REG - Coral Products PLC - Final Results
17/09/2024 07:00
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RNS Number : 3911E Coral Products PLC 17 September 2024
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 2024.
2024 2023
Financial headlines £m £m
Group sales 31.0 35.2
Gross profit 10.7 10.5
Gross margin % 34.4% 29.7%
Underlying results *
- Operating profit 1.8 2.7
- Profit before taxation 0.8 2.3
- EBITDA 3.2 3.9
- Basic earnings per share 0.96p 2.60p
Statutory Results
- Operating profit 0.1 1.7
- Profit before taxation (0.9) 1.3
- EBITDA 2.0 3.4
- Basic earnings per share (1.02)p 1.44p
Dividend paid per share 0.25p 1.1p
Proposed final dividend payment per share 0.25p -
* 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.
Financial and Operational Highlights
· Lance Burn appointed CEO on 2 January 2024. Since then, the Group has
been re-organised under a focused and accountable new two-Division structure,
Flexibles and Rigids, which will progressively deliver performance and margin
improvement through innovation, simplification and efficiency.
· Revenues of £31.0 million (2023: £35.2 million), reflecting a
challenging trading period in the second half of the financial year as well as
the strategic exit of lower margin businesses which accounted for c. £2.5m of
annualised sales.
· Underlying operating profit of £1.9m (2023: £2.7m) and
underlying EBITDA of £3.2m (2023: £3.9m) in line with market expectations.
Gross margins on existing operations showed a material increase, from 29.7% to
34.4% a result of the Group's divestment strategy.
· The Group has invested further in new machinery, re-tooling for
future projects and re-configuring warehouse space to expand manufacturing
capacity but remains in a strong cash position, with cash and cash equivalents
of £2.0 million at the end of the period (2023: £4.8m). Net debt was £9.4m
(2023: £7.0m).
· The merger of Customised Packaging Limited business into Manplas
Limited gives rise to operational, commercial and facilities restructuring. We
have taken the prudent approach in opting to impair goodwill and intangibles
as customer and order book rationalisation continues in pursuit of
efficiencies and margin accretion.
· The 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.
· An interim dividend of 0.25p per share was paid on 23 August 2024.
A final dividend of 0.25p is proposed to be paid on 17 January 2025, making a
full year dividend of 0.5p (2023: 1.1p) per share.
· Sustainability remains a core focus across all operations with
specific targets around:
o Adoption of bio-based materials;
o Ensuring that our products are recyclable
o Increasing move to inclusion of recycled materials in our manufacturing
processes
o Working with partners to explore carbon offset through the entire supply
chain
o Supply chain tracking and transparency.
Post year-end operational highlights
· The Group successfully sold the land and building in Runcorn for
£1,210,000 which was valued at £1,000,000 on the balance sheet at year end
and reduced gearing by 10% and was £500,000 cash generative after settlement
of mortgage. The property was leased by Alma Products Ltd on a 15-year lease.
· Consolidating raw material inventories enabled the Group to exit and
sell one of three freehold land and buildings in Haydock for £706,000. The
property has exchanged with completion expected shortly. The property was
revalued from £740,000 to £706,000 on the balance sheet at year end. This
sale reduces gearing by a further 5% and will be £200,000 cash generative
after settlement of mortgage.
· In May 2024 the Group purchased 136,260 of its own shares into
treasury at an average cost of 11.3p. The issued share capital following the
purchase is now 89,032,697 shares.
Outlook
· Overall, our markets have continued to be challenging in the first
four months of the year. Where there are pockets of recovery, they are in the
lower margin channels leading to an overall negative margin mix.
· Benefits from the investments made in new machinery in 2023 are
expected to begin to flow into the business in the second half of this
financial year.
Commenting on the results, Joe Grimmond, Chairman said:
"These results reflect the more challenging trading environment which emerged
in the second half of the financial year, which created caution amongst our
customers and resulted in orders being deferred. In addition, we chose to
divest of some £2.5 million lower margin business lines as part of the
overall reset of the Group. A key part of which has been to reorganise the
business under two new Divisions, each business retaining a high degree of
autonomy and entrepreneurialism and establishing our four strategic pillars of
growth for the long-term.
The current financial year continues with pockets of recovery in key markets,
albeit leading to a less favourable product mix. The re-organisation has
enabled more efficient use of the Group's physical footprint, leading to
recent asset sales which is adding to an already solid financial base, and
this is reflected also in our decision to re-instate dividend payments. Being
based in the UK and being adept at managing complexity well are key strengths
for which Coral is known, and we are adding to this through technology. Last
year, over £3 million was invested in machinery and new manufacturing
capabilities, the results of which are coming through and will help drive
performance over the next 18 months."
For further information, please contact:
Coral Products plc
Lance Burn, CEO Tel: 0161 946 9460
Nominated Adviser & Broker
Cavendish Capital Markets Limited 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.
