TIDMSDG
RNS Number : 7052P
Sanderson Design Group PLC
11 October 2023
11 October 2023
SANDERSON DESIGN GROUP PLC
("Sanderson Design Group", the "Company" or the "Group")
Interim Results for the six months ended 31 July 2023
Strong first-half licensing performance drives profit growth
Full year trading remains in line with Board expectations
Sanderson Design Group PLC (AIM: SDG), the luxury interior
design and furnishings group, announces its unaudited financial
results for the six months ended 31 July 2023.
Financial highlights
Six months % Change Year ended 31 January
ended 31 July (reported)
2023 2022 2023
(H1 FY24) (H1 FY23) (FY23)
------------ ------------ ----------------------
Revenue GBP56.7m GBP57.9m (2.1%) GBP112.0m
------------ ----------- ------------ ----------------------
Adjusted underlying profit before tax* GBP6.8m GBP6.3m 7.9% GBP12.6m
------------ ----------- ------------ ----------------------
Adjusted underlying basic EPS* 7.39p 6.90p 7.1% 14.18p
------------ ----------- ------------ ----------------------
Statutory profit before tax GBP6.2m GBP5.5m 12.7% GBP10.9m
------------ ----------- ------------ ----------------------
Statutory profit after tax GBP4.7m GBP4.2m 11.9% GBP8.8m
------------ ----------- ------------ ----------------------
Basic EPS 6.58p 5.89p 11.7% 12.42p
------------ ----------- ------------ ----------------------
Net cash** GBP15.9m GBP15.0m 6.0% GBP15.4m
------------ ----------- ------------ ----------------------
Dividend per share 0.75p 0.75p - 3.50p
------------ ----------- ------------ ----------------------
*excluding share-based incentives, defined benefit pension
charge and non-underlying items as summarised in note 5
** Net cash is defined as cash and cash equivalents less
borrowings. For the purpose of this definition, borrowings do not
include lease liabilities
-- Revenue of GBP56.7m (H1 FY23: GBP57.9m ), down 2.1% in
reported currency (down 3.0% in constant currency), reflects strong
growth in North America offset by a challenging market in the
UK
-- Outstanding performance from licensing with revenue up 81.6%
at GBP6.9m (H1 FY23: GBP3.8m) in reported currency
-- Brand product sales down 4.5% in reported currency (down 5.8%
in constant currency) at GBP40.3m (H1 FY23: GBP42.2m), impacted by
trading in the UK, down 11.8%, which represents approximately half
of brand product sales
o Strong performance from the strategic growth opportunity of
North America, with sales up 10.3% in reported currency (up 5.9% in
constant currency)
o Strong sales from the Zoffany and Morris & Co. brands in
North America, up 35% and 16% respectively in reported currency (up
30% and 12% in constant currency)
-- Following a strong comparator period when customers restocked
post-Covid, third party manufacturing returned closer to pre-Covid
levels with sales of GBP9.5m (H1 FY23: GBP11.9m; H1 FY20:
GBP9.6m)
-- Adjusted underlying profit before tax of GBP6.8m up 7.9% (H1
FY23: GBP6.3m) , reflecting the significant contribution from high
margin licensing activities and a continued focus on costs
-- Strong balance sheet with net cash of GBP15.9m at 31 July
2023 (31 July 2022: GBP15.0m; 31 January 2023: GBP15.4m)
-- Interim dividend of 0.75p per share (H1 FY23: 0.75p)
Operational highlights
-- Major licensing agreements signed with NEXT, for Clarke &
Clarke homewares, and with J Sainsbury plc's Habitat brand with
Morris & Co. and Tu brand with Scion for a wide range of
products
-- Progress in delivery of the Group's US strategy, including
relaunching the New York showroom and the early renewal of the
distribution agreement with Kravet Inc. for Clarke & Clarke for
a further five years
-- Exciting product launches including Sophie Robinson x
Harlequin and Disney Home x Sanderson with sampling running at a
high level
-- Investment in manufacturing continuing to drive digital
printing, rising to 76% (H1 FY23: 73%) of total printing at
Standfast and 22% (H1 FY23: 19%) of total printing at Anstey in the
half year
Dianne Thompson, Sanderson Design Group's Chairman, said:
" We are focused on growth opportunities in the US, where we are
currently under indexed, on driving licensing income
internationally and on mitigating the softness in the UK market
through cost saving measures. Our licensing activities had an
outstanding first half and continue to drive the Group's profit
growth in the current year. As we enter the key autumn selling
period, we are encouraged by the high level of sampling from recent
product launches, by our pipeline of licensing opportunities and by
the strength of our balance sheet. The Board's expectations for the
full year remain unchanged."
Analyst meeting and webcast
A meeting for analysts and institutional investors will be held
at 9.30 a.m. today, 11 October 2023, at the offices of Buchanan,
107 Cheapside, London EC2V 6DN. For details, please contact
Buchanan at SDG@buchanan.uk.com .
A live webcast of the meeting will be available via the
following link:
https://stream.buchanan.uk.com/broadcast/650086f2f50a141a955e7341
A replay of the webcast will be made available following the
meeting at the Company's investor website,
www.sandersondesign.group .
For further information:
Sanderson Design Group PLC c/o Buchanan +44 (0)
20 7466 5000
Lisa Montague, Chief Executive Officer
Mike Woodcock, Chief Financial Officer
Investec Bank plc (Nominated Adviser
and Joint Broker) +44 (0) 20 7597 5970
David Anderson / Alex Wright / Ben
Farrow
Singer Capital Markets (Joint Broker) +44 (0) 20 7496 3000
Tom Salvesen / Jen Boorer / Alex Emslie
Buchanan +44 (0) 20 7466 5000
Mark Court / Sophie Wills / Toto Berger
/ Abigail Gilchrist
SDG@buchanan.uk.com
Notes for editors:
About Sanderson Design Group
Sanderson Design Group PLC is a luxury interior furnishings
company that designs, manufactures and markets wallpapers, fabrics
and paints. In addition, the Company derives licensing income from
the use of its designs on a wide range of products such as bed and
bath collections, rugs, blinds and tableware.
Sanderson Design Group's brands include Zoffany, Sanderson,
Morris & Co., Harlequin, Clarke & Clarke and Scion.
The Company has a strong UK manufacturing base comprising Anstey
wallpaper factory in Loughborough and Standfast & Barracks, a
fabric printing factory, in Lancaster. Both sites manufacture for
the Company and for other wallpaper and fabric brands.
Sanderson Design Group employs approximately 600 people, and its
products are sold worldwide. It has showrooms in London, New York,
Chicago and Amsterdam.
Sanderson Design Group trades on the AIM market of the London
Stock Exchange under the ticker symbol SDG.
For further information please visit:
www.sandersondesigngroup.com .
