TIDMHOTC

RNS Number : 7849Q

Hotel Chocolat Group PLC

02 March 2021

2 March 2021

Hotel Chocolat Group plc

(" Hotel Chocolat ", the "Company" or the "Group")

Interim Results

Hotel Chocolat Group plc, a direct-to-consumer premium chocolate brand, today announces its interim results for the 26 weeks ended 27 December 2020. All numbers are shown post-IFRS16 unless otherwise stated.

Financial highlights:

 
   --   Revenue up 11% to GBP101.9m (H1 FY20: GBP91.7m) 
   --   Underlying EBITDA up 2% to GBP24.9m (H1 FY20: GBP24.6m)(1) 
   --   Profit before tax up 3% to GBP15.5m (H1 FY20: GBP15.0m) 
   --   Strong balance sheet with net cash at period end of GBP47.6m 
         (H1 FY20: GBP24.3m) 
   --   Earnings per share of 9.7p (H1 FY20: 11.5p) 
 

(1) Underlying EBITDA in H1 FY21 excludes GBP0.2m of share-based charges (H1 FY20: GBP0.5m).

Operational highlights:

 
    --   Strong sales growth reflecting growing brand appeal in the UK, 
          USA & Japan 
    --   UK sales grew by +12% driven by increased multichannel flexibility, 
          with online growth more than offsetting reduction in physical 
          retail sales caused by closures during lockdown and Tier 4 restrictions 
    --   UK customer database grew by 38%, adding + 0.6m active members 
          (USA customer database grew by 170%, Japan customer database 
          grew by 900%) 
    --   51% of UK sales in the period from direct to consumer digital 
          (online sales, subscriptions, and online experiences) 
    --   A pivot to digital-led growth in USA. Sales grew 22% in Q2 with 
          the acceleration capped by level of inventory in-country at peak. 
          We are expanding our capabilities in the USA to fully capture 
          the market opportunity 
    --   Japanese joint-venture's sales to consumers grew 228%. Wholesale 
          sales by the Group to the joint venture contributed 1 percentage 
          point of the Group's year-on-year growth 
    --   Underlying gross production margins stable. The impacts of the 
          Covid-19 response drove an overall reduction in gross margins 
          of 400bps year-on-year, with the scale of these headwinds expected 
          to diminish once current ongoing restrictions ease 
    --   Overheads reduced as a percentage of sales; 160bps lower year-on-year, 
          mitigating the additional variable costs from increased digital 
          and wholesale channel mix 
    --   Continued progress on sustainable business goals: 
                o   Development of a new 'gentle farming' approach for cacoa 
                     growing 
                o   Investments in people created over 130 new roles 
                o   Achieved the highest ever team engagement survey result 
                     in our annual survey 
                o   The proportion of recyclable packaging rising to 93% 
 
 

Angus Thirlwell, Co-founder and Chief Executive Officer of Hotel Chocolat, said:

"The Hotel Chocolat brand stayed strong during a difficult period for all of us. We certainly kept the chocolate flowing thanks to our online capabilities and multichannel expertise. We recorded superb results in the UK, USA and Japan despite Covid-19 restrictions affecting all our physical locations. We achieved sales growth during those periods when all UK physical locations were closed, demonstrating the brand's appeal to our loyal customers, and our flexible business model.

"Databases of active customers grew substantially in all three markets, underpinning our confidence of growth in the years to come. In the UK, our multichannel model truly came of age, and excitingly, both Japan and the USA firmly stepped up from the 'test and learn' phase into 'grow and scale'. Total brand sales, through direct-to-consumer and partner-channels combined, increased 16% year-on-year.

"Huge thanks go to all the Hotel Chocolat family who worked tirelessly to safely and creatively adapt the business and deliver these results. We know that we all played a role in maintaining morale and bringing happiness through chocolate in all the countries we operate in.

"We look forward to building the Hotel Chocolat brand further as we move closer to our goal of becoming the leading global d irect-to-consumer premium chocolate brand."

For further information:

 
 Hotel Chocolat Group plc                    c/o Citigate    + 44 (0) 20 7638 9571 
 Angus Thirlwell, Co-founder and Chief 
  Executive Officer 
 Peter Harris, Co-founder and Development 
  Director 
 Matt Pritchard, Chief Financial Officer 
 
 Liberum Capital Limited - Nominated 
  Advisor and Broker                                         + 44 (0) 20 3100 2222 
 Clayton Bush 
 James Greenwood 
 
 Citigate Dewe Rogerson - Financial 
  PR                                                         + 44 (0) 20 7638 9571 
 Angharad Couch 
 Ellen Wilton 
 Kieran Farthing 
 

Notes to Editors:

Hotel Chocolat is a direct-to-consumer premium chocolate brand, involved in every stage of chocolate from growing to making and distributing. 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 locations in the UK and USA, and in Japan via a joint venture. The Group has an organic cacao farm and hotel in Saint Lucia, offering complete cacao immersion through tree-to-bar experiences and wellness treatments. The Group also has the Rabot flagship restaurant and cacao roastery in London's Borough Market. The Group was admitted to trading on AIM in 2016.

