TIDMSDG
RNS Number : 8648O
Sanderson Design Group PLC
13 October 2021
For immediate release 13 October 2021
SANDERSON DESIGN GROUP PLC
("Sanderson Design Group", the "Company" or the "Group")
Interim Results for the six months ended 31 July 2021
Strong recovery continues with key financial metrics ahead of
the previous two half years
Reinstatement of interim dividend. Full year trading in line
with expectations
Sanderson Design Group PLC (AIM: SDG), the luxury interior
design and furnishings group, announces its financial results for
the six months ended 31 July 2021.
Financial highlights
Six months ended 31 July 2021 2020 2019
Revenue GBP57.5m GBP38.8m GBP55.9m
----------- ---------- ----------
Adjusted underlying profit before GBP6.0m GBP0.4m GBP4.9m
tax*
----------- ---------- ----------
Adjusted underlying EPS* 6.53p 0.54p 5.54p
----------- ---------- ----------
Statutory profit/(loss) before GBP4.9m (GBP0.9m) GBP3.5m
tax
----------- ---------- ----------
Statutory profit/(loss) after GBP3.8m (GBP0.8m) GBP2.6m
tax
----------- ---------- ----------
Basic EPS 5.31p (1.10p) 3.68p
----------- ---------- ----------
Net cash excluding 'Leases' GBP15.4m GBP4.5m GBP0.9m
----------- ---------- ----------
Net cash/(debt) including 'Leases' GBP10.5m (GBP2.6m) (GBP7.7m)
----------- ---------- ----------
Interim dividend per share 0.75p n/a 0.52p
----------- ---------- ----------
*excluding share-based incentives, defined benefit pension
charge and non-underlying items - see note 8(b) of the financial
statements
-- Revenue up 48.2% at GBP57.5m (2020: GBP38.8m), reflecting continued demand for home interior products, the
sustained trend towards decorative styles and the strength of our UK manufacturing.
-- Brand product sales up 42.3% compared with the same period in 2020 in constant currency and up 5.4% compared with
the same period in 2019 in constant currency:
-- North America has delivered a very strong performance.
-- Brand product sales in Northern Europe were up 21.1% in constant currency against 2020 and up 7.8% against 2019.
-- Licensing income delivered GBP2.0m (2020: GBP1.3m) including accelerated licensing income of GBP0.5m (2020:
GBP0.3m).
-- Manufacturing sales up 100.0% from the same period in 2020 when the manufacturing sites were affected by Covid-19
closures and up 22.8% against the same period in 2019 reflecting the buoyant order books from both UK and export
customers.
-- Adjusted underlying profit before tax GBP6.0m (2020: GBP0.4m) on the back of stronger sales and the positive
effect of the operational measures introduced to reduce and control discretionary and fixed costs. This also
includes the forgiveness of the US Paycheck Protection Payment scheme of GBP0.4m.
-- Cash inflow from operating activities of GBP4.6m (2020: GBP5.1m) supporting increased liquidity and headroom of
GBP27.9m (2020: GBP17.0m) with a net cash position of GBP15.4m (2020: GBP4.5m) as at 31 July 2021.
-- Interim dividend of 0.75p per share (2020: nil; 2019: 0.52p).
Operational highlights
-- Sanderson 160th anniversary collection was well received along with the positive impact of the Very Sanderson
media campaign, featuring British sports personality Maro Itoje, launched in April 2021.
-- Harlequin's Own The Room TV campaign launched in September 2021.
-- Morris & Co. demonstrating strong appeal with the apparel collaboration with NEXT performing very strongly since
launch in May 2021 and its first major US licensing agreement with Williams Sonoma, America's market leader in
high quality kitchenware.
-- Direct-to-consumer digital strategy advanced with the launch of scionliving.com, our direct-to-consumer website
franchise collaboration, and the online launch of Archive by Sanderson Design, a consumer brand targeting a new
customer demographic for the Group.
-- Planet Mark certification for Year 3, reflecting our Live Beautiful sustainability commitment.
