TIDMBAR
RNS Number : 2159A
Brand Architekts Group PLC
28 September 2020
Brand Architekts Group plc
("Brand Architekts" or the "Group")
Final Results
Brand Architekts Group plc announces its final results for the
52 weeks ended 27 June 2020.
Overview of Results:
Group Continuing Operations
2020 2019 2020 2019
---------- ---------- ------------ ----------
Revenue GBP23.7m GBP77.3m GBP16.3m GBP19.7m
---------- ---------- ------------ ----------
Underlying operating (loss) GBP(0.8)m GBP4.4m GBP0.1m GBP2.4m
/ profit (1)
---------- ---------- ------------ ----------
(Loss) / Profit before taxation GBP2.2m GBP4.1m GBP(4.3)m GBP1.8m
---------- ---------- ------------ ----------
EPS 12.9p 20.7p
---------- ---------- ------------ ----------
Net cash / (debt) GBP18.0m GBP(7.2)m
---------- ---------- ------------ ----------
(1) Underlying operating profit is calculated before exceptional
items, share based payments, and amortisation of
acquisition-related intangibles
Financial headlines:
-- Revenues for the 52 weeks of GBP16.3m (excluding sales from
discontinued operations), a decline of 17% on the prior year.
-- UK sales declined by 16%, driven by low consumer confidence
and pressure within the retail environment, and the impact of store
closures as a result of the outbreak of COVID-19.
-- International sales declined by 24% following the heavy
impact of currency devaluation in Turkey, the effect of increased
tariffs on cosmetic goods shipped from China to USA and the impact
of COVID-19 across several of our markets.
-- Underlying Gross Profit Margin, excluding exceptional
inventory provisions and write offs made at the year end of
GBP2.5m, was 35.2%. Gross profit margin including these items
declined to 19.6% (2019: 35.6%).
-- Continuing operations made an underlying operating profit of
GBP0.1m, while the Group made an underlying operating loss of
GBP0.8m (2019: underlying operating profit GBP4.4m).
-- Group Profit before tax decreased to GBP2.2m (2019: profit before tax GBP4.1m).
-- Net cash position at the year ended June 2020 was GBP18.0m (2019: net debt GBP7.2m).
Operational highlights:
-- Creation of a solely Owned Brands business following the
disposal of the Contract Manufacturing Business for GBP35
million.
-- Operational transition now complete.
-- Appointment of new Executive team to build scale and deliver further profitable growth.
-- Detailed review of operations undertaken including full review of brand portfolio.
Quentin Higham, Chief Executive, commented:
"Since joining in May, I have been impressed with the depth of
our product portfolio and the professionalism of the team, who have
endured the most difficult of trading conditions with great
resilience and determination. Following a detailed review of all
operations, I believe we now have the right strategy to deliver
sustainable, profitable growth over the coming years."
Roger McDowell, incoming Non-Executive Chairman, commented:
"Having already been involved with the business for a number of
years as a Senior Independent Director, I am very excited to be
working with the new management team. I have no doubt that we have
the model and depth of resources to position us for success over
the next few years.
I would like to thank Brendan Hynes for his stewardship, as he
has overseen the transformation of the Group to a fully focused
branded business with a very strong balance sheet.
I look forward to working with the rest of the Board as we seek
to deliver growth organically, through transformational investment
and focus on DTC (direct to consumer) and through targeted
acquisitions."
For further information please contact:
Brand Architekts plc
--------------------------------- ---------------
Roger McDowell Incoming Non-Executive Chairman via Alma
Quentin Higham Chief Executive
Tom Carter Chief Finance Officer
--------------------------------- ---------------
Shaun Dobson / Jen
Boorer N+1 Singer (Nomad) 0207 496 3000
--------------------------------- ---------------
Josh Royston / Sam
Modlin Alma PR 07780 901979
--------------------------------- ---------------
CHAIRMAN'S STATEMENT
This financial year has been one of transformation for the
Group, while presenting both opportunities and challenges in equal
measure.
In August 2019 we concluded the disposal of our manufacturing
business, leaving a company solely focused on owned-brands, and
with a strong balance sheet. While this deal was transformational,
it also required the business to go through a period of significant
operational transition. We needed to recruit a fresh management
team with the necessary experience and ambition to reflect this
change of focus, and who could put in place their own strategic
vision for delivering shareholder value.
While the search was underway, we were fortunate to be able to
call on the experience of Chris How to act as Interim Chief
Executive, and I would like to thank him for providing executive
management continuity during this challenging period. Even so, the
distractions of managing the sale and realigning our management
structure inevitably impacted business performance during the
reporting period.
With these issues now behind us, I am pleased to say that in
Quentin Higham as CEO and Tom Carter as CFO, I am confident that we
have the right team in place to develop and execute an exciting new
strategic plan to deliver shareholder value for the business. They
have identified and will build the right platform of systems and
processes to drive the business forward.
This new executive team joined the business as we were starting
to see the effects of the COVID-19 pandemic. This had an immediate
effect on the buying habits of both consumers and retailers alike,
presenting both risks and opportunities for the Group.
Performance review
The final quarter of the financial year was heavily impacted by
COVID-19, with non-essential retailers closed during this period
and International business effectively on hold.
As a result net sales for FY20 were GBP16.3m, (excluding sales
from discontinued operations), a decline of 17% on the prior year.
Sales in the first half were GBP10.6m, a decline of 15% when
compared to H1 2019 (GBP12.5m). Sales in the second half of FY20
declined by 21%, to GBP5.7m (H2 2019: GBP7.2m).
Following the heavy impact of currency devaluation in Turkey and
the effect of increased tariffs on cosmetic goods shipped from
China to USA, international sales declined by 24%. Looking forward,
should the tariffs be reversed, the Board believes that the Group
is well placed to recover a large proportion of the affected USA
business.
UK sales declined by 16%, despite encouraging volume growth
across our three 'drive' brands, two of which were re-launched
within the period. The decline was largely due to one significant
customer, however, overall low consumer confidence and pressure
within the retail environment has resulted in a reduction of both
category space and the effectiveness of promotional activity.
Gross profit margin declined to 19.6% (2019: 35.6%). Underlying
Gross Profit Margin, which excludes Gross Profit of GBP2.5m from
exceptional inventory provisions and write offs made at the year
end, was 35.2%. As part of the business transformation to focus on
Owned Brands with a new management team, a number of decisions were
taken to reshape the brand portfolio, triggering adjustments to
these brands and related inventory. This includes brands being
exited, de-listed, re-launches and clearance of older products
which may have historically been sold through discount channels.
These costs are one off as part of the business transformation,
therefore margins are expected to normalise in FY20/21.
Profit before tax decreased to GBP2.2m (2019: profit before tax
GBP4.1m). This included exceptional items of GBP3.5m comprising the
profit made on the disposal of the manufacturing business of
GBP8.9m offset with exceptional costs of GBP5.4m.
