TIDMUBG
RNS Number : 9312Z
Unbound Group PLC
20 September 2022
Unbound Group plc
Interim results for the six months to 31 July 2022
Continued growth and strategic progress in a challenging
consumer environment
20(th) September 2022
Half Year Financial Highlights:
-- Revenue growth of 10.4% to GBP27.6m (H1 FY22 GBP25m),
illustrating benefits of multi-channel sales model despite
challenging market conditions
-- Expansion of Gross Margin to 63.4%, growth of 180 bps over
the prior year, driven by progress in efficiency plan and delivery
of product strategy, resulting in gross profit growth of
GBP2.1m
-- EBIT loss of GBP0.3m after costs incurred in technical launch
of Unbound platform of GBP1.0m and non-recurring PLC costs of
GBP0.15m
-- Cash at H1 FY22 of GBP2.7m (H1 FY22 GBP3.4m) with net debt of
GBP8.4m (H1 FY22 GBP16.4m), pre-equity fundraise in August 2022
raising GBP3.1m (net of expenses)
Summarised key financials (GBP000):
A+B+C A B C
Unbound Unbound Unbound Hotter Hotter Hotter
Group Consolidated Group Costs Development Shoes Shoes YOY
Costs
-------------------- ------------- ------------- --------- --------- ---------
July 22 July 22 July 22 July July
22 21
-------------------- ------------- ------------- --------- --------- ---------
Revenue 27,630 - - 27,630 25,028 +10.4%
-------------------- ------------- ------------- --------- --------- ---------
Gross Profit 17,518 - - 17,518 15,417 +GBP2.1m
-------------------- ------------- ------------- --------- --------- ---------
Gross Margin
% 63.4% - - 63.4% 61.6% -
-------------------- ------------- ------------- --------- --------- ---------
(343) (978) (14,094)
Costs (17,865) [1] [2] (16,544) [3] +17.4%
-------------------- ------------- ------------- --------- --------- ---------
Operating
(loss)/ profit
- Pre Exceptional (347) (343) (978) 974 1,323 -26.4%
-------------------- ------------- ------------- --------- --------- ---------
Net Debt(1) GBP8.4m - - - GBP16.4m
-------------------- ------------- ------------- --------- --------- ---------
Inventory GBP7.2m - - GBP7.2m GBP4.6m +GBP2.6m
[4]
-------------------- ------------- ------------- --------- --------- ---------
Notes:
In the above table and throughout this document references to
Hotter Shoes refer to the trading activities of Beaconsfield
Footwear Limited.
Alternative performance measures are defined in Note 7.
(1) Unbound PLC related costs (including LTIP charge of GBP0.1m)
of which approx. GBP0.6m will be recurring (per annum) -- post cost
reduction programme referenced below
(2) Unbound platform development costs of which GBP0.7m are
one-off in nature
(3) Hotter Shoes prior year operating costs reduced by
Covid-related support of GBP1.5m
(4) Prior year inventory reduced from optimal by approx. GBP2.5m
due to impact of supply chain disruption
Half Year Operational and Strategic Highlights:
Unbound Group
-- Successful equity raise of GBP3.1m (net of expenses) post
half-year, enabling the execution of our strategic growth plan as
market conditions improve, increasing the resilience and
significantly strengthening the liquidity position of the Group
-- Unbound trading platform roll-out is on track with technical
delivery and costs complete on schedule in July, with partner
brands continuing to be on-boarded throughout Q3 and Q4
-- Established an 'always-on' community of target consumers,
'U_Space', to fuel deep insight into their lifestyles, attitudes
and behaviours, shaping the future development of Unbound Group.
Further roll out is underway, to position Unbound as the authority
voice in the 55+ consumer
Hotter Shoes
-- All channels growing YoY, with notably strong performance in
Retail +71.6%, adjusting for COVID related closures in FY22
+17%
-- The combination of our UK manufacturing facility and
strengthened supply chain enabled us to respond to changing
consumer behaviour in-season, which has and will continue to
benefit our performance in an unpredictable environment
-- Strong strategic and operational progress delivered year to date:
-- Autumn Winter stock availability for Hotter at highest ever
levels for season launch
-- Continuous Improvement culture expanded throughout the
business, with targeted project groups working across departments,
focussed on efficiency and cost savings
-- ISO9001 Quality Management Systems accreditation achieved
-- Awarded Drapers Footwear 'Best Store Design' for Solihull
concept store
-- Finalists for 'Best Retailer' (GBP10-100m) at Drapers
-- Finalists for parliamentary Responsible Business Award,
acknowledging our ESG improvements and plans.
Outlook:
-- We have seen tougher trading conditions in recent weeks, the
short-term outlook is very challenging to predict, given the
volatility of the economic backdrop and resultant impact on
consumer confidence
-- Medium term growth objectives remain unchanged and, with 10%
sales growth achieved in H1 despite challenging economic
circumstances, we remain confident, but recognise an increased
short-term risk. Focus will continue to be on managing costs,
protecting margins and cashflow, ensuring the appropriate levels of
working capital and managing capital investment tightly
-- The launch of the Unbound platform will allow for a greater
degree of revenue diversification over the medium term, in addition
to growing and engaging with our active customer base
-- We have made good progress with partner brand sign-ups for
Unbound, and will continue to focus on onboarding further
complementary brands within apparel, with plans to introduce
wellness categories in Q1 2023. As planned, Unbound revenues in H2
will be small in the context of the Group, with the focus being
onboarding partners onto the platform
-- Given the challenging short term economic outlook we anticipate full year Operating Profit (pre-exceptional) will be between GBPnil and a GBP1m loss after H1 non-recurring costs of GBP0.7m
Ian Watson, Chief Executive Officer of Unbound Group plc,
commented:
"Unbound Group has delivered an encouraging first half
performance that builds on the momentum of 2021, despite the
increased challenges of high inflation and a volatile and
unpredictable consumer environment. The combination of further
growth in sales and gross margins demonstrates the effectiveness of
our strategic initiatives and the value that our customers attach
to our core Hotter product, giving us confidence despite the market
conditions, which have become more challenging in recent weeks. We
have made good strategic progress in H1 and will continue to focus
on efficiency gains and cost management in H2 to protect margins.
