TIDMITS
RNS Number : 9441S
In The Style Group PLC
19 July 2022
In The Style Group plc
("In The Style", the "Company" or the "Group")
Full Year Results for the Year Ended 31 March 2022
In The Style Group plc (AIM:ITS), the disruptive and inclusive
digital womenswear fashion brand, announces full year results for
the financial year ended 31 March 2022 ("FY22", "2022").
Financial highlights
Year ended Year ended
31 March 31 March Change
2022 2021 %
-------------------------------------- ----------- ----------- ----------
Revenue (GBP'000) 57,317 44,705 28%
Gross profit(1) (GBP'000) 25,169 20,589 22%
Gross profit margin(2) (%) 43.9% 46.1% (2.2%pts)
Adjusted EBITDA(3) (GBP'000) 551 3,799 (85%)
Adjusted EBITDA margin(4) (%) 1.0% 8.5% (7.5%pts)
(Loss) / profit before tax (GBP'000) (1,545) 125 n.m
Net cash as at 31 March (GBP'000) 5,823 11,939 (51%)
-------------------------------------- ----------- ----------- ----------
-- Group revenue increased by 28% to GBP57.3m (2021: GBP44.7m)
o Direct-to-consumer ("DTC") revenue grew by 23% to GBP44.7m
(2021: GBP36.4m)
o Wholesale revenue grew by 52% to GBP12.6m (2021: GBP8.3m)
o Revenue growth was driven by the ongoing expansion and
optimisation of the influencer-based business model
-- Gross profit (1) grew 22% to GBP25.2m (2021: GBP20.6m)
o Gross profit margin (2) reduced by 2.2%pts to 43.9% (2021:
46.1%) as the proportion of revenue from our wholesale channel
increased
o Product cost increases were well managed through DTC but
reduced wholesale gross margin. Cost pressures remain as we move
into the current year
-- Adjusted EBTIDA (3) for the year of GBP0.6m (2021: GBP3.8m)
o Adjusted EBTIDA margin (4) of 1.0% (2021: 8.5%)
-- The Group made a loss before tax of GBP1.5m (2021: profit of GBP0.1m)
-- Cash at 31 March 2022 was GBP5.8m (March 2021: GBP11.9m). As
was expected, cash levels reduced in the year as the Group invested
in its technology platform and had increased working capital
requirements due to growth within the wholesale channel. Following
the year end, the Group has entered into a new invoice discounting
facility to provide liquidity over trade receivables. This replaces
the previous facility that was cancelled in December 2021. Cash at
30 June 2022 was GBP10.5m.
Operational highlights
-- We have seen strong progress across all of our operational KPIs:
o Total orders (5) increased by 13% to 1,523,000 (2021:
1,343,000)
o Cross-platform visits increased by 4% across app and web
o Conversion rate (6) improved to 3.16% (2021: 2.89%)
o Average order value (7) increased by 21% to GBP52.00 (2021:
GBP42.85)
o New customers increased by 391,000 in the year; active
customer (8) base grew by 4% to 677,000 (2021: 653,000)
o Order frequency (9) increased by 9% to 2.25 times per year
(2021: 2.06 time per year)
Strategic highlights
-- The Group continued to leverage its highly distinctive
social-influencer collaboration model, launching 193 collaboration
collections across 27 influencers. This influencer base included
both established names such as Jac Jossa and Lorna Luxe as well as
a number of new influencers including Perrie Sian, Gemma Atkinson
and Stacey Solomon, with whom In The Style launched its first ever
sustainable collection.
-- Our first collaboration with Stacey Solomon in April 2021 was
our largest ever single launch night. At its peak, we processed 500
orders per second and took over GBP1 million gross order value in
the first hour after launch.
-- Consumer engagement with the In The Style proprietary app
continues to be strong, with over 850,000 downloads in the year. We
made good strides in the app customer journey including the
addition of 'selling fast' flags and the ability for customers to
save card details to make the checkout process easier.
-- We reached an agreement to collaborate with Dame Deborah
James in early 2022 which was well aligned to our purpose of
inspiring confidence. As we grew to know Deborah, we ourselves were
inspired by her desire to make a difference. Following the year
end, we have helped raise over GBP1.25m for the Bowelbabe fund for
Cancer Research UK by donating all profits from both the original
collection and a range of Rebellious Hope T-shirts which Deborah
designed. We are saddened by Deborah's passing and hope In The
Style's contribution will play some small part in the fight against
cancer.
-- Sam Perkins joined the Company as Chief Executive Officer in
January 2022 allowing Adam Frisby to focus on leading the Group's
creative direction in a new role as Chief Brand Officer. Richard
Monaghan joined the Company in March 2022 as Chief Financial
Officer following Paul Masters decision to retire.
Q1 2023 trading
-- Trading through Q1 2023 has been robust in a challenging
trading environment. Through the first quarter of the financial
year we have launched 44 ranges in collaboration with 18
influencers.
-- Our customer KPIs have continued to improve and return rates have been in line with management expectations.
-- Through Q1, we have seen year-on-year revenue growth in our
DTC channel of +12%. This includes revenue generated from the
collaborations with Dame Deborah James, the profits of which will
go to the Bowelbabe fund for Cancer Research UK. We have raised
>GBP1.25 million for the charity so far.
-- Total revenue was broadly flat year-on-year in the quarter.
Wholesale revenue decreased year-on-year as we reviewed how our
launch model works in physical retail.
-- Overall gross profit margin was in line with Q1 FY22.
-- As at 30 June 2022, the Group had cash of GBP10.5m.
FY23 Outlook
-- As we consider the outlook for FY23 as a whole, we have to
balance our confidence in the underlying business model and the
opportunity to implement our growth strategy. The combination of
our authentic inclusive brand, our differentiated influencer
collaboration model, our agile supply chain and our well invested
technology platform provides us with a competitive edge that can be
further leveraged.
-- We are planning for Group revenue to be broadly flat, with
DTC revenue growing at mid-single digit rates. Revenue from our
wholesale channel is expected to decline at a double-digit rate as
we focus on our digital partners.
-- We expect DTC gross margin to reduce but wholesale gross margin to return to FY21 levels.
-- We anticipate that by the end of September 2022 we will have
moved to a new warehouse and we will improve our fulfilment
efficiency as a result. We anticipate exceptional costs of cGBP0.5m
in relation to the move.
-- Taking into account all of the above, together with the very
uncertain market conditions, we are forecasting an adjusted EBITDA
loss for the year of GBP2.0 million.
-- The Group manages cash carefully and we are well capitalised
to navigate through this difficult period.
-- The Board is excited by the future growth strategy set out
and is confident of the medium- and long-term growth prospects.
Sam Perkins, Chief Executive Officer of In The Style Group plc
said:
"I am pleased to report that in our first full year as a public
company In The Style has delivered further strong revenue growth,
representing almost +200% on a two-year basis. This has been
supported by encouraging improvements across all our key customer
and brand metrics.
"Our purpose is to inspire confidence, and this drives us to
create unique products that help our customers to feel great about
themselves. We have a strong, inclusive brand and differentiated
influencer collaboration model which gives us fantastic reach,
highly effective marketing, and broad customer appeal. This
underpins our long-term confidence to create one of the UK's most
exciting fashion brands.
"This year is expected to be a challenging one for consumers and
retailers. We are taking actions to respond including prudent cost
control, cash management and executing against our refined growth
strategy."
Analyst presentation
A presentation for analysts will be held at the offices of
Hudson Sandler at 9.30am, Tuesday 19 July 2022. If you wish to
attend, please contact Hudson Sandler on the details below.
A live presentation relating to the Group's Preliminary Results
for the year ended 31 March 2022 will be conducted via the Investor
Meet Company platform on Wednesday 20th July 2022 at 3:00pm BST.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via your
Investor Meet Company dashboard up until 9am the day before the
meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet In The Style via:
https://www.investormeetcompany.com/in-the-style-group-plc/register-investor
For media enquiries:
Please contact the team at Hudson Sandler on +44 (0)20 7796 4133
or email inthestyle@hudsonsandler.com .
In The Style Group plc Via Hudson Sandler
Sam Perkins, CEO
Rich Monaghan, CFO
Liberum Capital Limited (Nomad and Broker) +44 (0)20 3100
2000
Clayton Bush
Scott Mathieson
Ed Thomas
Miquela Bezuidenhoudt
Hudson Sandler +44 (0)20 7796 4133
Alex Brennan inthestyle@hudsonsandler.com
Lucy Wollam
Ben Wilson
About In The Style
In The Style is a fast-growing digital womenswear fashion brand
with an innovative social media influencer collaboration model.
Founded in 2013 by entrepreneur Adam Frisby, the brand champions
inclusivity, body positivity and real beauty.
The brand's innovative and highly adaptable influencer
collaboration model, which sees it work with influencers on a
long-term basis to collaboratively design, develop and promote
branded collections, differentiates it from competitors. In The
Style currently partners with a stable of 25+ influencers,
including Jac Jossa, Stacey Solomon and Perrie Sian. Together they
enjoy a combined global social media reach of over 30m
followers.
For more information, please visit
https://corporate.inthestyle.com/about/
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act
2018.
Cautionary statement
This announcement of annual results does not constitute or form
part of and should not be construed as an invitation to underwrite,
subscribe for, or otherwise acquire or dispose of any In The Style
Group plc (the "Company") shares or other securities in any
jurisdiction nor is it an inducement to enter into investment
activity nor should it form the basis of, or be relied on in
connection with, any contract or commitment or investment decision
whatsoever. It does not constitute a recommendation regarding any
securities. Past performance, including the price at which the
Company's securities have been bought or sold in the past, is no
guide to future performance and persons needing advice should
consult an independent financial advisor. Certain statements in
this announcement constitute forward looking statements (including
beliefs or opinions). Any statement in this announcement that is
not a statement of historical fact including, without limitation,
those regarding the Company's future expectations, operations,
financial performance, financial condition and business is a
forward-looking statement. Such forward looking statements are
subject to risks and uncertainties because they relate to events
that may or may not occur in the future, that may cause actual
results to differ materially from those expressed or implied by
such forward looking statements. These risks and uncertainties
include, among other factors, changing economic, financial,
business or other market conditions. These and other factors could
adversely affect the outcome and financial effects of the plans and
events described in this results announcement. As a result, you are
cautioned not to place reliance on such forward-looking statements,
which are not guarantees of future performance. Except as is
required by applicable laws and regulatory obligations, no
undertaking is given to update the forward-looking statements
contained in this announcement, whether as a result of new
information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast. This
announcement has been prepared for the Company's group as a whole
and, therefore, gives greater emphasis to those matters which are
significant to the Company and its subsidiary undertakings when
viewed as a whole.
