Regulatory Story
Go to market news section View chart   Print
RNS
ScS Group PLC  -  SCS   

Interim Results

Released 07:00 21-Mar-2018

RNS Number : 3530I
ScS Group PLC
21 March 2018
 

For Immediate Release     

21 March 2018

 

 

 

ScS Group plc

("ScS" or the "Group")

 

Interim results for the 26 weeks ended 27 January 2018

 

MAINTAINING PROFITABLE GROWTH IN A CHALLENGING RETAIL ENVIRONMENT

 

ScS, one of the UK's largest retailers of upholstered furniture and floorings, is pleased to announce its interim results for the 26 weeks ended 27 January 2018.

 

Financial Highlights:

 

·      Gross sales up 1.5% to £168.4m (2017: £165.9m)

·      Revenue up 1.8% to £160.7m (2017: £157.9m)

·      Like-for-like order intake up 2.2%

·      Two year like-for-like order intake up 5.3%

·      Gross profit increased £2.4m to £75.3m (2017: £72.9m)

·      EBITDA improved by £2.8m to £2.9m (2017: £0.1m)

·      Operating profit improved by £2.9m to £0.3m (2017 loss: £2.6m)

·      Earnings per share of 0.1p (2017 loss: 5.6p)

·      Strong cash inflow from operating activities of £18.2m (2017: £22.5m)

·      Strong balance sheet with cash of £51.8m (2017: £36.8m)

·      Interim dividend increased 8.2% to 5.30p per share (2017: 4.90p per share)

 

Operational Highlights:

 

·      New store opened in Chelmsford on Boxing Day 2017. The Group now trades from 101 ScS stores and operates 27 House of Fraser concessions

·      Further development of the ScS e-commerce platform with online gross sales up 11.3% to £6.0m (2017: £5.4m)

·      5 star "Excellent" rating maintained on Trustpilot

·      The Group's committed £12m revolving credit facility extended to November 2021

 

Current trading and outlook:

 

·      Sales order intake up 0.9% on a like-for-like basis for the 33 weeks to 17 March 2018

·      Year to date trading in line with the Board's expectations

 

David Knight, Chief Executive Officer of ScS, commented:

 

"For the 26 weeks ended 27 January 2018, the Group achieved like-for-like order intake growth of 2.2% and two-year like-for-like order intake growth of 5.3%. Our focus on providing excellent choice, value and quality for our customers has proven successful. The Board is confident that its strategy is proving successful, and the business continues to strengthen, enabling it to maximise opportunities as they arise and continue to grow market share.

 

For the 33 weeks ended 17 March 2018, like-for-like order intake growth was 0.9%. Trading in the last seven weeks has softened, with the like-for-like order intake falling 5.3%. This was principally due to the adverse weather conditions experienced in the week commencing 25 February 2018. The remaining six weeks saw like-for-like order intake in line with the same period last year.

 

We expect that the retail market will continue to remain challenging in the short to medium term, and we are conscious that the Group still faces the key Easter and May bank holiday trading periods. Despite the challenging trading conditions, the Group continues to deliver profitable growth and the Board is pleased with the Group's year to date trading, which is in line with its expectations."

 

Enquiries:

 

ScS Group PLC

David Knight, Chief Executive Officer

Chris Muir, Chief Financial Officer

 

c/o Buchanan +44 (0)20 7466 5000

 

 

Buchanan

Richard Oldworth

Madeleine Seacombe

 

Tel: +44 (0)20 7466 5000

scs@buchanan.uk.com

 

Investor and Analyst Meeting

A meeting for analysts will be held at the office of Buchanan, 107 Cheapside, London, EC2V 6DN on 21 March 2018 commencing at 9.30am. ScS Group plc's Interim Results 2018 are available at www.scsplc.co.uk

 

An audio webcast will be available on:

http://vm.buchanan.uk.com/2018/scs210318/registration.htm

 

Notes to Editors

ScS is one of the UK's largest retailers of upholstered furniture and floorings, promoting itself as the "Sofa Carpet Specialist". The Group seeks to offer the perfect combination of great value and choice through a wide range of sofas, flooring and dining and living room furniture, coupled with an excellent customer experience. 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 over 100 stores nationwide. 

