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Samarkand Group PLC on Wednesday reported a widened interim loss and said its full-year earnings will probably be lower than expected, although the following financial year looks brighter.
The cross-border eCommerce technology solutions provider, which has headquarters in Shanghai and London, said its pretax loss widened in the half year that ended on September 30, to £3.1 million from £2.2 million.
Revenue overall decreased 1.5% on-year to £8.1 million from £8.3 million. Brand Ownership revenue rose 18% to £3.6 million, but Nomad Technology revenue fell 11% to £2.4 million, while Distribution revenue dropped 22% to £1.8 million.
Samarkand explained that sales in China have not yet met expectations for business recovery there once lockdowns ended. This was mainly due to a slower than anticipated performance in June, and new brands in the portfolio ‘taking longer to convert to material sales’.
Additionally, Chinese consumers were more cautious and Samarkand faced increased competition due to higher levels of discounting.
‘The forecast recovery of the Chinese market has not yet materialised, impacting our growth in China in FY 2024,’ explained Chief Executive Officer David Hampstead. ‘Achieving profitability remains our top priority and as such, we have taken another significant step towards achieving this goal.’
Samarkand said its cash balance at September 30 was £1.7 million, down from £2.0 million at March 31.
More recently, Samarkand said the third quarter has started well with revenue in October up 19% year-on-year, while its UK brands have delivered strong performances. However, November, ‘historically our peak trading month’, traded behind the previous year in China.
Looking ahead, Samarkand expects to miss its full-year earnings before interest, tax, depreciation and amortisation target due to the declining revenue. However, due to ‘cost actions’ the company is still ‘in a strong position to reach profitability’ the year after. It also expects to be materially better off on a run rate basis going into financial 2025.
‘We acknowledge that the current share price does not reflect the value of the business, as is the case with many listed companies in the micro-cap arena,’ added Hampstead. ‘We are focused on delivering on our strategy and expect that as we make progress, this will ultimately be reflected in the market value of the company.’
Shares in Samarkand were untraded at 3.50 pence in London on Monday.
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