Portmeirion Group (LSE:PMP) — Preliminary Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the Port Marion Group PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. And before we begin, we would just like

0:33 to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from PORTMEIRION GROUP PLC. Mike, good afternoon, sir. Good afternoon, everybody. Welcome to Port Marion's twenty twenty four prelims webinar. Thank you very much for dialing in. Before I start, I'd just like to introduce my colleague, John Hill. It's his first one of these. He joined us late last year, and it's great to have him on board as our as our group finance director. So I'm gonna start off with a few headlines, and then John will take us through a more detailed review of our financials. I'll then come back and talk about our plans going forward, our strategy, our priorities.

1:18 And as Jake said, we'll leave some time to cover questions at the end. Alright.

1:36 Right. Just to make a start, some some headlines for full year '24. Clearly, overall, a disappointing financial performance with reduction in sales and profit, albeit against a much tougher consumer market around the world. Really, all of that downturn in sales and profit was about one particular market, South Korea, and we'll come and explain that as we go through this presentation.

2:05 Those financial headlines, however, mask some really good strategic progress across a number of areas, and that includes our US division where despite a lot of supply chain disruption, we improved profitability quite considerably. It includes the fact that, one of our leading brands, Spode, is continuing to grow, and is up nearly 50% now in the last three or four years. Wax Lyrical, our home fragrance business, has continued to grow both sales and has made a considerable profit improvement in the year. And we also took some tough and painful steps at the start of 2024 to cut our cost base, releasing around £5,000,000 or 13%, of lower cost. We've developed in the last couple of months a new transformation plan, a plan that we think will help us to accelerate, and support the long term recovery of profitable growth.

3:03 And part of that, a big part of that, is a renewed focus and commitment to build a fortress balance sheet as priority, an intent to repay down our debt in the next two or three years and maintain a healthy net cash position. Those some headlines. I'm now gonna pass to John, who'll go through, our financial numbers in a little bit more detail. Thanks, Mike, and, hello to everyone. Just taking a run through the financials. You'll see the revenue was 11% lower at 91,200,000 for the year. That was due to a significant decline in the Korean sales of about 45% year on year, without which the rest of the group was about one point one percentage point down on a constant currency basis, which in a difficult economic climate, we felt was encouraging.

3:55 When you look at the headline profit before tax, that fell to 1,100,000 due again to the South Korea issue. And it's fair to say that the impact of that those lost sales and the factory absorption was actually a greater impact than the 1,900,000 movement we see here, which means that we did see, as Mike's referenced, positive signs elsewhere in the group. And those the main positive performances were in The US division where we saw profits increase by 18% despite slightly lower sales. Wax Lyrica has returned to profitability with sales being up 25%, and it's good to say that they've carried that momentum into the early part of 2025. And given the impact of of the the Korean of of sales, the business, as Mike said, had to take quick and decisive decisions, which were painful if necessary to reduce the overhead cost base, which was year on year 5,300,000 lower.

4:57 Altogether, that meant, as I said, profit was 1,100,000, but it's important to understand that there were two very different halves to the year. So the pain that we saw with the, the first half where Korean volumes were down by 60% meant that we took a £2,000,000 year on year decline in profitability in h one. In h two, that improved. Korea was 13% lower year on year, but importantly, the profitability of the group was flat with the prior year at 3,000,000. As a result of all of that, net debt increased by 4,200,000 to 12,100,000, with the Korea volume decline essentially meaning that we had lower receipts year on year, but also higher inventory of the Botanic Garden stock that had been made here in Stoke for that market.

5:49 And then we also had some supply chain issues in getting product into The US market for the critical Christmas season, which meant that that later timing led to later billing and therefore later receipts from customers.

6:04 As a result of the lower profits and the focus on the fortress balance sheet, which you'll hear more about later, we're not be paying a final dividend for this year.

6:18 Just moving to the balance sheet. So assets were net assets were broadly flat at 55,500,000. Inventory was up by 6%, and there were two drivers of that. One, the reduced Korea order flow, which meant that we were left holding more of the botanic garden stock here in Stoke, and also the cost of production with general inflation affecting fuel in particular, but also raw material and labor costs. And with the reduced volumes from the Korea decline going through the factory, obviously, then had an impact on our absorption of overheads. Trade receivables were up by 10% to 21,000,000. Let's reference again The US late delivery into the market for Christmas, meant that we build later and receive later, and those receipts were came in in January.

