REG - ProCook Group PLC - Preliminary Results
06/07/2022 07:00
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RNS Number : 4871R ProCook Group PLC 06 July 2022
6 July 2022
ProCook Group plc
Preliminary Results for the 52 weeks ended 3 April 2022
Continued revenue growth and market share gains in FY22
Confidence in proposition to continue to outperform market in FY23 and beyond
ProCook Group plc ("ProCook" or "the Group"), the UK's leading
direct-to-consumer specialist kitchenware brand, today reports its preliminary
results for the 52 weeks ended 3 April 2022.
FY22 FY21 YoY
Revenue £69.2m £53.4m +29.5%
Gross Profit £45.0m £35.9m +25.5%
Gross margin% 65.1% 67.2% (210bps)
Underlying profit before tax(1) £9.5m £8.3m +14.5%
Underlying profit before tax % 13.7% 15.5% (180bps)
New customers acquired ('000) 723 417 +73.8%
Number of active customers L12M ('000)(2) 974 557 +74.9%
12 month repeat rate %(3) 25.5% 18.6% +6.9%pts
Financial and strategic highlights
- Strong revenue growth of +29.5% (+78.0% vs FY20), with retail
stores re-opened following the end of Covid-19 restrictions, and our UK
website up +250.3% vs FY20, highlighting the strength of our multichannel
proposition
- LFL revenue(4) growth of +32.1% (+123.5% vs FY20), opened eight new
stores during the year
- Outperformed the UK kitchenware market (by +36.0%pts)(5);
consistently taking market share with substantial future opportunities to
continue to penetrate the UK market
- Growth in active customers of +74.9% YoY. Attracted 723,000 new
customers
- Increased 12 month repeat rates to 25.5% (+6.9%pts YoY)
- Strong gross margins of 65.1%, down YoY as expected after impact of
supply chain cost pressures
- Underlying PBT of £9.5m (FY21: £8.3m) reflecting shift back to
more normal operating costs post-pandemic
- New £10m revolving credit facility secured in April 2022
increasing total facilities to £16m. Year-end net debt of £1.8m (FY21: net
cash £3.1m)
- Great place to Work Certification(TM) awarded in year
- Carbon neutral for Scope I and II emissions, developing roadmap to
Net Zero including scope III
- Successful IPO with ProCook Group Plc listing on the premium
segment of the London Stock Exchange on 12 November 2021
- Final dividend of 0.9p proposed by the Board, reflecting our strong
financial performance in the year
Current Trading and Summary Outlook
Based on GfK data we estimate the UK Kitchenware market contracted during the
first quarter of our FY23 financial year by approximately -12%. In light of
this macro-economic backdrop, our exceptional outperformance of the market in
the first quarter of last year which provides tough comparatives (FY22 Q1:
Total revenue +84.9%, LFL revenue +96.7%, UK revenue excluding Amazon
+143.3%), and our strategic exit of Amazon UK in June 2021, our sales
performance in the first quarter of FY23 has declined year on year. Revenue in
the UK, excluding Amazon, was -9.0% year on year, outperforming the market,
and +49.9% compared to Q1 FY20. Total revenue in the first quarter of £11.4m
was -21.6% year on year, but +35.5% compared to Q1 FY20 (pre-pandemic).
The rapid deterioration in the consumer and macro environment means that we
have now had to adjust and re-prioritise our focus. We are well placed to
manage these current challenges with a strong financial position, a resilient
business model, a clear strategy for sustainable and profitable growth, and a
customer proposition focused on exceptional service, quality and value. We
will continue to invest in the initiatives that will drive our brand forward,
making ProCook a stronger, more sustainable business for all of our
stakeholders and with a sharpened focus on our core UK market in the short
term.
In line with our recent trading update on 10 June 2022, the Board expects that
revenue for FY23, will be broadly in line with the last year, with underlying
profit before tax of between £4-6m, reflecting ongoing investment in future
growth, cost inflation and a return to a more typical seasonal second half
weighting. We are confident that the Group remains well placed to capture
increased share of its large and growing market and deliver medium to long
term growth and value to all stakeholders.
Daniel O'Neill, CEO and Founder, commented:
"Over the last year we have made considerable progress in developing our
customer proposition and direct-to-consumer model. I am pleased with our
trading performance and the strategic progress we have made during what has
been a challenging period. Despite these challenges, our business is now much
larger and stronger than pre-pandemic, with more customers and significantly
improved sales and profits. I would like to personally thank all of our people
and partners, who have accomplished so much together over recent years.
"Current market conditions have changed rapidly with consumer confidence
deteriorating to lows not seen for many years.
"Despite this backdrop, as a direct-to-consumer kitchenware specialist, our
attention remains on providing our customers with great products, exceptional
value and the best possible service. We are confident that our proposition
will continue to attract new customers to ProCook and that we can cater for
all budgets and tastes, with our commitment to creating exceptional value
through pricing which is at least 30% cheaper than comparable products from
competitor brands.
"We are energised by the longer term opportunities we see ahead of us to
develop the ProCook brand and our sharpened focus on the core UK market
opportunity during these difficult times, will give us the capacity to
reinforce and strengthen our market position and customer proposition, leaving
us better placed to capture wider growth opportunities as trading conditions
improve."
Analyst presentation
There will be an in-person presentation for analysts and institutional
investors this morning at 9.00am, hosted at Peel Hunt LLP, 100 Liverpool
Street, London, EC2M 2AT. This presentation will also be streamed live as a
webinar with a facility for Q&A. For details, please contact
catherine.chapman@mhpc (mailto:catherine.chapman@mhpc) .com.
For further information please contact:
ProCook Group plc investor.relations@procook (mailto:investor.relations@procook) .co.uk
Daniel O'Neill, Chief Executive Officer and Founder
Dan Walden, Chief Financial Officer
MHP Communications (Financial PR Adviser) procook@mhpc.com
Katie Hunt Tel: +44 (0)7711 191 518
Catherine Chapman
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 through 55 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 700 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 £45m.
Quarterly revenue performance
FY22 (52 weeks ending 3 April 2022)
Q1 Q2 H1 Q3 Q4 H2 FY
Revenue £14.6m £17.5m £32.1m £23.0m £14.0m £37.0m £69.2m
Revenue growth % 84.9% 9.8% 34.6% 35.7% 11.4% 25.4% 29.5%
Yo2Y revenue growth % 72.9% 69.3% 70.9% 84.0% 85.8% 84.7% 78.0%
LFL revenue £11.2m £14.3m £25.5m £18.6m £10.9m £29.5m £55.0m
LFL growth % 96.7% 19.5% 44.4% 34.1% 7.7% 23.0% 32.1%
Yo2Y LFL growth % 167.7% 131.5% 146.2% 105.7% 109.1% 107.0% 123.5%
FY21 (53 weeks ending 4 April 2021)
Q1 Q2 H1 Q3 Q4 H2 FY
Revenue £7.9m £16.0m £23.9m £17.0m £12.5m £29.5m £53.4m
Revenue growth % (6.5%) 54.3% 27.0% 35.6% 66.8% 47.3% 37.5%
LFL revenue £5.7m £11.9m £17.7m £13.8m £10.1m £24.0m £41.6m
Total LFL growth % 36.1% 93.8% 70.4% 53.4% 94.1% 68.3% 69.1%
Notes
(1) Underlying profit before tax is presented before non-underlying items of
£9.4m in FY22 in relation to IPO costs and IPO-related share-based awards
(2) Number of active customers reflects those customers on our database who
have purchased in the last 12 months
(3) 12 month repeat rate reflects the % of customers first acquired in a
previous financial year which have made at least one subsequent purchase in
the following financial year
(4) LFL reflects:
- Retail 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 - Continuing ecommerce websites and
marketplaces that have been trading for at least one full financial year prior
to 29 March 2020, excluding the UK Marketplace which ceased trading on 28th
June 2021
(5) UK Kitchenware market growth (excluding ProCook) calculated using weekly
GfK data and management estimates
Chairman's Statement
I am pleased to report on our first annual results as a publicly listed
company. The year has been challenging in many ways; however, the business has
made considerable progress. During the year, we significantly grew our
customer base, delivered another record sales performance, and expanded our
store portfolio and product range, whilst also completing our initial public
offering ('IPO').
I would like to thank all of our ProCook team, suppliers and partners on
behalf of the Board for their energy and dedication to continually improving
our customer proposition.
The return to a more normal life for our customers following the Covid-19
restrictions which dominated so much of the previous two years offered a
welcome boost to trading in the year as our retail stores re-opened.
