RNS Number : 2514C
Qualceram Shires PLC
29 August 2008
Qualceram Shires plc
Unaudited Interim results for the six months ended 30 June 2008.
Friday 29 August, 2008
Qualceram Shires plc, a leading manufacturer and distributor of a wide range of bathroom suites, today announces its unaudited interim
financial results for the six months ended 30 June, 2008.
SUMMARY
Turnover EUR36.1m (2007:EUR50.1 million)
Gross Profit EUR12.5m (2007: EUR16.1 million)
Operating loss before exceptional items (EUR0.08m) (2007: Profit EUR2.4 million)
Net Debt EUR4.9m (2007: EUR20.9 million)
Commenting on the results Group Chief Executive of Qualceram Shires plc, John O'Loughlin said:
"Demanding market conditions have impacted on turnover and profitability in the first half of 2008 and conditions will remain
challenging for the remainder of the year. Further rationalisation will be implemented to counteract the downturn with particular emphasis
on cash management."
-ends-
For reference:
John O'Loughlin Aidan Clince
Chief Executive Company Secretary
Qualceram Shires plc Qualceram Shires plc
00-353-402-31288 00-353-1-4047600
Drury Communications (Dublin)
Paddy Hughes Tel: 00-353-1-2605000 / 00-353-87-6167811
Notes to Editors
Qualceram Shires plc is a leading manufacturer and distributor of a wide range of bathroom suites. Operating in Ireland and the UK, the
Group's strategy is to increase its market share in the luxury end of the bathroom products sector by offering a complete package of luxury
branded products supported by superior customer service. The Group has five brands: Qualceram, Shires, Selecta, Trent, and Shaws of Darwen.
Founded in 1988, it was admitted to the London and Irish Stock Exchanges in 1997.
www.qualceram-shires.com
Qualceram Shires plc
Interim Management Statement
for the six months ended 30 June 2008
Performance
The Group's trading performance in the six months ended 30 June 2008 has been adversely affected by the unprecedented slow-down in the
property market and the deepening economic downturn both in Ireland and in the UK.
Results
The Group's turnover in the first half of the year was EUR36.1m (2007: EUR50.1m). Turnover in Ireland fell by 34% to EUR13.7m (2007:
EUR20.8m) while turnover in the UK fell by 27% to EUR18.9m (2007: EUR25.9m). Turnover in the Group's export markets increased by 3% to
EUR3.4m (2007: EUR3.3m). Overheads for the six months were EUR12.7m (2007: EUR13.7m) and include costs of EUR0.23m relating to the
unsolicited approach announced on 20 March 2008. Operating loss, before exceptional items, for the first six months of the year, was
EUR0.08m (2007: profit EUR2.4m)
As a result of the sale of the Group's property in Arklow earlier this year, the Group's net debt has reduced from EUR17.3m at 31
December 2007 to EUR4.9m at 30 June 2008.
Properties
In February 2008, the Group completed the sale of its property at South Quay, Arklow, Co. Wicklow for EUR30.025m. In the current
volatile and uncertain property market, the consideration achieved represents very good value. The Group has agreed terms to continue to
occupy the premises in Arklow as its head office for a period of two and a half years from the date of completion at a nominal rent.
The Group is in discussions with the landlord of certain of its properties to waive covenants to reflect the changed environment in
which it is trading. As part of these discussions the Group is also negotiating the disposal of its premises in Longton and Rochdale
following the rationalisation of the Group's businesses operating from these premises.
Dividend
The Board is not proposing to declare an interim dividend.
Outlook
Economic conditions in the Group's main markets of Ireland and the UK continue to be challenging and with inflationary pressures
growing, revenues are expected to decline in the second half of the year. The Board continues to take decisive action to reduce costs and
rationalise the Group's businesses so as to counteract the downturn in the housing market and position the Group for the return of more
favourable market conditions.
