Last checked at 11 Jul 2014 07:00
11 July 2014
CORAL PRODUCTS PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2014
Coral Products PLC, (the "Company" or the "Group") 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 2014.
KEY FINANCIALS
2014 £
| 2013 £ |
Change | |
Revenue | 17.2m | 17.3m | - |
Operating profit * | 664,000 | 496,000 | 33.9% |
(Loss)/profit for the year after tax and non-cash exceptional item | (785,000) | 427,000 | - |
EBITDA before non-cash exceptional item* | 1,395,000 | 1,588,000 | (12.2%) |
Underlying earnings per share * | 1.21p | 1.08p | 12.0% |
Dividend per share | 0.5p | 0.5p | - |
* Operating profit, EBITDA and underlying EPS are reported before an exceptional operating charge in 2014 of £1,291,000 as the Directors are of the opinion that these give a more accurate picture of underlying performance
HEADLINES
· Significant underlying earnings increase arising from greater cost control and lower depreciation.
· Sales of food packaging containers continue to rise to £6.1m in 2014 (£5.4m in 2013).
· Exceptional non-cash charge relating to the write-down of media assets in line with strategic plan.
· Underlying EBITDA remains strong at £1.4m maintaining improvement in operating cash flow.
· Major investment in a new 1,150 tonne machine earmarked for new containers for online retail distribution customer.
· Revenues from non-media products increased to £10.9m (£9.2m in 2013).
· Ten year supply agreement with a leading national on-line retailer for a range of totes with expected revenues of £8m over first two years.
· Early conclusion of our 3 year strategic plan.
· Post year-end acquisition of Tatra Plastics Manufacturing Limited and placing of new equity raising £1.7 million.
· Proposed final dividend of 0.5p reflecting the Board's confidence in the future.
Commenting on the results, Joe Grimmond, Chairman, said:
"Last year was a challenging year for our company as the media packaging industry continued its relentless decline in turnover largely due to the increase in electronic media downloading. The successful implementation of our strategy has enabled us to more than offset this decline. The improved trading and financial position of our group allowed us to greatly reduce our reliance on the media sector.
"The non-cash charge in respect of our remaining media assets and the acquisition of Tatra completed after the year-end means we can conclude our 3 year strategic plan early.
"Your Board is now developing our next 3 year plan starting from a much improved position.
"The year ahead looks promising as we start to supply new products for retail distribution and continue to develop in-house food packaging and waste disposal containers. We have an agreement with a large retail distribution company to manufacture new containers to be introduced at purpose built depots. On the strength of this we have added a larger machine to our portfolio to adequately manage the increased tonnage required. We are expecting additional supply agreements as further opportunities arise.
"Interpack is performing strongly and the acquisition of Tatra post year end provides us with access to new markets, increased customer opportunities and an expanded product range. This gives us considerable confidence for the future.
"We believe the opportunity exists for us to create a significant plastic moulding business and we remain confident in our ability to implement our strategic vision and improve business performance to increase our customer base and market share and drive financial results over the medium term".
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
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Tel: 020 7148 7900 |
Broker Hume Capital plc David Lawman / Guy Peters
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Tel: 020 3693 1470
|
Bankside Consultants Richard Pearson | Tel: 07515 587 184 |
CHAIRMAN'S STATEMENT
Last year was a challenging year for our company as the media packaging industry continued its relentless decline in turnover largely due to the increase in electronic media downloading. The successful implementation of our strategy has enabled us to more than offset this decline. The improved trading and financial position of our group allowed us to greatly reduce our reliance on the media sector.
The non-cash charge in respect of our remaining media assets and the acquisition of Tatra completed after the year-end means we can conclude our 3 year strategic plan early.
Your Board is now developing our next 3 year plan starting from a much improved position.
The year ahead looks promising as we start to supply new products for retail distribution and continue to develop in-house food packaging and waste disposal containers. We have an agreement with a large retail distribution company to manufacture new containers to be introduced at purpose built depots. On the strength of this we have added a larger machine to our portfolio to adequately manage the increased tonnage required. We are expecting additional supply agreements as further opportunities arise.
