Interim Results

About this update from Angling Direct Plc

RNS Number : 9803B Angling Direct PLC 14 October 2020   14 October 2020   Angling Direct PLC ('Angling Direct' or the 'Company' of the 'Group')   Half-yearly results for the six months ended 31 July 2020   Angling Direct PLC  (AIM: ANG), the largest specialist fishing tackle and equipment retailer in the UK, is pleased to announce its unaudited financial results for the six months ended 31 July 2020. These results demonstrate the operational resilience and growth potential of the business, as well as its ability to generate cash despite the Covid-19 pandemic and temporary closure of its store network.   The Group continues to adapt in response to the ever-changing nature of the challenges presented by the pandemic and its impact on customers, suppliers and colleagues. The Board is now of the view that there is sufficient visibility to reinstate guidance for the current year outturn and confirms that the Group is trading in line with market expectations for the year ending 31 January 2021 ('FY21'). With the Group's growing multi-channel offering and the strength of the balance sheet, the Board remains optimistic about the growth prospects and overall success of the business.   Financial highlights: · Revenue of £32.1m (H1 20: £26.5m) - up 21% · Sales across all channels from 15 June 2020 (the date our stores re-opened) to 31 July 2020 - up 95% · Gross profit of £10.8m (H1 20: £8.5m) - up 27% · Gross margin improved by 140 bps to 33.5% · EBITDA of £2.9m (H1 20: £1.2m) - up 142% · Pre-IFRS 16 EBITDA of £2.1m (H1 20: £0.8m) - up 163% · Profit Before Tax of £1.4m (H1 20: £0.4m) - up 250% · Net cash and cash equivalents at 31 July 2020 of £21.0m (31 July 2019: £13.3m) · Operating cash generation of £11.3m (H1 20: £1.8m) - up 528% · Successful placing in June 2020 completed with certain existing and new institutional investors, raising £5.5m (gross) to strengthen the balance sheet and provide funds to invest in the Group's growth   Operational highlights: · Online:  Material growth in revenue and customer numbers: -  UK revenues up 62% to £14.8m (H1 20 £9.2m) -  Native language international country revenues up 51% to £1.6m (H1 20 £1.0m) -  UK unique website visitors up 54% to 3.7m (H1 20 2.4m) -  Native language unique website visitors up 150% to 1.0m (H1 20 0.4m) · Stores:  Resilient sales despite enforced government 12-week closure -  Revenue up 2% to £14.2m (H1 20 £14.0m) -  23% reduction in like for like store sales including the impact of closure during lockdown -  All stores safely and successfully reopened, with like-for-like sales growth of 75% between 15 June 2020 to 31 July 2020 -  New stores opened in Warrington (February 20), Bristol (June) and Northampton (July)   Current trading and outlook: · Current trading both online and in-stores proving resilient · Closely monitoring government guidance and continuing to operate stores safely and effectively and will review further government restrictions and financial packages available as circumstances change · Leicester store opened in September 2020, with total count of 38 stores anticipated at the year end · Guidance reinstated for FY21 and on track to meet current year market expectations     Martyn Page, Executive Chairman, said :   "The Group's first-half performance demonstrates considerable resilience, with strong growth achieved through our online business at a time when Covid-19 has posed significant challenges. The like-for-like sale growth of our store network since reopening has also been hugely encouraging. Importantly our focus on our core UK and European territories with a refined trading strategy, as well as further enhancements made to customer experience, has lifted margins and driven greater profitability.   Whilst the broader economic outlook and the risks associated with the ongoing pandemic remain uncertain over the coming months, based on the Group's performance so far and its strong start to the second half of the financial year, the Board believes it is on track to meet market expectations for the current financial year. With a strong balance sheet we are also well positioned to withstand any further challenges that may arise."   For further information:   Angling Direct PLC    +44 (0) 1603 258658 Martyn Page, Executive Chairman Andy Torrance, Chief Executive Officer Steven Crowe, Chief Financial Officer       N+1 Singer - NOMAD and Broker    +44 (0) 20 7496 3000 Peter Steel, Alex Bond (Corporate Finance) Tom Salvesen (Corporate Broking)     Yellow Jersey PR - Financial PR Charles Goodwin  +44 (0) 7747 788 221  Georgia Colkin    +44 (0) 7825 916 715 Annabel Atkins        About Angling Direct PLC: Angling Direct is the largest specialist fishing tackle retailer in the UK. The Company sells fishing tackle products and related equipment through its network of retail stores, located throughout the UK as well as through its own websites (www.anglingdirect.co.uk, .de, .fr and .nl) and other third-party websites.   