TIDMHOTC
RNS Number : 3706N
Hotel Chocolat Group PLC
24 September 2019
24 September 2019
Hotel Chocolat Group plc
("Hotel Chocolat", the "Company" or the "Group")
Preliminary Results
Hotel Chocolat Group plc, a premium British chocolatier and
multi-channel retailer, today announces its preliminary results for
the 52 weeks ended 30 June 2019.
Financial highlights:
-- Revenue up 14% to GBP132.5m (2018: GBP116.3m)
-- Underlying EBITDA(1) up 9% to GBP20.7m (2018: GBP18.9m)1,
up 14% excluding USA
-- Profit before tax up 11% to GBP14.1m (2018: GBP12.7m),
up 19% excluding USA
-- Profit after tax up 10% to GBP10.9m (2018: GBP10m)
-- Diluted earnings per share of 9.5p (2018: 8.8p)
-- Final dividend of 1.2p per share (2018: 1.1p). Full year
dividend of 1.8p per share (2018: 1.7p)
Operational highlights:
-- Opened 14 new UK & ROI stores, invested in two refits
and three relocations to larger sites
-- Over 900,000 members signed-up to new VIP ME loyalty
scheme
-- Launch of Velvetiser to 5-star reviews
-- Drinks, Ices & experiences rollout to more locations
-- Two new locations opened in the USA
-- Japan joint venture commenced trading, opening two locations
(1) Underlying EBITDA in FY19 excludes GBP0.9m of share-based
payment charges and related tax. (FY18: GBP0.7m)
Angus Thirlwell, Co-founder and Chief Executive Officer of Hotel
Chocolat, said:
"I am pleased to report another year of significant progress for
the Group with profits growing slightly ahead of expectations. In
the UK, our physical locations performed well, reflecting their
allure and relevance. Growth was underpinned by the combination of
leisure, gifts and experiences including Chocolate Lock-in
tastings, as well as new ranges of drinks and chocolate-dipped ice
lollies. The launch of the innovative Velvetiser, our in-home hot
chocolate system, supported strong sales growth and received
fantastic customer reviews. Our new VIP ME loyalty scheme attracted
over 900,000 active members during the period and we continued to
bring new and exciting products to market.
"Profit from existing Group operations increased faster than
sales growth, enabling us to invest in new markets. We are
confident that our international expansion will continue to develop
well. Our focus on USA and Japan, two of the three largest
economies in the world, led to four locations opening, with a
further five opening over the next six months. The brand, what it
stands for, and our "More Cacao Less Sugar" taste have proven
attractive in Tokyo and New York, as well as our refreshing price
versus quality ratio.
"Key imminent product launches include exciting new Velvetiser
chocolate flavours, including Maple & Pecan and Gingerbread,
and Dark Mint Chocolate Cream Liqueur, followed by new variants of
a product the Japanese in particular have fallen in love with, the
all-Chocolate Macaron.
"I would like to thank the whole team for their fantastic work,
delivering a strong set of results for the year, while at the same
time opening up multiple avenues for future growth."
This announcement is released by Hotel Chocolat plc and contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in
accordance with the Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Matt Pritchard, Chief Financial
Officer.
For further information:
Hotel Chocolat Group plc c/o Citigate + 44 (0) 20
Angus Thirlwell, Co-founder and 7638 9571
Chief Executive Officer
Peter Harris, Co-founder and Development
Director
Matt Pritchard, Chief Financial
Officer
Liberum Capital Limited - Nominated
Advisor and Broker
Clayton Bush
James Greenwood
William Hall + 44 (0) 20 3100 2222
Citigate Dewe Rogerson - Financial
PR
Angharad Couch
Ellen Wilton
Elizabeth Kittle + 44 (0) 20 7638 9571
Notes to Editors:
Hotel Chocolat is a premium British chocolatier with a strong
and distinct brand. The business was founded in 1993 by Angus
Thirlwell and Peter Harris and has traded under the Hotel Chocolat
brand since 2003. The Group sells its products online and through a
network of 130 locations in the UK and abroad. The Group has one
restaurant in the UK and a cacao estate and hotel in Saint Lucia.
The Group was admitted to trading on AIM in 2016.
CHAIRMAN'S STATEMENT
OVERVIEW
In FY19 the Group's existing operations continued to grow and
improve profitability. In addition, the new test locations in the
USA and a JV partner in Japan are showing encouraging early
results. The Group continues to have many opportunities and is
taking a disciplined approach to deliver long-term growth and
returns.
RESULTS
The Group achieved a pleasing result in FY19 with revenue of
GBP132.5m and growth of 14% versus FY18. Profit before tax grew by
11% to GBP14.1m. The Group results included GBP0.5m of sales and
GBP1.2m of losses relating to new investments in locations in the
USA, which performed in line with our business plan. Excluding the
USA, Group sales grew by 13% and profit before tax grew by 19%.
STRATEGY
The growth strategy remains unchanged. We will carefully
continue to open more locations, to invest in digital to make it
increasingly easier for consumers to access our brand, and work
with selected partners to extend our reach and accessibility. The
profit generation from these activities supports investment in
additional manufacturing capacity and improved efficiency, and the
continued trials in two large international markets taking a
cautious 'test, learn, grow' approach.
