Portmeirion : Report and Accounts for the year ended 31 December 2021

Our vision

Our vision is to be a leading force in the global homeware sector focused on growing our great brands. We aim to achieve this strategically through sustainable revenue growth and continued product development across our six established homeware brands.

Financial Headlines

• • Record Group revenue of £106.0 million in the year to 31 December 2021, an increase of 21% over the prior year (2020: £87.9 million) and 14% over pre Covid-19 level (2019: £92.8 million).

• • Excellent Q4 seasonal trading performance despite ongoing global supply chain inflation and disruption, demonstrating the strength of consumer demand for our brands, progress with our online strategy and resilience of our operations.

• • Sales from our own ecommerce platforms increased by 16% over 2020 and are now 81% above 2019 levels. Online sales now represent 50% of total sales in our core UK and US markets in the year to 31 December 2021 (2020: 47%, 2019: 30%).

• • Headline profit before tax(1) of £7.2 million

(2020: £1.4 million, 2019: £7.4 million).

• • EBITDA of £10.7 million (2020: £5.1 million, 2019: £11.4 million).

• • Headline basic earnings per share(1) of 38.85p (2020: 4.96p, 2019: 56.32p).

• • Dividend reinstated with final dividend proposed of 13.00p per share, bringing total dividends paid and proposed to 13.00p (2020: £nil, 2019: 8.00p).

• • Strong balance sheet maintained with net cash of £0.7 million (2020: net cash £0.7 million, 2019: net debt £12.3 million). Cash generative, which has allowed accelerated investments in our strategic capabilities.

(1) Headline profit before tax and headline basic

earnings per share exclude exceptional items -

see notes 6 and 13.

Operational Headlines

• • Sales growth across three key markets of the US, UK and South Korea. Rest of the world sales also performed strongly and are 71% ahead of pre Covid-19 levels.

• • Substantial progress in developing online and digital capabilities, including ongoing investment in online platforms and warehouse fulfilment capabilities to support growth.

• • Strong growth across all brands, particularly in Spode brand up 30% over 2020.

• • Completed a number of key operational projects; hand and body line extension at Wax Lyrical, automation investment in our UK ceramic factory and mezzanine floor installed in our UK distribution centre.

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portmeiriongroup.com

Headlines

• • Extended our long term energy hedging programme to Q1/2024, insulating the Group against the current volatility in energy prices.

• • Continued to deliver an improved carbon emission performance whilst undertaking a full evaluation of our ESG position in order to deliver a sustainable forward strategy.

• • Our UK businesses both achieved Investors in People Platinum accreditation in recognition of our commitment to leading, supporting and improving our workforce.

Strategic Report

At a Glance

Driving profitable sales growth in our global brands

Product design and developmentEstablished sales channels

The Group sells into over 70 countries worldwide and has sales offices in the UK, US, Canada, Europe, The Middle East and the Far East.

We sell our product primarily via UK and US websites and through a network of distributors, agents and own-retail stores.

In line with many businesses, we have seen a shift in demand from bricks and mortar retail to online channels. The increase in consumer demand for online has been further impacted by our focus to grow this channel, and 50% of total sales in our core UK and US markets are now made via an online platform, whether our own ecommerce store, pureplay web stores or omnichannel retailer websites.

We serve our customers from our warehouses in the UK, the US and Canada. We also direct ship from sourced suppliers to maximise efficiency and lead times where appropriate to do so.

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The Group's key economic driver is its six global brands and the designs which underpin them. Collectively these brands have over 750 years of history, and some of our major homeware ranges are also brand names in their own right such as the classic Portmeirion Botanic Garden, which was first launched in 1972 and still sells in significant volume around the world today, and Spode Christmas Tree which was first introduced in 1938 and continues to sell strongly, particularly in our key US market.

Design and quality is key to our business model. We continue to develop, extend, refresh and refine our existing collections, as well as launching new ranges and products in order to retain and improve our customer appeal. Our design studios are the creative hub for new product development.

Production and sourcing

We manufacture earthenware from our factory in Stoke-on-Trent and home fragrance at our factory in the Lake

Annual Report and Accounts 2021 • Portmeirion Group PLC

District. We also source a range of product from around the world to the same exacting quality standards; this includes bone china and porcelain tableware, wood, glass and metal alloy giftware and other associated homeware products. In 2021, our mix of sales was 40% manufactured product and 60% sourced product. With this diversified supply model, we are less exposed to the current supply chain issues faced by many of our competitors.

The Group continues to invest in our manufacturing sites and have completed a number of capital expenditure projects during 2021 in order to improve our cost efficiency and output capacity. This included a new hand and body line extension at our home fragrance site in the Lake District, and a number of automation investments in our Stoke-on-Trent ceramic factory. Our sites remained open in 2021 with Covid-19 secure working practices.

Strategic Report

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Global brands loved around the world

The Group owns six major brands which are sold into over 70 countries around the world and have a combined history of more than 750 years.

We are committed to developing and expanding the reach of our brands, with particular focus on growing our digital marketing strengths.

Despite the Covid-19 pandemic and supply chain issues experienced around the globe, due to our diversified business model and the underlying credibility of our long-standing brands, our business continues to grow.

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Online sales and capability to grow this channel

Our online channels have continued to experience significant growth. Reflecting the change in consumer behaviour to digital, we have invested heavily in our online platforms, fulfilment and capabilities.

We place strong focus on the growth of our own ecommerce, D2C for retail customers and building partnerships with distributors/retailers who have a like-minded approach to digital growth.

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Strong operational capabilities

The Group maintains two factories in the UK, these factories made up 40% of the revenue generated in 2021, with the remaining 60% coming from sourced product sales. Product from our six global brands is shipped mainly via our distribution centres in the UK, US and Canada.

During 2021, we have invested heavily in our direct to consumer capabilities, including a mezzanine floor at our distribution centre in the UK to be used solely for the purpose of fulfilling D2C orders. We have a clear investment plan for further development of our D2C capabilities at our UK, US and Canada distribution centres.

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Strong balance sheet and strong track record The Group maintains a strong balance sheet and at 31 December 2021 had £0.7 million net cash, with £22.6 million of headroom via cash and bank facilities available. Working capital has increased year-on-year by £2.3 million as a result of cost of goods increases and some forward purchasing to mitigate the risk of supply chain issues.

Annual Report and Accounts 2021 • Portmeirion Group PLC

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