TIDMBAR
RNS Number : 5584R
Brand Architekts Group PLC
09 March 2021
Brand Architekts Group plc
("Brand Architekts" or the "Group")
Interim results
Brand Architekts Group plc, a market leader in the development
and supply of beauty and personal care brands, announces its
interim results for the 6-month period ended 31 December 2020
Business highlights:
-- New management team fully onboarded with Project 50, a
transformational strategy to grow the Company into a GBP50m revenue
business within the next five years.
-- The pandemic impacted footfall and consumer behaviour,
resulting in a decline in beauty sales within the UK high-street,
International markets and led to retailer caution with regards to
2020 Xmas gift sets volumes. This was partially offset by growth in
the UK grocers and an overall improvement of 125% in e-tail and
direct-to-consumer sales.
-- Detailed review of operations undertaken resulting in an
improved net cash position; increase in net profitability and an
overhaul of the brand portfolio.
-- Project 50 plan has been clearly defined and moved into
execution phase. The plan has required new thinking, investment and
focus across four key pillars: operational efficiency, optimising
the portfolio, channel development and being a responsible
business.
-- Successfully implemented the following aspects of the Project
50 strategy, all of which will start to deliver return on
investment (ROI) from next financial year:
o Expected 5-year appointment of Global leading e-Commerce
providers, as our new direct-to-consumer (DTC) partner, who will
work in creating and launching a new marketplace in July 21
o Capitalising on Super Facialist +50% H1 sales growth, created
a transformational and integrated above the line (ATL) campaign to
run from May 21- March 22.
o Developed a communication program to effectively market five
brand relaunches and NPD program from May onwards.
o 98% of all products will be 100% recyclable; all NPD will
utilise a minimum 30% post-consumer recycled plastic (PCR); all UK
sourced card and outer packaging will be Forest Stewardship Council
(FSC) approved.
Financial Highlights:
-- Revenues for the period of GBP9.0m, a decline of 10% on the
prior year (GBP10.0m on an adjusted basis).
-- Underlying Gross Profit Margin improved to 39% (H1 2020: 38%).
-- Profit before tax increased to GBP0.4m (H1 2020: GBP0.3m).
-- Net cash position as at the period end was GBP19.0m, a
GBP1.0m improvement since the year end.
-- Repayment of outstanding term loans (GBP2.1m) and commercial
invoice discounting facility (GBP1.1m) leaving the Group debt
free.
Continuing Operations (excluding discontinued operations)
GBPm unless otherwise stated H1 2021 H1 2020 H1 2020 (Restated)
(2)
---------------------------------------------- --------- --------- -------------------
Reported results from continuing operations
(1)
--------- --------- -------------------
Revenue GBP9.0m GBP10.6m GBP10.0m
--------- --------- -------------------
Underlying operating profit (1) GBP0.8m GBP1.2m GBP1.1m
--------- --------- -------------------
Adjusted basic earnings per share (1) 3.0p 3.9p 3.6p
--------- --------- -------------------
Statutory results for the whole group
including discontinued operations
--------- --------- -------------------
Revenue GBP9.0m GBP18.0m
--------- --------- -------------------
Operating profit before exceptional GBP0.6m GBP0.1m
items
--------- --------- -------------------
Profit on disposal of manufacturing GBPNil GBP8.8m
business
--------- --------- -------------------
Basic earnings per share 2.3p 37.7p
--------- --------- -------------------
Total dividend per share Nil 0.9p
--------- --------- -------------------
Net cash GBP19.0m GBP15.1m
--------- --------- -------------------
(1) Underlying operating profit is calculated before LTIP,
amortisation of acquisition related intangibles, exceptional items
and net borrowing costs. Adjusted earnings per share is calculated
using operating profit before exceptional items and amortisation of
acquisition related intangibles.
(2) H1 2020 was a 28-week period vs 26 weeks in H1 2021. H1 2020
has therefore been restated to 26 weeks for comparative
purposes.
Quentin Higham, Chief Executive, commented:
"Since joining in May, we have taken time to get under the skin
of the business and have started to build the foundations to
deliver sustainable and profitable growth over the coming
years.
Despite the ongoing challenges caused by the pandemic, we have
made good progress against our strategic priorities, as we work
towards our Project 50 goal. As we move into the second half, we
will maintain our focus on our four key pillars, in particular the
investments we are making into our direct-to-consumer (DTC) channel
and Super Facialist marketing campaign.
Whilst the current operating environment remains uncertain, we
are confident we are building the right platform to achieve our
long-term goals.
I would like to thank our teams, whose dedication and hard work
since the onset of the pandemic has been impressive."
For further information please contact :
Brand Architekts Group PLC via Alma
Quentin Higham
Tom Carter
N+1 Singer (Nominated adviser and
Shaun Dobson / Jen Boorer broker) 0207496 3000
Alma PR
Josh Royston / Sam Modlin 0203 405 0205
CEO Review
Over the last nine months we have been able to fully immerse
ourselves into all aspects of the business, which has enabled
myself, Tom Carter and Jo Hutton (Commercial Director) to get a
thorough understanding of the business' strengths and
opportunities.
I am pleased to be reporting our results for the first half of
the year, but first and foremost, I would like to take this
opportunity to thank our team for their hard work. The pandemic has
bought about numerous challenges and changes to both how we work
and the environment in which we operate, and yet across the Group
we have seen our people continuing to tackle each day with
enthusiasm, diligence and a positive outlook.
