REG - Quiz PLC - Final Results
05/07/2022 07:00
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RNS Number : 2744R Quiz PLC 05 July 2022
5 July 2022
QUIZ plc
("QUIZ" or the "Group")
Final Results for the year ended 31 March 2022
Strong revenue recovery and return to profitability
QUIZ, the omni-channel fashion brand, announces its final audited results for
the year ended 31 March 2022 ("FY 2022").
Financial highlights:
The income statement set out below is included to show the underlying
performance of the Group:
Year ended 31 March 2022 Year ended 31 March 2021
Underlying and Reported Underlying Adjusting items Reported
£m
Revenue 78.4 39.7 - 39.7
Gross profit 47.3 21.2 - 21.2
Government grants 1.0 8.2 - 8.2
Other operating expenses (net) (47.4) (38.8) - (38.8)
Operating profit/(loss) 0.9 (9.4) - (9.4)
Gain arising on disposal of subsidiary - - 10.4 10.4
Gain on bargain purchase arising on acquisition - - 5.2 5.2
Profit/(loss) before financing and taxation 0.9 (9.4) 15.6 6.2
Finance costs (net) (0.1) (0.2) - (0.2)
Profit/(loss) before tax 0.8 (9.6) 15.6 6.0
EBITDA/(Loss BITDA) 5.1 (4.9) 15.6 10.7
Adjusting items in FY21 included the non-recurring £10.4m gain arising on the
disposal of a subsidiary undertaking when it was placed into Administration
and £5.2 million gain on bargain purchase arising on an acquisition.
· Group revenue increased 97% year on year further to the removal
of social restrictions, which led to an increased demand for our product
offering as well as a reduction in the amount of time that stores and
concessions were closed
· Higher levels of full price sales resulted in an increase to
the gross margin at 60.3%, consistent with the gross margin generated in the
year prior to the pandemic, from 53.4% in FY 2021
· The rise in operating costs, being distribution and
administrative costs, was restricted to 22% as the increased revenues
leveraged off the Group's existing infrastructure
· Underlying and reported EBITDA of £5.1 million (2021:
underlying loss of £4.9 million, reported profit of £10.7 million)
· Underlying and reported profit before tax of £0.8 million
(2021: underlying loss of £9.6 million, reported profit of £6.0 million)
· Operating cash inflows of £5.3 million (2021: outflow of
£2.5 million)
· Total liquidity headroom at 31 March 2022 of £6.5 million,
being cash net of borrowings of £4.4 million and £2.1 million of unutilised
bank facilities (31 March 2021: £2.4 million, being cash net of borrowings of
£1.5 million and £0.9 million of unutilised bank facilities)
Operational highlights:
· Strong online growth, with a 66% increase in sales through
QUIZ's own website
· Active customers increased 74% on the prior financial year in
line with demand for QUIZ's core occasion wear offering
· The benefit of store restructuring undertaken during the previous
year was reflected in positive contribution from stores
· Recovery in International revenues with a 96% increase year on
year
· QUIZ's store estate comprised 62 stores in the United Kingdom
and five in the Republic of Ireland at the end of the year (2021: 61 in the UK
and four in the ROI), with one further opening in the Republic of Ireland
subsequently
Post year end and Outlook:
· Revenues in the three months to 30 June 2022 increased 62% on
the prior year and were consistent with the levels generated prior to the
COVID-19 disruption on a like-for-like basis
· Potential for sales later in the year to be impacted by the
effect of the inflationary environment and increases in the cost of living on
consumer confidence
· Total liquidity headroom at 4 July 2022 of £11.8 million, being
a cash balance of £8.3 million and £3.5 million of undrawn banking
facilities, a £5.3 million increase since 31 March 2022
· Launched our first sustainable product range to help
further our practices in environmentally responsible production
· The Board remains confident the Group can continue to deliver
against its strategy and drive long-term sustainable and profitable growth
despite the current challenging trading backdrop
Tarak Ramzan, Founder and Chief Executive Officer, commented:
"The Group delivered a very encouraging FY 2022 performance with very strong
revenue growth and a return to profitability. This outcome reflects increased
demand for QUIZ's product offering and was supported by the decisive actions
we have taken in recent years to transform the business and successfully
leverage the Group's omni-channel model and infrastructure.
We are very pleased with the strong uplift in active customers and sales
growth through our own website, which is now supported by a flexible and
profitable portfolio of stores and concessions.
I would like to take this opportunity to thank the Group's management team and
all colleagues across the business for their commitment and hard work that has
contributed to the recovery of the business after such a challenging period,
and positioned it well for further growth.
Despite the well-documented challenges across the retail sector, we remain
encouraged by customer demand for the QUIZ brand, with sales up by 62% in the
year to date. Whilst there are significant levels of uncertainty impacting the
consumer right now, we are confident that QUIZ is well positioned to continue
to deliver against its strategy and drive long-term, sustainable and
profitable growth."
Enquiries:
QUIZ plc Via Hudson Sandler
Tarak Ramzan, Chief Executive Officer
Gerry Sweeney, Chief Financial Officer
Sheraz Ramzan, Chief Commercial Officer
Panmure Gordon +44 (0) 207 886 2500
(Nominated Adviser and Sole Broker)
Alina Vaskina (Corporate Finance)
Erik Anderson (Corporate Broking)
Hudson Sandler LLP (Public Relations) +44 (0) 207 796 4133
Alex Brennan quiz@hudsonsandler.com (mailto:quiz@hudsonsandler.com)
Lucy Wollam
Notes:
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR").
About QUIZ:
QUIZ is an omni-channel fashion brand, specialising in occasion wear and
dressy casual wear. QUIZ delivers a distinct proposition that empowers its
fashion forward customers to stand out from the crowd.
QUIZ's buying and design teams constantly develop its own product lines,
ensuring the latest glamorous looks at value prices. This flexible supply
chain, together with the winning formula of style, quality, value and
speed-to-market has enabled QUIZ to grow rapidly into an international brand
with stores, concessions, franchise stores, wholesale partners and
international online partners in 20 countries.
QUIZ operates through an omni-channel business model, which encompasses online
sales, standalone stores, concessions, international franchises and wholesale
arrangements.
To download images please visit:
http://www.quizgroup.co.uk/media-download-centre/
(http://www.quizgroup.co.uk/media-download-centre/)
For further information:
https://www.quizclothing.co.uk/ (https://www.quizclothing.co.uk/)
http://www.quizgroup.co.uk/ (http://www.quizgroup.co.uk/)
CHAIRMAN'S STATEMENT
Introduction
We are pleased to present our financial statements for the year ended 31 March
2022 which show a substantial uplift in revenues further to the removal of
COVID-19 related lockdowns and social restrictions. Due to the actions taken
by the Group over the last 18 months with regards to restructuring our
business and maintaining tight cost control and inventory management, we are
happy to report a return to profitability.
I would like to take this opportunity to thank the Group's management team and
all colleagues across the business for their commitment and hard work that has
contributed to the recovery of the business after such a challenging period.
Our restructured business places greater emphasis on our stores and own
website with a reduced dependence on less profitable third party revenues. Our
own website which has driven the growth in online revenues in the year has
traditionally generated a higher contribution than sales generated through
third parties. In addition, our offline sales are more focussed on our own
stores rather than concessions which have reduced in number from 119 to 69 in
the year. Further to the restructuring of our store portfolio undertaken in
the previous year, we are confident that our store estate will continue to
generate a positive financial contribution going forward.
Our trademark occasion and dressy wear for social events and activities has
always been at the centre of the QUIZ brand. QUIZ has traditionally provided
options for a variety of social occasions such as attending lunch with
friends, a day at the races, a Christmas party or a wedding. The return of
these and other activities in the year has led the notable positive impact on
customer demand.
FY2022 performance overview
The lifting of social restrictions resulted in sales progressively improving
during the year and by the second half of the year they had returned to the
levels achieved prior to the disruption caused by COVID-19 on a like-for like
basis. This resulted in a 97% increase in the Group's revenues during the
year to 31 March 2022 to £78.4 million (2021: £39.7 million).
The increase in revenues in part reflected the Group's stores and concessions
not being closed for the same sustained periods as the previous year. In
addition, the return of social events drove increased consumer demand for the
occasion wear and dressy wear which are at the centre of the QUIZ brand.
