Interim Results

Churchill China PLC
5 September 2001


FOR IMMEDIATE RELEASE                                          5 SEPTEMBER 2001



                               INTERIM RESULTS

                   for the six months ended 30th June 2001


Churchill China plc, is pleased to announce its results for the six months
ended 30th June 2001.



Key Points:


*       Substantial growth in sales and profits

*       Flexible manufacturing and outsourcing

*       Increased sales of £26.7m (2000 : £22.9m)

*       Pre-tax profit almost 3.5x last year at £1.2m (2000 : £0.3m)

*       Net cash improved by £1.3m (2000 : £0.2m outflow)

*       Cash balances of £2.4m (2000 : net debt of £1.8m)

*       Earnings per share of 7.3p (2000 : 2.3p)

*       Net asset value £2.49 per share

*       Interim dividend increased by 50% to 3p per ordinary share





Stephen Roper, Chairman, said:


'In the half year to 30 June 2001 the Group has shown a strong growth in both
sales and profits over the first half of 2000, as a result of an improving
performance in both our divisions.  The Board believe that the Group is
returning to a consistent growth path and this is recognised in the increased
dividend.'



For further information, please contact:


Stephen Roper, Chairman                                  Today on: 020 466 5000
Churchill China plc                                 thereafter on: 01782 577566


Tim Anderson                                               Tel No: 020 466 5000

Lisa Baderoon

Buchanan Communications Limited




                             CHAIRMAN'S STATEMENT





In the half year to 30 June 2001 the Group has shown a strong growth in both
sales and profits over the first half of 2000, as a result of an improving
performance in both our divisions.  The Board believe that the Group is
returning to a consistent growth path and this is recognised in the increased
dividend.



Dining In and Dining Out are benefiting from continuous improvements in
production, an increasing contribution from outsourcing and product creativity
which enables the Group to meet the needs and aspirations of its customers.
Our results have been achieved against a background of uncertainty in the
ceramics industry.  It is pertinent to appreciate that the Group's
profitability has always been largely derived from our leading position as a
supplier to the catering market as distinct from retail.



Financial Performance



For the half year to 30 June 2001 Group sales were £26.7m (2000: £22.9m) an
increase of 16%. Operating profit rose by 219% from £0.3m to £1.1m. Pre tax
profit was almost 3.5 times last years' figure, rising from a low base of £
0.3m to £1.2m, in line with our expectations and demonstrating the success of
our revised strategy.



Higher sales were achieved in both divisions, with steady progress in Dining
Out markets and a significant increase from Dining In. This growth was the
principal reason for the rise in Group profitability during the first half
year. Average price levels have risen in the majority of our major markets,
but most notably in Dining Out export sales and within Dining In's
manufactured earthenware market. These price levels have been achieved through
the introduction of higher value products and withdrawal from a number of loss
making areas.



The outsourcing business established in Dining In, has also generated
additional contribution on a substantial increase in volumes, £3.7m of sales
compared to just £1m last year.  We expect outsourcing to continue expanding
and for its contribution to grow as volume increases.  Sales of James Sadler,
acquired in March 2000, have substantially increased, and the business is
performing in line with our expectations.  We have maintained close control of
costs and continue to work at efficient levels within our manufacturing
operations.



There was an improvement in adjusted earnings per share of  217% to 7.3p
(2000: 2.3p per share).



The Board is pleased to announce that, given the improvement in profit, the
interim dividend will be increased by 50% to 3p per ordinary share. This
dividend reflects a re-balancing of the payment between interim and full year
as well as the Board's confidence in the improvement of the underlying
business, demonstrating our continuing commitment to delivering value to
shareholders.



