ScS Upholstery PLC - Final Results
December 01 1998 - 2:40AM
UK Regulatory
RNS No 3637v
SCS UPHOLSTERY PLC
1st December 1998
ScS Upholstery plc
RECORD RESULTS - PRE-TAX PROFIT UP 30%
ScS Upholstery plc, the specialist retailer of fabric and leather
upholstered furniture, is delighted to announce preliminary results
for the year ended 30 September 1998.
Highlight
* Pre-tax profits up 30% at #4.1 million after excluding the effects
of exceptional flotation costs and non-recurring items in 1997
* Turnover up 23% to #29.3 million
* EPS 8.91 pence excluding exceptional flotation costs
* Maiden full year dividend of 3.5 pence
* Net cash of #5.6 million
* Four new stores opened in the year, all now trading profitably
Chairman, Tony McCann commented:
"This has been a year of achievement for the Group with the
successful flotation on the Official List of the London Stock
Exchange in December 1997 followed by an excellent set of first
year results. Whilst trading conditions in the market have been
generally unhelpful, sales per square foot, margins and profits
have all increased during the year. In addition, the new store
opening programme has exceeded the projections stated in the
prospectus."
Contacts:
ScS Upholstery plc 0191 514 2209
Mike Browne, Chief Executive
or
Buchanan Communications 0171 466 5000
Richard Oldworth/Tom Gadsby
Chairman's Statement
I am delighted to report that the year ended 30 September 1998 has
been a year of achievement for the Group with a successful
flotation on the Official List of the London Stock Exchange in
December 1997 followed by an excellent set of first year results.
Results
Group pre tax profits, before charging #0.75 million for
exceptional flotation costs were #4.1 million. Pre tax profits
of the preceding year, before non recurring and exceptional item,
were #3.2 million, as shown in the placing document. Therefore,
the Group's underlying pre tax profit increased during the year by
30%. Turnover in the year increased 23% on the previous year to
#29 million with sales per square foot up 9% to #190. Earnings for
the year were 6.55 pence per ordinary share which is equivalent
to 8.91 pence excluding exceptional flotation costs.
The Board is recommending a final dividend of 2.4 pence per share
which, if approved, would make a total of 3.5 pence per share for
the year.
Whilst trading conditions in the market have been generally
unhelpful, sales per square foot, margins and profits have all
increased during the year. In addition, the new store opening
programme has exceeded the projections stated in the prospectus.
Turnover
New branches and the established new format branches contributed
to overall sales growth in the period. Like for like sales in
the financial year (ie. branches open for twelve months in both
this and the previous financial years) were overall 7% greater
than last year. We are particularly pleased that our
"new format" branches which showed a 20% increase in like for
like sales in the period over the previous financial year.
Particularly noteworthy was the favourable impact of the relocation
and re-launch of our premier store at Metro Retail Park, Metro
Centre, Gateshead. Furthermore, the timing of this re-launch
corresponded with the period leading up to the flotation of the
Northern Rock Building Society and the subsequent windfalls.
In comparison, our "old format" branches in the same period
recorded a small decline of 5%, whilst continuing to trade
profitably in the period.
Profitability
The Group's management style of "managing for profit" has resulted
in increased profits and margins during the year. Gross profit
for the year increased by 28% which was achieved by increased
volume and an increase of 1.5 percentage points in gross profit
margin over the previous financial year. Operating margin
before exceptional flotation costs was 13.1% for the year.
"Managing for profit" means that every element of the business
is continually scrutinised to increase value for customers and
improve returns to the business. An important outcome of this
approach, during the financial year, has been that the Group
has continued to move the balance of its promotional offering
away from including long term interest free loan finance (i.e.
with repayment periods more than twelve months). As a result,
long term interest free loan finance represented only 5% of
sales in the financial year.
Cash Flow
Cash flow remained positive for the year despite capital
expenditure of #1.7 million. Net cash and liquid resources
during the period increased by #1.4 million to stand at #5.6
million at the end of the financial year and consequently the
Group is particularly well placed to take advantage of any
opportunities which may arise to accelerate the rate of expansion.
The case of Primback versus Commissioners of Customs & Excise
remains unresolved. The appeal by Customs & Excise, which was
originally scheduled to be heard by the House of Lords, has now
been moved to the European Court of Justice. In October 1998,
following a significant increase in the Custom & Excise default
rate of interest, the Group repaid #0.96 million of previously
reclaimed VAT and deferred payment of its outstanding claims
pending the result of the outstanding appeal. This action was
taken after receiving appropriate advice and on the basis that
the Group's overall claim would not be compromised. No credit
has been taken in the profit and loss account for any possible
benefit arising from this case, pending final resolution of
the appeal.
Store Development
The Group opened four new stores during the financial year,
which was one more than the projection stated in the prospectus.
Whilst these new stores are trading in line with expectations
their contribution to profits in 1997/98 financial year was very
small. The Group plans to open a further four/five stores in
1998/99 financial year. The Group remains committed to its
expansion plan to build ScS into a major national specialist
furniture retailer within the medium term.