Impact of COVID-19
Clearly, the outbreak of COVID-19 in March presented us with a
challenge that no business had experienced before. We took
immediate steps to ensure the health and well-being of our
employees, clients and suppliers and this still remains the top
priority for the Group. I would like to thank all our employees for
their tireless work and dedication throughout these challenging
times.
Encouragingly, overall sales performance during H2 was stronger
than the Board had anticipated. Even so, we weren't immune to the
fluctuating demands of customers and end-consumers, and during the
last quarter of FY20 the impact of the pandemic had a significant
effect on the sales mix.
Our brands' performance within UK grocers showed single digit
growth, while our online sales channels, whether through large
e-tailers such as Amazon or our own branded websites, have
delivered high double digit growth. As a result of the shift to
online we stepped up promotional activity to capitalise on this
route to market.
These gains did not offset the significant decline in other high
street outlets, whose store traffic was impacted during lockdown.
Additionally, several key international markets did not place
orders during Q4 FY20 due to the closure of most general
merchandise and department stores.
Unsurprisingly, sales of handcare products increased
significantly and we were able to secure extra supply to support
retailer demand. But it was also no surprise that sales of male
haircare and shaving products saw a major decline.
Response to COVID-19
In order to mitigate the impact of COVID-19 on the business, the
Group took a number of decisions to reduce operating costs and
associated cash requirements. These included:
-- a number of short-term reductions on our discretionary expenditure
-- a short-term suspension of rent payments for our offices in Teddington
-- steps to manage staff costs, including a hiring freeze across a number of vacant positions
-- all Board directors agreeing to a 20% reduction in their
respective salaries or fees (April-June).
However, the business took the decision not to participate in
the furlough scheme, so that the team could focus on its response
to consumer behaviour post COVID-19, and to plan for FY21.
Board changes
Over the period, and following the sale of our manufacturing
business, we made a number of changes to the executive team and
Board. We now believe that we have the team in place to build scale
and deliver further profitable growth.
Quentin Higham became CEO, effective from 4 May 2020. Despite
the difficulties of joining the business in the midst of lockdown,
his deep industry experience and passion for brands has been
evident from the outset. Quentin joined Brand Architekts from
Yardley of London Ltd. where he had been Managing Director for 10
years. Previously he had been Marketing Director at Coty and was
Head of UK Marketing at global cosmetics company Revlon.
On 22 June 2020 Tom Carter joined the Group as Chief Financial
Officer. Tom brings strong financial and operational skills to the
business and the Board believes he is the right person to steer
Brand Architekts to the next stage in its development. Tom joined
from Technetix Group Limited, a market-leading technology company,
where he was Group Finance and Operations Director. Previously, he
was Regional Business Controller at Alliance Boots, Financial
Controller at Sky Media and Finance Manager at Procter &
Gamble. Tom trained as a Chartered Accountant with PwC.
As announced on 14 July 2020, Chris How was appointed as a
non-executive director with immediate effect. Chris was formerly
the CEO of Swallowfield PLC (the previous name of the Group) and
recently served as interim CEO of Brand Architekts. Chris brings
continuity, detailed knowledge of the business and extensive,
relevant sector experience. I have no doubt that he will provide
sound counsel to Quentin and Tom.
After seven years in the role, as announced on 14 July 2020, I
informed the Group of my intention to step down from the Board
following the presentation of these financial results. With the
Group now transformed into a strong, fully brands-focused,
cash-positive business, and with a new executive team in place, I
feel that now is the right time to step aside. I am proud of the
work that we have done to transform the business and believe that
it has never been better placed to build scale and drive
growth.
Roger McDowell, the incumbent Senior Independent Director and
Chair of the Remuneration Committee, will succeed me and take on
the role of Non-Executive Chairman. Roger is an experienced
Chairman and non-executive director, and his extensive knowledge of
the business provides for a smooth and seamless transition.
Dividends
Following the sale of the manufacturing business and subsequent
reorganisation, the Group has not delivered an operating profit
this year. Accordingly, the Board will not be proposing a final
dividend. The payment of the interim dividend was cancelled as a
result of uncertainty following the coronavirus outbreak. The
Group's dividend policy will be kept under review and further
updates made as appropriate.
Outlook
As we enter the new financial year the difficult trading
conditions remain and the impact on the high street in particular
is uncertain. This is evidenced by the caution being shown by
retailers for their forthcoming Christmas orders, where agreed
volumes are down on last year both domestically and I
internationally.
The impact of COVID-19 on our business has been significant, but
we have responded well to these challenges. We now have in place a
new management team, an experienced and committed workforce and a
strong balance sheet with significant positive cash.
We are responding to structural changes in the market, by
accelerating our strategy to develop and invest in online sales,
further innovative NPD and a stronger focus on distribution in both
the UK and internationally. There is still considerable work to be
done on relaunching a number of underperforming brands;
rationalising ranges & improving productivity. All of these
plans are in place but given retailer range review dates, will not
come to fruition until H2 this year.
Given the strength of our balance sheet, we also remain alert to
further acquisition opportunities which offer the potential to
build scale and deliver incremental shareholder value.
Given these uncertain conditions it would be inappropriate to
provide guidance on the likely outcome for the year at this time.
This will be kept under review and guidance will be provided when
there is greater clarity.
Brendan Hynes
Non-Executive Chairman
CEO'S STATEMENT
It is a great pleasure to give you my first impressions of Brand
Architekts, having taken up the reins as Chief Executive in
May.
I can safely say it has been an induction like no other I've
experienced: when I arrived the business had hunkered down due to
COVID-19, against a sad backdrop of ghost-town high streets and
rapidly changing retail habits. The lockdown also meant that
getting together with my new colleagues was necessarily confined to
Microsoft Teams.
However, it was instantly clear to me that I was inheriting a
team that had become adept at making light work of challenges and
changes. With unswerving dedication and passion, they had already
embraced significant structural and management changes during this
reporting year. They proceeded to address the pandemic, and its
considerable business and logistical implications, with the same
calm professionalism.
I'm also excited to be working with two fellow new recruits to
the management team: Tom Carter (Chief Financial Officer) and
Joanna Hutton (Commercial Director). We have already launched
ambitious new growth plans, and across our business I'm entirely
confident we have the talent, drive and portfolio to deliver
them.
Initial findings
Brand Architekts is not in fact entirely new to me. I have
worked in the beauty sector for nearly 30 years and was involved
with BA brands such as Fish! and Real Shaving Company in previous
roles.
One of my first tasks was to review how we are organised. Brand
Architekts was only established in its current guise in August 2019
and there were transitional service agreements in place until the
end of that calendar year. Much of my initial focus was therefore
on making sure that we have the right structures and processes in
place to give us the insight we need across all functions of the
business.
