Portmeirion Group (LSE:PMP) — Interim Results

0:01 Good morning, ladies and gentlemen, and welcome to the PORTMEIRION GROUP PLC Interim Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Simply click Q and A, scroll to the bottom, type your question and press send. The company may not be in a position to answer every question received during the meeting itself. Have the company review all questions submitted today and publish responses where it's appropriate to do so? These will be available via your investor meet company dashboard, and you'll be notified once they're ready for your review. I'd also

0:33 like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Mike Raybold, CEO and David Frost, CFO of PORTMEIRION GROUP PLC. Good morning. Good morning. Thank you, Mark, and welcome, everybody. Thank you for joining us this morning for our interim presentation. I think this is the fourth presentation we've done on this platform. It's it's worked very well, so far, and and we hope you get the most out of this, this session. Again, just to to repeat what Mark said, please do, post any questions you have, using the functionality of the platform, and Dave and I will will get to as many of those as we can at the end of the formal part of our of our presentation. Okay. So in terms of what we're gonna cover today, if we just look at the agenda slide, I'm gonna give a brief overview of our first half and our outlook for for the remainder of the year. Dave is gonna talk in some detail about our financials for the first half and our sales by market.

1:36 I'm gonna come come back and talk about the progress we're making on the key parts of our long term strategy. I'd then like to talk briefly about the progress we're making on ESG and our sustainability environmental impact projects, and then we'll come back and really pull it all together, summarize where we are, and and talk about forward view. Okay. So in terms of an overview of our first half, really, really pleased with our first half results. Actually, a record first half revenue, just over £43,000,000, obviously, up on 2020. I think the most important statistic here, the biggest takeaway that I that that I would emphasize is is the performance against pre COVID 2019, and with seven percent up like for like on 2019, that really shows the benefit of the long term strategy that we're working in the increased investment we're booking behind online in particular, but also other parts of our business.

2:39 What's driving this performance? Again, at its heart, strong online growth is a key part of our strategy, and I will pick this up later on the presentation. Good growth again on top of the growth we achieved during the various lockdowns last year combined with a really substantial improvement in gross margins for that channel as well. Also, contributions from new product launches, strong contribution from our focus on growing new markets and rest of world markets outside of our core markets. That means that we have a a immediate return to profitability, for the half, and Dave will take us through the balance sheet. We have a strong balance sheet, good, net cash, positive position. And we're also in the in the prices of where we can recommit to hitting our market expectations for the year.

3:29 Again, strong first half in terms of sales. Where we are today with order book and demand is in a good place. We have good, good demand and order books across all of our our key markets. We are aware of and impacted by the well publicized disruption to supply chain and some of the cost price inflations that are coming through. This affects us like everybody else in a number of ways in terms of, some delays on shipping, global shipping around the world, and unloading, at ports in terms of labor shortages and short term price inflation. We've mitigated these, effects very well so far in our first half numbers and are, you know, focused on on continuing to mitigate them in the second half, and, we have a lot of people pointed at that part of the business right now.

4:15 So that's an overview of where we are. We're gonna move on to the financial review, and I'm gonna hand over to Dave, our finance director.

4:26 Thank you, Mike, and good morning to to everyone on the call. So as Mike has laid out there, I think record h one revenue, 43,100,000, and that was 35% up on 2020 and actually 24% ahead of pre COVID levels of 2019. Since the first half of twenty nineteen, we've made a couple of acquisitions that we that we we're benefiting from in terms of top line revenue growth. So we acquired the the Nambe business in The US in July 2019,

5:08 in '20 the first half of twenty twenty one. And that that meant did mean, though, that that we were still like for like ahead 7% of 2019. So, you know, very pleasing to see that we're actually ahead of of pre COVID levels, you know, when there was still you know, we're still seeing disruption in in some of our sales markets, particularly, The UK where where retail was closed, for for three and a half months of the the first six months of the year. And that drop through revenue improvement drop through into improved profitability. So so operating margin growth, pre COVID 1.9%. We we've grown that to 4% for the first half of the year, and that meant that the headline profit before tax grew from from 500,000 in 2019 to 1,500,000 for for 2021.

