CR OW D F U N DI N G INV E STO R GUID E
“He who feared he would not succeed sat still” Horace
Candy Kittens - Crowd Funding Pack
CANDY KITTENS, THE MODERN CONFECTIONERS Striving to make the finest sweet in the world.
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Candy Kittens - Crowd Funding Pack
Contents
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Candy Kittens - Crowd Funding Pack
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Letter from Jamie
The Story
The Collection
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10
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Premium Confectioners
Great Customers
The Management Team
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Why are we raising funds?
Financials
How to invest
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Candy Kittens - Crowd Funding Pack
FOR AS LONG AS I CAN REMEMBER, I’VE DREAMED OF BECOMING A REAL LIFE WILLY WONKA… 4
Candy Kittens - Crowd Funding Pack
A BIG THANK YOU For as long as I can remember, I’ve dreamed of becoming a real life Willy Wonka… I’ve always had a very sweet tooth and like most young boys loved eating sweets! However, as I grew up I found that the sweets didn’t grow up with me. I realised that my friends at University were eating the same sweets, in virtually the same packaging, that I’d eaten all my life. It took us a little while to develop the perfect product and we finally launched at Selfridges in February 2014. Roll on 18 months and we are now stocked at some of the UK’s largest retailers, including Ocado, Sainsbury’s Selfridges, Tesco, Topshop and Waitrose. I’d like to say a big thank you to everyone that has helped us so far; we’ve been on an incredible adventure and couldn’t have done it without your support. We really couldn’t have asked for a better start and I’m super excited about what the future holds. I hope you will join us!
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Candy Kittens - Crowd Funding Pack
THE STORY SO FAR “You don’t stop eating sweets when you get old; you get old when you stop eating sweets”
The idea behind Candy Kittens was sparked when our founder, Jamie, felt there was an opportunity for a sweet that challenged the somewhat dated traditions of the confectionery market. Jamie met Ed in 2012 and they both set out to create an innovative product that really focused on quality. Using the best possible natural ingredients, and authentic flavours in beautiful packaging, the idea came to life. The brand was first launched on social media in May 2012. In fact, we managed to drum up thirty thousand followers on Twitter before we’d manufactured a single product. Through Jamie’s involvement in the BAFTA awardwinning Made in Chelsea, we were quickly able to establish a strong following for our brand across the UK. To begin with, Candy Kittens sold a broad mix of products within both confectionery and branded merchandise. This supported the development of the range you see today. With no permanent outlets, online sales historically accounted for our most consistent volume of sales. In addition, we operated, and still operate, a successful programme of pop-up shops across the UK that provide an excellent marketing
opportunity as well as a second, lucrative, revenue stream. To date we have “popped up” in more than 20 cities across the UK. After 18 months of developing and perfecting the product, the first range of Gourmet Candy was launched nationwide at Selfridges in February 2014. Following the launch, Candy Kittens quickly became, and has remained, Selfridges’ top selling confectionery brand.
THERE WERE NEARLY 2 BILLION PACKS OF SWEETS SOLD IN THE UK LAST YEAR (The Grocer 2015) As the business has continued to expand, more focus has been given to wholesale, working with an ever-increasing list of retailers to make our products available to a growing audience across the UK. We already have nearly 100K followers on Twitter, 50K on Instagram and 30K fans on Facebook. This online community plays a vital part in our business. Not many brands are fortunate to have such instant access to their audience and our followers really are engaged! 6
Following the successful launch at Selfridges we went on to launch with some of the UK’s biggest retailers, including Topshop, Waitrose, and Ocado. We’re even selling them at Dylan’s Candy Bar in New York, LA and Miami! Along the way we’ve had some very flattering press coverage and our social media has continued to grow alongside our list of retailers. More recently, we’ve added Booths, Sainsbury’s, and Tesco to the list, making Candy Kittens available at almost 1,750 stores across the UK. Consumer and trade interest in Candy Kittens is gathering pace and shows no sign of slowing. In the last four months we’ve launched our second range of sweets that allows us to offer our products to a wider range of customers. Behind the scenes we’re also working hard to develop a vegetarian sweet that will further widen our appeal. There were nearly 2 billion packs of sweets sold in the UK last year. If we can successfully gain 0.13% of that number we will double our revenue in the next 12 months. The future for Candy Kittens appears extremely exciting and we are looking forward to the challenges ahead.
