Not quite on a par with my share of the year (which is CFG) but this is my second best pick for the New Year. Those with a long memory might remember me mentioning this company (STT) last year on SC. Since then this company has made excellent progress and reached 165p before a pull-back to the current 142.5p as details of an acquisition were awaited.
The acquisition has infact turned out to be an absolute belter. before it, STT had produced excellent results, producing earnings of 3.7p at the interim stage and recently said trading was in line for the second half, so looking at 7-7.5p for the full year, before the vastly earnings enhancing acquisition. It may not be an exciting sector, but this is a very impressive growth story and Blackwall has been acquired for an absolute giveaway price.
Blackwall is a business very similar in nature to Straight. Blackwall is a Leeds
based supplier of container solutions for source separated waste to local
authorities, waste management companies, community sector organisations and
private sector businesses. Blackwall also supplies end-users with a
comprehensive range of environmentally friendly home and garden products,
including compost bins and water butts, often through partnerships with local
councils and water companies.
The shares in issue have risen from 7 million to 11.4 million but the acquisition will comfortably more than double profits, hence why STT is now relatively such a cheaper share than before.
And the proof that this acquisition which costs a maximum of 6.75 million including new shares and cash, is so superb is the comment that:
"Unaudited management accounts for the ten months (for Blackwall) ended 31 October 2004 show
turnover of £9.3 million and operating profits of £1.2 million."
Soa p/e of 5.5, on operating profits (which were exceeded by pre tax profits adjusted last year) for the acquired company based on TEN months of this year.
No wonder the whole share issue was hopelessly oversubscribed @130p. I ended up picking up 1800 additional shares in the market at 138.5p .
Like CFG this is one for the year, not for a short term punt.
A gift!
Full Version: A second pick for 2005.
More I see of the acquisition the better the value looks! However the share price simply has taken no account of what should lead to a doubling of profits.
Tipped again in IC today (curse??!).
Nudging all time-high, plenty growth to come.
Nudging all time-high, plenty growth to come.
Nice breakout to all time high today, but my fair value following the acquisition is in the 250-300p region. Plenty more to come. Holding all my shares.
Yet another all time high, excellent RNS after the close:
""Straight announces that, in order to satisfy market demand, Jonathan Straight,
the Company's Chief Executive, has today sold 100,000 shares representing less
than 0.9 per cent. of the Company's issued share capital. There are no further
share disposals anticipated. Durlacher have released Jonathan Straight from his
lock-up arrangements for the purpose of this transaction. Post disposal,
Jonathan Straight's shareholding represents 41.7 per cent. of issued share
capital."
""Straight announces that, in order to satisfy market demand, Jonathan Straight,
the Company's Chief Executive, has today sold 100,000 shares representing less
than 0.9 per cent. of the Company's issued share capital. There are no further
share disposals anticipated. Durlacher have released Jonathan Straight from his
lock-up arrangements for the purpose of this transaction. Post disposal,
Jonathan Straight's shareholding represents 41.7 per cent. of issued share
capital."
I'm sorry Jonathan, that simply will not do!! 
Tut-tut, nearly 40,000 bought yesterday up another 5p. by Wednesday at that rate the mms will be on your case again!
Tut-tut, nearly 40,000 bought yesterday up another 5p. by Wednesday at that rate the mms will be on your case again!
And another 50k snapped up this morning. Talking to myself, but not too bothered!
You've picked a good one here Eyecatcher. I should have gone long when you first mentioned it. I'm still not in.
Hi Chester, another big move today. The magnitude and quality of that acquisition really was missed by the market!
Don't remind me.......
Hi Chester I gather you have joined us! Welcome aboard! 
I banked profits briefly after a 50%+ rise in a few weeks, back in this morning @c.198p. The pullback was on very thin volume in line with a general market fall and i think we are ready to push on again.
I banked profits briefly after a 50%+ rise in a few weeks, back in this morning @c.198p. The pullback was on very thin volume in line with a general market fall and i think we are ready to push on again.
I doubled my holding around £2.
One for the long term.
One for the long term.
Yes, I've finally got into this one. Better late than never !!
Nice opportunity after a pull back. Remain very keen on this - way undervalued imho. Last year's finals were on April 20th.
Only able to buy a few online but am in as well. This year is April 20th as well as far as I know.
To set us up here were the H1's for this year:
http://www.hemscott.com/scripts/AFXHeadlin...D?EPIC=STT&IR=0
To set us up here were the H1's for this year:
QUOTE
LONDON (AFX) - Straight PLC said its turnover for the six months to June 30
2004 was 7.4 mln stg, ahead of expectations and compared with the full year's
turnover of 10.2 mln stg in 2003.
The improvement was mainly boosted by a substantial increase in sales of
higher value items, from the company's range of kerbside containers. Its
recently introduced range of wheeled refuse containers also formed a significant
part of the sales, albeit at a lower margin.
Retail sales were slow in the first half due to generally poor weather.
However, the new retail catalogue, which was completed in May, should help to
increase sales in the second half, the company added.
Operating costs were a little higher than expected mainly due to seasonal
expenditure on marketing and IT revenue expenditure, both of which are expected
to reduce in the second half.
Straight made a pretax profit of 351,000 stg in the six months under review,
which compares favourably with profits of 451,000 stg for the whole of 2003.
2004 was 7.4 mln stg, ahead of expectations and compared with the full year's
turnover of 10.2 mln stg in 2003.
The improvement was mainly boosted by a substantial increase in sales of
higher value items, from the company's range of kerbside containers. Its
recently introduced range of wheeled refuse containers also formed a significant
part of the sales, albeit at a lower margin.
Retail sales were slow in the first half due to generally poor weather.
However, the new retail catalogue, which was completed in May, should help to
increase sales in the second half, the company added.
Operating costs were a little higher than expected mainly due to seasonal
expenditure on marketing and IT revenue expenditure, both of which are expected
to reduce in the second half.
Straight made a pretax profit of 351,000 stg in the six months under review,
which compares favourably with profits of 451,000 stg for the whole of 2003.
http://www.hemscott.com/scripts/AFXHeadlin...D?EPIC=STT&IR=0
QUOTE
Highlights:
* Turnover at #12.8 million - up 26%
* Pre tax profits at #711,000 - up 58%
* Earnings per share at 7.5p
* Adjusted earnings per share up from 4.9p to 7.5p
* Acquisition of Blackwall Limited
* Order book at record levels
Commenting on the results, James Newman, Chairman, said
"2004 has been another successful year for the Company. Considerable progress
has been made in improving margins on the trade side of the business. Looking
forward, once Blackwall has been fully integrated, the Company will continue to
look at further ways to expand its business activities."
Jonathan Straight, Chief Executive, added
"Through 2005, we expect to continue to grow organically and profitably in the
waste and recycling container market. We will capitalise on all retail
opportunities and maximise both up-selling to existing customers and
cross-selling through our trade activity. Finally, we plan to make significant
strides forward with our material handing division."
