Interim Results
Churchill China PLC
30 August 2002
FOR IMMEDIATE RELEASE 30 August 2002
CHURCHILL CHINA PLC
INTERIM RESULTS
for the six months ended 30 June 2002
Churchill China Plc, is pleased to announce its results for the six months ended
30 June 2002.
Key Points:
• Dining Out - Sales maintained through increased market share
- Alchemy achieves success in 4 star market
• Dining In - Progress in housewares and premium dinnerware
• Maintained strong operating cash generation
• Dividend at 3p per ordinary share - high yield
• Pre-tax profit before exceptional item £0.5m (2001: £1.2m)
• Exceptional item - restructuring costs £167,000
• Group turnover £24.3m (2001: £26.7m)
• Adjusted earnings per share 3.4p (2001: 8.1p)
Stephen Roper, Chairman, said:
'Having taken account into future trading prospects for the remainder of 2002,
continued operating cash generation and the strength of the Group's balance
sheet, the Board is pleased to announce that the interim dividend will be
maintained at 3p per ordinary share.
'The launch of our premium new product Alchemy late in 2001, has proved
successful with substantial sales already achieved. We expect Dining Out to
continue to prosper and for the results of recent investment in this area to
generate additional returns in the coming year.'
For further information, please contact:
Stephen Roper, Chairman Today on: 020 7466 5000
Churchill China Plc thereafter on: 01782 577566
Tim Anderson Tel No: 020 7466 5000
Lisa Baderoon
Buchanan Communications
CHAIRMAN'S STATEMENT
In the half year to 30 June 2002 the Group produced a profit before tax and
exceptional items of £0.5m. This was, as expected, lower than the strong
performance in the corresponding period in 2001 where we reported a profit of
£1.2m. As we informed the market in July we expect these more difficult trading
conditions to continue in the second half of the year. The Dining Out division
has continued to perform well, however, market conditions for the Dining In
division remain mixed, although recently there has been some sign of modest
improvement.
Financial Performance
Group turnover for the half year was £24.3m (2001: £26.7m). Operating profit
before exceptional items was £0.5m (2001: £1.1m). After an exceptional cost of
£0.2m arising from the restructuring of certain manufacturing operations, pre
tax profits were £0.3m (2001: £1.2m). Adjusted earnings per share were 3.4p per
share (2001: 8.1p).
Operating cash generation has remained positive with continued investment in
working capital to support Dining Out and the Housewares sector of Dining In.
Overall cash balances have fallen by £0.7m to £1.4m in the half year as a result
of further capital investment and dividend payments. Nevertheless, having taken
into account future trading prospects for the remainder of 2002, continued
operating cash generation and the strength of the Group's balance sheet, the
Board is pleased to announce that the interim dividend will be maintained at 3p
per ordinary share.
Dining Out
Dining Out's performance has remained robust. Sales in the first half year were
£10.4m, in line with last year. Despite generally weaker trading conditions in
the UK we have maintained the level of sales through increasing market share.
New product introduction and excellent customer service have allowed us to
improve our competitive position.
The launch of our new premium product, Alchemy late in 2001, has proved
successful and we have achieved substantial sales to 4 star restaurants and
hotels both in the UK and overseas. We expect this progress to continue and to
generate increasing returns for the division.
The investment made in additional sales and marketing resources has allowed us
to continue to improve our position both for the UK national accounts sector and
key overseas markets.
Dining In
Dining In has been unable to continue the progress shown in the first half of
last year. Sales fell to £13.9m (2001: £16.3m) continuing the weaker trend
experienced in the second half of last year. Volume dinnerware was particularly
affected by lower promotional turnover in the USA, a general weakness in
European markets and the absence of sub contract business in the UK. The
volatility of sales to these sectors was not fully offset by an improved
performance in premium dinnerware. Sales of profitable sourced products
covering the full range of housewares including glassware, textiles and
tablemats as well as ceramics have grown from £3.7m to £4.8m during the period.
