RNS Number : 2572L
Coral Products PLC
04 September 2023
 

4 September 2023                                       

 

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 2023.

 

Financial headlines

2023

£m

2022

£m

%

Change

Group sales

35.2

14.4

144%

Gross profit

10.5

5.3

98%

Gross margin %

29.7%

36.7%


-       From existing operations

39.6%

36.7%

8%

-       From the four acquisitions

23.3%

-


Underlying results *




-       Operating profit

2.7

1.6

69%

-       Profit before taxation

2.3

1.5

53%

-       EBITDA

3.9

1.8

117%

-       Basic earnings per share

2.60p

1.39p

87%

Statutory Results




-       Operating profit

1.7

1.4

21%

-       Profit before taxation

1.3

1.3

0%

-       EBITDA

3.4

1.9

79%

-       Basic earnings per share

1.44p

1.19p

21%

Dividend paid per share

0.5p

1.1p


Proposed final dividend payment per share

0.6p

-


 

* 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.

 

Operational headlines

 

·    Completed a successful year more than doubling both sales and underlying EBITDA through a mix of organic and acquisition led growth.

 

·     Revenues increased by 144% to £35.2 million of which £21.3 million was derived from the four acquisitions completed during the year.

 

·     Underlying operating profit increased to £2.7m (2022: £1.6m) and underlying EBITDA increased to £3.9m (2022: £1.8m). Gross margins from existing operations increased by 8% from 36.7% to 39.6%.

 

·      Strong cash position with cash and cash equivalents in the Group totalling £4.8m (2022: £7.6m) after investing:

£4.3 million of cash completing four acquisitions during the year; and

£2.1 million of capex in new machinery, costs associated with re-tooling for future projects and re-configuring warehouse space to expand manufacturing capacity.

 

·      An interim dividend of 0.5p per share was paid on 16 December 2022. A final dividend of 0.6p is proposed to be paid on 30 November 2023, making a full year dividend of 1.1p (2022: 1.1p) per share.

 

·      Sustainability remains a core focus across all operations with specific targets around:

Adoption of bio-based materials;

Increasing move to re-cyclable materials; and

Supply chain tracking and transparency.

 

·      In March 2023 the Group entered into a new banking facility with Virgin Money. The new facility gives the Group a banking facility of £10.35 million comprising £7.35 million for invoice discounting and £3 million for trade financing.

 

Post year end

 

·    Customised Packaging Limited was merged into Manplas Limited. This should allow synergies between the two companies to be realised.

 

·      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.

 

·      Group sold the land and building in Parr, St Helens for £225,000. This unencumbered property was valued at £200,000 on the balance sheet at year end.

 

·     In July 2023 the Group paid an earn-out of £1,275,000 to the Vendors of Alma Products Limited. This earn-out completes the full consideration for the acquisition of Alma Products Limited taking the total consideration to £3,002,000.

 

·     In July 2023 the Group purchased 400,000 of its own shares into treasury at an average cost of 16.5p. The issued share capital following the purchase is now 89,877,589 shares

 

 

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

 

"We are pleased to have a completed a successful year for the business. We have invested in both organic and acquisition led growth, whilst maintaining our commitment to sustainability. Existing operations generated an 8% improvement in gross margins reflecting the investment we have made and the drive of our autonomous business teams. The four acquisitions completed during the first half of the financial year delivered a significant sales uplift and, have integrated well, adding complementary expertise and products lines. Despite investment in acquisitions and our ongoing capex programme, the Group continues to be highly cash generative and has retained a strong gross cash position. Our objective remains focused on capitalising on our position in the specialists' plastics market where we see significant further opportunity."

 


 

For further information, please contact:

 

Coral Products plc

Joe Grimmond, Chairman  

 

 

Tel: 07703 518 148

 

Nominated Adviser & Broker

Cenkos Securities plc

Adrian Hadden, Charlie Combe

 

Tel: 020 7397 8900



Novella Communications

Tim Robertson/Safia Colebrook

Tel: 020 3151 7008

 

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.

