TIDMSCS
RNS Number : 3260S
ScS Group PLC
16 March 2021
For immediate release 16 March 2021
ScS Group plc
("ScS" or the "Group")
Interim results for the 26 weeks ended 23 January 2021
STRONG H1 PERFORMANCE; WELL POSITIONED FOR STORES REOPENING
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 23 January 2021.
Financial highlights:
-- Gross sales* increased 13.9% to GBP182.3m (2020: GBP160.1m)
-- Revenue up 14.4% to GBP173.9m (2020: GBP152.0m)
-- Gross profit increased 16.8% to GBP83.7m (2020: GBP71.7m)
-- Gross margin improved to 45.9% (2020: 44.8%)
-- Operating profit of GBP19.8m (2020: GBP1.2m)
-- Profit before tax of GBP17.7m (2020: loss of GBP0.6m)
-- Earnings per share of 37.5p (2020: loss of 1.4p)
-- Government support of GBP6.6m (2020: GBPnil)
-- Cash generated from operating activities of GBP24.0m (2020: GBP31.3m)
-- Strong balance sheet with cash of GBP91.8m at 23 January 2021 (2020: GBP61.5m)
Operational highlights:
-- Record H1 performance driven by the delivery of the large
opening order book from pent up demand in June and July 2020,
coupled with strong order growth in the first quarter
-- Despite store closures throughout the autumn and key winter
sales period, like-for-like* order intake for the 26 weeks ended 23
January 2021 was only down 9.1%
-- Online sales increased 81.3% to GBP17.7m (2020: GBP9.8m)
-- Maintained "Excellent" Trustpilot TrustScore
-- Improved omnichannel offering by launching our new website,
introducing 'zero touch' finance and bringing customers in-store
from the comfort of their own homes with our MyScSLive video
technology
Current trading and outlook:
-- Latest government announcements indicate that we should be
able to open our stores in England and Wales on 12 April 2021, with
further guidance on store opening timeframes expected to be
announced in Scotland later today
-- Online order growth for the first seven weeks of the second
half of the year to 13 March 2021 of 157.5%
-- Overall order intake decrease of 87.2% on a like-for-like*
basis for the first seven weeks of the second half of the year to
13 March 2021 due to the current temporary store closures,
resulting in order intake decline of 23.8% for the 33 weeks to 13
March 2021
-- Cash at 13 March 2021 of GBP80.9m
-- As previously announced, Steve Carson will lead the Group as
CEO following David Knight's planned retirement in July 2021. Their
handover process is progressing well
*This report includes Alternative Performance Measures (APMs)
which are defined and reconciled to IFRS information, where
possible, on pages 13 to 14.
David Knight, Chief Executive Officer of ScS, commented:
"We are delighted to be reporting a strong result for the first
half of the year, and continue to make progress on our strategic
priorities. The Group has built a robust balance sheet in recent
years and remains focused on cost and cash management to ensure it
maintains its resilience in these challenging times. With consumer
confidence and the economic environment remaining uncertain, it is
difficult to provide clarity on the Group's outlook for the weeks
and months ahead. However, we remain cautiously optimistic as
recent government announcements have provided further clarity on
the anticipated reopening of our stores. The business continues to
adapt and respond to trading conditions, with increased focus on
the development of our digital channels. We are confident that our
underlying priority of providing an excellent customer experience
with outstanding value, quality and choice, will continue to prove
successful.
This is my final results statement as CEO of ScS, with my
handover to Steve Carson, who joined the business on 6 January
2021, progressing well. It was always my plan to leave the business
when I felt it was on a firm financial foundation with strong
succession plans in place. I have every confidence that the team we
have built over recent years will continue to bring success to the
business and have been inspired by the dedication of all our
colleagues in such uncertain times. I would like to take this
opportunity to thank the team here at ScS, our customers, partners
and our shareholders for their continued support. "
Enquiries:
ScS Group PLC c/o Buchanan +44 (0)20 7466
David Knight, Chief Executive Officer 5000
Chris Muir, Chief Financial Officer
Buchanan Tel: +44 (0)20 7466 5000
Richard Oldworth scs@buchanan.uk.com
Tilly Abraham
Charlotte Slater
Shore Capital Tel: +44 (0)207 408 4050
Patrick Castle
James Thomas
Sarah Mather
An analyst briefing will be held at 10.30am on the morning of
the results via live webcast, which can be accessed via the link:
https://webcasting.buchanan.uk.com/broadcast/6048c86e1e24d464e23ebd9c
ScS Group plc's Interim Results 2021 are available at
www.scsplc.co.uk
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 100
stores.
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, Inspire and SiSi
Italia). The Group also offers a range of third-party brands (which
include La-Z-Boy and G Plan). The Group's flooring business
includes carpets, as well as laminate and vinyl flooring.
Business review
Since the Group listed on the London Stock Exchange in January
2015, our focus has been on enhancing our customer experience and
developing our colleagues. Until the pandemic hit in March 2020,
progress in these two key areas had resulted in year on year profit
growth, coupled with a strengthening of the balance sheet which
enabled the Group to increase shareholder returns.
Whilst the Board and I regularly consider opportunities and
threats as part of our budgeting and reforecasting, we could not
have envisaged the situation that we have faced in the last 12
months. This time last year, we outlined the potential impacts that
the pandemic could have on the business, stating that the Group was
well positioned to deal with the headwinds it faced. Although a lot
has changed as a result of the pandemic, the strength of the
business has remained, and it is the Board's intention to
recommence dividend payments when trading certainty returns.
Results
The Group remains well positioned, with the results in the first
half of the year reflecting the significant order intake growth in
June and July 2020 following the first lockdown, together with
strong trading in the first quarter of the current financial year.
Despite continuing regional and local restrictions, like-for like*
order growth to 19 December (21 weeks) was 12.4%. The temporary
store closures during our key winter sale period (weeks 22 to 26),
caused a decrease in order intake of 65.2%, resulting in a
like-for-like* order intake decrease of 9.1% for the six-month
period ended 23 January. This, coupled with the fact that all 100
stores are still temporarily closed, will impact our performance in
the second half of the year.
