Stadium's chief in no hurry to splash the cash

Sep 2 2010 by John Hill, The Journal

ELECTRONICS manufacturer Stadium Group is in no hurry to splash out the money raised from the sale of its plastics business, despite boasting a net cash balance of £1.83m at the end of June.

The Hartlepool firm, which today unveils a big jump in profit and revenues, offloaded its last non-electronics division Branded Plastics to Kent’s Flambeau Europlast Ltd in June for £2.5m, and is now focusing entirely on the development of electronic manufacturing services and power.

Chief executive Nigel Rogers said: “Because of the financial resources we have available to us, we believe there will be opportunities for us to look at corporate activity, although there’s nothing to talk about yet.

“The money isn’t burning a hole in our pockets. It will all depend on the quality of the opportunities that come along. We don’t feel any pressure to get that cash into the market but if the right option was to come along, it’s good to be able to move quite quickly.”

Stadium Group today reports a 37% rise in revenues to £23.1m in the first half of the year, up from £16.8m in the same period in 2009. Pre-tax profit was 120% ahead of the same period last year, rising from £0.6m to £1.45m, while operating profit increased by 104% to £1.73m compared to £0.85m in 2009.

Rogers said: “It’s a very solid set of results. It’s fair to say that most of our peer group will probably have seen an improvement, drawn from a broad- based manufacturing recovery after a very difficult first half of 2009. Our strength is that we have a very good geographical spread and 40% of our total sales are outside the UK.

“In each of our markets we have seen quite a broad bounce-back in 2010. We’ve also seen improvement due to our ability to increase our market share.”

Stadium Electronics posted revenues of £21.1m in 2010 compared to £15.4m the year before. Revenue from its UK bases in Hartlepool and Rugby managed a 29% increase from £6.3m to £8.2m, while revenue from its Asian operations grew 43% from £9m to £12.9m.

Stadium Power’s UK revenue went up 19% from £1.1m to £1.3m while in Asia doubled from £0.35m to £0.7m.

Rogers expects the electronics division to pick up the slack from the loss of the Branded Plastics revenues to the business.

It sees particular potential in areas such as electronic security, transport infrastructure such as high-speed rail and green energy. Stadium Group sold off all but one of its non-electronics interests over the last nine years, and Rogers says the final sale of Branded Plastics represented the end of one journey and the start of another.

He said: “We retained the plastics business because it provided us with a readily available income stream which we could use to invest in electronics.

“The decision to sell was taken last autumn as we saw strong prospects in electronics and oil prices were making plastics more challenging. This is an important signal that we’re looking at growth in electronics, and we were keen to use the money from a sale to drive that growth.”