PEOPLE
The Group continues to be led by a strong founder-led executive
management team who have built a strong brand and successful
business. I would like to extend my thanks to the whole Hotel
Chocolat team for their energy and creativity which has delivered
another year of results to be proud of. Following three successful
years of growth, the Remuneration Committee has approved the full
vesting of the 2016 LTIP award for senior management, reflecting
the outperformance of the existing operations, and the impact of
new investments in the USA. In total 2.8m share options will
immediately vest and become exercisable.
DIVIDS
The Board is pleased to propose a final dividend of 1.2 pence
per share bringing the full year dividend to 1.8 pence per share.
If approved by shareholders at the AGM on 21 November 2019, it will
be paid on 20 December 2019 to shareholders on the register at 22
November 2019.
OUTLOOK
Despite the challenges and uncertainties facing the wider
economy, the strength of the brand drives great customer loyalty
and we are well positioned for future growth, with a strong
pipeline of opportunities. Trading since the end of the financial
period is in line with management expectations.
Andrew Gerrie
Non-executive Chairman
CHIEF EXECUTIVE'S STATEMENT
I am pleased to report another year of significant progress for
the Group. Revenue grew by 14% to GBP132.5m, underlying EBITDA(1)
increased by 9% to GBP20.7m and profit before tax increased by 11%
to GBP14.1m. The UK continues to deliver sales growth with profits
improving faster than sales due to increasing efficiency and the
benefits of scale. Our new test locations in the US and with our
Joint Venture partner in Japan are both delivering encouraging
sales and costs are tracking in line with expectations.
SALES CHANNEL REVIEW
Our multi-channel model continues to work well: each channel
supports the others and all channels are in growth.
UK
Physical
Hotel Chocolat locations are a doorway into instant escapist
happiness. We relentlessly innovate to make our spaces exciting,
relevant, friendly and experiential. The immediate gratification of
leisure-driven self-purchase is augmented by carefully selected
gifts for a wide spectrum of occasions and budgets. Launching
multiple seasonal gift ranges every year means there is something
exciting happening all the time. We have always understood the need
for our spaces to deliver for our guests on the leisure and
experience level, and I'm delighted that our work here is gaining
such strong traction; Drinks + Ices and Chocolate Lock-in tasting
experiences have performed extremely well this year, with further
huge potential also shown by the prolific customer-generated social
sharing.
Our existing locations performed very well over the year;
therefore we opened a further 14 new locations in the UK and
Ireland. We have also seen encouraging results from investments in
upgrades in existing catchments; Westfield London (FY19), and
Cardiff and Brighton (Q1 FY20) all moved to better locations,
adding Drinks + Ices with seating. Gateshead Metro Centre, where we
have built a great customer base since 2007, received a Drinks +
Ices and seating upgrade as part of a refit.
Whilst macro-economic trends have created headwinds, we remain
confident that further new openings can deliver attractive
financial returns and improve customers' ease of access to our
brand, based on our multi-channel leisure and gift format.
We observed an acceleration in same-store sales growth in H2
following the launches of our Velvetiser in-home hot chocolate
system and VIP ME scheme. This strong trading performance further
improved the collective EBITDA profitability of our established
sites (open more than 12 months). In addition, our new locations
made a positive contribution to EBITDA in their maiden
part-year.
As you may expect, we constantly evaluate the potential return
on capital of our different growth investment options. In assessing
physical locations, the Board modelled three scenarios, based on
various growth rates and cost inflation for our physical store
estate:
1) A continuation of the FY19 growth rates for sales and for
overhead costs - which would mean that store estate EBITDA
profitability would continue to rise in future years.
2) A more pessimistic scenario reflecting a drop to negative
sales growth and with externally driven cost inflation at rates in
excess of FY19 - this would still mean that the retail estate would
continue to generate significant EBITDA profit in five years' time.
Our average lease length is 5.5 years and our average time to
break-clause is 3.5 years, giving us a good degree of agility to
adapt in a timely manner.
3) However, we continue to focus all our energies on delivering
a third, and better, scenario which has the scope to generate a
material increase in EBITDA, by:
-- Increasing the rate of sales growth, driven by; product
innovation, gaining a deeper relationship with our customers via
VIP ME, adding more leisure experiences, and empowering our store
teams to deliver an ever-better experience for our guests, tasting
and demonstrating more of our exciting new products.
-- Mitigating cost pressures using a combination of better
buying, further innovation in our processes and perpetual focus on
working smarter, whilst never compromising on product quality or
service experience.
(1) Underlying EBITDA in FY19 excludes GBP0.9m of share-based
payment charges and related tax. (FY18: GBP0.7m)
Digital
Being born digital means that it is always at the centre of our
strategy, giving Hotel Chocolat an unusually high proportion of
digital sales compared to other chocolate brands, at 19%. In the
year we welcomed Lysa Hardy, our first ever Chief Marketing Officer
who brings a breadth of experience in brand communication,
omni-channel marketing, digital engagement and subscriptions.
-- Sales through our own website increased by 22%. In the year
we focussed on assembling the elements necessary to drive stronger
growth: investing in a more skilled and experienced team supporting
the new CMO role and instigating certain tech upgrades we have been
developing for a while. During FY20 we are insourcing all CRM and
email activity to give greater control and improved
personalisation, digitising the successful VIP ME loyalty scheme,
launching a gift-sending app, launching new app-based subscription
models, and improving e-commerce navigation and conversion. We
anticipate each of these improvements benefitting the autumn/winter
peak for FY20.
