Report and Accounts 2024

CHAIRMAN'S STATEMENT

I present my first report as your Non-Executive Chairman having been appointed to the Board of Portmeirion Group PLC on 1 February 2025. In our 36 years history as a listed company I am your 4th Chairman and although I join the Board after a period of disappointing performance and in a challenging global economy, I am excited for the Group's future, by the craftsmanship, skill and creativity I see across our operations, by the colleagues I have met and by the customers I have spoken with.

Our company owns an exceptional portfolio of premium homeware brands, all with rich and authentic origin stories renowned around the world for bold and enduring creative designs and products which are made to the highest standards of manufacture, for a loyal and growing customer base. The people in our Group are experienced, skilled and passionate for our brands, and determined to succeed. I look forward to working closely with my colleagues to improve performance, return to growth and achieve our full potential over the long term.

Our results in 2024 are disappointing. After three years of sales over £100m and headline profits in 2022 peaking at £8.0m, Group sales fell by 11% to £91.2m (2023: £102.7m) in 2024, 10% on a constant currency basis. Headline Profit before tax fell by 63% to £1.1m (2023: £3.0m) as a result of a mix of global inflation, international supply chains disruption and overstocking in one key market. The Group ended the year with net debt up by 53% at £12.1m (2023: £7.9m). We monitor our performance against key performance measures, which are set out in the financial overview table on page 1.

Nearly all our sales shortfall stemmed from one market - South Korea - which experienced an unprecedented 45% fall in sales due to a significant stock overhang at our key customers, just as the economic backdrop across Asia tightened on our core customer. Substantial progress has been made to reduce the stock overhang but it will take until 2027 to completely sell through and return to our historic levels of sales in this market. Our brands and products remain hugely popular in South Korea, and we have had success introducing new brands and collections, but once again it is Portmeirion's Botanic Garden collection which is our leading collection in the market.

Profits in our largest market, the US, improved vs 2023. US market performance was adversely impacted by supply chain disruption resulting in many of our Christmas ranges arriving late to customers, however the feedback on ultimate seasonal sell through was very positive.

Our Spode brand has grown each of the last four years and is now up 45% on pre-Covid levels. We see substantial opportunity to grow Spode brand sales in established and new markets over the next 5 years.

Wax Lyrical, our home fragrance business also has good momentum. The brand reported year-on-year sales growth of 25% and has returned to profitability. Wax Lyrical continues to win listings in national retailers and we expect further growth over the next few years driven by increased domestic and international listings.

We continue to grow penetration in online channels around the world, including our own US and UK websites which, in 2024, accounted for 9% of our sales.

Our inventory increased in the year by £2.3m to £38.2m driven by the significant reduction in South Korea orders together with cancelled US Christmas orders following late stock arrival after supply chain disruption. An appropriate level of stock for the Group would be c.£32.0m and our ambition over the next 12-24 months is to turn the £6.0m surplus into cash, hence reducing our debt, mindful to protect our brand and margins in all markets.

We ended the year with net debt of £12.1m (2023 £7.9m); the increase driven by the later invoicing of Christmas ranges in the US and higher inventory in our Stoke-on-Trent factory due to the reduced order flow from our South Korean market.

We reduced total overhead costs during the year by £5.3m, a reduction of 13%. A lean cost base will help mitigate unforeseen cost inflation, most notably the impact of the Autumn Budget which increased our costs by £0.8m (annualised) due to the rise in National Insurance Contributions and the National Minimum Wage, with additional inflation expected in utilities.

Our objective is to develop our premium brands responsibly and to realise their full growth potential over the long term, across different products, channels and markets. This will maintain our reputation, as an owner of great homeware brands, drive profitability and shareholder returns. More on our Objectives and Strategy is set out on page 5.

DIVIDEND

The Board does not recommend payment of a final dividend and has prioritised growth. To fund this growth we must invest, which requires us to first strengthen our balance sheet. As a consequence this will reduce the associated interest costs on our Profit & Loss account - which in 2024 was a £1.6m cost to the business. Savings in interest costs, efficiencies and growth will over time organically provide funds to enable us to make judicious investments for growth, particularly in sales & marketing, to support our premium brands in our established and international markets.