This announcement contains certain forward-looking statements
that are based on management's current expectations or beliefs as
well as assumptions about future events. These are subject to risk
factors associated with, amongst other things, the economic and
business circumstances occurring from time to time in the countries
and sectors in which Sanderson Design Group operates. It is
believed that the expectations reflected in these statements are
reasonable but they may be affected by a wide range of variables
which could cause actual results, and Sanderson Design Group's
plans and objectives, to differ materially from those currently
anticipated or implied in the forward-looking statements. Investors
should not place undue reliance on any such statements. Nothing in
this announcement should be construed as a profit forecast.
CHIEF EXECUTIVE OFFICER'S STRATEGY AND OPERATIONAL REVIEW
The financial results for the six months ended 31 July 2023 show
solid growth in profitability, further margin improvement and an
increasing cash balance amid challenging market conditions,
particularly in the UK, which impacted overall volumes. The
positive profit performance in the half year has been achieved
through a strong performance from licensing, continued growth in
North America, careful cost control and other targeted management
actions.
We have managed inflationary pressures in the first half,
including pay rises in line with the Real Living Wage. We remain
confident that market softness in the current half year will be
offset by recent product launches and our licensing pipeline, along
with cost savings from the recently completed rationalisation of
our UK support function.
Group sales in the six-month period were down 2.1% in reported
currency, down 3.0% in constant currency, at GBP56.7m (H1 FY23:
GBP57.9m) reflecting in large part the challenging consumer
environment in the UK which represents about half of brand product
sales.
Our licensing segment delivered an outstanding half year with
revenue up 81.6% at GBP6.9m (H1 FY23: GBP3.8m), driven by
accelerated income of GBP5.0m (H1 FY23: GBP1.9m) from record
licensing agreements signed in the first half. New licence
agreements, products from which usually take about a year to
progress from design to launch, are important building blocks for
the future in terms of cash generation and licensing's underlying
performance.
Major licensing agreements signed in the first half included
NEXT with the Clarke & Clarke brand for a wide range of
homewares. This five-year agreement, which will see the first
product launches in spring next year, included accelerated income
of GBP3.0m. The Company also signed a multi-year agreement with J
Sainsbury plc, in which the supermarket group's Habitat homewares
brand and Tu clothing brand will develop a wide range of licensed
products in collaboration with the Scion and Morris & Co.
brands. These agreements with NEXT and J Sainsbury highlight our
strategic emphasis on collaborating with larger companies,
complemented by high quality niche opportunities.
The underlying sales performance of licensing reflected good
growth from our core licence revenue along with a larger than
expected contribution from Morris & Co.'s agreement with
Ruggable, the US specialist in washable rugs.
We continue discussions in connection with other licence
opportunities and remain excited by the quality of our
pipeline.
Our strategic growth segment of North America, which now
represents about a quarter of brand product sales, showed growth of
10.3% in reported currency, 5.9% in constant currency, at GBP10.7m
(H1 FY23: GBP9.7m), driven by the Morris & Co. and Zoffany
brands along with a robust performance from Clarke & Clarke. We
remain excited by the opportunity in North America; progress in the
first half included relaunching our New York showroom, developing
relationships with designers and collaborative partners, and
renewing our distribution agreement with Kravet Inc. for Clarke
& Clarke for a further five years, starting in September 2023.
Clarke & Clarke sales have grown by approximately 25% since the
initial agreement was signed in June 2019 and we look forward to
the continued success of this relationship.
The difficult consumer environment in the UK led to brand
product sales in the UK being down 11.8% at GBP19.5m. We are
encouraged by recent product launches, including Sophie Robinson's
Harlequin collection and the Disney Home x Sanderson collaboration.
Sampling from both collections has been strong, with a particularly
high level of sampling from the Disney Home collection at the time
of last month's Focus trade show at Chelsea Harbour. However, we
remain focused on cost control and efficiency gains to drive margin
improvements. We recently completed a reorganisation of the UK
support function, which is expected to yield annualised savings of
GBP0.6m and will benefit the second half of this year and
thereafter. This reorganisation aligns the business to the lower
volumes of the current consumer environment and mitigates the
significant inflationary pressures of the recent past.
Trading in our Northern Europe segment largely reflected the
issues experienced in the UK, with brand product sales down 7.3% in
reported currency, down 8.9% in constant currency, at GBP5.1m.
Trading in the Rest of the World was up 2.0% in reported currency,
unchanged in constant currency, at GBP5.0m, benefiting from
contract sales to the hospitality market in the Middle East.
The Group's net cash balances have increased during the half
year to GBP15.9m at 31 July 2023 (31 July 2023: GBP15.0m, 31
January 2023: GBP15.4m). The strength of our balance sheet protects
the business during the current challenging macro-environment and
enables us to invest in growth opportunities and our ZeroBy30
pledge.
The second half last year included a significant investment in
inventory, which has since decreased as planned. Inventory at the
half year end was GBP26.2m, compared with GBP27.8m at 31 January
2023, and is expected to decrease further in the remainder of the
financial year.
Live Beautiful
Live Beautiful, which was launched in April 2021, is the
Company's Environmental, Social and Governance strategy and
includes two major commitments: for the Company to be net carbon
ZeroBy30 and to be the employer of choice in the interior design
and furnishings industry.
Along with consultants, we are looking at Scope 3 emissions in
detail for the first time. We also expect to complete the
previously announced installation of solar panel on a replacement
roof at our Standfast & Barracks factory over the next 12
months.
OPERATIONAL REVIEW
The table below shows the Group's sales performance in the six
months ended 31 July 2023 ('H1 FY24'), compared with H1 FY23.
Six months ended Change (%)
31 July (GBPm)
2023 2022 Reported Constant
currency
---------- ------- --------- ----------
Brand product
UK 19.5 22.1 (11.8%) (11.8%)
---------- ------- --------- ----------
North America 10.7 9.7 10.3% 5.9%
---------- ------- --------- ----------
Northern Europe 5.1 5.5 (7.3%) (8.9%)
---------- ------- --------- ----------
Rest of the World 5.0 4.9 2.0% (0.0%)
---------- ------- --------- ----------
Total Brand product revenue 40.3 42.2 (4.5%) (5.8%)
---------- ------- --------- ----------
Manufacturing*
External 9.5 11.9 (20.2%) -
---------- ------- --------- ----------
Internal 7.6 9.7 (21.6%) -
---------- ------- --------- ----------
Total Manufacturing revenue 17.1 21.6 (20.8%) -
---------- ------- --------- ----------
Licensing*
---------- ------- --------- ----------
Total Licensing revenue 6.9 3.8 81.6% -
---------- ------- --------- ----------
Intercompany eliminations* (7.6) (9.7) (21.6%) -
---------- ------- --------- ----------
TOTAL REVENUE* 56.7 57.9 (2.1%) (3.0%)
---------- ------- --------- ----------
*does not report in constant exchange rate
The Brands
The brands segment comprises the sales and licensing activities
of Clarke & Clarke, Harlequin, Morris & Co., Sanderson,
Scion and Zoffany. It also includes licensing income as well as
global trading from the brands.
