TIDMPROC
RNS Number : 5461W
ProCook Group PLC
13 December 2023
13 December 2023
ProCook Group plc
Interim results for the 28 weeks ended 15 October 2023
Building a stronger customer-focused business to accelerate
future growth
ProCook Group plc ("ProCook" or "the Group"), the UK's leading
direct-to-consumer specialist kitchenware brand, today announces
its interim results for the first half of FY24 (the 28 weeks ended
15 October 2023).
GBPm H1 FY24 H1 FY23 YoY
Revenue 26.3 27.4 (3.8%)
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Gross Profit 17.6 16.7 +5.1%
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Gross margin % 66.7% 61.0% +570bps
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Underlying loss before tax(1) (1.7) (2.8) +39.5%
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Reported loss before tax (3.2) (3.5) +7.9%
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Net debt (3.2) (1.3)
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Financial and Strategic Highlights
-- Total revenue of GBP26.3m declined by 3.8% YoY, or 1.2%
excluding the Amazon EU channels which we exited last year
-- LFL revenue declined by 4.4% YoY after a volatile first half
in difficult trading conditions and impacted by teething issues
following the launch of our new website
-- Held our UK kitchenware market share YoY(2) , despite a
continued shift away from online with UK Ecommerce revenue
representing 34.7% of total revenue (H1 FY23: 40.1%)
-- Gross profit margins significantly improved YoY to 66.7%
(+570bps) as expected following the unwinding of heightened costs
in our stock file as marine freight costs have returned to
pre-pandemic levels
-- Underlying LBT of GBP1.7m improved by +39.5% YoY driven by
stronger gross margins and ongoing cost discipline
-- Net debt at the end of the first half was GBP3.2m (FY23 year
end: GBP2.8m) with available liquidity of GBP12.8m
-- Delivering for our customers:
o Returned to 4.8 Trustpilot score with over 100,000 5-star
reviews received
o New brand campaign, Meta marketing, and referral scheme to
raise awareness and loyalty
o Attracted 290,000 new customers to shop with ProCook for the
first time
-- Good strategic progress will help us unlock and accelerate future growth:
o Committed to two new stores (opened shortly after half year)
and one upsize relocation for FY24
o Launched our new website which, following early teething
issues is now performing well
o Launched phase one of small electricals (kettles and
toasters), with phase two launching in spring 2024
o Completed the transition into our new Store Support Centre;
delivering operational efficiencies
o On track to deliver in full our GBP3m cost improvement
programme, offsetting cost headwinds
Current trading and outlook
In the first eight weeks of the second half, including Black
Friday and the early part of Christmas trading, total revenue was
+1.5% YoY, outperforming the market during this period.
Having solved the majority of the new website teething issues by
the beginning of the Black Friday period, we delivered a robust
Black Friday campaign with revenue growth of 3.5% YoY.
Our retail stores continue to perform well with +4.1% YoY LFL
performance and total revenue growth of 10.7% year on year
supported by the opening of Trafford Centre and Watford stores.
Trading conditions remain challenging and volatile as we
experienced in the first half, and the Board remains cautious about
the timing and pace of market recovery. However, we are confident
in our specialist proposition, and we are making good strategic
progress in building a stronger customer-focused business ready to
accelerate as conditions improve, to deliver profitable and
sustainable growth for all stakeholders.
Lee Tappenden, Chief Executive Officer, commented:
"Whilst the consumer macro backdrop remains challenging, we are
pleased to have delivered a robust Black Friday campaign and an
improvement in recent trading, as we enter the important
pre-Christmas trading period.
"I am delighted to have joined the business, with its strong
foundations as a specialist retailer with a differentiated model
and high-quality products providing a firm base from which to build
brand awareness and expand the product range and store
portfolio.
"Whilst we remain cautious about the timing and pace of market
recovery, we are confident in our proposition and are making good
strategic progress in building a stronger customer-focused business
ready to accelerate growth as trading conditions improve and
deliver profitable and sustainable growth for all
stakeholders."
Analyst Presentation:
An interim results presentation for analysts and investors will
be made available on the Group's corporate website at
https://www.procookgroup.co.uk/investors/reports-and-presentations/
this morning from 7.00am.
For further information please contact:
ProCook Group plc investor.relations@procook.co.uk
Lee Tappenden, Chief Executive Officer
Dan Walden, Chief Financial Officer
MHP Group (Financial PR Adviser) procook@mhpgroup.com
Katie Hunt Tel: +44 (0)7711 191 518
Catherine Chapman
Next scheduled event:
ProCook expects to release its third quarter trading update in
mid-January 2024.
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 its 60 own-brand retail stores, conveniently located
across the UK.
Founded over 25 years ago as a family business, selling cookware
sets by direct mail in the UK, ProCook has grown into a market
leading, multi-channel specialist kitchenware company, employing
over 600 colleagues and operating from its Store Support Centre in
Gloucester.
ProCook has been listed on the London Stock Exchange since
November 2021 (PROC.L).
Quarterly revenue performance:
FY24 (52 weeks ending 31 March 2024)
Q1 Q2 H1 Q3 Q4 H2 FY
--------- --------- --------- --- --- --- ---
Revenue GBP10.7m GBP15.7m GBP26.3m
--------- --------- --------- --- --- --- ---
Revenue growth
% (6.7%) (1.8%) (3.8%)
--------- --------- --------- --- --- --- ---
LFL revenue(3) GBP10.2m GBP15.0m GBP25.3m
--------- --------- --------- --- --- --- ---
LFL growth % (7.9%) (1.8%) (4.4%)
--------- --------- --------- --- --- --- ---
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(4) 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%
--------- --------- --------- --------- --------- --------- ---------
Notes
(1) Underlying loss before tax is presented before
non-underlying items of GBP1.5m in H1 FY24 (H1 FY23: GBP0.7m) in
relation to IPO-related share-based awards and transition and dual
running costs in respect of the Group's new Store Support
Centre
(2) UK Kitchenware market growth (excluding ProCook) calculated
using weekly GfK data and management estimates
(3) FY24 LFL (Like For Like) revenue reflects:
- Ecommerce LFL - ProCook direct website channel only.
- Retail LFL - Continuing Retail stores which were trading for
at least one full financial year prior to the 2 April 2023,
inclusive of any stores which may have moved location or increased/
decreased footprint within a given retail centre.
(4) FY23 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
CEO's Review
Introduction
I am pleased to report on our progress and performance during
the first half of FY24 having joined ProCook 12 weeks ago. In this
brief period, I have spent time listening and learning about our
business in our stores with our colleagues and customers, with many
supplier partners, and with every team in our Store Support Centre
("SSC"). My first impressions of ProCook reinforce those that I had
formed before I joined.
We have a real strength and competitive point of difference in
our business model through the direct-sourcing of our ProCook-brand
products and by selling directly to customers through our own
website and retail stores, owning every point of the "source to
sale" journey.
As a specialist retailer, the breadth and quality of our product
range is paramount to positioning our authority across our offer.
We cater for customers at different price points and by cutting out
the middleman, we offer everyday great value pricing across our
range. Our passionate colleagues who deliver outstanding levels of
customer service reinforce our specialist credentials and are key
to building loyalty amongst our customer base.
We have low brand awareness, with less than 10% of the UK
population spontaneously recognising us as a kitchenware retailer,
and only around 30% when prompted. Our retail stores coverage is
only just over 30% of the UK population. However, when customers do
find us, loyalty is strong with almost 40% of our sales being
generated by just 10% of our active customer base.
I am pleased that ProCook has taken a long term view with
regards to decision making, which means that the foundations of the
business are strong, have been well developed, and are ready for
scale.
