REG - Quiz PLC - Interim Results
08/12/2021 07:00
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RNS Number : 8954U Quiz PLC 08 December 2021
8 December 2021
QUIZ plc
("QUIZ" or the "Group")
Interim Results
for the six months ended 30 September 2021
Increased demand for the QUIZ brand contributes to revenue growth, a return to
EBITDA profitability and stronger operating cash inflows
QUIZ, the omni-channel fast fashion brand, announces its unaudited interim
results for the six months ended 30 September 2021 ("H1 2021" or the
"Period").
Financial highlights:
Six months to 30 September 2021 (unaudited) Six months to 30 September 2020 (unaudited)
Group revenue £36.0m £17.2m
EBITDA £0.7m £12.9m
Underlying(1) EBITDA £0.7m (£3.3m)
(Loss)/profit before tax (£1.3m) £10.6m
Underlying(1) loss before tax (£1.3m) (£5.6m)
Basic (loss)/earnings per share (1.18p) 9.62p
Underlying loss per share(1) (1.18p) (3.45p)
A reconciliation between underlying and reported results is provided at the
end of the Financial Review.
* Group revenue increased 109% period on period further to the removal of social
restrictions increasing demand for occasion and dressy products and a period
on period reduction in the amount of time stores and concessions were closed
* Higher level of full price sales and reduced discounting resulted in the gross
margin increasing to 57.5% from 51.7% in H1 2021
* The rise in operating costs, being distribution and administrative costs, was
restricted to 22% as the increased revenues leveraged off the existing
infrastructure
* Underlying EBITDA profit of £0.7 million (H1 2021: loss of £3.3 million)
* Operating cash flows of £3.4 million (H1 2021: £0.4 million)
* Total liquidity headroom at 30 September 2021 of £6.6 million, being cash net
of borrowings of £4.2 million and £2.2 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 43% increase in sales through QUIZ's own website
and a 27% uplift in total online sales
* Active customers increase 30% on the prior financial year in line with demand
for QUIZ's core occasion wear offering
* Benefit of store restructuring undertaken in the previous year reflected in
positive contribution from stores in the Period
* Group's store estate comprised 61 stores in the United Kingdom and five in the
Republic of Ireland at the end of the Period, with two more opening in the
United Kingdom subsequently
* Recovery in International revenues with a 160% increase period on period
Outlook and current trading:
* Revenues in the two months to 30 November 2021 up 108% on the prior year and
consistent with levels generated prior to the COVID-19 disruption on
like-for-like basis
* Potential for sales in key trading month of December to be impacted if
concerns over the Omicron variant suppress demand
* Total liquidity headroom at 7 December 2021of £7.1 million, being cash net of
borrowings of £4.6 million and £2.5 million of undrawn banking facilities
* Confident Group can return to profitability in a trading environment not
significantly impacted by COVID-19 restrictions and deliver long-term
sustainable and profitable growth
Tarak Ramzan, Founder and Chief Executive Officer, commented:
"QUIZ has delivered an encouraging set of results during the period with
strong cash flows generated and a return to positive EBITDA. The removal of
the social restrictions resulted in a substantial uplift in revenues in the
Period, as customer demand for the brand's dressy and occasion wear returned.
"The positive steps taken over the last 18 months with regards to
restructuring our business, tight cost control and inventory management have
all proved beneficial.
"Whilst there continues to be uncertainty in the short-term we remain
confident in the strength of our brand and are highly confident that the clear
demand for QUIZ's trademark occasion-wear will support continued profitable
growth."
Investor Presentation - Investor Meet Company:
The Group will provide a live Interim results presentation via the Investor
Meet Company platform on 8 December 221 at 9.30am GMT. Investors can sign up
to Investor Meet Company for free and add to meet QUIZ plc via:
https://www.investormeetcompany/quiz-plc/register-investor
Notes
1. Underlying EBITDA, Profit Before Tax and EPS: excludes the
non-recurring £16.2m gain arising on the administration of a subsidiary
undertaking in the prior year. A reconciliation to reported (IFRS) results is
included in the financial review below.
2. International sales comprise revenues from QUIZ standalone stores and
concessions in the Republic of Ireland and franchises in 20 countries.
3. Financial information in the front of this report has been rounded to
the nearest decimal place. Totals in the tables may not equal the arithmetic
sum of presented numbers. Percentages are calculated on non-rounded numbers
and may not conform to the percentage derived from the rounded components.
Enquiries:
QUIZ plc Via Hudson Sandler
Tarak Ramzan, Chief Executive Officer
Gerry Sweeney, Chief Financial Officer
Sheraz Ramzan, Chief Commercial Officer
Panmure Gordon (Nominated Adviser and Sole Broker) +44 (0) 207 886 2500
Alina Vaskina (Corporate Finance)
Erik Anderson (Corporate Broking)
Hudson Sandler LLP (Public Relations) +44 (0) 207 796 4133
Alex Brennan / Lucy Wollam quiz@hudsonsandler.com (mailto:quiz@hudsonsandler.com)
Notes:
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/201 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 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 into an international brand with
stores, concessions, franchise stores, wholesale partners and international
online partners.
