REG - Portmeirion Group - Interim Results
15/09/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220915:nRSO5191Za&default-theme=true
RNS Number : 5191Z Portmeirion Group PLC 15 September 2022
15 September 2022
PORTMEIRION GROUP PLC
('the Group')
Interim results for the six months ended 30 June 2022
Top and bottom line growth building on record 2021 sales year in H1
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 2022.
The Group experienced healthy trading in the first half with year-on-year
sales growth of 5% despite worsening consumer sentiment due to the significant
macro-economic headwinds. Sales are now 30% above pre-pandemic 2019 levels as
we continue to successfully expand our customer base through developing online
channels, new product and new geographies.
Headlines
Financial
· Record H1 Group revenue of £45.5 million, an increase of 5% over the
prior year (H1 2021: £43.1 million).
· Group sales 30% ahead of pre-pandemic 2019 levels demonstrating
significant expansion in our customer base.
· Headline profit before tax(1) grew by 30% to £2.0 million (H1
2021: £1.5 million).
· H1 headline operating profit margin(1) increased from 4.0% to 4.3% as
part of our long term ambition to achieve full year operating margin of 13%
(FY 2021: 7.2%).
· Maintained strong online channel sales growth achieved during the
pandemic despite physical retail reopening. Total online channel sales in our
core UK and US sales markets now 55% (H1 2021: 53%). Own ecommerce sales
declined by 16% as long term market trends stabilise but remain 111% ahead of
pre-pandemic 2019 levels.
· Headline basic earnings per share(1) up to 12.00p per share (H1
2021: 9.12p).
· Strong balance sheet maintained and significant headroom within
current borrowing facilities.
· Interim dividends to be resumed with dividend of 3.50p per share
(H1 2021: nil).
· Expectation of sales to be at least in line with record sales year in
2021, with profit also ahead of the prior year.
Operational
· Productivity in Stoke-on-Trent ceramic factory up 5% as we start to
obtain the benefits from automation capex.
· Long term energy hedge until Q1/2024 continues to insulate the
Group against ongoing volatility in energy prices.
· Nambé brand (acquired in 2019) continues to grow, up 14% over 2021 as
we successfully execute on acquisition integration.
· Strategic focus on international markets yields ongoing, encouraging
growth from markets including South Korea, Canada and China.
· New product launches continue to represent more than 10% of Group
sales, including new collections to celebrate the 50(th) anniversary of
Portmeirion Botanic Garden.
· Our Wax Lyrical factory achieved ISO9001:2015 accreditation,
demonstrating the high quality standards in our UK home fragrance facility.
· Post-period end, AromaWorks London brand and intellectual property
acquired in August 2022 to add scale and synergies to home fragrance division
operations.
(1) Headline profit before tax, headline operating profit margin and headline
basic earnings per share excludes exceptional items - see note 3.
Mike Raybould, Chief Executive, commented:
"Whilst we are not immune to the significant macro headwinds initiated by the
war in Ukraine, our brands remain in strong demand around the world, and we
have seen encouraging year on year growth continue through July and August.
Off the back of a record revenue year in 2021 our increasingly diversified
sales markets and continued execution of our strategy have enabled us to again
grow top line sales and bottom line profits in the first half, and we expect
to see sales at least in line with the record performance in 2021 and profit
for the full year also ahead of the prior year. Although the ongoing impact of
input cost inflation and labour market disruption is more significant than
previously forecast we still expect to grow operating margins in the short
term in 2022 and see significant upside in the medium and long term as and
when macro-economic conditions normalise and the full value of our brands and
business transformation becomes clear. We have therefore reintroduced our
interim dividend which was postponed during the Covid-19 pandemic.
We have a great pipeline of new product scheduled to launch over the next 24
months, and have just launched new and much improved UK and international
ecommerce sites as part of our key online strategy and continue to invest in
and develop new customers in rest of world sales markets. With the strength
and longevity of our portfolio of brands, there remains a significant
opportunity to expand our sales and customer base around the world over the
coming years."
