drawdowns and new loans / (repayments)
of non-current borrowings 18(b) 8,697 9,000
Finance costs paid (271) (691)
Principal elements of lease payments (855) (800)
Transaction costs related to borrowings - (480)
Dividends paid 16 (10,831) (10,126)
-------------------------------------------- ------ ------------ ------------
Net cash used in financing activities (3,260) (3,097)
-------------------------------------------- ------ ------------ ------------
Net decrease in cash and cash equivalents 109 (1,761)
Cash and cash equivalents at the beginning
of the period 15,446 13,658
Effects of foreign exchange on cash
and cash equivalents (146) 206
-------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at the end
of the period 15,409 12,103
-------------------------------------------- ------ ------------ ------------
Notes to the condensed INTERIM cONSOLIDATED financial
statements
for the PERIOD ended 30 June 2021 (unaudited)
1. General information
Strix Group Plc ('the Company') was incorporated and registered
in the Isle of Man on 12 July 2017 as a company limited by shares
under the Isle of Man Companies Act 2006 with the name Steam Plc
and with the registered number 014963V. The Company changed its
name to Strix Group Plc on 24 July 2017. The address of its
registered office is Forrest House, Ronaldsway, Isle of Man, IM9
2RG.
The Company's shares were admitted to trading on AIM, a market
operated by the London Stock Exchange on 8 August 2017.
The principal activities of Strix Group Plc and its subsidiaries
(together 'the Group') are the design, manufacture and supply of
kettle safety controls and other components and devices involving
water heating and temperature control, steam management and water
filtration.
These condensed interim consolidated financial statements
('interim financial statements') were approved for issue on 22
September 2021. The interim report will be available 22 September
on the Group's website www.strixplc.com and from the registered
office. These interim financial statements are unaudited.
2. Principle accounting policies
The Group's principle accounting policies, all of which have
been applied consistently to all of the periods presented, are set
out below.
Basis of preparation
The Group's annual financial statements are prepared in
accordance with International Financial Reporting Standards
('IFRS') and International Financial Reporting Standards
Interpretation Committee ('IFRS IC') as adopted by the European
Union.
These interim financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting". They do not
include all the information required for a complete set of
financial statements prepared in accordance with International
Financial Reporting Standards as adopted by the European Union.
However, explanatory notes are included to explain events and
transactions that are significant to an understanding of the
changes in the Group's financial position and its financial
performance compared with the comparative period ended 31 December
2020 and 30 June 2020 respectively. These interim financial
statements should be read in conjunction with the last annual
consolidated financial statements as at 31 December 2020 and the
comparative interim results for the period ended 30 June 2020.
The preparation of Group financial statements in conformity with
IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process
of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements, are disclosed in note 3.
Accounting policies
The interim financial statements have been prepared in
accordance with the accounting policies set out in the Group's
Annual Report and Accounts for the year ended 31 December 2020,
which is available at www.strixplc.com .
Basis of consolidation
The consolidated interim financial statements comprise the
financial statements of the Company and all of its subsidiary
undertakings. Subsidiaries are fully consolidated from the date on
which control commences and are deconsolidated from the date that
control ceases. The financial statements of all Group companies are
adjusted, where necessary, to ensure the use of consistent
accounting policies.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control
exists when the Group is exposed to or has the rights to variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity.
Transactions eliminated on consolidation
Intra-group balances and any gains and losses or income and
expenses arising from intra-group transactions, are eliminated in
preparing the consolidated interim financial statements.
Business combinations
Business combinations are accounted for using the acquisition
method as at the acquisition date with the assets and liabilities
of a subsidiary being measured at their fair values. Any excess of
the cost of acquisition over the fair values of the identifiable
net assets acquired is recognised as goodwill. The Group measures
goodwill at the acquisition date as:
-- the fair value of the consideration transferred; plus
-- the recognised amount of any non-controlling interests
in the acquiree; plus
-- if the business combination is achieved in stages, the
fair value of the pre-existing interest in the acquiree;
less
-- the fair value of the identifiable assets acquired and
liabilities assumed.
Transaction costs that the Group incurs in connection with a
business combination are expensed as incurred.
The Group recognises any non-controlling interest in the
acquired entity on an acquisition-by-acquisition basis either at
fair value or at the non-controlling interest's proportionate share
of the acquired entity's net identifiable assets.
Standards, amendments and interpretations which are not
effective or early adopted:
At the date of approval of the interim financial statements,
there are no new standards and interpretations which are relevant
to the Group which were in issue but not yet effective.
Going concern
These interim financial statements have been prepared on the
going concern basis.
The Directors have made enquiries to assess the appropriateness
of continuing to adopt the going concern basis.