 

 

About Us

Coral Products is a one stop shop for all plastic needs. Coral Products manufactures and distributes plastic injection, extruded and vacuum formed moulded products into a diverse range of sectors including personal care, household, healthcare, automotive, telecoms and rail. The Group has manufacturing and distribution facilities across the North West of the UK.

 

 

A colorful squares with text Description automatically generated with medium confidence

 

By developing innovative plastic moulded products, providing excellent customer service and through its hard-working employees, Coral Products continues to refocus on new markets creating growth and value for its shareholders.

 

Sustainability is a core principle of our business. In all manufacturing processes, any scrap or waste material is reused or recycled. We offer "end-of-life" recycling and where viable we adopt and use bio based and re-cyclable materials and provide supply chain tracking and transparency.

 

In 2021 the Group adopted a five-year plan aimed at substantially increasing Group revenue and profitability from our specialist plastic products manufacturing and distribution facilities. The Group took the initial step along this plan when it disposed of Coral Products (Mouldings) Ltd and Interpack Ltd closely followed by the acquisition of Customised Packaging Ltd.

CHAIRMAN'S STATEMENT

 

Introduction

The business has doubled in size during the course of the year under review. Importantly, this has been achieved through investment in both organic and acquisition led growth, in line with our aim to become a UK plastics business of scale. Overall, Group trading has been strong with sales in line with the upgraded market guidance given in May 2023 and adjusted EBITDA 9.6% ahead. The business is stable, cash generative and backed by a solid balance sheet.

 

The four acquisitions have integrated well. Each is a specialist plastics business based in the North West of the UK. We are confident there is scope to improve the performance of each business acquired and potential to collaborate across the Group. An example of this is the recent decision to merge Customised Packaging Limited into Manplas Limited, two very similar businesses offering customised product protection solutions. The combination of these businesses will create several synergies, together with an improved customer offer.

 

As ever, the Group is dedicated to moving towards more sustainable solutions where it is commercially viable to do so and during the year under review, good progress was made towards reaching our sustainability goals.

 

Results and Financial Position

Trading during the year shows a substantial increase on the prior year. Reported revenue was £35,216,000 (2022: £14,391,000), gross margins were 29.7% (2022: 36.7%) resulting in a gross profit of £10,476,000 (2022: £5,287,000). Underlying EBITDA was £3,882,000 (2022: £1,779,000) and underlying operating profits increased to £2,713,000 (2022: £1,574,000).

 

The change in gross margin reflects the changes in sales mix from the acquisitions during the year. After investing £11,571,000 in new subsidiaries the gearing remains comfortable at 50.7%. The balance sheet net asset position is strong at £13,848,000 (2022: £11,707,000). This represents a solid asset platform for developing the business.

 

In March 2023, the Group entered into a new banking facility with Virgin Money.  The new facility gives the Group a banking facility of £10.35 million comprising £7.35 million for invoice financing and £3 million for trade financing. In addition, the Group has re-mortgaged the freehold buildings acquired with Film & Foil Solutions Ltd and Alma Products Ltd for a combined £2.1 million which after repaying existing mortgages improved the Group's working capital position by circa £1.4 million.

 

In July 2023 the Group purchased 400,000 of its own shares into treasury at an average cost of 16.5p. The issued share capital following the sale is now 89,877,589 shares.

 

Trading

The year ended 30 April 2023 was an exceptionally productive year for Coral Products plc as we continue to adapt and develop our business to enable us to maximise the opportunities available.

 

The Company is focused on becoming a UK plastics business of scale and using its established acquisition criteria the Group bought four businesses during the first half of the financial year:

·      Film & Foil Solutions Ltd acquired in May 2022, a market leading converter and stockist of flexible packaging film, print lamination film and speciality plastics.

·      Alma Products Ltd also acquired in May 2022, is a niche specialist and expert in extrusion, thermoforming and container printing serving the food industry, providing formable plastic sheet for Form-Fill-Seal applications, thermoformed and printed plastic food packaging.

