Samarkand Group plc : FY21 Preliminary Unaudited Results DGAP

Samarkand Group plc (SMK)
Samarkand Group plc : FY21 Preliminary Unaudited Results

29-Jul-2021 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


29 July 2021

 

Samarkand Group plc

("Samarkand", the "Company" or together with its subsidiaries the "Group")

 

FY21 Preliminary Unaudited Results

 

Samarkand Group plc, the cross-border eCommerce technology solution provider, is pleased to announce its preliminary unaudited results for the year ended 31 March 2021 ("FY21").

 

FY21 Financial highlights:

  • Listed on the Apex segment of the AQSE Growth Market raising £17m
  • Revenue increased significantly by 201% to £20.6m (2020: £6.8m)
  • Like for like revenues increased 116% to £14.8m (2020: £6.8m) excluding the exceptional revenues of £5.8m
    • Nomad Technology revenue increased 317% to £6.4m (2020: £1.5m)
    • Brand Ownership revenues increased 66% to £3.5m (2020: £2.1m)
    • Distribution revenues increased 51% to £4.8m (2020: £3.2m)
  • Gross margin, excluding exceptional revenue, improved from 48% to 62% reflecting a shift to greater technology and direct-to-consumer revenues
  • EBITDA profit increased to £1.1m* (2020: loss £0.8m)
  • Adjusted EBITDA loss improved 50% to £0.4** (2020: loss £0.8m)

* after deducting £0.5m in listing fees and share based payment charge
** adjusted EBITDA is EBITDA adjusted to exclude the profit generated from exceptional revenues, listing fees and share based payment charge.

FY21 Operational highlights:

  • Orders processed for consumers in China increased 107% to 122k (2020: 59k)
  • Number of product lines processed on the Nomad platform in 2021 was 2,111 (2020: 381)
  • Significant investment in the Group's proprietary technology platform, Nomad continued with £0.6m (2020: £0.4m) in capitalised development costs
  • Nomad Checkout enterprise launched in November 2020 with c. £1m GMV processed on the platform on behalf of UK brands and retailers

Post period end highlights:

  • £3.1m net investment received from our strategic partner SF Express
  • Acquired Zita West Products Limited and majority interest in Babawest Ltd
  • Established Samarkand Global (Japan) KK based in Tokyo
  • Nomad Checkout beta launched on 4 SME brands

David Hampstead, Chief Executive Officer of Samarkand Group, commented: "It has been an exceptional year for Samarkand Group plc and I am extremely proud to be presenting the Group's maiden set of results as a listed Company. The ability with which the Company has progressed during the period in the face of the challenges posed by the pandemic is testament to the strength of our team and the value of our offering. I would like to take this opportunity to thank all our staff for their continued hard work.

 

The funds raised from our IPO provides Samarkand with the necessary capital to move to the next stage of our expansion and continued execution of our growth strategy. The use of such funds to acquire Zita West Products and a majority interest in Babawest Ltd underlines the ambition of the Group to move quickly in its progression. We continue to assess further opportunities for acquisitive growth.

Chinese eCommerce is only set to grow in significance moving forwards and our offering provides the optimal route for Western brands to penetrate the notoriously difficult Chinese market. The future of the Company is extremely bright and I am excited to continue delivering on our stated strategy in the coming months."

For more information, please contact:

 

Samarkand Group plc

Via Alma PR

David Hampstead, Chief Executive Officer

Eva Hang, Chief Financial Officer

http://samarkand.global/

 

 

VSA Capital - AQSE Corporate Adviser and Broker

+44(0)20 3005 5000

Andrew Raca, James Deathe, Pascal Wiese (Corporate Finance)

Andrew Monk (Corporate Broking)

IPO@vsacapital.com

 

 

Alma PR

+44(0)20 3405 0213

Josh Royston

Robyn Fisher

Joe Pederzolli

samarkand@almapr.co.uk

 

Notes to Editors

 

Samarkand is a cross-border eCommerce technology and retail group focusing on connecting Western Brands with China, the world's largest eCommerce market. The Group has developed a proprietary software platform, the Nomad platform, which is integrated across all necessary touch-points required for eCommerce in China including eCommerce platforms, payments, logistics, social media and customs. The Nomad platform is the foundation on which the Group's Nomad technology and service solutions are built. The core products include Nomad Checkout, Nomad Storefront, Nomad Commerce and Nomad Distribution.

 

The Company's current customer base comprises leading European brands such as 111SKIN, Shay & Blue, Omorovicza, ICONIC London, Philip Kingsley, Temple Spa and Planet Organic. Samarkand has also successfully grown its own brand, Probio7, acquired in December 2017 and recently announced the acquisition of Zita West Products and Babawest.

 

Founded in 2016, Samarkand is headquartered in London, UK with offices in Shanghai and Tokyo employing over 140 staff.

 

For further information please visit https://www.samarkand.global/

 

CHAIRPERSON'S STATEMENT

 

Introduction

 

Despite the challenging year we have all faced the Group continues to build on the strong foundations put in place since incorporation in 2016. I am delighted to have joined such a fast-growing company at such an exciting time and I am particularly pleased to be releasing our maiden full year results as a publicly listed company, following our successful oversubscribed IPO and listing onto the Apex segment of the Aquis Growth Market in March 2021.

 

The results we are reporting today show the significant progress that has been made over the past year. Our teams have remained focused on providing our customers with a more direct-to-consumer route to the world's largest eCommerce market. The mission of the Company, to connect consumers of the eCommerce market in China with international merchants, comes at a time when the need to reach new markets and new consumer groups has never been greater for businesses of all sizes. The pandemic has made eCommerce even more relevant than ever before, characterised by digital trade and technology and we believe Samarkand is at the frontier of this growing market.