Chief Executive's statement (inclusive of financial review)

RESULTS

 
                                                      Period ended 27 December 2020   Period ended 29 December 2019 
                                                                             GBP000                          GBP000 
----------------------------------  -------------  --------------------------------  ------------------------------ 
 
 Revenue                                                                    101,896                          91,716 
 Gross profit                                                                62,206                          59,633 
 Operating expenses                                                        (37,256)                        (35,064) 
-------------------------------------------------  --------------------------------  ------------------------------ 
 Underlying EBITDA                                                           24,950                          24,569 
 Share-based payments                                                         (197)                           (527) 
-------------------------------------------------  --------------------------------  ------------------------------ 
 EBITDA                                                                      24,753                          24,042 
 Depreciation & amortisation of property, 
  plant & equipment                                                         (3,153)                         (2,982) 
 Loss on disposal of property, plant & equipment                               (23)                            (12) 
 Depreciation of Right of Use asset                                         (5,081)                         (5,212) 
 Operating profit                                                            16,496                          15,836 
 Finance income                                                                  79                              62 
 Finance expense                                                              (897)                           (905) 
 Share of joint venture results                                               (219)                             (9) 
-------------------------------------------------  --------------------------------  ------------------------------ 
 Profit/(Loss) before tax                                                    15,459                          14,984 
 Tax expense                                                                (3,321)                         (1,908) 
-------------------------------------------------  --------------------------------  ------------------------------ 
 Profit for the period                                                       12,138                          13,076 
 Earnings per share - Basic                                                     9.7                           11.5p 
 Earnings per share - Diluted                                                   9.6                           11.4p 
 Dividend per share                                                             Nil                             Nil 
 
 

CHIEF EXECUTIVE'S STATEMENT

I am pleased to report continued progress for the Hotel Chocolat brand during the 26 weeks to 27 December 2020. Revenue for the period increased by 11% and profit before tax increased by 3%.

Our strong brand and direct-to-consumer multichannel model truly came of age in the UK, whilst the USA and Japan both delivered promising growth, firmly stepping up from the 'test and learn' phase into 'grow and scale'.

Brand

Our brand purpose is to bring happiness through chocolate. This means bringing happiness to all the communities we connect with, covering customers, team-members, growers, suppliers, and local communities. This is our North Star and by continuing to follow it we will achieve our business goal of becoming the leading global direct-to-consumer premium chocolate brand. Our commitment is to progressively improve every year on delivering this plan. In the period we made some good steps towards this.

Our compelling brand, innovative lifestyle product range and Direct-to-Consumer model mean we have many ways to bring happiness to a household, including via in-home authentic drinks, leisure experiences out of home, gift-sending to other households, and recurring purchases of treats for the household. The appeal of our products across generations, the combination of physical locations and fast growing online, plus the improvement in our customer engagement now present a significant opportunity to increase customer numbers and purchase frequency, and to create true "HC households".

Customers

Our customers justifiably expect us to continuously conjure up new happiness-inducing creations, and we launched multiple new product including our Unbelievably Vegan chocolate selections made with our Nutmilk recipe, latte-mocha hot chocolates for our Velvetiser in home system, and new pourable chocolate cream liqueurs in Espresso Martini, Salted Caramel & Clementine, and Mint recipes.

Prior to the first lockdown, over 1.5 million customers had joined our VIP Me loyalty program. As a result, we were able to stay connected to these customers whilst their favourite local Hotel Chocolat was temporarily closed. In the six-month period we added a further 0.6 million new active customers to our database, and deepened our engagement and brand recall, even when our physical retail channel was closed. We also launched new subscriptions to keep the chocolate flowing into homes.

Colleagues

Nourishing a truly meritocratic culture, where anyone from any background can have a happy, fulfilled career is essential to us. Our guiding principle is to 'be brave and be kind'. In the period we invested in external training in inclusion for every member of the HC Family, to better unlock the benefits of diversity. Our anti-racism group, composed of motivated individuals from our USA, UK, Saint Lucian and Japanese teams met 13 times in the period and is now firmly established, dismantling all types of discrimination, whether overt or subtle, and ensuring everyone has the opportunity to progress inside Hotel Chocolat.

We created over 130 new job roles across the worldwide business, and following an unprecedented period of rapid adaptations as a team in response to Covid, we achieved our highest ever scores in the annual all-employee engagement survey conducted in September.

Growers

Our objective is to ensure that cacao farming is economically, environmentally, and socially sustainable. Chocolate is loved by people all over the world and generates good margins for many businesses. It is wrong on every level that the growers of the magic ingredient are often impoverished and disenfranchised and that this situation has perpetuated for many decades. We aim to support a decent living income for each farming household, and we encourage responsible 'gentle farming' methods that are 'climate-smart', leveraging the natural biology of cacao trees which grow best in biodiverse environments under the shade of other tree species. Jo Brett, CEO of Hotel Chocolat Saint Lucia is taking our farming practices there to the next level, and our goal is to swiftly apply the learning from this to our farmer relationships in Ghana, the source of the majority of our cacao, and we will update further on our progress later this year.

