REG - ProCook Group PLC - Annual Results
26/06/2024 07:00
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RNS Number : 9300T ProCook Group PLC 26 June 2024
26 June 2024
ProCook Group plc
Annual Results for the 52 weeks ended 31 March 2024
Good strategic progress and trading momentum; clear route to accelerate
profitable growth over the medium term
ProCook Group plc ("ProCook" or "the Group"), the UK's leading
direct-to-consumer specialist kitchenware brand, today reports its Annual
Results for the 52 weeks ended 31 March 2024.
FY24 FY23 YoY
Revenue £62.6m £62.3m 0.4%
Gross Profit £41.1m £38.3m 7.2%
Gross profit margin% 65.7% 61.5% 420bps
Underlying profit / (loss) before tax(1) £1.0m (£0.2m)
Underlying profit / (loss) before tax % 1.6% (0.3%)
New customers acquired ('000) 687 692 (0.7%)
Number of active customers L12M ('000)(2) 1,047 991 +5.6%
12 month repeat rate %(3) 21.3% 23.6% (2.3%pts)
FY24 highlights
- Total revenue of £62.6m increased by 0.4%, or 1.7% excluding the
Amazon channels which we exited over the last two years
- LFL revenue decreased by 2.0% YoY reflecting improving trend and
building of momentum as we moved through the year
o LFL Retail revenue grew by 2.8% reflecting new product launches and
continued focus on customer service
o LFL Ecommerce declined by 8.7% primarily driven by disruption from the
transition to our new website platform which was completed during the year and
is now delivering stronger conversion rates and reduced time to develop new
customer features
- Grew our share of the UK kitchenware market(4), driven by Retail
channel outperformance
- Growth in L12M active customers of +5.6% YoY to over one million
customers. Successfully attracted 687,000 new customers to shop with the brand
in FY24
- Gross profit margin % improved as expected, following higher
supply chain costs and foreign exchange impacts in FY23, whilst improving
value for customers through meaningful price cuts on approximately 40% of the
range during the year
- Underlying PBT of £1.0m (FY23: Underlying LBT of £0.2m)
reflecting improved gross margins and strong cost discipline despite
significant inflationary cost pressures
- Launched the first two phases of our new small kitchen electricals
ranges winning multiple industry awards already
- Completed the transition into our new Store Support Centre
providing capacity for growth, and delivering operational supply chain
efficiencies as expected
- Opened two new stores in Trafford Centre and Watford and one
upsize relocation in Cheshire Oaks during the year
- Strong cash management and careful inventory planning improved
free cash flow to £2.0m (FY23: outflow of £0.5m)
- Year-end net debt of £0.7m (FY23: £2.8m) with available
liquidity in cash and committed/ uncommitted facilities of £15.3m at year end
A refreshed strategy to accelerate growth over the medium term
- Building on our specialist customer proposition, unique business
model and strong foundations to deliver sustainable and profitable growth for
all our stakeholders, targeting 100 retail stores in the UK, £100m revenue,
and 10% operating profit margin over the medium term
- Strategic priorities:
1. Accelerate profitable sales growth: By expanding our store network,
strengthening our product offer, delivering best-in-class omnichannel customer
service and growing brand awareness and customer engagement
2. Improve our operating efficiency: Through supply chain
transformation and developing resilient and scalable technology solutions
3. Create an even better place to work: By developing our teams and
leadership capabilities and building a high performance culture
4. Being a force for good: By reducing our environmental footprint and
caring for our communities
- New Leadership Team in place and energised to execute the
refreshed strategy to accelerate profitable growth over the medium term
Current trading and outlook
The Group has had a strong start to the new financial year with trading
momentum continuing to build on the trend established during the last
financial year. During the first quarter of FY25, we delivered like for like
sales growth of 3.5% with positive year on year performance in both Retail
(+2.4% LFL) and Ecommerce channels (+5.5% LFL). Including the effect of new
stores (net of store closures last year) our total revenue increased by 5.6%.
Whilst mindful of the uncertain macro backdrop, we are confident in our unique
specialist proposition and encouraged by the improving momentum we have been
delivering over the last year.
In FY25 we expect to deliver modest revenue growth, primarily driven by a
recovery in Ecommerce sales following the disruption last financial year, and
the planned opening of ten new stores in the year. We anticipate maintaining
gross margins, whilst delivering products at unbeatable value. Our continued
focus on cost discipline across our business is expected to deliver further
operating efficiencies which will allow us to re-invest carefully to
accelerate future profitable growth.
Despite the continued macro-economic and geo-political challenges, our
refreshed strategy and strengthened customer focus is beginning to deliver
improved performance and we have both the opportunity and a clear plan to
accelerate this further.
Lee Tappenden, CEO, commented:
"We have made good strategic progress and improved our trading performance
throughout the last year, growing revenue, returning to profitability, and
reducing net debt through positive cash generation.
"Our unique direct-sourced and own-brand specialist proposition which offers
high quality product at unbeatable value, with outstanding customer service,
resonates very well with customers. This, combined with our strong foundations
and a fragmented marketplace, provides a significant opportunity to raise
brand awareness, expand our customer base, and increase our market share. We
have a clear plan to accelerate profitable growth and we are focused on
building a stronger customer-focused business that will support our growth
ambition.
"Our performance during the first quarter of FY25 demonstrates continuing
momentum, and, whilst the market remains subdued and uncertain, we are
confident that we can build on our recent performance, delivering sustainable
and profitable growth for all our stakeholders in the current financial year
and beyond."
For further information please contact:
ProCook Group plc investor.relations@procook.co.uk
Lee Tappenden, Chief Executive Officer
Dan Walden, Chief Financial Officer
MHP Group (Financial PR Adviser) procook@mhpgroup.com
Katie Tel: +44 (0)7711 191 518
Hunt
Catherine Chapman
Next scheduled event:
ProCook expects to release its FY25 quarter two trading update in mid October
2024.
Notes to editors:
ProCook is the UK's leading direct-to-consumer specialist kitchenware brand.
ProCook offers a direct-to-consumer proposition, designing, developing, and
retailing a high-quality range of cookware, kitchenware and tableware which
provides customers with significant value for money.
The brand sells directly through its website, www.procook.co.uk, and through
58 own-brand retail stores, located across the UK.
Founded over 25 years ago as a family business, selling cookware sets by
direct mail in the UK, ProCook has grown into a market leading, multi-channel
specialist kitchenware company, employing over 600 colleagues, and operating
from its Store Support Centre in Gloucester.
ProCook has been listed on the London Stock Exchange since November 2021
(PROC.L).
Further information about the ProCook Group can be found at
www.procookgroup.co.uk.
Quarterly revenue performance
FY25 (52 weeks ending 30 March 2025)
£m Q1 Q2 H1 Q3 Q4 H2 FY
Revenue 11.3
Revenue growth % 5.6%
LFL revenue(5) 10.9
LFL growth % 3.5%
FY24 (52 weeks ending 31 March 2024)
£m Q1 Q2 H1 Q3 Q4 H2 FY
Revenue 10.7 15.7 26.3 23.1 13.2 36.2 62.6
Revenue growth % (6.7%) (1.8%) (3.8%) 3.0% 4.8% 3.6% 0.4%
LFL revenue(6) 10.1 14.8 24.9 21.4 12.2 33.6 58.5
LFL growth % (8.3%) (2.1%) (4.7%) (0.6%) 1.5% 0.2% (2.0%)
Notes
(1) Underlying profit/ (loss) before tax is presented before non-underlying
items of £0.3m in FY24, and £6.4m in FY23
(2) Number of active customers reflects those customers on our database who
have purchased in the last 12 months
(3) 12 month repeat rate reflects the % of customers first acquired in a
previous financial year which have made at least one subsequent purchase in
the following financial year
(4) Management estimate based on internal sales data GFK market weekly sales
information
(5) LFL (Like For Like) revenue in FY25 reflects:
- Ecommerce LFL - ProCook direct website channel only.
- Retail LFL - Continuing Retail stores which were trading
for at least one full financial year prior to the 31 March 2024, inclusive of
any stores which may have moved location or increased/ decreased footprint
within a given retail centre.
(6) LFL (Like For Like) revenue in FY24 reflects:
- Ecommerce LFL - ProCook direct website channel only.
- Retail LFL - Continuing Retail stores which were trading
for at least one full financial year prior to the 2 April 2023, inclusive of
any stores which may have moved location or increased/ decreased footprint
within a given retail centre.
