Synnovia PLC (LON:SYN)

Synnovia PLC (LON:SYN)


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Synnovia PLC RNS Release

Half-year Report


RNS Number : 1087J
Plastics Capital PLC
03 December 2018
 

 

3rd December 2018

 

Plastics Capital plc

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

 

Interim Results for the six months ended 30 September 2018

 

Plastics Capital (AIM: PLA) the niche plastics products manufacturer, announces the Company's unaudited interim results for the six months ended 30 September 2018 ("H1") or ("HY18-19"), which are in line with management's expectations.

 

Financial highlights

 

Six months ended

30 September 2018

£'000

Six months ended

30 September 2017

£'000

 

%

Change

Revenue

40,633

36,462

11.4%

EBITDA*

3,673

2,572

42.8%

Profit before tax*+

2,096

1,195

75.4%

Earnings per share*+^ (p)

4.7

2.8

67.9%

Dividend per share (p)

Nil

Nil

n/a

Net debt

15,748

14,989

-5.1%

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

+ also excludes non-controlling interests

^ applying an expected tax charge of 13% (2017-18: 10%) and based on the weighted average number of shares in issue in the period.

 

Operational highlights

•     12.1% organic revenue growth at constant currency

-    Films Division revenue up 12.0% organically, 11.1% in volume terms

-    Industrial Division revenue up 12.2% organically at constant currency

•     EBITDA up 29.0% at constant currency driven mainly by Industrial Division

       - Bearings projects flowing through to product sales as anticipated

       - Prior year matrix business acquisitions progressing well

•     Integration of Films Division progressing as planned; full benefits still to be felt

•     Further £2.1 million invested in capability and capacity expansion projects for future growth

•     Project wins in bearings business continue to build

       - £5.8 million of annual sales from projects won but still to enter production

 

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

"I am pleased to report continued strong organic revenue growth across the Group.  This is now being reflected in improved profitability as the mix of revenues in our two divisions has rebalanced and because we are now feeling the full effect of Sterling's devaluation in 2016 after the Brexit vote.  Meanwhile we have continued to invest heavily in business development, new products, production capacity and employee capabilities.  Order books are healthy and we expect good sales growth to continue for the foreseeable future if economic conditions remain satisfactory.  The Board anticipates that profits for the full financial year will be ahead of FY17-18 and in line with consensus market expectations."

 

 

 

For further information, please contact:

 

Plastics Capital plc

Tel: 020 7978 0574

Faisal Rahmatallah, Chairman

 

Nick Ball, Finance Director

 

 

 

Cenkos Securities plc

Tel: 020 7397 8900

(Nomad and joint broker)

 

Mark Connelly

 

Callum Davidson

 

 

 

Allenby Capital Limited

Tel: 020 3328 5656

(Joint broker)

 

David Hart

 

 

 

 

 

 

Notes to Editor

Plastics Capital is a niche manufacturer of specialist 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 - ball bearings

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

•          Cardboard box manufacture - 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 50% of its £80 million sales, as per current run-rate, are made outside the UK to more than 80 countries.

 

Further information can be found on www.plasticscapital.com

 

 

 

* All references to EBITDA are adjusted measures

"EBITDA" is stated before LTIP charges and exceptional costs

See page 14 (Financial Review) for reconciliations of (i) presented non-GAAP measures to the GAAP measures including adjusted EBITDA, (ii) net debt; and (iii) organic sales growth. 

"Adjusted" means excluding amortisation, exceptional costs, unrealised foreign exchange derivative and loan gains / losses, and LTIP charges

"like-for-like" means comparison between years applying a constant exchange rate (i.e. applying the same foreign exchange rates to both years) and assuming no impact from acquisitions

 

 

Chairman's Statement

 

Financial Review

 

I am pleased to report that Group revenue continues to increase at double digit rates due to strong organic growth. The HY18-19 comparison with HY17-18 reflects 11.4% growth and is unaffected by acquisitions as none were concluded in the period.  Foreign exchange has negatively impacted sales by 0.7%; so organic growth was 12.l% at constant currency.

 

This rate of organic growth has been achieved relatively equally across our Films and Industrial Divisions at 12.0% and 12.2%, respectively.  It is pleasing to note that this represents a good improvement in performance from the Industrial Division, compared to HY17-18 when our bearings business suffered delays in two important new product introductions by customers.  No similar delays have been incurred this year and these two important product introductions have now progressed satisfactorily and have also been added to by other business wins. The rate of growth in the Films Division, whilst still very good, is less than the 20% achieved last year; this followed the last year's step change in performance assisted partly by a key competitor failing during HY17-18.