5:55 We're continuing to to to see positive operating cash flows, and that's allowing us to to continue and accelerate our investment, behind our our our growth strategy. And we're recommitting to to to reintroducing the the the dividend for for full year '21. We're not paying an interim dividend, but we expect to be to be to be in a position to to pay a final dividend, and we'll be updating on on that, in the the first quarter when we announce our full year results at the first quarter of of twenty twenty.

6:34 Okay. Moving on to to balance sheet. We continue to to maintain a strong balance sheet. We're cash positive, £9,000,000 at the half year. And in addition to this, we we have £15,000,000 of unutilized borrowing facilities. So we had about £24,000,000 worth of of headroom, to allow us to continue to invest. We've actually spent about £4,000,000 in in net CapEx over the last twelve months, pre COVID levels for the group. We're we're now we're spending about three times the the the annual run rate from from pre COVID. So, you know, continuing to invest in a in a number of, you know, operational and and strategic projects, and, you know, we will update on that in a bit more detail in terms of some of the the progress against some of these projects.

7:23 Stock levels, we're continuing to to to focus on. We've got a small walk in there in in in terms of laying out the progress that we've that we've made in the last twelve months. And we've actually been able to to reduce inventory levels by by about 8%, which is worth £2,500,000 in cash terms. So, you know, very pleased and, you know, able to to increase the and improve our our stock turn, and that's something that, you know, we're continuing to focus on in terms of, leverage our leveraging our working capital, in a better way.

8:03 Onto sales breakdown by geographical market. I think the most pleasing thing that that we've seen in the first half when, you know, we compare to to twenty twenty, we you know, we're really seeing growth across, you know, all of our all of our key markets. So, you know, the three biggest markets, The US, The UK, and South Korea, growth against prior year in in all of those markets. The US, 44 up year on year, And we're now actually trading like for like above, pre COVID levels in in in f y in f y nineteen. So, you know, really pleasing to see growth in in that key market, and that's really driven by new product introduction now that we continue to to invest in during this period, and the the strength of, you know, of online sales, both our, you know, our own websites in The US, but but also third party platforms as well, which have seen seen significant growth during the, the COVID period.

8:58 The UK marketplace continues to to to be resilient, increase in in sales year on year, and really set against the, you know, the disruption to to physical, retail, which was, you know, closed, for for all of the first quarter and and and up until mid April. In the Korean marketplace, you know, very disrupted by, you know, by COVID, certainly through the first quarter of of twenty twenty. We're starting to see sales out in this marketplace, increasing year on year, and our sales, yeah, our sales in in into the market have have grown, over 2020, and we're now, you know, at a at a level where we believe we, you know, we we have a sustainable level where we can, you know, we can continue to see growth in that marketplace.

9:46 And then finally, in rest of the world as well, you know, we've seen growth over 2020 and and, actually, I think more pleasing, 40% growth over, you know, pre COVID levels of of 2019 in rest of world markets. So, you know, we're aiming to to establish two or three other, you know, key international markets, you know, and we're we're starting to see benefits of that strategy where, you know, progress against Australia and in The Middle East, and then we're benefiting from the the full ownership of of PORTMEIRION GROUP PORTMEIRION that we fully acquired in in in 08/20/2020.

10:26 Anything you want to add, Mike, to? Yeah. I mean, I'll just round that one off. Dave, thank you for that that overview. Again, I I think what I'm really pleased with on this slide in terms of our geography is the fact that we, you know, are substantially in growth across across so many different markets, across our core markets as well as making a a really good a really good getting a really good traction with some of our rest of world new markets. And in particular, in South Korea, we've spent a lot of time in the last couple of years stabilizing that market. We've made a lot of progress. Stock overhangs that we maybe had a couple of years ago have gone, and the sales out and and the demand in that market is now very, very strong for our brands, particularly the PORTMEIRION brand, which is which is very, very encouraging. Okay. So that that is our our overview in terms of financials.