Chair's introduction
Since I joined ProCook shortly before the IPO in November 2021, we have been
through a period of significant change as the Group became a larger and a
publicly-listed business. We have navigated extremely challenging trading
conditions which have affected consumers disposable income and inflated our
cost base, whilst making the right investment decisions for continued long
term growth. The journey has not been easy, but we are beginning to see
momentum build in the Group's trading performance, returning ProCook to
growth, profitability and positive cash generation.
In September last year our new CEO Lee Tappenden succeeded Daniel O'Neill, the
Group's founder who has now transitioned to a Non-Executive role. Lee has
brought energy, vision and different perspectives. In the months since Lee's
arrival, the pace of change and urgency of delivery has been renewed, and we
have greater clarity around strategic priorities and direction. The open and
ambitious culture built by Daniel over the years, has been a galvanising force
with our colleagues working together to build a better business and to better
serve our customers.
Lee has established his new Leadership Team for the next chapter, and we now
have a majority of women around the Leadership Team table having welcomed
Marta Navas as Ecommerce Director, Claire Tait as Marketing Director and
Laurie Haughton as Commercial Director. The right senior team is now in place
to accelerate profitable growth over the medium term.
ProCook is a business which has a unique position in its sector, with our
own-brand and direct-sourced specialist offer. Our customer proposition is
excellent, providing customers high quality products at unbeatable value
always with outstanding service both in-store and online. Once discovered,
customers are great advocates, but our market share and brand awareness remain
low providing significant opportunity for growth, while our strong business
foundations provide a solid platform from which we can build on.
Our refreshed strategy is rightly focused on capturing this growth
opportunity. Our store network today serves less than 40% of the UK population
and by expanding our physical footprint we will not only drive profitable
sales growth, but our increased physical presence will act as a beacon for the
brand helping to raise awareness. The launch of tableware in 2019 and
electricals in 2023 give us confidence that we can continue to develop the
product range, extending and adding new categories and adding more seasonal
relevance and inspiration which we know our customers want. Whilst ProCook's
customer service is already excellent-rated, this will be elevated to a new
level by an even deeper focus on our customer which, accompanied by our brand
building activities particularly through digital channels, will allow us to
increase awareness, advocacy and loyalty.
Cost pressures remain high, and a relentless focus on cost-discipline and
operational efficiency is critical. By improving supply chain effectiveness
and use of technology, the Group will reduce costs to serve and become more
nimble.
Dividend
In light of the continued macro uncertainty, and the Group's plans to continue
to invest in areas which will support future performance and growth, the Board
is not recommending a dividend payment for this financial year in order to
preserve cash within the business during this period. The Board will continue
to review dividend payments in future periods in line with the Group's Capital
Allocation Policy.
Our Board
I am committed to ensuring that the Board remains focused on strategy
development and execution whilst we continue to take our governance
commitments very seriously. These two parallel tracks are key to generating a
sustainable business that delivers for all our stakeholders.
The Non-Executive Directors continue to work very well with the Executives and
wider Leadership Team, providing relevant sector experience and skills with
pragmatic knowledge-sharing and insight, combined with appropriate challenge
on strategic, operational and governance matters.
In June, we welcomed Meg Lustman to our Board as Non-Executive Director and
Chair of the Remuneration Committee. Meg brings over 35 years of retail
experience to the Board which will be invaluable as we continue to build on
the growing momentum in our performance.
Luke Kingsnorth, our Non-executive Director and Remuneration Committee Chair,
who has been with us since IPO and added tremendous value over the last three
years, has now stood down from the Board to focus on other professional
commitments and I would like to thank him for his consistently high quality
contributions during his time with us.
Being a force for good
ProCook is a responsible retailer, an ethos which is embedded in our
proposition and cultural values. We remain focused on listening to our
colleagues and creating an even better place to work. Our continued membership
of the Real Living Wage Foundation reflects our commitment to support our
people as best we can through the pressures of the cost-of-living crisis,
providing fair pay for all.
We are taking the right steps to progress our ambition to achieve net zero by
2040 and, as a B Corp, we believe that we can be a force for good, encouraging
customers and other organisations to make positive choices which help protect
our planet and better serve the communities we operate in.
The support from all our people and suppliers to our mission has been
outstanding and on behalf of the Board, I would like to express our sincere
thanks.
Greg Hodder
Chair
25 June 2024
CEO's review
I am pleased to provide my first report as CEO of ProCook and I would like to
take the opportunity to thank all ProCook colleagues for the very warm welcome
and their continued commitment, passion and customer-focus during what has
been an extremely challenging trading environment over the last two years.
In the months since I joined, my initial impressions of the business have been
reinforced. The Group has real strength in its own-brand, direct sourced
model, providing a specialist retail offer with a high quality product range.
The service delivered by our passionate colleagues in our retail stores is
outstanding, and this helps build strong loyalty once customers find us.
I am pleased that the team under Daniel O'Neill's leadership have invested
wisely in capability and infrastructure, building solid foundations to support
future growth.
These strong foundations and our unique specialist proposition, combined with
low brand awareness and a fragmented marketplace, provide a significant
opportunity for us to accelerate profitable growth.
Building momentum and improving performance
Trading momentum has improved throughout the last financial year and ProCook
has returned to profit and generated positive cash flows in FY24.
Market conditions have remained challenging with the macro backdrop impacting
customers' disposable incomes and spending decisions. Total revenue of £62.6m
was up 0.4% year on year, and when excluding the impact of discontinued Amazon
EU channels that were exited last year, revenue increased by 1.7% reflecting
modest market share gains.
Gross margins recovered to 65.7% (FY23: 61.5%) following the impact of
heightened shipping costs in last year's results, and with continued cost
discipline the Group has delivered an improved underlying profit before tax of
£1.0m (FY23: loss of £0.2m). Statutory reported profit before tax increased
to £0.7m (FY23: loss of £6.5m, including £4.4m of impairment expenses).
Retail performance has remained resilient with revenue increasing by 8.7%
including like for like growth of 2.8% and the impact of new and upsized
stores. We took the opportunity to close three smaller, less profitable,
garden centre stores in quarter four as lease break points became available.
Like for like growth was driven by product innovation including the launch of
new Electricals ranges, pricing improvements for customers, and continued
focus on delivering outstanding customer service.
Ecommerce revenue declined by 11.5% including a 2.8% point impact of the
discontinued Amazon channels, and lower sales on our own website which reduced
by 8.7% year on year. Performance on our own website was impacted by
disruption from the transition to a new platform which began in early Summer
and had lasting effects through to Black Friday, and has since improved,
delivering stronger conversion rates and reduced time to develop new customer
features.
The Group ended the financial year with net debt of £0.7m (FY23: £2.8m)
reflecting free cash flow generation of £2.0m (FY23: outflow of £0.5m) and
available liquidity of £15.3m.
Our strategy for growth
Over the last 28 years ProCook has developed its business model to offer
customers high quality products at unbeatable value, delivered with
outstanding multichannel service. During the year the Group further improved
its excellent-rating from Trustpilot with over 110,000 5-star reviews received
and was again recognised by Which? as a Recommended Provider ranking joint
second in the UK by customer review score.
Following a period of significant growth before and during Covid-19, the Group
has gone through a period of significant change in the last two years,
consolidating operations, investing for future growth, and we have now
established our new Leadership Team for the next chapter after welcoming our
new Ecommerce, Marketing and Commercial Directors to the team.
During the months since I joined the Group, I have worked with the Board and
Leadership Team to develop a refreshed strategy to drive forward our
specialist proposition and unique business model with the focus, energy and
pace needed to accelerate our mission to become the customers' first choice
for kitchenware. Our plan will deliver sustainable and profitable growth for
all of our stakeholders and we are targeting 100 retail stores in the UK,
£100m revenue, and 10% operating profit margin over the medium term. The
activities which we will be pursuing in the years ahead are as follows:
1. Accelerate profitable sales growth
Expand our store network: Enabling more customers to shop in our stores by
increasing physical retail coverage towards 100 profitable stores across the
UK.
Strengthen our product offer: Creating more reasons to shop with us by adding
extended ranges and improving our seasonal and promotional campaigns, adding
more inspiration and broadening our appeal.
Deliver best in class omnichannel customer service: Putting the customer first
to deliver even better service and a seamless experience across in-store and
online, however our customers want to shop with us.
