Coronavirus Update

Portmeirion Group PLC- Preliminary Results for the Year Ended 31st December 2020

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Financial summary

 

2020

£m

2019

£m

 

Revenue

87.9

92.8

 

Headline profit before tax1

1.4

7.4

 

EBITDA

5.1

11.4

 

Headline basic earnings per share1

4.96p

56.32p

 

Dividends paid and proposed per share in respect of the year

nil

8.00p

 

 

Headlines:

 

Financial

·   Full year results ahead of recently upgraded market expectations following a strong H2 trading performance and a return to profitability.

· Group revenue of £87.9 million for FY20 (2019: £92.8 million), a decrease of 5.3%, a resilient trading performance against the backdrop of enforced retail shutdown.  

· Improved trading performance in H2 of 2020, with like-for-like sales down 5.8% on H2 2019 (H1 2020 against H1 2019: 20.4% decline).

· Significant increase in direct to consumer sales from online channels during the year - which remains a key area of strategic focus and investment. Sales from our own ecommerce platforms increased by 69% over 2019 and we estimate that approximately 47% of total sales in our core UK and US markets are now made via online channels (2019: 30%).

· Headline profit before tax1 of £1.4 million (2019: £7.4 million).

· EBITDA of £5.1 million (2019: £11.4 million).

·   No dividends paid or proposed for 2020 but expect to recommence dividend payments in 2021 assuming a return to normalised trading.

· Completed equity raise in June 2020 providing net proceeds of £11.2 million to:

o  accelerate online channel sales growth;

o  extend Wax Lyrical product lines;

o  build a more significant presence in Canada; and

o  invest in UK manufacturing efficiencies.

· Strong balance sheet maintained with net cash of £0.7 million (2019: net debt £12.3 million). Cash generative with net debt decreasing by £1.8 million during the year excluding the benefit of the equity raise in June 2020.

 

1 Headline profit before tax and headline basic earnings per share exclude exceptional items - see note 4.

 

Operational

 

 

Substantial progress in our strategic objectives including strong growth in online and digital capabilities.

 

Healthy and exciting pipeline of new products developed for launch globally in 2021 which we expect will contribute to sales growth across our key markets.

 

Acquired additional 50% of share capital in Portmeirion Canada Inc. for £0.5 million in August 2020, to obtain 100% control, in order to leverage our existing US sales and online infrastructure to grow our presence in the Canadian market.

 

Successful conversion of a Wax Lyrical manufacturing line to produce hand sanitiser for the NHS and other customers, leading to new hand and body care ranges to be launched in mid-2021.

 

 

Mike Raybould, Chief Executive commented:

 

"Although 2020 was a challenging year due to the huge disruption caused by Covid-19, our consumer homeware brands have shown great resilience and our business has continued to successfully pivot further to online sales. Pleasingly, we saw strong growth in our own online sales channels and we see the market shift to increased online shopping offering us a great opportunity to expand further in our key markets.

 

Following the successful equity raise in June 2020, and despite the disruption caused by Covid-19, we have increased our investment into the business and made a number of strategic hires, in particular expanding our online and digital marketing teams and making our operations more efficient. We believe this will put our business in a strong position to deliver on our two pillar strategy of generating consistent, sustainable sales growth; and improving our operating margins, thereby converting our sales more effectively into profit.

 

I would like to thank our employees around the world for working tirelessly and adapting working practices to cope with the undoubted challenges of the pandemic.

 

We are encouraged to see our positive trading momentum from H2 2020 continue in Q1 2021 despite the ongoing Covid-19 pandemic. We remain alert to further potential disruption in our key markets, but are confident of returning to growth in 2021."

 

Chairman and Chief Executive Statements

 

 

2020

£m

2019

£m

 

Reported sales

87.9

92.8

 

Total like-for-like sales*

82.4

92.8

 

  H1 like-for-like sales

27.8

34.9

 

  H2 like-for-like sales

54.6

57.9

 

 

 

 

 

Total own website sales

11.1

6.6

 

UK/US sales via online channels

47%

30%

 

 

* Like-for-like sales exclude the benefit in 2020 of a full year sales of Nambé (acquired in July 2019) and additional sales from Portmeirion Canada (acquired August 2020).

 

Trading

2020 was a challenging year due to the huge disruption that Covid-19 caused through globally enforced retailer shutdowns and ensuing supply chain disruption as economies around the world reopened at different times and speeds. However, our consumer homeware brands showed their strength and resilience and we saw significant growth in our online channel sales and a trend of improving sales as the year progressed.

 

Following an equity raise of £11.2 million in net proceeds in June 2020 we increased our investment, despite disruption caused by Covid-19, in our strategic initiatives. We believe this investment places our business and brands in the best possible position to grow strongly and profitably in the coming years.

 

In particular, we have continued our transformation to a more online and digital based business and were pleased to see 69% sales growth in our own online website sales and that 47% of total sales in our core UK and US markets now go through all online channels (2019: 30%). We will continue to invest in this area and our capabilities and expect to see further growth in the years ahead.

 

Our like-for-like sales declined by 11.2% during the year largely as a result of the impact of Covid-19 on physical retail stores, although we did see an improving trend through the third and fourth quarter and strong demand for our products through the key Christmas trading period.