We are cognisant that a significant percentage of our shares are held by individuals and we recognise that dividends can be a contributor to an individual shareholders annual income and our overall total shareholder return. Since floatation in November 1988, this enterprise has paid £57.8m in ordinary dividends to its shareholders (not adjusted

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for inflation). My priority is to put the Group in a strong position to compete globally and to do this we must eradicate our debt, and maintain a 'Fortress Balance Sheet', which I define as a growing net cash position, returning capital to our shareholders from a position of strength and comfortably funded from the earnings of an appropriately well invested business. I know we are far from that position today, but we are on the path now.

MADE IN STOKE-ON-TRENT

Approximately 26% of our branded tableware products are made in our Stoke-on-Trent factory and we intend to increase this over the next 24 months. This may have an initial impact on our gross margins due to the cost of manufacturing in the United Kingdom, but it is a necessary margin investment in our brands. I am confident that we will recover the margin investment and reap substantial benefits over the medium term.

We will continue to work closely with our worldwide factory partners on certain products lines and collections as they have a specific expertise and consistently deliver high quality products.

TRANSFORMING OUR BUSINESS: OUR 2025-2026 PRIORITIES

As we begin the journey of transforming your business, I have reflected on the challenges of 2024 and am pleased to announce a series of immediate priorities, which the Board believes will position the Group to accelerate our strategy and objectives below, and support a recovery of long-term, profitable growth.

1. RETURN TO GROWTH IN OUR ESTABLISHED MARKETS
   We are focused on returning our three established markets - US, South Korea and UK - to stability and onto growth after a year of disruption. In the US, we will accelerate in-stock dates for key Christmas collections and in South Korea, we will continue to support our distributors and retail partners to reduce stock levels. Across all markets we will develop our customer base, introduce new collections and expand existing collections, develop our online and eCommerce offer and exercise better control and oversight.
2. FORTRESS BALANCE SHEET
   We are focused on generating cash and our intent is to repay our debt in full over the next 2 to 3 years to maintain a net cash position. As we repay debt we benefit from lower associated interest costs, which together with efficiencies and growth, releases capital for investment in marketing our premium brands in established and international markets.
3. INVEST IN OUR PREMIUM BRANDS
   Our future success and prosperity depends on how we execute and develop our premium brands globally over the next few years. We will spend more on brand marketing in the years ahead, with brands seeing an anticipated c.5-8x increase in spend from current levels as funds become available. Success will not be instant. It requires commitment, consistency and patience, and as we spend we will evaluate effectiveness. In all markets we will engage direct with the end customer to introduce our brands, earn their trust and loyalty, and in parallel support our retail partners and brand ambassadors to drive sales for them and our own eCommerce.
   We intend to completely overhaul and re-energise our own retail store portfolio in the UK and our global eCommerce over the next 12 months to improve our customers brand experience very markedly. Increasing the proportion of branded product 'Made in Stoke-on-Trent' is an important commitment to our customer and our brands.
4. EXPLORE & DEVELOP
   International markets' are defined by 57 individual markets and account for 8% of Group sales, and only three contribute more than £0.5m sales each. We have the premium brands and collections to be successful in these markets, but until we build a consistent brand presence and connect with our end customer, growth will be hard fought. Our international sales team has been tasked to explore these markets and will be focusing on developing a handful initially. I am confident that we have the leadership and infrastructure in place to be successful; we certainly have the determination and integrity.
   Explore & Develop is not just about geography and markets, it applies throughout the business. We have a history of innovation across the business and at every level. We will explore the value and potential of our extensive design archives whether that be for ceramic tableware, giftware, or indeed licensing opportunities for other categories. We will continue to develop new, beautiful product; to innovate and support not only existing customers, but develop new customer demographics.
5. EXCELLENCE EVERYWHERE
   There is real opportunity for improvement across the Group and every colleague, at every level, across every department and geography can contribute to our performance improvement and transform our business. We

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will ingrain Excellence Everywhere in our everyday behaviours and actions and at every level, our mindset will be one of brand first, attention to detail, and continuous improvement everywhere. We have an open and entrepreneurial culture and a determination to succeed. Our colleagues are encouraged to take risks and learn from their mistakes to produce better results and generate a positive impact.

