TIDMSCS
RNS Number : 5601L
ScS Group PLC
04 October 2016
For Immediate Release 4 October 2016
ScS Group plc
("ScS" or the "Company")
Preliminary Results for the year ended 30 July 2016
ScS, one of the UK's largest retailers of upholstered furniture
and floorings, is pleased to announce its Preliminary Results for
the 53 weeks ended 30 July 2016.
Financial Highlights:
-- Gross sales up 14.5% to GBP334.7m (2015: GBP292.2m)
-- Revenue up 14.7% to GBP317.3m (2015: GBP276.7m)
-- Like for like order intake up 14.8% (2015: 5.0%)
-- Gross profit increased 17.3% to GBP149.1m (2015: GBP127.2m)
-- EBITDA increased to GBP16.0m (Adjusted EBITDA 2015: GBP11.3m)
-- Operating profit GBP11.0m (2015: GBP2.8m, 2015 operating
profit before exceptional items GBP6.4m)
-- Earnings per share 21.8p (2015: loss per share 5.6p, 2015
adjusted earnings per share 13.8p)
-- Strong balance sheet with cash of GBP22.4m (2015: GBP21.1m) and no debt
-- Recommended final dividend of 9.83p per share, full year
dividend of 14.5p per share (2015: 14.0p), an increase of 3.6%
Operational Highlights:
-- ScS sales density per square foot increased 12.9% to GBP219
(2015: GBP194) supported by a significant increase in marketing
spend
-- Two new stores opened in Bromborough on the Wirral on Boxing
Day 2015 and in Aberdeen in September 2016
-- Three further stores in Plymouth, Thanet and Edinburgh targeted to open on Boxing Day 2016
-- House of Fraser concession gross sales up 19.7% to GBP25.3m
(2015: GBP21.2m) resulting in a positive EBITDA contribution
-- Continued investment and development of the e-commerce
platform for ScS trading website resulting in gross sales
increasing 19.8% to GBP10.0m (2015: GBP8.4m)
-- Improved distribution management leading to a reduction in
costs expressed as a percentage of revenue to 4.9% (2015: 5.1%)
Current Trading:
-- Sales order intake up 4.5% on a like-for-like basis for the 9 weeks to 1 October 2016
David Knight, Chief Executive Officer of ScS commented:
"We are delighted to be reporting significant growth across all
areas of the Group for the 2016 financial year. Our sales order
intake is the highest ever and is up 14.8% on a like-for-like
basis. These results demonstrate that the Group has made
significant progress in developing ScS into a strong national brand
with three very clear retail offers - upholstered furniture,
flooring and our House of Fraser concessions, all supported by an
online platform that has seen continued investment.
We are encouraged by our trading performance since the start of
the current financial year which is in line with our expectations.
However, we are mindful that the Group continues to face very
strong comparatives during the remainder of the year.
Looking further ahead, we are excited about our prospects,
including the continued growth from our existing ScS network, the
concession agreement with House of Fraser, our flooring offering
and our online proposition. We continue to identify new store
opportunities within our target areas. The Group's cash flow
dynamics underpin the strong financial position which will support
our ambitions for future growth and continue to deliver value for
our shareholders."
Investor and Analyst Meeting
A meeting for analysts will be held at the office of Buchanan,
107 Cheapside, London, EC2V 6DN on 4 October 2016 commencing at
9.00am. ScS Group plc's Preliminary Results 2016 are available at
www.scsplc.co.uk
An audio webcast will be available on:
http://vm.buchanan.uk.com/2016/scs041016/registration.htm
Enquiries:
ScS Group plc c/o Buchanan +44 (0)20
David Knight, Chief Executive 7466 5000
Officer
Chris Muir, Chief Financial
Officer
Buchanan Tel: +44 (0)20 7466
Richard Oldworth / Jane Glover/ 5000
Madeleine Seacombe scs@buchanan.uk.com
Notes to Editors:
ScS is one of the UK's largest retailers of upholstered
furniture and floorings, promoting itself as the "Sofa Carpet
Specialist" seeking to offer value and choice through a wide range
of upholstered furniture and flooring products. The Group's product
range is designed to appeal to a broad customer base with a
mid-market priced offering and is currently traded from 97
stores.
The Company's upholstered furniture business specialises
primarily in fabric and leather sofas and chairs. ScS sells a range
of branded products which are not sold under registered trade marks
(such as the Ellis and the Neptune) and a range of branded products
which are sold under registered trade marks owned by ScS (such as
Endurance and SiSi Italia). The Group also offers a range of third
party brands (which include La-Z-Boy, G Plan and Parker Knoll). The
Company's flooring business includes carpets, as well as laminate
and vinyl flooring.
