REG - Quiz PLC - Interim Results
05/12/2023 07:15
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RNS Number : 6424V Quiz PLC 05 December 2023
5 December 2023
QUIZ plc
("QUIZ" or the "Group")
Interim Results
for the six months ended 30 September 2023
Inflationary pressures impact consumer demand and revenue across channels;
gross margin maintained; firm focus on returning to profitability and
maintaining cash position
Review of strategic options led by Non-Executive Chairman Peter Cowgill to
evaluate options to maximise shareholder value
QUIZ, the omni-channel fashion brand, announces its unaudited interim results
for the six months ended 30 September 2023 ("H1 2024" or the "Period").
Highlights:
Six months to 30 September 2023 (unaudited) Six months to 30 September 2022 (unaudited)
Group revenue £42.3m £49.4m
EBITDA £1.1m £3.7m
(Loss)/profit before tax -£1.5m £1.8m
(Loss)/earnings per share -0.96p 1.19p
Operating cash flows £2.1m £6.5m
Cash net of borrowings £3.6m £9.2m
● Group revenues decreased 14% to £42.3m (H1 2023: £49.4m) reflecting
challenging prior year comparatives as well as inflationary pressures
impacting consumer demand
O UK store and concession revenues decreased 11% to £22.0m (H1 2023:
£24.6m)
O Online revenues decreased 22% to £12.6m (H1 2023: £16.1m)
O International revenues(1) decreased 11% to £7.7m (H1 2023: £8.7m)
● Gross margin maintained at 61.8% (H1 2023: 61.6%), reflecting continued focus
on full-price sell-through
● Opened three stores, relocated two and closed two in the Period, taking the
total store estate to 64 stores in the UK and five in the Republic of Ireland
at the end of the Period
● Marketing spend as a proportion of Group sales remained broadly in line with
the prior year at 3.3% (H1 2023: 3.1%)
● Operating costs, being administrative and distribution costs, excluding
depreciation and amortisation charges decreased by 7%
● EBITDA decreased to £1.1 million (H1 2023: £3.7 million)
● Operating cash flows of £2.1 million (H1 2023: £6.5 million)
● Capital expenditure of £3.4 million (H1 2023: £0.7 million), which funded
the expansion of distribution centre capacity and new store openings /
relocations
● Total liquidity headroom at 30 September 2023 of £7.6 million with included
cash net of borrowings of £3.6 million (31 March 2023: £8.3 million which
includes cash net of borrowings of £6.2 million)
Outlook and current trading:
● The widely reported cost of living and inflationary pressures have impacted
customer demand during the financial year. As a result, the near-term outlook
is difficult to predict for many UK retailers including QUIZ.
● Sales for the two months to 30 November 2023, including the Black Friday sales
period, totalled £14.1 million (2023: £16.0 million), behind management
expectations.
● Notwithstanding that the remainder of QUIZ's important Christmas trading and
January sales periods are still to come, given the shortfall in demand
experienced in recent months and the potential for macro pressures continuing
to impact consumer demand, the Board anticipates that full year revenues will
be approximately 6-8% lower than current market expectations(2).
● Total liquidity headroom at 4 December 2023 was £4.9 million which includes
cash net of borrowings of £0.9 million.
Review of Strategic Options:
● The Board remains confident that QUIZ's brand is differentiated, and the
Group's omni-channel business model remains relevant. However, given the
Group's recent trading performance, the Board has decided to immediately
initiate a thorough review of the strategic options available to the Group to
maximise shareholder value. This process is being led by the Company's
independent Chairman, Peter Cowgill, supported by the Company's retained
advisor, Panmure Gordon.
● The findings from this review are expected to be announced in Q1 2024
Tarak Ramzan, Founder and Chief Executive Officer, commented:
"This has been a challenging period for many retailers, and we have not been
immune to the widely publicised macro headwinds impacting consumer demand.
Notwithstanding the ongoing pressure on consumers, we have continued to focus
on taking the right decisions for our long-term future, including prioritising
protecting full-price sales and carefully managing our store portfolio.
I remain confident that QUIZ remains a strong, distinctive brand known for
providing glamorous looks at good value prices. However, given the prolonged
period of challenging trading we believe it is prudent to examine a range of
options to maximise shareholder value."