 

Financial Results

The Group delivered significant revenue growth in FY21 of 201% to £20.6m (FY20: £6.8m) with like for like revenues increasing 116% to £14.8m (FY20: £6.8m) excluding exceptional revenues of £5.8m.  As a result of the proceeds raised at the IPO, the Group has moved from a net debt to net cash position. At the year end, the Group's net cash position was £11.6m (2020: net debt £5.9m), which provides the ideal platform to execute plans and deliver sustainable value.

 

People

None of this success would be possible without the passion and diligence shown by our people, who have risen to every challenge posed by the pandemic. These results are a reflection of that endeavour and on behalf of the Board, I offer them my sincere thanks.

 

Board and governance

At the time of the IPO, we established the Board and governance structures suitable for a fast-growing listed company. The newly formed Board, supported by the Nomination & Remuneration, Sustainability and Audit Committees, bring a breadth of experience in eCommerce, public markets, finance, and governance. We have established a solid working relationship, remaining well connected and communicative despite the restraints of the pandemic. It is a pleasure to work with a group of such knowledgeable and experienced professionals and I am grateful for the contributions that have been made to date. 

 

Summary and Outlook

We operate in one of the fastest changing markets where new trends and technologies can, and do, change the market rapidly. This is what makes this such an exciting industry to operate in but also brings with it a unique set of challenges. The ability to adapt and react quickly to the opportunities this environment brings will be key to our success and we are investing heavily in the technology that will best position us to succeed as this market continues to evolve.

 

We are making good progress towards our goal of acquiring additional consumer brands and making strategic acquisitions which is evidenced by our recent acquisition of Zita West Products and Baba West Ltd. The focus for the year ahead is to further develop the Nomad platform's functionality and services, as well as expand the Group's business development activities in Europe, Northeast Asia, and North America.

 

The Group has implemented a "buy in the West, build in the East" strategy in relation to its acquisition of own brands. We plan to continue to extend marketing of our own brands over the coming months. This strategy is focused on the identification of Western brands with growth potential, their acquisition, subsequent redevelopment and launch into the Group's sales channels in China and elsewhere.

The market appetite for our technology is being well received by our customers and we believe that the long term opportunity remains significant. We are continuing to build strong momentum with our customers and our own brands and look positively to the year ahead.

Tanith Dodge

Chairperson

 

CEO REVIEW

 

Despite the many challenges over the last year, it has been a year of phenomenal growth and major milestones achieved by the Group. The stand-out event was our over-subscribed IPO and listing onto the Apex segment of the Aquis Growth Market. Our listing was only possible due to the solid foundations we had built since incorporation and the successful execution of our strategy to make the world's largest but most complex eCommerce market more accessible through our technology and expertise.

 

Our teams in the UK and China responded and adapted remarkably well to perhaps the most disruptive event in our generation. Our UK distribution centre remained opened throughout the pandemic whilst maintaining the highest levels of safety for the operational teams working there. Our priority going forward is to continue providing a safe working environment and ensuring our teams remain safe, supported and motivated.

 

Our IPO & Strategic Investment

In March 2021 we successfully completed our IPO and admission on to the Aquis Growth Market in London in what was the first time a growth prospectus had been used in Europe. The IPO was supported by both institutional and retail investors and due to the high demand the amount raised was increased from the initial target of £10m to £17m. This was quickly followed by a further strategic investment by one of the leading express delivery companies in China, with whom we have been working for several years. Whilst the net proceeds of £3.1m will help to accelerate our growth, it is the commitment from such a major partner and the opportunity that represents which is truly significant. 

 

The IPO has enabled many of our colleagues to become shareholders and I am very pleased that over 10.4% of the shares in issue are currently held by employees. The support from our initial investor, Smollan Group, one of the world's leading retail service companies, continues and they converted an £1m loan note to equity.

 

Nomad Technology

The development of our technology continues at pace. We have increased our development and delivery capability to allow us to roll out our solutions faster and further afield. Our solutions are now being deployed by major enterprises in Europe and Asia which represent a huge addressable market. In Europe one of the largest eCommerce companies has deployed our Nomad Checkout solution to their flagship eCommerce site. In Northeast Asia, in line with our strategy to expand into this market, one of the world's largest beauty conglomerates is also deploying our Nomad Checkout solution to power direct-to-consumer sales from South Korea to Chinese consumers. North America is another enormous market opportunity for our technology and the group is already in advance discussions with a major partner for the market.  We expect to provide an update on this in due course.

 

With projects already underway and adoption of our technology by multi-national corporations we are executing our vision of becoming an integral part of the infrastructure that will power eCommerce between China and the rest of the world on the digital silk road. I'm very excited about what comes next and the potential for our solutions to help the millions of smaller merchants that have great potential in the world's largest eCommerce market but currently lack access.

 

Buy in the West Build in the East

In line with our strategy of acquiring businesses in the West with high growth potential in Asia we completed our first acquisition since the IPO in May. The acquisition of Zita West Products Limited ("ZWPL") and 51% of Baba West Ltd ("BW") is complimentary to the existing health brand owned by the Group, Probio7 and is positioned for significant growth in China through the Group's sales channels and technology. Zita West herself is a world-renowned specialist in fertility, IVF and assisted reproductive therapy (ART). The Zita West clinics have treated thousands of couples and has amongst the highest success rates in the UK. Zita is a widely published author on the subject of fertility and reproductive health and the range of nutritional supplements that have been developed over the last 20 years are specifically designed to support this process. As the global birth rates has dropped, China has become the biggest consumer of ART and in the same month as the acquisition, the Chinese government announced the introduction of a "3 child policy" to reverse the population decline. The acquisition of ZWPL represents a significant opportunity to rapidly grow this brand in the world's largest market.

