TIDMQUIZ
RNS Number : 8375M
Quiz PLC
26 January 2021
26 January 2021
QUIZ plc
("QUIZ" or the "Group")
Interim Results
for the six months ended 30 September 2020
COVID-19 related social restrictions and lockdown measures
impact revenues; however, cost reductions and measures to preserve
cash help offset impact
QUIZ , the omni-channel fast fashion brand, announces its
unaudited interim results for the six months ended 30 September
2020 ("H1 2021" or the "Period").
Financial highlights:
Six months to Six months to
30 September 2020 30 September 2019
(unaudited) (unaudited)
---------------------------------- ------------------- -------------------
Group revenue GBP17.2m GBP63.3m
EBITDA GBP12.8m GBP5.8m
Underlying(1) EBITDA (GBP3.4m) GBP6.3m
Profit/(loss) before tax GBP10.6m (GBP6.7m)
Underlying(1) (loss)/profit (GBP5.6m) GBP0.3m
before tax
Basic earnings/(loss) per
share 9.62p (4.44p)
Underlying (loss)/basic earnings
per share(1) (3.45p) 1.20p
---------------------------------- ------------------- -------------------
A reconciliation between underlying and reported results is
provided at the end of the Financial Review.
-- Group revenue decreased 73% period on period in part as a
result of the significant impact of the COVID-19 pandemic on
trading conditions with stores and concessions closed for a number
of months
-- Non-cash gain of GBP16.2 million arising on administration of
a subsidiary undertaken in the Period
-- Increased level of discounting reflected in gross margin
decreasing to 51.7% from 61.7% in H1 2020
-- Underlying operating costs, net of government support
payments, reduced by 62% reflecting management's decisive actions
in response to the impact of the pandemic
-- Underlying EBITDA loss of GBP3.4 million (H1 2020: profit of GBP6.3 million)
-- Operating cash flows of GBP0.4 million (H1 2020: GBP4.9
million) and net cash at the period end of GBP5.5 million (FY to
March 2020: GBP6.9 million)
Operational highlights:
-- Store restructuring undertaken, resulting in lower rental
costs and more flexible leases
-- Group's store estate comprised 55 stores in the United
Kingdom and four in the Republic of Ireland at the end of the
Period, with five more opening in the United Kingdom
subsequently
-- Substantial cost reductions implemented in response to
significant impact of COVID-19 pandemic on sales
Post-period events:
-- Since 30 September 2020 revenues continue to be impacted by
lower demand due to continued social restrictions and stores and
concessions being subject to closure
-- Stronger sales performance in December relative to other
months when all sales channels were operating
-- Net cash at 25 January 2021 of GBP3.0 million and GBP3.5
million of undrawn banking facilities
Tarak Ramzan, Founder and Chief Executive Officer,
commented:
"As with other omni-channel retailers, QUIZ has faced
significant challenges as a result of the COVID-19 pandemic. We
have taken a number of actions to protect our customers and people,
preserve liquidity, and restructure the size and cost base of our
store estate to adjust to the new normal of retail.
Whilst we continue to rebalance our product offering towards
more casual clothing reflecting near term customer demand, given
our focus on occasion wear, demand for our products has been
impacted significantly by the pandemic. However, we remain
confident in the strength of our brand and are highly confident
that demand for the brand's trademark occasion wear will recover
when restrictions on social events are eased.
The Period covered by this statement was particularly
challenging for the Group and its stakeholders and I would like to
take this opportunity to reiterate my thanks to our colleagues and
partners for their commitment, support and flexibility. We are
confident that the actions taken to preserve liquidity and reduce
our cost base mean that the Group can return to profitable growth
as market conditions improve."
1. Underlying EBITDA, Profit Before Tax and EPS: excludes the
non-recurring GBP16.2m gain arising on the administration of a
subsidiary undertaking in the current year and the GBP7.0m
non-recurring charge in respect of store impairments and onerous
leases in the prior year. A reconciliation to reported (IFRS)
results is included in the financial review below.
2. International sales comprise the results from QUIZ standalone
stores and concessions in the Republic of Ireland, standalone
stores in Spain and franchises in 20 countries.
3. Financial information in the front of this report has been
rounded to the nearest decimal place. Totals in the tables may not
equal the arithmetic sum of presented numbers. Percentages are
calculated on non-rounded numbers and may not conform to the
percentage derived from the rounded components.
Enquiries :
QUIZ plc Via Hudson Sandler
Tarak Ramzan, Chief Executive Officer
Gerry Sweeney, Chief Financial Officer
Sheraz Ramzan, Chief Commercial Officer
Panmure Gordon (Nominated Adviser and Sole
Broker)
Alina Vaskina / Joanna Langley (Corporate Finance) +44 (0) 207 886
Erik Anderson (Corporate Broking) 2500
+44 (0) 207 796
Hudson Sandler LLP (Public Relations) 4133
Alex Brennan / Lucy Wollam quiz@hudsonsandler.com
Notes:
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014
About QUIZ
QUIZ is an omni-channel fashion brand, specialising in occasion
wear and dressy casual wear. QUIZ delivers a distinct proposition
that empowers fashion forward customers to stand out from the
crowd.
QUIZ's buying and design teams constantly develop its own
product lines, ensuring the latest glamorous looks at value prices.
This flexible supply chain, together with the winning formula of
style, quality, value and speed-to-market has enabled QUIZ to grow
into an international brand with stores, concessions, franchise
stores, wholesale partners and international online partners.
QUIZ operates through an omni-channel business model, which
encompasses online sales, standalone stores, concessions,
international franchises and wholesale arrangements.
To download images please visit:
http://www.quizgroup.co.uk/media-download-centre/
For further information:
https://www.quizclothing.co.uk/
http://www.quizgroup.co.uk/
CHIEF EXECUTIVE'S REPORT
COVID-19 has had a significant impact on communities and
businesses across the UK since March 2020. The Group's priority
during this very challenging period has been the safety and welfare
of its people and customers.
The disruption created by COVID-19 and the associated drop in
demand for occasion wear had a significant impact on revenues in
the six months to 30 September 2020.
