REG - Huddled Group PLC - Full Year Results for Year Ended 31 December 2023
13/05/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240513:nRSM0663Oa&default-theme=true
RNS Number : 0663O Huddled Group PLC 13 May 2024
----3
13 May 2024
Huddled Group plc
("Huddled", the "Company" or the "Group")
Full Year Results for the Year Ended 31 December 2023
Huddled Group plc (AIM:HUD), the group focused on building a portfolio of
e-commerce brands, is pleased to announce its audited full year results for
the year to 31 December 2023, in which the group delivered a profit after tax
from total operations of £13.0m.
Background
During the year, the Group revised its strategy for growth following the sale
of its Immotion and Uvisan businesses, the return of £12.7m to shareholders
via a share buyback programme, and the acquisition of Discount Dragon,
underpinning the Company's new strategy to build a portfolio of high-growth
e-commerce brands. Such events limit the relevance of financial comparisons to
the prior period.
Discount Dragon, the Group's main e-commerce brand is a direct-to-consumer
e-commerce business, which predominantly sells surplus FMCG goods at a
significant discount. As well as offering customers a cheaper alternative for
branded goods, Discount Dragon's range includes short-dated and surplus
products which helps prevent waste in the food supply chain.
Discount Dragon FY2023 highlights:
Following its acquisition in October 2023, Discount Dragon has continued its
growth trajectory:
· Post-acquisition revenue of £1.6m (17 October - 31 December
2023)
· Q4 2023 revenue increased by 37.3% to £1.8m versus £1.3m in Q3
2023.
· Q4 2023 orders placed increased by 18.3% to 48.5k versus 41.0k in
Q3 2023.
· Q4 2023 average order value ("AOV") increased by 15.9% to £35.96
versus £31.03 in Q3 2023.
Discount Dragon post period highlights:
· Q1 2024 unaudited revenue increased by 21.3% to £2.1m versus
£1.8m in Q4 2023.
· Q1 2024 orders placed increased by 31.4% to 63.8k versus 48.5k in
Q4 2023.
· Q1 2024 unaudited AOV decreased 8.8% to £32.80 versus £35.96 in
Q4 2023 following the introduction of more generous incentives for new
customers placing an order in the period (AOV in April 2024 recovered,
exceeding £36.00 following the refinement of these incentives and the
increase in the minimum order value to £30 inclusive of VAT)
· Q1 2024 new customers placing an order for the first time
increased by 74.4% to 20.6k versus 11.8k in Q4 2023.
FY 2023 Group financial highlights:
· Profit after tax from total operations for the period of £13.0m
(2022: £0.7m loss)
· Cash proceeds of £20.4m from the sale of the Immotion and Uvisan
businesses, (inclusive of the $1.25m loan note repaid February 2024 and net of
expenses)
· Share buyback programme returned £12.7m to shareholders in the
period
· Completion of Discount Dragon acquisition in October 2023
· Revenue from continuing operations (constituting Discount Dragon
and Let's Explore) of £2.4m, with the vast majority falling in the last
quarter of the year
FY 2023 Group post period highlights:
· Completion of Food Circle Supermarket acquisition
· Let's Explore partnership with Wicked Vision Limited
Martin Higginson, Chief Executive Officer of Huddled Group PLC, commented:
"Generating a profit of £13.0m in 2023 allowed us to return significant funds
to shareholders as well as enabling us to transition into a group focused on
developing high growth e-commerce brands, which is a market in which we see
great potential.
"Discount Dragon has continued to deliver solid growth both in terms of
revenue and customer numbers since we acquired the business. At a challenging
time for consumers, the offering is extremely relevant, and we feel that being
able to offer great products, including many of the biggest brands at
significantly discounted prices, delivered to the customer's door, will have
wide appeal. Alongside this, we are playing our part in reducing food waste by
offering short-dated, mispackaged or other surplus stock as part of our core
range.
"Delivering on our strategy of building a Group of high growth e-commerce
businesses, the acquisition of Food Circle Supermarket bolsters our position
in the online surplus food sector and introduces a broader range of customers
to the Group, with a specific focus on health and nutrition, which is a
fast-growing space in the sector.
"Supported by a strong balance sheet, the next 12 months will be a year of
cash investment in the key areas of marketing, stock and fulfilment. We are
confident this investment will continue to stimulate growth and deliver long
term shareholder value."
Enquiries:
For further information please visit www.huddled.com/investors, or contact:
Huddled Group plc investors@huddled.com
Martin Higginson
David Marks
Daniel Wortley
Zeus (Nominated Adviser and Sole Broker) Tel + 44 (0) 203 829 5000
Nick Cowles, James Hornigold, Alex Campbell-Harris (Investment Banking)
Dominic King (Corporate Broking)
Alma Strategic Communications (Financial PR) huddled@almastrategic.com
Rebecca Sanders-Hewett
Sam Modlin
Kieran Breheny
Chairman's Statement
The year of 2023 was a year of significant change for the Group. The sale of
the Immotion and Uvisan divisions for £20.4m 1 allowed us to not only
deliver a significant return of capital to shareholders, it also gave us the
opportunity to pivot the business into a fully-fledged e-commerce group.
Building a group of high growth e-commerce businesses
The acquisition of Discount Dragon in October 2023 was a pivotal milestone for
the Company. Discount Dragon is a direct-to-consumer e-commerce business,
which focuses on the sale of branded FMCG, predominantly dry and tinned
groceries and beverages. Its core focus is selling surplus, end of line,
mispackaged, and short-dated items at significant discounts to full retail
prices. By procuring and reselling surplus goods, Discount Dragon not only
offers customers a cheaper alternative, it helps to tackle the issue of waste
in the food supply chain.
The market for discounters has, over the last few years, been expanding
significantly. According to the Nationwide Spending Report, UK customers spent
41% more with discount retailers in January 2024 compared to the previous
year. Additionally, according to Mintel's UK Food and Non-Food Discounters
report 2023, 90% of UK consumers now shop with food discount retailers. While
much of this market share growth has been achieved through the rapid roll-out
of high street stores by major retailers, according to IBISWorld the online
grocery market, whilst still fragmented, has continued to grow at 12% per
annum from 2018, reaching annual revenues of £20.6bn in 2023. Furthermore, in
the twelve-week period to 14 April 2024 Ocado was named as the fastest growing
supermarket in the UK which, in our opinion, signals that the demand for home
delivered groceries is on the increase.
The rapid growth in both revenue and customer numbers since the acquisition of
Discount Dragon gave us the confidence to acquire Food Circle Supermarket in
April 2024, a business with significant growth potential in a niche sector and
further strengthening our position in the online surplus food space. In the
coming weeks we will rebrand this business 'Nutricircle' as we hone its focus
further into the nutritional eating market.
As for our Let's Explore business, we are pleased to have agreed a partnership
with Wicked Vision Limited ("Wicked Vision"), the key wholesale distributor of
our Vodiac products since 2022. The agreement will see a jointly owned
business which benefits from the end-to-end revenue and margin from the sales
of both Vodiac and Let's Explore products. The partnership will also involve
Wicked Vision's team taking operational control on a day-to-day basis,
allowing us to focus more of our time on building the Discount Dragon and
Nutricircle brands, as well as looking for additional strategic acquisitions.
The dedication of our teams across the Group during the year cannot be
overstated, and my thanks go to the wider team for all of their efforts, as we
enter the next, exciting phase of our journey.
Looking ahead with confidence
Looking to the year ahead, we are excited to continue to build on the progress
made in 2023. FY24 is set to be a year of continued investment in the three
pillars the executive team outlined some months ago: the product range,
marketing and fulfilment. In the short to medium term this investment will
result in losses for the business, but we are confident this investment will
drive growth and ultimately deliver a sizeable profitable business in an
exciting sector.
