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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Conival | LSE:CVL | London | Ordinary Share | GB00B01YXY55 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.075 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:4535K
Conival plc
21 December 2007
CONIVAL PLC
("Conival" or "the Company")
21 December 2007
Preliminary results for the year ended 30 June 2007
DEPUTY CHAIRMAN'S STATEMENT
I am pleased to present our accounts for the year ended 30 June 2007.
The first half of the year was principally involved in the launch of the Sparky
brand which created a lot of interest in the market place. However it also
attracted the launch of competitive products, and the Board had little
alternative but to conclude that the Company with its current financial
structure could not fund the marketing support to compete head on with larger
competitors. This limitation has been reflected in the more niche outlook
which from 2008, will focus on a targeted "for growing kids" proposition.
The second half was focused on securing the listings for the Blenheim Palace
Provisions range of desserts and juices with the supermarkets. The listing
negotiations were protracted through 2006 but resulted in a successful,
exclusive, launch with Sainsbury's on 25 April 2007.
The weather over this summer in the UK suppressed the seasonal sales uplift for
juices. In addition, the poor weather and the changing global demands for
ingredients is driving significant inflation in the cost of juices, milk, cream
and chocolate at this time. This requires us to continually re-appraise our
recipes and price points.
NEW PRODUCTS AND LAUNCHES 2007/08
Blenheim Palace Provisions:
On 14 November 2007 the two existing desserts were replaced with a more
innovative range of four single serve desserts retailing at £1.49 each supported
by Sainsbury's with an increase to 346 stores for the launch. These products
offer greater differentiation, in what is becoming an increasingly competitive
category, with patisserie quality fruit and chocolate dessert products in
distinctive pots offered at a lower entry price point. These are manufactured on
a daily basis in a new site close to our distribution centre. This will reduce
distribution costs and levels of wastage, an important factor for improving our
margins.
Conival has secured a contract, through Gate Gourmet, to supply British Airways
First and Club class customers with Blenheim Palace Provisions yoghurt for the
breakfast menu from March 2008 for an initial period of one year. The recipe
will change each month, commencing with rhubarb, and though the volumes are
small the contract may allow the brand to win more substantial contracts in the
near future.
Glorious! Marco Pierre White:
Conival has in addition developed the brand Glorious! with Marco Pierre White.
The Company is in the final stages of listing agreements with grocery retailers
for a range of Glorious! Marco Pierre White fresh chilled soups that will be
launched in early 2008. The value of a "celebrity chef" trademark is related to
their media exposure and how consumers view them. Marco Pierre White was the
head chef on Celebrity Hells Kitchen in September 2007 reaching a maximum
audience of 6.3m on 17 September 2007 which has considerably improved shoppers'
awareness of him.
Sparky
Additional consumer research undertaken this year reinforced the appeal of the
proposition to mums "for a chilled juice enriched with Omega 3" for their kids,
which has led to a new more targeted packaging " for growing kids" execution to
be launched at the start of 2008.
Financials
Turnover achieved in the year ended 30 June 2007 was £1,001,000 (2006: £198,000)
and a loss before taxation of £1,864,000 after development costs, disposal of
short dated chilled stock, new accounting for stock options and amortisation of
goodwill (2006 restated: £10,829,000). The loss per share was 0.71p (2006
restated: 6.82p).
The business pursues four key business indicators to drive and measure
performance: stores listed, rate of sale, references listed and percentage
margin. Conival met its target for stores and references listed, but
underperformed in rate of sale and percentage gross margin. The rate of sale was
lower than expected due, in part, to the low level of marketing investment. The
overall percentage gross margin was diluted by the original low margin Sparky
pomegranate and apple juice with Omega 3, which has now been reformulated for
2008.
As a consequence of the losses incurred to date the Company announced on 6 June
2007 that it had secured a convertible loan facility of £500,000 from Corvus
Capital Inc. ("Corvus"), a substantial shareholder in the Company. This
facility replaced all previous agreements in relation to amounts previously
advanced to Conival, amounting in aggregate to £400,000, and provided additional
working capital of £100,000 to the Company. In this financial year, Corvus had
converted £200,000 to an unrelated third party with the remaining balance of
£300,000 having been converted since the 30 June 2007.