In the United Kingdom, our stores and concessions were closed
for a sustained period from 22 March until their gradual reopening
in June, with varying government-implemented social restrictions in
place during the Period. In addition, given the store restructuring
undertaken by the Group in June and the subsequent negotiation of
new leases many of QUIZ's stores did not re-open until the
Autumn.
QUIZ's trademark occasion and dressy wear for social events and
activities has been at the centre of the QUIZ brand. QUIZ has
traditionally provided options for a variety of social occasions
such as attending lunch with friends, a day at the races, a
Christmas party or a wedding. The curtailment of these and other
activities resulted in a materially detrimental impact on demand.
This disruption has also been felt in the Group's International
business segment.
In response to these circumstances, QUIZ has rebalanced its
product offering to increase casual ranges and reduce exposure to
occasion wear. These steps helped to mitigate the impact of
COVID-19 but do not fully compensate for the decline in demand
experienced since March. The business will continue to adapt its
product proposition to reflect customer demand over the
long-term.
The increased demand experienced during periods of the Summer,
when restrictions on events and social gatherings were relaxed,
provided confidence that there is good underlying customer demand
for the brand's trademark occasion wear. Whilst the timing of
easing of ongoing social restrictions remains uncertain, we are
confident that demand for QUIZ will significantly improve when this
occurs.
In June we undertook a restructuring of our physical store
estate. This was required to ensure that the Group had an
economically viable store portfolio going forward. As a result,
Kast Retail Limited ("Kast"), a subsidiary of the Group which
previously operated the Group's standalone stores in the United
Kingdom and Ireland, was placed into administration. Further to
this, the business and certain assets of Kast were acquired by the
Group for a cash consideration of GBP1.3 million.
The new lease arrangements negotiated provide increased
flexibility going forward and on the basis of revenues being at
similar levels to revenues generated in the year ended 31 March
2020, the full year rent payable would be approximately halved on a
like-for-like basis.
The business remains focused on preserving liquidity and to that
end, we have implemented plans to reduce capital spend and
operating costs. As at 25 January 2021, the Group had GBP3.0
million of cash and GBP3.5 million of undrawn bank facilities. This
will support the business's initiatives to further diversify the
product range and ensure the Group is well positioned to respond to
an anticipated increase in demand for its core occasion wear
offering in due course.
RESULTS OVERVIEW
Throughout this report, "underlying" results exclude the one-off
impact in the period which arose further to the administration of
one of the Group's subsidiaries, resulting in certain assets and
liabilities no longer being retained by the Group. This resulted in
a gain of GBP16.2 million in relation to the net liabilities which
are no longer reflected in the financial statements. These
liabilities primarily related to lease liabilities associated with
standalone stores.
In the comparable prior year period, underlying results exclude
the GBP7.0m exceptional charge in relation to store impairments and
onerous leases . A reconciliation between underlying and reported
results is provided at the end of the Financial Review.
Group revenue decreased 73% to GBP17.2m in H1 2021 (H1 2020:
GBP63.3m). The revenue generated from each channel in H1 2021 was
as follows:
Six months Six months Share of Share of
to 30 September to 30 September Year-on-year revenue revenue
2020 2019 change H1 2021 H1 2020
UK stores and concessions GBP4.7m GBP31.3m -85% 27% 49%
Online GBP9.9m GBP20.0m -50% 57% 32%
International GBP2.7m GBP12.0m -78% 16% 19%
Total GBP17.2m GBP63.3m -73%
The administration of a subsidiary in the Period resulted in a
GBP16.2 million gain being recorded, operating profits were GBP10.7
million (H1 2020: loss of GBP6.3m) and EBITDA generated increased
to GBP12.8m (H1 2020: GBP5.8m).
Underlying operating losses incurred were GBP5.5 million (H1
2020: profit of GBP0.7 million) and underlying EBITDA losses were
GBP3.4 million (H1 2020: profit of GBP6.3 million).
The reported profit before tax amounted to GBP10.6 million (H1
2020: Loss of GBP6.8 million). Underlying loss before tax decreased
to GBP5.6 million (H1 2020: profit of GBP0.3 million).
Earnings per share was 9.62 pence (H1 2020: loss per share of
4.44 pence). Underlying loss per share was 3.45 pence (H1 2020:
earnings per share of 1.20 pence).
Net cash at the period end was GBP5.5 million (H1 2020: GBP7.2
million). Net cash generated from operations was GBP0.4 million (H1
2020: GBP4.9 million). Capital expenditure in H1 2021 amounted to
GBP1.6 million, which includes GBP1.3 million paid for the business
and certain assets of Kast post administration (H1 2020: GBP2.7
million).
OPERATIONAL REVIEW
The Group's longer-term strategy remains to develop the QUIZ
brand through its omni-channel distribution model. The Group has a
particular focus on capturing the significant online opportunities
available to QUIZ as well as on expanding internationally.
The four challenges previously identified by the Board remain
relevant in light of the continued COVID-19 related disruption on
QUIZ:
1. Managing the decline in footfall and spend in our UK store and concession estate
Further to the store restructuring undertaken in the Period, 60
of the 75 stores previously operated in the United Kingdom have
been reopened under new lease arrangements. The new lease
arrangements have largely been secured on a flexible basis that
allows for rents to be commensurate with revenues generated.
These new arrangements have an average lease term of 24 months
and a lower cost base going forward.
The Board has also been taking steps to reduce its exposure to
UK department stores going forward. In the year ended to 31
December 2020, the Group reduced the number of concessions operated
by 20% to 142.
Of these remaining concessions 85 are in Debenhams stores and 29
in Outfit stores operated by Arcadia, both of which are in
Administration. We note the announcement that Boohoo has acquired
the intellectual property assets of Debenhams and that these stores
are expected to close, and that there is uncertainty as to
Arcadia's future. There is no financial exposure to outstanding
balances due from these businesses and the redundancy costs that
would arise from these store closures would not be significant.