Unlike during the first national lockdown, our distribution
centres have remained operational throughout the period. This has
enabled the Group to achieve revenues of GBP173.9m, a 14.4%
increase from GBP152.0 in the prior period.
Gross profit increased to GBP83.7m (2020: GBP71.7m), with the
gross margin percentage increasing to 45.9% (2020: 44.8%).
Operating profit increased to GBP19.8m (2020: GBP1.2m) and profit
before tax increased to GBP17.7m (2020: loss of GBP0.6m).
Customer experience
We began the new financial year with all of our stores open and
our colleagues working hard to create a safe environment for our
customers to shop in, adapting our services to meet their needs
during such challenging times. Our newly recruited 'meet and greet'
staff helped support our existing sales teams and welcome customers
into our stores, providing them with confidence to shop with us and
improving the customer journey and conversion levels. We also
introduced an in-store VIP appointments system to give customers
the option to book a convenient time with one of our team before
arriving, further enhancing our customers' safety and shopping
experience.
The level of pent-up demand we saw following the first lockdown
led to the Group increasing product lead times and cutting off
earlier than normal for our Christmas deliveries. Disruption from
localised COVID-19 outbreaks, raw material shortages and shipping
issues meant we did see some delays over the last six months. On
time delivery of product is something the business prides itself on
and we were disappointed to have to inform a proportion of our
customers of these delays when they arose. In response, we
increased customer communication, including talking to every
customer where we could contact them, rather than just sending
electronic or written notification. Our retail and centralised
customer services team have worked tirelessly throughout the period
to help our customers and we would like to take the opportunity to
thank our customers for their patience and understanding.
During the period, the Group also reviewed the customer flooring
journey and we have made significant changes to the way we book
delivery and fitting appointments. We have already seen the impact
of these positive improvements and are confident they will lead to
a better customer experience going forward.
Our "Excellent" Trustpilot score continues to recognise our
ability to provide an excellent customer experience, with our
Trustscore remaining high at 4.6 (2020: 4.7) out of 5.
*This report includes Alternative Performance Measures (APMs)
which are defined and reconciled to IFRS information, where
possible, on pages 13 to 14.
Our people
The mental health and wellbeing of our colleagues continues to
be a key priority. Since the onset of the pandemic, we have ensured
that all our furloughed colleagues receive their full salary, our
dedicated team of trained mental health first aiders are always on
hand, and our weekly company-wide internal communications ensures
all our colleagues are up to date with the latest changes across
the business. Ensuring the health and safety of our teams still
working has remained paramount to us and all colleagues have been
supplied with the necessary personal protective equipment.
In November, we carried out our employee survey, utilising the
improved technology of a new partner. The survey was shorter,
simpler and smarter than previous years, allowing us to obtain and
interpret the views and opinions of all 1,572 respondents (83% of
our team). It is of upmost importance to us that our colleagues are
engaged and have a clear understanding of the Group's strategy and
their role in it. We were very encouraged to see that our employee
satisfaction score was above the national average when benchmarked
against similar companies. Our employees felt particularly strongly
that they 'understand how their work contributes to ScS' success',
'understand how ScS plans to achieve its goals' and that ScS 'does
a good job of communicating with employees'. Most importantly, we
recognise their key feedback areas, and we are currently developing
appropriate action plans to further improve employee
satisfaction.
Improving our omnichannel offering
The online sales experience is more important than ever and we
continue to invest in and improve our digital offering, achieving
strong returns. In the first half of the year, we have seen online
sales grow 81.3% to GBP17.7m when compared to the same period in
the prior year. At the end of July we launched our new website,
making it even easier for our customers to browse our products on
their phones and tablets, and have been making further improvements
throughout the period.
The first lockdown period showed that our core 'store' customer
waited until our stores re-opened before making their purchase,
owing to the tactile nature of the products we sell and the value
of the purchase being made. This period of online-only sales
provided valuable insight that supported the business' plans to
push on with further web enhancements. The first of these was the
launch of website exclusive products, which have proven very
successful since their introduction.
Knowing our online customers value convenience, a key priority
was the introduction of 'zero touch' finance in time for the start
of our winter sale campaign. Where previously customers were
required to complete a finance application over the phone, 'zero
touch' finance enables our customers to apply for finance as part
of an integrated step in their online buying journey, receiving an
immediate decision from the lender, and completing their purchase
independently from the comfort of their own home. Our dedicated
online sales team are still available to help over the phone, but
empowering customers to shop on their preferred terms adds a new
dimension to making an online purchase with ScS.
With video calls becoming increasingly popular and store
closures preventing customers trying our product for themselves, we
wanted to bring our customers into our stores from the comfort of
their own homes. In January, we launched MyScSLive, a web-based
solution that enables our customers to video call with a colleague
based in-store, at a time convenient to them. Although we
acknowledge that not all customers will want to utilise this
technology instead of visiting a store, our experienced and
knowledgeable retail professionals are able to give product
demonstrations, review product options and explain product features
to those customers who value this safe and convenient option.
Further enhancing our virtual offerings, we have moved quickly
to establish our flooring surveyor teams online. Appointments to
measure rooms in customers' homes are prevented under the current
government lockdown measures, but our surveyors can now carry out
virtual appointments to guide and advise our customers through the
measurement of their own homes, encouraging increased online
flooring order growth.
Looking forward
We are delighted to be reporting a strong result for the first
half of the year and continue to make progress on our strategic
priorities. The Group has built a robust balance sheet in recent
years and remains focused on cost and cash management to ensure it
maintains its resilience in these challenging times. With consumer
confidence and the economic environment remaining uncertain, it is
difficult to provide clarity on the Group's outlook for the weeks
and months ahead. However, we remain cautiously optimistic as
recent government announcements have provided further clarity on
the anticipated reopening of our stores. The business continues to
adapt and respond to trading conditions, with increased focus on
the development of our digital channels. We are confident that our
underlying priority of providing an excellent customer experience
with outstanding value, quality and choice, will continue to prove
successful.