The Company currently sells over 21,500 fishing tackle products, including capital items, consumables, luggage and clothing. The Company also owns and sells fishing tackle products under its own brand 'Advanta', which was formally launched in March 2016.   From 1986 to 2003, the Company's founders acquired interests in a number of small independent fishing tackle shops in Norfolk and, in 2003, they acquired a significant premise in Norwich, which was branded Angling Direct. Since 2003, the Company has continued to acquire or open new stores, taking the total number up to 36 retail stores. In 2015, the Company opened a 30,000 sq. ft central distribution centre in Rackheath, Norfolk, where the Company's head office is also located. The Company has an established, and rapidly growing, presence in Europe with native language websites set up in key regions to address demand.   Angling Direct PLC shares are traded on the AIM market of the London Stock Exchange under the ticker symbol ANG.L.   For further information, please visit www.anglingdirect.co.uk   Chief Executive Officer's Review   The Group delivered a strong set of results in the period despite the challenges presented by Covid-19. This is credit to the Angling Direct team, and I would like to thank all of my colleagues for their ongoing commitment, agility and good-natured resilience. This has allowed the Board to remain focused on delivering its long-term strategy of profitable growth and the Company has made good progress in the key areas of:   · Developing margin  · Increasing own brand sales penetration · Improving working capital · Leveraging efficiencies from previous supply chain investments.   The unprecedented challenges during the period serves to underline further how well-positioned the Company is to leverage the strength and uniqueness of its multi-channel business model, as well as the continued strength of the fishing tackle markets both in the UK and Europe.   Results   Revenue increased by 21% to £32.1m for the six months ended 31 July 2020 (H1 2020: £26.5) for the Group. Gross profit increased by 27% to £10.8m (H1 2020: £8.5m). Pre IFRS 16 EBITDA grew by 163% to £2.1m (H1 2020: £0.8m) as the Company's web distribution centre continued to operate safely during lockdown, facilitated by drawing on existing stock levels as well as stock held in closed retail stores.    Since restrictions were lifted and all stores safely re-opened on 15 June, sales across all channels have continued to grow strongly, exhibiting growth between 15 June 2020 and 31 July 2020 of 95% compared with the previous year. The impact of lockdown has created an exceptional sales period, with new and pent-up demand, along with the 'staycation' effect. It is very pleasing to see that the number of angling annual licences issued by the Environment Agency has increased by 16% and that mainstream media has covered this uptake from new and lapsed anglers.   As trading restrictions have changed, we have returned our store colleagues from furlough, adopted working practices to protect staff welfare and as yet not lost any further full trading days.   Due to the strength of trading, associated cash conversion and working capital timing, the Company's cash position at 31 July 2020 grew strongly to 21.0m. In April 2020, the Company arranged a £2.5m short-term credit facility which expired undrawn on 30 th September. In July 2020, the Company also completed a placing of new ordinary shares, raising gross proceeds of £5.5m.     Operational Review   Online   The Company was very pleased to achieve strong online sales both in the UK and internationally, aided partially by the retail shutdown across Europe. Consequently, online sales in the period grew by 43% to 17.9m (H1 2020: £12.5m) which, alongside continued momentum in the UK, reflected further progression of the Company's native language international web platforms. Sales to Germany grew by 33%, France by 62% and Netherlands by 81%. As the Company continues to focus on expanding more profitable web channels, other international sales, eBay and insurance sales decreased by 0.8m, to £1.5m.    The number of unique visitors to the Company's UK website increased by 1.3m to 3.7m for the period, an increase of 54% with over 79,000 new customers across all of the Group's websites (H1 2020: 44,000) completing a purchase. Despite increased browsing during lockdown, UK conversion held up at 5.5%, a decrease of 20bps. European conversion recorded an improvement of 80bps to 2.7% as continued investment starts moving this metric nearer to UK levels.   