TIDMPROC
RNS Number : 2111E
ProCook Group PLC
28 June 2023
28 June 2023
ProCook Group plc
Preliminary Results for the 52 weeks ended 2 April 2023
Emerging stronger from difficult trading conditions through good
strategic progress
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 2 April 2023.
FY23 FY22 YoY
Revenue GBP62.3m GBP69.2m (9.9%)
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Gross Profit GBP38.3m GBP45.0m (14.9%)
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Gross profit margin% 61.5% 65.1% (360bps)
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Underlying (loss) / profit before tax(1) (GBP0.2m) GBP9.5m (102.1%)
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Underlying (loss) / profit before tax
% (0.3%) 13.7% (14.0%pts)
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New customers acquired ('000) 692 723 (4.3%)
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Number of active customers L12M ('000)(2) 991 974 +1.8%
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12 month repeat rate %(3) 23.6% 25.5% (1.9%pts)
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Financial and strategic highlights
- Total revenue of GBP62.3m declined by 9.9%, or 5.0% excluding
the Amazon channels which we exited over the last two years
- LFL revenue declined by 10.7% YoY against outperformance in
the prior year and remained +112.2% Yo3Y (pre-pandemic)
highlighting the substantial gains we have maintained over the last
three years(4)
- Broadly held our UK kitchenware market share(5) YoY in a year
of significant trading uncertainty, despite a significant shift
away from online sales
- Growth in L12M active customers of +1.8% YoY to almost one
million customers. Successfully attracted 692,000 new customers to
the brand in FY23
- Gross profit margin % held back by higher supply chain costs
and foreign exchange impacts, partly offset by pricing; supply
chain costs now largely unwound, with marine freight costs
stabilising back to pre-pandemic levels
- Underlying LBT of GBP0.2m (FY22: Underlying PBT of GBP9.5m)
reflecting lower sales, gross margin impacts, inflationary cost
pressures and investment in capability to drive continued
growth
- Completed the opening of our new Distribution Centre and HQ in
Gloucester which provides a significant increase in capacity and
potential for operational efficiency benefits
- Became the first UK-listed retailer to achieve B Corp certification
- Recognised by Which? as a Recommended Provider, ranking fourth
amongst a large peer group based on customer feedback
- Careful working capital management supported investment in
capital spend and improved free cash flow year on year
- Year-end net debt of GBP2.8m (FY22: GBP1.8m)
Current Trading and Summary Outlook
Trading conditions during the first quarter of FY24 to 26 June
2023 have remained challenging, with the continued impact of
inflation and further interest rate increases. Revenue of GBP10.7m
was 6.7% lower year on year with LFL revenue down 7.9% year on year
impacted by the warm weather and soft homewares market during May
and June. Our share of the market(5) has remained flat year on year
during the first quarter. Excluding the impact of discontinued
Amazon channels, total revenue was down 3.9% year on year.
The market led shift back towards retail shopping and away from
online has continued in the first quarter. Our retail stores
continue to outperform online, with 0.2% growth in retail like for
like revenue in the first quarter, and total retail revenue growth
of 7.3%. Revenue from our website was down 18.8% year on year,
partly impacted by a higher level of promotional activity last
year.
The outlook remains challenging and much is uncertain. While
there are indications that inflationary pressures will ease over
the months ahead, UK consumers have suffered a significant adverse
impact on disposable incomes and discretionary spending power.
Despite this, we see clear opportunities ahead of us to attract
more customers to the ProCook brand and grow our market share, by
building a better business through developing our products, service
and operating model, thereby emerging stronger from this
challenging period.
Daniel O'Neill, CEO and Founder, commented:
"In the 27 years since we first founded ProCook our focus on
product quality, value and service have served as the key pillars
of our customer offer, and I am pleased that this year we have
again increased our active customer base, added three more retail
stores and upsized two more, and retained our excellent-rated
Trustpilot score. Our value for money offer has enabled us to
retain a resilient trading performance despite the many
headwinds.
"This year the economic backdrop has been one of the toughest I
have experienced in my career. Our customers and colleagues have
felt the squeeze on disposable incomes as inflation has soared
upwards. We have faced challenging trading conditions before, and
emerged stronger, more nimble, and more determined to press ahead
with our mission to become the customers' first choice for
kitchenware.
"I am pleased with the strong strategic progress we have made
this year, despite the challenging economic backdrop. In opening
our new distribution centre, simplifying our operations to focus on
the UK, improving our in-store and online experience, and becoming
a B Corp, while also extending and improving our product ranges, we
have made significant steps forward. We have continued to invest in
the areas that will support our long-term growth and performance,
while taking difficult decisions to manage costs and preserve
cash.
"We know that our proposition continues to resonate very well
with customers, and with our progress this year, we have built a
better business, paving the way for improved performance and future
profitable growth in the years ahead."
For further information please contact:
ProCook Group plc investor.relations@procook.co.uk
Daniel O'Neill, Chief Executive Officer
& Founder
Dan Walden, Chief Financial Officer
MHP Group (Financial PR Adviser) procook@mhpgroup.com
Katie Hunt Tel: +44 (0)7711 191 518
Catherine Chapman
Next scheduled event:
ProCook expects to release its FY24 quarter two trading update
in late October 2023.
Notes to editors:
ProCook is the UK's leading direct-to-consumer specialist
kitchenware brand. ProCook offers a direct-to-consumer proposition,
designing, developing, and retailing a high-quality range of
cookware, kitchenware and tableware which provides customers with
significant value for money.
The brand sells directly through its website, www.procook.co.uk,
and through 58 own-brand retail stores, located across the UK.
Founded over 25 years ago as a family business, selling cookware
sets by direct mail in the UK, ProCook has grown into a market
leading, multi-channel specialist kitchenware company, employing
over 600 colleagues, and operating from its HQ in Gloucester.
ProCook has been listed on the London Stock Exchange since
November 2021 (PROC.L).
Further information about the ProCook Group can be found at
www.procookgroup.co.uk.
Quarterly revenue performance
FY24 (52 weeks ending 31 March 2024)
Q1 Q2 H1 Q3 Q4 H2 FY
------------- ---- ---- ---- ---- ---- ----
Revenue GBP10.7m
------------- ---- ---- ---- ---- ---- ----
Revenue growth
% (6.7%)
------------- ---- ---- ---- ---- ---- ----
LFL revenue GBP10.2m
------------- ---- ---- ---- ---- ---- ----
LFL growth % (7.9%)
------------- ---- ---- ---- ---- ---- ----
FY23 (52 weeks ending 2 April 2023)
Q1 Q2 H1 Q3 Q4 H2 FY
--------- --------- --------- --------- --------- --------- ---------
Revenue GBP11.4m GBP15.9m GBP27.4m GBP22.4m GBP12.6m GBP35.0m GBP62.3m
--------- --------- --------- --------- --------- --------- ---------
Revenue growth
% (22.6%) (7.6%) (14.5%) (2.5%) (9.7%) (5.2%) (9.9%)
--------- --------- --------- --------- --------- --------- ---------
Yo3Y revenue growth
% 35.5% 54.0% 45.6% 78.8% 64.6% 73.4% 60.0%
--------- --------- --------- --------- --------- --------- ---------
LFL revenue GBP10.0m GBP13.6m GBP23.6m GBP19.7m GBP10.8m GBP30.5m GBP54.1m
--------- --------- --------- --------- --------- --------- ---------
LFL growth % (17.1%) (15.6%) (16.2%) (3.8%) (9.4%) (5.9%) (10.7%)
--------- --------- --------- --------- --------- --------- ---------
Yo3Y LFL growth
% 133.3% 110.4% 119.7% 108.7% 103.2% 106.7% 112.2%
--------- --------- --------- --------- --------- --------- ---------
FY22 (52 weeks ending 3 April 2022)
Q1 Q2 H1 Q3 Q4 H2 FY
--------- --------- --------- --------- --------- --------- ---------
Revenue GBP14.6m GBP17.5m GBP32.1m GBP23.0m GBP14.0m GBP37.0m GBP69.2m
--------- --------- --------- --------- --------- --------- ---------
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 GBP11.2m GBP14.3m GBP25.5m GBP18.6m GBP10.9m GBP29.5m GBP55.0m
--------- --------- --------- --------- --------- --------- ---------
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%
--------- --------- --------- --------- --------- --------- ---------
Notes
(1) Underlying profit before tax is presented before
non-underlying items of GBP9.4m 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 (Like for Like) revenue reflects:
- Retail YoY - Continuing Retail stores which were trading for
at least one full financial year prior to the 3 April 2022,
inclusive of any stores which may have moved location or increased/
decreased footprint within a given retail centre.
- Retail Yo3Y - Continuing Retail stores which were trading for
at least one full financial year prior to the 29 March 2020,
inclusive of any stores which may have moved location or increased/
decreased footprint within a given retail centre.
- Ecommerce YoY and Yo3Y - ProCook direct website channel only.
