Synnovia PLC (LON:SYN)

Synnovia PLC (LON:SYN)


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Market Cap
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Synnovia PLC RNS Release

Half-year Report


RNS Number : 4898Y
Plastics Capital PLC
06 December 2017
 

6 December 2017

 

Plastics Capital plc

("Plastics Capital", the "Company" or the "Group")

 

Interim Results for the six months ended 30 September 2017

 

Plastics Capital (AIM: PLA) the niche plastics products manufacturer, announces the Company's unaudited interim results for the six months ended 30 September 2017 ("H1"), which are in line with management's expectations.

 

Financial highlights


Six months ended

30 September 2017

£'000

Six months ended

30 September 2016

£'000

 

%

Change

Revenue

36,462

27,771

+31.3%

EBITDA*

2,572

2,731

-5.8%

Profit before tax*

1,195

1,637

-27.0%

Earnings per share*+ (p)

2.8

4.3

-34.9%

Dividend per share (p)

nil

1.46

-100.0%

Net Debt

14,988

15,123

-0.9%

* excluding amortisation, exceptional costs, unrealised foreign exchange translation and derivative gains / losses and share-based incentive scheme charges

+ applying an expected tax charge of 10% (2016-17: 6.5%) and based on the weighted average number of shares in issue in the period.

 

Operational highlights

•     13.5% organic revenue growth

-    Films Division revenue up 18.9% organically, 15.2% in volume terms

-    Industrial Division revenue up 6.9% organically

•     Significant costs being incurred to enable sustained growth

•     Lower profits reflect planned growth strategy, adverse currency and raw material price movements

•     £2.5m invested in development and capacity expansion projects

•     Underlying profitability remains strong; constant currency EBITDA up 1.3%

•     Benefit of post-Brexit sterling devaluation still to be felt

•     Project wins in bearings business continue to build

-    £6.8m of annual sales from won projects still to enter into production

•     Interim dividend payment suspended in line with stated strategy to apply cash towards accelerating organic growth

 

Financial highlights

•     Oversubscribed equity placing completed raising £3.54m (net of expenses) 

 

 

Commenting on these results, Faisal Rahmatallah, Executive Chairman, said:

"I am pleased to report strong revenue growth across the Group.  We have increased investment in business development, new products, production capacity and employee capabilities.  Order books are healthy and we anticipate a significant uplift in profitability during the second half of the financial year which should benefit from the seasonal demand upswing and new business coming on stream. However, due to recent delays in ramp-up of two significant bearings projects, we believe that it is unlikely that there will be sufficient time in the second half year to fully recover.  That said, due to the strong sales growth in the first half and on a constant currency basis, the Board expects profits before taxation, to be marginally below consensus market expectations, but well ahead of FY 16-17, for the full financial year."

 

 

 

For further information, please contact:

 

Plastics Capital plc

Tel: 020 7978 0574

Faisal Rahmatallah, Executive Chairman


Nick Ball, Finance Director




Cenkos Securities

Tel: 020 7397 8900

(Nomad and joint broker)


Mark Connelly


Callum Davidson




Allenby Capital Limited

Tel: 020 3328 5656

(Joint broker)


David Hart


Katrina Perez




 

Notes to Editor

Plastics Capital is a niche manufacturer of specialist plastic products.  Applications for these products vary widely and examples include:

•          Packaging for the food manufacturing and distribution - films, sacks and pouches

•          Steering columns and instrument control knobs in the automotive industry - plastic ball bearings

•          Hydraulic and industrial rubber hose manufacture - various types of plastic mandrel

•          Cardboard box manufacture - plastic creasing matrices

 

Plastics Capital's business model is based on understanding customers' problems in depth, and then developing and mass producing proprietary, technical solutions for these problems. As such many projects take significant time to translate initial sale into volume production.

 

The business operates through two divisions, Films and Industrial, and has the majority of its production in six UK based factories, with a further three factories in Asia and one in West Virginia, USA.  Approximately 45% of its £66 million sales, as per FY2017, are made outside the UK to more than 80 countries.