The Company is well-positioned to benefit from the pandemic driven accelerated adoption of e-commerce channels. A key priority for management is to delight and retain our new customers as well as continuing to develop online margins. To this end we continue to develop, trial and release new customer facing web functionality made possible through last year's investment in our Magento II web platform.     Retail Stores   All retail stores were closed between 24 March 2020 and 14 June 2020 due to enforced Government Covid-19 restrictions. Total store sales in the period increased 1.6% to £14.2m (H1 2020: £14m). Like-for-like ('L4L') store sales were down by 23% for the period, as a consequence of the unavoidable impact of store closures. However, this has recovered strongly in the period since re-opening, with L4L growth of 75% from 15 June 2020 to 31 July 2020.   Working in accordance with Government lockdown restrictions, the Company opened three new stores in the period: Warrington (Feb 2020), Bristol (June 2020, with enhanced sea fishing ranges) and Northampton (July 2020), contributing £0.9m to sales. A fourth store, Leicester, opened in September 2020 and will trial some of the early concepts emerging from our new category management approach.   Trading   In line with our stated strategy, gross margin improved by 140bps to 33.5% as our renewed focus on pricing and promotional discipline started to take effect. The Board continues to assess and implement further operational efficiencies with a view to maintaining profitable sales growth, a key on-going priority to build shareholder value. In order to complement our extensive range and differentiated service levels, we remain committed to being broadly price competitive.   Increased stock investment year on year has led to an improved sales participation of our own brand, higher margin product range, Advanta, accounting for 5.6% of total sales in the period (H1 2020: 3.0%), with sales of £1.8m (H1 2020: £0.8m). Inventory reduced in the period by over £1m, reflecting strong trading and improving more targeted purchasing. Consequently, stock turn improved to 3.6x from 2.5x, driven particularly by online trade and pleasing sell through of slower moving items. Continuing warehouse efficiency improvements generated an equivalent saving of £0.2m versus prior year.   Despite rapid growth and operational pressures On-Time-In-Full deliveries to customers improved to 92% (H1 2020: 87%).     Organisational Development   To support further profitable sales growth, we have taken steps to reconfigure our office based teams, investing in new hires in category management, web development, IT and finance decision support. In stores, we have reviewed the appropriateness and flexibility of payroll costs to further improve profitability.     Placing   In June 2020, the Group completed a placing raising gross proceeds of £5.5m from new and certain existing shareholders. The proceeds of the placing have strengthened the Company's balance sheet to provide a buffer against any further uncertainty created by Covid-19 and provided the funding to invest in key growth areas.     Current Trading and Outlook    Trading in the second half of the financial year to date has continued strongly across all channels.   Looking ahead, the Board believes that with Angling Direct's growth and established competitive advantage, it is well-placed within its market to benefit from the heightened interest in angling as customers seek to take advantage of the pastime's numerous well-being benefits. We will continue to invest in both online and in-store growth and in improving awareness of our brand in the UK and Europe. In the last two years Angling Direct has issued over 16,000 free start fishing kits to under 16 -year-olds.   Whilst it is not yet clear the extent to which some of the exceptional trends of the last few months will continue longer-term, especially with renewed uncertainty as to the Covid-19 effect on consumers (and some moderate supply chain disruption), the Board is expecting sales to begin reverting to more normal trading patterns during the remainder of the year. The strong balance sheet means that the Company is well positioned to withstand any further challenges, and continue investing in key profitable growth areas.   Based on current performance, the Board is of the view that there is sufficient visibility to reinstate guidance for the current year outturn and confirms that the Group is trading in line with market expectations for FY21. Beyond that we remain cautious but optimistic about the future growth of the business.     