Community and Planet

Our goal is for 100% recyclable packaging. In the period we:

 
   --   Improved our collaboration with our upstream supply-chain partners 
         to increase the amount of recycled material used in our packaging 
         and to reduce our usage of cardboard. 
   --   Continue to redesign our bags and packaging to reduce their environmental 
         footprint and now over 93% of our packaging is widely recyclable. 
 

The most challenging material to recycle locally is flexible packaging, which we take back in our Hotel Chocolat locations, but which is not yet collected kerbside in the UK. As members of the Plastic Pact, we lobby for better recycling practices and co-operate on new packaging technologies as we strive for our goal of 100% recyclable packaging.

We are also making good progress in implementing an ISO Environmental Management System to ensure our production operations minimise their environmental footprint. Our continued investment in capital projects to increase the scale of our manufacturing presents us with a real opportunity to reduce the carbon-intensity by designing in climate smart practices.

Markets

Physical locations in the UK and the USA were closed for various extended periods of time, and in all three markets footfall to open locations reduced as consumers followed government guidance. Despite this impact, the UK, USA, and the Japan joint venture all achieved year-on-year growth, demonstrating the strength of the brand and our online capabilities.

UK

Despite a combination of lockdowns and tiering restrictions which reduced physical retail sales, the online offer drove strong sales growth, and we added 0.6 million new customers to our database. By combining a strong brand, multiple product categories and effective routes to market, we achieved overall growth whilst the physical locations were closed.

We remain fully committed to physical locations as they are a powerful way to recruit profitable new multichannel customers, and they deliver the deepest brand experience. We have three new locations opening during 2021. We have negotiated ongoing improved lease terms for 13% of our leases, with a further 56% of locations having a lease event in the next 24 months. As planned, we will use these opportunities to renegotiate or relocate to more attractive sites on better deals.

USA

Lockdown restrictions resulted in dramatically lower footfall. Two of the four physical sites are in mass transit hubs and were temporarily closed throughout H1. The team made a concerted effort to pivot the business to a digital model, immediately driving total sales growth of 47% in October and November combined. The sales acceleration resulted in some local stock shortages which constrained December growth. We are expanding our supply capabilities to capture the market opportunity. The customer database grew by 170%.

Japan

Our partner had fast growth, with +228% sales uplift, the opening of 11 new locations (taking the total to 19) and fielding 40 pop-ups for the key spring trading seasons in February and March. The locations are designed in our latest lifestyle format, which is popular with both prospective landlords and consumers, and delivers strong engagement and high VIP sign-up rates. The VIP customer database grew by 892% to 50,000. Property costs in Japan are typically flexible, with leases based on a percent of sales revenue. The Group's sales to our partner at wholesale prices contributed 1%pt to the Group's reported sales growth.

Saint Lucia

Visitor numbers reduced materially due to travel restrictions and as a result sales were 82% lower year-on-year. During the period of reduced occupancy, the team accelerated expansion works, ahead of the future easing of restrictions. Our Project Chocolat 6-acre visitor attraction opened during the half, and a doubling of the room numbers is well underway. I am particularly pleased that our 'gentle farming' approach to sustainable cacao growing made excellent progress and is ready to be expanded beyond the testbed of our own organic model farm, to the growers we work with in Ghana.

Operations

Operational performance is covered in more detail in the Financial review below. Careful Covid adaptations meant that we were able to continue to safely produce and distribute our products and to achieve similar unit costs of manufacture. However, gross margins were impacted by the additional costs of adapting the supply chain to shifting demand patterns across channels in response to Covid, and increased levels of inventory clearance and write-off due to the impacts of lockdowns altering the rates of sale of some impulse-product categories.

Overheads increased more slowly than sales. Further detail on overheads is included in the Financial Review.

FINANCIAL REVIEW

Revenue

Group revenue increased by 11% to GBP101.9m. Driven by multichannel growth in the UK, USA & Japan. Strong online and digital partner growth more than offset the impact of physical retail closures due to government restrictions.

Profit Before Tax

Profit before tax increased by 3% to GBP15.5m.

Gross margin

Gross margin declined by 400 basis points from 65.0% to 61.0%. Manufacturing productivity was safely maintained, with unit costs of production in line with prior year. Margin headwinds in H1 related to the impacts of Covid on customer buying patterns, which resulted in some temporary increases in discounting to clear inventory. The value of raw material write-offs increased due to temporary range rationalisation, which supported safer and smoother operation of the factory and supply chain. The shift in channel mix from retail to online reduced margin by 230bps due to the greater take-up of offers and multibuys when shopping online.

Operating expense

Operating expenses grew by 6%, which was slower than sales growth, as a result operating expenses as a percent of sales fell by 160 basis points from 38.2% to 36.6%.

The temporary cessation of business rates contributed +220bps of savings, and lower rents including turnover-based leases contributed +140bps. Retail customer service staff were furloughed during lockdown, reducing overheads by 80bps. The rapid channel mix shift to online resulted in higher variable costs for pick, pack, and despatch, as well for digital marketing, website licence and credit card fees. The combined impact of changing channel mix was a headwind of (150bps). The Group continues to invest in key roles to further drive brand innovation, digital customer engagement, and global supply, to deliver future growth in sales, these investments increased overheads by (130bps).