In 2014, ScS began to operate the furniture and carpet
concession ranges for House of Fraser. ScS currently operates in 28
House of Fraser stores across the UK.
CHAIRMAN'S STATEMENT
This is my second annual statement to our shareholders following
the Company's IPO in January 2015 and I am pleased to report that
the business has made excellent progress against its strategic
objectives in the year. This has resulted in growth in both revenue
and margins.
Financial and strategic objectives
The Company has set itself the following objectives:
-- To deliver profitable and sustainable growth;
-- To improve the quality of earnings;
-- To improve business resilience through the economic cycle, and
-- To increase shareholder returns.
The business has continued to pursue these objectives
determinedly, growing revenue, gross profit and tightly controlling
costs and cash flow. These objectives are well underpinned by the
pursuit of our strategy for growth, which includes four key areas
as follows:
-- Increasing sales densities at our stores;
-- Optimising the opportunity with House of Fraser customers;
-- Growing online revenue, and
-- Achieving strong and speedy financial returns from new store openings.
Performance
The business traded strongly throughout the year supported by
increased marketing spend. This growth coupled with strong cost
control resulted in an increase in earnings per share (EPS) to
21.8p (adjusted EPS 2015: 13.8p).
During the year the Group saw increases in both the gross margin
and the EBITDA margin in line with the objective of improving
quality of earnings. This improved performance also increased the
Group's resilience. Continued strong cash generation provides scope
to further expand the business and also increase shareholder
returns in the form of dividends.
Progress was also seen in all four strategic areas for growth as
detailed above and the business has increased market share in both
the upholstery and flooring markets. Encouragingly these market
share gains have been achieved at higher gross margins than in the
prior year.
Dividend
The Group remains in a strong financial position, with good cash
generation and a balance sheet that is growing in resilience. This,
coupled with the Board's continued confidence in the outlook for
the Group, means we are proposing a full year dividend of 14.5p, a
3.6% increase on the full year dividend for 2015. This results in a
final dividend of 9.83p. This final dividend is lower than in the
prior year (11.2p) because a higher interim dividend was paid in
line with the Board's intention of paying a one third and two
thirds split between the interim and the final respectively.
Board changes
During the year we welcomed Chris Muir to the Board as Chief
Financial Officer, following the decision of Ron Turnbull to step
down from the Board and resign from the Company. Chris joined the
Group on 4 April 2016 from Northgate plc where he was Group Finance
Director from May 2011. Chris brings substantial experience to the
Board and will be a valuable asset as we look to further grow and
develop our business.
Colleagues
I would like to record the Board's thanks to all of our 1,848
team members throughout the business. It is their commitment,
expertise and enthusiasm that allows the Group to deliver our
mission to provide our customers with excellent service, value and
quality.
Outlook
The Group has a clear strategy for growth underpinned by strong
cash flows and the Board remains positive about the long-term
prospects for the business.
The Board feels the business is in a strong position to maximise
opportunities as they arise and continue to grow market share by
pursuing the four areas of our strategy for growth.
Alan Smith
Chairman
CHIEF EXECUTIVE'S REPORT
Overview
We are delighted to be reporting significant growth across all
areas of the Group for the 2016 financial year. Our sales order
intake is the highest ever and is up 14.8% on a like-for-like
basis. These results continue to demonstrate the progress that has
been made in developing ScS into a strong national brand with three
very clear retail offers - upholstered furniture, flooring and our
House of Fraser concessions, all supported by an online platform
that has seen continued investment.
Results
The Group saw a GBP40.6m (14.7%) increase in revenue in the year
to GBP317.3m (2015: GBP276.7m). Gross profits increased 17.3% to
GBP149.1m with gross margin as a percentage of gross sales
increasing 110 basis points to 44.6% (2015: 43.5%). EBITDA
increased to GBP16.0m (2015: GBP11.3m after adjusting for
exceptional items).
Strategy for Growth
As previously articulated, the Group has four key areas in its
strategy for growth:
Area 1 - Increasing sales densities
Increasing sales densities is being targeted in the following
ways:
-- The ongoing use and further introduction of a branded range
of products, including both third party brands and ScS private
label brands;
-- The continued development of our flooring offering;
-- Ongoing investment in our online capability and offer;
-- Increasing footfall quality (both physically and digitally
via our websites) by raising brand awareness;
-- Improving sales conversion at our stores; and
-- Improving the customer journey, experience and confidence.
