Samarkand Group plc : Interim Results DGAP

Samarkand Group plc (SMK)
Samarkand Group plc : Interim Results

15-Dec-2022 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


15 December 2022

 

Samarkand Group plc

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

 

Interim Results for the half-year ending 30 September 2022

 

Samarkand Group plc, the cross-border eCommerce technology, services and consumer brand group, announces its unaudited interim results for the half year ending 30 September 2022 (“H1 2023”).

 

David Hampstead, Chief Executive Officer of Samarkand Group, commented:The first half of this financial year has included some of the most turbulent months in China since the outbreak of the pandemic with continued lockdowns across much of the country and restrictions on the flow of goods. As I described in our last full year results, we adapted quickly to the situation and I’m pleased that at the half-year point our revenues are up against prior year by 15%. Our key objective is to return to profitability and in that regard, we have also made strong progress. Adjusted EBITDA losses reduced by 48% from £2.6m in H1 2022 to £1.3m in H1 2023. We continue to drive further cost efficiencies and improvements in operational leverage across the business whilst maintaining good strategic progress across our other objectives and expect to finish the year within guidance.

 

Our open offer announced in September, received strong support and a further £1.9m of net proceeds was committed from existing shareholders and I thank them for their continued support. The opportunity in front of us remains compelling despite the challenging backdrop we are faced with in the immediate-term, and we continue to make progress towards our strategic goals.

 

Our cross-border eCommerce technology is being adopted by more merchants and from an increasingly diverse base in terms of geography and product category. Our core eCommerce Acceleration business is where we have experienced the most challenges related to supply chain disruption in China yet despite these headwinds, we have achieved revenue growth of 2% and made a material improvement in contribution margins and evolved the portfolio of brands we work with.

 

We release these interims shortly after a peak trading period for the Group known as “Singles Day”. This is a major shopping festival in China that takes place on 11th November. It took place this year during a period of heightened COVID disruption with bonded warehouses used by the Group in lockdown for two weeks in the run-up to the event. The leading eCommerce marketplaces have not released figures on 11/11 however industry analyst have reported that the beauty and skincare category is down on last year. Given the challenges we faced and the direction of industry trends, we are pleased with the performance of our portfolio over the singles day period, which performed in line with our expectations.”

 

Chief Executive’s Review

 

Overview

 

The disruption to supply chains, consumer habits and the economy in China as a result of the pandemic has been widely reported. Prevention measures remain in place and major cities can undergo mass testing and lockdown at short notice. It is likely this will continue for the remainder of the current financial year and possibly beyond, although we remain optimistic about a slowly improving picture.

 

We have adapted well to new ways of working and altered some of our sales channel mix to navigate the ongoing situation. In the first half of this financial year, we have been able to increase revenue and reduce losses. Adoption of our technology has grown through the partnerships we have formed with large international logistics companies and through our own marketing initiatives. Our brand acquisitions performed ahead of acquisition economics and have the added benefit of reducing the Group’s exposure to some of the disruption encountered in China. There will undoubtedly be further challenges to overcome in China but it unquestionably remains a highly attractive market for international brands.

 

Our Market

 

The period in review saw an eight-week lockdown for Shanghai, the Group’s base of operations and which represents a significant customer base. The COVID situation in China continues to make headlines in Western media with widespread testing and lockdowns. That said, the situation in China has steadily been improving with the loosening of restrictions on transport and travel leading to a reduction in logistical issues when compared to the peak earlier in the year. Although the overall situation remains fluid and difficult to predict, we remain positive in the long-term outlook for cross-border eCommerce in the world’s second largest economy and largest eCommerce market. It is frustrating that factors beyond our control are impacting performance, although the resilience of the business has come to the fore and we retain a strong degree of confidence in our medium-term prospects.

 

The Group has, through its past acquisitions, diversified revenues. Revenues from our core eCommerce Acceleration business, both through Nomad Technology and our traditional distribution channels, contributed to 57% of total revenue in H1 2023 vs 65% in H1 2022. Revenues on our owned brands from the UK and international markets contributed 28% for total revenues in H1 2023 vs 20% in H1 2022.

