Science in Sport
plc
("Science in Sport", "the
Company" or the "Group")
Audited Final Results for the Year Ended 31 December
2023
Science in Sport plc (AIM:
SIS), the premium performance nutrition
company serving elite athletes, sports enthusiasts, and the active
lifestyle community, announces its audited final
results for the year ended 31 December 2023 ("FY23" or the
"Period") which show a resilient performance, delivered under
challenging circumstances with a new leadership team in place since
the final quarter of FY23 driving significant change throughout the
business.
The current financial year ending 31
December 2024 ("FY24") is progressing well, with a restructure of
the executive and leadership team, a significant operational cost
review and rationalisation programme underway to deliver annualised
aggregate cost savings in excess of £6m compared to the run rate
prior to the leadership changes. Further details of H1 FY24 Trading
Performance can be seen in the Group's RNS announcement
"Half Year
Pre-Close Trading Update and Executive Appointments"
released on 28th June 2024.
Key
Financials
|
FY23
|
FY22
|
Change
|
Revenue
|
£62.7m
|
£63.8m
|
(1.7%)
|
Gross Profit
|
£26.8m
|
£26.9m
|
(0.4%)
|
Gross Margin
|
42.8%
|
42.2%
|
+0.6bps
|
Trading Contribution
|
£12.8m
|
£9.3m
|
+37.6%
|
Trading Contribution
Margin
|
20.5%
|
14.6%
|
+5.9bps
|
Underlying EBITDA[1]
|
£2.0m
|
£(2.7m)
|
+4.7m
|
Underlying EBITDA margin
|
3.2%
|
(4.2%)
|
+7.4bps
|
Adjusted Net Debt[2]
|
£12.8m
|
£10.9m
|
£(1.9m)
|
Loss Before Taxation
|
£(11.3m)
|
£(10.6m)
|
(6.6%)
|
Loss per share
|
(6.6p)
|
(7.9p)
|
+1.3p
|
FY23 Highlights:
· Restructure of the executive and leadership team with several
senior roles exiting the business.
· Record
revenue trading month in March, with April, May, and June all
setting records for the respective months demonstrate a strong
underlying demand for our products but routes to market have been
reviewed and reset to deliver improved profitability
margins.
· The
Group formed an exclusive partnership in the US with thefeed.com,
who are the number one endurance sports nutrition direct to
consumer business in the US. With this new partnership we have seen
a notable improvement in contribution in this jurisdiction
throughout FY23.
· Amazon
marketplace sales saw a 13% increase, driven by strong growth from
SiS products in the UK and Europe.
· Alongside the leadership changes in Q4 FY24 the Group
significantly reduced A&P spend to ensure the business focused
on profitability and cash generation rather than short term
unsustainable revenue targets.
· A
significant number of uncommercial marketing contracts have been
exited and further savings will be made throughout 2024. Marketing
spend will be aligned to identifiable commercial
traction.
· Significant operational cost savings have been extracted under
the new leadership in the final quarter of 2023 with an annualised
benefit in excess of £6m.
· The
Group continue to successfully integrate the state of the art
160,000 square foot manufacturing and logistics facility in
Blackburn, Lancashire to one combined supply chain site following
launch in 2022.
· Successfully developed a relaunch of the Rego recovery range
for Q1 FY24.
· The
above actions have largely been implemented from the final quarter
of FY23 under the new leadership and have underpinned improvements
in profitability in Trading Contribution of £3.5m (+37.6%) and in
Underlying EBITDA of +£4.7m year on year. The total operational
cost savings are estimated to deliver an annualised benefit in
excess of £6m, the majority of which will be delivered from H2 2024
onwards.
A separate H1 FY24 performance and
future trading outlook RNS "Half Year Pre-Close Trading
Update and Executive Appointments" has been released today
Dan Wright - Executive Chairman
said:
"The Group
has made significant strategic progress with a full business review
completed in the year. Whilst the strength of our two core brands,
SiS and PhD, is unquestionable, the relentless pursuit of top line
growth led to some poor historic strategic decisions and an
inflated operating structure.
Since joining the Board in October
2023 and establishing the new leadership team, the immediate focus
has been managing cash outflow and stabilising the relationship
with our various stakeholders. The prior strategy of aggressive top
line growth across all channels and markets has been reset, with
the revised model of controlled growth whilst delivering
sustainable cash generative profitability at improved margins from
a reduced cost base.
To date, a number of significant
cost rationalisation actions have been taken, benefitting the final
quarter of 2023 and providing a stable platform for 2024 in order
for the business to reset. Whilst we anticipate a short term
reduction of year on year revenue in FY24, EBITDA performance
has continued to strengthen and remains in line with previous
expectations.
Underpinning the Group's new
operating approach, and at the core of the business, are two very
strong brands operating in an expanding marketplace. With
confidence in the revised operating model, the new leadership team
is taking the opportunity to re-engage with our core customers,
shareholders and financing partners. We expect to return to
sustained revenue growth in 2025 and beyond and whilst cognisant of
the challenges ahead are extremely excited about the opportunity to
deliver a profitable and cash generative branded consumer goods
business and substantial shareholder value associated with
it."
For
further information:
Science in Sport plc
|
T: 020 7400 3700
|
Dan Wright, Executive
Chairman
Daniel Lampard, CFO
|
|
|
|
Liberum (Nominated
Adviser and Broker)
|
T: 020 3100 2000
|
Richard Lindley
John More
Anake Singh
|
|
Notes to Editors
About Science in Sport plc
Headquartered in London,
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
active lifestyle community. The Company has two highly regarded
brands, PhD Nutrition, a premium active-nutrition brand targeting
the active lifestyle community, and SiS, a leading endurance
nutrition brand among elite athletes and professional sports
teams.
The two brands sell through the
Company's phd.com and scienceinsport.com digital platforms,
third-party online sites, including Amazon and ebay, and 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.
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 since its launch in 2005. The range now comprises
powders, bars, and supplements, including the high protein, low
sugar range, PhD Smart.
SiS, a leading endurance nutrition
business founded in 1992, has a core range comprising gels, powders
and bars focused on energy, hydration, and recovery. SiS is an
official endurance nutrition supplier to over 330 professional
teams, organisations, and national teams worldwide. SiS supplies
more than 150 professional football clubs in
the UK, Europe, and the USA.
SiS is Performance Solutions partner
to Ineos Grenadiers cycling team, and Tottenham Hotspur, New York
City and CGC Nice football clubs.
For further information, please
visit phd.com and scienceinsport.com
Chairman's Statement
Overview
2023 has been a challenging year for
the Group with a new leadership team in place since the final
quarter of the year to 31 December 2023 driving change throughout
the Group.
For the year ended 31 December 2023,
the Group delivered underlying EBITDA1 of £2.0m in line
with market expectations and despite lower revenues of £62.7m.
Statutory loss before tax was £11.3m resulting in an improved loss
per share of -6.6 pence. Full details of the Group's financial
performance are set out in the Business Review .
The new executive team brings
together vast experience across a range of highly relevant sectors.
The Group are focused on delivering long term shareholder value via
our new strategy outlined below.
Strategy
The Group has made significant
strategic progress with a full business review completed in the
year. Whilst the strength of our two core brands, SiS and PhD, is
unquestionable, the relentless pursuit of top line growth led to
some poor historic strategic decisions and an inflated operating
structure.
Since joining the Board in October
2023 and establishing the new leadership team, the immediate focus
has been managing cash outflow and stabilising the relationship
with our various stakeholders. The prior strategy of aggressive top
line growth across all channels and markets has been reset, with
the model of controlled growth whilst delivering sustainable cash
generative profitability at improved margins from a reduced cost
base.
To date, a number of significant
cost rationalisation actions have been taken, benefitting the final
quarter of 2023 and providing a stable platform for 2024 in order
for the business to reset.
Key actions, both complete and
ongoing, include;
· Restructure of the executive and leadership team with several
senior roles exiting the business.
· Marginal revenue channels have been reset and measures
implemented to secure and grow the Group's profitable revenue
streams. Upon detailed review, a number of overseas distribution
agreements were found to be uncommercial and based on
prioritisation of revenue growth over profitability. While this
will reduce revenues in 2024, we will ensure that our distribution
arrangements are a two way partnership whereby the strength of the
brand is supported by both parties with measurable
deliverables.
· Supplier and operational reviews are underway in conjunction
with product inventory rationalisation.
· Whilst
brand health is robust, and both brands remain leading in their
respective categories, a significant number of uncommercial
marketing contracts have been exited in 2023 and further savings
will be made throughout 2024. Marketing spend will be aligned to
identifiable commercial traction.
1 Earnings before interest, tax, depreciation, amortisation,
loss on disposal of intangible assets, share-based payments,
restructuring costs, transition costs, unrealised foreign exchange
on intercompany balances and other non-EBITDA one-off
costs.
· Significant operational cost savings have been extracted under
the new leadership in the final quarter of 2023 and progress in
implementing operational efficiencies continues to be made. This is
anticipated to generate improved contribution to cashflow and
earnings throughout 2024.
· In
aggregate this will deliver annualised savings totalling £6m, the
majority of which will be delivered in 2024.
Environmental, Social and Governance (ESG)
We are committed to promoting
sustainability and responsible business practices both as a Group
and through our individual brands. As an industry leader, we have
invested in packaging technology and plant to transition all
protein powder products into recyclable pouch packaging, a first
for the sports nutrition industry globally. Furthermore, our move
to a new combined supply chain site in the prior year has seen
significant environmental improvements by reducing transport miles,
carbon emissions and creating new opportunities for those living
and working in Blackburn.
Outlook
Moving forward, we are taking a
balanced view on prospects for 2024. Key strategic areas of focus
include embedding the new operating model post the recent
restructuring; controlled growth over the medium term; and
continued margin improvements resulting in cash generation and
deleveraging. As a result, whilst we anticipate year on year
revenues will reduce, we are targeting a significant improvement of
underlying EBITDA and reduction of the Group's Adjusted net
debt.
Underpinning the Group's new
operating model, and at the core of the business, are two very
strong brands operating in an expanding marketplace. With
confidence in the revised operating model, the new leadership team
are taking the opportunity to re-engage with our core customers,
shareholders and financing partners to build the business from a
more stable platform and ultimately deliver substantial shareholder
value.
