Strix Group plc (LON:KETL) have today provided results for the year ended 31st December 2020.
Financial Summary
| Adjusted results1 | |||
| 2020 | 2019 | Change | |
| £m | £m | %5 | |
| Revenue | 95.3 | 96.9 | -1.6% |
| Revenue – constant currency basis2 | 95.6 | 96.9 | -1.3% |
| EBITDA3 | 38.1 | 36.9 | +3.2% |
| Gross profit | 39.4 | 39.6 | -0.5% |
| Operating profit | 32.1 | 31.5 | +1.8% |
| Profit before tax | 30.9 | 30.2 | +2.4% |
| Profit after tax | 29.5 | 28.9 | +2.3% |
| Net debt4 | 37.2 | 26.3 | +41.2% |
| Net cash generated from operating activities | 31.2 | 34.4 | -9.2% |
| Basic earnings per share (pence) | 14.9 | 15.2 | -2.0% |
| Total dividend per share (pence) | 7.85 | 7.70 | 2.0% |
1. Adjusted results exclude exceptional items, which include share based payment transactions and other reorganisation and strategic project costs. Adjusted results are non-GAAP metrics used by management and are not an IFRS disclosure.
2. Revenue – constant currency basis, which is defined as 2020 revenue restated at the exchange rates prevailing in 2019, is a non-GAAP metric used by management and is not an IFRS disclosure.
3. 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.
4. Net debt excludes the impact of IFRS 16 lease liabilities, pension liabilities, deferred taxes and earn-out provisions on satisfaction of performance conditions.
5. Figures are calculated from the full numbers as presented in the consolidated financial statements.
Financial Highlights
| • | The Group reported revenue of £95.3m, a decline of 1.6% versus the same period in prior year significantly ahead of COVID-19 scenario planning expectations with marked recovery in H2. |
| • | Gross profit margin has further increased to 41.4% (2019: 40.9%). Adjusted EBITDA increased to £38.1m (2019: £36.9m), representing a 3.2% increase, reflecting the combined impact of product mix, a range of efficiency measures including continued automation and strategic initiatives. |
| • | The Group has significant liquidity providing financial flexibility. |
| • | Net debt (excluding the impact of IFRS 16 lease liabilities) has increased to £37.2m (2019: £26.3m) to fund the LAICA acquisition, continued investment in compelling growth opportunities as well as the new manufacturing operations in China. This represents a net debt/adjusted EBITDA ratio of 1.0x. |
| • | Basic earnings per share and reported diluted earnings per share were 14.9p (2019: 15.2p) and 12.2p (2019: 11.3p) respectively. |
| • | Given the Group’s resilient performance in 2020 and confidence in the continued strength of its cash generation, the Board confirms its intention to increase the total dividend to 7.85 per share in respect of the 2020 financial year, inclusive of the 2.6p per share paid as an interim dividend and in line with its progressive dividend policy that is linked to underlying earnings. |
Strategic Highlights
| • | Updated medium-term targets to double the Group’s revenues over the next five years primarily through organic growth in its water and appliances categories. Alongside this the Company will continue to grow market share in kettle controls. |
| • | Expanded global market share by value of the kettle controls market. |
| • | Acquisition of LAICA successfully completed in October 2020, expanding Strix’s Water category and enhancing its presence in the health and wellness market segment of the appliance category, both of which are growth markets and core to Strix’s sustainability strategy. Integration in line with plan to achieve the identified benefits and the trading performance has been strong over the period delivering double-digit revenue growth. |
| • | New manufacturing operations in China remains on target to be on budget and fully operational by August 2021 as originally scheduled. The press machinery and test lab facilities are being installed and the transfer and commencement of some of the production lines has begun. |
| • | Launched HaloPure technology water purification and disinfection solution and signed a contract to adopt it with Chia Tai Group, one of the leading livestock companies operating in China. |
| • | Continues to strengthen senior management, engineering and commercial teams through strategic recruitment to support medium term objectives. |
Operational Highlights
| • | Production efficiency of core kettle products improved with 67% of all assembly lines now fully automated. |
| • | The U9 series of controls continue to show strong growth with 33 million controls sold to date. The new U90 automation line achieved labour and machine efficiency targets, in line with original projections. |
| • | Focus on continuous improvement, automation and refinement of existing processes has delivered significant improvement in customer quality ppm (parts per million). |
| • | The Group was awarded Supor’s “Best Cooperation” and Xinbao’s “Most Outstanding Contributor” in 2020. |
| • | 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). |
| • | Successfully upgraded to SAP to improve real time data and streamline internal processes. |
Mark Bartlett, Chief Executive Officer of Strix Group plc, said:
“We are pleased to report another resilient trading performance in what has been a challenging year for all. We are particularly proud of the way in which the Company has responded to the pandemic and as a result the Group has produced revenue that is significantly ahead of our COVID-19 scenario planning expectations with a marked recovery in H2. In addition, the combined impact of product mix and a range of efficiency measures, including continued automation and strategic initiatives, has enabled the Group to report an increase in both gross profit margin and the absolute level of EBITDA generated.
“The Board has recently outlined its strategy of doubling revenues in the next five years. Despite recent events, the Board maintains its confidence in achieving this medium-term target, primarily through organic growth in its water and appliances categories whilst continuing to grow market share in kettle controls.
“We are also delighted with the addition of the LAICA team following the successful acquisition in October which will serve to expand Strix’s water category and enhance its presence in the health and wellness segment of the appliance category, both of which are growth markets and enhance Strix’s sustainability strategy.
“The much improved performance in the second half has continued into 2021. The kettle controls category has a strong order book for Q2 giving management confidence in delivering a significantly stronger first half versus last year. In the water category, the Group expects sales of the new products launched in 2020 to accelerate this year as the retailers introduce them to their in-store and online portfolios. 2021 will also see many of the appliances created in 2020 penetrate the 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.
“Given the Group’s resilient performance in 2020 and confidence in the continued strength of its cash generation, the Board confirms its intention to increase total dividend to 7.85p per share in respect of the 2020 financial year. The Group’s commitment to its dividend reflects the Board’s confidence in the outlook for the Group going forward.”
