TIDMCHH
RNS Number : 1080T
Churchill China PLC
24 March 2016
For immediate release 24 March 2016
CHURCHILL CHINA plc
("Churchill China" or the "Company" or the "Group")
PRELIMINARY RESULTS
For the year ended 31 December 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
preliminary results for the year ended 31 December 2015.
Key Highlights:
-- Group revenue up 5% to GBP46.8m (2014: GBP44.5m)
- Hospitality revenue growth 8% (2014: 10%)
-- Operating profit up 16% to GBP5.0m (2014: GBP4.2m)
-- Profit before tax up 16% to GBP5.0m (2014: GBP4.3m)
-- Basic earnings per share up 20% to 37.3p (2014: 31.2p)
-- Proposed final dividend up 15% to 12.7p (2014: 11.0p)
-- Cash and deposit balances of GBP11.8m (2014: GBP10.5m)
-- Further progress against key strategic objectives
Alan McWalter, Chairman of Churchill China, commented:
"Our business plan continues to evolve steadily with clear
targets within an established strategic framework. We will continue
building a business for the long term based on excellence in
design, quality and customer service, supported by a well invested
manufacturing operation and strong balance sheet.
"The current year has started well and the Board looks forward
with confidence."
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: 0113 388 4789
Richard Lindley / James White
CHAIRMAN'S STATEMENT
Introduction
I am happy to report that Churchill has once again delivered a
strong set of trading results with the good performance in the
first half of the year being followed by further growth in the
second half. Our performance has been robust with continued
progress against our strategic objectives, despite some adverse
conditions. Increased revenues have been achieved in our target
markets and we have benefitted from returns on the long term
investment made across our business. The Hospitality business again
recorded increased revenues in all of its markets.
Financial Review
Total revenues increased by 5% to GBP46.8m (2014: GBP44.5m).
Gross margins remained at similar levels to 2014, with the
adverse effect of a weaker Euro being offset by improved
profitability on added value products. On a constant currency basis
revenues would have been GBP1.0m higher had exchange rates remained
at 2014 levels. Operating profits were adversely impacted by
GBP0.7m on the same basis
Operating profit increased by 16% to GBP5.0m (2014: GBP4.2m).
Operating margins improved to 10.6% (2014: 9.5%) due to our
continued focus on developing profitable business across all our
markets and careful management of our cost base. Earnings before
interest, tax, depreciation and amortisation increased by 10% to
GBP6.5m (2014: GBP5.9m).
Profit before tax rose by 16% to GBP5.0m (2014: GBP4.3m),
largely a result of our improved operating performance.
Earnings per share improved by 20% to 37.3p (2014: 31.2p). The
tax charge on profits was at a lower than standard rate largely
reflecting changes to forward deferred tax rates.
We have once again generated strong operating cash flows.
Operating cash generation was GBP5.3m (2014: GBP6.9m). Working
capital requirements increased given the need to build inventory in
support of our service promise together with increased activity
levels. Investment in capital expenditure reduced to GBP1.2m (2014:
GBP2.0m). We expect investment spend to rise in 2016 as we complete
new buildings and install additional capability to meet increased
demand. At the year end, net cash and deposit balances had risen by
GBP1.3m to GBP11.8m (2014: GBP10.5m).
Dividend and shareholder return
The Board is recommending a 15% increase in the final dividend
to 12.7p per share (2014: 11.0p), giving a total of 18.3p for the
year (2014: 16.1p). We are pleased that the growth in profitability
and continued strong cash generation in the year has allowed us to
again raise the dividend at an increased rate. If approved, the
final dividend will be paid on 26 May 2016 to shareholders on the
register on 29 April 2016.
Total shareholder returns have again been very good, reflecting
both dividend growth and our improved performance. Overall returns
were 33% (2014: 42%) during the year.
Markets
Hospitality
Total sales to our Hospitality customers increased by GBP2.8m
(8%) and reached a record of GBP38.8m (2014: GBP36.0m).
