Samarkand Group plc : Interim Results

15 December 2022

 

Samarkand Group plc

("Samarkand", the "Company" or together with its subsidiaries the "Group")

 

Interim Results for the half-year ending 30 September 2022

 

Samarkand Group plc, the cross-border eCommerce technology, services and consumer brand group, announces its unaudited interim results for the half year ending 30 September 2022 (“H1 2023”).

 

David Hampstead, Chief Executive Officer of Samarkand Group, commented: “The first half of this financial year has included some of the most turbulent months in China since the outbreak of the pandemic with continued lockdowns across much of the country and restrictions on the flow of goods. As I described in our last full year results, we adapted quickly to the situation and I’m pleased that at the half-year point our revenues are up against prior year by 15%. Our key objective is to return to profitability and in that regard, we have also made strong progress. Adjusted EBITDA losses reduced by 48% from £2.6m in H1 2022 to £1.3m in H1 2023. We continue to drive further cost efficiencies and improvements in operational leverage across the business whilst maintaining good strategic progress across our other objectives and expect to finish the year within guidance.

 

Our open offer announced in September, received strong support and a further £1.9m of net proceeds was committed from existing shareholders and I thank them for their continued support. The opportunity in front of us remains compelling despite the challenging backdrop we are faced with in the immediate-term, and we continue to make progress towards our strategic goals.

 

Our cross-border eCommerce technology is being adopted by more merchants and from an increasingly diverse base in terms of geography and product category. Our core eCommerce Acceleration business is where we have experienced the most challenges related to supply chain disruption in China yet despite these headwinds, we have achieved revenue growth of 2% and made a material improvement in contribution margins and evolved the portfolio of brands we work with.

 

We release these interims shortly after a peak trading period for the Group known as “Singles Day”. This is a major shopping festival in China that takes place on 11th November. It took place this year during a period of heightened COVID disruption with bonded warehouses used by the Group in lockdown for two weeks in the run-up to the event. The leading eCommerce marketplaces have not released figures on 11/11 however industry analyst have reported that the beauty and skincare category is down on last year. Given the challenges we faced and the direction of industry trends, we are pleased with the performance of our portfolio over the singles day period, which performed in line with our expectations.”

 

Chief Executive’s Review

 

Overview

 

The disruption to supply chains, consumer habits and the economy in China as a result of the pandemic has been widely reported. Prevention measures remain in place and major cities can undergo mass testing and lockdown at short notice. It is likely this will continue for the remainder of the current financial year and possibly beyond, although we remain optimistic about a slowly improving picture.

 

We have adapted well to new ways of working and altered some of our sales channel mix to navigate the ongoing situation. In the first half of this financial year, we have been able to increase revenue and reduce losses. Adoption of our technology has grown through the partnerships we have formed with large international logistics companies and through our own marketing initiatives. Our brand acquisitions performed ahead of acquisition economics and have the added benefit of reducing the Group’s exposure to some of the disruption encountered in China. There will undoubtedly be further challenges to overcome in China but it unquestionably remains a highly attractive market for international brands.

 

Our Market

 

The period in review saw an eight-week lockdown for Shanghai, the Group’s base of operations and which represents a significant customer base. The COVID situation in China continues to make headlines in Western media with widespread testing and lockdowns. That said, the situation in China has steadily been improving with the loosening of restrictions on transport and travel leading to a reduction in logistical issues when compared to the peak earlier in the year. Although the overall situation remains fluid and difficult to predict, we remain positive in the long-term outlook for cross-border eCommerce in the world’s second largest economy and largest eCommerce market. It is frustrating that factors beyond our control are impacting performance, although the resilience of the business has come to the fore and we retain a strong degree of confidence in our medium-term prospects.

 

The Group has, through its past acquisitions, diversified revenues. Revenues from our core eCommerce Acceleration business, both through Nomad Technology and our traditional distribution channels, contributed to 57% of total revenue in H1 2023 vs 65% in H1 2022. Revenues on our owned brands from the UK and international markets contributed 28% for total revenues in H1 2023 vs 20% in H1 2022.

