Interim results

RNS Number : 2465V
Portmeirion Group PLC
06 August 2015
 

6 August 2015

 

PORTMEIRION GROUP PLC

('Portmeirion' or 'the Group')

 

Interim results for the six months ended 30 June 2015

 

 

 

 

Portmeirion Group is pleased to announce a strong performance for the six months ended 30 June 2015 in line with market expectations in respect of the full year run-rate.

 

Highlights

 

·    Revenue of £27.9 million up by 14% on the comparative period (2014: £24.5 million).

·    Profit before tax up by 45% to £1.8 million (2014: £1.2 million).

·    EBITDA up by 23% to £2.3 million (2014: £1.9 million).

·    Earnings per share up by 41% to 13.01p (2014: 9.21p).

·    Interim dividend increased by 11% to 6.10 pence per share (2014: 5.50 pence per share).

·    Strong sales growth in UK, USA and other export markets.

·    The £1.5 million project to expand production capacity is on track with the new kiln expected to be commissioned in final quarter of 2015.

·    Production at our Stoke-on-Trent factory continuing at record levels with average of 155,000 best pieces per week for H1 (full year 2014: 150,000).

·    Strong order book for H2.

 

 

 

Dick Steele, Non-executive Chairman, commented:

 

"The performance of Portmeirion Group in the first six months of 2015 has been strong. We remain confident of the outcome for the full year to 31 December 2015."

 

Enquiries:

 

Portmeirion Group PLC:

 

Dick Steele,

Non-executive Chairman  

+44 (0) 1782 744721

steele_clan@msn.com

Brett Phillips,

Group Finance Director  

+44 (0) 1782 744721

bphillips@portmeiriongroup.com

 

 

 

Bell Pottinger:

 

Dan de Belder

+44 (0) 203 772 2561

ddebelder@bellpottinger.com

Kashara Taylor

+44 (0) 203 772 2593

ktaylor@bellpottinger.com

 

 

 

Panmure Gordon:

(Nominated Adviser and Broker)                

+44 (0) 207 886 2500

 

Freddy Crossley / Duncan Monteith

 

Corporate Finance

Tom Salvesen / Maisie Atkinson

 

Corporate Broking

 

Cantor Fitzgerald Europe:

(Joint Broker)                                           

+44 (0) 207 894 7000

 

Catherine Leftley/Marc Milmo

 

Corporate Finance

David Banks /Tessa Sillars

 

Corporate Broking

 

Interim Review

 

The performance of Portmeirion Group for the first six months of 2015 has been very encouraging. However, it is too early to imply second half increases at a similar level. Our results for the full year are always significantly weighted towards the second half. In 2014 the first half year revenues were 40% of the full year, and pre-tax profits were 16% of the full year, similarly the percentages for 2013 were 41% for revenue and 12% for pre-tax profits. Accordingly, we remain confident for the full year.

 

Dividends

The Board is declaring an interim dividend of 6.10 pence per share (2014: 5.50 pence per share), an increase of 11% (2014: 10%) which is broadly in line with the percentage increase in the final dividend for the prior year.

 

The interim dividend will be paid on 1 October 2015. The ex-dividend date will be 3 September 2015 with a record date of 4 September 2015.

 

We continue with our long held policy of having any increase in the interim dividend determined by the increase in the prior year final dividend, rather than be a presage for the following final dividend, subject to the needs of the business. The final dividend will be determined when we know the results for 2015. This approach allows us to better allocate dividend increases and payments taking account of our important second half year's performance.

 

The Board is committed to a progressive dividend policy. It is a core part of our strategy underpinned by the principle that a company exists for the benefit of its shareholders. Our consistently held aim is to maintain a sustainable level of dividend cover whilst increasing dividends whenever our reasoned views of future trading conditions and business cash needs allow us so to do. We have increased our dividend for six consecutive years.

 

Revenues

Our revenues for the first six months of 2015 were £27.9 million (2014 first half year: £24.5 million), 14% higher than the comparative period. The 2014 full year revenues were £61.4 million. At a constant US dollar exchange rate our total revenue increase would have been 10%.

 

The United States, our largest market on a full year basis, increased by 12% in local currency and by 22% when translated into sterling as it continued the recovery which we noted in last year's figures. In the United Kingdom, our second largest market on a full year basis, we achieved a sales increase of 16%. Included in the above sales increases, our direct online sales into the United States and the United Kingdom increased by 43% compared to last year.