BOARD

Clare Askem, Mick Knapper and Bill Robedee will not seek re-election at the forthcoming AGM. I am delighted that both Mick and Bill will continue in their present roles as Group Operations Director and President of North America respectively. Clare has been a Non-executive Director since August 2020 and Chair of the Remuneration Committee since April 2021 and I would like to record our collective thanks for the valuable contributions Clare has made, particularly in retail and digital transformation. Angela Luger, our Senior Non-Executive Director, will take over as chair of the Remuneration Committee from the conclusion of the AGM.

Our Group Board is suitably structured for the business we are today, with appropriate skills and experience to contribute towards the transformation now underway. I am confident that the Board will provide both challenge and support to the Executive and Senior Leadership Team as they work towards delivering our 2025-2026 Transformation Priorities and execute our long-term strategy.

OUTLOOK

2024 was undoubtedly a disappointing year. We have started 2025 positively and are taking a number of actions across our operations to position the business for sustainable future growth through our transformation plans.

We are mindful of the challenges we need to overcome in an uncertain economic environment. From a global perspective we will continue to closely follow the evolving situation with regards to new or increased import tariffs between the US market and other parts of the world. From a UK perspective, it remains disappointing that UK energy costs continue to be significantly higher than the rest of the world, impacting the general competitiveness of UK manufacturing on the world stage. Both these challenges are outside of our control, but we continue to monitor them closely and take mitigating action in response where appropriate.

Despite these uncertain times we have plenty of reasons to be cautiously optimistic. We own great premium brands which provide us with significant global potential and have clear plans in place to help us reclaim lost ground, return to growth and deliver performance. I look forward to updating shareholders on our progress in due course.

On behalf of the Board, I would like to thank our people around the world who work tirelessly every day for our brands, our customers who delight in owning our branded product and finally, our shareholders for their ongoing support.

Peter Tracey

Non-Executive Chairman

31 March 2025

RICHARD "DICK" STEELE

Dick Steele was appointed to the Board of Portmeirion Potteries (Holdings) PLC as Senior Non-Executive Director on 20 May 1999 and succeeded Arthur Rally as Chairman on 1 May 2007. Dick stepped down from the Board on 31 January 2025.

A Fellow of the Institute of Chartered Accountants in England and Wales and Chartered Tax Advisor, Dick was Group Finance Director of Lloyds Chemist and Storehouse and served as a Director of HobbyCraft, Snap Digital Imaging, Factory Shop and many other companies during his career. He was a Board Director at The Quoted Companies Alliance (QCA) between October 2011 and October 2020 and a lay member of Council at Keele University.

During Dick's tenure on our Board, he oversaw significant change and activity, ranging from our first corporate name change to Portmeirion Group PLC in June 2000, the global financial Crash and Covid-19, and a number of acquisitions of businesses and brands, notably in April 2009 our premium tableware brands Spode and Royal Worcester.

We thank Dick for his many decades of service and wish him and his family well for the future.

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STRATEGIC REPORT

STRATEGY & OBJECTIVES

Our Strategy: to establish the highest standards of manufacturing and creative design, to maintain our reputation as makers of high quality products, and to develop our premium brands responsibly, so we continue to delight our customers around the world.

Our Objective: to think and act as responsible brand owners at all times, nurturing our premium brands for long term growth, constantly striving to realise their full potential across different products, channels and markets.

If we are successful in our endeavours, we will enhance our reputation as a great owner of homeware brands, and retain committed and caring people who are motivated to build a global business capable of sustainable growth, with increasing profitability, lower risk, and higher returns to our shareholders.

Our key performance indicators are set out in the Financial Overview on page 1. Our Five-Year Report Card is on page 100.

BRANDS

We have success when our customers connect with one of our premium brands, when they have a great experience with our branded products, and when they share their positive experience with family and friends.

As we continue our customer journey, we are fortunate to own several incredible premium homeware brands which are known globally for their quality, that excite with their creative designs and which have authentic rich origin stories and histories.

