CORAL PRODUCTS PLC

Earnings Release • Jul 11, 2013

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RNS Number : 0653J

Coral Products PLC

11 July 2013

11 July 2013

CORAL PRODUCTS PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2013

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 2013.

KEY FINANCIALS

	2013    £	2012    £	Change
Revenue	17.3m	17.3m	-
Operating profit *	496,000	250,000	98%
Profit/(loss) for the year after tax	427,000	(369,000)	-
EBITDA *	1,588,000	1,212,000	30%
Underlying earnings per share *	1.08p	0.58p	86%
Dividend per share	0.5p	0.5p	-

* Operating profit, EBITDA and underlying EPS are reported before an exceptional operating charge in 2012 of £554,000 as the Directors are of the opinion that these give a more accurate picture of underlying performance.

HEADLINES

·      Return to profit following further progress of strategic plan and despite difficult trading conditions particularly in our media sales division.

·      Benefits from Interpack acquisition beginning to show through.

·      Operating profit of £496,000 from £250,000 resulting from growth in sales of food packaging containers and other higher added value products.

·      Underlying EBITDA up to £1.6m from £1.2m reflecting significant improvement in operating cash flow.

·      Investment of £1.9m in freehold property purchase leading to rental savings of £250,000 p.a. part funded by a 10 year loan increasing gearing to 45.8% from 23.3%.

·      Revenues from non-media products increased by £2.5m to £9.2m (53.3% of total) as targeted in the strategic plan.

·      Interpack recently added to its sales team to enable it to take advantage of opportunities and increase area coverage as it looks to further grow its income.

·      Proposed final dividend of 0.5p reflecting the Board's confidence in the future.

Commenting on the results, Joe Grimmond, Chairman, said:

"I am pleased to report that in the face of challenging market conditions the Group has made a return to an overall profit for the past financial year with EBITDA having shown significant growth. This was the middle year of our three year strategic plan of improvement and progress has continued to be made as the Group reduces its exposure to media packaging by developing other markets.

"This was the first full year of integration of the results of our reselling and distributing business Interpack Limited. The costs of converting our existing facilities and upgrading to BRC standards and accreditations have now been completed and we expect the benefits from this new range of products to increase over the coming years. Interpack has recently added to its experienced sales and marketing team as it looks to further increase in sales in the current period.

"The Group introduced a range of new packaging products and completed the purchase of the freehold of its production facility in Haydock which will save £250,000 per annum in rental costs. Whilst the Group experienced poor trading conditions, particularly in the second half of the year, the investments that have been made are starting to yield benefits and are expected to result in a further year of solid growth." 

For further information, please contact:

Coral Products plc Joe Grimmond, Non-Executive Chairman Warren Ferster, Chief Executive & Managing Director	Tel: 07703 518 148 Tel: 01942 272 882
Nominated Adviser Cairn Financial Advisers LLP Tony Rawlinson / Avi Robinson	Tel: 020 7148 7900
Broker XCAP Securities plc David Lawman / Adrian Kirk	Tel: 020 7101 7070
Bankside Consultants Richard Pearson	Tel: 020 7367 8888

CHAIRMAN'S STATEMENT

I am pleased to report that in the face of challenging market conditions the Group has made a return to an overall profit for the past financial year with EBITDA having shown significant growth. This was the middle year of our three year strategic plan of improvement and progress has continued to be made as the Group reduces its exposure to media packaging by developing other markets.

This was the first full year of integration of the results of our reselling and distributing business, Interpack Limited. The costs of converting our existing facilities and upgrading to BRC standards and accreditations have now been completed and we expect the benefits from this new range of products to increase over the coming years. Interpack has recently added to its experienced sales and marketing team as it looks to further increase sales in the current period.

Sales volumes overall were maintained at the previous year's level belying the fact that the Group continued to diversify into more added value products resulting in improved gross margins (24.6% compared to 22.1% last year). This will continue to be our strategy and a number of new product areas are being assessed to this end.

Sales of media packaging products were adversely impacted by the difficult economic backdrop with consumer discretionary spending remaining subdued and by the discontinuance of a leading high street retailer. The distributor companies have only recently been able to recover and rebuild stocks. Further, the exceptionally poor weather particularly in the period through Easter pushed back food container orders, in particular for ice-cream and salads, and lowered our expectations for this period. However, the Group did benefit from the overall sales mix being focussed on sales of higher value products.

Trade moulding revenues showed a small increase and a number of products are being moulded for new customers. A recent order has been placed which is expected to produce significant additional revenue over the next 12 months.

Revenue from media products, having been on target until early in 2012, fell towards the latter stages of the financial year, as announced earlier this year. Overall however, our customers expect that volumes will be largely maintained and we remain committed to the sector.

