Portmeirion Regulatory News (PMP)

12 Aug 2005 07:00

Portmeirion Group PLC12 August 2005 PORTMEIRION GROUP PLC RESULTS FOR 6 MONTHS ENDED 30 JUNE 2005 CHAIRMAN'S STATEMENT Financial Highlights:- Restated First Half First Half 2005 2004 £000's £000'sTurnover 12,968 13,392------------------------ ---------- -----------Profit/(loss) before tax before exceptionals 64 (378)------------------------ ---------- -----------Profit/(loss) before tax after exceptionals 18 (378)------------------------ ---------- -----------Basic earnings/(loss) per share 0.09p (2.45p)------------------------ ---------- -----------Interim dividend per share 3.30p 3.30p------------------------ ---------- ----------- Results I am pleased to announce the Group reported a profit before taxation, and beforetotal exceptional items, of £64,000 for the six months ended 30 June 2005 (2004:£378,000 loss). Exceptional operating costs of £284,000 were incurred as aresult of consolidating manufacturing onto one site from two and redundancies.An exceptional gain of £238,000 was recognised as a result of selling thevacated freehold manufacturing site in Stoke-on-Trent for £700,000 in cash. Thetotal profit before tax for the first half of 2005 was £18,000 (2004: £378,000loss). Group Sales for the six months to 30 June 2005 were £12,968,000 which is 3.2%below the previous half-year. However Group sales (on a like for like dollarexchange rate of $1.6317/£) increased by 1% from the previous six months to June2004. Dividend Given the strong balance sheet, the Board has decided to maintain the interimdividend at 3.30p per ordinary share of 5p each, payable on 3rd October 2005 toshareholders on the register on 16th September 2005. Trading Performance Group Sales were sustained by an excellent export performance. Sales in the USincreased by 9% for the 6 months ended 30 June 2005. This was on top of analready significant 22% increase in sales in the US for the 6 months ended 30June 2004. However, this translates to a 1% reduction in US sales when convertedto sterling at the higher GBP/USD exchange rate. This exchange rate differencealso reduced the pre-tax profit by some £250,000, so that the like for likeimprovement (as above) over last half-year's pre-tax profit is approximately£700,000. As predicted in my 2004 year end statement, sales to South Korea have returnedto significant growth, being 29% higher at £2.5m. The Group is now designingclassic styles specifically for the Korean market, which is contributing to thissuccess. Sales to Italy through our newly appointed distributor increased by36%. Although total export sales, excluding the USA, increased by a verycreditable 23%, this was offset by a reduction in UK sales of 21%. The UK markethas been very difficult this year, with fierce competition coming from low-costoverseas products and selling price deflation. However, the Group is introducingits own imported product ranges into the UK at lower prices for Spring 2006, andI expect UK sales to improve as a result. Manufacturing and Warehouse Reorganisation The major reorganisation project has proceeded on time and to budget, and someof the predicted benefits are now starting to be seen; namely reduced costs andmanufacturing efficiencies. The smaller of our two manufacturing sites inStoke-on-Trent was closed at the end of May, following the successful relocationof all casting production to our main site in Stoke-on-Trent, with no loss ofproduction capacity. This complex move was carried out without any significant disruption to suppliesand within budgeted expenditure. The first half manufacturing gross marginimproved by 0.8% as a result of this relocation. The smaller site was then soldfor a cash sum of £700,000, resulting in an exceptional gain to the profit andloss account of £238,000. Exceptional reorganisation costs of £284,000 wereincurred on the relocation and redundancies. The expected annual reduction in operating costs are at least £0.5m per annum,and I expect some benefits to be realised in the second half of this year. Allour UK production is now manufactured on one site. The Group is now in the final stages of agreeing contracts for the newdistribution centre in Stoke-on-Trent. This has been a very lengthy process, butI do believe the new warehouse will be opened during 2006. As previouslyreported, the Group will then consolidate warehousing and distribution from twosites to one enabling it to sell the vacated freehold site. Current