Contribution to Group operating profits rose by 9% to GBP7.2m from
GBP6.6m.
We have continued to make progress in the UK where we enjoy a
market-leading position. We have delivered a satisfactory level of
growth against strong comparative figures which enjoyed the benefit
of substantial new installation business.
Export markets, in Europe and increasingly further afield,
remain our key growth target. Export revenues increased by 15% in
2015, following on from 16% growth recorded in 2014, marking a
third consecutive year of strong increase. Europe has moved forward
well, with the adverse exchange rate effect more than offset by the
benefits of investment in sales and marketing and a strong
performance from new products. Our competitive position in Europe
continues to benefit from Anti Dumping Duties on Chinese ceramics.
We are pleased with our performance in other export markets with
strong growth in most areas. Notable progress has been achieved in
Australasia, Central and South America and in the United States,
where the developments seen in 2014 have continued this year. Again
investment in sales, marketing and new product introductions has
been central to this growth.
The strength of our established relationships with end users,
distributors and agents in the UK and worldwide continues to be of
great value to the business.
Innovation across our product range has remained a significant
contributor to our success in the year. Our hand crafted Stonecast
range, supported by unmatched service levels, has been an
outstanding product, with range extensions building on the core
ranges introduced last year. Other new products have also performed
well and the initial response to our 2016 introductions has been
good.
Retail
Retail has performed well, slightly ahead of our expectations,
making further progress against the strategic objectives we set.
Whilst revenues reduced from GBP8.5m to GBP8.0m as we continued to
exit from certain lower margin license business, the impact of
lower sales on profit levels has been minimal as we have increased
the proportion of Churchill branded manufactured product and
retained control of costs. Contribution to Group profit was
maintained at GBP0.9m.
We benefit from our long heritage in Retail. Our product range
remains substantial. Customers continue to value the traditional
benefits of well designed product made in Stoke on Trent whilst
also appreciating the variety that our access to third party
manufacturers provides.
The repositioning of Retail has created a business providing a
clear financial contribution to our overall operations.
Additionally it continues to support the long term development of
Churchill in less tangible ways. The capacity created by the
commissioning of a new glost (second firing) kiln during the year
has been partially utilised by Retail allowing us to optimise
output levels. Retail also continues to allow us to develop skills
in a highly competitive environment.
Operations
The positive challenges of continued growth have again been met
by our manufacturing and logistics teams. We have increased our
level of product and process innovation, achieved volume growth and
commissioned several major capital projects, all of which place
increased demands on the fulfilment side of our business. The
progress made in both revenues and profitability, without any
impact on the level of customer service, supports the conclusion
that we have met those challenges well.
Capital expenditure on manufacturing projects during the year
totalled GBP1.1m, a little below our earlier expectations. We
successfully completed the commissioning of a new kiln in January
2015 and have installed further added value product forming
capacity. We expect 2016 to show increased expenditure as new
manufacturing space currently under construction is completed and
further kiln and making forming capacity is installed. This
increase in capacity is planned to support the growth opportunities
we see in several markets for our UK made product.
People
Our success in 2015 is again attributable to our workforce. They
continue to demonstrate admirable skill and commitment to meet the
challenges raised through our operations and creating the forward
opportunities and capabilities necessary for future progress. Once
again we wish to thank our staff for their efforts.
We have begun to see the benefits from our increased investment
in training and staff development at all levels across our
business. We have made good progress against our targets of
improving skills and providing more opportunity for our workforce.
These initiatives have been supplemented by recruitment of
additional skills where necessary to support our plans.
Our Board continues to evolve. We were pleased to welcome James
Roper to the Board in July 2015, increasing the representation of
Sales and Marketing at senior level. Jonathan Morgan, who has
served as a non Executive director for nine years, will retire at
the next Annual General Meeting. Jonathan has provided support and
guidance for the Company through periods of major change and his
contribution has always been of great value. All his colleagues
wish him well for the future. The process of recruitment of a
successor to Jonathan is well underway.
