TIDMCRU
RNS Number : 6835Q
Coral Products PLC
14 September 2017
CORAL PRODUCTS PLC
('Coral' or the 'Company' or the 'Group')
FINAL RESULTS
Coral Products PLC, (the "Company" or the "Group") a specialist
in the design, manufacture and supply of injection moulded plastic
products based in Haydock, Merseyside, announces its audited final
results for the year ended 30 April 2017.
KEY FINANCIALS
2017 2016 Change
GBP GBP
Group revenue 21,432,000 18,714,000 14.5%
Operating profit 693,000 938,000 (26.1)%
Underlying operating profit
* 1,093,000 1,649,000 (33.7)%
Profit for the year before
taxation 465,000 758,000 (38.7)%
Underlying profit for the
year before taxation* 865,000 1,469,000 (41.1)%
Underlying EBITDA* 1,914,000 2,342,000 (18.3)%
Underlying earnings per
share * 1.04p 2.20p (52.7)%
Dividend payable per share 0.7p 1.0p (30.0)%
* Underlying results are reported before separately disclosed
items, as shown in note 2. Such underlying results are not intended
to be a substitute for, or superior to, IFRS measures of
profit.
HEADLINES
-- Group revenue increase of 14.5%.
-- The fall in underlying operating profits to GBP1.1m (GBP1.6m
in 2016) related to poor performance at Coral Products
Mouldings.
-- All of the other subsidiaries have performed in line with or ahead of expectations.
-- Underlying EBITDA decreased by 18.3% to GBP1.9m.
-- Purchase of the fixed assets of ICM, allowing bespoke
moulding solutions for the automotive industry.
-- 90+ new automotive components successfully introduced during
March and April 2017 with attendant start-up costs.
-- Revenues from non-media products increased to GBP21.1m
(GBP17.8m in 2016) representing 98% of total revenues (2016:
95%).
-- Substantial new business in online totes, bakery trays and
automotive components, circa GBP4.5m for current year.
Commenting on the results, Joe Grimmond, Chairman, said:
"We continue to invest in our Group adding new and improved
capacity. This is creating greater sales opportunities and we
anticipate significant sales growth over the current financial
year. Whilst I was pleased with the increase in revenue up 14.5% to
GBP21.4m (2016: GBP18.7m), the poor performance of Coral Products
Mouldings led to a reduced underlying profit of GBP1.1m (2016:
GBP1.6m)".
"The Group continues with its strategic progress of increasing
focus on value-added and innovative products, particularly in the
food container, recycling, telecommunications, rail industry and
automotive markets. We successfully introduced 90+ new automotive
components in March and April. Our aim continues to be to build a
significant plastic moulding business and we remain confident in
our ability to make further progress by improving business
performance and increasing our market share to drive forward
financial results over the medium term".
"We look forward with confidence to an improved performance in
the coming year."
For further information, please contact:
Coral Products plc
Joe Grimmond, Executive Chairman Tel: 07703
518 148
Tel: 01942
272 882
Nominated Adviser
Cairn Financial Advisers LLP Tel: 020 7213
Tony Rawlinson 0880
Liam Murray
Broker
Daniel Stewart & Co plc Tel: 020 7776
David Lawman 6550
Capital Markets Consultants Tel: 07515
Richard Pearson 587 184
CHAIRMAN'S STATEMENT
We continue to invest in our Group adding new and improved
capacity. This is creating greater sales opportunities and we
anticipate significant sales growth over the current financial
year. Whilst I was pleased with the increase in revenue up 14.5% to
GBP21.4m (2016: GBP18.7m), the poor performance of Coral Products
Mouldings (Haydock) led to a reduced underlying operating profit of
GBP1.1m (2016: GBP1.6m). (Note that underlying profit is defined in
note 2).
For the current year Haydock has gained substantial new business
in online totes, bakery trays and automotive. These are expected to
bring in circa GBP4.5m in additional turnover. To support the
expected increase in new sales operational improvements at the
Haydock plant are being addressed with pace. A new Sage 200 system
is currently being integrated to enable better control of raw
materials, packaging, inventory and costings. In addition, specific
management focus on health and safety, hygiene and engineering
processes will enable future proofing making the plant ready to
accept further growth opportunities into 2018 and beyond.
