TIDMPMP

RNS Number : 6397L

Portmeirion Group PLC

14 September 2021

14 September 2021

PORTMEIRION GROUP PLC

('the Group')

Interim results for the six months ended 30 June 2021

Excellent first half performance driven by success of online strategy

Portmeirion Group PLC, the designer, manufacturer and worldwide distributor of high quality homewares under the Portmeirion, Spode, Royal Worcester, Pimpernel, Wax Lyrical and Nambé brands, is pleased to announce its results for the six months ended 30 June 2021.

Portmeirion experienced excellent trading in the first half with year-on-year sales growth of 35%. Furthermore, the business has not only recovered to its pre-pandemic levels but is now exceeding them with sales up 24% compared to two years ago in H1 2019.

Headlines

Financial

 
 --   Record Group revenue of GBP43.1 million, an increase of 35% over the 
       prior year (2020: GBP32.0 million) and 24% over pre Covid-19 levels 
       (2019: GBP34.9 million). 
 --   Like-for-like sales in constant currency up 7% against 2019 ("YO2Y"), 
       ahead of pre Covid-19 levels despite ongoing disruptions, showing 
       the strength of consumer demand and progress with our online strategy. 
 --   Headline profit before tax(1) was GBP1.5 million (2020: loss before 
       tax GBP2.7million, 2019: profit before tax GBP0.5 million). 
 --   Continued strong online sales growth which increased by 15% on a constant 
       currency basis over 2020 with gross margin improvement of +900bps 
       and 124% growth YO2Y. 
 --   Earnings per share up to 9.12p per share (2020: loss per share 20.71p, 
       2019: earnings per share 3.96p). 
 --   Strong balance sheet maintained and significant headroom within current 
       borrowing facilities. 
 --   Dividends to be resumed for FY21. 
 --   Following a strong first half of the year and with an expanding global 
       order book, the Group remains confident of achieving market expectations 
       for FY21. 
 

Operational

 
 --   Good progress in developing online and digital capabilities, including 
       further investment in online platforms and fulfilment capabilities. 
 --   Strong growth (57% against 2020, 4% YO2Y) in key South Korean market 
       following successful period of management action and focus on stabilisation 
       of stock levels. Growth expected to continue in H2. 
 --   Completed a number of automation investments in UK ceramic factory 
       which will increase capacity to underpin future sales growth and margin 
       improvements. 
 --   Successful expansion of home fragrance brand portfolio at Wax Lyrical; 
       new factory line now producing hand and body care ranges, with first 
       products shipping in the third quarter of the year. 
 --   New product launches including Sophie Conran for Portmeirion and Spode 
       Creatures of Curiosity. 
 --   Our UK businesses both achieved Investor in People (IIP) Platinum 
       accreditation in recognition of our commitment to leading, supporting 
       and improving our workforce. 
 

(1) Headline profit/(loss) before tax excludes exceptional items - see note 3.

Mike Raybould, Chief Executive, commented:

"We have seen strong trading in the first half of the financial year, including a significant benefit from the focus on our online transformation strategy. Since the period end trading has continued that trend into the first two months of the second half of the financial year. Looking forward we continue to have a strong order book across our key markets. While we are cognisant of the ongoing, widely reported disruption and volatility in global supply chains we are confident the accelerated strategic investments we are making across our business will enable a strong path of growth in the next few years.

Our products are much loved by our customers around the world and this is borne out by the speed of recovery in demand we are seeing across our key markets. Our brands are well known for their high-quality design and manufacture and, in addition, we now have a huge opportunity to deepen the direct relationship we have with the end consumer as well as attracting new direct customers, as we grow the percentage of sales made through our own digital channels.

The investments we are making across all parts of our business underpin our strategic commitment to better serve our end consumer. These include building significant new in-house digital/online expertise, improvements to front and back end web systems and increasing direct to consumer order fulfilment capacity in our UK and US warehouses. This will enable us to continue to grow strongly in all online channels whilst offering an even better level of service to all our customers. Whilst still only in the early stages of our digital journey, we are very pleased in the delivery of 124% growth in our own website sales against 2019, demonstrating the potential of pursuing this strategy and showing the immense further opportunity in this area.

I am pleased a number of key operational projects that have been in progress over the last twelve months are now close to completion. In August, the first products came off our new hand and body production line at our Wax Lyrical factory in Cumbria. This opens up a new revenue category for our Wax Lyrical brand and we expect to launch hand and body products under our Portmeirion Botanic Garden range in 2022 as part of its 50(th) year promotional campaign. Key automation projects in our Stoke-on-Trent ceramic factory are now close to completion and will deliver improved efficiency and additional capacity that will underpin the scaling up of our UK production output and support our sales growth and operating margin ambitions.

I would like to thank all our employees for their exceptional resilience and tenacity in dealing with the daily ongoing challenges that Covid-19 presents whilst at the same time delivering on our strategy with considerable success. I am confident that the changes we are making to our business and the significant levels of new expertise we are adding will enable our brands to grow strongly in the coming years whilst we continue to develop much loved homeware products for our customers around the world."

This announcement contains inside information for the purposes of the retained UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").

