TIDMSIS
RNS Number : 2651R
Science in Sport PLC
20 September 2017
The following amendment has been made to the Half-year Report
announcement released on 20 September 2017 at 7.00 a.m. under RNS
number 2156R.
In the previous version of the announcement, the consolidated
statement of comprehensive income incorrectly stated unaudited
Total Costs for the six months ended 30 June 2017 as GBP4,118k; the
correct figure of GBP6,006k is now shown.
All other details remain unchanged, and the full amended
announcement is shown below.
SCIENCE IN SPORT PLC
("SiS" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2017
Science in Sport plc (AIM: SIS), a leading sports nutrition
company that develops, manufactures and markets sports nutrition
products for professional athletes and sports enthusiasts, is
pleased to announce its unaudited results for the 6 months ended 30
June 2017.
Highlights
-- Revenues increased 28% to GBP8.27 million (H1 2016: GBP6.48
million) demonstrating continued strong growth, with the Company's
e-commerce platform delivering 87% growth across all markets. All
e-commerce channels now account for 51% of total revenues (H1 2016:
46%).
-- International performed strongly with growth of 55%, driven
by increased investment in the USA and Italy which are trading in
line with expectations, as is the Australian business.
International revenue accounts of 27% of total revenue (H1 2016:
22%).
-- Strategic investment in international market expansion and
e-commerce business resulted in underlying operating loss of
GBP1,141k* in line with expectations and growth strategy (H1 2016:
-GBP369k).
-- Core UK and EU business break even at the half year and on
track for profitable second half, given first half phasing of
marketing investment.
-- Increased input prices on raw materials and growth in protein
products have been absorbed through increased efficiencies, leaving
overall gross profit unchanged at 58.8%.
-- New product development and launches continued with GO
Caffeine Shots launched in H1, and further acceleration in H2 with
WHEY20 relaunched in July 2017 and GO Energy + Immune Gel and REGO
Rapid Recovery Plus launched in August 2017.
-- Increased investment in marketing was focused on driving
brand awareness in international markets and on growing our
e-commerce business customer database by 38% from the beginning of
the period.
-- Significant investment in systems and people in all markets to support growth strategy.
-- Cash and cash equivalents of GBP3.9 million (H1 2016: 6.7 million) reflecting investment in international markets, e-commerce platform and investment in systems in all markets to support the accelerated growth.
* excludes depreciation, amortisation, and share based
payments
Stephen Moon, Science in Sport's CEO, said: "I am pleased that
we have had such a strong start to the year in a difficult market
of rising input costs and uncertain consumer spending. We have
achieved yet another period of substantial growth, which was in
line with our expectations, and saw revenues increase 28% year on
year."
"We have invested heavily in international markets during the
first half and trading is in line with expectations in Australia,
Italy and the USA. We have also seen exceptionally strong growth
from our own e-commerce platform. Our strategy of focusing on
online and international growth is delivering results."
"Operating losses are in line with expectations and reflect our
investment in category leading growth in new markets and digital
channels. The core business is expected to be profitable at EBITDA
level for the full year and we will continue to invest in strategic
international markets. Costs remain tightly controlled and gross
margin is very robust in a difficult climate. We remain confident
in our growth-led strategy."
For further information:
Science in Sport PLC +44 (0) 20 7400 3700
Stephen Moon, CEO
Elizabeth Lake, Finance Director
Cenkos Securities - NOMAD
and Broker +44 (0) 20 7397 8900
Bobbie Hilliam
About Science in Sport plc
Science in Sport plc is a leading sports nutrition company that
develops, manufactures and markets sports nutrition products for
professional athletes and sports enthusiasts. SiS is a strong brand
in the elite athlete community - in the 2016 Rio Olympics, 34
medal-winning athletes or teams used SiS products (compared with 24
medals in 2012).
The SiS core product ranges include: SiS GO, comprising energy
powders, isotonic gels, energy bars and hydration tablets; and SiS
REGO, including protein-based recovery powders and bars; and SiS
Protein, products specifically designed to contribute to athletes'
lean muscle mass growth and maintenance. SiS products are sold in a
range of retail channels, including specialist sport retailers,
major grocers, high street retailers and e-commerce websites.