In making this assessment they have considered:
-- the strong historic trading performance of the Group;
-- the current and past profitability of the Group;
-- budgets and cash flow forecasts for the period to December
2023;
-- the current financial position of the Group, including
its cash and cash equivalents balances of GBP15.4m (YE
2020: GBP15.4m);
-- the availability of further funding should this be required
(including the headroom of GBP19.0m (YE 2020: GBP30.0m)
on the revolving credit facility and the access to the
AIM market afforded by the admission to AIM);
-- the current and past ability of the Group to meet its
debt covenants;
-- the low liquidity risk the Group is exposed to; and
-- the Group operates within a sector that is experiencing
relatively stable demand for its products.
Based on these considerations, the Directors have concluded that
there is a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. The key entities in the Group have traded
profitably for a long period of time. As a result, the Directors
continue to adopt the going concern basis of accounting in
preparing the interim financial statements and there are no
material uncertainties about the Group's ability to continue as a
going concern.
As a Company, the dividend-paying entity, Strix Group Plc, has
sufficient reserves from which to make distributions to
shareholders, although the retained reserves of the Group show a
deficit.
EBITDA and adjusted EBITDA - non-GAAP performance measures
Earnings before interest, taxation, depreciation and
amortisation ('EBITDA') and adjusted EBITDA are non-GAAP measures
used by management to assess the operating performance of the
Group. EBITDA is defined as profit before finance costs, finance
income, taxation, depreciation and amortisation. Exceptional items
are excluded from EBITDA to calculate adjusted EBITDA.
The Directors primarily use the adjusted EBITDA measure when
making decisions about the Group's activities. As these are
non-GAAP measures, EBITDA and adjusted EBITDA measures used by
other entities may not be calculated in the same way and hence are
not directly comparable.
Seasonality of operations
The Group's revenue and profit after tax is subject to a degree
of seasonality due primarily to the occurrence of the Chinese New
Year public holiday during the first half of the year ('H1'), when
the Group's major customers and suppliers based in China cease
operations for a period, as well as the impact of the COVID
pandemic in the first half of 2020. In the financial year ended 31
December 2020, 36% (2019: 45%) of the Group's revenue and 30%
(2019: 32%) of the Group's profit after tax accumulated in H1.
Foreign currency translation
Functional and presentational currency
Items included in the financial information of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated interim financial statements are
presented in Sterling, which is Strix Group Plc's functional and
presentation currency.
Transactions and balances
Foreign currency balances are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the condensed interim
consolidated statement of comprehensive income within cost of
sales.
Group companies
The results and financial position of foreign operations that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
-- assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that
balance sheet, or historic rates for certain line items;
-- income and expenses for each condensed interim consolidated
statement of comprehensive income are translated at average
exchange rates (unless this is not a reasonable approximation
of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses
are translated at the dates of the transactions), and
-- all resulting exchange differences are recognised in
the condensed interim consolidated statement of comprehensive
income.
Leases
Leases in which a significant portion of the risks and rewards
of ownership were not transferred to the Group as lessee were
classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessor) were
charged to the statement of comprehensive income on a straight-line
basis over the period of the lease.
The leasing activities of the Group and how these are accounted
for
The Group leases office space, workshops, warehouses and factory
space. Rental contracts are typically made for periods of 3 - 10
years, but may have extension options. Lease terms are negotiated
on an individual basis and contain a wide range of different terms
and conditions. The lease agreements do not impose any covenants,
but leased assets may not be used as security for borrowing
purposes.
Leases are recognised as a right-of-use assets and a
corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated
between the liability, finance costs and foreign exchange (where
the lease is denominated in a foreign currency). The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight line basis.
Measurement of future lease liabilities
Assets and liabilities arising from a lease are initially
measured on a present value basis. Future lease liabilities include
the net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments),
less any lease incentives receivable
-- variable lease payments that are based on an index or
a rate
-- amounts expected to be payable by the lessee under residual
value guarantees
-- the exercise price of a purchase option if the lessee
is reasonably certain to exercise that options, and
-- the payment of penalties for terminating the lease, if
the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Measurement of right-of-use assets
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement
date less any lease incentives received
-- any initial direct costs, and
-- restoration costs
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise
primarily IT equipment.
Extension and termination options
Extension and termination options are included in a number of
property leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts.
3. Critical accounting judgements and estimates
The preparation of these interim financial statements under IFRS
requires the Directors to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities. Estimates and
judgements are continually evaluated and are based on historical
experience and other factors including expectations of future
events that are believed to be reasonable under the
circumstances.
In preparing these interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty are the same
as those that applied to the Group's Annual Report and Accounts for
the year ended 31 December 2020.
