Preliminary Results
Stanelco PLC
27 April 2001
STANELCO PLC
EMBARGOED FOR 07H30 ON FRIDAY 27 APRIL 2001
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS FOR THE YEAR ENDED 31 OCTOBER
2000
CHAIRMAN'S STATEMENT
Results
I am pleased to report that the group continued to build upon the foundations
of growth that were laid down last year, turnover increased 45 per cent and
profits increased as set out below:
Year to 31 October Year to 31 October
2000 1999
£'000 £'000
Turnover 3,602 2,477
Trading Profit - before exceptional 735 326
item
Exceptional research & development (380) -
expenditure
Holding company costs (72) (31)
Net interest receivable/(payable) 16 (17)
Profit on ordinary activities before 299 278
taxation
Taxation (55) (69)
Retained profit for the year 244 209
I am pleased to welcome the appointment of Ian Balchin as full time chief
executive of the group. Ian joins us with an impressive track record as a
team player leading the growth and development of technology businesses. I
would also like to thank Ian Davis for his sterling work overseeing the
building of business foundations that enable us to accelerate the development
of the group. Ian Davis continues his active involvement as an executive
director.
Future prospects
Sales enquiries continue to remain strong and the group has an outstanding
order book of in excess of £2m. Strongest growth looks set to occur in
furnace sales. The introduction of new trading terms should see the group's
consumables business hold steady during the coming year.
Since the end of the financial year we have set up a new subsidiary, InGel
Technologies Limited, as a vehicle to manage the commercial introduction of
certain of our patented technologies with applications in the healthcare
market. We anticipate that if this technology demonstrates production-scale
success then it is likely to generate additional revenue streams to the group
which could include licensing, equipment supply and further development work.
The group continues to actively consider appropriate acquisitions.
Christopher Mills
Chairman
26 April 2001
CHIEF EXECUTIVE'S STATEMENT
Our aim is to continue to develop the Stanelco group into a valuable
technology business.....
The nucleus of our business is the supply of equipment and services to
manufacturers of optical fibre. Our focus in this market is to be the leading
supplier of high technology 'furnaces' required to heat special glasses so
that they can be pulled into fibre. Our heating technology sustains
temperatures in excess of 2000 degrees centigrade for hundreds of hours
enabling optical fibre to be produced at rates exceeding one kilometre per
minute with dimensional tolerances of one ten thousandth of a millimetre.
During the year we extended our product range, successfully introducing
further new graphite based systems to complement our existing zirconia based
systems. This is reflected in our forward order book. We now offer the full
range of industry-accepted systems.
Our plans for 2001 are both to build upon the current business and begin to
diversify into other technological businesses.
1. Low risk extensions to existing businesses
This includes the introduction of new and improved products for the
existing customer base. In addition it includes a number of internal
projects to optimise existing resources, such as factory floor space,
work methods, procurement, and training.
2. Diversification into new markets
a) Based upon core competencies
We shall continue to review business opportunities enabling our core
competencies to be applied to new markets. This includes the novel use
of our heating technology for certain healthcare applications. Our work
in this field with AEA Technology plc has already led to patent
applications. Negotiations with potential licensees have reached an
advanced stage with one organisation currently holding an option to an
exclusive licence, on terms to be agreed. The economics of the
technology have yet to be demonstrated and whilst £130,000 has been
expended its value has yet to be determined and so such cost has been
written off in full. We expect to be able to understand the value of the
technology during 2001, following trials. In anticipation of
positive results we have established InGel Technologies Limited (a wholly
owned subsidiary) to manage the commercial introduction of the
technology. It is our intention to transfer the intellectual property
rights and necessary resources to InGel prior to agreeing any licence.
b) In new areas
During a time of high expectation, the company decided to commit
expenditure investigating various ventures with a view to establishing an
e-commerce marketplace for the distribution of goods, named LogistiGO.
The new marketplace aims to match haulage requirements with haulage
carriers, thus optimising the capacity of the carriers on all routes.
The overall benefits include lower transportation costs and reduced
environmental impact. Whilst Stanelco believes that the business concept
is sound we decided not to provide second round funding to this venture,
since we now have other opportunities to invest in areas of both lower
risk and higher return. It is our view that the viability of the venture
is at risk and as a precaution we have decided to write down the entire
£250,000 expended rather than carry it on the balance sheet. Currently,
there are no plans to explore other opportunities of this kind and no
start-up costs are being carried in the balance sheet.
Given the size of expenditure (£380,000) incurred in diversifying into
new markets these costs have been highlighted separately in the profit
and loss account.
