REG - ProCook Group PLC - Interim results
16/12/2021 07:00
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RNS Number : 8162V ProCook Group PLC 16 December 2021
16 December 2021
ProCook Group plc
Interim results for the 28 weeks ended 17 October 2021
Strong revenue growth, gaining market share and making good strategic progress
ProCook Group plc ("ProCook" or "the Group"), the UK's leading
direct-to-consumer specialist kitchenware brand, today announces its interim
results for the first half of FY22 (the 28 weeks ended 17 October 2021).
£m H1 FY22(1) H1 FY21 YoY (2)
Revenue 32.1 23.9 +34.4%
Gross Profit 21.7 16.2 +34.4%
Gross margin % 67.8% 67.8% -
Underlying operating profit 3.3 4.5 (26.9%)
Underlying operating profit % 10.4% 19.0%
Underlying Profit before tax (PBT) 3.6 4.0 (11.0%)
Net cash / (debt) 0.9 5.5
Highlights
· Strong revenue growth of +34.4% continues in line with
expectations (+70.8% Yo2Y and +142.5% Yo2Y LFL(3)). Channel performance in
part reflecting fewer trading restrictions in Retail compared to the prior
year:
o Very strong growth on ProCook.co.uk direct website against tough
comparatives +23.5% YoY and +309.7% Yo2Y. Total Ecommerce channel -3.7% YoY
due to the strategic exit of Amazon UK
o Retail performed exceptionally well with revenue of £16.9m, +108.4% YoY,
and +77.7% on a Yo2Y LFL basis, since reopening in mid-April
· Significantly outperformed the UK kitchenware market (by
+41.9%pts); consistently taking market share(4)
· Growth in active customers of +42.5% YoY. Attracted 319,000 new
customers
· Repeat rate (within 12 months) increasing, with Retail +21.7%
(+4.3%pts YoY) and Ecommerce(5) +27.8% (+4.2%pts YoY)
· Opened six new destination stores in line with plan, and a London
cookery school. As planned, we have closed two high street stores. New stores
at Westfield London (opens today) and Westfield Stratford City (opens
Saturday)
· Strong inventory position as planned, with inventory on hand of
£10.1m, +143.7% YoY, well positioned for peak period despite ongoing supply
chain challenges, with good availability for customers
· Underlying PBT performance in line with expectations, reflecting
more normal levels of digital marketing spend (lower costs last year during
Covid-19 restrictions), retail stores reopening, and investment for continued
growth
· Successful IPO with ProCook Group Plc admitted to the premium
segment of the London Stock Exchange on 12 November 2021
Daniel O'Neill, CEO & Founder, commented:
"In our maiden set of results as a listed business, we are pleased with our
strong performance in the first half. We have made good strategic progress as
we continue to share our passion for cooking; attracting more customers to
experience our brand and our extensive kitchenware offer.
"I am incredibly grateful to all of our People who have shown such commitment
to serving our customers and the enthusiasm they bring to building our brand,
despite such a difficult backdrop.
"The retail markets and wider markets are experiencing continued challenges
and uncertainties. Whilst not immune to these, our direct-to-consumer business
model provides a strong foundation. We believe we are well positioned to
continue to disrupt the market with our beautiful and great value product
ranges, accompanied by our excellent service proposition, and we are excited
by the many opportunities ahead of us."
(1 )Underlying operating profit and PBT is presented before exceptional costs
in H1 FY22 of £1.4m incurred in relation to the IPO.
(2) YoY reflects year on year performance between H1 FY22 and H1 FY21
(3) Yo2Y LFL reflects:
- Retail Yo2Y LFL - Continuing Retail stores which were
trading for at least one full financial year prior to 29 March 2020 inclusive
of any stores which may have moved location or increased/ decreased footprint
within a given retail centre
- Ecommerce LFL / Yo2Y LFL- Continuing ecommerce websites
and marketplaces that have been trading for at least one full financial year
prior to 4 April 2021 / 29 March 2020, excluding the UK Marketplace which
ceased trading on 28th June 2021
(4) UK Kitchenware market growth (excluding ProCook) calculated using weekly
GfK data and management estimates.
(5) Ecommerce repeat rates reflects repeat purchase from procook.co.uk
acquired customers, excluding marketplace customers
(6) Latest analyst expectations include total revenue growth of +33.5% to
£71.3m, and adjusted PBT of £10.0m
(7) Revenue growth in the eight weeks to 12 December 2021 reflects total
business including retail sales and ecommerce sales orders despatched, but not
yet adjusted for despatch to delivery timing differences year on year
(expected to be minimal)
Analyst Presentation
There will be a live presentation for analysts and institutional investors
this morning at 9.30am, hosted via a webinar. For details, please contact
procook@mhpc.com.
For further information please contact:
ProCook Group plc investor.relations@procook.co.uk
Daniel O'Neill, Chief Executive Officer & Founder
Dan Walden, Chief Financial Officer
MHP Communications (Financial PR Adviser) procook@mhpc.com
Katie Hunt Tel: +44 (0)7709 496 125
Simon
Hockridge
Catherine Chapman
Next scheduled event
ProCook expects to release its third quarter trading update in January 2022.
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
(http://www.procook.co.uk) , and via over 50 own-brand retail stores, located
across the UK. ProCook products are also available in Germany and France with
delivery options extending to Belgium, Austria, Luxembourg, the Netherlands,
and Poland.
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 650 colleagues, and operating
from its Head Office in Gloucester.
ProCook has been listed on the London Stock Exchange since November 2021
(PROC.L) and has a current market capitalisation of approximately £150m.
CHIEF EXECUTIVE OFFICER'S REPORT
It gives me great pleasure to report on our progress for the first half of our
financial year, following our successful IPO and admission to the premium
segment of the London Stock Exchange a little over a month ago.
I would like to take the opportunity to thank all of our fantastic people, who
have delivered such outstanding results over recent years. Their commitment,
skill and ambition are both inspiring and humbling. I'd also like to extend my
gratitude to our suppliers and partners, many of whom we have been working
with for a long time, who have gone above and beyond to support ProCook,
particularly during the recent challenges brought by the pandemic.
In the first half, we were very pleased to be able to welcome our customers
back into our stores from mid-April as daily life began to return to something
more normal. The recent outbreak of the new covid-19 variant has highlighted
just how finely balanced this recovery is. We are committed to taking sensible
and cautious measures to help protect our people and customers and keep
everyone as safe as possible whilst this pandemic continues.
Finally, I am delighted to welcome our new Chairman, Greg Hodder, and our new
Non-Executive Directors, David Stead, Gillian Davies, and Luke Kingsnorth, to
the ProCook Group. I am looking forward to working with them all over the
years ahead.
Continued momentum and strong trading performance
I am thrilled with our continued momentum and strong trading performance in
the first half, and the increasing reach of the ProCook brand.
The UK kitchenware market(1) contracted by -2.8% in the first half, following
a strong uplift last year as customers spent more time at home, enjoying more
home-cooked meals and developing their hobbies. Impressively, ProCook has
outperformed the market by +41.9 percentage points, consistently taking market
share throughout the year to date.
We have achieved +34.4% revenue growth in the first half, building on the
+27.1% achieved in the same period last year. On a two-year basis we have
achieved +70.8% total growth, and on a two-year like for like basis, growth of
+142.5%.
£m FY22 H1 H1 FY21 YoY % H1 FY20 Yo2Y %
Revenue 32.1 23.9 34.4% 18.8 70.8%
Ecommerce 15.2 15.8 (3.7%) 5.6 169.9%
Retail 16.9 8.1 108.4% 13.2 28.4%
Ecommerce Mix % 47.3% 66.0% 29.9%
Our Ecommerce channel has performed in line with our expectations,
representing 47.3% of our total revenue in the first half (H1 FY21: 66.0%) as
Retail stores reopened, and customers returned to physical shopping. The
performance of our own direct website has remained very strong, with revenue
growing by +23.5% year on year (against exceptionally tough comparatives), and
+309.7% on a two-year basis. As a whole, our Ecommerce revenue declined by
-3.7% compared to the same period last year driven by the strategic decision
we took to exit the Amazon UK marketplace at the end of June this year.
Revenue from our Retail stores has grown by +108.4% in the first half compared
to the same period last year. Existing stores benefited from less social
distancing restrictions year on year, and approximately 50% more opening time.
Performance in existing stores on a two year like for like basis was +77.7%.
We have opened six new destination stores during the period, and as planned we
have closed two high street stores which did not fit well with our retail
portfolio of high-footfall locations. We open our new Westfield London store
today, with another at Westfield Stratford City opening this Saturday (18(th)
December).
Our profit performance in the first half is in line with our expectations and
reflects the seasonal profile we expect in the first half; profits in the
second half of the year typically being stronger as volumes increase during
peak. We have returned to more normal levels of digital marketing spend this
year, after particularly low spend last year whilst online demand was
especially high during lockdown periods. We have continued to invest for
growth, in new brand marketing activities and in new people to support the
ongoing development of the business.
Further detail on our financial performance in the first half is set out in
the Financial Review.
(1) Kitchenware market (excluding ProCook) calculated using GfK data and
management estimates. Excludes small kitchen electricals.
A clear strategy for sustainable growth
Our mission to become the customers' first choice for Kitchenware is supported
by a clear and straightforward strategy for growth building on our strengths
and well-established foundations. We have made strong progress with our two
strategic priorities during the first half, and in developing our customer
offer.
Priority 1: Attracting more customers to our brand
We have accelerated growth in new customer acquisition, with 319,000 new
customers acquired in H1 (+72% YoY). Of these, 106,000 have been acquired
through our direct Ecommerce channels (+12.5% YoY, +304.8% Yo2Y) and 213,000
through our Retail stores (+139.9% YoY, +51.2% Yo2Y).
Our active customer database is now up to 733,000 at the end of the first half
which is 42.5% higher year on year and our total customer database is now
exceeds 2.8 million customers.
Priority 2 - Increasing the life time value of our customers
We very closely monitor the two key components of life time value; repeat
rates and average order values, and the trends are encouraging.
In the first half our Ecommerce repeat purchase rate within 12 months
increased to 27.8% (+4.2 percentage points year on year) and in Retail, we
achieved an increase to 21.7% (+4.3 percentage points year on year).
Average transaction values also continued on an upward trajectory with
Ecommerce increasing to £65 excluding VAT (+11.1% year on year) supported by
the higher mix of customers transacting on our own direct website, and in
retail it increased to £35 excluding VAT (+7.6% year on year).
Developing our customer offer in H1
In the UK we have continued our focus on Ecommerce capabilities, deploying a
number of platform improvements to re-vamp our check-out, re-design our
product landing pages, introduce a new navigation header bar, and to increase
payment options adding in Apple pay and Google pay. We are committed to
continually developing our capabilities in this area.
We have opened six new stores in retail destination locations where footfall
remains strong, and where we anticipate better performance over the years
ahead. We are pleased with the performance of these stores since they have
opened.