Candy Kittens - Crowd Funding Pack
Candy Kittens - Crowd Funding Pack
THE COLLECTION “Made using natural ingredients, we provide a product that is unrivaled in taste and presented in packaging to match”
SOUR WATERMELON
LEMON SHERBET
SOUR BLUEBERRY
We’ve given watermelon a whole new meaning with a sour twist.
A classic flavour brought up to date in spectacular fashion.
Blueberries aren’t just for muffins you know.
ETON MESS
SOUR GRAPE
FRESH RASPBERRY
We couldn’t resist putting a modern spin on an old favourite.
We can guarantee that the little gems are completely seedless.
No bitter surprises here, just pure zingy raspberry.
APPLE & ELDERFLOWER
WILD STRAWBERRY
PEACHES & CREAM
A British flavour that is peaceful in theory but punchy in taste.
Strawberry like you’ve never seen it before.
This sweet will ensure your day gets a whole lot peachier.
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Candy Kittens - Crowd Funding Pack
PREMIUM CONFECTIONERS From the very beginning we have concentrated on quality; at the same time taking great care not to sacrifice flavour. After months of experimenting, we managed to successfully develop a range of flavours that not only tasted delicious, but also possessed the qualities of texture, detail, and chewiness that we wanted, which all combine to
make Candy Kittens so unique. Having made our sweets gluten free and with natural ingredients, we needed to replicate this image with packaging to match. In order to do so, we developed a bag that would cut through the noise in the confectionery market. Too often we see confectioners bombard their packaging with 9
cartoons and child-like imagery. For us, this wasn’t an option. We envisaged a bag with connotations of premium quality and a sense of exclusivity; something that would stand out from competition in the confectionery aisle. Three years later and our customers continue to tell us how much they love our designs.
Candy Kittens - Crowd Funding Pack
WE BELIEVE IN WORKING WITH GREAT CUSTOMERS Since the launch of our product in Selfridges, the number of our stockists has grown exponentially. We are now stocked in over 1,700 stores. From the very beginning we were deliberately selective in deciding where our sweets would be available. To maintain the essence of exclusivity that surrounds the brand, we have given a lot of thought to selecting
our distributors. It is essential that as we grow we view our stockists as partners and as key ambassadors of our brand. We are now stocked in three of the major UK retailers; Waitrose, Sainsbury’s and Tesco. Our products can also be found in Topshop, Booths and a number of independent and fashion outlets.
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Whilst we are excited and proud to be stocked in such an impressive range of distributors, it remains imperative that we communicate our presence in these channels to our potential customers. Now, we must improve our product availability. Whilst our presence in key stockists across the UK is a wonderful start, there is still a long way to go.
Candy Kittens - Crowd Funding Pack
1,932,000 FOLLOWERS across our social media channels
789,000 PACKETS sold to an ever growing audience
1,743 STORES stock our sweets across the UK
9 FLAVOURS of delicious sweets
18 MONTHS of product development
7 PEOPLE in our wonderful team
1 IDEA the finest sweet in the world!
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WE’RE A YOUNG TEAM STRIVING TO MAKE THE FINEST SWEET IN THE WORLD.
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YOUR MANAGEMENT TEAM “Because a thing seems difficult for you, do not think it is impossible for anyone to accomplish” (Marcus Aurelius)
JAMIE LAING
EDWARD WILLIAMS
CHARLOTTE BRASK
Founder
Managing Director & Head of Sales
Supply Chain Manager
Jamie’s media profile continues to provide an excellent platform to promote Candy Kittens. His boundless enthusiasm and wide appeal and make him the perfect face for the brand.
Coming from a design background Ed was initially responsible for creating the brand identity. He now manages the business and is completely dedicated to make Candy Kittens a household name.
