Interim Results
Portmeirion Group PLC
09 August 2007
9th August 2007
Portmeirion Group PLC
('Portmeirion' or 'the Group')
Interim results for the six months ended 30 June 2007
HIGHLIGHTS:
Financial -Solid set of financial results underpin impressive sales growth
- Operating profit before exceptional items and financing of £838,000
compared to £748,000 in 2006.
- Profit before taxation of £2,491,000 compared to £713,000 in 2006.
- Revenue increased by 19% to £14.5 million compared to £12.2 million
in 2006.
- Export revenue up by 18%.
- UK revenue up by 22%.
- Proposed interim dividend of 3.55p, an increase of 7.6%.
Operational
- Sophie Conran collection performed ahead of expectations
- New 64,000 sq ft Trentham Lakes warehouse operational
- New ranges being actively developed in the UK and sourced in the Far East
- Externally sourced products expected to comprise a third of sales in 2007
- Current trading in-line with expectations
Dick Steele, Non Executive Chairman commented:
'We have had a very encouraging first half with sales in the UK and North
America well ahead of last year. Growth has been driven by the popularity of our
well established ranges such as Botanic Garden and importantly, by the success
of the new ranges particularly Sophie Conran.
'In addition, we have achieved some major structural changes to the Group with
the completion of the new warehouse which will have long term benefits as we
expand. These results demonstrate the huge potential for the Group both in the
UK and internationally and we look forward to the future with confidence.'
ENQUIRIES:
Portmeirion 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 James Henderson 020 7743 6673
James.henderson@pelhampr.com
Chairman's Statement
Trading performance
I am delighted to report that revenue has increased significantly in our UK, US
and other markets. In the UK sales were 22% above the same period in 2006, in
the US they were 9% ahead in sterling terms and 20% ahead in local currency.
Our other markets were 29% ahead. This strong sales growth follows a turnaround
in sales in the second half of last year with an 11% increase resulting in a
full year increase of 3.2% in 2006.
The Group has a clear strategy for growth in place which is already generating
impressive sales and profit increases. There are three principal strands to our
strategy:
- Focus on improving operating efficiency by streamlining our
manufacturing cost base and outsourcing to overseas manufacturing where
appropriate
- Enhance the existing product base with innovative designs across all key
segments of the tableware and giftware market; formal, informal and children
- Extend the product range through the acquisition of niche bolt on
businesses.
This strategy is enabling us to maintain our position and profile at the
forefront of the UK and overseas tableware and giftware markets helped by some
very successful new product ranges including Sophie Conran's range and
Jacqueline Wilson's 'Totally Tracy' collection which to date have both performed
well ahead of expectation.
Our pure manufacturing margin has held steady compared to last year, although
costs after manufacturing - particularly UK warehousing where we have been
double running and royalties reflecting more designer ranges - have increased.
We expect that the double running costs of UK warehousing will cease by the year
end, but royalty costs will continue to increase in line with our design
strategies.
Profitability
Operating profit before exceptional1 items and financing was £838,000, an
increase of 12% compared to the restated figures for 2006, reflecting an
excellent sales performance, steady margins and careful cost control. The
exceptional credit of £1,644,000 is largely composed of the profit achieved on
the disposal of a freehold site which became surplus to requirements as a result
of the consolidation of our UK manufacturing facilities, a process which we
started in 2004 and which is now complete.
Dividend
The Board has decided to increase the interim dividend by 7.6% to 3.55p per
ordinary share, this is the same percentage increase as was applied to the final
dividend last year. The dividend will be paid on 1 October 2007 to shareholders
on the register on 7 September 2007.
1. See note 4 on page 16 for definition of exceptional.
Balance sheet
Our balance sheet remains strong, with net assets of £17.0 million. Our cash at
bank is currently £2.0 million, following a greater investment in stock required
to pursue our sales opportunities, our new ranges and to facilitate double
running as the new UK warehouse was commissioned. The fixed asset investment in
the new warehouse has been partly financed by the sale of a surplus freehold
site. We hold 677,218 of treasury shares, at an average balance sheet
acquisition cost of £1.87 each.