Of course, one of the businesses key strengths is its portfolio
of brands. Understanding the needs of retailers and delivering
products to meet those needs has been the foundation of Brand
Architekts' success and reflects the strength of relationships we
enjoy. This is also a time when the breadth of our portfolio comes
into its own: we cover both female beauty and male grooming
products, and at different price points ranging from "masstige" to
everyday accessible value. This should give us resilience as the
true economic impact of the pandemic becomes increasingly felt. We
are increasingly focused on productivity and rationalising
underperforming SKUs and brands.
As we move into FY21 and beyond, I see immediate priorities in
three specific areas:
-- Getting closer to our end-consumers' needs and wants. Just as
we have forged strong relationships with customers, we need to do
the same with consumers. Consumer habits change at pace and it is
only by being hard-wired into those evolving needs that a brand can
achieve its full potential. By complementing our team's knowledge
of the marketplace with more deep-dive data analysis, we can
improve and create more powerful, sustainable brands.
Pleasingly, our portfolio contains brands with considerable
untapped potential. Once we have gained consumer insight, we will
invest in these specific brands to accelerate market awareness,
drive demand and achieve higher ROI. Even where certain brands do
not merit extra investment, they can still be profitable and cash
generative.
-- Strengthening our DTC channels. As I write, high street
outlets are cautiously emerging from lockdown. While this is
heartening to see, footfall is, and is expected to remain,
depressed for the foreseeable future. COVID-19 has highlighted that
we have a pressing need to build a robust direct-to-consumer (DTC)
channel. We will invest the resources required and actively get
closer to our consumer base.
-- Realise our full potential internationally. Although we
already have a presence in 28 countries, there is much more we can
do. The love of high quality, efficacious, yet affordable beauty
products transcends borders and I will be drawing on my
international experience to oversee this personally.
I am pleased to say that the sale of our manufacturing business
in 2019 means we have the resources to make these investments
happen. We also intend to supplement these organic initiatives with
acquisitions which will strengthen our core competences, and/or
address areas of weakness. It is always hard to predict a timeline
for M&A activity, but we will approach opportunities
selectively. The Board will be focused on the right deals - those
that complement our strategy and generate good ROI - rather than
quick deals.
With this combination of organic and acquisitive initiatives,
I'm confident that within five years we will have created a company
delivering GBP50m of annualised revenues. To this end we have
launched "Project 50" internally, and we are united in believing
that while this goal is ambitious, it is also eminently achievable.
Project 50 will enable us to achieve scale and increase earnings,
resulting in improved shareholder value.
This Project 50 plan allows for the challenging retail
conditions we are witnessing now and the uncertainty around when
they might improve. In FY21, the year ahead will be one of
consolidation for Brand Architekts as we finalise the platform, the
products and the routes to market that will drive this business
forward.
Quentin Higham
Chief Executive Officer
FINANCIAL REVIEW
Key Performance Indicators
To measure and monitor our progress against our growth strategy,
we track our performance against a set of ambitious targets and
milestones. The goals we set are closely assessed to ensure we
focus our efforts to deliver both in the short term and long term.
A summary of the financial measures used are:
2020 2019
----------------------------------- ----------- ----------
Reported Results from continuing
operations
----------- ----------
Revenue (note 5) GBP16.3m GBP19.7m
----------- ----------
Underlying operating profit GBP0.1m GBP2.4m
(1)
----------- ----------
(Loss) / Profit before taxation GBP(4.3)m GBP1.8m
----------- ----------
Reported Results from continuing
and discontinued operations
----------- ----------
Revenue (note 5) GBP23.7m GBP77.3m
----------- ----------
Underlying operating (loss) GBP(0.8)m GBP4.4m
/ profit (1)
----------- ----------
Profit before taxation GBP2.2m GBP4.1m
----------- ----------
Basic earnings per share GBP12.9p 20.7p
---------- ----------
Net cash / (debt) GBP18.0m GBP(7.2)m
---------- ----------
(1) Underlying operating profit is calculated before exceptional
items, share based payments, and amortisation of
acquisition-related intangibles
A reconciliation of underlying operating profit to profit before
taxation is shown below:
2020 2020 2020 2019 2019 2019
------------------------- ----------- ------------- -------- ----------- ------------- ------
Continuing Discontinued Total Continuing Discontinued Total
Underlying
(loss) /
profit from
operations 121 (909) (788) 2,355 2,073 4,428
----------- ------------- -------- ----------- -------------
Exceptional
Cost of
Sales (2,535) (2,535)
Amortisation
of acquisition-related
intangibles (260) (260) (260) (260)
Charge for
share-based
payments (4) - (4) (115) (115)
Adjusted
Operating
(loss) /
profit (2,678) (909) (3,587) 1,980 2,073 4,053
----------- ------------- -------- ----------- -------------
Net finance
(costs)
/ income (224) (23) (246) (144) 901 757
--------------------------
Adjusted
(loss) /
profit before
taxation (2,902) (931) (3,833) 1,836 2,974 4,810
Other exceptional
items (1,444) 7,460 6,016 (48) (669) (717)
(Loss) /
profit before
taxation (4,346) 6,529 2,183 1,788 2,305 4,093
----------- ------------- -------- ----------- -------------
The Group implements a number of non-statutory measures which
are summarised in the tables above and in more detail within the
segmental Income Statement (note 5). These measures are used to
illustrate the impact of non-recurring and non-trading items on the
Group's financial results.
In addition to the financial key performance measures, a range
of operational non-financial key performance indicators are also
monitored at a management level covering, amongst others, new
product development and innovation. The Board receives an overview
of these as part of its board management report.
Group statutory revenue at GBP16.3m from continuing operations
was down 17% against prior year, adversely impacted by the
continued decline in consumer confidence and retailer pressures,
coupled with international pressures following the currency
devaluation in Turkey and increased US tariffs from goods shipped
from China and also the impact of COVID-19 in the last quarter of
the financial year.
The gross profit margin declined to 19.6% (2019: 35.6%). This
decline is driven by exceptional adjustments as discussed in the
Chairman's statement. Adjusting for these items Underlying Gross
Profit margin was 35.2%. As these are one off costs, margins are
expected to normalise in 2021.
Continuing operations made an underlying operating profit of
GBP0.1m, while the Group made an underlying operating loss of
GBP0.8m (2019: underlying operating profit GBP4.4m). Underlying
operating profit is shown before amortisation of intangibles,
exceptional costs and charges for share-based payments. Share
options are put in place in order to incentivise the Group's wider
management team (including the Executive Directors) and to ensure
that their interests are aligned with shareholders. At the
year-end, all previous executive share option schemes had been
settled in full. At the reporting date, new schemes are in the
process of being implemented.
The Group made a Profit Before Tax of GBP2.2m including other
exceptional items of GBP3.5m made from the disposal of the
manufacturing business of GBP8.9m offset with exceptional costs of
GBP5.4m.
