REG - Brand Architekts Grp - Interim results
25/03/2024 07:00
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RNS Number : 0356I Brand Architekts Group PLC 25 March 2024
Brand Architekts Group plc
("Brand Architekts" or the "Group")
Interim results
Brand Architekts Group plc, a market leader in the development and supply of
beauty and personal care brands, announces its interim results for the 6-month
period ended 31 December 2023.
Business highlights:
· H1 delivered growth in contribution across our Invest and Nurture
portfolio, although trading was significantly impacted by challenges faced by
the self-tan category.
· Super Facialist H1 net sales were up 42%, driven by the launch of 14
SKUs into all 580 Holland & Barrett stores. Super Facialist H2 looks
positive with the launch of the new Vegan Collagen line, the roll-in of the
New Sleep Smart Night Moisturisers; Q3's Vitamin C Digital campaign and the
roll out of the new design upgrade in Q4.
· In response to market trends and consumers' switch to more affordable
gradual tanners, the new Skinny Tan Body Glow will launch in Boots, Superdrug,
Asda and Tesco in Q3. Boots International has also confirmed launch of Skinny
Tan as a Boots exclusive in all 144 stores across six Gulf countries in Q3.
· Dirty Works contribution increased by 33%, driven by the Q2 roll out
to over 500 Watsons stores in 9 countries, with very encouraging sell out
results in Thailand, Turkey, Malaysia, the Gulf, Singapore and Hong Kong.
Encouraging discussions with Watsons to launch into Taiwan and Indonesia in
Q3.
· The Solution's net sales for H1 were up 95% driven by the
Bodycare launch into Waitrose and an increase in demand on Amazon.
· Net sales of Root Perfect, a key Harvest brand, were up 26%, driven
by a pan European expansion across Normal stores and an improved EDLP
(everyday low price) strategy in Morrisons.
· MR acquisition was completed in July and a new brand development
plan put in place for FY25.
· The focus on rationalisation of the Group's portfolio and exiting
underperforming & unprofitable brands continued during the period,
releasing working capital and providing greater focus on its problem-solving
margin accretive brand portfolio.
· Improved operational efficiencies - more effective use of advertising and promotions and improved
overhead and manpower cost management.
Financial highlights:
· Revenue for the period of £8.7m, a £1.9m decrease on the prior
year half year results, driven by a softening in the self-tan category and a
reduction in discontinued brand sales.
· Gross Profit margins increased by +1ppts to 40%. Notable
improvements on Dirty Works +9ppts and Super Facialist +3ppts
· Brand contribution has increased by +5ppts YTD.
· Underlying operating loss of £0.2m (H1 2023: £0.8m), a
reduction in the underlying operating loss of +£0.6m, due to successful
implementation of planned Innovaderma Opex synergy savings
· Loss before tax reduced by £1m from £1.8m in the prior year to
£0.8m.
· Net cash of £7.2m (H1 2023: £8.1m) reflecting the cash outflow
for the acquisition of MR and associated costs. Excluding MR costs cash has
remained stable since June 23.
· £1.2m reduction in stock holding versus the H1 FY23 position,
given depletion in inventory on Divest and Discontinued brands.
· April 2023's triennial valuation of the closed defined benefit
pension plan resulted in a significant reduction in the deficit recovery plan,
under which BA has a commitment to make payments of £318,000 per annum until
30(th) June 2033.
H1 2024 H1 2023
Revenue (Note 2) £8.7m £10.6m
Underlying operating (loss)/profit1 £(0.2)m £(0.8)m
(Loss)/profit before taxation £(0.8)m £(1.8)m
Basic (loss)/earnings per share (Note 4 of financial statements) (2.6)p (6.1)p
Net cash £7.2m £8.1m
(1) Underlying operating (loss)/profit is calculated before exceptional items,
share-based payments and organization of acquisition-related intangibles.
Quentin Higham, Chief Executive, commented:
"During this period, we have completed the simplification of the UK
organization and have made progress in minimizing our losses, in particular
reducing H1's underlying operating loss from £0.8m to £0.2m. We have secured
good distribution gains on our key Invest and Nurture brands domestically and
Internationally. In particular we are excited by the new trading relationship
with Dirty Works in Watsons across Asia and the rollout of Super Facialist
into Holland & Barrett.