Dan
Wright
Executive
Chairman
Science in Sport Overview
Key
Performance Indicators
|
FY23
|
FY22
|
Change
|
Revenue
|
£62.7m
|
£63.8m
|
(1.7%)
|
Gross Margin
|
42.8%
|
42.2%
|
+0.6bps
|
Contribution Margin
|
20.5%
|
14.6%
|
+5.9bps
|
Underlying EBITDA
|
£2.0m
|
£(2.7)m
|
+£4.7m
|
Overview
Headquartered in London,
Science in Sport Plc ('SiS') is a leading sports nutrition business
that develops, manufactures, and markets innovative nutrition
products for professional athletes, sports and fitness enthusiasts
and the active lifestyle community. The Group has two highly
regarded brands, PhD Nutrition ('PhD'), a premium active-nutrition
brand targeting the active lifestyle community, and SiS, a leading
endurance nutrition brand among elite athletes and professional
sports teams.
The two brands sell through the
Group's phd.com and scienceinsport.com digital platforms,
third-party online sites, including Amazon and eBay, and extensive
retail distribution in the UK and internationally, including major
supermarkets, high street chains and specialist sports retailers.
This omnichannel footprint enables the Group to address the full
breadth of the global sports nutrition market, worth $24.6bn in
2022 and forecast to grow at 5.9% CAGR from 2022 to
2027[3].
Launched in 2005, PhD is one of
the UK's leading active nutrition brands with a
reputation for high quality and product innovation. The range
comprises powders, bars, and supplements, including the high
protein, low sugar range, PhD Smart. PhD brand ambassadors include
leading endurance and strength athlete Ross Edgley.
SiS, a leading endurance nutrition
business founded in 1992, has a core range comprising gels, powders
and bars focused on energy, hydration, and recovery. SiS is an
official endurance nutrition supplier to over 330 professional
teams, organisations, and national teams worldwide. SiS supplies
more than 150 professional football clubs in
the UK, Europe, and the USA. Brand ambassadors
include the former track cyclist Sir Chris Hoy, an eleven-time
world champion and six-time Olympic champion, and Elish McColgan,
who won gold in the 2022 Commonwealth Games 10,000
metres.
SiS is a Performance Solutions
partner to INEOS Grenadiers cycling team, Tottenham Hotspur, New
York City and OGC Nice football clubs, as well as Official Sports
Nutrition Partner to the Milwaukee Bucks, 2021 National Basketball
Association Champions. In 2023, winner of the women's marathon at
the 2022 World Athletics Championships, Gotytom Gebreslase, and the
Elite Running Team joined other Performance Solutions partners that
are benefitting from bespoke support and products developed with
world leading science.
In 2022, the Group opened a state of
the art 160,000 square foot manufacturing and logistics facility in
Blackburn, Lancashire.
Our
Brands
The Group's results and operations
are underpinned by our two market leading brands;
PhD
Born from science, with innovation
and quality at the core of the brand, PhD is one of
the UK's leading active nutrition brands. The PhD brand
is established internationally with a strong retail network across
the globe which has enabled the Group to grow and develop the
brand's exceptional reputation.
Our range of PhD products
includes:
· Diet
- The delicious Diet range combines protein, which
is ideal for building and maintaining lean muscle whilst keeping
you satiated for longer.
· Smart
- Consisting of great
tasting high protein, low sugar foods, bars and snacks. This
includes the Smart Bar, an on-the-go protein hit and the multi-use
Smart Protein Powder suitable for cooking.
· Life - A range of premium,
expertly formulated health optimisation products. From the high in
protein, low sugar, plant-based Complete meal solution, and Reset,
a night time formula, to Mind, made to support optimal mental
performance, this is a range to optimise performance for life.
· Performance
- expertly formulated to help you perform at your
best and optimise your training. From key supplements to aid in
strength gains pre and intra workout to replenishment and recovery
post workout, to maximise training and hitting goals.
Science in Sport:
Science in Sport is a leading
performance nutrition brand with over 330 elite athletes and teams
relying on its products for success. The combination of world-class
knowledge and scientific formulations ensure the brand provides
optimal performance solutions for athletes across the nutritional
need states of energy, hydration and recovery.
Our range of SiS products
includes:
· Energy -
Bars, shots, gels and powders to give athletes
energy
· Hydration - Gels, tablets
and powders to keep athletes energised and hydrated
· Recovery -
Powder range to aid athletes' recovery
post-exercise
· Athlete health
- Vitamins and supplements range
designed to support and maintain immune function, digestive health
and bone health amongst athletes
Our focus in delivering long term value
As part of the comprehensive review
of the business in 2023, the leadership team have outlined six key
areas of focus, which will enable the Group to reset in 2024 and
deliver long-term value going forward;
1. World-class science
As a world leader in nutritional
science and product development, investment in science remains at
the core of the business. Quality, efficacy of ingredients and
proven product benefits are key principles of both
brands.
2. Brand exposure
Both brands command significant
share within their respective markets. Science in Sport holds the
number one position in UK retail and marketplace channels, with a
leading presence globally. PhD is in the top three within the UK
retail and marketplace channels and is strongly positioned in the
Asia Pacific region. We will continue to grow brand awareness,
leveraging our Elite athlete portfolio and scientific credentials,
through targeted investment delivering measurable
returns.
3. Sales growth
The opportunity for global sales
growth is significant, given the strength of the brands and
continued positive trajectory of the sports nutrition market. We
will deliver this by working with existing and new partners,
building profitable long-term relationships in the UK and
globally.
4. Financial health
The Group had previously pursued an
aggressive growth strategy, while this delivered positive revenue
growth it was not cash accretive. The revised strategy is on
sustainable profitable cash generation, through delivery of
enhanced margins on a lower cost base while deleveraging the
business.
5. Operational excellence
With the transition to the
manufacturing facility at Blackburn fully completed, optimising the
supply chain and manufacturing processes to deliver enhanced
margins is the key focus for 2024.
6. High performing team
We are resetting the culture and
ways of working; we are creating the conditions where everyone can
perform at their best by integrating all aspects of our business
and ensuring accountability and product pride across every
department.
Our Market and Customers
The global sports nutrition market
was worth $24.6bn in 2022 and is forecast to grow at 5.9% CAGR from
2022 to 2027. Our 2023 revenue of £62.7m (2022: £63.8m) represents
a solid foothold in this market but highlights the scale of the
opportunity for both brands for significant growth.
Our current revenues are weighted to
the UK, representing 56% (2022: 57%) of our total revenue. This is
driven through strong distribution through multiple channels of
specialist retailers, grocery, Amazon and our own direct channel.
The UK is a key market, and we see further opportunities to expand
and grow our market share through existing and new
customers.
Outside of the UK, representing 44%
(2022: 43%) of our revenue, we have several key distribution
partners covering multiple geographies. We are in the process of
resetting a number of these commercial relationships to ensure
strategic alignment, with the objective of delivering mutually
beneficial profitable growth and improved margins.
Turnover by geographic destination
of sales are analysed as follows:
|
|
Year ended
31 December
2023
£'000
|
Year
ended
31
December
2022
£'000
|
United Kingdom
|
|
35,302
|
36,574
|
Rest of Europe
|
|
12,047
|
11,391
|
USA
|
|
3,548
|
4,670
|
Rest of the World
|
|
11,774
|
11,138
|
Total Sales
|
|
62,671
|
63,773
|
Our People and Culture
In the current year, and subsequent
to the balance sheet date, the business has undergone a significant
organisational restructure, with over 20 management roles removed.
This has resulted in streamlined reporting lines on a much lower
cost base. The new executive and senior management team having the
capability and expertise to deliver the new strategy.
Our world class team across all
parts of the organisation know the performance nutrition market
like no one else. With functional experts in all disciplines,
including; science, brand, digital marketing, retail, and supply
chain, the Group are well placed to deliver on the plan for
2024.
Our Future
As outlined in the Chairman's
Statement, the Group is taking a balanced view on prospects for
2024 with the strategic focus on embedding the new operating model
following the recent restructuring; controlled growth over the
medium term continued margin improvements resulting in cash
generation and deleveraging.
Business Review
The Group delivered £62.7m revenue
in the year ended 31 December 2023, down 1.7% on prior year (2022:
£63.8m) and underlying EBITDA increased to £2.0m (2022: £2.7m loss)
consistent with expectations despite the lower revenue.
|
2023
|
2022
|
Increase/
|
|
£'000
|
£'000
|
(decrease)
|
|
|
|
|
Revenue
|
62,671
|
63,773
|
(1.7%)
|
Cost of goods
|
(35,839)
|
(36,837)
|
|
Gross profit
|
26,832
|
26,936
|
(0.4%)
|
Selling & general administration
costs
|
(13,985)
|
(17,611)
|
|
Trading contribution
|
12,847
|
9,325
|
37.8%
|
Underlying operating
expenses
|
(10,854)
|
(12,014)
|
|
Underlying EBITDA
|
1,993
|
(2,689)
|
174.1%
|
|
|
|
|
Share-based payment
charges
|
-
|
(262)
|
|
Depreciation and
amortisation
|
(6,250)
|
(4,808)
|
|
Restructuring and one-off
costs
|
(1,975)
|
(888)
|
|
Loss on disposal of intangible
assets
|
(879)
|
-
|
|
Transition costs
|
(2,092)
|
(1,075)
|
|
Unrealised foreign exchange on
intercompany balances
|
(247)
|
(99)
|
|
Other items
|
(283)
|
-
|
|
|
|
|
|
Loss from operations
|
(9,733)
|
(9,821)
|
0.9%
|
Performance in 2023 was driven from
growth in the Retail (UK and International) and USA online
channels, offset by lower trading in China and in the Digital
channel. Our SiS brand delivered annual revenue growth of 15%, with
PhD closing 2023 with an annual revenue reduction of 16% compared
to the prior year, predominantly due to the interrupted trade in
the Chinese markets.
Gross profit for the Group remained
consistent with £26.8m recognised in 2023 (2022: £26.9m) with gross
margin improving to 43% (2022: 42%). The underlying improvement is
better reflected by the significant improvement in trading
contribution of 21% (2022: 15%). The trading margin reflects the
benefit of the distributor model, particularly in the US, together
with the operational efficiencies and cost savings at all levels.
The 2023 trading contribution margin percentage achieved the
highest levels during Q4 of 2023, giving confidence in further
improvements in 2024.
Underlying EBITDA of £2.0m (2022:
£2.7m loss) improved year on year through improved margins and
ongoing cost efficiencies which remain the focus of the Group
moving into 2024. Excluded from underlying EBITDA are one-off
costs, principally relating to the organisational restructure,
transition costs moving to the internally manufactured protein bars
and moving the distributor model in the US.