We are confident in our brand and the benefits that will result
from this focus and our continued ability to deliver our strategy
over the long term.
The broader revenue base we have created with the launch of the
Unbound platform marks an important strategic shift for the Group.
However, we remain mindful of the growing pressures on consumer
spend. Consequently, we continue to review and adapt to the
changing market conditions, maintaining our specialist focus on our
core customer demographic of financially resilient 55+
consumers."
S
Enquiries
Unbound Group plc
Ian Watson / Dan Lampard
investorrelations@unboundgroup.com
020 3874 8300
Singer Capital Markets
Peter Steel / Tom Salvesen / Alaina Wong / Kailey Aliyar
0207 496 3000
Vico Partners
Sofia Newitt
snewitt@vicopartners.com
020 3957 5045
CHIEF EXECUTIVE'S REVIEW
Unbound Group plc - overview:
Unbound Group plc is the parent company for a group selling a
range of brands focused on the 55+ demographic. Unbound Group will
build on the solid foundation of Hotter Shoes, its current main
business, to grow value through its curated, multi-brand retail
platform supporting the active lifestyles of the 55+ demographic
with a range of products and services. Unbound Group's platform is
powered by Mirakl's leading marketplace technology to enable the
Group to partner seamlessly with selected third-party brands, on a
drop ship model while negating the need to invest in working
capital. Unbound Group's expanded offering beyond footwear will
feature a broad range of active lifestyle products and services,
with third-party complementary brands featuring alongside new
Unbound Group brands, as well as Hotter.
Hotter Shoes - overview:
Hotter Shoes, an Unbound Group plc company, is one of the UK's
leading specialist footwear brands, selling over 1.4 million pairs
of shoes per year. Hotter's footwear has an uncompromising focus on
'customised comfort' and perfect fit through the use of its
differentiating technology, including its e-commerce platform, 3D
foot scanner and augmented reality app which enables the consumer
to try products virtually from home. Hotter has been transformed
from a retail to a digitally led, omni-channel business over the
past 3 years, selling its footwear to over 4 million customers via
online, its direct mail order channel and its targeted 17
Technology Centres and 8 garden centre concessions in the UK. Over
75% of sales are direct to consumer through digital channels. With
its clearly defined, large and growing target demographic, Hotter
now reaches 29% of the female population in the UK over the age of
55. Digital partnerships have recently been established with
several online retailers including Next, John Lewis, The Very Group
and M&S.
Brand awareness:
Hotter Shoes has a strong brand reputation amongst its core
demographic, demonstrated by recent studies showing that 60 per
cent. of the people surveyed (aged 50+) recognise Hotter Shoes as
the number one brand for comfort shoes in the UK, ahead of Clarks
on 57 per cent., Ecco on 49 per cent. and M&S and Gabor on 27
per cent. each. This sector (comfort and fit) is a significant
segment of the footwear market, where numerous trends support
positive market growth dynamics compared to other market segments.
Furthermore, Hotter Shoes has a differentiated, premium product
range, where 68 per cent. of its range is continuity product rather
than fashion footwear, focusing on "Cushion+" lightweight cushioned
soles, "Stability+" ultra supportive and "Precision fit" with over
40 width and size combinations.
Market drivers and expansion opportunity:
As a result of the Hotter Shoes' history and brand, the Group
has a growing (currently 4.6 million individuals) customer
database, with approximately 30 per cent. of the 55+ female
population in the UK represented. With c. 15 million website visits
each year, the customer base continues to grow, with the Group's
email database having exceeded 1 million individuals in 2022.
Unbound's target demographic is not only the fastest growing
demographic of the UK population, it is also an increasingly
wealthy demographic generally experiencing a higher discretionary
spend compared with the under 55s. The Group's target cohort of
customers aged 55+ is increasingly focusing on health and wellbeing
and becoming more active with the largest percentage rise in
exercise participation being in this cohort. The majority of
e-commerce businesses tend to be focussed on younger demographics
leaving, in the opinion of the Directors, the Group's target
demographic materially underserved online, despite online shopping
participation and general digital literacy increasing the most
amongst the over 65s age group.
The Directors believe that this offers an opportunity for
sustainable incremental growth beyond that already being targeted
by the Group's Hotter footwear brand. The Directors believe that
Unbound has a specialist 'insight-led' focus on this under-served
demographic and therefore intend to seek to capitalise on this
opportunity by accelerating the Company's growth strategy as and
when market conditions allow.
Trading performance:
In the first half of the year, performance was hit by
significant macro-economic disruption, which was unforeseen and not
factored into our original assumptions. The on-going conflict in
Ukraine, political destabilisation, high inflation and the
cost-of-living crisis were incremental impacts felt. Despite this,
Hotter delivered a successful first half, and we built and launched
our Unboundgroup.co.uk trading site, on time, on budget and to
specification.
Our performance benefitted from our UK manufacturing base,
including our strengthened supply chains which allowed us to react
in season to changing customer demand patterns, as we saw a return
to event-led and seasonal products.
Whilst volatility remains, management have taken swift action to
address a number of external factors meaning Unbound has made
strong operational progress in the first half of the year and
approaches the second half with a clear set of strategic priorities
and optimised stock availability. In addition, the Group now
carries significantly less net debt, allowing for a more agile
approach to executing on our strategic priorities to deliver
shareholder value over the medium term.
Post period-end equity raise:
We have been able to progress all aspects of our strategy during
H1. Our successful equity raise in August allows the acceleration
of this, covering the areas below while also significantly
strengthening the liquidity of the Group:
-- Driving digital connection with our target customer base
through growth of our Unbound Group partner brand strategy;
-- Further expansion of our garden centre concession model;
-- Investment in technology to improve customer experience,
deliver cost efficiencies and facilitate accelerated scalable
growth; and
-- Increasing inventory effectiveness by utilising near shore
suppliers with shorter lead time procurement of design-led and
own-brand goods.