Trading conditions remain challenging, in particular for Skinny Tan. The
self-tan category was adversely affected by the cost-of-living crisis and
consumers switching away from traditional premium priced tanning products to
less expensive gradual tanners. We have responded to this change in
consumption by relaunching our Body Glow Gradual Tanner and secured extensive
new offline distribution and look forward to these upcoming launches.
The reduction in revenue also reflects the business's planned strategy to exit
underperforming and less profitable brands and focus on fewer, bigger,
solution-led margin accretive brands. This is demonstrated by the improvement
in gross profit percentage and brand contribution. In H2 we will be supporting
Skinny Tan and Super Facialist with planned targeted digital awareness and
acquisition campaigns, with an increased focus on Tik Tok. We remain confident
that the foundations we are building will enable us to return to profitability
and achieve our medium and long-term goals".
For further information please contact:
Brand Architekts Group PLC 020 3166 2840
Quentin Higham / Geoffrey Ellis
Singer Capital Markets 0207496 3000
(Nominated adviser and broker)
Shaun Dobson / Jen Boorer
CEO's Review
The well documented cost-of-living crisis has resulted in an ongoing challenging trading environment, with consumers' confidence adversely affected by the wider geopolitical and economic issues. This has resulted in a greater focus on price, with consumers either trading down to less expensive products or buying more on promotion. We have reviewed our product portfolio, notably by relaunching our Skinny Tan Gradual Tanner, as well as our promotional strategy and have put in place a strengthened offline offering for H2.
The ongoing strong performance of the UK Beauty High Street and the general softening of the direct-to-consumer market reinforces the need for a strong omnichannel approach. We continue to work closely with our offline partners and I am pleased to see some notable distribution gains on our key Invest and Nurture brands. The focus for our DTC channels (primarily Skinny Tan) has been on improving profitability and ROAS (return on advertising spend). We have significantly reduced the running costs of the site, by bringing external agency costs (such as performance management) in house and renegotiated all agreements and continue to monitor Advertising & promotional investment.
Over the next 12 months we have a strong brand development program in place, with a number of exciting product launches (Super Facialist and Skinny Tan), brand redesigns (Super Facialist; Dirty Works; Fish; MR Expert solutions); brand extensions (The Solution Menopause), and relaunching Skinny Tan as Skin & Tan in 2025 in response to consumer and customer feedback. Relaunching in FY25 will enable the brand to increase its relevance and saliency.
Key achievements include:
· Super Facialist launched 14 SKUs in 580 Holland & Barrett
stores. New Vegan Collagen and Sleepsmart Night Moisturisers ranges will
launch in H2, alongside a packaging design upgrade across the brand.
· Skinny Tan's New Body Glow Gradual Tanner launched in Asda in
December and will launch in Superdrug and Tesco in February and Boots in
March.
· Boots International is launching Skinny Tan as an exclusive in all
144 stores across six Gulf countries in Q3.
· Dirty Works has launched in over 500 Watsons stores in 9 countries.
· The Solution's Bodycare range launched into Waitrose and The Solution
Menopause will launch online by the end of H2.
Performance review
Revenues for the period were £8.7m, a decline of 18% on the prior year (£10.6m). This was driven by a decline in Skinny Tan Sales, due to a change in consumer shopping behaviour; the ongoing softness of the DTC market and a focus on profitability. In addition, there was a sales decline as a result of discontinuing and exiting a number of non-core brands. With the exception of Skinny Tan, all Invest and Nurture brands showed positive net sales growth. The focus on profitability improved Gross Profit Margin to 40%, which is +1ppts on H1 last year and up +7ppts on H1 2022. This reflects our drive to improve margins and long term profitability.
The underlying operating loss improved by £0.6m to show a loss for the half of £0.2m. This was driven by savings in Skinny Tan A&P spend as we focus on ROAS and profitability; acquisition manpower savings; warehouse savings given the reduction in stock holding and a release of CEO LTIP accruals.
The Net cash position as at the period end was £7.2m, which was £0.9m less than prior year end, but includes all MR Haircare Ltd legal settlement and acquisition costs. Excluding all MR costs, the net cash position improved by £100k.