Accounting policies
These are the first results presented under International Financial Reporting
Standards (IFRS) and the comparatives have been restated on this basis. The
only significant impact for the interim report is in respect of accounting for
forward foreign exchange contracts which has had a net adverse effect on the
profit before tax compared to last year of £217,000. Details of the adjustments
are set out in note 10.
New UK warehouse
We started shipping some product from our new Trentham Lakes warehouse in
Stoke-on-Trent in June 2007 and with effect from 30 June 2007, one of our other
two UK warehouses ceased operation. Most products will be shipped from the new
warehouse from September 2007 and the remaining old warehouse will close shortly
thereafter. The installation and commissioning of the automatic handling
equipment was completed satisfactorily and within budget. It will be some time
before the full cost savings we have planned for are achieved as we will still
have one surplus leasehold property for disposal. We will also have to bring
our stock levels back into balance once double running has ceased.
Product development
We have continued to develop contemporary ranges in the Far East, taking
advantage of outside manufacturing capabilities. In 2006 20% of our total volume
came from externally sourced product, we continue to anticipate that 2007 will
see a third of our volume from externally sourced product.
We have been delighted by the success of our new ranges, in particular the
Sophie Conran range which is currently our second biggest seller in the UK and
our fourth biggest seller in the US.
On 13 October 2006 we acquired the Pimpernel brand and certain assets from the
Administrator to the company. This has been a successful transaction for
Portmeirion and has already generated sales in excess of the purchase price.
Current trading
These results are to the end of June, the month of July has seen sales at a
similar level to July last year but we still have our important Autumn trading
period to come.
We look forward to the future with confidence.
R.J. Steele
Non-executive Chairman
8 August 2007
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 2007 which comprises the consolidated income
statement, the consolidated balance sheet, the consolidated cash flow statement,
the consolidated statement of recognised income and expense, the reconciliation
of movements in shareholders' equity and related notes 1 to 10. We have read
the other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company, in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are also responsible for ensuring that the accounting policies and presentation
applied to the interim figures are consistent with those applied in preparing
the preceding annual accounts except where any changes, and the reasons for
them, are disclosed and also preparing the interim report as required by AIM
Rules issued by the London Stock Exchange.
International Financial Reporting Standards
As disclosed in note 1, the next financial statements of the Group will be
prepared in accordance with International Financial Reporting Standards as
adopted for use in the EU. Accordingly, the Interim Report has been prepared in
accordance with the recognition and measurement criteria of IFRS and by the AIM
Rules. The accounting policies are consistent with those that the Directors
intend to use in the annual financial statements.
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 International Standards on Auditing (UK and
Ireland) 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 2007.
Deloitte & Touche LLP
Chartered Accountants, Birmingham, UK
8 August 2007
Consolidated Income Statement
Unaudited
Notes Six months Restated* Restated*
to 30.06.07 Six months Year to
£'000 to 30.06.06 31.12.06
£'000 £'000
Revenue 3 14,520 12,232 28,422
Operating costs (13,682) (11,484) (25,747)
Operating profit before exceptional items and financing 838 748 2,675
Exceptional items 4 1,644 (277) (277)
Operating profit after exceptional items 2,482 471 2,398
Interest receivable from bank deposits 90 130 231
Finance costs 6 (106) 137 46
Share of profit of associated undertakings 25 (25) 58
Impairment in investment in associated undertaking - - (46)
Profit before tax 2,491 713 2,687
Income tax (930) (263) (938)
Profit for the period attributable to equity holders of the 1,561 450 1,749
parent
Earnings per share 8 15.94p 4.57p 17.81p
Diluted earnings per share 8 15.40p 4.52p 17.58p
Dividend per share 7 3.55p 3.30p 14.00p
All the above figures relate to continuing operations.
* Restated to reflect the adoption of IFRS as per note 10.
