(CGG) Coburg Group

RNS Number : 4069E Coburg Group PLC 18 December 2009

18 December 2009

COBURG GROUP PLC

(the 'Company')

Unaudited Interim Results for the Six Months Ended 31 October 2009

Chairman's Statement

Sales recorded an increase from £1,719,000 to £1,964,000 during the first six months in what continued to be a challenging period. Much of the sales growth came from advances in own label coffee supply and there was a small delay in some price rises feeding through so that margins were down 2.8% on last year. Caffe Nero traded at its full volume level during the six months although, as previously communicated, this will reduce to zero by the end of the second half of the year. Our reorganisation of overheads has fed through to our results and we are delighted to report profit for the half year of £60,000, being £109,000 ahead of the first six months the previous year.

We continue to be cautious about future prospects generally due to the economy but are pleased with the level of new business opportunities we are pursuing as we are able to offer increased flexibility to our customers with the managed departure of Caffe Nero from the business. Overhead reductions have been necessary and these have all been successfully implemented. As part of these changes, we have had to say goodbye to some long-standing members of staff and we would like to thank them for all their hard work over many years.

Although the loss of Caffe Nero is likely to have an adverse effect on profitability in the short term, the Board remains confident of the medium and long term prospects for the business. We are encouraged by the rate of development of sales from existing customers and the level of interest from a number of potential new customers with whom we are in discussions. We have begun a programme to strengthen and accelerate our new business development activities which we believe will start to produce results in the new year.

The directors are also continuing to consider additional measures to improve profitability.

Konrad Legg

CHAIRMAN

consolidated Statement of comprehensive income

Period ended 31 OCTOber 2009

Six months to Six months to
31 October 31 October

(Unaudited) (Unaudited)
£'000 £'000

Revenue 1,964 1,719

Cost of sales (1,347) (1,130)
Gross profit 617 589

Distribution costs 137 170
Administration expenses 412 445

Group Operating Profit 68 (26)

Interest payable and similar charges (8) (23)

Profit/(Loss) before tax 60 (49)

Income tax expense - -

Profit/(Loss) for the financial period 60 (49)

Other comprehensive income: - -

Total comprehensive income for the period 60 (49)

Basic profit / (loss) per share 0.25p (0.21)p
Diluted profit / (loss) per share 0.25p (0.21)p

consolidated balance sheet

Period ended 31 OCTOber 2009

31 October 31 October 30 April

(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000

ASSETS

Non-current assets

Goodwill 198 198 198
Intangible Assets - 6 -
Property, plant and equipment 330 412 358

Current assets

Inventories 190 247 211
Trade and other receivables 498 470 446
Cash and cash equivalents 4 - 2

TOTAL ASSETS 1,220 1,333 1,215

LIABILITIES

Current liabilities

Trade and other payables 742 681 741

Financial liabilities - borrowings
Short term borrowings 45 70 70
Interest bearing loans and 44 - 96

borrowings

Non-current liabilities

Trade and other payables - 71 6

Financial liabilities - borrowings
Interest bearing loans and 49 148 22

borrowings

Total liabilities 880 970 935
Net assets 340 363 280

EQUITY

Called up equity share capital 1,190 1,190 1,190
Share premium account 418 418 418
Other reserves 428 435 426
Retained earnings (1,696) (1,680) (1,754)

Total Equity 340 363 280

consolidated statement of cashflows

Period ended 31 OCTOber 2009

Six months to Six months to
31 October 31 October

(Unaudited) (Unaudited)
£'000 £'000

Cash flows from operating activities

Operating profit/ (loss) 68 (26)

Adjustments for:
Depreciation 38 49
Amortisation - 6
Profit on disposal of property, plant and (3) -

equipment
Increase in trade and other receivables (52) (58)
Increase/(Decrease) in trade and other (6) 35

payables
Decrease in inventories 21 8

Cash generated from operations 66 14

Interest paid (8) (23)