·      Manplas Limited acquired in September 2022, is a provider of customised product protection solutions solving logistical problems across multiple sectors with premises that adjoin our largest subsidiary Tatra Rotalac.

·      Ecodeck Grids Limited acquired in October 2022, e-commerce led business selling plastic grids with potential to take the manufacture of the grids in-house. In June 2023, the Group acquired a small business which gives the Group a foothold in Spain for the sale and distribution of Ecodeck Grids.

 

All four acquisitions are specialist design and product led plastics businesses based in the North West of the UK and all are now fully integrated into the Group and performing well.

 

It is important to highlight that the existing companies also performed well in the period and it is the combination of both that has delivered the positive trading performance for the year. In particular, Tatra Rotalac Limited had a good year with increases in both turnover and operating profit. The operational efficiencies implemented during the previous year continue to pay off and this, combined with the £2 million capital investment into new machinery, will deliver during the next financial year.

 

Global One Pak Limited continues to focus on future growth and researching new innovative products and markets. The machinery and tooling to manufacture a range of caps and enclosures are on site and production is expected to start during the second half of the new financial year.

 

Customised Packaging Limited continues to perform well.  The focus is on improving efficiencies within the business and as such, following the year end, Customised Packaging Limited was merged into Manplas Limited, taking advantage of the Manplas premises which are adjacent to Tatra Rotalac thereby centralising these operations together. There are quick synergies to come from the combination and through their shared expertise they will offer customers enhanced solutions.

 

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 the past years whilst having to deal with disruption to both their work and personal lives due to the current economic climate.

 

Dividend

The Board remains committed to its long-term progressive dividend policy, which takes account of the underlying growth, whilst acknowledging the requirement for continuing investment and short-term fluctuations in profit. Having made an interim dividend payment of 0.5 pence per share for this financial period the Board are proposing a final dividend of 0.6 pence per share (2022: 1.1p).

 

Outlook

We are mindful of the macroeconomic and geopolitical risks yet remain confident about the current prospects for our business and its ability to continue its successful evolution. Our continued investment over many years in our people and our systems has generated strong and resilient results in the past year and we believe will continue to do so.

 

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 and due to contracts already negotiated all operations will remain relatively unaffected by the current turmoil in energy prices.

 

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.

 

We have enjoyed a strong start to our current financial year, and we look forward to a satisfactory outturn for the year given the prevailing conditions.

 

 

 

 

 

Joe Grimmond
Chairman
4 September 2023



 

Group Income Statement

for the year ended 30 April 2023

 



 

2023

£'000

2022

£'000

 

 



 

 

 

Revenue



35,216

14,391

 

Cost of sales



(24,740)

(9,104)

 

Gross profit



10,476

5,287

 

Operating costs



 


 

Distribution expenses



(1,301)

(787)

 

Administrative expenses before impairment and other separately disclosed items

(6,462)

(2,926)

 

Other separately disclosed items



(1,003)

(162)

 

Administrative expenses



(7,465)

(3,088)

 

Operating profit/(loss)



1,710

1,412

 

Finance costs



(458)

(82)

 

Profit/(loss) for the financial year before taxation



1,252

1,330

 

Taxation



(363)

 

Profit/(loss) for the financial year attributable to the equity holders of the parent

1,258

967

 

 


 

Basic earnings loss per ordinary share

1.44p

1.19p

 

Diluted earnings loss per ordinary share

1.44p

1.17p

 


 


 

 

 



 

 

 



 

Group Statement of Comprehensive Income

for the year ended 30 April 2023

 



 

 

 

2023

£'000

 

2022

£'000

 




 


Profit/(loss) for the financial year




1,258

967

Total other comprehensive income




-

-

Total comprehensive (loss)/income for the year attributable to equity holders of the parent

1,258

967

  

 

 

Balance Sheet

as at 30 April 2023


As at 30 April

2023

£'000

As at 30 April

2022

£'000

ASSETS

 


Non-current assets

 


