Interim Results

https://www.investegate.co.uk/announcement/rns/samarkand-group-plc–smk/interim-results/8526678

4th November 2024

Samarkand Group plc

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

Interim Results

Shift in Strategy to Owned Brands Progressing Well

Samarkand Group plc, (AQSE:SMK), the consumer brand owner and cross border eCommerce distribution services group announces its unaudited interim results for the half year ending 30 September 2024 (“H1 2025”).

As stated in our annual results FY24, our future is as a scale up platform for meaningfully different, high potential, niche brands in the health and healing space, targeted at specific consumer segments with long term growth potential, specifically natural herbal health and beauty and fertility and reproductive health.

The Group has made strong progress in shifting its strategy to focus on growing our portfolio of owned brands (Napiers the Herbalists, Zita West, Nature’s Greatest Secret and Benatural) and in restructuring our China distribution operations. This is reflected in our first half performance with owned brands growing strongly year over year, particularly in the UK, and China related revenues declining as we focus on a smaller portfolio of third-party brands.

Financial Highlights

·     Revenues decreased by 22% to £6.3m (H1 2024: £8.1m)

o  Brand Ownership revenues up 14% to £4.1m (H1 2024: £3.6m)

o  Brand Acceleration revenues of third party brands decreased by 57% to £1.8m (H1 2024: £4.1m)

o  Distribution revenues remained flat at £0.4m (H1 2024: £0.4m)

·     Gross margin decreased 22% to £3.8m (H1 2024: £4.9 m) in line with reduction in revenues

·     Adjusted EBITDA loss* reduced by 10% to £0.6m (H1 2024: £0.7m)

·     Cash and cash equivalents were £0.68m (H1 2024: £1.66m)

*adjusted for restructuring costs, impairment on intangible assets, profit on disposal of Brand Asset and share based payments.

Operational Highlights

·     Strong growth in owned brand revenues with H1 sales for our portfolio of owned brands Napiers the Herbalists, Zita West, Nature’s Greatest Secret and Benatural up 64% in the UK over prior year on a like for like basis

·     Napiers the Herbalists revenue grew over 100% in the UK vs prior year as a result of product innovation, social commerce activities and expansion in the independent sales channel

·     Zita West revenues grew 22% in the UK as a result of new product introductions, upgraded packaging and ongoing investment in education and provision of a high-touch customer experience

·     Performance of recently acquired Optimised Energetics Ltd running ahead of expectations with owned brands Natures Greatest Secret and Benatural growing at over 100% and the flexible manufacturing capacity which is now part of the Group improving our speed to market and ability to respond to fast moving consumer trends

·     Restructuring of China distribution activities and associated costs in the period as we focus on a far smaller portfolio of third-party brands

·     Reduction in Group’s adjusted EBITDA losses by 10% vs prior year and good progress made towards goal of monthly breakeven

David Hampstead, Chief Executive Officer of Samarkand Group, commented: “Our strategic shift to focus on growing our owned, proprietary brands and taking a more selective approach to distributing 3^rd party brands gathered pace in the first half. We are delighted with the growth momentum behind our owned brands and the acquisition of Optimised Energetics has strengthened our portfolio of meaningfully different premium health and healing brands and improved our competitive position with the addition of flexible manufacturing services.

Reaching monthly profitability remains our top priority and I’m pleased to report this strategy is bearing fruit with September bringing a profit of c.£40k at adjusted EBITDA level, a material improvement on previous months. This, together with the significant improvement in our owned brands and ongoing restructuring of our China operations, is moving us closer to that goal. I am confident in the future potential of our brands.”

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