3. Start-ups, spinouts and acquisitions
When the risk to the group from taking on a new business activity is
relatively low, compared to the return, we intend to start up, spin out
and acquire such new technology businesses. There are a number of such
opportunities currently being progressed. Entrepreneurs are invited to
consider working with Stanelco as a possible vehicle for enabling their
venture to happen.
Investor Relations
The group receives many requests for information from shareholders and those
contemplating investment. In direct response we are taking a number of
actions to improve the availability of information on the company. Share
price details are now published in the Evening Standard and Financial Times
and a new website has been launched to coincide with these results,
www.stanelcoplc.com.
I would particularly like to thank our employees for rising to the challenge
of growing our business and creating such a positive working environment. We
look forward to reporting our further progress to shareholders through the
year.
Ian Balchin
Chief Executive
26 April 2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2000
Unaudited Audited
Note 2000 1999
£'000 £'000
Turnover 3,602 2,477
Cost of sales (1,904) (1,309)
Gross profit 1,698 1,168
Distribution costs (27) (11)
Administrative expenses: Research and development 1 (380) -
Other (1,008) (862)
(1,388) (862)
Operating profit 283 295
Interest receivable and similar income 20 3
Interest payable and similar charges (4) (20)
Profit on ordinary activities before taxation 299 278
Taxation (55) (69)
Retained profit for the year 244 209
The calculation of earnings per share is based on the
profit after tax for the year of £244,000 (year to 31
October 1999 - profit £209,000) and 666,224,850
ordinary shares in issue
Basic earnings per share - pence 0.037 0.031
All transactions arise from continuing operations.
All recognised gains and losses are included in the profit and loss account.
CONSOLIDATED BALANCE SHEET AT 31 OCTOBER 2000
Unaudited Audited
2000 2000 1999 1999
£'000 £'000 £'000 £'000
Fixed assets
Tangible assets 242 147
Current assets
Stock 442 182
Debtors 453 804
Cash at bank and in hand 551 274
1,446 1,260
Creditors: amounts falling due within one year (1,167) (1,125)
Net current assets 279 135
Total assets less current liabilities 521 282
Creditors: amounts falling due after more than (3) (11)
one year
Provisions for liabilities and charges (24) (21)
494 250
Capital and reserves
Called up share capital 666 666
Profit and loss account (172) (416)
Equity shareholders' funds 494 250
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2000
Unaudited Audited
Note 2000 1999
£'000 £'000
Net cash inflow from operating activities 2 719 403
Returns on investments and servicing of finance
Interest received 20 3
Interest paid (1) (16)
Finance lease interest paid (3) (4)
Net cash inflow/(outflow) from returns on investments 16 (17)
and servicing of finance
Taxation
Corporation tax paid (61) (4)
Capital expenditure and financial investment
Sale of tangible fixed assets 4 3
Purchase of tangible fixed assets (177) (42)
Net cash (outflow) from capital expenditure and (173) (39)
financial investment
Financing
Repayment of borrowing (90) (105)
Capital element of finance lease rentals (19) (24)
Net cash (outflow) from financing (109) (129)
Increase in cash 392 214
1 EXCEPTIONAL ITEMS
2000 1999
£'000 £'000
Research and development on diversification into new markets
consists of:
Developing heat technology for healthcare applications 130 -
Investigating potential e-commerce opportunities 250 -
380 -
Further details in respect of both of the above items are referred to in the
chairman's and chief executive's statements.
2 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2000 1999
£'000 £'000
Operating profit 283 295
Depreciation of tangible fixed assets 70 43
Loss on sale of tangible fixed assets 8 6
(Increase) in stocks (260) (61)
Decrease/(increase) in debtors 351 (339)
Increase in creditors 255 447
Provision for liabilities and charges 12 12
Net cash inflow from operating activities 719 403
3 DIVIDENDS
The directors are not proposing the payment of a dividend.
4 REPORT AND FINANCIAL STATEMENTS
The information relating to the year ended 31 October 2000 is unaudited and
has been extracted from draft accounts on which the auditors expect to issue
an unqualified opinion.
The information relating to the year ended 31 October 1999 is extracted from
the audited accounts that have been filed at Companies House and on which the
auditors issued an unqualified opinion.
The above financial information does not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985.
5 ANNUAL GENERAL MEETING
The Annual General Meeting will be held at Oliver House, 22 East Barnet Road,
New Barnet, Hertfordshire, EN4 8RN, on 15 June 2001 at 10.00 am.