 

We will continue to explore opportunities to leverage our brands, infrastructure and technology outside of China where there are compelling and profitable opportunities to do so.

 

Strategic Progress

 

Recognising the disruption we have faced in China we continue to execute well against the priorities identified at the time of our IPO, with the added imperative of returning to profitability in the next financial year, towards which we are making good progress.

 

eCommerce Acceleration

 

Our eCommerce acceleration business where we operate as the China market development partner for a number of prestige international brands was most impacted by supply side disruptions in China in the first half. We work with a high-quality portfolio of niche prestige brands targeting high end Chinese consumers and maintain a strong funnel of new and emerging brand opportunities to ensure our portfolio remains balanced as our business evolves. Due to the impact of COVID on logistics into China we shifted some of our sales from direct-to-consumer to B2B which reduced the revenue attributable to our Nomad Technology but was necessary to maintain sales.

 

Adoption of our cross-border Checkout technology solution

 

We launched two new enterprise retail merchants in the first half of the year and expect to add new enterprise merchants in the second half. Our partnerships with three major logistics companies (SF Express, FedEx and ECMS) have started to yield client opportunities in multiple territories including South Korea, Japan, Hong Kong, Europe and USA. The timelines for the implementation of these channels have taken longer than anticipated. Sales cycles have also been extended due to the uncertainty surrounding the situation in China.

 

Growth of our owned brands

 

Zita West Products continues to perform ahead of management forecasts. Revenue for H1 revenue has increased 81% compared to prior year. Revenue outside of China, predominantly in the UK, grew at 24% in the first half. We continued to leverage our infrastructure to expand the brand in China adding JD Worldwide and Douyin stores to our existing TMALL Global store and working with key influencers to raise the profile of the brand in China.

 

The acquisition of Napiers the Herbalist was completed in November 2021 and has since been fully integrated into the Group’s eCommerce operations have been consolidated into the Group. The acquisition of Napiers gives the Group an entry into the high-margin beauty category in addition to the existing health and wellbeing portfolio. Since the acquisition of Napiers the Group has developed 12 new beauty and skincare products. These now make up more than 50% of the top 20 products sold and will be launching across the Groups beauty channels in China in the coming months.

 

Path to profitability

 

Moving the business towards profitability is a key objective and we continued to seek opportunities to improve efficiency and operating leverage in the first half. Simplifying our organisational structure as well as reducing our network of offices and expenses has enabled us to lower our run rate cost base in the period.

 

Investment in our Checkout DTC technology remains at a high level in relation to the income generated from it to date and expanding the commercialisation of our solution remains a top priority for the Group.

 

Outlook

 

Current indications for the second half are that the underlying trends from the first half are likely to continue as is the volatility in the China market. The focus for the remainder of the financial year and into the next is for the Group to reach a self-funding situation which we are well on the path towards.

 

Our acquisitions have diversified our revenues, with revenues from our eCommerce Acceleration business decreasing and revenues from our UK and international markets increasing. The Company has been forged in the world’s most advanced, competitive and innovative eCommerce market that is China. We are committed to realising the opportunity in China while recognising that we are well positioned to further exploit emerging opportunities in new markets through our technology, infrastructure and the partnerships we’ve built over the last 5 years.

 

FINANCIAL REVIEW

Overview

 

During the period the Group’s revenues increased by 15% to £8.3m (H1 2022: £7.2m) with gross margin decreasing to 54% (H1 2022: 57%).

 

Revenues from our core activities, Brand ownership is up 36% to £3.1m (H1 2022: £2.2m), Nomad technology is down 10% to £2.7m (H1 2022: £3.0m) with revenues from our distribution business increasing 29% to £2.3m (H1 2022: £1.8m). The disruption caused by the widespread COVID lockdowns impacted our ability to fulfil orders to China from our UK warehouse, which impacted our Nomad technology revenues, the Group reacted quickly and effectively by moving inventory to our Bonded Warehouses and increasing sales through our existing B2B distribution channels which were less affected by the lockdowns.

 

The Group’s gross margin has decreased from H1 2022 from 57% to 54% but has improved from those levels achieved in FY 2022. The change in gross margin is a result of changes in our product mix, sales channels and supply chain pricing pressures not all which could be passed on to our customers.