The effective tax rate for the period was negative 1% (2019:
positive 11.1%) of pre-tax profits. The effective rate is below the
statutory rate of 19% mainly due to the impact of the untaxable
profit on disposal of the manufacturing division, losses carried
back to previous period and the non recognition of deferred tax
assets in relation to taxable losses carried forward. The current
year tax charge reflects standard UK rates of taxation.
Net debt and cash flow
The Group has moved from a net debt to a net cash position
primarily as a result of the net proceeds from the disposal of the
manufacturing business in August 2019. The Group's net cash
position at the year ended June 2020 was GBP18.0m (2019: net debt
GBP7.2m). Following the disposal of the manufacturing business, the
majority of the Group's trading was in GBP. Note 10 provides an
analysis of net cash.
Financing costs of GBP0.3m (2019: GBP0.4m) comprised interest
expense of GBP0.1m (2019: GBP0.26m) plus a pension plan notional
finance charge of GBP0.2m (2019: charge GBP0.13m). Finance income
in the year is interest received on cash deposits. Finance income
in the prior year was the receipt of GBP1.15m income from the
investment holding in Shanghai Colour Cosmetics Technology Company
Limited (which was disposed of as part of the sale of the
manufacturing business).
Capital expenditure in the year was limited to the design and
implementation of a new ERP system (GBP0.1m), plus purchases of
laptops and fixtures and fittings for the office (GBP0.03m).
Defined benefit pension plan
The defined benefit pension plan underwent its last triennial
valuation on 5 April 2017. The deficit on a statutory funding basis
was GBP2.6m and the Group entered into a revised deficit recovery
plan and schedule of contributions in July 2018. Under this there
is a commitment to make deficit reduction payments of GBP318k per
annum for seven years and GBP210k for a further three years, and to
pay certain administration costs and the PPF levy for the life of
the plan. This commitment will be re-assessed and is likely to be
increased once the results of the next triennial valuation at 5
April 2020 are available. At the reporting date, the April 2020
valuation is still in progress.
Accounting Standards require the discount rate used for
valuations under IAS19 'employee benefits' to be based on yields on
high quality (usually AA-rated) corporate bonds of appropriate
currency, taking into account the term of the relevant pension
plan's liabilities. Corporate bond indices are used as a proxy to
determine the discount rate. At the reporting date, the yields on
bonds of all types were lower than they were at 29 June 2019. This
has resulted in lower discount rates being adopted for accounting
purposes compared to last year. This has materially increased the
fair value of the plan liabilities as measured under IAS 19, which
combined with the anticipated investment return performance, has
translated into an increased liability under the IAS19 methodology.
For accounting purposes at 27 June 2020, the Group recognised under
IAS19 'employee benefits', a net liability of GBP13.2m (2019:
GBP9.4m).
Going Concern
As part of its normal business practice, the Group prepares
annual and longer-term plans and, in reviewing this information the
Directors have a reasonable expectation that the Company and Group
have adequate resources to continue in operational existence for
the foreseeable future. The Group has significant cash reserves of
GBP21.2m following the sale of the manufacturing business.
Accordingly, we continue to adopt the going concern basis in
preparing the annual report and accounts.
Group Statement of Comprehensive Income
For the 52 weeks ended 27 June 2020 and 52 weeks ended 29 June
2019
2020 2019
Notes GBP'000 GBP'000
Revenue 5 16,250 19,676
Cost of sales (including Exceptional costs) 6 (13,069) (12,680)
--------------------------------------------------------------------- ------ --------- ---------
Gross profit 3,181 6,996
Commercial and administrative costs (5,859) (5,016)
--------------------------------------------------------------------- ------ --------- ---------
Operating (loss) / profit before other exceptional items (2,678) 1,980
Exceptional items 6 (1,444) (48)
--------------------------------------------------------------------- ------ --------- ---------
Operating (loss) / profit (4,122) 1,932
--------------------------------------------------------------------- ------ --------- ---------
Finance income 77 -
Finance expense (301) (144)
--------------------------------------------------------------------- ------ --------- ---------
(Loss) / Profit before taxation 7 (4,346) 1,788
Taxation 8 55 (198)
--------------------------------------------------------------------- ------ --------- ---------
(Loss) / Profit for the year (4,291) 1,590
--------------------------------------------------------------------- ------ --------- ---------
Profit on Discontinued Operations after taxation 11 6,529 2,050
--------------------------------------------------------------------- ------ --------- ---------
Profit for the year 2,238 3,640
===================================================================== ====== ========= =========
Other comprehensive income/(loss):
Items that will not be reclassified subsequently to profit or loss:
Re-measurement of defined benefit liability (4,086) (4,011)
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (49) (35)
Loss on financial assets held at fair value - (6)
Other comprehensive loss for the year (4,135) (4,052)
--------------------------------------------------------------------- ------ --------- ---------
Total comprehensive loss for the year (1,897) (412)
===================================================================== ====== ========= =========
Profit attributable to:
--------------------------------------------------------------------- ------ --------- ---------
Equity shareholders 2,217 3,539
--------------------------------------------------------------------- ------ --------- ---------
Non-controlling interests 21 101
Total comprehensive (loss) / income attributable to:
--------------------------------------------------------------------- ------ --------- ---------
Equity shareholders (1,918) (513)
--------------------------------------------------------------------- ------ --------- ---------
Non-controlling interests 21 101
Earnings per share
- basic 9 12.9p 20.7p
- diluted 9 12.9p 20.0p
Dividends
Paid in year (GBP'000) 745 1,088
Paid in year (pence per share) 4.35p 6.35p
Proposed (GBP'000) Nil 745
Proposed (pence per share) Nil 4.35p
Group Statement of Financial Position
For the 52 weeks ended 27 June 2020, and 52 weeks ended 29 June
2019
2020 2019
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment including right of use assets 142 21
Intangible assets 11,714 12,817
Deferred tax assets 2,515 1,714
Total non-current assets 14,371 14,552
Current assets
Inventories 3,724 5,211
Trade and other receivables 3,969 3,475
Assets held for resale 11 - 22,700
Cash and cash equivalents 21,240 381
Current tax receivable 836 285
------------------------------------------------------------- ------ --------- --------
Total current assets 29,769 32,052
------------------------------------------------------------- ------ --------- --------
Total assets 44,140 46,604
------------------------------------------------------------- ------ --------- --------
LIABILITIES
Current liabilities
Trade and other payables 4,503 6,628
Interest-bearing loans and borrowings 1,029 1,139
Current tax payable - 527
------------------------------------------------------------- ------ --------- --------
Total current liabilities 5,532 8,294
------------------------------------------------------------- ------ --------- --------
Non-current liabilities