Following the Five-Year Plan that was adopted in 2015 the Group
has made a number of acquisitions aimed at substantially increasing
Group revenue and profitability from our specialist plastic
products manufacturing and distribution activities. In June 2015,
we acquired certain plant and machinery from Neiman Packaging
Limited. This acquisition introduced two new manufacturing
processes, injection blow moulding and extrusion blow moulding,
enhancing our range of manufacturing capability. In January 2016,
we purchased the fixed assets, stock and business of Rotalac
Plastics Limited from its administrators. Rotalac provides
thermoplastic extrusion and moulding solutions across a number of
industries worldwide, including aerospace, medical and automotive
and is a leader in shutter system design and manufacture. This
addition further enabled the broadening of the Group's product
range. In February 2016, the Group acquired Global One-Pak Limited
which designs, manufactures and supplies lotion pumps and trigger
sprayers to a broad range of customers worldwide, including a
number of global brands, across a wide range of markets, including
household and garden, automotive, personal care and pet grooming.
This business expanded further the market coverage and product
range with the supply of a number of high value components. These
businesses have all been successfully integrated into the Group and
enable us to promote a more diverse range of products and
manufacturing methods, the benefits of which are already being
seen.
In August 2016, the operations of Tatra Plastics Ltd were
relocated from Halifax to the premises of Rotalac Plastic Ltd, at
the same time both companies were merged to form Tatra-Rotalac Ltd.
In March 2017, the Group acquired the fixed assets of Industrial
& Commercial Mouldings Limited (ICM), which specialised in the
production of bespoke high quality injection moulded parts for the
automotive industry. This acquisition greatly increased the
production capacity at the Haydock site as well as allowed the move
into the automotive industry. We successfully introduced 90+
automotive components during March and April. This involved
substantial initial costs, the benefits of which will flow through
in our new financial year.
All of the acquisitions to date have performed in line with or
ahead of expectations. Unfortunately, our management and operation
systems at Haydock proved inadequate for managing materially higher
business volumes and a more diverse product range. Our information
system also suffered similar volume related problems. These issues
only became apparent in early January 2017 and immediate steps were
taken to remedy the shortcomings. The Group Finance Director and
Chief Executive Officer both left the business and a new Group
Finance Director, Sharon Gramauskas was appointed in February 2017.
In February, I assumed the position of Executive Chairman on a
temporary basis until a new Chief Operating Officer (non-board
member) could be appointed. I am pleased to report that a new Chief
Operating Officer, Michael Wood commenced on 14 August 2017 after
serving his three-month notice period with a large international
plastics manufacturing group. His immediate priority is to maintain
and improve upon the steps taken to date and achieve a position of
sustainable profitability at our Haydock operation. I will remain
Executive Chairman in support of the Chief Operating Officer to
ensure all the progress at Haydock since February is
maintained.
It is important to note that Interpack, Global One-Pak and Tatra
Rotalac all remain substantially profitable, performing in line
with or ahead of expectations.
The continuing fall in the relative value of sterling against
the dollar and the euro, together with the prevailing uncertainty,
could have a negative effect on our business particularly due to
the Group purchasing a large proportion of stock items in these
currencies. We are taking steps across the Group to mitigate these,
particularly in recovering increased input costs because of
sterling's decline.
Performance of the Group is monitored principally through
adjusted profit measures which exclude GBP0.4m of underlying items.
Such items are set out in note 2 and include the amortisation of
intangibles arising on the acquisitions of Global One-Pak and
Tatra-Rotalac, acquisition costs, share based payment charges,
compensation for loss of office of senior management, release of
earn-out provision, reorganisation costs and losses/profits on sale
of tangible assets.
The Group has increased net debt by GBP2.3m in the year and
gearing has increased to 40.7% (2016: 23.9%). Due to production
constraints, we have increased stock levels of bakery trays and we
have also had to build up minimum stock levels for new customers in
the automotive industry. Overall the Group reported a net cash
outflow of GBP1.7m.
Following a revaluation of land and buildings in December 2016,
a GBP1.7m mortgage was taken out, this was finalised and drawn down
on 18 May 2017. This mortgage was used to repay two current term
loans and it also gave GBP0.3m available cash, which was used to
fund the installation of the machinery purchased from the
liquidators of ICM Ltd. This new mortgage has been taken out over
ten years and gives rise to savings of GBP0.2m in repayments per
annum, providing additional cashflow flexibility.
Results
Group revenue improved for the year to GBP21.4m (2016:
GBP18.7m). Margins improved slightly to 34.1% (2016: 33.1%).
