Interim Results
Robinson PLC
23 August 2006
FOR IMMEDIATE RELEASE 23 August 2006
Robinson plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006
Robinson plc ('Robinson' or 'the Company'; stock code: RBN), the custom
manufacturer of paperboard and plastic packaging, has announced its unaudited
interim results for the six months ended 30 June 2006.
Key features:
• Sales up 4% to £11.8 million, partly reflecting higher input costs,
which were passed on to customers, and volume growth in the plastics
division
• Exceptional costs of £661,000 (vs. exceptional income of £194,000 in
2005), as a result of investment in Lodz factory, the acquisition of
Stanton Hill and reorganisation costs in paperboard
• Pre-exceptional pre-tax loss of £715,000 (2005: £164,000 profit)
• Interim dividend maintained at 1.5p per share
Commenting on the results, Chairman, Richard Clothier said:
'Despite a challenging operating environment during the first half of 2006,
Robinson continues to make good progress towards our strategic objectives. The
most notable events this year have been the start-up of the new factory in
Poland and the acquisition of a complementary injection-moulding business at
Stanton Hill. However the benefits of both initiatives will not be fully
reflected in the financial results until 2007.'
'Although the paperboard division is facing increasing competition in the
cosmetic & toiletry sectors from producers in the Far East, the Board believes
that this will be more than offset by the growth expected in the plastic
division.'
About Robinson
Based in Chesterfield, and with additional manufacturing facilities in
Kirkby-in-Ashfield and in Stanton Hill, Nottinghamshire, in Toronto, Canada, and
in Lodz, Poland, Robinson currently employs over 400 people. It was formerly a
family business, with its origins dating back some 165 years. Today the
Company's main activities are in the manufacture and sale of rigid paper
packaging and injection moulded plastic packaging. Robinson operates primarily
within the food, drink, confectionery, cosmetic and toiletry sectors, providing
niche or custom manufacture to major players in the fast moving consumer goods
market, such as Nestle, Lever Faberge and Chivas. The Company also has a
substantial property portfolio with significant development potential.
For further information, please contact:
Jon Marx, Chief Executive, Robinson plc 01246 220022
Guy Robinson, Finance Director, Robinson plc 01246 220022
www.r1son.co.uk
Sue Scott/Daniela Hale, Bankside Consultants 020 7367 8888
CHAIRMAN'S STATEMENT
The 2006 interim results have been affected by the increases in raw material and
energy prices. Some of these cost increases have been recovered in price rises
to our customers and this has contributed to the higher turnover, up 4 percent.
The first half was also significantly affected by a loss of sales in the
paperboard businesses and the exceptional costs of developing the plastics
businesses. Although trading overall has resulted in a loss, there has been good
progress on strategic developments.
The increase in sales is also due to the first contribution from the Stanton
Hill operation. This was acquired in May for £2.8 million with a further
£300,000 purchase of assets in June. The costs of this purchase (£230,000),
together with the start-up costs of establishing the new factory in Poland
(£277,000) and the reorganisation costs in Paperboard (£154,000) make up the
exceptional costs of £661,000. Last year we reported an exceptional profit of
£311,000 on the sale of surplus plant and machinery.
After a taxation credit of £402,000 (2005: £86,000 tax charge), the loss after
tax in the first half of this year was £974,000 (2005: £272,000 profit). The
Stanton Hill acquisition and a further £1.6 million of capital expenditure
increased borrowings by £4.5 million to £6.8 million.
Plastics
Sales increased substantially in the first half, of which the majority was
volume growth and the balance a pass through of input price rises. The growth is
attributable to business gained during the second half of 2005 and further
business won in the UK in 2006 that will more than offset the business being
transferred to Poland.
Plastic resin prices increased by 24 percent in 2005 and by a further 7.5
percent during the first half of 2006. In addition, after a 22 percent rise in
electricity prices last year, they have risen by a further 50 percent this year.
Whilst these largely have been passed on, we have suffered some margin erosion.
We continue to seek to offset this by productivity improvements through
automation in the factory.
On 4 May Robinson acquired the business of VR Plastics, based at Stanton Hill in
Nottinghamshire, for a cash consideration of £2.8 million, which broadly equated
to the book value of the assets which include a freehold property valued at £1.4
million. This is a plastic injection moulding business, established in 1996, and
whose principal client is a major international branded goods company. Stanton
Hill employs approximately 85 people at its premises 4 miles from our Kirkby
plant and broadly broke-even in the year to 31 December 2005 on sales of £4.7
million. The acquisition is expected to be earnings enhancing in 2007. Costs of
£230,000 relating to the acquisition have been written off in these accounts.
