Portmeirion Group (LSE:PMP) — FY21 Results Presentation

0:01 Good afternoon, and welcome to the PORTMEIRION GROUP PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives from the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to David Froston, CFO, and Mike Gray, CEO. Good afternoon to you both. Thank you. Good afternoon, everybody. Welcome to our full year twenty twenty one investor roadshow presentation. Terms of our agenda, today, we have a presentation that will last between thirty and forty minutes, and we'd encourage you to post any questions you have on the software. We'll we'll try and answer as many of those as we can at the end.

0:56 In terms of the agenda for the presentation itself, I'm gonna start off with a brief overview,

1:02 and then Dave Sproston, our group finance director, will cover some detailed financial slides. I'll then do a recap on our business model and strategy and where we're going, and then we'll spend the bulk of the the time of the presentation on reviewing the progress that we've made in the last twelve months in our long term strategy before we come back, pull everything together, and look at a forward view as well. So turning to the headlines for 2021. Delighted to report a record sales number for the group, 14% ahead of previous best year the group's ever had, and you can see there a chart on the right hand side of that sales trend. More pleasing, I think, is that that growth has come across a real breadth of areas.

1:52 All of our key markets were up in the year, and all of our brands grew at the same time. Online channel continued to be a significant driver of that growth, and we'll deal in some detail with what we're doing with online, later on in the presentation. We continue to have a strong balance sheet, cash generative. Dave will pick up the detail on that, in the coming slides, and we're very pleased to be reinstating our long standing dividend for FY 2021. We're now gonna turn to some detailed slides on our financial performance, and then I'll come back and look at our business model. Okay. Thank you, Mike, and good afternoon to everybody on the call.

2:39 So just to summarize FY '21 financial performance. Strong revenue performance, 21% increase over the prior year. Record sales performance, first time the group has exceeded GBP 100,000,000 per sales, and that was a like for like improvement of 19% over 2020. That strong revenue performance has dropped through to headline profit before tax, which at £7,200,000 was 12% ahead of our initial market expectations and broadly back in line with the profit performance from 2019 prior to COVID. Strong cash performance, we've maintained a net cash positive position.

3:27 And the strong trading performance and strong cash performance means that we are reinstating our long standing dividend, which is £0.13 per share, which will be paid subject to shareholder approval at the AGM at the end of May.

3:47 Okay, moving on to balance sheet. We continue to maintain a strong balance sheet. Our net assets increased by 11% to GBP 62,000,000. Net cash, 700,000 maintained, and that allowed us to accelerate the capital expenditure investment. So net CapEx was £4,600,000 in 2021. That was about three times the historic rate that the group has invested. So back to 2019, 2018, we're about three times that level. And Mike will provide an update on some of the key capital expenditure projects later in the presentation. We continue to maintain a strong facility headroom position.

4:36 In addition to the GBP 7,600,000 of cash on the balance sheet at the end of the year, we also had working capital facilities of £15,000,000 which were not being utilized at that point in time. On this slide, we've also got a small inventory bridge. We've put this in presentations before, which is just really to break down the 7% increase in inventory year on year. And about two thirds of that increase is really just as a relation to increased cost of product, so increased freight, increased raw material costs. So actually, like for like, we had a very small 2% increase in inventory levels, which compared to the 21% increase in revenue demonstrates that we've been able to successfully improve our stock turn over the previous years.

5:28 Okay. Moving on to sales breakdown by geographical market. I think, as Mike said, growth really across all of our key markets, The UK, The US and South Korea, just under 90% of sales for the group, all increased in sales over the previous year. So The US was up 27% driven by strong drop shipping online fulfillment, good stock availability in the fourth quarter and new product launches.

5:57 Underlying UK growth was 14% year on year. And then South Korea, back in growth over 2020. And we now believe we're at a robust base that we're going to see sustainable growth in this market going forward. And then in rest of the world markets, 27% ahead of the prior year, but actually 71% ahead of 2019 prior to COVID. Starting to see the benefit of the acquisition of PORTMEIRION GROUP PORTMEIRION GROUP GROUP in August 2020 and starting to see strong growth in that marketplace. Good growth in Australia. And then contained within other balance, we have a new Chinese distribution partner, which was commenced in the second half of last year. We look forward to seeing reporting good growth in that marketplace in 2022, and going forward.