-- Subscription sales reduced by 26%. We are not perturbed by
this as it is part of our remodelling plan and reflects our pause
in acquisition marketing for this part of our model. A new
subscription app is scheduled for launch in H1 bringing with it new
offers, intended to create a sustainable subscription growth
platform for the future. As a result of the temporary pause in
acquisition marketing, profitability increased year on year.
Wholesale Partners
We have achieved very encouraging growth in the year with UK B2B
sales growing by 19%. Each partner is selected on a careful balance
of attributes and customer demographics, then matched with a
specific capsule collection from our product range. As these
partnerships have become established, we have been able to curate
capsule ranges that are specific to the needs of each partners'
customers. Each partner typically has less than 10 percent of our
total range, meaning we retain many reasons to visit our own
locations and website, where we can offer the deepest brand
experience and service, nourishing the brand for the long term.
INTERNATIONAL
FY19 was a significant year for our global aspirations, opening
Hotel Chocolats in two of the three largest economies in the world.
In both markets the brand has been well received by customers, with
our approach seen as refreshing and attractive and our prices
perceived as fair value. With only a part-year of data, our initial
site-level sales are tracking in line with our expectations, a
level at which we believe we can deliver EBITDA profitability once
supply chain costs are normalised. We are making continuous
improvements to our sea-freight supply chains driving higher
availability and higher gross margins. Both our 100% owned business
in the US and the JV in Japan remain sub-scale in this test phase
but we have invested in high calibre local teams to ensure the
brand is well presented and the foundations are being laid for
potential roll-out, with a clear success criteria for our 'test,
learn, grow' approach.
USA
-- Opened two locations, both featured the full Hotel Chocolat
offer with Drinks + Ices and seating
-- Lexington Avenue, New York opened Nov 2018
-- Garden State Plaza Mall, New Jersey opened Feb 2019
-- Union Station, Washington DC and Columbus Circle, a mass
transit location in New York will both be opening in H1 FY20
-- We are upgrading our US transactional website and exploring
the potential for wholesale partnerships
Japan JV
-- Laketown Mall, Tokyo opened Nov 2018. Japan's largest mall
-- Narita Mall, Tokyo opened Feb 2019
-- Both locations feature the full Hotel Chocolat offer with Drinks + Ices and prominent seating
-- Three further locations are planned to open ahead of the Spring '20 peak
-- The website is live and social outreach is being invested in
-- The gifting seasons are different in Japan, where Valentine's
and White Day in February and March generate a sales peak similar
to Christmas in the UK
Scandinavia Franchise
-- Four Danish locations now open
-- New central Copenhagen location opening H1 FY20
-- Our partner continues to explore opportunities for growth in
the market including B2B wholesale, concessions and opening more
locations
OPERATIONAL REVIEW
The key seasonal ranges traded strongly and our ability to
create imaginative and desirable products continues to be a
carefully nurtured asset. Our vertically integrated business
infrastructure is well invested and as the business grows, we
remain focused on controlling overheads, which as a result reduced
by 180bps from 52.2% of sales to 50.3%.
In FY19 gross margin reduced by 250bps. The decline was
primarily driven by the growth of the Velvetiser and Wholesale,
both of which have lower gross margins but also have lower overhead
costs as a percent of sales. We made 40bps of margin gains from
operational improvements which were re-invested in sales-driving
activity with VIP me. Further detail is provided in the Financial
review below.
Manufacturing Investment
Having invested over GBP4m in production capex in the previous
two years, in FY19 we focussed on; optimising and fine-tuning the
performance of these new assets and building detailed capacity
plans for 5-year and 15-year horizons. We acquired land adjacent to
our freehold factory campus in Huntingdon, Cambridgeshire and have
obtained outline planning permission that would ultimately enable
us to increase our site output capacity by more than 200% as and
when required. We focus on maximising return on capital employed by
improving existing asset utilisation, only investing in additional
productive assets as and when the capacity is clearly required. We
are well advanced with plans for a fourth production line, a
capital project of approximately GBP4m due to enter service in
2021, the project will also enable the addition of up to two
further lines by 2024.
BRAND REVIEW
We continue to invest in our most valuable asset, the Hotel
Chocolat brand, at many levels.
Our culture of constant innovation is crucial in ensuring the
brand remains fresh and relevant. We have always invested heavily
in innovation and creativity, and as a result we now have many
years of new innovations in the pipeline. Those that we launch will
have made it through our disciplined testing and trialling
approach. Recent highlights included the Velvetiser, our in-home
hot chocolate system, which launched to the best customer reviews
we have ever received. Our amazing chocolate-dipped Ice Lollies
were tested this spring and proved so popular we immediately began
a rollout to more locations.
Key launches for FY20 include Biscuits of the Gods, aiming to
offer the best chocolate biscuit on the planet, exciting new
Velvetiser chocolate flavours, Dark Chocolate Mint Cream Liqueur
and new variants of a product the Japanese in particular have
fallen in love with, the all Chocolate Macaron.
Experiences
Leisure experiences are ever-increasing as the new luxury, with
consumers seeking to go beyond the purely transactional, but only
with the brands they love. We are well positioned as an early
pioneer and a brand that enjoys a good degree of consumer love.