Our Spode brand was founded in Stoke-on-Trent, Staffordshire, England by Josiah Spode I in 1770, Portmeirion was founded in 1965 by Susan Williams-Ellis, daughter of Sir Clough Williams-Ellis who created the Italian style Portmeirion Village in North Wales, and Royal Worcester was founded in 1751. Our Pimpernel tablemat brand was founded in 1933, Nambé, our premium design US homewares business was founded in Sante Fe, New Mexico, US in 1951 and our home fragrance brand, Wax Lyrical, in Cumbria, UK was founded in 1980.

Tableware is a functional product. Our products are certainly functional, manufactured to the highest standards to be strong, resilient and durable. But they are also designed to be tactile, beautiful, bold and loved. Our customers delight in using our products every day, or to mark a special occasion, season or celebrations with them, or love adding to a cherished collection that they intend to pass down through the generations.

We are thankful that over 250 years ago Josiah Spode I had the integrity of character and business nous to design 'planned permanence' into the beautiful blue & white tableware he made in Stoke-on-Trent and sold to his customers in London and around the world. We keep with Josiah's approach, and it continues to serve us and our customers extremely well.

We are proactively working to centre production in Stoke-on-Trent, England where possible, over the next 12-24 months, which will increase the proportion of products we manufacture in the city. This will have an impact on our gross margins initially, but it is a necessary investment of margin in our brands. 'Made in Stoke-on-Trent' is the foundation of our brand DNA and it is what our customers expect from our brand. This margin investment will take time to repay, but over the medium term, as volume increases, the factory economics improve materially, and we are confident that we will recover that margin investment and reap multiple benefits.

STRATEGY

We see a significant opportunity to grow top line sales around the world, thereby increasing the utilisation and efficiency of our factories and warehouses, leading to improved operating margins, profitability and cash generation.

We will capture our portfolios of premium brands full potential by:

1. Brands mindset
   The way we think and act across all areas of our business must be in the long term best interests of our brands, and supporting their growth. This brand mindset should inform every decision and action, keep us striving for excellence and focused on delighting our customers. It should influence how we work, who we partner with, when we do something and what we explore next.

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1. International sales growth
   We sell to over 60 markets, but our 3 'established markets' of North America, UK and South Korea dominate, accounting for 92% of our sales. The 8% balance is derived from 57 remaining 'international markets', of which only 3 generate more than £0.5m of sales each.
   These international markets offer a clear opportunity to introduce our premium brand presence for the first time and build new relationships with end customers and appropriate retail partners in those markets. It is frustrating that over the many decades we have failed to grow more than a handful of these markets to any level of significance. However, with consistent investment in sales and marketing in future years, we are confident that we can establish our brands in these markets and develop them.

1. Increase online channel penetration and own eCommerce
   We have successfully grown our online direct-to-consumer sales over the last 4 years and our own websites account for c. 9% of the Group's sales. We will continue to invest in customer acquisition, conversion and improving digital assets for all online platforms where our products are featured.
   We have identified areas where we can improve and that requires investment to better align with our premium brands, to deliver a much enhanced customer experience and financial contribution.
2. Our design archive
   We have an extensive designs archive which we are not actively commercialising. We are exploring how to grow this area of our business in a responsible way, particularly in licensing and through exclusive products and working with appropriate partners in every category.
3. Seasonal products
   Seasonal products enable our brands to build enduring relationships with our customers at times of the year that matter to them. Our Christmas tableware collection Spode Christmas Tree was first produced in 1938 for the American market, and 87 years later it is still growing its sales footprint, with growth still to come from existing and new customers in our established and international markets.
   We have expertise in the seasonal product category, and while we have achieved a great deal in recent years, we will do more to develop product for other seasonal occasions.

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1. Return to sustainable levels of trade in South Korea
   South Korea has been an important market for us over the last 15 years and the Portmeirion Botanic Garden collection is one of the best known in that market. We are confident that sales will recover over time through elimination of overstocks (meaning customers will order more, so increasing our revenue); recovery of Asian consumer economies; and selling our wider collections from our existing portfolio and new products.
   We are taking a disciplined approach with controls to improve order flow and channel oversight.
2. Engage and grow our brand fans, creating tomorrow's customer!
   We work to delight our customers. When we achieve that, they share their experience with family and friends and we expand our customer base. We will continue to develop deeper brand engagement through our social channels and online / offline advertising.
3. Reduce net debt and invest savings in our marketing key brands
   The long term success of our business will be determined by how we nurture and grow our premium brands over time. Growth requires investment, specifically in sales and marketing, and a long term commitment to consistently support our premium brands with marketing spend in established and international markets. Over the next 2-3 years, as our net debt reduces, the associated interest cost savings at a minimum will be judiciously allocated to support international brand marketing.