Grow brand awareness and customer engagement: Helping more customers discover
ProCook for the first time, and encouraging more existing customers to shop
with us again by adding more personality and personalisation.
2. Improve our operating efficiency
Supply Chain Transformation: Transforming our supply chain to better serve our
retail stores and customers, by increasing delivery frequency, reducing out of
stocks and improving availability whilst operating at a lower cost.
Resilient and scalable Technology solutions: Developing and evolving our
technology solutions and capabilities to support greater operational
efficiency while improving ease of use for our customers and colleagues.
3. Creating an even better place to work
Developing our teams and our leadership capabilities: Enhancing our service
and product training for all customer-facing colleagues to further improve
customer experience and focusing on our leadership development to ensure we
deliver on our accelerated growth ambition.
Building a high performance culture: Adding greater pace and urgency into our
ways of working to ensure our people are focused on the right priorities and
deliver effectively together as one team.
4. Being a force for good
Reducing our environmental footprint: Continuing the great work that has
already been achieved to help protect our planet, by progressing our
action-plan to deliver on our commitment of Net Zero by 2040.
Caring for our communities: Increasing our support for the local communities
in which we operate, acting as a force for good for society as a whole.
Outlook for the year ahead
The Group has had a strong start to the new financial year with trading
momentum continuing to build on the trend established during the last
financial year. During the first quarter of FY25, we delivered like for like
sales growth of 3.5% with positive year on year performance in both Retail
(+2.4% LFL) and Ecommerce (+5.5% LFL). Including the effect of new stores (net
of store closures last year) our total revenue increased by 5.6%.
Whist mindful of the uncertain macro backdrop, we are confident in our unique
specialist proposition and encouraged by the improving momentum we have been
delivering over the last year.
In FY25 we expect to deliver modest revenue growth, primarily driven by a
recovery in Ecommerce sales, following the website transition disruption last
financial year, and the planned opening of ten new stores in the current year.
We anticipate maintaining gross margins, whilst delivering products at
unbeatable value. Our continued focus on cost discipline across our business
is expected to deliver further operating efficiencies which will allow us to
re-invest carefully to accelerate future profitable growth.
Despite the continued macro-economic and geo-political challenges, our
refreshed strategy and strengthened customer focus is beginning to deliver
improved performance and we have both the opportunity and a clear plan to
accelerate this further.
Lee Tappenden
Chief Executive Officer
25 June 2024
CFO's review
Trading momentum has improved throughout the year resulting in total
continuing business revenue growth of 1.7% year on year, while gross margins
have increased by 420bps as expected. These impacts, combined with our focus
on cost discipline and delivering improved operating efficiency in the face of
significant inflationary cost pressures, has resulted in a return to profit
and positive cash generation.
Revenue
£m/ % FY24 FY23 YoY growth
£m £m %
Revenue 62.6 62.3 0.4%
Ecommerce 22.7 25.6 (11.5%)
Retail 39.9 36.7 8.7%
LFL Revenue 58.5 59.6 (2.0%)
Ecommerce 22.7 24.9 (8.7%)
Retail 35.8 34.8 2.8%
Total revenue in FY24 (the 52-week period ending 31 March 2024) increased by
0.4% to £62.6m (FY23, the 52-week period ending 2 April 2023: £62.3m).
Excluding the year on year impact of the discontinuation of the Amazon EU
channels in FY23, total revenue grew by 1.7%. Trading performance improved
through the year with total like for like revenue returning to growth in the
fourth quarter.
We have marginally increased our share in the UK Kitchenware market(1) during
the year, driven by resilient Retail revenue growth which outperformed the
market. Our mix of revenue remains more heavily weighted to Ecommerce (36%)
than the wider market (26%).
Ecommerce revenue decreased by 11.5% to £22.7m (FY23: £25.6m) including the
£0.8m impact of lower sales year on year from the discontinued Amazon
channels. Like for like revenue from our own website channels declined by 8.7%
year on year, largely the result of disruption caused by the transition to our
new website during the year.
Retail revenue increased by 8.7% year on year to £39.9m (FY23: £36.7m),
benefitting from the three new stores opened last year and the two new stores
opened in the year, partly offset by the closure of three smaller garden
centre stores during the final quarter. Like for like Retail revenue grew by
2.8% year on year. At the end of the financial year our UK Retail estate
comprised 57 stores.
(1) Management estimates based on internal sales data and GFK weekly
kitchenware sales data.
Gross profit
Gross profit of £41.1m in FY24 (FY23: £38.3m) reflected improved gross
margins of 65.7% (FY22: 61.5%) which were driven by the reduced impact of
heightened marine freight costs which had adversely impacted cost of goods
sold over the last financial year (+530 bps impact), and lower levels of
promotional activity year on year (+50 bps impact). These positive effects
were partly offset by our drive to improve our value proposition, offering
better pricing for customers across the majority of the range from Q3 onwards,
which was carefully applied and monitored through the remainder of the year
(-160 bps impact).
Operating expenses and other income
Underlying operating expenses net of other income
Total underlying operating expenses net of other income were £39.0m (FY23:
£37.6m) representing 62.3% of sales (FY23: 60.3%). The growth in costs was
driven by a number of key factors:
- Expenses in relation to the two new stores and one relocation
upsize opened this year and the annualisation of the three new stores opened
last year: +£0.8m
- Annualisation of new Store Support Centre ("SSC") occupancy
costs compared to previous HQ and Distribution Centres: +£0.8m
- Pay inflation and capability investment: +£2.0m
- Above the line marketing campaign investment: +£0.6m
- Increased digital marketing costs driven by website disruption
(£0.8m) offset by volume reduction (-£0.9m): -£0.1m
- Lower costs from the discontinued Amazon EU marketplace
channels: -£0.6m
- Annualisation of FY23 £3m cost savings programme: -£2.1m
Other income
Total other income of £49k in FY24 (FY23: £51k) related solely to rental
income.
Non-underlying operating expenses
It is the Group's policy to disclose separately such items that relate to
non-recurring events and are material in nature, and incurred outside of the
normal business operations, in order to provide a consistent and comparable
view of the underlying performance of the Group. Non-underlying operating
expenses in FY24 were £0.1m (FY23: £6.2m).
Consistent with prior years, expenses in respect of employee share-based
awards which relate to the IPO event in FY22, which itself is non-recurring,
have been presented as non-underlying costs. These expenses are expected to
continue into FY25 up to the third anniversary of the IPO in November 2024.
During FY24, the Group completed the final elements of consolidation of
warehouse operations into its new SSC, with subsequent assignment of the two
pre-existing warehouse leases to new tenants later in the year. Operating and
finance expenses associated with the costs of transitioning into the new site,
dual occupancy of the new or previous sites, and exit costs associated with
the disposal of the two previous sites of £1.2m in FY24 (FY23: £0.5m) have
been presented as non-underlying costs as these items are non-recurring,
dual-running and transition-related. Non-underlying finance expenses relate to
interest on lease liabilities relating to the disused warehouses.
Assignment of the leases, resulting in derecognition of the related
right-of-use assets and liabilities and disposal of related fixed assets,
resulted in gains of £1.9m, including the reversal of £1.1m of prior year
impairment provisions against these two sites which were treated as
non-underlying costs. The prior year impairment assessment considered a number
of estimation factors at that time, including the length of time each property
would remain vacant. The reversal in current year reflects the leases being
assigned to new tenants in shorter timescales than those previously assumed.
During the year, there was a significant amount of change in the Group's
senior management team, following the announcement that the Group's Founder
Daniel O'Neill would step down from his role as CEO and transition to a
Non-Executive Director role. The one-off costs associated with recruiting a
new CEO and a subsequent restructuring of the senior management team totalling
£0.7m have been treated as non-underlying given their material and one-off
nature. Management considers that separate disclosure of this restructuring
cost as non-underlying provides additional useful information to the users of
the financial statements around the day to day trading performance of the
Group.
The Group carried out an impairment assessment as at 31 March 2024 which did
not result in any expense (or reversal of previous expense) to the
Consolidated Income Statement. (2023: £3.3m in respect of Retail CGU
impairment and £1.1m) in respect of the Group's two pre-existing distribution
/ head office sites).
Operating profit
Total underlying operating profit for the period was £2.1m (FY23: £0.8m).