7:12 As a result, operating cash flow was positive at 2,100,000. But when adjusting for CapEx and the lease costs to the business, free cash flow was an outflow of 3,700,000. Obviously, as we mentioned, going forward, our focus is on strengthening the balance sheet by reducing debt and also interest costs to the business. Two two smaller points to mention. The business did agree a new RCF 30,000,000 facility on a four plus one basis with Barclays during the year, And we also have a small legacy DB pension scheme, which is carrying a surplus up from last year at just about 1,100,000 to 1,900,000 following the triennial valuation in 2023.

8:02 Just going back to sales and looking at this on a market by market basis, North America was down by 7%, 5% on a constant currency basis. Tougher markets, consumer sentiment, and disposable income affecting sales, but also the Christmas supply of stock, which meant that sales were lower than we would have liked. That said, The US retailer customers post Christmas reported very strong sell through of our Christmas product, which gives which is very encouraging for later this year. South Korea, as I've already mentioned, was down 45% driven by overstocks in the market, which we're now closer to, and a significant market slowdown with consumer sentiment appetite for say for purchases taking quite a hit in the year.

8:53 In The UK geography, we were up 5% driven by wax lyrical growth, as I've mentioned earlier. And the other international markets were down on a small value basis, but we still feel that they represent an important area for growth for us in the medium term.

9:14 Brands, obviously, are very important to us. And when you look at the the business performance through the year on a brand by brand basis, PORTMEIRION holds the botanic garden product, which is extremely popular in Korea. It's our number one product in Korea. And therefore, that decline in the Korean sales meant that the sales of that product fell proportionately. And so the brand sold 29,000,000 last year. Spode, we continue to be very positive about. It's now at 45% above the 2,019 levels, grew slightly in the year by 2% to 22,000,000, which in the markets that we've been facing, we feel is a is a positive result. Wax Lyrical on a group wide basis, not just as a standalone entity, was up 19% year on year, continuing its growth through the capture of new listings and the introduction of new products.

10:08 And Nambe, which is very much centered in Santa Fe, New Mexico in The States, That area has suffered lower tourist for footfall, and we also saw lower sales to The US premium department stores. Namba is a an important brand for us, and it's an area that we're focusing on in the year ahead. That's right.

10:32 Thank you, John. I thought it'd be useful to do a deeper dive into some of the key markets that impacted our results last year, and I'll start with The US. As John has said, this is our largest sales market accounting for nearly 40% of the group sales. We experienced a number of challenges in the last twelve months, weaker consumer sentiment, A real theme of retailers continue to reduce stock levels across the board, but in particular, adverse weather in Asia through the summer delayed production, and that was compounded by strikes on the East Coast Of The US at the ports, which delayed key Christmas stocks getting in and us being able to ship it out to the retailers around The US.

11:22 As a result of that, we lost key sales at a key part of our year and missed out on potential replenishment orders. The net result of that was that sales in the market were down around 5% at constant currency. Without that disruption, supply chain disruption, sales actually would have been up in the market. What's reassuring is that at the end of the season, most of, our key retail partners reported that the sell through of our products had been very strong for the season, indeed, in many cases, up on the previous year. As John has said, despite the disruption, the extra costs and some of the margin pressure we felt, as a result, the overall profits from this division were up nearly 20% year on year.

12:10 As a result of that experience, we've already taken a number of actions. That includes getting earlier Christmas range production slots for 2025. And those production slots will be earlier, not only for the product made in our own factories in The UK, but also for our partner factories in Asia. We've developed and launched a global Christmas lookbook for the first time. We have over a 100 pages of all of our Christmas ranges that have been put together. That's gone out to all of our customers, and we think that will help leverage the extensive range that we have across network of customers. We are focused on helping the thousands of independent stores around The US with a new, plan as well as bringing out new products and new exclusives, for this year.