Contacts
Company: James Newman/Jonathan Straight - 0113 245 2244
Simon Mountford Communications: Simon Mountford - 01347 844844
Durlacher Limited: Matthew Robinson/Katherine Roe - 0207 459 3600
The preliminary announcement was approved by the Board on 18 April 2005
Chairman's Statement
2004 has been another successful year for the Company, this being its first full
year following admission to AIM in November 2003.
Results
Turnover for the year grew significantly by 26% to #12.8m. This growth was
achieved despite a disappointing performance from our retail sales campaigns.
Trade sales, however, remained buoyant throughout the year and the order book
going into 2005 was at record levels.
Considerable progress has also been made in improving margins on the trade side
of the business with more use of UK suppliers and the benefits starting to
accrue from the capital expenditure on new product tooling.
Profit before tax at #711,000 was 58% up on 2003's result, after absorbing a
full year's costs of being a listed company.
Dividend
In the year, the Board declared and paid an interim dividend of 0.8p per share.
On 17 January 2005 the Board declared a final dividend for the year 2004 of 1.6p
per share, making a total dividend for the year of 2.4p per share. This was in
line with the statement made in the Prospectus at the time of the flotation in
2003.
This final dividend is payable on 27 May 2005 to shareholders on the register at
7 January 2005.
Materials Handling Division
During the year, our materials handling division was developed in conjunction
with our long time US supplier, The Rehrig Pacific Company. Two experienced
sales personnel were recruited and are pursuing a number of exciting
opportunities in a market place which is significantly larger than our own but
has relatively few good UK suppliers.
The Board intends to expand this division, being both complementary and having a
similar business model, to the company's existing activities.
Acquisition of Blackwall and Share Placing
In December, the Board announced that it had successfully provisionally placed
3.8m new shares at 130p to fund the acquisition of Blackwall Limited ('
Blackwall'), a company also based in Leeds, carrying out similar activities to
your company. The total cost of the acquisition was #6.75 million.
Following shareholder approval of the placing and acquisition at an
Extraordinary General Meeting of the Company on 17 January 2005, the new shares
were admitted to AIM on l8 January 2005 and the acquisition completed on 19
January 2005.
I am pleased to report that the integration of the two businesses is proceeding
ahead of our expectations and that the combination of the Blackwall retail brand
name and Straight's high profile in trade and B2B activities has given the
Company a strong position in the market place for specialist waste containers.
Board and Employees
I would like to thank my Board colleagues for their support during a very busy
year and all employees for their time and efforts to overcome the many
challenges which inevitably arose in a business which has again grown
substantially for yet another year.
Outlook
Much has been achieved in 2004. Looking forward, once Blackwall has been fully
integrated, the Company will continue to look at further ways to expand its
business activities.
Recycling, and especially household recycling, is fast becoming part of the
fabric of UK society as it is already in many parts of Europe. The Government
continues to make funds available to our customers to expand existing and create
new recycling schemes. More funds and fiscal action are, however, still needed
in order to achieve the targets the Government has set itself.
The Company's unique position in being able to provide products and services in
this expanding market, should mean another year of organic growth in 2005
James H Newman
Chairman 18 April 2005
Chief Executive's Review
Floating Straight onto the AIM market at the end of 2003 was the single most
important event in the Company's history. In 2004 the challenge was to deliver
on the promises we had made at that time.
The goals set out on flotation were to expand the business by developing new
products and increase market penetration through the creative use of the funds
raised. In addition, we were tasked with building a strong management structure
to allow for growth and develop a system of sharing our success across the
entire team. Finally, it was necessary to seek out suitable companies for
acquisition in order to build on our own organic growth.
I am pleased to advise that in many respects these goals have been met. A series
of product launches and an increase in our overall marketing activity has
resulted in a substantial increase in turnover. Key appointments have
strengthened the management structure and helped to build a strong and dynamic
team. The culmination of our work through 2004 was the acquisition of Blackwall,
long considered our biggest rival. This was concluded earlier this year.
Waste and recycling container business
During 2004, we maintained our lead in the kerbside box market and consolidated
our position as a key supplier of wheeled bins. Innovation in containers for
organic waste, bulk sales of home composters and strong sales of our systems for
workplace recycling also contributed. Sales in this sector rose 37% from #8.3m
to #11.4m.
Home and garden products business
Our business supplying home composters and water butts failed to make the
predicted contribution through 2004 with sales of #1.4m, falling from #1.9m
achieved in 2003. Although poor weather led to a flat season for the sector in
general, our retail catalogue came out too late in the year to make a real
impact. Bulk sales to WRAP also replaced some of the retail activity we may
have achieved ourselves.
I am pleased to advise that the 2005 catalogue is already being distributed and
is being favourably received.
Materials handling division
Working on the same model as our core activity, the launch of our materials
handling division, in partnership with The Rehrig Pacific Company, a world
leader in this field, demonstrates a commitment to a long term growth strategy.
The appointment of two specialised and experienced sales people has allowed
tremendous headway to be made.
Whilst this market sector only made a small contribution in 2004, we will
shortly be commencing production of a new range of distribution containers and
hope to make a number of contract announcements in the coming weeks and months.
Acquisitions
Despite a growing market, we felt that competitive pressures were likely to
continue to restrict progress. There was general agreement amongst the board
that a quantum leap was needed in order to propel the Company forward.
In the last few years, we have established ourselves as the lead player in the
kerbside container market and second in the home composter market. Blackwall was
the clear leader in home composters, and recently had made substantial in-roads
into the growing kerbside containers market. Furthermore, we both were running
water conservation campaigns with UK water companies.
The case for making the acquisition was compelling. It would give us the lead in
all of our specialist niche markets and would be significantly earnings
enhancing. Their existing UK supplier base was an attractive proposition in
order to increase our own domestic production and provide a platform for our
future expansion. Their well developed retail business also appeared a perfect
fit with our own. Finally, a strong middle management team running the business
provided the resource to expand the combined operation.
To date, we have fully combined the retail side of both businesses with the
consolidation of our contact centres and carrier networks. A major investment in
IT is now allowing the remaining elements to be integrated. The market has been
generally well disposed to this move, especially due to the sense of continuity
afforded by the continued involvement of the former Blackwall directors as
consultants to the business.
Contract awards
Significant contract awards in the latter half of 2004 included an #820,000
award from Kettering Borough Council in kerbside boxes, wheeled bins and home
delivery services and a #608,000 contract to supply Somerset's councils with
kerbside containers for organic waste along with our newly-designed kitchen
caddy developed in conjunction with them.
A second #1m contract to supply wheeled bins to Northampton Borough Council will
help to drive turnover forward in 2005.
At the close of 2004, our order book was at a record level. Combined with the
Blackwall order book, we entered 2005 with #9m of business to fulfill.
Management and employees
In April 2004, James Mellor was promoted from Financial Controller to Finance
Director, a role which he has since fulfilled with dedication and attention to
detail. Of particular note has been his focus on cashflow, which has transformed
the financial health of the business.
