TIDMCRU
RNS Number : 8323H
Coral Products PLC
08 December 2020
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 2020.
Financial headlines Six months Six months
to to
31 October 31 October
2020 2019 % change
GBP10.65 GBP12.14
Group sales million million -12.3%
GBP4.29 GBP4.60
Gross profit million million -6.7%
Underlying operating margin* 40.3% 37.9% 6.3%
Underlying operating profit (excluding
finance expenses)* GBP994,000 GBP485,000 104.9%
Reported profit before taxation GBP541,000 GBP 25,000 2,064.0%
Underlying EBITDA* GBP1,622,000 GBP1,341,000 21.0%
Underlying basic earnings per share* 0.93p 0.26p 257.7%
Proposed interim dividend per share 0.00p 0.00p
*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), see note 7.
Operational and financial highlights
- I am pleased to report that the first half of this year has
seen a return to profit. This is despite the on-going Covid-19
pandemic impact, Brexit, the China-USA trade wars, volatile
currency fluctuations and variable trading conditions.
- Ensuring that the business is Covid-19 secure for employees
and visitors is paramount. As a critical supplier our business
continued to operate under strict Covid-19 Government guidelines to
support the medical, transport, food and communication industries
through the UK lockdowns encountered this year.
- The Covid-19 pandemic caused a reduction in profitability at
Global One-Pak in the first few months of this financial period. I
am very pleased to report however that with the addition of new
Chinese suppliers in recent months profitability has returned.
- Particularly pleasing is the Group's return to profit when
considering the huge negative impact of the Covid-19 pandemic on
our customer base has meant that the new business expected from the
new and improved food packaging and the 23 litre/55 litre recycling
products have not been realised in the current period. It is
expected that both will positively impact the business in the final
quarter of this financial period.
- The business cost base was reduced via improvements in
automation, labour shift pattern changes, increasing the raw
material supplier base, utilisation of the recycling plant and the
integration of the Interpack daily operation into the Mouldings
operation.
- The extruded fire retardant click & fix product has been
developed with huge interest from both existing and potential new
customer base. It is expected that this will positively impact the
business in the final quarter of this year.
- The recycling plant is contributing to the business, and has
done throughout the pandemic to date. This exciting area of the
business is expected to become more and more integral to the
business profitability in the future.
- The recycling plant has gained re-processor status enabling
the business to mitigate the Government waste packaging levy
incurred on the business.
- The Group has retained its BRC food packaging accreditation.
- The Multi-box-recycling-system (MBRS) has now been
commissioned with positive impact on sales expected over the rest
of this financial period and beyond.
- A very strong net assets position has been maintained.
Commenting on today's results, Joe Grimmond, Coral's Chairman,
said:
"In my Chairman's statement that accompanied the release of the
2020 accounts I expressed concerns over the uncertainties
associated with the ongoing Brexit situation and coronavirus
pandemic. Despite these concerns I am encouraged with the level of
sales and profitability achieved over the period".
Enquiries
Coral Products plc Tel: 01942 272
Joe Grimmond, Non-Executive Chairman 882
Mick Wood, CEO
Nominated Adviser & Broker
Cairn Financial Advisers LLP Tel: 020 7213
Liam Murray / Sandy Jamieson / Ludovico Lazzaretti 0880
David Lawman (Corporate Broking)
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 that even
though revenue and gross profit are below the same period for last
year, the gross profit % has improved. Reported revenue was
GBP10,645,000 (six months to 31 October 2019: GBP12,143,000), gross
margins were 40.3% (2019: 37.9%) resulting in a gross profit of
GBP4,291,000 (2019: GBP4,601,000) in the six months to 31 October
2020. Underlying EBITDA was GBP1,622,000 (2019: GBP1,341,000).
Underlying operating profits increased to GBP994,000 (2019:
GBP485,000).
Separately disclosed expenses of GBP230,000 (2019: GBP193,000)
comprised the amortisation of intangibles acquired on acquisition,
share based payment charges over employee options and redundancy
costs.
Finance costs dropped slightly to GBP223,000 (2019: GBP267,000)
in this period due to the payment holidays taken in the first few
months of the financial period.
Profit before tax after including all the above items was
GBP541,000 (2019: GBP25,000).
The balance sheet net asset position remains strong at
GBP12,645,000 (2019: GBP12,945,000). This represents a solid asset
platform for developing the business.
