# **Science in Sport Plc**
Annual report and financial statements
Year ended 31 December 2023
Company number 08535116
### Page **Company Information Strategic Report** Chairman's Statement 1 Science in Sport overview 3 **Business review** 8 **Corporate Governance** 19 **Board of Directors** 23 **Report on Corporate Governance** 29 Report of the Remuneration Committee 34 Report of the Directors 41 Statement of Directors' Responsibilities **Financial Statements** 42 Independent Auditor's Report Consolidated statement of comprehensive income 48 Consolidated statement of financial position 49 Consolidated statement of cash flows 50 51 . Consolidated statement of changes in equity Notes to the consolidated financial statements 52 Parent company statement of financial position 84 85 Parent company statement of cash flows Parent company statement of changes in equity 86 87 Notes to the parent company financial statements
### Science in Sport Plc Company Information
| Com | nanu | num | har |
|-----|------|-----|-----|
| Com | panv | num | per |
08535116
Directors
D P Wright R T Mather D M Lampard H A J Turcan P D Richardson
Secretary
D M Lampard
Registrars
Equiniti Limited Highdown House Yeoman Way West Sussex BN99 3HH
**Registered office**
2nd Floor
16-18 Hatton Garden
Farringdon London EC1N 8AT
Nominated adviser and Broker
Liberum Capital Limited Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
**Principal solicitors**
Dentons
One Fleet Place
London
EC4M 7WS
**Independent auditors**
RSM UK Audit LLP Ninth Floor Landmark St Peter's Square 1 Oxford Street Manchester M1 4PB
#### Overview
2023 has been a challenging year for the Group with a new leadership team in place since the final quarter of the year to 31 December 2023 driving change throughout the Group.
For the year ended 31 December 2023, the Group delivered underlying EBITDA1 of £2.0m in line with market expectations and despite lower revenues of £62.7m. Statutory loss before tax was £11.3m resulting in an improved loss per share of -6.6 pence. Full details of the Group's financial performance are set out in the Business Review on pages 8 to 18.
The new executive team brings together vast experience across a range of highly relevant sectors. The Group are focused on delivering long term shareholder value via our new strategy outlined below.
### Strategy
The Group has made significant strategic progress with a full business review completed in the year. Whilst the strength of our two core brands, SiS and PhD, is unquestionable, the relentless pursuit of top line growth led to some poor historic strategic decisions and an inflated operating structure.
Since joining the Board in October 2023 and establishing the new leadership team, the immediate focus has been managing cash outflow and stabilising the relationship with our various stakeholders. The prior strategy of aggressive top line growth across all channels and markets has been reset, with the model of controlled growth whilst delivering sustainable cash generative profitability at improved margins from a reduced cost base.
To date, a number of significant cost rationalisation actions have been taken, benefitting the final quarter of 2023 and providing a stable platform for 2024 in order for the business to reset.
Key actions, both complete and ongoing, include;
- Restructure of the executive and leadership team with several senior roles exiting the business.
- Marginal revenue channels have been reset and measures implemented to secure and grow
the Group's profitable revenue streams. Upon detailed review, a number of overseas
distribution agreements were found to be uncommercial and based on prioritisation of
revenue growth over profitability. While this will reduce revenues in 2024, we will ensure that
our distribution arrangements are a two way partnership whereby the strength of the brand\nis supported by both parties with measurable deliverables.
- Supplier and operational reviews are underway in conjunction with product inventory rationalisation.
- Whilst brand health is robust, and both brands remain leading in their respective categories, a significant number of uncommercial marketing contracts have been exited in 2023 and further savings will be made throughout 2024. Marketing spend will be aligned to identifiable commercial traction.
<sup>1 Earnings before interest, tax, depreciation, amortisation, loss on disposal of intangible assets, share-based payments, restructuring costs, transition costs, unrealised foreign exchange on intercompany balances and other non-EBITDA one-off costs as detailed in note 1.9 of the financial statements.
- Significant operational cost savings have been extracted under the new leadership in the final quarter of 2023 and progress in implementing operational efficiencies continues to be made.
This is anticipated to generate improved contribution to cashflow and earnings throughout 2024.
- In aggregate this will deliver annualised savings totalling £6m, the majority of which will be delivered in 2024.
### **Environmental, Social and Governance (ESG)**
We are committed to promoting sustainability and responsible business practices both as a Group and through our individual brands. As an industry leader, we have invested in packaging technology and plant to transition all protein powder products into recyclable pouch packaging, a first for the sports nutrition industry globally. Furthermore, our move to a new combined supply chain site in the prior year has seen significant environmental improvements by reducing transport miles, carbon emissions and creating new opportunities for those living and working in Blackburn.
#### Outlook
Moving forward, we are taking a balanced view on prospects for 2024. Key strategic areas of focus include embedding the new operating model post the recent restructuring; controlled growth over the medium term; and continued margin improvements resulting in cash generation and deleveraging. As a result, whilst we anticipate year on year revenues will reduce, we are targeting a significant improvement of underlying EBITDA and reduction of the Group's Adjusted net debt.
Underpinning the Group's new operating model, and at the core of the business, are two very strong brands operating in an expanding marketplace. With confidence in the revised operating model, the new leadership team are taking the opportunity to re-engage with our core customers, shareholders and financing partners to build the business from a more stable platform and ultimately deliver substantial shareholder value.
Dan Wright
Executive Chairman
27 June 2024
### **Key Performance Indicators**
### Revenue
(2022: £63.8m)
### £62.7m
-1.7%
The total of sales from all customers and partners in all markets.
### **Contribution %**
(2022: 14.6%)
### 20.5%
+5.9 pp
Contribution % is calculated as gross profit per the consolidated statement of comprehensive income less advertising, carriage and online selling costs. A reconciliation is shown on page 64 of these financial statements.
### **Gross Margin %**
(2022: 42.2%)
42.8%
+0.6 pp
Gross Margin % as per the consolidated statement of comprehensive income.
### **Underlying EBITDA**
(2022: £(2.7)m)
### £2.0m
+174%
Underlying EBITDA is EBITDA adjusted for exceptional and other items. An indicator of trading performance. A reconciliation is shown on page 8.
#### Overview
Headquartered in London, Science in Sport Plc ('SiS') is a leading sports nutrition business that develops, manufactures, and markets innovative nutrition products for professional athletes, sports and fitness enthusiasts and the active lifestyle community. The Group has two highly regarded brands, PhD Nutrition ('PhD'), a premium active-nutrition brand targeting the active lifestyle community, and SiS, a leading endurance nutrition brand among elite athletes and professional sports teams.
The two brands sell through the Group's phd.com and scienceinsport.com digital platforms, third-party online sites, including Amazon and eBay, and extensive retail distribution in the UK and internationally, including major supermarkets, high street chains and specialist sports retailers. This omnichannel footprint enables the Group to address the full breadth of the global sports nutrition market, worth \$24.6bn in 2022 and forecast to grow at 5.9% CAGR from 2022 to 20271.
Launched in 2005, PhD is one of the UK's leading active nutrition brands with a reputation for high quality and product innovation. The range comprises powders, bars, and supplements, including the high protein, low sugar range, PhD Smart. PhD brand ambassadors include leading endurance and strength athlete Ross Edgley.
SiS, a leading endurance nutrition business founded in 1992, has a core range comprising gels, powders and bars focused on energy, hydration, and recovery. SiS is an official endurance nutrition supplier to over 330 professional teams, organisations, and national teams worldwide. SiS supplies more than 150 professional football clubs in the UK, Europe, and the USA. Brand ambassadors include the former track cyclist Sir Chris Hoy, an eleven-time world champion and six-time Olympic champion, and Elish McColgan, who won gold in the 2022 Commonwealth Games 10,000 metres.
SiS is a Performance Solutions partner to INEOS Grenadiers cycling team, Tottenham Hotspur, New York City and OGC Nice football clubs, as well as Official Sports Nutrition Partner to the Milwaukee Bucks, 2021 National Basketball Association Champions. In 2023, winner of the women's marathon at the 2022 World Athletics Championships, Gotytom Gebreslase, and the Elite Running Team joined other Performance Solutions partners that are benefitting from bespoke support and products developed with world leading science.
In 2022, the Group opened a state of the art 160,000 square foot manufacturing and logistics facility in Blackburn, Lancashire.
-
<sup>1 Euromonitor October 2022
#### **Our Brands**
The Group's results and operations are underpinned by our two market leading brands;
#### PhD
Born from science, with innovation and quality at the core of the brand, PhD is one of the UK's leading active nutrition brands. The PhD brand is established internationally with a strong retail network across the globe which has enabled the Group to grow and develop the brand's exceptional reputation.
Our range of PhD products includes:
- **Diet** The delicious Diet range combines protein, which is ideal for building and maintaining lean muscle whilst keeping you satiated for longer.
- Smart Consisting of great tasting high protein, low sugar foods, bars and snacks. This\nincludes the Smart Bar, an on-the-go protein hit and the multi-use Smart Protein Powder
suitable for cooking.
- Life A range of premium, expertly formulated health optimisation products. From the high\nin protein, low sugar, plant-based Complete meal solution, and Reset, a night time formula,
to Mind, made to support optimal mental performance, this is a range to optimise
performance for life.
- Performance expertly formulated to help you perform at your best and optimise your training. From key supplements to aid in strength gains pre and intra workout to replenishment and recovery post workout, to maximise training and hitting goals.
### Science in Sport:
Science in Sport is a leading performance nutrition brand with over 330 elite athletes and teams relying on its products for success. The combination of world-class knowledge and scientific formulations ensure the brand provides optimal performance solutions for athletes across the nutritional need states of energy, hydration and recovery.
Our range of SiS products includes:
- Energy Bars, shots, gels and powders to give athletes energy
- Hydration Gels, tablets and powders to keep athletes energised and hydrated
- Recovery Powder range to aid athletes' recovery post-exercise
- Athlete health Vitamins and supplements range designed to support and maintain immune function, digestive health and bone health amongst athletes
### Our focus in delivering long term value
As part of the comprehensive review of the business in 2023, the leadership team have outlined six key areas of focus, which will enable the Group to reset in 2024 and deliver long-term value going forward;
#### 1. World-class science
As a world leader in nutritional science and product development, investment in science remains at the core of the business. Quality, efficacy of ingredients and proven product benefits are key principles of both brands.
#### 2. Brand exposure
Both brands command significant share within their respective markets. Science in Sport holds the number one position in UK retail and marketplace channels, with a leading presence globally. PhD is in the top three within the UK retail and marketplace channels and is strongly positioned in the Asia Pacific region. We will continue to grow brand awareness, leveraging our Elite athlete portfolio and scientific credentials, through targeted investment delivering measurable returns.
### 3. Sales growth
The opportunity for global sales growth is significant, given the strength of the brands and continued positive trajectory of the sports nutrition market. We will deliver this by working with existing and new partners, building profitable long-term relationships in the UK and globally.
#### 4. Financial health
The Group had previously pursued an aggressive growth strategy, while this delivered positive revenue growth it was not cash accretive. The revised strategy is on sustainable profitable cash generation, through delivery of enhanced margins on a lower cost base while deleveraging the business.
### 5. Operational excellence
With the transition to the manufacturing facility at Blackburn fully completed, optimising the supply chain and manufacturing processes to deliver enhanced margins is the key focus for 2024.
### 6. High performing team
We are resetting the culture and ways of working; we are creating the conditions where everyone can perform at their best by integrating all aspects of our business and ensuring accountability and product pride across every department.
#### **Our Market and Customers**
The global sports nutrition market was worth \$24.6bn in 2022 and is forecast to grow at 5.9% CAGR from 2022 to 2027. Our 2023 revenue of £62.7m (2022: £63.8m) represents a solid foothold in this market but highlights the scale of the opportunity for both brands for significant growth.
Our current revenues are weighted to the UK, representing 56% (2022: 57%) of our total revenue. This is driven through strong distribution through multiple channels of specialist retailers, grocery, Amazon and our own direct channel. The UK is a key market, and we see further opportunities to expand and grow our market share through existing and new customers.
Outside of the UK, representing 44% (2022: 43%) of our revenue, we have several key distribution partners covering multiple geographies. We are in the process of resetting a number of these commercial relationships to ensure strategic alignment, with the objective of delivering mutually beneficial profitable growth and improved margins.
Turnover by geographic destination of sales are analysed as follows:
| | Year ended | Year ended |
|-------------------|-------------|-------------|
| | 31 December | 31 December |
| | 2023 | 2022 |
| | £'000 | £′000 |
| United Kingdom | 35,302 | 36,574 |
| Rest of Europe | 12,047 | 11,391 |
| USA | 3,548 | 4,670 |
| Rest of the World | 11,774 | 11,138 |
| Total Sales | 62,671 | 63,773 |
### **Our People and Culture**
In the current year, and subsequent to the balance sheet date, the business has undergone a significant organisational restructure, with over 20 management roles removed. This has resulted in streamlined reporting lines on a much lower cost base. The new executive and senior management team having the capability and expertise to deliver the new strategy.
Our world class team across all parts of the organisation know the performance nutrition market like no one else. With functional experts in all disciplines, including; science, brand, digital marketing, retail, and supply chain, the Group are well placed to deliver on the plan for 2024.
### **Our Future**
As outlined in the Chairman's Statement, the Group is taking a balanced view on prospects for 2024 with the strategic focus on embedding the new operating model following the recent restructuring; controlled growth over the medium term continued margin improvements resulting in cash generation and deleveraging.
### Results for the year
The Group delivered £62.7m revenue in the year ended 31 December 2023, down 1.7% on prior year (2022: £63.8m) and underlying EBITDA increased to £2.0m (2022: £2.7m loss) consistent with expectations despite the lower revenue.
| | 2023 | 2022 | Increase/ |
|----------------------------------------|----------|---------------------------------------|------------|
| | £′000 | £'000 | (decrease) |
| Revenue | 62 671 | 62.772 | (1.70/) |
| Revenue | 62,671 | 63,773 | (1.7%) |
| Cost of goods | (35,839) | (36,837) | (0.40() |
| Gross profit | 26,832 | 26,936 | (0.4%) |
| Selling & general administration costs | (13,985) | (17,611) | |
| Trading contribution | 12,847 | 9,325 | 37.8% |
| Underlying operating expenses | (10,854) | (12,014) | |
| Underlying EBITDA | 1,993 | (2,689) | 174.1% |
| Share-based payment charges | | (262) | |
| Depreciation and amortisation | (6,250) | (4,808) | |
| Restructuring and one-off costs | (1,975) | (888) | |
| Loss on disposal of intangible assets | (879) | · · · · · · · · · · · · · · · · · · · | |
| Transition costs | (2,092) | (1,075) | |
| Unrealised foreign exchange on | (247) | (99) | |
| intercompany balances | • • | (/ | |
| Other items | (283) | - | |
| Loss from operations | (9,733) | (9,821) | 0.9% |
Performance in 2023 was driven from growth in the Retail (UK and International) and USA online channels, offset by lower trading in China and in the Digital channel. Our SiS brand delivered annual revenue growth of 15%, with PhD closing 2023 with an annual revenue reduction of 16% compared to the prior year, predominantly due to the interrupted trade in the Chinese markets.
Gross profit for the Group remained consistent with £26.8m recognised in 2023 (2022: £26.9m) with gross margin improving to 43% (2022: 42%). The underlying improvement is better reflected by the significant improvement in trading contribution of 21% (2022: 15%). The trading margin reflects the benefit of the distributor model, particularly in the US, together with the operational efficiencies and cost savings at all levels. The 2023 trading contribution margin percentage achieved the highest levels during Q4 of 2023, giving confidence in further improvements in 2024.
Underlying EBITDA of £2.0m (2022: £2.7m loss) improved year on year through improved margins and ongoing cost efficiencies which remain the focus of the Group moving into 2024. Excluded from underlying EBITDA are one-off costs, principally relating to the organisational restructure, transition costs moving to the internally manufactured protein bars and moving the distributor model in the US.
#### Revenue
| | 2023 | | | | 2022 | | |
|----------------------|--------|--------|--------|--------|--------|--------|--|
| | SiS | ₽hD | Total | SiS | PhD | Total | |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Digital | 4,984 | 2,325 | 7,309 | 8,859 | 3,618 | 12,477 | |
| Marketplace | 6,218 | 6,835 | 13,053 | 6,199 | 7,851 | 14,050 | |
| China | 1,105 | 2,285 | 3,390 | 178 | 7,031 | 7,209 | |
| USA | 3,548 | - | 3,548 | - | - | - | |
| Global online | 15,855 | 11,445 | 27,300 | 15,236 | 18,500 | 33,736 | |
| International retail | 8,322 | 4,257 | 12,579 | 6,491 | 3,904 | 10,395 | |
| UK retail | 10,007 | 12,785 | 22,792 | 7,981 | 11,661 | 19,642 | |
| Retail | 18,329 | 17,042 | 35,371 | 14,472 | 15,565 | 30,037 | |
| Total Sales | 34,184 | 28,487 | 62,671 | 29,708 | 34,065 | 63,773 | |
### Global Online
Global online sales accounted for 44% of total sales (2022: 53%) and decreased 19% to £27.3m (2022: £33.7m). The reduction in our own channel digital sales was driven by lower traffic and saw digital sales decrease 41% year on year to £7.3m (2022: £12.5m) following the conscious decision by the Group to reduce marketing spend in this area whilst focusing on significantly improving contribution on digital sales in 2024 and beyond.
Our Amazon marketplace sales saw a 13% increase, driven by strong growth from SiS products in the UK and Europe. Despite this, weaker US marketplace sales (driven by transition to thefeed.com) saw overall marketplace channel revenues decline to £13.1m (2022: £14.1m).
Our US and China business, combined, has been broadly flat delivering £6.9m (2022: £7.2m). In Q1 of 2023, we formed an exclusive partnership in the US with thefeed.com, who are the number one endurance sports nutrition direct to consumer business in the US. With thefeed.com now partnering for operations and fulfilment of our products in the US to both direct to consumer and marketplace channels we have seen a significant improvement in contribution in 2023. In China, whilst annual revenue slowed due to lower demand in H2, the business is now recovering and we anticipate growth in 2024.
### Retail
Retail sales accounted for 56% of total sales (2022: 47%) and delivered another year of annual growth in revenue with total retail sales increasing by 18% to £35.4m (2022: £30.0m) driven from both UK and International sales growth across both brands.
UK Retail delivered another year of solid growth, with sales rising by 16% to £22.8m (2022: £19.6m). Strong performances across numerous retailers saw growth in major grocery accounts (6%), independents (10%) and specialist retailers (30%).
PhD UK retail sales grew again by 10% (2022: 11%). We are the second largest manufacturer on sports nutrition shelves in UK Retail as well as the number #1 manufacturer of lean whey powder and plant-based protein powders.
Science in Sport delivered growth of 25% (2022: 6%) in UK Retail, with our high gross margin gels continuing their consistent growth trend. Science in Sport is still the clear number #1 in endurance nutrition in UK Retail.
International Retail also continued its strong growth, and sales were £12.6m (2022: £10.4m), 21% up on the prior year. This was acheieved with strong growth across multiple geographies and both brands with SiS and PhD international retail achieving sales growth of 28% and 9% respectively.
### **Profitability**
The Group generated a gross profit of £26.8m (2022: £26.9m) with a gross margin of 43% compared with 42% in 2022. Gross margin improvements were driven from efficiencies generated from the new Blackburn facility despite increases in raw material prices and other rising prices.