(5) Management estimate based on internal sales data GFK market
weekly sales information
Chairman's Statement
In a year which has been challenging for many reasons, not least
the impact of inflation on the cost of living for our customers and
our colleagues, I am pleased that ProCook has delivered a resilient
trading performance. We broadly maintained market share in the UK,
while making significant progress on strategic priorities which
will support the development of the brand in the years ahead.
The year has been a pivotal one for a number of reasons. We
completed the transition away from unprofitable Amazon channels,
reducing revenue by 4.9% year on year, in order to focus fully on
attracting customers to shop directly with the brand. Additionally,
the opening of our new Distribution Centre and HQ has been a key
strategic achievement, which paves the way for improved operational
efficiency in the years ahead and provides capacity for continued
growth.
We have relaunched our brand purpose and Company values, based
on the ethos and principles of the business which was first
established in the late 1990's by the O'Neill family. Equipping
everyone with the tools to bring joy to everyday cooking clearly
articulates why we do what we do. This will guide all of our
activities and help us focus our efforts as we move forward to
become the customers' first choice for kitchenware.
The significant inflationary and cost of living pressures have
presented challenges for our business, as well as for our
customers, colleagues, and suppliers, and is evident in our gross
margins following the impact of heightened shipping costs post
Covid-19. However, we are confident in our strategy, our business
model, and our proposition. We have the right plans and foundations
to deliver sustainable, profitable growth over the medium to longer
term and we are focused on developing our business to be stronger
and even more appealing to customers.
I would like to thank all of the ProCook team, suppliers, and
partners on behalf of the Board for their resilience in the face of
difficult conditions and in their efforts to continually improve
our proposition and serve our customers with such commitment.
Governance and CEO succession planning
We are committed to the highest standards of corporate
governance, and I am pleased to report that the Board considers
that it has complied in full with the UK Corporate Governance
Code's principles and provisions during the year.
The Non-Executive Directors continue to work very well with the
Executive Directors and wider Leadership Team, providing highly
relevant sector experience and skills with pragmatic
knowledge-sharing and support, and healthy challenge on strategic,
operational and governance matters.
During the year, we have reduced the size of the Board to five
members, following the retirement in Spring 2023 of Steve Sanders,
who has been instrumental to ProCook's growth and success over the
last seven years, and as Gillian Davies stepped down from the Board
at the same time as Steve in December 2022. I would like to
reiterate my thanks, on behalf of the Board, to both Steve and
Gillian for their contributions to the Board during their
tenure.
Daniel O'Neill has indicated his intention to step back from the
CEO role at an appropriate point. Daniel has discussed the timing
of this with the Nominations Committee and it was agreed that the
business had reached a stage where he could begin thinking about
making this transition. Having founded ProCook over twenty years
ago, Daniel has deep knowledge of the business, and it is his
intention to continue to add value by supporting the product
development team on a part-time basis. The Board has therefore
commenced a search process to ensure effective succession planning
and in the meantime, Daniel will remain in the role, until a
suitable successor is appointed, and an orderly handover is
complete.
Sustainability
The Group's new values highlight ProCook's commitment to always
doing the right thing, and that is exemplified by the successful
achievement of the B Corp certification during the year, with
ProCook becoming the first UK listed retailer to achieve this
award. This reflects the Group's long-held commitment to building a
responsible brand with a strong purpose; having already celebrated
many milestones including eliminating and mitigating Scope 1 and 2
emissions, committing to the real Living Wage, and being recognised
as one of the UK's Best Workplaces (TM) .
The Group reported carbon neutral status for Scope 1 and 2
emissions last year, and since then the Leadership Team have
completed the work to understand and measure Scope 3 emissions and
have begun to develop strategies to eliminate and mitigate them
over the years ahead. This is a critical task, necessary to help
protect our planet for future generations, but we recognise it is
challenging given the nature of global supply chains and is not
something that can be solved in the immediate term. It will instead
be achieved through continually caring for our community and
planet, and I am pleased to see plentiful evidence of this in both
the day-to-day operational decision-making, and broader strategic
decisions that the Group takes.
Daniel O'Neill, in his report, sets out more detail about this
important topic and the next steps we will take.
Dividend
With the wider macro-economic uncertainty in mind, and therefore
taking a cautious and responsible decision to preserve cash within
the business during these times, the board is not recommending a
dividend payment for this financial year. The Board will continue
to review dividend payments in future periods in line with the
Group's capital allocation policy.
Outlook
The outlook remains challenging and much is uncertain. While
there are indications that inflationary pressures will ease over
the months ahead, UK consumers have suffered a significant adverse
impact on disposable incomes and discretionary spending power.
Despite this, we see clear opportunities ahead of us to attract
more customers to the ProCook brand and grow our market share, by
building a better business through developing our products, service
and operating model, thereby emerging stronger from this
challenging period.
Greg Hodder
Chairman
27 June 2023
CEO's Review
Bringing joy to everyday cooking
This year the economic backdrop has been one of the toughest I
have experienced in the 27 years since we founded the business. Our
customers and colleagues have felt the squeeze on disposable
incomes as inflation has soared upwards.
As a specialist kitchenware brand, our value for money offer has
enabled us to retain a resilient trading performance despite the
many headwinds. We have faced challenging trading conditions
before, and emerged stronger, more nimble, and more determined to
press ahead with our mission to become the customers' first choice
for kitchenware.
Our team have worked incredibly hard this year as we have faced
into these challenges. We have continued to invest in the areas
that will support our long-term growth and performance, most
notably in our new Distribution Centre and HQ in Gloucester, while
taking difficult decisions to manage costs, preserve cash, and
improve our focus on our core business in the UK, resulting in the
exit of our EU operations.
We have spent time this year developing our people and culture,
and our new brand purpose; equipping everyone with the tools to
bring joy to everyday cooking. This purpose accompanied by our new
Company values which reflect the principles upon which we have
always worked, together provide a North Star for our future
activities.
Challenging trading conditions
The significant pressures on consumers' disposable income, due
to the high inflation macro-environment, have led to very difficult
trading conditions in FY23. Our total revenue of GBP62.3m was 9.9%
lower year on year, in part due to the decisions we took to exit
unprofitable Amazon Marketplace channels including in the EU, which
reduced revenue by 4.9%. Sales in our core UK business were down
5.0% year on year, yet still up 112.2% on a like-for-like basis
("LFL") compared to pre-pandemic (FY20), and we broadly held our
share of the UK kitchenware market year on year despite a
significant shift away from online sales (a channel which we
over-index in) as consumers returned to physical retail
shopping.
Cost inflation impacted our gross margins, particularly the
post-pandemic heightened shipping costs and the adverse movement in
foreign exchange rates, and these impacts were only partly offset
by price increases. As a result, our gross profit margins declined
by 3.6% points year on year to 61.5%. While we are seeing some
easing of these gross margin impacts, other inflationary cost
pressures, including wages, energy and fuel costs remain high in
the current financial year.
We have made difficult choices to manage and right-size our cost
base during the year. We have implemented a plan to deliver GBP3.0m
of annualised cost savings, which we expect to realise the benefits
of in the current financial year and beyond.
Underlying profit before tax reduced to a loss of GBP0.2m in the
year (FY22: GBP9.5m profit), and after non-underlying items
including impairment charges, we reported a loss before tax of
GBP6.5m.
We maintained a strong focus on cash management with tight
discipline of working capital, while investing in the areas that
will continue to drive our business forward including three new
stores openings, two upsized store relocations, and our new
distribution centre and headquarters. Free cash flow improved by
GBP2.5m year on year to an outflow of GBP0.5m (FY22: outflow of
GBP3.0m).
Attracting more customers to our brand
In a recent survey that we commissioned with YouGov, spontaneous
awareness of ProCook was just 7% of the UK population, with
prompted awareness at 33%. Combined with our relatively low
kitchenware market share, which we estimate is approximately 2%,
this provides a significant opportunity to grow our customer base
over the medium term.
During the last year we attracted a further 692,000 new
customers to shop with us (FY22: 723,000) and increased our active
customer base to 991,000 (FY22: 974,000). Our 12 month repeat rate
decreased by 1.9% points year on year to 23.6%, largely reflecting
the market-driven channel shift back towards Retail which has
historically had a lower repeat frequency. Retail repeat rates
increased year on year, while Ecommerce repeat rates slowed
slightly.
We have invested in and implemented a new CRM platform. This
will provide us greater opportunity to increase loyalty and
advocacy through improved segmentation, greater personalisation,
and a broadening of our communications across more customer
channels including social media.
We cautiously reduced our brand marketing spend in the year
while we revisited our brand purpose, which, now refreshed, will
provide improved clarity to our future marketing messaging.
Developing our customer proposition
During the year we made the considered decision to discontinue
our operations on Amazon marketplace channels, including in the EU,
in order to focus more fully on our UK market and our own direct
consumer proposition. The Amazon channels historically provided a
lower contribution than our core business, and added complexity to
our business model, which we are pleased to have eliminated.
