TIDMCRAW
RNS Number : 9247B
Crawshaw Group PLC
26 September 2018
26 September 2018
Crawshaw Group Plc
Britain's best value fresh meat and food to go retailer
Crawshaw Group Plc ("Crawshaw", the "Company" or the "Group"),
the UK's leading value butcher, announces its interim results for
the 26 weeks ended 29 July 2018 and strategic update.
H1 Financial Highlights:
-- Group revenue down 1.9% to GBP21.6m (2017: GBP22.1m)
-- Gross margin of 39.6% (2017: 42.9%)
-- EBITDA(1) (GBP1.1m) (2017: -GBP0.2m)
-- Underlying Operating Loss(2) of GBP1.7m (2017: loss of GBP0.8m)
-- Loss Before Tax of GBP1.7m (2017: loss of GBP1.2m)
-- Cash of GBP3.3m at 29 July 2018 (28 January 2018: GBP4.7m)
H1 Operational Highlights:
-- Group LFL(3) sales -13.2% (2017: -4.2%); (Q1: -14.0%; Q2 -12.4%)
-- Customer numbers -9.1%; (Q1: -9.5%; Q2 -8.8%)
-- 12 Factory shops producing 30% of Group sales from a total number of 54 stores
-- Two new factory shops opened in first half, with another 1 new store opening early in the
second half
-- We remain focused on cost and continue to maximize our collaborative relationship with 2Sisters
-- New CEO appointed late May 2018 with new CFO appointed late July 2018 to reinvigorate the
business and restore growth and profitability. Both join with a significant amount of experience
working in the meat industry
Strategic Update:
Management has completed its review of the business and is
implementing its change programme to restore growth and
profitability.
Factory Shops are central to future profitable growth
-- 3 new factory shops opened in current year
-- 10 more planned in 2019/2020 and a further 10 in 2020/2021
-- Cash payback for new stores estimated to be 12 to 18 months
-- The Board believe the UK offers significant future growth within this immature Factory store
format
Franchise
-- Three-store trial agreed with A.F. Blakemore, the UK's leading Spar wholesaler and retailer
-- The trial is expected to commence in early October 2018
-- Subject to trial results, a further 12 stores per annum could be opened delivering 15 stores
by full year 2019/2020
-- This initiative takes the Crawshaw value meat offer into the growing convenience market
Online
-- New route to market with farm to fork marketable point of difference
-- Website expected to go live in early October 2018 delivered direct to the doorstep
-- The online brand will be WF Burtons, which is a traditional, high quality butchers owned and
operated by Crawshaw in Pocklington, Yorkshire
-- Working in partnership with Givendale British Beef Society
High Street
-- 42 stores trading
-- UK High Streets under increasing pressure which is unlikely to change given market dynamics
-- Crawshaw is reviewing its structure and investment in traditional high street locations
Commenting on the results, Crawshaw CEO Jim Viggars, said:
"Clearly the results for H1 are disappointing, but not entirely
a surprise given market conditions and the issues that face a
retail estate that has too many high street stores and currently
not enough factory stores. However, the important issue is the
future growth and profitably of Crawshaw. The new management team
has identified what it considers to be the key issues and are
moving at pace to remedy them on a sustainable basis. This is
achievable over the medium term, despite market conditions which
include declining high street shopper numbers, increasing
convenience and online shopping and retail pricing that is more
competitive.
"Our factory stores continue to produce good returns and have
substantial room to improve as we get to grips with the supply
chain and operational standards. Factory stores are our priority
for growth and this is reflected in our plans to open a further 20
stores over the next two years.
"Our strategic partnership with A.F. Blakemore, with 3 trial
sites due to open in October, will deliver an enhanced shopping
experience for Spar customers as they purchase quality Crawshaw
branded product at low prices. This should generate new customers
for the trial Spar stores and provide existing customers with an
improved value shopping basket. Convenience shopping is growing
significantly and this route to market will complement our own
Factory store rollout.
"Taking Crawshaw online by utilising our bespoke butchers' shop
WF Burtons of Pocklington provides another new route to market.
This will enable us to reach many more consumers who choose online
shopping as part of their shopping repertoire. Our key point of
difference will be providing a farm to fork Givendale British beef
range of high-quality cuts at market leading prices."
Crawshaw Chairman Jim McCarthy, added:
"The new leadership team has a significant amount of experience
working in the meat industry. They have identified the core issues
affecting the business and are actively implementing a programme of
change.
