5 October 2021                                       

CORAL PRODUCTS PLC

('Coral' or the 'Company' or the 'Group')

Final results for year ended 30 April 2021

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 2021.

KEY FINANCIALS

* 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.

HEADLINES

·      In February 2021, Coral Products (Mouldings) Ltd and Interpack Ltd were sold for £7.8m.

·      Customised Packaging Ltd was acquired for £1.2m in March 2021.

·      Much improved performance in our continuing operations during the year.

·      Underlying operating profit increased to £0.9m (2020: £0.4m) and underlying EBITDA increased to £1.3m (2020: £0.8m) on continuing operations.

·      Gross margin increased to 35.5% (2020: 33.4%).

·      The CBIL loan facility taken out at the start of the pandemic was repaid in full.

·      The mortgage on the Haydock facility was repaid in full.

·      The land and buildings at Haydock have exchanged contracts with completion agreed after the completion of the contractual roof works expected during the new financial year. This will bring in a further £3.5m of cash.

·      In November 2020, BT signed up for a further 3-year contract.

·      Strong net assets position of £12.7m as at the year-end (2020: £12.1m).

·      Cash reserves in the Group total £3.8m (2020: £0.5m). This excludes the anticipated £3.5m from the Haydock property sale.

·      Gearing has been eliminated (2020: 66%).

·      The parent company distributable reserves increased to £5.9m (2020: £3.4m) as a result from the profit in the year of £2.5m (2020: 1.4m loss).

·      Return to dividend payments. An interim dividend of 0.5p per share was paid on 28 May 2021 and a further 0.5p per share is proposed to be paid on 30 November 2021, making a full year dividend of 1p per share.

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

"This current trading period has improved significantly upon the previous one, despite the ongoing Brexit, United States - China trading hostilities and Covid-19 pandemic issues.  Revenue on continuing operations was £10.7m (2020: £8.7m), underlying operating profit £0.9m (2020: £0.4m) and gross margin 35.5% (2020: 33.4%)."

"In February 2021, the Group sold Interpack Limited and Coral Products (Mouldings) Limited to IPL Limited for a consideration of £7.8m. The Board believes that the Disposal provided the Company with the opportunity to crystallise an attractive return on invested capital with respect to the Sale Companies, reduce net debt and also to provide additional financial flexibility to further develop and support the recent progress of the Continuing Group.  Following the Disposal, the Continuing Group will consist of Coral Products PLC, Tatra Rotalac Limited and Global One-Pack Limited. The Board believes there is potential to further develop the Continuing Group in terms of sales and profits. The net result was a profit after tax to the parent company of £2.5m and an increase in distributable reserves to £5.9m (2020: £3.4m). The Group used the funds to repay in full the £1m coronavirus business interruption loan (CBIL) and a £1.7m mortgage on the property at Haydock."

"The proposed sale of the land and building at the Haydock site has now exchanged with completion expected in the first half of the new financial year, following the completion of the current roof replacement works."

"In March 2021, the Group acquired 100% of the share capital of Customised Packaging Limited (CPL) for a net consideration of £1.2m. CPL designs, supplies and manufactures plastic products, using top-of-the-range sheet extrusion technology and vacuum forming capabilities to its network of blue-chip customers. This is a significant milestone for Coral as it expands further the Group's market coverage and product range."

"Whilst we have confidence in our development strategy and the prospects of the Group, the very real uncertainties over Brexit and the coronavirus pandemic are a cause for concern."

"The Group continues with its strategic progress of increasing focus on value-added and innovative products, particularly in the telecommunications, rail industry, shutters, extrusion and vacuum forming areas. Our aim is to build a significant plastic moulding business with a bias towards using recycled materials."

"Our Group is facing macro-economic challenges that are unprecedented, but we believe that our balance sheet and margins mean that we can mitigate the effects. The crisis will pass at some point. At that time, it will be the work we do to move the business forward that will determine our future success. So, our priorities being clear: (1) to do all we can to keep our workplaces as safe as possible for staff, (2) secure the cash resources of the business and (3) continue to develop our product ranges throughout the next financial period."

"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."

For further information, please contact:

 This announcement contains inside information for the purpose of Article 7 of the EU Regulation 596/2014.
 