It's an area of strong focus for us. We are determined to step-up
further the multi-sensory elements at all our Hotel Chocolat
locations. We are extending the range of experiences we offer,
starting with increased in-store demonstration and perpetual
product sampling, adding Drinks + Ices for immediate gratification,
all the way up to our most immersive experiences, the Chocolate
Lock-Ins, as featured in our hit documentary Inside Hotel Chocolat
and now featuring over twenty different themes including
season-specific evenings and in-depth tastings of a single
chocolate genre.
Wellness
Consumers increasingly want delicious and hedonistic chocolate
that's also made with responsible amounts of sugar. Hotel
Chocolat's 15-year track record of "more cacao, less sugar" is
applied to every single grade of our chocolate, from whites,
through milks and darks, and our pipeline of product innovation
continues to focus on ways to reduce sugar further. In August we
refreshed our super-premium Rare & Vintage range, made from the
top 10% of the world's cacao harvest and showcasing our expertise
in tree-to-bar chocolate-making know-how, making us the most
authentic player in premium chocolate.
Engaged Ethics
Consumers expect brands they love to do the right thing, using
their resources and influence to make the world a better place
whenever and wherever they can. This has always been a central
element of the Hotel Chocolat DNA and we challenge ourselves to
progressively strengthen our programmes and initiatives
year-on-year. The three areas we focus on are cacao, the planet and
people:
1) Cacao: All of our cacao is sourced under our Engaged Ethics
scheme. We pay more for our cacao to ensure that farmers receive a
premium, sustainable farming practices are encouraged, and to fund
productivity and community projects.
2) The planet: whilst we have always taken a responsible
approach to packaging, we now explicitly state a target to further
reduce our impact: 100% of our packaging will be compostable,
reusable or recyclable by 2021. We have already begun to replace
plastics with alternatives that meet these goals, offer recycling
through our locations for any chocolate brand's plastic packaging,
and will continue to look for innovative ways to be reduce our
impact on our planet.
3) People: We know that culture is the essential ingredient in
building winning teams. Ensuring that our colleagues are happy at
work and feel they can maximise their potential are key to
engagement. We listen continuously to employee feedback and are
strengthening our investments in team development. We are building
an ever-stronger team united by common goals and behaviours that
reflect our unchanging brand values of Originality, Authenticity
and Ethics, as underpinned by the mantra 'be brave and be
kind'.
OUTLOOK
Continued innovation and a relentless focus on customer
happiness aims to generate sales growth. By combining this with a
tight control of costs, we aim to improve returns.
Our growth is in large UK markets with significant headroom,
which gives lots of scope for continued success through both
brand-owned channels and carefully selected wholesale partners. The
defensive attributes of the business are well-honed and include the
strength and integrity of our brand and the agility of vertical
integration. We have reviewed the potential impacts from a 'hard
Brexit' and have contingency plans in place to mitigate potential
short-term supply disruptions. We are focussing our international
growth efforts in the US and Japan, two of the world's largest and
most attractive markets.
The market and wider economy may not be without challenges;
however, I remain confident that our plans for the coming year and
well beyond will deliver sustainable growth and we have a strong
brand and an exciting pipeline of future opportunities. Our aim of
eventually becoming the global leader in direct-to-consumer
chocolate is firmly in our sights.
Angus Thirlwell
Co-founder and Chief Executive Officer
Financial review
FY19 FY19 FY18
GBPm ex-USA GBPm
GBPm
------------------------------------------ ----------- ------- ------
Revenue 132.5 132.0 116.3
Gross profit 87.3 87.0 79.6
Operating expenses 66.7 65.3 60.7
Underlying EBITDA 20.7 21.7 18.9
Share-based payments 0.9 0.8 0.7
Depreciation & amortisation 5.5 5.4 4.8
Impairment (non-recurring) 0 0 0.3
(Profit)/loss on disposal 0 0 (0.1)
Operating profit 14.3 15.4 13.2
Finance income 0.1 0.1 0.0
Finance expense 0.3 0.3 0.6
Profit before tax 14.1 15.2 12.7
Tax 3.1 3.1 2.7
Profit for the period 10.9 12.1 10.0
----------------------------------------------- ------ ------- ------
REVENUE
Reported revenue for 52 weeks ending 30 June 2019 was GBP132.5m.
Revenue increased by 14% compared to the 52 weeks ending 1 July
2018. The new locations in the US generated GBP0.5m sales in their
first part-year, having opened too late in the year to fully
capitalise on the seasonal peak. The US contributed 0.5% percentage
points to Group year on year sales growth with the rest of the
Group growing by 13.5%.
GROSS MARGIN
Gross profit as a percent of sales reduced 250 basis points from
68.4% to 65.9%. Increased efficiency of production and better
buying generated gains of +40bps. Foreign exchange impacted the
sterling cost of imported raw materials, which reduced margin by
-20bps. The launch of VIP Me, which is intended to drive visit
frequency and sales volume growth, resulted in -60bps of costs for
sign-up incentives associated with the initial launch phase. The
balance of the gross margin decline was due to the growth of
Velvetiser and Wholesale, both of which generate lower gross
margins, but which also have lower overhead operating expenses as a
percent of sales when compared to higher gross margin areas.
OPERATING EXPENSES
A focus on efficiency and cost control meant that externally
driven cost inflation was mitigated, this combined with the
favourable mix effect of the lower overhead Wholesale and
Velvetiser channels meant that overheads as a percentage of sales
fell by 180bps from 52.2% to 50.3%.