 

Further information can be found on www.plasticscapital.com

 

 



 

Chairman's Statement

 

Financial Review

 

I am pleased to report that Group revenue increased by 31.3% over the same period last year.  The key elements of revenue growth in H1 can be summarised as follows:

 

·    Organic growth - 13.5%

·    Acquisition - 16.0%

·    Foreign Exchange - 1.8% 

 

Following considerable investment in recent years in business development activities and capacity, it is particularly pleasing to report that organic growth has more than doubled over the same period last year, with last year already a doubling on the previous year.

 

However, profitability has not followed the growth in revenues for the period under review.  There are five contributory factors:

 

·    Investments that we have made to accelerate top line organic growth.  These investments are of two types: (a) in people to build business, product and process development capability and (b) in machinery to build production capacity.  On a like-for-like* basis, people costs have increased by 12% compared to the prior half year, depreciation costs reflecting investments made in capacity have increased 28% and interest costs reflecting the higher average level of debt in H1 are up 44%.  These investments, which have resulted in a "step change" in costs, have facilitated the acceleration in organic growth to the rate now being achieved.  All of this has been as planned.

 

·    The two distributors of creasing matrix and related consumables which we acquired in the prior year have intrinsically lower profit margins, roughly half that of our manufacturing businesses; we have seen a full half year's contribution from these.  We expect to get some costs savings from these acquisitions in H2 as the manufacturing consolidation plan has completed more or less to schedule at the end of H1.  This has also been as expected.

 

·    Currency movements have been unfavourable during H1.  We have remained hedged for our trading exposure to the dollar and so have not yet felt any benefit from the weakening of sterling following last year's decision to exit the EU.  Meanwhile, Sterling's strengthening in H1, in contrast to last year's weakening, has resulted in translational losses compared to last year's gains made.  The negative impact of currency on                                 Pro-forma EBITDA** compared to the prior half year has been circa £0.2m.  These matters are largely outside of our control and not what we expected.

 

·    Weaker than expected sales in our more operationally geared Industrial Division, particularly bearings and stronger sales than expected in our less operationally geared Films Division.  This has the effect of reducing gross margins for the Group overall relative to expectations.  Contrary to our internal forecasts, sales of bearings since August have been below expectations due to two large projects for major key accounts falling short of planned production volumes in their ramp-up phases.  This is largely outside our control but we believe that this is a temporary lull.

 

* "Like-for-like" means comparison between years applying a constant exchange rate and assuming no impact from acquisitions.         ** "Pro-forma" means comparison between years assuming no impact from acquisitions

 

·    Commodity raw material prices in the Films Division rose sharply in Q1 and caused short term margin pressure until we adjusted our prices accordingly. This is a characteristic of this industry and can work the other way as commodity raw material prices are relatively volatile.

 

Overall, therefore, despite a 31.3% increase in sales, EBITDA was down 5.8% to £2.57m and profit before tax was down 27% to £1.20m compared to the same period in FY16-17.  Whilst this appears disappointing, it chiefly reflects our planned growth strategy and adverse currency and raw material price movements.  We believe that the benefit of sterling weakness since Brexit will start to be felt in FY18-19; however, as I have indicated before, we must not allow this to make us complacent.

 

Our effective corporation tax rate is estimated to remain low but increase from 6.5% to 10% for the full year as the Group now has more than 500 employees and so receives less benefit from the R&D tax credit than previously.  We believe our effective corporation tax rate will be 10% or less for the foreseeable future.

 

We issued 3,194,445 shares via a placing at the end of May 2017 at 117p raising approximately £3.54m (net of expenses) during the half year.  This capital has assisted the investment strategy that we have been following for the last 2-3 years. Consequently, underlying earnings per share for H1 17-18, compared to H1 16-17, has decreased 34.9% from 4.3p to 2.8p.

 

Films Division

The Films Division accounted for approximately 53% of Group sales in H1 including a full contribution from Synpac, acquired in July 2016, which has continued to achieve profits in line with our expectations at the time of acquisition.  Currency movements during H1 increased material costs as certain films are imported from Europe and converted in the UK; which resulted in the adverse impact on EBITDA due to foreign exchange movements of 4.9%.  On a like-for-like basis H1 sales were up 18.9% and EBITDA by 14.8%.