We will be looking to improve our stock range both in terms of depth and
breadth, giving customers more choice and opportunities to purchase.
On the marketing side we have scaled our marketing effort through our
data-driven growth strategy and seen the number of new purchasing customers
increase by some 74% against Q4 2023, underpinning our focus on growth and
investment in this area.
We have now located a potential new warehouse and we are working to move our
operations there as soon as possible. This will allow us to scale our business
further and to operate more efficiently.
In addition, we are investing in the further development of our website to
ensure it offers both a first-class experience for customers, as well as
giving us flexibility in running promotions and enhancing customer spend, thus
improving lifetime values.
We have fast growing businesses in a growth sector, and cash on the balance
sheet. As such I believe the Group is in a good position to deliver against
our plans and drive shareholder value.
Chief Executive's Review
This was a transformational period, in which we pivoted the Group towards
growing our presence in the e-commerce market, whilst returning substantial
value to shareholders.
A transaction that delivered significant returns to shareholders
Our decision to sell the Immotion business brought in over £20m, creating a
substantial profit, and delivering a significant return of £12.7m to
shareholders. Following the return of cash to shareholders, we retained
sufficient cash to develop the Group into a business that we believe can drive
significant further value for shareholders.
Our transition to high growth
Having looked at several potential businesses, we entered into a due diligence
process on Discount Dragon and completed the acquisition of the business in
October 2023. Since acquisition, we have overseen the rapid growth of revenue
and customers numbers, underpinning our decision to focus our efforts on
building out a portfolio of e-commerce businesses. The focus during 2024 will
be scaling the Discount Dragon business further and driving it towards
profitability.
We believe Discount Dragon is well positioned to benefit from three key market
trends: the growth in popularity of discount retailers, the desire for home
delivered goods, and consumers becoming increasingly conscious of the
environmental impact of food waste.
In Q4 2023 Discount Dragon's revenue increased sharply by 37.3% to £1.8m.
This growth continued into 2024 with Q1 2024 unaudited revenues being 21.3% up
on Q4 2023 at £2.1m. Average order value in Q1 2024 reduced slightly to circa
£32.80, as a result of testing introductory discounts for new customers.
These incentives have since been amended and the minimum order value on the
website has been increased to £30 (inclusive of VAT) and as a result we have
seen unaudited AOV rebound to more than £36 in April 2024.
Driving growth for the long term
As outlined when we acquired the business there are three interdependent
foundation stones on which we need to build: customer acquisition and
retention, breadth and depth of stock, and fulfilment.
Customer acquisition and retention
We have invested heavily in both the team and technology to help us drive this
area. Our business intelligence platform delivers real time data thus allowing
us to hone our customer communication strategy with a view to improving both
retention and the lifetime value of our customers.
We are encouraged by the performance of our acquisition marketing, adding some
20.6k new customers in Q1 2024. This has given us the confidence to test other
acquisition channels such as teleshopping and print advertising.
We are pleased to have come to an agreement with ShopOnTV, a late-night
teleshopping show on ITV1. Following successful airings in April 2024, it has
been agreed that Discount Dragon will now become a regular weekly feature on
the show.
In the initial trial, viewers were educated about the offers available along
with the Group's core values around surplus stock and waste. Viewers of the
ITV1 channel will now be able to tune in weekly to see a selection of special
offers, alongside product displays and features of the current stock range. We
will continue to strive for excellence in this area as we use data and
insights to repeatedly drive people to our site.
Stock
With the benefit of the Group balance sheet, our stock buying has improved
considerably over the last six months and we have developed a number of
important new supplier relationships. We have a considerably greater range
now being offered to customers and will seek to grow this further and maintain
consistency across key categories. Growth in sales has allowed us to buy
deeper which in turn can help us improve margins. We believe a wider range and
greater depth of stock will have a positive impact on both AOV and the
frequency at which our customers return.
Warehouse capacity
With a rapidly growing customer base comes fulfilment challenges, but our team
has risen to these challenges. With our current growth trajectory we are
cognisant of the need for a move to a new warehouse facility and to this end
we have identified a potential option which we hope to relocate to as soon as
possible. We are being assisted by a specialist consultancy who are helping us
in design and internal logistics to ensure a smooth transition as well as
optimising the new setup.
Broadening our group of e-commerce brands
The acquisition of Food Circle Supermarket Limited ("Food Circle"),
post-period end, was a further step in building a portfolio of e-commerce
brands and further underpins our focus on the online surplus food market. Food
Circle is an online, direct-to-consumer retailer specialising in discounted
goods for the health and nutrition market, such as high-protein bars, whey
powders, and other energy products. Food Circle serves customers across the UK
and stocks well-known brands within this market, including Huel, Nakd, Grenade
and Optimum Nutrition, amongst others. A rebranding of the business to
'Nutricircle' is underway, which we feel better reflects its offering.
Founded in 2018 by Paul Simpson and James Barthorpe, who remain in their roles
with the business, Food Circle has seen strong growth since inception and
delivered £1.4m of revenue and a small net loss for the year ended 31
December 2023 (unaudited). Food Circle's trading to date is underpinned by
strong market drivers in health foods, the demand for direct delivery, and a
group of highly loyal customers.
Additional capital will be provided to further develop the business, and
potential warehousing and marketing synergies make this a perfect fit for the
Group. Early signs are very encouraging with sales showing a notable increase
since acquisition. We are confident this will be highly accretive, and that
the team running it will be a great addition to our organisation.
Driving growth in Let's Explore
Let's Explore delivered revenues of £0.8m for FY23 (FY22: £0.8m). This was
generated from two primary sources, firstly a wholesale agreement on Vodiac
with Wicked Vision, and secondly a direct-to-consumer sales strategy on the
Let's Explore range, predominantly through Amazon.
As referenced in our trading update in January 2024, sales of our Vodiac
product have been encouraging with circa 30,000 headsets sold in 2023 via our
wholesale partner, Wicked Vision. Sales have been generated mainly via TV
shopping channels, including QVC in both the UK and USA, TSC in Canada and
TVSN in Australia.
The new Let's Explore range launched in Q4 2023 and has proven very popular
with consumers achieving an 'Excellent' rating on TrustPilot. Sales of over
8,000 units were achieved in Q4 2023 across the UK and USA, predominantly
through Amazon in the weeks running up to Christmas.
As we focus more of our time and effort on the growing online surplus FMCG
sector, and having built a suite of products customers clearly love, we wanted
to explore how we could scale the Let's Explore business more quickly and
efficiently.
Following discussions with Wicked Vision, we have agreed to issue them equity
in the Let's Explore business. As noted above, all revenue and contribution
from the sale of Vodiac and Let's Explore products will accrue to the
jointly-owned entity. Wicked Vision's team will manage the business and will
also turn their attention to promoting the Let's Explore range of products
whilst continuing to sell Vodiac.
In return for their wholesale margin being transferred and taking on
day-to-day management of the business, Wicked Vision will be issued an initial
25% equity interest in Let's Explore Limited, a subsidiary of Huddled, and
will see their shareholding increase to 50% once Huddled has recouped circa
£400,000, being the value of the working capital in the business at the time
the deal was completed.
Delivering on the sizeable opportunity
The opportunities within the surplus FMCG market, the continued search for
value among consumers, and the demand for e-commerce and direct delivery
services, provide both Discount Dragon and Food Circle with a significant
opportunity to drive growth and take market share.
As we move into 2024, we can see the levers that need to be pulled to
capitalise on the opportunities available to us. Through our strong balance
sheet, this year will be one of investment in our three foundation stones as
we take the brands to more customers across the UK and scale our businesses
towards profitability.