Chairman's Statement
Our business
The Company continued its focus on becoming a plastics business of scale and
using its established acquisition criteria the Group bought Ecotatou ES in
July 2023 to gain a foothold in the Spanish market for Ecodeck Grids. The
EcoDeck brand is now trading through BigMat that has more than 350 stores
throughout Spain and a further 540 stores in Western Europe.
I was delighted to welcome Lance Burn as our new CEO in January 2024 enabling
me to return to my role as Non-Executive Chair. Lance brings a suite of very
relevant skills and experiences to our Group coupled with entrepreneurialism
and energy.
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 past years.
Dividend
The Board remains committed to a long-term progressive dividend policy, which
takes account of the underlying growth, whilst acknowledging the requirement
for continuing investment and maintaining sufficient working capital levels.
The Board are therefore proposing a final dividend of 0.25 pence per share.
Outlook
We are mindful of the macroeconomic and geopolitical risks yet remain
confident about the prospects for our business in the medium to long-term as
we continue our transformation journey.
Lance and his colleagues have reacted swiftly to the more challenging
macro-economic environment, and it is testimony to their decisive actions that
gross margin improvements at half year from 29.7% to 34.4% maintained through
to year end.
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.
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.
Joe Grimmond
Chairman
16 September 2024
Chief Executive Officer's Statement
Following a challenging trading period during the second half of the financial
year, Group trading has been in line with the new market guidance given in
January 2024.
Reported revenue was £30,991,000 (2023: £35,216,000), gross margins were
34.4% (2023: 29.7%) resulting in a gross profit of £10,676,000 (2023:
£10,476,000). Underlying EBITDA was £3,200,000 (2023: £3,882,000) and
underlying operating profits was £1,894,000 (2023: £2,713,000).
Gearing is 76.8% (2023: 50.7%), the post year end sale of the land and
buildings at Haydock and Runcorn reduces the gearing by circa 15%. The balance
sheet net asset position is strong at £12,272,000 (2023: £13,848,000). This
represents a solid asset platform for developing the business.
FY24 H1 performance to October 2023 indicated momentum towards FY24 YE target
outcomes. A sharp industry-wide downward correction in sales from December
2023 largely reflecting UK economic recession, needed to be recognised in our
late January 2024 trading update subsequently reflected in YE outcomes. YoY
sales also reflect exiting c. £2.5m annualised low margin contracts mid-year
representing c. £1.4m of the reduction.
FY24 YE FY23 YE % YoY FY24 H1 FY23 H1 % YoY
Revenue (£m) 31.0 35.2 -12% 17.2 17.6 -2.3%
Underlying EBITDA (£m) 3.2 3.9 -16% 2.3 1.9 +21%
By the financial year end gradual market recovery in some channels was evident
but still weaker than expected and not anticipated to fully recover before the
calendar year end. With line of sight of key new commercial contracts starting
July 24 onwards the business is stable, back into modest growth and cash
generative.
The business is stable backed by a solid balance sheet, entering the new
financial year there have been some pockets of recovery albeit leading to a
lower product margin mix and there continues to be pressure on input and
labour costs. Offsetting this, is good visibility on new commercial contracts
coming through the business from the investment made in new machinery in 2023
to benefit largely FY25 H2.
Recognising the adverse commercial impact experienced in our industry towards
the end of 2023 enabled us to quickly implement corrective commercial measures
and organisational reform throughout Q4. We have created a focused and
accountable new two-Division structure which will increasingly deliver
performance and margin improvement through innovation, simplification and
efficiency.
We also continue to strengthen our organisation to support our four strategic
pillars of growth:
o Successfully managing complex commercial, product
and service solutions.
o Excelling at UK manufacturing and technical
innovation.
o Greater margin efficiency through investment in
technology and people.
o Accessing commercial opportunity, scale and
synergy through M&A.
The previous year's acquisitions were successfully integrated during what was
a challenging trading period. Work is ongoing to further improve the
performance of each business and the potential remains to further collaborate
across the Group as the new Division structures mature.
Customised Packaging Limited was merged into Manplas Limited at the start of
the year, these were two very similar businesses offering customised product
protection solutions. The combination of these businesses is creating several
synergies, together with an improved customer offer, and work is continuing to
realise these synergies into FY25. The merger gives rise to operational,
commercial and facilities restructuring. We have taken the prudent approach in
opting to impair goodwill and intangibles as customer and order book
rationalisation continues in pursuit of efficiencies and margin accretion.
The Group embarked mid-2023 on an ambitious programme of capital investments
designed to enable diversification into adjacent channels plus bring in-house
outsourced manufacturing associated with recent acquisitions, most notably
EcoDeck with the accompanying enhanced capacity and margin accretion. Our
commitment to UK manufacturing affords our customers tangible economic,
environmental, lead-time and working capital advantages over imported
equivalents and also delivering reduced-risk supply chain benefits.