Enquiries:

 
 Portmeirion Group PLC: 
 Mike Raybould,             +44 (0) 1782         mraybould@portmeiriongroup.com 
  Chief Executive            743443 
 David Sproston,            +44 (0) 1782         dsproston@portmeiriongroup.com 
  Group Finance Director     743443 
 
 Hudson Sandler: 
 Dan de Belder              +44 (0) 207 796      ddebelder@hudsonsandler.com 
  Nick Moore                 4133                 nmoore@hudsonsandler.com 
 
 Panmure Gordon (UK) Limited: 
 (Nominated Adviser and     +44 (0) 207 886 
  Broker)                    2500 
 Freddy Crossley            Corporate Finance 
 Rupert Dearden             Corporate Broking 
 Singer Capital Markets: 
                            +44 (0) 207 496 
 (Joint Broker)              3000 
 Peter Steel                Investment Banking 
 Rachel Hayes 
 

Interim Review

 
                                        2021    2020    2019 
                                        GBPm    GBPm    GBPm 
 Reported sales                         43.1    32.0    34.9 
 H1 like-for-like sales*                35.8    27.4    34.4 
 H1 constant currency like-for-like 
  sales*                                36.7    27.2    34.4 
 
 Total own website sales                 5.2     4.7     2.0 
 UK/US sales via online channels         51%     48%     30% 
 

* Like-for-like sales exclude the benefit in 2021 and 2020 of a full year sales of Nambé (acquired in July 2019) and additional sales from Portmeirion Canada (acquired August 2020) previously held as an associated company.

Trading

We are delighted to announce that reported sales were up on pre Covid-19 levels despite the ongoing disruptions from the pandemic which included the closure of retail in the UK during the first four months of the period.

We have continued to grow sales in our online channels - a key part and focus of our long term strategy. At the same time, we have increased average prices and margins on our own websites sales channels versus the same period in 2020, with average gross margin increasing by +900bps. In our key UK and US markets, 51% of sales went through all online channels (2020: 48%).

We have also seen strong growth from our rest of world markets, particularly from our key South Korean market which grew 57% on a more sustainable base following a successful period of stabilisation over the last few years.

We have continued to develop new products for our customers through the pandemic and have seen successful launches including a new Sophie Conran for Portmeirion range and Spode Creatures of Curiosity.

Financial highlights

Revenue was GBP43.1 million for the first six months of the year, an increase of 35% over the previous year (H1 2020: GBP32.0 million) and 24% over pre Covid-19 levels (2019: GBP34.9 million).

Like-for-like sales on a constant currency basis, excluding the benefit of sales from our Nambé division (acquired in July 2019) and additional sales from Portmeirion Canada (fully acquired in August 2020), were up by 35% over 2020 and by 7% over 2019 levels (YO2Y).

Our operating performance was encouraging; headline operating profit(1) was GBP1.7 million which was significantly ahead of both the prior year (H1 2020: operating loss GBP2.2 million) and pre Covid-19 levels (H1 2019: operating profit GBP0.7 million). This left the Group's operating margin at 4.0% for the first half of the year, which was significantly ahead of pre Covid-19 levels in 2019 of 1.9%.

Following the strong revenue and operating performance, headline profit before tax(1) was GBP1.5 million (2020 H1: loss before tax GBP2.7 million, 2019 H1: profit before tax GBP0.5 million).

Headline basic earnings per share(1) was 9.12p per share (2020: basic loss per share 20.71p, 2019: basic earnings per share 3.96p).

(1) Headline profit/(loss) before tax, headline operating profit/(loss) and headline earnings/(loss) per share exclude exceptional items (see note 3).

Operational overview

Our increased focus on online sales channel development allowed us to continue to grow and deliver our products into the hands of end consumers despite the ongoing challenges associated with the Covid-19 pandemic. Our experienced teams have worked hard to mitigate Covid-related disruption to our supply chains, including the extremely tight global container freight market.

Our two UK manufacturing sites both operated throughout the first half of the year. Demand for "Made in Britain" ceramics has remained strong and our Stoke-on-Trent factory is now operating above pre-Covid output levels. Our Wax Lyrical site in the Lake District has continued to produce our home fragrance lines, and following the completion of the hand and body product line extension, has launched a number of new collections which we have already started to ship in the third quarter.

The Group continues to prioritise the health and safety of our workforce and customers and ensure appropriate measures are in place at all of our premises.

The Group has continued to generate operating cash which has supported ongoing strategic investment. From the time of the equity raise in June 2020, the Group has spent a net sum of GBP4.0 million on capital expenditure, and has a number of further new projects already at the later stages of planning to accelerate future sales growth.

We continue to monitor the impact of Brexit on our trading markets. We have seen some disruption to shipping product into the EU from the UK and additional duty costs, but this has not had a material impact on H1 profitability.

Geographical performance

Following the acquisition of Nambé in July 2019, the USA became the Group's largest geographical market and accounted for 35% of total Group revenue. With the lifting of Covid-19 restrictions across the USA, this market grew by 44% compared to the first half of 2020 and like-for-like sales are now above 2019 levels. We see good opportunity for further growth in our US market in the next few years driven by further online penetration and new product launches.

Our second largest market is the UK, which accounted for 31% of total Group sales. Despite ongoing Covid-19 restrictions in the UK, with non-essential retail closed for the first quarter of the year, sales increased by 5% in this market. This was driven by the continued growth in online sales both on our own ecommerce site and third party platforms.

In international markets, sales in South Korea grew by 57%. South Korea was one of the first countries to enter national lockdown in 2020, and sales in H1 2020 were duly impacted. Our sales into the market rebounded strongly in the second half of 2020 and we continued to see growth due to new ranges and collections launched with our distributor.

In our rest of world markets, sales were up 93% over the same period in 2020 as various restrictions around the world ended and economies started to recover from the pandemic. Rest of world sales benefitted from additional sales in Canada due to the Group owning 100% of the share capital of Portmeirion Canada (fully acquired in August 2020). We also experienced strong growth in Australia and the Middle East.