UNDERLYING EBITDA
Whilst EBITDA is not a statutory measure the Board believe it is
helpful to investors to include it as an additional metric.
Underlying EBITDA as reported excludes non-cash share-based payment
charges and related tax of GBP0.9m. (FY18: GBP0.7m). On this basis,
underlying EBITDA increased by GBP1.8m on the prior year, and as a
percent of sales reduced from 16.3% to 15.6%. Within this figure
the US generated an EBITDA loss of GBP1m on sales of GBP0.5m. The
rest of the Group generated underlying EBITDA growth of 14% with
EBITDA margin rising from 16.3% to 16.4%.
IFRS16 LEASES
Effective from FY20 onward, IFRS16 requires lessees to recognise
a lease liability and right of use asset. Rent expenses will be
removed from operating expenses and depreciation and interest will
increase. Operational cash flows and business decision-making will
be completely unaffected. The modelled impact to FY20 operating
profit is not expected to be material. Further detail on the
forecast impact to the financial statement presentation is provided
in note 2.
FINANCE INCOME AND EXPENSE
Finance expense relates to a working capital overdraft. The
Board intends to finance its ongoing working capital requirements
using a GBP22m overdraft facility with Lloyds bank. Capital
expenditure projects will be financed from operating cashflow.
Finance income relates to interest received on bank deposits and
the GBP2.5m of loans made to the Japan JV. The loans to Japan are
made on commercial terms at market rates of interest and are being
used to fund capital investments and start-up costs.
DEPRECIATION & AMORTISATION
Depreciation increased as a result of additional capital
expenditure. Capital expenditure of GBP8.9m comprised investments
in 16 new locations, re-sites and refits, a number of IT projects
and operational projects including work-in-progress upgrades to
factory capacity and capability including a fourth production line
which is due to enter use in 2021.
PROFIT BEFORE TAX
Profit before tax increased 11% from GBP12.7m to GBP14.1m.
Excluding the reported losses of the US entity Hotel Chocolat Inc,
profit from the rest of the Group increased by 19%.
TAXATION
The effective rate of taxation is 22.2% (FY18: 21.5%). This is
higher than the standard rate of 19% mainly due to permanent timing
differences between depreciation charges and capital allowances,
and overseas losses that are not deductible against UK corporation
tax.
EARNINGS PER SHARE (EPS) AND DIVIDS
Diluted earnings per share were 9.5p (FY18: 8.8p). Profit after
tax increased by 10%. The weighted average number of shares in FY19
was 113m (FY18: 113m). Having delivered a year of strong growth the
Board is pleased to propose a final dividend of 1.2 pence per
share, bringing the total dividend for the year to 1.8 pence per
share (FY18: 1.7 pence per share).
CASH POSITION
The Group had GBP5.8m of cash at period-end, an increase of
GBP5.5m as a result of increased EBITDA generation and working
capital management.
WORKING CAPITAL
Closing inventories increased by 2% to GBP12.8m, growing more
slowly than sales growth of 14%, this as a result of improved
working capital management. This change reduced stock cover from
approximately 13 weeks in FY18 to 10 weeks in FY19.
Matt Pritchard
Chief Financial Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2019
52 weeks ended 52 weeks ended
Notes 30 June 2019 1 July 2018
GBP GBP
------------------------------------------------------------- -------- --------------- ---------------
Revenue 132,479,543 116,331,566
Cost of Sales (45,139,983) (36,740,859)
--------------- ---------------
87,339,560 79,590,707
Administrative expenses 3 (73,028,333) (66,360,796)
--------------- ---------------
14,311,227 13,229,911
Finance income 4 68,967 22,113
Finance expenses 4 (294,966) (578,760)
Share of joint venture (loss)/profit (33,969) 35,501
--------------- ---------------
Profit before tax 14,051,259 12,708,765
Tax expense (3,122,486) (2,729,123)
--------------- ---------------
Profit for the period 10,928,773 9,979,642
Other comprehensive income/(loss):
Derivative financial instruments 71,931 (106,001)
Deferred tax charge on derivative financial instruments 16,667 20,561
Currency translation differences arising from consolidation 372,795 (168,661)
--------------- ---------------
Total other comprehensive income/(loss) for the period 461,393 (254,101)
--------------- ---------------
Total comprehensive income for the period 11,390,166 9,725,541
--------------- ---------------
Earnings per share - Basic 5 9.7p 8.8p
Earnings per share - Diluted 5 9.5p 8.8p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
As at As at
Notes 30 June 2019 1 July 2018
GBP GBP
------------------------------------------- -------- -------------- -------------
ASSETS
Non-current assets
Intangible assets 2,911,586 2,788,152
Property, plant and equipment 6 40,115,095 36,408,775
Deferred tax asset 622,649 623,961
Derivative financial assets - 68,721
Prepayments 18,000 1,643
Loan to Hotel Chocolat KK 2,488,041 -
Investment in JV 8,731 35,501
-------------- -------------
46,164,102 39,926,753
Current assets
Derivative financial assets 81,299 14,925
Inventories 12,810,049 12,555,517
Trade and other receivables 9,359,766 7,486,894
Cash and cash equivalents 5,778,205 235,936
-------------- -------------
28,029,319 20,293,272
Total assets 74,193,421 60,220,025
LIABILITIES
Current liabilities
Trade and other payables 7 19,527,743 15,545,845
