REG - ProCook Group PLC - Interim Results
11/12/2024 07:00
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RNS Number : 5923P ProCook Group PLC 11 December 2024
11 December 2024
ProCook Group plc
Interim results for the 28 weeks ended 13 October 2024
Strong first half trading momentum as we deliver on our plan to accelerate
profitable growth
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 FY25 (the 28 weeks ended 13 October 2024).
£m H1 FY25 H1 FY24 YoY
Revenue 28.3 26.3 +7.5%
LFL Revenue 26.7 25.7 +4.2%
Gross Profit 18.4 17.6 +5.1%
Gross margin % 65.1% 66.7% (160bps)
Underlying operating loss(1) (1.8) (1.5)
Underlying loss before tax(1) (2.8) (1.7)
Reported loss before tax (3.2) (3.2)
Underlying EBITDA(1) 1.2 1.2
Net debt (4.2) (3.2)
Financial and strategic highlights
· Total revenue increased by +7.5% to £28.3m and like for like
revenue increased by +4.2%, outperforming the market by +5%(2) and reflecting
an improving trend within the period (Q2 revenue growth +8.8%, LFL: +4.7%)
o Retail revenue increased by +6.5% benefitting from like for like growth of
+1.9% having now delivered five consecutive quarters of positive like for like
growth, with the impact of new store openings contributing a further +4.6%
points
o Ecommerce revenue increased by +9.4%, with like for like growth of +8.5%,
driven by increased conversion following migration to the new website in the
comparative period, alongside marketing improvements and the planned relaunch
of sales on the Amazon UK marketplace to broaden our customer reach which
contributed +0.9% points
· Attracting new customers by broadening brand reach and product
ranges, and providing excellent service and value
o 315,000 new customers (+9.8%) shopped with ProCook for the first time
o Record high L12M active customers of 1.1m (+11.7%)
· Gross margin and operating expenses in line with expectations for
H1, annualising investment in pricing from H2 last year and reflecting typical
seasonal H1 operational leverage
· Net debt at the end of the first half was £4.2m (H1 FY24:
£3.2m), reflecting an increased inventory position as a result of prudent
intake planning in response to global supply chain disruption, with available
liquidity of £11.8m
· Good strategic progress to support second half weighting to the
Group's revenues and profit, and improved profitability over the medium term:
o Opened 4 new stores in H1, with committed pipeline to exceed our ambition
of 10 new stores in the full year, in locations providing new access to
>150m centre visitors (combined) per year
o Launched phase three of small electricals, with our fourth phase (coffee
machines) ready to launch in Q4
o Driven greater brand awareness and marketing efficiency including through
shifting digital channel mix and lifestyle-centred marketing campaigns
o Enhanced store customer service and online experience, improving NPS score
and achieving higher conversion rates
Current trading
In the first eight weeks (ending 8 December 2024) of Q3, including Black
Friday and the early part of Christmas trading:
· Total revenue increased by +7.5%, and like for like revenue grew
by +0.9% reflecting continued trading momentum and market outperformance
· Retail performance was hampered by weak footfall during the early
weeks of the second half, coinciding with the Budget event, but has improved
since. As a result, Retail like for like revenue was -4.0%. New stores
contributed a further +10.3% points to deliver total Retail revenue growth of
+6.3% over the eight weeks
· Ecommerce performance continued to increase year on year with
like for like growth of +7.7% and total growth of +9.3% when including revenue
generated from the recently re-launched Amazon UK marketplace channel
· During the eight weeks we opened five new stores as planned,
taking the year to date total up to nine new stores, with two smaller garden
centre stores closed during the eight weeks.
Lee Tappenden, Chief Executive Officer, commented:
"We delivered a strong performance in the first half, outperforming a subdued
market, and growing our customer base whilst maintaining cost discipline. We
have made good progress against our strategic priorities and continue to
invest carefully in the areas that will support profitable growth in the
medium term.
"We now expect to open a further three new stores in the remainder of the
financial year, taking the total up to 12 new stores and, by closing two
smaller garden centre stores, adding a net 10 new stores to our Retail network
across the year.
"We are pleased with trading results in the first half of the year. Whilst the
important Q3 trading period had a subdued start in the early weeks coinciding
with the Budget event, and a later Black Friday year on year, we are well
positioned to take advantage of the improved momentum we are now experiencing,
supported by our Christmas campaign, new product launches and strong inventory
levels.
"Notwithstanding recent continued challenging trading conditions, our
expectations for the Group's full year performance are unchanged, as we
anticipate our typical second half weighting of revenue and profitability,
supplemented by the actions we have taken to expand our retail network,
combined with continued margin and cost discipline.
"We remain confident in delivering continued strategic progress and
sustainable growth over the medium term, as we work towards our ambitions of
100 stores, £100m revenue and 10% operating profit margin."
Analyst Presentation:
An interim results presentation for analysts and investors will be made
available on the Group's corporate website at
https://www.procookgroup.co.uk/investors/reports-and-presentations/
(https://protect.checkpoint.com/v2/___https:/www.procookgroup.co.uk/investors/reports-and-presentations/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplNGI3MWRmMWU3MjYxMTc1MzRjMzUxNGEwMDkyZGM1MTo2OmU0ODU6YWNjNzgxZjJmMmRlNTc0NmRhYmFjM2Q1Y2E5MmI2YzAzMmY5NmMwMzlhNWZmZjFhMzBlMzU5NjM2NWFmNjYwZjpwOkY6Tg)
this morning from 9.00am.
For further information please contact:
ProCook Group plc investor.relations@procook.co.uk
Lee Tappenden, Chief Executive Officer
Dan Walden, Chief Financial Officer
MHP Group (Financial PR Adviser) procook@mhpgroup.com
Katie Tel: +44 (0)7711 191 518
Hunt
Robert Collett-Creedy
Next scheduled event:
ProCook expects to release its third quarter trading update in early-mid
January 2025.
Notes to editors:
ProCook is the UK's leading direct-to-consumer specialist kitchenware brand.
ProCook designs, develops, and retails a high-quality range of direct-sourced
and own-brand kitchenware which provides customers with significant value for
money.
The brand sells directly through its website, www.procook.co.uk, and through
64 own-brand retail stores, located across the UK.
Founded over 25 years ago as a family business, selling cookware sets by
direct mail in the UK, ProCook has grown into a market leading, multi-channel
specialist kitchenware company, employing over 600 colleagues, and operating
from its Store Support Centre in Gloucester.
As a B Corp, a Real Living Wage employer and a certified Great Place to
Work(TM), ProCook is committed to being a socially responsible and
environmentally conscious business for the benefit of all stakeholders.
ProCook has been listed on the London Stock Exchange since November 2021
(PROC.L).
Further information about the ProCook Group can be found at
www.procookgroup.co.uk
(https://protect.checkpoint.com/v2/___http:/www.procookgroup.co.uk___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplNGI3MWRmMWU3MjYxMTc1MzRjMzUxNGEwMDkyZGM1MTo2OmIyNjQ6MjZiYjc5Y2FiM2RkOGRhMmMzOWI1YTY5ZjIyYzg0MjBkZTg0ZDE0Njk5NTQwYzg0NDI5OTU5YjA4NDZiOTRhZDpwOkY6Tg)
.