Interest-bearing loans and borrowings 1,066 2,091
Post-retirement benefit obligations 13,237 9,417
Lease liabilities 81 -
Deferred tax liabilities 1,154 1,061
Total non-current liabilities 15,538 12,569
------------------------------------------------------------- ------ --------- --------
Total liabilities 21,070 20,863
------------------------------------------------------------- ------ --------- --------
Net assets 23,070 25,741
------------------------------------------------------------- ------ --------- --------
EQUITY
Share capital 862 857
Share premium 11,987 11,987
Revaluation of investment reserve - 1,241
Exchange reserve - (147)
Pension re-measurement reserve (10,588) (6,502)
Retained earnings 20,711 18,160
------------------------------------------------------------- ------ --------- --------
Equity attributable to holders of the parent 22,972 25,596
------------------------------------------------------------- ------ --------- --------
Non-controlling interest 98 145
------------------------------------------------------------- ------ --------- --------
Total equity 23,070 25,741
------------------------------------------------------------- ------ --------- --------
Group Statement of Changes in Equity
For the 52 weeks ending 27 June 2020 and 52 weeks ending 29 June
2019
Share Share Revaluation Exchange Pension Retained Non-controlling Total
Capital Premium of Reserve re-measurement Earnings interest Equity
investment reserve
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Balance as at
June 2019 857 11,987 1,241 (147) (6,502) 18,160 145 25,741
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Dividends - - - - - (745) (68) (813)
Issue of new
shares 5 - - - - - - 5
Non-controlling
interest - - - - - - 21 21
Share based
payments
(credit) - - - - - (162) - (162)
Realisation of
exchange
differences on
sale of
subsidiary - - - 196 - - - 196
Transactions
with owners 5 - - 196 - (907) (47) (753)
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Profit for the
year - - - - - 2,217 - 2,217
Other
comprehensive
income:
Re-measurement
of defined
benefit
liability - - - - (4,086) - - (4,086)
Exchange
difference on
translating
foreign
operations - - - (49) - - - (49)
Realised profit
on asset sold - - (1,241) - - 1,241 - -
Total
comprehensive
income for the
year - - (1,241) (49) (4,086) 3,458 - (1,918)
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Balance as at
June 2020 862 11,987 - - (10,588) 20,711 98 23,070
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Share Share Revaluation Exchange Pension Retained Non-controlling Total
Capital Premium of Reserve re-measurement Earnings interest Equity
investment reserve
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Balance as at
June 2018 857 11,987 1,247 (112) (2,491) 15,455 79 27,022
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Dividends - - - - - (1,088) (35) (1,123)
Non-controlling
interest - - - - - - 101 101
Share based
payments charge - - - - - 254 - 254
Transactions
with owners - - - - - (834) 66 (768)
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Profit for the
year - - - - - 3,539 - 3,539
Other
comprehensive
income:
Re-measurement
of defined
benefit
liability - - - - (4,011) - - (4,011)
Exchange
difference on
translating
foreign
operations - - - (35) - - - (35)
Gain on
available for
sale financial
assets - - (6) - - - - (6)
Total
comprehensive
income for the
year - - (6) (35) (4,011) 3,539 - (513)
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Balance as at
June 2019 857 11,987 1,241 (147) (6,502) 18,160 145 25,741
----------------- -------- -------- ------------ --------- --------------- --------- ---------------- --------
Cash Flow Statement
For the 52 weeks ending 27 June 2020 and 53 weeks ending 29 June
2019
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Profit before taxation 2,183 4,093 5,627 461
Depreciation 93 1,262 - 1,064
Amortisation 1,204 944 1,020 768
Gain on disposal of subsidiaries (8,922) - (9,015) -
Change in value of assets held for resale prior to sale in period (3,225) - (3,681) -
Finance income (77) (1,146) (149) (1,182)
Finance cost 324 389 278 382
Decrease/(Increase) in inventories 1,487 (2,129) - (877)
Decrease /(Increase) in trade and other receivables (494) 1,252 (214) (1,693)
Increase/(Decrease) in trade and other payables 923 3,059 (1,562) 7,712
(Decrease) in share-based payments provision (124) (221) (124) (221)
Contributions to defined benefit plans (318) (282) (318) (282)
Cash generated from operations (6,946) 7,221 (8,138) 6,132
------------------------------------------------------------------- -------- -------- -------- --------
Finance expense paid (128) (263) (82) (256)
Taxation paid (773) (593) (50) (197)
------------------------------------------------------------------- -------- -------- -------- --------
Net cash flow from operating activities (7,847) 6,365 (8,270) 5,679
------------------------------------------------------------------- -------- -------- -------- --------
Cash flow from investing activities
Investment income received - 1,146 - 1,182
Purchase of property, plant and equipment (28) (1,088) - (900)
Purchase of intangible assets (101) (699) - (699)
Proceeds from the sale of subsidiaries 35,255 35,255
Cost associated with disposal of subsidiaries (1,315) - (1,315) -
Net cash flow from investing activities 33,811 (641) 33,940 (417)
------------------------------------------------------------------- -------- -------- -------- --------
Cash flow from financing activities
Movements in invoice discounting facility (3,187) (4,027) (3,592) (3,637)
Finance income received 77 - 149 -
Repayment of loans (1,135) (1,127) (1,135) (1,127)
Lease payments (52) - - -
Issue of new shares 5 - 5 -
Dividends paid (813) (1,123) (745) (1,088)
------------------------------------------------------------------- -------- -------- -------- --------
Net cash flow from financing activities (5,105) (6,277) (5,318) (5,852)
------------------------------------------------------------------- -------- -------- -------- --------
Net increase / (decrease) in cash and cash equivalents 20,859 (553) 20,352 (590)
Cash and cash equivalents at beginning of year 381 934 147 737
------------------------------------------------------------------- -------- -------- -------- --------
Cash and cash equivalents at end of year 21,240 381 20,499 147
------------------------------------------------------------------- -------- -------- -------- --------
Notes to the Accounts
1. Statutory Accounts
The financial information does not constitute statutory accounts
as defined in section 435 of the Companies Act 2006, but has been
extracted from the statutory accounts for the year ended June 2020
on which an unqualified audit report has been issued and which will
be delivered to the Registrar following their adoption at the
Annual General Meeting.
The statutory accounts for the financial year ended June 2019
have been delivered to the Registrar of Companies with an
unqualified audit report and did not contain a statement under
section 498 of the Companies Act 2006.
Copies of the 2020 Annual Report and Accounts will be posted to
shareholders with the notice of the Annual General Meeting. Further
copies may be obtained by contacting the Company Secretary at Brand
Architekts Group plc, 8 Waldegrave Rd, Teddington, TW11 8GT. An
electronic copy will be available on the Group's web site (
www.brandarchitektsplc.com ).
2. Basis of preparation
The Group has prepared its consolidated financial statements in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union and also in accordance with IFRS
issued by the International Accounting Standards Board. These
financial statements have been prepared under the historical cost
convention, modified to include the revaluation of certain
non-current assets and financial instruments.
