TIDMPMP
RNS Number : 0539F
Portmeirion Group PLC
17 March 2022
17 March 2022
Portmeirion Group PLC
('the Group')
Preliminary results for the year ended 31 December 2021
Record revenue performance and profit recovery delivered
Full year dividend restored
Financial summary
2021 2020 2019
GBPm GBPm GBPm
Revenue 106.0 87.9 92.8
Headline profit before tax(1) 7.2 1.4 7.4
Profit/(loss) before tax 6.0 (0.2) 7.1
EBITDA 10.7 5.1 11.4
Headline basic earnings per share(1) 38.85p 4.96p 56.32p
Basic earnings per share 23.58p (6.02)p 54.66p
Dividends paid and proposed per share
in respect of the year 13.00p Nil 8.00p
Headlines:
Financial
-- Record Group revenue of GBP106.0 million in the year to 31
December 2021, an increase of 21% over the prior year (2020:
GBP87.9 million) and 14% over pre Covid-19 level (2019: GBP92.8
million).
-- Excellent Q4 seasonal trading performance despite ongoing
global supply chain inflation and disruption, demonstrating the
strength of consumer demand for our brands, progress with our
online strategy and resilience of our operations.
-- Sales from our own ecommerce platforms increased by 16% over
2020 and are now 81% above 2019 levels. Online sales now represent
50% of total sales in our core UK and US markets in the year to 31
December 2021 (2020: 47%, 2019: 30%).
-- Headline profit before tax(1) of GBP7.2 million (2020: GBP1.4 million, 2019: GBP7.4 million).
-- EBITDA of GBP10.7 million (2020: GBP5.1 million, 2019: GBP11.4 million).
-- Headline basic earnings per share(1) of 38.85p (2020: 4.96p, 2019: 56.32p).
-- Dividend reinstated with final dividend proposed of 13.00p
per share, bringing total dividends paid and proposed to 13.00p
(2020: GBPnil, 2019: 8.00p).
-- Strong balance sheet maintained with net cash of GBP0.7
million at 31 December 2021 (2020: net cash GBP0.7 million, 2019:
net debt GBP12.3 million). Cash generative, which has allowed
accelerated investments in our strategic capabilities.
(1) Headline profit before tax and headline basic earnings per
share exclude exceptional items - see notes 2 and 4.
Operational
-- Sales growth across three key markets of the US, UK and South
Korea. Rest of the world sales also performed strongly and are 71%
ahead of pre Covid-19 levels.
-- Substantial progress in developing online and digital
capabilities, including ongoing investment in online platforms and
warehouse fulfilment capabilities to support growth.
-- Strong growth across all brands, particularly in Spode up 30% over 2020.
-- Completed a number of key operational projects; hand and body
line extension at Wax Lyrical, automation investment in our UK
ceramic factory and mezzanine floor installed in our UK
distribution centre.
-- Extended our long term energy hedging programme to Q1 2024,
insulating the Group against the current volatility in energy
prices.
-- Continued to deliver an improved carbon emission performance
whilst undertaking a full evaluation of our ESG position in order
to deliver a sustainable forward strategy.
-- Our UK businesses both achieved Investor in People (IIP)
Platinum accreditation in recognition of our commitment to leading,
supporting and improving our workforce.
Mike Raybould, Chief Executive commented:
" I am delighted with the significant progress we have made. Our
record sales reflect the strong progress we have made on our
strategy whilst successfully navigating the ongoing disruption from
the pandemic. I would like to thank our employees around the world
for their tireless efforts against this unprecedented backdrop.
We are focused on reaching an ever wider potential customer base
- by developing online sales channels, building out new geographies
and leveraging our brands and new product development more
effectively. On each count, I am pleased to report we have made
strong progress in 2021.
We saw a very successful seasonal holiday trading period driven
by customers increasingly searching for our brands online as well
as in physical retail stores. We have a roadmap for developing our
brands around the world and the 30% against 2020 (and 33% against
2019) growth in our Spode brand indicates the potential opportunity
ahead.
Our capital investments made in the last 12 months will enable
increased production in the current year and beyond whilst driving
improved operating margins through productivity gains.
We are mindful of the ongoing disruption to global supply chains
and cost pressures including container freight rates. We have long
term energy contracts in place until early 2024 that will protect
the business in the short term from increased energy costs but are
watchful that consumers around the world will require a period of
adjustment to the inflationary pressures in everyday spend. We
remain confident we can continue to navigate those challenges and
that our brand strength and the changes we have made to the
business will allow us to continue to grow in the short term with
improved operating margins, and in the long term deliver
significant gains in profitability.
We are also pleased that the strong trading performance and
operating cash generated has allowed us to reintroduce our
longstanding dividend to shareholders ."
Portmeirion Group PLC
Chairman and Chief Executive Statements
Trading
2021 was a record sales year for the Group driven by our
strategy of reaching a wider potential customer base through
developing our online sales channels, building new geographical
markets and new product launches within our strong family of
brands.
We were pleased to see growth over 2020 and 2019 pre Covid-19
levels in our UK and US core markets. We experienced a strong
seasonal Christmas trading period, particularly in the US market
where new product launches and our ability to handle drop ship
order fulfilment enabled good levels of growth.
The work we did in 2019 and 2020 to safeguard our brands, long
term, in South Korea enabled a robust and sustainable sales
performance in 2021 with sales rising by 43% over the prior
year.
We have continued our transformation to a more online and
digital based business and were delighted to see 16% sales growth
in our own branded websites despite high street retail stores
reopening. 50% of total sales in our core UK and US markets now go
through all online channels (2020: 47%, 2019: 30%). Developing a
deeper direct relationship with the end consumer represents a huge
opportunity for the Group and we will continue to invest in our
capabilities in this area. Our website customer lists grew by 25%
in 2021 and by over 220,000 (110%) on a two year basis versus 2019.