Fortunately, the impact of the Omicron variant, which resulted in lower
footfall during quarters three and four, was relatively short lived. Global
supply chain disruptions have continued to present multiple and complex
challenges and our buying, logistics and supply chain teams have had to work
tirelessly to resolve these whilst we also invested in inventory to protect
availability for customers during this period.
The more recent onset of the significant inflation and cost of living
pressures has presented new challenges for our business, as well as for our
customers, colleagues and suppliers. However, we are confident that our
strategy and proposition will deliver sustainable, profitable growth over the
medium to longer term, and we are highly focussed on emerging from these
near-term headwinds as an even stronger business.
We have a clear purpose to share our passion for cooking, and our mission to
become the customers' first choice for kitchenware drives our focus on raising
brand awareness, attracting new customers and increasing the lifetime value of
customers. Excellent progress has been made with these key strategic
objectives over the last year.
Governance
As a Board, we are committed to the highest standards of corporate governance,
and I am very pleased to now be working with our Non-Executive Directors -
David Stead, Gillian Davies and Luke Kingsnorth - each of whom have brought
deep and highly relevant sector experience and skills to the Group, since we
formed the Board in October 2021, prior to the IPO.
The Board is working very well with the Executive Directors and wider
Leadership Team, balancing a healthy challenge on strategic, operational and
governance matters, with pragmatic knowledge-sharing and support to help
achieve our strategic ambitions.
Sustainability
ProCook is committed to doing the right thing with a long-standing focus on
improving sustainability and I am encouraged by the progress made in this area
over the last year. Having already reported carbon neutral status for Scope I
and II emissions during the year, the Leadership Team are now completing the
work to establish the roadmap of actions needed to mitigate Scope III
emissions and achieve Net Zero by our target date of 2030, whilst also further
eliminating waste across the business including single-use plastics.
Additionally, the group has been recognised as a Great Place to Work(TM)
during the year, testament to the efforts to create an inclusive, engaging and
caring workplace. We also continue to support a number of important community
initiatives.
Our Chief Executive Officer, in his review, sets out more detail about this
important topic and the next steps we will take. I am pleased to witness the
high level of engagement right across the business towards sustainability as a
whole, and as a Board we are committed to reducing our impact on the
environment and creating an even better place to work.
Dividend
As a result of the Group's strong performance in the year and our confidence
in the Group's ability to deliver sustainable, profitable growth over the
medium to longer term, and in line with our capital allocation policy, the
Board is pleased to recommend a final dividend of 0.9p per share.
Subject to approval at the AGM, payment is expected to be made in late
September.
Outlook
It is clear that the current macro environment is extremely challenging and is
having significant impacts on consumer behaviour. However, ProCook offers
exceptional value across different price points, and our market opportunity
remains highly attractive. We are financially strong, with a flexible and
resilient business model and we are continually enhancing our customer
proposition and marketing activities.
By focusing our efforts on the core organic UK market opportunity in the short
term, we are confident that we can emerge from these difficult market
conditions in a stronger position to capture the clear opportunities ahead of
us.
Greg Hodder
Chairman
6 July 2022
CEO's Review
Introduction
Over the last year we have made considerable progress in developing our
customer proposition and direct-to-consumer model. I am pleased with our
trading performance and the strategic progress we have made during what has
been a challenging period. Despite these challenges, our business is now much
larger and stronger than pre-pandemic, with more customers and significantly
improved sales and profits.
The Group has achieved a great deal during the last year in pursuit of our
mission to become the customers' first choice for kitchenware, and I would
like to personally thank all of our people and partners, who have accomplished
so much together over recent years.
Current market conditions have changed rapidly due to rising inflation and the
cost-of-living squeeze, with consumer confidence deteriorating to lows not
seen for many years. We have adjusted quickly to the reality of this new
trading environment, but uncertainty remains around how prolonged this
difficult trading environment may be.
Despite this backdrop, as a direct-to-consumer kitchenware specialist, our
attention remains on providing our customers with great products, exceptional
value and the best possible service. We are confident that our proposition
will continue to attract new customers to ProCook and that we can cater for
all budgets and tastes, with our commitment to creating exceptional value
through pricing which is at least 30% cheaper than comparable products from
competitor brands.
We are energised by the longer term opportunities we see ahead of us to
develop the ProCook brand and our sharpened focus on the core UK market
opportunity during these difficult times, will give us the capacity to
reinforce and strengthen our market position and customer proposition, leaving
us better placed to capture wider growth opportunities as trading conditions
improve.
Performance in FY22
Strong trading momentum
We are pleased with our strong revenue growth of 29.5% in FY22, which
represented a +78.0% increase on FY20 (pre-pandemic) and a compound annual
growth rate exceeding +30% over the last five years. This performance
reflected our consistent outperformance of the UK kitchenware market, which
enabled us to further grow our market share.
Early in the year we were pleased to re-open our Retail stores following the
disruption and closures related to Covid-19 restrictions in the previous
financial year. Our like for like Retail revenue was +69.3% compared to FY20
supported by strong conversion and increased average transaction values.
Additionally, we opened eight new stores during the year (and closed two) in
retail destination locations extending our retail portfolio to 55 stores, as
well as launching our first Cookery School on Tottenham Court Road, London.
Our Ecommerce performance reflected two key factors; the shift back to
retail-based shopping by consumers and the strategic exit of the Amazon UK
Marketplace at the end of June 2021. Whilst total Ecommerce revenue declined
by -18.9% as a result of these factors, our like for like Ecommerce revenue
remained up +197.1% compared to FY20 reflecting the step change in performance
achieved through our own website.
Gross margin declined by -210bps year on year due to the continued global
supply chain disruption and the higher costs incurred to import products.
During the year revenue growth was driven by volume and product mix as we
chose to hold our pricing to maximise value for customers. We maintained our
disciplined focus on our cost base throughout the year, whilst investing in
specific initiatives to support our growth ambitions. We delivered underlying
profit before tax of £9.5m (FY21: £8.3m) after the return to a more normal
level of operating costs post-pandemic, higher central costs reflecting our
becoming a plc, and as we continued to invest for long term growth.
Customer first focus drives growth
As a direct-to-consumer business, our customers' experience is key to our
continued success and we are pleased to have retained our excellent-rated
Trustpilot score of 4.8. Our growth opportunity is significant and
successfully attracting and retaining customers is our highest strategic
priority.
During the year we accelerated new customer acquisition, attracting 723,000
new customers to shop with ProCook (+73.8% year on year). Our active customer
database reached 974,000 customers at the end of the year (+74.9% year on
year) and our total customer database was approximately 3.2 million customers.
Additionally, we have made strong progress with customer retention activities
including improved re-targeting, better email collection in-store and enhanced
customer segmentation, resulting in our 12-month repeat purchase rate
increasing during the year to 25.5% (FY21: 18.6%). In Ecommerce this rose by
+3.8% points to 27.9%, and in Retail by +4.3% points to 21.4%.
Average Transaction Values (ATV) continued on an upward trajectory driven by
the customer-focused improvements we have made. In Retail we increased overall
value for customers through add-on items and enhanced product training for our
colleagues with ATV increasing to £35 (+7.3% year on year). In Ecommerce, we
have improved the overall shopping experience on our website with improved
navigation tools, increased payment options and redesigned product landing
pages. Ecommerce ATV increased to £67 (+8.9% year on year) which was also
supported by the higher mix of customers transacting on our own direct
website.
Focused on sustainability
Our business has always been focused on doing the right thing, and we are
pleased with the progress we have made in the last 12 months. The appointment
of our ESG Director this year has helped us gain further momentum in the
implementation of our ESG strategy.
We are committed to making ProCook an even better place to work and were
delighted to be certified as a Great Place to Work(TM) during the year as well
as receiving two awards from the UK's Best Workplaces for being ranked 60 in
the top 100 large organisations and being ranked 45 in the top 100 large
organisations for Colleague Wellbeing. We have made good progress with our B
Corp application. Of course, there is more to do, and we will be shortly
launching a new colleague advisory panel to help us listen more and capture
feedback and ideas from right across the business.
We are passionate about reducing our environmental footprint and our
partnership with The Woodland Trust to mitigate unavoidable Scope I and II
emissions has enabled some of our colleagues to utilise their 'Great Causes'
day (which we offer all colleagues) to support replanting activities in the
UK. We have taken further steps to eliminate single use plastics in our
operations and now have minimal plastic product packaging left in our ranges.
Having now developed our environmental management framework we are finalising
our roadmap to achieve Net Zero emissions (including scope III) by our target
date of 2030.