The Directors have considered trading and cash flow forecasts
prepared for the Group, and based on these, and the confirmed
banking facilities, are satisfied that the Group will continue to
be able to meet its liabilities as they fall due for at least one
year from the date of signing of these accounts. On this basis,
they consider it appropriate to adopt the going concern basis in
the preparation of these accounts.
The consolidated financial statements are presented in sterling
and all values are rounded to the nearest thousand (GBP'000) except
where otherwise indicated.
3. Discontinued activities
As a result of the disposal of the manufacturing business
(completed 23 August 2019), these operations have been disclosed as
discontinued and the related assets classified as held for sale at
the prior year end.
4. Basis of consolidation
The Group financial statements consolidate the financial
statements of the Company and its subsidiary undertakings. The
results and net assets of undertakings acquired or disposed of
during a financial year are included in the Group Statement of
Comprehensive Income and Group Statement of Financial Position from
the effective date of acquisition or to the effective date of
disposal. Subsidiary undertakings have been consolidated using the
purchase method of accounting. In accordance with the exemptions
given by section 408 of the Companies Act 2006, the Company has not
presented its own Statement of Comprehensive Income. The Company's
profit after tax for the year to June 2020 was GBP5.518m (2019:
profit after tax GBP0.487m).
The Group financial statements consolidate those of the parent
company and all of its subsidiaries as of June 2020. The parent
controls a subsidiary if it is exposed, or has rights, to variable
returns from its involvement with the subsidiary and has the
ability to affect those returns through its power over the
subsidiary. All subsidiaries have a reporting date of June.
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Amounts reported in the
financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies
adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of
disposal, as applicable.
5. Segmental analysis
During the year, the reportable segments of the Group were
aggregated as follows:
-- Brands - we leverage our skilled resources to develop and
market a growing portfolio of Brand Architekts Group owned and
managed Brands. These include organically developed MR. and Tru,
plus the acquisitions of The Real Shaving Company (in 2015), the
portfolio of Brands included in The Brand Architekts acquisition
(in 2016) and the Fish brand acquired during 2018.
-- Manufacturing - the contracted development, formulation and
production of quality products for many of the world's leading
personal care and beauty Brands. Disposal of the manufacturing
business completed on the 23 August 2019.
-- Eliminations and Central Costs. Other Group-wide activities
and expenses, including defined benefit pension costs, share-based
payment expenses / (credits), amortisation of acquisition-related
intangibles, interest, taxation and eliminations of intersegment
items, are presented within 'Eliminations and central costs'.
This is the basis on which the Group presents its operating
results to the Directors, which is considered to be the Chief
Operating Decision Maker (CODM) for the purposes of IFRS 8.
Comparative full year numbers have been presented on the same
basis.
IFRS15 requires the disaggregation of revenue into categories
that depict how the nature, timing, amount and uncertainty of
revenue and cash flows are affected by economic factors. The
Directors have considered how the Group's revenue might be
disaggregated in order to meet the requirements of IFRS15 and has
concluded that the activity and geographical segmentation
disclosures set out below represent the most appropriate categories
of disaggregation.
a) Principal measures of profit and loss - Income Statement
segmental information for 52 weeks ending 27 June 2020 and 52 weeks
ending 29 June 2019:
52 weeks ended Brands Manufacturing Eliminations Total 2019
27 June 2020 and Central
Costs
Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
UK revenue 13,796 4,841 - 18,637 52,144
International
revenue 2,454 2,639 - 5,093 25,194
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Revenue - External 16,250 7,480 - 23,730 77,338
Revenue - Internal 5 444 (449) - -
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Total Revenue 16,255 7,924 (449) 23,730 77,338
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Discontinued
Operation - (7,924) 444 (7,480) (57,662)
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Total Revenue
Continuing
Operations 16,255 - (5) 16,250 19,676
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Underlying (loss)
/ profit from
operations* 1,204 (909) (1,083) (788) 4,428
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Charge for
share-based
payments - - (4) (4) (115)
Amortisation of
acquisition-related
intangibles - - (260) (260) (260)
Exceptional items
included in cost
of sales (Note
3) (2,535) - - (2,535) -
Other Exceptional
items (Note 3) (176) 7,460 (1,268) 6,016 (717)
Net borrowing costs (46) (22) (178) (246) 757
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Tax charge on
discontinued
operations - - - - (255)
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Segment Profit
included in
Discontinued
Operations - (6,529) - (6,529) (2,050)
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
(Loss) / Profit
before taxation (1,553) - (2,793) (4,346) 1,788
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Tax credit /
(charge) 328 - (273) 55 (198)
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
Profit for the
period from
continuing
activities (1,225) - (3,066) (4,291) 1,590
--------------------- ------------------------------ ----------------------------- -------------------------------- -------------------------------- ---------------------------
*The underlying profit net of eliminations and central costs are
as follows:
Continuing Discontinued Total
operations operations
- Brands - Manufacturing
GBP'000 GBP'000 GBP'000
Underlying profit / (loss) from
operations - operating segments 1,204 (909) 295
Eliminations and central costs (1,083) - (1,083)
------------ ----------------- --------
Underlying profit /(loss) from operations 121 (909) (788)
52 weeks ended 30 Eliminations and 2018
June 2019 Brands Manufacturing Central Costs Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
UK revenue 16,381 35,763 - 52,144 51,253
International
revenue 3,220 21,974 - 25,194 22,692
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
Revenue - External 19,601 57,737 - 77,338 73,945
Revenue - Internal 75 4,235 (4,310) - -
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
Total revenue 19,676 61,972 (4,310) 77,338 73,945
Discontinued
Operation - (61,972) 4,310 (57,662) (52,860)
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
Total Revenue
Continuing
Operations 19,676 - - 19,676 21,085
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
Underlying profit
from operations* 3,619 2,515 (1,706) 4,428 5,470
Charge for
share-based
payments - - (115) (115) (297)
Amortisation of
acquisition-related
intangibles - - (260) (260) (197)
Other Exceptional
items (Note 3) - (669) (48) (717) (279)
Net borrowing costs - 901 (144) 757 (173)
Tax charge on
discontinued
operations - (255) - (255) (438)
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
Segment Profit
included in
Discontinued
Operations - (2,492) 442 (2,050) (1,701)
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
Profit before
taxation 3,619 - (1,831) 1,788 2,385
Tax charge (198) (198) (453)
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
Profit for the
period from
continuing
activities 3,619 - (2,029) 1,590 1,932
--------------------- ------------------------- ----------------------- -------------------- ------------------------ ------------------------
*The underlying profit net of eliminations and central costs are
as follows:
Continuing Discontinued Total
operations operations
- Brands - Manufacturing
GBP'000 GBP'000 GBP'000
Underlying profit from operations
- operating segments 3,619 2,515 6,134
Eliminations and central costs (1,264) (442) (1,706)
------------ ----------------- --------
Underlying profit from operations 2,355 2,073 4,428
The segmental Income Statement disclosures are measured in
accordance with the Group's accounting policies.