As detailed at the time of completion in August 2022, we will
deploy the proceeds of the equity raise in controlled fashion as
and when market conditions allow. We look forward to updating
shareholders on our progress.
Strategic and business update
Our five strategic principles:
1. Guided by Insight - Insight excellence drives all we do
We build our business out of unrivalled insight into the needs,
attitudes and behaviours of our 55+ audience.
We go the extra mile to engage with, listen to and respond to
their changing needs. We continuously track, measure and improve
based on our learnings - embedding insight into everything we
do.
Progress made during H1:
In March, we set up 'U_Space', an 'always-on' community of
target Unbound Group consumers, to fuel deep insight into their
lifestyles, attitudes and behaviours. This platform is used to
shape the future development of Unbound Group. Further roll out is
underway, to position Unbound as the authority voice in the 55+
consumer.
'U_Space' has two core insight objectives:
1. Connection
a. Provide the insight to help us connect with and sell to our audience
b. Development of group strategy, partner offer and own brand offer
c. Guiding communications strategy and execution
2. Credibility
a. Provide the data to underpin Unbound's position of expertise in the 55+ audience
b. Driving Unbound profile and perceptions in media and broader discourse
2. Superiority through specialism - Expert and focus are how we win
We're focused and undistracted. Focused on the 55+ consumer.
Experts in comfort that helps you do more of what you love. We
leverage our audience and comfort specialism to both strengthen our
roots in footwear and expand into relevant adjacent categories.
Growing and leveraging our unique database of engaged consumers is
central to our business strategy and the tactics we deploy to
achieve our goals.
Progress made during H1 - Focus on our next generation of core
comfort styles:
We continue to enhance our products and build superiority
through specialism. Our Autumn Winter (AW) 22 Hotter collection
sees a +10% growth in shoes featuring our unique, comfort
technologies, specific to the needs of the 55+ consumer.
We have increased real choice for the season, with +17% more
styles available within the range. A culture of continual
improvement sees the brand striving to establish next generation,
comfort hero styles. Successful new constructions from Spring
Summer (SS) 2022 have been developed with seasonally appropriate
styling, adding further breadth and consumer choice.
H1 FY23 saw a return to normalised product category demand.
Seasonal styling outperformed versus plan and bounced back to
pre-pandemic mix levels. We have reshaped our AW22 collection to
reflect this behavioural change, resulting in style growth of 16%
within our boot category, for example.
Our SS23 range continues to evolve and become a wider offer, as
we expand into new comfort constructions following the success of
recent sourcing and styling trials. We expect overall style growth
of +4% on SS22.
Our expertise in comfort is further enhanced through the launch
of a new technology Flex+. This addition to our family of
technologies supports natural movement through anatomically placed
flex grooves within Hotter exclusive sole designs. Comfort
technology within the collection has grown by +25% vs last
season.
Hotter SS23 product strategy reflects the ongoing market shift
towards Athleisure and Sport styling. Following a strong
performance of +32% on prior year in SS22, further style growth has
been planned for the season at +11%. New for SS23 is an exclusive
range of functional athletic footwear suitable for light
exercise.
Insight, gained via product testing with our core consumer,
demonstrates the equal importance of desirability and comfort when
buying. SS23 sees the range evolve from being 'item led' with a
focus on improved styling and a nod to relevant fashion trends.
Trends were validated and product tested with Hotter customers
ahead of orders being placed.
Within 'superiority through specialism', we have focussed on
improving the capabilities of our supply chain, which allowed us to
respond in-season to changing customer demand patterns, with a
return to seasonal, event-led demand. Our own UK-based
manufacturing plant provides flexibility and resilience within our
supply chain and as we enter the autumn / winter season our
inventory levels and availability are at optimal levels.
3. Growth through connection - We grow our business by curating, connecting and engaging
We have unique access to and understanding of the 55+ consumer.
Leveraging our combination of access and understanding we bring
together a highly curated group of brands with deep relevancy for
our consumer.
Our connected commerce excellence means we enable our customers
to shop when, where and how they want. We drive loyalty, frequency
and advocacy by engaging our customers with targeted marketing and
personalised journeys, amplified by our digital content and
community.
Progress made during H1: Significant progress bringing partners
onto Unboundgroup.co.uk
The Unboundgroup.co.uk website successfully launched on time, on
budget and to specification on Thursday 28 (th) July with 7 brands
operating on a capital light, drop-ship basis, live at point of
launch . The team continue to engage with complementary partner
brands, with further apparel brands expected to be on-boarded
during October before developing a wellness category in Q1 2023.
The partner brands we have met and are working with have
unanimously recognised the strategic opportunity that Unbound Group
presents.
The initial launch phase had the objective of ensuring technical
and business readiness (for both Unbound and partner brands), for a
seamless customer journey. The site stability and performance has
been resilient and transactions, despatch and returns successful
ahead of our further partner brands on-boarding in the coming weeks
and months.
4. Working Smarter - We fuel success by driving productivity
We continuously assess and improve the ways we work - seeking to
maximise our efficiency and enhance our outputs. We utilise LEAN 6
Sigma principles to minimise wastage and maximise the customer
experience. We do this every day in all we do - believing in the
power of marginal gains to drive our business forward.
Progress made during H1: Robust operational performance and
tight cost control, with Continuous Improvement at the heart of our
culture
We have developed a culture of Continuous Improvement, which
began within the operations team and has been expanded, driving
productivity across the business. Over 80 members of the workforce
are now trained and skilled in the tools of LEAN 6 Sigma,
delivering six figure productivity savings. This culture is
underpinned by our corporate values and behaviours, which were
rolled out across the business in May, embedding a culture of
efficiency and cost saving focus throughout our workforce. This
initiative comes in to sharper focus in volatile periods and will
remain a core part of our drive to protect margins in the short
term and enhance them over time, as evidenced in this set of
results.
