REG - Coral Products PLC - Preliminary Results <Origin Href="QuoteRef">CRU.L</Origin>

Coral ProductsAnnouncement

29/07/2015 07:02

RNS Number : 3712U
Coral Products PLC
29 July 2015
29 July 2015
CORAL PRODUCTS PLC
PRELIMINARY RESULTS
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 2015.
KEY FINANCIALS
2015
2014
Change
Group revenue 
17,425,000
17,222,000
+1.2%
Operating profit/(loss)
375,000 
(764,000)

Underlying operating profit *
1,349,000
664,000
+103.2%
Profit/(loss) for the year before taxation
191,000
(922,000)

Underlying profit before taxation*
1,165,000
506,000
+130.2%
Underlying EBITDA*
1,912,000
1,395,000
+35.3%
Underlying earnings per share *
 2.12p
1.21p
+75.2%




Dividend payable per share
0.7p
0.5p
 +40.0%
* "Underlying" results are reported before separately disclosed items, as shown in note 2, as the Directors are of the opinion that these give a more accurate picture of underlying performance
HEADLINES
 Significant underlying earnings increase.
 Inter group sales increase to 3.1m (2.3m in 2014).
 Sales of food packaging containers continue to rise to 7.0m in 2015 (6.1m in 2014). 
 Underlying EBITDA increased by over 35% to 1.9m maintaining improvement in operating cash flow.
 Investment in new tooling for food containers in line with increase in demand through 2016.
 Revenues from non-media products increased to 14.5m (10.9m in 2014) representing 83% of total revenues (2014: 63%).
 Acquisition of Tatra Plastics Manufacturing Limited ("Tatra") completed in July 2014.
 40% increase in total dividend for the year of 0.7p (2014: 0.5p).
 Post period end acquisition of assets from Neiman Packaging Limited in June 2015.
Commenting on the results, Joe Grimmond, Chairman, said:
"I am pleased to report a further year of progress for the Group with revenue up by 1.2% to 17,425,000 and underlying profit (profit before separately disclosed items) up by 130.2% to 1,165,000. This profit growth reflects the success of our core strategy of replacing sales of media based assets with sales of other plastic moulded products whilst maintaining control of our costs. I am also pleased to report an increase in underlying basic earnings per share to 2.12p (75% growth in the year).
"Given raw material price increases, we have focused on driving material reductions in our inventory across the Group as a whole. This has enabled the Group to report a net cash inflow of 452,000 (2014:60,000).
"The Group's strategic progress is encouraging, with its increased focus on value-added and innovative products, particularly in the food container, telecommunications and rail industry markets. 
"We adopted a new five year plan this year which has targets aimed at substantially increasing group revenue and profitability from our specialist plastic products manufacturing and distribution activities. In June 2015, we took our first step along this plan when we acquired certain plant and machinery from Neiman Packaging Limited. This acquisition introduces a new product area to the Group as well as two new manufacturing processes, injection blow moulding and extrusion blow moulding, enhancing our range of manufacturing capability.
"We look forward with confidence to further progress in the coming year."
For further information, please contact:
Coral Products plc
Joe Grimmond, Executive Chairman 
Tel: 07703 518 148
Tel: 01942 272 882
Nominated Adviser
Cairn Financial Advisers LLP
Tony Rawlinson / Avi Robinson
Tel: 020 7148 7900
Broker
Daniel Stewart & Co plc
David Lawman / David Coffman
Tel: 020 7776 6550
Capital Markets Consultants
Richard Pearson
Tel: 07515 587 184
CHAIRMAN'S STATEMENT
I am pleased to report a further year of progress for the Group with revenue up by 1.2% to 17,425,000 and underlying profit (profit before separately disclosed items) up by 130.2% to 1,165,000. This profit growth reflects the success of our core strategy of replacing sales of media based assets with sales of other plastic moulded products whilst maintaining control of our costs. I am also pleased to report an underlying basic earnings per share of 2.12p (75% growth in the year).
The acquisition of Tatra Plastics Manufacturing Limited ("Tatra") completed on 8 July 2014, has given the Group additional products with better added values. This business has been integrated successfully and offers a more diverse range of products to be promoted and manufacturing methods that can be applied. 
In the core business, the supply of new products for on-line retail distribution, which had been expected during the year, was unfortunately delayed whilst purpose built depots were completed by our customer. Initial orders worth 2 million have now been committed and production has now commenced and is expected to lead to additional supply agreements as further opportunities arise.
Food packaging sales continue to increase sales and contribution and recently we have further added to its range of products by the installation of additional tooling in-house. The market for plastic food containers continues to grow in the UK.
