Source - LSE Regulatory
RNS Number : 3810M
Portmeirion Group PLC
14 September 2023
 

14 September 2023

 

PORTMEIRION GROUP PLC

('the Group')

 

Interim results for the six months ended 30 June 2023

 

H1 results reflect previously stated US retailer destocking

H2 started in line with 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 2023.

 

Financial summary

 

 

H1 2023

£m

H1 2022

£m

FY 2022

£m

Revenue

44.1

45.5

110.8

Headline profit before tax1

0.0

2.0

8.0

(Loss)/profit before tax

(0.1)

1.0

7.0

Headline EBITDA1

2.8

4.3

13.2

EBITDA

2.7

3.3

12.1

Headline basic (loss) / earnings per share1

(0.12p)

12.00p

46.59p

Basic (loss) / earnings per share

(0.82p)

5.72p

40.39p

Dividends proposed and paid per share in respect of the period

3.50p

3.50p

15.50p

 

Financial

H1 Group revenue of £44.1 million, a decrease of 3% compared to the record prior year sales (H1 2022: £45.5 million); as previously stated this is reflective of increased caution on ordering from US customers, in particular the destocking by retailer customers.

Headline profit before tax1 was £0.0 million (H1 2022: £2.0 million).

H1 headline operating profit margin1 of 1.6% was impacted by the fall in revenue (H1 2022: 4.3%) and gross margin reduction.

H1 gross margin impacted by peak inflation in stock due to container freight rates which are expected to subside through H2 2023 and 2024.  

Solid growth in the UK, South Korea and rest of world markets.

Headline basic loss per share1 of 0.12p (H1 2022: earnings per share of 12.00p).

Interim dividend declared of 3.50p per share (H1 2022: 3.50p).

Strong balance sheet maintained with like-for-like inventory reduction of 5% since FY 2022 and further reduction expected in H2 2023.

Net debt is £15.0 million but we expect this to reduce below FY 2022 levels (FY 2022: £10.1 million) by year end as working capital unwinds and we maintain significant headroom within current borrowing facilities.

1Headline profit before tax, headline EBITDA, headline operating margin and headline basic earnings per share excludes exceptional items - see note 3.

 

Operational summary

Improved productivity in Stoke-on-Trent ceramic factory maintained through ongoing automation programme.

Spode brand continues to grow, with further benefit expected in H2 from new collaboration with Kit Kemp Design Studio and further new product development in Spode Christmas Tree range.

Rest of world ceramic sales continue to grow, diversification being a key part of our long term growth strategy, with further growth expected in H2.

Home fragrance division benefits from adding AromaWorks London brand with sales growth and factory now operating at a more efficient level. We expect growth and improved profitability in H2.

Launch of new sustainability strategy 'Crafting a Better Future' demonstrates the Group's commitment to becoming a more sustainable business. In H1 we were pleased to reduce gas and electricity usage by 6% compared to the prior year.

 

Current Trading & Outlook

H2 has started in line with our expectations and we have a strong Christmas order book, which is ahead of the same period last year.

We expect FY sales and profit to be in line with consensus market expectations which were revised in July as a result of North American retailer destocking.

We remain committed to our long term ambition of rebuilding operating margins.

 

 

Mike Raybould, Chief Executive, commented:

"As previously indicated, the Group has seen reduced order flow in H1 2023 across our North American market. This has been particularly noticeable amongst retail customers reducing stock levels. However we are confident that in the past few years we have made lasting market share gains in the US and have further incremental product listings agreed across key US department store chains for H2 2023.  Together with new product launches we therefore expect that sales in our US and Canadian markets will stabilise and return to growth in due course.

 

We are successfully controlling overheads despite the significant inflationary environment and will continue to target further global synergies in our cost base over the next 12 months. Alongside ongoing improved factory productivity in our Stoke site and as global container shipping rates return to historical levels, we remain confident of delivering our medium and long term operating margin growth targets.

 

We have made great strides on both operational and commercial fronts in the last few years and our brands continue to resonate well with consumers around the world."

