Amended Final Results
Portmeirion Group PLC
18 April 2006
Portmeirion Group plc
Amendment to the results for the year ended 31 December 2005
Released 16 March 2006 at 08:05 under RNS number 8918Z
The Company today announces the following amendments to its preliminary results
for the year ended 31 December 2005 following discussions with its auditors,
Deloitte & Touche LLP:
Financial Reporting Standard (FRS) 17 'Retirement Benefits' was implemented in
full for the first time for the year ended 31 December 2005. FRS 17 requires a
charge for the current service cost of the defined benefit scheme to be included
in the profit and loss account, with any cash contributions reflected as funding
only and not charged to the profit and loss account. However, we have now
discovered that we had incorrectly charged the £348,000 annual cash contribution
to the closed defined benefit pension scheme to the profit and loss account for
2005 and the restated profit and loss account for 2004. This understated the
profit for 2005 and overstated the restated loss for 2004 both by £348,000.
There is no effect on the consolidated balance sheet or the consolidated cash
flow statement. The changes to the preliminary announcement are:
+------------------------------------------+---------+----------+---------+----------+
| | Amended |Previously| Amended |Previously|
+------------------------------------------+---------+----------+---------+----------+
| | 2005 |Announced |Restated |Announced |
+------------------------------------------+---------+----------+---------+----------+
| | £'000 | 2005 | 2004 | Restated |
+------------------------------------------+---------+----------+---------+----------+
| | | £'000 | £'000 | 2004 |
+------------------------------------------+---------+----------+---------+----------+
| | | | | £'000 |
+------------------------------------------+---------+----------+---------+----------+
|In the consolidated profit and loss | | | | |
|account | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Operating profit/(loss) before exceptional| 1,507 | 1,159 | (384) | (732) |
|items | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Operating profit/(loss) after exceptional | 1,223 | 875 | (1,577) | (1,925) |
|items | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Pre-tax profit/(loss) on ordinary | 1,699 | 1,351 | (72) | (420) |
|activities before exceptional items | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Pre-tax profit/(loss) on ordinary | 1,380 | 1,032 | (1,265) | (1,613) |
|activities after exceptional items | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Profit/(loss) on ordinary activities after| 1,063 | 715 | (811) | (1,159) |
|taxation | | | | |
+------------------------------------------+---------+----------+---------+----------+
| | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Earnings/(loss) per share | 10.57p | 7.11p | (7.84p)| (11.20p)|
+------------------------------------------+---------+----------+---------+----------+
|Diluted earnings/(loss) per share | 10.54p | 7.09p | (7.84p)| (11.20p)|
+------------------------------------------+---------+----------+---------+----------+
| | | | | |
+------------------------------------------+---------+----------+---------+----------+
|In the statement of total recognised gains| | | | |
|and losses | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Profit/(loss) for the financial year | 1,063 | 715 | (811) | (1,159) |
+------------------------------------------+---------+----------+---------+----------+
|Total recognised gains and losses for the | 744 | 396 | (2,202) | (2,550) |
|financial year | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Total recognised gains and losses since | (587) | (935) | (2,202) | (2,550) |
|the last annual report | | | | |
+------------------------------------------+---------+----------+---------+----------+
| | | | | |
+------------------------------------------+---------+----------+---------+----------+
|In the reconciliation of movements in | | | | |
|shareholders funds | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Profit/(loss) for the financial year | 1,063 | 715 | (811) | (1,159) |
+------------------------------------------+---------+----------+---------+----------+
|Movement in pension scheme liability | (779) | (431) | (1,198) | (850) |
+------------------------------------------+---------+----------+---------+----------+
| | | | | |
+------------------------------------------+---------+----------+---------+----------+
|In the reconciliation of operating profit/| | | | |
|(loss) to operating cash flows | | | | |
+------------------------------------------+---------+----------+---------+----------+
|Operating profit/(loss) | 1,223 | 875 | (1,577) | (1,925) |
+------------------------------------------+---------+----------+---------+----------+
|Contributions to defined benefit pension | (348) | - | (348) | - |
|scheme | | | | |
+------------------------------------------+---------+----------+---------+----------+
As a consequence, the preliminary results for the year ended 31 December 2005
which were announced on 16 March 2006 are to be replaced in full by the amended
results for the year ended 31 December 2005 which follow. The Company's annual
report and accounts for the year ended 31 December 2005 are now expected be sent
to shareholders on 25 April 2006.
