REG - Hotel Chocolat Group - Interim Results
02/03/2022 07:00
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RNS Number : 2920D Hotel Chocolat Group PLC 02 March 2022
2 March 2022
Hotel Chocolat Group plc
("Hotel Chocolat", the "Company" or the "Group")
Interim Results
Hotel Chocolat Group plc, a direct-to-consumer premium chocolate brand, today
announces its interim results for the 26 weeks ended 26 December 2021. All
numbers are shown post-IFRS16 unless otherwise stated.
Financial highlights:
● Revenue up 40% to £142.9m (H1 FY21: £101.9m)
● Underlying EBITDA up 35% to £33.8m (H1 FY21: £24.9m)(1)
● Profit before tax up 56% to £24.1m (H1 FY21: £15.5m)
● Strong balance sheet with net cash at period end of £53.8m (H1 FY21: £45.6m)
● Earnings per share of 14.2p (H1 FY21: 9.7p)
● Investing for growth with 50% of placing proceeds deployed
● Interim dividend of Nil per share (H1 FY21: Nil)
(1) Underlying EBITDA in H1 FY22 excludes £1.5m of share-based payment
charges (H1 FY21: £0.2m).
Operational highlights:
● Strong sales growth reflecting growing brand appeal in the UK, US and Japan
● 38% increase in active UK customer database to 2.3m
● Digital-led growth in USA, active customer numbers grew by 119%
● Japanese joint-venture's sales to consumers grew 131%
● Inflationary impacts mitigated with profit growing faster than sales growth
● Sustainability programmes made further progress with the on the ground launch
of a new 'Gentle Farming' approach for cocoa growing in Ghana
Angus Thirlwell, Co-founder and Chief Executive Officer of Hotel Chocolat,
said:
"I am delighted that we have achieved a great set of results both in terms of
sales and profits, indicating the global strength of the Hotel Chocolat brand
and our direct-to-consumer business model. These results enable continued new
job creation based in our British manufacturing operations, as well as roles
in technology and multi-channel retailing.
"In the UK, we continued to entice many new customers to Hotel Chocolat,
growing our active customer database by 38% to 2.3m. Our unparalleled pipeline
of new product launches means I am confident we will be able to excite and
retain their custom for many years ahead. In the US, our digital model drove
an increase of 119% in our active customer database, with our Velvetiser
in-home drinks system proving a great hit, and in Japan our customer database
grew strongly, with the JV business now truly multi-channel, across online,
digital partners, and 31 stores.
"A key personal highlight in the period took place in Ghana, where we launched
our pioneering Gentle Farming programme, meeting with farming families, local
community groups, and the government. Our programme funds an achievable decent
living income, hand-in-hand with replanting indigenous trees to shade the
cacao and regenerate biodiversity.
"The last two years have been a period of very significant change both
globally and within the business as we have evolved from a UK store-led brand
to a globally ambitious digital-led brand with a broad-range of luxury cacao
products. The team has successfully managed to adapt to the continuously
changing landscape and we have remained focused on our opportunities,
delivering a sustained acceleration in growth over the last 18 months.
"Since the end of the financial reporting period, trading has continued to be
in line with the Board's expectations. The multi-channel performance of the UK
remains encouraging, and the new markets continue to show promising potential
for growth and profitability.
"A focus on bringing happiness through chocolate in every aspect of our
business model will further strengthen and nurture the appeal of our brand,
helping us achieve our goal of becoming the leading global direct-to-consumer
premium chocolate brand."