Ecommerce operating profitability improved from 17.9% of revenue to 23.5%
benefitting from the improved gross profit margins, exit of the EU
marketplaces and operational efficiencies year on year, partly offset by
higher digital marketing costs. Retail profitability improved from 14.5% of
revenue to 20.6%, also benefitting from revenue growth, improved gross profit
margins, and operating efficiencies. The total operating profit from the
Ecommerce and Retail channels combined was £13.5m (FY23: £9.9m). Central
costs increased by £2.3m year on year driven by increased costs associated
with the new SSC, pay inflation and other central cost investments including
brand marketing campaigns.
£m FY24 FY23
Underlying operating profit
Ecommerce 5.3 4.6
Retail 8.2 5.3
Central costs (11.4) (9.1)
Total 2.1 0.8
Underlying operating profit % of revenue
Ecommerce 23.5% 17.9%
Retail 20.6% 14.5%
Central costs (18.3%) (14.7%)
Total 3.4% 1.2%
Total reported operating profit, after the £0.1m of non-underlying expenses
set out above was £2.0m (FY23: £5.4m operating loss).
Profit and earnings per share
Underlying profit before tax was £1.0m (FY23: £0.2m underlying loss before
tax).
During the year, there was a net expense of £1.2m (FY23: £1.1m) in respect
of financial items in the period. Financial items included interest expenses
on lease liabilities and borrowings of £1.4m (FY23: £1.1m), and other gains
in respect of foreign exchange of £114k (FY23: £55k loss).
After non-underlying items, reported profit before tax was £0.7m (FY23:
£6.5m loss before tax). Reported profit after tax was £0.6m (FY23 restated:
£6.1m reported loss after tax).
The effective tax rate on underlying profit before tax was 16.4% (FY23
restated: 6.7%).
Earnings per share
Underlying basic earnings per share for the year increased to 0.77 pence (FY23
restated: -0.14 pence) and underlying diluted earnings per share increased to
0.73 pence (FY23 restated: -0.14 pence).
Reported basic earnings per share for the year increased to 0.56 pence (FY23
restated: -5.59 pence) and reported diluted earnings per share for the year
increased to 0.53 pence (FY23 restated: -5.59 pence).
Prior period restatement
The deferred tax asset in the financial years ending 3 April 2022 and 2 April
2023 has been restated in relation to share based payments. Further
information relating to this restatement is set out in the notes to the
Consolidated Financial Statements.
Cash generation and net debt
We have continued to carefully manage our cash position during the year,
resulting in free cash flow of £2.0m (FY23: -£0.5m outflow) and a reduction
in net debt to £0.7m (FY23: £2.8m) with available liquidity headroom of
£15.3m (FY23: £13.2m).
£m FY24 FY23
Reported profit before tax 0.7 (6.5)
Depreciation, amortisation, impairment, and (profit)/ loss on disposal 3.1 9.5
Share based payments 0.2 1.1
Finance expense 1.4 1.1
Unrealised FX (gains)/ losses (0.4) 0.5
Net working capital 3.6 3.8
Tax paid (0.0) (0.1)
Net operating cash flow 8.6 9.3
Net capital expenditure (1.9) (5.2)
Interest (1.3) (1.1)
Payment of lease liabilities 3.4 (3.6)
Free cash flow 2.0 (0.5)
Movement in borrowings (2.0) (1.0)
Dividends paid - (0.3)
Movement in cash and cash equivalents 0.0 (1.8)
£m FY24 FY23
Cash and cash equivalents 2.0 2.0
Borrowings (2.7) (4.8)
Net (Debt)/ Cash 0.7 (2.8)
The reported profit before tax in the year includes £0.3m of non-underlying
operating and finance expenses, which resulted in £2.5m of cash outflow
(FY23: £0.7m cash outflow).
A reduction in net working capital resulted in a cash inflow of £4.0m in the
year (FY23: £3.8m) reflecting our planned reduction of inventory and an
increased trade payable position. Inventory on hand at the year-end (excluding
inventory in transit) was £8.1m (FY23: £9.5m) down 14.9% year on year. Total
inventory at the year-end was £9.7m (FY23: £11.5m).
Net capital expenditure of £1.9m in the year primarily related to the final
elements of investment in the new SSC, and the two new stores and one upsized
relocation store which opened during the year. In the prior year, net capital
expenditure of £5.2m largely related to the investment in the new SSC and new
and relocating store investments.
As at 31 March 2024, the Group held a current tax asset of £0.1m (FY23:
£0.6m) and a deferred tax asset of £0.7m (FY23 restated: £0.9m). We
anticipate, based on our current financial projections, that this deferred tax
asset will be utilised against taxable profits generated within the next two
financial years.
Banking agreements
The Group has access to a committed £10m Revolving Credit Facility ("RCF") to
provide additional cash headroom to support operational and investment
activities. Additionally, the RCF agreement provides an accordion option,
subject to the lender's approval, to extend the facility by a further £5m.
Shortly after the year-end, on the 19 April 2024, the Group successfully
arranged a one-year extension to the RCF which extends the expiry date out to
April 2026. Additionally, the terms in respect of the fixed charge cover
covenant were amended, in order to provide additional headroom against that
covenant in light of the Group's performance over the last two financial
years. The revised covenant test requires EBITDAR to be no less than 1.30x
fixed charges for the FY24 Q4 and FY25 Q1 and Q2 test dates, and 1.40x
thereafter. The leverage coverage remains unchanged with net debt to be no
greater than 2.0x EBITDA. Both covenants are tested quarterly and are
calculated on a last 12 month rolling, pre-IFRS 16 basis.
The Group's ability to meet these covenants has been stress tested as part of
going concern and viability considerations.
The Group has retained its access to an existing uncommitted £6.0m trade
finance facility, which is due to expire on 31 August 2024, although is
expected to be renewed at that date. There is a performance KPI (inventory to
payables ratio), which is monitored on a quarterly basis, however, there are
no covenants or guarantees or other collateral associated with this facility.
Capital allocation and dividend policy
In normal circumstances, the Board currently believes that, to ensure
operating flexibility through the business cycle, it must maintain a minimum
unrestricted cash/ debt headroom which the Board reviews on an annual basis,
or more frequently as required. Maintaining this headroom provides a level of
flexibility sufficient to fund the working capital and investment needs of the
Group (as well as set aside an appropriate operating reserve for unexpected
events).
The Group's dividend policy targets an ordinary dividend pay-out ratio of
20-30% of profit after tax during the financial year to which the dividend
relates. The Board anticipates, under normal circumstances, that it will
consider returning surplus cash to shareholders if average cash/ debt headroom
over a period consistently exceeds the minimum headroom target, subject to
known and anticipated investment plans at the time.
The full capital and dividend policy is available on the Group's website at
www.procookgroup.co.uk (http://www.procookgroup.co.uk) .
Dividends
Due to the ongoing challenging consumer environment and the uncertainty that
it creates around trading performance, and, therefore, taking a cautious and
responsible decision to preserve cash within the business during these times,
the Board have not recommended any final dividend in respect of FY24.
Treasury management
The Group is exposed to foreign currency risk through its trading activities.
The main source of this relates to stock purchases from non-UK suppliers,
which accounts for approximately 95% of the Group's annual stock purchases. To
manage the exchange rate risk, a mixture of standard ("vanilla") forwards and
outperformance trades are utilised. The Group seeks target levels of coverage
for future USD payments, as determined by internal forecasts and the Group's
Treasury Management Policy.
Given the level of USD transactions and cover obtained via financial
instruments, the Group is exposed to a counter-party risk with each of the
financial institutions where arrangements are held. The Group manages this
risk by ensuring only highly credited institutions are used and limiting the
level of exposure with each.
The Group is also exposed to interest rate risk where the Group has financial
obligations that give rise to a variable interest charge. To minimise the
charges and exposure driven by interest rates, the Group ensures that credit
facilities are used optimally in parallel with the latest interest rate
information and forecasts.
Tax strategy
The Group's tax policy is to manage its tax affairs in a responsible and
transparent manner in line with our commitment to high corporate governance
standards. This ensures the Group complies with the relevant legislation and
has due regard to our reputation and thus seek to promote the long-term
success of the Group and deliver sustainable shareholder value.
A full copy of the Tax Strategy is available on the Group's website at
www.procookgroup.co.uk (http://www.procookgroup.co.uk) .