Recycling product sales remained fairly constant over the year as a whole. The revenues were affected by local authorities' ability to determine their available spend and policy towards waste management. This area is significant to the Group and we continue to commit resources to developing products and partnerships with logistic distributors.

In addition to the introduction of a range of new packaging products in the year the Group also completed the purchase of the freehold of its production facility in Haydock. Whilst this has initially increased the debt levels and gearing of the Group there will be rental savings of £250,000 per annum in future financial years.

Revenue and Profits

Group revenue remained constant for the year at £17,279,000 (2012: £17,309,000). Improved margins on more added value products increased gross profit by 11% to £4,249,000 (2012: £3,826,000). EBITDA showed further strong growth to increase to £1,588,000 (2012: £1,212,000). Overheads in the group were maintained at 2012 levels with the increase representing the inclusion of Interpack for a full year.

Group underlying operating profit was £496,000 (2012: £250,000). Finance costs were £146,000 (2012: £65,000) and there was a credit for taxation of £77,000 (2012: £nil) resulting in a profit after tax of £427,000 (2012: loss of £369,000) to be added to reserves.

Cash and Finances

Cash flow generated from operating activities before taxation and working capital movements was £1,588,000 compared to £658,000 generated in the previous financial year. Net proceeds from the equity placing of £447,000 were used in conjunction with a new bank term loan of £1.4 million to fund the purchase of the freehold property at a cost of £1,949,000. Capital expenditure in the year on plant refurbishment and tooling for new recycling container products was £600,000.

Earnings per share

The underlying earnings per share, which, in the opinion of the Directors, best reflects the performance of the Group, has increased significantly to 1.08p (2012: 0.58p). Basic and diluted earnings per share rose to 1.08p (2012: loss of 1.16p).

Dividends

The Board proposes a final dividend of 0.5p per share to be paid on 17 October 2013 to shareholders on the register at the close of business on 27 July 2013.

Outlook

Whilst, as previously announced, the Group experienced poor trading conditions particularly in the second half of the year the investments that have been made are starting to yield benefits and are expected to result in a further year of solid growth.

We believe the opportunity exists for us to create a significant plastic moulding business and we remain confident in our ability to implement our strategic vision and improve business performance to increase our customer base and market share and drive financial results over the medium term.

Joe Grimmond

Chairman

11 July 2013

GROUP INCOME STATEMENT

FOR THE YEAR ENDED 30 APRIL 2013

			Unaudited 2013				Audited 2012
		£'000						£'000
Continuing operations
Revenue			17,279					17,309
Cost of sales			(13,030)					(13,483)
Gross profit			4,249					3,826
Operating costs			(3,753)					(3,576)
Underlying operating profit			496					250
Exceptional items			-					(554)
Profit/(loss) from operations			496					(304)
Finance costs			(146)					(65)
Profit/(loss) for the financial year before taxation			350					(369)
Taxation			77					-
Profit/(loss) for the year attributable to equity holders			427					(369)
Earnings/(loss) per share	Note 3
Basic and diluted per ordinary share from continuing operations				1.08p				(1.16)p
Underlying per ordinary share from continuing operations				1.08p				0.58p

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 APRIL 2013

	Unaudited 2013		Audited 2012
	£'000		£'000
Profit/(loss) for the financial year	350		(369)
Total comprehensive income for the year attributable to the company's shareholders	350		(369)

GROUP STATEMENT OF FINANCIAL POSITION

AS AT 30 APRIL 2013

		Unaudited 2013		Audited 2012
		£'000		£'000
Non-current assets
Goodwill		3,868		3,868
Other intangible assets		144		200
Property, plant and equipment		6,286		4,658
		10,298		8,726
Current assets
Inventories		1,377		1,986
Trade and other receivables		3,874		3,517
Corporation tax repayable		107		-
Cash		-		52
		5,358		5,555
Total assets		15,656		14,281
Current liabilities
Trade and other payables		(3,047)		(4,291)
Corporation tax payable		-		(143)
Borrowings		(2,564)		(1,518)
		(5,611)		(5,952)
Non-current liabilities
Borrowings		(1,386)		(385)
Deferred tax		(32)		-
		(1,418)		(385)
Total liabilities		(7,029)		(6,337)
Net assets		8,627		7,944
Equity
Share capital		419		381
Share premium		409		6,977
Capital redemption reserve		-		7
Retained earnings		7,799		579
Equity attributable to shareholders		8,627		7,944