While performance in our own Ecommerce website has been
difficult, with LFL sales declining by 11.0% largely driven by
changing customer shopping preferences between channels,
exacerbated by the Royal Mail strikes during December, we have made
positive progress in developing our capabilities. We completed a
technical re-platform of our website in the first half of the year,
improving the code base which has made subsequent developments far
quicker and has improved site speed. We have enhanced our delivery
offer for customers to include a named day and a cheaper 2-3 day
service, improved product range navigation, and experimented with a
wide range of smaller changes. During the latter part of the year,
we initiated a programme of work to overhaul the design and user
experience on our website which is progressing well, and we plan to
test and launch this to customers during the summer.
We have increased our Retail estate to 58 stores, adding three
new stores in destination retail locations, and completing upsize
relocations for two existing stores during the year. Early
performance in these new stores has been strong and we expect a
combined payback on investment of less than one year. We have also
worked hard to improve retail service in existing stores, and
through continued investment in training and development, we have
improved conversion rates and average transaction values which had
been impacted by the macro-environment.
In the latter part of the year, supported by external expertise,
we developed our understanding of the potential for retail estate
expansion in the UK, increasing our expectation of how many stores
we can open in the UK and providing a list of target location
opportunities to consider further. While we will pursue these newly
identified locations with appropriate caution in this rapidly
changing retail environment, we are excited by the opportunities
ahead of us to extend our customer reach and firmly believe that
bricks and mortar retailing is a key component of our
proposition.
We were pleased to have been recognised by Which? as a
Recommended Provider, ranking fourth amongst a large peer group
based on customer feedback, noting in particular our product
quality and range. Our continued focus on product development has
resulted in the launch of 154 new products in the year with a range
refresh rate of 20%. We have been cautious in our pricing,
carefully monitoring the impact of increases we have had to make in
response to cost pressures and retaining our relative value
advantage.
We have identified a new manufacturing partner and worked
together to design the first phase of our range of small kitchen
electricals during the year, ready for launch in H1 FY24. We are
excited by the potential opportunity that this new complementary
category brings in creating another reason to shop with ProCook,
extending our total market size by a quarter, and enabling us to
attract a new group of in-market customers to our brand.
Building on our strong foundations
A key strategic priority for us this last year has been the
development of our new distribution centre and headquarters in
Gloucester which we began to transition into during February 2023.
This new facility provides significant capacity for growth and will
allow us to achieve efficiencies in our logistics operations, as
well as providing a more collaborative and inspirational workplace
for our office-based colleagues. We are focused on completing the
transition and realising the efficiencies that this new site
provides.
We have continued to develop our technology capabilities, and
our team have successfully delivered a comprehensive roadmap of
initiatives this year, building on our core bespoke platforms.
Their focus has been to support customer experience and revenue
growth initiatives, operational efficiencies, and reduce risk
through a range of infrastructure and cyber security
improvements.
Creating an even better place to work
We are committed to continually making ProCook an even better
place to work. We recognise that the last year has been challenging
for our colleagues, and while it is disappointing to see our
engagement score drop year over year, we welcome the opportunity to
receive feedback and to identify more ways to support our team.
During the year we launched our Colleague Advisory Panel and
regular monthly Town Hall meetings, improved our benefits and total
reward package (including our response to the cost of living
crisis), and reiterated our commitment to the Real Living Wage
Foundation.
We were pleased to be recognised again as a Great Place to Work
(TM) for the second year running and for two categories, Women and
Wellbeing, to have finished inside the top tier as well as being
ranked amongst the UK's Best Places to Work.
Reducing our environmental footprint
In October 2022, we were certified as a B Corp following a
rigorous assessment and enormous team effort across our business.
There are very few publicly listed brands certified as B Corps and
so we are incredibly proud to be trailblazing in our sector.
Alongside our sustainability goals, B Corp provides a stringent
framework against which we can measure ourselves.
Now that we have completed our full carbon footprint analysis
including our Scope 1, 2 and 3 emissions, we have gained a fuller
understanding of the extent of the emissions implicit in our
indirect sourcing activities. These are significant in comparison
to the relatively modest emissions from our own operations which we
have worked hard to reduce or eliminate over recent years. As a
result of the emissions in our supply chain not being directly in
our control and being in sectors and countries where no clear
de-carbonisation plans exist yet, we are undertaking a detailed
exercise to reassess the timescales on which we can commit to net
zero with confidence across our value chain as a whole and in the
meantime, we have set out eight initial priorities to progress in
the next twelve months. We believe in honouring our
responsibilities to people and the planet alongside our commercial
goals, and we are committed to making as much progress as we
possibly can with our suppliers and partners to reduce our
environmental impact.
Emerging stronger than ever
I am pleased with the strong strategic progress we have made
this year, despite the challenging economic backdrop. We have faced
challenging conditions before in our 27-year history, and by
focusing on our customers and improving our business model for the
long term, we have always emerged stronger.
In opening our new distribution centre, simplifying our
operations to focus on the UK, improving our customers' in-store
and online experience, and becoming a B Corp, while also extending
and improving our product ranges, we have made significant steps
forward. We know that our proposition continues to resonate very
well with customers, and with our progress this year, we have built
a better business, paving the way for improved performance and
profitable growth in the years ahead.
Daniel O'Neill
CEO and Founder
27 June 2023
CFO's Review
Trading performance has been challenging over the last financial
year, with revenue excluding the discontinued Amazon channels
declining by 5.0%, margins under pressure from heightened freight
costs and foreign exchange, and inflationary pressures impacting
our cost base. We have carefully managed our cash flows, while
still investing in the areas which will support improved
operational performance and profitability in the years ahead, and
we have reduced costs which will benefit the current financial year
and beyond.
Revenue
GBPm / % FY23 YoY growth Yo3Y growth
GBPm % %
Revenue 62.3 (9.9%) 60.0%
------ ----------- ------------
Ecommerce 25.6 (20.7%) 77.1%
------ ----------- ------------
Retail 36.7 (0.4%) 49.9%
------ ----------- ------------
LFL Revenue 54.1 (10.7%) 112.2%
------ ----------- ------------
Ecommerce 24.9 (11.0%) 207.6%
------ ----------- ------------
Retail 29.2 (10.4%) 52.5%
------ ----------- ------------
Total revenue in FY23 (the 52-week period ending 2 April 2023)
reduced by 9.9% to GBP62.3m (FY22, the 52-week period ending 3
April 2022: GBP69.2m). This included a GBP3.4m or 4.9 percentage
point reduction in revenue in respect of discontinued Amazon
channels. Compared to FY20 pre-pandemic, total revenue remains
60.0% ahead, reflecting like for like growth of 112.2%.
We have broadly maintained our share in the UK Kitchenware
market, which as a whole, has experienced a significant shift in
sales mix back towards physical Retail stores (from Ecommerce
channels) compared to the last financial year. Based on
Euromonitor's total UK kitchenware market size for the 2022
calendar year(1) , we estimate that our share of the market
remained similar year on year at 1.85% (2021: 1.90%), and broadly
flat year on year for the financial year ended 2 April 2023.(2)
Ecommerce revenue decreased by 20.7% to GBP25.6m (FY22:
GBP32.3m) including the GBP3.4m impact of lower sales year on year
from the discontinued Amazon channels. Revenue from our own website
channels declined by 11.0% year-on-year, remaining 207.6% compared
to pre-pandemic performance in FY20, driven by the challenging
macro trading environment and the market-wide return of customers
to physical retail stores throughout the year.
Retail revenue was broadly flat year on year, declining by 0.4%
to GBP36.7m (FY22: GBP36.8m), benefiting from the eight new stores
opened last year and the three new stores opened in the year.
Like-for-like Retail revenue was down 10.4% year on year against
strong comparatives due to pent up demand post Covid-19
restrictions, and was also impacted by consumer spending which
impacted customer conversion rates. Compared to FY20 pre-pandemic,
on a like-for-like basis, revenue in existing stores remained up
52.5%. The three new stores openings in the current year increased
our UK Retail estate to 58 stores.
(1) Euromonitor "Homewares in the UK report" April 2023. The
2021 UK Kitchenware market size has been revised upwards to
GBP3.9bn from GBP3.4bn as reported in April 2022.
(2) Management estimates based on internal sales data and GFK
weekly kitchenware sales data.
Gross profit
Gross profit of GBP38.3m in FY23 (FY22: GBP45.0m) reflected the
lower revenue performance and was compounded by lower gross margins
of 61.5% (FY22: 65.1%) which were driven by the heighted costs of
marine freight (-270 bps impact), adverse foreign exchange
movements (-130 bps impact) in costs of goods sold, and higher
levels of promotional activity to support revenue performance (-20
bps impact). These adverse effects were partly offset by selling
price increases which were carefully applied and monitored
throughout the year (+70 bps impact).
