Portmeirion Group (LSE:PMP) — Preliminary results for the year ended 31 December 2020

0:01 Good morning, ladies and gentlemen, and welcome to the PORTMEIRION GROUP PLC Preliminary Results Presentation for the Year Ended 12/31/2020. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted any time via the q and a tab situated on the right hand corner of your screen. Simply type in your question and press send.

0:21 The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via investor meet company dashboard, and you'll be notified when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we'd like to submit the following poll. And I'd now like to hand you over to Mike Ray Bol, CEO of PORTMEIRION GROUP. Good morning, Mike.

0:53 Good morning, everybody. Thank you for joining me today. This is, Port Marion Group's full year twenty twenty results presentation. I'm gonna switch my camera off now so that we can see the screen, and and you can see the slides, which I'm gonna go through.

1:12 In terms of what I'm gonna cover today, a brief overview of 2020 and our results. I'll then do a a deeper dive into our our trading and balance sheet, and sales markets. I'm gonna spend some time on the progress we've made in our key parts of our strategy. I'm gonna look at sustainability and, ESG, agenda, and then I'll come back and and summarize everything and give a forward view. As Marcus said, there's opportunity to to raise questions, and I'll look forward to getting those and and take those questions, deal with them at the end. Okay. So in terms of an overview, key headlines really were against a very tough backdrop, severely disrupted year because of COVID, both in terms of enforced retailer shutdowns and and and supply chain disruption.

2:09 We were actually really pleased with how robust and resilient our brands performed around the world. Our like for like sales were down 11%, but what we saw was a a much improved level of trading in the second half of last year. We beat our our initial forecast in the second half by around 7% and returned to profitability, with a profit of just over £4,000,000. We're pleased to see that trend that we saw, that positive improvement trend continue through into the first quarter of this year, which gives us, encouragement for for 2021. I'll talk a little bit about balance sheet. We finished the year with with a strong balance sheet, net cash positive. In terms of our strategic progress, I'm gonna cover this in in some detail as we go through, but we've made significant progress on our key strategic initiatives. And in particular, we've been focusing on on our ongoing transformation to online and digital. This remains the biggest opportunity, I believe, that the group has to grow both top and bottom line in the future.

3:14 We've been investing, the proceeds from our equity raise in June last year of around £11,000,000 behind our key strategic objectives. And, as I say, I'll go through the progress that we've that we've made in due course.

3:33 Moving on to our headlines in terms of p and l. Our total revenue was down 5%, just over 5% year on year, and like for like down 11%. The difference being that we had the full year impact of an acquisition of NonBay and a small contribution at the end of the year from our acquisition of of our PORTMEIRION Canadian business. As as I said, we had an improving trend, despite cope despite COVID as we went through the year. In the first half, we were impacted and were down 20% like for like. In the second half, down just 6%, so that improving trend, helps our profit, in the second half. We have had a positive, cash inflow during the year of just under £2,000,000 before we have the benefit of our equity raise proceeds, which leaves us cash positive for the year.

4:30 We have significant headroom in our facilities. At the end the year, we had around about $2,526,000,000 pounds of facility headroom, which means we have strong strong balance sheet, room to invest behind our strategy, as well as the the regular working capital, requirements of the business.

4:52 Moving on to our balance sheet. We continue to have a strong balance sheet bolstered by the equity raise that we did in the middle of last year. As I said, significant facility headroom, to invest behind our growth strategy. A couple of notable things here on this slide. Firstly, we had a working capital improvement of just under £4,000,000. This was largely driven by improvement in our receivables and our our debt of days, and this was driven really by two things. First of all, an improved mix, more online sales, particularly for our own websites where it's cash on order, and and secondly, a reduction in the data days for some of our more traditional customers, retail customers, and distributors around the world. We see that improvement, carrying on, rather than being given back next year, and so that's a that's a a a good pickup in terms of cash.

5:44 Second area I would pick up is is stock and inventory. Our headline inventory is up during the year, but I put a walk on on the slide here that shows the key movements. Our like for like inventory was actually down 3%, point 8,000,000, and we expect the like for like inventory to reduce further in 2021. But in in addition to the like for like, we acquired, a new business Canada, and so we brought their stock into our consolidated number. We also had new, raw materials in stock for our hand sanitizer production that we turned on in the second quarter of last year in our wax lyrical division. The final thing to say on this slide, I think, is is the pension scheme. This relates to a, a long standing heritage pension scheme that has been closed for over twenty years, where we're putting in an annual, contribution.