Approach
On 20 March 2008, the Board announced that it had received a preliminary expression of interest from a party which may or may not lead
to a formal offer being made for the Group. As a result of that approach, a number of other parties expressed an interest in entering into
discussions with the Group.
The position of potential buyers and current valuation levels had been negatively impacted by the continued deterioration in the UK and
Irish construction markets, the general downturn in the economy, credit market conditions and uncertainty surrounding a recovery in the
Group's key markets. These factors restricted the ability of the parties who had expressed an initial interest in making an offer for the
Group, and with whom the Board had engaged during the last five months, to make an offer.
As a result, on 26 August 2008, the Board announced that it had terminated the process and ended discussions with potential buyers.
Principal risks and uncertainties
Under the Transparency (Directive 2004/109/EC) Regulations 2007 the Group is required to give a description of the principal risks and
uncertainties it faces for the remaining six months of 2008. Risk management is an integral part of the Group's business processes.
The risks and uncertainties which are currently judged to have a material impact on the Group's performance for the remaining six months
of the year are as follows:
* The Group faces strong competition in its various markets and if it fails to compete successfully market share and profitability
may decline
* Due to market conditions, the Groups covenants with its landlord may come under increasing pressure
* The continuing upward trend in the cost of raw materials and energy may impact on the profitability of the Group
* A continued contraction in the new housebuilding sector could further impact on the profitability of the Group
* Movements in foreign currency exchange rates and higher interest rates could adversely affect the Group
* Changes in government regulations, particularly in the environment sector, may adversely affect the Group.
Related party transactions
In the opinion of the Directors, there have been no related party transactions, or changes therein since 31 December 2007, that have
materially affected the Group's financial position or performance in the six months ended 30th June 2008.
Audit Review
The half year financial report has not been audited or reviewed by the Auditors of the Group pursuant to the Auditing Practices Board
guidance on review of interim financial information.
Forward Looking Statements
Certain comments made in these interim results are forward looking statements. Such statements are based on current expectations and are
subject to a number of risks and uncertainties that could cause actual events or results to differ materially from the expected future
events or results referred to in these forward looking statements.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Interim Statement in accordance with International Accounting Standard 34 "Interim
Financial Reporting" (IAS 34) and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Irish
Financial Services Regulatory Authority.
The Directors confirm that the condensed set of financial statements have been prepared in accordance with IAS 34 and that they give a
true and fair view of the assets, liabilities, financial position and loss of the Group and that as required by the Transparency (Directive
2004/109/EC) Regulations 2007, the Interim Statement includes a fair review of:
* important events that have occurred during the first six months of the year;
* the impact of those events on the condensed financial statements;
* a description of the principal risks and uncertainties for the remaining six months of the financial year; and
* details of any related party transactions that have materially affected the Group's financial position or performance in the six
months to 30 June 2008.
Peter Addison John O'Loughlin
Chairman Group Chief Executive
29 August 2008
Qualceram Shires plc
Unaudited Consolidated Income Statement for the period ended 30 June 2008
6 months ended 6 months ended Year ended
30 June 2008 30 June 2007 31
