07:00 Thu 21 Mar 2019
Portmeirion Group - Final Results
Preliminary results for the year ended
Financial summary
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2018 £m |
2017 £m |
Increase % |
Revenue |
89.6 |
84.8 |
5.7 |
Pre-tax profit |
9.7 |
8.8 |
10.1 |
EBITDA |
11.8 |
11.0 |
7.5 |
Basic earnings per share |
72.12p |
65.07p |
10.8 |
Dividends paid and proposed per share in respect of the year |
37.50p |
34.66p |
8.2 |
Highlights:
Financial
· Tenth consecutive year of record Group revenue which increased by 5.7% to
· Profit before tax increased by 10.1% to
· EBITDA increased by 7.5% to
· Earnings per share increased by 10.8% to 72.12p (2017: 65.07p).
· Total dividends paid and proposed for 2018 increased by 8.2% to 37.50p per share (2017: 34.66p).
· Net cash improved to
· Operating margin increased to 11.1% (2017: 10.7%).
Operational
· Strong progress across key markets of
· Home fragrance division (acquired in 2016) delivers sales growth of 11.1%.
· Online sales growth of 24.4% over the prior year.
· Successful new product launches including Sara Miller London Portmeirion and line extensions in
· For 2019, three exciting new
· Appointed
"We are delighted to be reporting a tenth consecutive year of record revenue and another record profit before taxation. Our strategy and core values remain unchanged. We are focused on driving profitable sales growth through new product introduction, developing our markets, investing behind our brands and enhancing our operational capabilities and efficiency supported with complementary strategic acquisitions.
We look forward into 2019 with confidence and at this very early stage of the year expect trading to be in line with expectations for the full year."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).
ENQUIRIES:
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+44 (0) 1782 744 721 |
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Non-executive Chairman |
+44 (0) 1782 744 721 |
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Group Finance Director
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+44 (0) 207 796 4133 |
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(Nominated Adviser and Broker): |
+44 (0) 207 886 2500 |
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Corporate Finance |
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Corporate Broking |
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(Joint Broker): |
+44 (0) 207 894 7000 |
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Corporate Finance |
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Sales |
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Chairman and Chief Executive Statements
We are very pleased to be able to report another record breaking year for the Group. Sales within our key markets of the
The Group continues to invest in our major brands which are the key drivers of value for the business.
Financial Highlights
Revenue was
Since 2013, the Group has increased revenue by 54% from
Profit before taxation was
Basic earnings per share increased by 10.8% to 72.12p per share (2017: 65.07p), while dividends have increased by 8.2% to 37.50p (2017: 34.66p), with dividend cover of 1.93 times (2017: 1.85 times) maintained in line with our long term target of approximately two times.
Dividend
The Board is committed to a progressive dividend policy and aims to maintain a sustainable and appropriate level of dividend cover. We have increased our dividend for ten consecutive years. The Group will look to increase our dividend whenever appropriate driven by our results, cash balances, future prospects and other key performance indicators.
The Board is recommending a final dividend of 29.50p (2017: 27.26p) per share bringing the total paid and proposed for the year to 37.50p (2017: 34.66p) per share, an increase of 8.2% over the total amounts paid in respect of 2017.
Governance
The Directors recognise and welcome the importance and benefits of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the 'QCA Code').
Further details on how the Company complies with the principles of the QCA Code can be found on our website and in our annual report and accounts.
People and culture
We are committed to the continuing promotion of our established and unique vision and values which support the Group's culture of openness and integrity. We encourage attitudes and behaviours that will positively impact on our long-term success and sustainability through the achievement of our objectives and business strategy.
The Group recruits people who share our values, and this continues to be a key part of our recruitment strategy as it enables new and existing employees to work seamlessly towards realising our vision. Further details on our corporate culture and its integration within the Group can be found in the Corporate Responsibility section and the Corporate Governance Statement in our annual report and accounts.
The Board keeps the composition and performance of the Directors and most senior management of the Group under review to ensure we have the appropriate skills and experience in place to deliver our strategic aims.