Net cash from operating activities 58 (9)

Cash flows from investing activities

Purchase of property, plant and equipment (10) (5)
Sale of property, plant and equipment 3 -

Net cash used in investing activities (7) (5)

Cash flows from financing activities

New borrowings - 16
Repayment of loans (14) -
(Payments)/Proceeds of finance lease (10) (32)

liabilities

Net cash used in financing activities (24) (16)

Net increase in cash and cash equivalents 27 (30)

Cash and cash equivalents at beginning of (68) (38)

period

Cash and cash equivalents at end of period (41) (68)

consolidated statement of changes in equity

Period ended 31 OCTOber 2009

Share Share Other Retained Total
capital premium reserves earnings equity
£'000 £'000 £'000 £'000 £'000

Balance at 1 May 2008
brought forward 1,190 418 435 (1,631) 412
Loss for the period - - - (49) (49)

Balance at
31 October 2008 1,190 418 435 (1,680) 363
Share Share Other Retained Total
capital premium reserves earnings equity
£ £ £ £ £

Balance at 31 October
2008 brought forward 1,190 418 435 (1,680) 363
Loss for the period - - - (74) (74)
Share options expense - - (9) - (9)

Balance at 30 April
2009 1,190 418 426 (1,754) 280

Balance at 1 May 2009
brought forward 1,190 418 426 (1,754) 280
Profit for the period - - - 60 60
Other reserves transfer - - 2 (2) -

Balance at
31 October 2009 1,190 418 428 (1,696) 340

NOTES TO THE interim FINANCIAL STATEMENTS

Period ended 31 OCTOber 2009

1 Basis of accounting

These interim financial statements for the period ended 31 October 2009 have been prepared in accordance with International Financial Reporting Standards (IFRS). The Group financial statements of Coburg Group plc consolidate the financial statements of Coburg Coffee Company Limited and C.K. Coffee Limited.

The information presented within these interim financial statements is in compliance with IAS 34 'Interim Financial Reporting'. This requires the use of certain accounting estimates and requires that management exercise judgement in the process of applying the Company's accounting policies. The areas involving a high degree of judgement or complexity, or areas where the assumptions and estimates are significant to the interim financial statements are disclosed below.

The financial information contained in this report, which has not been audited, does not constitute statutory accounts as defined by Section 434 of the Companies Act 2006 and on the same basis and using same accounting policies as used in the financial statements for the year ended 30 April 2009. The interim financial statements have not been audited.

The Company's statutory financial statements for the year ended 30 April 2009, prepared under IFRS have been filed with the Registrar of Companies. The auditors' report for the 2009 financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The following International Financial Reporting Standards, amendments and interpretations have been released but are not effective for the current period. The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group's profit or equity: IFRS Standards and Interpretations issued but not yet effective:

IFRS Standards and Interpretations issued but not yet effective
Title Issued Effective Date
IFRS Improvements re IFRS 5 May-08 Accounting periods beginning on or after
(see detail below) 01/07/2009
IAS 27 Consolidated and Jan-08 Accounting periods beginning on or after
Separate Financial Statements 01/07/2009
IFRS 3 Business Combinations Jan-08 Acquisitions in Accounting periods
beginning on or after 01/07/2009
IAS 39 Financial Instruments: Jul-08 Accounting periods beginning on or after
Recognition and Measurement 01/07/2009

(Amendment) - Eligible Hedged Items

IFRIC 17 Distributions of Nov-08 Accounting periods beginning on or after
Non-cash Assets to Owners 01/07/2009

IFRS 1 First- time Adoption of Nov-08 Accounting periods beginning on or after
International Financial 01/07/2009

Reporting Standards (revised)

IFRS Standards and Interpretations issued by IASB but not yet EU approved
Title Issued Effective Date
IFRIC 18 Transfers of Assets from Customers Jan-09 Accounting periods
beginning on or
after 01/07/2009