SiS is currently the official sports nutrition supplier to
professional cycling team Team SKY, British Cycling, Cycling
Australia, USA Cycling and British Triathlon. SiS is also the
official sports nutrition partner to Celtic FC and Aston Villa FC
and has supplies over 40 clubs including four national teams and
seven Premiership teams. In addition, Olympians Sir Chris Hoy MBE,
and Katarina Johnson-Thompson are Brand Ambassadors and Mark
Cavendish MBE is an Elite Sports Consultant to the brand.
SiS was founded in 1992 and is headquartered in Hatton Garden,
London. Its manufacturing facility is in Nelson, Lancashire.
SiS shares are traded on the AIM market of the London Stock
Exchange under the ticker symbol SIS.
For further information, please visit www.scienceinsport.com
BUSINESS REVIEW
Overview and Strategy
We are delighted to report a strong set of interim results, both
financially and operationally. The six months to 30 June 2017 saw a
period of strong revenue growth with half year sales up 28% to
GBP8.27 million from GBP6.48 million for the same period last year,
driven by international expansion and investing in our e-commerce
business. This continues to demonstrate the effectiveness of our
growth strategy, as we further extend our UK and international
presence as a leader in the global endurance sports nutrition
market.
As part of our growth strategy, the Company has invested heavily
in international markets, focusing on Australia, Italy and the USA.
Major emphasis has been on building brand awareness and
implementing our proven online customer acquisition and conversion
model, both of which we will continue to be key strategies in our
international expansion.
The core business has continued to outperform market growth and
the Company continues to invest in brand awareness to broaden
visibility and availability of our product across all retail and
online channels. The core business is expected to be profitable at
EBITDA level in 2017.
We delivered against our objective of maintaining gross margin,
against a backdrop of increases in some raw material costs and the
growth in the mix of protein products. We continue to tightly
control underlying overhead growth, in order to underpin investment
in the brand and to benefit from operational gearing.
Investment in our e-commerce platform and financial and
logistics systems is underway, for both the core market and to
facilitate effective logistics and high customer service levels in
strategic international markets.
The Board continues to believe that there are significant growth
opportunities for the Company over the next few years. To maximise
these opportunities the Company will continue to invest in
international markets, the e-commerce platform and infrastructure,
whilst growing profitability of the core UK and EU business.
Financial Summary
The 6 months to 30 June 2017 was a period of strong revenue
growth, with sales up 28% at GBP8.27 million (H1 2016: GBP6.48
million). International and e-commerce sales growth was
particularly strong, reflecting the continued investment in our
e-commerce platform and brand awareness.
Gross profit of 58.8% (H1 2016: 58.9%) is reflective of our
low-cost manufacturing facility in Nelson which remains a strategic
advantage. Investment has driven further efficiencies at the
facility which has enabled the business to absorb increases in raw
material costs and the growth of protein products within the
overall product mix.
The underlying operating loss was in line with management
expectations at GBP1.14 million (H1 2016: GBP0.37 million loss)
given accelerated investment in all markets in marketing, sales and
e-commerce of GBP4.67 million (H1 2016: GBP3.04 million). The core
UK and EU business broke even in the first half and with marketing
expenditure phased heavily to the first half, is on track to be
profitable at EBITDA level for the full year, in line with
management expectations.
Overheads excluding sales and marketing were GBP2.39 million (H1
2016: GBP1.61 million) for the six months. Share-based payments are
higher this period by GBP0.59 million, as H1 2016 had no LTIP
charge given no share schemes were in place. Management continue to
seek to limit underlying overheads to single-digit increases in the
future, currently achieving 13.8% excluding the share-based
payments charge. The increase over the targeted single-digit growth
rate was due to one-off costs related to a significant upgrade in
our world-class banned substance programme, and investment in
project management skills to ensure delivery of a range of major
commercial and operational strategic projects.