With an MSc in Supply Chain and experience of working at a large high street chain, her knowledge and real attention to detail has transformed the way we manage our supply chain.
JONATHAN BAINES
WILLIAM ALLINGHAM
Jonathan brings 30 years of international business experience to Candy Kittens, introducing a level of structure and professionalism that is rarely seen at this start-up level.
William has 30 years of experience managing the finances of rapidly growing PR and media based companies. His expertise ensures that we are always on top of the numbers.
Chairman
Financial Director
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Candy Kittens - Crowd Funding Pack
WHY ARE WE RAISING FUNDS? “Financial rewards follow accomplishment; they don’t precede it” (Harry F Banks)
Marketing Campaign We have achieved , even exceeded, every target we have set ourselves since inception. We have a delicious sweet and a proven ability to deliver it anywhere in the world, in the right quantity, and at the right time. Now we need to shout about our existence. We have chosen the awardwinning agency Hat-Trick Designs to work with us over the next two years and beyond. By far the largest part of the funds we raise will be directed towards this campaign.
Brand Awareness With the combination of our own social media reach and the skills of Hat-Trick we will launch a series of brand awareness campaigns during 2016. We want to raise the profile of Candy Kittens so that it gains the recognition of the best consumer brands that have launched in recent years: such as Innocent; Popchips; Tea Pigs; and Propercorn to name but just four. We can, and we will, do this with your help.
Professional Sales Strategy Until now, Ed has led our sales effort, ably supported by the team. Now we need to move on. Our retail relationships need constant professional attention; new leads need to be developed; and new outlets identified. We have to be alert to what our customers really want. We are about to appoint a senior and experienced Commercial Director who, supported by our existing sales team, will take full responsibility for all Sales. The funds raised will support this next step.
Finance We are not expecting rewards overnight. We believe that a sensible target for next year is to double revenue again- as we have more than done this year. There is no requirement to grow costs; the infrastructure to grow is in place and it works. We want to create a business that delivers real value to you over the next three years. 14
Candy Kittens - Crowd Funding Pack
HOW WE’RE GOING TO SPEND THE MONEY... We have spent the last 3 years, developing an iconic, high quality sweet. We have built an enthusiastic team, developed a first class supply chain and put in place an enviable distribution network. We are stocked by Waitrose, Sainsbury’s, Tesco, Selfridges, Topshop, Ocado and numerous other high profile independent stores. In total, we can now be bought in almost 1,750 major stores in the UK. We now need to drive the consumer to these outlets, which will, in turn, increase our penetration into the supermarket network and accelerate sales. The three majors have some 9,000 stores between them – so there is plenty of growth potential. To do this exercise properly, we have committed to engage the best professional help that 15
we can find and put in place a major marketing programme that we will run during the first half of 2016 and beyond. After a long series of beauty- parades we have chosen Hat-Trick Designs to be our advisers in this exercise and we feel certain that their experience of similar campaigns will deliver what we need. Hat-Trick are the Design Week number one award winning agency who have created campaigns for Williams FI, The Natural History Museum, and the Wimbledon Championships among many many others. They will be our close partner and guide in this initiative. Almost all the funds that we raise will be directed towards this awareness campaign and it is our firm view that this will help us more than double sales in the next twelve months.
Candy Kittens - Crowd Funding Pack
THE FINANCIALS Financial assumptions
Schedules Attached - P&L Account for the 7 months to 31 October 2015 - Balance Sheet at 31 October 2015 - 5 year P&L to 31 March 2018 Executive Summary We have invested over £600,000 over the past 3 years to bring our iconic sweet to market.The product is now stocked in over 1,700 stores by the 3 major UK supermarkets, Waitrose, Sainsbury’s and, as of early November, Tesco. In addition you will find us in Topshop, Selfridges, Booths and numerous other independent outlets. October marks a significant landmark in that we have recorded a trading profit in the month of October and are projecting a modest profit for the remaining 5 months of our financial year to 31 March 2016. Whilst getting our sweets into these major retailers is a considerable achievement, we now need to tell our potential customers that we are there.