Quarterly revenue performance:
FY25 (52 weeks ending 30 March 2025)
Q1 Q2 H1 Q3 Q4 H2 FY
Revenue (£'m) 11.3 17.0 28.3
Revenue growth % 5.6% 8.8% 7.5%
LFL revenue (£'m)(3 & 5) 10.8 16.0 26.7
LFL growth % 3.5% 4.7% 4.2%
FY24 (52 weeks ending 31 March 2024)
Q1 Q2 H1 Q3 Q4 H2 FY
Revenue (£'m) 10.7 15.7 26.3 23.1 13.2 36.2 62.6
Revenue growth % (6.7%) (1.8%) (3.8%) 3.0% 5.0% 3.7% 0.4%
LFL revenue (£'m)(4) 10.2 15.0 25.3 21.4 12.2 33.6 58.5
LFL growth % (7.9%) (1.8%) (4.4%) (0.6%) 1.5% 0.2% (2.0%)
Notes
(1) Underlying operating loss, underlying loss before tax and underlying
EBITDA are presented before non-underlying items of £0.3m in H1 FY25 (H1
FY24: £1.5m) in relation to IPO-related share-based awards and, in FY24,
transition and dual running costs in respect of the Group's new Store Support
Centre
(2) UK Kitchenware market growth (excluding ProCook) calculated using weekly
GfK data and management estimates.
(3) FY25 LFL (Like For Like) revenue reflects:
- Ecommerce LFL - ProCook direct website channel only.
- Retail LFL - Continuing Retail stores which were trading
for at least one full financial year prior to 31 March 2024, inclusive of any
stores which may have moved location or increased/ decreased footprint within
a given retail centre.
(4) FY24 LFL (Like For Like) revenue reflects:
- Ecommerce LFL - ProCook direct website channel only.
- Retail LFL - Continuing Retail stores which were trading
for at least one full financial year prior to 2 April 2023, inclusive of any
stores which may have moved location or increased/ decreased footprint within
a given retail centre.
(5) The LFL revenue growth % by quarter for Q1 and Q2 FY25 has been adjusted
to exclude the closures of two garden centre stores which were closed during
Q3 FY25 and were previously included within LFL revenue.
FY25 store opening programme:
Location Retail Centre Anticipated opening
Bracknell Lexicon Opened April 2024
Birmingham, Solihull Touchwood Opened August 2024
Newcastle Metrocentre Opened September 2024
Oxford Westgate Opened September 2024
Epsom Ashley Centre Opened October 2024
Norwich Chantry Place Opened November 2024
Exeter Princesshay Opened November 2024
Guildford High Street Opened November 2024
Birmingham, Dudley Merry Hill Opened November 2024
Bournemouth Castlepoint February 2025
Bristol Cabot Circus February 2025
Milton Keynes Centre:MK March 2025
CEO's Review
Our first half trading performance has been encouraging, with continued
momentum in revenue growth and positive like for like momentum in both Retail
and Ecommerce channels. We have attracted more new customers to shop with us
year on year, and our L12M active customer base is at a record high of 1.1m
customers, having increased by +11.7% year on year.
We are well positioned for the remainder of the important peak trading period,
having expanded our store footprint and ranges, with strong inventory levels
secured. Trading in the first eight weeks of the second half, including Black
Friday, has shown improving momentum after a subdued start to the period which
coincided with the Budget event, and our Christmas campaign will provide
customers with our award-winning quality at great value prices.
Continued trading momentum in challenging conditions
The consumer backdrop remains difficult, with improving trends in consumer
confidence stalling more recently, fuelled by uncertainty around the recent UK
Budget, and wider macroeconomic and geopolitical factors. The kitchenware
market remains subdued, with limited growth, with the lack of consumer
confidence impacting discretionary spending.
Against this backdrop, I am pleased that we grew market share during the first
half with revenue growth of +7.5% year on year and like for like revenue
growth of +4.2%.
We have now delivered five consecutive quarters of like for like growth in
Retail stores, and by expanding our store network, with the addition of four
new stores in H1, our total Retail revenue growth was +6.5%.
Ecommerce revenue grew by +9.4% year on year, with like for like growth of
+8.5%, recuperating much of the disruption from the previous year's website
migration. Additionally, our re-launch of sales through Amazon UK contributed
the balance of +0.9% points of growth.
We have continued to invest in offering outstanding value for customers during
the first half, retaining the lower prices we implemented in H2 last year for
the majority of the first half. Therefore, our revenue growth has been driven
by volume and transaction growth, with a 160bps reduction in gross margin, in
line with our expectations for the first half.
We have maintained strong cost discipline throughout the first half, with
operating costs as a percentage of revenue slightly lower year on year,
despite inflationary headwinds. This resulted in a £1.1m increase in
underlying operating costs as we have grown; we continue to focus on improving
operating efficiency for the medium term to offset the impacts of inflation on
our business, especially in pay costs. As a result, our underlying operating
loss in H1 increased by £0.3m to £1.8m compared to FY24 H1.
H2 is the Group's critical trading period, as it typically represents
approximately 60% of revenue each year and this seasonal weighting provides
improved operating leverage over our fixed cost base. We have improved our
Black Friday and Christmas offers for customers, and with the right inventory
on hand we are well prepared.
Delivering on our strategic plan
In June we set out our plan to achieve our medium-term ambition of operating
100 retail stores in the UK, growing revenue to £100m and delivering 10%
operating profit margins, and we are making good progress with the actions we
set out.
We opened four new stores in the first half, followed by five new stores
during the first seven weeks of the second half (nine new stores in the year
to date). After closing two smaller and less profitable garden centre stores,
we now operate from 64 stores. We now plan to open a further three new stores
in the balance of this financial year taking our new store tally for FY25 to
12. Our new property pipeline for FY26 is taking shape already and we are
encouraged by both the performance in the new stores thus far, and the
opportunity these new stores present to deliver profitable growth, better
leverage our fixed cost base, and build brand awareness.
High quality and great value products are critical to our continued success,
and I am pleased with the progress we have made in this regard, as highlighted
by Good Housekeeping, Which? and Ideal Home. We have expanded our promotional
Black Friday and seasonal Christmas offers, and increased the range of small
kitchen electricals we now offer following phase 3 launch in Summer. Phase 4
of small kitchen electricals (coffee) is on track to launch during Q4. We
continue with efforts to consolidate our supplier base which will improve
quality, service and cost price.
We have continued our relentless drive to ensure our customer service and
experience is the very best it can be. We now monitor NPS in retail stores and
online transactions, using learnings and customer feedback to enhance service
levels and experience. Our focus on User Experience online has enhanced
conversion rates year on year and we have developed and deployed a series of
enhancements during the year thus far.
Building brand awareness remains one of our largest opportunities. Opening the
12 new stores planned for FY25 will give us access to new centre visitors in
excess of 150m per year that we previously did not serve. Additionally, we
have made substantial headway in developing our social marketing activities,
and our mix of spend between digital channels has already shifted and is
delivering improved marketing efficiency. Concurrently, we have made good
progress in developing more inspirational and lifestyle-centred marketing
campaigns, including for Autumn and Christmas, and we have begun developing
our online recipe bank for customers. We are confident these actions will
support greater engagement and connectivity with our brand. We also took the
decision to launch a curated range on Amazon UK, enabling more customers to
discover us for the first time, whilst also providing a convenient next day
service for those who choose to shop this way.