As a responsible employer and corporate citizen, we continue to promote
equality, diversity and inclusion, and our work with the GEM Project, supports
people in Gloucestershire overcome challenges to employment and helps them
move closer towards or into work. In March we were awarded the Gloucestershire
Inclusive Employer award. We began participation in the Disability Confident
Committed scheme this year, and plan to move this forward another level in the
coming months.
Becoming the customers' first choice for Kitchenware
Well positioned in a large market opportunity
The UK kitchenware market in which we operate in is large and typically quite
stable. Experience tells us that the market is relatively resilient in
difficult economic times as consumers eat out less and entertain more in their
homes.
As a direct-to-consumer specialist retailer, our business model allows us to
offer customers exceptional value through our high quality direct-sourced
products, designed by our own team, and which span a range of styles and price
points to suit individual needs, tastes and budgets. These value for money
credentials, accompanied by our conveniently located stores and strong
service, provide a level of resilience to the current macro challenges.
In our core UK market, we have a significant opportunity to raise brand
awareness and increase market share, which we estimate was 2.2% in 2021, as we
pursue our mission to become the customers' first choice for kitchenware.
Attract, engage and retain more customers
Prompted recall of the ProCook brand is still below 40% in the UK (with some
of our competitors enjoying over 70%). Our opportunity to raise customer's
awareness of what we offer is therefore significant. Showcasing our passion
for cooking through 'how to' guides, recipes and lifestyle content combined
with our quality product range and leading pricing will allow us to inspire
and engage our customers.
Having recently welcomed our new Chief Marketing Officer, Angela Porter, we
are now refreshing our brand marketing strategy. We will be accelerating our
top-of funnel campaign activity utilising digital content, much of which we
will create in our own cookery school which doubles as a studio and media hub.
We are optimising our paid media activities implementing automated bidding and
integrating customer data to deliver enhanced conversion tracking.
We are in the process of implementing a powerful new customer experience
platform which will also serve as our email service provider. We will use this
new technology to drive forward our retention marketing activities. We will
improve segmentation of customers cohorts, enhance our targeting and
re-targeting activities across our sales channels and introduce greater
personalisation all whilst gaining valuable and deep insights into customer
behaviour and activity.
Developing our proposition
We are committed to developing our own ecommerce platforms to enable us to
engage more effectively and directly with our customers. As a result, we
expect to withdraw from our remaining Amazon EU activities during the next few
months in order to focus fully on this priority.
Our own website already performs well, as our recent benchmarking exercise
conducted by external specialists has concluded, however we have identified
where we can make further improvements, and we have developed an
experimentation roadmap for user experience and conversion optimisation in the
months ahead. We are planning to migrate the website to the new codebase that
we developed for the EU during FY22 to benefit from improved site speed,
enhanced security and reduced ongoing development time. Focusing on the UK
first will deliver benefits more quickly and allow us to optimise the website,
ready for when we choose to roll out Ecommerce trading to new territories.
Our 55 retail stores, which are designed to inspire customers, provide a
convenient opportunity to test, seek advice and take products home the same
day. Our focus in the short term is on the key retail metrics that drive
performance, so we are rolling out further training for our colleagues and
elevating our customer service focus. In the year ahead we are planning to
open approximately four new stores in the UK, as well as relocating at least
two stores to larger sites within existing retail centres to provide more
space to better display product ranges, particularly tableware.
Our comprehensive product range across Cookware, Kitchen Accessories and
Tableware has over 1,600 SKUs which are ProCook own-brand, designed by us and
direct-sourced from our manufacturing partners. We construct ranges within
clear price and quality/feature hierarchies providing customers choice over
what suits their needs best. We are committed to our pricing model, saving the
customer at least 30% against comparable products from competitor brands, and
are confident that this offers our customers exceptional value for money.
Looking ahead we are excited by the opportunity to extend our Tableware offer
as we further penetrate this large segment of the kitchenware market. Equally,
we expect to launch the first phases of our new ranges of Kitchen Electricals
within the coming year, which will provide another reason for our existing
customers to shop again with ProCook and allow us to attract new customers to
the brand.
Building on our foundations
The rapid growth of the business over recent years has meant our head office
working space and logistics efficiency has been compromised. We are very much
looking forward to moving into our new BREEAM certified Distribution Centre
and HQ later in FY23. This will improve efficiency and capacity in our
logistics operations and provide an inspiring environment for our colleagues
to flourish and teams to collaborate, pushing us on to greater achievements in
the years ahead.
Our proprietary technology platforms support our operations across the
business and coupled with best-in-class third-party technologies, allow us to
be nimble, efficient and highly customer-oriented. We have a full development
roadmap for the year ahead, including the implementation of the new customer
experience platform, migration to our new codebase for our UK website,
improvements to our warehouse management system and security enhancements,
alongside continual website performance improvements.
We remain fully committed to investing in our infrastructure and foundations
to ensure we have an agile and scalable platform that will support future
growth.
Current Trading and Outlook
Based on GfK data we estimate the UK Kitchenware market contracted during the
first quarter of our FY23 financial year by approximately -12%. In light of
this macro-economic backdrop, our exceptional outperformance of the market in
the first quarter of last year which provides tough comparatives (FY22 Q1:
Total revenue +84.9%, LFL revenue +96.7%, UK revenue excluding Amazon
+143.3%), and our strategic exit of Amazon UK in June 2021, our sales
performance in the first quarter of FY23 has declined year on year. Revenue in
the UK, excluding Amazon, was -9.0% year on year, outperforming the market,
and +49.9% compared to Q1 FY20. Total revenue in the first quarter of £11.4m
was -21.6% year on year, but +35.5% compared to Q1 FY20 (pre-pandemic).
The rapid deterioration in the consumer and macro environment means that we
have now had to adjust and re-prioritise our focus. We are well placed to
manage these current challenges with a strong financial position, a resilient
business model, a clear strategy for sustainable and profitable growth, and a
customer proposition focused on exceptional service, quality and value. We
will continue to invest in the initiatives that will drive our brand forward,
making ProCook a stronger, more sustainable business for all of our
stakeholders and with a sharpened focus on our core UK market in the short
term.
In line with our recent trading update on 10 June 2022, the Board expects that
revenue for FY23, will be broadly in line with the last year, with underlying
profit before tax of between £4-6m, reflecting ongoing investment in future
growth, cost inflation and a return to a more typical seasonal second half
weighting. We are confident that the Group remains well placed to capture
increased share of its large and growing market and deliver medium to long
term growth and value to all stakeholders.
Daniel O'Neill
Chief Executive Officer and Founder
6 July 2022
CFO's Review
We have delivered another strong financial performance in FY22, despite the
increasingly challenging market backdrop. Revenue grew by 29.5% to £69.2m as
we continued to grow our market share, and underlying profit before tax of
£9.5m represents 13.7% of revenue. We have continued to invest, with the long
term in mind, in areas that will support sustainable and profitable growth and
the achievement of our strategic priorities.
Revenue
FY22 YoY Yo2Y
Revenue £69.2m 29.5% 78.0%
Ecommerce £32.3m (18.9%) 124.9%
Retail £36.8m 171.9% 50.5%
LFL Revenue £55.0m 32.1% 123.5%
Ecommerce £31.0m (2.2%) 197.1%
Retail £24.0m 140.7% 69.3%
Total revenue in FY22 (the 52-week period ending 3 April 2022) increased by
+29.5% to £69.2m (FY21, the 53-week period ending 4 April 2021: £53.4m).
Compared to FY20, total revenue growth was +78.0%, reflecting like for like
growth of 123.5%.
We have continued to grow our market share, significantly outperforming the UK
Kitchenware market. Based on our analysis of weekly GfK data, our year-on-year
growth was +36 percentage points ahead of the market. Based on Euromonitor's
updated total UK kitchenware market size for 2021 calendar year(1), we
estimate that our share of the market grew from 1.7% in 2020 to 2.2% in 2021.
Ecommerce revenue decreased by -18.9% to £32.3m (FY21: £39.9m) reflecting
the strategic decision we took at the end of June 2021 to exit the UK Amazon
marketplace which reduced our overall Ecommerce revenue by -£6.8m (-17.2%).
Revenue from own website declined by just -1.5% year-on-year, remaining
+250.3% compared to pre-pandemic performance in FY20, despite the return of
customers to physical retail stores very early in the year.
Retail revenue grew by +171.9% to £36.8m (FY21: £13.5m), benefiting from the
stores being open for almost all of the year (Covid-19 restrictions in FY21
meant that our stores were only open for approximately 50% of the year). On a
two-year like-for-like basis, revenue in existing stores in FY20 grew by
+69.3%. During the year we opened eight new stores in destination retail
centres and closed two high street stores increasing our retail store estate
to 55 stores.
