S-Ventures PLC Interim unaudited results

RNS Number : 7249I

S-Ventures PLC

28 March 2024

 

28 March 2024

S-Ventures PLC

("S-Ventures", "Group" or the "Company")
Company Number: 12723377

Interim unaudited results for the six months ended 30 September 2023

The Directors of S-Ventures PLC are pleased to report on the second interim period for the six months ended 30 September 2023.  These accounts are unaudited and have not been reviewed by an auditor.

The Directors have decided to change the accounting reference date for the Group to 31 December 2023.  This will bring the accounts into line with our largest subsidiary, Juvela Limited.  Accordingly, these results represent a second half year.

Financial highlights:-

	Six Months ended 30 September 2023	Six months ended 31 March 2023	Year ended 30 September 2022
Gross Revenues from continuing operations	£9.6m	£8.4m	£7.8m
EBITDA	£0.8m	(£0.8m)	(£1.7m)
Profit (Loss) from continuing operations	(£1.5m)	(£1.3 m)	(£3.2m)
Cash	£0.3m	£0.4 m	£1.8m
LPS (in pence per share)	(1.14p)	(1.98p)	(2.4p)

 

Operational highlights:-

The business was formed to invest in, acquire and grow businesses in the natural wellness food tech and organic snacking sector. The key points of this period are:

·    Gross Sales for the six months of £9.7m (prior period £8.4 m) made up as follows:-

	Continuing Operations	Discontinued Operations	Total six months ended 30 September 2023	Six months ended 31 March 2023	12 months ended 30 September 2022
Gross Sales	£9.6 m	£0.0 m	£9.7 m	£8.4 m	£8.6m
Trade discounts, listing fees etc	£0.9 m	-	£0.9 m	£0.8 m	£0.8 m
Net Sales	£8.7 m	£0.0 m	£8.7 m	£7.6 m	£7.8 m

 

 

 

·    The results for our business segments analysis is:

	Plant-based Nutrition *	Bakery	Technical Services	Admin- istration	Total
Net Sales Revenues	£3.2m	£3.8m	£1.7m	£0.1m	£8.7m
Operating Profit/(Loss) before Tax	(£0.7m)	£0.7m	£0.0m	(£1.4m)	(£1.4m)

* The Plant-based Nutrition division includes the discontinued Ohso Chocolate business

·    The Loss after tax is stated after closure and impairment costs of in respect of Lizza GmbH, Ohso Chocolate Limited and Vegan Punk Ventures.

·    This half year is the first full period of Juvela's contribution.  The Lizza business was placed into liquidation at the end of the previous half year.

·    As previously reported, the Group has obtained bridging finance loans totalling £3m.  Certain of these loans include conversion rights in the event that the proposed transaction, discussed below, occurs.

·    In addition to the debt funding, the Company is in discussions with Riverfort Global Opportunities plc ("RGO") with respect to a potential sale of its operating subsidiaries and the novation of SVEN's liabilities, (the "Business") to RGO (the "Proposed Transaction").

Under the Proposed Transaction, RGO would acquire 100% of the Business in exchange for new shares in RGO issued to SVEN.  The Proposed Transaction, if finalised, would be a reverse takeover for RGO, requiring, among other things, the publication of an AIM Admission Document in respect of the enlarged group and the approval of both RGO and SVEN shareholders.

Scott Livingston, CEO of S-Ventures, comments: -

I am pleased to present our interims for the second 6-month period ended September 2023.

The business has evolved significantly in the period and steered through a large number of challenges. As previously reported Juvela Limited, acquired in December 2022, has been performing strongly since our acquisition with gross sales of £4.3m for the six months to 30 September 2023 (six months to 31 March 2023 - £2.6m).

Our primary trading focus has been on restructuring Pulsin, which has resulted in very significant cost reductions post the period end.  The business has been hampered by rising ingredient prices and sourcing difficulties.  I am now pleased to report that we have significantly restructured the business in the period since these accounts and reduced its overheads by some 34%.  The team is now actively gearing up for new product launches later in 2024.

Gross Revenues as a group, year on year, are more than double the level they were this time last year as a result of both organic growth and acquisition.  Juvela is performing above plan.  We have very exciting new product development in progress and look forward to providing updates in due course.