Revenue
|
|
2023
|
|
|
2022
|
|
|
SiS
|
PhD
|
Total
|
SiS
|
PhD
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Digital
|
4,984
|
2,325
|
7,309
|
8,859
|
3,618
|
12,477
|
Marketplace
|
6,218
|
6,835
|
13,053
|
6,199
|
7,851
|
14,050
|
China
|
1,105
|
2,285
|
3,390
|
178
|
7,031
|
7,209
|
USA
|
3,548
|
-
|
3,548
|
-
|
-
|
-
|
Global online
|
15,855
|
11,445
|
27,300
|
15,236
|
18,500
|
33,736
|
International retail
|
8,322
|
4,257
|
12,579
|
6,491
|
3,904
|
10,395
|
UK retail
|
10,007
|
12,785
|
22,792
|
7,981
|
11,661
|
19,642
|
Retail
|
18,329
|
17,042
|
35,371
|
14,472
|
15,565
|
30,037
|
Total Sales
|
34,184
|
28,487
|
62,671
|
29,708
|
34,065
|
63,773
|
Global Online
Global online sales accounted for
44% of total sales (2022: 53%) and decreased 19% to £27.3m (2022:
£33.7m). The reduction in our own channel digital sales was driven
by lower traffic and saw digital sales decrease 41% year on year to
£7.3m (2022: £12.5m) following the conscious decision by the Group
to reduce marketing spend in this area whilst focusing on
significantly improving contribution on digital sales in 2024 and
beyond.
Our Amazon marketplace sales saw a
13% increase, driven by strong growth from SiS products in the UK
and Europe. Despite this, weaker US marketplace sales (driven by
transition to thefeed.com) saw overall marketplace channel revenues
decline to £13.1m (2022: £14.1m).
Our US and China business, combined,
has been broadly flat delivering £6.9m (2022: £7.2m). In Q1 of
2023, we formed an exclusive partnership in the US with
thefeed.com, who are the number one endurance sports nutrition
direct to consumer business in the US. With thefeed.com now
partnering for operations and fulfilment of our products in the US
to both direct to consumer and marketplace channels we have seen a
significant improvement in contribution in 2023. In China, whilst
annual revenue slowed due to lower demand in H2, the business is
now recovering and we anticipate growth in 2024.
Retail
Retail sales accounted for 56% of
total sales (2022: 47%) and delivered another year of annual growth
in revenue with total retail sales increasing by 18% to £35.4m
(2022: £30.0m) driven from both UK and International sales growth
across both brands.
UK Retail delivered another year of
solid growth, with sales rising by 16% to £22.8m (2022: £19.6m).
Strong performances across numerous retailers saw growth in major
grocery accounts (6%), independents (10%) and specialist retailers
(30%).
PhD UK retail sales grew again by
10% (2022: 11%). We are the second largest manufacturer on sports
nutrition shelves in UK Retail as well as the number #1
manufacturer of lean whey powder and plant-based protein
powders.
Science in Sport delivered growth of
25% (2022: 6%) in UK Retail, with our high gross margin gels
continuing their consistent growth trend. Science in Sport is still
the clear number #1 in endurance nutrition in UK Retail.
International Retail also continued
its strong growth, and sales were £12.6m (2022: £10.4m), 21% up on
the prior year. This was acheieved with strong growth across
multiple geographies and both brands with SiS and PhD international
retail achieving sales growth of 28% and 9%
respectively.
Profitability
The Group generated a gross profit
of £26.8m (2022: £26.9m) with a gross margin of 43% compared with
42% in 2022. Gross margin improvements were driven from
efficiencies generated from the new Blackburn facility despite
increases in raw material prices and other rising
prices.
Trading contribution was £12.8m
(20.5% contribution margin) (2022: £9.3m; 14.6% contribution
margin). The Group focused on continued cost mitigations from
reduced advertising and promotion spend and the benefit of the
distributor model, particularly in the US. As a result, selling and
administration costs of £14.0m (2022: £17.6m) decreased by £3.6m
year on year as management continued to focus on more efficient use
of spend to promote profitable growth.
Underlying operating costs decreased
by £1.2m year on year. The Group has good levels of visibility on
these costs due to them relating to people, premises and related
overhead costs with a renewed focus on efficiency of spend. The
Group has fixed energy tariffs in place utill 2025 for electricity
and 2027 for gas.
Underlying EBITDA was a gain of
£2.0m, a significant improvement on the loss of £2.7m in 2022. The
reported loss before tax is £11.3m, (2022: £10.6m loss). Loss per
share improved to -6.6p (2022: -7.9p).
The Group has chosen to report
underlying EBITDA as an alternative performance measure. This is
adjusted for depreciation, amortisation, loss on disposal of
intangible assets, non‐cash share-based payments, restructuring
costs, transition costs and material one-off costs. The Board
believes this provides additional useful information for
Shareholders to assess an underlying profit performance more
closely aligned to a cash profit value, excluding one-offs. This
measure is used by the Board for internal performance analysis. A
reconciliation of underlying EBITDA to profit from operations is
presented in note 1.3.
Working capital
As at 31 December 2023, the Group
held inventory of £6.8m (31 December 2022: £6.6m). Inventory
remained consistent as we continued to manage the supply chain
tightly to ensure efficient working capital and ensure optimal
cover.
The year on year decrease in trade
receivables of £3.7m was primarily due to increases in the
impairment and credit note provision.
Correspondingly, the year on year
increase in trade and other payables of £5.3m, was predominantly
due to the increase in the year end invoice financing facility
position of £6.3m (2022: £4.5m).
Cash position
The Group ended 2023 with cash of
£2.1m (2022: £0.9m) and Adjusted net debt of £12.8m (2022: £10.9m)
with headroom in facilities of over £4m. The increase in Adjusted
net debt (Adjusted net debt is presented in note 1.3) at the year
end was driven by the timing of restructuring payments and working
capital outflow associated with the early termination of a
marketing partner, both of which will result in significant savings
in 2024.
A £7.5m flexible invoice credit
facility with HSBC, our principal bankers, was drawn to £6.3m.
Additional trade finance facilities of £3.5m were drawn at
year-end. Total headroom on the combined facilities including cash
was over £4m at the year-end. All banking working capital
facilities were successfully renewed to April 2025 as part of an
annual renewal cycle, with increases in our invoice financing
facility to £8m (2023: £7.5m) and trade finance facility to £4m
(2023: £3.5m).
Intangible Assets
Total intangible additions during
2023 were £1.0m (2022: £1.9m), with £0.4m (2022: £1.2m) being on
technology spend and £0.6m (2022: £0.7m) on product development.
Technology spend relates to continued investment on the warehouse
management system and ecommerce platform, and product development
spend in relation to a number of elite and commercial products
across both brands.
Following a review of capitalised
product development costs, there were several products where
management were no longer able to justify the carrying value of the
asset where products are no longer produced, formula has been
superseded or commercial viability no longer exists. As a result,
the assets have been disposed of leading to a loss on disposal of
£0.9m.
Fixed Assets
Total fixed asset additions during
2023 were £1.1m with a final £1.6m work in progress related to the
new bar line delivered in December 2023. This completes the
strategic investment cycle of peak cash outflows with the Blackburn
investment complete. Capital commitments at the end of 2023 were
£nil. Ongoing capital expenditure of fixed assets is anticipated to
be in the range of £0.5m to £1m excluding any strategic investment
opportunities.
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
2020‐2022 is in place.
£nil charge was recognised for the
2023 LTIP and STIP schemes (2022 schemes: £Nil).
Taxation
The tax credit in the year is £Nil
(2022: £0.3m charge). The Group has cumulative tax losses of £35.3m
(2022: £29.1m), a proportion of which the Group will look to use to
cover future profits.
Current Trading and Outlook
Following the strategic,
organisational, and operational review in 2023, the Group has begun
2024 with greater clarity and focus in delivering the new operating
model. This will be achieved with a lean and flexible cost base
which will enable the Group to improve underlying EBITDA and its
cash generation in 2024.
In the first quarter of 2024,
management have been focused on embedding the new operating model
and structure, tightly managing the cost base through cutting spend
on non value add activities and exiting uneconomic contracts in
marketing and technology while resetting commercial arrangements to
deliver appropriate margins. While this will result in a top line
reduction in the short-term, the margin improvements and cost
reductions will be additive to cash and EBITDA
generation.
The Board expects 2024 to be a year
of progress as management continues to execute the strategic plan
driving a balanced 2024 with the focus on controlled
growth.
Dividend Policy
Focusing on de-leveraging of
the Group and continual investment in the future growth of the
business, the Board is taking a prudent approach to the Group's
dividend policy and made the decision not to propose a final
dividend for the full year to 31 December 2023 (2022: nil pence per
share). It remains the Board's intention to review returns to
shareholders when conditions improve and financial performance
permits.
Post year-end events
There are no events subsequent to
the reporting date which would have a material impact on the
financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
|
|
|
|
|
|
Year ended
|
Year ended
|
|
|
31 December
|
31 December
|
|
|
2023
|
2022
|
|
Notes
|
£'000
|
£'000
|
|
|
|
|
Revenue
|
4
|
62,671
|
63,773
|
Cost of goods
|
|
(35,839)
|
(36,837)
|
Gross profit
|
|
26,832
|
26,936
|
|
|
|
|
Operating expenses
|
5
|
(36,565)
|
(36,757)
|
Loss from operations
|
6
|
(9,733)
|
(9,821)
|
Comprising:
|
|
|
|
Underlying EBITDA
|
1.3
|
1,993
|
(2,689)
|
Share-based payment
expense
|
|
-
|
(262)
|
Depreciation and
amortisation
|
|
(6,250)
|
(4,808)
|
Non-recurring costs and other
items
|
6
|
(5,476)
|
(2,062)
|
|
|
|
|
Finance costs
|
9
|
(1,558)
|
(757)
|
Loss before taxation
|
|
(11,291)
|
(10,578)
|
|
|
|
|
Taxation credit /
(expense)
|
10
|
12
|
(332)
|
Loss for the year
|
|
(11,279)
|
(10,910)
|
|
|
|
|
Other comprehensive income
|
|
|
|
Cash flow hedges
|
|
-
|
2
|
Exchange differences on translation
of foreign operations
|
|
54
|
(21)
|
Total comprehensive loss for the year
|
|
(11,225)
|
(10,929)
|
|
|
|
|
Loss per share to owners of the parent
|
|
|
|
Basic and diluted - pence
|
11
|
(6.6p)
|
(7.9p)
|
|
|
|
|
All amounts relate to continuing
operations.