Holding market share in challenging trading conditions
Trading conditions remain challenging. Consumer spending is
squeezed, and customers are delaying big ticket purchases which has
impacted sales of our larger cookware and knife sets. Our UK
revenue, excluding the Amazon EU marketplaces which we exited last
year, was down 1.2% year on year. We have held our UK market share
position despite the ongoing channel shift back to retail (where we
remain under-represented in the UK) and our authority in bigger
ticket and more discretionary Cookware and Knife sets.
Performance in our retail stores has been pleasing with +2.6%
like for like revenue growth and 7.9% total growth including new
stores. Ecommerce sales have been more challenging. Excluding the
impact of our prior year exit of Amazon EU channels, our like for
like Ecommerce sales reduced by -14.6%.
We completed the development and transition to our new website
at the end of August after A/B testing over the summer. With a
cleaner and more modern layout, more inspiration and improved user
experience this provides a great platform for future growth. We
endured teething issues in the weeks following launch which
impacted our performance, but I am pleased to see improved metrics
coming through including conversion which is now +15% year on
year.
We have delivered a strong recovery in gross margins (+570bps
year on year to 66.7%) as expected, benefitting from the unwinding
of higher shipping costs within our stock file and reduced factory
gate pricing negotiated with suppliers.
We have maintained our focus on cost discipline. Entering FY24
with many cost headwinds including pay and cost inflation, our new
SSC, and our new stores, we have worked hard to offset these with
the GBP3m cost savings plan which we announced last year and which
we are on track to deliver in full.
As a result, our underlying loss before tax during the first
half was GBP1.7m, which is 39.5% improved year on year, and we
finished the first half with net debt of GBP3.2m (FY23 year end:
GBP2.8m) and available liquidity of GBP12.8m.
Further detail on our financial performance in the first half is
set out in the CFO's Report.
Good strategic progress with clear opportunities to accelerate
growth
Whilst I was only with ProCook for the last 4 weeks of the first
half, I am pleased with the good strategic progress made by the
team, which will help us unlock and accelerate future growth.
We have continued to develop our marketing capability to attract
new customers to our brand. We launched our latest brand awareness
campaign in October featuring Saturday Kitchen chef Matt Tebbutt
and are pleased with the results so far which have delivered over
30 million impressions in the first few weeks of the campaign.
Brand building is a long term exercise and we have complemented
this with further experimentation on Meta channels which will drive
more immediate conversion. I am excited by the potential to do much
more in this area. Additionally, we have launched a new referral
scheme to attract new customers, using the power of customer
advocacy to recommend our products and services to their friends
and family.
We have worked hard to improve our service levels in stores
through more training, and improved rota scheduling which has also
improved our efficiency helping to offset cost pressures. We were
particularly pleased to re-earn our 4.8 star Excellent rated
Trustpilot score in the first half with over 100,000 5 star reviews
received from our customers.
As planned, we have pressed on with retail store expansion.
Shortly after the half year we completed the fit out works and
openings of our 2 new stores at the Trafford Centre Manchester and
Atria Watford. We will also be upsizing our Cheshire Oaks store in
Q4. Our retail estate is now at 60 stores and as we increase our UK
coverage further, we will continue to apply rigorous opening
criteria to each new store acquisition.
Our new website is now performing much better, with conversion
and traffic now ahead of last year. Our team has worked hard to
improve site performance with all metrics now in a stronger
position. There are still many opportunities available to improve
user experience which our teams will focus on in the months
ahead.
During the first half we launched the first phase of electricals
- our new kettles and toasters ranges. This sub-category alone
represents approximately 30% of the GBP1 billion small kitchen
appliance market in the UK, and we are thrilled to have been
awarded best kettle by the Good Housekeeping awards and joint-best
two slice toaster; a testament to the great work done by our
product teams to design and source these ranges. We have now
completed designs and raised production orders for our phase 2 of
electricals which includes mixers, blenders, choppers, processors,
slow cookers and our first airfryer ready for launch in spring
2024. We have also added coloured cookware ranges, new knife
ranges, and new tableware with a new product refresh of 7.5% of our
range in the first half and more planned for the second half.
We completed the transition to our new SSC in the first quarter,
with the final elements of our Ecommerce logistics operations
moving over in May. We have eliminated the transport and dual
handling costs associated with operating the two previous
distribution centres and we are making good progress in reducing
pick and pack costs which are 12% lower year on year in H1.
Priorities for growth
I am working with our leadership team to update our strategic
plan, and I will share further detail on that when we release our
FY24 annual results. In the meantime, our priorities are clear.
With a very strong product focus already established in the
business, we will focus even more on our customers. This will
ensure we have the right range, quality, pricing, marketing and
service levels combining to create a stand-out proposition.
We will revisit our value positioning against our competitive
set. We are committed to providing customers with value through
both better quality and our direct-sourcing model supporting lower
pricing, and, following the return to normal shipping costs, we
will work to improve our everyday low pricing for customers with
support from our suppliers. We have begun detailed category reviews
and already implemented new pricing strategies across parts of our
range with encouraging early results.
We will expand our digital marketing capabilities, shifting
reliance away from Google channels and adding more social media
content. Our category is well-suited to content-led marketing with
a large proportion of the population interested in cooking and
dining. This will help us attract new customers to our brand and
raise awareness of our offer to customers who are in the early
consideration stages of the purchase journey.
Our product range is already strong and broad; however, gaps
exist that will enable us to build a fuller offer. In addition to
building out our electricals range, we will add more entry level
products to appeal to a broader customer base (including students
and first time renters/ buyers), expand our tableware and baking
offer, and add more seasonal and promotional relevance to our
assortment providing more inspiration to customers. Given the
design and production lead times, this will take time, and so we
have begun work on this already.
With only 60 retail stores in the UK, we have a significant
opportunity to accelerate growth through retail expansion. Our
stores offer customers the chance to test and trial products
supported by knowledgeable colleagues who help customers find the
right product to suit their needs and budget. With only 30% of the
UK population served by our stores within reasonable drive times,
we have already begun building our pipeline of new store openings
for FY24 and beyond. Not only will new stores trade effectively,
but they will support greater awareness of our brand and increased
sales online.
Now that we have a new website, we will delve deeper into
improving user experience. We have identified a series of priority
developments to focus on which will better support customers in
their online journey, making it easier to find the right products.
We are building the expertise in the team to support this important
initiative.
Finally, we will seek to eliminate all unnecessary complexity in
our business, reducing cost where possible, and allowing us to
operate a simpler, more nimble and more profitable business.
The fundamentals of our business are strong, and I am energised
by the many opportunities we have to build a stronger
customer-focused business. As market conditions improve, these
initial priorities will help us accelerate growth and deliver
profitable and sustainable growth for our stakeholders.
Lee Tappenden
Chief Executive Officer
12 December 2023
CFO's Review
Trading conditions have remained challenging and volatile
throughout the first half, with customers seeking out greater value
and completing more research before committing to spend especially
on discretionary items. Despite this we have held our market
share.
As expected, our gross margins have improved significantly, and
combined with our cost discipline and actions to deliver GBP3m of
cost improvements year on year in FY24, we have reduced our first
half underlying operating loss by 36% year on year.
We continue to prioritise and invest in the areas which will
support our performance and growth for the long term including new
stores, our logistics operations and our technology, as well as
focusing on delivering the excellent service that we are known
for.
The first half typically generates around 40% of full year
sales, and with strong product availability and a robust trading
plan in place we are well prepared for the second half.
Revenue
GBPm H1 FY24 YoY %
Revenue 26.3 (3.8%)
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Ecommerce 9.1 (20.2%)
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Retail 17.2 +7.9%
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LFL Revenue 25.3 (4.4%)
---------------------------------------------------- --------
LFL Ecommerce 9.1 (14.6%)
---------------------------------------------------- --------
LFL Retail 16.1 +2.6%
---------------------------------------------------- --------
First half revenue of GBP26.3m was -3.8% year on year, or -1.2%
excluding the exit from Amazon EU during the last financial year.