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 743443 mraybould@portmeiriongroup.com
Chief Executive
David Sproston, +44 (0) 1782 743443 dsproston@portmeiriongroup.com
Group Finance Director
Hudson Sandler:
Dan de Belder +44 (0) 207 796 4133 ddebelder@hudsonsandler.com
Nick Moore nmoore@hudsonsandler.com
Panmure Gordon (UK) Limited:
(Nominated Adviser and Broker) +44 (0) 207 886 2500
Freddy Crossley Corporate Finance
Rupert Dearden Corporate Broking
Singer Capital Markets:
(Joint +44 (0) 207 496 3000
Broker)
Peter Steel Investment Banking
Rachel Hayes
Interim Review
Trading
Following a record sales performance in 2021, we are pleased to see further
growth in H1 2022 despite the well-publicised macro-economic factors driven by
ongoing inflation and supply chain disruption and the war in Ukraine, which
have disrupted our markets and created significant inflationary pressure on
energy costs and labour rates. We remain covered on our own energy prices
until Q1/2024 by the long term energy hedge put in place last year.
As retail markets have fully reopened we have maintained our strong online
channel sales growth achieved during the pandemic despite physical retail
reopening. In our core UK and US markets, 55% of sales went through all online
channels (H1 2021: 53%).
We continued to benefit from our efforts to diversify across international
markets and saw strong growth in South Korea, Canada and China.
We have continued to invest in and develop new products for our customers and
have seen a number of successful launches including a range of collections to
celebrate the 50(th) anniversary of Portmeirion Botanic Garden.
Financial highlights
Revenue was £45.5 million for the first six months of the year, an increase
of 5% over the previous year (H1 2021: £43.1 million).
Our operating performance was encouraging; headline operating profit(1) was
£2.0 million which was significantly ahead of the prior year (H1 2021: £1.7
million). This left the Group's operating margin at 4.3% for the first half of
the year (H1 2021: 4.0%).
Following the strong revenue and operating performance, headline profit before
tax(1) was £2.0 million (H1 2021: £1.5 million).
Headline basic earnings per share(1) was 12.00p per share (H1 2021: 9.12p).
(1) Headline profit before tax, headline operating profit and headline
earnings per share exclude exceptional items (see note 3).
Geographical and online performance
The Group's largest sales market, the US, accounted for 31% of total Group
revenue. Sales were 7% behind the first half of 2021, largely due to retailers
reducing stock levels following Covid-19 supply chain disruption and fears of
a slowdown in consumer spending. Retailer sales to the end consumer have
remained robust, and we believe our diversified range of products and sizeable
online penetration will result in an improved trading performance in the US
market in the second half of the year.
Our second largest market is the UK, which accounted for 25% of total Group
sales. Sales were down 13% on the prior year due to a challenging retail
environment, particularly due to the impact on disposable income from large
inflationary pressures including significant increases in energy prices.
In South Korea, sales grew by 38% as our strategy of stabilisation and
diversification of products continued to provide a robust platform for growth.
We have continued to introduce new ranges in this market which have performed
well and we expect further growth in 2023 with increased penetration of new
products.
In our rest of world markets, sales were up 28% over the same period in 2021
as various restrictions around the world ended and economies started to
recover from the pandemic. In particular we saw a strong sales rebound in
Canada, where sales grew 73% and China and the Far East, with sales up 100% as
we deepen our relationship with our new distributor. Sales in most of our
other international markets were at least in line with 2021 levels.
Our own ecommerce sales decreased by 16% in the first half of 2022 as physical
retail stores reopened, but remain significantly ahead of pre-pandemic 2019
levels (+111%). Total online sales in our core UK/US markets now account for
55% of sales made in those markets (2021: 53%).
Profit
In the first half of 2022, the Group made a headline profit before tax(1) of
£2.0 million; this compared to a profit before tax of £1.5 million in 2021.
Given the macro-economic events in our main sales markets, it is pleasing to
continue to deliver sales and profit growth which is testament to the strength
of the Group's brands.
(1) Headline profit 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
maintain a prudent and sustainable level of dividend cover.
Due to the Group's ability to grow in such a challenging trading environment,
and our medium term expectations for profit and cash generation, the Board is
declaring an interim dividend of 3.50p per share (2021: nil). The interim
dividend will be paid on 21 October 2022. The ex-dividend date will be 22
September 2022 with a record date of 23 September 2022.
The cover for dividends paid and proposed for 2021 was 3.0 times. We remain of
a view that a dividend cover level of approximately 3.0 times is in the
long-term interest of the Group and shareholders.
