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Share Name | Share Symbol | Market | Type |
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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 | |
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0.00 | 0.00% | 0.037 | 0.037 | 0.039 | 0.00 | 01:00:00 |
RNS Number:4374S European Colour PLC 25 November 2003 For Immediate Release 25 November 2003 European Colour plc Interim Results for the Six Months Ended 30 September 2003 European Colour, the speciality chemical pigments manufacturer, announces interim results for the six months ended 30 September 2003. Chairman's Statement In my first statement to shareholders, I want to start by thanking Paul Deakin for his excellent work as Non-executive Chairman and, for a brief period, Executive Chairman. Paul joined the Board during a difficult time and guided our company through a period of change. Group results and dividend Group results for the first six months of the financial year are not directly comparable to those of last year as they included the contribution of Tor Coatings, subsequently sold on 7 October 2002. We will, therefore, additionally give details of the comparisons for the EC Pigments activity, which is a more suitable reference for our business going forward. Group turnover for the six months to 30 September 2003 was #14.8 million (2002: #23.9 million) generating profit before goodwill amortisation, exceptional items and taxation of #0.6 million (2002: #2.2 million). EC Pigments reported turnover for the period of #14.8 million (2002: #17.4 million) and operating profit before exceptional items of #0.9 million (2002: #1.7 million). Group headline earnings per share amounted to 0.88 pence (2002: 2.98 pence). These results are after the fixed asset write down of #119,000 as detailed below. As you will read below, EC Pigments is in a challenging and fluid trading environment. With the level of uncertainty around the business at the moment, the Directors consider that the prudent course is to not declare an interim dividend. The Board will continue to monitor the situation closely and will assess the appropriateness of a final dividend following the year end. EC Pigments results EC Pigments continues to operate in a challenging trading environment, evident from the weaker second half of our last financial year. EC Pigments turnover for the six month period ended 30 September 2003 was #14.8 million, #2.6 million less than the first half of last year but only #0.3 million less than last year's second half. Operating profit before exceptional items of #0.9 million was #0.8 million less than the first half of last year and #0.2 million more than the six months to 31 March 2003. The result is #0.3 million more than the six months to 31 March 2003 before adjustments for accounting practices as detailed below, reflecting improved margins due to an improved product mix. The difficult trading environment reflects the competitive market conditions that our major customers face in Europe and North America. Although pigments for printing inks is an attractive, growing sub sector of the inks market, demand over the past year has been weak and we believe that these challenging market conditions will continue for the remainder of the year. This environment puts additional pressure on pricing as customers seek to lower costs. Consequently, we are working on specific programmes to support our customers, but these have resulted in lower margins and profitability. EC Pigments wants to be a positive element of our customer's strategic options, both in the short term and long term. There are currently some indications of a stronger US economy. However, though we are ready to respond to higher demand, it is too early to assume a durable economic recovery and therefore we remain cautious. Group strategic direction The entire European Colour team is focussed on strengthening our business. The immediate task is the advancement of our Operational Excellence programme, which emphasises top quality performance in all aspects of our business. We will measure our success through introduction of successful new products and improved business performance. Through the Operational Excellence programme, we are paying particular attention to our business fundamentals. Improved focus and attention on this important area will positively impact our marketing efforts, manufacturing standards and the success rate of new product development. We have made significant organisational changes with special focus on operational management where the team is new and still in a development phase. We are seriously evaluating how our business processes are executed and establishing targets that are more challenging. Progress is being made but there is some way to go before we can deliver the level of customer service and new products that we strive to achieve. When we are comfortable with our progress organically, we will consider external growth opportunities. If we do grow by acquisition, we will do so while maintaining a suitably prudent balance sheet. We will also maintain sufficient flexibility so that we can continue to manage our company strategically during difficult as well as healthy periods. EC Pigments strategy Our pigments activity will continue to serve its customers globally with specially developed products designed to add value to their coloration processes. EC Pigments will emphasise proprietary products developed to meet specific customer needs. This focus on product