Summary financial performance
Year ended Year ended Year-on-year
31 March 31 March change
Units 2022 2021 %
--------------------------------- ----------- ----------- ----------- -------------
Income statement
--------------------------------- ----------- ----------- ----------- -------------
Direct-to-consumer revenue GBP'000 44,683 36,374 23%
--------------------------------- ----------- ----------- ----------- -------------
Wholesale revenue GBP'000 12,634 8,331 52%
--------------------------------- ----------- ----------- ----------- -------------
Revenue GBP'000 57,317 44,705 28%
--------------------------------- ----------- ----------- ----------- -------------
Gross profit(1) GBP'000 25,169 20,589 22%
--------------------------------- ----------- ----------- ----------- -------------
Gross profit margin(2) % 43.9% 46.1% (2.2%pts)
--------------------------------- ----------- ----------- ----------- -------------
Adjusted EBITDA(3) GBP'000 551 3,799 (86%)
--------------------------------- ----------- ----------- ----------- -------------
Adjusted EBITDA margin(4) % 1.0% 8.5% (7.5%pts)
--------------------------------- ----------- ----------- ----------- -------------
(Loss) / profit before tax GBP'000 (1,545) 125 n.m
--------------------------------- ----------- ----------- ----------- -------------
Basic (loss) / earnings per
share(10) pence (2.53) 1.19 (313%)
--------------------------------- ----------- ----------- ----------- -------------
Cash flow
--------------------------------- ----------- ----------- ----------- -------------
Net cash as at 31 March GBP'000 5,823 11,939 (51%)
--------------------------------- ----------- ----------- ----------- -------------
Cash (used in) / generated from
operations GBP'000 (3,771) 1,129 n.m
--------------------------------- ----------- ----------- ----------- -------------
Capital expenditure including
intangible assets GBP'000 (2,121) (414) n.m
--------------------------------- ----------- ----------- ----------- -------------
Key performance indicators
--------------------------------- ----------- ----------- ----------- -------------
Total orders(5) '000 1,523 1,343 13%
--------------------------------- ----------- ----------- ----------- -------------
Conversion rate(6) % 3.16% 2.89% 27bps
--------------------------------- ----------- ----------- ----------- -------------
Average order value(7) GBP 52.00 42.85 21%
--------------------------------- ----------- ----------- ----------- -------------
Active customers(8) '000 677 653 4%
--------------------------------- ----------- ----------- ----------- -------------
Times per
Order frequency(9) year 2.25 2.06 9%
--------------------------------- ----------- ----------- ----------- -------------
(1) Gross profit is defined as revenue less all direct costs
incurred in purchasing products for resale.
(2) Gross profit margin is gross profit as a percentage of retail.
(3) Adjusted EBITDA is defined as profit before net finance
costs, tax, depreciation, amortisation, share-based payments and
exceptional items (which are material and non-recurring in
nature).
(4) Adjusted EBITDA margin is defined as adjusted EBITDA divided by revenue.
(5) Total orders is defined as the total number of orders placed
through our direct-to-consumer channel in the year.
(6) Conversion rate is defined as total orders divided by visits to the Group's platform.
(7) Average order value is defined as gross sales (including
sales tax) divided by total orders.
(8) Active customers is defined as the number of consumers who
have made at least one purchase in the last twelve months through
either the In The Style website or the In The Style app.
(9) Order frequency has been defined as the total number of
orders placed by consumers divided by the number of active
customers.
(10) Basic EPS has been calculated for the comparative periods
using the weighted average number of shares in issue immediately
prior to the IPO in March 2021.
FY22 performance overview
This has been a truly landmark year for In The Style. In our
first year as a listed company, and against a challenging market
backdrop, we improved all of our key customer metrics including
visits, conversion, order frequency and average order value.
Revenue of GBP57.3m (2021: GBP44.7m) represented a strong
year-on-year increase of 28% and transformational growth of 197% on
a two-year basis. Adjusted EBITDA for the year was GBP0.6m (2021:
GBP3.8m) which resulted in an adjusted EBITDA margin of 1% (2021:
8.5%).
Continued revenue growth and strategic progress
The continued momentum in revenue growth was driven by the
ongoing expansion and optimisation of our influencer-based business
model, through which we launched 193 collaborations across 27
influencers, creating over 7,500 new products. Our collaborations
over the past year included established partners such as Jac Jossa
and Lorna Luxe, along with a number of new partnerships with Perrie
Sian, Gemma Atkinson and Stacey Solomon, with whom In The Style
launched its first ever sustainable collection.
In The Style's platforms attracted 48.2 million visits from
consumers in 2022 (2021: 46.5 million), an increase of 4% on the
prior year. Consumer engagement with the In The Style proprietary
app continued to be particularly strong, with over 850,000
downloads during the year. Conversion from visit to order increased
to 3.16% (2021: 2.89%) as our inspirational product designs and
increased social reach were backed up by improvements in the
customer journey. During the year we added features such as 'fast
selling' flags to products, quick purchase, and the ability to save
card details to allow a smooth checkout journey.
Total orders increased by 13% to 1,523,000 (2021: 1,343,000). On
average, we attracted an average of 33,000 new customers a month
through 2022 to grow our active customer base by 4% to 677,000
(2021: 653,000). Order frequency increased by 9% to 2.25x per year
(2021: 2.06x) as we leveraged the use of our proprietary app, along
with an increase in launch frequency, to increase the propensity to
purchase. Although we are pleased that both of these core metrics
improved in the year, we believe that there is a great opportunity
to reactivate customers to grow our active customer base.
Our collaboration model allows us to design products which
resonate with consumers and promote high levels of body confidence.
By taking this approach we have been able to increase the value we
provide to our customers. Average order value increased by 21% to
GBP52.00 (2021: GBP42.85) through both retail price inflation and
as the sales mix shifted to higher value product categories, such
as occasion wear, following the end of lockdown restrictions in May
2021.
The Group's wholesale channel continued to grow, increasing by
52% to GBP12.6m (2021: GBP8.3m) to represent 22% of total revenue
(2021: 19%). Retail partnerships provide the Group with additional
consumer reach which support increased levels of brand awareness.
In the year, the Group started to retail product to key European
markets through Zalando and About You. Although sales to
international markets remained small in 2022, this remains an
important growth opportunity for the Group in the coming years.
Managing costs through a challenging period
Adjusted EBITDA margin reduced to 1.0% in 2022 (2021: 8.5%)
which equated to adjusted EBITDA of GBP0.6m (2021: GBP3.8m).
Disruption to worldwide supply chains and inflationary pressures
as a result of Covid-19 and the Russia-Ukraine conflict have been
well documented, and we were not immune to these. Increases to
product costs and the cost of freight put pressure on our gross
margin whilst delivery timelines became less predictable which had
an impact on our launch schedule. Our teams were able to react
quickly to any disruption in our supply chain and flex our sourcing
channels. That led to some substantial changes in our supplier base
in the year, away from China and into new territories such as
Morocco and India.
As a result of this cost management and increasing retail prices
on our platform, inflation was well managed through our
direct-to-consumer segment, but it did impact our growing wholesale
channel where retail prices are set in advance. Overall gross
margin therefore decreased by 220bps to 43.9% (2021: 46.1%).
Adjusted EBITDA margin was also impacted from rising
distribution costs, an increase in return rates following a year of
lockdown restrictions, and an increase in salaries and overheads as
we invested for future growth.
Investment for sustained growth
During the year we made several key investments in our team and
infrastructure to strengthen our business for long-term,
sustainable growth.
We strengthened our senior team with appointments across
product, people and finance. In addition, we made several hires in
our technology team under the leadership of John Allen, our Chief
Technology Officer. As well as the customer journey improvements
mentioned previously, we added features such as a chatbot to gain
efficiencies in customer services and we have substantially
replatformed our site. The team are now working to a detailed
roadmap of further app and website improvements that put the
customer journey at its centre.
We know that the environment in which our people work is
important to them, and we want to provide a space which gives our
creative talent the best chance to flourish. In October 2021 we
moved our head office to a new, larger premises close to our
previous headquarters in Salford. Our new site offers space for,
amongst other things, an on-site photography studio, as well as a
better collaborative environment for our teams.
Operating responsibly
We are committed to operating responsibly and we are mindful of
the communities we impact, our customers, our suppliers and the
environment. During the year we made further progress against the
actions resulting from a supply chain review undertaken by Anthesis
ahead of the Group's IPO in March 2021. This included mapping our
supply chain for visibility, strengthening our due diligence
processes as we onboard suppliers and throughout our supplier
relationships, and updating our CSR policies. 70% of all short- and
medium-term recommendations from this review are now complete, with
plans in place to deliver against the remaining
recommendations.
Furthermore, led by the Group's CSR Committee, we have sought to
reduce our impact on the environment and improve the lives of
people in our supply chain. We have delivered our first full
collection featuring more sustainable fabrics, strengthened our
commitment to only work with suppliers committed to meeting our
ethical standards, and reviewed our own purchasing practices and
the impact these have on our supply chain.
In January 2022, we launched the first In The Style collection
made from sustainable and recycled materials. The collection,
created in partnership with ITS influencer Stacey Solomon, was
received well by customers and has presented a number of useful
insights for future collections of this kind.
An evolution of our strategy
The Group is well positioned and has three competitive
advantages which we can build on in the coming years:
-- Our authentic brand purpose-built around inclusivity
As a brand, In The Style was born out of a desire to inspire all
women to love who they are by giving them the best inclusive
fashion and unique influencer collaborations. This brand purpose is
authentic, runs through the very lifeblood of the Group, and is not
easy for others to replicate.
-- Our differentiated, influencer-led business model
ITS operates a differentiated social influencer-led business
model, which sees us work collaboratively with social influencers
to develop and launch its eponymous design-led collections. This
model creates real engagement with consumers, an ability to respond
rapidly to changing consumer trends, and drives the Group's robust
economic model.
-- Our well-invested technology platform
Comprising the In The Style e-commerce site and proprietary app,
the Group's scalable technology platform has been developed to
deliver a seamless customer experience, particularly during periods
of very high browsing and transaction volumes and frequencies. The
In The Style app, which is created by our in-house tech team and is
bespoke to the Group, successfully drives engagement and
conversion.
As we look ahead to the Company's next phase of growth, we have
taken the opportunity to evolve and refine our growth strategy to
maximise value for all stakeholders, built around the following
pillars:
1. A retail experience equal to the brand
The Group's model of collaborating with influencers to launch
small but regular ranges that are size inclusive has been well
received. Our collaborative launch model will always be at the
heart of the brand. The model is an unrivalled source of new
customers and gives us great reach in a cost-effective way. As we
move forward, we will look to adapt this to become the 'best of
launch and browse'. To do that we will relentlessly focus on
product quality and fit, increasing our assortment and improve our
customer experience by honing our app and our website.
