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RNS
Coral Products PLC  -  CRU   

Half Yearly Report

Released 07:00 08-Dec-2016

RNS Number : 2540R
Coral Products PLC
08 December 2016
 

8 December 2016

CORAL PRODUCTS PLC

("Coral" or the "Group")

 

HALF YEARLY REPORT

 

Coral Products plc, a specialist in the design, manufacture and supply of injection moulded plastic products, is pleased to report its half yearly report for the six months ended 31 October 2016.

 

 

Financial headlines

 

 

Six months to

31 October

2016

Six months to

31 October

2015

% change

 

 

 

 

Group sales **

 £10.75 million

 £8.26 million

+30.1%

Gross profit

 £3.51 million

 £2.85 million

+23.2%

Operating profit               

£842,000

£778,000

+8.2%

Underlying operating profit

£1,030,000

£817,000

+26.1%

Underlying operating margin

 33%

 35%

 

Profit before taxation

 £718,000

 £684,000

+5.0%

Underlying EBITDA

   £1,413,000

   £1,130,000

+25.0%

Underlying basic earnings per share

 1.03

 1.06p

-2.8%

Proposed interim dividend per share

0.33p

0.30p

+10.0%

 

 

*The financial headlines disclosed as underlying represent the reported metrics excluding separately disclosed items.

 

** Total sales (including inter-group sales) in 2016 were £12.41m, of which inter-group sales were £1.66m (2015: total sales of £10.02m of which inter-group sales were £1.76m).

 

 

Operational and financial highlights 

 

-           Half year performance in line with expectations, full year outlook unchanged.

 

-           New long-term business gained for bakery trays.

 

-           Underlying EBITDA increases by 25% to £1.41 million.

 

-           Successful integration of Tatra business into 'TatraRotalac' with much improved facilities in Wythenshawe.

 

-           Margins have remained high and underlying operating profit has increased by 25%.

 

-           Strong net assets position has been maintained.

 

-           Gearing has risen from 24% to 37% as capital investment has increased due to our continued programme of continuous operational improvement and also covering the increased demand.

 

-           Proposed Interim dividend increased from 0.30 pence to 0.33 pence per share. Last year's final dividend payment was increased to 0.70p per share giving a full year payment of 1.0p.

 

-           But for adverse currency movements pre-tax profits would have been 33% higher.

 

Commenting on today's results, Joe Grimmond, Coral's Chairman, said:

"I am pleased to announce that trading in the first half of the current year shows revenue and profits both substantially ahead of the same period for last year.

Coral Products continues to make good progress in line with our 2015 strategic plan. We have strengthened our position in injection moulding and extruded products whilst at the same time expanding our range of capabilities enhancing our market offering.

Results to date in the current financial year have been in line with the Board's expectations and, in spite of prevailing political uncertainties, we remain confident about the Group's future prospects."

 

Enquiries

 

Coral Products plc

Joe Grimmond, Chairman

Roberto Zandona

 

Tel: 01942 272882

 

Nominated Adviser

Cairn Financial Advisers LLP

Tony Rawlinson / Liam Murray

 

 

Tel: 020 7213 0880

Broker

Daniel Stewart & Company Limited

David Lawman

 

 

Tel: 020 7776 6550

 

Capital Markets Consultants Limited

Richard Pearson

Tel: 07515 587184

 

 

 

Chairman's Statement

 

Results

 

I am pleased to announce that trading in the first half of the current year shows revenue and profits both substantially ahead of the same period for last year. Reported revenue increased to £10,752,000 (six months to 31 October 2015: £8,259,000). Group revenue including inter-group sales were £12,410,000 (2015: £10,021,000) with inter-group sales of £1,658,000 (2015: £1,762,000). This incorporated a full period of contribution from the Global One-Pak and Rotalac acquisitions.

 

Gross margins remained high at 32.7% (2015: 34.5%) resulting in a gross profit of £3,506,000 (2015: £2,849,000) in the six months to 31 October 2016.