 

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:

(Nominated Adviser and Joint Broker):

 

+44 (0) 207 408 4090


Patrick Castle

Corporate Advisory


Lucy Bowden

Malachy McEntyre

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 £44.1 million for the first six months of the year, a decrease of 3% over the record prior year sales (H1 2022: £45.5 million).

 

Our operating performance was negatively impacted by the sales reduction; headline operating profit1 was £0.7 million (H1 2022: £2.0 million). This left the Group's operating margin at 1.6% for the first half of the year (H1 2022: 4.3%).

 

Due to the reduced operating margin performance and increased interest costs, headline profit before tax1 was £nil (H1 2022: £2.0 million).

 

Headline basic loss per share1 was 0.12p (H1 2022: earnings per share of 12.00p).

 

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 33% of total Group revenue. Sales were 13% behind the first half of 2022 at £14.4 million (H1 2022: £16.7 million) as major retailers undertook aggressive destocking ahead of anticipated fears of a slowdown in consumer spending. Where we have retailer sales out data to the end consumer, this evidences that demand remains robust and we therefore believe our diversified range of products and sizeable online penetration will result in an improved trading performance once this destocking exercise is complete.  

 

Our second largest market is the UK, which accounted for 27% of total Group sales. Sales were slightly ahead of prior year at £11.7 million (H1 2022: £11.5 million) as we benefitted from additional sales from the AromaWorks London brand that the Group acquired in August 2022. We are closely monitoring the impact of inflationary pressures on consumer spending but currently this market is performing in line with our expectations.

 

In South Korea, our third largest market accounting for 32% of total Group revenue, sales grew by 7% to £14.3 million (H1 2022: £13.4 million) as we continued our strategy of increasing online exposure of our brands and diversifying our ranges. We have introduced new ranges in this market but expect both the increasing impact of inflation and currency movement to impact consumer sentiment in the short term.  

 

In our rest of world markets, sales were down 4% over the same period in 2022 at £3.7 million (H1 2022: £3.8 million). The prior year included some Q1 sales to Russia/Eastern Europe and some loss-making home fragrance contracts which we have since discontinued; excluding these, underlying ceramic sales were 10% 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 Spode collaboration with the Kit Kemp Design Studio.

 

Balance sheet

The Group ended the first half of 2023 with net debt of £15.0 million at 30 June 2023; this compares to net debt of £6.8 million at 30 June 2022 and net debt of £10.1 million at 31 December 2022. In addition to the cash balance of £1.5 million and bank borrowings of £16.4 million, the Group also has unutilised bank facilities of £10.1 million. The increase in net debt since 30 June 2022 is largely driven by working capital movements, with higher receivables due to customer mix and lower payables due to reduced inventory purchasing. We expect both of these movements to unwind in H2.

 

Our stock balance at 30 June 2023 was £42.1 million compared to £42.6 million at 30 June 2022 and £41.1 million at 31 December 2022. Excluding the impact of AromaWorks London inventory (brand acquired in August 2022) and seasonal shipping timing, we have reduced inventory from both June 2022 and December 2022 on a like-for-like basis by 5%. We have a number of initiatives in the second half of 2023 which should see further reductions in inventory and an improved net debt position by 31 December 2023 compared to the prior year end.

 

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.

 

Despite the short term challenges in the Group's trading performance, we expect to generate cash in the current financial year and with our medium term expectations for profit and cash generation, the Board is declaring an interim dividend of 3.50p per share (2022: 3.50p). The interim dividend will be paid on 15 December 2023. The ex-dividend date will be 16 November 2023 with a record date of 17 November 2023.

 

The cover for dividends paid and proposed for 2022 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.

 

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 6% compared to the prior year.

 

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

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. In June 2023, the Group announced that Jeremy Wilson had been appointed as a Non-executive Director.

 

Group Strategy

Our homeware brands have a combined history of more than 750 years and are much loved around the world.

