TIDMSIS
RNS Number : 4847S
Science in Sport PLC
17 March 2021
17 March 2021
SCIENCE IN SPORT PLC
("Company" or "Group")
Final Results for the Year ended 31 December 2020
Science in Sport plc (AIM: SIS), the premium performance
nutrition company serving elite athletes, sports enthusiasts and
the gym lifestyle community, is pleased to announce its audited
final results for the financial year ended 31 December 2020.
HIGHLIGHTS
During a challenging year, the Group performed well, delivering
an underlying EBITDA(1) profit of GBP1.1m (2019: loss of GBP0.2m)
as we strengthened the critical building blocks of long-term
profitable growth.
Revenue of GBP50.4m was in line with the prior year (2019:
GBP50.6m), as Online grew 39% year on year and increased to 50% of
total Group sales.
Gross margin improved to 49% (2019: 44%) due to Supply Chain
efficiencies, together with sales channel shift to our Digital
platform and improved pricing. 50% gross margin was achieved for
the second half, reflecting further benefits flowing through.
Key SiS growth markets of Australia, Football, Italy and the USA
contributed 28% of total SiS revenue at GBP7.2m. The USA made good
progress with 33% revenue growth to GBP3.5m and significantly
reduced cash burn.
UK Retail was adversely affected by COVID-19 delivering revenues
of GBP16.1m (2019: GBP21.8m). The GBP9.3m of International Retail
revenue was 14% behind last year (2019: GBP10.8m). We saw a good
recovery in several markets and a resilient rate of sale in key UK
product lines in Q4.
While we held some Innovation back given the pandemic, sales
from new products still contributed well at GBP2.2m, some 4% of
total Group revenues. The 2021 new product pipeline is extremely
strong.
The balance sheet remained strong, with GBP10.5m of cash (2019:
GBP5.4m) and an GBP8m unused flexible credit facility. We raised
GBP4.2m net in April 2020 to strengthen the balance sheet, given
the COVID-19 pandemic.
Announced a new 160,000 sq. ft. Supply Chain site, together with
a new gel processing and packing line. The site will open in Q1
2022 and will support growth to around GBP150m in revenue.
CURRENT TRADING AND OUTLOOK
Trading for January and February is in line with the same period
in 2020, despite the current COVID-19 lockdown in the UK and other
key markets. We have continued to make gross margin improvements,
and this will underpin EBITDA progress.
Our Online business continues to perform very well with strong
growth of 65% versus the same period in 2020, representing 54% of
group sales and offsetting the adverse effect of COVID-19 on UK
Retail. We continue to see good recovery in our International
Retail business.
Trading in March is in line with plan, and we are well placed
for growth as lockdown lifts in our key markets.
(1) excludes depreciation, amortisation, share-based payments,
2019 PhD acquisition costs and foreign exchange variances on
intercompany balances
Stephen Moon, Science in Sport's Chief Executive Officer,
commented:
"Delivering a robust underlying EBITDA profit was a key goal for
2020, and this was achieved through a focus on developing our
fundamental building blocks of long-term profitable growth. We
realised all expected synergies from the PhD acquisition and saw
strong performance across the whole supply chain. Together with our
strategic shift to online, this underpinned a step change in gross
margin.
The very strong momentum in our online business continues into
2021 with growth in all markets. We see recovery in international
retail, and the US business is well ahead of last year. Revenue is
on track for the first half, despite continued lockdown
restrictions in many key markets. We are well-positioned to
accelerate as restrictions are lifted.
Our long-term and proven profitable growth strategy remains
unchanged. We have demonstrated the business's resilience in 2020
and are continuing to invest for growth in the key strategic areas
of online and technology. This year will see us roll out our
premium brands to several key European and Asian markets.
Whilst it is too early to reinstate market guidance, given the
current COVID-19 lockdown, we are well funded and remain very
optimistic about the long-term growth prospects for the Group".
For further information:
Science in Sport plc
Stephen Moon, Chief Executive Officer
James Simpson, Chief Financial
Officer +44 (0) 20 7400 3700
Liberum
Nominated adviser and broker
Richard Lindley
James Greenwood
Will Hall +44 (0) 20 3100 2000
Notes to Editors
About Science in Sport plc
Science in Sport plc is a leading sports nutrition business that
develops, manufactures and markets innovative nutrition products
for professional athletes, sports and fitness enthusiasts and the
gym lifestyle community. The Company has two highly regarded
brands: PhD Nutrition, a premium active-nutrition brand targeting
the gym lifestyle community, and SiS, a leading endurance nutrition
brand among elite athletes and professional sports teams.
The two brands are sold internationally through our own phd.com
and scienceinsport.com digital platform, together with third-party
online sites, including Amazon and Tmall. We have extensive retail
distribution in the UK and internationally, including major
supermarkets, high street chains and specialist sports retailers.
This omnichannel footprint enables the Company to address the full
breadth of the sports nutrition market, forecast to be GBP13
billion worldwide by 2023.
PhD is one of the UK's leading active nutrition brands with a
reputation for high quality and product innovation. The brand has
grown rapidly, based on its core protein powders, since its launch
in 2005. The range now comprises powders, bars and supplements,
including the high protein, low sugar range, PhD Smart. PhD brand
ambassadors include leading fitness influencers Ross Edgley and Obi
Vincent. The PhD brand is an official partner to the Tough Mudder
Challenge and Race Series.
