TIDMCHH
RNS Number : 2274X
Churchill China PLC
27 August 2015
For immediate release 27 August 2015
CHURCHILL CHINA plc
("Churchill China" or the "Company" or the "Group")
INTERIM RESULTS
For the six months ended 30 June 2015
Churchill China plc (AIM: CHH), the manufacturer and global
distributor of performance ceramic and related products to
hospitality and retail markets, is pleased to announce its interim
results for the six months ended 30 June 2015.
Key Highlights:
-- Group revenue up 3% to GBP21.4m (2014: GBP20.9m)
- Hospitality revenue growth 6%
-- Operating profit up 12% to GBP1.6m (2014: GBP1.4m)
-- Profit before tax up 12% to GBP1.6m (2014: GBP1.4m)
-- Basic earnings per share up 14% to 11.4p (2014: 10.0p)
-- Interim dividend up 10% to 5.6p (2014: 5.1p)
-- Cash and deposit balances of GBP8.7m (June 2014: GBP8.5m)
Alan McWalter, Chairman of Churchill China, commented:
Churchill has continued to perform well and I am pleased to
report a good performance in the first six months of the year. We
have delivered further growth against strong comparative figures
and the Hospitality business has again achieved a record
performance.
We are confident that the continued growth of our markets and
the strength of our position within them will enable us to meet our
expectations for the full year.
For further information, please contact:
Churchill China plc Tel: 01782 577566
David O'Connor / David Taylor
Buchanan Tel: 020 7466 5000
Mark Court / Sophie Cowles / Jane
Glover
N+1 Singer Tel: 020 7496 3000
Richard Lindley / James White
Our interim results will be available today on the Company's
website: www.churchill1795.com. Copies of the Interim Report will
be sent to shareholders in due course.
CHAIRMAN'S STATEMENT
Introduction
Churchill has continued to perform well and I am pleased to
report a good performance in the first six months of the year. We
have delivered further growth against strong comparative figures
and the Hospitality business has again achieved a record
performance. This progress has been achieved from our target
markets and from new product ranges, in line with the strategy we
have developed. We have also continued to invest in the long term
future of our business through market development and new
manufacturing capacity.
Financial Review
Total revenues increased by 3% to GBP21.4m (2014: GBP20.9m).
Gross margins have remained comparable to the first half of 2014
with the adverse effect of the strengthening of sterling against
the euro being offset by increased operating efficiencies. On a
constant currency basis revenue would have been GBP0.5m higher had
exchange rates remained at 2014 levels. Operating profit was
impacted by GBP0.3m on the same basis. We have retained tight
control of overheads.
Operating profit increased by 12% to GBP1.6m (2014: GBP1.4m).
Operating margins improved to 7.2% (2014: 6.6%).
Earnings before interest, tax, depreciation and amortisation
increased by 4% to GBP2.3m (2014: GBP2.2m).
Profit before tax rose by 12% to GBP1.6m (2014: GBP1.4m),
largely arising from the improved operating performance.
Earnings per share improved by 14% to 11.4p (2014: 10.0p).
Operating cash inflow was lower than in previous years, largely
as a result of increased working capital requirements. Following
the strong demand experienced in the second half of 2014, we
rebuilt inventory levels to support our service promise. Operating
cash generation was GBP0.4m (2014: GBP2.7m). At the end of the
period, net cash and deposit balances were GBP8.7m (June 2014:
GBP8.5m).
We continue to invest in our core business. Capital investment
was GBP0.6m (2014: GBP1.1m) with this further expenditure mainly
focussed on our manufacturing unit in Stoke on Trent. This spend
delivers additional capacity to produce added value products and
will be followed by further investment in the UK over the remainder
of 2015 and 2016.
Dividend
The Board is declaring a 0.5p increase in the interim dividend
to 5.6p per share (2014: 5.1p). This increase reflects our policy
of linking dividends to increased profitability whilst maintaining
appropriate levels of dividend cover. The interim dividend will be
paid on 1 October 2015 to shareholders on the register on 11
September 2015.
Markets
Hospitality
Total sales to our Hospitality customers increased by GBP1.0m
(6%). Contribution to Group operating profits rose by 6% to GBP2.9m
from GBP2.7m.
We continue to make steady progress in the UK where we enjoy a
leading position in a growing market. We have delivered a good
performance against strong comparative figures that included a
significant benefit from an installation contract in the first half
of last year. This performance reflects the progress achieved in a
number of market segments.