Sales density per square foot at our ScS stores has increased to
GBP219. This is an increase of GBP25 or 12.9% on that achieved in
2015 and 19.0% higher than that achieved in 2014. Flooring
continues to prove a very successful product offering since its
introduction in 2012, with gross sales increasing GBP6.3m (19.9%)
in the year.
The average order price in furniture was stable with an increase
in flooring as the business ceased the aggressive flooring
promotion that it ran in the previous year as it continued to
establish its market share and awareness.
Marketing spend increased to GBP23.1m in the year (2015:
GBP19.2m) as the Group invested in brand awareness, targeting and
achieving increased footfall and website hits. Increases were also
noted in sales conversion, being the proportion of customers who
purchased a product after entering a store.
The Group recognises the importance of the customers' experience
and measures and monitors this on an ongoing basis. As with a
number of other retail companies, satisfaction levels are provided
by Trustpilot, which allows customers to provide feedback and a
rating on their experience. I am pleased to announce that our
continued dedication to improving this means we are now rated as
excellent based on over 31,000 Trustpilot reviews and have been
awarded the maximum 5-star rating.
Area 2 - Optimising the opportunity with House of Fraser
customers
When reviewing opportunities for growth the Group identified
that certain customer types prefer to shop in department stores and
town centres and have a different expectation of the product being
offered. Rather than losing the focus that is evident in our ScS
stores the Group looked at concession opportunities across the
UK.
Following a pilot, the full roll out was completed by July 2014.
The arrangement currently operates from 28 House of Fraser stores
and has delivered a gross sales increase of GBP4.1m (19.7%) in the
year to GBP25.3m (2015: GBP21.2m) and made a positive contribution
to the Group's EBITDA.
As the relationship matures, both ScS and House of Fraser
management teams recognise the potential that exists. In light of
this, the Group has recently appointed a senior manager to help
lead and maximise this opportunity.
Area 3 - Growing online revenue
Evidence indicates that customers are increasingly researching
online prior to making a purchase and our websites are an integral
tool to support our customers. Given the high-ticket and bespoke
nature of the items we sell, a high proportion of our customers
will visit our stores before they make their final purchase
decision. However, the Group recognises that the investment in our
website is critical and that it is an ever increasing part of the
customer journey.
Accordingly, in the year ended 30 July 2016, the Group has
continued to improve its online offering, investing GBP1.4m in
website development (2015: GBP0.7m). The business has also
significantly increased website marketing spend.
Online gross sales increased 19.8% to GBP10.0m (2015:
GBP8.4m).
Area 4 - Achieving strong and speedy financial returns from new
store openings
During the year ended 30 July 2016, the Group opened a new ScS
store in Bromborough, in the Wirral. This new store made a positive
contribution to the Group's EBITDA in the 2016 year with
performance being ahead of original expectations.
A further new store was opened in Aberdeen in September, post
the year end. New stores in Plymouth, Thanet and Edinburgh are
targeted to open on Boxing Day 2016.
In line with the Group's commitment to increase quality of
earnings and resilience, store profitability is regularly reviewed
and lease extensions are considered in line with the Group's
objectives. Following careful consideration, the decision was taken
to close the Stechford store in August 2016.
We now operate from 97 stores across the UK, almost all of which
are in modern out of town retail parks, often alongside competing
furniture and floorcoverings retailers - plus the 28 House of
Fraser concessions.
Current Trading and Outlook
We are encouraged by our trading performance since the start of
the current financial year and this is in line with our
expectations. However, we are mindful that the Group continues to
face very strong comparatives during the remainder of the year.
Looking further ahead, we are excited about our prospects,
including the continued growth from our ScS network, the concession
agreement with House of Fraser, our flooring offering and our
online proposition. We continue to identify new store opportunities
within our target areas. The Group's cash flow dynamics underpin
the strong financial position which will support our ambitions for
future growth and continue to deliver value for our
shareholders.