13:06 So looking forward in The US, whilst we have, in the short term, some caution around the fast evolving tariff situation, we believe that we've taken steps already to recover from the challenges for the Christmas, trading we had last year. We're focused on growing independence. We're focused on growing our own very profitable ecommerce channel, as well.

13:33 Turning next to South Korea and just to build on some of what John has already said. We saw huge demand, and we're given a huge amount of orders to make in our factory in 2022 and 2023 as South Korea reawoke rather late from a kind of a long COVID shutdown. Unfortunately, by the time we made all those orders and they had made their way through the the quite long supply chains to get through to the end of retail in South Korea, the Asian economies had deteriorated significantly. Retail footfall was down in premium but also in mass stores, and therefore those customers at the end of the chain that we've made those orders for were left with significant overstocks.

14:22 That resulted in a much lower level of sales and orders in the year that we're reporting on today, 2024, a lost sales margin and the impact on our factory was also significant in terms of lower utilization. Again, in terms of reassurance, what we can see is that, online, our sales continue to grow on key online platforms. Our market share has held up, and the awareness of our brand engagement with our brand, particularly around our key PORTMEIRION Botanic Garden products remains strong. In terms of action that we've taken, we've supported our customers in the last twelve months on reducing those stock levels.

15:10 I still think there's more to do through 2025, but we've made some good progress. We have and are going to accelerate new product development, giving our customers and the end consumer something new and fresh to to look at and to buy. We continue to review our supply chains and work with our customers to get improved information about stock, about sell through, and use that to build into our forward plans. We've launched Christmas ranges for the first time in the last twelve months. And again, we're reassured by the sell through and the market share that we have. Looking forward for this key market, we expect a modest recovery, I think, in 2025, but probably a fuller return to more historic levels of trading in 2026, 2027, and that will include our key botanic garden range as well as some of the new ranges we are introducing, including Spoke Christmas Tree.

16:15 Few words about wax lyrical, our home fragrance business. Again, this division was most impacted by COVID shutdowns. Its independent customer base in particular, was shut for long periods of time. We saw in 2021, 2022, and 2023 sales fall, and the division making it a loss. The great news is that the new strategy that we have in place in this business has made significant improvement to those results. New products have been developed with a really strong value proposition. A lot of new listings have been gained in national grocers and retailers around The UK. Sell through of those new ranges has been very, very encouraging with repeat orders.

17:03 In addition, the management team have strengthened our Christmas ranges, Christmas gift ranges, and as a result, are up 25% in the year and nearly 60% on a two year basis. Profit is up nearly a million pounds year on year, and our factory is far better utilized as a result. Looking forward, we started 2025 in Home Fragrance with good sales momentum. The team are working hard on winning new further listings for this year and also see an opportunity to take some of the successful ranges in grocery in The UK and take them into European and other international

17:43 markets. All of that, we hope, will give us further battery efficiencies with very little CapEx. So that concludes the first part of this review in terms of our our historic results. I wanna now turn and talk about our forward strategy and, in particular, our short term priorities.

18:12 We want to accelerate our long term strategy delivery. We want to accelerate our profit recovery. I think we are fortunate to start with a strong foundation. We have really a great portfolio of premium brands. We sell all around the world, diversified in terms of our global markets. We have two great UK factories, which have a lot of spare capacity. In terms of people, we have very experienced, people across our organization from operations through to sales, through to marketing. And as we've said already in this presentation, despite challenging market conditions the last twenty four months, we have made good progress in many areas in the business. Our Spode brand is roughly 50% bigger in terms of the sales footprint than it was four years ago.

19:07 We've constantly increased our online penetration. Our product is on sale, more online platforms around the world than it's ever been. We've invested in new automation in our factories, which will lead to efficiencies. And our wax lyrical business is growing nicely and its return to profitability. However, that said, we reflect in terms of the near term that markets are likely to remain challenging, remain volatile, and we want to accelerate our progress. And therefore, we've done work in the last two or three months on a new transformation plan that I'll share with you today over the next few slides.

19:51 So a five point plan. Firstly, returning to growth in our established markets as soon as possible. Number two is about driving to having a strong fortress balance sheet.