6:56 Okay. So I'm now going to hand back to Mike. Thank you, Dave. I'm gonna look now at our brand revenue breakdown. This is a a new slide that we haven't put into previous presentations. I think since I took over as chief executive a couple years ago, I've been very keen, that we understand that Port Marion Group is a lot more than just PORTMEIRION brand that even ranges franchises like Botanic Garden within PORTMEIRION. We have six great brands, and, you know, I felt for some time that some of the, other brands have a huge opportunity for growth. We've spent the last eighteen months working as a business from a marketing and brand marketing point of view and really understanding how we can communicate what our brands stand for to the end consumer, particularly in online digital space. And then we've produced road maps for each of our brands that are gonna enable us to grow these brands around the world in the coming years.

7:56 So I'm really pleased with the early progress that we're reporting today on those brands and their growth. And in particular, I would highlight the far right hand column on this chart that shows the y o two y growth, so the growth on pre COVID levels. And we can see already that brands like Spode, plus 33%, Royal Worcester, nearly 20% up, and PMPINEL, plus 26%, all showing positive reaction to the new work, the new focus, the new brand work that we've done. Other things to note on this slide, Nombe, which was acquired partway through 2019, grew again in the year and reported its best sales for the last five years. That, as David said, was helped by increased direct to consumer business, better stock availability during key seasonal sales periods.

8:46 PORTMEIRION shows us being down 3% on a y o two y basis. But if we exclude from their botanic garden where we've pulled back and reduced over shipping that was going on to the Korean market So the rest of that brand, contemporary ranges like Sophie Conran and Sara Miller collaborations, those are up double digit, on that metric. So a really positive, a really positive story on many of these brands. Wax Lyrical, a home fragrance business, was up 5% in the year, but still short of where we were pre COVID. Wax Lyrical is the business, the brand that's been most impacted by COVID enforced retail shutdowns. Its sales were very dominated by traditional bricks and mortar retail and clearly has been disrupted in the last twelve months. And I'm gonna come on to how that business is turning around later on in the presentation.

9:40 So I'm now gonna move to our business model and our strategy and our ambition. So a few words in terms of our key strengths, that our strategy is built on.

9:59 Six great brands together with over seven hundred and fifty years of combined history. Increasingly, our business is diversified diversified in terms of geography, sales channels, offline physical retail, and now online and product. We have a significant amount of expertise in our business across the world in the categories that we operate in, expertise in design, expertise in manufacturing and sourcing, and significant sales infrastructure as well, particularly in The UK and The US. We have two UK factories that supply nearly 50% of everything that we sell, and we have drop ship warehouse facilities, in The UK and and in The US. Moving on to our strategy.

10:48 Our commercial strategy is really very simple. It's about getting our products, our brands in front of an ever wider customer base potential customer base. And we're doing that by growing and developing new online channels, so getting in front of more customers. We're doing it by building out international markets. So our three core markets of The UK, US, and South Korea account for nearly 90% of our sales, but the remaining 10 is 60 or 70 different countries where we already have small sales footprints. So we wanna build those markets, to be much, much bigger in the future. We're leveraging our brands more effectively. What do I mean by that? Well, where we have existing distributors and existing markets, encouraging them to take more of our products, more of our brand portfolio, where we have websites that already sell and have good customer traction, cross selling more of our products to those existing online customers.

11:49 Our operational strategy is really to enable that growth as it comes through, and that means that we're investing in increasing the capabilities and the capacities, the output of our factories, and also building additional warehouse fulfillment capabilities so we can ship more online orders. Online orders for our own website sales, but increasingly also for retailer website sales as well. In terms of ESG, we're very respectful of all the communities that we operate in. We understand that we have a carbon footprint and energy footprint, and we have a long term strategy to constantly get better, reduce the impact that we have on the environment. I'm gonna talk to this a little bit more data a little bit more detail later on. So putting that together in terms of our ambition, by delivering on this strategy, the commercial strategy, the operational strategy, we're really looking sustainable top line sales growth backed by significant improvement in operating margins, thereby converting those sales more effectively into bottom line profit. And you can see there that our short term target, our immediate target is to get back to an operating margin of 10% and thereafter each year to try and go up into an increment of at least 1%.

