REG - Robinson PLC - Interim Results

RobinsonAnnouncement

19/08/2021 07:05

RNS Number : 1028J
  
Robinson PLC
  
19 August 2021
  
 

 
 
Robinson plc                                                          
 
Half-year Report
Interim Results for the six months ended 30 June 2021
 
Robinson plc ("Robinson" or the "Group" stock code: RBN), the custom manufacturer of plastic and paperboard packaging based in Chesterfield, announces its interim results for the six months ended 30 June 2021.
 
Financial highlights
·    Revenue up 19% to £21.2m (2020: £17.9m)
·    Gross margin decreased to 16.7% from 23.6% in 2020
·    Operating profit before amortisation of intangible assets reduced to £0.1m (2020: £1.6m)
·    Loss before tax of £0.6m (2020: profit of £1.1m)
·    Interim dividend of 2.5p per share announced
·    Net debt1 of £13.7m (31/12/2020: £6.6m), after net capital expenditure of £2.0m, consideration for the Schela Plast acquisition of £1.4m and net debt acquired of £3.5m
 
Operational highlights
·    Successfully secured resin supply to allow continued operations in a very tight market
·    Acquisition of Schela Plast A/S completed on 10 February, with integration progressing to plan
·    Recent business wins in the UK and Denmark with major FMCG brand owners provide confidence for the future
·    "Packaging with purpose" sustainability pledge launched in February based on five pillars and 15 ambitious commitments
·    Continued progress with the sale of surplus properties
 
Alan Raleigh, Chairman, commented:
"Resin prices have now stabilised and shown the first signs of a reduction in July, however, we are not expecting a significant reduction before the end of the year. We are also experiencing price inflation in other areas including secondary packaging and transport which will continue to impact on the second half of the year.
Across our markets we are seeing a lower-than-normal level of demand in the third quarter due to the ongoing uncertainty across FMCG supply networks and a varying pace of recovery following the pandemic. We are now expecting this to continue for the second half, so we are accelerating our plans to improve our operations for additional cost savings and profitability.
We expect full year operating profit before amortisation of intangible assets to be in the region of £2.0m (2020: £2.7m).
We remain committed in the medium term to delivering above-market profitable growth and our target of 6-8% of adjusted operating margin2."
 




Robinson plc


www.robinsonpackaging.com




Helene Roberts, CEO
Mike Cusick, Finance Director


Tel: 01246 389280




 


 




finnCap Limited


 




Ed Frisby / Seamus Fricker, Corporate Finance
Tim Redfern / Barney Hayward, ECM


Tel: 020 7220 0500




 
 
About Robinson:
 
Being a purpose-led business, Robinson specialises in custom packaging with technical and value-added solutions for food and consumer product hygiene, safety, protection, and convenience; going above and beyond to create a sustainable future for our people and our planet. Its main activity is in injection and blow moulded plastic packaging and rigid paperboard luxury packaging, operating within the food and beverage, homecare, personal care and beauty, and luxury gift sectors. Robinson provides products and services to major players in the fast-moving consumer goods market including McBride, Procter & Gamble, Reckitt Benckiser, SC Johnson and Unilever.
 
Headquartered in Chesterfield, UK, Robinson has 3 plants in the UK, 2 in Poland and recently acquired a plant in Denmark, Schela Plast. Schela Plast specialises in the design and manufacture of plastic blow moulded containers, serving a number of the major FMCG brands in Denmark and neighbouring countries.
 
Robinson was formerly a family business with its origins dating back to 1839, currently employing nearly 400 people. The Group also has a substantial property portfolio with development potential.
 
 
1 cash less borrowings (excludes IFRS 16 lease liabilities)
2 operating profit margin before exceptional items and amortisation of intangible assets
 