2. Reach through partnerships
Our brand is attractive to established retailers and
marketplaces, and we have grown wholesale revenue as a result. We
have an opportunity to use our partners to increase our consumer
reach both in the UK and internationally. We aim to develop
technology that allows us to partner at scale and speed with
efficiencies for all.
3. New influencer-based business models
Engaging consumers through social has been key to In The Style's
success. In 2022 we collaborated with 27 influencers and launched
193 collections. As this approach evolves, over the long-term we
will look to new business models that could be incremental to our
success and the potential of new brands to expand our consumer
reach. This could mean retailing to different customer types,
helping influencers to launch their own brands, or helping others
adopt a similar launch model. This could be accelerated through the
right acquisitions.
The Board
During the year we announced two important changes to our
leadership team. Firstly, having founded In The Style and led the
Company for the last eight years, Adam Frisby took the decision to
become Chief Brand Officer, a newly created Board-level Executive
Director role with responsibility for developing the Group's
influencer partnerships and the brand's creative direction. At the
same time, we were delighted to announce the appointment of Sam
Perkins as the Group's new CEO.
Sam has a proven track record of delivering strategic and
commercial success across multichannel and pureplay retailers.
He joined In The Style from The Very Group, where he held the
role of Managing Director of the Group's retail division since 2018
and helped to drive the company's transformation from a multi-brand
catalogue business to a fast-paced pure-play retailer.
In March 2022, Paul Masters, the Group's CFO & COO, stepped
down from his role to focus on his health. Paul joined In The Style
in 2017 and during his tenure played a critical role in driving the
Company's growth, including through its IPO in March 2021. I would
like to again take this opportunity to thank Paul on behalf of
everyone at In The Style for his outstanding commitment and
significant contributions during his time with the Group.
In Richard Monaghan the Group identified a high calibre
successor. Richard is an ICAEW qualified Chartered Accountant with
significant experience at consumer-facing businesses, having
previously held the roles of Director of Finance at Victorian
Plumbing Group plc, and Deputy CFO and Group Financial Controller
at Auto Trader Group plc.
The Board has been delighted with both Sam and Richard's
contributions since joining the business and we believe that along
with Adam, we have a formidable and ambitious executive leadership
team to help drive the business through the next chapters of its
growth.
Financial review
In our first full year as a public company, we achieved another
strong year of revenue growth.
2022 2021 Change
GBP'000 GBP'000 %
------------------------------------ --------- --------- -------
Direct-to-consumer ('DTC') 44,683 36,374 23%
Wholesale 12,634 8,331 52%
------------------------------------ --------- --------- -------
Revenue 57,317 44,705 28%
Cost of sales (32,148) (24,116) (33%)
------------------------------------ --------- --------- -------
Gross profit 25,169 20,589 22%
Distribution costs (10,036) (7,402) (36%)
Underlying administrative expenses (14,582) (9,665) (51%)
Other operating income - 277 (100%)
------------------------------------ --------- --------- -------
Adjusted EBITDA 551 3,799 (85%)
Depreciation and amortisation (980) (934) (5%)
Share-based payments (861) - n.m.
Exceptional items (216) (2,346) 91%
------------------------------------ --------- --------- -------
Operating (loss)/ profit (1,506) 519 (390%)
------------------------------------ --------- --------- -------
Revenue
The past financial year saw another strong year of revenue
growth. Revenue increased by 28% to GBP57.3m (2021: GBP44.7m).
Growth came through both our Direct-to-consumer ('DTC') and
Wholesale channels.
DTC revenue, which is generated through the sale of apparel on
the Group's platforms, increased by 23% to GBP44.7m (2021:
GBP36.4m). This was achieved through increases in total order
volumes and the average revenue per order.
The Group leverages its distinctive collaboration launch model
with influencers to drive engagement with consumers. An increase in
visits to our platform was amplified by an increase in conversion
and resulted in a 13% increase in the total number of orders served
by the Group to over 1,523,000 (2021: 1,343,000).
These orders were generated from 677,000 active customers, an
increase of 4% on the prior year (2021: 653,000). Order frequency,
defined as total orders divided by active customers, increased by
9% to 2.25 times per year (2021: 2.06 times per year).
Average revenue per order increased by 8% to GBP29.34 (2021:
GBP27.08) with an increase in average order value being offset
somewhat by an increase in return rates.
Average order value, which we define as gross sales including
sales tax divided by the number of orders, increased by 21% to
GBP52.00 (2021: GBP42.85). This increase in average order value
resulted from a combination of a change in sales mix between both
influencers and product categories, and an increase in average
recommended retail prices. The number of items per order remained
flat at 2.4 (2021: 2.4).
Return rates increased by 900bps to 34.3% (2021: 25.3%), partly
due to the forementioned change in sales mix between product
categories. In addition, the Group temporarily experienced
particularly high levels of returns in the first half of 2022 as
improvised changes in the supplier base made to mitigate disruption
caused by Covid-19, resulted in challenges in product fit. This
normalised through the second half of the year.
Wholesale revenue, which is generated through sales to
third-party retail partners, increased by 52% to GBP12.6m (2021:
GBP8.3m). The brand's association with high profile retail partners
such as ASOS and The Very Group provide a profitable revenue stream
and access to a broader consumer base which increases brand
awareness.
Gross profit
Gross profit increased by 22% to GBP25.2m (2021: GBP20.6m)
although gross profit margin reduced by 220bps to 43.9% (2021:
46.1%).
Direct-to-consumer gross profit margin remained flat at 52%
(2021: 52%). The Group incurred cost inflation due to supply chain
disruption caused by Covid-19 and the Russia-Ukraine conflict.
Increases in average revenue per order were therefore largely
offset by increases in raw material costs and increased rates for
both air and sea freight.
These cost pressures were more challenging to mitigate as
effectively through our wholesale channel. Wholesale gross margin
reduced as a result to 15% (2021: 19%).
Distribution costs
Distribution costs, which includes postage, direct warehouse
costs and transaction fees, increased by 36% to GBP10.0m (2021:
GBP7.4m) which was equivalent to 17.5% of revenue (2021: 16.6%).
The Group incurred increases in direct warehouse costs due to staff
labour inflation, an increased out-of-hours operation to keep up
with rapid growth, and the outsourcing of returns on a short-term
basis to conserve warehouse space. It is expected that by moving to
a larger warehouse space in the coming year we will be able to gain
efficiencies on a cost per unit basis.
Underlying administrative expenses
Underlying administrative expenses increased by 51% to GBP14.6m
(2021: GBP9.6m).
2022 2021 Change
GBP'000 GBP'000 %
------------------------------------- --------- --------- -------
Marketing 7,076 4,995 42%
People costs (exc direct warehouse) 4,311 2,843 52%
Overheads 3,195 1,801 77%
------------------------------------- --------- --------- -------
Underlying administrative expenses 14,582 9,639 51%
------------------------------------- --------- --------- -------
Marketing costs increased by 42% to GBP7.1m (2021: GBP5.0m),
equating to 12% of revenue (2021: 11%). The majority of marketing
costs relate to influencer commissions on collaborations. The Group
also increased the amount invested in performance marketing through
the first half of 2022 to amplify consumer traffic to our
platforms.
People costs, excluding direct warehouse costs and share-based
payments, increased by 52% year-on-year to GBP4.3m (2021: GBP2.8m).
The number of full-time equivalent employees, excluding warehouse
colleagues, increased by 42% to 122 (2021: 86). Cost per FTE
increased by 10%, primarily as a result of changes in staff mix as
we invested in the middle and senior management level of the team
to give us the best possible chance of achieving future sustainable
growth.
Overheads increased by 75% to GBP3.2m (2021: GBP1.8m). Of the
GBP1.4m increase in overheads year-on-year, GBP0.3m were costs
incurred in relation to being a listed business. Other increases
related to supply chain governance, tech infrastructure and
services to improve our platform, and an increase in travel
following the easing of lockdown restrictions.
Adjusted EBITDA
Significant items of income and expense that do not relate to
the trading of the Group are disclosed separately. Examples of such
items are exceptional items and share-based payment charges
relating to one-off awards.
The table below provides a reconciliation from operating profit
to adjusted EBITDA, which is a non-GAAP metric used by the Group to
assess the operating performance.
2022 2021 Change
GBP'000 GBP'000 %
----------------------------------- --------- --------- -------
Operating (loss)/ profit (1,506) 519 (390%)
Share-based payments 861 - n.m.
Exceptional items 216 2,346 91%
----------------------------------- --------- --------- -------
Adjusted operating (loss)/ profit (429) 2,865 (115%)
Depreciation and amortisation 980 934 (5%)
----------------------------------- --------- --------- -------
Adjusted EBITDA 551 3,799 (85%)
----------------------------------- --------- --------- -------
Adjusted EBTIDA for the year was GBP0.6m (2021: GBP3.8m) which
resulted in an adjusted EBITDA margin of 1.0% (2021: 8.5%).
Operating loss/(profit)
The Group made an operating loss for the year of GBP1.5m (2021:
GBP0.5m operating profit).
Depreciation and amortisation for the year amounted to GBP1.0m
(2021: GBP0.9m) and primarily related to capitalised development of
the Group's web and app platforms.
The Group incurred share-based payment charges (including
associated NI) of GBP0.9m (2021: GBPnil). The majority of the
charge recognised relates to shares awarded to management at IPO.
The award made vests over three years.
Costs associated with the Board reorganisation and the
appointment of Sam Perkins (CEO) and Richard Monaghan (CFO)
amounted to GBP0.2m (2021: GBPnil) and have been recognised as
exceptional. Exceptional items in 2021 related to IPO expenses.
Loss/(profit) before tax
The Group made a loss before tax of GBP1.5m in the year (2021:
GBP0.1m profit).
Taxation
The Group recognised a deferred tax credit of GBP0.2m in the
year in respect of losses carried forward.
Earnings per share
Basic earnings per share ('EPS') from continuing operations,
which is calculated for both the current and comparative year based
upon the weighted average number of shares in issue immediately
prior to the IPO, was a 2.53 pence loss per share (2021: 1.19 pence
profit per share).
The adjusted basic earnings per share from continuing operations
decreased to a 0.56 pence loss per share (2021: 5.66 pence profit
per share). The table shows the effect on the Group's basic
earnings per share of the exceptional items and share-based
payments.
2022 2021 Change
GBP'000 GBP'000 %
---------------------------------------------------------------------- --------- --------- -------
(Loss)/profit for EPS (1,329) 519 (356%)
Share-based payments 861 - n.m.
Exceptional items 216 2,346 (91%)
Tax effect (41) - n.m.