Prospects
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Throughout 2015 we have continued to make good progress against
our long term objectives despite some significant headwinds from
adverse currency movements and other economic changes.
Our markets continue to develop. We believe we have the ability
to secure further increases in revenue, particularly from export
markets, although we remain aware of the potential wider political
and economic uncertainties which may impact on our performance.
Our business plan continues to evolve steadily with clear
targets within an established strategic framework. We will continue
building a business for the long term based on excellence in
design, quality and customer service, supported by a well invested
manufacturing operation and strong balance sheet.
The current year has started well and the Board looks forward
with confidence.
Alan McWalter
Chairman
24 March 2016
Churchill China plc
Consolidated Income Statement
for the year ended 31 December 2015
Audited Audited
Year to Year to
31 December 31 December
2015 2014
GBP000 GBP000
Note
Revenue 46,829 44,518
============= =============
Operating profit 1 4,959 4,249
Share of results
of associate company 135 116
Finance income 2 82 76
Finance costs 2 (162) (124)
------------- -------------
Profit before income
tax 5,014 4,317
Income tax expense 3 (928) (901)
------------- -------------
Profit for the
year 4,086 3,416
============= =============
Pence Pence
per share per share
Basic earnings
per ordinary share 4 37.3 31.2
Diluted basic earnings
per ordinary share 4 36.9 30.8
All the above figures relate to continuing operations
Churchill China plc
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2015
Audited Audited
Year to Year to
31 December 31 December
2015 2014
GBP000 GBP000
Other comprehensive income
/ (expense)
Items that will not be
reclassified to profit
or loss:
Re-measurements of post-employment
benefit obligations 104 (1,850)
Items that may be reclassified
subsequently to profit
or loss:
Impact of change in UK
tax rate on deferred tax
on revaluation reserve 24 -
Currency translation difference 16 17
--------------------- -------------
Other comprehensive income
/ (expense) 144 (1,833)
Profit for the year 4,086 3,416
Total comprehensive income
for the period 4,230 1,583
===================== =============
Attributable to:
Equity holders of the Company 4,230 1,583
===================== =============
All the above figures relate to continuing operations
Churchill China plc
Consolidated Balance Sheets
as at 31 December 2015
Audited Audited
31 December 31 December
2015 2014
GBP000 GBP000
Assets
Non Current Assets
Property, plant and
equipment 14,046 14,258
Intangible assets 59 63
Investment in associates 1,231 1,096
Deferred income tax
assets 848 1,117
------------- -------------
16,184 16,534
------------- -------------
Current Assets
Inventories 8,360 8,274
Trade and other receivables 8,648 8,255
Other financial assets 2,500 1,500
Cash and cash equivalents 9,307 8,961
------------- -------------
28,815 26,990
------------- -------------
Total Assets 44,999 43,524
============= =============
Liabilities
Current liabilities
Trade and other payables (8,721) (8,676)
Current income tax
liabilities (580) (698)
Total current Liabilities (9,301) (9,374)
------------- -------------
Non current liabilities
Retirement benefit
obligations (3,837) (4,674)
Deferred income tax
liabilities (936) (1,070)
Total non current
liabilities (4,773) (5,744)
------------- -------------
Total liabilities (14,074) (15,118)
============= =============
Net Assets 30,925 28,406
============= =============
Equity attributable
to owners of the
company
Issued share capital 1,101 1,096
Share premium account 2,348 2,348
Treasury shares (144) (224)
Retained earnings 26,181 23,654
Other reserves 1,439 1,532
------------- -------------
30,925 28,406
============= =============
Churchill China plc
Consolidated Statement of Changes in Equity
as at 31 December 2015
Retained Share Share Treasury Other Total