On a like for like basis, first half revenue was -4.4% year on
year, an improving trend compared to prior year (H1: -16.2%, H2:
-5.9%).
Ecommerce revenue of GBP9.1m was -14.6% year on year on a LFL
basis. This reflects reduced promotional activity year on year in
the first quarter, and teething issues following the launch of our
newly designed website in late August which impacted traffic and
conversion in the second quarter, and which has subsequently been
largely resolved.
Retail revenue of GBP17.2m was +7.9% year on year, with LFL
revenue growth of +2.6% outperforming the market, benefitting from
strong product availability and launches of new products,
accompanied by our excellent customer service.
Gross profit
Gross profit increased +5.1% year on year to GBP17.6m despite
the drop in sales with gross profit margins increasing by +570bps
as expected. The key drivers of margin growth have been reduced
shipping costs (+550bps YoY), improved pricing and reduced
promotional costs (+90bps), partly offset by adverse foreign
exchange impacts (-100bps).
Operating expenses and other income
Underlying operating expenses net of other income
We have maintained a disciplined approach to costs, holding
total underlying operating expenses net of other income flat year
on year at GBP19.1m despite significant cost pressures. We are on
track to deliver in full the GBP3m cost improvement plan we set out
this time last year which has helped offset these cost pressures in
the first half. The key drivers of change in first half operating
expenses year on year include:
-- New store costs: +GBP0.5m
-- Payroll cost inflation: +GBP0.5m
-- New Store Support Centre ("SSC") occupancy costs: +GBP0.4m
-- Capability investment: +GBP0.4m
-- Retail hours structures and scheduling improvements: -GBP0.4m
-- Logistics cost savings (volume): -GBP0.7m
-- Logistics cost savings (efficiency): -GBP0.2m
-- Exit of Amazon EU: -GBP0.5m
Non-underlying operating expenses
It is the Group's policy to disclose separately such items that
relate to non-recurring events and are material in nature, and
incurred outside of the normal business operations, in order to
provide a consistent and comparable view of the underlying
performance of the Group. Non-underlying operating expenses in H1
FY24 were GBP1.4m (H1 FY23: GBP0.7m).
Consistent with prior periods, expenses in respect of employee
share-based awards which relate to the IPO in FY22, which itself is
non-recurring, have been presented as non-underlying costs. These
expenses amounted to GBP0.7m in H1 FY24 (H1 FY23: GBP0.6m). These
expenses are expected to continue through relevant vesting periods
to FY25, albeit these costs reduce over time.
During the first half of FY24, we completed the final elements
of transition into our new SSC. Operating expenses associated with
the costs of transitioning into the new site and the dual occupancy
of the new and previous sites were GBP0.8m in H1 FY24 (H1 FY23:
GBP0.1m) and have been presented as non-underlying items as these
costs are non-recurring, dual-running and transition-related.
At the FY23 year end, the Group performed impairment assessments
in respect of all Retail stores which had indicators of impairment
as well as the Group's two pre-existing distribution/ head office
sites. The impairment provision will be reviewed at least annually
where impairment indicators arise.
Shortly after the first half the Group assigned the lease for
one of its two pre-existing distribution centres to a third party.
The marketing and search for a new occupier for the second site
remains underway.
Operating profit / (loss)
Total underlying operating loss for the period improved by 36.3%
year on year to GBP1.5m (H1 FY23: GBP2.4m) driven by the gross
profit and cost improvements delivered in the first half. Ecommerce
operating margins increased to 20.5% (H1 FY23: 10.8%) whilst Retail
operating margins increased to 13.6% (H1 FY23: 7.3%).
GBPm H1 FY24 H1 FY23
Underlying operating (loss) / profit
-------- --------
Ecommerce 1.9 1.2
-------- --------
Retail 2.3 1.2
-------- --------
Central costs (5.7) (4.8)
-------- --------
Total (1.5) (2.4)
-------- --------
As a % of revenue
-------- --------
Ecommerce 20.5% 10.8%
-------- --------
Retail 13.6% 7.3%
-------- --------
Central costs (21.8%) (17.5%)
-------- --------
Total (5.8%) (8.7%)
-------- --------
Total reported operating loss in the first half of FY24 of
GBP3.0m, after GBP1.4m of non-underlying operating expense items,
was +2.8% improved year on year.
Profit and earnings per share
Underlying losses before tax improved by 39.5% year on year to
GBP1.7m in the first half of FY24 (H1 FY23: GBP2.8m).
During the first half there was a net expense of GBP0.2m (H1
FY23: GBP0.4m net expense) in respect of financial items. Financial
items included interest expenses on lease liabilities and
borrowings of GBP0.7m (H1 FY23: GBP0.4m) reflecting increased
interest rates year on year and a higher average net debt position.
In H1 FY24, interest expenses were partly offset by unrealised
gains of GBP0.5m in respect of foreign exchange (H1 FY23: GBP17k
unrealised losses).
After non-underlying items, the loss before tax was GBP3.2m (H1
FY23: GBP3.5m). Reported loss after tax was GBP2.4m (H1 FY23:
GBP2.8m).
The effective tax rate based on underlying loss before tax was
25.0% (H1 FY23: 18.5%).
Earnings per Share
Underlying basic earnings per share for the first half improved
to -1.18 pence (H1 FY23: -2.12 pence) and underlying diluted
earnings per share increased to -1.18 pence (H1 FY23: -2.12
pence).
Reported basic earnings per share for the first half were -2.22
pence (H1 FY23: -2.61 pence) and reported diluted earnings per
share were -2.22 pence (H1 FY23: -2.61 pence).
Cash generation and net cash / debt
We have carefully managed our cash position during the first
half, with net debt increasing by GBP0.4m since the FY23 year end
despite the typical seasonal impacts of lower cash generation
during the first half and the requirement to build inventory ahead
of peak trading in Q3.
Free cash outflow for the first half was GBP0.3m (H1 FY23:
inflow of GBP0.4m, supported by significant inventory reduction)
with net debt at the period end of GBP3.2m (FY23 year end: GBP2.8m;
H1 FY23: GBP1.3m) and available liquidity of GBP12.8m.
GBPm H1 FY24 H1 FY23
Reported loss before tax (3.2) (3.5)
-------- --------
Depreciation, amortisation, impairment and profit/loss
on disposal 2.6 2.5
-------- --------
Share based payments 0.7 0.6
-------- --------
Finance expense 0.8 0.4
-------- --------
Unrealised FX gains (0.5) (0.2)
-------- --------
Net working capital 2.6 3.8
-------- --------
Net operating cash flow 2.9 3.8
-------- --------
Net capital expenditure (1.0) (1.1)
-------- --------
Interest (0.8) (0.4)
-------- --------
Payment of lease liabilities (1.4) (1.8)
-------- --------
Free Cash Flow (0.3) 0.4
-------- --------
Movement in borrowings (0.2) (2.3)
-------- --------
Dividends paid - (0.3)
-------- --------
Movement in cash and cash equivalents (0.5) (2.2)
-------- --------
Cash and Cash equivalents 1.4 2.1
Borrowings (4.6) (3.4)
-------- --------
Net (Debt)/ Cash (3.2) (1.3)
-------- --------
The lower reported loss before tax in the first half includes
GBP1.5m of non-underlying items which resulted in GBP0.7m of cash
outflows (H1 FY23: GBP0.7m of non-underlying items of which GBP0.1m
were cash outflows).
A reduction in net working capital resulted in a cash inflow of
GBP2.6m in the first half (H1 FY23: GBP3.8m) driven by continued
planned reduction in inventory on hand as a result of improved
discipline around product intake prior to the peak trading period
and through improved payment terms negotiated with suppliers.