Operating expenses and other income
Underlying operating expenses net of other income
Total underlying operating expenses net of other income were
GBP37.6m (FY22: GBP35.9m) representing 60.3% of sales (FY22:
51.9%). This growth in costs was driven by a number of key
factors:
- Existing store rent and rates(3) uplifts: +GBP1.3m
- Expenses in relation to the 3 new stores opened this year and
the annualisation of the net six new stores opened last year:
+GBP2.0m
- Increased digital marketing costs: +GBP1.1m
- Annualisation of plc expenses including the Board and professional fees: +GBP1.1m
- Central cost inflation and investment: +GBP0.5m
- Partly offset by lower costs in the Amazon marketplace
channels (UK and EU) and website volume-related savings:
-GBP3.1m
- Partly offset by lower marketing spend: -GBP1.0m
(3) Retail costs benefitted in the prior year from the property
rates 'holiday' by approximately GBP1.3m. This temporary relief
came to an end in April 2022.
Other income
Total other income of GBP0.1m in FY23 (FY22: GBP0.4m) related
solely to rental income.
In the prior year, GBP0.4m of other income was reported in
respect of the final elements of the Government's Coronavirus Job
Retention Scheme and Business Rates Relief scheme which came into
effect during the pandemic while 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
It is the Group's policy to disclose separately such items that
relate to non-recurring events and are material in nature, and
incurred outside of the normal business operations, in order to
provide a consistent and comparable view of the underlying
performance of the Group. Non-underlying operating expenses in FY23
were GBP6.2m (FY22: GBP9.4m).
Consistent with FY22, expenses in respect of employee
share-based awards which relate to the IPO event in that year,
which itself is non-recurring, have been presented as
non-underlying costs. These expenses amounted to GBP1.2m in the
year ended 2 April 2023 (FY22: GBP6.7m). These expenses are
expected to continue through relevant vesting periods to FY25.
During the year ended 2 April 2023, the Group consolidated its
head office and warehouse operations into a new site.
Non-underlying operating expenses associated with occupying the
site while its development was completed, and transitioning into
the new site during the year were GBP0.7m. A smaller residual
expense is expected in FY24 as the transition fully completes.
The Group's impairment assessment has resulted in an expense to
the Consolidated Income Statement of GBP3.3m (2022: GBPnil) in
respect of Retail CGU impairment and GBP1.1m (2022: GBPnil) in
respect of the Group's two pre-existing distribution / head office
sites. Further detail of this impairment assessment is set out in
note 3.
In FY22, non-underlying items included expenses of GBP2.7m in
relation to the IPO.
Operating profit
Total underlying operating profit for the period was GBP0.8m
(FY22: GBP9.2m). Ecommerce operating profitability declined from
24.9% of revenue to 17.9% impacted by the lower gross profit
margins, and higher costs of customer acquisition year on year.
Retail profitability reduced from 26.2% of revenue to 14.5%, driven
by the lower sales performance and gross profit margins year on
year, and the impact of increased rates costs which benefitted from
relief in the prior year. The total operating profit from our
Ecommerce and Retail channels combined was GBP9.9m (FY22:
GBP17.7m). Central costs increased by GBP0.6m year on year driven
by full year annualisation of plc and board costs and wage
inflation, partly offset by lower brand marketing spend year on
year.
GBPm FY23 FY22
Underlying operating profit
-------- --------
Ecommerce 4.6 8.1
-------- --------
Retail 5.3 9.6
-------- --------
Central costs (9.1) (8.5)
-------- --------
Total 0.8 9.2
-------- --------
Underlying operating profit % of revenue
-------- --------
Ecommerce 17.9% 24.9%
-------- --------
Retail 14.5% 26.2%
-------- --------
Central costs (14.7%) (12.3%)
-------- --------
Total 1.2% 13.3%
-------- --------
Total reported operating loss, after the GBP6.2m of
non-underlying expenses set out above was GBP5.4m (FY22:
GBP0.2m).
Profit and earnings per share
Underlying loss before tax was GBP0.2m (FY22: Underling profit
before tax of GBP9.5m).
During the year there was an expense of GBP1.1m (FY22: GBP0.3m
gain) in respect of financial items in the period. Financial items
included interest expenses on lease liabilities and borrowings of
GBP1,065k (FY22: GBP623k), and other losses in respect of foreign
exchange of GBP55k (FY22: GBP944k gain).
After non-underlying costs, loss before tax was GBP6.5m (FY22:
GBP0.1m profit before tax). Reported loss after tax was GBP4.9m
(FY22: GBP0.1m).
The effective tax rate based on underlying profit before tax was
17.6% (FY22: 20.0%).
Earnings per Share
Underlying basic earnings per share for the year decreased to
-0.12 pence (FY22: 7.34 pence) and underlying diluted earnings per
share decreased to -0.12 pence (FY22: 6.76 pence).
Reported basic earnings per share and reported diluted earnings
per share for the year were -4.53 pence (FY22: -0.01 pence).
Cash generation and net cash/ debt
We have carefully managed our cash position during the year,
preserving cash in the business while investing in the areas that
will support our long term growth. During the year we improved our
free cash outflow by GBP2.5m to GBP0.5m (FY22: outflow of GBP3.0m)
and ended the year with net debt of GBP2.8m (FY22: net debt
GBP1.8m), with available liquidity headroom of GBP13.2m (FY22:
GBP14.2m).
GBPm FY23 FY22
Reported profit before tax (6.5) 0.1
------- ------
Depreciation, amortisation, impairment, and profit/loss
on disposal 9.5 4.1
------- ------
Share based payments 1.1 5.8
------- ------
Finance expense 1.1 0.6
------- ------
Unrealised FX (gains)/losses 0.5 (1.1)
------- ------
Net working capital 3.8 (3.2)
------- ------
Tax paid (0.1) (2.0)
------- ------
Net operating cash flow 9.3 4.3
------- ------
Net capital expenditure (5.2) (3.8)
------- ------
Interest (1.1) (0.6)
------- ------
Payment of lease liabilities (3.6) (2.9)
------- ------
Free cash flow (0.5) (3.0)
------- ------
Movement in borrowings ( 1.0) (2.7)
------- ------
Proceeds from the issue of shares - 0.1
------- ------
Dividends paid (0.3) (1.9)
------- ------
Movement in cash and cash equivalents (1.8) (2.1)
------- ------
GBPm FY23 FY22
------- ------
Cash and cash equivalents 2.0 3.8
------- ------
Borrowings (4.8) (5.5)
------- ------
Net (Debt)/ Cash (2.8) (1.8)
------- ------
The lower reported profit before tax in the year includes
GBP6.2m of non-underlying expenses which resulted in GBP0.7m of
additional cash outflows (FY22: GBP2.2m).
A reduction in net working capital resulted in a cash inflow of
GBP3.8m in the year (FY22: GBP3.2m outflow) reflecting our planned
reduction of inventory. Inventory on hand at the year-end
(excluding inventory in transit) was GBP9.5m (FY22: GBP15.2m) down
37.5% year on year. Total inventory at the year-end was GBP11.5m
(FY22: GBP16.8m).
Net capital expenditure of GBP5.2m in the year primarily related
to the investment in the new distribution centre and HQ, and three
new stores and two upsize relocation stores which opened during the
year. In the prior year, net capital expenditure of GBP3.8m largely
related to the eight new store openings and the ProCook Cookery
School.
There was GBP0.1m of corporation tax paid in the year reflecting
the Group's lower profitability (FY22: GBP2.0m). As at 2 April
2023, we had a current tax asset of GBP0.6m (FY22: GBP0.3m).
Banking agreements
The Group has access to a committed GBP10m Revolving Credit
Facility (RCF) to provide additional cash headroom to support
operational and investment activities. This facility expires in
April 2025 and has a one-year extension option available to extend
the term to April 2026. Additionally, the RCF agreement provides an
accordion option, subject to the lender's approval, to extend the
facility by a further GBP5m.
Shortly after the year-end, on the 5 May 2023, the Group
successfully finalised an amendment to the RCF terms in respect of
the fixed charge cover covenant which had been agreed with HSBC
during March 2023, in order to provide additional headroom against
that covenant given that the Group's EBITDA performance declined
during the year and would have breached the covenant test at the
FY23 Q4 test date. The revised test requires EBITDAR to be no less
than 1.25x fixed charges for the FY23 Q4 and FY24 Q1 test dates,
and 1.40x thereafter. The leverage coverage remains unchanged with
net debt to be no greater than 2.0x EBITDA. Both covenants are
tested quarterly and are calculated on a last twelve month rolling,
pre-IFRS 16 basis.
The 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 in the Going Concern section below.
The Group has retained its access to an existing GBP6.0m trade
finance facility, which is due to expire on 23 September 2023,
although is expected to be renewed at that date. There are no
covenants associated with this facility. The terms of this facility
are consistent with normal practice.
Capital allocation and dividend policy
In normal circumstances, the Board currently believes that, to
ensure operating flexibility through the business cycle, it must
maintain a minimum unrestricted cash / debt headroom which the
Board reviews on an annual basis, or more frequently as required.