Consolidated Balance Sheet
Unaudited
As at Restated* Restated*
30.06.07 As at As at
30.06.06 31.12.06
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 6,329 5,068 5,767
Intangible assets 714 69 628
Interests in associates 1,377 1,369 1,332
Derivative financial instruments - 36 -
Total non-current assets 8,420 6,542 7,727
Current assets
Inventories 9,896 6,859 8,352
Trade and other receivables 5,373 4,815 4,467
Cash and cash equivalents 1,959 5,209 5,203
Derivative financial instruments 64 76 105
Assets held for sale - - 350
Total current assets 17,292 16,959 18,477
Total assets 25,712 23,501 26,204
Current liabilities
Trade and other payables (4,085) (3,179) (5,328)
Current income tax liabilities (33) (377) (246)
Derivative financial instruments - (4) -
Total current liabilities (4,118) (3,560) (5,574)
Non-current liabilities
Deferred income tax liabilities (560) (24) (49)
Pension scheme deficit (4,028) (2,796) (3,995)
Total non-current liabilities (4,588) (2,820) (4,044)
Total liabilities (8,706) (6,380) (9,618)
Net assets 17,006 17,121 16,586
Equity
Called up share capital 525 523 523
Share premium account 4,725 4,657 4,657
Treasury shares (1,266) (1,263) (1,266)
Share based payment reserve 60 22 38
Cash flow hedging reserve (3) (65) (6)
Tax on cash flow hedging reserve 1 20 2
Retained earnings 12,964 13,227 12,638
Total equity 17,006 17,121 16,586
* Restated to reflect the adoption of IFRS as per note 10.
Consolidated Cash Flow Statement
Unaudited
Six months Six months Year
to 30.06.07 to 30.06.06 to 31.12.06
£'000 £'000 £'000
Operating profit 2,482 471 2,398
Adjustments for:
Depreciation 314 368 712
Amortisation of intangible fixed assets 68 18 54
Contributions to defined benefit pension scheme (174) (174) (348)
Charge for share based payments 22 10 26
Exchange loss (75) (160) (328)
Profit on sale of tangible fixed assets (1,793) (6) (16)
Operating cash flows before movements in working capital 844 527 2,498
Increase in inventories (1,544) (946) (2,439)
(Increase)/decrease in receivables (891) 56 382
(Decrease)/increase in payables (1,243) 139 2,290
Cash (absorbed by)/generated from operations (2,834) (224) 2,731
Interest paid - (1) (1)
Income taxes (paid)/refunded (627) 437 (306)
Net cash from operating activities (3,461) 212 2,424
Investing activities
Interest received 97 181 304
Proceeds on disposal of property, plant and equipment 2,172 11 32
Purchase of property, plant and equipment (921) (237) (1,678)
Purchase of intangible fixed assets (154) (10) (605)
Purchase of treasury shares - (299) (302)
Purchase of equity interest - (40) (40)
Net cash inflow/(outflow) from investing activities 1,194 (394) (2,289)
Financing activities
Equity dividends paid (1,047) (982) (1,305)
Shares issued under employee share schemes 70 79 79
Net cash outflow from financing activities (977) (903) (1,226)
Net decrease in cash and cash equivalents (3,244) (1,085) (1,091)
Cash and cash equivalents at beginning of period 5,203 6,294 6,294
Cash and cash equivalents at end of period 1,959 5,209 5,203
Consolidated Statement of Recognised Income and Expense
Six months Six months Year
to 30.06.07 to 30.06.06 to 31.12.06
£'000 £'000 £'000
Exchange differences on translation of foreign operations (77) (234) (498)
Actuarial loss on defined benefit pension scheme - - (1,858)
Deferred tax on pension deficit (111) - 557
Net expense recognised directly in equity (188) (234) (1,799)
Transfers
Transferred to profit or loss on cash flow hedges 3 66 125
Tax on transfers to profit or loss on cash flow hedges (1) (19) (37)
(186) (187) (1,711)
Profit for the period 1,561 450 1,749
Total recognised income and expense for the period 1,375 263 38
Reconciliation of Movements in Shareholders' Equity
Six months Six months Year
to 30.06.07 to 30.06.06 to 31.12.06
£'000 £'000 £'000
Opening balance as previously reported 16,538 18,205 18,205
Adjustments on adoption of IFRS from 1 January 2006 48 (115) (115)
Opening balance as restated 16,586 18,090 18,090
Total recognised income and expense for the period 1,375 263 38
Dividends paid (1,047) (982) (1,305)
Shares issued under employee share schemes 70 79 79
Increase in share based payment reserve 22 10 26
Purchase of treasury shares - (299) (302)
Purchase of equity interests - (40) (40)
Closing balance 17,006 17,121 16,586
Notes to the Financial Statements
1. Basis of preparation
1.1 The interim financial information has not been audited and
does not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985 but has been reviewed by the auditors in accordance with
Bulletin 1999/4 issued by the Auditing Practices Board. The Company's statutory
accounts for the year ended 31 December 2006, prepared under UK GAAP, have been
delivered to the Registrar of Companies; the report of the auditors on these
accounts was unqualified and did not contain a statement under Section 237 (2)
or (3) of the Companies Act 1985.