 

Adjusted EBITDA loss improved by 48% from £2.6m to £1.4m.

 

 

 

Operating expenses

 

Selling and distribution expenses decreased to 28% (H1 2022: 46%) of revenue, as a result of more efficient and targeted advertising spends and product pricing changes to adapt to the increasing distribution and inflationary costs seen in the last 6 months.

 

Administrative expenses, excluding one-off costs such share-based payment expense, acquisition and restructuring related costs, decreased to 42% (H1 2022: 49%) of revenue as a result of tighter controls over other administrative costs. Staff costs have remained the same at £2.5m (H1 2022: £2.5m) due to the timing of reductions. The full effect will be of these actions will be reflected in the full year results. The number of employees at 30 September 2022 was 117 (30 September 2021: 133), down from 158 at 31 March 2022.

 

Earnings per share

 

Basic and diluted loss per share was 3.9p and 3.8p per share respectively (H1 2022: 6.5p per share).

 

Net cash

 

Sep-22

Sep-21

Mar-22

Cash and cash equivalents

3,054,184

10,389,765

4,049,118

Right-of-use lease liabilities

(590,164)

(847,433)

(720,353)

Borrowings

(1,451,113)

(1,607,040)

(1,452,127)

Net cash

1,012,907

7,935,292

1,876,638

 

At the period end, the Group’s net cash position was £0.9m (H1 2022: £7.9m), excluding the IFRS 16 lease liabilities, net cash was £1.6m (H1 2022: £8.8m). The Group’s reduction in staff and operational costs has resulted in 51% improvement in operating cashflow from negative £4.3m to £2.0m. On the 21 September 2022, the Company raised gross proceeds of £2.0m pursuant to a Placing and Open Offer dated 5 September 2022. Furthermore, acquisitions in H2 2022 and the payments of deferred consideration in H1 2023 reduced cash balance by £1.5m and £0.1m respectively.

 

Inventories

 

The Group reduced gross inventories from £4.4m at 31 March 2022 to £3.4m at 30 September 2022. Improvements in inventory management and ordering process has resulted in the Group holding lower inventory levels. To reduce complexity, the Group focused on reducing the breath of inventory in its UK and bonded warehouses.

 

Depreciation and amortisation

 

The total depreciation and amortisation costs were £0.2m and £0.3m respectively (H1 2022: £0.2m and £0.2m). The Group continued to invest in its Nomad Technology platform with a total of £0.6m (H1 2022: £0.5m) development costs capitalised during the period.

 

Adjusted EBITDA loss

 

Adjusted EBITDA loss improved by 48% from £2.6m to £1.4m. The improvements in adjusted EBITDA loss is driven by the decrease in staff cost and operating costs.

 

Condensed Consolidated Statement of Comprehensive Income

For the six-month period ended 30 September 2022

 

 

 

Period ended 30 September 2022

 

Period ended 30 September 2021

 

Year ended

31 March 2022

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

Notes

£

 

£

 

£

Revenue

3

8,254,207

 

7,167,152

 

16,576,228

Cost of sales

3

(3,814,675)

 

(3,061,619)

 

(8,226,260)

Gross profit

 

4,439,532

 

4,105,533

 

8,349,968

Selling and distribution expenses

 

(2,325,694)

 

(3,262,723)

 

(7,056,415)

Administrative expenses

4

(3,776,853)

 

(3,917,370)

 

(8,183,996)

Adjusted EBITDA

 

(1,392,232)

 

(2,635,916)

 

(6,236,249)

Repayment of share option plan

5

-

 

(315,540)

 

(306,579)

Acquisition and restructuring costs

5

(157,031)

 

(123,104)

 

(347,615)

Share based payment expense

 

(113,752)

 

-

 

-

EBITDA

 

(1,663,015)

 

(3,074,560)

 

(6,890,443)

Depreciation and amortisation

 

(521,189)

 

(362,561)

 

(786,639)

Operating loss

 

(2,184,204)

 

(3,437,121)

 

(7,677,082)

Finance income

 

64,539

 

86

 

86

Finance costs

 

(59,529)

 