Financial review
The split between continuing and discontinued operations in the period is
summarised below. The results of Immotion and Uvisan are included within
discontinued operations in the period, as they were in the published 2022
results.
Discount Dragon Let's Explore Head Continuing Operations Discontinued Operations Total
£'000 £'000 Office £'000 £'000 Operations
£'000 £'000
Revenue 1,631 792 - 2,423 1,626 4,049
Cost of sales (1,541) (927) - (2,468) (924) (3,392)
Gross profit/(loss) 90 (135) - (45) 702 657
Adjusted EBITDA 2 (130) (337) (866) (1,333) 312 (1,021)
Profit/(loss) after tax (210) (521) (1,556) (2,287) 15,268 12,981
Revenue from continuing operations increased to £2,423,000 from £796,000 in
2022. The increase in revenue was driven by Discount Dragon, which generated
revenue of £1,631,000 subsequent to its acquisition in October 2023, with
Let's Explore's revenue being flat year-on-year (£792,000 in 2023 vs
£796,000 in 2022).
Discount Dragon made a small gross profit of £90,000 in the period. Cost of
sales of £1,541,000 included cost of goods sold, fulfilment costs including
warehouse payroll costs, and marketing costs. As the business scales we
would expect to see these costs, excluding marketing costs, fall as a
percentage of revenue.
Let's Explore produced a gross loss of £135,000 (2022: £69,000 loss). The
division suffered from the increased cost of social media marketing felt
across the industry in Q4 2023, which impacted direct-to-consumer margins and
units sold, leaving us with inventory of circa 14,000 Let's Explore packs at
the period end. Sales via business-to-business channels produced a positive
contribution to divisional overheads.
Head office costs were mitigated in the period through income of £244,000
received for the provision of transitional finance and other services to the
disposed Immotion and Uvisan subsidiaries.
Also included within the head office segment was £337,000 finance income
received on its cash deposits and the accrued loan note interest payable by
the buyer of the Immotion business.
One-off costs in the period of £675,000 reflected the range of corporate
transactions which took place in the year: the disposal of Immotion, the
acquisition of Discount Dragon, capital reduction and share buybacks and other
restructuring costs.
Included within discontinued operations is a £15,206,000 profit on the
disposal of the Immotion and Uvisan businesses.
Balance sheet
Net assets increased to £10,302,000 at the period end (2022: £5,321,000).
Intangible assets increased to £3,935,000 (2022: £214,000) as a result of
the Discount Dragon acquisition (the carrying value of the Immotion and Uvisan
businesses were included in assets held for sale in the prior period).
Inventories increased to £724,000 (2022: £67,000), mainly driven by Discount
Dragon's presence on the balance sheet at the end of the period though Let's
Explore stock on hand also increased.
Included within receivables was the £1,030,000 loan note due from the buyer
of the Immotion business (repayment of which was received by the Company in
February 2024).
Cash increased to £4,268,000 (2022: £51,000) following the sale of the
Immotion business and subsequent return of capital to shareholders.
There were also notable changes to the capital and reserves of the Company in
the year. A capital reduction was required to facilitate the share buyback
programme and resulted in £20,572,000 being transferred from share premium to
retained earnings. A capital redemption reserve was created in the period,
being the nominal value of shares cancelled following the buybacks. The
acquisition of Discount Dragon also resulted in the creation of two new
reserves: a merger reserve and an equity reserve. The former being the premium
above the nominal value of the shares issued for the initial consideration;
the latter being a provision for the deferred equity consideration yet to be
issued.
Cash flow
Net cash increased £3,939,000 in the period to £4,268,000. Operating cash
outflows before and after changes in working capital were £2,454,000 and
£3,201,000 respectively. Other major movements were the £19,818,000 cash
inflow from the disposal of subsidiaries and the £12,680,000 returned to
shareholders through the share buyback programme.
HUDDLED GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
Year Ended Year Ended
31 December 31 December
2023 2022
£'000 £'000
Continuing operations Note
Revenue 2,423 796
Cost of sales (2,468) (865)
--------------- ---------------
Gross loss (45) (69)
Administrative expenses (2,813) (1,848)
Other operating income 244 -
--------------- ---------------
Loss from operations (2,614) (1,917)
Memorandum:
Adjusted EBITDA (1,333) (1,582)
Depreciation 9 (28) (1)
Amortisation 10 (241) (168)
Share based payments (337) (133)
One-off costs 5 (675) (33)
--------------- ---------------
Loss from operations (2,614) (1,917)
Finance costs (2) (11)
Finance income 337 -
_______ _______
Loss before taxation and attributable to equity (2,279) (1,928)
holders of the parent
Taxation (8) -
_______ _______
Loss after taxation from continuing operations (2,287) (1,928)
Profit after tax from discontinued operations 6 15,268 1,267
______ ______
Profit/(Loss) after taxation from all operations 12,981 (661)
Other comprehensive expense
Profit/(loss) on translation of subsidiary (282) 129
Cumulative translation differences transferred to the income statement on 155 -
disposal of subsidiaries
______ ______
Loss after taxation and attributable to equity 12,854 (532)
holders of the parent and total comprehensive
income for the period
======== ========
HUDDLED GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
Year ended Year ended
31 December 2023 31 December
2022
£0.01 £0.01
Earnings/(loss) per share
Continuing operations
Basic 7 (0.71) (0.46)
Diluted 7 (0.71) (0.46)
------------ ------------
Discontinued operations
Basic 7 4.75 0.30
Diluted 7 4.75 0.30
------------ ------------
Continuing and discontinued operations
Basic 7 4.04 (0.16)
Diluted 7 4.04 (0.16)
------------ ------------
HUDDLED GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Share capital Share premium Foreign exchange reserve Merger reserve Capital redemption reserve Equity reserve Retained earnings/ Total equity
(deficit)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2022 166 20,556 (36) - - - (14,966) 5,720
Loss after tax - - - - - - (661) (661)
Equity settled share-based payments - - - - - - 133 133
Currency translation of overseas subsidiary - - 129 - - - - 129
------------ -------------- ------------ ------------ ------------ ------------ ---------------- ------------
Balance at 31 December 2022 166 20,556 93 - - - (15,494) 5,321
------------ -------------- ------------ ------------ ------------ ------------ ---------------- ------------
Profit after tax - - - - - - 12,981 12,981
Equity settled share-based payments - - - - - - 337 337
Currency translation differences - - 155 - - - - 155
transferred to income statement on disposal of subsidiaries
Currency translation of overseas subsidiary - - (282) - - - - (282)
Exercise of share options 19 1,159 - - - - - 1,178
Acquisition of subsidiaries 52 - - 2,823 - 417 - 3,292
Reduction in share premium - (20,572) - - - - 20,572 -
Buyback and cancellation of shares (110) - - - 110 - (12,680) (12,680)
------------ -------------- ------------ ------------ ------------ ------------ ---------------- ------------
Balance at 31 December 2023 127 1,143 (34) 2,823 110 417 5,716 10,302
------------ -------------- ------------ ------------ ------------ ------------ ---------------- ------------
HUDDLED GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023 31 December 2022
ASSETS Note £'000 £'000
Non-current assets
Property, plant and equipment 9 209 3
Intangible fixed assets 10 3,935 214
------------ ------------
Total non-current assets 4,144 217
Current assets
Inventories 724 67
Trade and other receivables 1,819 786
Contract assets 95 2
Cash and cash equivalents 4,268 51
------------ ------------
Total current assets 6,906 906
------------ ------------
Assets held for sale 6 - 6,362
------------ ------------
Total assets 11,050 7,485
====== ======
LIABILITIES
Current liabilities
Trade and other payables (580) (786)
Provisions (53) (7)
Loans and borrowings (10) (45)
------------ --------------
Total current liabilities (643) (838)
------------ --------------
Non-current liabilities
Loans and borrowings (18) (28)
Deferred tax (87) -
------------ ------------
Total non-current liabilities (105) (28)
------------ ------------
Liabilities associated with assets held for sale 6 - (1,298)
------------ ------------
Total liabilities (748) (2,164)
------------ ------------
Total net assets 10,302 5,321
====== ======
Capital and reserves attributable to owners
of the parent
Share capital 11 127 166
Share premium 12 1,143 20,556