Our supply chain transformation programme is a multi-year initiative, but
early progress has been strong. Our team have shifted thinking to end-to-end
cost effectiveness. Key initiatives launched in the first half include
warehouse operations pick and pack efficiencies, trialling a new delivery
partner with caged deliveries for the South-East region, and increasing
delivery frequency to improve on shelf availability whilst reducing store
inventory levels. These initiatives will, over time, enable us to run a more
efficient business.
Current trading and outlook
In the first eight weeks (ending 8 December 2024) of the second half,
including Black Friday and the early part of Christmas trading, total revenue
was +7.5% year on year, and like for like revenue was +0.9% reflecting
continued trading momentum and market outperformance.
Retail performance was hampered by weak footfall during the early weeks of the
second half which coincided with the Budget event, and a later Black Friday
year on year, but has improved since. As a result, Retail like for like
revenue was -4.0% year on year, however new store openings added +10.3% points
to deliver total Retail revenue growth of +6.3%. Ecommerce performance
continued to increase year on year with like for like growth of +7.7% and
total growth of +9.3% including revenue generated from the recently
re-launched Amazon UK marketplace channel.
Whilst the important Q3 trading period had a subdued start in the early weeks,
we are well positioned to take advantage of the improved momentum we are now
experiencing, supported by our Christmas campaign, new product launches and
strong inventory levels.
Notwithstanding recent continued challenging trading conditions, our
expectations for the Group's full year performance are unchanged, as we
anticipate our typical second half weighting of revenue and profitability,
supplemented by the actions we have taken to expand our retail network,
alongside continued margin and cost discipline.
Accelerating profitable growth
Having returned to profitability last year, we are now committed to building
on this and achieving our medium-term ambition to grow our store network to
100 UK stores, delivering revenue of £100m and improving operating profit
margins to 10%.
The trading momentum of the first half and the eight weeks since, combined
with the strategic progress we have made, provides encouragement that we are
taking the right steps, and that despite the macro headwinds, we are building
improved resilience and a performance culture that can deliver.
The fundamentals of our business model are strong and becoming stronger, and
the Leadership Team, Board and I are eager to progress the many opportunities
we have to build a stronger customer-focused business. As market conditions
improve, the actions we are taking, and investments we are making now will
help us accelerate and deliver profitable and sustainable growth for our
stakeholders.
I am excited by the journey we are on, and I would like to take the
opportunity to thank all our colleagues for their effort, commitment and
customer focus over the first part of this financial year.
Lee Tappenden
Chief Executive Officer
CFO's Review
The market remains challenging and volatile as consumer confidence is impacted
by cost-of-living pressures, economic and geopolitical uncertainty. Against
this backdrop, we have delivered a strong performance in the first half,
outperforming a subdued market and growing our customer base.
We maintain a tight grip on gross margins and operating costs, balancing the
need to offer the best possible value to customers in a competitive market,
whilst driving improved profitability. We have worked to mitigate, where
possible, the effects of inflation, through operating efficiencies and
improved business processes.
As a result of the global supply chain disruption, we prudently ordered
inventory earlier than normal, to ensure that we were well positioned for the
peak trading period.
We have made good progress against our strategic priorities, and we continue
to invest in the areas which will support our performance and deliver
profitable growth for the long term, including in particular this year our new
store opening programme which is a key part of our strategy.
The first half of the financial year typically generates around 40% of full
year sales. The larger and far more profitable second half of the year
typically delivers around 60% of sales, and with strong inventory levels and a
robust trading plan in place we are well placed for the remainder of the
second half.
Revenue
£m H1 FY25 YoY %
Revenue 7.5%
28.3
Ecommerce 10.0 9.4%
Retail 6.5%
18.3
LFL Revenue 4.2%
26.7
LFL Ecommerce 8.5%
9.9
LFL Retail 16.8 1.9%
First half revenue of £28.3m was +7.5% year on year, and +4.2% on a like for
like basis, reflecting continued trading momentum and +5% market
outperformance.
Ecommerce revenue increased by +9.4% reflecting a significantly improved
performance on last year (which was impacted by the new website migration in
Q2) driven by conversion and marketing improvements. The planned relaunch of
sales on the Amazon UK marketplace to broaden our customer reach contributed
+0.9% points of non-like for like growth in the second quarter.
Retail revenue increased by +6.5% benefitting from the fifth consecutive
quarter of positive like for like growth (+1.9% for the first half) and the
impact of new store openings which added a further 4.6% points.
Gross profit
Gross profit increased +5.1% year on year to £18.4m, driven by revenue
growth. This represented a gross profit margin decrease of 160bps which was
primarily due to investment in improved pricing for customers (-210bps),
increased freight costs (-30bps) and mix effect (-60bps), partly offset by
favourable foreign exchange impacts (+130bps) and lower promotional discounts
(+20bps).
Operating expenses and other income
Underlying operating expenses net of other income
Total underlying operating expenses net of other income increased by £1.1m
(+6.3%) year on year, although despite inflationary headwinds, were 120bps
lower year on year as a percentage of revenue, driven by:
· Volume growth: +£0.5m
· Payroll inflation: +£0.6m
· Digital marketing: +£0.2m
· New stores: +£0.2m
· Cost efficiencies: -£0.3m
Non-underlying operating expenses
It is the Group's policy to disclose separately such items that relate to
non-recurring events and are material in nature, and incurred outside of the
normal business operations, in order to provide a consistent and comparable
view of the underlying performance of the Group. Non-underlying operating
expenses in H1 FY25 were £0.3m (H1 FY24: £1.4m).
Consistent with prior periods, expenses in respect of employee share-based
awards which relate to the IPO in FY22, which itself is non-recurring, have
been presented as non-underlying costs. These expenses amounted to £0.3m in
H1 FY25 (H1 FY24: £0.7m). These expenses are expected to continue through
relevant vesting periods to the third anniversary of the IPO in November 2024.
During the first half of FY24, we completed the final elements of transition
into our new SSC. Operating expenses associated with the costs of
transitioning into the new site and the dual occupancy of the new and previous
sites were £0.9m in H1 FY24.
Operating profit / (loss)
Total underlying operating loss for the period increased year on year to
£1.8m (H1 FY24: £1.5m) primarily driven by the lower gross margins in the
first half. Ecommerce operating margins decreased to 18.8% (H1 FY24: 20.5%)
and Retail operating margins decreased to 11.9% (H1 FY24: 13.6%).
£m H1 FY25 H1 FY24
Underlying operating profit / (loss)
Ecommerce 1.9 1.9
Retail 2.2 2.3
Central costs (5.9) (5.7)
Total (1.8) (1.5)
As a % of revenue
Ecommerce 18.8% 20.5%
Retail 11.9% 13.6%
Central costs (20.6%) (21.8%)
Total (6.2%) (5.8%)
Total reported operating loss in the first half of FY25 of £2.1m, after
£0.3m of non-underlying operating expense items, improved by £0.9m from
£3.0m H1 FY24.