(91,757)

 

(171,455)

Loss before taxation

 

(2,179,194)

 

(3,528,792)

 

(7,848,451)

Taxation

 

13,271

 

13,149

 

141,499

Loss after taxation

 

(2,165,923)

 

(3,515,643)

 

(7,706,952)

Other comprehensive income:

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

 

 

 

 

 

 

(3,333)

 

13,435

 

(23,234)

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

 

 

 

 

 

 

 

(3,333)

 

13,435

 

(23,234)

Total comprehensive loss for the period

 

(2,169,256)

 

(3,502,208)

 

(7,730,186)

 

 

 

 

 

 

 

Loss attributable to:

 

 

 

 

 

 

Equity holders of the Company

 

(2,122,404)

 

(3,506,624)

 

(7,617,081)

Non-controlling interests

 

(43,519)

 

(9,019)

 

(89,871)

 

 

(2,165,923)

 

(3,515,643)

 

(7,706,952)

 

 

 

 

 

 

 

Loss per share (basic)

6

(0.0387)

 

(0.0648)

 

(0.1399)

Loss per share (diluted)

6

(0.0383)

 

(0.0648)

 

(0.1399)

 

 

 

 

 

 

 

Comprehensive loss attributable to:

 

 

 

 

 

 

Equity holders of the Company

 

(2,125,737)

 

(3,493,189)

 

(7,640,315)

Non-controlling interests

 

(43,519)

 

(9,019)

 

(89,871)

 

 

(2,169,256)

 

(3,502,208)

 

(7,730,186)



Condensed Consolidated Statement of Financial Position

For the six-month ended 30 September 2022

 

 

30 September 2022

 

30 September 2021

 

31 March 2022

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

Notes

£

 

£

 

£

ASSETS

 

 

 

 

 

 

Intangible assets

7

7,265,902

 

4,246,664

 

7,011,236

Property, plant and equipment

 

236,470

 

233,223

 

243,417

Right-of-use assets

 

492,649

 

724,621

 

608,635

Non-current assets

 

7,995,021

 

5,204,508

 

7,863,288

Inventories

8

2,618,636

 

3,547,425

 

3,720,248

Trade receivables

 

2,125,136

 

1,790,874

 

1,512,702

Corporation tax recoverable

 

120,251

 

52,846

 

113,710

Other receivables and prepayments

 

785,407

 

791,160

 

1,012,371

Cash and cash equivalents

 

3,054,184

 

10,389,765

 

4,049,118

Current assets

 

8,703,614

 

16,572,070

 

10,408,149

Total assets

 

16,698,635

 

21,776,578

 

18,271,437

 

 

 

 

 

 

 

Trade and other payables

 

1,709,326

 

3,308,947

 

3,597,110

Accrued liabilities

 

976,484

 

655,722

 

566,266

Deferred revenue

 

324,439

 

21,618

 

214,383

Borrowings

 

56,701

 

239,896

 

62,092

Right-of-use lease liabilities

 

266,823

 

257,274

 

262,001

Total current liabilities

 

3,333,773

 

4,483,457

 

4,701,852

Right-of-use lease liabilities

 

323,341

 

590,159

 

458,352

Borrowings

 

1,394,412

 

1,367,144

 

1,390,035

Deferred tax liability

 

356,963

 

269,673

 

370,590

Accrued liabilities

 

512,441

 

-

 

512,441

Total non-current liabilities

 

2,587,157

 

2,226,976

 

2,731,418

Total liabilities

 

5,920,930

 

6,710,433

 

7,433,270

 

 

 

 

 

 

 

Net assets

 

10,777,705

 

15,066,145

 

10,838,167

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Share capital

9

583,581

 

547,148

 

547,148

Share premium

 

22,954,412

 

21,022,958

 

21,022,958

Merger relief reserve

 

(2,063,814)

 

(2,063,814)

 

(2,063,814)

Accumulated loss

 

(10,669,157)

 

(4,436,296)

 

(8,546,753)

Currency translation reserve

 

(7,766)

 

5,168

 

(31,501)

Share option reserve

 

113,839

 

-

 

-

Total equity attributable to parent

 

10,911,095

 