SiS, founded in 1992, has a core range comprising gels, powders
and bars focused on energy, hydration and recovery. SiS is the
official sports nutrition supplier to many professional teams and
organisations, including INEOS Grenadiers Cycling Team, Team INEOS
UK (America's Cup Team) and Manchester United Football Club. SiS
supplies more than 100 professional football clubs in the UK,
Europe and the USA and is Performance Research Partner to the
English Football Association.
Science in Sport is headquartered in London. Its shares joined
the AIM market of the London Stock Exchange in August 2013 and
trade under the ticker symbol SIS.
For further information, please visit phd.com and
scienceinsport.com
CHAIRMAN'S STATEMENT
In an unprecedented year for the Group, we demonstrated the
resilience of the business. Despite COVID-19 related disruption, we
delivered positive underlying EBITDA(1) and positive free cash
flow. The company adapted at speed and maintained a focus on
delivering the strategic plan during a year of significant
disruption and change.
Given the progress made, we exited 2020 with an agile and leaner
business, underpinned by a robust balance sheet. We enhanced our
people and technology capabilities, ready for the next stage of our
Online and International growth ambition.
COVID-19
Our priority during the pandemic continues to be the health and
safety of our employees. In the factory, we rapidly introduced
additional safety and hygiene measures, including segregating
facilities, breaks between shifts and increased cleaning routines.
Operations have continued uninterrupted throughout the period.
Our office employees moved to remote working well ahead of
government lockdown guidance, supported by our technology team.
Whilst uncertainty remains as to the overall duration and impact of
COVID-19, we continue to work closely with our customers, suppliers
and partners to manage effectively through this period.
Overview
We are delighted to announce a robust set of results for the
year ended 31 December 2020. Group revenue was GBP50.4m, in line
with GBP50.6m revenue in 2019, in spite of the considerable
disruption caused by COVID-19.
Underlying EBITDA(1) was GBP1.1m net of one-off costs of GBP0.3m
related to COVID-19 (2019: loss of GBP0.2m) This reflected gross
margin improvement from Supply Chain efficiencies and Online
growth. The reported loss before tax was GBP2.3m (2019: GBP5.1m
loss).
Our cash position remains strong with a year-end balance of
GBP10.5m, of which GBP4.2m net was from the April equity raise. The
business was cashflow positive, generating GBP0.9m of cash in the
period. Our HSBC invoice credit facility of GBP8.0m remains
unused.
We demonstrated our business's resilience during a year of
disruption and made good progress in delivering our strategic
objectives.
Our proven growth strategy remains unchanged, focusing on
science-led product innovation, building brand equity, driving
global Online scale supported with world-class customer service,
through an efficient Supply Chain.
Our People
During this challenging year, the continued high performance of
the Group is due to the resilience, energy, and focus of all the
people who work for our PhD and SiS brands. Their leadership and
ability to navigate change have ensured we have come through this
stronger together as a business.
I would especially like to extend my gratitude to the team at
our Nelson manufacturing and fulfilment facility, which continued
to produce, pack and ship product to our customers during this
challenging time without disruption.
We continued to strengthen the executive and senior leadership
teams during this period with a new Chief Technology Officer, Asia
Online Director and Head of Customer Experience to drive the next
stage of our Online, International growth.
Development of the Board
It is the Board's duty to ensure the Group is managed for the
long--term benefit of all shareholders, with effective and
efficient decision--making. Corporate governance is an essential
part of that role, reducing risk and adding value to our
business.
During the period, the Company has appointed Roger Mather to the
Board and nominated him as Chair of the Audit Committee. Tim
Wright, an existing Board member, has been nominated as Chair of
the Remuneration Committee.
John Clarke
Non-Executive Chairman
16 March 2021
CEO REPORT
Strategic Intent
We see a significant opportunity ahead with the global sports
nutrition category growing consistently and forecast to be worth
GBP13 billion by 2023. The COVID-19 pandemic has driven an
increased focus on wellbeing and nutrition. Customers are
exercising more and shopping online more frequently. Ethical
consumption and plant-based diets are of growing importance in the
sector.
We remain well-positioned to benefit from these trends, and the
key drivers of our proven growth strategy remain unchanged:
-- Performance Innovation: a robust new product pipeline based on science-led technology
-- Premium Brand: investment in brand awareness, driving
conversion and usage with the highly engaged consumers in the
category
-- World-Class Customer Experience: supporting our customers in
all channels and markets whilst creating brand loyalty
-- Global Online Scale: growth led by our Digital platform and
underpinned by Marketplace, based on an agile technology platform
that delivers deep consumer insight
-- Efficient Supply Chain: simpler, more cost-effective,
scalable and increasingly in-house, with a new single site
planned
Supporting these strategic pillars is investment in technology
and people, underpinned by a strong balance sheet.
Online
Online channels performed strongly during the year, with total
Online sales growing 39% year on year. Online sales mix reached 50%
of total revenue through our Digital platform and Marketplace
channels.