Clarke & Clarke
Clarke & Clarke is the Company's biggest selling brand. Its
sales in the half year were resilient at GBP11.6m, a decrease of 2%
in reported currency, 4% in constant currency, compared with the
first half last year. As mentioned earlier, the Company recently
renewed its successful distribution agreement in the US with Kravet
Inc. for Clarke & Clarke for a further five years. Clarke &
Clarke has recently begun to attract licencing partners and in
February this year NEXT signed a master agreement to produce a very
broad range of Clarke & Clarke homeware, including bedding,
towelling, tableware, furniture and lighting. The launch of the
first products from this agreement, which attracted accelerated
income of GBP3.0m, is expected in spring 2024.
Harlequin
Harlequin is a predominantly UK brand and its sales in the half
year were GBP7.2m, a decrease of 13% in reported currency, 14% in
constant currency, compared with the first half last year. The
brand remains the biggest selling wallpaper and fabric brand in
John Lewis and we are beginning to gain traction from our strategy
to promote the brand, including the colour science initiative. We
are excited by the recent launch of the Sophie Robinson collection,
which has been well received. John Lewis has already been
developing licensed products from the collection including cushions
which launched recently.
Morris & Co.
Morris & Co. has grown rapidly during the past few years to
become our second biggest selling brand in terms of brand product
sales, and it also attracts substantial licensing income. Morris
& Co.'s brand product sales in the first half were broadly
unchanged at GBP9.4m, a decrease of 1% in reported currency and 2%
in constant currency, compared with the first half last year. The
brand continues to perform well in the US, where initiatives have
included a special edit in a collaboration with McGee & Co, a
direct-to-consumer website created by the influential interiors
company Studio McGee. In terms of licensed product in the US,
Ruggable's launch of Morris & Co. rugs has quickly exceeded
expectations.
Sanderson
The Sanderson brand was resilient in the first half, with sales
of GBP6.9m, a decrease of 4% in reported currency, 5% in constant
currency, compared with the first half last year. Its big product
launch this year was Arboretum, which was launched in the spring
and has been well received. We are excited by the potential of the
Sanderson brand in the months ahead following the recent launch of
the Disney Home x Sanderson collection of vintage-inspired
wallpapers and fabrics, and also by a collection of trimmings from
Salvesen Graham, the British design duo. Calendar year 2024
promises to be an important year for the brand, not least with the
launch of the much-anticipated collaboration with London-based
Giles Deacon, the couture designer and illustrator.
Scion
Scion is predominantly a licensing brand, and its licensing
revenue makes a strong contribution to the Group. Its products are
also sold from a direct-to-consumer website, scionliving.com. Sales
in the half year were GBP0.7m, a decrease of 30% in both reported
currency and constant currency, compared with the first half last
year.
Zoffany
Zoffany returned to growth in the first half of the year as a
result of our work to restore the brand to its luxury roots,
positioning it for high-end bespoke projects. Recent collections,
including Arcadian Thames, have sold well, benefiting from the
sourcing of niche, luxury fabrics from high end mills. Zoffany
sales in the first half were GBP4.4m, an increase of 5% in reported
currency, 2% in constant currency, compared with the first half
last year. Zoffany has performed particularly well in the US, where
the Company has been working directly with designers on major
residential projects.
Manufacturing
Manufacturing is a core part of our value proposition as an
integrated design company that designs, scales and prints. The
world-class capabilities of our manufacturing operations include
the use of multiple printing techniques with the share of digital
printing rising significantly and creating new opportunities for
innovation by combining digital and conventional techniques.
During the half year, third party manufacturing at GBP9.5m was
down 20.2% compared with the strong comparator last year, when
customers restocked post Covid. In addition, the general consumer
slowdown has reduced the requirement for repeat orders as customers
have sufficient stock. Importantly, orders for new collections have
held up well and orderbooks have further improved during the past
few weeks. Going forward, the comparator for manufacturing in the
second half last year is less demanding as it does not include
restocking post Covid.
Digital printing at Anstey, our wallpaper factory, has grown
rapidly since the investment in a new digital printer last year.
The percentage of digital wallpaper printing, compared with
traditional techniques, increased to 22% of the factory's wallpaper
printing during the first half (H1 FY23: 19%) and is currently at
about 25%.
Digital printing at Standfast represented 76% of the factory's
fabric printing during the first half (H1 FY23: 73%).
CURRENT TRADING AND OUTLOOK
We are focused on growth opportunities in the US, where we are
currently under indexed, on driving licensing income
internationally and on mitigating the softness in the UK market
through cost saving measures. Our licensing activities had an
outstanding first half and continue to drive the Group's profit
growth in the current year. At the start of this month, the second
year of our Morris & Co. womenswear licensing renewal with NEXT
was confirmed, attracting accelerated income of GBP0.3 million.
As we enter the key autumn selling period, we are encouraged by
the high level of sampling from recent product launches, by our
pipeline of licensing opportunities and by the strength of our
balance sheet. Therefore, the Board's expectations for the full
year remain unchanged.
CHIEF FINANCIAL OFFICER'S REVIEW
Key Financial Indicators
We measure and monitor key performance and financial indicators
across the Group. We set out below a summary of the Group's key
financial indicators.
Six months ended 31 July
2023 2022
Revenue (GBPm) 56.7 57.9
Profit before tax (GBPm) 6.2 5.5
Profit before tax (%) 10.9% 9.5%
Basic earnings per share (pence) 6.58p 5.89p
Adjusted underlying profit before
tax* (GBPm) 6.8 6.3
Adjusted underlying profit before
tax* (%) 12.0% 10.9%
Adjusted underlying basic earnings
per share* (pence) 7.39p 6.90p
Net cash (GBPm) 15.9 15.0
Inventory (GBPm) 26.2 26.7
Capital expenditure (GBPm) 1.5 1.5
------------------------------------ ---------------- ------
*excluding share-based payment charge, defined benefit pension
charge and non-underlying items as summarised in note 5
Revenue
Group sales in the six-month period of GBP56.7m (comprising
Brand product and external Manufacturing sales along with licensing
revenue) were down 2.1% in reported currency compared with the same
period last year (H1 FY23: GBP57.9m), down 3.0% on a constant
currency basis.
Six months ended 31 July
2023 2022 Change
Revenue GBPm GBPm %
-------------------------- ----------- --------- --------------
Brands 40.3 42.2 (4.5%)
Licensing 6.9 3.8 81.6%
-------------------------- ----------- --------- --------------
Total Brands 47.2 46.0 2.6%
Manufacturing - External 9.5 11.9 (20.2%)
-------------------------- ----------- --------- --------------
Group 56.7 57.9 (2.1%)
-------------------------- ----------- --------- --------------
Brand product
Brand product revenue in the first half was impacted by the
challenging UK market, which represents approximately 48% of total
brand product revenue. The targeted growth market of the US
continued to perform well, with sales up 10.3% in reported
currency. The Rest of the World market benefited from an increasing
number of contract sales to the hospitality market in the Middle
East.
