Interim Results

RNS Number : 1751Z

Parsley Box Group PLC

13 September 2022

 

13 September 2022

Parsley Box Group plc

("Parsley Box", the "Company" or the "Group")

Interim Results

Parsley Box Group plc (AIM: MEAL), the provider of ready meals focused on the 65+ demographic, today announces its unaudited interim results for the six months ending 30 June 2022 ("H122" or the "Period").

Financial h ighlights

		H122	H121
Revenue £'000		9,577	14,003
	New customer revenue £'000	899	2,959
	Repeat customer revenue £'000	8,678	11,044
Product margin £'000		5,194	7,076
Product margin (% of sales)		54%	51%
Marketing expenses £'000		2,285	5,038
Adjusted EBITDA £'000 *		(2,110)	(3,618)
Loss before tax £'000		(2,771)	(5,416)
Basic loss per share (pence)		(4.9)	(12.9)
Inventory £'000		1,191	800
Cash £'000		5,314	6,520
Net current assets £'000		4,362	4,354

*Adjusted EBITDA is defined as earnings before interest, taxation, depreciation and amortisation, IPO costs, fundraising costs and share based payments.

· Revenue fell by 32% period on period as high online shopping volumes experienced during the pandemic were not sustained, and new customer revenue reduced as marketing acquisition spend was cut back in the first quarter whilst new funds were sought

· Product margins, however, rose due to a greater proportion of repeat customer orders and modest price increases at the start of the period, that increased average order values by 24% period on period

· Marketing expenses were reduced by 55% period on period, to 24% of revenue in H122 (H121: 36%) as the Company exercised strict discipline on spend to focus on acquiring and retaining customers with potential higher lifetime values

· The adjusted EBITDA loss reduced by 42% to £2,110k (H121: £3,618k) as the Company continues its drive towards profitability

· Basic loss per share reduced 62% to 4.9 pence (H121: 12.9 pence)

· £5.9m fund raise completed in March, with strong support from directors of in excess of £3m. Cash at 30 June was £5.3m.

Operational highlights

· Supply chains stabilised and stock levels rebuilt. 47 days of inventory at the period end

· Ongoing evolution of marketing strategy to acquire and retain higher spending customers

· New larger portion size meals launched in June

· In depth customer insight completed to support business planning

Post period end developments

· Take up of ParsleyClub, our new membership scheme, launched in August to reward customer loyalty and improve customer retention has been positive

· Everyday Low Price ("ELP") meal range was launched in July to support the rising cost of living and drive order volumes, whilst maintaining good product margins

· Gifting range also launched in July in preparation for building customer awareness of new food gifts to come for Christmas

· The new daytime TV and PR campaigns were launched in September to showcase how the convenience of Parsley Box supports our customers' busy lives

Current trading

· H122 revenue levels have continued for the first 10 weeks of H222 and remain in line with market guidance

· The ongoing cost price inflation in the supply chain is being managed and offset by fulfilment cost efficiencies to deliver steady improvement in gross margins

· The financial focus remains on continued loss reduction and cash preservation

· The full year adjusted EBITDA loss forecast remains in line with market guidance

Kevin Dorren, CEO of Parsley Box, commented:

" As with other retailers, 2022 has been challenging for the Company as consumers feel the effects of the higher cost of living.

We have continued to invest in product innovation to deliver category expansion with the launch of our larger portion and sharing meals to drive into additional meal occasions and more snacks and bakery to increase basket size. We have also introduced the 'everyday low price' range of meals at a £2.95 price point to ensure our product range meets the needs of all customers in our target over 65s market, especially those feeling the pressure of increased energy prices.

We have launched ParsleyClub, our new membership scheme, designed to reward our loyal customers and improve retention rates, and continue to evolve our marketing strategies to mitigate higher customer acquisition and retention costs.

Parsley Box's key competitive advantage is that 90% of our meals can be stored in the cupboard for up to 6 months and prepared in the microwave in minutes, so our customers can stock up to manage food price inflation and minimize their energy costs, key concerns for all UK consumers. The ease of storage and speed of preparation is also a significant benefit for the public sector, and we continue to investigate nascent B2B revenue channels in this area.

We have taken a number of actions to adapt to the changing macro-economic climate, improve gross margins, and reduce overheads to conserve the £5.9m funds raised in March. The Board remains focused on investment strategies to generate a longer term return to revenue growth, and are reorganising the business for the current revenue run rate to balance cash consumption. The Company has strong shareholder support as evidenced during the March fund raise where board members invested over £3m of the total raised.