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
|
|
As at
|
As at
|
Company number: 08535116
|
|
31 December
|
31 December
|
|
|
2023
|
2022
|
|
Notes
|
£'000
|
£'000
|
Non-current assets
|
|
|
|
Intangible assets
|
12
|
27,042
|
30,739
|
Right-of-use assets
|
20
|
10,520
|
10,536
|
Property, plant and
equipment
|
13
|
10,000
|
10,338
|
Deferred tax
|
19
|
19
|
-
|
Total non-current assets
|
|
47,581
|
51,613
|
Current assets
|
|
|
|
Inventories
|
14
|
6,764
|
6,638
|
Trade and other
receivables
|
15
|
13,812
|
16,524
|
Cash and cash equivalents
|
16
|
2,144
|
930
|
Total current assets
|
|
22,720
|
24,092
|
|
|
|
|
Total assets
|
|
70,301
|
75,705
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
17
|
(25,257)
|
(19,993)
|
Provision for liabilities
|
18
|
(671)
|
(901)
|
Lease liabilities
|
20
|
(789)
|
(415)
|
Asset financing
|
28
|
(1,192)
|
(843)
|
Hire purchase agreement
|
27
|
(82)
|
(80)
|
Total current liabilities
|
|
(27,991)
|
(22,232)
|
|
|
|
|
Non-current liabilities
|
|
|
|
Provision for liabilities
|
18
|
(1,059)
|
-
|
Lease liabilities
|
20
|
(9,903)
|
(10,261)
|
Asset financing
|
28
|
(2,282)
|
(2,839)
|
Hire purchase agreement
|
27
|
-
|
(82)
|
Total non-current liabilities
|
|
(13,244)
|
(13,182)
|
|
|
|
|
Total liabilities
|
|
(41,235)
|
(35,414)
|
|
|
|
|
Net
assets
|
|
29,066
|
40,291
|
Capital and reserves attributable to owners of the parent
company
|
|
|
|
Share capital
|
21
|
18,227
|
17,242
|
Share premium reserve
|
23
|
53,134
|
53,134
|
Employee benefit trust
reserve
|
23
|
(204)
|
(429)
|
Other reserve
|
23
|
(907)
|
(907)
|
Foreign exchange reserve
|
23
|
(84)
|
(138)
|
Retained deficit
|
23
|
(41,100)
|
(28,611)
|
Total equity
|
|
29,066
|
40,291
|
CONSOLIDATED STATEMENT OF CASH
FLOWS
|
|
|
|
|
|
Year ended
|
Year ended
|
|
|
31 December
|
31 December
|
|
|
2023
|
2022
|
|
Notes
|
£'000
|
£'000
|
Cash flows from operating activities
|
|
|
|
Loss for the financial
year
|
|
(11,279)
|
(10,910)
|
Adjustments
for:
|
|
|
|
Amortisation of intangible
assets
|
12
|
3,827
|
2,919
|
Depreciation of right-of-use
assets
|
20
|
993
|
963
|
Depreciation of property, plant and
equipment
|
13
|
1,430
|
926
|
Loss on disposal of intangible
assets
|
6
|
879
|
-
|
Loss on disposal of property, plant
and equipment
|
|
11
|
-
|
Unrealised foreign exchange on
intercompany balances
|
|
247
|
-
|
Interest expense
|
|
1,558
|
757
|
Taxation
|
10
|
(12)
|
332
|
Share based payment
charge
|
|
-
|
262
|
Operating cash outflow before changes in working
capital
|
|
((2,346)
|
(4,751)
|
|
|
|
|
Changes in inventories
|
|
(126)
|
1,809
|
Changes in trade and other
receivables
|
|
2,712
|
(3,737)
|
Changes in trade and other
payables
|
|
3,009
|
(1,970)
|
Total cash inflow / (outflow) from
operations
|
|
3,249
|
(8,649)
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Purchase of property, plant and
equipment
|
|
(1,103)
|
(6,013)
|
Purchase of intangible
assets
|
|
(1,009)
|
(1,941)
|
Net
cash outflow from investing activities
|
|
(2,112)
|
(7,954)
|
|
|
|
|
Cash flows from financing activities
|
29
|
|
|
Gross proceeds from issue of share
capital
|
|
-
|
5,000
|
Share issue costs
|
|
-
|
(371)
|
(Repayments) / proceeds from asset
financing
|
|
(208)
|
2,184
|
Interest paid on asset
financing
|
|
(253)
|
(143)
|
Proceeds from invoice
financing
|
|
1,818
|
4,523
|
Interest paid on invoice
financing
|
|
(419)
|
(119)
|
Proceeds from trade
facility
|
|
527
|
2,733
|
Interest paid on trade
facility
|
|
(399)
|
(53)
|
Principal repayments of lease
liabilities
|
|
(306)
|
(629)
|
Interest paid on lease
liabilities
|
|
(436)
|
(442)
|
Net
cash inflow from financing activities
|
|
324
|
12,683
|
|
|
|
|
Net
increase / (decrease) in cash and cash
equivalents
|
|
1,461
|
(3,920)
|
Unrealised foreign exchange differences
|
|
(247)
|
-
|
Opening cash and cash equivalents
|
|
930
|
4,850
|
Closing cash and cash equivalents
|
16
|
2,144
|
930
|
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
|
Share
capital
|
Share
premium
|
Employee Benefit Trust
reserve
|
Other
reserve
|
Foreign exchange
reserve
|
Cash flow hedge
reserve
|
Retained
deficit
|
Total
equity
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At
31 December 2021
|
13,510
|
51,839
|
(158)
|
(907)
|
(117)
|
(2)
|
(17,836)
|
46,329
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the
year
|
-
|
-
|
-
|
-
|
(21)
|
2
|
(10,910)
|
(10,929)
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
Issue of shares
|
3,732
|
1,295
|
(398)
|
-
|
-
|
-
|
-
|
4,629
|
Issue of shares held by EBT to
employees
|
-
|
-
|
127
|
-
|
-
|
-
|
(127)
|
-
|
Share based payments
|
-
|
-
|
-
|
-
|
-
|
-
|
262
|
262
|
|
|
|
|
|
|
|
|
|
At
31 December 2022
|
17,242
|
53,134
|
(429)
|
(907)
|
(138)
|
-
|
(28,611)
|
40,291
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the
year
|
-
|
-
|
-
|
-
|
54
|
-
|
(11,279)
|
(11,225)
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
Issue of shares
|
985
|
-
|
-
|
-
|
-
|
-
|
(985)
|
-
|
Share based payments
|
-
|
-
|
225
|
-
|
-
|
-
|
(225)
|
-
|
|
|
|
|
|
|
|
|
|
At
31 December 2023
|
18,227
|
53,134
|
(204)
|
(907)
|
(84)
|
-
|
(41,100)
|
29,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
1.
Accounting policies
1.1 General information
Science in Sport plc (the "Company"
and together with its subsidiaries "SIS" or the "Group") is a
public limited company incorporated and domiciled in England and
Wales (registration number 08535116). The address of the registered
office is 2nd Floor, 16 - 18 Hatton Garden, Farringdon,
London EC1N 8AT. The functional and presentation currency is Pounds
Sterling and the financial statements are rounded to the nearest
£1,000.
The main activities of the Group are
those of developing, manufacturing and marketing sports nutrition
products for professional athletes and sports
enthusiasts.
1.2 Basis of preparation
Whilst the financial information
included in this results announcement has been prepared on the
basis of UK-adopted International Accounting Standards, it does not
contain sufficient information to comply with UK-adopted
International Accounting Standards.. The
financial information contained within this results announcement
for the year ended 31 December 2023 and the year ended 31 December
2022 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 2022 have
been filed with the Registrar of Companies.. The auditors' report
on the statutory accounts for the year ended 31 December 2023 and
the year ended 31 December 2022 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.
1.3
Use of non-GAAP measures - Underlying EBITDA and Adjusted net
debt
The Directors believe that the
underlying EBITDA as a measure provides additional useful
information for Shareholders on underlying trends and performance.
This measure is used for internal performance analysis. Underlying
operating profit/(loss) 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:
|
Year Ended 31
December
2023
(£'000)
|
Year
Ended 31 December
2022
(£'000)
|
Underlying
EBITDA
|
1,993
|
(2,689)
|
Share-based payment expense
|
-
|
(262)
|
Depreciation and amortisation
|
(6,250)
|
(4,808)
|
Restructuring and one-off costs
|
(1,975)
|
(888)
|
Loss on disposal of intangible assets
|
(879)
|
-
|
Transition costs
|
(2,092)
|
(1,075)
|
Unrealised foreign exchange on intercompany
balances
|
(247)
|
(99)
|
Other items
|
(283)
|
-
|
Loss from
operations
|
(9,733)
|
(9,821)
|
The Directors believe that Adjusted
net debt as a measure provides additional useful information for
Shareholders on underlying trends and performance. This measure is
used for internal performance analysis. This measure is not defined
by IFRS and therefore may not be directly comparable with other
companies' net debt analysis. It is not intended to be a substitute
for, or superior to IFRS measurements.
|
Year Ended 31
December
2023
(£'000)
|
Year
Ended 31 December
2022
(£'000)
|
Adjusted net
debt
|
|
|
Cash and cash equivalents
|
2,144
|
930
|
Invoice financing
|
(6,341)
|
(4,523)
|
Trade facility
|
(3,260)
|
(2,733)
|
Asset financing obligation
|
(3,474)
|
(3,682)
|
Other payables
|
(1,903)
|
(877)
|
Adjusted net
debt
|
(12,834)
|
(10,885)
|
2.
Financial risk management
The Group's activities inevitably
expose it to a variety of financial risks: market risk (including
currency risk, cash flow interest rate risk and fair value interest
rate risk), credit risk and liquidity risk.
It is Group policy not to enter into
speculative positions using complex financial instruments. The
Group's primary treasury objective is to minimise exposure to
potential capital losses.
(a) Market
risk
Foreign exchange risk
The Group operates globally with
subsidiaries in the USA, Italy and Australia, and therefore there
will be risks around foreign exchange rates. Refer to note 16 for
analysis of cash balances by currency.
The Group primarily enters into
contracts which are to be settled in UK Pounds. However, some
contracts involve other major world currencies including the US
Dollar, Euro and Australian Dollar.