6:38 The deficit has increased in the year in terms of, how it's assessed with accounting standards. That increase is really all about changes in the discount rate, rather than any material change in in portfolio values. And it's something we we don't think is, a significant or of a concern to us going forward. I wanna move on to a deeper dive into our our sales by market, by key geography. We have three significant core markets in The UK, in The US, and South Korea. All of our markets were impacted in terms of retail retailer shutdowns, but you can see from the numbers here that our UK business was particularly resilient, 2% down, and that shows that progress and this desire to become more of an online digital business, has largely mitigated the the lockdowns and the retail shutdowns.

7:35 In The US, our sales were up 3%, but that includes the full year impact of The US based non bay business that we acquired last year. If we extract that, then our like for like sales are down around 10%. Again, that's driven by, large scale, COVID enforced retail shutdowns offset by strong online growth. In Korea and South Korea, our third biggest market, we'd planned our sales down. And as we previously announced with Korea, we wanted to deal with some historical overstocking and excessive gray shipping that had happened with that market. So we planned the market down. What we have done is continue to focus and be far more disciplined with this market and this area and saw some really reassuring and positive progress.

8:24 First of all, within the market, our distributor, their sales out to the end consumer actually finished up 15% year on year, it grew despite despite COVID and the impact on on retailers in that market. The new product that we designed for our distributor in 2019 has started selling really well and accounts for now around 30% of the sales out in that market, and indeed, has led to repeat orders, for our factories for this year. So Korea is down, but now at a much more stable base, we believe we've dealt with the historical issues with overstocking, from the gray ship market. We expect from this position to be able to grow in a much more consistent and sustainable way in future years, starting in 2021.

9:12 Canada, was previously in, for many decades, a fifty fifty joint venture with a number company. During the year, we bought their remaining 50% and now fully own our our Canadian distribution business. We've done that because we believe there's an opportunity to do more with the Canadian market. In particular, they have a very low level of online penetration. So by absorbing the Canadian business and leveraging our existing US teams and US infrastructure based in New Jersey, we think we can grow the Canadian market going forward. In terms of other markets, rest of world and other markets, you can see that we, have been very resilient in terms of our year on year performance.

9:57 All markets have been disrupted by COVID. There's no doubt about that. But as I said at the outset, we're really pleased with how resilient our brands have have performed in our in our key consumer markets.

10:12 So I'm gonna move now to look at our our strategic progress. We are investing more money than we've ever invested behind a number of initiatives. There's a slide number nine that we've put in our presentation, the last couple of rounds. So just to really recap, we're focused on two twin goals. The first thing is to deliver far more consistent and accelerated sales growth each year, and secondly, at the same time, increase our operating margins, effectively converting the sales more effectively into profit. We have six key strategic building blocks that our organization is working on to deliver those goals. The first five are concentrated on driving accelerated and more consistent sales growth, putting our brand brands at the heart of everything we do, and having more vitality with our product development.

11:09 Significant piece of work in terms of digital and online transformation that I'll cover in some detail shortly. Being much more disciplined, in our South Korean market, having a more stable market and and building a sustainable business there, leveraging the benefit of recent acquisitions, both Wax Lyrical, our home fragrance business, non bay, across all of our, global, sales markets. And finally, being more targeted in terms of generating and building additional rest of world export markets. And, again, I'll come onto that in some detail. Those five things will drive consistent sales growth. In terms of operating margin growth, then we're talking here about operating factories more efficiently investment, building capacity in our factories so that we can as we grow, we can push more volume through or leverage our asset base more effectively and be more effective in how we procure across our global teams. So together, those six things drive both the top line and the bottom line.

12:14 So I wanna spend a little bit of time on the most important one, the biggest opportunity that we see for our business and our brands, which is this online digital transformation. So we set a target to reach at least 15% of our group sales going through our own website platforms. We're actually taking that target up now and believe we can get to at least 20%. And on a wider basis in terms of volume that goes through all online channels, so including our own website, but also retailer websites in our core markets, we wanna get to at least 50% of our business going through online channels. In terms of progress we've made, both trading and strategic, a lot has gone on the last twelve months. Our own website sales, and there's a chart there in the middle, went up 69% year on year, and that accelerated as the year went on, and particularly, some of the initiatives that we've been investing in come into play. As an example, in The UK, our website sales were up 81% year on year in the second half versus the second half in the previous year. And at higher average prices, we raised our, margin points by 12 points as well as getting that growth.

