REG - Portmeirion Group - Interim Results
19/09/2024 07:00
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RNS Number : 7751E Portmeirion Group PLC 19 September 2024
19 September 2024
PORTMEIRION GROUP PLC
('the Group')
Interim results for the six months ended 30 June 2024
Sales growth in US and UK, South Korea challenging as anticipated
Current trading in line with market expectations with a strong Christmas order
book
Portmeirion Group PLC, the owner, designer, manufacturer and omni-channel
retailer of leading homeware brands in global markets, is pleased to announce
its results for the six months ended 30 June 2024.
Financial summary
H1 2024 H1 2023 FY 2023
£m £m £m
Revenue 36.6 44.1 102.7
Headline (loss)/profit before tax(1) (2.0) 0.0 3.0
Statutory (loss)/profit before tax (2.6) (0.1) (8.5)
Headline EBITDA(1) 0.8 2.8 9.2
EBITDA 0.1 2.7 8.5
Headline basic (loss) / earnings per share(1) (15.81p) (0.12p) 21.36p
Statutory Basic (loss) / earnings per share (19.18p) (0.82p) (61.46p)
Dividends proposed and paid per share in respect of the period 1.50p 3.50p 5.50p
Free cash flow -5.2 -3.2 4.4
Net debt -13.4 -15.0 -7.9
(1)Headline profit before tax, headline EBITDA, headline operating margin and
headline basic earnings per share excludes exceptional items - see note 3.
Financial
● H1 Group revenue of £36.6 million, a decrease of 17% compared to the prior
year (H1 2023: £44.1 million) due to reduced sales in South Korea, as
previously indicated.
● Excluding South Korea, sales were up 5% in constant currency.
● Headline loss before tax(1) of £2.0 million (H1 2023: £0.0 million) which
was in line with the Board's expectations.
● Sales growth in core UK and US markets. South Korea sales impacted by
challenging consumer environment and high stock levels taking more time to
sell through.
● Interim dividend declared of 1.50p per share (H1 2023: 3.50p) to reflect
rebalancing of H1/H2 dividends, with full year dividend market expectations
maintained.
● Inventory maintained below 2023 levels at £40.0 million (H1 2023: £42.1
million).
● Net debt is £13.4 million, being £1.6 million better than H1 2023 (H1 2023:
£15.0 million).
● In August 2024, the Group signed a new 4+1 year term £30 million revolving
credit facility with Barclays to consolidate and simplify our borrowing
structure and provide adequate working capital headroom for the future. This
replaces the Group's previous facilities totalling £24.5 million.
Operational
● Sales in the US were up 5% in constant currency combined with an improvement
in gross margins.
● Sales growth in UK of 11%, aided by further growth of Wax Lyrical, our home
fragrance division, which benefitted from the impact of recent new listing
wins in the grocery channel.
● As anticipated South Korea sales were down 61% against a comparison of an
abnormally high first half in 2023, with softer consumer spending compounded
by significant de-stocking by distributors and retailers.
● Strong H1 performance by the Spode brand with further sales growth, and expect
H2 sales increase due to further international growth in Spode Christmas Tree
range.
Current Trading & Outlook
● We expect FY24 profit to be up on prior year with improving operating margins,
in line with FY market expectations.
● Our cost restructuring is on track to deliver £4m lower overheads in FY24
supporting our commitment to growing operating margins in the short and long
term.
● Following a challenging first half in South Korea, we expect sales in the
second half to be broadly in line with the prior year.
● We have strong order books for Christmas, ahead of the same period last year,
despite markets remaining challenging and unpredictable.
Mike Raybould, Chief Executive, commented:
"We are pleased with the sales and gross margin growth in the US, our largest
sales market. We have added new distribution in the US in the last 6 months
and are confident that as the macroeconomics improve that we will see the
benefit in our top line sales.
Similarly, we continue to take market share in the UK Grocery channel with our
new Wax Lyrical home fragrance ranges and with further new major listings
since the half year, our factory in Cumbria continues to successfully ramp up
production levels and efficiency.
As previously indicated, the Group has seen reduced order flow in H1 2024 from
our South Korean market as high levels of stock take time to sell through.
However, we are encouraged that our brands continue to be in high demand in
this market as evidenced by growing online sales and that our Botanic Garden
tableware range remains in the top two for all online brand searches.
