Half Yearly Report

RNS Number : 1657X

Coral Products PLC

01 December 2010

 



CORAL PRODUCTS PLC

 

2010 Interim Results

Coral Products PLC announces interim results for the six months ended 31 October 2010.

In his statement to shareholders the Chairman, Geoffrey Piper, said:

"I am pleased to report that we have made good progress with our strategic plan of diversifying into the manufacturing of a range of products outside media packaging and introducing these to new markets. We have quickly gained accreditations and orders for our products despite being a new player. At the same time we have also improved the environmental impact of our existing media products and been awarded partnership status with leading distributors. The introduction of these eco-friendly DVD cases was unfortunately delayed until the end of the first quarter which resulted in a substantial loss of orders during this period. However, since August we have regained a number of accounts which are confined to this range of products and this has now enabled results to improve markedly. We are confident that this improvement can be maintained with further growth in prospect''

 

	Summary	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
	Turnover	£6 ,705,000	£ 6,645,000	£ 12,601,000
	Gross Profit	£1,217,000	£1,619,000	£2,745,000
	Loss before taxation	£ 354,000	£ 193,000	£ 651,000
	EBITDA	£533,000	£660,000	£940,000
	Basic loss per share	(1.76)p	(0.96)p	(3.23)p
	Dividend	Nil	Nil	Nil
·	Strong increase in activity in second quarter.
·	Waste recycling products fully introduced to new markets.
·	Capital expenditure programme close to completion.

Regarding prospects for the current year, Geoffrey Piper added:

"The company is now in a stronger position than it has been for several years. We have successfully entered a new market for waste recycling products and established ourselves as a significant player. We have redeveloped our DVD case which is now more environmentally friendly and have obtained contracts with leading media product suppliers which will run until the medium term Present trading conditions remain extremely difficult but we are in a good position to take advantage of any upturn in the economy.''

Enquiries:   Coral Products PLC                                    Tel: [phone]        

                                    Warren Ferster, Chief Executive/Managing Director

CHAIRMAN'S STATEMENT

I am pleased to report that we have made good progress with our strategic plan of diversifying into the manufacturing of a range of products outside media packaging and introducing these to new markets. We have quickly gained accreditations and orders for our products despite being a new player. At the same time we have also improved the environmental impact of our existing media products and been awarded partnership status with leading distributors. The introduction of these eco-friendly DVD cases was unfortunately delayed until the end of the first quarter which resulted in a substantial loss of orders during this period. However, since August we have regained a number of accounts which are confined to this range of products and this has now enabled results to improve markedly. We are confident that this improvement can be maintained with further growth in prospect.

Trading

Turnover for the period increased by 1% over the previous year, with the sales of new products compensating for the decline in media product demand.

Sales for media products started the year slowly but have now picked up to levels comparable to the previous year and look set to continue. There was a shift in customer demand to produce a new lightweight DVD case and we took the decision to convert existing moulds as quickly as possible. Unfortunately orders were lost during this conversion process but we are now able to meet customer requirements for a more environmentally friendly box.

Sales for non-media cases have progressed above our expectations and we have established new waste recycling products which have been well received. The markets for waste recycling are still developing and offer great potential for future growth as more contracts and partnerships with other players are obtained.

Margins have been affected by the rise in material prices as commodity prices increased and a weak sterling remained in place. This decrease led to a reduced gross profit of £1.2m. Operating expenses decreased by 12% to £1.5m and the overall operating result was a loss of £354,000 (2009: £193,000). Diluted loss per ordinary share was 1.76p (2009: 0.96p). No interim dividend will be paid.

Financing

Despite demands upon our working capital from the increased activity of recent months we have continued to operate within our existing bank facilities. During the period we invested in £441,000 of plant and equipment, converting existing DVD moulds and machinery, and producing new recycling products. Most of this expenditure has now been completed and, with the majority of our asset financing finishing early in 2011, we will become cash generative from then onwards.

Prospects

The company is now in a stronger position than it has been for several years. We have successfully entered a new market for waste recycling products and established ourselves as a significant player. We have redeveloped our DVD case which is now more environmentally friendly and have obtained contracts with leading media product suppliers which will run until the medium term.