 

The performance of our health brand, Probio7, has continued to improve throughout 2020. During the pandemic wholesale to retailer sales dropped significantly due to lockdown closures. The impact of this was offset by the higher margin sales through our own eCommerce channels and the enormous growth the brand experienced in the Chinese market during this period. When we acquired Probio7 in December 2017 it was a brand with a loyal consumer following developed over 20 years and had grown sales to £1.2m annually over that time. In FY2021 under our ownership, sales increased to £3.5m with over £1.7m coming from launching the brand in China.

 

We will continue to evaluate opportunities and acquisitions that fit within our strategy and are complementary to our portfolio.

 

Accelerated Investment

The original target for the fund raising of £10m was significantly surpassed which has allowed us to invest more aggressively to accelerate our strategy. We have significantly increased investment in our technology and operational teams and have begun the process of expansion into other international markets starting with Japan and continental Europe.

 

The company now employs over 140 up from 61 in March 2020. All of our employees are working extremely hard to deliver the objectives of the business, innovating and creating solutions to problems that are complex to solve in one of the fastest moving and changing industries. Our technology team which now spans the UK and China has increased from 14 in March 2021 to 23 in July 2021. The team has successfully delivered our unique Nomad Checkout solution across a number of eCommerce sites for one of Europe's largest eCommerce companies, providing a strong validation both of our technology and the addressable market for our solutions.

 

Markets and the Environment

In 2014, the Chinese government introduced the first policies designed to promote the cross-border eCommerce industry. These included pilot free trade zones, preferential tax policy for goods purchased through this route and dispensations on products in certain categories such as no need for animal testing on skincare and cosmetic products which was previously required for general imports. Since then, this policy has been further strengthened with more free trade zones, even lower tax rates and higher transaction limits.  During this time China has become the global leader in eCommerce both in terms of size and scale but also innovation. Social commerce and live-streaming is a phenomenon that started in China and has grown at an incredible rate, from $4bn in 2017 to a forecasted $300bn this year. This represents an enormous opportunity but also comes with it's own set of challenges as traffic moves to different platforms and channels at a relentless pace. We have experienced that first-hand with some of the channels we work on moving to Douyin where we didn't have a presence initially. We have now integrated Nomad into this very exciting platform and plan to generate our first sales in the coming months.

 

An interesting development is the adoption of these livestream technologies and trends appearing in Western markets which presents unique opportunities for the Group as one of the few Western companies with such exposure to what, I believe will become the dominant form of eCommerce for the Post 2000 generation in markets outside of China in the near future.

 

In the aftermath of the pandemic, there have been some notable developments in the market and industry in which we operate that present future opportunities and challenges. COVID-19 has caused immense disruption to international travel which is one of the ways Western brands have been discovered by Chinese consumers. This disruption has resulted in a rise of domestic Chinese brands replacing the once popular international brands. The almost complete cessation of international travel by Chinese tourists to overseas destinations means that the consumers who do want to purchase international brands have had to do so online which has created opportunities particularly in markets such as Japan and South Korea that have relied on physical retail and tourism. In response we have accelerated our timeline to enter these markets.

 

Commentary on KPIs

With the launch and rollout of our Nomad Checkout solution, one of the key KPI's we will be focussed over the next 12 months is the adoption and retention of merchants installing and using the solution. The merchant has the option to take an off-the-shelf plugin for eCommerce software platforms such as Shopify or an Enterprise version for companies that require a tailored solution to fit with their own technology and fulfilment processes.

 

Top line revenue is a key metric however the way we derive that revenue will evolve and change as we execute our plan. We anticipate that as more of our technology is adopted by clients it will become more repeatable and with a higher gross margin than revenue derived from our "buy-and-sell" model and own brand sales.

 

Outlook statement

I am extremely proud of what we have achieved over the last few years with a very modest amount of investment. We are truly excited by what the future holds now that we are well resourced. We have a solid foundation operationally, technically, and financially from which we can now build. The adoption of our technology solutions by significant and distinguished companies, combined with the investment from SF Express validates our vision and gives us confidence that the road ahead is a very positive one for the Company. As true pioneers, bridging technical and cultural divides between international merchants and consumers in the world's largest eCommerce market there will inevitably be challenges to overcome but I am confident that the partners and teams we have in place can deliver success.

 

The pace of change of Chinese eCommerce means we need to be constantly evolving and innovating. We have the benefit of operating in the most dynamic eCommerce market which is now shaping the evolution of eCommerce on a global scale.  Chinese eCommerce has been driving trends in other parts of Asia for some time and we are now starting to see that spread to Europe and North America where platforms such as TikTok and trends such as live-stream commerce are starting to gain traction.  This is an area where we will be paying close attention given our unique position in both geographies.

 

Our expansion into Northeast Asia through our newly formed entity and office in Japan represents an enormous and exciting opportunity for us to deploy our solutions and technology to a new market which already has huge demand from Chinese consumers. Japanese and South Korean brands are amongst the most sought-after and the cross-border trade between Chinese consumers and brands from these countries dwarfs that of almost all other markets.

 

We operate in an innovative, fast-moving eCommerce market, one that is shaping the way consumers shop online and defining what eCommerce will become not just in Asia but in other parts of the world. All aspects of life are accelerating towards digitalisation and the exchange of goods across geographical borders has become part of everyday life for consumers across the globe. It is an exciting time to be building the technology and infrastructure, the pipes and plumbing, that make digital commerce more efficient between international merchants and the world's largest group of consumers in China.