Inter segment revenue earned by Manufacturing from sales to
Brands is determined on commercial trading terms as if Brands were
a third-party customer, prior to disposal.
All defined benefit pension costs and share-based payment
expenses are recognised for internal reporting to the CODM as part
of Group-wide activities and are included within 'Eliminations and
central costs' above. Other costs, such as Group insurance and
auditors' remuneration which are incurred on a Group-wide basis are
recharged by the head office to segments on a reasonable and
consistent basis for all periods presented, and are included within
segment results above.
b) Other Income Statement segmental information
The following additional items are included in the measures of
underlying profit and loss reported to the CODM and are included
within (a) above:
52 weeks ended 27 June 2020 Eliminations and
Brands Manufacturing Central Costs Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------------- ---------------------- ------------------------ -----------------
Depreciation 93 - - 93
Amortisation / impairment* 16 - 1,188 1,204
* Impairment losses of GBP924,000 in Central Costs is included in
Exceptional Items
52 weeks ended 29 June 2019 Eliminations and
Brands Manufacturing Central Costs Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------------- ---------------------- ------------------------ -----------------
Depreciation 13 1,249 - 1,262
Amortisation - 684 260 944
c) Principal measures of assets and liabilities
The Groups assets and liabilities are managed centrally by the
CODM and consequently there is no reconciliation between the
Group's assets per the statement of financial position and the
segment assets. All assets and liabilities in relation to the
contract manufacturing division were sold during the period.
d) Additional entity-wide disclosures
The distribution of the Group's external revenue by destination
is shown below:
Geographical segments 52 weeks ended 52 weeks ended
27 June 2020 29 June 2019
GBP'000 GBP'000
--------------- ---------------
UK 18,637 52,144
Other European Union countries 2,683 17,482
Rest of the World 2,410 7,712
--------------- ---------------
23,730 77,338
--------------- ---------------
Geographical segments - Continuing Operations 52 weeks ended 52 weeks ended
27 June 2020 29 June 2019
GBP'000 GBP'000
--------------- ---------------
UK 13,796 16,456
Other European Union countries 541 609
Rest of the World 1,913 2,611
--------------- ---------------
16,250 19,676
--------------- ---------------
In the 52 weeks ended 27 June 2020, the Group had three
customers from Continuing Operations (being the Brands division)
that exceeded 10% of total revenues, being 26%, 13% and 11%
respectively. In the 52 weeks ended 29 June 2019, the Group had
three customers that exceeded 10% of total revenues from Continuing
Operations, being 26%, 15% and 11% respectively.
At 2020 year end the Group had non-current assets held overseas
of GBPnil (2019: GBP2,247,000).
6. Exceptional items
Exceptional charges / (credits) from Continuing
Operations: 52 weeks ended 52 weeks ended
27 June 2020 29 June 2019
GBP'000 GBP'000
--------------- ---------------
Included within Cost of sales:
Inventory related 2,535 -
--------------- ---------------
Other exceptional items:
Impairment / amortisation of
RSC 928 -
Severance costs (including social
security costs) 311 -
Consultancy fees 205 -
Write back of contingent consideration - (240)
GMP equalisation - 288
--------------- ---------------
1,444 48
--------------- ---------------
Total exceptional items from Continuing
Operations 3,979 48
--------------- ---------------
As discussed in the Chairman's statement, as part of the
business transformation to focus on Owned Brands business with a
new management team, a number of decisions were taken to reshape
the brand portfolio, triggering adjustments to these brands and
related inventory. This resulted in an exceptional charge of
GBP2.5m which includes provisions for payments due to manufacturers
for inventory not expected to be utilised and changes in estimates
surrounding the valuation of inventory. These are considered one
off and exceptional.
Other exceptional items includes GBP0.9m impairment of the RSC
brand, GBP0.3m cost in relation to the departure in September of
the former Chief Executive Officer and GBP0.2m exceptional
consultancy fees following the reorganisation of the group.
The prior year exceptional items charge represents a provision
of GBP0.3m made in respect to the GMP equalisation on the Group's
DB Pension scheme and write back of contingent consideration from
the acquisition of Fish which was not required to be paid.
Exceptional charges / (credits) from Discontinued
Operations (note 11): 52 weeks ended 52 weeks ended
27 June 2020 29 June 2019
GBP'000 GBP'000
--------------- ---------------
Other exceptional items:
Profit on disposal of the manufacturing
division (8,922) -
Deal related costs - 669
Bonus payments 1,116 -
Inventory write offs and disposal
costs 346 -
(7,460) 669
--------------- ---------------
The year ended 27 June 2020 exceptional items income includes
GBP8.9m profit on disposal of the manufacturing business, GBP1.1m
employee bonuses paid out following disposal of the manufacturing
business, and GBP0.3m relating to inventory disposals which were
intrinsically linked with the manufacturing division.
Exceptional items included within the prior year related to the
disposal of the manufacturing business of GBP0.7m
7. Profit before taxation
2020 2019
GBP'000 GBP'000
(a) This is stated after charging/ (crediting)
Depreciation of property, plant and equipment of purchased assets 93 1,262
Amortisation of intangible assets 276 944
Impairment of intangible assets (classified as exceptional - Note 3) 928 -
Research 177 1,039
Foreign exchange (gains) / losses 3 (37)
Gain on disposal of subsidiaries 8,922 -
Amounts expensed for short term and low value leases 5 -
(b) Auditors' remuneration
Audit services:
Audit of the Company financial statements 41 35
Audit of subsidiary undertakings 11 12
Audit related services:
Interim review 7 -
Other non-audit services:
Corporate finance advice 9 -
8. Taxation
2020 2019
(a) Analysis of tax charge in the year GBP'000 GBP'000
UK corporation tax:
- on profit for the year 14 528
- adjustment in respect of previous years (323) (171)
-foreign tax - 77
Total current tax (credit)/charge (309) 434
-------- --------
Deferred tax:
-current year (credit) (283) (28)
-prior year charge/(credit) 115 47
-effect of tax rate change on opening balance (122) -
-non-recognition of deferred tax asset for losses 544 -
Total deferred tax (credit)/charge 254 19
-------- --------
Tax (credit)/charge (55) 453
-------- --------
Total tax credit of GBP55,000 (2019: tax charge GBP453,000)
comprised tax credit on ongoing operations of GBP55,000 (2019: tax
charge GBP198,000) plus tax on discontinued operations of GBPnil
(2019: tax charge GBP255,000).