4. Segmental reporting
Management has determined the operating segments based on the
operating reports reviewed by the Board of Directors that are used
to assess both performance and strategic decisions. Management has
identified that the Board of Directors is the chief operating
decision maker in accordance with the requirements of IFRS 8
'Operating segments'. The Group's activities consist of the design,
manufacture and sale of thermostatic controls, cordless interfaces,
and other products such as water jugs and filters, primarily to
Original Equipment Manufacturers ("OEMs") based in China.
The Board of Directors has identified 3 reportable segments from
a product perspective, namely: kettle controls, water category and
appliances.
The Board of Directors primarily uses a measure of gross profit
to assess the performance of the operating segments, broken down
into revenue and cost of sales for each respective segment which is
reported to them on a monthly basis. Information about segment
revenue, cost of sales and gross profit is disclosed below.
Reported Results
Period ended 30 June 2021
(GBP000s)
Kettle Water
controls Category Appliances Total
Revenue 39,407 9,978 5,281 54,666
Cost of sales (24,679) (7,747) (4,060) (36,486)
Gross profit 14,728 2,231 1,221 18,180
========== ========== =========== =========
Period ended 30 June 2020
(GBP000s)
Kettle Water
controls Category Appliances Total
Revenue 29,132 5,039 541 34,712
Cost of sales (16,507) (4,051) (390) (20,948)
Gross profit 12,625 988 151 13,764
========== ========== =========== =========
Adjusted Results
Period ended 30 June 2021
(GBP000s)
Kettle Water
controls Category Appliances Total
Revenue 39,407 9,978 5,281 54,666
Cost of sales (22,628) (7,555) (4,023) (34,206)
Adjusted gross profit 16,779 2,423 1,258 20,460
========== ========== =========== =========
Period ended 30 June 2020
(GBP000s)
Kettle Water
controls Category Appliances Total
Revenue 29,132 5,039 541 34,712
Cost of sales (16,507) (4,051) (390) (20,948)
Adjusted gross profit 12,625 988 151 13,764
========== ========== =========== =========
Assets and liabilities
No analysis of the assets and liabilities of each operating
segment is provided to the Board of Directors as part of monthly
management reporting. Therefore no analysis of segmented assets or
liabilities is disclosed in this note.
Non-current assets (i) attributed to country of domicile and
(ii) attributable to all other foreign countries
A geographical analysis of revenue from external customers has
not been presented, as the OEMs to whom the majority of sales are
made are primarily based in China.
In accordance with IFRS 8, the following table discloses the
non-current assets located in both the Company's country of
domicile (the Isle of Man) and foreign countries, primarily China,
where one of the Group's principle subsidiaries is domiciled.
30 June 31 December
2021 2020
GBP000s GBP000s
---------------------------------------------- -------- ------------
Country of domicile
Intangible assets 9,309 8,888
Property, plant and equipment 2,938 2,958
---------------------------------------------- -------- ------------
Total country of domicile non-current assets 12,247 11,846
---------------------------------------------- -------- ------------
Foreign countries
Intangible assets 22,232 20,760
Property, plant and equipment 37,509 34,247
---------------------------------------------- -------- ------------
Total foreign non-current assets 59,741 55,007
---------------------------------------------- -------- ------------
Total non-current assets 71,988 66,853
---------------------------------------------- -------- ------------
Major customers
In the first half of 2021, there were two major customers that
individually accounted for at least 10% of total revenues (2020:
two customers). The revenues relating to these customers in 6
months ended 30 June 2021 were GBP6,624,000 and GBP4,598,000 (2020:
GBP13,683,000 and GBP11,618,000).
Geographical
A geographical analysis of revenue from external customers has
not been presented, as the OEMs to whom sales are made are
primarily based in China.
5. finance costs
Period Period
ended ended
30 June 30 June
2021 2020
GBP000s GBP000s
-------------------------- --------- ---------
Letter of credit charges 43 51
Lease liability interest 51 53
Borrowing costs 592 481
-------------------------- --------- ---------
Total finance costs 686 585
-------------------------- --------- ---------
Further information about the Group's borrowings is provided in
note 14.
6. Earnings per share
The calculation of basic and diluted earnings per share is based
on the following data.