 

South Korea had been growing consistently for us for fifteen years. However, this year the growth stalled and this market dropped by 16%. The economic conditions in South Korea have toughened but we remain confident of our long term prospects there. Elsewhere in our Asian markets there has been some notably strong performances including India whose growth in revenue has been 58%. It is one of the strengths of Portmeirion that we are not overly dependent upon any one geographic area.

 

Profits

Profit before tax has increased by 45% over the comparative period to £1,757,000 (2014 first half year: £1,213,000, 2014 full year: £7,611,000); earnings before interest, taxation, depreciation and amortisation increased by 23% to £2,307,000 (2014 first half year: £1,872,000, 2014 full year £8,871,000). Our first half year profits are not a reliable indicator for our full year profits.

We do not yet have any final resolution of the Anti-Dumping Duty imposed on us by the European Commission in 2012. We continue to pursue this matter through the legal processes as it has cost cumulative profits over £1.7 million. If we successfully resolve this to our satisfaction then we will treat any prior year repayment as an exceptional item.

 

Balance Sheet

Our net cash balance at 30 June 2015 was £3.4 million; this compares with £2.7 million at 30 June 2014 and £5.9 million at 31 December 2014. Our seasonal working capital swings always mean that our half year cash balances are below our year end cash balances.

 

We have invested in our stock balances with our important second half year sales targets to be met. Stocks are standing at £17.1 million at 30 June 2015; this compares with £14.5 million at 30 June 2014 and £15.5 million at 31 December 2014. The level of stockholdings is a major opportunity. Our stock valuation policies are prudent, rigorous and consistently applied.

 

The major capital expenditure on production capacity expansion which we announced earlier this year has already absorbed £1.0 million, total capital expenditure for the year will nearly double this level. £1.4 million of cash was used to purchase our own shares to satisfy employee share and incentive schemes in future years.

 

Production

In January 2015 we announced a major capital expenditure scheme in our Stoke-on-Trent factory at a cost of £1.5 million. This includes a new continuous tunnel kiln, the first that we have installed since 2002. This work is well underway and running to schedule with an anticipated kiln commissioning date in the fourth quarter of 2015.

 

Whilst the new kiln and associated expenditure will lift our production capacity significantly when fully installed we have continued to grow production incrementally; average weekly production for the first half year was over 155,000 best pieces per week, some 5% above the same level last year.

 

Our Stoke-on-Trent factory produces the finest English earthenware, a body for which we have a worldwide reputation and which is extensively used in Portmeirion and Spode patterns. We source our other ceramic bodies from elsewhere in Stoke and all over the world; they are all subject to our stringent quality standards.

 

Products and Brands

Pictures, descriptions, prices and availabilities of our current patterns can be found at www.portmeirion.co.uk, www.spode.co.uk, www.royalworcester.co.uk, www.pimpernelinternational.co.uk and for customers in the United States at www.portmeirion.com. Online purchasing is also available at these sites.

 

We have continued to extend our existing patterns and to develop new patterns for all our markets. Within Portmeirion we have Alfresco Pomona, in Spode we have variations on our Delamere patterns including Bouquet, Lakeside and Rural. Our new Ted Baker ranges have been well received around the world.

 

Outlook

As ever, our second half year remains key to our full year performance; we are ready. Our brands, quality standards, people, production facilities, logistics, designs and finances are all in good order.

 

We remain confident for the future; our strategy remains unchanged.       

 

Richard Steele                                      Lawrence Bryan

Non-executive Chairman                   Chief Executive

 

Independent Review Report to Portmeirion Group PLC

 

Introduction

We have been engaged by Portmeirion Group PLC to review the interim financial information for the six months ended 30 June 2015, which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of cash flows, the reconciliation of movement in shareholders' equity and related notes 1 to 7.  We have read the other information contained in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the interim financial information.

 

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 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 it 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.

 

Respective responsibilities of directors and auditors

The interim statement, including the interim 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 AIM Rules issued by the London Stock Exchange, which require that the interim statement must be prepared and presented in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

 

Our responsibility is to express to the Company a conclusion on the interim financial information in the interim statement based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information in the interim statement for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with the AIM Rules issued by the London Stock Exchange.