We have invested significantly in sales and market development
which has allowed us to achieve further growth in export markets.
In the first half of the year, Europe produced a strong performance
with sales 9% ahead of 2014, despite the considerable headwind from
the weaker euro. Underlying sales growth in constant currency terms
in Europe was over 20%. Other export markets also benefitted from
additional focus and resource and recorded double digit revenue
growth overall. These markets remain at an early stage of
development for us, but we are pleased with the progress we have
made and the opportunities we have generated.
Much of our success in export markets can be attributed to a
strong programme of new product development. The hand crafted
Stonecast range has performed particularly well in the first half
year as we have added additional colours to the existing product
range.
Retail
Results from our Retail business again reflected the
prioritisation of resources towards Hospitality. Revenue declined
by GBP0.5m to GBP3.6m, in line with our expectations. The effect on
profitability of this reduction was again largely mitigated by cost
reductions. Contribution to Group profit fell marginally to GBP0.2m
(2014: GBP0.2m).
Our Retail operation is performing in line with our strategic
objectives and has been repositioned in its markets. We remain
clear that it provides a valuable contribution to the Group's
overall future performance.
Operations
Manufacturing and logistics operations have continued to deliver
well against high expectations. The strong trading at the end of
2014 and consequent impact on inventory levels has necessitated
higher output levels across our operations to maintain the high
service levels required by the Hospitality market. At the same time
we have continued to introduce new products and have commissioned
two major capital projects increasing our UK capacity in key areas.
We have reached the half year well positioned to meet the expected
seasonal increase in demand in the second half year.
People
We continue to invest in the development of our workforce at all
levels. Increased skills and wider flexibility amongst our staff
remain important components of our strategy.
As announced in July 2015, we are pleased to welcome James Roper
to the Board as Sales and Marketing Director. James' appointment
reflects the increased focus we have given to market and product
development in recent years and we expect that his knowledge and
experience will bring further balance to the Board.
Prospects
Our business continued to perform well in the first half of
2015. Despite the forecast impact of stronger sterling and other
external factors, we have delivered an increase in profitability,
built upon the growth and resilience of our Hospitality
business.
We are pleased with the platform that the work carried out in
the first six months of the year gives us for future development in
the short and medium term. We continue to meet a number of
milestones in relation to the evolution and implementation of our
strategy. These include further sales and market development, new
product introductions and investment in our manufacturing
operations
We are confident that the continued growth of our markets and
the strength of our position within them will enable us to meet our
expectations for the full year.
Alan McWalter
Chairman
27 August 2015
Churchill China plc
Consolidated Income Statement
For the six months ended 30 June 2015
Unaudited Unaudited Audited
Six months Six months Twelve months
to to to
30 June 2015 30 June 31 December
GBP000 2014 2014
GBP000 GBP000
Note
Revenue 21,449 20,871 44,518
============== =========== ==============
Operating profit 1 1,549 1,380 4,249
Share of results of
associate company 75 68 116
Finance income 2 41 34 76
Finance costs 2 (84) (75) (124)
-------------- ----------- --------------
Profit before income
tax 1,581 1,407 4,317
Income tax expense 3 (341) (315) (901)
-------------- ----------- --------------
Profit for the period 1,240 1,092 3,416
============== =========== ==============
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Pence per Pence per Pence per
Share share share
Basic earnings per ordinary
share 4 11.4 10.0 31.2
Diluted basic earnings
per ordinary share 4 11.2 9.8 30.8
All the above figures relate to continuing operations
Churchill China plc
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2015
Unaudited Unaudited Audited
Six months Six months Twelve months
to to to
30 June 30 June 2014 31 December
2015 GBP000 2014
GBP000 GBP000
Other comprehensive income/(expense)
Items that will not be
reclassidied to profit
and loss:
Actuarial gain on retirement