 

David Hampstead

Chief Executive Officer

 

FINANCIAL REVIEW

 

Overview

During the year, the Group demonstrated high growth in revenue and gross profit, as total revenue (including exceptional revenues of £5.8m) grew by 201% to £20.6m (2020: £6.8m) and gross margin improving to 62% (2020: 48%).

 

Revenues and gross margin

Revenues excluding exceptional revenues are up 116% to £14.8m (2020: £6.8m), with revenues on our Nomad technology up 317% to £6.4m (2020: £1.5m), brand ownership revenues up 66% to £3.5m (2020: £2.1m) and distribution revenues up 51% to £4.8m (2020: £3.2m).

 

The significant increases are largely driven by the increase in revenues on our Nomad technology platform, including high levels of social selling, the growth of online sales during the first lockdown, as well as increases in revenue generated from our own brand, Probio7 in China. Due to the temporary closures and reduction in travel, the Group saw a dramatic shift in consumer behaviour towards online shopping, particularly during the months where different parts of the world were in lockdown.

 

The Group's gross margin (excluding exceptional revenues) increased to 62% (2020: 48%). The improving margins are a result of the Group's continued development of its B2C capabilities and the transition away from its low margin B2B distribution model. In addition, the increasing gross margin performance reflects the Group's focus on technology and services, which typically yields higher margin than distribution sales.

 

Exceptional Revenues

With teams in both the UK and China the group was ideally positioned to source and supply products necessary for the coronavirus response. As a result, a £5.8m government contract from the Department of Health and Social Care (the "Exceptional Revenue") was awarded to the company in April 2020 for the supply of personal protective equipment. This contract was successfully fulfilled.

 

Operating expenses

Selling and distribution expenses, excluding exceptional revenues have increased to 37% (2020: 22%) of revenue, as a result in the increase in social selling, with transaction fees paid to KOLs as well as an increase in marketing investment in our own brand Probio7. Variable costs (which includes cost of sales, selling and distribution expenses) have remained steady at 76% (2020: 74%) of revenue.

 

Administrative expenses, excluding exceptional revenues, listing fees, share-based payment expense, decreased to 27% (2020: 38%) of revenue as a result of operational efficiency and the Group's ability to scale its current operations and facilities as revenue grew. With the proceed from the IPO, the Group have begun investing heavy in its people and in additional regulatory, compliance costs as a result of being publicly listed.

 

Earnings per share

Basic and diluted earnings per share was 0.78 pence per share (2020: (3.93) pence per share).

 

IPO and net cash/(debt)

The Group listed on the Apex segment of the AQSE Growth Market in March 2021 and raised a total of £17m from both institutional investors and qualified investors. The subscription and placing shares represented approximately 29% of the enlarged share capital at the time.

 

As a result of the proceeds raised at the IPO, the Group has moved from a net debt to net cash position. Alongside the funds raised, the directors' loans, former director loans and loan notes were converted into shares or repaid.

 

 

 

Mar-21

Mar-20

Cash and cash equivalents

14,606,867

572,586

Right-of-use lease liabilities

(972,994)

(1,216,486)

Borrowings

(2,082,538)

(4,746,478)

Directors' loans

-

(499,511)

Net cash / (debt)

11,551,335

(5,889,889)

 

 

At the year end, the Group's net cash position was £11.6m (2020: net debt £5.9m), which places the Group in a good position to accelerate its growth, bringing forward investments in its technology and increasing its client service, fulfilment and operational capabilities to execute on its plans and deliver on long term value.

 

Financing costs of £0.4m (2020: £0.3m) comprised of interest expenses of £0.3m (2020: £0.3m).

 

Depreciation and amortisation

The total depreciation and amortisation costs were £0.2m and £0.3m respectively (2020: £0.1m and £0.3m). The Group continued to invest in its Nomad Technology platform with a total of £0.6m (2020: £0.4m) development costs capitalised during the year.

 

EBITDA

EBITDA increased to £1.1m (2020: loss £0.8m) after deduction £0.5m in listing fees and share based payment charges.

 

 

Mar-21

Mar-20

EBITDA

1,133,858

(828,971)

Share-based payment expense

26,914

-

IPO Listing Fees and restructuring costs

460,174

-

 

 

 

EBITDA before Listing Fees and Share-based payment expense

1,620,946

(828,971)

 

The increase in EBITDA is driven by the exceptional revenue contract with the Department of Health and Social Care, which contributed £2m in net profit. Adjusted EBITDA has improved from £0.8m to £0.4m loss.

 

 

Mar-21

Mar-20

EBITDA before Listing Fees and Share-based payment expense

1,620,946

(828,971)

 

 

 

Exceptional Revenues Contract (net profit)

(2,039,621)

-

 

 

 

Adjusted EBITDA

(418,675)

(828,971)

 

 

Going Concern

The financial statements have been prepared on a going concern basis. In adopting this basis, the Directors have carried out a robust assessment of the emerging and principal risks facing the business. As a result of the assessment performed, the Directors consider that the Group has adequate resources to continue its normal course of operations for the foreseeable future.