 

With more than 100 years' retail experience, the Group'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 trademarks and a range of branded products which are sold under registered trademarks 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 Group's flooring business includes carpets, as well as laminate and vinyl flooring. Across the UK, the group employs nearly 2,000 people with stores located throughout the UK as well as nine distribution centres.

 

In 2014, ScS began to operate the furniture and carpet concession ranges for House of Fraser. ScS currently operates in 27 House of Fraser stores across the UK.

 

The Group is rated 5-star by its customers on independent customer review site Trustpilot for in-store service, online shopping experience, delivery and product reviews.



 

BUSINESS REVIEW

 

The Group has continued to deliver against its strategy for growth, with further progress seen in the 26 weeks ended 27 January 2018, resulting in the Group trading in line with the Board's expectations.

 

Performance

 

The Group achieved like-for-like order intake growth of 2.2% for the first half of the financial year, and two year like-for-like order intake growth of 5.3%. Trading over the key Christmas and January sales period was in line with the Board's expectations.

 

Following the opening of four new stores last year, the Group has further increased its store network with a new store in Chelmsford opening on Boxing Day 2017. The Group now trades from 101 ScS stores and operates 27 House of Fraser concessions.

 

Together with order intake growth, the business has seen increases in revenue and gross profit, with continuing improvements in efficiencies and cost management resulting in a reduction in operating costs as a percentage of revenue. Total gross sales grew from £165.9m to £168.4m, an increase of 1.5%, and gross profit improved from £72.9m to £75.3m, an increase of £2.4m, or 3.3%.

 

Total administrative expenses decreased 1.1% from £67.2m to £66.5m. This was largely due to a £1.4m reduction in marketing expenditure to £15.2m, as the Group chose to alter the timing of advertising. This saving was offset by a £0.8m increase in operating expenses relating to new stores opened since September 2016.

 

Financial and strategic objectives

 

The Company continues to pursue the following objectives:

 

·      Deliver profitable and sustainable growth;

·      Improve the quality of earnings;

·      Improve business resilience through the economic cycle, and

·      Increase shareholder returns.

 

These objectives are underpinned by the pursuit of our strategy for growth, which includes four key areas:

 

Area 1 - Increase sales densities

 

Sales density per square foot at our ScS stores for the first half of the financial year was £108 (2017: £109). This slight fall is a consequence of the decrease in orders in the final quarter of the prior year, which reduced deliveries in the period. However, this figure is £12, or 12.5%, higher than the same period two years ago.

 

We continue to see progress in the key areas we are targeting for improvement:

·      Increased conversion, being the proportion of customers who purchase a product after entering a store;

·      An increase in the year-to-date furniture and flooring average order values, which rose to £1,610 from £1,571 and to £676 from £643 respectively;

·      Growth of our flooring offering, with sales increasing 5.7% in the period;

·      The re-launch of our dining and living furniture range;

·      The continued investment in our online capability, resulting in an 11.3% increase in sales, together with the indirect benefit of improving the quality of footfall in to stores, and

·      Improving our customer experience, where we continue to achieve a high number of "Excellent" Trustpilot ratings across our branch network. As a Group, we have now received over 93,000 reviews, averaging the maximum of 5-stars.

 

 

Area 2 - Maximise the opportunity with House of Fraser customers

 

The Group's 27 House of Fraser concessions had a challenging start to the year, with like-for-like order intake down 6.4% after 16 weeks. The slower start to the year, coupled with a significantly lower opening order book, due to a difficult final quarter of trading at the end of last year, resulted in a gross sales decrease of £1.8m (14.2%) to £11.0m (2017: £12.8m).

 

The Winter sale period did, however, show a considerable improvement, with the like-for-like orders decline for the 26 weeks to 27 January 2018 reducing to 0.4%, with two-year like-for-like orders up 13.2%.