 

We remain focused on our strategic goal of growing the sales footprint of the business over the next 3-5 years. We plan to do that by continuing to develop our key heritage ranges through product extensions and developing new sales channels to reach new customers, whilst at the same time increasing our market share in contemporary and giftware homewares through launching beautifully designed new products and leveraging these new ranges across our existing global sales infrastructure.

 

Our strategy remains to return operating margins back to historical levels with a medium-term target of reaching 10%.

 

Further detail on 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 ceramic sales markets (excluding Russia/Eastern Europe) grew by 10% in H1 2023. 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 92% of Group sales in H1 2023.

 

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

In our core UK and US markets, sales through all online channels accounted for 48% of sales (H1 2022: 52%, FY 2022: 51%). In addition, we continued to build our online presence in international markets including South Korea.

 

For our own websites, our customer lists continue to grow and are now 10% larger than twelve months ago. This has allowed us to reduce investment in traffic acquisition spend and drive an improved operating margin performance for our online sales.

 

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 2023 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. 

 

4.    Leveraging our brands

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 2023 and we expect further benefits in H2 2023 from the new collaboration with Kit Kemp Design Studio.

 

Returning our operating margin to 12.5% in the long term

 

1.    Improving productivity in our UK factories through investment in automation to reduce manual handling

We continue to invest in our UK factories and have a number of new automation investments being installed over the remainder of 2023 which will reduce manual handling and increase our pieces output per labour hour.

 

Productivity in our UK ceramic factory was maintained in H1 2023 despite a small reduction in output as we balance inventory levels.

 

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.

 

3.    Improving the profitability of our home fragrance division back to pre-Covid levels

Wax Lyrical, our home fragrance division, had a positive H1 2023 with both an improved sales and profit performance.

 

In 2022 we purchased the AromaWorks London brand and have now absorbed the manufacturing of all of its product ranges within the existing capacity at our Wax Lyrical factory in Cumbria, UK. This has driven better recovery of fixed overheads and we expect the home fragrance division to return to profitability for the full year.

 

Outlook

We are cognisant of the ongoing challenges facing consumers around the world with significant inflationary cost pressures and rising interest rates. Whilst in the short term this will continue to impact consumer spending decisions, we expect demand for our brands to remain robust. We expect retailer customer stock levels to stabilise after a period of destocking during the first half.

 

The second half of the year has started in line with our expectations and we have strong advance order books for our key Christmas ranges which are ahead of last year and provide us with good visibility of H2 sales. We will also continue to mitigate economic pressures by bringing new products to the market. We expect FY sales and profit to be in line with consensus market expectations which were revised in July as a result of North American retailer destocking.

 

Despite short term pressures, we remain confident in our medium and long term ambitions to grow our sales and operating margins. We have taken market share in key markets in recent years, particularly in the US - and together, with the ongoing work to increase productivity through investments in our factories, will drive much improved levels of profitability in the medium term.

 

 

Dick Steele                                    Mike Raybould

Non-executive Chairman             Chief Executive

 

 

 

 

Consolidated Income Statement

Unaudited

 


Notes

Six months to 30 June

2023

£'000

Six months to 30 June 2022

£'000

Year to

31 December 2022

£'000

 

Revenue

 

2

 

44,122

 

45,467

 

110,820

Operating costs


 (43,408)

 (43,510)

(102,154)

 

Headline operating profit1

 

 

 

714

 

1,957

 

8,666

Exceptional items

3

 



- restructuring costs

 

(124)

(1,006)

(958)

- acquisition costs

 

-

-

(76)

 

Operating profit


 

590

 

951

 

7,632

 

Interest income

 

 

 

-

 

-

 

29

Finance costs

4

(703)

(212)

(956)

Other income

 

-

265

265



 



 

Headline profit before tax1

 

 

 

11

 

2,010

 

8,004

Exceptional items

3

 



- restructuring costs


(124)

(1,006)

(958)

- acquisition costs


-

-

(76)



 



 

(Loss)/profit before tax

 

 

 

(113)

 

1,004

 

6,970

 

Tax

 