We see the switch to Online continuing and in line with our
strategy. Key growth drivers are a strengthened Online team,
diverting over 60% of marketing investment to Online in 2021,
launching a new scalable website platform to drive International
roll-out, and acquiring a new leading-edge customer data
platform.
We continue to expand the reach of our Marketplace offering,
opening new stores for both brands on Amazon across Germany, Spain
and the Netherlands.
In the last quarter, we saw strong momentum and launched new PhD
websites in Germany, Italy and Europe. The rate of launch of new
websites for both brands will accelerate further in 2021, with our
new commercial and technology teams in place to drive this.
UK Retail
UK Retail was adversely affected by the extended UK lockdown
restrictions, delivering GBP16.1m of revenue, versus GBP21.8m in
2019. We will continue developing and growing the channel in the
future, which we see as a critical brand awareness and product
trial driver, with a positive cash contribution.
We see opportunities in targeted growth areas: retailers with a
developed online presence, such as Holland & Barrett; the
Convenience sector, where we recently secured listings with the
UK's largest independent forecourt operator; and the growing
Discounter segment.
International
In line with our strategy, we streamlined the International
retail business, focussing on selected key accounts in scale
markets to drive profitable growth. As a result, we exited over 60
sub-scale accounts in late 2020. International retail sales were
GBP9.3m, 14% less than the prior year, as COVID-19 restrictions
impacted consumer behaviour in many of our markets.
Product Innovation
Revenue from new products was GBP2.2m for the period, although
we decided to delay some launches into 2021 to maximise their
impact. We continued to invest in new product development during
the economic downturn. 2020 key product launches included PhD Smart
Plant bars and protein powder and PhD high protein, low sugar Smart
Cake. July saw the launch of SiS Turbo+, the world's first
endurance nutrition range designed for indoor training. PhD
relaunched the best-selling Diet Whey range at the end of the year
in an industry-first recyclable pouch.
2021 sees PhD Diet Whey Clear, Keto and Diet Plant and SiS Whey
20 launching in Q1, with a very strong pipeline of new products in
the balance of the year.
Supply Chain
The new protein powder filling line, part of the PhD
integration, delivered cost savings and production efficiencies
ahead of plan in 2020, increasing in-house production and Supply
Chain control.
We streamlined our Supply Chain by removing over half of our
product line count during the year, removing significant complexity
and cost, and focussing inventory on our best-selling lines.
A strong focus on improved buying, cost-saving initiatives,
production efficiencies and increased in-house production drove an
improved gross margin of 49% (2019: 44%) supported by favourable
channel and product mix benefits. These improvements are considered
structural and sustainable, and indeed we saw further progress in
the second half of the year.
We have committed to a new leased Supply Chain facility, which
we will take possession of in December 2021. We expect it to be
fully operational in Q1 2022. The 160,000 square foot facility will
consolidate the Group's operations into one site and give us the
headroom to grow to more than GBP150m in revenue. We are to install
a new 8-lane gel manufacturing plant in the facility to meet the
continued strong growth in this highly profitable product line.
Of the GBP4.3m total new factory and gel machine cost, GBP2.1m
will be funded from cash reserves, together with GBP2.2m of
equipment leasing finance. The project is expected to contribute to
EBITDA in FY22 and deliver cash payback in FY23 through increased
operating efficiencies.
Outlook
As our strong performance in 2020 demonstrates, this year was an
inflexion point for the business, as we shifted to profitable
growth and cash generation. We emerged from the year a more
resilient and agile company, having made good progress delivering
our strategic objectives and are well-positioned to return to
strong growth once the COVID-19 restrictions ease.
We have confidence in our proven strategic growth model and
remain committed to our vision of becoming the world's number one
premium performance nutrition business.
Stephen Moon
Chief Executive Officer
16 March 2021
ENVIRONMENTAL, SOCIAL & GOVERNANCE
At Science in Sport, we take great pride in both our brand and
products. We are committed to ensuring the highest standards of
corporate responsibility covering environmental, social and
governance are maintained and understand the importance of these to
our customers. In 2020 we prepared our first ESG report, which can
be found on our sisplc.com corporate website.
Environmental
We now use recyclable pouch packaging for our protein powders,
and this is a first for the sports nutrition industry globally. The
PhD Nutrition pouch range moved to recyclable material, commencing
with the Diet Whey range at the start of December 2020, with a full
range change completed by early 2021, followed by Science in Sport
later in 2021. We expect to save one million pouches from landfill
waste in 2021.
In February 2021, we launched a partnership to allow customers
to recycle gel, bar and sachet wrappers. Customers add a
postage-paid recycling bag to their basket at no extra cost, which
can be returned with up to 30 wrappers avoiding landfill waste.
We have continued to increase the manufacture of products in our
Nelson factory, bringing protein powder production in house and
away from multiple suppliers, reducing transport miles and
products' carbon footprint.
A lease was signed in early January 2021 for a new combined
Supply Chain site at Blackburn comprising factory, warehouse and
e-commerce dispatch facility driving significant environmental
improvements by reducing transport miles and carbon emissions.
Under the SECR (Streamlined Energy and Carbon Reporting)
framework, SiS plc Scope 1 & 2 energy use in 2020 is 1,523,146
kWh from electricity, gas and own transport consumption, with 308
tCO2e emissions. Our energy intensity ratio is 6.1 tCO2e per GBPm
sales.