Trading contribution was £12.8m (20.5% contribution margin) (2022: £9.3m; 14.6% contribution margin). The Group focused on continued cost mitigations from reduced advertising and promotion spend and the benefit of the distributor model, particularly in the US. As a result, selling and administration costs of £14.0m (2022: £17.6m) decreased by £3.6m year on year as management continued to focus on more efficient use of spend to promote profitable growth.
Underlying operating costs decreased by £1.2m year on year. The Group has good levels of visibility on these costs due to them relating to people, premises and related overhead costs with a renewed focus on efficiency of spend. The Group has fixed energy tariffs in place utill 2025 for electricity and 2027 for gas.
Underlying EBITDA was a gain of £2.0m, a significant improvement on the loss of £2.7m in 2022. The reported loss before tax is £11.3m, (2022: £10.6m loss). Loss per share improved to -6.6p (2022: -7.9p).
The Group has chosen to report underlying EBITDA as an alternative performance measure. This is adjusted for depreciation, amortisation, loss on disposal of intangible assets, non-cash share-based payments, restructuring costs, transition costs and material one-off costs. The Board believes this provides additional useful information for Shareholders to assess an underlying profit performance more closely aligned to a cash profit value, excluding one-offs. This measure is used by the Board for internal performance analysis. A reconciliation of underlying EBITDA to profit from operations is presented in note 1.9.
### Working capital
As at 31 December 2023, the Group held inventory of £6.8m (31 December 2022: £6.6m). Inventory remained consistent as we continued to manage the supply chain tightly to ensure efficient working capital and ensure optimal cover.
The year on year decrease in trade receivables of £3.7m was primarily due to increases in the impairment and credit note provision.
Correspondingly, the year on year increase in trade and other payables of £5.3m, was predominantly due to the increase in the year end invoice financing facility position of £6.3m (2022: £4.5m).
### Cash position
The Group ended 2023 with cash of £2.1m (2022: £0.9m) and Adjusted net debt2 of £12.8m (2022: £10.9m) with headroom in facilities of over £4m. The increase in Adjusted net debt at the year end was driven by the timing of restructuring payments and working capital outflow associated with the early termination of a marketing partner, both of which will result in significant savings in 2024.
A £7.5m flexible invoice credit facility with HSBC, our principal bankers, was drawn to £6.3m. Additional trade finance facilities of £3.5m were drawn at year-end. Total headroom on the combined facilities including cash was over £4m at the year-end. All banking working capital facilities were successfully renewed to April 2025 as part of an annual renewal cycle, with increases in our invoice financing facility to £8m (2023: £7.5m) and trade finance facility to £4m (2023: £3.5m).
### **Intangible Assets**
Total intangible additions during 2023 were £1.0m (2022: £1.9m), with £0.4m (2022: £1.2m) being on technology spend and £0.6m (2022: £0.7m) on product development. Technology spend relates to continued investment on the warehouse management system and ecommerce platform, and product development spend in relation to a number of elite and commercial products across both brands.
Following a review of capitalised product development costs, there were several products where management were no longer able to justify the carrying value of the asset where products are no longer produced, formula has been superseded or commercial viability no longer exists. As a result, the assets have been disposed of leading to a loss on disposal of £0.9m.
### **Fixed Assets**
Total fixed asset additions during 2023 were £1.1m with a final £1.6m work in progress related to the new bar line delivered in December 2023. This completes the strategic investment cycle of peak cash outflows with the Blackburn investment complete. Capital commitments at the end of 2023 were £nil. Ongoing capital expenditure of fixed assets is anticipated to be in the range of £0.5m to £1m excluding any strategic investment opportunities.
<sup>2 Adjusted net debt is presented in note 1.9 and is defined as cash, less banking working capital facilities, asset financing and other payables and excludes property leases.
### **Share-based payments**
The Company operates both a Short-Term Incentive Programme ("STIP") and a Long-Term Incentive Programme ("LTIP"). Together, the Share Option Plan ("SOP") was approved by the Remuneration Committee in June 2014 in line with the proposal contained in the Company's AIM Admission document published in August 2013. A LTIP scheme for financial years 2020-2022 is in place.
£nil charge was recognised for the 2023 LTIP and STIP schemes (2022 schemes: £Nil).
### **Taxation**
The tax credit in the year is £Nil (2022: £0.3m charge). The Group has cumulative tax losses of £35.3m (2022: £29.1m), a proportion of which the Group will look to use to cover future profits.
### **Risk Management**
The Board has overall responsibility for setting the risk appetite of the business and for ensuring that the Group's ongoing risk profile aligns with this. In the course of its normal business, the Group is exposed to a range of risks and uncertainties, which could impact on the future results of the Group. The Board considers that risk management is an integral part of good business process and, on a quarterly basis, reviews the industry, operational and financial risks facing the Group and considers the adequacy of the controls and mitigations to manage these risks.
#### **Internal Controls**
The Group has an established framework of internal controls, the effectiveness of which is reviewed regularly by the Executive team, the Audit Committee and the Board as part of an ongoing assessment of significant risks facing the Group.
The Group's key risks (financial, operational and reputational) are recorded on a Business Risk Register and those risks together with their controls, mitigating and corrective actions are reviewed regularly by the Board. Risk is a standing agenda item for the Board and senior managers are required to review, identify and report on risks on an ongoing basis and review all key risks on a quarterly basis.
The key features of the Group's system of internal control are as follows:
- An ongoing process of risk assessment to identify, evaluate and manage business risks and opportunities;
- Comprehensive procedures for budgeting and planning and for monitoring and reporting to the Board business performance against plans;
- A consistent system of prior and post appraisal for investments overseen by the Chief Financial Officer and Executive Chair;
- An organisational structure with defined levels of responsibility, which promotes entrepreneurial decision-making and rapid implementation while minimising risk;
- Central control over key areas such as capital expenditure, authorisation and banking facilities.
The Group continues to review its system of internal control to ensure compliance with best practice, while also having regard to its size and the resources available. Due to the size of the business there is no internal audit function. As part of the Group's review a number of non-financial controls covering areas such as regulatory compliance, business integrity, health and safety, risk management and business continuity have been assessed.
Our culture is built on entrepreneurship, trust, honesty, ownership and employee wellbeing which underpins the effective operating of the control framework which addresses the principal risks and uncertainties.
The Directors have identified the following principal risks and uncertainties that could have the most significant impact on the Group's long-term value generation.
| | RISK | POTENTIAL IMPACT | MITIGATION CONTROLS |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| | RATING | | |
| 1 FOOD QUALITY & SAFETY Accidental or malicious\ningredient contamination, or supply chain contamination caused by human error or\nequipment fault or due to manufacturing or design faults could compromise the safety and quality of Science in Sport and PhD products. | 2022 | The consequences could be severe and may include adverse effects on consumer health, loss of market share, financial costs and loss of revenue to Science in Sport. A product recall may be required as a result, a subsequent product relaunch may not successfully return the relevant brand to its previous market position. Banned substance testing is considered mandated for the Elite customers and subsequent Brand position. | The Group's stringent approach to food quality and safety is controlled via quality assurance procedures which are based on a risk management approach. Internal systems are reviewed continuously and potential for improvement is monitored. The manufacturing facilities at Blackburn are subject to regular food safety and quality control audits. At the beginning of 2018 we enhanced our banned substance testing regime to ensure we remain best in class. The Group maintains product liability insurance cover to mitigate the potential impact of such an event. In Q1 2024 the Group passed its Food Safety System Certification ('FSSC') audit. |
| 2 COMMODITY PRICING RISK Movement in the commodity prices of raw materials and, in the case of imported raw materials and other goods, the value of Sterling against other currencies may have a corresponding impact on finished product cost. | 2023 | Failure to manage the Group's exposure to price increase may adversely affect the Group's financial performance, through increasing production costs which cannot be mitigated through price increases. | The risk is mitigated by securing supplies in advance based on estimated volumes, thus ensuring greater price certainty. In 2020 we moved our largest supplier of finished goods from Euros to GBP invoicing. At the end of 2021 globally traded whey commodity prices increased significantly. We are exploring new global scale suppliers and reformulating products to minimise exposure to the ingredients most impacted by price rises. We have 65% of raw material prices fixed for 2024. |
| 3 CUSTOMERS & CONSUMERS The Group operates in a competitive market sector and\nits ability to compete\neffectively requires an ongoing commitment to marketing, product development,\ninnovation, product quality and ability to offer value for money as well as first-class customer service. | 2023 0 2022 0 | Although no single retailer accounts for more than 13% of Group revenue, the dominance of the large retail multiples and third-party e-commerce retailers could force an erosion of prices and, subsequently, profit margins. | Significant resources are devoted to forging strong relationships with customers. The mix of customers diversifies the revenue channels and reduces key customer reliance. Our mix of customers has remained broadly constant since 2021 with lower revenues from the Digital channel being offset with growth in Amazon and marketplace channels. We are in the process of evaluating our international customer base to ensure appropriate commercial arrangements are in place to ensure optimal margin and payment terms. |
| RISK | RISK
RATING | POTENTIAL IMPACT | MITIGATION CONTROLS |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4 TRADEMARKS AND IP The Group's success will depend in part on its ability to obtain and protect its trademarks both in the UK and internationally. | 2023 O
2022 O | The Group cannot give definitive assurance that pending or future trademark applications will be granted or that trademarks granted will not be challenged or held unenforceable. | To mitigate this, the Group enters into non-disclosure agreements with employees, consultants and prospective commercial partners but cannot assure that such agreements will provide complete safeguards against unauthorised disclosure of confidential information. |
| 5 FACTORY DISRUPTION Risk of transition from the sites at Nelson to the new facility at Blackburn. | 2023 0 | Risk of overrun with building works and disruption to production, which could have resulted in supply chain delays and subsequent missed revenue. | The new site at Blackburn is fully operational with the go-live and transition resulting in no disruption other than planned parallel running. The business has in place comprehensive business interruption and related insurance policies. |
| 6 LIQUIDITY Ensuring the Group has sufficient cash reserves. | 2023 | Consequences of insufficient liquidity could be severe if the group is not able to pay key suppliers and employees on time. | Cashflow forecasts are prepared and reviewed by senior management, with all payments approved in advance. The Group adjusts investment levels as appropriate to maintain cash balances in line with forecasts. We have in place working capital facilities with HSBC which have been renewed and increased giving the Group more short term liquidity. |
| 7 COVID-19 COVID-19 coronavirus presents a significant global challenge | 2023 | We have assessed the business risk as low due to uncertainties and the level of disruption to our employees, customers and supply chain if a significant variant reoccurred. | Our Blackburn manufacturing site has clear cleaning processes taking place between shifts. The residual risk of COVID still exists but is considered low. |
| 8. RECRUITMENT & RETENTION | 2023 🔾 2022 🔾 | Recruiting and retaining talent is key to delivering future growth and strategic plan delivery. The market is increasingly competitive in key areas such as Technology, Online Trading & Marketing, in addition to Senior Leadership positions. | The business has undergone a significant organisational restructure, with over 20 management roles removed, resulting in streamlined reporting lines on a much lower cost base. The new executive and senior management team having the capability and expertise to deliver the new strategy. |
| 0 | Low |
|---|--------|
| 0 | Medium |
| | High |
### **Current Trading and Outlook**
Following the strategic, organisational, and operational review in 2023, the Group has begun 2024 with greater clarity and focus in delivering the new operating model. This will be achieved with a lean and flexible cost base which will enable the Group to improve underlying EBITDA and its cash generation in 2024.
In the first quarter of 2024, management have been focused on embedding the new operating model and structure, tightly managing the cost base through cutting spend on non value add activities and exiting uneconomic contracts in marketing and technology while resetting commercial arrangements to deliver appropriate margins. While this will result in a top line reduction in the short-term, the margin improvements and cost reductions will be additive to cash and EBITDA generation.
The Board expects 2024 to be a year of progress as management continues to execute the strategic plan driving a balanced 2024 with the focus on controlled growth.
### **Dividend Policy**
Focusing on deleveraging of the Group and continual investment in the future growth of the business, the Board is taking a prudent approach to the Group's dividend policy and made the decision not to propose a final dividend for the full year to 31 December 2023 (2022: Nil pence per share). It remains the Board's intention to review returns to shareholders when conditions improve and financial performance permits.
### Post year-end events
There are no events subsequent to the reporting date which would have a material impact on the financial statements.
#### **Section 172 Statement**
A Director of a Company must act in a way they consider, in good faith, would most likely promote the success of the Company for the benefit of members as a whole, taking into account the factors listed in section 172 of the Companies Act 2006 (s.172 CA).
Engaging with our stakeholders, and acting in a manner that promotes the long-term success of the Company, while considering the impacts of business decisions on our stakeholders, are central to the Directors' strategic thinking and duties in accordance with s.172 CA. We are aware that each stakeholder group requires a tailored engagement in order to foster effective and mutually beneficial relationships. We have identified the key stakeholder groups, resources and relationships on which the business relies. These are listed further below, with why we focus on them and how we engage them.
Throughout this Annual Report, and particularly in the Corporate Governance Report, we demonstrate how the Directors give careful consideration to the factors set out below in discharging their duties under s.172 CA, including;
- a) The likely consequences of any decisions in the long term;
- b) The interests of the Group's employees;
- c) The need to foster the Group's business relationships with suppliers, customers and others;
- d) The impact of the Group's operations on the community and the environment;
- e) The desirability of the Group maintaining a reputation for high standards of business conduct; and
- f) The need to act fairly as between shareholders of the Group.
As part of their induction, Directors are briefed on their duties and they can access professional advice on these, either from the Company Secretary or, if they judge necessary, from an independent advisor. The Board confirms that, during the year, it has had regard to the matters set out above. Further details as to how the Directors have fulfilled their duties are set out below. Please also see page 23 to 25 for information on how the Directors promote a corporate culture that is based on high standards of business conduct, ethical values and behaviours.
#### Risk management
The Group recognises the importance of identifying, evaluating and managing risk. Details of our principal risks and uncertainties, and how these are managed, are set out on pages 13 to 15. Further information can be found in the section on the Audit and Risk Committee on pages 26 to 27 and the Remuneration Committee Report on pages 29 to 33.
#### **Employees**
The continued strength of the Group is the hard work and dedication of all the people who work for PhD and Science in Sport. We continue to invest in existing employees who are being supported through professional training relevant to their functional areas, as well as other relevant role-specific training.
The Executive Directors keep staff informed of the progress and development of the Company on a regular basis through formal and informal meetings and regular communications such as the monthly CEO Briefing. We run monthly Wellbeing sessions providing all employees with practical sessions on mental health and wellbeing, provide mental health awareness training for managers and an employee assistance programme for all employees with accessible online counselling. Additionally, we are proud to be an accredited Real Living Wage employer and have retained this status.
#### Customers
As with any business, our customers are our key stakeholders, and our strategic model investments in product innovation, technology and data science are designed to improve our customers' experience.
We constantly invest in our website to improve our customer proposition, making it easier to search, select and shop for products. In addition, we collect and respond to online customer feedback continually to improve our processes, products and proposition both directly and through Trustpilot.
### Suppliers
Our suppliers are key business partners, and the quality of raw materials and services we receive are essential to maintain our premium product position. We operate with mutual confidentiality agreements in place and conduct open and two-way conversations with our biggest suppliers about our business and strategy.
#### Community and environment
The Group acknowledges the significance of maintaining and improving the quality of the environment in which we live and work in. Further information on how the Group interacts with its community and its environment can be found in the Report of the Directors on pages 34 to 40.
#### Shareholders
Shareholders are a key stakeholder for the future success of the Group, and consequently investor relations are a key focus area for the Directors. The Board regularly engages investors on Group performance following trading updates and results announcements with virtual video meetings and scheduled calls. Feedback is regularly collected via our broker following results updates and presentations. We have actively engaged our shareholders throughout the transition to the new operating model and the execution of the updated strategy centred on profitable cash generative growth. The Board acknowledges its duty to act fairly between members. Where there are conflicting interests, we will act as fairly as we are able to consider the implications for each stakeholder.
On behalf of the Board detailing the Strategic Report on pages 1 to 18:
18
Dan Wright
Executive Chairman
27 June 2024
D. Lagar
Daniel Lampard
Chief Financial Officer
### Dan Wright
**Executive Chairman**
### Date of appointment
16 October 2023
#### **Previous experience**
Dan was appointed Executive Chairman of SiS Plc in October 2023, having successfully led the turnaround of Accrol Papers Plc, where he also remains as Executive Chairman.
His other current directorships include SolasCure, a venture technology development business focused on wound care management, Ulnsure Limited, a fast-growth first-mover brand in the digital distribution of General Insurance, and Manchester & London Investment Trust Plc, a winner of CityWire's Investment Trust of the Year Award.
Dan previously spent eight years at NorthEdge Capital, a mid-market private equity fund where he was a Founder Partner, Chief Operating Officer and Head of Portfolio with primary responsibility for portfolio and operating matters.
While his previous chairmanships also include Vision Support Services Group, a private company he founded and grew to become Europe's leading distributor of textiles to the hospitality sector, resulting in a successful disposal to Icahn Enterprises in 2019.
With previous roles at Cable Partners LLC, Deutsche Morgan Grenfell Private Equity and The Royal Bank of Scotland, Dan first qualified as a Chartered Accountant with Arthur Andersen in 1996 and has an MA from the University of Cambridge in Modern & Medieval Languages and History.
### **External appointments**
Northedge Capital I GP LLP - LLP Member
#### **Board committees**
None
### **Roger Mather**
Non-Executive Director
### **Date of appointment**
31 January 2020
### **Previous experience**
Roger has broad business experience gained first in audit at PwC, in London and Hong Kong, and then in executive positions in consumer and distribution businesses in the UK, Asia Pacific and North America. He was Chief Financial Officer of Mulberry Group plc, the AIM-quoted fashion brand and manufacturer, from 2007 to 2016, a period of rapid growth at Mulberry during which time he established international revenue channels and implemented the business's digital strategy.
Prior to Mulberry, he worked for more than 10 years at Otto Group, a privately owned multinational distribution business, first as Group Finance Director of the sourcing division based in Hong Kong and then as Managing Director of a UK division. From 2017, Roger has focused on non-executive and part-time roles. He is currently a Non-Executive Director of Quiz plc, the AlM-quoted omni-channel fast fashion brand, and chair of its Audit and Remuneration committees. He is also a pro bono director of The Berkshire Golf Club Limited.
Roger brings a broad range of senior financial and executive leadership experience gained in fast growing international consumer businesses which are a strategic fit with the Science in Sport growth strategy. His knowledge of digital strategy and supply chain distribution brings to the board further experience in these key strategic areas.
### **External appointments**
The Berkshire Golf Club Limited - Director
### **Board committees**
Audit and Risk – Chairman Nomination – Chairman Remuneration
### **Paul Richardson**
Non-Executive Director
### **Date of appointment**
28 July 2023
### **Previous experience**
Paul is a Solicitor by qualification and, after a period in private practice, moved in-house as Head of Legal and Business Affairs before moving into senior management roles which have included Chief Executive or Chairman of private and listed companies. Paul has also enjoyed a parallel pro bono Charity career for over 20 years and was Chairman of The Steve Redgrave Trust, a Trustee at WellChild and is currently Chairman of Special Olympics Great Britain.