Despite the current market challenges, critically we have maintained the quality of our product and continued to deliver the high standard of service our customers deserve and following the actions taken the Company is now in a better position to withstand the macro-economic pressures whilst continuing to develop a long-term future."

Footnotes:

^{1 Financial information has been rounded for presentation purposes. As a result of this rounding in totals, comparatives and calculations presented in this document may vary slightly from the arithmetic totals or calculations using such data.}

^{2 Adjusted EBITDA is defined as earnings before interest, taxation, depreciation, amortisation, impairment, share-based payment charges connected with employee remuneration and fundraising-related expenditure}

Enquiries:

Parsley Box
Holly McComb Kevin Dorren	Tel: [phone]  Email: [e-mail]
FinnCap (Nominated Adviser and Broker) Matt Goode / Charlie Beeson (Corporate Finance)  Tim Redfern / Charlotte Sutcliffe (ECM)	Tel: [phone]
Instinctif Partners Matthew Smallwood / Justine Warren	Tel: [phone] / 2010

Notes to editors:

Parsley Box promotes, supports and celebrates independent living and wellbeing by making mealtimes for the over 65s easier and more enjoyable. We combine fast, friendly service with convenient, long life, ready meals for all occasions and have grown to offer a 'one stop shop' providing a growing range of quick and simple ambient ready meals which require no refrigeration and have a shelf life of up to six months together with a premium chilled range with extended shelf life. We have now also introduced more gifting products into our range as well increased our seasonal offerings.

Chief Executive Officer's Review

The past 18 months has seen continuous change to both consumer behaviour and the trading environment. The Company is not alone in finding the current market conditions extremely challenging, with many online retailers experiencing revenue reduction post the pandemic. The Company has remained focused on its key strengths of providing good quality meals and exceptional service to the under-served over 65s market, adapting to the cost price inflation environment in food, energy, packaging and labour, and investing in new team members to support a return to revenue growth over the longer term.

Following the £5.9m fund raise completed in March, with strong support from directors of in excess of £3m and cash at 30 June was £5.3m. H122 revenue levels have continued for the first 10 weeks of H222 and remain in line with market guidance.

Product and service

Our customers are predominantly over 65 with an average age of 74. They value the convenience of Parsley Box predominantly for midweek meals when they don't feel like cooking. Our product development strategy is evolving following insight from our customers.  To increase order frequency, we now offer new event based meal boxes to mark occasions, and to continue to drive up average order values will launch new weekend meal propositions such as dine in and take away style meals for treats and celebrations in the second half. The cupboard stored range provides a valuable staple for certain times of the week or month, and we are developing new products to fulfil other occasions to drive reorder rates and future growth. In tandem, additional product lines such as the new gift range, launched in July, will broaden our offering as we move beyond the store cupboard and start to play a larger role in our customer's lives.

Our customers like to communicate with people and value the service provided by our contact centre. Our customer team receives excellent net promotor scores, consistently in excess of 70, providing a strong connection to our loyal customers and offering the Company the ability to gain valuable insight to feed into product and marketing strategies and promote new product ranges. 

Additionally, a significant proportion of our customers are buying for others than themselves, predominantly their elderly relatives. These are regular and loyal customers who buy for reassurance, and we plan to develop our marketing for this customer segment in due course.

Active customers and average order values

Our active customer numbers have declined since the end of the pandemic as consumer shopping habits changed but remain over double the pre-pandemic levels. The Company has run extensive reactivation marketing campaigns during the period to showcase our new products and larger portion meals to lapsed customers, and post period end we have seen early signs of an uptick in active customers which is encouraging.

Our repeat average order value ("AOV") has increased by 13% period on period to £48.91. Within this, the AOV of our core active customer group who account for 70% of repeat orders, is £60.45, with newly reactivated repeat customers reducing the average as they return to the Company.

The new membership scheme was launched in August to help retain and reward loyal customers. It offers members named day delivery, free product trials to encourage trying new ranges and more frequent ordering, a birthday gift voucher to highlight the new gift range and an exclusive newsletter to build brand loyalty and a sense of community in our customer group.

The Company commissioned detailed customer insight work in the period to better understand our customer and former customer's  buying behaviours, barriers to more purchasing and to test the potential appeal of new products and services for the future.  This is informing our product roadmap and marketing strategies to grow our presence in the over 65s market.