20:09 Three is about increasing, really increasing the investment behind those premium brands that are the heart of the our business. Four is about exploring and developing as a driver of accelerating our top line sales growth. And five is about pushing and striving for excellence across all parts of our business, excellence everywhere. And together, we believe these priorities will help us execute more consistently and get back to growth sooner, and I'll deal with these, one by one.

20:48 Established markets, by which I mean The US, UK, and South Korea, which represent just over 90% of our sales today. We wanna return these markets to growth as soon as possible, and that will be helped by firstly focusing on

21:06 growing our strong Christmas business and getting market share in other key seasonal gifting events. In Korea, we'll continue to support our long standing retail and distribution partners, support them with eliminating those overstocks that have caused us some pain in the last twelve to eighteen months. We'll support them with accelerated new products, and we'll support them by exploring new categories that we could move our well known brands and ranges into. We're also looking at our independent channel, both in The US and The UK. The thousands upon thousands and thousands of smaller, often single stores, that carry already our ranges. How can we support them? How can we encourage them to take more of our products from our extensive existing ranges? How do we incentivize them to grow together with us?

22:01 We'll also look to continue to develop online channels, both omnichannels with retail partners and, in particular, our own highly profitable websites in The US and The UK. And finally, we are reviewing and we'll do a reset of our own retail stores in The UK. That's returning to growth in established markets. Secondly actually, before I move on to the second one, I wanted to give a a bit more detail about Christmas. For those that have seen our presentations in previous years, you'll know that our Christmas ranges are very strong, very profitable. It's a key part of our year.

22:41 So how do we grow how do we grow this part of our business? Well, again, we start with that strong base. We are fortunate to have some market leading ranges. Designs like Spoke Christmas tree have so much history and are loved in many markets around the world, particularly in The US. They're high margin substantially higher margin than our than our average products, and the teams that we have sales teams around the world have grown listings, the distribution points that we have in the last three or four years. We're on sale in more places with these ranges than ever before. In terms of operations, the role of operations has a role to play, then we recognize that the disruption and damage that the the supply chain disruption being late into stock last year caused our p and l.

23:30 And therefore, having those earlier production slots, building more contingency into the supply chain and timings is important, and that will give us the potential, we think, for a quick rebound in in Christmas sales in 2025. There's also commercial leverage. As I said, we've launched a new global Christmas catalog this year in terms of the trade shows we've done in the first quarter in The US and The UK. We've done those in a slightly different way this year with a real focus on the Christmas product. We'll continue to bring out a roadmap of new products to support those customers and where possible offering exclusives to to certain retailers.

24:16 And we're going to increase our marketing dollars and pounds behind our social media campaigns, our influencer work, and supporting our products online and offline with digital assets. We also, though, looking forward, want to build more market share in other seasonal gifting parts of the year. We wanna learn from our successful Christmas ranges and Christmas market share and use that to leverage the customers we already have, lean into the consumer trends, which show that more and more money is being concentrated around key seasonal gifting events. And that includes looking at events like Mother's Day, events like Halloween. So this is very much an opportunity for growth in 2026 and '27, but work is already underway on that.

25:07 Turning now to the second part of our five point plan, which is really about developing and building a fortress balance sheet. What do we mean by that? It's about delivering a consistently improved free cash flow, using that improved cash flow, to repay debt. Our intent is to repay down our debt in the next two to three year. Part of that will come from a plan to reduce inventory. And the benefit of doing this will be that we can take that interest cost, which you can see from, the chart on the right side is is ramped up a lot in the last five or six years As interest rates have gone up, we can repoint that interest cost and instead spend that money, nearly £2,000,000, behind our marketing, behind our sales teams, behind supporting those premium brands as a way of driving that growth engine.

26:08 Part three of our plan is about those premium brands. We want to ramp up the investment over the next three to five years behind those premium brands. As funds allow, we will scale up starting with PORTMEIRION and SPOAD, improving the experience that we give our customers in all of those brand touch points, online in physical store with product, with the packaging, how people order from us, with the feedback they give with us. So all of those brand touch points are important. Part of this brand proposition is renewing our ongoing commitment to making our tableware in Stoke on trend. So a lot of work to do there.