For further information:
Hotel Chocolat Group
plc
c/o Citigate + 44 (0) 20 7638 9571
Angus Thirlwell, Co-founder and Chief Executive Officer
Peter Harris, Co-founder and Development Director
Matt Pritchard, Chief Financial Officer
Liberum Capital Limited - Nominated Advisor and
Broker
+ 44 (0) 20 3100 2222
Clayton Bush
James Greenwood
Miquela Bezuidenhoudt
Citigate Dewe Rogerson - Financial
PR
+ 44 (0) 20 7638 9571
Angharad Couch
Ellen Wilton
Alex Winch
Notes to Editors:
Hotel Chocolat is a direct-to-consumer premium chocolate brand, involved in
every stage of chocolate from growing to making and distributing. The business
was founded in 1993 by Angus Thirlwell and Peter Harris and has traded under
the Hotel Chocolat brand since 2003. The Group sells its products online and
through a network of locations in the UK and USA, and in Japan via a
joint-venture. The Group has an organic cacao farm and hotel in Saint Lucia,
offering complete cacao immersion through tree-to-bar experiences in a UNESCO
World Heritage Site. The Group was admitted to trading on AIM in 2016.
Chief Executive's statement (inclusive of financial review)
RESULTS
Period ended 26 December 2021 Period ended 27 December 2020
£000 £000
Revenue 142,934 101,896
Gross profit 85,535 62,206
Operating expenses (51,776) (37,256)
Underlying EBITDA 33,759 24,950
Share-based payments (1,465) (197)
EBITDA 32,294 24,753
Depreciation & amortisation of property, plant & equipment (3,383) (3,153)
Loss on disposal of property, plant & equipment (14) (23)
Depreciation of Right of Use asset (4,273) (5,081)
Operating profit 24,624 16,496
Finance income 205 79
Finance expense (774) (897)
Share of joint venture results - (219)
Profit/(Loss) before tax 24,055 15,459
Tax expense (4,784) (3,321)
Profit for the period 19,271 12,138
Earnings per share - Basic 14.2 9.7
Earnings per share - Diluted 14.2 9.6
Dividend per share Nil Nil
CHIEF EXECUTIVE'S STATEMENT
I am pleased to report strong progress for Hotel Chocolat during the 26 weeks
to 26 December 2021. Revenue for the period increased by 40% year-on-year and
profit before tax increased by 56%.
Our strong brand and direct-to-consumer multi-channel model accelerated
further in the UK, whilst the US and Japan both continued to deliver promising
growth.
Brand
Our brand purpose is to make people happy through chocolate. This means
bringing happiness to all the groups we connect with, including customers,
team-members, growers, suppliers, and local communities. This remains our
'North Star' and by continuing to follow it we will achieve our business goal
of becoming the leading global direct-to-consumer premium chocolate brand. Our
commitment is to progressively improve year-on-year, every year, on delivering
this plan.
In the period we made some good steps towards this through our three brand
pillars:
1/ Originality - nurturing creativity to bring real innovation
Our stunning new Christmas and Holiday box designs with hand-tooled snowflake
embossing demonstrated our in-house design skills driving a lift in sales of
gifts. The further evolution of the Velvetiser in-home drinks concept with
rolling momentum on recipes also evidenced our innovation capabilities.
2/ Authenticity - being the real deal in people and products
With consumers increasingly looking for brands that are true, we saw growing
loyalty, repaying our investments and belief in the importance of
authenticity. This is driven by products that hero cacao not sugar, and a team
who know their stuff, with expertise all the way from designing and growing,
to making, retailing, and delivering.
3/ Ethics - using what we have to bring happiness to all stakeholders - our
Hotel Chocolat family, our customers, our growers, our partners, our
communities and our planet
The Gentle Farming initiative evidenced our progress. I have been in countless
cacao industry conferences over the last 20 years with endless promises and
lots of talking, but little real progress on alleviating the subsistence
farming that causes a poverty trap leading to the desperation where child
slavery and other unethical behaviours can develop.
We have been learning and experimenting with cacao growing on our own farm and
this is where our concept of Gentle Farming originated: pay more to the farmer
in return for increasing bio-diversity for the benefit of all. The cacao tree
thrives growing in the shade of other trees, rather than as a mono-culture.
