Half Year Trading Update and Board Changes

Science in Sport PLC

28 June 2024

 

 

SCIENCE IN SPORT PLC

("Group" or "Company")

Half Year Pre-Close Trading Update and Board Changes

Science in Sport plc (AIM: SIS), the premium performance nutrition company serving elite athletes, sports enthusiasts, and the active lifestyle community, is pleased to announce it's unaudited pre close trading update for the for the six months ended 30th June 2024 ("the Period" or "H1 FY24") as well as  the appointment of Christopher Welsh as Chief Financial Officer (CFO), with Dan Lampard taking on the role of Chief Operating Officer, having joined the Group as CFO in 2022. Megan Blaylock will also be joining as Chief Commercial Officer at the end of July 2024.

Half Year Pre-Close Trading Update - H1 FY24

The Board is pleased to report that the Group's performance improved throughout H1 FY24 as the Group made significant strategic progress following the appointment of a new leadership team and a detailed operational review completed in the previous year. Whilst the strength of our two core brands, SiS and PhD, is unquestionable, the prior strategy of focusing on top line growth across all channels and markets has been reset so that the business can address the huge growth opportunities and demand for SIS in particular from a solid platform. The resetting of marginal revenue channels and a pivot towards controlled profitable growth has reduced revenue in the short term but importantly, margins have and should continue to improve due to significant operational cost efficiencies and more disciplined pricing.

H1 FY24 EBITDA is anticipated to be in-line with  expectations despite lower revenues, with the focus in the Period shifting to higher margin, controlled growth. The Group estimates H1 FY24 will be Underlying EBITDA of c.£2.0m (FY22 £1.1m), up 77% as the cost rationalisation programme and review of the business operating model begins to benefit. Furthermore, a cost reduction was notable from the exiting of a number of uncommercial marketing contracts where further savings are anticipated throughout the remainder of FY24.

The Group estimates closing H1 FY24 with revenue of c.£25.5m (FY22: £34.4m), a reduction of 27% from H1 FY23 due to a shift in sales towards a royalty based model in certain export regions as well as a conscious step back from marginal revenue channels to prioritise profitable, cash generative growth. Management anticipates that full FY24 year on year revenues will decrease due to these actions but in the medium term management continue to expect sustained revenue growth via effecting marketing and strong commercial execution with profit margin growth prioritised.

Gross profit margin improved by 3 percentage points to 45% (H1 FY23: 42%), with the underlying improvement in the operating model better reflected by the significantly improved trading contribution margin of 25% (H1 FY23: 20%) from the lower cost base. A robust operational cost review and rationalisation programme has been undertaken and is anticipated to deliver annualised aggregate cost savings in excess of £6m compared to the run rate prior to leadership changes.

Net debt[1] is expected to be £13.8m (H1 FY23: £13.2m) as annualised cost saving actions are yet to be fully realised in cash generation, management anticipates continued margin improvements resulting in cash generation and significant deleveraging in the medium term.

Current trading outlook:

·      Underlying EBITDA performance is anticipated to continue to strengthen in H2 FY24 as operational and marketing cost savings annualise.

·      Underlying EBITDA and Trading Contribution margins anticipated to strengthen as the business focuses on high margin sales channels and continued focus on cost efficiency.

·      Management anticipate that full year FY24 year on year revenues will decrease in the short term as marginal revenue channels are reset or restructured as the business pivots in to more profitable routes to market. Beyond FY24 management expect sustained revenue growth via effective marketing and strong commercial execution.

·      New operating model being embedded post the recent restructuring; with a primary focus on controlled growth over the medium term; and continued margin improvements resulting in cash generation and deleveraging.

Dan Wright, Executive Chairman commented:

"The Board is pleased to report that the Group performed strongly in H1 FY24 delivering substantial growth in Underlying EBITDA year on year with profitability margins improving at both a gross and a trading contribution level. This is underpinned by the resetting of the cost base following detailed review of operating costs. Whilst the business has consciously stepped away from low margin revenue streams in the short term, we do anticipate controlled and sustained revenue and profit growth in the medium term."

