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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Scs Group Plc | LSE:SCS | London | Ordinary Share | GB00BRF0TJ56 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 270.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
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
Hot Features
Premium
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
(END) Dow Jones Newswires
October 04, 2016 02:00 ET (06:00 GMT)
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