 

Flexipol performed very well in H1. Organic sales growth increased by 16.4% to £10.2m, with total tonnes sold increasing by 14.4% compared to the previous year.  These increases reflect the Group's investments in new products and capacity made over the last two years.  Since certain materials are purchased from European suppliers, there has been some small erosion of value added margin during H1 as raw material prices went up faster than sales prices during H1.  This was similar to what happened in H1 in the prior year. People and overhead costs have been increased to cope with the growth being experienced but profit margins have remained satisfactory. 

 

Palagan has started to improve its performance following a disappointing FY16-17.  Now operating with an increased cost base after the strategic changes made last year, sales have increased by 18.6% to £6.6m and by 14.2% in tonnes sold.  Like Flexipol, there has been some slight erosion in value-added margin as raw material prices have increased faster than selling prices during H1. However, profitability for H1 is not materially different from the first half of the prior year and the "direction of travel" is positive.  We are pleased with the progress the new team has achieved in a relatively short time and anticipate further improvement to sales and to profitability over the next two years.

 

Working now with the Flexipol sales team, Synpac is pursuing an aggressive growth strategy, taking advantage of its excellent market reputation and significant spare capacity. Sales in H1 were up an excellent 18.5% compared to prior year on a like-for-like basis.  Synpac buys in the vast majority of its raw material as extruded film, rather than raw granules, from Europe and so has suffered more than our other Films businesses from margin erosion due to the strength of the Euro during H1.  This is being addressed through price increases implemented towards the end of H1.  Nevertheless, Synpac is delivering the profits we expected at the time of acquisition.

 

Industrial Division

In the period under review, I am pleased to report that revenue in the Industrial Division, which accounted for approximately 47% of Group sales, were 36.5% up on the same period last year. On a like-for-like basis revenues were up 6.9%.  This includes a full contribution from CCM and Mito, both distributors and small manufacturers of creasing matrix and related consumables, which were acquired in the prior year.  These businesses have added 25.7% to Industrial Division turnover but less to EBITDA; we expect this to significantly improve going forward since the manufacturing consolidation planned for these businesses at the time of acquisition was completed at the end of H1.  Currency movements added 3.9% to sales but not to EBITDA as the costs of people employed outside the UK has increased and we suffered translational losses in the period compared to gains in the first half of last year.  

 

Bearings business sales were up 5% in H1 compared to the same period in the prior year; ignoring currency movements the improvement was 0.4%.  As stated above, demand resulting from two major projects were significantly below expectations in the last two months of H1.  We are expecting some recovery of this in H2 and together with other recently won projects entering production, we expect a resumption of good organic growth at BNL in H2.  The new business pipeline at BNL (projects already won but not yet in production or not yet at full production rate) has increased from £5.0m at the end of FY16-17 to £5.7m at the end of H1.  This reinforces our view that the slowdown that we have seen in H1 is a temporary matter, even if the two large projects remain slower to ramp up than we have previously expected. 

 

Creasing matrix and related consumables were up 90% in H1 compared to the first six months of the prior year but the vast majority of this was due to acquisitions.  Like-for-like sales were up 2.8%. The business has been extremely busy integrating the recent acquisitions and bedding down the recent factory move in China.  The small manufacturing operations at CCM and Mito have been closed down and production moved to C&T's main production facility in Wellingborough.  This rationalisation will both reduce costs and free up space and time in these businesses to increase sales.

 

Our mandrel business has had an exceptional period.  Sales were up 39.6% overall of which 5.7% is due to currency movements, meaning like-for-like sales were up 33.9% on the same period in the prior year. Costs have been increased to cope with the new level of sales and two further production lines have been added. As a result, profitability has lagged slightly behind sales but we are very pleased with the business's achieved growth. 

 

 

Growth & Investment

 

We are now two and a half years into our five-year target to double annual EBITDA to £10.5m.  This target excludes contributions from acquisitions requiring new equity to be raised.  We are now achieving the revenue growth necessary to deliver this target and believe that the EBITDA growth will soon follow.

 

As we have articulated before, growth necessitates investment.  In total in H1, £3.0m has been invested in capital projects or investments in businesses - Synpac, CCM and Mito.  I wrote to shareholders in July 2017 to explain where we needed to invest and can report as follows on what has been achieved so far this financial year:

 

·    Customer specific projects - Our bearings business has invested £0.28m during H1 in two new moulding machines dedicated to a major new project won in the home appliance sector which is due to commence in H2 17-18.  This was our plan for the full year, but we now anticipate a further £0.3m to be invested as further major projects have been won in the last few months.