Corporation tax payable 1,607,069 1,328,673
Derivative financial liabilities 1,671 54,691
Borrowings 8 16,811 201,732
21,153,294 17,130,941
Non-current liabilities
Other payables and accruals 7 2,757,158 2,581,044
Derivative financial liabilities 9,106 -
Borrowings 8 - 16,811
Provisions 943,627 879,808
3,709,891 3,477,663
Total liabilities 24,863,185 20,608,604
NET ASSETS 49,330,236 39,611,421
EQUITY
Share capital 112,838 112,838
Share premium 11,750,056 11,749,487
Retained earnings 33,358,932 24,348,409
Translation reserve 1,253,355 880,560
Merger reserve 223,251 223,251
Capital redemption reserve 6,301 6,301
Other reserves 2,625,503 2,290,575
-------------- -------------
Total equity attributable to shareholders 49,330,236 39,611,421
-------------- -------------
The financial statements of Hotel Chocolat Group plc, registered
number 08612206 were approved by the Board of Directors and
authorised for issue on 24 September 2019. They were signed on its
behalf by:
Matt Pritchard
Chief Financial Officer
24 September 2019
CONSOLIDATED STATEMENT OF CASH FLOW
For the period ended 30 June 2019
52 weeks
ended 52 weeks
30 June ended
2019 1 July 2018
GBP GBP
------------------------------------------- ------------ ------------
Profit before tax for the period 14,051,259 12,708,765
Adjusted by:
Depreciation of property, plant and
equipment 4,939,982 4,247,550
Impairment loss on fixtures and equipment - 284,681
Amortisation of intangible assets 512,862 509,892
Net interest expense 225,999 556,647
Share-based payments 246,262 726,585
Share of Joint Venture Loss 33,969 -
(Profit)/loss on disposal of property,
plant and equipment and intangible assets 44,100 (88,253)
------------ ------------
Operating cash flows before movements
in working capital 20,054,433 18,945,867
Increase in inventories (259,442) (2,931,781)
Increase in trade and other receivables (1,890,866) (1,460,333)
Increase in trade and other payables
and provisions 4,076,600 277,219
------------ ------------
Cash inflow generated from operations 21,980,725 14,830,972
Interest received 40,935 22,113
Income tax paid (2,820,395) (2,466,051)
Interest paid on:
- finance leases and hire purchase loans - (1,192)
- bank loans and overdraft (110,282) (28,802)
- derivative financial liabilities (180,083) (147,747)
------------ ------------
Cash flows from operating activities 18,910,900 12,209,293
------------ ------------
Purchase of property, plant and equipment (8,295,817) (10,645,621)
Proceeds from disposal of property,
plant and equipment 9,500 340,737
Purchase of intangible assets (580,795) (949,229)
Loan to joint venture (2,460,009) -
Acquisition of joint venture (7,200) -
------------ ------------
Cash flows used in investing activities (11,334,321) (11,254,113)
------------ ------------
Dividends paid (1,918,250) (2,482,432)
Buy back of Chocolate bonds - (6,505,500)
Sale of shares 570 -
Capital element of hire purchase and
finance leases repaid (201,732) (237,195)
------------ ------------
Cash flows (used in)/from financing
activities (2,119,412) (9,225,127)
------------ ------------
Net change in cash and cash equivalents 5,457,167 (8,269,946)
Cash and cash equivalents at beginning
of period 235,936 8,470,178
Foreign currency movements 85,102 35,704
------------ ------------
Cash and cash equivalents at end of
period 5,778,205 235,936
------------ ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2019
Capital
Share Share Retained Translation Merger redemption Other
capital Premium earnings reserve reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP GBP
----------------------- -------- ---------- ----------- ----------- -------- ----------- --------- -----------
As at 2 July 2017 112,838 11,749,487 16,851,199 1,049,221 223,251 6,301 1,170,588 31,162,885
Profit for the period - - 9,979,642 - - - - 9,979,642
Dividends - - (2,482,432) - - - - (2,482,432)
Share-based payments - - - - - - 726,585 726,585
Deferred tax charge
on share-based
payments - - - - - - 478,842 478,842
Other comprehensive
income:
Derivative financial
instruments - - - - - - (106,001) (106,001)
Deferred tax charge
on derivative
financial
instruments - - - - - - 20,561 20,561
Currency translation
differences arising
from consolidation - - - (168,661) - - - (168,661)
-------- ---------- ----------- ----------- -------- ----------- --------- -----------
Equity as at 1 July
2018 112,838 11,749,487 24,348,409 880,560 223,251 6,301 2,290,575 39,611,421
Issue of share capital - 569 - - - - - 569
Profit for the period - - 10,928,773 - - - - 10,928,773
Dividends - - (1,918,250) - - - - (1,918,250)
Share-based payments - - - - - - 246,262 246,262
Deferred tax charge
on share-based
payments - - - - - - 68 68
Other comprehensive
income:
Derivative financial
instruments - - - - - - 71,931 71,931
Deferred tax charge
on derivative
financial
instruments - - - - - - 16,667 16,667
Currency translation
differences arising
from consolidation - - - 372,795 - - - 372,795
-------- ---------- ----------- ----------- -------- ----------- --------- -----------
Equity as at 30 June
2019 112,838 11,750,056 33,358,932 1,253,355 223,251 6,301 2,625,503 49,330,236
-------- ---------- ----------- ----------- -------- ----------- --------- -----------
Notes to the preliminary information
1. Basis of preparation
The consolidated financial information has been prepared in
accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations
(collectively IFRSs), as adopted by the European Union.
