Final Results

Coral Products PLC 4 July 2000 2000 Preliminary Results Record pre-tax profits up 13% to £2.6m; EPS up 18% to 8.82p 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 2000. Commenting, Chairman Sir David Rowe-Ham said: 'I am delighted to report a record set of results, which has been achieved through our continuing capital investment and expansion programme, particularly for DVD and CD case manufacture. This has enabled us to capitalise on the increased demand within the industry during the year.' Summary Year ended Year % change 30 April ended 2000 30 April 1999 * Turnover £15.0m £12.8m + 17.2 * Pre-tax profits £2.6m £2.3m + 13.0 * Fully diluted earnings per share 8.82p 7.49p + 17.8 * Total dividend 3.3p 2.875p + 14.8 * Shareholder approval to be sought for the company to have the authority to purchase up to 15% of its own share capital. * Media packaging division turnover increased by 20% to £13.6m * CD and DVD case sales strong, particularly in the home market * Considerable investment put into new DVD lines and expansion of CD case production and range. On prospects for the current year, he added: 'CD production facilities are being expanded further, together with our CD product range. The ALPHApak DVD box has been successfully introduced and substantial investment has been made in new DVD lines that should see production rise sharply, by December 2000. We believe that the media industry will continue to offer excellent prospects, particularly in the CD and DVD markets.' Enquiries: Coral Products PLC Tel: 01942 272 882 Warren Ferster, Managing Director Mobile: 07785 223039 David Shalom, Finance Director Mobile: 07771 603995 Binns & Co Peter Binns/Paul Vann Tel: 020 7786 9600 CHAIRMAN'S STATEMENT I am delighted to report a record set of results for the year ended 30 April 2000, with profits before tax up 13% at £2.6million (1999: £2.3million); diluted earnings per share increased by 18% to 8.82p (1999: 7.49p) and the recommended total dividend for the year up 14.8% at 3.3p (1999: 2.875p). This successful year's trading has been achieved through a further capital investment and expansion programme, particularly for CD and DVD case manufacture, which has enabled us to capitalise on increased demand within the industry. Turnover in the year increased by 17% to £15.0million (1999: £12.8million) and shareholders funds at 30 April 2000 amounted to £9.4million (1999: £8.2million), namely 45p per share (1999: 39p). Dividend Your directors are recommending an increased final dividend of 2.3p per ordinary share (1999: 2.0p) to be paid on 25 September 2000 to all shareholders on the register on 25 August 2000. This together with the interim dividend of 1p per ordinary share already paid, makes a total dividend for the year of 3.3p ( 1999: 2.875p). Trading Good demand for media products continued into the second half, particularly in the home market in relation to CD and DVD. The trading environment in the year was especially testing given rapidly rising raw material prices and the substantial strengthening of sterling in the last six months. I am pleased to say that the £3 million of new plant installed during the year as part of our continuing capital investment has enabled us to increase turnover and improve overall profitability. Housewares has again made a useful contribution, although it is gradually becoming a smaller part of our business as we continue to aggressively expand core media packaging products. Prospects We successfully introduced the ALPHApak DVD box in the second half of the year, with all initial production being sold out. Substantial investment has been made in new DVD lines that should see production in this market rise sharply by December 2000. CD production facilities are also being expanded further, together with our CD product range. We believe that the media industry will continue to offer excellent prospects, particularly in the CD and DVD markets. The beginning of the new financial year has started well. Market conditions remain testing despite the recent easing of sterling and slow down in raw material price increases. It is our intention to use our strong balance sheet and cashflow to invest in the business organically, which we believe will add to shareholder value, whilst at the same time maintaining a worthwhile stream of dividend income. In addition your board proposes to seek shareholder approval for the Company to have the authority to purchase up to 15% of its own share capital. Any such authority to purchase its own shares would be subject to shareholders' approval and the provisions of