Social
A Wellbeing & Mental Health Initiative was launched this
year to support employees through COVID-19 lockdown. An Employee
Assistance Programme, online counselling, and drivers of wellbeing
monthly sessions led by experts such as Sir Chris Hoy were
provided. We also offered line manager mental health awareness
training and signed up for the Inside Out Wellbeing Charter.
We strengthened the SiS plc People team with a new senior
function lead and apprenticeship role to drive increased employee
engagement and support across the business
Health & Safety is an essential element of our ESG policy
and a critical operational focus to which all employees contribute.
The last lost-time accident in the business was on 12 April 2018,
nearly three years ago. No reportable incidents occurred in
2020.
We signed up to the Business in the Community, Race at Work
Charter, committing to five actions to ensure that ethnic minority
employees are represented at all levels in an organisation. We have
launched a business-wide diversity initiative and initiated regular
group-wide diversity reporting to monitor progress. We have a CEO
diversity statement and a diversity blog on our websites and are
proud to support the Black Cyclists Network and Los Angeles Bike
Academy.
We launched a partnership with Career Ready, a national social
mobility charity, offering mentors from across the business and
paid summer internships in 2021.
Governance
The Board has adopted the QCA corporate governance Code in line
with the LSE requirement that AIM-listed companies adopt and comply
with a recognised corporate governance code. This policy is
reviewed and updated annually. Full corporate governance disclosure
can be found on our sisplc.com website.
Due to our accumulated losses which generated a deferred tax
asset, we are not a significant corporation taxpayer and continue
to make VAT, PAYE and NI contributions. In 2020 we formalised a
Group Taxation Policy and were proud that we contribute to the
development of the economies in which we operate and take our
responsibility to pay our fair share of tax seriously whilst
maximising shareholder returns.
FINANCIAL REVIEW
Revenue
The Group delivered GBP50.4m revenue in the year ended 31
December 2020, in line with the prior year (2019: GBP50.6m).
Online channels grew 39% year on year and now represent 50% of
Group sales, as customers shifted online, offsetting the decline in
UK Retail & International channels due to the impact of
extended lockdown restrictions on customers in many of the key
markets where we trade.
Gross margin
The Group generated a gross profit of GBP24.6m (2019: GBP22.2m)
with a gross margin of 49% compared with 44% in 2019. Gross margin
improved due to increased Supply Chain efficiencies from in-house
production, purchasing savings and input prices, online mix and
margin growth and non-recurring prior-year impacts.
Underlying EBITDA
2020 Underlying EBITDA(1) was GBP1.1m (2019: loss of GBP0.2m)
driven by improved gross margin and reduced overheads. Loss from
operations was GBP2.2m (2019: loss of GBP5.0m)
We made good progress in removing non-strategic overhead cost
across the business. Total overhead is down on the prior year
despite increased investment in growth overhead in key strategic
areas such as NPD and e-commerce employees.
The Group has chosen to report underlying EBITDA as the Board
believes that EBITDA before items such as depreciation,
amortisation, non--cash share-based payments and 2019 PhD
acquisition-related expenses provides additional useful information
for Shareholders to assess profit performance. This measure is used
for internal performance analysis. A reconciliation of underlying
EBITDA to profit from operations is presented in note 1.
Working capital
As at 31 December 2020, the Group held inventory of GBP7.0m (31
December 2019: GBP6.1m). Inventory levels increased as we managed
supply chain disruption risk due to the uncertainty around the
Brexit trade negotiations at year-end, increasing stock levels to
provide resilience into the new year. Trade and other receivables
were down GBP1.1m at GBP9.8m (31 December 2019: GBP10.9m).
Cash position
We exited the year with a GBP10.5m cash balance as at 31
December 2020 (31 December 2019: GBP5.4m). In April, we undertook a
proactive capital raise of GBP4.2m net to provide additional
liquidity during the COVID disruption and to enable us to continue
investing in our growth strategy. The business also generated
GBP0.9m from a significant increase in underlying EBITDA and
improved working capital discipline.
In addition, we secured an GBP8.0m flexible invoice credit
facility with HSBC, our principal bankers, which remains
unused.
Share-based payments
The Company operates both a Short-Term Incentive Programme
("STIP") and a Long-Term Incentive Programme ("LTIP"). Together,
the Share Option Plan ("SOP") was approved by the Remuneration
Committee in June 2014 in line with the proposal contained in the
Company's AIM Admission document published in August 2013. A LTIP
scheme for financial years 2019--2021 is in place. Options were
granted for the 2019 financial year based on the achievement of
2019 performance targets.
No award was made under the LTIP or STIP schemes for 2020
performance.
Taxation
The tax benefit recognised for the year is GBP0.5m (2019:
GBP0.6m tax expense). The Group has cumulative tax losses of
GBP15.5m (2019: GBP14.1m), which the Group will look to use to
cover future profits.
Losses and dividends
The loss attributable to equity holders of the parent for the
year was GBP1.7m (2019: GBP5.6m), and the basic and diluted loss
per share was 1.3p (2019: 4.6p loss). The payment of a dividend has
not been recommended.