 

There was an increase in operating costs from £2,032,000 to £2,476,000 in the period principally due to the acquisitions together with a £192,000 adverse currency effect resulting from the weaker sterling in the immediate period following Brexit.

 

Underlying profits for operations increased to £1,030,000 (2015: £817,000), a significant improvement over the same period last year.  

 

Finance costs were up from £94,000 to £124,000 in this period due to increased levels of borrowing.

 

Separately disclosed expenses of £188,000 (2015: £39,000) comprised the amortisation of intangibles acquired on acquisition of £174,000 (2015: £36,000) and a share based payment charge over employee options of £14,000 (2015: £3,000). Profit after tax after including these items was £663,000 compared with £611,000 in the six month period to 31 October 2015.

Operations

Coral Products Mouldings Ltd, based at our Haydock manufacturing site has added more new efficient equipment and introduced a programme of training to improve the performance of our staff. Our investments have provided tangible benefits, a 750 tonne moulding machine has seen significant scrap reduction, faster cycle times and was instrumental in helping us win a recent piece of business making bakery trays. In the last month we have taken receipt of three new tools which make product for our Interpack business and this has seen output at least quadruple for this product. We take receipt of further tooling for our blow moulded containers during December which will again provide additional volumes where we currently have limited capacity but increasing demand. We have also made significant improvements to the facility with more to come in the new year.

Our crates, caddies and larger container ranges have offered us the greatest opportunity to progress the business with orders from new customers for bakery trays now running alongside our crates for on-line retail and waste recycling. Despite a lull in demand, the expectation is for this to reverse in 2017 as we benefit from the increased sales activity over the last 6 months where we have added more opportunities into the pipeline. The benefits from economies of scale on the larger contracts offered in trade moulding are expected to result in improved efficiencies and performance in the new year. The blow moulding business stabilised during this period. There is planned and ordered investment in the second half in machinery and tooling for production lines that are exposed to higher growth and more predictable markets.

Interpack Ltd, our plastic packaging distribution business has had a strong six months, an increase in the customer base driven by the recruitment of further sales personnel adding to the previous good performance. Supply issues are resolved with our new tooling and we can service our customers from stock particularly from our own in house manufacturing. This puts us in a strong position as the seasonal demand picks up in the new year for our range of products. In addition to the three new tools added in October and November, we are currently looking to add more tooling in the coming months which will broaden our range and increase the percentage of product made by Coral Products Mouldings Ltd.

TatraRotalac Ltd is now formed due to the completed merger of our separate businesses of Tatra Plastics Manufacturing Ltd of Halifax and Rotalac Plastics Ltd of Wythenshawe. The newly merged entity is based at our Wythenshawe facility. The last of the production line moves was completed in September 2016. This gives us 18 extrusion lines under one roof giving opportunities of efficiency and capacity. During the transition there was minimal disruption to customers and continuity of sales numbers. We are yet to realise the full impact of the benefits of the move and look forward to the second half of the year.

Global One-Pak Ltd have worked through a volatile period for imports due to the currency effects post Brexit but have managed to pass on any increases to the customers in the main. However, there has been a time lag in being able to introduce these increases but we should be over this constraint in the second half. We are now looking to manufacture in house, some complimentary products for the Global One-Pak range such as bottles which will provide our customers with a one stop shop in this sector.  There is a planned visit to China in February in order to look at the potential for purchasing assembly equipment and tooling which could produce our current range of products, manufactured out of our UK facilities.

We remain focused on our adherence to Health and Safety standards and maintaining the highest level of accreditation to the Quality standards appropriate to the products we supply. We have an on-going agenda to train and develop our employees to the benefit of all of our stakeholders.      