 

The partnership with House of Fraser continues to allow the Group to access a wider demographic, targeting those customers who prefer to shop in department stores and town centres. The relationship continues to develop, and together with an ongoing review of the ranges offered, investment in advertising and in-store refurbishment, the Group remains committed to maximising the opportunity that the concessions provide.

 

Area 3 - Optimise online presence

 

Online gross sales increased 11.3% to £6.0m (2017: £5.4m). The growth in our online business is a consequence of the Group's continued efforts to further improve its online offering and digital marketing, which has again resulted in increases to website visitor count.

 

Continued investment into our online capability has resulted in the benefit of increased direct sales through our website and the indirect benefit of improving the quality of the footfall. Increasingly, we are finding that our customers enter our stores having already carried out online research. The Group remains committed to further improvements online.

 

Area 4 - Achieve strong financial returns from new store openings

 

On Boxing Day, the Group opened a new store in Chelmsford. This follows the addition of four new stores last year and brings our ScS store network to 101 locations. The new stores opened since September 2016 have generated £0.7m of EBITDA in the period (2017: loss of £0.5m).

 

Almost all of the 101 stores across the UK are in modern out of town retail parks, usually alongside competing furniture and floorcoverings retailers.

 

Current trading and outlook

For the 26 weeks ended 27 January 2018, the Group achieved like-for-like order intake growth of 2.2% and two-year like-for-like order intake growth of 5.3%. Our focus on providing excellent choice, value and quality for our customers has proven successful. The Board is confident that its strategy is proving successful, and the business continues to strengthen, enabling it to maximise opportunities as they arise and continue to grow market share.

 

For the 33 weeks ended 17 March 2018, like-for-like order intake growth was 0.9%. Trading in the last seven weeks has softened, with the like-for-like order intake falling 5.3%. This was principally due to the adverse weather conditions experienced in the week commencing 25 February 2018. The remaining six weeks saw like-for-like order intake in line with the same period last year.

 

We expect that the retail market will continue to remain challenging in the short to medium term, and we are conscious that the Group still faces the key Easter and May bank holiday trading periods. Despite the challenging trading conditions, the Group continues to deliver profitable growth and the Board is pleased with the Group's year to date trading, which is in line with its expectations.

FINANCIAL REVIEW

 


26 weeks ended

27 January 2018

26 weeks ended

28 January 2017

52 weeks ended 

29 July 2017

 

 


£m

£m

£m

 

 

Gross sales

168.4

165.9

349.5

 

 

Revenue

160.7

157.9

333.0

 

 

Gross profit

75.3

72.9

153.7

 

 

Distribution costs

(8.6)

(8.3)

(16.5)

 

 

Administration expenses

(66.4)

(67.2)

(125.2)

 

 

Total operating expenses

(75.0)

(75.5)

(141.7)

 

 

Operating profit/(loss)

0.3

(2.6)

12.0

 

 

Net finance costs

(0.1)

-

-

 

 

Profit/(loss) before tax

0.2

(2.6)

12.0

 

 

Tax

(0.2)

0.4

(2.6)

 

 

Profit/(loss) after tax

-

(2.2)

9.4

 

 

 

 

 

 

 

 

EBITDA

2.9

0.1

17.4

 

 

 




 

Gross sales and revenue

 

 

 

 

Gross sales increased by £2.5m (1.5%) to £168.4m (2017: £165.9m) and is attributable to:

·      An increase in upholstered furniture sales in ScS stores of 2.0% to £130.1m (2017: £127.6m);

·      An increase in flooring sales in ScS stores of 5.7% to £21.3m (2017: £20.1m);

·      An increase in online sales of 11.3% to £6.0m (2017: £5.4m), and

·      A decrease in sales from the House of Fraser concession of 14.2% to £11.0m (2017: £12.8m).

The five new stores contributed an additional £4.3m to gross sales in the first half of the year. The decrease in gross sales for existing ScS stores was due to a reduction in the opening order book, following the trading experienced at the end of the prior year. Gross sales in the House of Fraser concessions reduced due to the combination of a lower opening order book and weaker trading in the first half of the financial year.