### **External appointments**
Arwen Al Limited – Director
Chatom Investments (No.1) Limited – Director
Chatom Consulting Limited – Director
Pinnacle Holdings Group Limited – Director
PM Capital Advisors Ltd – Director
SOGB Promotions Limited – Director
Special Olympics Great Britain – Director
### **Board committees**
Audit and Risk Nomination Remuneration
### **Henry Turcan**
Non-Executive Director
### Date of appointment
1 February 2023
### **Previous experience**
Henry has worked in financial services since 1996, with a focus on equity capital markets. Having spent most of his career advising growth companies within investment banking, he became an investment manager, joining the Volantis team at Henderson Global Investors in 2015, which subsequently transferred to Lombard Odier Asset Management in 2017. He brings strong strategic and commercial experience having been a non-executive director of several public and private companies.
### **External appointments**
Jaywing PLC - Director
#### **Board committees**
Audit and Risk Nomination Remuneration – Chairman
### **Daniel Lampard**
Chief Financial Officer
#### Date of appointment
19 October 2022
### **Previous experience**
Daniel qualified as a chartered accountant with KPMG and is a member of the Institute of Chartered Accountants in England and Wales. He also holds an MSc in Executive Management from Manchester Business School. His previous appointments include serving as the Chief Financial Officer of Unbound Group plc, Chief Financial Officer of D2C Glanbia Performance Nutrition, a rapidly growing online sports nutrition business, the UK Finance Director at AO World plc and working for the Manchester Airport Group for 11 years in a variety of senior commercial and financial roles.
Daniel has extensive knowledge and experience of the sports nutrition industry and has been a professional athlete competing at an international level.
### **External appointments**
None
### **Board committees**
None
### Our purpose
The Board's overriding objective is to produce long-term value for its shareholders. Our core values, based on attitude, behaviour and communication, translate into everything we do for our customers, people, suppliers and shareholders. Our culture supports the Group's strategic objectives and business model.
We recognise the importance of good corporate governance and consider a strong corporate governance foundation essential in delivering shareholder value through long-term success and performance. The Board believes that corporate governance is more than just a set of guidelines; rather it is a framework which underpins the core values for running our business, including a comitment to open and transparent communications with stakeholders.
In 2018, Science in Sport adopted the 2018 Quoted Companies Alliance Corporate Governance Code ('the Code') as a benchmark for measuring our adherence to good governance principles. The Code sets out 10 principles, which provide a framework for assessing our perfrormance as a Board and as a Company:
### The 10 Principles of the Code and the Company's application of them:
1. Establish a strategy and business model which promotes long-term value for shareholders
The Board has collective responsibility for setting the strategic aims and objectives of the Group. Our business model and strategy are detailed in the Science in Sport overview section on pages 4 to 7. The key challenges in their execution can be found on pages 13 to 15.
2. Seek to understand and meet shareholder needs and expectations
We encourage all our shareholders to attend our AGM, which provides a forum and time for shareholders' questions through open disussion. The Board actively engage with shareholders on a regular basis as detailed in our Business Review.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Group seeks to ensure a sustainable business, behaving with social, ethical and environmental responsibility. We engage with all key stakeholders including the communities in which the Group operates, our people and the environment. Full details of the Group's approach to this are included in the Report of the Directors specifically pages 34 to 40.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
Details of the principal risks and uncertainties which the Board consider to be assocuated with the Group's activities, together with mitigating actions which are being pursued in relation to them are set out in the Risk Management section of the Strategic Report on pages 13 to 15.
5. Maintain the Board as a well-functioning, balanced team led by the Chair
The structure of the Board of Directors is described on pages 19 to 22. The Board of Directors are collectively responsible and accountable to shareholders for the long-term success of the Group as detailed on page 25.
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Directors have the necessary up-to-date experience, skills and capabilities required including overseeing the management of the Group. The biographies of the Directors are set out on pages 19 to 22 and further details on how this is maintained is included on page 25.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The performance of the Board is evaluated on an annual basis, following conclusion of the annual Audit and finalisation of the Annual Report. When addressing Board performance the factors considered include, but are not limited to, underlying group financial performance, the success of new strategy implementation and the effectiveness of risk and control measures.
8. Promote a corporate culture that is based on ethical values and behaviours
The Group has a strong ethical culture. The Board is responsible for setting and promoting this throughout our processes and behaviours. The policies related to these matters are regularly reviewed, updated and distributed to employees and other stakeholders as appropriate to ensure the policies remain aligned with the Group's objectives, strategy and culture. Further, specific training is given to keep staff updated on relevant changes. These sessions are often recorded for future reference and new staff induction. A copy of our Code of Conduct is available on our website. The Group has stated policies on Corporate Social Responsibility, Anti-Bribery and Anti-Corruption, Modern Slavery Policy and Whistleblowing Policy that are applicable to all our employees, other workers, suppliers and those providing services to our organisation. The Company's Sustainability Report is available on our website (sisplc.com).
Maintain governance structures and processes that are fit for purpose and support good decisionmaking by the Board
Further details on how the Board apply this principle can be found throughout this Report on Corporate Governance.
10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The descriptions of the Group's application of Principles 2 and 3 on page 23 explain the primary modes of communication with its shareholders and other stakeholders. Three key committees of the Board
play a significant role in the governance of the Group, the Audit and Risk Committee, the Nomination Committee and the Remuneration Committee as detailed later in this report.
#### **Board of Directors**
The Group is governed by the Board of Directors. The Chairman is responsible for the effective running of the Board and reviews its effectiveness on an ongoing basis. The Chief Executive Officer is ultimately responsible for all operational matters and the financial performance of the Group. During 2023, the Executive Chairman also performed, on an interim basis, the duties of the Chief Executive Officer, whilst the search for a new Chief Executive Officer was undertaken.
The Non-Executive Directors are independent of management and are free from any business or other relationship which could materially interfere with the exercise of their independent judgement. The Board is satisfied that the broad range and depth of experience of the Non-Executive Directors allows them to exercise independent judgement and apply unbiased rigour to all decisions.
The Directors' biographies on pages 19 to 22 demonstrate the experience they bring to the Group.
Board performance is reviewed on an ongoing basis as a unit to ensure that the members of the board are collectively functioning in an efficient and productive manner. Board members complete an annual review evaluating their own performance, that of fellow Board members and the Board as a unit across a range of measures including leadership, strategy and contribution.
In addition to their general Board responsibilities, Non-Executive Directors are encouraged to be involved in specific workshops, meetings or seminars in line with their individual areas of expertise. Board Directors have held regular updates with members of the Exec team on subjects such as funding strategy, technology and supply chain development. All Directors are encouraged to challenge and to provide independent judgement on all matters, both strategic and operational.
In accordance with its articles, the Company provides an indemnity to all the Company's Directors in respect of all losses arising out of or in connection with the execution of their powers, duties and responsibilities as Directors. The Group also maintained insurance cover during the year for its Directors and Officers and those of subsidiary companies under a Directors' and Officers' liability insurance policy against liabilities that may be incurred by them while carrying out their duties. In each case, the Directors remain liable in the event of their negligence, default, breach of duty or breach of trust.
The Board seeks guidance from external advisors when appropriate such as financial and legal due diligence on potential acquisitions. In addition, the Company Secretary ensures that the Board consults regularly with its Nominated Advisors and retained advisers for Market Abuse Regulation ('MAR') and company secretarial support to ensure that the Board are kept abreast of relevant changes in regulations or legislation.
The following Board committees deal with specific aspects of the Group's affairs, reporting their deliberations and conclusions to the Board as appropriate.
#### **Audit and Risk committee**
Membership of the Audit and Risk Committee is restricted to Non-Executive Directors and comprises Roger Mather (Chair), Paul Richardson and Henry Turcan.
The Board is satisfied that, for the year under review, all members of the committee have adequate recent and relevant commercial and financial knowledge and experience to fulfil their roles.
### The remit of the committee includes:
- Considering the continued appointment of the external auditors and their fees, terms of engagement and independence, including the appointment of auditors to undertake nonaudit work;
- Liaising with the external auditors in relation to the nature and scope of the audit;
- Reviewing the form and content of the financial statements and any other financial announcements issued by the Group, including consideration of significant issues, judgements, policies and disclosures;
- Reviewing any comments and recommendations received from the external auditors and considering any other matters which might have a financial impact on the Group;
- Reviewing the Group's risk management monitoring processes that identify, report and review corporate level risks and considering annually the requirement for an internal audit function; and
- Reviewing the Group's statements on internal control systems and risk management processes.
The Audit and Risk committee met five times during 2023. Attendees at committee meetings included the Executive Chairman, Chief Financial Officer, and representatives of the external auditors. All of these attended at the invitation of the Chairman of the committee to enhance the usefulness of the meetings. During the year, the committee also liaised informally with the Executive Directors and met with the external auditors in the absence of the Executive Management.
During the year, the Committee considered the following key matters:
- The previous external auditor's year-end report for 2022, their observations on the internal financial controls arising from the annual audit, the review of the Group's 2022 results and the disclosures in the 2022 annual report;
- The announcement of the 2023 half-year results;
- The external audit plan for the 2023 financial statements, which included a review of the audit objectives, scope, timetable and deliverables;
- The resignation of BDO LLP as external auditor;
- The appointment of RSM UK Audit LLP as external auditors in respect of the 2023 results, their independence and objectivity and their fees;
- The impairment review of goodwill and separately identifiable intangibles.
- Regularly reviewing the output and operation of the risk reporting process and undertaking the annual review of the risk reporting process; and
- Undertaking the annual review of the need for an internal audit function.
The auditors are retained to perform audit and audit-related work for the Group. The committee monitors the nature and extent of non-audit work undertaken by the auditors, including reviewing the letter of independence provided by the auditors annually, which includes details of audit and non-audit work undertaken. The committee is satisfied that there are adequate controls in place to ensure auditor independence and objectivity. Details of audit and non-audit fees for the period under review are shown in note 6 of the financial statements.
#### **Remuneration Committee**
The Remuneration Committee consists of the Chairman and two Non-Executive Directors. It is chaired by Henry Turcan and meets as required, at least twice during the year.
The committee reviews the performance of the executive Directors and sets, and reviews, the scale, and structure, of their remuneration and the basis of their remuneration and the terms of their service agreements with due regard to the interests of Shareholders. In determining the remuneration of executive Directors, the remuneration committee seeks to enable the Company to attract and retain executives of the highest calibre with reference to external benchmarking data. The remuneration committee also makes recommendations to the Board concerning the allocation of share options to employees.
The Remuneration Committee report is set out on pages 29 to 33.
#### **Nomination Committee**
The Nominations Committee consists of the Chairman and two Non-Executive Directors. It is chaired by Roger Mather and meets as required.
The Nominations Committee is responsible for reviewing the structure, size and composition of the Board, making recommendations to the Board with regard to any changes and identifying and nominating candidates to fill Board vacancies.
#### **Board attendances**
Directors are required to devote such time and effort to their duties as required to secure their proper discharge. For Non-Executive Directors, this typically entails one or two days of meetings per month as well as reading and preparation time. A full pack of management information is provided to the Board in advance of every meeting. Each Executive Director has a full-time service agreement.
Directors' attendances at meetings of the Board and its Committees during 2023 were:
| | Board | Audit
Committee | Remuneration
Committee | Nomination
Committee |
|----------------------------|-------|--------------------|---------------------------|-------------------------|
| Number of meetings in year | 9 | 5 | 3 | 3 |
| J M Clarke | 6 | 5 | 2 | 2 |
| R T Mather | 9 | 5 | 3 | 2 |
| P D Richardson | 3 | 1 | 1 | 1 |
| H A J Turcan | 9 | 5 | 3 | 3 |
| T R Wright | 6 | 4 | 2 | 2 |
| S N Moon . | 6 | 5 | · - | - |
| D M Lampard | 9 | 5 | 1 | - |
| D P Wright | 2 | - | 1 | _ |
### Internal control
The Board is responsible for maintaining a sound system of internal control to safeguard Shareholders' investment and the Group's assets, as well as reviewing its effectiveness. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material loss and misstatement. The Board believes that the Group has internal control systems in place appropriate to the size and nature of its business.
The Group maintains a comprehensive process of financial reporting. The annual budget is reviewed and approved by the Board before being formally adopted, following which the Board receives at least monthly financial reports of the Group's performance compared to the budget, with explanations of significant variances. Monthly cash flow forecasts are provided to the Board, as are budget reforecasts if deemed appropriate. The Executive Directors monitor key performance indicators on a monthly basis, management of these being delegated to the Group's Senior Management.
### **Conflicts of interest**
The Group has established procedures for the disclosure and review of any conflicts, or potential conflicts of interest which the Directors may have and for the authorisation of such conflict matters by the Board. The Board considers that these procedures are operating effectively.
On behalf of the Board, I have pleasure in presenting the report of the Remuneration Committee for 2023. The Group's policy on remuneration is designed to support the good functioning of the Board and the Executive Management Team, as described in the Report on Corporate Governance, and its strategic aims, as set out in the Strategic Report.
The purpose of the Remuneration Committee is to ensure that the Executive Directors are fairly rewarded for their individual contribution to the overall performance of the Group. The Committee considers and recommends to the Board the remuneration of the Executive Directors and is kept informed of the remuneration packages of senior staff and invited to comment on these.
The committee's remit is to determine and agree with the Board:
- The broad policy regarding remuneration of the Executive Directors and certain Senior Managers;
- The individual remuneration and incentive packages for Executive Directors;
- In consultation with the Executive Chairman, the remuneration packages for key Senior Managers, including the share incentive plans and performance related pay schemes; and
- To provide oversight of the benefit structure of the Group.
The committee has access to independent, professional advice as necessary, at the Group's expense.
During the year, the membership of the committee changed following resignations from the Board of multiple members of the committee. Additionally, Henry Turcan became Chair of the Remuneration Committee following the resignation from the Board of Tim Wright.
### **Remuneration policy**
Executive remuneration packages are designed to attract and retain executives of the necessary skill and calibre to run the Group successfully but avoiding paying more than is necessary. Direct benchmarking of remuneration is not possible given the specialised nature and size of the Group. The Remuneration Committee recommends to the Board remuneration packages by reference to individual performance and uses the knowledge and experience of the Non-Executive Directors and published surveys relating to AIM Directors, and market changes generally. The Remuneration Committee has responsibility for recommending any long-term incentive schemes.
The full Board determines whether or not Executive Directors are permitted to serve in roles with other companies. Such permission is only granted where a role is on a strictly limited basis, where there are no conflicts of interest or competing activities and providing there is not an adverse impact on the commitments required to the Group. Earnings from such roles are not disclosed nor paid by the Group.
There are three main elements of the remuneration package for Executive Directors and senior management:
### (i) Basic salaries and benefits in kind
Basic salaries are recommended to the Board by the Remuneration Committee, taking into account the performance of the individual and the rates for similar positions in comparable companies. Benefits in kind comprising private medical insurance are available to all senior staff and Executive Directors.
### (ii) Share option scheme
The Company operates a Share Option Plan ("SOP"), which grants options over Ordinary shares to certain Directors and senior employees. The purpose of the scheme is to incentivise key members of the management team and to align their interests with those of the shareholders.
The SOP was approved by the Remuneration Committee in June 2014 as outlined in the AIM Admission document. Further amendments to the SOP were approved in September 2016, introducing a new three-year plan to replace the existing five-year plan.
Under the SOP there are both short-term and long-term incentive arrangements. In both cases the options granted are nil-cost options, meaning that participants are not required to pay cash to exercise the option. An Employee Benefit Trust has been established to purchase, hold and issue ordinary shares when awards are exercised. Options must be exercised within a period of 10 years after the grant date for that option otherwise the option will lapse.
An LTIP for the years 2019-2021 was previously approved by the Remuneration Committee. In May 2022, the Remuneration Committee approved a new three-year LTIP for the years 2022-2024.
### Short term incentive plan ("STIP")
Awards are calculated as a percentage of base salary, which can be up to 100% of base salary, and are determined by reference to the attainment of personal objectives or revenue growth or both.
### Long term incentive plan ("LTIP")
A LTIP scheme for the financial years 2020 to 2022 was in place. In 2020 options were granted for the 2019 LTIP based on achievement of performance targets for the 2019 financial year. For the 2020 LTIP performance criteria were not met and no award was made relating to the 2020 financial year for STIP or LTIP. In 2022 options were granted for the 2021 LTIP based on the performance criteria achievement for the 2021 financial year.
Under the plan, options were awarded for each year of the scheme on a sliding scale on delivery of revenue growth, profit growth and brand reputation targets. The maximum value of the shares subject to these awards is 200% of the basic salary of the CEO, 150% of the basic salary of the CFO and 100% of the basic salary of other selected Senior Management. The non-Executive directors do not participate in the LTIP scheme. Based on results against these targets, options have not been awarded to participants for the 2022 or 2023 financial year.
### (iii) Pension contributions
The Company pays 4% of base salary as a defined contribution to the pension scheme of Executive Directors and employees. The individual pension schemes are private and their assets are held separately from those of the Company.
The Remuneration Committee is in the process of undertaking a full review of both the short and long term incentive arrangements with a view to ensuring much clearer focus on creating sustainable shareholder value. Whilst no final decision has been taken it is likely that a value creation scheme will be created to replace all long term incentives held by participating executives and the maximum quantum of short term annual bonuses will be reduced. The Remuneration Committee will publish full details of any revised scheme and awards once finalised.
### Directors' service agreements
Each Executive Director has a six-month rolling service agreement. Copies of all Directors' service agreements and letters of appointment are made available for inspection upon request to the Company Secretary at the Company's registered office, 2nd Floor, 16-18 Hatton Garden, Farringdon, London, EC1N 8AT.
#### **Non-Executive Directors**
The Non-Executive Directors each receive a fee for their services as a Director, which is approved by the Board, mindful of the time commitment and responsibilities of their roles and of current market rates for comparable organisations and appointments. Non-Executive Directors are reimbursed for travelling and other minor expenses incurred.
The Non-Executive Directors do not participate in the bonus or long-term incentive schemes.
### **Details of Directors' remuneration in 2023**
The emoluments paid to the individual Directors of the Company for the period were as follows.
### Year ended 31 December 2023
| | Salary /
Fees | LTIP | STIP | Benefits in
kind | Pension | Total |
|------------------------------|------------------|-------|-------|---------------------|---------|-------|
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Executive Directors | | | | | | |
| Stephen Moon 3 | 275 | - | - | 3 | - | 278 |
| Daniel Lampard | 249 | - | - | 1 | 12 | 262 |
| Dan Wright⁴ | 27 | - | - | • | - | 27 |
| Non-Executive | | | | | | |
| Directors | | | | | | |
| John Clarke⁵ | 63 | - | - | - | - | 63 |
| Tim Wright 6 | 24 | - | • | - | - | 24 |
| Roger Mather | 42 | - | - | - | - | 42 |
| Paul Richardson 7 | 18 | - | - | - | - | 18 |
| Henry Turcan 8 | - | - | - | - | - | - |
| | 698 | • | - | . 4 | 12 | 714 |
### Year ended 31 December 2022
| | Salary /
Fees | LTIP | STIP | Benefits in
kind | Pension | Total |
|---------------------|------------------|-------|-------|---------------------|---------|--------|
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000. |
| Executive Directors | | | | | | |
| Stephen Moon | 323 | 156 | 70 | 5 | - | 554 |
| James Simpson | 133 | 32 | 21 | 2 | 12 | 200 |
| Daniel Lampard | 48 | - | = | - | - | 48 |
| Non-Executive | | | | | | |
| Directors | | | | | | |
| John Clarke | 71 | - | • | - | - | 71 |
| Tim Wright | 39 | - | - | - | - | 39 |
| Roger Mather | 39 | - | - | - | - | 39 |
| | 653 | 188 | 91 | 7 | 12 | 951 |
The above fees and emoluments exclude reimbursed expenditure incurred in the conduct of Company business.
