City round-up: K3 Capital Group; Coral Products; Byotrol

Bolton-based professional services group, K3 Capital, has delivered a good performance during the first six months of its financial year, it said today.

K3, which is in “advanced discussions” with American private equity giant Sun European Partners over a £258m cash offer to buy the group, issued a trading update for the period to November 30, 2022.

It said it expects to report revenues in the region of £42m, which is an improvement on the £31.2m level in the same period last year, as well as profits which are “comfortably in line” with the board’s expectations.

The group said it maintains encouraging activity levels and pipelines across its brands for the second half of the year and management is confident in meeting the board’s expectations for the full year.

Chief executive, John Rigby, said: “The first six months of the year have been positive for K3C especially when taking into account the wide variety of challenges created by global events and the UK macro-economic environment.

“Our Q1 momentum has been maintained as we continue to deliver our growth strategy. The results are underpinned by diversified revenue streams and illustrate the benefits of our strategy of building a broader SME services group with greater visibility of future revenues.”

He said: “I am particularly pleased with the performance of the Business Sales Division. Despite the market headwinds, it has continued to grow and deliver strong results which includes some sizeable completions in H1 within our Corporate Finance function.

“Our Restructuring Division continues to see an uptick in activity levels and this is clearly a strong indicator of growing demand as the headwinds seen across the restructuring market now turn to tailwinds. As has been widely reported, the slower than expected return of the higher value administration work has resulted in a moderation in growth rates and margins. However, we would hope to see this improve as we look further forward.”

He added: “Whilst the Chancellor’s recent changes to the R&D scheme for SMEs were clearly not welcomed, we continue to drive client numbers within our Tax Division and we are hopeful that the negative impacts of the changes can be potentially offset by our continued organic growth.

“The board continues to look for complementary acquisitions within the professional services space. While cognisant of the negative outlook for the UK economy, we remain confident in the prospects of the group for the remainder of FY23.”

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Coral Products, Wythenshawe

Coral Products, the Wythenshawe-based plastics group, experienced a jump in first half revenues, and an increase pre-tax profits, for the six months to October 31, 2022.

Sales jumped by 147.9% to £17.6m, while pre-tax profits rose by 75.3% from £510,000 last year to £894,000. The interim dividend remains at 0.5p per share.

Coral revealed that, of the £17.6m in sales, £10.3m came from acquired businesses, which were Film & Foil Solutions, acquired for £3m in May, Alma Products (2.5m), also acquired in May, Manplas (£300,000), acquired in September, and Ecodeck (£5.5m), acquired in October.

The company has committed £2.5m to support future demand for new opportunities, including new injection moulding machines to create new lines, tooling for specific products and anticipated orders, and reconfigured warehouse space to create 5,000 sq ft of additional manufacturing capacity upgraded to BRC standard.

At the end of the reporting period, Coral had cash and cash equivalents of £3.8m, compared with £5.5m in the same period last year. Its property has also been revalued, resulting in an increase of £900,000 to £3.2m.

Coral said there is potential for further M&A activity, subject to meeting “value add” criteria, and, overall, it is well placed going into the second half of the financial year.

Executive chairman, Joe Grimmond, said: “These excellent results reflect our ongoing investment in future growth.

“Our objective is to build a specialist UK plastics business of scale, targeting profitable, high-demand sectors. We aim to drive growth both organically and via acquisitions, whilst maintaining our commitment to sustainable objectives.

“In the six-month period to 31 October 2022, we acquired four companies, all of which have performed well and we have committed £2.5m of capex into specific new business projects. At the same time, we remain prudent with a strong balance sheet, backed by freehold assets and cash, and we look to return value to shareholders via dividends and capital growth. And as a result, we are announcing an interim dividend of 0.5p.

“Like all businesses, we are mindful of the challenging economic environment, nevertheless, we believe Coral is in a good position going forward and we have yet to show the full benefit of our investments to date.”

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Daresbury-based hygiene group, Byotrol, experienced a fall in half year sales and an increase in pre-tax losses, it revealed in results covering the six months to September 30, 2022.

Revenues fell from £3.173m last year to £2.232m, while a pre-tax loss of £623,000 was higher than the previous year’s £141,000 loss. The company had cash of £1.2m at the period end.

It said its financial performance for the half year shows the results of an increasing focus on a smaller number of higher margin market segments, with fewer technologies and skus (stock keeping units) than during the pandemic.

Byotrol said feedback from its partners in existing IP agreements remains positive, with further regulatory approvals now being secured, especially in the US. This is yet to feed through to material royalty and commission income, but those partners continue to invest heavily in their markets so the company remains confident in future returns.

Executive chairman, David Traynor, said: “Byotrol is well positioned to grow in post-pandemic antimicrobial markets, as we continue to focus on regulatory-approved, high performance biocide technologies.

“We are now increasing market share from product sales in animal and human health as competitors withdraw for regulatory reasons, and within those markets we are increasing margins through sharper focus of resources, greater simplification of operations and enhanced economies of scale. These returns are set to grow further, boosted by ongoing high margin licensing agreements and alliances.”

He added: “We look forward to supporting Vivan Pinto in his new position of Byotrol CEO, and we sincerely thank John Langlands for his excellent contribution to our company.”