Present trading conditions remain extremely difficult but we are in a good position to take advantage of any upturn in the economy.

Geoffrey Piper

Chairman

1 December 2010

Income Statement -  (unaudited) for the half year to 31 October 2010	Notes	Half year to 31 October 2010 £'000	Half year to 31 October 2009 £'000	Year to 30 April 2010 £'000
Continuing operations		-----------	-----------	----------
Revenue	(2)	6,705	6,645	12,601
Cost of sales		(5,488) --------	(5,026) --------	(9,856) ---------
Gross profit		1,217	1,619	2,745
Operating expenses		(1,536) --------	(1,755) --------	(3,366) --------
Operating loss before taxation and finance costs		(319)	(136)	(621)
Exchange loss on finance leases	(1)	(5)	(20)	(15)
Interest payable		(30) ------	(37) -------	(15) --------
Loss before taxation		(354)	(193)	(651)
Taxation	(3)	- ------	- -------	- --------
Loss for the financial period		(354) ------	(193)            -------	(651) --------
Basic loss per ordinary share	(4)	(1.76) p ---------	(0.96) p          --------	(3.23)p ---------
Diluted loss per ordinary share	(4)	(1.76) p	(0.96) p	(3.23)p
		---------	---------	---------

All activities derive from continuing operations.

Statement of Changes in Shareholders' Equity - (unaudited) for the half year to 31 October 2010	As at 31 October 2010 £'000 --------	As at 31 October 2009 £'000 --------	As at 30 April 2010 £'000 --------
Equity at start of the period	6,467	7,118	7,118
Loss  for the financial period	(354)	(193)	(651)
	--------	------	---------
Equity at end of the period	6,113 --------	6,925 -------	6,467 ---------

Balance Sheet   -   (unaudited) as at 31 October 2010	As at 31 October 2010 £'000	As at 31 October 2009 £'000		As at 30 April 2010 £'000
ASSETS	-----------	-----------		-----------
Non-current assets
Intangible assets	216	260		243
Plant and equipment	4,257	5,048		4,626
Rental deposit	100 ---------	250 ----------		100 ---------
Total non-current assets	4,573 ---------	5,558 ----------		4,969 ---------
Current assets
Inventories	1,081	661		1,152
Trade and other receivables	4,795	3,930		2,391
Cash and cash equivalents	-	-		102
	-----------	-----------		-----------
Total current assets	5,876 -----------	4,591 -----------		3,645 ----------
LIABILITIES
Current liabilities
Financial liabilities - borrowings	1,069	872		962
Trade and other payables	3,227 ---------	2,101 ----------		1,115 ----------
Total current liabilities	4,296 ---------	2,973 ----------		2,077 ----------
Non current liabilities
Financial liabilities - borrowings	40                             ---------		251 ---------	70 ----------
Total non-current liabilities	40 ----------	251 ----------		70         ----------
Net assets	6,113	6,925		6,467
	----------	----------		-----------
Equity
Share capital	201	201		201
Share premium	4,558	4,558		4,558
Other reserves	7	7		7
Retained earnings	1,347	2,159		1,701
	-----------	-----------		-----------
Total shareholders' equity	6,113	6,925		6,467
	-----------	-----------		-----------

Cash Flow Statement - (unaudited) for the half year to 31 October 2010	Half year to 31 October 2010 £'000 ---------	Half year to 31 October 2009 £'000 --------	Year to 30 April 2010 £'000 --------
Cash inflow/(outflow) from operating activities                                                   (note 5)	300	(142)	222
Interest paid	(11)	(21)	(8)
Interest on finance lease rentals	(17)	(16)	(29)
Exchange loss on finance leases	5	(20)	(15)
	----------	---------	---------
Net cash from operating activities	277 ----------	(199) ---------	170 ---------
Cash flows from investing activities
Purchase of property, plant and equipment	(441)	(176)	(493)
Purchase of intangible assets	(15)	(20)	(29)
Net cash used in operating activities	---------- (456) ----------	---------- (196) ----------	--------- (522) ---------
Cash flows from financing activities
Proceeds of new asset finance	-	150	150
Receipt from repayment of rental deposit	-	-	150
Finance lease principal payments	(186) ----------	(209) ----------	(314) ---------
Net cash used in from financing activities	(186) ----------	(59) ----------	(14) ---------
Net decrease in cash and cash equivalents	(365)	(454)	(366)
Cash and cash equivalents at start of period	(515) ---------	(149) ----------	(149) ---------
Cash and cash equivalents at end of period	(880) ---------	(603) ----------	(515) ---------

