Half Yearly Report

RNS Number : 5569P

Robinson PLC

20 August 2014

 



Robinson plc

("Robinson" or the "Company)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014

HIGHLIGHTS

·      Madrox acquisition completed on 25 June 2014

·      Revenues flat after a positive first quarter

·      Lower property rental income of £0.2m following sale of the Portland property in 2013

·      Exceptional cost of £0.4m relating to acquisition of Madrox (2013: gain of £1.1m on sale of property)

·      Underlying operating profit of the trading businesses flat and reported profit before tax £0.3m (2013: £2.2m)

·      Interim dividend increased by 12% to 2.25p (2013: 2.0p)

CHAIRMAN'S STATEMENT

Revenues & Profits

In a period when we have seen both grocery and major brand sales come under pressure from discounters, I am pleased to report that, despite a weak second quarter, our turnover in the first six months of 2014 has remained at last year's level. Gross margins have slipped slightly mainly as a result of cost increases that could not be passed on to our customers. Operating costs have risen by £0.2m primarily as a consequence of non-repeating credits that benefited the prior year. Property rental income is £0.2m lower than the same period last year, following the sale of the Portland property to Sonoco. The underlying operating profit pre-exceptional, non-repeating items and the Portland factory rental income is broadly comparable with the previous year.

Madrox Acquisition

The acquisition of Madrox, completed on 25th June, has not affected the first half revenues although it has added to the costs.  The addition is fully in line with our strategy to expand in Central Europe partly through selective acquisition of local plastic packaging manufacturers who supply the strong brand owners and leading private labels in our sectors. It will allow us to take a more prominent position in the growing plastic packaging markets in this region.

Madrox is based in Warsaw and is a supplier of blow, stretch-blow and injection moulded plastic packaging primarily to major brands and private label businesses operating in the household, toiletries and cosmetics sectors in Central Europe. The audited Madrox accounts for the year ended 31 December 2013 reported sales of £9.8m and a profit before tax of £2.2m. The unaudited accounts for the 6 months ended 30 June 2014 show sales of £5.0m and a profit before tax of £1.1m.

Cash & Finances

We have funded the initial £10.9m cash element for the acquisition of Madrox (with costs) from the £5.4m cash reserves held at the end of 2013, £3.5m of property backed Polish Zloty loans with the balance taken from our existing UK bank facilities. A final dividend of 2.5p was paid to shareholders on 1 June 2014 (2013: 2.25p). Total borrowings at the end of the period were £4.9m.

Outlook and Dividend

We reported sales in the first quarter were 8% higher, so sales in the second quarter have reversed that to leave us level with the previous year at the half year stage.  Trends as we begin the second half indicate some improvement and, if sustained, we expect to show growth in sales in the underlying business by the end of this year. The Madrox addition will make a significant step change in the scale of the Group. The Board has therefore approved an increased interim dividend of 2.25p (2013: 2.0p) to be paid on 1 October 2014 to shareholders on the register at 29 August 2014.

For more information please contact:

Robinson plc
Guy Robinson, Finance Director	Tel: [phone]
	www.robinsonpackaging.com
WH Ireland
Katy Mitchell	Tel: [phone]

Robinson plc

Group Income Statement

			Six months to 30.06.14		Six months to 30.06.13		Year to 31.12.13
	Notes		£'000		£'000		£'000
Revenue			10,888		10,886		23,329
Cost of sales			(8,812)		(8,671)		(18,148)
Gross profit			2,076		2,215		5,181
Operating costs			(1,581)		(1,185)		(2,859)
Exceptional (costs)/gain			(364)		1,054		1,054
Operating profit			131		2,084		3,376
Finance income - interest receivable			14		2		11
Finance costs - bank interest payable			(1)		(1)		(1)
Finance income in respect of pension fund			165		124		307
Profit before taxation			309		2,209		3,693
Taxation	2		(76)		(310)		(599)
Profit for the period			233		1,899		3,094
Earnings per ordinary share (EPS)	4		pence		pence		pence
EPS from continuing operations excluding exceptional items			3.6		5.2		12.6
EPS from continuing operations			1.4		11.7		19.2
Diluted EPS	4
EPS from continuing operations excluding exceptional items			3.5		5.0		12.2
EPS from continuing operations			1.4		11.3		18.5
Statement of comprehensive income			£'000		£'000		£'000
Profit for the period			233		1,899		3,094
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of net defined benefit liability			-		-		(308)
Deferred tax relating to items not reclassified			(12)		-		152
			(12)		-		(156)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations			(74)		(58)		3
Other comprehensive expense for the period			(86)		(58)		(153)
Total comprehensive income for the period			147		1,841		2,941

Robinson plc

Group Statement of Financial Position

			30.06.14		30.06.13		31.12.13
			£'000		£'000		£'000
Non-current assets
Property, plant and equipment			15,946		8,913		10,802
Intangible assets			5,681		-		-
Deferred tax assets			127		111		160
Pension asset			4,053		4,224		4,053
			25,807		13,248		15,015
Current assets
Inventories			2,716		1,958		2,150
Trade and other receivables			7,732		9,802		6,565
Cash			-		1,055		5,375
			10,448		12,815		14,090
Non-current assets held for sale			1,250		2,782		1,250
Total assets			37,505		28,845		30,355
Current liabilities
Trade and other payables			(4,372)		(3,821)		(4,527)
Corporation tax payable			(181)		(211)		(130)
Loan Borrowings			(487)		-		-
Overdraft			(2,995)		-		-
			(8,035)		(4,032)		(4,657)
Non-current liabilities
Loan Borrowings			(1,454)		-		-
Deferred tax liabilities			(442)		(545)		(407)
Deferred consideration			(2,520)		-		-
Provisions			(187)		(187)		(187)
			(4,603)		(732)		(594)
Total liabilities			(12,638)		(4,764)		(5,251)
Net assets			24,867		24,081		25,104
Equity
Share capital			82		80		82
Share premium			610		526		610
Capital redemption reserve			216		216		216
Translation reserve			225		240		299
Revaluation reserve			4,416		4,371		4,416
Retained earnings			19,318		18,648		19,481
Equity attributable to shareholders			24,867		24,081		25,104