Recycling product sales were below expectations with revenue falling to 1.2 million (2014: 1.8 million). There remained challenging market conditions as local authorities continued not to commit resources in the present atmosphere of austerity. Waste management will continue to be a significant area of future spending and we are determined to offer products and partnerships that will assist in its management. 
Cash has been actively managed by the Group in a year when our key material costs increased in price and a trade debtor fell into administration. Given the raw material price increases, we have focused on driving material reductions in our inventory across the Group as a whole. This has enabled the Group to report a net cash inflow of 452,000 (2014:60,000).
Results
Group revenue increased slightly in the year to 17,425,000 (2014: 17,222,000). Margins increased substantially to 29.6% (2014: 23.7%) due to a more favourable mix of sales from better added value products. Underlying EBITDA (earnings before interest, tax, depreciation and amortisation and before separately disclosed items) for the Group was strong at 1,912,000 (2014: 1,395,000). Overheads in the Group increased to 3,808,000 (2014: 3,423,000) in line with the increase in Group activity. This resulted in an underlying operating profit (operating profit before separately disclosed items) of 1,349,000 (2014: 664,000). Finance costs amounted to 184,000 (2014: 158,000). The profit for the financial year after the separately disclosed items and before taxation was 191,000 (2014: loss of 922,000).
Underlying earnings per share were 2.12 pence (2014: 1.21 pence) and earnings per share after exceptional items were 0.35 pence (2014: loss of 2.20 pence).
Net debt at 30 April 2015 was 3,986,000 (2014: 3,968,000) giving reduced gearing (being net debt divided by net assets) of 43.7% (2014: 54.6%). Interest cover on underlying earnings costs was 7.3 times (2014: 4.2 times). Net assets per share were 15.8p (2014: 17.3p).
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 increased to 0.7 pence per share. The final payment of 0.5 pence per share will have an ex-dividend date of 6 August 2015 and record date of 7 August 2015. This final dividend will be paid on 30 October 2015. 
Board changes
In July 2014, following the acquisition of the Tatra business, Paul Freud was appointed as Corporate Development Director. David Low also joined the board in September 2014 as a Non-Executive Director, broadening the range of skills and experience within the board. In November 2014, Jonathan Lever retired from his position as Non-Executive Director having served the Group for 20 years.
In December 2014, both Warren Ferster and Stuart Ferster retired as directors of the Company to pursue other business interests. Warren and Stuart served the group for a substantial number of years and helped in the transition from a private company in the 1990s, through flotation, to the PLC of today. At the same time, Joe Grimmond became Executive Chairman having previously acted as Non-Executive Chairman.
Strategy
Our board continuously reviews business performance alongside market conditions to make sure that we take the correct strategic decisions for each of our businesses. The board recognises fully that it has been tasked with delivering enhanced shareholder value in accordance with the strategy that we outlined in 2011 and 2015. The challenges facing the board relate to managing the continued growth of the Group whilst preserving the strengths of the business.
Acquisition
The purchase of Tatra Plastics Manufacturing Limited was completed in July 2014. 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 has provided the Group with an entry into, inter alia, the rail and telecoms markets and the ability to expand its range of products. 
People
We are reliant on the expertise, professionalism and commitment of our people and thank them for their contribution to the business during a challenging year. 
Outlook
The Group's strategic progress is encouraging, with its increased focus on value-added and innovative products, particularly in the food container, telecommunications and rail industry markets. 
We adopted a five year plan this year which has targets aimed at substantially increasing Group revenue and profitability from our specialist plastic products manufacturing and distribution activities. In June 2015, we took our first step along this plan when we acquired certain plant and machinery from Neiman Packaging Limited. This acquisition introduces a new product area to the Group as well as two new manufacturing processes, injection blow moulding and extrusion blow moulding, enhancing our range of manufacturing capability. 
We look forward with confidence to further progress in the coming year.
Joe Grimmond
Chairman
29 July 2015
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 30 APRIL 2015
Restated 