Profit and earnings per share
Underlying losses before tax increased by 64.7% year on year to £2.9m in the
first half of FY25 (H1 FY24: £1.7m).
During the first half there was a net expense of £1.1m (H1 FY24: £0.2m net
expense) in respect of financial items. Financial items included interest
expenses on lease liabilities and borrowings of £0.7m (H1 FY24: £0.7m), and
unrealised losses of £0.4m in respect of foreign exchange (H1 FY24: £0.5m
unrealised gains).
After non-underlying items, the loss before tax was £3.2m (H1 FY24: £3.2m).
Reported loss after tax was £2.5m (H1 FY24: £2.4m).
The effective tax rate based on underlying loss before tax was 25.0% (H1 FY24:
25%).
Earnings per Share
Underlying basic earnings per share for the first half decreased to -1.98
pence (H1 FY24: -1.18 pence) and underlying diluted earnings per share
decreased to -1.98 pence (H1 FY24: -1.18 pence).
Reported basic earnings per share for the first half were -2.30 pence (H1
FY24: -2.22 pence) and reported diluted earnings per share were -2.30 pence
(H1 FY24: -2.22 pence).
Cash generation and net debt
We have carefully managed our cash position during the first half, with net
debt increasing by £3.4m since the FY24 year end reflecting investment in new
stores, the typical seasonal impacts of lower cash generation during the first
half and the requirement to build inventory ahead of peak trading in Q3.
Free cash outflow for the first half was £3.4m (H1 FY24: outflow of £0.3m,
including +£2.6m benefit of Net Working Capital as inventory was reduced)
with net debt at the period end of £4.2m (FY24 year end: £0.7m; H1 FY24:
£3.2m) and available liquidity of £11.8m.
£m H1 FY25 H1 FY24
Reported loss before tax (3.2) (3.2)
Depreciation, amortisation, impairment and profit/ loss on disposal 2.8 2.6
Share based payments 0.4 0.7
Finance expense 0.7 0.8
Unrealised FX losses/ (gains) 0.4 (0.5)
Net working capital (0.3) 2.6
Net operating cash flow 0.9 2.9
Net capital expenditure (1.3) (1.0)
Interest (0.7) (0.8)
Payment of lease liabilities (2.2) (1.4)
Free Cash Flow (3.4) (0.3)
Movement in borrowings 4.5 (0.2)
Dividends paid - -
Movement in cash and cash equivalents 1.1 (0.5)
Cash and Cash equivalents 3.1 1.4
Borrowings (7.3) (4.6)
Net debt (4.2) (3.2)
The reported loss before tax in the first half includes £0.3m of
non-underlying items which did not result in cash outflows during the period
(H1 FY24: £1.5m of non-underlying items of which £0.7m were cash outflows).
An increase in net working capital resulted in a cash outflow of £0.3m in the
first half (H1 FY24: £2.6m inflow) driven by increased inventory intake prior
to the peak trading period, as a result of prudent planning in response to
global supply chain disruption. Inventory on hand at the half year was
therefore £12.9m, £4.4m higher year on year, and up from £8.3m at the FY24
year end. Total inventory at the half year was £16.9m (H1 FY24: £11.9m).
Net capital expenditure of £1.3m in the first half related to the planned
investment in new retail stores.
Full year guidance
Our expectations for the full year remain unchanged. The second half reflects
the seasonal impact of higher trading volumes over Black Friday and Christmas,
and the effect this has to improve leverage of our fixed cost base.
Additionally, we anticipate H2 gross profit margins to improve modestly
compared to H1 driven by FX benefits and targeted price improvements. The new
stores opened in H1 will provide a benefit to profitability in H2, and we
expect to continue to drive operating efficiencies throughout the second half.
The recent Budget announcements around National Insurance Contributions will
not impact this financial year, but will add approximately £0.5m of
additional tax burden next financial year, which we will endeavour to offset
through continual process improvements. As a Real Living Wage employer, the
announcements around the increased National Living Wage were already factored
into our plans and we continue to pay all colleagues, no matter their age, in
excess of the adult National Living Wage.
Banking arrangements
The Group has access to a committed £10m Revolving Credit Facility ("RCF") to
provide additional cash headroom to support operational and investment
activities. This facility expires in April 2026 and provides an accordion
option, subject to the lender's approval, to extend the facility by a further
£5m.
The RCF facility has covenant terms in respect of fixed charge cover whereby
the test requires EBITDAR to be no less than 1.30x fixed charges for the FY25
Q1 and Q2 test dates, and 1.40x thereafter, and also leverage whereby net debt
should be no greater than 2.0x EBITDA. Both covenants are tested quarterly and
are calculated on a last twelve month rolling, pre-IFRS 16 basis.
The Group's ability to meet these covenants has been stress tested as part of
going concern considerations, which is described in more detail below.
The Group has retained its access to an existing uncommitted £6.0m trade
finance facility, which is due to expire in February 2025, although is
expected to be renewed at that date. There is a performance KPI (inventory to
payables ratio), which is monitored on a quarterly basis, however, there are
no covenants or guarantees or other collateral associated with this facility.
Capital allocation and dividend policy
In normal circumstances, the Board currently believes that, to ensure
operating flexibility through the business cycle, it must maintain a minimum
unrestricted cash / debt headroom which the Board reviews on an annual basis,
or more frequently as required. Maintaining this headroom provides a level of
flexibility sufficient to fund the working capital and investment needs of the
Group (as well as set aside an appropriate operating reserve for unexpected
events).
The Group's dividend policy targets an ordinary dividend pay-out ratio of 20%
to 30% of profit after tax during the financial year to which the dividend
relates. The Board anticipates, under normal circumstances, that it will
consider returning surplus cash to shareholders if average cash / debt
headroom over a period consistently exceeds the minimum headroom target,
subject to known and anticipated investment plans at the time.
The full capital and dividend policy is available on the Group's website at
www.procookgroup.co.uk.
Dividends
Due to the ongoing challenging consumer environment and the uncertainty that
it creates around trading performance, and therefore taking a cautious and
responsible decision to preserve cash within the business during these times,
the Board have not recommended any interim dividend in respect of FY25.
Principal risks and uncertainties
The Board regularly reviews and monitors the risks and uncertainties which
could have a material effect on the Group's results. A summary of the
principal risks is set out below:
Risk Impact
Strategy and business change Failure to identify and successfully execute appropriate strategies to develop
and grow the brand over the medium to long term could be affected by a range
of factors including changes in competition or products, consumer behaviours
and trends, inadequate change management or leadership. This could slow or
limit the growth of the business, distract from and / or damage the overall
customer proposition, incur additional cost or serve to demotivate colleagues
if not led effectively.
Competition, Failure to adapt to changing consumer needs given external macro factors, and
market and to maintain a compelling customer offer compared to competitors could limit or
macroeconomic reduce profitability and opportunities for growth. Macroeconomic factors which
reduce consumer confidence and / or disposable incomes or create additional
cost pressures could impact revenue growth and profit generation.
Brand and customer Reputational damage leading to loss of consumer confidence in ProCook products
or services, which could be caused by a variety of factors including customer
data loss, product quality, health and safety, level of direct marketing
activity, ethical or sustainability concerns, poor customer service or,
regulatory non-compliance.