---------------------------------------------------------------------- --------- --------- -------
Adjusted (loss)/profit for EPS (293) 2,865 (110%)
Weighted average number of ordinary shares for basic EPS (thousands) 52,450 52,450 -
---------------------------------------------------------------------- --------- --------- -------
Adjusted EPS (0.56) 5.66 (110%)
---------------------------------------------------------------------- --------- --------- -------
Cash flow and net cash
Net cash at the year end was GBP5.8m (2021: GBP11.9m). Net cash
outflows from operating activities totalled GBP3.8m (2021: GBP1.1m
inflow). Changes in working capital resulted in a cash outflow of
GBP4.1m. An increase in trade receivables relating to the growing
wholesale business was the primary reason for that movement. In
total, movements in trade and other receivables resulted in a
GBP3.5m cash outflow. Following the period end, the Group has
signed into a new invoice discounting arrangement which allows the
Group prepayment of up to 85% of the trade receivables balance.
This replaces the previous facility which was cancelled during the
past year.
Stock increased by GBP1.2m causing an additional working capital
cash outflow. Increased stock levels are a result of an increase in
purchase price, additional volume held as the business stocks up to
fuel growth, and increased levels of stock in transit as we look to
gain efficiencies by moving to a 'Free-on-Board' model. Payables
increased by GBP0.6m resulting in an offsetting cash inflow.
Cash flows used in investing activities, and specifically
capital expenditure, amounted to GBP2.1m (2021: GBP0.4m). The
majority of capital expenditure relates to the development of the
Group's web and app platforms. Costs related to the fit out of the
Group's new head office were included within the GBP0.7m investment
in property, plant and equipment.
Cash flows used in financing activities totalled GBP0.2m (2021:
GBP9.2m inflow) and primarily related to lease payments. Cash
inflows in the prior year were in relation to the IPO that took
place in March 2021.
Events after the reporting period
On 16 June 2022 the Group entered into an agreement to lease for
a circa 84,000 sqft warehouse in Heywood, Lancashire. It is
expected that the warehouse will be available for occupation at the
end of July and the Group expects this facility to be the main
fulfilment centre from September 2022. The lease term is 10 years
with a rental cost of GBP5.06 per square foot for the first three
years of the term and GBP6.50 thereafter. As part of the terms of
the agreement, GBP0.4m will be paid to the landlord to be held on
deposit until the end of the lease term.
On 24 June 2022 the Group signed into an invoicing discounting
facility. The facility allows prepayment of up to 85% of the
Group's trade receivables up to a limit of GBP4.0m. Interest is
charged on pre-paid amounts at a rate of 2.0% per annum.
Dividend
No final dividend for the year ended 31 March 2022 has been
declared.
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
For the year ended 31 March 2022
Note 2022 2021
GBP'000 GBP'000
Revenue 3 57,317 44,705
Cost of sales 4 (32,148) (24,116)
------------------------------------------------------------------ ------- --------- ---------
Gross profit 25,169 20,589
Distribution costs 4 (10,036) (7,428)
Administrative expenses 4 (16,639) (12,919)
Other operating income 4 - 277
------------------------------------------------------------------ ------- --------- ---------
Operating profit/(loss) (1,506) 519
Adjusted EBITDA(1) 3 551 3,799
Depreciation 11, 16 (585) (360)
Amortisation 10 (395) (574)
Share-based payments charge 18 (861)
Exceptional items 5 (216) (2,346)
Operating (loss)/profit (1,506) 519
Finance income 6 1 1
Finance costs 7 (40) (395)
------------------------------------------------------------------ ------- --------- ---------
(Loss)/profit before taxation (1,545) 125
Income tax 8 216 500
------------------------------------------------------------------ ------- --------- ---------
(Loss)/profit and total comprehensive (loss)/income for the year (1,329) 625
------------------------------------------------------------------ ------- --------- ---------
Earnings per share (pence)
(Loss)/profit per share - basic and diluted 9 (2.53) 1.19
------------------------------------------------------------------ ------- --------- ---------
Note 1: Adjusted EBITDA is defined as EBITDA (earnings before
interest, tax, depreciation and amortisation) less exceptional
items and IFRS 2 charges in respect of share-based payments along
with associated national insurance. Adjusted EBITDA is a non-GAAP
metric used by management and the Board to assist in providing
analysis of trading results and is not an IFRS disclosure.
Exceptional items are items which are material and non-recurring in
nature as disclosed in note 5.
All results derive from continuing operations.
Profit/(loss) and total comprehensive profit/(loss) is
attributable to equity holders of the Company.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March
2022 2021
Note GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 10 2,154 1,125
Property, plant and equipment 11 773 272
Right-of-use assets 16 972 292
Deferred tax asset 8 716 500
---------------------------------------- ----- -------- --------
Total non-current assets 4,615 2,189
---------------------------------------- ----- -------- --------
Current assets
Inventories 12 3,142 1,955
Trade and other receivables 13 5,191 1,746
Cash and cash equivalents 5,823 11,939
---------------------------------------- ----- -------- --------
Total current assets 14,156 15,640
---------------------------------------- ----- -------- --------
Total assets 18,771 17,829
---------------------------------------- ----- -------- --------
Equity
Share capital 17 131 131
Share premium 10,942 10,942
Merger reserve (58) (58)
Share-based payments reserve 861 -
Accumulated losses/(retained earnings) (1,161) 168
Total equity 10,715 11,183
Liabilities
Non-current liabilities
Provisions 127 -
Lease liability 16 686 281
---------------------------------------- ----- -------- --------
Total non-current liabilities 813 281
---------------------------------------- ----- -------- --------
Current liabilities
Trade and other payables 14 5,908 5,088
Contract liabilities 15 871 1,113
Provisions 179 -
Lease liability 16 285 164
---------------------------------------- ----- -------- --------
Total current liabilities 7,243 6,365
---------------------------------------- ----- -------- --------
Total liabilities 8,056 6,646
---------------------------------------- ----- -------- --------
Total equity and liabilities 18,771 17,829
---------------------------------------- ----- -------- --------
These financial statements were approved by the Board of
Directors on 19 July 2022 and authorised for issue.
Richard Monaghan
Chief Financial Officer
In The Style Group plc
Registered number: 13245400
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
Share based
Merger payments Retained earnings /
Share Capital Share Premium reserve reserve (accumulated losses) Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
As at 31 March
2020 15 4,914 - - (7,606) (2,677)
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Profit for the
year - - - - 625 625
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Total
comprehensive
income for the
year - - - - 625 625
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Transactions
with
shareholders:
Dividend - - - - (1,250) (1,250)
Share
reorganisation
- preference
share
redesignation
as equity and
cancellation
of share
premium (note
17) - - - - 3,470 3,470
Share capital
reduction
(note 17) (15) (4,914) - - 4,929 -
Issued on
incorporation
(note 17) 59 - - - - 59
Group
reorganisation
(note 17) 58 - (58) - - -
Share issue on
IPO (note 17) 14 10,986 - - - 11,000
IPO costs (note
17) - (44) - - - (44)
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Total
transactions
with
shareholders 116 6,028 (58) - 7,149 13,235
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
As at 31 March
2021 131 10,942 (58) - 168 11,183
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Loss for the
year - - - - (1,329) (1,329)
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Total
comprehensive
loss for the
year - - - - (1,329) (1,329)
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Transactions
with
shareholders:
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Employee share
schemes -
value of
employee
services (note
18) - - - 861 - 861
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
Total
transactions
with
shareholders - - - 861 - 861
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
As at 31 March
2022 131 10,942 (58) 861 (1,161) 10,715
---------------- -------------- -------------- -------------- -------------- --------------------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2022
Year Ended Year Ended
31 March 2022 31 March 2021
Note GBP'000 GBP'000
Net cash flow from operating activities
(Loss)/profit for the year (1,329) 625
Adjustments for:
Share based payments charge 18 861 -
Amortisation of intangible assets 10 395 574
Depreciation of property, plant and equipment 11 585 360
Finance income 6 (1) (1)
Finance costs 7 40 395
Income tax expense 8 (216) (500)
Working capital adjustments
Increase in inventories (1,187) (1,103)
Increase in trade and other receivables (3,499) (771)
Increase in trade and other payables 580 1,550
Taxation paid - -
------------------------------------------------------------- ----- --------------- ---------------
Net cash (used in)/ generated from operations (3,771) 1,129
------------------------------------------------------------- ----- --------------- ---------------
Cash flows used in investing activities
Purchase of intangible assets 10 (1,424) (325)
Purchase of property, plant and equipment 11 (698) (89)
Interest received 1 1
------------------------------------------------------------- ----- --------------- ---------------
Net cash used in investing activities (2,121) (413)
------------------------------------------------------------- ----- --------------- ---------------
Cash flows (used in)/ generated from financing activities
Issue of ordinary shares 17 - 11,000
Costs incurred on IPO charged to share premium - (44)
Receipt from/(repayment of) invoice discounting facility 53 (365)
Dividend paid - (1,250)
Interest paid on lease liabilities 16 (40) (19)
Repayment of lease liabilities 16 (237) (146)
------------------------------------------------------------- ----- --------------- ---------------
Net cash (used in)/ generated from financing activities (224) 9,176
------------------------------------------------------------- ----- --------------- ---------------
Net (decrease)/ increase in cash and cash equivalents (6,116) 9,892
Cash and cash equivalents brought forward 11,939 2,047
Cash and cash equivalents carried forward 5,823 11,939
------------------------------------------------------------- ----- --------------- ---------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, and in accordance
with UK-adopted international accounting standards. The
consolidated financial statements have been prepared on the going
concern basis and under the historical cost convention. The
financial information is presented in sterling and has been rounded
to the nearest thousand (GBP'000).
The following amendments to standards have been adopted by the
Group for the first time for the financial year beginning on 1
April 2021:
-- COVID-19-Related Rent Concessions (Amendment to IFRS 16);
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16);
-- COVID-19-Related Rent Concessions beyond 30 June 2021
(Amendment to IFRS 16) The adoption of these amendments has had no
material effect on the Group's consolidated financial
statements.
There are a number of amendments to IFRS that have been issued
by the IASB that become mandatory in a subsequent accounting period
including:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Annual Improvements to IFRS Standards 2018-2020
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
-- IFRS 17 Insurance Contracts -- Classification of liabilities
as current or non-current (Amendments to IAS 1) -- Disclosure of
Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2)
-- Definition of Accounting Estimate (Amendments to IAS 8)
-- Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes
-- Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
The Group has evaluated these changes and none are expected to
have a significant impact on these consolidated financial
statements.