13:27 In The US, we invested and relaunched all of our websites, five or six different websites replatformed. They went live in October last year, and already we're seeing improved conversion levels of at least 20%. In terms of our total online concentration in our core markets, we grew from 30% to 47% during 2020, clearly aided by the change in consumer behavior through the COVID pandemic. And our customer lists, which are important, for our own websites, grew by 95,000 customers, which is over 47% in the year. And this is important because over 50% of our own website sales come from customers that have bought from us before returning customers. So as we build that list of quality customer database, then it gives us a very clear indication of pathway of growth in in future years.

14:25 Staying on online and digital for a moment, I think it would be useful to I wanted to just show the scale of the road map that we have in this in this area of of the business. And so there's an indication here of some of the top line initiatives that fall under this project. And the items at the top to the first five, which are are shaded darker, are things we've already done through to today in terms of quarter one twenty twenty one. It started with people and capabilities that we've invested in, hired a lot more people in both digital marketing and in online ecommerce sales within the business, massively expanded our teams, and our capabilities in that area.

15:11 We've improved all the content and retaken photographs, much improved photographs of all of our key ranges, so that they can, demonstrate, and and show off our product more effectively in online space. At the same time, we've invested in a a new digital asset management system, a global dams that's gone live in the last few weeks that enables us to push that content around all of the retailer websites, in a much more efficient way. As I noted, we have relaunched all of our US websites, we're already seeing good, payback from that. And just in the last week, finally, we we launched a virtual sales showroom, and this is a a virtual house where all of our products and brands are represented, and our sales team can take buyers from retail groups, customers around the house, demonstrate our product in a a virtual space with all the specifications. And this is a a a great tool that helps replace some of the more traditional, routes of selling, that were done pre COVID.

16:14 In terms of the next tranche of projects that are shaded slightly lighter, things that are gonna go on in the next few quarters, A new product information management system will enable us to grow and be more efficient in terms of how we, deal with the specifications of all of our products in online space. We're gonna do a complete overhaul of our UK websites next to redesign, improve the customer journey and user experience, and we believe that will enable us to convert traffic into into into sales more effectively. CRM data systems become far more important to us now in that we can in contact with the end consumer. And so understanding the consumer, what they're buying, how they're buying, what they want, and building that data systems and being able to segment that data, again, will enable us to grow our own website sales more effectively in the future.

17:06 We're also working on product, and what's important here is is to recognize that, you know, taking existing successful ranges and reformatting them into to to different packaging and different formats that really works online gives us a great opportunity to increase our basket size and also connect more effectively, online with our customers. With all that growth going on, we need to make sure that we can ship the products and maintain service levels. So we have a series of different investment programs going on in our warehouses in The UK and in North America to incrementally take up our drop ship fulfillment capabilities. We increased the capacity in 2020 through additional shift patterns and process improvements. In 2021, in in in both warehouses, both sides of Atlantic, we're, again, taking capacity up, and we'll continue to do that on our road map as we go forward. So to finish off with online, you know, it's really is a comprehensive road map that touches all areas of our business and people through the platforms, data, Our systems are warehousing, but it's very exciting. And as I said, we're already seeing the benefit in terms of trading.

18:22 Moving on to the second key strategic driver of sales growth, which is about new products, bringing newness to the market, and we really wanna improve the vitality rate of of new product that we launch. I think the key headline on this one is that, you know, despite all of the disruption that we've we've had to deal with in the last twelve months, we've managed to keep on track our pipeline of new product for launch this year. We've got some really exciting new products coming to market. At the center of that is a huge new collection of Sophie Conran tableware. Sophie Conran the Sophie Conran collection has been, for ten years, one of our most successful contemporary ranges, and it's sold all around the world. We have a significant, new collection for that coming out in the in the next few weeks, and that will be launched in The US and The UK and Canada, Australia, and Europe, or really all around the world. And it'll include not only our traditional tableware, but also glassware, cutlery, wood serving, and and metal serving items.