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/)
CHIEF EXECUTIVE'S REPORT
We are pleased to report our Interim Results for the six months to 30
September 2021 (the "Period") 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 well placed to benefit from the continued
recovery in customer demand.
Our restructured business places greater emphasis on our own website and
stores with less dependence on the traditionally less profitable revenues
generated through third parties. Our own website has previously generated
higher returns than sales through third parties. In addition, further to the
restructuring of our store portfolio undertaken in the previous year, we are
confident that our store estate will generate a positive financial
contribution going forward, providing no severe social or trading restrictions
are reintroduced.
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 period had a notable positive impact on
demand.
Revenues in the Period increased by 109% to £36.0 million (H1 2021: £17.2
million) with strong growth recorded across each channel. The lifting of
social restrictions resulted in sales progressively improving and by the end
of the Period, they had returned to the levels achieved prior to the
disruption arising from COVID-19 on a like-for like basis.
As demand increased and revenues improved, the level of discounting reduced
and a higher proportion of sales were made at full price. This is reflected
in the 580bps improvement in the gross margin generated compared to the same
period in the previous year. Gross margins at the end of the Period were
consistent with the levels achieved in 2019.
During the Period, the business returned to generating positive operating cash
flows with EBITDA of £0.7 million and a £2.7 million improvement in the net
cash position to £4.2 million. This was an important development in our
return to profitability which we are confident of achieving in a trading
environment which is not significantly impacted by COVID-19 restrictions.
The core revenue streams for the business are derived from its website and
standalone stores. The increased demand for occasion wear and dresses
through the Period was a significant contributor to the improvement in
revenues. Sales through the QUIZ website have returned to similar levels
achieved in 2019 and the business is focussed on developing its online
potential going forward. The new lease arrangements entered into last year
for QUIZ's stores have contributed to delivering a positive financial
contribution from our standalone stores in the Period.
The generation of revenues through third parties remains important in
providing exposure for the QUIZ brand. During the Period, the final
Debenhams concessions ceased trading. The closures of the Group's Debenhams
concessions significantly reduced the amount of revenue generated through
concessions in the UK. In addition, the level of sales through third party
websites reduced as the business concentrated on the development of sales
through its own website.
We are increasingly optimistic as to the future prospects of QUIZ. The half
year results and autumn trading have demonstrated there is a strong underlying
demand for the brand and we are confident that the business will benefit from
a return to normal levels of social occasions, such as weddings, going
forward.
RESULTS OVERVIEW
Throughout this report, "underlying" results exclude the one-off impact in the
prior year period which arose further to the administration of one of the
Group's subsidiaries and the subsequent purchase of its trade and certain
assets. These non-recurring transactions resulted in £16.2 million of gains
being recognised in the income statement for H1 2021 (FY 2021: £15.6
million).
A reconciliation between underlying and reported results is provided at the
end of the Financial Review.
Group revenue increased 109% to £36.0 million in the period (H1 2021: £17.2
million). Revenues recovered across each channel as follows:
Six months to 30 September 2021 Six months to 30 September 2020 Year-on-year change Share of revenue H1 2022 Share of revenue H1 2021
UK stores and concessions £16.6m £4.7m +252% 46% 27%
Online £12.5m £9.9m +27% 35% 57%
International £6.9m £2.6m +160% 19% 16%
Total £36.0m £17.2m +109%
Underlying operating losses of £1.3 million were incurred (H1 2021: £5.5
million). Including the non-recurring transactions, a loss before financing
and taxation of £1.3 million was absorbed (H1 2021: profit of £10.6
million).
Underlying EBITDA increased to a profit of £0.7 million (H1 2021: losses of
£3.3 million) which represented an EBITDA margin of 1.8% (H1 2021: negative
margin of 19.2%). EBITDA after reflecting the non-recurring transactions was
£0.7m (H1 2021: £12.9 million).
Underlying loss before tax was £1.3 million (H1 2021: loss of £5.6 million).
The reported loss before tax amounted to £1.3 million (H1 2021: profit of
£10.6 million).
Underlying loss per share was 1.18 pence (H1 2021: loss per share of 3.45
pence). The loss per share incurred was 1.18 pence (H1 2021: earnings per
share of 9.62 pence).
Cash net of bank borrowings at the period end was £4.2 million (H1 2021:
£5.5 million) which represents a £2.7 million improvement since 31 March
2021. Net cash generated from operations was £3.4 million (H1 2021: £0.4
million). Capital expenditure in H1 2022 amounted to £0.3 million (H1 2021:
£1.6 million).
OPERATIONAL REVIEW
As we emerge from the shock of COVID-19 pandemic, the Group's long-term
strategy remains to develop the QUIZ brand through its omni-channel
distribution model and to adapt and improve to ensure the brand continues to
succeed. Central to this strategy is the QUIZ brand, which is a distinctive
fashion brand that empowers fashion-forward females to stand out from the
crowd. The Group has a particular focus on capturing the significant online
opportunities available to QUIZ, supported by maintaining a profitable store
and concession portfolio.