The Group's net debt has decreased to GBP7,192,000 (2019:
GBP8,625,000). The Group has undrawn bank facilities of GBP2.6
million, (2019: GBP2.0 million).
Operations
Tatra-Rotalac Ltd
Now with a reduced cost base gained by a major re-organisation
and a change in shift patterns the business is back to
profitability. Upgrades on current manufacturing assets have
enabled improved efficiencies, culminating in the retention of a
multimillion-pound three-year contract for a major
telecommunications customer. New upgraded extruded click & fix
panel will contribute in the final quarter of this financial
period.
Interpack Ltd
Due to the Covid 19 pandemic the financial benefits expected of
the new and improved ice-cream packaging have yet to be realised.
It is expected that this will happen in the final quarter of this
financial period. The integration of the day-to-day activities into
the Mouldings business has enabled continuity via familiarisation
of product coupled with cost reduction.
Global One-Pak Ltd
Initially this business was financially the worst hit by the
Covid-19 pandemic in the Group. New suppliers have successfully
been sought to enable continuity of supply of triggers and plungers
from China. World-wide demand is expected to remain high for the
foreseeable future. With the new aforementioned supply chain in
place and even with the uncertainty of the current Covid-19 and
Brexit situation in the UK we believe the business can be managed
to deliver improved profitability in the rest of this financial
period.
Coral Products (Mouldings) Ltd
Turnover for the first 6 months of this financial period was
affected by the reduction in services provided by councils and
authorities as the demand for recycling products reduced due mainly
to the impact of Covid-19. This demand is now coming back on stream
and coupled with high demand for Blow moulding products (supplied
into wet wipe and sanitizing companies), high demand for
transportation and telecommunication products, along with the
resurgence of food container products the business is set to
benefit from increased turnover and profitability.
The recycling plant is fully operational and the objective of
giving the business a full 360 degree offering across the recycling
spectrum has been achieved. It has maintained its re-processor
accreditation making it a go to site for the customer base.
Focus on adding high levels of recycled material to new
containers is a major objective for the site to offset the
forecasted GBP200 per tonne plastic tax set to be implemented in
April 2022 for products made with less than 30% of recycled
content. We are pleased to report that Mouldings is well down the
road to achieving the objective in advance of the deadline.
The industry anticipated MBRS (multi-box recycling system) is
now being made. It is expected that it will contribute to
profitability during this financial period.
Capital expenditure
Total capital expenditure in the first six months was GBP315,000
(2019: GBP650,000) of which GBPnil (2019: GBP69,000) related to
Tatra-Rotalac, GBPnil (2019: GBP375,000) related to Interpack, and
the balance expended on the tools for the multi box recycling
system (MBRS) at Coral Products (Mouldings).
Dividends
Whilst there has been a marked improvement of performance in the
first half of this year, the Board has decided to defer any
decision on dividend for the current year until we see the outcome
of the coronavirus pandemic.
Brexit
With the imminent departure of the United Kingdom from the
European Union, as a business, we continue to focus on operational
cost control to enable an improved gross margin.
We know that the impact at the UK docks towards the end of
2020/early 2021 will be challenging, delays are expected. A
constant monitoring of supplies to the plants is on-going with
extra working capital used to purchase raw materials in advance.
Our focus remains that of cost control across the two manufacturing
subsidiaries. These will be supplemented increasingly by the
recycling business which we believe will leave the Group on a sound
footing both during and after the completion of the UK's departure
from the European Union.
Outlook
In my Chairman's statement that accompanied the release of the
2020 accounts I expressed concerns over the uncertainties
associated with the ongoing Brexit situation and coronavirus
pandemic. Despite these concerns I am encouraged with the level of
sales and profitability achieved over the period.
Cost reduction controls now in place, the recycling plant
delivering to overall profitability coupled with continued and
increased demand for Covid-19-related products, telecommunications,
transport, food product packaging and recycling containers gives me
great confidence for the future prospects and performance of the
Group.
