22nd Aug 2007 07:00
Robinson PLC22 August 2007 FOR IMMEDIATE RELEASE 22 August 2007 Robinson plc INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Robinson plc ("Robinson" or "the Group"; AIM: RBN), the custom manufacturer ofpaperboard and plastic packaging, has announced its unaudited interim resultsfor the six months ended 30 June 2007. Key features: • Revenues increased 3% to £12.1 million, thanks largely to the first full-year contribution from the Stanton Hill business, acquired in May 2006; • Gross profit margins improved by over 1 percentage point as a result both of recouping raw material cost increases and operational efficiencies; • Overall, Robinson swung from a pre-tax loss of £1.4 million in 2006 to a pre-tax profit of £1.1 million in 2007, thanks to: • Exceptional income of £1.1 million (vs. exceptional costs of £0.7 million in 2006), due to profits on disposal of surplus property; • Improved operational performance; and • Reduced interest charges • Interim dividend maintained at 1.5p per share • These are the Group's first financial statements to be prepared according to International Financial Reporting Standards ("IFRS"). This has had a minimal impact on the Group P&L account but has reduced shareholders' funds by £1 million due to full provisioning for deferred tax in the revaluation reserve. Commenting on the results, Chairman, Richard Clothier said: "Given the backdrop of sustained increases in raw material and energy costs, itis encouraging that we have been able to enhance the underlying profitability ofthe business, as well as reducing indebtedness, over the period." "Our move to Poland is an example of our pre-emptive response to adverse markettrends which should facilitate profitable growth for Robinson longer term. Thesurplus property portfolio continues to provide income and asset backing for theGroup and will, in time, be used to reduce debt and provide funding for furtherexpansion opportunities." About Robinson Based in Chesterfield, and with additional manufacturing facilities inKirkby-in-Ashfield and in Stanton Hill, Nottinghamshire, in Toronto, Canada, andin Lodz, Poland. Robinson currently employs over 400 people. It was formerly afamily business, with its origins dating back some 165 years. Today the Group'smain activities are in the manufacture and sale of injection moulded plastic andrigid paperboard packaging. Robinson operates primarily within the food, drink,confectionery, cosmetic and toiletry sectors, providing niche or custommanufacture to major players in the fast moving consumer goods market, such asProctor & Gamble, Nestle, Cadbury, Trebor Bassett, Masterfoods, Unilever, Avonand Chivas. The Group also has a substantial property portfolio with significantdevelopment potential. For further information, please contact: Robinson plc 01246 220022Adam Formela, Chief Executive, Guy Robinson, Finance Director, Robinson plc www.r1son.co.uk Bankside Consultants 020 7367 8888Sue Scott/Louise Davis CHAIRMAN'S STATEMENT After a challenging year in 2006, I am pleased to report progress in improvingthe profitability of the underlying packaging businesses and a reduction indebt. Revenue increased by 3% predominantly as a result of the full year effect of theStanton Hill acquisition (May 2006) which has more than offset the downturn inthe paperboard business. Gross margins have improved by 1 percentage point as wehave sought to recover material price increases from our customers combined withcost reduction initiatives completed at the end of 2006. The successful completion of the sale of one of our surplus properties has added£1.2million to the profit before tax. Overall, the pre-tax result improved from a loss of £1.4million in the firsthalf of 2006 to a profit of £1.1million in 2007. The major factors behind thisswing were: • The profit on sale of surplus property - £1.2million • A reduction in exceptional costs - £0.6million • Improved operating results - £0.6million • Net reduced financing costs - £0.1million Capital expenditure of £0.5 million decreased in comparison to 2006 levels butremained focused on the development of our plant in Poland. This, which was lessthan the £1million depreciation charge for the period, combined with theproceeds of the property sale, reduced the Group's net bank overdraft from£6.7million at the start of the year to £4.3million at the interim stage. The low tax charge for the period reflects the fact that the capital gain on thesale of the surplus property has been offset by brought forward capital losses. These are the first financial statements that the Group has prepared under theIFRS convention. Details of the impact of the transition are included in thenotes attached. The effect on the profit and