Furthermore, we are accelerating new product launches to help support this
market in the short term.
Our brands continue to resonate globally and with a healthy Christmas order
book, we are currently trading in line with board expectations and are on
track to meet Full Year market expectations."
Portmeirion Group PLC:
Mike Raybould, Chief Executive +44 (0) 1782 743 443 mraybould@portmeiriongroup.com
David Sproston, Group Finance Director +44 (0) 1782 743 443 dsproston@portmeiriongroup.com
Hudson Sandler:
Dan de Belder +44 (0) 207 796 4133 portmeirion@hudsonsandler.com
Nick Moore
Emily Brooker
Shore Capital: +44 (0) 207 408 4090
(Nominated Adviser and Joint Broker):
Patrick Castle Corporate Advisory
Lucy Bowden
Malachy McEntyre Isobel Jones Corporate Broking
Singer Capital Markets
(Joint Broker): +44 (0) 207 496 3000
Peter Steel Investment Banking
Asha Chotai
NOTES TO EDITOR:
Portmeirion Group PLC is a leading, omni-channel British ceramics manufacturer
and retailer of leading homeware brands.
Based in Stoke-on-Trent, United Kingdom, the Group owns six unrivalled
heritage and contemporary brands, with 750+ years of collective heritage;
Portmeirion, Spode, Royal Worcester, Pimpernel, Wax Lyrical and Nambé.
The Group serves markets across the world, with global demand driven by
diversified international markets including the key geographies of the US, UK
and South Korea.
Portmeirion Group has a proven capital-light, well developed and self-funded
growth strategy focused on building a wider customer base and growing the
sales footprint of its brands, through:
· Building and growing international sales markets
· Developing online sales channels in core markets
· Designing and launching new product to widen appeal and take market
share
· Leveraging brands and extensive product ranges
Interim Review
Financial highlights
Revenue was £36.6 million for the first six months of the year, a decrease of
17% over the prior year (H1 2023: £44.1 million). Excluding our South Korean
market, sales were up 5% in constant currency.
Our operating performance was negatively impacted by the sales reduction and
resulting reduced production levels in our UK tableware factory; headline
operating loss(1) was £1.2 million (H1 2023: profit of £0.7 million). This
left the Group's operating margin at -3.4% for the first half of the year (H1
2023: 1.6%).
Operating costs were reduced from £43.4 million to £37.9 million - this
included a net £2.3 million reduction in overheads, in line with our target
of reducing by £4 million (10%) on an annualised basis.
As a result of the reduced sales performance, headline loss before tax(1) was
£2.0 million (H1 2023: £nil).
Headline basic loss per share(1) was 15.81p (H1 2023: 0.12p).
(1) Headline profit before tax, headline operating profit and headline
earnings per share excludes exceptional items (see note 3).
Operational overview
The Group's largest sales market, North America (the US and Canada), accounted
for 40% of total Group revenue. Sales were 1% ahead of the first half of 2023
at £14.5 million (H1 2023: £14.4 million) and up 5% at constant currency as
sales stabilised after a period of retail destocking.
Our second largest market is the UK, which accounted for 35% of total Group
sales. Sales were 11% ahead of the prior year at £13.0 million (H1 2023:
£11.7 million) aided by further growth of over 25% in Wax Lyrical, our home
fragrance division, which benefitted from the impact of recent new listing
wins in the grocery channel.
In South Korea, our third largest market accounting for 15% of total Group
revenue, sales declined by 61% to £5.6 million (H1 2023: £14.3 million). H1
sales were against an abnormally high first half in 2023, with softer consumer
spending compounded by significant de-stocking by distributors and retailers.
We expect sales in the second half to be more in line with H2 2023.
In our rest of world markets, sales were down 4% over the same period in 2023
at £3.5 million (H1 2023: £3.7 million). This reduction was largely due to
timing of shipments to Asian markets such as Malaysia, and we expect the full
year rest of world sales outturn to be ahead of the prior year as part of our
long-term strategy.
We continue to invest in new products for our customers around the world and
are pleased with the initial performance of a number of new ranges including
the new Portmeirion Minerals tableware range and Wax Lyrical England home
fragrance products.