Inventory on hand at the half year was GBP8.5m, 16.8% lower year on
year and down from GBP9.5m at the FY23 year end. Total inventory at
the half year was GBP11.9m (H1 FY23: GBP12.8m).
Net capital expenditure of GBP1.0m in the first half related to
the final elements of the development of the new SSC, as well as
continued investment in retail expansion.
Banking arrangements
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.
During the first half, the Group successfully agreed an
amendment to the RCF terms in respect of the fixed charge cover
covenant, in order to provide additional headroom against that
covenant at the H1 FY24 test date given that the Group's EBITDA
performance declined during the prior 12 months and would have
breached the existing covenant test at that date. The revised test
required EBITDAR to be no less than 1.25x fixed charges for that
test date and reverts to 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 considerations, which is described
in more detail below.
The Group has retained its access to an existing GBP6.0m trade
finance facility, which is due to expire in September 2024,
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
Due to the ongoing challenging consumer environment and the
uncertainty that it creates around trading performance, and
therefore taking a cautious and responsible decision to preserve
cash within the business during these times, the Board have not
recommended any interim dividend in respect of FY24.
Going concern
As at 15 October 2023, the date of the interim financial
statements, the Group had net debt of GBP3.2m and available
liquidity of GBP12.8m including a GBP6.0m uncommitted trade finance
facility.
Trading in the first eight weeks of the second half of the
financial year has been in line with the Board's expectations. As a
result of the seasonal profile of cash generation, net debt as at
10 December 2023, has reduced to GBP0.8m (11 December 2022:
GBP0.4m) and available liquidity has increased to GBP15.2m (11
December 2022: GBP15.6m).
At the time of approving these financial statements, the Board
of Directors are required to consider whether the Group has
sufficient resources to continue in operational existence for the
foreseeable future and hence support the use of the going concern
basis. In doing this, the Board has considered the forecast future
cash position and profitability of the Group under a range of
forecast scenarios taking into consideration the Group's principal
risks and uncertainties.
The Board considers that the factors which present the greatest
risk to performance over the next twelve months are:
-- Competition, market and macro-economic risks - in light of
the challenging economic and consumer market conditions
-- Financial and treasury risk - impact of increased interest
rates and volatile foreign exchange movements.
The potential impacts of these factors are reflected in the
downside scenarios below.
Base Case scenario
The Base Case for the scenario modelling reflects the Board's
latest forecast outturn performance for FY24 and projections for
FY25. These forecasts assume a recovery from the level of revenue
decline seen in the first half of the financial year, based on
recent run rate trading performance and actions taken to drive
improved performance including recent new store openings. Further
revenue growth in FY25 is expected. Prudent cost and cash
management are also assumed throughout.
Under this scenario, the Group will remain within its GBP10m
committed borrowing facilities and will meet relevant banking
covenants (leverage and fixed charge cover).
Downside scenario
The Directors consider that the principal risks to achieving the
Base Case scenario relate to the broad ranging macro conditions
affecting consumer confidence and disposable income. Therefore, a
downside scenario has been prepared which assumes 4% sales
underperformance compared to the Base Case in the remainder of
FY24, and a 6% lower sales performance throughout FY25 compared to
the Base Case.
Under this scenario, and before mitigating actions, the Group
would remain comfortably within its GBP10m committed borrowing
facilities throughout the next 12 months and remain compliant with
the leverage covenant, however, would breach the Fixed Charge
covenant (Debt Service plus Rent / EBITDAR) at the third quarter
test date of FY24 only.
Severe downside scenario
This scenario reflects a further pronounced deterioration in
trading conditions during the remainder of FY24 such that sales
performance reduces by 10% compared to the Base Case in the
remainder of the current financial year, and by 10% in FY25.
Additionally, given the uncertainty and volatility around foreign
exchange rates, this scenario reflects a reduction in anticipated
gross profit margins by 100bps in both the remainder of FY24 and
throughout FY25 compared to the base case.
Under this severe scenario, and before mitigation actions, the
Group would remain comfortably within its GBP10m committed
borrowing facilities throughout the next 12 months. However, the
Group would breach the leverage covenant at the quarterly test
dates of Q1 FY25 and would breach the Fixed Charge covenant at the
quarterly test dates of Q3 FY24, Q1 FY25 and Q2 FY25 before
recovering.
Mitigating actions
The Group has numerous mitigating actions available to improve
liquidity if this were required, including (but not limited
to):
-- Seek to renegotiate banking covenants or other terms with partners for the relevant periods
-- Reduce discretionary expenditure (not including performance marketing)
-- Reduce or delay capital expenditure
-- Reduce paid media marketing spend to enhance ecommerce profitability
-- Reduce reward arrangements (including pay rises and bonuses)
-- Reduce costs in operational functions to reflect the lower sales volumes
-- Extend payment terms with suppliers, or delay product intake or other activities
-- Additional promotional activity to accelerate trading performance and reduce stock levels
Conclusion
Having considered the range of scenarios, including the main
risks within them and the available mitigating actions described
above, the Directors believe that there is low likelihood of the
Group failing to operate within its liquidity headroom over the
twelve months from the date of this report. Accordingly, the
financial statements have been prepared under the going concern
basis of accounting.
However, the Directors recognise that in a plausible downside or
severe downside scenario, the Group is likely to breach one or more
of its banking covenants, requiring it to renegotiate covenant
waivers or seek other new banking terms. The Directors note the
positive and long-standing relationship the Group has with HSBC.
However, there can be no certainty that covenant waivers or other
new banking terms will be granted, the Directors therefore
acknowledge a material uncertainty surrounding the Group's going
concern basis.
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 strategies
and business to develop and grow the brand over the medium to long term
change 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 macro factors, and to maintain a compelling customer offer
and compared to competitors could limit or reduce profitability
macroeconomic 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 Any failure to implement our ESG ambitions within acceptable
change timescales and deliver on stakeholder expectations to reduce
the environmental impact of our business and progress towards
our net zero targets. These include actions linked to our
ESG strategy and managing the potential consequences of climate
change on our business. Failure to meet the expectations of
our customers, colleagues, investors and other stakeholders,
may impact our brand reputation and future trading performance.
--------------------------------------------------------------------
Supply chain Failure to source products effectively and efficiently, potentially
relating to geopolitics surrounding Far East manufacturing
reliance, or to ensure inventory is maintained in the right
volumes at the right locations could adversely impact our
short and medium term operational and financial performance.
--------------------------------------------------------------------
Technology Failure to develop and maintain appropriate technology to
platforms, support operations, or the loss of key platforms or data due
data loss to cyber-attacks or other failures without an adequate response,
and cyber could lead to reputational damage, fines or higher costs,
security or a loss of stakeholder and customer confidence in our Brand.
--------------------------------------------------------------------
Marketing Any failure to attract new customers and retain existing customers
effectiveness 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 Any failure to effectively manage our financial affairs and
and ensure an appropriate financial position and sufficient liquidity
treasury 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
12 December 2023
Statement of Directors' responsibilities
The Directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
- An indication of important events that have occurred during
the first half of the year and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remainder of the financial year; and
- Material related-party transactions in the first half of the
year and any material changes in the related-party transactions
described in the last annual report.
The Directors of the Company are listed in the Company's Annual
Report and Accounts for the year ended 2 April 2023. A list of
current Directors is maintained on the Company's corporate website:
www.procookgroup.co.uk.
