Shares in Science in Sport (SIS) dipped in the days after the sports nutrition company reported double-digit revenue growth but wider pre-tax losses (see table) due to accelerated investment across the business and in its international markets. This spending resulted in period-end cash falling to £3.9m, from £6.7m a year earlier. But management expects the business to achieve positive earnings before interest, taxation, depreciation and amortisation for the full year.
The proportion of revenue stemming from international markets rose by five percentage points to 27 per cent, with overseas sales increasing by more than half. Trading in Australia, Italy and the US is progressing in line with management expectations.
The gross margin stayed flat at 59 per cent, as cost management mitigated the impact of rising raw material prices. Interestingly, GSK (GSK) recently announced that it plans to sell MaxiNutrition – a rival to Science in Sport, which currently sits within the pharmaceuticals giant’s consumer healthcare business. That might well reduce SIS’s appeal as a potential takeover target. In the second quarter of 2017, GSK's overall nutrition segment was lossmaking, with sales down 8 per cent at constant currencies.
Analysts at Cenkos forecast pre-tax losses of £3.4m and a loss per share of 7.3p for the year to December 2017, worsening from the £2.8m and 6.2p losses seen in 2016.
| SCIENCE IN SPORT (SIS) | ||||
| ORD PRICE: | 73p | MARKET VALUE: | £33m | |
| TOUCH: | 71-74p | 12-MONTH HIGH: | 97p | LOW: 59p |
| DIVIDEND YIELD: | na | PE RATIO: | na | |
| NET ASSET VALUE: | 21p | NET CASH: | £3.9m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax loss (£m) | Loss per share (p) | Dividend per share (p) |
| 2016 | 6.48 | -0.84 | -1.6 | nil |
| 2017 | 8.27 | -2.20 | -4.6 | nil |
| % change | +28 | +162 | +188 | nil |
| Ex-div: | na | |||
| Payment: | na | |||