With the opportunity of repeat purchases this is a key KPI for the
Group and a positive indicator of future sales growth
potential.
The benefit of our diversified sales channels and increasing the
number of routes to market enabled a strong rebound in
profitability in 2021 despite the well-publicised disruption and
significant cost increases in global supply chains, particularly in
container sea freight. The strength and depth of experience of our
supply chain teams around the world really shone through and
enabled our Q4 sales to beat our forecasts.
Full year headline profit before tax(1) was GBP7.2 million
(2020: GBP1.4 million).
We are confident in our long-term strategy for growth and have a
strong balance sheet to support our ambitions. The Group continues
to be cash generative and we maintained a net cash positive
position after net capital expenditure of GBP4.6 million during the
year.
Financial Headlines
-- Revenue was GBP106.0 million, an increase of 21% on 2020 and 14% on 2019 pre Covid-19 levels.
-- Like-for-like sales increased by 19% over the prior year.
-- Own platform website sales increased by 16% to GBP11.4
million (2020: GBP9.8 million) and by 81% on a YO2Y basis.
-- Headline basic earnings per share(1) was 38.85p per share (2020: 4.96p).
-- Final dividend proposed of 13.00p per share, bringing total
dividends paid and proposed to 13.00p (2020: GBPnil, 2019:
8.00p).
(1) Headline profit before tax and headline basic earnings per
share exclude exceptional items - see notes 2 and 4.
Dividend
The Board remains committed to a sustainable dividend policy
with an appropriate level of cover. Our policy will ensure that we
retain and invest enough capital in our business to drive long-term
growth in our brands. We currently consider that a level of cover
at or close to three times the dividends paid and proposed for the
year is the appropriate rate for the medium term to allow increased
investment whilst providing a return for shareholders.
During the Covid-19 pandemic we determined not to pay a dividend
due to the impact and disruption on our business.
Due to the strong trading performance and cash generation, the
Board are recommending a final dividend of 13.00p (2020: GBPnil).
Total dividends paid and proposed for the year would therefore be
13.00p (2020: GBPnil).
The Board
The Board keeps its composition and performance under constant
review so as to ensure that we have the appropriate skills,
experience and resources to deliver on our four main board
requirements of: setting strategy, reviewing progress against
strategy, monitoring the resources required to deliver the strategy
and complying with relevant requirements be they legal or
otherwise. We undertake a formal board effectiveness review each
year.
In order to promote best practice, each of the relevant
committee meetings are now chaired by one of the Non-executive
directors; Andrew Andrea chairs the Audit Committee, Angela Luger
the Nomination Committee and Clare Askem the Remuneration
Committee.
Environmental, Social and Governance (ESG)
We are focused on doing business ethically and sustainably - for
our shareholders, the environment, our people, our customers, our
suppliers and the communities we operate in. The Group has a long
history of innovation and a strong track record of continual
improvements in ESG.
We have made a very conscious decision to go beyond minimum
compliance with our ESG requirements and push our progress to a
more targeted, deliverable strategy. Throughout 2021, we worked to
better understand the materiality of our impacts and to make
well-informed choices in focusing our resources and efforts to
deliver tangible strides towards a more sustainable world. We have
made significant progress in recent years in reducing our energy
usage, reducing carbon emission per tonne of sales product by 12%
over 2020, and are committed and look forward to publishing our
ambitions in key areas later this year. We are dedicated to
delivering further significant improvements in energy consumption
and carbon emissions in the coming years.
Our commitment to our people, ethics and governance are
unfaltering, supported by our policies and processes. Further
details on our corporate culture and its integration within the
Group can be found on our website, www.portmeiriongroup.com, and in
our annual report and accounts in the Section 172(1) statement -
Engaging with key stakeholders to deliver long term success, in the
Our commitment to ESG section and the Corporate Governance
Statement.
We are again immensely proud of and thankful to all our people
and teams for their commitment and hard work throughout 2021. Our
results, safety records and staff well-being are testimony to all
their efforts.
The Group is a committed member of the Quoted Companies Alliance
("QCA") and has chosen to apply the QCA Corporate Governance Code
as the most appropriate for our size and structure. We have
complied with the principles of the QCA code throughout 2021 and
continue to do so. Further details of our approach to governance
can be found on our website and in our annual report and accounts.
The Board consider our governance procedures to be appropriate for
a company of our size, however we are always open to improvement
and welcome feedback from shareholders.
Operational Overview
Revenue for the Group increased by 21% to GBP106.0 million
(2020: GBP87.9 million).
The US is our largest geographical market representing 40% of
Group sales. In translated figures, sales in the US increased by
27% to GBP42.5 million (2020: GBP33.5 million) due to the benefit
of increased online channel sales and successful product range
extensions. Sales of our ever popular Spode Christmas Tree range,
loved for generations as part of the ritual of family seasonal
celebrations, grew strongly as we reached ever more customers
through online sales and new extensions to the range.
Our UK market is our second largest market and in 2021 accounted
for 31% of Group sales at GBP32.9 million (2020: GBP31.8 million),
an increase of 3% over the prior year. Excluding the sales of hand
sanitiser in 2020 in response to the Covid-19 pandemic, UK market
sales increased by 14%.
As previously reported, we took action in 2019 and 2020 to
reduce levels of parallel shipping into our South Korean market,
enabling overstocks to subside. This allowed for a much more robust
and sustainable level of sales in 2021, with good sell through to
the end consumer. Sales into South Korea were GBP18.7 million (2020
GBP13.1 million, 2019: GBP20.8 million). We are pleased that the
steps we took to stabilise this important market have been
successful and we expect to see growth from a much more solid base
in the coming years.