Working with The Eden Project, we honed the idea in order to be ready to
launch to our c2,500 farming families in the Eastern Region of Ghana last
November. This is a long-term commitment by Hotel Chocolat, and we will be
reporting on progress transparently.
We also opened Project Chocolat, our new visitor attraction on our organic
cacao farm in Saint Lucia which gives visitors first-hand experience of our
roots to wrapper approach.
Customers
Most scaled chocolate brands focus on FMCG, selling mainly through grocery,
which is the largest distribution channel globally for chocolate. Our huge
advantage, as we see it, is that we know who our customers are and can develop
a close relationship, without intermediaries. We can see the behaviours of our
'wide church' of customers across multiple different cohorts and adapt our
conversations with them to be best matched. We can predict which cohorts would
most like to hear about our latest product concepts and invest in earning
enduring loyalty.
All markets and channels are focused on developing the active customer
database. We view stores as a prolific way of recruiting and retaining
multi-channel customers, as well as trading profitably through the till too.
We view wholesale partnerships as an opportunity to advertise our brand to
discrete customer pools using tightly curated range collections.
Our team
The Hotel Chocolat Family, has been put to the test over the last two years,
as have all families and businesses. We drew on our culture and worked as a
team to 'keep the chocolat flowing', behaving with 'equality, respect and
grace' and following our 'be brave, be kind' principle. We know that we could
not have achieved these results without our team cultural strength.
Markets
All markets achieved growth. Whilst we have yet to reach overall profitability
in the US & Japan, we have a clear line of sight as to how we can achieve
this, with clear strategies and KPIs measuring our progress. This of course
will unlock huge growth potential in two of the largest chocolate gifting and
home-barista markets in in the world.
Group H1 Sales by location YoY(1) Sales £m YOY %
UK & Rest of World 139.7 39%
USA 2.0 120%
St Lucia 1.2 755%
Group Total(1) 142.9 40%
Memo: Japan JV sales to end- consumers at final retail price 5.0 131%
1) Wholesale sales made by the Group to the JV are reported in
the Group total within UK & rest of world
UK
It was a mark of our brand appeal and direct marketing skills that we
attracted over 0.6m new active customers during the year, increasing our
active database to 2.3m. A combination of compelling product ranges and
data-driven marketing were the key to this growth. Active relationship
management programmes give us proven opportunities to attract more attention
from our customers through an annual calendar across categories, across
channels and across seasons and occasions.
We remain fully committed to physical locations as a powerful way to recruit
profitable new multi-channel customers. We opened two new stores and relocated
four to significantly larger and better sites on improved lease terms. We
have already negotiated ongoing improved lease terms for 35% of our leases,
with a further 43% of locations having a lease event in the next 24 months. As
planned, we will use these opportunities to renegotiate or upgrade to better
sites on better deals.
USA
Since late 2020, our strategy has been digital focused, driving overall
+150%(2) growth in sales with active customers up by 119%. Given three of the
four physical locations were in commuter locations, we decided to close the
stores and focus on optimising range and supply for the online business model.
The brand is proving to have strong customer appeal, so
focusing on supply chain efficiency and honing the range to ensure both
customer relevance and profitability enhances the scaling potential of the
model.
2) At constant exchange rates, sales at consumer prices
excluding fulfilment revenue-share deductions
Japan
Our joint venture had fast growth, with consumer sales up by 131%. We opened
nine new stores in the period taking the total to 31, whilst also growing
online and digital partner channels. Whilst the government never mandated
lockdowns, ongoing public health guidance continues to result in lower retail
footfall during the pandemic. Despite this the active database grew by 1,000%
proving the popularity of our VIP Me loyalty programme.
Saint Lucia
Visitor numbers have begun to recover significantly. We invested to extend
the Rabot Hotel and opened our Project Chocolat visitor attraction on our
organic farm, where we originated Gentle Farming. Both are well positioned to
capitalise on the recovery in visitor numbers to the island, who come
predominantly from USA and UK.
