Interim Results
Portmeirion Group PLC
16 August 2001
PORTMEIRION GROUP PLC
INTERIM RESULTS FOR THE YEAR ENDED 30 JUNE 2001
CHAIRMAN'S STATEMENT
Financial Highlights:
First Half First Half Decrease
2001 2000 %
£000's £000's
Turnover 13,552 14,898 9.0
Profit before tax 262 1,097 76.1
Earnings per share 1.57p 7.09p 77.9
Interim dividend per share 3.30p 3.30p -
Results
First half sales were down by 9.0% compared to last year's. Profit before tax
fell by 76.1% and earnings per share by 77.9%.
Dividend
The Board has decided to declare an unchanged interim dividend of 3.30p per
share, payable on 1st October 2001, to shareholders on the register on 14th
September 2001.
Trading Performance
It has been a difficult first half, with negative pressures in both of our
main markets.
In the UK sales were adversely affected in the first quarter by a reduction in
the number of overseas visitors, due to the foot and mouth epidemic. Sales
for the first quarter were 12% down on the previous year. However, in the
second quarter sales in the UK improved and were only 3% below last year by
the end of the half.
The economic slow-down in the USA has led to falling demand generally, and
significant destocking by our retail customers. Although our new product
ranges introduced in the spring have been well received, the overall lack of
demand in the market has resulted in sales that are 13% lower than last year
in the United States.
Despite careful management of costs, it was inevitable that a sales reduction
of this magnitude would affect profitability, and first half pre-tax profits
are lower by 76%.
The Board believes that the timing of a recovery from the current slow-down is
difficult to predict. However, the down-turn in sales is not specific to the
Portmeirion product range. The balance sheet remains strong, and the Board,
therefore, feel justified in maintaining the dividend.
We are now delivering our revolutionary new table and giftware range, The
Starfire Collection in both the United States and the home market. The
initial reaction has been very positive, and should contribute to an upturn in
the sales trend. The second half of the year has started with overall sales
in July increasing by 9% over last year.
Following a major review of our intended Visitor Centre project by independent
specialist consultants, the Board has decided to invest in its core business,
rather than developing the tourism sector, in order to further enhance
Portmeirion's ceramic manufacturing in Stoke-on-Trent.
Although there are now some positive indications for the second half, it would
be unrealistic to expect full year profits to recover completely, and I,
therefore, believe that profit before tax for the full year ended 31st
December 2001 is likely to fall below the level achieved in the year ended
31st December 2000.
Management Team
Kami Farhadi, Group Chief Executive, has resigned his directorship of the
Company and other group companies with effect from 15th August 2001, and I
thank him for his contribution to the development of the Company.
With immediate effect, Lawrence Bryan is appointed Group Chief Executive. He
has been president of Portmeirion USA since 1998. His career in the glass,
ceramics and gift industry is extensive, and he was instrumental in the
turnaround of Portmeirion USA in 1999 and 2000.
Alan Miles is appointed Managing Director of Portmeirion Potteries Ltd, our
main UK trading subsidiary. He has been our Sales & Marketing Director since
1996, and has a broad spectrum of business experience, including
manufacturing, merchanting, retailing and international distribution.
I believe this new management team has all the qualities necessary to lead the
Group to future success.
Future
Despite the short-term difficulties we face, I believe the company's strategy
of high quality design, and brand promotion of an increasing range of
homewares and gift products, will ensure a return to growth in sales and,
therefore, profits.
Arthur Ralley
Chairman
16th August 2001
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 2001 which comprises the profit and loss account,
the balance sheet, the cash flow statement, reconciliation of net cash flow to
movement in net funds and related notes 1 to 9. 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.
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 responsible for preparing the interim report 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 2001 .