Products and brands
Our brands and product ranges are key assets and a major
economic driver for the Group. Our six major brands - Portmeirion,
Spode, Wax Lyrical, Nambé, Royal Worcester and Pimpernel - have
over 750 years of combined history and are sold across the world.
Their design and appeal are timeless and are much loved in homes
around the world.
We see significant potential to grow the sales footprints of our
brands in the future and have developed more structured roadmaps in
the past 18 months to help deliver on this potential. Our roadmaps
include developing our heritage ranges such as Portmeirion Botanic
Garden and Spode Christmas Tree as well as more contemporary ranges
and licensed collaboration ranges. We are fortunate, in Spode
Christmas Tree and Portmeirion Botanic Garden, to have two of the
most successful and long selling ranges in the global tableware
category.
Portmeirion Botanic Garden was first launched in 1972 and
remains our largest selling range. We estimate there are over 50
million pieces of Botanic Garden in use worldwide today and there
is a strong repeating sales element. To mark its 50th year in 2022
we will be launching new range extensions to further support and
grow the appeal and longevity of this historic range.
The brand work we have done should allow us to accelerate and
leverage our brand portfolio across our diversified sales channels
and markets. We are pleased to see the early benefits of our work
in 2021. Our Spode brand, which celebrated its 250th anniversary in
2020, grew strongly in 2021, with sales up 30% on 2020 (up 33% on
2019). Key drivers included new product development and line
extensions within the ever popular Spode Christmas Tree range, new
contemporary range launches and the benefit of increased
availability on online channels. Similarly sales in our Pimpernel
brand were up 28% and 26% on a two year basis.
Strategic areas of focus
Our commercial strategy is focused on reaching more customers on
more occasions through:
-- developing online sales channels;
-- building new markets and geography;
-- new product launches/new categories; and
-- leveraging our brands more effectively.
Our operating strategy supports our commercial strategy and is
to build additional capabilities and increased
efficiency/productivity in everything we do.
As a result, our twin financial goals are:
1. consistent and sustainable sales growth; and
2. improved operating margins, thereby converting sales more effectively into profit.
We have continued increased investment in these strategic areas
despite the short-term challenges of Covid-19, as we believe this
will enable the Group to prosper in the long-term.
As a result, the strategic capabilities of the business have
taken a huge step forward in the past eighteen months. We have
significantly expanded our online sales and digital marketing teams
and re-organised our core market and export sales teams to more
effectively leverage our brands.
As we increasingly reach more end customers directly, we are
able to build an ever stronger emotional affinity for our brands
and products and get much improved feedback that helps us curate
our ranges and design tomorrow's products more effectively.
We are heavily investing in automation in our factories and
warehouses, building further capacity and efficiencies in
production and increasing our drop ship online warehouse fulfilment
capabilities.
DRIVING SALES GROWTH THROUGH REACHING MORE CUSTOMERS ON MORE
OCCASIONS
1. Developing online sales channels
Our brands are known and loved around the world. There is a huge
opportunity to reach more potential customers through online
channels including our own branded websites. The benefit of
building an increasingly direct relationship with the end consumer
allows us to continue to communicate after the first purchase,
building a long term relationship with the customer. Increasingly
we see potential customers searching for 'our brand names' when
searching online for products within the categories we operate in.
This affinity for our brands and what they stand for is an
important point of difference that we can leverage further as we
develop our web systems, data and analytics.
We have continued to invest through 2021 in improving our
website sales platforms and digital marketing assets. In the UK and
US we have established web sales platforms for all our core brands.
Website sales increased by 16% in 2021, building on the significant
growth we achieved in 2020 when retail stores were shut for much of
the year. On a two year basis, our own website sales are up 81%.
For our two core markets in the UK and US, sales through all online
channels (including third party retailer websites) increased to 50%
for the first time (2020: 47%, 2019: 30%).
In addition, we have built extra warehouse capacity for
online/drop ship order fulfilment that, for the UK, will allow us
to ship approximately double the number of direct to consumer
parcels per day in the second half of 2022.
We have an ongoing roadmap of development to further boost our
online sales and digital marketing for all our brands. In 2022, we
expect to launch new websites in the UK, building on the website
re-platforming project we executed in the US in 2020. We are also
working on improved CRM and launching Customer VIP club programmes
in 2022.
2. Building new markets and geography
Our products are sold in more than 70 countries around the
world, however, our three largest markets of the UK, US and South
Korea account for 89% of all Group sales.
We restructured our international sales teams in 2020 with a
focus on developing more sizeable rest of world markets over the
next three to five years.
We are pleased to report early positive results with our rest of
world sales growing by 27% in 2021 and we expect to see further
strong growth in the next three years. In 2021, we appointed a new
distributor for all our brands in China and we are excited to work
with them on developing new customers in this region. We have also
seen good growth in 2021 in a number of other markets including
Australia and Scandinavia.
3. New product launches
Developing and launching new products and extending existing
ranges is a key strategic driver for sales growth. We have
implemented new global processes for product development and launch
and have a future pipeline of development going out two years.
In 2021 we managed to keep our product launch programmes on
track despite ongoing disruption to supply chains and sales markets
from Covid-19. This included a new Sophie Conran for Portmeirion
tableware range, extensions to our ever popular Spode Christmas
Tree range, a new Spode range: Creatures of Curiosity and new
ranges for our Wax Lyrical and Nambé brands.
