Coral Products Regulatory News (CRU)

9 Dec 2005 07:00

Coral Products PLC09 December 2005 CORAL PRODUCTS PLC 2005 Interim Results Coral Products PLC, one of Europe's leading manufacturers and suppliers of mediapackaging for DVD, Video and CD, announces interim results for the six monthsended 31 October 2005. In his statement to shareholders, Chairman Sir David Rowe-Ham said: "Trading for the first half of our financial year continued to suffer from theeffects of reduced sales, higher material prices, and increased energy costs.The industry moved away from Video much faster than could have been foreseen andwe have had to devote considerable resources in adapting to this change. We arenow in a much stronger position where we can service anticipated increases indemand for DVD boxes." "Sales for DVD boxes increased significantly during the period, albeit at lowermargins, and there was also a further increase in CD case sales." Summary Six months Six months ended ended 31 October 31 October 2005 2004 Turnover £ 9.3m £ 10.0m Pre-tax profits £ 3,000 £ 560,000 Earnings per share 0.01p 1.93p Interim dividend NIL 0.70p * DVD box sales continued to increase significantly, albeit at lower margins. * CD case sales recover. * New product lines to extend range of DVD and CD cases. * Reduced margins due to high raw material price increases. * Costs of energy supplies rise. Regarding prospects for the current year, Sir David added: "We do not expect trading to improve substantially in the second half of theyear, however, we are seeing signs of gradual improvement. We are now set totake advantage of further growth in the DVD market and, as conditions for theindustry improve, we are confident we will share in that progress." Enquiries: Coral Products PLC Tel: 01942 272 882 Warren Ferster, Managing Director Stephen Fletcher, Finance Director CHAIRMAN'S STATEMENT Trading for the first half of our financial year continued to suffer from theeffects of reduced sales, higher material prices and increased energy costs. Theindustry moved away from Video much faster than could have been foreseen and wehave had to devote considerable resources in adapting to this change. We are nowin a much stronger position where we can service the anticipated increases indemand for DVD boxes and renewed interest in CD sales. Raw material prices increased throughout the period as a result of increasedworld-wide demand and reduced production output. There have recently beenindications that the peaks have been reached and raw material prices areexpected to ease in 2006. Sales for DVD boxes increased significantly during the period, albeit at lowermargins, and there was also a further increase in CD case sales. Overallturnover, however, fell due to a large reduction in demand for Video box salesand photo-finishing box sales. We are extending our range of both DVD and CD cases in the near future by addingmultiple product cases. This will improve margins and enable us to meet therequirements of more customers. By the end of our financial year we will havecompleted our capital projects and will have converted a substantial part of ourproduction from Video sales to DVD. We now have sufficient capacity to meetincreases in demand. Trading Turnover for the six months ended 31 October 2005 was £9.3 million (2004: £10.0million) and pre-tax profits decreased to £3,000 (2004: £556,000). Dilutedearnings per share were 0.01p (2004: 1.93p). Interim Dividend No interim dividend has been declared (2004: 0.70p) for the period to 31 October2005. Prospects We do not expect trading to improve substantially in the second half of theyear, however, we are seeing signs of gradual improvement. We are now set totake advantage of further growth in the DVD market and, as conditions for theindustry improve, we are confident we will share in that progress. IFRS The financial information within this interim report is presented in accordancewith International Financial Reporting Standards. The comparative informationfor the year to 30 April 2004 and the half year to 31 October 2004 has beenrestated under these standards. There were no material adjustments to thecompany's accounts. Sir David Rowe-Ham 9 December 2005 Profit and Loss Account - (unaudited) Notes Half year to Half year to Year to for the half year to 31 31 October 31 October 30 AprilOctober 2005 2005 2004 2005 £'000 £'000 £'000 ----------- ----------- -----------Revenue (2) 9,298 10,014 18,732Cost of sales (6,460) (6,613) (13,856) --------- -------- -------Gross