Our own ecommerce sales increased by 15% at a constant currency rate in the first half of 2021 and are up 124% on 2019 pre Covid-19 levels as we start to see the benefit of our focus and online transformation strategy. This is a key ongoing area of focus and we continue to invest in increasing resource and expertise in this area.

Segmental performance

At Portmeirion UK, the main trading entity of the Group, sales increased 45% to GBP21.9 million (2020: GBP15.1 million). This increase was driven by a return to growth in both the UK and international markets following the impact of Covid-19 on H1 2020.

Sales from the Portmeirion North America division include sales made through our long standing Portmeirion USA entity, sales from the Nambé business, acquired in July 2019, and sales made by Portmeirion Canada which was fully acquired in August 2020. Sales made by the division increased by 59% to GBP16.7 million for the first half (2020: GBP10.5 million); on a like-for-like basis, to exclude the benefit of additional sales from Portmeirion Canada, sales were 44% ahead of the prior year.

Sales from our global home fragrance division decreased by 28% over the prior year to GBP4.6 million (2020: GBP6.4 million). This decrease was driven by a reduction in hand sanitiser sales which benefitted the first half of 2020; the majority of these sales were not repeated as supply from overseas became more readily and cheaply available. Excluding these sales underlying home fragrance sales were above 2020 levels, but below historic levels due to the impact of the closure of physical UK retail stores.

Profit

In the first half of 2021, the Group made a headline profit before tax(1) of GBP1.5 million; this compared to a loss before tax of GBP2.7 million in 2020 and a profit before tax of GBP0.5 million in 2019.

This profit was a pleasing result and in line with management expectations, and is set against a challenging UK retail backdrop with forced non-essential retail closures for all of the first quarter of the year.

(1) Headline profit/(loss) before tax exclude exceptional items (see note 3).

Dividend

The Board is committed to a dividend policy which ensures we retain and invest enough capital in our business to drive long-term growth in our brands and we maintain a prudent and sustainable level of dividend cover.

The Board determined not to pay a dividend for FY20 due to the impact and disruption of Covid-19 on our business. On the basis of our strong first half trading performance we expect to resume dividend payments for FY21.

Balance sheet

The Group ended the first half of 2021 with net cash of GBP0.1 million; this compares to net cash of GBP1.1 million at 30 June 2020 and net cash of GBP0.7 million at 31 December 2020. In addition to the cash balance of GBP9.0 million and bank borrowings of GBP8.9 million, the Group also has unutilised committed bank facilities of GBP15.0 million.

Our stock balance is GBP29.3 million compared to GBP30.6 million at 30 June 2020 and GBP27.3 million at 31 December 2020. Excluding the inventory balance in Portmeirion Canada (acquired in August 2020), our like-for-like inventory has reduced by GBP2.5 million or 8% since the previous half year end. The business continues to invest in seasonal working capital to support the second half retail sales peak, so an increase over the year end position is to be expected.

We carry significant goodwill and intangible asset values on our balance sheet of some GBP15.7 million. These balances largely relate to the acquisitions of Wax Lyrical and Nambé and the goodwill is reviewed annually. The intangible assets are amortised over a range of ten and twenty years depending on their nature.

Environmental, Social and Governance

The Group remains committed to the vision and values which support the Group's culture of openness and integrity and encourage behaviours that will positively impact our long-term sustainability.

We remain committed to being environmentally responsible through our dedication to reducing energy consumption, improving efficiency including improved production yields and reduced waste.

At our Stoke-on-Trent ceramic factory, we continue to strive for improvement in energy efficiency and reduce carbon emissions; as a result of ongoing investment in kiln firing, energy recirculation and throughput capacity we have both improved energy efficiency and reduced carbon emissions by 10% over the prior year. We have also committed to reducing our plastic content in packaging which has yielded a 50% reduction in usage over 2020 levels. We are also focused on recycling waste material and this has resulted in less than 1% of our waste going to landfill sites, with much ceramic waste being reused in the construction industry.

At our home fragrance factory in the Lake District, we continue to utilise a wind turbine to provide 60% of the energy required on the site. As part of new product launches including the hand and body care ranges, we are using biopolymer plastic which is made from renewable energy sources which actually helps reduce CO2 emissions as part of the process. Wax Lyrical strive for continuous improvement in the environmental impact of its products, which includes using 100% recyclable future pump bottles, utilising longer-lasting diffuser oil and being a member of the Roundtable on Sustainable Palm oil (RSPO).

We continue to employ and recruit people who share our company values. Our ethics and governance are supported by internal policies and procedures. Further details on our corporate culture and its integration within the Group can be found on our website, www.portmeiriongroup.com, and in the Stakeholder Engagement, Our Sustainability and Corporate Governance Statements in our Annual Report and Accounts.

We are proud to have achieved Investor in People (IIP) Platinum accreditation in both our UK businesses in recognition of our commitment to leading, supporting and improving our workforce to achieve business results. Platinum is the highest level of IIP accreditation, which positions Portmeirion among the elite few for its commitment to high performance through excellent people management.

Strategic areas of focus

Our brands have a combined history of more than 750 years as the much loved choice for our customers' homes. Our ambition is to be a leading force in the global homewares category.

Our long-term strategy is centred around driving profitable growth through:

-- developing significant online sales channels including our own websites in key markets. In doing so we deepen the relationship with our end consumer and provide enhanced levels of satisfaction and demand for our products in the future;

-- increasing our footprint in new markets through new product categories, and driving commercial activity in new geographies;

-- building our brands' reach to engage even more consumers through new product design, as well as new formats of existing product and ranges including those targeted at the growing market for gifting; and

-- leveraging our long established areas of core business strengths. These include investing in automation in our UK factories to drive both extra capacity and cost efficiency, our network of sourced factories around the world, and developing further direct to consumer warehouse capacity in our core markets.