Manufacturing
Third-party manufacturing at GBP9.5 million was down 20.2%
compared with the strong comparator last year (H1 FY23: GBP11.9m),
when customers were restocking post Covid, and reflects a return to
more normalised trading conditions. Repeat orders were down in the
first half this year both from third-party and Group brands,
although orders for new collections have held up well.
Licensing
Licensing performed strongly in the first half with total
licensing revenue up 81.6% at GBP6.9 million (H1 FY23: GBP3.8m),
driven by accelerated income of GBP5.0m (H1 FY23: GBP1.9m) from
recently signed licence agreements. Major new licensing deals were
signed with NEXT and Sainsbury's in February and March 2023
respectively and a considerable number of licence renewals were
also agreed, underlining the strength of our licensing
relationships. Sangetsu has recently launched Morris Chronicles in
Japan, a collection of Morris & Co. fabrics, wallpapers and
floor coverings, and, this autumn, the Company has launched the
Disney Home x Sanderson collection of vintage-inspired fabrics and
wallpapers.
Gross profit
Gross profit for the period was GBP38.5m, compared with GBP38.1m
in H1 FY23, whilst the gross profit margin at 67.9% represents an
increase of 210 basis points over H1 FY23, driven by increased
licensing income.
Excluding the impact of licence income, which generates 100%
gross profit, margins remained flat at 63.4%. Manufacturing margins
have been negatively impacted by increased electricity costs,
salary inflation and reduced volumes in H1. However, Brand Product
margins have improved year-on-year as the benefits of our SKU
reduction programme start to be realised.
Six months ended 31 July
2023 2022
--------- ------------------------------------------------------------- ------------------ ------------------
Product Revenue (GBPm) 49.8 54.1
Gross profit (GBPm) 31.6 34.3
% 63.4% 63.4%
----------------------------------------------------------------------- ------------------ ------------------
Licence Revenue (GBPm) 6.9 3.8
Gross profit (GBPm) 6.9 3.8
% 100% 100%
----------------------------------------------------------------------- ------------------ ------------------
Total Revenue (GBPm) 56.7 57.9
Gross profit (GBPm) 38.5 38.1
% 67.9% 65.8%
----------------------------------------------------------------------- ------------------ ------------------
As previously communicated, our 2-year fixed price gas supply
contract expires in October this year. Given the significant
increases in wholesale prices since October 2021, we estimate this
will increase our costs by GBP0.9m per annum.
Profit before tax
Profit before tax for the period was GBP6.2m, up from GBP5.5m
for H1 FY23.
Six months ended 31 July (GBPm)
2023 2022
---------------------------------------------------------------------------- ----------------- ----------------
Revenue 56.7 57.9
----------------------------------------------------------------------------- ----------------- ----------------
Gross profit 38.5 38.1
Distribution and selling expenses (12.8) (12.7)
Administration expenses (22.1) (22.4)
Other operating income 2.4 2.3
Net finance income 0.2 0.1
----------------------------------------------------------------------------- ----------------- ----------------
Profit before tax 6.2 5.5
----------------------------------------------------------------------------- ----------------- ----------------
Distribution and selling expenses of GBP12.8m represented 22.6%
of revenue in the period compared with 21.9% in H1 FY23. The
increase as a percentage of revenue can largely be attributed to
commission payments as our sales mix has shifted towards those
markets where we employ an agency model.
Conversely, administration expenses fell to GBP22.1m in the
current period from GBP22.4m for H1 FY23 despite general
inflationary pressure including an average 7% salary increase (as
we continue our commitment to be a Real Living Wage Employer). The
Company has recently streamlined its UK support function, which is
expected to yield annualised savings of GBP0.6 million whilst
maintaining a high level of customer focus. Marketing investment
has also been re-focused following investment in the Chelsea Flower
Show in H1 FY23.
Other operating income of GBP2.4m (H1 FY23: GBP2.3m) comprises
consideration received from the sale of marketing materials (the
cost of which are included within distribution and selling
expenses).
Adjusted underlying profit before tax
Adjusted underlying profit before tax was GBP6.8m, up from
GBP6.3m in H1 FY23.
Six months ended 31
July (GBPm)
2023 2022
Profit before tax 6.2 5.5
Amortisation of acquired intangible assets 0.1 0.5
Restructuring and reorganisation costs 0.1 -
Underlying profit before tax 6.4 6.0
Share-based payment charge 0.2 -
Net defined benefit pension charge 0.2 0.3
------------------------------------------------------------------------------- --------- ------------------------
Adjusted underlying profit before tax 6.8 6.3
------------------------------------------------------------------------------- --------- ------------------------
Non-underlying items comprise:
- Amortisation of intangible assets: GBP0.1m (H1 FY23 GBP0.5m)
in respect of the acquisition of Clarke & Clarke in October
2016.
- Restructuring and re-organisation costs: GBP0.1m (H1 FY23:
nil) relate to the streamlining of the UK support function
Taxation
Tax for the period is charged on profit before tax based on the
forecast effective tax rate for the full year. The estimated
effective tax rate (before adjusting items) for the period was
23.7% (H1 FY23: 23.4%). The corporation tax rate increased from 19%
to 25% on 6 April 2023 giving a straddle rate of 24% for the full
year.
Working capital
(all figures in GBPm) 31 July 2023 31 July 31 January
2022 2023
----------------------- ----------------- ---------- -----------
Inventories 26.2 26.7 27.8
Trade debtors 11.3 12.6 12.0
Trade creditors (10.0) (9.9) (10.4)
----------------------- ----------------- ---------- -----------
Inventories
Net inventory of GBP26.2m was lower than both H1 FY23 of
GBP26.7m and year-end FY23 of GBP27.8m. Within the Brands segment,
the benefit of our SKU reduction strategy continues to realise
benefits with inventory GBP1.6m lower than at year-end. Within the
manufacturing division, lower sales volumes have meant that planned
reductions in raw material levels are taking longer to take effect
than for finished goods but is expected to start to be realised in
H2.
Trade receivables
The Group continues to experience limited bad debts across our
customer base. However, in the current economic environment we
maintain a strong focus on our credit management procedures to
improve controls and to mitigate potential credit risk.
Capital expenditure
Capital expenditure in the period totalled GBP1.5m (H1 FY23:
GBP1.5m). As highlighted previously, t he level of capital
investment required in the coming years is likely to be above
historical levels as we look to boost our digital printing capacity
in both our factories whilst also investing in improved systems to
improve our customer service proposition. Our forward expenditure
programme is closely aligned to our Live Beautiful strategy with
capital maintenance projects only being approved if they can be
proven to support us on our journey to ZeroBy30.
Cash position and banking facilities
Cash at the half year was GBP15.9m compared with GBP15.4m at 31
January 2023 and GBP15.0m at 31 July 2022.