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 March 2022 or
31 March 2021 but is derived from those accounts. Statutory
accounts for 31 March 2021 have been delivered to the registrar of
companies, and those for 31 March 2022 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
Going concern
The Group's ability to continue as a going concern is dependent
on maintaining adequate levels of resources to continue to operate
for the foreseeable future. The Directors have considered a number
of key dependencies which are set out in the group's risk
management section, specifically the group's exposure to liquidity
risk and foreign exchange risk.
When assessing the going concern of the Group, the Directors
have reviewed the year-to-date financial results, as well as
detailed financial forecasts for the Going Concern Review period up
to 31 July 2023. The assumptions used in the financial forecasts
are based on the Group's historical performance and management's
extensive experience of the industry. Taking into consideration the
wider economic environment, the forecasts have been assessed and
stress tested to ensure that a robust assessment of the Group's
working capital and cash requirements has been performed.
Liquidity and financing
At 31 March 2022, the Group held instantly accessible cash and
cash equivalents of GBP5.8m. In addition, in June 2022 the Group
signed into an invoice discounting facility. There is a sufficient
level of liquidity/financing headroom post stress testing across
the going concern forecast period to 31 July 2023, as outlined in
more detail below.
Approach to stress testing
The going concern analysis, which was approved by the Board in
July 2022, reflected the actual trading to May 2022, as well as
detailed financial forecasts for the period up to 31 July 2023. The
Group has taken a measured approach to its forecasting. The Group
has balanced the expected trading conditions with opportunities
available in the market which is still transitioning online. Given
the uncertainty of the impact of Covid-19, the conflict in Ukraine
and the current high levels of inflation in the UK, the Board has
in its assessment of going concern considered the potential impact
of a generalised economic downturn leading to a greater impact on
the spending patterns of consumers than has been experienced to
date.
In addition, the Board has considered the impact of disruption
to the supply chain caused by Covid-19, climate change risks and
the impact on gross margin. The extent to which these factors could
adversely affect the Group's revenue, gross margin and customer
acquisition costs, as well as the extent to which this can be
offset by cost savings, was modelled. The Group has prepared a
reasonable worst case downside scenario, which incorporated the
assumptions listed below:
-- Reduction in customer numbers and conversion when compared
with the Base Case and 2022 actual
-- Maintenance of average order value at 2022 actual levels,
despite seeing average order value grow in recent years
-- Increased marketing spend as a proportion of revenue
-- Reduction in gross margin
-- Increased stock holding due to the reduction in sales
The effect of the combination of applying all the above
downsides is a reduction in adjusted EBITDA on the 2022 base case
and an increased level of cash burn which resulted in additional
funding being necessary within the forecasting period. Mitigating
factors were then considered, including reducing stock buys to
reduce the working capital requirement and increase the level of
full price sales, reducing the level of software development
planned to make improvements to the Group's platform and reducing
the level of marketing through channels other than the Group's
influencer relationships. All of these mitigations are within the
Group's control and would be expected in a consumer downturn. The
severe downside scenario with reasonable mitigations results in
sufficient cash forecast to be held throughout the period to 31
July 2023 to cover the Group's liabilities as they fall due.
Going concern conclusion
Based on the analysis described above, the Group has sufficient
liquidity headroom through the forecast period. The Directors
therefore have reasonable expectation that the Group has the
financial resources to enable it to continue in operational
existence for the period to 31 July 2023. Accordingly, the
Directors conclude it is appropriate that these consolidated
financial statements be prepared on a going concern basis.
2. Critical accounting estimates and judgements
The preparation of these Group financial statements requires
management to make judgements and estimates that affect the
reported amounts of assets and liabilities at each Statement of
Financial Position date and the reported amounts of revenue during
the reporting periods. Actual results could differ from these
estimates. Information about such judgements and estimations are
contained in individual accounting policies. The key judgements and
sources of estimation uncertainty that could cause an adjustment to
be required to the carrying amount of asset or liabilities within
the next accounting period are outlined below:
Accounting estimates
2.1 Impairment of intangible assets
The Group tests goodwill for impairment every year in accordance
with the relevant accounting policies. The recoverable amounts of
the cash-generating unit is determined by calculating value in use.
This calculation requires the use of estimates.
Goodwill represents the excess of the cost of acquisition of
unincorporated businesses over the fair value of net assets
acquired and amounts to GBP528,000 as at 31 March 2022 (2021:
GBP528,000). At the date of preparation of the Group financial
statements the Management have not identified any indicators of
impairment in respect of the goodwill. As explained in note 10,
goodwill relates to the business as a whole and given the strong
trading in the financial year and considering the low value of the
goodwill held there is little sensitivity to the recoverability of
the carrying value.
2.2 Useful economic lives of intangible assets
Intangible fixed assets are amortised over their useful lives
taking into account residual values, where appropriate. The actual
lives of the assets and residual values are assessed annually and
may vary depending on a number of factors. In re-assessing asset
lives, factors such as technological innovation, product life
cycles and maintenance programmes are taken into account. Residual
value assessments consider issues such as future market conditions,
the remaining life of the asset and projected disposal values. The
net book value of these assets is GBP1,193,000 as at 31 March 2022
(2021: 597,000). Management regularly review the status of the
capitalised projects to ensure that their useful economic life
remains appropriate and as such there is little sensitivity to the
carrying value.
2.3 Returns provision
The provision for sales returns is estimated based on recent
historical returns and management's best estimates and is allocated
to the period in which the revenue is recorded. Actual returns
could differ from these estimates. The historic difference between
the provision estimate and the actual returns is not material. The
gross value of the provision for returns as at 31 March 2022 is
GBP754,000 (2021: GBP628,000). A difference of 1% in returns rates
based on overall gross order value would give rise to a difference
of +/- GBP34,000 in gross margin. Management have reviewed the
actual returns incurred post year end and given the amounts
involved, the short return window, and compared to returns actually
incurred they are satisfied with the estimate made at the reporting
date.
2.4 Inventory valuation
Inventory is carried at the lower of cost and net realisable
value, on a first-in first-out basis. A provision is made to write
down any slow-moving or obsolete inventory to net realisable value.
The provision is GBP552,000 at 31 March 2022 (2021: GBP372,000), an
overall charge to the consolidated statement of comprehensive
income of GBP180,000 (2021: GBP165,000) was recognised during the
year. A difference of 1% in the provision as a percentage of gross
inventory would give rise to a difference of +/- GBP32,000 in gross
margin.
Accounting judgements
2.5 Capitalisation of software development costs
Intangible assets include capitalised internal salaries and
third-party costs for computer software development. A certain
proportion of the total costs are capitalised, as they relate to
development costs, whilst the remaining costs are deemed to be
maintenance costs and are expensed to the statement of
comprehensive income. The proportion is calculated using a
combination of management's best estimate and information provided
by the third party.
2.6 Calculation for share-based payment charges
The charge related to equity-settled transactions with employees
is measured by reference to the fair value of the equity
instruments at the date they are granted, using an appropriate
valuation model selected according to the terms and conditions of
the grant. Judgement is applied in determining the most appropriate
valuation model and estimates are used in determining the inputs to
the model. Third-party experts are engaged to advise in this area
where necessary. Judgements are also applied in relation to
estimations of the number of options which are expected to vest, by
reference to historic leaver rates and expected outcomes under
relevant performance conditions.
3. Segmental analysis and non-GAAP measures
The Chief Operating Decision Maker ("CODM") has been identified
as the Senior Leadership Team ('SLT'). The SLT reviews internal
reporting in order to assess performance and allocate resources.
The SLT has determined that there are two operating segments, being
wholesale and direct to consumer retail, and together they form the
'Operating group'.
Revenue Gross Profit
-------------------- -------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- --------- --------- ---------
Wholesale 12,634 8,331 1,855 1,594
Direct-to-consumer 44,683 36,374 23,314 18,995
-------------------- --------- --------- --------- ---------
57,317 44,705 25,169 20,589
-------------------- --------- --------- --------- ---------
There are no sales between the two operating segments, and all
revenue is earned from external customers. The operating segments
gross profit is reconciled to profit before taxation as per the
Statement of Total Comprehensive Income.
The Group's overheads are managed centrally by the SLT and
consequently there is no reconciliation to profit before tax at a
segmental level. The Group's assets are managed centrally by the
SLT and consequently there is no reconciliation between the Group's
assets per the Statement of Financial Position and the segment
assets.
Information about major customers
The Group has not generated revenue from any individual customer
that accounted for greater than 10% of total revenue in either the
current or the prior year.
Analysis of revenue by geographical destination
2022 2021
GBP'000 GBP'000
------------------- --------- ---------
United Kingdom 53,558 42,388
Europe 2,598 1,336
Rest of the World 1,161 981
------------------- --------- ---------
57,317 44,705
------------------- --------- ---------
The above revenues are all generated from contracts with
customers and are recognised at a point in time. All assets of the
Group reside in the UK.
Adjusted EBITDA
Operating costs, comprising administrative expenses, are managed
on a Group basis. The SLT measures the overall performance of the
Operating group by reference to the following non-GAAP measure:
-- Adjusted EBITDA which is EBITDA (earnings before interest,
tax, depreciation and amortisation) less exceptional items and IFRS
2 charges in respect of share-based payments along with associated
national insurance.
This adjusted profit measure is applied by the SLT to understand
the earnings trends of the Operating group and is considered an
additional, useful measure under which to assess the operating
performance of the Operating group.
In addition to annual bonuses which are linked to the Operating
group's financial performance, the Operating group has implemented
a number of longer-term share-based payment incentives linked to
changes in ownership of the Operating group rather than the
achievement of individual or Company-specific financial performance
targets.
A reconciliation of Adjusted EBITDA is set out below:
Note 2022 2021
GBP'000 GBP'000
----------------------------- ----- --------- ---------
Operating (loss)/profit 4 (1,506) 519
Depreciation 11 585 360
Amortisation 10 395 574
Share-based payments charge 18 861 -
Exceptional items 5 216 2,346
----------------------------- ----- --------- ---------
Adjusted EBITDA 551 3,799
----------------------------- ----- --------- ---------
4. Operating profit
The operating (loss)/profit is stated after charging the
following expenses.