loss account is minor; however,shareholders' funds in the balance sheet have been reduced by £1million as aresult of the full provision for deferred taxation on the revaluation of assets. Plastics Revenue increased by £2million in comparison with the prior-year period mainlydue to the acquisition of Stanton Hill in May 2006. The Stanton Hill businesscontinues to perform well and has benefited from extended business that was dueto transfer to our plant in Poland. Revenue for the Kirkby plastics businessunit was 7% down on the previous half year as we have not yet replaced thebusiness transferred from Kirkby to Poland in this period. Plastic resin prices have increased by 24% in 2005, 15% in 2006 and by a further12% to this half-year. It is anticipated that prices will remain high for therest of the year. Electricity prices in the UK have fallen back slightlyfollowing an 83% increase in the past two years but remain at a significantpremium to those in Central Europe. The lag in recovering margins continues toaffect the results; however, some ground has been made up during the first halfof this year. Paperboard Revenue in the Paperboard businesses was £1.6million down on the same periodlast year. This is predominantly due to loss of the gravy granule tube businessat the end of 2006. New business is being actively pursued for the Chesterfieldplant and we remain confident of progress in the second half. Sales at Paperboard North America were £360,000 below the first half of 2006.This has been due to a change in ownership of a major customer at the start ofthe year resulting in some interruption to the supply chain. The strong Canadiandollar relative to the weak US dollar continues to impact on our margins. Property During the first half we completed the sale of land at Wheatbridge Mills for£1.6million. This resulted in a profit of £1.2million over book value. We remainat an advanced stage for the sale of Walton Works site (8 acres) which is vacantand this should complete, subject to planning, during the second half of 2007.Proceeds will be used to reduce debt. Management Adam Formela took over as Chief Executive from Jon Marx in February this year.Jon has agreed to remain an executive director until at least the end of 2007,primarily to assist with the development of the Polish business. Dividend The Board has approved an unchanged interim dividend of 1.5 pence per share. Thedividend is payable on 1 October 2007 to shareholders registered on 31 August2007. Outlook Revenues are normally stronger in the second half for our business and weanticipate this will be the case in 2007. We continue to face challenges fromthe volatility in input costs, our customers move to manufacturing offshore andthe need to innovate to improve our competitive position. Our move to Poland isan example of our pre-emptive response to adverse market trends which shouldfacilitate profitable growth for Robinson longer term. The surplus propertyportfolio continues to provide income and asset backing for the Group and will,in time, be used to reduce debt and provide funding for further expansionopportunities. Richard Clothier 21 August 2007ChairmanRobinson plc GROUP INCOME STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2007 Notes Unaudited Unaudited Unaudited Six months Six months Year ended to 30 June to 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Revenue 12,131 11,777 28,978Cost of sales (10,759) (10,600) (25,724) ------- ------- -------Gross profit 1,372 1,177 3,254Operating costs (1,799) (2,202) (4,194) ------ ------ ------ Operating loss before exceptional items (427) (1,025) (940)Exceptional items 3 1,091 (661) (1,104) ----- ------ -------Operating profit/(loss)after exceptional items 664 (1,686) (2,044)Finance costs (211) (120) (340)Finance income in respectof pension fund 636 430 1,120 ---- ---- ------ Profit/(loss) beforetaxation 1,089 (1,376) (1,264)Taxation 4 (149) 416 250 ---- ------ ------Profit/(loss) aftertaxation 940 (960) (1,014) ==== ===== =======Earnings/(loss) perordinary share (basic anddiluted (p)) 6 11.8 (6.1) (6.4) GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE SIX MONTHS ENDED 30 JUNE 2007 Unaudited Unaudited Unaudited Six months Six months Year ended to 30 June to 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Actuarial (loss)/gain on retirementbenefit obligations (1,259) (188) 429Currency translation differences 80 (119) 123 ------ ----- ----Net (expense)/income recogniseddirectly in equity (1,179) (307) 552Profit/(loss) for the period 940 (960) (1,014) ------ ----- ------Total recognised expense for theperiod (239) (1,267) (462) ====== ====== ====== GROUP BALANCE SHEETAS AT 30 JUNE 2007 Unaudited Unaudited Unaudited Six months Six months Year