TIDMBAR
RNS Number : 7605R
Brand Architekts Group PLC
31 October 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION 2014/596/EU (WHICH FORMS PART OF
DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT
2018 (THE "EUWA")) ("UK MAR"). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
Brand Architekts Group plc
("Brand Architekts" or the "Group")
Final Results
Brand Architekts Group plc, a market leader in the development
and supply of beauty and personal care brands, announces its Full
Year results to 30 June 2023.
Business highlights:
-- Successfully integrated Innovaderma into the Group and
delivered GBP1.4m of ongoing Opex savings.
-- Continued implementation of the strategy to invest and
support problem-solving solution led Invest & Nurture brands,
which command higher retail prices, engender strong consumer
loyalty and deliver stronger margins.
Brand Reach:
-- 49% growth vs the prior year in international channel sales
driven by post COVID-19 rebound in volumes from General Merchandise
stores across North America and Europe, benefitting Dirty
Works.
-- Confirmed Dirty Works distribution roll out to AS Watson
stores in 2023 & 2024 across the Middle East and Asia (Thailand
- 200 stores, Vietnam - 7, The Gulf - 16, Philippines - 100,
Malaysia - 66, Taiwan - 200, Singapore - 40, Turkey -100).
Brand Development:
-- New Super Facialist Clear Skin, targeting problematic teenage
skin care needs, launched on Amazon in September and in Boots in
June 23. New Super Facialist D2C site launched in March 23. Branded
Super Facialist instore merchandising trays rolled out to Boots and
Morrisons.
-- New Skinny Tan Wonder Serum brand awareness and customer
acquisition campaigns launched in July 2023 to capitalise on the
second half of the tanning season.
-- The Solution Menopause range to launch in 2024.
-- Good sales growth from key historical Brand Architekts'
Nurture and Harvest brands including Fish, MR, The Solution, Argan,
SenSpa and Root Perfect.
Financial Highlights:
-- Group sales of GBP20.1m (2022: GBP14.3m) up 41% primarily due
to the full year effect of the acquisition of InnovaDerma Plc,
which completed at the end of May 2022.
-- Excluding InnovaDerma (IDP), revenue increased by 7% due to
strong international sales offset by challenging trading conditions
in UK channels.
-- Underlying gross profit margins increased by 6.2% to 39.7%
(2022: 33.5%) driven by a full year of sales from the InnovaDerma
portfolio, chiefly Skinny Tan. Margins in the Brand Architekts
business are similar year on year.
-- Despite the challenging trading environment, the Group
generated a reduced underlying operating loss of GBP1.2m, GBP0.6m
lower than the prior year (2022: GBP1.8m), primarily as a result of
better targeted advertising & promotions.
-- The Group retains a strong net cash position of GBP8.2m at
the year-end (31 December 2022: GBP8.1m).
-- The increased loss before taxation of GBP6.8m (2022: GBP4.1m)
is driven by a GBP3.5m impairment in the goodwill associated with
the Innovaderma business.
2023 2022
-------------------------------------------- --------- ---------
Reported results from continuing operations
Revenue (Note 2) GBP20.1m GBP14.3m
--------- ---------
Underlying operating (loss) (1) GBP(1.2)m GBP(1.8)m
--------- ---------
Loss before taxation GBP(6.8)m GBP(4.1)m
-------------------------------------------- --------- ---------
Basic (loss)per share (23.5)p (23.9)p
-------------------------------------------- --------- ---------
Net cash GBP8.2m GBP11.3m
-------------------------------------------- --------- ---------
(1) Underlying operating loss is calculated before exceptional
items, share-based payments and amortisation of acquisition-related
intangibles.
Quentin Higham, Chief Executive, commented:
" Despite the challenging global and domestic macro-economic
factors, we have made good progress, successfully integrating
InnovaDerma and delivering GBP1.4m of ongoing Opex savings. The
immediate priorities remain driving brand awareness of key invest
and nurture brands, delivering revenue synergies through
international and domestic expansion, a laser focus on brand
contribution and releasing working capital tied up in harvest
brands. W e remain confident that our brand development and brand
reach strategic pillars will enable us to return to profitability
and achieve our medium and long-term goals."
For further information please contact:
Brand Architekts Group PLC
Quentin Higham / Geoff Ellis
Singer Capital Markets (Nominated adviser and
Shaun Dobson / Jen Boorer broker) 020 7496 3000
Chairman's Statement
Whilst we are disappointed with our overall financial
performance, we have made good progress in the year under review
and on successfully integrating Innovaderma into the Group and
consolidating the business. We have delivered GBP1.4m of ongoing
Opex savings, which are in line with our annualised synergy target
of GBP1.5m and have advanced the opportunities to generate revenue
synergies. We expect to be in a position to announce global
omnichannel distribution gains for Skinny Tan in time for the 2024
tanning season.
Group sales for FY23 were GBP20.1m (FY22: GBP14.2m) an increase
of 41% on the prior year due primarily to the full year effect of
the acquisition of InnovaDerma Plc, which completed at the end of
May 2022. Excluding InnovaDerma, revenue increased by 7% due to
strong international sales, which was offset by challenging trading
conditions in UK channels. We discontinued several non-strategic
brands, namely Roots, Kind Natured, Happy Naturals and Beautopia as
we continued our focus on profitability.
Skinny Tan's sales in the UK were adversely affected by the
softening of the direct-to-consumer (DTC) market and our decision
to focus on margin, at the expense of gross sales. We have
maintained Skinny Tan's UK Customer (CRM) database (350,000 email
addresses), but by dialling down our investment on Meta and
reducing promotional discounting, we saw a drop in net sales, but
an improvement in gross margin and contribution percentage. The
Group expects these initiatives to continue when we approach the
2024 tanning season, in particular the need to promote &
support more affordable self-tan products.
