COLORPAK LIMITED Colorpak Limited Half-Year Condensed Financial Report
31 December 2015
Your directors submit their report for the half-year ended 31 December 2015. Directors
The names of the company's directors in office during the half-year and until the date of this report are as below.
Geoff Willis (Non-executive Chairman) Alex Commins (Managing Director) David Heaney
Ian Wightwick
Neil Kearney (appointed 3 September 2015)
Directors were in office for this entire period unless otherwise stated.
Operating and Financial Review Financial Performance
Colorpak's six months to 31 December 2015 produced revenues from sale of goods and services of $79,208,000, 5.9% down on the corresponding prior comparable period ("pcp") of $84,181,000. The company's reported Net Profit After Tax (NPAT) was a profit of $1,356,000 (2014: profit of $1,645,000).
The reported result has been adjusted by adding back non-recurring costs of $1,045,000 to determine the underlying result. The underlying result is reflective of the on-going benefits delivered from productivity improvements and strong cost performance against a backdrop of continuing softness in sales volumes. Taking these matters into account the NPBT for 2015 exceeded the prior year by $34,000. The following table provides these comparisons:
For the six months ended 31 December | 2015 | 2014 | ||
$000's | $000's | |||
Revenues from sale of goods | 79,208 | 84,181 | ||
NPBT(1) | NPAT | NPBT(1) | NPAT | |
Reported result | 1,835 | 1,356 | 2,616 | 1,645 |
Non-recurring costs (2) | 1,045 | 732 | 230 | 161 |
Adjusted Underlying Result | 2,880 | 2,088 | 2,846 | 1,806 |
Notes:
NPBT refers to Net Profit Before Tax.
The reported result for 2015 includes costs considered to be non-recurring in nature, and includes restructure costs associated with re-sizing operations to align with expected demand ($704,000), a one-off legal settlement ($250,000) and takeover transaction costs ($91,000) which are expected to continue to be incurred in the second half year. The costs for 2014 relate to redundancy/restructure costs. An analysis of these costs is set-out in note 4 and 10 to the financial statements.
The numbers in the above table have been reviewed by the auditors.
EPS has decreased to 1.56 cents per share, down on the prior year's 2.00 cents on the reported result.
Cash generation from operations (before non-recurring items) for the half-year was an inflow of $58,000, down
$3,759,000 on the pcp.
The company undertook capital expenditure, net of proceeds on disposal of assets, of $737,000 for the half-year, with the total for 2016 expected to be around $2,400,000. Cash from operations for the half included a net increase in core working capital of $4,771,000 which resulted from relatively high inventory holdings driven by a combination of an expectation by customers of a return to normalised seasonal demand and extended lead-times for board deliveries.
Debt, net of cash at bank, increased by $1,542,000 to $32,985,000 since June 2015 as a result of the continuing trend of customers extending payment terms beyond 90 days on contract renewals which was offset by low capital expenditure and the underwritten reinvestment of the company's final dividend in October 2015. The company remains relatively conservatively geared with gearing of 35.1% (debt / debt + equity) and maintains adequate cash reserves and undrawn bank credit limits to meet its expected working capital and capital expenditure requirements for the foreseeable future.
After a prolonged period of integration the first half of 2016 has been relatively stable. All operations are back to business as usual mode, with the disruptions and distractions of plant and people movements complete.
The Australian dollar retracted strongly against most major currencies in the half, which saw pressure come to bear on raw material input prices which are all fully imported. As a well-known risk beyond the control of the company each of our customer contracts contain provision for full pass through of the cost impacts of such an event. The sales teams have been busy implementing price increases to customers to mitigate erosion to our margins and to a large extent have been successful.
We would anticipate that the scale of the currency retraction would see some reversal of the importation of fully packed imported goods into Australia/NZ. We have seen some early signs of it towards the later stage of this half and are hopeful if the currency continues to retreat that the trend for more locally produced packaging will ramp up.
The group's safety record continues to be in a strong position. At Regents Park, the team has set a strong benchmark at 2,159 Lost Time Injury days free at the end of December 2015.
During the half year Braeside and Penrose enterprise agreements were successfully renegotiated and ratified. Productivity based increases have been the foundation of the payments which will see staff rewarded by seeking ways to drive efficiency, and reduce spoilage to a greater extent. Wage outcomes have been modest. The Regents Park enterprise agreement is set down for negotiation in the second half.
Productivity in each of our operations is going well post integration as we continue to drive it on to world's best practice, we see more room for improvement. Our Paper cup operations have performed very strongly as the super premium and private label ice cream sector grows consistently without previously experienced seasonal slumps. Of particular note in the half was the securing of an iconic paper cup ice cream brand as part of a contract renegotiation with one of our major food customers.
Our New Zealand operation has witnessed a step up in demand after securing a strategic beverage customer in Auckland, and picking up a number of disgruntled customers from a competitor who was giving protracted lead-times to their customers during a plant move. Our customer pipeline is robust and expectation is that solid sales growth will continue for some time in the NZ division.
Brandpack continues to be the innovation hub that attracts and secures our customers. The technical skill set of the team continues to grow and be recognised as industry leading within the Folding Carton and Flexibles sector. The recent acquisition of The Connection was seamlessly integrated into the existing division in both Melbourne and Sydney bringing greater depth of experience to our team and providing more flexibility to our customers.
Our Flexibles division in Regents Park continues to grow and expand by enhancing its value proposition through the broadening of the businesses capability. The foray into digital printing has also proven to be very successful as the team is sought out to provide our customers with fast turnaround high quality solutions on a multitude of substrates from cartonboard, to self adhesives, to sachet and hard tempered aluminium foil.
Although the Folding Carton market in general remains very competitive, the sales team has delivered some important customer wins to partially offset other market movements. Colorpak has long been the reputational leader of the sector. An experienced management team of industry experts and a stable workforce has ensured that sound decisions are made and executed in a swift manner. The team is always willing to take the tough decisions to build for a stronger long term.
The company is pleased to announce an interim dividend of 1.25 cents per share, fully franked, which will be paid on or around 21 April 2016. The timing of the payment of the dividend has been delayed until after the takeover scheme meeting at which point if the takeover is approved by the shareholders then the interim dividend will be paid together with the proposed special dividend. In the event that the takeover scheme is not approved by the shareholders then only the interim dividend will be paid on or around the 21 April 2016.
As a result of the proposed takeover of the company, the directors consider it appropriate to suspend the dividend reinvestment plan until the outcome of the proposed takeover is known. The suspension of the dividend reinvestment plan will reduce the administrative burden and complexity of the takeover in the event that the shareholders give their approval.
31 December 2015 $000 | 30 June 2015 $000 | |
Debt: | ||
Interest-bearing loans and borrowings | 32,988 | 31,446 |
Cash and cash equivalents | (3) | (3) |
Net debt | 32,985 | 31,443 |
Total equity | 60,992 | 59,235 |
Total capital employed | 93,977 | 90,678 |
Gearing (debt/debt+equity) | 35.1% | 34.7% |
Colorpak Limited issued this content on 26 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 26 February 2016 03:04:17 UTC
Original Document: http://www.colorpak.com.au/sites/default/files/reports/Colorpak December 2015 financial statements.pdf