In September we were optimistic of seeing some green shoots
following the easing of restrictions over the summer months. The
tightening of restrictions since then has meant we have continued
to be impacted by the fluctuating demands of customers and
end-consumers, particularly with many domestic and international
high street outlets, either closed or experiencing significantly
decreased footfall. In addition, several brands & categories
have been adversely affected by consumers staying at home, such as
male grooming and hairstyling. Brexit placed further stress on our
manufacturing lead times, given freight container shortages and
paperwork delays at the UK ports for Asian manufactured stock and
imported componentry, which in turn led to some stock pressures in
December.
Notwithstanding this, we have successfully pushed ahead with key
tenets of our strategy over the half year period. Key achievements
include:
-- Expected 5-year appointment of Global leading e-Commerce
providers, as our new direct-to-consumer (DTC) partner, who will
work in creating and launching a new market place in July 21
-- Capitalising on Super Facialist +50% sales growth, created a
transformational and integrated above the line (ATL) campaign to
run from May 21- March 22.
-- Developed a communication program to effectively market five
brand relaunches and NPD program from May onwards.
-- 98% of all products will be 100% recyclable; all NPD will
utilise a minimum 30% post consumer recycled plastic (PCR); all UK
sourced card and outer packaging will be Forest Stewardship Counci
(FSC) certified.
-- 1m improvement in Net Cash position to GBP19.0m.
Performance review
Net sales for HY21 were GBP9.0m, a decline of 10% on the prior
year (GBP10.0m on a like for like basis). Our business on the high
street (Boots & Superdrug) has been adversely affected by Covid
and its impact on consumer footfall, but we have seen good growth
in the multiple grocers, DTC and e-tailers. Overall, Super
Facialist continues to show strong growth of 50+% and reflects
consumer demand and strong distribution gains. However, the two
principal reasons for the decline year on year was a GBP0.6m
shortfall on Christmas Gift (-25% YoY), which was a direct result
of retailers placing smaller volumes back in March 2020 at the
height of the first lockdown and a further GBP0.4m net shortfall,
which can be attributed to the impact of Covid on certain
categories and channels.
Gross profit margin was 39% (H1 2020: 38%) an improvement on
last year, reflecting an increase in facial skincare sales (margin
accretive) and a change in channel mix from the high street to
e-commerce.
Profit before tax increased to GBP0.4m (H1 2020: GBP0.3m).
Net cash position as at the period end was GBP19.0m. The strong
cash balance positions the Group well for future growth as we look
to further invest our operating cash flows across all aspects of
the business.
Strategic Review
Despite all the changes happening in the wider world, the new
management team were able to get under the skin of the business. As
previously announced, we launched "Project 50" internally, and
despite the lockdown extension and continued challenging retail
conditions, believe this is eminently achievable. To reach this
goal, we set out four strategic priorities centred around
operational efficiency; optimising our portfolio; channel
development and being a responsible business.
Within our plan, FY21 is a year of consolidation and
reinvigoration for Brand Architekts, as we finalise the platform,
the products, and the routes to market that will drive this
business forward - I am pleased that we have made good progress
against these objectives.
Operational efficiency
To become a consumer centric brands-only business, there was a
need for data investment that alongside our inherent consumer
insights, would allow us to understand our customers and markets
better, thereby enabling us to create products that consumers
demand.
Significant progress has been made, with the implementation and
integration of customer & consumer shopping data dashboards,
which enables the business to undertake in-depth analysis of our
performance versus the market. These tools will provide much
greater insight and prove invaluable as we increase scale and
control over how we maximise our portfolio and grow our
business.
The business is also in the process of implementing a demand
planning system, approvals management portal and business
intelligence application. These systems will be key enablers in
underpinning good customer service levels and strengthening
internal controls, while providing financial insights and robust
oversight of working capital.
Further enhancements are being scoped to strengthen both our new
product development (NPD) and purchasing processes, unlocking
efficiencies through automation and integrating with our key
suppliers during the next 12 months.
We believe that the culture of a business is one of the key
ingredients to success and over the last six months we have
encouraged a nimble and agile mindset; promoted a bias for action
and willingness to change, whilst embedding a culture of
empowerment; and a challenger mindset. This is a step change in the
way in which we think and act.
Whilst we have made good inroads so far there is still some way
to go in driving the operational platform to complement the Group's
Project 50 ambition.
Optimising our portfolio
Our true passion is evolving and working with brands and there
is no doubt that one of Brand Architekts' key strengths is its
brand portfolio. As part of Project 50, we set out to rationalise
the brand & product line up, with the intention of relaunching
all non-performing brands within 2021, whilst supporting all
omnichannel brands with relevant marketing programs.
Substantial work has been undertaken by our teams to create
redesigns and relaunch strategies for several our brands,
including: Kind Natured; Happy Naturals; SenSpa; Argan; Root
Perfect, and I am particularly pleased with the work-to-date. These
relaunches are set to take place over the course of the next six
months, with the timing dictated by customer purchasing cycles. We
were also able to launch an ingredient led bodycare range "The
Solution", as a Superdrug exclusive in September 2020.
In the second half of the year, we will be launching our largest
ever marketing campaign for Super Facialist. The brand has
delivered double digit growth and has been able to capture the
spirit of consumers wanting facial treatments at home. The
integrated media campaign will see a mix of video, social and
digital that will deliver a strong level of coverage and frequency.
The proposed 11-month campaign has been very well received by both
our customers and consumers (through inhouse research) and we are
confident that this investment will be drive sales for the brand
over the next 18 months.