Notes
1. International sales comprise revenues from QUIZ standalone stores and
concessions in the Republic of Ireland and franchises in 20 countries.
2. Current market expectations is for the Group to generate £86.4 million
of revenues in the year ended 31 March 2024.
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
Emma Earl
Rupert Dearden
Hudson Sandler LLP (Public Relations) +44 (0) 207 796 4133
Alex Brennan quiz@hudsonsandler.com (mailto:quiz@hudsonsandler.com)
Emily Brooker
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
The Group's performance in the six months to 30 September 2023 (the "Period")
was impacted by the challenging prior year comparatives and the negative
impact of inflationary pressures on consumer confidence and demand for QUIZ's
products. Revenue decreased by 14% to £42.3 million (H1 2023: £49.4
million).
The Group maintained key metrics such as conversion rates and average
transaction value but the drop in traffic, both in-store and online, led to
the decline in revenues. This supports the Board's confidence that QUIZ's
differentiated occasion wear and dressy casual wear continues to resonate with
consumers who are able to spend.
Customer demand remained consistent for new full price product rather than
discounted options. This is reflected in a consistent gross margin generated
compared to the same period in the previous year.
We continued to carefully appraise new store opportunities where the rental
arrangements are viable. During the Period we opened three new stores opened
in the United Kingdom and closed one in the United Kingdom and one the
Republic of Ireland. In addition, two of our flagship stores in Lakeside and
Braehead, Glasgow were relocated during the Period. The Board continues to
believe in the longer-term strategic benefits of its omni-channel model to
provide customers with the opportunities to interact directly with the brand
including purchasing in-store, utilising in-store click and collect, ordering
in-store, or exchanging/returning to store.
Further to the decline in revenues the Group incurred a loss before tax of
£1.5 million (H1 2023: profit of £1.8 million). In addition to targeting
higher revenues the Group is looking to return to profitability through
reviewing and reducing costs where possible.
Net cash at the Period end was £3.6 million. The Board is focussed on
maintaining its cash balances and is taking steps to maximise the available
headroom. These include the cost saving measures noted above, the suspension
of significant capital expenditure, and the continued careful management of
inventories.
RESULTS OVERVIEW
Group revenue decreased 14% to £42.3 million in the Period (H1 2023: £49.4
million):
Six months to 30 September 2023 Six months to 30 September 2022 Year-on-year change Share of revenue H1 2023 Share of revenue H1 2022
UK stores and concessions £22.0m £24.6m -10.6% 52.0% 49.8%
Online £12.6m £16.1m -21.7% 29.8% 32.6%
International £7.7m £8.7m -11.5% 18.2% 17.6%
Total £42.3m £49.4m -14.4%
Operating losses of £1.3 million were incurred (H1 2023: profit of £1.9
million). EBITDA was £1.1 million (H1 2023: £3.7 million) representing an
EBITDA margin of 2.7% (H1 2023: 7.5%).
Loss before tax was £1.5 million (H1 2023: profit of £1.8 million). Loss per
share was 0.96 pence (H1 2023: earnings per share of 1.19 pence).
Cash net of bank borrowings at the period end was £3.6 million (H1 2023:
£9.2 million) which represents a £2.6 million reduction since 31 March 2023.
Net cash generated from operations was £2.1 million (H1 2023: £6.5 million).
Capital expenditure in H1 2024 increased to £3.3 million (H1 2023: £0.7
million) further to £1.3 million of spend at our distribution centre and
£1.2 million of spend on new and relocated stores.
OPERATIONAL REVIEW
Central to our strategy is the QUIZ brand, which is a distinctive fashion
brand that empowers fashion-forward females to stand out from the crowd. This
is complemented by our omni-channel distribution model and focus on
operational improvement to ensure the business is positioned to succeed.
Optimising the omni-channel model
QUIZ continues to believe in the long-term benefits of operating an
omni-channel model that provides customers the opportunity to engage with and
shop the brand across different channels.
Online revenues in the Period were impacted by challenging prior year
comparatives and a decline in consumer demand as outlined above. Given these
factors online revenues reduced by 22% to £12.6 million in the Period (H1
2023: £16.1 million).