CHAIRMAN'S STATEMENT

Coronavirus

With the coronavirus pandemic ongoing, our continuing priority is to do all we can to keep our workplaces as safe as possible for staff, ensuring that we follow all government guidelines. 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. Our sites have continued manufacturing throughout the pandemic.

There will be many challenges to our working practices as the pandemic develops and we have put plans in place to protect our most vulnerable employees, comply with the differing levels of Government restrictions and cope with illness throughout the business. In particular, we have adapted our technology for greater home working and seeking to segregate critical operational teams so as to keep all our vital operations and projects on track.

The actions taken by your Board give us confidence that we will come through this current crisis and will be in a position to take advantage of any economic upturn.

The CBIL loan of £1 million pounds received on 13 May 2020 has now been fully repaid. We have returned to spending on capital expenditure to meet current increased demand and have recommenced dividend payments.

Trading

This current trading period has improved significantly upon the previous one, despite the ongoing Brexit, United States - China trading hostilities and Covid-19 pandemic issues.  Revenue on continuing operations was £10.7m (2020: £8.7m), underlying operating profit £0.9m (2020: £0.4m) and gross margin 35.5% (2020: 33.4%).

In February 2021, the Group sold Interpack Limited and Coral Products (Mouldings) Limited to IPL Limited for a consideration of £7.8m. The Board believes that the Disposal provided the Company with the opportunity to crystallise an attractive return on invested capital with respect to the Sale Companies, reduce net debt and also to provide additional financial flexibility to further develop and support the recent progress of the Continuing Group.  Following the Disposal, the Continuing Group will consist of Coral Products PLC, Tatra Rotalac Limited and Global One-Pack Limited. The Board believes there is potential to further develop the Continuing Group in terms of sales and profits. The net result was a profit after tax to the parent company of £2.5m and an increase in distributable reserves to £5.9m (2020: £3.4m). The Group used the funds to repay in full the £1m coronavirus business interruption loan (CBIL) and a £1.7m mortgage on the property at Haydock.

The proposed sale of the land and building at the Haydock site has now exchanged with completion expected in the first half of the new financial year, following the completion of the current roof replacement works.

In March 2021, the Group acquired 100% of the share capital of Customised Packaging Limited (CPL) for a net consideration of £1.2m. CPL designs, supplies and manufactures plastic products, using top-of-the-range sheet extrusion technology and vacuum forming capabilities to its network of blue-chip customers. This is a significant milestone for Coral as it expands further the Group's market coverage and product range.

The Group has reported a loss before taxation for the financial year of £0.3m (2020: £0.5m) on continuing operations. Across the Group, finance costs have remained static at £0.1m (2020: £0.1m) and depreciation at £0.4m (2020: £0.4m).

Dividends

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.

The Board having considered the improved financial performance for the year ended 30 April 2021 paid an interim dividend of 0.5p on 28 May 2021. A final dividend is proposed of 0.5 pence per share with an ex-dividend date of 11 November 2021 and a record date of 12 November 2021. This final dividend will be paid on 30 November 2021.

Board Changes

Michael (Mick) Wood left with the sale of Coral Products (Mouldings) Limited and Interpack Limited in March 2021. At the same time Joe Grimmond became Executive Chairman.

Steve Barber joined as non-executive director in March 2021.

Chairman's Corporate Governance Statement

As Chairman of the Board, my role is to set the strategy for the company, monitor the ongoing performance of the companies within the Group to ensure that they are meeting our requirements and also identify potential acquisition targets.

In addition, my role also encompasses overseeing the functioning of the Board and its effectiveness and ensuring sound corporate governance practices are followed.

All the Directors of Coral believe strongly in the importance of good corporate governance for the creation of shareholder value over the medium to long-term and to engender trust and support amongst the Group's wider stakeholders.

I work with key executives throughout the organisation to instill good corporate governance practices in accordance with the Code.

In accordance with the changes to AIM Rule 26 the Company is now applying the revised QCA Corporate Governance Code published earlier in 2018.

The Board monitors our corporate governance practices and will always implement improvements which further enhance performance and/or benefit stakeholders.