Our tech team at Market Rocket has continued to grow with increased revenues on its Marketverse Amazon platform coming mainly from third party businesses.

We have had to discontinue operations with Ohso due to rising cocoa prices making the product uneconomic in current market conditions.

 

The environment remains fragile and uncertain but we move forward with a strengthened portfolio and a clear idea of the markets best suited to our product ranges.  

The challenges of the recent period have redoubled our focus on instilling best practice and diligence in expenditure and cost control.  Despite constraints, we are building a strong foundation for future growth. I would like to thank the team for their hard work throughout the last 12 months.

 

As set out in our recent trading update, we are changing our year end to 31 December. Our revenue for the 15 months to the new year end of 31 December 2023 is approximately £21.6m.

We will update the market with progress on the potential reversal of our businesses into AIM quoted Riverfort Global Opportunities PLC, as appropriate.

We continue to consider alternative capital raising to optimise funding, should that prove necessary, to enable us to exploit market opportunities and for working capital purposes.

About S-Ventures

S-Ventures invests in, acquires and grows businesses in the natural wellness, food-tech and organic snacking sector.

Enquiries

 

S-Ventures PLC	VSA Capital Limited
Scott Livingston, Chief Executive Officer	Broker and Financial Advisor
Stephen Argent, Chief Financial Officer	Andrew Raca  (Corporate Finance)
[phone]	[phone]

 

Second Interim management report

Overview

We present the S-Ventures unaudited second interim results for the six months ended 30 September 2023. We have decided to amend our accounting date to 31 December to bring it in to line with that of our major subsidiary, Juvela Limited.

We are reporting gross revenue of £9.7m for the six months to 30 September 2023.  Together with gross revenue of £8.4m for the six months to 31 March 2023, the total for the 12 months to 30 September 2023 of £18.1m is slightly above the expectations of £16.9m disclosed in our trading update of 18 October 2023 and is above the run rate of the previous period, representing significant growth for the Group.  This resulted in an EBITDA profit of £0.8m (first half year loss £1.3m) on continuing operations and an overall pre-tax trading loss of £1.5m for the period (first half year loss £2.5m).

The overall loss includes debt costs of £0.5m, an increase of £0.2m, arising from our funding of the Juvela acquisition.  Also included are impairment costs of £1m arising from the closure of Lizza GmbH, Ohso Chocolate and Vegan Punk Ventures.

Whilst group sales continue to be ahead of last year, in common with other businesses, we have been affected by supply chain issues, exchange rate fluctuations as well as the general economic backdrop.

Overall progress:
The core brands continue to sell well and we are very focused on product development using food tech ideas and innovation. We have been seeking distribution across new channels and territories. We plan to launch a new range of Juvela and Pulsin products in the Autumn and refresh parts of the Pulsin range.

We are looking at ways to consolidate and streamline our production facilities and we have closed the distribution centre at Brockworth, Gloucester and amalgamated it back into the main Pulsin production site.

As reported recently, we are planning to progress a transaction with RGO which will provide the SVEN businesses with access to further capital to fund their investment and growth. 

Investment strategy and target markets

S-Ventures looks to identify investment opportunities in the heath & wellness, organic food and wellbeing sectors within the UK and Europe. The Company plans to add value by the adding capital and expertise to the target companies. The experience and operational skills of the Board are intended to act as an accelerator to smaller brands that have a strong foundation and platform but may lack specific skills and capital. The main objectives will be to cross fertilise opportunities between the target companies and to scale the individual entities and look for exit opportunities and or synergistic collaborations. We believe that scaling can create significant value creation for all stakeholders. 

Provided the planned transaction with RGO completes, the group will be in a strong position to add to its portfolio and further develop its existing brands through the new undertaking.

 

Principal risks and uncertainties

 

Credit and Liquidity risks
The group is seeking to raise new capital, the lack of which would impact on the group's ability to acquire goods and services and develop its business.

Foreign exchange

The Group does not hedge its foreign exchange exposures. We Love Purely buys most of its stock in US Dollars. Juvela currently sources a significant part of its ingredients from overseas and has some limited hedging in Euros.  As regards, Pulsin, much of its risk is naturally hedged by having both EU suppliers and customers.

