Unigel Group PLC - Final Results

Unigel Group plc

(the "Group" or the "Company")

Final Results and Notice of AGM

Unigel Group plc (AQSE: UNX), the manufacturer and distributor of materials used in the manufacture of telecommunication fibre optic cables announces its audited final results for the year ended 31 December 2023.

The turnover for the year for the Group was £28,465,064 (six months to December 2022: £18,828,803) and the profit after tax was £608,806 (six months to December 2022: £323,547). The gross profit percentage was 14.4% (2022: 11.8%).

The final report and accounts will be available on the Company's website shortly.

Notice of AGM

The Company announces that the Annual General Meeting ("AGM") of the Company will be held on 21 June 2024 at 11:00 a.m. at the offices of Shakespeare Martineau LLP at 6th Floor, 60 Gracechurch Street, London, EC3V 0HR, United Kingdom.

A notice of AGM, together with the form of proxy, will be sent to the shareholders of the Company ("Shareholders") today. The notice of AGM will also be shortly available for inspection on the Company website, http://www.unigel.com.

Full details of the operation and arrangements for the AGM are set out in the notice of AGM.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Enquiries:  

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

Notes to Editors

Unigel Group plc is the holding company whose operating subsidiaries, Unigel (UK) Limited ("Unigel") and Unitape Limited ("Unitape") manufacture and distribute materials used in the manufacture of telecommunication fibre optic cables.

Unigel formulates, manufactures, and markets thixotropic gels primarily to the fibre optic cable industry. In addition, it also makes specialty gel products for the construction, green energy, and high voltage transmission apparatus markets.

Unitape is one of the largest domestic manufacturers and suppliers of laminated steel tapes to the fibre optic cable industry in North America.

CHAIRMAN'S STATEMENT

The year 2023 was probably one of the most challenging years for the global fibre optic cable industry which are the main markets for our Group's products and services.  According to the CRU Report, global fibre optic cable market declined 6.6 % in 2023 compared to a 12.6 percent growth in 2022, the worst industry decline since the dotcom bubble of 2000.  Key driving factors were high interest rates, bearish capital investment sentiment of the global telecoms industry, and an uncertain economic outlook caused by continued high inflation, geopolitical conflicts, and weak consumer sentiment around the world.

US interest rate increased from 0.25% in the spring of 2022 to 5.25% in the summer of 2023.  Weak economic outlook combined with record high interest rate dampened capital investment sentiment for telecommunications network infrastructure globally. As a result, we witnessed the biggest global fibre optic cable industry contraction since 2000 and this adversely affected our business performance, especially during the second half of 2023.

Group revenue in 2023 was £ 28.5 million compared to £36.8 million in 2022. Our aggregate profit after tax was £0.44 million in 2023, down £0.58 million from £1.02 million, or 56.9% compared to the preceding period. We recorded good revenue performance in the first half of 2023 but saw a precipitous fall in second half revenue.

Overall business performance was weaker in 2023 for both our thixotropic gel and steel tape businesses:

·    Thixotropic Gel Our gel business volume decreased approximately 20.0% compared to year 2022, with a    corresponding decrease in profit after tax of 18.0% over the same period.

·    Steel Tapes Our laminated tapes business also registered revenue decline of 24.8%, with a corresponding decrease in profit after tax of 36.0 % over the same period.

Profit was affected by higher logistics cost in the second half of the year due to instability in the Middle East which affected shipping through the Suez Canal, and the Panama Canal which was affected by lack of rainfall.

Our overall Group working capital interest cost increased 63.4% due to global increase in interest rates, compared to previous year-financing charges increased from 0.22% of revenue to 0.45% of revenue.

In January 2024, the Company entered into a Sales & Purchase Agreement (SPA) to acquire the 40.0% equity stake in Unigel (UK) Limited ("UUK") that it did not own from Unigel Compounds Sdn Bhd for an agreed sum of £1.3 million. The purchase transaction is due to complete on 29 May 2024 through internally generated funds.  The Group believe a wholly owned UUK will enable the Group to increase operational efficiency and thus contribute to cost structure improvement over the medium term.