BUSINESS MODEL

Creative design

Any of our products will fulfil their raw purpose and function brilliantly well, because they have been manufactured to the highest standards, to be strong, resilient and durable. But it is our creative design team which makes the difference, they elevate functional to fabulous, and that's what delights our customers and keeps our product on the table or on display for decades. A design, a theme or a style can often be instantly recognised or connected to one of our brands. Spode is designed to be beautifully bold and Portmeirion is designed simply to be loved.

Because design is central to our brand proposition, we never out-sourced the creative design process, choosing to keep it in-house, with a team based in the UK and US. They take inspiration from our own archive and are informed by fashion and consumer trends, working to an 18-24 month forward product roadmap. At the time this report is published in Q1 2025, our team are finalising new designs to be in-store for Christmas 2026 and excited for what 2027 might hold.

Our heritage collections are extended every year and this keeps them front of mind with customers and collectors. Examples in 2024 include our annual Spode Christmas Tree plate, new decorations and Spode Staccato - which can be mixed and matched with our classic Spode Blue Italian collection which was first introduced over 200 years ago.

New products are designed and introduced to a collection every year, often targeting new and different demographics in the market. In 2024, we launched our beautiful Portmeirion Minerals tableware collection - a reactive stoneware collection presented in recyclable packing that appeals to a younger and sustainability conscious customer. New shapes are developed each year to extend successful collections. Often this will enable access to new markets which may require different dining experience or cultural need. Similarly, our new Wax Lyrical England home fragrance collection, which launched in 2023, gained wider distribution in 2024. It offers an incredible quality, UK made product, for exceptional value and is gaining very good traction in the grocery channel.

Operations: administration, manufacture, supply and logistics

Our business was founded over 65 years ago in Stoke-on-Trent, Staffordshire, England, and the city has remained the location of our headquarters, our tableware factory and warehouse ever since. Stoke-on-Trent has been the global centre of ceramic design and manufacture since the 1700s, it is our home and was the birth place of our Spode and Portmeirion brands. We benefit from the wonderful skills and talent that have been passed down from generation to generation. Our US offices are located in New Jersey, Connecticut and New Mexico, and we have further offices in China, Canada and Germany.

Our Wax Lyrical home fragrance business is based 120 miles north of Stoke-on-Trent in the Lake District National Park at Ulverston, Cumbria, which is the location of both its office and factory.

We manufacture c.40% of all the product we sell globally at our two factories in England and what we do not manufacture ourselves we outsource to long standing partner factories that we have worked with for many years, all to our same exacting quality standards and in compliance with our ethical codes of conduct. Our ambition is to increase the percentage of product we make in our Stoke-on-Trent factory over the next 12-24 months.

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Our UK warehouses service the UK and international customers and our US warehouses in Connecticut and New Mexico service the US, Canada and Latin America.

Routes to market

Our revenue is generated from three routes to market:

Wholesale (national and independent retailers):

Our wholesale channel accounts for 83% of total sales and our customers are national and independent retailers, or distributors in some markets, who in turn sell to national and independent retailers.

We support our wholesale customers through the use of wholesale marketing, online marketing and digital assets to promote the sale of our premium branded products. Many of our wholesale customers are omni-channel retailers with both physical stores and online sites.

Own eCommerce:

We operate our own eCommerce websites in the US and UK which accounts for 9% of total sales, offers a higher margin and the opportunity to build closer relationships with customers and engender long term brand loyalty.

Own Retail:

We have 5 factory outlet stores which trade as Portmeirion Home in the UK and 7 Nambé stores in New Mexico, US which accounts for c.8% of total sales.

In international markets, outside of North America and the UK we have used distributors which allows access to markets but permits us to limit our stock holding locations around the world.

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ROUTES TO MARKET

9%

83%

Marketing

Wholesale

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