Subsequent to the acquisition, we spent £300,000 on assets that were previously
leased by VR Plastics. Stanton Hill is being integrated into our Plastics
Division.
During the first quarter of 2006 the first injection moulding machines were
transferred from Kirkby to the refurbished factory in Lodz and were successfully
commissioned. During the second quarter, we transferred further machines and we
now have all the necessary approvals to operate a high quality food packaging
business in Poland. The costs of setting up the business have been treated in
the accounts as exceptional during this phase. Production efficiencies are
already approaching the levels experienced at Kirkby and we are confident this
business can make a significant contribution to the Group in future years.
Paperboard
Both the UK and Canadian paperboard operations have lost significant toiletry
and cosmetic business to cheaper packaging formats available from China. The
outlook made it necessary to reduce the cost base which has involved a number of
redundancies. The cost of these actions has been included in exceptional costs
and the reorganisation will benefit the second half. We have recently gained new
business with a major international branded toiletries company which involves
simultaneously packing their products into our containers as they are made.
The Canadian operation's fall in sales is a result of the loss of the tooth
whitening strips business that was reported in our annual results. This was
exacerbated by the further strengthening of the Canadian dollar to a 30 year
high against the US dollar. Our costs are incurred in Canada whereas sales are
largely in US dollars.
Property
The addition of the Stanton Hill factory brings the total value of properties
(at revaluation in 2003 or cost for later additions) to £13.3 million. This
includes around £5.5 million of properties not used in the business and which we
are seeking to sell. Some of these are currently let out to tenants yielding a
gross rental income of £0.6 million. We remain at an advanced stage of
discussions for the sale of both the Walton Works site (8 acres) and the
Wheatbridge Mill site (1.5 acres), both of which are vacant. Proceeds will be
used to reduce debt.
Dividend
The Board's approval of an interim dividend of 11/2 pence per share reflects our
view that the growth expected in Plastics from Stanton Hill and Lodz will more
than offset the adverse trends in Paperboard. The dividend is payable on 2
October 2006 to shareholders registered on 1 September 2006.
Outlook
The Paperboard division's sales in the second half of the year are expected to
return to the same level as last year and thus considerably strengthen the
depressed margins seen in this first half. Looking further ahead, Robinson's
strategic focus remains on developing our packaging business in territories with
which we are familiar. The initial response from our multinational customers
indicates that we have achieved an early mover advantage in our shift of
production to Poland. In the UK, Robinson is focusing on product innovation, in
both paperboard and plastic, to maintain its competitive advantage. We continue
to seek additional earnings-enhancing acquisitions, and the surplus property
portfolio offers the potential to reduce debt as it is liquidated.
Richard Clothier 23 August 2006
Chairman
Robinson plc
GROUP PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS TO 30 JUNE 2006
Notes Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Turnover 11,777 11,297 26,648
Cost of sales (11,097) (10,021) (22,512)
------ ------ ------
Gross profit 680 1,276 4,136
Overheads, excluding exceptional
items (1,705) (1,562) (3,608)
Exceptional items 3 (661) 194 (9)
----- ----- -------
Overheads 2 (2,366) (1,368) (3,617)
----- ------ -------
Operating (loss)/profit (1,686) (92) 519
Interest (paid)/received (120) 20 (40)
Other finance income in respect of
Pension Fund 430 430 870
----- ----- ------
(Loss)/profit on ordinary (1,376) 358 1,349
activities before taxation
Taxation 4 402 (86) (320)
----- ----- ------
(Loss)/profit on ordinary (974) 272 1,029
activities after taxation ===== ===== ======
(Loss)/Earnings per ordinary share
(p) 6 (6.1) 1.7 6.5
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS TO 30 JUNE 2006
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
(Loss)/profit for the period (974) 272 1,029
Actuarial (loss)/gain in respect of
pension fund net of deferred tax (188) (959) 297
Currency translation differences on
foreign currency net investments - - 82
------ ----- -----
Total (losses)/profits recognised (1,162) (687) 1,408
====== ===== =====
GROUP BALANCE SHEET
AS AT 30 JUNE 2006
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Tangible fixed assets 20,222 15,761 17,440
Current assets
Stocks 3,144 2,546 1,997
Debtors 7,164 6,013 7,246
Cash at bank and in hand 40 85 28
----- ----- -----
10,348 8,644 9,271
Creditors: amounts falling
due within one year (14,014) (6,065) (8,588)
------ ----- -----
Net current assets (3,666) 2,579 683
Total assets less current ------- ------ ------