The financial information for the period ended 30 June 2019 and
the period ended 1 July 2018 does not constitute the company's
statutory accounts for those years.
Statutory accounts for the period ended 1 July 2018 have been
delivered to the Registrar of Companies. The statutory accounts for
the period ended 30 June 2019 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
The auditors' reports on the accounts for 30 June 2019 and 1
July 2018 were unqualified, did not draw attention to any matters
by way of emphasis, and did not contain a statement under 498(2) or
498(3) of the Companies Act 2006.
The financial statements have been prepared on the historical
cost basis, except for the revaluation of derivative financial
instruments that are measured at fair values at the end of each
reporting period, as explained in the accounting policies
below.
At the date of authorisation of this financial information,
certain new standards, amendments and interpretations to existing
standards applicable to the Group have been published but are not
yet effective, and have not been adopted early by the Group.
2. IFRS 16 Leases
IFRS 16 "Leases" is a replacement for IAS 17 "Leases" and will
be effective for the year ending 28 June 2020 onwards. IFRS 16 sets
out the principles for the recognition, measurement, presentation
and disclosure of leases for both the lessee and the lessor. It
eliminates the lease classification of leases as either operating
leases or financial leases and introduces a single lease accounting
model requiring lessees to recognise a lease liability reflecting
future lease payments and a right-of-use asset for lease
contracts.
Relevant leased assets which will be impacted by this new
standard include retail property.
The preparations for this standard are substantially complete.
The Group intends to adopt the 'modified retrospective' approach
whereby for leases previously classified as operating leases the
right of use asset will be measured at carrying amount as if the
standard had always been applied, but discounted using the
incremental borrowing rate at the date of initial application. In
the period ended 28 June 2020 comparative information relating to
prior years will not be restated.
Impact on the Financial Statements
Statement of Financial Position: Operating leases capitalised at
a relevant discount rate to create a 'Right of Use' asset of
approximately GBP53m. A corresponding lease liability of
approximately GBP57m will be recognised. The impact of these
changes will be a reduction in retained earnings of approximately
GBP3m. The balance represents amounts already recognized in the
financial statements in respect of lease incentives, prepaid rent
and dilapidations.
Statement of Comprehensive Income: Administrative expenses will
reduce as rent costs are removed. Depreciation will increase as the
leased assets are depreciated over their useful economic lives.
Finance expenses will increase with an interest charge on the lease
liability. The expense in the Income Statement will be the same
over the life of the lease, but the finance charge will be
front-loaded as it is recognised using the effective interest rate
method.
Statement of Cash Flow: The presentation of cashflows will be
changed, however the total cashflows reported will not. The
operating cash outflows will reduce in line with the reduction of
administrative expenses. Cash flows from financing activities will
see a corresponding increase.
There will be no impact to business decisions or operational
cash.
3. Profit from operations
Profit from operations is arrived at after
charging/(crediting):
52 weeks ended 52 weeks ended
30 June 2019 1 July 2018
GBP GBP
---------------------------------------------- -------------- --------------
Staff cost 35,840,518 30,658,433
Depreciation of property, plant and equipment
(see Note 6) 4,939,982 4,247,550
Impairment of property, plant and equipment
(see Note 6) - 284,681
Amortisation of intangible assets 512,862 509,892
Loss/(profit) on disposal of property, plant
and equipment and intangible assets 44,100 (88,253)
Operating leases:
- Property 11,516,556 10,582,822
- Plant and equipment 225,337 148,949
Exchange differences (10,507) 106,760
Bad debt expense 47,527 57,940
4. Finance income and expenses
52 weeks ended 52 weeks ended
30 June 2019 1 July 2018
GBP GBP
-------------------------------------------- -------------- --------------
Interest from related party 28,032 -
Interest on bank deposits 40,935 22,113
-------------- --------------
Finance income 68,967 22,113
-------------- --------------
Interest on bank borrowings 78,947 92,373
Unrealised interest on derivative financial
instruments 35,828 121
Realised interest on derivative financial
liabilities 180,083 147,747
Finance leases and hire purchase contracts 108 1,192
Finance charges on Chocolate bonds - 337,327
-------------- --------------
Finance expenses 294,966 578,760
-------------- --------------
5. Earnings per share
Profit for the period used in the calculation of the basic and
diluted earnings per share:
52 weeks ended 52 weeks ended
30 June 2019 1 July 2018
GBP GBP
-------------------------------- -------------- --------------
Profit after tax for the period 10,928,773 9,979,642
-------------- --------------
The weighted average number of shares for the purposes of
diluted earnings per share reconciles to the weighted average
number of shares used in the calculation of basic earnings per
share as follows:
52 weeks ended 52 weeks ended
30 June 2019 1 July 2018
-------------------------------------------- -------------- --------------
Weighted average number of share in issue
for the period - basic 112,838,191 112,837,828
Effect of dilutive potential share:
Share-based payments - Hotel Chocolat Group
plc Save as You Earn Plan 271,405 244,987
Share-based payments - Long Term Incentive
Plan 2016 1,617,021 -
-------------- --------------
Weighted average number of shares in issue
used in the
calculation of earnings per share (number)
- Diluted 114,726,617 113,082,815
Earnings per share (pence) - Basic 9.7 8.8
Earnings per share (pence) - Diluted 9.5 8.8
-------------- --------------
As at 30 June 2019, the total number of potentially dilutive
shares issued under the Hotel Chocolat Group plc Long-Term
Incentive Plan was 830,000 (1 July 2018: 3,657,000). Due to the
nature of the options granted under this scheme, they are
considered contingently issuable shares and therefore have no
dilutive effect.