the Companies Act 1985, the Listing Rules of the UK Listing Authority and the Takeover Code. Sir David Rowe-Ham Chairman MANAGING DIRECTOR'S REVIEW OF OPERATIONS I am pleased to report a firm demand for our media packaging products over the last year despite increases of more than 50% in raw material prices and an ever-stronger pound. Previous investments in new highly efficient plant have meant that we have been able to remain competitive on price and still offer a quality and service to our customers that we believe is second to none in the industry. Strong cashflow generation in the year has been used to help finance substantial new capacity and invest in new products such as the DVD box. This investment programme continues into the current year with particular emphasis on further CD case facilities as well as further investment in state of the art DVD box manufacturing plant. Media Packaging Turnover in the division increased by 20% to £13.6million mainly reflecting a strong increase in CD case turnover as a result of nearly £2million of new capacity installed in the year. Video box turnover remained strong with volumes maintained at similar levels to last year. DVD box turnover has climbed steadily over the last six months with demand continuing to outstrip our capacity. Sales to Europe have declined during the year as sterling has continued to appreciate against a weak Euro and now only represent some 20% of turnover (1999: 26%). Despite declining exports and pricing pressure from cheap imports we have successfully expanded our business and have managed to maintain margins at a reasonable level. This has been achieved through our customers' appreciation of the benefits of having high quality products supplied on a just in time basis at competitive prices thereby allowing them to increase their production efficiency and reduce stocking costs. Raw material price rises have in the main been passed on and accepted by our customers, although at times not as quickly as we would have liked. The majority of new contracts negotiated with clients now include provision for automatic price adjustments both up and down should raw materials move beyond agreed limits. DVD box production has been gradually increased during the year and further capacity will be coming on stream shortly to ensure we capitalise on the increasing demand that we are now seeing for this product. Housewares Turnover in the division fell by 9% to £1.3million as a result of lower sales to our major accounts. The division still provides a worthwhile contribution and enables spare capacity to be utilised to ensure that our plant runs at full efficiency around the clock. Outlook Raw material prices have shown signs of stabilisation over the last few weeks and the recent weakening of sterling should help to improve the present testing trading environment we find ourselves in. Demand for our products remains buoyant and I am confident that the addition of further CD and DVD case capacity in the coming months should provide the opportunity to further increase turnover and profitability. Once again I would like to thank all the management and employees for their dedication and hard work during the year which has contributed in no small measure to another successful year for the company. Warren Ferster Managing Director Profit and Loss Account For the year ended 30 April 2000 2000 1999 £'000 £'000 Continuing operations Turnover 14,969 12,806 Cost of sales (8,911) (7,421) -------- -------- Gross Profit 6,058 5,385 Distribution costs (613) (610) Administration costs (2,725) (2,397) Other operating income 6 7 -------- -------- Operating profit 2,726 2,385 Interest receivable 17 42 Interest payable (135) (125) -------- -------- Profit on ordinary activities before taxation 2,608 2,302 Tax on profit on ordinary activities (768) (739) -------- -------- Profit on ordinary activities after taxation 1,840 1,563 Dividends (674) (588) -------- -------- Retained profit for the financial year 1,166 975 -------- -------- Basic earnings per ordinary share 9.00p 7.65p Diluted earnings per share 8.82p 7.49p -------- -------- 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 2000 2000 1999 £'000 £'000 -------- -------- Profit for the financial year 1,840 1,563 Dividends (674) (588) -------- -------- Net additions to equity shareholders' funds 1,166 975 Equity shareholders' funds at beginning of year 8,217 7,242 -------- -------- Equity shareholders' funds at end of the year 9,383 8,217 -------- -------- Balance Sheet At 30 April 2000 2000 1999 £'000 £'000 --------- --------- Fixed assets