Maintaining this headroom provides a level of flexibility
sufficient to fund the working capital and investment needs of the
Group (as well as set aside an appropriate operating reserve for
unexpected events).
The Group's dividend policy targets an ordinary dividend pay-out
ratio of 20% to 30% of profit after tax during the financial year
to which the dividend relates. The Board anticipates, under normal
circumstances, that it will consider returning surplus cash to
shareholders if average cash / debt headroom over a period
consistently exceeds the minimum headroom target, subject to known
and anticipated investment plans at the time.
The full capital and dividend policy is available on the Group's
website at www.procookgroup.co.uk.
Dividends
During the first half of the year ended 2 April 2023, the Group
paid the final dividend in respect of FY22 of 0.9p per share.
Dividend waivers by the O'Neill family shareholders, to preserve
cash within the business, reduced the total dividend paid by
GBP0.6m to GBP0.3m.
Due to the ongoing challenging consumer environment and the
uncertainty that it creates around trading performance, and
therefore taking a cautious and responsible decision to preserve
cash within the business during these times, the Board have not
recommended any final dividend in respect of FY23.
Treasury Management
The Group is exposed to foreign currency risk through its
trading activities. The main source of this relates to stock
purchases from non-UK suppliers, which accounts for approximately
95% of the Group's annual stock purchases. To manage the exchange
rate risk, a mixture of standard ("vanilla") forwards and
outperformance trades are utilised. The Group seeks target levels
of coverage for future USD payments, as determined by internal
forecasts and the Group's Treasury Management Policy.
Given the level of USD transactions and cover obtained via
financial instruments, the Group is exposed to a counter-party risk
with each of the financial institutions where arrangements are
held. The Group manages this risk by ensuring only highly credited
institutions are used and limiting the level of exposure with
each.
The Group is also exposed to interest rate risk where the Group
has financial obligations that give rise to a variable interest
charge. To minimise the charges and exposure driven by interest
rates, the Group ensures that credit facilities are used optimally
in parallel with the latest interest rate information and
forecasts.
Tax Strategy
The Group's tax policy is to manage its tax affairs in a
responsible and transparent manner in line with our commitment to
high corporate governance standards. This ensures the Group
complies with the relevant legislation and has due regard to our
reputation and thus seek to promote the long-term success of the
Group and deliver sustainable shareholder value.
A full copy of the Tax Strategy is available on the Group's
website at www.procookgroup.co.uk.
Going Concern
The financial statements have been prepared on a going concern
basis. The Group has reported a loss before tax of GBP6.5m after
non-underlying items for the financial year ended 2 April 2023
(FY22: profit before tax of GBP94k) and had a net asset position of
GBP9.3m as at 2 April 2023 (3 April 2022: GBP13.4m), with a net
current asset position of GBP1.3m (3 April 2022: GBP6.0m). The
Group had net debt (cash and cash equivalents less borrowings) of
GBP2.8m at 2 April 2023 (3 April 2022: GBP1.8m) with available
liquidity headroom of GBP13.2m.
In their assessment of going concern the Board has considered a
period of at least 12 months from the date of signing these
financial statements. In considering whether it is appropriate to
adopt the going concern basis in the preparation of the financial
statements, the Directors have considered the Group's principal
risks and uncertainties and have assessed the impact of a range of
downside scenarios, including a severe but plausible downside
scenario, on the Group's expected financial performance, position,
and cash generation. The scenarios have been informed by a
comprehensive review of the macroeconomic environment, including
the Group's experience of trading through challenging periods such
as the Covid-19 pandemic, and the most recent macro-economic
downturn in which consumers have been impacted by significant
inflationary pressures.
Consideration has been given to the availability of facility
headroom and covenant compliance within the Group's financing
facilities, details of which are as follows:
1. An uncommitted trade finance facility of GBP6.0m. There are
no covenants associated with this facility.
2. A Revolving Credit Facility ("RCF") of GBP10.0m which was
entered into on 20 April 2022 (expiring in April 2025, with a
one-year extension option to April 2026) with two covenants in
respect of fixed charge cover and leverage. Shortly after the
year-end, on the 5 May 2023, the Group successfully finalised an
amendment to the RCF terms in respect of the fixed charge cover
covenant, which had been agreed with HSBC during March 2023 in
order to provide additional headroom against that covenant given
that the Group's EBITDA performance declined during the year and
would have breached the test at the end of the financial year
without action. The revised test requires EBITDAR to be no less
than 1.25x fixed charges for the FY23 Q4 and FY24 Q1 test dates,
and 1.40x thereafter. The leverage coverage remains unchanged with
net debt to be no greater than 2.0x EBITDA. Both covenants are
tested quarterly and calculated on a last twelve month rolling,
pre-IFRS 16 bases.
The base case for the scenario modelling extends from the annual
budget plan that was approved by the Board in April 2023. Forecasts
for future periods are based on the Group's strategic plan and its
five year financial plan, which project forwards from the FY24
budget.
Key assumptions include Ecommerce and Retail like for like
revenue growth, gross margin performance reflecting the return to
more normal marine freight costs, the financial impacts of opening
of new stores (including capital investments and time to maturity),
operational efficiencies being delivered, investment in brand
marketing activities, and the appropriate level of inventory
required to maintain strong availability for customers.
In their consideration of the Group's principal risks and
uncertainties the Board believes that the most likely and most
impactful risks that the Group faces are those surrounding customer
and macro-economic factors, marketing effectiveness, and financial
and treasury risks, all of which are heightened as a result of the
current macro-environment.
The Board has reviewed the potential downside impacts of these
risks unfolding, modelled under a number of scenarios including a
severe but plausible downside scenario which reflected the
following assumptions:
- A significant reduction in customer demand and shopping
frequency, caused by continued macro inflationary pressures and
further increases in interest rates throughout the going concern
period, resulting in a 15% lower revenue performance in the FY24
year to go compared to base case (with LFL revenue declining a
further -5%pts compared to year to date performance), increasing to
a 20% decrease compared to base case in FY25.
- Heightened competition to acquire customers in the market as
demand falls, results in a 10% increase in the cost of customer
acquisition through online channels.
- The level of promotional activity required to convert
customers increases and coupled with a deterioration in GBP against
the US dollar, gross profit margins reduce by 200bps compared to
base case, commencing in H2 FY24.
- The increase in interest rates results in an increase of
100bps in the Group's cost of borrowing through its facilities.
Under this severe but plausible downside scenario, and before
mitigating actions, the Group would remain within its GBP10m
committed borrowing facilities throughout the next 12 months, and
remain compliant with the leverage covenant test. However, it would
breach the fixed charge covenant at the Q2 FY24 test date. The
Group has a positive and long-standing relationship with its
banking partner HSBC, however there is no guarantee that a covenant
waiver, new banking terms, or alternative funding arrangements
could be agreed within an acceptable period, and there is therefore
the risk that current funding arrangements could be withdrawn.
The Board has also reviewed a reverse stress test which has been
applied to the base case model to determine the level of sales
decline which would result in a breach of financial covenants. A
reduction in revenue, with no mitigations applied, of approximately
11% in Q2 FY24 (representing a year on year decline in LFL revenue
of 12% in the remainder of FY24), would be required to breach fixed
charge covenants at that quarter-end test date. A further reduction
in revenue of 21% in FY25 would be required to breach fixed charge
covenants in that year.
The other downside scenarios linked to the key principal risks
and uncertainties, which were considered by the Board, have a
cumulative impact which was similar to the severe but plausible
downside scenario outlined above.
The Board has also considered the potential impacts of climate
change risks. These are not considered to have a material effect on
the Group's financial projections over the assessment period.
If any of the downside scenarios were to arise, including the
severe but plausible downside scenario and the reverse stress test
scenario, there are a series of mitigating actions that the Group
could seek to implement to protect or enhance financial performance
and position including to:
- Increase selling prices for products which have lower price
elasticity to help offset additional sourcing costs
- Increase promotional activity to accelerate trading performance and reduce stock levels, or alternatively, reduce promotional activity to better protect gross margins
- Reduce paid media, above-the-line or retention marketing spend
- Reduce non-variable costs in operational functions to reflect the lower sales volumes
- Reduce central overhead costs (including headcount investment)
over the short or medium term
- Delay capital expenditure in retail, technology, and logistics
- Renegotiate payment terms with suppliers
- Seek alternative forms of financing to support working capital and investment requirements
Conclusion
The Board has undertaken a comprehensive review and assessment
of going concern including the Group's financial projections, debt
servicing requirements, available facility headroom and liquidity,
and its principal risks and uncertainties. In the base case
scenario, and in the other downside scenarios which the Directors
have reviewed, the Group remains comfortably within its available
facility headroom, and no facility covenants would be breached.