1.2 Prior to 2007 the Group prepared its audited financial
statements under United Kingdom Generally Accepted Accounting Principles (UK
GAAP). For the year ending 31 December 2007 the Group is required to prepare
its annual consolidated financial statements in accordance with accounting
standards adopted for use in the European Union (International Financial
Reporting Standards (IFRS)).
These interim financial statements have been prepared in accordance with the
accounting policies set out below, taking into account the requirements and
options in IFRS 1 'First-time adoption of International Financial Reporting
Standards'. The Group has not adopted the reporting requirements of IAS 34 '
Interim Financial Reporting'. The transition date for the Group's application
of IFRS is 1 January 2006 and the comparative figures for 30 June 2006 and 31
December 2006 have been restated accordingly. Reconciliations of the income
statement (previously the profit and loss account) and the balance sheet from
previously reported UK GAAP to IFRS are shown in note 10.
The interim financial statements have been prepared on the historic basis,
except that derivative financial instruments are stated at their fair value.
2. Accounting policies
The accounting policies which follow set out those policies which are expected
to apply in preparing the financial statements for the year ending 31 December
2007. These policies have been followed in producing these interim statements.
2.1 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
Portmeirion Group PLC and its subsidiaries.
Subsidiary undertakings are consolidated on the basis of the acquisition method
of accounting. Intra-group transactions and balances are eliminated fully on
consolidation and the consolidated accounts reflect external transactions only.
Subsidiaries' accounting policies are amended where necessary to ensure
consistency with the policies adopted by the Group.
2.2 Investment in associates
An associate is an entity over which the Group is in a position to exercise
significant influence, but not control or joint control, through participation
in the financial and operating policy decisions of the investee. Significant
influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those
policies.
The results and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting. Investments in
associates are carried in the balance sheet at cost as adjusted by
post-acquisition changes in the Group's share of the net assets of the
associate, less any impairment in the value of individual investments.
Where a Group company transacts with an associate of the Group, profits and
losses are eliminated to the extent of the Group's interest in the relevant
associate. Losses may provide evidence of an impairment of the asset
transferred in which case appropriate provision is made for impairment.
2.3 Non-current assets held for sale
Non-current assets classified as held for sale are measured at the lower of
carrying amount and fair value less costs to sell.
Non-current assets are classified as held for sale if their carrying amount will
be recovered through a sale transaction rather than through continuing use.
This condition is regarded as met only when the sale is highly probable and the
asset is available for immediate sale in its present condition. The Directors
must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.
2.4 Provisions
Provisions are recognised when the Group has a present obligation as a result of
a past event, and it is probable that the Group will be required to settle that
obligation. Provisions are measured at the Directors' best estimate of the
expenditure required to settle the obligation at the balance sheet date, and are
discounted to present value where the effect is material.
2.5 Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business, net of discounts, VAT and other sales related
taxes.
Sales of goods are recognised when goods are delivered and title has passed.
2.6 Operating leases
Rentals payable under operating leases are charged to income on a straight-line
basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating
lease are also spread on a straight-line basis over the lease term.
2.7 Foreign currencies
The individual financial statements of each Group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). The results and financial position of each Group company
are expressed in pounds sterling, which is the functional currency of the
Company, and the presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual companies, transactions
in currencies other than the entity's functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates prevailing
on the balance sheet date. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in profit or loss for the period.
In order to hedge its exposure to certain foreign exchange risks, the Group
enters into forward contracts (see below for details of the Group's accounting
policies in respect of such derivative financial instruments).