 

As we have frequently reported, operational gearing is greatest in our Industrial Division and so strong balanced growth across our two Divisions in HY18-19 has led to good profit improvement at Group level, compared to HY17-18 when growth was primarily achieved in the Films Division. Group EBITDA was up 42.8% at actual currency rates compared to HY17-18.

 

We have benefitted during this half year period, for the first time, from the devaluation in sterling that occurred post the Brexit referendum.  As previously reported, until June 2018, we had $/£ forward contracts in place that had been entered into at the pre-referendum levels of approximately $1.50/£; since then, these have been replaced with contracts at an average level of approximately $1.32/£. As a result, EBITDA for HY18-19 benefited by 13.7% due to currency movements and was up 29.1% in constant currency terms compared to the prior year interim period.

 

Profit before tax was up 75.4% and earnings per share increased by 67.9%, reflecting the gearing of the business.  At the end of September 2018, net debt increased marginally from £15 million to £15.7 million compared to the prior period end and interest costs changed only marginally.  Meanwhile depreciation increased 14.3%, reflecting our greater reinvestment rate to enable capacity expansion to support sales growth. Our effective corporation tax rate is estimated to be 13% for the full year, the same rate as for FY17-18 and this is reflected in the half year tax provision.

 

Films Division

The Films Division accounted for approximately 53.4% of Group sales in HY18-19.  In value terms, sales were up 12% and in volume terms up 11.1%. Raw material prices were stable during the half year and so the increase in sales value per ton reflected a more favourable product mix, which is part of the strategy for this business.  People and overhead costs in the Films Division for the half year increased by 17.9%, which was significantly ahead of revenues. This reflects the extra costs we have incurred to recruit and train new staff, to upgrade and maintain production machinery, to expand logistics infrastructure and to undertake numerous engineering projects associated with capacity expansion to cope with the strong growth that we are experiencing.

 

The management of the Division has been integrated in HY18-19, and we have moved from three separate businesses each with their own sales forces and factories, to one commercial team with three factories producing specialist products suited to the different specialist production machinery at each site.  Administrative functions such as customer service and accounting are present at each site whilst raw material procurement is carried out centrally. It will take another 6-18 months for all the management and system changes to bed down fully, but nevertheless we are confident that the direction we are taking towards product specialisation in the different factories, sensible centralisation of divisional functions and a combined sales team that is able to provide full technical sales advice on all our product capabilities, is the right way forward.  

 

Industrial Division

In the period under review, I am particularly pleased to report that revenues in the Industrial Division, which accounted for approximately 46.6% of Group sales, were up 10.9% on the same period last year. On a like-for-like basis revenues were up 12.2% as currency movements reduced sales by 1.3%. Profitability recovered significantly as gross margins and overheads remained similar to the prior period.

 

Bearings business sales were up 18% in HY18-19 compared to the same period in the prior year; ignoring currency movements the improvement was 19.7%.  In the prior year we suffered unexpected shortfalls in demand from two substantial projects from key accounts; these shortfalls have now partly reversed. Meanwhile new projects and increased demand from other key accounts have moved into production. The new business pipeline (projects already won but not yet in production or not yet at full production rate) has also increased to £5.8 million. We believe that this business is on a healthy growth trajectory whilst acknowledging that periodic unexpected demand fluctuations will be inevitable.

 

Creasing matrix and related consumables were up 10.8% in HY18-19 compared to the first six months of the prior year, with like-for-like sales up 12.1%. After the factory rationalization programme in the prior year, management has been able to focus on driving sales and profitability and has achieved promising improvements in all areas.  Much more remains to be done in our Chinese and US businesses, both of which are substantial markets where we are presently under-represented.

 

Our mandrels business was unable to sustain the exceptional growth attained over the prior 18 months.  Like-for like sales were down 5%.  Much of this was due to our delivery response times improving from 12 to 4 weeks following the addition of capacity that we have made over the last 18 months.  Inevitably customers have taken the opportunity to destock; however, we believe that this is a temporary situation and we expect to see more balanced demand in the second half.  New business wins continue to proceed satisfactorily in this area and we now have substantial additional capacity to respond to new opportunities as needed. 