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) and International Financial Reporting Interpretation Committee (IFRIC) interpretations as adopted for use. The financial statements have been prepared under the historical cost convention. The statements are prepared on a going concern basis, which the Directors believe to be appropriate based upon financial forecasts and bank facilities. The results for the 6 months ending 31 October 2010 and 2009 are unaudited. The results for the year ended 30 April 2010 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. The principal accounting policies applied in the preparation of this interim report are consistent with those set out in the 2010 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.
	Leased assets
	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 rental obligations is charged to the income statement over the period of the lease. All other leases are regarded as operating leases and the payments made under them are charged to the income statement on a straight-line basis over the lease term.
	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 income statement for the period.
	Pension contributions
	The company contributes to defined contribution pension schemes and the pension charge represents the amount payable for that period.
	Taxation
	The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax liabilities are recognised on intangible assets and other temporary differences recognised in business combinations.
	Plant and equipment
	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%
	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 trademarks 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.
	Financial assets
	Financial assets are recognised at fair value in the Company's balance sheet when the Company becomes a party to the contractual provisions of the instrument. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers, do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Impairment provisions are recognised when there is objective evidence that the Company will be unable to collect all of the amounts due under the terms receivable, the amount of such provision being the difference between the net carrying amount and the present value of future expected cash flows associated with the impaired receivable. Financial liabilities include bank borrowings and trade payables. Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the balance sheet. Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.
2.	Revenue
	All production is based in the United Kingdom.  The geographical analysis of revenue is shown below:
		Half year to 31 October 2010 £'000			Half year to 31 October 2009 £'000			Year to 30 April 2010 £'000
		-----------			-----------			--------
	United Kingdom	5,669			5,616			9,700
	Rest of Europe	1,036			1,029			2,901
		-----------			-----------			----------
		6,705			6,645			12,601
	Turnover by business activity:	-----------			-----------			-----------
	Media packaging and other cases	6,705			6,645			12,601
		-----------			-----------			-----------
3	Taxation
	The charge or credit for taxation on the loss for the period is charged at 28% being the estimated effective rate for the full financial year.
4	Basic loss per ordinary share
	The calculation of basic loss per ordinary share is based on the loss for the period available to shareholders of £354,000 (2009: £193,000) and on 20,135,609 (2009: 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.
5	Cash flow from operating activities
			Half year to 31 October 2010 £'000			Half year to 31 October 2009 £'000			Year to 30 April 2010 £'000
	Operating loss for the period		(326)			(136)			(621)
	Depreciation of  plant and equipment		810			775			1,514
	Amortisation of intangible assets		42			21			47
	Decrease/(increase) in inventories		71			102			(306)
	(Increase)/decrease  in trade and other receivables		(2,404)			(1,194)			262
	Increase/(decrease) in trade and other payables		2,107  ---------			290 ---------			(674)         --------
	Cash inflow/(outflow) from operating activities		300			(142)			222
			---------			---------			--------
6	Reconciliation of net cash flow to movement in net debt
				Half year to 31 October 2010 £'000			Half year to 31 October 2009 £'000			Year to 30 April 2010 £'000
	Net decrease in cash equivalents			(365)			(454)			(366)
	Additional finance lease			-			(150)			(150)
	Finance lease principal payments			186 ---------			209 --------			314 ----------
	Movement in net debt for the period			(179)			(395)			(202)
	Net debt at beginning of period			(930) ---------			(728) ---------			(728) --------
	Net debt at end of period			(1,109)			(1,123)			(930)
				---------			---------			--------
7	Interim report
	The interim report will be posted to all shareholders on 7 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.

 

END

 

 

IR BBBDDRDGBGGB