15,075,164

 

10,928,038

Non-controlling interest

 

(133,390)

 

(9,019)

 

(89,871)

Total equity

 

10,777,705

 

15,066,145

 

10,838,167

 

 

 

Condensed Consolidated Statement of Changes in Equity

For the six-month period ended 30 September 2022

 

 

Share

 

Merger relief reserve

Share option reserve

Currency

 

Non-controlling

 

Capital

Share

Translation

Accumulated

Total

 

Premium

reserve

loss

interests

equity

 

£

£

£

£

£

£

£

£

 

 

 

 

 

 

 

 

 

Balance at 1 April 2022

547,148

21,022,958

(2,063,814)

-

(31,501)

(8,546,753)

(89,871)

10,838,167

Loss after taxation

-

-

-

-

-

(2,122,404)

(43,519)

(2,165,923)

Other comprehensive loss

-

-

-

-

23,735

-

-

23,735

Total comprehensive income/(loss) for the period

-

-

-

-

23,735

(2,122,404)

(43,519)

(2,142,188)

Shares issued on acquisition net of fees

458

29,042

-

-

-

-

-

29,500

Shares issued on open offer net of fees

35,975

1,902,412

-

-

-

-

-

1,938,387

Share based payments

-

-

-

113,839

-

-

-

113,839

 

36,433

1,931,454

-

113,839

-

-

-

2,081,726

Balance at 30 September 2022

583,581

22,954,412

(2,063,814)

113,839

(7,766)

(10,669,157)

(133,390)

10,777,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 April 2021

516,190

17,412,900

(2,063,814)

-

(8,267)

(929,672)

-

14,927,337

Loss after taxation

-

-

-

-

-

(3,506,624)

(9,019)

(3,515,643)

Other comprehensive loss

-

-

-

-

13,435

-

-

13,435

Total comprehensive income/(loss) for the period

-

-

-

-

13,435

(3,506,624)

(9,019)

(3,502,208)

Shares issued net of transaction fees

30,958

3,610,058

-

-

-

-

-

3,641,016

 

30,958

3,610,058

-

-

-

-

-

3,641,016

Balance at 30 September 2021

547,148

21,022,958

(2,063,814)

-

5,168

(4,436,296)

(9,019)

15,066,145

 

 

 

 

 

 

 

 

 

 


Condensed Consolidated Statement of Cash Flows

For the six-month period ended 30 September 2022

 

 

30 September 2022

 

30 September 2021

 

31 March 2022

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

£

 

£

 

£

Cash flows from operating activities

 

 

 

 

 

Loss after taxation

(2,165,923)

 

(3,515,643)

 

(7,706,952)

Cash flow from operations reconciliation:

 

 

 

 

 

Depreciation and amortisation

521,189

 

362,561

 

786,639

Finance costs

59,529

 

91,757

 

60,182

Finance income

(64,539)

 

(86)

 

(86)

Net exchange differences

64,531

 

(31,386)

 

-

Share option expense

113,752

 

-

 

-

Income tax credit

(13,271)

 

-

 

(141,499)

Working capital adjustments:

 

 

 

 

 

Inventories

1,101,612

 

(1,468,921)

 

(1,544,851)

Trade and other receivables

(385,470)

 

(1,012,158)

 

(780,763)

Trade and other payables

(1,257,504)

 

1,318,496

 

1,258,687

Cash generated used in operating activities

(2,026,094)

 

(4,255,380)

 

(8,068,643)

Interest paid

(11,243)

 

-

 

-

Corporation tax paid

(6,897)

 

(42,898)

 

20,803

Net cash generated used in operating activities

(2,044,234)

 

(4,298,278)

 

(8,047,840)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of property, plant and equipment

(44,218)

 

(117,661)

 

(175,151)

Proceeds from disposal of property, plant and equipment

1,925

 

-

 

-

Payment of intangible assets

(609,214)

 

(499,253)

 

(1,228,096)

Acquisition of subsidiary, net of cash acquired

-

 

(1,829,993)

 

(3,341,477)

Payment of deferred consideration

(80,000)

 

-

 

-

Interest received

8

 

86

 