In addition, we have an integrated communications program of
events to support our brand relaunches; new product initiatives and
key selling periods.
The relaunches and additional investments described above will
be funded through the Group's operational cash flow.
Channel development
Whilst there will naturally be some shift back once the high
street is reopened, the trends seen during the times when
restrictions were relaxed earlier this year, suggest that a
significant proportion of retail will remain online. Having a
robust direct-to-consumer (DTC) channel is therefore vitally
important to cater to all shopping habits. Although sales from this
channel have grown by over 400% YTD, it is important to remember
that this growth is against a very low initial base of GBP52k last
year. The strategic objective of creating and building a Brand
Architekts marketplace addresses the definitive need for an
e-commerce site that sells our full product portfolio. This will
allow us to cross-sell between brands and utilise the benefits of
shared e-commerce assets. The marketplace will enable each brand to
be fully showcased, whilst also giving the business the opportunity
to launch and trial new BA brands and products. Over time the
marketplace will allow us to establish an asset that will be a new
beauty challenger community of consumers and advocates.
Having decided that a more sophisticated approach was necessary
and having explored several options and three months of due
diligence, we are delighted that we have reached an agreement in
principle with one of the world's leading e-Commerce and fulfilment
providers as our new DTC partner, who will work with us in
developing a bespoke marketplace for all Brand Architekts'
portfolio. Their proven ecommerce platform reduces execution risk;
its extensive logistical operatio n makes it very cost efficient
and it has the capabilities for fast and easy International
expansion. Over the next 6 months we will be working closely with
their content production and performance marketing teams to design
and launch our new platform in Q1 of the next financial year. This
investment will enable us to become a truly omni-channel business
and in line with our Project 50 aspirations, enable us to
organically grow our DTC sales to GBP10m+ over 5years.
Being a responsible business
We are fully committed to acting responsibly across the Group.
This will not only make our business a better partner for our
retail customers, but also means that purchasing our products will
be a choice that our end-consumers feel good to make. In September
we launched our Sustainability Blueprint and we are making good
progress in embedding the principles across the business and our
supplier partners.
Looking ahead, 98% of our lines will be 100% recyclable and all
UK sourced secondary packaging and outers will be made of Forest
Stewardship Council (FSC) certified board and will be 100%
recyclable. 90% of NPD lines will contain a minimum of 30% Post
Consumer Recycled (PCR) and 99% of our gift sets secondary
packaging will be made of recyclable materials (plastic free)
Defined Benefit Pension Plan
The Scheme is now closed to new members and to further accruals
of benefits. The Company is finalising the latest triennial funding
valuation as of 5 April 2020 and future funding deficit repayments
(currently GBP0.3m per annum). We continue to work closely with the
Trustee and believe that our objectives over the long-term are
aligned to ensure a robust Company that is able to support and
provide a strong covenant to the plan. A further update will be
provided at the year end.
Dividends
Given the Group's strategic focus on investing for growth to
reach its Project 50 goal and build a business of scale, the Board
will not be proposing an interim dividend. The Board recognises the
importance of dividends to the Group shareholders and will keep
future dividend payments under review and further updates will be
made as appropriate.
Outlook
The macroeconomic environment looks set to remain uncertain for
the remainder of the financial year driven by the Government's
fast-changing responses to Covid-19 and a likely impact on consumer
demand, given pressures on disposable income.
We will continue to evaluate all M&A opportunities against
Project 50's demanding growth potential and value criteria. We are
confident that progress will be made in this regard, but timing is
difficult to predict.
This year is one of consolidation, transition and putting in
place strategic building blocks for a transformational 2021/22. The
Group's focus in H2 is to land the 5 brand relaunches; deliver
Super Facialist's advertising campaign and thereby continue to
raise awareness and grow sales; continue to progress omni-channel
distribution gains and lay the foundations for the creation and
implementation of our be-spoke DTC marketplace. The significant
investments we will be making from our operating cash flow in H2
will drive growth from the financial year ended June 2022
onwards.