Post balance sheet events
The Company has secured further net funding of £530,000 since 30 June 2007 from
Corvus, and a conditional working capital facility of £400,000 from December
2007 with Corvus which will underpin the product launches in the first quarter
of 2008. Depending upon the success of the new product launches funding
requirements will be reviewed for the remainder of the year. Due to the
conditional nature of the funding facility from Corvus the auditors have
included an emphasis of matter in their audit report in respect of the going
concern basis of preparing the financial statements. This does not represent a
qualification of their audit opinion.
Outlook 2007/8.
The success of Hells Kitchen for Marco Pierre White has created a positive
environment for the launch proposal for our Glorious! Marco Pierre White brand
which we are looking forward to communicate further in the early part of 2008.
Finally, I would like to thank all our staff and commercial partners for their
hard work and dedication during the year and to our shareholders and our
customers for their continued support.
Dr Paul Clayton
Deputy Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Note 2007 2006
(Restated)
£'000 £'000
Turnover 1,001 198
Cost of sales (1,178) (374)
Gross loss (177) (176)
Other administrative expenses (976) (858)
Share-based payment expense (169) (85)
Amortisation and impairment of goodwill (300) (9,711)
Administrative expenses (1,445) (10,654)
Operating loss pre amortisation of goodwill and share-based (1,153) (1,034)
payment expense
Share-based payment expense (169) (85)
Amortisation and impairment of goodwill (300) (9,711)
Operating loss (1,622) (10,830)
Net interest (payable)/ receivable (242) 1
Loss on ordinary activities before taxation (1,864) (10,829)
Taxation 3 - -
Loss on ordinary activities after taxation and retained loss (1,864) (10,829)
Loss per ordinary share
- basic 4 (0.71)p (6.82)p
- diluted 4 (0.71)p (6.82)p
All of the activities of the Group are classed as continuing.
There were no recognised gains or losses other than the loss for the financial
period.
CONSOLIDATED BALANCE SHEET
Note 2007 2006
(Restated)
£'000 £'000
Fixed assets
Intangible assets 1,048 1,348
Current assets
Stocks and work in progress 34 66
Debtors 228 175
Cash at bank and in hand 71 72
333 313
Creditors:
Amounts falling due within one year (610) (945)
Net current liabilities (277) (632)
Total assets less net current liabilities 771 716
Creditors:
Amounts falling due after more than one year (350) -
Net assets 421 716
Capital and reserves
Called up share capital 1,543 838
Share premium 1,437 990
Share options reserve 290 121
Other reserves 446 471
Profit and loss account (3,295) (1,704)
Equity shareholders' funds 5 421 716
CONSOLIDATED CASH FLOW STATEMENT
Note 2007 2006
(Restated)
£'000 £'000
Net cash outflow from operating activities 6 (1,089) (927)
Returns on investments and servicing of finance
Interest received 7 3
Interest paid (1) (2)
Net cash inflow from returns on investments and service of finance 6 1
Capital expenditure and financial investment
Purchase of intangible fixed assets - (3)
Net cash outflow from capital expenditure and financial investment - (3)
Net cash outflow before financing (1,083) (929)
Financing
Issue of shares 760 569
Share issue costs (58) (27)
New loans 380 420
Net cash inflow from financing 1,082 962
(Decrease)/increase in cash 7 (1) 33
1 BASIS OF PREPARATION
The preliminary announcement has been prepared under the historical cost
convention and in accordance with applicable accounting standards apart from the
fact that the Directors have departed from the Companies Act and invoked a true
and fair override in connection with the treatment of the cost of investment in
the subsidiary as detailed below. The principal accounting policies of the
Group are set out in the Group's 2007 annual report and financial statements.
The group's accounting policies are unchanged compared with the prior year,
apart from the adoption of FRS 20 'Share-based payment' which became effective
for the year ended 30 June 2007. The adoption of this accounting standard has
resulted in a prior year adjustment (see note 2).
On 1 July 2005 the trade and net assets of the 100% subsidiary undertaking,
Portfolio Products Limited, were transferred to the Company at their book value.
