RNS Number:1097O
ScS Upholstery PLC
4 December 2001
For Immediate Release 4 December 2001
ScS Upholstery plc
Record Preliminary Results for the Year Ended 30 September 2001
ScS Upholstery plc, the fully listed furniture retailer of fabric and leather
upholstered furniture, is pleased to announce record preliminary results for
the year ended 30 September 2001.
KEY POINTS
* Record profit before tax #7.7 million Up 42.6%
* Record turnover #72.5 million Up 56.2%
* Record earnings per share 16.82p Up 43.3%
* Record final dividend of 5.8p per share proposed
giving record total dividend of 7.8p per share for the year Up 44.4%
* Sustained expansion - number of stores now more than doubled over the
last two years to 41
* David Knight to be appointed Chief Executive and Mike Browne to be
appointed as Deputy Chairman succeeding as Chairman in January 2003
* Net cash up at #6.2m following #4.3m spend on expansion programme
* Outlook remains strong
Tony McCann, Chairman, commenting, said:
"This has been a year of both growth and consolidation producing an excellent
financial result. As forecast we have opened six stores in the year whilst
maintaining strong margins and producing a record profit.
"The Group's expansion towards a national presence has emphasised our position
as one of the leading retailers in our sector. Furthermore we have already
opened four new stores in this new financial year with up to six more planned
to be opened before the end of the financial year. The outlook for the Group
remains strong and the Board is confident of reporting another record year."
For further information please contact:
ScS Upholstery plc
Mike Browne, Chief Executive 020 7466 5000 (Tuesday and Wednesday)
0191 514 6050 thereafter
Buchanan Communications
Richard Oldworth / Isabel Petre 020 7466 5000
CHAIRMAN'S STATEMENT
It gives me great pleasure to report another record result for the Group with
pre tax profits up by 42.6% on last year. As forecast, we opened six new
stores during the year, bringing the total at the year end to 37. This has
been a year of strong growth and one of strengthening our infrastructure in
preparation for what we believe to be a very exciting future.
Results
Group pre tax profits were #7.7 million compared to #5.4 million for 2000, an
increase of 42.6%. Earnings per share for the year were 16.82 pence per
ordinary share (2000: 11.74p), an increase of 43.3%.
Final Dividend
In line with these excellent results and our strong cash position the Board is
recommending a final dividend of 5.8 pence per ordinary share. If approved,
this would make a total dividend for the year of 7.8 pence per ordinary share
(2000: 5.4 pence per ordinary share), an increase of 44.4%. This clearly
demonstrates the Board's commitment to pursuing a progressive dividend policy.
Turnover
Our turnover increased by 56.2% to #72.5 million (2000: #46.4 million) with
like for like sales order intake up 4%. Of the six stores opened in the
financial year only four stores contributed to turnover as the remaining two
opened close to the year end.
Stores
The national roll out of our unique store format continued this year with six
new stores in Leeds (October 2000), Beckton (October 2000), Guildford
(December 2000), Wakefield (May 2001), Cheltenham (August 2001) and Rotherham
(August 2001). Three of these stores are based in existing regions enabling
us to benefit from critical mass, specifically in advertising, distribution
and staff costs. Leeds, Wakefield and Rotherham have created a new regional
cluster in Yorkshire, upon which we intend to build. All of these stores were
opened on prime retail parks.
Profitability
Our policy has always been to write off pre-opening costs as they are incurred
for new stores, irrespective of the financial impact. This year's results
would have been higher but for the revenue investment required to open six new
stores. Significant costs have also been incurred to strengthen our senior
management structure as well as our staffing levels during the year to prepare
us for continued and sustained growth. Despite these additional costs, our
margins continue to remain strong and are in line with those reported at the
interim stage at 10.3% operating margin (2000: 11.1%) with gross margin
strengthened at 48.2% (2000: 47.8%).