Group Statement of Comprehensive Income
Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
Continuing operations Notes GBP'000 GBP'000 GBP'000
Revenue 2 9,049 10,568 16,250
Cost of sales (5,517) (6,597) (13,069)
------------------------------------- ------ ------------- --------------- ---------------
Gross profit 3,532 3,971 3,181
Commercial and administrative
costs (2,974) (3,120) (5,859)
------------------------------------- ------ ------------- --------------- ---------------
Operating profit before exceptional
items 558 851 (2,678)
Exceptional items - (472) (1,444)
------------------------------------- ------ ------------- --------------- ---------------
Operating profit 558 379 (4,122)
------------------------------------- ------ ------------- --------------- ---------------
Finance income 2 46 77
Finance costs 3 (125) (123) (301)
Profit before taxation on
continuing operations 435 302 (4,346)
Taxation (17) (57) 55
------------------------------------- ------ ------------- --------------- ---------------
Profit after taxation on
continuing operations 418 245 (4,291)
Profit on discontinued operations
after taxation 8 - 6,278 6,529
------------------------------------- ------ ------------- --------------- ---------------
Profit after taxation 418 6,523 2,238
Other comprehensive (loss) / income for the
period:
Re-measurement of defined
benefit liability (113) (1,040) (4,086)
Items that will be reclassified
subsequently to profit or
loss:
Exchange differences on translating
foreign operations - (48) (49)
Other comprehensive loss
for the period (113) (1,088) (4,135)
------------------------------------- ------ ------------- --------------- ---------------
Total comprehensive income
/ (loss) for the period 305 5,435 (1,897)
===================================== ====== ============= =============== ===============
Profit attributable to:
------------------------------------- ------ ------------- --------------- ---------------
Equity shareholders 392 6,456 2,217
------------------------------------- ------ ------------- --------------- ---------------
Non-controlling interests 26 67 21
Continuing Operations - Profit
attributable to:
--------------------------------------------- ------------- --------------- ---------------
Equity shareholders 392 178 1,489
------------------------------------- ------ ------------- --------------- ---------------
Non-controlling interests 26 67 101
Total comprehensive income
/ (loss) attributable to:
------------------------------------- ------ ------------- --------------- ---------------
Equity shareholders 279 5,368 (1,918)
------------------------------------- ------ ------------- --------------- ---------------
Non-controlling interests 26 67 21
Earnings per share
- basic 4 2.3p 37.7p 12.9p
- diluted 4 2.3p 37.5p 12.9p
Dividend
Paid in period (GBP'000) - 745 745
Paid in period (pence per
share) 0p 4.35p 4.35p
Proposed (GBP'000) - 154 Nil
Proposed (pence per share) 5 0p 0.9p Nil
Group Statement of Financial Position
As at As at As at
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and
equipment 130 195 142
Intangible assets 11,637 12,757 11,714
Deferred tax assets 2,526 1,926 2,515
Total non-current
assets 14,293 14,878 14,371
----------------------------- ------ ------------ ------------ -------------
Current assets
Inventories 2,251 6,210 3,724
Trade and other receivables 4,962 8,277 3,969
Cash and cash equivalents 19,026 20,000 21,240
Current tax receivable 413 555 836
----------------------------- ------ ------------ ------------ -------------
Total current assets 26,652 35,042 29,769
----------------------------- ------ ------------ ------------ -------------
Total assets 40,945 49,920 44,140
----------------------------- ------ ------------ ------------ -------------
LIABILITIES
Current liabilities
Trade and other payables 3,059 5,893 4,503
Interest-bearing
loans and borrowings - 1,075 1,029
Current tax payable 25 259 -
----------------------------- ------ ------------ ------------ -------------
Total current liabilities 3,084 7,227 5,532
----------------------------- ------ ------------ ------------ -------------
Non-current liabilities
Interest-bearing
loans and borrowings - 1,548 1,066
Post-retirement benefit
obligations 7 13,195 9,505 13,237
Lease liabilities 57 - 81
Deferred tax liabilities 1,154 1,047 1,154
Total non-current
liabilities 14,406 12,100 15,538
----------------------------- ------ ------------ ------------ -------------
Total liabilities 17,490 19,327 21,070
----------------------------- ------ ------------ ------------ -------------
Net assets 23,455 30,593 23,070
----------------------------- ------ ------------ ------------ -------------
EQUITY
Share capital 862 857 862
Share premium 11,987 11,987 11,987
Revaluation of investment
reserve - - -
Exchange reserve - - -
Re-measurement of
defined benefit pension
fund liability (10,701) (7,542) (10,588)
Retained earnings 21,183 25,112 20,711
----------------------------- ------ ------------ ------------ -------------
Total equity 23,331 30,414 22,972
----------------------------- ------ ------------ ------------ -------------
Non-controlling interest 124 179 98
----------------------------- ------ ------------ ------------ -------------
Total equity 23,455 30,593 23,070
----------------------------- ------ ------------ ------------ -------------
Group Statement of Changes in Equity
Share Share Revaluation Exchange Pension Retained Non-controlling Total
Capital Premium of Reserve re-measurement Earnings interest Equity
investment reserve
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Balance as
at June 2020 862 11,987 - - (10,588) 20,711 98 23,070
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Dividends - - - - - - - -
Non-controlling
interest - - - - - - 26 26
Share-based
payments - - - - - 80 - 80
Transactions
with owners
and reserve
transfers - - - - - 80 26 106
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Profit for
the period - - - - - 392 - 392
Other
comprehensive
income:
Re-measurement
of defined
benefit
liability - - - - (113) - - (113)
Exchange
difference
on translating
foreign
operations - - - - - - - -
Total
comprehensive
income for
the year - - - - (113) 392 - 279
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Balance as
at 31 December
2020 862 11,987 0 0 (10,701) 21,183 124 23,455
----------------- -------- --------- ------------ --------- --------------- --------- ---------------- ---------
Share Share Revaluation Exchange Pension Retained Non-controlling Total
Capital Premium of Reserve re-measurement Earnings interest Equity
investment reserve
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Balance as at
June 2019 857 11,987 1,241 (147) (6,502) 18,160 145 25,741
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Dividends - - - - - (745) (33) (778)
Non-controlling
interest - - - - - - 67 67