This is my final results statement as CEO of ScS, with my
handover to Steve Carson, who joined the business on 6 January
2021, progressing well. It was always my plan to leave the business
when I felt it was on a firm financial foundation with strong
succession plans in place. I have every confidence that the team we
have built over recent years will continue to bring success to the
business and have been inspired by the dedication of all our
colleagues in such uncertain times. I would like to take this
opportunity to thank the team here at ScS, our customers, partners
and our shareholders for their continued support.
FINANCIAL REVIEW
26 weeks 26 weeks
ended ended
23 January 25 January
2021 2020 YoY change
GBPm GBPm
Gross sales 182.3 160.1 13.9%
=========== =========== ==============
Revenue 173.9 152.0 14.4%
=========== =========== ==============
Gross profit 83.7 71.7 16.8%
----------- ----------- --------------
Distribution costs (9.8) (9.1) 7.8%
Administration expenses before
exceptionals (60.7) (60.9) GBP0.2m
Business rates relief 5.3 - GBP5.3m
Coronavirus Job Retention Scheme
(CJRS) 1.3 - GBP1.3m
----------- ----------- --------------
Total operating expenses before
exceptionals (63.9) (70.0) (8.5)%
----------- ----------- --------------
Underlying operating profit*
for the period 19.8 1.7 GBP18.1m
Exceptional items - (0.5) GBP0.5m
----------- ----------- --------------
Operating profit for the period 19.8 1.2 GBP18.6m
Net finance expense (2.1) (1.8) GBP(0.3)m
Profit/(loss) before tax for
the period 17.7 (0.6) GBP18.3m
Income tax charge (3.5) - GBP(3.5)m
----------- ----------- --------------
Profit/(loss) after tax for
the period 14.2 (0.6) GBP14.8m
=========== =========== ==============
Underlying EBITDA* for the period 32.2 16.6 GBP15.6m
----------- ----------- --------------
Gross sales and revenue
Gross sales increased by GBP22.2m (13.9%) to GBP182.3m (2020:
GBP160.1m) and is attributable to:
-- An increase in upholstered furniture sales in ScS stores of
11.4% to GBP146.5m (2020: GBP131.6m);
-- A decrease in flooring sales in ScS stores of 3.6% to GBP18.1m (2020: GBP18.7m); and
-- An increase in online sales of 81.3% to GBP17.7m (2020: GBP9.8m).
Revenue, which represents gross sales less charges relating to
interest free credit sales (see note 5 - Segmental information),
increased by 14.4% to GBP173.9m (2020: GBP152.0m).
The Group's order book at the end of January 2021 was GBP90.5m
(including VAT), which is GBP16.8m larger than at the end of
January 2020.
Gross profit
The gross profit increase of GBP12.0m, or 16.8%, has been driven
by the increases in volume noted above, together with an improved
gross margin.
Gross margin* increased to 45.9% (2020: 44.8%). The increase of
1.1% is largely due to an improvement in the quality of our sale
together with a decrease in the cost of finance.
Distribution costs
Distribution costs comprise the total cost of the in-house
distribution function and includes employment, property and vehicle
costs for the nine distribution centres, as well as costs of
third-party delivery services contracted to support peak delivery
periods.
Distribution costs increased 7.8% to GBP9.8m in the period
(2020: GBP9.1m) driven by increased deliveries. As a percentage of
gross sales for the period, distribution costs were 5.4% (2020:
5.7%).
*This report includes Alternative Performance Measures (APMs)
which are defined and reconciled to IFRS information, where
possible, on pages 13 to 14.
Administrative expenses before exceptionals and government
support
Administrative expenses comprise:
-- Store operating costs, principally employment costs, property
related costs (depreciation, rates, utilities and store
repairs);
-- Marketing expenditure; and
-- General administrative expenditure, which includes the
employment costs for the directors, senior management and all head
office-based support functions and other central costs.
Administration expenses before exceptionals and government
support for the period totalled GBP60.7m, compared to GBP60.9m in
the prior period. Administration expenses as a percentage of
revenue were 35.0%, compared to 40.0% in the prior period.
The reduction in administrative expenses of GBP0.2m was driven
by the following:
-- A GBP3.0m decrease in marketing spend to GBP11.5m (2020:
GBP14.5m) as the business adjusted investment as a result of the
temporary store closures;
-- Depreciation and amortisation fell GBP2.3m to GBP11.1m (2020:
GBP13.4m). The reduction largely related to a decrease in
depreciation on the Group's right of use assets (properties and
vehicles) which had a lower book value at the start of the period
following impairments taken in the year ending 25 July 2020;
-- A GBP1.3m increase in non-performance related payroll costs
due to the recruitment of the store meet and greet roles and
additional sales staff, which have supported the improved order
growth when stores have been open;
-- A GBP3.1m increase in performance related pay, due to the
strong order intake performance and deliveries in the first 21
weeks and the Group's improved EBITDA; and
-- Other costs have increased by GBP0.7m including GBP0.3m of
COVID-19 related costs including personal protective equipment and
increased costs in relation to customer communication.
The control of costs remains a key focus for the Group, as does
maintaining the level of flexibility in our cost base.
Government support
During the period, the Group has recognised the benefit from
GBP6.6m (2020: GBPnil) of government support provided in response
to the COVID-19 outbreak. This support is attributable to:
-- GBP5.3m of retail business rates savings following the UK
government's retail rate holiday for the 12 month period to 31
March 2021. With the latest announcement that the retail rate
holiday is extended to the end of Jun 2021, with reduced payments
for the remainder of the 12 month period to 31 March 2022, the
Group expects to receive a further GBP4.9m of savings for the
remainder of the year.
-- GBP1.3m received via the Coronavirus Job Retention Scheme
(CJRS). This government grant provided support for 80% of
employees' payroll costs of the employees who were 'furloughed'
during the period. We have continued to top up the salaries of our
furloughed colleagues to their normal levels in order to support
them through the ongoing uncertainty.
The Group intends to repay the current year CJRS grants before
the end of the financial year, assuming the reopening of our stores
is line with our expectations.
Flexible costs
The nature of the Group's business model, where almost all sales
are made to order, results in the majority of costs being
proportional to sales. This provides the Group with the ability to
flex its cost base as revenue changes, protecting the business
should there be wider economic pressures. As shown below, the
proportion of cost variability remained relatively consistent
year-on-year.