Unaudited Unaudited December
2007
Audited
EUR'000 EUR'000 EUR'000
Turnover 2 36,094 50,075 90,051
Cost of sales (23,579) (34,006) (62,549)
Gross profit 12,515 16,069 27,502
Operating expenses (12,657) (13,661) (26,399)
Other operating income 66 - -
Operating (loss)/profit before (76) 2,408 1,103
exceptional items
Exceptional items 3 - - 5,142
Goodwill impairment loss (3,213) - -
Operating (loss)/profit (3,289) 2,408 6,245
Net interest payable (105) (298) (887)
(Loss)/profit before taxation (3,394) 2,110 5,358
Taxation (46) (481) (3,996)
(Loss)/profit after taxation (3,440) 1,629 1,362
Dividends approved 4 - - -
(Loss)/profit retained for the
financial period (3,440) 1,629 1,362
Basic earnings per share 5 (15.52c) 7.35c 6.14c
Qualceram Shires plc
Unaudited Consolidated Statement of total recognised income and expense
for the period ended 30 June 2008
6 months ended 6 months ended 30 June 2007 Year ended
30 June 2008 Unaudited 31
Unaudited December
2007
Audited
EUR'000 EUR'000 EUR'000
(Loss)/profit after tax (3,440) 1,629 1,362
Dividends approved - - -
(Loss)/profit retained for the (3,440) 1,629 1,362
period
Currency translation effects:
On results for the period 31 (22) 726
On foreign currency net (735) (242) (301)
investments
Total recognised income and
expenses (4,144) 1,365 1,787
Qualceram Shires plc
Unaudited Consolidated Balance Sheet as at 30 June 2008
30 June 2008 30 June 2007 31 December 2007
Unaudited Unaudited Audited
Assets EUR'000 EUR'000 EUR'000
Non-current assets
Tangible assets 2,740 8,915 3,264
Investment property - 6,269 -
Intangible assets 7,238 10,456 10,454
Deferred tax assets 1,107 1,429 1,107
11,085 27,069 14,825
Current assets
Stocks 14,280 18,177 13,926
Debtors 20,482 28,522 46,421
Bank 1,829 - -
36,591 46,699 60,347
Total assets 47,676 73,768 75,172
Equity and liabilities
Capital and reserves
Share capital 2,660 2,660 2,660
Share premium 17,921 17,921 17,921
Capital reserve 5,183 5,183 5,183
Reserves (4,895) (768) (751)
20,869 24,996 25,013
Non -current liabilities
Deferred tax 4 1,109 4
Employee benefit obligations 3,719 4,670 3,689
3,723 5,779 3,693
Current liabilities
Trade and other payables 15,047 19,417 21,348
Current tax liabilities 1,144 1,825 7,674
Corporation tax liabilities 177 857 174
Interest bearing liabilities 6,716 20,894 17,270
23,084 42,993 46,466
Total equity and liabilities 47,676 73,768 75,172
Qualceram Shires plc
Unaudited Consolidated Cash Flow Statement for the period ended 30 June 2008
6 months ended 6 months ended 30 Year ended
30 June 2008 June 2007 31
Unaudited Unaudited December
2007
Audited
EUR'000 EUR'000 EUR'000
(Loss)/profit before taxation (3,394) 2,110 5,358
Adjustments for:
Depreciation 378 843 3,789
Interest expense 105 298 887
Goodwill impairment loss 3,213 - -
Profit on sale of fixed asset - - (17,929)
Exchange rate movement (135) 142 1,389
167 3,393 (6,506)
(Increase)/decrease in (766) (1,319) 2,932
inventories
(Increase)/decrease in trade (2,723) (3,051) 4,532
and other receivables
(Decrease)/increase in trade (7,637) 441 2,942
and other payables
Cash generated from operations (10,959) (536) 3,900
Income taxes paid (4,518) - (158)
Interest paid (122) (256) (891)
Net cash flow from operating
activities (15,599) (792) 2,851
Investing activities
Purchase of property, plant & (43) (218) (238)
equip
Sale of tangible assets 28,025 - -
Net cash from (used in) 27,982 (218) (238)
investing activities
Financing activities
Dividends paid - - -
Loan (repaid)/drawdowns (8,284) 1,232 (4,154)
Net cash from financing (8,284) 1,232 (4,154)
activities
Net increase /(decrease) in
cash and cash equivalents 4,099 221 (1,541)
Cash and cash equivalents at
beginning of period (2,270) (729) (729)
Cash and cash equivalents at
end of period 1,829 (508) (2,270)
Qualceram Shires plc
Notes to the unaudited condensed interim financial statements
for the period ended 30 June 2008
1. Accounting policies and reporting currencies
This interim statement has been prepared on the basis of the accounting policies set out in the Annual Report for the year ended 31
December 2007.
Intra group sales and profits are eliminated on consolidation and all sales and profit figures relate to external transactions only.