26:53 I thought that I would dive into Spode and the work we've done with Spode as an example of where we can go with this. So Spode, as we know, is a is a great premium brand, has a strong heritage backstory going back to when it was founded in 1717. In the last couple of years with really very minimal resource and investment, our marketing team had real success in social media advertising and influencer campaigns that have resulted in real viral engagement with up to, you eight to 10,000,000 views on posts that have gone out. Our brand fans have grown. Engagement with those brand fans on Instagram and Facebook have grown significantly. And all this is with very limited funds. So in 2025 and further forward, we intend to increase the marketing pounds and marketing dollars that we spend here.

27:49 And, hopefully, that will amplify and accelerate the progress that we can make with our brands and be a driver of growth going forward.

28:04 And while I'm on our brands, an increased investment by our brands, a few words about our main Stoke proposition, product proposition, key part of our product proposition. We're very proud to still manufacture in The UK, in Cumbria for our wax lyrical business, in Stoke On Trent for our tableware business as part of our DNA, a key part of our our product and brand proposition. We recognize that in the last twelve months, the amount of tableware that we make as a proportion of all sales around the world has fallen, and we want that to recover. It's fallen really because of the lower orders we've had from South Korea, particularly Botanic Garden. So ambition our ambition over the next three years is to really increase that percentage of tableware that's made in our stope factory again.

28:55 We think our customers want it. They love our UK made product. It will help drive the factory economics, and, of course, it will support the premium brand position and support our price. In the short term, we will do this on a case by case basis and and are aware of the challenge and different cost basis between Asia manufacturing and UK manufacturing. But we believe that there'll be a payback, payback in terms of price we can achieve, the demand that we could generate. And so work is going on now to identify opportunities where we can onshore production that is currently outside of The UK. Point four of our forward plan is about explore and develop, and this really covers a number of different areas, all of which is about accelerating our sales growth engine.

29:50 It includes, for example, our international markets. We currently trade with, last count, about 57 markets outside of those top three, and they drive, around 8% of our group sales. So we want to focus on three to five of those smaller markets and move them up the chain, make them much bigger markets, leverage our our full range of products and brands across those markets. Explore and develop is also about the value and the potential of our extensive designed archive. What can we do with that archive in terms of supporting our customers, in terms of new product?

30:36 What are the licensing opportunities into other categories? All those things are areas that we're gonna explore. Explore and develop is also about innovation. It's about continuing to create beautiful product that is loved by our consumer base around the world. And finally, this section, and our pipeline plan, I wanna talk about driving excellence everywhere across our organization. It all starts with a brand first mindset, putting our brands first, recognizing that that is the heartbeat of our business. It's also about having an attention to detail in our operations, in our factories, in our warehouses, how we design, how we organize, how we support our customers through, the process, every part of our business, and attention to detail.

31:30 Many small incremental improvements, together, we think, will have a sizable impact on our performance and our ability to deliver in difficult markets. And we'll do this and support it by having an open entrepreneurial culture with a mentality and encouraging people across the organization to have bottom up ideas. So that was a review of our five key priorities for the next couple of years, 2025 and 2026. I'm now gonna turn to summary and outlook, and then we'll have time to pick up on questions. So just to recap on what we've gone through so far today, We recognize that financial results that we announced on Monday were disappointing, and recognize that really, sales reduction in one market, South Korea, was the driver of that. There is, as we've shown today, good progress going on across many other parts of the organization.

32:45 We recognize the need to accelerate our recovery, to accelerate our profit recovery, and therefore, we put together a transformation plan, which I've gone through to today to help deliver that. And, you know, we have a reinforced and supportive board behind us, behind John and I, that will help us support and and drive this next stage of the company's journey. So a few comments around forward outlook. If I start, first of all, with with the next twelve months, 2025, we're obviously mindful of the fact that economic environment around the world remains volatile, remains uncertain, and that includes the fast evolving situation with US tariffs.