86

Net cash used in investing activities

(731,499)

 

(2,446,821)

 

(4,744,638)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from issue of share capital (net of fees)

1,937,890

 

3,141,016

 

3,141,016

Repayment of right-of-use lease liabilities

(142,181)

 

(142,177)

 

(252,641)

Repayment of borrowings

(37,315)

 

(483,505)

 

(630,411)

Net cash from financing activities

1,758,394

 

2,515,334

 

2,257,964

 

 

 

 

 

 

Net change in cash and cash equivalents

(1,017,339)

 

(4,229,765)

 

(10,534,514)

Cash and cash equivalents at beginning of period

4,049,118

 

14,606,867

 

14,606,867

Effect of FX changes on cash and cash equivalents

22,405

 

12,663

 

(23,235)

Cash and cash equivalents at end of period

3,054,184

 

10,389,765

 

4,049,118

 

 

 

 

 

 

 

Notes to the Consolidated Financial Statements
For the period ended 30 September 2022

  1. General information

Samarkand Group plc was incorporated in England and Wales on 12 January 2021. The address of its registered office is Unit 13 & 14 Nelson Trading Estate, The Path, Merton, London SW19 3BL.

  1. Basis of preparation and measurement

 

(a)       Basis of preparation

The condensed consolidated interim financial statements of Samarkand Group plc and its subsidiaries (together referred to as the “Group”), comprises the results of the Group for the 6 months ended 30 September 2022. These interim financial statements are not audited nor reviewed by independent auditors, were approved by the board of directors on 14 December 2022.

The financial information in this interim report has been prepared in accordance with UK adopted international accounting standards. The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 March 2022 and which will form the basis of the 2022 financial statements.

The financial information for the year ended 31 March 2022 included in these financial statements does not constitute the full statutory accounts for that year. The Annual Report and Financial Statements for 2022 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2022 was (i) unqualified, although included an emphasis of matter in respect of material uncertainty around going concern and (ii) did not contain a statement under section 498(2) or (3) of 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 incomeor 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.

Going Concern

For the year ended 31 March 2022, the Group faced difficult trading conditions, with external factors including widespread COVID lockdowns in China causing high levels of disruptions to the Group’s operations. These conditions extended through H1 2023 with lockdowns continuing across much of the country restricting the flow of goods and people in many areas. The Group’s actions in Q4 2022 and its continued cost actions throughout FY 2023, have resulted in a 48% reduction in adjusted EBITDA losses from £2.6m to £1.4m.

 

On 21 September 2022, the Company raised gross proceeds of £2.0m pursuant to a Placing and Open Offer dated 5 September 2022, which will enable the Group to meet its obligations. The combined effect of the raise, the realisation of cost actions taken in Q4 plus additional planned cost actions in FY 2023 have led the Directors to conclude that the Company will continue to operate for a period of at least 12 months from the date of approval of these interim financial statements. It should be noted, that should market conditions deteriorate again, this could give rise to a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern.

 

(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.

 

  1. Segmental analysis

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

 

 

Unaudited

 

Unaudited

 

Audited

 

30 September 2022

 

30 September 2021

 

31 March 2022

Revenue analysed by class of business:

£

 

£

 

£

 

 

 

 

 

 

Brand ownership

3,055,517

 

2,246,237

 

4,509,979

Nomad technology

2,727,147

 

3,035,286

 

7,480,941

Distribution

2,325,534

 

1,803,700

 

4,447,990

Other

146,009

 

81,929

 

137,318

 

 

 

 

 

 

Total revenue

8,254,207

 

7,167,152

 

16,576,228

 

 

 

 

 

 

Cost of sale by business unit:

£

 

£

 

£

 

 

 

 

 

 

Brand ownership

1,292,910

 

842,751

 

1,991,401

Nomad technology

940,036

 

1,024,792

 

3,240,269

Distribution

1,579,483

 

1,192,414

 

2,992,880

Other

2,246

 

1,662

 

1,710

 

 

 

 

 

 

Total cost of sale

3,814,675

 

3,061,619

 

8,226,260

 

 

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.
 