As of 31 December 2023, the Group's
net exposure to foreign exchange risk was as follows:
|
Trade
receivables
|
Trade
payables
|
Cash and cash
equivalents
|
Net
|
|
£'000
|
£'000
|
£'000
|
£'000
|
AUD $
|
11
|
-
|
27
|
38
|
EUR €
|
229
|
(138)
|
401
|
492
|
USD $
|
1,144
|
(107)
|
271
|
1,308
|
NZD $
|
3
|
-
|
19
|
22
|
JPY ¥
|
-
|
(21)
|
-
|
(21)
|
Total
|
1,387
|
(266)
|
718
|
1,839
|
As of 31 December 2022, the Group's
net exposure to foreign exchange risk was as follows:
|
Trade
receivables
|
Trade
payables
|
Cash and cash
equivalents
|
Net
|
|
£'000
|
£'000
|
£'000
|
£'000
|
AUD $
|
5
|
-
|
31
|
36
|
EUR €
|
212
|
(13)
|
178
|
377
|
USD $
|
125
|
-
|
242
|
367
|
NZD $
|
-
|
-
|
6
|
6
|
JPY ¥
|
-
|
(24)
|
-
|
(24)
|
Total
|
342
|
(37)
|
457
|
762
|
Cash flow and fair value interest rate risk
The Group's interest rate risk
arises from medium term and short term money market deposits.
Deposits which earn variable rates of interest expose the Group to
cash flow interest rate risk. Deposits at fixed rates expose the
Group to fair value interest rate risk. The Group had no fixed rate
deposits during the year. The Group analyses its interest rate
exposure on a dynamic basis throughout the year. The Group has no
variable borrowings and therefore no interest rate swaps or other
forms of interest risk management have been undertaken.
(b) Credit
risk
Credit risk arises from cash and
cash equivalents and deposits with banks and financial institutions
as well as credit exposure in relation to outstanding receivables.
Group policy is to place deposits with institutions with investment
grade A2 or better (Moody's credit rating). The Group does not
expect any losses from non-performance by these institutions.
Management believes that the carrying value of outstanding
receivables and deposits with banks represents the Group's maximum
exposure to credit risk.
The top 10 customers account for 53%
(2022: 49%) of the Group's revenue and hence there is some risk
from the concentration of customers, the largest single customer is
16% (2022: 13%) of revenue and is a major international online
business. Further disclosures regarding trade and other receivables
are included in note 15.
(c) Liquidity
risk
Liquidity risk arises from the
Group's management of working capital; it is the risk that the
Group will encounter difficulty in meeting its financial
obligations as they fall due. Prudent liquidity risk management
implies maintaining sufficient cash and cash equivalents and
management monitors rolling forecasts of the Group's liquidity on
the basis of expected cash flow.
The Group had trade and other
payables at the reporting date of £25.3m (2022: £20.0m) as
disclosed in note 17. The following table sets out the contractual
maturities (representing undiscounted contractual cash-flows) of
financial liabilities:
|
Up to 3
months
|
Between 3 and 12
months
|
Between 1 and 2
years
|
Between 2 and 5
years
|
Over 5
years
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Trade payables
|
5,114
|
-
|
-
|
-
|
-
|
Accruals
|
8,728
|
-
|
-
|
-
|
-
|
Hire purchase
|
20
|
62
|
-
|
-
|
-
|
Asset financing
|
366
|
1,098
|
1,185
|
1,295
|
-
|
Invoice financing
|
6,341
|
-
|
-
|
-
|
-
|
Trade financing
|
3,260
|
-
|
-
|
-
|
-
|
Lease liabilities
|
315
|
884
|
1,051
|
3,030
|
8,434
|
Total financial liabilities
|
24,144
|
2,044
|
2,236
|
4,325
|
8,434
|
(d) Capital risk
management
The Group considers its capital to
comprise its ordinary share capital, share premium, other reserve
and accumulated retained earnings/deficit as disclosed in the
consolidated statement of financial position.
The Group remains funded primarily
by equity capital together with working capital facilities and
asset finance. The Group's objectives when managing capital are to
safeguard the Group's ability to continue as a going concern in
order to provide returns for equity holders of the Group and
benefits for other Stakeholders and to maintain an optimal capital
structure to reduce the cost of capital. The Group's debt and cash
position is monitored weekly which ensures these objectives are
being met along with other internal metrics.
3.
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, Science in Sport (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
16% of revenue and is not separately identified in segmental
reporting.
The Board uses revenue, EBITDA,
profit before tax and cash, as key measures of the segment's
performance. These are reviewed regularly.
|
|
2023
|
|
|
2022
|
|
|
SiS
|
PhD
|
Total
|
SiS
|
PhD
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Sales
|
34,184
|
28,487
|
62,671
|
29,708
|
34,065
|
63,773
|
Gross profit
|
16,565
|
10,267
|
26,832
|
17,383
|
9,553
|
26,936
|
Advertising and
promotions
|
(5,368)
|
(3,025)
|
(8,393)
|
(6,602)
|
(2,387)
|
(8,989)
|
Carriage
|
(3,173)
|
(1,909)
|
(5,082)
|
(6,356)
|
(756)
|
(7,112)
|
Online selling costs
|
(434)
|
(76)
|
(510)
|
(1,424)
|
(86)
|
(1,510)
|
Trading contribution
|
7,590
|
5,257
|
12,847
|
3,001
|
6,324
|
9,325
|
Other operating expenses
|
|
|
(22,580)
|
|
|
(19,146)
|
Loss from operations
|
|
|
(9,733)
|
|
|
(9,821)
|
4.
Revenue from contracts with customers
The Group operates the primary sales
channels shown below, which form the basis on which management
monitor revenue. UK Retail includes domestic grocers and high
street retailers, Digital are sales through the phd.com and scienceinsport.com platforms, International Retail relates to retailers and distributors
outside of the UK and Marketplace relates to online marketplaces
such as Amazon and Tmall.
|
|
2023
|
|
|
2022
|
|
|
SiS
|
PhD
|
Total
|
SiS
|
PhD
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Digital
|
4,984
|
2,325
|
7,309
|
8,859
|
3,618
|
12,477
|
Marketplace
|
6,218
|
6,835
|
13,053
|
6,199
|
7,851
|
14,050
|
China
|
1,105
|
2,285
|
3,390
|
178
|
7,031
|
7,209
|
USA
|
3,548
|
-
|
3,548
|
-
|
-
|
-
|
Global online
|
15,855
|
11,445
|
27,300
|
15,236
|
18,500
|
33,736
|
International retail
|
8,322
|
4,257
|
12,579
|
6,491
|
3,904
|
10,395
|
UK retail
|
10,007
|
12,785
|
22,792
|
7,981
|
11,661
|
19,642
|
Retail
|
18,329
|
17,042
|
35,371
|
14,472
|
15,565
|
30,037
|
Total Sales
|
34,184
|
28,487
|
62,671
|
29,708
|
34,065
|
63,773
|
Turnover by geographic destination
of sales may be analysed as follows:
|
|
Year ended
31 December
2023
£'000
|
Year
ended
31
December
2022
£'000
|
United Kingdom
|
|
35,302
|
36,574
|
Rest of Europe
|
|
12,047
|
11,391
|
USA
|
|
3,548
|
4,670
|
Rest of the World
|
|
11,774
|
11,138
|
Total Sales
|
|
62,671
|
63,773
|
5.
Operating expenses
|
|
Year ended
31 December
2023
|
Year
ended
31
December 2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Sales and marketing costs
|
|
13,985
|
17,611
|
Operating costs
|
|
16,330
|
14,076
|
Depreciation and
amortisation
|
|
6,250
|
4,808
|
Share based payment charge
(1)
|
|
-
|
262
|
Administrative expenses
|
|
22,580
|
19,146
|
|
|
|
|
Total operating expenses
|
|
36,565
|
36,757
|
(1) Includes associated social security credits/costs of £nil
(2022: credits of £218,000)
6.
Loss from operations
Loss from operations is stated after
charging/(crediting):
|
|
Year ended
31 December
2023
|
Year
ended
31
December
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Amortisation of intangible
assets
|
|
3,827
|
2,919
|
Loss on disposal of intangible
assets
|
|
879
|
-
|
Depreciation of right-of-use
assets
|
|
993
|
963
|
Depreciation of property, plant and
equipment
|
|
1,430
|
926
|
Research and development
costs
|
|
464
|
249
|
Grant income in respect of research
and development tax credits
|
|
(163)
|
(140)
|
A&P/Marketing costs
|
|
8,393
|
8,989
|
Impairment of trade
receivables
|
|
520
|
489
|
Non-recurring costs and other items
(breakdown detailed below)
|
|
5,476
|
2,062
|
Included within the amortisation of
intangible assets is £686k (2022: £nil) of accelerated amortisation
in relation to the corporate website.
Non-recurring costs and other items
deducted in arriving at the Groups underlying EBITDA are analysed
below:
|
|
Year ended
31 December
2023
£'000
|
Year
ended
31
December
2022
£'000
|
|
|
|
|
Restructuring and one-off
costs
|
|
1,975
|
888
|
Loss on disposal of intangible
assets
|
|
879
|
-
|
Transition costs
|
|
2,092
|
1,075
|
Unrealised foreign exchange on
intercompany balances
|
|
247
|
99
|
Other items
|
|
283
|
-
|
Total non-recurring costs and other items
|
|
5,476
|
2,062
|
The total fees for services provided
by the Group's Auditor are analysed below:
|
|
Year ended
31 December
2023
£'000
|
Year
ended
31
December
2022
£'000
|
Audit services
|
|
|
|
- Audit fees in respect of the
parent company and consolidation
|
|
66
|
57
|
- Audit fees in respect of the
subsidiary accounts
|
|
139
|
121
|
Non-audit services
|
|
|
|
- Corporation tax
compliance
|
|
-
|
18
|
- Other taxation advisory
|
|
-
|
17
|
Total fees
|
|
205
|
213
|
7.
Wages and salaries
The average monthly number of
persons, including Directors, employed by the Group was:
|
Year ended
31 December
2023
Number
|
Year
ended
31
December
2022
Number
|
|
|
|
Sales and marketing
|
57
|
56
|
Manufacturing
|
146
|
132
|
Administration
|
36
|
36
|
Directors
|
6
|
5
|
Total employees
|
245
|
229
|
Their aggregate emoluments
were:
|
Year ended
31 December
2023
£'000
|
Year
ended
31
December
2022
£'000
|
|
|
|
Wages and salaries
|
11,075
|
9,267
|
Directors' fees
|
24
|
181
|
Social security costs
|
1,155
|
1,048
|
Pension and other staff
costs
|
310
|
294
|
Total cash settled emoluments
|
12,564
|
10,790
|
Share based payments - equity
settled
|
-
|
480
|
Share based payments - social
security costs/(credits)
|
-
|
(218)
|
Total emoluments
|
12,564
|
11,052
|
8.
