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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| European Cobalt Limited | ASX:EUC | Australian Stock Exchange | Ordinary Share |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.037 | 0.037 | 0.039 | 0.00 | 01:00:00 |
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RNS Number:4383M
European Colour PLC
18 June 2003
For Immediate Release 07:00, 18 June 2003
European Colour plc
Preliminary Results for the year ended 31 March 2003
European Colour plc, the speciality pigments company, announces its preliminary
results for the year ended 31 March 2003.
Key Points
* Turnover on continuing operations up 5% to #32.5m (2002: #30.9m)
* Operating profit before exceptional items of Pigments business strongly
ahead at #2.4m (2002: #1.2m) - up 94%
* Headline earnings per share (diluted - before goodwill amortisation and
exceptional items) up 19% to 2.49p (2002: 2.10p)
* Final dividend proposed of 0.43p (total for year 0.64p)
* Debt reduced from #12.2m to #1.3m and all preference shares redeemed,
purchased or cancelled (at a cost in excess of #2m)
* Management team in Pigments strengthened
* Prospects for continued organic growth in Pigments encouraging
Commenting on the Group's prospects Paul Deakin, Chairman of European Colour,
said:
"The last year has been one of immense change for the Group. However, this
change has been positive and we have commenced the new financial year in a much
improved financial position, with a significantly stronger management team and
with real confidence that continued organic growth in our business can be
achieved."
For further information, please contact:
European Colour Tel: +44 (0)161 480 3891
Paul Deakin, Chairman
Nick Hawkins, Deputy Chairman
George Hughes, Managing Director
Buchanan Communications Tel: +44 (0)20 7466 5000
Charles Ryland/Suzanne Dunne/Nicola How
European Colour plc
Preliminary Results for the Year Ended 31 March 2003
Chairman's Statement
Overview:
The last financial year was a period of great change for European Colour -
positive change. We started the year with two businesses, Coatings and Pigments,
a Group Head Office, debt totalling #12.2 million and facing the prospect of
preference share redemptions of #2 million.
By the end of the year we had sold our Coatings business (Tor Coatings Limited);
closed our Head Office, saving over #0.5 million each year; reduced Group debt
to less than #2 million and redeemed, purchased or cancelled all of our
preference shares. These changes in Group structure have allowed us to refocus
on the Pigments business - a part of the business which had suffered in recent
years through lack of funding and management changes.
While being careful to ensure that all projects are carefully researched, in
recent months we have approved significant new investment in our Pigments
business which we believe will help to relieve bottlenecks and address product
quality and consistency issues that have been identified. We have also devoted
considerable effort to strengthening our management team with the recruitment in
April last year of George Hughes, now Managing Director, and in April this year
of Brian Quinn, Sales and Marketing Director.
It is still too early to see the benefit of these changes in the results being
announced today but I do believe we now have the team, the strategy and the
funding necessary to return European Colour to profitable growth.
Financial Review:
Group turnover was #38.9 million representing a reduction of 6% on prior year
(2002: #41.3 million). Group profit before tax, goodwill amortisation and
exceptional items was #2.4 million, representing a 77% increase on 2002 (#1.4
million).
The consolidated results cover a year during which the Coatings business was
part of the Group for a little over six months. The results do not therefore
reflect the financial performance of the continuing Group. In the period prior
to its sale, Tor contributed turnover of #6.4 million and operating profit of
#1.4 million to the Group.
The Pigments business increased sales 5% to #32.5 million (2002: 30.9 million)
and operating profit before exceptional items 94% to #2.4 million (2002: #1.2
million). Group costs were down to #1.0 million and are expected to fall
further during 2003/4 as the full benefits of closing our Head Office, in
December 2002, are realised. Interest costs before exceptional interest items
were down from #0.8 million to #0.6 million and are forecast to fall
substantially this year with debt now much reduced. Headline earnings per share
(diluted - before exceptional items and goodwill amortisation) were 2.49p, up
19% on last year.
Dividends:
Now that debt levels have been reduced and all of our preference shares have
been redeemed, purchased or cancelled, the Board is delighted to be in a
position to propose a final dividend of 0.43 pence per share, bringing the total
for the year to 0.64 pence per share
The dividend will be paid on 6 August 2003 to shareholders on the register at 4
July 2003.
Review of the Pigments Business:
Sales #32.5 million - up 5%.
Operating profit before exceptional items #2.4 million - up 94%.