However, the Directors recognise that under the severe but
plausible downside scenario, the Group is likely to breach its
fixed charge covenant, unless mitigating actions can be applied
sufficiently in advance to prevent such a breach, requiring
agreement of a covenant waiver, new banking terms, or alternative
funding arrangements, none of which can be guaranteed. The
Directors therefore acknowledge that this potential breach
represents a material uncertainty which may cast significant doubt
on the Group's ability to continue as a going concern.
The Board considers the likelihood of such a severe downside
scenario materialising to be low and recognises the range of
mitigating actions available to the Group to prevent such a breach
occurring, and the positive and long-standing relationship which
the Group has with its banking partner HSBC. The Directors
therefore have a reasonable expectation that the Group has adequate
resources to continue in operational existence and meet its
liabilities as they fall due over the period of at least 12 months
from the date of approving these financial statements. Accordingly,
the financial statements have been prepared under the going concern
basis of accounting.
Principal risks and uncertainties
The Board continually reviews and monitors the risks and
uncertainties which could have a material effect on the Group's
results. A summary of the principal risks is set out below:
Risk Impact
Strategy Failure to identify and successfully execute appropriate
and business strategies to develop and grow the brand over the medium
change to long term could be affected by a range of factors including
changes in competition or products, consumer behaviours and
trends, inadequate change management or leadership. This
could slow or limit the growth of the business, distract
from and / or damage the overall customer proposition, incur
additional cost or serve to demotivate colleagues if not
led effectively.
-------------------------------------------------------------------
Competition, Failure to adapt to changing consumer needs given external
market and macro factors, and to maintain a compelling customer offer
macroeconomic compared to competitors could limit or reduce profitability
and opportunities for growth. Macroeconomic factors which
reduce consumer confidence and / or disposable incomes or
create additional cost pressures could impact revenue growth
and profit generation.
-------------------------------------------------------------------
Brand and Reputational damage leading to loss of consumer confidence
customer in ProCook products or services, which could be caused by
a variety of factors including customer data loss, product
quality, health and safety, level of direct marketing activity,
ethical or sustainability concerns, poor customer service
or, regulatory non-compliance.
-------------------------------------------------------------------
Climate change Any failure to implement our ESG ambitions within acceptable
timescales and deliver on stakeholder expectations to reduce
the environmental impact of our business and progress towards
our net zero targets. These include actions linked to our
ESG strategy and managing the potential consequences of climate
change on our business. Failure to meet the expectations
of our customers, colleagues, investors and other stakeholders,
may impact our brand reputation and future trading performance.
-------------------------------------------------------------------
Supply chain Failure to source products effectively and efficiently, or
to ensure inventory is maintained in the right volumes at
the right locations could adversely impact our short and
medium term operational and financial performance.
-------------------------------------------------------------------
Technology Failure to develop and maintain appropriate technology to
platforms, support operations, or the loss of key platforms or data
data loss due to cyber-attacks or other failures without an adequate
and cyber response, could lead to reputational damage, fines or higher
security costs, or a loss of stakeholder and customer confidence in
our Brand.
-------------------------------------------------------------------
Marketing Any failure to attract new customers and retain existing
effectiveness customers in a cost-effective and engaging way could impact
short term performance and medium strategic growth ambitions.
-------------------------------------------------------------------
People and Any failure to attract, retain and develop the right talent,
culture skills and capabilities or to successfully protect and develop
our culture could impact operational activities including
customer service and our longer-term strategic objectives.
-------------------------------------------------------------------
Finance and Any failure to effectively manage our financial affairs and
treasury ensure an appropriate financial position and sufficient liquidity
for future growth, or any failure in financial planning,
financial reporting, compliance with tax legislation, or
the maintenance of a robust financial control environment,
could impact our ability to deliver our strategic objectives,
as well as have an adverse impact on business viability.
-------------------------------------------------------------------
Regulatory Any failure to comply with legal and regulatory obligations,
and or our wider corporate responsibility could result in financial
compliance or legal exposures or damage our reputation with our Stakeholders
as a responsible brand.
-------------------------------------------------------------------
Dan Walden
Chief Financial Officer
27 June 2023
Consolidated Income Statement
For the 52 weeks to 2 April 2023
52 weeks ended 2 April 52 weeks ended 3 April
2023 2022
GBP'000s Note Underlying Non-underlying Reported Underlying Non-underlying Reported
------------------------- ----- ----------- --------------- --------- ----------- --------------- ---------
Revenue 1 62,340 - 62,340 69,154 - 69,154
Cost of sales (23,994) - (23,994) (24,111) - (24,111)
------------------------- ----- ----------- --------------- --------- ----------- --------------- ---------
Gross profit 38,346 - 38,346 45,043 - 45,043
Operating expenses 2 (37,645) (6,159) (43,804) (36,277) (9,400) (45,677)
Other income 51 - 51 407 - 407
------------------------- ----- ----------- --------------- --------- ----------- --------------- ---------
Operating profit/(loss) 752 (6,159) (5,407) 9,173 (9,400) (227)
Finance expense (861) (204) (1,065) (623) - (623)
Other (losses)/gains (55) - (55) 944 - 944
------------------------- ----- ----------- --------------- --------- ----------- --------------- ---------
(Loss)/profit before
tax (164) (6,363) (6,527) 9,494 (9,400) 94
Tax credit/(expense) 5 29 1,559 1,588 (1,900) 1,720 (180)
Profit/(loss) for the
period (135) (4,804) (4,939) 7,594 (7,680) (86)
========================= ===== =========== =============== ========= =========== =============== =========
Total comprehensive
income/(loss) (135) (4,804) (4,939) 7,594 (7,680) (86)
========================= ===== =========== =============== ========= =========== =============== =========
Earnings per ordinary
share - basic 7 (0.12)p (4.53)p 7.34p (0.01)p
Earnings per ordinary
share - diluted 7 (0.12)p (4.53)p 6.76p (0.01)p
========================= ===== =========== =============== ========= =========== =============== =========
Consolidated Statement of Financial Position
As at 2 April 2023
GBP'000s Note As at 2 April As at 3 April
2023 2022
-------------------------------------------------- ----- -------------- --------------
Assets
Non-current assets
Intangible assets 8 235 363
Property, plant, and equipment 9 7,781 5,801
Right-of-use assets 10 25,450 20,985
Deferred tax asset 5 2,520 1,175
Total non-current assets 35,986 28,324
-------------------------------------------------- ----- -------------- --------------
Current assets
Inventories 11,515 16,759
Trade and other receivables 2,240 1,975
Current tax asset 611 271
Cash and cash equivalents 1,962 3,782
-------------------------------------------------- ----- -------------- --------------
Total current assets 16,328 22,787
Total assets 52,314 51,111
-------------------------------------------------- ----- -------------- --------------
Liabilities
Current liabilities
Trade and other payables 7,276 8,278
Lease liabilities 10 2,836 2,844
Provisions 200 173
Borrowings 4,716 5,540
Total current liabilities 15,028 16,835
-------------------------------------------------- ----- -------------- --------------
Non-current liabilities
Trade and other payables 954 816
Lease liabilities 10 26,430 19,605
Provisions 612 444
Total non-current liabilities 27,996 20,865
Total liabilities 43,024 37,700
-------------------------------------------------- ----- -------------- --------------
Net Assets 9,290 13,411
-------------------------------------------------- ----- -------------- --------------
Equity and reserves attributable to Shareholders
of ProCook Group plc
Share capital 1,090 1,090
Ordinary Shares to be issued 6,891 5,801
Share Premium 1 1
Retained earnings 1,308 6,519
-------------------------------------------------- ----- -------------- --------------
Total equity and reserves 9,290 13,411
-------------------------------------------------- ----- -------------- --------------
Consolidated statement of cash flows
For the 52 weeks to 2 April 2023
52 weeks ended 52 weeks ended
GBP'000s Note 2 April 2023 3 April 2022
-------------------------------------------- ----- --------------- ---------------
Cash flows from operating activities
(Loss)/Profit before tax (6,527) 94
Adjustments for:
Depreciation of property, plant, and
equipment 9 967 860
Amortisation of Intangible assets 8 128 52
Loss on disposal of property, plant,
and equipment 2 37 135
Profit on termination of leases (75) (50)
Amortisation of right-of-use assets 10 4,034 3,056
Impairment 2 4,405 -
Unrealised FX (gains)/losses 518 (1,098)
Share Based Payments 1,090 5,837
Finance expense 1,065 623
-------------------------------------------- ----- --------------- ---------------
Decrease/(Increase) in inventories 5,244 (6,671)
Increase in trade and other receivables (413) (372)
(Decrease)/Increase in trade and other
payables (1,233) 3,822
Increase in provisions 195 59
Income taxes paid (97) (2,041)
---------------
Net cash flows from operating activities 9,338 4,306
-------------------------------------------- ----- --------------- ---------------
Investing activities
Purchase of property, plant, and equipment 9 (4,928) (3,165)
Purchase of intangible assets 8 - (348)
Lease inception costs (460) (248)
Lease incentives received 204 -
Net cash (used in) investing activities (5,184) (3,761)
-------------------------------------------- ----- --------------- ---------------
Financing activities
Interest paid (294) (156)
Interest paid on lease liabilities (771) (467)
Proceeds from borrowings 18,689 28,320
Repayment of borrowings (19,701) (25,583)
Lease principle payments 10 (3,625) (2,910)
Proceeds from the issue of shares - 54
Dividends paid 6 (272) (1,900)
Net cash (used in) financing activities (5,974) (2,642)
-------------------------------------------- ----- --------------- ---------------
Net movement in cash and cash equivalents (1,820) (2,097)
-------------------------------------------- ----- --------------- ---------------
Cash and cash equivalents at beginning
of the period 3,782 5,879
--------------- ---------------
Cash and cash equivalents at end
of period 1,962 3,782
-------------------------------------------- ----- --------------- ---------------
Consolidated statement of changes in equity
For the 52 weeks to 2 April 2023
GBP'000s Note Share Share Share Retained Total
capital Premium Option earnings equity
Reserve
--------------------------- ------ ---------- ---------- ---------- ----------- ---------
As at 4 April 2021 - - - 9,505 9,505
Total comprehensive loss
for the period - - - (86) (86)
Bonus issue 117,300 - - (117,300) -
Capital reduction (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 6 - - - (1,900) (1,900)
As at 3 April 2022 1,090 1 5,801 6,519 13,411
--------------------------- ------ ---------- ---------- ---------- ----------- ---------
Total comprehensive loss
for the period - - - (4,939) (4,939)
Employee Share Based
Payment Awards - - 1,090 - 1,090
Ordinary dividends paid 6 - - - (272) (272)
As at 2 April 2023 1,090 1 6,891 1,308 9,290
--------------------------- ------ ---------- ---------- ---------- ----------- ---------
Notes to the consolidated financial statements
For the 52 weeks ending 2 April 2023
General Information
The financial information set out herein does not constitute the
Company's statutory financial statements for the periods ended 2
April 2023 or 3 April 2022, but is derived from those financial
statements. Statutory financial statements for 2023 will be
delivered to the Registrar of Companies in due course. The
financial statements were approved by the Board of directors on 27
June 2023. The auditors have reported on those financial
statements; their reports were (i) unqualified, (ii) contained a
reference to the material uncertainty in respect of going concern
to which the auditor drew attention by way of emphasis without
modifying their report, (iii) did not contain a statement under
Section 498 (2) or (3) of the Companies Act 2006.