We have also trialled new customer acquisition channels including paid social
activities and brand campaigns including press, TV, and social media channels
as we seek to attract new customers to experience and benefit from the ProCook
proposition. We are learning fast about what works best and how to move
forward in this area.
We have also developed, opened, and launched our new Cookery School, located
on Tottenham Court Road in central London. We are excited by the potential
this offers us to provide more inspiration and experiences to our customers,
and to showcase our passion for cooking. We anticipate that over time, we will
be able to create our own unique digital content with this fantastic new
facility.
Work has begun on our new fully localised and translated EU website
technology, and we are making good progress here. Furthermore, we have begun
discussions with landlords of outlet centre retail stores in Germany and the
Netherlands in anticipation of opening selected trial stores in the next
financial year. Our distribution operations in the Netherlands are now
functioning well. Our approach to European expansion is expected to be
capital-light, and we are adopting a test-and-learn methodology to ensure we
have the right level of confidence to build our footprint in these markets.
From a product perspective, our design and sourcing work is continually
evolving and improving. We have extended our glassware and tabletop accessory
ranges, introduced a fantastic new range of ProCook coffee, and begun the
design and development of new small kitchen electrical product ranges.
Developing our customer offer in H2
In the second half of the year, we plan to continue the development of the UK
channels, specifically the Ecommerce website, and the UK stores, opening the
two new stores in central London at the Westfield shopping centres. We expect
these stores to support the raising of our brand profile inside the M25 where
we are least well known. We will continue to develop our paid social and brand
marketing capabilities, learning as we go about what works best for ProCook.
We will ramp up our Cookery School operations, enabling more customers to
develop their own skills and passion for cooking.
We also intend to launch our first EU direct website in Germany before the
year end and we will test this carefully before ramping up activity and
extending shortly afterwards to France and the Netherlands. We will continue
the planning for EU trial store openings ready for the next financial year and
will scale up the distribution operations in the Netherlands ready for the
anticipated volume growth in the EU.
We are planning to further extend our table accessories ranges and re-launch
certain kitchen knives ranges over the second half which will see further
improvements in product quality and customer value. We will continue our work
to progress the development of our small kitchen electricals offer with our
suppliers, which is taking longer than we would normally like due to the
current Covid-19 challenges.
Building on our foundations
Over the course of the full year, we are committed to investing in our
infrastructure and foundations to ensure we have an agile and scalable
platform for continued growth, whilst simultaneously reducing our
environmental footprint.
We are committed to making ProCook an even better place to work. We have
recently launched new enhanced employee benefits and a new Save As You Earn
scheme, and we are committed to our membership of the Living Wage Foundation.
We were recently certified as a "Great Place to Work" and we will promote and
celebrate this with our colleagues over the months ahead as we progress our
BCorp application which is well underway.
We are passionate about reducing our environmental footprint and over the
course of the second half we are excited by the opportunity to develop our new
partnership with the Woodland Trust and are in the process of developing our
environmental management framework.
Summary & Outlook
Our performance throughout the first half has been strong, and our market
share gains and our improving customer acquisition and repeat metrics
highlight the growing awareness and appeal of the ProCook proposition.
Our direct-to-consumer business model provides a strong platform for continued
growth as a disruptor in the well-established kitchenware market. With our
strategic ambition to become the customers' first choice for kitchenware, and
a clear plan building on our strengths and well-established foundations, we
are excited about the opportunity ahead of us to attract more customers,
increase life time value, and deliver sustainable growth over the long term.
Performance in the eight weeks to 12 December 2021 has been in line with our
expectations. Customers have responded positively to our Black Friday campaign
and we have recorded our strongest ever week. We continue to significantly
outperform the kitchenware market and with good levels of product
availability, we are well positioned as we progress through the remainder of
our peak trading period.
The consumer and economic backdrop remains uncertain, particularly in light of
the new Omicron variant which has impacted high street footfall in recent
weeks, and the ongoing supply chain disruption and cost inflation.
Nonetheless, we remain focused on delivering the excellent value and service
to our customers that we are becoming well-known for. Absent of any
significant trading impact or disruption from COVID-19, the Board anticipates
full year performance will be in line with expectations.
Daniel O'Neill
Chief Executive Officer
16 December 2021
CHIEF FINANCIAL OFFICER'S REVIEW
Financial Summary
H1 - 28 weeks H1 FY22 H1 FY21 YoY% (FY22 Underlying)
£'m Underlying Adjusting items Reported Reported
Revenue 32.1 - 32.1 23.9 34.4%
Gross profit 21.7 - 21.7 16.2 34.4%
GP% 67.8% - 67.8% 67.8%
Net operating costs (18.4) (1.4) (19.8) (11.6) (58.3%)
Operating profit 3.3 (1.4) 2.0 4.5 (26.9%)
OP % 10.4% - 6.1% 19.0%
Finance expense (0.2) - (0.2) (0.2) (23.4%)
Other gains/ losses 0.5 - 0.5 (0.3) -
Profit before tax 3.6 (1.4) 2.2 4.0 (11.0%)
PBT % 11.2% - 7.0% 16.9%
Adjusted EBITDA 5.3 (1.4) 4.0 6.3 (15.0%)
EBITDA % 16.6% 12.4% 26.3%
Revenue
Total revenue for H1 FY22 (the 28-week period ending 17 October 2021)
increased by 34.4% to £32.1m (H1 FY21: £23.9m).
Ecommerce revenue decreased by -3.7% to £15.2m (H1 FY21: £15.8m) primarily
due to the reopening of the Retail stores, and the strategic decision taken to
exit the UK Amazon marketplace channel at the end of June 2021 which reduced
Ecommerce revenue by -17.1% in the first half. This was partly offset by
significant growth in the ProCook direct website with revenue increasing by
+23.5%. On a two-year like-for-like basis Ecommerce revenue increased by
+249.8%.
Retail revenue increased significantly by +108.4% to £16.9m (H1 FY21:
£8.1m), benefiting from an approximate +50% increase in store opening time
due to Covid-19 restrictions in the comparative period, and net four new
stores (six new stores, two closures) opening in the period. Revenue growth
benefited from an increase in ATV of +7.6% within retail and higher
conversion. On a two-year like-for-like basis, revenue in existing stores in
FY20 grew by +77.7% over the first half.
Gross margin
Gross margin of 67.8% was in line with the same period last year, despite the
impact of increased marine freight costs of approximately £0.6m incurred in
the year to date (impact of -180bps) due to the various macro challenges
around the global supply chain. Underlying product margins remain strong and
stable.
Operating costs
Operating costs for the period were £18.7m (H1 FY21: £13.0m), an increase of
+43.8%. The key drivers of this increase were:
· Ecommerce costs +£1.3m:
- Digital marketing costs +£1.2m returning to more normal levels,
as expected, due to unusually low costs in the comparative period as a result
of exceptional online demand during the Covid-19 restrictions
- Additional distribution and warehousing costs year on year of
£0.6m, partly offset by;
- Lower Amazon UK fees following the strategic exit of that
channel -£0.5m
· Retail costs +£3.5m:
- New stores impact of +£0.9m
- Re-opening and volume impact: +£2.6m, (including non-repeating
prior year government support +£1.1m which supported staff costs and rates
whilst non-essential retail stores were closed)
· Central costs +£1.9m as we continued to invest for growth in
brand marketing (£1.0m) and new people
Underlying operating costs before adjusting items in relation to IPO
exceptional costs, as a percentage of sales were 57.4%, reflecting improved
operational leverage compared to pre-pandemic levels.
Operating Profit
Operating profit generated in the Ecommerce and Retail channels totalled
£7.8m in the first half (H1 FY21: 7.1m) a +10% improvement. Operating margins
reflect the seasonal profile of the business, typically increasing in the
second half as volumes increase during peak trading as fixed overheads are
better absorbed.
£m H1 FY22(1) H1 FY21 YoY %
Ecommerce
Revenue 15.2 15.8 (3.7%)
Operating profit 3.6 5.4 (35.8%)
Operating profit % 23.5% 34.1%
Retail
Revenue 16.9 8.1 108.4%
Operating profit 4.2 1.7 145.7%
Operating profit % 25.1% 21.3%
Underlying central operating costs (4.5) (2.5) (72.4%)
Underlying operating profit 3.3 4.5 (26.9%)
Operating profit % 10.4% 19.0%
Underlying operating profit for the period was £3.3m (H1 FY21: £4.5m), a
decrease of -£1.2m, in line with our expectations for the period.
(1) FY22 Underlying central operating costs and underlying operating profit
presented before adjusting items of £1.4m in H1 in relation to exceptional
IPO costs
Financial items
There was a net gain of £0.3m (H1 FY21: £0.5m loss) in respect of financial
items in the period. This includes interest on lease liabilities of £0.2m (H1
FY21: £0.2m), interest payable and on the Group's trade finance facility
amounting to £24k (H1 FY21: £60k) and an unrealised gain of £0.5m (H1 FY21:
£0.3m loss) on foreign exchange differences on the translation of dollar
denominated assets and liabilities.
Profit before / after Tax
Underlying profit before tax in the period of £3.6m (H1 FY21: £4.0m), was in
line with our expectations for the first half.
Non-recurring IPO advisory costs of £1.4m have been recognised as adjusting
items during the period. After these costs, reported profit before tax was
£2.2m in H1 FY22.
Profit after tax and adjusting IPO cost items, was £1.7m (H1 FY21: £3.2m)
reflecting the projected full year effective tax rate of 22.4% (H1 FY21:
21.9%).
Cash generation and net cash
In the period, the Group's free cash flow was £0.4m (see comment below) after
investment in net working capital of £0.3m (£3.6m increase in inventory,
£0.3m increase in trade and receivables, largely offset by a £3.5m increase
in trade and other payables), and capital expenditure of £1.9m in respect of
the 6 new stores and the cookery school which were opened in the year to date.
Tax paid of £1.4m in the year to date reflects final payment in respect of
FY21 and a shift to quarterly payments to HMRC as a result of moving into the
"large company" status.
£m H1 FY22 H1 FY21
Operating profit (after adjusting items costs) 2.0 4.5
Depreciation and amortisation 2.0 1.7
Net working capital movement (0.3) 1.6
Other non-cash movements 0.1 0.1
Tax paid (1.4) -
Net cash from operations 2.3 8.0
Capital expenditure (1.9) 3.3
Free cash flow(1) 0.4 11.3
Net cash flow (1.6) 4.2
Net bank cash/ (debt) at end of period 0.9 5.5
(1) Free cash flow is defined as net cash from operations after capital
expenditure. This measure is presented before financing cash flows.
The Group has invested in increased stock levels to protect peak trading and
ensure strong levels of availability whilst global supply chain challenges
continue. Inventory on hand (excluding inventory in transit) was £10.1
million as at 17 October 2021 (H1 FY21: £4.1m) up +143.7% year on year. Total
inventory was £13.5m at 17 October 2021 (H1 FY21: £6.5m).