Once again the Group has shown its ability to generate cash for both further
investment in the business and to support the progressive dividend policy
established by the Board. Cash flow from operations increased to £2.2m (2000:
£0.6m) despite further growth in stock requirements from the Dining In
outsourcing business. This was achieved largely from improved profitability
and a reduction in debtors. Overall net cash improved by £1.3m (2000: £0.2m
outflow), leaving cash balances at £2.4m (2000: net debt £1.8m), a positive
swing of over £4m.




Dining Out



Sales showed a healthy increase of 6% to £10.4m.  (2000: £9.8m).



The sales growth in the UK was largely based on the continued success in
winning more national account business and a number of innovatory new product
launches.  We were particularly successful with city-centre coffee houses,
pubs and restaurants.



Sales growth has been achieved in spite of the impact of the foot and mouth
disease on UK tourism.  To date this appears to have only affected certain
regions and at this stage it has not impacted on our position nationally.



Sales in our other key growth target area, the USA, improved by 48%.  This
healthy performance benefited from increased sales and marketing resources. We
shall continue with this investment and expect to reap further rewards.  Other
export markets, principally Europe, remain flat.



Dining In



Sales increased significantly by 24% to £16.3m (2000 : £13.1m).



Volume increases largely arose from substantial growth in our outsourcing
activities, where specifically in the UK we offer major retailers a
comprehensive range of products which we either manufacture or oursource.
This flexibility benefits both our customers and Churchill.



The overall value of manufactured sales also increased during this period
reflecting a full contribution from James Sadler and the focus on higher unit
value tableware.



Sales to North America were up by 84% whereas sales to Europe fell by 8%.  The
classical Applebee design has gained further listings in the US, Europe and
Far East.    Similarly, our blue and white traditional print business has
grown in those markets.



You will recall that Churchill were successful in obtaining the Harry Potter
licence for both classic and movie mugs.  I am pleased to report that the
classic range has been successful, appealing to a wide range of outlets with a
high degree of repeat business.  The movie products will be launched in
October and reaction from the trade has been very positive.  We anticipate
signing up further licensed business in the next few months.



Prospects



The Group has demonstrated strong growth in both sales and profitability
during the first half of 2001 and we anticipate continued improvement in the
trading performance for the remainder of the financial year.



In October Dining Out will launch Alchemy; an exciting new china product which
has been under development for the last 2 years with a range of over 45 items
targeted at the 4 and 5 star market.  This introduction will expand
Churchill's portfolio of customers at home and abroad, and will be a
significant factor in the long term growth of the division.



The turnaround in the Dining In division continues, and is on course to
deliver a positive contribution to the group in 2002.



I am confident in the Group's ability to sustain and build on the recovery
programme for the long term, and I congratulate all of our staff who continue
to demonstrate flexibility, innovation and commitment.



Stephen Roper
Chairman
5 September 2001


Consolidated profit and loss account
for the six months ended 30 June 2001


                                                Unaudited   Unaudited   Audited
                                               Six months  Six months      Year
                                                       to          to     ended
                                                  30 June     30 June        31
                                                                       December
                                                     2001        2000      2000
                                        Note         £000        £000      £000


Turnover                                  1        26,660      22,918    49,913


Operating profit                                    1,075         337     2,395


Share of operating profit of associate                 50          67       143

Income from fixed asset investment                      0           0        48

Interest receivable                                    46           0        29

Interest payable and similar charges                   -5         -62      -126


Profit on ordinary activities before
taxation                                            1,166         342     2,489


Tax on profit on ordinary activities                 -383         -99      -636

Profit on ordinary activities after
taxation                                              783         243     1,853


Dividends                                 2          -319        -213      -746

Retained profit for the period                        464          30     1,107




                                          Pence per  Pence per    Pence per
                                            share      share         share


Earnings per ordinary share           3   7.3p       2.3p         17.4p

Basic                                 3   7.3p       2.3p         16.9p

Adjusted


Diluted earnings per ordinary share

Basic                                 3   7.3p       2.3p         17.4p

Adjusted                              3   7.3p       2.3p         16.9p







The Group has no recognised gains and losses other than those included in the
profit and loss account above and therefore no separate statement of
recognised gains and losses has been presented.


