REG - Robinson PLC - Interim Results
17/08/2023 07:00
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RNS Number : 5644J Robinson PLC 17 August 2023
Robinson
plc
Half-year Report
Interim Results for the six months ended 30 June 2023
Robinson plc ("Robinson" the "Company" 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 2023.
Financial
· Revenue down 4.3% to £24.3m (2022: £25.4m)
· Gross margin in line with the prior year at 18% (H1 2022: 18%)
· Operating profit before exceptional items and amortisation of
intangible assets reduced to £0.5m (2022: £1.5m)
· Exceptional costs of £0.5m (2022: profit of £2.0m) - included
profit on sale of properties of £2.1m in 2022
· Loss before tax of £0.9m (2022: profit of £2.8m)
· Interim dividend of 2.5p per share announced (2022: 2.5p)
· Net debt of £9.0m (31/12/2022: £9.2m), after capital expenditure of
£1.1m and proceeds on sale of property of £0.7m
Operational
· Good progress on transition to Interim CEO
· Restructuring program implemented in June, with exceptional costs of
c.£0.4m and annual savings of c.£0.7m, of which £0.4m will benefit 2023
· Sale of part of surplus property in Chesterfield completed in May
with proceeds of £0.7m
· Pension escrow account funds returned to the Company on 14 August
2023
· Conditional contract signed to sell 1.3 acres of Walton Works
property on 11 August 2023
Alan Raleigh, Chairman, commented:
"The results for the first half of 2023 reflect the current very challenging
macroeconomic conditions, which we expect to continue for the rest of 2023.
Despite these conditions, we are now seeing more new business activity with
existing and potential new customers, which provides opportunities for
additional sales in 2023 and beyond.
We are progressing well with the previously announced major project in
Denmark, with production equipment now installed in our factory and product
trials underway; this investment is expected to begin to benefit sales and
profit from 2024.
The demand slowdown that we anticipated has supressed volumes and resulted in
lower than desired sales and earnings in the first half of 2023, however, we
expect higher sales volumes due to recent business wins and seasonality, and
the benefit of the restructuring program actioned in June, to lead to an
improved result in the second half of the year. Based on trading in the first
half and our anticipated pipeline, we expect adjusted(1) operating profit in
the 2023 financial year to be marginally ahead of 2022 and in line with
current expectations.
We continue to progress our surplus property disposal agenda, which along with
the buy-out of the defined benefit pension scheme and return of the escrow
funds will reduce indebtedness and result in a simpler and more streamlined
organisation which is able to compete and win in a volatile marketplace.
We remain committed in the medium-term to delivering above-market profitable
growth and our target of 6-8% adjusted(1) operating margin."
Robinson plc www.robinsonpackaging.com (http://www.robinsonpackaging.com)
Helene Roberts, CEO Tel: 01246 389280
Mike Cusick, Finance Director
finnCap Limited
Ed Frisby / Seamus Fricker, Corporate Finance Tel: 020 7220 0500
Tim Redfern / Barney Hayward, ECM
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 Procter &
Gamble, Reckitt Benckiser, SC Johnson and Unilever.
Headquartered in Chesterfield, UK, Robinson has plants in the UK, Poland and
Denmark. 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.
Chairman's Statement
Dear Shareholders
The results for the first half of 2023 reflect the very challenging
circumstances we are continuing to experience across our operations due to the
ongoing macroeconomic uncertainty and volatility.
We noted 12 months ago that sales volumes would come under further pressure
during the second half of 2022 due to the effect of inflation, the
cost-of-living crisis, the de-listing of some products by our customers and
certain of our customers continuing to prioritise existing business over
innovation projects, a characteristic which started during the pandemic. As we
expected, these factors and other challenges have manifested in lower sales in
the current period.
Sales in the first half of the year are 4% below the comparative period in
2022, which includes a sales volume reduction of 12%. Of the Group volume
reduction, 5% relates to a single UK customer that made supply chain changes
during the period and is experiencing issues which have impacted our business
with them. As well as the issues with this specific customer, demand has
noticeably reduced across the premium products in our portfolio due to
inflation and the cost-of-living crisis.
As demand has softened, we have stepped up sales activity and as a result we
now have a portfolio of opportunities close to completion, which if converted
would comprise more than 10% of annual sales and partially mitigate the
softness in demand for our current customers' portfolio of products. We are
prioritising the management and execution of the previously announced capital
investment project in our Denmark operation, which we expect will benefit
sales and profit in 2024.
In response to the significant cost inflation experienced in 2022, we were
successful in passing on inflationary cost increases to customers and gross
margins were 18% (H1 2022: 18%). Margins are under pressure, primarily due to
the operational gearing effect of 12% lower sales volumes and continued
inflation in input costs.