The Group believes that stores and concessions with appropriate
cost bases can make a positive contribution going forward. We will
continue to undertake initiatives to promote footfall into stores
including trialling the introduction of new product categories in
store, utilising our store network for online collections and
returns, and improving stock availability across the estate.
2. Optimising the omni-channel model and capturing the online opportunity
QUIZ continues to believe in the benefits of operating an
omni-channel model that provides customers the opportunity to
engage with the brand across different channels. Capturing QUIZ's
sales growth potential online remains a key priority for the
Group.
The overall 50% decline in online revenues in the Period
reflected:
-- strong sales of occasion wear in the prior year;
-- the impact of the sharp decline in demand for occasion wear
following COVID-19-related restrictions on social activities, which
was only partially mitigated by the increase in availability of
casual wear product lines; and
-- a 57% decline of sales through QUIZ's third-party website partners.
Although demand declined through our third-party website
partners, we continued to receive positive feedback with regards to
our product and our performance on these websites relative to other
brands. We continue to work with these partners to optimise the
range and quantity of stock available to them to improve the
financial returns from these arrangements.
3. Managing the gross margin
Whilst progress was made in the previous year to improve gross
margins, the decline in revenues during the Period led to an
increased level of discounting. This resulted in the gross margin
generated declining to 51.7% (HI 2020: 61.7%).
Discounting was most prevalent in the Summer of 2020 after the
initial lockdown of stores. Given the need to negotiate new lease
arrangements a number of stores were closed from March through to
the Autumn and stock was deeply discounted following reopening
before new stock was introduced.
We continue to manage stock to ensure newness for customers
whilst being mindful of potentially over committing given the
uncertainty as to demand. We are confident that our
well-established relationships with suppliers will allow us to
promptly respond to increased demand from consumers when this
occurs.
4. Right-sizing our cost base
We have sought to manage and reduce costs wherever possible
given the challenging trading conditions and decline in revenues.
As well as various cost saving initiatives the utilisation of the
various arrangements to support businesses provided by the UK
Government has been important, with GBP4.3 million of cash support
received under the furlough scheme and other payments.
Further to the cost management actions taken by the Group,
operating costs, net of government support, reduced 62% in the
period. We will continue to review our cost base to ensure it is
appropriate for the revenues that will be generated going
forward.
SUPPLY CHAIN
We continue to be aware of our responsibilities to source
clothes in a responsible and ethical way. There is an ongoing
programme to ensure that all our products are supplied in line with
our Ethical Code of Practice. We continue to monitor our supplier
closely and have processes in place to allow for clear visibility
across our supply chain. We remain committed to ensuring our
systems processes are fit for purpose and assure compliance in this
area.
CASH POSITION
Despite the challenging trading conditions, the Group retained a
cash balance of GBP5.5 million (31 March 2020: GBP6.9 million) at
the Period end. As at 25 January 2021, the Group had a cash balance
of GBP3.0 million. In addition to this cash balance, the Group
retains GBP3.5 million of bank and credit facilities available to
it from HSBC which expire in October 2021. There are no financial
covenants applicable to these facilities.
OUTLOOK AND CURRENT TRADING
Since the period end revenues have continued to be impacted by
the tightening of Government restrictions. The increased
restrictions on social activities impacted demand in October and
most stores and concessions were closed in November. Given the
circumstances, we were pleased with the sales generated prior to
Christmas before the closure of stores and concessions recommenced
in late December. Further to these disruptions, the revenues
generated in the three months to 31 December 2020 are summarised
below:
I October I October
31 December to 31 December Year-on-year
2020 2019 change
UK stores and concessions GBP5.8m GBP18.8m -69%
Online GBP6.6m GBP12.0m -45%
International GBP2.8m GBP5.9m -53%
Total GBP15.2m GBP36.7m -59%
Further to the current government restrictions, revenues are
currently limited to online and international customers.
Whilst revenues would generally be lower in January and
February, the current restrictions on social activities continue to
further impact demand. We continue to extend our casual product
ranges to meet changing consumer behaviour but increased sales in
this area do not compensate for the decline in occasion wear
revenues.
This diversification of product ranges away from dressy occasion
wear and towards more causal ranges will inform the Group's
long-term approach as well as our near term response to the
restrictions caused by the COVID-19 pandemic.
We continue to believe that the QUIZ brand has strong customer
appeal and that the Group's omni-channel business model remains
relevant and key to our long-term success. Our ranges have
traditionally been based upon providing options for socialising,
from going to lunch with friends to attending weddings.
We are encouraged by the roll out of the vaccination programme
across the United Kingdom and we look forward to the gradual
relaxation of Government restrictions in due course. Whilst there
is uncertainty with regards to when social activities will revert
to their previous level, we remain confident that our proposition
remains attractive to customers in the long term.
FINANCIAL REVIEW
Gross margin
An increase in discounting was undertaken during the period
given the impact of the enforced lockdowns and requirement to clear
excess stocks. Due to this, the gross margin in period declined to
51.7% (H1 2020: 61.7%). Gross margins since 30 September 2020 have
been higher and more consistent with those previously
generated.
We continue to carefully monitor our stock levels and
requirements going forward.
Given the lower revenues generated in the Period there has been
an increase in the amount of slow-moving stock to be managed. To
maximise margins generated where possible we will consolidate and
represent stock left unsold from the previous year. In the previous
year we increased the level of stock provisions against slow-moving
stock and there was no requirement to significantly increase this
provision in the Period.
Operating costs
Consistent with the fall in revenues there have been significant
reductions in operating costs, namely administrative and
distribution costs, in the Period. Total costs decreased by 59% in
H1 2021 from GBP45.4 million to GBP18.8 million. The reductions in
costs reflect the benefit of cost reduction initiatives undertaken
during the Period as the impact of lower revenues being
generated.
Excluding the non-recurring charges in respect of the impairment
of right-of-use assets, property, plant and equipment and goodwill,
the write-down of inventory and a bad debt expense in the previous
year, underlying operating costs declined 51% from GBP38.3 million
to GBP18.8 million.
