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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Churchill China Plc | LSE:CHH | London | Ordinary Share | GB0001961035 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -25.00 | -2.08% | 1,175.00 | 1,150.00 | 1,200.00 | 1,200.00 | 1,175.00 | 1,200.00 | 7,119 | 12:09:45 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Misc Homefurnishings Stores | 83.08M | 7.9M | 0.7179 | 16.37 | 129.22M |
From Apr 2019 to Apr 2024
TIDMCHH
RNS Number : 4782K
Churchill China PLC
29 August 2019
For immediate release 29 August 2019
CHURCHILL CHINA plc
("Churchill" or the "Company" or the "Group")
INTERIM RESULTS
For the six months ended 30 June 2019
Strong first half performance continues long term growth trend
Churchill China plc (AIM: CHH), the manufacturer of innovative performance ceramic products serving hospitality markets worldwide, is pleased to announce its interim results for the six months ended 30 June 2019.
Key Highlights:
Financial
-- Operating profit before exceptional items up 30% to GBP4.2m (2018 H1: GBP3.3m)
o including contribution of GBP0.2m from acquisition of Furlong Mills
-- Profit before exceptional items and tax up 27% to GBP4.2m (2018 H1: GBP3.3m) -- Reported profit before tax after exceptional items GBP4.3m (2018 H1: GBP3.3m) -- Adjusted earnings per share up 24% to 30.4p (2018 H1: 24.4p) -- Basic earnings per share 31.3p (2018 H1: 24.4p) -- Interim dividend up 18% to 10.3p (2018 H1: 8.7p) -- Cash generated from operations GBP2.4m (2018 H1: GBP1.7m)
Business
-- Total revenues up 17% at GBP31.9m (2018 H1: GBP27.2m)
o including GBP2.0m from acquisition of Furlong Mills
-- Ceramics (like for like) revenue growth 10% (2018 H1: 6%) -- Export revenues up 13% -- Increased sales of Hospitality added value product
-- Higher levels of investment in capital expenditure, acquisition of controlling interest in Furlong Mills and purchase of products and brand from Dudson
-- Performance continues long term growth trend
Alan McWalter, Chairman of Churchill China, commented:
"Churchill has been substantially re-positioned as a business over the past five years. We have emphasised the development of differentiated high margin products in Hospitality and exited from markets where we did not have a competitive advantage. We believe we offer a technical performance product to attractive markets worldwide with a high level of service. We have a well invested business supported by a strong balance sheet."
For further information, please contact:
Churchill China plc Tel: 01782 577566 David O'Connor / David Taylor Buchanan Tel: 020 7466 5000 Mark Court / Sophie Wills Investec Tel: 020 7597 5970 David Flin / David Anderson / Alex Wright
This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR)
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report another strong performance in the first half of 2019, continuing the progress made over the last five years in re-positioning the business as a supplier of added value performance ceramics to the Hospitality industry. Our organic growth has remained strong with further development of our export markets and increase in the proportion of differentiated, added value product.
Alongside delivering an improvement in short term performance, we have accelerated investment in the future of our business with commitment to the expansion of our UK manufacturing facilities. The purchase of product and brand assets from Dudson provides a clear opportunity to further develop our business, bringing new product ranges and widening our global distribution. Finally, our acquisition of additional equity in Furlong Mills secures a major part of our material supply base in the short term and in the longer term brings further development options.
Financial Review
Total revenues increased by 17% to GBP31.9m (2018 H1: GBP27.2m) with further strong growth in Hospitality ceramics export revenues and the inclusion of revenues from Furlong Mills of GBP2.0m for four months of the period.
Ceramic revenue growth, excluding the effects of the acquisition of Furlong Mills, was 10% (2018 H1: 6%) with sales rising to GBP29.9m (2018 H1: GBP27.2m). UK revenues increased by 4% to GBP10.6m (2018 H1: GBP10.2m). Export revenues were GBP2.3m higher (+13%) at GBP19.3m (2018 H1: GBP17.0m).
There was little direct impact on revenues from the Dudson asset purchase in the first half year. We have made good progress in re-launching the acquired products and expect this to contribute to both revenue and profit more materially in the second half of 2019.