Harnessing the long-term potential of our online channel remains a key
objective for the Group. Sales through the QUIZ website declined to £8.6
million (H1 2023: £11.3 million) accounting for 68% of total online sales (H1
2023: 70%) and. This primarily reflects a decline in traffic to the site as
other key metrics such as the conversion of browsers to customers and the
Average Transaction Value generated were consistent with the previous year.
Online sales through selected third-party websites continue to provide the
QUIZ brand with important exposure to customers with the revenues totalling
£4.0 million (H1 2023: £4.8 million). The decline against the prior year
reflects changes in the third party partners where our product is sold.
Revenues generated through our UK stores and concessions declined 11% to
£22.0 million (H1 2023: £24.6 million) reflecting the challenging prior year
comparatives and a decline in in-store traffic. Other key metrics including
conversion rates and Average Transaction Values remained consistent with the
previous year.
As at 30 September 2023, the Group operated 64 stores in the United
Kingdom (H1 2023: 62 stores) with three stores opening during the Period in
Southampton, Plymouth and Fareham and one in Ayr closing during the Period. In
addition, two of our flagship stores at Lakeside and Braehead, Glasgow
relocated in the Period.
We continued to benefit from the reduced rental charges across the store
portfolio further to the restructuring undertaken in 2020. Immediately
following this restructuring the average lease length across the store estate
was 24 months. A number of key store leases were renegotiated during the
Period to allow for a longer lease period and, as a result, the average lease
length increased to 23 months (H1 2023: 18 months).
Since the Period end the Group has opened a new store in Liverpool and
commenced the relocation of its store in Grimsby. The relocation of our
Trafford Park store will be undertaken later in the financial year. Going
forward, store openings will be dependent upon securing suitable lease
arrangements with rental charges linked to revenues generated and flexible
arrangements with regards to termination.
As at 30 September 2023, the Group operated 60 concessions in the United
Kingdom (H1 2023: 62 concessions). During the Period, eleven concessions were
closed and four opened.
Concessions continue to provide QUIZ with a flexible and low-cost route to
market given the limited expenditure required to establish new outlets. The
majority of the concessions operated are not staffed by QUIZ personnel and
require limited capital outlay.
Selective international growth potential through capital light model
International revenues decreased 11% in the period to £7.7 million (H1 2023:
£8.7 million) as demand was impacted by similar factors witnessed in the
United Kingdom.
As at 30 September 2023, the Group operated five stores in the Republic of
Ireland and 21 concessions which generated £2.7 million (H1 2023: £3.4
million). One store closed and two concessions opened- in the Period.
Revenues from international franchise partners in the Period amounted
to £5.1 million (H1 2023: £5.3 million). We continue to receive
positive customer reactions to the QUIZ brand in our international franchise
markets.
Our mix of casual and occasion wear can be tailored for each market and our
flexible route to market has been beneficial. We continue to seek 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
The gross margin generated in the Period was consistent with the prior year.
Inflationary pressures on product costs in the Period were successfully
mitigated through selective price increases.
We continue to carefully manage stock levels and dispose of excess stock
held. This has contributed to the £1.0 million reduction in stock levels
since March 2023. Given the progress made in reducing inventory there has been
no significant change to our provision for slow moving stock.
Leveraging our cost base
Given the reduction in revenues we recognise the importance of continuing to
carefully manage costs. The £1.7 million reduction in operating costs,
excluding depreciation charges, represented a 7% decline, in overall costs.
We continue to review our cost base to eliminate costs where possible and to
ensure it is appropriate for the revenues that will be generated going
forward.
Targeted marketing investment supporting a differentiated brand
QUIZ brand has a focused, differentiated position in the market with a
specialisation in occasion wear and dressy casual wear for women, and the
brand resonates with a broad age range of customers.
Our marketing activity utilises a pipeline of celebrity and influencer
activity across the Period. The launch of our recent Party Wear Collection in
collaboration with Olivia Bowen since the Period end has helped generate
increased traffic ahead of the important Christmas party season. These
activities continue to be supplemented with returns-driven digital marketing
and offline investment to push the QUIZ brand to the forefront of our
customers' minds.