In addition to these reductions, operating costs have been
supplemented by GBP4.3 million of financial support from the UK
Government which is included in Other Operating Income. If these
costs were offset against operating costs, the reduction in
underlying operating costs amounted to 62% which reflects
management's emphasis on cost reduction activities.
Underlying administrative costs decreased by GBP12.5 million or
45% to GBP15.2 million (H1 2020: GBP27.7 million). The most
significant reductions included:
-- GBP5.2 million or a 76% reduction in property costs
(including depreciation charges in relation to leases for
standalone stores) further to the restructuring of our standalone
stores and revised rental agreements as well as the waiver of
business rates for retail businesses in the current financial year
to March 2021;
-- GBP4.1 million or a 31% reduction in employment costs
reflecting reductions in employee numbers, the impact of employees
being placed on furlough and the reduction in director salaries
applied in the Period;
-- GBP1.3 million or a 39% reduction in depreciation and
amortisation costs (excluding depreciation charges in relation to
leases for standalone stores). These reduced costs reflect the
impairment of assets recorded in the previous year which reduced
the amount of assets to depreciated and amortised; and
-- GBP1.0 million or a 60% reduction in marketing costs . Spend
undertaken has been focused on digital marketing which has proven
beneficial. We recognise the need to increase marketing for the
QUIZ brand to heighten customer awareness of the brand when demand
for occasion and dressy wear returns and we have various plans
ready to implement when appropriate.
Distribution costs decreased 66% to GBP3.3m (H1 2020: GBP10.6m)
and is reflective of the lower revenues generated in the
period.
Included in distribution costs are commission payments to third
parties who sell product on behalf of QUIZ. These fell as a result
of the enforced closure on concessions and lower online sales
through third parties.
Also reflected in the drop in distribution costs are lower
carriage costs to stores, concessions and franchises as well as to
online customers in line with the reduced revenues generated.
Other operating income
The business has benefited from the financial support provided
by the UK Government in response to the COVID-19 pandemic. The
support provided has included the waiver of business rates for
retail businesses as well as direct payments made to
businesses.
Given the enforced closure of our stores and concessions through
the period the business has placed employees on furlough to help
preserve these roles. During the Period the business received
GBP4.0 million of payments in relation to employees placed on
furlough.
In addition, there were GBP0.3 million of payments received in
relation to Coronavirus Grants made available to retail businesses
which were closed due to national or local restrictions.
Finance costs
The finance costs of GBP0.1 million (H1 2020: GBP0.4 million)
primarily relates to interest costs arising on the lease payments
for stores. The reduction in costs reflect the change in lease
arrangements further to the restructuring of the standalone retail
store portfolio and the termination of previous leases.
Foreign currency hedging
The Group currently undertakes foreign exchange
transactions.
The primary inflow of foreign exchange relates to the Euro
denominated revenues generated in Ireland. The primary outflow of
foreign exchange relates to the purchase of stock, primarily in
Chinese Renminbi.
The Group manages the risk associated with foreign currency
fluctuations through the use of forward contracts for the sale or
the purchase of the respective currency for a period of up to 12
months in advance. We have currently hedged our expected currency
inflows and outflows for the remainder of the financial year.
Taxation
Given the losses incurred, the reported tax rate in the current
year is a credit of 12.6% (H1 2020: credit of 18.4%) which reflects
the estimated tax credit for the year. There is no tax impact
arising from the GBP16.2 million non-recurring gain arising on the
administration of a subsidiary undertaking .
Earnings/loss per share
The earnings per share for H1 2021 was 9.62 pence (H1 2020: loss
per share of 4.44 pence). The underlying basic loss per share for
H1 2021, which is calculated using the underlying profit before tax
less tax at the effective statutory rate, was 3.45 pence (H1 2020:
earnings per share of 1.20 pence)
Dividends
Given the loss incurred in the current year the Board does not
recommend the payment of a dividend in respect of this Period. No
dividends were paid in the previous periods.
Cash flow and cash position
Net cash at the period end amounted to GBP5.5 million (H1 2020:
GBP7.2 million), a reduction of GBP1.4 million since 31 March
2020.
Given the reduced revenues generated during the period the
business has been focussed on preserving cash. Cost reductions have
been made where practical, the support available from Government
has been utilised, there has been a focus on managing working
capital, and capital expenditure projects have been suspended.
The impact of the underlying EBITDA loss of GBP3.4 million was
mitigated by favourable movement in working capital resulting in
GBP0.4 million of cash being generated from operating
activities.
Capital expenditure in the period has been restricted to GBP0.3
million (H1 2020: GBP2.5 million). Further to the administration of
Kast Retail Limited the business and certain assets were acquired
by the Group for GBP1.3 million.
The cash outflows from financing activities related to the
payment of lease liabilities of GBP0.2 million (H1 2020: GBP2.8
million).
The business will continue to preserve cash in anticipation of
increased demand from the Spring / Summer 2021 period. Net cash at
25 January 2021 amounted to GBP3.0 million. In addition, the
business has GBP3.5 million of bank facilities. There are no
financial covenants associated with these facilities.
Reconciliation of Underlying and Reported (IFRS) Results
In establishing the underlying operating profit in the current
year an adjustment is made to remove the impact of the
non-recurring gain arising on the administration of a subsidiary
undertaking, as described in Note 5.
The adjustments in the previous year related to non-recurring
charges in respect of the impairment of right-of-use assets,
property, plant and equipment and goodwill, the write-down of
inventory and a bad debt expense as described in Note 4.
