Portmeirion : 2020 Interim Results - Presentation

2020 Interim

Results

Global Brands

Timeless

Design

Agenda

1. H1 Overview
2. Strategy Recap
3. Update on Strategy & Equity Raise initiatives

4.	Outlook & Dividend	Mike Raybould	David Sproston
5.	Summary	Chief Executive Officer	Group Finance Director

INVESTOR PRESENTATION 2

Resilient performance H1 2020 shows brand strength

Overview

• Sales -8%, like for like (excl Nambe) -20% led to £2.7m loss before tax, (2019 £0.5m profit)
• Major Covid disruption due to global retail shutdown negated by
• • Substantial Online growth : Own website sales + 90% YOY
  • Re-purposingof UK Wax Lyrical factory to make 1m bottles hand sanitiser Q2 demonstrates agility
• Successful £11m Equity raise June 20: To invest & accelerate our growth strategy
• Strong Balance sheet maintained with net cash balance and significant facility headroom
• Improving sales trend seen June, pleasingly continued through Q3.
• Continued to invest throughout 2020 & good strategic progress on initiatives since fundraise
• Two UK factories now at, or very close, to pre-Covid output levels
• Expect to return to profitability H2 and return to sustainable dividend payments in 2021

Strong brands, diversified across 72 markets with over seven hundred years of history

INVESTOR PRESENTATION 3

Resilient H1 2020 Performance

	H1 2020	H1 2019	Change	FY 2019
	£m	£m		£m
Revenue	32.0	34.9	-8.3%	92.8
Headline* (loss)/profit before tax	-2.7	0.5	-3.2	7.4
Headline* (loss)/profit before tax margin	-8.3%	1.5%	-9.8%	8.4%
Headline* EPS	-20.71p	3.96p	-24.67p	56.32p
Dividends	0.00p	8.00p	-8.0p	8.00p
Net cash/(debt)	1.1	(5.8)	-	(12.3)

*Headline profit and EPS excludes exceptional items, being acquisition costs.

• Revenue down 8.3% YOY but -20% like for like
• Nambe first half adds to revenue but loss making H1 due to Covid own retail store closures Q2.
• PBT loss £2.7m vs £0.5m profit 2019 - in line with internal expectations June 20
• Anticipate resuming dividend payments in 2021
• Net debt reduced in H1 before equity raise proceeds of £11m

INVESTOR PRESENTATION 4

Strong Balance Sheet Maintained

	Jun-20	Jun-19	Change
	£m	£m
Total non-current assets	28.9	25.5	13.3%
Lease assets	5.6	4.8	16.7%
Inventory	30.6	24.2	26.4%
Trade & other receivables	12	12.9	-7.0%
Cash	13	2.2	490.9%
Total current assets	55.6	39.3	41.5%
Trade & other payables	-13.8	-11.9	16.0%
Borrowings	-11.9	-8	48.8%
Pension scheme deficit	-2	0.6	-433.3%
Net assets	56.5	45.5	24.2%
Share capital	0.7	0.6	16.7%
Share premium	18.3	7.3	150.7%
Other	-0.1	-0.4	-75.0%
Retained earnings	37.6	38.0	-1.1%
Total equity	56.5	45.5	24.2%

• Strong Balance sheet, significant facility headroom with funds to invest behind growth strategy
• Cash inflow H1 £2.2m before equity raise due to swift Covid response & action

INVESTOR PRESENTATION 5

Sales analysis by market

	H1	H1	Change
	2020	2019
Sales by Country	£m	£m
UK	12.7	13.5	-5.9%
US ( incl Nambe)	10.5	8.5	23.5%
South Korea	2.1	3.9	-46.2%
Europe	1.0	1.8	-43%
Rest of World	5.7	7.2	-21.3%
TOTAL	32.0	34.9	-8.3%

• Covid 3 month retail shutdowns impact all markets
• US excl Nambe first half -26%
• Korea - market impacted earliest (Jan 20) by Covid
• • Distributor sales out improving through period as retail gradually reopened. YOY Sales out data last 3 months is up on prior year
  • New product lines made H2, 2019, selling through in market
  • 2019 issue of Botanic Garden overstocks in mid market now subsided through much improved discipline on grey ship market