Our subsidiary Interpack has continued to perform in line with expectations and recent sales are particularly encouraging as new customers come on side. Interpack's turnover has risen by 48% since acquisition and profitability has more than doubled.
Trade moulding revenues showed a small increase to £2.7 million and a number of products are being moulded for new customers. A recent order has been placed which is expected to produce significant additional revenue over the next 12 months.
Recycling product sales remained fairly constant at £1.8 million over the year as a whole. The revenues were affected by local authorities' ability to determine their available spend and policy towards waste management. This area is significant to the Group and we continue to commit resources to developing products and partnerships with local authorities and waste management companies.
Results
Group revenue remained constant for the year at £17,222,000 (2013: £17,279,000). Margins declined only slightly as the gains from a more favourable mix of better added value products were offset by increases in raw materials. EBITDA for the group remained strong at £1,395,000 (2013: £1,588,000). Overheads in the group decreased to £3,423,000 (2013: £3,753,000) as a result of the ongoing management of our cost base and a decrease in depreciation charges. This resulted in an underlying operating profit of £664,000 (2013: £496,000). Exceptional costs resulting from the write-off of media assets were £1,291,000 (2013: £nil) and finance costs amounted to £158,000 (2013: £146,000). The loss for the financial year after exceptional items and before taxation was £785,000 compared with a profit for 2013 of £350,000.
Underlying earnings per share were 1.21 pence (2013: 1.08 pence) and the loss per share after exceptional items was 1.87 pence (2013: earnings of 1.08 pence).
Net debt at 30 April 2014 was £3,968,000 (2013: £3,950,000) giving gearing of 52% (2013: 46%). Interest cover before exceptional costs was 4.2 times (2013: 3.4 times). Net assets per share were 18.2p (2013: 20.6p).
Dividends
The board remains committed to its long-term progressive dividend policy, which takes account of the underlying growth in earnings, whilst acknowledging the requirement for continuing investment and short-term fluctuations in profit.
Having considered the results for the year, the outlook for the new financial year and the ongoing requirements of the business, the board has recommended the total dividend be maintained at 0.5 pence per share. The ex-dividend date will be Wednesday 23 July 2014 and the record date Friday 25 July 2014. This final dividend will be paid on 17 October 2014.
Strategy
We aim to enhance our position, through organic investment and selective acquisitions, as a leading plastic moulding group. We have successfully followed a 3 year strategic plan to replace production of media packaging with new products with longer and progressive futures. We continue to look at new markets and develop products and relationships that will enable us to benefit from the opportunities that will continue to arise from long-term growth in plastics moulding.
Acquisition and placing
In line with our strategy, we completed the acquisition of Tatra Plastics Manufacturing Limited earlier this month and successfully raised £1.7 million with new and existing investors via a placing of new equity.
Tatra is one of the UK's longest established specialists in PVC and plastic injection moulding and extrusion. Based near Halifax, West Yorkshire, Tatra is an approved supplier to, and holds current contracts with, major corporations in the telecommunications and rail industries and has, for the last 5 years, been developing and manufacturing products for the fibre optic market. The acquisition will provide Coral with an entry into, inter alia, the rail and telecoms markets and expand Coral's range of products. In the year ended 31 December 2013, Tatra's audited sales and profit before tax were approximately £3.2 million and £0.2 million respectively. The net asset value of Tatra as at 31 December 2013 was £0.9 million.
People
We are reliant on the expertise, professionalism and commitment of our people and their contribution to the business during a challenging year.
Outlook
Interpack is performing strongly and the acquisition of Tatra post year end provides us with access to new markets, increased customer opportunities and an expanded product range. This gives us considerable confidence for the future.
We believe the opportunity exists for us to create a significant plastic moulding business and we remain confident in our ability to implement our strategic vision and improve business performance to increase our customer base and market share and drive financial results over the medium term.