 

·    Capacity - We have added two further mandrel lines now making 11 in total.  A new high output conversion machine for relatively simple products has been added at Flexipol to broaden their range of products and relieve capacity elsewhere for their more complex products.  A further injection moulding machine has been added to the machine park at our bearings business to provide additional capacity generally.  It total £0.63m has been invested in the half year on these necessary capacity expansion initiatives. A total of £1.5m of expenditure remains the expectation for the full year.

 

·    New Product Introduction - £0.25m on machinery and test equipment related to new product introduction and patents has been invested in H1 17-18.  Some of this has gone to Palagan for new products that they are in the process of introducing and the rest to BNL and C&T. The plan was to invest £0.7m in this area during the full financial year.

 

·    Corporate - We have exercised our option to acquire a further 39% stake in CCM in August'17 for a cost of approximately £0.92m and to provide £0.2m of additional working capital on loan, alongside similar funding from CCM's 51% shareholders to assist the business to expand its geographic reach.  Small deferred consideration payments have been made for Synpac and Mito, amounting to £0.45m.  This area has progressed more or less as expected when we reported in July 2017.

 

In addition, £0.48m of expenditure has been made on maintenance and replacement items across all our factories.  So, in total for H1 17-18 we have invested £3.0m; this compares to the £4.3m we had planned to invest for the full financial year.  We currently expect to continue to invest to the originally planned level, or possibly a little beyond, for the current financial year.

 

 

Equity Placing and Debt

 

As mentioned above, we issued 3,194,445 new shares at the end of May 2017 through an oversubscribed placing to certain institutional investors.  This has given us additional financial flexibility to make the investments set out above ahead of the schedule originally anticipated and, potentially, to continue at this higher rate of investment during 2018-19 too.

 

Net Debt at the end of H1 stood at £15.0m down from £16.5m at the end of FY 16-17, assisted by the funds received from the placing mentioned above and by tight working capital management. Statutory net debt leverage has been maintained at 2.15 times and in the next twelve months we expect will come down to 1.5- 2.0 times, which is the target we have set ourselves. Meanwhile, interest cover is very solid at 8.2 times.

 

Dividend

 

At the time of the equity placing in May 2017, we explained that we would suspend dividends payments for at least the next two scheduled payments.  The Directors estimated at the time that this will result in a cash saving of approximately £1.7m.  The cash saving is being re-invested in the business, alongside the net proceeds of the Placing.  Thereafter, the Directors will reconsider the payment of dividends within the overall context of capital allocation decisions then facing the Company.

 

 

Outlook

 

The pattern of trading that we have seen so far this year is continuing in H2, with very strong performance in the Films Division and in our mandrels business, steady performance in our matrix group and slower growth than expected in our bearings business.  On the positive, the conversion of projects into confirmed orders in the bearings business has continued at the high levels that we have experienced over the last two years and so we are confident that this business will return to the higher rates of growth that we saw in FY16-17.  This, together with what we are achieving in our other businesses, causes the Board to be confident about the outcome for the current financial year and future growth of the Group for the medium to longer term.

 

 

Faisal Rahmatallah

Executive Chairman

 

 

 

 

Plastics Capital plc

Unaudited Consolidated Income Statements and Statements of Comprehensive Income

for the six months ended 30 September 2017 and the six months ended 30 September 2016

 

 



Before foreign exchange & exceptional items 

Foreign exchange impact on derivatives

Exceptional items

Total


Before foreign exchange & exceptional items

Foreign exchange impact on derivatives

Exceptional items

Total


2017

2017

2017

2017


2016

2016

2016

2016

Note

£'000

£'000

£'000

£'000


£'000

£'000

£'000

£'000












36,462

-

-

36,462


27,771

-

-

27,771













(24,836)

(404)

-

(25,240)


(18,586)

(308)

-

(18,894)













11,626

(404)

-

11,222


9,185

(308)

-

8,877












(1,885)

-

-

(1,885)


(1,376)

-

-

(1,376)













(8,293)

-

(219)

(8,512)


(6,357)

-

(269)

(6,626)












