MEAL.L Regulatory News (MEAL)

27 July 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF REGULATION (EU) NO 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 16 APRIL 2014 ON MARKET ABUSE (MARKET ABUSE REGULATION) AS RETAINED AS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED.

UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Parsley Box Group plc

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

Trading update and revised guidance for FY22

Parsley Box Group plc (AIM: MEAL), the direct to consumer provider of ready meals and other products focused on the 65+ demographic, today issues an update on trading for the first 6 months of 2022.

Highlights

- Revenue £9.6m (H1 2021: £14.0m)

o  New customer revenue £0.9m (H1 2021: £3.0m)

o  Repeat customer revenue £8.7m (H1 2021: £11.0m)

- Average order value ("AOV") increased 25% to £45 (H1 2021: £36)

- Gross margin % increased to 32% (H1 2021: 30%)

- Marketing spend as a % of revenue limited to 24% (H1 2021: 36%)

- Adjusted EBITDA loss reduced by 42% to £2.1m (H1 2021: £3.6m)

- Closing inventory £1.2m (Dec 2021 £1.2m)

- Closing cash £5.3m (Dec 2021: £2.5m)

As advised on 1 June 2022, the Group has continued product development at pace. The summer catalogue launched in July with the new gifting range of 40+ gifts for all year-round occasions, ten new slow cooked meals, four new hearty meals with a larger portion size, and more drinks, snacks and bakery items to increase AOVs.

The target to increase AOV by 25% has been achieved in the first half of the year, and order fulfilment process efficiencies have been delivered that more than offset cost inflation in logistics and the supply chain. Both of these improvements have delivered an improved gross margin of 32% (H1 2021: 30%).

Marketing spend and overheads have been purposefully managed, resulting in a 42% reduction in adjusted EBITDA loss to £2.1m (H1 2021: £3.6m).

The Group has a strong cash position of £5.3m (Dec 2021: £2.5m) and stock levels have been stable throughout H1 with >95% ongoing availability.

However, the cost of acquiring new customers has continued to increase, reaching £34 in H1 (H1 2021: £31) and the cost of a repeat order has risen to £6 (H1: £3). Deploying cost effective marketing spend continues to be a key challenge in the business and the marketing strategy continues to evolve, led by the Group's new Marketing Director. The Group has developed a new partnership with the Daily Mail online to acquire new customers through food hamper offers for occasions such as the Queen's Jubilee and Wimbledon which has opened a new customer acquisition channel that will continue in the second half of the year. A new TV campaign will also launch in September and run for the rest of the financial year, but the Group will reduce other marketing acquisition activities from Q4 should the high cost of acquisition continue.

The Group's new membership scheme will launch in August with the aim of providing a new marketing channel for repeat customers which over time can replace the high cost of customer mailings. The Group will also increase outbound call activity to target a reduction in the customer lapse rate.

The Group has also started investigating the potential for nascent B2B revenue channels in the public sector where food security concerns and the rising cost of living are well documented. The ambient product range is ideally suited for this sector as it can be stored without the need for a fridge or freezer and heated in the microwave to reduce energy bills.

Total order numbers in the first half were 212,000 (H1 2021: 385,000). As a result of the lower order numbers, the Group now expects full year revenue of £19m. The full year adjusted EBITDA is expected to remain broadly in line with expectations at a loss of £4.1m, due to careful management of marketing spend in the second half, together with the improved gross margin percentage.

The Group remains well funded and will run the business to focus on cash while seeking opportunities to adjust the ongoing marketing mix.

 Kevin Dorren, CEO of Parsley Box, commented:

"We have continued our product innovation at pace to increase the opportunities for customers to order from us, and remain focused on balancing investment in customer acquisition and maintaining cash reserves, whilst we navigate the challenging consumer environment. We recently brought down the price of a range of customer favourite meals to £2.95 to help alleviate the rising cost of living, and have frozen all prices until September. We remain well funded and continue to deliver quality, good value, and nutritious food."