We are confident that these initiatives, taken together, will drive accelerated sales growth and a sustained improvement in our operating margins which will deliver enhanced shareholder value.

Within these areas the Group has a number of specific areas of focus.

Products and brands

The Group has six major brands - Portmeirion, Spode, Royal Worcester, Pimpernel, Wax Lyrical and Nambé. Supporting and developing our brands is central to our business strategy and we continue to invest in both our heritage patterns and new product ranges.

Collectively, these brands have been chosen by our customers for more than 750 years, and we continue to invest and grow these brands via both line extensions to existing ranges and new complementary lines. In the last 12 months we have significantly increased the size of our brand marketing teams who, working with our designers, will develop and execute roadmaps to grow the sales footprints of our brands.

In addition to new product that we have already launched in 2021, we have an exciting future new product pipeline for the next 24 months that we believe will drive our sales over the next few years.

A list of our current ranges can be found at www.portmeirion.co.uk, www.spode.co.uk, www.waxlyrical.com, www.royalworcester.co.uk, www.pimpernelinternational.co.uk and www.nambe.co.uk. Customers in the United States should go to www.portmeirion.com and www.nambe.com. Our Canadian website operates under www.haustopia.com.

Accelerate our online transformation

The impact of Covid-19 has accelerated the trend to shopping online which represents a great opportunity for the Group to deepen our relationship and all points of contact with our end consumers. We have made great progress with our own website sales up 124% (YO2Y on pre Covid-2019 levels) and with all online channel sales now representing 51% in our UK and US markets (2020: 48%, 2019: 30%). We have hired significant new digital marketing and online sales expertise in the past twelve months and will continue across the next 18 months to deploy accelerated investments behind our front end and back end web systems, customer data systems and in building further direct to consumer warehouse capacity to meet our forecast growth.

Stabilise and diversify within our South Korean market

We have spent the last 24 months stabilising sales to our South Korean market with strengthened internal controls to reduce stock overhangs caused by excessive parallel shipping of product from other markets.

We are pleased therefore to see the benefit of this action and from recent new product launches, demonstrated by 57% sales growth over 2020 and 4% over 2019. From this more stable base we expect to see further and sustainable growth in our South Korean market over the next few years. Our Portmeirion Botanic Garden range is much loved in South Korea and we are looking forward to launching new products in 2022 to mark the 50(th) anniversary of the launch of this range.

Rest of world expansion

The Group sells into more than 70 countries around the world, with more than 80% of these sales made in our three key markets of the USA, UK and South Korea. We see a great opportunity to grow in other markets around the world through new distributor relationships and are particularly focused on Asia, Middle East and Europe.

Rest of world sales grew by 93% over 2020 levels with particularly strong growth in Australia and the Middle East and by 40% from YO2Y.

Included in rest of world sales are those made by Portmeirion Canada, our long standing 50% owned associated company which we fully acquired in August 2020. The Canadian retail market has been on Covid-19 related lockdown through much of the first half of FY21, but we have seen encouraging progress in sales made via online channels including the relaunch of our Canadian website, Haustopia.com.

Operating capabilities and efficiency

We constantly review our operating capabilities in order to position the Group to meet the changing requirements of our customers, including our ongoing strategy and focus on growth in online and direct to consumer fulfilment.

We have increased our capital investment in the past 12 months with new automation projects in our Stoke-on-Trent factory and a new hand and body product production line in our Wax Lyrical factory in the Lake District. These projects will add extra production capacity, new revenue streams and deliver lower cost per unit as part of our strategy to improve Group operating margins.

We have commenced capital projects in 2021 in both our UK and US warehouses to increase our direct to consumer order fulfilment capacity and overall system integration and service levels. When complete these initiatives will provide additional support to our online sales growth strategy.

Corporate governance and Board

The Board are committed to good governance and we have continued to apply the Quoted Companies Alliance ("QCA") Corporate Governance Code, complying with its principles throughout the period. To see how the Group addresses the key governance principles defined in the QCA Code please refer to our website at https://www.portmeiriongroup.com/investors.

The Board keeps its composition and performance under review to ensure that we have the appropriate skills and experience in place to deliver our strategy.

Outlook

We are delighted with our excellent results in the first half of the financial year. Since the period end trading has continued that trend into the first two months of the second half. Looking forward we have a strong order book across our key markets for the rest of the year. We are cognisant of the ongoing, widely reported disruption and volatility in global supply chains, including labour shortages, container shipping delays and significant market price rises in container shipping rates all of which impact our business. We have taken and will continue to take mitigating action where possible, expediting stock shipments, building additional raw material and finished goods stock contingency, reviewing our own selling prices and continuing to offer added protection and flexibility to our staff to protect them from Covid-19 and related absence.

We remain confident of achieving market expectations(1) , and the accelerated strategic investments we are making across our business will enable a strong path of growth in the next few years.

The Group benefits from global brands and products with timeless design. We have strong market positions around the world and over 750 years of combined history. During this pandemic we have not stood still and have continued to increase our investment behind our online growth strategy, new product pipeline and making our operations more efficient. We believe this investment, together with our strong balance sheet, underpins future growth and we remain confident in our ability to generate shareholder value.

(1) Current consensus market expectations for 2021 are revenue of GBP90 million and profit before tax of GBP6.4 million, and for 2022 are revenue of GBP99.5 million and profit before tax of GBP10.0 million.