(1) In the May 2022 "Homewares in the UK report" from Euromonitor, the 2020 UK
Kitchenware market size has been revised downwards, as a result of
subsequently obtaining more accurate and complete historic numbers for the
full year, to £3.1bn from £3.6bn as reported in April 2021.
Gross profit
We delivered gross profits of £45.0m in FY22 (FY21: £35.9m) maintaining
strong gross margins of 65.1% (FY21: 67.2%), despite choosing to hold selling
prices to maximise value for customers, whilst in the midst of significant
global supply chain challenges. The cost impact of increased marine freight
costs during the year was approximately -200bps year-on-year.
Prior year adjustment
Following careful review of the costs associated with transporting inventory
to its final selling location we have concluded that it is appropriate to
recognise such costs within gross profit. We have adjusted for this in the
current and prior year to aid comparability. This adjustment has reduced gross
margin in FY22 by approximately -210bps (FY21: approximately -140bps). A
corresponding credit has been made to reduce operating costs resulting in nil
net effect on profits in either financial year.
Operating expenses and other income
Underlying operating expenses net of other income
Total underlying operating expenses net of other income were £35.9m (FY21:
£26.2m) representing 51.9% of sales (FY21: 49.0%). This growth in costs was
driven by a number of key factors:
1. Year-on-year effect of existing retail stores fully reopening:
+£5.7m
2. New costs in relation the net six new stores opened in the year:
+£1.7m
3. Variable costs in relation to continuing ecommerce channels as cost
per acquisition returned to more normal pre-pandemic levels: +£0.7m
4. Variable cost savings from the exit of the UK Amazon marketplace:
-£0.6m
5. New headcount related costs in central functions to support growth:
£0.7m
6. Additional spend on brand marketing to increase customer awareness:
£0.9m
7. Other central overhead cost increases including audit and
professional fees, IT and facilities: £0.7m
Retail costs benefitted from the continued property rates 'holiday' during the
year by approximately £1.3m. This temporary relief came to an end in April
2022.
Other income
Total other income of £0.4m in FY22 (FY21: £2.8m) relates to the
Government's Coronavirus Job Retention Scheme and Business Rates Relief scheme
which came into effect during the pandemic whilst our stores (as
'non-essential' retail stores) were closed for significant periods of time.
These have been included in the above explanations on a net basis as they
relate directly to operating costs in relation to our Retail stores.
Non-underlying operating expenses
Non-underlying operating expenses in FY22 of £9.4m include non-recurring
costs in relation to the IPO of £2.7m (2021: £nil) and costs in respect of
employee share-based IPO awards of £6.7m (2021: £nil). Expenses in relation
to these IPO awards are expected to continue through relevant vesting periods
to FY25, albeit these costs reduce over time.
Operating profit
Total underlying operating profit for the period was £9.2m (FY21: £9.7m).
The significant change in channel mix year on year, as retail fully re-opened,
resulted in a large year on year shift in channel profitability. Ecommerce
operating profitability declined from 35.5% of revenue to 24.9% as demand
reduced and costs per acquisition rose back to pre-pandemic levels. Retail
profitability doubled from 13.1% of revenue to 26.2%, benefitting from the
significant growth in sales year on year. The total operating profit from our
Ecommerce and Retail channels combined was £17.7m (FY21: £15.9m) an +11.1%
increase. This growth was offset by the investment in brand marketing and
other central costs as set out above.
£m FY22 FY21
Underlying operating profit
Ecommerce 8.1 14.1
Retail 9.6 1.8
Central costs (8.5) (6.2)
Total 9.2 9.7
As a % sales
Ecommerce 24.9% 35.5%
Retail 26.2% 13.1%
Central costs (12.3%) (11.7%)
Total 13.3% 18.2%
Total reported operating loss, after the £9.4m of non-underlying costs
relating to the IPO in the current year was -£0.2m (FY21: profit of £9.7m).
Profit and earnings per share
Underlying profit before tax was £9.5m representing 13.7% of revenue (FY21:
£8.3m, 15.5%).
During the year there was a net gain of £0.3m (FY21: -£1.4m net loss) in
respect of financial items in the period. Financial items included interest
expenses on lease liabilities and borrowings of -£0.6m (FY21: -£0.5m) offset
by unrealised gains of +£0.9m on derivatives and foreign exchange differences
on the translation of dollar denominated assets and liabilities, (FY21:
-£0.9m loss).
After non-underlying costs, we reported a profit before tax of £0.1m (FY21:
£8.3m). Reported loss after tax was £0.1m (FY21: £6.4m profit).
The effective tax rate based on underlying profit before tax was 20.0% (FY21:
22.5%).
Earnings per Share
Underlying basic earnings per share for the year increased to 7.34 pence
(FY21: 6.42 pence) and underlying diluted earnings per share increased to 6.76
pence (FY21: 5.92 pence).
Reported basic earnings per share for the year were (0.01) pence (FY21: 6.42
pence) and reported diluted earnings per share were (0.01) pence (FY21: 5.92
pence).
Cash generation and net cash/ debt
The Group had a free cash outflow of £3.0m in the current period (FY21:
inflow of £8.2m) and ended the year with net debt of £1.8m (FY21: net cash
£3.1m).
£m FY22 FY21
Reported profit before tax 0.1 8.3
Depreciation, amortisation, impairment and profit/loss on disposal 4.1 3.8
Share based payments 5.8 -
Finance expense 0.6 0.5
Unrealised FX (gains)/losses (1.1) 0.9
Net working capital outflow (3.2) (3.8)
Tax paid (2.0) (2.0)
Net operating cash flow 4.3 7.7
Net capital expenditure (3.8) 3.1
Interest (0.6) (0.5)
Payment of lease liabilities (2.9) (2.1)
Free Cash Flow (3.0) 8.2
Cash and Cash equivalents 3.8 5.9
Borrowings (5.5) (2.8)
Net (Debt)/ Cash (1.8) 3.1
The lower reported operating profit in the year includes the £9.4m of
non-underlying expenses which resulted in £2.2m of additional cash outflows
compared to FY21.
Our increased net working capital position resulted in a cash outflow of
£3.2m in the year (FY21: £3.8m) reflecting our continued investment in
inventory to protect trading and ensure strong levels of availability during
this period of global supply chain disruption. Inventory on hand at the
year-end (excluding inventory in transit) was £15.2m (FY21: £8.1m) up +86.4%
year on year. Total inventory at the year-end was £16.8m (FY21: £10.1m). The
increase in inventory was partly offset by higher trade and other payables
including a higher VAT payable (£1.9m), as a result of the Group's creation
of a VAT Group earlier in the year, which will be paid early in the new
financial year.
Net capital expenditure of £3.8m in the year primarily related to the eight
new stores opened during the year including the new Cookery School at
Tottenham Court Road, London. In the prior year, there was a net capital
expenditure cash inflow of £3.1m after net proceeds of £5.1m in relation to
the sale and leaseback of the head office site in Gloucester.
Tax payments of £2.0m (FY21: £2.0m) reflect payments in advance based on the
anticipated full year current tax charge, which has reduced as we have
finalised our assessment of disallowable costs and share-based awards in
relation to the IPO and completed our transition to IFRS as part of the year
end close. As at 3 April 2022, we have a current tax asset of £0.3m which is
currently being recovered.
Banking agreements
After the year end, on 20 April 2022, the Group entered into an agreement for
a committed £10m Revolving Credit Facility (RCF) to provide additional cash
headroom to support operational and investment activities. This facility
expires in April 2025 and has two one-year extension options. 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 fixed charge
cover (EBITDAR to be no less than 1.7x fixed charges). Both covenants are
calculated on a pre-IFRS 16 basis. The Group's ability to meet these covenants
has been stress tested as part of going concern and viability considerations,
which is described in more detail elsewhere in this report.
As part of this new agreement, the Group has retained its access to the
existing £6.0m trade finance facility (although this is now an uncommitted
facility), which is due to expire in September 2023. The terms of the facility
are consistent with normal practice.
Additionally, the RCF agreement provides an accordion option, subject to the
lender's approval, to extend the facility by a further £5m.
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 Group's
full capital and dividend policy is available on our website at
www.procookgroup.co.uk (http://www.procookgroup.co.uk) .
Dividends
Prior to the IPO, in FY22 the Group paid dividends to the existing
shareholders at that time, totalling £1.9m (FY21: £1.5m), of which £1.0m
was paid in the first half of the year, and the remaining £0.9m was paid in
November 2021.