Revenue, which represents gross sales less charges relating to interest free credit sales (see note 5 - Segmental Information), increased by 1.8% to £160.7m (2017: £157.9m). This was driven mainly by increased volume, but also partly due to work undertaken to reduce the cost of interest free credit provided by the Group's finance houses in the second half of the prior year.

Gross profit

 

The gross profit increase of £2.4m, or 3.3%, has been affected both by the increases in the volume noted above, and by increased margin achieved in the first half of the financial year.

 

Gross margin (gross profit as a percentage of gross sales) increased to 44.7% (2017: 43.9%). An element of this is due to the reduction in the cost of interest free credit provided by the Group's finance houses, coupled with higher margin product mix sold in the run up to the Winter sale. However, the popularity of strong selling customer-enticing 'value' models and the highly competitive trading environment, has seen this margin reduce in line with those historically achieved in the last three months. Consequently, the Group expects full year margins to be in line with the prior year.



 

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 nine distribution centres, as well as costs of third party delivery services contracted to support peak delivery periods. Distribution costs expressed as a percentage of revenue for the period were 5.3%, in line with the prior period.

 

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, 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 expenses for the period totalled £66.4m, compared to £67.2m in the prior period. Administrative expenses as a percentage of revenue were 41.4%, compared to 42.6% in the prior period.

 

The reduction in expenses of £0.8m was driven by a £1.4m decrease in marketing expenditure, partly offset by a £0.8m increase in costs relating to the full effect of the additional new stores opened since September 2016.

Operating profit

The Group is reporting an operating profit of £0.3m for the first half of the financial year, compared to an operating loss of £2.6m for the same period last year. This improvement is mainly driven by the increased contribution from new stores of £1.0m and a reduction in marketing expenditure of £1.4m.

EBITDA

 

An analysis of EBITDA is as follows:



26 weeks ended

27 January 2018

26 weeks ended

28 January 2017

52 weeks ended

29 July 2017

£m

£m

£m

Operating profit/(loss)

0.3

(2.6)

12.0

Depreciation

2.2

2.3

4.8

Amortisation

0.4

0.4

0.6

EBITDA

2.9

0.1

17.4

 


 

 

 

 

Until last year, EBITDA had historically been negative in the first half of the financial year, reflecting the seasonal nature of our business, with higher revenue and lower media costs resulting in higher profits occurring in the second half.

 

The year on year improvement reflects the growth in EBITDA provided by the new stores, together with the reduced marketing expenditure.



 

Taxation

 

The tax charge is higher than if the standard rate of corporation tax had been applied, mainly due to charges not deductible for tax purposes, principally the share based payment charge and depreciation on capital expenditure that does not qualify for capital allowances.

 

Cash 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 seven 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:



26 weeks ended

27 January 2018

26 weeks ended

28 January 2017

52 weeks ended 

29 July 2017

£m

£m

£m

Cash generated from operating activities

19.7

22.3

30.1

Net capital expenditure

(1.5)

(4.1)

(5.2)

Net taxation and interest payments

(1.5)

0.2

(1.3)

Free cash flow

16.7

18.4

23.6

Dividends

(3.9)

(3.9)

(5.9)

Purchase of own shares

(1.1)

-

-

Net cash generated

11.7

14.5

17.7

 


 

 

 

Cash generated from operating activities reduced in comparison to the same period last year due to a decrease in the working capital inflow caused by timing of payments to suppliers.

 

Net capital expenditure in the first half of the financial year includes £0.8m on the new Chelmsford store and new Basildon distribution centre following the consolidation of the Thetford and West Thurrock distribution centres (2017: £3.0m on four new stores).

 

Dividend

 

The Group has continued to generate strong cash flows, deliver growth and build a balance sheet with increasing resilience. The Board is confident the Group can build on its strong performance to date and create sustainable value for its shareholders. As a consequence, the Board is pleased to announce a further increase in the interim dividend, to 5.30p per ordinary share (2017: 4.90p). This reflects an anticipated one third and two thirds split between the interim and final dividend respectively. Going forward, the Group will target earnings per share cover in the range of 1.25x to 2.00x, and cash cover in the range of 1.75x to 2.25x through the economic cycle.

