SPGH.L Regulatory News (SPGH)

Superglass Holdings plc

("Superglass" or the "Company")

Trading Update

Following the recent Board changes and the appointment of a Ken Munro as Chief Executive Officer, the Group provides the following progress update.

The ongoing turnaround plan remains broadly on track, with the delivery of planned cost savings and the continued repositioning of the business towards growing construction markets and more value added products is beginning to yield the positive margin improvements targeted.

As planned, throughout June and July 2015, the Company has undertaken a major capital investment project and has implemented the managed capacity reduction strategy announced last September, which going forward will deliver the planned operational cost savings and increase the focus on revenue quality. During the course of this complex capital project, the Company has taken the opportunity to make further improvements to the operational infrastructure and as a consequence production volumes have been lower than anticipated and a number of other capital projects, some of which have associated cost savings, have necessarily been deferred into the next financial year.

The Company has continued to reposition its revenue with strategic partners that require a richer mix of value added products and the planned improvement in net selling prices following the March price increase has been realised. However, the volume impact of adopting a more disciplined pricing policy which has seen the Company withdraw from lower margin export markets as well as some low value activity in the domestic market, has meant that sales volumes in the second half of the year will now be in line with the first half. 

In keeping with the strategy of adding value to its customers the Company has increased the focus on new product development. The Company has launched a number of new products in recent months, the most significant development being the achievement in May 2015 of British Board of Agrément certification for "Superwhite 34", a cavity wall insulation solution for new build housing. This product opens up a new segment of the market to the Company which will benefit the 2016 financial year.

On 23 July 2015, the UK Government announced it was to cease funding The Green Deal Financing Company, thereby effectively winding down the Green Deal scheme and that the Department for Energy and Climate Change will "work with the building industry and consumer groups to make new policy and build a system that works". This policy change will have a negligible impact on the Company in the short term and depending upon the nature of any replacement scheme, may represent an opportunity over the longer term although none of this is reflected in the Company's projections at this time.

As previously announced, following changes to the supply of glass cullet, which is the Company's key raw material, some issues have been experienced with the material's consistency. In recent months, the Company has made substantial progress with its cullet supplier to stabilise the supply, however the inconsistency of supply has adversely impacted manufacturing cost in the period. The Company continues to work closely with its waste glass supplier to implement a long term solution to provide a reliable supply of cullet of the desired quality specification and is confident that this will be achieved.

The combined impact of all of the factors above is expected to delay the Company's anticipated return to a positive aggregate earnings before interest, tax, depreciation, amortisation and exceptional items which was previously expected in the second half of this financial year. However, the progress made in the second half will demonstrate the substantial improvement in the Company's financial performance over both the first half of the year and the equivalent period last year. The Board is increasingly optimistic that the combination of growing construction markets, the introduction of new higher value products, production efficiencies and tighter overall capacity supports a more positive outlook for price and margin improvement over the coming year.

Following the equity funding received last year the Board continues to impose a strong focus on cash management and can confirm that the Company continues to trade with adequate cash headroom.

Board

On 18 May 2015 the Board announced John Colley's decision to step down as Chairman on 19 June 2015 and the process to find a replacement is expected to be completed in the next few weeks. 

For further information, please contact:

Superglass Holdings PLC

Ken Munro, Chief Executive Officer 01786 451170

Chris Lea, Finance Director

N+1 Singer

Sandy Fraser 020 7496 3000

Nick Owen