For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group's foreign operations are translated at exchange rates
prevailing on the balance sheet date. Income and expense items are translated
at the average exchange rates for the period. Exchange differences arising, if
any, are dealt with through reserves.
2.8 Operating profit
Operating profit is stated both before and after exceptional items but before
interest received, finance costs, share of results of associates and impairment
in investment in associates.
Exceptional items are defined as reorganisation costs: specifically profit or
loss on the sale of land and buildings, rent-free periods and other costs
associated with the assignment of leasehold property no longer required by the
business and redundancy costs.
2.9 Group pension schemes
The Group operates a Group stakeholder pension plan in the UK. For this scheme
the amount charged to income in respect of pension costs and other
post-retirement benefits is the contributions payable in the year. Differences
between contributions payable in the year and contributions actually paid are
shown as either accruals or prepayments in the balance sheet.
The defined benefit scheme previously operated by the Group closed on 5th April
1999. For this scheme the amounts charged to operating profit are the current
service costs and gains and losses on settlements and curtailments. They are
included as part of staff costs. Past service costs are recognised immediately
in the income statement if the benefits have vested. If the benefits have not
vested immediately, the costs are recognised over the period until vesting
occurs. The interest cost and the expected return on assets are shown as a net
amount of other finance costs or credits. Actuarial gains and losses are
recognised immediately in the statement of recognised income and expense.
Defined benefit schemes are funded, with the assets of the scheme held
separately from those of the Group, in separate trustee administered funds.
Pension scheme assets are measured at fair value and liabilities are measured on
an actuarial basis using the projected unit method and discounted at a rate
equivalent to the current rate of return on a high quality corporate bond of
equivalent currency and term to the scheme liabilities. The actuarial
valuations are obtained at least triennially and are updated at each balance
sheet date. The resulting defined benefit asset or liability, net of the
related deferred tax, is presented separately on the face of the balance sheet.
In the United States, the Group operates a money purchase pension scheme with
payments being made to the scheme at the discretion of the Group. All payments
are expensed as they are incurred.
2.10 Taxation
The tax expense represents the sum of the current tax and deferred tax.
Current tax including UK corporation tax and foreign tax is provided at amounts
expected to be paid using the tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is provided in full on timing differences which result in an
obligation at the balance sheet date to pay more tax, or a right to pay less tax
at a future date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the inclusion of items
of income and expenditure in taxation computations in periods different from
those in which they are included in financial statements.
Deferred tax is not provided on timing differences on unremitted earnings of
subsidiaries and associates where there is no commitment to remit these
earnings. Deferred tax assets are recognised to the extent that it is regarded
as more likely than not that they will be recovered. Deferred tax assets and
liabilities are not discounted.
2.11 Property, plant and equipment
Property, plant and equipment are held at cost, net of depreciation less any
provision for impairment. Depreciation is provided by either the reducing
balance method or the straight line method at rates calculated to write off the
cost of the assets less their estimated residual value over their expected
useful lives:
Freehold buildings - 2% per annum
Short leasehold buildings - over the life of the lease
Plant and vehicles - 10% to 33% per annum
2.12 Intangible assets
Purchases of trademarks are included at cost and written off in equal annual
instalments over 5 years, which is their estimated useful economic life.
Provision is made for any impairment.
Computer software is held at cost, net of depreciation less any provision for
impairment.
2.13 Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risk specific to the asset
for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately.
2.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to their present
location and condition. Net realisable value represents the estimated selling
price less all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
2.15 Derivative financial instruments
The Group's activities expose it primarily to the financial risks of changes in
foreign currency exchange rates. The Group uses foreign exchange forward
contracts to hedge this exposure. The Group does not use derivative financial
instruments for speculative purposes.
Changes in the fair value of derivative financial instruments that are
designated and effective as hedges of future cash flows are recognised directly
in equity and the ineffective portion is recognised immediately in the income
statement. Amounts deferred in equity are recognised in the income statement in
the same period in which the hedged item affects net profit or loss.
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the income statement as they
arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated, or exercised, or no longer qualifies for hedge accounting. At that
time, any cumulative gain or loss on the hedging instrument recognised in equity
is retained in equity until the forecasted transaction occurs.