David Knight
Chief Executive Officer
FINANCIAL REVIEW
FY16 FY15
GBPm GBPm
Gross Sales 334.7 292.2
=========== =========
Revenue 317.3 276.7
=========== =========
Gross profit 149.1 127.1
----------- ---------
Distribution costs (15.5) (14.0)
Administration expenses
(excluding exceptionals) (122.6) (106.7)
----------- ---------
Total operating expenses
(excluding exceptionals) (138.1) (120.7)
----------- ---------
Operating profit (excluding
exceptionals) 11.0 6.4
Net finance costs (excluding
exceptionals) (0.1) (3.9)
Exceptional items - (4.2)
----------- ---------
Profit / (Loss) before
tax 10.9 (1.7)
Tax (2.2) (0.5)
----------- ---------
Profit / (Loss) after
tax 8.7 (2.2)
=========== =========
Earnings / (loss) per
share 21.8p (5.6p)
=========== =========
EBITDA (excluding exceptionals) 16.0 11.3
-------------------------------- ----------- ---------
Gross sales and revenue
Gross sales increased by GBP42.5m (14.5%) on the previous
financial year to GBP334.7m (2015: GBP292.2m) and is attributable
to:
-- An increase in upholstered furniture gross sales in ScS stores of 13.2% to GBP261.3m;
-- An increase in flooring gross sales in ScS stores of 19.9% to GBP38.1m;
-- An increase in online gross sales of 19.8% to GBP10.0m, and
-- An increase in gross sales from the House of Fraser concession of 19.7% to GBP25.3m.
Revenue, which represents gross sales less charges relating to
interest free credit sales (see note 3 - Segment information),
increased by 14.7% on the previous financial year to GBP317.3m
(2015: GBP276.7m).
Like for like order intake for the financial year ended 30 July
2016, calculated on the basis of all stores opened for 12 months or
longer, was up 14.8% on the previous financial year (2015:
5.0%).
Gross profit
Gross margin as a percentage of gross sales increased by 110
basis points from 43.5% in the year ended 25 July 2015 to 44.6% in
the year ended 30 July 2016. The 2015 margin was impacted by very
competitive promotions, notably a "free carpet" offer during the
2014 Autumn period to support the growth and awareness of our
flooring business.
The increase in gross margin and growth achieved in the year
resulted in an increase in gross profit of GBP22.0m or 17.3%.
Operating profit
On a statutory basis operating profit for the year ended 30 July
2016 increased to GBP11.0m (2015: GBP2.8m). The 2015 operating
profit before exceptional items (relating to the January 2015 IPO)
was GBP6.4m.
Distribution costs
Distribution costs comprise the total cost of the in-house
distribution function and includes employment costs, the cost of
leasing vehicles and related running costs and property costs
(principally rent, rates and utilities) for the ten distribution
centres, as well as costs of third party delivery services
contracted to support peak delivery periods. During 2016 we have
successfully implemented initiatives for improved route planning
and central arranging of onward delivery to customers. The
resulting efficiency gains have contributed to the reduction in
distribution costs expressed as a percentage of revenue year on
year from 5.1% to 4.9%.
Administrative expenses
Administrative expenses comprise:
-- Store operating costs, principally employment costs and
property related costs (rent and rates, utilities, store repairs
and depreciation of capital investment) and costs associated with
the concession agreement with House of Fraser;
-- Marketing expenditure, and
-- General administrative expenditure which includes the
employment costs for the directors and senior management and all
head office based functions (customer call centre, finance, human
resources, IT, merchandising, online sales support, flooring
administration, administrative support for House of Fraser
concession), company pension contributions, legal and professional
costs, insurance, company car costs, IT systems support and
telecommunications.
Administration costs for the year totalled GBP122.6m, this
compares to GBP106.7m in the year ended 25 July 2015 after removing
IPO related exceptional costs of GBP3.7m (see Exceptional items -
note 4). Administrative costs as a percentage of revenue were in
line with the prior year.
The year saw an increase in administrative costs of GBP15.9m,
with the majority of the increase being driven by the
following:
-- GBP8.5m increase in payroll costs, GBP7.1m relating to
bonuses and commission, reflecting the strong sales and profit
performance in the year, and
-- Marketing investment increased by GBP3.9m to GBP23.1m.
Net finance costs
Net finance costs for the year ended 30 July 2016 were GBP0.1m
reflecting the Group's strong balance sheet with no debt (2015: net
finance cost GBP4.5m).
Net finance costs in 2015 comprised interest payable on the
pre-IPO US$ denominated debt owed to the principal shareholder,
together with a loss on exchange thereon. The year ended 25 July
2015 included exceptional items of GBP0.6m and a loss on exchange
of GBP2.8m.
Exceptional costs
Exceptional costs in the year ended 25 July 2015, comprised
legal and professional fees associated with the IPO, management
fees paid to an affiliate of Parlour Product Holding (Lux) Sarl,
the principal shareholder, in relation to the early termination of
a management services agreement as a result of the IPO and
commitment and legal fees relating to the new banking
facilities.