19:24 We're also launching product under Spode. We're extending some of our heritage lines, which are still important to our our underlying business, both in the Spode Christmas tree range and the Portmeyer and Botanic Garden range, as well as launching new product under our non bay brand and new home fragrance ranges as well that tie in with some of our most successful tableware ranges. So for Rendell, Rendell, and PORTMEIRION, we're now gonna have matching home fragrance ranges for people that love those tableware ranges. Third biggest, third big driver of strategic growth is, our rest of world markets. So we have these three core markets, The UK, The US, and Korea. We wanna build two or three new significant markets to complement those.

20:16 What have we done? We've done a complete reset, really, of our export sales teams, new hires to put people into our target markets, including in The Middle East and China and Korea, a new leadership. We started signing up new distributors and online distributors, and we really expect to see progress now, growth this year, and some real momentum going into 2022 and 2023 in The Middle East, in The Far East, in China, and in certain parts of Europe. As I said, we bought the remaining 50% of our Canadian distribution company in August last year. We made a good start with that business. It's been amalgamated into our our our New Jersey, US operation. Comes with very low levels of online penetration, so really good opportunity for our US team to work with Canadian business and really take that online, sales channel, up.

21:11 So we're expecting good growth, as I said, from our rest of world markets this year, 2021, and real momentum going into the next couple of years.

21:22 Finally, in terms of sales growth drivers, I just wanna talk about Wax Lyrical, our our UK based factory for home fragrance. A good year for Wax Lyrical in that we were flat year on year despite all of the disruption from COVID. A fantastic piece of agility in converting production lines, candle production lines, be making the hand sanitizer that was in such short demand in the in the in the country in quarter two. We were able to help support communities and care homes and sell some of the NHS trusts in the North Of England. We've got a lot of learning from that project, which is gonna enable us to to launch into new categories in 2021. We're investing a million pounds right now in a a big permanent factory extension, a new production line, a filling line that will enable us to make and design and sell hand and body soap, lotions, and products. Some example pictures there of some of the new ranges.

22:17 This, factory extension is on track to to go live at the end of quarter two, and we expect to have sales in the second half of of this year. The other areas where we see significant growth opportunities for wax Lyrica within our core markets, our online penetration and launching new products, particularly product ties in with our existing popular tableware ranges. And then new geography is about taking a UK centric basis and getting extensive market exposure around the world. We're launching in The US, a website in a couple of months' time and have signed up new distributors in other markets, including China. So we expect this division to grow in 2021 and, again, really have momentum, once the pandemic is behind us in in the next couple of years.

23:06 So those are four key sales drivers. I wanna turn to operating margins. So the other side of our strategy is taking our operating margins up. And this is really based around taking our factory cost down by 10%, generating global procurement savings, and increasing our capacity in our factories so that as we grow, we can push more volume through, leverage that volume against our asset base. So, again, just an indication of the scale of change and what we're doing here is a, a road map. The top two items, were things that were done in the middle of last year, and we have three big projects coming online at the end of the first half this year, all automation projects in our Stoke factory, heat release, clay lifting, and in line spraying, big big investments in automation, around about a £1,500,000 of capital spend that will pay back in two to two and a half years in terms of cost reductions.

24:02 But, critically, it also takes up our our capacity, and the amount of product we can make every hour will go up as a result of that, which should be great because as we grow around the world in our sales markets, we can push that through push that through the factory and get more volume out on the asset base. Going forward, towards the bottom, there are three or four things, that are in our road map that are under consideration for the next phase of activity, in our factories. And as we investigate those and bring them through a kind of a capital approval process, they'll become firm projects and then start to come through and deliver benefits in in 2022 and 2023. We're making good progress with our procurement project, in house teams working with procurement, specialists outside of the business. Know, our target is to get to a run rate £1,000,000 a year procurement savings that will feed through into our operating margin.

24:56 We're on track for that. Some of that will come through around about third of it in 2021, and then it'll build up and ramp up in the next couple of years. So overall, good progress on efficiencies and capabilities, all of which will feed into our into our operating margins. I wanna move off of strategic progress and and come on to sustainability. This is an important area for us as a as a UK manufacturer and a business that works across the world. You know? Clearly, we are very keen to do business ethically and in a sustainable way as we can. We're very aware of the impact that what we do has on all of our stakeholders, the environment, the communities that we live and and operate in.