Part of our strategic focus in this area is to see an improved
sales contribution from new product launches. In 2021, new products
launched (within the last 12 months) generated over 10% of total
Group sales. In 2022 we celebrate the 50th anniversary of
Portmeirion Botanic Garden and will be launching new products under
this range as well as substantial new launches across our other
brands.
We continue to focus on changing and improving packaging formats
for our products to enhance our customer proposition for online
channels.
4. Leveraging our brands more effectively
Telling the story to the end consumer of what our brands and
product ranges stand for, increasingly in online channels,
represents a significant opportunity for the Group. We have
increased resource, brand marketing and digital marketing spend
over the past two years and this will continue to support our
growth ambitions - and allow us to reach more potential end
customers on more occasions than ever before.
We are looking to leverage the Group's infrastructure more
effectively across all our consumer brands including the more
recent acquisitions: Wax Lyrical and Nambé.
In 2021, we combined UK sales teams across our tableware brands
and home fragrance division to allow more effective sales
synergies.
Nambé brand sales increased by 23% to record a five year high
despite ongoing disruption from Covid-19 to sales markets through
increased distribution, including online and better stock
availability.
Home fragrance sales, excluding hand sanitiser ranges
(production started in 2020 in reaction to the pandemic), grew by
5% in 2021. Our Wax Lyrical brand has been impacted by Covid-19
enforced retail closures for much of 2020 and 2021, however, we
expect to see a return to growth in 2022 as restrictions are
lifted.
In addition, we now produce home fragrance products under our
Sophie Conran for Portmeirion and Royal Worcester Wrendale Designs
tableware ranges. In 2022, we also expect to launch home fragrance
products as an extension to our hugely successful Portmeirion
Botanic Garden range as part of our celebrations of Botanic
Garden's 50th year.
All of our brands grew in 2021 and we are pleased to see the
early and positive signs from our efforts to leverage our brands
more effectively, with Spode and Pimpernel sales up 33% and 26%
respectively on a two year basis.
BUILDING OUR OPERATIONAL CAPABILITIES AND EFFICIENCIES
In order to support our growth and to deliver higher operating
margins, the Group has a clear plan to deliver increased production
capacity, improved productivity, lower costs per unit and increased
capabilities.
We have increased capital investment in our operations in the
past 24 months. In our Stoke-on-Trent manufacturing facility we
have designed new automation that will add capacity and lower costs
and reliance on manual labour. Despite delays in final assembly of
robotics due to the global shortage in silicon chips, a number of
these projects went live in late 2021 and early 2022. Further
investments are in progress for 2022 and 2023. As well as
delivering much increased levels of production output these
investments will also support our goal of reducing our cost per
unit by at least 10%.
In our home fragrance manufacturing site, in Cumbria, we
completed the build of a new hand and body liquid production
facility in the second half of 2021. This facility will add
capacity for production of core existing ranges of reed diffusers
and also allow the production and sales of hand and body liquid
soaps for the first time.
The experience and skills of our operations and supply chain
teams shone through 2021 as the business successfully coped with
the immense disruption to global supply chains and container
freight shipping. The fact that the business had a very strong
Christmas trading period, resulting in a record sales year for the
Group, is a testament to the immense efforts and experience of our
teams.
We have a roadmap for increasing warehouse capacity for drop
ship/online order fulfilment in both our key UK and US markets. The
first phase of this - building a large mezzanine floor extension in
our UK warehouse - was completed in Q4 2021 and will support
expected online sales growth in 2022.
In 2021, we continued to focus on improved procurement to drive
efficiencies in spending. In the first half of the year we also
extended our long term energy hedging programme to Q1 2024,
insulating the Group against the current volatility in energy
prices.
Outlook
We are pleased with the progress we have made in 2021 - not only
navigating the ongoing challenges of Covid-19 as evidenced by our
record sales performance but also our continued track record on
execution of our long term strategy.
We remain cognisant of ongoing economic uncertainty, in
particular the challenges to the consumer of the rising costs of
living including energy and fuel costs, and the ongoing impact of
the war in Ukraine. Likewise that it will take time for global
supply chains and container freight costs to stabilise following
Covid-19 and return to some sort of normality. We have long term
energy contracts in place until early 2024 that will protect the
business in the short term from increased energy costs but are
watchful that consumers around the world will require a period of
adjustment to the inflationary pressures in everyday spend.
However, we believe our investments in our brands, digital and
online presence and increasingly diversified sales channels and
geography will enable us to more than offset the afore-mentioned
challenges and continue to grow in 2022 and over the coming years.
Our operational investments in 2021 will enable growth in
production output and productivity in 2022 which, together with our
proven supply chain , should provide a solid foundation for future
progress, including further opportunities to improve margin.
We have a strong balance sheet, positive cash flow and a clear
and focused strategy which we believe will enable us to grow
profitably over the short and medium term.
Dick Steele Mike Raybould
Non-executive Chairman Chief Executive
This announcement contains inside information for the purposes
of the retained UK version of the EU Market Abuse Regulation No
596/2014 (UK MAR).
ENQUIRIES:
Portmeirion Group PLC:
Mike Raybould, Chief Executive +44 (0) 1782 mraybould@portmeiriongroup.com
743 443
David Sproston, Group Finance +44 (0) 1782 dsproston@portmeiriongroup.com
Director 743 443
Hudson Sandler:
Dan de Belder +44 (0) 207 796 ddebelder@hudsonsandler.com
4133
Nick Moore nmoore@hudsonsandler.com
Panmure Gordon +44 (0) 207 886
(Nominated Adviser and Broker): 2500
Freddy Crossley Corporate Finance
Rupert Dearden Corporate Broking
Singer Capital Markets +44 (0) 207
(Joint Broker): 496 3000
Peter Steel / Asha Chotai Investment Banking
Rachel Hayes
Financial Review
Following the challenging backdrop of disruption and lockdowns
of 2020, the year started with the UK back in lockdown and
significant inflation and disruption to both supply chains and
labour markets.