Optimising the omni-channel model
QUIZ continues to believe in the benefits of operating an omni-channel model
that provides customers the opportunity to engage with the brand across
different channels. Capturing QUIZ's sales growth potential online remains a
key priority for the Group.
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 online sales in the Period. Sales volumes through the
QUIZ website improved steadily during the period and have, in recent weeks,
generated revenues consistent with the comparable periods in 2019.
Third-party websites continue to provide the QUIZ brand with important
exposure to customers but the emphasis remains on developing sales through our
own website which accounted for 70% of online sales (H1 2021: 59%).
During the Period the Group operated 61 stores in the United Kingdom and five
in the Republic of Ireland, one of which opened in the Period. We are
pleased with the performance of these stores as they have benefited from
revenues progressively returning to their pre-pandemic levels on a
like-for-like basis as well as the reduced rental charges compared to prior to
the store portfolio restructuring undertaken in the prior year.
The Group will look to open further stores where it can secure lease
arrangements similar to its existing arrangements, with rentals charged linked
to revenues generated and an average lease length of 24 months. Since the
Period end, two new stores have opened in Telford and Craigavon.
During the Period, the closure of Debenhams and Outfit stores reduced the
Group's exposure to United Kingdom department stores. The number of
concessions operated reduced from 119 at 31 March 2021 to 72 at 30 September
2021. 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.
International revenues increased 160% in the period to £6.9 million (H1 2021:
£2.6 million) as demand increased consistent with the United Kingdom as
restrictions on trading and social activities were relaxed.
Managing gross margin
Gross margins in the period have progressively improved and in recent months
have been consistent with the levels generated prior to the pandemic.
During the period we encountered increased cost pressures in relation to
product costs and the costs associated with their shipment. To date these
additional costs have been absorbed by the business and we will look to
minimise any price increases that may be necessary to maintain our gross
margin.
In addition, the widely reported industry-wide issues with regard to global
freight disruption and increased costs have affected, and continue to affect
the Group. Going forward we will look to minimise the impact of increased
costs on customers and have adjusted delivery schedules to ensure that product
is available when required.
Progress has been made in disposing of excess stock from previous lockdown
periods and this contributed to the £1.4 million reduction in stock levels
since March 2021. Given the progress made in reducing these stocks there has
been no significant change to our stock provision for slow moving stock.
Right-sizing our cost base
We continue to carefully manage costs and will look to leverage off the
existing infrastructure as revenues grow. We were pleased that the increase in
operating costs was restricted to 22% substantially below the 109% increase in
revenues.
We will continue to review our cost base to ensure it is appropriate for the
revenues that will be generated going forward.
Targeted marketing investment supporting a strong brand
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 is supported by the increased demand for our products
since restrictions on social events have been eased.
Underpinning the growth and expansion of the QUIZ brand is the Group's
approach to targeted and returns-driven marketing investment. As social
restrictions eased, we increased our marketing investment and have utilised a
pipeline of celebrity and influencer activity across the autumn / winter 2021
party season. We were pleased to see our activity and voice through social
media increase significantly again as a result of the new campaigns. This
continues to be supplemented with digital marketing and offline activity to
push the QUIZ brand to the forefront of our customers' minds. Marketing
investment as a proportion of Group sales remained broadly in line with the
prior year at 3.5% (H1 2021: 3.6%).
We have seen a sharp recovery in the number of online active customers to
420,000 active customers, an uplift of 30% on the numbers recorded in the
prior financial year.
During the period, the brand has strengthened its social media engagement
relative to the prior year, with 2% and 4% increases in our Instagram and
Facebook audiences respectively.
SUPPLY CHAIN
We continue to prioritise our responsibilities to source clothes in a
responsible and ethical way. The Group has an ongoing programme to ensure that
all our products are supplied in line with our Ethical Code of Practice. We
continue to visit our suppliers regularly and have processes in place to allow
for clear visibility across our supply chain. We remain committed to ensuring
our systems and processes are fit for purpose and assure compliance in this
area.
CASH POSITION
Despite the challenging trading conditions, the Group increased its cash
balance net of borrowings by £2.7 million to £4.2 million (31 March 2021:
£1.5 million) at the Period end. Total liquidity headroom at the Period end
amounted to £6.6 million, being £4.2 million of cash net of borrowings and
£2.2 million of undrawn bank facilities (31 March 2021: £2.4 million, being
£1.5 million of cash net of borrowings and £0.9 million of undrawn bank
facilities).
The Group retains £3.5 million of bank and credit facilities available to it
from HSBC which expire in September 2022. There are no financial covenants
applicable to these facilities.
As at 7 December 2021, the Group had total liquidity headroom of £7.1
million, being a cash balance net of borrowings of £4.6 million and £2.5
million of undrawn facilities.