The currency used in these financial statements is the Euro, which is denoted by the symbol EUR.
2. Turnover
Analysis by product 6 months ended 30 6 months ended Year ended 31 December
June 2008 30 June 2007 2007
Unaudited Unaudited Audited
EUR'000 EUR'000 EUR'000
Manufactured products 8,953 12,358 24,564
Agency 27,141 37,717 65,487
36,094 50,075 90,051
Analysis by geographical 6 months ended 6 months ended Year ended 31 December 2007
market 30 June 2008 30 June 2007 Audited
Unaudited Unaudited
EUR'000 EUR'000 EUR'000
United Kingdom 18,925 25,926 45,930
Ireland 13,759 20,818 37,585
Export Markets 3,410 3,331 6,536
36,094 50,075 90,051
Qualceram Shires plc
Notes to the unaudited condensed interim financial statements
for the period ended 30 June 2008
3. Exceptional items
6 months ended 30 6 months ended Year ended 31 December 2007
June 2008 30 June 2007 Audited
Unaudited Unaudited
EUR'000 EUR'000 EUR'000
Profit on disposal of fixed - - 17,929
assets
Directors pension - - (1,500)
contributions
Re-organisation and - - (5,324)
restructuring costs
Redundancy and service costs - - (1,392)
Provision for disposal of - - (4,571)
leasehold properties
- - 5,142
In 2007 the Group entered into an unconditional contract to sell its property at South Quay, Arklow, Co. Wicklow for EUR30.025m to
Brattice Properties Ltd. The proceeds from the disposal were received on the 4th of February 2008.
For the year ended 31st December 2007 John J. O'Loughlin, John Byrne and Thomas J. Byrne were entitled to a pension contribution of
EUR500,000 from the Company following the completion of the sale of the Arklow property.
In 2007 the Group provided for the implementation of a restructuring programme to counter the slowdown in the construction sector. The
financial statements provide for the costs associated with the closure of its shower enclosure and ceramics plants, the re-organisation of
its distribution centres and disposal of its leaseholds in Rochdale and Stoke on Trent.
4. Dividends
No interim dividend was approved during the year (2007: nil per share).
5. Earnings per share
Basic earnings per share is based on the loss after tax of EUR3.44m (2007: Profit EUR1.629m) and the weighted average number of ordinary
shares in issue during the period of 22,170,111 (2007: 22,170,111).
Qualceram Shires plc
Notes to the unaudited condensed interim financial statements
for the period ended 30 June 2008
6. Analysis of net debt
6 Months ended 6 Months ended 30 Year ended 31 December 2007
30 June 2008 June 2007 unaudited Audited
unaudited
EUR'000 EUR'000 EUR'000
Cash in hand 1,829 (508) (2,270)
Debt due within one year (6,716) (20,386) (15,000)
Debt due between two and five
years - - -
Finance Leases - - -
(4,887) (20,894) (17,270)
7. Reconciliation of net cashflow to movement in net debt
6 Months ended 6 Months ended 30 Year ended 31 December
30 June 2008 June 2007 unaudited 2007
unaudited Audited
EUR'000 EUR'000 EUR'000
Increase/(decrease) in cash in 4,099 221 (1,541)
period
Cash inflow/ (outflow) from
movement in debt 8,284 (1,232) 4,154
Changes in debt resulting from
cashflow 12,383 (1,011) 2,613
Movement in net debt in the
period 12,383 (1,011) 2,613
Net debt at 1 January (17,270) (19,883) (19,883)
Net debt at end of period (4,887) (20,894) (17,270)
Qualceram Shires plc
Notes to the unaudited condensed interim financial statements
for the period ended 30 June 2008
8. Companies Amendment Act 1986
These financial statements do not constitute full accounts and are unaudited. Full accounts for the year ended 31 December 2007, which
received an unqualified audit report, have been filed with the Registrar of Companies in Dublin, Ireland
This information is provided by RNS
The company news service from the London Stock Exchange
END
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