The period end reflects one of the cash low points within the year as the
Group invests in working capital ahead of its peak trading period. As
mentioned above, the Group invested more heavily than is typical to protect
product availability for customers during the ongoing global supply chain
issues. Nonetheless, the Group ended the period with a strong balance sheet
with a net cash position of £0.9m (H1 FY21: net cash of £5.5m). In light of
this position, the directors believe that the Group is well placed to manage
its financing and other business risks have a reasonable expectation that the
Company will have adequate resources to continue for the foreseeable future.
Including IFRS 16 lease liabilities, net debt was £17.5m (H1 FY21: £10.1m).
Banking agreements
The Group has in place a £5.0m committed Trade Finance Facility which expires
in September 2023, with an option to extend to £6.0m if required at any point
during the term. The terms of the facility are consistent with normal practice
and include covenants in respect of leverage (net debt to be no greater than
2.0x EBITDA) and inventory (inventory less trade creditors to be no less than
1.5x facility drawdown). The Group's ability to meet these covenants has been
stress tested as part of going concern considerations, which is described in
more detail in the notes to the interim financial statements below.
Dividends
The Board is committed to a capital application and dividend policy which
targets a dividend pay-out ratio of 20-30% of Profit after tax and returning
any surplus cash to shareholders.
Pre IPO, the Group has paid a final dividend in respect of FY21 to
shareholders totalling £1.9m, of which £1.0m was paid in the first half of
the year, and the remaining £0.9m was paid in November.
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 will review and agree limits
on an annual basis, or more frequently as required. Maintaining this headroom
will provide a level of flexibility sufficient to fund ProCook's working
capital needs as well as set aside an appropriate operating reserve for
unexpected events). The Group's dividend policy targets ordinary dividend
pay-out ratio of 20% to 30% of profit after tax during the financial year to
which the dividend relates. The Board anticipates, again under normal
circumstances, considering 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
Group's full capital and dividend policy is available on our website at
www.procookgroup.co.uk (http://www.procookgroup.co.uk) .
IPO
On the 12 November 2021 the Group successfully completed an Initial Public
Offering and was admitted to the premium segment of the London Stock Exchange.
A Group reorganisation was completed prior to admission, with ProCook Group
plc incorporated as a holding company above the existing trading entities. The
financial statements presented in these interim results are those of the
ProCook Limited Group, prior to insertion of the new holding company which
took place after the balance sheet date.
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
Competition, Failure to adapt to changing consumer needs and to maintain a compelling
market and customer offer compared to competitors could limit or reduce profitability and
macroeconomic factors opportunities for growth. Macroeconomic factors which reduce consumer
confidence and / or disposable incomes could impact revenue growth and profit
generation.
Strategy and business change Failure to design and effectively implement appropriate strategies could slow
or limit the growth of the business, and / or impact the overall customers
proposition - in turn impacting revenue growth and profit generation
Brand damage Reputational damage due to a variety of issues such as data loss, product
quality or safety, and ethical or sustainability issues in the supply chain
could negatively impact the Group.
Climate change Changing customer needs and preferences, impacts on supply chain, increased
compliance burden, and changes to product and packaging requirements could
lead to lower revenues or increased costs.
Supply chain Delays or higher costs in the supply chain could impact product availability
disruption and customer satisfaction, or increased costs. This could lead to lower
revenues and profitability or reduced repeat rates in the future.
IT platforms, data loss and Failing to develop and maintain appropriate technology to support operations,
cyber security or the loss of key platforms or data due to cyber-attacks or other failures,
could lead to reputational damage and fines and a loss of customer confidence
in the Group.
People and culture Failing to attract, retain and motivate high calibre employees, and to
maintain our unique culture could lead to operational challenges and failure
to execute the Group strategy.
Marketing effectiveness Loss of ability to attract new customers and retain existing customers in a
cost-effective way could slow growth, and lead to loss of sales and / or
profits.
Finance and Failure to manage financial matters such as liquidity, foreign exchange,
treasury access to capital and effective financial planning and reporting could impact
growth and efficiency.
Regulatory and Adverse reputational risk and potential higher costs incurred due to failure
compliance to comply with legal and regulatory requirements, accompanied by potential
fines or other penalties, relating to a broad range of regulatory issues such
as health and safety, legal and financial compliance.
Dan Walden
Chief Financial Officer
16 December 2021
INTERIM FINANCIAL INFORMATION OF THE PROCOOK LIMITED GROUP
FOR THE 28 WEEKS ENDED 17 OCTOBER 2021
Consolidated Income Statement (Unaudited)
28 weeks ended 17 October 2021 28 weeks ended 53 weeks ended
£'000s Note Underlying Adjusting Reported 11 October 2020 04 April 2021
Revenue 4 32,076 - 32,076 23,875 53,417
Cost of sales (10,333) - (10,333) (7,693) (16,765)
Gross profit 21,743 - 21,743 16,182 36,652
Operating expenses 5 (18,712) (1,355) (20,067) (13,029) (29,762)
Other income 8 294 - 294 1,395 2,848
Operating Profit 3,325 (1,355) 1,970 4,548 9,738
Finance expense 9 (243) - (243) (197) (406)
Other gains/(losses) 10 514 - 514 (312) (949)
Profit before tax 3,596 (1,355) 2,241 4,039 8,383
Tax expense 11 (683) 181 (502) (884) (1,834)
Profit for the period 2,913 (1,174) 1,739 3,155 6,549
Total comprehensive income 2,913 (1,174) 1,739 3,155 6,549
Earnings per ordinary share (basic) 13 2.91p 1.74p 3.16p 6.50p
Earnings per ordinary share (diluted) 13 2.68p 1.60p 2.99p 6.10p
Consolidated Statement of Financial Position (Unaudited)
As at 17 October 2021
£'000s Note As at 17 October 2021 As at 4 April 2021
Assets
Non-current assets
Property, plant, and equipment 14 5,112 3,846
Right-of-use assets 15 16,564 15,137
Intangible assets 16 155 67
Total non-current assets 21,831 19,050
Current assets
Inventories 18 13,545 9,948
Trade and other receivables 19 2,145 1,888
Corporation tax 11 577 -
Cash and cash equivalents 20 4,287 5,879
Total current assets 20,554 17,715
Total assets 42,385 36,765
Liabilities
Current liabilities
Trade and other payables 21 9,629 6,612
Lease liabilities 15 2,672 2,673
Borrowings 22 3,419 2,803
Corporation tax payable 11 - 413
Total current liabilities 15,720 12,501
Non-current liabilities
Lease liabilities 15 15,701 14,073
Other provisions 23 160 160
Deferred tax liabilities 11 63 29
Total non-current liabilities 15,924 14,262
Total liabilities 31,644 26,763
NET ASSETS 10,741 10,002
Issued capital and reserves attributable to owners of ProCook Limited
Share capital 26 0 0
Retained earnings 10,741 10,002
TOTAL EQUITY 10,741 10,002
Consolidated Statement of cash flows (Unaudited)
For the 28 weeks to 17 October 2021
28 weeks ended 28 weeks ended
£'000s Note 17 October 2021 11 October 2020
Cash flows from operating activities
Profit before tax 2,241 4,039
Adjustments for:
Depreciation and impairment of property, plant, and equipment 14 428 379
Amortisation of Intangible assets 16 18 -
Loss/(profit) on disposal of property, plant, and equipment 79 89
Amortisation of right-of-use assets 15 1,559 1,346
Other (gains)/losses 10 (514) 312
Finance expense 9 243 197
4,054 6,362
Decrease/(increase) in inventories 18 (3,597) (1,225)
(Increase)/decrease in trade and other receivables 19 (257) (1,051)
Increase/(decrease) in trade and other payables 21 3,524 3,893
Cash generated from operations 3,724 7,979
Income taxes paid (1,404) -
Net cash flows from operating activities 2,320 7,979
Investing activities
Purchase of property, plant, and equipment 14 (1,820) (1,741)
Purchase of intangible assets 16 (106) -
Proceeds from sale of fixed assets - 5,085
Net cash (used in)/from investing activities (1,926) 3,344
Financing activities
Interest paid 9 (243) (197)
Proceeds from borrowings 22 3,419 -
Repayment of borrowings 22 (2,803) (4,920)
Principle movement on lease liabilities 15 (1,359) (1,070)
Dividends paid to the holders of the parent 12 (1,000) (950)
Net cash used in financing activities (1,986) (7,137)
Net increase/(decrease) in cash and cash equivalents (1,592) 4,186
Cash and cash equivalents at beginning of the period 5,879 2,956
Cash and cash equivalents at end of period 20 4,287 7,142
Consolidated statement of changes in equity (Unaudited)
For the 28 weeks to 17 October 2021
£'000 Share capital Revaluation reserve Retained earnings Total equity
As at 30 March 2020 0 472 4487 4,959
Comprehensive Income for the year
Adjustment in respect of prior years - - (56) (56)
Profit - - 3,155 3,155
Contributions by and distributions to owners
Dividends - - (950) (950)
As at 11 October 2020 0 472 6,636 7,108
As at 12 October 2020 0 472 6,636 7,108
Comprehensive Income for the year
Profit - - 3,394 3,394
Transfer from revaluation reserve to retained earnings - (472) 472 -
Contributions by and distributions to owners
Dividends - - (500) (500)
As at 4 April 2021 0 - 10,002 10,002
As at 5 April 2021 0 - 10,002 10,002
Comprehensive Income for the period
Profit - - 1,739 1,739
Dividends - - (1,000) (1,000)
As at 17 October 2021 0 - 10,741 10,741
Notes to the financial statements (Unaudited)
1 General Information
ProCook Limited is a private company limited by shares and is registered and
incorporated in England and Wales. The registered office is ProCook, Davy Way,
Waterwells, Gloucester, GL2 2BY.
The principal activity of ProCook Limited together with its subsidiary
undertakings (the "ProCook Limited Group" or the "Group") throughout the
period is the provision of retail of kitchenware and related products.
The Group's financial results and cashflows are subject to seasonal trends
throughout the financial period. Traditionally, revenue and profit are higher
in the last 24 weeks of the financial period due to the increase in trade in
the run up to Christmas.
2 Accounting policies
2.1 Basis of preparation
These interim financial statements for the 28 weeks ended 17 October 2021 have been prepared in accordance with IAS 34 "Interim financial information". These interim financial statements are the first period of financial statements prepared under IFRS and the 3 April 2022 full year will be the first full year prepared under IFRS. As such, they have been prepared in full accordance with IAS 1 - Presentation of Financial Statements.
These interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006 and are not audited. Statutory accounts for the period ended 4 April 2021 were approved by the Board of Directors on 19 August 2021 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.
The financial information presented is prepared on a going concern basis, under the historical cost convention, except for certain financial assets and liabilities, which are modified to include certain financial instruments at fair value through profit or loss. The financial information is presented in pounds sterling and all values are rounded to the nearest thousand (£'000), except when otherwise indicated.