Dianne Thompson, Sanderson Design Group's Chairman, said:
"The first six months of our financial year have continued the
strong recovery of the business, with particularly impressive
performances from North America, manufacturing and the Morris &
Co. brand. This positive trading and the strength of our balance
sheet mean we are delighted to return to the dividend list with an
interim payment.
"As we enter the second half of the financial year, we are
mindful of the cost, supply chain and other issues affecting the UK
and international business environment. We are focused on
mitigating the potential impact of those issues on our
business.
"Since the half year, manufacturing sales and licensing income
remained robust and offset a slight softening in brand sales. Our
key Autumn selling weeks in October and November have just started
and we remain confident of meeting the Board's expectations for the
full year."
Webcast and Analyst Q&A call
A pre-recorded presentation of the half year results, by Lisa
Montague, Chief Executive Officer, and Michael Williamson, Chief
Financial Officer, will be available from 7.05am today, 13 October
2021, at the following link:
https://webcasting.buchanan.uk.com/broadcast/614b5fa43ae1ca74490b23b9
The pre-recorded presentation will also be available at the
Company's investor website,
https://sandersondesign.group/investors/
A Q&A call for analysts and institutional investors will be
held at 11.00 a.m. today via video conferencing. For dial-in
details, please contact Buchanan at SDG@buchanan.uk.com .
For further information:
Sanderson Design Group PLC c/o Buchanan +44 (0) 20
7466 5000
Lisa Montague, Chief Executive Officer
Michael Williamson, Chief Financial
Officer
Caroline Geary, Company Secretary
Investec Bank PLC (Nominated Adviser
and Broker) +44 (0) 20 7597 5970
David Anderson / Alex Wright / Ben
Farrow
Buchanan +44 (0) 20 7466 5000
Mark Court / Sophie Wills / Toto
Berger
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, Scion, Clarke & Clarke and Archive
by Sanderson Design.
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 renowned interiors brands.
Sanderson Design Group employs approximately 610 people and its
products are sold worldwide. It has showrooms in London, New York,
Chicago, Paris, Amsterdam and Dubai.
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
CHIEF EXECUTIVE OFFICER'S STRATEGY, OPERATIONAL AND FINANCIAL
REVIEW
INTRODUCTION
The six months to 31 July 2021 were a period of strong trading,
continuing the momentum reported in the second half of the previous
financial year. It was also a period of considerable strategic and
operational development, particularly in respect of our digital
initiatives and sustainability strategy.
Comparing the first half of this year with the six months ended
31 July 2020, a period materially affected by Covid-19, shows that
the Group is significantly ahead on all the key metrics of revenue,
revenue growth, profit, EBITDA and net cash. This comparative
performance is particularly striking given that Covid-19
restrictions continued to have an impact at the beginning of the
current financial year.
The Group is benefiting from the sustained demand for home
interior products and the renewed focus on the home, which has
characterised the Covid-19 pandemic. Our manufacturing operations
are performing very strongly, reflecting the high quality of our
offering along with our post-Brexit competitiveness for both UK and
overseas customers.
Our income from licensing has also performed strongly. In the
half year, core licensing income, which excludes the recognition of
fixed minimum guaranteed licensing income under IFRS 15 and income
from apparel contracts, was GBP1.2m (2020: GBP1.0m; 2019: GBP0.9m),
driven by online retail. Licensing income from apparel was GBP0.3m
(2020: GBPnil; 2019: GBP0.3m) with the Morris & Co apparel
collaboration at NEXT performing particularly strongly since launch
in May 2021. Accelerated licensing income under IFRS 15 was GBP0.5m
(2020: GBP0.3m; 2019: GBP2.0m).
Significant strategic and commercial progress has also been made
in the year-to-date. Our digital strategy advanced with the launch
of scionliving.com, our direct-to-consumer website franchise
collaboration, and more recently by the direct online launch of
Archive by Sanderson Design, a consumer brand targeting a new
customer demographic for the Group.