Gross margins improved as we continued to grow sales of added value product.
Operating profit before exceptional items increased by 30% to GBP4.2m (2018 H1: GBP3.3m) with Furlong Mills contributing GBP0.2m (5%) of this increase. On a like-for-like basis operating profit increased by 25%, with margins increasing to 13.6% (2018 H1: 11.9%). Operating profit benefited from increased revenues and the continued move towards added value products. We have further invested in the extension of our export market distribution, in product development and in improved customer service.
Earnings before interest, tax, depreciation and amortisation increased by 29% to GBP5.4m (2018 H1: GBP4.2m).
Profit before exceptional items and income tax rose by 27% to GBP4.2m (2018 H1: GBP3.3m), largely as a result of our strong operating performance. The acquisition of a controlling interest in Furlong Mills contributed a net GBP0.1m. This strong performance continues our long term track record of profit growth. In the five years to the end of 2018 we increased profit before income tax at a compound rate of 22% per annum.
Adjusted earnings per share improved by 24% to 30.4p (2018 H1: 24.4p).
During the first half we purchased an additional 9.5% of the equity of Furlong Mills Limited at a cost of GBP0.5m, taking our holding from 46.1% to 55.6%, a controlling interest. As a result of this we now consolidate Furlong Mills as a subsidiary of Churchill. As we acquired a higher value of assets than the overall consideration paid, negative goodwill of GBP0.1m was generated. In accordance with accounting standards, this has been credited to the Income Statement as an exceptional item.
Reported profit before tax rose to GBP4.3m from GBP3.3m in H1 2018.
Basic earnings per share, including the above exceptional items, improved by 28% to 31.3p (2018 H1: 24.4p)
We have continued to generate good operating cash flows. Operating cash generation was GBP2.4m (2018 H1: GBP1.7m). Working capital requirements in the first half year were higher than last year at GBP2.4m (2018 H1: GBP1.9m) largely reflecting an increased level of inventory attributable to the establishment of a stock holding in our new European warehouse and a higher level of sales.
Capital expenditure has risen to support the increased level of activity within our business. In addition to the GBP2.1m spent on the purchase from Dudson, we have invested a further GBP1.5m (2018 H1: GBP0.9m) on a number of new projects including additional manufacturing space and kiln capacity which we expect to complete in 2020.
We retain a strong balance sheet with net assets of GBP41.4m, including net cash and deposits of GBP13.1m (H1 2018: GBP13.7m).
Dividend
The Board is pleased to announce an 18% increase in the interim dividend to 10.3p per share (2018 H1: 8.7p) maintaining our record of improvement in cash returns to shareholders. We are pleased that the further growth in profitability and cash generation allows us to raise the dividend. The interim dividend will be paid on 4 October 2019 to shareholders on the register on 13 September 2019, with the ex-dividend date being 12 September 2019.
Business
Ceramics
Within our Ceramics business, we have continued to make good progress, with all this growth coming from Hospitality markets.
Export revenues increased by 13% and now represent 65% of Ceramics revenues (2018 H1: 63%).Our progress in overseas markets has been maintained, with the highest short term growth again being achieved in Europe where we have strong momentum and increasing market penetration in key markets. We have continued to increase our sales in North America and the Rest of the World which are at an earlier stage of development. This export growth has been achieved as a result of many years of investment in new product development and building appropriate distribution channels.
We are pleased that, after a period of consolidation, we have returned to growth in the UK following implementation of a number of actions to improve our focus in this market. We benefit from wide distribution across a range of sectors and continue to enjoy a consistent level of replacement sales. Revenue from added value sales has increased.
Following the acquisition of product and brand intellectual property from Dudson in April 2019 we have re-engineered and replicated the products and the first phase of re-launches took place in June 2019. Further products will reach the market later this year. Total sales under the Dudson brand in the first half were GBP0.1m and are expected to increase substantially in the second half of 2019. The acquisition of this long established brand has given us a significant opportunity to establish new and separate distribution in a number of export markets. We have made good initial progress in securing this distribution in our target markets.