The principal accounting policies adopted in the preparation of the financial
information are set out below. These policies have been consistently applied
to all periods presented, unless otherwise stated. The Group have applied the
requirements of IFRS 16 Leases from 29 March 2020, to facilitate consistent
presentation across the periods shown. As such, IFRS 16 had been applied at 29
March 2020 which is the start of the financial periods presented. The modified
retrospective method of adoption was applied and has resulted in recognition
of assets (right-of-use assets) by the Group representing the right to use
items under operating leases. Lease liabilities have also been directly
recognised on the balance sheet representing obligations for future operating
lease payables. Lease costs each financial year are now recognised in the form
of depreciation of the right-of-use asset and interest expense on the lease
liability. This results in a higher interest expense in the earlier years of
the lease term, however the total expense that is ultimately recognised in the
Income Statement over the life of the lease will remain unaffected by the new
standard.
2.2 Going concern
The Group has performed well over recent periods, and continues to grow,
acquiring new customers, increasing retention, and creating more reasons to
shop with ProCook. With the retail estate closed for approximately half of the
FY21 financial year, the Group was able to quickly adapt to the rapid shift of
customer demand towards online sales channels, thanks to the well-established
and flexible multichannel model supported by high levels of customer service.
In their consideration of going concern, the Directors have reviewed the
Group's future cash forecasts and profit projections, which are based on
market data and past experience. The Directors are of the opinion that the
Group's forecasts and projections, which take into account reasonably possible
changes in trading performance, show that the Group is able to operate within
its current facilities and comply with its banking covenants for the
foreseeable future. With the continued encouraging current trading results the
Directors are satisfied that there are sufficient resources to continue in
business for at least 12 months from the date of signing these financial
statements.
The Directors believe that the Group is well placed to manage its business
risks successfully. Having reassessed the principal risks, the Directors
consider it appropriate to adopt the going concern basis of accounting in
preparing the financial information
2.3 Basis of consolidation
Subsidiaries
Subsidiaries are all entities over which ProCook Limited has control. The
ProCook Limited Group controls an entity when ProCook Limited is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to ProCook Limited until the date that control
ceases.
Where necessary, amounts reported by subsidiaries have been adjusted to
conform with ProCook Limited's accounting policies.
Transactions eliminated on consolidation
Intra-group balances, and any gains and losses or income and expenses arising
from intra-group transactions, are eliminated in preparing the financial
information. Losses are eliminated in the same way as gains, but only to the
extent that there is no evidence of impairment.
2.4 New standards, amendments, and interpretations
New standards impacting the Group that have been adopted for the year ended 4
April 2021 and period ending 17 October 2021 are as follows:
- Definition of a Business (Amendments to IFRS 3);
- Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to
IFRS 9, IAS 39 and IFRS 7); and
- COVID-19-Related Rent Concessions (Amendments to IFRS 16).
Following an assessment, the Group have determined that these standards have
no material impact.
New standards, amendments and interpretations not yet adopted
The following standards, amendments and interpretations are not yet effective
and have not been early adopted by the Group:
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early. The following
amendments are effective for the period beginning 5 April 2022:
- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37);
- Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16);
- Annual Improvements to IFRS Standards 2018-2020 (Amendments to
IFRS 1, IFRS 9, IFRS 16 and IAS 41);
- References to Conceptual Framework (Amendments to IFRS 3).
The Group does not believe that these standards will have a material impact.
2.5 Revenue recognition
IFRS 15 "Revenue from Contracts with Customers" is a principle-based model of
recognising revenue from contracts with customers. It has a five-step model
that requires revenue to be recognised with control over goods and services
are transferred to the customer.
The Group operates through store point of sale transactions and website
orders. Revenue is recognised at a point in time when the Group delivers a
product to a customer, whether this be at the point of sale in store, or
delivery. Payment of the transaction price is due immediately when the
customer purchases the product in store or upon ordering online.
Revenue is measured as the fair value of the consideration received or
receivable, excluding discounts, rebates, value added tax and other sales
taxes. Revenue is reduced for estimated customer returns, rebates, and other
similar allowances.
Warranties
Goods supplied provides customers with a warranty within a specified period
and this gives rise to an assurance of compliance with agreed upon
specifications of each sale. The right of return liability is recognised
within trade and other payables.
Deferred income
Sales made through the Group's websites are recognised at the point the
product is delivered to the customer. Deferred income is recognised as a
creditor at the point where goods have been dispatched but have yet to be
received by the customer.
2.6 Other operating income
Other operating income represents all other income received by the Group. This
includes Government grants for the Coronavirus Job Retention Scheme.
Government grants are recognised at their fair value where there is a
reasonable assurance that the grant will be received, and the Group will
comply with all attached conditions. Government grants relating to costs are
deferred and recognised in profit or loss over the period necessary to match
them with the costs that they are intended to compensate.
In the year ended 4 April 2021 and 28-week period ending 17 October 2021, the
Group utilised the Government's Coronavirus Job Retention Scheme ('CJRS'),
which allows for businesses to submit claims for repayment of furlough or
flexible furlough employee wages as a result of COVID-19. In addition to the
CJRS, the Group also utilised the Local Restrictions Support Grants, which
provided a cash grant for each period of national lockdowns. The grant income
received has been accounted for in accordance with IAS 20 'Accounting for
Government Grants and Disclosure of Government Assistance' and shown in other
operating income in the income statement and personnel costs have been shown
gross of grant income.
2.7 Adjusting items
Adjusting items consist of material non-recurring income and expense items
arising outside of the normal trading of the Group.
2.8 Net finance costs
Finance expense
Finance expense comprises of interest payable and lease interest which are
expensed in the period in which they are incurred and reported in finance
costs. Debt issue costs are capitalised and amortised over the life of the
associated facility.
Finance income
Finance income comprises interest on bank deposits.
2.9 Foreign currency translation
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the end of the
reporting period. All differences are taken to the statement of profit or loss
and other comprehensive income.
2.10 Inventories
Inventory is stated at the lower of cost or net realisable value. Cost is
determined on a weighted average cost basis (AVCO) and comprises all costs of
purchase and other costs incurred in bringing the inventories to their present
location and condition. Net realisable value is the amount that can be
realised from the sale of the inventory in the normal course of business after
allowing for the costs of realisation.
Stock in transit at the period end is included within inventory at cost, where
transfer of ownership can be readily determined.
At each reporting date, an assessment is made for impairment. Any excess of
the carrying amount of inventory over its estimated selling price less costs
to complete and sell is recognised as an impairment loss in profit or loss.
Reversals of impairment losses are also recognised in profit or loss.
2.11 Current and deferred taxation
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the consolidated statement of comprehensive income, except that
a charge attributable to an item of income or expense recognised as other
comprehensive income or to an item recognised directly in equity is also
recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated based on tax rates and laws that
have been enacted or substantively enacted by the reporting date in the UK
where the Group operates and generate taxable income.
Deferred tax balances are recognised in respect of all temporary differences
that have originated but not reversed by the balance sheet date, except:
- The recognition of deferred tax assets is limited to the extent
that it is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits;
- Any deferred tax balances are reversed if and when all
conditions for retaining associated tax allowances have been met; and
- Where timing differences relate to interests in subsidiaries,
associates, branches and joint ventures and the Group can control their
reversal and such reversal is not considered probable in the foreseeable
future.
Deferred tax balances are not recognised in respect of permanent differences
except in respect of business combinations, when deferred tax is recognised on
the differences between the fair values of assets acquired and the future tax
deductions available for them and the differences between the fair values of
liabilities acquired and the amount that will be assessed for tax. Deferred
income tax is determined using tax rates and laws that have been enacted or
substantively enacted by the reporting date.
Where applicable the Group claim Research and Development (R&D) tax
reliefs in accordance with the Small and Medium Sized Enterprise (SME) R&D
Relief Scheme. Projects are assessed by management to ensure the claims made
fit the criteria and definitions set out by the UK HM Revenue and Customs.
2.12 Property plant and equipment
Property, plant, and equipment is stated at historical cost less accumulated
depreciation and any accumulated impairment losses. Historical cost includes
expenditure that is directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the
manner intended by management.
Depreciation is charged to allocate the cost of assets less their residual
value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
- Land and
buildings
10 - 20% straight line
- Leasehold improvements
10% straight line (over term of the lease)
- Plant and machinery
5 - 10% straight line
- Fixtures, fittings, and
equipment 10 -20 % straight line
(over term of the lease)
- Motor vehicles
20% straight line
The assets' residual values, useful lives and depreciation methods are
reviewed, and adjusted prospectively if appropriate, or if there is an
indication of a significant change since the last reporting date. At each
reporting period end date, the Group reviews the carrying amounts of its
tangible assets to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in
use. If the recoverable amount of an asset is estimated to be less than it's
carrying amount, the carrying amount of the asse is reduced to its recoverable
amount. An impairment loss is recognised immediately in profit or loss.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised in the statement of comprehensive
income.
2.13 Intangible assets
Identifiable development expenditure to develop customised software for IT
systems is capitalised as intangible assets, provided they meet the following
recognition requirements:
- The development costs can be measured reliably
- The project is technically and commercially feasible
- The Group intends to and has sufficient resources to complete
the project
- The Group has the ability to use or sell the software
- The software will generate probable future economic benefits.
Costs not meeting these criteria are classed as research expenditure and are
expensed as they are incurred. Directly attributable costs include employee
costs incurred on software development. These include costs incurred in
developing the Group's website that meet the assessment of economic viability
associated with the development of an internally generated intangible asset.
Intangible assets are amortised on a straight-line basis over their estimated
useful lives. Amortisation is provided on the following basis:
- Intangibles (Software) 33.3% straight line
2.14 Impairment of non-financial assets
At the end of each reporting period, the Group reviews the carrying amounts of
its non-financial assets to determine whether there is an indication of
impairment. For impairment purposes, assets are grouped at the lowest levels
for which there are largely independent cash inflows (cash-generating unit).
As a result, some assets are tested individually for impairment, and some are
tested at the cash-generating unit level. Management considers cash generating
units to be determinable by individual store and the various ecommerce
platforms.
Assets and the cash generating unit is tested for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the
assets or cash-generating unit's carrying amount exceeds its recoverable
amount, which is the higher of fair value less costs of disposal and
value-in-use.
To determine the value-in-use, management estimate expected future cash flows
from the cash-generating unit and determine a suitable discount rate in order
to calculate the present value of those cash flows. Discount factors are
determined for the cash-generating unit to reflect current market assessments
of the time value of money and asset-specific risk factors.
Impairment charges are allocated on a pro-rata basis in accordance with the
CGUs' carrying amounts. In allocating the impairment loss to a CGU the
carrying amount of each asset within the CGU is reduced to the highest of
either its fair value less costs to sell; value in use; or nil. Recognition of
impairment losses do not result in a recognition of a liability. All assets
are subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist. An impairment loss is reversed if the assets
or cash-generating unit's recoverable amount exceeds its carrying amount.
2.15 Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand,
deposits held at call with banks, other short-term liquid investments with
original maturities of three months or less.
2.16 Financial instruments
Financial instruments are all financial assets and financial liabilities that
comprise a contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity and are detailed in
note 30.