Realisation
of exchange
differences
on sale of
subsidiary - - - 195 - - - 195
Realised profit
on asset sold - - (1,241) - - 1,241 - -
Transactions
with owners
and reserve
transfers - - (1,241) 195 - 496 34 (516)
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Profit for the
period - - - - - 6,456 - 6,456
Other
comprehensive
income:
Re-measurement
of defined
benefit
liability - - - - (1,040) - - (1,040)
Exchange
difference
on translating
foreign
operations - - - (48) - - - (48)
Total
comprehensive
income for the
year - - - (48) (1,040) 6,456 - 5,368
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Balance as at
11 January 2020 857 11,987 - - (7,542) 25,112 179 30,593
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Share Share Revaluation Exchange Pension Retained Non-controlling Total
Capital Premium of Reserve re-measurement Earnings interest Equity
investment reserve
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Balance as at
June 2019 857 11,987 1,241 (147) (6,502) 18,160 145 25,741
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Dividends - - - - - (745) (68) (813)
Issue of New
Shares 5 - - - - - - 5
Non-controlling
interest - - - - - - 21 21
Share-based
payments
(credit) - - - - - (162) - (162)
Realisation of
exchange
differences
on sale of
subsidiary - - - 196 - - - 196
Transactions
with owners and
reserve
transfers 5 - - 196 - (907) (47) (753)
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Profit for the
period - - - - - 2,217 - 2,217
Other
comprehensive
income:
Re-measurement
of defined
benefit
liability - - - - (4,086) - - (4,086)
Exchange
difference
on translating
foreign
operations - - - (49) - - - (49)
Realised profit
on asset sold - - (1,241) - - 1,241 - -
Total
comprehensive
income for the
year - - (1,241) (49) (4,086) 3,458 - (1,918)
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Balance as at
June 2020 862 11,987 - - (10,588) 20,711 98 23,070
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Group Cash Flow Statement
Period ended 28 weeks 52 weeks
ended ended
31 Dec 2020 11 Jan 2020 27 June 2020
Notes (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Profit before taxation 435 6,580 2,183
Depreciation 28 12 93
Amortisation 138 142 1,204
Profit on disposal of manufacturing
business 8 - (8,762) (8,922)
Increase in assets held for
resale - (3,008) (3,225)
Finance income (2) (46) (77)
Finance cost 125 181 324
Decrease/ (Increase) in inventories 1,473 (999) 1,487
(Increase) in trade and other
receivables (993) (3,512) (494)
(Decrease)/ Increase in trade
and other payables (300) 1,086 923
Share-based payment expense 80 (48) (124)
Contributions to defined benefit
plan (159) (159) (318)
Cash generated from/(used
in) operations 825 (8,533) (6,946)
------------------------------------- ------ ------------- ------------ -------------
Finance expense paid (123) (83) (128)
Taxation paid 407 (595) (773)
------------------------------------- ------ ------------- ------------ -------------
Net cash flow from/ (used
in) operating activities 1,109 (9,211) (7,847)
------------------------------------- ------ ------------- ------------ -------------
Cash flow from investing activities
Purchase of property, plant
and equipment (13) (27) (28)
Purchase of intangibles (61) (81) (101)
Proceeds from disposal of
manufacturing business 8 - 32,274 35,255
Cost associated with disposal
of subsidiaries - - (1,315)
Net cash flow (used in)/generated
by investing activities (74) 32,166 33,811
------------------------------------- ------ ------------- ------------ -------------
Cash flow from financing activities
Finance income received 2 46 77
Movements in invoice discounting
facility (1,132) (1,997) (3,187)
Repayment of loans (2,095) (607) (1,135)
Lease payments (24) - (52)
Issue of new shares - - 5
Dividends paid - (778) (813)
------------------------------------- ------ ------------- ------------ -------------
Net cash flow (used in) financing
activities (3,249) (3,336) (5,105)
------------------------------------- ------ ------------- ------------ -------------
Net (decrease)/ increase in
cash and cash equivalents (2,214) 19,619 20,859
Cash and cash equivalents
at beginning of period 21,240 381 381
------------------------------------- ------ ------------- ------------ -------------
Cash and cash equivalents
at end of period 19,026 20,000 21,240
------------------------------------- ------ ------------- ------------ -------------
Notes to the Accounts
Note 1 Basis of preparation
The Group has prepared its interim results for the six-month
period ended 31 December 2020 in accordance with the recognition
and measurement principles of International Financial Reporting
Standards (IFRS) as adopted by the European Union and also in
accordance with the recognition and measurement principles of IFRS
issued by the International Accounting Standards Board. The Group
has previously prepared its results for a 52-week period. The
comparative interim and results presented are, therefore, made up
to 11 Jan 2020 and 27 June 2020 respectively.
The Directors have considered trading and cash flow forecasts
prepared for the Group, and based on these, and the confirmed
banking facilities, are satisfied that the Group will continue to
be able to meet its liabilities as they fall due for at least one
year from the date of approval of the Interim Report. On this
basis, they consider it appropriate to adopt the going concern
basis in the preparation of these accounts.
As permitted, this interim report has been prepared in
accordance with the AIM rules and not in accordance with IAS34
'Interim Financial Reporting'.
These interim financial statements do not constitute full
statutory accounts within the meaning of section 434 of the
Companies Act 2006 and are unaudited. The unaudited interim
financial statements were approved by the Board of Directors on
8(th) March 2021.
The consolidated financial statements are prepared under the
historical cost convention. The accounting policies used in the
interim financial statements are consistent with IFRS and those
which will be adopted in the preparation of the Group's Annual
Report and Financial Statements for the year ended June 2021.
The statutory accounts for the year ended June 2020, which were
prepared under IFRS, have been filed with the Registrar of
Companies. These statutory accounts carried an unqualified Auditors
Report and did not contain a statement under Section 498(2) or
498(3) of the Companies Act 2006.
In August 2019, the Group sold its 100% interest in Curzon
Supplies Ltd for consideration of GBP35m (completing the disposal
of the Manufacturing segment) which is the only operation presented
as discontinued operations in the comparative figures. Curzon
Supplies Ltd was incorporated in March 2019. The impact of the
disposal on the comparative figures is disclosed in Note 9.