The recovery in turnover experienced in the early part of calendar year 2002
continued into the 2002/03 financial year and, accordingly, the first half of
the year showed a significant increase in sales.
Our European markets were particularly strong in the first half of the year as
traditional customers enjoyed a lift in their business activity over the spring
and summer period. In the United States, sales also showed steady growth from
April through to October. However, both businesses saw a significant slowdown
in November and December and, although there was a recovery in the last quarter,
overall sales in the second half were 14% lower than in the first. The second
half slow down in the UK business was particularly marked in relation to sales
into Europe. However, sales growth continued in other geographic regions of the
world, particularly in South America.
In spite of the disappointing second half, year on year sales rose 5% overall.
This sales growth helped operating profit before exceptional items to increase
by 94%. Particularly pleasing was the return to profitability in our US
business after a very poor 2001/02.
The business has developed a new three-year strategic plan based on the
following three key objectives:
* a return to growth of sales to Continental Europe;
* a shift in the balance of our US manufactured product range away from
commodities to higher value-added products; and
* a rapid increase in sales in UK-produced speciality products, such as
Dyecoms, into the USA.
In addition, the use of resale product items to broaden the product range was
redefined for the global businesses and we have strengthened the relationship
with the major partner in our joint venture company in China.
The development plan of products for the core printing ink market has been
modified to focus on these key objectives and a number of marketing initiatives
have been introduced in both businesses including the concept of "Key Account
Management" for our larger global customers.
At the sales level, there has been a focussed redefinition of territories in
both the UK and US businesses and, following the successful introduction of our
own salesman in Germany, the decision was taken to move away from the use of a
distributor for our products in this key market. This was a significant change
for the business but seems to be bearing fruit already.
The sales team was further strengthened at the end of the year by the
recruitment of Brian Quinn. Brian has over 25 years of sales management
experience gained at a number of pigment and pigment-consuming companies. He is
now Sales and Marketing Director and his experience has already had a major
impact on our sales function.
With the new management team in place and the business plan clarified, the
foundations are in place to restore our business to a level of profitability
enjoyed in the past.
With current uncertainty in the global economy, we anticipate a slow overall
recovery during the current financial year. The business intends to gain sales
growth by focussing on the core speciality products of the business,
particularly Dyecoms manufactured in the UK and Naphthols manufactured in the
USA.
The printing ink industry and, within it, specifically packaging inks will
remain the core activity of the business going forward and we intend to launch a
number of new products into this sector in the coming financial year.
However, Management recognises that there is also a large and less concentrated
market for products that we manufacture in the paint and plastics colouration
industries.
The business took the opportunity at the Nuremberg Coatings Show to launch a new
range of products, primarily focused on the Industrial and Decorative paints
market. This, along with our previous initiatives to enter the market for the
colouration of plastics, means that our product and market spread has now
widened.
We will continue to focus on improving customer service and product support and
a number of initiatives are already underway. These include modernising our
manufacturing operations and seeking to strengthen our product management.
Outlook:
European Colour has been extremely successful in the past through listening to
customers and delivering the required products. It is the intention of your
Board that the Business should return to these core values and, following a
number of years of changing management direction, the Board is now confident
that this strategy is in place and will form a simple but effective path back to
profitable and sustained growth.
At the trading level, the world economy remains uncertain and, although the
first signs in 2003/4 look encouraging, it is still too early to give any
guidance on the longer term outlook. However, with low debt and a more focussed
and experienced management team, we are far better placed to deal with any
difficulties, and capitalise on any opportunities, that might arise.
A significant matter for the future of European Colour is the emergence of
Jarvis Porter Group PLC as a 29.7% shareholder. Public comments made by Jarvis
Porter have merely confirmed that they believe European Colour is a good
investment opportunity. Whilst there has been press speculation about the
long-term intentions of Jarvis Porter, the Board has no knowledge of Jarvis
Porter's intentions, beyond that which they have already stated.
Financial Statement:
Trading Results:
Group turnover was #38.9 million representing a reduction of 6% on prior year
(2002: #41.3 million). Group profit before tax, goodwill amortisation and
exceptional items was #2.4 million, representing a 77% increase on last year
(2002: #1.4 million).
The reduction in turnover was largely a result of the sale of the Coatings
business with only six months contribution of Coatings turnover. The Pigments
business sales increased by 5% on 2002 to #32.5 million (2002: #30.9 million).
