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Top-line growth at Science in Sport comes at a cost

Losses widened at the specialist sports nutrition group in 2017, but management insists it's all part of the plan
Top-line growth at Science in Sport comes at a cost

Losses continued to widen at specialist nutrition group Science in Sport (SIS) in 2017, but management didn't seem particularly fazed. According to chief executive Stephen Moon, the £0.9m increase in adjusted operating losses to £1.7m is “in line with the growth strategy”. This strategy involves investment in the brand, e-commerce and international expansion, and management pointed to record levels of product usage as evidence that the plan is paying off. 

IC TIP: Hold at 73p

It is also comforting to note that SIS products are gaining credibility with elite athletes. During 2017, the group signed partnerships with the British cycling team, US triathlon and Cycling Australia and expanded into football thanks to new partnerships with Celtic FC and Manchester United. The £14.8m of net cash raised through an equity placing in December is expected to help fund further growth in the world's most lucrative sport. 

SIS is also in the process of major international expansion and has appointed decentralised commercial teams in the US and Italy – two core markets for sports nutrition. Revenue growth in all three international divisions accelerated in 2017 and now non-UK sales contribute 28 per cent of the group's top line. 

Bloomberg consensus estimates forecast an adjusted loss per share of -6.3p for the group in 2018, down from -7.7p in 2017.

SCIENCE IN SPORT (SIS)  
ORD PRICE:74pMARKET VALUE:£49m
TOUCH:72-75p12-MONTH HIGH:94pLOW: 69p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:34pNET CASH:£16.6m
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2013*6.5-1.1-5.6nil
2014*8.0-1.8-5.5nil
20159.4-1.7-5.5nil
201612.2-2.8-6.2nil
201715.6-3.9-7.7nil
% change+28---
Ex-div:na   
Payment:na   
*Pro-forma unaudited numbers