 

This dividend will be payable on 10 May 2018 to shareholders on the register on 20 April 2018. The ex-dividend date is 19 April 2018.

 

Principal risks and uncertainties

 

The principal risks and uncertainties for the remainder of the financial year are unchanged from those detailed on pages 28 to 30 of the Annual Report 2017 dated 2 October 2017, available from the ScS Group plc website: www.scsplc.co.uk.

 

David Knight

Chief Executive Officer

21 March 2018

 



STATEMENT OF DIRECTORS RESPONSIBILITIES


The directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

·      an indication of important events that have occurred during the first 26 weeks and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining 26 weeks of the financial year; and

·      material related-party transactions in the first 26 weeks and any material changes in the related-party transactions described in the last annual report.

The directors of ScS Group plc are listed on pages 36 and 37 of the Annual Report 2017 dated 2 October 2017.

 

A list of current directors is maintained on the ScS Group plc website: www.scsplc.co.uk.

 

By order of the Board

 

Chris Muir

Company Secretary

21 March 2018

 



Independent review report to ScS Group plc

Report on the condensed consolidated interim financial statements

 

Our conclusion

We have reviewed ScS Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the Interim Results of ScS Group plc for the 26 week period ended 27 January 2018. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

·      the condensed consolidated balance sheet as at 27 January 2018;

·      the condensed consolidated statement of comprehensive income for the period then ended;

·      the condensed consolidated cash flow statement for the period then ended;

·      the condensed consolidated statement of changes in equity for the period then ended; and

·      the explanatory notes to the condensed consolidated financial statements.

The interim financial statements included in the Interim Results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Interim Results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the Interim Results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the Interim Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

Newcastle upon Tyne

21 March 2018

 

a)    The maintenance and integrity of the ScS Group plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.

b)    Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.





ScS Group plc

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                                                                               


Note

Unaudited

26 weeks ended

27 January 2018

Unaudited

26 weeks ended

28 January 2017

Audited

52 weeks ended 29 July 2017



£'000

£'000

£'000

Gross Sales

5

168,359

165,921

349,502

Revenue

5

160,672

157,872

332,965

Cost of sales 

 

(85,349)

(84,976)

(179,224)

Gross profit

 

75,323

72,896

153,741

 

 

 

 

 

Distribution costs

 

(8,557)

(8,318)

(16,503)

Administrative expenses

 

(66,466)

(67,227)

(125,249)

Operating profit/(loss)

 

300

(2,649)

11,989

 

 

 

 

 

Finance costs

 

(188)

(48)

(96)

Finance income

 

80

24

70

Net finance costs

 

(108)

(24)

(26)

 

 

 

 

 

Profit/(loss) before taxation

 

192

(2,673)

11,963

Taxation

9

(151)

445

(2,561)

Profit/(loss) for the period

 

41

(2,228)

9,402

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the parent

 

41

(2,228)

9,402

Profit/(loss) attributable and total comprehensive income for the period

 

41

(2,228)

9,402

Earnings/(loss) per share (expressed in pence per share):

Basic earnings/(loss) per share

10

0.1p

(5.6)p

23.5p

Diluted earnings/(loss) per share

10

0.1p

(5.6)p

22.9p

 

There are no other sources of comprehensive income.

 

 



ScS Group plc

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Attributable to owners of the parent



Share
capital

 

Share
premium

Capital

Redemption
Reserve

Merger Reserve

 

Treasury Shares

Retained
earnings

 

Total equity



£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

Balance at 31 July 2016

 

40

16

13

25,511

-

4,036

29,616

 

 

 

 

 

 

 

 

 

Loss for the period

 

-

-

-

-

-

(2,228)

(2,228)

Share-based payment expense

 

-

-

-

-

-

155

155

Dividend paid

 

-

-

-

-

-

(3,933)

(3,933)

Balance at 28 January 2017

 

40

16

13

25,511

-

(1,970)

23,610

 

 

 

 

 

 

 

 

Balance at 29 January 2017

 