Andy Torrance Chief Executive Officer     Angling Direct PLC     Consolidated statements of profit or loss and other comprehensive income     For the period ended 31 July 2020                 Unaudited six months ended 31 July Audited year ended 31 January     Note   2020   2019   2020         £'000   Restated* £'000   £'000     Revenue from contracts with customers       32,128   26,522   53,181 Cost of sales of goods       (21,369)   (18,004)   (36,601)                   Gross profit       10,759   8,518   16,580   Government grants   4   1,503   -    -  Interest revenue calculated using the effective interest method       12   44   73   Expenses                 Administrative expenses       (8,971)   (6,589)   (14,747) Distribution expenses       (1,734)   (1,457)   (3,061) Finance costs       (211)   (149)   (325)   Profit/(loss) before income tax (expense)/benefit       1,358   367   (1,480)   Income tax (expense)/benefit       (2)   (36)   170   Profit/(loss) after income tax (expense)/benefit for the period attributable to the owners of Angling Direct PLC       1,356   331   (1,310)   Other comprehensive income for the period, net of tax       -    -     -    Total comprehensive income for the period attributable to the owners of Angling Direct PLC       1,356   331   (1,310)   Earnings per share (Pence)             Basic earnings per share  14   2.02   0.51   (2.03) Diluted earnings per share  14   2.02   0.50   (2.03)   * The interest revenue in the six months to 31 July 2019 of £44,000 was shown as other comprehensive income in prior interim accounts.    The above consolidated statements of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes       Angling Direct PLC     Consolidated statements of financial position     As at 31 July 2020                 Unaudited six months ended 31 July Audited year ended 31 January     Note   2020   2019   2020         £'000   £'000   £'000     Non-current assets                 Intangibles   6   6,252   4,887   6,216 Property, plant and equipment   7   5,784   5,119   5,593 Right-of-use assets       10,389   7,585   10,480 Total non-current assets       22,425   17,591   22,289                   Current assets                 Inventories       11,081   12,097   13,453 Trade and other receivables       674   334   509 Income tax refund due       -    53   -  Prepayments       108   528   474 Cash and cash equivalents       20,983   13,329   5,978 Total current assets       32,846   26,341   20,414     Current liabilities                 Trade and other payables   9   12,478   8,195   6,430 Lease liabilities       1,251   1,043   1,182 Income tax       -    -    17 Total current liabilities       13,729   9,238   7,629                   Net current assets       19,117   17,103   12,785                   Total assets less current liabilities       41,542   34,694   35,074                   Non-current liabilities                 Lease liabilities       9,264   7,325   9,334 Provision       265   -    249 Total non-current liabilities       9,529   7,325   9,583                   Net assets before deferred tax liability       32,013   27,369   25,491                   Deferred tax       19   306   -    Net assets       31,994   27,063   25,491     Equity                 Share capital   10   773   646   646 Share premium   11   31,037   26,017   26,017 Retained profits/(accumulated losses)       184   400   (1,172)                   Total equity       31,994   27,063   25,491     The above consolidated statements of financial position should be read in conjunction with the accompanying notes                 Angling Direct PLC   Consolidated statements of changes in equity   For the period ended 31 July 2020         Share   Share premium   Retained   Total equity     capital   account   profits   Unaudited six months ended 31 July   £'000   £'000   £'000   £'000                   Balance at 1 February 2020   646   26,017   (1,172)   25,491                   Profit after income tax (expense)/benefit for the period   -   -   1,356   1,356 Other comprehensive income for the period, net of tax   -   -   -   -                   Total comprehensive income for the period   -   -   1,356   1,356                   Transactions with owners in their capacity as owners:                 Contributions of equity, net of transaction costs (note 10)   127   -   -   127 Share premium, net of transaction costs (note 11)   -   5,020   -   5,020                   Balance at 31 July 2020   773   31,037   184   31,994       Share   Share premium   Retained profits/ (accumulated   Total equity     capital   account   losses)   Audited year ended 31 January   £'000   £'000   £'000   £'000                   Balance at 1 February 2019   646   26,017   138   26,801                   Loss after income tax (expense)/benefit for the period   -   -   (1,310)   (1,310) Other comprehensive income for the period, net of tax   -   -   -   -                   Total comprehensive income for the period   -   -   (1,310)   (1,310)                   Balance at 31 January 2020   646   26,017   (1,172)   25,491     The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes     Angling Direct PLC     Consolidated statements of cash flows     For the period ended 31 July 2020                 Unaudited six months ended 31 July Audited year ended 31 January     