REG - Coral Products PLC - Final Results
04/09/2023 07:00
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RNS Number : 2572L Coral Products PLC 04 September 2023
4 September
2023
CORAL PRODUCTS PLC
('Coral' or the 'Company' or the 'Group')
Final Results
Coral Products PLC, a specialist in the design, manufacture and supply of
injection moulded plastic products based in Wythenshawe, Manchester, announces
its audited final results for the year ended 30 April 2023.
2023 2022 %
Financial headlines £m £m Change
Group sales 35.2 14.4 144%
Gross profit 10.5 5.3 98%
Gross margin % 29.7% 36.7%
- From existing operations 39.6% 36.7% 8%
- From the four acquisitions 23.3% -
Underlying results *
- Operating profit 2.7 1.6 69%
- Profit before taxation 2.3 1.5 53%
- EBITDA 3.9 1.8 117%
- Basic earnings per share 2.60p 1.39p 87%
Statutory Results
- Operating profit 1.7 1.4 21%
- Profit before taxation 1.3 1.3 0%
- EBITDA 3.4 1.9 79%
- Basic earnings per share 1.44p 1.19p 21%
Dividend paid per share 0.5p 1.1p
Proposed final dividend payment per share 0.6p -
* Underlying results are reported before separately disclosed items, as shown
in note 2. Such underlying results are not
intended to be a substitute for, or superior to, IFRS measures of profit.
Operational headlines
· Completed a successful year more than doubling both sales and
underlying EBITDA through a mix of organic and acquisition led growth.
· Revenues increased by 144% to £35.2 million of which £21.3
million was derived from the four acquisitions completed during the year.
· Underlying operating profit increased to £2.7m (2022: £1.6m) and
underlying EBITDA increased to £3.9m (2022: £1.8m). Gross margins from
existing operations increased by 8% from 36.7% to 39.6%.
· Strong cash position with cash and cash equivalents in the Group
totalling £4.8m (2022: £7.6m) after investing:
o £4.3 million of cash completing four acquisitions during the year; and
o £2.1 million of capex in new machinery, costs associated with re-tooling
for future projects and re-configuring warehouse space to expand manufacturing
capacity.
· An interim dividend of 0.5p per share was paid on 16 December
2022. A final dividend of 0.6p is proposed to be paid on 30 November 2023,
making a full year dividend of 1.1p (2022: 1.1p) per share.
· Sustainability remains a core focus across all operations with
specific targets around:
o Adoption of bio-based materials;
o Increasing move to re-cyclable materials; and
o Supply chain tracking and transparency.
· In March 2023 the Group entered into a new banking facility with
Virgin Money. The new facility gives the Group a banking facility of £10.35
million comprising £7.35 million for invoice discounting and £3 million for
trade financing.
Post year end
· Customised Packaging Limited was merged into Manplas Limited. This
should allow synergies between the two companies to be realised.
· Group acquired 100% of the share capital of Ecotatou SL, a
reseller/distributor in Spain, for a total consideration of €18,000
satisfied in cash. This acquisition gives the Group a foothold in Spain for
the sale and distribution of Ecodeck Grids.
· Group sold the land and building in Parr, St Helens for
£225,000. This unencumbered property was valued at £200,000 on the balance
sheet at year end.
· In July 2023 the Group paid an earn-out of £1,275,000 to the
Vendors of Alma Products Limited. This earn-out completes the full
consideration for the acquisition of Alma Products Limited taking the total
consideration to £3,002,000.
· In July 2023 the Group purchased 400,000 of its own shares into
treasury at an average cost of 16.5p. The issued share capital following the
purchase is now 89,877,589 shares
Commenting on the results, Joe Grimmond, Chairman, said:
"We are pleased to have a completed a successful year for the business. We
have invested in both organic and acquisition led growth, whilst maintaining
our commitment to sustainability. Existing operations generated an 8%
improvement in gross margins reflecting the investment we have made and the
drive of our autonomous business teams. The four acquisitions completed during
the first half of the financial year delivered a significant sales uplift and,
have integrated well, adding complementary expertise and products lines.
Despite investment in acquisitions and our ongoing capex programme, the Group
continues to be highly cash generative and has retained a strong gross cash
position. Our objective remains focused on capitalising on our position in the
specialists' plastics market where we see significant further opportunity."