The Group maintained its disciplined approach to marketing and, as a result,
spend as a proportion of Group sales remained broadly in line with the prior
year at 3.3% (H1 2023: 3.1%).
Further to the decline in traffic and revenues the number of online active
customers in the year to 30 September 2023 reduced to 533,000, a drop of 11%
on the numbers recorded at 31 March 2023.
During the Period, the brand has maintained its social media engagement
relative to the prior year, with 2% and 1% increases in our Instagram and
Facebook audiences respectively.
Flexible Supply Chain
The business has a well invested infrastructure and a proven successful supply
chain which prioritises our commitment to source clothes in a responsible and
ethical way. This supply chain enables the business to respond to customer
demands and to provide on-trend products whether it be influenced by social
media, the catwalk or television.
During the Period work to expand the capacity at our Distribution Centre at a
cost of £1.3 million was completed. This work provides a new mezzanine level
which increases storage space and allows for an improved layout to accommodate
more efficient working practices.
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
The Group is focussed on maintaining an appropriate level of available
liquidity and its net cash position. The cash balance net of borrowings was
£3.6 million (31 March 2023: £6.2 million) at the Period end. Total
liquidity headroom at the Period end amounted to £7.6 million, which includes
£3.6 million of cash net of borrowings (31 March 2023: £8.3 million which
includes £6.2 million of cash net of borrowings).
The Group retains £4.0 million of bank and credit facilities available to it
from HSBC which expire in June 2024. There are no financial covenants
applicable to these facilities.
As at 4 December 2023, the Group had total liquidity headroom of £4.9 million
which includes a cash balance net of borrowings of £0.9 million.
OUTLOOK AND CURRENT TRADING
Customer demand in recent weeks, including through the Black Friday sales
period, has continued to be weaker than the previous year. Cumulatively
sales for the two months to 30 November 2023 were lower than both the prior
year and management expectations. The revenues generated are summarised below:
I October to 30 November 2023 I October to 30 November 2022 Year-on-year change
UK stores and concessions £6.9m £7.3m -5.5%
Online £5.2m £6.5m -20.0%
International £2.1m £2.2m -4.5%
Total £14.2m £16.0m -11.2%
Revenues across all channels were notably short of expectations in October.
Whilst the shortfall in revenues moderated in November they remained behind
expectations.
Sales in the Black Friday period in our UK stores were marginally below the
previous year on a like-for-like basis. There was a sharper drop in online
revenues through the QUIZ website which represents a disappointing shortfall
across this important trading period.
Notwithstanding that the remainder of QUIZ's important Christmas trading and
January sales periods are still to come, given the shortfall in demand
experienced in recent months and the potential for pressures on consumer
demand to continue impacting across the sector, the Board currently
anticipates that full year revenues will be approximately 6-8% lower than
current market expectations. As a Result, the Board anticipates reporting a
loss before taxation for the year materially larger than previous
expectations.
Longer term, the Board remains confident that underpinned by the strength and
distinctiveness of the QUIZ brand and the relevance of the Group's
omni-channel business model, QUIZ can deliver long-term, sustainable and
profitable growth for all stakeholders.
REVIEW OF STRATEGIC OPTIONS
Given the Group's recent trading performance, the Board is initiating a
thorough review of the strategic options available to the Group. This
comprehensive process will begin immediately and will evaluate a broad range
of options to maximise shareholder value. We expect to report findings from
this review in Q1 2024.
The Review will be led by the Company's independent Chairman, Peter Cowgill,
supported by the Company's retained advisor, Panmure Gordon.
FINANCIAL REVIEW
Gross margin
Whilst overall demand has been lower year-on-year there continued to be a
consumer preference for new full price items. We continued to encounter
increased cost pressures in relation to product compared to the previous year.
We have successfully adjusted prices to maintain our gross margin whilst
broadening the range of prices offered to customers, so they have a wide range
of options suitable for their budgets. Due to these factors, the gross margin
in the Period was consistent with the previous year at 61.8% (H1 2023: 61.6%).