We continue to enjoy success in the movement of standard to higher margin added value product. Sales of added value products now represent over 47% of our Hospitality sales. This increase reflects continued innovation, product and market research and new product development. Stonecast continues to grow strongly and our Studio Prints range has made further progress. The purchase of intellectual property in the Dudson Evo and Harvest products, which use distinctive glaze technology, will provide additional opportunities to continue to grow added value product revenues.
Churchill's core values are innovation, technical performance and service. 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.
Materials
The acquisition of a majority holding in Furlong Mills in February 2019 has had the short term effect of securing an important part of our supply chain. Furlong is a ceramic materials manufacturer based in Stoke on Trent and provides processed clay body and glaze to Churchill and other major manufacturers. Longer term we wish to maintain our position of producing a high quality technical performance ceramic and continuing to innovate and differentiate our product and we believe our increased investment in Furlong and its leading position in applied material science will support this.
Furlong Mills has traded in line with our expectations in the first half year, total revenues were GBP3.1m, of which GBP1.1m was sold to Churchill.
Operations
The first half of 2019 has seen substantial progress within our manufacturing and logistics operations both on a day-to-day basis and at a strategic level.
Activity levels within our operations have been high during the first half of the year, with consequent demands on both production and logistics. At the same time we have continued to develop and introduce new product at a significant rate. These have required an acceleration of our capital investment programme, notably the extension of our first stage kiln firing capacity and a further manufacturing extension, both to support the production of higher value products. We expect these projects to progress quickly in the second half of the year and to complete in 2020.
In addition to the operational challenge posed by organic growth, the Dudson purchase has created demands in relation to the introduction of new manufacturing technology and processes. This project is progressing well and we are pleased with the quality and efficiency improvements achieved to date.
We have accelerated our investment in logistics to support our European customer base and to mitigate the potential impact of Brexit on our delivery security. Our growth in Europe was expected to create the need for a local despatch operation in two to three years' time, but the need to maintain our service promise given potential disruption has again accelerated our investment. In February 2019 we began to supply orders to Europe from inventory established in a third party run warehouse in Rotterdam. We now hold over GBP0.5m of inventory in Europe and plan to increase this in the second half of 2019.
Brexit
We have reviewed our exposure to various Brexit scenarios. A major part of our revenue is earned outside the UK and our manufacturing process, in part, relies upon materials and equipment sourced from overseas.
Our detailed Brexit risk planning was completed earlier this year, but continues to be reviewed as the political and economic environment changes. We believe we have identified and developed sensible plans to mitigate the effect of disruption on our business where possible. Our plans are founded on our core principles which are the provision of value to our customers and maintenance of a high level of service.
People
I have previously commented on the investment we have made in our workforce in terms of training and development and the alignment and engagement of our employees with our business plans. Our continuous improvement programme remains the main focus of our efforts, but is supported by many other initiatives.
It is unlikely that the progress we have made in the first half of this year would have been possible without the past work carried out in relation to training and development and certainly not without the support and engagement of our staff. We have placed significant demands on our employees over the recent past and they have risen admirably to the challenge. Once again I thank them for their effort and commitment.
Outlook
We have reported a strong performance in first half year and once again this has been achieved as a result of long term investment in line with our strategic targets. We have continued to benefit from growth in export revenues and have increased our margins as a result of the sale of further added value products. Our market position remains strong and we believe we have further opportunity, both organically and from our recent acquisitions, to continue to make further progress.
Churchill has been substantially re-positioned as a business over the past five years. We have emphasised the development of differentiated high margin products in Hospitality and exited from markets where we did not have a competitive advantage. We believe we offer a technical performance product to attractive markets worldwide with a high level of service. We have a well invested business supported by a strong balance sheet.
Current trading remains in line with our expectations and we believe that we can, subject to external conditions, make further progress. We remain focused on the long term and on the delivery of value and return on a sustainable basis.
