Last checked at 17 Jul 2012 07:00
17 July 2012
CORAL PRODUCTS PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2012
Coral Products PLC ("Coral Products" or the "Company"), a specialist in the design, manufacture and supply of injection moulded plastic products based in Haydock, Merseyside, announces its preliminary results for the year ended 30 April 2012.
KEY FINANCIALS
2012 £
| 2011 £ |
Change | |
Revenue | 17.3m | 13.2m | 31% |
Operating profit * | 250,000 | (700,000) | |
Underlying profit before tax * | 185,000 | (753,000) | |
Underlying EBITDA* | 1,212,000 | 602,000 | 101% |
Gearing | 23.3% | 15.5% | |
Underlying earnings per share * | 0.58p | (3.74)p | |
Dividend per share | 0.5p | Nil |
* | Group operating profit, underlying profit before tax, EBITDA and underlying EPS are reported before an exceptional operating charge of £554,000 as the Directors are of the opinion that these give a better indication of underlying performance. |
HEADLINES
·; Revenue up £4.1m to £17.3m with strong performance from food packaging sales following acquisition of Interpack Limited.
·; Operating losses of £700,000 transformed to operating profit of £250,000 due to improved trading mix and initial benefits from the Interpack acquisition.
·; Underlying EBITDA up to £1.2m from £0.6m reflecting significant improvement in operating cash flow.
·; Move from Main Market to AIM completed in September 2011.
·; Investment of £1.6m in machinery and upgrade of facilities leading to new food packaging production facility and BRC approval.
·; Strategic plan on track to reduce revenues from sale of media products to below 50% of total revenues by 30 April 2014.
·; Final dividend of 0.5p reflecting Company's objective to return to dividends.
Commenting on the results, Joe Grimmond, Chairman, said:
"I am pleased to report that Coral Products has made good progress in the past financial year, achieving growth in revenue and a return to underlying profit. This was the initial year of our three year strategic plan of improvement the progress made demonstrates the fundamental strengths of the business and its capacity to improve.
"The acquisition during the year of the reselling and distributing business of Interpack Limited has enabled the group to reduce exposure to media packaging by diversifying into new markets. These markets focus on food packaging products where Interpack has an experienced sales and marketing team. Further, this has enabled us to convert some of our existing facilities and upgrade to BRC standards for which we have obtained accreditations. These products not only substitute for existing packaging but also represent a new range to be added to Interpack's portfolio.
"Whilst overall economic conditions remain difficult, our trading has continued to improve across the group. The benefit from our recent investments is leading to positive sales growth and this, together with a full year's contribution from Interpack is expected to result in a further year of solid growth."
For further information, please contact:
Coral Products plc Joe Grimmond, Non-Executive Chairman Warren Ferster, Chief Executive & Managing Director
|
Tel: 07703 518 148 Tel: 01942 272 882 |
Nominated Adviser Cairn Financial Advisers LLP Avi Robinson / Tony Rawlinson
|
Tel: 020 7148 7900 |
Broker XCAP Securities plc David Lawman / Adrian Kirk
|
Tel: 020 7101 7070
|
Bankside Consultants Richard Pearson | Tel: 020 7367 8888 |
CHAIRMAN'S STATEMENT
The results for the year to 30 April 2012 show a return to an underlying profit for the group reflecting a substantial improvement and, with the acquisition of our subsidiary, Interpack Limited ("Interpack"), the group now has a much improved outlook from entering new markets and having an experienced sales and marketing team leading the way.
Although overall economic conditions remain difficult, trading has continued to improve in recycling containers and food products and we expect new business gains to support further growth in the coming year. Sales of food packaging products from Interpack were above expectations and, with our existing facilities gaining BRC approval in December 2011 and now being used to manufacture some of Interpack's products, we expect a strong performance with improved margins in the coming year. This acquisition has lowered the group's reliance on media products and reduced its exposure to markets that, whilst still representing the main form of media format, are in decline.
Progress continued in recycling products with revenues of over £2.1m and gains of business with a number of additional local authorities. Coral is now recognised as a lead supplier with accreditations with the two largest purchasing organisations, ESPO and YPO, and has developed a number of partnerships with logistic distributors.
Revenue from media products, having been strong until early in 2012, fell towards the latter stages of the financial year, as announced in May 2012. Overall, however, our customers expect that volumes will be largely maintained and we remain committed to the sector.
Trade moulding revenues remained fairly constant over the year as a whole. This is another area where resource is being provided to target businesses which would benefit from our expertise and facilities and we expect improved results in the year ahead.
Revenue and Profits
Group revenue increased for the year by 31% to £17.3m (2011: £13.2m). Of the £4.1m increase, £3.1m was provided by Interpack since the date of acquisition of 6 September 2011. Increased sales and more stable operating costs improved gross profit by 57% to £3.8m (2011: £2.4m). Overheads in the group's original business were maintained at 2011 levels although overall they increased by £400,000 as a result of the addition of Interpack.