Capital expenditure

Total capital expenditure in the first six months was £1,143,000 (2015: £985,000) of which £293,000 was spent on the integrated facilities at Wythenshawe and the balance expended on the continued improvements to the capabilities at Haydock which included a new 750 tonne injection moulding machine specifically for making the larger crates, trays and totes. We expect to continue investing in equipment which offers more automation, increased outputs and scrap reduction, in order to keep pace with our business winning and all of which improves shareholder value.  

Financial position

 

The balance sheet asset position has improved further with our net assets standing at £13,787,000 (2015: £10,501,000). This represents a solid asset platform for developing the business. Reflecting higher cap ex and increased working capital requirements (latter due to increased activity, net debt rose to £5.2m to give a gearing ratio of 37% (24%).

 

Underlying EBITDA increased substantially to £1,413,000 (2015: £1,130,000). This has given the Group an improved platform to take the business forward with investment.

 

The Group had undrawn bank facilities of £1.0 million which, together with its asset based finance lines at 31 October 2016, enable it to invest internally or in further acquisitions and businesses for growth which will then enable better returns for our shareholders.

 

Dividends

 

It is the board's intention to pay an increased interim dividend of 0.33 pence per share (2015: 0.30p). The ex-dividend date and the record date for the interim dividend will be 19 January 2017 and 20 January 2017 respectively. The interim dividend will be paid on 1 March 2017. This continues to reflect our confidence in the recovery path and improvement this will bring to our results.

 

Outlook

 

Coral Products PLC continues to make good progress against our 2015 strategic plan. We have strengthened our position in injection moulding and extruded products whilst at the same time expanding our range of capabilities enhancing our market offering.

Results to date in the current financial year have been in line with the Board's expectations and, in spite of prevailing political uncertainties, we remain confident about the Group's future prospects.

 

Joe Grimmond                                                                                     

Chairman                                                                     

8 December 2016

 

 

  

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months to 31 October 2016

  

 

 

 

 

 

Notes

 

Six months to

31 October

2016

(unaudited)

 

 

Six months to

31 October

2015

(unaudited)

 

 

Year to

30 April

2016

(audited)

 

 

 

 

£000

£000

£000

 

 

 

 

 

 

Revenue

 

3

        

10,752

       

8,259

       

18,714

 

Cost of sales

 

       

 (7,246)

        (5,410)

 

(12,512)

Gross profit

 

          3,506

         2,849

    6,202

Operating costs

 

 

 

 

Distribution expenses

 

         (427)

          (313)

 (863)

Administrative expenses before separately disclosed items

 

    

   (2,049)

       

(1,719)

 

(3,690)

Underlying operating profit

              

        1,030

            817

1,649

Non-underlying items:

 

 

 

 

Share based payment charge

 

         (14)

            (3)

(28)

Amortisation of intangible assets

 

       (174)

           (36)

(118)

Compensation for loss of office

 

           -

           -

             (30)

Acquisition costs

 

           -

           -

(67)

Retirement costs of former directors

 

            -

          -

(418)

Impairment loss on trade receivables

 

            -

           -

(50)

 

Administrative expenses

 

                 

       (2,237)

              

        (1,758)

       

        (4,401)

Operating profit

 

           842

          778

      938

Finance expense

 

           (124)

           (94)

       (180)

Profit before taxation

 

           718

           684

     758

 

Taxation

 

4

             

(55)

         

    (73)

            

(15)

Profit after taxation and total comprehensive income attributable to shareholders

 

             663

             611

     743

 

 

 

 

 

 

 

 

 

 

Earnings per ordinary share

5

 

 

 

 

 

 

 

 

Basic and diluted (pence)

 

  0.80

  1.00

1.12

Underlying basic (pence)

 

1.03

1.06

2.20

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 October 2016

  

 

 

 

 

31 October

2016

(unaudited)

 

 

31 October

2015

(unaudited)

 

 

30 April

2016

 (audited)

 

 

 

 

£000

£000

£000

Non-current assets

 

 

 

 

Goodwill

 

   5,495

   4,768

 5,495

Other intangible assets

 

