7th Jul 2006 15:38
Coral Products PLC07 July 2006 CORAL PRODUCTS PLC 2006 Preliminary Results Coral Products PLC, one of Europe's leading manufacturers and suppliers of mediapackaging for DVD, CD and Video, announces its preliminary results for the yearended 30 April 2006. Commenting upon the Company's trading Sir David Rowe-Ham, Chairman of Coral,said: "Trading remained difficult throughout the year as a result of reduced demandwithin the industry for media products. This, combined with the effects of adecline in operating margins resulting from higher raw material prices andincreases in the costs of power, resulted in an operating loss." Summary Results (unaudited) Year ended Year ended 30 April 2006 30 April 2005 Turnover £16.4m £18.7mOperating (loss)/profit £(0.77)m £0.21m(Loss)/earnings per share - basic (3.63)p 0.24p(Loss)/earnings per share - diluted (3.63)p 0.24pTotal dividend NIL 0.70pNet assets per share 52p 55p Regarding prospects for the current year, Sir David added: "Trading in the opening months of the new financial year remains difficult,however, measures taken to improve trade and operating margins appear to betaking effect. There is no doubt that the industry will continue to suffer fromover-capacity in the short term. By focusing on operating margins we are seekingto take advantage of any increase in demand in the future." Enquiries: Coral Products PLC Tel: 01942 272 882Warren Ferster, Managing Director Stephen Fletcher, Finance Director CHAIRMAN'S STATEMENT Turnover for the year ended 30 April 2006 amounted to £16.4 million compared to£18.7 million last year. Operating loss for the year was £769,000 compared witha profit of £210,000 last year. After interest charges of £208,000 the lossbefore tax was £977,000 (2005: profit of £16,000). Shareholders' funds at 30April 2006 amounted to £10.4 million (2005: £11.2 million), namely 52p per share(on an undiluted basis)- (2005: 55p). Dividend Your directors are not recommending a final dividend (2005: nil) and the totaldividend for the year is therefore nil (2005: 0.7p). Trading Trading remained difficult throughout the year as a result of reduced demandwithin the industry for media products. This, combined with the effects of adecline in operating margins resulting from higher raw material prices andincreases in the cost of power, resulted in an operating loss. During the year we completed our investment programme in DVD manufacturingcapacity, and continued to expand our product. We also finalised design changesto our DVD moulds, and this has improved our operating margins. Cash Flow The company's operating cash flow remains positive and reflects the highdepreciation expense of the equipment compared to the current low level ofcapital spending required Prospects Trading in the opening months of the new financial year remains difficult,however, measures taken to improve trade and operating margins appear to betaking effect. There is no doubt that the industry will continue to suffer fromover-capacity in the short term. By focusing on operating margins we are seekingto take advantage of any increase in demand in the future Board I have served as Chairman since the flotation of the company in 1995. Following11 years as Chairman, I feel the time has come to step down and, as such, willnot be seeking re-election at the forthcoming Annual General Meeting. I amdelighted to say that Geoffrey Piper, the senior independent non-ExecutiveDirector, has agreed to succeed me, and I wish him all success. Sir David Rowe-Ham Chairman 7 July 2006 MANAGING DIRECTOR'S REVIEW OF OPERATIONS The year to April 2006 was difficult as the industry was subjected to changes asa result of its over-capacity. This greatly affected operations and we sufferedas a result of the faster than expected reduction in demand for video boxes,which was only partly compensated by the increased DVD box sales. The situationwas also badly affected by increases in raw material prices, rises in the costsof power and pressure from competitive selling prices. Overall turnoverdecreased by 12% to £16.4 million and the company incurred an operating loss of£0.77m compared to an operating profit of £0.21m last year. Our sales mix now consists almost entirely of CD cases and DVD boxes and, whilstwe have looked to manufacture other technical moulded products, we foundreluctance from prospective customers to switch from their existing supplierseven though we could offer improved performance. It will undoubtedly take timefor us to attract customers in other product areas although we remain confidentin the quality of our facilities. DVD box sales again increased as a result of market demands and our improvedcapacity. The move from video has been completed and we have adapted ourproduction accordingly. The majority of our DVD sales are of the Red Tagsecurity box, which is held under licence. Sales of the Red Tag box willincrease as the format becomes more widely adopted by retailers. CD case sales were slightly lower than the previous year. This market is nowfirmly