For and on behalf of the Board:
Dan Walden
Chief Financial Officer
12 December 2023
Consolidated Income Statement (Unaudited)
For the 28 weeks to 15 October 2023
28 weeks ended 15 October 28 weeks ended 16 October
2023 2022
------------------------------------------ ------------------------------------------
GBP'000s Note Underlying Non-underlying(1) Reported Underlying Non-underlying(1) Reported
----------------------- ----- ----------- ------------------ --------- ----------- ------------------ ---------
Revenue 1 26,330 - 26,330 27,382 - 27,382
Cost of sales (8,775) - (8,775) (10,680) - (10,680)
----------------------- ----- ----------- ------------------ --------- ----------- ------------------ ---------
Gross profit 17,555 - 17,555 16,702 - 16,702
Operating expenses (19,098) (1,435) (20,533) (19,113) (655) (19,768)
Other income 23 - 23 25 - 25
----------------------- ----- ----------- ------------------ --------- ----------- ------------------ ---------
Operating Loss (1,520) (1,435) (2,955) (2,386) (655) (3,041)
Finance expense (708) (77) (785) (430) (14) (444)
Other gains/(losses) 513 - 513 (17) - (17)
----------------------- ----- ----------- ------------------ --------- ----------- ------------------ ---------
Loss before tax (1,715) (1,512) (3,227) (2,833) (669) (3,502)
Tax credit 4 428 378 806 524 132 656
----------- ------------------ ---------
Loss for the period (1,287) (1,134) (2,421) (2,309) (537) (2,846)
======================= ===== =========== ================== ========= =========== ================== =========
Total comprehensive
loss (1,287) (1,134) (2,421) (2,309) (537) (2,846)
======================= ===== =========== ================== ========= =========== ================== =========
Earnings per ordinary
share - basic (1.18)p (2.22)p (2.12)p (2.61)p
Earnings per ordinary
share - diluted (1.18)p (2.22)p (2.12)p (2.61)p
======================= ===== =========== ================== ========= =========== ================== =========
52 weeks ended 2 April
2023
GBP'000s Note Underlying Non-underlying(1) Reported
------------------------- ----- ----------- ------------------ ---------
Revenue 1 62,340 - 62,340
Cost of sales (23,994) - (23,994)
------------------------- ----- ----------- ------------------ ---------
Gross profit 38,346 - 38,346
Operating expenses (37,645) (6,159) (43,804)
Other income 51 - 51
------------------------- ----- ----------- ------------------ ---------
Operating profit/(loss) 752 (6,159) (5,407)
Finance expense (861) (204) (1,065)
Other losses (55) - (55)
------------------------- ----- ----------- ------------------ ---------
Loss before tax (164) (6,363) (6,527)
Tax credit 4 29 1,559 1,588
Loss for the period (135) (4,804) (4,939)
========================= ===== =========== ================== =========
Total comprehensive
loss (135) (4,804) (4,939)
========================= ===== =========== ================== =========
Earnings per ordinary
share - basic (0.12)p (4.53)p
Earnings per ordinary
share - diluted (0.12)p (4.53)p
========================= ===== =========== ================== =========
(1) See note 2 for further information
Consolidated Statement of Financial Position (Unaudited)
As at 15 October 2023
GBP'000s Note As at 15 October 2023 As at 16 October 2022 As at 2 April 2023
-------------------------------- ----- ---------------------- ---------------------- -------------------
Assets
Non-current assets
Intangible assets 164 313 235
Property, plant, and equipment 8,169 6,551 7,781
Right-of-use assets 7 25,493 31,846 25,450
Deferred tax asset 2,520 1,112 2,520
Total non-current assets 36,346 39,822 35,986
-------------------------------- ----- ---------------------- ---------------------- -------------------
Current assets
Inventories 8 11,885 12,761 11,515
Trade and other receivables 3,409 3,148 2,240
Current tax asset 936 965 611
Cash and cash equivalents 9 1,446 2,116 1,962
-------------------------------- ----- ---------------------- ---------------------- -------------------
Total current assets 17,676 18,990 16,328
Total assets 54,022 58,812 52,314
-------------------------------- ----- ---------------------- ---------------------- -------------------
Liabilities
Current liabilities
Trade and other payables 10,722 9,160 7,276
Lease liabilities 7 3,772 3,287 2,836
Provisions 206 141 200
Borrowings 10 4,624 3,390 4,716
Total current liabilities 19,324 15,978 15,028
-------------------------------- ----- ---------------------- ---------------------- -------------------
Non-current liabilities
Trade and other payables 357 896 954
Lease liabilities 7 26,267 30,497 26,430
Provisions 552 530 612
Total non-current liabilities 27,176 31,923 27,996
Total liabilities 46,500 47,901 43,024
-------------------------------- ----- ---------------------- ---------------------- -------------------
Net Assets 7,522 10,911 9,290
-------------------------------- ----- ---------------------- ---------------------- -------------------
Equity and reserves attributable to Shareholders of ProCook Group plc
Share capital 1,090 1,090 1,090
Ordinary Shares to be issued 7,544 6,454 6,891
Share Premium 1 1 1
Retained earnings (1,113) 3,366 1,308
-------------------------------- ----- ---------------------- ---------------------- -------------------
Total equity and reserves 7,522 10,911 9,290
-------------------------------- ----- ---------------------- ---------------------- -------------------
The interim financial statements were approved by the Board of
Directors on 13 December 2023 and were signed on its behalf by:
Dan Walden
Chief Financial Officer
12 December 2023
Consolidated Statement of cash flows (Unaudited)
For the 28 weeks to 15 October 2023
28 weeks ended 28 weeks ended 52 weeks ended
GBP'000s Note 15 October 2023 16 October 2022 2 April 2023
------------------------------------------------------ ----- ---------------- ---------------- ----------------
Cash flows from operating activities
Loss before tax (3,227) (3,502) (6,527)
Adjustments for:
Depreciation of property, plant, and equipment 489 521 967
Impairment 2 - - 4,405
Amortisation of intangible assets 70 50 128
Loss on disposal of property, plant, and equipment - 38 37
Profit on termination of leases (5) (24) (75)
Amortisation of right-of-use assets 7 2,053 1,916 4,034
Unrealised FX (gains)/losses (549) (150) 518
Share Based Payments 653 649 1,090
Finance expense 785 444 1,065
------------------------------------------------------ ----- ---------------- ---------------- ----------------
(Increase)/decrease in inventories 8 (370) 3,998 5,244
Increase in trade and other receivables (664) (1,173) (413)
Increase/(decrease) in trade and other payables 3,700 1,016 (1,233)
(Decrease)/increase in provisions (54) - 195
Income taxes credited/(paid) 4 - - (97)
Net cash flows from operating activities 2,881 3,783 9,338
------------------------------------------------------ ----- ---------------- ---------------- ----------------
Investing activities
Purchase of property, plant, and equipment (1,060) (1,309) (4,928)
Purchase of intangible assets - - -
Lease inception costs (11) - (460)
Lease incentives received 10 222 204
Net cash (used in) investing activities (1,061) (1,087) (5,184)
------------------------------------------------------ ----- ---------------- ---------------- ----------------
Financing activities
Interest paid on borrowings (246) (139) (294)
Interest paid on lease liabilities 7 (539) (305) (771)
Proceeds from borrowings 10 15,785 11,033 18,689
Repayment of borrowings 10 (15,965) (13,322) (19,701)
Lease principle payments 7 (1,371) (1,827) (3,625)
Dividends paid 5 - (307) (272)
Net cash (used in) financing activities (2,374) (4,867) (5,974)
------------------------------------------------------ ----- ---------------- ---------------- ----------------
Net movement in cash and cash equivalents (516) (2,171) (1,820)
------------------------------------------------------ ----- ---------------- ---------------- ----------------
Cash and cash equivalents at beginning of the period 1,962 4,287 3,782
Cash and cash equivalents at end of period 9 1,446 2,116 1,962
------------------------------------------------------ ----- ---------------- ---------------- ----------------
Consolidated statement of changes in equity (Unaudited)
For the 28 weeks to 15 October 2023
GBP'000 Note Share capital Share Premium Share Option Reserve Retained earnings Total equity
--------------------- ----- -------------- -------------- --------------------- ------------------ -------------
As at 4 April 2022 1,090 1 5,801 6,519 13,411
--------------------- ----- -------------- -------------- --------------------- ------------------ -------------
Total comprehensive
loss for the period - - - (2,846) (2,846)
Employee Share Based
Payment Awards - - 653 - 653
Ordinary dividends 5 - - - (307) (307)
As at 16 October
2022 1,090 1 6,454 3,366 10,911
--------------------- ----- -------------- -------------- --------------------- ------------------ -------------
Total comprehensive
loss for the period - - - (2,093) (2,093)
Employee Share Based
Payment Awards - - 437 - 437
Ordinary dividends 5 - - - 35 35
As at 2 April 2023 1,090 1 6,891 1,308 9,290
--------------------- ----- -------------- -------------- --------------------- ------------------ -------------
Total comprehensive
loss for the period - - - (2,421) (2,421)
Employee Share Based
Payment Awards - - 653 - 653
As at 15 October
2023 1,090 1 7,544 (1,113) 7,522
--------------------- ----- -------------- -------------- --------------------- ------------------ -------------
Consolidated Financial Statements Accounting Policies
(Unaudited)
For the 28 weeks to 15 October 2023
General Information
The Group interim financial statements consolidate those of the
ProCook Group plc (the 'Company') and its subsidiaries, together
referred to as the 'Group'.