OUTLOOK AND CURRENT TRADING
Since the period end we have continued to experience good sales momentum
across all channels with sales at comparable levels to 2019 on a like-for-like
basis. We continue to be encouraged by the demand from customers in the
absence of social restrictions and lockdowns. The revenues generated in the
two months to 30 November 2021 are summarised below:
I October to 30 November 2021 I October to 30 November 2020 Year-on-year change
UK stores and concessions £7.3m £2.6m +186%
Online £6.8m £3.8m +77%
International £2.1m £1.4m +50%
Total £16.2m £7.8m +108%
The recent developments regarding the Omicron variant of COVID-19 are a
concern and the potential for Christmas and other social events to be
disrupted or cancelled would be expected to negatively impact short term
demand.
The Board remains confident in the strength of the QUIZ brand and the Group's
omni-channel business model and, underpinned by these attributes, believes the
Group can return to long-term, sustainable and profitable growth.
FINANCIAL REVIEW
Gross margin
The increased demand experienced since restrictions on social activities have
been relaxed has resulted in more full price sales and a decline in
discounting relative to the prior period when margins were impacted by the
enforced lockdowns and requirement to clear excess stocks. Due to these
factors, the gross margin in the period increased to 57.5% (H1 2021: 51.7%).
Operating costs
Consistent with the higher revenues generated there have been increases in
operating costs, namely administrative and distribution costs.
Operating costs increased 22% with costs of £23.0 million compared to £18.8
million in H1 2021. Further to this, operating costs amounted to 64% of the
revenues generated (H1 2021: 109%) and the business is focussed on reducing
this percentage further.
The operating costs do not reflect the benefit of the government grants
received in the period of £1.0 million (H1 2021: £4.3 million) which are
separately identified in the income statement. Much of these government grants
helped supplement employee costs which are included in operating costs. If
this income was offset against operating costs, the increase in net operating
costs would have been 52%.
Administrative costs increased by £2.5 million or 16% to £17.7 million (H1
2021: £15.2 million).
Property costs (including depreciation charges in relation to leases for
standalone stores) increased by £1.0 million or 53% to £2.9 million (H1
2021: £1.9 million). Costs were lower in the previous period given there
were no rental charges for standalone stores during the time between leases
being terminated on 10 June 2020 and new leases being agreed on a store by
store basis.
The increase in property costs is also attributable to business rates being
reinstated in England from July 2021 albeit at a discounted level. In the
current year, the business continues to benefit from the suspension of
business rates in Scotland and Northern Ireland. The Board was disappointed
to note the recent announcement that business rates would be effectively
reinstated in England from next year despite the continuing changes in the
retail environment.
Marketing costs increased by £0.5 million or 74% to £1.3 million (H1 2021:
£0.8 million). Investment undertaken in the period has continued to be
focused on digital marketing where a clear Return on Investment can be
demonstrated. We have also started to increase marketing spend to drive
broader awareness of the QUIZ brand and to ensure that we are well positioned
to benefit from increased consumer demand for occasion and dressy wear.
Distribution costs increased 47% to £5.3 million (H1 2021: £3.6 million)
reflecting the higher revenues generated in the period.
Included in distribution costs are commission payments to third parties who
sell product on behalf of QUIZ. These increased reflecting the higher levels
of sales made through third party websites, international franchises and
concessions in the United Kingdom.
Also reflected in the rise in distribution costs are higher carriage costs to
stores, concessions and franchises in line with the higher revenues generated.
Government grants
The business has continued to benefit from the financial support provided by
the UK Government in response to the COVID-19 pandemic. The support provided
has included the reduction in business rates for retail businesses as well as
direct payments made to businesses.
The business continued to access the payments available for employees placed
on furlough and received £0.6 million in the period (H1 2021: £4.0
million). In addition, the Group accessed further grant support in relation
to Coronavirus Grants made available to retail businesses which were closed
due to national or local restrictions amounting to £0.4 million (H1 2021:
£0.3 million).
Non-recurring items
In June 2020, the Group undertook a restructuring of its store portfolio. The
purpose of this restructuring was to secure an economically viable store
portfolio that, going forward, was aligned to the business strategy. As a
result of this restructuring, Kast Retail Limited ("Kast"), a subsidiary of
the Group which previously operated the Group's standalone stores in the
United Kingdom and Ireland was placed into administration and the business and
certain assets of Kast were acquired by the Group for a cash consideration of
£1.3 million.
The disposal of Kast when it entered into administration and the subsequent
repurchase of its business and certain assets gave rise to a total of £16.2
million of gains in the income statement (FY 2021: £15.6 million).
Finance costs
The finance costs of £0.1 million (H1 2021: £0.1 million) primarily relates
to interest costs arising on the lease payments for stores.
Foreign currency hedging
The Group currently undertakes foreign exchange transactions.
The primary inflow of foreign exchange relates to the Euro denominated
revenues generated in Ireland. The primary outflow of foreign exchange relates
to the purchase of stock, primarily in Chinese Renminbi.
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 of up to 12 months in advance. We have
currently hedged our expected currency inflows and outflows for the remainder
of the financial year.
Taxation
The reported tax rate in the current year is a charge of 0.9% (H1 2021: credit
of 12.6%).
There was no tax impact arising from the £16.2 million 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.