Underlying EBITDA

Underlying EBITDA is a non-GAAP measure and increased 2% year-on-year to GBP24.9m.

Share based payments

Share-based payment expense of GBP0.2m (H1 FY20: GBP0.5m) related to the share-based Long-Term Incentive Plan and an all-employee Save As You Earn schemes.

Foreign currency

The business manufactures the majority of its products in the UK; however, it does purchase some premium ingredients and materials in foreign currencies, predominantly Euros and Dollars. The Group hedges its forecast foreign currency purchases up to 18 months ahead. The movement in exchange rates have impacted margin by +10 basis points.

The import of ingredients and materials from Europe has not been materially disrupted by Brexit. The Group's export focus remains on USA and Japan, with a modest level of sales made to the EU via the Group's website.

Finance income and expense

Finance expense of GBP0.9m reflects GBP0.6m of interest charged in relation to Right of use Assets, GBP0.2m of interest for the CLBILs RCF that the Group has in place, and GBP0.1m of realised derivative interest. Finance income of GBP0.1m is driven primarily by interest from a related party.

Earnings per share

Basic earnings per share in the period decreased 16% to 9.7p (H1 FY20: 11.5p). In the prior year, the exercise of the 2016 Long Term Incentive Plan and Save As You Earn schemes in the period resulted in material corporation tax deductions, which gave rise to an effective tax rate of 12.7% in H1 FY20. This year, the effective tax rate has reverted to 21.5% which is closer to historic averages for the Group.

Dividend

In March 2020, in response to the potential risks arising from the Covid-19 pandemic, the Board raised additional equity via a placing and paused its progressive dividend policy. Whilst the medium-term outlook benefits from the rollout of vaccines, the duration and intensity of the current restrictions remains uncertain. We are mindful of the potential growth opportunities in USA and Japan, and the Board will continue to review potential reinstatement of any dividend relative to the potential opportunities for re-investment in service of profitability and growth.

Cash flow and closing cash position

During the period, the Group had access to a GBP35m CLBILs Revolving credit facility, which then reduced to GBP25m from 1 Jan 2021 and is committed in place until the end of December 2021. Net cash inflow from operating activities was GBP34.7m (H1 FY20: GBP30.2m) an increase of 15%. Net cash (being cash minus borrowings) at the end of the period was GBP47.6m (H1 FY20: GBP24.3m).

The strong cash position is a result of the sales performance and cost control and was supported by the GBP22m equity placement completed in March 2020. As at 28(th) February 2021, the Group has net cash of GBP26.3m.

CURRENT TRADING AND OUTLOOK

Since the end of the financial reporting period, trading has continued to be in line with the Board's expectations. The multichannel performance of the UK remains encouraging and the new markets continue to show promising growth. As per recent UK government guidelines, from 12th April we expect to begin re-opening our UK physical locations, with appropriate Covid-19 secure measures in place.

In delivering these results in a context of the global pandemic, the business has demonstrated creativity, resilience and spirit. A focus on bringing happiness through chocolate in every facet of our operations will nurture the brand appeal, furthering our business goal of becoming the leading global direct-to-consumer premium chocolate brand.

Angus Thirlwell

Co-founder and Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 27 December 20 20

 
                                                                                  Unaudited           Unaudited 
                                                                             26 weeks ended      26 weeks ended 
                                                                           27 December 2020    29 December 2019 
                                                                  Notes             GBP'000             GBP'000 
-------------------------------------------------------------  --------  ------------------  ------------------ 
 
 Revenue                                                                            101,896              91,716 
 Cost of sales                                                                     (39,690)            (32,083) 
                                                                         ------------------  ------------------ 
                                                                                     62,206              59,633 
 
 Operating expenses                                                                (45,710)            (43,797) 
                                                                         ------------------  ------------------ 
                                                                   3                 16,496              15,836 
 
 Finance income                                                    4                     79                  62 
 Finance expenses                                                  4                  (897)               (905) 
 Share of joint venture results                                                       (219)                 (9) 
                                                                         ------------------  ------------------ 
 Profit before tax                                                                   15,459              14,984 
 
 Tax expense                                                                        (3,321)             (1,908) 
                                                                         ------------------  ------------------ 
 Profit for the period                                                               12,138              13,076 
 
 Other comprehensive income: 
 Fair Value movement on hedges                                                      (1,054)               (518) 
 Deferred tax charge on hedges                                                          175                  42 
 
 Currency translation differences arising from consolidation                          (736)               (227) 
 Currency movement on net investment                                                  (572)                   - 
                                                                         ------------------  ------------------ 
 Total comprehensive income for the period                                            9,951              12,373 
                                                                         ------------------  ------------------ 
 
 Basic Earnings per share                                          5                   9.7p               11.5p 
 Diluted Earnings per share                                        5                   9.6p               11.4p 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 27 December 20 20

