Superglass : Period End Trading Update

Superglass Holdings PLC ("Superglass" or "the Company")

Period end Trading update

Board and Senior Management changes

Superglass Holdings PLC, the UK's leading independent manufacturer of glass wool and mineral fibre insulation solutions, today releases a trading update for the six months ended 28 February 2015 and announces changes to its Board and Senior Management.

Highlights

·     Following a slow start to the first half Superglass expects to post an EBITDA loss of approximately £1.9m in H1

·     The transformation plan outlined at the time of the recent placing remains on track, underpinned by recent positive developments on input costs, selling prices and overall market demand.  As a result the Company expects to return to profit at the EBITDA level during H2

·     Gross cash at the interim period end was £4.1m.  Comfortable cash headroom is available to execute the planned cost saving programme

·     Alex McLeod is to step down in August 2015.  Ken Munro has been promoted to a newly created position of Managing Director of Superglass Insulation Limited

·     The Board expresses cautious optimism for the remainder of the financial year and beyond

Trading Update

Partially as a result of customer uncertainty in advance of the successful refinancing of the Company completed at the end of October 2014, demand for the Company's products remained subdued during the majority of the first half of the current financial year.  The ongoing failure of the Green Deal and Energy Company Obligation ("ECO") to deliver any meaningful volumes further compounded a challenging commercial backdrop.  Low sales volumes also resulted in increased manufacturing costs per tonne through the under-absorption of fixed overheads.  This coincided with a period of increased energy consumption and higher raw material costs as a result of the cullet supplier commissioning a new facility producing higher quality cullet in January 2015.  As a result, Superglass expects to post an EBITDA loss of approximately £1.9m in H1.

However, a number of positive developments give the Board increasing reason for cautious optimism:

-      Construction markets, particularly house-building, continue to grow strongly and have started to generate higher volumes for Superglass since the turn of the year.

-      During December, the Company communicated a significant UK price increase across all product categories.  This is the first meaningful price increase for a number of years.  Other major suppliers of glass wool insulation have also announced significant price increases.

-      Superglass experienced strong trading throughout February in advance of the price increase taking effect and watches with interest for evidence of the acceptance of a more sustainable pricing environment by key customer groups.

-      With its financial position stabilised, the Company has been able to take advantage of positive movements in benchmark prices to lock in a lower pricing tariff on its energy supplies.

-      The improvement in UK markets together with the planned reconfiguration of the plant to deliver cost savings and a reduced, but more flexible manufacturing output will together allow the Company to focus increasingly on its most profitable and highest demand market segments and product lines.  This project remains on track for completion before the end of the financial year.

The Company's ability to capitalise on the above opportunities is conditional upon production continuing as planned, including the on-time completion of the capital project to reconfigure the plant scheduled for H2 and the ability to adapt the manufacturing process to accommodate the new cullet.  

Taking all of the above factors into account, the Directors anticipate a much stronger second half and currently expect that the Company will return to profit at the EBITDA level during H2.  Superglass retains comfortable cash headroom with which to implement the planned cost savings programme.

 Looking beyond the current period, the recovery plan is intact and the Board is cautiously optimistic that a combination of increasing demand and constrained supply can deliver a gradual but sustained improvement in performance.

The Company expects to publish interim results for the six months ended 28 February 2015 on 30 April 2015.

Board and Senior Management Changes

After five years as Chief Executive Officer and as the Company enters a new phase in its development, Alex McLeod has decided the time is now right for him to pursue other career opportunities. In order to ensure a smooth transition of both his PLC-related and operational responsibilities, Alex will by mutual agreement stand down from the Board and resign as Chief Executive Officer in August 2015.  The Board would like to thank Alex for his invaluable contribution to the Company and wish him well for the future.  A search process to identify Alex' successor has commenced in which internal and external candidates will be considered.

Ken Munro has recently been promoted from Sales Director to the newly created role of Managing Director of the Company's principal trading subsidiary, Superglass Insulation Limited, and has already assumed primary responsibility for all operational and trading aspects of the Superglass business. 

The Company is also actively seeking to strengthen the Board further, through the appointment of at least one additional non-executive director.

Enquiries:

Superglass, John Colley and Chris Lea

N+1 Singer, Sandy Fraser and Nick Owen