benefit obligations - - (1,850)
Items that will not be
reclassified to profit
and loss
Exchange differences (3) (8) 17
Other comprehensive expense (3) (8) (1,833)
Profit for the period 1,240 1,092 3,416
Total comprehensive income
for the period 1,237 1,084 1,583
=========== ============== ==============
Attributable to:
Equity holders of the
Company 1,237 1,084 1,583
=========== ============== ==============
All the above figures relate to continuing operations
Churchill China plc
Consolidated Balance Sheet
as at 30 June 2015
Unaudited Unaudited Audited
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Assets
Non Current assets
Property, plant and equipment 14,026 14,013 14,258
Intangible assets 53 67 63
Investment in associate 1,171 1,048 1,096
Deferred income tax assets 1,002 804 1,117
---------- ---------- ------------
16,252 15,932 16,534
---------- ---------- ------------
Current assets
Inventories 8,942 8,625 8,274
Trade and other receivables 8,457 8,312 8,255
Other financial assets 2,250 1,500 1,500
Cash and cash equivalents 6,421 6,996 8,961
---------- ---------- ------------
26,070 25,433 26,990
---------- ---------- ------------
Total assets 42,322 41,365 43,524
---------- ---------- ------------
Liabilities
Current liabilities
Trade and other payables (7,516) (8,180) (8,676)
Current income tax liabilities (490) (676) (698)
Total current liabilities (8,006) (8,856) (9,374)
---------- ---------- ------------
Non current liabilities
Retirement benefit obligations (4,715) (2,989) (4,674)
Deferred income tax liabilities (1,070) (1,090) (1,070)
Total non current liabilities (5,785) (4,079) (5,744)
---------- ---------- ------------
Total liabilities (13,791) (12,935) (15,118)
========== ========== ============
Net assets 28,531 28,430 28,406
========== ========== ============
Shareholders' equity
Issued share capital 1,101 1,096 1,096
Share premium account 2,348 2,348 2,348
Treasury shares (10) (134) (224)
Retained earnings 23,740 23,732 23,654
Other reserves 1,352 1,388 1,532
========== ========== ============
28,531 28,430 28,406
========== ========== ============
Churchill China plc
Consolidated Statement of Changes in Equity
as at 30 June 2015
Retained Share Share Treasury Other
Earnings capital premium shares reserves Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January
2014 23,697 1,096 2,348 (41) 1,332 28,432
---------- --------- --------- --------- ---------- ---------
Comprehensive income
Profit for the period 1,092 - - - - 1,092
Other comprehensive
income
Depreciation transfer
- gross 6 - - - (6) -
Depreciation transfer
- tax (1) - - - 1 -
Currency translation - - - - (8) (8)
Total comprehensive
income 1,097 - - - (13) 1,084
---------- --------- --------- --------- ---------- ---------
Transactions with
owners
Dividends (1,062) - - - - (1,062)
Share based payment - - - - 69 (93)
Treasury Shares - - - (93) - 69
Total transactions
with owners (1,062) - - (93) 69 (1,086)
---------- --------- --------- --------- ---------- ---------
Balance at 30 June
2014 23,732 1,096 2,348 (134) 1,388 28,430
Comprehensive income
Profit for the period 2,324 - - - - 2,324
Other comprehensive
income
Depreciation transfer
- gross 6 - - - (6) -
Depreciation transfer
- tax (1) - - - 1 -
Remeasurement of
post employment
benefit obligations
- net (1,850) - - - - (1,850)
Currency translation - - - - 25 25
Total comprehensive
income 479 - - - 20 499
---------- --------- --------- --------- ---------- ---------
Transactions with
owners
Dividends (557) - - - - (557)
Share based payment - - - - 124 124
Treasury shares - - - (90) - (90)
Total transactions
with owners (557) - - (90) 124 (523)
---------- --------- --------- --------- ---------- ---------
Balance at 31 December
2014 23,654 1,096 2,348 (224) 1,532 28,406
Comprehensive income
Profit for the period 1,240 - - - - 1,240
Other comprehensive
income
Depreciation transfer
- gross 6 - - - (6) -
Depreciation transfer
- tax (1) - - - 1 -
Currency translation - - - - (3) (3)
Total comprehensive
income 1,245 - - - (8) 1,237
---------- --------- --------- --------- ---------- ---------
Transactions with
owners
Dividends (1,200) - - - - (1,200)
Proceeds of share
issue - 5 - - - 5
Share based payment 250 - - - (172) 78
Treasury shares (209) - - 214 - 5
Total transactions
with owners (1,159) 5 - 214 (172) (1,112)
---------- --------- --------- --------- ---------- ---------
Balance at 30 June
2015 23,740 1,101 2,348 (10) 1,352 28,531
========== ========= ========= ========= ========== =========
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Churchill China plc
Consolidated Cash Flow Statement
for the six months ended 30 June 2015