Operating costs
Consistent with the decline in revenues generated there have been reductions
in operating costs, namely administrative and distribution costs.
Compared to the previous year there has been a £1.7 million reduction in
operating costs, excluding depreciation and amortisation costs. Total
operating costs were reduced by £1.2 million to £27.4 million (H1 2023:
£28.6 million).
Administrative costs of £22.0 million were consistent year on year (H1 2023:
£22.0 million).
Consistent with many other retailers the business has been impacted by higher
operational costs as inflationary pressures impact:
· Payroll costs in the Period increased further to uplifts in the
National Living Wage and other associated changes from April 2023. This
increased employee costs by circa £0.8 million per annum. Further to the
recently announced changes to the National Living Wage a similar increase in
costs will apply from April 2024.
· Utility contracts, which had been fixed for two years previously,
took affect from August 2023 which has resulted in an increase of £0.6
million in costs per annum.
Property costs (including depreciation charges in relation to leases for
standalone stores) decreased by 4% to £4.7 million (H1 2023: £4.9
million). The Group benefited from a reduction in business rates further to
their re-evaluation in March 2023 and rental costs declining as the lower
revenues generated were reflected in the revenue based rental charges across
the store estate. These reductions were partially offset by the property
costs associated with the new stores opened and from increased costs arising
from revised rental arrangements in certain locations.
Marketing costs were consistent at £1.4 million (H1 2023: £1.4 million).
The focus of the investment undertaken in the Period continued to be on
digital marketing where a clear Return on Investment can be demonstrated.
These activities are also complemented by marketing spend to drive broader
awareness of the QUIZ brand.
Distribution costs declined 16% to £5.5 million (H1 2023: £6.6 million)
reflecting the impact of lower revenues generated in the period. The
majority of this decline related to commission payments which were lower given
the decline in sales made through third party websites, international
franchises and concessions. Also reflected in the drop in distribution costs
are lower carriage costs to stores, concessions and franchises further to the
reduced activity in the Period.
Finance costs
The finance costs of £0.3 million (H1 2023: £0.1 million) primarily relate
to interest costs arising on the lease liabilities 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 using
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 credit of 20.1% (H1 2023:
charge of 19.5%).
As at 30 September 2023 the deferred tax asset amounted to £1.0 million (31
March 2023: £1.0 million). This balance reflects the anticipated future cash
benefit expected to be derived from utilising previously generated tax losses
and the utilisation of the available capital allowances which are greater than
the recorded net book value.
Earnings/loss per share
The loss per share for H1 2024 was 0.96 pence (H1 2023: earnings per share of
1.19 pence).
Dividends
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 £3.6 million (H1
2023: £9.2 million), a decline of £2.6 million since 31 March 2023.
The EBITDA of £1.1 million generated in the Period was a £2.6 million
decline on H1 2023. The positive cash flow was complemented by a £1.0
million cash inflow from working capital movements (H1 2023: £2.6 million)
which reflects the £1.0 million reduction in inventories since 31 March 2023.
Capital expenditure amounted to £3.4 million (H1 2023: £0.7 million) in the
Period. Included in this spend was a £1.3 million expenditure related to the
expansion of capacity at our Distribution Centre.
Also included in capital expenditure was investment of £1.2 million in year,
arising from the three new store openings and two store relocations completed
during the Period.
The cash outflows from financing activities amounted to £2.5 million (H1
2023: £2.4 million) and related to the repayment of £1.2 million of bank
borrowings and the payment of lease liabilities amounting to £1.3 million.
At 4 December 2023, total liquidity headroom amounted to £4.9 million which
included cash net of borrowings amounting to £0.9 million. There are no
financial covenants associated with the Group's bank facilities.