We have signed a number of new licensing deals in the year to
date, including an exclusive agreement with Japan's Sangetsu
Corporation for Morris & Co. products in 14 countries in east
and southeast Asia. The first products under this agreement are
expected to be launched in autumn 2023. In August 2021, we signed
our first major licensing agreement in the US, again for the Morris
& Co brand. This agreement, with kitchenware specialist
Williams Sonoma, covers a broad range of tableware, cookware and
kitchen accessories. NEXT is an increasingly important licensing
partner for the Group, with the most recent agreement being a
homewares collaboration with the Morris & Co. brand signed
earlier this month.
Initiatives to achieve our strategic ambition to increase brand
awareness have included working with Maro Itoje, the England rugby
star, on a media campaign for the Sanderson brand and using TV
advertising to launch Harlequin's Own the Room campaign.
In light of Covid-19, health and safety remains the top priority
throughout the business, particularly in our manufacturing,
warehousing and showroom operations. Progressively, the Group's
desk-based staff are returning to our offices and finding a balance
between office and remote working that best serves our people and
protects productivity. Covid-19 continues to create some
uncertainties for the near-term outlook, which we plan to mitigate
through maintaining a robust balance sheet and strong
liquidity.
It is particularly noteworthy that the Group's net cash balances
were GBP15.4 million at the half year end, excluding leases.
Inventory management remains focused on efficiency while ensuring
that strong-selling lines are always in stock. The Board will
continue to review further capital requirements across the business
as we come out of the pandemic to invest in a strong platform to
support future growth and efficiency.
As previously reported, in June 2021 we received US$565,818 in
forgiveness for a loan under the Paycheck Protection Payment scheme
in the US. We have had no staff on furlough from 1 April 2021 and,
during April 2021, we returned all CJRS monies received in the
current financial year, totalling GBP100,000.
The Audit Committee report in this year's Annual Report &
Accounts noted the intention to hold a competitive tender process
to appoint a new external auditor to succeed
PricewaterhouseCoopers, which has audited the Company for many
years. This tender process is well advanced and an announcement
will be made in due course.
Sustainability
We launched our Live Beautiful sustainability strategy in April
2021 with a broad range of initiatives including two major
commitments: for the Company to be net carbon zero by 2030 and to
be the employer of choice in the interior design and furnishings
industry.
As previously announced, our employee engagement survey carried
out earlier this year gave an overall employee satisfaction rating
of 78%, which compares with 58% two years ago when the survey was
last conducted. We have since raised our target of 70% to 80% for
employee satisfaction as we continuously strive for
improvement.
We were pleased to receive our Year 3 Planet Mark sustainability
certification, which measures our carbon footprint. In the year to
31 January 2021, our total carbon footprint was 6,359.3 tonnes
(2020: 7,977.8 tonnes; 2019: 9,246.9 tonnes) of carbon dioxide
equivalent.
Dividend
The strong performance in the first half of the financial year
and the strength of our balance sheet has enabled the Board to
restore the Company to the dividend list with an interim dividend
payment of 0.75p for the six months ended 31 July 2021 (2020: nil;
2019: 0.52p).
People
As announced in May this year, Vijay Thakrar, Non-Executive
Director, will step down from the Board on 27 November 2021 on
completion of his current three-year term. We are very grateful to
Vijay for his valuable contribution to the Board and wish him well
for the future. The recruitment process for further strengthening
the Board is proceeding well and it is expected that a further
announcement will be made shortly.
Earlier this month, we were delighted to welcome Mike Woodcock
to the Company as Group Financial Officer. Mike, an executive with
a strong track record in consumer and brand-based businesses, will
become Chief Financial Officer, and join the Board, on 1 November
2021 as announced on 29 September 2021. Michael Williamson, the
Company's current Chief Financial Officer, will step down from the
Company on 31 October 2021 to pursue new career opportunities. We
extend our sincere thanks to Michael for leading the Group's
finances through the challenging periods of Covid and Brexit and
wish him every success in the future.