Financial assets and financial liabilities are recognised when the Group
becomes party to the contractual provisions of the instrument. Financial
assets and financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable (other than financial assets
or liabilities at fair value through profit or loss) are added to or deducted
from the fair value as appropriate, on initial recognition.
Financial assets
Financial assets are subsequently classified into the following specified
categories:
- financial assets at fair value through profit or loss, including
held for trading;
- fair value through other comprehensive income; or
- amortised cost.
The classification depends on the nature and purpose of the financial asset
(i.e., the Group's business model for managing the financial assets and the
contractual terms of the cash flows) and is determined at the time of initial
recognition.
They are measured at amortised cost if they are held within a business model
whose objective is to hold financial assets in order to collect contractual
cash flows and the contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal
amount outstanding.
Financial assets not held at amortised cost or fair value through other
comprehensive income are held at fair value through profit or loss.
At present the Group only has financial assets held at amortised cost, apart
from derivatives which are measured at fair value through profit and loss.
Financial liabilities
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangements.
Equity instruments are any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
are recognised at proceeds received net of issue costs.
Financial liabilities are classified as either financial liabilities at fair
value through profit or loss ("FVTPL") or financial liabilities at amortised
cost, which are measured using the effective interest method.
At present the Group only has financial liabilities held at amortised cost,
apart from derivatives which are measured at fair value through profit and
loss.
Impairment of financial assets
IFRS 9 requires the use of forward-looking information to recognise expected
credit losses - the 'expected credit loss (ECL) model'. Recognition of credit
losses is not dependent on the Group first identifying a credit loss event;
instead, the Group considers a broader range of information when assessing
credit risk and measuring expected credit losses, including past events,
current conditions and reasonable and supportable forecasts that affect the
expected collectability of the future cash flows of the instrument.
Trade and other receivables
The Group makes use of a simplified approach in accounting for trade and other
receivables and records the loss allowance as lifetime expected credit losses.
These are the expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating this, the Group uses its historical experience,
external indicators, and forward-looking information to calculate the expected
credit losses using a provision matrix.
The Group assesses impairment of trade receivables on a collective basis as
they possess shared credit risk characteristics based on grouping debt by days
overdue.
2.17 Derivatives
Derivatives are initially recognised at fair value at the date a derivative
contract is entered into and are subsequently remeasured to fair value at each
reporting end date. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset,
whereas a derivative with a negative fair value is recognised as a financial
liability.
2.18 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an
expense unless those costs are required to be recognised as part of the cost
of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in
which the employee's services are received.
Termination benefits are recognised immediately as an expense when is
demonstrably committed to terminate the employment of an employee or to
provide termination benefits.
2.19 Pensions
The Group operates a defined contribution pension scheme. Contributions to the
scheme are charged to the statement of profit or loss and other comprehensive
income in the period to which the contributions relate. The assets of the
scheme are held separately from those of the Group.
2.20 Provisions
Provisions are recognised where a legal or constructive obligation has been
incurred which will probably lead to an outflow of resources that can be
reasonably estimated. Provisions are recorded for the estimated ultimate
liability that is expected to arise, taking into consideration the time value
of money. A contingent liability is disclosed where the existence of the
obligations will only be confirmed by future events, or where the amount of
the obligation cannot be measured with reasonable reliability.
A provision against replacement costs under warranties given by the Group has
been made based on senior management's assessment of likely costs in the light
of historic experience.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the reporting end date, taking
into consideration the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected
to be required to settle the obligation is recognised at present value. When a
provision is measured at present value, the unwinding of the discount is
recognised as a finance cost in profit or loss in the period in which it
arises.
2.21 Leased assets
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
To assess whether a contract conveys the right to control the use of an
identified asset, the Group assesses whether: an identified physically
distinct asset can be identified; and the Group has the right to obtain
substantially all of the economic benefits from the asset throughout the
period of use and has the ability to direct the use of the asset over the
lease term being able to restrict the usage of third parties as applicable.
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
- Leases of low value assets (less than £5,000); or
- Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
Group's incremental borrowing rate on commencement of the lease is used.
On initial recognition, the carrying value of the lease liability also
includes:
- amounts expected to be payable under any residual value
guarantee;
- the exercise price of any purchase option granted in favour of
the Group if it is reasonably certain to access that option; and
- any penalties payable for terminating the lease, if the term of
the lease has been estimated on the basis of the termination option being
exercised.
Right of use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
- lease payments made at or before commencement of the lease;
- initial direct costs incurred; and
- the amount of any provision recognised where the Group is
contractually required to dismantle, remove, or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted at
the revised discount rate applicable at the date of estimation. An equivalent
adjustment is made to the carrying value of the right-of-use asset, with the
revised carrying amount being amortised over the remaining (revised) lease
term.
During the year ended 4 April 2021, rates relief was obtained which provided
rent concessions throughout the periods where stores were closed. Such rent
concessions were treated as lease modifications and the PVMLP was adjusted to
reflect the new payment structure. An adjustment was made to both the Finance
lease liability and the Right of Use Asset value to this effect.
Where the Group's property leases contain variable payment terms, payments
determined as variable are treated as a charge to the income statement and not
capitalised. Variable lease payments are only included in the measurement of
the lease liability if they depend on an index or rate. In such cases, the
initial measurement of the lease liability assumes the variable element will
remain unchanged throughout the lease term.
Sale and leaseback
On entering into a sale and leaseback transaction the Group determines whether
the transfer of the assets qualifies as a sale (satisfying a performance
obligation in IFRS 15 'Revenue from Contracts with Customers'). Where the
transfer is a sale and providing the transaction is on market terms then the
previous carrying amount of the underlying asset is split between:
- a right-of-use asset arising from the leaseback (being the
proportion of the previous carrying amount of the asset that relates to the
rights retained); and
- the rights in the underlying asset retained by the buyer-lessor
at the end of the leaseback. The Group recognises a portion of the total gain
or loss on the sale. The amount recognised is calculated by splitting the
total gain or loss into:
- an unrecognised amount relating to the rights retained by the
seller-lessee; and
- a recognised amount relating to the buyer-lessor's rights in the
underlying asset at the end of the leaseback.
The leaseback itself is then accounted for under IFRS 16. Where the transfer
is not determined to be a sale, the previous carrying amount of the underlying
asset is not adjusted and the liability is included as a financial liability
under IFRS 9 Financial Instruments.
2.22 Share options
The Group issues equity-settled share-based incentives to certain employees in
the form of share options. Equity-settled share-based payments are measured at
fair value at the date of grant. The fair value determined at the grant date
is expensed in the Group's financial statements on a straight-line basis over
the estimated vesting period, based on the estimate of shares that will
eventually vest.
Share options that have been issued by the Group have been reviewed under the
Black Scholes model to evaluate any provision that may be required to set
against the reserves of the Group. All share options that have been issued by
the Group only vest on an exit event such as a sale, takeover, or IPO. No
share-based payment expense has been included in any periods presented on the
grounds of materiality.
No other entities in the Group other than ProCook Limited have issued any
equity-settled share-based incentives.
2.23 Dividends
Ordinary dividends proposed by the Board of Directors are not recorded in the
financial statements until they have been approved by the shareholders.
2.24 Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker ('CODM'). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors of the
Group. The Group currently reports under two reporting lines: Ecommerce and
Retail.
2.25 Business combinations
The Group applies the purchase method to account for business combinations.
The cost of a business combination is measured as the fair value of the assets
given, equity instruments issued, and liabilities incurred or assumed at the
date of exchange. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measure initially at their
fair values at the acquisition date. Any excess of the cost of the business
combination over the acquirer's interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities recognised is
recorded as goodwill, alternatively any deficit from the cost of the business
combination over the acquirer's interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities recognised is
recorded as a gain on bargain purchase.
Acquisition costs are expensed as incurred.
Assets acquired and liabilities assumed are generally measured at their
acquisition-date fair values.
3. Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Estimates
Discount rates
IFRS 16 states that the lease payments shall be discounted using the lessee's
incremental borrowing rate where the rate implicit in the lease cannot be
readily determined. Accordingly, all lease payments have been discounted using
the incremental borrowing rate (IBR). The IBR has been determined by
management using a range of data including current economic and market
conditions, review of current debt and capital within the Group, lease length
and comparisons against seasoned corporate bond rates and other relevant data
points.
Warranty Provision
The Group offers warranties ranging from 12 months to 25 years on certain
products sold, during which, the Group will make good any product defects
which may arise. Management have estimated the warranty provision amount based
on past experience claim rates.
Judgements
Expired leases
Judgement is exercised in determining the lease term and expiry date of the
lease. IFRS 16 defines the lease term as the non-cancellable period of a lease
together with the options to extend or terminate a lease, if the lessee were
reasonably certain to exercise that option, or when either the lessee or the
lessor each has the right to terminate the lease without permission from the
other party with no more than an insignificant penalty. The Group will assess
the likelihood of extending lease contracts beyond the break date by taking
into account current economic and market conditions, current trading
performance, forecast profitability, the significance of any fees payable, and
the level of capital investment in the property.
Dilapidations
Judgement is exercised when determining the likely restoration costs of each
of the freehold properties. As at the balance sheet dates provided withing
these financial statements, management have determined that there are no
expected dilapidations costs associated with the current leases and as such no
provision for dilapidation costs have been recognised.
4. Revenue from contracts with customers
No one customer makes up 10% or more of revenue in any period. Management
considers revenue is derived from one business stream being the retail of
kitchenware and related products.
Geographical Reporting
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
United Kingdom 30,661 22,205 50,110
European Union 1,415 1,670 3,307
Total revenue 32,076 23,875 53,417
5. Expenses by nature
Operating profit for the periods is stated after charging/(crediting):
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Exchange (gains)/losses 68 (336) 519
Depreciation of tangible fixed assets (428) (379) (708)
Amortisation of right-of-use-assets (1,559) (1,346) (2,666)
Impairment of tangible fixed assets - - (209)
6. Adjusting items
Due to the non-recurring nature of the activities relating to the Initial
Public Offering on the London Stock Exchange by the Group over the 28 weeks to
17 October 2021, the business has incurred exceptional costs which are
material and one-off in nature, and so have been separately disclosed on the
face of the Consolidated Statement of Comprehensive Income. These costs in the
year to date were £1,354,678 (4 April 2021: £nil) which all relate to the
Initial Public Offering, for which final admission took place on the 12
November 2021.
7. Segmental reporting
The Chief Operating Decision Maker (CODM) has been identified as the Board of
Directors and segmental reporting analysis is presented based on the Group's
internal reporting to the Board. At 17 October 2021, the Group had two
operating segments, being Ecommerce and Retail. Central costs are reported
separately to the Board, but this is not considered an operating segment.
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Revenue
Ecommerce 15,182 15,767 39,876
Retail 16,894 8,108 13541
32,076 23,875 53,417
Operating profit
Ecommerce 3,574 5,373 14,112
Retail 4,233 1,724 1849
Central costs (5,837) (2,549) (6,223)
Profit from operations 1,970 4,548 9,738
8. Other income
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Other income - - 43
Government grants 294 1,395 2,805
Total other income 294 1,395 2,848
The grants relate to the Government's Coronavirus Job Retention Scheme
('CJRS') and the Government Business Rates Relief Scheme. There are no
unfulfilled conditions or contingencies attached to these grants that have
been recognised.