INVESTOR PRESENTATION 6

Strategy Update

INVESTOR PRESENTATION 7

Strategy : 6 key areas of focus	Sales Growth
		Operating Margin
Focused Brand & Product	Digital & Online Transformation	Continued focus on South
development	Korean market
Fully leverage our strong brands	Accelerate our online transformation	Ongoing discipline and diversification to
and product development engine to	and the growth opportunities therein	protect our brands there long term
drive sales growth

Leverage Wax Lyrical and	Targeted ROW Export growth	Operating & Procurement
Nambe opportunities	Efficiency and Capabilities
Leverage our Wax Lyrical and Nambé	More targeted focus on key ROW	Become more efficient and agile: in
acquisitions - new product categories	growth opportunities	our factories, our processes and how
and ROW market expansion		we work across our global teams

Deliver consistent & accelerated sales growth

Deliver consistent operating margin growth

INVESTOR PRESENTATION 8

Strategy: Timeline & Progress

Q4 19

New Mg't

& Strategy

H1 2020	June 20	Q3 2020
Rapid	Progress
Equity
Covid	since equity
raise
response	raise

• Strong Cash management
• Repurpose Wax Lyrical factory
• Reopened ceramic factory May
• Online +90% H1
• Online increased investment

-> Accelerate strategy	• Online - further investment
-> Post Covid	systems / people / fulfilment
opportunities	capability H2
•	Online growth	• Canada JV purchased in Aug
• Custom build started for first
•	Manufacturing	factory automation project.
	efficiency	Other smaller projects
•	Factory extension	already completed.
	'Hand & Body' care	• Build started for 'Hand &
	range	Body' range factory extension
•	Purchase Canadian JV	• Board changes and UK
		structure simplified Aug 20
		for sales & cost synergies

Strategy Update : Accelerate Online Penetration

2019

• UK/US markets total online sales now c.30%
• Own ecommerce 6% (+16% YOY)
• Customer list grew c.100%

2020 H1

• Own ecommerce +90% (now 15% of sales) boosted by Covid
• Strong growth in most retailer.coms
• Customer database +31% vs Dec19. Now 225,000 vs 50,000 Dec18
• Increasing investment & resource

Objective 2020-22: Significant Online channel sales growth

(Own online sales 15%+ (vs 6% 2019) & all channel online sales >50% total sales) Strategic Action & Progress

Boost Customer Acquisition

• Email customer list is key source of repeat revenue : grown 31% since Dec19.
• Increased investment / resource behind paid search/social
• Filmed D2C advert for US market Q4 2020 trial

Customer Conversion & Brand Presence all online

• Four new website platforms launched Mar-Sept 20
• Doubled photography resource: all key ranges being reshot
• New global DAMS system in build; live Jan 1 2021; all brands
  Building People Capabilities
• Added hires YTD;
• 4 further hires join Oct 20

Objective 2020-22: Future proof warehouse online fulfilment & service levels

Strategic Action & Progress

• Built 100% YOY UK online drop ship capacity increase for Q4 2020
• Built JLP drop ship order integration - goes live Oct 20
• Initiatives underway for further capacity 2021/22

INVESTOR PRESENTATION 10

Strategy Update : Double size of Wax Lyrical business

H1 2020

• Sales + 2% despite Covid retailer shutdown
• 1m bottles hand sanitiser Q2
• New International customers

Objective 2020-22: Double sales with strong profit drop through

Strategic Action & Progress

Increase core market sales

• Wrendale range launched - strong initial order flow
• Core market sales started to return in Q3
• New Sophie Conran range ready for 2021 launch

International expansion

• Disrupted during retail shutdowns but still opened new markets in China, Taiwan with good initial order flow and sell through
• Agents appointed for US.