"We recognise that some of our existing High Street stores are
not core to our future growth. Our Factory store format is
attractive to consumers and we intend to accelerate the growth of
this proven model, constantly refining value, operational standards
and the overall shopping experience that is key in driving sales
and profitability. We are also trialling initiatives in both
convenience and online channels in order to meet changing customer
shopping requirements. We believe we will be able to achieve this
at relatively low cost and that over time these channels will
support the factory store format in delivering sustainable growth
and profitability.
"I am confident with the operational actions now being
undertaken and new personnel joining to deliver the change we need,
we have a programme in place that will, over time, restore
shareholder value."
Outlook
The new management team have undertaken a strategic review of
Crawshaw and have identified what they consider to be the key
issues affecting the business; previously expanding the Group too
quickly, not addressing the decline in High Street store
performance, and over investment in certain areas of labour in the
Group impacting on store standards and labour scheduling. These
issues are now being addressed with timely remedial actions that
will, over time, reinvigorate and restore Crawshaw and prepare the
business for future growth.
As previously announced, the retail trading environment remains
tough with rising shop rents and high business rates, along with
lower high street footfall and increased discounter competition
directly impacting sales and profitability which presents a number
of financial challenges.
Trading since the start of the second half is in line with
management's expectations and the Board expect full year Group
sales to January 2019 to be flat on the previous year and an
underlying operating loss of approximately GBP3m, whilst the
business delivers its change programme and improves operational
efficiency.
1. EBITDA is defined by the Group as profit/loss before tax,
exceptional items, depreciation, amortisation, profit/(loss) on
disposal of assets, net finance costs and shared based payment
charge attributable to the LTIP Growth Share Scheme.
2. Underlying Operating Loss is defined by the Group as
Operating Profit before exceptional items and share based payment
charges attributable to the LTIP Growth Share Scheme.
3. LFL stores are defined as stores which have been trading for
2 full years at the start of the financial year under review.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 ("MAR").
Enquiries:
Citigate Dewe Rogerson
Angharad Couch 020 7282 1093
Crawshaw Group plc
Jim Viggars, Nick Taylor 01709 369 600
Peel Hunt LLP
Adrian Trimmings, George Sellar 020 7418 8900
Condensed Consolidated Statement of Comprehensive Income For the 26 weeks ended 29 July 2018
Unaudited Audited Unaudited
26 Weeks 52 Weeks 26 Weeks
29.7.18 28.1.18 30.7.17
Notes GBP'000 GBP'000 GBP'000
Revenue 2 21,633 44,559 22,056
Cost of sales (13,074) (25,825) (12,595)
-------------------------------- ------ ---------- ----------- ----------
Gross profit 8,559 18,734 9,461
Other operating income 13 31 15
Administrative expenses (10,262) (21,710) (10,723)
-------------------------------- ------ ---------- ----------- ----------
Operating Loss (1,690) (2,945) (1,247)
Finance income 3 9 8
Finance expenses (2) (4) (2)
Net Finance Income/(Expense) 1 5 6
Share of profit of equity - 9 -
accounted investees (net of
tax)
-------------------------------- ------ ---------- ----------- ----------
Loss before income tax (1,689) (2,931) (1,241)
Income tax credit/(charge) 4 253 279 176
Total recognised loss for
the period (1,436) (2,652) (1,065)
-------------------------------- ------ ---------- ----------- ----------
Impairment Charge (10,590) -
-------------------------------- ------ ---------- ----------- ----------
Total recognised loss after
Impairment Charge (1,436) (13,242) (1,065)
-------------------------------- ------ ---------- ----------- ----------
Attributable to:
Equity holders of the Company (1,436) (13,242) (1,065)
Operating loss analysed as:
EBITDA(1) (1,127) (848) (172)
Exceptional Costs 3 - (819) (388)
Share Based Payment Charge 8 - (92) (92)
Depreciation and amortization (563) (1,186) (596)
Profit/(loss) on disposal
of fixed assets 1 - 1
Operating loss (1,689) (2,945) (1,247)
-------------------------------- ------ ---------- ----------- ----------
Basic loss per ordinary share 5 (1.495)p (12.950)p (1.163)p
Diluted loss per ordinary
share 5 (1.495)p (12.950)p (1.163)p
1. EBITDA is defined by the Group as profit/loss before tax, exceptional
items, depreciation, amortisation, profit/(loss) on disposal of assets,
net finance costs and shared based payment charge attributable to
the LTIP Growth Share Scheme.