For further information, please contact:
Coral Products plc
Joe Grimmond, Chairman Tel: 07703 518 148
Nominated Adviser & Broker
Cenkos Securities plc Tel: 020 7397 8900
Adrian Hadden, Charlie Combe
Novella Communications Tel: 020 3151 7008
Tim Robertson/Safia Colebrook
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
About Us
Coral Products is a one stop shop for all plastic needs. Coral Products
manufactures and distributes plastic injection, extruded and vacuum formed
moulded products into a diverse range of sectors including personal care,
household, healthcare, automotive, telecoms and rail. The Group has
manufacturing and distribution facilities across the North West of the UK.
By developing innovative plastic moulded products, providing excellent
customer service and through its hard-working employees, Coral Products
continues to refocus on new markets creating growth and value for its
shareholders.
Sustainability is a core principle of our business. In all manufacturing
processes, any scrap or waste material is reused or recycled. We offer
"end-of-life" recycling and where viable we adopt and use bio based and
re-cyclable materials and provide supply chain tracking and transparency.
In 2021 the Group adopted a five-year plan aimed at substantially increasing
Group revenue and profitability from our specialist plastic products
manufacturing and distribution facilities. The Group took the initial step
along this plan when it disposed of Coral Products (Mouldings) Ltd and
Interpack Ltd closely followed by the acquisition of Customised Packaging Ltd.
CHAIRMAN'S STATEMENT
Introduction
The business has doubled in size during the course of the year under review.
Importantly, this has been achieved through investment in both organic and
acquisition led growth, in line with our aim to become a UK plastics business
of scale. Overall, Group trading has been strong with sales in line with the
upgraded market guidance given in May 2023 and adjusted EBITDA 9.6% ahead. The
business is stable, cash generative and backed by a solid balance sheet.
The four acquisitions have integrated well. Each is a specialist plastics
business based in the North West of the UK. We are confident there is scope to
improve the performance of each business acquired and potential to collaborate
across the Group. An example of this is the recent decision to merge
Customised Packaging Limited into Manplas Limited, two very similar businesses
offering customised product protection solutions. The combination of these
businesses will create several synergies, together with an improved customer
offer.
As ever, the Group is dedicated to moving towards more sustainable solutions
where it is commercially viable to do so and during the year under review,
good progress was made towards reaching our sustainability goals.
Results and Financial Position
Trading during the year shows a substantial increase on the prior year.
Reported revenue was £35,216,000 (2022: £14,391,000), gross margins were
29.7% (2022: 36.7%) resulting in a gross profit of £10,476,000 (2022:
£5,287,000). Underlying EBITDA was £3,882,000 (2022: £1,779,000) and
underlying operating profits increased to £2,713,000 (2022: £1,574,000).
The change in gross margin reflects the changes in sales mix from the
acquisitions during the year. After investing £11,571,000 in new subsidiaries
the gearing remains comfortable at 50.7%. The balance sheet net asset position
is strong at £13,848,000 (2022: £11,707,000). This represents a solid asset
platform for developing the business.
In March 2023, the Group entered into a new banking facility with Virgin
Money. The new facility gives the Group a banking facility of £10.35
million comprising £7.35 million for invoice financing and £3
million for trade financing. In addition, the Group has re-mortgaged the
freehold buildings acquired with Film & Foil Solutions Ltd and Alma
Products Ltd for a combined £2.1 million which after repaying existing
mortgages improved the Group's working capital position by circa £1.4
million.
In July 2023 the Group purchased 400,000 of its own shares into treasury at an
average cost of 16.5p. The issued share capital following the sale is now
89,877,589 shares.
Trading
The year ended 30 April 2023 was an exceptionally productive year for Coral
Products plc as we continue to adapt and develop our business to enable us to
maximise the opportunities available.
The Company is focused on becoming a UK plastics business of scale and using
its established acquisition criteria the Group bought four businesses during
the first half of the financial year:
· Film & Foil Solutions Ltd acquired in May 2022, a market
leading converter and stockist of flexible packaging film, print lamination
film and speciality plastics.