 

Capital Expenditure

Significant investment continues to be made to add new product capabilities and additional capacity.

 

At our Films Division factory in Haslingden, Lancashire, we have acquired and installed a substantial eight-colour printing press which will substantially improve our ability to provide key accounts with high value-added printed sacks.  We have also acquired and are in the process of installing a 2,800 tonne multi-layer extrusion line which will enable our expansion into extended life packaging. We have also expanded our footprint at this location by adding a new warehouse and office unit to create additional logistics capacity and to provide a much-enlarged office space for the substantial team now operating from this site.

 

At our Films Division factory in Dunstable, Bedfordshire, we have added one of four new conversion machines planned for this financial year, and we have also added a 1,000 tonne extrusion line and a recycling/reprocessing unit, both of which have been relocated from the Haslingden site.  In total, capital expenditure into the Films Division in the half year amounted to £1.9 million.

 

Less investment has been needed in the Industrial Division than the Films Division in HY18-19.  A total of only £0.6 million of investment so far, of which £0.2 million was for a customer specific project in the bearings business and the remainder was primarily maintenance capital expenditure. We anticipate total capital expenditure for FY18-19 will be approximately £4 million, slightly more than the £3.7 million in FY17-18 and believe that this remains a realistic estimate.

 

Strategy

 

Plastic Waste

Public opinion regarding the blight of plastic waste, particularly in our oceans, has intensified since we last reported results in July 2018.  The main scourges are understandably viewed as single use, consumer plastics and the inability of our recycling systems to handle and reprocess these effectively. We are therefore not "in the eye of this storm" as our products are all industrial products sold to other industrial businesses and not used by consumers.

 

However, we cannot be complacent and are doing everything we can to reduce waste in four main ways:

1.   increased internal recycling to reduce the amount of waste we create for others to recycle; 

2.   enabling our customers to use less plastic through the introduction of thinner stronger films;

3.   assisting our customers to recycle more; and

4.   in the longer run, finding materials that will recycle more easily or degrade safely.

 

In his recent Budget, the Chancellor announced a new tax which will be applied from 2022 to manufactured or imported plastic packaging that does not contain at least 30% recycled content. This measure will be subject to a consultation process in the meantime. This announcement begs a lot of questions.  The consultation process and time allowed for its introduction are clearly helpful to make sure it is a practical measure having the effects intended and that it enables industry participants to make such adjustments as are appropriate to minimize unintended undesirable side effects.

 

Targets

We are now three and a half years into our five-year target to double annual EBITDA to £10.5 million.  This target excludes contributions from acquisitions requiring new equity to be raised.  We are now achieving both the rate of revenue and profit growth that should enable this target to be achieved. However, what was originally intended to be a target to guide long-term strategy when we started this process in 2015, is now a short-term target and risks causing management to focus excessively on the short-term. As such, this target has served its purpose by helping to "kick-start" the strong organic growth we are reporting now.  Consequently, we have set a new five-year target - to achieve £15 million EBITDA by end FY23-24; once again, this excludes acquisitions requiring new equity to be raised.

 

Each of our businesses has the potential to maintain this rate of growth and profitability over the long run. They all benefit from operating in niche markets in which they provide superior products and technical expertise. In most cases, they serve only a relatively small proportion of the key accounts that are present, and they provide each with only a subset of their product needs. So, opportunities for growth are good. Additionally, our businesses are continually developing and introducing innovative products to these accounts; these provide further opportunities for revenue growth and additional profit. Increased investment to enable the growth then results. This investment is in new facilities, machinery and equipment and in highly committed and talented teams and a virtuous circle should then ensue.

 

We are mindful over the risks in the short-term associated with global economic conditions and with any dislocation for UK based manufacturers associated with Brexit. We are working with our customers and suppliers to try to minimise the risk of possible disruptions to supply. So far, we have not discerned any negative trends affecting our businesses and our working assumptions remain for slow economic growth over the long term and current exchange rates remaining broadly unchanged.  It is of course possible that Brexit could result in customs delays, additional duties and exchange rate instability, but, due to the uncertainty, we are unable to plan for this with any degree of accuracy but will be ready to react accordingly when more is clear.

 

Key Initiatives

As we have set out before, delivery of our strategy hinges on successful pursuit of a handful of key initiatives by each of our businesses.  These dynamically change as they are implemented, we receive feedback on their progress and new opportunities and threats emerge.