Group underlying operating profit was £250,000 (2011: loss of £700,000). Finance costs were £65,000 (2011: £53,000) giving an underlying profit before exceptional items of £185,000 (2011: loss of £753,000). Exceptional items represented the cost of the acquisition and reorganisation and totalled £554,000, leaving a loss of £369,000 (2011; loss of £753,000) to be deducted from reserves.
Cash and Finances
Cash flow benefited from the proceeds from the £1.7m net receipt from a share issue to fund the acquisition of Interpack together with receipt of a term loan of £1.4m.This was offset by capital expenditure on new plant and machinery of £1.6m and the cost of the investment in Interpack of £4.1m, with additional expenditure for costs and reorganisation of £554,000.
Overall borrowings increased by £944,000 to £1,851,000 at the year end.
In June 2012, the Group announced that it had arranged new loan facilities to facilitate early repayment of its existing term loan and increase in its working capital facilities. The new loans comprise £350,000 of asset finance and £150,000 of an unsecured Director's loan. As a result of the early repayment, Coral's working capital facilities have been increased by £800,000.
Dividends
The Board proposes a final dividend of 0.5p per share to be paid on 15 October 2012 to shareholders on the register at the close of business on 27 July 2012. This return to a dividend payment for the first time since 2005 is a result of the improved performance of the group and the board's expectations of future performance.
AIM Market
The group moved its listing from the Main Market to AIM in September 2011. The directors believe that this market is the more appropriate for the size of the group and offers certain advantages to the group and shareholders.
Outlook
Management is committed to building upon the hard-earned improvements in the business and to increase the focus on growth markets and target areas in which sales can be developed.
Whilst overall economic conditions remain difficult, our trading has continued to improve across the group. The benefit from our recent investments is leading to very positive sales growth and this, together with a full year's contribution from Interpack should result in a further year of solid growth.
Joe Grimmond
Chairman
17 July 2012
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 30 APRIL
Unaudited 2012 | Audited 2011 |
| |||||||
£'000 | £'000 | ||||||||
Continuing operations | |||||||||
Revenue | 17,309 | 13,194 | |||||||
Cost of sales | (13,483) | (10,755) | |||||||
Gross profit | 3,826 | 2,439 | |||||||
Operating costs | (3,576) | (3,139) | |||||||
Underlying operating profit/(loss) | 250 | (700) | |||||||
Exceptional items | (554) | - | |||||||
Loss from operations | (304) | (700) | |||||||
Finance costs | (65) | (53) | |||||||
Loss for the financial year before taxation | (369) | (753) | |||||||
Taxation | - | - | |||||||
Loss for the year attributable to equity holders | (369) | (753) | |||||||
Earnings/(loss) per share | Note 3 | ||||||||
Basic and diluted per ordinary share from continuing operations | (1.16)p | (3.74)p | |||||||
Underlying per ordinary share from continuing operations | 0.58p | (3.74)p | |||||||
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL
Unaudited 2012 | Audited 2011 | ||
£'000 | £'000 | ||
Loss for the financial year | (369) | (753) | |
Total comprehensive income for the year attributable to the company's shareholders | (369) | (753) |
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL
Unaudited 2012 | Audited 2011 | |||
£'000 | £'000 | |||
Non-current assets | ||||
Property, plant and equipment | 4,658 | 3,994 | ||
Goodwill | 3,868 | - | ||
Other intangible assets | 200 | 217 | ||
Rental deposit | - | 50 | ||
8,726 | 4,261 | |||
Current assets | ||||
Inventories | 1,986 | 1,689 | ||
Trade and other receivables | 3,517 | 2,596 | ||
Cash | 52 | 5 | ||
5,555 | 4,290 | |||
Total assets | 14,281 | 8,551 | ||
Current liabilities | ||||
Trade and other payables | (4,291) | (1,925) | ||
Corporation tax payable | (143) | - | ||
Borrowings | (1,518) | (893) | ||
(5,952) | (2,818) | |||
Non-current liabilities | ||||
Borrowings | (385) | (19) | ||
(385) | (19) | |||
Total liabilities | (6,337) | (2,837) | ||
Net assets | 7,944 | 5,714 | ||
Equity | ||||
Share capital | 381 | 201 | ||
Share premium | 6,977 | 4,558 | ||
Capital redemption reserve | 7 | 7 | ||
Retained earnings | 579 | 948 | ||
Equity attributable to shareholders | 7,944 | 5,714 |
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL
Share capital | Share premium account | Capital redemption reserve | Retained earnings | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
Group | |||||
At 1 May 2010 | 201 | 4,558 | 7 | 1,701 | 6,467 |
Loss for the year | (753) | (753) | |||
At 30 April 2011 (audited) | 201 | 4,558 | 7 | 948 | 5,714 |
Underlying profit for the year | - | - | - | 185 | 185 |
Exceptional items | - | - | - | (554) | (554) |
Share issue | 180 | 2,419 | - | - | 2,599 |