Condensed Consolidated Balance Sheet
As at 29 July 2018
Unaudited Audited Unaudited
29.7.18 28.1.18 30.7.17
Notes GBP000 GBP000 GBP000
Property, plant and equipment 8,123 8,338 8,717
Intangible assets - goodwill
and related
acquisition intangibles 302 319 10,926
Investment in equity accounted
investees 125 125 125
------------------------------- --------- ------------------------------ -------------- -------------------
Total Non-Current Assets 8,550 8,782 19,768
Inventories 1,101 1,375 1,343
Trade and other receivables 1,289 780 1,351
Cash and cash equivalents 3,271 4,675 6,788
------------------------------- --------- ------------------------------ -------------- -------------------
Total Current Assets 5,661 6,830 9,482
------------------------------- --------- ------------------------------ -------------- -------------------
Total Assets 14,211 15,612 29,250
------------------------------- --------- ------------------------------ -------------- -------------------
Share capital 6 5,651 5,651 5,651
Share premium 17,498 17,499 17,498
Reverse acquisition reserve 447 447 447
Retained earnings (14,667) (13,231) (1,054)
------------------------------- --------- ------------------------------ -------------- -------------------
Total Shareholders' Equity 8,929 10,366 22,542
Other payables 611 666 619
Deferred tax liabilities (112) 41 297
Interest bearing loans and
borrowings 52 141 54
------------------------------- --------- ------------------------------ -------------- -------------------
Total Non-Current Liabilities 499 848 970
Trade and other payables 4,661 4,375 5,699
Interest bearing loans and
borrowings 70 23 39
------------------------------- --------- ------------------------------ -------------- -------------------
Total Current Liabilities 4,783 4,398 5,738
Total Liabilities 5,282 5,246 6,708
------------------------------- --------- ------------------------------ -------------- -------------------
Total Equity and Liabilities 8,929 15,612 29,250
------------------------------- --------- ------------------------------ -------------- -------------------
Condensed Consolidated statement of changes in shareholders' equity
For the 26 weeks ended 29 July 2018
Share Rev Acq Retained
Capital Share Premium Reserve Earnings Total Equity
GBP000 GBP000 GBP000 GBP000 GBP000
---------------- -------------- ------------------------- -------------- -------------- -------------------
Balance at 29
January
2017 3,962 14,051 447 (81) 18,379
---------------- -------------- ------------------------- -------------- -------------- -------------------
Loss for the
period - - - (1,065) (1,065)
Share Based
Payment
Charge - - - 92 92
Share Placing
33,794,490
shares 1,689 3,447 - - 5,137
---------------- -------------- ------------------------- -------------- -------------- -------------------
Balance at 30
July
2017 5,651 17,498 447 (1,054) 22,542
---------------- -------------- ------------------------- -------------- -------------- -------------------
Loss for the
period - - - (12,177) (12,177)
Share Based - - - - -
Payment
Charge
Dividend on - - - - -
Equity
Shares
Balance at 28
January
2018 5,651 17,498 447 (13,231) 10,365
---------------- -------------- ------------------------- -------------- -------------- -------------------
Loss for the
period - - - (1,436) (1,436)
Share Based - - - - -
Payment
Charge
Share Placing - - - - -
Balance at 29
July
2018 5,651 17,498 447 (14,667) 8,929
---------------- -------------- ------------------------- -------------- -------------- -------------------
Condensed Consolidated statement of cash flows
For the 26 weeks ended 29 July 2018
Unaudited Audited Unaudited
26 Weeks 52 Weeks 26 Weeks
29.7.18 28.1.18 30.7.17
Cash flows from operating GBP000 GBP000 GBP000
activities
(Loss)/Profit for the period (1,436) (13,242) (1,065)
Adjustments for:
Depreciation and amortization 563 1,184 596
Share Based Payment Charge - 92 92
Loss / (Profit) on sale of
property,
plant and equipment (1) 2 (1)
Impairment on
goodwill/investment
write down - 10,590 -
Store Closure Provision - 428 -
Share Placing & Supply
Partnership
Deal Fees - 391 -
Net finance (income)/charges (1) (5) (6)
Share of (profit) of equity
accounted
investees - (9) -
Taxation (253) (279) (176)
-------------------------------- ----------------------------------------- -------------- -------------------
Operating cash flow before
movements
in working capital (1,128) (848) (560)
-------------------------------- ----------------------------------------- -------------- -------------------
Movement in trade and other
receivables (508) 7 (563)
Movement in trade and other
payables 231 (470) 1,010
Movement in inventories 274 94 127
Tax Paid/(received) - (64) (64)
-------------------------------- ----------------------------------------- -------------- -------------------
Net cash generated from
operating
activities (1,131) (1,281) (50)
-------------------------------- ----------------------------------------- -------------- -------------------