Consolidated balance sheet
as at 30 June 2001


                                                 Unaudited Unaudited    Audited
                                                   30 June   30 June         31
                                                                       December
                                                      2001      2000       2000
                                                      £000      £000       £000

Fixed assets

Intangible Assets                                      242       297        268

Tangible assets                                     14,460    16,031     15,229

Investments                                          1,044       934        993


                                                    15,746    17,262     16,490


Current assets

Stocks                                               7,272     7,447      7,049

Debtors: amounts falling due within one
year                                                10,111     9,307     11,049

Cash at bank and in hand                             2,439        19      1,124


                                                    19,822    16,773     19,222

Creditors: amounts falling due within one
year                                                -9,062    -8,796     -9,655

Net current assets                                  10,760     7,977      9,567


Total assets less current liabilities               26,506    25,239     26,057




Creditors: amounts falling due after one
year                                                   -25       -39        -32

Provisions  for liabilities and charges                  0      -261         -8

Net assets                                          26,481    24,939     26,017


Capital and reserves

Called up share capital                              1,065     1,065      1,065

Share premium account                                1,960     1,960      1,960

Revaluation reserve                                  2,155     2,243      2,165

Other reserves                                         253       253        253

Profit and loss account                             21,048    19,418     20,574


Equity shareholders' funds                          26,481    24,939     26,017






Consolidated cash flow statement
for the six months ended 30 June 2001


                                                   Unaudited Unaudited  Audited
                                                         Six       Six     Year
                                                   months to months to    ended
                                                     30 June   30 June       31
                                                                       December
                                                        2001      2000     2000
                                                        £000      £000     £000


Net cash flow from operating activities
reconciliation to operating profit - note 4)           2,163       624    4,049



Returns on investments and servicing of
finance

Interest received

Interest paid                                             46         0       29

Dividends received                                         0       -54     -114

                                                           0         0       48


Returns on investments and servicing of
finance                                                   46       -54      -37

Taxation

UK corporation tax paid                                    0         2      -23


Capital expenditure and financial investment

Purchase of tangible fixed assets                       -390      -544     -949

Sale of tangible fixed assets                             54        45       82
                                                          
Purchase of Investments                                  -18         0        0


Net cash outflow for capital expenditure and
financial investment                                    -354      -499     -867

Acquisitions

Purchase of business                                       0      -250     -250


Equity dividends paid                                   -533         0     -213


Financing

Payment of principal under finance leases                 -7        -7      -13

Net cash outflow from financing                           -7        -7      -13


Increase / (decrease) in net cash                      1,315      -184    2,646






1. Turnover analysis



The Directors increasingly consider that the Group's activities are a single
class of business. The previously disclosed segmental analysis is now longer
appropriate. However, for additional shareholder information turnover is
analysed as follows:




                                   Unaudited          Unaudited         Audited
                               Six months to      Six months to      Year ended
                                     30 June            30 June     31 December
                                        2001               2000            2000
                                        £000               £000            £000


Analysis by market sector

Dining Out                            10,367              9,802          20,602

Dining In                             16,293             13,116          29,311


                                      26,660             22,918          49,913



Analysis by geographic market

United Kingdom                        15,717             12,844          28,594

Rest of Europe                         5,728              6,127          10,546

North America                          3,893              2,334           8,087

Australasia                              614                671           1,232

Far East                                 243                522             445

Other                                    465                420           1,009


                                      26,660             22,918          49,913




2. Dividend



The proposed dividend has been calculated on 10,649,876 shares being those in
issue at 30 June 2001 qualifying for the dividend. The dividend will be paid
on 12 October 2001 to shareholders on the register on 14 September 2001





3. Earnings per ordinary share



Basic earnings per ordinary share is based on the profit on ordinary
activities after taxation and on 10,649,876(2000: 10,649,876) ordinary shares,
being the weighted average number of ordinary shares in issue during the year.
Adjusted earnings per ordinary share is based on the profit on ordinary
activities after taxation and adjusted to take into account income from fixed
asset investment.