The increasing geopolitical friction between the US and China dominated the headlines over the past year.  Recent trade barriers by way of increased tariffs imposed by the United States on imports from China and other countries have had a negative impact on the Group's supply chain sourcing framework.  Our management team is focused on de-risking and diversifying our raw material supply chain away from China where possible, and we are working closely and involving our customer base in this crucial initiative.

Despite continued global economic and geopolitical uncertainties, Unigel Group continue to believe that there are substantial opportunities for us to grow organically and through acquisitions and industry consolidation in the coming years.  We remain steadfast in our growth narrative-and this year we leveraged our status as an AQUIS Stock Exchange issuer to successfully complete our 40.0% acquisition of UUK.  We will continue to access the capital markets and create an acquisition currency to fund future growth in the years to come.

Over the past months of 2024, we are encouraged by the emergence of "green shoots" in our businesses, especially in the US and Chinese markets.  However, we remain cautious-high interest rates, geopolitical conflicts, and recessionary pressure in some key markets continue to pin us down in a defensive posture.  I am reassured by the plans and actions of our committed management team as they pivot forward to improve cost and productivity, introduce new products to the marketplace and maintain our future business competitiveness.

On behalf of my colleagues at the Board, I would like to express our gratitude to our shareholders for the continued support.

UNIGEL GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME       

YEAR ENDED 31 DECEMBER 2023

UNIGEL GROUP PLC

CONSOLIDATED BALANCE SHEET

31 DECEMBER 2023

UNIGEL GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

31 DECEMBER 2023

UNIGEL GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT

PERIOD ENDED 31 DECEMBER 2023

UNIGEL GROUP PLC

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

PERIOD ENDED 31 DECEMBER 2023

1.    RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES

2.    ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT

UNIGEL GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

PERIOD ENDED 31 DECEMBER 2023

1.    GENERAL INFORMATION

The company is a public limited company incorporated in England and Wales (registered number 13934232) and its registered office is Unigel House, 7 Park View, Alder Close, Eastbourne, BN23 6QE.

The principal activity of the group is the manufacture and sale of cable filling and flooding compounds and associated pumping and delivery equipment.

The information above has been extracted from the Company's final report and accounts and therefore references to page numbers and notes may not be complete.  Shareholders should read the full version of the final report for the period ended 31 December 2023 which is available on the Company's website, http://www.unigel.com.

2.    ACCOUNTING POLICIES

Accounting convention and basis of preparation

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and the Companies Act 2006.

The preparation of the consolidated financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the group's accounting policies. Information is given in the accounting policies noted below. 

Going concern

The group meets its working capital requirements through the receipt of revenue from global sales of cable filling and flooding compounds. Ultimately the receipt of revenue depends upon the availability of liquidity for the group's customers and the level of activity in the telecommunications market.

The directors prepare annual budgets and forecasts in order to ensure that they have sufficient liquidity in place for the business and have considered the effect on the group's business from different scenarios in various countries with which it trades. Based on this assessment, and having regard to the post year-end cash reserves and trading levels of the group, related party funding and the borrowing facility available from the group's bankers, the directors believe they have a reasonable expectation that the group will have adequate resources to continue to discharge its debts and liabilities as they fall due for the foreseeable future. The directors therefore consider it appropriate to continue to adopt the going concern basis of accounting in preparing the financial statements.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the company and its subsidiary undertakings as at the balance sheet date. The financial statements of the subsidiaries are prepared to the same reporting date as the company. The subsidiaries are consolidated from the date of acquisition, being the date on which the group obtained control.

In preparing the consolidated financial statements, intra-group balances, transactions and unrealised gains or losses are eliminated in full.

3.   AGM

The AGM of the Company will be held on 21 June 2024 at 11:00 a.m. at the offices of Shakespeare Martineau LLP at 6th Floor, 60 Gracechurch Street, London, EC3V 0HR, United Kingdom.

4.    POST BALANCE SHEET EVENT

On 23 January 2024 Unigel Technologies Limited, a subsidiary of the company, entered into an agreement with Unigel Compounds Sdn Bhd to purchase their 40% shareholding in Unigel (UK) Limited which made Unigel Technologies Limited the 100% shareholder upon completion of the purchase transaction that is due to complete on 29 May 2024. The company now has a 100% holding, either directly or indirectly, in all of its subsidiaries.