Operations
We continued to invest in capacity, and were able to mitigate inflationary
pressures, with a combination of improved efficiency and scale economies.
Having installed a new hot chocolate production line to support Velevetiser, a
new chocolate production line is on track for installation this autumn
increasing chocolate-making capacity by over 60%.
FINANCIAL REVIEW
Revenue
Group revenue increased by 40% year-on-year to £142.9m, driven by
multi-channel growth in the UK, USA & Japan.
Profit before tax
Profit before tax increased by 56% year-on-year to £24.1m.
Gross margin
Gross margin declined by 120 basis points from 61.0% to 59.8%. Whilst all
channels grew sales, online and wholesale both grew faster than retail which
has higher gross margins. Higher input costs reduced gross margin by 80 basis
points, and FX by 10 basis points. A higher proportion of sales were
generated from third party-produced products which have lower gross margins
but also incur lower overheads. The impact of category mix was partly offset
by price adjustments which were timed to coincide with the improvements from
the refreshed gifting product range.
Operating expenses
Operating expenses grew more slowly than sales, diluting by 40 basis points.
Within this a planned investment in increased customer acquisition marketing
increased operating expense by 330 basis points, but this was more than offset
by a 370 basis points dilution in other operating expenses as a result of
efficiencies and scale economies.
Underlying EBITDA
Underlying EBITDA is a non-GAAP measure and increased 35% year-on-year to
£33.8m.
Share based payments
Share-based payment expense of £1.5m (H1 FY21: £0.2m) related to the
share-based Long-Term Incentive Plan and an all-employee Save As You Earn
plan.
Foreign currency
The business manufactures the majority of its products in the UK; however, it
does purchase some premium ingredients and materials in foreign currencies,
predominantly Euros and Dollars. The Group hedges its forecast foreign
currency purchases up to 18 months ahead. The movement in exchange rates have
adversely impacted margin by 10 basis points. The Group's export focus
remains on the USA & Japan.
Finance income and expense
Finance expense of £0.8m reflects £0.5m of interest charged in relation to
Right of use Assets, £0.2m of interest for the RCF that the Group has in
place, and £0.1m of realised derivative interest. Finance income of £0.2m is
driven primarily by interest from a related party.
Earnings per share
Basic earnings per share in the period increased 47% to 14.2p (H1 FY21: 9.7p).
The effective tax rate for the year was 19.9%, compared to the prior year
effective tax rate of 21.5%.
Dividend
In order to fund an acceleration in growth, the Group raised a total of £60m
equity via placings in 2020 and 2021 and paused its progressive dividend
policy. The Board are mindful of the potential growth opportunities in the USA
and Japan, and the Board will continue to review potential reinstatement of
any dividend relative to the potential opportunities for re-investment in
service of profitability and growth.
Cash flow and closing cash position
The Group had access to a £30m Revolving credit facility (RCF) with Lloyds
Bank, and a further £20m RCF was added during the period with Bank of
Ireland. Net cash inflow from operating activities was £29m (H1 FY21: £33m),
operating profits grew strongly, working capital increased £3.6m in the
period in comparison to an £8m reduction in H1 FY21, primarily as a result of
building inventory for continued sales growth, and for restocking stores that
were closed in Q3 FY21 due to UK lockdowns. Net cash (being cash minus
borrowings) at the end of the period was £53.8m (H1 FY21: £45.6m).
The strong cash position is a result of the strong sales performance and cost
management. Prior to the date of publication, as at 27(th) February 2022 the
Group has net cash of £27m.
OUTLOOK
Since the end of the financial reporting period, trading has continued to be
in line with the Board's expectations. The multi-channel performance of the UK
remains encouraging, and the new markets continue to show promising potential
for growth and profitability.
A focus on bringing happiness through chocolate in every aspect of our
business model will further strengthen and nurture our brand appeal, helping
us achieve our business goal of becoming the leading global direct-to-consumer
premium chocolate brand.