earnings capital premium shares Reserves
account
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 3,416 - - - - 3,416
Other comprehensive - - - - - -
income
Depreciation
transfer -
gross 12 - - - (12) -
Depreciation
transfer -
tax (2) - - - 2 -
Deferred tax
- change in
rate
Re-measurements
of post employment
benefit obligations - - - - - -
- net of tax (1,850) - - - - (1,850)
Currency translation - - - - 17 17
Total comprehensive
income 1,576 - - - 7 1,583
---------- --------- --------- --------- ---------------- ---------
Transactions
with owners
Dividends (1,619) - - - - (1,619)
Share based
payment - - - - 193 193
Treasury shares - - - (183) - (183)
Total transactions
with owners (1,619) - - (183) 193 (1,609)
---------- --------- --------- --------- ---------------- ---------
Balance at
31 December
2014 23,654 1,096 2,348 (224) 1,532 28,406
Comprehensive
Income
Profit for
the period 4,086 - - - - 4,086
Other comprehensive
income
Depreciation
transfer -
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gross 12 - - - (12) -
Depreciation
transfer -
tax (2) - - - 2 -
Deferred tax
- change in
rate - - - - 24 24
Actuarial losses
- net 104 - - - - 104
Currency translation - - - - 16 16
Total comprehensive
income 4,200 - - - 30 4,230
---------- --------- --------- --------- ---------------- ---------
Transactions
with owners
Dividends (1,816) - - - - (1,816)
Proceeds of
share issue - 5 - 5 - 10
Share based
payment 250 - - - (123) 127
Deferred tax
- share based
payment 102 - - - - 102
Treasury shares (209) - - 75 - (134)
Total transactions
with owners (1,673) 5 - 80 (123) (1,711)
---------- --------- --------- --------- ---------------- ---------
Balance at
31 December
2015 26,181 1,101 2,348 (144) 1,439 30,925
========== ========= ========= ========= ================ =========
Churchill China plc
Consolidated Cash Flow Statement
for the year ended 31 December 2015
Audited Audited
Year to Year to
31 December 31 December
2015 2014
GBP000 GBP000
Note
Cash flows from operating
activities
Cash generated from
operations 5,316 6,903
Interest received 82 76
Interest paid (1) (5)
Income tax paid (922) (688)
Net cash generated from
operating activities 4,475 6,286
------------- -------------
Cash flows from investing
activities
Purchases of property,
plant and equipment (1,214) (2,238)
Proceeds on disposal
of property, plant and
equipment 52 57
Purchases of intangible
assets (27) (42)
Net cash used in investing
activities (1,189) (2,223)
------------- -------------
Cash flows from financing
activities
Issue of ordinary shares 10 -
Purchase of treasury
shares (134) (183)
Dividends paid (1,816) (1,619)
Sale of other financial
assets 1,500 1,000
Purchase of other financial
assets (2,500) (1,500)
Net cash used in financing
activities (2,940) (2,302)
------------- -------------
Net increase in cash
and cash equivalents 346 1,761
Cash and cash equivalents
at the beginning of
the year 8,961 7,199
Exchange gains on cash
and cash equivalents - 1
Cash and cash equivalents
at the end of the year 9,307 8,961
------------- -------------
1. Segmental analysis
Audited for the year ended 31 December 2015
Hospitality Retail Unallocated Group
GBP000 GBP000 GBP000 GBP000
Revenue 38,859 7,970 - 46,829
------------ -------- ------------ --------
Contribution to group
overheads excluding depreciation
and amortisation 8,182 1,121 (2,849) 6,454
Depreciation and amortisation (1,033) (225) (237) (1,495)
------------ -------- ------------ --------
Operating profit 7,149 896 (3,086) 4,959
Share of results of associate
company 135
Finance income 82
Finance cost (162)
--------
Profit before income
tax 5,014
Income tax expense (928)
Profit for the period 4,086
--------
Audited
For the year ended 31
December 2014
Revenue 35,999 8,519 - 44,518
------------ -------- ------------ --------
Contribution to group
overheads excluding depreciation
and amortisation 7,779 1,183 (3,086) 5,876
Depreciation and amortisation (1,190) (224) (213) (1,627)
------------ -------- ------------ --------
Operating profit 6,589 959 (3,299) 4,249
Share of results of associate