As demand increased and revenues improved, so did the proportion of full price
sales. This is reflected in the 690bps improvement in the gross margin
generated compared to the same period in the previous year.
Management retained close control on operating costs, with the increase being
restricted to 22% in the year despite the significant increase in sales. In
addition to this, the business benefited from the restructuring of the Group's
store estate in the previous year which lowered the rental costs payable. The
existing lease arrangements provide increased flexibility, with rental charges
predominantly linked to revenues generated. Whilst our stores currently have
an average lease term of 15 months, given the positive contribution being
generated, we are looking to secure longer lease arrangements across key
sites, with a number of lease arrangements already renewed since the year end.
During the year the number of concessions operated by the Group reduced
substantially and there was a planned reduction in revenues generated from
third party websites. As a result, the Group's performance benefited from a
higher proportion of revenues generated from its own stores and website which
have traditionally generated a higher contribution than other revenue
streams.
Further to the above, operating profit before financing and taxation of £0.9
million was generated (2021: operating loss of £9.4 million). The reported
and underlying EBITDA amounted to £5.1 million (2021: reported - profit of
£10.7 million; underlying - loss of £4.9 million). The reported and
underlying profit before tax amounted to £0.8 million (2021: reported -
profit of £6.0 million; underlying - loss of £9.6 million).
The Financial Review section provides more detail on the Group's financial
performance during the year and an explanation as to the basis of preparation
of the financial statements for the current and previous year, including an
explanation of the underlying measures.
Cash position
One of the Group's primary objectives during the year was to start to
reinstate its cash balance further to it being reduced when revenues fell in
response to pandemic-related disruption. Increasing our cash balance
provides greater financial stability and helps ensure that the business can
continue to capitalise on increased demand for its product.
We were pleased to generate a cash inflow of £5.3 million from operating
activities in the year (2021: outflow of £2.5 million). Further to this,
the business has continued to restrict capital spend resulting in the total
liquidity headroom improving by £4.1 million. As at 31 March 2022, the Group
had £6.5 million of total liquidity headroom, being a cash balance and net of
bank borrowings of £4.4 million and £2.1 million of undrawn bank facilities
(31 March 2021: £2.4 million of total liquidity headroom).
The cash position since the year end has continued to improve, with total
liquidity headroom on 4 July 2022 of £11.8 million, being a £8.3 million
cash balance and £3.5 million of undrawn bank facilities. This represents a
£5.3 million increase in total liquidity headroom since 31 March 2022 which
reflects the recent positive trading as well as £2.0 million of a favourable
net movement in working capital.
The £3.5 million bank facilities available to the Group were recently renewed
and will expire on 30 June 2023. There are no financial covenants applicable
to these facilities.
This will support the business's initiatives to further diversify the product
range and ensure the Group is well positioned to respond to the continued
increase in demand for its core occasion wear offering in due course.
Operating an ethical supply chain
The Board will continue to prioritise ensuring that the Group has an ethical
and responsible supply chain that all QUIZ's stakeholders can be proud of. The
Group is committed to continuing to invest in this critical area of the
business to ensure that the Group's systems remain robust and that the Group's
strict Ethical Code of Practice is always adhered to by all QUIZ suppliers.
There is an ongoing programme in place to ensure that all our products are
supplied in line with our Ethical Code of Practice. Regular supplier visits
continue to be conducted and processes are in place to allow for clear
visibility across the Group's supply chain. The Board remains resolutely
committed to ensuring the Group's systems, processes and culture are fit for
purpose to assure compliance in this area.
Dividends
Given the level of profits generated in the current year, the Board does not
recommend the payment of a final dividend (2021: £Nil).
Going forward the business is focussed upon continuing to strengthen its
balance sheet and delivering a profitable performance, subject to which the
Board would anticipate reinstating dividend payments.
Outlook and current trading
The Group has experienced strong demand for its product offering since the
year end with a particular focus on holiday wear. As a result, revenues
generated have been consistent with the period prior to the pandemic on a
like-for-like basis.
The Board is pleased that the Group has achieved sales of £27.3m million
since the period end, being the three months to 30 June 2022. This was driven
by the good performance of our own website and across our store portfolio,
which was subject to a lockdown for part of the equivalent period in the
previous year. These sales are consistent with the Board's expectations and
represents a £10.5m million or 62% increase on the revenues generated in the
period from 1 April to 30 June 2021.
Revenues from each of the Group's channels were as follows:
I April to 30 June 2022 I April to 30 June 2021 Year-on-year change
Online £9.5m £6.0m + 58.2%
UK stores and concessions £13.0m £7.2m + 79.1%
International £4.8m £3.6m + 34.2%
Total £27.3m £16.8m + 62.0%
These recent sales demonstrate that the QUIZ brand has strong customer appeal
despite the potential for the current inflationary environment and increased
costs of living to impact consumer spend and confidence. In addition, the
business continues to manage the increased cost pressures affecting the wider
retail sector such as wage inflation, the reinstatement of business rates and
increases in input costs.
The Group's continued strong growth across all channels illustrates that that
the Group's omni-channel business model remains critical and key to our
long-term success which will be focused on the development of revenues from
our own stores and website.
Despite the well-documented near-term challenges across the retail sector, we
are encouraged by the continued increase in demand for the Group's product
proposition and the revenue growth generated since the year end and this
combined with the Group's return to profitability, mean we remain confident in
the Group's future success.
Peter Cowgill
Non-Executive Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
QUIZ's FY 2022 financial year reflected a strong recovery from the challenging
trading conditions which arose as a result of the COVID-19 pandemic. The
absence of prolonged lockdowns and the removal of restrictions on social
activities resulted in sales gradually recovering to previous levels on a
like-for-like basis.
The past year has illustrated the benefits of QUIZ's omni-channel model which
provides customers with the opportunity to engage with the QUIZ brand across
different channels. As a result, we have generated revenue growth in each
channel during the year as follows:
FY 2022 FY 2021 Year-on-year change Share of revenue 2022 Share of revenue 2021
Online £26.7m £21.6m + 24% 34.1% 54.5%
International £14.9m £7.6m + 96% 19.0% 19.1%
UK stores and concessions £36.8m £10.5m + 250% 46.9% 26.4%
Total £78.4m £39.7m + 97%
The Group's long-term strategy remains focussed on the development of the QUIZ
brand through its omni-channel distribution model and to adapt and improve to
ensure the brand continues to succeed. The Group continues to have a focus on
achieving the further online growth potential available to QUIZ through its
own website, which has historically generated a higher contribution than
revenues from third party websites, supported by a flexible and profitable
store and concession portfolio.
We continue to firmly believe that the QUIZ brand has a clear, differentiated
position in the market as an occasion wear led brand and continues to resonate
with a broad age range of customers. This belief is supported by the increased
demand for our products across the year.
Optimising the omni-channel model in the UK
QUIZ's online channel provides the potential for significant long-term growth.
The business has benefited from the return to social activities and the
corresponding increase in customer demand for occasion wear has increased the
profitability of sales, particularly online.
Given the long-term trends towards increased online shopping, we continue to
believe that QUIZ's online channel offers significant long-term profitable
growth potential for the Group. In FY 2022, given the increase in stores and
concession revenues in the year, online sales represented 34% of QUIZ's Group
revenue (2021: 55%), which is broadly consistent with the share of online
revenues prior to the pandemic.
Going forward, the focus will be to ensure the business continues to benefit
from offering on trend product for social activities ranging from lunch with
friends through to attending weddings. The business continues to benefit
from altering its product offering dependent upon the occasion, whether that
be attending a race day, going on holiday, or preparing for the Christmas
party season.
Sales volumes through the QUIZ website have continued to improve since the
year end.
The Group has continued to reduce its exposure to UK department stores. In the
year ended 31 March 2022 the number of concessions operated reduced from 119
to 69. The decline reflects the closure of concessions that were generating
little return or were operating at a loss as well as the impact of the closure
of Debenhams and Outfit stores. The majority of the remaining concessions are
operated in New Look stores and allow for flexible arrangements for increasing
the number of concessions operated given these are not staffed by QUIZ
personnel and there is limited capital outlay required. The business will open
further concessions selectively depending upon the potential level of sales
and financial returns.
The Group believes that stores and concessions with appropriate cost bases can
make a positive contribution going forward and is encouraged by the
improvement in returns generated from stores across the year. We will continue
to undertake initiatives to promote footfall into stores including trialling
the introduction of new product categories in store, utilising our store
network for online collections and returns, and improving stock availability
across the estate. We opened two new stores in the year and closed one. We
will continue to open new stores where appropriate flexible lease arrangements
can be secured.