I am very pleased to report that by year-end in excess of £3m of 2023-24
machine and process investments have been successfully installed and
commissioned and will all contribute to 2024-25 YoY revenue growth,
specifically H2. These investments have also enabled entry into the high
growth food packaging container sector, the introduction and supply of bottle
closures solutions, complementing established pumps and triggers range of
products in our Global One Pack business, plus the introduction of enhanced
telecommunications extrusions capabilities. Targeted capability investments
continue into 2024-25 specifically in our Flexibles division, further
diversifying capabilities at Film & Foil Ltd to the benefit of FY25 H2.
In support of these investments, I am delighted that our Wythenshawe-based
Tatra Rotalac business in February 2024 joined both Alma Products Ltd -
Runcorn and Film & Foil Ltd - Haydock as BRC accredited.
The Group reorganisation completed early on in calendar 2024 has also
accelerated our ability to invest in attracting new talent into the businesses
with several new function leaders joining our Group from competitors, bringing
with them industry specific skills, experience and relationships. We will
continue to focus on organisation strengthening to build resilience and to
support our ambitious organic growth aspirations.
Lance Burn
Chief Executive Officer
16 September 2024
Group Income Statement
for the year ended 30 April 2024
2024 2023
£'000 £'000
Revenue 30,991 35,216
Cost of sales (20,315) (24,740)
Gross profit 10,676 10,476
Operating costs
Distribution expenses (1,383) (1,301)
Administrative expenses before impairment and other separately disclosed items (7,449) (6,462)
Other separately disclosed items (1,770) (1,003)
Administrative expenses (9,219) (7,465)
Operating profit/(loss) 74 1,710
Finance costs (1,021) (458)
Profit/(loss) for the financial year before taxation (947) 1,252
Taxation 33 6
Profit/(loss) for the financial year attributable to the equity holders of the (914) 1,258
parent
Basic earnings loss per ordinary share (1.02)p 1.44p
Diluted earnings loss per ordinary share (1.02)p 1.44p
Group Statement of Comprehensive Income
for the year ended 30 April 2024
2024 2023
£'000 £'000
Profit/(loss) for the financial year (914) 1,258
Total other comprehensive income - -
Total comprehensive (loss)/income for the year attributable to equity holders (914) 1,258
of the parent
Balance Sheet
as at 30 April 2024
As at 30 April As at 30 April
2024 2023
£'000 £'000
ASSETS
Non-current assets
Goodwill 3,973 4,385
Other intangible assets 1,958 2,956
Property, plant and equipment 7,053 7,209
Right of use assets 2,077 2,870
Total non-current assets 15,061 17,420
Current assets
Inventories 4,743 4,320
Trade and other receivables 6,644 7,193
Cash and cash equivalents 2,014 4,774
Assets held for sale 1,706 200
Total current assets 15,107 16,487
LIABILITIES
Current liabilities
Other borrowings 6,534 6,063
Lease liabilities 721 970
Trade and other payables 5,466 7,218
Total current liabilities 12,721 14,251
Net current assets/(liabilities) 2,386 2,236
Non-current liabilities
Term loan 3,298 3,263
Lease liabilities 891 1,505
Deferred tax 986 1,040
Total non-current liabilities 5.,175 5,808
NET ASSETS 12,272 13,848
SHAREHOLDERS' EQUITY
Share capital 903 903
Treasury shares (170) -
Retained earnings 11,539 12,945
TOTAL SHAREHOLDERS' EQUITY 12,272 13,848
Statement of Changes in Shareholders' Equity
for the year ended 30 April 2024
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 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 account - (6,271) (111) (1,061) 7,443 -
Sale of treasury shares - - 1,119 - - 1,119
Dividend paid - - - - (966) (966)
At 1 May 2023 903 - - - 12,945 13,848
Profit for the year - - - - (914) (914)
Contributions by and distributions to owners
Equity settled share-based payments - - - - 43 43
Purchase of treasury shares - - (170) - - (170)
Dividend paid - - - - (535) (535)
At 30 April 2024 903 - (170) - 11,539 12,272
Cash Flow Statement
for the year ended 30 April 2024
Group
2024 2023
£'000 £'000
Cash flows from operating activities
Profit for the year (914) 1,258
Adjustments for:
Depreciation of property, plant and equipment 638 464
Depreciation of right of use assets under IFRS16 718 705
Amortisation of intangible assets 535 513
Share based payment charge 43 36
Impairment of goodwill and intangibles 890 -
Impairment of buildings 34 -
Interest payable 1,021 458
Taxation charge/(credit) (33) (6)
Operating cash flows before movements in working capital 2,932 3,428
(Increase)/decrease in inventories (423) 1,219
Decrease/(increase) in trade and other receivables 549 999
Increase/(decrease) in trade and other payables (1,575) (6,769)
Net cash generated from/(used in) operating activities 1,483 (1,123)
Cash flows from investing activities
Acquisition of subsidiary (15) -
Acquisition of property, plant and equipment (2,145) (2,080)
Net cash generated from/(used in) investing activities (2,160) (6,393)
Cash flows from financing activities
New bank borrowings raised 2,299 3,496
Dividends paid (535) (966)
Interest paid on bank borrowings (333) (19)
Interest paid on invoice discounting (568) (344)
Interest paid on lease liabilities (120) (95)
Repayments of bank borrowings (530) (814)
Repayments of obligations under lease liabilities (903) (867)
Purchase of treasury shares (170) -
Movement on invoice discounting facility (1,223) 4,310
Net cash used in financing activities (2,083) 4,701
Net increase in cash and cash equivalents (2,760) (2,815)
Cash and cash equivalents at 1 May 4,774 7,589
Cash and cash equivalents at 30 April 2,014 4,774
Notes
for the year ended 30 April 2024
1. Basis of preparation
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 30 April 2024 or 2023 within the
meaning of Section 434 of the Companies Act 2006 but is derived from those
accounts. Statutory accounts for 2023 have been delivered to the Registrar of
Companies and those for 2024 will be delivered following the company's 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.
