TIDMCRU
RNS Number : 8250I
Coral Products PLC
29 November 2018
CORAL PRODUCTS PLC
("Coral" or the "Group")
HALF YEARLY REPORT
Coral Products plc, a specialist in the design, manufacture and
supply of plastic products, is pleased to report its half yearly
report for the six months ended 31 October 2018.
Financial headlines Six months Six months
to to
31 October 31 October
2018 2017 % change
GBP13.08 GBP11.91
Group sales million million +9.8%
GBP4.04
Gross profit GBP5.04 million million +24.8%
Underlying operating margin* 38.5% 33.9% +13.5%
Underlying operating profit
(excluding finance expenses)* GBP1,009,000 GBP371,000 +172.0%
Reported profit/(loss) before
taxation GBP582,000 GBP (7,000) +8,414.3%
Underlying EBITDA* GBP1,747,000 GBP982,000 +77.9%
Underlying basic earnings
per share* 0.87p 0.23p +278.3%
Proposed interim dividend
per share 0.25p 0.0p
*The financial headlines disclosed as underlying represent the
reported metrics excluding separately disclosed items (being share
based payment charges, amortisation of intangible assets and other
one-off costs in each period).
Operational and financial highlights
- All metrics show substantial improvement.
- Strong net assets position has been maintained.
- Interim dividend of 0.25p proposed.
- Additional sales resource recruited at Interpack to support
growth aspirations in the business.
- Re-organisation and turn-around of the Haydock manufacturing
facility continued, with positive site profits in all of the six
months of this financial year.
- The commitment to the Group's 360-degree re-cycling supply
initiative has been realised by the purchase of a state-of-the-art
plastic recycling system. The system will be installed in December
2018 and commissioned in January 2019 with contribution expected
before the end of the current financial period.
- Capital investment programme continued across the Group with
investment in state-of-the-art injection moulding machines, blow
moulding capacity and extruding capability. This will reduce
operating costs, improve capacity and technical availability as
well as open up new areas of business.
- New chilled cooling water system installed in Haydock, saving
water and cost whilst eliminating future likely HSHE (health,
safety, hygiene and environmental) issues.
- New product development partnership with Rotite already
resulted in two new products being developed, with tools being
ordered for introduction during 2019/20. In addition, some current
products have benefited from design changes making for cost
savings. Our customers have shown high interest in these new and
improved products.
- Extension to the on-line tote supply gained for the rest of this financial period.
Commenting on today's results, Joe Grimmond, Coral's Chairman,
said:
"Trading in the first half of the current year shows a
substantial improvement of all our financial headlines.
We are delighted with the performance of the business in the
first half. The main feature of the results is the excellent
turnaround of Coral Products (Mouldings) into profit and we are
optimistic that this trend will continue. This improvement reflects
the huge amount of effort put in by the Coral team. We have
increased investment in business development, new products,
production capacity and employee capabilities. These investments
have strengthened our position in injection moulding, blow moulding
and plastic extrusion, whilst at the same time expanding the range
of plastic services we supply.
I am pleased to report that results to date are well ahead of
the same period last year and that, in spite of the prevailing
uncertainties of Brexit we remain confident of the Groups future
prospects."
Enquiries
Coral Products plc Tel: 01942 272
Joe Grimmond, Non-Executive Chairman 882
Mick Wood, CEO
Nominated Adviser
Cairn Financial Advisers LLP Tel: 020 7213
Tony Rawlinson / Liam Murray 0880
Broker
Daniel Stewart & Company Limited Tel: 020 7776
David Lawman 6550
Richard Potts
Capital Markets Consultants Limited Tel: 07515 587
Richard Pearson 184
Chairman's Statement
Results and Financial Position
Trading in the first half of the current year shows revenue and
gross profits both substantially ahead of the same period for last
year. Reported revenue increased to GBP13,077,000 (six months to 31
October 2017: GBP11,911,000).