Selective international growth potential through capital light model
We continue to receive positive customer reactions to the QUIZ brand
internationally. Our mix of casual and occasion wear can be tailored for each
market and our flexible route to market has been beneficial.
International customers also experienced increased demand further to the
cessation of lockdowns and the relaxation of social restrictions. Given
this, international revenues continue to represent 19% of Group revenue (2021:
19%). We continue to identify opportunities to extend our sales through
low-risk, low-cost international expansion driven by our capital-light online,
consignment and concession routes to market.
Managing gross margin
During the current year, gross margins progressively improved to their
previous levels and in the second half of the year were consistent with the
levels generated prior to the pandemic. The increased preference for newer
full price product experienced during the year and the higher proportion of
sales through the higher margin store and concession channel resulted in the
gross margin increasing to 60.3% (2021: 53.4%) which is consistent with the
gross margin generated in the year prior to the pandemic.
During the year we encountered increased cost pressures in relation to product
costs and the costs associated with their shipment. Whilst these additional
costs were initially absorbed by the business, we have successfully adjusted
prices to maintain our gross margin.
In addition to this cost pressure, the lead times for product being delivered
have extended. To date we have successfully adjusted delivery schedules to
ensure that product is available when required and avoided any significant
disruption to product availability.
Leveraging our cost base
We continue to carefully manage costs and will look to leverage off the
Group's existing infrastructure as revenues grow. We were pleased that the
increase in operating costs was restricted to 22%, which was substantially
below the 97% increase in revenues.
The Group continues to benefit from the substantial cost savings in the
previous year which arose from the renegotiation of rental arrangements for
stores and the reduction of staff numbers at head office and across the
business.
As well as various cost saving initiatives, the utilisation of the various
arrangements to support businesses provided by the UK Government have been
beneficial in managing the most significant disruption arising from COVID-19,
with the provision of £1.0 million (2021: £8.2 million) of cash support
received under the furlough scheme and other payments.
We will continue to review our cost base to ensure it is appropriate for the
revenues that will be generated going forward.
A strong brand
QUIZ is a distinctive fashion brand which, over many years, has developed a
specialisation in occasion wear and dressy casual wear for women. QUIZ's core
business continues to deliver a distinct proposition that empowers
fashion-forward females to stand out from the crowd.
We firmly believe that the QUIZ brand has a clear, differentiated position in
the market with a specialisation in occasion wear and dressy casual wear for
women, and the brand continues to resonate with a broad age range of
customers. This belief was supported by the increased demand for our products
over the year as restrictions on social events were eased.
The number of online active customers increased during the year, reflecting
the recovery in online revenues and the appeal of the QUIZ brand. The number
of active customers, increased by 74% to 563,000 (2021: 323,000) which is
approaching the levels achieved prior to the pandemic.
During the period, the brand has maintained its social media engagement
relative to the prior year, with 2% and 3% increases in our Instagram and
Facebook audiences respectively.
Our flexible supply chain remains a key competitive advantage
The business has a well invested infrastructure and a proven successful supply
chain which allows us to source clothes in a responsible and ethical manner.
This allows for the business to respond to customer demands and to provide
on-trend product whether it be influenced by social media, the catwalk or
television. In the last year we have started to work to broaden our supply
base to help reduce any dependency on any one particular supplier or region.
Our supply chain and ability to constantly refresh products for sale in store
and online are strong competitive advantages.
QUIZ continues to introduce new products each week in order to meet customer
demand as trends emerge throughout the season. The Board believes this remains
an important component for success as customers increasingly access the
options available of where, when and how to shop.
Launching QUIZ's first sustainable collection
We have recently introduced our first sustainable product range.
The QUIZ Eco collection is our first step to create an environmentally
friendly collection. The capsule collection is designed and manufactured in
the UK via the Global Recycled Standard certified route. Remaining mindful and
lowering our environmental impact, QUIZ ECO uses recycled polyester fibre made
into fabric blends to help further our practices in environmentally
responsible production. The print range used on the recycled soft fabrics are
water-based, using less chemicals and therefore producing less waste along the
way.
Targeted marketing investment
Continuing to underpin the growth and expansion of the QUIZ brand is the
Group's approach to targeted and returns-driven marketing investment.
Investment continued to be carefully managed during the year given the Group's
focus on cost management. Whilst marketing spend increased 64% to £2.3
million (2021: £1.4 million) revenues rose 97% and a result marketing
investment as a proportion of Group sales for FY 2021 decreasing to 3.0%
(2021: 3.6%).
With stores and concessions being open across most of the year, we increased
marketing activity and influencer and celebrity campaigns for the autumn /
winter 2021 period to promote our party wear ranges. The impact of this
activity was hindered by the reintroduction of restrictions on social events
prior to Christmas.
Since January and the removal of social restrictions, we have increased our
budgets and have undertaken a number of successful influencer marketing
initiatives and will continue this activity through the remainder of the year.
We are excited to see a positive response to our recent social media activity
and the resulting demand for our ranges of holiday wear. This activity
continues to be supplemented with digital marketing and offline activity to
ensure that QUIZ remains at the forefront of our customers' minds.
Strategic KPIs
FY 2022 FY 2021 Change FY 2020
Active customers 563,000 323,000 +74.3% 638,000
Online sales as a % of turnover 34.1% 54.5% -21.4% 31.8%
International outlets serviced 82 76 +6 80
UK retail space - square footage 136,000 174,000 -22% 218,000
Our team
Our business has staged a strong recovery from the unprecedented challenges
posed by the COVID-19 pandemic. The resilience of the business is a
reflection of the commitment and professionalism shown by our colleagues
across our stores and concessions, distribution centre and head office through
these difficult times. I would like to thank all my colleagues for their hard
work and contribution in the last year and we can look forward to achieving
further profitable growth going forward.
I would also like to thank our suppliers, business partners and customers for
their continued support, allowing the business and brand to approach the
future with confidence.
Tarak Ramzan
Chief Executive Officer
FINANCIAL AND BUSINESS REVIEW
Basis of preparation
To provide comparability across reporting years, the results within this
Financial Review are presented on an "underlying" basis and excludes certain
non-recurring transactions. In the previous year, an adjustment is made to
exclude the non-recurring £15.6 million of gains which arose from the
disposal of a subsidiary undertaking which entered administration and the
subsequent repurchase of its business and certain assets. A reconciliation
between underlying and reported results is provided at the end of this
Financial Review.
Group overview
The business benefited from the removal of lockdowns and the relaxation of
social restrictions related to COVID-19. There was an uplift in revenues
across each area of our business during the year, with the focus on responding
to the increased demand, re-establishing revenues and profitability and to
continue to strengthen the Group's financial position.
Group revenue increased 97% to £78.4 million (2021: £39.7 million).
Further to this increase in revenues, the reported and underlying operating
profit generated was £0.9 million (2021: reported operating profit of £6.2
million and underlying operating loss of £9.4 million).
Financial KPIs
FY 2022 FY 2021 Change
Revenue £78.4m £39.7m + 97.4%
Gross margin 60.3% 53.4% + 6.9%
Adjusted EBITDA % (1) 6.6% (12.3%) + 18.9%
Cash from operating activities (1) £5.3m (£2.5m) + £7.8m
1. In the previous year the impact of the non-recurring gains which
arose from the disposal of a subsidiary undertaking which entered
administration and the subsequent repurchase of its business and certain
assets is excluded.
Underlying EBITDA increased to a profit of £5.1 million (2021: loss of £4.9
million) which represented a EBITDA margin of 6.6% (2021: negative margin of
12.3%). Including the non-recurring transactions, EBITDA was £5.1million
(2021: £10.7 million).
Underlying Group profit before tax was £0.8 million (2021: loss of £9.6
million). Profit before tax reflecting non-recurring transactions was £0.8
million (2021: £6.0 million).
Further to this, the underlying earnings per share, which is calculated using
the underlying profit/(loss) before tax less tax at the effective statutory
rate, was 1.65 pence (2021: loss of 7.54 pence). After reflecting the
non-recurring transactions, the earnings per share was 1.65 pence (2021:
earnings of 5.00 pence).
