TIDMSCS
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 GBP168.4m (2017: GBP165.9m)
-- Revenue up 1.8% to GBP160.7m (2017: GBP157.9m)
-- Like-for-like order intake up 2.2%
-- Two year like-for-like order intake up 5.3%
-- Gross profit increased GBP2.4m to GBP75.3m (2017: GBP72.9m)
-- EBITDA improved by GBP2.8m to GBP2.9m (2017: GBP0.1m)
-- Operating profit improved by GBP2.9m to GBP0.3m (2017 loss: GBP2.6m)
-- Earnings per share of 0.1p (2017 loss: 5.6p)
-- Strong cash inflow from operating activities of GBP18.2m (2017: GBP22.5m)
-- Strong balance sheet with cash of GBP51.8m (2017: GBP36.8m)
-- 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 GBP6.0m (2017: GBP5.4m)
-- 5 star "Excellent" rating maintained on Trustpilot
-- The Group's committed GBP12m 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 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 5000
Madeleine Seacombe 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 GBP165.9m to GBP168.4m, an increase of 1.5%, and gross profit
improved from GBP72.9m to GBP75.3m, an increase of GBP2.4m, or
3.3%.
Total administrative expenses decreased 1.1% from GBP67.2m to
GBP66.5m. This was largely due to a GBP1.4m reduction in marketing
expenditure to GBP15.2m, as the Group chose to alter the timing of
advertising. This saving was offset by a GBP0.8m 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 GBP108 (2017: GBP109). 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 GBP12, 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 GBP1,610 from GBP1,571 and to
GBP676 from GBP643 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 GBP1.8m (14.2%) to GBP11.0m (2017: GBP12.8m).
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 GBP6.0m (2017: GBP5.4m).
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 GBP0.7m of EBITDA in the period
(2017: loss of GBP0.5m).
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 26 weeks 52 weeks
ended ended ended
27 January 28 January 29 July
2018 2017 2017
GBPm GBPm GBPm
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 GBP2.5m (1.5%) to GBP168.4m (2017:
GBP165.9m) and is attributable to:
-- An increase in upholstered furniture sales in ScS stores of
2.0% to GBP130.1m (2017: GBP127.6m);
-- An increase in flooring sales in ScS stores of 5.7% to GBP21.3m (2017: GBP20.1m);
-- An increase in online sales of 11.3% to GBP6.0m (2017: GBP5.4m), and
-- A decrease in sales from the House of Fraser concession of
14.2% to GBP11.0m (2017: GBP12.8m).
The five new stores contributed an additional GBP4.3m 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 GBP160.7m (2017: GBP157.9m). 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 GBP2.4m, 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 GBP66.4m,
compared to GBP67.2m 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 GBP0.8m was driven by a GBP1.4m
decrease in marketing expenditure, partly offset by a GBP0.8m
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 GBP0.3m for the
first half of the financial year, compared to an operating loss of
GBP2.6m for the same period last year. This improvement is mainly
driven by the increased contribution from new stores of GBP1.0m and
a reduction in marketing expenditure of GBP1.4m.
EBITDA
An analysis of EBITDA is as follows:
26 weeks 26 weeks 52 weeks
ended ended ended
27 January 28 January 29 July
2018 2017 2017
----------- ----------- --------
GBPm GBPm GBPm
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 26 weeks 52 weeks
ended ended ended
27 January 28 January 29 July
2018 2017 2017
----------- ----------- --------
GBPm GBPm GBPm
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 GBP0.8m on the new Chelmsford store and new Basildon
distribution centre following the consolidation of the Thetford and
West Thurrock distribution centres (2017: GBP3.0m 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
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
27 January 28 January 29 July
Note 2018 2017 2017
---- ----------- ----------- -----------
GBP'000 GBP'000 GBP'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
Capital
Share Share Redemption Treasury Shares Retained
capital premium Reserve Merger Reserve earnings Total equity
-------- --------- ----------- -------------- ----------------- --------- ----------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
Unaudited Unaudited Audited
as at as at as at
27 January 28 January 29 July
Note 2018 2017 2017
------ ----------- ----------- --------
GBP'000 GBP'000 GBP'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 Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
27 January 28 January 29 July
2018 2017 2017
Cash flows from operating
activities GBP'000 GBP'000 GBP'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 GBP12m 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 (GBP178,418,000 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 26 weeks 52 weeks
ended ended ended
27 January 28 January 29 July
2018 2017 2017
----------- ----------- --------
GBP'000 GBP'000 GBP'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 GBP2.6m 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 GBP14.6m 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 26 weeks 52 weeks
ended ended ended
27 January 28 January 29 July
2018 2017 2017
----------- ----------- --------
GBP'000 GBP'000 GBP'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 As at As at
27 January 28 January 29 July
2018 2017 2017
----------- ----------- ---------
GBP'000 GBP'000 GBP'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
GBP2.1m 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
(END) Dow Jones Newswires
March 21, 2018 03:00 ET (07:00 GMT)
Scs (LSE:SCS)
Historical Stock Chart
From Apr 2024 to May 2024
Scs (LSE:SCS)
Historical Stock Chart
From May 2023 to May 2024