Progress made against the Group's three strategic pillars is outlined below:
1. Brand Development
The brand portfolio is split into 3 classifications: Invest, Nurture and
Harvest.
Skinny Tan and Super Facialist are classified as Invest Brands. They have an
omnichannel route to market including their own DTC site; masstige
positioning; a degree of existing scale as demonstrated through net sales and
market share and both have significant growth potential through A&P
investment focusing on digital brand awareness and conversion campaigns. In
response to market research we will be relaunching Skinny Tan as Skin &
Tan in FY25. This will be a major and exciting initiative that we are
confident will help deliver sustainable and long term growth.
Dirty Works, The Solution and MR Expert Solutions are classified as Nurture
brands. Dirty Works has the potential to broaden its presence through new
category extensions, such as All Year Round Gifting in the UK, to new
distribution through International partners such as Watsons. The Solution and
MR are both high-performance propositions, with a clear point of difference
that answer the specific needs of the consumer. Our initial focus is on
developing The Solution franchise by launching a highly efficacious and
targeted sub brand called The Solution Menopause in June 24.
Although we have discontinued three brands, we will continue to have a
portfolio of low investment Harvest Brands. These brands, such as Argan and
Root Perfect require minimal investment, they compete on price and provide us
with a stronger category share of voice and credibility with key customers.
Fish, which is being upgraded with new packaging in 2024, has the potential to
become a Nurture brand, once its brand reach has been increased.
The following strategic Brand Development tenets have been applied to our
Invest and Nurture brands
· Profitability
With a laser focus on brand contribution, our A&P spend is focused on our
Invest and Nurture brands. In line with our sustainability pledge, we
continually evaluate our packaging footprint and where possible remove all
secondary packaging to reduce costs. In addition we implement VRE (value
reengineering) initiatives to reduce COG (cost of goods) so as to improve a
brand's Gross Profit. One such initiative is the VRE of the Root Perfect cans,
which will result in a double digit Gross Profit improvement from Q4.
The business continues to review its range offering and where possible we will
rationalise ranges to remove duplication and improve sku productivity and
profitability.
The recent developments in the Middle East and in particular the Red Sea has
placed additional cost pressure on sourcing product from the Far East, in
particular our Gift Business. As a precaution we have incorporated additional
container freight costs into 2024 gift cost prices, so as to maintain our
Gross Profit.
· NPD/Consumer Insights
A strong pipeline of new products will be launching in H2 in line with
retailer range cycles. Super Facialist will be launching a new Vegan Collagen
range and a range of new Night Moisturisers.
Vegan Collagen is an innovative, easy-to-navigate line up of ingredient-led,
solution-driven formulas including a cleanser, serum, day cream and night
cream. Blending a potent Marine Bio-Polymer made from sustainably sourced Red
Algae and Hyaluronic Acid, with plant-derived Vegan Collagen sourced from the
sap of the acacia tree. Collagen is a trending ingredient which responds to
the growing demand for age-preventative skincare, presenting an opportunity to
provide customers with an affordable trade-down collagen solution that's
vegan-friendly. It delivers both immediate and sustained hydration to the
skin, targeting signs of ageing to reveal a plumper and smoother complexion.
After three years of research and development Super Facialist is launching a
new range of Sleep Smart Night Creams across our bestselling ranges, Rosehip,
Retinol and Vitamin C. This "World first" Resync SleepSmart ™ Complex
technology is powered by two potent & proven actives. It is a
revolutionary concept that helps reset & rejuvenate skin overnight when
skin is its most receptive to repair. The formulation works in
synchronisation with the skin's circadian rhythm for a refreshed &
healthier looking complexion.
The new Skinny Tan Body Glow Gradual Tanner will launch across all UK
channels, along with Ultimate Dark Clear Tanning Mousse. In addition,
Superdrug will be launching two exclusive products. On the back of extensive
consumer research, we will be relaunching Skinny Tan in FY25. We expect the
relaunch will facilitate new customer acquisition, expand our press reach and
increase the scope for new brand listings domestically and internationally.
Relaunching as Skin & Tan is a simple name and logo change, but one that
encapsulates our vision, where everybody can radiate confidence and have a
healthy glow. Skin & Tan is an inclusive name that clearly demonstrates
our expertise and enables easier category, retailer and market expansion.