Appointments were made in the logistics, sales and marketing departments.
With the acquisition of Blackwall, we have gained five key middle-mangers, who
have been successfully integrated into the new enlarged structure.
Outlook
Through 2005, we expect to continue to grow organically and profitably in the
waste and recycling container market. We will capitalise on all retail
opportunities and maximise both up-selling to existing customers and
cross-selling through our trade activity. Finally, we plan to make significant
strides forward with our material handing division.
As always, our success is also due to the sterling efforts of my colleagues on
the board and all of our staff throughout the organisation.
We look forward to 2005 with confidence, as the leader of a growing market,
which will allow us to deliver added value to our shareholders.
Jonathan M Straight
Chief Executive 18 April 2005
Finance Director's Review
I am pleased to report that the increase in activity enjoyed by the Company in
2003 has been enjoyed once again in 2004, with overall sales 26% higher. The
Company has achieved this growth whilst improving margins and releasing cash
from working capital.
Operating margins
Gross margin has increased from 12.1% in 2003 to 15.3% in 2004. This improvement
is attributable to improved management of large contracts following the
strengthening of the project team, increased UK manufacture which has reduced
carriage inwards costs and a close monitoring of overheads.
Operating margin has increased from 4.3% to 5.0%. This improvement has been
achieved after accounting for the year on year cost increases of over #200,000
incurred directly as a result of becoming a listed company in late 2003.
The Company looks forward with confidence to consolidating its supplier base
with that of Blackwall in 2005 in order to further maximise cost reduction
opportunities.
Operating cashflow
During a year of substantially increased turnover, I am pleased to report that
we have been able to considerably reduce the amount of cash tied up in working
capital. A particular focus on debtors, following a newly introduced and
disciplined approach to cash collection, has resulted in a #1.3m reduction in
trade debtors.
Cash generated from operating activities was #1.5m, up from #0.2m in 2003.
Capital expenditure
The Company invested #280,000 in tooling and IT during the year. This trend
will continue as the Company develops its strategy of maintaining control of
products and margins by tool ownership and innovative design, and a desire to
offer best service through investment in IT infrastructure.
Earnings per share
Basic earnings per share were 7.5p (2003: 23.6p).
Adjusted earnings per share, reported as though all shares issued at 31 December
2003 had been in issue for the whole of 2003 and 2004, has increased by 53% from
4.9p to 7.5p.
Outlook
Overall, the Company remains both profitable and cash generative and, as a
combined business with Blackwall in 2005, I am confident that this pattern will
continue.
James D Mellor
Finance Director and Company Secretary l8 April 2005
Summarised Profit and Loss Account
For the year ended 31 December 2004 (unaudited)
2004 2003
Note #'000 #'000
Turnover 2 12,807 10,180
Cost of sales 3 (10,850) (8,947)
_____ _____
Gross profit 1,957 1,233
Operating expenses 3 (1,319) (798)
_____ _____
Operating profit 638 435
Interest receivable 4 73 16
_____ _____
Profit on ordinary activities before taxation 2 711 451
Taxation 5 (192) (113)
_____ _____
Profit for the financial year 519 338
Dividends 6 (166) -
_____ _____
Profit retained and transferred to reserves 353 338
_____ _____
Basic earnings per share (p) 7 7.5 23.6
Diluted earnings per share (p) 7 7.3 23.5
All operations are continuing.
There were no recognised gains or losses other than the profit for the financial
year.
Summarised Balance Sheet
At 31 December 2004 (unaudited)
2004 2003
#'000 #'000
Fixed assets
Tangible fixed assets 460 290
Investments - -
_____ _____
460 290
Current assets
Stocks 312 199
Debtors 2,055 3,303
Cash at bank and in hand 2,915 1,758
_____ _____
5,282 5,260
Creditors: amounts falling due within one year (3,120) (3,267)
_____ _____
Net current assets 2,162 1,993
Total assets less current liabilities 2,622 2,283
Provisions for liabilities and charges (17) (14)
_____ _____
Net assets 2,605 2,269
_____ _____
Capital and reserves
Called up share capital 69 69
Share premium account 1,158 1,175
Profit and loss account 1,378 1,025
_____ _____
Equity shareholders' funds 2,605 2,269
_____ _____
Summarised Cash Flow Statement
For the year ended 31 December 2004 (unaudited)
2004 2003
Note #'000 #'000
Net cash inflow from operating activities 8 1,550 203
_____ _____
Returns on investments and servicing of finance
Interest received 58 16
_____ _____
Net cash inflow from returns on investments
and servicing of finance 58 16
Taxation (99) (61)
Capital expenditure
Purchase of tangible fixed assets (280) (267)
Disposal of tangible fixed assets 1 -
_____ _____
Net cash outflow from capital expenditure (279) (267)
_____ _____
Equity dividends (56) -
Management of liquid resources
Purchase of short term deposits (1,500) -
_____ _____
Net cash (outflow) before financing (326) (109)
Financing
Issue of share capital - 1,524
Costs of share issue (17) (289)
_____ _____
Net cash (outflow)/inflow from financing (17) 1,235
_____ _____
(Decrease)/increase in cash (343) 1,126
_____ _____
Notes to the Preliminary Announcement
For the year ended 31 December 2004 (un-audited)
1. Basis of preparation
The preliminary announcement has been prepared under the historic cost
convention in accordance with applicable accounting standards. The
principal accounting policies of the Company have remained unchanged from
those set out in the Company's 2003 Financial Statements.
2. Turnover and profit on ordinary activities before taxation
The profit on ordinary activities before taxation is stated after the costs
stated below (except for those costs relating to the share issue).
2004 2003
#'000 #'000
Depreciation of owned assets 108 37
Operating lease rentals 62 62
Auditors' remuneration - audit services 13 13
Auditors' remuneration - other services 2 41
3. Cost of sales and operating expenses
2004 2003
#'000 #'000
Cost of sales 10,850 8,947
Operating expenses
Distribution costs 442 360
Administrative expenses 877 438
_____ _____
1,319 798
_____ _____
4. Interest receivable
2004 2003
#'000 #'000
On bank deposits 55 16
Short term deposits 18 -
_____ _____
73 16
_____ _____
5. Taxation
2004 2003
#'000 #'000
Corporation tax at an average rate of 27% (2003: 23%) 189 99
Deferred tax 3 14
_____ _____
192 113
_____ _____
Analysis of current tax charge
Profit on ordinary activities before tax 711 451
_____ _____
Profit on ordinary activities multiplied by
standard rate of Corporation tax in the UK
(30%) (2003: 30%) 213 135
Expenses not deductible for tax purposes 7 17
Capital allowances in excess of depreciation (9) (24)
Marginal relief (22) (29)
_____ _____
189 99
_____ _____
6. Dividends
2004 2003
#'000 #'000
Equity dividends
Interim dividend of 0.8p per share paid 10
December 2004 56 -
Final declared dividend of 1.6p per share 110 -
_____ _____
166 -
_____ _____
The final dividend is payable on 27 May 2005 to all shareholders who were on the
register of members at 7 January 2005.