Our Corporate Values & Behaviours:
Our We're here to help people move better, feel better
Vision: and do more of what they love
Our EMPATHY COURAGE COMMITMENT COLLABORATION
Values:
---------------- ----------------- ---------------- ------------------
Our Start with Lead the Strive for Succeed together
behaviours: the customer way better
---------------- ----------------- ---------------- ------------------
We believe We think courage We think good We think together
every member is the quality enough is we can go
of the team that sets never good further and
should be able apart great enough, always move faster
to walk in businesses striving to
our customers' from good improve
shoes businesses
---------------- ----------------- ---------------- ------------------
5. Stepping up - We step up - for our business, our planet & our community
We believe in taking responsibility - individually and
collectively for the way we operate as a business. For reducing our
impact on the planet. And for contributing to the communities, we
are part of.
Progress made during H1: Driving our culture to enable team
success in an unpredictable environment
During H1 we have increased focus on ESG initiatives, with
business wide targets agreed and set in July, formalising much of
the existing work that was on-going. The focus and passion of the
teams earned us a place as finalist in the parliamentary
Responsible Business Award.
Staff training and development continues to be a core focus, as
we build an empowered and agile team to fuel our performance
culture. The robustness and strength of the team to deliver
multiple projects during H1 has been highlighted against the
unprecedented macro backdrop that we are experience and gives us
confidence in our resilience entering into H2.
Summary
Since the beginning of H1, and increasingly in the recent weeks,
the external environment has become more challenging and harder to
predict. The business, however, has performed well, delivering
double digit growth and completing a range of strategic objectives
to improve reach, scale and improved efficiencies. The team has
applied LEAN principles, controlled costs successfully and acted
decisively to manage the factors within our control. A culture of
continuous improvement is now engrained in our business and will
allow for a greater degree of resilience during this period of
volatility.
In an uncertain environment, the team has delivered a solid
performance in H1 and remain focused on strategic deliverables,
cash conservation and driving inefficiencies out of the
business.
FINANCIAL REVIEW
Unbound Group plc was renamed from Electra Private Equity PLC
('Electra') on 21 January 2022. Electra was a Main Market listed
investment company with a private equity strategy. Following
Electra's decision to dispose of its investment business, as
announced on 21 May 2021, it sold or demerged a number of
companies. Following the demerger of Hostmore plc on 1 November
2021, Electra's only remaining trading subsidiary was Beaconsfield
Footwear Limited, trading as Hotter.
As part of the move from the Main Market to trading on AIM,
Electra/Unbound Group plc ceased to be an investment trust so was
no longer exempt from the obligation to prepare consolidated
accounts. Thus, the Unbound Group plc accounts for the period
ending 31 July 2022 contain all the trading activities and
operational assets and liabilities of the Hotter Group. During the
previous accounting period, the Electra accounts did not contain
the trading activities and operational assets and liabilities of
the Hotter Group whilst the accounts of Beaconsfield Footwear
Limited did contain all of the trading activities and operational
assets and liabilities of the Hotter Group and these accounts,
which were included in the AIM Admission Document, have been used
to show the comparative figures for the corresponding period.
As a result of the transfer to AIM, the capital structure of the
group changed so that the financing (cash and borrowings) and
equity of Unbound Group plc is different to that shown in the
comparatives for Beaconsfield Footwear Limited. In addition, the
balance sheet of Unbound Group plc included a number of financial
and non-trading assets that were previously owned by Electra most
of which were disposed of prior to the reporting date.
In order to comply with the requirements of AIM rule 18 which
requires that the information contained in a half-yearly report
must include at least a balance sheet, an income statement, a cash
flow statement and must contain comparative figures for the
corresponding period in the preceding financial year (apart from
the balance sheet which may contain comparative figures from the
last balance sheet notified), the half-yearly report shows the
comparative data in a consistent format to that which will be
adopted in the AIM company's annual accounts having regard to the
accounting standards applicable to such annual accounts i.e
accounts that are in the format of a commercial group rather than
an investment group as was the case for the published accounts for
Unbound Group plc when it was listed on the Main Market as an
Investment trust which included the set of accounts published for
the year ended 31 January 2022.
KPIs
Unbound Group
6 months 6 months Change
ended 31st ended 1st %
July 2022 August 2021
------------------------------------ ------------ ------------- --------
GBP'000s GBP'000s
Revenue 27,630 25,028 +10.4%
Gross Profit 17,518 15,417 +13.6%
Gross Margin % 63.4% 61.6% +180bps
Operating Loss pre exceptionals(1) (347) 1,323 -126.2%
EBITDA pre exceptionals(1) 1,619 3,154 -48.7%
(1) Alternative Performance Measures are defined in Note 7.
Hotter Online Direct to Consumer Metrics
6 months 6 months Change
ended 31st ended 1st %
July 2022 August 2021
Visits (000's) 9,313 9,315 (0.0)%
Conversion Rate % (i) 3.4% 3.7% (0.3)%
No. of Orders (000's) 317 341 (7.0)%
Average Order Value (ii) GBP64.17 GBP57.14 12.3%
Active Customer Base (iii) 619 587 5.5%
Order Frequency (iv) 1.58 1.54 2.6%
i. Calculated as total orders divided by total visits
ii. Calculated as total order value divided by total orders
iii. Defined as having shopped in the last 12 months as at 31 July
2022
iv. Calculated as last 12 months total shipped orders divided by
active customers
6 months 6 months Change
ended 31st ended 1st %
July 2022 August 2021
-------------------------------------- --------------- ---------------- ---------
Segmental GBP'000s GBP'000s
Direct to Consumer 20,703 20,218 +2.4%
Retail 5,052 2,944 +71.6%
Wholesale 1,875 1, 866 +0.5%
-------------------------------------- --------------- ---------------- ---------
Total Revenue - Hotter 27,630 25,028 +10.4%
Gross Profit 17,518 15,417
Administration costs (14,578) (12,263) +18.9%
-------------------------------------- --------------- ---------------- ---------
EBITDA pre exceptionals
- Hotter 2,940 3,154
Unbound Trading (978) -
PLC Costs (223) -
Share based payment (120) -
-------------------------------------- --------------- ---------------- ---------
EBITDA pre exceptionals
- Unbound Group 1,619 3,154 -48.7%
-------------------------------------- --------------- ---------------- ---------
Depreciation and amortisation (1,966) (1,831) +7.4%
-------------------------------------- --------------- ---------------- ---------
Operating (loss) / profit
pre exceptional items (347) 1,323 -126.2%
-------------------------------------- --------------- ---------------- ---------
Hotter
Hotter performed strongly across all channels with growth in all
segments, most notably Retail stores with annual growth being
driven from COVID related closures in H1 FY22, however on a like
for like trading day basis excluding this impact over 17%
annualised growth.