profit 2,838 3,401 4,876 ---------- --------- -------Operating expenses (2,734) (2,741) (4,641) ---------- --------- -------Operating profit beforeexceptionals 104 660 753Exceptional costs - - (518) ---------- --------- -------Operating profit 104 660 235 Interest receivable - - 12Interest payable (101) (104) (206) ------ ------- -------Profit on ordinaryactivities 3 556 41before taxTax on profit on ordinaryactivities (3) (1) (167) 26 ------ ------- -------Profit for the periodattributable to shareholders 2 389 67 ------ ------- ------- Basic earnings per share (4) 0.01p 1.93p 0.33p --------- --------- --------Diluted earnings per share (4) 0.01p 1.93p 0.33p --------- --------- -------- All activities derive from continuing operations. Balance Sheet - (unaudited) As at As at As atas at 31 October 2005 31 October 31 October 30 April 2005 2004 2005 £'000 £'000 £'000 ----------- ----------- -----------Non-current assets Intangible assets 397 - 418Property, plant and equipment 13,131 13,923 12,743 --------- ---------- ---------Total non-current assets 13,528 13,923 13,161 --------- ---------- --------- Current assets Inventories 1,814 2,493 2,856Trade and other receivables 6,023 6,053 4,334Cash and cash equivalents - - - ----------- ----------- -----------Total current assets 7,837 8,546 7,190 ----------- ----------- ---------- Total assets 21,365 22,469 20,351 ------------ ----------- ---------- Current liabilities Financial liabilities - borrowings 3,278 3,288 2,512Trade and other payables 4,534 5,597 4,539Current tax payable 128 110 126 --------- ---------- ----------Total current liabilities 7,940 8,995 7,177 --------- ---------- ---------- Non current liabilitiesFinancial liabilities - borrowings 836 430 587Deferred tax liabilities 1,412 1,548 1,412 ---------- ---------- ----------Total non-current liabilities 2,248 1,978 1,999 ---------- ---------- ---------- Net assets 11,177 11,496 11,175 ---------- ---------- -----------Equity Share capital 201 201 201Share premium 4,558 4,557 4,558Capital redemption reserve 7 7 7Retained earnings 6,411 6,731 6,409 ----------- ----------- -----------Total equity 11,177 11,496 11,175 ----------- ----------- ----------- Statement of Changes in Shareholders' As at As at As atEquity - (unaudited) 31 October 31 October 30 April 2005 2004 2005 £'000 £'000 £'000 -------- -------- --------Equity at start of the period 11,175 11,242 11,242Profit for the period 2 389 67Dividends - (141) (141)Proceeds of shares issued - 6 7 --------- --------- ---------Equity at end of the period 11,177 11,496 11,175 --------- --------- --------- Statement of Recognised Income and Expense As at As at As at- (unaudited) 31 October 31 October 30 April 2005 2004 2005 £'000 £'000 £'000 -------- -------- -------- Profit for the period 2 389 67 -------- -------- ---------Total recognised income and expenseattributable to shareholders 2 389 67 --------- -------- --------- Cash Flow Statement - (unaudited) Half year to Half year to Year tofor the half year to 31 October 31 October 31 October 30 April2005 2005 2004 2005 £'000 £'000 £'000 --------- -------- --------Cash flow from operatingactivities Operating profit for the period 104 660 235Adjustments for:Depreciation of property, plantand equipment 1,097 1,123 2,663Amortisation of intangibleassets 21 - 2Operating cash flows beforemovements in working capital ----------- ----------- ---------- 1,222 1,783 2,900Decrease in inventories 1,042 626 263Increase in trade and otherreceivables (1,689) (2,375) (656)(Decrease)/increase in trade andother payables (16) 1,036 657 ----------- ---------- ---------Cash generated from operations 559 1,070 3,164 Interest paid (89) (99) (216)Income taxes paid/(received) - 344 (94) ---------- --------- --------Net cash from operatingactivities 470 1,315 2,854 ---------- --------- --------- Cash flows from investingactivitiesPurchases of intangible assets - - (420)Purchases of property, plant andequipment (1,485) (1,078) (1,438) ---------- ---------- ---------Net cash used in investingactivities (1,485) (1,078) (1,858) ---------- ---------- ---------Cash flows from financingactivitiesProceeds from issue of sharecapital - 6 7Net proceeds from bank loans 895 - -Proceeds of new asset finance 942 490 790Repayment of loans (73) (74) (160)Repayment of capital element offinance leases (600) (559) (1,180)Dividend paid - (463) (604) ---------- ---------- ---------Net cash generated/(used in)financing activities 1,164 (600) (1,147) ---------- ---------- --------- Net