7. Earnings per share
Basic and diluted earnings per share
Basic earnings per share are calculated on the basis of profit for the year
after tax divided by the weighted average number of shares in issue for the
year.
Diluted earnings per share are calculated on the basis of profit for the
year after tax divided by the weighted average number of shares in issue
for 2004 plus the weighted average number of shares which would be issued
if all the options granted were exercised.
All options were dilutive at 31 December 2004.
7. Earnings per share (continued)
2004 2003
Weighted Weighted
Earnings average no. Per share Earnings
average no. Per share
#'000 of shares pence #'000 of shares pence
Basic earnings attributable
to ordinary shareholders 519 6,903,750 7.5 338
1,431,733 23.6
Dilutive effect of securities
options - 159,512 (0.2) - 3,758
(0.1)
_____ ________ ____ ____ ________ ____
Diluted earnings per share 519 7,063,262 7.3 338 1,435,491 23.5
_____ ________ ____ ____
________ ____
Adjusted earnings per share
In order to improve comparability with 2003, we have calculated adjusted
earnings per share as if all shares issued at 31 December 2003 had been in issue
throughout that year.
2004 2003
No. No.
Earnings of shares Per share Earnings of share Per share
#'000 in issue pence #'000 in issue pence
Basic earnings attributable
to ordinary shareholders 519 6,903,750 7.5 338 6,903,750 4.9
____ ________ ___ ____ ________
___
8. Reconciliation of operating profit to net cash flow from operating
activities
2004 2003
#'000 #'000
Operating profit 638 435
Depreciation 108 37
Loss on sale of tangible fixed assets 1 -
Increase in stocks (113) (4)
Decrease/(increase) in debtors 1,263 (1,835)
(Decrease)/increase in creditors (347) 1,570
_____ _____
1,550 203
_____ _____
9. Reconciliation of net cash flow to movement in net funds
2004 2003
#'000 #'000
(Decrease)/increase in cash in the year (343) 1,126
Purchase of short term deposits 1,500 -
Net funds at 1 January 1,758 632
_____ _____
Net funds at 31 December 2,915 1,758
_____ _____
10. Publication of non statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies
Act 1985.
The summarised balance sheet at 31 December 2004, the summarised profit and
loss account, summarised cash flow statement and associated notes for the
year then ended, have been extracted from the Company's financial
statements. Those financial statements have not yet been delivered to the
Registrar, nor have the auditors reported on them.
11. Annual General Meeting
The Annual General Meeting of the Company will be held in Leeds on Monday 4
July 2005. Full details will be included in the published Annual Report
and Financial Statements which will be sent to shareholders in due course.
* Turnover at #12.8 million - up 26%
* Pre tax profits at #711,000 - up 58%
* Earnings per share at 7.5p
* Adjusted earnings per share up from 4.9p to 7.5p
* Acquisition of Blackwall Limited
* Order book at record levels
Commenting on the results, James Newman, Chairman, said
"2004 has been another successful year for the Company. Considerable progress
has been made in improving margins on the trade side of the business. Looking
forward, once Blackwall has been fully integrated, the Company will continue to
look at further ways to expand its business activities."
Jonathan Straight, Chief Executive, added
"Through 2005, we expect to continue to grow organically and profitably in the
waste and recycling container market. We will capitalise on all retail
opportunities and maximise both up-selling to existing customers and
cross-selling through our trade activity. Finally, we plan to make significant
strides forward with our material handing division."
Contacts
Company: James Newman/Jonathan Straight - 0113 245 2244
Simon Mountford Communications: Simon Mountford - 01347 844844
Durlacher Limited: Matthew Robinson/Katherine Roe - 0207 459 3600
The preliminary announcement was approved by the Board on 18 April 2005
Chairman's Statement
2004 has been another successful year for the Company, this being its first full
year following admission to AIM in November 2003.
Results
Turnover for the year grew significantly by 26% to #12.8m. This growth was
achieved despite a disappointing performance from our retail sales campaigns.
Trade sales, however, remained buoyant throughout the year and the order book
going into 2005 was at record levels.
Considerable progress has also been made in improving margins on the trade side
of the business with more use of UK suppliers and the benefits starting to
accrue from the capital expenditure on new product tooling.
Profit before tax at #711,000 was 58% up on 2003's result, after absorbing a
full year's costs of being a listed company.
Dividend
In the year, the Board declared and paid an interim dividend of 0.8p per share.
On 17 January 2005 the Board declared a final dividend for the year 2004 of 1.6p
per share, making a total dividend for the year of 2.4p per share. This was in
line with the statement made in the Prospectus at the time of the flotation in
2003.
This final dividend is payable on 27 May 2005 to shareholders on the register at
7 January 2005.
Materials Handling Division
During the year, our materials handling division was developed in conjunction
with our long time US supplier, The Rehrig Pacific Company. Two experienced
sales personnel were recruited and are pursuing a number of exciting
opportunities in a market place which is significantly larger than our own but
has relatively few good UK suppliers.
The Board intends to expand this division, being both complementary and having a
similar business model, to the company's existing activities.
Acquisition of Blackwall and Share Placing
In December, the Board announced that it had successfully provisionally placed
3.8m new shares at 130p to fund the acquisition of Blackwall Limited ('
Blackwall'), a company also based in Leeds, carrying out similar activities to
your company. The total cost of the acquisition was #6.75 million.
Following shareholder approval of the placing and acquisition at an
Extraordinary General Meeting of the Company on 17 January 2005, the new shares
were admitted to AIM on l8 January 2005 and the acquisition completed on 19
January 2005.
I am pleased to report that the integration of the two businesses is proceeding
ahead of our expectations and that the combination of the Blackwall retail brand
name and Straight's high profile in trade and B2B activities has given the
Company a strong position in the market place for specialist waste containers.
Board and Employees
I would like to thank my Board colleagues for their support during a very busy
year and all employees for their time and efforts to overcome the many
challenges which inevitably arose in a business which has again grown
substantially for yet another year.
Outlook
Much has been achieved in 2004. Looking forward, once Blackwall has been fully
integrated, the Company will continue to look at further ways to expand its
business activities.
Recycling, and especially household recycling, is fast becoming part of the
fabric of UK society as it is already in many parts of Europe. The Government
continues to make funds available to our customers to expand existing and create
new recycling schemes. More funds and fiscal action are, however, still needed
in order to achieve the targets the Government has set itself.
The Company's unique position in being able to provide products and services in
this expanding market, should mean another year of organic growth in 2005
James H Newman
Chairman 18 April 2005
Chief Executive's Review
Floating Straight onto the AIM market at the end of 2003 was the single most
important event in the Company's history. In 2004 the challenge was to deliver
on the promises we had made at that time.