Cash flows from investing
activities
Purchase of property, plant and
equipment (340) (905) (435)
Proceeds from sale of property,
plant
& equipment 10 12 11
Interest Received 3 9 8
Interest paid (2) (4) (2)
Equity Investees - 9 -
Dividend paid - - -
-------------------------------- ----------------------------------------- -------------- -------------------
Net cash (used in) investing
activities (329) (879) (418)
-------------------------------- ----------------------------------------- -------------- -------------------
Cash flows from financing
activities
HP Financing 57 (58) (28)
Share Capital Raised - 5,137 5,137
Share Placing Costs - (391) -
Net cash generated from
financing
activities 57 4,688 5,109
-------------------------------- ----------------------------------------- -------------- -------------------
Net change in cash and cash
equivalents (1,404) 2,528 4,641
Cash and cash equivalents at
start
of period 4,675 2,147 2,147
-------------------------------- ----------------------------------------- -------------- -------------------
Cash and cash equivalents at
end
of period 3,271 4,675 6,788
-------------------------------- ----------------------------------------- -------------- -------------------
Notes to the condensed consolidated financial statements
1. BASIS OF PREPARATION
Reporting Entity
Crawshaw Group Plc (the "Company") is a company incorporated and
domiciled in the UK.
The condensed consolidated interim financial statements of the
Company as at and for the 26 weeks ended 29 July 2018 comprise the
Company and its subsidiaries (together referred to as the "Group")
and equity account the Group's interest in jointly controlled
entities.
Basis of Preparation
These condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 'Interim Financial
Reporting', as adopted by the EU and do not include all of the
information required for full annual financial statements and
should be read in conjunction with the consolidated financial
statements of the Group as at and for the year ended 28 January
2018. The annual financial statements of the Group are available
upon request from the Company's registered office.
The comparative figures for the financial year ended 28 January
2018 are not the Company's statutory accounts for that financial
year. Those accounts have been reported on by the Company's
auditors and delivered to the registrar of companies. The report of
the auditors was (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.
The condensed consolidated interim financial statements have not
been audited by the Company's auditors.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 25 September 2018.
Significant Accounting Policies
The accounting policies applied are consistent with those of the
annual financial statements for the 52 weeks ended 28 January 2018,
as described in those annual financial statements, which were
prepared in accordance with IFRS as adopted by the EU.
Significant Judgements, Key Assumptions and Estimation
Uncertainty
The preparation of the condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and other factors that are believed to be reasonable at
the time the estimate is made. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the
consolidated financial statements as at and for the 52 weeks ended
28 January 2018.
Going Concern
The Group meets its day to day working capital requirements
through cash on hand and cash generated from operations. Current
cash balance is GBP3.3m.
For the purposes of their assessment of the preparation of the
Group's accounts on a going concern basis, the Directors have
considered the current cash position, current trading and forecasts
of future trading including working capital and investment
requirements. These include consideration of the loss making
position of Group in recent periods and the cash outflows incurred.
These have been sensitised to take account potential risks and
uncertainties. These sensitivities and cash flow forecasts show
that the Group should be able to operate within its cash
reserves.
Basis of Consolidation
The consolidated financial information includes the financial
information of the Company and its subsidiary undertakings made up
to 29 July 2018 (together referred to as the 'Group').
2. REVENUE
The following standard has been adopted by the Group for the
first time for the financial year commencing
29 January 2018:
IFRS 15 'Revenue from Contracts with Customers' has been adopted
in the preparation of these
Financial statements. The standard establishes a principles
based approach for revenue recognition and
is based on the concept of recognising revenue when a customer
obtains control of a good or service and
has the ability to direct the use and obtain the benefits from
the goods or services. It applies to all
contracts with customers, except those in the scope of other
standards. It replaces the separate models
for goods, services and construction contracts under the
previous accounting standards.