Set against this, the Group continued to invest in our strategy,
confident in our ability to generate growth and make progress
against our strategic targets.
We saw ongoing demand for our brands, growing well across all
key geographical markets and further increases in online channel
sales.
Revenue
Revenue for the year ended 31 December 2021 totalled GBP106.0
million, an increase of 21% over the prior year (2020: GBP87.9
million) and is now 14% above pre-pandemic levels (2019: GBP92.8
million).
The Group has benefited from additional sales from recent
acquisitions; Nambé was acquired in July 2019 and Portmeirion
Canada was fully acquired in August 2020. On a like-for-like basis
revenue was 19% ahead of 2020.
Sales in our US market are translated from US dollars into
sterling at the average daily exchange rate. In 2021, sterling was
stronger against the US dollar than in 2020, therefore at a
constant currency rate the Group's like-for-like sales would have
been 22% higher.
Geographical sales performance was strong overall and we saw
growth across our three key markets of the US, UK and South
Korea.
The UK and US markets both achieved record sales levels, driven
by online where 50% of sales in these markets were via online
channels (2020: 47%, 2019: 30%).
In South Korea, sales increased by 43% to GBP18.7 million (2020:
GBP13.1 million) as consumer demand recovered from the prior year.
We remain confident that this is a sustainable base from which we
can grow sales going forward.
Rest of the world markets increased by 27% to GBP12.0 million
(2020: GBP9.4 million). This was driven by strong sales in Canada
following the acquisition of the remaining 50% of our distribution
partner in 2020.
Profit
Headline profit before taxation(1) was GBP7.2 million, a
significant improvement over the 2020 level of GBP1.4 million and
broadly in line with the pre-pandemic level in 2019 of GBP7.4
million. Statutory profit before taxation was GBP6.0 million (2020:
loss before taxation GBP0.2 million, 2019: profit before taxation
GBP7.1 million).
This strong profit performance was despite ongoing disruption
within a number of our key sales markets.
In the UK, retail stores were closed for the first quarter of
the year, and in Canada for much of the first half of the year.
This restricted sales channels, although we were able to compensate
for these shortfalls due to strong trading performance elsewhere,
including online sales in the UK and US.
The well-publicised supply chain inflation and delays impacted
our markets around the world, with container freight rates at five
times 2019 levels.
Covid-19 restrictions and isolation periods also impacted
absence rates in our factories and warehouses, which in turn
disrupted sales fulfilment and production efficiency.
Set against these significant challenges, the Group managed this
disruption incredibly well and delivered a record sales
performance, with profit before taxation in line with 2019
levels.
(1) Headline profit before taxation excludes exceptional items -
see note 4.
Interest and financing costs
Finance costs for the Group decreased by GBP0.1 million to
GBP0.6 million (2020: GBP0.7 million) due to reduced borrowing
facilities as long term loans were repaid.
We expect to see finance costs continue to reduce as long term
loans are repaid.
Taxation
The charge for taxation for the year was GBP2.7 million (2020:
GBP0.5 million). The increased charge is due to the improved profit
performance over the prior year and the one-off impact of the
change in UK corporation tax rate from 19% to 25% which caused a
deferred tax charge of GBP1.1 million.
Dividends
The Board proposes a final dividend of 13.00p per share (2020:
GBPnil) giving a total dividend for the year of 13.00p (2020:
GBPnil). The final dividend is expected to be paid on 26 May 2022
to shareholders on the register on 22 April 2022 with an
ex-dividend date of 21 April 2022.
We are reintroducing the dividend at a cover of three times in
order to balance our ongoing investment behind our growth strategy
with providing a positive return to shareholders.
Cash generation and net debt
At 31 December 2021, the Group had a net cash balance of GBP0.7
million (comprising cash and cash equivalents of GBP7.6 million
less borrowings of GBP6.9 million). This compares to a net cash
balance of GBP0.7 million at the prior year end.
The Group continues to be cash generative; operating cash
generated was GBP8.7 million (2020: GBP8.7 million) despite the
increased cost of inventory due to container freight prices.
The positive operating cash flows allowed the Group to continue
to invest behind our strategic goals; net capital expenditure was
GBP4.6 million in the year (2020: GBP2.8 million). This included
the new hand and body line extension at our home fragrance factory
in the Lake District, factory automation investments in our
Stoke-on-Trent ceramic factory and a new mezzanine floor at our
main UK distribution site.
Bank facilities
The Group has agreed debt facilities with Lloyds Bank which
totalled GBP22 million at the balance sheet date. This consists of
a GBP10 million revolving credit facility available until February
2025, a GBP5 million overdraft on an annual renewal cycle and a
GBP10 million term loan repayable by January 2025 of which GBP7
million was outstanding at the year end. The overdraft and
revolving credit facilities were not being utilised at 31 December
2021.
Our business remains seasonal due to the second half weighting
of our sales. We therefore experienced, in common with previous
years, a working capital swing of around GBP8 million during the
year as we built inventory to match our sales demand. At the year
end we had available cash and borrowing headroom of GBP22.6
million. We believe our committed funding lines more than
adequately addresses this seasonal dynamic and is prudent.
Assets and liabilities
We had a net working capital outflow of GBP2.3 million which was
driven by increased inventory over the prior year. Increased
receivable balances were largely offset by increased payable
balances due to an increase in year on year trading activity.