 

Mazars LLP

Chartered Accountants

45 Church Street

Birmingham

B3 2RT

5 August 2015

 

Notes:

(a) The maintenance and integrity of the Portmeirion Group PLC website is the responsibility of the directors; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the interim statement since it was initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

 

Consolidated Income Statement

Unaudited

 

 

 

 

 

Notes

Six months to 30 June 2015

 £'000

 

Six months to 30 June 2014

£'000

 

Year to

31 December

2014

£'000

Revenue

2

27,863

24,525

61,370

Operating costs

 

(26,153)

(23,293)

(53,811)

Operating profit

 

1,710

1,232

7,559

 

 

 

 

 

Interest income

 

46

46

16

Finance costs

3

(80)

(64)

(152)

Share of results of associated undertakings

 

81

(1)

188

Profit before tax

 

1,757

1,213

7,611

 

 

 

 

 

Tax

4

(394)

(241)

(1,538)

Profit for the period attributable to equity holders

 

1,363

972

6,073

 

Earnings per share

 

6

 

13.01p

 

9.21p

 

57.64p

 

Diluted earnings per share

 

6

 

12.90p

 

9.17p

 

57.30p

 

Dividends proposed and paid per share

 

5

 

6.10p

 

5.50p

 

26.50p

 

 

All the above figures relate to continuing operations.

 

 

Consolidated Statement of Comprehensive Income

Unaudited

 

 

 

 

 

 

 

Six months to 30 June 2015

 £'000

 

Six months to 30 June 2014

£'000

 

Year to

31 December

 2014

£'000

Profit for the period

1,363

972

6,073

Items that will not be reclassified subsequently to profit or loss:

 

 

 

Remeasurement of net defined benefit pension scheme liability

-

-

(2,455)

Deferred tax relating to items that will not be reclassified subsequently to profit or loss

-

-

491

Items that may be reclassified subsequently to profit or loss:

 

 

 

Exchange differences on translation of foreign operations

(38)

(249)

368

Deferred tax relating to items that may be reclassified subsequently to profit or loss

-

-

45

Other comprehensive income for the period

(38)

(249)

(1,551)

 

 

 

 

Total comprehensive income for the period attributable to equity holders


1,325


723


4,522

 

 

Consolidated Balance Sheet

Unaudited

 

 

30 June 2015

£'000

 

30 June 2014

£'000

 

31 December

 2014

 £'000

Non-current assets

 

 

 

Intangible assets

1,102

1,305

1,177

Property, plant and equipment

9,657

9,033

9,168

Interests in associates

1,911

1,656

1,854

Deferred tax asset

738

151

832

Total non-current assets

13,408

12,145

13,031

Current assets

 

 

 

Inventories

17,111

14,497

15,544

Trade and other receivables

7,840

8,332

10,772

Cash and cash equivalents

3,371

2,748

5,905

Total current assets

28,322

25,577

32,221

Total assets

41,730

37,722

45,252

Current liabilities

 

 

 

Trade and other payables

(6,580)

(5,365)

(6,856)

Current income tax liabilities

(506)

(633)

(1,196)

Total current liabilities

(7,086)

(5,998)

(8,052)

Non-current liabilities

 

 

 

Pension scheme deficit

(3,684)

(2,051)

(4,153)

Total non-current liabilities

(3,684)

(2,051)

(4,153)

Total liabilities

(10,770)

(8,049)

(12,205)

Net assets

30,960

29,673

33,047

Equity

 

 

 

Called up share capital

550

549

549

Share premium account

6,560

6,456

6,456

Investment in own shares

(3,169)

(1,814)

(1,814)

Share-based payment reserve

375

829

292

Translation reserve

974

350

1,012

Retained earnings

25,670

23,303

26,552

Total equity

30,960

29,673

33,047

 

Consolidated Statement of Cash Flows

Unaudited

 

 

Six months

to 30 June 2015

£'000

 

Six months

to 30 June

2014

£'000

Year to

31 December

2014

 £'000

Operating profit

1,710

1,232

7,559

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

503

488

1,001

Amortisation of intangible assets

94

152

311

Contributions to defined benefit pension scheme

(537)

(400)

(800)

Charge for share-based payments

83

87

194

Exchange gain/(loss)

28

9

(20)

Operating cash flows before movements in working capital

1,881

1,568

8,245

Increase in inventories

(1,649)

(2,950)

(3,506)

Decrease in receivables

2,990

2,593

332

(Decrease)/increase in payables

(242)

(1,034)

316

Cash generated from operations

2,980

177

5,387

Interest paid

(22)

(29)

(59)

Income taxes paid

(990)

(678)

(1,525)

Net cash inflow/(outflow) from operating activities

1,968

(530)