2024 2023
On continuing operations £'000 £'000
Operating profit/(loss) 74 1,710
Separately disclosed items within administrative expenses
Share based payment charge 43 36
Amortisation of intangible assets (customer relationships and brands) 535 513
Reorganisation costs 233 123
Acquisition costs 50 331
Impairment of goodwill & intangibles 875 -
Impairment of buildings 34 -
Total separately disclosed items 1,770 1,003
Underlying operating profit 1,844 2,713
Depreciation 1,356 1,169
Underlying EBITDA 3,200 3,882
Separately disclosed items (excluding amortisation and impairment) (1,235) (490)
EBITDA 1,965 3,392
Profit/(loss) before tax (914) 1,252
Separately disclosed items 1,770 1,003
Underlying profit/(loss) before tax 823 2,255
3. Earnings per share
Basic and underlying earnings per share
Number of Shares 2024 2023
Weighted average number of shares 90,277,589 88,222,891
Effect of weighted average number of treasury shares (723,409) (1,099,823)
Weighted average number of shares for the purposes of basic earnings per share 89,554,180 87,123,068
Effect of share options 139,579 102,564
Weighted average number of shares for the purposes of diluted earnings per 89,693,759 87,225,632
share
2024 2023
Weighted average number of shares Earnings per share Weighted average number of shares (Loss)/
(pence) (Loss)/ earnings earnings per share
Earnings £'000 (pence)
£'000
Profit/(loss) for the year (914) 89,554,180 (1.02) 1,258 87,123,068 1.44
Separately disclosed items (note 6) 1,770 - - 1,003 - -
Underlying profit/(loss) for the period 856 89,554,180 0.96 2,261 87,123,068 2.60
5. Dividends
£'000
PAID PRIOR YEAR 966
PAID DURING YEAR
Final dividend for 2023: 0.6p paid 30 November 2023 535
PAID FOLLOWING YEAR END
Interim dividend for 2024: 0.25p paid 23 August 2024 223
TO BE RECOMMENTED AT THE FORTHCOMING GM
Final dividend for 2024: 0.25p to be paid 17 January 2025 223
6. Group reconciliation of net cash flow to movement in net debt
2024 2023
£'000 £'000
Net increase in cash and cash equivalents (2,760) (2,815)
Decrease/(increase) on invoice discounting facility 1,223 (4,310)
Decrease/(increase) in bank loans and other loans (1,729) (3,627)
Decrease in lease liabilities 863 (1,152)
Movement in net debt for the period (2,403) (11,904)
Net debt at beginning of period (7,027) 4,877
Net funds/(debt) at end of period (9,430) (7,027)
7. Post Balance Sheet Event
An interim dividend for the year ended 30 April 2024 of 0.25p per share was
paid 23 August 2024.
In May 2024 the Group purchased 136,260 of its own shares into treasury at an
average cost of 11.3p. The issued share capital following the purchase is now
89,032,697 shares.
In July 2024 the land and buildings in Runcorn were sold for £1,210,000. The
net book value of the land and buildings as at 30 April 2024 was £1,000,000.
£700,000 of the mortgage was repaid from the funds received, reducing gearing
by circa 10%.
In September 2024 the land and buildings in Haydock exchanged with completion
expected shortly for £706,000. The net book value of the land and buildings
as at 30 April 2024 was impaired from £740,000 to £706,000. £518,000 of the
mortgage will be repaid from the funds when received, further reducing gearing
by 5%.
8. Publication of Annual Report
A copy of the 2024 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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