At the beginning of
Our performance during the year
Revenue for the Group increased by 5.7% to
Geographical performance
The
Sales into
Sales to the rest of the world decreased by 4.0% to
Our strategy of growing our own online sales continues to bear fruit, with sales growth of 24.4% to
Segmental performance
The Group continues to operate under our three key segments: Portmeirion
Portmeirion
Portmeirion
Our
The
Sales at
The growth in the
Home fragrance
The Group acquired the Wax Lyrical business in
We manufacture home fragrance products in our factory in the
We continue to believe the home fragrance division has strong potential for growth in the
Products and brands
Our brands and products are the key wealth creators for the Group. We have five major brands -
New product development is a vital component of our brand value and includes both new ranges and line extensions within our existing patterns. Each year we continue to develop, extend and refine our product offering to retain and build customer appeal. In 2018, we continued to refresh our heritage patterns such as
A list of our current patterns can be found at www.portmeirion.co.uk, www.spode.co.uk, www.wax-lyrical.com, www.royalworcester.co.uk and www.pimpernelinternational.co.uk. Customers in
Strategic priorities
The Group continues with its strategy of diversifying products, customers, geographical markets and routes to market within those countries. This strategy has enabled us to realise opportunities as they have arisen and reduce our reliance on any one market, customer or distribution channel.
Our long term strategy is focused on five key areas: profitable sales growth, new product introduction, developing our brands, enhancing our operational efficiency and capability and supporting this with complementary strategic acquisitions.
Profitable sales growth underpins all of the Group's strategic objectives, and we aim to achieve this by diversifying our markets and completing targeted product development within those markets. In 2018, we achieved our tenth consecutive year of record sales with 5.7% growth to
We continue to invest and enhance our five global brands, which collectively have been in existence for nearly seven hundred years.
Our operational capabilities are constantly reviewed in order to position the Group to meet the requirements of our customers. The continued trend of retail moving to online and drop-ship fulfilment has required operational investment and will continue to do so. We continue to drive efficiencies through our manufacturing and distribution sites to combat inflationary cost pressures and remain competitive.
The Group remains committed to acquiring businesses where there is a strategic fit and the combination would be earnings enhancing. We have now successfully integrated the Wax Lyrical business and continue to drive towards our goal of strong growth for this segment of the Group's sales.
As referred to in our principal risks section of our annual report and accounts, we are aware of the current uncertainties that surround the Brexit date of 29 March. The Group relies on the importation of some raw materials and finished product and exports to over 70 countries. Significant disruption to the flow of goods across the
Outlook
Although we face political and economic uncertainties around the world, including Brexit, we look forward into 2019 with confidence and at this very early stage of the year expect trading to be in line with expectations for the full year.
Our strategy and core values remain unchanged. We are focused on driving profitable sales growth through new product introduction, developing our markets, investing behind our brands and enhancing our operational capabilities and efficiency supported with complementary strategic acquisitions. In particular we will invest behind further growth in our online sales and fulfilment capabilities around the world. We will continue to leverage the potential of our home fragrance business and develop sales markets not only in the
As such, we remain confident in our ability to create shareholder value in the short, medium and long term.
Non-executive Chairman Chief Executive
Financial Review
2018 was a strong year, demonstrating our robust growth and profit generation. Overall business performance is shown in our key performance indicators in our annual report and accounts.
Revenue
Revenue totalled
Sales in our US market were translated on consolidation at a lower exchange rate than in 2017. At constant currency the Group's sales were up 7.2% on the previous year.
Our revenue grew in all of our three biggest geographical markets. The UK market benefited from growth in both our ceramic business and also in Wax Lyrical, our home fragrance business. Our US market continued to expand with an ongoing shift to online business from traditional department stores. Sales in South Korea improved, reversing the trend of the last few years, aided by new product development. New product launches continued to be a key driver of sales growth. This included product extensions to licensed ranges, such as Royal Worcester Wrendale Designs and Sara Miller London Portmeirion, delivering sales expansion on prior year. Heritage ceramic patterns under the Spode brand performed well - Spode Blue Italian was up 18% and Spode Christmas Tree was up 5%.