Going Concern
The financial statements have been prepared on a going concern basis. The
Group has reported a profit before tax of £0.7m after non-underlying items
for the financial year ended 31 March 2024 (FY23: loss before tax of £6.5m)
and had a net asset position of £8.4m as at 31 March 2024 (2 April 2023
restated: £7.7m), with a net current liabilities position of £1.2m (2 April
2023: net current assets of £1.3m). The Group had net debt (cash and cash
equivalents less borrowings) of £0.7m at 31 March 2023 (2 April 2023: £2.8m)
with available liquidity headroom of £15.3m.
In their assessment of going concern the Board has considered a period of at
least 12 months from the date of signing these financial statements. In
considering whether it is appropriate to adopt the going concern basis in the
preparation of the financial statements, the Directors have considered the
Group's principal risks and uncertainties and have assessed the impact of a
range of downside scenarios, including a severe but plausible downside
scenario, on the Group's expected financial performance, position, and cash
generation. The scenarios have been informed by a comprehensive review of the
macroeconomic environment, including consideration of the recent fall in
inflation, and anticipated decline in interest rates, alongside geo-political
tensions including the impacts on our supply chain.
Consideration has been given to the availability of facility headroom and
covenant compliance within the Group's financing facilities, the recently
extended RCF agreement and amended fixed charge covenant terms, details of
which are as follows:
- ProCook's bank facility agreements and the associated covenants
are set out in the CFO's Review within this annual report and include a
committed £10m RCF (expiring in April 2026, although expected by management
to be renewed at that date), with a £5m accordion option to the RCF, subject
to lender approval, and an uncommitted £6m trade finance facility.
- Shortly after the year-end, on the 19 April 2024, the Group
successfully arranged a one-year extension to the RCF which extends the expiry
date out to April 2026. Additionally, the terms in respect of the fixed charge
cover covenant were amended, in order to provide additional headroom against
that covenant in light of the Group's performance over the last two financial
years. The revised covenant test requires EBITDAR to be no less than 1.30x
fixed charges for the FY24 Q4 and FY25 Q1 and Q2 test dates, and 1.40x
thereafter. The leverage coverage remains unchanged with net debt to be no
greater than 2.0x EBITDA. Both covenants are tested quarterly and are
calculated on a last twelve month rolling, pre-IFRS 16 basis.
The base case for the scenario modelling extends from the Group's annual
budget plan that was approved by the Board in March 2024 and updated in its
most recent forecast during quarter one and approved by the Board in June
2024. Forecasts for FY26 are based on the Group's strategic objectives and its
five year financial plan, which projects forwards from the latest FY25
forecast.
Key assumptions include Ecommerce and Retail like for like revenue growth,
gross margin performance, the financial impacts of opening of new stores
(including capital investments and time to maturity), operational efficiencies
being delivered, investment in marketing activity, and the appropriate level
of inventory required to maintain strong product availability for customers.
In their consideration of the Group's principal risks and uncertainties the
Board believes that the most likely and most impactful risks that the Group
faces are those surrounding customer and macro-economic factors, and supply
chain disruption risk, both of which are heightened as a result of the current
macro-environment and geo-political tensions.
The Board has reviewed the potential downside impact of these risks unfolding,
modelled under a number of scenarios including a severe but plausible downside
scenario which reflected the following assumptions:
- A significant reduction in customer demand and shopping
frequency, caused by continued disposable income pressures and consumer
caution in light of political uncertainty, and additional cost impacts driven
by continued supply chain disruption associated with the Suez Canal
diversions. The impacts of these factors have been reflected in an 8% lower
revenue performance in the FY25 year compared to base case, increasing to a
16% decrease in FY26 and a 22% decrease in FY26, combining to reflect a 22%
reduction in Group revenue growth over the twelve month assessment period
compared to the base case.
- Included within this lower sales scenario, are fewer new store
openings in FY26 on the basis that there would be lower management confidence
of positive return on investment from such openings.
- A reduction in gross margins in FY26 compared to the base case
by 100bps to reflect heightened supply chain costs.
Under this severe but plausible downside scenario, and before mitigating
actions, the Group would remain comfortably within its available borrowing
facilities throughout the assessment period and remain compliant with the
fixed charge covenant test. However, it would breach the leverage covenant at
the Q2 FY25 test date given the level of planned and committed inventory
intake and new store openings during the first half of FY25.
The Board has also reviewed a reverse stress test which has been applied to
the base case model to determine the level of sales decline which would result
in a breach of financial covenants. A reduction in revenue, with no
mitigations applied, of approximately 8% from Q2 FY25 onwards would be
required to breach fixed charge covenants at that quarter-end test date. A
further reduction in revenue of 22% in FY26 would be required to breach fixed
charge covenants in that year.
The other downside scenario linked to the key principal risks and
uncertainties, which was considered by the Board, had a less severe cumulative
impact than the severe but plausible downside scenario outlined above and in
this scenario neither of the covenants would be breached, and the Group would
remain comfortably within its available borrowing facilities throughout the
assessment period.
The Board has also considered the potential impacts of climate change risks.
These are not considered to have a material effect on the Group's financial
projections over the assessment period.
If any of the downside scenarios were to arise, including the severe but
plausible downside scenario and the reverse stress test scenario, there are a
series of mitigating actions that the Group could seek to implement to protect
or enhance financial performance and position including to:
- Increase selling prices for products which have lower price
elasticity to help offset additional sourcing costs
- Increase promotional activity to accelerate trading performance
and reduce stock levels, or alternatively, reduce promotional activity to
better protect gross margins
- Reduce paid media marketing spend and postpone or reduce other
planned marketing activities
- Reduce variable costs in operational functions to reflect the
lower sales volumes
- Reduce central overhead costs (including headcount investment)
over the short or medium term
- Delay new store openings or capital expenditure in technology
and logistics
- Renegotiate or seek extended payment terms with suppliers on a
permanent or temporary basis
- Seek alternative forms of financing or new banking terms to
support working capital and investment requirements
Conclusion
The Board has undertaken a comprehensive review and assessment of going
concern including the Group's financial projections, debt servicing
requirements, available facility headroom and liquidity, and its principal
risks and uncertainties. In the base case and downside scenarios which the
Directors have reviewed, the Group remains comfortably within its available
facility headroom, and no facility covenants would be breached. However, the
Directors recognise that under the severe but plausible downside scenario, the
Group could breach its leverage covenant unless mitigating actions were to be
successfully applied sufficiently in advance to prevent such a breach, or were
it to agree a covenant waiver, new banking terms, or alternative funding
arrangements, none of which can be guaranteed. The Directors therefore
acknowledge that this potential breach represents a material uncertainty which
may cast significant doubt on the Group's ability to continue as a going
concern.
The Board considers the likelihood of such a severe downside scenario
materialising to be low and recognises the range of mitigating actions
available to the Group to prevent such a breach occurring, and the positive
and long-standing relationship which the Group has with its banking partner
HSBC. The Directors therefore have a reasonable expectation that the Group has
adequate resources to continue in operational existence and meet its
liabilities as they fall due over the period of at least 12 months from the
date of approving these financial statements. Accordingly, the financial
statements have been prepared under the going concern basis of accounting.
Principal risks and uncertainties
The Board continually reviews and monitors the risks and uncertainties which
could have a material effect on the Group's results. A summary of the
principal risks is set out below:
Risk Impact
Strategy and business change Failure to identify and successfully execute appropriate strategies to develop
and grow the brand over the medium to long term could be affected by a range
of factors including changes in competition or products, consumer behaviours
and trends, inadequate change management or leadership. This could slow or
limit the growth of the business, distract from and / or damage the overall
customer proposition, incur additional cost or serve to demotivate colleagues
if not led effectively.
Competition, Failure to adapt to changing consumer needs given external macro factors, and
market and to maintain a compelling customer offer compared to competitors could limit or
macroeconomic reduce profitability and opportunities for growth. Macroeconomic factors which
reduce consumer confidence and / or disposable incomes or create additional
cost pressures could impact revenue growth and profit generation.
Brand and customer Reputational damage leading to loss of consumer confidence in ProCook products
or services, which could be caused by a variety of factors including customer
data loss, product quality, health and safety, level of direct marketing
activity, ethical or sustainability concerns, poor customer service or,
regulatory non-compliance.
Climate change Any failure to implement our ESG ambitions within acceptable timescales and
deliver on stakeholder expectations to reduce the environmental impact of our
business and progress towards our net zero targets. These include actions
linked to our ESG strategy and managing the potential consequences of climate
change on our business. Failure to meet the expectations of our customers,
colleagues, investors and other stakeholders, may impact our brand reputation
and future trading performance.