Underlying earnings before interest, tax, depreciation and
amortisation for the group remained strong at GBP1.9m (2016:
GBP2.3m) (see note 2 for the definition of underlying profit
measures). Administrative expenses in the Group increased to
GBP5.6m (2016: GBP4.4m) in line with the increase in Group
activity. This resulted in an underlying operating profit of
GBP1.1m (2016: GBP1.6m), and profit before tax of GBP0.5m (2016:
GBP0.8m)
Separately disclosed underlying items totalling GBP0.4m (2016:
GBP0.7m) of which GBP0.2m relates to the settlement costs for loss
of office of former directors. The underlying profit for the
financial year before taxation was GBP1.1m (2016: GBP1.6m).
Earnings per share were 0.55 pence (2016: 1.12 pence), underlying
earnings per share were 1.04 pence (2016: 2.20 pence).
Dividends
The board remains committed to its long-term progressive
dividend policy, which takes account of the underlying growth in
earnings, whilst acknowledging the requirement for continuing
investment and short-term fluctuations in profit.
Despite the disappointing second half and the investment in new
plant, the Board has given consideration to the outlook for the
current year. As a result, the Board has decided to pay a total
dividend of 0.7 pence per share in respect of the financial year
ended 30 April 2017. Having paid an interim dividend at 0.33 pence
per share on 1 March 2017, the final payment of 0.37 pence per
share will have an ex-dividend date of 21 September 2017 and a
record date of 22 September 2017. This final dividend will be paid
on 31 October 2017.
Board Changes
In January 2017 Steve Fletcher left the business after 17 years
as Finance Director and the board would like to thank him for his
service. Sharon Gramauskas was appointed Finance Director in
February 2017. Sharon is a Chartered Management Accountant with
over 17 years of experience in Finance. In April 2017 Roberto (Rob)
Zandona left the business as Group Chief Executive and at the same
time Joe Grimmond became Executive Chairman having previously acted
as Non-Executive Chairman. Jonathan Lever retired as non-executive
director in April 2017.
Strategy
Our board continuously reviews business performance alongside
market conditions to make sure that we take the correct strategic
decisions for each of our businesses. The board recognises fully
that it has been tasked with delivering enhanced shareholder value
in accordance with the strategy that we outlined in 2015. The
challenges facing the board relate to managing the continued growth
of the Group whilst preserving the strengths of the business.
Acquisition
The purchase of the fixed assets of ICM (Industrial &
Commercial Mouldings) Ltd was completed on 21 March 2017. ICM
specialised in the production of bespoke high-quality injection
moulded parts for the automotive industry.
People
We are reliant on the expertise, professionalism and commitment
of our people and thank them for their contribution to the business
during a challenging year.
Outlook
The Group continues with its strategic progress of increasing
focus on value-added and innovative products, particularly in the
food container, automotive, telecommunications and rail industry
markets. Our aim continues to be to build a significant plastic
moulding business and we remain confident in our ability to make
further progress by improving business performance and increasing
our market share to drive forward financial results over the medium
term.
We look forward with confidence to further progress in the
coming year.
Joe Grimmond
Chairman
14 September 2017
Group Income Statement
for the year ended 30 April 2017
2017 2016
GBP'000 GBP'000
------------------------------- ---------- ----------
Continuing operations
Revenue 21,432 18,714
Cost of sales (14,114) (12,512)
---------- ----------
Gross profit 7,318 6,202
Operating costs
Distribution expenses (1,000) (863)
---------------------------------- ---------- ----------
Administrative expenses
before separately disclosed
items (5,225) (3,690)
Separately disclosed items (400) (711)
Administrative expenses (5,625) (4,401)
Operating profit 693 938
Finance costs (228) (180)
---------- ----------
Profit for the financial
year before taxation 465 758
Taxation (7) (15)
---------- ----------
Profit for the financial year
attributable to the equity
holders 458 743
---------- ----------
Earnings per share
Basic and dilutive earnings
per ordinary share 0.55p 1.12p
Group Statement of Comprehensive Income
for the year ended 30 April 2017
2017 2016
GBP'000 GBP'000
-------------------------------------- ---------- ----------
Profit for the financial
year 458 743
Revaluation of land and 506 -
building
---------- ----------
Total comprehensive income for the
year attributable to equity holders 964 743
---------- ----------
Balance Sheet
as at 30 April 2017
As at As at
30 April 30 April
2017 2016