QUIZ plc
Unaudited consolidated statement of comprehensive income
For the six months ended 30 September 2023
Notes Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022
£000 £000 Audited year ended 31 March 2023
£000
Continuing operations
Revenue 3 42,295 49,410 91,680
Cost of sales (16,148) (18,956) (35,166)
Gross profit 26,147 30,454 56,514
Administrative costs (21,925) (22,026) (41,728)
Distribution costs (5,521) (6,581) (12,544)
Other operating income 9 53 214
Total operating costs (27,437) (28,554) (54,058)
Operating (loss)/profit 4 (1,290) 1,900 2,456
Finance income 79 12 89
Finance costs (282) (77) (248)
(Loss)/profit before income tax (1,493) 1,835 2,297
Income tax credit/(charge) 5 300 (358) (260)
(Loss)/profit for the period (1,193) 1,477 2,037
Other comprehensive (expense)/income
Foreign currency translation differences - foreign operations (27) 156 138
(Loss)/profit and total comprehensive (expense)/ income for the period (1,220) 1,633 2,175
(Loss)/earnings per share 7 (0.96)p 1.19p 1.64p
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 2023
Notes Unaudited as at 30 September 2023 Unaudited as at 30 September 2022
£000 £000 Audited as at 31 March 2023
£000
Assets
Non-current assets
Property, plant and equipment 8 6,832 3,997 4,688
Right-of-use assets 9 6,790 5,069 6,523
Intangible assets 10 2,801 2,624 2,703
Deferred tax assets 1,041 600 957
Total non-current assets 17,464 12,290 14,871
Current assets
Inventories 11,334 11,122 12,322
Trade and other receivables 11 7,253 6,351 7,429
Cash and cash equivalents 13 3,850 9,210 7,575
Total current assets 22,437 26,683 27,326
Total assets 39,901 38,973 42,197
Liabilities
Current liabilities
Trade and other payables 12 (12,435) (13,136) (12,602)
Loans and borrowings (258) - (1,410)
Lease liabilities (2,384) (1,839) (1,909)
Derivative financial liabilities (43) (300) (65)
Corporation tax payable (95) - (291)
Total current liabilities (15,215) (15,275) (16,277)
Non-current liabilities
Lease liabilities (4,951) (3,320) (4,967)
Deferred tax liabilities - (14) (20)
Total non-current liabilities (4,951) (3,334) (4,987)
Total liabilities (20,166) (18,609) (21,264)
Net assets 19,735 20,364 20,933
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 7,917 8,546 9,115
Total equity 19,735 20,364 20,933
QUIZ PLC
Unaudited consolidated statement of changes in equity
For the six months ended 30 September 2023
Unaudited as at 30 September 2023 Unaudited as at 30 September 2022
£000 £000 Audited as at 31 March 2023
£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 the period 1,130 1,130 1,130
Retained earnings
Balance at beginning of period 9,115 6,885 6,885
Total comprehensive (expense)/income (1,220) 1,633 2,175
Share based payments 22 28 55
Balance at end of period 7,917 8,546 9,115
Total equity at beginning of period 20,933 18,703 18,703
Total equity at end of period 19,735 20,364 20,933
QUIZ PLC
Unaudited consolidated statement of changes of cash flows
For the six months ended 30 September 2023
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022
£000 £000 Audited year ended 31 March 2023
£000
Cash flows from operating activities
Cash generated by operations
(Loss)/profit for the period (1,193) 1,477 2,037
Adjusted for:
Depreciation of property, plant and equipment 845 606 1,263
Depreciation of right-of-use asset 1,282 943 1,898
Amortisation of intangible assets 293 284 589
Share based payment charges 22 28 55
Exchange movement (31) 153 126
Finance income (79) (12) (89)
Finance cost expense 282 77 248
Income tax (credit)/charge (300) 358 260
Decrease/(increase) in inventories 988 588 (612)
Decrease/(increase) in receivables 176 74 (1,384)
(Decrease)/increase in payables (189) 1,905 1,136
Net cash from operating activities 2,096 6,481 5,527
Interest paid (34) (28) (18)
Income taxes paid - - 417
Net cash inflow from operating activities 2,062 6,453 5,926
Cash flow from investing activities
Payments to acquire intangible assets (391) (126) (510)
Payments to acquire property, plant and equipment (2,989) (618) (1,965)
Interest received 79 12 89
Net cash outflow from investing activities (3,301) (732) (2,386)
Cash flows from financing activities
Loans repaid (1,152) (1,420) (10)
Payment of lease liabilities (1,338) (935) (1,807)
Net cash outflow from financing activities (2,490) (2,355) (1,817)
Net (decrease)/increase in cash and cash equivalents (3,729) 3,366 1,723
Cash and cash equivalents at beginning of period 7,575 5,840 5,840
Effect of foreign exchange rates 4 4 12
Cash and cash equivalents at end of period 13 3,850 9,210 7,575
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 2023 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 2023 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 2023, 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 2023 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 2023. 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 4
December 2023.
