Final Results

Portmeirion Group PLC 12 March 2003 PORTMEIRION GROUP PLC RESULTS FOR YEAR ENDED 31st DECEMBER 2002 CHAIRMAN'S STATEMENT Financial Highlights: 2002 2001 Increase £000's £000's % Turnover 30,712 29,626 3.7 Profit before tax 2,923 1,623 80.1 Basic earnings per share 19.75p 9.63p 105.1 Dividends per share 13.25p 13.25p - Sales for the year were £30.712m, 4% above the previous year. The profit before tax of £2.923m., compares with £1.623m. for the previous year, an increase of 80%. Basic earnings per share were 19.75p which compares with 9.63p in the previous year. The Board is recommending a final dividend of 9.95p bringing the total to 13.25p for the year. This is unchanged from 2001. The year has seen a commendable recovery in both sales and profitability, at a time when the economic climate has been difficult, particularly in one of our major markets, North America. Our strategy concerning new product ranges, and new areas of distribution, has protected the company from the negative impact of reduced consumer spending in both the USA and Europe. Sales in the UK increased by 2% compared with the previous year, supported by an annual increase of 15% in our own retail sales. This is a creditable performance considering the worsening economic outlook in the second half of the year. The company expects to continue to expand the number of our own retail outlets during this year. In the USA sales declined by 4% compared with the previous year. The negative forces affecting this market have been well documented, and they have lead to a significant reduction in consumer spending, particularly in our middle to upper end target market. I therefore believe that limiting the sales decline to only 4% is a creditable achievement, and is far better than the industry average. The USA accounts for 37% of total Group sales, and with no improvement in trading conditions in sight, the challenge is enormous. The introduction of new ceramic and glassware ranges has ensured that Portmeirion has out-performed many of its competitors, and this, together with a drive into new channels of distribution, is the strategy for the current year. The Far East proved to be the biggest growth market. Sales to South Korea increased by 120%, to almost £3m. and together with Japan now accounts for 11% of total sales. We have first class local management in these markets and with their guidance we are developing additional products exclusively for them. I believe there is the opportunity for further growth in the Far East, and we will continue to invest in our efforts to increase market share in both Japan and Korea. The improvement in manufacturing efficiency and productivity has continued during the year, resulting in a significant improvement in manufacturing gross profit margin. A reduction in stock levels was managed very efficiently, the Group total reducing by £1.4 million. This contributed to the Group's total cash balance, which improved by £2.4 million. The Board has, therefore, decided that the dividend will be maintained. The company has recently launched several new product ranges designed in conjunction with the homeware designer, Ella Doran, featuring ceramics, placemats and coasters, and glassware, and their success has lead us to develop further ranges for Spring 2003. A new range of bone china mugs has been designed in conjunction with Rob Scotton, a well known graphics designer, launched in the autumn of 2002 with great success, and the range will be expanded in 2003. These initiatives illustrate the commitment within the company to constant innovation and excellence of design, not only in ceramics, but also in our well-established glassware and gift ranges. We need to offer our retail customers high quality products and excellent service, particularly ever-decreasing lead-times. Portmeirion will, therefore, continue to invest in the ceramic manufacturing facility in Stoke-on-Trent. I believe that, as a result, still further improvements can be achieved in productivity and service levels. I would like to congratulate and thank the management team and workforce for their achievements. They have enhanced the company's reputation in 2002. New proposals on the role and effectiveness of non-executive directors have been put forward in the Higgs Report. I can report that Portmeirion already conforms with the majority of the recommendations. I am delighted to report that our founder, Susan Williams-Ellis, has been awarded an honorary Masters degree by Keele University for 'an outstanding contribution to the ceramic industry'. Many congratulations. Susan's belief that good design is good business has served the company well. We are now faced with a very challenging set of circumstances. The uncertain political situation, together with declining economic prospects in our major markets, are threatening to depress consumer spending. Inevitably, therefore, we have to be cautious about the prospects for 2003. However, we have a strong management team and a well proven strategy. I believe that we are well placed to take advantage of any improvement in market conditions as the year unfolds. Arthur Ralley Chairman 12th March 2003 For further information please contact: Arthur Ralley, Chairman Brett Phillips, Group Finance Director Tel: (01782) 744721 PORTMEIRION GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31st December 2002 Notes 2002 2001 £000's £000's Turnover - continuing operations 4 30,712 29,626 Raw materials and operating costs (28,174) (28,492) Operating profit - continuing operations 2,538 1,134 Share of profit of associated undertakings 230 245 