 

Ukraine/Russian War

Initially the outbreak of war caused a temporary delay in supplies and also increased prices. This has now receded but the recent developments and the breach of the dam on the Dnieper could cause further market disruption.  Accordingly, we continue to be aware of the potential impact of overseas events and look for alternative sources of materials.

 

Significant customers

The Group is not overly dependent on any one customer. However, Juvela does have a significant market presence in the supply of Coeliac related products which are sold on prescription and are processed through a single distributor.

 

Other

All our businesses carry appropriate insurance covers for product liability and other risks.

 

Post Balance Sheet events

 

1.    The Company has secured 3 loans each of £1m; each is secured by a debenture over the Company's assets.  The first was received in November 2023 for a 6-month period but has now been extended to November 2024.  Interest of 2% per month is payable and the lender can convert into equity if the proposed RGO transaction proceeds.

2.    On 22 March 2024, a shareholder has lent £1m repayable in March 2025.  Interest of 15% and a commission of 5% on the maturity of the loan.  The lender can convert into equity if the proposed RGO transaction proceeds.

3.    On 22 March 2024, RGO PLC lent £1m repayable in March 2025.  Interest of 15% and a commission of 5% is payable on the maturity of the loan.

 

Responsibility statement of the Directors

 

We confirm that to the best of our knowledge:

·    the consolidated financial statements have been prepared in accordance with IAS34 'Interim Financial Reporting' as adopted by the EU;

·    the interim management report includes a fair review of the information required by DTR 4.2.7R:

o  an indication of important events that have occurred during the first six months of the financial year, and their impact on these set of financial statements; and

o  a description of the principal risks and uncertainties for the remaining six months of the year

·    the interim management report includes a fair review of the information required by DTR 4.2.8R:

o  related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group in that period; and

o  any changes in the related parties transactions described in the 2022 Annual Report that could have a material effect on the financial position or performance of the Group in the current period.

 

By order of the Board

 

Scott Livingston                                             Stephen Argent

Chief Executive Officer                                  Chief Financial Officer

28 March 2024                                               28 March 2024

 

Cautionary statement

This report contains forward-looking statements. These have been made by the directors in good faith based on the information available to them up to the time of their approval of this report. The directors can give no assurance that these expectations will prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The directors undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

 

Consolidated Statement of Comprehensive Income (unaudited)

For the six months ended 30 September 2023

	Six months ended 30 September 2023			Six months ended 31 March 2023	12 months ended 30 Sept 2022
	Continuing Operations	Discontinued Operations	Group	Group	Group
	£	£	£	£	£
Gross sales value	9,634,817	34,197	9,669,014	8,448,499	8,635,818
Trade Investment	(947,484)	7,750	(939,734)	(783,071)	(835,192)
Net sales value	8,687,333	41,947	8,729,280	7,665,428	7,800,626
Cost of Goods Sold	(4,282,150)	(12,780)	(4,294,930)	(4,549,609)	(5,266,715)
Gross profit	4,405,183	29,167	4,434,350	3,115,819	2,533,911
Other income	417,311	-	417,311	-	693,354
Sales and marketing expenses	(1,391,328)	(6,684)	(1,398,012)	(867,676)	(922,174)
Distribution costs	(589,237)	(23,956)	(613,193)	(533,831)	(315,906)
Administrative expenses	(2,022,830)	(11,577)	(2,034,407)	(2,561,026)	(3,663,636)
	(4,003,395)	(42,217)	(4,045,612)	(3,962,533)	(4,901,716)
EBITDA	819,099	(13,050)	806,049	(846,714)	(1,674,451)
Interest and charges	(501,201)	(648)	(501,849)	(290,139)	(78,827)
Depreciation and amortisation	(816,432)	(2,875)	(819,307)	(921,755)	(934,667)
Impairment	(1,008,399)	-	(1,008,399)	(393,308)	(569,176)
	(2,326,032)	(3,523)	(2,329,555)	(1,605,202)	(1,582,670)
Profit (Loss) before tax	(1,506,933)	(16,573)	(1,523,506)	(2,451,916)	(3,257,121)
Taxation	(179,215)	-	(179,215)	(126,391)	(198,913)
Profit (Loss) after tax	(1,686,148)	(16,573)	(1,702,721)	(2,578,307)	(3,456,034)