ProCook Group plc is a public limited company incorporated and
domiciled in England and Wales under the Companies Act 2006
(Registration number: 13679248). The registered office is ProCook,
10 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.
The Group's financial results and cashflows are subject to
seasonal trends throughout the financial period. Typically, revenue
and profit are higher in the last 24 weeks of the financial year
due to the seasonal impact of increased trade in the run up to
Christmas.
Basis of preparation
These condensed interim financial statements for the 28 weeks
ended 15 October 2023 have been prepared in accordance with IAS 34
"Interim financial information". These condensed interim financial
statements do not comprise statutory accounts within the meaning of
Section 434 of the Companies Act 2006 and are not audited.
The condensed interim financial statements should be read in
conjunction with the annual financial statements for the year ended
2 April 2023, which were prepared in accordance with International
Accounting Standards in conformity with the requirements of the
Companies Act 2006, UK-adopted IFRS as issued by the International
Accounting Standards Board.
Statutory financial statements for the period ended 2 April 2023
were approved by the Board of Directors on 28 June 2023 and
delivered to the Registrar of Companies. The auditors have reported
on those financial statements; their reports were (i) unqualified,
(ii) contained a reference to the material uncertainty in respect
of going concern to which the auditor drew attention by way of
emphasis without modifying their report, (iii) did not contain a
statement under Section 498 (2) or (3) of the Companies Act
2006.
The presentation of the condensed financial statements requires
Directors to make judgements, estimates and assumptions that affect
the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated
assumptions are based on historical experiences and various other
factors that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates.
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Thus, they continue to adopt the going concern basis of
accounting in preparing the financial statements.
Basis of consolidation
Group companies included in these consolidated interim financial
statements include ProCook Group plc and all subsidiary
undertakings, which are those entities it controls. ProCook Group
plc controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and can
affect those returns through its power to direct the activities of
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to ProCook Group plc until the date
that control ceases. The Company assesses whether it controls an
investee if facts and circumstances indicate that there are changes
in the control indicators listed above.
Transactions eliminated on consolidation
Intra-group balances, and any unrealised gains and losses or
income and expenses arising from intra-group transactions are
eliminated in preparing the financial information. Losses are
eliminated in the same way as gains, but only to the extent that
there is no evidence of impairment.
Going concern
As at 15 October 2023, the date of the interim financial
statements, the Group had net debt of GBP3.2m and available
liquidity of GBP12.8m including a GBP6.0m uncommitted trade finance
facility.
Trading in the first eight weeks of the second half of the
financial year has been in line with the Board's expectations. As a
result of the seasonal profile of cash generation, net debt as at
10 December 2023, has reduced to GBP0.8m (11 December 2022:
GBP0.4m) and available liquidity has increased to GBP15.2m (11
December 2022: GBP15.6m).
At the time of approving these financial statements, the Board
of Directors are required to consider whether the Group has
sufficient resources to continue in operational existence for the
foreseeable future and hence support the use of the going concern
basis. In doing this, the Board has considered the forecast future
cash position and profitability of the Group under a range of
forecast scenarios taking into consideration the Group's principal
risks and uncertainties.
The Board considers that the factors which present the greatest
risk to performance over the next twelve months are:
-- Competition, market and macro-economic risks - in light of
the challenging economic and consumer market conditions
-- Financial and treasury risk - impact of increased interest
rates and volatile foreign exchange movements.
The potential impacts of these factors are reflected in the
downside scenarios below.
Base Case scenario
The Base Case for the scenario modelling reflects the Board's
latest forecast outturn performance for FY24 and projections for
FY25. These forecasts assume a recovery from the level of revenue
decline seen in the first half of the financial year, based on
recent run rate trading performance and actions taken to drive
improved performance including recent new store openings. Further
revenue growth in FY25 is expected. Prudent cost and cash
management are also assumed throughout.
Under this scenario, the Group will remain within its GBP10m
committed borrowing facilities and will meet relevant banking
covenants (leverage and fixed charge cover).
Downside scenario
The Directors consider that the principal risks to achieving the
Base Case scenario relate to the broad ranging macro conditions
affecting consumer confidence and disposable income. Therefore, a
downside scenario has been prepared which assumes 4% sales
underperformance compared to the Base Case in the remainder of
FY24, and a 6% lower sales performance throughout FY25 compared to
the Base Case.
Under this scenario, and before mitigating actions, the Group
would remain comfortably within its GBP10m committed borrowing
facilities throughout the next 12 months and remain compliant with
the leverage covenant, however, would breach the Fixed Charge
covenant (Debt Service plus Rent / EBITDAR) at the third quarter
test date of FY24 only.
Severe downside scenario
This scenario reflects a further pronounced deterioration in
trading conditions during the remainder of FY24 such that sales
performance reduces by 10% compared to the Base Case in the
remainder of the current financial year, and by 10% in FY25.
Additionally, given the uncertainty and volatility around foreign
exchange rates, this scenario reflects a reduction in anticipated
gross profit margins by 100bps in both the remainder of FY24 and
throughout FY25 compared to the base case.
Under this severe scenario, and before mitigation actions, the
Group would remain comfortably within its GBP10m committed
borrowing facilities throughout the next 12 months. However, the
Group would breach the leverage covenant at the quarterly test
dates of Q1 FY25 and would breach the Fixed Charge covenant at the
quarterly test dates of Q3 FY24, Q1 FY25 and Q2 FY25 before
recovering.
Mitigating actions
The Group has numerous mitigating actions available to improve
liquidity if this were required, including (but not limited
to):
-- Seek to renegotiate banking covenants or other terms with partners for the relevant periods
-- Reduce discretionary expenditure (not including performance marketing)
-- Reduce or delay capital expenditure
-- Reduce paid media marketing spend to enhance ecommerce profitability
-- Reduce reward arrangements (including pay rises and bonuses)
-- Reduce costs in operational functions to reflect the lower sales volumes
-- Extend payment terms with suppliers, or delay product intake or other activities
-- Additional promotional activity to accelerate trading performance and reduce stock levels
Conclusion
Having considered the range of scenarios, including the main
risks within them and the available mitigating actions described
above, the Directors believe that there is low likelihood of the
Group failing to operate within its liquidity headroom over the
twelve months from the date of this report. Accordingly, the
financial statements have been prepared under the going concern
basis of accounting.