Licensed products, including Harry Potter, have performed well.
A programme of actions to reduce dependence on the volume dinnerware market
remains on going.
Prospects
We expect Dining Out to continue to prosper and for the results of recent
investments in this business to generate additional returns. Whilst there is
currently some evidence of an improvement in retail markets the Board still
intends to accelerate the long term rate of change in the business.
We have developed a number of further initiatives, including a more rapid
increase in the proportion of manufacturing resources allocated to the
hospitality sector. We will continue to emphasise growth in profitable areas of
the retail business, notably premium dinnerware and housewares, which we believe
will have a positive impact on the Group's performance.
Stephen Roper 30 August 2002
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 2002
Unaudited Unaudited Total Unaudited Audited
Six months Six months Six months Six months Year ended
to 30 June to 30 June to 30 June to 30 June 31 December
2002 2002 2002 2001 2001
Before
exceptional Exceptional Total
items items
Note £000 £000 £000 £000 £000
Turnover 1 24,277 - 24,277 26,660 51,985
Operating profit 2 506 (167) 339 1,075 2,813
Share of operating profit of associate - 50 124
Profit on disposal of fixed asset - - 337
Net interest receivable 24 41 104
Profit on ordinary activities
before taxation 363 1,166 3,378
Tax on profit on ordinary
activities 7 (130) (305) (895)
Profit on ordinary activities
after taxation 233 861 2,483
Dividends 3 (320) (319) (958)
Retained (loss)/profit for the
period (87) 542 1,525
Note Pence per Pence per Pence per
share share share
Earnings per ordinary share
Basic 4 2.2 8.1 23.3
Adjusted 4 3.4 8.1 20.1
Diluted earnings per ordinary share
Basic 4 2.1 8.0 23.1
Adjusted 4 3.3 8.0 19.9
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.
In accordance with the Group's adoption of the provisions of FRS 19-Deferred
Tax, comparative figures for the six months to 30 June 2001 and the year to 31
December 2001 have been restated. No material changes have arisen as a result
of the adoption of the Standard.
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2002
Unaudited Unaudited Audited
30 June 30 June 31 December
2002 2001 2001
£000 £000 £000
Fixed assets
Intangible Assets 199 242 222
Tangible assets 14,319 14,460 14,767
Investments 1,092 1,044 1,092
15,610 15,746 16,081
Current assets
Stocks 8,893 7,272 8,459
Debtors: amounts falling due within one year 9,759 10,111 10,060
Cash at bank and in hand 1,447 2,439 2,167
20,099 19,822 20,686
Creditors: amounts falling due within one year (8,303) (9,062) (9,232)
Net current assets 11,796 10,760 11,454
Total assets less current liabilities 27,406 26,506 27,535
Creditors: amounts falling due after one year (12) (25) (19)
Provisions for liabilities and charges (123) (114) (166)
Net assets 27,271 26,367 27,350
Capital and reserves
Called up share capital 1,066 1,065 1,065
Share premium account 1,967 1,960 1,960
Revaluation reserve 2,111 2,155 2,122
Other reserves 253 253 253
Profit and loss account 21,874 20,934 21,950
Equity shareholders' funds 27,271 26,367 27,350
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2002
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
£000 £000 £000
Net cash inflow from operating activities 736 2,163 3,670
(reconciliation to operating profit - note 5)
Returns on investments and servicing of finance
Net interest received 24 46 109
Net cash inflow from returns on investments
and servicing of finance 24 46 109
Taxation
UK corporation tax paid (158) - (814)
Capital expenditure and financial investment
Purchase of tangible fixed assets (750) (390) (2,011)
Sale of tangible fixed assets 66 54 972
Purchase of Investments - (18) (18)
Net cash outflow for capital expenditure and
financial investment (684) (354) (1,057)
Equity dividends paid (639) (533) (852)
Financing
Issue of ordinary shares 8 - -
Payment of principal under finance leases (7) (7) (13)
Net cash inflow / (outflow) from financing 1 (7) (13)
(Decrease) / increase in net cash (720) 1,315 1,043
NOTES
1. Analysis of turnover
The Directors consider that the Group's activities are a single class of
business. However for additional shareholder information turnover is analysed as
follows:
Unaudited Unaudited Audited
Six months to Six months Year ended
30 June to 30 June 31 December
2002 2001 2001
£000 £000 £000
Turnover
Dining Out 10,383 10,367 21,323
Dining In 13,894 16,293 30,662
24,277 26,660 51,985
Geographic Turnover
United Kingdom 14,460 15,717 32,027
Rest of Europe 5,293 5,728 10,732
North America 3,235 3,893 6,704
Australasia 522 614 1,271
Far East 120 243 535
Other 647 465 716
24,277 26,660 51,985
2. Exceptional Items
The exceptional item of £167,000 represents the costs arising in the
restructuring of part of the Group's manufacturing operations. A credit of
£41,000 has been included in the charge for corporation tax in respect of the
restructuring costs.