Unaudited
2015 

Audited
2014 


'000 

'000 
Continuing operations




Revenue 

 17,425 

 17,222 
Cost of sales

(12,268)

(13,135)
Gross profit

5,157 

 4,087 
Distribution costs

(716)
 
(546)
Administrative expenses before separately disclosed items

(3,092)

(2,877)
IFRS2 share based payment charge

(12)

-
Intangible amortisation

(106)

(137)
Acquisition costs 

(106)

-
Impairment charges

-

(1,291)
Retirement costs of former directors

(414)

-
Bad debt charge 

(336)

-
Total administrative expenses

(4,066)

(4,305)
Operating profit

 375

(764) 
Finance costs 

(184) 

(158) 
Profit/(loss) for the financial year before taxation

191

(922)
Taxation

-

 -
Profit/(loss) for the year attributable to equity holders

191

(922) 





Earnings/(loss) per share
Note 3



Basic and diluted per ordinary share from continuing operations

0.35p

(2.20)p 
Underlying per ordinary share from continuing operations

2.12p 

1.21p 
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2015
 

Unaudited 
2015 

 Restated
Audited
2014 

'000 

'000 
Profit/(loss) for the financial year
191 

(922)
Total comprehensive income for the year 
attributable to the company's shareholders
191

(922)
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2015


Unaudited
2015 

Restated
Audited
2014 


'000 

'000 
Non-current assets




Goodwill

4,768

3,457
Other intangible assets

246

88
Property, plant and equipment

5,556

5,198


10,570 

8,743 
Current assets




Inventories

1,404 

1,725 
Trade and other receivables

3,854 

4,233 
Cash and cash equivalents

67

-


5,325 

5,958 
Total assets

15,895 

14,701 





Current liabilities




Trade and other payables

(2,615)

(3,432)
Borrowings

(1,814)

(2,199)
Corporation tax payable

(44)

(2)
Finance lease liabilities

(265) 

(192)
Term and other loans

(270)

(111)

 
(5,008)

(5,936)
Non-current liabilities




Finance lease liabilities

(425)

(285)
Term and other loans

(1,279)

(1,181)
Deferred tax

(62)

 (32)


(1,766)

(1,498)
Total liabilities

(6,774)

(7,434)





Net assets

9,121 

7,267 





Equity




Share capital

579 

419 
Share premium 

1,862 

409 
Other reserves

443

-
Retained earnings

6,237 

6,439 
Equity attributable to shareholders

9,121 

7,267 
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2015

Share capital
Share premium account
Other 
reserves
Retained earnings
Total

'000 
'000 
'000 
'000 
'000
Group





At 1 May 2013 (as previously reported)
419 
409 
- 
7,799 
8,627 






Effect of prior year adjustment on intangibles
-
-
-
 (228)
 (228)






At 1 May 2013 (restated)
419
409
-
7,571
8,399
Net profit for the year
-
-
- 
(922) 
(922)
Dividend paid
-
-
-
(210)
(210)






At 30 April 2014 (audited)
419 
409 
- 
6,439 
7,267






Net profit for the year
-
-
-
 191
191






Share issue (net of issue costs)
160
1,453
443 
- 
2,056
Dividends paid
-
-
-
(405)
(405)
Share based payment


-
12
12
At 30 April 2015 (unaudited)
579 
1,862 
443 
6,237 
 9,121
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2015 


Unaudited
2015 

Audited
2014 


'000 

'000 
Cash flows from operating activities




Profit/(loss) for the year

191 

(922) 
Adjustments for:




Depreciation of property, plant and equipment

533 

681 
Profit on disposal of fixed assets

(33)