Group Cash-settled Share-based Payment Transactions June 2009 Accounting periods
beginning on or
after 01/01/2010
Amendments to IFRS 2 Group Cash-settled Share-based Jun-09 Accounting periods
Payment Transactions beginning on or
after 01/01/2010
Amendments to IFRS 1 Additional Exemptions for Jul-09 Accounting periods
First-time Adopters beginning on or
after 01/01/2010
Amendment to IAS 32 Classification of Rights Issues Oct-09 Accounting periods
beginning on or
after 01/02/2010
IFRIC 19 Extinguishing Financial Liabilities with Nov-09 Accounting periods
Equity Instruments beginning on or
after 01/07/2010
IFRIC 14 (Amendment) Prepayments of a minimum funding Nov-09 Accounting periods
requirement beginning on or
after 01/01/2011
Revised IAS 24 Related Party Disclosures (Issued 4 Nov-09 Accounting periods
November 2009) beginning on or
after 01/01/2011
IFRS 7 Improving Disclosures about Financial Mar-09 Accounting periods
Instruments beginning on or
after 01/01/2009
IFRS 9 Financial Instruments Nov-09 Accounting periods
beginning on or
after 01/01/2013

2. Critical accounting estimates

In order to prepare these consolidated financial statements in accordance with the accounting policies set out in note 1, management has used estimates and judgements to establish the amounts at which certain items are recorded. Critical accounting estimates and judgements are those that have the greatest impact on the financial statements and require the most difficult, subjective and complex judgements about matters that are inherently uncertain. Estimates are based on factors including historical experience and expectations of future events that management believe to be reasonable. However, given the judgemental nature of such estimates, actual results could be different from the assumptions used. The critical accounting policies are set out below.

Impairment of goodwill

An impairment of goodwill has the potential to significantly impact upon the group's income for the year. In order to determine whether impairments are required the Group estimates the recoverable amount of the goodwill. This calculation is usually based on projecting future cash flows over a rolling nineteen-year period. A discount factor, based upon the Group's weighted average cost of capital is applied to obtain a current value ('value in use'). The 'fair value less costs to sell' of an asset is used if this results in an amount in excess of 'value in use'.

Estimated future cash flows for impairment calculations are based on management's expectations of future volumes and margins based on plans and best estimates of the productivity of the assets in their current condition. Future cash flows therefore exclude benefits from major expansion projects requiring future capital expenditure where that expenditure has not been approved at the balance sheet date.

Future cash flows are discounted using a discount rate based on the Group's weighted average cost of capital, adjusted if appropriate for circumstances specific to the asset being tested. The weighted average cost of capital is impacted by estimates of interest rates, equity returns and market related risks. The Group's weighted average cost of capital is reviewed on an annual basis.

Derivative financial instruments

The Group has applied the requirements of IFRS 2 'Share-based payment', as amended by IFRIC Interpretation 2 - IFRS 2 Group and Treasury share transactions.

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. Where services are from employees fair value is determined indirectly by reference to the fair value of the instrument granted. The fair value determined at the grant date of the equity settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.

Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital

Fair value is based upon a Trinomial Valuation model.

3. EARNINGS per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.

Six months to 31 October 2009 Six months to 31 October 2008
Earnings (£000) Weighted average no. Amount per share Earnings (£000) Weighted average no. Amount per share
of shares (pence) of shares (pence)

Losses attributable
to ordinary
shareholders 60 23,790,914 0.25 (49) 23,790,914 (0.21)

Dilutive effect
of options - - - - - -
Diluted losses
per share 60 23,790,914 0.25 (49) 23,790,914 (0.21)

All share options were cancelled in the year to 31 March 2009 and therefore there were no dilutive securities.

For further enquiries please contact:

Chris Birkle Coburg Group PLC +44 (0)20 8317 6410

Colin Aaronson Grant Thornton Corporate Finance +44 (0)20 7383 5100

This information is provided by RNS The company news service from the London Stock Exchange

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