To maintain momentum and consumer interest relaunched designs for Super
Facialist, Fish, MR Expert Solutions and Dirty Works will filter through in
2024.
· Digital 1(st)
Over the last 6 months we have restructured the team to better leverage
resources and have significantly increased digital activity across commercial
and media channels. Performance marketing has been brought inhouse, thereby
enabling us to execute more paid activity across Google, YouTube, TikTok, Meta
and Affiliation, which is helping drive consumers to D2C, Amazon and offline
retailers. TikTok is not only an entertainment channel but has taken over
the top search spot from Google in some demographics, so we have shifted a
higher portion of the media spend and organic activity to this channel and are
gradually launching branded TikTok shops. Given the growing importance of
first party data/direct consumer touch, we have increased the focus on
building social following (particularly TikTok) and growing the number of
engaged customers in our email/sms databases, whilst also removing unengaged
customers. Loyalty programmes are in the making and we have started involving
brand fans more in content creation and product development. We continue to
launch products first on D2C and Amazon, in order to quickly build 5-star
reviews before launching in other channels, but also to make sure that our
loyal database consumers are rewarded first.
· Advertising & promotions (A&P)
A&P spend is focused on Skinny Tan and Super Facialist, as they are the
only brands with D2C sites and broad omnichannel distribution. Both brands
benefit from a retained PR agency; appointed skincare & tanning experts;
substantial campaign activity across Google, YouTube, TikTok, Meta and retail
specific activation. H1 saw strong traction for Super Facialist Vitamin C + Me
campaign, which is continuing in the second half. Skinny Tan's Wonder Serum
awareness and conversion campaign was disappointing. The campaign was
adversely affected by overall category dynamics, in particular consumer
confidence, level of discretionary spend and a change in consumption
behaviour. In H2 significant investment will be put behind digital ads (Meta,
Tik Tok, YouTube & Google), website asset upgrades; organic social
activity and a PR campaign to support the relaunch and extended distribution
of Skinny Tan Body Glow, our on trend affordable gradual tanner.
2. Brand Reach
We believe in an omnichannel distribution approach, so as to ensure that our
customers can buy our brands and products whenever, wherever and on whatever
they want. It is therefore imperative that we build our brand distribution
online and offline, whilst supporting our key Invest brands with their own DTC
sites.
· UK & International
In the UK towards the end of H1 we launched Super Facialist into Holland &
Barrett and The Solution into Waitrose. Dirty Works rolled out to over 500
Watsons stores in 9 countries in the Middle East and Asia, with a further 2
expected in H2. Significant Super Facialist and Skinny Tan range extensions
will roll out in H2, as well as the launch of The Solution Menopause range in
June. Skinny Tan launches in Peru and 6 Gulf countries in H2.
· D2C
H1 focus for Skinny Tan's D2C site has been on profitability and to align
pricing and promotions across all channels. Historically the main selling
point of the brand had been to offer the lowest price points in the market. In
H1 Skinny Tan performance marketing was brought in-house, which is more cost
effective and allows for the resource to be used across other brands. All tech
stack contracts have been renegotiated with savings achieved across the
brands. D2C activity for H2 is in line with our omnichannel strategy but is
focused on growing revenue with a close eye on profitability. By June 2024 we
will also have launched The Solution D2C site which will be a very important
brand hub for the new Menopause range.
3. ESG
Halfway through the year, we are pleased to report that 99% of our single
products are fully recyclable or reusable. 60% of our plastic packaging
includes post recycled materials, with this figure reaching 90% for all tubes.
100% of our UK-sourced cartons have Forest Stewardship Council (FSC)
certification, reflecting our commitment to work in an environmentally
responsible manner whenever possible.
Our latest sustainable initiative is with the Super Facialist night
collection. All our night creams have been reengineered with less plastic (14%
less plastic in the lid), smaller cartons to reduce unnecessary paper use, and
single glass material for all lines, contributing to an improved carbon
footprint.
We have also started using Prevented Ocean Plastic™ (recycled plastic
collected from coastal areas at risk of plastic pollution) in some of our key
brands such Super Facialist, Dirty Works and Fish to actively prevent ocean
plastic and further support sustainable initiatives.