 

We will continue to explore opportunities to leverage our brands, infrastructure and technology outside of China where there are compelling and profitable opportunities to do so.

 

Strategic Progress

 

Recognising the disruption we have faced in China we continue to execute well against the priorities identified at the time of our IPO, with the added imperative of returning to profitability in the next financial year, towards which we are making good progress.

 

eCommerce Acceleration

 

Our eCommerce acceleration business where we operate as the China market development partner for a number of prestige international brands was most impacted by supply side disruptions in China in the first half. We work with a high-quality portfolio of niche prestige brands targeting high end Chinese consumers and maintain a strong funnel of new and emerging brand opportunities to ensure our portfolio remains balanced as our business evolves. Due to the impact of COVID on logistics into China we shifted some of our sales from direct-to-consumer to B2B which reduced the revenue attributable to our Nomad Technology but was necessary to maintain sales.

 

Adoption of our cross-border Checkout technology solution

 

We launched two new enterprise retail merchants in the first half of the year and expect to add new enterprise merchants in the second half. Our partnerships with three major logistics companies (SF Express, FedEx and ECMS) have started to yield client opportunities in multiple territories including South Korea, Japan, Hong Kong, Europe and USA. The timelines for the implementation of these channels have taken longer than anticipated. Sales cycles have also been extended due to the uncertainty surrounding the situation in China.

 

Growth of our owned brands

 

Zita West Products continues to perform ahead of management forecasts. Revenue for H1 revenue has increased 81% compared to prior year. Revenue outside of China, predominantly in the UK, grew at 24% in the first half. We continued to leverage our infrastructure to expand the brand in China adding JD Worldwide and Douyin stores to our existing TMALL Global store and working with key influencers to raise the profile of the brand in China.

 

The acquisition of Napiers the Herbalist was completed in November 2021 and has since been fully integrated into the Group’s eCommerce operations have been consolidated into the Group. The acquisition of Napiers gives the Group an entry into the high-margin beauty category in addition to the existing health and wellbeing portfolio. Since the acquisition of Napiers the Group has developed 12 new beauty and skincare products. These now make up more than 50% of the top 20 products sold and will be launching across the Groups beauty channels in China in the coming months.

 

Path to profitability

 

Moving the business towards profitability is a key objective and we continued to seek opportunities to improve efficiency and operating leverage in the first half. Simplifying our organisational structure as well as reducing our network of offices and expenses has enabled us to lower our run rate cost base in the period.

 

Investment in our Checkout DTC technology remains at a high level in relation to the income generated from it to date and expanding the commercialisation of our solution remains a top priority for the Group.

 

Outlook

 

Current indications for the second half are that the underlying trends from the first half are likely to continue as is the volatility in the China market. The focus for the remainder of the financial year and into the next is for the Group to reach a self-funding situation which we are well on the path towards.

 

Our acquisitions have diversified our revenues, with revenues from our eCommerce Acceleration business decreasing and revenues from our UK and international markets increasing. The Company has been forged in the world’s most advanced, competitive and innovative eCommerce market that is China. We are committed to realising the opportunity in China while recognising that we are well positioned to further exploit emerging opportunities in new markets through our technology, infrastructure and the partnerships we’ve built over the last 5 years.

 

FINANCIAL REVIEW

Overview

 

During the period the Group’s revenues increased by 15% to £8.3m (H1 2022: £7.2m) with gross margin decreasing to 54% (H1 2022: 57%).

 

Revenues from our core activities, Brand ownership is up 36% to £3.1m (H1 2022: £2.2m), Nomad technology is down 10% to £2.7m (H1 2022: £3.0m) with revenues from our distribution business increasing 29% to £2.3m (H1 2022: £1.8m). The disruption caused by the widespread COVID lockdowns impacted our ability to fulfil orders to China from our UK warehouse, which impacted our Nomad technology revenues, the Group reacted quickly and effectively by moving inventory to our Bonded Warehouses and increasing sales through our existing B2B distribution channels which were less affected by the lockdowns.