11:14 I'm now gonna move on to the next section, which is an overview of our strategy, long term strategy, in particular, the the progress that we're making. So this is a slide that we've put in for the last two or three presentations. And just as a as a recap, we have a six point strategy that the whole group is focused on. The first five are about targeting, consistent and accelerated sales growth, And the final sixth one is about improving our operating margins by investing in capacity and efficiency within all of our operation or all of our operations. So briefly, in terms of sales drivers, we're focused on a massive online and digital transformation, really getting penetration in online sales channels, including our own websites. Two, unlocking new geography to complement the three core markets we have in The UK, US, and South Korea. Three, driving new product launches to really drive sales growth in our markets.

12:13 And four, developing our brands, underweight brands, and and leveraging the benefit of new brands that we brought into the group like Wax Lyrical and Nontbe. In terms of operations, as I said, as we grow, we have to develop the capabilities of our operations, our factories, and our warehouses to cope with that growth. Those investments are going on now. I'll I'll update that in more in more detail. If you wanna move the slide forward, Dave, just in terms of how that strategy then plays out into our numbers, how do we see this playing out in the next few years? Well, those sales drivers that I've just gone through are all pointed at, again, accelerating our top line growth, our top line performance. And, you know, very quickly, you know, we wanna get back to 2019 pre COVID levels where we've already done that in the first half of this year. And then going forward in future years, we really wanna be driving 1010% plus double digit sales growth.

13:08 And then as we leverage that extra volume across our business, across our operational base, we're also looking to drive up operating margins. So the benefit of that sales volume going through our factories, going through our organization, the benefit of our own website sales growing, which are accretive above average gross margin drives up the margin. And, again, as we invest more money in automation projects in our factories, and we're gonna come onto that. All of these these things are gonna drive improvements in our operating margin. We wanna get back to 10% as soon as we can in 2022 and then grow beyond that up to 13% and even beyond in in the coming years. A little bit about digital and online. This is the single biggest opportunity that that we believe that we have.

13:57 We're we're partway through the journey, but I wanna talk a little bit about the benefit of deepening our relationship with the end customer. Bear in mind that a couple of years ago, our business really was focused and developed around servicing trade and wholesale and distributors around the world, still an important part of our business. But with the brands we have with over seven hundred fifty years of combined history, products that already exist and and are loved around the around many, many homes, millions of homes around the world, The benefit for us from deepening that relationship with the end consumer, the customer is is massive. This is really about telling the story of our brand, the quality of our products more to the end consumer. We wanna reduce the friction in all the touch points we have with that end consumer, whether it be when they place an order on our websites or on someone else's websites, how they engage with the brand, how we deliver to that customer, how we follow-up with with after sales and customer service.

14:53 So we're building our own customer lists, our consumer lists. We're expanding the reach that we have in terms of new product launches, new markets, and targeting new categories like gifting. As we do that, we we know already from our own websites that we have a very high, percentage of customers that buy from us and then come back. This repeat customer or returning customer KPI is certainly 50% or more. So that means that we can leverage. We build traffic, we build transactions. We can leverage and build and get repeat transactions. All of this is gonna feed through to stronger sales and stronger margin growth. So I'm gonna talk for a couple of slides about our targets within digital online and the progress we've made in the last six months period.

15:40 So, firstly, in terms of our own websites, and our own websites are only part of our online strategy, but in terms of our own websites, we want to get to 15 to 20% of our total group sales going through our own websites. Those sales are well above average margins, so it will take up our our group margins. In terms of progress, in the last six months, we've added another 15% growth on top of all the growth we made last year when retail was shut, and we've also taken our gross margins up by 900 basis points at the same time through higher average pricing. In the period, our website sales our own website sales represented about 12% of the group sales. We're delighted with the performance we've had during this period, hanging on to the gains we made last year, keeping those gains, and growing again despite retail physical retail reopening.

16:32 The performance improvements we made to our sites in America, in our American market last year, we relaunched all of our websites in October last year, Has really shone through this year, and we're seeing a much improved site performance from from our US websites this year, which is great. We've launched a new Canadian website in July of this year. And, again, at the end of the half, we launched a new Wax Lyrical US website too. There's a huge road map of work going on, and we're partway through that. And I'm gonna come talk to some of the key parts of that in a moment. If we move on now to our wider online and digital strategy, so outside of our pure own website sales. Again, our target is to take our US and US markets, account for roughly two third of the group sales, to a level of more than 50% penetration through online channels. And that'll be a massive shift from where we were two or three years ago where we were very, very focused in physical retail.

