14 January 2021
 

SCIENCE IN SPORT PLC

("Company" or "Group")

Pre-Close Trading Update and Notification of Final Results

Science in Sport plc (AIM: SIS), the premium performance nutrition company serving elite athletes, sports enthusiasts and the gym lifestyle community, is pleased to announce an update on trading for the financial year ended 31 December 2020.

Trading Update

The Group performed well during the year, delivering an adjusted EBITDA* profit of £1.1 million (FY19: loss of £0.3 million), as we strengthened the key building blocks of long-term profitable growth. Our Online business grew strongly by 39% to £25.0 million. Q4 Online performance was 65% higher than the corresponding period in FY19. While the COVID pandemic adversely affected our Retail business, total revenues of £50.3 million were in line with the previous year (FY19: £50.6 million). Online sales were 50% of total revenues, compared with 38% in FY19, and we see this strong channel switch continuing.

A step-change in gross margin was achieved, moving up five percentage points year on year to 49%. The gross margin was 50% for the second half, reflecting further benefits flowing through. The improvement resulted from Supply Chain efficiencies, together with sales channel shift to our Digital platform and improved pricing.

Improved gross margin, higher return on digital marketing investment, and tight cost control resulted in an adjusted EBITDA* of £1.1 million (FY19: £0.3 million loss). The balance sheet is strong, with £10.5 million of cash (FY19: £5.4 million), including £4.2 million net proceeds from the placing in April.

Operational Highlights  

Key SiS growth markets of Australia, Football, Italy and the USA contributed 28% of total SiS revenue at £7.2 million and were cash positive overall. The USA made good progress with 35% revenue growth to £3.6 million, and cash burn is significantly reduced.

Online as a share of total Group revenue increased to 50%, sharply up from 38% in FY19. PhD.com revenues grew 105% to £3.2 million and gained strong momentum during the final quarter.

Retail was adversely affected by COVID, mainly the UK, which delivered revenues of £16.1 million (FY19: £21.8 million). The £9.3 million of International revenues were 14% behind last year (FY19: £10.8 million). We saw a good recovery in several markets and resilient rate of sale in key UK product lines in Q4, and we remain optimistic.

While we held some Innovation back given the pandemic, sales from new products still contributed well at £2.2 million, some 4% of total Group revenues. The 2021 new product pipeline is extremely strong.

We significantly strengthened the team in the final quarter, including key senior hires in Online, Technology, and Customer Experience to support our strategic growth initiatives in Online and International.

Supply Chain Investment

We have agreed to heads of terms for a new Supply Chain facility in Blackburn. The lease commences in December 2021, and we expect to be fully operational in Q1 2022. The 160,000 square foot facility will consolidate the Group's operations into one site and give us the headroom to grow to more than £150 million in revenue. We are to install a new 8-lane gel manufacturing plant in the facility to meet the continued strong growth in this highly profitable product line.

Of the £4.3 million total costs, £2.2 million is for works related to the new site, and £2.1 million for the gel blending, filling and packing line. £2.1 million is to be funded from cash reserves, together with £2.2 million of equipment leasing finance. The project is expected to contribute to EBITDA in FY22, and to deliver cash payback in FY23, through increased operating efficiencies.

Notification of Final Results

The Company expects to announce its Final Results for the year ended 31 December 2020 on Wednesday 17 March 2021. Management will give an investor presentation on the Investor Meet Company platform at 14:00 GMT on that day.

*excludes depreciation, amortisation, share-based payments, 2019 PhD acquisition costs and foreign exchange variances on intercompany balances

Stephen Moon, Science in Sport's Chief Executive Officer, commented:

"Delivering a robust EBITDA profit was a key goal for the year, and this was achieved through a focus on developing our fundamental building blocks of long-term profitable growth. We have realised all expected synergies from the PhD acquisition and saw a strong performance in all supply chain dimensions. This, together with our strategic shift to online, saw a step change in gross margin.

Our online business's very strong momentum in all markets is exciting, and this has carried into the new year. While retail took the pandemic's brunt, there are promising signs of recovery in this cash generative channel, and we remain optimistic.

Building brand equity and having a strong innovation pipeline remains central to our strategic platform. I am pleased to say we continue to make consistently good progress in both of these areas.

Our long-term and proven profitable growth strategy remains unchanged. To that end, we have commenced investment in technology to drive our online business, together with securing a new supply chain site, as we look to the next strategic growth phase.

Whilst it is too early to reinstate market guidance, given the current COVID-19 lockdown, we are well funded and remain very optimistic about the long term growth prospects for the Group."

For further information:

Notes to Editors

About Science in Sport plc

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 gym lifestyle community. The Company has two highly regarded brands: PhD Nutrition, a premium active-nutrition brand targeting the gym lifestyle community, and SiS, a leading endurance nutrition brand among elite athletes and professional sports teams.

The two brands are sold internationally through our own phd.com and scienceinsport.com digital platform, together with third-party online sites including Amazon and Tmall. We have 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 currently estimated at approximately £11 billion worldwide.

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, based on its core protein powders, since its launch in 2005. The range now comprises powders, bars and supplements including the high protein, low sugar range, PhD Smart. PhD brand ambassadors include leading fitness influencers Ross Edgley and Obi Vincent. The PhD brand is an official partner to the Tough Mudder Challenge and Race Series.

SiS, founded in 1992, has a core range comprising gels, powders and bars focused on energy, hydration and recovery. SiS is the official sports nutrition supplier to many professional teams and organisations including INEOS Grenadiers Cycling Team, Team INEOS UK (America's Cup Team) and Manchester United Football Club. SiS supplies more than 100 professional football clubs in the UK, Europe and USA, and is Performance Research Partner to the English Football Association.

Science in Sport is headquartered in London. Its shares joined the AIM market of the London Stock Exchange in August 2013 and trade under the ticker symbol SIS.

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