15 Jun 2010 07:00
Stadium Group Plc
('Stadium Group' or the 'Company')
Disposal of Branded Plastics Business
&
Trading update
Stadium Group plc, the AIM listed provider of Electronic Manufacturing Services, announces the sale of its branded plastics business ("Branded Plastics") for net cash proceeds of approximately £2.5m. Stadium Group is now focussed solely on its high growth electronics business, which specialises in the provision of Electronic Manufacturing Services ("EMS") and power supply solutions from its operations in the UK and Asia.
In a trading update given below, Stadium Group also reports very strong trading in its core electronics business during the first half of the year, such that results for the six months ending 30 June 2010 are expected to be significantly ahead of the corresponding period last year. Further, even without the contribution of Branded Plastics for the remainder of the year as a consequence of the divestment announced above, the Company is confident of achieving market expectations for the full year.
Background to the disposal
The combined turnover of Stadium Electronics and Stadium Power amounted to £35.3m in 2009, out of a group turnover of £46.6m. This places Stadium Group as one of the leading independent EMS companies in the sector in the UK. In recognition of the critical mass achieved in this core activity, and its significant growth potential, the directors have decided to realise the value of the Group's non-core business in the manufacture and distribution of branded plastic products. The resources released from the sale will facilitate further expansion in this core activity, and reduce net pension obligations.
In the financial year ended 31 December 2009, Branded Plastics contributed turnover of £11.3m and net operating profit of £0.8m to the group.
Details of the disposal
The business and net trading assets of Branded Plastics have been sold to Flambeau Europlast Limited for net cash consideration of approximately £2.5m. This is equivalent to the estimated book value of Branded Plastics at the date of disposal. Precise values are subject to the preparation and agreement of completion accounts.
Stadium Group will retain the freehold property that Branded Plastics operates from, and this will be leased to Flambeau at an annual rental of approximately £0.40m for a flexible term expected to be between six and twelve months. The freehold property comprises of 128,000 square feet at Higham's Park, London and has a current net book value of £2.05m.
The Company intend to pursue opportunities for the sale of the freehold property with vacant possession at the conclusion of the lease, and anticipate that this can be achieved at a value significantly greater than net book value.
Utilisation of proceeds
Stadium intends to utilise the proceeds on sale of the business to provide cash resources for the further development of its EMS and Power business, and to reduce its net pension obligations. Agreement has been reached with the Trustees of the pension fund to make an additional contribution of approximately £0.9m from the net proceeds of the sale.
Trading update
Stadium also announces that revenue growth for the Group for the five months ended 31 May 2010 has been very strong and anticipates the announcement of results for the first half significantly ahead of last year.
The favourable outlook for revenues from the core electronics business in the second half is expected to continue, such that even without the contribution of Branded Plastics for the remainder of the year, the Company remains confident of achieving market expectations for the full year ending 31 December 2010.
For further information please contact:
| Stadium Group plc Nigel Rogers, Chief Executive Stacey Scullion, Marketing Manager | Tel: 01429 852 500 Tel: 01429 852 520 Mob:07773 040 535
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| Walbrook PR Ltd Paul McManus | Tel: 020 7933 8787 Mob: 07980 541 893 Email: paul.mcmanus@walbrookpr.com
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| Brewin Dolphin Andrew Emmott | Tel: 0845 270 8611 Mob: 07713 646 334 |