Robinson : Interim report 2021 (PDF)

ROBINSON plc: Interim results for the six months ended 30 June 2021/Page 1

Robinson plc

Half-year Report

Interim Results for the six months ended 30 June 2021

Robinson plc ("Robinson" or the "Group" stock code: RBN), the custom manufacturer of plastic and paperboard packaging based in Chesterfield, announces its interim results for the six months ended 30 June 2021.

Financial highlights

• Revenue up 19% to £21.2m (2020: £17.9m)
• Gross margin decreased to 16.7% from 23.6% in 2020
• Operating profit before amortisation of intangible assets reduced to £0.1m (2020: £1.6m)
• Loss before tax of £0.6m (2020: profit of £1.1m)
• Interim dividend of 2.5p per share announced
• Net debt1 of £13.7m (31/12/2020: £6.6m), after net capital expenditure of £2.0m, consideration for the Schela Plast acquisition of £1.4m and net debt acquired of £3.5m

Operational highlights

• Successfully secured resin supply to allow continued operations in a very tight market
• Acquisition of Schela Plast A/S completed on 10 February, with integration progressing to plan
• Recent business wins in the UK and Denmark with major FMCG brand owners provide confidence for the future
• "Packaging with purpose" sustainability pledge launched in February based on five pillars and 15 ambitious commitments
• Continued progress with the sale of surplus properties

Alan Raleigh, Chairman, commented:

"Resin prices have now stabilised and shown the first signs of a reduction in July, however, we are not expecting a significant reduction before the end of the year. We are also experiencing price inflation in other areas including secondary packaging and transport which will continue to impact on the second half of the year.

Across our markets we are seeing a lower-than-normal level of demand in the third quarter due to the ongoing uncertainty across FMCG supply networks and a varying pace of recovery following the pandemic. We are now expecting this to continue for the second half, so we are accelerating our plans to improve our operations for additional cost savings and profitability.

We expect full year operating profit before amortisation of intangible assets to be in the region of £2.0m (2020: £2.7m).

We remain committed in the medium term to delivering above-market profitable growth and our target of 6-8% of adjusted operating margin2."

Robinson plc	www.robinsonpackaging.com
Helene Roberts, CEO	Tel: [phone]
Mike Cusick, Finance Director
finnCap Limited
Ed Frisby / Seamus Fricker, Corporate Finance	Tel: [phone]
Tim Redfern / Barney Hayward, ECM

ROBINSON plc: Interim results for the six months ended 30 June 2021/Page 2

About Robinson:

Being a purpose-led business, Robinson specialises in custom packaging with technical and value- added solutions for food and consumer product hygiene, safety, protection, and convenience; going above and beyond to create a sustainable future for our people and our planet. Its main activity is in injection and blow moulded plastic packaging and rigid paperboard luxury packaging, operating within the food and beverage, homecare, personal care and beauty, and luxury gift sectors. Robinson provides products and services to major players in the fast-moving consumer goods market including McBride, Procter & Gamble, Reckitt Benckiser, SC Johnson and Unilever.

Headquartered in Chesterfield, UK, Robinson has 3 plants in the UK, 2 in Poland and recently acquired a plant in Denmark, Schela Plast. Schela Plast specialises in the design and manufacture of plastic blow moulded containers, serving a number of the major FMCG brands in Denmark and neighbouring countries.

Robinson was formerly a family business with its origins dating back to 1839, currently employing nearly 400 people. The Group also has a substantial property portfolio with development potential.

1. cash less borrowings (excludes IFRS 16 lease liabilities)
2. operating profit margin before exceptional items and amortisation of intangible assets

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

ROBINSON plc: Interim results for the six months ended 30 June 2021/Page 3

Chairman's Statement

Dear Shareholders

The interim results we report today reflect the very challenging circumstances we are continuing to experience in 2021 across materials price inflation, customer demand and the ongoing uncertainty resulting from the Covid-19 pandemic.

We indicated in March that a lack of resin availability and consequential sharp increase in prices were likely to create volatility in 2021. Since 1 January the market price of resins used in the Group have increased on average by 60% and we have experienced substantial challenge to secure raw materials in a market where resin unavailability has caused some competitors to shut down production lines.

The dedication of the Robinson team in acting decisively to procure resin supply and, where possible, to agree price increases with customers has mitigated some of the impact of these extreme market conditions.

Whilst over the medium-term the Group is protected from resin price movements through contractual arrangements with most customers, there is a short-term lag of typically three months before prices can be changed. Largely as a result of this lag impact, gross margins were 16.7% (2020: 23.6%) in the first half of 2021.

The pandemic has also created significant operational challenges. Whilst we have had a small number of positive Covid-19 cases amongst our employees, the controls that we've implemented have prevented onward transmission and no severe illness has resulted. This has enabled us to continue to operate the business safely and to service our customers effectively.

Revenues were 19% higher in the first half of 2021, 3% higher excluding the Schela Plast business acquired in February. After adjusting for price changes and foreign exchange, sales volumes in the underlying1 business, which have been affected by changes in consumer behaviour and intermittent lockdowns, are in line with 2020, which included additional demand due to the Covid-19 pandemic.