Foreign exchange reserve 12 (34) 93
Merger reserve 12 2,823 -
Capital redemption reserve 12 110 -
Equity reserve 12 417 -
Retained earnings/(deficit) 12 5,716 (15,494)
--------------- ------------
Total equity 10,302 5,321
======= ======
The financial statements were approved by the Board and authorised for issue
on 10 May 2024
Martin
Higginson
Daniel Wortley
Chief Executive Officer
Finance Director
HUDDLED GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Year ended Year ended
31 December 2023 31 December
2022
£'000 £'000
Cash flows from operating activities
Loss before tax from continuing operations (2,279) (1,928)
Profit before tax from discontinued operations 15,276 1,297
Adjustments for:
Share based payments 337 133
Depreciation of property plant and equipment 201 1,036
Loss/(gain) on disposal of fixed assets 3 (19)
Amortisation of intangible assets 280 601
Gain on disposal of subsidiary undertakings (15,206) -
Costs relating to the disposal of subsidiaries (437)
Impairment of tangible and intangible assets - 176
Finance costs 6 37
Finance income (337) (1)
Foreign exchange profit/(loss) (282) 37
Foreign corporate tax payment (16) (4)
Corporation tax repayment received - 18
_____ _____
Cash inflows/(outflows) from operating activities before changes in working (2,454) 1,383
capital
Increase in inventories (41) (11)
Decrease/(increase) in trade and other receivables 195 (46)
Decrease/increase in trade & other payables (901) 278
_____ _____
Cash from/(used in) operations (3,201) 1,604
Investing activities
Purchase of intangible assets (157) (510)
Purchase of property, plant and equipment (278) (1,797)
Proceeds from disposals of property, plant and equipment - 24
Proceeds from the sale of subsidiary undertakings 19,818 -
Cash disposed on disposal of subsidiaries (354) -
Cash acquired with subsidiaries 45 -
_____ _____
Net cash from/(used in) investing activities 19,074 (2,283)
Financing activities
Finance costs (6) (37)
Finance income 337 1
New loans and finance leases - 328
Loan and finance lease repayments (763) (422)
Foreign exchange on retranslation of financing - 39
Issue of new share capital 1,178 -
Share buybacks (12,680) -
_____ _____
Net cash used in financing activities (11,934) (91)
Year ended Year ended
31 December 2023 31 December
2022
£'000 £'000
Net (decrease)/increase in cash and cash equivalents 3,939 (770)
Cash and cash equivalents at beginning of the period 329 1,099
_____ _____
Cash and cash equivalents at end of the period 4,268 329
====== ======
Year ended Year ended
31 December 2023 31 December 2022
£'000 £'000
Reconciliation of net cashflow to movement in net debt
Net (decrease)/increase in cash and cash equivalents 3,939 (770)
New loans and finance leases - (328)
Loans acquired with subsidiaries (695) -
Repayment of loans and finance leases 763 422
Foreign exchange on retranslation of financing - (39)
Loans and finance leases disposed on sale of subsidiaries 309 -
_____ _____
Movement in net funds in the year 4,316 (715)
Net funds/(debt) at beginning of year (76) 639
_____ _____
Net funds at end of year 4,240 (76)
====== ======
Breakdown of net funds/(debts)
Cash and cash equivalents 4,268 51
Cash and cash equivalents attributable to disposal groups - 278
_____ _____
4,268 329
Loans and borrowings (28) (73)
Loans and borrowings attributable to disposal groups - (136)
Lease liabilities attributable to disposal groups - (196)
_____ _____
Net funds at end of year 4,240 (76)
====== ======
HUDDLED GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1 GENERAL INFORMATION
Huddled Group plc is a public limited company incorporated and domiciled in
the United Kingdom. The address of the registered office is Cumberland Court,
80 Mount Street, Nottingham, England, NG1 6HH. The Group is listed on AIM.
During the year, the principal activities of the Group were: (i) the sale of
the Group's Let's Explore and Vodiac consumer products; and (ii) the sale of
FMCG via the Group's Discount Dragon website.
These financial statements are presented in pounds sterling because that is
the currency of the primary economic environment in which the Group operates.
Foreign operations are included in accordance with the policies set out in
note 2.
2 ACCOUNTING POLICIES
Principal accounting policies
The Company is a public company incorporated and domiciled in the United
Kingdom. The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRS) issued by the International Accounting
Standards Board (IASB) as adopted by the United Kingdom ("adopted IFRSs") and
those parts of the Companies Act 2006 which apply to companies preparing their
financial statements under IFRSs. The financial statements are presented to
the nearest round thousand (£'000) except when otherwise indicated.
Basis of Consolidation
The Group comprises a holding company and a number of subsidiaries all of
which have been included in the consolidated financial statements in
accordance with the principles of acquisition accounting as laid out by IFRS 3
Business Combinations.
Going concern
At the time of approving the financial statements, the Directors have a
reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. The going
concern basis of accounting has therefore been adopted in preparing the
financial statements.
In reaching this conclusion, the Directors have considered the financial
position of the Group, together with its forecasts and projections for the
next 12 months, taking into account reasonably possible changes in trading
performance and capital expenditure requirements.
The financial statements do not include any adjustments that would result from
the going concern basis of preparation being inappropriate.
Business combinations and goodwill
Acquisitions of subsidiaries are accounted for using the acquisition method.
The assets and liabilities and contingent liabilities of the subsidiaries are
measured at their fair value at the date of acquisition. Any excess of
acquisition over fair values of the identifiable net assets acquired is
recognised as goodwill. Goodwill arising on consolidation is recognised as an
asset and reviewed for impairment twice-annually. Any impairment is recognised
immediately in profit or loss accounts and is not subsequently reversed.
Acquisition related costs are recognised in the income statement as incurred.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured as the fair value of the consideration received or
receivable, excluding discounts, rebates, value added tax and other sales
taxes. The following criteria must also be met before revenue is recognised:
Discount Dragon
For sales to consumers via Discount Dragon's website, revenue is recognised on
sales in the period in which the corresponding order is placed, at which point
products purchased are allocated to that customer. There is typically no more
than one week between the point when an order is placed and when the goods are
received by the customer.
For wholesale sales, revenue is recognised in the period in which delivery to
the wholesaler takes place.
Let's Explore
For sales to consumers, revenue is recognised on sales of the Let's Explore
and Vodiac products in the period in which the corresponding order is placed,
at which point products purchased are allocated to that customer. There is
typically no more than one week between the point when an order is placed and
when the goods are received by the customer.
For sales to resellers, revenue is recognised in the period in which delivery
to the reseller takes place.
Foreign currency
The individual financial statements of each group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each group company are
expressed in pound sterling, which is the functional currency of the Group,
and the presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies,
transactions in currencies other than the Group functional currency (foreign
currencies) are recorded at rates of exchange prevailing on the dates of the
transactions. At the reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates prevailing on
the reporting date. Non-monetary items carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at
the date when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in profit or loss for the
period. Exchange differences arising on the retranslation of non-monetary
items carried at fair value are included in profit or loss for the period
except for differences arising on the retranslation of non-monetary items in
respect of which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of the gain or loss is also
recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the reporting date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during the period, in which case the exchange rates at
the date of transactions are used. Exchange differences arising, if any, are
classified as equity and transferred to the Group's foreign exchange reserve.