Trading and Prospects The Board's decision to strengthen the export sales team is already starting topay dividends, and I believe the improvement in export sales will continuethrough the second half. I cannot, however, be so optimistic about UK sales, andI expect to see little improvement until Spring 2006. However, tight costcontrol, and the efficiencies from our manufacturing consolidation shouldprovide a modest improvement in the second half compared to last year's secondhalf, with significant progress expected from 2006 onwards. With the Group's strong balance sheet this situation should enable the Board, sofar as is possible, to maintain dividends. A. RalleyChairman11 August 2005 INDEPENDENT REVIEW REPORT TO PORTMEIRION GROUP PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2005 which comprises the consolidated profit andloss account, the consolidated balance sheet, the consolidated cash flow, thestatement of total recognised gains and losses and related notes 1 to 12. Wehave read the other information contained in the interim statement andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company, in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim statement, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare also responsible for ensuring that the accounting policies and presentationapplied to the interim figures are consistent with those applied in preparingthe preceding annual accounts except where any changes, and the reasons forthem, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom auditing standards and thereforeprovides a lower level of assurance than an audit. Accordingly, we do notexpress an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. Deloitte & Touche LLPChartered AccountantsBirmingham11 August 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT As restated As restated Notes Six Months Six Months Six Months Six Months Year Year Year to 30.6.05 to 30.6.05 to 30.6.05 to 30.6.04 to 31.12.04 to 31.12.04 to 31.12.04 Before Before exceptional Exceptional exceptional Exceptional items items Total Total items items Total £000's £000's £000's £000's £000's £000's £000's Turnover -continuingoperations 9 12,968 - 12,968 13,392 27,686 - 27,686 Rawmaterialsand (12,956) (284) (13,240) (13,915) (28,418) (1,193) (29,611)operatingcosts ------- ------- ------- ------- ------- ------- -------Operatingprofit/(loss)- continuing 12 (284) (272) (523) (732) (1,193) (1,925)operations Profit onsaleof tangible 6 - 238 238 - - -fixed assets Share ofprofit ofassociatedundertakings 9 - 9 71 145 - 145 Interestreceivableand 84 - 84 110 211 - 211similarincome Interestpayable andsimilarcharges - - - (22) (22) - (22) Otherfinance 7 (41) - (41) (14) (22) - (22)costs ------- ------- ------- ------- ------- ------- -------Profit/(loss)on ordinaryactivitiesbefore 64 (46) 18 (378) (420) (1,193) (1,613)taxation Taxation onprofit/(loss)on ordinary (9) 124 454activities ------- ------- -------Profit/(loss) 9 (254) (1,159)for the ======= ======= =======period Earnings/(loss) 4 0.09p (2.45p) (11.20p)per share ======= ======= ======= Dilutedearnings/(loss) 4 0.09p (2.45p) (11.20p)per share ======= ======= ======= Dividend pershare 5 3.30p 3.30p 13.25p ======= ======= ======= CONSOLIDATED BALANCE SHEET As restated As restated As at 30.6.05 As at 30.6.04 As at 31.12.04 £000's £000's £000's £000's £000's £000's Fixed assetsTangible assets 5,577 7,618 6,279Investments 1,584 1,476 1,544 -------- -------- -------- 7,161 9,094 7,823 Current assetsStocks 6,457 6,962 6,054Debtors 4,958 5,721 5,926Cash at bank and in hand 4,272 5,123 4,859 -------- -------- -------- 15,687 17,806 16,839 Creditors: amountsfalling due (2,081) (3,095) (2,653)within one year -------- -------- -------- Net current assets 13,606 14,711 14,186 -------- -------- -------- Total assets lesscurrent liabilities 20,767 23,805 22,009 Provisions forliabilities and charges (19) (310) (19) -------- -------- --------Net assets excludingpension deficit 20,748 23,495 21,990 Pension deficit net ofrelated deferred tax (2,399) (1,500) (2,358) -------- -------- --------Net assets includingpension deficit 18,349 21,995 19,632 ======== ======== ======== Capital and reservesCalled up share capital 521 521 521Share premium account 4,580 4,580 4,580Treasury shares (691) (202) (202)Profit and loss account 13,939 17,096 14,733 -------- -------- -------- Equity shareholders'funds 18,349 21,995 19,632 ======== ======== ======== CONSOLIDATED CASH FLOW