Goodwill

4,385

1,945

Other intangible assets

2,956

916

Property, plant and equipment

7,209

749

Right of use assets

2,870

1,393

Total non-current assets

17,420

5,003


 


Current assets

 


Inventories

4,320

1,781

Trade and other receivables

7,193

3,237

Cash and cash equivalents

4,774

7,589

Assets held for sale

200

-

Total current assets

16,487

12,607


 


LIABILITIES

 


Current liabilities

 


Other borrowings

6,063

1,389

Lease liabilities

970

416

Trade and other payables

7,218

2,800

Total current liabilities

14,251

4,605


 


Net current assets/(liabilities)

2,236

                        8,002

Non-current liabilities

 


Term loan

3,263

-

Lease liabilities

1,505

907

Deferred tax

1,040

391

Total non-current liabilities

5,808

1,298

NET ASSETS

13,848

11,707


 


SHAREHOLDERS' EQUITY

 


Share capital

903

859

Share premium

-

5,621

Treasury shares

-

(1,008)

Other reserves

-

1,061

Retained earnings

12,945

5,174

TOTAL SHAREHOLDERS' EQUITY

13,848

11,707

 

 

 

Statement of Changes in Shareholders' Equity

for the year ended 30 April 2023

 

 


 

Called Up

Share

Capital

£'000

Share

Premium

Reserve

£'000

 

Treasury Shares

£'000

 

Other Reserves

£'000

 

Retained

Earnings

£'000

 

Total

Equity

£'000

 








Group








At 1 May 2021

859

5,621

(218)

1,567

4,908

12,737

Profit for the year

-

-

-

-

-

967

967

Contributions by and distributions to owners








Equity settled share-based payments

-

-

-

-

21

21

Purchase of treasury shares

-

-

(790)

-

-

(790)

Revaluation Reserve

-

-

-

(506)

506

-

Dividend paid


-

-

-

-

(1,228)

(1,228)

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 accounts

-

(6,271)

(111)

(1,061)

7,443

-

Sale of treasury shares

-

-

1,119

-

-

1,119

Dividend paid


-

-

-

-

(966)

(966)

At 30 April 2023

 

903

-

-

-

12,945

13,848

 

 

 

Cash Flow Statement

for the year ended 30 April 2023

 

 

 

Group

 

 

2023

£'000

2022

£'000

Cash flows from operating activities

 

 


Profit for the year

 

1,258

967

Adjustments for:

 

 


Depreciation of property, plant and equipment

464

165

Depreciation of right of use assets under IFRS16

705

296

Amortisation of intangible assets

 

513

327

Share based payment charge

 

36

21

Profit on disposal of subsidiary

 

-

-

Profit on disposal of building

 

-

(424)

Interest payable

 

458

82

Taxation charge/(credit)

 

(6)

363

Operating cash flows before movements in working capital

3,428

1,797

(Increase)/decrease in inventories

 

1,219

47

Decrease/(increase) in trade and other receivables

999

82

Increase/(decrease) in trade and other payables

(6,769)

761

Cash generated by operations

 

(1,123)

2,687

UK corporation tax received

 

-

-

Net cash generated from/(used in) operating activities

(1,123)

2,687


 

 


Cash flows from investing activities

 

 


Net cash on disposal of building

-

3,500

Acquisition of subsidiary

(4,313)

-

Acquisition of property, plant and equipment

(2,080)

(206)

Net cash generated from/(used in) investing activities

 

(6,393)

3,294


 

 


Cash flows from financing activities

 

 


New bank borrowings raised

 

3,496

-

Dividends paid

 

(966)

(1,228)

Interest paid on bank borrowings

 

(19)

-

Interest paid on invoice discounting

 

(344)

(22)

Interest paid on lease liabilities

 

(95)

(60)

Repayments of bank borrowings

 

(814)

-

Repayments of obligations under lease liabilities

(867)

(171)

Purchase of treasury shares

-

(790)

Movement on invoice discounting facility

4,310

36

Net cash used in financing activities

 

4,701

(2,235)

Net increase in cash and cash equivalents

 

(2,815)

3,746

Cash and cash equivalents at 1 May

 

7,589

3,843

Cash and cash equivalents at 30 April

 

4,774

7,589

 

Notes

for the year ended 30 April 2023

 

1.   Basis of preparation

 

The financial information set out above does not constitute the Group's statutory accounts for the years ended 30 April 2023 or 2022 within the meaning of Section 434 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for 2022 have been delivered to the Registrar of Companies and those for 2023 will be delivered following the company's Annual 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.