Sanderson Design Group is a people business. We would like to
thank all employees for their tremendous energy and commitment
during the year to date.
OPERATIONAL REVIEW
The table below shows the Group's sales performance in the six
months ended 31 July 2021, compared with the same period in 2020
and in 2019. The major progress against 2020 reflects the
significant impact of Covid-19 in the early part of last year, when
the Group's factories were temporarily closed and the first
lockdowns were introduced worldwide.
The comparison with 2019 provides a better insight into the
Group's performance albeit during the initial months of the current
year there were Covid-related restrictions in the UK and
elsewhere.
Six months ended Change (%) Change (%)
31 July (GBPm)
2021 compared 2021 compared
with 2020 with
2019
2021 2020 2019 Reported Constant Reported Constant
currency currency
-------------------------- ---------- ----------- ---------- --------- ------------- ------------- ------------
UK Brand product
sales 22.3 15.5 22.2 43.9% 43.9% 0.5% 0.5%
International Brand
product sales 21.0 15.6 20.9 34.6% 40.0% 0.5% 6.6%
* Northern Europe 6.9 5.7 6.5 21.1% 21.1% 6.2% 7.8%
* North America 8.6 5.4 8.1 59.3% 75.5% 6.2% 11.0%
* Rest of the World 5.5 4.5 6.3 22.2% 22.2% (12.7%) (8.3%)
-------------------------- ---------- ----------- ---------- --------- ------------- ------------- ------------
Total Brand product
sales
(includes carriage
income) 43.3 31.1 43.1 39.2% 42.3% 0.5% 5.4%
-------------------------- ---------- ----------- ---------- --------- ------------- ------------- ------------
Licensing income 2.0 1.3 3.2 53.8% 53.8% (37.5%) (35.5%)
-------------------------- ---------- ----------- ---------- --------- ------------- ------------- ------------
Total Brand sales
including
Licensing* 45.3 32.4 46.3 39.8% - (2.2%) -
-------------------------- ---------- ----------- ---------- --------- ------------- ------------- ------------
Total Manufacturing
sales* 21.0 10.5 17.1 100.0% - 22.8% -
Eliminations and
unallocated* (8.8) (4.1) (7.5) 114.6% - 17.3% -
-------------------------- ---------- ----------- ---------- --------- ------------- ------------- ------------
Total Revenue* 57.5 38.8 55.9 48.2% - 2.9% -
-------------------------- ---------- ----------- ---------- --------- ------------- ------------- ------------
*does not report in constant exchange rate
The Brands
This interim report marks the first time that the performance of
each brand is reported separately with the intention being to
enhance transparency for shareholders. Previously some of the
brands were grouped together. The Brands segment comprises
Sanderson, Morris & Co, Harlequin, Zoffany, Scion, Clarke &
Clarke and Archive by Sanderson Design. The relatively small
Anthology brand has been absorbed into Harlequin, in line with our
strategic focus on efficiency. No new Anthology products will be
launched but existing products will continue to be sold and
supported by Harlequin.
The Brands segment includes licensing income as well as global
trading from the brands, including our overseas operations in the
US, Dubai, France, Netherlands, and Germany.
Morris & Co.
Morris & Co. sales in the first half were GBP8.2 million in
reportable currency, an increase of 57.7% on 2020 and an increase
of 51.9% on 2019. Sales in the UK were up 66.5%, in Northern Europe
were up 23.9% and in North America were up 122.6% in constant
currency compared with 2020 and up 28.2%, 53.6% and 121.1%
respectively compared with 2019.
Morris & Co.'s 160(th) anniversary year was celebrated with
a compilation collection of the brand's best sellers, which has
performed significantly ahead of expectations.
The brand's sales in the half year have also been driven by
licence income, where highlights include the Morris & Co.
apparel collections from NEXT which are performing ahead of
expectations. Exciting licensing deals signed in the current year
for the Morris & Co. brand include those with Japan's Sangetsu
and Williams Sonoma in the US. In addition, we have recently
announced a further licensing agreement with NEXT for an exciting
range of homewares.
