Final Results

Coral Products PLC 3 July 2001 CORAL PRODUCTS PLC 2001 Preliminary Results Coral Products PLC, one of Europe's leading manufacturers and suppliers of media packaging for Digital Versatile Disc (DVD), Video and CD, announces its final results for year ended 30 April 2001. Commenting upon the Company's trading Sir David Rowe-Ham Chairman of Coral said: 'The last financial year has seen extremely testing conditions with the weakness of the euro against sterling continuing to reduce exports and also providing increasing competition in the UK from cheap imports. Poor demand in the last quarter mainly in the CD case market, which now represents some 50% of our media turnover, has been the primary reason for the profits shortfall. Despite this, we have maintained sales volume growth across all areas of our core media packaging business.' Summary Results Year Year % change ended ended 30 April 30 April 2001 2000 * Turnover £18.4m £15.0m + 23% * Pre-tax profits £2.0m £2.6m - 23% * Fully diluted earnings per share 6.62p 8.82p - 25% * Total dividend 3.35p 3.3p + 1.5% * Continued focus on the core media packaging business * Media packaging division turnover increased by 28% to £17.5m * Demand for media packaging has been good with the exception of the CD case market where demand has been poor in line with the industry as a whole * Coral's most recent and efficient DVD line to date to be in production shortly * Cashflow generation and balance sheet remain strong Regarding prospects for the current year, Sir David added: 'The beginning of the new financial year has started slowly and continues to see below average demand in the CD markets in line with the industry as a whole. Substantial investment totalling over £3million has been made in the year mainly in new CD and DVD production facilities which will enable us to remain competitive and take full advantage of future demand.' Enquiries: Coral Products PLC Tel: 01942 272 882 Warren Ferster, Managing Director Mobile: 07785 223 039 David Shalom, Finance Director Mobile: 07771 603995 Binns & Co Peter Binns/Carole Butcher Tel: 020 7786 9600 CHAIRMAN'S STATEMENT Turnover for the year ended 30 April 2001 increased by 23% to £18.4 million compared with £15.0 million last year, profit before tax over the same period fell to £2.0 million from £2.6million. Diluted earnings per share fell to 6.62p (2000: 8.82p ) with shareholders funds at 30 April 2001 increasing to £ 10.1 million (2000: £9.4million ), namely 49p per share ( 2000: 45p). Dividend Your directors are recommending a maintained final dividend of 2.3p per ordinary share (2000: 2.3p) to be paid on 24 September 2001 to all shareholders on the register on 31 August 2001. This together with the interim dividend of 1.05p per ordinary share already paid, makes a total dividend for the year of 3.35p ( 2000: 3.3p). Trading Poor demand in the last quarter mainly in the CD case market, which now represents some 50% of our media turnover, has been the primary reason for the profits shortfall. The last financial year has seen extremely testing conditions with the weakness of the euro against sterling continuing to reduce exports and also providing increasing competition in the UK from cheap imports. Despite this we have maintained sales volume growth across all areas of our core media packaging business through continued investment in our production facilities and increased emphasis on service and quality whilst remaining competitive on price. Prospects The beginning of the new financial year has started slowly and continues to see below average demand in the CD market in line with the industry as a whole. We have also seen a slowdown in demand for Video products in the first two months, although May and June are traditionally quiet months of the year. Client schedules do however indicate strong demand for video for the rest of the year and we expect to sell our full capacity following the winning of a number of new clients in the past few months. DVD sales continue to grow and we will shortly have on stream our latest and most efficient DVD line to date ready to take advantage of expected demand as we move towards the busier months leading up to Christmas 2001. Substantial investment totalling over £3million has been made in the year mainly in new CD and DVD production facilities which will enable us to remain competitive and take full advantage of future demand. We consider that capital investment this year is likely to be lower than in previous years. Our cashflow generation and balance sheet remain strong and we continue to look for new opportunities in our core media business and elsewhere which will add to shareholder value whilst maintaining a worthwhile dividend income stream. Sir David Rowe-Ham Chairman 3 July 2001 MANAGING DIRECTOR'S REVIEW OF