Note   2020   2019   2020         £'000   £'000   £'000   Cash flows from operating activities                 Profit/(loss) before income tax (expense)/benefit for the period       1,358   367   (1,480)                   Adjustments for:                 Depreciation and amortisation       1,314   775   1,887 Net movement in provisions       16   -    81 Interest received       (12)   (44)   (70) Interest and other finance costs       211   149   325                           2,887   1,247   743                   Change in operating assets and liabilities:                 Increase in trade and other receivables       (165)   (154)   (143) Decrease/(increase) in inventories       2,372   (2,749)   (2,678) Decrease/(increase) in prepayments       366   -    (152) Increase in trade and other payables       6,008   3,514   1,552 Decrease in other provisions       -    -    (73)                           11,468   1,858   (751) Interest received       12   44   70 Interest and other finance costs paid       (211)   (149)   (325) Income taxes refunded       -    -    53                   Net cash from/(used in) operating activities       11,269   1,753   (953)   Cash flows from investing activities                 Payment for purchase of business, net of cash acquired       -    (273)   (2,475) Payments for property, plant and equipment   7   (614)   (1,140)   (2,474) Payments for intangibles   6   (179)   -    (501)                   Net cash used in investing activities       (793)   (1,413)   (5,450)   Cash flows from financing activities                 Proceeds from issue of shares and premium       5,147   -    -  Repayment of lease liabilities       (618)   (552)   (1,160)                   Net cash from/(used in) financing activities       4,529   (552)   (1,160)   Net increase/(decrease) in cash and cash equivalents       15,005   (212)   (7,563) Cash and cash equivalents at the beginning of the financial period       5,978   13,541   13,541                   Cash and cash equivalents at the end of the financial period       20,983   13,329   5,978     The above consolidated statements of cash flows should be read in conjunction with the accompanying notes       Angling Direct PLC Notes to the consolidated financial statements 31 July 2020   Note 1. General information   The financial statements cover Angling Direct PLC as a Group consisting of Angling Direct PLC ('Company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year (collectively referred to in these financial statements as the 'Group'). The financial statements are presented in British Pound Sterling ('GBP'), which is Angling Direct PLC's functional and presentation currency.   Angling Direct PLC is a public company limited by shares, listed on the AIM (Alternative Investment Market), a sub-market of the London Stock Exchange. The Company is incorporated and domiciled in the United Kingdom. Its registered office and principal place of business is:   2d Wendover Road,     Rackheath Industrial Estate     Rackheath     Norwich, Norfolk     NR13 6LH       The principal activity of the Group is the sale of fishing tackle through its websites and stores. The Group's business model is designed to generate growth by providing excellent customer service, expert advice and ensuring product lines include a complete range of premium equipment. Customers range from the casual hobbyist through to the professional angler.   The financial statements were authorised for issue, in accordance with a resolution of Directors, on 14 October 2020. The Directors have the power to amend and reissue the financial statements.     Note 2. Significant accounting policies   These financial statements for the interim half-year reporting period ended 31 July 2020 have been prepared in accordance with International Accounting Standards IAS 34 'Interim Financial Reporting'.   These interim financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 31 January 2020 and any public announcements made by the Company during the interim reporting period.   The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.   Government Grants  Government grants are recognised when there is reasonable assurance that the Group will comply with the conditions attaching to them, and that the grant will be received. Government grants are recognised in the consolidated statement of profit or loss and other comprehensive income on a systematic basis over the periods in which the related costs that they are intended to compensate are recognised. Government grants received in advance of the Group meeting the criteria for recognition in the consolidated statement of profit or loss and other comprehensive income are deferred and presented within trade and other payables. There is no impact of this policy on prior periods.   