40

16

13

25,511

-

(1,970)

23,610

 

 

 

 

 

 

 

 

 

Profit for the period

 

-

-

-

-

-

11,630

11,630

Share-based payment expense

 

-

-

-

-

-

(1)

(1)

Dividend paid

 

-

-

-

-

-

(1,960)

(1,960)

Balance at 29 July 2017

 

40

 

16

13

25,511

-

7,699

33,279

 

 

 

 

 

 

 

 

 

Balance at 30 July 2017

 

40

16

13

25,511

-

7,699

33,279

 

 

 

 

 

 

 

 

 

Profit for the period

 

-

-

-

-

-

41

41

Share-based payment expense

 

-

-

-

-

-

415

415

Treasury shares (note 13)

 

-

-

-

-

(661)

(447)

(1,108)

Dividend paid

 

-

-

-

-

-

(3,921)

(3,921)

Balance at 27 January 2018

 

40

16

13

 

25,511

 

(661)

3,787

28,706

 

 



ScS Group plc

CONDENSED CONSOLIDATED BALANCE SHEET


Note

Unaudited

 as at

27 January 2018

Unaudited

as at

28 January 2017

Audited

as at

29 July 2017



£'000

£'000

£'000

Non-current assets





Intangible assets


808

968

1,077

Property, plant and equipment


22,906

25,116

23,878

Total non-current assets


23,714

26,084

24,955






Current assets





Inventories


23,423

23,791

22,084

Trade and other receivables


9,537

9,823

9,699

Cash and cash equivalents


51,840

36,834

40,126

Total current assets


84,800

70,448

71,909

Total assets


108,514

96,532

96,864






Current liabilities





Current income tax liabilities


1,091

357

2,121

Trade and other payables

11

70,972

64,794

53,794

Total current liabilities


72,063

65,151

55,915






Non-current liabilities





Trade and other payables


7,328

7,032

7,140

Deferred tax liability


417

739

530

Total non-current liabilities


7,745

7,771

7,670

Total liabilities


79,808

72,922

63,585






Capital and reserves attributable to the owners of the parent





Share capital


40

40

40

Share premium


16

16

16

Capital redemption reserve


13

13

13

Merger reserve


25,511

25,511

25,511

Treasury shares

13

(661)

-

-

Retained earnings


3,787

(1,970)

7,699

Equity attributable to the owners of the parent


28,706

23,610

33,279

Total equity


28,706

23,610

33,279

Total equity and liabilities


108,514

96,532

96,864

 



ScS Group plc

CONDENSED CONSOLIDATED CASH FLOW STATEMENT



Unaudited

26 weeks ended

27 January 2018

Unaudited

26 weeks ended

28 January 2017

Audited

52 weeks ended

29 July 2017

Cash flows from operating activities


£'000

£'000

£'000

Profit/(loss) before taxation

 

192

(2,673)

11,963

Adjustments for:

 

 

 

 

Depreciation of property plant and equipment

 

2,185

2,338

4,806

Amortisation of intangible assets

 

373

367

599

Share-based payments

 

415

155

154

Finance costs

 

187

48

96

Finance income

 

(80)

(24)

(70)

 

 

3,272

211

17,548

Changes in working capital:

 

 

 

 

(Increase)/decrease in inventories

 

(1,339)

(603)

1,104

Increase in trade and other receivables

 

161

(809)

(685)

Increase in trade and other payables

 

17,598

23,526

12,123

Cash generated from operating activities

 

19,692

22,325

30,090

Interest paid

 

(188)

(48)

(96)

Income taxes (paid)/received

 

(1,300)

230

(1,220)

Net cash flow generated from operating activities

 

18,204

22,507

28,774

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

(1,462)

(3,953)

(4,728)

Payments to acquire intangible assets

 

(79)

(190)

(476)

Interest received

 

80

24

70

Net cash outflow from investing activities


(1,461)

(4,119)

(5,134)

 


 

 

 

Cash flows from financing activities


 

 

 

Dividends paid

 

(3,921)

(3,933)

(5,893)