· Alma Products Ltd also acquired in May 2022, is a niche
specialist and expert in extrusion, thermoforming and container printing
serving the food industry, providing formable plastic sheet for Form-Fill-Seal
applications, thermoformed and printed plastic food packaging.
· Manplas Limited acquired in September 2022, is a provider of
customised product protection solutions solving logistical problems across
multiple sectors with premises that adjoin our largest subsidiary Tatra
Rotalac.
· Ecodeck Grids Limited acquired in October 2022, e-commerce led
business selling plastic grids with potential to take the manufacture of the
grids in-house. In June 2023, the Group acquired a small business which gives
the Group a foothold in Spain for the sale and distribution of Ecodeck Grids.
All four acquisitions are specialist design and product led plastics
businesses based in the North West of the UK and all are now fully integrated
into the Group and performing well.
It is important to highlight that the existing companies also performed well
in the period and it is the combination of both that has delivered the
positive trading performance for the year. In particular, Tatra Rotalac
Limited had a good year with increases in both turnover and operating profit.
The operational efficiencies implemented during the previous year continue to
pay off and this, combined with the £2 million capital investment into new
machinery, will deliver during the next financial year.
Global One Pak Limited continues to focus on future growth and researching new
innovative products and markets. The machinery and tooling to manufacture a
range of caps and enclosures are on site and production is expected to start
during the second half of the new financial year.
Customised Packaging Limited continues to perform well. The focus is on
improving efficiencies within the business and as such, following the year
end, Customised Packaging Limited was merged into Manplas Limited, taking
advantage of the Manplas premises which are adjacent to Tatra Rotalac thereby
centralising these operations together. There are quick synergies to come from
the combination and through their shared expertise they will offer customers
enhanced solutions.
I am very proud to see how everyone within the business has embraced our
challenges, opportunities and ambitions. We are reliant on the expertise,
professionalism and commitment of our people. I would like to thank them for
this, and for the continued commitment that they have shown over the past
years whilst having to deal with disruption to both their work and personal
lives due to the current economic climate.
Dividend
The Board remains committed to its long-term progressive dividend policy,
which takes account of the underlying growth, whilst acknowledging the
requirement for continuing investment and short-term fluctuations in profit.
Having made an interim dividend payment of 0.5 pence per share for this
financial period the Board are proposing a final dividend of 0.6 pence per
share (2022: 1.1p).
Outlook
We are mindful of the macroeconomic and geopolitical risks yet remain
confident about the current prospects for our business and its ability to
continue its successful evolution. Our continued investment over many years in
our people and our systems has generated strong and resilient results in the
past year and we believe will continue to do so.
Our continuing priority is to do all we can to keep our workplaces as safe as
possible for staff. We have planned our business to be flexible, in all areas,
to meet fluctuating levels of demand. We have robust financial controls that
will ensure we maintain our working capital requirements whilst meeting all
our agreed parameters with our financial partners and due to contracts already
negotiated all operations will remain relatively unaffected by the current
turmoil in energy prices.
The Group continues with its strategic progress of increasing focus on
value-added and innovative products. Our aim is to build a significant
specialist plastics business with a bias towards using recycled materials.
We have enjoyed a strong start to our current financial year, and we look
forward to a satisfactory outturn for the year given the prevailing
conditions.