Such translation differences are recognised as other comprehensive income and
expense in the period of the disposal of the operation. Goodwill and fair
value adjustments arising on the acquisition of a foreign entity are treated
as assets and liabilities of the foreign entity and translated at the closing
rates.
Property, plant and equipment
Property, plant and equipment are stated at cost net of accumulated
depreciation and provision for impairment. Depreciation is provided on all
property plant and equipment, at rates calculated to write off the cost less
estimated residual value, of each asset on a straight-line basis over its
expected useful life.
The residual value is the estimated amount that would currently be obtained
from disposal of the asset if the asset were already of the age and in the
condition expected at the end of its useful economic life.
The method of depreciation for each class of depreciable asset is:
Leasehold
property
- Over term of lease on a straight-line basis
Fixtures, fittings and equipment - 3 years on a
straight-line basis
Motor
vehicles
- Between 3 and 7 years on a straight-line basis
IFRS 16 right of use assets - Over term of
lease on a straight-line basis
Intangible assets
Intangible assets include goodwill arising on the acquisition of subsidiaries
and represents the difference between the fair value of the consideration
payable and the fair value of the net assets that have been acquired. The
residual element of goodwill is not being amortised but is subject to
twice-annual impairment review. The expected useable lives of the classes of
intangible assets held by the Group are shown in note 10.
Internally-generated intangible assets
An internally-generated intangible asset arising from the Group's development
activities is capitalised and held as an intangible asset in the statement of
financial position when the costs relate to a clearly defined project; the
costs are separately identifiable; the outcome of such a project has been
assessed with reasonable certainty as to its technical feasibility and its
ultimate commercial viability; the aggregate of the defined costs plus all
future expected costs in bringing the product to market is exceeded by the
future expected sales revenue; and adequate resources are expected to exist to
enable the project to be completed. Internally generated intangible assets are
amortised over their estimated useful lives, being 3 years from completion of
development. Other development expenditure is recognised as an expense in the
income statement in the period in which it is incurred.
Impairment of assets
Impairment tests on goodwill are undertaken twice-annually. The recoverable
value of goodwill is estimated on the basis of value in use, defined as the
present value of the cash generating units with which the goodwill is
associated. When value in use is less than the book value, an impairment is
recorded and is irreversible.
Other non-financial assets are subject to impairment tests whenever
circumstances indicate that their carrying amount may not be recoverable.
Where the carrying value of an asset exceeds its estimated recoverable value
(i.e. the higher of value in use and fair value less costs to sell), the asset
is written down accordingly. Where it is not possible to estimate the
recoverable value of an individual asset, the impairment test is carried out
on the asset's cash-generating unit. The carrying value of property, plant and
equipment is assessed in order to determine if there is an indication of
impairment. Any impairment is charged to the statement of comprehensive
income. Impairment charges are included under administrative expenses within
the consolidated statement of comprehensive income.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs
comprise direct materials and, where applicable, direct labour costs and
overheads that have been incurred in bringing the inventories to their present
location and condition. Net realisable value represents the estimated selling
price less all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
Financial instruments
The Group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument.
The Group recognises lifetime expected credit losses for trade receivables and
amounts due on contracts with customers when appropriate. The expected credit
losses on these financial assets are estimated based on the Group's historical
credit loss experience, adjusted for facts that are specific to the debtors,
general economic conditions and an assessment of both the current as well as
the forecasted conditions at the reporting date, including time value of money
where appropriate. Lifetime expected credit losses are losses which will
result from all possible default events over the expected life of a financial
instrument.
Contract assets
Contract assets are recognised when the Group has satisfied a performance
obligation but cannot recognise a receivable.
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value,
and subsequently measured at amortised cost using the effective interest
method. A provision is established when there is objective evidence that the
Group will not be able to collect all amounts due. The amount of any provision
is recognised in profit or loss.
Cash and cash equivalents
Cash and cash equivalents are recognised as financial assets. They comprise
cash held by the Group and short-term bank deposits with an original maturity
date of three months or less.
Trade payables
Trade payables are initially recognised as financial liabilities measured at
fair value, and subsequent to initial recognition are measured at amortised
cost.
Bank borrowings
Interest bearing bank loans, overdrafts and other loans are recognised as
financial liabilities and recorded at fair value, net of direct issue costs.
Finance costs are accounted for on an amortised cost basis in the income
statement using the effective interest rate.
Provisions
Provisions are recognised where it is probable that an outflow of resources
will be required to settle a liability of an uncertain amount or timing but
where a reliable estimate can be made of the amount of the liability.
Provisions are expensed to the income statement and included within
liabilities on the statement of financial position.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deduction of all its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received net of direct
issue costs.
Share based payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to the statement of comprehensive income on a
straight-line basis over the vesting period. Non-market vesting conditions are
taken into account by adjusting the number of options expected to vest at each
statement of financial position date so that, ultimately, the cumulative
amount recognised over the vesting period is based on the number of options
that eventually vest. Market vesting conditions are factored into the fair
value of the options granted. The cumulative expense is not adjusted for
failure to achieve a market vesting condition.
Where share options are cancelled due to employees leaving the Group's
employment before they have vested, cumulative share based payment expenses
recognised in respect of those employees are reversed through the statement of
comprehensive income.
Where share options are replaced the fair value of the replaced options at the
date of grant continues to be recognised through the statement of
comprehensive income in addition to a charge equating to the incremental value
of the new options granted.
Pensions
The pension schemes operated by the Group are defined contribution schemes.
The pension cost charge represents the contributions payable by the Group.
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the executive directors, who are responsible for
allocating resources and assessing performance of the operating segments.
A business segment is a group of assets and operations, engaged in providing
products or services that are subject to risks and returns that are different
from those of other operating segments.
A geographical segment is engaged in providing products or services within a
particular economic environment that are subject to risks and returns that are
different from those of segments operating in other economic environments. The
executive directors assess the performance of the operating segments based on
the measures of revenue, adjusted EBITDA, profit before taxation and profit
after taxation. Central overheads are not allocated to business segments.
Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale
if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of an asset (disposal
group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the
sale is highly probable, the asset or disposal group is available for
immediate sale in its present condition and the sale is expected to complete
within one year from the date of the classification.
Assets and liabilities classified as held for sale are presented separately as
current items in the statement of financial position.
The Immotion and Uvisan divisions have been classified as discontinued
operations in the consolidated statement of comprehensive income.
Administrative expenses which the Group will continue to incur following the
sale of the disposal groups are included within continuing operations and
costs which will cease on disposal are included in discontinued operations.
Discontinued operations are excluded from the results of continuing operations
and are presented as a single amount as profit or loss after tax from
discontinued operations in the income statement.
Details of discontinued operations are shown in note 6. All other notes to
the financial statements include amounts for continuing operations only,
unless otherwise stated.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
In the application of the Group's accounting policies, which are described in
note 2, the Directors are required to make judgments, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on experience and other factors considered to be relevant. Actual
results may differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
The following are the critical judgments and estimations that the Directors
have made in the process of applying the Group's accounting policies and that
have the most significant effect on the amounts recognised in the financial
statements.
Critical accounting judgments
Discontinued operations
The sale of the Immotion and Uvisan businesses took place in the period.
Management were required to exercise judgment both in respect of allocation of
the consideration and presentation of the results in discontinued operations
in accordance with IFRS 5.
Valuation of intangible assets arising on acquisition at fair value
Separately identifiable intangible assets arising on acquisition have been
recognised at fair value as assessed at the acquisition date. This
identification and recognition of these intangibles requires the application
of judgement and is subject to significant estimation uncertainty given
assumptions made about future performance of these identified assets. Details
of the separately identifiable intangible assets recognised on acquisition can
be found in note 8.