13:05 Our long range target is to have an operating margin of 13% or more. We're now gonna move to the next section of this presentation, which is a review of our strategic progress. I'm gonna turn, first of all, to a summary slide, slide 15, that is a one page scorecard that shows our KPI performance against some of these key strategic goals that I've laid out. In terms of our commercial strategy, reaching more customers, more time, then you can see there in the middle column of this slide that our own website sales grew again in the year by 16%, and on a y o two y basis are now 81% up. Significant progress.

13:51 Similarly, our customer lists were up 24% and are more than double where we were pre COVID. That is an important metric for us because we know that customers that come and buy from us on our websites once, there's a very good chance they'll come back and buy again in the future. So it's a good predictor of of future growth. In terms of new product development, we wanted to see an improved contribution from new product. I'm pleased to say that in this year, more than 10% of our sales, came from new product launches, and that is a better return, a better hit rate than historically we've had in the business. In terms of building out geography and opening up new markets, then year on year, our sales were up 27%, and on a two year basis, 71%.

14:39 So good, pleasing progress there too. And in terms of leveraging our brands, as we saw on a slide a few pages ago, early signs that the new work we're doing, the new brand led work we're doing is giving a good return. SPOED, PIMPINEL, Raw Worcester, all showing good signs of growth. Turning now to the operational strategy. Then in terms of our factories, three key pieces of new automation have gone in and are going live right now. Those automation projects will increase the output that we can get from our Stoke ceramic factory, improve productivity, and reduce cost per unit, which will help drive that operating margin ambition that we have. In our warehouses in The UK, we've just completed a a floor extension that will enable us to ship roughly double the number of parcels direct to consumer in the second half of this year. And similar in The US, we have work going on to do the same.

15:38 In our home frames factory in the Lake District, we've just completed an extension that allow us to produce and sell a new revenue stream, hand and body soaps, and, we'll come and talk about that a little bit more in a moment. In terms of procurement, we hedged out our long term energy contracts in the first quarter of twenty twenty one out to the first half of twenty twenty four. So in the short term, that protects us from the immediate volatility that we're experiencing in energy costs right now. From an ESG point of view, our carbon emissions per ton were further reduced this year by 12% on the previous year. So that's a a very quick overview of some of our key KPIs on our strategy, and what I'm now gonna do is go into some of the key parts of this in a little bit more detail.

16:32 We're gonna start with developing online sales channels, a really important area that we can reach more potential customers. On the right hand side, you can see the trends for our own website sales platforms. Those platforms are in The UK and in The US. Good growth again year on year and significant growth on a y o two y basis, And that customer list is growing in line as well. When we talk about online channels, in addition to our own websites, we also have pure play retailers like Amazon and Wayfair as well as omnichannel retailers like John Lewis in The UK or Macy's in The US. And I'm pleased to report that when we look at all those online channels together in those two big markets of The US and UK, 50% or more of our sales now go through an online channel. That's significantly up on where we were two or three years ago.

17:31 Continuing on online, just a few words about the key pillars that we're investing in for our own website sales growth. Starting on the left with user experience. We're investing in our websites, improving the user experience. We've already launched brand new websites in The US market. And later this year in 2022, we have new websites for The UK that will go live. We wanna improve the user experience, simplify the journey that the customer makes when they're on our website, and that'll improve the conversion level as well. Secondly, we're increasing the pipe in terms of bringing new customers in to our websites by looking at page search, social media, all different routes and and channels of acquiring those customers.

18:20 Once we have those customers, our job then is to maximize the value of that customer through repeat purchases and really getting sticky and engaging with that customer. So later this year, we'll be launching loyalty and VIP programs and clubs for some of our brands as well as working with the new data that we have with that end consumer, segmenting that data effectively, being able to target, on on email campaigns. And finally, on all online channels, whether it's our websites or retailers' websites, we wanna stand out better on that digital shelf. And that means improving the content, the photography, video content, the story, the reviews, and so on. So in terms of if you'd like to move one one slide on, Dave.