The Group retained a healthy net cash position of GBP8.2m at the
year-end which was GBP0.1m better than the position at the half
year.
Despite the challenging trading environment, the Group generated
a reduced underlying operating loss of GBP0.4m in H2, a GBP0.4m
improvement on the performance in H1, due to a focus on better
targeted advertising & promotions resulting in improved
contribution. Full year underlying operating losses were GBP1.2m, a
GBP0.6m improvement on last year. Our focus for the current year is
to achieve breakeven and thereafter return to profitable
growth.
The Group continues to make progress on transitioning the
business to focus on fewer, bigger brands that are highly
efficacious, margin accretive and provide consumers with
problem-solving solutions. Historically Brand Architekts brands'
were retail exclusives, with little or no marketing investment, so
in order to compete in today's landscape, it is vital that we
transform the brands by investing in profitable brand awareness
digital campaigns and customer acquisition initiatives.
I was pleased that we were able to resolve our legal dispute
with Jamie Stevens Media Limited (JSML), our joint venture
counterparty/co-shareholder in Mr Haircare Ltd, which alleged a
breach of shareholders' agreement between the parties dating back
to the company's acquisition of Fish in 2018. We agreed a full and
final settlement of all claims in the sum of GBP200,000 together
with legal costs of GBP225,000. We also agreed to purchase JSML's
49% shareholding in Mr Haircare Ltd in cash at a fair value price
to be determined by an external valuer later in the year. JSML is
entitled to 55% of the sale valuation. MR sales for FY23 were
GBP0.54m (FY22 GBP0.5m). The transaction is expected to conclude
before the end of the 2023 calendar year and a further announcement
will be made in due course.
The proposed acquisition of the remaining JV shares is in line
with the company's strategic vision to invest and build its
portfolio of high-performance, problem-solving and margin accretive
brands. The brand will be relaunched as MR Expert Solutions and the
company's vision is to expand the brand into adjacent male grooming
problem solving categories and invest in the master brand to
accelerate brand awareness and stimulate consumer trial.
Although the trading environment remains extremely challenging,
good progress has been made during the period and post period-end,
which gives a degree of confidence for the future. Key highlights
include:
-- Continued implementation of the strategy to invest and
support our Invest & Nurture brands, which command higher
retail prices, engender strong consumer loyalty and deliver
stronger margins.
-- Branded Super Facialist instore merchandising trays rolled
out to Boots and Morrisons. New Super Facialist Clear Skin,
targeting problematic teenage skin care needs, launched on Amazon
in September and in Boots in June 23. New Super Facialist D2C site
launched in March 23.
-- New Skinny Tan Wonder Serum brand awareness and customer
acquisition campaigns launched in July 2023 to capitalise on the
second half of the tanning season.
-- The Solution Menopause range to launch in 2024.
-- 49% growth vs the prior year in international channel sales
driven by post COVID-19 rebound in volumes from General Merchandise
stores across North America and Europe, benefitting Dirty
Works.
-- Confirmed distribution roll out to AS Watson stores in 2023
& 2024 across the Middle East and Asia (Thailand - 200 stores,
Vietnam - 7, The Gulf - 16, Philippines - 100, Malaysia - 66,
Taiwan - 200, Singapore - 40, Turkey -100).
-- Good sales growth from key historical Brand Architekts'
Nurture and Harvest brands including Fish, MR, The Solution, Argan,
SenSpa and Root Perfect.
In line with our focus on contribution, as previously announced
we streamlined the board composition, reducing the number of
Non-Executive Directors by one. Geoff Ellis joined as part-time CFO
in June 2023. I would like to recognise and thank the board for
their support when I took a four-month sabbatical over the
summer.
Notwithstanding difficult market conditions, including
inflationary pressures, we are committed to returning the business
to profitability and cash generation at the earliest
opportunity.
On behalf of the board, I would like to thank our employees for
their hard work and commitment and shareholders for their continued
support.
CEO's Statement 2023
In response to the well documented changes in consumer behaviour
and the wider global and domestic macro-economic factors, we
pivoted our business strategy to focus on brands and products that
engender high levels of consumer loyalty and reflect the redefined
company purpose of focusing on high performance problem-solving
solution led brands. This resulted in a reclassification of our
brand portfolio and a strategic focus on brand contribution, rather
than aggressive sales growth.
Rampant inflation and high interest rates exacerbated the
cost-of-living crisis and in particular consumers' disposable
income. This affected their appetite for masstige products and
highlighted the importance of focusing on brand contribution and
the need to build awareness and acquire new customers. Cash
strapped consumers' initial response is to trade down, as
demonstrated in the Self Tan category, where consumers have
favoured gradual tanners retailing at less than GBP10, which
resulted in our decision to reduce Skinny Tan Mousse and Whip
retail prices. However, if brands are to succeed in a period of
recession, it is important to invest in brand awareness and new
product development, which are key tenets of our brand development
strategy.
The team worked very hard to integrate the Innovaderma team and
brands into the business. This is now complete, and we have
delivered GBP1.4 operating synergies, against the GBP1.5m target
set out at the time of acquisition. On acquisition, the team
expanded to nearly 80 people which we have consolidated down to 51.
To reflect the mix of business, we moved all Australian roles to
the UK. There are now 42 people in the UK and 9 people who provide
customer service and financial and operations support in the
Philippines. To further simplify the business, we will look to
close all USA & Australia entities within the next few
years.
The business is now focussed on a 3-year transition strategy
whereby our brand portfolio will ultimately be reduced to 9 (from
15) and we will evolve our brands and products to focus on margin
accretive high performance topically applied products. It is our
belief that if we successfully meet the needs of our consumers
problems, this will engender loyalty and reduce the need for brand
building advertising & promotion (A&P). Our mission is to
become a challenger beauty business that provides "problem solving
solutions for everyday beauty".