2022 2021
GBP'000 GBP'000
--------------------------------------------------------------------------------------- --------- ---------
Inventories recognised as an expense 31,968 22,464
Impairment of inventories 180 165
Staff costs included in administrative expenses 4,263 4,687
Contractors 48 -
Adjusting and non-recurring items 216 2,346
Distribution costs 10,036 7,428
Loss on disposal of property, plant and equipment and intangible assets 1 -
Depreciation - property, plant and equipment 193 118
Depreciation - right of use assets 392 242
Amortisation 395 574
Share-based payment charges 861 -
Marketing expenses 7,076 4,995
Research and development income - (277)
Foreign exchange 11 (10)
Auditor's remuneration 50 42
Other operating expenses 3,133 1,412
--------------------------------------------------------------------------------------- --------- ---------
Total cost of sales, distribution costs, administrative expenses and operating income 58,823 44,186
--------------------------------------------------------------------------------------- --------- ---------
5. Exceptional items
2022 2021
GBP'000 GBP'000
---------------------- --------- ---------
Board reorganisation 216 -
IPO related expenses - 2,346
---------------------- --------- ---------
216 2,346
---------------------- --------- ---------
To understand the underlying performance of the business,
certain costs included within administrative costs are classified
as exceptional items on the basis of their size and their nature of
being non-recurring. In the year ended 31 March 2022 these costs
related to search and recruitment fees incurred for Sam Perkins and
Richard Monaghan. In the year ended 31 March 2021 these items
principally related to legal and professional fees relating to the
IPO of GBP1,638,000 and bonuses of GBP708,000.
6. Finance income
2022 2021
GBP'000 GBP'000
-------------------------- --------- ---------
Bank interest receivable 1 1
-------------------------- --------- ---------
1 1
-------------------------- --------- ---------
7. Finance expense
2022 2021
GBP'000 GBP'000
------------------------------- --------- ---------
Preference share dividends - 376
Interest on lease liabilities 40 19
------------------------------- --------- ---------
40 395
------------------------------- --------- ---------
During the year ended 31 March 2021 the Group had outstanding
2,500,000 GBP1 preference shares on which dividends were paid. The
preference shares were redesignated as part of the Group
reorganisation in March 2021.
8. Taxation
2022 2021
GBP'000 GBP'000
------------------------------------ --------- ---------
Deferred tax
Origination and timing differences (216) (500)
------------------------------------ --------- ---------
Total deferred tax credit (216) (500)
------------------------------------ --------- ---------
Total tax credit (216) (500)
------------------------------------ --------- ---------
The taxation credit for the year is lower than the effective
rate of corporation tax in the UK of 19% (2021: 19%). The
differences are explained below:
2022 2021
GBP'000 GBP'000
------------------------------------------------------- --------- ---------
(Loss)/Profit before taxation (1,545) 125
Tax at the UK corporation tax rate of 19% (2021: 19%) (294) 24
Expenses not deductible for taxation purposes 286 465
Deferred taxation not previously recognised - (989)
Timing differences (76) -
Adjustments in respect of prior years 40 -
Changes in the tax rate (172) -
------------------------------------------------------- --------- ---------
Total taxation credit (216) (500)
------------------------------------------------------- --------- ---------
The tax charge for the year is based on the standard rate of UK
corporation tax for the period of 19% (2021: 19%). Deferred income
taxes have been measured at the tax rate expected to be applicable
at the date the deferred income tax assets and liabilities are
realised.
On 10 June 2021, Royal Assent to the Finance Act was given to
increase the UK corporation tax from 19% to 25% from 1 April 2023.
Management has performed an assessment, for all material deferred
income tax assets and liabilities, to determine the period over
which the deferred income tax assets and liabilities are forecast
to be realised, which has resulted in an average deferred income
tax rate of 25% being used to measure all deferred tax balances as
at 31 March 2022 (2021: 19%).
Movement in deferred taxation in the year 2022 2021
GBP'000 GBP'000
------------------------------------------- --------- ---------
Balance brought forward 500 -
Credited to profit or loss 216 500
------------------------------------------- --------- ---------
Balance carried forward 716 500
------------------------------------------- --------- ---------
Deferred taxation consists of losses carried forward of
GBP716,000 (2021: GBP500,000). The value of the unrecognised
deferred tax asset at 31 March 2022 is GBPnil (2021:
GBP158,000).
9. Earnings per share
Basic and diluted earnings per share
Weighted average number of ordinary shares
Total earnings Pence
GBP'000 per share
-------------------------- ------------------------------------------- ----------------- ------------
Year ended 31 March 2022
Basic 52,499,998 (1,329) (2.53)
Diluted 52,499,998 (1,329) (2.53)
Year ended 31 March 2021
Basic 52,499,998 625 1.19
Diluted 52,499,998 625 1.19
-------------------------- ------------------------------------------- ----------------- ------------
Basic earnings per share and diluted earnings per share are
calculated by dividing profit for the year attributable to equity
holders of the parent by the weighted average number of shares in
issue.
The weighted average number of shares for the year to March 2021
has been stated as if the Group reorganisation completed on 7 March
2021 had occurred at the beginning of the 2021 financial year. The
weighted average number of shares in issue in the period from 7
March 2021 to the year end was 52,499,998.
Diluted EPS is calculated by dividing the profit attributable to
ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year plus the
number of incremental ordinary shares, calculated using the
treasury stock method, that would be issued on conversion of all
the dilutive potential ordinary shares into ordinary shares.
The difference between the basic and diluted weighted average
number of shares represents the dilutive effect of options issued
under the In The Style Fashion Enterprise Management Incentive
Option Plan . The options issued under the plan are anti-dilutive
in both 2022 and 2021 and so there is no difference between basic
and dilutive EPS for either year.
Adjusted earnings per share
Adjusted basic and diluted earnings per share figures are
calculated by dividing adjusted profit after tax for the year by
the weighted average number of shares in issue (as set out
above).
2022 2021
GBP'000 GBP'000
--------------------------------------------- --------- ---------
(Loss)/profit for basic EPS (1,329) 625
Exceptional items 216 2,346
Share-based payments 861 -
Tax impact (41) -
--------------------------------------------- --------- ---------
Adjusted (loss)/profit (293) 2,971
--------------------------------------------- --------- ---------
Adjusted basic earnings per share (pence) (0.56) 5.66
Adjusted diluted earnings per share (pence) (0.56) 5.66
--------------------------------------------- --------- ---------
10. Intangible assets
Software development costs
GBP'000 Assets under construction
Goodwill GBP'000 Total
GBP'000 GBP'000
---------------------------------- ----------- --------------------------- ---------------------------- ----------
Cost
At 1 April 2020 528 1,562 - 2,090
Additions - 325 - 325
---------------------------------- ----------- --------------------------- ---------------------------- ----------
At 31 March 2021 528 1,887 - 2,415
Additions - 991 433 1,424
Disposals - - - -
---------------------------------- ----------- --------------------------- ---------------------------- ----------
At 31 March 2022 528 2,878 433 3,839
---------------------------------- ----------- --------------------------- ---------------------------- ----------
Accumulated amortisation
At 1 April 2020 - (716) - (716)
Amortisation charged in the year - (574) - (574)
---------------------------------- ----------- --------------------------- ---------------------------- ----------
At 31 March 2021 - (1,290) - (1,290)
Amortisation charged in the year - (395) - (395)
---------------------------------- ----------- --------------------------- ---------------------------- ----------
At 31 March 2022 - (1,685) - (1,685)
---------------------------------- ----------- --------------------------- ---------------------------- ----------
Carrying amount
At 31 March 2020 528 846 - 1,374
---------------------------------- ----------- --------------------------- ---------------------------- ----------
At 31 March 2021 528 597 - 1,125
---------------------------------- ----------- --------------------------- ---------------------------- ----------
At 31 March 2022 528 1,193 433 2,154
---------------------------------- ----------- --------------------------- ---------------------------- ----------
Goodwill represents the excess of the cost of acquisition of
unincorporated businesses over the fair value of net assets
acquired and represents goodwill in the business as a whole.
In accordance with International Financial Reporting Standards,
goodwill is not amortised, but instead is tested annually for
impairment, or more frequently if there are indicators of
impairment. Goodwill is carried at cost less accumulated impairment
losses.
Software development costs comprises both internal salaries and
external development capitalised in relation to the Group's bespoke
operational software. This includes development over bespoke
front-end software and functionality relating to the Group's
website and app and development to the Group's back-end operational
systems and infrastructure.
Assets are categorised as assets under construction if costs
have been incurred which meet the definition of an intangible asset
under IAS 38 but have not yet been completed and brought into
use.
The Group increased its investment in technology during 2022 in
three areas: customer journey, increasing the scalability of the
platform, and back-end operational systems that have the ability to
streamline the Group's operation. Additions to software development
costs and assets under construction in the year relate to these
three areas.
Intangible assets which have a finite useful life are carried at
cost less accumulated amortisation. Amortisation of these
intangible assets is calculated using the straight-line method to
allocate the cost of the assets over their estimated useful lives
(3 years). The longest estimated useful life remaining at 31 March
2022 is 3 years (31 March 2021: 3 years).
For the year to 31 March 2022, the amortisation charge of
GBP395,000 (2021: GBP574,000) has been charged to administrative
expenses in the consolidated statement of comprehensive income.
11. Property, plant and equipment
Fixture and
Property Plant and Motor vehicles fittings Computer
improvements machinery GBP'000 GBP'000 equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
Cost or
valuation
At 1 April 2019 83 32 1 283 190 589
Additions - 23 - 13 53 89
Disposals - - - - (2) (2)
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
At 31 March 2020 83 55 1 296 241 676
Additions 467 - - 126 105 698
Disposals - - - (1) (3) (4)
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
At 31 March 2022 550 55 - 421 343 1,370
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
Depreciation
At 1 April 2020 45 5 - 104 132 286
Depreciation 20 14 - 42 42 118
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
At 31 March 2021 65 19 - 146 174 404
Depreciation 70 2 - 74 50 196
Disposals - - - - (3) (3)
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
At 31 March 2022 135 21 - 220 221 597
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
Carrying amount
At 31 March 2020 38 27 1 179 58 303
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
At 31 March 2021 18 36 1 150 67 272
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
At 31 March 2022 415 34 1 201 122 773
----------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------
For the year to 31 March 2022, the depreciation charge of
GBP196,000 (2021: GBP118,000) has been charged to administrative
expenses in the consolidated statement of comprehensive income.
12. Inventories
2022 2021
GBP'000 GBP'000
------------------------------------- --------- ---------
Finished goods and goods for resale 2,755 1,583
Right-of-return inventory 387 372
------------------------------------- --------- ---------
3,142 1,955
------------------------------------- --------- ---------
The Directors believe that the replacement value of inventories
at would not be materially different than book value.
Inventories at 31 March 2022 are stated after provisions for
impairment of GBP552,000 (2021: GBP372,000).
13. Trade and other receivables
2022 2021
GBP'000 GBP'000
---------------------------------- --------- ---------
Trade receivables 4,070 993
Prepayments 688 641
Called up share capital not paid - 59
Other debtors 433 -
Invoice finance facility - 53
---------------------------------- --------- ---------
5,191 1,746
---------------------------------- --------- ---------
Trade receivables are written off where there is no reasonable
expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a
debtor to engage in a repayment plan.