However, the Directors recognise that in a plausible downside or
severe downside scenario, the Group is likely to breach one or more
of its banking covenants, requiring it to renegotiate covenant
waivers or seek other new banking terms. The Directors note the
positive and long-standing relationship the Group has with HSBC.
However, there can be no certainty that covenant waivers or other
new banking terms will be granted, the Directors therefore
acknowledge a material uncertainty surrounding the Group's going
concern basis.
Accounting Policies
The condensed interim financial statements have been prepared
under the historical cost convention, except for derivative
financial instruments and share based payments which are stated at
their fair value. The accounting policies adopted, as well as
significant judgements and key estimates applied, are consistent
with those in the annual financial statements for the year ended 2
April 2023, as described in those financial statements.
Notes to the Consolidated Financial Statements
For the 28 weeks to 15 October 2023
1. Revenue
Group revenue is not reliant on any single major customer or
group of customers. Management considers revenue to be derived from
one business stream being the retail of kitchenware and related
products and services.
Customers interact and shop with the Group across multiple
touchpoints and their journey often involves more than one channel.
The Chief Operating Decision Maker is the Board of Directors of
ProCook Group plc. The Board reviews internal management reports on
a frequent basis, and in line with internal reporting, the channel
reporting below indicates where customers complete their final
purchase transaction.
All of the Group's operations are carried out in the UK during
H1 FY24, following the cessation of the Group's EU operations
during FY23. All revenue is from external customers.
28 weeks ended 28 weeks ended 52 weeks ended
GBP'000 15 October 2023 16 October 2022 2 April 2023
---------------- ---------------- ---------------- ---------------
United Kingdom 26,330 26,638 61,550
European Union - 744 790
----------------
Total revenue 26,330 27,382 62,340
---------------- ---------------- ---------------- ---------------
2. Non-underlying items
Consistent with prior periods, expenses in respect of employee
share-based awards which relate to the IPO event in FY22, which
itself is non-recurring, have been presented as non-underlying
costs. These expenses are expected to continue through relevant
vesting periods to FY25, albeit these costs reduce over time.
During the first half of FY24, the Group completed the final
elements of consolidation of its head office and warehouse
operations into its new Store Support Centre ("SSC"). Operating and
finance expenses associated with the costs of transitioning into
the new site and the dual occupancy of the new or previous sites of
GBP0.9m in H1 FY24 (H1 FY23: GBP0.1m) have been presented as
non-underlying costs as these items are non-recurring, dual-running
and transition-related.
At the FY23 year end, the Group performed impairment assessments
in respect of all Retail stores which had indicators of impairment
as well as the Group's two pre-existing distribution/ head office
sites. The impairment provision will be reviewed at least annually
where impairment indicators arise.
28 weeks ended 28 weeks ended 52 weeks ended
GBP'000 15 October 2023 16 October 2022 2 April 2023
--------------------------------- ---------------- ---------------- ---------------
SSC transition and dual running
costs 851 90 749
Share based payments 661 579 1,209
Impairment expense - - 4,405
Total 1,512 669 6,363
--------------------------------- ---------------- ---------------- ---------------
3. Segmental reporting
The Chief Operating Decision Maker (CODM) has been identified as
the Board of Directors and segmental reporting analysis is
presented based on the Group's internal reporting to the Board. At
15 October 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 Income
Statement.
28 weeks ended 28 weeks ended 52 weeks ended
GBP'000 15 October 2023 16 October 2022 2 April 2023
--------------------------------- ---------------- ---------------- ---------------
Revenue
Ecommerce 9,124 11,431 25,653
Retail 17,206 15,951 36,687
--------------------------------- ---------------- ---------------- ---------------
Total revenue 26,330 27,382 62,340
--------------------------------- ---------------- ---------------- ---------------
Operating profit/ (loss)
Ecommerce 1,870 1,238 4,588
Retail 2,347 1,167 5,319
Central costs (5,737) (4,791) (9,155)
Non-underlying costs (1,435) (655) (6,159)
--------------------------------- ---------------- ---------------
Operating loss (2,955) (3,041) (5,407)
Finance costs (708) (430) (861)
Other gains/(losses) 513 (17) (55)
Non-underlying finance costs(1) (77) (14) (204)
--------------------------------- ---------------- ---------------- ---------------
Loss before tax (3,227) (3,502) (6,527)
--------------------------------- ---------------- ---------------- ---------------
(1) Non -underlying finance costs are the interest costs on the
lease liabilities for the disused warehouses.
Substantially all of the assets of the Group are located in the
UK.
4. Tax expense
The underlying effective tax rate for the 28 weeks ending 15
October 2023 is 25.0% (28 weeks ended 16 October 2022: 18.7%; year
ended 2 April 2023: 17.6%).
The standard rate of UK corporate income tax was 25% for H1 FY24
and 19% for all other periods presented.
5. Dividends
Dividends paid and declared during the periods presented are as
follows:
Dividend 52 weeks Dividend
28 weeks ended per share ended per share
15 October 2 April
GBP'000 2023 (pence) 2023 (pence)
---------------------------- --------------- ----------- --------- -----------
Final dividend for the year - - 272 0.9 pence
ended 3 April 2022
---------------------------- --------------- ----------- --------- -----------
The FY22 final dividend of GBP1.0m was declared representing 0.9
pence per share, however GBP0.7m of this dividend was waived by
certain shareholders. This final dividend was paid to the
shareholders on the register at close of business on 2 September
2022.
No final dividend was declared in respect of the period ended 2
April 2023 and the Group has not declared an interim dividend in
respect of the current half year period.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit
for the period attributable to equity holders of the Parent by the
weighted average number of ordinary shares in issue.
Diluted earnings per share is calculated by dividing the profit
for the period attributable to equity holders of the Parent by the
weighted average number of ordinary shares in issue during the
period plus the weighted average number of ordinary shares that
would have been issued on the conversion of all dilutive potential
ordinary shares into ordinary shares.
28 weeks ended 28 weeks ended 52 weeks ended
15 October 16 October 2022 2 April 2023
2023
------------------------------ --------------- ---------------- ---------------
Weighted average number of
shares 108,956,624 108,956,624 108,956,624
Impact of share options 11,897,040 7,796,576 9,126,940
Number of shares for diluted
earnings per share 120,853,664 116,753,200 118,083,564
============================== =============== ================ ===============
28 weeks ended 28 weeks ended 52 weeks ended
15 October 2023 16 October 2022 2 April 2023
GBP'000 Underlying(1) Reported Underlying Reported Underlying Reported
----------------------------- -------------- --------- ----------- --------- ----------- ---------
Loss for the period (1,287) (2,421) (2,309) (2,846) (135) (4,939)
----------------------------- -------------- --------- ----------- --------- ----------- ---------
Earnings per ordinary share
- basic (1.18)p (2.22)p (2.12)p (2.61)p (0.12)p (4.53)p
Earnings per ordinary share
- diluted(2) (1.18)p (2.22)p (2.12)p (2.61)p (0.12)p (4.53)p
============================= ============== ========= =========== ========= =========== =========
(1) Underlying earnings per ordinary share is a non-IFRS
measure.
(2) H1 FY23 diluted EPS corrected from H1 FY23 interims
disclosure.
7. Leased assets
The Group leases a number of assets, with all lease payments
fixed over the lease term. Where there are leasehold properties
which hold a variable element to lease payments made these are not
capitalised as part of the right of use asset. All expected future
non-variable cash out flows are reflected within the measurement of
the lease liabilities at each period end.