 

The Group’s gross margin has decreased from H1 2022 from 57% to 54% but has improved from those levels achieved in FY 2022. The change in gross margin is a result of changes in our product mix, sales channels and supply chain pricing pressures not all which could be passed on to our customers.

 

Adjusted EBITDA loss improved by 48% from £2.6m to £1.4m.

 

 

 

Operating expenses

 

Selling and distribution expenses decreased to 28% (H1 2022: 46%) of revenue, as a result of more efficient and targeted advertising spends and product pricing changes to adapt to the increasing distribution and inflationary costs seen in the last 6 months.

 

Administrative expenses, excluding one-off costs such share-based payment expense, acquisition and restructuring related costs, decreased to 42% (H1 2022: 49%) of revenue as a result of tighter controls over other administrative costs. Staff costs have remained the same at £2.5m (H1 2022: £2.5m) due to the timing of reductions. The full effect will be of these actions will be reflected in the full year results. The number of employees at 30 September 2022 was 117 (30 September 2021: 133), down from 158 at 31 March 2022.

 

Earnings per share

 

Basic and diluted loss per share was 3.9p and 3.8p per share respectively (H1 2022: 6.5p per share).

 

Net cash

 

At the period end, the Group’s net cash position was £0.9m (H1 2022: £7.9m), excluding the IFRS 16 lease liabilities, net cash was £1.6m (H1 2022: £8.8m). The Group’s reduction in staff and operational costs has resulted in 51% improvement in operating cashflow from negative £4.3m to £2.0m. On the 21 September 2022, the Company raised gross proceeds of £2.0m pursuant to a Placing and Open Offer dated 5 September 2022. Furthermore, acquisitions in H2 2022 and the payments of deferred consideration in H1 2023 reduced cash balance by £1.5m and £0.1m respectively.

 

Inventories

 

The Group reduced gross inventories from £4.4m at 31 March 2022 to £3.4m at 30 September 2022. Improvements in inventory management and ordering process has resulted in the Group holding lower inventory levels. To reduce complexity, the Group focused on reducing the breath of inventory in its UK and bonded warehouses.

 

Depreciation and amortisation

 

The total depreciation and amortisation costs were £0.2m and £0.3m respectively (H1 2022: £0.2m and £0.2m). The Group continued to invest in its Nomad Technology platform with a total of £0.6m (H1 2022: £0.5m) development costs capitalised during the period.

 

Adjusted EBITDA loss

 

Adjusted EBITDA loss improved by 48% from £2.6m to £1.4m. The improvements in adjusted EBITDA loss is driven by the decrease in staff cost and operating costs.

 

Condensed Consolidated Statement of Comprehensive Income

For the six-month period ended 30 September 2022

 

