7 September 2021

Parsley Box Group plc ("Parsley Box" the "Company")

Interim Results

26% YoY revenue growth, positive momentum on Average Order Value and product range

Parsley Box Group plc (AIM: MEAL), the rapidly growing direct to consumer provider of ready meals focused on the Baby Boomer + demographic, today issues its results for the six months ending 30 June 2020 (the "Period").

H1 Financial Highlights¹

H1 Business Highlights

Parsley Box has grown rapidly in a very short period of time (the business is just over 4 years old). The Board believes that this has been achieved by relentless customer focus on the Baby Boomer+ demographic, one of the largest overlooked age groups globally. Parsley Box's success is driven by its direct to consumer model combined with innovative product ranges and a constant drive to understand and interact with its customers.

·    Continued rapid revenue growth: 26% increase year on year

·    77% increase in active customers

·    38% growth in repeat orders and 8% increase in Average Order Value (AOV)

·    Expansion of range has driven increase in AOV

·    Successful IPO in March strengthening the capitalisation of the company

·    £1.2 million TV advertising campaign to build brand awareness increased both spontaneous and prompted awareness levels fivefold

·    Net cash at period end of £6.52 million

Post Period End

·   Extended innovation team headed up by food development expert Cassandra Suddes to drive 21/22 product  innovation strategy

·    Launch of chilled range of meals (initially eight 350g meals) increasing the total addressable market and offering a premium tier retailing at between £3.99 - £4.49

·  'Parsley Origins' ambient product improvement programme launching on the 7th September with greater emphasis on provenance and a shorter supply chain underscoring our environmental credentials important to our consumer base

·    Holly McComb confirmed as CFO from 13th September 2021

Current Trading and Outlook

·    Higher price point and new product range expected to deliver further growth in H2 2021

·    Adjustment to the blend in marketing channels is delivering positive momentum on both new AOV and customer numbers in H2 2021 to date

·    Further investment in new customer recruitment expected to deliver improved customer acquisition costs (CAC)

·    The very recently launched new range of chilled meals has made an encouraging start with strong initial demand from existing customers adding chilled meals to their basket

Kevin Dorren, CEO of Parsley Box, commented:

"This has been a highly rewarding period for the company, Parsley Box has achieved a great deal since our IPO in March 2021. The business is well capitalised and is using the opportunity to invest in new customers, product innovation and broadening our team as outlined in the run up to IPO.

"We have been successful in strengthening our team in the critical areas of innovation and IT positioning us well to deliver our goals in 2021 and beyond.

"The initial results of the investment in product innovation have been encouraging with  the trial of chilled ready meals delivering an increase in customer basket size and lower new customer recruitment costs compared to our purely ambient offering.

"Delivering our initial product innovation plan has been well received by our customer base.

"The focus remains to deliver long term growth within the UK to achieve a sustainable, profitable business and a recognised brand for the Baby Boomer+ demographic."

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.}

^{2EBITDA is defined as earnings before interest, taxation, depreciation, amortisation, impairment, share-based payment charges connected with employee remuneration and fundraising-related expenditure (2021)}

Enquiries:

Notes to editors:

Parsley Box delivers ready meals direct to the underserved Baby Boomer+ consumer, broadly defined as those aged 60 and over. Its mission is to champion and empower the over 60s. The core product range comprises over 60 single portion sized meals spanning various cuisines.

The Baby Boomer+ demographic is growing rapidly; it represented c.24 per cent. of the UK population (16.2 million people) in 2019 and is the only age demographic that is forecast to grow materially in the next 10 years (source: Government Office for Science, Future of an Ageing Population). Parsley Box was formed specifically to target this highly attractive fast-growing market.

Parsley Box was founded in March 2017 and has grown to offer a 'one stop shop' for its target market.

Chief Executive Review

I would like to welcome all new shareholders to Parsley Box plc following our admission to AIM in March 2021. This has been a rewarding period for the Company and we have achieved a great deal since our IPO. The business is well capitalised and is using the opportunity to invest in new customers, product innovation and broadening our team, in line with the objectives outlined in our Admissions Document.

We remain focused on delivering long term growth within the UK, to achieve a sustainable, profitable business and to be a renowned brand dedicated to the Baby Boomer+ consumer, the fastest growing demographic currently representing 24% of the population and expected to reach 27% by 2029.

During the first half, sales continued to grow rapidly with revenue, up 26% to £14 million, driven by a substantial increase in Active Customers to 177,174 from 100,846 a rise of 75.7%. 