company 116
Finance income 76
Finance cost (124)
Profit before income
tax 4,317
Income tax expense (901)
Profit for the period 3,416
--------
2. Finance income and costs
Audited Audited
Year to Year to
31 December 31 December
2015 2014
GBP000 GBP000
Finance income
Interest income on cash
and cash equivalents 82 76
Finance income 82 76
------------- -------------
Finance cost
Interest on pension scheme (161) (119)
Other interest (1) (5)
Finance cost (162) (124)
------------- -------------
The interest cost arising from pension schemes is a non cash
item
3. Income tax expense
Audited Audited
Year to Year to
31 December 31 December
2015 2014
GBP000 GBP000
Current taxation 803 822
Deferred taxation 125 79
Income tax expense 928 901
------------- -------------
4. Earnings per ordinary share
Basic earnings per ordinary share is based on the profit on
ordinary activities after taxation of GBP4,086,000 (2014:
GBP3,416,000) and on 10,956,828 (2014: 10,934,908) ordinary shares,
being the weighted average number of ordinary shares in issue
during the year.
Diluted basic earnings per ordinary share is based on the profit
on ordinary activities after taxation of GBP4,086,000 (2014:
GBP3,416,000) and on 11,064,046 (2014: 11,105,668) ordinary shares,
being the weighted average number of ordinary shares in issue
during the year of 10,956,626 (2014: 10,934,908) increased by
107,218 (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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5. Reconciliation of operating profit to net cash flow from
continuing activities
Audited Audited
Year to Year to
31 December 31 December
2015 2014
GBP000 GBP000
Cash flows from operating
activities
Operating profit 4,959 4,249
Adjustments for
Depreciation and amortisation 1,495 1,627
Loss on disposal of property,
plant and equipment 4 10
Charge for share based
payment 128 193
Decrease in retirement
benefit obligations (758) (672)
Changes in working capital
Inventory (86) 495
Trade and other receivables (371) 338
Trade and other payables (55) 663
Net cash inflow from operations 5,316 6,903
------------- -------------
6. Dividend
The final dividend, which has not been provided for, has been
calculated on 10,986,230 (2014: 10,909,976) ordinary shares, being
those in issue at 31 December 2015 qualifying for dividend and at a
rate of 12.7p (2014: 11.0p) per 10p ordinary share. The dividend
will be paid on 26 May 2016 to shareholders on the register at 29
April 2016, subject to approval at the Company's Annual General
Meeting.
The total dividend paid and proposed in respect of the year is
18.3p (2014: 16.1p).
7. Basis of preparation and accounting policies
The financial information included in the preliminary
announcement for the period to 31 December 2015 has been audited
and an unqualified audit report has been issued.
The preliminary financial statements represent extracts from
those audited accounts but do not constitute statutory accounts
within the meaning of Section 434 of the Companies Act 2006.
The Group's financial statements have been prepared in
accordance with IFRS as adopted by the European Union, IFRIC
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS, under the historical cost convention as
modified by the revaluation of land and buildings, available for
sale financial assets and liabilities (including derivative
instruments) at fair value through the profit and loss account. The
same accounting policies, presentation and methods of computation
are followed in the preliminary financial statements as were
applied in the Group's financial statements for the year ended 31
December 2014.
Statutory accounts for the year ended 31 December 2014 have been
delivered to the Registrar of Companies. Statutory accounts for the
year ended 31 December 2015 will be delivered to the Registrar of
Companies after the Company's Annual General Meeting and will also
be available on the Company's website www.churchill1795.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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