The Group has not changed any of its accounting policies in the
6 months to 31 December 2020.
Note 2 Segmental analysis (unaudited)
The Group is a market leader in the development and supply of
beauty and personal care brands.
The reportable segments of the Group are aggregated as
follows:
-- Brands - since the disposal of the manufacturing business in
August 2019 this has become the Group's sole focus and is referred
to elsewhere in these results as 'continuing operations'. The
portfolio of brands consists primarily of brands acquired by the
Group as part of the acquisition of The Brand Architekts in 2016
plus the acquisitions of Real Shaving Company (2015) and Fish
(2018).
-- Manufacturing - the development, formulation, and production
of quality products for many of the world's leading personal care
and beauty brands. The manufacturing business was sold in August
2019 and its results in the period have been treated as
discontinued operations. The impact of the disposal is disclosed in
Note 9. The profit on disposal of the manufacturing business is
included as an exceptional item in the segmental information.
-- Eliminations and Central Costs - other Group-wide activities
and expenses, including defined benefit pension costs (closed
defined benefit scheme), certain LTIP expenses, amortisation of
acquisition-related intangibles, interest, taxation and
eliminations of intersegment items, are presented within
'Eliminations and central costs'.
This is the basis on which the Group presents its operating
results to the Board of Directors, which is considered to be the
chief operating decision maker (CODM) for the purposes of IFRS 8.
Following the sale of the manufacturing business in 2019, the
reportable segments of the Group will be kept under review by
management and further updates made as appropriate.
a) Principal measures of profit and loss - Income Statement segmental information:
Period ended 31 December 2020 28 weeks ended 11 January 2020
Brands Eliminations Total Brands Manufacturing Eliminations Total
and Central and Central
Costs Costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
UK revenue 7,791 - 7,791 8,744 4,841 - 13,585
International
revenue 1,258 - 1,258 1,819 2,639 - 4,458
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
Revenue - External 9,049 - 9,049 10,563 7,480 - 18,043
Revenue - Internal - - - 5 990 (995) -
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
Total revenue 9,049 - 9,049 10,568 8,470 (995) 18,043
Discontinued
Operations - - - - (8,470) 990 (7,480)
Total revenue 9,049 - 9,049 10,568 - (5) 10,563
Underlying
operating profit/(loss) 1,405 (629) 776 1,637 (969) (483) 185
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
Charge for
share based
payments (14) (66) (80) - - (161) (161)
Amortisation
of acquisition-related
intangibles - (138) (138) - - (142) (142)
Charge for - - - -
stock provisions - - -
Net exceptional
items - - - (132) 7,305 (340) 6,833
Net borrowing
income / (costs) (5) (118) (123) (25) (58) (52) (135)
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
Segment (profit)
/ loss included
in Discontinued
Operations - - - - (6,278) - (6,278)
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
Profit/(loss)
before taxation 1,386 (951) 435 1,480 - (1,178) 302
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
Tax charge (25) 8 (17) - - (57) (57)
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
Profit/(loss)
for the period
from Continuing
Operations 1,361 (943) 418 1,480 - (1,235) 245
-------------------------- -------- ------------- -------- -------- -------------- ------------- --------
The segmental Income Statement disclosures are measured in
accordance with the Group's accounting policies as set out in note
1.
Inter segment revenue earned by Manufacturing from sales to
Brands was determined in 2020 on normal commercial trading terms as
if Brands were any other third-party customer.
All defined benefit pension costs and certain LTIP expenses are
recognised for internal reporting to the CODM as part of Group-wide
activities and are included within 'Eliminations and central costs'
above. Other costs, such as Group insurance and auditors'
remuneration which are incurred on a Group-wide basis are recharged
by the head office to segments on a reasonable and consistent basis
for all periods presented and are included within segment results
above.
Included in Net exceptional items in the comparative figures in
Manufacturing is the profit on disposal of the manufacturing
business of GBP8,762k offset by bonuses paid out on deal completion
of GBP1,116k and stock provision adjustments of GBP341k.
Exceptional items from continuing operations represents GBP0.3m in
relation to the departure in September of the former Chief
Executive Officer and GBP0.2m exceptional consultancy fees.
b) Other Income Statement segmental information
The following additional items are included in the measures of
profit and loss reported to the CODM and are included within (a)
above:
Period ended 31 December Brands Manufacturing Eliminations Total
2020 and Central
Costs
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------------- ------------- --------
Depreciation 28 - - 28
Amortisation - - 138 138
28 weeks ended 11 January Brands Manufacturing Eliminations Total
2020 and Central
Costs
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------------- ------------- --------
Depreciation 12 - - 12
Amortisation - - 142 142
c) Principal measures of assets and liabilities
The Groups assets and liabilities are managed centrally by the
CODM and consequently there is no reconciliation between the
Group's assets per the statement of financial position and the
segment assets.
d) Additional entity-wide disclosures
The distribution of the Group's external revenue by destination
is shown below:
Geographical segments Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- --------------- ---------------
UK 7,791 13,585 18,637
Other European Union countries 373 2,430 2,683
Rest of the World 885 2,028 2,410
------------- --------------- ---------------
9,049 18,043 23,730
------------- --------------- ---------------
Geographical segments - Continuing Period ended 28 weeks ended 52 weeks ended
Operations
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- --------------- ---------------
UK 7,791 8,744 13,796
Other European Union countries 373 288 541
Rest of the World 885 1,531 1,913
------------- --------------- ---------------
9,049 10,563 16,250
------------- --------------- ---------------
In the period ended 31 December 2020, the Group had two
customers that exceeded 10% of revenues from Continuing Operations,
being 24% and 11.8% respectively. In the 28 weeks ended 11 January
2020, the Group had two customers that exceeded 10% of revenues
from Continuing Operations, being 21.2% and 11.5% respectively.