For further information please contact:
Arthur Ralley, Chairman Tel.: 01782 744721
Brett Phillips, Group Finance Director Fax.: 01782 743493
Amended results for the year ended 31 December 2005
CHAIRMAN'S STATEMENT
Financial summary for the year
2005 Restated
£000's (Note 4)
2004
£000's
Turnover 27,552 27,686
----------------------------- --------- ---------
Pre-tax profit/(loss) before operating 1,699 (72)
exceptionals --------- ---------
-----------------------------
Pre-tax profit/(loss) 1,380 (1,265)
----------------------------- --------- ---------
Basic earnings/(loss) per share 10.57p (7.84p)
----------------------------- --------- ---------
Dividends per share 13.25p 13.25p
----------------------------- --------- ---------
Highlights:
• Annual sales of £27.552 million, 2.7% above the previous year when measured
in the same US dollar exchange rate, but level with last year following
the sterling/dollar exchange rate movement.
• 2005 pre-tax operating profit £1.699 million compared to a loss of £0.072
million (restated) in 2004.
• Final proposed dividend maintained at 9.95p.
• 2005 earnings per share 10.57p, compared to a loss of 7.84p in 2004.
Exceptional items for the year amounted to £0.319 million compared with £1.193
million in the previous year. Therefore, the total profit for the year, before
taxation, was £1.380 million compared with a loss of £1.265 million (restated)
the previous year.
The Board is recommending a final dividend of 9.95p bringing the total to 13.25p
for the year, unchanged from 2004. The dividend will be paid, subject to
shareholders' approval, on 26th May 2006, to shareholders on the register at the
close of business on 28th April 2006. We are nearing our short-term goal of
ensuring that the dividend is covered by earnings.
RESULTS FOR THE YEAR
I am pleased to report that, following the major re-organisation of the
Company's manufacturing plants, a creditable profit improvement of some £2.6
million was achieved. This was also after absorbing approximately £0.5 million
in costs due to the further fall, at our hedged rates, in the value of the US
dollar to sterling. Since sales in the US account for over a third of the total,
the Company hedges exchange rate risk by selling dollars forward. In 2004 the
hedged rate was $1.63, and in 2005 $1.78. The Group is largely hedged at $1.82
for 2006, so additional exchange losses should be minimal for the current year.
The 2005 full year cash contribution of £0.348 million to the Group's now closed
defined benefit pension scheme has been reviewed, following the scheme's
actuarial valuation during 2005. As a result the contribution will remain at the
same level for 2006.
Exceptional operating costs in 2005 consisted of £0.284 million following the
consolidation of the two manufacturing sites in Stoke-on-Trent to one. The Board
also decided to take an impairment charge of the Group's investment in Furlong
Mills, a company supplying raw material to the ceramic industry. This impairment
is a non-cash write-down of £0.273 million. These exceptional costs were offset
by an exceptional gain of £0.238 million following the sale of the vacated
manufacturing site.
The 2.7% improvement in sales on a constant exchange rate basis was achieved
with an exceptional export performance, which more than offset a disappointing
UK market result.
Sales in the US in dollars increased by an impressive 11%, to $18.275 million,
representing 37% of total sales in sterling. This was achieved with improved
sales of our established classic tableware patterns, plus the addition of lower
priced Portmeirion Studio ranges, sourced from overseas. The team at our US
subsidiary is to be congratulated on a fine performance in improving market
share.
Sales to South Korea increased by a remarkable 41% to £4.670 million, following
a major expansion in the number of retail outlets stocking the Company's classic
ranges. There is still opportunity for growth with new product ranges to be
introduced this year. Apart from Japan, where we changed from selling through a
wholly-owned subsidiary to a local distributor, all our other major export
markets showed healthy sales increases leading to a total Group export sales
increase of 18% on a constant exchange rate basis.
Sales in the UK were 19% below the previous year. Although the performance was
affected to some extent by reduced consumer spending, and fewer tourists, I
believe this disappointing sales trend will be corrected with the introduction
of much needed new product ranges. No fewer than five new ranges are being
delivered to our retail customers in the second quarter of this year, which
should lead to the essential improvement in sales.
The result of this sales performance and exceptional gains on property disposal
has increased the Group's cash balance to £6.3 million at the end of the year.
There will be a further cash gain following the sale of our secondary
warehousing site when the new warehouse is completed. This will ensure that the
Company maintains a strong balance sheet while still investing £3.0 million in
capital expenditure for mechanising and equipping the new warehouse.
PRODUCT STRATEGY
The markets in both the UK and US continue to be subjected to retail price
deflation. Low cost retailers and the supermarket groups continue to expand
their non-food offering, and our department store customers and independent
retailers are responding by offering good quality products at ever lower prices.