Period Period
ended ended
30 June 30 June
2021 2020
Earnings (GBP000s)
Earnings for the purpose of basic and diluted
earnings per share 7,526 7,318
---------------------------------------------------- --------- ---------
Number of shares (000s)
Weighted average number of shares for the purposes
of basic earnings per share 206,041 198,878
Weighted average dilutive effect of conditional
share awards 3,487 2,872
---------------------------------------------------- --------- ---------
Weighted average number of shares for the purposes
of diluted earnings per share (000s) 209,528 201,750
---------------------------------------------------- --------- ---------
Earnings per ordinary share (pence)
Basic earnings per ordinary share 3.7 3.7
Diluted earnings per ordinary share 3.6 3.6
---------------------------------------------------- --------- ---------
Adjusted earnings per ordinary share (pence)
(1)
Basic adjusted earnings per ordinary share 6.0 4.9
Diluted adjusted earnings per ordinary share 5.9 4.9
---------------------------------------------------- --------- ---------
The calculation of basic and diluted adjusted earnings per share
is based on the following data:
Period Period
ended ended
30 June 30 June
2021 2020
GBP000s GBP000s
----------------------------------- --------- ---------
Profit for the period 7,526 7,318
----------------------------------- --------- ---------
Add back:
Share-based payments 649 1,030
COVID-19 net exceptional costs(2) 332 456
Strategic projects 1,295 673
Reorganisation costs 2,480 358
----------------------------------- --------- ---------
Adjusted earnings (1) 12,282 9,835
----------------------------------- --------- ---------
(1. Adjusted results exclude exceptional items, including
share-based payments. Adjusted results are non-GAAP metrics used by
management and are not an IFRS disclosure.)
(2. COVID-19 net exceptional costs include certain employment
costs and Government support grants.)
The denominators used to calculate both basic and adjusted
earnings per share are the same as those shown above for both basic
and diluted earnings per share.
7. REVENUE
The following table shows a disaggregation of revenue into
categories by product line:
Period Period
ended ended
30 June 30 June
2021 2020
GBP000s GBP000s
----------------- --------- ---------
Kettle controls 39,407 29,132
Water Category 9,978 5,039
Appliances 5,281 541
----------------- --------- ---------
Total revenue 54,666 34,712
----------------- --------- ---------
8. Intangible assetS
For the period ended 30 June 2021
----------------------------------------------------------------------------------------------------
Intangible
assets
Development Intellectual under Customer Brand
costs Software Property construction relationships name Goodwill Total
------------ --------- ------------- ------------- -------------- -------- --------- --------
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 1 January
Cost 12,346 3,286 834 - 2,406 6,643 9,906 35,421
Accumulated
amortisation/impairment (4,999) (710) (64) - - - - (5,773)
---------------------------- ------------ --------- ------------- ------------- -------------- -------- --------- --------
Net book value 7,347 2,576 770 - 2,406 6,643 9,906 29,648
---------------------------- ------------ --------- ------------- ------------- -------------- -------- --------- --------
Period ended 30 June
Additions 1,529 286 119 222 - - - 2,156
Downstream merger of Strix
Italy S.R.L.
into LAICA S.p.A. (below
and note 11) - - - - - - 997 997
Disposals (cost) - (44) (19) - - - - (63)
Disposals (accumulated
depreciation) - 44 28 - - - - 72
Amortisation charges (610) (226) (13) - (103) - - (952)
Exchange differences (19) - (17) - (114) (329) 162 (317)
------------ --------- ------------- ------------- -------------- -------- --------- --------
Closing net book value 8,247 2,636 868 222 2,189 6,314 11,065 31,541
---------------------------- ------------ --------- ------------- ------------- -------------- -------- --------- --------
At 30 June
Cost 13,856 3,528 917 222 2,292 6,314 11,065 38,194
Accumulated
amortisation/impairment (5,609) (892) (49) - (103) - - (6,653)
------------ --------- ------------- ------------- -------------- -------- --------- --------
Net book value 8,247 2,636 868 222 2,189 6,314 11,065 31,541
---------------------------- ------------ --------- ------------- ------------- -------------- -------- --------- --------
All amortisation charges have been treated as an expense, and
allocated to cost of sales GBP826,000 (H1 2020: GBP696,000) and
administrative expenses GBP126,000 (H1 2020: GBP52,000) in the
condensed interim consolidated statement of comprehensive income.
There were no reversals of prior year impairments during the period
(H1 2020: none).
As a result of the downstream merger detailed in note 11,
goodwill has been revalued resulting in an increase of GBP997,000
reclassified from pre-merger retained profits impacted by foreign
exchange differences from the depreciation of the EUR currency.
For the period ended 30 June 2020
---------------------------------------------------------------------
Intangible
Assets
Development Intellectual under
costs Software Property Construction Goodwill Total
----------- -------- ------------ ------------- -------- -------
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 1 January
Cost 9,837 922 488 - 384 11,631
Accumulated amortisation and impairment (4,006) (540) (17) - - (4,563)
---------------------------------------- ----------- -------- ------------ ------------- -------- -------
Net book value 5,831 382 471 - 384 7,068
---------------------------------------- ----------- -------- ------------ ------------- -------- -------
Period ended 30 June
Additions 1,418 27 70 564 - 2,079
Transfers in/(out) - 23 - 1,131 - 1,154
Amortisation charges (626) (113) (9) - - (748)
Exchange differences (170) (5) (22) 9 - (188)
Closing net book value 6,453 314 510 1,704 384 9,365
---------------------------------------- ----------- -------- ------------ ------------- -------- -------
At 30 June
Cost 11,085 967 536 1,704 384 14,676
Accumulated amortisation and impairment (4,632) (653) (26) - - (5,311)
Net book value 6,453 314 510 1,704 384 9,365
---------------------------------------- ----------- -------- ------------ ------------- -------- -------
All amortisation charges have been treated as an expense, and
allocated to cost of sales GBP696,000 (H1 2019: GBP633,000) and
administrative expenses GBP52,000 (H1 2019: GBP55,000) in the
condensed interim consolidated statement of comprehensive
income.