Climate change Any failure to implement our ESG ambitions within acceptable timescales and
deliver on stakeholder expectations to reduce the environmental impact of our
business and progress towards our net zero targets. These include actions
linked to our ESG strategy and managing the potential consequences of climate
change on our business. Failure to meet the expectations of our customers,
colleagues, investors and other stakeholders, may impact our brand reputation
and future trading performance.
Supply chain Failure to source products effectively and efficiently, potentially relating
to geopolitics surrounding Far East manufacturing reliance, or to ensure
inventory is maintained in the right volumes at the right locations could
adversely impact our short and medium term operational and financial
performance.
Technology platforms, data loss and cyber security Failure to develop and maintain appropriate technology to support operations,
or the loss of key platforms or data due to cyber-attacks or other failures
without an adequate response, could lead to reputational damage, fines or
higher costs, or a loss of stakeholder and customer confidence in our Brand.
Marketing effectiveness Any failure to attract new customers and retain existing customers in a
cost-effective and engaging way could impact short term performance and medium
strategic growth ambitions.
People and culture Any failure to attract, retain and develop the right talent, skills and
capabilities or to successfully protect and develop our culture could impact
operational activities including customer service and our longer-term
strategic objectives.
Finance and Any failure to effectively manage our financial affairs and ensure an
treasury appropriate financial position and sufficient liquidity for future growth, or
any failure in financial planning, financial reporting, compliance with tax
legislation, or the maintenance of a robust financial control environment,
could impact our ability to deliver our strategic objectives, as well as have
an adverse impact on business viability.
Regulatory and Any failure to comply with legal and regulatory obligations, or our wider
compliance corporate responsibility could result in financial or legal exposures or
damage our reputation with our Stakeholders as a responsible brand.
Dan Walden
Chief Financial Officer
Statement of Directors' responsibilities
The Directors confirm that these condensed interim financial statements have
been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and that the
interim management report includes a fair review of the information required
by DTR 4.2.7 and DTR 4.2.8, namely:
- An indication of important events that have occurred during the
first half of the year and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remainder of the financial year; and
- Material related-party transactions in the first half of the
year and any material changes in the related-party transactions described in
the last annual report.
The Directors of the Company are listed in the Company's Annual Report and
Accounts for the year ended 31 March 2024. A list of current Directors is
maintained on the Company's corporate website: www.procookgroup.co.uk.
By order of the Board
Dan Walden
Chief Financial Officer
Consolidated Income Statement (Unaudited)
For the 28 weeks to 13 October 2024
28 weeks ended 13 October 2024 28 weeks ended 15 October 2023
£'000s Note Underlying Non-underlying(1) Reported Underlying Non-underlying(1) Reported
Revenue 1 28,312 - 28,312 26,330 - 26,330
Cost of sales (9,870) - (9,870) (8,775) - (8,775)
Gross profit 18,442 - 18,442 17,555 - 17,555
Operating expenses (20,252) (342) (20,594) (19,098) (1,435) (20,533)
Other income 46 - 46 23 - 23
Operating Loss (1,764) (342) (2,106) (1,520) (1,435) (2,955)
Finance expense (742) - (742) (708) (77) (785)
Other gains/(losses) (377) - (377) 513 - 513
Loss before tax (2,883) (342) (3,225) (1,715) (1,512) (3,227)
Tax credit 4 720 - 720 428 378 806
Loss for the period (2,163) (342) (2,505) (1,287) (1,134) (2,421)
Total comprehensive loss (2,163) (342) (2,505) (1,287) (1,134) (2,421)
Earnings per ordinary share - basic (1.98)p (2.30)p (1.18)p (2.22)p
Earnings per ordinary share - diluted (1.98)p (2.30)p (1.18)p (2.22)p
52 weeks ended 31 March 2024
£'000s Note Underlying Non-underlying(1) Reported
Revenue 1 62,585 - 62,585
Cost of sales (21,486) - (21,486)
Gross profit 41,099 - 41,099
Operating expenses (39,025) (145) (39,025)
Other income 49 - 49
Operating profit 2,123 (145) 1,978
Finance expense (1,230) (132) (1,362)
Other gains 114 - 114
Profit before tax 1,007 (277) 730
Tax expense 4 (165) 45 (120)
Profit for the period 842 (232) 610
Total comprehensive loss 842 (232) 610
Earnings per ordinary share - basic 0.77p 0.56p
Earnings per ordinary share - diluted 0.73p 0.53p
(1) See note 2 for further information
Consolidated Statement of Financial Position (Unaudited)
As at 13 October 2024
£'000s Note As at 13 October 2024 As at 15 October 2023 (restated)(1) As at 31 March 2024
Assets
Non-current assets
Intangible assets 52 164 104
Property, plant, and equipment 8,894 8,169 8,232
Right-of-use assets 7 20,520 25,493 20,522
Deferred tax asset 655 894 655
Total non-current assets 30,121 34,720 29,513
Current assets
Inventories 8 16,941 11,885 9,716
Trade and other receivables 2,206 3,409 3,742
Current tax asset 865 797 145
Cash and cash equivalents 9 3,091 1,446 2,005
Total current assets 23,103 17,537 15,608
Total assets 53,224 52,257 45,121
Liabilities
Current liabilities
Trade and other payables 16,223 10,722 10,431
Lease liabilities 7 3,251 3,772 3,347
Provisions 210 206 253
Borrowings 10 7,273 4,624 2,754
Total current liabilities 26,957 19,324 16,785
Non-current liabilities
Trade and other payables 48 357 48
Lease liabilities 7 19,279 26,267 19,295
Provisions 591 552 565
Total non-current liabilities 19,918 27,176 19,908
Total liabilities 46,875 46,500 36,693
Net Assets 6,349 5,757 8,428
Equity and reserves attributable to Shareholders of ProCook Group plc
Share capital 1,090 1,090 1,090
Ordinary Shares to be issued 4,525 7,405 4,099
Share Premium 1 1 1
Retained earnings 733 (2,739) 3,238
Total equity and reserves 6,349 5,757 8,428
(1) The deferred tax and current tax assets in the financial year ending 2
April 2023 has been restated in relation to deferred tax on share-based
payments. Further information relating to this restatement is set out in the
Group's FY24 Annual Report and Accounts.