Cash net of bank borrowings at the year end amounted to £4.4 million (2021:
£1.5 million).
Revenue
Group revenue increased by 97% to £78.4 million from £39.7 million in 2021,
with our three revenue channels shown below:
FY 2022 FY 2021 Year-on-year growth Share of revenue 2022 Share of revenue 2021
Online £26.7m £21.6m + 24% 34.1% 54.5%
International £14.9m £7.6m + 96% 19.0% 19.1%
UK stores and concessions £36.8m £10.5m + 250% 46.9% 26.4%
Total £78.4m £39.7m + 97%
Online
The increase in Online revenues reflects the increased demand for product
following the removal of social restrictions and the reinstatement of social
occasions through the period.
Growth in revenues generated through QUIZ website sales amounted to 66%.
Sales through third-party websites declined 21% in the year reflecting the
termination of sales through certain third-parties and a reduction in the
stock made available to other third-parties to help maximise the financial
returns generated.
The impact of the stronger demand during the year was reflected in the number
of active customers at 31 March 2022, which increased 74% in the year to
563,000 (2021: 323,000).
International
International sales include revenue from QUIZ standalone stores and
concessions in the Republic of Ireland and franchises in 19 countries.
As with the UK sales, International revenues benefited from increased demand
as pandemic related restrictions were eased leading to a 96% rise to £14.9
million (2021: £7.6 million).
Revenues in Ireland increased 262% in the year to £4.3 million (2021: £1.2
million) further to the reduction in the lockdown periods which restricted
trading. At 31 March 2022 the business operated 5 stores and 18 concessions
in Ireland (March 2021 - 5 stores and 15 concessions), with a new store
opening subsequent to the year end.
Franchise sales also benefited from the removal of lockdown and social
restrictions and the subsequent return to previous demand levels. Further to
this, revenues increased 65% to £10.6 million (2021: £6.4 million).
UK stores and concessions
Sales in the Group's UK standalone stores and concessions increased 250% to
£36.8 million (2021: £10.5 million). The increase was largely
attributable to our store estate and concessions trading for most of the year.
In the previous year, store revenues were impacted by the closure of stores
for a period whilst new lease arrangements were negotiated following the
restructuring of the store estate. In addition, stores and concession
revenues were also impacted by the various lockdowns whereby stores were not
allowed to trade and the reduced demand further to restrictions on social
occasions.
As at 31 March 2022, the Group operated from 62 stores and 69 concessions
(2021: 61 stores and 119 concessions). In the current year, the numbers of
concessions operated was impacted by the closure of the Debenhams stores. As
a result of these changes, total selling space across the stores and
concessions at 31 March 2022 decreased by 22% to 136,000 sq. ft. (2021:
174,000 sq. ft.).
Gross margin
Gross margins in the year progressively improved and returned to the levels
generated prior to the pandemic. In the current year, customers have
expressed their preference for new products and whilst promotional activity is
still undertaken it is not as aggressive as in the previous year. In
addition, a higher proportion of sales were generated through stores and
concessions which are traditionally higher margin channels.
Further to the factors, the gross margin in the year increased to 60.3% (2021:
53.4%).
Progress was made in disposing of excess stock from previous lockdown periods
and this contributed to a £1.1 million reduction in the provision against
slow-moving stock in the year to £2.6 million (2021: £3.7 million).
During the year we continued to encounter increased product cost and shipment
cost pressures. Whilst these additional costs were initially absorbed by the
business, we have marginally increased prices to maintain our gross margin.
In addition, the widely reported industry-wide global freight disruption and
increased costs have affected, and continue to affect, the Group. To date we
have minimised the impact of increased costs on customers arising from
additional freight costs by adjusting delivery schedules to ensure that
product is available when required.
Underlying operating costs
Further to the Group's increased revenues and operational activities there
have been increases in operating costs, namely administrative and distribution
costs, in the year. Operating costs increased by 22% from £38.8 million to
£47.4 million.
The increases in costs reflect the impact of higher revenues on variable
costs, including turnover rents, merchant fees, certain distribution costs,
utilities, travel and expenses.
In addition to these increases, the receipts from the financial support such
as furlough payments for employees provided by the UK Government, which is
included in other operating income, has reduced 88% to £1.0 million (2021:
£8.2 million). If this income was offset against operating costs, the
increase in underlying operating costs amounted to 52%.
Administrative costs increased by £6.1 million or 20% to £36.6 million
(2021: £30.5 million). The most significant increases included:
· A £3.6 million or 114% rise in property costs to £6.7 million
(including depreciation charges in relation to leases for standalone
stores). Costs were lower in the previous period as there were no rental
charges for standalone stores between leases being terminated on 10 June 2020
and new leases being agreed on a store by store basis. In addition, the
increase relates to higher charges for stores where rentals are tied to
revenues generated and the partial reintroduction of business rates for retail
businesses
· A £0.9 million or 64% increase in marketing costs to £2.3 million.
Spend was focused on digital marketing where a clear Return on Investment can
be demonstrated and spend to drive broader awareness of the QUIZ brand and to
ensure the business benefited from the increased consumer demand for occasion
and dressy wear; and
· A £0.5 million or 104% uplift in merchant fees which is broadly in
line with the increase in revenues in the year.
The above increases were partially offset by a £0.7 million or 22% decrease
in depreciation and amortisation costs (excluding depreciation charges in
relation to leases for standalone stores which are reflected in property
costs) to £2.3 million (2021: £3.0 million) which reflect the higher level
of asset impairments and therefore reduced depreciation charges recorded in
previous years.
Distribution costs increased 30% to £10.8 million (2021: £8.3 million) and
is reflective of the higher revenues generated in the period. Included in
distribution costs are commission payments to third parties which sell product
on behalf of QUIZ. These increased as a result of the higher revenues
generated through concessions and International franchise partners.
Also reflected in the increase in distribution costs are higher carriage costs
to stores, concessions and franchises as well as to online customers further
to the increased revenues generated.
Other operating income
Given the lockdown that applied at the beginning of the year and the time that
elapsed before demand returned to normalised levels, the business continued to
benefit from the financial support provided by the UK Government in response
to the COVID-19 pandemic.
The Group placed employees on furlough through the Government's Coronavirus
Job Retention Scheme and received £0.6 million (2021: £7.0 million) of
payments in relation to its utilisation of these arrangements.
In addition, there were £0.4 million (2021: £1.2 million) of payments
received in relation to coronavirus grants made available to retail businesses
which were closed due to national or local restrictions.
In addition to the above the business benefited from the partial waiver of
business rates for retail businesses in England and the suspension of business
rates for retail business in Scotland and Northern Ireland. It is
disappointing to note that business rates are being reinstated to their
previous levels despite the ongoing challenges faced by the retail sector.
Non-recurring items
As noted above, in the previous year £15.6 million of gains arose from the
disposal of a subsidiary undertaking which entered administration and the
subsequent repurchase of its business and certain assets.
Finance costs
The finance cost of £0.1 million (2021: £0.2 million) primarily relates to
interest costs arising on the lease payments for stores in accordance with
IFRS 16.
Taxation
In the current year the Group recorded an income tax credit of £1.3 million
(2021: £0.2 million) which represents a reported tax rate of a credit of
160.0% (2020: tax credit rate of 3.1%).
Included in the income tax credit is £0.9 million in relation to the
anticipated future cash benefit expected to be derived from utilising
previously generated tax losses and available capital allowances in excess of
the recorded net book value. This is reflected in the deferred tax asset of
£1.0 million (2021: £0.1 million). The deferred tax asset had not
previously been recognised given the uncertainty with regards to future
earnings and the timing of the assets being realised. Given the improved
financial performance in the current year it is now considered appropriate to
recognise these assets.
In addition, the tax credit reflects an anticipated £0.4 million cash payment
from carrying back of tax losses to reclaim tax paid in previous periods.
The remaining unrecognised deferred tax asset at 31 March 2022 amounts to
£0.4 million (2021: £1.9 million).
Earnings per share
Basic earnings per share for 2022 was 1.65 pence per share (2021: 5.00 pence).
The underlying basic loss per share for 2022, which is calculated using the
underlying loss after tax, was 1.65 pence (2021: loss of 7.54 pence).
Dividends
No dividend was paid during the year (2021: £Nil). Given the relatively low
level of operating profits generated in the current year the Board does not
recommend the payment of a final dividend.