A major marketing campaign with Hat-Trick is planned for early 2016 for which we are seeking funding of up to £400,000. With this in place we are forecasting that our sales in the year to 2017 will be close to £2.5m on which we anticipate a net profit of £410k P&L Account to 31 October 2015 Our financial year-end is 31 March – these accounts cover 7 months. Revenue in the period comes from the following sources REVENUE 7 MONTHS TO 31 OCT Waitrose
117,234
Sainsbury’s
133,280
Tesco
22,378
Topshop
42,468
Other Sweets
54,862
Retro Fees
(35,890)
TOTAL SWEETS
334,331
Merchandise
1,039
TOTAL REVENUE
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335,370
We have been in Waitrose since Aug 2014, Sainsbury’s since June 2015 and we have just started in Tesco in November. For the remainder of the year sales with all 3 supermarkets on board will be £471k, making £807k for the year. This is a near 300% increase on 2015. We forecast a small profit in the final 5 months, which will reduce the overall annual loss to £70k. Production costs are strictly monitored and we work very closely with our suppliers to drive down margins. Our goal this year is to get the gross margin to 43%, which we will achieve by a combination of increased volumes and negotiated reductions with our suppliers. Overheads are kept to a minimum. Salaries are the largest item and we run a very lean machine. No one is paid a salary of more than £40k and we have a steady stream of keen undergraduates who spend a few weeks with us, particularly helping with marketing through social media. They are attracted to the Candy Kittens brand.
Candy Kittens - Crowd Funding Pack
Balance Sheet at 31 October 2015 Obviously 3 years of trading losses has required funding and we are very fortunate in having a loyal team of supporters who have provided a combination of loan and equity funding to allow us to build the business to where it is today. We currently have equity funding of £450k and loans of £305k. These loans have been provided by shareholders, their families, and employees. All the loans are unsecured with flexible repayment dates. Of the loans, £230k is not due for repayment within the next 24 months.
5 year P&L to 31 March 2018 As stated earlier, losses in the current year will reduce to £70k – a very considerable reduction on 2014 and 2015. In the year to March 2017, we plan to invest c£350k on marketing the product with the aim of increasing the revenue to £2.5m and delivering a net profit of £400k. The growth will come from increased penetration in the existing supermarkets. For example we are in 1,700 stores currently but the total number of stores owned by these supermarkets is 9,000, which provides plenty of scope for growth. We will drive sales into
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these outlets by creating broad market awareness of the product. We will also extend our coverage into the more niche retailers who, whilst not able to deliver the volumes achieved in the supermarkets, do give a much better yield. We are recruiting a senior commercial manager with relevant experience to drive this growth. We have identified several excellent candidates and expect to appoint shortly. Conclusion Our plans are ambitious but we believe that we have now established a good base from which to further grow the business and achieve our targets.
Candy Kittens - Crowd Funding Pack
CANDY KITTENS LTD (t/a Longaim) Profit & Loss Account
31-Oct-15
Actual Majors Other Sweets Merchandise Retro
Oct-15
Budget
Year to Date Actual Budget
33,040 6,000 0
315,359 54,862 1,039 (35,890)
266,099 51,499 1,026 (31,725)
TOTAL REVENUE
59,770 5,062 0 (1,230) 0 63,603
39,040
335,370
286,899
Costs of Production
25,328
21,200
205,265
183,566
TOTAL DIRECT COSTS
25,328
21,200
205,265
183,566
GROSS PROFIT
38,274 60%
17,840 46%
130,105 39%
103,333 36%