(b) Factors affecting total tax charge for the year
The tax assessed on the profit before taxation for the year is
lower (2019: lower) than the standard rate of UK corporation tax of
19.00% (2019: 19.00%). The differences are reconciled below:
2020 2019
GBP'000 GBP'000
Profit before taxation (from continuing and discontinued activities) 2,183 4,093
-------- --------
Tax at the applicable rate of 19.00% (2019: 19.00%) 415 778
Effect of:
Adjustment in respect of previous years (208) (124)
Income not taxable for tax purposes (806) -
Adjustment to deferred tax - (7)
Deferred tax asset not recognised on taxable losses 544
Differences between UK and foreign tax rates - 10
Permanent differences and other - (168)
R&D tax credit - (36)
Actual tax charge (55) 453
-------- --------
The group has tax losses of GBP2.9m (2019: GBPnil) which have
not been recognised as there is no certainty that they can be
utilised.
9. Earnings per share
2020 2019
Basic and Diluted
Profit for the year attributable to equity holders (GBP'000) 2,217 3,539
(Loss) / Profit for the year (GBP'000) continuing operations attributable to equity
holders (4,312) 1,489
Basic weighted average number of ordinary shares in issue during the year 17,143,646 17,135,542
Diluted number of shares 17,143,646 17,659,183
------------- -------------
Basic earnings per share 12.9p 20.7p
------------- -------------
Diluted earnings per share 12.9p 20.0p
------------- -------------
Basic (loss) / earnings per share continuing operations (25.2)p 8.7p
------------- -------------
Diluted (loss) / earnings per share continuing operations (25.2)p 8.4p
------------- -------------
Basic earnings per share has been calculated by dividing the
profit for each financial year by the weighted average number of
ordinary shares in issue at 27 June 2020 and 29 June 2019
respectively.
10. Notes to cash flow statement
GROUP
(a) Reconciliation of cash and cash equivalents to movement in net cash / (debt):
2020 2019
GBP'000 GBP'000
Increase / (Decrease) in cash and cash
equivalents 20,859 (553)
Net cash outflow from decrease in borrowings 4,322 5,154
------------- ---------
Change in net cash / (debt) 25,181 4,601
Opening net (debt) (7,168) (11,769)
------------- ---------
Closing net cash / (debt) 18,013 (7,168)
------------- ---------
(b) Analysis of net cash / (debt): Closing 2019 Cash Flow Non-Cash Movement Closing 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 381 20,858 1 21,240
CID facility (4,319) 3,187 - (1,132)
Borrowings due within one year (1,139) 110 - (1,029)
Borrowings due after one year (2,091) 1,025 - (1,066)
------------- ---------- ------------------ ---------------
(7,168) 25,180 1 18,013
------------- ---------- ------------------ ---------------
COMPANY
(a) Reconciliation of cash and cash equivalents to movement in net cash / (debt):
2020 2019
GBP'000 GBP'000
Increase / (Decrease) in cash and cash
equivalents 20,352 (590)
Net cash outflow / (inflow) from decrease /
(increase) in borrowings 4,727 4,764
------------- ----------
Change in net cash / (debt) 25,079 4,174
Opening net cash / (debt) (6,675) (10,849)
------------- ----------
Closing net cash / (debt) 18,404 (6,675)
(b) Analysis of net cash /
(debt): Closing 2019 Cash Flow Non-Cash Movement Closing 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 147 20,352 - 20,499
Secured debt facility (3,592) 3,592 - -
Borrowings due within one year (1,139) 110 - (1,029)
Borrowings due after one year (2,091) 1,025 - (1,066)
------------- ---------- ------------------ -------------
(6,675) 25,079 - 18,404
------------- ---------- ------------------ -------------
11. Discontinued operations
On 23 August 2019, the Group sold its 100% interest in Curzon
Supplies Ltd for consideration of GBP35,255,000 (completing the
disposal of the manufacturing division) which is the only operation
presented as discontinued operations in 2019. Curzon Supplies Ltd
was incorporated in March 2019. Assets relating to the
manufacturing division, along with the related investments in
Swallowfield Consumer Products Limited, Swallowfield SARL,
Swallowfield s.r.o. and Swallowfield Inc, were transferred to
Curzon Supplies Ltd prior to its disposal.
Profit on disposal Group
At Disposal
23 August
2019
GBP'000
Property, plant and equipment 11,338
Intangible fixed assets 695
Equity instruments held at fair
value 1,558
Inventories 9,724
Trade and other receivables 13,196
Trade and other payables (10,025)
Deferred tax liability (561)
Post-retirement pension obligations
* (1,103)
Realisation of exchange differences 196
25,018
--------------
Deal costs 1,315
Profit on disposal ** 8,922
Satisfied by:
Cash consideration 35,255
* Post-retirement pension scheme obligations figure of GBP1,103,000
in this table relates to reassessment of annual uprating of pension
liabilities.
** Profit on disposal increased by GBP161,000 compared to the
interim accounts owing mainly to recovery of VAT on deal related
costs and changes in consideration following agreement on the
final completion accounts.
Result of discontinued operations 2020 2019
GBP'000 GBP'000
Revenue 7,480 57,663
Expenses other than finance costs (8,389) (55,835)
(Finance Costs) / Investment Income (22) 1,146
Exceptional costs (1,462) (669)
Profit on disposal of manufacturing
business 8,922 -
Tax expense - (255)
Profit for the year 6,529 2,050
----------- -----------
Included in 2020 Exceptional costs in discontinued operations
are GBP1,116,000 employee bonuses paid out following disposal
of the manufacturing business and GBP346,000 relating to specific
branded inventory write offs that were intrinsically linked to
the manufacturing division.
Included in 2019 Exceptional costs in discontinued operations
are restructuring charges of GBP535,000 and deal fees of GBP88,000.
No tax charge has been allocated to discontinued operations as
the division was loss making, excluding the profit on disposal,
in the period from 30 June 2019 to disposal. These taxable losses
were transferred with the trade.
Earnings per share from discontinued
operations: 2020 2019
GBP GBP
Basic earnings per share 38.1 12.6
Diluted earnings per share 38.1 11.6
Cashflow in respect of discontinued
activities 2020 2019
GBP000 GBP000
Operating cash flows (5,761) 6,717
Investing cash flows 35,255 (602)
Financing cash flows (3,592) (3,637)
-------- --------
Total cash flows 25,902 2,478
-------- --------
Assets held for sale Group Company
2020 2019 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000
Property, plant and equipment - 11,190 - 10,329
Intangible fixed assets - 779 - 779
Equity instruments held at fair
value - 1,385 - 1,385
Inventories - 10,743 - 10,743
Trade and other receivables - 13,966 - 13,962
Trade and other payables - (14,800) - (14,550)
Deferred tax liability - (563) - (497)
- 22,700 - 22,151
------------------------------------------- --------- -------- ---------
Annual Report
This report will also be available from the Company's registered
office and on the Company's website www.brandarchitektsplc.com.
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END
FR SESFDWESSESU
(END) Dow Jones Newswires
September 28, 2020 02:00 ET (06:00 GMT)
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