25:43 We focus on this, as you'd expect, you know, consistently in recent years, and we start from a good place, I think, in terms of environment, in terms of energy usage. There's a photo there of our our wax lyrical factory that already uses 60% of its energy from from wind turbines. We already have a 100 of our manufacturing waste products in our Stoke factory being recycled back, into the operation of the manufacturing process. In the last twelve months, we've gone further replacing lighted lighting with LED lights and in our factories reducing the firing temperatures in our kilns, and reducing the cycle times so that we can reduce the amount of energy we're using for for every product that comes off the production line. We converted all of our wax lyrical rediffusers from alcohol to a natural blend. That means that the carbon footprint is lower, and we're gonna continue to invest in energy and environment, environmental facing, initiatives in the in the next twelve months.

26:42 In terms of people and social, the big thing here really has been about looking after our people in this COVID environment, making our workplaces safe. So a huge amount of time and and money invested in doing that. I'm very glad that, today, we had an extremely low incidence of of COVID within our operations. Our factories today are working at good and and and pretty much full capacity. We continually, seek to train and retrain our people not only on COVID safe procedures, but also regular and general health and safety. And in terms of governance, you know, we have and we continue to apply all of the key codes that you would expect in terms of QCA, corporate governance, modern slavery, anti bribery. All of those policies can be found on our corporate website.

27:29 We've also made changes to our board, during 2020 with new executive directors and new nonexecutive directors, both bringing fresh ideas and energy, but also fresh challenge in terms of, new nonexecs as well. So to sum up, where we are today, as I said at the start, clearly a challenging year in terms of what we've had to deal with. You know, A

28:03 huge amount of respect to our our teams and our people who have worked tirelessly through the year adapting to all the challenge that COVID has thrown at us. We're actually really pleased how resilient our brands and our trading performance has been, and we've seen, you know, huge growth in online, and that gives us great confidence, that there's a lot of headroom, for us to grow in that area with investments we're making in the in the future. We saw an improving sales trend through last year. In particular, our half two was better than we expected by around 7%, and that positive momentum trading momentum's pleasingly continued through into the first quarter of this year. Our factories are operating at good, pre COVID levels of output, and in a safe way, and we'll continue to invest behind all these strategic initiatives that I've I've gone through in in the last ten or fifteen minutes. Again, our twin objectives are sustainable sales growth and improving our operating margins each year.

29:02 So we're expecting, at this stage, to return to growth in 2021. On that basis, we'll be able to resume dividend payments as well in a in a sustainable way while still investing money back in the business. So we're optimistic about 2021 and really think we're gonna go into the next couple of years with with great momentum from all the work we're doing in all parts of the business. I hope that's been helpful to everybody. I really appreciate you coming on the call today. I'm looking forward to to going through the questions that have been raised as I've gone through, and I'll try and pick up and and answer as many of them as I can. Thank you, Mike. Thank you very much for your presentation. Ladies and gentlemen, do please continue to submit your question using the Q and A tab situated on the right hand corner of your screen, which is why it might take a few moments to review those investor questions submitted already.

29:52 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. And 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 And also a number of questions submitted by investors during the presentation there. Perhaps if I could just direct you over to the Q and A tab and just ask you to read out the question where appropriate to do so, that'd be fantastic. Okay. Thank you. So I I'll start at the top. I'll try and answer as many of these questions as as I can.

30:40 The first question is, is it an issue that you make certain products in in China in terms of, the consumer, given your British brand heritage? Example, Spode. So it's not an issue. I mean, Spode is 250 years old as a brand. And for many years, some of it has been made in our UK factories, and some has been made in other parts of the world. In particular, a range that we call Spode Christmas tree that has been selling in The US around around Thanksgiving and Christmas because of $10,000,000 a year. That is sold since '19 the nineteen twenties and for, you know, at least ten years has not been made in The UK, but still grows each year. So I don't think, I don't think the the location of manufacture is a particular issue.

31:36 The second question is, what's the distributor share in Korea? The honest answer is I I can't tell you right off the top of my head what share we have in Korea within tableware. What I can tell you is for thirty years, particularly our range called Botanic Garden has been, you know, the leading and and most successful tableware range in that market. This is why we took such difficult and tough action in the last couple of years to to cut down the amount of product that was being reshipped into Korea. It's reshipped into Korea because the price points are higher than other parts of the world. So protecting that market is is is important going forward. We're certainly not losing share in that market, and I think we have a more stable Is it a game changer? What are the growth prospects?