2.16 Share-based payments
The Group has applied the requirements of IFRS 2 'Share-based Payment'. In
accordance with the transitional provisions, IFRS 2 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested at 1
January 2005.
The Group issues equity-settled and cash-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair value
(excluding the effect of non market-based vesting conditions) at the date of
grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions.
Fair value is measured by use of the Black Scholes model. The expected life
used in the model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions, and behavioural
considerations.
A liability equal to the portion of the goods or services received is recognised
at the current fair value determined at each balance sheet date for
cash-settled, share-based payments.
2.17 Segmental reporting
Activities are allocated to one business segment being consumer housewares. A
business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that is
subject to risks and returns which are different from those segments operating
in other economic environments.
3. Geographical segments
The following table provides an analysis of the Group's revenue by geographical
market, irrespective of the origin of the products:
Six months Six months Year
to 30.06.07 to 30.06.06 to 31.12.06
£'000 £'000 £'000
United Kingdom 4,163 3,422 8,457
United States 5,273 4,855 11,009
South Korea 2,895 2,323 5,590
Rest of the World 2,189 1,632 3,366
14,520 12,232 28,422
4. Exceptional items
As stated in the Group's accounting policies, the Directors define
reorganisation costs as exceptional. Specifically included under such
exceptional costs are profit or loss on the sale of land and buildings,
rent-free periods and other costs associated with the assignment of leasehold
property no longer required by the business and redundancy costs. The analysis
of exceptional items is as follows:
Six months Six months Year
to 30.06.07 to 30.06.06 to 31.12.06
£'000 £'000 £'000
Profit on sale of freehold land & 1,793 - -
buildings
Costs associated with assignment of (139) - -
leasehold property
Redundancy costs (10) (277) (277)
1,644 (277) (277)
5 Taxation
Tax for the interim period is charged at 37% (year to 31 December 2006 35%)
representing the best estimate of the weighted average annual corporation tax
rate expected for the full year. Deferred tax has been calculated at a rate of
28%.
6. Finance costs
Six months Six months Year
to 30.06.07 to 30.06.06 to 31.12.06
£'000 £'000 £'000
Interest paid - (1) (1)
(Losses)/gains on financial derivatives (44) 173 111
Other finance costs (62) (35) (64)
(106) 137 46
7. Dividend
A dividend of 3.55p (2006 - 3.3p) per ordinary share will be paid on 1 October
2007 to shareholders on the register on 7 September 2007.
8. Earnings per share
The earnings per share are calculated on profit after tax of £1,561,000 (2006 -
£450,000) and the weighted average number of ordinary shares of 9,791,802 (2006
- 9,852,718) in issue during the period. The share options in existence during
the six months ended 30 June 2007 have a dilutive effect. The diluted earnings
per share are calculated on earnings of £1,561,000 (2006 - £450,000) and the
weighted average of ordinary shares in issue adjusted to assume conversion of
all dilutive potential ordinary shares which is 10,137,066 (2006 - 9,951,750).
9. Analysis of net funds
As at As at As at
30.06.07 30.06.06 31.12.06
£'000 £'000 £'000
Cash in hand and at bank 609 1,314 1,178
Short term money market deposits 1,350 3,895 4,025
Total 1,959 5,209 5,203
10. Explanation of transition to IFRS
As explained in Note 1, these are the Group's first interim financial statements
prepared for part of the first year in which financial statements will be
prepared in accordance with International Financial Reporting Standards (IFRS).
The accounting policies in Note 2 have been applied in preparing these interim
financial statements, and in preparing an opening IFRS balance sheet as at 1
January 2006 (the Group's date of transition). The preparation of these
financial statements has required the adjustment of amounts previously reported
in financial statements prepared in accordance with UK GAAP.
As required by IFRS 1 'First time adoption of international reporting standards'
an explanation of how the transition from UK GAAP to IFRS has affected the
Group's financial position is set out in the tables below. The adjustments shown
in the tables are:
(i) The effect of the change to valuing pension scheme assets
at bid rather than mid price as required by IAS 19 'Employee Benefits'.