6. Property, plant and equipment
Furniture
& fittings,
Freehold Leasehold equipment Plant &
property improvements & hardware machinery Total
GBP GBP GBP GBP GBP
-------------------------- ---------- ------------- ------------ ---------- -----------
52 weeks ended 1 July
2018
Cost:
As at 2 July 2017 12,588,855 734,999 28,418,804 16,319,351 58,062,009
Additions 606,892 - 6,735,380 2,576,577 9,918,849
Disposals (236,084) - (259,713) - (495,797)
Translation differences (122,296) - (4,029) - (126,325)
---------- ------------- ------------ ---------- -----------
As at 1 July 2018 12,837,367 734,999 34,890,442 18,895,928 67,358,736
---------- ------------- ------------ ---------- -----------
Accumulated depreciation:
As at 2 July 2017 567,231 733,256 15,796,562 9,567,378 26,664,427
Depreciation charge 156,847 950 2,918,523 1,171,230 4,247,550
Disposal - - (151,603) - (151,603)
Impairment - - 284,681 - 284,681
Translation differences 607 - (95,701) - (95,094)
---------- ------------- ------------ ---------- -----------
As at 1 July 2018 724,685 734,206 18,752,462 10,738,608 30,949,961
---------- ------------- ------------ ---------- -----------
Net book value
---------- ------------- ------------ ---------- -----------
As at 1 July 2018 12,112,682 793 16,137,980 8,157,320 36,408,775
---------- ------------- ------------ ---------- -----------
52 weeks ended 30
June 2019
Cost:
As at 1 July 2018 12,837,367 734,999 34,890,442 18,895,928 67,358,736
Reclassifications - - (743,041) 743,041 -
Additions 1,589,584 - 4,726,534 1,946,508 8,262,626
Disposals (68,193) - (2,727,832) (41,292) (2,837,317)
Translation differences 416,127 - 38,309 - 454,436
---------- ------------- ------------ ---------- -----------
As at 30 June 2019 14,774,885 734,999 36,184,412 21,544,185 73,238,481
---------- ------------- ------------ ---------- -----------
Accumulated depreciation:
As at 1 July 2018 724,685 734,206 18,752,462 10,738,608 30,949,961
Reclassifications - - 160,159 (160,159) -
Depreciation charge 157,518 793 3,625,732 1,155,939 4,939,982
Disposal (68,193) - (2,709,079) (6,445) (2,783,717)
Impairment - - - - -
Translation differences 1,632 - 15,528 - 17,160
---------- ------------- ------------ ---------- -----------
As at 30 June 2019 815,642 734,999 19,844,802 11,727,943 33,123,386
---------- ------------- ------------ ---------- -----------
Net book value
---------- ------------- ------------ ---------- -----------
As at 30 June 2019 13,959,243 - 16,339,610 9,816,242 40,115,095
---------- ------------- ------------ ---------- -----------
As at 30 June 2019, the net book value of freehold property
includes land of GBP2,930,823 (1 July 2018: GBP2,817,709), which is
not depreciated.
Included within fixed assets are assets held under finance
leases and hire purchase agreements. As at 30 June 2019, the net
book value of such assets within computer software and hardware is
GBP274,547 (1 July 2018: GBP395,586).
During the period, assets were re-classified to more accurately
represent their asset class.
Included in Freehold Property is GBP3,767,475 of assets under
construction (1 July 2018: GBP2,302,203).
Included in in Furniture & fittings, equipment &
hardware is GBP340,120 of assets under construction (1 July 2018:
GBP1,129,774).
Included in Plant & machinery is GBP2,137,056 of assets
under construction (1 July 2018: GBP2,294,675).
7. Trade and other payables
52 weeks ended 52 weeks ended
30 June 2019 1 July 2018
GBP GBP
---------------------------- -------------- --------------
Current
Trade payables 7,848,496 6,800,747
Other payables 5,292,888 2,574,971
Other taxes payable 2,082,303 761,544
Accruals 4,304,056 5,408,583
-------------- --------------
19,527,743 15,545,845
-------------- --------------
Non-current
Other payables and accruals 2,757,158 2,581,044
-------------- --------------
2,757,158 2,581,044
-------------- --------------
8. Borrowings
52 weeks ended 52 weeks ended
30 June 2019 1 July 2018
GBP GBP
-------------------------------------------- -------------- --------------
Current
Finance and lease hire purchase liabilities 16,811 201,732
-------------- --------------
16,811 201,732
-------------- --------------
Unamortised costs of issue - -
-------------- --------------
Total current borrowings 16,811 201,732
-------------- --------------
Non-current
Finance and lease hire purchase liabilities - 16,811
-------------- --------------
Total non-current borrowings - 16,811
-------------- --------------
Total borrowings 16,811 218,543
-------------- --------------
During the prior period, the Group repaid in full all
outstanding "chocolate bonds" which had been issued in 2010 and
2014.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAXNDALPNEFF
(END) Dow Jones Newswires
September 24, 2019 02:00 ET (06:00 GMT)
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