There were no reversals of prior year impairments during the
year. During the period, GBP1,131,000 of assets under construction
were transferred in.
9. Property, plant and equipment
For the period ended 30 June 2021
---------------------------------------------------------------------------------------------------
Fixtures,
Plant fittings Land Assets
& & Motor Production & Right-of-use under
machinery equipment vehicles tools Buildings assets construction Total
---------- ---------- --------- ----------- ---------- ------------- ------------- ---------
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 1 January
Cost 22,750 4,367 137 14,013 3,737 6,533 16,751 68,288
Accumulated depreciation (12,686) (3,428) (95) (12,140) (129) (2,605) - (31,083)
---------------------------- ---------- ---------- --------- ----------- ---------- ------------- ------------- ---------
Net book value 10,064 939 42 1,873 3,608 3,928 16,751 37,205
---------------------------- ---------- ---------- --------- ----------- ---------- ------------- ------------- ---------
Period ended 30 June
Additions 2,533 379 1 260 - 1,443 5,111 9,727
Disposals (cost) (7,051) (990) (29) (901) (2,193) (1,027) (39) (12,230)
Disposals (accumulated
depreciation) 5,720 880 28 833 311 708 - 8,480
Depreciation charge (998) (342) (14) (368) (50) (808) - (2,580)
Exchange differences (39) (6) (1) 1 (30) (77) (3) (155)
---------------------------- ---------- ---------- --------- ----------- ---------- ------------- ------------- ---------
Closing net book value 10,229 860 27 1,698 1,646 4,167 21,820 40,447
---------------------------- ---------- ---------- --------- ----------- ---------- ------------- ------------- ---------
At 30 June
Cost 18,193 3,750 108 13,373 1,514 6,872 21,820 65,630
Accumulated depreciation (7,964) (2,890) (81) (11,675) 132 (2,705) - (25,183)
---------------------------- ---------- ---------- --------- ----------- ---------- ------------- ------------- ---------
Net book value 10,229 860 27 1,698 1,646 4,167 21,820 40,447
---------------------------- ---------- ---------- --------- ----------- ---------- ------------- ------------- ---------
Depreciation charges are allocated to cost of sales GBP2,196,000
(H1 2020: (GBP1,757,000)), distribution costs GBP46,000 (H1 2020:
(GBP61,000)), and administrative expenses GBP338,000 (H1 2020:
(GBP394,000)) in the condensed interim consolidated statement of
comprehensive income.
Included in disposals during the period were assets with a net
book value of GBP1,678,000 that were scrapped for GBPNIL due to the
move from the old to the new manufacturing plant in China, and land
and buildings with a net book value of GBP1,882,000 in the Group's
subsidiary LAICA International Corp. disposed of in a sale and
leaseback arrangement in line with the acquisition agreement for
GBP1,750,000.
For the period ended 30 June 2020
------------------------------------------------------------------------------------------------------
Fixtures,
Plant fittings Land Assets
& & Motor Production & Right-of-use under
machinery equipment vehicles tools Buildings assets construction Total
---------- ----------- ---------- ----------- ----------- ------------- ------------- ---------
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 1 January
Cost 21,924 4,126 130 13,298 1,996 5,386 8,569 55,429
Accumulated
depreciation (14,444) (2,935) (67) (11,291) (33) (1,135) - (29,904)
-------------- ---------- ----------- ---------- ----------- ----------- ------------- ------------- ---------
Net book
value 7,480 1,191 64 2,007 1,963 4,251 8,569 25,525
-------------- ---------- ----------- ---------- ----------- ----------- ------------- ------------- ---------
Period ended
30 June
Additions 1,935 111 - 571 7 203 2,787 5,614
Transfers (36) (43) - 56 - - (1,131) (1,154)
Disposals - - - - - - - -
Depreciation
charge (612) (387) (16) (426) (50) (721) - (2,212)
Exchange
differences 11 (21) - (7) - (79) (41) (137)
-------------- ---------- ----------- ---------- ----------- ----------- ------------- ------------- ---------
Closing net
book value 8,778 851 48 2,201 1,920 3,654 10,184 27,636
-------------- ---------- ----------- ---------- ----------- ----------- ------------- ------------- ---------
At 30 June
Cost 23,834 4,173 130 13,918 2,003 5,509 10,184 59,751
Accumulated
depreciation (15,056) (3,322) (83) (11,717) (83) (1,856) - (32,117)
-------------- ---------- ----------- ---------- ----------- ----------- ------------- ------------- ---------
Net book
value 8,778 851 48 2,201 1,920 3,654 10,184 27,636
-------------- ---------- ----------- ---------- ----------- ----------- ------------- ------------- ---------
Depreciation charges are allocated to cost of sales
GBP1,757,000, distribution costs GBP61,000, and administrative
expenses GBP394,000 in the condensed interim consolidated statement
of comprehensive income.