As a result of the re-organisation and cost reduction action
taken in January 2018, gross margins have substantially increased
to 38.5% (2017: 33.9%) resulting in a gross profit of GBP5,039,000
(2017: GBP4,037,000) in the six months to 31 October 2018.
Underlying EBITDA has improved substantially on last year at
GBP1,747,000 (2017: GBP982,000).
Underlying profits for operations increased to GBP1,009,000
(2017: 371,000), a significant improvement over the same period
last year.
Separately disclosed expenses of GBP222,000 (2017: GBP196,000)
comprised the amortisation of intangibles acquired on acquisition
and share based payment charges over employee options.
Finance costs were up from GBP182,000 to GBP205,000 in this
period due to the increased levels of borrowing needed to fund
capital expenditure.
Profit after tax after including all these items was GBP500,000
compared to a loss of GBP7,000 over the same period last year.
The balance sheet net asset position remains strong at
GBP13,749,000 (2017: GBP13,493,000). This represents a solid asset
platform for developing the business.
The Group's net debt has decreased to GBP6,868,000 (2017:
GBP7,110,000). The Group has undrawn bank facilities of GBP1.9
million which, together with its asset-based finance lines at 31
October 2018, enable it to invest internally or in further
acquisitions and businesses for growth which will then enable
better returns for our shareholders.
Operations
Tatra-Rotalac Ltd
New extrusion technology and capacity has been introduced
allowing both current products to be competitively produced and, as
importantly, giving the business a technology boost that allows
more technically advanced products to be made. A full business
overview has taken place and subsequent actions are being addressed
urgently to enable the business to realise its potential. The extra
costs we have incurred to boost future performance have impacted on
the current period resulting in a loss and we are below our budget
expectations but I am confident that the actions being taken will
support the business growth aspirations of the company via its
existing customer base and with the introduction of new customers
in light of the new technically advanced extrusion equipment now in
the operation.
Interpack Ltd
Sales, Gross and Net profit exceeded expectations and were well
ahead of the same period last year. New European suppliers have
been sourced to supplement the range of products offered for sale
whilst new capacity released by the introduction of new ice cream
tools at Coral Products (Mouldings) will give further growth
opportunities.
Global One-Pak Ltd
Sales, Gross profit and Net profit are substantially ahead of
expectations for the current financial period albeit below the same
period last year. New products using high levels of plastic
recyclate are being developed to supplement the current successful
portfolio. It is expected that the Global One-Pak's strong
financial performance will continue through the second half of this
financial period.
Coral Products (Mouldings) Ltd
We are delighted with the turnaround in Coral Products
(Mouldings) in the period. Sales, Gross and Net profit are
substantially ahead of the comparative previous year financial
period albeit below budget but as announced, with a healthy
pipeline in place we are optimistic about the overall performance
for the year.
The Operational & Sales turnaround actions taken over the
previous eleven months have been successful with the subsidiary
achieving a profit every month since January 2018. Improvement work
in logistics and material purchasing is now bearing fruit with all
actions completed in this area expected prior to the end of this
financial period.
Improving the machine capabilities of the subsidiary has meant
some capital expenditure has been incurred. The new injection
moulders and blow moulders have enabled the business to advance
technically whilst improving the manufacturing cost base.
A new recycling plant has been developed and purchased. This
plant will be installed in December 2018 with commissioning
expected to be completed by the end of January 2019. The interest
from our customer base in this plant, its capabilities and our
360-degree approach to recycling has been extremely encouraging.
Aimed, in the first instance, at the UK Council and local authority
recycling arms our novel approach has put Coral at the forefront of
the decision makers. Encouragingly the plant has received the first
batch of crates to be recycled from a local Council in anticipation
of the plant being operational. In addition, there are also local
agreements to take waste crates, caddies and bins at a further five
councils and this is expected to exponentially increase during the
coming months. This recycling plant is expected to be profit
enhancing during this current financial period.