<sup>3 Resigned 19 October 2023
<sup>4 Appointed 16 October 2023 5 Resigned 16 October 2023
<sup>6 Resigned 28 July 2023
<sup>7 Appointed 28 July 2023
<sup>8 Appointed 1 February 2023
### **Directors' interests in shares**
The Directors' interests in the Ordinary shares of the Company, as recorded in the register maintained by the Company in accordance with the provisions of the Companies Act 2006, were as follows:
| Beneficial interests | Ordinary shares of
10p each
31 December 2023 | Ordinary shares of
10p each
31 December 2022 |
|----------------------|----------------------------------------------------|----------------------------------------------------|
| R T Mather | 106,790 | 106,790 |
| P D Richardson | • | ·
- |
| H A J Turcan | - | - |
| D P Wright | 706,141 | - |
| D M Lampard | 33,333 | 33,333 |
### **Executive Directors' interests in share options**
No Director had any interest in share options of the Company or its subsidiary company at 31 December 2023 or 31 December 2022.
The report of the Remuneration Committee was approved by the Board on 27 June 2024
Henry Turcan
**Chair of the Remuneration Committee**
The Directors present their annual report together with the audited financial statements for the year ended 31 December 2023.
### **Strategic Report**
The Chairman's statement, Science in Sport overview and Business review on pages 1 to 18 comprise the Strategic Report. The Company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the Company's Strategic Report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the Directors' Report. It does so in respect of the future developments for the business.
### Results and dividends
The consolidated statement of comprehensive income is set out on page 48 and shows the loss of the Group for the year.
The Company did not pay any dividend during the year (2022: £nil).
### **Directors**
The Directors of the Company during the year and up to the date that the financial statements were approved are shown below.
#### **Executive Directors**
S N Moon (resigned 19 October 2023)
D M Lampard
D P Wright (appointed 16 October 2023)
#### **Non-Executive Directors**
J M Clarke (resigned 16 October 2023)
P D Richardson (appointed 28 July 2023)
TR Wright (resigned 28 July 2023)
R T Mather
HAJ Turcan (appointed 1 February 2023)
Details of Directors are included on pages 19 to 22.
A qualifying third-party indemnity provision as defined in Section 234 of the Companies Act 2006 is in force for the benefit of each of the Directors in respect of liabilities incurred as a result of their office, to the extent permitted by law. In respect of those liabilities for which Directors may not be indemnified, the Company maintained a Directors' and officers' liability insurance policy throughout the financial year.
Details of each Directors' interests in the Company's Ordinary shares and options over Ordinary shares are set out in the Report of the Remuneration Committee on pages 29 to 33.
### **Substantial shareholdings**
In addition to the Directors' shareholdings, the Company had been notified of the following shareholdings of 3% or more in the ordinary share capital of the Company at 31 May 2024:
| Shareholder | Number of shares | |
|-----------------------------------|------------------|-------|
| | | % |
| Lombard Odier Investment Managers | 46,938,024 | 25.75 |
| Otus Capital Management | 19,552,540 | 10.73 |
| JO Hambro Capital Management | 15,290,000 | 8.39 |
| Aviva Investors | 14,674,192 | 8.05 |
| River Global Investors | 12,138,456 | 6.66 |
| Cazenove Capital Management | 9,698,820 | 5.32 |
| Mr Richard Griffiths | 6,896,977 | 3.78 |
| Mr Stephen Moon | 5,721,858 | 3.14 |
### **Share capital**
Full details of the share capital of the Company are shown in note 21 of the financial statements.
### **Employees**
The diversity of our workforce is a strength, and we are keen to recruit employees from a wide range of backgrounds. We place a strong emphasis on fostering diversity and inclusion within our workforce. In 2023, we actively recruited employees from a wide array of backgrounds, with 19% of our workforce comprising non-UK nationals, exceeding the 17% average reported in Gov.Uk Official Statistics.
We also recognise the importance of gender equality and transparency in pay, as demonstrated by our Gender Pay Gap report, which showcased a 54%/46% split between men and women in relation to pay.
### **Employees (continued)**
Gender diversity as at 31 December 2023 across the business is set out below:
| | Female | Male |
|----------------|--------|------|
| Manager Team | 21 | 23 |
| Executive Team | - | 5 |
| All employees | 82 | 107 |
| Total | 103 | 135 |
Our investment in talent development and employee support remains unwavering. We appointed a Chief People Officer in H2 to spearhead our people strategy, resulting in 17 internal movements and ongoing efforts to leverage employee feedback through surveys and focus groups. Furthermore, initiatives such as our People Performance Lead focusing on Performance Engagement and the implementation of OKRs, upskilling our internal talent by offering apprenticeships from entry level 3 up to level 7 Executive master's in leadership degree to strengthen our leadership capability, demonstrate our dedication to fostering a culture of continuous growth and development.
Our commitment to community engagement is exemplified through initiatives such as our internship program with Blackburn College and our participation in their work fair.
As advocates for fair compensation, we proudly retain our accredited Real Living Wage employer status, ensuring fair pay for all employees and contractors across our UK sites.
Additionally, our MVP scheme has bolstered peer and leadership recognition, culminating in awards at our end-of-year celebrations.
Internally, we prioritise mental health and wellbeing, fostering open dialogue and support through dedicated events and the presence of Mental Health First Aiders at both our sites. Our unwavering dedication to diversity, talent development, fair compensation, and employee wellbeing underscores our commitment to responsible business practices and sustainable growth.
#### **Environment**
In the prior year, we successfully opened our new single supply chain site at Blackburn. This new purpose-built facility replaces four separate operating sites and eliminates the need to move raw materials and finished goods between the different sites reducing carbon emissions. In addition, the new significantly larger single site provides increased capability to manufacture finished goods products in house reducing transport miles and the carbon footprint of products.
The new building incorporates many of the latest energy saving features such as low flow plumbing fixtures, programmable air temperature control units, LED lighting and the use of natural light to reduce lighting requirements.
We have commenced measurement of our new carbon emissions level as a baseline for targeting future carbon emissions efficiency improvements towards developing science based targets.
We have moved all our PhD and Science in Sport protein containers to recyclable materials. Protein pouches are recyclable via supermarket soft plastic recycling facilities.
We are constantly evaluating new packaging technology and its appropriateness for our premium products. Sustainable packaging means using the packaging format with the lowest possible environmental footprint, whilst meeting the requirement to protect, transport and present the Science in Sport and PhD brands.
Since the second half of 2021 all products are screened for recycling or use in electricity generation, with a view to eliminating landfill waste going forward.
### **Carbon Reporting**
Each year our carbon emissions are reviewed by Carbon Neutral Britain. We use their methodology to calculate the carbon emissions from our ongoing operations. 2023 values are taken from our submitted report.
Calculated carbon emissions are offset using projects certified through the Verified Carbon Standard (VCS) and UK Emissions Trading Standard (UK ETS), in order to achieve accredited carbon neutral status.
Key energy efficiency actions are described above in our Environmental section of the ESG report.
Under the SECR (Streamlined Energy and Carbon Reporting) framework, the Group's Scope 1 & 2 energy use in 2023 is set out overleaf, along with the Intensity ratio. All energy use relates to activities in the UK.
The Intensity ratio is calculated as the tonnes of CO2 per £m sales above divided by the reported 2023 total group revenue as per the Income statement.
### **Carbon Reporting (continued)**
| | | | Increase / |
|-----------------------------------------------|-------|-------|------------|
| | 2023 | 2022 | (decrease) |
| Energy use (MWh) | | | |
| Scope 1 - Combustion of fuel, owned transport | - | - | - |
| Scope 1 - Consumption of gas | 915 | 828 | 87 |
| Scope 2 - Consumption of electricity | 1,438 | 923 | 515 |
| Total energy use | 2,353 | 1,751 | 602 |
| GHG emissions (tonne CO2e) | | | |
| Scope 1 - Combustion of fuel, owned transport | 3 | 3 | - |
| Scope 1 - Consumption of gas | 167 | 151 | 16 |
| Scope 2 - Consumption of electricity | 301 | 192 | 109 |
| Total CO2e emissions | 471 | 346 | 125 |
| Intensity ratio (CO2 per £m Sales) | 7.5 | 5.4 | (2.1) |
As Blackburn site is now fully operational, we will reset our baseline emissions and use this as a reference point to measure further improvements. We are expecting future operational efficiencies as a result of this move.
In the prior year, we introduced a working from home policy with sustainability guidelines and financial support for employees to reduce their carbon emissions whilst working at home.
### Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. As a result, they continue to adopt the going concern basis of accounting in preparing the financial statements.
The Group made a loss after tax for the year attributable to owners of the parent of £11.3m (2022: £10.9m), which included significant non-cash items of £6.3m depreciation and amortisation (2022: £4.8m), and £0.9m loss on disposal of intangible assets (2022: £nil). The net increase in cash at bank at the year ended 31 December 2023 was £1.2m (2022: £3.9m decrease).
As at 31 December 2023, the Group had cash at bank of £2.1m (31 December 2022: £0.9m), and headroom in facilities of over £4m. These facilities include working capital facilities of £12m which are renewed annually and are currently due to be next renewed in April 2025. Due to the nature of these facilities, which are secured against the working capital of the business and includes a blue chip trade debtor book and realisable inventory, and the strong relationship with the bank, the Directors expect this to be renewed annually going forward.
During 2023, the Directors continued to focus on realigning the business to put the Group in a stronger position. As a result, the operating model of the business is much leaner and we have no significant fixed asset capital investment requirements which will enable the Group to improve underlying EBITDA and cash generation in 2024. Trading at the start of 2024 has been positive and management continue to focus on embedding the new operating model and structure.
With regards sensitivity analysis, management have prepared scenario planning of different revenue outcomes, including interruption of trade, no sales growth, and customer failure to stress-test potential impacts on the cash position of the business, and concluded that in each of these downside stress tests sufficient liquidity is in place. In the event of a shock or prolonged economic downturn we have a number of mitigating actions that could be taken, plus high level of cost protection in place. The Directors have prepared projected cash flow information for the period ending 31 December 2025.
Accordingly, the Directors have a reasonable expectation that the Company will have sufficient cash to meet all liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements.
#### **Corporate Governance Code**
Science in Sport has adopted the QCA 2018 Corporate Governance Code ('the Code'). See pages 23 to 25 for details.
### Financial risk management
The Group's risk management policies can be found in note 2.
### **Annual General Meeting**
The Annual General Meeting of the Company will be held at 11 York Street, Manchester, M2 2AW on Wednesday 31 July 2024 at 9:30am.
### Stakeholder engagement
Details of stakeholder engagement can be found on pages 23 to 25.
### Research and development
The Group is engaged in nutritional science and product development in relation to new recipes, improved packaging and manufacturing processes. In the year, research and development costs of £464k were expensed to the consolidated statement of comprehensive income (2022: £249k).
### Post balance sheet events
There are no events subsequent to the reporting date which would have a material impact on the financial statements.
### **Auditor**
In the case of each of the persons who are Directors of the Company at the date when this report was approved:
- so far as each of the Directors is aware, there is no relevant audit information of which the Company's auditor is unaware; and
- each of the Directors has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
During the year, RSM UK Audit LLP were appointed as auditor and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they are re-appointed will be put at a General Meeting.
On behalf of the Board
18
Dan Wright
Executive Chairman
27 June 2024
### Directors' responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors' Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. The Directors have elected under company law and are required by the AIM Rules of the London Stock Exchange to prepare the Group financial statements in accordance with UK-adopted International Accounting Standards and elected under company law to prepare the Company financial statements in accordance with UK-adopted International Accounting Standards and applicable law.
The Group and Company financial statements are required by law and UK-adopted International Accounting Standards to present fairly the financial position of the Group and the Company and the financial performance of the group. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing each of the Group and Company financial statements, the Directors are required to:
- a) Select suitable accounting policies and then apply them consistently;
- b) Make judgements and accounting estimates that are reasonable and prudent;
- c) state whether they have been prepared in accordance with UK-adopted International Accounting Standards; and
- d) Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Science in Sport Plc website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
### INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SCIENCE IN SPORT PLC
#### Opinion
We have audited the financial statements of Science in Sport Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the consolidated statement of comprehensive income, consolidated and company statement of financial position, consolidated and company statement of cash flows, consolidated and company statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted International Accounting Standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
### In our opinion:
- the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2023 and of the group's loss for the year then ended;
- the group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards;
- the parent company financial statements have been properly prepared in accordance with UKadopted International Accounting Standards and as applied in accordance with the Companies Act 2006; and
- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
### **Basis for opinion**
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
### Summary of our audit approach
| Key audit matters | Group | | | | |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| | - Impairment of Intangible Assets - PHD
- Parent Company
| | | | |
| | - We do not consider there to be any key audit matters in relation to the
parent company.
| | | | |
| Materiality | Group | | | | |
| | - Overall materiality: £621,000 (2022: £630,000)
- Performance materiality: £310,000 (2022: £470,000)
- Parent Company
| | | | |
| | - Overall materiality: £760,000 (2022: £250,000)
- Performance materiality: £380,000 (2022: 187,500)
| | | | |
| Scope | Our audit procedures covered 98% of revenue, 87% of net assets and 97% of profit before tax. | | | | |
### **Key audit matters**
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the group financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the group
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
| Impairment of | Intangible | Assets - | PHD |
|---------------|------------|----------|-----|
|---------------|------------|----------|-----|
| Impairment of Intan | gible Assets - PHD |
|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Key audit matter description See notes 1.26 and | The group has significant intangible assets, including goodwill, which were initially recognised in December 2018, upon the acquisition of PHD Nutrition Limited ("PHD"). |
| 12 | PHD is considered, by management, to be a cash generating unit ("CGU"). As the CGU incorporates goodwill, it is subject to an annual impairment review. |
| | The carrying value of the CGU is £30.5m, of which £17.4m is goodwill. |
| | Impairment testing involves a significant degree of judgement because management's determination of value in use ("VIU") is based on a number of assumptions. |
| | Due to the level of estimation uncertainty, we have assessed this to be a key audit matter. |
| | We have obtained managements impairment assessment and performed the following procedures: |
| | • Checked the mathematical accuracy of the calculation of VIU and the carrying value of the CGU. |
| How the matter | • Compared the forecast data to the board approved budget and strategic plan. |
| was addressed in
the audit | - Critically assessed and challenged management's key assumptions,
including revenue growth, working capital cycle, overhead cost allocation
and expected margins.
|
| | - Used a specialist to develop an independent estimate of an appropriate discount rate and compared this to the rate determined by management.
- Reviewed the disclosures in the annual report to ensure they provide
|
| | sufficient and appropriate analysis to the users of the financial statements. |
### Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements. Based on our professional judgement, we determined materiality as follows:
| • | Group | Parent company | | |
|-------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|
| Overall materiality | £621,000 (2022: £630,000) | £760,000 (2022: £250,000) | | |
| Basis for determining overall materiality | 1% of revenue (2022: 1% of Revenue) | 1% of Total Assets (2022: 0.32% of Net Assets) | | |
| Rationale for benchmark applied | Revenue is a Key Performance Indicator for the market. As a business at the current stage of its lifecycle, the main focus of the group is revenue generation. | Considered the most appropriate benchmark for a holding company. Changed from prior year to reflect the value of the holding company is in the investments in the subsidiaries. | | |
| Performance materiality | £310,000 (2022: £470,000) | £380,000 (2022: £187,500) | | |
| Basis for determining performance materiality | 50% of overall materiality (2022: 75% of materiality) | 50% of overall materiality (2022: 75% of materiality) | |
|---------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|--|
| Reporting of
misstatements to the
Audit Committee | Misstatements in excess of £31,000 and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds. | Misstatements in excess of £38,000 and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds. | |
### An overview of the scope of our audit
The group consists of 6 components, located in the following countries; UK, Italy, USA and Australia. The coverage achieved by our audit procedures was:
| | Number of components | Revenue | Net assets | Profit before tax |
|---------------------------|----------------------|---------|------------|-------------------|
| Full scope audit | 1 | 87% | 87% | 90% |
| Specific audit procedures | 1 | 11% | - | 7% |
| Total | 2 | 98% | 87% | 97% |
Analytical procedures at group level were performed for the remaining 4 components.
None of the above was undertaken by component auditors.
Specific audit procedures were undertaken in respect of revenue cut-off, as this is an area we identified as being susceptible to material misstatement due to fraud.
### Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's and parent company's ability to continue to adopt the going concern basis of accounting included consideration of the cash flow forecasts and scenario analysis present and headroom provided by existing funding facilities.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
### Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
### Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
### Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
- the parent company financial statements are not in agreement with the accounting records and returns; or
- · certain disclosures of directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
### Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 41, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
#### Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
## The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit engagement team:
- obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the group and parent company operate in and how the group and parent company are complying with the legal and regulatory framework;
- inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud:
- discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud.
The most significant laws and regulations were determined as follows:
| Legislation /
Regulation | Additional audit procedures performed by the audit engagement team included: |
|----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| UK-adopted IAS,
Companies Act | Review of the financial statement disclosures and testing to supporting documentation; |
| 2006 and AIM
Rules | Completion of disclosure checklists to identify areas of non-compliance. |
| Tax compliance regulations | Inspection of advice received from external tax advisors. |
| Informed Sport accreditation | ISAs limit the required audit procedures to identify non-compliance with these laws and regulations to inquiry of management and where appropriate, those charged with governance (as noted above) and inspection of legal and regulatory correspondence, if any. |
The areas that we identified as being susceptible to material misstatement due to fraud were:
| Risk Audit procedures performed by the audit engagement tea | | | | |
|-------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|
| Revenue recognition - cut off | Substantive tests of detail on transactions surrounding the period end, tracing transaction to invoice and dispatch dates to confirm recognition period. | | | |
| | Substantive tests of detail and recalculation of a sample of the rebate accrual to assess the cut off assertion. | | | |
| Management | Testing the appropriateness of journal entries and other adjustments; | | | |
| override of
controls | Assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and | | | |
| | Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. | | | |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
### Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
G Bond
GRAHAM BOND FCA (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
20 Chapel Street, Liverpool, L3 9AG
27 June 2024
| | • | Year ended | Year ended |
|-----------------------------------------------------------|-------|------------|-----------------------------------------------|
| | | 31 | 31 |
| | | December | December |
| · | | 2023 | 2022 |
| | Notes | £'000 | £'000 |
| Revenue | 4 | 62,671 | 63,773 |
| Cost of goods | • | (35,839) | (36,837) |
| Gross profit | | 26,832 | 26,936 |
| Operating expenses | 5 | (36,565) | (36,757) |
| Loss from operations | 6 | (9,733) | (9,821) |
| Comprising: | | | , , , , , , , , , , , , , , , , , , , |
| Underlying EBITDA | 1.9 | 1,993 | (2,689) |
| Share-based payment expense | | - | (262) |
| Depreciation and amortisation | | (6,250) | (4,808) |
| Non-recurring costs and other items | 6 | (5,476) | (2,062) |
| Finance costs | 9 | (1,558) | (757) |
| Loss before taxation | | (11,291) | (10,578) |
| Taxation credit / (expense) | 10 | 12 | (332) |
| Loss for the year | | (11,279) | (10,910) |
| Other comprehensive income | | | |
| Cash flow hedges | | - | 2 |
| Exchange differences on translation of foreign operations | | 54 | (21) |
| Total comprehensive loss for the year | | (11,225) | (10,929) |
| | | | |
| Loss per share to owners of the parent | | | |
| Basic and diluted – pence | 11 | (6.6p) | (7.9p) |
| | | | |
All amounts relate to continuing operations.