New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board that are mandatory for the current reporting period. There was no impact on the adoption of these new or amended Accounting Standards and Interpretations   Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.   Note 3. Operating segments   Identification of reportable operating segments The Group operates in one segment being the retail of fishing tackle under the single brand of Angling Direct. This operating segment is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.   The operating segment information is the same information as provided throughout the consolidated financial statements and is therefore not duplicated.   Note 4. Government grants       Unaudited six months ended 31 July Audited year ended 31 January     2020   2019   2020     £'000   £'000   £'000               Government grants   1,503   -    -    As a result of the economic impacts of the Covid-19 pandemic, a number of government programmes have been put into place to support businesses and consumers. Examples of such initiatives include the UK's Coronavirus Job Retention Scheme. In accounting for the impacts of these measures, the Group has applied IAS 20: 'Government Grants'. Refer to note 2 for the relevant accounting policy.   During the six months to 31 July 2020, the Group recognised an amount totalling £893,000 receivable under the UK Government's Coronavirus Job Retention Scheme and an amount totalling £610,000 receivable under the UK Government's Retail Hospitality and Leisure Grant Fund.   Note 5. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)       Unaudited six months ended 31 July   Unaudited six months ended 31 July   Audited year ended 31 January     2020   2019   2020     £'000   £'000   £'000               EBITDA reconciliation             Profit/(loss) before income tax expense post IFRS 16   1,358   367   (1,480) Less: Interest income   (12)   (44)   (73) Add: Interest expense   211   149   325 Add: Depreciation and amortisation   1,314   776   1,887 EBITDA post IFRS 16   2,871   1,248   659               Less: rental costs   (778)   (495)   (1,123)               EBITDA pre IFRS 16   2,093   753   (464)   The financial statements include both the statutory financial statements and additional performance measures of EBITDA. The Directors believe these additional measures provide useful information on the underlying trend in operational performance going forward.   Note 6. Intangibles       Unaudited six months ended 31 July Audited year ended 31 January     2020   2019   2020     £'000   £'000   £'000               Non-current assets             Goodwill - at cost   5,802   5,069   5,802 Less: Impairment   (182)   (182)   (182)     5,620   4,887   5,620               Software - at cost   945   -    766 Less: Accumulated amortisation   (313)   -    (170)     632   -    596                   6,252   4,887   6,216   Reconciliations Reconciliations of the written down values at the beginning and end of the current financial period are set out below:       Goodwill   Software   Total Unaudited six months ended 31 July   £'000   £'000   £'000               Balance at 1 February 2020   5,620   596   6,216 Additions   -   179   179 Amortisation expense   -   (143)   (143)               Balance at 31 July 2020   5,620   632   6,252   Note 7. Property, plant and equipment       Unaudited six months ended 31 July Audited year ended 31 January     2020   2019   2020     £'000   £'000   £'000               Non-current assets             Land and buildings improvements - at cost   1,002   1,002   1,002 Less: Accumulated depreciation   (313)   (258)   (269)     689   744   733               Plant and equipment - at cost   5,910   4,279   5,286 Less: Accumulated depreciation   (1,326)   (778)   (1,012)     4,584   3,501   4,274               Motor vehicles - at cost   15   15   15 Less: Accumulated depreciation   (6)   (4)   (5)     9   11   10               Computer equipment - at cost   1,093   1,376   1,062 Less: Accumulated depreciation   (591)   (513)   (486)     502   863   576                   5,784   5,119   5,593   Reconciliations Reconciliations of the written down values at the beginning and end of the current financial period are set out below:       Land and  buildings   Plant and   Motor   Computer         improvements   equipment   vehicles   equipment   Total Unaudited six months ended 31 July   £'000   £'000   £'000   £'000   £'000                       Balance at 1 February 2020   733   4,274   10   576   5,593 Additions   -   623   -   31   654 Depreciation expense   (44)   (313)   (1)   (105)   (463)                       Balance at 31 July 2020   689   4,584   9   502   5,784   Note 8. Impairment   Impairment testing of intangibles Goodwill is allocated to the Group's cash-generating-unit ('CGU').   The Directors consider Angling Direct PLC to represent a singular cash-generating unit as the cash flows of the assets of goodwill are not independent of other cash flows of the Group.   