Other income


-

-

-

-


36

-

-

36













1,448

(404)

(219)

825


1,488

(308)

(269)

911











5

-

1,179

-

1,179


-

-

-

-












5

(438)

-

-

(438)


(399)

(1,240)

-

(1,639)













(438)

1,179

-

741


(399)

(1,240)

-

(1,639)












1,010

775

(219)

1,566


1,089

(1,548)

(269)

(728)












6

(101)

-

-

(101)


(107)

-

-

(107)












Profit / (loss) for the period


909

775

(219)

1,465


982

(1,548)

(269)

(835)














 

 









Attributable to:

Equity holders of the parent


957

775

(219)

1,513


982

(1,548)

(269)

(835)

Non-controlling interest


(48)

-

-

(48)


-

-

-

-












Profit / (loss) for the period


909

775

(219)

1,465


982

(1,548)

(269)

(835)














 

 









Foreign exchange translation differences


(232)

-

-

(232)


(4)

-

-

(4)

 

Total comprehensive income/(loss)


677

775

(219)

1,233


978

(1,548)

(269)

(839)























Earnings per share









Basic

8




3.9p





(2.4)p

Diluted

8




3.8p





(2.4)p

 

Plastics Capital plc

Consolidated Income Statement and Statement of Comprehensive Income (continued)

for the year ended 31 March 2017

 

 








Audited

Before foreign exchange & exceptional

items

Audited

Foreign exchange impact on derivatives

Audited

Exceptional items

Audited

Total








2017

2017

2017

2017


Note






£'000

£'000

£'000

£'000












Revenue







65,785

-

-

65,785












Cost of sales







(43,703)

(953)

-

(44,656)












Gross profit







22,082

(953)

-

21,129












Distribution expenses







(3,100)

-

-

(3,100)












Administration expenses






(13,852)

-

(907)

(14,759)












Other income







33

-

-

33












Operating profit







5,163

(953)

(907)

3,303












Financial expense

5






(1,293)

(1,244)

-

(2,537)












Net financing costs







(1,293)

(1,244)

-

(2,537)












Profit before tax






3,870

(2,197)

(907)

766












Tax

6






(227)

-

-

(227)












Profit for the year





3,643

(2,197)

(907)

539












Attributable to:











Equity holders of the parent





3,536

(2,197)

(907)

432

Non-controlling interest





107

-

-

107












Profit for the year







3,643 

(2,197)

(907)

539 












Foreign exchange translation differences





607

-

-

607












Total comprehensive income





4,250

(2,197)

(907)

1,146























Earnings per share









Basic

8









1.5p

Diluted

8









1.5p

 



Plastics Capital plc

Consolidated Balance Sheets

           


 

Unaudited

As at

30

September

2017

 

Unaudited

As at

30

September

2016

 

Audited

As at

31

March

2017



£000

£000

£000

Non-current assets





Property, plant and equipment


11,677

9,382

11,057

Intangible assets


27,339

24,286

26,376



             

             

             



39,016

33,668

37,433



             

             

             

Current assets





Inventories


7,372

5,712

6,657

Trade and other receivables


16,037

12,556

15,482

Cash and cash equivalents


4,991

4,150

4,914



             

             

             



28,400

22,418

27,053



             

             

             

Total assets


67,416

56,086

64,486



             

             

             






Current liabilities





Interest-bearing loans and borrowings


6,199

5,810

6,199

Trade and other payables


15,082

9,872

14,502

Corporation tax liability


445

495

448



             

             

             



21,726

16,177

21,149



             

             

             

Non-current liabilities





Interest-bearing loans and borrowings


13,781

13,463

15,037

Other financial liabilities


98

1,307

1,277

Deferred tax liabilities


1,182

361

1,182



             

             

             



15,061

15,131

17,496



             

             

             

Total liabilities


36,787

31,308

38,645



             

             

             

Net assets


30,629

24,778

25,841



             

             

             

Equity attributable to equity holders of the parent





Share capital


389

356

357

Share premium


24,912

21,263

21,396

Reverse acquisition reserve


2,640

2,640

2,640

Translation reserve


989

652

1,246

Retained earnings


2,036

(133)

491



             

             

             

Total Parent equity


30,966

24,778

26,130



             

             

             

Non-controlling interest


(337)

