Portmeirion Regulatory News (PMP)

2 Apr 2008 07:01

Portmeirion Group PLC02 April 2008 2 April 2008 PORTMEIRION GROUP PLC ('Portmeirion' or 'the Group') Preliminary Results for the Year Ended 31 December 2007 Financial summary 2007 2006 Increase £'000 £'000 % Revenue 32,017 28,422 12.6Pre-tax profit before exceptional items * 3,411 2,964+ 15.1Pre-tax profit after exceptional items * 4,419 2,687+ 64.5Basic earnings per share 30.77p 17.81p+ 72.8Dividends paid and proposed per share in respect of the year 14.70p 14.00p 5.0 + Restated to reflect the adoption of IFRS.* See note 5 Highlights: Financial - revenues hit an all-time record. • Total paid and proposed dividend for the year increased by 5.0% to 14.70p (2006 - 14.00p). • Revenue increased by 12.6% to £32.0 million (2006 - £28.4 million). • Proposed final dividend of 11.15p per share (2006 - 10.70p per share). • Profit before exceptional items and tax increased 15.1% to £3,411,000 (2006 - £2,964,000). • Profit before taxation of £4,419,000 (2006 - £2,687,000) • Earnings per share up by 72.8% to 30.77p (2006 - 17.81p). • Export revenue up by 13.6%. • UK revenue up by 10.4%. Operational • New 60,000 sq.ft. warehouse at Trentham Lakes now fully operational. • Botanic Garden, the highly popular casual dining collection worldwide, remains the best selling range accounting for over half of revenue. • 189% growth in sales of contemporary ranges such as Sophie Conran and Totally Tracy. • Continued development of overseas sourcing to supplement Stoke-on-Trent production and meet growing global demand. • New warehousing facilities planned for 2008 in USA to accommodate increased sales volume. Dick Steele, Non-executive Chairman commented: "We are delighted with these results, especially given the backdrop of a weakretail environment, which reflect the operational improvements we haveimplemented during the year. Our heritage ranges have continued to sell intonew markets and at increased levels, and the contemporary ranges such as SophieConran continued to grow both in the level of sales and in range of products. Importantly, in the coming year we will continue to invest in our operationaland distribution capabilities and expect to see the greater cost benefits thiswill deliver. Through continued new product development and range extensions weplan to drive sales forward both internationally and domestically. Current trading remains strong and we are well positioned to deliver furthergrowth and shareholder value in 2008." ENQUIRIES: Portmeirion Group PLC: Dick Steele, Non-executive Chairman 01782 744721 steele_clan@msn.com Brett Phillips, Group Finance Director 01782 744721 bphillips@portmeirion.co.uk Pelham Public Relations: Alex Walters 020 7743 6674 alex.walters@pelhampr.com Kate Catchpole 020 7743 6674 kate.catchpole@pelhampr.com KBC Peel Hunt Ltd (Nomad) David Anderson 020 7418 8900 david.anderson@kbcpeelhunt.com Richard Newman 020 7418 8900 richard.newman@kbcpeelhunt.com Portmeirion Group PLC Business Review Dividend The Board is recommending a final dividend of 11.15p bringing the total paid andproposed for the year to 14.70p, an increase of 5% compared to 2006. We firmlybelieve that the value and strength of a company lies in its ability to generatelong term returns for shareholders. Since we first went onto the Stock Marketat an issue price of £1.80 in November 1988, we have paid dividends totalling£2.22 per share, including the final proposed 2007 dividend. The dividend will be paid, subject to shareholders' approval, on 23 May 2008, toshareholders on the register at the close of business on 25 April 2008. Results for the year Revenue of £32 million in 2007 was an all time record for Portmeirion. Thepre-exceptional profit before tax increased by 15.1% to £3.411 million (2006:£2.964 million). Our sales increase was even higher in real terms as our salesfrom Portmeirion USA are transacted in US dollars, and for 2007 we havetranslated our dollar sales at $2.0022/£ whereas in 2006 we translated at$1.8424/£. At constant exchange rates our sales increase would have been 16.3%rather than the 12.6% reported figure. As stated last year, we have enjoyed a pre-tax exceptional credit on thedisposal of a freehold site, which has been partly offset by exceptional chargesin respect of the opening of the new UK warehouse. Cash generation was strong during the year, enabling us to invest some £1.5million in capital expenditure, mainly in the new warehouse but also in ourproduction facilities in Stoke. Because of the major change to our warehousingfacilities, stock absorbed more cash during the year. Stock balances shouldmove towards optimum levels in 2008. We finished the year with cash balances of£2.7 million, a £2.5 million reduction on 2006. Our pension scheme deficit, net of deferred tax, is £1.8 million under IAS19, adecrease of £2.2 million over 2006. We made a cash contribution of £0.348million to our final salary scheme, closed in 1999, during the year. The Groups' three largest markets are the United States - 38% of sales (2006:39%), United Kingdom - 29% of sales (2006: 30%) and South Korea - 17% of sales(2006: 20%). Both the US and the UK provided increases compared to 2006,although as stated earlier the United States increase is depressed by thetranslation rate of the US dollar. The Group now has broad equivalence betweenUS dollar receipts and payments, so we are less subject to real foreign exchangedifferences, although translation differences will still affect reportedfigures. Product design and development We are widely recognised by our heritage ranges - Botanic Garden, Pomona andHolly & Ivy, these are strengths of the Group. Increasingly we are becomingknown for our contemporary designs such as Sophie Conran and Totally Tracy, and,since 2006, for Pimpernel. We continue to build upon all our successful rangesand to develop new ones. Our new product pipeline is now stronger, more diverse and more commercial thanat any time during the Group's history. It seeks to serve a number of differentconsumer markets, United States, United Kingdom and South Korea being our threelargest. To serve such markets we have to have a global outlook and globalsourcing feeding into a centralised product development department based inStoke-on-Trent. We spend approximately 3% of revenue on design and development. Manufacturing and sourcing We are committed to our presence in Stoke-on-Trent, where approximatelytwo-thirds of our product is manufactured. We have a skilled and loyalworkforce here and a significant investment in manufacturing. Nevertheless, weoperate in global markets which demand globally sourced products and prices. Itis likely that the percentage of our sales which is manufactured abroad willincrease over the years, but it is also likely that our volumes through ourStoke factory will be maintained. To achieve these aims we look to increasesales. We are constantly striving to increase the efficiency and capabilities of ourStoke factory, and indeed of our manufacturing partners overseas. Efficienciesat Stoke have continued to improve in 2007. Warehousing We opened our new warehouse at Trentham Lakes in Stoke-on-Trent in September2007. This was a huge undertaking and it took longer than planned to get the newwarehouse operating at an optimum level, with some loss of revenue. Anycommissioning problems are now behind us and we go forward confidently withgreater flexibility in terms of customer service. We are intending to undertake a similar warehouse move in the USA in 2008 inorder to accommodate the increasing volumes in that market and the increasingdemands of our customers. Environment The Group recognises the importance of its environmental responsibilities,monitors its impact on the environment and designs and implements policies toreduce damage that might be caused by the Group's activities. Initiativesdesigned to reduce the Group's impact on the environment include the recyclingof manufacturing waste, reducing its carbon emissions and utilisation ofrecyclable packaging materials. Examples of our environmental commitment include recycling our fired ceramicwaste in ceramic tiles produced by a local manufacturer and recycling our usedplaster of paris moulds in the cement industry. As part of our continuingcommitment to recycling we are investigating the feasibility of using ourunfired ceramic waste (our only major waste stream currently not recycled) as araw material component in the brick industry. Portmeirion's commitment to reducing our carbon emissions is evidenced by ourbeing party to a Climate Change Agreement since 2000. During this period,Portmeirion has reduced its Specific Primary Energy Consumption from 34,522 kWh/tonne to the level, in 2007, of 22,558 kWh/tonne. This represents animprovement in energy efficiency of 35% and a reduction in CO2 emissions of12,344 tonnes, a 12% reduction. Corporate Governance As an AIM listed company we are not subject to the full rigour of the corporategovernance regime, nevertheless we comply more fully than required using therules which apply to fully listed companies as guidance. We have deliberatelychosen not to extend our Board by the addition of another non-executivedirector, nor to shuffle the committee positions around in line with what wouldconstitute full compliance, as we consider that to do so would be of nosignificant benefit to shareholders. Outlook The Group will continue with its established