19:14 In terms of our road map in this online area, I shan't go through the detail on this slide, but really just to get over that, we have a very comprehensive program that we're working through. And it touches everything from people and capabilities through to the front end websites, back end systems, data, how we use data, how we fulfill, and how much we can fulfill in terms of customer orders as well. And I think the key point here is to say that, you know, although we've made significant progress in the last year and a half, we're still really in our infancy, I think, in terms of developing our expertise in this area. We've got, you know, another year and a half ahead of us. The things to watch out for in the next twelve months, as I said, are new websites coming in The UK with better customer experience, hopefully, better conversion as well as the launch of some VIP loyalty, clubs and referral schemes.

20:07 So online, if I sum that up, good growth again in 2021 even with retail, physical retail reopening. We're partway through our journey in terms of getting in front of more customers and really leveraging, our brand values. And in the next twelve to twenty four months, there's gonna be a considerable number of new projects that come

20:28 to bear. Moving on to our second key strategic sales driver, which is building that rest of world, geography. So in 2021, our sales in this area were up well 27% on a y o two y basis, 71%, and that really shows, some positive early results from the reset of the team, the sales team that we did, just over eighteen months ago. We've worked on aligning our RRPs around the world and are now seeing good growth from many countries, including Australia, Canada, Scandinavia. We've also, in the second half of last year, signed a new distribution agreement for all six of our brands in China. We're very excited to see that market grow for us in the next two or three years.

21:22 We expect, therefore, to see our rest of world geography, sales markets grow at a faster rate than the average business the next two or three years, and some of those target markets, are on that slide. Turning to our third key strategic sales driver, which is getting a improved return from new product development and launches. In this area, we launched a number of new ranges or products in the last twelve months. We extended some of our key heritage ranges like botanic garden and Spoke Christmas tree. Spoke Christmas tree, in particular, was a big driver of our very successful outperformance in in quarter four. We've also increasingly launched new contemporary ranges, including our collaboration with Sophie Conrad and Spode ranges like Treaties of Curiosity, which are targeted at growing, a wider consumer market in areas of the

22:19 market where we aren't as concentrated in at the moment. In total, in the year, more than 10% of our sales came from these new launches. As I said, that's an improved contribution versus our historical hit rate. Looking forward now, what are we doing? Well, we have a two year road map in place for all of our brands for products that we're going to launch. In the next twelve months, you're gonna see product launch to celebrate the fiftieth anniversary of botanic garden. We're also extending botanic garden,

22:51 Port Marion botanic garden into home fragrance and hand and body products, using our wax lyrical factory. We have further Spode Christmas tree products that come out this Christmas to build on the real success we had in 2021. And then we have contemporary ranges and gifting ranges, including new Sarah Miller coming too. So a good, a good product road map for the next twelve months, and as I say, a two year rolling road map is part of our, our processes going forward.

23:26 Final key strategic sales driver is to leverage our brands more effectively. You can see our six brands there on slide 26. Just to touch first of all on Spode. I've talked about Spode a little bit earlier, but you can see on the chart there that really good early signs from the work we've done, the focus the extra focus on this brand, that we've had a breakout year, in terms of sales growth. We expect this brand Spode to continue to grow. Where did we get the growth from? And it was a combination of of of new product launches in our heritage ranges and some more contemporary giftware as well. Critically, as we talk to the end consumer more and more on online digital channels, then we're seeing a real engagement, social following for this brand, and some significantly, improved KPIs.

24:22 Next in this section, I wanna talk about wax lyrical, our home fragrance business, factory based up in the Lake District in The UK. Sales were up 5% in the year, but are still below where we were pre COVID. Why is that? Well, this business, this brand has been most impacted by COVID enforced physical retail shutdowns. Many of its customers are physical bricks and mortar retail and were enforced to close through large parts of last year. The good news is that with retail reopen, particularly in The UK, then sales this year should rebound. We're also leveraging our wider group infrastructure in The US and some of our rest of world sales teams to really go out and sell and take this brand to new markets.