Revenue recognition
For sales to consumers, revenue from the sale of Let's Explore and Vodiac
products is recognised on receipt of payment, which is a condition for an
order to be accepted. The price paid by the consumer excluding sales taxes is
recognised as revenue. At each accounting date provision is made for refunds
to be made for orders received and paid for, prior to the accounting date.
This provision is based on past experience of the level of refund applications
received.
Recoverability criteria for capitalisation of development expenditure
The Group recognises costs incurred on development projects as an intangible
asset which satisfies the requirements of IAS 38. The calculation of the costs
incurred includes the percentage of time spent by certain employees on
development projects. The decision whether to capitalise and how to determine
the period of economic benefit of a development project requires an assessment
of the commercial viability of the project and the prospect of selling the
project to new or existing customers. An assessment is made as to the future
economic benefits of the project and whether an impairment is needed.
Impairment of goodwill
Impairment of the valuation of the goodwill relating to the acquisition of
subsidiaries is considered twice-annually for indicators of impairment to
ensure that the asset is not overstated within the financial statements. The
twice-annual impairment assessment in respect of goodwill requires estimates
of the value in use (or fair value less costs to sell) of subsidiaries to
which goodwill has been allocated. As a result, estimates of future cash flows
are required, together with an appropriate discount factor for the purpose of
determining the present value of those cash flows. Further details of the
considerations made when conducting the impairment review can be found in note
10.
Valuation of inventories
The carrying value of inventories of finished products held by the Group are
assessed for impairment at the end of each period. Judgment is required to
assess whether the net realisable value (NRV) of inventories held is less than
carrying value with reference to the expected price the inventory is likely to
achieve if sold. Where items of inventory are identified as having a NRV of
less than their carrying value, a provision for impairment is recognised.
Critical accounting estimates
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised intangible
assets and capitalised staff costs requires judgments to be made in respect of
estimating the useful lives of the intangible assets to determine an
appropriate amortisation rate. Variances between actual and estimated useful
economic lives could impact on the operating results both positively and
negatively.
Depreciation
The useful economic lives of tangible fixed assets are based on management's
judgment and experience. When management identifies that actual useful
economic lives differ materially from the estimates used to calculate
deprecation, that charge is added retrospectively. Variances between actual
and estimated useful economic lives could impact on the operating results both
positively and negatively.
Share based payments expense
Non-market performance and service conditions are included in the assumptions
about the number of options that are expected to vest. At the end of each
reporting period the Group revises its estimates of the number of options that
are expected to vest based on the non-market vesting conditions. It recognises
the impact of the revision to the original estimates, if any, in the
consolidated statement of comprehensive income, with a corresponding
adjustment to equity. This requires a judgment as to how many options will
meet the future vesting criteria as well as the judgments required in
estimating the fair value of the options. Where options are cancelled followed
by the grant of new options at or close to the time of the cancellations,
judgment is required as to the extent to which the new options granted are
modifications of, or replacements for, the cancelled options, or new options.
Modifications to share options give rise to a charge to the income statement
equating to the difference between the estimated fair value of the share
options immediately prior to and immediately after the modification takes
place. Judgment is required to calculate the fair values of options at these
points in time.
4 SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the year ended 31 December
2023 is below.
DiscountDragon Let's Explore Head Office Total Continuing Operations Dis-continued Operations Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 1,631 792 - 2,423 1,626 4,049
Cost of sales (1,541) (927) - (2,468) (924) (3,392)
Gross profit/(loss) 90 (135) - (45) 702 657
Administrative expenses* (220) (202) (1,110) (1,532) (390) (1,922)
Other operating income - - 244 244 - 244
Adjusted EBITDA** (130) (337) (866) (1,333) 312 (1,021)
(866) ()
Depreciation (6) (1) (21) (28) (173) (201)
Amortisation (61) (175) (5) (241) (39) (280)
Loss on disposal of assets - - - - (3) (3)
Profit on disposal of subsidiaries - - - - 15,206 15,206
One-off costs (13) - (662) (675) (23) (698)
Share based payments - - (337) (337) - (337)
Finance costs - - (2) (2) (4) (6)
Finance income - - 337 337 - 337
Taxation - (8) - (8) (8) (16)
----------- ----------- ------------- ---------- ------------ ------------
(Loss) / profit for the year (210) (521) (1,556) (2,287) 15,268 12,981
====== ====== ====== ====== ====== ======
*Administrative expenses exclude depreciation, amortisation, profit on
disposals, one-off costs and share based payments.
**Adjusted EBITDA is a non-GAAP metric.
A segmental analysis of revenue and expenditure for the year ended 31 December
2022 is below:
Let's Explore Head Office Total Continuing Operations Discontinued Operations Total
£'000 £'000 £'000 £'000 £'000
Revenue 796 - 796 10,781 11,577
Cost of sales (865) - (865) (5,696) (6,561)
Gross profit/(loss) (69) - (69) 5,085 5,016
Administrative expenses* (143) (1,370) (1,513) (2,167) (3,680)
Other operating income - - - 39 39
Adjusted EBITDA** (212) (1,370) (1,582) 2,957 1,375
Depreciation - (1) (1) (1,035) (1,036)
Amortisation (158) (10) (168) (433) (601)
Impairment: intangible assets - - - (78) (78)
Impairment: assets held for sale - - - (97) (97)
Profit on disposal - - - 19 19
One-off costs - (33) (33) (12) (45)
Share based payments - (133) (133) - (133)
Finance costs - (11) (11) (25) (36)
Finance income - - - 1 1
Taxation - - - (30) (30)
---------- ------------ -------------- --------------- ----------
Loss for the year (370) (1,558) (1,928) 1,267 (661)
======= ======= ======= ======= ======
*Administrative expenses exclude depreciation, amortisation, impairment, loss
on disposal, restructuring costs and share based payments
**Adjusted EBITDA is a non-GAAP metric.
The table below splits revenue, assets and capital expenditure by location:
Revenue
2022
2023 £'000
£'000
Continuing operations
United Kingdom 1,934 396
USA & Canada 489 400
---------- ------------
2,423 796
===== ======
Total assets Net tangible capital expenditure
2023 2022 2023 2022
£'000 £'000 £'000 £'000
United Kingdom 11,301 1,062 173 3
USA & Canada 320 61 - -
Assets held for sale - 6,362 - 1,794
------------ ------------ ------------- ------------
11,621 7,485 173 1,797
====== ====== ====== ======
5 ONE-OFF COSTS
2023 2022
£'000 £'000
One-off costs (non-GAAP measure)*
Costs relating to the acquisition of Huddled Holdings Limited 244 -
Costs related to the capital reduction and share buybacks 225 -
Bonuses awarded in relation to the LBE business sale 181 -
Business restructuring 25 33
------------- ------------
675 33
====== ======
*One-off costs are included within administrative expenses but have been added
back for the purposes of calculating adjusted EBITDA which is a non-GAAP
alternative performance measure.
6 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
The Immotion and Uvisan businesses were sold on 28 February 2023 and 1
February 2023 respectively. The results for these businesses have been
excluded from the continuing results of the Group for the periods ended 31
December 2023 and 31 December 2022.