Cash Flow
As in previous years, cash generation has been strong with net cash at the
year end of #6.2 million (2000: #4.0 million) which includes #4.3 million
(2000: #4.7 million) spent on our expansion programme. This puts the Group in
a strong position to maximise any future expansion opportunities.
People
We have always recognised the importance of having the very best staff. We
believe in investing in the development of our people and are continuing to
attract the highest calibre of new staff for the next phase of our expansion.
As part of this programme we are delighted to announce that the Group has been
awarded Investors in People on our first application, an indication of our
serious intent to be a first class employer. Our success is also testament to
the high level of dedication shown by our staff, which is greatly appreciated
by the Board. On behalf of the Board I would like to thank everyone, including
all those who have joined our Company during the year, for their outstanding
contribution in helping to achieve an extremely successful result.
Main Board
In line with our succession planning objectives David Knight will be appointed
as Chief Executive with effect from 1 January 2002. Mike Browne will be
appointed Deputy Chairman and will succeed me as Chairman in January 2003. As
Deputy Chairman, Mike will maintain his executive role with the Group ensuring
a smooth handover of investor relations activities to David who has been with
the Group for 14 years and Managing Director for over two years. When Mike is
appointed Chairman in January 2003, it is intended that he will reduce his
time commitment to the business to approximately two to three days per week.
Trading Board
The Trading Board, which has successfully operated for two years, headed by
David Knight, includes three Directors of the trading company who have a
combined experience within the Group of 40 years. The Trading Board has
played an extremely important role in the growth and development of the
business and I would like to thank, on behalf of the Main Board, Mark
Haughney, Andrew Rosenthal and Kevin Royal for their dedication throughout the
year.
Outlook
The excellent results achieved once again this year clearly demonstrate our
winning formula and it remains our firm intention to continue to build an
extensive national presence. During this new financial year we have opened
four new stores in Northampton, Aintree, Blackburn and Sheffield and we aim to
open a further four to six stores before the end of the financial year, of
which three have already been signed in Liverpool (Speke), Southampton (West
Quay) and Darlington.
Total sales order intake for the first nine weeks of the current financial
year is substantially higher than the same period last year with like for like
sales order intake up 3%. As the Group is now recognised as one of the leading
retailers in the sector this is presenting us with greater opportunities for
expansion. Having already doubled the number of stores in last two years to
41 and with our further commitment to aggressive growth the Board remains
confident of reporting yet another record year.
A J McCann
Chairman
The Preliminary Announcement was approved by
the Board of Directors on 4 December 2001
OPERATING AND FINANCIAL REVIEW
I am proud to report on another record year in which we have significantly
grown the profits of the Group and increased the total number of stores to 37
after successfully opening six new stores. During the year we have also
strengthened our management structure both centrally, and at store level, in
preparation for continued expansion in the future. I believe we have the
structure in place to successfully manage plans for further significant
growth.
Gross Profit
Once again we have achieved an excellent gross profit margin of 48.2% (2000:
47.8%). This margin has been achieved by our continued focus on professional
retailing and not chasing volume by reducing margins.
Profit Before Tax
The Group's profit on ordinary activities before taxation was #7.7 million, an
increase of 42.6% on the previous financial year.
This record profit was achieved after absorbing the significant costs of
opening six new stores, one new distribution centre and the additional
overhead associated with an aggressive expansion programme. Given our policy
of recognising sales when the goods have been delivered, and with normal lead
times from our suppliers of 6 to 8 weeks, new stores have a significant period
when overhead is taken but revenue is not. The Group also continues to apply
its accounting policy of writing off pre-opening and launch costs as they are
incurred and no interest is capitalised on new store developments. The Group
has also made significant investment this year on strengthening the management
structure and branch staff levels to prepare for future expansion. Despite
this we have still achieved an excellent operating margin of 10.3% (2000:
11.1%).
Overhead cost and our business efficiency continue to be tightly controlled
and monitored, with advertising expenditure - a major variable overhead in our
sector - strongly managed to produce consistently one of the most cost
effective advertising spends in the sector.