		Period ended 30 September 2022		Period ended 30 September 2021		Year ended 31 March 2022
		(Unaudited)		(Unaudited)		(Audited)
	Notes	£		£		£
Revenue	3	8,254,207		7,167,152		16,576,228
Cost of sales	3	(3,814,675)		(3,061,619)		(8,226,260)
Gross profit		4,439,532		4,105,533		8,349,968
Selling and distribution expenses		(2,325,694)		(3,262,723)		(7,056,415)
Administrative expenses	4	(3,776,853)		(3,917,370)		(8,183,996)
Adjusted EBITDA		(1,392,232)		(2,635,916)		(6,236,249)
Repayment of share option plan	5	-		(315,540)		(306,579)
Acquisition and restructuring costs	5	(157,031)		(123,104)		(347,615)
Share based payment expense		(113,752)		-		-
EBITDA		(1,663,015)		(3,074,560)		(6,890,443)
Depreciation and amortisation		(521,189)		(362,561)		(786,639)
Operating loss		(2,184,204)		(3,437,121)		(7,677,082)
Finance income		64,539		86		86
Finance costs		(59,529)		(91,757)		(171,455)
Loss before taxation		(2,179,194)		(3,528,792)		(7,848,451)
Taxation		13,271		13,149		141,499
Loss after taxation		(2,165,923)		(3,515,643)		(7,706,952)
Other comprehensive income:
Exchange differences on translation of foreign operations
		(3,333)		13,435		(23,234)
Items that may be reclassified to profit and loss in subsequent periods
		(3,333)		13,435		(23,234)
Total comprehensive loss for the period		(2,169,256)		(3,502,208)		(7,730,186)
Loss attributable to:
Equity holders of the Company		(2,122,404)		(3,506,624)		(7,617,081)
Non-controlling interests		(43,519)		(9,019)		(89,871)
		(2,165,923)		(3,515,643)		(7,706,952)
Loss per share (basic)	6	(0.0387)		(0.0648)		(0.1399)
Loss per share (diluted)	6	(0.0383)		(0.0648)		(0.1399)
Comprehensive loss attributable to:
Equity holders of the Company		(2,125,737)		(3,493,189)		(7,640,315)
Non-controlling interests		(43,519)		(9,019)		(89,871)
		(2,169,256)		(3,502,208)		(7,730,186)

Condensed Consolidated Statement of Financial Position

For the six-month ended 30 September 2022

		30 September 2022		30 September 2021		31 March 2022
		(Unaudited)		(Unaudited)		(Audited)
	Notes	£		£		£
ASSETS
Intangible assets	7	7,265,902		4,246,664		7,011,236
Property, plant and equipment		236,470		233,223		243,417
Right-of-use assets		492,649		724,621		608,635
Non-current assets		7,995,021		5,204,508		7,863,288
Inventories	8	2,618,636		3,547,425		3,720,248
Trade receivables		2,125,136		1,790,874		1,512,702
Corporation tax recoverable		120,251		52,846		113,710
Other receivables and prepayments		785,407		791,160		1,012,371
Cash and cash equivalents		3,054,184		10,389,765		4,049,118
Current assets		8,703,614		16,572,070		10,408,149
Total assets		16,698,635		21,776,578		18,271,437
Trade and other payables		1,709,326		3,308,947		3,597,110
Accrued liabilities		976,484		655,722		566,266
Deferred revenue		324,439		21,618		214,383
Borrowings		56,701		239,896		62,092
Right-of-use lease liabilities		266,823		257,274		262,001
Total current liabilities		3,333,773		4,483,457		4,701,852
Right-of-use lease liabilities		323,341		590,159		458,352
Borrowings		1,394,412		1,367,144		1,390,035
Deferred tax liability		356,963		269,673		370,590
Accrued liabilities		512,441		-		512,441
Total non-current liabilities		2,587,157		2,226,976		2,731,418
Total liabilities		5,920,930		6,710,433		7,433,270
Net assets		10,777,705		15,066,145		10,838,167
EQUITY
Share capital	9	583,581		547,148		547,148
Share premium		22,954,412		21,022,958		21,022,958
Merger relief reserve		(2,063,814)		(2,063,814)		(2,063,814)
Accumulated loss		(10,669,157)		(4,436,296)		(8,546,753)
Currency translation reserve		(7,766)		5,168		(31,501)
Share option reserve		113,839		-		-
Total equity attributable to parent		10,911,095		15,075,164		10,928,038
Non-controlling interest		(133,390)		(9,019)		(89,871)
Total equity		10,777,705		15,066,145		10,838,167

 

 

Condensed Consolidated Statement of Changes in Equity

For the six-month period ended 30 September 2022

 