Outlook
Against the backdrop of a challenging market, our strategy of deliberate brand
rationalisation, portfolio focus and rigorous cost control is beginning to
realise the medium term financial aims of the Group and will ultimately lead
to a return to profitability. Progress has been made in reducing losses, but
whilst current trading conditions remain, organic sales growth will continue
to be difficult. The immediate priorities are, driving brand awareness of our
Invest brands, delivering revenue synergies through domestic and international
expansion, and releasing working capital. We expect to see a full year revenue
decline, but are making progress in reducing operating losses. We expect to
retain our cash balance and remain confident that the foundations we are
building will enable us to achieve our medium and long-term goals.
Group Statement of Comprehensive Income
Period ended Period ended Year ended
31 Dec 2023 31 Dec 2022 30 June 2023
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Revenue 8,676 10,629 20,085
2
Cost of sales (5,211) (6,493) (12,101)
Gross profit 3,465 4,136 7,984
Commercial and administrative costs (3,709) (5,013) (9,175)
Underlying operating loss (244) (877) (1,191)
Amortisation of acquisition-related intangibles (499) (513) (1,027)
Operating loss before exceptional items (743) (1,390) (2,218)
Exceptional items - Impairment of intangible assets - - (3,500)
Other exceptional items (70) (366) (1,078)
Operating loss (813) (1,756) (6,796)
Finance income 100 21 111
Finance (46) (42) (88)
costs
3
Loss before taxation (759) (1,777) (6,773)
Taxation 89 91 188
Loss after taxation (670) (1,686) (6,585)
Other comprehensive income/(loss) for the period:
Items that will not be reclassified
subsequently to profit or loss:
Remeasurement of defined benefit liability 149 655 444
Other comprehensive income for the period 149 655 444
Total comprehensive (loss) for the period (521) (1,031) (6,141)
(Loss)/profit attributable to:
Equity shareholders (736) (1,718) (6,588)
Non-controlling interests 66 32 3
Total comprehensive (loss)/income attributable to:
Equity shareholders (587) (1,063) (6,141)
Non-controlling interests 66 32 3
(Loss) per share 4
- basic (2.6)p (6.1)p (23.5)p
- diluted (2.6)p (6.1)p (23.5)p
Group Statement of Financial Position
As at As at As at
31 Dec 2023 31 Dec 2022 30 June 2023
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment including
right-of-use assets 36 61 43
Intangible assets 13,940 18,327 14,462
Deferred tax assets 440 483 520
Total non-current assets 14,416 18,871 15,025
Current assets
Inventories 5,672 6,921 6,123
Trade and other receivables 4,496 5,833 4,774
Cash and cash equivalents 7,190 8,062 8,177
Total current assets 17,358 20,816 19,074
Total assets 31,774 39,687 34,099
LIABILITIES
Current liabilities
Trade and other payables 3,851 5,164 4,687
Current tax payable 2 9 2
Total current liabilities 3,853 5,173 4,689
Non-current liabilities
Post-retirement benefit obligations 6 1,299 1,452 1,619
Deferred tax liabilities 2,071 2,309 2,190
Total non-current liabilities 3,370 3,761 3,809
Total liabilities 7,223 8,934 8,498
Net assets 24,551 30,753 25,601
EQUITY
Share capital 1,397 1,397 1,397
Share premium 11,987 11,987 11,987
Merger reserve 6,588 6,588 6,588
Pension remeasurement reserve (2,066) (2,004) (2,215)
Retained earnings 6,645 12,525 7,613
Total equity 24,551 30,493 25,370
Non-controlling interest - 260 231
Total equity 24,551 30,753 25,601
Group Statement of Changes in Equity
Pension Non-controlling
Share Share Merger remeasurement Retained Total
capital premium reserve reserve earnings interest equity
Group £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 30 June 2023 1,397 11,987 6,588 (2,215) 7,612 232 25,601
Non-controlling interest - - - - - 66 66
Share-based payments - - - - 6 - 6
Purchase of remaining NCI shares - - - - (239) (298) (537)
Transactions with owners - - - - (233) (232) (465)
Loss for the period - - - - (734) - (734)
Other comprehensive income:
Remeasurement of defined benefit liability
- - - 149 - - 149
Total comprehensive income / (Loss) for the period - - - 149 (734) - (585)
Balance as at 31 December 1,397 11,987 6,588 (2,066) 6,645 - 24,551