Angus Thirlwell
Co-founder and Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 26 December 2021
Unaudited Unaudited
26 weeks ended 26 weeks ended
26 December 2021 27 December 2020
Notes £'000 £'000
Revenue 142,934 101,896
Cost of sales (57,399) (39,690)
85,535 62,206
Operating expenses (60,911) (45,710)
3 24,624 16,496
Finance income 4 205 79
Finance expenses 4 (774) (897)
Share of joint venture results - (219)
Profit before tax 24,055 15,459
Tax expense (4,784) (3,321)
Profit for the period 19,271 12,138
Other comprehensive income:
Fair Value movement on hedges 583 (1,054)
Deferred tax charge on hedges (93) 175
Currency translation differences arising from consolidation
107 (736)
Currency movement on net investment 428 (572)
Total comprehensive income for the period 20,296 9,951
Basic Earnings per share 5 14.2p 9.7p
Diluted Earnings per share 5 14.2p 9.6p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 26 December 2021
Restated* Audited
Unaudited Unaudited As at
As at As at 27 June
26 December 2021 27 December 2020 2021
Notes £'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 5,161 3,192 3,976
Property, plant and equipment 6 65,005 44,159 53,496
Right of use asset 6 27,565 37,896 30,357
Investment in joint ventures - 81 -
Loan to joint venture 19,482 9,678 12,153
Derivative financial assets - 10 -
Deferred tax asset - 916 479
117,213 95,932 100,461
Current assets
Derivative financial assets - 402 -
Inventories 41,637 15,544 32,038
Trade and other receivables* 7 25,628 19,749 12,421
Corporation tax receivable - - 1,049
Cash and cash equivalents* 53,788 45,560 10,046
121,053 81,255 55,554
Total assets 238,266 177,187 156,015
LIABILITIES
Current liabilities
Trade and other payables 8 64,373 50,484 42,223
Corporation tax payable 965 2,580 -
Derivative financial liabilities 293 392 925
Lease liabilities 9,008 13,735 9,061
74,639 67,191 52,209
Non-current liabilities
Other payables and accruals 8 - 26 2
Derivative financial liabilities 99 5 28
Deferred tax liabilities 1,622 - -
Lease liabilities 27,568 31,345 30,503
Provisions 1,598 956 1,585
30,887 32,332 32,118
Total liabilities 105,526 99,523 84,327
NET ASSETS 132,740 77,664 71,688
EQUITY
Share capital 137 126 126
Share premium 77,800 37,726 38,684
Retained earnings 48,246 36,417 28,976
Translation reserve 861 843 754
Merger reserve 223 223 223
Capital redemption reserve 6 6 6
Other reserves 5,467 2,323 2,919
Total equity attributable to shareholders
132,740 77,664 71,688
*Restated 26 weeks ended 27 December 2020 - see note 7 for more information.