The upward sales movement along with a significant increase in margin in the
United States led to a 94% increase in operating profit of the Pigments business
before exceptional items to #2.4million (2002: #1.2 million). The increase in
margin in the US was partly due to the impact of lower raw material prices, but
also due to the adjustment in resale pigment prices and volumes of resale
products within the overall product mix.
Exceptional Items:
During the year, a number of exceptional items arose from fundamental changes to
various aspects of the Group. These totalled #6.4 million. #4.2 million
related to the loss on disposal of Tor Coatings Limited. Other exceptional items
included costs relating to the closure of the Head Office, the restructuring of
both the Group and Group finances and a #0.6 million loss resulting from the
impairment of the carrying value of the Group's interest in its Chinese joint
venture.
In the prior year, the only exceptional charge was #0.3 million, which related
to compensation paid to a former director.
Interest:
The #0.6 million net interest charge before exceptional interest items is #0.2
million lower than prior year (2002: #0.8 million). This reflects the reduction
in borrowings in the second half of the year.
Pure interest cover of profit before interest and exceptional items over
interest before exceptional interest items increased to 4.7 times (2002: 2.6
times). This increase reflects both the reduction in interest and the increase
in operating profit.
Ordinary Dividends:
With the improvement in trading profits and the reduction in debt, the Board
feels it is appropriate to recommend a final dividend for the year of 0.43p per
share (2002: nil), bringing the total for the year to 0.64p (2002: nil).
Net Debt:
In light of the changes in the Group during the year, the Group renegotiated its
banking facilities. Consequently, these facilities now comprise a #2 million
overdraft facility and a #2 million revolving credit facility.
The net overdraft balance of the Group was #1.2 million at 31 March 2003. This
was after netting off the positive UK subsidiary bank balances against the
Company's overdraft of #1.4 million (2002 #4.5 million), in line with the
set-off arrangements agreed with the Group's banks.
During the year, overall net debt was reduced by #11 million due to the receipt
of the proceeds of the sale of Tor Coatings.
Taxation:
The taxation charge of #0.9 million (2002: #0.2 million) was in respect of a
loss after exceptional items but before goodwill of #4.0 million. This charge
has arisen as a large proportion of the exceptional items are disallowable for
corporation tax purposes.
Operating Cash Flow:
Operating cash flow decreased by 39% to #2.3 million (2002: #3.7 million)
reflecting only six months operating cash flow from the Coatings business. The
decrease in cash flow also reflects an increase in working capital requirements
from the Pigments business brought about by increased activity during the year.
Capital Expenditure:
Capital expenditure increased slightly to #0.77 million (2002: #0.68 million)
although capital expenditure for the Pigments business alone increased by 27% to
#0.65 million (2002: #0.51million).
Paul Deakin
Chairman
18 June 2003
European Colour plc
CONSOLIDATED PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2003
Year ended 31 March 2003 Year ended 31 March 2002
Continuing Discontinued Total Continuing Discontinued Total
Operations operations Operations Operations
#'000 #'000 #'000 #'000 #'000 #'000
TURNOVER 33,778 6,418 40,196 31,924 10,372 42,296
Less: share of joint venture's turnover (1,268) - (1,268) (1,021) - (1,021)
GROUP TURNOVER 32,510 6,418 38,928 30,903 10,372 41,275
Cost of sales (24,542) (3561) (28,103) (24,230) (5,837) (30,067)
GROSS PROFIT 7,968 2,857 10,825 6,673 4,535 11,208
Distribution costs (2,498) (324) (2,822) (2,385) (525) (2,910)
Administrative expenses (3,949) (1,099) (5,048) (4,149) (1,993) (6,142)
GROUP OPERATING PROFIT
Before goodwill amortisation and exceptionals 1,521 1,434 2,955 139 2,017 2,156
Exceptional operating items (1,051) - (1,051) (265) - (265)
Amortisation of goodwill (142) - (142) (154) - (154)
After goodwill amortisation and exceptionals 328 1,434 1,762 (280) 2,017 1,737
Share of operating profit in joint venture 35 - 35 6 - 6
Share of operating loss in joint venture
- exceptional items (562) - (562) - -