5

 

-

 

(218)

 

(1,415)

 

(Loss)/profit for the period attributable to equity holders

 

 

 

 

(113)

 

 

786

 

 

5,555

 

Earnings per share

 

7

 



Basic

Diluted

 

 

(0.82p)

(0.82p)

5.72p

5.70p

40.39p

40.35p

 

Headline earnings per share1

 

7

 



Basic

Diluted

 

 

(0.12p)

(0.12p)

12.00p

11.97p

46.59p

46.54p

 

Dividends proposed and paid per share

 

6

 

3.50p

 

3.50p

 

15.50p

 

All the above figures relate to continuing operations.

 

1Headline operating profit is statutory operating profit of £590,000 (H1 2022: £951,000) add exceptional items of £124,000 (H1 2022: £1,006,000). Headline profit before tax is statutory loss before tax of £113,000 (H1 2022: profit before tax of £1,004,000), add exceptional items of £124,000 (H1 2022: £1,006,000).

 



Consolidated Statement of Comprehensive Income

Unaudited

 

 

Six months

to 30 June

2023

 £'000

 

Six months

to 30 June

2022

£'000

 

Year to

31 December

 2022

£'000

 

(Loss)/profit for the period

 

(113)

 

786

 

5,555

Items that will not be reclassified subsequently to profit or loss:

 

 

 

Remeasurement of net defined benefit pension scheme asset

-

-

(1,517)

Deferred tax relating to items that will not be reclassified subsequently to profit or loss

 

-

 

-

 

380

Items that may be reclassified subsequently to profit or loss:

 

 

 

Exchange differences on translation of foreign operations

(1,050)

2,082

2,466

 

Other comprehensive income for the period

 

(1,050)

 

2,082

 

1,329

Total comprehensive income for the period attributable to equity holders

 

(1,163)

 

2,868

 

6,884

 



Consolidated Balance Sheet

Unaudited

 



30 June

2023

 £'000

 

30 June

2022

£'000

 

 

31 December

 2022

£'000

 

Non-current assets

 

 

 



Goodwill


9,467

8,978

9,416

Intangible assets


9,119

7,176

8,581

Property, plant and equipment


16,640

16,326

16,842

Right-of-use assets


5,820

6,366

5,869

Pension scheme surplus


617

1,360

317

Total non-current assets


41,663

40,206

41,025

 

Current assets

 

 



Inventories


42,100

42,597

41,117

Trade and other receivables


17,319

13,998

19,887

Current income tax asset


121

649

792

Cash and cash equivalents


1,460

3,189

1,681

Total current assets


61,000

60,433

63,477

 

Total assets

 

 

 

102,663

 

100,639

 

104,502

 

Current liabilities

 

 



Trade and other payables


(12,938)

(18,188)

(16,469)


(14,436)

(6,044)

(8,789)


(1,239)

(1,842)

(1,696)

Total current liabilities

 

(28,613)

(26,074)

(26,954)

 

Non-current liabilities


 



Deferred tax liability


(3,213)

(2,562)

(3,230)

Borrowings


(2,000)

(3,977)

(2,981)

Lease liabilities


(5,058)

(4,967)

(4,654)

Total non-current liabilities


(10,271)

(11,506)

(10,865)

 

Total liabilities

 

 

 

(38,884)

 

(37,580)

 

(37,819)

 


 



Net assets


63,779

63,059

66,683

 

Equity


 



Called up share capital


710

710

710


18,344

18,344

18,344


(3,108)

(3,124)

(3,108)

Share-based payment reserve


58

160

148


2,602

3,268

3,652

Retained earnings


45,173

43,701

46,937

Total equity


63,779

63,059

66,683


Consolidated Statement of Changes in Equity 

Unaudited

 

 

 

 

Share

capital

£'000

 

Share

premium

account

£'000

 

Investment

in own

shares

£'000

Share-based payment

reserve

£'000

 

 

Translation

reserve

£'000

 

 

Retained

earnings

£'000

 

 

 