Going concern
The Group made a loss after tax for the year attributable to
owners of the parent of GBP1.7m (2019: loss of GBP5.6m). The net
increase in cash and cash equivalents in the year ended 31 December
2020 was GBP5.1m (2019: GBP2.6m decrease). As at 31 December 2020,
the Group had cash balances of GBP10.5m (31 December 2019:
GBP5.4m).
As the extended UK and international lockdown restrictions
impacted consumer demand and revenue growth, management took
pro-active and decisive steps to improve profitability and generate
operating cash flow. Sensitivity analysis and scenario planning
different revenue outcomes stress-tested potential impacts on the
cash position of the business, ensuring that sufficient liquidity
was in place. The Directors have prepared projected cash flow
information for the period ending 31 December 2022.
Accordingly, the Directors have a reasonable expectation that
the Company will have sufficient cash to meet all liabilities as
they fall due for a period of at least 12 months from the date of
approval of these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year Year
ended ended
31 December 31 December
2020 2019
Notes GBP'000 GBP'000
------------------------------------- ------ ------------ ------------
Revenue 3 50,351 50,573
Cost of goods (25,755) (28,366)
------------------------------------- ------ ------------ ------------
Gross profit 24,596 22,207
Operating expenses 4 (26,833) (27,252)
------------------------------------- ------ ------------ ------------
Loss from operations (2,237) (5,045)
Finance income 43 4
Finance cost (79) (23)
Loss before taxation (2,273) (5,064)
Taxation benefit / (expense) 5 545 (554)
------------------------------------- ------ ------------ ------------
Loss for the year (1,728) (5,618)
Other comprehensive income
Cash flow hedges 171 (181)
Exchange differences on translation
of foreign operations (25) 67
Income tax relating to these items (32) 33
------------------------------------- ------ ------------ ------------
Total comprehensive loss for the
year (1,614) (5,699)
------------------------------------- ------ ------------ ------------
Loss per share to owners of the
parent
Basic and diluted - pence 6 (1.3p) (4.6p)
All amounts relate to continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
31 December 31 December
Company number: 08535116 2020 2019
Notes GBP'000 GBP'000
--------------------------------------- ------ ------------ ------------
Intangible assets 32,099 33,066
Right of use assets 520 689
Property, plant and equipment 1,847 1,771
Deferred tax asset 10 1,203 919
--------------------------------------- ------ ------------ ------------
Total non-current assets 35,669 36,445
--------------------------------------- ------ ------------ ------------
Inventories 7 6,974 6,141
Trade and other receivables 8 9,841 10,927
Cash and cash equivalents 10,466 5,371
--------------------------------------- ------ ------------ ------------
Total current assets 27,281 22,439
--------------------------------------- ------ ------------ ------------
Total assets 62,950 58,884
--------------------------------------- ------ ------------ ------------
Trade and other payables 9 (11,838) (9,954)
Lease liabilities (134) (164)
Hire purchase agreement (75) (77)
Derivative financial liabilities (10) (181)
Total current liabilities (12,057) (10,376)
--------------------------------------- ------ ------------ ------------
Lease liabilities (412) (530)
Hire purchase agreement (239) (309)
Deferred tax liability 10 (2,195) (2,472)
--------------------------------------- ------ ------------ ------------
Total non-current liabilities (2,846) (3,311)
--------------------------------------- ------ ------------ ------------
Total liabilities (14,903) (13,687)
Net assets 48,047 45,197
--------------------------------------- ------ ------------ ------------
Capital and reserves attributable to owners
of the Parent company
Share capital 13,510 12,282
Share premium reserve 51,839 48,829
Employee benefit trust reserve (191) (193)
Other reserve (907) (907)
Foreign exchange reserve (55) (30)
Cash flow hedge reserve (9) (148)
Retained deficit (16,140) (14,636)
Total equity 48,047 45,197
--------------------------------------- ------ ------------ ------------
These consolidated financial statements were approved and
authorised for issue by the Board on 16 March 2021 and signed on
its behalf by:
STEPHEN MOON
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Year
ended ended
31 December 31 December
2020 2019
Notes GBP'000 GBP'000
------------------------------------------- -------- ------------ ------------
Cash flows from operating activities
Loss for the financial year (1,728) (5,618)
Adjustments for:
Amortisation 2,384 2,129
Amortisation of right-of-use asset 169 156
Depreciation 615 489
Taxation (545) 554
Share based payment charge 226 1,165
----------------------------------------------------- ------------ ------------
Operating cash inflow / (outflow)
before changes in working capital 1,121 (1,125)
----------------------------------------------------- ------------ ------------
Changes in inventories (833) 961
Changes in trade and other receivables 1,086 (1,988)
Changes in trade and other payables 1,770 2,072
----------------------------------------------------- ------------ ------------
Total cash inflow / (outflow) from
operations 3,144 (80)
----------------------------------------------------- ------------ ------------
Cash flow from investing activities
Purchase of property, plant and
equipment (697) (920)
Purchase of intangible assets (1,417) (1,453)
Net cash inflow / (outflow) from
investing activities (2,114) (2,373)
----------------------------------------------------- ------------ ------------
Cash flow from financing activities
Gross proceeds from issue of share 4,544 -
capital
Principal repayments of lease liabilities (148) (150)
Interest paid on lease liabilities (25) (24)
Finance income - (4)
Share issue costs (306) -
Net cash inflow / (outflow) from
financing activities 4,065 (178)
----------------------------------------------------- ------------ ------------
Net increase / (decrease) in cash