CONSOLIDATED STATEMENT OF CASH FLOW
For the period ended 26 December 2021
Restated*
Unaudited Unaudited
26 weeks ended 26 weeks ended
26 December 2021 27 December 2020
Notes £'000 £'000
Profit before tax for the period 24,055 15,459
Adjusted by:
Depreciation of property, plant and equipment 6 2,702 2,749
Depreciation of Right of use asset 4,273 5,081
Amortisation of intangible assets 681 404
Loss of joint ventures - 219
Profit recognised on lease modifications - (75)
Net interest expense 569 818
Share-based payments 1,465 197
Loss on disposal of property, plant and equipment and intangible assets
14 23
Operating cash flows before movements in working capital
33,759 24,875
Increase in inventories (12,222) (1,628)
Increase in trade and other receivables* (13,589) (14,111)
Increase in trade and other payables and provisions 22,232 23,771
Cash inflow generated from operations* 30,180 32,907
Interest received 3 3
Income tax received/(paid) (534) 751
Interest paid on:
- interest paid - IFRS leases (466) (302)
- derivative financial instruments (48) (101)
- bank loans and overdraft (218) (125)
Cash flows from operating activities* 28,917 33,133
Purchase of property, plant and equipment (13,629) (6,402)
Proceeds from disposal of property, plant and equipment - -
Investment in joint venture - (300)
Loan to joint venture (4,200) (3,900)
Purchase of intangible assets (1,876) (751)
Cash flows used in investing activities (19,705) (11,353)
Proceeds on issue of shares 40,250 99
Costs associated to issue of ordinary shares (998) -
Capital element of hire purchase and finance leases repaid
- -
Payment of IFRS16 lease liabilities (4,738) (3,758)
Dividends paid - -
Cash flows used in financing activities 34,514 (3,659)
Net change in cash and cash equivalents* 43,726 18,121
Cash and cash equivalents at beginning of period* 10,046 27,503
Foreign currency movements 16 (64)
Cash and cash equivalents at end of period* 53,788 45,560
*Restated 26 weeks ended 27 December 2020 - see note 7 for more information.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 26 December 2021
Share capital Capital redemption reserve
£000s Share Premium Retained earnings Translation reserve Merger reserve £000s Other reserves
£000s £000s £000s £000s £000s(*) Total
£000s
Restated Equity as 28 June 2020(*)
126 37,627 23,290 1,579 223 6 4,139 66,990
Fair value movement on hedges
- - - - - - (1,054) (1,054)
Deferred tax charge on hedges - - - - - - 175 175
Currency translation differences arising from consolidation
- - - (736) - - - (736)
Profit for the period - - 12,138 - - - - 12,138
Total comprehensive income for the period - - 12,138 (736) - - (879) 10,523
Issue of share capital - 99 - - - - - 99
Share-based payments - - - - - - 197 197
Deferred tax charge on share-based payments
- - - - - - 173 173
Forex reclasssified to cost of sales and inventory - - - - - - 254 254
Currency movement on net investment - - - - - - (572) (572)
Restated Equity as at 27 December 2020 126 37,726 35,428 843 223 6 3,312 77,664
Fair value movement on hedges - - - - - - (843) (843)
Deferred tax charge on hedges - - - - - - 133 133
Currency translation differences arising from consolidation - - - (89) - - - (89)
Profit for the period - - (6,453) - - - - (6,453)
Total comprehensive income for the period - - (6,453) (89) - - (710) (7,252)
Issue of share capital - 959 - - - - - 959
Dividends - - - - - - - -
Share-based payments - - - - - - 714 714
Deferred tax charge on share-based payments - - - - - - (184) (184)
Current tax of share-based payments - - - - - - 56 56
Forex reclassified to cost of sales and inventory - - - - - - (111) (111)
Long-term loan reserve - - - - - - (158) (158)
Equity as at 27 June 2021 126 38,685 28,975 754 223 6 2,919 71,688
*Restated 52 weeks ended 28 June 2020 - see Hotel Chocolat Group Annual Report
for more information.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the period ended 26 December 2021
Share capital Capital redemption reserve
£000s Share Premium Retained earnings Translation reserve Merger reserve £000s Other reserves
£000s £000s £000s £000s £000s Total
£000s
Equity as at 27 June 2021 126 38,685 28,975 754 223 6 2,919 71,688
Fair value movement on hedges - - - - - - 583 583
Deferred tax charge on hedges - - - - - - (93) (93)
Currency translation differences arising from consolidation - - - 107 - - - 107
Profit for the period - - 19,271 - - - - 19,271
Total comprehensive income for the period - - 19,271 107 - - 490 19,868
Issue of share capital 11 39,115 - - - - - 39,126
Dividends - - - - - -
Share-based payments - - - - - - 1,465 1,465
Deferred tax charge on share-based payments - - - - - - 230 230
Forex reclassified to cost of sales and inventory - - - - - - (65) (65)
Long-term loan reserve - - - - - - 428 428
Equity as at 26 December 2021 137 77,800 48,246 861 223 6 5,467 132,740
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. Basis of preparation
The consolidated interim financial information has been prepared in accordance
with International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRSs), as adopted by UK
international accounting standards.