OPERATIONS During the past 12 months we have continued to invest in state of the art automation to enhance and increase our productive media capacity. Unfortunately demand for CD cases, which now represents nearly 50% of our media turnover has been affected by an industry wide slow down in sales, particularly since January, and as a result we have not been able to fully utilise the new capacity brought on stream in the year. Demand elsewhere in the division has been good but has not been able to make up the shortfall in sales of CD cases. Media Packaging Turnover in the division rose by 28% during the year to £17.5m with increased sales volumes being achieved across our full product range. The increase in turnover also reflected higher unit selling prices achieved as a result of higher raw material costs when compared to the same period last year. CD sales volumes were increased by some 22% in the year but fell well short of our expectations as a result of a global slowdown in demand particularly since the start of 2001. A busy Easter period lasted only a few weeks and demand generally in the last quarter has been poor. Margins on CD also suffered in the last quarter with, in certain instances, selling prices falling faster than raw material prices as we sought to protect our market share with clients threatening to switch to cheaper imports. Video box demand has been strong with volumes increasing by 11% when compared with the same period last year. This has been achieved by gaining market share from our competitors who are increasingly focusing on the DVD case market which currently offers higher margins as compared to Video. Demand for DVD cases continued to build in the year with substantial growth in sales being achieved albeit from a small base when compared to the same period last year. Substantial new investment has been made in the last 12 months as we continue to expand our production capacity. Housewares The housewares division continued to provide a contribution to profits despite a 28% fall in turnover in the year to £949,000 as a result of lower demand from our principal customer. The division now represents less than 5% of overall turnover and continues to utilise any surplus production capacity available in the core media business. We continue to run the division as long as demand for our products is required by our customers. Outlook We continue to focus our efforts on the core media business and recent investment in new equipment has left us with a state of the art production facility which will enable us to remain competitive and take advantage of anticipated demand in the coming 12 months. Capital expenditure in the coming year is likely to be restricted to further enhancement and expansion of our DVD production facilities and will be at lower levels than previous years. The strength of sterling against the euro continues to make the trading environment tough with the constant threat of cheap imports putting pressure on margins particularly in the CD case market. I am confident of further growth in sales of Video and DVD cases in the coming year and remain hopeful that CD demand will pick up in the second half of 2001. I must express my gratitude to all members of staff and management for their hard work and endeavour in what has been the most difficult trading environment experienced in recent years. Warren Ferster - Managing Director 3 July 2001 Profit and Loss Account For the year ended 30 April 2001 2001 2000 £'000 £'000 Continuing operations Turnover 18,424 14,969 Cost of sales (12,736) (8,911) -------- -------- Gross Profit 5,688 6,058 Distribution costs (643) (613) Administration costs (2,803) (2,725) Other operating income 2 6 -------- -------- Operating profit 2,244 2,726 Interest receivable 5 17 Interest payable (246) (135) -------- -------- Profit on ordinary activities before 2,003 2,608 taxation Tax on profit on ordinary activities (614) (768) -------- -------- Profit on ordinary activities after 1,389 1,840 taxation Dividends (692) (674) -------- -------- Retained profit for the financial year 697 1,166 -------- -------- Basic earnings per ordinary share 6.77p 9.00p Diluted earnings per share 6.62p 8.82p -------- -------- The Company has no recognised gains and losses other than the profits above and therefore no separate statement of total recognised gains and losses has been presented. Reconciliation of Movements in Shareholders' Funds For the year ended 30 April 2001 2001 2000 £'000 £'000 -------- -------- Profit for the financial year 1,389 1,840 Dividends (692) (674) -------- -------- Net additions to equity shareholders' funds 697 1,166 Proceeds of shares issued 56 - -------- -------- 753 1,166 -------- -------- Equity shareholders' funds at beginning of year 9,383 8,217 -------- -------- Equity shareholders' funds