A reconciliation between Reported and Underlying results is
provided below:
Non-recurring
Reported costs Underlying
GBP000 GBP000 GBP000
Six months ended 30 September
2020
Profit/(loss) before tax 10,615 (16,231) (5,616)
Operating profit/(loss) 10,714 (16,231) (5,517)
Depreciation and amortisation 2,118 - 2,118
EBITDA 12,832 (16,231) (3,399)
Six months ended 30 September
2019
(Loss)/profit before tax (6,751) 7,007 256
Operating (loss)/profit (6,332) 7,007 675
Depreciation and amortisation 12,118 (6,507) 5,611
EBITDA 5,786 500 6,286
Year ended 31 March 2020
Loss before tax (29,445) 26,337 (3,108)
Operating loss (28,662) 26,337 (2,325)
Depreciation and amortisation 34,283 (23,788) 10,495
EBITDA 5,621 2,549 8,170
QUIZ plc
Unaudited consolidated statement
of comprehensive income
For the six months ended 30 September
2020
Unaudited Unaudited
six months six months Audited
ended 30 ended 30 year ended
September September 31 March
2020 2019 2020
Notes GBP000 GBP000 GBP000
Continuing operations
Revenue 3 17,246 63,259 118,020
Cost of sales (8,336) (24,245) (46,892)
----------- ----------- ------------
Gross profit 8,910 39,014 71,128
Recurring administrative costs (15,180) (27,746) (54,681)
Non-recurring administrative costs 4 - (7,007) (26,337)
----------- ----------- ------------
Administrative costs (15,180) (34,753) (81,018)
Distribution costs (3,602) (10,598) (18,810)
----------- ----------- ------------
Total operating costs (18,782) (45,351) (99,818)
Non-recurring gain arising from
administration of subsidiary undertaking 5 16,231 - -
Other operating income 6 4,355 5 38
----------- ----------- ------------
Total operating income 7 20,586 5 38
Operating profit/(loss) 10,714 (6,332) (28,662)
Finance income 45 5 28
Finance costs (144) (424) (811)
Profit/(loss) before income tax 10,615 (6,751) (29,445)
Income tax credit 8 1,333 1,239 418
Profit/(loss) for the year 11,948 (5,512) (29,027)
Other comprehensive income
Foreign currency translation differences
- foreign operations 211 67 62
Profit/(loss) and total comprehensive
income for the year 12,159 (5,445) (28,965)
=========== =========== ============
Basic and earnings/(loss) per
share 10 9.62p (4.44)p (23.37)p
=========== =========== ============
All of the above income is attributable to the shareholders of
the Company.
QUIZ PLC
Unaudited consolidated statement of financial position
As at 30 September 2020
Unaudited Unaudited
as at 30 as at 30 Audited
September September as at 31
2020 2019 March 2020
Notes GBP000 GBP000 GBP000
Assets
Non-current assets
Property, plant and equipment 11 6,474 11,277 7,270
Right to use asset 12 4,671 15,692 2,992
Intangible assets 13 3,918 8,753 4,061
Deferred tax asset 1,333 1,158 -
Total non-current assets 16,396 36,880 14,323
---------- ---------- ------------
Current assets
Inventories 10,011 14,601 9,693
Trade and other receivables 14 5,473 8,727 7,110
Cash and cash equivalents 5,503 7,161 6,897
Total current assets 20,987 30,489 23,700
Total assets 37,383 67,369 38,023
Liabilities
Current liabilities
Trade and other payables 15 (9,617) (12,112) (11,367)
Lease liabilities (1,486) (7,031) (6,388)
Derivative financial liabilities (21) (16) (36)
Corporation tax payable (75) (213) (149)
Total current liabilities (11,199) (19,372) (17,940)
Non-current liabilities
Lease liabilities (3,582) (12,152) (9,950)
Deferred tax liabilities (1) (484) (7)
Total non-current liabilities (3,583) (12,636) (9,957)
---------- ---------- ------------
Total liabilities (14,782) (32,008) (27,897)
Net assets 22,601 35,361 10,126
========== ========== ============
Equity
Called up share capital 373 373 373
Share premium 10,315 10,315 10,315
Merger reserve 1,130 915 915
Retained earnings 10,783 23,758 (1,477)
Total equity 22,601 35,361 10,126
========== ========== ============
QUIZ PLC
Unaudited consolidated statement of changes in equity
For the six months ended 30 September 2020
Unaudited Unaudited
as at 30 as at 30 Audited
September September as at 31
2020 2019 March 2020
GBP000 GBP000 GBP000
Share capital
Balance at beginning and end of
period 373 373 373
Share premium
Balance at beginning and end of
period 10,315 10,315 10,315
Merger reserve
Balance at beginning and end of
period 915 915 915
Movement arising from administration
of subsidiary 215 - -
---------- ---------- ------------
Balance at the end of the period 1,130 915 915
Profit and loss account
Balance at beginning of period (1,477) 29,196 29,916
Total comprehensive income 12,159 (5,445) (28,965)
Impact of IFRS 16 implementation - (67) (1,739)
Share based payments charge 101 74 31
Balance at end of period 10,783 23,758 (1,477)
---------- ---------- ------------
Total equity at beginning of period 10,126 40,799 10,799
========== ========== ============
Total equity at end of period 22,601 35,361 10,126
========== ========== ============
QUIZ PLC
Unaudited consolidated statement of changes of cash flows
For the six months ended 30 September 2020
Unaudited Unaudited
six months six months Audited
ended 30 ended 30 year ended
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Cash flows from operating activities
Cash generated by operations
Profit/(loss) for the year 11,948 (5,512) (29,027)
Depreciation of property, plant
and equipment 963 1,905 3,911
Impairment of property, plant
and equipment - 4,626 7,350
Depreciation of right-of-use asset 916 3,518 6,117
Impairment of right-of-use assets - 1,881 11,208
Amortisation of intangible assets 310 188 467
Impairment of intangible assets - - 5,230
Gain from administration of subsidiary
undertaking (16,231) - -
Share based payment charges 101 74 31
Exchange movement 39 59 87
Finance cost expense 139 419 783
Income tax credit (1,333) (1,239) (418)
(Increase)/decrease in inventories (288) (147) 4,760
Decrease in receivables 691 2,325 4,920
Increase/(decrease) in payables 3,170 (2,697) (4,273)
Increase in provisions - 107 -
----------- ----------- ------------
Net cash from operating activities 425 5,507 11,146
Interest paid (36) (424) (696)
Income taxes paid (5) (149) (255)
Net cash generated in operating
activities 384 4,934 10,195
----------- ----------- ------------
Cash flow from investing activities
Payments to acquire intangible
assets (166) (711) (1,528)
Payments to acquire property,
plant and equipment (167) (1,824) (2,548)
Payment to acquire trade and assets (1,302) - -
Interest received 45 5 28
Net cash used in investing activities (1,590) (2,530) (4,048)
----------- ----------- ------------
Cash flows from financing activities
Repayment of borrowings - (40) (40)
Payment of lease liabilities (187) (2,765) (6,739)
Net cash used by financing activities (187) (2,805) (6,779)
----------- ----------- ------------
Net decrease in cash and cash
equivalents (1,393) (401) (632)
Cash and cash equivalents at beginning
of period 6,897 7,555 7,555
Effect of foreign exchange rates (1) 7 (26)
Cash and cash equivalents at end
of period 16 5,503 7,161 6,897
=========== =========== ============
Basis of Preparation
1.1 General Information
QUIZ plc is a public limited company incorporated and registered
in Jersey and listed on the Alternative Investment Market (AIM) of
the London Stock Exchange. Its registered office is: 22 Grenville
Street, St Helier, Jersey, Channel Islands, JE4 8PX.