17:31 In the period, that we're reporting on today, we've now reached 51%. It's the first time we've gone through that 50 barrier. I think there's further further gains in these channels to come, so we're delighted with that progress. And, again, what we're seeing, on retailer websites that we that we are present on is that we are hanging on to and growing the online channels and getting the benefit of the physical stores reopening as we go through this this pandemic, which is fantastic. Customer lists, another another important part of what we do, our own customer lists, our own consumer customer list. As I said, we have a high percentage of customers that buy from us and then come back, and so our focus on growing those lists is important. We've added another 60,000 in six months and a 120,000 customers over the last twelve months through through our our traffic acquisition strategies.

18:25 So, again, a good performance in terms of online channel penetration. And then finally, in this area, I just want to to to look at where we are on this journey. I'm not gonna go through this road map in in in a huge amount of detail, but really just to get over the, the breadth and the and how comprehensive the the transformation that we are pushing through our business in terms of people, in terms of systems, both front end and back end, terms in of new websites, in terms of our warehouses, building additional direct to consumer ship capabilities, and developing our data systems so that we can better, service, our new consumers on direct to consumers in the future. As I said, in terms of last six months, we've made progress on this road map. We've launched new websites in Canada, a new website in The US for Wax Lyrical.

19:13 We are underway with some very big pieces of work in terms of new product information management systems. We've launched, and we're working on significant overhaul for all of our UK websites right now, and, hopefully, they'll be ready to launch in the first quarter of next year. We learned a lot from the work we did relaunching The US websites last year, and we expect to get the same level of performance improvements on The UK websites when they go live next year. We're also partway through projects on implementing new eCRM data systems and email campaign systems. A lot of work going on there. And then on the back end in terms of delivering to the consumer, we have a big project going on right now in our our warehouse in Stoke in The UK that is gonna more than double the capacity we have to ship direct to consumer and drop ship orders, not only for our own website, but for some of the retailer websites where we do the order fulfillment for them. And we're engaged with our US warehouse and systems to add similar capacity improvements and efficiencies as well in that part of the world.

20:17 So very comprehensive road map. We're making good progress. We're happy where we are. This has always been about a three a three to

20:24 four year program, and so we're we're we're in a good place. So moving on from digital and online to second big area of focus in terms of driving sales, new product launches, new product vitality. My challenge, you know, eighteen months ago to our teams was, you know, I wanted more contribution from new products in more areas, where we operate. And I'm really pleased that despite the pandemic, we've managed to launch, great new products so far this year, and indeed, that new product has contributed more than 10% of the group sales in the period. Launches have included a new Sophie Conrad for PORTMEIRION range that complements a very successful range that we have around the world already with that partnership. There's a a photo in the center there.

21:10 Also, new ranges for Spode, creatures of curiosity on the left hand side has been a big new launch for us and has worked and resonated really well with the end Spode consumer too. All parts of our business have have had successful product launches, and we expect this engine, to continue through the second half with some some Christmas lines as well as into, next year. Moving on to the next area of our strategy, which is about driving and developing new rest of world, export markets to complement the positions we have in The UK, US, and South Korea. I think the real headline here is having reset the teams and reset the focus kinda twelve to eighteen months ago. Really pleasing to see that in the period we're reporting, we're now 40 percent up in these in these rest of world markets where we were pre COVID. And that's, you know, a a really good start to to to generating growth. Where is this coming from? Well, we're pleased with progress in in The Middle East, within Europe, Germany, and Scandinavia.

22:14 We've just signed up a new distributor actually in China, so it won't be in these numbers in the last couple of weeks. We've been working on this for about six or seven months. That distributor will be responsible for taking all of our brands out within the Far East and the Chinese market. As Dave said, in Canada, we acquired last year the joint venture distributor that we had in the Canadian market. That market has been

22:41 locked down in the first half of of this year in terms of physical retail, but we've launched new websites. We've integrated that into our business very successfully, and we're very confident of getting a very good return on that acquisition in the coming months and years. So moving off export growth into the next area, which is about leveraging some of our new brands, and I'll briefly here about Wax Lyrical, our home fragrance business, again, a made in UK brand, a factory based up in Cumbria in the North Of England. Tough first half in this division in The UK. It's a UK centric business at the moment and obviously impacted by the the the most recent lockdowns we had January through through April.