We recently launched the first Simply Morris collection, a new
design concept. This bright interpretation of Morris & Co.
designs represents a fresh take on maximalism and targets sunshine
states in the US, southern Europe and Australia. This highly
accessible and on-trend collection is also expected to gain
traction in our wider markets.
The use of colour in Simply Morris distinguishes the collection
from Pure Morris, the neutral collections launched in 2016 that
have sold particularly well in Japan.
Current plans at Morris & Co. include a new collection next
year through a collaboration with a designer and an exciting event
at the Chelsea Flower Show next year to conclude Morris & Co.'s
160(th) anniversary celebrations.
Sanderson
Sanderson sales in the first half were GBP7.5 million in
reportable currency, an increase of 53.1% on 2020 and an increase
of 11.9% in 2019. Sales in the UK were up 55.2%, in Northern Europe
were up 33.0% and in North America were up 85.0% in constant
currency compared with 2020 and up 5.1%, 8.2% and 59.8%
respectively compared with 2019.
To celebrate the brand's 160(th) anniversary, Sanderson launched
the Sanderson One Sixty collection of fabrics and wallpapers in
June this year and began an exciting collaboration with Maro Itoje,
the England rugby star, who features as the new face of the Very
Sanderson media campaign.
In line with our strategy to focus and invest behind our brand
collections, Sanderson collection launches have been rationalised
to one big launch each year, the next being planned for February
2022.
Zoffany
Zoffany sales in the first half were GBP4.5 million in
reportable currency, an increase of 28.6% on 2020 but a decrease of
8.2% on 2019. Sales in the UK were up 31.5%, in Northern Europe
were down 0.1% and in North America were up 58.1% in constant
currency compared with 2020 and down 14.4%, down 14.9% and up 30.9%
respectively compared with 2019.
Zoffany's Kensington Walk collection of wallpapers and fabrics
was launched earlier this year. Its Palladio collection of
screen-printed wallpapers, which draw on the original Palladio
wallpapers launched in the 1950s, was launched in September 2020.
Each year a new designer is chosen to create a new wallpaper for
the collection and the design by this year's winner, Ruth Blanke,
will be launched shortly.
Clarke & Clarke
Clarke & Clarke sales in the first half were GBP12.6 million
in reportable currency, an increase of 41.6% on 2020 but a decrease
of 4.5% on 2019. Sales in the UK were up 43.0%, in Northern Europe
were up 28.3% and in North America were up 83.1% in constant
currency compared with 2020 and up 5.4%, down 5.5% and down 23.7%
respectively compared with 2019.
Following the change in the distributor of Clarke & Clarke
in North America to Kravet Inc in 2020, sales continue to grow
strongly in this market.
Clarke & Clarke's collections in the UK with Emma J Shipley
and Tess Daly have continued to grow well. NEXT is the main partner
for the Tess Daly collections and recent new bedding designs,
launched this year, have been well received.
As previously announced, Clarke & Clarke has signed an
exclusive licence agreement with the heritage brand Wedgwood.
Clarke & Clarke will launch bedding, fabrics and wallpapers in
spring next year based on Wedgwood's iconic designs and creative
direction.
A key strategic initiative for Clarke & Clarke has been to
increase the brand's proportion of wallpaper, as historically it
has been largely fabric focused. We believe this represents an
important opportunity for the brand over time and we will expand
the offering in 2022.
Harlequin
Harlequin sales in the first half were GBP8.0 million in
reportable currency, an increase of 33.3% on 2020 but a decrease of
14.0% on 2019. Sales in the UK were up 32.1%, in Northern Europe
were up 13.6% and in North America were up 65.1% in constant
currency compared with 2020 and down 14.5%, down 16.7% and up 21.5%
respectively compared with 2019.
Harlequin sales have been driven by the combination of the
Little Book of Treasures launch last year and a new Momentum
collection launched in January this year. The Momentum collection,
with its printed velvets aimed at the contract market, is
performing well in the UK and the US.