1.2 Basis of Preparation
These interim financial statements for the six months to 30
September 2020 have been prepared in accordance with "IAS 34
Interim Financial Reporting" as adopted by the European Union and
the requirements of the Disclosures and Transparency Rules. T hey
are unaudited and do not include all of the information required
for full annual financial statements and do not constitute
statutory accounts within the meaning of Companies (Jersey) Law
1991 .
The comparative figures for the year ended 31 March 2020 are not
the Group's statutory accounts for that financial year. The interim
financial statements should be read in conjunction with the Group's
Annual Report and Accounts for the year ended 31 March 2020,
prepared and approved by the directors in accordance with
International Financial Reporting Standards as adopted by the EU
("Adopted IFRSs"), IFRIC Interpretations and the Companies (Jersey)
Law 1991 applicable to companies reporting under IFRS. The Annual
Report and Financial Statements for the year ended 31 March 2020
has been filed with the Jersey Companies Registry.
The auditors' reports drew the reader's attention to the
macro-economic and social factors outside the Group's control,
primarily in respect of the UK Government's measures to control the
spread of COVID 19 and which would continue to have, a material
impact on the Group's trading performance for the foreseeable
future. The uncertainty this created in the Group's ability to
accurately forecast trading cash flows and continue to trade within
their current facilities indicated that a material uncertainty
existed that may cast significant doubt on the Group's ability to
continue as a going concern. The auditor's opinion was not modified
in respect of this matter and did not include reference to any
matters on which the auditors were required to report by exception
under Companies (Jersey) Law 1991.
The Group's business activities together with the factors that
are likely to affect its future developments, performance and
position are set out in the Business and Financial Reviews of its
Annual Report and Financial Statements for the year ended 31 March
2020. The Financial Review describes the Group's financial
position, cash flows and bank facilities. The interim financial
statements are unaudited and were approved by the board of
directors on 25 January 2020.
The interim financial statements have been prepared by the
directors of the Company (the "Directors") under the historical
cost convention except for certain financial instruments and share
based payment liabilities which are measure at fair value.
1.3 Accounting Standards
The accounting policies applied in these interim financial
statements are the same as those set out in the Group's Annual
Report and Financial Statements for the year ended 31 March 2020.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not effective.
There are several standards and interpretations issued by the
IASB that are effective for financial statements after this
reporting period. Of these new standards, amendments and
interpretations, there are none which are expected to have a
material impact on the Group's consolidated financial
statements.
1.4 Use of Estimates and Judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
In preparing these interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the Group's annual financial
statements for the year ended 31 March 2020.
1.5 Going concern
In determining whether the Group's accounts can be prepared on a
going concern basis, the Directors considered the Group's business
activities and cash requirements together with factors likely to
affect its performance and financial position, including the
current and future anticipated impact of COVID-19.
The key judgements in relation to the going concern assessment
are in respect of the potential ongoing impact of COVID-19 on the
Group. They include the timing of the Group's recovery to
pre-COVID-19 trading levels and the likelihood and impact of
further lockdowns, including their duration and the impact on
consumer demand in the markets in which the Group operates.
When making these judgements, the Directors considered trading
levels when the Group's stores were reopened and the outlook for
the Group against their detailed base case scenario and further
downside scenarios.
The directors have prepared trading and cash flow forecasts for
a period of one year from the date of approval of these interim
financial statements. In preparing the above scenarios there
remains the uncontrollable factor with regards the extent of the
measures the UK Governments will take to control the spread of
COVID-19. These measures have the potential to materially impact on
the operation of non-essential retail and on demand for fashionwear
such that the Group may not be able to operate within its existing
facilities. The Directors believe that, in the absence of further
funding, this creates a material uncertainty which casts
significant doubt on the Group's ability to continue as a Going
Concern.
Further actions could be undertaken to mitigate against any
shortfalls arising from these scenarios. These include reducing
operating costs and capital expenditure, ceasing or suspending
loss-making activities and optimising working capital
Based on the assessment undertaken, the directors have a
reasonable expectation that the Group has access to adequate
resources to enable it to continue to operate as a going concern
for the foreseeable future, being a period of twelve months from
the interim financial statements were approved. Accordingly, the
directors consider it appropriate to continue to adopt a going
concern basis of accounting in preparing the financial statements
of the Group.
2. Principal risks and uncertainties
The board considers the principal risks and uncertainties which
could impact the group over the remaining six months of the
financial year to 31 March 2021 to be unchanged from those set out
on in the Annual Report and Financial Statements for the year ended
31 March 2020 on pages 18 to 21, which are available on
www.quizgroup.co.uk.
In summary these relate to the current and possible future
pandemic, the loss of a key trading partner, brand and reputational
risk, a changing economic environment, product sourcing, fashion
and customer demands risk; the risk of disruption to IT systems or
distribution networks; people, financial and regulatory risk.