Pricing and supply chain

The supply chain constraints experienced in H221 receded in the period and the Company has held good stock levels since the start of the period. The continued, industry wide, cost process inflation in the food supply chain will result in some low margin lines being discontinued in the second half of the year to ensure we concentrate our working capital on high margin, high volume lines.

The long shelf life of our products has enabled the Group to build stock ahead of cost price increases allowing the Company to avoid passing on further price increases since January 2022, and to continue the retail price freeze until January 2023 providing our loyal customers with the best value, and to enable the Group to compete effectively in a price sensitive market.

Our team

Our team was 30% smaller at the end of H122 compared to H121, but we have continued to invest in key new talent in the period to drive the business forward into the next stage growth. New team members include a new marketing director, commercial and product innovation specialists in the product team, a new software team to develop our platform for the expanding range of products and services, and tailor it for the best experience for our target customer group, and support functions to develop our processes for the next stage. The Company is now far stronger internally to both manage the current environment and start to build future growth.

Path to profitability and cash

The adjusted EBITDA loss reduced considerably in the period, down 42% to £2,110k. The Company is focused on becoming a profitable business by improving product margins predominantly via reduced discounting, ongoing efficiency improvement in order fulfilment, strict discipline on marketing spend and some further reductions in general and administration expenses.

Cash at the period end was £5,314k and continues to be very carefully managed. The Company continues to reduce its losses, however, balancing working capital in a market where suppliers across the industry are reducing credit terms to address their working capital constraints from higher energy costs, remains a significant challenge.  The Company will continue to review funding and capital structure over the medium term as the business develops.

Opening new channels

Over the next 12 months the Group will open new sales channels, initially focused on B2B opportunities in the public sector where our long shelf life, cupboard stored range is ideally suited to support some of the current challenges in the elderly care sector.

Additionally, the Company is evaluating additional sales channels such as online marketplaces predominantly to support customers who are buying for relatives.

Our purpose

The Company remains committed to our purpose to provide dedicated service to the over 65s. Parsley Box remains one of few brands solely focused on this customer demographic, a group that represents £12m people in the UK, over 17% of the current population and one that is set to grow rapidly, at over 15% in the short time period to 2025. The Company continues to develop its product offering and tailored offline and online service to our customers, their family members and support services in this age group.

Current trading and outlook

Revenue for the first 10 weeks of H222 has been in line with H122 and in line with market guidance. New daytime TV and PR campaigns launched in September to showcase how the convenience of Parsley Box support our customers' busy lives, and our research showing the top 5 main retiree personality types in retirement is receiving good national coverage.

New product development continues at pace in preparation for the winter and Christmas period, the new membership scheme is being rolled out more widely and operational cost efficiencies continue to be delivered.

Notwithstanding the very challenging market conditions, the Company is now in a better position to withstand the macro-economic pressures whilst continuing to develop a long-term future, and continues to trade in line with market forecasts.

Financial Review

Key performance indicators

		HY22	HY21	YOY %
Order numbers '000s	Repeat customers	177	256	(31%)
	New customers	35	129	(73%)
Average order value ("AOV") £	Repeat customers	48.91	43.30	13%
	New customers	25.69	22.98	12%
Active customers at period end '000s		145	219	(34%)
Marketing expenses as a % of revenue		24%	36%	12%
Results of operations
Revenue £'000	Repeat customers	8,678	11,044	(21%)
	New customers	899	2,959	(70%)
	Total	9,577	14,003	(32%)
Product margin £'000		5,194	7,076	(27%)
Product margin %		54%	51%	3%
Marketing expenses £'000		2,285	5,038	55%
Adjusted EBITDA £'000 *		(2,110)	(3,618)	42%
Loss for the period £'000		(2,771)	(5,416)	49%
Financial position
Closing inventory £'000		1,191	800	49%
Inventory days		47	31	52%
Closing cash £'000		5,314	6,520	(18%)
* Adjusted EBITDA is defined as earnings before interest, taxation, depreciation and amortisation, IPO costs, fundraising costs and share based payments.

Revenue and marketing spend

The decline in new customer revenue is due to the reduction in marketing expenses. The cost of acquiring new customers rose to £33 in H122 (H121: £30). Deploying c ost effective customer acquisition spend in the current changing market is a key challenge for the business. The Group developed a new partnership with the Daily Mail online which has opened a new channel that will continue in the second half of the year and will start to build its brand presence through new TV and PR campaigns in H222. Spend has ceased in acquisition channels that are no longer cost effective.