-

(289)



             

             

             

Total equity


30,629

24,778

25,841



             

             

             

Plastics Capital plc

Consolidated Cash Flow Statements



Unaudited

Six months

ended

30

September

2017

Unaudited

Six months

ended

30

September

2016

Audited

Year

ended

31

March

2017



£000

£000

£000






Profit / (loss) after tax for the period


1,465

(835)

539

Adjustments for:





 Income tax adjustment


101

107

227

 Depreciation, amortisation and impairment


1,448

1,551

2,525

 Financial income


(1,179)

-

-

 Financial expense


438

1,639

2,537

 Gain on disposal of plant, property and equipment


-

-

(18)

 LTIP charge


80

-

165






Changes in working capital:





 (Increase) in trade and other receivables


(555)

(25)

(2,020)

 (Increase) in inventories


(715)

(408)

(796)

 Increase in trade and other payables


480

104

3,080



                    

             

             

Cash generated from operations


1,563

2,133

6,239






Interest paid


(392)

(292)

(725)

Income tax paid


(104)

-

(474)



                    

             

             

Net cash from operating activities


1,067

1,841

5,040



                    

             

             

Cash flows from investing activities





Acquisition of subsidiary (net of cash acquired)


(1,381)

(2,470)

(4,095)

Acquisition of property, plant and equipment


(1,650)

(1,896)

(3,499)

Dividends received


-

-

15

Proceeds from disposal of plant, property and equipment


-

-

26

Development expenditure capitalised


(125)

(125)

(539)



                    

             

             

Net cash from investing activities


(3,156)

(4,491)

(8,092)



                    

             

             

Cash flows from financing activities





Net proceeds from new loan


-

2,641

5,512

Change in borrowings


(1,156)

(847)

(1,131)

Equity raise (net)


3,548

-

-

Dividends paid


-

(1,038)

(1,110)



                    

             

             

Net cash from financing activities


2,392

1,756

3,271



                    

             

             

Increase in cash, cash equivalents and bank overdrafts


303

(894)

219

Cash and cash equivalents at 1 April


4,914

5,488

5,488

Overdraft at 1 April


(4,511)

(5,304)

(5,304)



                    

             

             

Cash, cash equivalents and bank overdrafts

at 30 September and 31 March


 

706

 

(710)

 

403



                   

             

             


Plastics Capital plc

Consolidated statement of changes in equity

 


Share

capital

Share

premium

Translation reserve

Reverse

acquisition

reserve

 

Retained

earnings

Total

Parent

equity

Non-

controlling

interests

Total

equity



£000

£000

£000

£000

£000

£000

£000

£000












 

Balance at 31 March 2016

353

20,951

639

2,640

1,740

26,323

-

26,323



             

             

             

             

             

             

                

             


Share issue

3

312

-

-

-

315

-

315


Profit or loss

-

-

13

-

(835)

(822)

-

(822)


Dividends paid

-

-

-

-

(1,038)

(1,038)

-

(1,038)



             

             

             

             

             

             

                

             


Balance at 30 September 2016

356

21,263

652

2,640

(133)

24,778

-

24,778



             

             

             

             

             

             

                

             


Share issue

1

133

-

-

-

134

-

134


Profit or loss

-

-

594

-

925

1,519

(107)

1,412


Elimination of non-controlling  interests

-

-

-

-

-

-

(182)

(182)


Dividends paid

-

-

-

-

(72)

(72)

-

(72)


LTIP charge





165

165

-

165


Settlement of LTIP 2011





(394)

(394)

-

(394)



             

             

             

             

             

             

                

             


Balance at 31 March 2017

357

21,396

1,246

2,640

491

26,130

(289)

25,841



             

             

             

             

             

             

                

             


Share issue

32

3,516

-

-

-

3,548

-

3,548


Profit or loss

-

-

(257)

-

1,465

1,208

48

1,256


Elimination of non-controlling  interests

-

-

-

-

-

-

(96)

(96)


LTIP charge





80

80

-

80



             

             

             

             

             

             

               

            


Balance at 30 September 2017

389

24,912

989

2,640

2,036

30,966

(337)

30,629



             

             

             

             

             

             

                

             


 

 



1          Basis of preparation and accounting policies

 

Basis of preparation

 

The interim financial information has been prepared on the basis of the recognition and measurement requirements of adopted IFRSs as at 30 September 2017 that are effective (or available for early adoption) as at 31 March 2018.  Based on these adopted IFRSs, the directors have applied the accounting policies, as set out below, which they expect to apply to the annual IFRS financial statements for the year ending 31 March 2018.