25:13 We have new product coming through, in particular, following through with the development of the new extension to the factory that allows us to make the hand and body products. There's a couple of photos there on this slide of some of the new ranges that are being produced right now. And then finally, in terms of leveraging our brands, an update on Nombe. Nombe, a brand that we bought in the second half of twenty nineteen to increase our exposure initially in The US. So, again, pleased to see a five year sales high for the Nombe brand despite all the ongoing disruption from COVID. Good sales in online channels, reaching more potential customers, really benefiting, being able to reship and replenish and take orders through quarter four, better stock availability, and good new product launches.

26:06 We expect to grow in the next couple of years. Again, further extensions within online channels is gonna be a big focus as well as leveraging our UK, and other markets around the world, for for new listings.

26:23 So that is an overview of our key strategic sales drivers. Again, all about getting our products, our brands in front of more potential customers on more occasions. Looking now at our operational strategy, again, which is about our capabilities, our efficiency, driving up our operating margins. I'm gonna start, first of all, with our factories. So in our Stoke factory, we've invested heavily in the last twelve months in designing and developing with automation specialists new pieces of machinery that will increase our output on every shift, reduce our cost,

27:02 and make us more productive. Three pieces of automation are now in and live, and so we expect to see increased output this year and in future years, better productivity, lower cost per unit, driving that accretive operating margin goal. These pieces of CapEx also reduce the energy consumption that we have in our factories and reduce reliance on on on manual labor. In our wax lyrical factory, we've completed the extension that allows us to make the hand and body products. Those are in production right now and are going on sale and begin to take orders from a number of markets around the world. Terms of our two factories, we have a further two years of this road map with projects that are either underway in design and build or will shortly be underway. And at the end of the two years, our factories will have a much higher output, much better productivity, and lower cost base.

27:58 In terms of our warehouses, we've extended our UK warehouse, specifically to double the capacity we have for picking online orders. So enabling and getting ahead of the growth that we're gonna be bringing in on the on those channels. Similarly, in our US warehouses in Connecticut and New Mexico, we are investing in systems that allow us to be more efficient in how our ERP and warehouse management systems work that we can pick and pack and ship all six of our brands on on on one single order. And finally, on this section, a really important area, which is ESG. We have a strong track record, in these areas of making incremental improvements.

28:48 And 2021 was no exception. New products that we put in in our factories enable us to reduce our carbon cost, carbon emission per ton by further 12%. We also achieved for the first time platinum accreditation on investment people in our UK businesses. We've worked hard on our environmental sustainability piece with outside consultants in the last six months, really understanding not only what our emissions are, but also our suppliers and our supplier suppliers that we have a full audit, if you like, of of of everything that goes on both in our control and on our on our suppliers. What we're gonna do with this is come up with a ambition that we will launch to the market in the next six to nine months of how we go even further in terms of reducing our impact on the environment, and I look forward to to sharing that in due course.

29:47 That completes the strategic overview, of this presentation. So I'm gonna come back, and summarize, the year. So, again, as we said at the start, very pleased with sales performance despite all of the ongoing disruptions. A record sales year for the group, and that sales growth really was across all of our markets and all of our brands. So strength and depth in that growth. As Dave highlighted, our cash generation, our balance sheet is robust, and we're very pleased to reinstate our long standing dividend. As we look forward now into 2022 and 2023 in terms of our outlook, we expect the disruption from COVID to continue in supply chains at least in the short term. And I think that would be evidenced by the lockdowns in China that have been announced in the last seven to ten days. We have a good track record of very experienced sourcing and operational teams, and we've been used to dealing with these these bumps in the road for the last couple of years. So we expect to navigate those existing those continued supply chain disruptions as we go through this year.

31:00 We're also very aware of inflationary impressions. In terms of energy and our business, we're fortunate to have these long term energy contracts, fixed price energy contracts in place. So as a business and our factors, we know we're protected at least for the next couple of years. But we are cognizant and watchful of the impact that energy price, rises, fuel pump price rises, food price rises are gonna have on the end consumer. We expect that it's gonna take the consumer around the world a little time this year to adjust to all that, all those inflationary pressures. However, with the things that we can control, the areas of strategic growth that I've just talked through, we expect to continue to grow despite that pressure on the on the consumer in 2022.