The decline in repeat customer revenue is due to the number of active customers in the period. Extensive reactivation campaigns ran during the period to introduce these former customers to the new products. The cost per repeat order rose to £6 (H121: £3) due to rise in printing and mailing costs and higher volumes of mailings to support reactivation campaigns. These activities will scale back in H222.

Product margin

Product margin was £5,194k, 54% (H121: £7,076k, 51%). The good increase in product margins was due to a greater proportion of repeat customer orders and modest price increases at the start of the period.

Gross profit

Gross profit was down year on year at £3,020k (H121: £4,165k). However, the gross margin percentage showed good increase from 30% in H121 to 32% in H122, due to the order mix.

General and administration costs

General and administration expenses were reduced by 3% period on period as the Company resized operations for the current revenue level and invested in new talent for future business growth.

EBITDA

The adjusted EBITDA loss before exceptional items was £2,110k (H121: £3,618k) for the period.

The EBITDA loss after exceptional items for the period was a loss of £2,543k (H121: £4,965k). Exceptional items consisted of fundraising costs in the period of £330k (H121: IPO costs of £1,064k) and share based payments of £103k (H121: £283k).

Inventory

Inventory at 30 June 2022 was £1,191k (FY21: £1,179k) representing 47 days of inventory (FY21: 30 days). The Group has been purposely increasing inventory days to manage cost price inflation in the supply chain.

Cash

Cash and cash equivalents at 30 June 2022 were £5,314k (FY21: £2,521k). The Group also has access to a £500k unused overdraft facility.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2022

		Unaudited	Unaudited	Audited
		six months	six months	Year ended
		ended 30 June	ended 30 June	31 December
		2022	2021	2021
	Note	£'000	£'000	£'000
Revenue		9,577	14,003	25,456
Cost of goods sold		(4,383)	(6,927)	(12,984)
Product margin		5,194	7,076	12,472
Fulfilment costs		(2,174)	(2,911)	(5,921)
Gross profit		3,020	4,165	6,551
Marketing expenses		(2,285)	(5,038)	(8,301)
G&A expenses (excluding depreciation & amortisation)		(2,948)	(3,028)	(6,113)
IPO & fundraising expenses		(330)	(1,064)	(1,064)
EBITDA		(2,543)	(4,965)	(8,927)
Add back exceptional items:
IPO and fundraising costs		330	1,064	1,064
Share based payments		103	283	753
Adjusted EBITDA		(2,110)	(3,618)	(7,110)
Depreciation & amortisation		(224)	(436)	(776)
Adjusted operating loss		(2,334)	(4,054)	(7.886)
Finance income		-	1	2
Finance costs		(4)	(16)	(31)
Adjusted loss before tax		(2,338)	(4,069)	(7,915)
Exceptional items		(433)	(1,347)	(1,817)
Loss before tax		(2,771)	(5,416)	(9,732)
Taxation		-	-	-
Loss and total comprehensive expense for the period		(2,771)	(5,416)	(9,732)
Basic loss per share (pence)	3	(4.9)	(12.9)	(23.8)
Diluted loss per share (pence)		(4.9)	(12.9)	(23.8)

All of the above income is attributable to the shareholders of the Company.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2022

		Unaudited	Unaudited	Audited
		As at 30	As at 30	As at 30
		June 2022	June 2021	December 2021
	Note	£'000	£'000	£'000
Assets
Non-current assets
Intangible assets		-	3	1
Property, plant and equipment		92	212	161
Right-of-use assets		70	460	210
Total non-current assets		162	675	372
Current assets
Inventories		1,191	800	1,179
Trade and other receivables		431	590	247
Cash and cash equivalents		5,314	6,520	2,521
Total current assets		6,939	7,910	3,947
Total assets		7,098	8,585	4,319
Current liabilities
Trade and other payables		2,506	3,164	2,989
Lease liabilities		71	392	213
Total current liabilities		2,577	3,556	3,202
Non-current liabilities
Lease liabilities		-	71	-
Total non-current liabilities		-	71	-
Total liabilities		2,577	3,627	3,202
Net assets		4,521	4,958	1,117
Equity
Share capital	5	726	422	422
Share premium		10,906	5,126	5,132
Share option reserve		334	380	283
Retained earnings		(7,446)	(970)	(4,720)
Total equity		4,521	4,958	1,117