Portfolio & Brand Development strategy -
Invest brands (Skinny Tan and Super Facialist):
Both have a degree of scale and are masstige positioned brands,
which address key problem-solving needs. They have a clear point of
difference and recognisable brand personalities. They benefit from
extensive annual NPD pipelines and ideally incorporate either
proprietary technology or trademarked ingredients, which leads to
consumers paying a premium.
They will benefit from 360-degree marketing activation plans,
which will result in "fewer-bigger-better" holistic omnichannel
communications; an investment in the creation of best-in-class
assets, which will then be used across their organic social, paid
social, PR and retail channels. Both brands will be supported with
new customer acquisition initiatives (Meta; Tik Tok; Google;
Affiliation etc) and we will invest in consumer mechanics such as
user generated content; VIP product testing & feedback loops
that will enable us to get closer to the consumer, which in turn
will provide strong reasons for consumers to follow the brand and
to join the email database.
We will continue to drive and support an omnichannel
distribution approach and will apply a digital first lens to
product launches and marketing activity.
Nurture brands (The Solution, MR Expert Solutions and Dirty
Works):
The fundamental difference between our Invest and Nurture brands
is the level of A&P we allocate to each category. The Solution
and MR Expert Solutions are both currently sub scale but have
significant growth potential by creating problem solving master
brand propositions. Both brands are masstige and margin accretive.
Their brand names have a clear point of difference and a distinct
personality that lends itself to address beauty/personal care pain
points across multiple categories. Initially we launched The
Solution as "skinification" for the body, and we will be launching
a Menopause range in 2024, which meets the specific needs of
consumers going through the menopause and beyond. Once we have
fully acquired the MR brand, we believe that its high-performance
efficacious proposition will lend itself to enter into other male
problem categories, such as problem skincare and perspiration. Once
the master brands have been created by investment in a strong NPD
pipeline, both brands will be supported with their own DTC site and
360 marketing activation campaigns.
Dirty Works has the greatest international reach of all our
brands with sales in over 40 countries. The brand is being
exclusively rolled out to over 700 Watsons stores across Middle
East and Asia in FY24. We are also developing over 12 exclusive
skincare lines for our North American retail partner. Dirty Works
is a master brand, given that it participates in the Washing &
Bathing, Skincare, Accessories and Gifting categories. Given its
affordable, fun, fragrant & indulgent proposition, brand
investment will be focussed on supporting key retail partners
around the World. We will not launch a Dirty Works DTC but will
support its rollout offline and online.
Harvest Brands:
Although our objective is to focus and invest in fewer brands,
we have a small portfolio of Harvest brands that play several key
roles - they meet the needs of a specific category (Men's Styling);
provide retail or channel exclusivity (Root Perfect); strengthen
Brand Architekts trading relationship with key offline partners
(Argan+ and Dr Salts) and absorb a disproportionate share of
corporate overheads, given we support these brands with trade
marketing spend only. For our remaining Harvest brands, we will
look to discontinue over the next couple of years either as a
divestment (Charles + Lee), a termination of license agreements or
discontinuation, so that we can provide more focus and resource on
investing in our key focus brands.
Brand Reach:
Offline & Online:
The number one objective of our brand reach strategy is to
secure new distribution across our Invest and Nurture brands, both
domestically and internationally. We will be aggressively pushing
Dirty Works (Middle East, Asia and USA); Skinny Tan (USA, Middle
East, Europe); The Solution (Europe) into new international
retailers and territories. Domestically we will look to land all
new product development in FY24 and to consolidate and drive
productivity on Skinny Tan and Super Facialist within existing
distribution. We will be looking to capitalise on the recent
success of Super Facialist Clear Skin; the relaunch of MR Expert
Solutions; the launch of The Solution Menopause and the relaunch of
Fish and Dirty Works in 2024.
DTC:
Despite the global softening of the DTC channel, we believe that
DTC sites play an integral role in our omnichannel distribution
strategy. Brand Architekts believes in a digital first approach,
initially to launch new products but also to generate traffic and
consumer interest, prior to roll out online and offline. DTC helps
with digital engagement and brand education. To drive customer
acquisition, we will be increasing pay-per-click advertising and
Meta spend behind our social footprint and database activity, given
the upcoming reduction of third party-cookies. Our focus last year
was on improving the profitability of the Skinny Tan site,
potentially to the detriment of gross sales. By applying an ongoing
test and learn approach, we will be focusing more on delivering
actual cash contribution, rather than % contribution.
By the end of 2024 all Invest and Nurture brands will have their
own DTC offering (excluding Dirty Works), we will have exited The
Unexpekted Store and Skinny Tan Australia. Our strategic focus and
investment will be behind four DTC sites, whereby we can generate
an appropriate AOV (average order value) and margin.
Environmental & sustainability
We continue to review and improve our beauty sustainability and
are making good progress against our 2025 sustainability pledge.
78% of brands use either reusable or bio sourced plastic and
packaging. Our target is 100% for 2025. Please see separate
sustainability section of the annual report.
Outlook:
Against a backdrop of continued challenging market conditions
and inflationary pressures the management team is focused upon
realising both the strategic and financial aims of the Group. The
immediate priorities are driving brand awareness of key Invest and
Nurture brands, delivering revenue synergies through international
expansion, a laser focus on brand contribution and releasing
working capital tied up in harvest brands. W e remain confident
that the foundations we are building will enable us to return to
profitability and achieve our medium and long-term goals.