In September this year, the Group used TV advertising for the
first time to drive renewed impetus in the Harlequin brand through
a campaign called Own the Room, which seeks to empower consumers to
choose the best designs and colours for emotional and physical
well-being.
Scion
Scion sales in the first half were GBP1.2 million in reportable
currency, an increase of 9.1% on 2020 but a decrease of 29.4% on
2019. Sales in the UK were up 16.4%, in Northern Europe were up
2.7% and in North America were down 4.7% in constant currency
compared with 2020 and down 26.5%, 26.9% and 33.7% respectively
compared with 2019.
To complement the brand's existing sales channels, and as part
of advancing the Group's digital strategy, the Company signed an
agreement in November 2020 with Design Online, a business formed by
the leading internet retailer Jane Clayton and Company, to launch a
direct-to-consumer online shop, Scion Living. The shop went live in
June 2021, at www.scionliving.com .
Archive by Sanderson Design
Archive by Sanderson Design is a completely new,
direct-to-consumer brand which represents a significant step
forward in the Group's digital strategy. Archive, launched in
September 2021, is a maximalist brand targeting digitally native
consumers who are new customers for the Group.
Selfridges, the leading luxury lifestyle retailer, which has not
sold the Group's products previously, is the exclusive retail
launch partner, bringing a new concept and home offer to its
discerning audience, launching in store in mid-October 2021.
The brand's first collection comprises a capsule range of
wallpapers, fabrics, cushions and lampshades. A made-to-measure
service for curtains, blinds and smaller furniture items will be
provided on the brand's website as part of developing the brand as
a lifestyle offering.
The brand leverages the Company's design archive, both through
the use of heritage designs that have not been seen in the recent
past, and through the re-invention of well-known Morris & Co
designs through bold reinterpretation.
Licensing
Core licensing income, excluding apparel and the recognition of
fixed minimum guaranteed licensing income under IFRS 15, was up
20.0% in reportable currency compared with 2020, and up 33.3%
compared with 2019, reflecting a strong performance from core
bedding, blinds and Japanese licensees.
Our agreement with the UK's Blinds2Go performed very strongly,
particularly with the Harlequin and Scion brands during the first
half.
Reported licensing income was up 53.8% in both reportable
currency and constant currency, compared with 2020 following a
strong performance from apparel, but down 37.5% and 35.5%
respectively compared with 2019. In 2019, there were significant
minimum guarantees and one-off income reported for licensing income
including a significant apparel contract
NEXT's Morris & Co.'s womenswear, which was launched in May
this year, is performing ahead of expectations. We are working
closely with NEXT on a broad range of Morris & Co. and
Sanderson products.
We have signed a number of new licensing agreements in the year
to date and continue to develop a pipeline of future
opportunities.
Manufacturing
Our manufacturing operations have performed strongly in the
year-to-date, such that we have added additional shifts to increase
capacity. The order books at both Standfast & Barracks, our
fabric printer, and Anstey, our wallpaper factory, are
substantially ahead of previous levels, reflecting demand in the
industry generally and the attraction of UK-based manufacturing
post-Brexit to both UK and overseas customers.
Total manufacturing sales in the first half increased 100.0% to
GBP21.0 million compared with 2020, up 22.8% compared with 2019.
Total third-party sales were up 89.3% compared with 2020 at GBP12.2
million, up 27.7% compared with 2019.
Of the third-party sales, 59.3% were from the UK and the
remainder from overseas. The US and Europe were our strongest
export markets.
The profit contribution from manufacturing during the half year
has been ahead of expectations.
The introduction of a new ERP system has recently commenced at
Standfast & Barracks. It is expected that capital expenditure
at the factories will return to more normalised levels with focused
investment in technology to improve productivity and to deliver on
our net zero by thirty goals.