 

The key initiatives now driving our strategy in the Films Division are as follows:

·    The introduction of new multilayer films which will enable a new range of sacks and pouches with extended life properties to be produced in-house.

·    The introduction of a new range of very high strength films, enabled by recently installed conversion machinery, that will further improve the competitiveness of our less specialized products.

·    The introduction of a patented sack with a special air release mechanism that provides a superior solution to double-skin polythene/paper sacks currently used for packing powders.

·    An increased focus on export markets, with particular emphasis on Northern Europe and Australia.

·    An increase in internal recycling of plastic scrap and waste material with an objective of recycling and reusing internally 75% of the plastic scrap we produce.

 

In the Industrial Division, we are pursuing the following key initiatives:

·    The roll-out of our innovative plastic bearing solutions for key accounts in our core applications like steering columns, instrument controls, domestic appliances, video conferencing cameras, conveyors and shower enclosures.

·    The introduction of a range of plastic bearings that can operate at higher loads, temperatures and speeds than has hitherto been the case, so widening the range of applications and available market that can be served.

·    Forward integration in the matrix business and using this to increase both the range of customers we serve directly and the range of products we can offer.

·    Improvement in the security and speed of supply of bespoke mandrels to key accounts, particularly those based in the USA and Asia.

·    The introduction of new abrasion resistant films suitable for hose coverings, transmission belts and conveyor belts.

 

Capital Allocation

In the year to date, all internally generated cash flow after meeting interest and tax and debt repayments has been reinvested in the organic growth of the business.  We estimate that our marginal return on capital is running at 20% and that this represents a good rate of return in the current environment. Given the opportunities for growth and this rate of return, the Board is not proposing to declare a dividend.

 

As we look towards next year, we can already see the opportunity to invest in further product capabilities in the Films Division and to expand our production footprint and hence our capacity in Thailand, where many of our plastic bearings are produced.  Further opportunities to reinvest are likely to come forward as we conclude next year's budgeting process. It is likely that any surplus cash flow after reinvestment will be used to pay down debt so improving the financial flexibility of the business going forward.

 

Company Name

We have recognised that, at its core, our business relies not on plastics technology but on the ability to find innovative solutions to our customers' problems in niche market applications. For reasons of sustainability and to minimise plastic waste, we must consider using any materials in our products whether or not they are plastic, if they are more environmentally sustainable and can meet our specifications in other ways. For example, biodegradable films made from plant-based extracts may form part of the solutions we offer to customers increasingly in the future.

 

To signal the importance we give to this matter we are proposing changing the Company name to Synnovia plc, which signifies our core competence - the synthesis of innovative solutions.  We will be seeking shareholder approval for this name change at a General Meeting to be held on 20th December 2018 and further details will be sent to shareholders in due course.

 

Outlook

H2 18-19 has commenced favourably with the usual seasonal upturn in the Films Division and continued good performance in the Industrial Division. We have seen an improvement in the order book in our mandrel business which was the only part of the Group that had a weaker than expected first half and we are hopeful that this will be sustained.  However, these are uncertain times - trade wars, Brexit and plastic waste are all factors, amongst others, that give us pause for thought.  If these factors remain benign or at least we are given sufficient time for us to adapt, the Board remains confident about the outcome for the current financial year and future growth of the Group for the medium to longer term.

 

 

Faisal Rahmatallah

Chairman
 

Plastics Capital plc

Unaudited Consolidated Income Statements and Statements of Comprehensive Income

for the six months ended 30 September 2018 and the six months ended 30 September 2017

 

 

 

 

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

 

 

2018

2018

2018

2018

 

2017

2017

 

Note

£'000

£'000

£'000

£'000

 

£'000

£'000

 

 

 

 

 

 

 

 

 

Revenue

 

40,633

-

-

40,633

 

36,462

-

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(27,752)

(4)

-

(27,756)

 

(24,836)

-

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

12,881

(4)

-

12,877

 

11,626

-

 

 

 

 

 

 

 

 

 

Distribution expenses

 

(1,892)

-

-

(1,892)

 

(1,885)

-

 

 

 

 

 

 

 

 

 

 

 

Administration expenses

 

(8,918)

-

-

(8,918)

 

(8,293)

(219)

 

 

 

 

 

 

 

 

 

 

 

Other income

 

-

-

-

-

 

-

-

-

-

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

2,071

(4)