Total

£'000

 

 

 

 

 

 

 

 

At 1 January 2022

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

Profit for the period

-

-

-

-

-

4,769

4,769

Other comprehensive income for the period

 

-

 

-

 

-

 

-

 

384

 

(1,137)

 

(753)

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

384

 

3,632

 

4,016

Dividends paid

-

-

-

-

-

(481)

(481)

Increase in share-based payment reserve

 

-

 

-

 

-

 

59

 

-

 

-

 

59

Transfer on exercise or lapse of options

 

-

 

-

 

-

 

(71)

 

-

 

71

 

-

Shares issued under employee share schemes

 

 

-

 

 

-

 

 

16

 

 

-

 

 

-

 

 

(16)

 

 

-

Deferred tax on share-based payment

 

-

 

-

 

-

 

-

 

-

 

30

 

30

At 31 December 2022

710

18,344

(3,108)

148

3,652

46,937

66,683

Loss for the period

-

-

-

-

-

(113)

(113)

Other comprehensive income for the period

 

-

 

-

 

-

 

-

 

(1,050)

 

-

 

(1,050)

Total comprehensive income 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



 

Consolidated Statement of Cash Flows

Unaudited

 

 

Six months

to 30 June 2023

£'000

 

Six months

to 30 June

2022

£'000

Year to

31 December

2022

 £'000

 

 



Operating profit

590

951

7,632

Adjustments for:

 



Depreciation of property, plant and equipment

686

895

1,810

Depreciation of right-of-use assets

988

1,008

1,881

Amortisation of intangible assets

434

408

813

Charge for share-based payments

(90)

32

91

Exchange gain/(loss)

618

(193)

(559)

Loss on disposal of tangible fixed assets

-

269

251

Operating cash flows before movements in working capital

3,226

3,370

11,919

Increase in inventories

(2,052)

(11,388)

(9,869)

Decrease in receivables

2,104

6,100

239

(Decrease)/increase in payables

(3,275)

754

(643)

Cash generated from/(used by) operations

3

(1,164)

1,646

Contributions to defined benefit pension scheme

(300)

(450)

(900)

Interest paid

(596)

(114)

(686)

Income taxes paid

587

(179)

(300)

Net cash outflow from operating activities

(306)

(1,907)

(240)

Investing activities

 



Interest received

-

-

5

Purchase of property, plant and equipment

(753)

(2,663)

(4,093)

Purchase of intangible assets

(1,007)

(491)

(1,933)

Other income

-

265

265

Acquisition of subsidiary

-

-

(821)

Net cash outflow from investing activities

(1,760)

(2,889)

(6,577)

Financing activities

 



Dividends paid

(1,651)

(1,788)

(2,269)

Principal elements of lease payments

(1,086)

(1,057)

(1,864)

Drawdown of short term borrowings

11,916

4,060

6,803

Repayments of borrowings

(7,250)

(1,000)

(2,000)

Net cash inflow from financing activities

1,929

215

670

 

Net decrease in cash and cash equivalents

(137)

(4,581)

(6,147)

Cash and cash equivalents at beginning of period

1,681

7,616

7,616

Effect of foreign exchange rate changes

(84)

154

212

Cash and cash equivalents at end of period

1,460

3,189

1,681

 

 

 

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 2023 was approved by the Board on 13 September 2023.

 

The interim financial information for the six months to 30 June 2023 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 2022 were 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 2022.

 

Statutory accounts for the year ended 31 December 2022 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 funding headroom available.

 

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 to assess the potential negative impact of a significant downturn in trading performance. This demonstrated the Group still has sufficient headroom within borrowing facilities and loan covenants.