The Group's strategy of producing excellent design and quality in new product
ranges under the Portmeirion brand, sourced overseas, is now beginning to show
results, while the classic ranges continue to be produced at our Stoke-on-Trent
factory.
Most notable of the five new products this Spring is a range of ceramic cookware
designed by Sophie Conran. This has met with a tremendous response, both in the
UK and abroad. I expect this product range to be sold in the US, Japan,
Australia and South Korea, and will open up new channels of distribution for
Portmeirion.
MANUFACTURING & WAREHOUSE REORGANISATION
As a result of the consolidation of our manufacturing sites, I had anticipated a
reduction in annual operating costs of approximately £0.5 million per annum. I
am pleased to confirm that approximately half of these savings were achieved in
the second half of 2005, and as a result the manufacturing gross margin improved
by 3 percentage points compared to the previous year. Further cost reductions
have been made at the start of 2006, since the Group is now faced with an
increase of at least £0.25 million in energy costs this year. However, the
overall level of annual cost reduction should be maintained.
As reported in December 2005, the contract has now been placed for the lease of
the Group's new warehouse and distribution centre. Construction work has begun,
and completion is planned for the end of 2006, with operations commencing in
Spring 2007.
MANAGEMENT STRUCTURE
The Group has continued to strengthen the sales and marketing team in 2005,
without increasing the overall size of the management team. Resources have been
transferred from production and support services, so that the cost base has not
increased. This adjustment to the management structure is in anticipation of
continued growth in the number of sourced product ranges, and the need to market
our classic ranges to new export markets.
CURRENT TRADING & PROSPECTS
I expect 2006 to be another challenging year, with consumer spending on a tight
rein. Sales so far this year are below the previous year, but broadly in line
with expectations. As I have reported, I expect the sales trend to improve as
our new ranges come to market in the second quarter of this year.
Our consumers now require new casual dining products every season, and we will
maintain the momentum of new product introductions. This, together with constant
improvement in efficiency and productivity, will, I believe, result in
continuing improvement in the Group's performance.
I would particularly like to thank the management team and workforce for their
contribution to the successful repositioning of the Group in 2005, which will
now continue through this year.
Arthur Ralley
Chairman
18th April 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31st December 2005
As restated
Notes Before Exceptional Total Before Exceptional Total
exceptional items 2005 exceptional Items 2004
items 2005 £000's items 2004 £000's
2005 £000's 2004 £000's
£000's £000's
Turnover - continuing 5 27,552 - 27,552 27,686 - 27,686
operations
Raw materials and operating 2 (26,045) (284) (26,329) (28,070) (1,193) (29,263)
costs
------- ------- ------ ------- ------- ------
Operating profit/(loss) - 1,507 (284) 1,223 (384) (1,193) (1,577)
continuing operations
Profit on sale of tangible 2 - 238 238 - - -
fixed assets
Share of profit of 68 - 68 145 - 145
associated undertakings
Interest receivable and 207 - 207 211 - 211
similar income
Interest payable and (2) - (2) (22) - (22)
similar charges
Other finance costs (81) - (81) (22) - (22)
Impairment of investment in 2 - (273) (273) - - -
associated undertaking
------- ------- ------ ------- ------- ------
Profit/(loss) on ordinary 1,699 (319) 1,380 (72) (1,193) (1,265)
activities before taxation
Taxation on profit/(loss) (317) 454
on ordinary activities
Profit/(loss) on ordinary
activities after taxation ------ ------
being the profit/(loss)
for the financial year 1,063 (811)
====== ======
Earnings/(loss) per share 3 10.57p (7.84p)
====== ======= ======= ======
Diluted earnings/(loss) per 3 10.54p (7.84p)
share ====== ======= ======= ======
Dividends per share paid 6 13.25p 13.25p
and proposed ====== ======= ======= ======
CONSOLIDATED BALANCE SHEET
As at 31st December 2005
As restated
2005 2004
£000's £000's £000's £000's
Fixed assets
Tangible assets 5,335 6,279
Investments 1,413 1,544
------- -------
6,748 7,823
Current assets
Stocks 5,913 6,054
Debtors 5,243 5,926
Cash at bank and in hand 6,294 4,859
------ -------
17,450 16,839