The goals set out on flotation were to expand the business by developing new
products and increase market penetration through the creative use of the funds
raised. In addition, we were tasked with building a strong management structure
to allow for growth and develop a system of sharing our success across the
entire team. Finally, it was necessary to seek out suitable companies for
acquisition in order to build on our own organic growth.
I am pleased to advise that in many respects these goals have been met. A series
of product launches and an increase in our overall marketing activity has
resulted in a substantial increase in turnover. Key appointments have
strengthened the management structure and helped to build a strong and dynamic
team. The culmination of our work through 2004 was the acquisition of Blackwall,
long considered our biggest rival. This was concluded earlier this year.
Waste and recycling container business
During 2004, we maintained our lead in the kerbside box market and consolidated
our position as a key supplier of wheeled bins. Innovation in containers for
organic waste, bulk sales of home composters and strong sales of our systems for
workplace recycling also contributed. Sales in this sector rose 37% from #8.3m
to #11.4m.
Home and garden products business
Our business supplying home composters and water butts failed to make the
predicted contribution through 2004 with sales of #1.4m, falling from #1.9m
achieved in 2003. Although poor weather led to a flat season for the sector in
general, our retail catalogue came out too late in the year to make a real
impact. Bulk sales to WRAP also replaced some of the retail activity we may
have achieved ourselves.
I am pleased to advise that the 2005 catalogue is already being distributed and
is being favourably received.
Materials handling division
Working on the same model as our core activity, the launch of our materials
handling division, in partnership with The Rehrig Pacific Company, a world
leader in this field, demonstrates a commitment to a long term growth strategy.
The appointment of two specialised and experienced sales people has allowed
tremendous headway to be made.
Whilst this market sector only made a small contribution in 2004, we will
shortly be commencing production of a new range of distribution containers and
hope to make a number of contract announcements in the coming weeks and months.
Acquisitions
Despite a growing market, we felt that competitive pressures were likely to
continue to restrict progress. There was general agreement amongst the board
that a quantum leap was needed in order to propel the Company forward.
In the last few years, we have established ourselves as the lead player in the
kerbside container market and second in the home composter market. Blackwall was
the clear leader in home composters, and recently had made substantial in-roads
into the growing kerbside containers market. Furthermore, we both were running
water conservation campaigns with UK water companies.
The case for making the acquisition was compelling. It would give us the lead in
all of our specialist niche markets and would be significantly earnings
enhancing. Their existing UK supplier base was an attractive proposition in
order to increase our own domestic production and provide a platform for our
future expansion. Their well developed retail business also appeared a perfect
fit with our own. Finally, a strong middle management team running the business
provided the resource to expand the combined operation.
To date, we have fully combined the retail side of both businesses with the
consolidation of our contact centres and carrier networks. A major investment in
IT is now allowing the remaining elements to be integrated. The market has been
generally well disposed to this move, especially due to the sense of continuity
afforded by the continued involvement of the former Blackwall directors as
consultants to the business.
Contract awards
Significant contract awards in the latter half of 2004 included an #820,000
award from Kettering Borough Council in kerbside boxes, wheeled bins and home
delivery services and a #608,000 contract to supply Somerset's councils with
kerbside containers for organic waste along with our newly-designed kitchen
caddy developed in conjunction with them.
A second #1m contract to supply wheeled bins to Northampton Borough Council will
help to drive turnover forward in 2005.
At the close of 2004, our order book was at a record level. Combined with the
Blackwall order book, we entered 2005 with #9m of business to fulfill.
Management and employees
In April 2004, James Mellor was promoted from Financial Controller to Finance
Director, a role which he has since fulfilled with dedication and attention to
detail. Of particular note has been his focus on cashflow, which has transformed
the financial health of the business.
Appointments were made in the logistics, sales and marketing departments.
With the acquisition of Blackwall, we have gained five key middle-mangers, who
have been successfully integrated into the new enlarged structure.
Outlook
Through 2005, we expect to continue to grow organically and profitably in the
waste and recycling container market. We will capitalise on all retail
opportunities and maximise both up-selling to existing customers and
cross-selling through our trade activity. Finally, we plan to make significant
strides forward with our material handing division.
As always, our success is also due to the sterling efforts of my colleagues on
the board and all of our staff throughout the organisation.
We look forward to 2005 with confidence, as the leader of a growing market,
which will allow us to deliver added value to our shareholders.
Jonathan M Straight
Chief Executive 18 April 2005
Finance Director's Review
I am pleased to report that the increase in activity enjoyed by the Company in
2003 has been enjoyed once again in 2004, with overall sales 26% higher. The
Company has achieved this growth whilst improving margins and releasing cash
from working capital.
Operating margins
Gross margin has increased from 12.1% in 2003 to 15.3% in 2004. This improvement
is attributable to improved management of large contracts following the
strengthening of the project team, increased UK manufacture which has reduced
carriage inwards costs and a close monitoring of overheads.
Operating margin has increased from 4.3% to 5.0%. This improvement has been
achieved after accounting for the year on year cost increases of over #200,000
incurred directly as a result of becoming a listed company in late 2003.
The Company looks forward with confidence to consolidating its supplier base
with that of Blackwall in 2005 in order to further maximise cost reduction
opportunities.
Operating cashflow
During a year of substantially increased turnover, I am pleased to report that
we have been able to considerably reduce the amount of cash tied up in working
capital. A particular focus on debtors, following a newly introduced and
disciplined approach to cash collection, has resulted in a #1.3m reduction in
trade debtors.
Cash generated from operating activities was #1.5m, up from #0.2m in 2003.
Capital expenditure
The Company invested #280,000 in tooling and IT during the year. This trend
will continue as the Company develops its strategy of maintaining control of
products and margins by tool ownership and innovative design, and a desire to
offer best service through investment in IT infrastructure.
Earnings per share
Basic earnings per share were 7.5p (2003: 23.6p).
Adjusted earnings per share, reported as though all shares issued at 31 December
2003 had been in issue for the whole of 2003 and 2004, has increased by 53% from
4.9p to 7.5p.
Outlook
Overall, the Company remains both profitable and cash generative and, as a
combined business with Blackwall in 2005, I am confident that this pattern will
continue.
James D Mellor
Finance Director and Company Secretary l8 April 2005
Summarised Profit and Loss Account
For the year ended 31 December 2004 (unaudited)
2004 2003
Note #'000 #'000
Turnover 2 12,807 10,180
Cost of sales 3 (10,850) (8,947)
_____ _____
Gross profit 1,957 1,233
Operating expenses 3 (1,319) (798)
_____ _____
Operating profit 638 435
Interest receivable 4 73 16
_____ _____
Profit on ordinary activities before taxation 2 711 451
Taxation 5 (192) (113)
_____ _____
Profit for the financial year 519 338
Dividends 6 (166) -
_____ _____
Profit retained and transferred to reserves 353 338
_____ _____
Basic earnings per share (p) 7 7.5 23.6
Diluted earnings per share (p) 7 7.3 23.5
All operations are continuing.