STATEMENT Notes Six Months Six Months Year to 30.6.05 to 30.6.04 to 31.12.04 £000's £000's £000's Cash flow from operating 11 109 (446) 48activities Returns on investments andservicing of finance 12 88 73 171 Taxation refunded/(paid) 202 (249) (604) Capital expenditure and 12 502 (245) (414)financial investments Equity dividends paid (999) (1,036) (1,368) ---------- ---------- ---------- Cash outflow before use of (98) (1,903) (2,167)liquid resources and financing Management of liquid resources 504 2,435 2,560 Financing 12 (489) (202) (202) ---------- ---------- ----------(Decrease)/increase in cash inthe period (83) 330 191 ========== ========== ========== Note to consolidated cash flowstatement:Reconciliation of net cash flowto movement in net funds (Decrease)/increase in cash inthe period (83) 330 191 Cash inflow from decrease inliquid resources (504) (2,435) (2,560) Net funds at 1st January 4,859 7,228 7,228 ---------- ---------- ----------Net funds at period end 10 4,272 5,123 4,859 ========== ========== ========== CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESRECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES As restated As restated Six Months Six Months Year to 30.6.05 to 30.6.04 to 31.12.04 £000's £000's £000's Profit/(loss) for the period 9 (254) (1,159) Currency translation differences 196 (27) (291) Actuarial loss on defined benefitpension scheme - - (1,572)Related deferred tax - - 472 ------------ ------------- ------------Total recognised gains and losses forthe period 205 (281) (2,550) Prior period adjustment (Note 8) (1,331) - - ------------ ------------- ------------Total recognised gains and lossessince the last annual report (1,126) (281) (2,550) ============ ============= ============ RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS As restated As restated Six Months Six Months Year to 30.6.05 to 30.6.04 to 31.12.04 £000's £000's £000's Profit/(loss) for the period 9 (254) (1,159) Movement in pension scheme liability - - (850) Dividends (999) (1,035) (1,379) Currency translation differences 196 (27) (291) Purchase of treasury shares (489) (202) (202) ------------ ------------- ------------Net reduction in shareholders' funds (1,283) (1,518) (3,881) ------------ ------------- ------------ Opening shareholders' funds aspreviously stated 20,963 23,964 23,964 Prior period adjustment (Note 8) (1,331) (451) (451) ------------ ------------- ------------Opening shareholders' funds asrestated 19,632 23,513 23,513 ------------ ------------- ------------ ------------ ------------- ------------Closing shareholders' funds 18,349 21,995 19,632 ============ ============= ============NOTES 1. The interim financial statements for the six months ended 30 June 2005 andthe six months ended 30 June 2004 have been reviewed by the auditors but notaudited. 2. The comparative figures for the financial year ended 31 December 2004 are notthe Group's statutory accounts for that year. Those accounts have been reportedon by the Group's auditors and delivered to the Registrar of Companies. Thereport of the auditors was unqualified and did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. 3. This Interim Statement has been prepared in accordance with the accountingpolicies set out in the Group's 2004 Report and Accounts with the exception ofretirement benefits, events after the balance sheet date and earnings per share.FRS 17 "Retirement Benefits" and FRS 21 "Events after the balance sheet date"are applicable for the first time and have a prior year impact which is detailedin Note 8. FRS 22 "Earnings Per Share" has also been applied but has no impact. 4. The earnings per share are calculated on profit after tax of £9,000 (2004 - aloss of £254,000) and the weighted average number of Ordinary shares of10,163,016 (2004 - 10,379,472) in issue during the period. The options inexistence during the six months ended 30 June 2005 do not have a dilutive effectas defined by FRS 22. As the effect of share options is anti-dilutive for thesix months ended 30 June 2004, the anti-dilutive share options have beenexcluded from the calculation of diluted weighted average number of Ordinaryshares. 5. A dividend of 3.3p (2004 - 3.3p) per Ordinary share will be paid on 3 October2005 to shareholders on the register on 16 September 2005. 