Total share operating (loss)/profit in joint
venture (527) - (527) 6 6
TOTAL OPERATING (LOSS)/PROFIT:
GROUP AND SHARE OF JOINT VENTURE (199) 1,434 1,235 (274) 2,017 1,743
Loss on disposal of subsidiary - (4,237) (4,237) - - -
(LOSS)/PROFIT ON ORDINARY ACTIVITIES
BEFORE INTEREST (199) (2,803) (3,002) (274) 2,017 1,743
Interest receivable - 22 22 - 23 23
Interest payable and similar charges (599) - (599) (780) (46) (826)
Interest payable and similar charges
- exceptional items (558) - (558) - - -
Total interest payable and similar charges (1,157) - (1,157) (780) (46) (826)
(LOSS)/PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION (1,356) (2,781) (4,137) (1,054) 1,994 940
Tax on (loss)/profit on ordinary activities (863) (175)
(LOSS)/PROFIT FOR THE FINANCIAL YEAR (5,000) 765
Dividends paid and proposed on non-equity and
equity share capital (345) (138)
RETAINED (LOSS)/PROFIT FOR THE YEAR (5,345) 627
Headline earnings per share - diluted 2.49p 2.10p
(Loss)/earnings per ordinary share - basic (11.07p) 1.37p
(Loss)/earnings per ordinary share - diluted (11.07p) 1.36p
European Colour plc
BALANCE SHEETS
AS AT 31 MARCH 2003
Group Company
2003 2002 2003 2002
#'000 #'000 #'000 #'000
FIXED ASSETS:
Intangible assets 2,242 2,771 - -
Tangible assets 7,696 10,131 2 33
Investments 405 430 1,565 15,543
Investments in joint ventures:
Share of gross assets 2,924 2,984 - -
Share of gross liabilities (2,924) (2,378) - -
- 606
10,343 13,938 1,567 15,576
CURRENT ASSETS:
Stocks 4,824 5,861 - -
Debtors 6,341 9,288 16,818 15,554
Cash 462 363 1 308
11,627 15,512 16,819 15,862
CREDITORS - less than one year:
Borrowings (1,748) (5,233) (1,443) (5,486)
Other (5,152) (7,051) (348) (473)
(6,900) (12,284) (1,791) (5,959)
NET CURRENT ASSETS 4,727 3,228 15,028 9,903
TOTAL ASSETS LESS CURRENT
LIABILITIES 15,070 17,166 16,595 25,479
CREDITORS - greater than one year:
Borrowings - (7,286) - (7,273)
PROVISIONS FOR LIABILITIES AND
CHARGES:
Deferred taxation (611) (595) - (70)
Other provisions (285) - (285) -
Total provisions for liabilities and charges (896) (595) (285) (70)
TOTAL NET ASSETS 14,174 9,285 16,310 18,136
CAPITAL AND RESERVES:
Called up share capital 2,330 2,577 2,330 2,577
Share premium account 4,864 4,858 4,864 4,858
Capital redemption reserve 550 300 550 300
Revaluation reserve 434 445 - -
Merger reserve - - - 8,874
Special reserve 3 3 3 3
Profit and loss account 5,993 1,102 8,563 1,524
SHAREHOLDERS' FUNDS 14,174 9,285 16,310 18,136
Attributable to:
Equity shareholders' funds 14,174 7,235 16,310 16,086
Non-equity shareholders' funds - 2,050 - 2,050
TOTAL SHAREHOLDERS' FUNDS 14,174 9,285 16,310 18,136
Approved by the board of directors on 18 June 2003 and signed on its behalf by:
George Hughes - Managing Director
European Colour plc
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2003
Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
Net cash inflow from operating activities 2,253 3,680
Dividends from joint ventures 27 56
Returns on investments and servicing of finance (828) (917)
Taxation paid (99) (697)
Capital expenditure (769) (685)
Acquisitions - (188)
Proceeds of disposal 12,515 -
Less cash disposed of with subsidiary (562) -
Equity dividends paid (95) (806)
Cash inflow before financing 12,442 443
Redemption of preference shares (2,105) (3,000)
Other financing (7,475) 955
Increase/(decrease) in cash in the year 2,862 (1,602)
FREE CASH FLOW* (73) 631
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase/(decrease) in cash in the year 2,862 (1,602)
Cash inflow from increase in loans (1,500) (8,646)
Cash outflow from repayment of loans and finance leases 8,830 7,692
Change in net debt resulting from cash flows 10,192 (2,556)
Exchange rate movements 804 14
Other non-cash movements (126) 36
Movement in net debt in the year 10,870 (2,506)
Net debt at 1 April 2002 and 2001 (12,156) (9,650)
Net debt at 31 March 2003 and 2002 (1,286) (12,156)
ANALYSIS OF NET DEBT
At Exchange Other non- At
1 April Differences cash 31 March
2002 Cash Flow Movements 2003
#'000 #'000 #'000 #'000 #'000
Cash 363 99 - - 462
Overdrafts (4,231) 2,763 220 - (1,248)
(3,868) 2,862 220 - (786)
Debt due within one year (983) 483 - - (500)
Debt due after one year (7,273) 6,815 584 (126) -
Finance leases (32) 32 - - -
Total (12,156) 10,192 804 (126) (1,286)
* Free cash flow is defined as cash flow before acquisitions, disposals and
financing.
RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
Operating profit 1,235 1,743
Share of joint venture loss/(profit) 527 (6)
Depreciation 847 1,000
Loss on sale of tangible fixed assets 14 20
Amortisation of intangible fixed assets 142 154
Write down of shares in trust 165 -
(Increase)/decrease in stock (869) 1,014
Decrease/(increase) in debtors 269 (885)
(Decrease)/increase in creditors (77) 640
Net cash inflow from operating activites 2,253 3,680
SEGMENTAL INFORMATION
Year ended Year ended
31 March 2003 31 March 2002
#'000 #'000
GEOGRAPHIC GROUP TURNOVER:
By origin: United Kingdom 25,848 28,265
USA 13,080 13,010
38,928 41,275
By destination: United Kingdom 14,263 17,647
Continental Western Europe 8,408 8,539
South America 666 516
USA 13,321 13,079
Rest of World 2,270 1,494
38,928 41,275
GEPGRAPHIC OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS:
By origin: United Kingdom 3,106 3,470
USA 693 (233)
Central costs (986) (1,235)
2,813 2,002
CLASSES OF BUSINESS:
Turnover: Pigments 32,510 30,903
Coatings 6,418 10,372
38,928 41,275
Operating profit before exceptional items:
Pigments 2,365 1,220
Coatings 1,434 2,017
Other (986) (1,235)
2,813 2,002
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Group Company
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2003 2002 2003 2002
#'000 #'000 #'000 #'000
(Loss)/profit for the financial year (5,000) 765 615 1,715
Dividends (345) (138) (345) (138)
(5,345) 627 270 1,577
Options exercised 9 1 9 1
Goodwill taken to the profit and loss
account on disposal 12,321 - - -
Foreign exchange gain 9 - - -
Scrip dividend - 51 - 51
Preference share redemption (2,105) (3,000) (2,105) (3,000)
Net addition/(reduction) to shareholders' funds 4,889 (2,321) (1,826) (1,371)
Shareholders' funds at the beginning of the year 9,285 11,606 18,136 19,507
Shareholders' funds at the end of the year 14,174 9,285 16,310 18,136
EARNINGS PER SHARE
Earnings and numbers of shares used in the calculations of earnings per
ordinary share are set out
Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
HEADLINE
Profit after tax and before goodwill amortisation and exceptional items 1,134,000 967,000
Weighted average no of shares - diluted 45,622,647 45,986,996
EPS 2.49p 2.10p
BASIC
(Loss)/Profit after tax and preference dividend (5,050,000) 627,000
Weighted average no of shares 45,622,647 45,919,409
EPS (11.07p) 1.37p
DILUTED
(Loss)/Profit after tax and preference dividend (5,050,000) 627,000
Weighted average number of shares - basic 45,622,647 45,919,405
Weighted average effect of convertaible cumulative redeemable preference shares - -
Weighted average effect of share options - 67,587
Weighted average number of shares - diluted 45,622,647 45,986,996
EPS (11.07p) 1.36p
PROFIT RECONCILIATION
Profit before tax, goodwill amortisation and exceptional items 2,413,000 1,359,000
Tax before exceptionals (1,279,000) (254,000)
Profit after tax, before goodwill amortisation and exceptional items 1,134,000 1,105,000
Goodwill amortisation (142,000) (154,000)
Exceptional items including tax effect (5,992,000) (186,000)
(Loss)/Profit after tax (5,000,000) 765,000
Preference dividend (50,000) (138,000)
(Loss)/Profit after tax and preference dividend (5,050,000) 627,000
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2003 or 31 March 2002. The
financial information for 2002 is derived from the statutory accounts for 2002
which have been delivered to the registrar of companies. The auditors have
reported on the 2002 accounts; their report was unqualified and did not contain
a statement under section 237 (2) or (3) of the Companies Act 1985. The
statutory accounts for 2003 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will
be delivered to the registrar of companies following the Company's annual
general meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GUUAAQUPWGAM
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