Superglass considers sale options

The Board of Superglass Holdings plc, the independent insulation manufacturer has revealed that it is investigating options for the sale of its principle trading division, Superglass Insulation.
The Board’s latest trading and financial update reveals that the Board received “unsolicited approaches to acquire the Group’s principal trading subsidiary”. In response to this, it has appointed advisors to approach a “restricted number of other potential buyers to gauge their interest.”

The offers received do not, the Board believes, reflect the value inherent in the business, the invested capital, nor its future potential and, as such, “would provide unacceptable returns for shareholders.”

The sale process will not include the shares of Superglass Holdings PLC and the Board has not received any approach nor is it engaged in any discussions which may lead to an offer for the shares of Superglass Holdings PLC.

The company’s latest report admits that .demand from Government energy efficiency schemes has remained at “negligible levels and no near term pick up is anticipated”. By contrast, demand from construction markets is showing good growth fuelled by new build housing activity and commercial construction. Responding to this the Group has been repositioned to focus on construction markets, with sales to that sector now accounting for 80% of UK revenues compared to 30% four years ago.

Whilst revenues for the financial year ended 31 August 2014 were 5% behind the prior period, revenues in the second half of the year were 10% ahead of the equivalent prior period. Overall trading for the full year was slightly behind management expectations and order patterns remain volatile with order visibility expected to continue to remain low for the foreseeable future. The Group’s net debt was £0.4m at 31 August.

New banking facilities of up to £4.8m are expected to be in place before the end of September with the level of draw down largely determined by the quantum of trade debtors. These will replace the existing arrangements with Clydesdale Bank, which will be repaid on the drawdown of this facility.

Whilst there are increasing signs of recovery and growth in construction markets, the poor uptake of Government energy efficiency schemes is expected to persist through the coming financial year and beyond. As a result, it is the Board’s view that the scale and pace of revenue and earnings growth is now expected to be more modest than previously anticipated.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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