3. Revenue
An analysis of revenue by source and geographical destination is
as follows:
Unaudited Unaudited
six months six months Audited
ended 30 ended 30 year ended
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Online 9,880 19,951 37,485
International 2,661 11,985 21,789
UK stores and concessions 4,703 31,323 58,746
----------- ----------- ------------
17,246 63,259 118,020
United Kingdom 14,358 50,774 95,288
Overseas 2,888 12,485 22,732
17,246 63,259 118,020
=========== =========== ============
4. Non-recurring administrative costs
Non-recurring administrative costs comprise:
Unaudited Unaudited
six months six months Audited
ended 30 ended 30 year ended
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Impairment of right-of-use assets - 1,881 11,208
Impairment of property, plant
and equipment - 4,626 7,350
Write-down of inventory - 500 2,165
Impairment of goodwill - - 5,230
Write-off of debt - - 384
----------- ----------- ------------
- 7,007 26,337
=========== =========== ============
Impairment of right-of-use assets
The GBP11,208,000 charge in relation to the impairment of
right-of-use assets includes a GBP1,881,0000 charge recognised at
30 September and a further GBP9,327,000 charge further to the
appointment of joint administrators to a wholly owned subsidiary
undertaking. The impairment relates to the value previously
attributed to the right-of-use assets associated with standalone
stores.
The impairment charges arose further to a decline in footfall in
stores leading to a number of them becoming unprofitable during the
year. In addition, Kast Retail Limited which operated the
standalone stores was placed into administration on 10 June 2020.
Further to this all the leases associated with standalone stores
were terminated resulting in a reduction in value previously
attributed to these leases.
Whilst none of the leases associated with the standalone stores
operated by Kast transferred to Zandra, new lease arrangements were
secured for the majority of the previous standalone stores.
Further to this, management assessed the value in use of each
CGU at 31 March 2020 with reference to the new lease arrangements
entered into. Further to this the Group recognised an additional
impairment charge of GBP9,327,000.
Impairment of property, plant and equipment
Retail store assets (as with other financial and non-financial
assets) are subject to impairment based on whether current or
future events and circumstances suggest that their recoverable
amount may be less than their carrying value. Given the
circumstances outlined above there was a requirement for an
impairment charge in the current year.
The calculation of the net present value of future cash flows is
based on the same assumptions for growth rates and expected changes
to future cash flows as set out above, discounted at the
appropriate risk adjusted rate.
The GBP7,350,000 charge in relation to the impairment of
property, plant and equipment includes a GBP4,626,0000 charge
recognised at 30 September and a further GBP2,724,000 charge
further to the appointment of joint administrators to a wholly
owned subsidiary undertaking.
Write-down of inventory
The GBP2,165,000 charge in relation to the write-down of
inventory includes a GBP500,000 charge recognised at 30 September
and a further GBP1,615,000 charge further to the appointment of
joint administrators to Kast Retail Limited which operated our
standalone stores.
Further to the COVID-19 outbreak there has been a substantial
reduction in consumer demand. Stores were closed for a prolonged
period initially in response to Government guidance and then
further to the appointment of the joint administrators. A
significant amount of the stock acquired prior to March 2020
remained unsold. Given the circumstances this stock was written
down to its estimated realisable value.
Impairment of goodwill
At 31 March 2019, the Group recorded goodwill of GBP6,175,000
relating to the difference between the fair value of the
consideration transferred and the fair value of assets and
liabilities purchased which arose when Shoar (Holdings) Limited
acquired the entire share capital of Tarak Retail Limited in
2012.
The goodwill was assessed for impairment by comparing the
carrying value to value-in-use calculations. Further to this
assessment given the losses projected for the year ended 31 March
2021 and the uncertainty as to future performance the Directors
considered that the goodwill was impaired by GBP5,230,000.
Write-off of debt
The non-recurring costs of GBP384,000 related to the write-off
of debt arising from a customer entering into an administration
process.
5. Non-recurring gain arising from administration of subsidiary undertaking
On 10 June 2020, the Company announced proposals to restructure
its standalone retail store portfolio. The Group's 82 standalone
stores in the United Kingdom and the Republic of Ireland were
operated by Kast Retail Limited ("Kast"). The Group's three
standalone stores in Spain were operated by Kast International
Spain SL, a wholly owned subsidiary of Kast.
Further to the appointment of joint administrators to Kast,
Zandra Retail Limited ("Zandra"), a wholly owned subsidiary of the
Company, acquired the business and certain assets of Kast,
including inventories, fixtures and fittings, contracts and
vehicles.
Whilst none of the leases associated with the standalone stores
operated by Kast transferred to Zandra, new lease arrangements were
secured for the majority of the previous standalone stores.
Further to this restructuring, Kast is no a longer subsidiary
undertaking owned by QUIZ plc and certain assets and liabilities of
Kast are no longer retained by the Group.
This resulted in a gain of GBP16.2 million being recorded in
relation to the net liabilities which are no longer reflected in
the financial statements. These liabilities primarily related to
lease liabilities in relation to leases associated with standalone
stores.
6. Other operating income
Other operating income comprises:
Unaudited Unaudited
six months six months Audited
ended 30 ended 30 year ended
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Government support - furlough
payments 4,024 - -
Government support - grant income 331 - -
Other income - 5 38
4,355 5 38
=========== =========== ============
7. Operating profit/(loss)
Operating profit/(loss) is stated after charging:
Unaudited Unaudited
six months six months Audited
ended 30 ended 30 year ended
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Cost of inventories recognised
as an expense 8,336 24,245 46,892
Distribution costs 3,602 10,598 18,810
Employment costs 8,860 12,928 25,206
Depreciation 1,879 5,423 10,028
Amortisation 310 188 467
Short-term lease payments 262 234 542
Non-recurring impairment of
property, plant and equipment - 4,626 7,350
Non-recurring impairment of
right-to-use assets - 1,881 11,208
Non-recurring write-down to
inventory - 500 2,165
Non-recurring impairment of
goodwill - - 5,230
Non-recurring write-off of debt - - 384
Non-recurring income arising
from administration of subsidiary
undertaking (16,231) - -
Other operating income (4,355) (5) (38)
Other expenses 3,868 8,973 19,427
6,531 69,591 130,687
=========== =========== ============
Employment costs reflect the costs incurred on those directly
employed by the Group and agency costs.