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 APRIL 2013

	Share capital	Share premium account	Capital redemption reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000
Group
At 1 May 2011	201	4,558	7	948	5,714
Underlying profit for the year	-	-	-	185	185
Exceptional items	-	-	-	(554)	(554)
Share issue	180	2,419	-	-	2,599
At 30 April 2012 (audited)	381	6,977	7	579	7,944
Net profit for the year	-	-	-	427	427
Dividend	-	-	-	(191)	(191)
Cancellation of share premium and capital redemption reserve	-	(6,977)	(7)	6,984	-
Share issue	38	409	-	-	447
At 30 April 2013 (unaudited)	419	409	-	7,799	8,627

On 3 October 2012 the Company announced that it had received confirmation by the Court to its application to cancel its share premium account of £6,977,000 and capital redemption reserve of £7,000. This enabled it to credit the resulting sums to the Company's profit and loss account for the purpose of, inter alia, making distributions to its shareholders.

GROUP STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 APRIL 2013

		Unaudited 2013		Audited 2012
		£'000		£'000
Cash flows from operating activities
Loss for the year		350		(369)
Adjustments for:
Depreciation of property, plant and equipment		1,019		904
Amortisation of intangible assets		73		58
Interest expense		146		65
Operating cash flows before movements in working capital		1,588		658
Decrease/(increase) in inventories		609		(200)
(Increase)/decrease in trade and other receivables		(357)		53
(Decrease)/increase in trade and other payables		(1,244)		1,226
Cash generated by operations		596		1,737
UK corporation tax paid		(141)		(-)
Net cash generated from operating activities		455		1,737
Cash flows from investing activities
Purchase of subsidiaries net of cash acquired		-		(2,756)
Acquisition of property, plant and equipment		(2,647)		(1,568)
Acquisition of intangible assets		(17)		(41)
Dividend paid to equity holders		(191)		-
Net cash used in investing activities		(2,855)		(4,365)
Cash flows from financing activities
Proceeds of share issue		447		1,699
Proceeds of term loan		1,400		1,400
Proceeds of director's loan		150		-
Proceeds of new asset finance		350		100
Rental deposit repayment		-		50
Interest paid		(146)		(65)
Term loan repayments		(1,170)		(380)
Finance lease principal payments		(179)		(39)
Net cash generated from financing activities		852		2,765
Net (decrease)/increase in cash and cash equivalents		(1,548)		137
Cash and cash equivalents at 1 May		(711)		(848)
Cash and cash equivalents at 30 April		(2,259)		(711)
Cash		-		52
Overdraft		(2,259)		(763)
Cash and cash equivalents at 30 April		(2,259)		(711)

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 2013 or 2012 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the company's Annual General Meeting. The auditors' report on the statutory accounts for the year ended 30 April 2012 was unqualified and does not contain statements under s498 (2) or (3) Companies Act 2006.

This financial information has been prepared in accordance with International Financial Reporting Standards ("IFRSs") and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Underlying profit - the Company believes that underlying profit and underlying earnings provide additional useful information for shareholders. The term underlying earnings is not a defined term under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies.

2.  Earnings per share

The basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders for the financial period by the weighted average number of shares in issue during the financial period of 39,613,965 (2012: 31,840,527).

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, diluted and underlying earnings per share:

	Unaudited 2013		Audited 2012
	£'000	EPS (p)	£'000	EPS (p)
Profit/(loss) for the financial period	427	1.08	(369)	(1.16)
Exceptional items	-	-	554	1.74
Underlying profit for the period	427	1.08	185	0.58

3.  Taxation

Analysis of the tax credit in the accounts comprises the following:

		2013		2012
		£'000		£'000
Current income tax credit		109		-
Deferred income tax		(32)		-
		77		-

4.  Dividends

A final dividend of 0.5p per share was paid on 15 October 2012 to shareholders on the register on 27 July 2012. This dividend amounted to £191,000.

In respect of the current year the directors propose a final dividend of 0.5p per share to be paid on 17 October 2013 to shareholders on the register on 19 July 2013 subject to approval by the shareholders of the company at the Annual General Meeting. This dividend equates to £210,000 and has not been included as a liability at 30 April 2013.

5.  Group reconciliation of net cash flow to movement in net debt

		2013		2012
		£'000		£'000
(Decrease)/increase in cash and cash equivalents		(1,548)		137
Increase in bank loans		(230)		(1,020)
New director's loan		(150)		-
Increase in asset finance		(171)		(61)
Movement in net debt in the period		(2,099)		(944)
Net debt at start of the period		(1,851)		(907)
Net debt at end of the period		(3,950)		(1,851)

6.  Publication of Annual Report and Notice of Annual General Meeting

A copy of the 2013 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 28 August 2013 at 12:00 p.m., will be sent to all shareholders on or around 5 August 2013. 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

END

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