Balance sheet
The Group ended the first half of 2024 with net debt of £13.4 million at 30
June 2024; this compares to net debt of £15.0 million at 30 June 2023 and net
debt of £7.9 million at 31 December 2023. The increase in net debt since the
year end is largely driven by the year to date loss and an increase in
inventory as we begin to build our holdings of seasonal product ahead of the
important second half of the year.
In August 2024 the Group signed a new 4+1 year term £30m revolving credit
facility with Barclays, which replaced the existing facilities with Lloyds.
This new facility allows the Group to consolidate and simplify our borrowing
structure, whilst providing a secure structure and sufficient working capital
headroom for the future.
Our stock balance at 30 June 2024 was £40.0 million compared to £42.1
million at 30 June 2023 and £36.0 million at 31 December 2023. The increase
since the year end was largely driven by a build of stock for Q3 orders, with
seasonal product in transit at the half year date and home fragrance inventory
built for customer demand. We expect to see inventory levels decrease in the
second half of the year as these orders are fulfilled and remain committed to
reducing stock levels over the medium term.
Dividend
The Board remains committed to a sustainable dividend policy with an
appropriate level of cover. Our policy will ensure that we retain and invest
sufficient capital in our business to drive long-term growth in our brands. We
currently consider that a level of cover at or close to three times the
dividends paid and proposed for the year is the appropriate rate for the
medium-term to allow increased investment whilst providing a return for
shareholders.
Prudently, given the ongoing macro-economic uncertainty and the continued
prioritisation of further reduction to net debt, the Board is declaring an
interim dividend of 1.50p per share (2023: 3.50p). The interim dividend
reflects a rebalancing of H1/H2 dividends from 2023 to align with the
anticipated phasing of profitability, with no change to the full year dividend
market expectations. The interim dividend will be paid on 13 December 2024.
The ex-dividend date will be 14 November 2024 with a record date of 15
November 2024.
The cover for dividends paid and proposed for 2023 was 3.88 times.
Environmental, Social and Governance (ESG)
In May 2023, the Group launched a new sustainability strategy and roadmap
entitled 'Crafting a Better Future' which outlines the Group's commitment to
becoming a more sustainable business. The launch represents the next level of
ambition for the Group - to ensure that we continue to reduce our impact on
the environment and support our colleagues and communities.
We continue to drive our progress on reducing our energy consumption and in H1
reduced gas and electricity usage by 10% compared to the prior year as a
result of energy efficiency programmes. In addition, we have recently taken
the opportunity to extend our energy contracts until Q1 2027 at a lower cost.
Further details on our ESG commitments and integration within the Group can be
found on our website, www.portmeiriongroup.com, and in the Section 172(1)
statement - Engaging with key stakeholders, Our commitment to ESG and the
Corporate Governance Statements in our Annual Report and Accounts.
Corporate governance and Board
On 6 September 2024 the Group announced that Jonathan Hill joined with
immediate effect and will be appointed as Group Finance Director from 1
October 2024. Jonathan will join the Board following the satisfactory
completion of the required regulatory checks. Jonathan is a qualified
Chartered Accountant with over 20 years of finance and leadership experience
across multiple industry sectors having spent extensive time living abroad
heading up international finance teams and supporting sales market
development.
Following sixteen years with the Group, David Sproston is stepping down from
the Board and his role as Group Finance Director to pursue new opportunities.
We would like to thank David for all his hard work and time he has given to
the Group over his tenure and we wish him well in the future.
The Group is a committed member of the Quoted Companies Alliance ("QCA") and
has chosen to apply the QCA Corporate Governance Code, complying with its
principles throughout the period. Further details can be found on 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.
Group Strategy
Our homeware brands have a combined history of more than 750 years and are
much loved around the world.
We see a strong opportunity to grow our sales as sales markets around the
world normalise following a period of inflation and interest rate shock on
consumer spending.
We remain focused on:
1. Developing our key heritage ranges that are well known around the
world through new product extensions, new sales channels and new geography.
2. Increasing our market share in contemporary and giftware markets. We
intend to drive this via new product development and leveraging our well-known
brands and global sales infrastructure.
