Interim Results
Coral Products PLC
07 December 2007
CORAL PRODUCTS PLC
2007 Interim Results
Coral Products PLC announces interim results for the six months ended 31 October
2007.
In his statement to shareholders the Chairman, Geoffrey Piper, said:
'The first half of our financial year continued in a similar vein to the
previous year with trade seriously affected by lower margins resulting from
higher raw material prices. In particular, sales of CD cases have been affected
by reduced demand with regard to down-loading and market developments. DVD sales
have continued to grow although values were affected by the strength of
sterling. We have seen a gradual increase in sales of non-media products that
are trade moulded for customers and, if this continues, we should see improved
results. As a result of the sale of the property we are now in a much better
financial position from which to source our working capital requirements and
enable us to meet demands from our new business partners.'
Summary
Six months ended Six months ended Year
31 October 31 October ended
2007 2006 30 April
20007
Turnover £ 7.1m £ 7.8m £ 14.3m
Pre-tax loss before exceptional item £ 899,000 £ 833,000 £ 2.2m
Pre-tax loss after exceptional item £ 180,000 £ 833,000 £ 2.2m
EBITDA £1,073,000 £356,000 £104,000
Earnings/(loss) per share 0.55p (2.90)p (7.43)p
Dividend NIL NIL NIL
• DVD box sales have continued to increase but CD case sales have declined.
• Margins continue to be affected by inability to pass on raw material price increases.
• A number of new product lines have been introduced for our trade moulding customers.
• Sale and leaseback of property completed in period.
Regarding prospects for the current year, Geoffrey Piper added:
'We are now seeing sales of new products emerge which offer improved prospects
for 2008.'
Enquiries: Coral Products PLC
Tel: 01942 272 882
Warren Ferster, Managing Director
Stephen Fletcher, Finance Director/Company Secretary
CHAIRMAN'S STATEMENT
The first half of our financial year continued in a similar vein to the
previous year with trade seriously affected by lower margins resulting from
higher raw material prices. In particular, sales of CD cases have been affected
by reduced demand with regard to down-loading and market developments.
DVD sales have continued to grow although values were affected by the strength
of sterling. We have seen a gradual increase in sales of non-media products that
are trade moulded for customers and, if this continues, we should see improved
results. As a result of the sale of the property we are now in a much better
financial position from which to source our working capital requirements and
enable us to meet demands from our new business partners.
The sale and leaseback of the property was completed on 24 September and the
sales proceeds enabled the company's bank borrowings to be repaid. In addition,
the Board decided that rather than remaining dependent on the continuing
availability of bank overdrafts that are repayable on demand, Invoice
Discounting facilities would be acquired in order to finance the company's
working capital requirements.
Trading
Turnover for the six months ended 31 October 2007 was £7.1 million (2006: £7.8
million) and the pre-tax loss was £180,000 (2006: £855,000). Diluted earnings/
(loss) per ordinary share was 0.55p (2006: loss of 2.90p).
Interim Dividend
No interim dividend has been declared (2006: nil) for the period to 31 October
2007.
Prospects
We are now seeing sales of new products emerge and expect this to continue
through 2008. Margins are still extremely tight but volumes have improved and we
are in a better position now to benefit from improvements in market conditions.
It continues to be a slow process to return to satisfactory levels of
profitability but with the prospect of longer production periods for additional
products, we are hopeful that the required progress can be achieved.
Geoffrey Piper
Chairman
7 December 2007
Income Statement - (unaudited)
for the half year to 31 October 2007 Half year to Half year to Year to
31 October 31 October 30 April
2007 2006 2007
Notes £'000 £'000 £'000
Continuing operations ----------- ----------- ----------
Revenue (2) 7,056 7,785 14,291
Cost of sales (5,216) (5,846) (12,352)
-------- -------- ---------
Gross profit 1,840 1,939 1,939
Operating expenses (2,667) (2,703) (4,029)
-------- -------- --------
Operating loss before exceptional item (827) (764) (2,090)
Exceptional profit on sale of property 719 - -
------ ------ --------
Operating loss before taxation and finance costs (108) (764) (2,090)
Exchange (loss)/gain on finance leases (1) (10) 16 16
Interest payable (62) (85) (142)
------ ------- --------
Loss before taxation (180) (833) (2,216)
Taxation (3) 291 250 720
------- ------- ------
Profit/(loss) for the financial period 111 (583) (1,496)
------ ------- -------
Earnings/(loss) per share (4) 0.55p (2.90)p (7.43)p
--------- --------- --------
Diluted earnings/(loss) per share (4) 0.55p (2.90)p (7.43)p
--------- --------- --------
All activities derive from continuing operations.