Capital expenditure
Total capital expenditure in the first six months was GBP810,000
(2017: GBP1,277,000) of which GBP244,000 (2017: GBP201,000) was
spent at Tatra-Rotalac, Wythenshawe and the balance expended on the
continued improvements to the capabilities at Coral Mouldings,
Haydock which included two fully electric machines and three blow
moulding machines.
Dividends
It is the board's intention to pay an interim dividend of 0.25p
pence per share (2017: 0.00p). The ex-dividend date and the record
date for the interim dividend will be 14 February 2019 and 15
February 2019 respectively. The interim dividend will be paid on 28
March 2019. This continues to reflect our confidence in the
recovery path and improvement this will bring to our results.
Outlook
We are delighted with the performance of the business in the
first half. The main feature of the results is the excellent
turnaround of Coral Products (Mouldings) into profit and we are
optimistic that this trend will continue. This improvement reflects
the huge amount of effort put in by the Coral team. We have
increased investment in business development, new products,
production capacity and employee capabilities. These investments
have strengthened our position in injection moulding, blow moulding
and plastic extrusion, whilst at the same time expanding the range
of plastic services we supply.
Results to date in the current financial year have been
excellent. The return to profitability of Coral Products
(Mouldings) along with the continued financial performance of
Interpack and Global One-Pak has enabled the Group to return to
profitability. It is expected that actions currently underway will
bring Tatra-Rotalac back to profitability prior to the end of this
financial year.
The exciting new plastic recycling plant will give the business
an edge when operational with interest in it already evident by
both existing customers and prospective customers alike.
Brexit
As the current outcome of Brexit is still undecided the business
continues as normal with focus on operational cost control. This is
reflected in our significantly improved gross margin.
Discussions with customers and suppliers are on-going with
reference to holding finished goods and raw material supply.
Agreements for the months leading up to the 29(th) March have been
made with various major suppliers to the Group, and customers of
the Group, to mitigate any shortages that may or may not
happen.
We are confident that whilst the next 12 months will be
challenging, Coral will remain in a good position to deal with the
aftermath of Brexit.
Joe Grimmond
Non-Executive Chairman
29 November 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 31 October 2018
Six months Six months
to to Year to
31 October 31 October 30 April
2018 2017 2018
Notes (unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Revenue 3 13,077 11,911 23,405
Cost of sales (8,038) (7,874) (15,302)
------------- ---------------- --------------
Gross profit 5,039 4,037 8,103
Operating costs
Distribution expenses (575) (546) (1,256)
Administrative expenses
before separately disclosed
items (3,455) (3,120) (5,968)
------------- ---------------- --------------
Underlying operating profit 1,009 371 879
Separately disclosed items:
-------------
Share based payment charge (78) (8) (50)
Amortisation of intangible
assets (144) (174) (348)
Compensation for loss of
office - (14) -
Reorganisation costs - - (481)
Impairment loss on trade
receivables - - (186)
------------- ---------------- --------------
(222) (196) (1,065)
Operating profit/(loss) 787 175 (186)
Finance expense (205) (182) (311)
------------- ---------------- --------------
Profit/(loss) before taxation 582 (7) (497)
Taxation 4 (82) - 127
------------- ---------------- --------------
Total comprehensive income/(loss) 500 (7) (370)
------------- ---------------- --------------
Earnings per ordinary share 5
Basic and diluted (pence) 0.61 0.00 (0.45)
Underlying basic (pence) 0.87 0.23 0.84
------------- ---------------- --------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2018
31 October 31 October 30 April
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Non-current assets
Goodwill 5,495 5,495 5,495
Other intangible assets 1,546 1,864 1,690
Property, plant and equipment 9,314 9,111 9,299
Total non-current assets 16,355 16,470 16,484
------------- -------------- ---------------
Current assets
Inventories 3,278 3,162 2,864
Trade and other receivables 6,005 5,172 5,452
Cash and cash equivalents 727 464 471
Total current assets 10,010 8,798 8,787
------------- -------------- ---------------
