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