Directors' and Key Management Personnel
remuneration
Amounts paid to the Directors of the
parent company are analysed in the following table:
|
Year ended
31 December
2023
|
Year
ended
31
December 2022
|
|
£'000
|
£'000
|
|
|
|
Directors
|
|
|
Aggregate emoluments and
fees
|
698
|
653
|
Benefits in kind
|
4
|
7
|
Pension contributions
|
12
|
12
|
Total emoluments
|
714
|
672
|
Share based payment remuneration
charge: equity settled
|
-
|
279
|
Total Directors' emoluments
|
714
|
951
|
Directors' fees of £24,000 (2022:
£39,000) for one Director are paid through a limited
company.
During the year, one Director
participated in defined contribution pension schemes
(2022: none). The
number of Directors serving during the year who participated in the
long-term incentive programme was 2 (2022: 2). A total of 9,852,866
share options were exercised by 2 Directors in the current year
with a total gain of £1,157,712 (2022: none).
The highest paid Director received
£278,000 (2022: £554,000) which was made up of salary, share-based
payments and benefits in kind.
Directors' emoluments include
amounts attributable to benefits in kind comprising private medical
insurance on which the Directors are assessed for tax purposes. The
amounts attributable to benefits in kind are stated at cost to the
Group, which is also the tax value of those benefits.
The aggregate remuneration of
members of Key Management Personnel (which includes the Board of
Directors and other Senior Management Personnel) during the year
was as follows:
|
Year ended
31 December
2023
|
Year
ended
31
December
2022
|
|
£'000
|
£'000
|
|
|
|
Remuneration and short-term
benefits
|
1,188
|
878
|
National insurance costs
|
160
|
99
|
Pension
|
12
|
-
|
Compensation loss of
office
|
103
|
-
|
Post-employment benefits
|
-
|
3
|
Share based payments
|
-
|
167
|
Total amounts paid to Key Management
Personnel
|
1,463
|
1,147
|
9.
Finance costs
|
Year ended
31 December
2023
|
Year
ended
31
December
2022
|
|
£'000
|
£'000
|
|
|
|
Interest expense on lease
liabilities
|
436
|
442
|
Interest expense on asset
financing
|
253
|
143
|
Interest expense on invoice
financing
|
419
|
119
|
Interest expense on trade
facility
|
399
|
53
|
Unwinding of dilapidation
provision
|
51
|
-
|
Total finance costs
|
1,558
|
757
|
10. Taxation
|
Year ended
31 December
|
Year
ended
31
December
|
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
Current tax
|
|
|
Overseas subsidiary
taxation
|
(7)
|
(332)
|
Total current tax charge
|
(7)
|
(332)
|
Deferred tax
|
|
|
Effect of change in tax
rates
|
-
|
270
|
Origination and reversal of
temporary differences
|
19
|
790
|
Adjustment in respect of prior
period
|
-
|
(1,060)
|
Total deferred tax credit
|
19
|
-
|
|
|
|
Total tax credit / (charge)
|
12
|
(332)
|
The tax assessed for the year is
different from the standard rate of corporation tax in the UK. The
differences are explained below:
|
|
|
Loss before tax
|
11,291
|
10,578
|
|
|
|
Loss before tax multiplied by a
hybrid rate of corporation tax
in the UK of 23.52%
(2022: standard
rate of 19%)
|
2,656
|
2,010
|
Effects of:
|
|
|
Expenses not deductible for tax
purposes
|
(423)
|
(366)
|
Fixed asset differences
|
6
|
186
|
Current year movement in respect of
prior periods
|
22
|
-
|
Unrecognised deferred tax asset on
losses carried forward
|
(2,772)
|
(2,498)
|
R&D expenditure credit
received
|
38
|
48
|
Effect of changes in tax
rate
|
155
|
357
|
Excess overseas tax
suffered
|
-
|
(69)
|
Other
|
330
|
-
|
Total tax credit / (charge)
|
12
|
(332)
|
Tax on each component of other
comprehensive income is as follows:
|
2023
|
2022
|
|
Before tax
|
Tax
|
After tax
|
Before
tax
|
Tax
|
After
tax
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Profit recognised on hedging
instrument
|
-
|
-
|
-
|
2
|
-
|
2
|
Exchange losses on the translation
of foreign operations
|
54
|
-
|
54
|
(21)
|
-
|
(21)
|
Total
|
54
|
-
|
54
|
(19)
|
-
|
(19)
|
At 31 December 2023 UK tax losses of
the Company available to be carried forward are estimated to be
£38.6m (2022: £30.5m. The rate of UK Corporation tax increased from 19% to
25% on 6 April 2023, for the financial year ended 31 December 2023
a hybrid rate of 23.52% has been used. Existing deferred tax
liabilities had been calculated at the rate at which the relevant
balances were expected to be recovered or settled. This rate was
25% and therefore existing deferred tax liabilities have not had to
be remeasured.
There are no future factors at the
reporting date that are expected to impact the Group's future tax
charge. The Group is not within the scope of the OECD Pillar Two
model rules.
11. 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 December
|
31
December
|
|
2023
|
2022
|
|
|
|
Loss for the year attributable to
owners of the parent - £'000
|
(11,279)
|
(10,910)
|
Weighted average number of
shares
|
170,123,783
|
138,860,015
|
Basic loss per share - pence
|
(6.6p)
|
(7.9p)
|
Diluted loss per share - pence
|
(6.6p)
|
(7.9p)
|
The number of vested but unexercised
share options is 2,896,615 (2022: 16,446,937).
12. Intangible assets
|
Goodwill
|
Brands
|
Customer
relationships
|
Website and software
development
|
Product
development
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Cost
|
|
|
|
|
|
|
At 31 December 2021
|
17,398
|
8,957
|
5,638
|
5,740
|
2,309
|
40,042
|
Additions
|
-
|
-
|
-
|
1,195
|
746
|
1,941
|
At 31 December 2022
|
17,398
|
8,957
|
5,638
|
6,935
|
3,055
|
41,983
|
Additions
|
-
|
-
|
-
|
443
|
566
|
1,009
|
Disposals
|
-
|
-
|
-
|
(216)
|
(1,573)
|
(1,789)
|
At
31 December 2023
|
17,398
|
8,957
|
5,638
|
7,162
|
2,048
|
41,203
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
|
At 31 December 2021
|
-
|
2,763
|
1,738
|
2,930
|
894
|
8,325
|
Charge for the year
|
-
|
894
|
564
|
1,105
|
356
|
2,919
|
At 31 December 2022
|
-
|
3,657
|
2,302
|
4,035
|
1,250
|
11,244
|
Charge for the year
|
-
|
896
|
564
|
1,691
|
676
|
3,827
|
Disposals
|
-
|
-
|
-
|
(216)
|
(694)
|
(910)
|
At
31 December 2023
|
-
|
4,553
|
2,866
|
5,510
|
1,232
|
14,161
|
|
|
|
|
|
|
|
Net
book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
31 December 2023
|
17,398
|
4,404
|
2,772
|
1,652
|
816
|
27,042
|
At 31 December 2022
|
17,398
|
5,300
|
3,336
|
2,900
|
1,805
|
30,739
|
Following a review of capitalised
product development costs, there were several products where
management were no longer able to justify the carrying value of the
asset where products are no longer produced, formula has been
superseded or commercial viability no longer exists. As a result,
the assets have been disposed of leading to a loss on disposal of
£879,000 which has been recognised in operating
expenses.
The brand and customer relationships
recognised were purchased as part of the acquisition of PhD
Nutrition on 6 December 2018. They are considered to have finite
useful lives and are amortised on a straight-line basis over their
estimated useful lives of 10 years. The intangibles were valued
using an income approach, using the Multi-Period Excess Earnings
Method for customer relationships and Relief from Royalty Method
for brand valuations.
The Group is required to test, on
an annual basis, whether goodwill has suffered any impairment. The
recoverable amount is determined based on value in use
calculations. The use of this method requires the estimation of
future cash flows and the determination of a discount rate in order
to calculate the present value of the cash flows.
The Group has estimated the value
in use of PhD Nutrition based on a discounted cashflow model which
adjusts for risks associated with the assets. The post-tax discount
rate used to measure the CGUs value in use was 11.21% (2022:
9.74%).
The recoverable amount of the CGU
has been determined from value in use calculations based on cash
flow projections covering a period to 31 December 2028. The
forecasts are based on a 3-year, board approved, strategic plan,
which forecasts revenue growth ahead of the forecast market growth
rate. For the period from 2028 revenue growth rates have been
reduced to the forecast average growth rate for the sports
nutrition market.
The Board approved cash forecast
uses a growth rate of 11.1% for 2024 and 20% for 2025 to 2027. A
growth rate of 15% for 2028 has been used which is aligned to long
term historic PhD growth rates. From 2028 an annual growth rate of
1.5% is applied into perpetuity.
The key assumptions used in the
discounted cashflow model were the discount rate, sales growth and
gross margin. Gross margin percentages were based on 2023 actuals
adjusted for expected improvements to the manufacturing cycle as
well as extra costs around headcount and carriage that are
appropriate with the future revenue growth rate.
The discount rate used in the
discounted cashflow is based on a WACC analysis which takes into
account estimates on the:
· Risk-free rate (rate used is higher than the long-term UK
government bond)
· Equity
risk premium (this is higher than the average equity risk premium
in the UK)
· Size
premium (the same value as prior year has been used)
Sensitivity analysis
With regard to the assessment of
value in use, a change in any of the above key assumptions could
have a material impact on the carrying value of the cash-generating
unit.
If any of the following changes
were independently made to the key assumptions the carrying amount
and recoverable amount would be equal:
· 5%
absolute increase in the discount rate; or
· 70%
decrease in EBITDA (years 1-5); or
· A
combination of 1% decrease in gross margin and 5% absolute decrease
in the current revenue growth rate (years 1-5)
13. Property, plant and equipment
|
Leasehold
improvements
|
Plant and
machinery
|
Fixture, fittings and
computer equipment
|
Motor
vehicles
|
Capital work in
progress
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Cost
|
|
|
|
|
|
|
At 31 December 2021
|
663
|
3,143
|
2,462
|
16
|
2,894
|
9,178
|
Additions
|
3,117
|
2,269
|
627
|
-
|
-
|
6,013
|
Transfers
|
711
|
632
|
-
|
-
|
(1,343)
|
-
|
At 31 December 2022
|
4,491
|
6,044
|
3,089
|
16
|
1,551
|
15,191
|
Additions
|
95
|
859
|
149
|
-
|
-
|
1,103
|
Disposals
|
(538)
|
(502)
|
(644)
|
(16)
|
-
|
(1,700)
|
Transfers
|
31
|
1,520
|
-
|
-
|
(1,551)
|
-
|
At
31 December 2023
|
4,079
|
7,921
|
2,594
|
-
|
-
|
14,594
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
At 31 December 2021
|
572
|
1,774
|
1,567
|
14
|
-
|
3,927
|
Charge for the year
|
184
|
347
|
395
|
-
|
-
|
926
|
At 31 December 2022
|
756
|
2,121
|
1,962
|
14
|
-
|
4,853
|
Charge for the year
|
312
|
681
|
437
|
-
|
-
|
1,430
|
Disposals
|
(538)
|
(502)
|
(635)
|
(14)
|
-
|
(1,689)
|
At
31 December 2023
|
530
|
2,300
|
1,764
|
-
|
-
|
4,594
|
|
|
|
|
|
|
|
Net
book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
31 December 2023
|
3,549
|
5,621
|
830
|
-
|
-
|
10,000
|
|
|
|
|
|
|
|
At 31 December 2022
|
3,735
|
3,923
|
1,127
|
2
|
1,551
|
10,338
|
|
|
|
|
|
|
|
Capital Commitments
At 31 December 2023, the Group had
£nil of capital commitments (2022: £nil).