33:38 We've started 2025 positively. We're pleased with the progress that we're making both financially and with the the plan that I've laid out today. We see significant global potential from our portfolio of premium brands. We're very, very sure on what we have to do in the short term this year and next year in order to drive that transformation. And part of that will be this focus on reducing our net debt, improving that free cash flow, and using the savings or financing costs to support our brands in terms of increased marketing, and investment. Looking further forward, I've talked today about the desire over time to ramp up the investment behind our premium brands.

34:25 That is gonna be important. I've talked about our ambition to eliminate our net debt in the next two to three years and the benefits that will that will give us. We've talked about our ambition to take those international smaller international markets and find three to five that can become much bigger markets in the next three to five years. And we're gonna continue to develop and innovate with beautiful new products, explore new categories, and leverage where we can our extensive archive of designs. And all of that, we think, should be amplified as as wider markets recover in terms of the improvements we've already made, and are gonna make in the next twelve months.

35:15 So that is us, in terms of the formal part of this presentation. I do hope that that run through has been useful. This slide deck will be is already on our investor website, and we look forward to answering any questions that you have. Perfect. Mike, John, if I may just jump back in there. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the company take a few moments just to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboards. Guys, we did receive a number of pre submitted questions ahead of today's event. And as you can see there, we've also received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions.

36:14 And, Mike, John, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you. Thank you very much, Jake. So, right, we've had a a lot of questions, which is great. Thank you very much. And we'll do our very best to answer as many of those as we can in the time that we've got. You can always contact us, outside of this via our investor website at any time with questions as well. So in terms of the pre submitted questions, that John and had to scan through, there were a number of questions that all came under two or three headings. So I'm gonna deal with those first and then go back and pick up the other questions. So there were three or four questions around our commitment to making manufacturing in The UK.

37:05 And those questions really were around, is that the right strategy? Is The UK the right place to manufacture given the inflation and situation with cost base? Why do we wanna focus on UK Made? Is there a cost and margin impact? So let me deal with that first. Firstly, our brands such as PORTMEIRION and SPOED have been manufactured in The UK for many, many years. I think it's a key part of our brand, our product proposition. When we say that we want to increase the percentage of tableware that we manufacture in Stoke On Trent, we understand that that's going to require careful management.

37:50 We need to understand the orders and capabilities that we have. This is not going to be a sudden and stark shift overnight. It will be a careful and gradual plan. We in terms of priorities, recovering our South Korean volumes back to historic levels will be a key part of supporting that UK made commitment, key part of helping the the factory economics overall, help reduce the kind of fixed cost allocation to all of our products. So South Korea is our number one priority. Getting those volumes back, that will support our UK factory. There's then the opportunity that we've talked about today to really grow some of those smaller international markets.

38:35 Again, many of the other markets we have small positions in, including in in, you know, in other parts of Asia, really, really value The UK proposition. So growing international markets is the second thing that will help support this. When we develop new product, we will always first say, can we make this in our own factory in The UK? And if we can, that should be our our first point of call. If we can't, we don't have the capabilities, then obviously, we can continue to manufacture that overseas. And there'll always be some complex products, some product that maybe isn't commercially viable for one reason or the other, and, you know, we will keep continuing to make that with our long standing partnerships with overseas factories.

39:22 So I hope that that's clear and helps, with The UK made questions. The next sort of thematic two of the questions were around what do we learn from any of the challenges that the world has thrown at business like ours in the last two years and the experience that we've had in terms of financial results. So, clearly, there's a lot that we've had to deal with, and there's a lot we have to learn. Let me start with with Korea. We recognize that if we go back to that chart with our ten years of of sales history that South Korea has been right up and down. The average sales in the market are around 20,000,000, but we've had years that have peaked at sort of 26 and years that have been at nearer to 10,000,000.

40:09 Smoothing that out would be enormously beneficial to our factory and to our forecasting and our results. How do we do that? We need to deepen the relationships and information flow that we have with our with our Korean partners. I went back in in Seoul and Korea in a couple of weeks' time, for about ten days meeting all of our our key partners. And so it really starts with that relationship, spending time on the ground there. We have someone that also works locally out in Seoul for us, getting better information, and, hopefully, that we can we could judge stock levels in in in the supply chain better and and have a smoother flow in the future. We're also you know, a part of this was about our commitment, I think, to what we call d to c sales or ecommerce.