                                                 Unaudited  Unaudited   Audited
                                                Six months Six months      Year
                                                        to         to     ended
                                                   30 June    30 June        31
                                                                       December
                                                      2001       2000      2000
                                                 pence per  pence per pence per
                                                     share      share     share


Basic earning per                                      7.3        2.3      17.4
share

Adjustments :
                   Income from fixed asset
                   investment                            0          0      -0.5


Adjusted earning per share                             7.3        2.3      16.9



Diluted basic earnings per ordinary share is based on the profit on ordinary
activities after taxation and on 10,745,465 (2000: 10,666,663) ordinary
shares, being the weighted average number of ordinary shares in issue during
the year of 10,649,876 (2000:10,649,876) increased by 95,589 (2000:16,787)
shares, being the weighted average number of ordinary shares which would have
been issued if the outstanding options to acquire shares in the Group had been
exercised at the average price during the year.



Diluted adjusted earnings per ordinary share is based on the profit on
ordinary activities after taxation and adjusted to take into account income
from fixed asset investment.


                                           Unaudited     Unaudited     Audited
                                       Six months to Six months to  Year ended
                                             30 June       30 June 31 December
                                                2001          2000        2000
                                           pence per     pence per   pence per
                                               share         share       share



Diluted basic earnings per share                 7.3           2.3        17.4
Adjustments :
      Income from fixed asset                      0             0        -0.5
      investment
Diluted adjusted earnings per share              7.3           2.3        16.9



4. Reconciliation of operating profit to net cash inflow from operating
activities


                                              Unaudited   Unaudited    Audited
                                             Six months  Six months Year ended
                                                     to          to         31
                                                30 June     30 June   December
                                                   2001        2000       2000
                                                   £000        £000       £000


Continuing operating activities

Operating profit                                  1,075         337      2,395

Depreciation                                      1,088       1,208      2,356

Loss on sale of assets                               17           4         26

Goodwill amortisation                                26          11         40

Increase in stocks                                 -223      -1,161       -763

Decrease/(Increase) in debtors                      521         634     -1,080

(Decrease)/Increase in trade creditors             -333        -352      1,132

Decrease in provisions                               -8         -57        -57


Net inflow from continuing operating              2,163         624      4,049
activities



5. Reconciliation of increase/(decrease) in net cash to movement in net cash /
(debt)


                                              Unaudited     Unaudited   Audited
                                               Six months  Six months      Year
                                                       to          to     ended
                                                  30 June     30 June        31
                                                                       December
                                                     2001        2000      2000
                                                     £000        £000      £000

Increase / (decrease) in cash during the            1,315        -184     2,646
period                                                  

Cash outflow from decrease in debt and lease            7           7        13
financing

Movement in net debt during resulting from
cash flows                                          1,322        -177     2,659


Net cash/(debt) at the start of the period          1,079      -1,580    -1,580

Net cash/(debt) at the end of the period            2,401      -1,757     1,079





6. Financial Information



(a) The interim financial statement has been prepared in accordance with the
accounting policies set out in the  Annual Report for the year ended 31
December 2000.



(b) The interim financial statement was approved by the board on 4 September
2001. Neither the interim financial statement nor comparative information for
the six months ended 30 June 2000 have been audited or reviewed. Comparative
information for the  year to 31 December 2000 has been extracted from the
audited financial statements.



(c) The interim financial statement set out above does not constitute
statutory accounts as defined by the Companies Act 1985. Statutory accounts
for the year ended 31 December 2000, including an unqualified audit report
which did not contain statements under Section 237 (2) or (3) of the Companies
Act 1985 have been filed with the Registrar of Companies