As a result of the Group's strong performance in the year and the Board's
confidence in the Group's ability to deliver sustainable, profitable growth
over the medium to longer term, and in line with our capital allocation
policy, the Board has recommended to pay a final dividend of 0.9p per share.
Subject to approval by shareholders at the AGM, the final dividend will be
paid on 30 September 2022 to shareholders on the register on 2 September 2022.
Treasury Management
The Group is exposed to foreign currency risk through its trading activities.
The main source of this relates to stock purchases from non-UK suppliers,
which accounts for approximately 95% of the Group's annual stock purchases. To
manage the exchange rate risk, a mixture of standard ("vanilla") forwards and
outperformance trades are utilised. The Group seeks target levels of coverage
for future USD payments, as determined by internal forecasts and the Group's
Treasury Management Policy.
Given the level of USD transactions and cover obtained via financial
instruments, the Group is exposed to a counter-party risk with each of the
financial institutions where arrangements are held. The Group manages this
risk by ensuring only highly credited institutions are used and limiting the
level of exposure with each.
The Group is also exposed to interest rate risk where the Group has financial
obligations that give rise to a variable interest charge. To minimise the
charges and exposure driven by interest rates, the Group ensures that credit
facilities are used optimally in parallel with the latest interest rate
information and forecasts.
Tax Strategy
The Group's tax policy is to manage its tax affairs in a responsible and
transparent manner in line with our commitment to high corporate governance
standards. This ensures the Group complies with the relevant legislation and
has due regard to our reputation and thus seek to promote the long-term
success of the Group and deliver sustainable shareholder value.
A copy of the Group's tax strategy is available our website at
www.procookgroup.co.uk (http://www.procookgroup.co.uk) .
IPO
On the 12 November 2021, the Group successfully completed its 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.
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
6 July 2022
Consolidated Income Statement
For the 52 weeks to 3 April 2022
52 weeks ended 3 April 2022 53 weeks ended
4 April 2021
£'000s Note Underlying Non-underlying Reported
Revenue 1 69,154 - 69,154 53,393
Cost of sales (24,111) - (24,111) (17,513)
Gross profit 45,043 - 45,043 35,880
Operating expenses 2 (36,277) (9,400) (45,677) (29,032)
Other income 5 407 - 407 2,848
Operating profit/(loss) 9,173 (9,400) (227) 9,696
Finance expense (623) (623) (457)
Other gains/(losses) 944 - 944 (949)
Profit before tax 9,494 (9,400) 94 8,290
Tax expense 6 (1,900) 1,720 (180) (1,866)
Profit/(loss) for the period 7,594 (7,680) (86) 6,424
Total comprehensive income/(loss) 7,594 (7,680) (86) 6,424
Earnings per ordinary share - basic 8 7.34p (0.01)p 6.42p
Earnings per ordinary share - diluted 8 6.76p (0.01)p 5.92p
Consolidated Statement of Financial Position
As at 3 April 2022
£'000s Note As at 3 April 2022 As at 4 April 2021 As at 29 March 2020
Assets
Non-current assets
Intangible assets 9 363 67 -
Property, plant, and equipment 10 5,801 3,631 6,780
Right-of-use assets 11 20,985 17,834 10,132
Deferred tax asset 6 1,175 - -
Total non-current assets 28,324 21,532 16,912
Current assets
Inventories 16,759 10,088 5,402
Trade and other receivables 1,975 1,455 600
Current tax asset 271 - -
Cash and cash equivalents 3,782 5,879 2,956
Total current assets 22,787 17,422 8,958
Total assets 51,111 38,954 25,870
Liabilities
Current liabilities
Trade and other payables 8,278 6,221 3,651
Lease liabilities 11 2,844 2,781 1,751
Provisions 173 160 160
Borrowings 5,540 2,803 4,239
Current tax liability - 387 294
Total current liabilities 16,835 12,352 10,095
Non-current liabilities
Trade and other payables 816 - -
Lease liabilities 11 19,605 16,670 8,334
Provisions 444 398 303
Borrowings - - 2,357
Deferred tax liability 6 - 29 250
Total non-current liabilities 20,865 17,097 11,244
Total liabilities 37,700 29,449 21,339
Net Assets 13,411 9,505 4,531
Equity and reserves attributable to Shareholders of ProCook Group plc
Share capital 1,090 - -
Share option reserve 5,801 - -
Share premium 1 - -
Revaluation reserve - - 472
Retained earnings 6,519 9,505 4,059
Total equity and reserves 13,411 9,505 4,531
Consolidated statement of cash flows
For the 52 weeks to 3 April 2022
52 weeks ended 53 weeks ended
£'000s Note 03 April 2022 04 April 2021
Cash flows from operating activities
(Loss)/Profit before tax 94 8,290
Adjustments for:
Depreciation of property, plant, and equipment 10 860 673
Impairment of property, plant, and equipment 10 - 209
Amortisation of Intangible assets 9 52 -
Loss/(profit) on disposal of property, plant, and equipment 10 135 (961)
(Profit)/loss on termination of leases (50) 1,128
Amortisation of right-of-use assets 11 3,056 2,715
(Gains)/losses on derivatives (1,098) 949
Share Based Payments 5,837 -
Finance expense 623 457
Increase in inventories (6,671) (4,686)
Increase in trade and other receivables (372) (855)
Increase in trade and other payables 3,822 1,621
Increase in provisions 59 95
Income taxes paid (2,041) (1,995)
Net cash flows from operating activities 4,306 7,640
Investing activities
Purchase of property, plant, and equipment 10 (3,165) (1,868)
Purchase of intangible assets 9 (348) (67)
Proceeds from sale of fixed assets - 5,096
Lease inception costs (248) (97)
Net cash (used in)/from investing activities (3,761) 3,064
Financing activities
Interest on borrowings (156) (99)
Interest paid on lease liabilities 11 (467) (358)
Proceeds from borrowings 28,320 14,854
Repayment of borrowings (25,583) (18,647)
Principle movement on lease liabilities 11 (2,910) (2,081)
Proceeds from the issue of shares 54 -
Dividends paid 7 (1,900) (1,450)
Net cash used in financing activities (2,642) (7,781)
Net (decrease)/increase in cash and cash equivalents (2,097) 2,923
Cash and cash equivalents at beginning of the period 5,879 2,956
Cash and cash equivalents at end of period 3,782 5,879
Consolidated statement of changes in equity
For the 52 weeks to 3 April 2022
£'000 Share capital Share premium Share option reserve Revaluation reserve Retained earnings Total equity
Note
As at 30 March 2020 - - - 472 4,059 4,531
Total comprehensive income for the period - - - - 6,424 6,424
Transfer from revaluation reserve to retained earnings - - - (472) 472 -
Ordinary dividends paid 7 - - - - (1,450) (1,450)
As at 4 April 2021 - - - - 9,505 9,505
Total comprehensive loss for the period - - - - (86) (86)
Bonus issue(1) 117,300 - - - (117,300) -
Capital reduction(1) (116,300) 116,300 -
Share options exercised 54 1 - - - 55
Issue of shares 36 - (36) - - -
Employee Share Based Payment Awards - - 5,837 - - 5,837
Ordinary dividends paid 7 - - - - (1,900) (1,900)
As at 3 April 2022 1,090 1 5,801 - 6,519 13,411
(1)The bonus issue and capital reduction resulted from the acquisition of
ProCook Limited Group by the new Parent company, ProCook Group plc.
Accounting Policies
For the 52 weeks ending 3 April 2022
General Information
The financial information set out herein does not constitute the Company's
statutory financial statements for the periods ended 3 April 2022 or 4 April
2021, but is derived from those financial statements. Statutory financial
statements for 2022 will be delivered to the Registrar of Companies in due
course. The financial statements were approved by the Board of directors on XX
July 2022. The auditors have reported on those financial statements; their
reports were (i) unqualified, (ii) did not include a reference to any matters
to which the auditors drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under Section 498 (2) or
(3) of the Companies Act 2006.
ProCook Group plc (the Company) 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, Davy Way, Waterwells,
Gloucester, GL2 2BY.
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
Group Reorganisation
On 26 October 2021, ProCook Group Limited acquired the entire shareholding of
ProCook Limited via a share-for-share exchange, with the existing owners of
ProCook Limited at that time becoming the owners of ProCook Group Limited. 100
ordinary shares of £1.00 each in ProCook Limited were exchanged by the owners
for 10,000 ordinary shares of £0.01 each in ProCook Group Limited.
During the year a capital reorganisation was undertaken in the Parent Company
following the acquisition of ProCook Limited. This increased the number of
ordinary shares in issue to 100,000,000 shares of £0.01 each.