Cash flow and cash position
Cash, net of bank borrowings, at the year-end amounted to £4.4 million (2021:
£1.5 million).
Net cash flow from operating activities resulted in an inflow of £5.3 million
(2021: outflow of £2.5 million). Reflected in this inflow of cash is a £0.2
million working capital inflow (2021: £2.3 million). The reduction in working
capital in the year, which is net of the impact of the administration of the
subsidiary undertaking, arose further to:
· higher revenues being derived from third parties leading to a £2.5
million uplift in receivables;
· increased stock purchasing and other operating expenses which
resulted in a £3.3 million increase in payables; and
· the unwind of stock further to increased sales and discounting
undertaken at the start of the financial year resulting in a £0.6 million
increase in inventories.
Given the continued focus on preserving cash and in strengthening the balance
sheet in the last year, investment in the business was restricted to £0.5
million with £0.2 million spent on intangible assets and £0.3 million on
property, plant and equipment.
Loans at 31 March 2022 of £1.4 million was consistent with the previous year.
The payment of lease liabilities amounted to £1.9 million (2021: £1.3
million) reflecting lease charges and the increased period of trading for the
relevant stores in the past year.
Foreign currency hedging
The Group currently undertakes foreign exchange transactions.
The primary outflow of foreign exchange relates to the purchase of stock,
primarily in Chinese Renminbi. The primary inflow of foreign exchange relates
to Euro denominated revenues generated in Ireland.
The Group manages the risk associated with foreign currency fluctuations
through the use of forward contracts for the sale or the purchase of the
respective currency for a period between six and twelve months in advance. We
have currently hedged our expected currency inflows and outflows in respect of
Chinese Renminbi for the remainder of the financial year to 31 March 2022.
Reconciliation of underlying and reported IFRS results
In establishing the underlying operating profit in the prior year an
adjustment is made to remove the impact of the non-recurring £15.6 million of
gains which arose from the disposal of a subsidiary undertaking which entered
administration and the subsequent repurchase of its business and certain
assets, as described in Notes 6 and 7.
A reconciliation between underlying and reported results is provided below:
2022 2021
£m Underlying and Reported Underlying Non-recurring costs Reported
Revenue 78.4 39.7 - 39.7
Gross profit 47.3 21.2 - 21.2
Government grants 1.0 8.2 - 8.2
Other operating costs (net) (47.4) (38.8) - (38.8)
Operating loss 0.9 (9.4) - (9.4)
Gain on disposal of subsidiary - - 10.4 10.4
Gain on bargain purchase arising on acquisition - - 5.2 5.2
(Loss)/(profit) before finance costs 0.9 (9.4) 15.6 6.2
Finance costs (net) (0.1) (0.2) - (0.2)
(Loss)/profit before tax 0.8 (9.6) 15.6 6.0
Operating loss 0.9 (9.4) - (9.4)
Gain on disposal of subsidiary - - 10.4 10.4
Gain on bargain purchase arising on acquisition - - 5.2 5.2
Depreciation and amortisation 4.2 4.5 - 4.5
EBITDA 5.1 (4.9) 15.6 10.7
QUIZ plc
Consolidated statement of comprehensive income
Year ended 31 March 2022
Notes 2022 2021
£000 £000
Continuing operations
Revenue 2 78,371 39,703
Cost of sales (31,074) (18,516)
Gross profit 47,297 21,187
Administrative costs (36,578) (30,476)
Distribution costs (10,820) (8,304)
Government grants 3 1,010 8,163
Other operating income 1 70
Total operating costs (46,387) (30,547)
Operating profit/(loss) 5 910 (9,360)
Gain arising on disposal of subsidiary undertaking 6 - 10,364
Gain on bargain purchase arising on acquisition 7 - 5,216
Profit before financing and taxation 910 6,220
Finance income 8 - 45
Finance costs 8 (122) (239)
Profit before income tax 788 6,026
Income tax credit 9 1,261 186
Profit for the year ( ) 2,049 6,212
Other comprehensive income: ( )
Foreign currency translation differences - foreign operations (20) (20)
Profit and total comprehensive income for the year attributable to owners of 2,029 6,192
the parent
( )
Profit per share:
Basic and diluted earnings per share 10 1.65p 5.00p
All of the above income is attributable to the shareholders of the Company.
QUIZ plc
Consolidated statement of financial position
As at 31 March 2022
Notes 31 March 31 March
2022 2021
£000 £000
Assets
Non-current assets
Property, plant and equipment 12 3,985 5,218
Right to use asset 13 1,108 2,981
Intangible assets 14 2,782 3,413
Deferred tax assets 20 964 74
Total non-current assets 8,839 11,686
Current assets
Inventories 15 11,710 11,087
Trade and other receivables 16 6,425 3,590
Cash and cash equivalents 5,840 4,183
Total current assets 23,975 18,860
Total assets 32,814 30,546
Liabilities
Current liabilities
Trade and other payables 17 (11,466) (8,202)
Loans and borrowings 18 (1,420) (2,662)
Lease liabilities 13 (954) (1,866)
Derivative financial liabilities 19 (65) (21)
Total current liabilities (13,905) (12,751)
Non-current liabilities
Lease liabilities 13 (185) (1,099)
Deferred tax liabilities 20 (21) (74)
Total non-current liabilities (206) (1,173)
Total liabilities (14,111) (13,924)
Net assets 18,703 16,622
Equity
Called-up share capital 22 373 373
Share premium 22 10,315 10,315
Merger reserve 22 1,130 1,130
Retained earnings 22 6,885 4,804
Total equity 18,703 16,622
QUIZ plc
Consolidated statement of changes in equity
Year ended 31 March 2022
Share Share premium Merger reserve Retained earnings Total
capital
£'000 £'000 £'000 £'000 £'000
At 1 April 2020 373 10,315 915 (1,477) 10,126
Profit and total comprehensive income for the year - - - 6,192 6,192
Share-based payments charge - - - 89 89
Movement arising from administration of subsidiary - - 215 - 215
At 31 March 2021 373 10,315 1,130 4,804 16,622
Profit and total comprehensive income for the year - - - 2,029 2,029
Share-based payments charge - - - 52 52
At 31 March 2022 373 10,315 1,130 6,885 18,703
QUIZ plc
Consolidated cash flow statement
Year ended 31 March 2022
Notes Year ended Year ended
31 March 31 March
2022 2021
£000 £000
Cash flows from operating activities
Cash generated by operations
Profit before tax for the year 2,049 6,212
Adjusted for:
Depreciation of property, plant and equipment 1,522 2,153
Depreciation of right-of-use assets 1,873 1,447
Amortisation of intangible assets 832 868
Gain from disposal of subsidiary undertaking - (10,364)
Gain on bargain purchase arising from acquisition - (5,216)
Share-based payment charges 52 89
Exchange movement (20) (3)
Finance cost expense 122 194
Income tax credit (1,261) (186)
Increase in inventories (623) (1,486)
(Decrease)/increase in receivables (2,454) 2,517
Increase in payables 3,308 1,266
Net cash from operating activities 5,400 (2,509)
Interest paid (40) (55)
Income taxes (paid)/refunded (62) 97
Net cash inflow/(outflow) by operating activities 5,298 (2,467)
Cash flows from investing activities
Payments to acquire intangible assets (200) (220)
Payments to acquire property, plant and equipment (290) (101)
Payment to acquire trade and assets - (1,302)
Interest received - 45
Net cash outflow from investing activities (490) (1,578)
Cash flows from financing activities
Loans received 14 1,406
Payment of lease liabilities (1,908) (1,316)
Net cash (outflow)/inflow from financing activities 24 (1,894) 90
Net increase/(decrease) in cash and cash equivalents 2,914 (3,955)
Cash and cash equivalents at beginning of year 2,927 6,897
Effect of foreign exchange rates (1) (15)
Cash and cash equivalents at end of year 25 5,840 2,927
The Group considers overdrafts to be an integral part of its cash management
activities and these are included in cash and cash equivalence for the
purposes of the cash flow statement.
Selected notes to the Group financial statements
Year ended 31 March 2022
1 Significant accounting policies
General information
Quiz Plc (the 'parent company') is a public limited company, incorporated and
domiciled in Jersey. It is listed on AIM. The registered office of the Company
is 22 Grenville Street, St Helier, Jersey, Channel Islands E4 8PX. The
principal activity of the group is that of retailing clothes.