development will be supported by a co-ordinated sales and marketing campaign and a production and supply chain organisation that is sensitive to maintaining a quality product at a competitive cost. The organisational steps taken over the past year have supported this strategy. Changes to accounting practices As part of Operational Excellence, we have reviewed our accounting practices. We have decided, with auditor approval, to revise our practice of absorbing indirect overheads within finished goods and work in progress. This change will value our stocks more prudently and will lessen the variability of our earnings as stock levels change. The total impact of this is to reduce stock valuation by #364,000 as at 30 September 2003. We are also adjusting fixed asset values in the UK for equipment not fully utilised and the investment cost of our jointly owned captive insurance investment in the USA. These adjustments reduce fixed assets by #119,000 as at 30 September 2003. These adjustments are non-cash but they are reflected in the profit and loss account and balance sheet included with this results statement. Corporate governance Corporate governance has dominated the UK and international business news recently. Good corporate governance is not a fad; it is a philosophical approach to managing a business. As directors of a public company we all feel a strong sense of responsibility to our shareholders. We support current governance initiatives and have aligned ourselves to them. Board changes I joined the Board on 4 August 2003 as Chairman. Dr. David Ingles joined the Board on 23 September 2003 as an Independent Non-executive Director. On 21 July 2003, John E. Colchester resigned as a Director after seven years on the Board. His counsel has been of constant benefit to our company. Phillip Myles also resigned as a Director with effect from 15 July 2003 after a 12-year career with European Colour including nine months as a Director. Upon my appointment, Paul Deakin assumed the role of Senior Independent non executive director. At its September meeting the Board discussed Paul's independence and unanimously agreed that his six month tenure as Executive Chairman did not prejudice his independence. He was never directly involved in business operations and reverted to a non executive role as soon as possible. Board committees The Board committees have been re-energised. The Audit Committee comprises David Ingles (Chairman) and Paul Deakin. The Remuneration Committee comprises Nick Hawkins (Chairman) and Paul Deakin. I chair the Nominations Committee, the other member of which is David Ingles. European Colour people A good organisation is made up of teams of people working together. European Colour people have been through a period of restructuring and uncertainty. We are now in a phase of rebuilding and refocusing on our traditional strengths and business fundamentals in order to give us a solid platform for continued growth. I want to thank all of our people for their effort, support and, most importantly, ideas as we work together to build our company. Current trading and prospects At the beginning of my statement I characterised trading as challenging. In particular, we are in the process of reformulating a product line to meet a lower price expectation for an application. Several large customers are re-evaluating their purchasing forecasts. We are also working with targeted customers to supply additional volumes of existing products and new products, but at a somewhat lower margin for existing products. In both Europe and the USA, pricing continues to be difficult. To offset these pressures we are increasing our technical resources and our supply chain team is working with suppliers to lower our costs. The current environment is quite fluid and uncertain. We believe our performance for the full year is likely to be materially below current market forecasts. There are a number of economic forecasts that indicate brighter prospects and probably an equal number that see a softening after an initial burst of growth. Our reading of key markets indicates to us that we should maintain a prudent approach to our business. Consequently, we will continue to be cautious and strive to manage our company with professionalism and diligence. Steve Smith Chairman 25 November 2003 For further information, please contact: European Colour Steve Smith, Chairman Tel: +44 (0) 161 480 3891 Buchanan Communications Charles Ryland/Suzanne Brocks Tel: +44 (0) 20 7466 5000 Consolidated Profit and Loss Account 6 months ended 30 September 6 months ended 30 September 12 months ended 31 March 2003 2002 2003 (audited) (unaudited) (unaudited) Continuing Discontinued Total Continuing Discontinued Total Continuing Discontinued Total operations Operations operations operations operations Operations Note #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 Turnover 14,837 - 14,837 17,441 6,418 23,859 32,510 6,418 38,928 Gross profit 4,008 - 4,008 4,448 2,857 7,305 7,968 2,857 10,825 OPERATING PROFIT/LOSS Before goodwill 625 - 625 1,222 1,401 2,623 1,556 1,434 2,990 amortisation and exceptional items Exceptional (364) - (364) (114) - (114) (1,051) - (1,051) items Share of - - - - - - (562) - (562) operating loss in joint venture - exceptional items Amortisation (68) - (68) (73) - (73) (142) - (142) of goodwill 193 - 193 1,035 1,401 2,436 (199) 1,434 1,235 Provision 2 - - - - (201) (201) - - - for costs incurred on disposal of subsidiary Loss on disposal - - - - - - - (4,237) (4,237) of