Impairment losses on trade receivables are presented as net
impairment losses within operating profit. Subsequent recoveries of
amounts previously written off are credited against the same line
item. There is no provision at 31 March 2022 for impairment loss
against trade receivables (2021: nil).
14. Trade and other payables
2022 2021
GBP'000 GBP'000
------------------------------------ --------- ---------
Trade payables 2,154 2,041
Other taxation and social security 166 425
Other payables 53 -
Accruals 3,535 2,622
------------------------------------ --------- ---------
5,908 5,088
------------------------------------ --------- ---------
15. Contract liabilities
2022 2021
GBP'000 GBP'000
------------------------------------------- --------- ---------
Balance at 1 April 1,113 362
Recognised as revenue in the year (1,113) (362)
New and existing contracts with customers 871 1,113
------------------------------------------- --------- ---------
Balance at 31 March 871 1,113
------------------------------------------- --------- ---------
Deferred revenue outstanding at each year end is expected to be
recognised within revenue within 12 months from the reporting
date.
16. Leases
The group leases offices and warehouses. Rental contracts are
typically made for fixed periods of 3 to 5 years. There are no
judgements over the length of the lease term for any of the Group's
leases. There are no variable lease payments in any of the Group's
leases.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases of the Group, the
incremental borrowing rate is used, being the rate that the Group
would have to pay to borrow the funds necessary to obtain an asset
of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
Amounts recognised in the Statement of Financial Position
Right-of-use assets GBP'000
----------------------------------- --------
Balance at 31 March 2020 303
New leases recognised in the year 65
Lease modifications 166
Depreciation charge for the year (242)
----------------------------------- --------
Balance at 31 March 2021 292
New leases recognised in the year 942
Lease modifications 127
Depreciation charge for the year (389)
----------------------------------- --------
Balance at 31 March 2022 972
----------------------------------- --------
The net book value of the right of use assets all relates to
property leases.
Lease liabilities 2022 2021
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Maturity analysis - contractual undiscounted cash
flows
Less than one year 315 171
More than one year, less than two years 218 283
More than two years, less than three years 212 6
More than three years, less than four years 212 -
More than four years, less than five years 88 -
Total undiscounted lease liabilities at year end 1,045 460
Finance costs (74) (15)
--------------------------------------------------- --------- ---------
Total discounted lease liabilities at year end 971 445
--------------------------------------------------- --------- ---------
Lease liabilities included in the statement of
financial position
Current 285 164
Non-current 686 281
--------------------------------------------------- --------- ---------
971 445
--------------------------------------------------- --------- ---------
Amounts recognised in the consolidated statement of
comprehensive income.
The consolidated statement of comprehensive income shows the
following amounts relating to leases:
2022 2021
GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Depreciation charge (within administrative expenses) 389 242
Interest expense (within finance costs) 40 19
Expense relating to leases of low-value assets - -
------------------------------------------------------ --------- ---------
The total cash outflow for in relation to lease liabilities in
the year was GBP277,000 (2021: GBP165,000).
17. Share capital
Ordinary
Ordinary shares Ordinary Ordinary Deferred
shares of A1 shares B1 shares shares of
of GBP0.0025 GBP0.0000001 of GBP0.0000001 of GBP0.0000001 GBP0.0000001 Total
No. No. No. No. No. GBP
---------------- -------------- --------------- ----------------- ----------------- ------------------ ---------
At 31 March
2020 - - 12,986,532,000 12,400,000,000 128,470,950,000 15,386
Issue in the - 237,141 - - - -
year
Re-designation
ordinary
shares - 22,637,858 (12,986,532,000) (12,400,000,000) 25,363,894,142 -
Re-designation
preference
shares - 625,000 - - 1,875,000 -
Purchase and
cancellation - - - - (153,836,719,142) (15,386)
Issued on 4
March
2021 23,499,999 - - - - 58,750
Group
reorganisation 23,499,999 (23,499,999) - - - 58,750
Issued on IPO 5,500,000 - - - - 13,750
---------------- -------------- --------------- ----------------- ----------------- ------------------ ---------
At 31 March
2021 52,499,998 - - - - 131,250
---------------- -------------- --------------- ----------------- ----------------- ------------------ ---------
At 31 March
2022 52,499,998 - - - - 131,250
---------------- -------------- --------------- ----------------- ----------------- ------------------ ---------
All shares rank pari-passu except the deferred shares which are
non-voting and have no right to dividends.
In anticipation of the IPO in March 2921, the share capital
structure was re-organised with the following:
-- The Ordinary A1 and B1 shares were re-designated as Ordinary
shares of GBP0.0000001 and Deferred shares of GBP0.0000001;
-- The 2,500,000 GBP1 preference shares were re-designated as
625,000 Ordinary shares of GBP0.0000001 and 1,875,000 Deferred
shares of GBP0.0000001; and
-- The Deferred shares were purchased and cancelled.
The Company was incorporated on 4 March 2021 as a public company
limited by shares in England and Wales with the issue of 23,499,999
GBP0.0025 ordinary shares.
On 4 March 2021 the Company allotted and credited as fully paid
23,499,499 Ordinary shares of GBP0.0025 in exchange for the entire
issued share capital of In The Style Fashion Limited pursuant to an
exchange agreement entered into between the Company and the then
shareholders of In The Style Fashion Limited.
On 15 March 2021, the Company issued 5,500,000 Ordinary shares
of GBP0.0025 each for consideration of GBP11,000,000 in an IPO,
with the balance recorded as share premium. IPO costs of
GBP1,638,000 have been charged to the income statement and
GBP44,000 were recorded within share premium.
The Ordinary shares of GBP0.0025 relate solely to the Company.
The other classes of share disclosed above show the movements of In
The Style Fashion Limited.
18. Share-based payments
During the year the Group operated one share plan, being the In
The Style Fashion Enterprise Management Incentive Option Plan (the
"MIOP" or "LTIP").
The total charge in the year relating to the scheme was
GBP861,000 (2021: GBPnil) with a Company charge of GBPnil (2021:
GBPnil). This included associated national insurance ('NI') at
15.05%, which management expects to be the prevailing rate when the
awards are exercised, and apprentice levy at 0.5%, based on the
share price at the reporting date.
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- --------- ---------
Management incentive option plan 861 - - -
National insurance and apprentice levy - - - -
--------------------------------------- --------- --------- --------- ---------
861 - - -
--------------------------------------- --------- --------- --------- ---------
All share-based incentives carry a service condition. Such
conditions are not taken into account in the fair value of the
service received. The fair value of services received in return for
share-based incentives is measured by reference to the fair value
of share-based incentives granted. The estimate of the fair value
of the share-based incentives is measured using the Black-Scholes
pricing model. Sensitivity analysis has been performed in assessing
the fair value of the share-based incentives. There are no changes
to key assumptions that are considered by the Directors to be
reasonably possible, which give rise to a material difference in
the fair value of the share-based incentives.
The Group operates a Management Incentive Option Plan (the
"MIOP" or "LTIP") for the Senior Leadership Team and certain key
employees. The awards will vest in three tranches, with the first
tranche vesting on the first anniversary of the award, and
subsequent tranches vesting on the second and third anniversaries,
subject to continuing employment.
On 24 January 2022, the Group awarded 1,574,999 options under
the MIOP scheme with an exercise price of GBP0.91 per option. The
fair was determined to be GBP0.34 per option. The awards have been
valued using a Black-Scholes pricing model.
The resulting share-based payments charge is being spread evenly
over the period between the grant date and the vesting date. MIOP
award holders are entitled to receive dividends accruing between
the grant date and the vesting date and this value will be
delivered in shares. The assumptions used in the measurement of the
fair value at grant date of the MIOP awards are as follows:
Grant date Share Exercise Expected Option life Risk-free Dividend Non-vesting Fair value
price at price volatility years rate yield condition per option
grant date GBP % % % %
GBP
15/03/2021 2.00 2.00 56% 4 0.25% 0.0% 0.0% GBP0.85
----------- ----------- ----------- ------------ ----------- ----------- ------------ -----------
24/01/2022 0.91 0.91 47% 4 0.90% 0.0% 0.0% GBP0.34
----------- ----------- ----------- ------------ ----------- ----------- ------------ -----------
As the Company listed on or just before the dates of grant,
there is no share price history available to use to derive a
volatility assumption directly. Expected volatility is therefore
derived from the historical 4-year volatility of the constituents
of the FTSE AIM Retailers super-sector (to the extent that they
have sufficient share price history prior to the respective date of
grant), as of the date of grant.
During the year, the Directors in office in total had gains of
GBPnil (2021: GBPnil) arising on the exercise of share-based
incentive awards.
2022 2021
number number
------------------------------- ---------- ----------
Outstanding at 1 April 1,862,500 -
Options granted in the year 1,574,999 1,862,500
Options forfeited in the year (354,375) -
------------------------------- ---------- ----------
Outstanding at 31 March 3,083,124 1,862,500
------------------------------- ---------- ----------
Exercisable at 31 March - -
------------------------------- ---------- ----------
19. Post balance sheet events
On 16 June 2022 the Group entered into an agreement to lease for
a circa 84,000 sqft warehouse in Heywood, Lancashire. It is
expected that the warehouse will be available for occupation at the
end of July and the Group expects this facility to be the main
fulfilment centre from September 2022. The lease term is 10 years
with a rental cost of GBP5.06 per square foot for the first three
years of the term and GBP6.50 thereafter. As part of the terms of
the agreement, GBP0.4m will be paid to the landlord to be held on
deposit until the end of the lease term.
On 24 June 2022 the Group signed into an invoicing discounting
facility. The facility allows prepayment of up to 85% of the
Group's trade receivables up to a limit of GBP4.0m. Interest is
charged on pre-paid amounts at a rate of 2.0% per annum.
Principle risks and uncertainties
RISK POTENTIAL IMPACT CHANGES IN THE YEAR
1. Economy, Specific macroeconomic factors Covid-19 restrictions across
market and and changes due to geopolitical the world resulted in some
business uncertainty can have an impact disruption in the supply chain
environment on how customers behave and through 2021. Logistics costs
can also have an impact on increased as a result of a
our operations and the operations container shortage and port/airport
of our supply chain. In turn, closures. As we entered into
this could impact our overall 2022, these pressures began
financial performance. Examples to normalise.
of such events include a pandemic The conflict in Ukraine has
or national conflict. placed renewed pressure on
logistics providers, particularly
air freight from the Far East.
Cost of raw materials have
increased.
Inflation levels in the UK
have risen, and with energy
prices increasing, there is
a cost-of-living crisis in
the UK. This could reduce
the discretionary spend available
to consumers.