established and it is expected to continue for a number of years.Unfortunately margins were under continued pressure from increases in rawmaterial costs. The production of photo-finishing boxes ended during the year and housewaresales were disappointing. We have concentrated on finding other products tocomplement our media products range and have some promising signs ofbreakthrough, although it is a slow process. We remain confident in our serviceand performance capabilities and expect other technical moulded products tobecome a significant area in the future. We have now completed the capital investment into our DVD production linesfollowing upgrades to products in the year. The increased capacity will enableus to meet the industry forecasts for enhanced sales of this format. Whilst the recent period has probably been the most difficult for our industrywe are still optimistic and committed to its future. We have invested heavily inhaving the best available equipment to obtain the highest product specificationand we expect to benefit from these outlays once the market accelerates. WhilstI expect that trading conditions will only improve slowly, nonetheless I do seeimprovements as the DVD market continues to develop. I would like to thank Sir David Rowe-Ham, who is to retire at the forthcomingAnnual General Meeting, for his leadership of the Board and for his commitmentto the Company. I, along with my Board colleagues, wish him every success forthe future. I also express my gratitude to our staff and management for theirdedication and effort throughout the year. Warren Ferster Managing Director 7 July 2006 On 7 July 2006, the directors of Coral Products PLC approved the followingstatements of the unaudited preliminary results of the company for the financialyear ended 30 April 2006. Profit and Loss Account-------------------------for the year ended 30th April 2006------------------------------------ 2006 2005 £'000 £'000 (unaudited) (unaudited)Continuing operationsTurnover 16,360 18,732Cost of sales (12,823) (13,856) ------------ -----------Gross Profit 3,537 4,876 ------------ -----------Operating costsDistribution costs (585) (600)Administrative expenses (3,721) (4,066) ------------ -----------Operating (loss)/profit before exceptionalcosts (769) 728Exceptional costs-asset write-offs and earlyretirement costs - (518) ------------ -----------Operating (loss)/profit (769) 210Interest payable (208) (206)Interest receivable - 12 ------------ -----------(Loss)/profit before taxation (977) 16Taxation 246 33 ------------ -----------(Loss)/profit for the financial year (731) 49 ------------ ----------- (Loss)/earnings per shareBasic (3.63)p 0.24p ------------ -----------Diluted (3.63)p 0.24p ------------ ----------- Statement of Changes in Shareholders' Equity--------------------------------------------for the year ended 30th April 2006---------------------------------- 2006 2005 £'000 £'000 (unaudited) (unaudited) ------------ -----------Opening equity 11,171 11,246 ------------ -----------(Loss)/profit for the financial year (731) 49 ------------ -----------Total recognised (expense)/income for the year (731) 49Dividends - (141)Share based payment (charge)/credit (5) 10Issue of new shares - 7 ------------ -----------Changes in equity in the year (736) (75) ------------ -----------Closing equity 10,435 11,171 ------------ ----------- Balance Sheet-------------as at 30th April 2006--------------------- 2006 2005 £'000 £'000 (unaudited) (unaudited)ASSETSNon-current assetsIntangible assets 383 431Property, plant and equipment 12,560 12,730 ------------ ----------- 12,943 13,161 ------------ -----------Current assetsInventories 1,687 2,856Trade and other receivables 3,308 4,334Cash and cash equivalents 36 -Current tax assets 88 - ------------ ----------- 5,119 7,190 ------------ -----------LIABILITIESCurrent liabilitiesFinancial liabilities - borrowings 1,659 2,527Trade and other payables 2,859 4,539Current tax liabilities - 126 ------------ ----------- 4,518 7,192 ------------ ----------- Net current assets/(liabilities) 601 (2)Non-current liabilitiesFinancial liabilities - borrowings 1,774 587Deferred tax liabilities 1,335 1,401 ------------ ----------- 3,109 1,988 ------------ -----------NET ASSETS 10,435 11,171 ============ =========== SHAREHOLDERS' EQUITYOrdinary shares 201 201Share premium 4,558 4,558Other reserves 27 32Retained earnings 5,649 6,380 ------------ -----------TOTAL SHAREHOLDERS' EQUITY 10,435 11,171 ============ =========== Cash Flow Statement-------------------for the year ended 30th April 2006---------------------------------- 2006 2005 £'000 £'000 (unaudited) (unaudited)Cash inflows from operating activitiesOperating (loss)/profit (769) 210Profit on disposal of property, plant andequipment (40) -Depreciation of property, plant and equipment 2,179 2,660Amortisation of intangible assets 57 5Share based payments (5) 10Decrease in inventories 1,169 263Decrease/(increase) in trade and otherreceivables 1,026 (656)(Decrease)/increase in trade and other payables (1,695) 