Taxation
The Group's effective tax rate for the year ended 30 July 2016
was 19.8%.
The 2015 tax charge based on profit before tax adjusted for IPO
costs charged as exceptional operating items was an effective rate
of 25.8% which was higher than if the standard rate of corporation
tax had been applied due to charges not deductible for tax
purposes, principally foreign exchange losses.
Earnings per share (EPS)
EPS for the year ended 30 July 2016 was 21.8p compared to a loss
per share of 5.6p in the previous year. Adjusting the 2015 year for
exceptional / non-recurring operating costs and non-recurring net
finance costs gives a revised EPS for 2015 of 13.8p.
EBITDA
An analysis of EBITDA (2015: adjusted EBITDA) is as follows:
Year ended Year ended
30 July 25 July
2016 2015
---------- ----------
GBP'm GBPm
Operating profit 11.0 2.8
Depreciation 4.5 4.2
Amortisation 0.5 0.6
Exceptional items - 3.7
---------- ----------
EBITDA 16.0 11.3
========== ==========
Cash flow and cash equivalents
A strong cash flow has been generated from operations reflecting
the negative working capital business model whereby:
-- For cash / card sales, customers pay deposits at the point of
order and settle outstanding balances before delivery;
-- For consumer credit sales, the loan provider pays ScS
approximately 7 days after delivery, and
-- The majority of product suppliers are paid at the end of the
month following the month of delivery into the distribution
centres.
A summary of the Group's cash flows is shown below:
Year ended Year ended
30 July 25 July
2016 2015
---------- ----------
GBP'm GBPm
Cash generated from
operating activities 13.2 10.0
Net capital expenditure (3.4) (4.1)
Net taxation and interest
payments (2.2) (1.8)
---------- ----------
Free cash flow 7.6 4.1
Loan repayment - (0.8)
Dividends (6.3) (1.0)
---------- ----------
Net cash generated 1.3 2.3
========== ==========
At an operational level the Group remained strongly cash
generative with cash generated from operating activities of
GBP13.2m (2015: GBP10.0m).
Capital expenditure of GBP3.4m (2015: GBP4.1m) included GBP1.0m
on new stores (2015: GBP2.5m) and refurbishment expenditure of
GBP1.0m (2015: GBP0.5m).
The Group's cash and cash equivalents at the end of the
financial year are very strong at GBP22.4m (2015: GBP21.1m), whilst
debt is GBPnil. The year-end closing cash balance has been impacted
by the 53-week year with the year-end falling in line with the
month end. This timing means that the month end payment runs to
suppliers and employees have been made. The Group's cash and cash
equivalents at the end of week 52 was GBP31.9m.
In August 2016, the Group also extended its GBP12.0m committed
revolving credit facility to October 2018.
Dividend
An interim dividend of 4.67p per ordinary share was paid in May
2015. With confidence in the Group's future growth prospects, and
supported by strong cash flow dynamics, robust financial position
and the extended committed banking facility, it is proposed to pay
a final dividend of 9.83p per ordinary share, resulting in a full
year dividend of 14.5p (2015: 14.0p).
KEY PERFORMANCE INDICATORS
The Group's key financial performance indicators and how we have
performed against them are as follows:
2016 2015 2014
-------- -------- --------
(1) Total year on year
gross sales growth % 14.5% 13.2% 5.1%
(2) ScS sales density GBP219 GBP194 GBP184
per square foot
(3) Like for like order
intake growth % 14.8% 5.0% 4.7%
(4) Gross margin % of
gross sales 44.6% 43.5% 43.8%
(5) Trustpilot customer
satisfaction (out of 10) 8.9 7.4 -
(6) Adjusted EBITDA
2016 2015 2014
GBPm GBPm GBPm
Operating profit 11.0 2.8 6.6
Depreciation and impairment 4.5 4.2 4.0
Amortisation 0.5 0.6 0.2
----- ------ -----
EBITDA 16.0 7.6 10.8
----- ------ -----
IPO related costs - 3.7 -
House of Fraser roll out
costs - - 1.4
Management fees and other - - 1.5
----- ------ -----
Total EBITDA adjustments - 3.7 2.9
--- ---- ----
Adjusted EBITDA 16.0 11.3 13.7
===== ===== =====
(7) Adjusted cash generated from operations
2016 2015 2014
GBPm GBPm GBPm
Net cash from operating
activities 11.0 8.2 13.8
EBITDA adjustments (6) - 3.7 2.9
Interest paid 0.2 0.7 0.2
----- ----- -----
Adjusted cash generated
from operations 11.2 12.6 16.9
===== ===== =====
(8) Adjusted earnings per share - pence
2016 2015 2014
GBPm GBPm GBPm
Profit/(loss) after tax 8.7 (2.2) 5.9
EBITDA adjustments (6)* - 3.7 2.3
Net finance costs/(income)* - 4.0 (1.2)
----------- ----------- -----------
Adjusted profit after
tax 8.7 5.5 7.0
=========== =========== ===========
Weighted average number
of shares 40,006,654 40,000,000 40,000,000
=========== =========== ===========
Adjusted earnings per
share - pence 21.8p 13.8p 17.5p
====== ====== ======
* net of tax
Consolidated statement of comprehensive income for the year
ended 30 July 2016
2016 2015
Note GBP'000 GBP'000