Consolidated Statement of cash flows (Unaudited)
For the 28 weeks to 13 October 2024
28 weeks ended 28 weeks ended 52 weeks ended
£'000s Note 13 October 2024 15 October 2023 31 March 2024
Cash flows from operating activities
(Loss)/profit before tax (3,225) (3,227) 730
Adjustments for:
Depreciation of property, plant, and equipment 566 489 936
Amortisation of intangible assets 51 70 131
(Gain)/Loss on disposal of property, plant, and equipment (21) - 457
Gain on disposal of leases - - (2,301)
Profit on termination of leases - (5) -
Amortisation of right-of-use assets 7 2,226 2,053 3,945
Unrealised FX losses/(gains) 383 (549) (411)
Cash outlay on exercise of share options - - (360)
Share Based Payments 426 653 514
Finance expense 742 785 1,362
Operating cash flows before movements in working capital 1,148 269 5,003
(Increase)/decrease in inventories 8 (7,225) (370) 1,799
Decrease/(Increase) in trade and other receivables 1,494 (664) (1,459)
Increase in trade and other payables 5,454 3,700 3,255
(Decrease)/increase in provisions (17) (54) 5
Income taxes (paid) 4 - - (9)
Net cash flows from operating activities 854 2,881 8,594
Investing activities
Purchase of property, plant, and equipment (1,312) (1,060) (1,844)
Lease inception costs (19) (11) (71)
Lease incentives received - 10 60
Net cash (used in) investing activities (1,331) (1,061) (1,855)
Financing activities
Interest paid on borrowings (238) (246) (367)
Interest paid on lease liabilities 7 (494) (539) (982)
Proceeds from borrowings 10 14,142 15,785 23,974
Repayment of borrowings 10 (9,623) (15,965) (25,923)
Lease principle payments 7 (2,224) (1,371) (3,398)
Net cash (used in) financing activities 1,563 (2,374) (6,696)
Net movement in cash and cash equivalents 1,086 (516) 43
Cash and cash equivalents at beginning of the period 2,005 1,962 1,962
Cash and cash equivalents at end of period 9 3,091 1,446 2,005
Consolidated statement of changes in equity (Unaudited)
For the 28 weeks to 13 October 2024
£'000 Note Share capital Share Premium Share Option Reserve Retained earnings Total equity
As at 2 April 2023 (restated)(1) 1,090 1 6,891 (318) 7,664
Total comprehensive loss for the period - - - (2,421) (2,421)
Employee Share Based Payment Awards - - 653 - 653
As at 15 October 2023 (restated)(1) 1,090 1 7,544 (2,739) 5,896
Total comprehensive loss for the period - - 3,031 3,031
Employee Share Based Payment Awards - - (139) - (139)
Exercise of share options 5 - - (3,306) 2,946 (360)
As at 31 March 2024 1,090 1 4,099 3,238 8,428
Total comprehensive loss for the period - - - (2,505) (2,505)
Employee Share Based Payment Awards - - 426 - 426
As at 13 October 2024 1,090 1 4,525 733 6,349
(1) The deferred tax asset in the financial year ending 2 April 2023 has been
restated in relation to deferred tax on share-based payments, with resulting
decreases to retained earnings. Further information relating to this
restatement is set out in the Group's FY24 Annual Report and Accounts.
Consolidated Financial Statements Accounting Policies (Unaudited)
For the 28 weeks to 13 October 2024
General Information
The Group interim financial statements consolidate those of ProCook Group plc
(the 'Company') and its subsidiaries, together referred to as the 'Group'.
ProCook Group plc is a public limited company incorporated and domiciled in
England and Wales under the Companies Act 2006 (Registration number:
13679248). The registered office is ProCook, 10 Indurent Park, Gloucester,
GL10 3EZ.
The principal activity of the Company together with its subsidiary
undertakings throughout the period is the sale of kitchenware and related
products in stores and via ecommerce platforms.
The Group's financial results and cashflows are subject to seasonal trends
throughout the financial period. Typically, revenue and profit are higher in
the last 24 weeks of the financial year due to the seasonal impact of
increased trade in the run up to Christmas.
Basis of preparation
These condensed interim financial statements for the 28 weeks ended 13 October
2024 have been prepared in accordance with IAS 34 "Interim financial
information". These condensed interim financial statements do not comprise
statutory accounts within the meaning of Section 434 of the Companies Act 2006
and are not audited.
The condensed interim financial statements should be read in conjunction with
the annual financial statements for the year ended 31 March 2024, which were
prepared in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006, UK-adopted IFRS as issued by
the International Accounting Standards Board.
Statutory financial statements for the period ended 31 March 2024 were
approved by the Board of Directors on 25 June 2024 and delivered to the
Registrar of Companies. The auditors have reported on those financial
statements; their reports were (i) unqualified, (ii) contained a reference to
the material uncertainty in respect of going concern to which the auditor drew
attention by way of emphasis without modifying their report, (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
The presentation of the condensed financial statements requires Directors to
make judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experiences
and various other factors that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates.
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the financial statements.
Basis of consolidation
Group companies included in these consolidated interim financial statements
include ProCook Group plc and all subsidiary undertakings, which are those
entities it controls. ProCook Group plc controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with the entity
and can 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 Group plc until the date that control ceases. The
Company assesses whether it controls an investee if facts and circumstances
indicate that there are changes in the control indicators listed above.
Transactions eliminated on consolidation
Intra-group balances, and any unrealised 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.
Going concern
The interim financial statements have been prepared on a going concern basis.
The Group had net debt (cash and cash equivalents less borrowings) of £4.2m
at 13 October 2024 (15 October 2023: £3.2m) with available liquidity headroom
of £11.8m.
In their assessment of going concern the Board has considered a period of at
least 12 months from the date of signing these financial statements. In
considering whether it is appropriate to adopt the going concern basis in the
preparation of the financial statements, the Directors have considered the
Group's principal risks and uncertainties and have assessed the impact of a
range of downside scenarios, including a severe but plausible downside
scenario, on the Group's expected financial performance, position, and cash
generation. The scenarios have been informed by a comprehensive review of the
macroeconomic environment, including consideration of the current weakened
consumer confidence driven by economic uncertainty, alongside geo-political
tensions including the impacts on our supply chain.
Consideration has been given to the availability of facility headroom and
covenant compliance within the Group's financing facilities, the recently
extended RCF agreement and amended fixed charge covenant terms, details of
which are as follows:
- ProCook's bank facility agreements include a committed £10m
Revolving Credit Facility "RCF" (expiring in April 2026, although expected by
management to be renewed at that date), with a £5m accordion option to the
RCF, subject to lender approval, and an uncommitted £6m trade finance
facility.
- The RCF facility has covenant terms in respect of fixed charge
cover whereby the test requires EBITDAR to be no less than 1.30x fixed charges
for the FY25 Q1 and Q2 test dates, and 1.40x thereafter, and also leverage
whereby net debt should be no greater than 2.0x EBITDA. Both covenants are
tested quarterly and are calculated on a last twelve month rolling, pre-IFRS
16 basis.
The base case for the scenario modelling reflects the Group's most recent
quarterly forecast that was presented to the Board in November 2024. Forecasts
for FY26 are based on the Group's strategic objectives and its latest five
year financial plan, which projects forwards from the latest FY25 quarterly
forecast.
Key assumptions include Ecommerce and Retail like for like revenue growth,
gross margin performance, the financial impacts of opening of new stores
(including capital investments and time to maturity), operational efficiencies
being delivered, investment in marketing activity, and the appropriate level
of inventory required to maintain strong product availability for customers.
In their consideration of the Group's principal risks and uncertainties the
Board believes that the most likely and most impactful risks that the Group
faces are those surrounding customer and macro-economic factors, and supply
chain disruption risk, and finance and treasury risks (foreign exchange on
account of the US presidential elections) all of which are heightened as a
result of the current macro-environment.
The Board has reviewed the potential downside impact of these risks unfolding,
modelled under a number of scenarios including a severe but plausible downside
scenario which reflected the following assumptions:
- A significant reduction in customer demand and shopping
frequency, caused by continued disposable income pressures and consumer
caution in light of political uncertainty, additional cost impacts driven by
continued supply chain disruption associated with the Suez Canal diversions,
and FX impacts on gross profit margins from a stronger US dollar.