The recoverable amount of the CGU was determined based on a value-in-use calculation. Cash flow projections used in the value-in-use calculation were based on financial budgets approved by management covering a one-year period with extrapolation to year five using estimated growth rates stated below. Cash flows beyond five years are based on an estimated long-term average growth rate of 1%.   Management determined budgeted gross margins based on expectations of market developments. The growth rates used were based on consumer price index ('CPI') plus a margin. The discount rates used were pre-tax and reflected specific risks relating to the CGUs.   Key assumptions used for value-in-use calculations:    Budgeted gross margin   33.9% Five-year compound revenue growth rate   8.8% Pre-tax discount rate   10.3%   Based on the assessment, no impairment charge is required. Management have performed a number of sensitivity tests on the above rates and note that there are no impairment indicators arising from this analysis. The recoverable amount exceeded the carrying amount by £23,916,000.   In the assumptions regarding the goodwill impairment test, the impact of Covid-19 has been included, but the underlying medium and long-term health of the business is not expected to be materially impacted. Therefore, the like-for-like and terminal growth rate reflect management's belief in the continued growth of the company after recovery from the provisions necessary during the pandemic.   Since the re-opening of stores, the sales performance of the business has been promising and the Directors will continue to monitor the performance.   Sensitivity As disclosed in 2020 annual report, the Directors make judgments and estimates in respect of testing of goodwill. Should these judgments and estimates not occur the resulting goodwill carrying amount may decrease. Sensitivity analysis has been performed on the value-in-use calculations. Holding all other variables constant, the following represents the effect of reasonably possible changes in key assumptions.   (i)   the application of a 1.0% increase in discount rate from 10.3% to 11.3% would not result in impairment. (ii)   reducing the five-year revenue compound growth rate by 100 bps would not result in impairment. (iii)   reducing the five-year revenue compound growth rate by 200 bps would result in impairment.   Impairment testing of right-of-use assets Property, plant and equipment and right-of-use assets (ROU) are allocated to each individual cash-generating unit, for which Directors consider to be each individual store.    Each CGU is reviewed for indicators of impairment through current and budgeted trading performance. Where indicators of impairment existed a recoverable amount of the CGU was determined based on a value-in-use calculation. Cash flow projections used in the value-in-use calculation were based on financial budgets approved by management covering a one-year period extrapolated to year 5 or the end of the lease to which the ROU related.    Cash flows to evaluate value-in-use included the lease rentals in respect of the associated ROU assets and the recoverable amount was reviewed against the carrying value of the property, plant and equipment and net book value of the ROU asset net of the remaining lease liability.    Two stores were identified with impairment indicators as at 31 July 2020 (2019: nil).   Key assumptions used for value-in-use calculations:      Compound revenue growth rate   9.5% Pre-tax discount rate   10.3%   Based on the assessment, no impairment charge is required. Management have performed a number of sensitivity tests on the above rates and note there are no impairment indicators arising from this analysis. The recoverable amounts exceeded the carrying amount by £14,000 for Store A, and £40,000 for Store B.   Sensitivity As disclosed in 2020 annual report, the Directors make judgments and estimates in respect of testing of property, plant and equipment and ROU. Should these judgments and estimates not occur the resulting property, plant and equipment and ROU may decrease. Sensitivity analysis has been performed on the value-in-use calculations. Holding all other variables constant, the following represents the effect of reasonably possible changes in key assumptions.   Store A:   (i)   the application of a 1.0% increase in discount rate from 10.3% to 11.3% would not result in impairment. (ii)   reducing the compound revenue growth rate by 100bps would not result in impairment. (iii)   reducing the compound revenue growth rate by 230bps would result in impairment.   Store B:   (i)   the application of a 1.0% increase in discount rate from 10.3% to 11.3% would not result in impairment. (ii)   reducing the compound revenue growth rate by 100bps would not result in impairment. (iii)   reducing the compound revenue growth rate by 155bps would result in impairment.   