14. Inventories
|
31 December
2023
|
31
December
2022
|
|
£'000
|
£'000
|
|
|
|
Raw materials
|
1,825
|
2,455
|
Finished goods
|
4,939
|
4,183
|
Total inventories
|
6,764
|
6,638
|
There is a provision of £1,505,000
included within inventories in relation to the impairment of
inventories (2022: £452,000). The provision relates to the
impairment of residual packaging stock following the change in gel
machinery and a reduction in the number of active stock keeping
units (SKUs). During the year, inventories of £34,334,000 (2022:
£36,042,000) were recognised as an expense within cost of
sales.
15. Trade and other receivables
|
31 December
2023
|
31
December
2022
|
|
£'000
|
£'000
|
|
|
|
Trade receivables
|
12,046
|
15,274
|
Less: provision for impairment of
trade receivables
|
(700)
|
(281)
|
Trade receivables - net
|
11,346
|
14,993
|
Other receivables
|
1,408
|
1,046
|
Total financial assets other than cash and cash equivalents
classified as amortised cost
|
12,754
|
16,039
|
Prepayments and accrued
income
|
1,058
|
485
|
Total trade and other receivables
|
13,812
|
16,524
|
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 2023. 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. The historical loss rates are
then adjusted for current and forward-looking information affecting
the Group's customers.
At 31 December 2023 the lifetime
expected loss provision for trade receivables is as
follows:
|
Less than 60 days past
due
|
More than 60 days past
due
|
More than 90 days past
due
|
Total
|
At
31 December 2023
|
|
|
|
|
Expected loss rate (%)
|
0%
|
0%
|
5%
|
|
Gross carrying amount
(£'000)
|
11,493
|
1,324
|
702
|
13,519
|
Loss provision (£'000)
|
-
|
-
|
35
|
35
|
At
31 December 2022
|
|
|
|
|
Expected loss rate (%)
|
0%
|
0%
|
5%
|
|
Gross carrying amount
(£'000)
|
13,271
|
776
|
1,227
|
15,274
|
Loss provision (£'000)
|
-
|
-
|
66
|
66
|
A further provision of £665,000
(2022: £215,000) has been included against specific debts
considered impaired.
Movement in the provision in the year
|
|
|
|
Total
|
|
|
|
|
|
At 31 December 2022
|
|
|
|
281
|
Amount utilised in the
year
|
|
|
|
(101)
|
Additional provision charged in the
year
|
|
|
|
520
|
At
31 December 2023
|
|
|
|
700
|
16. Cash and cash equivalents
|
31 December
2023
|
31
December
2022
|
|
£'000
|
£'000
|
Cash at bank and in hand
|
2,144
|
930
|
Cash at bank and in hand is made up
of the following currency balances:
|
|
|
|
|
|
British Pound
|
1,428
|
551
|
Euro
|
399
|
109
|
US Dollar
|
271
|
235
|
Australian Dollar
|
27
|
29
|
New Zealand Dollar
|
19
|
6
|
|
2,144
|
930
|
The Directors consider that the
carrying amount of cash approximates to its fair value.
17. Trade and other payables
|
31 December
2023
|
31
December
2022
|
|
£'000
|
£'000
|
Trade payables
|
5,114
|
4,981
|
Accruals
|
8,728
|
7,226
|
Invoice financing
|
6,341
|
4,523
|
Trade facility
|
3,260
|
2,733
|
Total financial liabilities measured at amortised
cost
|
23,443
|
19,463
|
Other taxes and social
security
|
1,814
|
530
|
Total trade and other payables
|
25,257
|
19,993
|
The Directors consider that the
carrying amount of these liabilities approximates to their fair
value.
All amounts shown fall due within
one year.
Invoice financing is the amount due
to HSBC after drawing down from the £7.5m (2022: £6.0m) flexible
invoice credit facility during the year. This facility contains
both fixed and floating charges over all the property and
undertakings of the parent company. Repayments and draw downs on
the facility are a continuous process as and when invoice payments
are collected from customers.
Additionally, a £3.5m uncommitted
trade facility was entered into during the prior year which is
secured on stock. The drawdowns on the trade facility during the
year were £527,000 (2022: £2,733,000). Drawdowns on the trade
facility are repaid over 90 days from the drawdown.
All banking working capital
facilities were successfully renewed to April 2025 as part of an
annual renewal cycle, with increases in the invoice financing
facility to £8m (2023: £7.5m) and trade finance facility to £4m
(2023: £3.5m).
18. Provisions for liabilities
The Group had the following
provisions during the year:
|
|
VAT
provision
|
Dilapidations
provision
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
At 1 January 2023
|
|
513
|
388
|
901
|
Additions to the income
statement
|
|
98
|
731
|
829
|
At
31 December 2023
|
|
611
|
1,119
|
1,730
|
|
|
|
|
|
Due within one year
|
|
611
|
60
|
671
|
Due in over one year
|
|
-
|
1,059
|
1,059
|
Following an HMRC VAT assessment in
the prior year, a small number of Bar products in the PhD range
that were previously classed as zero-rated have been assessed by
HMRC as standard rated for VAT purposes. The total exposure on
these products is £0.6m (2022: £0.5m).
In determining the appropriate
accounting treatment, management has taken into consideration the
decision reached by the First-tier Tribunal in a current case an
unrelated Group has ongoing for a similar product. In this case,
the Tribunal decided in favour of HMRC that the flapjacks were
standard rated. Whilst this decision is being appealed and could be
reversed by the Upper-tier Tribunal, given the precedent set,
management has determined it appropriate to recognise a provision
for the full amount. An equal and opposite other receivable has
been recognised for this amount as management consider it virtually
certain that it will be recovered from customers by the
Group.
A dilapidations provision has been
increased during the year in conjunction with the new Blackburn
operating site. The estimated cost is expected to bring the
property back, at the end of the lease, into the same condition it
was in at the start of the lease. There are 13 years remaining on
the initial lease term at the yearend. There is therefore
uncertainty over the final amount and timing of the cashflows.
Management have utilised their best estimate of the future
obligation at the yearend and will be engaging an independent
surveyor in the year to continue to monitor the appropriateness of
the provision.
19. Deferred tax
Deferred tax is calculated in full
on temporary differences under the liability method using a tax
rate of 25% (2022: 25%). 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 2023:
|
Asset
|
Liability
|
Net
|
(Charged)/ credited to profit
or loss
|
(Charged)/ credited to
equity
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Accelerated capital
allowances
|
19
|
-
|
19
|
19
|
-
|
Available losses
|
1,786
|
-
|
1,786
|
(365)
|
-
|
Other temporary
differences
|
-
|
-
|
-
|
-
|
-
|
Business combinations
|
-
|
(1,786)
|
(1,786)
|
365
|
-
|
Net
tax assets/(liabilities)
|
1,805
|
(1,786)
|
19
|
19
|
-
|
Year ended 31 December 2022:
|
Asset
|
Liability
|
Net
|
(Charged)/ credited to profit
or loss
|
(Charged)/ credited to
equity
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Accelerated capital
allowances
|
-
|
-
|
-
|
71
|
-
|
Available losses
|
2,151
|
-
|
2,151
|
(428)
|
-
|
Business combinations
|
-
|
(2,151)
|
(2,151)
|
357
|
-
|
Net
tax assets/(liabilities)
|
2,151
|
(2,151)
|
-
|
-
|
-
|
SiS (Science in Sport) Limited has a
cumulative assessed tax loss of £38.6m as at 31 December 2023
(2022: £30.5m). The losses are split into pre 1 April 2017 losses
of £4.2m (2022: £4.2m) and post 1 April 2017 losses of £34.4m
(2022: £26.3m). SiS (Science in Sport) Limited can utilise its
assessed tax losses in the coming years against future expected
profits. Assessed losses from before 1st April 2017 can only be
used against SiS (Science in Sport) Limited profit whereas assessed
tax losses from after 1st April 2017 can be used to offset the
future profits from SiS (Science in Sport) Limited and PhD
Nutrition Ltd profits. Tax losses have not been recognised as a
deferred tax asset due to the uncertainty of the timing of
recoverability based on recent results; the Group will continue to
assess recoverability.
20. Leases
The Group leases several properties
in the jurisdictions from which it operates. In all jurisdictions
the rates are fixed over the lease term.
Right of use assets
|
Land and
buildings
£000
|
Vehicles
£000
|
Total
£000
|
Cost
|
|
|
|
At 31 December 2021
|
10,902
|
14
|
10,916
|
Additions
|
1,041
|
-
|
1,041
|
Disposals
|
(201)
|
-
|
(201)
|
At 31 December 2022
|
11,742
|
14
|
11,756
|
Additions - leased assets
|
325
|
-
|
325
|
Additions - dilapidations
provision
|
655
|
-
|
655
|
Disposals
|
(3)
|
-
|
(3)
|
At
31 December 2023
|
12,719
|
14
|
12,733
|
|
|
|
|
Amortisation
|
|
|
|
At 1 January 2021
|
257
|
-
|
257
|
Charge for period
|
949
|
14
|
963
|
At 31 December 2022
|
1,206
|
14
|
1,220
|
Charge for period
|
993
|
-
|
993
|
At
31 December 2023
|
2,199
|
14
|
2,213
|
|
|
|
|
Net
book value
|
|
|
|
At
31 December 2023
|
10,520
|
-
|
10,520
|
|
|
|
|
At 31 December 2022
|
10,536
|
-
|
10,536
|
|
|
Lease liabilities
|
|
|
Total
|
|
£'000
|
|
|
At 1 January 2023
|
10,676
|
Additions
|
325
|
Disposals
|
(3)
|
Interest expense
|
436
|
Lease payments
|
(742)
|
At
31 December 2023
|
10,692
|
Current
|
789
|
Non current
|
9,903
|
The maturity analysis of the
contractual undiscounted lease liabilities is shown in the
following table:
|
Up to 3
months
|
Between 3 and 12
months
|
between 1 and 2
year
|
Between 2 and 5
years
|
Over 5
years
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
At
31 December 2023
|
315
|
884
|
1,051
|
3,030
|
8,434
|
13,714
|
Short term and low value lease
expenses in the year were nil. In the previous year short term
leases, classified as operating leases, related to rental property
in UK and Italy totalling £120,000.