Excluding government support, total costs before tax for the
year were GBP171.2m (2020: GBP160.7m).
Of this total, 76% (2020: 74%), or GBP129.5m (2020: GBP118.5m),
are variable or discretionary, and are made up of:
-- GBP98.6m cost of goods sold, including finance and warranty costs (2020: GBP88.4m);
-- GBP9.8m distribution costs (2020: GBP9.1m);
-- GBP11.5m marketing costs (2020: GBP14.5m), and
-- GBP9.6m performance related payroll costs (2020: GBP6.5m).
Semi-variable costs totalled GBP21.3m, or 12% of total costs,
for the year (2020: GBP19.8m; 12%) and are predominantly other
non-performance related payroll costs. Depreciation and interest
(including ROU assets), rates, heating and lighting make up the
remaining GBP20.4m (12%) of total costs (2020: GBP22.4m; 14%).
Operating profit
Operating profit, excluding government support, was GBP13.2m for
the first half of the financial year, compared to an operating
profit of GBP1.2m for the same period last year. This was driven by
increased sales coupled with an improved gross margin.
Exceptional costs
In the prior period, exceptional items comprised amounts payable
for redundancy costs incurred relating to the centralisation of
administrative support from each of our individual stores to our
head office in Sunderland.
Finance costs
The net finance expense has increased by GBP0.3m to GBP2.1m
(2020: GBP1.8m) as a result of a GBP0.1m increase in finance costs
in relation to the new CLBILS revolving credit facility, coupled
with a reduction of GBP0.2m in finance income due to reduced
deposit rates.
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
The Group operates a 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 within
two working days of 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
23 January 25 January 25 July
2021 2020 2020
----------- ----------- --------
GBPm GBPm GBPm
Cash generated from operating
activities 24.0 31.3 59.5
Payment of capital and interest
elements of leases (10.1) (12.9) (20.0)
Net capital expenditure (2.9) (2.4) (3.9)
Net taxation and interest payments (1.1) (2.7) (1.5)
----------- ----------- --------
Free cash flow* 9.9 13.3 34.1
Dividends - (4.3) (4.3)
Purchase of own shares (0.4) (5.2) (5.2)
----------- ----------- --------
Net cash generated 9.5 3.8 24.6
----------- ----------- --------
*This report includes Alternative Performance Measures (APMs)
which are defined and reconciled to IFRS information, where
possible, on pages 13 to 14.
The Group continued to be cash generative in the period with a
net cash inflow from operating activities of GBP24.0m (2020:
GBP31.3m).
The cash generated from operating activities has decreased by
GBP7.3m which is due to a working capital outflow principally as a
result of a reduction in the VAT liability and payments in relation
to PAYE/NI which were previously deferred in line with the
government support offered as part of its response to COVID-19.
The payment of capital and interest elements of leases has
decreased by GBP2.8m as a result of rent deferrals negotiated with
landlords. This benefit will begin to unwind over the second half
of the financial year and into the following year.
Dividend
The Group has prioritised protecting the financial strength and
resilience of the business before reconsidering reinstating
dividend payments. The Board recognises the importance of income to
the Group's shareholders and the intention is to re-instate a
progressive dividend policy as soon as trading performance permits.
As stated earlier in this statement, the Group intends to repay its
current year CJRS grants if trading of our stores is in line with
our expectations.
Application of IFRS 16
The interim results and the prior period comparatives have been
prepared under the requirements of IFRS16. Implementation of IFRS16
has had no effect on the cash flows or operations of the Group.
In order to clearly show the impact of IFRS16, below is a
reconciliation for Group profit before tax and underlying
EBITDA.
26 weeks ended Pre-IFRS Exclude Include depreciation Include Post IFRS
23 January 2021 16 rent interest 16
GBPm
Revenue 173.9 - - - 173.9
--------- -------- --------------------- ---------- ----------
Distribution costs (10.0) 1.6 (1.4) - (9.8)
--------- -------- --------------------- ---------- ----------
Administrative
expenses (56.7) 11.1 (8.6) - (54.2)
--------- -------- --------------------- ---------- ----------
Operating profit 17.1 12.7 (10.0) - 19.8
--------- -------- --------------------- ---------- ----------
Net finance expense (0.2) - - (1.9) (2.1)
--------- -------- --------------------- ---------- ----------
Profit before
tax 16.9 12.7 (10.0) (1.9) 17.7
--------- -------- --------------------- ---------- ----------
Underlying EBITDA 19.5 12.7 - - 32.2
--------- -------- --------------------- ---------- ----------
26 weeks ended Pre-IFRS Exclude Include depreciation Include Post IFRS
25 January 2020 16 rent interest 16
GBPm
Revenue 152.0 - - - 152.0
--------- -------- --------------------- ---------- ----------
Distribution costs (9.1) 1.4 (1.4) - (9.1)
--------- -------- --------------------- ---------- ----------
Administrative
expenses (62.1) 11.4 (10.7) - (61.4)
--------- -------- --------------------- ---------- ----------
Operating profit 0.5 12.8 (12.1) - 1.2
--------- -------- --------------------- ---------- ----------
Net finance expense 0.2 - - (2.0) (1.8)
--------- -------- --------------------- ---------- ----------
Profit before
tax 0.7 12.8 (12.1) (2.0) (0.6)
--------- -------- --------------------- ---------- ----------
Underlying EBITDA 3.8 12.8 - - 16.6
--------- -------- --------------------- ---------- ----------
Principal risks and uncertainties
The principal risks and uncertainties which the Group faces are
unchanged from those detailed on pages 38 to 48 of the Annual
Report for 2020, which is dated 1 October 2020 and is available
from the ScS Group plc website: www.scsplc.co.uk . With the
exception of the decision to remove Brexit as a principal risk
because the transition period is now complete, we do not foresee
any material impact to the Group going forward. A summary of the
remaining principal risks has been provided below:
-- Changes in consumer confidence
-- Currency and interest rate fluctuations could lead to cost pressure
-- COVID-19 or similar pandemic risk
-- Competition with other retailers and failing to respond to
key changes in the competitive environment
-- External factors adversely affecting footfall in our stores over key trading periods
-- Regulatory and compliance risk
-- Disruption to the Group's IT systems
-- Supply chain and sourcing risk
-- Challenges in retaining and developing our colleagues
-- Protecting our brand and reputation
-- Liquidity and credit risk
David Knight
Chief Executive Officer
15 March 2021
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 27 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 who were in office during the
period and up to the date of this report were:
Alan Smith Non-Executive Chairman
George Adams Non-Executive Director
Ron McMillan Non-Executive Director
Angela Luger Non-Executive Director
David Knight Chief Executive Officer
Stephen Carson Chief Executive Officer (Appointed 6 January 2021)
Chris Muir Chief Financial Officer
A list of current directors is maintained on the ScS Group plc
website: www.scsplc.co.uk.