Executing our growth strategy
1. Geography - building and growing sales markets outside of our three
core markets of North America, UK and South Korea
Rest of World H1 sales were £3.5 million, a decrease of 4% over the prior
year. This decrease was mainly due to timing of order shipments and we expect
to grow our sales for the full year. Our products are sold in more than 80
countries around the world. Our three core markets of North America, UK and
South Korea accounted for 90% of Group sales in H1 2024.
We continue to see a significant opportunity to grow the contribution from
sales outside of core markets over the next 3-5 years.
2. Online - further developing online sales channels in our core markets
reaching more potential customers on more occasions
We continue to invest in building long term direct-to-consumer relationships
through our own ecommerce sites in the UK and US.
In our core UK and US markets, sales through all online channels accounted for
47% of sales (H1 2023: 48%, FY 2023: 44%). In addition, we continued to build
our online presence in international markets including South Korea where our
online customer, Coupang, continued to drive strong sales growth.
For our own websites, we have improved net profitability significantly across
the last 12 months and look forward to the benefit as we enter our
traditionally stronger second half.
3. Designing and launching new products - widening the appeal with our
existing customer base and taking market share
Sales from new product launches in H1 2024 accounted for in excess of 10% of
the Group's total sales, with a strong roadmap of new launches for the next 18
months.
We expect to see further strengthening of this KPI due to our investment in
this area. For 2024, we have launched a new UK made edition of our very
popular Spode Christmas Tree range which will sell in the US, UK and South
Korea during the fourth quarter.
4. Leveraging our brands
Our brands are well known across our key markets and we see a strong
opportunity to leverage our portfolio across different markets. We continue to
invest in our six global brands and work on leveraging the strength of our
brands outside of their current core markets.
Our Spode brand has grown again in H1 2024 and we expect further benefits in
H2 2024 due to market growth in Spode Christmas Tree outside of its core US
market.
Opportunity to improve our operating margins in medium and long term
1. Improving productivity and efficiency in our UK factories through
capital investment and process improvement
We are proud to manufacture around 50% of our tableware sales in our factory
in Stoke-on-Trent and all of our home fragrance product in our Lake District
factory.
We have accelerated capital investment in our Stoke-on-Trent site over the
last 3 years investing in automation, reducing manual handling so that we can
increase productivity and capabilities.
We are also delighted that ongoing project work to reduce our energy
consumption and carbon footprint resulted in 10% lower energy used in our UK
factories vs. 2023.
In our home fragrance factory, we have significantly increased our output as a
result of our sales growth in the grocery channel and seen benefits as we
leverage our fixed cost base in terms of throughput.
2. Leveraging our fixed cost base as we grow top line sales
We still see a significant opportunity to grow our sales footprint over the
next 3-5 years which will enable us to leverage our spare factory capacity and
improve capabilities in our UK factories and our existing sales and
distribution infrastructure around the world.
In 2024 we have taken the opportunity to restructure our cost base to provide
a significantly leaner operating model that should allow operating margins to
improve more quickly once sales markets around the world normalise. As a
result, we anticipate overhead costs will be around 10% (£4 million) lower in
2024 than the prior year.
3. Improving the profitability of our home fragrance division back to
pre-Covid levels
Wax Lyrical, our home fragrance division, had a positive H1 2024 with both an
improved sales and profit performance.
Our continued strategy to target grocery customers is starting to bear fruit.
Our sales since the half year have continued to grow with further new listings
added in major Grocery retailers. We expect the division to be profitable for
FY24.
Outlook
We are encouraged by our strong Christmas order books for the US and expect
our second half sales in South Korea to be more in line with the prior year.
However, we remain aware of the ongoing uncertainty and challenges facing
consumers across the world. In the short term, we expect this to continue to
impact consumer spending decisions for discretionary homeware products. We
expect FY24 profit to be up on prior year and in line with market forecasts
together with improved operating margins.
We are also accelerating new product design launches to help support customers
in Korea whilst higher stock levels of existing ranges continue to dissipate.
We continue to successfully navigate supply chain disruption from Asia,
including delays to factory production from the adverse weather events in
China over the summer and the increase in container shipping costs and sailing
times.
Despite short term market pressures, we remain confident in our medium and
long term ambitions to grow our top line sales and significantly improve our
operating margins. We have taken market share across key markets, continue to
drive further online penetration with our well known, established brands and
have a leaner cost base across our operations and global business.