There were no recognised gains or losses other than the profit for the financial
year.
Summarised Balance Sheet
At 31 December 2004 (unaudited)
2004 2003
#'000 #'000
Fixed assets
Tangible fixed assets 460 290
Investments - -
_____ _____
460 290
Current assets
Stocks 312 199
Debtors 2,055 3,303
Cash at bank and in hand 2,915 1,758
_____ _____
5,282 5,260
Creditors: amounts falling due within one year (3,120) (3,267)
_____ _____
Net current assets 2,162 1,993
Total assets less current liabilities 2,622 2,283
Provisions for liabilities and charges (17) (14)
_____ _____
Net assets 2,605 2,269
_____ _____
Capital and reserves
Called up share capital 69 69
Share premium account 1,158 1,175
Profit and loss account 1,378 1,025
_____ _____
Equity shareholders' funds 2,605 2,269
_____ _____
Summarised Cash Flow Statement
For the year ended 31 December 2004 (unaudited)
2004 2003
Note #'000 #'000
Net cash inflow from operating activities 8 1,550 203
_____ _____
Returns on investments and servicing of finance
Interest received 58 16
_____ _____
Net cash inflow from returns on investments
and servicing of finance 58 16
Taxation (99) (61)
Capital expenditure
Purchase of tangible fixed assets (280) (267)
Disposal of tangible fixed assets 1 -
_____ _____
Net cash outflow from capital expenditure (279) (267)
_____ _____
Equity dividends (56) -
Management of liquid resources
Purchase of short term deposits (1,500) -
_____ _____
Net cash (outflow) before financing (326) (109)
Financing
Issue of share capital - 1,524
Costs of share issue (17) (289)
_____ _____
Net cash (outflow)/inflow from financing (17) 1,235
_____ _____
(Decrease)/increase in cash (343) 1,126
_____ _____
Notes to the Preliminary Announcement
For the year ended 31 December 2004 (un-audited)
1. Basis of preparation
The preliminary announcement has been prepared under the historic cost
convention in accordance with applicable accounting standards. The
principal accounting policies of the Company have remained unchanged from
those set out in the Company's 2003 Financial Statements.
2. Turnover and profit on ordinary activities before taxation
The profit on ordinary activities before taxation is stated after the costs
stated below (except for those costs relating to the share issue).
2004 2003
#'000 #'000
Depreciation of owned assets 108 37
Operating lease rentals 62 62
Auditors' remuneration - audit services 13 13
Auditors' remuneration - other services 2 41
3. Cost of sales and operating expenses
2004 2003
#'000 #'000
Cost of sales 10,850 8,947
Operating expenses
Distribution costs 442 360
Administrative expenses 877 438
_____ _____
1,319 798
_____ _____
4. Interest receivable
2004 2003
#'000 #'000
On bank deposits 55 16
Short term deposits 18 -
_____ _____
73 16
_____ _____
5. Taxation
2004 2003
#'000 #'000
Corporation tax at an average rate of 27% (2003: 23%) 189 99
Deferred tax 3 14
_____ _____
192 113
_____ _____
Analysis of current tax charge
Profit on ordinary activities before tax 711 451
_____ _____
Profit on ordinary activities multiplied by
standard rate of Corporation tax in the UK
(30%) (2003: 30%) 213 135
Expenses not deductible for tax purposes 7 17
Capital allowances in excess of depreciation (9) (24)
Marginal relief (22) (29)
_____ _____
189 99
_____ _____
6. Dividends
2004 2003
#'000 #'000
Equity dividends
Interim dividend of 0.8p per share paid 10
December 2004 56 -
Final declared dividend of 1.6p per share 110 -
_____ _____
166 -
_____ _____
The final dividend is payable on 27 May 2005 to all shareholders who were on the
register of members at 7 January 2005.
7. Earnings per share
Basic and diluted earnings per share
Basic earnings per share are calculated on the basis of profit for the year
after tax divided by the weighted average number of shares in issue for the
year.
Diluted earnings per share are calculated on the basis of profit for the
year after tax divided by the weighted average number of shares in issue
for 2004 plus the weighted average number of shares which would be issued
if all the options granted were exercised.
All options were dilutive at 31 December 2004.
7. Earnings per share (continued)
2004 2003
Weighted Weighted
Earnings average no. Per share Earnings
average no. Per share
#'000 of shares pence #'000 of shares pence
Basic earnings attributable
to ordinary shareholders 519 6,903,750 7.5 338
1,431,733 23.6
Dilutive effect of securities
options - 159,512 (0.2) - 3,758
(0.1)
_____ ________ ____ ____ ________ ____
Diluted earnings per share 519 7,063,262 7.3 338 1,435,491 23.5
_____ ________ ____ ____
________ ____
Adjusted earnings per share
In order to improve comparability with 2003, we have calculated adjusted
earnings per share as if all shares issued at 31 December 2003 had been in issue
throughout that year.
2004 2003
No. No.
Earnings of shares Per share Earnings of share Per share
#'000 in issue pence #'000 in issue pence
Basic earnings attributable
to ordinary shareholders 519 6,903,750 7.5 338 6,903,750 4.9
____ ________ ___ ____ ________
___
8. Reconciliation of operating profit to net cash flow from operating
activities
2004 2003
#'000 #'000
Operating profit 638 435
Depreciation 108 37
Loss on sale of tangible fixed assets 1 -
Increase in stocks (113) (4)
Decrease/(increase) in debtors 1,263 (1,835)
(Decrease)/increase in creditors (347) 1,570
_____ _____
1,550 203
_____ _____
9. Reconciliation of net cash flow to movement in net funds
2004 2003
#'000 #'000
(Decrease)/increase in cash in the year (343) 1,126
Purchase of short term deposits 1,500 -
Net funds at 1 January 1,758 632
_____ _____
Net funds at 31 December 2,915 1,758
_____ _____
10. Publication of non statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies
Act 1985.
The summarised balance sheet at 31 December 2004, the summarised profit and
loss account, summarised cash flow statement and associated notes for the
year then ended, have been extracted from the Company's financial
statements. Those financial statements have not yet been delivered to the
Registrar, nor have the auditors reported on them.
11. Annual General Meeting
The Annual General Meeting of the Company will be held in Leeds on Monday 4
July 2005. Full details will be included in the published Annual Report
and Financial Statements which will be sent to shareholders in due course.
Brilliant. EPS (no meaningful contribution from blackwall will be a full year next year so should at least double profits) bang in line. I reckoned 7.5p and spot on - most unusual for me!
Cracking and well managed growing business that should do well even in any market downturn. Win/win in my view. Handy little divvy too, should also be near double next year.
Cracking and well managed growing business that should do well even in any market downturn. Win/win in my view. Handy little divvy too, should also be near double next year.
Your ramping has done it for me ec, doubled up today. It's the ideal low maintanence share, now play I play the waiting game!