increase/(decrease) in cashand cash equivalents 149 (363) (151) Cash and cash equivalents atstart of period (1,440) (1,289) (1,289) --------- ---------- --------- Cash and cash equivalents at endof period (1,291) (1,652) (1,440) --------- ---------- --------- Notes to the Interim Financial Statements 1. Basis of preparation From 2005 the company will prepare its accounts in accordance with International Financial Reporting Standards ('IFRS') as adapted for use in the European Union. The company's first IFRS based results are its interim results for the six months ending 30 April 2005. As a result, the comparative amounts included in these Interim Financial Statements have been prepared under IFRS. These preliminary IFRS statements will form the basis of the comparative information in the company's first IFRS Annual Report. The company has applied IFRS1 in preparing these statements. The date of transition was 1 May 2004 and the company prepared its opening balance sheet at that date. IFRS are subject to continuing review and amendment by the International Accounting Standards Board ('IASB') and endorsement by the European Commission and therefore are subject to change. As a result, the company has used its best endeavours in making assumptions about those IFRS expected to be available for adoption when the first IFRS Annual Report is prepared for the year ending 30 April 2006. The Interim Financial Statements have been prepared on the historic cost basis, except that derivative financial instruments are stated at their fair value. As permitted under IFRS1 the company has elected not to apply IAS 32 and IAS 39 regarding presentation and treatment of financial instruments prior to 30 April 2005. The financial information shown for the year ended 30 April 2005 does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The company's financial statements prepared under UK GAAP for that year have been delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified and did not contain a statement under either section 237(2) or (3) of the Companies Act 1985. The principal accounting policies applied in preparing the Interim Financial Statements are set out below: Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes. Sales of goods are recognised when goods are shipped and title has passed. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Foreign currencies Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on translation are included in the profit and loss account for the period. Pensions The company contributes to defined contribution pension schemes and the pension charge represents the amount payable for that period. Taxation Current tax is provided at amounts expected to be paid (or recovered) using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided in full, using the liability method, in temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements. Deferred tax is determined using tax rates that have been enacted by the balance sheet date and are expected to apply when the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment losses. Depreciation is charged so as to write off the cost of the assets over their estimated useful lives, using the straight-line method, on the following bases: Moulds - 10-25% Plant and machinery - 10% Fixtures and fittings - 10-33% Freehold land and buildings - 2% The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised as income. Intangible assets Intangible assets comprise licence fees paid in advance for the use of trade marks and technology. Such assets are defined as having finite useful lives and the costs are amortised on a straight-line basis over their estimated useful lives. Intangible assets are reviewed for impairment whenever there is an indication that the carrying value may be impaired. Inventories Inventories are stated at the lower of cost and net realisable value. The cost of finished goods manufactured includes appropriate materials, labour and production overhead expenditure. Net realisable value is the estimated selling price less the costs of disposal. Cash and cash equivalents Cash and cash equivalents comprise cash and bank balances together with bank overdrafts that are repayable on demand. Financial instruments Financial instruments are used to hedge the company's exposure to foreign exchange and interest rate risk. The company uses forward currency contracts and interest rate swaps to reduce exposure and these are stated in the balance sheet at fair value. The fair value of interest rate swaps is the estimated amount that would be paid or received to terminate the derivative. The company does not enter into speculative financial instruments. 