 
                                                                Unaudited               Unaudited         Audited 
                                                                    As at                   As at           As at 
                                                         27 December 2020        29 December 2019         28 June 
                                                                  GBP'000                 GBP'000            2020 
                                                Notes                                                     GBP'000 
-------------------------------------------  --------  ------------------      ------------------      ---------- 
 ASSETS 
 Non-current assets 
 Intangible assets                                                  3,192                   3,244           2,897 
 Property, plant, and equipment                  6                 44,159                  45,009          41,868 
 Right of use asset                              6                 37,896                  50,728          39,848 
 Investment in joint ventures                                          81                       -               - 
 Loan to joint venture                                              9,678                   3,970           5,705 
 Derivative financial assets                                           10                      12              92 
 Deferred tax asset                                                   916                     278             597 
                                                                   95,932                 103,241          91,007 
 Current assets 
 Derivative financial assets                                          402                       -           1,100 
 Inventories                                                       15,544                  16,222          13,916 
 Trade and other receivables                                       17,680                  10,230           6,942 
 Corporation tax receivable                                             -                       -           1,520 
 Cash and cash equivalents                                         47,629                  24,299          28,053 
                                                       ------------------      ------------------      ---------- 
                                                                   81,255                  50,751          51,531 
 Total assets                                                     177,187                 153,992         142,538 
 
 LIABILITIES 
 Current liabilities 
 Trade and other payables                        7                 50,484                  34,758          27,251 
 Corporation tax payable                                            2,580                     712               - 
 Derivative financial liabilities                                     392                     404              27 
 Lease liabilities                                                 13,735                  11,705          10,993 
                                                                   67,191                  47,579          38,271 
 Non-current liabilities 
 Other payables and accruals                     7                     26                       -              31 
 Derivative financial liabilities                                       5                       -             327 
 Lease liabilities                                                 31,345                  43,221          35,960 
 Provisions                                                           956                       -             959 
                                                                   32,332                  43,221          37,277 
 
 Total liabilities                                                 99,523                  90,800          75,548 
 
 NET ASSETS                                                        77,664                  63,192          66,990 
 
 EQUITY 
 Share capital                                                        126                     116             126 
 Share premium                                                     37,726                  15,825          37,627 
 Retained earnings                                                 36,417                  43,760          24,279 
 Translation reserve                                                  843                   1,026           1,579 
 Merger reserve                                                       223                     223             223 
 Capital redemption reserve                                             6                       6               6 
 Other reserves                                                     2,323                   2,236           3,150 
                                                       ------------------      ------------------      ---------- 
 
 Total equity attributable to shareholders                         77,664                  63,192          66,990 
                                                       ------------------      ------------------      ---------- 
 
 

CONSOLIDATED STATEMENT OF CASH FLOW

For the period ended 27 December 20 20

 
                                                                                     Unaudited               Unaudited 
                                                                                26 weeks ended          26 weeks ended 
                                                                             27 December 20 20        29 December 2019 
                                                                    Notes              GBP'000                 GBP'000 
---------------------------------------------------------------  --------  -------------------      ------------------ 
 
 Profit before tax for the period                                                       15,459                  14,984 
 Adjusted by: 
 Depreciation of property, plant, and equipment                      6                   2,749                   2,727 
  Depreciation of Right of use asset                                                     5,081                   5,212 
 Amortisation of intangible assets                                                         404                     255 
 Loss of joint ventures                                                                    219                       9 
 Profit recognised on lease modifications                                                 (75)                       - 
 Net interest expense                                                                      818                     845 
 Share-based payments                                                                      197                     527 
 Loss on disposal of property, plant and equipment and 
  intangible assets                                                                         23                      12 
                                                                           -------------------      ------------------ 
 
 Operating cash flows before movements in working capital                               24,875                  24,571 
 Increase in inventories                                                               (1,628)                 (3,412) 
 Increase in trade and other receivables                                              (12,592)                 (3,111) 
 Increase in trade and other payables and provisions                                    23,771                  15,590 
                                                                           -------------------      ------------------ 
 Cash inflow generated from operations                                                  34,426                  33,638 
 Interest received                                                                           3                       6 
 Income tax received/(paid)                                                                751                 (2,541) 
 Interest paid on: 
 
        *    interest paid - IFRS leases                                                 (302)                   (722) 
 
        *    derivative financial instruments                                            (101)                   (104) 
 
        *    bank loans and overdraft                                                    (125)                    (45) 
                                                                           -------------------      ------------------ 
 Cash flows from operating activities                                                   34,652                  30,232 
                                                                           -------------------      ------------------ 
 
 Purchase of property, plant, and equipment                                            (6,402)                 (7,362) 
 Proceeds from disposal of property, plant, and equipment                                    -                      79 
 Investment in joint venture                                                             (300)                       - 
 Loan to joint venture                                                                 (3,900)                 (1,482) 
 Purchase of intangible assets                                                           (751)                   (480) 
 Cash flows used in investing activities                                              (11,353)                 (9,245) 
                                                                           -------------------      ------------------ 
 
 Proceeds on issue of shares                                                                99                   4,078 
 
 Capital element of hire purchase and finance leases repaid                                  -                    (17) 
 Payment of IFRS16 lease liabilities                                                   (3,758)                 (5,065) 
 Dividends paid                                                                              -                 (1,386) 
 Cash flows used in financing activities                                               (3,659)                 (2,390) 
                                                                           -------------------      ------------------ 
 
