TRADING UPDATE 31ST DECEMBER 2016 YEAR ENDED 31ST DECEMBER 2016
Sales £1,018k, 265% increase on 12 months to Dec 2015, gross margin up 1.56% to 38.4%.
73% sales exported during year, December 2016 exported 85.4% driven by fall in value of £ post Brexit vote and increased competitiveness abroad. This trend we believe will continue.
UK now 4th largest market behind USA, France and Italy. We expect Germany to overtake UK in February.
Online sales B2B and B2C grew 2390% in North America and 440% in Europe during the year as buyers continue trend to online purchasing. This trend we expect to continue.
Products available in 9 countries directly, work underway to expand this in a manageable fashion through 2017.
Deal agreed with Casino Group in France in December, First sales expected Feb 2017.
2017 FORWARD LOOKING
Significant progress has been made across all areas of the business with products well received by customers and awareness growing. Change in last quarter with international companies contacting us with interest in stocking and selling.
Online sales continue to grow very strongly across all markets, good margins. This area we believe provides strongest and quickest growth opportunity with continued transition of buyers to direct to manufacturer online purchasing. Work underway now to identify and expand selling platforms, in existing territories and internationally, rework of UK and US sites underway to increase awareness, marketing and purchasing opportunity.
US partner has good pipeline of regional distributors signed across all areas of North America in last quarter selling direct B2B, revenue stream expected to begin first quarter 2017.
Work is now on to further deepen product ranges and pipeline to focus business along distinct market opportunity lines (Surface Protection, Clean Up, Marine Protection, Flood Protection and Bespoke Technical Materials). All products based on quality and patentable design.
Rapid growth has provided certain logistical and stocking issues with goods held in supply chain across 7 distribution warehouse locations worldwide, managing efficient stock levels at locations has been a challenge to ensure supply. We expect locations to increase as expansion continues further complicating supply chain. This is under review.
Manufacturing has coped with demand but we expect production capacity issues in second half of the year if growth continues at existing rate as only two lines able to be run simultaneously. This is being reviewed now as to best option moving forward.
Deepening expertise within and contracted outside the business remains a priority with focus on management of expansion (sales online/direct, administration, marketing, logistics and manufacturing efficiency).
Currency/Brexit/US elections etc. – whilst we expect some changes here as everything beds in we are not currently concerned as to effect. Business generates significant Euro/ Dollar revenue already which insulates exchange risk to a certain level. Business already pays import taxation/duties on all North American sales which are built into model. Sales prices are based on £1:1.25Euro and £1:$1.35 providing exchange flexibility.