41:00 We are still very committed to our own ecommerce and d to c channels. The opportunity to interact directly with the end consumer is fantastic. Our e commerce business is very profitable. It's we got more profit in the last few years. So that's absolutely part of our of of our priorities as well. I think then the third area where there were a number of three or four questions was around outlook, and those questions centered around, where will things get better? Are things gonna still get worse? They've centered around when is it realistic to get back to a 10% level operating margin? They centered around, the fact recognizing that last year's performance is disappointing and how what is our confidence level with Outlook going forward? So if I deal with all of those together, first off, you know, I think that we're aware that generally economics around the world in terms of consumer markets are still difficult.

42:07 UK, US, Asia, we can't control that. We're also very close to the the fast evolving sort of tariff situation in The US. US is an important market for us. We have a response to that, and that's gonna be about price. Any costs that we incur will pass on in price. What we're gonna do, however, is we're gonna concentrate on what we can control, what we can influence in the next twelve, twenty four months. And a lot of that I've covered today in that five point plan. Okay. So returning to the other questions, individual questions, if I may. We had a question about whether the company should buy back its own shares.

42:57 I think the answer to that is that our priority as I've laid out today is to repay our debt. The benefits of repaying our debt is that we can repoint the cost of servicing that debt behind our brands, behind marketing, behind sales, behind growing our top line. So currently, there's no intention to buy back our own shares. There's a question around the interest rates that we pay on our borrowing, and I'll I'll let John answer that. Yeah. Current interest rates are about just over 6% based on the Sonia overnight interest rates and the margin ahead. So it will move as that rate moves, but currently, just over 6%. Thank you. And, John, there's a question about what the cost would be to replace our factory, or renew our factory in Stoke On Trent.

43:48 I think at this this moment in time, there's no plans to do such a thing. As Mike referenced earlier, there's significant capacity available to us in our current facilities, and we're focusing on getting the most efficiency and productivity out of those rather than looking at a a new facility. Fantastic. And then, John, do mind just taking the question about where you see our our inventory and net debt level We're not putting guidance into the market today. I think it's fair to say from from the results that you've seen, our focus is very much on making sure we are, you know, working on reducing both as we go forward. Okay. Thank you. We have a question around referencing that there's been some other organizations, other ceramic manufacturers in around Stoke And Trent that have recently gone into administration. Does that impact us?

44:41 Look. It's always very sad to see fellow businesses in the area struggle, and so it's it's sad to see that and the impact that it has on their employees. That doesn't really impact what we do. We're an international business. We sell around the world. We're clear on what we have to do. We're clear on what our product and brand proposition is. And so, you know, I don't think that's gonna have any kind of material impact on our business. We have a question around recent redundancies and if we're planning to do any more. I think the short answer to that is that we've had to take some tough decisions on our cost base. That's been very painful. We had a small number of redundancies earlier this year. We're not planning to do any further redundancies at this stage.

45:30 The next question was around whether we hedge our energy costs, and I'm gonna let John answer that one. We do hedge. We do forward buy. We're always looking at the markets and forward prices. At the moment, we've got a very high level of cover for the next twelve months. Okay. John, the next question was around was this, can we better manage, and balance our reach to market inventory levels and associated costs? Yeah. It's a it's a difficult balance, but we manufacture based on forward forecasts, and also customer orders. And and staying close to those and staying on top of those helps us manage inventory, although it's fair to say significant shocks like the courier situation makes it difficult to manage and respond to those immediately.

46:20 Around cost control, we do have an internal procurement team, are constantly challenging suppliers and ourselves internally on the on the costs that we're incurring. Okay. Thank you. The next question was around what we expect from import tariffs potentially for The US and how will that impact the company's sales. And so I touched briefly on that, but I'm happy to expand. So, yes, this is a fast moving situation. It's fast evolving. Where there are extra tariffs that have to be paid, then our focus will be on passing that through to our customers on price, first and foremost, in terms of where this is going to go. I think that's anybody's guess. How does it impact sales? Well, really, it's well, that will depend upon how consumers react to to price rises. But right now, we know we're gonna do from what we've seen across the market, across the industry, everyone is doing the same thing. And so we're not gonna stand out, and we'll have to see where where that goes.