 

Consolidated Statement of Financial Position (unaudited)

For the six months ended 30 September 2023

			As at 30	As at 31	As at 30
			September 2023	March 2023	September 2022
			£	£	£
ASSETS
	Non-Current
		Goodwill	4,997,054	4,997,054	3,897,628
		Owned:
		- intangible assets	7,401,443	8,124,998	2,989,722
		- Property, Plant & Equipment	1,808,005	2,675,722	2,027,170
		Right of Use:
		- Property, Plant & Equipment	1,340,365	1,555,791	1,418,576
		Investments	30,237	30,237	30,238
	Total non-current assets		15,577,104	17,383,802	10,363,334
	Current assets
		Stocks in trade	2,304,956	2,318,878	1,647,121
		Trade and other receivables	3,561,333	3,676,322	2,599,044
		Cash and cash equivalents	305,462	423,902	1,781,921
			6,171,751	6,419,102	6,028,086
TOTAL ASSETS			21,748,855	23,802,904	16,391,420
EQUITY
	Shareholders' Equity
		Called Up Share capital	132,216	132,216	125,572
		Share premium	14,707,738	14,707,738	13,509,382
		Share based payment reserve	-	-	10,997
		Equity component of convertible debt	-	-
		Contingent equity settled consideration for investment	112,131	112,131	112,131
		Warrant reserve	8,265	8,265	-
		Retained earnings	(8,487,798)	(6,785,077)	(4,227,855)
			6,472,552	8,175,273	9,530,227
		Non-controlling interests	(133,545)	(55,570)	(34,448)
			6,339,007	8,119,703	9,495,779

Consolidated Statement of Financial Position (unaudited) (Cont'd)

For the six months ended 30 September 2023

 

			As at 30	As at 31	As at 30
			September 2023	March 2023	September 2022
			£	£	£
LIABILITIES
	Current Liabilities
		Amounts falling due within one year	4,203,190	5,126,300	3,585,375
		Financial Liabilities: - Borrowings
		- Bank Overdrafts	-	22,834	276,079
		-Interest bearing loans and borrowings	702,500	2,549,739	1,156,258
			4,905,690	7,698,873	5,017,712
	Non-current Liabilities
		Amounts falling due after more than one year	1,950,001	96,034	-
		Loans falling due after more than one year	8,554,157	7,888,294	1,877,929
			10,504,158	7,984,328	1,877,929
TOTAL LIABILITIES			15,409,848	15,683,201	6,895,641
NET EQUITY AND LIABILITIES			21,748,855	23,802,904	16,391,420

 

Consolidated Statement of Changes in Equity (unaudited)

For the six months ended 30 September 2023

 

	Share capital	Retained earnings	Share premium	Share Based Reserve
	£	£	£	£
Balance at 31 March 2023	132,216	(6,785,077)	14,707,738	8,265
Total comprehensive loss		(1,702,721)
Balance at 30 September 2023	132,216	(8,487,798)	14,707,738	8,265
	Contingent Equity settled consideration for investment	Total	Non Controlling interest	Total Equity
	£	£	£	£
Balance at 31 March 2023	112,131	8,175,273	(55,570)	8,119,703
Total comprehensive loss		(1,702,721)	(77,975)	(1,780,696)
Balance at 30 September 2023	112,131	6,472,552	(133,545)	6,339,007

 

 

 

Consolidated cash flow statement (unaudited)