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, 10 St. Modwen Park, Gloucester, GL10 3EZ.
The principal activity of the Company together with its
subsidiary undertakings throughout the period is the sale of
kitchenware and related products in stores and via ecommerce
platforms.
Basis of preparation
These consolidated financial statements have been prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006, UK-adopted IFRS as
issued by the International Accounting Standards Board. The
consolidated Group financial statements are presented in Pounds
Sterling, being the Group's functional currency, and generally
rounded to the nearest thousand. They are prepared on the
historical cost basis, unless otherwise stated.
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and Group
have adequate resources to continue in operational existence for
the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the financial statements.
Further information on going concern is set out in the CFO's
Review.
1. Revenue
Group revenue is not reliant on any single major customer or
group of customers. Management considers revenue is derived from
one business stream being the retail of kitchenware and related
products and services.
Customers interact and shop with the Group across multiple
touchpoints and their journey often involves more than one channel.
The Chief Operating Decision-maker is the Board of Directors of
ProCook Group plc. The Board reviews internal management reports on
a frequent basis, and in line with internal reporting, the channel
reporting below indicates where customers complete their final
purchase transaction.
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. During the financial year ended 2
April 2023 the Group ceased its trading operations in the European
Union. All revenue is from external customers.
52 weeks ended 52 weeks ended
GBP'000 2 April 2023 3 April 2022
---------------- --------------- ---------------
United Kingdom 61,550 66,124
European Union 790 3,030
---------------- --------------- ---------------
Total revenue 62,340 69,154
---------------- --------------- ---------------
2. Operating expenses
Operating profit/(loss) for the periods is stated after
charging:
52 weeks ended 52 weeks ended
GBP'000 2 April 2023 3 April 2022
--------------------------------------- --------------- ---------------
Depreciation of tangible fixed assets 967 860
Amortisation of Intangible assets 128 52
Amortisation of right-of-use assets 4,034 3,056
Impairment of tangible fixed assets 1 ,944 -
I mpairment of right-of-use assets 2,461
Variable lease payments 785 985
Loss on disposal of property, plant,
and equipment 37 174
--------------------------------------- --------------- ---------------
3. Non-underlying items
Consistent with FY22, expenses in respect of employee
share-based awards which relate to the IPO event in that year,
which itself is non-recurring, have been presented as
non-underlying costs. These expenses are expected to continue
through relevant vesting periods to FY25, albeit these costs reduce
over time.
During the financial year ended 2 April 2023, the Group
consolidated its head office and warehouse operations into a new
site. Operating expenses of GBP0.7m associated with occupying the
site while its development was completed, and the costs of
transitioning into the new site have been presented as
non-underlying costs as these costs are non-recurring, dual-running
and transition-related.
The Group's impairment assessment has resulted in an expense to
the Consolidated Income Statement of GBP3.3m (2022: GBPnil) in
respect of Retail CGU impairment and GBP1.1m (2022: GBPnil) in
respect of the Group's two pre-existing distribution / head office
sites. These have been presented as non-underlying items as each
are material in nature, and by virtue of their relationship to
future performance, are not considered related to the performance
of the financial year ended 2 April 2023.
52 weeks ended 52 weeks ended
GBP'000 2 April 2023 3 April 2022
--------------------------------- --------------- ------------------
IPO Associated costs - 2,742
Share based payments 1,209 6,658
Headquarters transition-related 749 -
costs
Impairment expense 4,405 -
--------------------------------- --------------- ------------------
Total 6,363 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 2 April 2023, 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 52 weeks ended
GBP'000 2 April 2023 3 April 2022
-------------------------------- --------------- ------------------
Revenue
Ecommerce 25,653 32,332
Retail 36,687 36,822
-------------------------------- --------------- ------------------
Total revenue 62,340 69,154
-------------------------------- --------------- ------------------
Operating profit
Ecommerce 4,588 8,056
Retail 5,319 9,635
Central costs (9,155) (8,518)
Non-underlying operating costs (6,159) (9,400)
-------------------------------- --------------- ------------------
Operating loss (5,407) (227)
Non-underlying finance costs (204) -
Finance costs (861) (623)
Other (losses)/gains (55) 944
-------------------------------- --------------- ------------------
(Loss)/profit before tax (6,527) 94
-------------------------------- --------------- ------------------
5. Tax expense
The tax expense for the periods presented differ from the
standard rate of UK corporate income tax applicable in the
financial year. The differences are explained below:
52 weeks ended 52 weeks ended
GBP'000 2 April 2023 3 April 2022
------------------------------------------ --------------- ---------------
Current taxation
Corporate income tax charge for the
period - 1,384
Adjustments in respect of previous years (243) -
------------------------------------------
(243) 1,384
Deferred tax
Origination and reversal of temporary
differences (1,632) (920)
Impact of change in tax rate - (284)
Adjustments in respect of prior periods 287 -
--------------- ---------------
Total tax ( credit)/expense (1,588) 180
------------------------------------------ --------------- ---------------
The tax charge reconciles with the standard rate of UK corporate
income tax as follows:
52 weeks ended 52 weeks ended
GBP'000 2 April 2023 3 April 2022
------------------------------------------- --------------- ---------------
Profit on ordinary activities before
tax (6,527) 94
------------------------------------------- --------------- ---------------
UK Corporate income tax at standard
rate of 19% (2021: 19%) (1,240) 18
Factors effecting the charge in the
period:
Tax effect of expenses that are not
deductible for tax purposes (20) 446
Adjustments in respect of prior years (243) -
Adjustments in respect of prior periods 287 -
(deferred tax)
Remeasurement of deferred tax for changes
in tax rates (372) (284)
------------------------------------------- --------------- ---------------
Total taxation ( credit)/expense (1,588) 180
------------------------------------------- --------------- ---------------
The underlying taxation expense for the period as a percentage
of profit before tax (the effective tax rate) was 17.6% (2022:
20.0%).
The standard rate of UK corporate income tax was 19% for all
periods presented. Deferred tax balances reflect future corporation
tax rates of 25%.
The deferred tax asset has arisen due to accelerated capital
allowances on items of property, plant and equipment 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. The following is the
analysis of the deferred tax balances for financial reporting
purposes:
Movement in the year:
GBP'000 Accelerated Share based Carried forward Total
capital allowances payments losses
-------------------------- -------------------- ------------ ---------------- -------
Deferred tax asset as at
3 April 2022 (479) 1,654 - 1,175
(Debit)/Credit to profit
and loss (601) 315 1,631 1,345
-------------------------- --------------------
Deferred tax asset at 2
April 2023 (1,080) 1,969 1,631 2,520
-------------------------- -------------------- ------------ ---------------- -------
Carried forward losses arise from the tax losses incurred during
this financial year. This has been recognised as a deferred tax
asset as the Group believes there is a high degree of likelihood
there will be sufficient future profits to offset against over the
medium term planning cycle.