Total revenue in the period has increased by 10.4% to GBP27.6m
and gross margin expansion to 63.4%, growth of 180 bps over the
prior year. Revenue growth was driven by higher average selling
prices, due to a combination of increased technology within the
range and increased RRPs. The higher selling prices combined with
the progress in operational efficiencies more than offset
operational inflationary pressures resulting in gross profit growth
of GBP2.1m.
Digital KPIs on the whole improved compared to the prior period,
as demonstrated by stable levels of web traffic and strong
conversion levels. Growth in the active customer database, average
order value and frequency was the driver of revenue growth.
We controlled costs tightly across all areas, with the annual
increase in costs predominantly driven by the removal of one-off
support events such as CJRS, rent and rates relief which were
GBP1.5m in H1 FY22.
We delivered efficiencies in marketing costs with spend in H1
FY23 being 20.1% of revenue compared to 20.9% in the prior year.
Fixed cost underlying growth was 3.6% with the removal of the rent
and rates non-recurring benefit of H1 FY22.
EBITDA (pre-exceptional charges) was GBP2.9m delivering a 10.6%
margin. As noted above, comparative profits have been impacted by
the removal of one-off support events such as CJRS, rent and rates
relief which were GBP1.5m in H1 FY22.
Unbound Trading
As previously disclosed, the costs associated with the launch of
the Unbound platform have resulted in a HY loss of GBP1m. The costs
incurred relate to people, marketing and launch related costs. Of
these costs cGBP0.7m are one off in nature.
As the trading platform launched (www.unboundgroup.co.uk) at the
end of H1, no revenues occurred during H1.
Group Costs
Net of residual income streams the PLC costs were GBP0.2m in H1
HY23. The Company has given notice on the offices at Old Park Lane
in London and these will be vacated by the end of the calendar
year. This will result in an annualised cost reduction of GBP0.3m.
Ongoing recurring cash costs (i.e. excluding LTIPs) are anticipated
to be GBP0.6m per annum.
Balance Sheet and Cash Flow
The increase in intangible assets, up by GBP1.2 million to
GBP31.2 million (31 January 2022: GBP30.1 million), reflects the
investment during the period in the ecommerce and technology
platform.
The reduction in investments held for sale of GBP3.7 million to
GBP0.1 million (31 January 2022: GBP3.8 million) relates to the
disposal of the Company's shares in Hostmore plc and leasehold
property investment during H1. These transactions generated gross
cash proceeds of GBP2.4m and an aggregated loss on disposal of
GBP1.3 million.
Inventory increased by GBP2.3 million to GBP7.2 million (31
January 2022: GBP4.9 million; H1 FY22 (Hotter Shoes): GBP4.6m). The
overriding majority of inventory is represented by Hotter Shoes,
with the increase driven by supply chain issues in the comparative
period and strong availability for the autumn winter season.
Cash at H1 FY23 was GBP2.7m (31 January 2022: GBP5.5 million; H1
FY22 (Hotter Shoes): GBP3.4m) with net debt of GBP8.4m (31 January
2022: GBP6.6 million; H1 FY22 (Hotter Shoes): GBP16.4m). The H1
FY23 cash and net debt positions are stated pre the equity
fundraise in August 2022 which raised GBP3.1m (net of expenses).