Active Customers at the period end were at record levels as a result of the substantial number of new customers acquired in H1 2021, albeit new customer additions returned to a more normalised level compared to the unusually high level of new customers in H1 2020. 

Repeat customer orders, the key driver for long term profitable growth, showed a significant increase on the comparable period in H1 2020, demonstrating the benefit of the acceleration of customer growth seen last year, which also continues to flow through into higher order values. Repeat orders grew 38.30% to 256,089 and the repeat AOV improved from £40.24 to £43.30. Revenue from repeat orders, which is key to driving long term profitability, consequently grew by 48%.

Product strategy

Driving innovation is the key to our long term growth and is expected  to deliver higher repeat order rates, increase AOV and extend the total addressable market by appealing to broader tastes. The total ready meal market in the UK is worth £5.9 billion (Euromonitor: Nov 2020) and by extending our range and investing in continuous improvements to our existing products we aim to take a greater share of the market.

We have extended our innovation team by appointing food development expert Cassandra Suddes to lead our 2021/22 product innovation strategy and much progress has already been made in this area.

Our customer is at the heart of our strategy and our purpose is to surprise and delight this underserved Baby Boomer+ market. So often overlooked by other food retailers focused on the family basket or the younger consumer living on their own, we want to ensure that every product or range we develop keeps their needs and aspirations front of mind.

Premium longer-life chilled ready meal range

In August we launched a small trial range of eight chilled ready meals, branded Chef's Table by Parsley Box, featuring some of the Nation's favourite dishes including beef lasagne and luxury fish pie. This premium-tier product range has a 21-day shelf life and a higher price point than the ambient range, with meals priced at £3.99 to £4.49 for 350g.

Initial sales data for the trial have been encouraging, with existing customers showing a positive response to the introduction. Additionally, the cost per acquisition of new customers via marketing channels has been lower than for our existing ambient range. It is still early days in the trial as we look to see reorder patterns emerge over the next quarter for a clearer picture of uptake and repeat demand. We will update investors with our progress in this regard at the appropriate time.

Food provenance - Parsley Origins

Our customers want to know where their food is made, how it is produced and where the key ingredients are from. Although provenance has always been important, consumer interest in discovering the stories behind the food they eat is growing and increasingly influences purchasing decisions, building brand trust and loyalty.

To meet this need we have launched Parsley Origins to share these food stories, showcasing the taste and quality of our products, as well as their uniqueness and sustainability credentials.

We are very proud that all our products are produced in the UK which is highlighted on the front of the new packaging.

Food credentials

We continually seek to improve our food credentials and drive our ethical agenda. Product lines to be relaunched this year will only use free range eggs, UTZ certified chocolate and sustainably sourced fish. We are working towards  also eradicating the use of palm oil in our products.

Packaging redesign

Our packaging has been refreshed to clearly communicate our food credentials. The design elevates our products and defines our sub-ranges to make it even easier for customers to shop online and find what they are looking for in the catalogues.

Parsley People

A key strength of Parsley Box is our people and the direct relationship we have with our consumers. The direct-to-consumer model allows us to gather detailed insights from customers, building meaningful relationships and allowing for greater levels of innovation perfectly aligned with their demands.

The food development team is working closely with the call centre team to continue to build a foodie culture across the business to further engage our customers and help strengthen the emotional connection to our brand.

New CFO appointment

Investing in the right people is essential to our continued success and after a thorough and rigorous process we are pleased to appoint Holly McComb as our new Chief Financial Officer who will join the company and Board on 13th September 2021, subject to the completion of the required AIM regulatory due diligence procedures. She will succeed John Swan who is retiring but will remain with the business for a period of time to ensure a seamless handover.  The Board wishes to place on record its gratitude for John's contribution to the development of the Company.

John has been an integral and invaluable part of the team and the development of the Company through to the IPO.  On behalf of everyone at Parsley Box we thank and wish him well for the future.

Holly is ACA trained and an ICAEW fellow. She was most recently, since 2016, CFO of privately backed TV Squared Ltd, a SAAS platform providing analytics for the TV advertising market. For the preceding ten years she was Chief Financial Officer of IndigoVision Group, an AIM listed business which was sold to Motorola in 2020. She is a member of the Scottish Finance Director Forum which she chaired between May 2017 and May 2018.

Holly brings valuable experience and learnings from her previous roles in rapidly expanding businesses and having been CFO of a successful PLC. We warmly welcome her to the team and look forward to working together in building Parsley Box into a household name.

