RNS Number:8459S
Comeleon PLC
04 December 2003
COMELEON PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2003
4 DECEMBER 2003
CHAIRMAN'S STATEMENT
Since my last statement in December 2002 there has been a severe downturn in the
global market for replaceable covers for mobile phones and this is reflected in
our results for the six months ended 31 March 2003.
Interim Results
Turnover for the period was #2.0 million - including mobile phone handsets sales
of #2.1 million and a provision against bad and doubtful debts of #1.3 million
and a write-back of deferred income of #0.3 million - leaving #1.5 million
relating mainly to imaged product using the comeleon process (H1 2002: #1.6m).
The gross loss of #1.0 million (H1 2002: gross profit #0.4 million) arose
following the provision against #1.3 million of bad and doubtful debts, a stock
write-down of #0.7 million, a gross loss on handset sales of #0.2 million and a
write-back of provisions no longer required of #0.4 million. Both the provision
against bad and doubtful debt and the stock write-down were a consequence of the
fall off in the market for replaceable covers for mobile phones which has
affected a number of our customers.
Administrative overheads increased to #3.2 million (H1 2002: #2.1 million)
including a write down of fixed assets of #0.6 million reflecting the fall in
demand for replaceable mobile phone covers. Overheads in the period were
expected to be higher as staff numbers had increased significantly in comparison
with prior periods. The loss before taxation for the period was #4.1 million (H1
2002: #1.7 million loss).
Debtors were reduced by #2.7 million and Creditors: amounts falling due within
one year were reduced by #2.4 million owing to the write-back of deferred income
recognised during the year ended 30 September 2002 under distribution and
licence agreements.
The closing cash balance was #0.9 million (H1 2002: #2.0 million).
Trading update
As explained in the trading statement made in December 2002, we viewed it as
strategically important for our young business to diversify quickly into new
markets, but that at that time our business was still dependent on a single
market area, namely mobile phone replaceable covers.
The unforeseen downturn, which occurred very quickly in the early months of
2003, has therefore had a serious adverse impact on our business. The extent to
which the downturn impacted the Company is shown clearly by the stark contrast
in order intake between the two months of October and November 2002, where order
intake was #1.6 million, and the two months of January and February 2003, where
order intake fell to #0.12 million.
Faced with such a fall in business at a time when the Company had been relying
on reaching a breakeven position and when cash resources were limited, action
needed to be taken quickly. A far reaching and radical cost cutting exercise was
quickly implemented with a view to conserving cash and protecting the Company.
Overheads fell from #0.40 million in November 2002 to #0.26 million in March
2003 including voluntary pay reductions by all Directors.
Since March this year comeleon has concentrated on sales of ImageBoxes and wide
format licences and consumables. In addition, it has continued to receive a low
volume of orders for imaged product. Sales have averaged around #66,000 per
month over the six months to 30 September 2003. There have been no further sales
of mobile phone handsets. comeleon continues to be loss making and is consuming
cash, albeit at much lower levels than in the six months ended 31 March 2003.
Proposed Acquisition
Since the update given on 24 February 2003, we have continued to cut operating
costs but have not yet reached a stable cash break-even position and have
dwindling cash reserves. The Directors have considered a number of options over
the past six months with the aim of securing the funding position of the Group
and of diversifying its activities.
The first of the options to reach an advanced stage was a reverse takeover,
announced on 16 April, since when trading in the Company's shares has been
suspended. Those first talks did not lead to a successful deal, but the Company
has today announced proposals to acquire Tanfield Holdings Limited and to raise
#1.65 million in a placing of convertible unsecured loan stock and ordinary
shares. An admission document in respect of the Proposals has been published
today.
Outlook
The Directors and Proposed Director continue to believe in the comeleon
technology, but take a prudent view of its prospects. The immediate target for
comeleon's business is to operate at a cash break-even position. The Directors
and Proposed Director are encouraged by the prospects of Tanfield Holdings
Limited which comes with an established business and order pipeline.