Summary income statement
The results for Immotion and Uvisan included in the income statement as
discontinued operations are as follows:
Total Total
Immotion Uvisan 2023 2022
Discontinued operations £'000 £'000 £'000 £'000
Revenue 1,532 94 1,626 10,781
Cost of sales (886) (38) (924) (5,697)
Other operating income - - - 39
Administrative expenses (579) (49) (628) (3,802)
---------------- ---------------- --------------- ---------------
Operating profit 67 7 74 1,321
Finance costs (4) - (4) (25)
Finance income - - - 1
---------------- ---------------- ------------- -------------
Profit before taxation 63 7 70 1,297
Taxation (8) - (8) (30)
---------------- ---------------- ------------- -------------
Profit from discontinued operations before gain on disposal of subsidiaries 55 7 62 1,267
---------------- ---------------- ------------- -------------
Gain on disposal of subsidiaries 15,164 42 15,206 -
---------------- ---------------- ------------- -------------
Profit from discontinued operations 15,219 49 15,268 1,267
---------------- ---------------- ------------- -------------
Adjusted EBITDA 279 33 312 2,957
Depreciation (172) (1) (173) (1,035)
Amortisation (37) (2) (39) (433)
Impairment of intangible assets - - - (78)
Impairment of assets held for sale - - - (97)
Profit/(loss) on disposal of fixed assets (3) - (3) 19
One-off costs - (23) (23) (12)
---------------- ---------------- ------------- -------------
Operating profit 67 7 74 1,321
---------------- ---------------- ------------- -------------
Immotion - Location-based entertainment
Uvisan - Sale of UV-C disinfection cabinets
The figures included in discontinued operations do not include any allocation
of head office costs, details of which can be found in note 4.
Summary cash flow statement
The net cash flows for Immotion and Uvisan included in the cash flow statement
are as follows:
Total Total
Immotion Uvisan 2023 2022
Discontinued operations £'000 £'000 £'000 £'000
Cash generated from/(used in) operating activities 416 72 488 3,216
Cash generated from/(used in) investing activities 19,335 (43) 19,292 (2,070)
Cash used in financing activities (27) - (27) (105)
---------------- ---------------- ------------- -------------
Net cash flows generated/(used in) discontinued operations 19,724 29 19,753 1,041
---------------- ---------------- ------------- ----------------
Net assets held for sale
The major classes of assets and liabilities classified as held for sale as at
31 December 2022 were as follows:
Immotion Uvisan Total
Discontinued operations £'000 £'000 £'000
Assets
Property, plant and equipment 1,996 23 2,019
Goodwill on consolidation 2,438 - 2,438
Other intangible assets 466 32 498
Cash and cash equivalents 187 91 278
Other assets 1,013 213 1,226
Impairment of assets held for sale - (97) (97)
------------ ------------ ------------
Assets held for sale 6,100 262 6,362
------------ ------------ ------------
Liabilities
Liabilities directly associated with assets held for sale (1,136) (162) (1,298)
------------ ------------ -----------
Net assets held for sale 4,964 100 5,064
------------ ------------ -----------
Other assets comprise inventories, receivables, prepayments and accrued
income. Liabilities comprise payables, accruals, deferred income and tax
liabilities.
7 EARNINGS PER SHARE
2023 2022
£'000 £'000
Profit/(loss) after taxation
Continuing operations (2,287) (1,928)
Discontinued operations 15,268 1,267
-------------- -------------
Profit/(loss) after taxation from all operations 12,981 (661)
Basic weighted average number of shares 321,686,426 415,538,083
Diluted weighted average number of shares 355,153,905 473,775,097
============ ============
Continuing and discontinued operations £0.01 £0.01
Basic earnings/(loss) per share 4.04 (0.16)
Diluted earnings/(loss) per share 4.04 (0.16)
======== ========
Continuing operations £0.01 £0.01
Basic loss per share (0.71) (0.46)
Diluted loss per share (0.71) (0.46)
======== ========
Discontinued operations £0.01 £0.01
Basic earnings per share 4.75 0.30
Diluted earnings per share 4.75 0.30
======== ========
Earnings/(loss) per ordinary share has been calculated using the weighted
average number of shares outstanding during the relevant financial periods. In
accordance with IAS 33, diluted EPS must be presented when a company could be
required to issue shares that would decrease earnings per share or increase
the loss per share. However, IAS 33 stipulates that diluted EPS cannot show an
improvement compared to basic EPS. In this case, as the inclusion of potential
ordinary shares would result in an improvement, they have been disregarded in
the calculation of diluted EPS. Diluted EPS is calculated based on continuing
operations. Although the discontinued operations generated positive earnings
per share, the loss per share from continuing operations means that the
dilutive effect of the potential ordinary shares is ignored.
8 BUSINESS COMBINATIONS
On 17 October 2023, the Company announced that it had acquired 100%
of the ordinary shares in Huddled Holdings Limited (formerly Huddled Group
Limited) for equity consideration of up to £3,950,000, the shares having been
priced at 2.64p under the terms of the share purchase agreement. In
accordance with IFRS 3, the consideration has been priced at 2.2p per share
which was the price of the Company's shares when the acquisition completed.
This investment is also included in the Parent Company's statement of
financial position at the fair value of the equity consideration at the date
of acquisition.
The assets and liabilities of the acquired company were as follows:
Book Fair Value Adjustment Fair Value
Value to Group
£'000 £'000 £'000
Property, plant and equipment 62 - 62
Intangible assets: Discount Dragon brand - 2,097 2,097
Intangible assets: customer database - 86 86
Intangible assets: other 55 - 55
Cash and cash equivalents 45 - 45
Inventories 340 260 600
Trade and other receivables 140 - 140
Trade and other payables (497) (149) (646)
Loans (695) - (695)
Deferred tax - (87) (87)
------------- ------------- -------------
Net assets on acquisition (550) 2,207 1,657
Goodwill on acquisition 1,635
-------------
Total consideration 3,292
======
Consideration discharged by:
Shares in the Company issued in the year 2,875
Shares in the Company yet to be issued 417
-------------
3,292
======
On 17 October 2023, the Company issued 130,681,818 new ordinary shares at a
fair value of 2.2p each in satisfaction of the £2,875,000 initial
consideration. Subject to any adjustments to the purchase price in the event
of warranty claims against the vendors, the Company will issue a further
18,939,394 new ordinary shares in satisfaction of the deferred consideration
within 5 business days of the date of filing of the consolidated financial
statements of the Group for the financial year ending on 31 December 2024. The
deferred consideration shares have been valued at completion date fair value
of 2.2p each.
A net deferred tax liability of £87,000 has been recognised in relation to
fair value adjustments arising on the business combination. The net
liability is comprised of a £573,000 deferred tax liability arising on the
fair value adjustment which has been partially offset by a deferred tax asset
of £486,000 arising on accumulated losses in the acquired group.
The goodwill on consolidation of £1,635,000 includes assets acquired which
did not meet the criteria for separate recognition such as supplier
relationships and employees' 'know-how'.
Costs of £225,000 relating to the acquisition are included within
administrative expenses in the year.
The revenue and loss after tax recorded by Huddled Holdings Limited and its
subsidiaries in the period were £1,631,000 and £216,000 respectively. Had
the acquisition of Huddled Holdings Limited completed on 1 January 2023, the
combined revenue and loss before tax for the Group would have been £6,030,000
and £3,890,000 respectively.