Dick
Steele
Mike Raybould
Non-executive Chairman Chief Executive
Unaudited Consolidated Income Statement for the six months to 30 June 2024
Notes Six months to 30 June Six months to 30 June 2023 Year to
2024 £'000 31 December 2023
£'000 £'000
Revenue 2 36,609 44,122 102,743
Operating costs (37,857) (43,408) (97,920)
Headline operating (loss)/profit(1) (1,248) 714 4,823
Exceptional items 3
- restructuring costs (620) (124) (694)
- impairment charge - - (10,867)
Operating (loss)/profit (1,868) 590 (6,738)
Interest income - - 23
Finance costs 4 (770) (703) (1,813)
Headline (loss)/profit before tax(1) (2,018) 11 3,033
Exceptional items 3
- restructuring costs (620) (124) (694)
- impairment charge - - (10,867)
Loss before tax (2,638) (113) (8,528)
Tax 5 - - 72
Loss for the period attributable to equity holders
(2,638) (113) (8,456)
Earnings per share 7
Basic (19.18p) (0.82p) (61.46p)
Diluted (19.15p) (0.82p) (61.41p)
Headline earnings per share(1) 7
Basic (15.81p) (0.12p) 21.36p
Diluted (15.79p) (0.12p) 21.34p
Dividends proposed and paid per share 6 1.50p 3.50p 5.50p
All the above figures relate to continuing operations.
(1)Headline operating loss is statutory operating loss of £1,868,000 (H1
2023: £590,000 operating profit) add exceptional items of £620,000 (H1 2023:
£124,000). Headline loss before tax is statutory loss before tax of
£2,638,000 (H1 2023: loss before tax of £113,000), add exceptional items of
£620,000 (H1 2023: £124,000).
Unaudited Consolidated Statement of Comprehensive Income for the six months to 30 June 2024
Six months
to 30 June Six months Year to
2024 to 30 June 31 December
£'000 2023 2023
£'000 £'000
Loss for the period (2,638) (113) (8,456)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of net defined benefit pension scheme asset - - 504
Deferred tax relating to items that will not be reclassified subsequently to
profit or loss
- - (126)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 101 (1,050) (1,400)
Other comprehensive loss for the period 101 (1,050) (1,022)
Total comprehensive loss for the period attributable to equity holders
(2,537) (1,163) (9,478)
Unaudited Consolidated Balance Sheet for the six months to 30 June 2024
30 June
2024 30 June
£'000 2023 31 December
£'000 2023
£'000
Non-current assets
Goodwill 1,749 9,467 1,749
Intangible assets 7,728 9,119 7,511
Property, plant and equipment 14,712 16,640 15,020
Right-of-use assets 7,048 5,820 7,325
Pension scheme surplus 1,144 617 1,144
Total non-current assets 32,381 41,663 32,749
Current assets
Inventories 39,974 42,100 35,956
Trade and other receivables 16,868 17,319 19,053
Current income tax asset - 121 -
Cash and cash equivalents 733 1,460 888
Total current assets 57,575 61,000 55,897
Total assets 89,956 102,663 88,646
Current liabilities
Trade and other payables (12,906) (12,938) (13,860)
Current income tax liability (50) - (161)
Borrowings (14,165) (14,436) (7,825)
Lease liabilities (1,987) (1,239) (1,972)
Total current liabilities (29,108) (28,613) (23,818)
Non-current liabilities
Deferred tax liability (3,020) (3,213) (3,015)
Borrowings - (2,000) (983)
Lease liabilities (5,627) (5,058) (5,840)
Total non-current liabilities (8,647) (10,271) (9,838)
Total liabilities (37,755) (38,884) (33,656)
Net assets 52,201 63,779 54,990
Equity
Called up share capital 710 710 710
Share premium account 18,344 18,344 18,344
Investment in own shares (3,108) (3,108) (3,108)
Share-based payment reserve 90 58 66
Translation reserve 2,353 2,602 2,252
Retained earnings 33,812 45,173 36,726
Total equity 52,201 63,779 54,990
Unaudited Consolidated Statement of Changes in Equity for the six months to 30 June 2024
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 2023 710 18,344 (3,108) 148 3,652 46,937 66,683
Loss for the period - - - - - (113) (113)
Other comprehensive loss for the period
- - - - (1,050) - (1,050)
Total comprehensive loss for the period
- - - - (1,050) (113) (1,163)
Decrease in share-based payment reserve
- - - (90) - - (90)
Dividends paid - - - - - (1,651) (1,651)
At 30 June 2023 710 18,344 (3,108) 58 2,602 45,173 63,779
Loss for the period - - - - - (8,343) (8,343)