The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 
Chairman's Statement
Dear Shareholders
The interim results we report today reflect the very challenging circumstances we are continuing to experience in 2021 across materials price inflation, customer demand and the ongoing uncertainty resulting from the Covid-19 pandemic.
We indicated in March that a lack of resin availability and consequential sharp increase in prices were likely to create volatility in 2021. Since 1 January the market price of resins used in the Group have increased on average by 60% and we have experienced substantial challenge to secure raw materials in a market where resin unavailability has caused some competitors to shut down production lines. 
The dedication of the Robinson team in acting decisively to procure resin supply and, where possible, to agree price increases with customers has mitigated some of the impact of these extreme market conditions. 
Whilst over the medium-term the Group is protected from resin price movements through contractual arrangements with most customers, there is a short-term lag of typically three months before prices can be changed. Largely as a result of this lag impact, gross margins were 16.7% (2020: 23.6%) in the first half of 2021.
The pandemic has also created significant operational challenges. Whilst we have had a small number of positive Covid-19 cases amongst our employees, the controls that we've implemented have prevented onward transmission and no severe illness has resulted. This has enabled us to continue to operate the business safely and to service our customers effectively.
Revenues were 19% higher in the first half of 2021, 3% higher excluding the Schela Plast business acquired in February. After adjusting for price changes and foreign exchange, sales volumes in the underlying1 business, which have been affected by changes in consumer behaviour and intermittent lockdowns, are in line with 2020, which included additional demand due to the Covid-19 pandemic.
Operating costs are in line with the second half of 2020, during which we added resources to partner with key customers and accelerate our sustainability agenda. Following this investment, underlying1 operating costs are 22% higher than the same period in 2020. 
Operating profit before amortisation of intangible assets has reduced by £1.5m versus the same period last year, to £0.1m. The Group made a loss before tax of £0.6m (2020: profit before tax £1.1m).
Property
Work has continued on the potential disposals that we announced had reached heads of agreement in March. We expect completion in the second half of 2021, for a gross value of £3.4m for two plots of land with a book value of less than £1m. 
 
Subject to the necessary planning approvals, we would expect further sales to be achieved in the latter part of 2021 or early 2022. The intention of the Group remains, over time, to realise the maximum value from the disposal of surplus properties and to reinvest the proceeds in developing our packaging business.
Net debt and capital expenditure
Net debt2 has increased to £13.7m (31/12/2020: £6.6m) following the acquisition of Schela Plast and the resin price impact on profitability and working capital. In addition, deferred consideration of £2.3m is payable to the former owners of Schela Plast in 2022, this is provided for in Trade and Other Payables. With total credit facilities of £22.6m, the Group considers it has comfortable headroom for the foreseeable future.
 
The Group continues to invest in its property, plant and equipment to improve efficiency and support our future growth ambitions. Net capital expenditure in the first half year was £2.0m (2020: £2.1m) including new production equipment, previously announced, and now installed in Schela Plast to service a major FMCG brand owner.
Dividend
Despite the short-term market challenges we face, the Board has confidence in the medium term prospects for the business and therefore announces an interim dividend of 2.5p per share to be paid on 8 October 2021 to shareholders on the register at 10 September 2021 (record date). The ordinary shares ex-dividend date is 9 September 2021.
The current intention of the Board is to pay a total dividend of 5.5p (2020: 8.5p including the 3.0p deferred 2019 final dividend) per share for the year ended 31 December 2021.
Outlook
Resin prices have now stabilised and shown the first signs of a reduction in July, however, we are not expecting a significant reduction before the end of the year. We are also experiencing price inflation in other areas including secondary packaging and transport which will continue to impact on the second half of the year.
Across our markets we are seeing a lower-than-normal level of demand in the third quarter due to the ongoing uncertainty across FMCG supply networks and a varying pace of recovery following the pandemic. We are now expecting this to continue for the second half, so we are accelerating our plans to improve our operations for additional cost savings and profitability.
We expect full year operating profit before amortisation of intangible assets to be in the region of £2.0m (2020: £2.7m).
We remain committed in the medium term to delivering above-market profitable growth and our target of 6-8% of adjusted operating margin3.
 
Alan Raleigh
Chairman
18 August 2021
 
 
 
1 excluding the results from the Schela Plast business acquired on 10 February
2 cash less borrowings (excludes IFRS 16 lease liabilities)
3 operating profit margin before exceptional items and amortisation of intangible assets
 
 


 




Condensed consolidated income statement and statement of comprehensive income




 


 


 


 


 




 


 


 


 


 




Condensed consolidated income statement


£'000 


Six months

to 30.06.21


Six months

to 30.06.20


Year to

31.12.20




 


 


 


 


 




Revenue


 


21,231


17,860


37,203




Cost of sales


 


(17,689)


(13,648)


(28,637)




Gross profit


 


3,542


4,212


8,566




Operating costs


 


(3,491)


(2,633)


(5,878)