At 30 April 2012 (unaudited) | 381 | 6,977 | 7 | 579 | 7,944 |
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL
Group |
| ||||
Unaudited 2012 | Audited 2011 | ||||
£'000 | £'000 | ||||
Cash flows from operating activities | |||||
Loss for the year | (369) | (753) | |||
Adjustments for: | |||||
Depreciation of property, plant and equipment | 904 | 1,246 | |||
Amortisation of intangible assets | 58 | 56 | |||
Interest payable | 65 | 53 | |||
Exchange loss on finance leases | - | (18) | |||
Operating cash flows before movements in working capital | 658 | 584 | |||
Increase in inventories | (200) | (537) | |||
Decrease/(Increase) in trade and other receivables | 53 | (205) | |||
Increase in trade and other payables | 1,226 | 810 | |||
Cash generated by operations | 1,737 | 652 | |||
UK corporation tax paid | (-) | (-) | |||
Net cash generated from operating activities | 1,737 | 652 | |||
Cash flows from investing activities | |||||
Purchase of subsidiaries net of cash acquired | (2,756) | - | |||
Acquisition of plant and equipment | (1,568) | (614) | |||
Acquisition of intangible assets | (41) | (30) | |||
Net cash used in investing activities | (4,365) | (644) | |||
Cash flows from financing activities | |||||
Proceeds of share issue | 1,699 | - | |||
Proceeds of term loan | 1,400 | - | |||
Proceeds of new asset finance | 100 | - | |||
Rental deposit repayment | 50 | 50 | |||
Interest paid | (65) | (35) | |||
Term loan repaid | (380) | - | |||
Finance lease principal payments | (39) | (356) | |||
Net cash used in/(from) financing activities | 2,765 | (341) | |||
Net increase/(decrease) in cash and cash equivalents | 137 | (333) | |||
Cash and cash equivalents at 1 May | (848) | (515) | |||
Cash and cash equivalents at 30 April | (711) | (848) | |||
Cash | 52 | 5 | |||
Overdraft | (763) | (853) | |||
Cash and cash equivalents at 30 April | (711) | (848) | |||
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 April 2012 or 2011 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's Annual General Meeting. The auditors' report on the statutory accounts for the year ended 30 April 2011 was unqualified and does not contain statements under s498(2) or (3) Companies Act 2006.
This financial information has been prepared in accordance with International Financial Reporting Standards ("IFRSs") and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Underlying profit - the Company believes that underlying profit and underlying earnings provide additional useful information for shareholders. The term underlying earnings is not a defined term under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies. It is not intended to be a substitute for, or superior to, IFRS measures of profit. A reconciliation of the statutory measure required by IFRS is disclosed in note 3.
2. Acquisition of subsidiary
On 6 September 2011, the Company acquired the entire share capital of Interpack Limited. The analysis of the net assets and consideration for this business are shown as follows:
£'000 | |
Inventories | 97 |
Trade and other receivables | 974 |
Trade payables | (697) |
Other creditors | (443) |
Taxation | (143) |
(212) | |
Cash and cash receivables | 439 |
Total net assets at fair value | 227 |
Goodwill arising on the acquisition | 3,868 |
Total purchase consideration | 4,095 |
The cash consideration consisted of an initial payment of £2,100,000 followed by an earn-out payment of £1,095,000 which was dependent upon the profits of Interpack and represented the maximum payment under the Acquisition Agreement. The balance was met by consideration shares of £900,000. Since acquisition, Interpack has contributed £3,105,000 revenue and £605,000 profit to the group.
3. Earnings per Share
The basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders for the financial period by the weighted average number of shares in issue during the financial period of 31,840,527 (2011: 20,135,609).
Diluted earnings per share include the effects of potentially dilutive share options granted.
Underlying earnings per share is also shown calculated by reference to earnings before exceptional items. The Directors consider that this gives a useful indication of underlying performance,
Basic, diluted and underlying earnings per share:
Unaudited 2012 | Audited 2011 | |||
£'000 | p | £'000 | p | |
Loss for the financial period | (369) | (1.16) | (753) | (3.74) |
Exceptional items | 554 | 1.74 | - | - |
Underlying profit / (loss) | 185 | 0.58 | (753) | (3.74) |
4. Publication of Annual Report and Notice of Annual General Meeting
A copy of the 2011 Report & Accounts, together with a notice of the Annual General Meeting to be held at Haydock Thistle Hotel, Penny Lane, Haydock, Merseyside WA11 9SG on 29 August 2012 at 12:00 p.m., will be sent to all shareholders on or around 6 August 2012. Further copies will be available to the public at the Company's registered address at North Florida Road, Haydock Industrial Estate, Haydock, Merseyside WA11 9TP and on the Company's website at www.coralproducts.com.