Joe Grimmond
Chairman
4 September 2023
Group Income Statement
for the year ended 30 April 2023
2023 2022
£'000 £'000
Revenue 35,216 14,391
Cost of sales (24,740) (9,104)
Gross profit 10,476 5,287
Operating costs
Distribution expenses (1,301) (787)
Administrative expenses before impairment and other separately disclosed items (6,462) (2,926)
Other separately disclosed items (1,003) (162)
Administrative expenses (7,465) (3,088)
Operating profit/(loss) 1,710 1,412
Finance costs (458) (82)
Profit/(loss) for the financial year before taxation 1,252 1,330
Taxation 6 (363)
Profit/(loss) for the financial year attributable to the equity holders of the 1,258 967
parent
Basic earnings loss per ordinary share 1.44p 1.19p
Diluted earnings loss per ordinary share 1.44p 1.17p
Group Statement of Comprehensive Income
for the year ended 30 April 2023
2023 2022
£'000 £'000
Profit/(loss) for the financial year 1,258 967
Total other comprehensive income - -
Total comprehensive (loss)/income for the year attributable to equity holders 1,258 967
of the parent
Balance Sheet
as at 30 April 2023
As at 30 April As at 30 April
2023 2022
£'000 £'000
ASSETS
Non-current assets
Goodwill 4,385 1,945
Other intangible assets 2,956 916
Property, plant and equipment 7,209 749
Right of use assets 2,870 1,393
Total non-current assets 17,420 5,003
Current assets
Inventories 4,320 1,781
Trade and other receivables 7,193 3,237
Cash and cash equivalents 4,774 7,589
Assets held for sale 200 -
Total current assets 16,487 12,607
LIABILITIES
Current liabilities
Other borrowings 6,063 1,389
Lease liabilities 970 416
Trade and other payables 7,218 2,800
Total current liabilities 14,251 4,605
Net current assets/(liabilities) 2,236 8,002
Non-current liabilities
Term loan 3,263 -
Lease liabilities 1,505 907
Deferred tax 1,040 391
Total non-current liabilities 5,808 1,298
NET ASSETS 13,848 11,707
SHAREHOLDERS' EQUITY
Share capital 903 859
Share premium - 5,621
Treasury shares - (1,008)
Other reserves - 1,061
Retained earnings 12,945 5,174
TOTAL SHAREHOLDERS' EQUITY 13,848 11,707
Statement of Changes in Shareholders' Equity
for the year ended 30 April 2023
Called Up Share
Share Premium Treasury Shares Other Reserves Retained Total
Capital Reserve £'000 £'000 Earnings Equity
£'000 £'000 £'000 £'000
Group
At 1 May 2021 859 5,621 (218) 1,567 4,908 12,737
Profit for the year - - - - - 967 967
Contributions by and distributions to owners
Equity settled share-based payments - - - - 21 21
Purchase of treasury shares - - (790) - - (790)
Revaluation Reserve - - - (506) 506 -
Dividend paid - - - - (1,228) (1,228)
At 1 May 2022 859 5,621 (1,008) 1,061 5,174 11,707
Profit for the year - - - - 1,258 1,258
Contributions by and distributions to owners
Equity settled share-based payments - - - - 36 36
New shares 44 650 - - - 694
Cancellation of share premium accounts - (6,271) (111) (1,061) 7,443 -
Sale of treasury shares - - 1,119 - - 1,119
Dividend paid - - - - (966) (966)
At 30 April 2023 903 - - - 12,945 13,848
Cash Flow Statement
for the year ended 30 April 2023
Group
2023 2022
£'000 £'000
Cash flows from operating activities
Profit for the year 1,258 967
Adjustments for:
Depreciation of property, plant and equipment 464 165
Depreciation of right of use assets under IFRS16 705 296
Amortisation of intangible assets 513 327
Share based payment charge 36 21
Profit on disposal of subsidiary - -
Profit on disposal of building - (424)
Interest payable 458 82
Taxation charge/(credit) (6) 363
Operating cash flows before movements in working capital 3,428 1,797
(Increase)/decrease in inventories 1,219 47
Decrease/(increase) in trade and other receivables 999 82
Increase/(decrease) in trade and other payables (6,769) 761
Cash generated by operations (1,123) 2,687
UK corporation tax received - -
Net cash generated from/(used in) operating activities (1,123) 2,687
Cash flows from investing activities
Net cash on disposal of building - 3,500
Acquisition of subsidiary (4,313) -
Acquisition of property, plant and equipment (2,080) (206)
Net cash generated from/(used in) investing activities (6,393) 3,294
Cash flows from financing activities
New bank borrowings raised 3,496 -
Dividends paid (966) (1,228)
Interest paid on bank borrowings (19) -
Interest paid on invoice discounting (344) (22)
Interest paid on lease liabilities (95) (60)
Repayments of bank borrowings (814) -
Repayments of obligations under lease liabilities (867) (171)
Purchase of treasury shares - (790)
Movement on invoice discounting facility 4,310 36
Net cash used in financing activities 4,701 (2,235)
Net increase in cash and cash equivalents (2,815) 3,746
Cash and cash equivalents at 1 May 7,589 3,843
Cash and cash equivalents at 30 April 4,774 7,589
Notes
for the year ended 30 April 2023
1. Basis of preparation
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 30 April 2023 or 2022 within the
meaning of Section 434 of the Companies Act 2006 but is derived from those
accounts. Statutory accounts for 2022 have been delivered to the Registrar of
Companies and those for 2023 will be delivered following the company's Annual
General Meeting.