10. Inventories
30 June 31 December
2021 2020
GBP000s GBP000s
------------------------------------- -------- ------------
Raw materials and consumables 11,397 9,154
Finished goods and goods in transit 8,049 6,070
------------------------------------- -------- ------------
19,446 15,224
------------------------------------- -------- ------------
The cost of inventories recognised as an expense and included in
cost of sales amounted to GBP23,816,000 (H1 2020: GBP 12,189,000 ).
The charge for impaired inventories was GBP157,000 (H1 2020:
GBP129,000). There were no reversals of previous write-downs.
11. PRINCIPAL SUBSIDIARY UNDERTAKINGS OF THE GROUP
A list of all subsidiary undertakings controlled by the Group,
which are all included in the interim financial statements, is set
out below.
% of ordinary % of ordinary
Country shares held shares held
Subsidiary Nature of business of incorporation by the Company by the Group
% %
Sula Ltd Holding company IOM 100 100
Manufacture and sale
Strix Ltd of products IOM - 100
Strix Guangzhou Manufacture and sale
Ltd of products China - 100
Group's sale and
distribution
Strix (U.K.) Ltd centre UK - 100
Strix Hong Kong Sale and distribution
Ltd of products Hong Kong - 100
Construction of
manufacturing
Strix (China) Ltd facility China - 100
HaloSource Water
Purification Technology
(Shanghai) Co. Manufacturing and sales
Ltd of products China - 100
Research and development,
sales, and distribution
Strix (USA), Inc. of products USA - 100
Manufacture and sales
LAICA S.p.A. of products Italy - 100
LAICA Iberia Distribution Sale and distribution
S.L. of products Spain - 100
LAICA International Sale and distribution
Corp. of products Taiwan - 67
Sale and distribution
Taiwan LAICA Corp. of products Taiwan - 67
Foshan Yilai Life
Electric Appliances Sale and distribution
Co. Limited. of products China - 45
LAICA Brand House Holding and licensing
Limited of trademarks Hong Kong - 45
Strix Italy S.R.L. Merged entity Italy - -
(see below)
As part of a Group restructuring that occurred during April
2021, Strix Italy S.R.L was merged into LAICA S.p.A. in a
downstream merger transaction, resulting in Strix (U.K.) Limited
owning 100% of the merged entity's share capital. As a result of
the group restructure, all assets and liabilities of the merged
entity were recognised at net book value amounts at date of the
downstream merger, with goodwill recognised on acquisition of LAICA
S.p.A. in October 2020 being revalued from reclassification of
pre-merger profits impacted by foreign exchange differences from
the depreciation of the EUR currency, in line with IFRS acquisition
accounting allowable within the 12 month look-back period.
12. Trade and other receivables
30 June 31 December
2021 2020
GBP000s GBP000s
--------------------------------------------------- -------- ------------
Amounts falling due within one year:
Trade receivables 12,066 13,355
Loss allowance (76) (159)
--------------------------------------------------- -------- ------------
Trade receivables - net 11,990 13,196
--------------------------------------------------- -------- ------------
Prepayments 994 1,108
Advance purchases of commodities 2,684 2,024
Advance payments to capital expenditure suppliers 2,351 764
Other receivables 3,372 3,580
--------------------------------------------------- -------- ------------
21,391 20,672
--------------------------------------------------- -------- ------------
Trade and other receivables are all current and any fair value
difference is not material.
The amount of trade receivables past due is not material,
therefore an aging analysis has not been presented (2020:
same).
The advance purchase of commodities relates to a payment in
advance to secure the purchase of certain key commodities at an
agreed price to mitigate the commodity price risk.
Movement on the Group's provision for impairment of trade
receivables and the inputs and estimation technique used to
calculate expected credit losses have not been disclosed on the
basis the amounts are not material.