The bulk of the net debt position is accounted for by Hotter Shoes,
the decrease since H1 FY22 due to the refinancing completed in
December 2021 which reduced debt by GBP5m and a further GBP1m
repaid in July 2022.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME AND OTHER
COMPREHENSIVE INCOME FOR THE 6 MONTHSED 31 JULY 2022
Unbound Hotter Shoes
Group plc
Notes 6 months 6 months
ended 31(st) ended 1(st)
July 2022 August 2021
GBP'000s GBP'000s
--------------------------------- ----------------- -------------- -------------
Revenue 3 27,630 25,028
Operational Costs (10,112) (9,611)
--------------------------------- ----------------- -------------- -------------
Gross Profit 3 17,518 15,417
Other operating income 288 804
Administrative expenses (16,067) (13,067)
Share based payment (120) -
Depreciation and amortisation (1,966) (1,831)
--------------------------------- -----------------
Operating (loss) / profit
pre-exceptional items (347) 1,323
--------------------------------- ----------------- -------------- -------------
Exceptional items 4 (1,152) (3,160)
Operating loss post exceptional
items (1,499) (1,837)
--------------------------------- ----------------- -------------- -------------
Finance cost (645) (284)
--------------------------------- ----------------- -------------- -------------
Loss on ordinary activities
before tax (2,144) (2,121)
Taxation - 707
Loss on ordinary activities
after tax (2,144) (1,414)
Loss on investments held (1,292) -
for sale
Other comprehensive income - -
Total comprehensive income
for the period (3,436) (1,414)
--------------------------------- ----------------- -------------- -------------
Attributable to:
Equity holders of the parent (3,436) (1,414)
Total comprehensive loss
for the period (3,436) (1,414)
--------------------------------- ----------------- -------------- -------------
Loss per share:
Loss per share - basic and
diluted, attributable to
ordinary equity holders of
the parent (pence) (0.08)
--------------------------------- ----------------- -------------- -------------
The comparative financial information presented represents the
historical financial information of Beaconsfield Footwear Limited,
as was set out in Section B of Part 3 of the admission document
dated 27 January 2022 (the "Admission Document") of Unbound Group
plc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 31 JULY 2022
Unbound Hotter Unbound
Group plc Shoes Group plc
Notes 6 months 6 months 16 months
ended 31(st) ended 1(st) ended 31(st)
July 2022 August January
2021 2022(1)
GBP'000s GBP'000s GBP'000s
------------------------------- ------ -------------- ------------- --------------
Assets
Non-current assets
Intangible assets 31,229 3,968 30,057
Right-of-use asset 6,207 7,640 6,922
Property, plant and equipment 2,163 2,749 2,665
Deferred tax 3,894 4,163 3,887
------------------------------- ------ -------------- ------------- --------------
Total non-current assets 43,493 18,520 43,531
------------------------------- ------ -------------- ------------- --------------
Current assets
Investments 38 - 3,755
Inventories 7,220 4,582 4,855
Trade and other receivables 2,691 1,989 2,283
Cash and cash equivalents 2,705 3,425 5,484
------------------------------- ------ -------------- ------------- --------------
Total current assets 12,654 9,996 16,377
------------------------------- ------ -------------- ------------- --------------
Total assets 56,147 28,516 59,908
------------------------------- ------ -------------- ------------- --------------
Equity and liabilities
Equity
Share capital 5 10,565 42 10,565
Share premium 5 4,959 - 4,959
Own shares held 5 (2,273) - (2,426)
Revenue reserve 5 7,958 (9,972) 11,427
------------------------------- ------ -------------- ------------- --------------
Equity attributable to
owners of the parent 21,209 (9,930) 24,525
Total equity 21,209 (9,930) 24,525
------------------------------- ------ -------------- ------------- --------------
Current liabilities
Trade and other payables 15,809 9,366 14,114
Borrowings 2,000 19,778 2,000
Lease liability 1,462 1,312 1,383
Provisions 107 - 490
------------------------------- ------ ------------- --------------
Total current liabilities 19,378 30,456 17,987
------------------------------- ------ -------------- ------------- --------------
Non-Current liabilities
Borrowings 9,100 - 10,100
Provisions 876 975 981
Lease liability 5,584 7,015 6,315
------------------------------- ------ ------------- --------------
Total non-current liabilities 15,560 7,990 17,396
------------------------------- ------ -------------- ------------- --------------
Total liabilities 34,938 38,446 35,383
------------------------------- ------ -------------- ------------- --------------
Total equity and liabilities 56,147 28,516 59,908
------------------------------- ------ -------------- ------------- --------------
(1) Unaudited Group Statement of Financial Position following
the transition of Electra Private Equity Plc, an investment company
to Unbound Group Plc, a trading group with effect from 1 February
2022.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE
6 MONTHSED 31 JULY 2022
Unbound Hotter
Group plc Shoes
Notes 6 months 6 months
ended 31(st) ended 1(st)
July 2022 August 2021
GBP'000s GBP'000s
Cash flows from operating
activities
-------------------------------------------- -------- -------------- -------------
Group loss for the period (3,436) (2,121)
Share based payments 120 -
Depreciation and amortisation 1,966 1,831
(Profit) on disposal of property,
plant and equipment - (11)
Loss on disposal of investments 1,292 -
held for sale
Impairment of intercompany loan
receivable - 2,524
Gain on extinguishment of lease
liabilities - (1)
Finance expense 645 284
Working capital adjustments
Change in inventories (2,380) 1,389
Change in trade and other receivables (688) 552
Change in trade and other payables 1,793 (1,504)
Cash (used in)/ generated from operating
activities (688) 2,943
------------------------------------------------------ -------------- -------------
Corporation tax refunded - 55
Net cash flow (used in)/ generated from
operating activities (688) 2,998
------------------------------------------------------ -------------- -------------
Cash flow from investing activities
Addition of property, plant
and equipment (9) (92)
Addition of intangibles (1,912) (384)
Proceeds from disposal of investments held 2,424 -
for sale
Proceeds from disposal of property,
plant and equipment - 19
Bank interest paid (596) -
Net cash flow from investing
activities (93) (457)
------------------------------------------------------ -------------- -------------
Cash flow from financing activities
Payment of lease liabilities (763) (629)
Payment of interest on lease
liabilities (235) (276)
Payment of borrowings (1,000) (2,524)
Other interest paid - (8)
Net cash flow from financing
activities (1,998) (3,437)
------------------------------------------------------ -------------- -------------
Net change in cash and cash
equivalents (2,779) (896)
Cash and cash equivalents at
beginning of period 5,484 4,321
Cash and cash equivalents
at end of period 2,705 3,425
------------------------------------------------------ -------------- -------------
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTHSED 31 JULY 2022
Share Share premium Own shares Capital Revenue
capital held reserve reserve Total
equity
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------- --------------- ---------------------- ------------- ---------- ----------- ----------
As at 1 February
2022 - Electra 10,565 4,959 (2,426) (35,350) 45,325 23,073
----------------------- --------------- ---------------------- ------------- ---------- ----------- ----------
On transition from
Electra to
Unbound(1) - - - - 1,452 1,452
Reserves combination
on ceasing to be
an investment trust - - - 35,350 (35,350) -
As at 1 February 2022 - Unbound 10,565
4,959 (2,426) - 11,427 24,525
Total comprehensive expense for the
period
Loss during the period - - - - (3,436) (3,436)
----------------------- --------------- ---------------------- ------------- ---------- ----------- ----------
Total comprehensive
expense for the
period - - - - (3,436) (3,436)
----------------------- --------------- ---------------------- ------------- ---------- ----------- ----------
Contributions by and distributions to owners
of the Company
Share based payments - - 153 - (33) 120
----------------------- --------------- ---------------------- ------------- ---------- ----------- ----------
As at 31 July 2022 10,565 4,959 (2,273) - 7,958 21,209
----------------------- --------------- ---------------------- ------------- ---------- ----------- ----------
(1) The net impact of the transition of Electra (an investment
trust) to Unbound (a trading group) which recognises the assets and
liabilities of Hotter Shoes (Beaconsfield Footwear Limited) on a
line by line basis within the Group's results.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR
THE 6 MONTHSED 31 JULY 2022
1. General Information
Unbound Group Plc (the 'Company') is a limited liability company
incorporated and domiciled in the United Kingdom. The address of
the Company's Registered Office is 17 Old Park Lane, London, United
Kingdom, W1K 1QT with Hotter Shoe's Registered Office being 2 Peel
Road, Skelmersdale, Lancashire, WN8 9PT.
