Financial Highlights
· Revenues increased by 28% to £15.62 million (2016: £12.24 million) significantly ahead of market growth forecast for the sports nutrition sector, with particularly strong growth in online channels and international markets;
· New product development continued to be a key growth driver, and delivered £0.9m of sales in the year (2016: £0.8m) contributing 27% to overall revenue growth;
· Gross profit increased to £9.32m (2016: £7.38m) reflecting continuing factory efficiencies which have maintained gross margin close to 60%;
· Underlying operating loss* of £1.70m (2016: £0.80m) in line with growth strategy and expectations, reflecting continued investment in brand awareness, e-commerce and international expansion. Core UK business delivered operating profit of £0.6m;
· Cash and cash equivalents of £16.57m (2016: £6.13m) reflect funds raised in December 2017.
* excludes depreciation and amortisation and non-cash share based payments
Operational Highlights
· Consistent investment in the Science in Sport brand resulted in record levels of brand awareness and usage;
· 55% of revenue was derived from online channels (2016: 49%), exceeding the 50% target set for 2017;
· Continued investment in the Science in Sport e-commerce platform:
o Delivered 58% year on year growth, contributing 30% of revenues
· Revenue from International customers grew 60% across both Core and International segments, and 28% (2016: 22%) of total Group revenue was derived from these customers;
· Innovation and new product development including;
o Rego Rapid Recovery Plus developed with Team Sky
o Further extension of the Whey 20 portfolio
o Strong launch pipeline for 2018;
· Continued efficiency improvements in factory underpinned margin;
· Best in world banned substance testing regime introduced January 2017;
· New brand partnerships including British Cycling, USA Triathlon, Rock'n'Roll Marathon, Cycling Australia and Celtic FC. In January 2018, the Company signed a 3 year exclusive strategic partnership with Manchester United Football Club.
Stephen Moon, Science in Sport's CEO, said: “This was another period of very strong growth, the fifth consecutive year where SiS has significantly outstripped this sector. We saw outperformance in all online channels and international markets. Our strategy of consistent investment in brand equity, our e-commerce platform and product innovation underpinned this success. Continuing improvements in factory and supply chain efficiencies underpinned a very robust gross margin. Our core business in the UK and EU was profitable at EBITDA level and we commenced our investment in the strategic markets of the USA and Italy.
We are looking forward to another year of strong revenue growth in 2018. We expect gross margin to be consistent, given further factory efficiencies and favourable raw material prices. Our innovation pipeline for 2018 and beyond is very healthy and will continue to be a key driver of progress. We are investing substantially to develop our businesses in the USA and Italy and in addition we have launched our new Football business, underpinned by our recently announced exclusive nutrition partnership with Manchester United.”