discontinued operations Net interest (45) - (45) (494) 27 (467) (1,157) 22 (1,135) payable PROFIT 148 - 148 541 1,227 1,768 (4,137) BEFORE TAX Tax 2 (76) (685) (863) PROFIT AFTER 72 1,083 (5,000) TAX Paid and - (148) (345) proposed dividends RETAINED PROFIT 72 935 (5,345) Headline 4 0.88p 2.98p 2.49p earnings per share Earnings per 4 0.16p 2.22p (11.07p) share (basic) Earnings per 4 0.16p 2.22p (11.07p) share (diluted Consolidated Balance Sheet Notes 30 September 30 September 31 March 2003 2002 2003 (unaudited) (unaudited) (audited) #000 #000 #000 FIXED ASSETS Intangible assets 2,077 2,448 2,242 Tangible assets 7,864 9,940 7,696 Investments 438 948 405 10,379 13,336 10,343 CURRENT ASSETS Stocks 4,705 6,435 4,824 Debtors 6,221 9,624 6,341 Cash 408 71 462 11,334 16,130 11,627 CREDITORS - less than one year Borrowings (1,479) (4,624) (1,748) Other (5,343) (7,820) (5,152) (6,822) (12,444) (6,900) NET CURRENT ASSETS 4,512 3,686 4,727 TOTAL ASSETS LESS CURRENT LIABILITIES 14,891 17,022 15,070 CREDITORS - greater than one year Other (27) (7,203) - Deferred taxation (612) (590) (611) Other provisions (285) - (285) TOTAL NET ASSETS 13,967 9,229 14,174 CAPITAL AND RESERVES Called up share capital 2,330 2,480 2,330 Share premium account 4,864 4,864 4,864 Capital redemption reserve 550 400 550 Revaluation reserve 429 438 434 Special reserve - 3 3 Profit and loss account 6 5,794 1,044 5,993 SHAREHOLDERS' FUNDS 13,967 9,229 14,174 Attributable to: Equity shareholders' funds 13,967 8,179 14,174 Non-equity shareholders' funds - 1,050 - Total shareholders' funds 13,967 9,229 14,174 Consolidated Cash Flow Statement 6 months ended 6 months ended 12 months 30 September 30 September ended 2003 2002 31 March (unaudited) (unaudited) 2003 (audited) #000 #000 #000 Net cash inflow from operating activities 1,254 1,885 2,253 Dividends from joint ventures - - 27 Returns on investments and servicing of finance (126) (510) (828) Tax paid 11 (317) (99) Capital expenditure and financial investment (679) (519) (769) Proceeds of disposal - - 12,515 Less cash disposed of with subsidiary - - (562) Equity dividends paid (195) - (95) Cash inflow before financing 265 539 12,442 Financing (46) 721 (7,475) Preference share redemptions - (1,000) (2,105) Increase in cash in the period 219 260 2,862 Reconciliation of net cash flow to movement in net debt Increase in cash in the period 219 260 2,862 Cash inflow from increase in loans - (1,000) (1,500) Cash outflow from repayment of loans and finance - 288 8,830 leases Change in net debt resulting from cash flows 219 (452) 10,192 Exchange movement (4) 822 804 New finance leases (32) - - Other non-cash movements - 30 (126) Movement in net debt in the period 183 400 10,870 Net debt at 1 April (1,286) (12,156) (12,156) Net debt at 30 September / 31 March (1,103) (11,756) (1,286) Analysis of net debt At 1 April Cash Exchange Other non- cash At 30 Sept 2003 Flow differences changes 2003 #000 #000 #000 #000 #000 Cash 462 (54) - - 408 Overdrafts (1,248) 273 (4) - (979) (786) 219 (4) - (571) Debt due within one year (500) - - - (500) Debt due after one year - - - - - Finance leases - - - (32) (32) Total (1,286) 219 (4) (32) (1,103) Notes to the Financial Statements 1. The financial information set out above does not constitute the Company's statutory financial statements for 2003 or 2002. Full accounts for the year to 31 March 2003, on which the auditors gave an unqualified report, have been delivered to the Registrar of Companies. 2. The interim report has been prepared on the basis of the accounting policies set out in the March 2003 financial statements. 3. The charge for taxation on the profit for the period is based on the estimated effective rate for the full year. 4. With the exception of the profit for the financial period and the prior year adjustment, there were no recognised gains or losses in the group. 5. Earnings per ordinary share have been calculated using 44,902,760 (basic and diluted), being the weighted average of ordinary shares in issue in the period (2002: 46,569,698 basic and 48,743,174 diluted) Headline earnings per share has been stated before goodwill amortisation and exceptional items and on a diluted basis. The directors consider that this gives a better understanding of the group's earnings. 6. Copies of this report are being sent to all shareholders. Further copies are available on request from the registered office of the Company. 7. Statement of retained profit: 30 September 2003 30 September 2002 31 March 2003 (unaudited) (unaudited) (audited) #000 #000 #000 Reserves at 1 5,993 1,102 1,102 April Transfer from revaluation reserve 5 7 11 Retained profit for the period to date 72 935 (5,345) Preference share redemption - (1,000) (2,105) Goodwill taken to the profit and loss - - 12,321 account on disposal Write back of special reserve 3 - - Foreign exchange (279) - 9 Reserves at 30 September / 31 March 5,794 1,044 5,993 Directors Paul Deakin, Senior Independent Non-Executive Director Nick Hawkins ACA, Non-Executive Director George Hughes, Managing Director Dr. David Ingles, Non-Executive Director Steve Smith, Chairman Senior Management Team George Hughes, Managing Director Neil McKinlay, Supply Chain Director Brian Quinn, Sales and Marketing Director Lee Schofield, Technology Director Christine Thompson FCCA, Chief Financial Officer Company Secretary Lisa de Caux ACA This information is provided by RNS The company news service from the London Stock Exchange END IR BIBFTMMITBIJ
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