The accounts have been prepared in accordance with accounting policies that
are consistent with the Group's Annual Report and Accounts for the period
ended 27 June 2021.
The Group's Annual Report and Accounts for the period ended 26 June 2022 are
expected to be prepared under UK IFRS.
The comparative financial information for the period ended 27 June 2021 in
this interim report does not constitute statutory accounts for that period
under 435 of the Companies Act 2006.
Statutory accounts for the period ended 27 June 2021 have been delivered to
the Registrar of Companies.
The auditors' report on the accounts for 27 June 2021 was unqualified, did not
draw attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
2. Significant accounting policies
At the year ended 27 June 2021 the Directors undertook a rigorous review of
financial forecasts and available resources in order to consider the Group's
ability to trade as a going concern.
The assessment included a review of a Base case and Downside scenario. The
base case assumed ongoing growth in FY22 as the Group evolves from a
UK-store-led brand to a global digital-led brand. The base case included the
necessary overhead and capital spend required to deliver FY22 growth.
The Board also considered the levers available to mitigate the impact on
profit and cashflow if performance and the pandemic were to follow the
downside scenario. These included:
● Reductions in working capital in response to lower sales.
● Reduction in variable costs, including lower sales-related costs and costs of
production.
● Deferring or cancelling discretionary spend.
● Reducing ongoing fixed costs of operation.
● Deferring capital expenditure and overseas investment.
Since 27 June 2021 the Group has consistently performed ahead of the Base
case. To assess the Group's position as at 26 December 2021 the Directors have
reviewed an updated Base case reflecting current performance.
On this basis the Board has a reasonable expectation that the Group will have
adequate resources to continue in operational existence for a period of at
least 12 months from the date of approval of the financial statements and will
not breach any covenants over the remaining term of the current facilities.
For these reasons they continue to adopt the going concern basis of accounting
in preparing the consolidated financial information and have concluded that
there is no material uncertainty in relation to going concern.
The interim financial results have been prepared by applying the accounting
policies that were applied in the preparation of the 2021 Annual Report and
Accounts which are published on the Hotel Chocolat website,
www.hotelchocolat.com (http://www.hotelchocolat.com) . There are no new or
amended standards effective in the period which has had a material impact on
the interim consolidated financial information.
3. Profit from operations
Profit from operations is arrived at after charging/(crediting):
Unaudited Unaudited
26 weeks ended 26 weeks ended
26 December 2021 27 December 2020
£000 £000
Staff cost 25,092 24,634
Depreciation of property, plant and equipment 2,702 2,749
Amortisation of intangible assets 681 404
Depreciation of Right of Use asset 4,273 5,081
Loss on disposal of property, plant and equipment and intangible assets 14 23
Exchange differences (131) (51)
Government grants received (41) (893)
Bad debt expense 43 -
Write off of inventory recognised as an expense 1,357 1,878
4. Finance income and expenses
Unaudited Unaudited
26 weeks ended 26 weeks ended
26 December 2021 27 December 2020
£000 £000
Interest from related party 160 73
Interest on bank deposits 3 3
Unrealised interest on derivative financial instruments 42 3
Finance income 205 79
Interest on bank borrowings 218 192
Realised interest on derivative financial liabilities 90 101
IFRS 16 Interest charge 466 604
Finance expenses 774 897
5. Earnings per share
Profit for the period used in the calculation of the basic and diluted
earnings per share:
Unaudited Unaudited
26 weeks ended 26 weeks ended
26 December 2021 27 December 2020
£000 £000
Profit after tax for the period 19,271 12,138
The weighted average number of shares for the purposes of diluted earnings per
share reconciles to the weighted average number of shares used in the
calculation of basic earnings per share as follows:
Unaudited Unaudited
26 weeks ended 26 weeks ended
26 December 2021 27 December 2020
Weighted average number of shares in issue used in the calculation of earnings 135,327,170 125,509,201
per share (number) - Basic
Dilutive share options outstanding - Hotel Chocolat Group plc Save As You Earn 67,886 48,168
Plan
LTIP unexercised options 417,858 240,830
Weighted average number of shares in issue used in the calculation of earnings 135,812,914 125,798,199
per share (number) - Diluted
Basic Earnings per share (pence) 14.2 9.7
Diluted Earnings per share (pence) 14.2 9.6
As at 26 December 2021, the total number of potentially dilutive shares issued
under the Hotel Chocolat Group plc Long-Term Incentive Plan was 3,254,989 (27
December 2020: 501,073). Due to the nature of the options granted under this
scheme, they are considered contingently issuable shares and therefore have no
dilutive effect.