23:28 What that meant was that many of our customers were shut, and this business has a lower level of online penetration at this stage than than our tableware businesses. We've managed to get that online penetration from from close to zero up to

23:42 about 20%, but that 20%, if you remember, compares to the the sort of 51% average we have across The UK and US. So we have some way to go. The good news is that retail, obviously, in UK has reopened, as it has reopened, our order books have started to swell again. In terms of where we are now in the second half, we're we're pleased with our order books off of this business, and they're ahead of where we were last year at this stage. In addition, we've spent the last nine months investing in a new part of the factory there, a new production process to give us access to a new revenue stream, and that is to make hand and body products under the wax lyrical brand. So hand soaps, hand pump soaps, hand pump lotions, and cleansers. There's a couple of pictures there on the on the third and on the right hand side of those new parts of the factory.

24:33 We had some delays in getting this over the line due to COVID and and contractors having to go off and and self isolate due to the the pandemic and also delays to getting, you know, these these very crucial electronic chipboards, chipsets. They're in such short supply around the world at the moment, but we finally completed that end of August. We've now started production in the first half September and, indeed, in the last week or so, shipped first orders, which is great to to our our first UK customers. So that's gonna give us access in the future to a a new and interesting, category and and and potential revenue stream. Okay. So that section in our strategy is about how we're progressing with these key areas of strategic focus from a sales point of view.

25:25 How do we accelerate our sales and top line growth? I now wanna turn to what we're doing within our operations, how we are going to drive that operating margin gain that I talked about earlier. And, really, it's about investing in our factories in terms of efficiency, taking our capacity up so we can get more output through as the growth comes in. Again, our target here in our factories is to take 10% cost per unit out by year three. We're in year two of that plan. There's a detailed road map here, and I won't go through it line by line. You can you can look at it offline. But, again, we're making substantial progress in addition to the initiative that went live during last year. At the top of this sheet, we have three or four programs that have gone live this year or about to go live. Heat release automation adds key capacity within our Stoke factory as well as as efficiency and cost per unit savings. Clay lifting automation, same and and gives health and safety benefits. Inline spraying automation, again, gets us more efficient, enables us to put more product down key parts of our factory that went live in, in in the end of August.

26:35 And I've already mentioned the the wax lyrical hand and body extension. These are are big pieces of CapEx investment for us. They will have a long term, benefit to the business. It's been tough delivering, capital projects and factories because of COVID, again, keeping contractors on-site, because of of of the pandemic, but also the shortage in in key electronic circuit boards. But we are either there or very close to being there on all of these three or four projects, and they will benefit us back end of this year, but particularly next year. In terms of what this means, in terms of financial progress, then I think we're on track end of this year to be at a cost base, cost per unit around 5% below where we when we started. And we're also believe we're on track by the end of year three, end of next year to be 1010% down. At the same time, we'll have built a significant amount of extra capacity that will enable us to grow the business.

27:31 Okay. So that is a a quick talk through the progress we've made on the key parts of our strategy, both the sales facing parts as well as our our operating parts. And now I wanna move on to sustainability and ESG. We have a great track record in this area. Clearly, we're very aware as a as a manufacturer, as a business that ships products around the world, the impact that we have on the environment and and the communities that we we both operate in and sell in. As I say, we we've had a a track record over many years of of of getting better, and this year is no exception. A number of new initiatives have been put in this year, both in terms of reducing plastic packaging within some of our factories, also in terms of recycling and recirculating improving heat flow within our Stoke factory and the kilns that we have fire the product. And that's got us to a place in the last couple of months where we are now 10% better in terms of our energy efficiency per ton and and and lower carbon emissions per ton, which is a great a great improvement. We're gonna continue to work and develop in this area. And in fact, we're working right now with a a consultancy on auditing all of our supply chains globally in terms of impact on the environment. So not only our suppliers, but our supply suppliers and really following right back to first principles. And once we have that map and that audit, then we can set some challenging

29:02 ambitions in this area for how we again improve and and reduce our impact on the environment while growing the business. Within people, worth saying that we've continued to work safely and really look after our teams, keeping everyone safe during the COVID, pandemic. Our factories, our warehouses are operating at full capacity, which is fantastic and in a COVID safe way. And I'm really delighted in The UK that for the first time this month, we've achieved platinum investment people, accreditation. I think only four percent of people that that are credited get get accredited, are so it's great to be in that small in that small, group people that have reached the highest level. Okay. So that's sustainability, and ESG.

