Leading sports nutrition company, Science in Sport (SiS) has announced a trading update ahead of issuing its full financial results for the year ended 31 March 2014. The company has also confirmed a conditional placing of shares to raise gross proceeds of £2.3 million.
Full year trading update
At its half year, SiS reported strong sales growth of 23% compared with the same period the previous year. The company now reports that this sales momentum has continued in the second half. Sales in the full year to 31 March 2014 are expected to be up 24% year on year to reach £6.8 million. According to SiS, ‘this rate of revenue growth is ahead of market expectations.’
The outcome for the full year will include the exceptional costs associated with the company joining AIM (formerly the Alternative Investment Market), a sub-market of the London Stock Exchange, in August 2013. However ‘the Directors believe the outlook for the company is extremely positive.’
Revenue growth during the year has been achieved across all of the company’s distribution channels including major supermarkets, high street retail chains, independent retailers and e-commerce retailers. The company’s own direct e-commerce sales ‘have enjoyed very strong year-on-year growth and the current year will see increased resource invested in this channel.’
To support e-commerce sales, the company recently relaunched the SiS website and the launch of a website for mobile devices is imminent.
International growth is an important part of the company’s strategy and ‘the Board is pleased to report an encouraging start with two overseas initiatives announced during the second half of the financial year.’
The first of these is a master distribution agreement in the Asia Pacific region. In November 2013, SiS confirmed that a long-term contract had been signed with Science in Sport Asia Pacific Limited (SiSAP), a newly created company formed in New Zealand.
Secondly, in December, SiS forged a distribution agreement in eight European countries with Shimano, the major Japanese company. As noted by SiS, Shimano will commence selling at the beginning of next month.
The Placing
SiS has also announced that it has raised £2.3 million by the issue and allotment of 5,111,116 Ordinary Shares at the Placing Price of £0.45 per share. The Placing has been undertaken with new and existing institutional shareholders and SiS notes that this was oversubscribed.
The Placing will enable SiS to ‘fund the working capital required to fund further revenue growth and also to invest internally in further new revenue generating opportunities.’ The directors believe the net proceeds of the Placing enable the SiS Board to increase its revenue outlook ahead of historical year performances.
The Placing also introduces a number of new and significant institutional investors onto the shareholder register of the company. The directors believe ‘establishing a broader institutional shareholder base is in the long term interests of the group.’
As part of the Placing, Stephen Moon (Chief Executive Officer) is subscribing for 222,223 Ordinary Shares and Dawson Buck (Non-Executive Director) is subscribing for 111,112 Ordinary Shares. Following their subscription, Moon will have a total beneficial interest in 421,330 Ordinary Shares and Buck will have a total beneficial interest in 418,677 Ordinary Shares, representing 1.71% and 1.70% respectively of the company’s issued share capital as enlarged by the Placing.
The company has committed as part of the Placing to strengthen the Board by appointing an additional non-executive director. The process for identifying an appropriate candidate for this role has already begun and the Board intends to update shareholders on the appointment in due course.
Subject to Admission of the Placing, the company will issue 5,111,116 new Ordinary Shares, which will raise approximately £2.3 million, before expenses, and £2.1 million, after the expenses of the Placing. The Placing Shares have been conditionally placed by Cenkos Securities, as agent for the company, with institutional and other investors.
The Placing is not underwritten. Application has been made for the Placing Shares to be admitted to trading on AIM and dealings are expected to commence on 15 April 2014.
The Placing Shares issued pursuant to the Placing will represent approximately 20.76% of the Enlarged Share Capital. The Placing Shares will, following Admission, rank in full for all dividends and distributions declared, and rank on an equal footing with the existing Ordinary Shares.
The Placing Price represents a 1.1% discount per Ordinary Share to the closing mid-market price as at 8 April 2014.
SiS was founded in 1992 and is headquartered in London. Its manufacturing and product development facility is in Nelson, Lancashire. SiS is currently the official sports nutrition supplier to professional cycling teams Rapha Condor JLT, Belkin Pro Cycling, Madison Genesis, Pro Team Astana, Team Katusha and Trek.
SiS is also currently the official supplier of sports drinks and sports nutrition to the GB Rowing Team. In addition, Olympians Sir Chris Hoy MBE, Mark Cavendish MBE and pro triathlete Helen Jenkins are Elite Sports Consultants and brand ambassadors.