ended to 30 June to 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Non-current assetsProperty, plant andequipment 17,129 18,522 17,680Intangible assets - - -Pension asset 6,334 6,800 7,636 ------- ------ ------ 23,463 25,322 25,316 Current assetsInventories 2,341 3,144 2,031Trade and other receivables 5,207 6,261 7,076Deferred taxation 619 903 625Cash and cash equivalents 290 40 196 ----- ------ ----- 8,457 10,348 9,928Non-current assets held for sale 1,250 1,700 1,700 ------ ------ ------Total assets 33,170 37,370 36,944 ====== ====== ====== Current liabilitiesTrade and other payables (5,923) (7,143) (6,719)Bank overdraft (4,617) (6,871) (6,761) ------- -------- ------- (10,540) (14,014) (13,480) Non-current liabilitiesProvision for deferredtaxation (3,211) (3,534) (3,602)Provision for liabilities (204) (252) (208) -------- ------- ------- (3,415) (3,786) (3,810) -------- ------- -------Total liabilities (13,955) (17,800) (17,290) -------- ------- -------Net assets 19,215 19,570 19,654 ======== ======= ======= Capital and reservesOrdinary shares 80 80 80Share premium account 402 398 402Other reserves 3,839 4,267 4,185Profit and loss account 14,894 14,825 14,987 ------ ------ ------Shareholders' Funds 19,215 19,570 19,654 ====== ====== ====== GROUP CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2007 Unaudited Unaudited Unaudited Six months Six months Year to to 30 June to 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Cash flows from operating activitiesProfit/(loss) after taxation 940 (960) (1,014) Adjustments for: Depreciation charges and write-down of fixed assets 1,027 965 1,986 Reversal of impairment of fixed assets - - 317 Profit on disposal of land and buildings (1,151) - (252) Profit on sale of other tangible assets - - (19) Impairment of acquired goodwill - 155 79 Decrease in provisions (4) - (44) Other finance income in respect of Pension Fund (636) (430) (1,120) Finance costs 211 120 340 Taxation charged/(credited) 149 (416) (250) Non-cash items: - Increase in net pension asset charged to operating profit 139 120 440 - Cost of share options 46 39 79Transfer to pension escrow account - - (159) --- ---- ------Operating cash flows beforemovements in working capital 721 (407) 383(Increase)/decrease in inventories (310) (940) 173 Decrease in trade and otherreceivables 1,757 794 242(Decrease)/increase in trade andother payables (796) 867 620 ----- --- -----Cash generated by operations 1,372 314 1,418UK Corporation tax received/(paid) 132 (2) (129)Interest paid (211) (58) (340) ----- --- -----Net cash generated from operatingactivities 1,293 254 949 ===== === ===== Cash flows from investing activities Sale of surplus properties 1,601 - 332 Acquisition of tangible fixed assets (452) (1,640) (1,995) Acquisition of business - (3,102) (3,102) Sale of other tangible fixed assets 40 247 46 Issue of share capital - - 4 ----- ------- -------Net cash generated from/(used in)investing activities 1,189 (4,495) (4,715) ===== ======= ======= Cash flows from financing activitiesDividends paid (244) (244) (453) ----- ----- ---- Net cash used in financing activities (244) (244) (453) ===== ===== ====Net decrease/(increase) in cash,cash equivalents and bank overdrafts 2,238 (4,485) (4,219)Cash, cash equivalents and bank (6,565) (2,346) (2,346)overdrafts at 1 January ------ ------ ------ Cash, cash equivalents and bank (4,327) (6,831) (6,565)overdrafts at end of period ====== ====== ====== Notes to the financial statements 1. Basis of preparationThe interim report, for a 26 week period, which was approved by the directors on21 August 2007, does not comprise full accounts within the meaning of theCompanies Act 1985. The interim financial information is not audited. These interim financial statements adopt the recognition and measurementrequirements of those Standards expected to be applied in the Group's firstfinancial statements prepared under International Financial Reporting Standards("IFRS"). The resulting accounting policies have been set out in note 8. Areconciliation of equity and profit under UK GAAP with equity and profit underIFRS is also presented in note 7. Comparative figures for the year ended 31 December 2006 are based on thestatutory accounts prepared under UK GAAP which have been filed with theRegistrar of Companies and on which the auditors gave an unqualified report, asadjusted for the first time adoption of IFRS. The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. TheGroup's statutory financial statements for the year ended 31 December 2006,prepared under UK GAAP, have been filed with the Registrar of Companies. Theauditors' report on those financial statements was unqualified and did notcontain a statement under Section 237(2) of the Companies Act 1985. 