Statement of Changes in Shareholders' Equity -
(unaudited)
As at As at As at
31 October 31 October 30 April
2007 2006 2007
£'000 £'000 £'000
-------- -------- --------
Equity at start of the period 8,924 10,435 10,435
Profit/(loss) for the period 111 (583) (1,496)
Share based payment charge - - (15)
--------- --------- ---------
Equity at end of the period 9,035 9,852 8,924
--------- --------- ---------
Balance Sheet - (unaudited)
as at 31 October 2007 As at As at As at
31 October 31 October 30 April
2007 2006 2007
£'000 £'000 £'000
ASSETS ----------- ----------- -----------
Non-current assets
Intangible assets 304 359 339
Property, plant and equipment 7,818 11,780 10,831
--------- ---------- ---------
Total non-current assets 8,122 12,139 11,170
--------- ---------- ---------
Current assets
Inventories 1,267 1,372 1,407
Trade and other receivables 4,520 5,091 3,303
Cash and cash equivalents 487 - -
Taxation - - 35
----------- ----------- -----------
Total current assets 6,274 6,463 4,745
----------- ----------- ----------
LIABILITIES
Current liabilities
Financial liabilities - borrowings 603 2,139 2,503
Trade and other payables 3,745 4,057 2,918
Current tax payable - - -
--------- ---------- ----------
Total current liabilities 4,348 6,196 5,421
--------- ---------- ----------
Non current liabilities
Financial liabilities - borrowings 639 1,450 905
Deferred tax liabilities 374 1,104 665
---------- ---------- ----------
Total non-current liabilities 1,013 2,554 1,570
---------- ---------- ----------
Net assets 9,035 9,852 8,924
---------- ---------- -----------
Equity
Share capital 201 201 201
Share premium 4,558 4,558 4,558
Other reserves 12 27 12
Retained earnings 4,264 5,066 4,153
----------- ----------- -----------
Total shareholders' equity 9,035 9,852 8,924
----------- ----------- -----------
Cash Flow Statement - (unaudited)
for the half year to 31 October 2007 Half year to Half year to Year to
31 October 31 October 30 April
2007 2006 2007
£'000 £'000 £'000
--------- -------- --------
Cash (outflow)/inflow from operating activities (112) 86 390
(note 5)
Interest paid (52) (49) (108)
Interest on finance lease rentals (20) (20) (18)
Income taxes received 35 107 103
---------- --------- --------
Net cash from operating activities (149) 124 367
---------- --------- ---------
Cash flows from investing activities
Proceeds from disposal of plant and equipment 2,802 - 43
Purchases of property, plant and equipment - (316) (421)
---------- ---------- ---------
Net cash generated by/(used in) investing activities 2,802 (316) (378)
---------- ---------- ---------
Cash flows from financing activities
Net proceeds from new bank loans - 113 113
Proceeds of new asset finance 22 - -
Repayment of bank loans (286) (212) (457)
Finance lease principal payments (313) (444) (724)
---------- ---------- ---------
Net cash used in from financing activities (577) (543) (1,068)
---------- ---------- ---------
Net increase/(decrease) in cash and cash equivalents 2,076 (735) (1,079)
Cash and cash equivalents at start of period (1,589) (510) (510)
--------- ---------- ---------
Cash and cash equivalents at end of period 487 (1,245) (1,589)
--------- ---------- ---------
Notes to the Interim Financial Statements
1. Basis of preparation
This interim report, including comparative data, has been prepared in accordance with
International Financial Reporting Standards (IFRS) in issue that are either adopted by the EU
and effective at 31 October 2007. The Interim Financial Statements have been prepared in
accordance with the listing rules of the Financial Services Authority and do not constitute
financial statements as defined in section 240 of the Companies Act 1985.