6. Property, plant and equipment
Furniture & fittings, Equipment, Computer software & hardware
£000
Freehold property Leasehold property Plant & machinery Right of use asset
£000 £000 £000 £000 Total
£000
26 weeks ended 27 December 2020
Cost:
As at 28 June 2020 17,038 1,397 39,838 26,816 54,830 139,919
Additions 1,205 - 763 4,297 5,229 11,494
Disposals - (18) (5) (157) (1,663) (1,843)
Translation differences (1,152) - (219) - (689) (2,060)
As at 27 December 2020 17,091 1,379 40,377 30,956 57,707 147,510
As at 28 June 2020 3,267 768 26,174 13,013 14,982 58,204
Depreciation charge 98 64 1,848 739 5,081 7,830
Disposal - - (4) (138) (195) (337)
Translation differences (41) - (144) - (57) (242)
As at 27 December 2020 3,324 832 27,874 13,614 19,811 65,455
Net book value
As at 27 December 2020 13,767 547 12,503 17,342 37,896 82,055
26 weeks ended 26 December 2021
Cost:
As at 27 June 2021 19,947 1,884 41,281 38,834 53,871 155,817
Additions 2,816 - 2,965 7,848 1,476 15,105
Disposals (3) - - - (314) (317)
Translation differences 548 90 424 1 5 1,068
As at 26 December 2021 23,308 1,974 44,670 46,683 55,038 171,673
Accumulated depreciation:
As at 27 June 2021 3,426 842 29,858 14,324 23,514 71,964
Depreciation charge 109 96 1,832 665 4,273 6,975
Disposal - - - (314) (314)
Translation differences 70 - 91 317 - 478
As at 26 December 2021 3,605 938 31,781 15,306 27,473 79,103
Net book value
As at 26 December 2021 19,703 1,036 12,889 31,377 27,565 92,570
As at 26 December 2021, the net book value of freehold property includes land
of £4,564k (27 December 2020: £3,893k), which is not depreciated.
7. Trade and other receivables
Unaudited Restated*
Unaudited 26 weeks ended
26 weeks ended 27 December 2020
26 December 2021 £000
£000
Current
Trade receivables 13,186 11,054
Other receivables* 8,822 7,181
Prepayments 3,620 1,514
25,628 19,749
*Restated 26 weeks ended 27 December 2021. During the period ended 27 June 2021, clarification of guidance issued by the FRC resulted in a change in accounting policy in relation to 'cash in transit'. Previously this had been classified as cash and cash equivalents but going forward will be classified as other debtors. The consolidated financial statements include a prior year restatement to correct the classification of cash in transit of £2,069k.
8. Trade and other payables
Unaudited Unaudited
26 weeks ended 26 weeks ended
26 December 2021 27 December 2020
£000 £000
Current
Trade payables 20,545 11,329
Other payables 2,454 8,557
Other taxes payable 14,473 11,880
Accruals 26,901 18,718
64,373 50,484
Non-current
Other payables - 26
- 26
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