Operating profit before amortisation of intangible assets


51


1,579


2,688




Amortisation of intangible assets


 


(479)


(400)


(809)




Operating (loss)/profit


 


(428)


1,179


1,879




Finance income - interest receivable


 


12


-


1




Finance costs


 


(165)


(63)


(128)




(Loss)/profit before taxation


 


(581)


1,116


1,752




Taxation


 


44


(263)


(343)




(Loss)/profit for the period


 


(537)


853


1,409




 


 


 


 


 




Earnings per ordinary share (EPS)


 


p


p


p




Basic earnings per share


 


(3.2)


5.1


8.5




Diluted earnings per share


 


(3.2)


5.1


8.4




 


 


 


 


 




Condensed consolidated statement of comprehensive income


£'000 


Six months

to 30.06.21


Six months

to 30.06.20


Year to

31.12.20




 


 


 


 


 




(Loss)/profit after tax for the period


 


(537)


853


1,409




Items that will not be reclassified subsequently to the Income Statement:


 


 


 


 




Re-measurement of net defined benefit liability


 


98


79


180




Deferred tax relating to items not reclassified


 


(19)


(15)


(34)




 


 


79


64


146




Items that may be reclassified subsequently to the Income Statement:


 


 


 


 




Exchange differences on retranslation of foreign currency goodwill and intangibles


 


(221)


116


(55)




Exchange differences on retranslation of foreign currency deferred tax balances


 


31


(16)


7




Exchange differences on translation of foreign operations


 


(397)


339


(163)




 


 


(587)


439


(211)




Other comprehensive (expense)/income for the period


 


(508)


503


(65)




Total comprehensive (expense)/income for the period


(1,045)


1,356


1,344




 
 
 
 




Condensed consolidated statement of financial position




 


 


 


 


 




 


£'000 


30.06.21


30.06.20


31.12.20




 


 


 


 


 




Non-current assets


 


 


 


 




Goodwill


 


1,694


1,175


1,127




Other intangible assets


 


4,945


3,301


2,769




Property, plant and equipment


 


24,356


19,893


20,873




Deferred tax asset


 


984


1,001


978




 


 


31,979


25,370


25,747




Current assets


 


 


 


 




Inventories


 


5,918


3,287


3,110




Trade and other receivables


 


10,699


9,454


9,185




Cash at bank and on hand


 


2,471


2,093


1,386




 


 


19,088


14,834


13,681




Total assets


 


51,067


40,204


39,428




Current liabilities


 


 


 


 




Trade and other payables


 


10,377


6,794


6,489




Borrowings


 


5,504


5,539


3,260




Current tax liabilities


 


126


78


69




 


 


16,007


12,411


9,818




Non-current liabilities


 


 


 


 




Borrowings


 


10,899


2,110


4,991




Deferred tax liabilities


 


1,516


1,232


1,042




Provisions


 


173


169


173




 


 


12,588


3,511


6,206




Total liabilities


 


28,595


15,922


16,024




Net assets


 


22,472


24,282


23,404




 


 


 


 


 




Equity


 


 


 


 




Share capital


 


84


83


83




Share premium 


 


828


732


732




Capital redemption reserve


 


216


216


216




Translation reserve


 


(426)


811


161




Revaluation reserve


 


4,118


4,145


4,133




Retained earnings


 


17,652


18,295


18,079




Equity attributable to shareholders


 


22,472


24,282


23,404





 





Condensed consolidated statement of changes in equity




 


 


 


 


 


 


 


 


 




 


£'000 


Share capital


Share premium


Capital redemption reserve


Translation reserve


Revaluation reserve


Retained earnings


Total 




 


 


 


 


 


 


 


 


 




At 31 December 2019


 


83


732


216


372


4,134


17,386


22,923




Profit for the period


 


 


 


 


 


 


853


853




Other comprehensive income


 


 


 


 


439


 


64


503




Total comprehensive income for the period


 


-


-


-


439


-


917


1,356




Credit in respect of share-based payments


 


 


 


 


 


 


5


5




Transactions with owners


 


-


-


-


-


-


5


5




Transfer from revaluation reserve as a result of property transactions


 


 


 


 


 


13


(13)


-




Tax on revaluation


 


 


 


 


 


(2)


 


(2)




At 30 June 2020


 


83


732


216


811


4,145


18,295


24,282




Profit for the period


 