Our home fragrance division was up 11.1% with sales growth from Made in England and seasonal ranges.
Profit
Profit before taxation was
Operating profit margins improved for the second consecutive year to 11.1% (2017: 10.7%). This was enabled by good control over our cost base and improved customer and product mix.
Earnings per share increased from 65.07p to 72.12p per share.
Interest and financing costs
Finance costs reduced by
Taxation
The charge for taxation was
Dividends
The Board proposes a final dividend of 29.50p per share (2017: 27.26p) giving a total dividend for the year of 37.50p, an increase of 8.2% (2017: 34.66p). This final dividend is expected to be paid on
The Group remains committed to a progressive dividend policy.
Cash generation and net debt
At
This was after new capital investment of
Bank facilities
The Group has agreed debt facilities with
Our business remains seasonal due to the timing of our sales. We therefore experience a large working capital swing during the year. Our committed funding addresses this and we believe is prudent.
Assets and liabilities
Controlling our working capital remains an area of focus for us. Inventory increased in the year from
During 2018, we paid
At the end of the year, we held treasury shares with a book value of
Goodwill and intangibles on our balance sheet represent the value of acquired brands, including Spode, Royal Worcester and Wax Lyrical. The net book value of intangibles reduced in the year by
Treasury and risk management
The impact of transactional currency flows on the Group's profit is limited due to natural matching across different regions. Where there is an anticipated material exposure to the Group, then our policy is to use appropriate hedging instruments to mitigate that risk. We have a robust approach to managing risk to deliver our strategy as is explained in our annual report and accounts.
Mike Raybould
Group Finance Director
CONSOLIDATED INCOME STATEMENT
For the year ended
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Notes |
2018 £'000 |
2017 £'000 |
Revenue |
3 |
89,594 |
84,769 |
Operating costs |
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(79,688) |
(75,687) |
Operating profit |
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9,906 |
9,082 |
Interest income |
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14 |
17 |
Finance costs |
5 |
(301) |
(487) |
Share of results of associated undertakings |
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95 |
210 |
Profit before tax |
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9,714 |
8,822 |
Tax |
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(2,023) |
(1,944) |
Profit for the year attributable to equity holders |
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7,691 |
6,878 |
Earnings per share |
2 |
72.12p |
65.07p |
Diluted earnings per share |
2 |
71.90p |
64.79p |
Dividends paid and proposed per share |
4 |
37.50p |
34.66p |
All the above figures relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended
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2018 £'000 |
2017 £'000 |
Profit for the year |
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7,691 |
6,878 |
Items that will not be reclassified subsequently to profit or loss: |
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Remeasurement of net defined benefit pension scheme liability |
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495 |
4,428 |
Deferred tax relating to items that will not be reclassified subsequently to profit or loss |
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(84) |
(753) |
Items that may be reclassified subsequently to profit or loss: |
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Exchange differences on translation of foreign operations |
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680 |
(767) |
Deferred tax relating to items that may be reclassified subsequently to profit or loss |
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(33) |
(57) |
Other comprehensive income for the year |
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1,058 |
2,851 |
Total comprehensive income for the year attributable to equity holders |
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8,749 |
9,729 |
CONSOLIDATED BALANCE SHEET
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2018 £'000 |
2017 £'000 |
Non-current assets |
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Goodwill |
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7,229 |
7,229 |
Intangible assets |