On the 10 November 2021, the entire issued share capital of the Company was
admitted for provisional trading on to the premium listing segment of the
Official List of the London Stock Exchange's Main Market for listed
securities, becoming ProCook Group plc, with full admission taking place on
the 12 November 2021.
The insertion of the Company on top of the existing ProCook Limited Group does
not constitute a business combination under IFRS 3 Business Combinations and
as such the consolidated accounts for the Group are treated as a continuation
of the consolidated accounts of the ProCook Limited Group, under the
principles of Merger accounting.
Under the principles of merger accounting the consolidated financial
statements of the newly formed Group must reflect:
- The comparative Consolidated statement of financial position and
income statement show the assets and liabilities and results of the former
ProCook Limited group, transitioned to IFRS, as detailed in note 12.
- The retained earnings and other equity balances of the ProCook
Limited Group at pre-combination carrying amounts.
- The share capital of the Company.
- The Consolidated Income Statement reflects the consolidated results
of the ProCook Limited Group for the full financial year ending 3 April 2022,
inclusive of the results of the newly incorporated parent entity, ProCook
Group plc, from 26 October 2021 onwards.
- As at 3 April 2022, a merger reserve is not recognised on preparing
these consolidated results as the nominal value of the shares issued by
ProCook Group Limited equal the nominal value of the shares received from
ProCook Limited.
These consolidated financial statements of the Group are the first set of
financial statements for the newly formed Group. The prior period has been
presented as a continuation of the former ProCook Limited Group on a
consistent basis as if the group reorganisation had taken place at the start
of the earliest period presented, being 30 March 2020. The prior period
comparatives are those of the former ProCook Limited Group since no
substantive economic changes have occurred.
The Group and its subsidiaries results reported in these financial statements
have been prepared on a consistent basis with uniform accounting policies.
Basis of preparation
These Group's consolidated financial statements have been prepared in
accordance with International Accounting Standards in conformity with the
requirements of the Companies Act 2006, UK-adopted IFRS as issued by the
International Accounting Standards Board. ProCook is a first-time adopter of
IFRS and these financial statements have been properly prepared in accordance
with IFRS 1. The consolidated Group financial statements are presented in
Pounds Sterling, being the Group's functional currency, and generally rounded
to the nearest thousand. They are prepared on the historical cost basis,
unless otherwise stated.
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and Group have adequate resources to
continue in operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in preparing the
financial statements.
Notes to the consolidated financial statements
For the 52 weeks ending 3 April 2022
1. Revenue
Group revenue is not reliant on any single major customer or group of
customers. Management considers revenue is derived from one business stream
being the retail of kitchenware and related products and services.
Customers interact and shop with the Group across multiple touchpoints and
their journey often involves more than one channel. The Chief Operating
Decision-maker is the Board of Directors of ProCook Group plc. The Board
reviews internal management reports on a frequent basis, and in line with
internal reporting, the channel reporting below indicates where customers
complete their final purchase transaction.
The majority of the Group's operations are carried out in the UK, with a
smaller proportion of the Group's revenue being generated in the European
Union. All revenue is from external customers.
52 weeks ended 53 weeks ended
£'000 3 April 2022 4 April 2021
United Kingdom 66,124 50,087
European Union 3,030 3,306
Total revenue 69,154 53,393
2. Operating expenses
Operating profit/(loss) for the periods is stated after charging:
52 weeks ended 53 weeks ended
£'000 3 April 2022 4 April 2021
Exchange losses 32 519
Depreciation of tangible fixed assets 860 673
Amortisation of Intangible assets 52 -
Amortisation of right-of-use-assets 3,056 2,715
Impairment of tangible fixed assets - 209
Variable lease payments 985 267
Loss/(profit) on disposal of property, plant, and equipment 174 (961)
3. Non-underlying items
Due to the non-recurring nature of the Initial Public Offering on the London
Stock Exchange by the Group in the period ended 3 April 2022, the business has
incurred costs which relate to non-recurring events, and are material in
nature, and so have been separately disclosed on the face of the Consolidated
Income Statement as non-underlying items. These included non-recurring costs
in relation to the IPO of £2.7m (2021: £nil) and costs in respect of
employee share-based IPO awards of £6.7m (2021: £nil). Expenses in relation
to these IPO awards are expected to continue through relevant vesting periods
to FY25, albeit these costs reduce over time.
52 weeks ended 53 weeks ended
£'000 3 April 2022 4 April 2021
IPO costs 2,742 -
IPO Share based compensation 6,658 -
Total 9,400 -
4. Segmental reporting
The Chief Operating Decision Maker (CODM) is the Board of Directors and
segmental reporting analysis is presented based on the Group's internal
reporting to the Board. At 3 April 2022, 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 Statement of Income.
52 weeks ended 53 weeks ended
£'000 3 April 2022 4 April 2021
Revenue
Ecommerce 32,332 39,853
Retail 36,822 13,540
Total revenue 69,154 53,393
Operating profit
Ecommerce 8,056 14,146
Retail 9,635 1,773
Central costs (8,518) (6,223)
Non-underlying costs (9,400) -
Operating (loss)/profit (227) 9,696
Finance costs (623) (457)
Other gains/(losses) 944 (949)
Profit before tax 94 8,290
5. Other income
52 weeks ended 53 weeks ended
£'000 3 April 2022 4 April 2021
Other income 112 43
Government grants 295 2,805
Total other income 407 2,848
The government grants relate to the Government's Coronavirus Job Retention
Scheme ('CJRS'), the Government Business Rates Relief Scheme and local
restrictions support grants. There are no unfulfilled conditions or
contingencies attached to these grants that have been recognised.
6. Tax expense
The tax expense for the periods presented differ from the standard rate of UK
corporate income tax applicable in the financial year. The differences are
explained below:
52 weeks ended 53 weeks ended
£'000 3 April 2022 4 April 2021
Current taxation
Corporate income tax charge for the period 1,384 2,087
Adjustments in respect of previous years - -
1,384 2,087
Deferred tax
Origination and reversal of temporary differences (920) (221)
Impact of change in tax rate (284) -
Total tax expense 180 1,866
The tax charge reconciles with the standard rate of UK corporate income tax as
follows:
52 weeks ended 53 weeks ended
£'000 3 April 2022 4 April 2021
Profit on ordinary activities before tax 94 8,290
UK Corporate income tax at standard rate of 19% (2021: 19%) 18 1,575
Factors effecting the charge in the period:
Tax effect of expenses that are not deductible for tax purposes 446 (123)
Adjustments in respect of prior years - 105
Impact of change in tax rate (284) -
Chargeable gains - 309
Total taxation expense 180 1,866
The underlying taxation expense for the period as a percentage of profit
before tax (the effective tax rate) is 20.0% (2021: 22.5%)
The standard rate of UK corporate income tax was 19% for all periods
presented. During the year, the UK Government substantively enacted an
increase in the UK corporate income tax rate to 25% effective from 1 April
2023. Deferred tax balances have been adjusted to reflect the expected
increase in Corporation tax rates.
The deferred tax asset has arisen due to accelerated capital allowances on
items of property, plant and equipment and the timing of future vesting dates
in respect of share based payments. The amounts have been presented on a net
basis to follow the way in which they will be recouped by the Group.
7. Dividends
52 weeks ended Dividend per share 53 weeks ended Dividend per share
(pence) (pence)
£'000 3 April 2022 4 April 2021
(£'000) (£'000)
Final dividend for the period 29 March 2020 - - 1,450 1.5
Final dividend for the period 4 April 2021 1,000 1.0 - -
Interim dividend for the period ended 3 April 2022 900 1.0 - -
In the table above, the 10,000 ordinary shares of £1 each in issue as at 4
April 2021 have been converted to the equivalent post share for share exchange
quantity (100,000,000 ordinary shares of 1 pence) for comparative purposes.
The FY22 interim dividend of £1.0m was declared and paid representing 1.0
pence per shares, however £0.1m of this dividend was waived by certain
shareholders. The interim dividend was paid to the shareholders on the
register at close of business on 8 November 2021.
The Directors have recommended a final dividend of 0.9 pence per ordinary
share, which equates to £1.0m, for the period ended 3 April 2022. Subject to
shareholder approval at the AGM, this will be paid on 30 September 2022 to
shareholders on the register at close of business on 2 September 2022.
8. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period
attributable to equity holders of the Group by the weighted average number of
ordinary shares in issue.
Diluted earnings per share is calculated by dividing the profit for the period
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares in issue during the period plus the weighted average
number of ordinary shares that would have been issued on the conversion of all
dilutive potential ordinary shares into ordinary shares.