Other comprehensive income for the period
- - - - (350) 378 28
Total comprehensive loss for the period
- - - - (350) (7,965) (8,315)
Dividends paid - - - - - (482) (482)
Increase in share-based payment reserve
- - - 8 - - 8
At 31 December 2023 710 18,344 (3,108) 66 2,252 36,726 54,990
Loss for the period - - - - - (2,638) (2,638)
Other comprehensive income for the period
- - - - 101 - 101
Total comprehensive loss for the period
- - - - 101 (2,638) (2,537)
Increase in share-based payment reserve
- - - 24 - - 24
Dividends paid - - - - - (276) (276)
At 30 June 2024 710 18,344 (3,108) 90 2,353 33,812 52,201
Unaudited Consolidated Statement of Cash Flows for the six months to 30 June 2024
Six months Year to
to 30 June 2024 Six months 31 December
£'000 to 30 June 2023
2023 £'000
£'000
Operating (loss)/profit (1,868) 590 (6,738)
Adjustments for:
Depreciation of property, plant and equipment 625 686 1,459
Depreciation of right-of-use assets 1,073 988 2,058
Amortisation of intangible assets 317 434 884
Charge/(credit) for share-based payments 24 (90) (82)
Exchange gain/(loss) 35 618 (1,053)
Impairment charge - - 10,867
Operating cash flows before movements in working capital 206 3,226 7,395
(Increase)/decrease in inventories (4,018) (2,052) 5,161
Decrease in receivables 2,185 2,104 834
Decrease in payables (954) (3,275) (2,609)
Cash (used by)/generated from operations (2,581) 3 10,781
Contributions to defined benefit pension scheme - (300) (300)
Interest paid (558) (596) (1,569)
Income tax refunded (111) 587 684
Net cash (outflow)/inflow from operating activities (3,250) (306) 9,596
Investing activities
Purchase of property, plant and equipment (312) (753) (1,340)
Purchase of intangible assets (507) (1,007) (1,585)
Net cash outflow from investing activities (819) (1,760) (2,925)
Financing activities
Dividends paid (276) (1,651) (2,133)
Principal elements of lease payments (1,165) (1,086) (2,283)
Drawdown/(repayment) of short term borrowings 6,357 11,916 (964)
Repayments of borrowings (1,000) (7,250) (2,000)
Net cash inflow/(outflow) from financing activities 3,916 1,929 (7,380)
Net decrease in cash and cash equivalents (153) (137) (709)
Cash and cash equivalents at beginning of period 888 1,681 1,681
Effect of foreign exchange rate changes (2) (84) (84)
Cash and cash equivalents at end of period 733 1,460 888
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 2024 was approved by the Board on 18 September 2024.
The interim financial information for the six months to 30 June 2024 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 2023, 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 2023.
Statutory accounts for the year ended 31 December 2023 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 current trading performance and available banking facilities with
appropriate headroom in facilities and financial covenants.
There remains ongoing challenges in our sales markets around the world caused
by the negative impact of the cost of living crisis, but the Group remains
well-diversified with adequate headroom within both borrowing quantum and
covenants following the new revolving credit facility signed with Barclays in
August 2024.
The Group has also produced a sensitivity analysis to its cash flow forecast
based upon possible downside scenarios. We have modelled a 10% sales reduction
across all geographies to assess the potential impact of a significant
downturn in trading performance similar to the reduction experienced in 2020
during the Covid-19 pandemic. This demonstrated the Group still has sufficient
headroom within borrowing facilities and loan covenants.
We have also considered a reverse stress-tested scenario to try and assess the
amount of sales reduction required before the Group begins to approach maximum
facility and covenant headroom. This demonstrated that sales across the Group
could reduce by approximately 16% before we breached facility limits or
covenants, assuming no further mitigating cost actions were undertaken.
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 2023 Financial Statements.