Purchase of own shares (note 13)

 

(1,108)

-

-

Net cash flow used in financing activities


(5,029)

(3,933)

(5,893)

 


 

 

 

Net increase in cash and cash equivalents


11,714

14,455

17,747

 


 

 

 

Cash and cash equivalents at beginning of period


40,126

22,379

22,379

 


 

 

 

Cash and cash equivalents at end of period


51,840

36,834

40,126




Notes to the unaudited condensed consolidated financial statements

 

1.             General information

ScS Group plc (the "Company") is 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 principal activity of the Company and its subsidiaries (the "Group") is the provision of upholstered furniture and flooring, trading under the name ScS.

 

The 2017 audited financial statements for the Group have been filed with Companies House.

 

2.             Basis of preparation

This interim report has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services Authority) and IAS 34 "Interim Financial Reporting" as adopted by the European Union. The financial reporting framework used is the same as that of the full annual financial statements of the Group, being the International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

The condensed consolidated financial statements for the 26 weeks ended 27 January 2018 should be read in conjunction with the Annual Report 2017 dated 2 October 2017 (the "Annual Report 2017").

 

The report of the auditors for the financial statements for the 52 weeks ended 29 July 2017, included in the Annual Report 2017, was unqualified, did not contain an emphasis of matter paragraph and did not include a statement under Section 498 of the Companies Act 2006.

 

The Group's interim condensed consolidated financial information is not audited and does not constitute statutory financial statements as defined in Section 434 of the Companies Act 2006.

 

These condensed interim financial statements were approved for issue on 21 March 2018.

 

3.             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 £12m revolving credit facility in place. The Group's forecasts and projections show that the Group has adequate resources to continue to operational existence for the foreseeable future. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of the approval of the Interim Results and did not identify any material uncertainties to the Group's ability to do so. The Group therefore continues to adopt the going concern basis in preparing its condensed interim financial statements.

 

4.             Accounting policies

The Group's principal accounting policies used in preparing this information are as stated in note 2 to the Consolidated Financial Statements on pages 72 to 75 of the Annual Report 2017. There has been no change to any accounting policy from the date of the Annual Report.

 

A number of new standards and interpretations and amendments to existing standards have been issued but are not yet effective nor adopted by the EU, including IFRS 15 'Revenue from Contracts with Customers', IFRS 9 'Financial Instruments' and IFRS 16 'Leases', and have not been applied in preparing these condensed interim financial statements. Of these, only IFRS 16 is expected to have a material impact to the Group.

 

IFRS 16 'Leases' will be effective for the year ending 25 July 2020 onwards and the impact on the financial statements will be significant. IFRS 16 requires lessees to recognise a lease liability reflecting future lease payments and a right-of-use asset for all lease contracts. Therefore, the substantial majority of the Group's operating lease commitments (£178,418,000 on an undiscounted basis as at the previous year end, 29 July 2017) would be brought on to the balance sheet. Depreciation of the right of use asset will be recognised in the income statement on a straight-line basis, with interest recognised on the lease liability. This will result in a change to the profile of the net charge taken to the income statement over the life of the lease. Depreciation and interest charges will replace the lease costs currently charged to the income statement and consequently there will be a significant adjustment to the quoted unadjusted Group EBITDA. There will be no impact on cash flows, although the presentation of the cash flow statement will change significantly. Management has begun to model and quantify the expected impact using the current lease portfolio and presented initial thoughts on the expected impact to the Board, however the impact will greatly depend on the facts and circumstances at the time of adoption and upon transition choices adopted. It is therefore not yet practicable to provide a reliable estimate of the financial impact on the Group's consolidated results.

 

5.             Segmental 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 main type of business generating revenue; the retail of upholstered furniture and flooring. All segment revenue, profit/(loss) before taxation, assets and liabilities are attributable to the principal activity of the Group and other related services. All revenues are generated in the United Kingdom. There have been no changes to the director's determination of segments since those disclosed in the Annual Report 2017.