------------------------------------ ------ ----------------------- -----------------------
Gross sales 3 334,660 292,163
==================================== ====== ======================= =======================
Revenue 3 317,305 276,734
Cost of sales (168,177) (149,583)
------------------------------------ ------ ----------------------- -----------------------
Gross profit 149,128 127,151
Distribution costs (15,491) (14,041)
Administrative expenses (122,622) (110,343)
------------------------------------ ------ ----------------------- -----------------------
Operating profit 11,015 2,767
==================================== ====== ======================= =======================
Analysed as:
Operating profit before exceptional
items 11,015 6,420
Exceptional items 4 - (3,653)
------------------------------------ ------ ----------------------- -----------------------
Operating profit after exceptional
items 11,015 2,767
------------------------------------ ------ ----------------------- -----------------------
Finance costs 5 (217) (4,515)
Finance income 6 86 20
------------------------------------ ------ ----------------------- -----------------------
Net finance costs (131) (4,495)
------------------------------------ ------ ----------------------- -----------------------
Profit / (loss) before taxation 10,884 (1,728)
Taxation 7 (2,155) (496)
------------------------------------ ------ ----------------------- -----------------------
Profit / (loss) for the year 8,729 (2,224)
==================================== ====== ======================= =======================
Attributable to:
Profit / (loss) to the owners
of the parent 8,729 (2,224)
==================================== ====== ======================= =======================
Earnings per share
Basic 8 21.8p (5.6p)
Diluted 8 21.3p (5.6p)
==================================== ====== ======================= =======================
All results arise from continuing operations. There are no other
sources of comprehensive income.
Consolidated statement of changes in equity
Share Share Capital Redemption Merger reserve Retained
capital premium reserve earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- ------------------ -------------- --------- ----------------
At 27 July 2014 - - - - 4,253 4,253
Total comprehensive income - - - - (2,224) (2,224)
Share based payments - - - - 234 234
Proceeds from shares issued 50 70,000 - - - 70,050
Capital reduction - (70,000) - - - (70,000)
Share buyback (13) - 13 - - -
Group re-organisation - - - 25,511 - 25,511
Dividend paid - - - - (1,044) (1,044)
-------- -------- ------------------ -------------- --------- ----------------
At 25 July 2015 37 - 13 25,511 1,219 26,780
-------- -------- ------------------ -------------- --------- ----------------
At 26 July 2015 37 - 13 25,511 1,219 26,780
Total comprehensive income - - - - 8,729 8,729
Share based payments - - - - 437 437
Proceeds from shares issued 3 16 - - - 19
Dividend paid - - - - (6,349) (6,349)
-------- -------- ------------------ -------------- --------- ----------------
At 30 July 2016 40 16 13 25,511 4,036 29,616
-------- -------- ------------------ -------------- --------- ----------------
Consolidated statement of financial position as at 30 July
2016
2016 2015
Note GBP'000 GBP'000
------ -------- --------
Non-current assets
Intangible assets 1,145 1,291
Property, plant and equipment 23,501 25,005
Total non-current assets 24,646 26,296
-------- --------
Current assets
Inventories 23,188 20,705
Trade and other receivables 9,014 8,887
Cash and cash equivalents 22,379 21,055
-------- --------
Total current assets 54,581 50,647
-------- --------
Total assets 79,227 76,943
======== ========
Capital and reserves attributable
to the equity shareholders
of the parent
Share capital 40 37
Share premium 16 -
Capital redemption reserve 13 13
Merger reserve 25,511 25,511
Retained earnings 4,036 1,219
-------- --------
Equity shareholders' funds 29,616 26,780
-------- --------
Total equity 29,616 26,780
-------- --------
Non-current liabilities
Trade and other payables 6,068 5,668
Deferred tax liability 1,101 530
Total non-current liabilities 7,169 6,198
-------- --------
Current liabilities
Current income tax liabilities 210 675
Trade and other payables 9 42,232 43,290
Total current liabilities 42,442 43,965
-------- --------
Total liabilities 49,611 50,163
-------- --------
Total equity and liabilities 79,227 76,943
======== ========
Consolidated statement of cash flows for the year ended 30 July
2016
2016 2015
GBP'000 GBP'000
-------- -----------------------
Cash flows from operating activities
Profit / (loss) before taxation 10,884 (1,728)
Adjustments for:
Depreciation of property plant and equipment 4,478 4,185
Amortisation of intangible assets 556 596
Share-based payments 437 234
Finance costs 217 4,515
Finance revenue (86) (20)