21. Share capital
|
Ordinary
10p shares
|
Ordinary
10p shares
|
|
Number
|
£'000
|
|
|
|
Authorised share capital
|
221,000,000
|
22,100
|
Allotted, called up and fully paid
|
Ordinary
10p shares
|
Ordinary
10p shares
|
|
Number
|
£'000
|
At 1 January 2022
|
135,100,931
|
13,510
|
Share issue - 5 May 2022
|
3,985,477
|
399
|
Share issue - 21 October
2022
|
33,333,333
|
3,333
|
At 31 December 2022
|
172,419,741
|
17,242
|
Share issue - 29 December
2023
|
9,852,866
|
985
|
At
31 December 2023
|
182,272,607
|
18,227
|
The Company has one class of
Ordinary shares which carry no rights to fixed income.
On 29 December 2023, the Company
issued and allotted 9,852,866 new Ordinary shares which were used
to satisfy the exercise of share options. At 31 December 2023 the
Employee Benefit Trust held in reserve 2,045,230 new Ordinary
shares of 10p each to be issued as share options (2022: 4,293,194
new Ordinary shares of 10p each).
22. Share options
In June 2014 the Company adopted a
Share Option Plan ("SOP"). The key terms of the SOP are
substantially the same as set out in the AIM Admission Document
which is available on the Group's website. Under the SOP, options
to purchase Ordinary shares may be granted by the Remuneration
Committee to Directors, Senior Executives and potentially other
employees at nil-cost.
To enable the Company to grant
nil-cost options it has established an Employee Benefit Trust to
purchase, hold and transfer the Ordinary shares pursuant to the
options.
The SOP is managed by the
Remuneration Committee on behalf of the Company. The Company will
grant each participant an option subject to the terms and
conditions of each participant's individual option agreement
(including performance conditions) and the SOP rules. Each
participant may be granted either annual or long term (three- or
five-year vesting period) options or both. Annual options may be
settled in either cash or shares at the sole discretion of the
Remuneration Committee. As at 31 December 2023, 2,045,230 (2022:
4,293,194) shares were held by the Employee Benefit Trust in
respect of options awarded to the Directors in respect of previous
years. All other annual options have been treated as equity settled
options.
In the event that the option
holder's employment is terminated before vesting, the option may
not be exercised unless the Remuneration Committee so permits.
Options expire 10 years from date of grant.
The Board approved an LTIP element
of the SOP on 22 September 2016 which relates to revenue growth
achievement. This award replaces the existing five-year LTIP, the
three-year revenue growth phase of this scheme vested in March 2016
and was then planned to be a profit plan for two years thereafter.
Following the raising of additional capital in October 2015, the
strategy has continued to be focussed on revenue growth following
the completion of the first three years of the previous
LTIP.
An additional LTIP scheme for
2019-2021 was approved during the prior year, and a new LTIP scheme
for 2022-2024 was approved during the current year. Further
information on the schemes can be found in the Remuneration
report.
There is no charge for the year
relating to employee share-based payment plans. In 2022 the charge
was £262,000, which mainly relates to 2021 STIP & LTIP and 2019
LTIP equity settled share-based payment transactions, with social
security credits of £218,000.
Options granted during the
period
During the year ended 31 December
2023, no options were granted under the short term and long-term
incentive plan with regard to performance in the year ended 31
December 2022 or 31 December 2023. All options have a nil
exercise price and no market-based performance
conditions.
Movements in the number of share
options outstanding and their related weighted average exercise
prices are as follows:
|
Weighted average exercise
price
|
Weighted average share price
at date of exercise
|
Share
options
|
|
pence
|
pence
|
Number
|
|
|
|
|
Options at 1 January 2022
|
nil
|
-
|
10,820,373
|
Granted during year
|
nil
|
58p
|
4,037,471
|
Exercised
|
nil
|
50p
|
(1,276,351)
|
Forfeited during year
|
nil
|
-
|
-
|
Outstanding at 31 December 2022
|
nil
|
|
13,581,493
|
|
|
|
|
Granted during year
|
nil
|
-
|
-
|
Exercised
|
nil
|
12p
|
(12,100,830)
|
Forfeited during year
|
nil
|
11p
|
(629,278)
|
Outstanding at 31 December 2023
|
nil
|
|
851,385
|
The exercise price of all options
outstanding at the end of the year was nil. The average remaining
contractual life for these options as at 31 December 2023 was 0.5
years (2022: 6.4 years). Of the 851,385 outstanding share options
at the yearend, 350,835 were exercised following the yearend,
320,751 lapsed following the yearend and 179,799 remained
exercisable at the date of signing these financial statements with
no further vesting conditions.
23. Reserves
Share premium
|
Amount subscribed for share capital
in excess of nominal value less costs directly attributable to the
issue of shares.
|
Employee Benefit Trust reserve
|
Shares in the Company held by the
Employee Benefit Trust which will be used to settle options held by
employees under the SOP.
|
Cash flow hedge reserve
|
Gains/losses arising on the
effective portion of hedging instruments carried at fair value in a
qualifying cash flow hedge. There were no movements in cash flow
hedges in the current or prior year. There remains a historic cash
flow hedge reserve on the consolidated statement of financial
position as a result of previous cash flow hedge
accounting.
|
Other reserve
|
Arose as a result of applying the
principles of reverse acquisition accounting following the demerger
of SIS (Science in Sport) Limited from Provexis plc in August 2013
and represents the difference between the capital reserves of
Science in Sport plc (the legal acquirer) and those of SIS (Science
in Sport) Limited (the legal acquiree).
|
Retained deficit
|
Cumulative net gains and losses
recognised in the consolidated statement of comprehensive
income.
|
Foreign exchange reserve
|
Arises on the translation of
foreign subsidiaries into Sterling at the year-end date.
|
24. Pension costs
The pension charge represents
contributions payable by the Group to independently administered
funds which during the year ended 31 December 2023 amounted to
£310,000 (2022:
£294,000). Pension contributions payable but not yet paid at 31
December 2023 totalled £59,000 (2022: £49,000).
25. Related party transactions
IAS 24 'Related Party Transactions'
requires the disclosure of the details of material transactions
between reporting entities and related parties. Transactions and
balances with group companies are eliminated on consolidation and
therefore do not need to be disclosed.
There were no other related party
transactions during the financial year, nor any balances
outstanding at the end of the financial year.
26. Financial instruments
Financial instruments at amortised cost
|
31 December
2023
|
31
December
2022
|
|
£'000
|
£'000
|
|
|
|
Financial assets measured at
amortised cost
|
14,898
|
16,969
|
|
|
|
Financial liabilities measured at
amortised cost
|
37,691
|
33,983
|
Financial assets comprise cash and
cash equivalents trade and other receivables. Financial liabilities
comprise trade payables, accruals, hire purchase, invoice
financing, trade facility, asset financing and lease
liabilities.
27. Hire purchase agreement
|
31 December
2023
|
31
December
2022
|
|
£'000
|
£'000
|
|
|
|
Current portion of hire purchase
obligation
|
82
|
80
|
Long term portion of hire purchase
obligation
|
-
|
82
|
Total hire purchase obligation
|
82
|
162
|
28. Asset financing
An asset financing agreement was
entered into in 2021 with Lombard Equipment Finance to fund capital
expenditure for the Blackburn single site operations facility. The
full amount funding has now been received and totals £3,553,000.
The Group's obligation is to repay the financing over 60 months,
the first repayment occurred in July 2022.
This agreement with Lombard contains
both fixed and floating charges over all the property and
undertakings of the parent company.
|
31 December
2023
|
31
December
2022
|
|
£'000
|
£'000
|
|
|
|
Current portion of asset financing
obligation
|
1,192
|
843
|
Long term portion of asset financing
obligation
|
2,282
|
2,839
|
Total asset financing obligation
|
3,474
|
3,682
|
The maturity analysis of the
undiscounted asset financing obligations is shown in the following
table:
|
Up to 3
months
|
Between 3 and 12
months
|
between 1 and 2
year
|
Between 2 and 5
years
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At
31 December 2023
|
366
|
1,098
|
1,185
|
1,295
|
3,944
|
29. Notes to the cash flow statement
The following table shows a
reconciliation of the changes in liabilities arising from financing
activities during the year.
|
1
January
2023
|
Cash
flows
|
Non-cash
changes
|
31 December
2023
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
Cash and cash equivalents
|
930
|
1,461
|
(247)
|
2,144
|
Asset financing
|
(3,682)
|
208
|
-
|
(3,474)
|
Invoice financing
|
(4,523)
|
(1,818)
|
-
|
(6,341)
|
Trade facility
|
(2,733)
|
(527)
|
-
|
(3,260)
|
Lease liabilities
|
(10,676)
|
306
|
(322)
|
(10,692)
|
Total
|
(20,684)
|
66
|
(1,005)
|
(21,623)
|
Non-cash changes in cash are in
relation to unrealised foreign exchange differences. Non-cash
changes in lease liabilities are in relation to additions and
disposals (note 20).
30. Contingent liabilities
Following an HMRC VAT assessment in
the prior year, a small number of Powder products in the PhD range
that were previously classed as zero-rated have been assessed by
HMRC as standard rated for VAT purposes. VAT at the standard rates
on sales of these products in the period December 2018 to 31
December 2021 is £0.7m. Management are challenging HMRC's
assessment and have determined the probability of an outflow of
resources is low. Accordingly, a contingent liability has been
disclosed for this amount.
To the extent there is any liability
due to HMRC, the Group will seek to recover this from
customers.
31. Post balance sheet events
There are no events subsequent to
the reporting date which would have a material impact on the
financial statements.
32. Parent company guarantees
As the ultimate parent undertaking,
Science in Sport plc is providing SIS (Science in Sport) (included
within these Group consolidated financial statements) with
guarantees of its debts in the form prescribed by Section 479C of
the Companies Act 2006 ("the Act") such that the subsidiary can
claim exemption from requiring an audit in accordance with section
479A of the Act. This guarantee covers all of the outstanding
actual and contingent liabilities of this company as at 31 December
2023.