Strategy

Our Board continuously reviews business performance alongside market conditions to make sure that we take the correct strategic decisions for each of our businesses. The Board recognises fully that it has been tasked with delivering enhanced shareholder value. The challenges facing the Board relate to managing the continued growth of the Group through the uncertainty and timelines surrounding UK Brexit and the coronavirus pandemic.

People

We are reliant on the expertise, professionalism and commitment of our people and thank them for their continued contribution to the business during a challenging year.

Future Developments

Following on from the disposal of Coral Products (Mouldings) Limited, Interpack Limited, the Group have cash reserves of circa £3.8m as at the year end. After the sale of the Haydock property during the current financial year, the Group will have cash reserves of circa £6.5m after the payment of dividends.

The Board is continuing to consider the most effective use of the very strong cash rich asset base. We recognise that in today's low interest rate climate cash is a poor substitute for profit earning assets.

Outlook

Whilst we have confidence in our development strategy and the prospects of the Group, the very real uncertainties over Brexit and the coronavirus pandemic are a cause for concern.

The Group continues with its strategic progress of increasing focus on value-added and innovative products, particularly in the telecommunications, rail industry, shutters, extrusion and vacuum forming areas. Our aim is to build a significant plastic moulding business with a bias towards using recycled materials.

Our Group is facing macro-economic challenges that are unprecedented, but we believe that our balance sheet and margins mean that we can mitigate the effects. The crisis will pass at some point. At that time, it will be the work we do to move the business forward that will determine our future success. So, our priorities being clear: (1) to do all we can to keep our workplaces as safe as possible for staff, (2) secure the cash resources of the business and (3) continue to develop our product ranges throughout the next financial period.

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 October 2021

Group Income Statement

for the year ended 30 April 2021

Group Statement of Comprehensive Income

for the year ended 30 April 2021

Balance Sheet

as at 30 April 2021

An income statement is not provided for the parent Company as permitted by section 408 of the Companies Act 2006. The profit dealt with in the financial statements of Coral Products Plc was £2,485,000 (2020: £1,388,000 loss).

Statement of Changes in Shareholders' Equity

for the year ended 30 April 2021

Cash Flow Statement

for the year ended 30 April 2021

Notes

for the year ended 30 April 2021

1.   Basis of preparation

The financial information set out above does not constitute the Group's statutory accounts for the years ended 30 April 2021 or 2020 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts. Statutory accounts for 2020 have been delivered to the Registrar of Companies and those for 2021 will be delivered following the company's Annual General Meeting. The auditors' report on the statutory accounts for the year ended 30 April 2021 was qualified purely upon the qualification with respect to inventory from 30 April 2020, it did not draw attention to any other matters by way of emphasis, and did not contain statements under s498 (2) or s498 (3) of the Companies Act 2006. The auditor's report on the statutory accounts for the year ended 30 April 2020 was qualified with respect to inventory having a carrying value of £3,368,000 as the audit evidence available was limited because, given the global Covid-19 pandemic, no inventory count was undertaken and the auditor did not observe the physical inventory as at 30 April 2020. In respect solely of the limitation relating to inventory, the auditor did not obtain all the information and explanations considered necessary for the purpose of the audit and were unable to determine whether adequate accounting records had been kept by the parent company.

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.

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.

3.  Disposals

On 3 March 2021 the Group sold 100% of the voting equity instruments of Coral Products (Mouldings) Ltd and Interpack Ltd for a consideration of £7.8 million. The principal reason for this disposal was to provide the company with the opportunity to crystallise an attractive return on invested capital with respect to the sale companies, reduce net debt and to provide additional financial flexibility to further develop and support the recent progress of the continuing Group.

Details of the fair value of identifiable assets and liabilities disposed of are as follows:

4. Earnings per share

Basic and underlying earnings per share

5.  Dividends

An interim dividend for the year ended 30 April 2021 of 0.5p per share was paid on 28 May 2021. This dividend amounted to £429,712.

A final dividend payment for the year ended 30 April 2021 of 0.5p per share is recommended.

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

7. Post Balance Sheet Event

The invoice discounting facility with Barclays was renegotiated in September 2021 and renewed for a further twelve months. This has resulted in lower interest fees.

8.  Publication of Annual Report

A copy of the 2021 Report & Accounts will be sent to all shareholders on 4 October 2021. 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.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR). The Directors of the Group take responsibility for this announcement.