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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Portmeirion Group Plc | LSE:PMP | London | Ordinary Share | GB0006957293 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-2.50 | -1.04% | 237.50 | 230.00 | 245.00 | 240.00 | 237.50 | 240.00 | 30,014 | 09:36:17 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Misc Homefurnishings Stores | 102.74M | -8.46M | -0.6146 | -3.86 | 32.68M |
TIDMPMP
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 H1 2022 FY 2022 GBPm GBPm GBPm Revenue 44.1 45.5 110.8 -------- -------- -------- Headline profit before tax(1) 0.0 2.0 8.0 -------- -------- -------- (Loss)/profit before tax (0.1) 1.0 7.0 -------- -------- -------- Headline EBITDA(1) 2.8 4.3 13.2 -------- -------- -------- EBITDA 2.7 3.3 12.1 -------- -------- -------- Headline basic (loss) / earnings per share(1) (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 GBP44.1 million, a decrease of 3% compared to the record prior year sales (H1 2022: GBP45.5 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 tax(1) was GBP0.0 million (H1 2022: GBP2.0 million). -- H1 headline operating profit margin(1) 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 share(1) 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 GBP15.0 million but we expect this to reduce below FY 2022 levels (FY 2022: GBP10.1 million) by year end as working capital unwinds and we maintain significant headroom within current borrowing facilities.
(1) Headline 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 mraybould@portmeiriongroup.com 743 443 David Sproston, Group Finance +44 (0) 1782 dsproston@portmeiriongroup.com Director 743 443 Hudson Sandler: Dan de Belder +44 (0) 207 796 portmeirion@hudsonsandler.com 4133 Nick Moore Emily Brooker Shore Capital: (Nominated Adviser and Joint +44 (0) 207 408 Broker): 4090 Patrick Castle Corporate Advisory Lucy Bowden Corporate Broking Malachy McEntyre Singer Capital Markets +44 (0) 207 (Joint Broker): 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 GBP44.1 million for the first six months of the year, a decrease of 3% over the record prior year sales (H1 2022: GBP45.5 million).
Our operating performance was negatively impacted by the sales reduction; headline operating profit(1) was GBP0.7 million (H1 2022: GBP2.0 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 tax(1) was GBPnil (H1 2022: GBP2.0 million).
Headline basic loss per share(1) 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 GBP14.4 million (H1 2022: GBP16.7 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 GBP11.7 million (H1 2022: GBP11.5 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 GBP14.3 million (H1 2022: GBP13.4 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 GBP3.7 million (H1 2022: GBP3.8 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 GBP15.0 million at 30 June 2023; this compares to net debt of GBP6.8 million at 30 June 2022 and net debt of GBP10.1 million at 31 December 2022. In addition to the cash balance of GBP1.5 million and bank borrowings of GBP16.4 million, the Group also has unutilised bank facilities of GBP10.1 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 GBP42.1 million compared to GBP42.6 million at 30 June 2022 and GBP41.1 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
Six months Six months Year to to 30 June to 30 June 31 December 2023 2022 2022 Notes GBP'000 GBP'000 GBP'000 Revenue 2 44,122 45,467 110,820 Operating costs (43,408) (43,510) (102,154) ----------------------------------- ------ ------------ ------------ ------------- Headline operating profit(1) 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 tax(1) 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 (0.82p) 5.72p 40.39p Diluted (0.82p) 5.70p 40.35p Headline earnings per share(1) 7 Basic (0.12p) 12.00p 46.59p Diluted (0.12p) 11.97p 46.54p Dividends proposed and paid per share 6 3.50p 3.50p 15.50p ----------------------------------- ------ ------------ ------------ -------------
All the above figures relate to continuing operations.
(1) Headline operating profit is statutory operating profit of GBP590,000 (H1 2022: GBP951,000) add exceptional items of GBP124,000 (H1 2022: GBP1,006,000). Headline profit before tax is statutory loss before tax of GBP113,000 (H1 2022: profit before tax of GBP1,004,000), add exceptional items of GBP124,000 (H1 2022: GBP1,006,000).
Consolidated Statement of Comprehensive Income
Unaudited
Six months to 30 Six months Year to June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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) Borrowings (14,436) (6,044) (8,789) Lease liabilities (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 Share premium account 18,344 18,344 18,344 Investment in own shares (3,108) (3,124) (3,108) Share-based payment reserve 58 160 148 Translation reserve 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-based Share Investment payment Share premium in own reserve Translation Retained capital account shares GBP'000 reserve earnings Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 1 January 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 Six months Year to to 30 June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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:
Six months Six months Year to to 30 June to 30 June 31 December Operating segment 2023 2022 2022 GBP'000 GBP'000 GBP'000 UK 29,547 27,567 59,753 North America 14,575 17,900 51,067 44,122 45,467 110,820 --------------------- ------------ ------------ ------------- Six months Six months Year to to 30 June to 30 June 31 December Geographical market 2023 2022 2022 GBP'000 GBP'000 GBP'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 Six months Year to to 30 June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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 Six months Year to to 30 June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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 Six months Year to June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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 Six months Year to to 30 June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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 Six months Year to to 30 June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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 Six months Year to to 30 June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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 Six months Year to to 30 June to 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'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 GBP300,000 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 GBP4.69 per share when the market price was GBP4.69 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 GBP1 per individual when the market price was GBP4.69 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) Dow Jones Newswires
September 14, 2023 02:00 ET (06:00 GMT)
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