Tangible assets 10,741 8,752 ---------- ---------- Current assets Stocks 2,515 1,347 Debtors 4,914 3,221 Cash at bank and in hand 191 797 ---------- ---------- 7,620 5,365 Creditors: amount falling due within one year (6,662) (4,337) ---------- ---------- Net current assets 958 1,028 ---------- ---------- Total assets less current liabilities 11,699 9,780 Creditors: amounts falling due after more than one year (1,242) (687) Provisions for liabilities and charges (1,074) (876) ---------- ---------- Net assets 9,383 8,217 ---------- ----------- Capital and reserves Called up share capital 204 204 Share premium account 4,443 4,443 Profit and loss account 4,736 3,570 ---------- ---------- Equity shareholders' funds 9,383 8,217 ---------- ---------- Cash Flow Statement For the year ended 30 April 2000 2000 1999 £'000 £'000 --------- --------- Net cash inflow from operating activities 3,190 3,473 --------- --------- Return on investments and servicing of finance Interest received 17 42 Interest paid (33) (38) Interest paid on finance leases (96) (82) -------- --------- (112) (78) -------- --------- Taxation (635) (65) -------- --------- Capital expenditure and financial investment Purchase of tangible fixed assets (3,288) (2,380) Sale of tangible assets 20 1 --------- --------- (3,268) (2,379) --------- ---------- Equity dividends paid (612) (485) --------- --------- Net cash (outflow)/inflow before taxation (1,437) 466 --------- --------- Financing Repayments of principal under finance leases (928) (1,013) Proceeds of sale and leaseback 1,800 519 Repayment of loans (41) (92) --------- --------- 831 (586) --------- --------- Decrease in cash (606) (120) --------- --------- Other Financial Statements For the year ended 30 April 2000 Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 2000 1999 £'000 £'000 --------- --------- Operating Profit 2,726 2,385 Depreciation on tangible fixed assets 1,284 990 (Profit)/loss on disposal of tangible fixed assets (5) 30 Release of grant income (1) (1) Increase in stocks (1,168) (397) (Increase)/decrease in trade debtors (1,695) 316 Decrease/(increase) in other debtors, prepayments and accrued income 2 (411) Increase in trade creditors 1,757 266 Increase in other taxation and social security creditors 5 3 Increase in accruals and deferred income 79 43 Increase in other creditors 206 249 -------- -------- Net cash inflow from operating activities 3,190 3,473 -------- -------- Reconciliation of Net Cash Flow to Movement in Net Debt 2000 1999 £'000 £'000 --------- --------- Decrease in cash in the year (606) (120) Cash outflow from debt and lease financing 969 1,105 --------- --------- Change in net debt resulting from cashflows 363 985 Proceeds of sale and leaseback (1,800) (519) ---------- --------- Movement in net debt in the year (1,437) 466 Net debt at 1 May 1999 (490) (956) ---------- --------- Net debt at 30 April 2000 (1,927) (490) --------- ---------- 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 1999 and 30 April 2000 within 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 1999 have been delivered to the Registrar of Companies, and those for the year ended 30 April 2000 will be delivered following the company's Annual General Meeting. The auditors have reported on the accounts for 1999; their report was unqualified and did not contain statements under Section 237(2) or (4) of the Companies Act 1985. The accounts for the year ended 30 April 2000 have been prepared using the same accounting policies as were used in the preparation of the accounts for the year ended 30 April 1999 except for changes arising from the first application of the following Financial Reporting Standards ('FRS'); FRS 15 Tangible Fixed Assets FRS 16 Current Tax There has been no material effect on the results for the year from the implementation of these new financial reporting standards. 2. Dividends A final dividend of 2.3p net is recommended by the directors payable on 25 September 2000 to all shareholders on the register on 25 August 2000. 3. Earnings per Ordinary Share The calculation of earnings per share is based on the profit on ordinary activities after taxation namely £1,840,000 (1999: £1,563,000) and on 20,440,000 (1999: 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 20,856,000 (1999: 20,860,000). 4. Annual Report and Accounts The Annual Report and Accounts will be posted to shareholders on 21 August 2000. 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 Holiday Inn Crowne Plaza Hotel, Manchester, on Friday 22 September 2000 at 12.00 noon.

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