2. Segmental information The company's reporting format is geographical. All production is based in the United Kingdom. The geographical analysis of turnover is shown below: Half year to Half year to Year to 31 October 31 October 30 April 2005 2004 2005 £'000 £'000 £'000 ----------- ----------- -------- United Kingdom 7,766 8,593 16,142 Rest of Europe 1,532 1,421 2,590 ----------- ----------- ---------- 9,298 10,014 18,732 Turnover by business activity: ----------- ----------- ----------- Media packaging 9,298 10,014 18,732 ----------- ----------- ----------- 3 Taxation The charge for taxation on the profit for the period is charged at 30% being the estimated effective rate for the full financial year. 4 Earnings per share The calculation of basic earnings per share is based on the profit for the period available to shareholders of £2,000 (2004: £389,000) and on 20,135,609 (2004: 20,119,472) ordinary shares, being the weighted average number of ordinary shares in issue and ranking for dividend during the period. Calculation of fully diluted earnings per share is based upon a fully diluted weighted average number of ordinary shares of 20,295,787 (2004: 20,153,832). 5 Reconciliation of net cash flow to movement in net debt Half year to Half year to 31 Year to 31 October 31 October 30 April 2005 2005 2005 £'000 £'000 £'000 Net increase/(decrease) in cash 149 (363) (151) and cash equivalents Net cash flow from debt and lease (1,164) 143 550 financing --------- -------- --------- Change in net debt resulting from (1,015) (220) 399 cash flows Net debt at beginning of period (3,099) (3,498) (3,498) --------- --------- -------- Net debt at end of period (4,114) (3,718) (3,099) --------- --------- -------- 6 Explanation of transition to IFRS The policies set out below have been consistently applied to all the periods presented except for those relating to the classification and measurement of financial instruments. The company has made use of the exemption available under IFRS to apply IAS 32 and IAS 39 from 1 May 2005. The significant IFRS accounting policies that have been considered by the company are the following: IFRS 2 Share-based payments In accordance with IFRS 2 the company has reflected a change reflecting the fair value of outstanding share options granted to employees since 7 November 2002. The fair value was assessed but the resulting adjustment was not significant. IAS 1 Presentation of financial statements IAS 1 requires all assets and liabilities to be split between current and non-current portions. The company has examined each asset class and has concluded that no adjustment is necessary. IAS12 Income taxes IAS 12 requires entities to calculate deferred taxation based on temporary differences, which are defined as the difference between carrying values and their tax base. The company already provides for deferred taxation on all taxable temporary differences. IAS 17 Leases Under IAS 17 a lease is classified as a finance lease if it transfers substantially all the risks and rewards of ownership to the lessee. Assets held under finance leases and the related lease obligations are recorded in the balance sheet at the lower of the fair value and the present value of the minimum lease payments at inception of the leases. The company has considered its leases and no adjustment was necessary. IAS 19 Employee benefits IAS 19 requires accrual to be made for accrued holiday entitlement when there is an obligation to pay. The company already makes an accrual for this expense under UK GAAP and therefore no adjustment was necessary. The company does not operate a defined benefit pension scheme. IAS 39 Financial instruments IAS 39 covers the recognition, measurement and derecognition of financial instruments, in addition to rules on hedge accounting. The company has elected not to apply IAS 39 prior to 30 April 2005. The company has not identified any significant adjustments that would be required under IAS 39. 7 Interim report The interim report will be posted to all shareholders on 14 December and will be made available on the company's website at www.coralproducts.com and at the company's registered office at North Florida Road, Haydock Industrial Estate, Haydock, Merseyside WA11 9TP. This information is provided by RNS The company news service from the London Stock Exchange