The Group has banking facilities provided by Barclays Bank plc.
The Group has a GBP12.5m multi-currency revolving committed credit
facility which is due for renewal in October 2024, further details
of which can be found in the Group's Annual Report and Accounts
2023. The agreement also includes a GBP5m uncommitted accordion
facility option to further increase available credit which provides
substantial headroom for future growth. Our covenants under the
facility are EBITDA and interest cover measures. The Group is
currently renegotiating the renewal of this facility.
Defined benefit pension
The Group operates two defined benefit pension schemes in the UK
both of which are closed to new members and to future service
accrual. In the six months ended 31 July 2023, the Group made
contributions of GBP1.4m (H1 FY22: GBP1.2m) to these schemes. The
schemes recorded a deficit of GBP1.2m at 31 July 2023 (H1 FY22:
surplus of GBP2.6m; 31 January 2023: deficit of GBP2.4m).
Dividend
A final dividend of 2.75p in respect of the year ended 31
January 2023 was paid on 11 August 2023 to the shareholders on the
Company's register on 14 July 2023.
The Board is announcing a maintained interim dividend of 0.75p
for the six months ended 31 July 2023 (H1FY22: 0.75p), payable on
24 November 2023 to shareholders on the register on 20 October
2023. The ex-dividend date is 19 October 2023. This dividend
reflects the progress made by the business in the first half and
the strength of the Group's balance sheet whilst also acknowledging
the uncertainties in the current macro-economic and consumer
environment.
Unaudited Consolidated Income Statement
For the six months ended 31 July 2023
6 months 6 months
to 31 July to 31 July
2023 2022
Note GBP000 GBP000
--------------------------------------- ----- ------------ ------------
Revenue 2 56,689 57,922
Cost of sales (18,198) (19,788)
--------------------------------------- ----- ------------ ------------
Gross profit 38,491 38,134
--------------------------------------- ----- ------------ ------------
Net operating expenses:
Distribution and selling expenses (12,820) (12,652)
Administration expenses (22,079) (22,371)
Other operating income 3 2,363 2,272
--------------------------------------- ----- ------------ ------------
Profit from operations 5,955 5,383
--------------------------------------- ----- ------------ ------------
Finance income 345 166
Finance costs (148) (83)
--------------------------------------- ----- ------------ ------------
Net finance income 197 83
--------------------------------------- ----- ------------ ------------
Profit before tax 6,152 5,466
Tax expense 4 (1,453) (1,282)
--------------------------------------- ----- ------------ ------------
Profit for the period attributable to
owners of the parent 4,699 4,184
--------------------------------------- ----- ------------ ------------
Earnings per share - Basic 5 6.58 5.89p
--------------------------------------- ----- ------------ ------------
Earnings per share - Diluted 5 6.52 5.83p
--------------------------------------- ----- ------------ ------------
Adjusted earnings per share - Basic 5 7.39 6.90p
--------------------------------------- ----- ------------ ------------
Adjusted earnings per share - Diluted 5 7.33 6.82p
--------------------------------------- ----- ------------ ------------
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 31 July 2023
6 months 6 months
to 31 July to 31 July
2023 2022
GBP000 GBP000
--------------------------------------------- ------------ ------------
Profit for the period 4,699 4,184
Other comprehensive income/(expense):
Items that will not be reclassified to
profit or loss
Remeasurement of defined benefit pension
schemes 121 (856)
Tax (credit)/charge relating to pension
schemes (30) 214
Cash flow hedge (61) -
Total items that will not be reclassified
to profit or loss 30 (642)
---------------------------------------------- ------------ ------------
Items that may be reclassified subsequently
to profit or loss
Currency translation losses (251) (84)
---------------------------------------------- ------------ ------------
Other comprehensive expense for the period,
net of tax (221) (726)
---------------------------------------------- ------------ ------------
Total comprehensive income for the period
attributable to the owners of the parent 4,478 3,458
---------------------------------------------- ------------ ------------
Unaudited Consolidated Balance Sheet
As at 31 July 2023
As at As at
31 July 31 January
2023 2023
Note GBP000 GBP000
---------------------------------- ----- --------- ------------
Non-current assets
Intangible assets 26,299 26,448
Property, plant and equipment 12,814 12,619
Right-of-use assets 3,770 4,577
Minimum guaranteed licensing
receivables 6,889 2,637
---------------------------------- ----- --------- ------------
49,772 46,281
---------------------------------- ----- --------- ------------
Current assets
Inventories 26,248 27,774
Trade and other receivables 15,718 16,327
Minimum guaranteed licensing
receivables 1,488 1,433
Financial derivative instruments 51 112
Cash and cash equivalents 6 15,859 15,401
---------------------------------- ----- --------- ------------
59,364 61,047
---------------------------------- ----- --------- ------------
Total assets 109,136 107,328
---------------------------------- ----- --------- ------------
Current liabilities
Trade and other payables (16,047) (16,286)
Lease liabilities (1,370) (1,701)
Provision for liabilities and (420) -
charges
(17,837) (17,987)
---------------------------------- ----- --------- ------------
Net current assets 41,527 43,060
---------------------------------- ----- --------- ------------
Non-current liabilities
Lease liabilities (2,495) (3,421)
Deferred income tax liabilities (1,013) (1,121)
Retirement benefit obligation (1,175) (2,446)
Provision for liabilities and
charges (717) (1,037)
---------------------------------- ----- --------- ------------
(5,400) (8,025)
---------------------------------- ----- --------- ------------
Total liabilities (23,237) (26,012)
---------------------------------- ----- --------- ------------
Net assets 85,899 81,316
---------------------------------- ----- --------- ------------
Equity
Share capital 715 715
Share premium account 18,682 18,682
Foreign currency translation
reserve (618) (367)
Retained earnings 26,613 21,779
Other reserves 40,507 40,507
---------------------------------- ----- --------- ------------
Total equity 85,899 81,316
---------------------------------- ----- --------- ------------
Unaudited Consolidated Cash Flow Statement
For the six months ended 31 July 2023
6 months 6 months
to 31 July to 31 July
2023 2022*
Note GBP000 GBP000
--------------------------------------------- ----- ------------ ------------------
Profit from operations 5,955 5,383
Intangible asset amortisation 368 846
Property, plant and equipment depreciation 1,164 1,233
Right-of-use asset depreciation 1,167 1,253
Share-based payment equity charge 181 28
Defined benefit pension charge 164 310
Employer contributions to pension schemes (1,355) (1,182)
Decrease/(increase) in inventories 1,526 (4,097)
Decrease in trade and other receivables 475 960
Increase in minimum guaranteed licensing
receivables (4,042) (1,622)
Decrease in trade and other payables (1,829) (4,393)
Increase in provision for liabilities 100 -
and charges
Tax paid (418) (133)
--------------------------------------------- ----- ------------ ------------------
Net cash generated from/(used in) operating
activities 3,456 (1,414)
--------------------------------------------- ----- ------------ ------------------
Cash flows from investing activities
Finance income received 80 10
Purchase of intangible assets (219) (188)
Purchase of property, plant and equipment (1,404) (1,301)
Net cash used in investing activities (1,543) (1,479)
--------------------------------------------- ----- ------------ ------------------
Cash flows from financing activities
Repayment of lease liabilities (1,281) (1,175)
Net cash used in financing activities (1,281) (1,175)
--------------------------------------------- ----- ------------ ------------------
Net increase/(decrease) in cash and cash
equivalents 632 (4,068)
Cash and cash equivalents at the beginning
of period 15,401 19,050
Effect of exchange rate fluctuations on
cash held (174) 36
--------------------------------------------- ----- ------------ ------------------
Cash and cash equivalents at end of period 6 15,859 15,018
--------------------------------------------- ----- ------------ ------------------
*the prior period comparatives have been restated to provide
consistent presentation with the Annual Report 2023. Depreciation
for property, plant and equipment and depreciation for right-of-use
assets are disclosed separately instead of a combined figure.