Operating costs in the first half were £4.0m (2022: £3.2m). The increase of
£0.8m includes:
· £0.2m of new roles brought into the business to improve our
operational capabilities and support our efforts to grow sales volumes,
including the major new project in Denmark.
· £0.2m of inflation in wages and salaries in response to double digit
market inflation and substantial mandatory minimum wage increases across our
three countries of operation.
· £0.1m related to property and insurance as the costs of maintaining,
repairing and rebuilding premises have escalated, and the insurance market has
hardened since the previous renewal.
· £0.1m due to the movement in foreign exchange rates.
Whilst most of these cost increases were anticipated, our efforts to increase
sales prices to recover the inflation were insufficient to cover these
operating cost increases. As a result of these inflationary pressures, we
implemented a restructuring program in June, which resulted in exceptional
costs of c.£0.4m and annual savings of c.£0.7m, of which £0.4m will benefit
2023.
Operating profit before exceptional items and amortisation of intangible
assets reduced by £1.0m versus the same period last year, to £0.5m. This is
in line with the six-month period to 31 December 2022, where operating profit
before exceptional items and amortisation of intangible assets was also
£0.5m.
Including the exceptional items, the Group made a loss before tax of £0.9m
(2022: profit before tax £2.8m).
Defined benefit pension scheme
In December 2022, the Scheme completed a buy-in of all the Group's defined
benefit pension scheme liabilities with a plan to complete a full buy-out
during 2023, following a data cleanse exercise. The administration and payroll
functions were handed over to Legal and General Assurance Society Limited from
1 August 2023 and the data cleanse is ongoing, with completion expected before
the end of the year.
The Company announced on 14 August 2023 that it had reached agreement with the
trustees of the Scheme for the funds held in the pension escrow account,
totalling c.£3.3m, to be returned to the Group (of which, £2.7m was already
loaned to the Company). The Group will recognise an exceptional profit of
c.£3.3m in its income statement for the 12 months to 31 December 2023.
Property
As previously announced, part of the Walton Works surplus property in
Chesterfield, known as "Mill Lane", was sold on 30 May 2023. The consideration
of £700,000 was received in cash and used to reduce bank debt.
On 11 August 2023, the Company also exchanged contracts for the sale of c.1.3
acres of the Walton Works surplus property. Completion is subject to
conditions, notably including satisfactory planning approval, and is expected
to take around 12-18 months. The consideration payable on completion would be
£1,500,000 in cash, with estimated Company costs of £400,000. The net
proceeds of £1,100,000 would be used by the Company to reduce current bank
debt.
Including this property transaction, which is not yet completed, the Directors
estimate that the current market value of the remaining surplus properties
held by the Group is approximately £7,400,000.
We would expect further sales of surplus property in Chesterfield to be
achieved in the next 12 months. The intention of the Group remains, over time,
to realise value from the disposal of surplus properties and to reinvest the
proceeds in developing our packaging business.
Net debt and capital expenditure
Net debt has decreased to £9.0m (31/12/2022: £9.2m) including capital
expenditure of £1.1m (2022: £1.1m) and the receipt of £0.7m proceeds on
sale of surplus property in the period. With total credit facilities of
£18.1m at 30 June 2023, the Group considers it has sufficient headroom for
the foreseeable future.
The return of the funds in the pension escrow account reduced net debt by a
further c.£3.3m on 14 August 2023.
Dividend
Despite the short-term market challenges we face, the Board has confidence in
the medium-term prospects for the business and therefore announces that it
intends to pay an interim dividend of 2.5p per share to be paid on 13 October
2023 to shareholders on the register at 22 September 2023 (record date). The
ordinary shares ex-dividend date is 21 September 2023.
The current intention of the Board is to pay a total dividend of 5.5p (2022:
5.5p) per share for the year ending 31 December 2023.
CEO position
A previously announced, Dr Helene Roberts will resign as CEO and a Director of
the Company on 1 September 2023, at which point Sara Halton will assume
responsibility as the Interim CEO for a transitional period whilst the Board
conducts a search for a new CEO. We thank Helene for her enormous contribution
to the business.
Outlook
Despite the ongoing challenging macroeconomic conditions, we are now seeing
more new business activity with existing and potential new customers, which
provides opportunities for additional sales in 2023 and beyond.
We are progressing well with the previously announced major project in
Denmark, with production equipment now installed in our factory and product
trials underway; this investment is expected to begin to benefit sales and
profit from 2024.
The demand slowdown that we anticipated has supressed volumes and resulted in
lower than desired sales and earnings in the first half of 2023, however, we
expect higher sales volumes due to recent business wins and seasonality, and
the benefit of the restructuring program actioned in June, to lead to an
improved result in the second half of the year. Based on trading in the first
half and our anticipated pipeline, we expect adjusted(1) operating profit in
the 2023 financial year to be marginally ahead of 2022 and in line with
current expectations.