29:49 Before I move on, Dave, I wanna try and pull all of this together, and then we'll for questions, and and and Dave and I will try and get to as many questions as we can. I can see a number of questions have already come through, so thank you for those.

30:04 So in terms of our first half, again, just to reiterate, we're delighted with with the sales number. It is a record for the group for the first half despite ongoing drag from from COVID and and closures at retail in certain parts, particularly UK, and as I said, Canada. I think the fact that our like for like sales are now comfortably up on 2019 pre COVID is really a good indicator of the the change and the potential that we are building into our business through those kind of strategic programs that I've just updated on. We're sitting on good and strong order books for the second half, which is great. We are a seasonal business. We do more volume in the second half and produce more profit in the second half in a typical year.

30:49 We are cognizant of, the challenges that I talked about right at the start in terms of supply chain disruption, moving products around the world, inflation in in global, shipping rates, as well as, you know, short term labor shortages and pressure on on labor rates. We have dealt with that very well so far. We have built those short term on costs that we can see into our second half forecast and, again, are recommitting to hitting our full year full year expectations. At the same time, as as executing on on our sales and our profit, obviously, we are making a significant investment in our business for the future. You know, we're investing roughly three times our historic average run rate in terms of capital projects, both on front end, online digital systems, but particularly in our factories and warehouses to develop the capacity and efficiency for for future growth. I think that's fantastic.

31:43 Because of that, again, we're confident of the future. We're confident that we're gonna be delivering sustained sales growth and improved operating margins. We've talked about as we've gone through this presentation, those kind of targets that we're aiming for. We have a strong balance sheet, and we are, you know, delighted to commit to resuming dividends for this year as well. So that's our overview. What we're gonna do now is I'm gonna pass you back to Mark from IMC for a moment and give you a chance to to log any questions on the right hand side of the screen, and then Dave and I will come back and and hopefully, I'll answer as many of those questions as we can get to. Thank you. Mike, David, thank you very much indeed for your presentation. Ladies and gentlemen, please continue to submit your questions. As Mike said, just click on Q and A, type your question and press send.

32:28 But just while the team take a few moments to review those investor questions submitted already, I'd like to remind you that recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via investor dashboard on the Investor Meet company platform. I'd also like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Mike, David, obviously, we have had a number of questions come through from investors today. If I may just hand back to you to click on that Q and A tab and just start at the top and where appropriate to do so, just read out the question and give you a response, please. Thank you very much, Mark. Thank you. So thank you for all your questions, and and please do do add to those as we get on the list. And as I say, we've we've got time in this presentation. Hopefully, we can answer as many of them as we can. The first question is is it what do we mean by like for like when we're talking about sales sales growth? Well, by like for like, we are excluding the benefit of acquisitions that might be in one period and not the other. So when we report 7% like for like growth over 2019 pre COVID, We're actually discounting the benefit of the nonpaid business that we bought in the second half of twenty nineteen and discounting the benefit of of the Canadian acquisition we made in 2020.

33:47 The next question is about direct website sales. Where do we want to get to in terms of revenue? What is the impact of margin? And what do we do in other geographies? So our target for our own website sales is to get to 15 to 20% of the group sales going through our own websites. We're at 12% now, and that's a massive advance on where we were two or three years ago. The benefit of that as well as revenue growth is also that it will drive up our average margins. On average, kind of a net margin level after the additional cost of of kind of warehouse picking and and and parcel shipment, our own website sales are roughly 15% above average margins in the group, which is fantastic.