Jon Pither
Non-executive Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 March 31 March 30 September
2003 2002 2002
# # #
TURNOVER: continuing operations 2,022,896 1,575,460 4,502,696
Cost of sales (2,976,445) (1,188,380) (3,404,025)
Gross(loss)/ profit (953,549) 387,080 1,098,671
Administrative expenses (3,157,134) (2,074,553) (4,378,907)
Other operating income 25,046 20,000 50,000
OPERATING LOSS: continuing operations (4,085,637) (1,667,473) (3,230,236)
Interest received and similar income 1,914 48,909 91,243
Interest payable and similar charges (49,767) (52,331) (128,728)
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (4,133,490) (1,670,895) (3,267,721)
Tax on loss on ordinary activities - - 24,679
LOSS FOR THE FINANCIAL PERIOD
WITHDRAWN FROM RESERVES (4,133,490) (1,670,895) (3,243,042)
Basic and dilutive loss per ordinary share (27.01p) (13.13p) (24.32p)
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
31 March 31 March 30 September
2003 2002 2002
# # #
FIXED ASSETS
Intangible assets 692,937 790,980 839,460
Tangible assets 1,390,325 2,260,431 2,317,683
2,083,262 3,051,411 3,157,143
CURRENT ASSETS
Stocks 192,788 304,558 455,797
Debtors 588,867 963,873 4,704,713
Cash at bank and in hand 930,251 2,024,700 2,985,734
1,711,906 3,293,131 8,146,244
CREDITORS: amounts falling due
within one year (988,372) (1,749,421) (4,587,070)
NET CURRENT ASSETS 723,534 1,543,710 3,559,174
TOTAL ASSETS LESS CURRENT LIABILITIES 2,806,796 4,595,121 6,716,317
CREDITORS: amounts falling due after more
than one year
Obligations under finance leases (1,007,751) (943,353) (716,912)
1,799,045 3,651,768 5,999,405
CAPITAL AND RESERVES
Called up share capital 153,021 127,563 153,021
Shares to be issued reserve 555,469 555,469 555,469
Other reserves 111,150 111,150 111,150
Share premium 12,416,999 8,589,543 12,483,869
Merger reserve 615,614 615,614 615,614
Profit and loss account (12,053,208) (6,347,571) (7,919,718)
TOTAL EQUITY SHAREHOLDERS' FUNDS 1,799,045 3,651,768 5,999,405
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 March 31 March 30 September
2003 2002 2002
# # #
Net cash outflow from operating activities 4 (1,687,421) (1,411,160) (3,882,383)
Return on investments and servicing of finance (47,853) (3,422) (37,485)
Taxation 24,679 - -
Capital expenditure & financial investment (168,864) (214,346) (435,491)
Cash outflow before financing (1,879,459) (1,628,928) (4,355,359)
Financing (176,024) (194,228) 3,493,237
Decrease in cash (2,055,483) (1,823,156) (862,122)
Reconciliation of net cash flow to movement in net funds
Decrease in cash in the period (2,055,483) (1,823,156) (862,112)
Cash outflow from decrease in debt 176,024 195,178 427,497
Change in debt resulting from cashflows (1,879,459) (1,627,978) (434,615)
New finance leases (105,750) (600,996) (729,616)
(1,985,209) (2,228,974) (1,164,231)
Net funds at 1 October 2002/2001 1,907,709 3,071,940 3,071,940
Net funds at 31 March 2003/2002 (77,500) 842,966 1,907,709
NOTES TO THE INTERIM RESULTS
1. Basis of preparation
The interim financial statements, which have been neither audited nor reviewed
by the auditors, have been prepared on the basis of the accounting policies set
out in the comeleon plc statutory accounts for the period ended 30 September
2002.
The interim financial statements do not constitute statutory accounts within the
meaning of S240 of the Companies Act and have not been delivered to the
Registrar of Companies.
2. Taxation
The tax charge in the period is based on the anticipated effective rate of tax
for the year ended 30 September 2003.
3. Loss per ordinary share
Loss per share has been calculated using the weighted average number of shares
in issue during the relevant financial periods.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 March 31 March 30 September
2003 2002 2002
No./# No./# No./#
Weighted average number of shares 15,302,104 12,725,027 13,333,577
Loss on ordinary activities after taxation 4,133,490 1,670,895 3,243,042
No diluted loss per share has been disclosed as the share options are
anti-dilutive.
4. Net cash outflow from operating activities
Unaudited Unaudited Audited
6 month 6 months Year
ended ended ended
31 March 31 March 30 September
2003 2002 2002
# # #
Operating loss (4,085,637) (1,667,473) (3,230,236)
Depreciation on tangible fixed assets 1,118,729 244,396 464,864
Amortisation of intangible fixed assets 158,584 46,702 70,267
Decrease/(increase) in stocks 326,591 (114,721) (265,960)
Decrease/(increase) in debtors 4,091,167 (367,620) (4,083,781)
(Decrease)/increase in creditors (3,296,855) 447,556 3,162,463
Cash outflow from operating activities (1,687,421) (1,411,160) (3,882,383)
5. Going Concern
In conjunction with the proposed acquisition of Tanfield Holdings Limited the
Directors have considered the future financing of comeleon and the Enlarged
Group. An integral part of that financing is the issue of #1.6 million nominal
of Convertible Loan Stock. Whilst there is uncertainty as to the outcome the
Directors remain confident that both the proposed Acquisition and the issue of
the Convertible Loan Stock will be successful. The financial information has
been prepared on a going concern basis and does not include any adjustments that
might result from failure to satisfactorily conclude the proposed Acquisition
and fundraising.
6. Copies of this report are being forwarded to all shareholders and
further copies are available from the Company's Registered Office at Comeleon
House, North Tanfield Industrial Estate, Tanfield Lea, Co Durham, DH9 9NX.
This information is provided by RNS
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END
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