13. Trade and other payables
30 June 31 December
2021 2020
GBP000s GBP000s
------------------------------------ -------- ------------
Trade payables 11,644 10,499
Current income tax liabilities 2,863 3,048
Social security and other taxes 269 316
Other liabilities 10,092 8,242
Payments in advance from customers 3,190 2,955
Accrued expenses 5,625 3,620
Consideration payable - 1,519
------------------------------------ -------- ------------
33,683 30,199
------------------------------------ -------- ------------
The fair value of financial liabilities approximates their
carrying value due to short maturities.
14. Borrowings
30 June 31 December
2021 2020
GBP000s GBP000s
------------------------ -------- ------------
Current bank loans 626 2,220
Non-current bank loans 60,823 50,426
------------------------ -------- ------------
All of the current bank loans comprise of small individual short
term arrangements for financing purchases and optimising cash flows
within the Italian subsidiary and were entered into by LAICA S.p.A.
prior to acquisition by the Group.
Current and non-current borrowings are shown net of loan
arrangement fees of GBP181,000 (2020: GBP175,000) and GBP603,000
(2020: GBP700,000), respectively.
Term and debt repayment schedule for long-term borrowings
31 December
30 June 2020
2021 carrying carrying
Maturity value value
Currency Interest rate date (GBP000s) (GBP000s)
Revolving credit LIBOR +1.50%
facility GBP to + 2.85% 27-May-25 61,000 50,000
EURIBOR +1.10%
Unicredit facility EUR to + 3.60% 28-Jun-24 258 317
EURIBOR +1.10%
Banco BPM EUR to + 3.60% 30-Nov-23 423 536
BNP Paribas EUR 0.3115% 30-Sep-21 168 632
Banca Intesa Sanpaolo EUR 0.2% 29-Oct-21 312 170
EURIBOR 3M +
Banca Intesa Sanpaolo EUR 1,10% 27-Oct-21 68 142
Banca Monte dei Paschi
di Siena EUR 0.9% 1-Feb-21 - 659
LIBOR 1Y + Spread
BANK SINOPAC CO.LTD. TWD 0,755% 29-May-27 - 275
LIBOR 3M + Spread
BANK SINOPAC CO.LTD. TWD 0.750% 23-Jun-21 - 789
On 27 July 2017, the Company entered into an agreement with The
Royal Bank of Scotland Plc (as agent), and the Royal Bank of
Scotland International Limited and HSBC Bank Plc (as original
lenders) in respect of a revolving credit facility of
GBP70,000,000, of which GBP40,000,000 was drawn down as at 31
December 2019. During 2020, the Company refinanced this by entering
into an agreement with The Royal Bank of Scotland Plc (as agent),
along with the Bank of China (UK) Limited and the Bank of Ireland
in respect of a revolving credit facility of GBP80,000,000, with
materially the same terms and covenants as the existing
facility.
On 27 May 2020, the first facility available with Royal Bank of
Scotland Plc through the addition of the Bank of China (UK) Limited
increased to GBP60,000,000, and has continued to increase by a
further GBP20,000,000 on 1 October 2020 by applying for a further
facility with Bank of Ireland through the same. As at 30 June 2021,
the total facilities available are GBP80,000,000 (YE 2020:
GBP80,000,000).
The initial drawdown of GBP50,000,000 allowed for the
refinancing of the existing revolving credit facility as well as
being used to fund the acquisition of LAICA S.p.A.. Additional
amounts may be drawn under the agreement for financing working
capital and for general corporate purposes of the Group.
All amounts become immediately repayable and undrawn amounts
cease to be available for drawdown in the event of a third party
gaining control of the Company. The Company and its material
subsidiaries have entered into the agreement as guarantors,
guaranteeing the obligations of the borrowers under the agreement
(2020: same).
Transactions costs amounting to GBP875,000 incurred as part of
the debt financing with the new facility entered were capitalised
in the prior year and are being amortised over the period of the 5
year facility.
The various agreements contain representations and warranties
which are usual for an agreement of this nature. The agreement also
provides for the payment of a commitment fee, agency fee and
arrangement fee, contains certain undertakings, guarantees and
covenants (including financial covenants) and provides for certain
events of default. During 2021, the Group has not breached any of
the financial covenants contained within the agreements (2020:
same)
Interest applied to the revolving credit facility is calculated
as the sum of the margin and LIBOR. The margin is calculated based
on the Group's leverage as follows:
Leverage Annualised margin
--------------------------------------------- ------------------
Greater than or equal to 2.5x 2.85%
Less than 2.5x but greater than or equal to
2.0x 2.50%
Less than 2.0x but greater than or equal to
1.5x 2.20%
Less than 1.5x but greater than or equal to
1.0x 2.00%
Less than 1.0x 1.50%
At 30 June 2021, the margin applied was 2.00% (31 Dec 2020:
2.00%).