34:33 Obviously, that differs a little bit by range, but that's what's what the average is. Do we operate direct sales in websites and other geographies? Our key websites at the moment are in The UK and The US. We have a small European website that collects some some orders in some of those markets. But at this stage, we are focused on The UK and The US. We may expand that later on in our road map, but right now, it's The UK and The US where we're investing. The next couple of questions are about dated dividend and are we concerned about energy price rises? I'm gonna let Dave step in and and and pick those up. Okay. Thanks, Mike. So, yeah, the the dividend date the the final dividend will need to be approved by by shareholders at the AGM. The date of the AGM is the 05/19/2022.

35:28 So it was it's typically the following week that any dividend would be, will be paid. So so final dividends will will be going to the AGM for, for for the usual shareholder approval. Rising, in energy prices, gas and electricity, we we actually hedge against that, and we we bought, the the main gas and electricity contracts out, until the end of the first quarter of twenty twenty four. So so in the short term, there there is there is minimal risk in terms of in terms of energy price increases, obviously, going further out in the medium term. If if there is a, you know, an ongoing uplift for the next five to ten years, then it will will be an impact, but certainly not in the, you know, the next two two to two and a half years when we're on a we're on a fixed fixed contract.

36:19 Okay. Thank you. Thank you, Dave. The next question is about our us entering the Canada market website relaunch and what plans we have for this market. So we've had a long term joint venture distribution partner for Canada. We bought that partner out in the second half of last year. The first half of this year, the Canadian market generally has been locked down by the Canadian government. It's been one of the toughest lockdowns anywhere in the world. What we've spent that time doing is starting to develop our online sales channels in that market. The Canadian market is is very similar to the North American market where, obviously, our products are very successful. So, you know, we see a great synergy there in terms of where we think demand should should should be able to go.

37:09 We've developed started developing online sales channels. We're doing that using our North American existing North American team. So we're leveraging the benefit and skills that we have, particularly in our New Jersey offices over our Canadian market now rather than than hiring fresh in the Canadian market. We have launched a Canadian website in the last couple of months. I'm gonna start working that, acquiring traffic, and building up our own website channel. We're also now servicing more retailer websites. So, you know, for example, Hudson Bay is a massive retail chain and big customer important customer for us in Canada. We'll be increasingly working with retail partners on their own websites as as well. What visibility great next question is what visibility do we have on our various revenue streams? I'm not sure whether whether that means future revenue streams or whether it means kind of till sell sales out.

38:08 So I I think that we collect a lot of data now, particularly in The UK and US, on what I call sales out. So, obviously, we know what we sell into customers, but if that's not the end customer, the end consumer, and it's an intermediary retailer or another another retailer's website, then we collect sales out data, which is the sales out to the end consumer. And we obviously track that sales out data every week, and we compare it to previous periods. So that gives us a good guide about how well our product is selling out, and we're very comfortable with with the data we're we're seeing there and the growth we're seeing in online channels. There's a question about our plans with regard to hand sanitizer and how we compete. We wanna compete with overseas supplies.

38:57 So I think this refers in in last year, twenty twenty numbers, we and during the first and second lockdowns in The UK, we were able to convert part of our wax lyrical factory in Cumbria to to make in the short term hand sanitizer. We supplied some of the NHS Trust in North Of England, some retail customers, and and, you know, and we're a good and happy to help the community into the care homes. That was great. That business has become commoditized, and we've not really repeated that business so much this year. We still do a little bit of business. What we have done though is worked on the learnings from that exercise and and built out hand and body production lines for that business. In terms of how we take this going forward and competing with overseas supplies, there is a huge amount of very cheap product that comes in from China and and whatever in hand sanitizer, and it's hard to compete with that if the procurer of that simply wants the cheapest supply.

39:58 We obviously have marketed our product as being made in England, not having a carbon footprint and having very short lead times. But I think the honest answer is that I think I think a large part of the NHS still buy, unfortunately, buy Chinese supply. Are we looking at new warehouse sites is a question. Right now, for The UK and The US, the answer is no. Although as we've gone through investment projects to look at expanding our our online facilities and and capacity in our warehouses, we have looked at the choice between increasing the size of our own warehouses versus going somewhere else. And at the moment, the investments we're making are are in growing the capabilities of our existing warehouses.