Our inventory balance increased to GBP29.2 million (2020:
GBP27.3 million) which was predominantly caused by supply chain
inflation due to increased raw material and finished goods prices
inflating the cost of goods. We continue to monitor supply chain
disruption and the impact it may have on our inventory costs and
lead times.
We continue to make contributions to our closed defined benefit
pension scheme and paid GBP1.35 million during the year, with
agreed contributions of GBP0.9 million for 2022.
At the 2020 year end we had an accounting deficit of GBP2.7
million which had increased due to a fall in the discount rate used
to calculate scheme liabilities, which is based on corporate bond
yields.
As yields have recovered following the pandemic, we now have a
GBP0.9 million pension surplus under IAS 19. We continue to
evaluate ways to de-risk the volatility in the scheme, with a
medium term aim to reach low-dependency.
At the year end we held treasury shares with a book value of
GBP0.4 million in order to satisfy employee share option schemes,
which had been bought at an average price of GBP1.87 per share,
equating to 218,645 shares, having used 8,330 during the year. In
addition, we also hold 234,523 shares in The Portmeirion Employees'
Share Trust. These shares have a book value of GBP2.7 million,
having been bought at an average cost of GBP11.58 each. The balance
of these shares did not move during the year.
Goodwill and intangible assets on our balance sheet largely
represent the value of the acquired brands of Spode, Royal
Worcester, Wax Lyrical and Nambé, as well as computer software
investment including our online webstore and associated
infrastructure. The balance of intangible assets increased during
the year as we continued to invest in our UK and US websites and
systems.
Treasury and risk management
The impact of transactional currency flows on the Group's profit
is not material due to the natural matching of revenue and costs
across our global businesses. In the year sterling strengthened
against both the US dollar and euro, but this had no material
impact on Group profit.
When any anticipated exposure arises, our policy is to use
appropriate hedging instruments to mitigate that risk. We have a
robust approach to managing risk to deliver our strategy as
explained in our annual report and accounts.
David Sproston
Group Finance Director
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2021
2021 2020
Notes GBP'000 GBP'000
Revenue 3 106,018 87,854
Operating costs before exceptionals (98,375) (85,661)
--------------------------------------------- ------ ---------- ---------
Headline operating profit(1) 7,643 2,193
Exceptional items 4
- restructuring costs (1,036) (1,288)
- acquisition costs - (104)
- share issue costs - (55)
- Covid-19 costs - (176)
- GMP equalisation (197) -
Operating profit 6,410 570
Interest income 12 13
Finance costs 5 (580) (740)
Profit on sale of fixed assets 120 -
Share of results of associated undertakings - (75)
Headline profit before tax(1) 7,195 1,391
Exceptional items 4
- restructuring costs (1,036) (1,288)
- acquisition costs - (104)
- share issue costs - (55)
- Covid-19 costs - (176)
- GMP equalisation (197) -
Profit/(loss) before tax 5,962 (232)
Tax (2,721) (503)
--------------------------------------------- ------ ---------- ---------
Profit/(loss) for the year attributable
to equity holders 3,241 (735)
--------------------------------------------- ------ ---------- ---------
Earnings per share 2
Basic 23.58p (6.02)p
Diluted 23.49p (6.02)p
--------------------------------------- ------- --------
Headline earnings per share(1) 2
Basic 38.85p 4.96p
Diluted 38.71p 4.95p
--------------------------------------- ------- --------
Dividends proposed and paid per share 6 13.00p 0.00p
--------------------------------------- ------- --------
All the above figures relate to continuing operations.
(1) Headline operating profit is statutory operating profit of
GBP6,410,000 (2020: GBP570,000) add exceptional items of
GBP1,233,000 (2020: GBP1,623,000). Headline profit before tax is
statutory profit before tax of GBP5,962,000 (2020: GBP232,000 loss
before tax) add exceptional items of GBP1,233,000 (2020:
GBP1,623,000).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
Profit/(loss) for the year 3,241 (735)
--------------------------------------------------- --------- ---------
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement of net defined benefit
pension scheme liability 2,505 (3,208)
Deferred tax relating to items that will
not be reclassified subsequently to profit
or loss 267 843
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of
foreign operations 64 (525)
Deferred tax relating to items that may
be reclassified subsequently to profit
or loss 45 (26)
--------------------------------------------------- --------- ---------
Other comprehensive income/(loss) for
the year 2,881 (2,916)
--------------------------------------------------- --------- ---------
Total comprehensive income/(loss) for
the year attributable to equity holders 6,122 (3,651)
--------------------------------------------------- --------- ---------
CONSOLIDATED BALANCE SHEET
31 December 2021
2021 2020
GBP'000 GBP'000
Non-current assets
Goodwill 8,978 8,978
Intangible assets 7,126 6,976
Property, plant and equipment 14,398 12,197
Right-of-use assets 6,409 6,910
Pension scheme surplus 910 -
Deferred tax asset - 119
Total non-current assets 37,821 35,180
-------------------------------- --------- ---------
Current assets
Inventories 29,224 27,313
Trade and other receivables 19,243 15,269
Current income tax asset 662 579
Cash and cash equivalents 7,616 11,590
Total current assets 56,745 54,751
-------------------------------- --------- ---------
Total assets 94,566 89,931
-------------------------------- --------- ---------
Current liabilities
Trade and other payables (16,245) (12,601)
Lease liabilities (1,695) (2,143)
Borrowings (1,986) (3,972)
Total current liabilities (19,926) (18,716)
-------------------------------- --------- ---------
Non-current liabilities
Pension scheme deficit - (2,721)
Deferred tax liability (2,609) (738)
Lease liabilities (5,119) (5,096)
Borrowings (4,965) (6,951)
Total non-current liabilities (12,693) (15,506)