Balance sheet
The Group ended the first half of 2022 with net debt of £6.8 million at 30
June 2022; this compares to net cash of £0.1 million at 30 June 2021 and net
cash of £0.7 million at 31 December 2021. In addition to the cash balance of
£3.2 million and bank borrowings of £10.0 million, the Group also has
unutilised committed bank facilities of £18.4 million.
Our stock balance at 30 June 2022 was £42.6 million compared to £29.3
million at 30 June 2021 and £29.2 million at 31 December 2021. Approximately
one third of the inventory increase is driven by cost price inflation, freight
rates and the movement in GBP/USD exchange rate which is used to revalue
inventory held in our US division. The remaining increase is driven by forward
purchasing of US inventory to avoid third quarter supply chain disruption,
which we expect to be timing only and therefore inventory levels will reduce
to more normalised levels by the end of the year.
We carry significant goodwill and intangible asset values on our balance sheet
of some £16.2 million. These balances largely relate to the acquisitions of
Wax Lyrical and Nambé and the carrying value of 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 (ESG)
We are focused on doing business ethically and sustainably - for our
shareholders, the environment, our people, our customers, our suppliers and
the communities we operate in. The Group has a long history of innovation and
a strong track record of continual improvements in ESG.
The Group continues to drive forward our ESG agenda and assess the materiality
of our impacts and make tangible progress towards a more sustainable world. We
expect to provide a detailed update to investors in Q4 2022 regarding the
scope of this work and a targeted, deliverable strategy.
Our commitment to our people, ethics and governance are unfaltering, supported
by our policies and processes. Further details on our corporate culture and
its integration within the Group can be found on our website,
www.portmeiriongroup.com, and in the Section 172(1) Statement on Stakeholder
Engagement, Our Commitment to ESG and Corporate Governance Statements in our
Annual Report and Accounts.
Strategic areas of focus
Our homeware brands have a combined history of more than 750 years and are
much loved around the world.
Our strategy is to drive sustainable long-term sales growth together whilst
increasing operating margins to 13%.
We see a significant opportunity to expand our customer base by taking share
in existing and new markets through:
1. increasing sales through online channels including our own ecommerce
sites;
2. developing rest of world sales markets and new geographies;
3. using new product development to expand share in existing new product
categories; and
4. leveraging our brands more effectively by cross selling across customer
and sales markets.
We are targeting returning operating margins to historical levels in the
medium term and to 13% (2021: 7.2%) over the next five years. We believe
growth in operating margins will be delivered by:
1. improved mix as we increase sales through our own ecommerce sites;
2. productivity gains in our two UK factories from capital investments in
automation;
3. leveraging our portfolio of brands more effectively by driving higher
sales against our fixed cost base; and
4. increasing the scale and profitability of our home fragrance division,
Wax Lyrical.
Accelerate our online transformation
As online sales markets have reverted to their longer term growth trajectory
following the reopening of physical retail stores around the world, we are
pleased to hold on to the gains we made in online channels over the past 24
months. Total online channel sales in our core UK and US markets were 55%
(2021: 53%).
Although sales from our own ecommerce sites reduced by 16% versus 2021, they
remain up 111% on pre-Covid 2019 levels. Following a period of stabilisation
in 2022 we expect our ecommerce site sales to resume growth in 2023.
We have increased the depth and expertise of our digital marketing and online
sales teams over the past two years and continue to deploy investments behind
front end systems and direct to consumer warehouse capacity. Following the
launch of new US market ecommerce sites in Q4 2020, we have built and launched
our new UK ecommerce sites in August 2022 that will enable a much richer brand
experience for our customers, improved conversion levels particularly for
mobile traffic and enable improved cross-selling.
Rest of world expansion
The Group sells into more than 70 countries around the world, with more than
85% of these sales made in our three key markets of the US, UK and South
Korea. We see a great opportunity to establish our brands and grow in other
markets around the world. We will do this through taking on new distributor
relationships and are particularly focused on Asia, Middle East and Europe.
Rest of world market sales grew by 28% over 2021 levels (from £5.0 million to
£6.4 million) and by 78% from 2019. Our Canadian sales operation continued to
prosper with sales growth of 73% over H1 2021 with strong online channel
market growth. We have continued to build with our new Chinese distributor,
signed up in 2021, with growth in H1 2022 of 100%.