Alan McWalter
Chairman
29 August 2019
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Churchill China plc
Consolidated Income Statement
for the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 2019 30 June 2018 31 December 2018
GBP000 GBP000 GBP000
Note
Revenue 1 31,934 27,247 57,479
=========== =========== ===========
Operating profit before exceptional
item 1 4,237 3,254 9,237
Exceptional item 2 117 - (541)
---------------------------------------- ----- ------------------- ------------------- -------------------
Operating Profit 1 4,354 3,254 8,696
Share of results of associate company (22) 92 185
Finance income 3 69 46 110
Finance costs 3 (100) (90) (144)
------------------ ------------------ ------------------
-------------------------------------- ----- ------------------- ------------------- -------------------
Profit before exceptional item and
income tax 4,184 3,302 9,388
Exceptional item 2 117 - (541)
--------------------------------------- ----- ------------------- ------------------- -------------------
Profit before income tax 4,301 3,302 8,847
Income tax expense 4 (815) (626) (1,649)
------------------ ------------------ ------------------
Profit for the period 3,486 2,676 7,198
=========== =========== ===========
Profit for the period is attributable
to:
Owners of the Company 3,425 2,676 7,198
Non-controlling interests 61 - -
------------------ ------------------ ------------------
3,486 2,676 7,198
=========== =========== ===========
Pence
per Pence per Pence per
Share share share
Adjusted basic earnings
per ordinary share 5 30.4 24.4 69.6
Diluted adjusted earnings
per ordinary share 5 30.1 24.2 69.0
Basic earnings per ordinary
share 5 31.3 24.4 65.6
Diluted earnings per ordinary
share 5 31.0 24.2 65.0
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 2019 30 June 2018 31 December 2018
GBP000 GBP000 GBP000
Other comprehensive income / (expense)
Items that will not be reclassified to profit and
loss:
Actuarial loss on retirement benefit
obligations - - (175)
Items that may be reclassified subsequently to
profit
and loss
Exchange differences 2 (11) 23
--------------- -------------- ---------------
Other comprehensive income / (expense) 2 (11) (152)
Profit for the period 3,486 2,676 7,198
--------------- --------------- ----------------
Total comprehensive income for the period 3,488 2,665 7,046
========== ========== ==========
Attributable to:
Owners of the Company 3,427 2,665 7,046
Non-controlling interest 61 - -
--------------- --------------- ----------------
3,488 2,665 7,046
========== ========== ==========
All above figures relate to continuing operations
Churchill China
plc
Consolidated Balance
Sheets
as at 30 June
2019
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
Assets
Non-current assets
Property, plant
and equipment 18,964 14,520 14,847
Intangible assets 1,620 93 91
Investment in associate - 1,639 1,732
Deferred income
tax assets 998 1,066 1,107
------------------ ----------------- ----------------------
21,582 17,318 17,777
------------------ ----------------- ----------------------
Current assets
Inventories 11,747 9,706 9,911
Trade and other
receivables 12,013 9,220 9,719
Other financial
assets 6,511 4,506 3,001
Cash and cash equivalents 6,971 9,230 14,380
------------------ ----------------- ----------------------
37,242 32,662 37,011
------------------ ----------------- ----------------------
Total assets 58,824 49,980 54,788
========== ========== =============
Liabilities
Current liabilities
Trade and other
payables (10,572) (8,617) (9,561)
Current income tax
liabilities (836) (716) (1,063)
----------------- ---------------- ---------------------
Total current liabilities (11,408) (9,333) (10,624)
----------------- ---------------- ---------------------
Non-current liabilities
Trade and other
payables (274) - -
Deferred income
tax liabilities (972) (765) (754)
Retirement benefit
obligations (4,809) (5,282) (5,443)
----------------- ---------------- ---------------------
Total non-current
liabilities (6,055) (6,047) (6,197)
----------------- ---------------- ---------------------
Total liabilities (17,463) (15,380) (16,821)
========== ========== =============
Net assets 41,361 34,600 37,967
========== ========== =============
Equity
Issued share capital 1,103 1,103 1,103
Share premium account 2,348 2,348 2,348
Treasury shares (445) (530) (729)
Other reserves 1,653 1,534 1,703
Retained earnings 34,739 30,145 33,542
----------------- ---------------- ---------------------
Capital and reserves
attributable
to owners of
the Company 39,398 34,600 37,967
Non-controlling
interest 1,963 - -
------------------ ----------------- ----------------------