Supply chain Failure to source products effectively and efficiently, potentially relating
to geopolitics surrounding Far East manufacturing reliance, or to ensure
inventory is maintained in the right volumes at the right locations could
adversely impact our short and medium term operational and financial
performance.
Technology platforms, data loss and cyber security Failure to develop and maintain appropriate technology to support operations,
or the loss of key platforms or data due to cyber-attacks or other failures
without an adequate response, could lead to reputational damage, fines or
higher costs, or a loss of stakeholder and customer confidence in our Brand.
Marketing effectiveness Any failure to attract new customers and retain existing customers in a
cost-effective and engaging way could impact short term performance and medium
strategic growth ambitions.
People and culture Any failure to attract, retain and develop the right talent, skills and
capabilities or to successfully protect and develop our culture could impact
operational activities including customer service and our longer-term
strategic objectives.
Finance and Any failure to effectively manage our financial affairs and ensure an
treasury appropriate financial position and sufficient liquidity for future growth, or
any failure in financial planning, financial reporting, compliance with tax
legislation, or the maintenance of a robust financial control environment,
could impact our ability to deliver our strategic objectives, as well as have
an adverse impact on business viability.
Regulatory and Any failure to comply with legal and regulatory obligations, or our wider
compliance corporate responsibility could result in financial or legal exposures or
damage our reputation with our Stakeholders as a responsible brand.
Dan Walden
Chief Financial Officer
25 June 2024
Consolidated Income Statement
For the 52 weeks to 31 March 2024
52 weeks ended 31 March 2024 52 weeks ended 2 April 2023 (restated)(1)
£'000s Note Underlying Non-underlying Reported Underlying Non-underlying Reported
Revenue 1 62,585 - 62,585 62,340 - 62,340
Cost of sales (21,486) - (21,486) (23,994) - (23,994)
Gross profit 41,099 - 41,099 38,346 - 38,346
Operating expenses 2 (39,025) (145) (39,170) (37,645) (6,159) (43,804)
Other income 49 - 49 51 - 51
Operating profit/(loss) 2,123 (145) 1,978 752 (6,159) (5,407)
Finance expense (1,230) (132) (1,362) (861) (204) (1,065)
Other gains/(losses) 114 - 114 (55) - (55)
Profit/(loss) before tax 1,007 (277) 730 (164) (6,363) (6,527)
Tax (expense)/credit 5 (165) 45 (120) 11 424 435
Profit/(loss) for the period 842 (232) 610 (153) (5,939) (6,092)
Total comprehensive income/(loss) 842 (232) 610 (153) (5,939) (6,092)
Earnings per ordinary share - basic 7 0.77p 0.56p (0.14)p (5.59)p
Earnings per ordinary share - diluted 7 0.73p 0.53p (0.14)p (5.59)p
(1) The tax (expense)/credit and earnings per share, in the financial year
ending 2 April 2023 has been restated in relation to deferred tax on share
based payments. Further information relating to this tax restatement is set
out in note 5, and the impact on earnings per share is set out in note 7.
Consolidated Statement of Financial Position
As at 31 March 2024
£'000s Note As at 31 March 2024 As at 2 April 2023 As at 3 April 2022
(restated)(1) (restated)(1)
Assets
Non-current assets
Intangible assets 8 104 235 363
Property, plant, and equipment 9 8,232 7,781 5,801
Right-of-use assets 10 20,522 25,450 20,985
Deferred tax asset 5 655 894 702
Total non-current assets 29,513 34,360 27,851
Current assets
Inventories 9,716 11,515 16,759
Trade and other receivables 3,742 2,240 1,975
Current tax asset 145 611 271
Cash and cash equivalents 2,005 1,962 3,782
Total current assets 15,608 16,328 22,787
Total assets 45,121 50,688 50,638
Liabilities
Current liabilities
Trade and other payables 10,431 7,276 8,278
Lease liabilities 10 3,347 2,836 2,844
Provisions 253 200 173
Borrowings 2,754 4,716 5,540
Total current liabilities 16,785 15,028 16,835
Non-current liabilities
Trade and other payables 48 954 816
Lease liabilities 10 19,295 26,430 19,605
Provisions 565 612 444
Total non-current liabilities 19,908 27,996 20,865
Total liabilities 36,693 43,024 37,700
Net Assets 8,428 7,664 12,938
Equity and reserves attributable to Shareholders of ProCook Group plc
Share capital 1,090 1,090 1,090
Share option reserve 4,099 6,891 5,801
Share Premium 1 1 1
Retained earnings 3,238 (318) 6,046
Total equity and reserves 8,428 7,664 12,938
(1) The deferred tax asset in the financial years ending 3 April 2022 and 2
April 2023 has been restated in relation to deferred tax on share based
payments. Further information relating to this restatement is set out in note
5, and the impact on earnings per share is set out in note 7.
Consolidated statement of cash flows
For the 52 weeks to 31 March 2024
52 weeks ended 52 weeks ended
£'000s Note 31 March 2024 2 April 2023
Cash flows from operating activities
Profit/(Loss) before tax 730 (6,527)
Adjustments for:
Depreciation of property, plant, and equipment 9 936 967
Amortisation of Intangible assets 8 131 128
Loss on disposal of property, plant, and equipment 2 457 37
Gain on disposal of leases 2 (2,301) (75)
Depreciation of right-of-use assets 10 3,945 4,034
Impairment of non-current assets 2 - 4,405
Unrealised FX (gains)/losses (411) 518
Share Based Payments 514 1,090
Cash outlay on exercise of share options (360) -
Finance expense 1,362 1,065
Operating cash flows before movements in working capital 5,003 5,642
Decrease/(Increase) in inventories 1,799 5,244
Increase in trade and other receivables (1,459) (413)
Increase/(Decrease) in trade and other payables 3,255 (1,233)
Increase in provisions 5 195
Income taxes paid (9) (97)
Net cash flows from operating activities 8,594 9,338
Investing activities
Purchase of property, plant, and equipment 9 (1,844) (4,928)
Lease inception costs (71) (460)
Lease incentives received 60 204
Net cash used in investing activities (1,855) (5,184)
Financing activities
Interest paid on borrowings (367) (294)
Interest paid on lease liabilities 10 (982) (771)
Proceeds from borrowings 23,974 18,689
Repayment of borrowings (25,923) (19,701)
Lease principal payments 10 (3,398) (3,625)
Dividends paid - (272)
Net cash (used in) financing activities (6,696) (5,974)
Net movement in cash and cash equivalents 43 (1,820)
Cash and cash equivalents at beginning of the period 1,962 3,782
Cash and cash equivalents at end of period 2,005 1,962
Consolidated statement of changes in equity
For the 52 weeks to 31 March 2024
£'000s Note Share Share Premium Share Option Reserve Retained earnings Total
capital equity
As at 3 April 2022 (restated)(1) 1,090 1 5,801 6,046 12,938
Total comprehensive loss for the period (restated) - - - (6,092) (6,092)
Employee Share Based Payment Awards - - 1,090 - 1,090
Ordinary dividends paid 6 - - - (272) (272)
As at 2 April 2023 (restated)(1) 1,090 1 6,891 (318) 7,664
Total comprehensive profit for the period - - - 610 610
Employee Share Based Payment Awards - - 514 - 514
Exercise of share options - - (3,306) 2,946 (360)
As at 31 March 2024 1,090 1 4,099 3,238 8,428
(1) The deferred tax asset in the financial years ending 3 April 2022 and 2
April 2023 has been restated in relation to deferred tax on share based
payments, with resulting decreases to retained earnings in each period.
Further information relating to this restatement is set out in note 5, and the
impact on earnings per share is set out in note 7.
Notes to the consolidated financial statements
For the 52 weeks ending 31 March 2024
General Information
The financial information set out herein does not constitute the Company's
statutory financial statements for the periods ended 31 March 2024 or 2 April
2023, but is derived from those financial statements. The financial statements
were approved by the Board of directors on 25 June 2024. Statutory financial
statements for 2024 will be delivered to the Registrar of Companies in due
course.
The auditors have reported on those financial statements; their reports were
(i) unqualified, (ii) contained a reference to the material uncertainty in
respect of going concern to which the auditor drew attention by way of
emphasis without modifying their report, (iii) did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006.
Basis of preparation
These consolidated financial statements have been prepared in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006, UK-adopted IFRS as issued by the International Accounting
Standards Board. The consolidated Group financial statements are presented in
Pounds Sterling, being the Group's functional currency, and generally rounded
to the nearest thousand. They are prepared on the historical cost basis,
unless otherwise stated.