The Group does not have any significant exposure to the impact of the new
deferred tax or pension financial reporting standards.
Final Dividend
In line with our progressive dividend policy the Board is recommending an
increased final dividend of 5.8 pence per ordinary share giving a total of 7.8
pence for the year. This represents an increase of 44.4% over the 2000
dividend. Subject to approval at the Annual General Meeting the final dividend
will be paid on 8 February 2002 to shareholders on the register on 11 January
2002.
Turnover
Turnover increased by 56.2% on the previous financial year to #72.5 million
(2000: #46.4 million). We have continued to maintain our pricing policy and
the increase in turnover is due to increases in volume and market share.
Balance Sheet
The Group balance sheet remains very strong with net cash of #6.2 million
(2000: #4 million) after capital expenditure of #4.3 million spent in respect
of the expansion programme. The Group has continued to achieve strong
operating cash flow during the year. The Board's policy continues to be to
maintain a strong balance sheet in order to give the Group maximum flexibility
to react to opportunities arising from the expansion programme.
Fixed Assets
Additions to fixed assets during the period totalled #4.9 million (2000: #4.7
million). New store leasehold improvements and fixtures and fittings amounted
to #4.1 million (2000: #4 million) and computer equipment #829,000 (2000: #
731,000).
Store Formats
The Group's expansion programme is based on a format which comprises a prime
retail park location with a unique mezzanine floor layout, designed to
encourage customers to circulate around the store. Displays are set in
attractive, well-lit, open room settings and attention is paid to creating a
relaxing homelike environment. This format was first introduced at our very
successful store at Metro Retail Park, Metro Centre, Gateshead, which has
produced excellent results over many years. Seven old format stores are all in
the North East and are located in secondary trading positions. Whilst these
stores do not have mezzanine floors they carry the same merchandise which is
displayed to the same high standard. They can never be converted to new format
due to their varying shapes and locations. However, they continue to make a
valuable contribution to the Group's overall results.
Product Range
ScS offers its customers a wide range of upholstered furniture products. Each
store typically displays a range of models, of which approximately 65% are
fabric and 35% leather. Although the price per suite ranges from #800 to #
4,000, the average selling price tends to be in the region of #1,400. All
prices are determined centrally with no regional variations.
Suppliers
ScS does not manufacture any of the products it sells. The Group purchases
from a selection of around 25 to 30 different manufacturers, of which
approximately 85% are based in the UK. Buying is organised on a Group-wide
basis to achieve a consistent and co-ordinated product range. The Board firmly
believes that effective buying is crucial to the success of a retail business
and has worked at maximising its bargaining position by developing good
working relationships with suppliers. This policy has enabled the Group to
secure good purchase terms and to negotiate regional exclusivity (within 25
miles of stores) on 85% of current product lines.
Branch Network
Selling space continues to grow with the addition of six new stores in Leeds,
Beckton, Guildford, Wakefield, Cheltenham and Rotherham. Whilst sales order
intake at these new stores has been in line with expectations, the last
branches, Cheltenham and Rotherham made no material contribution to the
Group's turnover for the year. These new stores enable the Group to benefit
from building critical mass in established areas and form the start of a new
cluster in the Yorkshire area. At the end of the financial year the Group
operated from 37 stores, eight located in the North East, three in Yorkshire,
five in the North West, ten in the Midlands and eleven in the South and South
East.
Our plan for the new financial year is to continue the expansion of the Group
by opening eight to ten additional new stores. Four of these stores have
already been opened in Northampton, Aintree, Blackburn and Sheffield and a
further three at Speke in Liverpool, West Quay in Southampton and Darlington
have already been legally completed. The other stores will open in the second
half of the financial year. All of these stores will continue to add to
existing clusters in established TV regions giving us the benefits of shared
advertising costs and distribution.