### **Consolidated Statement of Financial Position**
| Company number: 08535116 | Notes | As at 31 December 2023 £'000 | As at 31 December 2022 £'000 |
|-------------------------------------------------------------------|-------|------------------------------|------------------------------|
| Non-current assets | | | |
| Intangible assets | 12 | 27,042 | 30,739 |
| Right-of-use assets | 20 | 10,520 | 10,536 |
| Property, plant and equipment | 13 | 10,000 | 10,338 |
| Deferred tax | 19 | 19 | - |
| Total non-current assets | | 47,581 | 51,613 |
| Current assets | _ | | - |
| Inventories | 14 | 6,764 | 6,638 |
| Trade and other receivables | 15 | 13,812 | 16,524 |
| Cash and cash equivalents | 16 | 2,144 | 930 |
| Total current assets | | 22,720 | 24,092 |
| Total assets | · : | 70,301 | 75,705 |
| Current liabilities | | | |
| Trade and other payables | 17 | (25,257) | (19,993) |
| Provision for liabilities | 18 | (671) | (901) |
| Lease liabilities | 20 | (789) | (415) |
| Asset financing | 28 | (1,192) | (843) |
| Hire purchase agreement | 27 | (82) | (80) |
| Total current liabilities | | (27,991) | (22,232) |
| Non-current liabilities | | | |
| Provision for liabilities | 18 | (1,059) | _ |
| Lease liabilities | 20 | (9,903) | (10,261) |
| Asset financing | 28 | (2,282) | (2,839) |
| Hire purchase agreement | 27 | (2,202) | (82) |
| Total non-current liabilities | | (13,244) | (13,182) |
| Total liabilities | | (41,235) | (35,414) |
| Total Hashington | | (12)233 | (33,424)_ |
| Net assets | | 29,066 | 40,291 |
| Capital and reserves attributable to owners of the parent company | | | |
| Share capital | 21 | 18,227 | 17,242 |
| Share premium reserve | 23 | 53,134 | 53,134 |
| Employee benefit trust reserve | 23 | (204) | (429) |
| Other reserve | 23 | (907) | (907) |
| Foreign exchange reserve | 23 | (84) | (138) |
| Retained deficit | 23 | (41,100) | (28,611) |
| Total equity | | 29,066 | 40,291 |
These consolidated financial statements were approved and authorised for issue by the Board on 27 June 2024 and signed on its behalf by:
Daniel Lampard
D. Layer
Director
| | | Year ended
31
December
2023 | Year ended
31
December
2022 |
|----------------------------------------------------------------------------------------------------------------------------------|-------|--------------------------------------|--------------------------------------|
| | Notes | £'000 | £'000 |
| Cash flows from operating activities | | | |
| Loss for the financial year | | (11,279) | (10,910) |
| Adjustments for: | | | |
| Amortisation of intangible assets | 12 | 3,827 | 2,919 |
| Depreciation of right-of-use assets | 20 | 993 | 963 |
| Depreciation of property, plant and equipment | 13 | 1,430 | 926 |
| Loss on disposal of intangible assets | 6 | 879 | - |
| Loss on disposal of property, plant and equipment | | 11 | - |
| Unrealised foreign exchange on intercompany balances | | 247 | - |
| Interest expense | | 1,558 | 757 |
| Taxation | 10 | (12) | 332 |
| Share based payment charge | | | 262 |
| Operating cash outflow before changes in working capital | | (2,346) | (4,751) |
| | | | |
| Changes in inventories | | (126) | 1,809 |
| Changes in trade and other receivables | | 2,712 | (3,737) |
| Changes in trade and other payables | | 3,009 | (1,970) |
| Total cash inflow / (outflow) from operations | | 3,249 | (8,649) |
| | | | |
| Cash flows from investing activities | | () | |
| Purchase of property, plant and equipment | | (1,103) | (6,013) |
| Purchase of intangible assets | | (1,009) | (1,941) |
| Net cash outflow from investing activities | | (2,112) | (7,954) |
| Cash flows from financing activities | 29 | | |
| Gross proceeds from issue of share capital | 25 | _ | 5,000 |
| Share issue costs | | _ | (371) |
| (Repayments) / proceeds from asset financing | | (208) | 2,184 |
| Interest paid on asset financing | | (253) | (143) |
| Proceeds from invoice financing | | 1,818 | 4,523 |
| Interest paid on invoice financing | | (419) | (119) |
| Proceeds from trade facility | | 527 | 2,733 |
| Interest paid on trade facility | | (399) | (53) |
| Principal repayments of lease liabilities | | (306) | · (629) |
| Interest paid on lease liabilities | | (436) | (442) |
| Net cash inflow from financing activities | | 324 | 12,683 |
| 1400 casti tilliott itotti tilliaticiile activitics | | 3.4 | 12,003 |
| | | 1,461 | (3,920) |
| Net increase / (decrease) in cash and cash equivalents | | 1,401 | |
| Net increase / (decrease) in cash and cash equivalents Unrealised foreign exchange differences | | | - |
| Net increase / (decrease) in cash and cash equivalents Unrealised foreign exchange differences Opening cash and cash equivalents | | (247)
930 | 4,850 |
| | Share
capital
£'000 | Share premium reserve | Employee
benefit
trust
reserve
£'000 | Other reserve | Foreign
exchange
reserve
£'000 | Cash flow
hedge
reserve
£'000 | Retained
deficit
£'000 | Total
equity
£'000 |
|-----------------------------------------------------------------|---------------------------|-----------------------|--------------------------------------------------|---------------|-----------------------------------------|----------------------------------------|------------------------------|--------------------------|
| At 31 December
2021 | 13,510 | 51,839 | (158) | (907) | (117) | (2) | (17,836) | 46,329 |
| Total comprehensive loss for the year Transactions with owners: | - | - | · - | - | (21) | 2 | (10,910) | (10,929) |
| Issue of shares | 3,732 | 1,295 | (398) | - | - | - | - | 4,629 |
| Issue of shares
held by EBT to
employees | - | - | 127 | - | - | - | (127) | - |
| Share based payments | - | | - | | - | - | 262 | 262 |
| At 31 December
2022 | 17,242 | 53,134 | (429) | (907) | (138) | - | (28,611) | 40,291 |
| Total comprehensive loss for the year Transactions with | - | - | | - | 54 | - | (11,279) | (11,225) |
| owners: | 005 | | | | | | (005) | |
| Issue of shares
Share based | 985 | - | - | - | - | - | (985) | - |
| payments | - | - | 225 | - | - | - | (225) | - |
| At 31 December
2023 | 18,227 | 53,134 | (204) | (907) | (84) | - | (41,100) | 29,066 |
### 1. Accounting policies
#### 1.1 General information
Science in Sport plc (the "Company" and together with its subsidiaries "SIS" or the "Group") is a public limited company incorporated and domiciled in England and Wales (registration number 08535116). The address of the registered office is 2nd Floor, 16 - 18 Hatton Garden, Farringdon, London EC1N 8AT. The functional and presentation currency is Pounds Sterling and the financial statements are rounded to the nearest £1,000.
The main activities of the Group are those of developing, manufacturing and marketing sports nutrition products for professional athletes and sports enthusiasts.
#### 1.2 Basis of preparation
The Company has elected to prepare its parent company financial statements in accordance with UK adopted International Accounting Standards as applied in accordance with the provisions of the Companies Act 2006, and these are set out on pages 84 to 89. The financial statements are prepared for the year ended 31 December 2023.
The Group's financial statements have been prepared in accordance with UK adopted International Accounting Standards and those parts of the Companies Act 2006 that are applicable to financial statements prepared in accordance with IFRS. The Group's financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
The accounting policies set out below have been applied to all periods presented in these Group financial statements and are in accordance with UK adopted International Accounting Standards and in conformity with the requirements of the Companies Act 2006 that were applicable for the period ended 31 December 2023.
#### 1.3 New accounting standards, interpretations and amendments adopted by the Group
The Group has adopted the new interpretations and revised standards below effective for the year ended 31 December 2023, none of which has had a significant impact on the Group. The newly adopted standards in the annual financial statements for the year ended 31 December 2023 are:
- Definition of Accounting Estimates Amendments to IAS 8
- Disclosure of Accounting Policies Amendments to IAS 1 and IFRS Practice Statement 2
- Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction Amendments to IAS 12
- International tax reform and temporary exception for deferred tax assets and liabilities related to the OECD pillar two income taxes - Amendment to IAS 12
### 1.4 New standards, interpretations and amendments not yet effective
At the date of authorisation of these financial statements there were amendments to standards which were in issue, but which were not yet effective, and which have not been applied. The principal ones were:
Effective for annual periods beginning on or after 1 January 2024:
- Amendment to IFRS 16 Leases: Leases on sale and leaseback.
- Amendment to IAS 1 Presentation of Financial Statements: Non-current liabilities with covenants.
- Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Supplier finance.
Effective for periods on or after 1 January 2025:
• Amendments to IAS 21 - The Effects of Changes in Foreign Exchange Rates: Lack of exchangeability.
These accounting standards and amendments are not expected to have a material impact on the Group.
#### 1.5 Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. As a result, they continue to adopt the going concern basis of accounting in preparing the financial statements.
The Group made a loss after tax for the year attributable to owners of the parent of £11.3m (2022: £10.9m), which included significant non-cash items of £6.3m depreciation and amortisation (2022: £4.8m), and £0.9m loss on disposal of intangible assets (2022: £nil). The net increase in cash at bank at the year ended 31 December 2023 was £1.2m (2022: £3.9m decrease).
As at 31 December 2023, the Group had cash at bank of £2.1m (31 December 2022: £0.9m), and headroom in facilities of over £4m. These facilities include working capital facilities of £12m which are renewed annually and are currently due to be next renewed in April 2025. Due to the nature of these facilities, which are secured against the working capital of the business and includes a blue chip trade debtor book and realisable inventory, and the strong relationship with the bank, the Directors expect this to be renewed annually going forward.
During 2023, the Directors continued to focus on realigning the business to put the Group in a stronger position. As a result, the operating model of the business is much leaner and we have no significant fixed asset capital investment requirements which will enable the Group to improve underlying EBITDA and cash generation in 2024. Trading at the start of 2024 has been positive and management continue to focus on embedding the new operating model and structure.
With regards sensitivity analysis, management have prepared scenario planning of different revenue outcomes, including interruption of trade, no sales growth, and customer failure to stress-test potential impacts on the cash position of the business, and concluded that in each of these downside stress tests sufficient liquidity is in place. In the event of a shock or prolonged economic downturn we have a number of mitigating actions that could be taken, plus high level of cost protection in place. The Directors have prepared projected cash flow information for the period ending 31 December 2025.
Accordingly, the Directors have a reasonable expectation that the Company will have sufficient cash to meet all liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements.
#### 1.6 Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and its subsidiaries (the "Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
#### 1.7 Revenue
#### (i) Performance obligations and timing of revenue recognition
The Group's revenue is derived from selling goods with revenue recognised at a point in time when control of the goods has transferred to the customer. Revenue from sales to consumers is recognised when the order is placed. Business to business revenue is recognised at the point of dispatch, based on ex-works terms. There is limited judgement needed in identifying the point at which the performance obligation is satisfied.
### (ii) Determining the transaction price
Most of the Group's revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices. Variable consideration relating to volume rebates has been constrained in estimating contract revenue in order that it is highly probable that there will not be a future reversal in the amount of revenue recognised when the amount of volume rebates has been determined.
### (iii) Allocating amounts to performance obligations
For most contracts, there is a fixed unit price for each product sold, with discounts given for bulk orders placed at a specific time. Therefore, there is no judgement involved in allocating the contract price to each unit ordered in such contracts (it is the total contract price divided by the number of units ordered). Where a customer orders more than one product line, the Group is able to determine the split of the total contract price between each product line by reference to each products standalone selling price. All product lines are capable of being, and are, sold separately.
Sales rebate and discount reserves are established based on management's best estimate of the amounts necessary to meet claims by customers in respect of these rebates and discounts. A refund liability is made at the time of sale and updated at the end of each reporting period for changes in circumstances.
#### 1.8 Segment reporting
The Directors have determined that two operating segments exist under the terms of IFRS 8 'Operating Segments'. The Group is organised between SIS (Science in Sport) and PhD Nutrition.
### 1.9 Use of non-GAAP measures - Underlying EBITDA and Adjusted net debt
The Directors believe that the underlying EBITDA as a measure provides additional useful information for Shareholders on underlying trends and performance. This measure is used for internal performance analysis. Underlying operating profit/(loss) is not defined by IFRS and therefore may not be directly comparable with other companies' adjusted profit measures. It is not intended to be a substitute for, or superior to IFRS measurements of profit.
A reconciliation of the underlying EBITDA to statutory operating loss is provided below:
| | Year Ended 31 | Year Ended 31 |
|------------------------------------------------------|---------------|---------------|
| | December | December |
| | 2023 | 2022 |
| | £′000 | £'000 |
| Underlying EBITDA | 1,993 | (2,689) |
| Share-based payment expense | - | (262) |
| Depreciation and amortisation | (6,250) | (4,808) |
| Restructuring and one-off costs | (1,975) | (888) |
| Loss on disposal of intangible assets | (879) | - |
| Transition costs | (2,092) | (1,075) |
| Unrealised foreign exchange on intercompany balances | (247) | (99) |
| Other items | (283) | |
| Loss from operations | (9,733) | (9,821) |
### 1.9 Use of non-GAAP measures - Underlying EBITDA and Adjusted net debt (continued)
The Directors believe that Adjusted net debt as a measure provides additional useful information for Shareholders on underlying trends and performance. This measure is used for internal performance analysis. This measure is not defined by IFRS and therefore may not be directly comparable with other companies' net debt analysis. It is not intended to be a substitute for, or superior to IFRS measurements.
A reconciliation of the Adjusted net debt figure presented on page 11 is provided below:
| | Year Ended 31 | Year Ended 31
December | |
|----------------------------|---------------|---------------------------|--|
| | December | | |
| | 2023 | 2022 | |
| | (£'000) | (£'000) | |
| Cash and cash equivalents | 2,144 | 930 | |
| Invoice financing | (6,341) | (4,523) | |
| Trade facility | (3,260) | (2,733) | |
| Asset financing obligation | (3,474) | (3,682) | |
| Other payables | (1,903) | (877) | |
| Adjusted net debt | (12,834) | (10,885) | |
#### 1.10 Foreign currency translation
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign subsidiaries are retranslated using the closing rate method and foreign exchange gains and losses on translation are recognised through other comprehensive income. The exchange differences are held in a separate reserve and will be recycled to the profit or loss on disposal of the subsidiary.
### 1.11 Employee benefits
### (i) Defined contribution plans
The Group provides retirement benefits to a number of employees and Executive Directors. The assets of these schemes are held separately from those of the Group in independently administered funds. Contributions made by the Group are charged to profit or loss in the period in which they become payable.
### (ii) Accrued holiday pay
Provisions made at the reporting dates for holidays accrued but not taken at the salary of the relevant employee at that date
### 1.12 Research and development
Expenditure on research and development activities of internal projects is written off as incurred unless the criteria are met to recognise an intangible asset in accordance with IAS 38 'Intangible assets'. Development costs that are directly attributable to the design and testing of identifiable and unique products controlled by the Group are capitalised as intangible assets only when the following criteria are met: (i) it is technically feasible to complete the product so that it will be available for use; (ii) the Directors intend to complete the product and use it; (iii) there is an ability to use the product; (iv) it can be demonstrated how the product will generate probable future economic benefits; (v) adequate technical, financial and other resources to complete the development and use the product are available; and (vi) the expenditure attributable to the product during its development can be measured reliably. Directly attributable costs that are capitalised include relevant employee costs. Capitalised development costs are amortised on a straight-line basis over a period of five years from the date that the product is brought into first use. The Directors consider that five years represents the usual period over which the main benefits of a new product are gained by the Group.
#### 1.13 Taxation
Current tax is provided at amounts expected to be recovered or to be paid using the tax rates and tax laws that have been enacted or substantively enacted at the reporting date. When research and development tax credits are claimed, they are recognised on an accruals basis and are included as a grant and are taken above the line as a credit to expenditure. Tax credits are included in underlying operating loss.
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability differs from its tax base, except for differences arising on:
- The initial recognition of goodwill;
- The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and
- Investments in subsidiaries where the Company can control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profits will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered). Deferred tax balances are not discounted.
#### 1.14 Finance costs
Finance costs are charged to profit and loss account over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount.
#### 1.15 Goodwill
Goodwill represents the excess of the cost of a business combination over the Group's interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued. No contingent consideration has been paid. Direct costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.
#### 1.16 Intangible assets
#### (i) Externally acquired intangibles
Externally acquired intangible assets are initially recognised at cost less impairment and subsequently amortised on a straight-line basis over their expected useful economic lives. Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:
| | Useful economic life | Valuation method |
|------------------------|----------------------|------------------------------|
| Brands | 10 years | Relief from royalty |
| Customer relationships | 10 years | Multi period excess earnings |
#### (ii) Internally generated intangible assets
Expenditure on internally developed products is capitalised if it can be demonstrated that; it is technically feasible to develop the product for it to be sold, adequate resources are available to complete the development, there is an intention to complete and sell the product, the Group is able to sell the product, sale of the product will generate future economic benefits, and expenditure on the project can be measured reliably. Further details are disclosed in note 1.12.
Capitalised development costs are amortised over the periods the Group expects to benefit from selling the products developed. The amortisation expense is included within the administrative expenses in the consolidated statement of comprehensive income. Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred.
| | Useful economic life | |
|----------------------------------|----------------------|---|
| Website and software development | 2 years | |
| Product development | 5 years | - |
#### Change in accounting estimate
During the year, management reassessed the useful economic life of its website resulting in a change of useful economic life from 5 years to 2 years. See note 1.26 for further details.
### 1.17 Impairment of tangible and intangible assets
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (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 amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ('CGUs'). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from a business combination that gives rise to the goodwill. Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed. All goodwill relates to the Group's acquisition of PhD Nutrition which forms an individual CGU.
#### 1.18 Property, plant and equipment
Plant and equipment assets are stated at cost. Cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is charged to profit or loss on all plant and equipment at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line basis over their estimated useful lives, which is:
| | Useful economic life | |
|----------------------------------------|--------------------------|---|
| Leasehold improvements | Over length of the lease | |
| Plant and machinery | 4 – 15 years | • |
| Fixtures, fittings, computer equipment | 4 years | |
| Motor vehicles | 4 years | |
The assets' residual values and useful lives are determined by the Directors and reviewed and adjusted if appropriate at each reporting date in accordance with the Group policy for impairment of assets.