GBP'000 GBP'000
----------------------------- ---------- ----------
ASSETS
Non-current assets
Goodwill 5,495 5,495
Other intangible assets 2,038 2,390
Property, plant and
equipment 8,411 6,517
Investments in subsidiaries - -
---------- ----------
Total non-current
assets 15,944 14,402
---------- ----------
Current assets
Inventories 2,883 1,843
Trade and other receivables 5,529 5,279
Cash and cash equivalents 673 910
Total current assets 9,085 8,032
---------- ----------
LIABILITIES
Current liabilities
Borrowings 3,808 2,062
Trade and other payables 4,487 4,054
---------- ----------
Total current liabilities 8,295 6,116
---------- ----------
Net current assets 790 1,916
---------- ----------
Non-current liabilities
Borrowings 2,475 2,122
Deferred tax 462 508
---------- ----------
Total non-current
liabilities 2,937 2,630
---------- ----------
NET ASSETS 13,797 13,688
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 826 826
Share premium 5,288 5,288
Other reserves 1,567 1,061
Retained earnings 6,116 6,513
---------- ----------
TOTAL SHAREHOLDERS'
EQUITY 13,797 13,688
---------- ----------
Statement of Changes in Shareholders' Equity
for the year ended 30 April 2017
Called Share
Up Premium Other Retained Total
Share Reserve reserves Earnings Equity
Capital GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
--------------------- --------- --------- ----------- ----------- ----------
Group
At 1 May 2015 579 1,862 443 6,237 9,121
Profit for
the year - - - 743 743
--------- --------- ----------- ----------- ----------
Total comprehensive
income - - - 743 743
--------- --------- ----------- ----------- ----------
Transactions
with owners
Issue of share
capital 247 3,426 618 - 4,291
Credit to
equity for
equity settled
share based
payments - - - 28 28
Dividend paid - - - (495) (495)
--------- --------- ----------- ----------- ----------
At 1 May 2016 826 5,288 1,061 6,513 13,688
Profit for
the year - - - 458 458
Other comprehensive
income 506 506
--------- --------- ----------- ----------- ----------
Total comprehensive
income - - 506 458 964
--------- --------- ----------- ----------- ----------
Transactions
with owners
Debit to equity
for equity
settled share
based payments - - - (4) (4)
Dividend paid - - - (851) (851)
At 30 April
2017 826 5,288 1,567 6,116 13,797
--------- --------- ----------- ----------- ----------
Cash Flow Statement
for the year ended 30 April 2017
Group
2017 2016
GBP'000 GBP'000
------------------------------------- --------- ---------
Cash flows from operating
activities
Profit for the year 458 743
Adjustments for:
Depreciation of property, plant
and equipment 821 678
Profit on disposal of tangible
assets 44 50
Amortisation of intangible
assets 352 133
Share based payment (credit)/charge (4) 28
Release of earn-out provision 93 -
Interest payable 228 180
Taxation charge 7 15
--------- ---------
Operating cash flows before
movements in working capital 1,999 1,827
Increase in inventories (1,040) (174)
Increase in trade and other
receivables (250) (455)
Increase in trade and other
payables 452 658
--------- ---------
Cash generated by operations 1,161 1,856
UK corporation tax paid (66) (40)
--------- ---------
Net cash generated from operating
activities 1,095 1,816
--------- ---------
Cash flows from investing
activities
Acquisition of subsidiary,
net of cash acquired (100) (2,402)
Acquisition of property,
plant and equipment (919) (1,668)
Proceeds from disposal 46 -
of fixed assets
Net cash used in investing
activities (973) (4,070)
--------- ---------
Cash flows from financing
activities
Proceeds of issue of share
capital - 3,641
New bank loans raised - 1,150
Dividends paid (851) (495)
New asset finance raised 208 463
Interest paid on borrowings (228) (180)
Repayments of bank borrowings (371) (666)
Repayment of director's
loan - (200)
Repayments of obligations under
finance lease (558) (205)
Net cash used in financing
activities (1,800) 3,508
--------- ---------
Net (decrease)/increase
in cash and cash equivalents (1,678) 1,254
Cash and cash equivalents
at 1 May 2016 (493) (1,747)
--------- ---------
Cash and cash equivalents
at 30 April 2017 (2,171) (493)
--------- ---------
Cash 673 910
Invoice discounting facility (2,844) (1,403)
--------- ---------
Cash and cash equivalents
at 30 April 2017 (2,171) (493)
--------- ---------
Notes
for the year ended 30 April 2017
1. Basis of preparation
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 30 April 2017 or
2016 within the meaning of Section 434 of the Companies Act 2006,
but is derived from those accounts. Statutory accounts for 2016
have been delivered to the Registrar of Companies and those for
2017 will be delivered following the company's Annual General
Meeting. The auditors' report on the statutory accounts for the
year ended 30 April 2017 was unqualified and does not contain
statements under s498 (2) or (3) Companies Act 2006.