 


 


 


 


 


556


556




Other comprehensive income/(expense)


 


 


 


 


(650)


 


82


(568)




Total comprehensive income for the period


 


-


-


-


(650)


-


638


(12)




Dividends paid


 


 


 


 


 


 


(890)


(890)




Credit in respect of share-based payments


 


 


 


 


 


 


26


26




Transactions with owners


 


-


-


-


-


-


(864)


(864)




Transfer from revaluation reserve as a result of property transactions


 


 


 


 


 


(12)


10


(2)




At 31 December 2020


 


83


732


216


161


4,133


18,079


23,404




Loss for the period


 


 


 


 


 


 


(537)


(537)




Other comprehensive income


 


 


 


 


(587)


 


79


(508)




Total comprehensive income for the period


 


-


-


-


(587)


-


(458)


(1,045)




Issue of ordinary shares under employee share option scheme


 


1


96


 


 


 


 


97




Credit in respect of share-based payments


 


 


 


 


 


 


25


25




Transactions with owners


 


1


96


-


-


-


25


122




Transfer from revaluation reserve as a result of property transactions


 


 


 


 


 


(6)


6


-




Tax on revaluation


 


 


 


 


 


(9)


 


(9)




At 30 June 2021


 


84


828


216


(426)


4,118


17,652


22,472





 





Condensed consolidated cash flow statement
 


 




 


 


 


 


 




 


 


 


 


 




 


£'000 


Six months

to 30.06.21


Six months

to 30.06.20


Year to

31.12.20




 


 


 


 


 




Cash flows from operating activities


 


 


 


 




 (Loss)/profit for the period


 


(537)


853


1,409




 Adjustments for:


 


 


 


 




 Depreciation of property, plant and equipment


 


1,361


988


2,164




 Impairment of property, plant and equipment


 


-


-


98




 Profit on disposal of other plant and equipment


 


(24)


(5)


(24)




 Amortisation of intangible assets


 


479


400


809




 Decrease in provisions


 


-


-


4




 Finance income


 


(12)


-


(1)




 Finance costs


 


165


63


128




 Taxation charged


 


(44)


263


343




 Other non-cash items:


 


 


 


 




   Pension current service cost and expenses


 


98


79


180




   Charge for share options


 


25


5


31




Operating cash flows before movements in working capital


 


1,511


2,646


5,141




 Increase in inventories


 


(1,834)


(488)


(363)




 (Increase)/decrease in trade and other receivables


 


(50)


316


296




 Increase in trade and other payables


 


351


1,601


1,512




Cash (used in)/generated by operations


 


(22)


4,075


6,586




 Corporation tax paid


 


(93)


(285)


(529)




 Interest paid


 


(165)


(63)


(128)




Net cash (used in)/generated by operating activities


 


(280)


3,727


5,929




 


 


 


 


 




Cash flows from investing activities


 


 


 


 




 Interest received


 


12


-


1




 Acquisition of plant and equipment


 


(2,014)


(2,085)


(4,673)




 Proceeds on disposal of property, plant and equipment


 


47


18


81




 Cash outflow on acquisition of subsidiary net of cash acquired


 


(1,832)


-


-




Net cash used in investing activities


 


(3,787)


(2,067)


(4,591)




 


 


 


 


 




Cash flows from financing activities


 


 


 


 




 Loans repaid


 


(57)


-


-




 Loans drawndown


 


6,633


-


-




 Net proceeds from sale and leaseback transactions


 


1,481


245


1,061




 Finance lease capital repayments


 


(859)


(302)


(710)




 Proceeds from issue of ordinary shares


 


97


-


-




 Dividends paid


 


-


-


(890)




Net cash generated by/(used in) financing activities


 


7,295


(57)


(539)




 


 


 


 


 




Net increase in cash and cash equivalents


 


3,228


1,603


799




 Cash and cash equivalents at 1 January


 


(896)


(1,678)


(1,678)




 Effect of foreign exchange rate changes


 


(23)


29


(17)




Cash and cash equivalents at end of period


 


2,309


(46)


(896)




 


 


 


 


 




Cash


 


2,471


2,093


1,386




Overdraft


 


(162)


(2,139)


(2,282)




Cash and cash equivalents at end of period


 


2,309


(46)


(896)





 

Notes to the condensed consolidated financial statements
 
1.   Basis of preparation
Robinson plc (the Company) is a public limited company incorporated and domiciled in the United Kingdom and its ordinary shares are admitted to trading on the AIM market of the London Stock Exchange. For the year ended 31 December 2020, the Group prepared consolidated financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. These condensed consolidated interim financial statements (the interim financial statements) have been prepared under the historical cost convention adjusted for the revaluation of certain properties. They are based on the recognition and measurement principles of IFRS in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.
 