#### 1.19 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated as follows:
Raw materials - cost of purchase on a first in, first out basis.
Work in progress and finished goods - cost of raw materials and labour, together with attributable overheads based on the normal level of activity.
Net realisable value is based on estimated selling price less further costs to completion and disposal. A charge is made to profit or loss for slow moving inventories. The charge is reviewed at each reporting date.
### 1.20 Financial Instruments
Financial instruments are classified according to the substance of the contractual arrangements into which the Group enters.
### Financial assets
On initial recognition, financial assets are classified as either fair value through profit and loss, fair value through other comprehensive income or amortised cost. The classification depends on the purpose for which the financial assets were acquired.
Amortised cost assets are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. They arise principally through the provision of services to customers (e.g. trade receivables). But also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest.
The Group's assets at amortised cost comprise trade and other receivables and cash and cash equivalents including cash held at bank.
#### 1.20 Financial Instruments (continued)
The Group applies the simplified approach under IFRS 9 for measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and ageing. Expected loss rates are based on historical credit losses experienced and are then adjusted for current and forward-looking information on factors affecting the Group's customers.
#### Financial liabilities
Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
A financial liability is de-recognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same party on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.
#### 1.21 Cash and cash equivalents
Cash and cash equivalents comprise of cash at bank (which includes balances in transit from payment merchant platforms, for example, PayPal) and in hand.
### 1.22 Share capital
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.
The Group's ordinary shares are classified as equity instruments.
### 1.23 Share-based payments
Some employees are granted share options which allow these employees to acquire shares in the Company if certain performance conditions are met.
The fair value of share options is recognised as an employee expense in profit or loss with a corresponding increase in equity. The fair values of options are calculated at the earlier of the date on which an expectation of the share options arise and the date on which the options are granted. All options have a £nil exercise price and no market-based performance conditions, therefore the fair value has been calculated using the market value of the shares at the date of grant adjusted for any non- entitlement to dividends over the vesting period.
The amount recognised as an expense is adjusted to reflect the number of equity instruments vested or expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of shares that eventually vest.
Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received.
The social security contributions payable in connection with the grant of the share options is considered an integral part of the grant itself, and the charge will be treated as a cash settled transaction.
#### 1.24 Employee Benefit Trust ("EBT")
As the Group is deemed to have control of the EBT, it is treated as a subsidiary and consolidated for the purpose of the Group accounts. The EBT's investment in the Company's shares is deducted from shareholders' funds in the Group statement of financial position as if they were treasury shares.
#### 1.25 Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for Leases of low value assets; and Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for lease payments made at or before commencement of the lease; initial direct costs incurred.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term.
### 1.26 Critical accounting estimates and judgements
The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Directors to exercise their judgement in the process of applying the accounting policies which are detailed above. These judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
### **Judgements**
#### (i) Capitalised costs
Management capitalises specific payroll costs related to the development of intangible assets such as new product development and technology development where the requirements of IAS 38 intangible assets accounting standard are met. This requires that the project is technically feasible to complete, management intends to complete the project and has resources to do so. The project itself has been assessed to generate future economic benefits for the business.
#### 1.26 Critical accounting estimates and judgements (continued)
#### **Estimates**
Estimates are continually made and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable in the circumstances.
As the use of estimates is inherent in financial reporting, actual results could differ from these estimates. The Directors believe the following to be the key areas of estimation:
### (i) Intangible assets including goodwill – Acquisition of PhD Nutrition
Intangible assets including goodwill were recognised on the acquisition of PhD Nutrition in relation to brands and customer relationships. The fair value of these assets were determined by discounting estimated future net cash flows generated by the assets. These were assessed based upon management forecasts. Key assumptions are those regarding discount rates and revenue growth rates.
In the current year the intangible assets recognised on acquisition have been tested for impairment based on the board approved cash forecast which includes a sales growth rate and gross margin estimates.
The discount rate used to calculate the present value of the cashflow is based on a WACC analysis which takes into account estimates of the risk-free rate, equity risk premium and company size premium. Further detail is given in note 12, which includes sensitivity analysis performed on managements estimates.
As at 31 December 2023, recoverable amounts were £4,404,000 (2022: £5,300,000) and £2,772,000 (2022: £3,336,000) in relation to brands and customer relationships respectively.
### (ii) Intangible assets - Change in accounting estimate
During the year, management reassessed the useful economic life of its website due to the planned redesign of the current website, resulting in a change of useful economic life from 5 years to 2 years. The change has been applied in the financial statements for the year ended 31 December 2023 and has increased the depreciation charge in the current year by £686,000 and decreased the carrying amount of the associated assets by the same amount.
The impact on future periods will be a cumulative reduction in depreciation charge of the same amount (£686,000) given it has been recognised in the current year.
As at 31 December 2023, the recoverable amount of the intangible asset was £1,652,000 (2022: £2,900,000).
### 2. Financial risk management
The Group's activities inevitably expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk and fair value interest rate risk), credit risk and liquidity risk.
It is Group policy not to enter into speculative positions using complex financial instruments. The Group's primary treasury objective is to minimise exposure to potential capital losses.
#### (a) Market risk
### Foreign exchange risk
The Group operates globally with subsidiaries in the USA, Italy and Australia, and therefore there will be risks around foreign exchange rates. Refer to note 16 for analysis of cash balances by currency.
The Group primarily enters into contracts which are to be settled in UK Pounds. However, some contracts involve other major world currencies including the US Dollar, Euro and Australian Dollar.
As of 31 December 2023, the Group's net exposure to foreign exchange risk was as follows:
| | Trade
receivables | Trade payables | Cash and cash equivalents | Net |
|--------|----------------------|----------------|---------------------------|-------|
| | £'000 | £'000 | £'000 | £'000 |
| AUD\$ | 11 | - | 27 | 38 |
| EUR € | 229 | (138) | 401 | 492 |
| USD \$ | 1,144 | (107) | 271 | 1,308 |
| NZD \$ | 3 | - | 19 | 22 |
| JPY ¥ | - | (21) | - | (21) |
| Total | 1,387 | (266) | 718 | 1,839 |
As of 31 December 2022, the Group's net exposure to foreign exchange risk was as follows:
| | Trade
receivables | Trade payables | Cash and cash equivalents | Net |
|--------|----------------------|----------------|---------------------------|-------|
| | £'000 | £'000 | £'000 | £'000 |
| AUD\$ | 5 | - | 31 | 36 |
| EUR € | 212 | (13) | 178 | 377 |
| USD \$ | 125 | - | 242 | 367 |
| NZD \$ | - | - | 6 | 6 |
| JPY ¥ | ~ | (24) | - | (24) |
| Total | 342 | (37) | 457 | 762 |
### Cash flow and fair value interest rate risk
The Group's interest rate risk arises from medium term and short term money market deposits. Deposits which earn variable rates of interest expose the Group to cash flow interest rate risk. Deposits at fixed rates expose the Group to fair value interest rate risk. The Group had no fixed rate deposits during the year. The Group analyses its interest rate exposure on a dynamic basis throughout the year. The Group has no variable borrowings and therefore no interest rate swaps or other forms of interest risk management have been undertaken.
### 2. Financial risk management (continued)
#### (b) Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions as well as credit exposure in relation to outstanding receivables. Group policy is to place deposits with institutions with investment grade A2 or better (Moody's credit rating). The Group does not expect any losses from non-performance by these institutions. Management believes that the carrying value of outstanding receivables and deposits with banks represents the Group's maximum exposure to credit risk.
The top 10 customers account for 53% (2022: 49%) of the Group's revenue and hence there is some risk from the concentration of customers, the largest single customer is 16% (2022: 13%) of revenue and is a major international online business. Further disclosures regarding trade and other receivables are included in note 15.
### (c) Liquidity risk
Liquidity risk arises from the Group's management of working capital; it is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and management monitors rolling forecasts of the Group's liquidity on the basis of expected cash flow.
The Group had trade and other payables at the reporting date of £25.3m (2022: £20.0m) as disclosed in note 17. The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:
| | Up to 3 months | Between 3
and 12
months | Between 1 and 2 years | Between 2 and 5 years | Over 5 years |
|-----------------------------|----------------|-------------------------------|-----------------------|-----------------------|--------------|
| | £'000 | £'000 | £'000 | £'000 | £'000 |
| Trade payables | 5,114 | - | - | - | - |
| Accruals | 8,728 | - | - | - | - |
| Hire purchase | 20 | 62 | - | - | • |
| Asset financing | 366 | 1,098 | 1,185 | 1,295 | - |
| Invoice financing | 6,341 | - | - | - | - |
| Trade financing | 3,260 | - | - | - | - |
| Lease liabilities | 315 | 884 | 1,051 | 3,030 | 8,434 |
| Total financial liabilities | 24,144 | 2,044 | 2,236 | 4,325 | 8,434 |
### (d) Capital risk management
The Group considers its capital to comprise its ordinary share capital, share premium, other reserve and accumulated retained earnings/deficit as disclosed in the consolidated statement of financial position.
The Group remains funded primarily by equity capital together with working capital facilities and asset finance. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for equity holders of the Group and benefits for other Stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group's debt and cash position is monitored weekly which ensures these objectives are being met along with other internal metrics.
### 3. Segmental reporting
Operating segments are identified on the basis of internal reporting and decision making. The Group's Chief Operating Decision Maker ("CODM") is considered to be the Board, with support from the senior management teams, as it is primarily responsible for the allocation of resources to segments and the assessments of performance by segment.
The Group's reportable segments have been split into the two brands, Science in Sport (SiS) and PhD Nutrition. Operating segments are reported in a manner consistent with the internal reporting provided to the CODM as described above. The single largest customer makes up 16% of revenue and is not separately identified in segmental reporting.
The Board uses revenue, EBITDA, profit before tax and cash, as key measures of the segment's performance. These are reviewed regularly.
| | | 2023 | | | 2022 | |
|----------------------------|---------|---------|----------|---------|---------|----------|
| | SiS | PhD | Total | SiS | PhD | Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Sales | 34,184 | 28,487 | 62,671 | 29,708 | 34,065 | 63,773 |
| Gross profit | 16,565 | 10,267 | 26,832 | 17,383 | 9,553 | 26,936 |
| Advertising and promotions | (5,368) | (3,025) | (8,393) | (6,602) | (2,387) | (8,989) |
| Carriage | (3,173) | (1,909) | (5,082) | (6,356) | (756) | (7,112) |
| Online selling costs | (434) | (76) | (510) | (1,424) | (86) | (1,510) |
| Trading contribution | 7,590 | 5,257 | 12,847 | 3,001 | 6,324 | 9,325 |
| Other operating expenses | | | (22,580) | | | (19,146) |
| Loss from operations | | | (9,733) | | | (9,821) |
### 4. Revenue from contracts with customers
The Group operates the primary sales channels shown below, which form the basis on which management monitor revenue. UK Retail includes domestic grocers and high street retailers, Digital are sales through the phd.com and scienceinsport.com platforms, International Retail relates to retailers and distributors outside of the UK and Marketplace relates to online marketplaces such as Amazon and Tmall.
| | | 2023 | | | 2022 | |
|----------------------|--------|--------|--------|--------|--------|--------|
| | SiS | PhD | Total | SiS | PhD | Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Digital | 4,984 | 2,325 | 7,309 | 8,859 | 3,618 | 12,477 |
| Marketplace | 6,218 | 6,835 | 13,053 | 6,199 | 7,851 | 14,050 |
| China | 1,105 | 2,285 | 3,390 | 178 | 7,031 | 7,209 |
| USA | 3,548 | - | 3,548 | - | - | - |
| Global online | 15,855 | 11,445 | 27,300 | 15,236 | 18,500 | 33,736 |
| International retail | 8,322 | 4,257 | 12,579 | 6,491 | 3,904 | 10,395 |
| UK retail | 10,007 | 12,785 | 22,792 | 7,981 | 11,661 | 19,642 |
| Retail | 18,329 | 17,042 | 35,371 | 14,472 | 15,565 | 30,037 |
| Total Sales | 34,184 | 28,487 | 62,671 | 29,708 | 34,065 | 63,773 |
Turnover by geographic destination of sales may be analysed as follows:
| | Year ended | Year ended |
|-------------------|-------------|-------------|
| | 31 December | 31 December |
| | 2023 | 2022 |
| | £′000 | £′000 |
| United Kingdom | 35,302 | 36,574 |
| Rest of Europe | 12,047 | 11,391 |
| USA | 3,548 | 4,670 |
| Rest of the World | 11,774 | 11,138 |
| Total Sales | 62,671 | 63,773 |
### 5. Operating expenses
| | Year ended
31 December | Year ended
31 December |
|--------------------------------|---------------------------|---------------------------|
| | 2023 | 2022 |
| | £′000 | £'000 |
| Sales and marketing costs | 13,985 | 17,611 |
| Operating costs | 16,330 | 14,076 |
| Depreciation and amortisation | 6,250 | 4,808 |
| Share based payment charge (1) | - | 262 |
| Administrative expenses | 22,580 | 19,146 |
| Total operating expenses | 36,565 | 36,757 |
(1) Includes associated social security credits/costs of £nil (2022: credits of £218,000)
### 6. Loss from operations
| Loss from operations is stated after charging/(crediting): | Year ended
31 December
2023
£'000 | Year ended
31 December
2022
£'000 |
|-----------------------------------------------------------------|--------------------------------------------|--------------------------------------------|
| Amortisation of intangible assets | 3,827 | 2,919 |
| Loss on disposal of intangible assets | . 879 | - |
| Depreciation of right-of-use assets | 993 | 963 |
| Depreciation of property, plant and equipment | 1,430 | 926 |
| Research and development costs | 464 | 249 |
| Grant income in respect of research and development tax credits | (163) | (140) |
| A&P/Marketing costs | 8,393 | 8,989 |
| Impairment of trade receivables | 520 | 489 |
| Non-recurring costs and other items (breakdown detailed below) | 5,476 | 2,062 |
Included within the amortisation of intangible assets is £686k (2022: £nil) of accelerated amortisation in relation to the corporate website.
Non-recurring costs and other items deducted in arriving at the Groups underlying EBITDA are analysed below:
| · | Year ended
31 December | Year ended
31 December |
|------------------------------------------------------|---------------------------|---------------------------|
| | 2023 | 2022 |
| | £′000 | £′000 |
| Restructuring and one-off costs | 1,975 | 888 |
| Loss on disposal of intangible assets | 879 | - |
| Transition costs | 2,092 | 1,075 |
| Unrealised foreign exchange on intercompany balances | 247 | 99 |
| Other items · | · 283 | - |
| Total non-recurring costs and other items | 5,476 | 2,062 |
The total fees for services provided by the Group's Auditor are analysed below:
| | Year ended | Year ended |
|-----------------------------------------------------------------|-------------|-------------|
| | 31 December | 31 December |
| | 2023 | 2022 |
| | £'000 | £'000 |
| Audit services | | |
| - Audit fees in respect of the parent company and consolidation | 66 | 57 |
| - Audit fees in respect of the subsidiary accounts | 139 | 121 |
| Non-audit services | | |
| - Corporation tax compliance | • | 18 |
| - Other taxation advisory | - | 17 |
| Total fees | 205 | 213 |
### 7. Wages and salaries
The average monthly number of persons, including Directors, employed by the Group was:
| | Year ended | Year ended |
|---------------------|-------------|-------------|
| | 31 December | 31 December |
| | 2023 | 2022 |
| | Number | Number |
| Sales and marketing | 57 | 56 |
| Manufacturing | 146 | 132 |
| Administration | 36 | 36 |
| Directors | 6 | 5 |
| Total employees | 245 | 229 |
Their aggregate emoluments were:
| | Year ended
31 December | Year ended
31 December |
|--------------------------------------------------------|---------------------------|---------------------------|
| | 2023 | 2022 |
| | £′000 | £′000 |
| Wages and salaries | 11,075 | 9,267 |
| Directors' fees | 24 | 181 |
| Social security costs | 1,155 | 1,048 |
| Pension and other staff costs | 310 | 294 |
| Total cash settled emoluments | 12,564 | 10,790 |
| Share based payments – equity settled | - | 480 |
| Share based payments – social security costs/(credits) | - | (218) |
| Total emoluments | 12,564 | 11,052 |
### 8. Directors' and Key Management Personnel remuneration
Amounts paid to the Directors of the parent company are analysed in the following table:
| | Year ended | Year ended |
|---------------------------------------------------------|-------------|-------------|
| | 31 December | 31 December |
| | 2023 | 2022 |
| | £′000 | £′000 |
| Directors | | |
| Aggregate emoluments and fees | 698 | 653 |
| Benefits in kind | 4 | 7 |
| Pension contributions | 12 | 12 |
| Total emoluments | 714 | 672 |
| Share based payment remuneration charge: equity settled | - | 279 |
| Total Directors' emoluments | 714 | 951 |
Directors' fees of £24,000 (2022: £39,000) for one Director are paid through a limited company.
During the year, one Director participated in defined contribution pension schemes (2022: none). The number of Directors serving during the year who participated in the long-term incentive programme was 2 (2022: 2). A total of 9,852,866 share options were exercised by 2 Directors in the current year with a total gain of £1,157,712 (2022: none).
The highest paid Director received £278,000 (2022: £554,000) which was made up of salary, share-based payments and benefits in kind. The Remuneration committee report provides more detail on page 29 to 33.
Directors' emoluments include amounts attributable to benefits in kind comprising private medical insurance on which the Directors are assessed for tax purposes. The amounts attributable to benefits in kind are stated at cost to the Group, which is also the tax value of those benefits. Further details of Directors' emoluments are included in the Remuneration committee report on page 29 to 33.