Unaudited Unaudited Audited
Six months Six months Twelve months
to to to
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Cash flow from operating activities
Cash generated from operations
(note 5) 355 2,728 6,903
Interest received 41 34 76
Interest paid - - (5)
Income tax paid (434) (254) (688)
Net cash (used by) / generated
from operating activities (38) 2,508 6,286
----------- ----------- -----------------------
Investing activities
Purchases of property, plant and
equipment (584) (1,076) (2,238)
Proceeds on disposal of property,
plant and equipment 28 41 57
Purchases of intangible assets (5) (20) (42)
Net cash used in investing activities (561) (1,055) (2,223)
----------- ----------- -----------------------
Financing activities
Issue of ordinary shares 10 - -
Purchase of treasury shares - (93) (183)
Dividends paid (1,200) (1,062) (1,619)
Sale of other financial assets 1,500 1,000 1,000
Purchase of other financial assets (2,250) (1,500) (1,500)
Net cash used in financing activities (1,940) (1,655) (2,302)
----------- ----------- -----------------------
Net decrease in cash and cash
equivalents (2,539) (202) 1,761
Cash and cash equivalents at the
beginning of the period 8,961 7,199 7,199
Exchange losses on cash and cash
equivalents - (1) 1
Cash and cash equivalents at the
end of the period 6,422 6,996 8,961
----------- ----------- -----------------------
1. Segmental analysis
For the six months ended 30 June 2015
Hospitality Retail Unallocated Total
GBP000 GBP000 GBP000 GBP000
6 months to 30
June 2015
Revenue 17,849 3,600 - 21,449
------------ ------- ------------ --------
Contribution to
group overheads
excluding depreciation 3,383 325 (1,360) 2,348
Depreciation (563) (116) (120) (799)
------------ ------- ------------ --------
Operating profit 2,820 209 (1,480) 1,549
Share of results
of associate company 75
Finance income 41
Finance costs (84)
------------ --------
Profit before income
tax 1,581
Income tax expense (341)
Profit for the
period 1,240
--------
6 months to 30
June 2014
Revenue 16,793 4,078 - 20,871
------------ ------- ------------ --------
Contribution to
group overheads
excluding depreciation 3,313 359 (1,423) 2,249
Depreciation (652) (113) (104) (869)
------------ ------- ------------ --------
Operating profit 2,661 246 (1,527) 1,380
Share of results
of associated company 68
Finance income 34
Finance costs (75)
------------ --------
Profit before income
tax 1,407
Income tax expense (315)
--------
Profit for the
period 1,092
--------
12 months to 31
December 2014
Revenue 35,999 8,519 - 44,518
------------ ------- ------------ --------
Contribution to
group overheads
excluding depreciation 7,779 1,183 (3,086) 5,876
Depreciation (1,190) (224) (213) (1,627)
------------ ------- ------------ --------
Operating profit 6,589 959 (3,299) 4,249
Share of results
of associated company 116
Finance income 76
Finance costs (124)
------------ --------
Profit before income
tax 4,317
Income tax expense (901)
--------
Profit for the
period 3,416
--------
2. Finance income and costs
Unaudited Unaudited Audited
Six months Six months Twelve months
to to to
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Finance income
Other interest receivable 41 34 76
Finance income 41 34 76
----------- ----------- --------------
Finance costs
Interest on pension scheme (84) (75) (119)
Other interest payable - - (5)
Finance costs (84) (75) (124)
----------- ----------- --------------
The interest cost arising on pension schemes is a non cash
item.
3. Income tax expense
Unaudited Unaudited Audited
Six months Six months Twelve months
to to to
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Current taxation 226 366 822
Deferred taxation 115 (51) 79
Income tax expense 341 315 901
----------- ----------- --------------
4. Earnings per ordinary share
Basic earnings per ordinary share is based on the profit after
taxation of GBP1,240,000 (June 2014: GBP1,092,000, December 2014:
GBP3,416,000) and on 10,914,230 (June 2014: 10,945,755, December
2014: 10,934,908) ordinary shares, being the weighted average
number of ordinary shares in issue during the period.
Diluted basic earnings per ordinary share is based on the profit
after taxation of GBP1,240,000 (June 2014: GBP1,092,000, December
2014: GBP3,416,000) and on 11,021,343 (June 2014: 11,116,239,
December 2014: 11,105,668) ordinary shares, being the weighted
average number of ordinary shares in issue during the period of
10,914,230 (June 2014: 10,945,755, December 2014 10,934,908)
increased by 107,113 (June 2014: 170,484, December 2014: 170,760)
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
period.
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