By order of the Board
Richard Butts
Company Secretary
15 March 2021
Independent review report to ScS Group plc
Report on the consolidated interim financial statements
Our conclusion
We have reviewed ScS Group plc's consolidated interim financial
statements (the "interim financial statements") in the interim
results of ScS Group plc for the 26 week period ended 23 January
2021 (the "period").
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 statement of financial position as
at 23 January 2021;
-- 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 interim financial
statements.
The interim financial statements included in the interim results
of ScS Group plc 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
15 March 2021
Alternative Performance Measures ("APMs")
In the reporting of financial information, the Board have
adopted various Alternative Performance Measures ("APMs"). APMs
should be considered in addition to IFRS measurements. The Board
believe that these APMs assist in providing useful information on
the underlying performance and position of the Group and enhance
the comparability of information between reporting periods by
adjusting for non-underlying items which affect IFRS measures and
are used internally by the Board to measure the Group's
performance.
Consequently, APMs are used by the Board and management for
performance analysis, planning, reporting and incentive setting
purposes and have remained consistent with prior year. A subset is
also used by management in setting director and management
remuneration. The measures are also used in discussions with the
investment analyst community. The key APMs used by the Group are
summarised in the table below.
APM Definition Reconciliation
Like-for like 'Like-for-like' order growth N/A
order growth comprises total orders
(inclusive of VAT) in a
financial period compared
to total orders achieved
in a prior period excluding
new or closed stores to
ensure comparability.
------------------------------------- -----------------------------------------------
Gross sales Gross sales represents HY21 HY20
turnover on the sale of ------------------- ------ ------
goods and warranties before Revenue 173.9 152.0
deduction of interest free Add back: costs
credit of interest free
credit 8.4 8.1
------------------- ------ ------
Gross sales (note
5) 182.3 160.1
------------------- ------ ------
------------------------------------- -----------------------------------------------
Gross margin Gross profit as a percentage
of gross sales HY21 HY20
------------------- ------ ------
Revenue 173.9 152.0
Add back: costs
of interest free
credit 8.4 8.1
------------------- ------ ------
Gross sales (note
5) 182.3 160.1
Gross profit 83.7 71.7
------------------- ------ ------
Gross margin 45.9% 44.8%
------------------- ------ ------
------------------------------------- -----------------------------------------------
Free cash flow Net increase in cash before
the impacts of dividends HY21 HY20
paid and the purchase of ---------------------------- ----- -----
own shares. Net increase in
cash and cash equivalents 9.5 3.8
Dividends - 4.3
Purchase of own
shares 0.4 5.2
---------------------------- ----- -----
Free cash flow 9.9 13.3
---------------------------- ----- -----
------------------------------------- -----------------------------------------------
Non-underlying Certain costs or incomes
items that derive from events HY21 HY20
or transactions that fall ------------------- ------ ------
outside the normal activities Exceptional items
of the Group and are excluded (note 6) - (0.5)
by virtue of their size
and nature to reflect management's
view of the performance
of the Group.
------------------------------------- -----------------------------------------------
Underlying Earnings before interest, HY21 HY20
EBITDA tax, depreciation & amortisation ------------------------------ ----- -----
before the effect of non-underlying Statutory operating
items in the period. profit 19.8 1.2
Depreciation on tangible
fixed assets 2.1 2.4
Depreciation on right-of-use
assets 10.0 12.1
Amortisation of intangible
assets 0.4 0.4
Non-underlying items - 0.5
------------------------------ ----- -----
Underlying EBITDA 32.2 16.6
------------------------------ ----- -----
------------------------------------- -----------------------------------------------
Underlying Underlying operating profit HY21 HY20
operating profit is based on operating profit ---------------------- ----- -----
before the impact of certain Statutory operating
costs or incomes that derive profit 19.8 1.2
from events or transactions Non-underlying items - 0.5
that fall outside the normal ---------------------- ----- -----
activities of the Group Underlying operating
and are excluded by virtue profit 19.8 1.7
of their size and nature ---------------------- ----- -----
to reflect management's
view of the performance
of the Group.
------------------------------------- -----------------------------------------------
Underlying Underlying basic earnings HY21 HY20
basic EPS per share (EPS) is based ---------------------- ----- ------
on earnings per share before Profit/(loss) for
the impact of certain costs the period 14.2 (0.6)
or incomes that derive Non-underlying items
from events or transactions net of tax - 0.4
that fall outside the normal ---------------------- ----- ------
activities of the Group Underlying profit
and are excluded by virtue after tax 14.2 (0.1)
of their size and nature ---------------------- ----- ------
to reflect management's
view of the performance
of the Group.