47:26 We have a question about road maps road maps for online digital channels, a brand, product, sales, operational capability, and tell us. I I don't have time to to go through all of that today, but what I can do is reassure you that we do have road maps. We have an eighteen month, sometimes twenty four month road map for new products for innovation. We have a clear three to five market plan for our international sales. Our factories and our warehouses have a roadmap of investment for automation that we are, you know, some way through. We've spent two or four years increasing investment in our factories in terms of automation. And and, obviously, people as well, we have a lot of work that goes around our own people, talent retention, and and hiring and enable time to to keep driving the business forward. So, yes, we have plans for all of those things.

48:29 The next question was around PORTMEIRION and SPODE. Is there a step by step plan for PORTMEIRION as well as SPODE? So, yes, today, in the presentation, I took the opportunity to talk about some of the marketing activity that we've done in Spokes as an example of what we can do to amplify our our brand sales reach as we put more thousand dollars behind our brands. The same applies to a PORTMEIRION brand. The PORTMEIRION brand is very important as as the question here recognizes and gets plenty of attention and will continue to do so. Okay. So those those were the questions that were submitted. We've got a few more questions that have that have come through. Let me just pick these up as well.

49:27 First one was around, can I give more detail on routes to market to Korea, and how does it improve stock visibility? So I sort of touched on this, but we sell through distributors for the premium retail part of the South Korean market, premium retail stores. We sell through distributors for the mass channel, and we sell direct to the online player, KUP PANG. So it's slightly different routes to market. And, yes, we are working hard on getting more visibility, better visibility of stock that's in channels. I think we've made some good progress on that in the last twelve months, but it is important. The next question was around career again. Is there, a potential discounting or write down of stock?

50:18 No. Not not to my knowledge. There's a question around our UK retail stores. Is that gonna change? Well, look. Yeah. We're gonna take the opportunity this year to review our UK own retail strategy. What is the purpose of it, and how do we do it the best that we can? So that may well change. There's a question around how we interface and and in with with shareholders, key shareholders. So we talk to key shareholders regularly. And, you know, this week, John and I are going through this very same presentation with with all of our main shareholders, and and we offer meetings wherever appropriate. And those meetings are always very helpful, and we'll continue to do that.

51:14 There's a question around whether there's any potential for us to sell in the hospitality sector. That's not really where our strengths lie. Our products, are strong in consumer markets around the world, our focus, at least in the in the short term, is gonna remain on on the consumer retail markets. There's a question around how we may strive to eliminate our net debt in the next two to three years. So really, this will be from a number of things. Firstly, reducing our inventory. We think that a healthy level of inventory for our business at current levels is probably something like 6,000,000 lower than it is now.

52:01 Secondly, accelerating the recovery, the profit recovery, making sure that's a cash rich profit recovery, that will help. So that's two examples. The next question was around UK manufacturing. I think we've dealt with that. And and the final one is also around UK manufacturing. So I hope that I've dealt with that as well. So, look, thank you to everybody that submitted a question either in advance or during the presentation today. I do hope, that that our answers have been helpful. Jake, at this point, I'll pass back to you. Perfect. Mike, John, that's great. Thank you very much indeed for being so generous of your time then addressing all of those questions that that came in for investors. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But, Mike, perhaps before now, just really looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company.

53:04 If I could just ask you for a few closing comments, really, just to wrap up with, that'd be great. Thank you, Jake. Yes. So especially, again, thanks to everybody for dialing in today. I do hope this run through has been useful. Just as a reminder, this investor presentation is now on our investor, on our investor website. Look. As a management team, John and I and the whole management team, we're hugely excited about the potential of the brands that we have. We're hugely excited about the potential to grow the business, and we're absolutely committed to returning this profit to strong and profitable growth. We've laid out our intentions, some of the ways that we intend to do that, and our priorities in the next couple of years. Hope that's been hope that's been useful to everybody. And we look forward to updating you on our progress in in our interims and then in in a year's time. So thank you very much to everybody.

54:03 Perfect, Mike. That's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of PORTMEIRION GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.