policies for growth. We will focuson developing the brand with the emphasis on product design and development,particularly contemporary ranges and continued extensions to our heritagepatterns. Commercial design is at the heart of everything we do. We will usevigorous efforts to expand our existing customer base worldwide and continue tolook for new retail outlets in the UK. In 2008 we will be focusing specifically on maximising the benefits from our newUK warehouse and bringing our stock to more optimum levels, realising the fullbenefits from the Pimpernel brand and on the efficient move of our US warehouseto larger premises. In summary, we will continue to drive growth in sales, return on sales anddividend payments. Current trading remains strong and we are well positioned to deliver furthergrowth and shareholder value in 2008. Richard Steele Lawrence Bryan Non-executive Chairman Chief Executive CONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2007 Notes 2007 2006 £'000 £'000 Revenue 4 32,017 28,422Operating costs (28,665) (25,747) Operating profit before exceptional items 3,352 2,675 Exceptional items 2 1,008 (277) Operating profit after exceptional items 4,360 2,398 Investment revenue 142 231Finance costs (242) 46Share of profit of associated undertakings 159 58Impairment in investment in associated undertaking - (46)Profit before tax 4,419 2,687 Tax 6 (1,393) (938) Profit for the year attributable to equity holders of the parent 3,026 1,749 Earnings per share 3 30.77p 17.81p Diluted earnings per share 3 29.55p 17.58p Dividends paid and proposed per share 7 14.70p 14.00p All the above figures relate to continuing operations. CONSOLIDATED BALANCE SHEETAs at 31 December 2007 2007 2006 £'000 £'000 Non-current assetsIntangible assets 631 628Property, plant and equipment 6,353 5,767Interests in associates 1,387 1,332Deferred tax asset 396 1,663Total non-current assets 8,767 9,390 Current assetsInventories 9,581 8,352Trade and other receivables 6,630 4,467Cash and cash equivalents 2,708 5,203Derivative financial instruments - 105Assets held for sale - 350Total current assets 18,919 18,477 Total assets 27,686 27,867 Current liabilitiesTrade and other payables (4,487) (5,328)Current income tax liabilities (121) (246)Total current liabilities (4,608) (5,574) Non-current liabilitiesPension scheme deficit (2,498) (5,707)Total non-current liabilities (2,498) (5,707) Total liabilities (7,106) (11,281)Net assets 20,580 16,586 EquityCalled up share capital 528 523Share premium account 4,820 4,657Treasury shares (1,266) (1,266)Share based payment reserve 91 38Hedging and translation reserves (457) (502)Retained earnings 16,864 13,136Total equity 20,580 16,586 CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 December 2007 2007 2006 £'000 £'000 Operating profit after exceptional items 4,360 2,398Adjustments for:Depreciation 671 710Amortisation of intangible fixed assets 154 56Contributions to defined benefit pension scheme (348) (348)Charge for share based payments 53 26Exchange loss (61) (328)Profit on sale of tangible fixed assets (1,795) (16)Operating cash flows before movements in working capital 3,034 2,498Increase in inventories (1,229) (2,439)(Increase)/decrease in receivables (2,020) 382(Decrease)/increase in payables (841) 2,290Cash (absorbed by)/generated from operations (1,056) 2,731Interest paid (4) (1)Income taxes paid (1,141) (306)Net cash from operating activities (2,201) 2,424Investing activitiesDividend received from associate 83 -Interest received 132 304Proceeds on disposal of property, plant and equipment 2,257 32Purchase of property, plant and equipment (1,379) (1,676)Purchase of intangible fixed assets (157) (607)Purchase of treasury shares - (302)Purchase of equity interest - (40)Net cash inflow/(outflow) from investing activities 936 (2,289)Financing activitiesEquity dividends paid (1,398) (1,305)Shares issued under employee share schemes 168 79Net cash outflow from financing activities (1,230) (1,226)Net decrease in cash and cash equivalents (2,495) (1,091)Cash and cash equivalents at beginning of year 5,203 6,294Cash and cash equivalents at end of year 2,708 5,203 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEFor the year ended 31 December 2007 2007 2006 £'000 £'000 Exchange differences on translation of foreign operations 41 (498)Actuarial gain/(loss) on defined benefit pension scheme 2,988 (1,858)Deferred tax on pension deficit (951) 557Net expense recognised directly in equity 2,078 (1,799) TransfersTransferred to profit or loss on cash flow hedges 6 125Tax on transfers to profit or loss on cash flow hedges (2) (37) 2,082 (1,711)Profit for the year 3,026 1,749Total recognised income and expense for the year 5,108 38 attributable to equity holders of the parent NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. This announcement was approved by the Board of Directors on 1 April 2008. 