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and Group have adequate resources to
continue in operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in preparing the
financial statements. Further information on going concern is set out in the
CFO's Review.
1. Revenue
Group revenue is not reliant on any single major customer or group of
customers. Management considers revenue is derived from one business stream
being the retail of kitchenware and related products and services.
Customers interact and shop with the Group across multiple touchpoints and
their journey often involves more than one channel. The Chief Operating
Decision-Maker is the Board of Directors of ProCook Group plc. The Board
reviews internal management reports on a frequent basis, and in line with
internal reporting, the channel reporting below indicates where customers
complete their final purchase transaction.
During the financial year ended 31 March 2024, all of the Group's operations
were carried out in the UK, the Group ceased its trading operations in the
European Union during the financial year ended 2 April 2023. All revenue is
from external customers.
52 weeks ended 52 weeks ended
£'000 31 March 2024 2 April 2023
United Kingdom 62,585 61,550
European Union - 790
Total revenue 62,585 62,340
2. Operating expenses
Operating profit/(loss) for the periods is stated after charging:
52 weeks ended 52 weeks ended
£'000 31 March 2024 2 April 2023
Depreciation of tangible fixed assets 936 967
Amortisation of intangible assets 131 128
Depreciation of right-of-use assets 3,945 4,034
Impairment of tangible fixed assets - 1,944
Impairment of right-of-use assets - 2,461
Variable lease payments 637 785
Gain on disposal of leases (2,301) (75)
Loss on disposal of property, plant, and equipment 457 37
3. Non-underlying items
Consistent with prior years, expenses in respect of employee share-based
awards which relate to the IPO event in FY22, which itself is non-recurring,
have been presented as non-underlying costs. These expenses are expected to
continue into FY25 up to the third anniversary of the IPO in November 2024.
During FY24, the Group completed the final elements of consolidation of
warehouse operations into its new Store Support Centre ("SSC"), with
subsequent assignment of the two pre-existing warehouse leases to new tenants
later in the year. Operating and finance expenses associated with the costs of
transitioning into the new site, dual occupancy of the new or previous sites,
and exit costs associated with the disposal of the two previous sites of
£1.2m in FY24 (FY23: £0.5m) have been presented as non-underlying costs as
these items are non-recurring, dual-running and transition-related.
Non-underlying finance expenses relate to interest on lease liabilities
relating to the disused warehouses.
Assignment of the leases, resulting in derecognition of the related
right-of-use assets and liabilities and disposal of related fixed assets,
resulted in gains of £1.9m, including the reversal of £1.1m of prior year
impairment provisions against these two sites which were treated as
non-underlying costs. The prior year impairment assessment considered a number
of estimation factors at that time, including the length of time each property
would remain vacant. The reversal in current year reflects the leases being
assigned to new tenants in shorter timescales than those previously assumed.
During the year, there was a significant amount of change in the Group's
senior management team, following the announcement that the Group's Founder
Daniel O'Neill would step down from his role as CEO and transition to a
Non-Executive Director role. The one-off costs associated with recruiting a
new CEO and a subsequent restructuring of the senior management team totalling
£0.7m have been treated as non-underlying given their material and one-off
nature. Management considers that separate disclosure of this restructuring
cost as non-underlying provides additional useful information to the users of
the financial statements around the day to day trading performance of the
Group.
The Group carried out an impairment assessment as at 31 March 2024 which did
not result in any expense (or reversal of previous expense) to the
Consolidated Income Statement. (2023: £3.3m in respect of Retail CGU
impairment and £1.1m in respect of the Group's two pre-existing distribution
/ head office sites).
52 weeks ended 52 weeks ended
£'000 31 March 2024 2 April 2023
SSC transition-related costs 1,213 545
Net profit on reassignment of leases (1,867) -
Senior management restructuring costs 718 -
Share based payments 81 1,209
Impairment expense - 4,405
Non-underlying operating expenses 145 6,159
Non-underlying finance expense 132 204
Non-underlying loss before tax 277 6,363
4. Segmental reporting
The Chief Operating Decision Maker (CODM) is the Board of Directors and
segmental reporting analysis is presented based on the Group's internal
reporting to the Board. At 31 March 2024, the Group had two operating
segments, being Ecommerce and Retail. Central costs are reported separately to
the Board. Whilst central costs are not considered to be an operating segment,
it has been included below to aid reconciliation with operating profit as
presented in the Consolidated Income Statement.
52 weeks ended 52 weeks ended
£'000 31 March 2024 2 April 2023
Revenue
Ecommerce 22,695 25,653
Retail 36,687
39,890
Total revenue 62,340
62,585
Operating profit/(loss)
Ecommerce 4,588
5,325
Retail 5,319
8,220
Central costs (11,422) (9,155)
Non-underlying operating costs (145) (6,159)
Operating profit/(loss) 1,978 (5,407)
Finance costs (1,230) (861)
Other (losses)/gains 114 (55)
Non-underlying finance costs (132) (204)
(Loss)/profit before tax 730 (6,527)
5. Tax expense
The tax expense for the periods presented differ from the standard rate of UK
corporate income tax applicable in the financial year. The differences are
explained below:
52 weeks ended 52 weeks ended
£'000 31 March 2024 2 April 2023
(restated)
Current taxation
Corporate income tax charge for the period - -
Adjustments in respect of previous years (119) (243)
(119) (243)
Deferred tax
Origination and reversal of temporary differences 336 (479)
Impact of change in tax rate - -
Adjustments in respect of prior periods (97) 287
Total tax (credit)/expense 120 (435)
The tax charge reconciles with the standard rate of UK corporate income tax as
follows:
52 weeks ended 52 weeks ended
£'000 31 March 2024 2 April 2023
(restated)
Profit on ordinary activities before tax 730 (6,527)
UK Corporate income tax at standard rate of 25% (2023: 19%) 183 (1,240)
Factors effecting the charge in the period:
Tax effect of expenses that are not deductible for tax purposes 153 (20)
Adjustments in respect of prior years (119) (243)
Other permanent differences (128) -
Fixed asset differences 9 -
Adjustments in respect of prior periods (deferred tax) (97) 287
Adjustments to brought forward values (13) -
Remeasurement of deferred tax 132 781
Total taxation expense/(credit) 120 (435)
The taxation expense for the period as a percentage of underlying profit
before tax (the effective tax rate) was 16.4% (2023: 6.7%).
The standard rate of UK corporate income tax was 25% for the 52 weeks ended 31
March 2024 (2 April 2023: 19%). Deferred tax balances reflect future
corporation tax rates of 25%.
The deferred tax asset has arisen due to accelerated capital allowances on
items of property, plant and equipment, the timing of future vesting dates in
respect of share-based payments and carried forward losses from the previous
financial year. The amounts have been presented on a net basis to follow the
way in which they will be recouped by the Group.
The deferred tax assets recognised as at 3 April 2022 and 2 April 2023 have
been restated. Both financial years showed an overstated deferred tax asset
due to the deferred tax on future-vesting share based payments having
previously been recognised based on the fair value of the options granted
instead of the available future tax relief (the available tax relief being
based on the difference between exercise price and market value as at the
reporting date, accruing over the time period from grant until vest date).
Restated brought forward movements:
£'000 Short-term timing differences Accelerated capital allowances Share based payments Carried forward losses Total
Deferred tax asset as at 3 April 2022 (as reported) - (479) 1,654 - 1175
Remeasurement of deferred tax on share options - - (473) - (473)
Deferred tax asset as at 3 April 2022 (restated) - (479) 1,181 - 702
(Debit)/Credit to profit and loss - (601) (838) 1,631 192
Deferred tax asset as at 2 April 2023 (restated) - (1,080) 343 1,631 894
Movement in the year:
£'000 Short-term timing differences Accelerated capital allowances Share based payments Carried forward losses Total
Deferred tax asset as at 2 April 2023 (restated) - (1,080) 343 1,631 894
(Debit)/Credit to profit and loss 112 (516) (132) 297 (239)
Deferred tax asset at 31 March 2024 112 (1,596) 211 1,928 655
Carried forward tax losses arise from the losses incurred during the previous
financial year. The recognition of the deferred tax asset in relation to the
carried forward losses is judged to be appropriate given the Group's
projections of sufficient future taxable profits against which such deferred
tax assets could be offset.