The Company is listed on the Alternative Investment Market (AIM)
of the London Stock Exchange (ticker: UBG).
The financial information set out in this Interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. These condensed consolidated interim financial
statements as at and for the six months ended 31 July 2022 comprise
of the Company and its subsidiaries (together referred to as the
'Group'). These condensed consolidated interim financial statements
has not been audited or reviewed by the Company's auditor.
This condensed consolidated interim financial information was
approved and authorised for issue by a duly appointed and
authorised committee of the Board of Directors on 16 September
2022.
2. Basis of preparation and significant accounting policies
The interim financial statements, which are unaudited, have been
prepared on the basis of the accounting policies expected to apply
for the financial year to 5 February 2023 and in accordance with
recognition and measurement principles of International Financial
Reporting Standards (IFRSs) as endorsed by the European Union. The
accounting policies applied in the preparation of these interim
financial statements are consistent with those used in the
financial statements for the year ended 31 January 2021 for
Beaconsfield Footwear Limited as disclosed in the Admission
Document published by the company on 1 February 2022.
The interim financial statements do not include all of the
information required for full annual financial statements and do
not comply with all of the disclosures in IAS34 'Interim Financial
Reporting'. Accordingly, while the interim financial statements
have been prepared in accordance with IFRS they cannot be construed
as being in full compliance with IFRS.
The Group's statutory financial information for the year ended
31 January 2022 does not constitute the full statutory accounts for
that period. The Annual Report and Accounts for 31 January 2022 for
the Group, prepared under International Financial Reporting
Standards ("IFRS"), have been filed with the Registrar of
Companies. The Independent Auditors' Report on the Annual Report
and Accounts for the year ended 31 January 2022 was unqualified and
did not include references to any matters which the auditors drew
attention to by way of emphasis without qualifying their report and
did not contain statements under Section 498(2) or 498(3) of the
Companies Act 2006. Similarly the Annual Report and Accounts for 31
January 2022 for Beaconsfield Footwear Limited have been filed with
the Registrar of Companies and the Independent Auditors' Report on
the Annual Report and Accounts for the year ended 31 January 2022
was unqualified and did not include references to any matters which
the auditors drew attention to by way of emphasis without
qualifying their report and did not contain statements under
Section 498(2) or 498(3) of the Companies Act 2006.
Going concern
The Directors have reviewed current performance and cash flow
forecasts, and are satisfied that the Group's forecasts and
projections, taking account of potential changes in trading
performance, along with potential mitigations available, in
addition to factoring in the successful equity raise completed post
half year (in August 2022) show that the Group will be able to
operate within the level of its available facilities for the
foreseeable future. The Directors have therefore continued to adopt
the going concern basis in preparing the Group's financial
statements.
3. Segmental reporting
The Chief Operating Decision Maker has been identified as the
Directors. In the opinion of the Directors, the Group has one
single operating segment, the manufacture and sale of footwear with
the sales of the products being through three channels as
follows:
Unbound Group Plc: 6 months ended 31st July 2022
Direct to consumer Retail Wholesale Group
-------------- ------------------- --------- ---------- ---------
GBP'000s GBP'000s GBP'000s GBP'000s
Revenue 20,703 5,052 1,875 27,630
Gross Profit 13,375 3,277 866 17,518
Gross Profit
% 64.6% 64.9% 46.2% 63.4%
Hotter Shoes: 6 months ended 1st August 2021
Direct to consumer Retail Wholesale Group
-------------- ------------------- --------- ---------- ---------
GBP'000s GBP'000s GBP'000s GBP'000s
Revenue 20,218 2,944 1,866 25,028
Gross Profit 12,993 1,830 594 15,417
Gross Profit
% 64.3% 62.2% 31.8% 61.6%
4. Exceptional items
Unbound Hotter Shoes
Group plc
6 months 6 months
ended 31st ended 1st
July 2022 August 2021
GBP'000s GBP'000s
---------------------------------- ------------ ---------------
Impairment of amounts owed by
group undertakings (i) - 2,524
IPO and transition related costs 656 -
(ii)
Profit on disposal of property,
plant and equipment - (11)
Refinancing costs (iii) - 155
Other restructuring and one-off
costs (iv) 496 492
----------------------------------
1,152 3,160
---------------------------------- ------------ ---------------
Exceptional items include the following:
i. Impairment of amounts owed by group undertakings - sums due
from intermediate holding companies have been provided against when
the recoverability of those loans is considered in doubt.
ii. Legal, transitional costs, advisory and insurance fees
incurred directly in relation to the Group relinquishing its
listing on the FTSE Main Market and subsequent admission to the
'Alternative Investment Market ('AIM') on 1 February 2022.
iii. Refinancing costs incurred in the prior period as a result
of the need to renegotiate banking facilities that whilst held
primarily by a holding company were effectively for the benefit of
Hotter Shoes as the trading company in the group.
iv. Other restructuring and one-off costs include severance
costs associated with headcount reductions as well as the costs
associated with strategic reviews.