Total equity 41,361 34,600 37,967
=========== ========== =============
Churchill China
plc
Consolidated Statement of Changes in
Equity
as at 30 June Issued Non-
2019
Retained share Share Treasury Other controlling Total
earnings capital premium shares reserves Total Interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January
2018 29,456 1,103 2,348 (579) 1,565 33,893 - 33,893
Comprehensive
income
Profit for the
period 2,676 - - - - 2,676 - 2,676
Other
comprehensive
income
Depreciation
transfer
- gross 5 - - - (5) - - -
Depreciation
transfer
- tax (1) - - - 1 - - -
Currency
translation - - - - (11) (11) - (11)
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Total
comprehensive
income 2,680 - - - (15) 2,665 - 2,665
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Transactions with
owners
Dividends (1,886) - - - - (1,886) - (1,886)
Proceeds of share
issue - - - 3 - 3 - 3
Share based
payment 137 - - - (16) 121 - 121
Deferred tax -
share
based payment (8) - - - - (8) - (8)
Treasury shares (234) - - 46 - (188) - (188)
------------------- ----------------- -------- -------- --------- --------- -------- ------------ --------
Total
transactions
with owners (1,991) - - 49 (16) (1,958) - (1,958)
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Balance at 30
June
2018 30,145 1,103 2,348 (530) 1,534 34,600 - 34,600
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Comprehensive
income
Profit for the
period 4,522 - - - - 4,522 - 4,522
Other
comprehensive
income
Depreciation
transfer
- gross 7 - - - (7) - - -
Depreciation
transfer
- tax (1) - - - 1 - - -
Re-measurements o
f post employment
benefit
obligations - net
of tax (175) (175) - (175)
Currency
translation - - - - 34 34 - 34
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Total
comprehensive
income 4,353 - - - 28 4,381 - 4,381
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Transactions with
owners
Dividends (954) - - - - (954) - (954)
Share based
payment - - - - 141 141 - 141
Deferred tax -
share based
payment (1) - - - - (1) -
Treasury shares (1) - - (199) - (200) - (200)
Total
transactions
with owners (956) - - (199) 141 (1,014) - (1,014)
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Balance at 31
December 2018 33,542 1,103 2,348 (729) 1,703 37,967 - 37,967
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Comprehensive
income
Profit for the
period 3,425 - - - - 3,425 61 3,486
Other
comprehensive
income
Depreciation
transfer - gross 5 - - - (5) - - -
Depreciation
transfer - tax (1) - - - 1 - - -
Currency
translation - - - - 2 2 - 2
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Total
comprehensive
income 3,429 - - - (2) 3,427 61 3,488
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Transactions with
owners
Dividends (2,224) - - - - (2,224) - (2,224)
Proceeds of share
issue - - - 3 - 3 - 3
Share based
payment 200 - - - (48) 152 - 152
Deferred tax -
share based
payment 73 - - - - 73 - 73
Treasury shares (281) - - 281 - - - -
Non-controlling
interest on
acquisition - - - - - - 1,902 1,902
------------------- ----------------- -------- -------- --------- --------- -------- ------------ --------
Total
transactions
with owners (2,232) - - 284 (48) (1,996) 1,902 (94)
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Balance at 30
June 2019 34,739 1,103 2,348 (445) 1,653 39,398 1,963 41,361
------------------ ----------------- -------- -------- --------- --------- -------- ------------ --------
Churchill China plc
Consolidated Cash Flow Statement
for the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 2019 30 June 2018 31 Dec 2018
GBP000 GBP000 GBP000
Cash flows from operating activities
Cash generated from operations (note 6) 2,434 1,686 8,260
Interest received 69 46 110
Interest paid (19) - (1)
Income tax paid (922) (628) (1.321)
----------------- ----------------- ------------------
Net cash generated from operating activities 1,562 1,104 7,048
----------------- ----------------- -----------------
Investing activities
Purchases of property, plant and equipment (2,010) (867) (2,042)
Proceeds on disposal of property, plant and
equipment 49 47 80
Purchases of intangible assets (1,619) (53) (58)
Payments for acquisition of
subsidiary, net of cash acquired 370 - -
----------------- ----------------- -----------------
Net cash used in investing activities (3,210) (873) (2,020)
----------------- ----------------- -----------------
Financing activities
Issue of ordinary shares 3 3 3
Purchase of treasury shares - (188) (388)
New finance leases 21 - -
Principal element of finance lease
payments (52) - -
Dividends paid (2,224) (1,886) (2,840)