Joe Grimmond
Non-Executive Chairman
8 December 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 31 October 2020
Six months Six months
to to Year to
31 October 31 October 30 April
2020 2019 2020
Notes (unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Revenue 3 10,645 12,143 22,321
Cost of sales (6,354) (7,542) (14,329)
------------- ---------------- --------------
Gross profit 4,291 4,601 7,992
Operating costs
Distribution expenses (544) (622) (1,296)
Administrative expenses
before separately disclosed
items (2,753) (3,494) (6,295)
------------- ---------------- --------------
Underlying operating profit 994 485 401
Separately disclosed items:
-------------
Share based payment credit/(charge) 2 (7) (14)
Amortisation of intangible
assets (138) (138) (277)
Reorganisation costs (94) (48) (142)
Impairment loss on goodwill - - (350)
(230) (193) (783)
Operating profit/(loss) 764 292 (382)
Finance expense (223) (267) (439)
------------- ---------------- --------------
Profit/(loss) before taxation 541 25 (821)
Taxation 4 - - -
------------- ---------------- --------------
Total comprehensive income/(loss) 541 25 (821)
------------- ---------------- --------------
Earnings per ordinary share 5
Basic and diluted (pence) 0.66 0.03 (0.99)
Underlying basic (pence) 0.93 0.26 (0.05)
------------- ---------------- --------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2020
31 October 31 October 30 April
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Non-current assets
Goodwill 5,145 5,495 5,145
Other intangible assets 986 1,263 1,124
Property, plant and equipment 2,768 9,406 2,790
Right of use assets 4,058 835 4,365
Total non-current assets 12,957 16,999 13,424
------------- ------------- ------------
Current assets
Inventories 3,395 3,667 3,368
Trade and other receivables 4,575 5,783 4,931
Cash and cash equivalents 1,292 436 453
Total current assets 9,262 9,886 8,752
------------- ------------- ------------
Assets held for sale 2,520 - 2,520
Current liabilities
Bank overdrafts and borrowings (2,526) (4,779) (2,978)
Trade and other payables (3,212) (4,473) (3,749)
Lease liabilities (1,393) - (1,191)
Corporation tax - (43) -
Total current liabilities (7,131) (9,295) (7,918)
------------- ------------- ------------
Liabilities on assets held
for sale (1,706) - (1,765)
Non-current liabilities
Borrowings (1,000) (4,282) -
Lease liabilities (1,859) - (2,509)
Deferred taxation (398) (363) (398)
------------- ------------- ------------
Total non-current liabilities (3,257) (4,645) (2,907)
------------- ------------- ------------
Total liabilities (12,094) (13,940) (12,590)
------------- ------------- ------------
Total net assets 12,645 12,945 12,106
------------- ------------- ------------
Equity
Share capital 826 826 826
Share premium 5,288 5,288 5,288
Other reserves 1,567 1,567 1,567
Retained earnings 4,964 5,264 4,425
------------- ------------- ------------
Total equity 12,645 12,945 12,106
------------- ------------- ------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months to 31 October 2020 (unaudited)
Share Share Other Retained Total
capital premium reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2020 826 5,288 1,567 4,425 12,106
Total comprehensive
income - - - 541 541
Charge for share based
payment - - - (2) (2)
Dividend paid - - - - -
----- --------- ---------- ---------- --------
At 31 October 2020 826 5,288 1,567 4,964 12,645
----- --------- ---------- ---------- --------
For the six months to 31 October 2019 (unaudited)
Share Share Other Retained Total
capital premium reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2019 826 5,288 1,567 5,232 12,913
Total comprehensive
income - - - 25 25
Credit for share based
payment - - - 7 7
Dividend paid - - - - -
--------- ---------------- ------------ ---------- --------
At 31 October 2019 826 5,288 1,567 5,264 12,945
--------- ---------------- ------------ ---------- --------
For the year ended 30 April 2020 (audited)
Share Share Other Retained Total
capital premium reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2019 826 5,288 1,567 5,232 12,913
Total comprehensive
loss - - - (821) (821)
Credit for share based
payment - - - 14 14
Dividend paid - - - - -
--------- --------- ------------ ---------- --------------
At 30 April 2020 826 5,288 1,567 4,425 12,106
--------- --------- ------------ ---------- --------------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months to 31 October 2020
Six months Six months
to to Year to
31 October 31 October 30 April
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Cash flow from operating activities
Profit/(loss) for the period after
tax 541 25 (821)
Adjustments for:
Depreciation of property, plant
and equipment 321 733 1,032
Depreciation of right of use assets
under IFRS16 307 - 681
Goodwill impairment - - 350
Amortisation of intangible assets 138 138 277
Share based payment (credit)/charge (2) 7 14
Interest payable 223 267 439
(Increase)/decrease in inventories (27) (162) 137
Decrease/(increase) in trade and
other receivables 386 (262) 563
(Decrease)/increase in trade and
other payables (537) 639 (87)
Net cash generated from operating
activities 1,350 1,385 2,585
------------- ------------- ------------
Cash flow from investing activities