31:48 And in 2023, we'd expect to see the full benefit of the program of work that we've done in the business, both in the sales commercial side and operational side, that transformation come through in in our p and l. So where does that leave us? This is our final slide, and then we're gonna turn over and give you some time to to put any questions on the screen. I think we feel like a very different business. I think that's the first thing to say. A very different business to where we were a couple of years ago and with a very different potential. We've added significant strength and depth in into our teams in the last twenty four months in online and digital in particular as well as resetting all of our international sales teams. And so our focus is really getting our product in front of an ever wider customer base. And we're doing that through developing these online sales channels, by building out, markets, by leveraging our brands more effectively, and by launching new products.

32:49 As we do that, we're building ahead of time the capacities, capabilities we need in our operations. And as a result, we're targeting sustainable top line sales growth combined with improved operating margins. When we do that, it should be transformational to our p and l and to shareholder value. So on behalf of Dave and I, for now, we'd like to thank you for listening and joining our presentation today. I hope it's been useful. I'm now gonna pass back to the host and give you a few moments to enter any questions you've got, and then Dave and I will come back and answer as many of those questions as we Thank you. Thank you. Mike, David, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions in the q and a tab situated in the top right hand corner of your screen.

33:36 But just while Mike and David take a few moments to review those questions submitted already today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you can see, we've received a number of questions prior to and throughout today's presentation. Thank you to all the investors for submitting those. But could I ask you to read out the questions and give responses where it is appropriate to do so? And then I'll I'll pick up from you at the end. Right. Thank you. So you can continue to to add those questions, but I'm gonna start at at the top of the list. I'll try and read out a short version of the question just for everybody benefit who's on the call. The first question is whether we can include a high level table of revenue by brand.

34:24 And, hopefully, you've seen that table in the slide show that we've just gone through today. Thank you. The next question is about, again, a simple table of revenue showing direct to consumer versus online versus multichannel wholesale and so on. It's difficult to do that at a group level simply because while whilst we have that data in markets where we sell direct to the customer, UK and US, for example, in many of the other 60 or 70 markets that we sell, we sell through distributors, and so they don't necessarily share that data with us. What we do do and have done, I think, during this presentation and in our wider accounts releases, we talk about the level of sales for direct to consumer and how that compares to previous years.

35:20 The next question is about directors holding shares as equity investment. So directors are incentivized to grow the share price. Our long term incentive program is clearly targeted on earnings per share growth. Those targets have not been diminished or reduced as a result of what's happened with COVID. They're stretching. And so I believe that all of the exec board are very focused on growing the share price. The next question is how much will gas and electricity prices impact profit, consumer demand as a result of less disposable income, and how strong is your cash position? So I'll start on this, and then I'll let Dave jump in on on the cash piece.

36:17 So in terms of gas and electricity prices, so the vast majority of our energy consumption is a result of having two factories in The UK. As we've noted in this presentation, we are in a a long term contract for energy that goes out to the first half of twenty twenty four. So for the next couple of years, we are currently buying at a at a at a price that is much lower than the market rate, and so we are protected. What about the consumer? Absolutely. You know, there is clearly gonna be an impact on the consumer in all of the markets that we operate on. We can't, I don't have any better forecast than in the forecast, I'm sure, that you are able to read in the press, but we're watchful for that. I think what we can say is that we expect to mitigate that by some of the strategic sales growth drivers that I've just talked through in the presentation.

37:20 How strong is our cash position? I'm gonna let Dave, our finance director, answer that. Yeah. Thanks, Mike. So I think as I said when we went through the the presentation, we are net cash positive. We've got cash on the balance sheet and then £15,000,000 of facility unutilized facilities at the end of the year. So we've just under £23,000,000 in terms of cash facilities. We have a working capital movement, which is about 8,000,000, typically. That that's a pretty normal run rate over the last the last two two to three years. So we've still got, you know, about £15,000,000 worth of worth of headroom within our facilities. Great. Thank you, Dave.