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2021

 

 

 

Year ended 31 March 2021

 

Year ended 31 March 2020

 

 

£

 

£

Revenue

 

20,600,541

 

6,844,100

Cost of sales

 

(8,770,887)

 

(3,562,548)

Gross profit

 

11,829,654

 

3,281,552

Selling and distribution expenses

 

(6,189,506)

 

(1,519,294)

Administrative expenses

 

(4,506,290)

 

(2,591,229)

 

 

 

 

 

Adjusted EBITDA

 

(418,675)

 

(828,971)

 

 

 

 

 

Share-based payment expense

IPO Listing Fees and restructuring costs

 

(26,914)

(460,174)

 

-

-

Exceptional revenue (net profit)

 

2,039,621

 

-

 

 

 

 

 

EBITDA

 

1,133,858

 

(828,971)

Depreciation and amortisation

 

(503,354)

 

(313,069)

Operating profit/(loss)

 

630,504

 

(1,142,040)

Finance income

 

115

 

6,392

Finance costs

 

(401,076)

 

(296,158)

Income/(loss) before taxation

 

229,543

 

(1,431,806)

Taxation

 

177,514

 

44,247

Income/(loss) after taxation

 

407,057

 

(1,387,559)

 

 

 

 

 

Other comprehensive income:

 

 

 

 

Exchange differences on translation of foreign operations

 

 

(18,517)

 

 

(1,331)

Items that may be reclassified to profit and loss in subsequent periods

 

 

(18,517)

 

 

(1,331)

 

 

 

 

 

Total comprehensive income/(loss) for the year

 

388,540

 

(1,388,890)

 

 

 

 

 

Income/(loss) attributable to:

 

 

 

 

Equity holders of the Company

 

405,074

 

(1,373,059)

Non-controlling interests

 

1,983

 

(14,500)

 

 

407,057

 

(1,387,559)

 

 

 

 

 

Earnings/(loss) per share (basic and diluted)

 

0.0078

 

(0.0393)

 

 

 

 

 

Comprehensive income/(loss) attributable to:

 

 

 

 

Equity holders of the Company

 

386,557

 

(1,374,390)

Non-controlling interests

 

1,983

 

(14,500)

 

 

388,540

 

(1,388,890)

 

 

Consolidated Statement of Financial Position

For the year ended 31 March 2021

 

 

 

31 March 2021

 

31 March 2020

 

 

£

 

£

ASSETS

 

 

 

 

Intangible assets

 

1,462,981

 

1,083,373

Property, plant and equipment

 

151,262

 

134,550

Right-of-use assets

 

840,607

 

1,072,580

Non-current assets

 

2,454,850

 

2,290,503

 

 

 

 

 

Inventories

 

1,857,239

 

1,295,193

Trade receivables

 

1,013,631

 

1,056,443

Corporation tax recoverable

 

98,893

 

-

Other receivables and prepayments

 

522,022

 

313,398

Cash and cash equivalents

 

14,606,867

 

572,586

Current assets

 

18,098,652

 

3,237,620

 

 

 

 

 

Total assets

 

20,553,502

 

5,528,123

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

Share capital

 

516,190

 

1,767

Retained earnings

 

(929,672)

 

(3,342,203)

Currency translation reserve

 

(8,267)

 

(3,333)

Capital contribution

 

-

 

266,072

Share premium

 

17,412,900

 

-

Merger relief reserve

 

(2,063,814)

 

28,764

Non-controlling interest

 

-

 

(32,168)

Total equity

 

14,927,337

 

(3,081,101)

 

 

 

 

 

Right-of-use lease liabilities

 

720,353

 

973,512

Borrowings

 

1,372,964

 

1,924,387

Deferred tax liability

 

67,576

 

76,314

Total non-current liabilities

 

2,160,893

 

2,974,213

 

 

 

 

 

Trade and other payables

 

1,981,054

 

1,661,312

Accrued liabilities

 

472,807

 

204,762

Deferred revenue

 

42,563

 

201,715

Borrowings

 

709,574

 

2,822,091

Right-of-use lease liabilities

 

252,641

 

242,974

Loans from directors

 

-

 

499,511

Refund liabilities

 

6,633

 

2,646

Total current liabilities

 

3,465,272

 

5,635,011

Total liabilities

 

5,626,165

 

8,609,224

 

 

 

 

 

Total liabilities and equity

 

20,553,502

 

5,528,123

 

 

Consolidated Statement of Changes in Equity

For the year ended 31 March 2021

 

 

Share

Capital

 

Share

Premium

Merger relief reserve

 

Capital

contribution

Currency

Translation

reserve

 

Retained

earnings

Non-controlling

interests

 

Total

equity

 

£

£

£

£

£

£

£

£

Balance at 1 April 2019

1,767

-

28,764

266,072

(2,002)

(1,969,144)

(3,716)

(1,678,259)

 

 

 

 

 

 

 

 

 

Loss after taxation

-

-

-

-

-

(1,373,059)

(14,500)

(1,387,559)

 

 

 

 

 

 

 

 

 

Other comprehensive loss

-

-

-

-

(1,331)

-

-

(1,331)

 

 

 

 

 

 

 

 

 

Total comprehensive loss for the year

-

-

-

-

(1,331)

(1,373,059)

(14,500)

(1,388,890)

 

 

 

 

 

 

 

 

 

Acquisition of minority interests

-

-

-

-

-

-

(19,970)

(19,970)

 

 

 

 

 

 

 

 

 

Minority interest arising on new subsidiary

-

-

-

-

-

-

6,018

6,018

 

 

 

 

 

 

 

 

 

Transactions with owners

-

-

-

-

-

-

(13,952)

(13,952)

 

 

 

 

 

 

 

 

 

Balance at 31 March 2020

1,767

-

28,764

266,072

(3,333)

(3,342,203)

(32,168)

(3,081,101)

 

 

 

 

 

 

 

 

 