-------- -----------------------
16,486 7,782
Changes in working capital:
Increase in inventories (2,483) (704)
Increase in trade and other receivables (127) (571)
(Decrease) / increase in trade and other payables (658) 3,492
Cash generated from operating activities 13,218 9,999
Interest paid (217) (731)
Income taxes paid (2,049) (1,088)
-------- -----------------------
Net cash flow from operating activities 10,952 8,180
-------- -----------------------
Cash flows from investing activities
Purchase of property, plant and equipment (2,974) (3,666)
Payments to acquire intangible assets (410) (480)
Interest received 86 20
-------- -----------------------
Net cash flow from investing activities (3,298) (4,126)
-------- -----------------------
Cash flows from financing activities
Repayment of borrowings from related party - (799)
Dividends paid (6,349) (1,044)
Proceeds of share issue 19 50
-------- -----------------------
Net cash flow from financing activities (6,330) (1,793)
-------- -----------------------
Net increase in cash and cash equivalents 1,324 2,261
Cash and cash equivalents at beginning of year 21,055 18,794
Cash and cash equivalents at end of year 22,379 21,055
======== =======================
Notes to the audited consolidated financial statements
1. General information
ScS Group plc (the "Company") is a company incorporated and
domiciled in the UK (Company registration number 03263435). The
address of the registered office is 45-49 Villiers Street,
Sunderland, SR1 1HA. The Company and its subsidiaries' (the
"Group") principal activity is the provision of upholstered
furniture and flooring, trading under the name ScS. The shares in
the Company were admitted to the Official List of the London Stock
Exchange ("LSE") on 28 January 2015.
2. Accounting Policies
Basis of preparation
The Board approved the preliminary announcement on 3 October
2016.
The results for the year ended 30 July 2016, including
comparative financial information, have been prepared in accordance
with EU endorsed International Financial Standards ("IFRS"), IFRIC
interpretations and those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement of IFRS, this announcement does not itself contain
sufficient information to comply with IFRS. ScS Group plc will
publish full financial statements that comply with IFRS in October
2016.
The financial information does not constitute the Company's
statutory accounts for the years ended 2016 or 2015, but is derived
from those accounts. Statutory accounts for 2015 have been
delivered to the Registrar of Companies and those for 2016 will be
delivered following the Company's Annual General Meeting. The
auditors have reported on those accounts: their reports were
unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under s498 (2) or (3) of
the Companies Act 2006.
The financial information presented in respect of the year ended
30 July 2016 has been prepared on a basis consistent with that
presented in the annual report for the year ended 25 July 2015.
Going concern
The Group generates strong cash flows, reflecting the negative
working capital requirements of the business model. In addition,
the Group has a committed GBP12.0m revolving credit facility in
place. The Group's forecasts and projections show that the Group
has adequate resources to continue in operational existence for the
foreseeable future.
Having considered the Group's current trading and cash flow
generation including severe but plausible stress testing scenarios,
the Directors have concluded that it is appropriate to prepare the
Group Financial statements on a going concern basis.
New standards, amendments and interpretations
Amendments to and interpretation of standards effective and
adopted by the Group will be disclosed in the 2016 annual financial
statements.
Critical accounting judgements and estimates
The preparation of the financial statements under IFRS requires
the directors' to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities. Estimates and judgements are
continually evaluated and are based on historical experience and
other factors including expectations of future events that are
believed to be reasonable under the circumstances. Actual results
may differ from these estimates. Relevant accounting judgement and
estimates will be disclosed in the 2016 annual financial
statements.
3. Segment information
The directors have determined the operating segments based on
the operating reports reviewed by the senior management team (the
executive directors and the other directors of the trading
subsidiary, A. Share & Sons Limited) that are used to assess
both performance and strategic decisions. The directors have
identified that the senior management team are the chief operating
decision makers in accordance with the requirements of IFRS 8
'Segmental reporting'.