2023
Pension Non-controlling
Share Share Merger remeasurement Retained Total
capital premium reserve reserve earnings interest equity
Group £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 30 June 2022 1,397 11,987 6,588 (2,659) 14,213 228 31,754
Non-controlling interest - - - - - 32 32
Share-based payments - - - - 30 - 30
Transactions with owners - - - - 30 32 62
Profit for the period - - - - (1,718) - (1,718)
Other comprehensive income:
Remeasurement of defined benefit liability
- - - 655 - - 655
Total comprehensive income for the period - - - 655 (1,718) - (1,063)
Balance as at 31 December 1,397 11,987 6,588 (2,004) 12,525 260 30,753
2022
Pension Non-
Share Share Merger remeasurement Retained controlling Total
capital premium reserve reserve earnings interest equity
Group £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 30 June 2022 1,397 11,987 6,588 (2,659) 14,213 228 31,754
Non-controlling interest - - - - - 3 3
Share-based payments - - - - (12) - (12)
Transactions with owners - - - - (12) 3 (9)
Loss for the year - - - - (6,588) - (6,588)
Other comprehensive income:
Remeasurement of defined benefit liability
- - - 444 - - 444
Total comprehensive income - - - 444 (6,588) - (6,144)
for the year
Balance as at 30 June 2023 1,397 11,987 6,588 (2,215) 7,613 231 25,601
Group Cash Flow Statement
Period ended Period ended Year ended
31 Dec 2023 31 Dec 2022 30 June 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flow from operating activities
(Loss) after taxation (670) (1,686) (6,585)
Depreciation 20 7 32
Amortisation 545 574 1,118
Impairment of intangible assets and PPE - - (166)
Impairment of intangible assets - - 3,500
Tax charge (89) (91) (188)-
Finance income (100) (21) (111)
Finance cost 46 42 88
Decrease in inventories 451 454 1,252
Decrease in trade and other receivables 279 (734) 325
(Decrease)in trade and other payables (855) (1,681) (2,082)
Share-based payment expense 6 30 (14)
Contributions to defined benefit plan (159) (159) (318)
Cash (utilised in) operations (526) (3,265) (3,149)
Finance expense paid 2 3 -
Taxation received - - (66)
Net cash flow from operating activities (524) (3,262) (3,215)
Cash flow from investing activities
Purchase of property, plant and equipment (8) (13) (22)
Purchase of intangibles (18) (31) (44)
Cash consideration paid for acquisitions (537) - -
Net cash flow from investing activities (563) (44) (66)
Cash flow from financing activities
Finance income received 100 21 111
Net cash flow from financing activities 100 21 111
Net decrease in cash and cash equivalents (987) (3,285) (3,170)
Cash and cash equivalents at beginning of period 8,177 11,347 11,347
Cash and cash equivalents at end of period 7,190 8,062 8,177
Notes to the Interim financial statements
Note 1 Basis of preparation
The Group has prepared its interim results for the six-month period ended 31
December 2023 in accordance with the recognition and measurement principles of
UK Adopted International Accounting Standards (UK adopted IAS) and also in
accordance with the recognition and measurement principles of IFRS issued by
the International Accounting Standards Board.
The Directors have considered trading and cash flow forecasts prepared for the
Group, and based on these, and the confirmed banking facilities, are satisfied
that the Group will continue to be able to meet its liabilities as they fall
due for at least one year from the date of approval of the Interim Report. On
this basis, they consider it appropriate to adopt the going concern basis in
the preparation of these Interim financial statements.
These interim financial statements do not constitute full statutory accounts
within the meaning of section 434 of the Companies Act 2006 and are unaudited.
The unaudited interim financial statements were approved by the Board of
Directors on 25 March 2024.
The consolidated financial statements are prepared under the historical cost
convention. The accounting policies used in the interim financial statements
are consistent with IFRS and those which will be adopted in the preparation of
the Group's Annual Report and Financial Statements for the year ended 30 June
2024.