8. Income Tax Expense
The Group's effective tax rate in respect of continuing
operations for the six months ended 30 September 2020 is 12.6% (six
months ended 30 September 2019 - 18.4% and year ended 31 March
2020: 1.4%).
9. Dividends
No dividend was paid in the current or previous periods.
10. Earnings per share
Unaudited Unaudited
six months six months Unaudited
ended 30 ended 30 year ended
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Number of shares: No. No. No.
Weighted number of ordinary shares
outstanding 124,230,905 124,230,905 124,230,905
Effect of dilutive options - 5,573 132,357
Weighted number of ordinary shares
outstanding- diluted 124,230,905 124,236,478 124,363,262
Earnings: GBP000 GBP000 GBP000
Profit/(loss) basic and diluted 11,948 (5,512) (29,027)
(Loss)/profit adjusted basic and
diluted (3,283) 1,495 (2,960)
Earnings per share: Pence Pence Pence
Basic earnings/(loss) per share 9.62 (4.44) (23.37)
Adjusted basic earnings/(loss)
per share (3.45) 1.20 (2.17)
Diluted earnings/(loss) per share 9.62 (4.44) (23.34)
Diluted earnings/(loss) per share (3.45) 1.20 (2.16)
The adjusted profit after tax in the current year is shown
before the gain arising on the administration of a subsidiary
undertaking of GBP16.2 million (six months ended 30 September 2019
- non-recurring administrative costs of GBP7.0 million and year
ended 31 March 2020: non-recurring administrative costs of GBP26.3
million).
The directors believe that the adjusted profit after tax and the
adjusted earnings per share measures provide additional useful
information for shareholders on the underlying performance of the
business. These measures are consistent with how underlying
business performance is measured internally. The adjusted profit
after tax measure is not a recognised profit measure under IFRS and
may not be directly comparable with adjusted profit measures used
by other companies.
11. Property, Plant and Equipment
Fixtures,
Leasehold Motor vehicles Computer fittings
property equipment and equipment Total
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 April 2020 1,627 146 2,031 24,081 27,885
Additions 122 13 7 25 167
Disposals (250) (18) (339) (6,531) (7,138)
----------- ---------------- ---------- -------------- -------
At 30 September
2020 1,499 141 1,699 17,575 20,914
Depreciation
At 1 April 2020 1,357 101 1,061 18,096 20,615
Charge 47 10 110 796 963
Disposals (250) (18) (339) (6,531) (7,138)
----------- ---------------- ---------- -------------- -------
At 30 September
2020 1,154 93 832 12,361 14,440
Net book value
At 30 September
2020 345 48 867 5,214 6,474
At 31 March 2020 270 45 970 5,985 7,270
=========== ================ ========== ============== =======
12. Right-of-Use Assets
Property
GBP000
Cost
At 1 April 2020 32,218
Additions 2,595
Disposals (28,685)
--------
At 30 September
2020 6,128
Depreciation
At 1 April 2020 29,226
Charge 916
Disposals (28,685)
--------
At 30 September
2020 1,457
Net book value
At 30 September
2020 4,671
At 31 March 2020 2,992
========
The Group present lease liabilities separately within the
statement of financial position. The movement in the year
comprised:
GBP000
Cost
At 1 April 2020 16,338
Additions 2,595
Interest expense related to lease
liabilities 144
Liabilities extinguished further
to administration (13,787)
Repayment of lease liabilities (including
interest) (222)
--------
At 30 September 2020 5,068
========
Current lease liabilities 1,486
Non-current lease liabilities 3,582
========
13. Intangibles
Computer
Goodwill software Trademarks Total
GBP000 GBP000 GBP000 GBP000
Cost
At 1 April 2020 6,175 4,085 165 10,425
Additions - 167 - 167
At 30 September
2020 6,175 4,252 165 10,592
Depreciation
At 1 April 2020 5,230 1,090 44 6,364
Amortisation - 301 9 310
At 30 September
2020 5,230 1,391 53 6,674
Net book value
At 30 September
2020 945 2.861 112 3,918
At 31 March 2020 945 2,955 121 4,061
=========== ========= ========== =======
14. Trade and other receivables
Unaudited Unaudited
as at 30 as at 30 Audited
September September as at 31
2020 2019 March 2020
GBP000 GBP000 GBP000
Trade receivables - gross 3,076 6,333 3,079
Allowance for doubtful debts (301) (191) (320)
---------- ---------- ------------
Trade receivables - net 2,775 6,142 2,759
Other receivables 307 158 1,539
Prepayments and accrued income 2,389 2,425 2,810
Amounts owed by related parties 2 2 2
5,472 8,727 7,110
========== ========== ============
15. Trade and other payables
Unaudited Unaudited
as at 30 as at 30 Audited
September September as at 31
2020 2019 March 2020
GBP000 GBP000 GBP000
Trade payables 5,340 6,740 6,852
Other taxes and social security
costs 974 1,549 1,354
Accruals 2,602 3,281 2,301
Other creditors 633 470 852
Amounts due to related parties 8 72 8
9,617 12,112 11,367
========== ========== ============
16. Financial Instruments
The following table shows the carrying amounts and fair values
of financial assets and liabilities. All financial liabilities are
measured at amortised cost.
Unaudited Unaudited
as at 30 as at 30 Audited
September September as at 31
2020 2019 March 2020
GBP000 GBP000 GBP000
Carrying value of financial
assets:
Cash and cash equivalents 5,503 7,161 6,897
Trade and other receivables 3,083 6,302 4,300
Total financial assets 8,586 13,463 11,197
========== ========== ============
Carrying value of financial
liabilities:
Trade and other payable (8,643) (10,563) (10,013)
Lease liabilities (5,068) (19,183) (16,338)
Total financial liabilities (3,711) (29,746) (26,351)
========== ========== ============
The cash and cash equivalents are held with bank and financial
institution counterparties, which are rated P-1 and A-1, based on
Moody's ratings.
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