6. Dividends
52 weeks Dividend 52 weeks Dividend
ended per ended per
GBP'000 2 April 2023 share (pence) 3 April 2022 share (pence)
-------------------------------- ------------- -------------- ------------- --------------
Final dividend for the period - - 1,000 1.0 pence
ended 4 April 2021
Interim dividend for the period - - 900 1.0 pence
ended 3 April 2022
-------------------------------- ------------- -------------- ------------- --------------
Final dividend for the period 272 0.9 pence - -
ended 3 April 2022
Interim dividend for the period - - - -
ended 2 April 2023
-------------------------------- ------------- -------------- ------------- --------------
The FY22 final dividend of GBP1.0m was declared representing 0.9
pence per share, however GBP0.6m of this dividend was waived by
certain shareholders. The final dividend was paid to the
shareholders on the register at close of business on 2 September
2022.
The FY22 interim dividend of GBP1.0m was declared and paid
representing 1.0 pence per ordinary share, however GBP0.1m of this
dividend was waived by certain shareholders.
7. Earnings per share
Basic earnings per share is calculated by dividing the profit
for the period attributable to equity holders of the Group by the
weighted average number of ordinary shares in issue.
Diluted earnings per share is calculated by dividing the profit
for the period attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares in issue
during the period plus the weighted average number of ordinary
shares that would have been issued on the conversion of all
dilutive potential ordinary shares into ordinary shares.
52 weeks ended 52 weeks ended
2 April 2023 3 April 2022
--------------------------------------- --------------- ---------------
Weighted average number of shares 108,956,624 103,509,034
Impact of share options 9,126,940 8,774,159
Number of shares for diluted earnings
per share 118,083,564 112,283,193
--------------------------------------- --------------- ---------------
52 weeks 52 weeks 52 weeks ended 52 weeks ended
ended ended
2 April 2023 2 April 2023 3 April 2022 3 April 2022
GBP'000 Underlying Reported Underlying Reported
----------------------- ------------- ------------- --------------- ---------------
(Loss)/profit for the
period (135) (4,939) 7,594 (86)
----------------------- ------------- ------------- --------------- ---------------
Earnings per ordinary
share - basic (0.12)p (4.53)p 7.34p (0.01)p
Earnings per ordinary
share - diluted (0.12)p (4.53)p 6.76p (0.01)p
----------------------- ------------- ------------- --------------- ---------------
8. Intangible assets
GBP'000 Software Assets under construction Total
------------------------------- --------- -------------------------- ------
Cost
At 5 April 2021 - 67 67
Transfers out of Assets under
construction 67 (67) -
Additions 190 158 348
------------------------------- --------- -------------------------- ------
At 3 April 2022 257 158 415
Additions - - -
Transfers out of Assets under
construction 158 (158) -
At 2 April 2023 415 - 415
------------------------------- --------- -------------------------- ------
Accumulated Amortisation
At 5 April 2021 - - -
Charge for the period 52 - 52
------------------------------- --------- -------------------------- ------
At 3 April 2022 52 - 52
Charge for the period 128 - 128
At 2 April 2023 180 - 180
------------------------------- --------- -------------------------- ------
Net book value
At 4 April 2021 - 67 67
At 3 April 2022 205 158 363
At 2 April 2023 235 - 235
------------------------------- --------- -------------------------- ------
Amortisation was recognised in the Consolidated Statement of
Income within operating expenses throughout the period.
9. Property, plant and equipment
GBP'000 Land and Buildings Plant and Fixtures Motor Assets Total
Machinery and Fittings Vehicles under Construction
----------------- ------------------- ----------- -------------- ---------- -------------------- -------
Cost
At 5 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
Additions - - 1,112 - 3,816 4,928
Transfers 175 21 2,418 - (2,614) -
Disposals - - (241) - - (241)
At 2 April 2023 187 508 11,751 29 1,627 14,102
----------------- ------------------- ----------- -------------- ---------- -------------------- -------
Accumulated depreciation and impairments
At 5 April 2021 9 32 2,726 4 - 2,771
Charge for the
period 3 31 818 8 - 860
Disposals (9) - (3) (5) - (17)
----------------- ------------------- ----------- -------------- ---------- -------------------- -------
At 3 April 2022 3 63 3,541 7 - 3,614
Charge for the
period 3 34 925 5 - 967
Disposals - - (204) - - (204)
Impairment 1 101 1,838 4 - 1,944
At 2 April 2023 7 198 6,100 16 - 6,321
----------------- ------------------- ----------- -------------- ---------- -------------------- -------
Net book value
At 4 April 2021 25 288 3,318 - - 3,631
At 3 April 2022 9 424 4,921 22 425 5,801
At 2 April 2023 180 310 5,651 13 1,627 7,781
----------------- ------------------- ----------- -------------- ---------- -------------------- -------
Assets under construction includes retail store equipment and
fixtures acquired but not yet in use, and certain assets relating
to the new distribution centre and head office which had not been
fully developed or commissioned at 2 April 2023.
Impairment tests have been carried out where appropriate and an
impairment charge of GBP1.9m has been recognised in the 52 weeks
ended 2 April 2023 (3 April 2022: GBPnil). This impairment charge
relates to a retail wide impairment review where certain stores
have been identified as impaired.
Depreciation was recognised in the Consolidated Income Statement
within operating expenses throughout the period.
10. Leased assets
Right-of-use assets included in the Consolidated Statement of
Financial Position were as follows:
Plant and
GBP'000 Leasehold Property Motor Vehicles Equipment Total
----------------------- --------------------- ----------------- ----------- ---------
Cost
At 5 April 2021 20,437 179 29 20,645
Additions 7,843 57 39 7,939
Re-measurement(1) 241 - - 241
Disposals (2,296) - - (2,296)
----------------------- --------------------- ----------------- ----------- ---------
At 3 April 2022 26,225 236 68 26,529
Additions 16,336 - - 16,336
Re-measurement (4,371) - - (4,371)
Disposals (1,706) (54) (29) (1,789)
At 2 April 2023 36,484 182 39 36,705
----------------------- --------------------- ----------------- ----------- ---------
Accumulated amortisation and impairments
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
Charge for the period 3,959 64 11 4,034
Disposals (701) (54) (29) (784)
Impairment 2,461 - - 2,461
-----------------------
At 2 April 2023 11,149 97 9 11,255
----------------------- --------------------- ----------------- ----------- ---------
Net book value
At 4 April 2021 17,658 160 16 17,834
At 3 April 2022 20,795 149 41 20,985
At 2 April 2023 25,335 85 30 25,450
----------------------- --------------------- ----------------- ----------- ---------
For impairment testing purposes, the Group has determined that
each store is a separate CGU. Each CGU is tested for impairment at
the balance sheet date for any indicators of impairment. Due to the
macro-economic environment in the UK, all stores have been assessed
for impairment.
The value in use of each CGU is calculated based on the Group's
latest budget and forecast cash flows, covering a five-year period,
which have regard to historic performance and knowledge of the
current market, together with the Group's views on the future
achievable growth. Cash flows beyond this five-year period are
extrapolated using a long-term growth rate based on management's
future expectations.
The key assumptions in the value in use calculations are the
growth rates of sales and gross profit margins, changes in the
operating cost base, long-term growth rates and the risk-adjusted
pre-tax discount rate. The pre-tax discount rates are derived from
the Group's weighted average cost of capital, which has been
calculated using the capital asset pricing model, the inputs of
which include a country risk-free rate, equity risk premium, Group
size premium and a risk adjustment (beta) along with the cost of
debt.
Lease liabilities included in the Consolidated Statement of
Financial Position were as follows:
GBP'000 Leasehold Property Motor Vehicles Plant and Total
Equipment
------------------ ------------------- --------------- ----------- --------
At 4 April 2021 19,281 155 15 19,451
Additions 7,615 57 39 7,711
Remeasurement(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
------------------ ------------------- --------------- ----------- --------
Additions 15,893 - - 15,893
Remeasurement(1) (4,371) - - (4,371)
Interest expense 768 2 1 771
Lease payments (4,318) (67) (11) (4,255)
Disposals (1,080) - - (1,080)
------------------- --------------- ----------- --------
At 2 April 2023 29,161 76 29 29,266
------------------ ------------------- --------------- ----------- --------
(1) Remeasurements have arisen where store lease rental terms
and lease expiry dates have been renegotiated.
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END
FR GUGDLCUDDGXI
(END) Dow Jones Newswires
June 28, 2023 02:06 ET (06:06 GMT)
Procook (LSE:PROC)
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