Net purchase of other financial assets (3,509) (1,506) (1)
----------------- ----------------- -----------------
Net cash used in financing activities (5,761) (3,577) (3,226)
----------------- ----------------- -----------------
Net (decrease) / increase in cash and cash
equivalents (7,409) (3,346) 1,802
Cash and cash equivalents at the beginning of the
period 14,380 12,577 12,577
Exchange loss on cash and cash equivalents - (1) 1
----------------- ----------------- -----------------
Cash and cash equivalents at the end of the period 6,971 9,230 14,380
----------------- ----------------- -----------------
1. Segmental analysis
for the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months Six months Twelve months
to to to
30 June 2019 30 June 2018 31 December 2018
GBP000 GBP000 GBP000
Revenue
by class
of business
Ceramics 29,927 27,247 57,479
Materials 3,090 - -
Inter
segment (1,083) - -
-------------------------- ------------------------- -----------------------------------
31,934 27,247 57,479
-------------------------- -------------------------- -----------------------------------
Revenue
by
destination
United Kingdom 12,587 10,173 23,008
Rest of
Europe 13,109 10,958 21,306
USA 2,934 2,704 6,054
Rest of
the World 3,304 3,412 7,111
-------------------------- ------------------------- -----------------------------------
31,934 27,247 57,479
-------------------------- -------------------------- -----------------------------------
1. Segmental analysis (continued)
for the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months Six months Twelve months
to to to
30 June 2019 30 June 2018 31 December 2018
GBP000 GBP000 GBP000
Operating
profit
before
exceptional
items
Ceramics 4,067 3,254 9,237
Materials 170 - -
-------------------------- ------------------------- -----------------------------------
4,237 3,254 9,237
--------------------------- -------------------------- ------------------------------------
Exceptional
items
Ceramics - - (541)
Materials 117 - -
-------------------------- ------------------------- -----------------------------------
117 - 541
--------------------------- -------------------------- ------------------------------------
Operating
profit
after
exceptional
items
Ceramics 4,067 3,254 8,696
Materials 287 - -
-------------------------- ------------------------- -----------------------------------
4,354 3,254 8,696
Unallocated
items
Share of
results
of associate
company (22) 92 185
Finance income 69 46 110
Finance costs (100) (90) (144)
--------------------------- -------------------------- ------------------------------------
Profit before
income tax 4,301 3,302 8,847
--------------------------- -------------------------- ------------------------------------
2. Exceptional items
2019: In accordance with IFRS, the negative goodwill of GBP117,000 generated on the acquisition of a controlling interest in Furlong Mills Limited has been credited to the Income Statement as an exceptional item. A related deferred tax charge of GBP20,000 has been provided for.
2018: Following changes to the law relating to the equalisation of Guaranteed Minimum Pensions, a one-off sum of GBP611,000 was provided to reflect the cumulative effect of these changes. A related deferred tax credit of GBP104,000 was also provided for. Additionally provisions for costs of GBP70,000 for in relation to the disposal of property were released and credited to profit.
3. Finance income and costs
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 2019 30 June 2018 31 December 2018
GBP000 GBP000 GBP000
Finance income
Other interest receivable 69 46 110
Finance income 69 46 110
-------------- -------------- -----------------
Finance costs
Interest paid (19) - (1)
Interest on pension scheme (81) (90) (143)
Finance costs (100) (90) (144)
-------------- -------------- -----------------
The interest cost arising from pension schemes is a non cash item.
4. Income tax expense
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 2019 30 June 2018 31 December 2018
GBP000 GBP000 GBP000
Current taxation 621 513 1,552
Deferred taxation 194 113 97
Income tax expense 815 626 1,649
-------------- -------------- -----------------
5. Earnings per ordinary share
Basic earnings per ordinary share is based on the profit after taxation attributable to owners of the Company of GBP3,425,000 (June 2018: GBP2,676,000; December 2018: GBP7,198,000) and on 10,961,584 (June 2018: 10,964,570; December 2018: 10,966,966) ordinary shares, being the weighted average number of ordinary shares in issue during the period. Adjusted earnings per ordinary share is calculated after adjusting for the post tax effect of the exceptional items (see note 2).