Basis of preparation
The Board of Directors approved this preliminary announcement on 4 July 2022.
Whilst the financial information included in the preliminary announcement
has been prepared in accordance with the recognition and measurement criteria
of UK-adopted International Accounting Standards and the Companies (Jersey)
Law 1991, this announcement does not itself contain sufficient information to
comply with all the disclosure requirements of UK-adopted International
Accounting Standards and does not constitute statutory accounts within the
meaning of Companies (Jersey) Law 1991 but is derived from the accounts of the
Company for the years ended 31 March 2022 and 2021. The financial
information is prepared on the same basis as set out in the statutory accounts
for the year ended 31 March 2022.
The financial statements are presented in Pounds Sterling because that is the
currency of the primary economic environment in which the Group operates.
Monetary amounts in these financial statements are rounded to the nearest
thousand. Foreign operations are included in accordance with the policies set
out below.
The annual financial statements have been prepared on the historical cost
basis, except for certain financial assets and liabilities which are carried
at fair value.
The preparation of financial statements in conformity with UK-adopted
International Accounting Standards requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported year. Although these estimates are based on management's best
knowledge of current events and actions, actual results ultimately may differ
from those estimates.
The statutory accounts for the year ended 31 March 2021 have been filed with
the Jersey Companies Registry and the statutory accounts for the year ended 31
March 2022 will be filed in due course. The auditors have reported on the
accounts for the years ended 31 March 2022 and 2021; their reports were
unqualified, did not include any matters to which the auditor drew attention
by way of emphasis and under 113B (3) or 113B (4) of the Companies (Jersey)
Law 1991.
Accounting standards in issue but not yet effective
At the date of issue of these financial statements, there are several
standards and interpretations issued by the IASB that are effective for
financial statements after this reporting period. Of these new standards,
amendments and interpretations, there are none which are expected to have a
material impact on the Group's consolidated financial statements.
Going concern
The Directors have prepared a detailed forecast with a supporting business
plan for the foreseeable future to determine whether the Group will have
adequate resources to enable it to operate as a going concern for the
foreseeable future.
When preparing this forecast, the Directors considered the current trading
levels, which have been consistent with management's expectation, and the
outlook for the Group against their detailed base case scenario and further
downside scenarios.
At 31 March 2022, the Group had cash net of bank borrowings of £4.4 million,
being a £5.8 million cash balance offset by a bank loan of totalling £1.4
million, and £2.1 million of unutilised banking facilities (2021: £1.5
million of net cash and £0.9 million of unutilised banking facilities).
Borrowing facilities
The Group has £3.5 million of banking facilities, which were recently
extended until 30 June 2023. These facilities comprise a £2.0 million
overdraft and £1.5 million working capital facility. There are no financial
covenants associated with these facilities, which are reviewed annually.
Whilst the facilities are repayable on demand the Directors believe that these
facilities will be available to the Group through to 30 June 2023 and will be
renewed in due course.
The Group had a cash balance of £8.3 million at 4 July 2022 and £3.5 million
of unutilised banking facilities.
Forecast scenarios
The Directors have reviewed management's business plan forecast for the period
to 31 March 2023. The forecasts have been produced on the following basis:
• Base case scenario assumes stores and concessions are open
throughout the period under review. A sales recovery is assumed to levels
consistent with those generated prior to COVID-19 on a like-for-like basis
throughout the period under review for stores and concessions. Web sales are
assumed to be at a level similar to those generated prior to COVID-19. The
assumed sales levels are consistent with those currently achieved.
• Downside scenario assumes reduced sales across the next year to
reflect reduced demand including assumed reductions in store and concessions
sales of 10% on a like-for-like basis. Online sales are assumed to be 10%
below their base case scenario.
Within each forecast, management have reflected outstanding financial
commitments and the impact of previously realised cost savings. There are no
further anticipated savings incorporated in response to any downside scenario
for reduced revenues. Further actions could be undertaken to mitigate against
any shortfalls arising from these scenarios. These include reducing operating
costs and capital expenditure, ceasing or suspending loss-making activities
and optimising working capital.
The Base Case and Downside scenario forecasts indicate the Group will remain
within its available borrowing facilities through the forthcoming twelve month
period. Under the downside scenario the Group has more than £4.5 million
available liquidity headroom through-out the period under consideration.
Going concern basis
Based on the assessment outlined above, the Directors have a reasonable
expectation that the Group has access to adequate resources to enable it to
continue to operate as a going concern for the foreseeable future, being a
period of at least twelve months from the date when these financial statements
are authorised to be issued. For these reasons, the Directors consider it
appropriate for the Group to continue to adopt the going concern basis of
accounting in preparing the Annual Report and financial statements.
Accordingly, the financial statements of the Group have been prepared on a
going concern basis in accordance with UK-adopted International Accounting
Standards and the Companies (Jersey) Law 1991.
2 Revenue
An analysis of revenue by geographical destination is as follows:
2022 2021
£000 £000
Online 26,742 21,621
International 14,862 7,592
UK stores and concessions 36,767 10,490
78,371 39,703
2022 2021
£000 £000
United Kingdom 63,176 31,565
Rest of the world 15,195 8,138
78,371 39,703
As at 31 March 2022 non-current assets in the United Kingdom were £8,616,000
(FY 2021: £11,528,000) with £223,000 (FY 2021: £158,000) located in the
rest of the world.
3 Government grants
2022 2021
£000 £000
Government support - furlough payments 640 6,943
Government support - grant income 370 1,220
1,010 8,163
4 Employee benefit expenses
Employment costs and average monthly number of employees (including Directors)
during the year were as follows:
2022 2021
£000 £000
Wages and salaries 14,420 15,382
Social security costs 1,023 969
Other pension costs 302 299
Agency costs 2,065 939
Share-based payment charges 52 89
17,862 17,678
No. No.
Retail 689 998
Distribution 37 46
Administration 196 206
922 1,250
Included above is £679,000 in respect of Directors' remuneration (FY 2021:
£624,000).
5 Operating profit
Operating profit is stated after charging/(crediting):
2022 2021
£000 £000
Cost of inventories recognised as an expense 31,074 18,516
Distribution costs 10,820 8,304
Employment costs 17,862 17,678
Depreciation 3,395 3,600
Amortisation 832 868
Short-term and variable lease costs 2,105 430
Government grants (1,010) (8,163)
Other operating income (1) (70)
Other expenses 12,384 7,900
77,461 49,063
Included in the above are the costs associated with the following services
provided by the Company's auditors:
2022 2021
£000 £000
Audit services
Audit of the Company and the consolidated financial statements 18 12
Audit of the Company's subsidiaries 117 80
Total audit fees 135 92
All other services 4 1
Total fees payable to the Company's auditors 139 93
6 Gain arising from disposal of subsidiary undertaking
The Group's 82 standalone stores in the United Kingdom and the Republic of
Ireland were operated by Kast Retail Limited ("Kast"). The Group's three
standalone stores in Spain were operated by Kast International Spain SL, a
wholly owned subsidiary of Kast. On 10 June 2020, the Company announced
proposals to restructure its standalone retail store portfolio which resulted
in Kast being placed into administration and triggered the disposal of Kast by
QUIZ plc which resulted in the gain below:
£000
Disposal proceeds -
Net liabilities of subsidiary undertaking disposed of (10,364)
Gain arising on disposal of subsidiary undertaking (10,364)
The net liabilities of the disposed subsidiary undertaking primarily related
to lease liabilities in relation to leases associated with standalone stores
7 Gain on bargain purchase arising on acquisition
Further to the appointment of joint administrators to Kast, Zandra Retail
Limited ("Zandra"), a wholly owned subsidiary of the Company, acquired the
business and certain assets of Kast, including inventories, fixtures and
fittings, contracts and vehicles on 10 June 2020 for a cash consideration of
£1,302,000.
Whilst none of the leases associated with the standalone stores operated by
Kast transferred to Zandra, new lease arrangements were secured for the
majority of the previous standalone stores.
The acquired business contributed revenues of £5,975,000 and profit after tax
of £1,117,000 to the Group for the period from 10 June 2020 to 31 March 2021.
The activities of the acquired business in the period from 1 April to 10 June
2020 are reflected in the consolidated financial statements contributing no
revenues and a loss after tax of £2,983,000. The results of the combined
entity for the full financial year are therefore revenues of £5,975,000 and
loss after tax of £1,866,000 and these are fully reflected in the
consolidated financial statements.