 

Unaudited

 

Unaudited

 

Audited

 

30 September 2022

 

30 September 2021

 

31 March 2022

Revenue by geographical destination:

£

 

£

 

£

 

 

 

 

 

 

UK

3,861,056

 

2,380,437

 

4,917,082

China

4,256,910

 

4,743,191

 

11,606,545

Rest of the World

136,241

 

43,524

 

52,601

 

 

 

 

 

 

Total revenue

8,254,207

 

7,167,152

 

16,576,228

 

 

  1. Expenses by nature

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

 

 

Unaudited

 

Unaudited

 

Audited

 

 

30 September 2022

 

30 September 2021

 

31 March 2022

Administrative expenses:

 

£

 

£

 

£

Property costs

 

194,963

 

181,083

 

393,714

Staff costs

 

2,478,415

 

2,451,513

 

5,330,434

Professional fees

 

303,055

 

313,547

 

714,495

Other

 

529,637

 

532,583

 

1,091,159

Repayment of share option plan

(a)

-

 

315,540

 

306,579

Acquisition and restructuring costs

(b)

157,031

 

123,104

 

347,615

Share based payment charge

 

113,752

 

-

 

-

 

 

 

 

 

 

 

Total administrative expenses

 

3,776,853

 

3,917,370

 

8,183,996

 

  1. (a) Recompense of Share option plan
  2. (b) Acquisition costs relate to the costs incurred in relation to the acquisitions in the period and restructuring costs are as a result of corrective actions taken in light of the challenges presented by the disruptions

 
  1. Adjusted EBITDA

 

EBITDA and Adjusted EBITDA are non-GAAP measures and exclude exceptional items, depreciation, and amortisation. Exceptional items are those items the Group considers to be non-recurring or material in nature that may distort an understanding of financial performance or impair comparability.

 

Adjusted EBITDA is stated before exceptional items as follows:

 

Unaudited

 

Unaudited

 

Audited

 

30 September 2022

 

30 September 2021

 

31 March 2022

 

£

 

£

 

£

 

 

 

 

 

 

Repayment of share option plan

-

 

315,540

 

306,579

Acquisition and restructuring costs

157,031

 

123,104

 

347,615

Share based payment charge

113,752

 

 -

 

- 

 

270,783

 

438,644

 

654,194

 

 

 

 

 

 



 
  1. Loss per share

 

 

Unaudited

Unaudited

Audited

 

30 September 2022

30 September 2021

31 March

2022

 

£

£

£

 

 

 

 

Basic loss per share

(3.87) pence

(6.48) pence

(13.99) pence

Diluted loss per share

(3.83) pence

(6.48) pence

(13.99) pence

 

 

 

 

Earnings

 

 

 

Loss for the purpose of basic and diluted earnings per share

(2,122,404)

(3,506,624)

(7,617,081)

 

 

 

 

Number of shares

 

 

 

Basic weighted average number of shares in issue

54,923,137

54,140,377

54,419,885

 

 

 

 

Potentially dilutive share options

641,345

-

-

 

 

 

 

Dilutive weighted average number of shares in issue

55,564,482

54,140,377

54,419,885


 

  1. Intangible assets

 

 

Development costs

Trademarks

Brands

Goodwill

Website

Total

 

£

£

£

£

£

£

Cost

 

 

 

 

 

 

At 1 April 2022

2,330,437

99,596

2,484,091

2,829,718

70,198

7,814,040

Additions

598,251

10,180

-

-

783

609,214

At 30 September 2022

2,928,688

109,776

2,484,091

2,829,718

70,981

8,423,254

Amortisation

 

 

 

 

 

 

At 1 April 2022

493,548

32,503

271,680

-

5,073

802,804

Amortisation charge

257,229

6,785

80,980

-

9,554

354,548

At 30 September 2022

750,777

39,288

352,660

-

14,627

1,157,352

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

At 31 March 2022

1,836,889

67,093

2,212,411

2,829,718

65,125

7,011,236

At 30 September 2022

2,177,911

70,488

2,131,431

2,829,718

56,354

7,265,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Development costs

Trademarks

Brands

Goodwill

Website

Total

 

£

£

£

£

£

£

Cost

 

 

 

 

 

 