Profit after taxation

-

-

-

-

-

405,074

1,983

407,057

 

 

 

 

 

 

 

 

 

Other comprehensive loss

-

-

-

-

(18,517)

-

-

(18,517)

 

 

 

 

 

 

 

 

 

Total comprehensive income/(loss) for the year

-

-

-

-

(18,517)

405,074

1,983

388,540

 

 

 

 

 

 

 

 

 

Disposal of minority interests

-

-

-

-

-

(12,891)

30,185

17,294

 

 

 

 

 

 

 

 

 

Transactions with owners

-

-

-

-

-

(12,891)

30,185

17,294

 

 

 

 

 

 

 

 

 

Share capital reduction

351,633

-

(2,092,578)

(266,072)

13,583

1,993,434

-

-

 

 

 

 

 

 

 

 

 

Shares issued on listing net of transaction fees

 

 

147,804

 

15,852,283

 

-

 

-

 

-

 

-

 

-

 

16,000,087

 

Shares issued on conversion of loans

14,986

1,560,617

-

-

-

-

-

1,575,603

 

 

 

 

 

 

 

 

 

Share based payments

-

-

-

-

-

26,914

-

26,914

 

514,423

17,412,900

(2,092,578)

(266,072)

13,583

2,020,348

-

17,602,604

 

 

 

 

 

 

 

 

 

Balance at 31 March 2021

516,190

17,412,900

(2,063,814)

-

(8,267)

(929,672)

-

14,927,337

 

Consolidated Statement of Cash Flows

For the year ended 31 March 2021

 

 

 

31 March 2021

 

31 March 2020

 

 

£

 

£

Cash flows from operating activities

 

 

 

 

Income/(loss) after taxation

 

407,057

 

(1,387,559)

Cash flow from operations reconciliation:

 

 

 

 

Depreciation and amortisation

 

503,354

 

313,069

Interest expense

 

314,027

 

270,927

Finance income

 

(115)

 

(4)

Income tax credit

 

(177,514)

 

(44,247)

Share based payment

 

26,914

 

-

Working capital adjustments:

 

 

 

 

(Increase) in inventories

 

(562,046)

 

(493,588)

(Increase) in trade and other receivables

 

(209,168)

 

(291,544)

Increase in trade and other payables

 

482,589

 

1,038,256

Cash generated from/(used) in operating activities

 

785,098

 

(594,690)

Taxes received

 

69,883

 

35,509

Net cash generated from/(used in) operating activities

 

854,981

 

(559,181)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

(71,238)

 

(123,913)

Payment of intangible assets

 

(586,226)

 

(467,088)

Acquisition of subsidiary, net of cash acquired

 

(9,125)

 

-

Disposal of subsidiary, net of cash sold

 

17,294

 

-

Finance income

 

115

 

4

Net cash used in investing activities

 

(649,180)

 

(590,997)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds from issue of shares, net of fees

 

16,000,087

 

-

Interest paid

 

-

 

(73,920)

Repayment of right-of-use lease liabilities

 

(283,424)

 

(159,512)

Proceeds from borrowings

 

1,833,400

 

1,958,729

Repayment of borrowings

 

(3,703,069)

 

(271,733)

Net cash from financing activities

 

13,846,994

 

1,453,564

 

 

 

 

 

Net increase in cash and cash equivalents

 

14,052,795

 

303,386

 

 

 

 

 

Cash and cash equivalents - beginning of the year

 

572,586

 

270,564

Effects of exchange rate changes on the balance of cash held in foreign currencies

 

 

(18,514)

 

 

(1,364)

Cash and cash equivalents - end of the year

 

14,606,867

 

572,586

 

 

Notes to the Consolidated Financial Statements
For the year ended 31 March 2021

  1. General information

Samarkand Group plc was incorporated in England and Wales on 12 January 2021 as a public company with limited liability under the Companies Act 2006.

Samarkand Group plc's registered office is Unit 13 & 14 Nelson Trading Estate, The Path, Merton, London SW19 3BL.

The Consolidated Group financial statements represents the consolidated results of Samarkand Group plc and its subsidiaries, (together referred to as the "Group"). The Parent Company financial statements present information about the Company as a separate entity and not about its Group.

These are the first consolidated financial statements of the Group following the reorganisation of the Group to facilitate the listing. The result of the application of the capital reorganisation is to present the consolidated financial statements (including comparatives) as if the Company has always owned the Group. The share capital structure of the Company as at the date of the Group reorganisation is pushed back to the first date of the comparative period (1 April 2020). A Merger Reserve is created as a separate component of equity, representing the difference between the share capital of the Company at the date of the Group reorganisation and that of the previous parent of the Group, Samarkand Holdings Limited.

The financial information set out in this announcement does not constitute the Company's statutory financial statements for the year ended 31 March 2021. Whilst the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRS) this announcement itself does not contain sufficient financial information to comply with IFRS. The Company's statutory financial statements will be finalised subsequent to this preliminary unaudited results announcement and a copy of the statutory financial statements for the year ended 31 March 2021 will be issued to shareholders prior to the Company's Annual General Meeting. The Company expects to publish its Annual Report and full financial statements for the year ended 31 March 2021 that comply with IFRS.

  1. Basis of preparation and measurement

 

(a)       Basis of preparation

The financial statements have been prepared in accordance in accordance with International Accounting Standards in conformity with the Companies Act 2006.

Unless otherwise stated, the financial statements are presented in Pounds Sterling (£) which is the currency of the primary economic environment in which the Group operates.

