Final Results
Coral Products PLC
07 July 2006
CORAL PRODUCTS PLC
2006 Preliminary Results
Coral Products PLC, one of Europe's leading manufacturers and suppliers of media
packaging for DVD, CD and Video, announces its preliminary results for the year
ended 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 demand
within the industry for media products. This, combined with the effects of a
decline in operating margins resulting from higher raw material prices and
increases 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 £18.7m
Operating (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 0.24p
Total dividend NIL 0.70p
Net 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 be
taking effect. There is no doubt that the industry will continue to suffer from
over-capacity in the short term. By focusing on operating margins we are seeking
to take advantage of any increase in demand in the future.'
Enquiries:
Coral Products PLC Tel: 01942 272 882
Warren 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 with
a profit of £210,000 last year. After interest charges of £208,000 the loss
before tax was £977,000 (2005: profit of £16,000). Shareholders' funds at 30
April 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 total
dividend for the year is therefore nil (2005: 0.7p).
Trading
Trading remained difficult throughout the year as a result of reduced demand
within the industry for media products. This, combined with the effects of a
decline in operating margins resulting from higher raw material prices and
increases in the cost of power, resulted in an operating loss.
During the year we completed our investment programme in DVD manufacturing
capacity, and continued to expand our product. We also finalised design changes
to our DVD moulds, and this has improved our operating margins.
Cash Flow
The company's operating cash flow remains positive and reflects the high
depreciation expense of the equipment compared to the current low level of
capital 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 be
taking effect. There is no doubt that the industry will continue to suffer from
over-capacity in the short term. By focusing on operating margins we are seeking
to take advantage of any increase in demand in the future
Board
I have served as Chairman since the flotation of the company in 1995. Following
11 years as Chairman, I feel the time has come to step down and, as such, will
not be seeking re-election at the forthcoming Annual General Meeting. I am
delighted to say that Geoffrey Piper, the senior independent non-Executive
Director, 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 as
a result of its over-capacity. This greatly affected operations and we suffered
as 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 situation
was also badly affected by increases in raw material prices, rises in the costs
of power and pressure from competitive selling prices. Overall turnover
decreased 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, whilst
we have looked to manufacture other technical moulded products, we found
reluctance from prospective customers to switch from their existing suppliers
even though we could offer improved performance. It will undoubtedly take time
for us to attract customers in other product areas although we remain confident
in the quality of our facilities.
DVD box sales again increased as a result of market demands and our improved
capacity. The move from video has been completed and we have adapted our
production accordingly. The majority of our DVD sales are of the Red Tag
security box, which is held under licence. Sales of the Red Tag box will
increase as the format becomes more widely adopted by retailers.
CD case sales were slightly lower than the previous year. This market is now
firmly established and it is expected to continue for a number of years.
Unfortunately margins were under continued pressure from increases in raw
material costs.
The production of photo-finishing boxes ended during the year and houseware
sales were disappointing. We have concentrated on finding other products to
complement our media products range and have some promising signs of
breakthrough, although it is a slow process. We remain confident in our service
and performance capabilities and expect other technical moulded products to
become a significant area in the future.
We have now completed the capital investment into our DVD production lines
following upgrades to products in the year. The increased capacity will enable
us to meet the industry forecasts for enhanced sales of this format.
Whilst the recent period has probably been the most difficult for our industry
we are still optimistic and committed to its future. We have invested heavily in
having the best available equipment to obtain the highest product specification
and we expect to benefit from these outlays once the market accelerates. Whilst
I expect that trading conditions will only improve slowly, nonetheless I do see
improvements as the DVD market continues to develop.
I would like to thank Sir David Rowe-Ham, who is to retire at the forthcoming
Annual General Meeting, for his leadership of the Board and for his commitment
to the Company. I, along with my Board colleagues, wish him every success for
the future. I also express my gratitude to our staff and management for their
dedication and effort throughout the year.
Warren Ferster
Managing Director
7 July 2006
On 7 July 2006, the directors of Coral Products PLC approved the following
statements of the unaudited preliminary results of the company for the financial
year ended 30 April 2006.
Profit and Loss Account
-------------------------
for the year ended 30th April 2006
------------------------------------
2006 2005
£'000 £'000
(unaudited) (unaudited)
Continuing operations
Turnover 16,360 18,732
Cost of sales (12,823) (13,856)
------------ -----------
Gross Profit 3,537 4,876
------------ -----------
Operating costs
Distribution costs (585) (600)
Administrative expenses (3,721) (4,066)
------------ -----------
Operating (loss)/profit before exceptional
costs (769) 728
Exceptional costs-asset write-offs and early
retirement costs - (518)
------------ -----------
Operating (loss)/profit (769) 210
Interest payable (208) (206)
Interest receivable - 12
------------ -----------
(Loss)/profit before taxation (977) 16
Taxation 246 33
------------ -----------
(Loss)/profit for the financial year (731) 49
------------ -----------
(Loss)/earnings per share
Basic (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) 49
Dividends - (141)
Share based payment (charge)/credit (5) 10
Issue 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)
ASSETS
Non-current assets
Intangible assets 383 431
Property, plant and equipment 12,560 12,730
------------ -----------
12,943 13,161
------------ -----------
Current assets
Inventories 1,687 2,856
Trade and other receivables 3,308 4,334
Cash and cash equivalents 36 -
Current tax assets 88 -
------------ -----------
5,119 7,190
------------ -----------
LIABILITIES
Current liabilities
Financial liabilities - borrowings 1,659 2,527
Trade and other payables 2,859 4,539
Current tax liabilities - 126
------------ -----------
4,518 7,192
------------ -----------
Net current assets/(liabilities) 601 (2)
Non-current liabilities
Financial liabilities - borrowings 1,774 587
Deferred tax liabilities 1,335 1,401
------------ -----------
3,109 1,988
------------ -----------
NET ASSETS 10,435 11,171
============ ===========
SHAREHOLDERS' EQUITY
Ordinary shares 201 201
Share premium 4,558 4,558
Other reserves 27 32
Retained 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 activities
Operating (loss)/profit (769) 210
Profit on disposal of property, plant and
equipment (40) -
Depreciation of property, plant and equipment 2,179 2,660
Amortisation of intangible assets 57 5
Share based payments (5) 10
Decrease in inventories 1,169 263
Decrease/(increase) in trade and other
receivables 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 activities
Purchase of property, plant and equipment (2,009) (1,438)
Purchase of intangible assets (9) (420)
Proceeds from disposal of property, plant and
equipment 40 -
------------ -----------
Net cash used in investing activities (1,978) (1,858)
------------ -----------
Cash flows from financing activities
Proceeds from issue of ordinary shares - 7
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)
Dividends paid to shareholders - (604)
------------ -----------
Net cash generated/(used in) by financing
activities 1,228 (1,147)
------------ -----------
Net increase/(decrease) in cash and cash
equivalents 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 mail@coralproducts.com).
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
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