 

However, the adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the period ending 31 March 2017 are still subject to change and to additional interpretations and therefore cannot be determined with certainty.  Accordingly, the accounting policies for that annual period will be determined finally only when the annual financial statements are prepared for the period ending 31 March 2018.

 

Accounting policies

 

The accounting policies applied to the Interim Results for six months ended 30 September 2017 are consistent with those of the Company's annual accounts for the year ended 31 March 2017.

 

Going concern

 

The Financial Reporting Council issued "Going Concern and Liquidity Risk: Guidance for Directors of UK Companies" in October 2009 and the Directors have considered this when preparing the financial statements.  These have been prepared on a going concern basis and the Directors have taken steps to ensure that they believe the going concern basis of preparation remains appropriate.

 

 



2          Reconciliation of financial highlights table to the consolidated income statement

 



Unaudited

Six months to

30 September

2017

Unaudited

Six months to

30 September

2016



£000

£000






Revenue


36,462

27,771

31.3%

Gross profit


11,222

8,877

26.4%

Operating profit


825

911

-9.4%






Add back: Exceptional cost


219

269

Add back: Amortisation


418

749

Add back: Depreciation


1,030

802

Add back: LTIP charge


80

-






EBITDA before exceptional costs


2,572

2,731

-5.8%






Profit / (loss) before tax


1,566

(728)

315.1%






Add back: Exceptional costs


219

269

Add back: Amortisation


418

749

Add back: Capitalised deal fee amortisation


43

107

Add back: Unrealised foreign exchange & derivate (gains) / losses


(1,179)

1,240

Add back: LTIP charge


80

-

Add back: Non-controlling interest loss


48







Profit before tax*


1,195

1,637

-27.0%





Taxation


(101)

(107)






Profit after tax*


1,094

1,530

-28.5%

Basic adjusted EPS*+


2.8p

4.3p

34.9%

Basic EPS


3.9p

(2.4)p

-262.5%

Capital expenditure


1,650

1,896

-13.0%

Net Debt


14,988

15,123

-0.9%

* excluding amortisation, exceptional costs, unrealised foreign exchange translation and derivative gains/losses, capitalised deal fee amortisation, share-based incentive scheme charges and non-controlling interests

+ applying an expected tax charge of 10% (2016-17: 6.5%) and based on the average number of shares in issue in the year

 



3          Operating segment information

 

The following summary describes the operations in each of the Group's reportable segments:

·    Films - includes industrial films

·    Industrial - includes hose mandrel, creasing matrix and plastic bearings

 


 

Industrial

 

Films

Unallocated and reconciling items

 

Total







Unaudited

Six months to

30 September

2017

Unaudited

Six months to

30 September

2017

Unaudited

Six months to

30 September

2017

Unaudited

Six months to

30 September

2017


£000

£000

£000

£000






External sales*

17,071

19,391

-

36,462

Profit before tax**

181

402

983

1,566

Depreciation and amortisation

674

348

426

1,448


_______

_______

_______

______







 

Unaudited

Six months to

30 September

2016

 

Unaudited

Six months to

30 September

2016

 

Unaudited

Six months to

30 September

2016

 

Unaudited

Six months to

30 September 2016


£000

£000

£000

£000






External sales*

12,455

15,316

-

27,771

Profit / (loss) before tax**

635

153

(1,516)

(728)

Depreciation and amortisation

471

303

777

1,551


_______

_______

_______

_______












Audited

Year to

31 March

2017

Audited

Year to

31 March

2017

Audited

Year to

31 March

2017

Audited

Year to

31 March

2017


£000

£000

£000

£000






External sales*

32,472

33,313

-

65,758

Profit / (loss) before tax**

1,887

1,340

(2,461)

766

Depreciation and amortisation

1,057

654

1,149

2,860


_______

_______

_______

_______






* All revenue is attributable to external customers, there are no transactions between operating segments