(31)
Amortisation of intangible assets

136

 187 
Shared based payment charge

12

 -
Impairment provision

-

1,187
Interest expense

184

158
Operating cash flows before movements in working capital

1,023

1,260 
Decrease/(increase) in inventories

801

(348)
Decrease/(increase) in trade and other receivables

 1,108

(359)
(Decrease)/increase in trade and other payables

(1,361)

 385
Cash generated by operations

1,571

938 
UK corporation tax paid

-

109
Net cash generated from operating activities

 1,571

1,047





Cash flows from investing activities




Acquisition of property, plant and equipment

(440)

(375)
Purchase of subsidiary (net of cash acquired)

(1,998)

-
Proceeds from disposal of fixed assets

42

 45
Acquisition of intangible assets

(7)

(12)
Net cash used in investing activities

 (2,4030)

(342)





Cash flows from financing activities




Proceeds of share issue

 1,605

 -
Proceeds of term loan

 500 

-
Proceeds of director's loan

200

-
Dividends paid to equity holders

(405)

(210)
Proceeds of new asset finance

237

-
Repayment of director's loan

(146)

(4)
Interest paid

(184) 

(158) 
Term loan repayments

(297)

(104)
Finance lease principal payments

(226)

(169)
Net cash generated from financing activities

 1,284

(645)





Net increase in cash and cash equivalents

452

60
Cash and cash equivalents at 1 May

(2,199)

(2,259)
Cash and cash equivalents at 30 April

(1,747)

(2,199)





Cash

67

- 
Overdraft 

(1,814)

(2,199)
Cash and cash equivalents at 30 April

(1,747)

(2,199)
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 2015 or 2014 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the company's Annual General Meeting. The auditors' report on the statutory accounts for the year ended 30 April 2014 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.
The intangible assets figure for comparative periods has been restated to include the unamortised value relating to customer relationships that had previously been included in goodwill. This change in policy reduced profit before taxation for 2014 by 137,000 and net assets as at 30 April 2014 by 365,000.
2.Underlying profit before tax and separately disclosed items


2015

2014


'000 

 '000 
Underlying profit before tax

 1,165

 506
Separately disclosed items in administrative expenses




IFRS2 share based payment charge

 (12)

- 
Intangible amortisation

(106)

(137)
Costs of acquisition 

(106)

 -
Impairment charges 

 -

(1,291) 
Retirement costs of former directors

 (414)

-
Bad debt write-off

(336)

- 
Profit before tax

191

(922) 
3. Earnings per share
The basic and diluted earnings per share are 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 54,894,513 (2014: 41,935,609).
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 and underlying earnings per share:

Unaudited
2015
Audited
2014

'000
EPS (p)
'000
EPS (p)





Profit/(loss) for the financial period
191
 0.35
 (922)
(2.20)
Separately disclosed items
974
 1.77
1,428
3.41
Underlying profit for the period
1,165
 2.12
506
1.21
4.Dividends
A final dividend for the year ended 30 April 2014 of 0.5p per share was paid on 17 October 2014 to shareholders on the register on 25 July 2014. This dividend amounted to 289,308.
In respect of the current year an interim dividend of 0.2p per share was paid on 30 April 2015 to shareholders on the register on 19 March 2015. This dividend amounted to 115,723. 
A final dividend of 0.5p per share is to be paid on 30 October 2015 to shareholders on the register on 7 August 2015. The ex dividend date will be 6 August 2015. The dividend is subject to approval by the shareholders of the company at the Annual General Meeting. This dividend equates to 289,308 and has not been included as a liability at 30 April 2015.
5.Group reconciliation of net cash flow to movement in net debt


2015

2014


'000 

'000 
Increase in cash and cash equivalents

452

60
(Increase)/decrease in bank loans and other loans

(257)

104
Increase in asset finance

(213)

 (186) 
Movement in net debt in the period

 19

(18) 
Net debt at start of the period

(3,968)

(3,950)
Net debt at end of the period

(3,986)

(3,968)
6. Publication of Annual Report and Notice of Annual General Meeting
A copy of the 2015 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 26 August 2015 at 12:00 p.m., will be sent to all shareholders on 3 August 2015. 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.

This information is provided by RNS
The company news service from the London Stock Exchange
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