9 PROPERTY, PLANT AND EQUIPMENT
Fixtures, Fittings & Equipment Right-of-Use
Leasehold Property Motor Vehicles Asset
Total
Cost £'000 £'000 £'000 £'000 £'000
At 1 January 2022 379 2,699 - 642 3,720
Additions 71 1,498 - 228 1,797
Disposals (154) (86) - (659) (899)
Foreign exchange - 230 - 42 272
Redesignated as held for sale (296) (4,338) - (253) (4,887)
----------- ------------ ------------ -------------- ------------
At 31 December 2022 - 3 - - 3
----------- ------------ ------------ -------------- ------------
At 1 January 2023 - 3 - - 3
Acquired with subsidiary - 74 6 - 80
Additions - 17 156 - 173
----------- -------------- -------------- -------------- ------------
At 31 December 2023 - 94 162 - 256
------------ --------------- -------------- -------------- ------------
Accumulated depreciation
At 1 January 2022 315 1,701 - 516 2,532
Depreciation of owned assets 64 816 - - 880
Depreciation of financed assets - - - 156 156
Disposals (153) (84) - (659) (896)
Foreign exchange - 149 - 47 196
Redesignated as held for sale (226) (2,582) - (60) (2,868)
----------- --------------- --------------- -------------- ------------
At 31 December 2022 - - - - -
----------- --------------- --------------- --------------- ------------
At 1 January 2023 - - - - -
Acquired with subsidiary 18 1 - 19
Depreciation of owned assets - 7 21 - 28
------------- -------------- -------------- -------------- ------------
At 31 December 2023 - 25 22 - 47
------------- -------------- -------------- -------------- ------------
Net Book Value
At 31 December 2023 - 69 140 - 209
======= ======= ======= ======= ========
At 31 December 2022 - 3 - - 3
======= ======= ======= ======= ========
At 31 December 2021 64 998 - 126 1,188
======= ======= ======= ======= ======
The net book value of assets held under finance leases or hire purchase
contracts, included above, is £Nil (2022: £Nil).
10 INTANGIBLE ASSETS
Development Goodwill on Consolidation Other Intangible Assets Total
Costs
£'000 £'000 £'000 £'000
Cost
At 1 January 2022 2,467 2,438 568 5,473
Additions 493 - 17 510
Disposals - - (66) (66)
Foreign exchange 57 - - 57
Redesignated as held for resale
(2,563) (2,438) (490) (5,491)
------------- ------------- ------------ ---------------
At 31 December 2022 454 - 29 483
------------- ------------- ------------ ---------------
At 1 January 2023 454 - 29 483
Acquired with subsidiary 30 1,635 2,226 3,891
Additions 86 - 9 95
Transfers - - 7 7
Disposals - - (20) (20)
------------- ------------- ------------ ---------------
At 31 December 2023 570 1,635 2,251 4,456
------------- ------------- ------------ ---------------
Accumulated amortisation
At 1 January 2022 1,623 - 545 2,168
Amortisation 582 - 19 601
Disposals - - (66) (66)
Impairment 78 - - 78
Foreign exchange 42 - - 42
Redesignated as held for resale (2,070) - (484) (2,554)
------------- ------------- ------------- ---------------
At 31 December 2022 255 - 14 269
------------- ------------- ------------- ---------------
At 1 January 2023 255 - 14 269
Acquired with subsidiary 5 - 13 18
Amortisation 166 - 75 241
Transfers - - 5 5
Disposals - - (12) (12)
------------- ------------- ------------- ---------------
At 31 December 2023 426 - 95 521
------------- ------------- ------------- ---------------
Net Book Value
At 31 December 2023 144 1,635 2,156 3,935
====== ======= ====== =======
At 31 December 2022 199 - 15 214
====== ======= ====== =======
At 31 December 2021 844 2,438 23 3,305
====== ======= ====== =======
Other intangible assets comprise the Discount Dragon brand, customer
databases, trademarks and other intellectual property.
Amortisation is charged on the Discount Dragon brand at 10% on a straight-line
basis. The Discount Dragon brand has an estimated useful life of over ten
years.
Amortisation is charged on all other intangible assets over periods ranging
between two and three years on a straight-line basis. All other intangible
assets have between one and three years' remaining average useful lives.
Goodwill and impairment
The Group is obliged to test goodwill annually for impairment, or more
frequently if there are indications that goodwill and indefinite life
intangibles might be impaired, due to the goodwill deemed to have an
indefinite useful life. In order to perform this test, management is required
to compare the carrying value of the relevant cash generating unit ("CGU")
including the goodwill with its recoverable amount. The recoverable amount of
the CGU is determined from a value in use calculation. It is considered that
any reasonably possible changes in the key assumptions would not result in an
impairment of the present carrying value of the goodwill. The goodwill on
consolidation relates to the Discount Dragon CGU in its entirety.
Discount Dragon
The recoverable amount of the Discount Dragon segment has been assessed from a
review of its current and anticipated performance. In preparing these
projections, an asset-specific discount rate of 19.71% has been applied to
forecast earnings for 2024 to 2026 followed by a terminal value calculation
based on 5% annual growth and subjected to sensitivity analysis. Reducing
forecasted revenue by 25% throughout the forecast period produced discounted
cash flows which were still sufficient to support the carrying value of the
CGU's intangible assets. The asset-specific discount rate is based on the
Company's estimated weighted average cost of capital plus 3%.
11 SHARE CAPITAL
2023 2023 2022 2022
Called up share capital Shares of 0.040108663 pence each £'000 Shares of 0.040108663 pence each £'000
Allotted, called up and fully paid
At beginning of period 415,538,083 166 415,538,083 166
Share options exercised 47,125,978 19 - -
Share buybacks and cancellations (275,040,736) (110) - -
Acquisition of Huddled Holdings Limited 130,681,818 52 - -
At end of period 318,305,143 127 415,538,083 166
12 RESERVES
Full details of movements in reserves are set out in the consolidated
statement of changes in equity. The following describes the nature and purpose
of each reserve within owners' equity:
Share premium: Amount subscribed for share capital in excess of nominal value.
Merger reserve: Premium above the nominal value of shares issued for equity
consideration.
Capital redemption reserve: Nominal value of the Company's own shares
purchased and cancelled.
Retained deficit: Cumulative net gains and losses recognised in the
consolidated statement of comprehensive income.
Foreign exchange reserve: Reserve arising on translation of the Group's
overseas subsidiaries.
Equity reserve: Deferred equity consideration in relation to the Huddled
Holdings Limited (formerly Huddled Group Limited) acquisition.
13 POST BALANCE SHEET EVENTS
On 29 February 2024, the Company received $1,325,000 from the buyer of the
Immotion location based entertainment business in settlement of the loan note
which formed part of the consideration from the sale of that business.
On 12 April 2024, the Company announced that it had acquired the entirety of
Food Circle Supermarket Limited for consideration of up to £300,000. The
consideration is comprised of an initial payment of £100,000 in cash and
£50,000 in shares. A further £50,000 in shares will be payable on the
first anniversary of the acquisition, subject to any adjustments in the event
of any warranty claims against the sellers. An additional £100,000 in cash
will be payable if the business meets certain targets during its first 12
months post-acquisition. The business combination accounting in respect of
this acquisition has not yet been completed.
On 10 May 2024, the Company announced that it had entered into an agreement
with Wicked Vision Limited to manage the Group's Let's Explore division in
exchange for a 25% share in Let's Explore Limited, increasing to 50% subject
to the Company being repaid an amount equating to the working capital in the
business, being circa £400,000. Wicked Vision are the current distributor
of the Group's Vodiac product and as part of the deal the jointly-owned Let's
Explore Limited will benefit from the distribution margin which previously
accrued to Wicked Vision.
1 Inclusive of the $1.25m loan note repaid February 2024 and net of
transaction costs.
2 Adjusted EBITDA is stated before finance income and costs, taxation,
depreciation, amortisation, share based payments, profit on asset disposals
and one-off costs. Adjusted EBITDA a non-GAAP metric.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR DBGDUUXBDGSBRecent news on Huddled
See all newsREG - Huddled Group PLC - Investment in Boop Beauty
AnnouncementREG - Huddled Group PLC - Result of AGM
AnnouncementREG - Huddled Group PLC - AGM Statement
AnnouncementREG - Huddled Group PLC - Posting of Annual Report and Notice of AGM
AnnouncementREG - Huddled Group PLC - Director/PDMR Shareholding
Announcement