Joe Grimmond
Chairman
11 July 2014
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 30 APRIL 2014
Unaudited 2014 | Audited 2013 |
| |||||||
£'000 | £'000 | ||||||||
Continuing operations | |||||||||
Revenue | 17,222 | 17,279 | |||||||
Cost of sales | (13,135) | (13,030) | |||||||
Gross profit | 4,087 | 4,249 | |||||||
Operating costs | (3,423) | (3,753) | |||||||
Underlying operating profit | 664 | 496 | |||||||
Exceptional items * | (1,291) | - | |||||||
(Loss)/profit from operations |
(627) | 496 | |||||||
Finance costs | (158) | (146) | |||||||
(Loss)/profit for the financial year before taxation |
(785) | 350 | |||||||
Taxation | - | 77 | |||||||
(Loss)/profit for the year attributable to equity holders |
(785) | 427 | |||||||
Earnings/(loss) per share | Note 2 | ||||||||
Basic per ordinary share from continuing operations | (1.87)p | 1.08p | |||||||
Underlying per ordinary share from continuing operations | 1.21p | 1.08p | |||||||
* Exceptional items are impairment losses on media asset values. The losses comprise a write-down of £1,187,000 in fixed assets and £104,000 in stock.
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2014
Unaudited 2014 | Audited 2013 | ||
£'000 | £'000 | ||
(Loss)/profit for the financial year | (785) | 427 | |
Total comprehensive income for the year attributable to the company's shareholders | (785) | 427 |
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2014
Unaudited 2014 | Audited 2013 | |||
£'000 | £'000 | |||
Non-current assets | ||||
Goodwill | 3,868 | 3,868 | ||
Other intangible assets | 42 | 144 | ||
Property, plant and equipment | 5,198 | 6,286 | ||
9,108 | 10,298 | |||
Current assets | ||||
Inventories | 1,725 | 1,377 | ||
Trade and other receivables | 4,233 | 3,874 | ||
Corporation tax repayable | - | 107 | ||
5,958 | 5,358 | |||
Total assets | 15,066 | 15,656 | ||
Current liabilities | ||||
Trade and other payables | (3,434) | (3,047) | ||
Borrowings | (2,199) | (2,259) | ||
Finance lease liabilities | (192) | (163) | ||
Term loan | (111) | (142) | ||
(5,936) | (5,611) | |||
Non-current liabilities | ||||
Finance lease liabilities | (285) | (128) | ||
Term loans | (1,181) | (1,258) | ||
Deferred tax | (32) | (32) | ||
(1,498) | (1,418) | |||
Total liabilities | (7,434) | (7,029) | ||
Net assets | 7,632 | 8,627 | ||
Equity | ||||
Share capital | 419 | 419 | ||
Share premium | 409 | 409 | ||
Retained earnings | 6,804 | 7,799 | ||
Equity attributable to shareholders | 7,632 | 8,627 |
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2014
Share capital | Share premium account | Capital redemption reserve | Retained earnings | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
Group | |||||
At 1 May 2012 | 381 | 6,977 | 7 | 579 | 7,944 |
Net profit for the year | - | - | - | 427 | 427 |
Cancellation of share premium and capital redemption reserve | - | (6,977) | (7) | 6,984 | - |
Share issue | 38 | 409 | - | - | 447 |
Dividend paid | - | - | - | (191) | (191) |
At 30 April 2013 (audited) | 419 | 409 | - | 7,799 | 8,627 |
Net profit for the year | - | - | - |
(785) |
(785) |
Dividend paid | - | - | - | (210) | (210) |
At 30 April 2014 (unaudited) | 419 | 409 | - | 6,804 | 7,632 |
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2014
Unaudited 2014 | Audited 2013 | |||
£'000 | £'000 | |||
Cash flows from operating activities | ||||
(Loss)/profit for the year | (785) | 427 | ||
Adjustments for: | ||||
Depreciation of property, plant and equipment | 681 | 1,019 | ||
Profit on disposal of fixed assets | (31) | - | ||
Amortisation of intangible assets | 50 | 73 | ||
Impairment provision | 1,187 | - | ||
Taxation recovered | - | (77) | ||
Interest expense | 158 | 146 | ||
Operating cash flows before movements in working capital | 1,260 | 1,588 | ||