(ii) The effect of the revised treatment of the Group's forward
foreign exchange contracts as required by IAS 39 'Financial Instruments:
Recognition and Measurement'.
(iii) The reclassification of interest paid to finance costs.
(iv) The disclosure of share of profit of associated undertakings net of
income taxes.
(v) The reclassification of software assets as intangible assets.
(vi) The separate disclosure of income taxes payable or
recoverable.
(vii) The reclassification of property being marketed for sale as an
asset held for sale in current assets.
10.1 Reconciliation of income statement for the six months ended 30 June 2006
Other
IFRS
UK Reclass-
GAAP IAS 39 ifications IFRS
£'000 £'000 £'000 £'000
Revenue 12,232 - - 12,232
Operating costs (11,484) - - (11,484)
Operating profit before exceptional items and financing 748 - - 748
Exceptional items (277) - - (277)
Operating profit after exceptional items 471 - - 471
Interest receivable from bank deposits 130 - - 130
Interest payable (1) - 1 -
Finance costs (35) 173 (1) 137
Share of profit of associated undertakings (55) - 30 (25)
Profit before tax 510 173 30 713
Income tax (181) (52) (30) (263)
Profit for the period 329 121 - 450
Earnings per share 3.34p 4.57p
Diluted earnings per share 3.31p 4.52p
10.2 Reconciliation of income statement for the year ended 31 December 2006
Other IFRS
UK Reclass-
GAAP IAS 19 IAS 39 ifications IFRS
£'000 £'000 £'000 £'000 £'000
Revenue 28,422 - - - 28,422
Operating costs (25,747) - - - (25,747)
Operating profit before exceptional items 2,675 - - - 2,675
and financing
Exceptional items (277) - - - (277)
Operating profit after exceptional items 2,398 - - - 2,398
Interest receivable from bank deposits 231 - - - 231
Interest payable (1) - - 1 -
Finance costs (62) (2) 111 (1) 46
Share of profit of associated undertakings 64 - - (6) 58
Impairment in investment in associated undertaking (46) - - - (46)
Profit before tax 2,584 (2) 111 (6) 2,687
Income tax (912) 1 (33) 6 (938)
Profit for the period 1,672 (1) 78 - 1,749
Earnings per share 17.03p 17.81p
Diluted earnings per share 16.80p 17.58p
10.3 Reconciliation of balance sheet as at 1 January 2006
As at Other IFRS As at
01.01.06 Reclass- 01.01.06
UK GAAP IAS 19 IAS 39 ifications IFRS
£'000 £'000 £'000 £'000 £'000
Non-current assets
Property, plant and equipment 5,335 - - (77) 5,258
Intangible assets - - - 77 77
Interests in associates 1,413 - - - 1,413
Derivative financial instruments - - - - -
Total non-current assets 6,748 - - - 6,748
Current assets -
Inventories 5,913 - - - 5,913
Trade and other receivables 5,243 - - (321) 4,922
Current income tax receivable - - - 321 321
Cash and cash equivalents 6,294 - - - 6,294
Derivative financial instruments - - - - -
Assets held for sale - - - - -
Total current assets 17,450 - - - 17,450
Total assets 24,198 - - - 24,198
Current liabilities - -
Trade and other payables (3,080) - - 42 (3,038)
Current income tax liabilities - - - (42) (42)
Derivative financial instruments - - (131) - (131)
Total current liabilities (3,080) - (131) - (3,211)
Non-current liabilities
Deferred income tax liabilities (43) - 39 - (4)
Pension scheme deficit (2,870) (23) - - (2,893)
Total non-current liabilities (2,913) (23) 39 - (2,897)
Total liabilities (5,993) (23) (92) - (6,108)
Net assets 18,205 (23) (92) - 18,090
Equity
Called up share capital 521 - - - 521
Share premium account 4,580 - - - 4,580
Treasury shares (964) - - - (964)
Share based payment reserve 12 - - - 12
Cash flow hedging reserve - - (131) - (131)
Tax on cash flow hedging reserve - - 39 - 39
