Churchill China, which makes and distributes high-quality ceramic tableware, reported impressive interim results to June and said full-year figures would exceed forecasts.

Pre-tax profits, stripping out a £2.6m exceptional gain from 2006 related to property disposals and pension changes, surged 42% higher to £1.4m on £22.2m sales. Adjusted earnings sparked up 33% to 8.4p, allowing for a 15% dividend hike to 4.5p. Churchill’s earnings were supported by £3.1m of cash generated from operations, which left it with £8.5m at the half-year.

UK market leader and selling into Europe, the USA and the Middle East, Churchill’s hospitality business grew sales 16% to £13.6m on the back of good hotel occupancy rates and increased investment by its pub and restaurant clients following the smoking ban. A stellar turn from the prestige Alchemy range, which is sold into 4-star hotels and restaurants, also helped.

Though there was a fall in sales in the retail division, from £9.1m to £8.6m, the profit contribution remained the same with the planned exit from the lower-margin promotional business replaced by licensed product sales at a higher margin.

Profit forecasts for December 2007 and 2008 have been upgraded from £3.3m to £3.7m and from £3.5m to £4m respectively. Based on this year’s 23.5p earnings figure, the shares trade on a forward multiple of 13.8 times with a solid yield. Investors looking for an asset-backed business with plenty of cash and progressive dividend appeal, look no further.

Churchill China	AIM	£20.71m	190.00p	0.00p
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