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 Standards1282
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 2023. 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
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
value of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which the
estimate is revised where the revision affects only that year, or in the year
of the revision and future years where the revision affects both current and
future years.
Information about such estimations and judgements are contained in individual
accounting policies. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are:
Inventory provision
Provision is made for those items of inventory where the net realisable value
is estimated to be lower than cost. Net realisable value is based on both
historical experience and assumptions regarding future selling prices and is
consequently a source of estimation uncertainty.
The provision for aged inventory is calculated by providing for 50% of
inventory that is more than three seasons old and providing for 100% of
inventory that is more than three years old. Given the potential for demand to
be impacted going forward the Group has provided up to 10% of the remaining
inventory. Given this approach the provision for aged inventory totalled
£1,570,000 at 31 March 2023 (31 March 2023: £1,675,000).
Returns provision
The accounting estimate related to the return of stocks sold online is
susceptible to changes from period to period. The value of expected returns of
£518,000 (31 March 2023: £638,000) is estimated using recent past experience
and a review of returns received post year end. The provision reflecting the
impact of these anticipated returns on the income statement is included in the
other payables balance.
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. The directors have prepared trading and cash flow
forecasts covering a period of one year from the date of approval of these
interim financial statements.
The key judgements in relation to the going concern assessment are in respect of the potential impact of the recent cost of living increases on the Group 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 and the outlook for the Group against their detailed base case scenario and further downside scenarios.
The Group has £4.0 million of banking facilities, which expire on 30 June 2024. These facilities comprise a £2.0 million overdraft and £2.0 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 2024 and will be renewed in due course.
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, 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 4 December 2023. Accordingly, the directors consider it
appropriate to continue to adopt a going concern basis of accounting in
preparing the interim 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 2024 to be unchanged from those set out on in the Annual Report and Financial Statements for the year ended 31 March 2023 which related to the following matters:
· Global or Regional Pandemics
· Brand and Reputational Risk
· Development of Overseas Markets
· Fashion and Design
· Challenging Economic Environment
· Competitor Actions
· Product Sourcing;
· Loss of Key Trading Partner
· Physical Infrastructure
· IT Infrastructure and Cyber Security
· Infrastructure for E-commerce Sales
· People
· Loss of Key Staff
· Regulatory and Legal Framework
· Foreign Exchange
Further information on the nature of these risks, their potential impact and
the existing mitigating factors to address them is detailed on pages 14 to 17
of the Annual report and Financial Statements for the year ended 31 March 2023
3. Revenue
An analysis of revenue by source and geographical destination is as follows:
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022
Audited year ended 31 March 2023
£000 £000 £000
Online 12,555 16,121 29,872
International 7,736 8,691 16,357
UK stores and concessions 22,004 24,598 45,451
42,295 49,410 91,680
United Kingdom 33,879 40,574 75,077
Overseas 8,416 8,836 16,603
42,295 49,410 91,680
4. Operating (loss)/profit
Operating (loss)/profit is stated after charging/(crediting):
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022
Audited year ended 31 March 2023
£000 £000 £000
Cost of inventories recognised as an expense 16,148 18,956 35,166
Distribution costs 5,521 6,581 12,544
Employment costs 10,879 10,064 19,236
Depreciation 2,127 1,549 3,161
Amortisation 293 284 589
Short-term lease payments 1,048 1,404 2,257
Other operating income (9) (53) (214)
Other expenses 7,578 8,725 16,485
43,585 47,510 89,224
Employment costs reflect the costs incurred on those employees directly
employed by the Group and agency costs.
5. Income Tax Expense
The Group's effective tax rate in respect of continuing operations for the six
months ended 30 September 2023 is a credit of 20.1% (six months ended 30
September 2022 - charge of 19.5% and year ended 31 March 2023: charge of
11.3%).