People
Developing and maintaining our customer driven and profit oriented
culture in every part of the business is a key objective of the
management team.
The Group's strategy of focussing expansion in the Midlands has
improved our opportunity to recruit high calibre staff in that
region. The frequency and spread of advertising arising from our
expanding business has raised the ScS profile considerably.
The company is no longer an unknown newcomer and increasingly seen
as an established and highly professional retail business worthy
of the attention of high calibre ambitious personnel. We continue
to believe that the quality of our staff throughout the Group
provides our business with a competitive advantage in the sector.
On behalf of the Board I would like to thank every one of our staff
for their dedication and hard work which has produced another year
of excellent results.
Outlook
The style and history of the Group demonstrates that we have been
able to operate successfully in both favourable and unfavourable
market conditions. Despite continuing unhelpful market trading
conditions the Group shall continue to strive to improve margins
and take all opportunities to open more "new format" stores. As
a result your Board is confident that the Group will continue to
make progress during the remainder of the current year.
Tony McCann
Chairman
Group profit and loss account (unaudited)
for the year ended 30 September 1998
1998 1997
#'000 #'000
TURNOVER 29,255 23,691
Cost of sales 15,797 13,149
______ ______
GROSS PROFIT 13,458 10,542
Distribution costs 1,307 922
Administrative expenses 9,071 7,277
OPERATING PROFIT BEFORE
EXCEPTIONAL ITEM 3,830 2,343
Exceptional item (750) (139)
OPERATING PROFIT 3,080 2,204
Operating profit before
non-recurring and exceptional item 3,830 3,060
Non-recurring and exceptional item (750) (856)
______ ______
Operating profit 3,080 2,204
Interest receivable and similar
income 315 137
______ ______
3,395 2,341
Interest payable and similar
charges 32 42
______ ______
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 3,363 2,299
Tax on profit on ordinary
activities 1,280 749
______ ______
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 2,083 1,550
Dividends (including non
equity dividends) 1,331 4
______ ______
RETAINED PROFIT FOR THE
FINANCIAL YEAR 752 1,546
______ ______
Earnings per ordinary share 6.55p 4.46p
______ ______
Earnings per ordinary share
before exceptional item 8.91p 4.86p
______ ______
Earnings per ordinary share
before non-recurring and
exceptional item 8.91p 6.21p
______ ______
There were no recognised gains or losses other than the profit
on ordinary activities after taxation for the year.
The exceptional item comprises the costs of flotation.
Non-recurring and exceptional item comprise the costs of flotation
and in 1997 these also comprise "excess" directors' remuneration
as disclosed in the placing document.
ScS Group Balance Sheet (unaudited)
At 30 September 1998
1998 1997
#'000 #'000
FIXED ASSETS
Tangible assets 5,001 3,869
CURRENT ASSETS
Stocks 2,196 1,637
Debtors 2,124 2,431
Cash at bank and in hand 5,923 4,915
______ ______
10,243 8,983
CREDITORS: amounts falling
due within one year 9,829 8,108
______ ______
NET CURRENT ASSETS 414 875
______ ______
TOTAL ASSETS LESS CURRENT
LIABILITIES 5,415 4,744
CREDITORS: amounts falling due
after more than one year 432 530
PROVISIONS FOR LIABILITIES
AND CHARGES
Deferred taxation 71 121
______ ______
NET ASSETS 4,912 4,093
______ ______
CAPITAL AND RESERVES
Called up share capital 318 250
Capital redemption reserve 195 120
Profit and loss account 4,399 3,723
______ ______
4,912 4,093
______ ______
SHAREHOLDERS' FUNDS
Equity 4,912 4,018
Non-equity - 75
______ ______
4,912 4,093
______ ______
Group Statement of Cash Flows (unaudited)
for the year ended 30 September 1998
1998 1997
#'000 #'000
NET CASH INFLOW FROM
OPERATING ACTIVITIES 4,144 4,725
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 350 159
Interest paid (33) (36)
Dividends paid to preference
shareholders (4) (10)
_____ _____
NET CASH INFLOW FROM RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE 313 113
TAXATION
Corporation tax paid (including
advance corporation tax) (797) (578)
CAPITAL EXPENDITURE
Payments to acquire tangible
fixed assets (1,737) (1,145)
EQUITY DIVIDENDS PAID (425) -
_____ _____
NET CASH INFLOW BEFORE USE OF
LIQUID RESOURCES AND FINANCING 1,498 3,115
MANAGEMENT OF LIQUID RESOURCES
Net investments in short
term deposits (783) (3,275)
FINANCING
Repurchase of ordinary shares - (25)
Repurchase of preference shares (75) (95)
Repayment of bank loan (125) (125)
_____ _____
NET CASH OUTFLOW FROM FINANCING (200) (245)
_____ _____
INCREASE/(DECREASE) IN CASH IN
THE YEAR 515 (405)
_____ _____
END
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