 

The Group returned to profitability in the second half of 2020, with H2 headline profit before tax1 of £4.1 million (H2 2019: £6.9 million). For the full year this left headline profit before tax1 at £1.4 million (2019: £7.4 million) following the loss made in the first half of 2020 due to the impact of Covid-19.

 

We are confident in our long-term strategy for growth and have a strong balance sheet to support our ambitions. The Group continues to be cash generative and our underlying net debt reduced by £1.8 million over 2019. 

 

Financial Headlines

 

?

Revenue was £87.9 million, a decrease of 5.3% (2019: £92.8 million).

?

Like-for-like sales were £82.4 million (2019: £92.8 million), a decline of 11.2%.

?

Own platform website sales increased by 69% to £11.1 million (2019: £6.6 million) and total online sales in core UK and US markets rose to 47% (2019: 30%).

?

H2 returned to headline profit before tax1 of £4.1 million (2019: £6.9 million), FY20 headline profit before tax1 of £1.4 million (2019: £7.4 million). 

?

Headline basic earnings per share1 was 4.96p per share (2019: 56.32p).

 

1Headline profit before tax and headline basic earnings per share exclude exceptional items - see note 4.

 

Dividend

The Board has determined not to pay a dividend for FY20 due to the impact and disruption of Covid-19 on our business. Assuming the positive trends we saw in our core sales markets in the second half of 2020 and into 2021 continue, we expect to resume paying dividends for FY21. Our dividend policy will ensure that we retain and invest enough capital in our business to drive long-term growth in our brands and we maintain a prudent and sustainable level of dividend cover.

 

The Board

The Board keeps its composition and performance under constant review so as to ensure that we have the appropriate skills, experience and resources to deliver on our four main Board requirements of: setting strategy, reviewing progress against strategy, monitoring the resources required to deliver the strategy and complying with relevant requirements be they legal or otherwise. We undertake a formal board effectiveness review each year.

 

In August 2020, both Lawrence Bryan and Phil Atherton resigned from the Board. We have previously paid testimony to the invaluable contributions which they have both made, but it is appropriate that we record the thanks of ourselves, our colleagues and our shareholders one more time.

 

Jacqui Gale and Bill Robedee joined the Board in August 2020, Jacqui as Chief Commercial Officer and Bill as President of North America; both of these appointments were internal promotions. These appointments were detailed in the Interim results for the six months ended 30 June 2020 released on 24 September 2020. Their appointments are already delivering notable results.

 

Clare Askem joined the Board as a Non-executive Director in August 2020 following the retirement of Janis Kong in May 2020 at the Annual General Meeting. This appointment was presaged in the Chairman's Statement within the report and accounts for the year ended 31 December 2019 in March 2020.

 

Environmental, Social and Governance

We remain committed to the vision and values which support the Group's culture of openness and integrity and encourage behaviours that will positively impact our long-term sustainable success.

 

The Group is committed to being environmentally responsible through our dedication to reduce energy consumption and eliminate waste. We strive for operational excellence, whilst reducing environmental impact. During 2020, we were successful in a number of energy saving initiatives including in relation to the production method and glaze changes in our Stoke-on-Trent manufacturing process, which has led to substantial savings in energy, cost and processing time. We also continue to use wind power at our Lake District manufacturing site. We make a point of recycling manufacturing waste and utilise recyclable packaging materials where possible.

 

Our business is only as good as our people and we continue to recruit people who share our values and work together towards realising our vision. Our ethics and governance are unfaltering, supported by our policies and processes. Further details on our corporate culture and its integration within the Group can be found on our website, www.portmeiriongroup.com, and in our annual report and accounts in the Stakeholder Engagement, Our Sustainability and the Corporate Governance Statement sections.

 

The Covid-19 pandemic threw a huge number of challenges at our people and teams and we would like to thank them for their enormous resilience and hard work throughout 2020. The health, safety and wellbeing of our employees is, and remains, of paramount importance to the Group and we will continue to ensure we have safe places of work.

 

The Group is a committed member of the Quoted Companies Alliance ("QCA") and has chosen to apply the QCA Corporate Governance Code as the most appropriate for our size and structure. We have complied with the principles of the QCA code throughout 2020 and continue to do so. Further details of our approach to governance can be found on our website and in our annual report and accounts. The Board consider our governance procedures to be appropriate for a company of our size, however we are always open to improvement and welcome feedback from shareholders.

 

Operational Overview

Revenue for the Group decreased by 5.3% to £87.9 million (2019: £92.8 million).

 

The United States is our largest geographical market at 38% of Group sales. In translated figures, sales in the US increased by 3.1% to £33.5 million (2019: £32.5 million) due to the benefit of a full year of sales in the Nambé business, acquired in July 2019. On a like-for-like basis sales reduced by 9.8% due to the impact of the Covid-19 pandemic.

 

Outlook

We continue to monitor the impact of the Covid-19 pandemic on all parts of our business. Like many, Covid-19 has significantly disrupted our business and there continues to be disruption in key sales markets and international supply channels in the first quarter of 2021 due to national and local lockdowns.

 

However, the strong growth we have experienced in online sales channels has mitigated much of the impact of retailer shutdowns and we are pleased by the improving trend of sales performance we saw in the second half of 2020. Encouragingly, we have continued to see this improving trend in the first quarter of 2021 and therefore remain confident of returning to sales growth in 2021.

 

We have a strong balance sheet, a well-invested business and a clear strategy which we believe will enable us to prosper in the medium to long-term.