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CHAIRMAN’S STATEMENT

• Sales for the year were £30.727m, an 11.9% growth over the previous year.
• The profit before tax of £3.351m compares with £2.823m the previous year, an increase of 18.7%.
• Earnings per share were 22.19p which compares with 18.50p the previous year.
• The Board is recommending a final dividend of 9.95p bringing the total to 13.25p for the year. This is unchanged from 1999.
• The dividend cover is 1.7.

During 2000,the steady development of the business continued in all departments. Sales in our two most important markets,the UK and the USA, have been good, increasing by 20% in the US and some 15% in the UK.We are concentrating considerable effort on Japan and the Far East,where we believe we have good prospects. To that end we have formed a wholly owned subsidiary in Japan. The climate is improving for exports to the European market and we expect gains there in the current year.

Our product development strategy is now delivering excellent results. Enhancements to our classic ranges, with the emphasis on the world famous Botanic Garden and Pomona patterns, have rejuvenated the offer, leading to significantly improved sales in both the UK and USA. Two new contemporary collections, Dawn and Dusk, were introduced during the first half of the year. Both ranges have achieved excellent sales, and enhanced our reputation for innovative and creative design.Two new collections of tableware and giftware, Beachcomber and Amabel, have been launched during February 2001. Our reputation for exciting new products has enabled us to achieve immediate acceptance and sales with a large number of our retail customers, both in the home market and overseas. Our product development plans will ensure that we maintain the momentum that has now been generated.

Our strategy of developing associated homeware and gift product ranges under the Portmeirion brand is paying handsome dividends. Sales of glassware and candles increased significantly. This has enabled us to sell into new retail outlets, and additional departments within department store groups.

This careful diversification is continuing with textiles and metal products. We believe the Portmeirion brand can encompass a broadening homeware and gift range that concentrates on design excellence and quality.

We are continuing to progress our plans for a Visitor Centre. This will comprise a new high technology factory extension, a tourist and visitor centre, and additional retail facilities. Subject to a final decision to proceed, we would anticipate spending some £10m over the next 3 years,of which £3m will be funded by grants from Government agencies and the EU The process of investment in new plant and the application of “Lean Thinking” methods is helping to reduce loss and increase productivity, leading to lower costs and better service to customers.

We now have a strong management team, led by the Chief Executive, Kami Farhadi, and we have added to the executive management team where new skills were required. Given the pace of change and development in the Group, investment in management expertise will continue to be a priority. We have further strengthened the Board of Directors to meet the challenges before us, by appointing Janis Kong as a Non-executive Director. She is currently managing director of Gatwick Airport, part of BAA plc, and has wide business experience. Euan Cooper-Willis, our previous Chairman, continues to make a very valuable contribution in the role of Non-executive Director and consultant.

I believe we now have the corporate strategy and the management team to meet our aspirations for the growth and development of the Company. I would like to thank all our employees for their contribution during last year.

Arthur Ralley
Chairman
16th March 2001

FINANCIAL HIGHLIGHTS

	2000 £000’s	1999 £000’s	Increase
Turnover	30,727	27,469	11.9%
Pre-Tax Profit	3,351	2,823	18.7%
Earnings per share – Basic	22.19p	18.50p	19.9%
Dividends per share	13.25p	13.25p	-