------------------------------------- -----------------------------------------------
ScS Group plc
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
26 weeks Unaudited Audited
ended 26 weeks ended 52 weeks
23 January 25 January ended 25
Note 2021 2020 July 2020
---- ----------- --------------- ------------
GBP'000 GBP'000 GBP'000
Gross sales 5 182,329 160,074 268,119
=========== =============== ============
Revenue 5 173,905 151,962 255,491
Cost of sales (90,199) (80,307) (135,911)
----------- --------------- ------------
Gross profit 83,706 71,655 119,580
Distribution costs (9,774) (9,064) (16,988)
Administrative expenses including
exceptional items (54,176) (61,379) (101,873)
----------- --------------- ------------
Operating profit 19,756 1,212 719
----------- --------------- ------------
Analysed as:
Underlying operating profit 19,756 1,745 4,708
Exceptional items 6 - (533) (3,989)
---------------------------------- ---- ----------- --------------- ------------
Operating profit 19,756 1,212 719
---------------------------------- ---- ----------- --------------- ------------
Finance costs 7 (2,135) (2,035) (4,195)
Finance income 64 228 355
----------- --------------- ------------
Net finance costs (2,071) (1,807) (3,840)
Profit/(loss) before taxation 17,685 (595) (3,121)
Income tax (charge)/credit 11 (3,454) 35 898
----------- --------------- ------------
Profit/(loss) for the period 14,231 (560) (2,223)
Profit/(loss) is attributable
to:
----------- --------------- ------------
Owners of the parent 14,231 (560) (2,223)
----------- --------------- ------------
Underlying earnings/(loss) per share:
Basic earnings/(loss) per share
(pence) 12 37.5p (0.3p) 2.6p
Diluted earnings/(loss) per share
(pence) 12 35.9p (0.3p) 2.6p
Statutory earnings/(loss) per share:
Basic earnings/(loss) per share
(pence) 12 37.5p (1.4p) (5.8p)
----------- --------------- ------------
Diluted earnings/(loss) per share
(pence) 12 35.9p (1.4p) (5.8p)
----------- --------------- ------------
There are no other sources of comprehensive income.
ScS Group plc
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited
as at as at Audited
23 January 25 January as at
Note 2021 2020 25 July 2020
------ ----------- ----------- -------------
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 2,196 1,716 2,358
Property, plant and equipment 17,671 19,568 17,209
Right of use asset 108,277 126,710 118,499
Deferred tax asset 515 671 722
----------- ----------- -------------
Total non-current assets 128,659 148,665 138,788
----------- ----------- -------------
Current assets
Inventories 16,660 19,707 18,207
Trade and other receivables 4,530 5,314 4,804
Tax receivable - 816 358
Cash and cash equivalents 91,775 61,458 82,282
----------- ----------- -------------
Total current assets 112,965 87,295 105,651
----------- ----------- -------------
Total assets 241,624 235,960 244,439
=========== =========== =============
Current liabilities
Current income tax liabilities 1,946 - -
Trade and other payables 13 70,790 70,758 81,169
Provisions 188 - 125
Lease liabilities 24,912 20,917 24,167
----------- ----------- -------------
Total current liabilities 97,836 91,675 105,461
----------- ----------- -------------
Non-current liabilities
Trade and other payables 121 496 137
Provisions 1,058 - 1,084
Lease liabilities 103,061 115,536 112,253
----------- ----------- -------------
Total non-current liabilities 104,240 116,032 113,474
----------- ----------- -------------
Total liabilities 202,076 207,707 218,935
----------- ----------- -------------
Capital and reserves attributable
to the owners of the parent
Share capital 38 38 38
Share premium 16 16 16
Capital redemption reserve 15 15 15
Merger reserve 25,511 25,511 25,511
Treasury shares 15 (592) (182) (182)
Retained earnings 14,560 2,855 106
----------- ----------- -------------
Equity attributable to the
owners of the parent 39,548 28,253 25,504
----------- ----------- -------------
Total equity 39,548 28,253 25,504
----------- ----------- -------------
Total equity and liabilities 241,624 235,960 244,439
=========== =========== =============
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 28 July
2019 40 16 13 25,511 (91) 17,407 42,896
Impact of change
in accounting
policy - - - - - (5,826) (5,826)
Tax impact of
change in
accounting policy - - - - - 990 990
At 28 July 2019
(restated for
IFRS16) 40 16 13 25,511 (91) 12,571 38,060
Loss for the
period - - - - - (560) (560)
Share-based
payment expense - - - - - 267 267
Purchase of own
shares - - - - - (4,425) (4,425)
Treasury shares - - - - (91) (663) (754)
Cancellation of
repurchased
shares (2) - 2 - - - -
Dividend paid - - - - - (4,336) (4,336)
-------- --------- ----------- -------------- ----------------- --------- ----------------
Balance at 25
January 2020 38 16 15 25,511 (182) 2,854 28,252
======== ========= =========== ============== ================= ========= ================
Balance at 26 January 2020 38 16 15 25,511 (182) 2,854 28,252
Loss for the period - - - - - (1,663) (1,663)
Share-based payment expense - - - - - (1,085) (1,085)
Balance at 25 July 2020 38 16 15 25,511 (182) 106 25,504
====== ===== ======= =========
Balance at 26 July 2020 38 16 15 25,511 (182) 106 25,504
Profit for the period - - - - - 14,231 14,231
Share-based payment expense - - - - - 223 223
Treasury shares - - - - (410) - (410)
Balance at 23 January 2021 38 16 15 25,511 (592) 14,560 39,548
====== ===== ====== ========
ScS Group plc
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited
Unaudited 26 weeks Audited
26 weeks ended ended 52 weeks
23 January 25 January ended
2021 2020 25 July 2020
--------------- ----------- -------------
Cash flows from operating activities GBP'000 GBP'000 GBP'000
Profit/(loss) before taxation 17,685 (595) (3,121)
Adjustments for:
Depreciation of property plant
and equipment 2,064 2,357 4,847
Depreciation - right-of-use assets 9,973 12,054 22,787
Amortisation of intangible assets 426 417 647
Impairment on non-current assets - - 3,376
Share-based payments 223 267 (818)
Finance costs 2,135 2,035 4,195
Finance income (64) (228) (355)
--------------- ----------- -------------
32,442 16,307 31,558
Changes in working capital:
Decrease/(Increase) in inventories 1,547 (498) 1,002
Decrease/(increase) in trade
and other receivables 274 (320) 191
(Decrease)/Increase in trade
and other payables (10,300) 15,818 26,715
Cash generated from operating
activities 23,963 31,307 59,466
Interest paid (214) (48) (215)
Income taxes paid (941) (2,865) (1,595)
--------------- ----------- -------------
Net cash flow generated from
operating activities 22,808 28,394 57,656
--------------- ----------- -------------
Cash flows from investing activities
Purchase of property, plant and
equipment (2,413) (1,955) (2,694)
Payments to acquire intangible
assets (437) (491) (1,151)
Interest received 64 228 355
--------------- ----------- -------------
Net cash outflow from investing
activities (2,786) (2,218) (3,490)
--------------- ----------- -------------
Cash flows from financing activities
Dividends paid - (4,336) (4,336)
Purchase of own shares (note
15) (410) (5,180) (5,180)
Interest paid on lease liabilities (1,921) (1,987) (3,980)
Payment of capital element of
leases (8,198) (10,881) (16,054)
Proceeds from bank loan - - 12,000
Repayment of borrowings - - (12,000)
Net cash flow used in financing
activities (10,529) (22,384) (29,550)
--------------- ----------- -------------
Net increase in cash and cash
equivalents 9,493 3,792 24,616
Cash and cash equivalents at
beginning of period 82,282 57,666 57,666
Cash and cash equivalents at
end of period 91,775 61,458 82,282
=============== =========== =============
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 2020 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 23 January 2021 should be read in conjunction with the Annual
Report 2020 dated 1 October 2020 (the "Annual Report 2020").