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:
2023 2022
-------------------------------------------- --------- ---------
Reported results from continuing operations
Revenue (Note 2) GBP20.1m GBP14.3m
--------- ---------
Underlying operating (loss)/profit(1) GBP(1.2)m GBP(1.8)m
--------- ---------
Loss before taxation GBP(6.8)m GBP(4.1)m
-------------------------------------------- --------- ---------
Basic (loss)/earnings per share (23.5)p (23.9)p
-------------------------------------------- --------- ---------
Net cash GBP8.2m GBP11.3m
-------------------------------------------- --------- ---------
1 Underlying operating (loss)/profit is calculated before
exceptional items, share-based payments and amortisation of
acquisition-related intangibles.
A reconciliation of underlying operating profit to operating is
shown below:
2023 2022
Total Total
------------------------------------- ------- -------
Underlying (loss) from operations (1,206) (1,811)
------- -------
Amortisation of acquisition-related
intangibles (1,027) (240)
Charge for share-based payments 12 (39)
Exceptional items - Impairment
of intangible assets (3,500) (500)
Other exceptional items (1,078) (1,350)
-------------------------------------
Operating (loss)/profit (6,799) (3,940)
------- -------
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 2). Exceptional items are also
explained further in Note 3. 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.
Statement of comprehensive income
Group statutory revenue for the year was GBP20.1 m (FY 2022:
GBP14.3m), an increase of 41% on the prior year due primarily to
the full year effect of the acquisition of InnovaDerma Plc, which
completed on 31 May 2022. Excluding InnovaDerma, revenue increased
by 7% due to strong international sales offset by challenging
trading conditions in the UK.
The underlying gross profit margin was significantly better than
the prior year increasing by 6.2% to 39.7% (2022: 33.5%). This is
due to the full year effect of the Innovaderma portfolio, chiefly
Skinny Tan where margins are higher. Margins from the sale of Brand
Architekts' brand products have held up well year on year despite
continued and significant cost increases throughout the supply
chain, notably in raw materials, componentry and energy. Every
attempt was made to pass cost increases on to retailers but that is
often difficult due to previously agreed pricing commitments.
Despite the challenging trading environment, the Group generated
a reduced operating loss in H2, a significant improvement on the
performance in H1, due to a focus on better targeted advertising
& promotions resulting in improved contribution.
The Group made a loss before tax of GBP6.8m after amortisation
of intangibles GBP1m, impairment of GBP3.5m and other exceptional
items of GBP1.1m which included restructuring costs (GBP0.4m), and
costs associated with the resolution of the legal claim with MR
haircare (GBP0.7m).
Financing costs were GBP0.1m (2022: GBP0.2m) relating to the
defined benefit pension plan notional finance charge.
The effective tax rate for the period was 3% (2022: negative 3%)
of pre-tax profits. The effective rate is below the statutory rate
of 20.5% due to the losses in the period.
Financial position and cash flow
The Group retains a net cash position of GBP8.2m, a reduction of
GBP3.1m versus the prior year (2022: GBP11.3m). The cash outflow
was due to a mix of the underlying operating loss of GBP1.2m,
exceptional costs relating to the InnovaDerma acquisition of
GBP1.0m which includes restructuring costs and a GBP0.6m net
increase in working capital following a planned investment in key
product line inventory holdings to offset cost inflation. The
company also made a payment of GBP0.3m, its annual payment
commitment to its defined benefit pension scheme as outlined
below.
Defined benefit pension plan
The defined benefit pension plan underwent its last triennial
valuation on 5 April 2020. The scheme funding valuation at this
date revealed a deficit of GBP21.1m. The Group entered a revised
deficit recovery plan and schedule of contributions in July 2021.
Under this there was a commitment to make a one-off deficit
reduction payment of GBP1m by 31 July 2021, GBP318k payment per
annum for four years followed by GBP791k for a further thirteen
years, and to pay certain administration costs and the PPF levy for
the life of the plan. The outcome of the next triennial valuation
at 5 April 2023 is expected in late autumn 2023 and will form the
basis of a potential re-assessment.
Accounting standards require the discount rate used for
valuations under IAS 19 '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 higher than they were at 30 June 2022. This
has resulted in a slightly higher discount rate being adopted for
accounting purposes compared to last year. This has decreased the
fair value of the plan liabilities as measured under IAS 19, and
while it is also true that the fair value of the scheme's assets
also decreased, the decrease in assets was lower than the decrease
in liability hence the net result is a decreased liability under
the IAS 19 methodology. For accounting purposes at 30 June 2023,
the Group recognised under IAS 19, a net liability of GBP1.6m
(2022: GBP2.4m).
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
GBP8.2m. Accordingly, we continue to adopt the going concern basis
in preparing the Annual Report and Accounts.