52 weeks ended 53 weeks ended
3 April 2022 4 April 2021
Weighted average number of shares 103,509,034 100,000,000
Impact of share options 8,774,159 8,580,000
Number of shares for diluted earnings per share 112,283,193 108,580,000
In the table above, the 10,000 ordinary shares of £1 each in issue as at 4
April 2021 have been converted to the equivalent post share for share exchange
quantity (100,000,000 ordinary shares of 1 pence) for comparative purposes.
52 weeks ended 52 weeks ended 53 weeks ended
3 April 2022 3 April 2022 4 April 2021
£'000 Underlying Reported Reported
Profit/(loss) for the period 7,594 (86) 6,424
Earnings per ordinary share - basic 7.34p (0.01)p 6.42p
Earnings per ordinary share - diluted 6.76p (0.01)p 5.92p
9. Intangible assets
£'000 Software Assets under construction Total
Cost
At 30 March 2020 - - -
Additions - 67 67
At 4 April 2021 - 67 67
Transfers out of Assets under construction 67 (67) -
Additions 190 158 348
At 3 April 2022 257 158 415
Accumulated Amortisation
At 30 March 2020 - - -
Charge for the period - - -
At 4 April 2021 - - -
Charge for the period 52 - 52
At 3 April 2022 52 - 52
Net book value
At 29 March 2020 - - -
At 4 April 2021 - - 67
At 3 April 2022 205 158 363
Amortisation was recognised in the Consolidated Statement of Income within
operating expenses throughout the period.
10. Property, plant and equipment
£'000 Land and Buildings Plant and machinery Fixtures and Fittings Motor Vehicles Assets under construction Total
Cost
At 30 March 2020 4,236 211 4,700 4 - 9,151
Additions 2 206 1,660 - - 1,868
Disposals (4,204) (97) (316) - - (4,617)
At 4 April 2021 34 320 6,044 4 - 6,402
Additions 34 167 2,514 25 425 3,165
Disposals (56) - (96) - - (152)
At 3 April 2022 12 487 8,462 29 425 9,415
Accumulated depreciation
At 30 March 2020 328 38 2,002 3 - 2,371
Charge for the period 35 15 622 1 - 673
Impairment - - 209 - - 209
Disposals (354) (21) (107) - - (482)
At 4 April 2021 9 32 2726 4 - 2771
Charge for the period 3 31 818 8 - 860
Disposals (9) - (3) (5) - (17)
At 5 April 2022 3 63 3,541 7 - 3,614
Net book value
At 29 March 2020 3,908 173 2,698 1 - 6,780
At 4 April 2021 25 288 3,318 - - 3,631
At 3 April 2022 9 424 4,921 22 425 5,801
Impairment tests have been carried out where appropriate and no impairment
charge has been recognised as a result in the 52 weeks to 3 April 2022. In the
year ended 4 April 2021, an impairment loss of £209k was recognised in the
Consolidated Statement of Income within operating expenses which related to a
Group wide review of fixtures and fittings, where certain assets were
identified not to be in working order or in use in retail stores. The
impairment was recognised within the Retail reporting segment.
Depreciation was recognised in the Consolidated Statement of Income within
operating expenses throughout the period.
11. Leased assets
Right-of-use assets included in the Consolidated Statement of Financial
Position were as follows:
£'000 Leasehold Property Motor Vehicles Plant and Equipment Total
Cost
At 30 March 2020 10,239 78 29 10,346
Additions 8,511 117 - 8,628
Re-measurement 2,491 - - 2,491
Disposals (804) (16) - (820)
At 4 April 2021 20,437 179 29 20,645
Additions 7,843 57 39 7,939
Re-measurement 241 - - 241
Disposals (2,296) - - (2,296)
At 3 April 2022 26,225 236 68 26,529
Accumulated amortisation
At 30 March 2020 214 - - 214
Charge for the period 2,667 35 13 2,715
Disposals (102) (16) - (118)
At 4 April 2021 2,779 19 13 2,811
Charge for the period 2,974 68 14 3,056
Disposals (323) - - (323)
At 3 April 2022 5,430 87 27 5,544
Net book value
At 29 March 2020 10,025 78 29 10,132
At 4 April 2021 17,658 160 16 17,834
At 3 April 2022 20,795 149 41 20,985
Lease liabilities included in the Consolidated Statement of Financial Position
were as follows:
£'000 Leasehold Property Motor Vehicles Plant and Equipment Total
At 30 March 2020 9,978 78 29 10,085
Additions 9,385 117 - 9,502
Re-measurement(1) 2,491 - - 2,491
Interest expense 354 3 1 358
Lease payments (2,381) (43) (15) (2,439)
Disposals (546) - - (546)
At 4 April 2021 19,281 155 15 19,451
Additions 7,615 57 39 7,711
Re-measurement(1) 241 - - 241
Interest expense 462 4 1 467
Lease payments (3,286) (75) (16) (3,377)
Disposals (2,044) - - (2,044)
At 3 April 2022 22,269 141 39 22,449
(1)Remeasurements have arisen where store lease rental terms and lease expiry
dates have been renegotiated.
12. Transition to IFRS and other adjustments
These are the first consolidated financial statements prepared for ProCook
Group plc and the first audited financial statements prepared in accordance
with IFRS for the newly formed Group. For all periods up to and including 4
April 2021, the previous group headed by ProCook Limited prepared its
statutory financial statements in accordance with UK GAAP under FRS 102. As
these consolidated financial statements apply merger accounting and present
the comparative as a continuation of the former ProCook Limited Group, these
consolidated financial statements are prepared on the basis that the newly
formed Group's date of transition to IFRS is 30 March 2020, being the
beginning of the comparative period to 4 April 2021.
The effects of transition to IFRS on the Consolidated Statement of Financial
Position at 4 April 2021 and 30 March 2020 and the Consolidated 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 from 30 March 2020. The group has elected not to apply IFRS 3
retrospectively to business combinations that occurred prior to the IFRS
transition date, as permitted by IFRS 1. The principles and requirements for
first time adoption of IFRS are set out in IFRS 1.
Under IFRS the IFRS 16 standard became effective from 1 January 2019, with
early adoption possible. The Group has 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.
Additionally, the Group has undertaken a comprehensive review of its
historical reporting under FRS to consider the accuracy and integrity of the
historical financial statements. As a result, a number of prior year errors
have been identified which require restatement. The adjustments and
restatements for transition to IFRS and correction of FRS prior year errors
are set out below. The impact on the opening balance sheet (30 March 2020) has
been stated first, followed by the impact to the balance sheet as at 4 April
2021; the impact on the 4 April 2021 balance sheet being the sum of the 2020
and 2021 impacts.
1. IFRS Transition:
i. Right of use assets of £9,912k were recognised in the period ended 30
March 2020. An increase of £7,664k was recognised in the period ended 4 April
2021.
ii. Lease liabilities of £10,085k were recognised in the period ended 30
March 2020. An increase of £9,366k was recognised in the period ended 4 April
2021.
iii. Trade and
other payables decreased by £(420k) in the period ended 30 March 2020. A
decrease of £(434k) was recognised in the period ended 4 April 2021.
iv. Non-current
other payables decreased by £(296k) in the period ended 30 March 2020. An
increase of £133k was recognised in the period ended 4 April 2021.
v. Trade and other receivables decreased by £(182k) in the period ended 30
March 2020. A decrease of £(251k) was recognised in the period ended 4 April
2021.
vi. PPE
decreased by of £(386k) in the period ended 30 March 2020. An increase of
£116k was recognised in the period ended 4 April 2021.
vii. Decrease
deferred tax by £(69k) in the period ended 30 March 2020. A decrease of
£(303k) was recognised in the period ended 4 April 2021.
viii. Increased
operating expenses by £1,206k in the period ended 4 April 2021.
ix. Increased
finance expenses by £327k in the period ended 4 April 2021.
x. Decreased the tax expense by £(303k) in the period ended 4 April 2021.
xi. Retained
earnings increased by £44k in the period ended 30 March 2020. Retained
earnings decreased by £(1,233k) in the period ended 4 April 2021.
2. FRS 102 restatement - correction of prior year errors:
2.1 Historically the Group did not defer revenue for the impact of timing
differences between completion of order and actual delivery of the order to a
customer, which was a requirement under FRS 102. The adjustments to reflect
this are:
i. Deferred income increased by £133k in the period ended 30 March 2020.