Standards effective from 1 January 2021
None of the standards, interpretations and amendments effective for the first time from 1 January 2021 have had a material effect on the financial statements.
There are no standards that are not yet effective and that would be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.
Accounting policies
The interim report is unaudited and has been prepared on the basis of IFRS accounting policies. The accounting policies adopted in the preparation of this unaudited interim financial report are consistent with the most recent annual financial statements, being those for the year ended 31 December 2020.
The financial information for the six months ended 30 June 2021 and 30 June 2020 has not been audited and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006.
The financial information relating to the year ended 31 December 2020 does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. This information is based on the Group's statutory accounts for that period. The statutory accounts were prepared in accordance with International Financial Reporting Standards ('IFRS') and received an unqualified audit report and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. These financial statements have been filed with the Registrar of Companies, a copy is available upon request from the Company's registered office: Field House, Wheatbridge, Chesterfield, S40 2AB, UK or from its website at robinsonpackaging.com.
 
Going concern
The Directors have performed a robust assessment, including a review of the forecast for the 12 month period ending 31 December 2021 and longer term strategic forecasts and plans, including consideration of the principal risks faced by the Group including stress testing of the business, as detailed in the 2020 Annual Report (page 68). Following this review, the Directors have a reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the condensed consolidated financial statements.
 
2.   Accounting estimates and judgements
The preparation of half year financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
 
The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2020.
 
 
 
3.   Risks and uncertainties
The principal risks and uncertainties which may have the largest impact on performance in the second half of the year are the same as disclosed in the 2020 Annual Report on pages 16-17. The principal risks set out in the 2020 Annual Report were: Acquisition integration; Customer relationships; Fluctuations in input prices; Raw material supply; IT and digital security; Environment; Plastics legislations; Market competitiveness; People; Debt leverage and Foreign currency risk.
 
The Board considers that the principal risks and uncertainties set out in the 2020 Annual Report have not changed and remain relevant for the second half of the financial year.
 
4.   Earnings per share
The calculation of basic and diluted earnings per ordinary share for continuing operations shown on the income statement is based on the profit for the period divided by the weighted average number of shares in issue, net of treasury shares. The potentially dilutive effect of further shares issued through share options is also applied to the number of shares to calculate the diluted earnings per share.
 




 


Six months to 30.06.21


Six months to 30.06.20


Year to 31.12.20 




 


 


 


 




(Loss)/profit for the period (£'000)


(537,000)


853,000


1,409,000




 


 


 


 




Weighted average number of ordinary shares in issue 


16,673,745


16,613,389


16,613,389




Effect of dilutive share option awards*


-


59,799


168,505




Weighted average number of ordinary shares for calculating diluted earnings per share


16,673,745


16,673,188


16,781,894




 


 


 


 




Basic earnings per share (pence)


(3.2)


5.1


8.5




Diluted earnings per share (pence)


(3.2)


5.1


8.4




 
*In the six months to 30.06.21, there was no difference in the weighted average number of shares used for the calculation of basic and diluted loss per share as the effect of potentially dilutive shares outstanding was antidilutive.
 
5.   Dividends
 




 


 


£'000


Six months

to 30.06.21


Six months

to 30.06.20


Year to

31.12.20




Ordinary dividend paid:


2020 interim of 3.5p per share


 


-


-


566




 


2020 interim of 2.0p per share


 


-


-


324




 


 


 


-


-


890




 
The 2020 final dividend of 3.0p (2019: nil) per share was paid to shareholders on 16 July 2021. An interim dividend of 2.5p (2020: total interim dividends 5.5p) is proposed to be paid on 8 October 2021. Neither the final nor interim dividend have been included as a liability in the financial statements.
 
 
6.   Interim report
 
Electronic copies of this interim report will shortly be sent to those shareholders who have requested such copies and this interim report is also available from Robinson plc's website at robinsonpackaging.com.
 
 

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