The statutory accounts for the year ended 30 June 2023, which were prepared
under IFRS, have been filed with the Registrar of Companies. These statutory
accounts carried an unqualified Auditors Report and did not contain a
statement under Section 498(2) or 498(3) of the Companies Act 2006.
The Group has not changed any of its accounting policies in the six months to
31 December 2023.
Note 2 Segmental analysis
The reportable segments of the Group were aggregated as follows:
- Brands - we leverage our skilled resources to develop and market a growing
portfolio of Brand Architekts Group owned and managed brands. These include
those organically developed plus the acquisitions of the portfolio of brands
included in the Brand Architekts acquisition (in 2016) and the Fish brand
acquired during 2018.
- InnovaDerma Brands - This segment includes those brands acquired as part of
the InnovaDerma business combination. The results of InnovaDerma brands are
currently reported separately from other brands to the directors.
- Eliminations and central costs - other group-wide activities and expenses,
including defined benefit pension costs, share-based payment
expenses/(credits), amortisation of acquisition-related intangibles, interest,
taxation and eliminations of inter-segment items, are presented within
"Eliminations and central costs".
IFRS 15 requires the disaggregation of revenue into categories that depict how
the nature, timing, amount and uncertainty of revenue and cash flows are
affected by economic factors. The directors have considered how the Group's
revenue might be disaggregated in order to meet the requirements of IFRS 15
and have concluded that the activity and geographical segmentation disclosures
set out below represent the most appropriate categories of disaggregation.
(a) Principal measures of profit and loss - Income Statement segmental information:
Period ended 31 December 2023
Period ended 31 December 2022
Eliminations
Eliminations
BA Innova Derma and central BA Innova Derma and central Total
Brands Brands costs Total Brands Brands costs
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
UK revenue 5,280 988 - 6,268 6,087 2,316 - 8,403
International revenue 2,100 308 - 2,408 1,595 631 - 2,226
Revenue - external 7,380 1,296 - 8,676 7,682 2,947 - 10,629
Revenue - internal - - - - - 126 (126) -
Total revenue 7,380 1,296 - 8,676 7,682 3,051 (126) 10,629
Underlying operating profit/(loss) 341 (249) (330) (238) 117 (361) (603) (847)
Charge for share-based payments (2) - (4) (6) (9) - (21) (30)
Amortisation of acquisition-related intangibles - - (499) (499) - - (514) (514)
Exceptional items (50) (6) (14) (70) (139) (138) (88) (365)
Net borrowing costs - - 54 54 - - (21) (21)
(Loss)/profit before taxation 290 (255) (793) (759) (31) (499) (21) (1,777)
Tax credit/(charge) - - 89 89 - 8 83 91
(Loss)/profit for the period 290 (255) (704) (670) (31) (491) (1,164) (1,686)
(b) Other Income Statement segmental information:
The following additional items are included in the measures of underlying
profit and loss reported to the Chief Operating Decision Maker and are
included within (a) above:
Period ended 31 December 2023
Brands Central costs Total
£'000 £'000 £'000
Depreciation 20 - 20
Amortisation - 545 545
Period ended 31 December 2022
Brands Central costs Total
£'000 £'000 £'000
Depreciation 7 - 7
Amortisation - 574 574
(c) Principal measures of assets and liabilities:
The Groups assets and liabilities are managed centrally by the Chief Operating
Decision Maker and consequently there is no reconciliation between the Group's
assets per the Statement of Financial Position and the segment assets.
(d) Additional entity-wide disclosures:
The distribution of the Group's external revenue by destination is shown
below:
Geographical segments Period ended 31 Dec 2023 Period ended 31 Dec 2022 Year ended 30 June 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
UK 6,268 8,131 15,781
European Union countries 441 564 642
Rest of the World 1,967 1,934 3,662
8,676 10,629 20,085
In the period ended 31 December 2023, the Group had two customers that
exceeded 10% of total revenues, being 12.0% and 10.5% respectively. In the
period ended 31 December 2022, the Group had three customers that exceeded 10%
of total revenues, being 13.5%, 11.3% and 11.2% respectively.