Our ambition is to double the annual revenue stream from rest of world markets
within the next five years.
New product development
Developing and launching new product is a key driver of sales growth and our
ambition is to increase market share through new product development.
We have continued to see an improved contribution with new product launches
contributing over 10% of sales in H1 2022.
We have a strong pipeline of product launches for the next 12 months. Our
product roadmaps are built around:
- maintaining and building out our key heritage ranges including
Portmeirion Botanic Garden, Spode Christmas Tree and Spode Blue Italian; and
- growing share in a younger age demographic through more contemporary
product launches.
A list of our current ranges can be found at www.portmeirion.co.uk,
www.spode.co.uk (http://www.spode.co.uk) , www.waxlyrical.com and
www.portmeirion.co.uk/int/. Customers in the United States should go to
www.portmeirion.com and www.nambe.com. Our Canadian website operates under
www.haustopia.com.
Growing our operating margins
Our roadmap to increase automation in our Stoke-on-Trent ceramic factory
continues at pace. Productivity (output per labour hour) increased by 5% as
recent capital investments came into effect. Further projects are underway for
launch in 2023 that together with completed projects will contribute to
further improvements in efficiency.
We are on track to launch our new warehouse system and order integration in
our US warehouses in early 2023 that will drive both cost and sales order
synergies.
Corporate governance
The Board is 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
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.
In July 2022, Jacqui Gale, our Chief Commercial Officer, stepped down from the
Board and left the Group in September 2022. At the same time, the Group was
pleased to announce that Bill Robedee, previously on the Board as the
President of our North America division, assumed the role of Global Sales
Director.
Strategic acquisitions
The Group remains committed to acquiring businesses where the combination
would be earnings enhancing and support our long term strategy.
On 12 August 2022, we announced the acquisition of the AromaWorks London
brand, intellectual property and certain stock, trade and assets for a total
consideration of £0.44 million. AromaWorks London manufactures a range of
home fragrance products using essential oils in the health and wellbeing
category with a retailer customer base in the UK and US. This acquisition will
add further scale to our existing home fragrance business, Wax Lyrical, and we
expect to deliver cost synergies and cross-selling opportunities within the
first twelve months.
Outlook
We are pleased to record continued sales and profit growth in the first half
of the financial year building on the back of our record Group sales last year
and for the remainder of the year we expect to continue towards another year
of growth across the business. This has been despite the significant worsening
in consumer sentiment due to the impact of the Ukraine war on energy prices
and general cost of living. Our business benefits from increasing sales market
diversification and we believe our strategy of developing new geographies,
developing online channels and launching compelling new product will enable us
to continue to grow market share.
We are cognisant of ongoing and significant input cost price inflation
together with challenges of retention and absence levels in labour markets. We
have successfully mitigated these in the first half with sales price rises and
productivity gains in our factories, allowing us to report continued
improvement in operating margins. However, it is clear that, at least in the
very short term, these factors will limit the level of operating margin growth
we can deliver.
We are pleased to see early signs that in the US, our largest sales market,
consumer sentiment is improving and our order books for our key 2022 Christmas
trading period in the US are strong and bolstered by range extensions. We also
expect to continue to grow in rest of world markets in the second half as we
leverage our portfolio of brands more effectively. Our UK sales market is
difficult to forecast due to the ongoing impact of cost of living rises and
the October energy price cap changes. The UK is 31% of annual Group sales and
we remain cautious in this market and expect sales to remain lower in the
second half of 2022.
Despite this, we remain confident in our medium and long term aspirations to
grow our sales and operating margins. We have made huge progress in
strengthening our business over the last two years and our brands have shown
their resilience to the macro backdrop with continued growth. For 2022, we
expect sales to be at least in line with a record sales year in 2021, with
pre-tax profit also ahead of 2021 and operating margin growth of at least 10%
on 2021.
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. We have made and continue to make significant improvements to our
business and are committed to our long term sales growth strategy and driving
our operating margins by improving efficiencies in everything we do.