Cash and cash equivalents at the period end were GBP3.88 million
(H1 2016: GBP6.64 million). Cash outflow since the year end
represents continued operational investment to support the strongly
growing international and e-commerce businesses. In addition,
significant investment has continued in the e-commerce platform to
accelerate customer conversion, investment in systems to further
support international expansion with the integration of third party
logistics in the Italy and USA, as well as the introduction of SAP
to support finance and operations across the whole business.
Sales Channels
Our e-commerce platform continues to be a key focus in 2017 and
has achieved growth across all markets of 87% for the period (H1
2016: 73%). The Company has invested in the platform in all markets
to enhance the customer experience, including features such as
world-class knowledge content and effective checkout processes. We
launched our market leading Premier delivery subscription service
in March 2017 providing unlimited next day delivery for a single
annual fee. Third-party online grew at a more modest 13% in the
period, although Amazon performed very strongly (+56%).
Traditional retail channels have grown by 14% despite the tough
trading environment. High Street sales have recovered following a
challenging year in 2016 with Decathlon and Halfords leading the
progress and channel growth was 27%. The Heartland of independent
cycle and running shops also had a good first half to the year
compared with 2016, with distribution remaining robust and channel
growth of 12%, to cement our dominant position in this important
channel. Despite growing our distribution in multiple Grocers,
revenue growth was 6% and below expectation due to space pressure
from other lifestyle-oriented categories, although we remain
optimistic about the medium-term potential of the channel.
International sales across all channels grew 55%, and 27% of
total revenues came from existing and new overseas markets (H1
2016: 22%). Additional digital marketing spend has been channeled
into the key strategic international markets of Australia, Italy
and USA. In the USA we established a foothold via a focused test
market and this has enabled us to prove our e-commerce customer
acquisition and conversion model. We expect to accelerate our
investment in the USA next year, while maintaining a conservative
and risk-managed approach.
Italy has delivered strong growth through all channels, with our
own e-commerce platform being particularly pleasing. A third-party
managed distribution hub has been established to improve speed and
cost of delivery, giving us a market-leading position. Our
Australian business has also performed well and in line with
expectations. Across all international markets we are further
developing our relationship with Amazon, particularly in the USA.
International distributors contributed to our progress, with new
markets such as Russia and China beginning to underpin our growth
strategy.
Product Innovation
We have continued to invest in this strategically important area
and have an exciting pipeline of novel products. We expect
innovation revenue growth to be consistent with the contribution to
sales made in previous periods.
In the first half we launched our new GO Caffeine Shots which
are performing well and in line with expectation. An enhanced
WHEY20 was relaunched in July and has been very well received by
our customers. Ahead of the winter season we have launched a range
of GO Energy+ Immune gels with enhanced immunity properties. In
August we launched the premium recovery product REGO Rapid Recovery
Plus, which we developed in conjunction with Team Sky.
In addition, our world-class science team is working on a range
of technology and product innovations to underpin growth in the
medium and long term and to cement our position as the leading
endurance sport nutrition business.
In May 2017 patents were granted in respect of our novel WHEY20
protein product and we have a series of further patents in
process.
People
We have continued to strengthen the commercial teams during
2017, with the central e-commerce team seeing a number of new
appointments, and new in-market staff to support international
growth.
Investment has been made in training and skills across both
sites, with major focus and investment on project management
skills.
Outlook
While the trading environment in the UK remains difficult, we
are confident of delivering revenue growth in line with market
expectations for 2017. The core UK and EU business is expected be
profitable at EBITDA level for the year and overall group EBITDA
loss will be broadly in line with expectations, this loss
reflecting the planned strategic expansion into major new growth
markets.
The Board believes there continues to be significant growth
opportunity for the Company and we will continue to invest in
international markets and our e-commerce platform.