 

Analysis of gross sales is as follows:

 


26 weeks ended

27 January 2018

26 weeks ended

28 January 2017

52 weeks ended

29 July 2017

£'000

£'000

£'000

Sale of goods

157,613

156,033

328,381

Associated warranties

10,746

9,888

21,121

Gross Sales

168,359

165,921

349,502

Less: costs of interest free credit

(7,687)

(8,049)

(16,537)

Revenue

160,672

157,872

332,965

 

6.             Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

The fair value of trade and other receivables is approximate to their carrying value. The fair value of financial liabilities approximates their carrying value due to short maturities.


In preparing these condensed interim financial statements, the more important judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the historical financial information in the Annual Report.

 

7.             Financial risk management

The Groups activities expose it to a variety of financial risks which include funding and liquidity risk, credit risk, interest rate risk and other price risk. The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements and they should be read in conjunction with the Annual Report 2017. There has been no change to the risk management procedures or the accounting policies from those included in the Annual Report 2017.

 

8.             Seasonality of operations

Due to the seasonal nature of this retail segment, higher revenues and operating profits are usually expected in the second half of the year than the first half. In the 26 weeks ended 28 January 2017, 47% of revenues accumulated in the first half of the year and an operating loss of £2.6m was incurred. In the second half of the 52 weeks ended 29 July 2017, 53% of total revenue was earned and an operating profit of £14.6m was generated.

 

 

9.             Taxation

The tax charge for the 26 weeks ended 27 January 2018 is based on an estimated effective tax rate for the period of 78.6% (26 weeks ended 28 January 2017: tax credit 16.6%; 52 weeks ended 29 July 2017: tax charge 21.4%). The tax charge is higher than if the standard rate of corporation tax had been applied, mainly due to charges not deductible for tax purposes, principally the share based payment charge and depreciation on capital expenditure that does not qualify for capital allowances.

 

10.          Earnings/(loss) per share


26 weeks ended

27 January 2018

26 weeks ended

28 January 2017

52 weeks ended

29 July 2017



£'000

£'000

£'000

Profit attributable to owners of the Company

41

(2,228)

9,402

 

Weighted average number of shares in issue for the purposes of basic earnings per share


 40,009,109

 40,009,109

40,009,109

 


 

 

 

Effect of dilutive potential Ordinary shares:

 

 

 

- share options

1,430,667

-

1,085,096

Weighted average number of Ordinary shares for the purpose of diluted earnings per share

 41,439,776

 40,009,109

 41,094,205

 


 

 

 

Basic earnings/(loss) per share

0.1p

(5.6)p

23.5p

Diluted earnings/(loss) per share

0.1p

(5.6)p

22.9p

 

A total of 1,440,014 potential ordinary shares have not been included within the calculation of diluted earnings per share for the 26 weeks ended 28 January 2017 as they are antidilutive.

 

11.          Trade and other payables current

                               


As at

 27 January 2018

As at

28 January 2017

As at

29 July 2017



£'000

£'000

£'000

Trade payables

 

26,181

24,315

29,142

Payments received on account

 

24,935

22,785

11,506

Other tax and social security payable

 

7,853

7,401

4,775

Accruals

 

12,003

10,293

8,371

 

 

70,972

64,794

53,794

 

The fair value of financial liabilities approximates their carrying value due to short maturities. Financial liabilities are denominated in pounds sterling.

 

12.          Dividend

                The Board has declared an interim dividend of 5.30p (2017: 4.90p) per share. It will be paid on 10 May 2018 to shareholders on the register on 20 April 2018. The interim dividend, amounting to £2.1m has not been recognised as a liability in this interim financial information. It will be recognised in shareholders' equity in the year to 28 July 2018.

 

13.          Treasury shares

                During the period the Group's Employee Benefit Trust purchased 517,136 ordinary shares of 0.1 pence each in the Group at a price of 212.5 pence per Ordinary Share for the purposes of satisfying management share incentive awards granted at the time of the IPO, which vested on 21 January 2018. As at 27 January 2018, 208,570 of these shares had been used to satisfy awards, with the remainder held as treasury shares.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR PGUBUWUPRGMU
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Interim Results - RNS