- The impacts of these factors have been reflected in an 6% lower
revenue performance in the balance of the FY25 year compared to base case,
increasing to a 10% decrease in FY26, combining to reflect a 38% reduction in
Group revenue growth over the assessment period compared to the base case.
- A reduction in gross margins in the balance of FY25 compared to
the base case of 100bps and by 200bps in FY26 to reflect heightened supply
chain costs and a weaker GBP compared to the US dollar for product purchasing.
Under this severe but plausible downside scenario, and before mitigating
actions, the Group would remain comfortably within its available borrowing
facilities throughout the assessment period and remain compliant with the
fixed charge covenant test. However, it would breach the leverage covenant at
the Q2 FY26 test date given the level of planned and committed inventory
intake and new store openings during the remainder of FY25 and first half of
FY26.
The other downside scenario linked to the key principal risks and
uncertainties, which was considered by the Board, had a less severe cumulative
impact than the severe but plausible downside scenario outlined above and in
this scenario neither of the covenants would be breached, and the Group would
remain comfortably within its available borrowing facilities throughout the
assessment period.
The Board has also considered the potential impacts of climate change risks.
These are not considered to have a material effect on the Group's financial
projections over the assessment period.
If any of the downside scenarios were to arise, including the severe but
plausible downside scenario, there are a series of mitigating actions that the
Group could seek to implement to protect or enhance financial performance and
position including to:
- Increase selling prices for products which have lower price
elasticity to help offset additional sourcing costs
- Increase promotional activity to accelerate trading performance and
reduce stock levels, or alternatively, reduce promotional activity to better
protect gross margins
- Reduce paid media marketing spend and postpone or reduce other
planned marketing activities
- Reduce variable costs in operational functions to reflect the
lower sales volumes
- Reduce central overhead costs (including headcount investment)
over the short or medium term
- Delay new store openings or capital expenditure in technology
and logistics
- Renegotiate or seek extended payment terms with suppliers on a
permanent or temporary basis
- Seek alternative forms of financing or new banking terms to
support working capital and investment requirements
Conclusion
The Board has undertaken a comprehensive review and assessment of going
concern including the Group's financial projections, debt servicing
requirements, available facility headroom and liquidity, and its principal
risks and uncertainties. In the base case and downside scenarios which the
Directors have reviewed, the Group remains comfortably within its available
facility headroom, and no facility covenants would be breached. However, the
Directors recognise that under the severe but plausible downside scenario, the
Group could breach its leverage covenant unless mitigating actions were to be
successfully applied sufficiently in advance to prevent such a breach, or were
it to agree a covenant waiver, new banking terms, or alternative funding
arrangements, none of which can be guaranteed. The Directors therefore
acknowledge that this potential breach represents a material uncertainty which
may cast significant doubt on the Group's ability to continue as a going
concern.
The Board considers the likelihood of such a severe downside scenario
materialising to be low and recognises the range of mitigating actions
available to the Group to prevent such a breach occurring, and the positive
and long-standing relationship which the Group has with its banking partner
HSBC. The Directors therefore have a reasonable expectation that the Group has
adequate resources to continue in operational existence and meet its
liabilities as they fall due over the period of at least 12 months from the
date of approving these financial statements. Accordingly, the financial
statements have been prepared under the going concern basis of accounting.
Accounting Policies
The condensed interim financial statements have been prepared under the
historical cost convention, except for derivative financial instruments and
share based payments which are stated at their fair value. The accounting
policies adopted, as well as significant judgements and key estimates applied,
are consistent with those in the annual financial statements for the year
ended 31 March 2024, as described in those financial statements.
Notes to the Consolidated Financial Statements
For the 28 weeks to 13 October 2024
1. Revenue
Group revenue is not reliant on any single major customer or group of
customers. Management considers revenue to be derived from one business stream
being the retail of kitchenware and related products and services.
Customers interact and shop with the Group across multiple touchpoints and
their journey often involves more than one channel. The Chief Operating
Decision Maker is the Board of Directors of ProCook Group plc. The Board
reviews internal management reports on a frequent basis, and in line with
internal reporting, the channel reporting below indicates where customers
complete their final purchase transaction.
All of the Group's operations are carried out in the UK during H1 FY25. All
revenue is from external customers.
28 weeks ended 28 weeks ended 52 weeks ended
£'000 13 October 2024 15 October 2023 31 March 2024
United Kingdom 28,312 26,330 62,585
Total revenue 28,312 26,330 62,585
2. Non-underlying items
Consistent with prior periods, expenses in respect of employee share-based
awards which relate to the IPO event in FY22, which itself is non-recurring,
have been presented as non-underlying costs. These expenses are expected to
continue through relevant vesting periods to the third anniversary of the IPO
in November 2024.
During the first half of the prior year, the Group completed the final
elements of consolidation of its head office and warehouse operations into its
new Store Support Centre ("SSC"). Operating and finance expenses associated
with the costs of transitioning into the new site and the dual occupancy of
the new or previous sites were £0.9m, and were presented as non-underlying
costs as these items are non-recurring, dual-running and transition-related.
28 weeks ended 28 weeks ended 52 weeks ended
£'000 13 October 2024 15 October 2023 31 March 2024
SSC transition-related costs - 774 1,213
Share based payments 342 661 81
Net profit on reassignment of leases - - (1,867)
Senior management restructuring costs - - 718
Non-underlying operating expenses 342 1,435 145
Non-underlying finance expense - 77 132
Non-underlying loss before tax 342 1,512 277
3. 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 13 October 2024, the Group had two
operating segments, being Ecommerce and Retail. Central costs are reported
separately to the Board. Whilst central costs are not considered to be an
operating segment, it has been included below to aid reconciliation with
operating profit as presented in the Consolidated Income Statement.
28 weeks ended 28 weeks ended 52 weeks ended
£'000 13 October 2024 15 October 2023 31 March 2024
Revenue
Ecommerce 9,979 9,124 22,695
Retail 18,333 17,206 39,890
Total revenue 28,312 26,330 62,585
Operating (loss)/profit
Ecommerce 1,875 1,870 5,325
Retail 2,186 2,347 8,220
Central costs (5,825) (5,737) (11,422)
Non-underlying costs (342) (1,435) (145)
Operating loss (2,106) (2,955) 1,978
Finance costs (742) (708) (1,230)
Other (losses)/gains (377) 513 114
Non-underlying finance costs(1) - (77) (132)
(Loss)/profit before tax (3,225) (3,227) 730
(1)Non-underlying finance costs are the interest costs on the lease
liabilities for the disused warehouses in FY24.
Substantially all of the assets of the Group are located in the UK.
4. Tax expense
The underlying effective tax rate for the 28 weeks ending 13 October 2024 is
25.0% (28 weeks ended 15 October 2023: 25%; year ended 31 March 2024: 16.4%).
Tax expense has been provided for in H1 FY25 at the prevailing tax rate of
25%.
The standard rate of UK corporate income tax was 25% for all periods
presented.
5. Dividends
No final dividend was declared in respect of the period ended 31 March 2024
and the Group has not declared an interim dividend in respect of the current
half year period.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period
attributable to equity holders of the Parent by the weighted average number of
ordinary shares in issue.