We continue our strategy to locate new branches on prime retail parks adjacent
to competitors where returns on our investment are greater due to increased
footfall of customers shopping for furniture and reducing the need for high
advertising spend. We are therefore very selective about the branches we open.
Distribution
Delivery to customers is made by our own network of localised distribution
centres. Each centre supports several stores in its locality such that the
Group benefits from economies of scale. This in-house delivery service enables
the Group to maintain full control of each stage in the progress of a
customer's order. In particular, we retain control of final delivery, which is
a very important event for each of our customers.
The Group operated seven distribution centres during the year, two in the
Midlands, two in the North East, one in the North West and two in the South
and South East. Since the year end a further distribution centre has been
opened in Doncaster to service the new Yorkshire region.
Staff
As part of our continued focus on staff development, and clearly demonstrating
our commitment to having the best trained staff in the industry, I am
delighted to announce that the Group has been awarded Investors in People at
our first attempt. During a period of such rapid expansion we have maintained
the recruitment and development of motivated and effective staff, this being
fundamental to the success achieved in the year.
Our staff are our most important asset and this is key to the success of the
Group's business strategy and long term goal of establishing ScS as a major
national retailer of upholstered furniture. The Group continues to offer all
staff opportunities to advance their careers by means of training and
promotion within the Group to senior positions.
An important element of the Group's strategy is to employ only well trained
professional sales staff in our branches. This requires a continuous
commitment to sales training and product knowledge development. In
consolidating our approach to training within the business we have invested in
all areas of learning and continue to add training centres within warehouses
as they are opened. We now have seven training centres throughout the UK
having just opened the latest in Doncaster. This commitment confirms the
Group's belief in its staff and the power of its customer driven and profit
oriented culture. These factors are fundamental to the long term success of
the business.
These results clearly demonstrate the enormous commitment and enthusiasm of
our staff and their determination to fulfill our customers' expectations and
this is greatly appreciated by the Directors. I would like to convey my
sincere thanks to every member of staff who has helped us to achieve these
results.
Mike Browne
Chief Executive
The Preliminary Announcement was approved by
the Board of Directors on 4 December 2001
GROUP PROFIT AND LOSS ACCOUNT (Unaudited)
for the year ended 30 September 2001
2001 2000
Notes #'000 #'000
Turnover 72,504 46,420
Cost of sales (37,570) (24,238)
Gross Profit 34,934 22,182
Distribution costs (3,660) (2,739)
Administration expenses (23,812) (14,277)
Operating Profit 7,462 5,166
Interest receivable and similar income 240 235
Profit On Ordinary Activities Before Taxation 7,702 5,401
Tax on profit on ordinary activities (2,358) (1,664)
Profit On Ordinary Activities After Taxation 5,344 3,737
Dividends 2 (2,486) (1,718)
Retained Profit For The Financial Year 2,858 2,019
Earnings per ordinary share - basic 3 16.82p 11.74p
- diluted 3 16.47p 11.60p
There were no recognised gains or losses other than the profit on ordinary
activities after taxation for the year.