-

2,067

 

1,448

(219)

 

 

 

 

 

 

 

 

 

Financial income

5

4

-

-

4

 

-

-

 

 

 

 

 

 

 

 

 

 

 

Finance expense

5

(454)

(712)

-

(1,166)

 

(438)

-

 

 

 

 

 

 

 

 

 

 

 

Net financing (costs) / income

 

(450)

(712)

-

(1,162)

 

(438)

1,179

-

741

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) before tax

 

1,621

(716)

-

905

 

1,010

(219)

 

 

 

 

 

 

 

 

 

 

 

Tax

6

(272)

-

-

(272)

 

(101)

-

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) for the period

 

1,349

(716)

-

633

 

909

775

(219)

1,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

Equity holders of the parent

 

1,346

(716)

-

630

 

957

775

(219)

1,513

Non-controlling interest

 

3

-

-

3

 

(48)

-

-

(48)

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) for the period

 

1,349

(716)

-

633

 

909

775

(219)

1,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation differences

 

222

-

-

222

 

(232)

-

-

(232)

 

Total comprehensive income/(loss)

 

1,571

(716)

-

855

 

677

775

(219)

1,233

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

Basic

8

 

 

 

1.6p

 

 

 

 

3.9p

Diluted

8

 

 

 

1.6p

 

 

 

 

3.8p

 

 

Plastics Capital plc

Consolidated Income Statement and Statement of Comprehensive Income (continued)

for the year ended 31 March 2018

 

 

 

 

 

 

 

 

 

Audited

Before foreign exchange & exceptional

items

Audited

Foreign exchange impact on derivatives

Audited

Exceptional items

Audited

Total

 

 

 

 

 

 

 

2018

2018

 

Note

 

 

 

 

 

£'000

£'000

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

76,726

-

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

(53,146)

-

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

23,580

-

 

 

 

 

 

 

 

 

 

Distribution expenses

 

 

 

 

 

 

(3,542)

-

 

 

 

 

 

 

 

 

 

 

 

Administration expenses

 

 

 

 

 

(15,727)

(1,452)

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

2

-

-

2

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

4,313

(1,452)

 

 

 

 

 

 

 

 

 

Financial expense

5

 

 

 

 

 

(870)

-

 

 

 

 

 

 

 

 

 

 

 

Net financing costs

 

 

 

 

 

 

(870)

263

-

(607)

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

 

 

 

 

3,443

(1,452)

 

 

 

 

 

 

 

 

 

 

 

Tax

6

 

 

 

 

 

(945)

-

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

 

 

 

2,498

(1,452)

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

 

 

2,551

(1,152)

Non-controlling interest

 

 

 

 

(53)

(300)

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

 

 

 

 

 

2,498 

771

(1,452)

1,817 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation differences

 

 

 

 

(267)

-

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

2,231

(1,452)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

Basic

8

 

 

 

 

 

 

 

 

5.7p

Diluted

8

 

 

 

 

 

 

 

 

5.6p

 

 

Plastics Capital plc

Consolidated Balance Sheets

           

 

 

Unaudited

As at

30

September

2018

 

Unaudited

As at

30

September

2017

 

Audited

As at

31

March

2018

 

 

£000

£000

£000

Non-current assets

 

 

 

 

Property, plant and equipment

 

13,976

11,677

12,444

Intangible assets

 

26,607

27,339

26,989

 

 

             

             

             

 

 

40,583

39,016

39,433

 

 

             

             

             

Current assets

 

 

 

 

Inventories

 

9,071

7,372

8,656

Trade and other receivables

 

16,879

16,037

16,979

Other financial assets

Cash and cash equivalents

 

-

5,113

-

4,991

421

4,854

 

 

             

             

             

 

 

31,063

28,400

30,910

 

 

             

             

             

Total assets

 

71,646

67,416

70,343

 

 

             

             

             

 

 

 

 

 

Current liabilities

 

 

 

 

Interest-bearing loans and borrowings

 

9,122

6,199

7,206

Trade and other payables

 

16,161

15,082

16,949

Corporation tax liability

 

936

445

922

 

 

             

             

             

 

 

26,219

21,726

25,077

 

 

             

             

             

Non-current liabilities

 

 

 

 

Interest-bearing loans and borrowings

 

11,739

13,781

12,771

Other financial liabilities

 

143

98

-

Deferred tax liabilities

 