Diluted earnings per share is calculated by dividing the profit for the period
attributable to 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 52 weeks ended
13 October 2024 15 October 2023 31 March 2024
Weighted average number of shares 108,956,624 108,956,624 108,956,624
Impact of share options 8,452,918 11,897,040 7,072,398
Number of shares for diluted earnings per share 117,409,542 120,853,664 116,029,022
28 weeks ended 28 weeks ended 52 weeks ended
13 October 2024 15 October 2023 31 March 2024
£'000 Underlying(1) Reported Underlying(1) Reported Underlying(1) Reported
(Loss)/profit for the period (2,163) (2,505) (1,287) (2,421) 842 610
Earnings per ordinary share - basic (1.98)p (2.30)p (1.18)p (2.22)p 0.77p 0.56p
Earnings per ordinary share - diluted(2) (1.98)p (2.30)p (1.18)p (2.22)p 0.73p 0.53p
(1)Underlying earnings per ordinary share is a non-IFRS measure.
(2)In the 28 weeks ended 13 October 2024 and 15 October 2023 the impact of
share options was anti-dilutive.
7. Leased assets
The Group leases a number of assets, with all lease payments fixed over the
lease term. Where there are leasehold properties which hold a variable element
to lease payments made these are not capitalised as part of the right of use
asset. All expected future non-variable cash out flows are reflected within
the measurement of the lease liabilities at each period end.
As at 13 October As at 15 October As at 31 March
2024 2023 2024
Number of active leases 74 72 70
Right of use assets
£'000 Leasehold Property Motor Vehicles Plant and Equipment Total
Cost
At 31 March 2024 31,341 125 92 31,558
Additions 2,053 78 - 2,131
Remeasurement(1) 131 - - 131
Disposals (1,105) (16) - (1,121)
At 13 October 2024 32,420 187 92 32,699
Accumulated amortisation and impairments
At 31 March 2024 10,916 94 26 11,036
Charge for the period 2,188 28 10 2,226
Disposals (1,067) (16) - (1,083)
At 13 October 2024 12,037 106 36 12,179
Net Book Value
At 31 March 2024 20,425 31 66 20,522
At 13 October 2024 20,383 81 56 20,520
Lease liabilities
£'000 Leasehold Property Motor Vehicles Plant and Equipment Total
At 31 March 2024 22,549 29 64 22,642
Additions 1,959 78 - 2,037
Remeasurement(1) 135 - - 135
Interest expense 491 2 1 494
Lease payments (2,671) (35) (12) (2,718)
Disposals (60) - - (60)
At 13 October 2024 22,403 74 53 22,530
(1) Remeasurements have arisen where store lease rental terms and/ or lease
expiry dates have been amended.
8. Inventories
As at 13 October As at 15 October As at 31 March
£'000 2024 2023 2024
Finished goods and goods for resale 16,941 11,885 9,716
Total 16,941 11,885 9,716
The cost of inventories recognised as an expense in the 28 weeks ending 13
October 2024 amounted to £9.9m (28 weeks ending 15 October 2023: £8.8m).
9. 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 13 October As at 15 October As at 31 March
£'000 2024 2023 2024
Cash at bank available on demand 1,860 472 854
Cash in transit 1,231 974 1,151
Total 3,091 1,446 2,005
10. Borrowings
As at 13 October As at 15 October As at 31 March
£'000 2024 2023 2024
Current
Bank loans 7,273 4,624 2,754
Total borrowings 7,273 4,624 2,754
11. Derivatives
The Group's local currency is pounds sterling however but due to purchases of
goods and services in foreign currencies the Group seeks to reduce foreign
exchange risk by entering into forward contracts and other derivatives. At 13
October 2024, the outstanding contracts all mature within 28 months of the
period end, with committed purchases of $33.7m (31 March 2024: $20.8m).
The contracts are measured at their 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. There were no
designated hedges in place during the current or proceeding financial year.
The fair value of derivative financial assets, included within Trade and other
receivables, are as follows:
As at 13 October As at 15 October As at 31 March
£'000 2024 2023 2024
Derivatives - 505 42
Total - 505 42
The fair value of derivative financial liabilities, included within Trade and
other payables, are as follows:
As at 13 October As at 15 October As at 31 March
£'000 2024 2023 2024
Derivatives 341 - -
Total 341 - -
12. Financial Risk Management
Financial risk management
The Group is exposed through its operation to the following financial risks:
credit risk, interest rate risk, foreign exchange 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.
Currently all financial institutions whereby the Group holds significant
levels of cash are rated A+ to A-.
Interest rate risk
As at 13 October 2024 the Group's drawn borrowings are through its trade
finance facility with a floating interest rate linked to the United States
Federal funds rate and its revolving credit facility with a floating interest
rate linked to the Bank of England base rate. Both are variable on the amount
drawn down and there is no fixed settlement date, therefore the 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.
The Group does not currently use any form of derivatives to manage interest
rate volatility or future rate increases, however it does seek to minimise
interest costs through careful management of its use of facilities.
Foreign exchange risk
Foreign exchange risk arises when the Group enters 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 makes purchases of goods and services from overseas in foreign
currencies and uses additional means to cover its exposure to the foreign
exchange movement. The Group uses various financial derivatives such as
forward exchange contracts, to help mitigate movements 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 to support its working
capital and investment requirements. Management reviews cash flow forecasts on
a regular basis to determine whether the Group has sufficient cash available
to support its operational and investment activities.
13. Related Parties
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
Transactions with Life's a Beach, a related party by virtue of one of the
Group's Directors during the period (Daniel O'Neill) being a trustee, relate
to charitable donations made on ProCook sales and other associated
transactions. During the period, ProCook sales generated £19k of donations
payable to Life's a Beach (28 weeks ending 15 October 2023: £17k). During the
period ending 13 October 2024, ProCook made payments totalling £55k to Life's
a Beach (28 weeks ending 15 October 2023: nil). The amount payable at 13
October 2024 was £13k (15 October 2023: £23k).
Transactions with Conway House Limited, a related party by virtue of one of
the Group's Directors (Daniel O'Neill) being a Director of the company, relate
to the provision of advisory services to the Group. During the period, Conway
House Limited provided services totalling £69k (28 weeks ending 15 October
2023: nil). Payments to Conway House totalled £47k during the period (28
weeks ending 15 October 2023: nil). The amount payable at 13 October 2024 was
£22k (28 weeks ending 15 October 2023: nil).
Transactions with Quella Bicycle Limited, a related party by virtue of one of
the Group's Directors during the period (Daniel O'Neill) holding a financial
interest, have previously related to the renting of warehouse space from
ProCook Limited. Quella vacated the premises in March 2023, therefore no
charges were made in the period H1 FY25 (H1 FY24: nil). The amount receivable
at 13 October 2024 was nil (16 October 2023: £9k).
14. Subsequent events
The Group has monitored trading performance, internal activities, as well as
other relevant external factors throughout the period from the balance sheet
date to the date of approving these interim financial statements. No material
changes in key estimates and judgements have been identified as adjusting post
balance sheet events and there have been no material non-adjusting events
since 13 October 2024.
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