and cash equivalents 5,095 (2,631)
Opening cash and cash equivalents 5,371 8,002
----------------------------------------------------- ------------ ------------
Closing cash and cash equivalents 10,466 5,371
----------------------------------------------------- ------------ ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Employee Cash
Benefit Foreign flow
Share Share Trust Other exchange hedge Retained Total
capital premium reserve reserve reserve reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- --------- -------- --------- -------- --------- ----------
At 31 December
2018 12,197 48,464 (372) (907) (97) - (9,468) 49,817
Total
comprehensive
loss for
the year - - - - 67 (148) (5,618) (5,699)
Transactions
with owners
Issued in
return for
sponsorship
services 85 365 - - - - (450) -
Issue of shares
held by EBT
to employees - - 179 - - - (179) -
Share based
payments - - - - - - 1,079 1,079
---------------- -------- -------- --------- -------- --------- -------- --------- --------
At 31 December
2019 12,282 48,829 (193) (907) (30) (148) (14,636) 45,197
---------------- -------- -------- --------- -------- --------- -------- --------- --------
Total
comprehensive
loss for
the year - - - - (25) 139 (1,728) (1,614)
Transactions
with owners
Issue of shares 1,228 3,316 - - - - - 4,544
Transaction
costs of
placing - (306) - - - - - (306)
Issue of shares
held by EBT
to employees - - 2 - - - (2) -
Share based
payments - - - - - - 226 226
---------------- -------- -------- --------- -------- --------- -------- --------- --------
At 31 December
2020 13,510 51,839 (191) (907) (55) (9) (16,140) 48,047
---------------- -------- -------- --------- -------- --------- -------- --------- --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting policies
This final results announcement for the year ended 31 December
2020 has been prepared in accordance with the recognition and
measurement criteria of International Accounting Standards in
conformity with the requirements of the Companies Act 2006. The
accounting policies applied are consistent with those set out in
the Science in Sport plc Annual Report and Accounts for the year
ended 31 December 2020.
The financial information contained within this final results
announcement for the year ended 31 December 2020 and the year ended
31 December 2019 is derived from but does not comprise statutory
financial statements within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31
December 2019 have been filed with the Registrar of Companies and
those for the year ended 31 December 2020 will be filed following
the Company's annual general meeting. The auditors' report on the
statutory accounts for the year ended 31 December 2020 and the year
ended 31 December 2019 is unqualified, does not draw attention to
any matters by way of emphasis, and does not contain any statement
under section 498 of the Companies Act 2006.
Use of non--GAAP profit measure -- underlying EBITDA
The Directors believe that the operating loss before
depreciation, amortisation, share based payments, costs relating to
the acquisition of PhD and the restructuring due to this
acquisition, and intercompany balance retranslation variances as a
measure provides additional useful information for Shareholders on
underlying trends and performance. This measure is used for
internal performance analysis. Underlying EBITDA is not defined by
IFRS and therefore may not be directly comparable with other
companies' adjusted profit measures. It is not intended to be a
substitute for, or superior to IFRS measurements of profit.
A reconciliation of the underlying EBITDA to statutory operating
loss is provided below:
2020 2019
(GBP'000) (GBP'000)
-------------------------------------------- ----------- -----------
Loss from operations (2,237) (5,045)
PhD acquisition and integration
costs - 637
Share-based payment expense 226 1,165
Depreciation & amortisation 3,168 2,774
Foreign exchange variances on intercompany
balances (71) 297
-------------------------------------------- ----------- -----------
Underlying operating profit / (loss) 1,086 (172)
-------------------------------------------- ----------- -----------
2. Segmental reporting
Operating segments are identified on the basis of internal
reporting and decision making. The Group's Chief Operating Decision
Maker ("CODM") is considered to be the Board, with support from the
senior management teams, as it is primarily responsible for the
allocation of resources to segments and the assessments of
performance by segment.
The Group's reportable segments have been split into the two
brands, SiS and PhD Nutrition. Operating segments are reported in a
manner consistent with the internal reporting provided to the CODM
as described above. The single largest customer makes up 19% of
revenue and is not separately identified in segmental
reporting.
Year ended Year ended
31 December 2020 31 December 2019
SiS PhD Total SiS PhD Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sales 25,408 24,943 50,351 24,601 25,972 50,573
---------------------- -------- -------- --------- -------- -------- ---------
Gross profit 15,665 8,931 24,596 13,899 8,308 22,207
Marketing costs (5,278) (2,869) (8,147) (5,978) (1,961) (7,939)
Carriage (4,051) (1,339) (5,390) (3,279) (1,273) (4,552)
Online selling
costs (748) (87) (835) (237) (28) (265)
---------------------- -------- -------- --------- -------- -------- ---------
Trading contribution 5,588 4,636 10,224 4,405 5,046 9,451
Other operating
expenses (12,461) (14,496)
---------------------- -------- -------- --------- -------- -------- ---------
Loss from Operations (2,237) (5,045)
====================== ======== ======== ========= ======== ======== =========
3. Revenue from contracts with customers
The group operates four primary sales channels, which form the
basis on which management monitor revenue. UK Retail includes
domestic grocers and high street retailers, Digital is sales
through the phd.com and scienceinsport.com platforms, Export
relates to retailers and distributors outside of the UK and Market
place relates to online marketplaces such as Amazon and TMall.