	Share		Merger relief reserve	Share option reserve	Currency		Non-controlling
	Capital	Share			Translation	Accumulated		Total
		Premium			reserve	loss	interests	equity
	£	£	£	£	£	£	£	£
Balance at 1 April 2022	547,148	21,022,958	(2,063,814)	-	(31,501)	(8,546,753)	(89,871)	10,838,167
Loss after taxation	-	-	-	-	-	(2,122,404)	(43,519)	(2,165,923)
Other comprehensive loss	-	-	-	-	23,735	-	-	23,735
Total comprehensive income/(loss) for the period	-	-	-	-	23,735	(2,122,404)	(43,519)	(2,142,188)
Shares issued on acquisition net of fees	458	29,042	-	-	-	-	-	29,500
Shares issued on open offer net of fees	35,975	1,902,412	-	-	-	-	-	1,938,387
Share based payments	-	-	-	113,839	-	-	-	113,839
	36,433	1,931,454	-	113,839	-	-	-	2,081,726
Balance at 30 September 2022	583,581	22,954,412	(2,063,814)	113,839	(7,766)	(10,669,157)	(133,390)	10,777,705
Balance at 1 April 2021	516,190	17,412,900	(2,063,814)	-	(8,267)	(929,672)	-	14,927,337
Loss after taxation	-	-	-	-	-	(3,506,624)	(9,019)	(3,515,643)
Other comprehensive loss	-	-	-	-	13,435	-	-	13,435
Total comprehensive income/(loss) for the period	-	-	-	-	13,435	(3,506,624)	(9,019)	(3,502,208)
Shares issued net of transaction fees	30,958	3,610,058	-	-	-	-	-	3,641,016
	30,958	3,610,058	-	-	-	-	-	3,641,016
Balance at 30 September 2021	547,148	21,022,958	(2,063,814)	-	5,168	(4,436,296)	(9,019)	15,066,145

Condensed Consolidated Statement of Cash Flows

For the six-month period ended 30 September 2022

 

	30 September 2022		30 September 2021		31 March 2022
	(Unaudited)		(Unaudited)		(Audited)
	£		£		£
Cash flows from operating activities
Loss after taxation	(2,165,923)		(3,515,643)		(7,706,952)
Cash flow from operations reconciliation:
Depreciation and amortisation	521,189		362,561		786,639
Finance costs	59,529		91,757		60,182
Finance income	(64,539)		(86)		(86)
Net exchange differences	64,531		(31,386)		-
Share option expense	113,752		-		-
Income tax credit	(13,271)		-		(141,499)
Working capital adjustments:
Inventories	1,101,612		(1,468,921)		(1,544,851)
Trade and other receivables	(385,470)		(1,012,158)		(780,763)
Trade and other payables	(1,257,504)		1,318,496		1,258,687
Cash generated used in operating activities	(2,026,094)		(4,255,380)		(8,068,643)
Interest paid	(11,243)		-		-
Corporation tax paid	(6,897)		(42,898)		20,803
Net cash generated used in operating activities	(2,044,234)		(4,298,278)		(8,047,840)
Cash flows from investing activities
Purchase of property, plant and equipment	(44,218)		(117,661)		(175,151)
Proceeds from disposal of property, plant and equipment	1,925		-		-
Payment of intangible assets	(609,214)		(499,253)		(1,228,096)
Acquisition of subsidiary, net of cash acquired	-		(1,829,993)		(3,341,477)
Payment of deferred consideration	(80,000)		-		-
Interest received	8		86		86
Net cash used in investing activities	(731,499)		(2,446,821)		(4,744,638)
Cash flows from financing activities
Proceeds from issue of share capital (net of fees)	1,937,890		3,141,016		3,141,016
Repayment of right-of-use lease liabilities	(142,181)		(142,177)		(252,641)
Repayment of borrowings	(37,315)		(483,505)		(630,411)
Net cash from financing activities	1,758,394		2,515,334		2,257,964
Net change in cash and cash equivalents	(1,017,339)		(4,229,765)		(10,534,514)
Cash and cash equivalents at beginning of period	4,049,118		14,606,867		14,606,867
Effect of FX changes on cash and cash equivalents	22,405		12,663		(23,235)
Cash and cash equivalents at end of period	3,054,184		10,389,765		4,049,118

 

Notes to the Consolidated Financial Statements
For the period ended 30 September 2022

1. General information

Samarkand Group plc was incorporated in England and Wales on 12 January 2021. The address of its registered office is Unit 13 & 14 Nelson Trading Estate, The Path, Merton, London SW19 3BL.