Given the uncertainty with the timing and quantum of future profits no
deferred tax assets have been recognised in relation to previously incurred
tax losses. The unrecognised deferred tax asset at 30 September 2021
amounted to £2.1 million.
Loss/earnings per share
The loss per share for H1 2021 was 1.18 pence (H1 2021: earnings per share of
9.62 pence). The underlying basic loss per share for H1 2021, which is
calculated using the underlying loss before tax less tax at the effective
statutory rate, was 3.45 pence (H1 2021: 1.18 pence).
Dividends
Given the loss incurred in the current year the Board does not recommend the
payment of a dividend in respect of this Period. No dividends were paid in the
prior financial year.
Cash flow and cash position
Cash, net of bank borrowings, at the period end amounted to £4.2 million (H1
2021: £5.5 million), an increase of £2.7 million since 31 March 2021.
The EBITDA of £0.7 million in the period was a £4.0m improvement from the
underlying EBITDA loss in H1 2021. The positive financial performance was
complemented by a £2.8 million cash inflow from working capital movements.
This reflects the £1.4 million reduction in inventories and a £3.2 million
increase in payables since 31 March 2021 offset by £1.8 million increase in
receivables.
Capital expenditure continued to be monitored closely with spend in the period
restricted to £0.3 million (H1 2021: £1.6 million, which includes £1.3
million for the acquisition of a trade and assets).
The cash outflows from financing activities amounted to £0.8 million and
related to the repayment of £0.3 million of bank borrowings and the payment
of lease liabilities amounting to £0.5 million (H1 2021: £0.2 million).
The business continues to be focussed on improving its cash position. At 7
December 2021, total liquidity headroom amounted to £7.1 million, being £4.6
million of cash net of borrowings and £2.5 million of unutilised bank
facilities. There are no financial covenants associated with the Group's bank
facilities.
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 gains which arose
from the disposal of a subsidiary undertaking which entered into
administration and the subsequent repurchase of its business and certain
assets as described in Notes 6 and 7.
A reconciliation between Reported and Underlying results is provided below:
Reported Non-recurring costs Underlying
£000 £000 £000
Six months ended 30 September 2021
Loss before tax (1,340) - (1,340)
Operating loss (1,258) - (1,258)
Depreciation and amortisation 1,921 - 1,921
EBITDA 663 - 663
Six months ended 30 September 2020
Profit/(loss) before tax 10,615 (16,231) (5,616)
Operating profit/(loss) 10,714 (16,231) (5,517)
Depreciation and amortisation 2,189 - 2,189
EBITDA 12,903 (16,231) (3,328)
Year ended 31 March 2021
Profit/(loss) before tax 6,026 (15,580) (9,554)
Operating profit/(loss) 6,220 (15,580) (9,360)
Depreciation and amortisation 4,468 - 4,468
EBITDA 10,688 (15,580) (4,892)
QUIZ plc
Unaudited consolidated statement of comprehensive income
For the six months ended 30 September 2021
Notes Unaudited six months ended 30 September 2021 Unaudited six months ended 30 September 2020
£000 £000 Audited year ended 31 March 2021
£000
Continuing operations
Revenue 3 36,030 17,246 39,703
Cost of sales (15,303) (8,336) (18,516)
Gross profit 20,727 8,910 21,187
Administrative costs (17,667) (15,180) (30,476)
Distribution costs (5,303) (3,602) (8,304)
Government grants 4 985 4,355 8,163
Other operating income - - 68
Total operating costs (21,985) (14,427) (30,547)
Operating loss 5 (1,258) (5,517) (9,360)
Gain arising on disposal of subsidiary undertaking 6 - 10,407 10,364
Gain on bargain purchase arising on acquisition 7 - 5,824 5,216
(Loss)/profit before financing and taxation (1,258) 10,714 6,220
Finance income - 45 45
Finance costs (82) (144) (239)
(Loss)/profit before income tax (1,340) 10,615 6,026
Income tax (charge)/credit 8 (123) 1,333 186
(Loss)/profit for the year (1,463) 11,948 6,212
Other comprehensive income
Foreign currency translation differences - foreign operations 31 211 (20)
Loss/(profit) and total comprehensive income for the year (1,432) 12,159 6,192
(Loss)/earnings per share 10 (1.18p) 9.62p 5.00p
All of the above income is attributable to the shareholders of the Company.