Interest receivable and similar income 155 244 Profit on ordinary activities before taxation 2,923 1,623 Taxation on profit on ordinary activities (870) (623) Profit on ordinary activities after taxation 2,053 1,000 being the profit for the financial year Dividends (1,378) (1,377) Retained profit/(loss) for the financial year 675 (377) Earnings per share 2 19.75p 9.63p Diluted earnings per share 2 19.71p 9.61p Dividend per share 3 13.25p 13.25p PORTMEIRION GROUP PLC CONSOLIDATED BALANCE SHEET As at 31st December 2002 2002 2001 £000's £000's £000's £000's Fixed assets Tangible assets 8,249 8,952 Investments 1,503 1,453 9,752 10,405 Current assets Stocks 6,195 7,591 Debtors 5,715 6,110 Cash at bank and in hand 7,678 5,205 19,588 18,906 Creditors: amounts falling due within one year (4,732) (4,851) Net current assets 14,856 14,055 Total assets less current liabilities 24,608 24,460 Provisions for liabilities and charges (261) (192) Net assets 24,347 24,268 Capital and reserves Called up share capital 520 519 Share premium account 4,547 4,536 Profit and loss account 19,280 19,213 Equity shareholders' funds 24,347 24,268 PORTMEIRION GROUP PLC CONSOLIDATED CASH FLOW STATEMENT For the year ended 31st December 2002 Notes 2002 2001 £000's £000's Cash inflow from operating 6 5,053 1,252 activities Returns on investments and servicing of finance 7 175 244 Taxation (827) (1,018) Capital expenditure and financial investment 7 (563) (1,034) Equity dividends paid (1,377) (1,377) Cash inflow/(outflow) before use of liquid 2,461 (1,933) resources and financing Management of liquid resources (1,824) 1,350 Financing 7 12 - Increase/(decrease) in cash in the year 5 649 (583) Reconciliation of net cash flow to movement in net funds 2002 2001 £000's £000's Increase/(decrease) in cash in 649 (583) the year Cash outflow/(inflow) from increase /(decrease) 1,824 (1,350) in liquid resources Net funds at 1st January 5,205 7,138 Net funds at 31st December 7,678 5,205 PORTMEIRION GROUP PLC STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS For the year ended 31st December 2002 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2002 2001 £000's £000's Profit for the financial year 2,053 1,000 Currency translation (608) 169 differences Total recognised gains and losses for the financial 1,445 1,169 year RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2002 2001 £000's £000's Profit for the financial year 2,053 1,000 Dividends (1,378) (1,377) Currency translation (608) 169 differences Shares issued under employee share schemes 12 - Net addition/(reduction) to shareholders' funds 79 (208) Opening shareholders' funds, 24,268 24,476 Closing shareholders' funds 24,347 24,268 PORTMEIRION GROUP PLC NOTES 1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31st December 2002 and 2001 but is derived from those accounts. Statutory accounts for 2001, 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 2002 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. This announcement was approved by the Board of Directors on 11th March 2003. 2. Earnings per share Basic The basic earnings per share is calculated by dividing the profit after taxation of £2,053,000 (2001 - £1,000,000) by the weighted average number of Ordinary shares in issue during the year of 10,394,731 (2001 - 10,389,230). Diluted The diluted earnings per share is calculated in accordance with Financial Reporting Standard 14. This calculation uses a weighted average number of Ordinary shares in issue adjusted to assume conversion of all dilutive potential Ordinary shares and is show below: Earnings 2002 Earnings Earnings 2001 Earnings £ Weighted Per Share £ Weighted per Share Number of (Pence) Number of (Pence) Shares Shares Basic earnings per share 2,053,000 10,394,731 19.75 1,000,000 10,389,230 9.63 Effect of dilutive securities: Employee share options 23,092 15,889 Diluted earnings per share 2,053,000 10,417,823 19.71 1,000,000 10,405,119 9.61 3. The Directors propose the payment of a final dividend of 9.95p (2001 - 9.95p) per Ordinary share on 27 May 2003 to shareholders on the register on 2 May 2003. 4. Turnover by destination 2002 2001 £000's £000's United Kingdom 12,820 12,576 North America 12,108 12,625 European Union 1,792 2,006 Far East 3,448 1,721 Rest of the World 544 698 30,712 29,626 5. Analysis of net funds 2001 Cash flow 2002 £000's £000's £000's Cash in hand, at bank 545 649 1,194 Short term money market deposits 4,660 1,824 6,484 Total 5,205 2,473 7,678 6. Reconciliation of operating profit to operating cash flows. 2002 2001 £000's £000's Operating profit 2,538 1,134 Depreciation 1,231 1,217 Exchange (loss)/gain (478) 134 Loss/(Profit) on sale of tangible fixed assets 9 (16) Decrease/(Increase) in stocks 1,396 (1,017) Decrease/(Increase) in debtors 461 (413) (Decrease)/Increase in creditors (104) 213 Net cash inflow from operating activities 5,053 1,252 All of the above relate to continuing operations 7. Analysis of cash flows for headings netted in the cash flow statement 2002 2001 £000's £000's Returns on investments and servicing of finance Interest received 175 244 Net cash inflow for returns on investments and servicing of finance 175 244 Capital expenditure and financial investment Purchase of tangible fixed assets (611) (1,158) Sale of tangible fixed assets 48 124 Net cash outflow for capital expenditure and financial investments (563) (1,034) Financing Issue of Ordinary shares under share option 12 - schemes Net cash inflow from financing 12 - This information is provided by RNS The company news service from the London Stock Exchange

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