Stephen Moon Elizabeth Lake
Chief Executive Officer Chief Financial Officer
Consolidated statement of comprehensive income
Six months ended 30 June 2017
Unaudited Unaudited Audited
six months six months twelve
ended ended months
30 June 30 June ended
2017 2016 31
December
2016
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ------ ------------ ------------ ----------
Revenue 8,274 6,484 12,243
Cost of goods (3,408) (2,665) (4,865)
------------------------------------ ------ ------------ ------------ ----------
Gross profit 4,865 3,819 7,378
Total Costs (6,006) (4,188) (8,177)
Underlying operating profit/(loss) (1,141) (369) (799)
Depreciation and amortisation (210) (213) (419)
Share-based payment charges (851) (257) (1,572)
Exceptional Items - - -
------------------------------------ ------ ------------ ------------ ----------
Loss from operations (2,202) (839) (2,790)
Finance income - - 1
Finance costs 0 (2) (4)
------------------------------------ ------ ------------ ------------ ----------
Loss before taxation (2,202) (841) (2,793)
Taxation 4 167 160 149
(Loss)/profit and total
comprehensive expense for
the period (2,035) (681) (2,644)
------------------------------------ ------ ------------ ------------ ----------
Attributable to:
Owners of the parent (2,035) (681) (2,644)
(Loss)/profit and total
comprehensive expense for
the period (2,035) (681) (2,644)
------------------------------------ ------ ------------ ------------ ----------
Foreign currency translation
differences for foreign operations 21 (25) (50)
Total comprehensive income
for the year (2,014) (706) (2,694)
------------------------------------ ------ ------------ ------------ ----------
(Loss)/profit per share
to owners of the parent
Basic and diluted 5 (4.6)p (1.6p) (6.2p)
------------------------------------ ------ ------------ ------------ ----------
All amounts relate to continuing operations
Consolidated statement of financial position
30 June 2017
Unaudited Unaudited Audited
six months six months twelve
ended ended months
30 June 30 June ended
2017 2016 31
December
2016
GBP'000 GBP'000 GBP'000
----------------------------- ------------ ------------ ----------
Assets
Non-current assets
Intangible assets 1,212 585 884
Plant and equipment 847 645 798
Deferred tax 1,253 1,097 1086
Total non-current
assets 3,312 2,327 2,768
-------------------------------- ------------ ------------ ----------
Current assets
Inventories 2,338 2,289 2,238
Trade and other receivables 3,746 2,648 2,217
Cash and cash equivalents 3,883 6,637 6,130
Total current assets 9,967 11,574 10,585
-------------------------------- ------------ ------------ ----------
Total assets 13,279 13,901 13,353
-------------------------------- ------------ ------------ ----------
Liabilities
Current liabilities
Trade and other payables (3,662) (2,342) (2,534)
Borrowings - (15) -
------------ ----------
Total current liabilities (3,662) (2,357) (2,534)
-------------------------------- ------------ ------------ ----------
Net current assets 6,305 9,217 8,051
-------------------------------- ------------ ------------ ----------
Non-current liabilities
Borrowings - - -
----------------------------- ------------ ------------ ----------
Total non-current - - -
liabilities
----------------------------- ------------ ------------ ----------
Total liabilities (3,662) (2,357) (2,534)
-------------------------------- ------------ ------------ ----------
Total net assets 9,617 11,544 10,819
-------------------------------- ------------ ------------ ----------
Capital and reserves
attributable to
owners of the parent
company
Share capital 4,562 2,557 4,322
Share premium reserve 10,440 3,519 10,331
Employee benefit
trust (422) (64) (215)
Merger reserve (907) (907) (907)
Foreign exchange
reserve (29) (50)
Retained earnings (4,027) (1,145) (2,662)
Total Equity 9,617 11,544 10,819
-------------------------------- ------------ ------------ ----------
Consolidated statement of cash flows
Unaudited Unaudited Audited
six months six months twelve
ended 30 ended 30 months
June 2017 June 2016 ended
31 December
2016
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ------------ ---------------------------------------
Cash flows from operating
activities
(Loss)/profit after tax (2,035) (706) (2,644)
Adjustments for:
Amortisation 86 57 160
Depreciation 124 156 261
Net finance cost - 2 3
Taxation (167) (160) (149)
Share-based payment charges 851 257 1,572
Operating cash (outflow)/inflow
before changes in working
capital (1,141) (394) (797)
------------------------------------ ------------ ------------ ---------------------------------------