      2,214

      203

   2,390

Property, plant and equipment

 

   7,293

   6,010

  6,517

Total non-current assets

 

   15,002

   10,981

 14,402

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

   2,716

   1,456

  1,843

Trade and other receivables

 

5,283

3,922

5,279

Cash and cash equivalents

 

   214

 55

  910

Total current assets

 

   8,213

   5,433

  8,032

Total assets

 

  23,215

  16,414

  22,434

 

 

 

 

 

Current liabilities

 

 

 

 

Bank overdrafts and borrowings

 

 (3,405)

 (1,517)

   (2,062)

Trade and other payables

 

(3,360)

(2,894)

(3,914)

Corporation tax

 

 (233)

 (119)

(140)

Total current liabilities

 

 (6,998)

 (4,530)

(6,116)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

 

    (1,960)

    (1,321)

     (2,122)

Deferred taxation liability

 

         (470)

         (62)

 (508)

Total non-current liabilities

 

    (2,430)

    (1,383)

     (2,630)

Total liabilities

 

  (9,428)

  (5,913)

(8,746)

Total net assets

 

        13,787

   10,501

         13,688

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

   826

     656

      826

Share premium

 

   5,288

  2,849

   5,288

Other reserves

 

1,061

443

1,061

Retained earnings

 

      6,612

      6,553

     6,513

Total equity

 

   13,787

   10,501

   13,688

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

 

For the six months to 31 October 2016 (unaudited)

 

 

Share

capital

Share

premium

Other

reserves

Retained

earnings

Total

equity

 

 £000

 

  £000

£000

 £000

  £000

At 1 May 2016

  826

5,288

1,061

   6,513

  13,688

Total comprehensive income

-

-

-

663

663

Credit for share based payment

-

-

-

14

14

Dividend paid

       -

         -

               -

        (578)

   (578)

At 31 October 2016

   826

 5,288

1,061

   6,612

  13,787

 

 

 For the six months to 31 October 2015 (unaudited)

 

 

Share

capital

Share

premium

Other

reserves

Retained

earnings

Total

equity

 

 £000

 

  £000

£000

 £000

  £000

At 1 May 2015

  579

 1,862

          443

   6,237

  9,121

Total comprehensive income

-

-

-

611

611

Issue of share capital            

 

77

 

987

 

-

          

    -

         

1,064

Credit for share based payment

 

-

          

    -  

 

-

 

3

 

3

Dividend paid

       -

       -

 

       (298)

 (298)

At 31 October 2015

   656

 2,849

443

   6,553

  10,501

             

  

 

For the year ended 30 April 2016 (audited)

 

 

Share

capital

Share

premium

Other

reserves

Retained

earnings

Total

equity

 

 £000

 

  £000

£000

 £000

  £000

At 1 May 2015

   579

1,862

          443

6,237

9,121

Total comprehensive income

-

-

-

743

743

Issue of share capital

247

3,426

618

-

       4,291

Credit for share based payment

-

-

-

28

            28

Dividend paid

-

-

-

(495)

        (495)

At 30 April 2016

   826

5,288

1,061

    6,513

13,688

 

 

 

 

  

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months to 31 October 2016

 

Six months to

31 October

2016

(unaudited)

               

Six months to

31 October

2015

(unaudited)

              

Year to

30 April

2016

(audited)

 

 

£000

£000

        £000

Cash flow from operating activities

 

 

 

Profit for the period after tax

663

611

743

Adjustments for:

 

 

 

Depreciation

367

306

678

Loss on disposal of fixed assets

-

                    25

50

Intangibles amortisation

176

                    43

133

Share based payment charge

14

                     3

28

Taxation charge

                    55

                     -

            15

Interest payable

 124

                   94

   180

Increase in inventories

(873)

                 (52)

(174)

(Increase)/decrease in trade and other receivables

(4)

                 (68)

(455)