Dick Steele Mike
Raybould
Non-executive Chairman Chief Executive
Consolidated Income Statement
Unaudited
Notes Six months to 30 June Six months to 30 June 2021 Year to
2022 £'000 31 December 2021
£'000 £'000
Revenue 2 45,467 43,136 106,018
Operating costs (43,510) (41,415) (98,375)
Headline operating profit(1) 1,957 1,721 7,643
Exceptional items 3
- restructuring costs (1,006) (378) (1,036)
- GMP equalisation costs - - (197)
Operating profit 951 1,343 6,410
Interest income - 2 12
Finance costs 4 (212) (299) (580)
Other income 265 - -
Profit on sale of fixed assets - 120 120
Headline profit before tax(1) 2,010 1,544 7,195
Exceptional items 3
- restructuring costs (1,006) (378) (1,036)
- GMP equalisation costs - - (197)
Profit before tax 1,004 1,166 5,962
Tax 5 (218) (233) (2,721)
Profit for the period attributable to equity holders
786 933 3,241
Earnings per share 7
Basic 5.72p 6.79p 23.58p
Diluted 5.70p 6.77p 23.49p
Headline earnings per share(1) 7
Basic 12.00p 9.12p 38.85p
Diluted 11.97p 9.09p 38.71p
Dividends paid and proposed per share 6 3.50p 0.00p 13.00p
All the above figures relate to continuing operations.
(1)Headline operating profit is statutory operating profit of £1,957,000 (H1
2021: £1,721,000) before exceptional items of £1,006,000 (H1 2021:
£378,000). Headline profit before tax is statutory profit before tax of
£2,010,000 (H1 2021: £1,544,000), after adding back the exceptional items.
Consolidated Statement of Comprehensive Income
Unaudited
Six months
to 30 June Six months Year to
2022 to 30 June 31 December
£'000 2021 2021
£'000 £'000
Profit for the period 786 933 3,241
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of net defined benefit pension scheme asset/(liability) - 3,000 2,505
Deferred tax relating to items that will not be reclassified subsequently to
profit or loss
- (750) 267
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 2,082 (304) 64
Deferred tax relating to items that may be reclassified subsequently to profit
or loss
- - 45
Other comprehensive income for the period 2,082 1,946 2,881
Total comprehensive income for the period attributable to equity holders
2,868 2,879 6,122
Consolidated Balance Sheet
Unaudited
30 June
2022 30 June
£'000 2021 31 December
£'000 2021
£'000
Non-current assets
Goodwill 8,978 8,978 8,978
Intangible assets 7,176 6,769 7,126
Property, plant and equipment 16,326 13,212 14,398
Right-of-use assets 6,366 6,328 6,409
Pension scheme surplus 1,360 1,152 910
Deferred tax asset - 80 -
Total non-current assets 40,206 36,519 37,821
Current assets
Inventories 42,597 29,259 29,224
Trade and other receivables 13,998 12,329 19,243
Current income tax asset 649 895 662
Cash and cash equivalents 3,189 9,043 7,616
Total current assets 60,433 51,526 56,745
Total assets 100,639 88,045 94,566
Current liabilities
Trade and other payables (18,188) (12,032) (16,245)
Borrowings (6,044) (2,979) (1,986)
Lease liabilities (1,842) (1,595) (1,695)
Total current liabilities (26,074) (16,606) (19,926)
Non-current liabilities
Deferred tax liability (2,562) (1,774) (2,609)
Borrowings (3,977) (5,959) (4,965)
Lease liabilities (4,967) (5,058) (5,119)
Total non-current liabilities (11,506) (12,791) (12,693)
Total liabilities (37,580) (29,397) (32,619)
Net assets 63,059 58,648 61,947
Equity
Called up share capital 710 710 710
Share premium account 18,344 18,344 18,344
Investment in own shares (3,124) (3,124) (3,124)
Share-based payment reserve 160 212 128
Translation reserve 3,268 773 1,186
Retained earnings 43,701 41,733 44,703
Total equity 63,059 58,648 61,947
Consolidated Statement of Changes in Equity
Unaudited
Share-based payment
Share Investment reserve
Share premium in own £'000 Translation Retained
capital account shares reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 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
Profit for the period - - - - - 2,308 2,308
Other comprehensive income for the period
- - - - 413 522 935
Total comprehensive income for the period
- - - - 413 2,830 3,243
Increase in share-based payment reserve
- - - 4 - - 4
Transfer on exercise or lapse of options
- - - (88) - 88 -
Deferred tax on share-based payment
- - - - - 52 52
At 31 December 2021 710 18,344 (3,124) 128 1,186 44,703 61,947
Profit for the period - - - - - 786 786
Other comprehensive income for the period
- - - - 2,082 - 2,082
Total comprehensive income for the period
- - - - 2,082 786 2,868
Increase in share-based payment reserve
- - - 32 - - 32
Dividends paid - - - - - (1,788) (1,788)
At 30 June 2022 710 18,344 (3,124) 160 3,268 43,701 63,059
Consolidated Statement of Cash Flows
Unaudited
Six months Year to
to 30 June 2022 Six months 31 December