   Dick Steele                                       Mike Raybould 
   Non-executive Chairman                  Chief Executive 

Independent review report

We have been engaged by Portmeirion Group PLC ("the Group") to review the interim financial information for the six months ended 30 June 2021 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated statement of cash flows and related notes 1 to 12. We have read the other information contained in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the interim financial information.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board and our Engagement Letter dated July 2021. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Respective responsibilities of directors and auditor

The interim statement, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim statement in accordance with the AIM Rules issued by the London Stock Exchange, which requires that the interim statement must be prepared and presented in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility is to express to the Company a conclusion on the consolidated interim financial information in the interim statement based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom.

A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial information in the interim statement does not give a true and fair view of the financial position of the Company as at 30 June 2021 and of its financial performance and its cash flows for the six months then ended, in accordance with the AIM Rules issued by the London Stock Exchange.

Signed:

Mazars LLP

Chartered Accountants

The Pinnacle

160 Midsummer Boulevard

Milton Keynes

MK9 1FF

13 September 2021

Notes:

(a) The maintenance and integrity of the Portmeirion Group PLC web site is the responsibility of the directors; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

Consolidated Income Statement

Unaudited

 
                                                   Six months    Six months        Year to 
                                                   to 30 June    to 30 June    31 December 
                                                         2021          2020           2020 
                                          Notes       GBP'000       GBP'000        GBP'000 
 
   Revenue                                  2          43,136        32,002         87,854 
 Operating costs                                     (41,415)      (34,203)       (85,661) 
---------------------------------------  ------  ------------  ------------  ------------- 
 
   Headline operating profit/(loss)(1)                  1,721       (2,201)          2,193 
 Exceptional items                        3 
 - restructuring costs                                  (378)          (85)        (1,288) 
 - acquisition costs                                        -             -          (104) 
 - share issue costs                                        -          (55)           (55) 
 - Covid-19 costs                                           -          (67)          (176) 
---------------------------------------  ------  ------------  ------------  ------------- 
 
   Operating profit/(loss)                              1,343       (2,408)            570 
 
   Interest income                                          2             -             13 
 Finance costs                            4             (299)         (384)          (740) 
 Profit on sale of fixed assets                           120             -              - 
 Share of results of associated 
  undertakings                                              -          (83)           (75) 
 
 
   Headline profit/(loss) before 
   tax(1)                                               1,544       (2,668)          1,391 
 Exceptional items                        3 
 - restructuring costs                                  (378)          (85)        (1,288) 
 - acquisition costs                                        -             -          (104) 
 - share issue costs                                        -          (55)           (55) 
 - Covid-19 costs                                           -          (67)          (176) 
---------------------------------------  ------  ------------  ------------  ------------- 
 
 
   Profit/(loss) before tax                             1,166       (2,875)          (232) 
 
   Tax(2)                                   5           (233)           460          (503) 
---------------------------------------  ------  ------------  ------------  ------------- 
 
   Profit/(loss) for the period 
   attributable to equity holders                         933       (2,415)          (735) 
---------------------------------------  ------ 
 
   Earnings per share                       7 
 Basic                                                  6.79p      (22.66p)        (6.02p) 
  Diluted                                               6.77p      (22.66p)        (6.02p) 
 
   Headline earnings per share(1)           7 
 Basic                                                  9.12p      (20.71p)          4.96p 
  Diluted                                               9.09p      (20.71p)          4.95p 
 
   Dividends paid and proposed per 
   share                                    6           0.00p         0.00p          0.00p 
---------------------------------------  ------  ------------  ------------  ------------- 
 

All the above figures relate to continuing operations.

(1) Headline operating profit or (loss) is statutory operating profit of GBP1,721,000 (H1 2020: GBP2,201,000 loss) before exceptional items of GBP378,000 (H1 2020: GBP207,000). Headline profit or (loss) before tax is statutory profit before tax of GBP1,544,000 (H1 2020: GBP2,668,000 loss), after adding back the exceptional items.

(2) Tax on exceptional items in the current period has reduced the charge by GBP58,000 (H1 2020: GBPnil).

Consolidated Statement of Comprehensive Income

Unaudited

 
 
                                                      Six months     Six months         Year to 
                                                      to 30 June     to 30 June     31 December 
                                                            2021           2020            2020 
                                                         GBP'000        GBP'000         GBP'000 
 
   Profit/(loss) for the period                              933        (2,415)           (735) 
--------------------------------------------------  ------------  -------------  -------------- 
 Items that will not be reclassified subsequently 
  to profit or loss: 
 Remeasurement of net defined benefit 
  pension scheme asset/(liability)                         3,000        (1,980)         (3,208) 
 Deferred tax relating to items that will 
  not be reclassified subsequently to profit 
  or loss                                                  (750)            385             843 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Exchange differences on translation of 
  foreign operations                                       (304)          1,219           (525) 
 Deferred tax relating to items that may 
  be reclassified subsequently to profit 
  or loss                                                      -              -            (26) 
--------------------------------------------------  ------------  -------------  -------------- 
 
   Other comprehensive income for the period               1,946          (376)         (2,916) 
--------------------------------------------------  ------------  -------------  -------------- 
 Total comprehensive income for the period 
  attributable to equity holders                           2,879        (2,791)         (3,651) 
--------------------------------------------------  ------------  -------------  -------------- 
 

Consolidated Balance Sheet

Unaudited

 
 
 
                                      30 June      30 June     31 December 
                                         2021         2020            2020 
                                      GBP'000      GBP'000         GBP'000 
 
