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 -
------------------ ------------------
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