40:47 Do we expect to see a further increase in cost in the next six months due to disruption? I think that's I mean, supply chain, absolutely. As I said earlier, we have we have baked into our forecast for the second half higher costs in terms of global shipping, higher costs in terms of short term seasonal labor that we bring on to to to to make the peak peak factory production, peak warehouse. As we're baking those in, they will be of, you know, magnitude of of somewhere around a million pounds sterling. Most of these cost increases we think will be will be transitory temporary and and will soften as we go into next year. And we will, you know, obviously and right now, are looking at our own sales prices in terms of balancing any cost pressures that come through and being able to pass that on to the market.

41:37 Next question is on outside of our core markets, UK, US, South Korea. The rest of our business is around 11%. Where would we like to get that to? Okay. That's a tough question. So we do want to grow, and we can see we can definitely see the ability to grow our core markets, UK, US, and South Korea. That's the first thing to say. In terms of developing our rest of world markets, and I talked about some of the geography that we were particularly focused on, Middle East, parts of Europe, including Germany and Scandinavia, China where we've just landed a new a major new distributor. Australia and Canada are also countries that we wanna wanna go to. In terms of where that's gonna go to, and that 11% will definitely go up because I see some of that rest of our job fee growing faster than our core markets. But in terms of the exact ambition, I don't have an exact ambition other than I I expect that rest of world to grow faster than the rest of the business.

42:37 Are your targets for growth based on existing brand or more acquisitions? Our our targets for growth and and our guidance that we give in terms of forecast to to brokers to form consensus expectations are based on the business we have now, the brands we have now. We have six great brands in the business, and I think we have a huge opportunity to do a lot more with those brands in the ways that I've described online channel penetration, new geography, new products, and and and and going off to new categories like gifting. That really is where our focus is. If in in in eighteen months' time, you know, we really have made a step change in that and we we we see an acquisition that would really drive our strategy forward, then, you know, we would look at it. But right now, our priority is making the most out of the the brands that we have.

43:27 Couple more questions unless something else comes through. Can we expand on the inflationary challenges you're facing and how long you see them impacting the business? Again, I think that's about the supply chain pressures that are are well publicized at the moment. I have just talked about that in another question, but we are seeing them in terms of short term seasonal labor around the world. We're seeing them in supply chain shipping, global shipping freight, packaging costs. Again, we're dealing with them. We've been we've been able to mitigate those cost rises so far. They will impact us in the second half. We're happy that we can still make up full year expectations. And we think that it those pricing that inflation will come come and soften, and we're already seeing actually some of the global shipping rates just starting to come off their their peaks in the last couple of weeks, which is which is important. And as The UK furlough scheme has has begun to unwind the last two weeks, we're now seeing considerably more labor coming to to to against some of the vacancies that we have in our factories and warehouses.

44:32 Right. Are we being affected by the shortage of a g g h g HGV drivers? It's hard to say. Absolutely. In The UK and The US, there is a shortage of drivers. It affects everybody, not just us. It is causing some short term disruption, but not in a way that I think is gonna impact our sales number this year. And then another question. Final question. Do we use any influencers? I think this is social media influencers, particularly. We are starting down that route and indeed now working with a number of influencers both in The UK and The US. And that was the final question. So, look, really, really I really, really appreciate the people that have have put questions up. I hope that Dave and I managed to give you a satisfactory answer and that through the whole presentation and the q and a, you've got a good feeling for what we're doing, how we're executing on our strategy, and the exciting future that we think we have for for all of our brands.

45:35 Thank you. Thank you very much, everybody, for joining in. This is a safe presentation, and the Q and As get written up, I think, and can be accessed later on should you need to see them. Absolutely. Mike, David, thank you so much again for addressing all those questions we've had through from investors. If any further questions do come through, of course, the company will be able to review those. And as Mike said, we'll publish your responses where appropriate to do so on the platform. Mike, thank you very much for that nice succinct wrap up as well. So thank you both for updating investors today. Could I please ask investors not to close the session as you'll be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. So it'll only take a few moments to complete and we'll be greatly valued by the company. So on behalf of the management team, PORTMEIRION GROUP PLC, we'd like to thank you for attending today's presentation.

46:24 That concludes today's session. Thank you, and good morning.