Group Statement of Comprehensive Income
For the year ended 30 June 2023 and 30 June 2022
2023 2022
Notes GBP'000 GBP'000
Revenue 2 20,085 14,296
Cost of sales (12,101) (9,506)
--------------------------------------------------------------------- ------ --------- --------
Gross profit 7,984 4,790
Commercial and administrative costs (10,202) (6,880)
--------------------------------------------------------------------- ------ --------- --------
Operating loss before exceptional items (2,218) (2,090)
Exceptional items - Impairment of intangible assets 3 (3,500) (500)
Other exceptional items 3 (1,078) (1,350)
--------------------------------------------------------------------- ------ --------- --------
Operating loss (6,796) (3,940)
--------------------------------------------------------------------- ------ --------- --------
Finance income 111 20
Finance expense (88) (196)
--------------------------------------------------------------------- ------ --------- --------
Loss before taxation 4 (6,773) (4,116)
Taxation 5 188 (130)
--------------------------------------------------------------------- ------ --------- --------
Loss for the year (6,585) (4,246)
--------------------------------------------------------------------- ------ --------- --------
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Re-measurement of defined benefit liability 444 5,143
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations - -
Other comprehensive income for the year 444 5,143
--------------------------------------------------------------------- ------ --------- --------
Total comprehensive income for the year (6,141) 897
===================================================================== ====== ========= ========
Loss attributable to:
--------------------------------------------------------------------- ------ --------- --------
Equity shareholders (6,588) (4,322)
--------------------------------------------------------------------- ------ --------- --------
Non-controlling interests 3 76
Total comprehensive income attributable to:
--------------------------------------------------------------------- ------ --------- --------
Equity shareholders (6,141) 821
--------------------------------------------------------------------- ------ --------- --------
Non-controlling interests 3 76
Earnings per share 6
- basic (23.5)p (23.9)p
- diluted (23.5)p (23.9)p
Dividends
Paid in year (GBP'000) Nil Nil
Paid in year (pence per share) Nil Nil
Proposed (GBP'000) Nil Nil
Proposed (pence per share) Nil Nil
Group Statement of Financial Position
As at 30 June 2023
2023 2022
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment including right of use assets 43 53
Intangible assets 7 14,462 18,870
Deferred tax assets 520 730
Total non-current assets 15,025 19,653
Current assets
Inventories 6,123 7,375
Trade and other receivables 4,774 5,099
Cash and cash equivalents 8,177 11,347
Total current assets 19,074 23,821
------------------------------------------------------------- ------ -------- --------
Total assets 34,099 43,474
------------------------------------------------------------- ------ -------- --------
LIABILITIES
Current liabilities
Trade and other payables 4,687 6,844
Current Tax Payable 2 9
Total current liabilities 4,689 6,853
------------------------------------------------------------- ------ -------- --------
Non-current liabilities
Post-retirement benefit obligations 1,619 2,439
Deferred tax liabilities 2,190 2,428
Total non-current liabilities 3,809 4,867
------------------------------------------------------------- ------ -------- --------
Total liabilities 8,498 11,720
------------------------------------------------------------- ------ -------- --------
Net assets 25,601 31,754
------------------------------------------------------------- ------ -------- --------
EQUITY
Share capital 1,397 1,397
Share premium 11,987 11,987
Merger reserve 6,588 6,588
Pension re-measurement reserve (2,215) (2,659)
Retained earnings 7,613 14,213
------------------------------------------------------------- ------ -------- --------
Equity attributable to holders of the parent 25,370 31,526
------------------------------------------------------------- ------ -------- --------
Non-controlling interest 231 228
------------------------------------------------------------- ------ -------- --------
Total equity 25,601 31,754
------------------------------------------------------------- ------ -------- --------
Group Statement of Changes in Equity
For the year ended 30 June 2023 and the year ended 30 June
2022
Share Capital Share Merger Pension Retained Non-controlling Total
Premium Reserve re-measurement Earnings interest Equity
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Balance as at
June 2022 1,397 11,987 6,588 (2,659) 14,213 228 31,754
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Non-controlling
interest - - - - - 3 3
Share based
payments - - - - (12) - (12)
Transactions
with owners - - - - (12) 3 (9)
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Loss for the
year
attributable to
equity
shareholders - - - - (6,588) - (6,588)
Other
comprehensive
income:
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Re-measurement
of defined
benefit
liability - - - 444 - - 444
Total
comprehensive
income for the
year - - - 444 (6,588) - (6,144)
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Balance as at
June 2023 1,397 11,987 6,588 (2,215) 7,613 231 25,601
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Share Capital Share Merger Pension Retained Non-controlling Total
Premium Reserve re-measurement Earnings interest Equity
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Balance as at
June 2021 862 11,987 - (7,802) 18,496 152 23,695
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Issue of new
shares 535 - 6,588 - - - 7,123
Non-controlling
interest - - - - - 76 76
Share based
payments - - - - 39 - 39
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Transactions
with owners 535 - 6,588 - 39 76 7,238
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Loss for the
year
attributable to
equity
shareholders - - - - (4,322) - (4,322)
Other
comprehensive
income:
Re-measurement
of defined
benefit
liability - - - 5,143 - - 5,143
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Total
comprehensive
income for the
year - - - 5,143 (4,322) - 821
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Balance as at
June 2022 1,397 11,987 6,588 (2,659) 14,213 228 31,754
----------------- ------------------- --------- --------- --------------- --------- ---------------- ----------
Cash Flow Statement
For the year ended 30 June 2023 and the year ended 30 June
2022
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Loss before taxation (6,773) (4,116) (5,493) (2,581)
Depreciation 32 29 - -
Amortisation 1,118 388 74 78
Impairment of property, plant & equipment (166) 166 - -
Impairment of intangible assets 3,500 770 - 500
Impairment of investments - - 3,500 -
Finance income (111) (20) (111) (10)
Finance cost 88 196 88 190
(Increase)/ Decrease in inventories 1,252 (3,084) - -
Decrease /(Increase) in trade and other receivables 325 101 (904) (1,266)
Increase / (Decrease) in trade and other payables (2,082) 641 (996) (559)
Share based payment expense (14) 39 (23) 42
Contributions to defined benefit plans (318) (1,318) (318) (1,318)
Cash (outflow) / generated from operations (3,149) (6,208) (4,183) (4,924)
---------------------------------------------------------- ------------ ----------- -------- --------
Finance costs paid - - - -
Taxation received (66) 432 - -
---------------------------------------------------------- ------------ ----------- -------- --------
Net cash (outflow) from operating activities (3,215) (5,776) (4,183) (4,924)
---------------------------------------------------------- ------------ ----------- -------- --------
Cash flow from investing activities
Purchase of property, plant and equipment (22) (15) - -
Purchase of intangible assets (44) (237) - -
Cash consideration paid for acquisitions - (1,965) - (1,965)
Cash acquired on acquisition - 1,510 - -
Net cash flow from investing activities (66) (707) - (1,965)
---------------------------------------------------------- ------------ ----------- -------- --------
Cash flow from financing activities
Repayment of / Movements in invoice discounting facility - - - -
Finance income received 111 20 111 10
Repayment of loans - (1,208) - -
Net cash flow from financing activities 111 (1,188) 111 10
---------------------------------------------------------- ------------ ----------- -------- --------
Net decrease in cash and cash equivalents (3,170) (7,671) (4,072) (6,879)
Cash and cash equivalents at beginning of year 11,347 19,018 9,802 16,681
---------------------------------------------------------- ------------ ----------- -------- --------
Cash and cash equivalents at end of year 8,177 11,347 5,730 9,802
---------------------------------------------------------- ------------ ----------- -------- --------
Notes to the 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
period ended June 2023 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 period ended June 2022
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 2023 Annual Report and Accounts with the
notice of Annual General Meeting will be sent to
shareholders via their elected channel. 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).