liabilities 16,556 18,340 18,123
Provision for liabilities (607) (615) (607)
Net assets excluding pension ------ ------ ------
asset 15,949 17,725 17,516
Pension asset (net of
deferred tax) 4,760 2,513 4,705
------ ------ ------
Net assets including pension
asset 20,709 20,238 22,221
Capital and reserves
Called up share capital 80 80 80
Share premium account 398 398 398
Capital redemption reserve 216 216 216
Revaluation reserve 4,991 5,130 5,136
Profit and loss account 15,024 14,414 16,391
------ ------ ------
Shareholders' Funds 20,709 20,238 22,221
====== ====== ======
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2006
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Cash (outflow)/inflow from operating
activities
Operating (loss)/profit (1,686) (92) 519
Depreciation charges and write-down
of fixed assets 965 813 1,705
Reversal of impairment of fixed
assets - (296) (296)
Profit on sale of other tangible
fixed assets - (15) (5)
Write-off of acquired goodwill 155 - -
Increase in stocks (940) (906) (357)
Decrease/(increase) in debtors 794 (598) (1,732)
Increase in creditors 867 654 928
Decrease in provisions - (22) (7)
Non-cash items:
- Increase in net pension asset
charged to operating profit 120 215 400
- Cost of share options 39 21 65
- Transfer to pension escrow account - - (822)
Net cash inflow/(outflow) from --- ---- ----
operating activities 314 (226) 398
Returns on investments and servicing
of finance
Interest received - 22 24
Interest paid (58) - (62)
---- --- ----
Net cash inflow from returns on
investments and servicing of finance (58) 22 (38)
Taxation ---- ---- ----
UK corporation tax paid (2) - (229)
Capital expenditure and financial
investment
Acquisition of business (see note 5) (3,102) - -
Acquisition of tangible fixed assets (1,640) (1,592) (4,119)
Sale of other tangible fixed assets 247 345 315
----- ------- ------
Net cash outflow from capital (4,495) (1,247) (3,804)
expenditure and financial investment
Dividends paid (244) (279) (488)
----- ------- ------
Net cash outflow before use of
liquid resources and financing (4,485) (1,730) (4,161)
Management of liquid resources
Decrease in short-term cash deposits
with UK banks - 1,002 1,002
------ ----- -----
Net cash inflow from management of
liquid resources - 1,002 1,002
----- ----- ------
Decrease in cash (4,485) (728) (3,159)
====== ===== ======
Analysis of changes in cash during
the year
Balance at 31 December 2005 (2,346) 813 813
Net cash outflow (4,485) (728) (3,159)
------ ----- ------
Balance at 30 June 2006 (6,831) 85 (2,346)
====== ===== ======
Notes to the financial statements
1. Basis of preparation
The interim report, for a 26 week period, which was approved by the directors on
22 August 2006, does not comprise full accounts within the meaning of the
Companies Act 1985. The interim financial information is not audited.
The interim financial information has been prepared on a consistent basis using
the same accounting policies set out in the audited accounts for the year to 31
December 2005. Comparative figures for the year ended 31 December 2005 have been
extracted from the statutory accounts which have been filed with the Registrar
of Companies and on which the auditors gave an unqualified report.
2. Overheads
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Selling, marketing and distribution
costs 562 653 1,278
Administrative expenses including
exceptional items 1,906 826 2,549
Net income from let properties (102) (111) (210)
------ ----- -----
2,366 1,368 3,617
====== ===== =====
3. Exceptional items
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Redundancies (154) - -
Cost of acquisition of Stanton Hill
business (including write-off of
acquired goodwill) (230) - -
Cost of setting up Polish
manufacturing facility (277) (70) (267)
Reversal of impairment of fixed
assets - 296 296
Costs of aborted acquisition - (47) (38)
Profit on sale of machinery - 15 -
----- ---- ---
(661) 194 (9)
===== ==== ===
4. Taxation
The taxation credit for the six months to 30 June 2006 has been calculated on
the basis of the estimated effective tax rate on profits before tax for the year
to 31 December 2006.
5. Acquisition of business
During the period the Company acquired part of the plastic injection moulding
business of VR Plastics Ltd at Stanton Hill for a cash consideration of
£3,102,000. The net assets acquired were as follows:
Unaudited
Six months
to 30 June
2006
£'000
Tangible fixed assets 2,425
Stocks 207
Debtors 315
-----
2,947
Goodwill 155
-----
3,102
=====
The goodwill has been written off during the period.
6. Earnings per share
The calculation of earnings per ordinary share is based on the loss on ordinary
activities after taxation (£974,000) divided by the weighted average number of
shares in issue (15,919,243).
7. Interim Report
The Interim Report will be posted to shareholders shortly and further copies are
available from Robinson plc's Registered office: Bradbury House, Goyt Side Road,
Chesterfield, S40 2PH.
ENDS
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