Samarkand Group PLC (AQSE:SMK) reported strong revenue growth for its core activities in the first half despite the supply chain disruptions that have impacted the global retail sector.
The cross-border eCommerce company, which is focused on connecting Western brands with China, the world’s largest eCommerce market, said it has mitigated against the supply chain headwinds and revenues in the second half have shown good momentum as a result of new deals.
Group revenues were broadly flat at £7.2mln in the six months to 30 September 2021 compared with the same period last year.
Sales from the group's core activities grew significantly, with Nomad technology revenues up 15% to £3.0mln and brand ownership revenues increasing 13% to £2.3mln.
Revenues from the company’s legacy distribution business fell by 31% to 1.8mln as it continued to move away from B2B distribution and focus on Nomad and B2C capabilities in the UK, China and the rest of the world.
Revenues so far in the second half have been robust with growth of 15% in October and 25% in November. The trend has accelerated in December and Samarkand said the benefit of deals signed in the first half will start to come through during the rest of the financial year to March 2022.
In order to counteract the impact of the supply chain constraints, Samarkand has invested in additional stock and at the half year, it had inventory of £3.5mln, up from £1.9mln at the same point in the prior year.
Gross margin dropped to 57% in the first half from 62% the year before as a result of a change in the product mix and supply chain pricing pressures, which could not be entirely passed on to customers.
Higher staff and marketing costs resulted in a slide to an adjusted EBITDA loss of £2.7mln, compared with a profit £0.3mln. Pre-tax losses were £3.5mln versus a profit of £1.9mln.
Cash and cash equivalents at 30 September 2021 stood at £10.4mln.
READ: Samarkand inks Nomad Checkout deal with Hong Kong’s Strawberrynet
"Following our listing onto the Aquis Stock Exchange in March, we have proceeded to continue exploiting the demand for access to the Chinese eCommerce market, whilst allocating the fundraised capital towards strategic growth and operational enhancements,” said chief executive David Hampstead.
“We look to the future with real optimism, with the group well-positioned in a space only set to expand further. We are confident in Samarkand's opportunity to become an integral driver of commerce in the world's largest eCommerce market."