5. Share capital and reserves
Share capital
Unbound Group plc
6 months ended 31st
July 2022
No. GBP'000s
-------------------------------- ------------ ---------
Allotted, called up and fully
paid shares
Opening number of 25p ordinary
shares 42,258,128 10,564
Closing number of 25p ordinary
shares 42,258,128 10,564
Hotter Shoes
6 months ended 1st
August 2021
No. GBP'000s
--------------------------------- --------- -----------
Allotted, called up and fully
paid shares
Opening number of GBP1 ordinary
shares 42,000 42
Opening number of GBP1 ordinary
shares 42,000 42
Own Shares Held
Own shares held are shares purchased by the Company's Employee
Benefit Trust (the "Trust"). The Trust waives its rights to
dividends on the shares held.
The number of shares held by the Trust was 690,481 as at 31
January 2022 held at a historic cost of GBP2.4 million. 43,650 were
withdrawn from the Trust in HY FY23 and issued to all employees of
the Group at nil cost on the date of entry to AIM.
Share Premium
Issuance of the 690,566 ordinary shares in settlement of vesting
of the Electra Share of Value Plan (SoVP) in May 2021 and 3,284,799
ordinary shares in settlement of the Hotter MIP in January 2022
created a GBP5.0 million share premium account.
Capital and Revenue Reserve
The brought forward capital reserve has been combined with the
revenue reserve following Unbound Group Plc ceasing to be an
investment trust.
The revenue reserve is the accumulated net revenue profits and
losses of the Group.
6. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to the owners of the parent company by the weighted
average number of ordinary shares in issue during the period. Own
shares held by the Employee Benefit Trust are eliminated from the
weighted average number of ordinary shares.
Diluted loss per share is calculated by dividing the profit
attributable to the owners of the parent company by the weighted
average number of ordinary shares in issue during the period,
adjusted for the effects of potentially dilutive share options.
Unbound
Group plc
6 months
ended 31st
July 2022
Loss for the period attributable to equity
shareholders (GBP000's) (3,436)
--------------------------------------------- ------------
Weighted average share capital (No.
of shares)
- Issued ordinary shares at beginning
of year 42,258,128
- Effect of own shares held (646,831)
Weighted average shares in issue for
basic earnings per share 41,611,297
Weighted average effect of dilutive options -
Weighted average shares in issue for
diluted earnings per share 41,611,297
--------------------------------------------- ------------
Basic loss per share / (0.08)
Diluted loss per share
--------------------------------------------- ------------
No meaningful comparative is available for the prior period as
the prior year results shown is that for Hotter Shoes, a limited
company with 42,000 shares.
The Group has issued 1,390,398 nil cost LTIP options which are
potentially convertible on vesting. These have not been included in
the calculation of diluted earnings per share because they are
anti-dilutive for the six months ended 31 July 2022.
7. Alternative performance measures
The Group use the below alternative performance measures to
assist shareholders to better understand underlying financial
performance and position, in addition to being used by the Board in
evaluating performance. However, this additional information
presented is not required by IFRS or uniformly defined by all
companies. Certain measures are derived from amounts calculated in
accordance with IFRS but are not in isolation an expressly
permitted GAAP measure. The measures are as follows:
i. Operating loss/profit pre-exceptional items is based on
ordinary operating performance before the impact of exceptional
items. This metric is used by the Board to assess the underlying
performance of the business excluding items that are, in aggregate,
material in size and / or unusual or infrequent in nature.
Exceptional items are disclosed in note 4;
ii. EBITDA pre-exceptional items is ordinary loss before finance
costs, tax, depreciation, amortisation, and exceptional items. This
metric is used as a measure of the Group's underlying cash
generating ability for the period;
Unbound Hotter
Group plc Shoes
6 months 6 months
ended 31st ended 1st
July 2022 August
2021
GBP'000s GBP'000s
----------------------------------- ------------ -----------
Loss on ordinary activities after
tax (2,144) (1,414)
Taxation - (707)
Finance costs 645 284
Depreciation and amortisation 1,966 1,831
Exceptional items 1,152 3,160
----------------------------------- ------------ -----------
EBITDA pre-exceptional items 1,619 3,154
----------------------------------- ------------ -----------
iii. Net debt is cash and cash equivalents less any borrowings
drawn down at the period end, but excluding outstanding lease
liabilities. This metric is used as a measure of the Group's
liquidity.
Unbound Hotter Shoes
Group plc
6 months 6 months
ended 31st ended 1st
July 2022 August 2021
GBP'000s GBP'000s
--------------------------- ------------ -------------
Cash and cash equivalents 2,705 3,425
Borrowings - current (2,000) (19,778)
Borrowings - non current (9,100) -
Net debt (8,395) (16,353)
--------------------------- ------------ -------------
The borrowings in relation to Hotter Shoes (an unconsolidated
view) for the 6 months ended 1st August 2021 represents a related
party loan payable, which was classified as due within one year as
there was no formal agreement.
8. Post balance sheet events
In August 2022, the Company successfully raised GBP3.1 million
(net of expenses) through an equity raise. As a result on 11 August
2022, the Company issued and allotted 20,783,334 Placing Shares,
1,221,281 Subscription Shares and 893,237 Open Offer
accordingly.
The issue price was 15 pence a share which was less than the
nominal value of an ordinary share of 25 pence. The issue of new
shares at a price which is less than the current nominal value is
prohibited under the Companies Act 2006. A Share Capital
Reorganisation was performed accordingly whereby each existing
Ordinary Share was subdivided into 1 ordinary share of GBP0.01 (New
Ordinary Share) and 1 deferred ordinary share of GBP0.24 (Deferred
Share). The interests of existing Shareholders (both in terms of
their economic interest and voting rights) will not be diluted by
the implementation of the Share Capital Reorganisation.
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END
IR ZZGMLRLGGZZM
(END) Dow Jones Newswires
September 20, 2022 02:00 ET (06:00 GMT)
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