The report of the auditors for the financial statements for the
52 weeks ended 25 July 2020, included in the Annual Report 2020,
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 15 March 2021.
3. Going concern
The interim financial statements have been prepared on a going
concern basis.
Liquidity
The most significant factor in considering whether current
resources are adequate is the Group's liquidity. At 23 January
2021, the Group's cash balance totalled GBP91.8m, and GBP19.7m was
owed as trade payables for goods delivered. The Group has no drawn
down debt, and further liquidity is available through the GBP20.0m
CLBILS revolving credit facility (RCF) granted on 25 August 2020.
This facility is committed for a term of 36 months and is
anticipated to be renegotiated well in advance of this maturity
date. The RCF is subject to certain covenants in respect of fixed
charge cover, liquidity, leverage and capital spending.
Cash flows
As part of the Group's ongoing review of going concern, the
directors have reviewed the results for the 6 months to 23 January
2021 and have modelled cash flow forecasts under the following
scenarios:
-- A 'base case' scenario that the current lockdown, which was
announced on 4 January 2021 will continue until 1 May 2021, and
that the Group's stores will be closed in an additional lockdown
for 4 weeks in November 2021. The modelling assumes distribution
operations are still permitted in periods of store closure. The
forecasts include the assumption that there will be pent-up
customer demand, as there was following the first lockdown period,
albeit this has been prudently assumed to be 20% lower than
experienced previously. The forecasts also assume continued
availability of product and no other significant impacts of
COVID-19.
-- A 'severe but plausible' downside sensitivity scenario where
stores remain closed until the end of June 2021 but distribution
operations continue to be permitted. Stores reopen in July 2021,
and as in the base case scenario, there is an additional lockdown
for 4 weeks in November 2021. Again the forecast includes expected
pent-up demand.
3. Going concern (continued)
The Group has included within both scenarios associated
reductions in marketing, capital spend, management and staff bonus
costs and sales-related commission payments.
The government continues to provide an 80% grant under the
Coronavirus Job Retention Scheme (CJRS) as support for furloughed
workers, which currently ends in September 2021. Further government
support continues to be provided through a business rates holiday,
extended to 30 June 2021 for all retail businesses, and reduced
business rates to 31 March 2022. The modelled downside scenarios
include the impact of maintaining the current store staff on
furlough until stores reopen, as well as the benefit of the reduced
business rates. No additional government or landlord support (such
as a further extension of the furlough scheme) has been included to
support the modelled November lockdown.
Throughout the 'severe but plausible downside' scenario, the
Group would have significant cash headroom, with the cash low point
at the end of July 2021 still being substantial at GBP33.5m, before
use of the GBP20m RCF. Furthermore, forecasts show sufficient
headroom on all of the financial covenants and no requirement for
any additional sources of financing (including any drawdown on the
RCF).
Many of our large suppliers operate using credit insurance,
which they use to support their payment terms with the Group. As
these credit insurers are consistently reviewing their support for
the companies involved a severe economic climate could mean that
they withdraw their support for the Group. This could create
working capital challenges for our suppliers, requiring them to
request earlier payment dates. The Group has modelled the impact of
the full withdrawal of this insurance, and noted that the cash
headroom available ensures this does not pose a further risk to the
Group's going concern basis.
For the reasons set out in detail above, the Board believe that
it remains appropriate to prepare the Group financial statements on
a going concern basis.
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 89 to 94 of the Annual Report 2020. There has
been no change to any accounting policy from the date of the Annual
Report.
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 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, and recognised at the point in time the goods and
any associated warranty contracts have been delivered to the
customer. Warranty services, once sold, are subsequently provided
by third parties. There have been no changes to the director's
determination of segments since those disclosed in the Annual
Report 2020.
5. Segmental information (continued)
Analysis of gross sales is as follows:
26 weeks 26 weeks 52 weeks
ended ended ended
23 January 25 January 25 July
2021 2020 2020
----------- ----------- --------
GBP'000 GBP'000 GBP'000
Sale of goods 168,951 149,057 249,578
Associated warranties 13,378 11,017 18,541
----------- ----------- --------
Gross Sales* 182,329 160,074 268,119
----------- ----------- --------
Less: costs of interest free
credit (8,424) (8,112) (12,628)
----------- ----------- --------
Revenue 173,905 151,962 255,491
=========== =========== ========
6. Exceptional items
In order to provide a clearer understanding of underlying
profitability, underlying operating profit excludes exceptional
items, which relate to costs that, either by their size or nature,
require separate disclosure in order to give a fuller understanding
of the Group's financial performance. Exceptional items, booked to
operating costs, comprised the following:
26 weeks 26 weeks
ended ended 52 weeks
23 January 25 January ended
2021 2020 25 July 2020
----------- ----------- -------------
GBP'000 GBP'000 GBP'000
Impairment charges associated
with stores - - 3,376
Restructuring costs - 533 613
- 533 3,989
=========== =========== =============
In the prior period exceptional costs disclosed related to the
following:
- Impairment charges associated with stores- As a result of
COVID-19 a revision in future projections for the business resulted
in an impairment charge of GBP3,376,000 being recognised on the
assets associated with a number of our stores.