Note 3 Finance costs
Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- --------------- ---------------
Total
Bank loans and overdrafts 27 83 128
Notional pension scheme costs 98 98 196
------------- --------------- ---------------
125 181 324
------------- --------------- ---------------
Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- --------------- ---------------
Continuing Operations
Bank loans and overdrafts 27 25 105
Notional pension scheme costs 98 98 196
------------- --------------- ---------------
125 123 301
------------- --------------- ---------------
Note 4 Earnings per share
Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
------------- --------------- ---------------
Basic and diluted
Profit attributable to equity
shareholders (GBP'000) 392 6,456 2,217
Profit/(loss) attributable to
equity shareholders Continuing
Operations ('000) 392 178 (4,312)
Basic weighted average number
of
ordinary shares in issue during
the period 17,277,146 17,135,542 17,143,646
Diluted number of shares 17,366,146 17,230,703 17,143,646
Basic earnings per share 2.3p 37.7p 12.9p
--------------------------------- ------------- --------------- ---------------
Diluted earnings per share 2.3p 37.5p 12.9p
Basic earnings/(loss) per share
continuing operations 2.3p 1.0p (25.2)p
--------------------------------- ------------- --------------- ---------------
Diluted earnings/(loss) per
share continuing operations 2.3p 1.0p (25.2)p
--------------------------------- ------------- --------------- ---------------
Basic earnings/(loss) per share has been calculated by dividing
the profit/(loss) for each financial period by the weighted average
number of ordinary shares in issue in the period.
0BAdjusted earnings per share Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
------------- --------------- ---------------
Profit attributable to equity
shareholders (GBP'000) 392 6,456 2,217
Add back: Net exceptional items
(GBP'000) - (6,833) (6,016)
Add back: Amortisation of Acquisition
Related Intangibles (GBP'000) 138 142 275
Notional tax charge on above
items (GBP'000) (26) (393) (605)
--------------------------------------- ----------- ----------- -----------
Adjusted profit/(loss) before
exceptional items (GBP'000) 504 (628) (4,129)
--------------------------------------- ----------- ----------- -----------
Basic weighted average number
of
ordinary shares in issue during
the period 17,277,246 17,135,542 17,143,646
Diluted number of shares 17,366,146 17,230,703 17,143,646
--------------------------------------- ----------- ----------- -----------
Adjusted basic earnings/(loss)
per share 2.9p (3.7)p (24.1)p
--------------------------------------- ----------- ----------- -----------
Adjusted diluted earnings/(loss)
per share 2.9p (3.7)p (24.1)p
--------------------------------------- ----------- ----------- -----------
1BAdjusted earnings per share Period ended 28 weeks 52 weeks
- Continuing Operations ended ended
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
------------- ------------ -------------
Profit attributable to equity
shareholders (GBP'000) 392 178 (4,312)
Add back: Net exceptional items
(GBP'000) - 472 1,444
Add back: Amortisation of Acquisition
Related Intangibles (GBP'000) 138 142 275
Notional tax charge on above
items (GBP'000) (26) (117) (327)
--------------------------------------- ----------- ----------- -----------
Adjusted profit/(loss) before
exceptional items (GBP'000) 504 675 (2,920)
--------------------------------------- ----------- ----------- -----------
Basic weighted average number
of
ordinary shares in issue during
the period 17,277,246 17,135,542 17,143,646
Diluted number of shares 17,366,146 17,230,703 17,143,646
--------------------------------------- ----------- ----------- -----------
Adjusted basic earnings/(loss)
per share 2.9p 3.9p (17.0)p
--------------------------------------- ----------- ----------- -----------
Adjusted diluted earnings/(loss)
per share 2.9p 3.9p (17.0)p
--------------------------------------- ----------- ----------- -----------
Adjusted earnings per share has been calculated by dividing the
adjusted profit (after allowing for the notional tax charge on
exceptional items) by the weighted average number of shares in
issue in the period.
Note 5 Dividends
The Directors have not declared an interim dividend payment for
the period (2020: Interim: 0.9p; Final: GBPNil).
Note 6 Notes to Cash Flow Statement
(a) Reconciliation of cash and cash equivalents to movement in
net debt:
Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 Jan 2020 27 June 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- --------------- ---------------
Increase / (decrease) in cash
and cash equivalents in the
period (2,214) 19,619 20,859
Net cash outflow from decrease
in borrowings 3,227 2,604 4,322
------------------------------------ ------------- --------------- ---------------
Change in net debt resulting
from cash flows 1,013 22,223 25,181
Net cash / (debt) at the beginning
of the period 18,013 (7,168) (7,168)
------------------------------------ ------------- --------------- ---------------
Net cash at the end of the period 19,026 15,055 18,013
------------------------------------ ------------- --------------- ---------------
(b) Analysis of net cash/(debt):
Closing Cash flow Closing
11 Jan 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
------------- ---------- -------------
Cash at bank and in hand 21,240 (2,216) 19,026
CID facility (1,132) 1,132 0
Borrowings due within one year (1,029) 1,029 0
Borrowings due after one year (1,066) 1,066 0
-------------------------------- ------------- ---------- -------------
18,013 1,013 19,026
-------------------------------- ------------- ---------- -------------
Note 7 IAS 19 'Employee Benefits'
Expected future cash flows to and from the Group's defined
benefit pension scheme:
The Scheme is closed to new members and to further accruals of
benefits. It is subject to the scheme funding requirements outlined
in UK legislation. The last scheme funding valuation of the Scheme
was as at 5 April 2017 and revealed a funding deficit of GBP2.6m.