at end of the year 10,136 9,383 -------- -------- Balance Sheet At 30 April 2001 2001 2000 £'000 £'000 --------- --------- Fixed assets Tangible assets 12,474 10,741 ---------- ---------- Current assets Stocks 1,893 2,515 Debtors 5,417 4,914 Cash at bank and in hand 395 191 ---------- ---------- 7,705 7,620 Creditors: amount falling due within one year (6,928) (6,662) ---------- ---------- Net current assets 777 958 ---------- ---------- Total assets less current liabilities 13,251 11,699 Creditors: amounts falling due after more than one (1,842) (1,242) year Provisions for liabilities and charges (1,273) (1,074) ---------- ---------- Net assets 10,136 9,383 ---------- ----------- Capital and reserves Called up share capital 206 204 Share premium account 4,497 4,443 Profit and loss account 5,433 4,736 ---------- ---------- Equity shareholders' funds 10,136 9,383 ---------- ---------- Cash Flow Statement For the year ended 30 April 2001 2001 2000 £'000 £'000 --------- --------- Net cash inflow from operating activities 3,589 3,190 --------- --------- Return on investments and servicing of finance Interest received 5 17 Interest paid (73) (33) Interest paid on finance leases (160) (96) -------- --------- (228) (112) -------- --------- Taxation (571) (635) -------- --------- Capital expenditure and financial investment Purchase of tangible fixed assets (3,274) (3,288) Sale of tangible assets 7 20 --------- --------- (3,267) (3,268) --------- ---------- Equity dividends paid (687) (612) --------- --------- Net cash outflow before financing (1,164) (1,437) --------- --------- Financing Issue of Share Capital 56 - Repayments of principal under finance leases (1,284) (928) Proceeds of sale and leaseback 2,289 1,800 Repayment of loans (193) (41) Inception of new loans 500 - --------- --------- 1,368 831 --------- --------- Increase/ (Decrease) in cash 204 (606) --------- --------- Other Financial Statements For the year ended 30 April 2001 Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 2001 2000 £'000 £'000 --------- --------- Operating Profit 2,244 2,726 Depreciation on tangible fixed assets 1,536 1,284 Profit on disposal of tangible fixed assets (2) (5) Release of grant income (1) (1) Decrease/(Increase) in stocks 622 (1,168) Increase in trade debtors (574) (1,695) Decrease in other debtors, prepayments and accrued income 71 2 (Decrease)/increase in trade creditors (299) 1,757 Increase in other taxation and social security creditors 126 5 (Decrease)/increase in accruals and deferred income (48) 79 (Decrease)/increase in other creditors (86) 206 -------- -------- Net cash inflow from operating activities 3,589 3,190 -------- -------- Reconciliation of Net Cash Flow to Movement in Net Debt 2001 2000 £'000 £'000 --------- --------- Increase/ (Decrease) in cash in the year 204 (606) Net cash outflow from debt and lease financing (1,312) (831) --------- --------- Change in net debt resulting from cashflows (1,108) (1,437) Net debt at 1 May 2000 (1,927) (490) ---------- ---------- Net debt at 30 April 2001 (3,035) (1,927) --------- --------- Notes 1. Financial Statements The foregoing financial information is derived from the company's statutory accounts but does not constitute such statutory accounts for the financial years ended 30 April 2000 and 30 April 2001within the meaning of Section 240 of the Companies Act 1985 ('the Act') and has not been reported on, but has been agreed by the company's auditors. Statutory accounts for 2000 have been delivered to the Registrar of Companies, and those for the year ended 30 April 2001 will be delivered following the company's Annual General Meeting. The auditors have reported on the accounts for 2000; their report was unqualified and did not contain statements under Section 237(2) or (4) of the Companies Act 1985. 2. Dividends A final dividend of 2.3p net is recommended by the directors payable on 24 September 2001 to all shareholders on the register on 31 August 2001. 3. Earnings per Ordinary Share The calculation of earnings per share is based on the profit on ordinary activities after taxation namely £1,389,000 (2000: £1,840,000) and on 20,522,000 (2000: 20,440,000) ordinary shares. Diluted earnings per share is based on the same earnings and on the weighted average number of ordinary shares of 20,995,000 (2000: 20,856,000). 4. Annual Report and Accounts The Annual Report and Accounts will be posted to shareholders on 20 August 2001 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 mail@coralproducts.com). The reports may also be viewed on our web site at www.coralproducts.com after posting to shareholders. 5. Annual General Meeting The Annual General Meeting will be held at the Crowne Plaza Hotel, Manchester, on Friday 21 September 2001 at 12.00 noon.

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