Operating costs are in line with the second half of 2020, during which we added resources to partner with key customers and accelerate our sustainability agenda. Following this investment, underlying1 operating costs are 22% higher than the same period in 2020.

Operating profit before amortisation of intangible assets has reduced by £1.5m versus the same period last year, to £0.1m. The Group made a loss before tax of £0.6m (2020: profit before tax £1.1m).

Property

Work has continued on the potential disposals that we announced had reached heads of agreement in March. We expect completion in the second half of 2021, for a gross value of £3.4m for two plots of land with a book value of less than £1m.

Subject to the necessary planning approvals, we would expect further sales to be achieved in the latter part of 2021 or early 2022. The intention of the Group remains, over time, to realise the maximum value from the disposal of surplus properties and to reinvest the proceeds in developing our packaging business.

Net debt and capital expenditure

Net debt2 has increased to £13.7m (31/12/2020: £6.6m) following the acquisition of Schela Plast and the resin price impact on profitability and working capital. In addition, deferred consideration of £2.3m is payable to the former owners of Schela Plast in 2022, this is provided for in Trade and Other Payables. With total credit facilities of £22.6m, the Group considers it has comfortable headroom for the foreseeable future.

The Group continues to invest in its property, plant and equipment to improve efficiency and support our future growth ambitions. Net capital expenditure in the first half year was £2.0m (2020: £2.1m) including new production equipment, previously announced, and now installed in Schela Plast to service a major FMCG brand owner.

ROBINSON plc: Interim results for the six months ended 30 June 2021/Page 4

Dividend

Despite the short-term market challenges we face, the Board has confidence in the medium term prospects for the business and therefore announces an interim dividend of 2.5p per share to be paid on 8 October 2021 to shareholders on the register at 10 September 2021 (record date). The ordinary shares ex-dividend date is 9 September 2021.

The current intention of the Board is to pay a total dividend of 5.5p (2020: 8.5p including the 3.0p deferred 2019 final dividend) per share for the year ended 31 December 2021.

Outlook

Resin prices have now stabilised and shown the first signs of a reduction in July, however, we are not expecting a significant reduction before the end of the year. We are also experiencing price inflation in other areas including secondary packaging and transport which will continue to impact on the second half of the year.

Across our markets we are seeing a lower-than-normal level of demand in the third quarter due to the ongoing uncertainty across FMCG supply networks and a varying pace of recovery following the pandemic. We are now expecting this to continue for the second half, so we are accelerating our plans to improve our operations for additional cost savings and profitability.

We expect full year operating profit before amortisation of intangible assets to be in the region of £2.0m (2020: £2.7m).

We remain committed in the medium term to delivering above-market profitable growth and our target of 6-8% of adjusted operating margin3.

Alan Raleigh

Chairman

18 August 2021

1. excluding the results from the Schela Plast business acquired on 10 February
2. cash less borrowings (excludes IFRS 16 lease liabilities)
3. operating profit margin before exceptional items and amortisation of intangible assets

ROBINSON plc: Interim results for the six months ended 30 June 2021/Page 5

Condensed consolidated income statement and statement of comprehensive income

Condensed consolidated income		Six months	Six months	Year to
statement	£'000	to 30.06.21	to 30.06.20	31.12.20
Revenue		21,231	17,860	37,203
Cost of sales		(17,689)	(13,648)	(28,637)
Gross profit		3,542	4,212	8,566
Operating costs		(3,491)	(2,633)	(5,878)
Operating profit before amortisation of intangible assets	51	1,579	2,688
Amortisation of intangible assets		(479)	(400)	(809)
Operating (loss)/profit		(428)	1,179	1,879
Finance income - interest receivable		12	-	1
Finance costs		(165)	(63)	(128)
(Loss)/profit before taxation		(581)	1,116	1,752
Taxation		44	(263)	(343)
(Loss)/profit for the period		(537)	853	1,409
Earnings per ordinary share (EPS)		p	p	p
Basic earnings per share		(3.2)	5.1	8.5
Diluted earnings per share		(3.2)	5.1	8.4

Condensed consolidated statement of	Six months	Six months	Year to
comprehensive income	£'000 to 30.06.21	to 30.06.20	31.12.20
(Loss)/profit after tax for the period	(537)	853	1,409
Items that will not be reclassified subsequently to
the Income Statement:
Re-measurement of net defined benefit liability	98	79	180
Deferred tax relating to items not reclassified	(19)	(15)	(34)
	79	64	146
Items that may be reclassified subsequently to the
Income Statement:
Exchange differences on retranslation of foreign	(221)	116	(55)
currency goodwill and intangibles
Exchange differences on retranslation of foreign	31	(16)	7
currency deferred tax balances
Exchange differences on translation of foreign	(397)	339	(163)
operations
	(587)	439	(211)
Other comprehensive (expense)/income for the period	(508)	503	(65)
Total comprehensive (expense)/income for the period	(1,045)	1,356	1,344