Minimum guaranteed licensing receivables are separated from trade
and other receivables. Interest paid is split into lease interest
within repayment of lease liabilities and prepayment of facility
fee within trade and other receivables.
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 31 July 2023
Attributable to owners of the parent
company
---------------------------------------------------------------------------------
Foreign
Share currency
Share premium Retained Other translation Total
capital account earnings reserve* reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- -------------- --------- ------------- -----------
Balance at 1 February
2022 710 18,682 20,610 40,507 (796) 79,713
Profit for the period - - 4,184 - 4,184
---------------------- -------------- --------- -------------- ---------- ------------- -----------
Remeasurements of
defined benefit
pension schemes - (856) - - (856)
Deferred tax relating
to pension
schemes - - 214 - - 214
Currency translation
differences - - - - (84) (84)
---------------------- -------------- --------- -------------- ---------- ------------- -----------
Total comprehensive
expense - (642) - (84) (726)
---------------------- -------------- --------- -------------- ---------- ------------- -----------
Transactions with
owners, recognised
directly in equity:
Share-based payment
equity
charge - - 89 - - 89
Related tax movements
on share
based payment - - (109) - - (109)
---------------------- -------------- --------- -------------- ---------- ------------- -----------
Balance at 1 August
2022 710 18,682 24,132 40,507 (880) 83,151
Profit for the period - 4,641 - - 4,641
---------------------- -------------- --------- -------------- ---------- ------------- -----------
Other comprehensive
income/(expense):
Remeasurements of
defined benefit
pension schemes - - (6,125) - - (6,125)
Deferred tax relating
to pension
scheme liability - - 1,531 - - 1,531
Cash flow hedge - - 112 - - 112
Currency translation
differences - - - - 513 513
---------------------- -------------- --------- -------------- ---------- ------------- -----------
Total comprehensive
income/(expense) - 18,682 (4,482) - 513 (3,969)
---------------------- -------------- --------- -------------- ---------- ------------- -----------
Transactions with
owners, recognised
directly in equity:
Dividends - - (2,484) - - (2,484)
Issuance of share
capital for
share-based payment
vesting 5 - (5) - - -
Share-based payment
equity
charge - - 404 - - 404
Related tax movements
on share-
based payment - - 3 - - 3
Share-based payment
vesting - - (430) - - (430)
Balance at 31 January
2023 715 18,682 21,779 40,507 (367) 81,316
---------------------- -------------- --------- -------------- ---------- ------------- -----------
*consists of capital reserve and merger reserve
Unaudited Consolidated Statement of Changes in Equity
(cont'd)
For the six months ended 31 July 2023
Attributable to owners of the parent
company
---------------------------------------------------------------------
Foreign
Share currency
Share premium Retained Other translation Total
capital account earnings reserve* reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- --------- --------- ---------- ---------- ------------- --------
Balance at 1 February 2023 715 18,682 21,779 40,507 (367) 81,316
Profit for the period - - 4,699 - - 4,699
--------------------------------------- --------- --------- ---------- ---------- ------------- --------
Other comprehensive income/(expense):
Remeasurements of defined benefit
pension schemes - - 121 - - 121
Deferred tax relating to pension
scheme liability - - (30) - - (30)
Cash flow hedge - - (61) - - (61)
Currency translation differences - - - - (251) (251)
--------------------------------------- --------- --------- ---------- ---------- ------------- --------
Total comprehensive income/(expense) - - 4,729 - (251) 4,478
--------------------------------------- --------- --------- ---------- ---------- ------------- --------
Transactions with owners, recognised
directly in equity:
Share-based payment equity charge - - 181 - - 181
Related tax movements on share-based
payment - - (76) - - (76)
--------------------------------------- --------- --------- ---------- ---------- ------------- --------
Balance at 31 July 2023 715 18,682 26,613 40,507 (618) 85,899
--------------------------------------- --------- --------- ---------- ---------- ------------- --------
*consists of capital reserve and merger reserve
Notes to the unaudited interim financial statements
1. Basis of preparation of unaudited interim financial statements
The interim financial statements have been prepared in
accordance with the accounting policies that the Group expects to
apply in its annual financial statements for the year ending 31
January 2024.
The accounting policies adopted in the preparation of these
interim financial statements to 31 July 2023 are consistent with
the accounting policies applied by the Group in its Annual Report
and Accounts for the year ended, 31 January 2023.
The interim financial statements should be read in conjunction
with the annual financial statements for the year ended 31 January
2023 prepared in accordance with UK adopted International
Accounting Standards. All comparative information is for the
six-month period ended 31 July 2022, except for the Balance Sheet
information which is as at 31 January 2023.
No new standards and interpretations issued and effective for
the year have had any significant impact on the preparation of the
financial statements.
The interim financial statements do not represent statutory
accounts for the purposes of section 434 'Requirements in
connection with publication of statutory accounts' of the Companies
Act 2006. The financial information for the year ended 31 January
2023 is based on the statutory accounts for the financial year
ended 31 January 2023, on which the auditors issued an unqualified
opinion and did not contain a statement under section 498 'Duties
of auditor' of the Companies Act 2006 and have been delivered to
the Registrar of Companies. The interim financial statements for
the six-month period ended 31 July 2023 have not been audited.
Critical accounting estimates and judgements
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 expenses. Actual
results may differ from these estimates. In preparing these interim
financial statements, the significant 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
consolidated financial statements for the year ended 31 January
2023 - going concern assessment which is explained in further
detail below, retirement benefit pension obligations and impairment
of non-financial assets.
Going concern
A key accounting judgement for these interim financial
statements for the six months ended 31 July 2023 is the adoption of
the going concern basis of preparation.
The Board of Sanderson Design Group PLC has undertaken an
assessment of the ability of the Group and Company to continue in
operation and meet its liabilities as they fall due over the period
of its assessment to 31 January 2025. In doing so, the Board
considered events throughout the period of their assessment,
including the availability and maturity profile of the Group's
financing facilities and covenant compliance. These interim
financial statements have been prepared on the going concern basis
which the directors consider appropriate for the reasons set out
below.