Year ended Year ended
31 December 2020 31 December 2019
SiS PhD Total SiS PhD Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------- -------- -------- -------- -------- --------
Digital 9,628 3,475 13,103 8,619 1,551 10,170
Export 4,471 4,820 9,291 5,221 5,539 10,760
Retail 6,411 9,683 16,094 8,063 13,783 21,846
Marketplace 4,898 6,965 11,863 2,698 5,099 7,797
--------
Total sales 25,408 24,943 50,351 24,601 25,972 50,573
------------- -------- -------- -------- -------- -------- --------
Turnover by geographic destination of sales may be analysed as
follows:
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
------------------- -------------- --------------
United Kingdom 32,968 32,751
Europe 8,612 9,174
Australia 1,234 1,416
Rest of the World 7,537 7,232
Total sales 50,351 50,573
-------------------- -------------- --------------
4. Operating expenses
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
----------------------------------- -------------- -------------
Sales and marketing costs 14,372 12,756
Operating costs 9,067 9,920
Depreciation and amortisation 3,168 2,774
Share based payment charge (1) 226 1,165
Costs associated with integration
of PhD (2) - 637
Administrative expenses 12,461 14,496
Total operating expenses 26,833 27,252
------------------------------------ -------------- -------------
(1) Includes associated social security costs of GBP6,000 (31
December 2019 - GBP87,000) and consideration in respect of
sponsorship services of GBPnil (31 December 2019 - GBP450,000).
(2) Integration costs of PhD Nutrition into the Group amounted
to GBPnil (2019 GBP637,000) this relates mainly to restructuring
and the powder production line installation.
5. Taxation
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
--------------------------------------- ------------- -------------
Current tax income
United Kingdom corporation tax - -
Foreign corporation tax (47) -
Total current tax income (47) -
Deferred tax
Effect of change in tax rates - (100)
Origination and reversal of temporary
differences 592 (454)
Tax on benefit / (expense) for
the year 545 (554)
--------------------------------------- ------------- -------------
The tax assessed for the year is different from the standard
rate of corporation tax in the UK. The differences are explained
below:
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Loss before tax 2,273 5,064
-------------------------------------------- ------------- -------------
Loss before tax multiplied by the standard
rate of corporation tax
in the UK of 19% ( 2019 - 19%) 432 962
Effects of:
Expenses not deductible for tax purposes (53) (6)
Unprovided deferred tax asset on losses
carried forward - (1,482)
Temporary timing differences -
Additional deduction for R&D expenditure 95 98
Share scheme deduction 74 (33)
Effect of changes in tax rate - (100)
Adjustment in respect of prior periods - -
Excess overseas tax suffered (13) -
Other 10 7
Total tax credit for the period 545 (554)
-------------------------------------------- ------------- -------------
Tax on each component of other comprehensive income is as
follows
As at As at
31 December 2020 31 December 2019
Before Tax After Before Tax After
tax tax tax tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- -------- -------- --------
Loss recognised on hedging
instrument 171 (32) 139 (181) 33 (148)
Exchange gains on the
translation of foreign
operations (25) - (25) 67 - 67
Total 146 (32) 114 (114) 33 (81)
---------------------------- -------- -------- -------- -------- -------- --------
At 31 December 2020 UK tax losses of the Company available to be
carried forward are estimated to be GBP15.5m (2019: GBP14.1m). In
the deferred tax note 10 the recoverability of the deferred asset
against future profits is assessed. Deferred tax balances are
valued at the rate of 19% in these accounts to the extent that
timing differences are expected to reverse after this later
date.
6. 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. The exercise
of share options would have the effect of reducing the loss per
share and is therefore anti-dilutive under the terms of IAS 33
'Earnings per share'.
Year ended Year ended 31
31 December December
2020 2019
Loss for the year attributable
to owners of the parent - GBP'000 (1,728) (5,618)
Weighted average number of shares 129,372,525 122,716,318
Basic and diluted loss per share
- pence (1.3p) (4.6p)
------------------------------------ ------------- --------------
The number of vested but unexercised share options is 11,150,449
(2019: 6,080,901).
7. Inventories
31 December 31 December
2020 2019
GBP'000 GBP'000
---------------- ------------ ------------
Raw materials 2,313 1,551
Finished goods 4,661 4,590
6,974 6,141
---------------- ------------ ------------
There is a provision of GBP232,000 included within inventories
in relation to the impairment of inventories (31 December 2019 -
GBP131,000). During the period inventories of GBP25,755,000 (year
ended 31 December 2019 - GBP28,236,000) were recognised as an
expense within cost of sales.