-------------------------------- --------- ---------
Total liabilities (32,619) (34,222)
-------------------------------- --------- ---------
Net assets 61,947 55,709
-------------------------------- --------- ---------
Equity
Called up share capital 710 710
Share premium account 18,344 18,344
Investment in own shares (3,124) (3,140)
Share-based payment reserve 128 152
Translation reserve 1,186 1,077
Retained earnings 44,703 38,566
-------------------------------- --------- ---------
Total equity 61,947 55,709
-------------------------------- --------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Share-based
Share Investment payment
Share premium in own reserve Translation Retained
capital account shares GBP'000 reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2020 555 7,310 (3,146) 87 1,628 41,664 48,098
------------------------ ---------- ---------- ------------- ------------ -------------- ----------- ----------
Loss for the year - - - - - (735) (735)
Other comprehensive
loss for the year - - - - (551) (2,365) (2,916)
------------------------ ---------- ---------- ------------- ------------ -------------- ----------- ----------
Total comprehensive
loss for the year - - - - (551) (3,100) (3,651)
Unclaimed dividends
written back - - - - - 4 4
Issue of own shares 155 11,074 - - - - 11,229
Cost of issue
of own shares - (40) - - - - (40)
Increase in share-based
payment reserve - - - 86 - (21) 65
Transfer on exercise
or lapse of options - - - (21) - 21 -
Shares issued
under employee
share schemes - - 6 - - (6) -
Deferred tax on
share- based payment - - - - - 4 4
------------------------ ---------- ---------- ------------- ------------ -------------- ----------- ----------
At 1 January 2021 710 18,344 (3,140) 152 1,077 38,566 55,709
------------------------ ---------- ---------- ------------- ------------ -------------- ----------- ----------
Profit for the
year - - - - - 3,241 3,241
Other comprehensive
income for the
year - - - - 109 2,772 2,881
------------------------ ---------- ---------- ------------- ------------ -------------- ----------- ----------
Total comprehensive
income for the
year - - - - 109 6,013 6,122
Increase in share-based
payment reserve - - - 64 - - 64
Transfer on exercise
or lapse of options - - - (88) - 88 -
Shares issued
under employee
share schemes - - 16 - - (16) -
Deferred tax on
share- based payment - - - - - 52 52
------------------------ ---------- ---------- ------------- ------------ -------------- ----------- ----------
At 31 December
2021 710 18,344 (3,124) 128 1,186 44,703 61,947
------------------------ ---------- ---------- ------------- ------------ -------------- ----------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
Operating profit 6,410 570
Adjustments for:
Depreciation of property, plant and equipment 1,652 1,634
Depreciation of right-of-use assets 1,933 2,037
Amortisation of intangible assets 698 848
Charge for share-based payments 64 65
Charge for GMP equalisation 197 -
Exchange gain/(loss) 36 (100)
Loss on sale of tangible fixed assets 17 12
Operating cash flows before movements in working
capital 11,007 5,066
(Increase)/decrease in inventories (2,071) 171
(Increase)/decrease in receivables (3,960) 4,398
Increase/(decrease) in payables 3,707 (913)
Cash generated from operations 8,683 8,722
Contributions to defined benefit pension scheme (1,350) (900)
Interest paid (368) (497)
Income taxes paid (461) (125)
------------------------------------------------------ --------- ---------
Net cash inflow from operating activities 6,504 7,200
------------------------------------------------------ --------- ---------
Investing activities
Interest received 12 12
Purchase of property, plant and equipment (4,511) (2,556)
Proceeds from disposal of property, plant and
equipment 786 -
Purchase of intangible assets (843) (196)
Acquisition of subsidiary - (541)
Net cash outflow from investing activities (4,556) (3,281)
------------------------------------------------------ --------- ---------
Financing activities
Equity dividends paid - -
Issue of own shares - 11,229
Costs taken directly through reserves - (40)
New bank loans raised - 5,000
Principal elements of lease payments (1,927) (2,084)
Repayments of borrowings (4,000) (7,581)
Net cash (outflow)/inflow from financing activities (5,927) 6,524
------------------------------------------------------ --------- ---------
Net (decrease)/increase in cash and cash equivalents (3,979) 10,443
Cash and cash equivalents at beginning of year 11,590 1,151
Effect of foreign exchange rate changes 5 (4)
------------------------------------------------------ --------- ---------
Cash and cash equivalents at end of year 7,616 11,590
------------------------------------------------------ --------- ---------
NOTES TO THE PRELIMINARY RESULTS
1. This announcement was approved by the Board of Directors on 16 March 2022.
1.1 The financial information set out above does not constitute
the Company's statutory accounts for the years ended 31 December
2021 or 2020, but is derived from those accounts. Statutory
accounts for 2020 have been delivered to the Registrar of Companies
and those for 2021 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those accounts:
their reports were unqualified, did not draw attention to any
matters by way of emphasis and did not contain a statement under
Sections 498(2) or (3) of the Companies Act 2006.
1.2 For the year ended 31 December 2021 the Group has prepared
its annual report and accounts in accordance with accounting
standards in conformity with the requirements of the Companies Act
2006 (International Financial Reporting Standards).
This financial information has been prepared in accordance with
the accounting policies stated in the Group's financial statements
for the year ended 31 December 2021.
The financial statements have been prepared on the historical
cost basis, with the exception of derivative financial instruments
which are stated at their fair value.
1.3 At the year end the Group had net cash of GBP0.7 million
(comprising cash and cash equivalents of GBP7.6 million less
borrowings of GBP6.9 million) and had unutilised bank facilities
with available funding of GBP15.0 million. Operating cash
generation was strong during the year at GBP8.7 million (2020:
GBP8.7 million).