This financial information has been prepared in accordance with
International Financial Reporting Standards ("IFRSs") and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations as adopted by the European Union and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS.
2. Underlying operating profit and separately disclosed
items
Underlying profit - the Company believes that underlying profit
and underlying earnings provide additional useful information for
shareholders. The term underlying earnings is not a defined term
under IFRS and may not therefore be comparable with similarly
titled profit measurements reported by other companies.
2017 2016
GBP'000 GBP'000
Underlying EBITDA 1,914 2,342
Depreciation (821) (693)
Underlying operating profit 1,093 1,649
Separately disclosed items
in administrative expenses:
Share based payment credit/(charge) 4 (28)
Intangible amortisation (352) (118)
Costs of acquisition - (67)
Loss of office costs of
former directors (189) (30)
Release provision for earn-out 93 -
agreement
Reorganisation costs - (418)
Profit on disposal of tangible
fixed assets 44 (50)
Operating profit 693 938
-------- --------
3. Earnings per share
Basic and underlying earnings per share
The basic earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders for the financial
period by the weighted average number of shares in issue during the
financial period of 82,614,865 (2016: 66,238,090).
Underlying earnings per share is also shown calculated by
reference to earnings before separately disclosed items. The
directors consider that this gives a useful indication of
underlying performance.
2017 2016
GBP'000 EPS (p) GBP'000 EPS (p)
Profit for the
financial period 458 0.55 743 1.12
Separately disclosed
items 400 711
-------- -------- ------------ ------------
Underlying profit
for the period 858 1.04 1,454 2.20
-------- -------- ------------ ------------
The share options issued in the previous year are non-dilutive
(2016: non-dilutive)
4. Dividends
A final dividend for the year ended 30 April 2016 of 0.7p per
share was paid on 14 October 2016 to shareholders on the register
on 9 September 2016. This dividend amounted to GBP578,304.
Despite the disappointing second half and the investment in new
plant, the Board has given consideration to the outlook for the
current year. As a result, the Board has decided to pay a total
dividend of 0.7 pence per share in respect of the financial year
ended 30 April 2017.
Having paid an interim dividend at 0.33 pence per share on 1
March 2017 (this dividend amounted to GBP272,628), the final
payment of 0.37 pence per share will have an ex-dividend date of 21
September 2017 and a record date of 22 September 2017. This final
dividend will be paid on 31 October 2017.
5. Group reconciliation of net cash flow to movement in net
debt
2017 2016
GBP'000 GBP'000
Net (decrease)/increase in cash
and cash equivalents (1,678) 1,254
Decrease/(increase) in bank loans
and other loans 371 (284)
Increase in asset finance (1,029) (258)
-------- --------
Movement in net debt in the period (2,336) 712
Net debt at start of the period (3,274) (3,986)
-------- --------
Net debt at end of the period (5,610) (3,274)
-------- --------
6. Post Balance Sheet Event
Although not impacting the year-end balance sheet, we report
that following a revaluation of land and buildings, a GBP1.7m
mortgage was finalised and drawn down on 18 May 2017. This mortgage
was used to repay two current term loans and also gave rise to
GBP0.3m available cash which was subsequently utilised to fund the
installation of the machinery purchased from the liquidators of ICM
Ltd. This new mortgage has been taken out over ten years and gives
rise to savings of GBP0.2m in repayments per annum.
7. Publication of Annual Report and Notice of Annual General
Meeting
A copy of the 2017 Report & Accounts, together with a notice
of the Annual General Meeting to be held in Leverhulme Room One at
Haydock Race Track, Newton-le-Willows, Merseyside, WA12 0HQ on 11
October 2017 at 12:00 p.m., will be sent to all shareholders on 18
September 2017. Further copies will be available to the public at
the company's registered address at North Florida Road, Haydock
Industrial Estate, Haydock, Merseyside WA11 9TP and on the
Company's website at www.coralproducts.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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