 

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 pages 80-81 of the Group's 2022 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:

 

 

 

Operating segment

Six months

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

 

UK

 

29,547

 

27,567

 

59,753

North America

14,575

17,900

51,067


44,122

45,467

110,820

 

 

 

 

Geographical market

Six months

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

 

United Kingdom

 

11,703

 

11,531

 

28,255

North America

14,422

16,659

48,944

South Korea

14,333

13,443

26,656

Rest of the World

3,664

3,834

6,965


44,122

45,467

110,820

 

 

3.   Exceptional items

 

 

 

 

Six months

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

 

Restructuring costs

 

124

 

1,006

 

958

Acquisition costs

-

-

76


124

1,006

1,034

 

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

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

Interest paid

596

121

686

Interest on lease liabilities

107

91

270

 

703

212

956

 

 

 

 

Notes to the Interim Financial Information

Continued

 

5.   Taxation

Tax for the interim period is charged at 0% (year to 31 December 2022: 20%) due to a loss being incurred during the period. The expected weighted average annual corporation tax rate for the year is 23%.

 

6.   Dividend

An interim dividend of 3.50p (2022: 3.50p) per ordinary share will be paid on 15 December 2023 to shareholders on the register on 17 November 2023. During the period a final dividend of 12.00p (2022: 13.00p) per ordinary share was paid in respect of the previous financial year.

 

7.   Earnings per share

 

 

 

Six months

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

Earnings

 



Earnings for the purpose of basic and diluted earnings per share, being profit for the period attributable to equity holders

(113)

786

5,555

 

 

 

 

Six months

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

Number of shares

 



Weighted average number of shares for the purpose of basic earnings per share

 

13,759,282

 

13,750,919

 

13,753,233

Weighted average dilutive effect of conditional share awards

 

13,658

 

33,507

 

14,773

Weighted average number of shares for the purpose of diluted earnings per share

13,772,940

13,784,426

13,768,006

 

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

 

 

 

 

Six months

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

Profit for the period attributable to equity holders

(113)

786

5,555

Add back/(deduct):

 



Exceptional items

124

1,006

1,034

Tax effect of exceptional items

(28)

(142)

(182)

Headline earnings

(17)

1,650

6,407

 

 

 

 

 

 

 

 

 

 

 

Notes to the Interim Financial Information

Continued

 

8.   Reconciliation of earnings before interest, tax, depreciation and amortisation (EBITDA)

 

Headline EBITDA

 

 

 

 

Six months

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

Headline operating profit

714

1,957

8,666

Add back:

 



Depreciation

1,674

1,903

3,691

Amortisation

434

408

813

Headline earnings before interest, tax, depreciation and amortisation

2,822

4,268

13,170

 

Statutory EBITDA

 

 

 

 

Six months

to 30 June

 2023

£'000

Six months

to 30 June

2022

£'000

Year to

31 December 2022

 £'000

Operating profit

590

951

7,632

Add back:

 



Depreciation

1,674

1,903

3,691

Amortisation

434

408

813

Earnings before interest, tax, depreciation and amortisation

2,698

3,262

12,136

 

9.   Retirement benefit schemes

Defined benefit scheme

The defined benefit obligation as at 30 June 2023 is calculated on a year-to-date basis, using the latest actuarial valuation as at 31 December 2022 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.

 

The Group has made contributions of £300,000 to the scheme during the period.

 

10. Related party transactions

The Group's related parties are as disclosed in the Report and Accounts for the year ended 31 December 2022. There were no material differences in related parties or related party transactions in the six months ended 30 June 2023 except for transactions with key management personnel.

 

The most significant of these was on 2 May 2023, under The Portmeirion Group 2022 Approved and Unapproved Share Option Plans, when 50,000, 35,000, 35,000, 35,000 and 15,000 share options awards were granted to M Raybould, M Knapper, W Robedee, D Sproston and M MacDonald respectively at an option price of £4.69 per share when the market price was £4.69 per share.

 

In addition, on 2 May 2023, under The Portmeirion Group 2018 Deferred Incentive Share Option Plan, 5,275, 2,686, 3,864 and 2,087 share option awards were granted to M Raybould, M Knapper, W Robedee and D Sproston respectively at a total exercise price of £1 per individual when the market price was £4.69 per share.

 

11. Post balance sheet events

There were no post balance sheet events.

 

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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END
 
 
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