As at 15 October As at 16 October As at 2
April
2023 2022 2023
------------------------- ----------------- ----------------- --------
Number of active leases 72 75 71
========================= ================= ================= ========
Right of use assets
GBP'000 Leasehold Motor Vehicles Plant and Total
Property Equipment
------------------------------ ---------- --------------- ----------- --------
Cost
At 2 April 2023 36,484 182 39 36,705
Additions 2,044 - 53 2,097
Remeasurement(1) (1) - - (1)
At 15 October 2023 38,527 182 92 38,801
------------------------------ ---------- --------------- ----------- --------
Accumulated amortisation and
impairments
At 2 April 2023 11,149 97 9 11,255
Charge for the period 2,015 29 9 2,053
At 15 October 2023 13,164 126 18 13,308
------------------------------ ---------- --------------- ----------- --------
Net Book Value
At 2 April 2023 25,335 85 30 25,450
------------------------------
At 15 October 2023 25,363 56 74 25,493
------------------------------ ---------- --------------- ----------- --------
Lease liabilities
GBP'000 Leasehold Motor Vehicles Plant and Total
Property Equipment
-------------------- ---------- --------------- ----------- --------
At 2 April 2023 29,161 76 29 29,266
Additions 2,044 - 53 2,097
Remeasurement(1) 54 - - 54
Interest expense 536 1 1 538
Lease payments (1,872) (26) (12) (1,910)
Disposals (5) - - (5)
---------- --------------- ----------- --------
At 15 October 2023 29,918 51 71 30,040
==================== ========== =============== =========== ========
(1) Remeasurements have arisen where store lease rental terms
and/ or lease expiry dates have been amended.
8. Inventories
As at 16 As at 2
As at 15 October October April
GBP'000 2023 2022 2023
-------------------------- ----------------- --------- --------
Finished goods and goods
for resale 11,885 12,761 11,515
-------------------------- ----------------- --------- --------
Total 11,885 12,761 11,515
-------------------------- ----------------- --------- --------
The cost of inventories recognised as an expense in the 28 weeks
ending 15 October 2023 amounted to GBP8.8m (28 weeks ending 16
October 2022: GBP10.7m).
9. Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash
equivalents include cash on hand and in banks and investments in
money market instruments. Cash and cash equivalents at the end of
the financial year as shown in the statement of cash flows can be
reconciled to the related items in the statement of financial
position as follows:
As at 16 As at 2
As at 15 October October April
GBP'000 2023 2022 2023
--------------------------- ----------------- --------- --------
Cash at bank available on
demand 472 1,426 1,180
Cash in transit 974 690 782
--------------------------- -----------------
Total 1,446 2,116 1,962
--------------------------- ----------------- --------- --------
10. Borrowings
As at 2
As at 15 October As at 16 October April
GBP'000 2023 2022 2023
------------------ -------------------------------- ----------------- --------
Current
Bank loans 4,624 3,390 4,716
------------------ -------------------------------- ----------------- --------
Total borrowings 4,624 3,390 4,716
------------------ -------------------------------- ----------------- --------
11. Derivatives
The Group's local currency is pounds sterling however but due to
purchases of goods and services in foreign currencies the Group
seeks to reduce foreign exchange risk by entering into forward
contracts and other derivatives. At 15 October 2023, the
outstanding contracts all mature within 17 months of the period
end, with committed purchases of $19.8m (2 April 2023: $21.5m).
The contracts are measured at their fair value, which is
determined using valuation techniques that utilise observable
inputs. The key inputs used in valuing the derivatives are the
forward exchange rates. There were no designated hedges in place
during the current or proceeding financial year.
The fair value of derivative financial assets, included within
Trade and other receivables, are as follows:
As at 15 October As at 16 October As at 2
April
GBP'000 2023 2022 2023
------------- ----------------- ----------------- --------
Derivatives 505 298 -
------------- ----------------- ----------------- --------
Total 505 298 -
------------- ----------------- ----------------- --------
The fair value of derivative financial liabilities, included
within Trade and other payables, are as follows:
As at 15 October As at 16 October As at 2
April
GBP'000 2023 2022 2023
------------- ------------------ ------------------ --------
Derivatives - - 369
------------- ------------------ ------------------ --------
Total - - 369
------------- ------------------ ------------------ --------
12. Financial Risk Management
Financial risk management
The Group is exposed through its operation to the following
financial risks: credit risk, interest rate risk, foreign exchange
risk and liquidity risk. Risk management is carried out by the
Directors of the Group. The Group uses financial instruments to
provide flexibility regarding its working capital requirements and
to enable it to manage specific financial risks to which it is
exposed.
The Group finances its operations through a mixture of debt
finance, cash and liquid resources and various items such as trade
debtors and trade payables which arise directly from the Business's
operations.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. To minimise the risk, the Group
endeavours only to deal with companies which are demonstrably
creditworthy and this, together with the aggregate financial
exposure, is continuously monitored. The maximum exposure to credit
risk is the carrying value of its financial receivables, trade and
other receivables and cash and cash equivalents as disclosed in the
notes to the financial information.
The receivables' age analysis is evaluated on a regular basis
for potential doubtful debts, considering historic, current, and
forward-looking information. No impairments to trade receivables
have been made to date. Further disclosures regarding trade and
other receivables are provided within the notes to financial
statements.
Credit risk also arises on cash and cash equivalents and
deposits with banks and financial institutions. For banks and
financial institutions, only independently rated parties with
minimum rating "B+" are accepted.
Currently all financial institutions whereby the Group holds
significant levels of cash are rated A+ to A-.
Interest rate risk
As at 15 October 2023 the Group's drawn borrowings are through
its trade finance facility with a floating interest rate linked to
the United States Federal funds rate and its revolving credit
facility with a floating interest rate linked to the Bank of
England base rate. Both are variable on the amount drawn down and
there is no fixed settlement date, therefore the interest rate risk
exposure for the Group is minimal. The Group's policy aims to
manage the interest cost of the Group within the constraints of its
financial borrowings. The Group does not currently use any form of
derivatives to manage interest rate volatility or future rate
increases, however it does seek to minimise interest costs through
careful management of its use of facilities.
Foreign exchange risk
Foreign exchange risk arises when the Group enters transactions
in a currency other than their functional currency. The Group's
policy is, where possible, to settle liabilities denominated in a
currency other than its functional currency with cash already
denominated in that currency.
The Group makes purchases of goods and services from overseas in
foreign currencies and uses additional means to cover its exposure
to the foreign exchange movement. The Group uses various financial
derivatives such as forward exchange contracts, to help mitigate
movements in foreign currency to restrict losses and to ascertain
control of expected cash out flows. All the Group's foreign
exchange contracts are designated to settle the corresponding
liability.
Liquidity risk
The Group seeks to maintain sufficient cash balances to support
its working capital and investment requirements. Management reviews
cash flow forecasts on a regular basis to determine whether the
Group has sufficient cash available to support its operational and
investment activities.
13. Related Parties
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Transactions with Quella Bicycle Limited, a related party by
virtue of one of the Group's Directors during the period (Daniel
O'Neill) holding a financial interest, have previously related to
the renting of warehouse space from ProCook Limited. Quella vacated
the premises in March 2023, therefore no charges were made in the
period H1 FY24 (2 April 2023: GBP7k). The amount receivable at 16
October 2023 was GBP9k.
Transactions with Life's a Beach a related party by virtue of
one of the Group's Directors during the period (Daniel O'Neill)
being a trustee, relate to charitable donations made on ProCook
sales and other associated transactions. During the period, ProCook
sales generated GBP17k of donations payable to Life's a Beach (28
weeks ending 16 October 2022: GBP6k). During the period ending 15
October 2023, ProCook made no payments to Life's a Beach (28 weeks
ending 16 October 2022: GBP7k). The amount payable at 15 October
2023 was GBP23k (16 October 2022: GBP6k).
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END
IR FFSFWEEDSEEE
(END) Dow Jones Newswires
December 13, 2023 02:00 ET (07:00 GMT)
Procook (LSE:PROC)
過去 株価チャート
から 4 2024 まで 5 2024
Procook (LSE:PROC)
過去 株価チャート
から 5 2023 まで 5 2024