Changes in inventories (100) (818) (767)
Changes in trade and other
receivables (1,529) (1,399) (968)
Changes in trade and other
payables 1,109 832 921
Total cash outflow from operations (1,661) (1,779) (1,611)
------------------------------------ ------------ ------------ ---------------------------------------
Tax credits received - - -
Total cash outflow from operating
activities (1,661) (1,779) (1,611)
------------------------------------ ------------ ------------ ---------------------------------------
Cash flow from investing
activities
Purchase of property, plant
and equipment (225) (178) (402)
Purchase of intangible assets (370) (123) (558)
Interest received 0 0 1
Net cash outflow from investing
activities (595) (301) (959)
------------------------------------ ------------ ------------ ---------------------------------------
Cash flow from financing
activities
Decrease in borrowings - (34) (49)
Interest paid - (2) (4)
Net cash (outflow)/inflow
from financing activities - (36) (53)
------------------------------------ ------------ ------------ ---------------------------------------
Net (decrease)/increase in
cash and cash equivalents (2,256) (2,116) (2,623)
Opening cash and cash equivalents 6,130 8,753 8,753
Closing cash and cash equivalents 3,874 6,637 6,130
------------------------------------ ------------ ------------ ---------------------------------------
Consolidated statement of changes in equity
Share Share Preference Other Foreign Retained Total
Capital Premium Shares/EBT Reserve exchange earnings/(deficit) Equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- --------- ------------ --------- ---------- -------------------- --------
Balance at 31 December
2015 4,025 10,228 (61) (907) 0 (1,269) 12,016
Comprehensive Income
Loss for the period (681) (681)
Issue of shares
- consideration 22 103 125
related to sponsorship
Jan 16
Transactions with
owners
recorded directly
in equity
Issue of shares
to the EBT - 275 (275) 0
31 March 2016
Exercise of share
options 121 (121) 0
Recognition of
share-based 109 109
payments charge
FX on translation of
foreign subs (25) (25)
Balance at 30 June
2016 4,322 10,228 (215) (907) 0 (1,884) 11,544
------------------------ --------- --------- ------------ --------- ---------- -------------------- --------
Comprehensive Income
Loss for the period (1,963) (1,963)
Issue of shares
- consideration 103 (103) 0
related to sponsorship
Jan 16
Transactions with
owners
recorded directly
in equity
Issue of shares
to the EBT - 0
31 March 2016
Exercise of share
options (0) (0)
Recognition of
share-based 1,263 1,263
payments charge
FX on translation of
foreign subs (50) 25 (25)
Balance at 31 December
2016 4,322 10,331 (215) (907) (50) (2,662) 10,819
------------------------ --------- --------- ------------ --------- ---------- -------------------- --------
Comprehensive Income
Loss for the period (2,035) (2,035)
Issue of shares
- consideration 16 109 125
related to sponsorship
Jan 16
Transactions with
owners
recorded directly
in equity
Issue of shares
to the EBT - 224 (224) 0
23 March 2017
Exercise of share
options 17 (17) 0
Recognition of
share-based 687 687
payments charge
FX on translation of
foreign subs 21 21
Balance at 30 June
2017 4,562 10,440 (422) (907) (29) (4,027) 9,617
------------------------ --------- --------- ------------ --------- ---------- -------------------- --------
EBT Own shares held by the Employee Benefit Trust ('EBT') which
will be used to settle options held by employees under the Group's
Employee Share Option Plan.
Other reserve The other reserve arose as a result of applying
the principles of reverse acquisition accounting following the
demerger of SiS (Science in Sport) Limited from Provexis plc and
represents the difference between the capital reserves of Science
in Sport plc (the legal acquirer) and those of SiS (Science in
Sport) Limited (the legal acquire).
Notes to the interim financial information
For the six months ended 30 June 2017
1. Basis of preparation
This interim report has been prepared using the same accounting
policies as those applied in the annual financial statements for
the year ended 31 December 2016, and those expected to be adopted
in the financial statements for the year ending 31 December
2017.
The Directors believe that the operating loss before
depreciation, amortisation and impairment of intangibles,
share-based payments and exceptional items measure provides
additional useful information for shareholders on underlying trends
and performance. This measure is used for internal performance
analysis.