Note 9. Trade and other payables       Unaudited six months ended 31 July Audited year ended 31 January     2020   2019   2020     £'000   £'000   £'000               Current liabilities             Trade payables   8,444   6,312   4,824 Accrued expenses   1,030   769   725 Social security and other taxes   2,240   762   345 Contingent consideration   50   250   50 Other payables   714   102   486                   12,478   8,195   6,430   Note 10. Share capital       Unaudited six months ended 31 July     2020   2019   2020   2019     Shares   Shares   £'000   £'000                   Ordinary shares of £0.01 each - fully paid   77,267,304   64,621,993   773   646   Movements in ordinary share capital   Details   Date   Shares   £'000               Balance   1 February 2020   64,621,993   646 Issue of shares   17 June 2020   6,500,000   65 Issue of shares   1 July 2020   4,500,000   45 Exercise of options   17 July 2020   1,645,311   17               Balance   31 July 2020   77,267,304   773   During the period, the Company issued 11m new Ordinary shares of 1p each. 6.5m of these shares were issued on 17 June 2020 with a further 4.5m on 1 July. The shares were fully paid up and issued at a placing price of 50p, a 49p premium per share. The gross proceeds of the total placing totalled £5.5m. £5.4m has been transferred to the share premium account net of direct transaction costs of £0.4m.   On the 17 July 1,645,311 options under the EMI Share option Scheme were exercised at 1p per option. £16,453 has been credited to the share capital account. There was no share premium arising on this transaction and there are no unexercised options remaining at the period end.   Note 11. Share premium       Unaudited six months ended 31 July Audited year ended 31 January     2020   2019   2020     £'000   £'000   £'000               Share premium account   31,037   26,017   26,017   Movements in share premium account   Detail   Date   £'000           Balance 1 February 2020       26,017 Issued during the year   17 June 2020   5,020           Balance 31 July 2020       31,037   The share premium account is used to recognise the difference between the issued share capital at nominal value and the capital received, net of transaction costs.   Refer to note 10 for further details.   Note 12. Dividends   There were no dividends paid, recommended or declared during the current or previous financial period.   Note 13. Contingent liabilities   The Group had no material contingent liabilities as at 31 July 2020, 31 January 2020 and 31 July 2019.   At the period end the company had a £2.5m short term credit facility with NatWest bank which remained undrawn. NatWest have a company debenture in their favour as a condition of providing the credit facility. The facility expired on 30 th September and was not renewed in light of the strength of the Group's liquidity position.   Note 14. Earnings per share       Unaudited six months ended 31 July   Unaudited six months ended 31 July   Audited year ended 31 January     2020   2019   2020     £'000   £'000   £'000               Profit/(loss) after income tax attributable to the owners of Angling Direct PLC   1,358   331   (1,310)       Number   Number   Number               Weighted average number of ordinary shares used in calculating basic earnings per share   67,172,185   64,621,993   64,621,993 Adjustments for calculation of diluted earnings per share:   Options over ordinary shares   -   1,645,311   - Weighted average number of ordinary shares used in calculating diluted earnings per share   67,172,185   66,267,304   64,621,993       Pence   Pence   Pence               Basic earnings per share   2.02   0.51   (2.03) Diluted earnings per share   2.02   0.50   (2.03)   Note 15. Events after the reporting period   The impact of the Covid-19 pandemic is ongoing and whilst it did not have a catastrophic impact on the financial performance of the Group to date, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by Governments around the world, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.   On 18 August 2020, the Company issued options to the Chief Executive Officer Andrew Torrance and the Chief Financial Officer Steve Crowe. The details of these respective awards are set out in the table below.   Director   Date of Grant   No of options   Exercise price (p)   Minimum vesting  period                   A Torrance   18/08/2020   540,000   22   31/01/2023 A Torrance   18/08/2020   270,000   21   31/03/2024 S Crowe   18/08/2020   444,444   22   31/01/2023 S Crowe   18/08/2020   222,222   21   31/03/2024   No other matter or circumstance has arisen since 31 July 2020 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.     This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com . 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