The results for the 6 months ending 31 October 2006 and 2007 are unaudited. The results for
the year ended 30 April 2007 have been extracted from the Financial Statements for that
period, which were filed with the Registrar of Companies and on which the auditors gave an
unqualified report when did not contain a statement under sections 237(2) and (3) of the
Companies Act 1985.
The principal accounting policies applied in the preparation of this interim report are
consistent with those set out in the 2007 Annual Report and Financial Statements. A summary
of the company's principal accounting policies is set out below
Segmental reporting
The Directors consider the Company's operations as one business segment and that it operates
in one geographical segment.
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. Assets held under
finance leases are capitalised as tangible fixed assets in the balance sheet and are
depreciated over the useful economic life of the asset The interest element of the renatl
obligations is charged to the Income Statement over the period of the lease. 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.
Exceptional items
These are material items which derive from events or transactions that fall within the
ordinary activities of the company and which individually need to be disclosed if the
financial statements are to give a true and fair view.
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.
Employee benefits
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 in the income
statement.
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 of 10 years. 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.
Provision is made to write down obsolete or slow-moving inventory to their net realisable
value.
Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances together with bank overdrafts that
are repayable on demand.
Derivatives
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.
Share related payments
The fair value of equity settled share based payments to employees is determined at the date
of grant and is expensed on a straight-line basis over the vesting period based on the
Company's estimate of shares or options that will eventually vest. In the case of options
granted, fair value is measured by a Black-Scholes pricing model.
2. Revenue
All production is based in the United Kingdom. The geographical analysis of revenue is shown
below:
Half year to Half year to Year to
31 October 31 October 30 April
2007 2006 2007
£'000 £'000 £'000
----------- ----------- --------
United Kingdom 4,584 6,163 11,073
Rest of Europe 2,472 1,622 3,218
----------- ----------- ----------
7,056 7,785 14,291
----------- ----------- -----------
Turnover by business activity:
Media packaging 7,056 7,785 14,291
----------- ----------- -----------
3 Taxation
The charge or credit for taxation on the loss for the period is charged at 30% being the
estimated effective rate for the full financial year.
4 Earnings /(loss) per share
The calculation of basic earnings/(loss) per share is based on the earnings for the period
available to shareholders of £111,000 (2006: loss of £583,000) and on 20,135,609 (2006:
20,135,609) 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 the same number of shares.
The loss per share before taking account of exceptional items is 3.10p (2006:2.90p).
5 Cash flow from operating activities
Half year to Half year to 31 Year to
October
31 October 30 April
2007 2006 2007
£'000 £'000 £'000
Operating loss for the period (108) (764) (2,090)
Profit on disposal of fixed assets (719) - (43)
Depreciation of property, plant and equipment 942 1,096 2,144
Amortisation of intangible assets 23 24 50
Share based payments - - (15)
Decrease in inventories 140 315 280
(Increase)/decrease in trade and other
receivables (1,217) (1,783) 5
Increase in trade and other payables 827 1,198 59
--------- --------- ---------
Cash (outflow)/inflow from operating activities (112) 86 390
--------- --------- --------
6 Reconciliation of net cash flow to movement in net debt
Half year to Half year to 31 Year to
October
31 October 30 April
2007 2006 2007
£'000 £'000 £'000
Net increase/(decrease) in cash equivalents 2,076 (735) (1,079)
Net proceeds from issue of new bank loans - (113) (113)
Repayment of bank loans 286 212 457
Proceeds of new asset finance (22) - -
Finance lease principal payments 313 444 724
--------- -------- ----------
Movement in net debt for the period 2,653 (192) (11)
Net debt at beginning of period (3,408) (3,397) (3,397)
--------- --------- --------
Net debt at end of period (755) (3,589) (3,408)
--------- --------- --------
7 Interim report
The interim report will be posted to all shareholders on 12 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.
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