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5,680 |
6,058 |
Property, plant and equipment |
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9,666 |
10,149 |
Interests in associates |
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2,567 |
2,525 |
Deferred tax asset |
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- |
340 |
Total non-current assets |
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25,142 |
26,301 |
Current assets |
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Inventories |
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19,179 |
18,074 |
Trade and other receivables |
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15,638 |
12,431 |
Cash and cash equivalents |
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7,214 |
8,487 |
Total current assets |
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42,031 |
38,992 |
Total assets |
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67,173 |
65,293 |
Current liabilities |
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Trade and other payables |
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(12,025) |
(10,556) |
Current income tax liabilities |
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(546) |
(475) |
Borrowings |
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(1,981) |
(1,981) |
Total current liabilities |
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(14,552) |
(13,012) |
Non-current liabilities |
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Pension scheme deficit |
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(6) |
(1,672) |
Deferred tax liability |
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(991) |
(882) |
Borrowings |
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(2,974) |
(4,955) |
Total non-current liabilities |
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(3,971) |
(7,509) |
Total liabilities |
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(18,523) |
(20,521) |
Net assets |
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48,650 |
44,772 |
Equity |
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Called up share capital |
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555 |
554 |
Share premium account |
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7,310 |
7,193 |
Investment in own shares |
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(3,257) |
(1,876) |
Share-based payment reserve |
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282 |
550 |
Translation reserve |
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2,723 |
2,076 |
Retained earnings |
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41,037 |
36,275 |
Total equity |
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48,650 |
44,772 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended
|
Share capital £'000 |
Share premium account £'000 |
Investment in own shares £'000 |
Share-based payment reserve £'000 |
Translation reserve £'000 |
Retained earnings £'000 |
Total £'000 |
At |
550 |
6,624 |
(2,936) |
496 |
2,900 |
29,154 |
36,788 |
Profit for the year |
- |
- |
- |
- |
- |
6,878 |
6,878 |
Other comprehensive income for the year |
- |
- |
- |
- |
(824) |
3,675 |
2,851 |
Total comprehensive income for the year |
- |
- |
- |
- |
(824) |
10,553 |
9,729 |
Dividends paid |
- |
- |
- |
- |
- |
(3,433) |
(3,433) |
Increase in share-based payment reserve |
- |
- |
- |
66 |
- |
- |
66 |
Transfer on exercise or lapse of options |
- |
- |
- |
(12) |
- |
12 |
- |
Shares issued under employee share schemes |
4 |
569 |
1,094 |
- |
- |
(7) |
1,660 |
Purchase of own shares |
- |
- |
(34) |
- |
- |
- |
(34) |
Deferred tax on share-based payment |
- |
- |
- |
- |
- |
(4) |
(4) |
At |
554 |
7,193 |
(1,876) |
550 |
2,076 |
36,275 |
44,772 |
Profit for the year |
- |
- |
- |
- |
- |
7,691 |
7,691 |
Other comprehensive income for the year |
- |
- |
- |
- |
647 |
411 |
1,058 |
Total comprehensive income for the year |
- |
- |
- |
- |
647 |
8,102 |
8,749 |
Dividends paid |
- |
- |
- |
- |
- |
(3,766) |
(3,766) |
Increase in share-based payment reserve |
- |
- |
- |
143 |
- |
- |
143 |
Transfer on exercise or lapse of options |
- |
- |
- |
(411) |
- |
411 |
- |
Shares issued under employee share schemes |
1 |
117 |
1,138 |
- |
- |
(6) |
1,250 |
Purchase of own shares |
- |
- |
(2,519) |
- |
- |
(2) |
(2,521) |
Deferred tax on share- based payment |
- |
- |
- |
- |
- |
23 |
23 |
At |
555 |
7,310 |
(3,257) |
282 |
2,723 |
41,037 |
48,650 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended
|
2018 £'000 |
2017 £'000 |
Operating profit |
9,906 |
9,082 |
Adjustments for: |
|
|
Depreciation of property, plant and equipment |
1,326 |
1,329 |
Amortisation of intangible assets |
591 |
588 |
Charge for share-based payments |
143 |
66 |
Exchange gain/(loss) |
31 |
(168) |
Profit on sale of tangible fixed assets |
(16) |
(17) |
Operating cash flows before movements in working capital |
11,981 |
10,880 |
Increase in inventories |
(657) |
(2,243) |
Increase in receivables |
(3,005) |
(193) |
Increase in payables |
1,355 |
1,992 |
Cash generated from operations |
9,674 |
10,436 |
Contributions to defined benefit pension scheme |
(1,200) |
(1,200) |
Interest paid |
(248) |
(247) |
Income taxes paid |
(1,591) |
(2,246) |
Net cash from operating activities |
6,635 |
6,743 |
Investing activities |
|
|
Interest received |
14 |
17 |
Dividend received from associate |
115 |
- |
Proceeds on disposal of property, plant and equipment |
76 |
47 |
Purchase of property, plant and equipment |
(879) |
(938) |
Purchase of intangible assets |
(213) |
(80) |
Net cash outflow from investing activities |
(887) |
(954) |
Financing activities |
|
|
Equity dividends paid |
(3,766) |
(3,433) |
Shares issued under employee share schemes |
1,250 |
1,660 |
Purchase of own shares |
(2,521) |
(34) |
New bank loans raised |
3,000 |
3,000 |
Repayments of borrowings |
(5,000) |
(5,000) |
Net cash outflow from financing activities |
(7,037) |
(3,807) |
Net (decrease)/increase in cash and cash equivalents |
(1,289) |
1,982 |
Cash and cash equivalents at beginning of year |
8,487 |
6,540 |
Effect of foreign exchange rate changes |
16 |
(35) |
Cash and cash equivalents at end of year |
7,214 |
8,487 |
NOTES TO THE PRELIMINARY RESULTS
1. This announcement was approved by the Board of Directors on
1.1 The financial information set out above does not constitute the Company's statutory accounts for the years ended
1.2 For the year ended
This financial information has been prepared in accordance with the accounting policies stated in the Group's financial statements for the year ended
The financial statements have been prepared on the historical cost basis, with the exception of derivative financial instruments which are stated at their fair value.
1.3 At
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
NOTES TO THE PRELIMINARY RESULTS
Continued
2. Earnings per share
The calculation of basic and diluted earnings per share is based on the following data:
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Earnings £'000 |
2018 Weighted average number of shares |
Earnings per share (pence) |
Earnings £'000 |
2017 Weighted average number of shares |
Earnings per share (pence) |
Basic earnings per share |
7,691 |
10,664,531 |
72.12 |
6,878 |
10,570,942 |
65.07 |
Effect of dilutive securities: employee share options |
- |
32,746 |
- |
- |
45,459 |
- |
Diluted earnings per share |
7,691 |
10,697,277 |
71.90 |
6,878 |
10,616,401 |
64.79 |
3. Segmental reporting
The following tables provide an analysis of the Group's revenue by operating segment and geographical market, irrespective of the origin of the products:
Operating segment |
2018 £'000 |
2017 £'000 |
Portmeirion UK - ceramic |
48,141 |
46,146 |
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25,988 |
24,700 |
Home fragrance |
15,465 |
13,923 |
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89,594 |
84,769 |
Geographical market |
2018 £'000 |
2017 £'000 |
United Kingdom |
31,487 |
28,836 |
United States |
26,669 |
25,156 |
South Korea |
8,229 |
6,604 |
Rest of the World |
23,209 |
24,173 |
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89,594 |
84,769 |
NOTES TO THE PRELIMINARY RESULTS
Continued
4. Dividends
The Directors recommend that a final dividend for 2018 of 29.50p (2017: 27.26p) per ordinary share be paid, subject to shareholders' approval, on
5. Finance costs
|
2018 £'000 |
2017 £'000 |
Interest paid |
260 |
313 |
Realised losses on financial derivatives |
12 |
4 |
Net interest expense on pension scheme deficit |
29 |
170 |
|
301 |
487 |
6. Reconciliation of earnings before interest, tax, depreciation and amortisation (EBITDA)
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2018 £'000 |
2017 £'000 |
Operating profit |
9,906 |
9,082 |
Add back: |
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Depreciation |
1,326 |
1,329 |
Amortisation |
591 |
588 |
Earnings before interest, tax, depreciation and amortisation |
11,823 |
10,999 |
The accounts for the year ended
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