1,469

1,182

1,355

 

 

             

             

             

 

 

13,351

15,061

14,126

 

 

             

             

             

Total liabilities

 

39,570

36,787

39,203

 

 

             

             

             

Net assets

 

32,076

30,629

31,140

 

 

             

             

             

Equity attributable to equity holders of the parent

 

 

 

 

Share capital

 

389

389

389

Share premium

 

24,960

24,912

24,960

Reverse acquisition reserve

 

2,640

2,640

2,640

Translation reserve

 

1,201

989

979

Retained earnings

 

2,829

2,036

2,171

 

 

             

             

             

Total Parent equity

 

32,019

30,966

31,139

 

 

             

             

             

Non-controlling interest

 

57

(337)

1

 

 

             

             

             

Total equity

 

32,076

30,629

31,140

 

 

             

             

             

 

Plastics Capital plc

Consolidated Cash Flow Statements

 

 

Unaudited

Six months

ended

30

September

2018

Unaudited

Six months

ended

30

September

2017

Audited

Year

ended

31

March

2018

 

 

£000

£000

£000

 

 

 

 

 

Profit / (loss) after tax for the period

 

633

1,465

1,817

Adjustments for:

 

 

 

 

 Income tax adjustment

 

272

101

945

 Depreciation, amortisation and impairment

 

1,578

1,448

3,237

 Foreign exchange non-cash realised loss / (gain)

 

712

(1,179)

(1,120)

 Financial expense / (credit)

 

450

438

607

 Loss/(gain) on disposal of plant, property & equipment

 

-

-

125

 LTIP charge

 

28

80

94

 

 

 

 

 

Changes in working capital:

 

 

 

 

 Decrease / (Increase) in trade and other receivables

 

100

(555)

(1,497)

 (Increase) in inventories

 

(415)

(715)

(1,998)

 (Decrease) / Increase in trade and other payables

 

(788)

480

2,284

 

 

                   

                   

                 

Cash generated from operations

 

2,570

1,563

4,494

 

 

 

 

 

Interest paid

 

(403)

(392)

(780)

Income tax paid

 

(144)

(104)

(566)

 

 

                   

                   

                 

Net cash from operating activities

 

2,023

1,067

3,148

 

 

                   

                   

                 

Cash flows from investing activities

 

 

 

 

Acquisition of subsidiary (net of cash acquired)

 

-

(1,381)

(1,207)

Acquisition of property, plant and equipment

 

(2,565)

(1,650)

(3,705)

Dividends received

 

-

-

2

Proceeds from disposal of plant, property and equipment

 

-

-

-

Development expenditure capitalised

 

(125)

(125)

(496)

 

 

                   

                   

                 

Net cash from investing activities

 

(2,690)

(3,156)

(5,406)

 

 

                   

                   

                 

Cash flows from financing activities

 

 

 

 

Net proceeds from new loan

 

-

-

572

Change in borrowings

 

382

(1,156)

(2,393)

Issue of share capital

 

-

3,548

3,546

Dividends paid

 

-

-

-

 

 

                   

                   

                 

Net cash from financing activities

 

382

2,392

1,725

 

 

                   

                   

                 

Increase in cash, cash equivalents and bank overdrafts

 

(285)

303

(533)

Cash and cash equivalents at 1 April

 

4,854

4,914

4,914

Overdraft at 1 April

 

(4,984)

(4,511)

(4,511)

 

 

                   

                   

                 

Cash, cash equivalents and bank overdrafts

at 30 September and 31 March

 

 

(415)

 

706

 

(130)

 

 

                  

                  

                 

 

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 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

1,265

 

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

 

 

             

             

             

             

             

             

                

             

 

Share issue

-

-

-

-

-

-

-

-

 

Profit or loss

-

-

(10)

-

705

695

-

695

 

Non-controlling interests

-

-

-

-

(584)

(584)

338

(246)

 

LTIP charge

-

-

-

-

14

14

-

14

 

Adjustment

-

48

-

-

-

48

-

48

 

 

             

              

             

             

             

             

                

             

 

Balance at 31 March 2018

389

24,960

979

2,640

2,171

31,139

1

31,140

 

 

             

             

             

             

             

             

               

            

 

Profit or loss

-

-

222

-

630

852

3

855

 

Non-controlling interests

-

-

-

-

-

-

53

53

 

LTIP charge

-

-

-

-

28

28

-

28

 

 

             

             

             

             

             

             

               

            

 

Balance at 30 September 2018

389

24,960

1,201

2,640

2,829

32,019

57

32,076

 

 

             

             

             

             

             

             

                

             

 

 

 

 

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 2018 that are effective (or available for early adoption) as at 31 March 2019.  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 2019.