Total assets 26,365 25,268 25,271
------------- -------------- ---------------
Current liabilities
Bank overdrafts and borrowings (4,518) (4,199) (5,939)
Trade and other payables (4,554) (3,657) (3,909)
Corporation tax (51) (82) -
Total current liabilities (9,123) (7,938) (9,848)
------------- -------------- ---------------
Non-current liabilities
Borrowings (3,077) (3,375) (1,843)
Deferred taxation liability (416) (462) (409)
------------- -------------- ---------------
Total non-current liabilities (3,493) (3,837) (2,252)
------------- -------------- ---------------
Total liabilities (12,616) (11,775) (12,100)
------------- -------------- ---------------
Total net assets 13,749 13,493 13,171
------------- -------------- ---------------
Equity
Share capital 826 826 826
Share premium 5,288 5,288 5,288
Other reserves 1,567 1,567 1,567
Retained earnings 6,068 5,812 5,490
------------- -------------- ---------------
Total equity 13,749 13,493 13,171
------------- -------------- ---------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months to 31 October 2018 (unaudited)
Share Share Other Retained Total
capital premium reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2018 826 5,288 1,567 5,490 13,171
Total comprehensive
income - - - 500 500
Credit for share based
payment - - - 78 78
Dividend paid - - - - -
----- --------- ---------- ---------- --------
At 31 October 2018 826 5,288 1,567 6,068 13,749
----- --------- ---------- ---------- --------
For the six months to 31 October 2017 (unaudited)
Share Share Other Retained Total
capital premium reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2017 826 5,288 1,567 6,116 13,797
Total comprehensive
income - - - (6) (6)
Credit for share based
payment - - - 8 8
Dividend paid - - (306) (306)
--------- ---------- ------------ ------------- ----------------
At 31 October 2017 826 5,288 1,567 5,812 13,493
--------- ---------- ------------ ------------- ----------------
For the year ended 30 April 2018 (audited)
Share Share Other Retained Total
capital premium reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2017 826 5,288 1,567 6,116 13,797
Total comprehensive
loss - - - (370) (370)
Credit for share based
payment - - - 50 50
Dividend paid - - - (306) (306)
--------- --------- ---------- ---------- --------------
At 30 April 2018 826 5,288 1,567 5,490 13,171
--------- --------- ---------- ---------- --------------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months to 31 October 2018
Six months Six months
to to Year to
31 October 31 October 30 April
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Cash flow from operating activities
Profit/(loss) for the period after
tax 500 39 (370)
Adjustments for:
Depreciation 738 611 1,212
Loss on disposal of fixed assets 3 - 17
Intangibles amortisation 144 174 348
Share based payment charge 78 8 50
Taxation charge 82 8 (127)
Interest payable 205 182 311
(Increase)/decrease in inventories (414) (279) 18
(Increase)/decrease in trade and
other receivables (553) 357 77
Increase/(decrease) in trade and
other payables 645 (803) (549)
UK corporation tax paid - - 46
Net cash generated/(used) from
operating activities 1,428 297 1,033
------------- ----------------------- ------------
Cash flow from investing activities
Proceeds from disposal of property,
plant and equipment - 13 (5)
Acquisition of property, plant
and equipment (180) (1,265) (907)
Net cash used in investing activities (180) (1,252) (912)
------------- ----------------------- ------------
Cash flow from financing activities
Proceeds of new asset finance - 1,291 500
Dividend paid - (306) (306)
Interest paid (205) (182) (311)
Repayments of bank borrowings (75) (65) (1,601)
Finance lease principal payments (539) (501) (899)
Repayment of bank term loans - (1,462) -
New bank loans raised - 1,743 1,743
Movements on invoice discounting
facility (173) 228 551
Net cash generated/(used) in financing
activities (992) 746 (323)
------------- ----------------------- ------------
Net increase/(decrease) in cash
and cash equivalents 256 (209) (202)
Cash and cash equivalents at the
start of the period 471 673 673
------------- ----------------------- ------------
Cash and cash equivalents at the
end of the period 727 464 471
------------- ----------------------- ------------
1. Basis of preparation
The financial information set out in this Interim Report does
not constitute statutory accounts as defined in Section 435 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 30 April 2018, prepared under IFRS, have been filed
with the Registrar of Companies.