The costs of the Company's investment in that subsidiary undertaking reflected
the nominal value of the shares issued at the time of its acquisition, advantage
having been taken of the relief offered by Section 131 of the Companies Act
1985. As a result of this transfer, the value of the Company's investment in
that subsidiary undertaking fell below the amount at which it was stated in the
Company's accounting records. Schedule 4 to the Companies Act 1985 requires
that the investment be written down accordingly and that the amount be charged
as a loss in the Company's profit and loss account. However, the Directors
consider that, as there had been no overall loss to the Group, it would have
failed to give a true and fair view to charge the diminution to the Company's
profit and loss account for the year ended 30 June 3007 and it was instead
re-allocated to goodwill so as to recognise in the Company's individual balance
sheet the effective cost to the Company of those net assets and goodwill. The
effect on the Company's balance sheet of this departure is to recognise goodwill
of £554,000 net of amortisation of £138,000.
GOING CONCERN
The Directors have prepared cash flow forecasts for the period ending 31
December 2008 which make several assumptions concerning the successful roll out
of new products and the number of product listings which will be secured.
The forecasts also assume that Corvus Capital Inc. (Corvus), a substantial
shareholder in the Company, will not seek repayment of the £350,000 convertible
and other loans advanced to the Company at 30 June 2007 and it will not seek
repayment of funding provided since 30 June 2007, which Corvus has confirmed to
the Company. The convertible loan of £300,000 has been converted into ordinary
shares since 30 June 2007.
The cash flow forecasts indicate a maximum funding requirement of approximately
£500,000 in June 2008 after £530,000 of further net loans made available by
Corvus since 30 June 2007. Corvus have made available an additional facility,
conditional on trading, of £400,000 to cover the funding requirements through to
31 March 2008. The cash flow forecasts indicate that on the basis that one
major creditor will defer collection of the amounts owed to it, the additional
facility will be sufficient to cover that funding requirement through to 31
March 2008. Corvus has also confirmed that it will provide further facilities
to cover the maximum funding requirement after 31 March 2008, if the Company
achieves its forecast trading results and there is evidence of further growth
opportunities in the period to 31 March 2008.
As the Directors are comfortable that assumptions made in respect of product
lines to be listed, number of stores in which products are presently listed and
the gross margin achievable on these products are reasonable based on current
trading patterns, the Directors believe that they should achieve their forecast
trading results in the period to 31 March 2008 On this basis the Directors
consider that the funding facilities will be made available by Corvus to meet
their maximum funding requirements to 31 March 2008. Therefore, the accounts
have been prepared on a going concern basis. The financial statements do not
include any adjustments that would result if the assumptions detailed above are
not met.
2 PRIOR YEAR ADJUSTMENT
As disclosed in the basis of preparation (note 1), a new accounting standard FRS
20 'Share-based payment' was adopted in the year. The financial effect of this
has been analysed below.
In the prior year equity-settled share-based payment arrangements were accounted
for under UITF Abstract 17. Under that Abstract, the intrinsic value of the
options granted, measured at the date of grant, was expensed to the profit and
loss account. Charges under UITF Abstract 17 were £nil. FRS 20 has been adopted
for the first time during the current year. FRS 20 has been applied
retrospectively to all equity instruments granted after 7 November 2002 that
were unvested as of 1 July 2006.
For the year ended 30 June 2006, the change in accounting policy has resulted in
a net decrease in the profit for the year of £85,000. The balance sheet has been
restated to reflect the recognition of share options reserve of £36,000 as at 1
July 2005 and £121,000 as at 30 June 2006.
For the year ended 30 June 2007 the change in accounting policy has resulted in
a charge to the profit and loss account of £169,000. At 30 June 2007, the share
options reserve amounted to £290,000.
3 TAXATION ON LOSS ON ORDINARY ACTIVITIES
There is no tax charge for the period. Unrelieved tax losses of approximately
£3.0 million (2006: £1.4 million) remain available to offset against future
taxable trading profits. The unprovided deferred tax asset at 30 June 2007
amounts to approximately £930,000 (2006: £400,000).
The tax assessed for the year differs from the standard rate of corporation tax
in the UK as follows:
2007 2006
(Restated)
£'000 £'000
Loss on ordinary activities before tax (1,864) (10,829)
Loss on ordinary activities multiplied by standard rate (559) (3,249)
of corporation tax in the UK of 30%
Effect of
Expenses not deductible for tax purposes (primarily 90 2,921
goodwill impairment and amortisation)
Deferred tax asset not recognised 469 328
Current tax charge for period - -
4 LOSS PER SHARE
The calculation of the basic loss per share is based on the loss on ordinary
activities after tax of £1,864,000 (2006 as restated: £10,829,000) divided by
the weighted average number of ordinary shares in issue during the year of
261,503,622 (2006: 158,722,739). The impact of the share options on the loss
per share is anti-dilutive.