 

However, the adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the period ending 31 March 2019 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 2019.

 

Accounting policies

 

The accounting policies applied to the Interim Results for six months ended 30 September 2018 are consistent with those of the Company's annual accounts for the year ended 31 March 2018.

 

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          Reconciliations

Financial highlights table to the consolidated income statement

 

 

 

Unaudited

Six months to

30 September

2018

Unaudited

Six months to

30 September

2017

 

 

 

Change

 

 

£000

£000

%

 

 

 

 

Revenue

 

40,633

11.4%

Gross profit

 

12,877

14.7%

Operating profit

 

2,067

150.5%

 

 

 

 

 

Add back: Exceptional cost

 

-

219

 

Add back: Amortisation

 

401

418

 

Add back: Depreciation

 

1,177

1,030

 

Add back: LTIP charge

 

28

80

 

 

 

 

 

EBITDA before exceptional costs

 

3,673

42.8%

 

 

 

 

Profit before tax

 

905

-42.2%

 

 

 

 

 

Add back: Exceptional costs

 

-

219

 

Add back: Amortisation

 

402

418

 

Add back: Capitalised deal fee amortisation

 

52

43

 

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

 

712

(1,179)

 

Add back: LTIP charge

 

28

80

 

Add back: Non-controlling interest (gain)/loss

 

(3)

48

 

 

 

 

 

Profit before tax*

 

2,096

75.4%

 

 

 

 

 

Taxation

 

(272)

(101)

 

 

 

 

 

Profit after tax*

 

1,824

66.7%

Basic adjusted EPS*+

 

4.7p

67.9%

Basic EPS

 

1.6p

-59.0%

Capital expenditure

 

2,565

55.5%

Net Debt

 

15,748

-5.1%

             

* 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 13% (2017-18: 10%) and based on the average number of shares in issue in the year

 

Revenue

                                                                                                                                                                                                    Change on

                                                                                                                                            Prior half year

Alternative Performance Measure:  Organic Revenue Growth reconciliation                                                      £000                %

Actual Revenue H1 2017-18                                                                                                                              36,462

Foreign Exchange impact                                                                                                                                       (218)

Proforma and Constant Foreign Exchange Revenue H1 2017-18                                                                36,244          (0.1)%

Organic revenue                                                                                                                                                    4,389

Actual Revenue H1 2018-19                                                                                                                              40,633          12.1%

  

 

2          Reconciliations (continued)

 

Net debt

Net debt at the half year-end was £15.7 million (2017: £15.0 million), an increase of £0.7 million of debt on the prior half year.  As at 30 September 2018, net debt leverage was approximately 1.9x based on the current EBITDA of the Group.

 

                                                                                                                                                                             30 Sept          30 Sept

                                                                                                                                                                                 2018              2017

Alternative Performance Measure:  Net debt reconciliation                                                                                  £000              £000

Cash and cash equivalents                                                                                                                                    (5,113)          (4,991)

Current Liabilities: Interest bearing loans and borrowings                                                                                     9,122          6,199

Non-current Liabilities: Interest bearing loans and borrowings                                                                            11,739        13,781

Net Debt                                                                                                                                                                15,748        14,989

 

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

2018

Unaudited

Six months to

30 September

2018

Unaudited

Six months to

30 September

2018

Unaudited

Six months to

30 September

2018

 

£000

£000

£000

£000

 

 

 

 

 

External sales*

18,920

21,713

-

40,633

Profit before tax**

581

555

(231)

905

Depreciation and amortisation

751

415

412

1,578

 

_______

_______

_______

______

 

 

 

 

 

 

 

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

1,391

-

36,462

Profit before tax**

181

402

983

1,566

Depreciation and amortisation

674

348

426

1,448

 

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

 

Audited

Year to

31 March

2018

Audited

Year to

31 March

2018

Audited

Year to

31 March

2018

Audited

Year to

31 March

2018

 

£000

£000

£000

£000

 

 

 

 

 

External sales*

34,464

42,262

-

76,726

Profit / (loss) before tax**

704

2,541

(483)