 Net change in cash and cash equivalents                                                19,640                  18,597 
 Cash and cash equivalents at beginning of period                                       28,053                   5,778 
 Foreign currency movements                                                               (64)                    (76) 
 Cash and cash equivalents at end of period                                             47,629                  24,299 
                                                                           -------------------      ------------------ 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 27 December 20 20

 
                                                                                      Capital 
                       Share        Share    Retained    Translation      Merger   redemption       Other 
                     capital      Premium    earnings        reserve     reserve      reserve    reserves        Total 
                     GBP000s      GBP000s     GBP000s        GBP000s    GBP 000s      GBP000s     GBP000s     GBP 000s 
---------------  -----------  -----------  ----------  -------------  ----------  -----------  ----------  ----------- 
 Equity as at 
  30 June 2019           113       11,750      33,359          1,253         223            6       2,626       49,330 
 Adjustment on 
  initial 
  application 
  of IFRS 16               -            -     (1,289)              -           -            -           -      (1,289) 
                 -----------  -----------  ----------  -------------  ----------  -----------  ----------  ----------- 
 Opening Equity 
  as at 1 July 
  2019                   113       11,750      32,070          1,253         223            6       2,626       48,041 
 Issue of share 
  capital                  3        4,075           -              -           -            -           -        4,078 
 Share-based 
  payments                 -            -           -              -           -            -         466          466 
 Deferred tax 
  charge on 
  share-based 
  payments                 -            -           -              -           -            -       (380)        (380) 
 Profit for the 
  period                   -            -      13,076              -           -            -           -       13,076 
 Dividends paid            -            -     (1,386)              -           -            -           -      (1,386) 
 Other 
 comprehensive 
 income: 
 Fair value 
  movement on 
  cash flow 
  hedges                   -            -           -              -           -            -       (518)        (518) 
 Deferred tax 
  charge on 
  cash flow 
  hedges                   -            -           -              -           -            -          42           42 
 Currency 
  translation 
  differences 
  arising from 
  consolidation            -            -           -          (227)           -            -           -        (227) 
                 -----------  -----------  ----------  -------------  ----------  -----------  ----------  ----------- 
 Equity as at 
  29 December 
  2019                   116       15,825      43,760          1,026         223            6       2,236       63,192 
 Adjustment on 
  initial 
  application 
  of IFRS 16               -            -          63              -           -            -           -           63 
                 -----------  -----------  ----------  -------------  ----------  -----------  ----------  ----------- 
 Equity as at 
  30 December 
  2019                   116       15,825      43,823          1,026         223            6       2,236       63,255 
 Issue of share 
  capital                 10       22,228           -              -           -            -           -       22,238 
 Costs 
  associated to 
  issue of 
  share capital            -        (426)           -              -           -            -           -        (426) 
 Loss for the 
  period                   -            -    (19,544)              -           -            -           -     (19,544) 
 Share-based 
  payments                 -            -           -              -           -            -       (104)        (104) 
 Deferred tax 
  charge on 
  share-based 
  payments                 -            -           -              -           -            -       (319)        (319) 
 Forex 
  reclassified 
  to cost of 
  sales and 
  inventory                -            -           -              -           -            -       (194)        (194) 
 Other 
 comprehensive 
 income: 
 Fair value 
  movement on 
  cash flow 
  hedges                   -            -           -              -           -            -       1,794        1,794 
 Deferred tax 
  charge on 
  cash flow 
  hedges                   -            -           -              -           -            -       (263)        (263) 
 Currency 
  translation 
  differences 
  arising from 
  consolidation            -            -           -            553           -            -           -          553 
 Equity as 28 
  June 2020              126       37,627      24,279          1,579         223            6       3,150       66,990 
 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 27 December 20 20

 
                                                                                      Capital 
                       Share        Share    Retained    Translation      Merger   redemption       Other 
                     capital      Premium    earnings        reserve     reserve      reserve    reserves        Total 
                     GBP000s      GBP000s     GBP000s        GBP000s    GBP 000s      GBP000s     GBP000s     GBP 000s 
---------------  -----------  -----------  ----------  -------------  ----------  -----------  ----------  ----------- 
 Equity as 28 
  June 2020              126       37,627      24,279          1,579         223            6       3,150       66,990 
 Issue of share 
  capital                  -           99           -              -           -            -           -           99 
 Share-based 
  payments                 -            -           -              -           -            -         197          197 
 Deferred tax 
  charge on 
  share-based 
  payments                 -            -           -              -           -            -         173          173 
 Profit for the 
  period                   -            -      12,138              -           -            -           -       12,138 
 Forex 
  reclassified 
  to cost of 
  sales and 
  inventory                -            -           -              -           -            -         254          254 
 Other 
 comprehensive 
 income: 
 Fair value 
  movement on 
  hedges                   -            -           -              -           -            -     (1,054)      (1,054) 
 Deferred tax 
  charge on 
  hedges                   -            -           -              -           -            -         175          175 
 Currency 
  movement on 
  net 
  investment               -            -           -              -           -            -       (572)        (572) 
 Currency 
  translation 
  differences 
  arising from 
  consolidation            -            -           -          (736)           -            -           -        (736) 
                 -----------  -----------  ----------  -------------  ----------  -----------  ----------  ----------- 
 Equity as at 
  27 December 
  2020                   126       37,726      36,417            843         223            6       2,323       77,664 
                 -----------  -----------  ----------  -------------  ----------  -----------  ----------  ----------- 
 