New investment in permanent Hand & Body Lines

• Build on learning from pivot to Hand sanitiser production
• Project and build on track for Spring 21 launch
• Target: Baseline of continuing hand sanitiser sales + new hand & body soap/lotions ranges

INVESTOR PRESENTATION 11

Acquisition : Canadian Joint Venture

Objective 2020-22: Build more significant presence in Canada

Opportunity to grow Canada market and revitalise

Strategic Action & Progress

• Acquired Canadian JV August 20 for CAD $1m ( £0.6m)

• Lower price than expected at Equity raise June 20

Targeted manufacturing investments

• Opportunity to revitalise and grow sales in long standing market

• Started closer integration of Toronto team and warehouse into existing New Jersey office

• Already working on quick wins behind strong online sales channel opportunity

• Purchase came with ongoing exclusive premium glass licenses for Canada

INVESTOR PRESENTATION 12

Strategy Update : Manufacturing Efficiency

Objective 2020-22

• Reduce manufacturing cost / unit by 10% by year 3

Strategic Action & Progress

• Working with 3P automation manufacturers on automation roadmap for both UK factories
• Heat release machine £0.7m ordered and in build. Ready Spring 2021
• Litho cutter installed Aug 2020
• Decal automated mug machine live Aug 20
• Further projects to follow in next 12-18 months
• Ongoing projects to reduce energy usage

Targeted manufacturing investments

• Improved throughput UK factory and lower cost/unit
• Heat release machines, digital printing
• Improved energy efficiency

INVESTOR PRESENTATION 13

Manufacturing Efficiency: Examples of progress last 3 months

	•	Fully automated
• 20 yr old Decal		custom design
• In build now for Apr 21
application
technology	•	2x output for 1/3rd the
		labour
	•	Less energy

•	Hand applied			• Automated mug
	decal onto Mug			machine went ive
Opportunity to grow Canada market and	Targeted	investments	Aug 20
•	revitalise
Labour intensive

• 4x output in same 8 hr shift

•	Hand litho	•	Automated litho
	cutting		cutting machine
•	Slow and	•	Implemented Aug 20
	labour	• 5x output in same 8
	intensive
			hr shift and 1/3rd

labour

Forward Outlook / Dividend

Forward Outlook

• Improving sales trend seen in June has pleasingly continued throughout Q3.
• Our two UK factories now at, or very close, to pre Covid output levels
• Online sales channels growth continuing in Q3
• Cognisant that our key trading period is still ahead of us and Covid macro uncertainties still persist around the world
• Expect to return to profitability H2
• Expect to broadly return to 2019 trading levels in 2021 (ie Covid overhang persists offset by sales growth from new strategy)
• Investment now will drive sustained annual double digit sales growth thereafter and enhanced operating margin %

Dividends

• Understand dividend payments important to our shareholders / committed to recommencing
• Prudent to see out key seasonal Christmas period and expect to resume payments for FY21
• Will balance dividend payout levels with need to invest behind growth strategy and sustainable levels as measured by dividend cover

INVESTOR PRESENTATION 15

Summary

Strong brands enabled resilient H1 performance against backdrop of retail shutdowns

90% Online H1 sales growth shows what is possible: Key part of strategy

Robust balance sheet plus fundraise proceeds provides platform to invest

Improving sales trend continuing through Q3 pleasing but Covid still provides uncertainty ahead of key seasonal trading period

Continued investment through 2020 will drive strong top and bottom line growth

INVESTOR PRESENTATION 16

Appendix

INVESTOR PRESENTATION 17

Board and Management Team

Mike Raybould

Chief

Executive

Officer

Jacqui Gale

Chief

Commercial

Officer

Mick Knapper

Operations

Director

David Sproston

Group

Finance

Director

Bill Robedee

President of

North America

Dick Steele

Non-executive

Chairman

Andrew Andrea

Non-executive Director

Angela Luger

Non-executive Director

Claire Askem Non -executiveDirector

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Contact

Mike Raybould

Chief Executive Officer

Email: [e-mail]

Direct Tel: [phone]

Mobile Tel: [phone]

David Sproston

Group Finance Director

Email: [e-mail]

Direct Tel: [phone]

Mobile Tel: [phone]

Hudson Sandler: Dan de Belder

Email: [e-mail]

Direct Tel: [phone]

www.portmeiriongroup.com

Portmeirion, Spode, Royal Worcester, Pimpernel, Nambé and Wax Lyrical are registered trade marks of Portmeirion Group

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