1.1 The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2007 and 2006 but is derived from those accounts. Statutory accounts for 2006 which have been delivered to the Registrar of Companies, contain an unqualified audit opinion and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. Statutory accounts for the year ended 31 December 2007 on which the auditors have given an unqualified opinion and which do not contain a statement under Section 237(2) or (3) of the Companies Act 1985 will be delivered to the Registrar of Companies in due course. 1.2 Prior to 2007 the Group prepared its audited financial statements under United Kingdom Generally Accepted Accounting Principles (UK GAAP). For the year ended 31 December 2007 the Group has prepared its annual consolidated financial statements in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards (IFRS)). These financial statements have been prepared in accordance with the accountingpolicies stated in the Interim Statement for the six months ended 30 June 2007,taking into account the requirements and options in IFRS 1 'First-time adoptionof International Financial Reporting Standards'. The transition date for theGroup's application of IFRS is 1 January 2006 and the comparative figures for 31December 2006 have been restated accordingly. The financial statements have been prepared on the historic basis, except thatderivative financial instruments are stated at their fair value. 2. Exceptional items Included in exceptional items are profit or loss on the sale of land andbuildings and costs associated with leasehold property not yet operational or nolonger required by the business including rent-free periods granted onsub-letting. Additional labour costs incurred in moving to and setting up thenew warehouse and redundancy costs have also been included as exceptional. Theanalysis of exceptional items is as follows: 2007 2006 £'000 £'000 Profit on sale of freehold land & buildings 1,783 -Costs associated with assignment of leasehold property (126) -Redundancy costs (108) (277)Costs associated with implementation of new warehouse (541) - 1,008 (277) 3. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data: Earnings 2007 Earnings Earnings 2006 Earnings £ Weighted Per Share £ Weighted Per Share Number of (Pence) Number of (Pence) Shares Shares Basic earnings per share 3,026,000 9,832,804 30.77 1,749,000 9,818,990 17.81Effect of dilutive securities: employee share options - 408,463 - - 131,701 -Diluted earnings per share 3,026,000 10,241,267 29.55 1,749,000 9,950,691 17.58 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued 4. Segmental analysis The following table provides an analysis of the Group's revenue by geographicalmarket, irrespective of the origin of the products: 2007 2006 £'000 £'000 United Kingdom 9,337 8,457United States 12,181 11,009South Korea 5,526 5,590Rest of the World 4,973 3,366 32,017 28,422 5. Profit before tax reconciliation 2007 2006 £'000 £'000 Pre-tax profit before exceptional items 3,411 2,964Exceptional items (note 2) 1,008 (277)Pre-tax profit after exceptional items 4,419 2,687 6. Taxation on profit on ordinary activities 2007 2006 £'000 £'000 United Kingdom corporation tax at 30% (2006 - 30%) 814 545Adjustment to corporation tax in respect of prior 4 56yearsOverseas taxation 341 377Double tax relief (143) (134)Current taxation 1,016 844 Deferred taxation origination and reversal of timing 376 38differencesAdjustment to deferred taxation in respect of prior (61) (30)yearsPension scheme 62 86Deferred taxation 377 94 1,393 938 Corporation tax is calculated at 30% (2006 - 30%) of the estimated assessableprofit for the year. Taxation for other jurisdictions is calculated at therates prevailing in the respective jurisdictions. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued 7. Dividends The Directors recommend that a final dividend of 11.15p (2006 10.70p) perOrdinary share be paid on 23 May 2008 to shareholders on the register on 25April 2008. The total dividend proposed and paid for the year is 14.70p (2006 -14.00p) per share. The accounts for the year ended 31 December 2007 will be posted out toshareholders on or before 21 April 2008 and laid before the Company at theAnnual General Meeting on 20 May 2008. Copies will be available from theCompany Secretary at Portmeirion Group PLC, London Road, Stoke-on-Trent,Staffs., ST4 7QQ, or from the website, www.portmeirion.com following posting toshareholders. This information is provided by RNS The company news service from the London Stock Exchange