QUIZ PLC
Unaudited consolidated statement of financial position
As at 30 September 2021
Notes Unaudited as at 30 September 2021 Unaudited as at 30 September 2020
£000 £000 Audited as at 31 March 2021
£000
Assets
Non-current assets
Property, plant and equipment 11 4,681 6,474 5,218
Right to use asset 12 2,042 4,671 2,981
Intangible assets 13 3,250 3,918 3,413
Deferred tax asset 59 1,333 74
Total non-current assets 10,032 16,396 11,686
Current assets
Inventories 9,665 10,011 11,087
Trade and other receivables 14 5,405 5,473 3,590
Cash and cash equivalents 5,279 5,503 4,183
Total current assets 20,349 20,987 18,860
Total assets 30,381 37,383 30,546
Liabilities
Current liabilities
Trade and other payables 15 (11,397) (9,617) (8,202)
Loans and borrowings (1,087) - (2,662)
Lease liabilities (1,433) (1,486) (1,866)
Derivative financial liabilities (28) (21) (21)
Corporation tax payable (64) (75) -
Total current liabilities (14,009) (11,199) (12,751)
Non-current liabilities
Lease liabilities (1,100) (3,582) (1,099)
Deferred tax liabilities (59) (1) (74)
Total non-current liabilities (1,159) (3,583) (1,173)
Total liabilities (15,168) (14,782) (13,924)
Net assets 15,213 22,601 16,622
Equity
Called up share capital 373 373 373
Share premium 10,315 10,315 10,315
Merger reserve 1,130 1,130 1,130
Retained earnings 3,395 10,783 4,804
Total equity 15,213 22,601 16,622
QUIZ PLC
Unaudited consolidated statement of changes in equity
For the six months ended 30 September 2021
Unaudited as at 30 September 2021 Unaudited as at 30 September 2020
£000 £000 Audited as at 31 March 2021
£000
Share capital
Balance at beginning and end of period 373 373 373
Share premium
Balance at beginning and end of period 10,315 10,315 10,315
Merger reserve
Balance at beginning and end of period 1,130 915 915
Movement arising from administration of subsidiary - 215 215
Balance at the end of the period 1,130 1,130 1,130
Profit and loss account
Balance at beginning of period 4,804 (1,477) (1,477)
Total comprehensive income (1,432) 12,159 6,192
Share based payments charge 23 101 89
Balance at end of period 3,395 10,783 4,804
Total equity at beginning of period 16,622 10,126 10,126
Total equity at end of period 15,213 22,601 16,622
QUIZ PLC
Unaudited consolidated statement of changes of cash flows
For the six months ended 30 September 2021
Unaudited six months ended 30 September 2021 Unaudited six months ended 30 September 2020
£000 £000 Audited year ended 31 March 2021
£000
Cash flows from operating activities
Cash generated by operations
(Loss)/profit for the year (1,463) 11,948 6,212
Depreciation of property, plant and equipment 708 963 2,153
Depreciation of right-of-use asset 939 916 1,447
Amortisation of intangible assets 274 310 868
Gain from disposal of subsidiary undertaking - (10,407) (10,364)
Gain from acquisition - (5,824) (5,216)
Share based payment charges 23 101 89
Exchange movement 31 39 (2)
Finance cost expense 82 139 194
Income tax credit 123 (1,333) (186)
Decrease/(increase) in inventories 1,422 (288) (1,486)
(Increase)/decrease in receivables (1,815) 691 2,517
Increase in payables 3,193 3,170 1,265
Net cash from operating activities 3,517 425 (2,509)
Interest paid (25) (36) (55)
Income taxes paid (60) (5) 97
Net cash inflow/(outflow) from operating activities 3,432 384 (2,467)
Cash flow from investing activities
Payments to acquire intangible assets (111) (166) (220)
Payments to acquire property, plant and equipment (171) (167) (101)
Payment to acquire trade and assets - (1,302) (1,302)
Interest received - 45 45
Net cash outflow from investing activities (282) (1,590) (1,578)
Cash flows from financing activities
Loans (repaid)/received (319) - - 1,406
Payment of lease liabilities (481) (187) (1,316)
Net cash (outflow)/inflow from financing activities (800) (187) 90
Net (increase)/decrease in cash and cash equivalents 2,350 (1,393) (3,955)
Cash and cash equivalents at beginning of period 2,927 6,897 6,897
Effect of foreign exchange rates 2 (1) (15)
Cash and cash equivalents at end of period 16 5,279 5,503 2,927
Basis of Preparation
1.1 General Information
QUIZ plc is a public limited company incorporated and registered in Jersey and listed on the Alternative Investment Market (AIM) of the London Stock Exchange. Its registered office is: 22 Grenville Street, St Helier, Jersey, Channel Islands, JE4 8PX.
1.2 Basis of Preparation
These interim financial statements for the six months to 30 September 2021 have been prepared in accordance with "IAS 34 Interim Financial Reporting" as adopted by the European Union and the requirements of the Disclosures and Transparency Rules. They are unaudited and do not include all of the information required for full annual financial statements and do not constitute statutory accounts within the meaning of Companies (Jersey) Law 1991.
The comparative figures for the year ended 31 March 2021 are not the Group's
statutory accounts for that financial year. The interim financial statements
should be read in conjunction with the Group's Annual Report and Accounts for
the year ended 31 March 2021, which were prepared and approved by the
directors in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and the Companies (Jersey) Law
1991. The auditors' report on those accounts was unqualified and did not
include reference to any matters on which the auditors were required to report
by exception under Companies (Jersey) Law 1991. The Annual Report and
Financial Statements for the year ended 31 March 2021 has been filed with the
Jersey Companies Registry and are available on www.quizgroup.co.uk
The Group's business activities together with the factors that are likely to
affect its future developments, performance and position are set out in the
Business and Financial Reviews of its Annual Report and Financial Statements
for the year ended 31 March 2021. The Financial Review describes the Group's
financial position, cash flows and bank facilities. The interim financial
statements are unaudited and were approved by the board of directors on 7
December 2021.
