Interim results for the six months ended 30 June 2007

RNS Number:7829B
9th August 2007


                     Portmeirion Group PLC

				("Portmeirion" or "the Group")


Interim results for the six months ended 30 June 2007

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:

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

All the above figures relate to continuing operations.

* Restated to reflect the adoption of IFRS as per note 10.