----------------------------------------- --------------------------------------
2. Influencer The Group's business model The Group expanded its influencer
model is based heavily on designing base with a number of influencers
products in conjunction with signed up to do collaborations.
influencers and marketing These included Perrie Sian,
these products using both Gemma Atkinson and Stacey
the Group's and the relevant Solomon.
influencer's social media The Group's founder, Adam
platforms. Frisby, stepped down from
If the Group is not able to his role as CEO to become
develop and maintain positive Chief Brand Officer. This
relationships with its network role allows Adam to focus
of influencers, the Group's more on building the brand
ability to promote and maintain and working with the influencers.
awareness of its brand and The Group invested in its
leverage social media platforms product and merchandising
to drive visits to its website teams that work alongside
and app may be adversely affected. the influencers to produce
The Group's network of influencers product.
currently comprises c.27 influencer During the year a small number
relationships. Negative publicity of the influencers we work
relating to any one of these with have been warned by the
influencers (including in Advertising Standards Agency
relation to the matters outlined for not adhering to the CAP
further on within this section) code. Our social team have
or a breakdown in such relationship increased their efforts in
with the Group may have a educating influencers as to
material adverse effect on why this is important and
the Group's business, results now monitors posts to ensure
of operations and financial compliance.
condition.
Influencer commissions may
increase over time and/or
the market for influencers
may become more competitive
over time. There is no guarantee
a new influencer will be a
success.
Influencers are often responsible
for creating their own content,
and the commission model means
that they can often do this
independent from In The Style.
A risk therefore exists that
influencers do not comply
with the relevant advertising
standards or provide false
information to consumers.
----------------------------------------- --------------------------------------
3. Social Social media platforms may Social media platforms such
media change their advertising policies, as Instagram and Facebook
or be required to do so by are continually changing their
changes to regulation. algorithms and seemingly placing
If any change to these policies more relevance on paid-for
delays or prevents the Group advertisements. This has the
from advertising through these ability over time to reduce
channels or reduces the effectiveness the number of impressions
of its influencer strategy, served to consumers.
this could result in a reduction Instagram users are being
in consumer traffic to the drawn more towards 'stories'
Group's website and app and than posts. Although the use
reduced sales of its products. of stories is an effective
In addition, the Group's social way to reach consumers with
media presence amplifies consumer dynamic content, they are
engagement but is less controllable, not as permanent as a traditional
due to consumer comments and post.
hashtags, than more traditional New platforms such as Tik
public relations and marketing Tok continue to grow consumer
methods. This could associate audience. The Group ensures
the brand with content which that it quickly grows a presence
is not aligned with the Group's on these platforms as they
values, something that could emerge so we learn how to
result in negative publicity market effectively and whether
different influencers are
required for different audiences.
----------------------------------------- --------------------------------------
4. Design As a design-led female apparel The Group invested in product
and accessories brand, there and merchandising teams in
is a risk that the Group's the year, including appointing
product proposition does not a head of product to lead
satisfy the needs of our customer the design area alongside
base, or that the Group fails Adam Frisby who moved into
to correctly identify trends a Chief Brand Officer role.
that are desired by its customer The Group collaborates on
base. product with influencers and
As a result, lower sales, worked with 15 new influencers
excess inventories and increased to design apparel through
levels of discounting may the year.
occur.
----------------------------------------- --------------------------------------
5. Supply The Group may be subject to Ongoing spotlight on labour
chain ethics potential reputational damage conditions in UK garment industry.
if one or more of its suppliers National and international
violates or is alleged to scrutiny on ethical trading
have violated applicable laws is increasing and we continue
or regulations including improper to engage with stakeholders
labour conditions or human to monitor and react to ethical
rights abuses, fails to meet risk in the supply chain.
the Group's requirements or
does not meet industry standards
and safety specifications.
----------------------------------------- --------------------------------------
6. Supply The Group's ability to remain Since March 2020, disruption
chain operations competitive is highly dependent caused by Covid-19 resulted
on its success in maintaining has resulted in challenges
access to its production facilities across our supply chain.
and an efficient distribution Over the past year the Group
network. ITS typically works further diversified its geographical
with a relatively tight supplier base of suppliers, moving
base of circa 50 product suppliers away from China which was
and so the loss of one or impacted by both factory shutdowns
a handful of those suppliers and logistics availability.
could have a material impact A reduction in the availability
on the Group's business. of space for freight and a
One or more of the Group's resulting increase in costs
suppliers may be unable to relating to shipping have
supply or decide to cease been a challenge in the year.
supplying the Group for reasons This was caused first through
beyond the Group's control, Covid-19 lockdown restrictions
or they may increase prices and subsequently impacted
significantly where it is by the conflict in Ukraine.
not possible to pass on price The Group has invested in
increases to customers. Alternative a small but specialised logistics
suppliers may be difficult team so that it can source
or impossible to identify more product on an 'Free On
and, in any event, may take Board' ('FOB') basis, improving
a significant period of time rates and allowing for greater
to begin supplying the Group. visibility of stock before
Moreover, if the Group expands it reaches our warehouse.
beyond the production capacity The Group has defined improving
of its current suppliers as our 'critical path' as a focus
it continues to grow, it may area for the year. As part
not be able to find new suppliers of this focus, the Group is
with an appropriate level exploring ways in which it
of expertise and capacity can move a greater proportion
in a timely manner. The Group of its product by sea rather
operates a just-in-time supply than by air.
chain in relation to stock
which adds risk to the business
model.
The Group's supply chain could
also be materially adversely
affected by a number of other
factors, including, among
other things, potential economic
and political instability
in countries where its suppliers
are located, increases in
shipping or other transportation
costs, manufacturing and transportation
delays and interruptions,
whether as a result of pandemics,
natural disasters, political
crises, civil unrest and other
catastrophic events. Given
the profit margins of the
business, any supply chain
cost inflation or disruption
that leads to higher costs,
could have a significant impact
on profitability given it
may not be possible to pass
on price increases to customers.
----------------------------------------- --------------------------------------
7. Employees The Group's business, development Over the past year the Group
and key and prospects are dependent has invested in its senior
individuals on a small number of key management leadership team, bringing
personnel. The loss of the on key roles such as Head
service of one or more of of Product and Head of People.
such key management personnel In addition, the Group went
may have an adverse effect through significant change
on the Group. The Directors at Board level. Adam Frisby,
believe that the experience, the founder of In The Style,
technical know-how and commercial stepped down from his role
relationships of the Group's as CEO to become Chief Brand
key management personnel help Officer. Sam Perkins joined
provide the Group with strategic the business in January 2022
focus and a competitive advantage. as CEO. Subsequently, in March
The Group's ability to develop 2022, Paul Masters retired
its business and achieve future from his position on the Board
growth and profitability will and Richard Monaghan joined
depend in large part on the the Group as CFO.
efforts of these individuals These changes and overall
and the Group's ability, when investment in the management
required, to attract new key structure further mitigate
management personnel of a risks of key personnel loss.
similar calibre.
The loss of the services of
any key management personnel,
for any reason, or failure
to attract and retain necessary
additional personnel, could
adversely impact on the business,
development, financial condition,
results of operations and
prospects of the Group. The
Directors believe that the
Group operates a progressive
and competitive remuneration
policy which will play an
important part in retaining
and attracting key management
personnel.
----------------------------------------- --------------------------------------
8. Response The focus on climate change Through the year we have placed
to sustainability and sustainability is growing, further focus on how we can
and is in the spotlight more make a difference in this
now than ever before. We recognise area. We have started to define
that we need to play our part our ESG strategy across three
in combating climate change pillars, one of which is how
and, if we fail to do this, we help the planet.
we risk adversely impacting We launched our first sustainable
our brand and reputation. range in collaboration with
Stacey Solomon in the year.
----------------------------------------- --------------------------------------
9. IT and The Group relies on systems External threats are now managed
cyber security and websites that allow for through web application firewalls
the secure storage and transmission and multi-layer security so
of proprietary or confidential that the core line of business
information regarding its data, including customer transaction
consumers, customers, suppliers, data, is at least two levels
employees and others, including away from the external interfaces.
credit card information and These tools ensure low level
personal information. attempts to probe or attempt
Advances in computer capabilities, to run scripts against our
new technological discoveries sites are automatically blocked
or other developments may and monitored.
result in the whole or partial More sophisticated brute force
failure of this technology attacks intending to stop
to protect transaction data commercial activity do occur
or other sensitive and confidential from time to time. When these
information from being breached happen the same tools are
or compromised. In addition, used to block, diagnose and
e-commerce websites are often manage the attacks and then
attacked through compromised new rules added to prevent
credentials, including those ongoing impact.
obtained through phishing The Group has adopted a cloud-first
and credential stuffing. model, this ensures data typically
If any of these breaches of remains at its source, is
security should occur, the managed based on usage, and
reputation of the Group could transmission and duplication
be damaged, customers could of data is therefore minimised
develop the perception that across the Group.
the Group's platforms are The Group uses tokenisation
not secure, its business may for all payment types and
suffer, it could be required thus never holds nor transmits
to expend significant capital payment data.
and other resources to alleviate Group staff have enforced
problems caused by such breaches, two-step authentication and
and it could be exposed to a robust policy is in place
a risk of loss, litigation to ensure removal of leavers
or regulatory action and possible and that staff have appropriate
liability. access to systems based on
role and experience.
----------------------------------------- --------------------------------------
10. Regulatory There is a risk that the Group The Policies that govern GDPR
compliance fails to comply with regulatory have been embedded into the
requirements or to respond employee contract, handbook
to changes in regulations, and working practices of the
including GDPR. Group. In summary the Group
The Group stores some personally requires that user consent
identifiable information of and data is given based only
its customers, employees and on the need to provide the
other stakeholders and is core business services and
subject to data protection that all other usage of data
and privacy regulations such is expressly linked to consent
as the General Data Protection for that purpose only.
Regulation (Eu) 2016/679 (the
"GDPR"), which forms part
of domestic law pursuant to
the Data Protection, Privacy
and Electronic Communications
(Amendments etc) (Eu Exit)
Regulations 2019.
The Group has policies and
procedures in place in relation
to data protection but there
can be no guarantees that
even strict compliance with
such policies and procedures
will completely eliminate
all risk in this regard.
Any perceived or actual failure
by the Group, including its
third-party service providers,
to protect confidential data
or any material non-compliance
with privacy or data protection
or other consumer protection
laws or regulations may harm
the Group's reputation and
credibility, adversely affect
revenue, reduce its ability
to attract and retain customers
and consumers, result in litigation
or other actions being brought
against the Group and the
imposition of significant
fines and, as a result, could
3have a material adverse effect
on the Group's business, financial
condition, results of operations
and prospects.
----------------------------------------- --------------------------------------
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END
FR EKLBFLDLZBBB
(END) Dow Jones Newswires
July 19, 2022 02:00 ET (06:00 GMT)
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