The financial statements have been prepared on a historical cost basis (except
for certain financial instruments, land and buildings and share-based payments
that have been measured at fair value), and in accordance with the AIM Rules
and UK adopted International Accounting Standards.
2. Underlying operating profit and separately disclosed items
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.
2023 2022
On continuing operations £'000 £'000
Operating profit/(loss) 1,710 1,412
Separately disclosed items within administrative expenses
Share based payment charge 36 21
Amortisation of intangible assets (customer relationships and brands) 513 327
Profit on sale of land and building - (383)
Reorganisation costs 123 158
Acquisition costs 331 -
Cost of living payment to all staff - 39
Total separately disclosed items 1,003 162
Underlying operating profit 2,713 1,574
Depreciation 1,169 205
Underlying EBITDA 3,882 1,779
Separately disclosed items (excluding amortisation and impairment) (490) 165
EBITDA 3,392 1,944
Profit/(loss) before tax 1,252 1,330
Separately disclosed items 1,003 162
Underlying profit/(loss) before tax 2,255 1,492
3. Earnings per share
Basic and underlying earnings per share
Number of Shares 2023 2022
Weighted average number of shares 88,222,891 85,942,534
Effect of weighted average number of treasury shares (1,099,823) (4,828,836)
Weighted average number of shares for the purposes of basic earnings per share 87,123,068 81,113,698
Effect of share options 102,564 1,369,230
Weighted average number of shares for the purposes of diluted earnings per 87,225,632 82,482,928
share
2023 2022
Weighted average number of shares Earnings per share Weighted average number of shares (Loss)/
(pence) (Loss)/ earnings earnings per share
Earnings £'000 (pence)
Continuing Operations £'000
Profit/(loss) for the year 1,258 87,123,068 1.44 967 81,113,698 1.19
Separately disclosed items (note 6) 1,003 - - 162 - -
Underlying profit/(loss) for the period 2,261 87,123,068 2.60 1,129 81,113,698 1.39
5. Dividends
An interim dividend for the year ended 30 April 2023 of 0.5p per share was
paid 16 December 2022.
A final dividend payment for the year ended 30 April 2023 of 0.6p per share is
recommended.
6. Group reconciliation of net cash flow to movement in net debt
2023 2022
£'000 £'000
Net increase in cash and cash equivalents (2,815) 3,746
Decrease/(increase) on invoice discounting facility (4,310) (36)
Decrease/(increase) in bank loans and other loans (3,627) -
Decrease in lease liabilities (1,152) 171
Movement in net debt for the period (11,904) 3,881
Net debt at beginning of period 4,877 996
Net funds/(debt) at end of period (7,027) 4,877
7. Post Balance Sheet Event
In May 2023 Customised Packaging Limited was merged into Manplas Limited. This
should allow synergies between the two companies to be realised.
In June 2023 the Group acquired 100% of the share capital of Ecotatou SL in
Spain for a total consideration of €18,000 satisfied in cash. This
acquisition gives the Group a foothold in Spain for the sale and distribution
of Ecodeck Grids.
In June 2023 the Group sold the land and building in Parr, St Helens for
£225,000. This unencumbered property was valued at £200,000 on the balance
sheet at year end.
In July 2023 the Group paid an earn-out of £1,275,000 to the Vendors of Alma
Products Limited. This earn-out completes the full consideration for the
acquisition of Alma Products Limited taking the total consideration to
£3,002,000.
In July 2023 the Group purchased 400,000 of its own shares into treasury at an
average cost of 16.5p. This puts the issued share capital to 89,877,589
shares.
8. Publication of Annual Report
A copy of the 2023 Report & Accounts will be sent to all shareholders.
Further copies will be available to the public at the company's registered
address at Southmoor Road, Wythenshawe, Manchester, M23 9DS and on the
Company's website at www.coralproducts.com.
9. 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 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.
The Directors of the Group take responsibility for this announcement.
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