Diluted basic earnings per ordinary share is based on the profit after taxation attributable to owners of the Company of GBP3,425,000 (June 2018: GBP2,676,000; December 2018: GBP7,198,000) and on 11,064,534 (June 2018: 11,066,621; December 2018: 11,069,061) ordinary shares, being the weighted average number of ordinary shares in issue during the period of 10,961,584 (June 2018: 10,964,570; December 2018: 10,966,966) increased by 102,950 (June 2018: 102,051; December 2018: 102,065) 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. Diluted adjusted earnings per ordinary share is calculated after adjusting for the post tax effect of the exceptional items (see note 2).
6. Reconciliation of operating profit to net cash inflow from continuing activities
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 2019 30 June 2018 31 December 2018
GBP000 GBP000 GBP000
Cash flow from operations
Operating profit 4,354 3,254 8,696
Adjustments for
Depreciation and amortisation - before exceptional item 1,187 913 1,725
Amortisation - exceptional item (117) - -
Profit on disposal of property, plant and equipment (22) (4) (91)
Charge for share based payment 152 121 262
Decrease in retirement benefit obligations (715) (715) (1,430)
Pension current serve charge - non cash exceptional - - 611
Changes in working capital
Inventory (1,006) 110 (95)
Trade and other receivables (402) (585) (1,039)
Trade and other payables (997) (1,408) (379)
Cash inflow from operations 2,434 1,686 8,260
-------------- -------------- -----------------
7. Acquisition of subsidiary
On 25 February 2019 Churchill acquired a further 9.5% of the issued ordinary share capital of Furlong Mills Limited for a total consideration of GBP454,000. Churchill's shareholding in Furlong Mills prior to the purchase was 46.1% and it had previously been accounted for as an associate company. As the February purchase increased Churchill's overall holding to 55.6% of the issued ordinary share capital, a controlling interest, it has been accounted for as a subsidiary from that date.
Furlong Mills is a ceramic materials manufacturer based in Stoke on Trent, providing processed clay body and glazes to Churchill and to other ceramic manufacturers.
The amounts recognised at fair value in respect of the identifiable assets acquired and liabilities assumed are as follows:
GBP000
Plant, property and equipment 3,176
Inventory 830
Debtors 1,891
Cash and cash equivalents 824
Trade and other payables (2,258)
Current income tax liabilities (75)
Deferred income tax liabilities (205)
Total identifiable assets 4,183
Goodwill (117)
Non-controlling interest at acquisition (1,902)
--------
Total consideration 2,164
--------
Satisfied by:
Cash and cash equivalents 454
Investment in associate at acquisition 1,710
--------
2,164
--------
Net cash inflow arising on
acquisition
Cash consideration (454)
Less: Cash and cash equivalents
acquired 824
--------
Net cash inflow 370
--------
8. Basis of preparation and accounting policies
The interim financial information for the period to 30 June 2019 has not been audited or reviewed and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The Company's statutory accounts for the year ended 31 December 2018, prepared in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards - IFRS), have been delivered to the Registrar of Companies; the report of the auditors on these accounts was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
The interim 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 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 interim financial statements as were applied in the Group's last audited financial statements, except in relation to the adoption of IFRS 16 'Leases', effective from 1 January 2019.
The asset and corresponding liability on implementation on 1 January 2019 amounted to GBP234,000. In the six months to 30 June 2019, IFRS 16 resulted in a GBP6,000 increase to operating profit and an GBP11,000 increase in interest payable.
9. Share buybacks
The Company did not buy back any ordinary shares during the first six months of the year, but may consider making further ad hoc share buybacks going forward at the discretion of the Board and subject to the shareholder authorities approved at the 2019 Annual General Meeting.
The half-yearly report and this announcement will be available shortly on the Company's website: www.churchill1795.com
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR LLFFDTDITFIA
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August 29, 2019 02:00 ET (06:00 GMT)
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