6. Dividends
52 weeks ended Dividend per 52 weeks ended Dividend per
£'000 31 March 2024 share (pence) 2 April 2023 share (pence)
Final dividend for the period ended 3 April 2022 - - 272 0.9 pence
Interim dividend for the period ended 2 April 2023 - - - -
The FY22 final dividend of £1.0m was declared representing 0.9 pence per
share, however £0.7m of this dividend was waived by certain shareholders. The
final dividend was paid to the shareholders on the register at close of
business on 2 September 2022. No dividends were declared or paid in the 52
weeks to 31 March 2024.
7. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period
attributable to equity holders of the Group by the weighted average number of
ordinary shares in issue.
Diluted earnings per share is calculated by dividing the profit for the period
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares in issue during the period plus the weighted average
number of ordinary shares that would have been issued on the conversion of all
dilutive potential ordinary shares into ordinary shares.
52 weeks ended 52 weeks ended
31 March 2024 2 April 2023
Weighted average number of shares 108,956,624 108,956,624
Impact of share options 7,072,398 9,126,940
Number of shares for diluted earnings per share 116,029,022 118,083,564
Restated(3)
52 weeks ended 52 weeks ended 52 weeks ended 52 weeks ended
31 March 2024 31 March 2024 2 April 2023 2 April 2023
£'000 Underlying(1) Reported Underlying(1) Reported
Profit/(loss) for the period 842 610 (153) (6,092)
Earnings per ordinary share - basic 0.77p 0.56p (0.14)p (5.59)p
Earnings per ordinary share - diluted(2) 0.73p 0.53p (0.14)p (5.59)p
(1) Underlying earnings per ordinary share is a non-IFRS measure.
(2) In the 52 weeks ended 2 April 2023 the impact of share options was
anti-dilutive.
(3) The deferred tax asset in the financial years ending 3 April 2022 and 2
April 2023 has been restated in relation to share based payments. Further
information relating to this restatement is set out in note 11.
8. Intangible assets
£'000 Software Assets under construction Total
Cost
At 3 April 2022 257 158 415
Additions - - -
Transfers out of Assets under construction 158 (158) -
At 2 April 2023 415 - 415
Additions - - -
31 March 2024 415 - 415
Accumulated amortisation
At 3 April 2022 52 - 52
Charge for the period 128 - 128
At 2 April 2023 180 - 180
Charge for the period 131 - 131
31 March 2024 311 - 311
Net book value
At 3 April 2022 205 158 363
At 2 April 2023 235 - 235
31 March 2024 104 - 104
Amortisation was recognised in the Consolidated Statement of Income within
operating expenses throughout the period.
9. Property, plant and equipment
£'000 Land and Buildings Plant and Machinery Fixtures and Fittings Motor Vehicles Assets under Construction Total
Cost
At 3 April 2022 12 487 8,462 29 425 9,415
Additions - - 1,112 - 3,816 4,928
Transfers 175 21 2,418 - (2,614) -
Disposals - - (241) - - (241)
At 2 April 2023 187 508 11,751 29 1,627 14,102
Additions - 153 1,327 - 364 1,844
Transfers - - 1,532 - (1,532) -
Disposals - (296) (615) - (35) (946)
31 March 2024 187 365 13,995 29 424 15,000
Accumulated depreciation and impairment
At 3 April 2022 3 63 3,541 7 - 3,614
Charge for the period 3 34 925 5 - 967
Disposals - - (204) - - (204)
Impairment 1 101 1,838 4 - 1,944
At 2 April 2023 7 198 6,100 16 - 6,321
Impairment reallocation(1) 132 (10) (121) (1) - -
Charge for the period - 29 903 4 - 936
Disposals - (130) (359) - - (489)
31 March 2024 139 87 6,523 19 - 6,768
Net book value
At 3 April 2022 9 424 4,921 22 425 5,801
At 2 April 2023 180 310 5,651 13 1,627 7,781
At 31 March 2024 48 278 7,472 10 424 8,232
(1) A detailed review of prior year impairment allocation to individual assets
was performed during the period, resulting in a revised allocation of the
charge across the different asset classes, As the overall effect of the
reallocation is immaterial to the financial statements, retrospective
application has not been required.
Assets under construction includes retail store equipment and fixtures
acquired but not yet in use.
Impairment tests have been carried out where appropriate, with no impairment
charges recognised in the 52 weeks ended 31 March 2024 (FY23: £1.9m).
Depreciation was recognised in the Consolidated Income Statement within
operating expenses throughout the period.
10. Leased assets
Right-of-use assets included in the Consolidated Statement of Financial
Position were as follows:
£'000 Leasehold Property Motor Vehicles Plant and Equipment Total
Cost
At 3 April 2022 26,225 236 68 26,529
Additions 16,336 - - 16,336
Re-measurement(1) (4,371) - - (4,371)
Disposals (1,706) (54) (29) (1,789)
At 2 April 2023 36,484 182 39 36,705
Additions 2,712 - 53 2,765
Re-measurement(1) 1,021 - - 1,021
Disposals (8,876) (57) - (8,933)
At 31 March 2024 31,342 125 92 31,558
Accumulated depreciation and impairments
At 3 April 2022 5,430 87 27 5,544
Charge for the period 3,959 64 11 4,034
Disposals (701) (54) (29) (784)
Impairment 2,461 - - 2,461
At 2 April 2023 11,149 97 9 11,255
Charge for the period 3,874 54 17 3,945
Disposals (4,107) (57) - (4,164)
Impairment - - - -
At 31 March 2024 10,916 94 26 11,036
Net Book Value
At 3 April 2022 20,795 149 41 20,985
At 2 April 2023 25,335 85 30 25,450
At 31 March 2024 20,425 31 66 20,522
For impairment testing purposes, the Group has determined that each store is a
separate CGU. Each CGU is tested for impairment at the balance sheet date if
any indicators of impairment exist.
The value in use of each CGU is calculated based on the Group's latest budget
and forecast cash flows, covering a three-year period, which have regard to
historic performance and knowledge of the current market, together with the
Group's views on the future achievable growth. Cash flows beyond this
three-year period are extrapolated using longer-term growth rates based on
management's future expectations. These have been prepared utilising both
historical experience as well as a forward-looking estimates with respect to
trading conditions and performance, together with allocations of central
overheads and an estimate of Ecommerce contribution attributable to customers
first acquired in retail stores, reflecting the omnichannel nature of our
business, based on historical sales data.
The key assumptions in the value in use calculations are the growth rates of
sales and gross profit margins, changes in the operating cost base, long-term
growth rates and the risk-adjusted pre-tax discount rate.
The pre-tax discount rates are derived from the Group's weighted average cost
of capital, which has been calculated using the capital asset pricing model,
the inputs of which include a country risk-free rate, equity risk premium,
Group size premium and a risk adjustment (beta) along with the cost of debt.
The resulting pre-tax discount rate used was 13.4% (FY23: 12.8%). Impairment
tests have been carried out where appropriate, with no impairment charges
recognised in the 52 weeks ended 31 March 2024 (2023: total impairment charge
of £4.4m, being £2.5m relating to Right-of-use assets and £1.9m relating to
Property, plant, and equipment.)
Lease liabilities included in the Consolidated Statement of Financial Position
were as follows:
£'000 Leasehold Property Motor Vehicles Plant and Equipment Total
At 3 April 2022 22,269 141 39 22,449
Additions 15,893 - - 15,893
Remeasurement(1) (4,371) - - (4,371)
Interest expense 768 2 1 771
Lease payments (4,318) (67) (11) (4,396)
Disposals(2) (1,080) - - (1,080)
At 2 April 2023 29,161 76 29 29,266
Additions 2,665 - 53 2,718
Remeasurement(1) 1,126 - - 1,126
Interest expense 978 1 3 982
Lease payments (4,311) (48) (21) (4,380)
Disposals(2) (7,070) - - (7,070)
At 31 March 2024 22,549 29 64 22,642
(1) Remeasurements have arisen where rentals have been subject to indexation
or rent reviews, or where store lease rental terms and lease expiry dates have
been renegotiated.
(2) Disposals in the year predominantly related to the assignment of leases
relating to two distribution centres which were surplus to requirements after
the transition to the new Store Support Centre at the beginning of FY24. In
the prior year impairment charges of £0.9m were recognised against these
leases based on a Value In Use assessment which considered a number of
estimation factors at that time, including the length of time each property
would remain vacant.
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