3. Dividend
The proposed dividend has been calculated on 10,659,876 shares being those in
issue at 30 June 2002 qualifying for the dividend. The dividend will be paid on
4 October 2002 to shareholders on the register on 13 September 2002.
4. Earnings per ordinary share
Basic earnings per ordinary share is based on the profit on ordinary activities
after taxation and on 10,653,633 (2001: 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 exceptional items
and profit on disposal of fixed assets
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
pence per pence per pence per
share share share
Basic earnings per share 2.2 8.1 23.3
Adjustments :
- Exceptional items 1.2 - -
- Profit on disposal of fixed assets - - (3.2)
Adjusted earnings per share 3.4 8.1 20.1
Diluted basic earnings per ordinary share is based on the profit on ordinary
activities after taxation and on 10,730,677 (2001: 10,745,465) ordinary shares,
being the weighted average number of ordinary shares in issue during the year of
10,653,633 (2001:10,649,876) increased by 77,044 (2001:95,589) 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 exceptional items
and profit on disposal of fixed assets.
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
pence per pence per pence per
share share share
Diluted basic earnings per share 2.1 8.0 23.1
Adjustments :
- Exceptional items 1.2 - -
- Profit on disposal of fixed assets - - (3.2)
Diluted adjusted earnings per share 3.3 8.0 19.9
5. Reconciliation of operating profit to net cash inflow from operating
activities
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
£000 £000 £000
Continuing operating activities
Operating profit 339 1,075 2,813
Depreciation 1,044 1,088 2,053
(Profit) / loss on sale of assets (13) 17 16
Goodwill amortisation 23 26 46
Increase in stocks (434) (223) (1,410)
Decrease in debtors 301 521 572
Decrease in trade creditors (524) (333) (412)
Decrease in provisions - (8) (8)
Net inflow from continuing operating activities 736 2,163 3,670
6. Reconciliation of (decrease) / increase in net cash to movement in net cash
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
£000 £000 £000
(Decrease) / increase in cash during the period (720) 1,315 1,043
Cash outflow from decrease in debt and lease financing 7 7 13
Movement in net cash during the period resulting from cash flows (713) 1,322 1,056
Net cash at the start of the period 2,135 1,079 1,079
Net cash at the end of the period 1,422 2,401 2,135
7. 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
2001, with the exception that the Group has adopted the provisions of Financial
Reporting Standard 19 - Deferred Tax. Comparative data for the six months to 30
June 2001 and 31 December 2001 has been restated in accordance with FRS 19
b) The interim financial statement was approved by the board on 29 August
2002. Neither the interim financial statement nor comparative information for
the six months ended 30 June 2001 have been audited or reviewed. Comparative
information for the year to 31 December 2001 has been extracted from the
audited financial statements as restated in respect of the introduction of FRS
19.
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 2001, 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
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