Note 1 Significant accounting policies
General Information
Brand Architekts Group plc is a public limited company which is
listed on AIM and is incorporated in the United Kingdom under the
Companies Act 2006. The address of the registered office is given
at the end of the financial report. The nature of the Group's
operations and its principal activities are set out in the
Strategic Report. The results for the current period have been
drawn up for a traditional 12 month calendar year.
Basis of preparation
The Group has prepared its consolidated financial statements in
accordance with UK adopted International Accounting Standards (UK
adopted IAS) in conformity with the requirements of the Companies
Act 2006. 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 level of cash
held, 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. In making this assessment
directors have considered the possible impact of a reduction of
trading on budgets and have stress tested the figures by comparing
costs committed to with the cash available which showed sufficient
headroom to continue trading. 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.
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
acquisition 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
loss after tax for the year to June 2023 was GBP5.529m (2022: loss
after tax GBP2.742m).
The Group financial statements consolidate those of the parent
company and all of its subsidiaries as of 30 June 2023. 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 30 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.
Note 2 Segmental Analysis
During the year, there were three reportable segments of the
Group, the reportable segments of the Group were aggregated as
follows:
-- Brand Architekts Brands - These include those brands
organically developed plus the acquisitions of the portfolio of
Brands included in The Brand Architekts acquisition (in 2016) and
the Fish brand acquired during 2018.
-- Innovaderma Brands - This segment includes those brands
acquired as part of the Innovaderma business combination. The
results of Innovaderma brands are currently reported separately
from other brands to the directors.
-- 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 year ended 30 June 2023 and year ended 30
June 2022:
Year ended 30 June 2023 Brand Eliminations Total
Architekt Innovaderma and Central
Brands Brands Costs
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----------- -------------- ------------------------- --------
UK revenue 11,243 4,538 - 15,781
International revenue 3,225 1,079 - 4,304
------------------------------------- ----------- -------------- ------------------------- --------
Revenue - External 14,468 5,617 - 20,085
Revenue - Internal - - - -
------------------------------------- ----------- -------------- ------------------------- --------
Total Revenue 14,468 5,617 - 20,085
------------------------------------- ----------- -------------- ------------------------- --------
Underlying profit / (loss)
from operations 193 (233) (1,166) (1,206)
------------------------------------- ----------- -------------- ------------------------- --------
Credit / (charge) for share-based
payments (12) - 24 12
Amortisation of acquisition-related
intangibles - - (1,027) (1,027)
Exceptional items - Impairment
of intangible assets (Note
3) - (3,500) - (3,500)
Other Exceptional items
(Note 3) (147) (297) (634) (1,078)
Net borrowing income /
(expense) - - 26 26
------------------------------------- ----------- -------------- ------------------------- --------
Profit / (Loss) before
taxation 34 (4,030) (2,777) (6,773)
------------------------------------- ----------- -------------- ------------------------- --------
Tax charge 77 (91) 202 188
------------------------------------- ----------- -------------- ------------------------- --------
Loss for the year 111 (4,121) (2,575) (6,585)
------------------------------------- ----------- -------------- ------------------------- --------
Year ended 30 June Brand Architekt Innovaderma Eliminations Total
2022 Brands Brands and Central
Costs
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ---------------- ------------ ------------- --------
UK revenue 10,910 741 - 11,651
International revenue 2,558 87 - 2,645
------------------------------------- ---------------- ------------ ------------- --------
Revenue - External 13,468 828 - 14,296
Revenue - Internal - 26 (26) -
------------------------------------- ---------------- ------------ ------------- --------
Total Revenue 13,468 854 (26) 14,296
------------------------------------- ---------------- ------------ ------------- --------
Underlying loss from
operations (667) (87) (1,057) (1,811)
------------------------------------- ---------------- ------------ ------------- --------
Credit / (charge) for
share-based payments 3 - (42) (39)
Amortisation of acquisition-related
intangibles - - (240) (240)
Other Exceptional items
(Note 3) (281) (341) (1,228) (1,850)
Net borrowing income
/ (expense) 4 - (180) (176)
------------------------------------- ---------------- ------------ ------------- --------
Loss before taxation (941) (428) (2,747) (4,116)
Tax charge - - (130) (130)
------------------------------------- ---------------- ------------ ------------- --------
Loss for the period (941) (428) (2,877) (4,246)
------------------------------------- ---------------- ------------ ------------- --------
The segmental Income Statement disclosures are measured in
accordance with the Group's accounting policies as set out in note
1.