9. Finance expense
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Finance expense:
Interest on borrowings and other interest 24 60 90
Interest on lease liabilities 219 137 316
Total finance expense 243 197 406
10. Other gains and losses
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Gain/(loss) on derivatives 514 (312) (949)
Total 514 (312) (949)
11. Tax expense
The tax expense for the periods presented differ from the standard rate of
corporate tax. The differences are explained below:
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Current tax on profits for the year 468 933 2113
Adjustments in respect of previous years - - -
Total current tax 2113
Deferred tax
Origination and reversal of temporary differences 34 (49) (221)
Adjustment in respect of prior periods - - (58)
Total deferred tax 34 (49) (279)
Tax expense per statement of comprehensive income 502 884 1,834
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Profit on ordinary activities before tax 2,241 4,039 8,383
Tax using the domestic tax rates 426 767 1593
Effects of:
Tax effect of expenses that are not deductible for tax purposes 140 3 8
Adjustments in respect of prior years - - 58
Permanent capital allowances in excess of depreciation (63) (87) (134)
Chargeable gains - 200 309
Total taxation expense 502 884 1,834
The main rate of UK corporation tax was 19% for all periods presented. The UK
corporation tax will be set at the main rate of 25% from the 1 April 2023,
which will be recognised in the financial year ended 31 March 2024.
11. Tax expense (continued)
Current tax assets and liabilities
As at 17 October As at 4 April
£'000 2021 2021
Income tax payable (585) 413
Total (585) 413
The following is the analysis of the deferred tax balances for financial
reporting purposes:
As at 17 October As at 4 April
£'000 2021 2021
Accelerated capital allowances and other timing differences 63 29
Total 63 29
Movement in the year
Liability at 30 March 2020 138
Credit to profit and loss (49)
Liability at 11 October 2020 89
Liability at 5 April 2021 29
Charge to profit and loss 34
Liability at 17 October 2021 63
12. Dividends
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Final dividends paid 1,000 950 1,450
Total 1,000 950 1,450
Dividend paid per share in the 28 weeks ended 17 October 2021 £100 (53 weeks
ended 4 April 2021: £145; 28 weeks ended 11 October 2020: £95).
13. Earnings per share
Basic and diluted earnings per share is calculated by dividing the result
attributable to equity holders by the weighted average number of ordinary
shares in issue. Earnings per share is presented based on the number of shares
outstanding in the Company, after giving effect to the share for share
exchange, bonus issue and capital reduction as part of the corporate
reorganisation set out in note 32. Diluted earnings per share is calculated by
dividing the profit 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.
28 weeks ended 28 weeks ended 53 weeks ended
£'000 17 October 2021 11 October 2020 04 April 2021
Profit used in calculating basic diluted EPS 1,739,016 3,155,363 6,502,000
Weighted average number of shares 100,000,000 100,000,000 100,000,000
Diluted weighted average number of shares 108,580,000 105,360,000 106,583,774
Earnings per share 1.74p 3.16p 6.50p
Diluted earnings per share 1.60p 2.99p 6.10p
14. Property, plant, and equipment
£'000 Land and Buildings Plant and machinery Fixtures and Fittings Motor Vehicles Total
Cost
At 30 March 2020 4,697 211 4,700 4 9,612
Additions 100 206 1,660 - 1,966
Disposals (4,398) (97) (316) - (4,811)
At 4 April 2021 399 320 6,044 4 6,767
Depreciation
At 30 March 2020 468 38 2,002 3 2,511
Charge for the period 70 15 622 1 708
Impairment - - 209 - 209
Disposals (379) (21) (107) - (507)
At 4 April 2021 159 32 2,726 4 2,921
Net book amount
At 4 April 2021 240 288 3,318 - 3,846
Cost
At 5 April 2021 399 320 6,044 4 6,767
Additions 177 108 1,510 25 1,820
Disposals (56) - (375) - (431)
At 17 October 2021 520 428 7,179 29 8,156
Depreciation
At 5 April 2021 159 32 2,726 4 2,921
Charge for the period 22 13 392 1 428
Disposals (9) - (296) - (305)
At 17 October 2021 172 45 2,822 5 3,044
Net book amount
At 17 October 2021 348 383 4,357 24 5,112
Impairment tests have been carried out where appropriate and no impairment
charge has been recognised as a result in the 28 weeks to 17 October 2021. An
impairment loss of £208,907 was recognised in the income statement within
operating expenses during the year ended 4 April 2021, which related to a
Group wide review of fixtures and fittings, where assets were identified
whether they are still in working order or in use in retail stores, the
impairment was recognised within the UK retail reporting segment.
Depreciation was recognised in the income statement within operating expenses
throughout the period.
15. Leased assets
The Group leases a number of assets in the jurisdictions from which it
operates in with all lease payments, in-substance, fixed over the lease term.
Where there are leasehold properties which hold a variable element to lease
payments made these are not fixed and not capitalised as part of the right of
use asset. All expected future cash out flows are reflected within the
measurement of the lease liabilities at each period end.
As at 17th October As at 4th April
2021 2021
Number of active leases 63 53
The Group leases include leasehold properties for commercial and head office
use, motor vehicles and plant equipment. The leases range in length from two
to twenty years and vary on length depending on lease type. Leasehold
properties holding the longest-term length of up to 20 years, plant, and
equipment up to 5 years, and motor vehicles of up to 4 years.
Extension, termination, and break options
The Group occasionally negotiates extension, termination, or break clauses in
its leases. In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise an extension
option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated).
15. Leased Assets (continued)
On a case-by-case basis, the Group will consider whether the absence of a
break clause would expose the Group to excessive risk. Typically, factors
considered in deciding to negotiate a break clause include:
- The length of the lease term;
- The economic stability of the environment in which the property
is located; and
- Whether the location represents a new area of operations for the
Group.
Incremental borrowing rate
The Group has adopted a rate with a range of 2% - 4% as its incremental
borrowing rate, being the rate that the individual lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar terms,
security and conditions. This rate is used to reflect the risk premium over
the borrowing cost measured by reference to the Group's financing facilities.
Sensitivity analysis has been performed that shows that an effect of 1%
decrease in the IBR rates used will cause a decrease in lease liabilities of
£932,247 (4 April 2021; £703,360); and decrease in ROU assets of £931,473
(4 April 2021; £683,981). This rate is used to reflect the risk premium over
the borrowing cost measured by reference to the Groups financing facilities.
Short term or low value lease expense
No short term or low value leases existed during the financial period.
Right of use assets
£'000 Leasehold Property Motor Vehicles Plant and Equipment Total
Cost
At 30 March 2020 12,563 94 52 12,709
Additions 9,196 117 - 9,313
Re-measurement 1,214 - - 1,214
Disposals (1,534) - - (1,534)
At 4 April 2021 21,439 211 52 21,702
Depreciation
At 30 March 2020 4,142 22 24 4,188
Charge for the period 2,618 36 12 2,666
Disposals (289) - - (289)
At 4 April 2021 6,471 58 36 6,565
Net book amount
At 4 April 2021 14,968 153 16 15,137
Cost
At 5 April 2021 21,439 211 52 21,702
Additions 2,069 - - 2,069
Re-measurement 917 - - 917
At 17 October 2021 24,425 211 52 24,688
Depreciation
At 5 April 2021 6,471 58 36 6,565
Charge for the period 1,519 34 6 1,559
At 17 October 2021 7,990 92 42 8,124
Net book amount
At 17 October 2021 16,435 119 10 16,564
15. Leased Assets (continued)
Lease liabilities
£'000 Leasehold Property Motor Vehicles Plant and Equipment Total
At 30 March 2020 8,559 73 29 8,661
Additions 9,196 117 - 9,313
Re-measurement 1,214 - - 1,214
Interest expense 312 3 1 316
Lease payments (2,496) (43) (15) (2,554)
Disposals (204) - - (204)
At 4 April 2021 16,581 150 15 16,746
At 5 April 2021 16,581 150 15 16,746
Additions 2,069 - - 2,069
Re-measurement 917 - - 917
Interest expense 217 2 - 219
Lease payments (1,539) (33) (6) (1,578)
At 17 October 2021 18,245 119 9 18,373
Remeasurements have arisen where store lease rental terms and lease expiry
dates have been renegotiated.
Reconciliation of minimum lease payments and present value
As at 17 October As at 4 April As at 29 March
£'000 2021 2021 2020
Within 1 year 3,063 2,908 2,525
Later than 1 year and less than 5 years 8,629 8,064 5,628
After 5 years 9,003 8,051 1,087
Total including interest cash flows 20,695 19,023 9,240
Less: interest cash flows (2,322) (2,277) (579)
Total principal cash flows 18,373 16,746 8,661
Reconciliation of current and non-current lease liabilities
As at 17 October As at 4 April As at 29 March
£'000 2021 2021 2020
Current 2,672 2,673 1,717
Non-current 15,701 14,073 6,944
Total 18,373 16,746 8,661
16. Intangible assets
£'000 Software Total
Cost
At 30 March 2020 - -
Additions 67 67
At 4 April 2021 67 67
Amortisation
At 30 March 2020 - -
Charge for the period - -
At 4 April 2021 - -
Net book amount
At 4 April 2021 67 67
Cost
At 5 April 2021 67 67
Additions 106 106
At 17 October 2021 173 173
Amortisation
At 5 April 2021 - -
Charge for the period 18 18
At 17 October 2021
Net book amount 18 18
At 17 October 2021 155 155
17. Investments
ProCook Limited substantially owns directly or indirectly the whole of the
issued and fully paid ordinary share capital of its subsidiary undertakings.
The subsidiary undertakings of ProCook Limited are presented below:
Proportion of ordinary shares held by ProCook Limited
Subsidiaries Principal activity Country of Registered address
incorporation
ProCook (Kitchens) Limited Dormant company England & Wales ProCook, Davy Way, Waterwells, Gloucester, United Kingdom, GL2 2BY 100%; (From incorporation at 11 February 2019)
ProCook (Steamer Trading) Limited Provision of retail of cookware and related products England & Wales ProCook, Davy Way, Waterwells, Gloucester, United Kingdom, GL2 2BY 100%; (From incorporation at 9 January 2019)
ProCook B.V. Provision of retail of cookware and related products Netherlands ProCook B.V., Veerpolder 1-B, 2361KV, Warmond, The Netherlands 100%; (From incorporation at 14 June 2021)
ProCook Limited holds direct investments in all subsidiaries.
18. Inventories
As at 17 October As at 4 April
£'000 2021 2021
Finished goods and goods for resale 13,545 9,948
The cost of Group inventories recognised as an expense in the period to 17
October 2021 amounted to £9,292,011 (4 April 2021: £15,928,664). This is
included in cost of sales.