38:06 The next question is what percentage of manufacturing is now in China? What are the effects on lead times, lead delivery times, and shortage of containers, and so on? So, again, a number of different things here. When we say percentage of manufacture, I'm not gonna give you a percentage of sales. So roughly, nearly 50% of all of our sales come from our UK factories, our own factories. Of the bit that isn't our own factories that is outsourced, some of it is in China. I would estimate that around 25% of our products that we sell come from China. Yes. There is an impact of COVID of longer lead times and shortages of containers and and and and inflation in container freight.

38:53 At the moment, those are no worse than they've been at any other time in the last two years, but, clearly, COVID is not in in in the rear mirror, so to speak, in that part of the world by any stretch. So we'll continue to monitor that, and container freight rates are still way way above historic levels. In terms of how we mitigate that, well, we have put through price rises on our customers, to cover all of the inflationary costs that we've seen and experienced, including container freight, but also, labor inflation and raw material inflation. And we'll continue to revisit and review our own pricing in the light of what may happen as we go through this year. The next question, can we talk about inflation, energy prices, average cost increases?

39:41 Are we able to pass on these costs? So I think thank you for that question. I think that we've covered a lot of that already. I've talked about energy prices, the the the long term contracts. I've talked about the fact just now that we've put price rises through to to mitigate and cover the price rises we faced as a manufacturer. The next question is our marketing strategy for direct to consumer sales. How are you acquiring customers? Do you have an influencer strategy? Are you using TikTok, and is this being successful? So we've we've hired marketers brand marketers in the last eighteen months. For me, that was important because I think that, you know, the economic engine, if you like, of our business, of our group, is those six brands.

40:35 The opportunity to talk about those brands and to reach the end consumer, I think, is big. We've talked about that through the online section of this presentation. How do we acquire customers? We acquire customers through page search, through social media increasingly. These are things that, you know, we weren't probably doing a year or two ago. So these are new areas of business. But as I say, we've hired a lot of people. They're working as well with outside agencies on developing those those acquisition channels. Do we have an influencer strategy? We do have some influencers that work on behalf of the business in UK and US, but I think that's an area that will probably increase over the coming twelve to twenty four months. I think it's a great it's a great point.

41:21 Are we using platforms like TikTok? Not yet, but we may well do in the next twelve months. And are influencers successful? Yes. I think so. I think the right influencer can can be can be very can be very helpful. Next question is, do we offer shareholders a discount or voucher scheme? Would we consider doing this? Yeah. So I like it. I don't believe that we currently offer shareholders a discount or voucher scheme, but I like the idea. And so Dave and I will take that one away and think about it and and come back. The next question, which I think looks like the last question, could you share the proportion of total revenue for company website online sales?

42:23 Yes. I'm gonna look at you, Dave. I believe it's 11 around about £11,000,000. It's about 11 yeah. It's it's, yeah, it's about 10 about 11%. Yeah. 10 and half to 11%. And I I I hesitate because, obviously, we whilst we have put our RNS out, we haven't sent out our full I know some some of these some of these numbers will will be disclosed in the full version of the annual report and accounts, which will come out next month. Okay. Thank you. So it is an important part of the business. It's a great part of the business, and we were reporting that in in our full full year accounts release shortly. So if there are no further questions, and I'll just give that a moment in case anything else comes through, I think that's that's taken care of all the questions. So thank you to everybody that posted a question. I hope our answers and and the main presentation were useful. We appreciate you you joining the call today, and I hope you got some value out of it.

43:30 And in which case, we're gonna say thank you, and I'm gonna pass you back to the investor meets company host. Thank you very much. I think I actually managed to address all those questions from investors. And, of course, if any do further if any questions come in, we will give them back to you, and we'll publish those response on the investment company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important for company, Mike, could I ask you for a few closing comments? Yeah. Thank you. So, look, we we appreciate you joining the call. Hope it's been useful. We feel that we've made real progress with our business in the last twelve months. Equally, we think we've got some very exciting opportunities ahead of us. I hope that's come through today, and we look forward to doing this again next time and sharing, you know, further progress on developing our business. Thank you. Thank you.

44:22 Mike, David, thank you very much for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few minutes to complete, and I'm sure will be greatly valued by the company. On behalf of the management here at PORTMEIRION GROUP PLC, we'd like to thank you for attending today's presentation. Thank you, and good afternoon to you all.