Creditors: amounts falling due within (3,081) (2,653)
one year ------ -------
Net current assets 14,369 14,186
------- -------
Total assets less current liabilities 21,117 22,009
Provisions for liabilities and charges (43) (19)
------- -------
Net assets excluding pension deficit 21,074 21,990
Pension deficit net of related (2,870) (2,358)
deferred tax
------- -------
Net assets including pension deficit 18,204 19,632
======= =======
Capital and reserves
Called up share capital 521 521
Share premium account 4,580 4,580
Treasury shares (964) (202)
Profit and loss account 14,067 14,733
------- -------
Equity shareholders' funds 18,204 19,632
======= =======
PORTMEIRION GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31st December 2005
2005 2004
Notes £000's £000's
Cash inflow from operating 8 3,033 48
activities
Returns on investments and 9 148 171
servicing of finance
Taxation received/(paid) 54 (604)
Capital expenditure and 9 292 (414)
financial investment
Equity dividends paid (1,330) (1,368)
------- -------
Cash inflow/(outflow) before 2,197 (2,167)
use of liquid resources and
financing
Management of liquid (1,654) 2,560
resources
Financing 9 (762) (202)
------- -------
(Decrease)/increase in cash 7 (219) 191
in the year ======= =======
Reconciliation of net cash flow to movement in
net funds
2005 2004
£000's £000's
(Decrease)/increase in cash (219) 191
in the year
Cash outflow/(inflow) from increase/(decrease)
in liquid
resources
1,654 (2,560)
Net funds at 1st January 4,859 7,228
------- -------
Net funds at 31st December 6,294 4,859
======= =======
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31st December 2005
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
As
restated
2005 2004
£000's £000's
Profit/(loss) for the financial year 1,063 (811)
Currency translation differences 380 (291)
Actuarial loss on defined benefit pension scheme (998) (1,572)
Related deferred tax 299 472
------- -------
Total recognised gains and losses for the financial 744 (2,202)
year
Prior year adjustment (1,331) -
------- -------
Total recognised gains and losses since the last (587) (2,202)
annual report ======= =======
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
As
restated
2005 2004
£000's £000's
Profit/(loss) for the financial year 1,063 (811)
Movement in pension scheme liability (779) (1,198)
Dividends paid (1,330) (1,379)
Currency translation differences 380 (291)
Purchase of treasury shares (762) (202)
------- -------
Net reduction in shareholders' funds (1,428) (3,881)
------- -------
Opening shareholders' funds as previously stated 20,963 23,964
Prior year adjustment (1,331) (451)
------- -------
Opening shareholders' funds as restated 19,632 23,513
------- -------
------- -------
Closing shareholders' funds 18,204 19,632
======= =======
NOTES
1. The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31st December 2005 and 2004 but is
derived from those accounts. Statutory accounts for 2004 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 31st December 2005 on which the
auditors have given an unqualified opinion and 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. The principal accounting policies have
been applied consistently except for the change in accounting policies as stated
in Note 4. This announcement was approved by the Board of Directors on 18th
April 2006.
2. Exceptional items
The consolidation of manufacturing onto one site referred to in the 2004 annual
report was completed during the six months ended 30 June 2005. The exceptional
operating costs incurred as a result of this move and redundancies were
£284,000.
Following the consolidation of manufacturing the vacated freehold premises were
sold. The resulting exceptional gain is analysed as follows:
£000's
Net proceeds (£700,000 less selling expenses of £12,000) 688
Less: Impaired value of site (450)
----------
Exceptional gain 238
==========
Furlong Mills is a supplier of raw materials to the ceramic manufacturing
industry and, in the light of continuing changes to that industry in the UK, an
impairment review has been carried out which has resulted in an additional
impairment provision of £273,000.
3. Earnings/(loss) per share
Basic
The basic earnings/(loss) per share are calculated by dividing the profit after
taxation of £1,063,000 (2004 - loss of £811,000 as restated) by the weighted
average number of Ordinary shares in issue during the year of 10,057,467 (2004 -
10,350,192).
Diluted
The diluted earnings/(loss) per share is calculated in accordance with Financial
Reporting Standard 22 (FRS 22).