GROUP BALANCE SHEET (Unaudited)
at 30 September 2001
2001 2000
#'000 #'000
Fixed Assets
Tangible assets 13,504 10,030
Investment in own shares 367 -
13,871 10,030
Current Assets
Stocks 5,009 4,076
Debtors 4,408 3,675
Cash at bank and on deposit 6,974 5,112
16,391 12,863
Creditors: amounts falling due within one year (19,220) (14,920)
Net Current Liabilities (2,829) (2,057)
Total Assets Less Current Liabilities 11,042 7,973
Creditors: amounts falling due after more than one year (679) (660)
Provisions For Liabilities and Charges
Deferred taxation (281) (151)
Net Assets 10,082 7,162
Capital And Reserves
Called up share capital 319 318
Share premium 61 -
Capital redemption reserve 195 195
Profit and loss account 9,507 6,649
Equity Shareholders' Funds 10,082 7,162
Group Statement Of Cash Flows (Unaudited)
for the year ended 30 September 2001
Notes 2001 2000
#'000 #'000
Net Cash Inflow From Operating Activities 4a 10,556 7,814
Returns On Investments And Servicing Of Finance
Interest received 246 244
Net Cash Inflow From Returns On Investments
And Servicing Of Finance 246 244
Taxation
Corporation tax paid (2,052) (1,419)
Capital Expenditure And Financial Investment
Payments to acquire tangible fixed assets (4,316) (4,671)
Payment to acquire own shares (367) -
Receipts from the sale of tangible fixed assets 6 2
Net Cash Outflow From Capital Expenditure (4,677) (4,669)
Equity Dividneds Paid (1,908) (2,924)
Net Cash Inflow/(Outflow) Before Use Of Liquid
Resources And Financing 2,165 (954)
Management Of Liquid Resources
Net investment in short term deposits (1,801) (402)
Financing
Issue of ordinary share capital 61 -
Net Cash Inflow From Financing 61 -
Increase/(Decrease) In Cash In The Year 4b 425 (1,356)
Notes To The Accounts
1. Annual Accounts
The financial information set out above is unaudited and does not constitute
the Group's statutory accounts for the years ended 30 September 2000 or 30
September 2001. It is prepared on the same basis as set out in the previous
year's annual accounts. The financial information for the preceding financial
year is based upon the statutory accounts for the year ended 30 September
2000. Those accounts, upon which the auditors issued an unqualified opinion,
have been delivered to the Registrar of Companies. Statutory accounts for the
year ended 30 September 2001 will be sent to shareholders by early January
2002.
2. Dividends
The Directors are recommending a final ordinary dividend of 5.8p per ordinary
share. Subject to the approval of the Directors' recommendation at the Annual
General Meeting, the dividend will be paid on 8 February 2002 to shareholders
on the register at 11 January 2002.
2001 2000
#'000 #'000
Equity dividends on ordinary Interim paid 2p (2000: 1.4p) 635 445
shares:
Final proposed 5.8p (2000: 1,851 1,273
4p)
2,486 1,718
3. Earnings Per Share
Earnings per ordinary share is based on the profit attributable to the equity
shareholders of the Company in the year of #5,344,000 (2000: #3,737,000) and
on 31,772,134 ordinary shares, being the weighted average number of ordinary
shares in issue during the year (2000: 31,818,200).
Diluted earnings per share is based on 32,440,967 ordinary shares, the
difference from the basic calculation being due to the inclusion of 668,833
dilutive ordinary shares under share option schemes.
4. Cash Flow
a) Reconciliation of operating profit to net cash inflow from operating
activities
2001 2000
#'000 #'000
Operating Profit 7,462 5,166
Depreciation charge 1,459 1,058
(Profit)/loss on sale of fixed assets (3) 1
Increase in stocks (933) (1,411)
Increase in debtors (733) (1,813)
Increase in creditors 3,304 4,813
Net cash inflow from operating activities 10,556 7,814
b) Analysis of changes in net funds
2000 Cash flow 2001
#'000 #'000 #'000
Cash at bank and in hand 3 61 64
Bank Overdraft (1,110) 364 (746)
(1,107) 425 (682)
Bank Deposits 5,109 1,801 6,910
4,002 2,226 6,228
c) Reconciliation of net cash flows to movement in net funds
2001 2000
#'000 #'000
Increase/(decrease) in cash in the year 61 (246)
Increase in bank deposits 1,801 402
Decrease/(increase) in bank overdraft 364 (1,110)
Movements in net funds resulting from cash flows 2,226 (954)
At 1 October 4,002 4,956
At 30 September 6,228 4,002
5. Annual General Meeting
The Annual General Meeting will be held on 29 January 2002.
Scs Upholstery (LSE:SUY)
Historical Stock Chart
From May 2024 to Jun 2024
Scs Upholstery (LSE:SUY)
Historical Stock Chart
From Jun 2023 to Jun 2024