Robinson plc

Group Statement of Cash Flows

		Six months to 30.06.14		Six months to 30.06.13		Year to 31.12.13
		£'000		£'000		£'000
Cash flows from operating activities
Profit for the period		233		1,899		3,094
Adjustments for:
Depreciation of property, plant and equipment		470		476		969
Profit on disposal of other plant and equipment		(8)		(5)		(20)
Profit on sale of non-current asset		-		-		(1,054)
Other finance income in respect of pension fund		(165)		(128)		(307)
Finance costs		1		1		1
Finance income		(14)		-		(11)
Taxation charged		76		310		599
Non-cash items:
Pension current service cost		96		128		170
Cost of share options		25		24		43
Operating cash flows before movements in working capital		714		2,705		3,484
Decrease/(increase) in inventories		90		(350)		(542)
Decrease/(increase) in trade and other receivables		950		(882)		(641)
Decrease in trade and other payables		(1,062)		(587)		(25)
Cash generated by operations		692		886		2,276
Tax paid		(228)		(367)		(769)
Interest received/ (paid)		13		(2)		(3)
Net cash generated from operating activities		477		517		1,504
Cash flows from investing activities
Interest received		14		-		11
Proceeds of disposal of non-current assets		-		-		4,250
Acquisition of subsidiary		(10,346)		-		-
Acquisition of plant and equipment		(70)		(565)		(1,402)
Disposal of other plant and equipment		9		28		45
Net cash (used in)/generated from investing activities		(10,393)		(537)		2,904
Cash flows from financing activities
Loans paid		-		(307)		(307)
Proceeds on issue of shares		-		-		193
New Bank Loans raised		1,941		-		-
Dividends paid		(395)		(361)		(662)
Net cash generated from/(used in) financing activities		1,546		(668)		(776)
Net (decrease)/increase in cash and cash equivalents		(8,370)		(688)		3,632
Cash and cash equivalents at 1 January		5,375		1,743		1,743
Cash and cash equivalents at end of period		(2,995)		1,055		5,375
Cash		-		1,055		5,375
Overdraft		(2,995)		-		-
Cash and cash equivalents at end of period		(2,995)		1,055		5,375

Robinson plc

Notes to the Interim Report

1.   Basis of preparation

The interim report for the six month period to 30 June 2014 was approved by the directors on 19 August 2014. The interim financial information is not audited.

The interim financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs). These should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with applicable IFRSs. The information for the year ended 31 December 2013 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under sections 498 (2) or (3) respectively of the Companies Act 2006.

2.   Taxation

The taxation charge for the six months to 30 June 2014 has been calculated on the basis of the estimated effective tax rate on profits before tax for the year to 31 December 2014.

3.   Dividends

	Six months to 30.06.14		Six months to 30.06.13		Year to 31.12.13
Ordinary:	£'000		£'000		£'000
Final	395		361		349
Interim	-		-		313
	395		361		662

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 after taxation of £233,000 divided by the weighted average number of shares in issue, net of treasury shares of 16,394,304: for diluted earnings per share 17,048,518.The calculation of basic and diluted earnings per ordinary share for continuing operations excluding exceptional items is based on a profit of £597,000 being the profit after taxation of £233,000 plus the exceptional item of £364,000.

5.   Madrox Acquisition

On 25 June 2014 the Group acquired effective control of 100% of the share capital of MADROX Spółka Jawna, a Polish based manufacturer of plastic packaging. This transaction has been accounted for using the acquisition method of accounting. The book and fair value of the net assets of the acquired business were as follows:

Net assets at date of acquisition		Book Value	Fair Value adjustments	Total Fair Value
		£'000	£'000	£'000
Intangible assets		-	5,681	5,681
Property, plant & equipment		2,881	2,669	5,550
Inventories		656		656
Trade & other receivables		2,117		2,117
Trade & other payables		-1,139		-1,139
Cash & bank balances		121		121
		4,636	8,350	12,986

The adjustment to intangible assets represents customer contacts acquired and will be amortised over the life of the relationships. The adjustment to property, plant and equipment represents the difference between book value and estimated market value of the assets. The consideration paid in cash on 25 June 2014 was £10.5m and a further £2.5m accrued as the estimated value of the earnout payment due in 2016. The level of the earnout is dependent upon performance of the Madrox business prior to the payment of the earnout. In addition, acquisition costs of £0.4m have been expensed and reported as exceptional costs.

6.   Going concern

The directors have considered the cash flow forecasts for the Group and the availability of facilities. As at the date of this report, 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.

7.   Interim report

Copies of the interim report are available from Robinson plc's registered office: Field House, Wheatbridge, Chesterfield, S40 2AB, UK or from its website at www.robinsonpackaging.com.

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