Note 3 Finance costs
Period ended 31 Dec 2023 Period ended 31 Dec 2022 Year ended 30 June 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Bank loans and overdrafts (2) (3) -
Pension plan notional finance charge 48 45 88
46 42 88
Note 4 Loss per share
Period ended 31 Dec 2023 Period ended 31 Dec 2022 Year ended 30 June 2023
(unaudited) (unaudited) (audited)
Basic and diluted
(Loss) attributable to equity shareholders (£'000) (736) (1,718) (6,579)
Basic weighted average number of ordinary shares in issue during the period
27,943,180 27,943,180 27,943,180
Diluted number of shares 28,748,949 28,032,180 28,032,180
Basic (loss) per share (2.6)p (6.1)p (23.5)p
Diluted (loss) per share (2.6)p (6.1)p (23.5)p
Basic (loss) per share has been calculated by dividing the profit/(loss) for
each financial period by the weighted average number of ordinary shares in
issue in the period.
Note 5 Notes to Cash Flow Statement
(a) Reconciliation of cash and cash equivalents to movement in net cash:
Period ended Period ended Year ended
31 Dec 2023 31 Dec 2022 30 June 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Decrease in cash and cash equivalents in the period (987) (3,285) (3,170)
Change in net cash resulting from cash flows (987) (3,285) (3,170)
Net cash at the beginning of the period 8,177 11,347 11,347
Net cash at the end of the period 7,190 8,062 8,177
(b) Analysis of net cash:
Closing 30 June 2023 Closing 31 Dec 2023
Cash flow
£'000 £'000 £'000
Cash at bank and in hand 8,177 (987) 7,190
Note 6 IAS 19 'Employee Benefits'
Expected future cash flows to and from the Group's defined benefit pension
scheme:
The Scheme is closed to new members and to further accruals of benefits. It is
subject to the scheme funding requirements outlined in UK legislation. The
last scheme funding valuation of the Scheme was as at 5 April 2023 and
revealed a deficit of £4,612,000.
The deficit reduction payment will remain at £318,000 per annum until 30 June
2033.
In addition, the Company has agreed to meet the cost of administrative
expenses and Pension Protection Fund insurance premiums for the Scheme.
Anticipated payments by the Company in respect of plan administrative expenses
and the Pension Protection Fund premium in the year ending 30 June 2024 are
expected to be of a similar order of magnitude to payments in 2023.
Payments made by the Company to the Scheme and in respect of Scheme
liabilities were:
Period ended Period ended Year ended
31 Dec 2023 31 Dec 2022 30 June 2023
£'000 £'000 £'000
Deficit recovery payments 159 159 318
Scheme administrative expenses 50 67 67
Pension Protection Fund premium 81 113 113
Total 290 339 498
The amounts expensed in the Group Statement of Comprehensive Income were:
Period ended Period ended Year ended
31 Dec 2023 31 Dec 2022 30 June 2023
£'000 £'000 £'000
In operating profit:
Plan administrative expenses 50 67 101
Pension Protection Fund premium 30 54 113
80 121 214
In finance costs:
Unwinding of notional discount factor 48 45 88
Total 128 166 302
IAS 19 Employee benefits:
IAS 19 requires a separate valuation of the Scheme on a different basis to the
funding valuation referred to above. The key assumptions used were:
At 31 December 2023 At 31 December 2022 At 30 June 2023
Discount rate 4.55% 4.65% 5.00%
Inflation assumption (RPI) 3.10% 3.30% 3.50%
Inflation assumption (CPI) 2.65% 2.90% 3.15%
The amounts recognised in the Group Statement of Financial Position were:
At 31 December 2023 At 31 December 2022 At 30 June 2023
£'000 £'000 £'000
Present value of funded obligations (23,739) (23,321) (23,273)
Fair value of scheme assets 22,440 21,869 21,654
Deficit (1,299) (1,452) (1,619)
Note 7 Acquisition of MR Haircare Ltd
On 24 November 2023, the Group acquired the remaining 49% issued share capital
of MR Haircare Ltd from Jamie Stevens Media Limited (JSML) our joint venture
counterparty/co-shareholder. Cash consideration of £537k was paid, following
a valuation determined by an independent valuer. JSML was entitled to 55% of
the sale valuation. The brand will be relaunched as MR Expert Solutions.
Note 8 Announcement of results
The Interim Report is available to members of the public at the Company's
Registered Office at 8 Waldegrave Road, Teddington, TW11 8GT and on the
Company's website.
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