The gain on bargain purchase amounting to £5,216,000 on the acquisition,
which arose as the deemed fair value of the asset acquired was greater than
the consideration paid, has been recognised in the Statement for Comprehensive
Income for the year.
Details of the acquisition are as follows:
Fair Value
£000
Receivables 266
Property, plant and equipment 5,429
Intangibles 1,199
Inventories 2,420
Trade payables (2,036)
Employee benefits (365)
Other liabilities (395)
Net assets acquired 6,518
Gain on bargain purchase (5,216)
Fair value of the total consideration transferred 1,302
Represented by:
Cash paid to the vendor 1,302
The assets and liabilities acquired have been recognised at their estimated
fair values at the acquisition date on the basis that the business is being
carried on as a going concern and is expected to generate a positive financial
contribution going forward. The costs of the acquisition recognised as an
expense as part of administration costs amounted to £194,000.
8 Finance income and expense
2022 2021
£000 £000
Interest on cash deposits - 45
Finance income - 45
2022 2021
£000 £000
Interest on lease liabilities 82 199
Interest on loans and overdrafts 40 38
Other interest - 2
Finance expense 122 239
9 Income tax
2022 2021
£000 £000
UK corporation tax - current year - -
UK corporation tax - prior year (244) (170)
Foreign tax - (9)
Deferred tax - current year (1,088) (200)
Deferred tax - prior year 71 193
Tax on profit (1,261) (186)
Reconciliation of effective tax rate
Profit on ordinary activities before taxation 788 6,027
Profit on ordinary activities multiplied by standard rate of UK corporation 150 1,145
tax of 19%
Expenses not deductible for tax purposes 42 (2,862)
Non recognition of potential of deferred tax asset - 1,494
Impact on deferred tax of increase in UK corporation tax rate 13 -
Recognition of previously unrecognised deferred tax asset (964) -
Utilisation in current year of previously unrecognised deferred tax asset (327) -
Adjustments to previous years (173) 23
Foreign tax adjustments (2) 14
(1,261) (186)
10 Earnings per share
Number of shares: 2022 2021
No. No.
Weighted number of ordinary shares outstanding - basic and diluted
124,230,905 124,230,905
Earnings: £000 £000
Profit 2,049 6,212
Profit/(loss) adjusted 2,049 (9,368)
Earnings per share: Pence Pence
Basic earnings per share 1.65 5.00
Adjusted earnings per share 1.65 (7.54)
The diluted basic and adjusted earnings per share is the same as the basic and
adjusted earnings per share each year as the average share price during the
year was less than the prices applicable to the outstanding options and
therefore the outstanding options were not dilutive.
The adjusted profit after tax in the previous year is shown before the impact
of the £15,580,000 of gains which arose from the disposal of a subsidiary
undertaking which entered administration and the subsequent repurchase of its
business and certain assets
The Directors believe that the adjusted profit/(loss) after tax and the
adjusted earnings/(loss) per share measures provide additional useful
information for shareholders on the underlying performance of the business.
These measures are consistent with how underlying business performance is
measured internally. The adjusted profit/(loss) after tax measure is not a
recognised profit measure under IFRS and may not be directly comparable with
adjusted profit measures used by other companies.
11 Dividends
No dividends in respect of 2022 are proposed (FY 2021: £Nil).
12 Property, plant and equipment
Leasehold Motor Computer Fixtures, Total
improvements vehicles equipment fittings and £000
£000 £000 £000 equipment
£000
Cost
At 1 April 2021 484 104 1,565 15,051 17,204
Additions 117 29 38 105 289
Disposals - - (20) (357) (377)
At 31 March 2022 601 133 1,583 14,799 17,116
Depreciation
At 1 April 2021 285 67 789 10,845 11,986
Charge 131 24 198 1,169 1,522
Disposals - - (20) (357) (377)
At 31 March 2022 416 91 967 11,657 13,131
Net book value
At 31 March 2022 185 42 616 3,142 3,985
At 31 March 2021 199 37 776 4,206 5,218
13 Right to use assets and lease liabilities
Property
£000
Cost
At 1 April 2021 4,153
Disposals (281)
At 31 March 2022 3,872
Amortisation
At 1 April 2021 1,172
Charge 1,873
Disposals (281)
At 31 March 2022 2,764
Net book value
At 31 March 2022 1,108
At 31 March 2021 2,981
The Group presents lease liabilities separately within the statement of
financial position. The movement in the year comprised:
2022 2021
£000 £000
At 1 April 2021 2,965 16,338
Additions - 4,153
Interest expense related to lease liabilities 82 199
Repayment of lease liabilities (including interest) (1,908) (1,316)
Leases terminated further to administration of subsidiary undertaking - (16,338)
Interest liability terminated further to administration of subsidiary - (71)
undertaking
At 31 March 2022 1,139 2,965
Current lease liabilities 954 1,866
Non-current lease liabilities 185 1,099
Short-term operating leases
At the balance sheet date, the Group had outstanding commitments for future
minimum lease payments under non-cancellable leases which fall due as follows:
2022 2021
£000 £000
Within one year 109 48
14 Intangibles
Goodwill Computer Trademarks Total
software
£000 £000 £000 £000
Cost
At 1 April 2021 6,175 3,626 165 9,966
Additions - 201 - 201
At 31 March 2022 6,175 3,827 165 10,167
Amortisation
At 1 April 2021 5,248 1,245 60 6,553
Charge - 815 17 832
At 31 March 2022 5,248 2,060 77 7,385
Net book value
At 31 March 2022 927 1,767 88 2,782
At 31 March 2021 927 2,381 105 3,413
The goodwill primarily arose when Shoar (Holdings) Limited acquired the entire
share capital of Tarak Retail Limited in 2012 and reflects the difference
between the fair value of the consideration transferred and the fair value of
assets and liabilities purchased. Goodwill is assessed for impairment by
comparing the carrying value to value-in-use calculations. Value in use has
been estimated using cash flow projections based on detailed budgets and
forecasts over the period of three years, with a decline rate of 10% (FY 2021:
5%) and a pre-tax discount rate of 10% (FY 2021: 10%) applied, being the
Directors' estimate of the Group's cost of capital, with no terminal value.
The budgets and forecasts are based on historical data and the past experience
of the Directors as well as the future plans of the business. No reasonable
change in any of the assumptions would result in an impairment charge and
therefore no sensitivity analysis is disclosed. The Directors do not consider
goodwill to be impaired in the current year.
15 Inventories
2022 2021
£000 £000
Finished goods and goods for resale 11,710 11,087
The cost of inventories recognised as an expense during the year in respect of
continuing operations amounted to £31,074,000 (2021: £18,516,000). The cost
of inventories included a net credit in respect of write-downs of inventory to
net realisable value of £1,138,000 (2021: credit of £617,000). Inventories
are stated after provisions for impairment of £2,550,000 (2021: £3,688,000).
16 Trade and other receivables
2022 2021
£000 £000
Trade receivables - gross 3,948 2,265
Allowance for doubtful debts (327) (301)
Trade receivables - net 3,621 1,964
Other receivables 802 769
Current tax receivable 380 -
Prepayments and accrued income 2,002 857
6,425 3,590
The Directors consider that the fair value of trade and other receivables is
not materially different from the carrying value.
17 Trade and other payables
2022 2021
£000 £000
Trade payables 5,155 4,025
Other taxes and social security costs 979 1,562
Accruals 3,733 2,149
Other payables 1,591 458
Amounts due to related parties 8 8
11,466 8,202
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The Directors consider that the fair value of
trade and other payables is not materially different from the carrying value.
Included within other payables at the year-end date was a balance of £52,000
(FY 2021: £52,000) owed to the Group's pension scheme.
18 Loans and borrowings
2022 2021
£000 £000
Bank loans 1,420 1,406
Bank overdrafts - 1,256
1,420 2,662
The Group's overdraft and other credit facilities amount to £3.5 million
(2021: £3.5 million) and are secured by an unlimited multilateral and
cross-company guarantee given by Zandra Retail Limited and Tarak International
Limited and also by a limited guarantee given by, and by a floating charge
over the assets of, Zandra Retail Limited and Tarak International Limited. The
bank also holds a right of set-offs between Zandra Retail Limited and Tarak
International Limited. All entities included in the guarantee are wholly owned
subsidiaries in the Group. In addition, the Company has provided a parent
company guarantee with respect to the facilities.