Deferred income increased by £49k in the period 4 April 2021.
ii. Inventory increased
by £38k in the period ended 30 March 2020. Inventory increased by £15k in
the period 4 April 2021.
iii. Tax expense reduced
by £(7k) in the period ended 4 April 2021.
iv. Reduced cost of sales
by £15k in the period 4 April 2021.
v. Revenue decreased by
£49k in the period 4 April 2021.
vi. Retained earnings
reduced by £(77k) in the period ended 30 March 2020. Retained earnings
decreased by £(25k) in the period ended 4 April 2021.
2.2 Upon adoption of IFRS 15 for the first time, the Group considered
the customer's right to return products for refunds as this is not explicitly
set out under UK GAAP. The adjustment to previous periods for the right to
return is made consistently. The adjustments to reflect this are:
i. Trade and other payables increased by £21k in the period ended 30 March
2020. Trade and other payables increased by £23k in the period to 4 April
2021.
ii. Inventory increased by £7k in the period ended 30 March 2020. Inventory
increased by £8k in the period 4 April 2021
iii. Reduce revenue by
£23k in the period 4 April 2021.
iv. Reduce cost of sales
by £8k in the period 4 April 2021.
v. Retained earnings reduced by £(14k) in the period ended 30 March 2020.
Retained earnings reduced by £(15k) in the period ended 4 April 2021.
2.3 FRS 102 requires the recognition of software within intangible
assets, having previously been recognised under PPE due to their historical
low value. The adjustments to reflect this are:
i. Reduce Property, plant and equipment by £67k in the period ended 4 April
2021.
ii. Increase Intangible assets by £67k in the period ended 4 April 2021.
iii. Retained earnings
were not affected by this adjustment.
2.4 Under IAS 8 a restatement of prior periods is required to
appropriately recognise provisions for dilapidations in the prior period where
they were previously omitted. The adjustments to reflect this are:
i. Provisions of £303k were recognised in the period ended 30 March 2020.
An increase of £95k, from £303k to £398k was recognised in the period ended
4 April 2021.
ii. ROU asset of £220k was recognised in the period ended 30 March 2020. An
increase of £38k in ROU asset was recognised in the period ended 4 April
2021.
iii. Increased operating
expenses by £49k in the period ended 4 April 2021.
iv. Increased finance
expenses by £8k in the period ended 4 April 2021.
v. Retained earnings reduced by £(83k) in the period ended 30 March 2020.
Retained earnings reduced by £(57k) in the period ended 4 April 2021.
2.5 A further restatement in respect of inventory is required as the
Group did not historically include directly attributable transport and labour
costs in relation to bringing inventory into its present location. Such labour
and transport costs were also previously recognised within operating expenses
- this adjustment correctly allocates them to cost of sales. The adjustments
to reflect this are:
i. Inventory increased by £91k in the period ended 30 March 2020. Inventory
increased by £37k in the period ended 4 April 2021.
ii. Increase cost of sales by £799k in the period ended 4 April 2021.
iii. A corresponding
decrease in operating expenses of £799k in the period ended 4 April 2021.
iv. Decrease in cost of
sales by £37k in the period ended 4 April 2021.
v. Retained earnings increased by £91k in the period ended 30 March 2020.
Retained earnings increased by £37k in the period ended 4 April 2021.
2.6 A reclassification was required to recognise the warranty
provision as current as opposed to non-current. The adjustments to reflect
this are:
i. Increase current provisions by £160k in the period ended 30 March 2020.
Increase current provisions by £160k in the period ended 4 April 2021.
ii. Decrease non-current provisions by £160k in the period ended 30 March
2020. Decrease non-current provisions by £160k in the period ended 4 April
2021.
2.7 During the period ended 4 April 2021, the group did not
appropriately recognise an accrual relating to employee holiday entitlement
for employees on furlough. The adjustments to reflect this are:
i. Increase accruals by £136k in the period ended 4 April 2021.
ii. Increase operating expenses by £136k in the period ended 4 April 2021.
iii. Reduce tax expense
and corporation tax payable by £(26k) in the period ended 4 April 2021.
iv. Retained earnings
reduced by £(110k) in the period ended 4 April 2021.
The transition to IFRS and correction of prior year errors has impacted the
presentation of items within the consolidated cash flow statement. The
implementation of IFRS 16 has resulted in £2,081k of payments being
recognised within cash flows from financing activities, which were previously
presented under cash flows from operating activities, during the period ended
4 April 2021.
Consolidated statement of financial position
As at 30 March 2020
£'000 UK GAAP IFRS Transition 1 FRS 102 Restatement IFRS
2
Assets
Non-current assets
Intangible assets - - - -
Property, plant, and equipment 7,166 (386) - 6,780
Right-of-use assets - 9,912 220 10,132
Total non-current assets 7,166 9,526 220 16,912
Current assets
Inventories 5,266 - 136 5,402
Trade and other receivables 782 (182) - 600
Cash and cash equivalents 2,956 - - 2,956
Total current assets 9,004 (182) 136 8,958
Total assets 16,170 9,344 356 25,870
Liabilities
Current liabilities
Trade and other payables 3,917 (420) 154 3,651
Lease liabilities - 1,751 - 1,751
Other Provisions - - 160 160
Borrowings 4,239 - - 4,239
Current tax liability 294 - - 294
Total current liabilities 8,450 1,331 314 10,095
Non-current liabilities
Trade and other payables 296 (296) - -
Lease liabilities - 8,334 - 8,334
Other provisions 160 143 303
Borrowings 2,357 - - 2,357
Deferred tax liability 337 (69) (18) 250
Total non-current liabilities 3,150 7,969 125 11,244
Total liabilities 11,600 9,300 439 21,339
Net assets 4,570 44 (83) 4,531
Equity and reserves attributable to Shareholders of ProCook Group plc
Share capital - - - -
Revaluation reserve 472 - - 472
Retained earnings 4,098 44 (83) 4,059
Total equity and reserves 4,570 44 (83) 4,531
Consolidated Income statement for the period ended 4 April 2021
UK GAAP IFRS Transition 1 FRS 102 Restatement 2 IFRS
Revenue 53,465 - (72) 53,393
Cost of sales (16,775) - (738) (17,513)
Gross profit 36,690 - (810) 35,880
Operating expensed (28,469) (1,176) 613 (29,032)
Other income 2,848 - - 2,848
Operating profit 11,069 (1,176) (197) 9,696
Finance expenses (89) (360) (8) (457)
Other gains/(losses) (949) - - (949)
Profit before tax 10,031 (1,536) (205) 8,290
Tax expense (2,202) 303 33 (1,866)
Profit for the period 7,829 (1,233) (172) 6,424
Total other comprehensive income 7,829 (1,233) (172) 6,424
Consolidated statement of financial position
As at 4 April 2021
£'000 UK GAAP B/fwd Adj IFRS Transition 1 FRS 102 Restatement 2 IFRS
Assets
Non-current assets
Intangible assets - - - 67 67
Property, plant, and equipment 3,968 (386) 116 (67) 3,631
Right-of-use assets - 10,132 7,664 38 17,834
Total non-current assets 3,968 9,746 7,780 38 21,532
Current assets
Inventories 9,892 136 - 60 10,088
Trade and other receivables 1,888 -182 -251 - 1,455
Cash and cash equivalents 5,879 - - - 5,879
Total current assets 17,659 -46 -251 60 17,422
Total assets 21,627 9,700 7,529 98 38,954
Liabilities
Current liabilities
Trade and other payables 6,713 (266) (434) 208 6,221
Lease liabilities - 1,751 1,030 - 2,781
Provisions - 160 - - 160
Borrowings 2,803 - - - 2,803
Current tax liability 413 - - (26) 387
Total current liabilities 9,929 1,645 596 182 12,352
Non-current liabilities
Trade and other payables 163 (296) 133 - -
Lease liabilities - 8,334 8,336 - 16,670
Provisions 160 143 - 95 398
Deferred tax liability 426 (87) (303) (7) 29
Total non-current liabilities 749 8,094 8,166 88 17,097
Total liabilities 10,678 9,739 8,762 270 29,449
Net assets 10,949 (39) (1,233) (172) 9,505
Equity and reserves attributable to Shareholders of ProCook Group plc
Share capital - - - - -
Retained earnings 10,949 (39) (1,233) (172) 9,505
Total equity and reserves 10,949 (39) (1,233) (172) 9,505
13. Subsequent events
On 20 April 2022 ProCook Group plc entered into a revolving credit facility
agreement for £10.0m with an accordion agreement for a further £5.0m at the
Group's request, subject to approval by the lender. The facility is subject to
normal commercial terms and conditions associated with such a facility. The
term of the agreement is to April 2025, with two one-year extension options
available to the Group.
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