6. Exceptional itemsThe consolidation of manufacturing onto one site referred to in the 2004 annualreport was completed during the six months ended 30 June 2005. The exceptionaloperating costs incurred as a result of this move and redundancies were£284,000. Following the consolidation of manufacturing the vacated freehold premises weresold. The resulting exceptional gain is analysed as follows: £000'sNet proceeds (£700,000 less sellingexpenses of £12,000) 688Less: Impaired value of site (450) --------Exceptional gain 238 ======== 7. Pension liabilitiesThe Group has applied FRS 17 "Retirement Benefits" in full.The total effect of this on the profit and loss account is as follows: Six Months Six Months Year to 30.6.05 to 30.6.04 to 31.12.04 £000's £000's £000'sAmount charged to other finance costs Expected return on pension scheme assets 461 430 865Interest on pension scheme liabilities (502) (444) (887) -------- -------- --------Net effect on profit for the period (41) (14) (22) ======== ======== ======== 8. Prior year adjustmentsThe Group has also applied FRS 21 " Events after the balance sheet date". Underthis financial reporting standard dividends which have been declared after thebalance sheet date are not recognised as a liability. Accordingly adjustmentshave been made for the following provisions for dividends: Six Months Year to 30.6.04 to 31.12.04 £000's £000's Dividend previously provided 344 1,027 -------- -------- The total of the prior year adjustments arising from the application of FRS 17and FRS 21 is analysed as follows: The closing shareholders' funds as at 31 December 2004 £000's £000'swere restated as follows: Shareholders' funds at 31 December 2004 aspreviously stated 20,963 Pension scheme liability as at 31 December 2004 (2,358)Liability for 2004 final dividend notdeclared at 31 December 2004 1,027 -------- Total prior period adjustment (1,331) --------Shareholders' funds at 31 December 2004 as restated 19,632 ======== The opening shareholders' funds as at 1 January 2004 £000's £000'swere restated as follows: Shareholders' funds at 1 January as previously stated 23,964 Pension scheme liability as at 31 December 2003 (1,486)Liability for 2003 final dividend notdeclared at 31 December 2003 1,035 -------- Total prior period adjustment (451) --------Shareholders' funds at 1 January 2004 as restated 23,513 ======== 9. Turnover by destination Six Months Six Months Year to 30.6.05 to 30.6.04 to 31.12.04 £000's £000's £000's United Kingdom 4,391 5,552 11,848North America 4,701 4,728 10,256European Union 882 730 1,338Far East 2,774 2,196 3,913Rest of the World 220 186 331 --------- -------- -------- 12,968 13,392 27,686 ========= ======== ======== 10. Analysis of net funds As at As at As at 30.6.05 30.6.04 31.12.04 £000's £000's £000's Cash in hand, at bank 1,272 1,494 1,355Short term money market deposits 3,000 3,629 3,504 -------- -------- --------Total 4,272 5,123 4,859 ======== ======== ======== 11. Reconciliation of operating profit to operating cash flows Six Months Six Months Year to 30.6.05 to 30.6.04 to 31.12.04 £000's £000's £000's Operating loss (272) (523) (1,925)Depreciation 483 494 987Impairment of tangible fixed assets -operating exceptional - - 977Exchange gain/(loss) 109 13 (248)(Profit)/loss on sale of tangiblefixed assets 9 (2) (3)(Increase)/decrease in stocks (403) (187) 721Decrease/(increase) in debtors 755 (563) (441)(Decrease)/increase in creditors (572) 322 (20) -------- -------- --------Net cash inflow/(outflow) fromoperating activities 109 (446) 48 ======== ======== ======== All of the above relate to continuing operations. Analysis of cash flows for headings netted in the cash flow statement Six Months Six Months Year to 30.6.05 to 30.6.04 to 31.12.04 £000's £000's £000's £000's £000's £000's Returns on investments andservicing of financeInterest received 88 95 193Interest paid - (22) (22) -------- ------- ------- Net cash inflow forreturns on investmentsand servicing of finance 88 73 171 ======= ======= =======Capital expenditure andfinancial investmentsPurchase of tangiblefixed assets (224) (262) (437)Sale of tangible fixedassets 726 17 23 -------- ------- ------- Net cash inflow/(outflow)for capital expenditureand financialinvestments 502 (245) (414) ======= ======= ======= FinancingPurchase of treasuryshares (489) (202) (202) -------- ------- ------- Net cash outflow fromfinancing (489) (202) (202) ======= ======= ======= For further information please contact: Arthur Ralley (Chairman) Brett Phillips (Finance Director) Telephone: 01782 744721 This information is provided by RNS The company news service from the London Stock Exchange