8. Trade and other receivables
31 December 31 December
2020 2019
GBP'000 GBP'000
----------------------------------------- ------------ ------------
Trade receivables 9,518 9,415
Less: provision for impairment of trade
receivables (529) (51)
----------------------------------------- ------------ ------------
Trade receivables - net 8,989 9,364
Other receivables 112 517
----------------------------------------- ------------ ------------
Total financial assets other than cash
and cash equivalents classified as
amortised cost 9,101 9,881
Prepayments and accrued income 740 1,046
----------------------------------------- ------------ ------------
Total trade and other receivables 9,841 10,927
----------------------------------------- ------------ ------------
Trade receivables represent debts due for the sale of goods to
customers. Trade receivables are denominated in local currency of
the operating entity and converted to Sterling at the prevailing
exchange rate as at 31 December 2020. The Directors consider that
the carrying amount of these receivables approximates to their fair
value. All amounts shown under receivables fall due for payment
within one year. The Group does not hold any collateral as
security.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure
expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and
aging.
The expected loss rates are based on the Group's historical
credit losses experienced over 2020, this is due to SiS using SAP
which has provided more visibility over debtors. PhD has also
looked at credit loss over the 2019 year as this is the first full
year under SiS plc ownership. The historical loss rates are then
adjusted for current and forward-looking information affecting the
Group's customers.
At 31 December 2020 the lifetime expected loss provision for
trade receivables is as follows:
More than More than Total
60 days 90 days
past due past due
31 December 2020
--------------------------------- -------------- ---------- -------
Expected loss rate (%) 4% 17%
Gross carrying amount (GBP'000) 333 404
Loss provision (GBP'000) 14 68 82
--------------------------------- -------------- ---------- -------
31 December 2019
--------------------------------- -------------- ---------- -------
Expected loss rate (%) 2% 10%
Gross carrying amount (GBP'000) 224 463
--------------------------------- -------------- ---------- -------
Loss provision (GBP'000) 5 46 51
--------------------------------- -------------- ---------- -------
A further provision of GBP447,000 (2019: nil) has been included
against specific debts considered impaired.
9. Trade and other payables
31 December 31 December
2020 2019
GBP'000 GBP'000
------------------------------------- -------------- -----------
Trade payables 5,435 5,680
Accruals 5,353 3,354
------------------------------------- -------------- -----------
Total financial liabilities measured
at amortised cost 10,788 9,082
Other taxes and social security 1,050 920
Total Trade and other payables 11,838 9,954
------------------------------------- -------------- -----------
The Directors consider that the carrying amount of these
liabilities approximates to their fair value.
All amounts shown fall due within one year.
10. Deferred tax
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 19% ( year ended 31
December 2019 - 19%). Details of the deferred tax asset and
liability, amounts recognised in profit or loss and amounts
recognised in other comprehensive income are as follows:
Year ended 31 December Asset Liability Net (Charged)/ (Charged)/
2020: credited credited
to profit to equity
or loss
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- ---------- -------- ----------- -----------
Accelerated capital
allowances - (395) (395) (13) -
Available losses 1,016 - 1,016 255 -
Other temporary and
deductible differences 580 - 580 73 -
Business combinations - (2,195) (2,195) 277 -
Cash flow hedges 2 - 2 - (32)
------------------------------- -------- ---------- -------- ----------- -----------
Tax assets/ (liabilities) 1,598 (2,590) (992) 592 (32)
Set-off of tax (395) 395 - - -
Net tax assets/ (liabilities) 1,203 (2,195) (992) 592 (32)
=============================== ======== ========== ======== =========== ===========
(Charged)/ (Charged)/
credited credited
Year ended 31 December to profit to equity
2019: Asset Liability Net or loss
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- ---------- -------- ----------- -----------
Accelerated capital
allowances - (382) (382) (63) -
Available losses 761 - 761 (564) -
Other temporary and
deductible differences 507 - 507 84 -
Business combinations - (2,472) (2,472) (11) -
Cash flow hedges 33 - 33 - 33
------------------------------- -------- ---------- -------- ----------- -----------
Tax assets/ (liabilities) 1,301 (2,854) (1,553) (554) 33
Set-off of tax (382) 382 - - -
Net tax assets/ (liabilities) 919 (2,472) (1,553) (554) 33
------------------------------- -------- ---------- -------- ----------- -----------
Recoverability of deferred tax asset:
SiS (Science in Sport) Limited has a cumulative assessed tax
loss as at 31 December 2020 of GBP15.5m (2019: GBP14.1m), this has
increased by GBP1.4m from 2019. The losses are split into pre 1
April 2017 losses of GBP4.2m and post 1 April 2017 losses of
GBP11.3m. SiS can utilise its assessed tax losses in the coming
years against future expected profits. Assessed losses from before
1 April 2017 can only be used against SiS (Science in Sport)
Limited profit whereas assessed tax losses from after 1 April 2017
can be used to offset the future profits from SiS (Science in
Sport) Limited and tax losses from November 2018 which is the date
of acquisition can be offset against PhD Nutrition Ltd profits.
Tax losses have been recognised to the extent that they are
considered recoverable based on short term forecast taxable
profits.
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END
FR SFUESMEFSELD
(END) Dow Jones Newswires
March 17, 2021 03:00 ET (07:00 GMT)
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