Coral Products Share Discussion Threads

[base7] 12/10/2022 11:47

Arent new shares being issued to vendors @ 16p value ?
Also this is not a distressed sale as Eco owned by Staples ,husband & wife in early 40s making pre tax profits of £1.125mill after Directors Remun & other Director costs (cars ,insurances ,pensions ,travel to Spain etc )

[effortless cool] 12/10/2022 11:24

An interesting transaction that adds further to the dramatic scaling up of the business that we have seen this year. I suspect that this will be the last one for a while, given surplus cash and treasury shares must be exhausted now.

What puzzles me is how they are going to get 4.3m new shares away at 16p, so I await the 'further announcement' with interest.

[this_is_me] 12/10/2022 10:54

How do you work out that they are not debt free considering that they had £7.5 million of cash at the year end? They have only spent around half of that on aquisitions.

[hatfullofsky] 12/10/2022 10:23

They are no longer debt free, do you read the updates and broker notes ?

[hatfullofsky] 12/10/2022 10:23

Goodbye Clock tower, you are clearly an idiot

[hatfullofsky] 12/10/2022 10:21

WTF Clocktower, it's the best time to do deals. Depressed market, distressed sellers. CRU are in a perfect position to acquire

[charo] 12/10/2022 09:48

Increases eps by 1p ?

[base7] 12/10/2022 09:45

That’s why I am not wildly enthusiastic about this deal which certainly increases our risk profile but in the event that it does prove to be a successful acquisition ,it will also increase our reward scenario .We are now a debt free diverse niche manufacturer with revenues of £50mill & net profits of £3mill (total estimate ) + paying an 8% dividend & valued at under £9mill (not much more than we just paid for Eco ).I personally whetgervwe can continue trading ahead of expectations but I am not JG or out CFO & they should know best but -as you say ,JG has had his disasters so I am hoping that this won’t be one of them .
Presumably now only additional bolt ins will be considered & I still expect JG to seek an exit some time fairly soon -unless he prefers to keep his shares & prospective dividends of £100k+

[clocktower] 12/10/2022 09:35

Agreed base7 but I question the security of the dividend and how long will it be debt free for now if there is even the slightest wobble in trade.

[base7] 12/10/2022 09:04

I have a decent number & luckily bought some at 5p so my yield in these difficuly times is high & for new buyers today assuming no increase in the 1.1p divi, the yield is almost 8%.The recent trading update confirmed current year trading ahead of expectations & energy costs fixed so ,unless a disaster occurs over the Winter ( entirely possible on many levels)the dividend is likely to increase ,lets say modestly to 1.2p providing a prospective yield of approaching 9% for a debt free company with annualised revenues approaching £50mill & not profits of xxx.
Great exits for the Staples but remains to be seen whether it will be a great buy for us

[clocktower] 12/10/2022 08:40

None of you adding huge chunks then? That sort of says it all - a lack of real confidence in the basket full of different plastic toy makers.

This is parked or may even drop a lot if things do not go as well as you all hope.

I can envisage the excuses - higher energy costs than expected, increased transport costs, disruption due to the ongoing problems within China - High interest rates (as we have drained our cash pot) - illness - old age - Alzheimer's - just bad luck like the entry into the motor trade last time.

[base7] 12/10/2022 08:36

£4350 + earn out up to £1250,most of which based on current year

[charo] 12/10/2022 08:23

The cost is £4.35 million at pbt of £1 million.

[base7] 12/10/2022 08:21

Clearly a high margin niche business & in "normal " times may have been viewed very positively by The Market & if pre tax profits in excess of £1.125mill are sustainable it will be seen to be a great acquisition,especially as only 6.25 mill shares being issued,ie minimal dilution,although our cash pile will have substantially diminished & at times like these we dont want any dependency on bank lending.
It is not clear the extent of the export market , which clearly carries a currency risk while being a major supplier to the construction sector as it goes into recession is probably a bigger risk.It is not clear whether any or all of our raw materials are imported or whether our energy costs at our substantial facility are fixed.For a young couple The Staples have done brilliantly well but it wasnt clear to me whether they will stay to drive the company forward-or whether they will be leaving next year after the major part of their ear out is established.
I would have preferred a continuation of the low cost acquisition of companies facing liquidity & energy issues with potential to strip out unnecessary costs & employ economies of scale & this feels risky to me - especially if The Staples are going ( which is likely due to their strong wealth position ) & their website only refers to them - not a management team.
Shares issued at 16p should underpin our share price but that didnt happen following the last modest acquisition.

[this_is_me] 12/10/2022 08:00

It looks looks a good deal ; buying £0.9 million of after tax profit for £5.6 million with a NAV of £1.9 million.

They have several websites and a depot in Spain. I think that they are a good fit.

They are well positioned just off the M1

[clocktower] 12/10/2022 07:30

Is this going to be JG’s watershed?

Not the best of times to be doing a deal like this imo. Has he lost the plot again?

it’s like trying to watch five football matches at the same time and having to be the ref.

[charo] 10/10/2022 13:35

But what if you bought at 4/10. All relative.

[temelco] 10/10/2022 12:39

I wonder... use 625,000 shares at 16p, buy them back in at 14.5p. Hmmm

[clocktower] 29/9/2022 18:14

Charo, while this has recovered, you cannot describe it as a wonderful investment if you were a buyer at around 25p , so in light of the current world problems you need to be very cautious once again with CRU. While every deal looks good, the landscape is changing.

[base7] 29/9/2022 10:53

Good point Hatful & I too did company searches of all acquired companies & concluded that the trade debt is in keeping with the trading positions of each company ,ie liabilities in the normal course of business which should be met out of ongoing cashflow & as we are currently profitable our cash position should have improved since 1/5 ,after accounting for acquisition costs .Expensive creditors ,eg Manplas debt factoring ,must surely have been settled & closed which will improve the net contribution from them -apart from our using their space for Tatra Rotalac to expand into ,thereby eliminating the cost of seeking new &larger premises
Obviously bad debts need to be monitored closely & in this uncertain world we must be sure to look for yellow & red flags from Debtors .
7%+ yield sits comfortably with me right now when capital preservation is more valuable than speculative growth -of which I have more than enough in my portfolio

[hatfullofsky] 29/9/2022 10:39

Correct however what hasn't been disclosed is the amount of debt the acquisitions were carrying I've rechecked and it's GBP4m.The acquisitions were post year end so have reduced the cash pile and the contingent consideration will do the same. I have a number of around GBP 1m net cash post acquisition costs. Will post calculations later

[temelco] 29/9/2022 09:47

Hatful - according to the 30th April 2022 figures they had £7.6m cash. They haven't spent that and more will have accrued from trading

[hatfullofsky] 29/9/2022 09:27

I don't think we're debt free now, brokers estimating 5m of acquisition debt