It's the ideal low maintanence share, now play I play the waiting game!
Trading suspended now !
................Not on planet earth anyway, AJ!!
Well, that's what SC told me when I tried to trade it at 14.20 !
my guess is they tried to trade it electronically and got rejected, as occasionally happens, but i don't think it was actually suspended. If you get an inexperienced telephonist they sometimes don't know what to do next.
I'm staying in!
I'm staying in!
Put this in here rather than the trading thread, I contacted the company today and they are to 'fully investigate' their listing on the Berlin Bourse, about which I sense they are extremely unhappy.
That said over 500 UK stocks are now listed there and the majority of them are largely dormant. Won't put me off adding when I think the shares and markets are more stable.
That said over 500 UK stocks are now listed there and the majority of them are largely dormant. Won't put me off adding when I think the shares and markets are more stable.
Back up to my full quota of shares now. Happy to sit tight with these and wait for 300p+ over next twelve months or so. Bounced nicely off long term uptrend recently.
Trading slightly off today on low volume, but this can do no harm!
http://news.bbc.co.uk/2/hi/science/nature/4617805.stm
http://news.bbc.co.uk/2/hi/science/nature/4617805.stm
Slight retracement on thin volumes.
A real value play at this level. Looking for eps around 18p for this year after the acquisition. A prospective p/e of 10 for a company with a regional monopoly and fast growth as well as benefitting from green legislation is not just miserly, it's absurd.
Buy.
A real value play at this level. Looking for eps around 18p for this year after the acquisition. A prospective p/e of 10 for a company with a regional monopoly and fast growth as well as benefitting from green legislation is not just miserly, it's absurd.
Buy.
seriously tempted now, as I agree is looking a bit of a bargain
I've just topped up my holding at 187p.
I'm sure they are a possible bargain at present but i've decided to sell a good few of my shares. I'm just not happy holding stock that isn't performing when most are. I might regret selling but hey-ho, there you go.
I know where you are coming from Chester, and STT is going through a consolidation phase by the looks of it, but I am very happy to hold.
Added some more this morning. (Maybe I bought your's Chester).
may'be.....
looking cheap?
Very! The selling has been small which reassured me to increase my stake.
Was thinking of buying some, but found could buy a lot but could not sell all of my existing holding. Makes me wonder if there is a seller out there...
usually the sign of a large seller about
Nope.
I haven't seen it but apparently a positive write-up in IC today according to a couple of posters elsewhere. Has missed out on market re-rating and worth picking up more at this level after a reassuring trading update recently.
Also perhaps a stock that is seen as defensive and may do well if the market pulls back - or there is a bit of rotation. What very small selling there has been may be de to malcolm Stacey's share of the year tip (after mine lol!) which brought in a lot of small buyers i think in winter.
Lack of newsflow may have led to some of them taking profits and mean the mms have a few shares sitting around. just my thoughts.
I haven't seen it but apparently a positive write-up in IC today according to a couple of posters elsewhere. Has missed out on market re-rating and worth picking up more at this level after a reassuring trading update recently.
Also perhaps a stock that is seen as defensive and may do well if the market pulls back - or there is a bit of rotation. What very small selling there has been may be de to malcolm Stacey's share of the year tip (after mine lol!) which brought in a lot of small buyers i think in winter.
Lack of newsflow may have led to some of them taking profits and mean the mms have a few shares sitting around. just my thoughts.
I'm happy enough holding STT for medium-term at least. no serious selling evident, and a few small buys coming in. Probably won't move much until next RNS.
Well done all holders. As you know I sold on the weakness, possibly the wrong decision.
Cheers chester, hard lines, but fear not, we've all been there!
STT at the start of a re-rating short term to near to 200p but which imho will see it top 300p within 18 months as the fruits of the Blackwall acquisition become fully apparent.
but fear not, we've all been there! STT at the start of a re-rating short term to near to 200p but which imho will see it top 300p within 18 months as the fruits of the Blackwall acquisition become fully apparent.
The offer has now moved up to 200p. Wonder what will happen when she passes the 200 mark, all time highs?
I suspect we will get consolidation then a steady move higher towards fair value.
Major X trade at 195p late today. interesting to see what happens next with interims due in about three weeks.
lovely riser today!
Excellent set of numbers which should underpin a bright future. The rise in eps was particularly gratifying given the larger number of shares in issue following the acquisition. Hopefully an overdue VTS style post-results re-rating now on the cards.
Very nice Thanks for bringing this one to my attention ec.
Thanks for bringing this one to my attention ec.
No probs Teal, looks like the breakout (as forecast! ) could take us to all time highs very soon.
) could take us to all time highs very soon.
Topped up yesterday, and second tranche in profit already
Nice tip from trendwatch, not a fan of tipsters but here's what he says:
There are many excellent little AIM-listed companies in uptrend at present. They're growing fast, and each has its particular attractions. However, what worries me a little is the increasing evidence of a slowing economy. So I asked myself this question: Which companies would be least affected by a slowing economy? A couple of companies leapt into focus immediately. For example, there's Tristel (hospital infection control - MRSA is immune to a slowing economy as well as to most antibiotics) and Straight (waste recycling targets are being tightened all the time). In the end, it was little more than a toss-up to choose between them. I've settled on Straight.
When Tony Blair said a while back: "I'm a pretty Straight sort of guy", did he actually mean that No 10's wheelie bin, as supplied by Westminster City Council, was actually made by Straight? It would make sense. Straight supplies waste containers such as the aforementioned wheelie bins, curved side recycling boxes, composters and water butts, which (water butts excepted) allows householders to sort their domestic waste. As at its 2003 flotation, it had supplied over 6m such containers. The eponymous Jonathan Straight, a former direct marketing specialist, founded the company in 1993. It floated on Aim in November 2003 at 80p. The pony-tailed Mr Straight holds over 41% of the shares.
Its customers are mainly local authorities. For example, it has supplied 150,000 kerbside containers for Cheshire County Waste Partnership. However, with the escalating cost of landfill dumping, businesses too have a strong incentive to step up their recycling efforts. Straight doesn't make its own products. All manufacturing is outsourced. It does, however, control the master moulds. This arrangement enables it to maintain healthy profit margins of around 16%. Its rapid growth has been fuelled by large sums of money paid to local authorities by the Department of the Environment, Food & Rural Affairs (Defra) to increase recycling. EU regulations state that 30% of all household waste must be recycled by 2007. We currently manage 23%. Most other European countries achieve 40%.
Since 2000, it has grown turnover at a terrific rate: from 2.51 million pounds to 12.8 million pounds last year. Its latest set of interims show that growth continues apace. At 14 million pounds, turnover is already higher in the first half than it was in the whole of last year. And interim profits were up 135% on a year ago, to 0.825 million pounds. These excellent results are due in part to the fact that, in January, it acquired its biggest competitor, Blackwall, integration of which is now complete.