The liabilities of the Scheme are based on the current value of
expected benefit payments to members of the Scheme over the next 60
to 80 years. The average duration of the liabilities is
approximately 20 years.
In accordance with the schedule of contributions dated 4
September 2018, the Company is expected to pay contributions to the
Scheme to make good shortfalls in funding identified in the 5 April
2017 funding valuation and has agreed to pay GBP0.3m per annum. The
magnitude of such payments is being reviewed following the scheme
funding valuation as at April 2020.
In addition, the Company has agreed to meet the cost of
administrative expenses and Pension Protection Fund insurance
premiums for the Scheme.
Payments made by the Company to the Scheme and in respect of
Scheme liabilities were:
Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 January 2020 27 June 2020
GBP'000 GBP'000 GBP'000
------------- ----------------- ---------------
Company pension contributions - - -
Deficit recovery payments 159 159 318
Scheme administrative
expenses 69 138 121
Pension Protection Fund
premium 101 120 121
------------------------------- ------------- ----------------- ---------------
Total 329 417 560
------------------------------- ------------- ----------------- ---------------
The amounts expensed in the Group Statement of Comprehensive
Income were:
Period ended 28 weeks ended 52 weeks ended
31 Dec 2020 11 January 2020 27 June 2020
GBP'000 GBP'000 GBP'000
------------- ----------------- ---------------
In Operating profit:
Scheme administrative
expenses 69 92 121
Pension Protection Fund
premium 101 65 121
Past service measurement
gain on pension scheme
- included in profit on
disposal of manufacturing
business - - (1,103)
------------- ----------------- ---------------
170 157 (861)
In Finance costs:
Unwinding of notional
discount factor 98 98 196
---------------------------- ------------- ----------------- ---------------
Total 268 255 (665)
---------------------------- ------------- ----------------- ---------------
IAS 19 requires a separate valuation of the Scheme on a
different basis to the funding valuation referred to above.
The key assumptions used were:
At 31 December At 11 January At 27 June 2020
2020 2020
--------------- -------------- ----------------
Discount Rate 1.40% 2.00% 1.50%
Rate of inflation (RPI) 2.85% 2.90% 2.75%
Rate of inflation (CPI) 1.95% 2.00% 1.85%
The amounts recognised in the Group statement of financial
position were:
At 31 December At 11 January At 27 June 2020
2020 2020
GBP'000 GBP'000 GBP'000
--------------- -------------- ----------------
Present value of funded
obligations (38,714) (34,367) (37,324)
Fair value of scheme assets 25,519 24,862 24,087
----------------------------- --------------- -------------- ----------------
(Deficit) (13,195) (9,505) (13,237)
----------------------------- --------------- -------------- ----------------
Note 8 Discontinued operations
In August 2019, the Group sold its 100% interest in Curzon
Supplies Ltd for consideration of GBP35m (completing the disposal
of the Manufacturing segment) which is the only operation presented
as discontinued operations. Curzon Supplies Ltd was incorporated in
March 2019.
Result of discontinued operations: Period ended 28 weeks 52 weeks
ended ended
31 December 11 January 27 June
2020 2020 2020
GBP'000 GBP'000 GBP'000
Revenue - 7,480 7,480
Expenses other than finance costs - (8,449) (8,389)
(Finance costs) / investment income - (58) (22)
Exceptional costs - (1,457) (1,462)
Profit on disposal of manufacturing
business - 8,762 8,922
Tax credit / (expense) - - -
Profit for the year - 6,278 6,529
-------------- ---------------- ----------
Included in Exceptional costs in discontinued operations were bonuses
paid out on deal completion of GBP1.1m and stock provision adjustments
of GBP0.3m.
Earnings per share from discontinued Period ended 28 weeks ended 52 weeks
operations: 31 December 11 January ended
2020 2020 27 June
2020
----------
Basic earnings per share - 36.6p 38.1p
Diluted earnings per share - 36.4p 38.1p
52 weeks
Earnings per share from discontinued Period ended 28 weeks ended ended
operations excluding profit on 31 December 11 January 27 June
disposal of manufacturing business: 2020 2020 2020
--------------------------------------- --------------- ---------------- ----------
Basic earnings per share - (14.5)p 38.1p
Diluted earnings per share - (14.4)p 38.1p
Cash flow in respect of discontinued Period ended 28 weeks ended 52 weeks
operations: ended
31 December 11 January 27 June
2020 2020 2020
GBP'000 GBP'000 GBP'000
Operating cash flows - 3,220 (5,761)
Investing cash flows - - 35,255
Financing cash flows - (3,592) (3,592)
Total cash flows - (372) 25,902
-------------- ---------------- ----------
Note 9 Announcement of results
The Interim Report will be sent to shareholders and is available
to members of the public at the Company's Registered Office at 8
Waldegrave Road, Teddington, TW11 8GT and on the Company's
website.
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