672 ------------ -----------Cash generated from operations 1,922 3,164 ------------ -----------Bank and loan interest paid (119) (194)Interest element of finance lease rentals (89) (22)Tax paid (34) (94) ------------ -----------Net cash from operating activities 1,680 2,854 ------------ -----------Cash flows from investing activitiesPurchase of property, plant and equipment (2,009) (1,438)Purchase of intangible assets (9) (420)Proceeds from disposal of property, plant andequipment 40 - ------------ ----------- Net cash used in investing activities (1,978) (1,858) ------------ -----------Cash flows from financing activitiesProceeds from issue of ordinary shares - 7Net proceeds from issue of new bank loans 1,131 -Repayment of bank loans (485) (160)Proceeds of new asset finance 1,614 790Finance lease principal payments (1,032) (1,180)Dividends paid to shareholders - (604) ------------ -----------Net cash generated/(used in) by financingactivities 1,228 (1,147) ------------ -----------Net increase/(decrease) in cash and cashequivalents 930 (151)Cash and cash equivalents at 1st May 2005 (1,440) (1,289) ------------ -----------Cash and cash equivalents at 30th April 2006 (510) (1,440) ------------ ----------- Cash and cash equivalents consist of:Cash at bank 36 -Bank overdraft (546) (1,440) ------------ ----------- (510) (1,440) ------------ ----------- Notes to the Financial Statements 1 Basis of Reporting These preliminary results have been prepared on the basis of the accounting policies set out in the Company's 2005 financial statements with the exception of the changes resulting from the adoption of International Financial Reporting Standards (IFRS) referred to in note 6 below. The preliminary results for the year ended 30 April 2006 are unaudited. The financial information shown in this report does not amount to full financial statements within the meaning of Section 240 of the Companies Act 1985 (as amended). The comparative figures for the year ended 30 April 2005 do not constitute statutory accounts. Apart from changes resulting from the adoption of International Financial Reporting Standards, these figure have been extracted from the audited accounts for that period which have been delivered to the registrar of companies and on which the auditors issued an unqualified report which did not contain a statement under either section 237 (2) or (3) of the Companies Act 1985. 2 Segmental information The company has identified geographical segments as its primary reporting format. All production is based in the United Kingdom. The geographical analysis of turnover is shown below: 2006 2005 £'000 £'000 Continuing operations UK 13,345 16,142 Rest of Europe 3,015 2,590 --------- ---------- 16,360 18,732 --------- ---------- 3 Taxation The charge for taxation on the profit for the financial year is as follows: 2006 2005 £'000 £'000 Continuing operations UK corporation tax at 30% (2005:30%) - 126 Adjustment in respect of prior years (180) (16) --------- ---------- Total current tax (180) 110 Deferred tax (66) (143) --------- ---------- Total taxation credit (246) (33) --------- ---------- 4 Earnings per share The calculation of (loss)/earnings per share is based on the (loss)/profit for the period attributable to shareholders of £(731,000) (2005: profit £49,000) and on 20,135,609 (2005: 20,127,474) 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 20,264,719 (2005: 20,202,651). 5 Directors' interests in shares On 29th July 2005 share options under the Coral Products PLC Savings Related Share Option Scheme were cancelled over 48,214 shares granted to Warren Ferster, 55,167 shares granted to Jonathan Ferster, 48,214 shares granted to Stuart Ferster, and 37,011 shares granted to Stephen Fletcher. On the same date share options under the Savings Related Share Option Scheme were granted to the directors as shown below: Date of grant Option Number of Exercise date price options Warren Ferster 29/7/2005 16.8p 98,363 30/7/2010 Jonathan Ferster 29/7/2005 16.8p 98,363 30/7/2010 Stuart Ferster 29/7/2005 16.8p 98,363 30/7/2010 Stephen Fletcher 29/7/2005 16.8p 56,398 30/8/2008 6 Reconciliation of net cash flow to movement in net debt 2006 2005 £'000 £'000 Net increase/(decrease) in cash and cash 930 (151) equivalents Net proceeds from issue of new bank loans (1,131) - Repayment of bank loans 485 160 Proceeds of new asset finance (1,614) (790) Finance lease principal payments 1,032 1,180 -------- -------- Movement in net debt for the period (298) 399 Net debt at beginning of period (3,099) (3,498) -------- -------- Net debt at end of period (3,397) (3,099) -------- -------- 7 First time adoption of IFRS The company reported under UK GAAP in its previous published financial statements for the year ended 30 April 2005. The following analysis shows a reconciliation of net assets and profit as reported under UK GAAP as at 30 April 2005 to the revised net assets and profit under IFRS as reported in these financial statements. In addition, there is a reconciliation of net assets under UK GAAP to