Holly Juliet McComb (nee Peryer) (age 46) held a directorship in the past five years preceding her appointment to Parsley Box, at TV Squared Ltd. There are no additional disclosures to be made in accordance with Schedule Two paragraph (g) of the AIM Rules.

Current Trading and Outlook

Our business continues to see rapid revenue growth and adjustments to the blend of marketing channels are delivering positive momentum on new customer recruitment. Media response rates have also improved in a number of channels giving us confidence of positive growth in both new AOV and customer numbers in H2 2021.

The launch of our chilled range has given us the opportunity to offer a new range to a broader consumer in our media titles delivering a lower cost of acquisition and higher response rates at a significantly higher AOV for new business. We will continue to monitor this in H2 2021 but expect that our recruitment offer may skew towards chilled in H2 2021.

We will continue to innovate, extend our product range,  grow awareness and build sales to take full advantage of our direct to consumer business model and the fundamental channel shift that is taking place.

We have largely maintained our input prices and margins over the last four years, but like the rest of the food industry we are seeing input prices rise. We expect to negate any input price rises by retail price increases on selected lines in H2 2021.

In the short term, supply chain challenges being seen across the food, manufacturing and distribution industries are likely to lead to higher input prices across all sectors. Looking forward we remain excited for the future.

Financial Review

Key performance indicators

The financial results for the period reflect the continued growth in revenue coupled with improved Gross and Contribution margins. In line with the company's aim to drive growth and strengthen the brand, funds raised in the IPO have been deployed in marketing to further increase the customer base by new customer acquisition.  This investment is reflected in a 26% growth in revenue and a 77% increase in Active Customers (customers who have purchased in the last 13 months - 2 or more orders) to 178,274.  Customer loyalty remains strong, with a sales retention rate (defined as repeat customer contribution by revenue, by Customer Cohort) of 67%, in line with that reported for H2 2020 (68%).

The company has also continued to improve Average Order Values from purchases by existing customers by expanding the product range whilst managing the New Order Value for introductory new customer acquisition. The combination of increased levels of active customers combined with higher order values has resulted in a gross margin improvement of 1% and a 3% contribution margin improvement.

Marketing spend was accelerated in the period with a £1.2m investment in TV advertising to build brand awareness - this campaign has proved successful increasing both spontaneous and prompted awareness levels fivefold.

Customer acquisition costs (CAC) have risen over the first six months of 2021, with the investment in TV advertising to drive brand awareness increasing CAC from its previous range of £15-£20 by approx. £11 to an average of £31. However, the easing of TV spend, coupled with the introduction of the chilled range, is resulting in movement back down in H2 to date, which is expected to continue.

G&A expenses have risen due to increased staff levels in the call centre as a consequence of higher customer traffic and in line with our focus on supporting and serving our customer base. Inbound call levels rose by some 18% and outbound calls by 89%. Despite these increased call levels, we achieved a 92% drop in call abandonment although this figure is inflated by the Covid-19 impact in H1 2020. Key hires have also been made in Marketing, Finance, IT and NPD as the company builds out organisational infrastructure in line with the plan.

Unlike many other companies, Parsley Box maintained its call centre operations throughout the Covid lockdown to be able to both meet the requirements of our customer demographic and maintain security in respect of credit card transactions. Consequently, additional costs were incurred in terms of cleaning, Covid tests and infrastructure with the main expense being a doubling of our premises to both manage social distancing and ensure continuity of operations. The second lease ends in September 2021 and combined with an element of home working, operations can be supported from one location, thus decreasing our premises cost going forward by c£480k.

EBITDA before exceptional items was (£3,618k) for the six months to 2021 as a consequence of the continued planned investment in marketing, with EBITDA after Exceptional items of (£4,965k).

Exceptional items comprised IPO related costs of £1,064k and Share Based Payments of £283k.

Property Plant & Equipment in the balance sheet includes the IFRS 16 value of the double premises costs that will cease in September 2021. On an annualised basis this will save some £480k in cash terms.

In light of the impending introduction of the chilled and new and improved ambient range in, early H2, inventory levels have been managed down from £1.5m at December 2020 to £0.8m at H1 2021. This has had a consequent reduction in Trade Creditors as at 30 June.

Cash and cash equivalents at 30 June 2021 amounted to £6,520k - the company also has a £500k unused overdraft facility.

Unaudited statement of comprehensive income for the six months ended 30 June 2021

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

Unaudited statement of financial position as at 30 June 2021

Unaudited statement of changes in equity for the six months ended 30 June 2021

Unaudited cash flow statement for the six months ended 30 June 2021