The Group funds its operations through cash generated by the
Group and has access to a GBP12.5m Revolving Credit Facility
("RCF") which is linked to two covenants. These covenants are
tested quarterly on 30 April, 31 July, 31 October and 31 January
each year until the facility matures in October 2024. The Board
expects the facility to be rolled over with broadly similar terms
with no significant changes to the existing covenant levels.
Throughout the period and up to the date of this report the
Company has met all required covenant tests. The total headroom of
the Group on 31 July 2023 was GBP28.4m (31 January 2023: GBP27.9m),
including cash and cash equivalents of GBP15.9m (31 January 2023:
GBP15.4m) and the committed facility of GBP12.5m (31 January 2023:
GBP12.5m). The Group has also access to an uncommitted accordion
facility of GBP5.0m (31 January 2023: GBP5.0m) with Barclays Bank
plc.
A Management Base Case ('MBC') model has been prepared, together
with alternative stress tested scenarios, given the uncertainty
regarding the impact of economic difficulties (including
inflationary pressures and interest rate rises) and the Ukraine war
(including impact of sanctions, duration of war and inflationary
pressures). These scenarios indicate that the Company retains
adequate headroom against its borrowing facilities and bank
covenants for the foreseeable future.
The actual results which will be reported will undoubtedly be
different from the MBC and other scenarios modelled by the Group.
If there are significant negative variations from the MBC,
management would act decisively, as they have done in the recent
years, to protect the business, particularly its cash position.
Having considered all the comments above the Directors consider
that the Group has adequate resources to continue trading for the
foreseeable future and will be able to continue operating as a
going concern for a period of at least 12 months from the date of
approval of the financial statements. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
Principal risks
The Group's activities expose it to a variety of financial
risks: market risk (including foreign exchange risk and interest
rate risk), credit risk and liquidity risk. The interim financial
statements do not include all of the risk management information
and disclosures required in the annual report and accounts; they
should be read in conjunction with the Group's Annual Report and
Accounts on 31 January 2023. Information on the principal risks can
be found on page 35 to 39 of the Group's 2023 Annual Report and
Accounts on 31 January 2023 which comprise of competition, trading
environment, foreign exchange, supply chain pressure, recruitment
and retention of key employees, reputation risk, environmental
risk, health and safety risk, major incident or disaster and IT.
There have been no changes in either the principal risks or risk
management policies since the year end.
Approval of interim financial statements
The Board approved the interim financial statements on 10
October 2023.
2. Segmental analysis
The Group is a designer, manufacturer and distributor of luxury
interior furnishings, fabrics and wallpaper.
The reportable segments of the Group are aggregated as
follows:
-- Brands - comprising the design, marketing, sales and
distribution, and licensing activities of Morris & Co.,
Sanderson, Zoffany, Clarke & Clarke, Harlequin and Scion
brands.
-- Manufacturing - comprising the wallcovering and printed
fabric manufacturing businesses operated by Anstey and Standfast
& Barracks respectively.
This is consistent with the basis on which the Group presents
its operating results to the Board of Directors, which is the Chief
Operating Decision Maker, for the purposes of IFRS 8. Other
Group-wide activities and expenses, predominantly related to
corporate head office costs, defined benefit pension costs,
long-term incentive plan expenses, taxation and eliminations of
inter-segment items, are presented within 'intercompany
eliminations and unallocated'.
The Group has revised its segmental methodology during the
period by reviewing the allocation of shared costs and operating
profits among the business segments and restated the prior year's
comparatives to improve usefulness of the segmentation. The amounts
reclassified for the period ended 31 July 2022 are:
1. Central to Manufacturing of GBP0.7m relating to allocation of
costs such as rental, audit fee, insurance, human resource and IT
which are shared by all business segments but accounted for by a
business segment and Brands to Central of GBP1.0m relating to
central costs such as pension scheme costs and stock consolidation
adjustments accounted for in Brands.
2. Central to Brands of GBP0.1m in operating profits as the
senior management at the Central and Brands units spend significant
amount of time jointly performing key value driving functions and
taking important decisions that influence the way the Group
functions strategically as well as on a day-to-day basis. Each of
these segments also perform some more routine and less complex
functions. These functions take place within the framework set by
the senior leadership in these two business segments.
a) Principal measures of profit and loss - Income Statement segmental information
6 months to 31 July Intercompany
2023 eliminations
Brands Manufacturing and unallocated Total
GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------------- ----------------- --------
UK revenue 19,512 6,411 - 25,923
International revenue 20,769 3,047 - 23,816
Licence revenue 6,950 - - 6,950
------------------------ -------- -------------- ----------------- --------
Revenue - external 47,231 9,458 - 56,689
Revenue - internal - 7,576 (7,576) -
------------------------ -------- -------------- ----------------- --------
Total revenue 47,231 17,034 (7,576) 56,689
------------------------ -------- -------------- ----------------- --------
Profit / (Loss) from
operations 6,506 (485) (66) 5,955
Net finance income - - 197 197
------------------------ -------- -------------- ----------------- --------
Profit / (Loss) before
tax 6,506 (485) 131 6,152
Tax charge - - (1,453) (1,453)
------------------------ -------- -------------- ----------------- --------
Profit / (Loss) for
the period 6,506 (485) (1,322) 4,699
------------------------ -------- -------------- ----------------- --------
There is no seasonality to the total revenue and operating
profits for the period.
6 months to 31 July
2022* Intercompany
eliminations
Brands Manufacturing and unallocated Total
GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------------- ------------------ --------
UK revenue 22,039 7,827 - 29,866
International revenue 20,131 4,090 - 24,221
Licence revenue 3,835 - - 3,835
------------------------ -------- -------------- ------------------ --------
Revenue - external 46,005 11,917 - 57,922
Revenue - internal - 9,773 (9,773) -
------------------------ -------- -------------- ------------------ --------
Total revenue 46,005 21,690 (9,773) 57,922
------------------------ -------- -------------- ------------------ --------
Profit / (Loss) from
operations* 4,035 2,503 (1,155) 5,383
Net finance income - - 83 83
------------------------ -------- -------------- ------------------ --------
Profit / (Loss) before
tax 4,035 2,503 (1,072) 5,466
Tax charge - - (1,282) (1,282)
------------------------ -------- -------------- ------------------ --------
Profit / (Loss) for
the period 4,035 2,503 (2,354) 4,184
------------------------ -------- -------------- ------------------ --------
*the prior period comparatives have been restated to provide
consistent presentation with the current period
b) Additional segmental revenue information
The segmental revenues of the Group are reported to the CODM in
more detail. One of the analyses presented is revenue by export
market for Brands.