3,803

Investing activities

 

 

 

Interest received

11

12

16

Proceeds on disposal of property, plant and equipment

2

-

16

Purchase of property, plant and equipment

(996)

(257)

(860)

Purchase of intangible assets

(19)

(38)

(69)

Net cash outflow from investing activities

(1,002)

(283)

(897)

Financing activities

 

 

 

Equity dividends paid

(2,216)

(2,008)

(2,587)

Shares issued under employee share schemes

125

86

86

Purchase of own shares

(1,404)

(716)

(716)

Net cash outflow from financing activities

(3,495)

(2,638)

(3,217)

 

Net decrease in cash and cash equivalents

(2,529)

(3,451)

(311)

Cash and cash equivalents at beginning of period

5,905

6,205

6,205

Effect of foreign exchange rate changes

(5)

(6)

11

Cash and cash equivalents at end of period

3,371

2,748

5,905

 

 

 

 

Reconciliation of Movement in Shareholders' Equity 

Unaudited

 

 

 

Six months

to 30 June 2015

£'000

Six months

to 30 June

2014

£'000

Year to

31 December 2014

 £'000

 

 

 

 

 

Opening balance

 

33,047

 

31,501

 

31,501

 

Total comprehensive income for the period

 

1,325

 

723

 

4,522

 

Dividends paid

 

(2,216)

 

(2,008)

 

(2,587)

 

Shares issued under employee share schemes

 

125

 

86

 

86

 

Purchase of own shares

 

(1,404)

 

(716)

 

(716)

 

Increase in share-based payment reserve

 

83

 

87

 

194

 

Deferred tax on share-based payment

 

-

 

-

 

47

 

Closing balance

 

30,960

 

29,673

 

33,047

 

 

Notes to the Interim Financial Information

 

1.   Basis of preparation

The interim financial information has not been audited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 but has been reviewed by the auditors in accordance with International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board.  The Group's statutory accounts for the year ended 31 December 2014, prepared in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards (IFRS)), 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 498 (2) or (3) of the Companies Act 2006.

 

 

2.   Geographical segments

 

 

 

Six months

to 30 June

 2015

£'000

Six months

to 30 June

2014

£'000

Year to

31 December 2014

 £'000

 

United Kingdom

 

7,711

 

6,637

 

15,939

United States

7,074

5,784

20,052

South Korea

6,034

7,210

15,077

Rest of the World

7,044

4,894

10,302

 

27,863

24,525

61,370

 

 

3. Finance costs

 

 

 

Six months

to 30 June

 2015

£'000

 

Six months

to 30 June

2014

£'000

 

Year to

31 December

2014

 £'000

Interest paid

9

14

43

Realised losses on financial derivatives

3

3

3

Unrealised losses on financial derivatives

-

-

12

Defined benefit pension scheme - other finance costs

68

47

94

 

80

64

152

 

 

4.  Taxation

Tax for the interim period is charged at 22.4% (year to 31 December 2014: 20.2%) 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 20%.

 

5.  Dividend

A dividend of 6.10p (2014: 5.50p) per ordinary share will be paid on 1 October 2015 to shareholders on the register on 4 September 2015.

 

6.  Earnings per share

The earnings per share is calculated on profit after tax of £1,363,000 (June 2014: £972,000; December 2014: £6,073,000) and the weighted average number of ordinary shares of 10,477,109 (June 2014: 10,556,134; December 2014: 10,535,950) in issue during the period.  The share options in existence during the six months ended 30 June 2015 have a dilutive effect.  Diluted earnings per share is calculated on earnings of £1,363,000 (June 2014: £972,000; December 2014: £6,073,000) and the weighted average number of ordinary shares in issue adjusted to assume conversion of all dilutive potential ordinary shares of 10,565,507 (June 2014: 10,605,438; December 2014: 10,598,258).

 

7.  Reconciliation of earnings before interest, tax, depreciation and amortisation (EBITDA)

 

 

 

 

 

Six months

to 30 June

 2015

£'000

Six months

to 30 June

2014

£'000

Year to

31 December

2014

 £'000

Operating profit

1,710

1,232

7,559

Add back:

 

 

 

Depreciation

503

488

1,001

Amortisation

94

152

311

Earnings before interest, tax, depreciation and amortisation


2,307


1,872


8,871

 

 

8.  Availability of document

A copy of the interim results will shortly be available on the Company website at www.portmeiriongroup.com.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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