** Profit before tax for unallocated and reconciling items is analysed on Page 16.



 



3          Operating segment information (continued)

 

Reconciliation of reportable segment revenue



 

Unaudited

Six months to 30 September 2017

£000

 

Unaudited

Six months to 30 September 2016

£000

Audited

Year to

31 March

2017

£000

Films





  High strength film packaging


19,391

15,316

33,313

Industrial





  Packaging consumables


7,090

3,667

12,663

  Plastics rotating parts


6,947

6,614

14,800

  Hydraulic hose consumables


3,034

2,174

5,009



             

             

             

Turnover per consolidated income statement

36,462

27,771

65,785



             

             

             

 

 

Reconciliation of reportable segment profit



Unaudited

Six months to

September

2017

£000

Unaudited

Six months to

30 September 2016

£000

Audited

Year to

31 March

2017

£000






Total profit for reportable segments


583

788

3,227



            

            

            

Unallocated amounts:





  Amortisation


(418)

(749)

(604)

  Unrealised gains / (losses) on derivatives


1,179

(1,240)

(862)

  Management charge income


2,145

2,125

4,050

  FX hedge (loss) on forward contracts


(404)

(307)

(953)

  Plastics Capital Trading Ltd and Plastics Capital plc costs


(829)

(641)

(1,927)

  Other foreign exchange costs


-

-

(382)

  LTIP charge


(80)

-

(165)

  Net interest costs


(395)

(292)

(694)

  Deal fee amortisation


(43)

(107)

(568)

  Exceptional costs


(219)

(269)

(406)

  Other


47

(36)

50



            

            

             

Consolidated profit / (loss) before income tax

1,566

(728)

766



            

            

              

 

 



4          Exceptional items

 

Administrative Expenses


 

Unaudited

Six months to 30 September 2017

£000

 

Unaudited

Six months to 30 September 2016

£000

Audited

Year to

31 March

2017

£000






Redundancy & recruitment costs


70

-

79

Acquisitions - professional and legal costs


149

269

314

Factory relocations


-

-

395

Other


-

-

119



            

            

           


219

269

907



            

            

           

 

 

5          Financial income and expenses

 



Unaudited

Six months to

30 September

2017

£000

Unaudited

Six months to

30 September

2016

£000

Audited

Year to

31 March

2017

£000

Financial expenses:





 Bank interest


395

292

725

 Amortisation of capitalised deal fees


43

107

360

 Write-off of capitalised deal fees

-

-

208



             

             

             

Financial expenses


438

399

1,293



             

             

             

Financial income and expenses included within foreign exchange:



 Net foreign exchange (gains) / losses


-

-

382

 Unrealised (gains) / losses on derivatives used to manage foreign exchange risk

(1,179)

1,240

862



             

             

             

Foreign exchange impact and derivatives


(1,179)

1,240

1,244



             

             

             

 

 

6          Taxation

 

The taxation charge is calculated by applying the Directors' best estimate of the annual tax rate for the profit for the period.

 

 

7          Dividends

 

The Directors have not recommended the payment of an interim dividend (30 September 2016: 1.46p).

 

 

 

 

8          Earnings per share

 


Unaudited

Six months to

30 September

2017

Unaudited

Six months to

30 September

2016


£000

£000

Numerator



(Loss) / profit for the period

1,465

(835)

539





Denominator




Weighted average number of shares used in basic EPS

37,364,795

34,512,663

34,957,994

Weighted average number of shares used in diluted EPS

39,001,714

36,665,359

36,632,457







Basic earnings per share (total)

3.9p

(2.4)p

Diluted earnings per share (total)

3.8p

(2.4)p




 

 

9          Accounts

 

Copies of the interim accounts may be obtained from the Company Secretary at the Registered Office of the Company: London Heliport, Bridges Court Road, London, SW11 3BE.

 

 

10        Acquisitions

 

In the six-month period to 30 September 2017, Plastics Capital made the following payments for acquisitions and investments:

·    Synpac Limited - £310,000 paid in July'17 relating to deferred consideration on the acquisition made a year earlier;

·    CCM Inc - $1,200,000 paid in August'17 to acquire an additional 39% shareholding in the business; and

·    Mito Srl - €150,000 paid in April'17 relating to deferred consideration on the investment made in December'16

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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