2,762

Depreciation and amortisation

1,404

696

1,137

3,237

 

_______

_______

_______

_______

 

 

 

 

 

* 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 2018

£000

 

Unaudited

Six months to 30 September 2017

£000

Audited

Year to

31 March

2018

£000

Films

 

 

 

 

  High strength film packaging

 

21,713

19,391

42,262

Industrial

 

 

 

 

  Packaging consumables

 

7,844

7,090

14,552

  Plastics rotating parts

 

8,201

6,947

13,703

  Hydraulic hose consumables

 

2,875

3,034

6,209

 

 

             

             

             

Turnover per consolidated income statement

40,633

36,462

76,726

 

 

             

             

             

 

 

Reconciliation of reportable segment profit

 

 

Unaudited

Six months to

September

2018

£000

Unaudited

Six months to

30 September 2017

£000

Audited

Year to

31 March

2018

£000

 

 

 

 

 

Total profit for reportable segments

 

1,136

583

3,245

 

 

            

            

            

Unallocated amounts:

 

 

 

 

  Amortisation

 

(401)

(418)

(764)

  Unrealised (losses) / gains on derivatives

 

(712)

1,179

578

  Management charge income

 

2,148

2,145

2,720

  FX hedge (loss) on forward contracts

 

(4)

(404)

508

  Plastics Capital Trading Ltd and Plastics Capital plc costs

 

(836)

(829)

(2,104)

  Other foreign exchange costs

 

-

-

(59)

  LTIP charge

 

(28)

(80)

(94)

  Net interest costs

 

(398)

(395)

(751)

  Deal fee amortisation

 

(52)

(43)

(89)

  Exceptional costs

 

-

(219)

(408)

  Other

 

52

47

(20)

 

 

            

            

             

Consolidated profit before income tax

905

1,566

2,762

 

 

            

            

              

           

 

 

 

4          Exceptional items

 

Administrative Expenses

 

 

Unaudited

Six months to 30 September 2018

£000

 

Unaudited

Six months to 30 September 2017

£000

Audited

Year to

31 March

2018

£000

 

 

 

 

 

Redundancy & recruitment costs

 

-

70

192

Acquisitions - professional and legal costs

 

-

149

278

Factory relocations

 

-

-

362

Restatement of CCM's opening balance sheet

 

-

-

620

 

 

            

            

           

 

-

219

1,452

 

 

            

            

           

             

 

 

5          Financial income and expenses

 

 

 

Unaudited

Six months to

30 September

2018

£000

Unaudited

Six months to

30 September

2017

£000

Audited

Year to

31 March

2018

£000

Financial income:

 

 

 

 

Bank interest

 

4

-

-

 

 

             

             

             

Financial income

 

4

-

-

 

 

             

             

             

Financial expenses:

 

 

 

 

Bank interest

 

402

395

789

Interest received

Amortisation of capitalised deal fees

 

 

52

-

43

(8)

89

 

 

 

 

 

 

             

             

             

Financial expenses

 

454

438

870

 

 

             

             

             

Financial income and expenses included within foreign exchange:

 

 

 Net foreign exchange (gains) / losses

 

-

-

315

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

712

(1,179)

(578)

 

 

             

             

             

Foreign exchange impact and derivatives

 

712

(1,179)

(263)

 

 

             

             

             

 

 

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 2017: nil).

 

 

8          Earnings per share

 

 

Unaudited

Six months to

30 September

2018

Unaudited

Six months to

30 September

2017

Audited

Year to

31 March

2018

 

£000

£000

£000

Numerator

 

 

 

Profit for the period

630

1,465

2,170

 

 

 

 

Denominator

 

 

 

Weighted average number of shares used in basic EPS

38,995,161

37,364,795

37,922,211

Weighted average number of shares used in diluted EPS

40,116,539

39,001,714

39,043,589

 

 

 

 

 

 

 

 

Basic earnings per share (total)

1.6p

3.9p

5.7p

Diluted earnings per share (total)

1.6p

3.8p

5.6p

 

 

 

 

 

 

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        General Meeting

 

It is intended that the General Meeting, to approve the name change to Synnovia plc, will take place at the offices of Plastics Capital plc, Room 1.1, London Heliport, Bridges Court Road, London, SW11 3BE at 10.00am on Thursday 20 December 2018. 

The notice of the General Meeting and proxy will be sent to shareholders on 3 December 2018.

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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