2. Basis of preparation and measurement

 

(a)       Basis of preparation

The condensed consolidated interim financial statements of Samarkand Group plc and its subsidiaries (together referred to as the “Group”), comprises the results of the Group for the 6 months ended 30 September 2022. These interim financial statements are not audited nor reviewed by independent auditors, were approved by the board of directors on 14 December 2022.

The financial information in this interim report has been prepared in accordance with UK adopted international accounting standards. The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 March 2022 and which will form the basis of the 2022 financial statements.

The financial information for the year ended 31 March 2022 included in these financial statements does not constitute the full statutory accounts for that year. The Annual Report and Financial Statements for 2022 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2022 was (i) unqualified, although included an emphasis of matter in respect of material uncertainty around going concern and (ii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Unless otherwise stated, the financial statements are presented in Pounds Sterling (£) which is the currency of the primary economic environment in which the Group operates.

Transactions in foreign currencies are translated into £ at the rate of exchange on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date. The resulting gain or loss is reflected in the “Consolidated Statements of Comprehensive Income” within either “Finance income” or “Finance costs”.

The financial statements have been prepared under the historical cost convention except for certain financial instruments that have been measured at fair value.

The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The directors of Samarkand Group plc have reviewed the Group’s overall position and outlook and are of the opinion that the Group is sufficiently well funded to be able to operate as a going concern for at least the next twelve months from the date of approval of these financial statements.

Going Concern

For the year ended 31 March 2022, the Group faced difficult trading conditions, with external factors including widespread COVID lockdowns in China causing high levels of disruptions to the Group’s operations. These conditions extended through H1 2023 with lockdowns continuing across much of the country restricting the flow of goods and people in many areas. The Group’s actions in Q4 2022 and its continued cost actions throughout FY 2023, have resulted in a 48% reduction in adjusted EBITDA losses from £2.6m to £1.4m.

 

On 21 September 2022, the Company raised gross proceeds of £2.0m pursuant to a Placing and Open Offer dated 5 September 2022, which will enable the Group to meet its obligations. The combined effect of the raise, the realisation of cost actions taken in Q4 plus additional planned cost actions in FY 2023 have led the Directors to conclude that the Company will continue to operate for a period of at least 12 months from the date of approval of these interim financial statements. It should be noted, that should market conditions deteriorate again, this could give rise to a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern.

 

(b)      Basis of consolidation

The Consolidated Group financial statements comprises the financial statements of Samarkand Group plc and its subsidiaries.

A subsidiary is defined as an entity over which Samarkand Group plc has control. Samarkand Group plc controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

Intra-group transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests.

 

3. Segmental analysis

An analysis of the Group’s revenue and cost of sales is as follows:

 

	Unaudited		Unaudited		Audited
	30 September 2022		30 September 2021		31 March 2022
Revenue analysed by class of business:	£		£		£
Brand ownership	3,055,517		2,246,237		4,509,979
Nomad technology	2,727,147		3,035,286		7,480,941
Distribution	2,325,534		1,803,700		4,447,990
Other	146,009		81,929		137,318
Total revenue	8,254,207		7,167,152		16,576,228
Cost of sale by business unit:	£		£		£
Brand ownership	1,292,910		842,751		1,991,401
Nomad technology	940,036		1,024,792		3,240,269
Distribution	1,579,483		1,192,414		2,992,880
Other	2,246		1,662		1,710
Total cost of sale	3,814,675		3,061,619		8,226,260

 

 

Segment assets:

The non-current assets of the Group are not measured or reported internally on a segmental basis as they are not considered to be attributable to any specific business segment.
 