At 1 April 2021

1,190,555

70,372

459,916

68,042

-

1,788,885

Acquired through business combinations

-

8,857

1,133,915

1,358,497

-

2,501,269

Additions

491,057

8,196

-

-

-

499,253

At 30 September 2021

1,681,612

87,425

1,593,831

1,426,539

-

4,789,407

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

At 1 April 2021

163,067

13,345

149,492

-

-

325,904

Acquired through business combinations

-

7,661

-

-

-

7,661

Charge for the year

137,964

5,341

65,873

-

-

209,178

At 30 September 2021

301,031

26,347

215,365

-

-

542,743

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

At 31 March 2021

1,027,488

57,027

310,424

68,042

-

1,462,981

At 30 September 2021

1,380,581

61,078

1,378,466

1,426,539

-

4,246,664

 

 

 

 

 

 

 

 

 

 

  1. Inventories

 

 

 

 

 

 

 

 

 

30 September 2022

 

30 September 2021

 

31 March 2022

 

 

£

 

£

 

£

 

 

 

 

 

 

 

Finished goods

 

3,363,195

 

3,664,533

 

4,394,080

Provision for obsolescence

 

(744,559)

 

(117,108)

 

(673,832)

Total inventories

 

2,618,636

 

3,547,425

 

3,720,248

 

 

 

 

 

 

 

Cost of inventory recognised in profit and loss

 

3,814,675

 

3,061,619

 

8,226,260

 

 

 

 

 

 

 

 

 

  1. Share capital

 

 

Number of shares

 

Share capital

 

Note

No.

 

£

At 1 April 2021

 

 

 

 

51,618,966

516,190

Shares issued on 4 May 2021

 

357,977

 

3,580

Shares issued on 10 May 2021

 

2,737,840

 

27,378

At 30 September2021 and 31 March 2022

 

54,714,783

 

547,148

 

 

 

 

 

Shares issued on 15 August 2022

(a)

45,802

 

458

Shares issued on 21 September 2022

(b)

3,597,616

 

35,975

At 30 September 2022

 

58,358,201

 

583,581

 

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

 

  1. On 15 August 2022, Samarkand Group plc issued 45,802 new ordinary shares of £0.01 each as part of the deferred consideration paid, for the acquisition of The Edinburgh Herbal Dispensary Limited.
  2. On 21 September 2022, Samarkand Group plc issued 3,597,616 new ordinary shares of £0.01 each raising gross proceeds of £1,978,688 pursuant to the Open Offer set out on the 5 September 2022.


 
  1. Notes to the statements of cash flows

 

Net debt reconciliation:

 

Opening balances

Cash flows

Foreign exchange movements

Closing balances

 

£

£

£

£

Six-month period ended 30 September 2022

 

 

 

 

Cash and cash equivalents

4,049,118

(1,017,339)

22,405

3,054,184

Right of use lease liabilities

(720,353)

130,189

-

(590,164)

Borrowings

(1,452,127)

1,014

-

(1,451,113)

Totals

1,876,638

(886,136)

22,405

1,012,907

 

 

 

 

 

Six-month period ended 30 September 2021

 

 

 

 

Cash and cash equivalents

14,606,867

(4,229,765)

12,663

10,389,765

Right of use lease liabilities

(972,994)

125,561

-

(847,433)

Borrowings

(2,082,538)

475,498

-

(1,607,040)

Totals

11,551,335

(3,628,706)

12,663

7,952,670

 

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, Pascal Wiese (Corporate Finance)

Andrew Monk, David Scriven (Corporate Broking)

IPO@vsacapital.com

 

 

Alma PR

+44(0)20 3405 0213

Josh Royston

Lily Soares Smith

Joe Pederzolli

samarkand@almapr.co.uk

 

 

Notes to Editors 

 

Samarkand is a cross-border eCommerce technology and retail group focusing on connecting International 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 touchpoints 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 and Nomad Distribution. 

 

Founded in 2016, Samarkand is headquartered in London, UK with offices in Shanghai.

 

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

 



ISIN: GB00BLH1QT30
Category Code: MSCM
TIDM: SMK
Sequence No.: 208720
EQS News ID: 1513379

 
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