Underlying operating loss is not defined by IFRS and therefore
many not be directly comparable with other companies' adjusted
profit measures. It is not intended to be suitable substitute for,
or superior to IFRS measurements of profit. A reconciliation of
underlying operating profit to statutory operating profit is set
out on the face of the statement of comprehensive income.
The condensed financial information herein has been prepared
using accounting policies consistent with International Financial
Reporting Standards in the European Union (IFRS). While the
financial figures included in this interim report have been
prepared in accordance with IFRS applicable for interim periods,
this interim report does not contain sufficient information to
constitute an interim financial report as defined in IAS 34.
The Company has taken advantage of the exemption not to apply
IAS 34 'Interim Financial Reporting' since compliance is not
required by AIM listed companies.
This interim report does not constitute statutory accounts as
defined in section 434 of the Companies Act 2006 and has been
neither audited nor reviewed by the Company's auditors Moore
Stephens LLP, pursuant to guidance issued by the Auditing Practices
Board.
The interim report should be read in conjunction with the annual
financial statements period ended 31 December 2016.
The statutory Accounts for the last period ended 31 December
2016 were approved by the Board on 22 March 2017 and are filed at
Companies House. The report of the auditors on those accounts was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498 of the
Companies Act 2006.
The unaudited interim report was authorised by the Company's
Board of Directors on 19 September 2017
2. Segmental reporting
The Directors have determined that only one operating segment
exists under the terms of IFRS 8 Operating Segments, as the Group
is organised and operates as a single business unit.
3. Operating expenses
Unaudited Unaudited Audited twelve
six months six months months ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
GBP'000 GBP'000 GBP'000
--------------------- ------------ ------------ ---------------
Sales and marketing
costs 4,673 3,044 5,931
--------------------- ------------ ------------ ---------------
Operating Costs 1,334 1,144 2,246
Depreciation
and amortisation 210 213 419
Share-based
payments 851 257 1572
Exceptional - - -
items
--------------------- ------------ ------------ ---------------
Administrative
Costs 2,394 1,614 4,237
Total costs 7,067 4,658 10,168
--------------------- ------------ ------------ ---------------
4. Taxation
The corporation tax and deferred tax for the six months ended 30
June 2017 has been calculated with reference to the estimated
effective tax rate on the operating results for the full year.
5. Loss per share
Basic and diluted loss per share is calculated by dividing the
loss attributable to owners of the parent by the weighted average
number of ordinary shares in issue during the period.
Unaudited Unaudited Audited
six months six months twelve months
ended 30 ended 30 ended 31
June 2017 June 2016 December
2016
GBP'000 GBP'000 GBP'000
------------------------- ------------ ------------ ---------------------------------
(Loss)/profit for
the financial period (2,035) (681) (2,644)
Number of shares Number Number Number
'000 '000 '000
Weighted average number
of shares-basic and
diluted 44,592 41,848 42,528
EPS Summary
Basic and diluted
loss per share (4.6)p (1.6)p (6.2)p
------------------------- ------------ ------------ ---------------------------------
6. Share Capital
The number of ordinary shares in issue as at 30 June 2017 is
45,613,456 shares (31 December 2016 43,216,191).
On 9 January 2017 159,236 ordinary shares were issued as
consideration related for sponsorship services.
On 23 March 2017 2,238,029 ordinary shares were issued to the
EBT to satisfy STIP and LTIP awards with respect to previous
periods performance.
The number of shares held by the EBT and referred to as Treasury
shares was 4,219,240, (30 June 2016: 2,152,892, 31 December 2016:
2,152,892 shares).
8. Cautionary statement
This document contains certain forward-looking statements with
respect to the financial condition, results and operations of
business. These statements involve risk and uncertainty as they
relate to events and depend on circumstances that will incur in the
future. Nothing in this interim report should be construed as a
profit forecast.
9. Copies of the interim report
The interim report for the six months ended 30 June 2017 can be
downloaded from the Company's website www.scienceinsport.com.
Further copies can be obtained by writing to the Company Secretary,
Science in Sport plc, 16-18 Hatton Garden, Farringdon, London, EC1N
8AT.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LMMRTMBATMRR
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