Science in Sport plc (AIM: SIS), the premium performance nutrition company serving elite athletes, sports enthusiasts and the gym lifestyle community, is pleased to announce an update on trading for the current financial year, ending 31 December 2020.
The business is performing well, driven by continued momentum in our Online business and substantial improvements in gross margin, with both factors leading to the business transitioning into being profitable on an EBITDA level for 2020.
Online channels continue to perform very strongly and this has offset some of the downturn caused in our Retail channels by the COVID-19 pandemic. Total Online revenues are ahead 39% year on year at £23 million to the end of November. Online sales are expected to grow to approximately 51% of total revenue for the full year, compared with 38% in 2019.
Very good progress has been made with our PhD.com digital business, up 108% to the end of November versus the same period in 2019. Our USA business is up 32% year on year and cash burn is significantly reduced, given the gross margin improvement to 74% and a streamlined operating model.
Group gross margin for the year is forecast to be up by four percentage points to approximately 48%, compared with 44% in 2019. Gross margin to date for the second half is up a further two percentage points to 50% and we see this as a sustainable base. The improvement is driven by Online pricing and promotion strategy, together with strategic Supply Chain initiatives flowing through in the second half of the year.
Given strong momentum in Online channels and some recovery in Retail following the severe downturn in April and May, we expect Group revenue for 2020 will be in the region of £49.8 million, versus £50.6 million in 2019.
We expect to report underlying EBITDA* of approximately £1.0 million for the year, net of COVID-related exceptional costs of £0.3 million, versus a full-year loss of (£0.3 million) in 2019. The business has generated a positive EBITDA each month from June 2020 onwards.
The cash position is strong and we expect to close the year with approximately £10 million, having generated cash of around £0.5 million in 2020, this after capital investment in our production capacity and technology platform.
*excludes depreciation, amortisation, share-based payments, 2019 PhD acquisition costs and foreign exchange variances on intercompany balances
The Company will issue a Pre-Close Trading Statement in early January 2021.
Stephen Moon, Science in Sport's Chief Executive Officer, commented:
"I am pleased to announce the business is performing well. We bounced back strongly following our decisive actions in March and April to restructure the business and strengthen the balance sheet. Our focus has been accelerating our long-term growth strategy and investing in our online business, and this has successfully delivered for us.
We have invested in technology and talent to drive our online business across global territories for 2021 onwards, and we have continued to drive innovation and brand equity to underpin our premium margin business.
A new supply chain unit is planned for late 2021. This will build further on the substantial progress made in gross margin during this year, and we expect to make progress throughout the strategic planning period.
Whilst it is too early to reinstate guidance for the longer term, once the COVID-19 pandemic abates, we are well positioned to take advantage of profitable growth opportunities in all major global regions."