It also has a strong balance sheet. Profuse cash flow means that it now has net cash of 4.3 million pounds. This gives it plenty of firepower for further acquisitions to enable it to tighten its grip on the market, as it did with Blackwall. This is important. Producing plastic bins and boxes is hardly a high-tech business, which means that the barriers to entry are relatively low. Getting bigger via acquisitions as well as organically gives it greater buying power, which means that the company can squeeze the competition through highly competitive pricing. It recently set up a materials handling division, making lidded boxes for industries such as retailing and pharmaceuticals, rather that for waste recycling purposes. It's early days yet but it has already received orders totalling 0.4 million pounds; and the level of enquiries looks promising.
What happens if and when UK demand is sated? The company plans to extend its operations to the former Eastern bloc countries that are joining the EU, in many of which recycling is as yet almost unheard of. The shares are not expensive. Panmure Gordon's earnings per share estimate for 2005 is 13.5p. Strip out the 4.3 million pounds cash and the shares trade on a forward p/e of 12, very low for a company growing as fast as this one. The main driver of this company is EU directives and national legislation. In our view, recycling targets can only go on getting tighter and tighter for the foreseeable future. Add geographical diversification to the mix and that should mean that Straight has years of growth ahead of it. BUY.
There are many excellent little AIM-listed companies in uptrend at present. They're growing fast, and each has its particular attractions. However, what worries me a little is the increasing evidence of a slowing economy. So I asked myself this question: Which companies would be least affected by a slowing economy? A couple of companies leapt into focus immediately. For example, there's Tristel (hospital infection control - MRSA is immune to a slowing economy as well as to most antibiotics) and Straight (waste recycling targets are being tightened all the time). In the end, it was little more than a toss-up to choose between them. I've settled on Straight.
When Tony Blair said a while back: "I'm a pretty Straight sort of guy", did he actually mean that No 10's wheelie bin, as supplied by Westminster City Council, was actually made by Straight? It would make sense. Straight supplies waste containers such as the aforementioned wheelie bins, curved side recycling boxes, composters and water butts, which (water butts excepted) allows householders to sort their domestic waste. As at its 2003 flotation, it had supplied over 6m such containers. The eponymous Jonathan Straight, a former direct marketing specialist, founded the company in 1993. It floated on Aim in November 2003 at 80p. The pony-tailed Mr Straight holds over 41% of the shares.
Its customers are mainly local authorities. For example, it has supplied 150,000 kerbside containers for Cheshire County Waste Partnership. However, with the escalating cost of landfill dumping, businesses too have a strong incentive to step up their recycling efforts. Straight doesn't make its own products. All manufacturing is outsourced. It does, however, control the master moulds. This arrangement enables it to maintain healthy profit margins of around 16%. Its rapid growth has been fuelled by large sums of money paid to local authorities by the Department of the Environment, Food & Rural Affairs (Defra) to increase recycling. EU regulations state that 30% of all household waste must be recycled by 2007. We currently manage 23%. Most other European countries achieve 40%.
Since 2000, it has grown turnover at a terrific rate: from 2.51 million pounds to 12.8 million pounds last year. Its latest set of interims show that growth continues apace. At 14 million pounds, turnover is already higher in the first half than it was in the whole of last year. And interim profits were up 135% on a year ago, to 0.825 million pounds. These excellent results are due in part to the fact that, in January, it acquired its biggest competitor, Blackwall, integration of which is now complete.
It also has a strong balance sheet. Profuse cash flow means that it now has net cash of 4.3 million pounds. This gives it plenty of firepower for further acquisitions to enable it to tighten its grip on the market, as it did with Blackwall. This is important. Producing plastic bins and boxes is hardly a high-tech business, which means that the barriers to entry are relatively low. Getting bigger via acquisitions as well as organically gives it greater buying power, which means that the company can squeeze the competition through highly competitive pricing. It recently set up a materials handling division, making lidded boxes for industries such as retailing and pharmaceuticals, rather that for waste recycling purposes. It's early days yet but it has already received orders totalling 0.4 million pounds; and the level of enquiries looks promising.
What happens if and when UK demand is sated? The company plans to extend its operations to the former Eastern bloc countries that are joining the EU, in many of which recycling is as yet almost unheard of. The shares are not expensive. Panmure Gordon's earnings per share estimate for 2005 is 13.5p. Strip out the 4.3 million pounds cash and the shares trade on a forward p/e of 12, very low for a company growing as fast as this one. The main driver of this company is EU directives and national legislation. In our view, recycling targets can only go on getting tighter and tighter for the foreseeable future. Add geographical diversification to the mix and that should mean that Straight has years of growth ahead of it. BUY.
Straight plc
Contract win
Straight plc, the AIM quoted supplier of waste and recycling containers,
announces the award of a new contract worth £1.44 million to supply home
composters and accessories to WRAP (Waste & Resources Action Programme).
Home composters allow householders to easily convert much of their kitchen and
garden green waste into a soil improver. Because the waste material does not
need to be collected and sent to landfill, there are considerable environmental
benefits.
This contract, following an award earlier this year, will result in the
continuous production of more than 300,000 home composters. These will be used
towards WRAP's target of delivering 500,000 home composting bins through 2006.
The 220 litre and 330 litre compost bins, supplied under Straight's Blackwall
brand, have been a major focus of the WRAP campaign, which will now enter its
third year.
A new kitchen waste composter developed by Straight is also included in the
products selected by WRAP. This allows all biodegradeable material to be
composted by including the composting of cooked foods as well as meat, fish and
dairy products.
WRAP (the Waste & Resources Action Programme) is a major UK programme
established to promote resource efficiency. Its particular focus is on creating
stable and efficient markets for recycled materials and products and removing
the barriers to waste minimisation, re-use and recycling. The promotion and
support of Home Composting forms a major part of the work on Waste
Minimisation.
Contract win
Straight plc, the AIM quoted supplier of waste and recycling containers,
announces the award of a new contract worth £1.44 million to supply home
composters and accessories to WRAP (Waste & Resources Action Programme).
Home composters allow householders to easily convert much of their kitchen and
garden green waste into a soil improver. Because the waste material does not
need to be collected and sent to landfill, there are considerable environmental
benefits.
This contract, following an award earlier this year, will result in the
continuous production of more than 300,000 home composters. These will be used
towards WRAP's target of delivering 500,000 home composting bins through 2006.
The 220 litre and 330 litre compost bins, supplied under Straight's Blackwall
brand, have been a major focus of the WRAP campaign, which will now enter its
third year.
A new kitchen waste composter developed by Straight is also included in the
products selected by WRAP. This allows all biodegradeable material to be
composted by including the composting of cooked foods as well as meat, fish and
dairy products.
WRAP (the Waste & Resources Action Programme) is a major UK programme
established to promote resource efficiency. Its particular focus is on creating
stable and efficient markets for recycled materials and products and removing
the barriers to waste minimisation, re-use and recycling. The promotion and
support of Home Composting forms a major part of the work on Waste
Minimisation.
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