The Group's revenue is based on the sale of product in a retail
unit directly to an end
customer therefore there is no impact on adoption of IFRS 15.
Accordingly, the group has not restated prior
year comparators and no adjustment has been recognised in the
opening balance of equity at the date of
initial application.
3. FINANCIAL INSTRUMENTS
The following standard has been adopted by the Group for the
first time for the financial year commencing
29 January 2018:
IFRS 9 'Financial Instruments' replaces the classification and
measurement models for financial instruments
in IAS 39 with three classification categories: amortised cost,
fair value through profit or loss and fair value
through other comprehensive income. Consistent with the
non-complex nature of the Group's financial
instruments, the impact of the new standard is not material and
therefore the Group has not restated prior
year comparators. The Group has amended its accounting policy
for the establishment of provisions against
trade receivables to reflect the lifetime expected loss model
(consistent with the simplified approach under
IFRS 9), however, given the low level of receivables within the
business this has not had a material impact.
4. EXCEPTIONAL ITEMS
Unaudited Audited Unaudited
26 Weeks 52 Weeks 26 Weeks
29.7.18 28.1.18 30.7.17
GBP000 GBP000 GBP000
Exceptional costs in the period relate
to:
Supply chain partnership and subscription
agreement - 383 380
Store Closure Provision - 156 -
Accelerated Depreciation in relation
to store closures - 272 -
Bank facility arrangement fees and
non-utilisation - -
Charges - 8 8
Other costs - -
Total exceptional items - 819 388
5. INCOME TAX EXPENSE
Unaudited Audited Unaudited
26 Weeks 52 Weeks 26 Weeks
29.7.18 28.1.18 30.7.17
GBP000 GBP000 GBP000
Recognised in the Income Statement
The income tax expense is based
on the estimated effective rate
of taxation on trading for the
period and represents:
Current tax - - -
- 52 -
Adjustments for prior year
----------- --------- ----------
- 52 -
Deferred tax:
Origination and reversal of timing
differences (253) (354) (176)
Adjustments for prior year - 23 -
(331) (176)
Income Tax (Credit) (253) (279) (176)
Reconciliation of effective tax
rate
Loss for the period (1,436) (13,242) (1,065)
Impairment - 10,590 -
Total Tax Expense (253) (279) (176)
----------- --------- ----------
Loss excluding taxation (1,689) (2,931) (1,241)
Tax using UK Corporation tax rate
of 19% (321) (562) (240)
Non-Deductible Expenses 21 68 40
Current Year losses not recognized 18 94 -
Adjustment in respect of prior - 75 -
years
Tax not at standard rate 30 46 24
Group relief - - -
----------- --------- ----------
Total tax credit (253) (279) (176)
6. EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share is calculated by dividing the
earnings attributable to the ordinary shareholders by the weighted
average number of ordinary shares outstanding during the period of
102,255,376 (28/01/18: 102,255,376) (30/07/17: 91,553,412). There
were no dilutive potential ordinary shares. In the period under
review the share options were anti-dilutive as the Group reported a
loss.
7. SHARE CAPITAL
Unaudited Audited Unaudited
29.7.18 28.1.18 30.7.17
Allotted, called up and fully paid GBP000 GBP000 GBP000
113,025,049 ordinary shares of 5p each 5,651 5,651 5,651
8. RELATED PARTY TRANSACTIONS
Crawshaw Butchers Limited, a subsidiary of Crawshaw Group Plc,
holds a 50% share in a partnership which trades under the name of
RGV Refrigeration. The operations of the partnership comprise of
the maintenance and repair of refrigeration machinery for a variety
of customers.
2 Sisters Food Group are considered to be a related party of
Crawshaw Group Plc. The value of purchases from 2 Sisters Food
Group to 29 July 2018 was GBP446k and a balance of GBP171k was owed
by Crawshaw Group Plc to 2 Sisters Food Group at the end of the
period. There were no sales made by Crawshaw Group Plc to 2 Sisters
Food Group during this period.
9. SHARE BASED PAYMENTS
Shares that were granted under the Crawshaw Group plc Long-Term
Incentive Plan have lapsed due to Noel Collett and Alan Richardson
stepping down as Chief Executive Office and Chief Financial Officer
respectively.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFIDADIEFIT
(END) Dow Jones Newswires
September 26, 2018 02:00 ET (06:00 GMT)
Crawshaw (LSE:CRAW)
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