Samarkand Group PLC (AQSE:SMK) reported a 15% increase in revenues and progress on its return to profitability in the first half of the year amid what it said were “some of the most turbulent months in China since the outbreak of the pandemic”.
The cross-border e-commerce technology provider said current indications for the second half are that the underlying trends are likely to continue, including the volatility in China.
These interims come shortly after China’s ‘singles day’, a peak trading period in mid-November, which was said to have performed “in line” despite continued heightened Covid disruption.
Samarkand said the focus for the remainder of the year to March and into the following year is for the group to reach a self-funding situation.
Revenues in the six months to 30 September 2022 increased 15% to £8.3mln and adjusted EBITDA losses reduced 48% to £1.3mln.
Chief executive David Hampstead said moving the business towards profitability is a key objective and that it continued to seek opportunities to improve efficiency and operating leverage in the first half.
“We continue to drive further cost efficiencies and improvements in operational leverage across the business whilst maintaining good strategic progress across our other objectives and expect to finish the year within guidance.”
Simplifying the organisational structure as well as reducing the office network and expenses lowered the cost base, he said.
Investment in the Checkout DTC technology is still at a high level in relation to the income generated from it to date, with commercialisation of this solution “a top priority”.
Net cash stood at just over £1mln at the end of September, with £1.9mln of net proceeds from the open offer announced that month.
“Our cross-border eCommerce technology is being adopted by more merchants and from an increasingly diverse base in terms of geography and product category,” said Hampstead.
“Our core eCommerce Acceleration business is where we have experienced the most challenges related to supply chain disruption in China yet despite these headwinds, we have achieved revenue growth of 2% and made a material improvement in contribution margins and evolved the portfolio of brands we work with.”
Helped by acquisitions that have diversified revenues, with revenues from UK and international markets increasing, Hampstead said the company is “committed to realising the opportunity in China while recognising that we are well positioned to further exploit emerging opportunities in new markets through our technology, infrastructure and the partnerships we’ve built over the last 5 years”.