 

 

On continuing operations

2023

£'000

2022

£'000

Operating profit/(loss)

1,710

1,412

Separately disclosed items within administrative expenses

 


Share based payment charge

36

21

Amortisation of intangible assets (customer relationships and brands)

513

327

Profit on sale of land and building

-

(383)

Reorganisation costs

123

158

Acquisition costs

331

-

Cost of living payment to all staff

-

39

Total separately disclosed items

1,003

162

Underlying operating profit

2,713

1,574

Depreciation

1,169

205

Underlying EBITDA

3,882

1,779

Separately disclosed items (excluding amortisation and impairment)

(490)

165

EBITDA

3,392

1,944

 

 


 

 


 

 


Profit/(loss) before tax

1,252

1,330

Separately disclosed items

1,003

162

Underlying profit/(loss) before tax

2,255

1,492

 

 

 

3. Earnings per share

 

Basic and underlying earnings per share

 

Number of Shares


2023

2022

 


 


Weighted average number of shares


88,222,891

85,942,534

Effect of weighted average number of treasury shares


(1,099,823)

(4,828,836)

Weighted average number of shares for the purposes of basic earnings per share


87,123,068

81,113,698

Effect of share options

102,564

1,369,230

Weighted average number of shares for the purposes of diluted earnings per share


87,225,632

82,482,928

 

 

 

 

 

 

2023

2022

 

 

 

Continuing Operations

 

 

 

 

 

Earnings

£'000

Weighted average number of shares

Earnings per share

(pence)

 

(Loss)/ earnings

£'000

Weighted average number of shares

(Loss)/

earnings per share

(pence)

 

 

 

 

 

 

 


Profit/(loss) for the year

1,258

87,123,068

1.44

967

81,113,698

1.19

Separately disclosed items (note 6)


1,003

-

-

162

-

-

Underlying profit/(loss) for the period


2,261

87,123,068

2.60

1,129

81,113,698

1.39

 

 

5.  Dividends

 

An interim dividend for the year ended 30 April 2023 of 0.5p per share was paid 16 December 2022.

 

A final dividend payment for the year ended 30 April 2023 of 0.6p per share is recommended.

 

 

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

 

 

 

 

2023

£'000

2022

£'000

 

 

 

Net increase in cash and cash equivalents

(2,815)

3,746

Decrease/(increase) on invoice discounting facility

(4,310)

(36)

Decrease/(increase) in bank loans and other loans

(3,627)

-

Decrease in lease liabilities

(1,152)

171

Movement in net debt for the period

(11,904)

3,881

Net debt at beginning of period

4,877

996

Net funds/(debt) at end of period

(7,027)

4,877

 

 

7. Post Balance Sheet Event

 

In May 2023 Customised Packaging Limited was merged into Manplas Limited. This should allow synergies between the two companies to be realised.

 

In June 2023 the Group acquired 100% of the share capital of Ecotatou SL 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.

 

In June 2023 the Group sold the land and building in Parr, St Helens for £225,000. This unencumbered property was valued at £200,000 on the balance sheet at year end.

 

In July 2023 the Group paid an earn-out of £1,275,000 to the Vendors of Alma Products Limited. This earn-out completes the full consideration for the acquisition of Alma Products Limited taking the total consideration to £3,002,000.

 

In July 2023 the Group purchased 400,000 of its own shares into treasury at an average cost of 16.5p. This puts the issued share capital to 89,877,589 shares.

 

8.  Publication of Annual Report

 

A copy of the 2023 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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