IFRS at the transition date for the company, being 1 May 2004. The rules for first time adoption of IFRS are set out in IFRS1, 'First time adoption of International Financial Reporting Standards'. The standard requires the same accounting policies to be applied in the opening balance sheet and throughout periods presented in the first IFRS financial statements. The standard requires that the accounting policies used comply with IFRSs effective at the reporting date of the first published financial statements under IFRS, which is 30 April 2006. IFRS 1 allows exemptions from the application of certain IFRSs to assist companies in the transition process. The company has taken advantage of the exemption of adopting IAS 32, 'Financial instruments: disclosure and presentation' and IAS 39 'Financial instruments: recognition and measurement' from 1 May 2005 with no restatement of comparative information in the financial statements. The company has also applied IFRS 2, 'Share-based payment' to all grants of employee share options after 7 November 2002 that were unvested as of 1 May 2005. The reconciliation of the results from UK GAAP to IFRS Note Profit Profit after before tax Taxation tax Year ended 30th April 2006 £'000 £'000 £'000 Proforma UK GAAP (997) 251 (746) Share based payments a 5 (1) 4 Fair value of interest rate swaps b 15 (4) 11 IFRS (977) 246 (731) Year ended 30th April 2005 Proforma UK GAAP 41 26 67 Share based payments a (10) 3 (7) Fair value of interest rate swaps b (15) 4 (11) IFRS 16 33 49 The reconciliation of equity at 30th April 2005 from UK GAAP to IFRS Effect of transition to Note UK GAAP IFRS IFRS £'000 £'000 £'000 ASSETS Non-current assets Intangible assets c 418 13 431 Property, plant and equipment c 12,743 (13) 12,730 13,161 - 13,161 Current assets Inventories 2,856 2,856 Trade and other receivables 4,334 4,334 7,190 7,190 LIABILITIES Financial liabilities - borrowings b 2,512 15 2,527 Trade and other payables 4,539 4,539 Current tax liabilities 126 126 7,177 15 7,192 Net current assets/(liabilities) 13 (2) Non-current liabilities Financial liabilities - borrowings 587 587 Deferred tax liabilities a b 1,412 (11) 1,401 1,999 (11) 1,988 NET ASSETS 11,175 (4) 11,171 SHAREHOLDERS EQUITY Ordinary shares 201 201 Share premium 4,558 4,558 Capital redemption reserve 7 7 Profit and loss- share based payments a - 25 25 Retained earnings a b 6,409 (29) 6,380 TOTAL SHAREHOLDERS EQUITY 11,175 (4) 11,171 The reconciliation of equity at 1st May 2005 from UK GAAP to IFRS Effect of transition to Note UK GAAP IFRS IFRS £'000 £'000 £'000 ASSETS Non-current assets Intangible assets c - 16 16 Property, plant and equipment c 13,968 (16) 13,952 13,968 - 13,968 Current assets Inventories 3,119 3,119 Trade and other receivables 3,678 3,678 Cash and cash equivalents 14 14 6,811 6,811 LIABILITIES Financial liabilities - borrowings 2,524 2,524 Trade and other payables 4,367 4,367 Current tax liabilities 110 110 7,001 7,001 Net current liabilities (190) (190) Non-current liabilities Financial liabilities - borrowings b 988 988 Deferred tax liabilities 1,548 (4) 1,544 2,536 (4) 2,532 NET ASSETS 11,242 4 11,246 SHAREHOLDERS EQUITY Ordinary shares 201 201 Share premium 4,551 4,551 Capital redemption reserve b 7 7 Profit and loss- share based payments a - 15 15 Retained earnings a 6,483 (11) 6,472 TOTAL SHAREHOLDERS EQUITY 11,242 4 11,246 Explanation of reconciling items between UK GAAP and IFRS a) IFRS 2, 'Share-based payments' requires that an expense for equity instruments granted is recognised in the financial statements on their fair value at the date of grant. This expense, which is in relation to employee share option schemes is recognised over the vesting period of the scheme. b) IAS 39, 'Financial instruments-recognition and measurement' requires that interest rate swaps are recognised and measured at fair value and are designated as part of a hedging relationship. The company had two interest rate swaps in place at 30 April 2005. These had been obtained to reduce the risk exposure to changes in interest rates. The unrealised liability at 30 April 2005 was £20,000, included in current liabilities. No interest swaps remained at 30 April 2006. c) IAS 38, 'Intangible assets' requires that computer software is recognised and included as an intangible asset. This resulted in a movement from tangible assets to intangible assets of £16,000 at 1 May 2005. 7 Annual Report and Accounts The Annual Report and Accounts will be posted to shareholders before 26 August 2005. Copies will be available by writing to the Company Secretary, Coral Products PLC, North Florida Rd, Haydock Industrial Estate, Haydock, Merseyside WA11 9TP. (e-mail [email protected]). These Reports may also be downloaded or viewed through our web-site at www.coralproducts.com. 8 Annual General Meeting The Annual General Meeting will be held at the Midland Crowne Plaza Hotel, Peter Street, Manchester, M60 2DS on Friday 29 September 2006 at 12.00 noon This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Coral Products