£'000 to 30 June 2021
2021 £'000
£'000
Operating profit 951 1,343 6,410
Adjustments for:
Depreciation of property, plant and equipment 895 773 1,652
Depreciation of right-of-use assets 1,008 914 1,933
Amortisation of intangible assets 408 403 698
Charge for share-based payments 32 60 64
Charge for GMP equalisation - - 197
Exchange (loss)/gain (193) (157) 36
Other income 265 - -
Loss on disposal of intangible fixed assets 264 - -
Loss on disposal of tangible fixed assets 5 - 17
Operating cash flows before movements in working capital 3,635 3,336 11,007
Increase in inventories (11,388) (2,096) (2,071)
Decrease/(increase) in receivables 6,100 2,864 (3,960)
Increase/(decrease) in payables 754 (465) 3,707
Cash (used by)/generated from operations (899) 3,639 8,683
Contributions to defined benefit pension scheme (450) (900) (1,350)
Interest paid (114) (240) (368)
Income taxes paid (179) (208) (461)
Net cash (outflow)/inflow from operating activities (1,642) 2,291 6,504
Investing activities
Interest received - 2 12
Proceeds on disposal of property, plant and equipment - 775 786
Purchase of property, plant and equipment (2,663) (2,465) (4,511)
Purchase of intangible assets (491) (228) (843)
Net cash outflow from investing activities (3,154) (1,916) (4,556)
Financing activities
Dividends paid (1,788) - -
New bank loans raised 4,060 - -
Principal elements of lease payments (1,057) (897) (1,927)
Repayments of borrowings (1,000) (2,000) (4,000)
Net cash inflow/(outflow) from financing activities 215 (2,897) (5,927)
Net decrease in cash and cash equivalents (4,581) (2,522) (3,979)
Cash and cash equivalents at beginning of period 7,616 11,590 11,590
Effect of foreign exchange rate changes 154 (25) 5
Cash and cash equivalents at end of period 3,189 9,043 7,616
Notes to the Interim Financial Information
1. Basis of preparation
The financial information included in the interim results announcement for the
six months to 30 June 2022 was approved by the Board on 14 September 2022.
The interim financial information for the six months to 30 June 2022 has not
been audited or reviewed and does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The Company's statutory
accounts for the year ended 31 December 2021, prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006.
The interim financial information has been prepared in accordance with IFRS on
the historical cost basis, except that some derivative financial instruments
are stated at their fair value. The same accounting policies, presentation and
methods of computation are followed in the interim financial statements as
were applied in the Group's last audited financial statements for the year
ended 31 December 2021.
Statutory accounts for the year ended 31 December 2021 have been delivered to
the Registrar of Companies.
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, Ukraine war, cash flow forecasts, and available banking facility
with appropriate headroom in facilities and financial covenants.
Details of the Covid-19 pandemic and Ukraine war impact on the Group and its
going concern assessment are included in the Group's statutory financial
statements for the year ended 31 December 2021. 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 and Ukraine war 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 80 of the Group's 2021 Financial Statements.
Government grants
In prior periods, the Group received funding from various Governments in
relation to Covid-19. Government income was 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 2021
Operating segment 2022 2021 £'000
£'000 £'000
UK 27,567 26,480 59,686
North America 17,900 16,656 46,332
45,467 43,136 106,018
Six months Six months Year to
to 30 June to 30 June 31 December 2021
Geographical market 2022 2021 £'000
£'000 £'000
United Kingdom 11,531 13,264 32,871
United States 14,084 15,126 42,492
South Korea 13,443 9,724 18,680
Rest of the World 6,409 5,022 11,975
45,467 43,136 106,018
3. Exceptional items
Six months Six months Year to
to 30 June to 30 June 31 December 2021
2022 2021 £'000
£'000 £'000
Restructuring costs 1,006 378 1,036
GMP equalisation costs - - 197
1,006 378 1,233
Exceptional costs relate to a restructuring 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
2022 2021 £'000
£'000 £'000
Interest paid 121 190 361
Interest on lease liabilities 91 92 192
Net interest expense on pension scheme - 17 27
212 299 580
Notes to the Interim Financial Information
Continued
5. Taxation
Tax for the interim period is charged at 22% (year to 31 December 2021: 20%)
representing the best estimate of the weighted average annual corporation tax
rate expected for the full year.