Transactions in foreign currencies are translated into £ at the rate of exchange on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date. The resulting gain or loss is reflected in the "Consolidated Statements of Comprehensive Income" within either "Finance income" or "Finance costs".

The financial statements have been prepared under the historical cost convention except for certain financial instruments that have been measured at fair value.

The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The directors of Samarkand Group plc have reviewed the Group's overall position and outlook and are of the opinion that the Group is sufficiently well funded to be able to operate as a going concern for at least the next twelve months from the date of approval of these financial statements

(b)      Basis of consolidation

The Consolidated Group financial statements comprises the financial statements of Samarkand Group plc and its subsidiaries.

A subsidiary is defined as an entity over which Samarkand Group plc has control. Samarkand Group plc controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

Intra-group transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests.

(c)       New standards and interpretations

New standards impacting the Group that have been adopted in the annual financial statements for the year ended 31 March 2021 are:

  • Definition of a Business (Amendments to IFRS 3);
  • Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 9, IAS 39 and IFRS 7); and
  • COVID-19-Related Rent Concessions (Amendments to IFRS 16).

Management anticipates that these new standards, interpretations and amendments will be adopted in the financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, will be reviewed for their impact on the financial statements prior to their initial application.

  1. Segmental analysis

An analysis of the Group's revenue and cost of sales is as follows:

 

 

 

31 March 2021

 

31 March 2020

 

 

£

 

£

Revenue by business unit:

 

 

 

 

Brand ownership

 

3,518,615

 

2,119,654

NOMAD technology

 

6,360,740

 

1,527,094

Distribution

 

4,832,644

 

3,191,211

Exceptional revenue

 

5,780,000

 

-

Other

 

108,542

 

6,141

Total revenue

 

20,600,541

 

6,844,100

 

 

 

 

 

Revenue by geographical destination:

 

 

 

 

UK

 

8,960,128

 

2,910,994

China

 

11,131,560

 

3,497,842

Rest of the world

 

508,853

 

435,264

Total revenue

 

20,600,541

 

6,844,100

 

 

 

 

 

Cost of sale by business unit:

 

 

 

 

Brand ownership

 

1,126,480

 

998,333

NOMAD technology

 

2,001,204

 

536,369

Distribution

 

2,496,299

 

2,006,172

Exceptional

 

3,091,046

 

-

Other

 

55,858

 

21,674

Total costs of sale

 

8,770,887

 

3,562,548

 

Exceptional revenues:

With teams in both the UK and China, the Group was ideally positioned to source and supply products necessary for the coronavirus response. As a result, a £5.8m government contract from the Department of Health and Social Care (DHSC) (the "Exceptional Revenue") was awarded to the Company in April 2020 for the supply of personal protective equipment. This contract was successfully fulfilled on time and within budget.

Segment assets:

The non-current assets of the Group are not measured or reported internally on a segmental basis as they are not considered to be attributable to any specific business segment.

  1. Expenses by nature

An analysis of the Group's expenses by nature is as follows:

 

 

31 March 2021

 

31 March 2020

 

 

£

 

£

Administrative expenses:

 

 

 

 

Property costs

 

227,910

 

253,729

Staff costs

 

2,982,338

 

1,749,679

Professional fees

 

382,068

 

201,240

Other

 

426,886

 

386,581

Share based payment

 

26,914

 

-

IPO costs

 

460,174

 

-

Total administrative expenses

 

4,506,290

 

2,591,229

 

  1. Earnings per share

 

 

 

31 March 2021

 

31 March 2020

Basic and diluted earnings/(loss) per share

 

0.78 pence

 

(3.93) pence

Basic and diluted number of shares in issue

 

51,618,966

 

35,340,000

 

Basic earnings per share is calculated by dividing the profit/(loss) after tax attributable to the equity holders of Samarkand Group plc by number of shares in issue after the allotment of ordinary shares on 22 March 2021. The same number of shares is used for the corresponding period in order to provide a meaningful comparison.

  1. Taxation

 

The components of the provision for taxation on income included in the "Statement of Profit or Loss and Other Comprehensive Income" for the periods presented are summarised below:

 

 

31 March 2021

 

31 March 2020

 

 

£

 

£

Current tax

 

 

 

 

UK corporate income tax credit

 

(168,776)

 

(35,509)

Deferred tax

 

 

 

 

UK deferred income tax credit

 

(8,738)

 

(8,738)

Total income tax credit

 

(177,514)

 

(44,247)

 

The differences between the statutory income tax rate and the effective tax rates are summarised as follows:

 

 

31 March 2021

 

31 March 2020

 

 

£

 

£

 

 

 

 

 

Profit/(loss) before tax for the year

 

229,543

 

(1,431,806)

 

 

 

 

 

Expected tax at statutory UK corporation tax rate of 19%

 

43,613

 

 

(272,043)

Increase/(decrease) in tax resulting from:

 

 

 

 

Effect of different tax rates in foreign jurisdictions

 

76,829

 

58,567

Research and development tax credits

 

(168,776)

 

(35,509)

Tax losses utilised

 

(131,381)

 

150,660

Capital allowances less depreciation

 

(6,151)

 

(1,159)

Over provision in previous periods

 

(10,822)

 

-

Deferred tax credit

 

(8,738)

 

(8,738)

Non-deductible expenditure

 

27,912

 

63,975

 

 

(177,514)

 

(44,247)

 

The Group had a deferred tax liability of £67,576 as at 31 March 2021 (31 March 2020: £76,314. The deferred tax liabilities relate to taxable temporary differences.

As at 31 March, the Group had £1,492,553 of tax losses available to be carried forward against future profits (31 March 2020: £2,184,034).