The directors consider the business to be one type of business
generating gross sales and revenue, the retail of upholstered
furniture and flooring. All gross sales and revenue, profit /
(loss) before taxation, assets and liabilities are attributable to
the principal activity of the Group and other related services. All
gross sales and revenues are generated in the United Kingdom.
An analysis of Gross sales is as follows: Year ended
Year ended 30 July 2016 25 July 2015
GBP'000 GBP'000
------------------------ ---------------
Sale of goods 312,776 273,491
Associated sale of warranties 21,884 18,672
------------------------ ---------------
Gross sales 334,660 292,163
======================== ===============
Charges associated with interest free credit are deducted from
gross sales in arriving at revenue. Charges for interest free
credit in 2016 and 2015 were GBP17,355k and GBP15,429k
respectively.
4. Exceptional items
Exceptional costs comprise: Year Year Year
ended ended ended
30 July 25 July 25 July
2016 2015 2015
Note GBP'000 GBP'000 GBP'000
----- --------- -------------- ---------
Administrative Finance
expenses costs
Management fees 4(a) - 1,100 -
IPO deal fees 4(b) - 2,553 -
Bank facility fees 4(c) - - 555
--------- -------------- ---------
- 3,653 555
========= ============== =========
4 (a) Management fees payable to an affiliate of the former
parent undertaking, Sun Capital Partners, Inc. in relation to the
termination of a management service agreement due to the IPO.
4 (b) Legal and professional fees related to the admission.
4 (c) Banking and legal fees related to the committed GBP12m revolving credit facility.
5. Finance costs
Year ended Year ended
30 July 25 July
2016 2015
GBP'000 GBP'000
---------- ----------
Foreign exchange losses on amounts
owed to related parties - 2,829
Interest payable on amounts
owed to related parties - 995
Bank facility fees 71 555
Other finance costs 146 176
---------- ----------
217 4,515
========== ==========
6. Finance income
Year ended Year ended
30 July 25 July
2016 2015
GBP'000 GBP'000
---------- ----------
Bank interest received 86 20
========== ==========
7. Taxation
The total tax charge for the financial year of GBP2.2 million
(2015: GBP0.5 million) comprises a corporation tax charge of GBP1.6
million (2015: GBP1.5 million) and a deferred tax charge of GBP0.6
million (2015: credit GBP1.0 million). The tax charge is an
effective rate of 19.8% which is in line with the standard rate of
corporation tax (2015: 25.8% - based on profit before tax adjusted
for IPO costs charged as exceptional operating items - which is
higher than if the standard rate of corporation tax had been
applied due to charges not deductible for tax purposes, principally
foreign exchange losses).
8. Earnings per share
Year ended Year ended
30 July 25 July
2016 2015
GBP'000 GBP'000
----------- ----------
Profit / (loss) attributable to
owners of the Company 8,729 (2,224)
----------- ----------
Weighted average number of shares
in issue for the purposes of
basic earnings per share 40,006,654 40,000,000
---------- ----------
Effect of dilutive potential Ordinary
shares:
* share options 965,889 -
Weighted average number of Ordinary
shares for the purpose of diluted
earnings per share 40,972,543 40,000,000
Basic earnings / (loss) per
share 21.8p (5.6p)
Diluted earnings / (loss) per
share 21.3p (5.6p)
========== ==========
A total of 1,085,791 potential ordinary shares have not been
included within the calculation of diluted earnings per share for
the year ended 25 July 2015 as they are antidilutive.
9. Trade and Other Payables - Current
Year ended Year ended
30 July 25 July
2016 2015
GBP'000 GBP'000
---------- ----------
Trade payables 14,430 24,356
Payments received on account 12,825 7,247
Other taxation and social security
payable 4,862 3,449
Accruals 10,115 8,238
---------- ----------
42,232 43,290
========== ==========
The fair value of financial liabilities approximates their
carrying value due to short maturities. Financial liabilities are
denominated in pounds sterling.
10. Dividends
An interim dividend of 4.67p per ordinary share was declared by
the Board of directors on 12 April 2016 and paid on 27 May 2016. It
has been recognised in shareholders' equity in the year to 30 July
2016.
A final dividend of 9.83p per ordinary share has been proposed
by the Board of directors.
At 30 July 2016 the retained earnings of the parent Company
amounted to GBP66.5m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKNDKABDDOKK
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