(Decrease)/increase in trade and other payables

(554)

                  354

658

UK corporation tax paid

-

                      -

(40)

Net cash generated from operating activities

(32)

1,316

   1,816

 

 

 

 

Cash flow from investing activities

 

 

 

Acquisition of subsidiary, net of cash

   -

    -

  (2,402)

Acquisition of property, plant and equipment

(1,143)

(785)

(1,668)

Net cash used in investing activities

(1,143)

    (785)

  (4,070)

 

 

 

 

Cash flow from financing activities

 

 

 

Proceeds of issued share capital

-

               1,064

3,641

New loans raised

-

200

1,150

Proceeds of new asset finance

482

                    33

463

Repayment of director's loan

-

               (200)

(200)

Dividend paid

        (578)

      (298)

    (495)

Interest paid

(124)

  (94)

       (180)

Repayments of bank borrowings

               (204)

(197)

(666)

Finance lease principal payments

               (186)

               (137)

(205)

Net cash used in financing activities

    (610)

       371

 3,508

 

Net (decrease)/increase in cash and cash equivalents

    (1,785)

    902

  1,254

Cash and cash equivalents at the start of the period

    (493)

     (1,747)

   (1,747)

Cash and cash equivalents at the end of the period

  (2,278)

  (845)

   (493)

 

 

 

 

1.         Basis of preparation

 

The financial information set out in this Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the year ended 30 April 2016, 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 2016.

 

The Interim Report has not been audited or reviewed 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 2016.

 

 

3.         Revenue

 

All production is based in the United Kingdom. The geographical analysis of revenue is shown below:

 

 

Six months to

31 October 2016

   (unaudited)

£000

Six months to

31 October 2015

(unaudited)

£000

Year to

30 April 2015

(audited)

£000

 

 

 

 

United Kingdom

     9,812

     7,991

    18,151

Rest of Europe

538

268

      408

Rest of the World

402

-

155

 

    10,752

     8,259

    18,714

 

 

 

 

Turnover by business activity

 

 

 

Sale and manufacture of plastic products

     10,752

     8,259

     18,714

 

 

4.         Taxation

 

The taxation charge for the six months to 31 October 2016 is based on the effective taxation rate, which is estimated will apply to earnings for the year ending 30 April 2016.The rate used is below the applicable UK corporation tax rate of 20% 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 2015: 62,118,164 and 30 April 2016: 66,238,090). The earnings used to calculate basic and diluted earnings per share are £663,000 (31 October 2015: £611,000 and 30 April 2016: £743,000). The earnings used to calculate underlying earnings per share are £841,000 (31 October 2015: £650,000 and 30 April 2016: £1,454,000). 

 

 

 

Six months to

31 October 2016

(unaudited)

 

Six months to

31 October 2015

(unaudited)

 

Year to

30 April 2016

(audited)

 

 

£000

p

£000

p

£000

p

Basic and diluted earnings per ordinary share

 

 

 

 

 

 

Profit for the period after tax

 663

0.80

611

1.00

743

1.12

 

 

Underlying earnings per ordinary share

 

 

 

 

 

 

Underlying profit for the period after tax

 851

1.03

650

1.06

1,454

2.20

 

 

 

6.         Reconciliation of net cash flow to 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 to

31 October

2016

 (unaudited)

 

£000

Six months to

31 October

2015

(unaudited)

 

£000

Year to    30 April

2015

(audited)

 

 £000

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

    (1,785)

    902

1,254

Decrease/(increase) in bank and other loans

204

                  197

          (284)

(Increase)/decrease in finance leases

               (296)

                 104 

  (258)

Decrease/(increase) in net debt in the financial period

  (1,877)

1,203

     712

Opening net debt

     (3,274)

    (3,986)

  (3,986)

Closing net debt

 (5,151)

 (2,783)

  (3,274)

 

 

 

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 statements 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. 

 

 


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Half Yearly Report - RNS