Executive Appointments

The Board is pleased to announce the appointment of Christopher Welsh as CFO, with Dan Lampard taking on the role of Chief Operating Officer, having joined the Group as CFO in 2022. Megan Blaylock will also be joining as Chief Commercial Officer (a non-plc board position) at the end of July 2024.

Chris Welsh is a Chartered Accountant and brings a wealth of financial experience and was formerly CFO at AIM company Accrol Group Holdings plc until the recent acquisition by Navigator Paper UK Limited.  He has also held senior roles in large global businesses including as Head of Financial Reporting at INEOS Enterprises. Chris has significant experience in M&A, and multi-national consolidation in addition to being skilled in technical accounting, audit management - delivering on multi-national and multi-firm audits, and tax.

Megan Blaylock is a McKinsey alumnus and joins from Glanbia Performance Nutrition, where she led the global commercial team for the Body & Fit division. She has extensive experience in strategic development and commercial execution with a proven track record of delivering growth in multi-national markets.

Dan Wright, Executive Chairman commented:

"We are delighted to welcome Chris to the Board. He is an experienced financial executive who he has been operating at the highest standard, and brings a refreshed commitment, energy and acumen to the Board which will help deliver our strategic objectives."

"The appointment of Megan as Chief Commercial Officer significantly strengthens our executive and commercial team, her capability, industry experience and passion will help accelerate the delivery of our strategy and we are delighted that she will join in July"

"I would also like to take this opportunity to thank Dan for his significant contribution to the Group as CFO, Dan hands over to Chris a much strengthened finance team and infrastructure. Dan will now take on the role of Chief Operating Officer and we look forward to continue benefiting from his wealth of experience.

"The following information is disclosed in respect of Christopher Welsh pursuant to Rule 17 and Schedule 2(g) of the AIM Rules for Companies.

The names of all companies and partnerships of which Christopher James Welsh, aged 34, is, or has been a director or partner at any time in the previous five years are set out below:

Previous directorships or partnerships (in the last five years)

Accrol Papers Limited

Accrol UK Limited

John Dale (Holdings) Limited

Leicester Tissue Company Limited

Accrol Group Holdings Plc

Art Tissue Ltd

Accrol Holdings Limited

John Dale Limited

LTC Parent Ltd

Severn Delta Limited

Christopher Welsh has no personal interest in the ordinary shares of Science in Sport plc. Save as set out in this announcement, there are no further details to be disclosed under Rule 17 or Schedule 2(g) of the AIM Rules for Companies in respect of Mr Welsh.

Ends

Science in Sport plc	T: 020 7400 3700
Dan Wright, Executive Chairman Daniel Lampard Chief Operating Officer
Liberum (Nominated Adviser and Broker)	T: 020 3100 2000
Richard Lindley John More Anake Singh

About Science in Sport plc

www.sisplc.com

Headquartered in London, Science in Sport plc is a leading sports nutrition business that develops, manufactures, and markets innovative nutrition products for professional athletes, sports and fitness enthusiasts and the active lifestyle community. The Company has two highly regarded brands, PhD Nutrition, a premium active-nutrition brand targeting the active lifestyle community, and SiS, a leading endurance nutrition brand among elite athletes and professional sports teams.

The two brands sell through the Company's phd.com and scienceinsport.com digital platforms, third-party online sites, including Amazon and ebay, and extensive retail distribution in the UK and internationally, including major supermarkets, high street chains and specialist sports retailers. This omnichannel footprint enables the Company to address the full breadth of the sports nutrition market.

PhD is one of the UK's leading active nutrition brands with a reputation for high quality and product innovation. The brand has grown rapidly since its launch in 2005. The range now comprises powders, bars, and supplements, including the high protein, low sugar range, PhD Smart.

SiS, a leading endurance nutrition business founded in 1992, has a core range comprising gels, powders and bars focused on energy, hydration, and recovery. SiS is an official endurance nutrition supplier to over 320 professional teams, organisations, and national teams worldwide. SiS supplies more than 150 professional football clubs in the UK, Europe, and the USA.

SiS is Performance Solutions partner to Ineos Grenadiers cycling team, and Tottenham Hotspur and CGC Nice football clubs.

For further information, please visit phd.com and scienceinsport.com

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[1] Net debt is reported on a Pre-IFRS16 basis

 

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