Acquisition of property, plant and
equipment (314) (17) (322)
Net cash used in investing activities (314) (17) (322)
------------- ------------- ------------
Cash flow from financing activities
Interest paid (223) (267) (135)
Interest paid on lease liabilities - - (304)
Repayments of bank borrowings (60) (93) (188)
Repayments of obligations under
lease liabilities (462) (672) (1,180)
New bank loans raised 1,000 500 500
New lease liabilities - - 58
Movements on invoice discounting
facility (452) (373) (534)
Net cash used in financing activities (197) (905) (1,783)
------------- ------------- ------------
Net increase/(decrease) in cash
and cash equivalents 839 463 480
Cash and cash equivalents at the
start of the period 453 (27) (27)
------------- ------------- ------------
Cash and cash equivalents at the
end of the period 1,292 436 453
------------- ------------- ------------
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 2020, prepared under IFRS, are in the process of being filed
with the Registrar of Companies . The auditor's report on the
statutory accounts for the year ended 30 April 2020 was qualified
with respect to inventory having a carrying value of GBP3,368,000
as the audit evidence available was limited because, given the
global Covid-19 pandemic, no inventory count was undertaken and the
auditor did not observe the physical inventory as at 30 April 2020.
In respect solely of the limitation relating to inventory, the
auditor did not obtain all the information and explanations
considered necessary for the purpose of the audit and were unable
to determine whether adequate accounting records had been kept by
the parent company.
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 2020 .
The Interim Report has not been reviewed by our auditor 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 2020.
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
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
United Kingdom 9,676 11,433 20,882
Rest of Europe 874 648 916
Rest of the World 95 62 523
10,645 12,143 22,321
-------------- -------------- -----------
Turnover by business activity
Sale and manufacture of plastic
products 10,645 12,143 22,321
-------------- -------------- -----------
4. Taxation
The taxation charge for the six months to 31 October 2020 is
based on the effective taxation rate, which is estimated will apply
to earnings for the year ending 30 April 2021. 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 2019:
82,614,865 and 30 April 2020: 82,614,865).
Year to
Six months Six months
to to 30 April
31 October 31 October
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP000 p GBP000 p GBP000 p
Basic and diluted earnings
per ordinary share
Profit/(loss) for the period
after tax 541 0.66 25 0.03 (821) (0.99)
-------- ----- -------- ----- ------- -------
Underlying earnings per ordinary
share
Underlying profit/(loss) for
the period after tax 771 0.93 218 0.26 (38) (0.05)
-------- ----- -------- ----- ------- -------
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
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Net increase in cash and cash
equivalents 839 463 1,014
Decrease/(increase) in bank
and other loans 510 (9) (312)
(Decrease)/increase in lease
liabilities (551) (862) (475)
Movement in net debt in the
financial period 798 (408) 227
Net debt at beginning of period (7,990) (8,217) (8,217)
-------------- ------------- -----------
Net debt at end of period (7,192) (8,625) (7,990)
-------------- ------------- -----------
7. Underlying profit and separately disclosed items
Underlying profit before tax, underlying earnings per share,
underlying operating profit, underlying earnings before interest,
tax, depreciation and amortisation are defined as being before
share based payment charges, amortisation of intangibles recognised
on acquisition, acquisition costs, reorganisation costs,
compensation for loss of office, impairment of goodwill and
impairment loss on trade receivables. Collectively these are
referred to as separately disclosed items. In the opinion of the
directors the disclosure of these transactions should be reported
separately for a better understanding of the underlying trading
performance of the Group.
Six months Six months
to to
Year to
31 October 31 October 30 April
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Operating profit/(loss) 764 292 (382)
Separately disclosed items within
administration expenses
-------------------------------------- -------------- ------------- -----------
Share based payment (credit)/charge (2) 7 14
Amortisation of intangible assets 138 138 277
Reorganisation costs 94 48 142
Impairment of goodwill - - 350
-------------------------------------- -------------- ------------- -----------
Total separately disclosed items 230 193 783
-------------- ------------- -----------
Underlying operating profit 994 485 401
Depreciation 628 856 1,731
Underlying EBITDA 1,622 1,341 2,114
8. 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 Coral's 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). The Directors of the
Group take responsibility for this announcement.
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END
IR FLFSDFFLDIII
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