We continue to progress our surplus property disposal agenda, which along with
the buy-out of the defined benefit pension scheme and return of the escrow
funds will reduce indebtedness and result in a simpler and more streamlined
organisation which is able to compete and win in a volatile marketplace.
We remain committed in the medium-term to delivering above-market profitable
growth and our target of 6-8% adjusted(1) operating margin.
Alan Raleigh
Chairman
17 August 2023
1. before amortisation of intangible assets and exceptional items
Condensed consolidated income statement and statement of comprehensive income
Condensed consolidated income statement £'000 Six months Six months Year to
to 30.06.23
to 30.06.22
31.12.22
Revenue 24,348 25,444 50,529
Cost of sales (19,911) (20,781) (41,765)
Gross profit 4,437 4,663 8,764
Operating costs (3,968) (3,172) (6,731)
Operating profit before amortisation of intangible assets 469 1,491 2,033
Exceptional items (476) 1,967 1,714
Amortisation of intangible assets (492) (472) (947)
Operating (loss)/profit (499) 2,986 2,800
Finance income - interest receivable 4 - -
Finance costs (379) (232) (507)
(Loss)/profit before taxation (874) 2,754 2,293
Taxation (33) (25) 51
(Loss)/profit for the period (907) 2,729 2,344
(Loss)/earnings per ordinary share (EPS) p p p
Basic and diluted (loss)/earnings per share (5.4) 16.3 14.0
Condensed consolidated statement of comprehensive income £'000 Six months Six months Year to
to 30.06.23
to 30.06.22
31.12.22
(Loss)/profit for the period (907) 2,729 2,344
Items that will not be reclassified subsequently to the Income Statement:
Remeasurement of net defined benefit liability 99 96 180
Deferred tax relating to items not reclassified (19) (18) (34)
80 78 146
Items that may be reclassified subsequently to the Income Statement:
Exchange differences on translation of foreign currency goodwill and (17) 52 176
intangibles
Exchange differences on translation of foreign currency deferred tax balances 7 (9) (26)
Exchange differences on translation of foreign operations 198 45 481
188 88 631
Other comprehensive income for the period 268 166 777
Total comprehensive (expense)/income for the period (639) 2,895 3,121
Condensed consolidated statement of financial position
£'000 30.06.23 30.06.22 31.12.22
Non-current assets
Goodwill 1,583 1,526 1,570
Other intangible assets 2,401 3,320 2,924
Property, plant and equipment 22,458 23,467 22,960
Deferred tax asset 1,272 1,145 1,294
27,714 29,458 28,748
Current assets
Inventories 4,622 5,458 5,155
Trade and other receivables 9,623 10,972 9,522
Cash at bank and on hand 3,975 2,148 5,097
Current tax asset - - 110
Assets classified as held for sale - - 642
18,220 18,578 20,526
Total assets 45,934 48,036 49,274
Current liabilities
Trade and other payables 8,146 7,652 9,543
Borrowings 5,281 1,530 5,535
Current tax liabilities 69 115 -
13,496 9,297 15,078
Non-current liabilities
Borrowings 7,701 12,782 8,743
Deferred tax liabilities 1,299 1,235 1,395
Provisions 116 128 116
9,116 14,145 10,254
Total liabilities 22,612 23,442 25,332
Net assets 23,322 24,594 23,942
Equity
Share capital 84 84 84
Share premium 828 828 828
Capital redemption reserve 216 216 216
Translation reserve (179) (910) (367)
Revaluation reserve 3,498 3,865 3,856
Retained earnings 18,875 20,511 19,325
Equity attributable to shareholders 23,322 24,594 23,942
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 2021 84 828 216 (998) 4,107 17,433 21,670
Profit for the period - - - - - 2,729 2,729
Other comprehensive income - - - 88 - 78 166
Total comprehensive income for the period - - - 88 - 2,807 2,895
Credit in respect of share-based payments - - - - - 25 25
Transactions with owners - - - - - 25 25
Transfer from revaluation reserve as a result of property transactions - - - - (246) 246 -
Tax on revaluation - - - - 4 - 4
At 30 June 2022 84 828 216 (910) 3,865 20,511 24,594
Loss for the period - - - - - (385) (385)
Other comprehensive income - - - 543 - 68 611
Total comprehensive income/(expense) for the period - - - 543 - (317) 226
Dividends paid - - - - - (898) (898)
Credit in respect of share-based payments - - - - - 20 20
Transactions with owners - - - - - (878) (878)
Transfer from revaluation reserve as a result of property transactions - - - - (9) 9 -
At 31 December 2022 84 828 216 (367) 3,856 19,325 23,942
Loss for the period - - - - - (907) (907)
Other comprehensive income - - - 188 - 80 268
Total comprehensive income for the period - - - 188 - (827) (639)
Credit in respect of share-based payments - - - - - 19 19
Transactions with owners - - - - - 19 19
Transfer from revaluation reserve as a result of property transactions - - - - (358) 358 -
At 30 June 2023 84 828 216 (179) 3,498 18,875 23,322
Condensed consolidated cash flow statement
£'000 Six months Six months Year to
to 30.06.23
to 30.06.22
31.12.22
Cash flows from operating activities