   Non-current assets 
 Goodwill                               8,978        8,978           8,978 
 Intangible assets                      6,769        7,457           6,976 
 Property, plant and equipment         13,212       11,121          12,197 
 Right-of-use assets                    6,328        5,612           6,910 
 Interests in associates                    -          633               - 
 Pension scheme surplus                 1,152            -               - 
 Deferred tax asset                        80          691             119 
 Total non-current assets              36,519       34,492          35,180 
--------------------------------  -----------  -----------  -------------- 
 
   Current assets 
 Inventories                           29,259       30,608          27,313 
 Trade and other receivables           12,329       11,252          15,269 
 Current income tax asset                 895          733             579 
 Cash and cash equivalents              9,043       12,987          11,590 
 Total current assets                  51,526       55,580          54,751 
--------------------------------  -----------  -----------  -------------- 
 
   Total assets                        88,045       90,072          89,931 
--------------------------------  -----------  -----------  -------------- 
 
   Current liabilities 
 Trade and other payables            (12,032)     (12,722)        (12,601) 
 Borrowings                           (2,979)      (2,970)         (3,972) 
 Lease liabilities                    (1,595)      (1,685)         (2,143) 
 Total current liabilities           (16,606)     (17,377)        (18,716) 
--------------------------------  -----------  -----------  -------------- 
 
   Non-current liabilities 
 Pension scheme deficit                     -      (2,000)         (2,721) 
 Deferred tax liability               (1,774)      (1,065)           (738) 
 Borrowings                           (5,959)      (8,938)         (6,951) 
 Lease liabilities                    (5,058)      (4,200)         (5,096) 
 Total non-current liabilities       (12,791)     (16,203)        (15,506) 
--------------------------------  -----------  -----------  -------------- 
 
   Total liabilities                 (29,397)     (33,580)        (34,222) 
--------------------------------  -----------  -----------  -------------- 
 
 Net assets                            58,648       56,492          55,709 
--------------------------------  -----------  -----------  -------------- 
 
   Equity 
 Called up share capital                  710          710             710 
 Share premium account                 18,344       18,347          18,344 
 Investment in own shares             (3,124)      (3,146)         (3,140) 
 Share-based payment reserve              212          123             152 
 Translation reserve                      773        2,847           1,077 
 Retained earnings                     41,733       37,611          38,566 
--------------------------------  -----------  -----------  -------------- 
 Total equity                          58,648       56,492          55,709 
--------------------------------  -----------  -----------  -------------- 
 

Consolidated Statement of Changes in Equity

Unaudited

 
                                                                  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 period               -           -              -             -               -      (2,415)     (2,415) 
 Other comprehensive 
  income for the period            -           -              -             -           1,219      (1,595)       (376) 
------------------------  ----------  ----------  -------------  ------------  --------------  -----------  ---------- 
 Total comprehensive 
  income for the period            -           -              -             -           1,219      (4,010)     (2,791) 
 Issue of own shares             155      11,037              -             -               -            -      11,192 
 Cost of issue of 
  own shares                       -           -              -             -               -         (43)        (43) 
 Increase in share-based 
  payment reserve                  -           -              -            36               -            -          36 
 At 30 June 2020                 710      18,347        (3,146)           123           2,847       37,611      56,492 
------------------------  ----------  ----------  -------------  ------------  --------------  -----------  ---------- 
 Profit for the period             -           -              -             -               -        1,680       1,680 
 Other comprehensive 
  income for the period            -           -              -             -         (1,770)        (770)     (2,540) 
------------------------  ----------  ----------  -------------  ------------  --------------  -----------  ---------- 
 Total comprehensive 
  income for the period            -           -              -             -         (1,770)          910       (860) 
 Unclaimed dividends 
  written back                     -           -              -             -               -            4           4 
 Issue of own shares               -          37              -             -               -            -          37 
 Cost of issue of 
  own shares                       -        (40)              -             -               -           43           3 
 Increase in share-based 
  payment reserve                  -           -              -            50               -         (21)          29 
 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 31 December 2020             710      18,344        (3,140)           152           1,077       38,566      55,709 
------------------------  ----------  ----------  -------------  ------------  --------------  -----------  ---------- 
 Profit for the period             -           -              -             -               -          933         933 
 Other comprehensive 
  income for the period            -           -              -             -           (304)        2,250       1,946 
------------------------  ----------  ----------  -------------  ------------  --------------  -----------  ---------- 
 Total comprehensive 
  income for the period            -           -              -             -           (304)        3,183       2,879 
 Increase in share-based 
  payment reserve                  -           -              -            60               -            -          60 
 Shares issued under 
  employee share schemes           -           -             16             -               -         (16)           - 
 At 30 June 2021                 710      18,344        (3,124)           212             773       41,733      58,648 
------------------------  ----------  ----------  -------------  ------------  --------------  -----------  ---------- 
 

Consolidated Statement of Cash Flows

Unaudited

 
 
                                                   Six months     Six months        Year to 
                                                   to 30 June     to 30 June    31 December 
                                                         2021           2020           2020 
                                                      GBP'000        GBP'000        GBP'000 
 