	Unaudited		Unaudited		Audited
	30 September 2022		30 September 2021		31 March 2022
Revenue by geographical destination:	£		£		£
UK	3,861,056		2,380,437		4,917,082
China	4,256,910		4,743,191		11,606,545
Rest of the World	136,241		43,524		52,601
Total revenue	8,254,207		7,167,152		16,576,228

 

 

4. Expenses by nature

An analysis of the Group’s expenses by nature is as follows:

		Unaudited		Unaudited		Audited
		30 September 2022		30 September 2021		31 March 2022
Administrative expenses:		£		£		£
Property costs		194,963		181,083		393,714
Staff costs		2,478,415		2,451,513		5,330,434
Professional fees		303,055		313,547		714,495
Other		529,637		532,583		1,091,159
Repayment of share option plan	(a)	-		315,540		306,579
Acquisition and restructuring costs	(b)	157,031		123,104		347,615
Share based payment charge		113,752		-		-
Total administrative expenses		3,776,853		3,917,370		8,183,996

 

1. (a) Recompense of Share option plan
2. (b) Acquisition costs relate to the costs incurred in relation to the acquisitions in the period and restructuring costs are as a result of corrective actions taken in light of the challenges presented by the disruptions

5. Adjusted EBITDA

 

EBITDA and Adjusted EBITDA are non-GAAP measures and exclude exceptional items, depreciation, and amortisation. Exceptional items are those items the Group considers to be non-recurring or material in nature that may distort an understanding of financial performance or impair comparability.

 

Adjusted EBITDA is stated before exceptional items as follows:

	Unaudited		Unaudited		Audited
	30 September 2022		30 September 2021		31 March 2022
	£		£		£
Repayment of share option plan	-		315,540		306,579
Acquisition and restructuring costs	157,031		123,104		347,615
Share based payment charge	113,752		-		-
	270,783		438,644		654,194

6. Loss per share

 

	Unaudited	Unaudited	Audited
	30 September 2022	30 September 2021	31 March 2022
	£	£	£
Basic loss per share	(3.87) pence	(6.48) pence	(13.99) pence
Diluted loss per share	(3.83) pence	(6.48) pence	(13.99) pence
Earnings
Loss for the purpose of basic and diluted earnings per share	(2,122,404)	(3,506,624)	(7,617,081)
Number of shares
Basic weighted average number of shares in issue	54,923,137	54,140,377	54,419,885
Potentially dilutive share options	641,345	-	-
Dilutive weighted average number of shares in issue	55,564,482	54,140,377	54,419,885

 

7. Intangible assets

 

	Development costs	Trademarks	Brands	Goodwill	Website	Total
	£	£	£	£	£	£
Cost
At 1 April 2022	2,330,437	99,596	2,484,091	2,829,718	70,198	7,814,040
Additions	598,251	10,180	-	-	783	609,214
At 30 September 2022	2,928,688	109,776	2,484,091	2,829,718	70,981	8,423,254
Amortisation
At 1 April 2022	493,548	32,503	271,680	-	5,073	802,804
Amortisation charge	257,229	6,785	80,980	-	9,554	354,548
At 30 September 2022	750,777	39,288	352,660	-	14,627	1,157,352
Net book value
At 31 March 2022	1,836,889	67,093	2,212,411	2,829,718	65,125	7,011,236
At 30 September 2022	2,177,911	70,488	2,131,431	2,829,718	56,354	7,265,902
	Development costs	Trademarks	Brands	Goodwill	Website	Total
	£	£	£	£	£	£
Cost
At 1 April 2021	1,190,555	70,372	459,916	68,042	-	1,788,885
Acquired through business combinations	-	8,857	1,133,915	1,358,497	-	2,501,269
Additions	491,057	8,196	-	-	-	499,253
At 30 September 2021	1,681,612	87,425	1,593,831	1,426,539	-	4,789,407
Amortisation
At 1 April 2021	163,067	13,345	149,492	-	-	325,904
Acquired through business combinations	-	7,661	-	-	-	7,661
Charge for the year	137,964	5,341	65,873	-	-	209,178
At 30 September 2021	301,031	26,347	215,365	-	-	542,743
Net book value
At 31 March 2021	1,027,488	57,027	310,424	68,042	-	1,462,981
At 30 September 2021	1,380,581	61,078	1,378,466	1,426,539	-	4,246,664

