PORTMEIRION GROUP PLC

RESULTS FOR 6 MONTHS ENDED

30 JUNE 2005

CHAIRMAN’S STATEMENT

Financial Highlights:-

Results

I am pleased to announce the Group reported a profit before taxation, and before total exceptional items, of £64,000 for the six months ended 30 June 2005 (2004: £378,000 loss). Exceptional operating costs of £284,000 were incurred as a result of consolidating manufacturing onto one site from two and redundancies. An exceptional gain of £238,000 was recognised as a result of selling the vacated freehold manufacturing site in Stoke-on-Trent for £700,000 in cash. The total profit before tax for the first half of 2005 was £18,000 (2004: £378,000 loss).

Group Sales for the six months to 30 June 2005 were £12,968,000 which is 3.2% below the previous half-year. However Group sales (on a like for like dollar exchange rate of $1.6317/£) increased by 1% from the previous six months to June 2004.

Dividend

Given the strong balance sheet, the Board has decided to maintain the interim dividend at 3.30p per ordinary share of 5p each, payable on 3^rd October 2005 to shareholders on the register on 16^th September 2005.

Trading Performance

Group Sales were sustained by an excellent export performance.  Sales in the US increased by 9% for the 6 months ended 30 June 2005. This was on top of an already significant 22% increase in sales in the US for the 6 months ended 30 June 2004.  However, this translates to a 1% reduction in US sales when converted to sterling at the higher GBP/USD exchange rate.  This exchange rate difference also reduced the pre-tax profit by some £250,000, so that the like for like improvement (as above) over last half-year’s pre-tax profit is approximately £700,000.

As predicted in my 2004 year end statement, sales to South Korea have returned to significant growth, being 29% higher at £2.5m.  The Group is now designing classic styles specifically for the Korean market, which is contributing to this success.  Sales to Italy through our newly appointed distributor increased by 36%.  Although total export sales, excluding the USA, increased by a very creditable 23%, this was offset by a reduction in UK sales of 21%.  The UK market has been very difficult this year, with fierce competition coming from low-cost overseas products and selling price deflation.  However, the Group is introducing its own imported product ranges into the UK at lower prices for Spring 2006, and I expect UK sales to improve as a result.

Manufacturing and Warehouse Reorganisation

The major reorganisation project has proceeded on time and to budget, and some of the predicted benefits are now starting to be seen; namely reduced costs and manufacturing efficiencies.  The smaller of our two manufacturing sites in Stoke-on-Trent was closed at the end of May, following the successful relocation of all casting production to our main site in Stoke-on-Trent, with no loss of production capacity.

This complex move was carried out without any significant disruption to supplies and within budgeted expenditure.  The first half manufacturing gross margin improved by 0.8% as a result of this relocation.  The smaller site was then sold for a cash sum of £700,000, resulting in an exceptional gain to the profit and loss account of £238,000. Exceptional reorganisation costs of £284,000 were incurred on the relocation and redundancies.

The expected annual reduction in operating costs are at least £0.5m per annum, and I expect some benefits to be realised in the second half of this year.  All our UK production is now manufactured on one site.

The Group is now in the final stages of agreeing contracts for the new distribution centre in Stoke-on-Trent.  This has been a very lengthy process, but I do believe the new warehouse will be opened during 2006.  As previously reported, the Group will then consolidate warehousing and distribution from two sites to one enabling it to sell the vacated freehold site.

Current Trading and Prospects

The Board’s decision to strengthen the export sales team is already starting to pay dividends, and I believe the improvement in export sales will continue through the second half.  I cannot, however, be so optimistic about UK sales, and I expect to see little improvement until Spring 2006.  However, tight cost control, and the efficiencies from our manufacturing consolidation should provide a modest improvement in the second half compared to last year’s second half, with significant progress expected from 2006 onwards.

With the Group’s strong balance sheet this situation should enable the Board, so far as is possible, to maintain dividends.

A. Ralley

Chairman

11 August 2005

INDEPENDENT REVIEW REPORT TO

PORTMEIRION GROUP PLC                            

Introduction

We have been instructed by the company to review the financial information for the six months ended 30 June 2005 which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated cash flow, the statement of total recognised gains and losses and related notes 1 to 12.  We have read the other information contained in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

This report is made solely to the company, in accordance with Bulletin 1999/4 issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The interim statement, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are also responsible for ensuring that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom.  A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed.  A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions.  It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit.  Accordingly, we do not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2005.

Deloitte & Touche LLP

Chartered Accountants

Birmingham

11 August 2005