The aggregate remuneration of members of Key Management Personnel (which includes the Board of Directors and other Senior Management Personnel) during the year was as follows:
| | Year ended
31 December | Year ended
31 December |
|------------------------------------------------|---------------------------|---------------------------|
| | 2023 | 2022 |
| | £'000 | £'000 |
| Remuneration and short-term benefits | 1,188 | 878 |
| National insurance costs | 160 | 99 |
| Pension | 12 | |
| Compensation loss of office | 103 | - |
| Post-employment benefits | - | 3 |
| Share based payments | - | 167 |
| Total amounts paid to Key Management Personnel | 1,463 | 1,147 |
### 9. Finance costs
| | Year ended
31 December | Year ended
31 December |
|---------------------------------------|---------------------------|---------------------------|
| | 2023 | 2022 |
| | £′000 | £′000 |
| Interest expense on lease liabilities | 436 | 442 |
| Interest expense on asset financing | 253 | 143 |
| Interest expense on invoice financing | 419 | 119 |
| Interest expense on trade facility | 399 | 53 |
| Unwinding of dilapidation provision | 51 | - |
| Total finance costs | 1,558 | 757 |
### 10. Taxation
| | Year ended
31 December
2023
£'000 | Year ended
31 December
2022
£'000 |
|---------------------------------------------------|--------------------------------------------|--------------------------------------------|
| Current tax | | |
| Overseas subsidiary taxation | (7) | (332) |
| Total current tax charge | (7) | (332) |
| Deferred tax | | |
| Effect of change in tax rates | - | 270 |
| Origination and reversal of temporary differences | 19 | 790 |
| Adjustment in respect of prior period | - | (1,060) |
| Total deferred tax credit | 19 | - |
| Total tax credit / (charge) | 12 | (332) |
The tax assessed for the year is different from the standard rate of corporation tax in the UK. The differences are explained below:
| Loss before tax | 11,291 | 10,578 |
|----------------------------------------------------------------|---------|---------|
| Loss before tax multiplied by a hybrid rate of corporation tax | 2,656 | 2.010 |
| in the UK of 23.52% (2022: standard rate of 19%) | 2,030 | 2,010 |
| Effects of: | | |
| Expenses not deductible for tax purposes | (423) | (366) |
| Fixed asset differences | 6 | 186 |
| Current year movement in respect of prior periods | 22 | - |
| Unrecognised deferred tax asset on losses carried forward | (2,772) | (2,498) |
| R&D expenditure credit received | 38 | 48 |
| Effect of changes in tax rate | 155 | 357 |
| Excess overseas tax suffered | - | (69) |
| Other | 330 | - |
| Total tax credit / (charge) | 12 | (332) |
### 10. Taxation (continued)
Tax on each component of other comprehensive income is as follows:
| | 2023 | | | 2022 | | |
|----------------------------------------------------------|---------------|-------|--------------|---------------|-------|--------------|
| | Before
tax | Tax | After
tax | Before
tax | Tax | After
tax |
| · · · · · · · · · · · · · · · · · · · | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Profit recognised on hedging instrument | • | • | - | 2 | - | 2 |
| Exchange losses on the translation of foreign operations | 54 | - | 54 | (21) | - | (21) |
| Total | 54 | - | 54 | (19) | - | (19) |
At 31 December 2023 UK tax losses of the Company available to be carried forward are estimated to be £38.6m (2022: £30.5m. The rate of UK Corporation tax increased from 19% to 25% on 6 April 2023, for the financial year ended 31 December 2023 a hybrid rate of 23.52% has been used. Existing deferred tax liabilities had been calculated at the rate at which the relevant balances were expected to be recovered or settled. This rate was 25% and therefore existing deferred tax liabilities have not had to be remeasured.
There are no future factors at the reporting date that are expected to impact the Group's future tax charge. The Group is not within the scope of the OECD Pillar Two model rules.
### 11. Loss per share
Basic and diluted loss per share is calculated by dividing the loss attributable to owners of the parent by the weighted average number of Ordinary shares in issue during the period. The exercise of share options would have the effect of reducing the loss per share and is therefore anti-dilutive under the terms of IAS 33 'Earnings per share'.
| | Year ended
31 December
2023 | Year ended
31 December
2022 |
|----------------------------------------------------------------|-----------------------------------|-----------------------------------|
| Loss for the year attributable to owners of the parent – £'000 | (11,279) | (10,910) |
| Weighted average number of shares | 170,123,783 | 138,860,015 |
| Basic loss per share - pence | (6.6p) | (7.9p) |
| Diluted loss per share – pence | (6.6p) | (7.9p)_ |
The number of vested but unexercised share options is 2,896,615 (2022: 16,446,937).
### 12. Intangible assets
| | Goodwill | Brands | Customer relationships | Website and software development | Product
development | Total |
|---------------------|----------|--------|------------------------|----------------------------------|------------------------|---------|
| | £'000 | £'000 | £'000 | £′000 | £′000 | £'000 |
| Cost | | - | - | | | |
| At 31 December 2021 | 17,398 | 8,957 | 5,638 | 5,740 | 2,309 | 40,042 |
| Additions | - | - | - | 1,195 | 746 | 1,941 |
| At 31 December 2022 | 17,398 | 8,957 | 5,638 | 6,935 | 3,055 | 41,983 |
| Additions | - | - | - | 443 | 566 | 1,009 |
| Disposals | - | - | - | (216) | (1,573) | (1,789) |
| At 31 December 2023 | 17,398 | 8,957 | 5,638 | 7,162 | 2,048 | 41,203 |
| Amortisation | | | | | | |
| At 31 December 2021 | - | 2,763 | 1,738 | 2,930 | 894 | 8,325 |
| Charge for the year | - | 894 | 564 | 1,105 | 356 | 2,919 |
| At 31 December 2022 | - | 3,657 | 2,302 | 4,035 | 1,250 | 11,244 |
| Charge for the year | - | ` 896 | 564 | 1,691 | 676 | 3,827 |
| Disposals | - | - | - | (216) | (694) | (910) |
| At 31 December 2023 | - | 4,553 | 2,866 | 5,510 | 1,232 | 14,161 |
| Net book value | | | | | | |
| At 31 December 2023 | 17,398 | 4,404 | 2,772 | 1,652 | 816 | 27,042 |
| At 31 December 2022 | 17,398 | 5,300 | 3,336 | 2,900 | 1,805 | 30,739 |
Following a review of capitalised product development costs, there were several products where management were no longer able to justify the carrying value of the asset where products are no longer produced, formula has been superseded or commercial viability no longer exists. As a result, the assets have been disposed of leading to a loss on disposal of £879,000 which has been recognised in operating expenses.
The brand and customer relationships recognised were purchased as part of the acquisition of PhD Nutrition on 6 December 2018. They are considered to have finite useful lives and are amortised on a straight-line basis over their estimated useful lives of 10 years. The intangibles were valued using an income approach, using the Multi-Period Excess Earnings Method for customer relationships and Relief from Royalty Method for brand valuations.
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.
The Group has estimated the value in use of PhD Nutrition based on a discounted cashflow model which adjusts for risks associated with the assets. The post-tax discount rate used to measure the CGUs value in use was 11.21% (2022: 9.74%).
The recoverable amount of the CGU has been determined from value in use calculations based on cash flow projections covering a period to 31 December 2028. The forecasts are based on a 3-year, board approved, strategic plan, which forecasts revenue growth ahead of the forecast market growth rate. For the period from 2028 revenue growth rates have been reduced to the forecast average growth rate for the sports nutrition market.
### 12. Intangible assets (continued)
The Board approved cash forecast uses a growth rate of 11.1% for 2024 and 20% for 2025 to 2027. A growth rate of 15% for 2028 has been used which is aligned to long term historic PhD growth rates. From 2028 an annual growth rate of 1.5% is applied into perpetuity.
The key assumptions used in the discounted cashflow model were the discount rate, sales growth and gross margin. Gross margin percentages were based on 2023 actuals adjusted for expected improvements to the manufacturing cycle as well as extra costs around headcount and carriage that are appropriate with the future revenue growth rate.
The discount rate used in the discounted cashflow is based on a WACC analysis which takes into account estimates on the:
- Risk-free rate (rate used is higher than the long-term UK government bond)
- Equity risk premium (this is higher than the average equity risk premium in the UK)
- Size premium (the same value as prior year has been used)
### Sensitivity analysis
With regard to the assessment of value in use, a change in any of the above key assumptions could have a material impact on the carrying value of the cash-generating unit.
If any of the following changes were independently made to the key assumptions the carrying amount and recoverable amount would be equal:
- 5% absolute increase in the discount rate; or
- 70% decrease in EBITDA (years 1-5); or
- A combination of 1% decrease in gross margin and 5% absolute decrease in the current revenue growth rate (years 1-5)
### 13. Property, plant and equipment
| | Leasehold
improvements
£'000 | Plant and
machinery
£'000 | Fixture,
fittings and
computer
equipment
£'000 | Motor
vehicles
£'000 | Capital work in progress £'000 | Total
£'000 |
|----------------------------------|------------------------------------|---------------------------------|------------------------------------------------------------|----------------------------|--------------------------------|----------------|
| Cost | | ·- | | | | |
| At 31 December 2021 | 663 | 3,143 | 2,462 | 16 | 2,894 | 9,178 |
| Additions | 3,117 | 2,269 | 627 | - | - | 6,013 |
| Transfers | 711 | 632 | - | - | (1,343) | - |
| At 31 December 2022 | 4,491 | 6,044 | 3,089 | 16 | 1,551 | 15,191 |
| Additions | 95 | 859 | 149 | - | - | 1,103 |
| Disposals | (538) | (502) | (644) | (16) | - | (1,700) |
| Transfers | 31 | 1,520 | - | - | (1,551) | - |
| At 31 December 2023 | 4,079 | 7,921 | 2,594 | • | - | 14,594 |
| Depreciation At 31 December 2021 | 572 | 1,774 | 1,567 | 14 | | 3,927 |
| Charge for the year | 184 | 347 | 395 | 14 | - | 926 |
| At 31 December 2022 | 756 | 2,121 | 1,962 | 14 | | 4,853 |
| Charge for the year | 312 | 681 | 437 | 14 | _ | 1,430 |
| Disposals | (538) | (502) | (635) | (14) | _ | (1,689) |
| At 31 December 2023 | 530 | 2,300 | 1,764 | - | • | 4,594 |
| Net book value | | | | | | |
| At 31 December 2023 | 3,549 | 5,621 | 830 | • | • | 10,000 |
| At 31 December 2022 | 3 735 | 3 923 | 1 127 | 2 | 1 551 | 10 338 |
### **Capital Commitments**
At 31 December 2023, the Group had £nil of capital commitments (2022: £nil).
### 14. Inventories
| | 31 December | 31 December |
|-------------------|-------------|-------------|
| | 2023 | 2022 |
| | £′000 | £′000 |
| Raw materials | 1,825 | 2,455 |
| Finished goods | 4,939 | 4,183 |
| Total inventories | 6,764 | 6,638 |
There is a provision of £1,505,000 included within inventories in relation to the impairment of inventories (2022: £452,000). The provision relates to the impairment of residual packaging stock following the change in gel machinery and a reduction in the number of active stock keeping units (SKUs). During the year, inventories of £34,334,000 (2022: £36,042,000) were recognised as an expense within cost of sales.
### 15. Trade and other receivables
| | 31 December
2023
£'000 | 31 December
2022
£'000 |
|------------------------------------------------------------------------------------------|------------------------------|------------------------------|
| Trade receivables Less: provision for impairment of trade receivables | 12,046
(700) | 15,274
(281) |
| Trade receivables – net
Other receivables | 11,346
1,408 | 14,993
1,046 |
| Total financial assets other than cash and cash equivalents classified as amortised cost | 12,754 | 16,039 |
| Prepayments and accrued income | 1,058 | 485 |
| Total trade and other receivables | 13,812 | 16,524 |
Trade receivables represent debts due for the sale of goods to customers.
Trade receivables are denominated in local currency of the operating entity and converted to Sterling at the prevailing exchange rate as at 31 December 2023. The Directors consider that the carrying amount of these receivables approximates to their fair value. All amounts shown under receivables fall due for payment within one year. The Group does not hold any collateral as security.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging.
The expected loss rates are based on the Group's historical credit losses. The historical loss rates are then adjusted for current and forward-looking information affecting the Group's customers.
At 31 December 2023 the lifetime expected loss provision for trade receivables is as follows:
| | Less than
60 days
past due | More than
60 days
past due | More than
90 days
past due | Total |
|-------------------------------|----------------------------------|----------------------------------|----------------------------------|--------|
| At 31 December 2023 | | | | |
| Expected loss rate (%) | 0% | 0% | 5% | |
| Gross carrying amount (£'000) | 10,020 | 1,324 | 702 | 12,046 |
| Loss provision (£'000) | - | • | 35 | 35 |
| At 31 December 2022 | | | | |
| Expected loss rate (%) | 0% | 0% | 5% | |
| Gross carrying amount (£'000) | 13,271 | 776 | 1,227 | 15,274 |
| Loss provision (£'000) | • | - | 66 | 66 |
A further provision of £665,000 (2022: £215,000) has been included against specific debts considered impaired.
| Movement in the provision in the year | Total |
|------------------------------------------|-------|
| At 31 December 2022 | 281 |
| Amount utilised in the year | (101) |
| Additional provision charged in the year | 520 |
| At 31 December 2023 | 700 |
### 16. Cash and cash equivalents
| | 31 December | 31 December |
|-------------------------------------------------------------------------|-------------|-------------|
| | 2023 | 2022 |
| | £'000 | £′000 |
| Cash at bank and in hand | 2,144 | 930 |
| Cash at bank and in hand is made up of the following currency balances: | · | |
| British Pound | 1,428 | 551 |
| Euro | 399 | 109 |
| US Dollar | 271 | 235 |
| Australian Dollar | 27 | 29 |
| New Zealand Dollar | 19 | 6 |
| | 2,144 | 930 |
The Directors consider that the carrying amount of cash approximates to its fair value.
### 17. Trade and other payables
| | 31 December | 31 December | |
|--------------------------------------------------------|-------------|-------------|--|
| | 2023 | 2022 | |
| | £′000 | £′000 | |
| Trade payables | 5,114 | 4,981 | |
| Accruals | 8,728 | 7,226 | |
| Invoice financing | 6,341 | 4,523 | |
| Trade facility | 3,260 | 2,733 | |
| Total financial liabilities measured at amortised cost | 23,443 | 19,463 | |
| Other taxes and social security | 1,814 | 530 | |
| Total trade and other payables | 25,257 | 19,993 | |
The Directors consider that the carrying amount of these liabilities approximates to their fair value.
All amounts shown fall due within one year.
Invoice financing is the amount due to HSBC after drawing down from the £7.5m (2022: £6.0m) flexible invoice credit facility during the year. This facility contains both fixed and floating charges over all the property and undertakings of the parent company. Repayments and draw downs on the facility are a continuous process as and when invoice payments are collected from customers.
Additionally, a £3.5m uncommitted trade facility was entered into during the prior year which is secured on stock. The drawdowns on the trade facility during the year were £527,000 (2022: £2,733,000). Drawdowns on the trade facility are repaid over 90 days from the drawdown.
All banking working capital facilities were successfully renewed to April 2025 as part of an annual renewal cycle, with increases in the invoice financing facility to £8m (2023: £7.5m) and trade finance facility to £4m (2023: £3.5m).
#### 18. Provisions for liabilities
The Group had the following provisions during the year:
| | VAT
provision
£'000 | Dilapidations provision £'000 | Total
£'000 |
|-----------------------------------|---------------------------|-------------------------------|----------------|
| At 1 January 2023 | 513 | 388 | 901 |
| Additions to the income statement | 98 | 731 | 829 |
| At 31 December 2023 | 611 | 1,119 | 1,730 |
| Due within one year | 611 | 60 | 671 |
| Due in over one year | - | 1,059 | 1,059 |
Following an HMRC VAT assessment in the prior year, a small number of Bar products in the PhD range that were previously classed as zero-rated have been assessed by HMRC as standard rated for VAT purposes. The total exposure on these products is £0.6m (2022: £0.5m).
In determining the appropriate accounting treatment, management has taken into consideration the decision reached by the First-tier Tribunal in a current case an unrelated Group has ongoing for a similar product. In this case, the Tribunal decided in favour of HMRC that the flapjacks were standard rated. Whilst this decision is being appealed and could be reversed by the Upper-tier Tribunal, given the precedent set, management has determined it appropriate to recognise a provision for the full amount. An equal and opposite other receivable has been recognised for this amount as management consider it virtually certain that it will be recovered from customers by the Group.
A dilapidations provision has been increased during the year in conjunction with the new Blackburn operating site. The estimated cost is expected to bring the property back, at the end of the lease, into the same condition it was in at the start of the lease. There are 13 years remaining on the initial lease term at the yearend. There is therefore uncertainty over the final amount and timing of the cashflows. Management have utilised their best estimate of the future obligation at the yearend and will be engaging an independent surveyor in the year to continue to monitor the appropriateness of the provision.
### 19. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2022: 25%). Details of the deferred tax asset and liability, amounts recognised in profit or loss and amounts recognised in other comprehensive income are as follows:
| Year ended 31 December 2023: | Asset | Liability | Net | (Charged)
/ credited
to profit
or loss | (Charged)
/ credited
to equity |
|--------------------------------|----------|-----------|---------|-------------------------------------------------|--------------------------------------|
| | £′000 | £'000 | £′000 | £′000 | £'000_ |
| Accelerated capital allowances | 19 | - | 19 | 19 | - |
| Available losses | 1,786 | , - | 1,786 | (365) | - |
| Other temporary differences | - | - | _ | - | - |
| Business combinations | - | (1,786) | (1,786) | 365 | |
| Net tax assets/(liabilities) | 1,805 | (1,786) | 19 | 19 | - |
### 19. Deferred tax (continued)
| Year ended 31 December 2022: | Asset | Liability | Net | (Charged)
/ credited
to profit
or loss | (Charged)
/ credited
to equity |
|--------------------------------|-------|-----------|---------|-------------------------------------------------|--------------------------------------|
| | £′000 | £'000 | £'000 | £′000 | £'000 |
| Accelerated capital allowances | - | - | _ | 71 | - |
| Available losses | 2,151 | - | 2,151 | (428) | - |
| Business combinations | - | (2,151) | (2,151) | 357 | - |
| Net tax assets/(liabilities) | 2,151 | (2,151) | - | • | |
SiS (Science in Sport) Limited has a cumulative assessed tax loss of £38.6m as at 31 December 2023 (2022: £30.5m). The losses are split into pre 1 April 2017 losses of £4.2m (2022: £4.2m) and post 1 April 2017 losses of £34.4m (2022: £26.3m). SiS (Science in Sport) Limited can utilise its assessed tax losses in the coming years against future expected profits. Assessed losses from before 1st April 2017 can only be used against SiS (Science in Sport) Limited profit whereas assessed tax losses from after 1st April 2017 can be used to offset the future profits from SiS (Science in Sport) Limited and PhD Nutrition Ltd profits. Tax losses have not been recognised as a deferred tax asset due to the uncertainty of the timing of recoverability based on recent results; the Group will continue to assess recoverability.
### 20. Leases
The Group leases several properties in the jurisdictions from which it operates. In all jurisdictions the rates are fixed over the lease term.
| Right-of-use assets | Land and
buildings | Vehicles | Total |
|-------------------------------------|-----------------------|----------|--------|
| | £000 | £000 | £000 |
| Cost | - | | |
| At 31 December 2021 | 10,902 | 14 | 10,916 |
| Additions | 1,041 | - | 1,041 |
| Disposals | (201) | - | (201) |
| At 31 December 2022 | 11,742 | 14 | 11,756 |
| Additions – leased assets | 325 | - | 325 |
| Additions – dilapidations provision | 655 | - | 655 |
| Disposals | (3) | - | (3) |
| At 31 December 2023 | 12,719 | 14 | 12,733 |
| Amortisation | | | |
| At 1 January 2021 | 257 | - | 257 |
| Charge for period | 949 | 14 | 963 |
| At 31 December 2022 | 1,206 | 14 | 1,220 |
| Charge for period | 993 | - | 993 |
| At 31 December 2023 | 2,199 | 14 | 2,213 |
| Net book value | | | |
| At 31 December 2023 | 10,520 | | 10,520 |
| At 31 December 2022 | 10,536 | | 10,536 |
### 20. Leases (continued)
### Lease liabilities
| | Total |
|---------------------|--------|
| | £′000 |
| At 1 January 2023 | 10,676 |
| Additions | 325 |
| Disposals | (3) |
| Interest expense | 436 |
| Lease payments | (742) |
| At 31 December 2023 | 10,692 |
| Current | 789 |
| Non current | 9,903 |
The maturity analysis of the contractual undiscounted lease liabilities is shown in the following table:
| | Up to 3
months
£'000 | Between 3
and 12
months
£'000 | between 1
and 2 year
£'000 | Between 2
and 5
years
£'000 | Over 5
years
£'000 | Total
£′000 |
|---------------------|----------------------------|----------------------------------------|----------------------------------|--------------------------------------|--------------------------|----------------|
| At 31 December 2023 | 315 | 884 | 1,051 | 3,030 | 8,434 | 13,714 |
Short term and low value lease expenses in the year were nil. In the previous year short term leases, classified as operating leases, related to rental property in UK and Italy totalling £120,000.