Retained earnings 14,056 (23) - 14,033
Total equity 18,205 (23) (92) - 18,090
10.4 Reconciliation of balance sheet as at 30 June 2006
As at Other IFRS As at
30.06.06 Reclass- 30.06.06
UK GAAP IAS 19 IAS 39 ifications IFRS
£'000 £'000 £'000 £'000 £'000
Non-current assets
Property, plant and equipment 5,137 - - (69) 5,068
Intangible assets - - - 69 69
Interests in associates 1,369 - - - 1,369
Derivative financial instruments - - 36 - 36
Total non-current assets 6,506 - 36 - 6,542
Current assets
Inventories 6,859 - - - 6,859
Trade and other receivables 4,815 - - - 4,815
Cash and cash equivalents 5,209 - - - 5,209
Derivative financial instruments - - 76 - 76
Assets held for sale - - - - -
Total current assets 16,883 - 76 - 16,959
Total assets 23,389 - 112 - 23,501
Current liabilities
Trade and other payables (3,504) - - 325 (3,179)
Current income tax liabilities - - (52) (325) (377)
Derivative financial instruments - - (4) - (4)
Total current liabilities (3,504) - (56) - (3,560)
Non-current liabilities
Deferred income tax liabilities (44) - 20 - (24)
Pension scheme deficit (2,773) (23) - - (2,796)
Total non-current liabilities (2,817) (23) 20 - (2,820)
Total liabilities (6,321) (23) (36) - (6,380)
Net assets 17,068 (23) 76 - 17,121
Equity
Called up share capital 523 - - - 523
Share premium account 4,657 - - - 4,657
Treasury shares (1,263) - - - (1,263)
Share based payment reserve 22 - - - 22
Cash flow hedging reserve - - (65) - (65)
Tax on cash flow hedging reserve - - 20 - 20
Retained earnings 13,129 (23) 121 - 13,227
Total equity 17,068 (23) 76 - 17,121
10.5 Reconciliation of balance sheet as at 31 December 2006
As at Other IFRS As at
31.12.06 Reclass- 31.12.06
UK GAAP IAS 19 IAS 39 ifications IFRS
£'000 £'000 £'000 £'000 £'000
Non-current assets
Property, plant and equipment 6,243 - - (476) 5,767
Intangible assets 502 - - 126 628
Interests in associates 1,332 - - - 1,332
Derivative financial instruments - - - - -
Total non-current assets 8,077 - - (350) 7,727
Current assets
Inventories 8,352 - - - 8,352
Trade and other receivables 4,467 - - - 4,467
Cash and cash equivalents 5,203 - - - 5,203
Derivative financial instruments - - 105 - 105
Assets held for sale - - - 350 350
Total current assets 18,022 - 105 350 18,477
Total assets 26,099 - 105 - 26,204
Current liabilities
Trade and other payables (5,524) - - 196 (5,328)
Current income tax liabilities (17) - (33) (196) (246)
Derivative financial instruments - - - - -
Total current liabilities (5,541) - (33) - (5,574)
Non-current liabilities
Deferred income tax liabilities (51) - 2 - (49)
Pension scheme deficit (3,969) (26) - - (3,995)
Total non-current liabilities (4,020) (26) 2 - (4,044)
Total liabilities (9,561) (26) (31) - (9,618)
Net assets 16,538 (26) 74 - 16,586
Equity
Called up share capital 523 - - - 523
Share premium account 4,657 - - - 4,657
Treasury shares (1,266) - - - (1,266)
Share based payment reserve 38 - - - 38
Cash flow hedging reserve - - (6) - (6)
Tax on cash flow hedging reserve - - 2 - 2
Retained earnings 12,586 (26) 78 - 12,638
Total equity 16,538 (26) 74 - 16,586
This interim statement will be posted out to shareholders in August and will be
available from the Company Secretary at Portmeirion Group PLC, London Road,
Stoke-On-Trent, Staffs. ST4 7QQ or from the website, www.portmeirion.com after
31 August 2007.
This information is provided by RNS
The company news service from the London Stock Exchange OKFKQOBKDOFK
Latest directors dealings
- 50 minutes ago Harworth Group
- 1 hour ago British Land Company
- 1 hour ago BAE Systems
- 2 hours ago Ocado Group
- 3 hours ago Aviva