(Loss)/profit for the period (907) 2,729 2,344
Adjustments for:
Depreciation of property, plant and equipment 1,617 1,576 3,151
Profit on disposal of property, plant and equipment (3) (2,275) (1,454)
Profit on disposal of assets held for sale (58) - (737)
Amortisation of intangible assets 492 472 947
Decrease in provisions - - (12)
Finance income (4) - -
Finance costs 379 232 507
Taxation charged/(credited) 33 25 (51)
Other non-cash items:
Pension current service cost and expenses 99 96 180
Charge for share options 19 25 45
Operating cash flows before movements in working capital 1,667 2,880 4,920
Decrease/(increase) in inventories 533 (362) 36
(Increase)/decrease in trade and other receivables (43) (826) 671
(Decrease)/increase in trade and other payables (1,022) (168) 1,951
Cash generated by operations 1,135 1,524 7,578
Corporation tax received/(paid) 53 (136) (317)
Interest paid (379) (232) (492)
Net cash generated by operating activities 809 1,156 6,769
Cash flows from investing activities
Interest received 4 - -
Acquisition of property, plant and equipment (1,112) (1,132) (2,584)
Proceeds on disposal of property, plant and equipment 23 3,516 2,600
Proceeds on disposal of assets held for sale 700 - 975
Deferred consideration paid - (2,311) (2,261)
Net cash (used in)/generated by investing activities (385) 73 (1,270)
Cash flows from financing activities
Loans repaid (805) (1,474) (1,501)
Loans drawn down 236 - 440
Net proceeds from sale and leaseback transactions - 439 439
Capital element of lease payments (1,005) (830) (1,714)
Dividends paid - - (898)
Net cash used in financing activities (1,574) (1,865) (3,234)
Net (decrease)/increase in cash and cash equivalents (1,150) (636) 2,265
Cash and cash equivalents at 1 January 5,096 2,775 2,775
Effect of foreign exchange rate changes 29 9 57
Cash and cash equivalents at end of period 3,975 2,148 5,097
Cash at bank and on hand 3,975 2,148 5,097
Bank overdrafts - - -
Cash and cash equivalents at end of period 3,975 2,148 5,097
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 2022, the Group prepared consolidated financial statements in
accordance with UK-adopted 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 2023
None of the standards, interpretations, and amendments effective for the first
time from 1 January 2023 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 2022.
The financial information for the six months ended 30 June 2023 and 30 June
2022 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 2022 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 UK-adopted international accounting standards in conformity with the
requirements of the Companies Act 2006 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 (http://www.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 2023 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 2022 Annual Report (page 73). 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 2022.
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
2022 Annual Report on pages 18-19. The principal risks set out in the 2022
Annual Report were: Acquisition performance; Customer relationships; Raw
material supply and input prices; IT and digital security; Environment; Debt
leverage; Operational gearing; Foreign currency; Market competitiveness; and
People.
The Board considers that the principal risks and uncertainties set out in the
2022 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 30.06.23 Six months to 30.06.22 Year to 31.12.22
(Loss)/profit for the period (£'000) (907,000) 2,729,000 2,344,000
Weighted average number of ordinary shares in issue 16,753,445 16,753,445 16,753,445
Effect of dilutive share option awards* - - -
Weighted average number of ordinary shares for calculating diluted earnings 16,753,445 16,753,445 16,753,445
per share
Basic (loss)/earnings per share (pence) (5.4) 16.3 14.0
Diluted (loss)/earnings per share (pence) (5.4) 16.3 14.0
*In the six months to 30.06.23 and six months to 30.06.22 there was no
difference in the weighted average number of shares used for the calculation
of basic and diluted earnings per share as all the share options outstanding
were out-of-the-money and not dilutive.
5. Dividends
£'000 Six months Six months Year to
to 30.06.23
to 30.06.22
31.12.22
Ordinary dividend paid: 2021 final of 3.0p per share - - 490
2022 interim of 2.5p per share - - 408
- - 898
The 2022 final dividend of 3.0p (2021: 3.0p) per share was paid to
shareholders on 21 July 2023. An interim dividend of 2.5p (2022: 2.5p) is
proposed to be paid on 13 October 2023. 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 be sent on 18 August 2023 to
those shareholders who have requested such copies and this interim report is
also available from Robinson plc's website at robinsonpackaging.com
(https://robinsonpackaging.com/) .
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