Advertising & Marketing Audit & Accountancy fees Bank Fees Depreciation Events/Pop Up Factor/Transaction Fees Insurance for Business IT Costs Legal Expenses Loan Interest Paid Motor Vehicle Expenses Postage, Freight & Courier Printing & Stationery Recruitment Costs Rent and Rates Salaries and consulting Staff Training Storage Costs Sundry Expenses Telephone & Internet Travel and Subsistence
3,505 20 26 378 2,649 1,959 245 627 0 0 62 141 69 0 2,917 20,486 120 350 574 131 1,457
2,000 400 0 700 0 750 250 1,000 250 500 250 400 100 0 3,000 18,070 0 500 800 300 1,000
23,354 2,657 471 4,831 14,452 5,303 1,824 8,903 55 4,391 5,705 1,958 954 2,667 20,417 111,073 120 2,570 5,516 1,482 8,267
13,902 1,655
TOTAL OVERHEADS
35,716
30,270
226,968
205,329
NET PROFIT/(LOSS)
2,559
(12,430)
(96,863)
(101,996)
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4,911 4,181 3,147 1,691 9,262 500 4,928 5,964 2,625 1,080 2,667 20,667 112,358 2,520 3,910 1,805 7,556
Candy Kittens - Crowd Funding Pack
CANDY KITTENS LTD (t/a Longaim) Balance Sheet 31-Oct-15 £
FIXED ASSETS Tangibles
27,195
TOTAL FIXED ASSETS
27,195
CURRENT ASSETS Stocks Debtors Cash
97,907 95,322 60,666
TOTAL CURRENT ASSETS
253,895
CURRENT LIABILITIES Trade Creditors Other Creditors
118,344 6,523
TOTAL CURRENT LIABILITIES
124,867
NET CURRENT ASSETS
129,029
LONG TERM LOANS
(304,703)
NET ASSETS/(LIABILITIES)
(148,479)
Share Capital Share Premium P&L b/f P&L for the year
12,310 431,190 (495,116) (96,863)
SHAREHOLDER FUNDS
(148,479)
CANDY KITTENS LTD (t/a Longaim) Summary P&L Account Year to 31 March
2014 ACT
2015 ACT
2016 ACT/BUD
2017 BUD
2018 BUD
REVENUE
254,209
350,650
807,107
2,447,815
3,570,597
PRODUCTION
191,943
222,382
460,509
1,234,985
1,801,457
62,266
128,268
346,598
1,212,830
1,769,140
GROSS PROFIT GP % SALARIES MARKETING
24%
37%
43%
50%
50%
98,199
117,550
224,922
284,904
350,000
50,448
34,138
33,354
360,000
400,000
ESTABLISHMENT COSTS
104,864
212,458
158,874
157,800
222,740
TOTAL OVERHEADS
253,511
364,146
417,150
802,704
972,740
NET PROFIT/(LOSS)
(191,245)
(235,878)
(70,551)
410,126
796,400
17%
22%
NP %
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Candy Kittens - Crowd Funding Pack
HOW TO INVEST “If you dare nothing, then when the day is over, nothing is all you will have gained” (Neil Gaiman)
Now that you have decided to make an investment, follow this step-by-step guide to buying your shares! 1. At the top of the Seedrs homepage click ‘How to Invest’. 2. You will be directed to a page titled ‘Getting Started’. On this page click ‘Start Investing’. 3. You will then need to register by entering your details. You will then be sent a confirmation email.
4. The email will contain a link to confirm your registration at Seedrs. 5. After clicking ‘Confirm’ in the email, you will be redirected to the Seedrs website on a page titled ‘Become an Investor’. You will then either need to self-certify or complete a short quiz. 6. Once you have become an Authorised Investor, click ‘Invest’ on the main toolbar. This will direct to you to a page of ‘Investment Opportunities’.
7. Click on Candy Kittens, which will direct you to our company campaign profile. Click on ‘Invest’. 8. Enter the amount you would like to invest. 9. Read the Investment Agreement, and confirm that you have read and agree with this. 10. Enter your payment details. 11. Confirm your Investment and wait for your perks!
INVESTOR PERKS For investments of, or greater than, each of the amounts below,
£24
£240
£2,400
you will receive: Signed photo from Jamie
Share certificate
Plus...
Branded Jar of CK sweets
Plus... 50% off CK sweets for life* Invitation to annual Founders Lunch *50% reduction applies to all purchases via www.candykittens.co.uk
Any Questions? Please contact Stephanie Ross | stephanie@candykittens.co.uk | 0207 183 9379 20
Argon House | Argon Mews | London | SW6 1BJ www.candykittens.co.uk @candykittens_UK