2. Group Income StatementThe directors have re-assessed the allocation of costs between cost of sales andoperating costs as a result of which prior year allocations have been re-statedon a consistent basis. 3. Exceptional items Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Sale of surplus properties 1,151 - 252Redundancies (60) (154) (465)Reversal of impairment of fixedassets - - (317)Costs of setting up Polishmanufacturing facility - (277) (296)Costs relating to acquisition ofStanton Hill business - (230) (143)Write-off of tooling costs - - (135) ------ ----- ------ (1,091) (661) (1,104) ====== ===== ======4. TaxationThe taxation credit for the six months to 30 June 2007 has been calculated onthe basis of the estimated effective tax rate on profits before tax for the yearto 31 December 2007. The low taxation charge is due the utilisation of capitallosses brought forward in respect of the property gain. 5. Dividends Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Ordinary:Final 244 244 244Interim - - 209 --- --- --- 244 244 453 === === === 6. Earnings per shareThe calculation of earnings per ordinary share is based on the loss on ordinaryactivities after taxation (£940,000) divided by the weighted average number ofshares in issue (15,923,501). 7. First time adoption of IFRSThe following changes have been made to the profit and loss account and balancesheet as a result of the adoption of IFRS: IAS 12 Income taxesAdditional deferred tax has been provided on the revaluation of assets, whichnow constitutes a taxable temporary difference. IAS 19 Employee benefitsThe pension asset is now shown gross of deferred tax, which has been added backto the deferred tax balance. IAS 21 The effects of changes in foreign exchange ratesThe profit and loss accounts of the Group's foreign subsidiaries have beentranslated at the average rate of exchange ruling during the period rather than,as previously, the closing rate. Changes have also been made to reverse previouscumulative exchange adjustments. The effect of the changes on profit, on equity and on the other elements of theGroup's balance sheet at the opening balance sheet date for the comparativefigures, 1 January 2006, 30 June 2006 and 31 December 2006 are as follows: Six months to Year to 30 June 31 December 2006 2006 £'000 £'000 Loss after taxation under UK GAAP (974) (1,014) ----- ------IAS 12 - 28IAS 21 14 (28) -- ----Total differences 14 - ----- ------Loss after taxation under IFRS (960) (1,014) ===== ====== Balance sheet Balance sheet Balance sheet at 31 December at 30 June at 1 January 2006 2006 2006 £'000 £'000 £'000 Shareholders' funds under UKGAAP 20,779 20,709 22,221IAS 12 (1,125) (1,139) (1,057) ------- ------ ------Shareholders funds under IFRS 19,654 19,570 21,164 ======= ====== ====== Pension asset under UK GAAP 5,345 4,760 4,705IAS 19 2,291 2,040 2,016 ----- ----- -----Pension asset under IFRS 7,636 6,800 6,721 ===== ===== ===== Provisions for deferredtaxation under UK GAAP 186 355 355IAS 12 1,125 1,139 1,057IAS 19 2,291 2,040 2,016 ----- ----- -----Provisions under IFRS 3,602 3,534 3,428 ===== ===== ===== In accordance with IAS 7 the cash flow statement has been re-presented. The Company has elected to implement the provisions of paragraph 17 of IFRS 1and has included previously revalued land and buildings at deemed cost. 8. Accounting policiesThe consolidated financial statements have been prepared under InternationalFinancial Reporting Standards (IFRS) as adopted by the European Union. Thefinancial statements have been prepared under the historical cost convention. ConsolidationThe Group's financial statements consolidate the financial statements ofRobinson plc and all its subsidiaries. Subsidiaries are consolidated from thedate on which control transfers to the group and are included until the date onwhich the group ceases to control them. Transactions between group companies areeliminated on consolidation. RevenueRevenue comprises the fair value of the consideration received or receivable forthe external sales of products, exclusive of value added tax, other salesrelated taxes and trade discounts and is recognised when goods have beensupplied. Foreign currenciesAssets and liabilities of overseas subsidiaries are translated into sterling atthe rate of exchange ruling at the balance sheet date. The results and cashflows of overseas subsidiaries are translated into sterling using the averagerate of exchange for the year. Exchange movements on the restatement of the netassets of overseas subsidiaries and the adjustment between the profit and lossaccount translated at the average rate and the closing rate are taken directlyto other reserves and reported in the statement of recognised income