 Operating profit/(loss)                                1,343        (2,408)            570 
 Adjustments for: 
 Depreciation of property, plant and equipment            773            813          1,634 
 Depreciation of right-of-use assets                      914          1,075          2,037 
 Amortisation of intangible assets                        403            431            848 
 Charge for share-based payments                           60             36             65 
 Exchange loss                                          (157)          (147)          (100) 
 Costs taken directly through reserves                      -           (43)              - 
 Loss on sale of tangible fixed assets                      -              -             12 
-----------------------------------------------  ------------  -------------  ------------- 
 Operating cash flows before movements in 
  working capital                                       3,336          (243)          5,066 
-----------------------------------------------  ------------  -------------  ------------- 
 (Increase)/decrease in inventories                   (2,096)        (3,272)            171 
 Decrease in receivables                                2,864          8,328          4,398 
 Decrease in payables                                   (465)          (427)          (913) 
-----------------------------------------------  ------------  -------------  ------------- 
 Cash generated from operations                         3,639          4,386          8,722 
-----------------------------------------------  ------------  -------------  ------------- 
 Contributions to defined benefit pension 
  scheme                                                (900)          (400)          (900) 
 Interest paid                                          (240)          (303)          (497) 
 Income taxes paid                                      (208)           (29)          (125) 
-----------------------------------------------  ------------  -------------  ------------- 
 Net cash inflow from operating activities              2,291          3,654          7,200 
-----------------------------------------------  ------------  -------------  ------------- 
 Investing activities 
 Interest received                                          2              -             12 
 Proceeds on disposal of property, plant and              775              -              - 
  equipment 
 Purchase of property, plant and equipment            (2,465)          (542)        (2,556) 
 Purchase of intangible assets                          (228)           (92)          (196) 
 Acquisition of subsidiary                                  -              -          (541) 
-----------------------------------------------  ------------  -------------  ------------- 
 Net cash outflow from investing activities           (1,916)          (634)        (3,281) 
-----------------------------------------------  ------------  -------------  ------------- 
 Financing activities 
 Issue of own shares                                        -         11,192         11,229 
 Costs taken directly through reserves                      -              -           (40) 
 New bank loans raised                                      -          2,000          5,000 
 Principal elements of lease payments                   (897)          (801)        (2,084) 
 Repayments of borrowings                             (2,000)        (3,581)        (7,581) 
-----------------------------------------------  ------------  -------------  ------------- 
 Net cash (outflow)/inflow from financing 
  activities                                          (2,897)          8,810          6,524 
-----------------------------------------------  ------------  -------------  ------------- 
 
 
 Net (decrease)/increase in cash and cash 
  equivalents                                  (2,522)   11,830   10,443 
 Cash and cash equivalents at beginning of 
  period                                        11,590    1,151    1,151 
 Effect of foreign exchange rate changes          (25)        6      (4) 
--------------------------------------------  --------  -------  ------- 
 Cash and cash equivalents at end of period      9,043   12,987   11,590 
--------------------------------------------  --------  -------  ------- 
 

Notes to the Interim Financial Information

   1.   Basis of preparation 

The interim financial information has not been audited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 but has been reviewed by the auditors in accordance with International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board. The Group's statutory accounts for the year ended 31 December 2020, prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, 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 information has been prepared in accordance with IFRS on the historical cost basis, except that derivative financial instruments are stated at their fair value. The same accounting policies, presentation and methods of computation are followed in the interim financial information as were applied in the Group's last annual audited financial statements.

Going concern

The directors having made suitable enquiries and analysis of the accounts, consider that the Group has adequate resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered the Group's revised trading conditions following the impact of the Covid-19 pandemic, cash flow forecasts, share issue and available banking facility with appropriate headroom in facilities and financial covenants.

Details of the Covid-19 pandemic impact on the Portmeirion Group and its going concern assessment are included in the Group's statutory financial statements for the year ended 31 December 2020. The Group continues to trade in line with the revised trading conditions and the Directors continue to carefully monitor the impact of the Covid-19 pandemic on the operations of the Group.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those detailed on page 74 of the Group's 2020 Financial Statements.

Government grants

The Group has received funding from various Governments in relation to Covid-19. Government income is recognised in profit or loss (as a deduction in the related expense) on a systematic basis over the periods in which the Group recognises expenses for the related costs for which the grants are intended to compensate (see note 10).

Notes to the Interim Financial Information

Continued

   2.   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:

 
                               Six months    Six months        Year to 
                               to 30 June    to 30 June    31 December 
   Operating segment                 2021          2020           2020 
                                  GBP'000       GBP'000        GBP'000 
 
   Portmeirion UK                  21,879        15,133         38,086 
 Portmeirion North America         16,656        10,492         34,936 
 Global home fragrance              4,601         6,377         14,832 
---------------------------  ------------  ------------  ------------- 
                                   43,136        32,002         87,854 
---------------------------  ------------  ------------  ------------- 
 
 
                           Six months    Six months        Year to 
                           to 30 June    to 30 June    31 December 
   Geographical market           2021          2020           2020 
                              GBP'000       GBP'000        GBP'000 
 
   United Kingdom              13,264        12,684         31,845 
 United States                 15,126        10,506         33,493 
 South Korea                    9,724         6,211         13,071 
 Rest of the World              5,022         2,601          9,445 
-----------------------  ------------  ------------  ------------- 
                               43,136        32,002         87,854 
-----------------------  ------------  ------------  ------------- 
 
   3.   Exceptional items 
 
                           Six months    Six months        Year to 
                           to 30 June    to 30 June    31 December 
                                 2021          2020           2020 
                              GBP'000       GBP'000        GBP'000 
 
   Restructuring costs            378            85          1,288 
 Acquisition costs                  -             -            104 
 Share issue costs                  -            55             55 
 Covid-19 costs                     -            67            176 
-----------------------  ------------  ------------  ------------- 
                                  378           207          1,623 
-----------------------  ------------  ------------  ------------- 
 

Restructuring costs relate to a redundancy exercise undertaken within the Group. All of these costs are exceptional in nature and non-recurring.