19. Trade receivables
As at 17 October As at 4 April
£'000 2021 2021
Amounts falling due within one year:
Trade receivables - 1
Other receivables 920 516
Derivative financial instruments - -
Corporation Tax 577 -
Prepayments 1,225 1,371
Total 2722 1,888
Included in other receivables at the period end is supplier deposits
consisting of £761,512 in the period ending 17 October 2021 (4 April 2021:
£380,973)
Prepayments consist mainly of standard prepayments, which includes the likes
of rates and electricity, with no material individual prepayments.
20. Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents
include cash on hand and in banks and investments in money market
instruments. Cash and cash equivalents at the end of the financial year as
shown in the statement of cash flows can be reconciled to the related items in
the statement of financial position as follows:
As at 17 October As at 4 April
£'000 2021 2021
Cash at bank available on demand 4,287 5,879
Total 4,287 5,879
21. Trade and other payables
As at 17 October As at 4 April
£'000 2021 2021
Amounts falling due within one year:
Trade payables 3,025 2,705
Other payables 1,342 231
Accruals 3,275 2,098
Deferred income 98 182
Derivative financial instruments 434 949
Other taxation and social security 1,455 447
Total 9,629 6,612
The Directors consider that the carrying value of trade and other payables
approximates to their fair value. Trade payables are non-interest bearing and
are normally settled monthly.
Included in other payables was £19,216 at the period ended 17 October 2021 (4
April 2021: £95,820) owing to a director. The balances were non-interest
bearing.
22. Borrowings
As at 17 October As at 4 April
£'000 2021 2021
Current
Bank loans 3,419 2,803
Non-current
Bank loans - -
Total borrowings 3,419 2,803
A maturity analysis of the Group's borrowings is shown below:
As at 17 October As at 4 April
£'000 2021 2021
Payable within one year 3,419 2,803
Payable after one year but less than five years - -
Payable after five years - -
Total 3,419 2,803
Included in bank loans is a trade finance facility which is committed until
September 2023. The agreement provides a 150-day finance facility. At 17
October 2021 the facility held a limit of £5,000,000 with an option to extend
to £6,000,000 at the Group's discretion. The following amounts had been drawn
down and were outstanding at 17 October 2021: £3,418,923 (4 April 2021:
£2,803,182). The facility incurred interest payable at 17 October 2021 at a
fixed rate above the Bank of England base rate.
23. Other provisions
As at 17 October As at 4 April
£'000 2021 2021
Amounts falling after one year:
Warranty provision 160 160
Total 160 160
The Group offers warranties ranging from 12 months to 25 years on certain
products. The warranty provision is an estimate of the expected costs to the
Group of servicing such warranties.
24. Forward currency contracts
The Group's local currency is pounds sterling but due to international
purchases in foreign currencies, the Group seeks to reduce the foreign
exchange risk by entering into forward contracts and other derivatives. At 17
October 2021, the outstanding contracts all mature within 8 months of the
period end. At the balance sheet date, Group was committed to buy $33,615,750
and pay a fixed sterling amount of £24,937,500.
The contracts are measured at fair value, which is determined using valuation
techniques that utilise observable inputs. The key inputs used in valuing the
derivatives are the forward exchange rates. The fair value movement of the
foreign currency contracts are detail in note 11 above.
25. Retirement benefit plan
The Group operates a defined contribution retirement benefit scheme for all
qualifying employees. The scheme is administered and managed by a separate
third-party specialist pension scheme provider. The total expense recognised
in the statement of profit or loss and other comprehensive income for the
period ended 17 October 2021 was £97,982 (4 April 2021 was £136,081)
represents contributions payable to these plans by the Group at rates
specified in the rules of the plans.
26. Share Capital
As at 17 October As at 4 April
2021 2021
Allotted, called up and fully paid
10,000 Ordinary shares of 1p each 100 100
Total 100 100
All classes of shares have full voting, dividend and capital distribution
rights.
The Group operates several equity-settled share-based remuneration schemes for
employees. The options will lapse if the individual leaves within ten years
from the date of grant if all vesting conditions had not been met earlier. The
terms and conditions of the grants are detailed below:
Date of grant No. of options Vesting conditions Contractual life of options
Exercise price
21 October 2015 536 101.73 Exit Event 10 years
16 November 2020 322 207.69 Exit Event 10 years
Total 858
Details of the number of share options granted, exercised, lapsed and
outstanding at the end of each period as well as the weighted average exercise
prices in £ ("WAEP") are as follows:
As at 17 October As at 4 April
2021 WAEP 2021 WAEP
Outstanding at beginning of period 858 141.5 536 101.7
Granted during the period - - 322 207.7
Forfeited/lapsed during the period - - - -
Exercised during the period - - - -
Outstanding at period end 858 141.5 858 141.5
Exercisable at end of period - - - -
All options valid at the end of each of the period presents had the same
exercise condition based on an exit criterion. No expense was recognised in
the statement of comprehensive income for the options outstanding on the
grounds of materiality.
The equity settled remuneration scheme granted on the 21 October 2015 vested
on Initial Public Offering. The 536 share options granted were transferred and
converted into 5,360,000 share options in the ProCook Group plc.
27. Reserves
Revaluation reserve
Revaluation reserve represents the surplus or deficit on the revaluation of
assets less any associated deferred taxation. The revaluation reserve relates
solely to the warehouse which was disposed of during the year ended 4 April
2021. This has therefore been transferred to retained earnings during that
period.
Retained earnings
Cumulative profit and loss net of distributions to owners.
28. Commitments and contingences
Capital and financial commitments
As at the 17 October 2021 the Group had committed to a 15-year lease of Unit
10, St, Modwen Park, Haresfield, Gloucester, GL10 3EZ. The expected
commencement of this lease is 1 December 2022, with expected initial rental of
£1.1m per annum and a rent-free period of 24 months.
29. Financial Instruments
Financial assets
Financial assets are not measured at fair value and due to the short-term
nature, the carrying value approximates their fair value. They comprise trade
receivables, other receivables, and cash. It does not include current tax
receivable and prepayments.
29. Financial Instruments (continued)
As at 17 October As at 4 April
£'000 2021 2021
Trade receivables - 1
Other receivables 920 516
Corporation Tax 577 -
Prepayments 1,225 1,371
Cash at bank and on hand 4,287 5,879
Total 7,009 7,767
Financial liabilities
Financial liabilities measured are not measured at fair value and due to
short-term nature, the carrying value approximates their fair value. They
comprise trade payables, accruals, and borrowings.
As at 17 October As at 4 April
£'000 2021 2021
Trade payables 3,025 2,705
Other payables 1,342 231
Accruals 3,275 2,098
Deferred income 98 182
Other taxation and social security 1,455 447
Other Provisions 160 160
Deferred tax liabilities 63 29
Corporation Tax payable - 413
Borrowings 3,419 2,803
Lease liabilities 18,373 16,746
Total 31,210 25,814
Financial liabilities measured at fair value include derivative financial
liabilities, as follows:
As at 17 October As at 4 April
£'000 2021 2021
Derivatives 434 949
Total 434 949
Derivatives are included within the balance sheet under trade and other
payables and are recognised under level 3 of the fair value hierarchy.
Financial risk management
The Group is exposed through its operation to the following financial risks:
credit risk, interest rate risk, and liquidity risk. Risk management is
carried out by the directors of the Group. The Group uses financial
instruments to provide flexibility regarding its working capital requirements
and to enable it to manage specific financial risks to which it is exposed.
The Group finances its operations through a mixture of debt finance, cash and
liquid resources and various items such as trade debtors and trade payables
which arise directly from the Business's operations.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. To minimise the risk, the Group endeavours only to deal with
companies which are demonstrably creditworthy and this, together with the
aggregate financial exposure, is continuously monitored. The maximum exposure
to credit risk is the carrying value of its financial receivables, trade and
other receivables and cash and cash equivalents as disclosed in the notes to
the financial information.
The receivables' age analysis is evaluated on a regular basis for potential
doubtful debts, considering historic, current, and forward-looking
information. No impairments to trade receivables, have been made to date.
Further disclosures regarding trade and other receivables are provided within
the notes to financial statements.
Credit risk also arises on cash and cash equivalents and deposits with banks
and financial institutions. For banks and financial institutions, only
independently rated parties with minimum rating "B+" are accepted.
29. Financial Instruments (continued)
Currently all financial institutions whereby the Group holds significant
levels of cash are rated from AA- to A+.
Interest rate risk
As at 17 October 2021 the Group's only current borrowings are the Trade
Finance facility at a floating interest rate linked to the Bank of England
base rate. This is variable on the amount drawn down, therefore interest rate
risk exposure for the Group is minimal. The Group's policy aims to manage the
interest cost of the Group within the constraints of its financial borrowings.
Foreign exchange risk
Foreign exchange risk arises when the Group enter transactions in a currency
other than their functional currency. The Group's policy is, where possible,
to settle liabilities denominated in a currency other than its functional
currency with cash already denominated in that currency.
The Group will make purchases of large inventory orders from overseas, and the
Group will use additional means to cover its exposure to the foreign exchange
movement. The Group will use various financial derivatives such as forward
exchange contracts, to hedge against any predicted movement in foreign
currency to restrict losses and to ascertain control of expected cash out
flows. All the Group's foreign exchange contracts are designated to settle the
corresponding liability.
Liquidity risk
The Group seeks to maintain sufficient cash balances. Management reviews cash
flow forecasts on a regular basis to determine whether the Group has
sufficient cash reserves to meet future working capital requirements and to
take advantage of business opportunities.
A maturity analysis of the Group's trade and other payables is shown below:
As at 17 October As at 4 April
£'000 2021 2021
Trade payables 3,025 2,705
Other payables 1,342 231
Accruals 3,275 2,098
Deferred income 98 182
Derivative financial instruments 434 949
Other taxation and social security 1,455 447
Borrowings 3,419 2,803
Lease liabilities 2,672 2,673
Total 15,720 11,436
As at 17 October As at 4 April
£'000 2021 2021
Due after one year:
Deferred tax liabilities 63 29
Other Provisions 160 160
Lease liabilities 15,701 14,073
Total 15,924 14,262
A maturity analysis of borrowings is shown in separately in note 23.
Capital disclosures
The capital structure of the business consists of cash and cash equivalents,
debt, and equity. Equity comprises share capital and retained profit and is
equal to the amount shown as 'Equity' in the balance sheet. As at 17 October
2021 Debt comprised of one HSBC Trade Finance facility loan which is set out
in further detail above and in the notes to the accounts.
The Group's current objectives when maintaining capital are to:
- Safeguard the Group's ability as a going concern so that it can
continue to pursue its growth plans.
- Provide a reasonable expectation of future returns to
shareholders.
- Maintain adequate financial flexibility to preserve its ability
to meet financial obligations, both current and long term.
29. Financial Instruments (continued)
The Group sets the amount of capital it requires in proportion to risk. The
Group manages its capital structure and adjusts it in the light of changes in
economic conditions and the risk characteristics of underlying assets. In
order to maintain or adjust the capital structure, the Group may issue new
shares or sell assets to reduce debt.