All defined benefit pension costs and an element of the
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
Year ended 30 June 2023 Innovaderma Eliminations and Central
Brand Architekt Brands Brands Costs Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ----------------------- ------------ --------------------------- --------
Depreciation / impairment of PPE 32 - - 32
Amortisation / impairment of
intangibles * 91 3,500 1,027 4,618
Period ended 30 June 2022 Innovaderma Eliminations and Central
Brand Architekt Brands Brands Costs Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ----------------------- ------------ --------------------------- --------
Depreciation 29 166 - 195
Amortisation/ impairment* 418 - 740 1,158
* Impairment losses of GBPNil (2022: GBP0.5m) in Central Costs is included in Exceptional
Items - Impairment of intangible assets
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.
d) Additional entity-wide disclosures
The distribution of the Group's external revenue by destination
is shown below:
Geographical segments Year ended Period ended
30 June 2023 30 June 2022
GBP'000 GBP'000
------------- -------------
UK 15,781 11,651
Other European Union countries 642 982
Rest of the World 3,662 1,663
------------- -------------
20,085 14,296
------------- -------------
In the year ended 30 June 2023, the Group had one customer that
exceeded 10% of total revenues, being 13.7%. In the year ended 30
June 2022, the Group had three customers from that exceeded 10% of
total revenues, being 15.5%, 11.8% and 10.3% respectively. All of
these customers are reported within the Brand Architekts Brands
segment. Revenue is recognised when goods are despatched to the
customer and the significant risks and rewards of ownership to the
customer have been transferred. Our policy requires customers to
pay us in accordance with agreed payment terms. Depending on the
geographical location, our settlement terms are generally due
within 30 or 60 days from the end of the month of sale.
Note 3 Exceptional Items
Exceptional charges / (credits) from Continuing Operations: Year ended Year ended
30 June 2023 30 June 2022
GBP'000 GBP'000
------------- --------------------------
Exceptional items - Impairment of intangible assets 3,500 500
Other exceptional items:
Impairment of software - 270
Acquisition costs - 728
Restructuring costs 390 186
Legal costs 705
Other exceptional costs (17) 166
Total exceptional items 4,578 1,850
------------- --------------------------
Exceptional impairments of intangible assets relates to the
partial impairment of the InnovaDerma brand of GBP3.5m (2022:
impairment of Fish brand GBP0.5m).
Restructuring costs of GBP0.4m have been incurred following the
acquisition of InnovaDerma in the prior year.
Legal costs of GBP0.7m associated with the resolution of the
claim with MR Haircare were incurred in the year, including the
settlement agreement reached totalling GBP425k as disclosed in the
Chairman's statement on page 6. Final settlement of these costs
were made after the year end.
Note 4 Loss before taxation
2023 2022
GBP'000 GBP'000
(a) This is stated after charging/ (crediting)
Depreciation of property, plant and equipment of purchased assets 32 29
Amortisation of intangible assets 1,118 388
Impairment of intangible assets and property, plant and equipment (classified as exceptional
- Note 3) - 770
Foreign exchange (gains) / losses 66 (5)
Amounts expensed for short term and low value leases 56 56
(b) Auditors' remuneration
Audit services:
Audit of the Company financial statements 57 53
Audit of subsidiary undertakings 32 14
Audit related services:
Interim review 3 3
Non audit services:
Corporate finance - acquisition related services - 45
Note 5 Taxation
2023 2022
(a) Analysis of tax charge in the year GBP'000 GBP'000
UK corporation tax:
- on profit for the year - -
- adjustment in respect of previous years - -
Total current tax credit - -
--------------- --------
Deferred tax: - -
-current year (credit)/ charge (188) 130
-effect of tax rate change on opening balance - -
Total deferred tax charge (188) 130
--------------- --------
Tax charge (188) 130
--------------- --------
(b) Factors affecting total tax charge for the year
The tax assessed on the profit before taxation for the year is
at the standard rate of UK corporation tax of 20.50% (2022:
19.00%). The applicable rate of tax in the year ended June 2024
will be 25%, the tax rate in the year is 20.50% due to the tax rate
changing from 1 April 2023. The differences are reconciled
below:
2023 2022
GBP'000 GBP'000
Loss before taxation (6,773) (4,116)
-------- --------
Tax at the applicable rate of 20.5.% (2022: 19.00%) (1,388) (782)
Effect of:
Adjustment in respect of previous years - -
Expenses not deductible for tax purposes 792 138
Adjustment to losses 15 -
Income not taxable for tax purposes - -
Deferred tax asset not recognised on taxable losses 494 774
Remeasurement of deferred tax for changes in tax rates (44) -
Other timing differences (57) -
Actual tax (credit)/charge (188) 130
-------- --------
The group has tax losses of GBP12.9m (2022: GBP11.3m) which have
not been recognised as there is no certainty that they can be
utilised.
Note 6 Earnings per share
2023 2022
Basic and Diluted
Loss for the year attributable to equity holders (GBP'000) (6,579) (4,322)
Basic weighted average number of ordinary shares in issue during the year 27,943,180 18,111,180
Diluted number of shares 28,032,180 18,200,180
----------- -----------
Basic loss per share (23.5)p (23.9)p
----------- -----------
Diluted loss per share (23.5)p (23.9)p
----------- -----------
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 30 June 2023 and 30 June 2022
respectively.