This calculation uses a weighted average number of Ordinary shares in issue
adjusted to assume conversion of all dilutive potential Ordinary shares and is
shown below:
Earnings 2005 Earnings Loss As restated Loss
£ Weighted per £ 2004 per Share
Share
Number of (Pence) Weighted (Pence)
Shares Number of
Shares
Basic earnings/ 1,063,000 10,057,467 10.57 (811,000) 10,350,192 (7.84)
(loss) per share
Effect of dilutive
securities:
employee share - 23,636 - - - -
options
------ -------- ------ ------- ------- ----------
Diluted earnings/ 1,063,000 10,081,103 10.54 (811,000) 10,350,192 (7.84)
(loss) per share ====== ======== ====== ======= ======= ==========
FRS 22 requires presentation of diluted earnings per share when a company could
be called upon to issue shares that would decrease net profit or increase net
loss per share. For a loss making company with outstanding share options, net
loss per share would only be increased by the exercise of out-of-the-money
options. Since it seems inappropriate to assume that option holders would act
irrationally and there are no other diluting future share issues, diluted loss
per share in 2004 equals basic loss per share.
4. Prior year adjustments
In addition to applying FRS 17 'Retirement Benefits' in full the Group has also
applied FRS 21 ' Events after the balance sheet date'. Under this financial
reporting standard dividends which have been declared after the balance sheet
are not recognised as a liability. Accordingly an adjustment has been made for
the provision of £1,027,000 for dividends in the accounts for the year ended
31st December 2004.
The total of the prior period adjustments arising from the application of FRS 17
and FRS 21 is analysed as follows:
The closing shareholders' funds as at 31st December 2004 were restated as
follows:
£000's £000's
Shareholders' funds at 31st December 2004 as 20,963
previously stated
Pension scheme liability as at 31st December 2004, net (2,358)
of related deferred tax
Liability for 2004 final dividend not declared at 31st 1,027
December 2004 -------
Total prior period adjustment (1,331)
--------
Shareholders' funds at 31st December 2004 as restated 19,632
========
The opening shareholders' funds as at 1st January 2004 £000's £000's
were restated as follows:
Shareholders' funds at 1st January as previously 23,964
stated
Pension scheme liability as at 31st December 2003, net (1,486)
of related deferred tax
Liability for 2003 final dividend not declared at 31st 1,035
December 2003 -------
Total prior period adjustment (451)
--------
Shareholders' funds at 1st January 2004 as restated 23,513
========
Following the application of FRS 17 in full, the 2004 operating loss has been
restated to £1,577,000 (previously stated loss of £1,925,000) and the 2004 loss
on ordinary activities before tax has been restated to £1,265,000 (previously
stated loss of £1,577,000). An other finance charge of £81,000 has been
recognised in the 2005 profit and loss account (2004 - £22,000).
The 2004 loss per share has been restated to 7.84p (previously stated loss per
share of 10.99p).
FRS 22 'Earnings per share' has also been applied but has no impact.
5. Turnover by destination
Turnover by destination 2005 2004
£000's £000's
United Kingdom 9,562 11,848
North America 10,864 10,256
European Union 1,542 1,338
Far East 5,186 3,913
Rest of the World 398 331
------- --------
27,552 27,686
======= ========
6. Dividends
The Directors propose the payment of a final dividend of 9.95p (2003 - 9.95p)
per Ordinary share on 26th May 2006 to shareholders on the register on 28th
April 2006.
7. Analysis of net funds
At 1st Cash At 31st
January flow December
2005 2005
£000's £000's £000's
Cash in hand, at bank 1,355 (219) 1,136
Short term money market deposits 3,504 1,654 5,158
-------- -------- --------
Total 4,859 1,435 6,294
======== ======== ========
8. Reconciliation of operating profit/(loss) to operating cash flows
As
restated
2005 2004
£000's £000's
Operating profit/(loss) 1,223 (1,577)
Depreciation 952 987
Contributions to defined benefit pension scheme (348) (348)
Impairment of tangible fixed assets - operating - 977
exceptional
Exchange gain/(loss) 200 (248)
Loss/(profit) on sale of tangible fixed assets 21 (3)
Decrease in stocks 141 721
Decrease/(increase) in debtors 456 (441)
Increase/(decrease) in creditors 388 (20)
------- --------
Net cash inflow from operating activities 3,033 48
======= ========
All of the above relate to continuing operations.
9. Analysis of cash flows for headings netted in the cash flow statement
2005 2005 2004 2004
£000's £000's £000's £000's
Returns on investments and servicing
of finance
Interest received 150 193
Interest paid (2) (22)
------ -------
Net cash inflow from returns on
investments
and servicing of finance 148 171
======= ========
Capital expenditure and financial investment
Purchase of tangible fixed assets (458) (437)
Sale of tangible fixed assets 750 23
------ -------
Net cash inflow/(outflow) for capital
expenditure
and financial investments 292 (414)
======= ========
Financing
Purchase of treasury shares (762) (202)
------ -------
Net cash outflow from financing (762) (202)
======= ========
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 13th May 2024
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