N OTES TO THE INTERIM FINANCIAL INFORMATION

   1.            Basis of preparation 

The consolidated interim 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 accounts have been prepared in accordance with accounting policies that are consistent with the Group's Annual Report and Accounts for the period ended 28 June 2020. This is with the exception of the calculation of right of use assets and lease liabilities under IFRS16. The Group has elected to adopt the COVID-19 Practical Expedient for rent payment concessions; this expedient had not been approved for use for the period ended 28 June 2020. Subject to certain criteria, the Practical Expedient allows rent concessions to be recognised in the profit and loss statement rather than being treated as lease modifications.

The Group's Annual Report and Accounts for the period ended 27 June 2021 are expected to be prepared under UK IFRS.

The comparative financial information for the period ended 28 June 2020 in this interim report does not constitute statutory accounts for that period under 435 of the Companies Act 2006.

Statutory accounts for the period ended 28 June 2020 have been delivered to the Registrar of Companies.

The auditors' report on the accounts for 28 June 2020 was 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.

   2.            Significant accounting policies 

At the year ended 28 June the Directors undertook a comprehensive assessment to consider the Group's ability to trade as a going concern having considered the significant uncertainties being faced by the retail sector because of COVID-19.

The assessment included a review of a Base case and Downside scenario. The base case considered a year-on-year reduction in Retail sales but with a strong transition to Online and continued delivery of Wholesale growth plans.

The Board also considered the levers available to mitigate the impact on profit and cashflow if performance and the pandemic were to follow the downside scenario. These included:

 
   --   Reductions in working capital & variable costs in response 
         to lower sales 
   --   Deferring or cancelling discretionary spend, and reducing 
         ongoing fixed costs of the operation 
   --   Deferring Capital expenditure and overseas investment 
   --   Government funding support 
 

Since 28 June 2020, the Group has consistently performed ahead of the Base case. To assess the Group's position as at 27 December 2020 the Directors have reviewed an updated Base case reflecting the current National Lockdown for the first quarter of CY2021 and disrupted Retail ongoing to September, offset by the continuing strong performance of Digital and Wholesale.

On this basis the Board has a reasonable expectation that the Group will have adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the financial statements and will not breach any covenants over the remaining term of the current facilities. For these reasons they continue to adopt the going concern basis of accounting in preparing the consolidated financial information and have concluded that there is no material uncertainty in relation to going concern.

The interim financial results have been prepared by applying the accounting policies that were applied in the preparation of the 2020 Annual Report and Accounts which are published on the Hotel Chocolat website, www.hotelchocolat.com , except for the IFRS16 practical expedient noted above. There are no new or amended standards effective in the period which has had a material impact on the interim consolidated financial information.

   3.            Profit from operations 

Profit from operations is arrived at after charging/(crediting):

 
                                                                                     Unaudited           Unaudited 
                                                                                26 weeks ended      26 weeks ended 
                                                                              27 December 2020    29 December 2019 
                                                                                        GBP000              GBP000 
-------------------------------------------------------------------------   ------------------  ------------------ 
 Staff cost                                                                             24,634              23,924 
 Depreciation of property, plant, and equipment                                          2,749               2,727 
 Amortisation of intangible assets                                                         404                 255 
 Depreciation of Right of Use asset                                                      5,081               5,212 
 Loss on disposal of property, plant and equipment and intangible assets                    23                  12 
 Exchange differences                                                                     (51)                (88) 
 Government grants received                                                              (893)                   - 
 Bad debt expense                                                                            -                  18 
                                                                            ------------------  ------------------ 
 
   4.            Finance income and expenses 
 
                                                                     Unaudited           Unaudited 
                                                                26 weeks ended      26 weeks ended 
                                                              27 December 2020    29 December 2019 
                                                                        GBP000              GBP000 
---------------------------------------------------------   ------------------  ------------------ 
 
 Interest from related party                                                73                   - 
 Interest on bank deposits                                                   3                   6 
 Unrealised interest on derivative financial instruments                     3                  56 
 Finance income                                                             79                  62 
                                                            ------------------  ------------------ 
 
 Interest on bank borrowings                                               192                  79 
 Realised interest on derivative financial liabilities                     101                 104 
 Finance leases and hire purchase contracts                                  -                   - 
 IFRS 16 Interest charge                                                   604                 722 
                                                            ------------------  ------------------ 
 Finance expenses                                                          897                 905 
                                                            ------------------  ------------------ 
 
 
   5.            Earnings per share 

Profit for the period used in the calculation of the basic and diluted earnings per share:

 
                                             Unaudited           Unaudited 
                                        26 weeks ended      26 weeks ended 
                                      27 December 2020    29 December 2019 
                                                GBP000              GBP000 
---------------------------------   ------------------  ------------------ 
 