 

 

 

8. Inventories

		30 September 2022		30 September 2021		31 March 2022
		£		£		£
Finished goods		3,363,195		3,664,533		4,394,080
Provision for obsolescence		(744,559)		(117,108)		(673,832)
Total inventories		2,618,636		3,547,425		3,720,248
Cost of inventory recognised in profit and loss		3,814,675		3,061,619		8,226,260

 

 

9. Share capital

		Number of shares		Share capital
	Note	No.		£
At 1 April 2021
		51,618,966		516,190
Shares issued on 4 May 2021		357,977		3,580
Shares issued on 10 May 2021		2,737,840		27,378
At 30 September2021 and 31 March 2022		54,714,783		547,148
Shares issued on 15 August 2022	(a)	45,802		458
Shares issued on 21 September 2022	(b)	3,597,616		35,975
At 30 September 2022		58,358,201		583,581

 

The following table summarises the share capital of Samarkand Group plc for the periods presented:

 

1. On 15 August 2022, Samarkand Group plc issued 45,802 new ordinary shares of £0.01 each as part of the deferred consideration paid, for the acquisition of The Edinburgh Herbal Dispensary Limited.
2. On 21 September 2022, Samarkand Group plc issued 3,597,616 new ordinary shares of £0.01 each raising gross proceeds of £1,978,688 pursuant to the Open Offer set out on the 5 September 2022.

10. Notes to the statements of cash flows

 

Net debt reconciliation:

	Opening balances	Cash flows	Foreign exchange movements	Closing balances
	£	£	£	£
Six-month period ended 30 September 2022
Cash and cash equivalents	4,049,118	(1,017,339)	22,405	3,054,184
Right of use lease liabilities	(720,353)	130,189	-	(590,164)
Borrowings	(1,452,127)	1,014	-	(1,451,113)
Totals	1,876,638	(886,136)	22,405	1,012,907
Six-month period ended 30 September 2021
Cash and cash equivalents	14,606,867	(4,229,765)	12,663	10,389,765
Right of use lease liabilities	(972,994)	125,561	-	(847,433)
Borrowings	(2,082,538)	475,498	-	(1,607,040)
Totals	11,551,335	(3,628,706)	12,663	7,952,670

 

For more information, please contact:

 

Samarkand Group plc	Via Alma PR
David Hampstead, Chief Executive Officer Eva Hang, Chief Financial Officer	http://samarkand.global/
VSA Capital – AQSE Corporate Adviser and Broker	+44(0)20 3005 5000
Andrew Raca, Pascal Wiese (Corporate Finance) Andrew Monk, David Scriven (Corporate Broking)	IPO@vsacapital.com
Alma PR	+44(0)20 3405 0213
Josh Royston Lily Soares Smith Joe Pederzolli	samarkand@almapr.co.uk

 

 

Notes to Editors 

 

Samarkand is a cross-border eCommerce technology and retail group focusing on connecting International Brands with China, the world's largest eCommerce market. The Group has developed a proprietary software platform, the Nomad platform, which is integrated across all necessary touchpoints required for eCommerce in China including eCommerce platforms, payments, logistics, social media and customs. The Nomad platform is the foundation on which the Group's Nomad technology and service solutions are built. The core products include Nomad Checkout, Nomad Storefront and Nomad Distribution. 

 

Founded in 2016, Samarkand is headquartered in London, UK with offices in Shanghai.

 

For further information please visit https://www.samarkand.global/