   4.   Finance costs 
 
                                     Six months    Six months        Year to 
                                     to 30 June    to 30 June    31 December 
                                           2021          2020           2020 
                                        GBP'000       GBP'000        GBP'000 
 Interest paid                              190           295            561 
 Interest on lease liabilities               92            83            179 
 Net interest expense on pension 
  scheme                                     17             6              - 
---------------------------------  ------------  ------------  ------------- 
                                            299           384            740 
---------------------------------  ------------  ------------  ------------- 
 

Notes to the Interim Financial Information

Continued

   5.   Taxation 

Tax for the interim period is charged at 20% (year to 31 December 2020: 19%) representing the best estimate of the weighted average annual corporation tax rate expected for the full year. Deferred tax has been calculated at a rate of 19%.

In the Finance Bill 2021, the Government announced that from 1 April 2023 the corporation tax rate would increase from 19% to 25%. The Finance Bill 2021 had its third reading on 24 May 2021 and is now considered substantively enacted. As a consequence, deferred tax assets/liabilities have been measured at the rate they are expected to reverse.

   6.   Dividend 

During the period no dividend was paid in respect of the previous financial year. The Directors do not propose a dividend in respect of the interim period ended 30 June 2021.

   7.   Earnings per share 
 
                                                Six months    Six months        Year to 
                                                to 30 June    to 30 June    31 December 
                                                      2021          2020           2020 
                                                   GBP'000       GBP'000        GBP'000 
 Earnings 
 Earnings for the purpose of basic 
  and diluted earnings per share, being 
  profit/(loss) for the period attributable 
  to equity holders                                    933       (2,415)          (735) 
--------------------------------------------  ------------  ------------  ------------- 
 
 
                                           Six months     Six months        Year to 
                                           to 30 June     to 30 June    31 December 
                                                 2021           2020           2020 
                                              GBP'000        GBP'000        GBP'000 
 Number of shares 
 Weighted average number of shares 
  for the purpose of basic earnings 
  per share                                13,743,924     10,659,592     12,208,723 
 Weighted average dilutive effect 
  of conditional share awards                  42,784              -              - 
--------------------------------------  -------------  -------------  ------------- 
 Weighted average number of shares 
  for the purpose of diluted earnings 
  per share                                13,786,708     10,659,592     12,208,723 
--------------------------------------  -------------  -------------  ------------- 
 

The calculation of basic and diluted headline earnings per share is based on the following data:

 
                                               Six months    Six months        Year to 
                                               to 30 June    to 30 June    31 December 
                                                     2021          2020           2020 
                                                  GBP'000       GBP'000        GBP'000 
 Profit/(loss) for the period attributable 
  to equity holders                                   933       (2,415)          (735) 
 Add back: 
 Exceptional items and associated 
  tax benefits                                        320           207          1,340 
-------------------------------------------  ------------  ------------  ------------- 
 Headline earnings                                  1,253       (2,208)            605 
-------------------------------------------  ------------  ------------  ------------- 
 

Notes to the Interim Financial Information

Continued

   8.   Reconciliation of earnings before interest, tax, depreciation and amortisation (EBITDA) 
 
                                         Six months    Six months        Year to 
                                         to 30 June    to 30 June    31 December 
                                               2021          2020           2020 
                                            GBP'000       GBP'000        GBP'000 
 Operating profit/(loss)                      1,343       (2,408)            570 
 Add back: 
 Depreciation                                 1,687         1,888          3,671 
 Amortisation                                   403           431            848 
 Earnings/(loss) before interest, 
  tax, depreciation and amortisation          3,433          (89)          5,089 
-------------------------------------  ------------  ------------  ------------- 
 

9. Retirement benefit schemes

Defined benefit scheme

The defined benefit obligation as at 30 June 2021 is calculated on a year--to--date basis, using the latest actuarial valuation as at 30 June 2021.

There have been no significant market fluctuations and significant one-off events, such as plan amendments, curtailments and settlements that have resulted in an adjustment to the actuarially-determined pension cost since the end of the prior financial year. The defined benefit plan assets have been updated to reflect their market value at 30 June 2021.

There have been no significant falls in asset prices observed during Covid-19 due to the diversified market portfolio. However, significant market fluctuations have caused an increase in the discount rate applied to the defined benefit obligation resulting in an asset.

10. Government grants

Government grants were receivable as part of a Government initiative's to provide immediate financial support as a result of the effects of the Covid-19 shutdown. There are no future related costs in respect of these grants which are receivables solely as compensation for past expenses.

The Group received funding from the UK Government's 'Coronavirus Job Retention Scheme' and retail support grants, as well as the US Government's 'Paycheck Protection Programme' and the Canadian Government's 'Emergency Wage Subsidy'. In total this support amounted to GBP312,000 (2020: GBP2,843,000) and is included as a credit within operating costs.

11. Related party transactions

The Group's related parties are as disclosed in the Report and Accounts for the year ended 31 December 2020. There were no material differences in related parties or related party transactions in the six months ended 30 June 2021 except for transactions with key management personnel.

The most significant of these was on 25 March 2021, under the Portmeirion 2012 Approved and Unapproved Share Option Plan, when 50,000, 30,000, 30,000, 30,000, 30,000 and 12,500 share option awards were granted to M Raybould, M Knapper, D Sproston, J Gale, W Robedee and M MacDonald respectively at an option price of GBP6.33 per share when the market price was GBP6.33 per share.

12. Post balance sheet events

There were no post balance sheet events.

13. Availability of document

A copy of the interim results will shortly be available on the Company website at www.portmeiriongroup.com.

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END

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September 14, 2021 02:00 ET (06:00 GMT)

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