 Profit after tax for the period                12,138              13,076 
 
 

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:

 
                                                                                     Unaudited           Unaudited 
                                                                                26 weeks ended      26 weeks ended 
                                                                              27 December 2020    29 December 2019 
-------------------------------------------------------------------------   ------------------  ------------------ 
 
 Weighted average number of shares in issue used in the calculation of 
  earnings per share (number) 
  - Basic                                                                          125,509,201         114,197,428 
 Dilutive share options outstanding - Hotel Chocolat Group plc Save As You 
  Earn Plan                                                                             48,168             566,898 
 LTIP 2016 unexercised options                                                         240,830             418,810 
 Weighted average number of shares in issue used in the calculation of 
  earnings per share (number) 
  - Diluted                                                                        125,798,199         115,183,136 
 
 Basic Earnings per share (pence)                                                          9.7                11.5 
 Diluted Earnings per share (pence)                                                        9.6                11.4 
                                                                            ------------------  ------------------ 
 

As at 27 December 2020, the total number of potentially dilutive shares issued under the Hotel Chocolat Group plc Long-Term Incentive Plan was 501,073 (29 December 2019: 301,073). 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, 
                                                             Equipment, 
                                                               Computer 
                           Freehold         Leasehold        software &           Plant &      Right of use 
                           property          property          hardware         machinery             asset      Total 
                             GBP000            GBP000            GBP000            GBP000            GBP000     GBP000 
-----------------  ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 26 weeks ended 29 December 2019 
 Cost: 
 As at 30 June 
  2019                       14,775               735            36,184            21,544                 -     73,238 
 IFRS 16 opening 
  adjustment                      -                 -             (695)                 -            50,603     49,907 
 As at 1 July 
  2019                       14,775               735            35,489            21,544            50,603    123,145 
 Additions                      586                18             3,647             4,178             5,507     13,936 
 Disposals                        -                 -             (401)                 -                 -      (401) 
 Translation 
  differences                 (339)                 -              (67)                 -             (179)      (585) 
 As at 29 
  December 2019              15,022               753            38,668            25,722            55,931    136,095 
 
 Accumulated 
 depreciation: 
 As at 30 June 
  2019                          816               735            19,845            11,727                 -     33,123 
 IFRS 16 opening 
  adjustment                      -                 -             (353)                 -                 -        353 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 As at 1 July 
  2019                          816               735            19,492            11,727                 -     32,770 
 Depreciation 
  charge                         80                 -             2,059               588             5,212      7,939 
 Disposal                                           -             (309)                 -                 -      (309) 
 Translation 
  differences                  (11)                 -              (21)                 -               (9)       (41) 
 As at 29 
  December 2019                 885               735            21,221            12,315             5,203     40,359 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 
 Net book value 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 As at 29 
  December 2019              14,137                18            17,447            13,407            50,728     95,737 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 
 26 weeks ended 27 December 2020 
 Cost: 
 As at 28 June 
  2020                       17,038             1,397            39,838            26,816            54,830    139,919 
 Additions                    1,205                 -               763             4,297             5,229     11,494 
 Disposals                        -              (18)               (5)             (157)           (1,663)    (1,843) 
 Translation 
  differences               (1,152)                 -             (219)                 -             (689)    (2,060) 
 As at 27 
  December 2020              17,091             1,379            40,377            30,956            57,707    147,510 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 
 Accumulated 
 depreciation: 
 As at 28 June 
  2020                        3,267               768            26,174            13,013            14,982     58,204 
 Depreciation 
  charge                         98                64             1,848               739             5,081      7,830 
 Disposal                         -                 -               (4)             (138)             (195)      (337) 
 Translation 
  differences                  (41)                 -             (144)                 -              (57)      (242) 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 As at 27 
  December 2020               3,324               832            27,874            13,614            19,811     65,455 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 
 Net book value 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 As at 27 
  December 2020              13,767               547            12,503            17,342            37,896     82,055 
                   ----------------  ----------------  ----------------  ----------------  ----------------  --------- 
 

As at 27 December 2020, the net book value of freehold property includes land of GBP3,893k (29 December 2019: GBP4,740k), which is not depreciated.

   7.    Trade and other payables 
 
                                 Unaudited           Unaudited 
                            26 weeks ended      26 weeks ended 
                          27 December 2020    29 December 2019 
                                    GBP000              GBP000 
---------------------   ------------------  ------------------ 
 Current 
 Trade payables                     11,329              10,504 
 Other payables                      8,557               4,376 
 Other taxes payable                11,880               9,566 
 Accruals                           18,718              10,312 
                        ------------------  ------------------ 
                                    50,484              34,758 
                        ------------------  ------------------ 
 Non-current 
 Other payables                         26                   - 
                        ------------------  ------------------ 
                                        26                   - 
                        ------------------  ------------------ 
 
 

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.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

IR BLLBBFXLBBBK

(END) Dow Jones Newswires

March 02, 2021 02:00 ET (07:00 GMT)

Hotel Chocolat (LSE:HOTC)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Hotel Chocolat Charts.
Hotel Chocolat (LSE:HOTC)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Hotel Chocolat Charts.