5 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2007 2006
£,000 £'000
Loss for financial period (as previously stated) (1,864) (10,744)
Prior year adjustment - (85)
Loss for the financial period (restated) (1,864) (10,829)
On conversion of loan 248 -
Equity-settled share-based payments 169 85
Issue of ordinary share capital (net of issue costs) 1,152 568
Net decrease in shareholders' funds (295) (10,176)
Equity shareholders' funds brought forward 716 10,892
Equity shareholders' funds carried forward 421 716
6 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2007 2006
(Restated)
£'000 £'000
Operating loss (1,622) (10,830)
Amortisation and impairment of goodwill and other intangibles 300 9,718
Equity-settled share-based payments 169 85
Decrease/(increase) in stocks 32 (66)
Increase in debtors (53) (86)
Increase in creditors 85 252
Net cash outflow from operating activities (1,089) (927)
7 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2007 2006
(Restated)
£'000 £'000
(Decrease)/increase in cash for the period (1) 33
Change in net funds resulting from cashflows (1) 33
Capitalisation 450 -
New loans (note 9) (380) (420)
Net (debt)/funds brought forward (348) 39
Net debt carried forward (279) (348)
8 ANALYSIS OF CHANGES IN NET DEBT
1 July Cash flow 30 June 2007
2006 Capitalised
£'000 £'000 £'000
Cash at bank 72 - (1) 71
Other loans (note 9) - - (50) (50)
Convertible loan (note 9) (420) 450 (330) (300)
(348) 450 (381) (279)
9 TRANSACTIONS WITH RELATED PARTIES
During the year the Company received further loans of £380,000 from Corvus
Capital Inc. (Corvus) which owns 12.2% of the issued share capital of the
Company as at the date of these financial statements.
In July 2006, £250,000 of the outstanding loan balance due to Corvus was
capitalised by the allotment and issue of 25,000,000 ordinary shares of 0.5p.
As announced on 6 June 2007 the Company secured a convertible loan facility for
£500,000 issued at par. During the year ended 30 June 2007 the Company
converted 40,000,000 ordinary shares to the value of £200,000. A cost of
conversion of £248,000 has been recognised in the profit and loss account in
respect of this conversion.
Since 20 June 2007 Corvus has converted the remaining 60,000,000 ordinary shares
to a value of £300,000.
The total amount due to Corvus at 30 June 2007 was £350,000 (2006: £420,000) of
which £300,000 (2006: £Nil) is a convertible loan and £50,000 is included in
other loans (2006: £420,000).
During the year CVS Management Limited, a wholly owned subsidiary of Corvus,
provided management and accounting services and paid amounts on behalf of the
Company amounting to £46,670 (2006: £27,295). At 30 June 2007 the Company owed
CVS Management Limited £40,952 (2006: £10,992).
During the year directors emoluments were payable as disclosed with the Report
on Remuneration set out in the Group's 2007 annual report and financial
statements. At 30 June 2007 the following amounts were owed to Directors by the
Group in respect of these emoluments:
2007
£
Paul Clayton 2,350
Paul McGowan 11,000
10 PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The balance sheet at 30 June 2007 and the profit and loss account, cash flow
statement and associated notes for the year then ended have been extracted from
the Group's 2007 statutory financial statements upon which the auditors opinion
is unqualified although readers should note that an emphasis of matter was
raised by the auditors, as follows:
Emphasis of matter - Going Concern
In forming our opinion, which is not qualified, we have considered the adequacy
of the disclosure made in the principal accounting policies at page 13 of the
financial statements concerning the Group's ability to continue as a going
concern. The Group incurred a net loss of £1,864,000 during the year ended 30
June 2007 and, at that date, the Group's current liabilities exceeded its
current assets by £277,000. These conditions, along with the other matters
explained in the accounting policies at page 13, indicate the existence of a
material uncertainty which may cast significant doubt about the Group's ability
to continue as a going concern. The financial statements do not include the
adjustments that would result if the Group was unable to continue as a going
concern.
Those financial statements have not yet been delivered to the registrar of
companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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