For the six months ended 30 September 2023

		6 months to 30 September 2023	6 months to 31 March 2023	12 months to 30 September 2022
		£	£	£
Reported Trading Loss Pre-Interest		(1,021,657)	(2,161,775)	(3,178,294)
	Add Back Depreciation and Amortisation	819,307	921,755	934,667
Changes in Working Capital
	Stocks & Inventories	(13,922)	(316,419)	(636,993)
	Trade and other receivables	(132,651)	258,867	(98,944)
	Creditors	1,016,868	469,977	585,623
Cash from Operations		667,945	(827,595)	(2,393,941)
Sources of Funds
	Share issue	-	5,000	5,073,374
	Bank loans & leasing agreements	243,222	5,932,500	-
	Shareholder loan	250,000		-
	New HP contracts	-	19,112	-
	Amount introduced by directors	89,193	496,095	171,635
		582,415	6,452,707	5,245,009
Application of Funds
	Tax Paid	-	(24,000)	(126,059)
	Net Interest paid	(501,849)	(273,060)	(100,469)
	Payment of lease liabilities	(125,567)	(272,667)	(308,992)
	Payment of deferred consideration	(357,000)	(108,334)	-
	Acquisition of subsidiaries (net of cash acquired)	-	(5,882,442)	(100,001)
	Bank loan repayments	(299,248)	(127,439)	(237,445)
	Purchase of tangible fixed assets	(62,302)	(41,944)	(366,188)
		(1,345,966)	(6,729,886)	(1,239,154)
Net Cashfow Movement		(95,606)	(1,104,774)	1,611,914
Cash Brought forward		401,068	1,505,842	(106,072)
Cash & Equivalents		305,462	401,068	1,505,842

 

 

Notes to the condensed consolidated financial statements (unaudited)

 

1.    General information
The consolidated financial statements for the six months ended 30 September 2023 are unaudited and were authorised for issue in accordance with a resolution of the Board of Directors. The information for the period ended 30 September 2023 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.

A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, however, the auditors drew attention to Note 2 to the Statutory accounts relating to the basis of preparation and Going Concern.  The Directors have indicated a need for additional capital for which they are in discussion with potential parties.

The audit report did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2.  Basis of preparation
The condensed interim financial statements have been prepared in accordance with the requirements of the AQSE Growth Market Rules.

The interim financial information set out above does not constitute statutory accounts. They have been prepared on a consolidated going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union. The directors recognise that additional capital is required to ensure that the company can continue to discharge its liabilities as they fall due and have concluded that the funding requirements represents a material uncertainty that casts significant doubt upon the company's ability to continue as a going concern. However, since the period end, the directors have additional funding; a director has made a loan facility available to the group of £0.5 million and as noted in Note 5, further convertible loans of £3m have been received post the date of these accounts to ensure the Company can meet its liabilities as they fall due.

These condensed consolidated interim financial statements comprise the accounts of the parent company and its subsidiaries, after elimination of all material intercompany balances and transactions.  As Lizza was still under the group's control as at 31 March, it assets and liabilities net of impairment processed in the Annual Accounts, were processed in our first half year accounts but these provisions have been released in these accounts.

3.    Loss per share:
The calculation of the total basic loss per share of 1.14p (first 6 months - 1.98p loss) is based on the loss attributable to equity owners of the company of £2,451,916, divided by the weighted number of shares in issue during the period.

4.    Taxation
The Statement of Comprehensive Income includes a provision for a net Corporation Tax liability.  This is based on the individual tax positions of each subsidiary in the group.  However, it is anticipated that group loss relief will be applicable, when the accounts for the 15 months to 31 December 2023 are submitted, enabling the charge to be extinguished.

 

5.    Investments:
The acquisition of shares in Coldpress Foods Limited is accounted for at cost.

6.    Post Balance Sheet Events:

a.    The Company has secured 3 loans each of £1m; each is secured by a debenture over the Company's assets.  The first was received in November 2023 for a 6 month period but has now been extended to November 2024.  Interest of 2% per month is payable and the lender can convert into equity if the proposed RGO transaction proceeds.

b.    On 22 March 2024, a shareholder has lent £1m repayable in March 25.  Interest of 15% and a commission of 5% on the maturity of the loan.  The lender can convert into equity if the proposed RGO transaction proceeds.

c.     On 22 March 2024, RGO PLC lent £1m repayable in March 25.  Interest of 15% and a commission of 5% is payable on the maturity of the loan.  If the proposed transaction with RGO proceeds this will become an intercompany loan.

7.    Approval of Interim Finance Statements:
These interim financial statements were approved by the Board of Directors on 27 March 2024.

 

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