 

  1. Intangible assets - Group

 

 

Development costs

 

Trademarks

 

Brands

 

Goodwill

 

Total

 

£

 

£

 

£

 

£

 

£

Cost

 

 

 

 

 

 

 

 

 

At 1 April 2019

193,614

 

13,999

 

459,916

 

57,807

 

725,336

Additions

439,760

 

27,328

 

-

 

-

 

467,088

At 31 March 2020

633,374

 

41,327

 

459,916

 

57,807

 

1,192,424

 

Additions

 

557,181

 

 

29,045

 

 

-

 

 

-

 

 

586,226

Additions through business combinations

 

-

 

 

-

 

 

10,235

 

 

-

 

 

10,235

At 31 March 2021

1,190,555

 

70,372

 

470,151

 

57,807

 

1,788,885

 

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

 

 

At 1 April 2019

-

 

1,077

 

57,490

 

-

 

58,567

Charge for the year

-

 

4,491

 

45,993

 

-

 

50,484

At 31 March 2020

-

 

5,568

 

103,483

 

-

 

109,051

Charge for the year

163,067

 

7,775

 

46,011

 

-

 

216,853

At 31 March 2021

163,067

 

13,343

 

149,494

 

 

 

325,904

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

At 31 March 2021

1,027,488

 

57,029

 

320,657

 

57,807

 

1,462,981

At 31 March 2020

633,374

 

35,759

 

356,433

 

57,807

 

1,083,373

 

  1. Inventories

 

 

31 March 2021

 

31 March 2020

 

 

£

 

£

Finished goods

 

1,908,560

 

1,315,193

Provision for obsolescence

 

(51,321)

 

(20,000)

Total inventories

 

1,857,239

 

1,295,193

 

 

 

 

 

Cost of inventory recognised in profit and loss

 

8,770,887

 

3,562,548

 

  1. Share capital and merger relief reserve

 

The following table summarises the share capital of Samarkand Group plc for the periods presented:

 

 

Number of shares

 

Share capital

 

 

No.

 

£

Issued share capital in Samarkand Holdings Ltd at 31 March 2020

 

 

1,767

 

 

1,767

Sub-division of shares

(a)

174,933

 

-

At 31 March 2020

 

176,700

 

1,767

 

 

 

 

 

Exchanged for shares in Samarkand Group plc

(b)

35,340,000

 

353,400

Share issued on incorporation

 

1

 

-

Shares issued on 22 March 2021

 

16,278,965

 

162,790

At 31 March 2021

 

51,618,966

 

516,190

 

  1. By way of an ordinary resolution passed on 24 September 2020, Samarkand Holdings Limited resolved to sub-divide each of its ordinary shares of £1.00 each in issue into 100 ordinary shares of £0.01 each. Accordingly, the number of shares in issue increased from 1,767 to 176,700.
  2. On 16 February 2021, Samarkand Group plc issued 35,340,000 ordinary shares of £0,01 each in exchange for the entire share capital of Samarkand Holdings Limited on the basis of 1 ordinary share in Samarkand Holdings Limited for 200 shares in Samarkand Group plc.

Shareholders are entitled to receive dividends as declared from time to time and are entitled to one vote per ordinary share at meetings of Samarkand Group plc.

Merger relief reserve

At 31 March 2021, the merger relief reserve arises from the issue of shares by Samarkand Group plc in exchange for shares in Samarkand Holdings Limited. At 31 March 2020, the merger relief reserve arises from the issue of shares by Samarkand Holdings Limited in exchange for shares in Samarkand Global Limited. In both cases, merger relief has been applied to those shares issued on a share for share basis.

  1. Notes to the statements of cash flows

 

Net debt reconciliation:

 

Opening balances

Cash flows

Foreign exchange movements

Closing balances

 

£

£

£

£

Year ended 31 March 2021

 

 

 

 

Cash & cash equivalents

572,586

14,052,795

(18,514)

14,606,867

Right of use lease liabilities

(1,216,486)

243,492

-

(972,994)

Borrowings

(4,746,478)

2,663,940

-

(2,082,538)

Directors' loans

(499,511)

499,511

-

-

Totals

(5,889,889)

17,459,738

(18,514)

11,551,335

 

 

 

 

 

Year ended 31 March 2020

 

 

 

 

Cash & cash equivalents

270,564

303,386

(1,364)

572,586

Right of use lease liabilities

(1,375,998)

159,512

-

(1,216,486)

Borrowings

(2,870,198)

(1,876,280)

-

(4,746,478)

Directors' loans

(499,511)

-

-

(499,511)

Totals

(4,475,143)

(1,413,382)

(1,364)

(5,889,889)

 

  1. Material subsequent events

On 4 May 2021, the Group announced that it had acquired the entire share capital of London based Zita West Products Limited (ZWPL), www.zitawest.com, and 51% of Babawest (BW), www.babawest.co.uk, for a total consideration of £2.4m.  For the 6 month period ending 31 March 2021, ZWPL generated unaudited revenue of £635,901, a 60% increase on the same period in the previous year.

On 10 May 2021, the Group announced a placing of 2,737,840 new ordinary shares at a price of 115 pence raising £3,148,516 from United Win Asia Limited, a subsidiary of S.F. Holding Co., Ltd., as part of a strategic investment to further develop the Group's international expansion and technology.



ISIN: GB00BLH1QT30
Category Code: FR
TIDM: SMK
Sequence No.: 118693
EQS News ID: 1222495

 
End of Announcement EQS News Service

fncls.ssp?fn=show_t_gif&application_id=1222495&application_name=news&site_id=acquiremedia3]]>