Deloitte & Touche
Chartered Accountants
Colmore Gate
2 Colmore Row
Birmingham
B3 2BN
16 August 2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Notes Six Six Year
Months Months
to to to
30.6.01 30.6.00 31.12.00
£000's £000's £000's
Turnover - continuing operations 6 13,552 14,898 30,727
Raw materials and operating costs (13,535) (14,048) (27,958)
Operating profit - continuing 17 850 2,769
operations
Share of profit of associated 85 71 254
undertakings
Interest receivable and similar 160 176 328
income
Profit on ordinary activities 262 1,097 3,351
before taxation
Taxation on profit on ordinary (99) (360) (1,046)
activities
Profit for the period 163 737 2,305
Dividends (343) (343) (1,377)
Retained (loss)/profit for the (180) 394 928
period
Earnings per share 4 1.57p 7.09p 22.19p
Diluted earnings per share 4 1.57p 7.09p 22.17p
Dividend per share 5 3.30p 3.30p 13.25p
See notes on pages 8 and 9
CONSOLIDATED BALANCE SHEET
As at 30.6.01 As at 30.6.00 As at
31.12.00
£000's £000's £000's £000's £000's £000's
Fixed assets
Tangible assets 9,120 9,243 9,119
Investments 1,336 1,152 1,262
10,456 10,395 10,381
Current assets
Stocks 7,841 6,837 6,574
Debtors 6,453 5,891 5,978
Cash at bank and in 4,320 5,930 7,138
hand
18,614 18,658 19,690
Creditors: amounts falling
due within one year (4,092) (4,534) (4,950)
Net current assets 14,522 14,124 14,740
Net assets 24,978 24,519 25,121
Capital and reserves
Called up share 519 519 519
capital
Share premium account 4,536 4,536 4,536
Profit and loss 19,923 19,464 20,066
account
Equity shareholders' 24,978 24,519 25,121
funds
CONSOLIDATED CASH FLOW STATEMENT
Notes Six Six Year
Months Months
to to to
30.6.01 30.6.00 31.12.00
£000's £000's £000's
Cash flow from operating activities 8 (1,042) (291) 2,255
Dividends received from associates - - 118
Returns on investments and 9 164 181 315
servicing of finance
Taxation (360) (157) (826)
Capital expenditure and financial 9 (546) (342) (920)
investment
Equity dividends paid (1,034) (1,034) (1,377)
Cash outflow before use of liquid
resources and financing (2,818) (1,643) (435)
Management of liquid resources 2,438 41 (1,125)
Decrease in cash in the period (380) (1,602) (1,560)
Note to cash flow statement:
Reconciliation of net cash flow to movement in net funds
Decrease in cash in the period (380) (1,602) (1,560)
Cash (inflow)/outflow from (decrease)
/increase in liquid resources (2,438) (41) 1,125
Net funds at 1st January 7,138 7,573 7,573
Net funds at period end 7 4,320 5,930 7,138
See notes on pages 8 and 9
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Six Six Year
Months Months
to to to
30.6.01 30.6.00 31.12.00
£000's £000's £000's
Profit for the period 163 737 2,305
Currency translation differences 37 13 81
Total recognised gains and losses for 200 750 2,386
the period
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Six Six Year
Months Months
to to to
30.6.01 30.6.00 31.12.00
£000's £000's £000's
Profit for the period 163 737 2,305
Dividends (343) (343) (1,377)
Currency translation differences 37 13 81
Net (reduction)/addition to (143) 407 1,009
shareholders' funds
Opening shareholders' funds 25,121 24,112 24,112
Closing shareholders' funds 24,978 24,519 25,121
NOTES
1. The consolidated profit and loss account for the six months
ended 30 June 2001 and balance sheet at that date have been reviewed by the
auditors but not audited. The consolidated profit and loss account for the six
months ended 30 June 2000 and balance sheet at that date have neither been
reviewed by the auditors nor audited.
2. The comparative figures for the financial year ended 31 December
2000 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 Report has been prepared in accordance with the
accounting policies set out in the Group's 2000 Report and Accounts.
4. The earnings per share are calculated on earnings of £163,000
(2000 - £737,000) and the weighted average number of Ordinary shares of
10,389,230 (2000 - 10,389,230) in issue during the period. The options in
existence during the six months ended 30 June 2001 and 2000 have a negligible
dilutive effect as defined by FRS 14 and therefore the diluted earnings per
share under FRS 14 are the same as the basic earnings per share.
5. A dividend of 3.3p (2000 - 3.3p) per Ordinary share will be paid
on 1 October 2001 to shareholders on the register on 14 September 2001.
6. Turnover by destination
Six Six Year
Months Months
to to to
30.6.01 30.6.00 31.12.00
£000's £000's £000's
United Kingdom 5,555 5,751 11,941
North America 5,775 6,688 14,429
European Union 1,140 1,496 2,501
Far East 688 546 1,155
Rest of the World 394 417 701
13,552 14,898 30,727
7. Analysis of net funds
As at As at As at
30.6.01 30.6.00 31.12.00
£000's £000's £000's
Cash in hand, at bank 748 1,086 1,128
Short term money market 3,572 4,844 6,010
deposits
Total 4,320 5,930 7,138
8. Reconciliation of operating profit to operating cash flows
Six Six Year
Months Months
to to to
30.6.01 30.6.00 31.12.00
£000's £000's £000's
Operating profit 17 850 2,769
Depreciation 562 601 1,234
Exchange gain/(loss) 13 (4) 66
Profit on sale of tangible fixed assets (17) (61) (25)
Increase in stocks (1,267) (661) (398)
Increase in debtors (414) (1,444) (1,525)
Increase in creditors 64 428 134
Net cash (outflow)/inflow from (1,042) (291) 2,255
operating activities
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
to 30.6.01 to 30.6.00 31.12.00
£000's £000's £000's £000's £000's £000's
Returns on investments
and servicing of finance
Interest received 164 181 315
Net cash inflow for returns
on investments and
servicing of finance 164 181 315
Capital expenditure and
financial investment
Purchase of tangible (628) (446) (1,062)
fixed assets
Sale of tangible fixed 82 104 142
assets
Net cash outflow for capital
expenditure and
financial investments (546) (342) (920)