The auditor's report on those financial statements was
unqualified and did not contain a statement under Section 498 (2)
or (3) of the Companies Act 2006.
The interim financial information has been prepared in
accordance with the recognition and measurement principles of
International Financial Reporting Standards (IFRS) and on the same
basis and using the same accounting policies as used in the
financial statements for the year ended 30 April 2018.
The Interim Report has not been audited in accordance with the
International Standard on Review Engagement 2410 issued by the
Auditing Practices Board.
2. Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements for
the year ended 30 April 2018.
In respect of the new accounting standards, the Directors have
reviewed and adopted the requirements of IFRS 9 and IFRS 15, which
became effective for the year ended 30 April 2019. The Directors
are currently reviewing the impact of IFRS 16 which will become
effective for the year ended 30 April 2020. At this point it is not
practicable for the Directors to provide a reasonable estimate of
the effect of IFRS 16 as their detailed review of this standard is
ongoing.
3. Revenue
All production is based in the United Kingdom. The geographical
analysis of revenue is shown below:
Six months Six months
to to Year to
31 October 31 October 30 April
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
United Kingdom 12,283 10,764 21,068
Rest of Europe 710 967 1,326
Rest of the World 84 180 1,011
13,077 11,911 23,405
-------------- ------------- -----------
Turnover by business activity
Sale and manufacture of plastic
products 13,077 11,911 23,405
-------------- ------------- -----------
4. Taxation
The taxation charge for the six months to 31 October 2018 is
based on the effective taxation rate, which is estimated will apply
to earnings for the year ending 30 April 2019. The rate used is
below the applicable UK corporation tax rate of 19% due to the
utilisation of tax losses in the period.
5. Earnings per share
Basic and underlying earnings per ordinary share are calculated
using the weighted average number of ordinary shares in issue
during the financial period of 82,614,865 (31 October 2017:
82,614,865 and 30 April 2018: 82,614,865).
Year to
Six months Six months
to to 30 April
31 October 31 October
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP000 p GBP000 p GBP000 p
Basic and diluted earnings
per ordinary share
Profit/(loss) for the period
after tax 500 0.61 (7) 0.00 (370) (0.45)
-------- ----- -------- ----- ------- -------
Underlying earnings per ordinary
share
Underlying profit for the period
after tax 722 0.87 189 0.23 695 0.84
-------- ----- -------- ----- ------- -------
6. Movement in Net Debt
Net debt incorporates the Group's borrowings and bank overdrafts
less cash and cash equivalents. A reconciliation of the movement in
the net debt is shown below:
Six months Six months
to to
Year to
31 October 31 October 30 April
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Net increase/(decrease) in
cash and cash equivalents 256 (437) (753)
Decrease/(increase) in bank
and other loans 248 (212) (142)
Increase in finance leases (61) (851) (806)
Movement in net debt in the
financial period 443 (1,500) (1,701)
Net debt at beginning of period (7,311) (5,610) (5,610)
-------------- ------------- -----------
Net debt at end of period (6,868) (7,110) (7,311)
-------------- ------------- -----------
7. Forward looking statements
This announcement contains unaudited information and
forward-looking statements that are based on current expectations
or beliefs, as well as assumptions about future events. These
forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts and undue
reliance should not be placed on any such statement because they
speak only as at the date of this document and are subject to known
and unknown risks and uncertainties and can be affected by other
factors that could cause actual results, and Corals plans and
objectives, to differ materially from those expressed or implied in
the forward-looking statements. Coral undertakes no obligation to
revise or update any forward-looking statement contained within
this announcement, regardless of whether those statements are
affected as a result of new information, future events or
otherwise, save as required by law and regulations.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (MAR).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFFDLFLTFIT
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