15. CAPITAL Commitments
30 June 31 December
2021 2020
GBP000s GBP000s
------------------------------------------------------ -------- ------------
Contracted for but not provided in the interim
financial statements: Property, plant and equipment 3,222 4,307
------------------------------------------------------ -------- ------------
Construction of new factory
The above commitments include capital expenditure of
GBP1,702,579 (2020: GBP2,810,000) relating to the construction of a
new factory in Zengcheng district, China.
16. Dividends
The following amounts were recognised as distributions in the
period:
Period Period
ended ended
30 June 30 June
2021 2020
GBP000s GBP000s
-------------------------------------------- --------- ---------
Final 2020 dividend of 5.25p per share (H1
2020: 5.1p) 10,831 10,126
-------------------------------------------- --------- ---------
Total dividends recognised in the period 10,831 10,126
-------------------------------------------- --------- ---------
In addition to the above dividend, since the end of the period
the Directors have approved the payment of an interim dividend of
2.75p per share. The aggregate amount of the interim dividend
expected to be paid on 7(th) October 2021 out of retained earnings
at 30 June 2021, but not recognised as a liability at the period
end, is GBP5,679,000. The payment of this dividend will not have
any tax consequences for the Group.
17. FUTURE LEASE LIABILITIES
The table below shows the split of future leases payable between
current and non-current in the condensed interim consolidated
balance sheet:
30 June 31 December
2021 2020
GBP000s GBP000s
---------------------------------------------- --------- ------------
Current future lease liabilities (due within
12 months) 1,241 1,254
Non-current future lease liabilities (due in
more than 12 months) 3,079 2,846
---------------------------------------------- --------- ------------
Total Future Lease Liabilities payable 4,320 4,100
---------------------------------------------- --------- ------------
18. Cash flow statement notes
a) Cash generated from operations
Period Period
ended ended
30 June 30 June
2021 2020
GBP000s GBP000s
----------------------------------------------- --------- ---------
Cash flows from operating activities
Operating profit 9,150 8,112
Adjustments for:
Depreciation of property, plant and equipment
(note 9) 1,772 1,491
Depreciation of right-of-use assets (note
9) 808 721
Amortisation of intangible assets (note
8) 952 748
Share of losses from joint ventures 10 -
Loss/(profit) on disposal of property, 1,678 -
plant and equipment (note 9)
Other non-cash flow items 420 -
Pension contributions made - 59
Share based payment transactions 649 678
Net exchange differences (411) (61)
------------------------------------------------ --------- ---------
15,028 11,748
Changes in working capital:
(Increase)/ decrease in inventories (4,222) (1,674)
(Increase)/ decrease in trade and other
receivables (718) 1,235
Increase / (decrease) in trade and other
payables 4,532 (2,321)
------------------------------------------------ --------- ---------
Cash generated from operations 14,620 8,988
------------------------------------------------ --------- ---------
b) Movement in net debt
Non-cash movements
--------- -------- ------------------------ ---------
At 1 Cash Currency Other At 30
January flows movements movements June
2021 2021
GBP000s GBP000s GBP000s GBP000s GBP000s
--------- -------- ----------- ----------- ---------
Borrowings, net of loan
arrangement fees (52,646) (8,697) - (105) (61,448)
Contingent consideration
(earn-out provisions) - - - (5,551) (5,551)
Lease Liabilities (4,100) 855 - (1,074) (4,319)
--------------------------- --------- -------- ----------- ----------- ---------
Total liabilities from
financing activities (56,746) (7,842) - (6,730) (71,318)
--------------------------- --------- -------- ----------- ----------- ---------
Cash and cash equivalents 15,446 109 (146) - 15,409
--------------------------- --------- -------- ----------- ----------- ---------
Net debt (41,300) (7,733) (146) (6,730) (55,909)
--------------------------- --------- -------- ----------- ----------- ---------
19. RELATED PARTY TRANSACTIONS
Key management compensation
The following table details the aggregate compensation paid in
respect of key management, which includes the Directors and the
members of the Trading Board, representing members of the senior
management team from all key departments of the Group.
Period Period
ended ended
30 June 30 June
2021 2020
GBP000s GBP000s
--------------------------------------------------- --------- ---------
Salaries and other short-term employment benefits 1,208 806
Post-employment benefits 84 81
Termination - 48
Share-based payment transactions 440 820
--------------------------------------------------- --------- ---------
1,732 1,755
--------------------------------------------------- --------- ---------
There are no defined benefit schemes for key management.
20. Post balance sheet events
The Group has no post balance sheet events to disclose.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR LBMLTMTMTBMB
(END) Dow Jones Newswires
September 22, 2021 02:00 ET (06:00 GMT)
Strix (LSE:KETL)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Strix (LSE:KETL)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