- Restructuring costs- Amounts payable for loss of office
incurred as a result of restructuring, in particular, relating to
the centralisation of administrative support from each of our
individual stores to our head office in Sunderland.
7. Finance costs
26 weeks 26 weeks
ended ended 52 weeks
23 January 25 January ended
2021 2020 25 July 2020
----------- ----------- -------------
GBP'000 GBP'000 GBP'000
Bank facility non-utilisation
fees 170 48 63
Bank facility renewal fees 19 - 55
Bank facility utilisation
fees - - 97
Other finance costs 25 - -
Interest on lease liability 1,921 1,987 3,980
----------- ----------- -------------
2,135 2,035 4,195
=========== =========== =============
8. 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.
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 2020.
*This report includes Alternative Performance Measures (APMs)
which are defined and reconciled to IFRS information, where
possible, on pages 13 to 14.
9. 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 2020.
There has been no change to the risk management procedures or the
accounting policies from those included in the Annual Report
2020.
10. Seasonality of operations
Due to the seasonal nature of this retail segment, in a typical
year, higher revenues and operating profits are usually expected in
the second half of the year than the first half. However, in light
of COVID-19 and the government imposed temporary store closures,
order intake and the subsequent delivery has not followed a typical
year profile. As a consequence of the significant order book at the
beginning of the year, the continued strong order growth until the
store closures, and the subsequent delivery of those orders, the
results in the first half of the year are expected to account for a
large proportion of the results for the year ending 31 July
2021.
11. Taxation
The tax charge for the 26 weeks ended 23 January 2021 is based
on an estimated average annual effective tax rate of 19.5% (26
weeks ended 25 January 2020: tax charge 5.9%; 52 weeks ended 25
July 2020: tax credit 28.8%).The tax charge is slightly higher than
the if the standard rate of corporation tax had been applied 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. In line with previous
years, we also expect the tax rate for the full year to be slightly
higher than the statutory rate.
The UK corporation tax standard rate for the period was 19%
(2020: 19%).
12. Earnings per share
26 weeks 26 weeks 52 weeks
ended ended ended
23 January 25 January 25 July
2021 2020 2020
----------- ----------- --------
pence pence Pence
a) Basic earnings/(loss) per
share attributable to the
ordinary equity holders of
the company
Basic earnings/(loss) per
share from underlying operations 37.5p (0.3p) 2.6p
From exceptional costs - (1.1p) (8.4p)
----------- ----------- --------
Total basic earnings/(loss)
per share 37.5p (1.4p) (5.8p)
=========== =========== ========
b) Diluted earnings/(loss)
per share attributable to
the ordinary equity holders
of the company
Diluted earnings/(loss) per
share from underlying operations 35.9p (0.3p) 2.6p
From exceptional costs - (1.1p) (8.4p)
----------- ----------- --------
Total diluted earnings/(loss)
per share 35.9p (1.4p) (5.8p)
=========== =========== ========
26 weeks 26 weeks 52 weeks
ended ended ended
23 January 25 January 25 July
2021 2020 2020
----------- ----------- --------
GBP'000 GBP'000 GBP'000
c) Reconciliations of earnings
used in calculating earnings
per share
Profit/(loss) from operations 14,231 (560) (2,223)
- Add back exceptional costs
net of tax - 432 3,231
----------- ----------- --------
Profit/(loss) from underlying
operations 14,231 (128) 1,008
12. Earnings per share (continued)
26 weeks 26 weeks
ended ended 52 weeks
23 January 25 January ended 25
2021 2020 July 2020
Number Number Number
Weighted average number of
shares in issue for the purposes
of basic earnings per share 37,903,759 38,993,561 38,464,470
=========== =========== ==========
Effect of dilutive potential
ordinary shares:
* share options 1,773,974 - -
Weighted average number of
ordinary shares for the purpose
of diluted earnings per share 39,677,733 38,993,561 38,464,470
=========== =========== ==========
In the 26 weeks ended 25 January 2020 a total of 1,659,458
potential ordinary shares have not been included within the
calculation of diluted earnings per share as they are
antidilutive.
In the 52 weeks ended 25 July 2020 a total of 1,598,815
potential ordinary shares have not been included within the
calculation of diluted earnings per share as they are
antidilutive.
13. Trade and other payables current
As at As at
23 January 25 January As at
2021 2020 25 July 2020
----------- ----------- -------------
GBP'000 GBP'000 GBP'000
Trade payables 19,652 24,748 20,638
Payments received on account 30,840 24,081 34,592
Other tax and social security
payable 4,402 6,298 12,834
Accruals 15,896 15,631 13,105
----------- ----------- -------------
70,790 70,758 81,169
=========== =========== =============
The fair value of financial liabilities approximates their
carrying value due to short maturities. Financial liabilities are
denominated in pounds sterling.
14. Dividend
An interim dividend has not been declared by the board (2020:
GBPnil) due to the current uncertainty surrounding the store
re-opening timetable and the unknown future order demand.
15. Treasury shares and share buyback
During the first half of the financial year to 23 January 2021,
the Group's Employee benefit Trust purchased 200,000 ordinary
shares of 0.1 pence each in the Group at an average price of 205.1
pence per ordinary share for the purpose of satisfying management
share incentive awards. The number of shares held as treasury
shares at the period end was 277,275.
In the prior period to 25 January 2020, the Group's Employee
benefit Trust purchased 324,582 ordinary shares of 0.1 pence each
in the Group at an average price of 232.2 pence per ordinary share
for the purpose of satisfying management share incentive awards.
Across the same period 290,025 of these shares were used to satisfy
awards, with the remaining 77,275 held as treasury shares as at the
25 January 2020.
In the prior period, on 8 November 2019, the Group acquired
1,996,454 ordinary shares at a price of 220.0 pence per ordinary
share from related party Parlour Product Holdings (LUX) S.A.R.L for
a total consideration of GBP4.4m. Following this purchase, the
ordinary shares purchased by the Company were cancelled, and the
Company's issued share capital subsequently consists of 38,012,655
ordinary shares, each with one voting right.
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END
IR GPURUWUPGGRA
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