(Increase)/decrease in inventories | (348) | 609 | ||
(Increase) in trade and other receivables | (359) | (357) | ||
Increase/(decrease) in trade and other payables | 385 | (1,244) | ||
Cash generated by operations | 938 | 596 | ||
UK corporation tax paid | 109 | (141) | ||
Net cash generated from operating activities | 1,047 | 455 | ||
Cash flows from investing activities | ||||
Acquisition of property, plant and equipment | (375) | (2,647) | ||
Proceeds from sales of plant | 45 | - | ||
Acquisition of intangible assets | (12) | (17) | ||
Net cash used in investing activities | (342) | (2,664) | ||
Cash flows from financing activities | ||||
Proceeds of share issue | - | 447 | ||
Proceeds of term loan | - | 1,400 | ||
Proceeds of director's loan | - | 150 | ||
Dividends paid to equity holders | (210) | (191) | ||
Proceeds of new asset finance | - | 350 | ||
Repayment of director's loan | (4) | - | ||
Interest paid | (158) | (146) | ||
Term loan repayments | (104) | (1,170) | ||
Finance lease principal payments | (169) | (179) | ||
Net cash generated from financing activities | (645) | 661 | ||
Net increase/(decrease) in cash and cash equivalents |
60 |
(1,548) | ||
Cash and cash equivalents at 1 May | (2,259) | (711) | ||
Cash and cash equivalents at 30 April | (2,199) | (2,259) | ||
Cash | - | - | ||
Overdraft | (2,199) | (2,259) | ||
Cash and cash equivalents at 30 April | (2,199) | (2,259) |
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial information set out above does not constitute the Group's statutory accounts for the years ended 30 April 2014 or 2013 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the company's Annual General Meeting. The auditors' report on the statutory accounts for the year ended 30 April 2013 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.
2. 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 41,935,609 (2013: 39,613,965).
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 and underlying earnings per share:
Unaudited 2014 | Audited 2013 | |||
£'000 | EPS (p) | £'000 | EPS (p) | |
(Loss)/profit for the financial period | (785) | (1.87) | 427 | 1.08 |
Exceptional items | 1,291 | 3.08 | - | - |
Underlying profit for the period | 506 | 1.21 | 427 | 1.08 |
3. Taxation
Analysis of the tax credit in the accounts comprises the following:
2014 | 2013 | |||
£'000 | £'000 | |||
Current income tax credit | - | 109 | ||
Deferred income tax | - | (32) | ||
- | 77 |
4. Dividends
A final dividend of 0.5p per share was paid on 17 October 2013 to shareholders on the register on 19 July 2013. This dividend amounted to £209,678.
In respect of the current year the directors propose a final dividend of 0.5p per share to be paid on 17 October 2014 to shareholders on the register on 25 July 2014. The ex dividend date will be 23 July 2014. The dividend is subject to approval by the shareholders of the company at the Annual General Meeting. This dividend equates to £209,678 and has not been included as a liability at 30 April 2014.
5. Group reconciliation of net cash flow to movement in net debt
2014 | 2013 | |||
£'000 | £'000 | |||
Increase/(decrease) in cash and cash equivalents | 60 | (1,548) | ||
Decrease/(increase) in bank loans | 104 | (230) | ||
New director's loan | - | (150) | ||
Directors loan repayment | 4 | - | ||
Increase in asset finance | (186) | (171) | ||
Movement in net debt in the period | (18) | (2,099) | ||
Net debt at start of the period | (3,950) | (1,851) | ||
Net debt at end of the period | (3,968) | (3,950) |
6. Publication of Annual Report and Notice of Annual General Meeting
A copy of the 2014 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 27 August 2014 at 12:00 p.m., will be sent to all shareholders on or around 5 August 2014. 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.