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
An interim dividend of 3.50p (2021: 0.00p) per ordinary share will be paid on
21 October 2022 to shareholders on the register on 23 September 2022. During
the period a final dividend of 13.00p per ordinary share was paid in respect
of the previous financial year.
7. Earnings per share
Six months Six months Year to
to 30 June to 30 June 31 December 2021
2022 2021 £'000
£'000 £'000
Earnings
Earnings for the purpose of basic and diluted earnings per share, being profit 786 933 3,241
for the period attributable to equity holders
Six months Six months Year to
to 30 June to 30 June 31 December 2021
2022 2021 £'000
£'000 £'000
Number of shares
Weighted average number of shares for the purpose of basic earnings per share
13,750,919 13,743,924 13,747,450
Weighted average dilutive effect of conditional share awards
33,507 42,784 49,235
Weighted average number of shares for the purpose of diluted earnings per 13,784,426 13,786,708 13,796,685
share
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
2022 2021 £'000
£'000 £'000
Profit for the period attributable to equity holders 786 933 3,241
Add back/(deduct):
Exceptional items 1,006 378 1,233
Tax effect of exceptional items (142) (58) (223)
Exceptional impact of remeasuring deferred tax balances from 19% to 25%
- - 1,090
Headline earnings 1,650 1,253 5,341
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
2022 2021 £'000
£'000 £'000
Operating profit 951 1,343 6,410
Add back:
Depreciation 1,903 1,687 3,585
Amortisation 408 403 698
Earnings before interest, tax, depreciation and amortisation 3,262 3,433 10,693
9. Retirement benefit schemes
Defined benefit scheme
The defined benefit obligation as at 30 June 2022 is calculated on a
year-to-date basis, using the latest actuarial valuation as at 31 December
2021 adjusted for payments to the scheme in line with the Schedule of
Contributions.
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.
10. Government grants
Government grants were receivable as part of Government initiatives 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 has previously received funding from the UK Government's
'Coronavirus Job Retention Scheme' and retail support grants, the US
Government's 'Paycheck Protection Programme' and the Canadian Government's
'Emergency Wage Subsidy'. In total this support amounted to £nil (2021:
£312,000).
11. Related party transactions
The Group's related parties are as disclosed in the Report and Accounts for
the year ended 31 December 2021. There were no material differences in related
parties or related party transactions in the six months ended 30 June 2022
except for transactions with key management personnel.
The most significant of these was on 25 April 2022, under The Portmeirion 2012
Approved and Unapproved Share Option Plans, when 40,000, 25,000, 25,000,
25,000, 25,000 and 11,000 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 £5.70 per share when the market price was £5.70 per share.
In addition, on 25 April 2022, under The Portmeirion Group 2018 Deferred
Incentive Share Option Plan, 10,813, 5,506, 4,279, 5,706 and 7,051 share
option awards were granted to M Raybould, M Knapper, D Sproston, J Gale and W
Robedee respectively at a total exercise price of £1 per individual when the
market price was £5.70 per share.
12. Post balance sheet events
On 12 August 2022, the Group acquired the AromaWorks London brand,
intellectual property and certain stock, trade and assets for a total
consideration of £0.44 million. AromaWorks manufactures a range of home
fragrance products using essential oils in the health and wellbeing category
with a retailer customer base in the UK and US.
13. Availability of document
A copy of the interim results will shortly be available on the Company website
at www.portmeiriongroup.com.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BKQBBDBKBCCDRecent news on Portmeirion
See all newsREG - Portmeirion Group - Annual Report & Accounts and Notice of AGM
AnnouncementREG - Portmeirion Group - Director's Dealing
AnnouncementREG - Portmeirion Group - Director's Dealing
AnnouncementREG - Portmeirion Group - Director's Dealing
AnnouncementREG - Portmeirion Group - Director's Dealing
Announcement