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Coral Products PLC  -  CRU   

Half-year Report

Released 07:00 29-Nov-2018

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 to

31 October

2018

Six months to

31 October

2017

% change

 

 

 

 

Group sales

 £13.08 million

 £11.91 million

+9.8%

Gross profit

 £5.04 million

 £4.04 million

+24.8%

Underlying operating margin*

 38.5%

 33.9%

+13.5%

Underlying operating profit (excluding finance expenses)*

 £1,009,000

 £371,000

+172.0%

Reported profit/(loss) before taxation

 £582,000

 £ (7,000)

+8,414.3%

Underlying EBITDA*

   £1,747,000

   £982,000

+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

Joe Grimmond, Non-Executive Chairman

Mick Wood, CEO

 

Tel: 01942 272 882

 

Nominated Adviser

Cairn Financial Advisers LLP

Tony Rawlinson / Liam Murray

 

 

Tel: 020 7213 0880

Broker

Daniel Stewart & Company Limited

David Lawman

Richard Potts

 

 

Tel: 020 7776 6550

 

Capital Markets Consultants Limited

Richard Pearson

Tel: 07515 587 184

 

 

 

 

 

 

 

 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 £13,077,000 (six months to 31 October 2017: £11,911,000).

 

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 £5,039,000 (2017: £4,037,000) in the six months to 31 October 2018.

 

Underlying EBITDA has improved substantially on last year at £1,747,000 (2017: £982,000).

 

Underlying profits for operations increased to £1,009,000 (2017: 371,000), a significant improvement over the same period last year.

 

Separately disclosed expenses of £222,000 (2017: £196,000) comprised the amortisation of intangibles acquired on acquisition and share based payment charges over employee options.

 

Finance costs were up from £182,000 to £205,000 in this period due to the increased levels of borrowing needed to fund capital expenditure.

 

Profit after tax after including all these items was £500,000 compared to a loss of £7,000 over the same period last year.

 

The balance sheet net asset position remains strong at £13,749,000 (2017: £13,493,000). This represents a solid asset platform for developing the business.

 

The Group's net debt has decreased to £6,868,000 (2017: £7,110,000). The Group has undrawn bank facilities of £1.9 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 £810,000 (2017: £1,277,000) of which £244,000 (2017: £201,000) 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 29th 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

  

 

 

 

 

 

Notes

 

Six months to

31 October

2018

(unaudited)

 

£000

Six months to

31 October

2017

(unaudited)

 

£000

Year to

30 April

2018

(audited)

 

£000

 

 

 

 

 

 

 

 

 

 

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

2018

(unaudited)

 

£000

31 October

2017

(unaudited)

 

£000

30 April

2018

 (audited)

 

£000

 

 

 

 

 

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

capital

Share

premium

Other

reserves

Retained

earnings

Total

equity

 

 £000

 

  £000

£000

 £000

  £000

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

capital

Share

premium

Other

reserves

Retained

earnings

Total

equity

 

 £000

 

  £000

£000

 £000

  £000

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

capital

Share

premium

Other

reserves

Retained

earnings

Total

equity

 

 £000

 

  £000

£000

 £000

  £000

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 to

31 October

2018

(unaudited)

               £000

Six months to

31 October

2017

(unaudited)

               £000

Year to

30 April

2018

(audited)

        £000

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

 

 

 

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.

 

 

 

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.

 

 

 

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

 

 

Six months to

31 October 2018

   (unaudited)

£000

Six months to

31 October 2017

(unaudited)

£000

Year to

30 April 2018

(audited)

£000

 

 

 

 

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

 

 

 

 

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.

 

 

 

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).

 

 

 

Six months to

31 October 2018

(unaudited)

 

Six months to

31 October 2017

(unaudited)

 

Year to

30 April

2018

(audited)

 

 

£000

p

£000

p

£000

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

 

 

 

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

2018

 (unaudited)

 

£000

Six months to

31 October

2017

(unaudited)

 

£000

Year to    30 April

2018

(audited)

 

 £000

 

 

 

 

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)

         

 

  

 

 

 

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).

 


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Half-year Report - RNS