The interim financial statements have been prepared by the directors of the
Company (the "Directors") under the historical cost convention except for
certain financial instruments and share based payment liabilities which are
measure at fair value.
1.3 Accounting Standards
The accounting policies applied in these interim financial statements are the same as those set out in the Group's Annual Report and Financial Statements for the year ended 31 March 2021. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not effective.
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.
1.4 Use of Estimates and Judgements
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
In preparing these interim financial statements, the significant judgements
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those that applied to the
Group's annual financial statements for the year ended 31 March 2021.
1.5 Going concern
In determining whether the Group's accounts can be prepared on a going concern
basis, the Directors considered the Group's business activities and cash
requirements together with factors likely to affect its performance and
financial position, including the current and future anticipated impact of
COVID-19.
The key judgements in relation to the going concern assessment are in respect of the potential ongoing impact of COVID-19 on the Group and the likelihood and impact of further lockdowns, including their duration and the impact on consumer demand in the markets in which the Group operates. When making these judgements, the Directors considered the current trading levels, which are currently consistent with management's expectations, and the outlook for the Group against their detailed base case scenario and further downside scenarios.
The Group has £3.5 million of banking facilities, which expire on 30
September 2022. 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 September 2022 and will be renewed in due
course.
The directors have prepared trading and cash flow forecasts for a period of
one year from the date of approval of these interim financial statements. The
base case and downside scenario forecasts indicate the Group will remain
within its available borrowing facilities through the forthcoming twelve-month
period. 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
Based on the assessment undertaken, 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 twelve months from the date interim financial statements were
approved, being 7 December 2021. Accordingly, the directors consider it
appropriate to continue to adopt a going concern basis of accounting in
preparing the financial statements of the Group.
2. Principal risks and uncertainties
The board considers the principal risks and uncertainties which could impact the group over the remaining six months of the financial year to 31 March 2021 to be unchanged from those set out on in the Annual Report and Financial Statements for the year ended 31 March 2021 on pages 16 to 19.
In summary these relate to the current and possible future pandemic, the loss of a key trading partner, brand and reputational risk, fashion and customer demands risk, a changing economic environment, product sourcing; the risk of disruption to IT systems or distribution networks and people, financial and regulatory risk.
3. Revenue
An analysis of revenue by source and geographical destination is as follows:
Unaudited six months ended 30 September 2021 Unaudited six months ended 30 September 2020
Audited year ended 31 March 2021
£000 £000 £000
Online 12,534 9,882 21,621
International 6,923 2,661 7,591
UK stores and concessions 16,573 4,703 10,491
36,030 17,246 39,703
United Kingdom 29,064 14,358 31,565
Overseas 6,966 2,888 8,138
36,030 17,246 39,703
4. Government grants
Government grant income comprises:
Unaudited six months ended 30 September 2021 Unaudited six months ended 30 September 2020
Audited year ended 31 March 2021
£000 £000 £000
Government support - furlough payments 615 4,024 6,943
Government support - grant income 370 331 1,220
985 4,355 8,163
5. Operating (loss)/profit
Operating (loss)/profit is stated after charging/(crediting):
Unaudited six months ended 30 September 2021 Unaudited six months ended 30 September 2020
Audited year ended 31 March 2021
£000 £000 £000
Cost of inventories recognised as an expense 15,303 8,336 18,516
Distribution costs 5,303 3,602 8,304
Employment costs 8,558 8,860 17,678
Depreciation 1,647 1,879 3,600
Amortisation 274 310 868
Short-term lease payments 983 262 430
Government grants (985) (4,355) (8,163)
Other operating income - - (68)
Other expenses 6,206 3,869 7,900
37,289 22,763 49,065
Employment costs reflect the costs incurred on those directly employed by the
Group and agency costs.
6 Gain arising from disposal of subsidiary undertaking
The Group's standalone stores in the United Kingdom and the Republic of
Ireland were operated by Kast Retail Limited ("Kast"). The Group's 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 being recognised in the year ended 31 March
2021:
£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.
The unaudited gain arising on the disposal of a subsidiary undertaking of
£10,407,000 recognised in the six months to 30 September 2021 was based on an
initial assessment of the net liabilities of the subsidiary undertaking
disposed of which was amended for inclusion in the audited accounts for the
year ended 31 March 2021.
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. As the trade acquired was operated by the Group for the whole
reporting period the revenue and loss for the combined entity as though the
acquisition date had been the beginning of the period are those shown in the
consolidated income statement.
The gain on bargain purchase amounting to £5,216,000 on the acquisition,
which arose as the deemed fair value of the assets acquired were greater than
the consideration paid, has been recognised in the Statement for Comprehensive
Income in the year ended 31 March 2021.
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 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.