6. Dividends
No dividend was paid in the current or previous periods.
7. Earnings per share
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022
Unaudited year ended 31 March 2023
Weighted number of ordinary shares outstanding 124,230,905 124,230,905 124,230,905
Earnings: (loss)/profit (£000) (1,193) 1,477 2,037
(Loss)/earnings per share (pence) (0.96) 1.19 1.64
Given the share price during the period there is no dilutive effect from the
share options outstanding.
8. Property, Plant and Equipment
Computer equipment Fixtures, fittings and equipment
Leasehold property Motor vehicles
Total
£000 £000 £000 £000 £000
Cost
At 1 April 2023 792 137 1,698 15,822 18,449
Additions 87 - 425 2,477 2,989
Disposals (7) - (11) (417) (435)
At 30 September 2023 872 137 2,112 17,882 21,003
Depreciation
At 1 April 2023 573 99 1,150 11,939 13,761
Charge 81 8 126 630 845
Disposals (7) - (11) (417) (435)
At 30 September 2023 647 107 1,265 12,152 14,171
Net book value
At 30 September 2023 225 30 847 5,730 6,832
At 31 March 2023 219 38 548 3,883 4,688
9. Right-of-Use Assets
Property
£000
Cost
At 1 April 2023 8,888
Additions 1,549
Disposals (928)
At 30 September 2023 9,509
Depreciation
At 1 April 2023 2,365
Charge 1,282
Disposals (928)
At 30 September 2023 2,719
Net book value
At 30 September 2023 6,790
At 31 March 2023 6,523
The Group presents lease liabilities separately within the statement of
financial position. The movement in the period comprised:
£000
Cost
At 1 April 2023 6,876
New leases entered into 1,549
Interest expense related to lease liabilities 248
Repayment of lease liabilities (including interest) (1,338)
At 30 September 2023 7,335
Current lease liabilities 2,383
Non-current lease liabilities 4,951
10. Intangibles
Computer software Trademarks
Goodwill Total
£000 £000 £000 £000
Cost
At 1 April 2023 6,175 4,337 165 10,677
Additions - 391 - 391
At 30 September 2023 6,175 4,728 165 11,068
Depreciation
At 1 April 2023 5,248 2,632 94 7,974
Amortisation - 285 8 293
At 30 September 2023 5,248 2,917 102 8,267
Net book value
At 30 September 2023 927 1,811 63 2,801
At 31 March 2023 927 1,705 71 2,703
11. Trade and other receivables
Unaudited as at 30 September 2023 Unaudited as at 30 September 2022
Audited as at 31 March 2023
£000 £000 £000
Trade receivables - gross 3,144 3,069 3,292
Allowance for doubtful debts (283) (447) (333)
Trade receivables - net 2,861 2,622 2,959
Other receivables 533 574 2,113
Current tax receivable - 380 -
Prepayments and accrued income 3,859 2,775 2,357
7,253 6,351 7,429
12. Trade and other payables
Unaudited as at 30 September 2023 Unaudited as at 30 September 2022
Audited as at 31 March 2023
£000 £000 £000
Trade payables 8,442 5,728 7,116
Other taxes and social security costs 377 1,642 1,610
Accruals 2,418 3,990 2,585
Other payables 1,198 1,768 1,291
Amounts due to related parties - 8 -
12,435 13,136 12,602
13. Cash and cash equivalents
Unaudited as at 30 September 2023 Unaudited as at 30 September 2022
Audited as at 31 March 2023
£000 £000 £000
Cash at bank and in hand 3,850 9,210 7,575
14. 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 2023 Unaudited as at 30 September 2022
Audited as at 31 March 2023
£000 £000 £000
Carrying value of financial assets:
Cash and cash equivalents 3,850 9,210 7,575
Trade and other receivables 3,394 3,576 5,072
Total financial assets 7,244 12,786 12,647
Carrying value of financial liabilities:
Trade and other payable (9,640) (7,504) (10,992)
Bank and other borrowings (258) - (1,410)
Derivative financial instruments (43) (300) (65)
Lease liabilities (7,334) (5,159) (6,876)
Total financial liabilities (17,275) (12,963) (19,343)
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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