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 2023
Operating segment 2024 2023 £'000
£'000 £'000
UK 22,024 29,547 60,076
North America 14,585 14,575 42,667
36,609 44,122 102,743
Six months Six months Year to
to 30 June to 30 June 31 December 2023
Geographical market 2024 2023 £'000
£'000 £'000
United Kingdom 12,990 11,703 30,782
North America 14,528 14,422 42,407
South Korea 5,558 14,333 21,488
Rest of the World 3,533 3,664 8,066
36,609 44,122 102,743
3. Exceptional items
Six months Six months Year to
to 30 June to 30 June 31 December 2023
2024 2023 £'000
£'000 £'000
Restructuring costs 620 124 694
Impairment charge - - 10,867
620 124 11,561
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 2023
2024 2023 £'000
£'000 £'000
Interest paid 558 596 1,568
Interest on lease liabilities 212 107 245
770 703 1,813
Notes to the Interim Financial Information
Continued
5. Taxation
Tax for the interim period is charged at 0% (year to 31 December 2023: 23%)
due to a loss being incurred during the period. The expected weighted average
annual corporation tax rate for the year is 25%.
6. Dividend
An interim dividend of 1.50p (2023: 3.50p) per ordinary share will be paid on
13 December 2024 to shareholders on the register on 15 November 2024. During
the period a final dividend of 2.00p (2023: 12.00p) 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 2023
2024 2023 £'000
£'000 £'000
Earnings
Earnings for the purpose of basic and diluted earnings per share, being profit (2,638) (113) (8,456)
for the period attributable to equity holders
Six months Six months Year to
to 30 June to 30 June 31 December 2023
2024 2023 £'000
£'000 £'000
Number of shares
Weighted average number of shares for the purpose of basic earnings per share
13,759,282 13,759,282 13,759,282
Weighted average dilutive effect of conditional share awards
18,231 13,658 10,566
Weighted average number of shares for the purpose of diluted earnings per 13,777,513 13,772,940 13,769,848
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 2023
2024 2023 £'000
£'000 £'000
Loss for the period attributable to equity holders (2,638) (113) (8,456)
Add back/(deduct):
Exceptional items 620 124 11,561
Tax effect of exceptional items (158) (28) (166)
Headline earnings (2,176) (17) 2,939
Notes to the Interim Financial Information
Continued
8. Reconciliation of earnings before interest, tax, depreciation and
amortisation (EBITDA)
Headline EBITDA
Six months Six months Year to
to 30 June to 30 June 31 December 2023
2024 2023 £'000
£'000 £'000
Headline operating (loss)/profit (1,248) 714 4,823
Add back:
Depreciation 1,698 1,674 3,517
Amortisation 317 434 884
Headline earnings before interest, tax, depreciation and amortisation 767 2,822 9,224
Statutory EBITDA
Six months Six months Year to
to 30 June to 30 June 31 December 2023
2024 2023 £'000
£'000 £'000
Operating (loss)/profit (1,868) 590 (6,738)
Add back:
Depreciation 1,698 1,674 3,517
Amortisation 317 434 884
Impairment charge - - 10,867
Earnings before interest, tax, depreciation and amortisation 147 2,698 8,530
9. Retirement benefit schemes
Defined benefit scheme
The defined benefit obligation as at 30 June 2024 is calculated on a
year-to-date basis, using the latest actuarial valuation as at 31 December
2023.
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 Group has made no contributions to the scheme during the period (2023:
£300,000).
10. Related party transactions
The Group's related parties are as disclosed in the Report and Accounts for
the year ended 31 December 2023. There were no material differences in related
parties or related party transactions in the six months ended 30 June 2024
except for transactions with key management personnel.
The most significant of these was on 7 May 2024, under The Portmeirion Group
2022 Approved and Unapproved Share Option Plans, when 50,000, 35,000, 35,000,
35,000 and 20,000 share options awards were granted to M Raybould, M Knapper,
W Robedee, D Sproston and M MacDonald respectively at an option price of
£2.575 per share when the market price was £2.575 per share.
11. Post balance sheet events
On 30 August 2024 the Group signed a new 4+1 year term £30 million revolving
credit facility with Barclays to consolidate and simplify our borrowing
structure and provide adequate working capital headroom. This replaces the
existing facilities provided by Lloyds.
12. 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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