Interim Results

Portmeirion Group PLC 15 August 2002 PORTMEIRION GROUP PLC RESULTS FOR 6 MONTHS ENDED 30 JUNE 2002 CHAIRMAN'S STATEMENT Financial Highlights:- Restated First Half First Half Increase 2002 2001 % £000's £000's Turnover 14,395 13,552 6.2 Profit before tax 1,015 262 287.4 Earnings per share - Basic 6.56p 1.53p 328.8 Interim dividend per share 3.30p 3.30p - 2001 results have been restated as set out in the notes to the interim financial statements following the adoption of FRS19. Results First half sales increased by 6.2% compared to last year's. Profit before tax increased by 287% and earnings per share by 329%. Dividend The Board has decided to declare an unchanged interim dividend of 3.30p payable on 1 October 2002, to shareholders on the register on 13 September 2002. Trading Performance I am pleased to report that the improved performance of the second half of last year has indeed continued into the first half of 2002. Total sales increased by 6.2% over the equivalent period for last year, due largely to an increase in volume sales. Total sales in the UK increased by 3.7% compared to the first half of last year, a satisfactory performance, and in line with our retail customers' average increase. Our 15 retail outlets, although a relatively small proportion of total sales, contributed a commendable 25% increase in sales and we intend to carefully expand the number of retail sites. After such a difficult year in 2001 for our USA business, I am now able to report some improvement. Last year's decline has been arrested and total sales are in line with the first half of last year. However, business remains very fragile and the turmoil in the equity markets has created a lack of confidence in consumers. As a result, our major retail customers are taking a very conservative approach to their sales projections. Since the USA accounts for almost 40% of our turnover, this will continue to be a significant factor in our second half performance. Our concerted efforts to establish Portmeirion as a successful brand in the Far East is now bearing fruit. Total sales increased by 127%, with major improvements in Korea and Japan. Our marketing initiatives include signing tours, television appearances and advertising, leading to a significant increase in the number of stores offering 'Portmeirion' branded tableware and home wares. Our continued drive for improved manufacturing efficiency, together with investment in new plant and machinery is now delivering real benefits. The manufacturing gross margin in the first half of 2002 is considerably higher than last year and the production management team are confident that further improvements are possible to this commendable increase in productivity. This, together with tightly controlled indirect costs, has had a significant impact in improving profitability. Our commitment is to continue to invest in our manufacturing operations in Stoke-on-Trent. The consumers' demand for new product ranges, reflecting current style and fashion, continues to be a major influence in our strategic planning. It is essential that we have new design led products every year and to that end, the Company has recently launched several important ranges. 'Ella Doran at Portmeirion' is a range of ceramic tableware, placemats and coasters, created by the well-known home ware designer Ella Doran, and produced by Portmeirion. Handpainted glassware to complement the Botanic Garden range has been very successful since its introduction this Spring. These new ranges, together with a new collection of porcelain mugs, textiles and candles, continue the strategy of home ware development with design excellence. I believe that our management team have produced a commendable improvement in the Company's performance, in difficult trading conditions, and we are well prepared for the challenges ahead. Our proven strategy should lead to continuing growth and success. A. Ralley Chairman 14 August 2002 INDEPENDENT REVIEW REPORT TO PORTMEIRION GROUP PLC Introduction We have been instructed by the Company to review the financial information for the six months ended 30 June 2002 which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated cash flow statement, the statement of total recognised gains and losses and related notes 1 to 9 together with the reconciliation of net cash flow to movement in net funds and the reconciliation of movements in shareholders' funds. We have read the other information contained in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim statement, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim statement in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2002. Deloitte & Touche Chartered Accountants Colmore Gate 2 Colmore Row Birmingham B3 2BN 14 August 2002 CONSOLIDATED PROFIT AND LOSS ACCOUNT As restated Notes Six Months Six Months Year to 30.6.02 to 30.6.01 to 31.12.01 £000's £000's £000's Turnover - continuing operations 6 14,395 13,552 29,626 Raw materials and operating costs (13,539) (13,535) (28,492) Operating profit - continuing operations 856 17 1,134 Share of profit of associated undertakings 81 85 245 Interest receivable and similar income 78 160 244 Profit on ordinary activities before taxation 1,015 262 1,623 Taxation on profit on ordinary activities (333) (103) (623) Profit for the period 682 159 1,000 Dividends (343) (343) (1,377) Retained profit/(loss) for the period 339 (184) (377) Earnings per share 4 6.56p 1.53p 9.63p Diluted earnings per share 4 6.55p 1.53p 9.61p Dividend per share 5 3.30p 3.30p 13.25p See notes on pages 8 and 9 CONSOLIDATED BALANCE SHEET As restated As at 30.6.02 As at 30.6.01 As at 31.12.01 £000's £000's £000's £000's £000's £000's Fixed assets Tangible assets 8,694 9,120 8,952 Investments 1,448 1,336 1,453 10,142 10,456 10,405 Current assets Stocks 7,410 7,841 7,591 Debtors 5,712 6,011 6,110 Cash at bank and in hand 5,413 4,320 5,205 18,535 18,172 18,906 Creditors: amounts falling due within (3,980) (4,092) (4,851) one year Net current assets 14,555 14,080 14,055 Total assets less current liabilities 24,697 24,536 24,460 Provisions for liabilities and (240) (207) (192) charges Net assets 24,457 24,329 24,268 Capital and reserves Called up share capital 520 519 519 Share premium account 4,547 4,536 4,536 Profit and loss account 19,390 19,274 19,213 Equity shareholders' funds 24,457 24,329 24,268 CONSOLIDATED CASH FLOW STATEMENT Notes Six Months Six Months Year to 30.6.02 to 30.6.01 to 31.12.01 £000's £000's £000's Cash flow from operating activities 8 1,645 (1,042) 1,252 Returns on investments and servicing of finance 9 72 164 244 Taxation (164) (360) (1,018) Capital expenditure and financial investments 9 (323) (546) (1,034) Equity dividends paid (1,034) (1,034) (1,377) Cash inflow/(outflow) before use of liquid resources and financing 196 (2,818) (1,933) Management of liquid resources (345) 2,438 1,350 Financing 12 - - Decrease in cash in the period (137) (380) (583) Note to consolidated cash flow statement: Reconciliation of net cash flow to movement in net funds Decrease in cash in the period (137) (380) (583) Cash outflow/(inflow) from increase/(decrease) in liquid resources 345 (2,438) (1,350) Net funds at 1st January 5,205 7,138 7,138 Net funds at period end 7 5,413 4,320 5,205 See notes on pages 8 and 9 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES As restated Six Months Six Months Year to 30.6.02 to 30.6.01 to 31.12.01 £000's £000's £000's Profit for the period 682 159 1,000 Currency translation differences (162) 37 169 Total recognised gains and losses for the period 520 196 1,169 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS As restated Six Months Six Months Year to 30.6.02 to 30.6.01 to 31.12.01 £000's £000's £000's Profit for the period 682 159 1,000 Dividends (343) (343) (1,377) Currency translation differences (162) 37 169 Shares issued under employee share schemes 12 - - Net addition/(reduction) to shareholders' funds 189 (147) (208) Opening shareholders' funds 24,268 24,476 24,476 Closing shareholders' funds 24,457 24,329 24,268 NOTES 1. The consolidated profit and loss account for the six months ended 30 June 2002 and balance sheet at that date, together with the notes to the financial information, have been reviewed by the auditors but not audited. The consolidated profit and loss account for the six months ended 30 June 2001 and balance sheet at that date have also been reviewed by the auditors but not audited. The results for the six months ended 30 June 2001 have been restated following the adoption of FRS19, the effect of which is shown in the full financial statements for the year ended 31 December 2001. 2. The comparative figures for the financial year ended 31 December 2001 are not the Group's statutory accounts for that year. Those accounts have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. 3. This Interim Statement has been prepared in accordance with the accounting policies set out in the Group's 2001 Report and Accounts. 4. The earnings per share are calculated on earnings of £682,000 (2001 - £159,000) and the weighted average number of Ordinary shares of 10,392,147 (2001 - 10,389,230) in issue during the period. The options in existence during the six months ended 30 June 2002 have a dilutive effect as defined by FRS 14. The diluted earnings per share under FRS14 are calculated on earnings of £682,000 (2001 - £159,000) and a weighted average number of Ordinary shares in issue adjusted to assume conversion of all dilutive potential Ordinary shares which is 10,417,861 (2001 - 10,389,230). 5. A dividend of 3.3p (2001 - 3.3p) per Ordinary share will be paid on 1 October 2002 to shareholders on the register on 13 September 2002. 6. Turnover by destination Six Months Six Months Year to 30.6.02 to 30.6.01 to 31.12.01 £000's £000's £000's United Kingdom 5,759 5,555 12,576 North America 5,932 5,775 12,625 European Union 865 1,140 2,006 Far East 1,560 688 1,721 Rest of the World 279 394 698 14,395 13,552 29,626 7. Analysis of net funds As at As at As at 30.6.02 30.6.01 31.12.01 £000's £000's £000's Cash in hand, at bank 408 748 545 Short term money market deposits 5,005 3,572 4,660 Total 5,413 4,320 5,205 Included in short term money market deposits is an advance of a European Grant of £455,000 which is repayable to the European Commission in the event of environmental improvement projects not proceeding. 8. Reconciliation of operating profit to operating cash flows Six Months Six Months Year to 30.6.02 to 30.6.01 to 31.12.01 £000's £000's £000's Operating profit 856 17 1,134 Depreciation 573 562 1,217 Exchange (loss)/gain (103) 13 134 Loss/(profit) on sale of tangible fixed assets 8 (17) (16) Decrease/(increase) in stocks 181 (1,267) (1,017) Decrease/(increase) in debtors 592 (414) (413) (Decrease)/increase in creditors (462) 64 213 Net cash inflow/(outflow) from operating activities 1,645 (1,042) 1,252 All of the above relate to continuing operations. 9. Analysis of cash flows for headings netted in the cash flow statement Six Months Six Months Year to 30.6.02 to 30.6.01 to 31.12.01 £000's £000's £000's £000's £000's £000's Returns on investments and servicing of finance Interest received 72 164 244 Net cash inflow for returns on investments 72 164 244 and servicing of finance Capital expenditure and financial investments Purchase of tangible fixed assets (335) (628) (1,158) Sale of tangible fixed assets 12 82 124 Net cash outflow for capital expenditure and (323) (546) (1,034) financial investments Financing Issue of Ordinary shares under Executive Share Option Schemes 12 - - Net cash inflow from financing 12 - - For further information contact Arthur Ralley (Chairman), Brett Phillips (Finance Director) on: 01782 744721 This information is provided by RNS The company news service from the London Stock Exchange

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