During the periods presented the Group's business strategy remained unchanged.
30. Related Parties
Included in trade debtors at the period ending 17 October 2021 was £3,011 (4
April 2021: £11,208) owing from Quella Bicycle Limited which shares a
director with the Group. The balance is non-interest bearing.
Included in other creditors at the period ending 17 October 2021 was £19,216
(4 April 2021: £Nil) owed to a director. The balance is non-interest bearing.
Included in other creditors at the period ending 17 October 2021 was £50,054
(4 April 2021: £49,318) owed to a charity called Life's a Beach, where a
director of the entity acts as a trustee. The balance is non-interest bearing.
31. Events after the reporting period
Initial Public Offering
On the 9 November 2021, the Group successfully completed its Initial Public
Offering and began conditional trading on the premium segment of the London
Stock Exchange, with full admission being granted on the 12 November 2021.
Group Reorganisation
The Group has undertaken a reorganisation following the reporting period. As
at the reporting date, the Group structure is as detailed within note 17.
Following the restructuring, ProCook Group plc has been incorporated and is
the ultimate holding company of the group with the name ProCook Group plc,
with the following significant subsidiaries and undertakings:
Name Country of incorporation Principal Activity
ProCook Limited England and Wales Trading
ProCook B.V. The Netherlands Trading
ProCook (Steamer Trading) Limited England and Wales Trading
ProCook (Kitchens) Limited England and Wales Dormant
ProCook Group plc owns 100% of the issued shares of ProCook Limited, with
ProCook Limited owning 100% of the issued shares of ProCook B.V., ProCook
(Steamer Trading) Limited and ProCook (Kitchens) Limited.
Contingent Fee
KPMG LLP has been engaged by the Group to provide a range of corporate finance
services since July 2015. The Initial Public Offering (IPO) has triggered a
contingent fee within the scope of their engagement and fees of £1.6m became
payable under the terms of this agreement. The fee is expected to be paid in
December 2021.
Dividend
A dividend of £0.9m was paid out by ProCook Group plc on the 10 November 2021
to existing shareholders prior to the Initial Public Offering.
32. Changes in liabilities arising from financing activities
£'000 At 5 April Financing cash flows Interest New borrowings and remeasurements Reclass At 17 October 2021
2021
Short-term borrowings 2,803 (8,684) 24,216 (14,916) 0 3,419
Lease liabilities 16,746 (1,578) 219 2,986 0 18,373
Total liabilities from financing activities 19,549 (10,262) 24,435 (11,930) 0 21,792
33. Transition to IFRS
For all periods up to and including 4 April 2021, the Group prepared its
statutory financial statements in accordance with FRS 102. These are the first
financial statements the Group has prepared in accordance with IFRS. The
Group's effective IFRS transition date for the purposes of these financial
statements was 29 March 2020. The effects of transition to IFRS on the balance
sheets at 4 April 2021 and 29 March 2020 and the income statements for the
period ended 4 April 2021 are shown below. In preparing the consolidated
financial statements of the Group, the Group has applied IFRS for the first
time from29 March 2020. The principles and requirements for first time
adoption of IFRS are set out in IFRS 1. IFRS 1 allows certain exemptions in
the application of standards to prior periods in order to assist companies
with the transition process.
Estimates
The estimates within the statutory accounts up to 17 October 2021 are
consistent with those made for the same dates in accordance with FRS 102
(after adjustments to reflect any differences in accounting policies). We note
here that there has been a net zero impact on the consolidated cash flow as a
result of the transition to IFRS.
The transition adjustments required on applying IFRS, as numbered in the
tables below, were:
1. Under IFRS 16 the standard was effective from 1 January 2019, with
early adoption applicable. The Group have applied the modified retrospective
approach with no other expedients used on transition. Adjustments to leases
under IFRS 16, to recognise leases previously recognised as operating leases
as right-of-use assets. Under this adjustment, in the period to 4 April 2021
right of use assets increased £6,616,294 (29 March 2020: £792,491) and lease
liabilities by £8,085,309 (29 March 2020: £865,392) along with a decrease in
trade and other payables of £16,168 (29 March 2020: £47,530), non-current
other payables decreased by £133,337 (29 March 2020: £nil) and a PPE net
reduction of £55,193 (29 March 2020: £33,489). During the period to 4 April
2021 the impact of this adjustment has increased operating expenses by
£1,292,228, increased finance expenses by £316,326 and decreased the tax
expense by £279,168. Additional detail on transition to IFRS 16 is detailed
in the accounting policies note 2.21 and note 15.
2. This adjustment was to correctly align the purchase of Steamer
Trading Limited with IFRS. Historically the purchase of Steamer Trading
Limited was not accounted for under business combinations in the FRS 102
financial statements. Upon review of the balance, on transition, it was deemed
the business did meet the criteria of a business acquisition and should have
been classified under acquisition accounting. The balance has been correctly
restated in the transition to IFRS, including the impact of IFRS 3. The impact
of this adjustments in relation to restatement was an increase in cost of
sales expenses and decreased inventories by £1,266,239 in the year ended 29
March 2020, the net impact of restatement under FRS102 within operating
expense is £nil.
3. Included in this adjustment is cumulative tax impact of each of the
IFRS and FRS102 adjustments. This has resulted in a deferred tax liabilities
reducing by £310,327 as at 4 April 2021 (29 March 2020: £287,771) and a
corresponding tax expense reduction of £310,327 (29 March 2020: £287,771).
4. Historically the Group did not apply adjustments for the impact of
timing differences between completion of order and actual delivery of online
sales. This adjustment is therefore an alignment of revenue to IFSR 15 as well
as a restatement under FRS102. The impact of this adjustment for the period to
4 April 2021 has decreased revenue by £48,356 (29 March 2021: £86,483) and
reduced cost of sales by £10,261(29 March 2020: £26,125) and increased
deferred income and inventory respectively. This adjustment also reduced the
tax expense by £7,463. Two further adjustments were required under FRS 102;
firstly, is the movement of intangible assets into their own class, having
previously been recognised under PPE due to their level of materiality (4
April 2021: £67,000, 29 March 2020: £nil). Secondly is the restatement for
stock in transit, which was recognised in the 2021 financial statements and
revised 2020 figures correctly, however, was not adjusted for in the opening
Balance Sheet as at 29 March 2020; this adjustment increased stock in transit
by £362,945 and a corresponding increase to Trade Payables. There is no
impact to the income statement of the Group.
Balance sheet at 29 March 2020
£'000 UK GAAP B/fwd Adj IFRS Adjustment 1 IFRS Adjustment 2 IFRS Adjustment 3 FRS 102 Restatement 4 IFRS
Assets
Current assets
Inventories 5,266 1,649 - (1,266) - (337) 5,312
Trade and other receivables 782 - - - - - 782
Cash and cash equivalents 2,956 - - - - - 2,956
Total current assets 9,004 1,649 - (1,266) - (337) 9,050
Non-current assets
Property, plant, and equipment 7,166 (32) (33) - - - 7,101
Right-of-use assets - 7,729 792 - - - 8,521
Intangible assets - - - - - - -
Total non-current assets 7,166 7,697 759 - - - 15,622
Total assets 16,170 9,346 759 (1,266) - (337) 24,672
Liabilities
Current liabilities
Trade and other payables 3,917 159 (47) - - (277) 3,752
Lease liabilities - 1,884 (167) - - - 1,717
Borrowings 4,239 - - - - - 4,239
Corporation tax payable 294 - - - - - 294
Total current liabilities 8,450 2,043 (214) - - (277) 10,002
Non-current liabilities
Lease liabilities - 5,912 1,032 - - - 6,944
Other provisions 160 - - - - - 160
Other payables 296 (296) - - - - -
Borrowings 2357 - - - - - 2357
Deferred tax liabilities 337 201 - (288) - 250
Total non-current liabilities 3150 5,817 1,032 - (288) - 9,711
Total liabilities 11,600 7,860 818 - (288) (277) 19,713
NET ASSETS 4,570 1,486 (59) (1,266) 288 (60) 4,959
Equity attributable to owners of ProCook Limited
Share capital 0 - - - - - 0
Revaluation reserve 472 - - - - - 472
Retained earnings 4,099 1,486 (59) (1,266) 288 (60) 4,487
TOTAL EQUITY 4,572 1,486 (59) (1,266) 288 (60) 4,959
Balance sheet at 4 April 2021
£'000 UK GAAP B/fwd Adj IFRS Adjustment 1 IFRS Adjustment 2 IFRS Adjustment 3 FRS 102 Restatement 4 IFRS
Assets
Current assets
Inventories 9,892 46 - - - 10 9,948
Trade and other receivables 1,888 - - - - - 1,888
Cash and cash equivalents 5,879 - - - - - 5,879
Total current assets 17,659 46 - - - 10 17,715
Non-current assets
Property, plant, and equipment 3,968 (65) 10 - - (67) 3,846
Right-of-use assets - 8,521 6,616 - - - 15,137
Intangible assets - - - - - 67 67
Total non-current assets 3,968 8,456 6,626 - - - 19,050
Total assets 21,627 8,502 6,626 - - 10 36,765
Liabilities
Current liabilities
Trade and other payables 6,713 (165) 16 - - 48 6,612
Lease liabilities - 1,717 956 - - - 2,673
Borrowings 2,803 - - - - - 2,803
Corporation tax payable 413 - - - - - 413
Total current liabilities 9,929 1,552 972 - - 48 12,501
Non-current liabilities
Lease liabilities - 6,944 7,129 - - - 14,073
Other provisions 160 - - - - - 160
Other payables 163 (296) 133 - - - -
Deferred tax liabilities 426 (87) - (310) - 29
Total non-current liabilities 749 6,561 7,262 - (310) - 14,262
-
Total liabilities 10,678 8,113 8,234 - (310) 48 26,763
-
NET ASSETS 10,949 389 (1,608) - 310 (38) 10,002
Equity attributable to owners of ProCook Limited
Share capital - - - - - - -
Retained earnings 10,949 389 (1,608) - 310 (38) 10,002
TOTAL EQUITY 10,949 389 (1,608) - 310 (38) 10,002
Income statement for the period ended 4 April 2021
£'000 UK GAAP IFRS IFRS IFRS FRS 102 Restatement 4 IFRS
Adjustment 1 Adjustment 2 Adjustment 3
Revenue 53,465 - - - (48) 53,417
Cost of sales (16,775) - - - 10 (16,765)
Gross profit 36,690 - - - (38) 36,652
Operating expenses (28,470) (1,292) - - - (29,762)
Other income 2,848 - - - - 2,848
Profit from operations 11,068 (1,292) - - (38) 9,738
Finance expense (90) (316) - - - (406)
Other gains/(losses) (949) - - - - (949)
Profit before tax 10,029 (1,608) - - (38) 8,383
Tax expense (2,144) - - 310 - (1,834)
Profit for the period 7,885 (1,608) - 310 (38) 6,549
Total other comprehensive income 7,827 (1,608) - 310 (38) 6,549
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