The unaudited gain on bargain purchase of £5,824,000 recognised in the six
months to 30 September 2021 was based on an initial assessment of the assets
and liabilities acquired which was amended for inclusion in the audited
accounts for the year ended 31 March 2021.
8. Income Tax Expense
The Group's effective tax rate in respect of continuing operations for the six
months ended 30 September 2021 is 0.9% (six months ended 30 September 2020 -
12.6% and year ended 31 March 2021: 3.1%).
9. Dividends
No dividend was paid in the current or previous periods.
10. Earnings per share
Unaudited six months ended 30 September 2021 Unaudited six months ended 30 September 2020
Unaudited year ended 31 March 2021
£000 £000 £000
Number of shares: No. No. No.
Weighted number of ordinary shares outstanding 124,230,905 124,230,905 124,230,905
Earnings: £000 £000 £000
(Loss)/profit basic (1,463) 11,948 6,212
(Loss)/profit adjusted basic (1,463) (4,283) (9,368)
Earnings per share: Pence Pence Pence
Basic (loss)/earnings per share (1.18) 9.62 5.00
Adjusted basic loss per share (1.18) (3.45) (7.54)
Given the share price during the period there is no dilutive effect from the
share options outstanding.
The adjusted profit after tax in the year ended 31 March 2021 is shown before
the impact of the £16,231,000 of gains which arose from the disposal of a
subsidiary undertaking which entered administration and the subsequent
repurchase of its business and certain assets, as outlined in Notes 6 and 7
(Year ended 31 March 2021: £15,580,000).
The directors believe that the adjusted profit after tax and the adjusted
earnings 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 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. Property, Plant and Equipment
Computer equipment Fixtures, fittings and equipment
Leasehold property Motor vehicles
Total
£000 £000 £000 £000 £000
Cost
At 1 April 2021 484 104 1,565 15,051 17,204
Additions 103 11 17 40 171
At 30 September 2021 587 115 1,582 15,091 17,375
Depreciation
At 1 April 2021 285 67 789 10,845 11,986
Charge 56 11 99 542 708
At 30 September 2021 341 78 888 11,387 12,694
Net book value
At 30 September 2021 246 37 694 3,704 4,681
At 31 March 2021 199 37 776 4,206 5,218
12. Right-of-Use Assets
Property
£000
Cost
At 1 April and 30 September 2021 4,153
Depreciation
At 1 April 2021 1,172
Charge 939
At 30 September 2021 2,111
1Net book value
At 30 September 2021 2,042
At 31 March 2021 2,981
The Group present lease liabilities separately within the statement of
financial position. The movement in the year comprised:
£000
Cost
At 1 April 2021 2,965
Interest expense related to lease liabilities 49
Repayment of lease liabilities (including interest) (481)
At 30 September 2021 2,533
Current lease liabilities 1,433
Non-current lease liabilities 1,100
13. Intangibles
Computer software Trademarks
Goodwill Total
£000 £000 £000 £000
Cost
At 1 April 2021 6,175 3,626 165 9,966
Additions - 111 - 111
At 30 September 2021 6,175 3,737 165 10,077
Depreciation
At 1 April 2021 5,248 1,245 60 6,553
Amortisation - 265 9 274
At 30 September 2021 5,248 1,510 69 6,827
Net book value
At 30 September 2021 927 2,227 96 3,250
At 31 March 2021 927 2,381 105 3,413
14. Trade and other receivables
Unaudited as at 30 September 2021 Unaudited as at 30 September 2020
Audited as at 31 March 2021
£000 £000 £000
Trade receivables - gross 2,155 3,076 2,265
Allowance for doubtful debts (301) (301) (301)
Trade receivables - net 1,854 2,775 1,964
Other receivables 292 309 769
Prepayments and accrued income 3,259 2,389 857
5,405 5,473 3,590
15. Trade and other payables
Unaudited as at 30 September 2021 Unaudited as at 30 September 2020
Audited as at 31 March 2021
£000 £000 £000
Trade payables 5,066 5,400 4,025
Other taxes and social security costs 1,950 974 1,562
Accruals 3,824 2,602 2,149
Other creditors 549 633 458
Amounts due to related parties 8 8 8
11,397 9,617 8,202
16. Cash and cash equivalents
Unaudited as at 30 September 2021 Unaudited as at 30 September 2020
Audited as at 31 March 2021
£000 £000 £000
Cash at bank and in hand 5,279 5,503 4,183
Overdraft - - (1,256)
5,279 5,503 2,927
17. 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.
Unaudited as at 30 September 2021 Unaudited as at 30 September 2020
Audited as at 31 March 2021
£000 £000 £000
Carrying value of financial assets:
Cash and cash equivalents 5,279 5,503 4,183
Trade and other receivables 2,146 3,084 2,733
Total financial assets 7,425 8,587 6,916
Carrying value of financial liabilities:
Trade and other payable (5,623) (8,643) (6,640)
Bank and other borrowings (1,087) - (2,662)
Lease liabilities (2,533) (5,068) (2,965)
Total financial liabilities (9,243) (13,711) (12,267)
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.
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