32:39 I don't think Canada is gonna become a a 20 or £30,000,000 market. You know? I think it's a a full year impact. I think it's £4,000,000, and I think we could maybe grow it to 6 or £8,000,000 over three years, and that really will be about online penetration. It has a very low level of online at the moment, and I see no reason why we shouldn't have the same level of online penetration in Canada that we have in North America. There's a question about why Korea is an important market, South Korea. Kind of what I said earlier, it's been a big market for about thirty years. The South Korean consumer really values, British brands and German brands, and are very loyal. And so, it's a big market for us.

33:27 We will do everything we can to protect our brand there. We've we've taken the tough action, if you like, in the last couple of years. Now I think we get the benefit in the next couple of years. There's a question then about a long term view and and our share price performance and the decline from a peak of around £12. What are the reasons for that? As far as I understand it, and, obviously, I accept the price, I think it's a couple of things, John. Firstly, it's some bumps in the road that we had with reporting Korea, South Korea sales. So in '18 and '19, we we we missed forecast because of excessive great shipping career, and we had to take action to to, as I've described, to pull it back. And I think that then the second thing is is is, you know, a lot of share prices were hit in March last year when when COVID became, you know, the number one thing in our mind. So, I think those are the two things.

34:29 What we're concentrating on now is is, we're getting investor trust. I think we're doing that with the action we've taken in Korea. We sorted that out and building the capability of the business. And, you know, hopefully, you can see as we've gone through this presentation, the work and the investment that's going in to really take this company, and all of our brands to the to the next stage, and the opportunities that are out there. There's a question about this percentage split of sales between business to business and business to consumer, and what percentage of those sales are online compared to physical retail stores. So very broadly in in the two biggest markets, The UK and The US, which is roughly two thirds of the group sales, nearly 50% of those sales now go through online channels, and that's rapidly advanced in the last couple of years from maybe kind of mid mid teens through to 30 and then from 30 to to nearly 50%.

35:29 Do we own our our own retail stores? We have a very limited number of retail stores. We have some outlet stores in The UK, seven or eight that sell in particular something we call seconds. One of the outputs of our our manufacturing process in stokers that we get product that's nearly perfect, but not quite. And so we sell that throughout the stores. And we have a number of stores, again, six or seven non based stores in some of the Southern states in in North America. Retail isn't a big part of our group, and it's not a big part of our strategy in terms of growth, and we'll wait and see what how the market comes back to traditional retail post COVID. Rest of world there's a question here. Rest of world, while small, grew well, is this organic, and why is it being so strong?

36:25 Well, I think, you know, I think we have well known brands that you know, actually, sell around 70 countries, and I think that's fantastic. And in particular, as I said, the made in The UK product really resonates in some of those export markets. So I think that COVID has impacted different markets around the world at different times of the year. You know, South Korea was impacted in the first quarter last year and then gradually recovered, whereas The UK and The US kinda came later on. So, you know, I think COVID has impacted different markets at different times, but we certainly see a big opportunity ahead of us by being more focused and investing a bit more in in some of these rest of world markets. Question. Antique sales have picked up recently. Has it been reflected in your heritage brands?

37:12 I'd be honest, I didn't realize that, but, you know, our business today is a combination of heritage brands and heritage ranges that have sold in pretty much the same format for many, many years and newer, more contemporary ranges. Both of those are doing well. You know, we will continue to invest in our heritage brands, expect to grow those, but are equally focused on more contemporary product development, gifting, and, as I said, online formats. The next question is about why build toiletries capacity when there are so many contract manufacturers. So a couple of things here. The production line that we are putting in right now, this million pound investment, the vast majority of that spend supports a production line that can be used not only for filling hand soaps, hand lotions, hand sanitizer, hand cleaning, bottles, but also can be used to fill our core product ranges, candles, rediffuses. So if you like, there's a dual functionality there. So, you know, we can use it to, extend the capacity of our existing core, lines as well as go into the new, into the new the new category.