andexpense. All other exchange differences are dealt with through the consolidatedprofit and loss account. By application of an exemption under IFRS1 thecumulative translation differences for all foreign operations were deemed to bezero at the transition date to IFRS. Exceptional itemsExceptional items are disclosed separately on the face of the income statement.They include any components of financial performance which management considersignificant to the Group's results and/or for which separate disclosure wouldassist in better understanding these. Such items may include: • Major restructuring or rationalisation programs • The sale or impairment of tangible or intangible assets • Other non-recurring items. Property, plant and equipmentProperty, plant and equipment are stated at cost less a provision fordepreciation. In the case of property this represents deemed cost lessaccumulated depreciation to the date of transition to IFRS. Depreciation iscalculated so as to write off the cost less estimated residual values of theassets in equal instalments over their expected useful lives. No depreciation isprovided on freehold land. Depreciation is provided on other assets at thefollowing rates: Buildings 25 - 40 yearsPlant and equipment 3 - 20 years Non-current assets held for saleAssets held for sale include assets that the group intends and expects to sellwithin one year from the date of classification as held for sale. Assetsclassified as held for sale are measured at the lower of their carrying amountsimmediately prior to their classification as held for sale and their fair valueless costs to sell. Assets classified as held for sale are not subject todepreciation or amortisation. GoodwillPurchased positive goodwill arising on the acquisition of a business representsthe difference between the cost of acquisition and the fair value of theidentifiable net assets acquired. No intangible assets were acquired and thegoodwill arising on the acquisition of the Stanton Hill business of VR PlasticsLimited was written off as impaired in full during 2006. InventoriesInventories are valued at the lower of cost, including related overheads, andnet realisable value. Cost comprises direct materials and, where applicable,direct labour costs and the overheads incurred in bringing items to theirpresent location and condition. Financial assetsTrade and other receivables are recognised initially at fair value andsubsequently measured at amortised cost using the effective interest method,less any required allowances for uncollectible amounts. Financial liabilitiesTrade and other payables are recognised initially at fair value and subsequentlymeasured at amortised cost using the effective interest method. Deferred taxationDeferred taxation is provided on taxable and deductible temporary differencesbetween the carrying amounts of assets and liabilities in the financialstatements and their corresponding tax bases. Deferred tax assets are recognisedto the extent that it is probable that taxable profits will be available againstwhich temporary differences can be utilised or that they will reverse. Deferredtax is measured using the tax rates expected to apply when the asset is realisedor the liability settled based on tax rates enacted or substantially enacted bythe balance sheet date. Employee benefitsThe retirement benefit asset recognised in the balance sheet represents the fairvalue of defined benefit fund assets less the present value of the definedbenefit obligation, to the extent that this is recoverable by means of acontribution holiday, payment of money purchase contributions and expenses fromthe fund. Operating costs comprise the current service cost. Finance incomecomprises the expected return on fund assets less the interest on fundliabilities. Actuarial gains or losses comprising differences between the actualand expected return on fund assets, changes in fund liabilities due toexperience and changes in actuarial assumptions are recognised immediately inthe Statement of recognised income and expense. Pension costs for the members of the money purchase section representcontributions payable during the year. Share based paymentsThe fair value at the date of grant of share options is calculated using theBlack-Scholes pricing model and charged to the profit and loss account on astraight line basis over the vesting period of the award. The charge to theprofit and loss account takes account of the estimated number of share optionsthat will vest. 9. Interim ReportThe Interim Report will be posted to shareholders shortly and further copies areavailable from Robinson plc's Registered office: Bradbury House, Goyt Side Road,Chesterfield, S40 2PH. 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