In addition, credit facilities are secured by a bond and floating charge from
Tarak Retail Limited over the whole of its property and undertakings.
The bank overdraft and other credit facilities are annual facilities and are
repayable on demand. These facilities were renewed after the year end and are
next subject to review in June 2023.
Borrowings are denominated and repaid in Pounds Sterling, have contractual
interest rates that are either fixed rates or variable rates linked to LIBOR
that are not leveraged, and do not contain conditional returns or repayment
provisions other than to protect the lender against credit deterioration or
changes in relevant legislation or taxation.
19 Derivative financial instruments
The following is an analysis of the derivative financial instruments
liability:
2022 2021
£000 £000
Foreign currency options 65 21
Forward foreign exchange contracts are used to hedge exposure to fluctuations
in foreign exchange rates that arise in the normal course of the Group's
business.
As at 31 March 2022, the Group had commitments to buy the equivalent of
£5,200,000 of Chinese Renminbi (FY 2021: £800,000).
20 Deferred tax
The following is an analysis of the deferred tax assets:
Tax Losses Fixed asset timing differences Total
£000 £000 £000
Balance brought forward 74 - 74
Transfer to trade and other receivables (74) - (74)
Credit to income statement 634 330 964
Total deferred tax asset at end of year 634 330 964
At 31 March 2022 there was a total of unprovided deferred tax assets of
£413,000 (2021 - £990,000) in relation to fixed asset timing differences.
The unprovided deferred tax assets reflects trading losses of £Nil (2021 -
£3,868,000).
The following is an analysis of the deferred tax liabilities:
Fixed asset timing differences
£000
Balance brought forward 74
Credit to income statement (53)
Total deferred tax asset at end of year 21
21 Financial instruments
The following table shows the carrying amounts and fair values of financial
assets and liabilities. All financial liabilities are measured at amortised
cost. The derivative liability, which is measured at fair value, is level 2 in
the fair value hierarchy as disclosed in note 19.
2022 2021
£000 £000
Category of financial instruments
Carrying value of financial assets:
Cash and cash equivalents 5,840 4,183
Trade and other receivables 4,423 2,733
Total financial assets 10,263 6,916
Carrying value of financial liabilities:
Trade and other payables (6,754) (4,491)
Bank and other borrowings (1,420) (2,662)
Derivative financial instruments (65) (21)
Lease liabilities (1,139) (2,965)
Total financial liabilities (9,378) (10,139)
The fair value and carrying value of financial instruments have been assessed
and there is deemed to be no material differences between fair value and
carrying value.
The cash and cash equivalents are held with bank and financial institution
counterparties, which are rated P-1 and A-1, based on Moody's ratings.
22 Share capital and reserves
2022 2021
£000 £000
Share capital - allotted, called up and fully paid
124,230,905 ordinary shares of 0.3 pence each (31 March 2021: 124,230,905) 373 373
Share premium 10,315 10,315
Share capital
The issued share capital at 31 March 2022 comprised 124,230,905 ordinary
shares of 0.3 pence each with a nominal value of £372,693. The company has
one class of ordinary share which have equal right, preferences and
restrictions.
Share premium
The share premium reserve contains the premium arising on the issue of equity
shares, net of issue expenses incurred by the Company. The 6,583,851 ordinary
shares of 0.3 pence each with a nominal value of £19,752 on 28 July 2017 were
issued at a price of 161 pence per share giving rise to a share premium of
£10,315,248 (net of expenses).
Merger reserve
The merger reserve arose on the purchase of certain subsidiaries. The merger
reserve represents the difference between the cost value of the shares
acquired less the cost value of the shares issued for the purchase of each
company and the stamp duty payable in respect of these transactions.
Retained earnings
The movement on retained earnings is as set out in the statement of changes in
equity. Retained earnings represent cumulative profits or losses, net of
dividends and other adjustments.
23 Share-based payments
The movement in awards during the year was:
Opening Granted Lapsed Closing Exercise Exercise
balance during during balance price period
the year the year
Date of grant Number of shares Pence
Warrants 186,335 - - 186,335 80.50 See below
CSOP - 31/7/19 1,530,097 - (176,996) 1,353,101 15.75 31/7/22-31/7/29
CSOP - 18/1/22 - 1,407,150 (30,000) 1,377,150 17.00 18/1/25-18/1/32
ESOP - 31/07/19 - 190,850 - 190,850 17.00 18/1/25-18/1/32
1,716,432 1,598,000 (206,996) 3,107,436
None of the above options were exercisable at 31 March 2022 other than the
warrants, which is consistent with 31 March 2021. The weighted average life of
the CSOP options was 8.7 years (2021: 8.3 years) and 9.8 years for the ESOP
options.
All share options were valued using the Black-Scholes model. Expected
volatility was determined by management, using comparator volatility as a
basis. The expected life of the options was determined based on management's
best estimate. The expected dividend yield was based on the anticipated
dividend policy of the Company over the expected life of the options. The
risk-free rate of return input into the model was a zero-coupon Government
bond with a life in line with the expected life of the options.
The inputs to the model were as follows:
Option plan Warrant CSOP CSOP and ESOP
Grant date 28/07/17 31/07/19 18/1/22
Share price at grant date 80.50 15.75 17.00
Number of employees 1 72 38
Shares under option 186,335 1,530,097 1,598,000
Vesting period (years) - 3 3
Expected volatility 31.4% 88.5% 100.1%
Risk-free rate 0.5% 0.5% 0.5%
Expected life (years) 2 4 4
Expectations of meeting performance criteria 100% 100% 100%
Expected dividend yield 2.0% 2.0% 2.0%
The Group recognised a total expense of £52,000 during the year (2021:
£89,000) relating to equity-settled share-based payments, including
employer's National Insurance contributions of £13,000 (2021: £11,000).
As at 31 March 2022, the weighted average exercise price of outstanding share
options, excluding those exercisable as part of the Warrant Instrument, was
16.42 pence (2021: 15.75 pence).
Company Share Option Plan ("CSOP")
The Group operated a share option scheme during the year for certain employees
under the CSOP, which allows tax advantaged options to be granted over the
Company's shares to selected employees of the Group. New options are granted
at a price consistent with the mid-market price of an ordinary share on the
dealing day immediately preceding the date of grant. The different options
vest after three years and have an exercise life between three and ten years
from grant date. The exercise of the options is subject to continued
employment over the vesting year.
Executive Share Option Plan ("ESOP")
The Group operated a share option scheme during the year for certain employees
under the ESOP, which allows non-tax advantaged options to be granted over the
Company's shares to selected employees of the Group. New options are granted
at a price consistent with the mid-market price of an ordinary share on the
dealing day immediately preceding the date of grant. The different options
vest after three years and have an exercise life between three and ten years
from grant date. The exercise of the options is subject to continued
employment over the vesting year.
Warrants
The Company entered into a Warrant Instrument with its Chairman, Peter
Cowgill, dated 18 July 2017, pursuant to which Peter Cowgill may subscribe for
up to 186,335 ordinary shares exercisable in whole or in part at a
subscription price equal to 80.5 pence. The warrants are exercisable until the
earlier of (i) their full exercise, (ii) Peter Cowgill ceasing to be a
Director, or (iii) a takeover of the Company. At the year end, no warrant
instruments had yet been exercised.
24 Change in liabilities arising from financing activities
2021 Cash flow Non-cash 2022
changes
£000 £000 £000 £000
Cash at bank and in hand 2,927 2,914 (1) 5,840
Net cash per statement of cash flows 2,927 2,914 (1) 5,840
Borrowings (1,406) (14) - (1,420)
Net cash before lease liabilities 1,521 2,900 (1) 4,420
Lease liabilities (2,965) 1,908 (82) (1,139)
Net debt after lease liabilities (1,444) 4,808 (83) 3,281
Non-cash changes relate to the translation of foreign currency balances at the
end of the period and lease acquisitions, disposals and modifications.
25 Cash and cash equivalents
2022 2021
£000 £000
Cash at bank and in hand 5,840 4,183
Overdraft - (1,256)
Net cash at bank and in hand 5,840 2,927
26 Financial commitments
Capital commitments
The Group has no capital commitments of at 31 March 2022 (FY 2021: Nil) which
were not provided for in the financial statements.
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