CONSOLIATED STATEMENT OF CHANGES IN EQUITY

F or the six months ended 30 June 2022

	Share	Share	Share	Retained	Total
	capital	premium	option	loss
			reserves
	£'000	£'000	£'000	£'000	£ '000
Balance at 30 June 2021	422	5,126	380	(970)	4,958
Total comprehensive expense for the period				(4,317)	(4,317)
Issue of shares	-	6	-	-	6
Share based payments	-	-	470	-	470
Share options exercised	-	-	(536)	536	-
Share options lapsed			(31)	31	-
Balance at 31 December 2021	422	5,132	283	(4,720)	1,117
Total comprehensive expense for the period	-	-	-	(2,771)	(2,771)
Issue of shares	303	5,762	(6)	-	6,059
Share based payments	-	-	103	-	103
Share options exercised	1	12	-	-	13
Share options lapsed	-	-	(45)	45	-
Balance at 30 June 2022	726	10,906	335	(7,446)	4,521

CONSOLIDATED STATEMENT OF CASH FLOW

For the six months ended 30 June 2022

		Unaudited	Unaudited	Audited
		six months	six months	year
		ended 30	ended 30	ended 31
		June 2022	June 2021	December 2021
		£'000	£'000	£'000
Cash flows from operating activities
Loss before tax		(2,771)	(5,416)	(9,732)
Adjusted for:
Share based payment transactions		103	283	753
Finance income		-	(1)	(2)
Finance costs		4	16	31
Depreciation		223	430	771
Amortisation		1	6	5
(Increase)/decrease in inventories		(12)	684	305
(Increase)/decrease in trade and other receivables		(184)	(60)	283
(Decrease)/increase in trade and other payables		(483)	(517)	(696)
Cash generated from operations		(3,119)	(4,577)	(8,282)
Taxation paid		-	-	-
Net cash inflow from operating activities		(3,119)	(4,577)	(8,282)
Cash flows from investment activities
Purchase of property and equipment		(14)	(155)	(192)
Net cash outflow from investing activities		(14)	(155)	(192)
Cashflows from financing activities
Share issue proceeds		6,059	10,712	10,348
Proceeds from exercise of share options		13	-	370
Interest ( paid /( )/ received )		-	1	2
Payment of lease obligations		(146)	(375)	(639)
Net cash inflow/(outflow) from financing activities		5,926	10,338	10,081
Net increase/(decrease) in cash and cash equivalents		2,793	5,606	1,607
Cash and cash equivalents at beginning of period		2,521	914	914
Cash and cash equivalents at end of period		5,314	6,520	2,521

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)s. They are unaudited and do not include all of the information required for full annual financial statements and do not constitute statutory accounts within the meaning of Companies Act 2006.

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 31 December 2021.

The Group's Annual Report and Accounts for the period ended 31 December 2022 are expected to be prepared under UK IFRS.

The comparative financial information for the period ended 31 December 2021 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 31 December 2021 have been delivered to the Registrar of Companies.

The auditors' report on the accounts for 31 December 2021 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

The accounting policies applied in these interim financial results are the same as those set out in the Group's Annual Report and Financial Statements for the year ended 31 December 2021 which are published on the Parsley Box website, https://corporate.parsleybox.com/ . There are no new or amended standards effective in the period which has had a material impact on the interim consolidated financial information.

3  Loss per share

Basic loss per share is calculated by dividing the losses attributable to ordinary shareholders by the weighted average number of Ordinary Shares in issue during the period.

Diluted loss per share is capped at the basic loss per share as the impact of dilution cannot result in a reduction in the loss per share as the Group is loss making.

		Unaudited six months ended 30 June 2022	Unaudited six months ended 30 June 2021	Audited Year ended  31 December 2021
		£000	£000	£000
	Basic calculation
	Loss used in calculation of loss per share	(2,771)	(5,416)	(9,732)
		Number	Number	Number
	Weighted average number of shares in issue	56,495	42,048	40,935
	Basic and diluted loss per share (pence)	(4.9)	(12.9)	(23.8)

4  Dividends

No dividend is payable for six months ended 30 June 2022 (year ended 31 December 2021 : £nil and period ended 30 June 2021 : £nil).

5  Share capital

				Unaudited six months ended 30 June 2022	Unaudited six months ended 30 June 2021	Audited year ended 31 December 2021
Number of shares
Ordinary shares of 0.01p each				72,596,512	42,184,382	42,211,983
				£'000	£'000	£'000
Share capital
Ordinary shares of 0.01p each				726	422	422
In issue at the start of the financial year				422	342	342
Shares issued				303	61	61
Share options exercised				1	19	19
In issue at end of the period				726	422	422

 

END

 

 

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