Brands international revenue by export 6 months 6 months
market to 31 July to 31 July
2023 2022
GBP000 GBP000
---------------------------------------- ------------ ------------
North America 10,687 9,681
Northern Europe 5,083 5,521
Rest of the World 4,999 4,929
----------------------------------------- ------------ ------------
20,769 20,131
---------------------------------------- ------------ ------------
Revenue of the Brands reportable segment - revenue from
operations in all territories where the sale is sourced from the
Brands operations, together with contract and licence revenue:
Brands revenue analysis 6 months 6 months
to 31 July to 31 July
2023 2022
GBP000 GBP000
------------------------- ------------ ------------
Clarke & Clarke 11,576 11,828
Morris & Co. 9,357 9,462
Harlequin 7,185 8,277
Sanderson 6,887 7,174
Zoffany 4,433 4,247
Scion 697 997
Other brands 146 185
Licensing 6,950 3,835
-------------------------- ------------ ------------
47,231 46,005
------------------------- ------------ ------------
Revenue of the Manufacturing reportable segment - including
revenues from internal sales to the Group's Brands:
Manufacturing revenue analysis 6 months 6 months
to 31 July to 31 July
2023 2022
GBP000 GBP000
Standfast 8,900 11,265
Anstey 8,134 10,425
--------------------------------- ------------ ------------
17,034 21,690
-------------------------------- ------------ ------------
3. Other operating income
Other operating income comprises consideration received from the
sale of marketing materials and other services of GBP2,363,000 (H1
FY23: GBP2,272,000).
4. Tax expense
6 months 6 months
to 31 July to 31 July
2023 2022
GBP000 GBP000
Current tax:
- UK, current tax (1,029) (759)
- overseas, current tax (45) (61)
- overseas, adjustment in respect
of prior year (256) (54)
Corporation tax (1,330) (874)
------------------------------------- ------------ ------------
Deferred tax:
- current period (339) (408)
- adjustments in respect of prior 216 -
year
Deferred tax (123) (408)
------------------------------------- ------------ ------------
Total tax expense for the period (1,453) (1,282)
------------------------------------- ------------ ------------
5. Earnings per share
a) Earnings per share
Basic earnings per share ('EPS') is calculated by dividing the
earnings attributable to ordinary shareholders by the weighted
average number of shares outstanding during the period, excluding
those held in the Employee Benefit Trust ('EBT') and those held in
treasury, which are treated as cancelled. The adjusted basic
earnings per share is calculated by dividing the adjusted earnings
by the weighted average number of shares.
6 months to 31 July 6 months to 31 July
2023 2022
Weighted Weighted
average average
number Per number Per
of share of share
Earnings shares amount Earnings shares amount
GBP000 (000s) Pence GBP000 (000s) Pence
Basic earnings per
share 4,699 71,468 6.58 4,184 70,983 5.89
--------------------- --------- --------- -------- --------- --------- ---------
Effect of dilutive
securities:
Shares under LTIP 592 838
--------------------- --------- --------- -------- --------- --------- ---------
Diluted earnings
per share 4,699 72,060 6.52 4,184 71,821 5.83
--------------------- --------- --------- -------- --------- --------- ---------
Adjusted underlying
basic and diluted
earnings per share:
Add back:
share-based
payment
charge 183 28
Add back: Net
defined
benefit pension
charge
(including National
Insurance) 164 310
Non-underlying items
(see below) 269 508
Tax effects of
non-underlying
items with other
add
backs (33) (134)
--------------------- --------- --------- -------- --------- --------- ---------
Adjusted underlying
basic earnings per
share 5,282 71,468 7.39 4,896 70,983 6.90
--------------------- --------- --------- -------- --------- --------- ---------
Adjusted underlying
diluted earnings
per
share 5,282 72,060 7.33 4,896 71,821 6.82
--------------------- --------- --------- -------- --------- --------- ---------
The Group issued ordinary share capital with voting rights
consists of 71,468,206 (H1 FY23: 70,983,505) ordinary shares of
which nil (H1 FY23: nil) ordinary shares are held in treasury and 1
(H1 FY23: 220) ordinary share is held by the Walker Greenbank PLC
EBT. Shares held in treasury or by the EBT are treated as cancelled
when calculating EPS.
b) Adjusted underlying profit before tax
The Group uses an Alternative Performance Measure "adjusted
underlying profit before tax". This is defined as statutory profit
before tax adjusted for the exclusion of share-based incentives,
defined benefit pension charge and non-underlying items. This is
recognised by the investment community as an appropriate measure of
performance for the Group and is used by the Board of Directors as
a key performance measure. The table below reconciles statutory
profit before tax to adjusted underlying profit before tax.
Adjusted underlying profit before tax:
6 months 6 months
to 31 July to 31 July
2023 2022
GBP000 GBP000
---------------------------------------- ------------ ------------
Statutory profit before tax 6,152 5,466
----------------------------------------- ------------ ------------
Amortisation of acquired intangible
assets (a) 138 508
Restructuring and reorganisation costs 131 -
(b)
Net non-underlying charge included
in
statutory profit before tax 269 508
----------------------------------------- ------------ ------------
Underlying profit before tax 6,421 5,974
Share-based payment charge 183 28
Net defined benefit pension charge 164 310
Adjusted underlying profit before
tax 6,768 6,312
----------------------------------------- ------------ ------------
In calculating the adjusted underlying profit before tax, the
Group adjusts for non-underlying items which are material
non-recurring items or items considered to be non-operational in
nature. The nature of these adjustments is outlined as follows:
(a) Amortisation of acquired intangible assets of GBP138,000 (H1 FY23: GBP508,000).
(b) Restructuring and reorganisation costs
These relate to the reorganisation of the Group and comprise of
rationalisation of certain operation and support functions of
GBP131,000 (H1 FY23: nil).
6. Analysis of net funds
Other
1 February non-cash 31 July
2023 Cash flow changes 2023
GBP000 GBP000 GBP000 GBP000
--------------------------- ----------- ---------- ---------- --------
Cash and cash equivalents 15,401 632 (174) 15,859
--------------------------- ----------- ---------- ---------- --------
Total funds 15,401 632 (174) 15,859
Lease liabilities (5,122) 1,091 166 (3,865)
--------------------------- ----------- ---------- ---------- --------
Total debt (5,122) 1,091 166 (3,865)
--------------------------- ----------- ---------- ---------- --------
Net funds/(debts) 10,279 1,723 (8) 11,994
------------------- ------- ------ ---- -------
7. Dividends
A final dividend of 2.75p in respect of the year ended 31
January 2023 was paid on 11 August 2023 to the shareholders on the
Company's register on 14 July 2023.
The Board is announcing a maintained interim dividend of 0.75p
for the six months ended 31 July 2023 (H1 FY22: 0.75p), payable on
24 November 2023 to shareholders on the register on 20 October
2023. The ex-dividend date is 19 October 2023.
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END
IR DGBDGCSBDGXG
(END) Dow Jones Newswires
October 11, 2023 02:00 ET (06:00 GMT)
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