The Group sells into over 70 countries worldwide and has a
spread of customers and sales channels within its major UK and US
markets with adequate credit insurance cover in export markets
where required. The Group manufactures approximately 40% of its
products and sources the remainder from a range of third-party
suppliers.
Following the negative impact on trading in 2020 caused by the
Covid-19 pandemic, the Group's performance rebounded strongly
despite ongoing disruption in key sales markets and to supply chain
and labour markets. However, the Group is well diversified and
retains a strong balance sheet with significant funding headroom
available.
The Group has also produced a sensitivity analysis to its cash
flow forecast based upon current trading conditions, including the
impact of the current war in Ukraine, and to allow for further
potential impact of Covid-19; this demonstrated the Group still has
sufficient headroom within borrowing facilities.
After making enquiries and reviewing budgets and forecasts for
the Group, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the annual
report and accounts.
NOTES TO THE PRELIMINARY RESULTS
Continued
2. Earnings per share
The calculation of basic and diluted earnings per share is based
on the following data:
2021 2020
Weighted Weighted
average average
number Earnings number Earnings
Earnings of per share Earnings of per share
GBP'000 shares (pence) GBP'000 shares (pence)
Basic earnings
per share 3,241 13,747,450 23.58 (735) 12,208,723 (6.02)
Effect of dilutive
securities: - 49,235 - - - -
employee share
options
-------------------- --------- ----------- ----------- --------- ----------- -----------
Diluted earnings
per share 3,241 13,796,685 23.49 (735) 12,208,723 (6.02)
-------------------- --------- ----------- ----------- --------- ----------- -----------
2021 2020
Weighted Weighted
average average
number Earnings number Earnings
Earnings of per share Earnings of per share
GBP'000 shares (pence) GBP'000 shares (pence)
Headline basic
earnings per
share 5,341 13,747,450 38.85 605 12,208,723 4.96
Effect of dilutive
securities:
employee share
options - 49,235 - - 8,335 -
-------------------- --------- ----------- ----------- --------- ----------- -----------
Headline diluted
earnings per
share 5,341 13,796,685 38.71 605 12,217,058 4.95
-------------------- --------- ----------- ----------- --------- ----------- -----------
The calculation of basic and diluted headline earnings per share
is based on the following data:
2021 2020
GBP'000 GBP'000
Profit/(loss) for the year attributable to
equity holders 3,241 (735)
Add back/(deduct):
Exceptional items 1,233 1,623
Tax effect of exceptional items (223) (283)
Exceptional impact of remeasuring deferred 1,090 -
tax balances from 19% to 25%
Headline earnings 5,341 605
------------------------------------------------ --------- ---------
NOTES TO THE PRELIMINARY RESULTS
Continued
3. Segmental analysis
The following tables provide an analysis of the Group's revenue
by operating segment and geographical market, irrespective of the
origin of the products:
2021 2020
Operating segment GBP'000 GBP'000
UK 59,686 52,918
North America 46,332 34,936
106,018 87,854
------------------- --------- ---------
2021 2020
Geographical market GBP'000 GBP'000
United Kingdom 32,871 31,845
United States 42,492 33,493
South Korea 18,680 13,071
Rest of the World 11,975 9,445
--------------------- --------- ---------
106,018 87,854
--------------------- --------- ---------
4. Exceptional items
Exceptional items by type are as follows:
2021 2020
GBP'000 GBP'000
Restructuring costs 1,036 1,288
Acquisition costs - 104
Share issue costs - 55
Covid-19 costs - 176
GMP equalisation costs 197 -
1,233 1,623
------------------------ --------- ---------
5. Finance costs
2021 2020
GBP'000 GBP'000
Interest paid 361 561
Interest on lease liabilities 192 179
Net interest expense on pension scheme 27 -
asset
580 740
---------------------------------------- --------- ---------
NOTES TO THE PRELIMINARY RESULTS
Continued
6. Dividends
The Directors recommend that a final dividend for 2021 of 13.00p
(2020: GBPnil) per ordinary share be paid. The final dividend will
be paid, subject to shareholders' approval, on 26 May 2022, to
shareholders on the register at the close of business on 22 April
2022. This dividend has not been included as a liability in these
financial statements.
7. Reconciliation of earnings before interest, tax, depreciation
and amortisation (EBITDA)
2021 2020
GBP'000 GBP'000
Operating profit 6,410 570
Add back:
Depreciation 3,585 3,671
Amortisation 698 848
Earnings before interest, tax, depreciation
and amortisation 10,693 5,089
--------------------------------------------- --------- ---------
8. Government grants
Government grants were receivable as part of Government
initiatives to provide financial support as a result of Covid-19
lockdowns. There are no future related costs in respect of these
grants which are receivable solely as compensation for past
expenses.
The Group received funding from the UK Government's 'Coronavirus
Job Retention Scheme' and retail support grants, the US
Government's 'Paycheck Protection Programme' and the Canadian
Government's 'Emergency Wage Subsidy'. In total this support
amounted to GBP316,000 (2020: GBP3,475,000) and is included as a
credit within operating costs.
9. Post balance sheet events
Subsequent to the year end, the Group agreed an extension to its
existing GBP10,000,000 revolving credit facility until February
2025.
10. Availability of annual report and accounts
The accounts for the year ended 31 December 2021 will be posted
to shareholders on or before 1 April 2022 and laid before the
Company at the Annual General Meeting on 19 May 2022. Copies will
be available from the Company Secretary at Portmeirion Group PLC,
London Road, Stoke-on-Trent, Staffordshire, ST4 7QQ, or from the
website www.portmeiriongroup.com.
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END
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March 17, 2022 03:00 ET (07:00 GMT)
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