Note 7 Intangible assets
Software Trade
and Customer marks
Trademarks Brand Names Relationships Goodwill Total
GROUP GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At June 2021 385 8,715 2,126 2,618 - 13,844
------------ ------------ -------------- --------- -------- --------
Additions 218 - - - 19 237
Acquired through business combinations-
Additions - 1,608 2,329 5,736 - 9,673
------------ ------------ -------------- --------- -------- --------
At June 2022 603 10,323 4,455 8,354 19 23,754
------------ ------------ -------------- --------- -------- --------
Additions 44 - - - - 44
At June 2023 647 10,323 4,455 8,354 19 23,798
------------ ------------ -------------- --------- -------- --------
Amortisation:
------------ ------------ -------------- --------- -------- --------
At June 2021 56 2,524 1,146 - - 3,726
Provided during the year 145 - 240 - 3 388
Impairment charge during the year 270 500 - - - 770
At June 2022 471 3,024 1,386 - 3 4,884
------------ ------------ -------------- --------- -------- --------
Provided during the year 85 466 561 - 6 1,118
Impairment charge during the year - - - 3,500 - 3,500
Acquired through business combinations - - - (166) - (166)
Disposals - - - - - -
------------ ------------ -------------- --------- -------- --------
At June 2023 556 3,490 1,947 3,334 9 9,336
------------ ------------ -------------- --------- -------- --------
Net book value:
At June 2023 91 6,833 2,508 5,020 10 14,462
At June 2022 132 7,299 3,069 8,354 16 18,870
------------ ------------ -------------- --------- -------- --------
Brand Names Customer Relationships Total
COMPANY GBP'000 GBP'000 GBP'000
Cost:
------------ ----------------------- --------
At June 2021 3,624 480 4,104
------------ ----------------------- --------
At June 2022 3,624 480 4,104
------------ ----------------------- --------
At June 2023 3,624 480 4,104
------------ ----------------------- --------
Amortisation:
------------ ----------------------- --------
At June 2021 2,524 309 2,833
Provided during the year - 74 74
Impairment charge during the year 500 - 500
------------ ----------------------- --------
At June 2022 3,024 383 3,407
Provided during the year - 74 74
Impairment charge during the year - - -
At June 2023 3,024 457 3,481
------------ ----------------------- --------
Net book value:
At June 2023 600 23 623
------------ ----------------------- --------
At June 2022 600 97 697
------------ ----------------------- --------
Impairment testing
Three Brands (Brand Architekts, Fish and InnovaDerma) and
associated goodwill have been tested for impairment as they have
indefinite useful lives. The Brand Architekts and Fish brands gave
a valuation in excess of their carrying values, and therefore no
impairment is required. The InnovaDerma brand was partially
impaired by GBP3.5m.
The recoverable amount of each brand was determined based on the
higher of value-in-use calculations or fair value less costs to
sell. The value-in-use calculations covered underlying 1-2 year
forecasts, followed by an extrapolation of expected cash flows for
the remaining useful life using growth assumptions of 2%. Fair
value less costs to sell was determined by a review of historic
acquisitions in the consumer goods market of similar size and
current market data to identify multiples that have been paid.
The present value of the expected cash flows is determined by
applying a suitable discount rate for current market assessments of
the time value of money and risks specific to the brand. The
discount rate applied is 8.1% (2022: 8%), reflecting expected
returns for AIM listed businesses as well as the debt free capital
structure of the Group.
Growth assumptions
Management have assumed a base case growth rate of 2%, in line
with wider industry forecasts, in the calculations including into
perpetuity.
Discount rates
The discount rates reflect appropriate adjustments relating to
market risk and specific risk factors.
Cash flow assumptions
Management's key assumptions include profit margins, based on
past experience in this market. The Group's management believes
that this is the best available input for forecasting this mature
sector. The expectations included in the workings are for increases
in performance and profits being made due to cost synergies from
integration into the BAG group and a focus on higher margin
products.
Apart from the considerations in determining the value-in-use of
the brand described above, management is not currently aware of any
other probable changes that would necessitate changes in its key
estimates. The values of the intangibles with indefinite useful
lives for Brand Architekts remains at GBP7,709,000 (comprising
Goodwill of GBP2,618,000 and Brands of GBP5,091,000), while the
Fish brand net carry value is GBP600,000. Goodwill held in relation
to InnovaDerma was GBP2,236,000, following the partial impairment
of GBP3,500,000. The value of the customer relationship intangibles
for Brand Architekts are GBP478,000. The values of the customer
relationship and brand intangibles for InnovaDerma are GBP1,863,000
and GBP1,286,000 respectively.
Sensitivity analysis
Fair value less costs to sell are the higher of the value in use
and fair value less costs to sell and as a result the fair value
has been used to assess the impairment. A 10% decrease in the fair
value for the Brand Architekts goodwill and brand names would not
result in an additional impairment. A 10% decrease in the fair
value of Innovaderma would results in an additional impairment of
the goodwill of GBP0.6m and an increase of 10% would result in a
reduction in the impairment of the goodwill of GBP0.6m.
Note 8 Notes to Cash Flow Statement
GROUP
2023 2022
GBP'000 GBP'000
Decrease in cash and cash equivalents (3,170) (9,181)
Net cash outflow from decrease in borrowings - 1,208
-------------------- -------------------
Change in net cash (3,170) (7,973)
Opening net cash 11,347 19,018
-------------------- -------------------
Net cash acquired on business combinations - 302
-------------------- -------------------
Closing net cash 8,177 11,347
-------------------- -------------------
(b) Analysis of net cash: Closing 2022 Cash Flow Closing 2023
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 11,347 (3,170) 8,177
Borrowings due within one year - - -
11,347 (3,170) 8,177
------------- ------------ -----------------
Note 9 Post Balance Sheet Events
Since the year end a settlement has been reached in respect of
the dispute in relation to Mr Haircare. As part of the settlement
agreement, Brand Architekts Group plc will purchase the remaining
shares in Mr Haircare at fair value as determined by an independent
third party valuer. The basis of valuation adopted is currently
subject to challenge and the purchase price has not yet been
agreed. The potential value of the shares is not disclosed as it
could be prejudicial to the outcome. The transaction is expected to
conclude before the end of the 2023 calendar year and a further
announcement will be made in due course.
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END
FR FDAFMSEDSEIS
(END) Dow Jones Newswires
October 31, 2023 03:00 ET (07:00 GMT)
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