### 21. Share capital
| | Ordinary
10p shares
Number | Ordinary
10p shares
£'000 |
|------------------------------------|----------------------------------|---------------------------------|
| Authorised share capital | 221,000,000 | 22,100 |
| Allotted, called up and fully paid | Ordinary
10p shares
Number | Ordinary
10p shares
£'000 |
| At 1 January 2022 | 135,100,931 | 13,510 |
| Share issue – 5 May 2022 | 3,985,477 | 399 |
| Share issue – 21 October 2022 | 33,333,333 | 3,333 |
| At 31 December 2022 | 172,419,741 | 17,242 |
| Share issue – 29 December 2023 | 9,852,866 | 985 |
| At 31 December 2023 | 182,272,607 | 18,227 |
The Company has one class of Ordinary shares which carry no rights to fixed income.
On 29 December 2023, the Company issued and allotted 9,852,866 new Ordinary shares which were used to satisfy the exercise of share options. At 31 December 2023 the Employee Benefit Trust held in reserve 2,045,230 new Ordinary shares of 10p each to be issued as share options (2022: 4,293,194 new Ordinary shares of 10p each).
### 22. Share options
In June 2014 the Company adopted a Share Option Plan ("SOP"). The key terms of the SOP are substantially the same as set out in the AIM Admission Document which is available on the Group's website. Under the SOP, options to purchase Ordinary shares may be granted by the Remuneration Committee to Directors, Senior Executives and potentially other employees at nil-cost.
To enable the Company to grant nil-cost options it has established an Employee Benefit Trust to purchase, hold and transfer the Ordinary shares pursuant to the options.
The SOP is managed by the Remuneration Committee on behalf of the Company. The Company will grant each participant an option subject to the terms and conditions of each participant's individual option agreement (including performance conditions) and the SOP rules. Each participant may be granted either annual or long term (three- or five-year vesting period) options or both. Annual options may be settled in either cash or shares at the sole discretion of the Remuneration Committee. As at 31 December 2023, 2,045,230 (2022: 4,293,194) shares were held by the Employee Benefit Trust in respect of options awarded to the Directors in respect of previous years. All other annual options have been treated as equity settled options.
In the event that the option holder's employment is terminated before vesting, the option may not be exercised unless the Remuneration Committee so permits. Options expire 10 years from date of grant.
The Board approved an LTIP element of the SOP on 22 September 2016 which relates to revenue growth achievement. This award replaces the existing five-year LTIP, the three-year revenue growth phase of this scheme vested in March 2016 and was then planned to be a profit plan for two years thereafter. Following the raising of additional capital in October 2015, the strategy has continued to be focussed on revenue growth following the completion of the first three years of the previous LTIP.
An additional LTIP scheme for 2019-2021 was approved during the prior year, and a new LTIP scheme for 2022-2024 was approved during the current year. Further information on the schemes can be found in the Remuneration report.
There is no charge for the year relating to employee share-based payment plans. In 2022 the charge was £262,000, which mainly relates to 2021 STIP & LTIP and 2019 LTIP equity settled share-based payment transactions, with social security credits of £218,000.
### Options granted during the period
During the year ended 31 December 2023, no options were granted under the short term and long-term incentive plan with regard to performance in the year ended 31 December 2022 or 31 December 2023. All options have a nil exercise price and no market-based performance conditions.
### 22. Share options (continued)
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
| | Weighted
average
exercise price
pence | Weighted average share price at date of exercise pence | Share options
Number |
|---------------------------------|------------------------------------------------|--------------------------------------------------------|-------------------------|
| Options at 1 January 2022 | nil | - | 10,820,373 |
| Granted during year | nil | 58p | 4,037,471 |
| Exercised | nil | 50p | (1,276,351) |
| Forfeited during year | nil | - | • |
| Outstanding at 31 December 2022 | nil | | 13,581,493 |
| Granted during year | nil | - | - |
| Exercised | nil | 1 2p | (12,100,830) |
| Forfeited during year | nil | 11p | (629,278) |
| Outstanding at 31 December 2023 | nil | | 851,385 |
The exercise price of all options outstanding at the end of the year was nil. The average remaining contractual life for these options as at 31 December 2023 was 0.5 years (2022: 6.4 years). Of the 851,385 outstanding share options at the yearend, 350,835 were exercised following the yearend, 320,751 lapsed following the yearend and 179,799 remained exercisable at the date of signing these financial statements with no further vesting conditions.
#### 23. Reserves
| Share premium | Amount subscribed for share capital in excess of nominal value less costs directly attributable to the issue of shares. |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Employee Benefit Trust reserve | Shares in the Company held by the Employee Benefit Trust which will be used to settle options held by employees under the SOP. |
| Cash flow hedge reserve | Gains/losses arising on the effective portion of hedging instruments carried at fair value in a qualifying cash flow hedge. There were no movements in cash flow hedges in the current or prior year. There remains a historic cash flow hedge reserve on the consolidated statement of financial position as a result of previous cash flow hedge accounting. |
| Other reserve | Arose as a result of applying the principles of reverse acquisition accounting following the demerger of SIS (Science in Sport) Limited from Provexis plc in August 2013 and represents the difference between the capital reserves of Science in Sport plc (the legal acquirer) and those of SIS (Science in Sport) Limited (the legal acquiree). |
| Retained deficit | Cumulative net gains and losses recognised in the consolidated statement of comprehensive income. |
| Foreign exchange reserve | Arises on the translation of foreign subsidiaries into Sterling at the year-end date. |
#### 24. Pension costs
The pension charge represents contributions payable by the Group to independently administered funds which during the year ended 31 December 2023 amounted to £310,000 (2022: £294,000). Pension contributions payable but not yet paid at 31 December 2023 totalled £59,000 (2022: £49,000).
### 25. Related party transactions
IAS 24 'Related Party Transactions' requires the disclosure of the details of material transactions between reporting entities and related parties. Transactions and balances with group companies are eliminated on consolidation and therefore do not need to be disclosed.
Details of Directors' remuneration are within the Remuneration Committee report on pages 29 to 33.
There were no other related party transactions during the financial year, nor any balances outstanding at the end of the financial year.
### 26. Financial instruments
### Financial instruments at amortised cost
| | 31 December | 31 December |
|--------------------------------------------------|-------------|-------------|
| | 2023 | 2022 |
| | £′000 | £′000 |
| Financial assets measured at amortised cost | 14,898 | 16,969 |
| Financial liabilities measured at amortised cost | 37,691 | 33,983 |
Financial assets comprise cash and cash equivalents trade and other receivables. Financial liabilities comprise trade payables, accruals, hire purchase, invoice financing, trade facility, asset financing and lease liabilities.
### 27. Hire purchase agreement
| | • | |
|-----------------------------------------------|-------------|-------------|
| , | 31 December | 31 December |
| | 2023 | 2022 |
| | £'000 | £'000 |
| Current portion of hire purchase obligation | 82 | 80 |
| Long term portion of hire purchase obligation | - | 82 |
| Total hire purchase obligation | 82 | 162 |
### 28. Asset financing
An asset financing agreement was entered into in 2021 with Lombard Equipment Finance to fund capital expenditure for the Blackburn single site operations facility. The full amount funding has now been received and totals £3,553,000. The Group's obligation is to repay the financing over 60 months, the first repayment occurred in July 2022.
This agreement with Lombard contains both fixed and floating charges over all the property and undertakings of the parent company.
### 28. Asset financing (continued)
| | 31 December | 31 December | |
|-------------------------------------------------|-------------|-------------|--|
| | 2023 | 2022 | |
| | £′000 | £'000 | |
| Current portion of asset financing obligation | 1,192 | 843 | |
| Long term portion of asset financing obligation | 2,282 | 2,839 | |
| Total asset financing obligation | 3,474 | 3,682 | |
The maturity analysis of the undiscounted asset financing obligations is shown in the following table:
| | | Between 3 | | | |
|---------------------|----------|-----------|-------------|-------------|-------|
| · | Up to 3 | and 12 | between 1 | Between 2 | |
| | , months | months | and 2 years | and 5 years | Total |
| | £'000 | £′000 | £'000 | £'000 | £'000 |
| At 31 December 2023 | 366 | 1,098 | 1,185 | 1,295 | 3,944 |
#### 29. Notes to the cash flow statement
The following table shows a reconciliation of the changes in liabilities arising from financing activities during the year.
| | 1 January
2023
£'000 | Cash flows
£'000 | Non-cash
changes
£'000 | 31 December
2023
£'000 |
|---------------------------|----------------------------|---------------------|------------------------------|------------------------------|
| Cash and cash equivalents | 930 | 1,461 | (247) | 2,144 |
| Asset financing | (3,682) | 208 | · · · | (3,474) |
| Invoice financing | (4,523) | (1,818) | - | (6,341) |
| Trade facility | (2,733) | (527) | - | (3,260) |
| Lease liabilities | (10,676) | 306 | (322) | (10,692) |
| Total | (20,684) | (370) | (569) | (21,623) |
Non-cash changes in cash are in relation to unrealised foreign exchange differences. Non-cash changes in lease liabilities are in relation to additions and disposals (note 20).
### 30. Contingent liabilities
Following an HMRC VAT assessment in the prior year, a small number of Powder products in the PhD range that were previously classed as zero-rated have been assessed by HMRC as standard rated for VAT purposes. VAT at the standard rates on sales of these products in the period December 2018 to 31 December 2021 is £0.7m. Management are challenging HMRC's assessment and have determined the probability of an outflow of resources is low. Accordingly, a contingent liability has been disclosed for this amount.
To the extent there is any liability due to HMRC, the Group will seek to recover this from customers.
### 31. Post balance sheet events
There are no events subsequent to the reporting date which would have a material impact on the financial statements.
### 32. Parent company guarantees
As the ultimate parent undertaking, Science in Sport plc is providing SIS (Science in Sport) (included within these Group consolidated financial statements) with guarantees of its debts in the form prescribed by Section 479C of the Companies Act 2006 ("the Act") such that the subsidiary can claim exemption from requiring an audit in accordance with section 479A of the Act. This guarantee covers all of the outstanding actual and contingent liabilities of this company as at 31 December 2023.
| Company number: 08535116 | | As at
31
December
2023 | As at
31
December
2022 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|---------------------------------|---------------------------------|
| | Notes | £'000 | £'000 |
| Assets | | | |
| Non-current assets | - | | |
| Investments | 4 | 51,943 | 51,681 |
| Intangible assets | | 12 | 12 |
| Other receivables | 5 | 26,874 | 26,859 |
| Total current assets | | 78,829 | 78,552 |
| | | | |
| Current assets | | | |
| Cash and cash equivalents | | 1 | ·6 |
| Total current assets | | 1 | 6 |
| Total assets | | 78,830 | 78,558 |
| Liabilities | | | |
| Current liabilities | | | |
| Trade and other payables | 6 | (15) | (15) |
| Total current liabilities | | (15) | (15) |
| Net current liabilities | | (15) | (9) |
| Total net assets | | 78,815 | 78,543 |
| Control and an arrangement of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the co | | | |
| Capital and reserves attributable to owners of the parent company Share capital | 7 | 18,227 | 17,242 |
| Share premium reserve | , | 53,134 | 53,134 |
| Employee Benefit Trust reserve | | (204) | (429) |
| Retained earnings | | 7,658 | 8,596 |
| Total equity | | 78,815 | 78,543 |
As permitted by Section 408 of the Companies Act 2006 no separate parent company profit and loss account has been included in these financial statements. The parent company profit for the year was £10k (2022: loss of £284k).
These financial statements were approved and authorised for issue by the Board on 27 June 2024 and signed on its behalf by:
Daniel Lampard Director
D. Layout
The notes on pages 87 to 89 form part of these parent company financial statements.
| | Year | Year |
|----------------------------------------------------------|----------|----------|
| | ended | ended |
| | 31 | 31 |
| | December | December |
| | 2023 | 2022 |
| | £000 | £000 |
| Cash flows from operating activities | | |
| Profit / (loss) after tax | 10 | (284) |
| Operating cash outflow before changes in working capital | - | - |
| Changes in trade and other payables | - | (1) |
| Total cash inflow / (outflow) from operations | 10 | (285) |
| Cash flow from investing activities | | |
| Changes in other receivables and investments | (15) | 285 |
| Net cash (outflow) / inflow from investing activities | (15) | 285 |
| Net (decrease) in cash and cash equivalents | (5) | • |
| Opening cash and cash equivalents | 6 | 6 |
| Closing cash and cash equivalents | 1 | 6 |
The notes on pages 87 to 89 form part of these parent company financial statements.
| At 31 December 2021 | Share
capital
£'000
13,510 | Share premium reserve £'000 | Employee
benefit
trust
reserve
£'000 | Retained
earnings
£'000 | Total
equity
£'000 |
|------------------------------------------|-------------------------------------|-----------------------------|--------------------------------------------------|-------------------------------|--------------------------|
| At 51 December 2021 | 13,310 | 51,839 | (136) | 8,745 | 73,330 |
| Total comprehensive loss for the year | - | - | - | (284) | (284) |
| Transactions with owners: | | | | | |
| Issue of shares (net of costs) | 3,732 | 1,295 | (398) | - | 4,629 |
| Issue of shares held by EBT to employees | - | - | 127 | (127) | |
| Share based payments | - | - | - | 262 | 262 |
| At 31 December 2022 | 17,242 | 53,134 | (429) | 8,596 | 78,543 |
| Total comprehensive profit for the year | - | - | - | 10 | 10 |
| Transactions with owners: | | | | | |
| Issue of shares (net of costs) | 985 | - | - | (985) | - |
| Share based payments | - | - | 225 | 37 | 262 |
| At 31 December 2023 | 18,227 | 53,134 | (204) | 7,658 | 78,815 |
The notes on pages 87 to 89 form part of these parent company financial statements.
### 1. Accounting policies
To the extent that an accounting policy is relevant to both Science in Sport Group and Company financial statements, refer to the Group financial statements for disclosure of the accounting policy.
The parent company financial statements have been prepared in accordance with UK adopted International Accounting Standards and applied in accordance with the Companies Act 2006. The accounting policies are consistent with those of the Group which are disclosed in note 1 to the consolidated financial statements.
#### Intercompany loans
Intercompany loans are measured in accordance with IFRS 9 and as the loan is payable on demand and interest free, the loan has been measured at amortised cost. The estimated credit losses are calculated using the general approach. If at the reporting date it is determined that the loan cannot be repaid immediately on request, we will consider the most appropriate way to maximize recovery. Where this is considered to be by allowing the counterparty time to pay, we model a number of expected recovery scenarios based on underlying forecasts of the counterparty to calculate the expected credit loss.
#### Employee Benefit Trust Reserve ("EBT")
The shares held in the EBT are included in the Company accounts, as it is considered that the Company (as sponsor) retains the majority of the risks and rewards relating to the funding arrangement with the EBT trust.
#### Going concern
The going concern basis has been applied in preparing the parent company financial statements for the reasons identified and disclosed in note 1 to the consolidated financial statements.
#### Valuation of investments
The investment in SIS (Science in Sport) Limited is recorded at the nominal value of shares issued for the purposes of the demerger in accordance with Section 615 of the Companies Act 2006. Accordingly, no premium on the issue of shares has been recognised. All other investments are held at cost.
#### 2. Profit attributable to Shareholders
As permitted by Section 408 of the Companies Act 2006 no separate parent company profit and loss account has been included in these financial statements. The parent company profit for the period was £10k (2022: loss of £284k).
The Auditor's remuneration for audit and other services is disclosed in note 6 to the consolidated financial statements.
### 3. Employee costs
The Directors are the only employees of the Company with all salary costs borne by subsidiary companies and are disclosed in note 8 of the consolidated financial statements.
### 4. Investments
| | £′000 |
|----------------------|--------|
| Cost | |
| At 31 December 2021 | 51,419 |
| Capital contribution | 262 |
| At 31 December 2022 | 51,681 |
| Capital contribution | 262 |
| At 31 December 2023 | 51,943 |
Capital contribution relates to share-based payment transactions settled by the Company on behalf of SIS (Science in Sport) Ltd.
At 31 December 2023 the Company owned the following subsidiary undertakings:
# Share of issued ordinary share capital, and voting
| | rights | Registered office | Business activity |
|-----------------------------------|--------|-----------------------------------------------------------------------------------------------|-------------------|
| SIS (Science in
Sport) Limited | 100% | 2 nd Floor, 16-18 Hatton Garden, Farringdon,
London, EC1N 8AT
United Kingdom | Sports Nutrition |
| SIS (APAC) Pty
Limited | 100% | Level 3, 41-43 Stewart St, Richmond, VIC 3121
Australia | Sports Nutrition |
| Science in Sport
Inc | 100% | C/o USA Corporate Services Inc., 3500 S Dupont
Hwy, Dover, DE 19901
USA | Sports Nutrition |
| Science in Sport
(Italy) Srl | 100% | Via Bernadino Telesio 25, 20142, Milan
Italy | Sports Nutrition |
| PhD Nutrition
Limited | 100% | 2 nd Floor, 16-18 Hatton Garden, Farringdon,
London, EC1N 8AT
United Kingdom | Dormant |
### 5. Other receivables
| | 31 December
2023
£'000 | 31 December
2022
£'000 |
|-----------------------------------------------|------------------------------|------------------------------|
| Amounts falling due after more than one year | | _ |
| Amounts owed by Science in Sport (Italy) Srl | 5 | - |
| Amounts owed by Science in Sport (UK) Limited | 26,869 | 26,859 |
| Total other receivables | 26,874 | 26,859 |
Total other receivables are carried at amortised cost.
There has been no change in the credit risk comparison of the loan and as such has stayed in stage 1 of the general approach. The ECL has been calculated assuming the loan will be repaid over a future period of continued trading. This has been calculated based off the board approved plan for SIS (Science in Sport) Limited. The cash flow includes internal and external forward-looking information. The Growth rate from 2024 has been at 8% which is just below the growth rate of the nutritional market. No material estimated credit losses were identified.
### 6. Other payables
| | | 31 December | 31 December |
|-------------------------------------|---|-------------|-------------|
| | | 2023 | 2022 |
| · | | £′000 | £′000 |
| Amounts falling due within one year | | | |
| Accruals | • | 15 | 15 |
| Total other payables | | 15 | 15 |
### 7. Share capital
Details of the share capital of the Company are included in note 21 to the consolidated financial statements, details of share-based payments are in note 22 to the consolidated financial statements.
### 8. Related party transactions
Amounts owed by subsidiaries are disclosed in note 5 of the Company financial statements. There are no other related parties other than the subsidiaries listed in note 4 and no other transactions other than the loan to group subsidiaries.
There are no employees during either period other than the Directors. The remuneration of the Directors of the Company is disclosed within the Remuneration Committee Report on pages 29 to 33.