38:33 Can I give more detail on the process of the Canada market? I think there was a question that I've already dealt with on Canada, but it's a small business at the moment. It was a fifty fifty joint venture for around thirty years. We weren't in control of the the management team, but we sold product into it. And then the management team there were responsible for sending it on. The change now is that in owning a 100%, you know, we've amalgamated into the group. We have complete control. And as I said, the opportunity is is to leverage our existing North American sales team and our web website knowledge and experience, over Canada as well. Will the dividend payout, is the next question, be lower than previously as more capital is reinvested back in the business?

39:23 I think that what we've done is we've put out and advised brokers in terms of expectations that we will expect to resume dividends gradually, for full year '21 and then, and then improve in full year '22 and and beyond. In terms of those, that guidance that we gave, it is at a at a at a bit lower level than maybe it was back in, you know, three, four years ago. But we think that's not only the right and a prudent thing to do at the moment given that we're still in the middle of a pandemic, But, also, I think there's a huge opportunity if we invest the right amount of money back in our business, to to grow, and that should then be reflected in in in the capital value of our company, and, hopefully, share price.

40:12 Could you broadly outline your intended dividend policy? I think that's the same question, so, hopefully, I've dealt with that. I'd like to understand our views on capital allocation and potential buybacks. So in terms of if that's about buying our own shares, we don't have any current plans to do that. We raised capital in June last year, £11,000,000. We raised that capital to invest more and accelerate our our strategy, our growth strategy, in particular, online and digital transformation. Do you see any distressed opportunities is the next question? I think that's I'm talking about acquisitions.

40:59 I think I think different companies have obviously handled and and and have have been impacted by COVID in different ways whilst I think we've been very resilient and I think navigated its best, you know, could possibly have been hoped. I'm sure there are other companies that have been impacted different ways. We've got a lot of work to do with the six brands we already own, and so my first priority is is to deliver on the opportunity that we see for those six brands and talk you through some of the things we're doing to to achieve that. You know, further down the line, if there's a a a a compelling acquisition opportunity that comes along, then absolutely, we would consider it. But our first priority is is making good and really getting the benefit from what we already have.

41:49 Just a couple more questions. Next one is playing devil's advocate. Could you summarize in a few sentences why should I invest in your company compared to other potential opportunities? Wow. That's a good question. So, within a few sentences, I think we are a great consumer brand company. We have great brands that I know love around the world. We're well diversified in terms of our geography, and, you know, we've identified some significant growth opportunities both in terms of top line and bottom line. And in particular, telling the story of our brand, the quality of our product in online and digital space, I think, is is is a a big, big opportunity for us.

42:36 And then the final question, you mentioned that you want another three growth markets. What's a conservative view about how much growth you expect to see from these? So, going back to our sales analysis chart on the table, the three big markets of UK, US, and Korea, we certainly expect those to grow, particularly driven by our online investments. The rest of world markets, which are smaller, should have more upside to growth in terms of percentage and absolute pound dollars. So, you know, I'm not gonna pluck a number out of the air today, but we should certainly be seeing some significant growth in some of those markets. I think that is all of them.

43:24 Mike, thank you. Them all. Thanks to everybody that submitted a question. It's really it's really great to get that that level of questions coming through. Mike, thank you very much. As and as you say, you've you've answered all the questions, so thank you very much indeed for that. If any further questions do come through, obviously, Mike will get the opportunity to review those as well. And, Mike, just before we redirect investors to give you some feedback, perhaps just a a final few closing words if possible, please. Yeah. Thank you, Mark. So, look, again, thank you for joining, me today. I hope that this has been useful. You know, it it's it's great to better share what we're doing, with with a wide group of people. We're gonna carry on doing these, these broadcasts, coming through, so I hope they're useful. If there is feedback about what we've covered and what we haven't covered, then it'd be very useful to have that.

44:15 As I said, we're very optimistic in terms of our company, the way we are today. We have a very strong balance sheet. We see some great opportunities, and the whole business is working very hard on delivering that that shareholder value. So thank you very much. Mike, thank you again for updating investors today. Could I ask investors not to close the session? It should be automatically redirected for the opportunity to provide your feedback. If you've accessed the meeting from our website, the feedback page will appear in front of you. If you've accessed the meeting via the link sent to you in the email, you'll simply just be asked to log in to submit your feedback. And as Mike said, it'd be greatly appreciated. On behalf of Mike and the PORTMEIRION GROUP PLC team, we'd like to thank you very much for attending today's presentation. That concludes today's session. Thank you.