CURRENT TRADING AND OUTLOOK
As we enter the second half of the financial year, we are
mindful of the cost, supply chain and other issues affecting the UK
and international business environment. We are focused on
mitigating the potential impact of those issues on our
business.
Since the half year, manufacturing sales and licensing income
remained robust and offset a slight softening in brand sales. Our
key Autumn selling weeks in October and November have just started
and we remain confident of meeting the Board's expectations for the
full year.
Lisa Montague
Chief Executive Officer
13 October 2021
FINANCIAL 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
2021 2020 2019
---- -------------------------------------- ----------------------------- ------------------ ------------------
Revenue (GBPm) 57.5 38.8 55.9
Revenue Growth (%) 48.2% (30.6%) 2.2%
Adjusted underlying profit before
tax (GBPm) 6.0 0.4 4.9
Adjusted underlying profit before
tax (%) 10.4% 1.0% 8.8%
Adjusted earnings per share
(pence) 6.53p 0.54p 5.54p
Net cash position (GBPm) 15.4 4.5 0.9
Net cash flow (GBPm) (0.1) 3.2 0.5
Inventory (GBPm) 19.4 23.4 28.8
Capital expenditure (GBPm) 1.2 0.4 1.2
Reported EBITDA (GBPm) 8.4 3.0 7.3
-------------------------------------------- ----------------------------- ------------------ ------------------
These financial indicators have been reported on and used by the
Group to drive financial performance. We are able to report a
strong recovery in these key financial metrics against the previous
two half years. Our revenue has grown over the two prior periods to
GBP57.5 million. Adjusted underlying profit before tax has improved
to GBP6.0 million with a 10.4% operating margin. The net cash
position has increased to GBP15.4 million from GBP0.9 million on 31
July 2019 through the cash and costs control measures applied
through the pandemic period. As a result, operating performance has
improved and the balance sheet has been significantly
strengthened.
Revenue Performance
Our reported revenue for the period was GBP57.5 million (2020:
GBP38.8 million and 2019: GBP55.9 million) an increase of GBP19.3
million (or 48.2%) over 2020 and an increase of GBP1.6 million (or
2.9%) over 2019.
Six months ended 31 July Change (%) Change (%)
(GBPm)
2021 compared 2021 compared
with 2020 with 2019
--------------- ---------------
2021 2020 2019
------------------- --------- --------- --------- --------------- ---------------
Total revenue 57.5 38.8 55.9 48.2% 2.9%
------------------- --------- --------- --------- --------------- ---------------
Comprising:
Brand product
revenue 43.3 31.1 43.1 39.2% 0.5%
Manufacturing
external revenue 12.2 6.4 9.6 89.3% 27.7%
Licensing 2.0 1.3 3.2 53.8% (37.5%)
------------------- --------- --------- --------- --------------- ---------------
Underlying Profit Performance
Despite the effects of a third lockdown in the first few months
of the first half, our adjusted underlying profit before tax
increased to GBP6.0 million (2020: GBP0.4 million and 2019: GBP4.9
million). We can report an increase in margin for adjusted
underlying profit before tax to 10.4% (2020: 1.0% and 2019: 8.8%).
The profit performance has benefited from the increased sales and
the effects of the prior year restructuring and cost efficiency and
control measures.
Six months ended (GBPm)
July January July January July
2021 2021 2020 2020 2019
----------------------------- ---------- ------------------------ -------------------------
H1 H2 H1 H2 H1
Revenue 57.5 55.0 38.8 55.6 55.9
Adjusted underlying profit
before tax 6.0 6.7 0.4 2.5 4.9
Statutory profit/(loss)
before tax 4.9 5.9 (0.9) 0.9 3.5
----------------------------- ---------- ----------- ----------- --------------- --------
Income statement
The Group's income statement is summarised below.
Six months ended 31 July
2021 2020 2019
---- ------------------------------------------------------ -------------- ---------- ----------
Revenue (GBPm) 57.5 38.8 55.9
Gross profit (GBPm) 35.9 22.9 35.5
Gross profit (%) 62.4% 59.0% 63.5%
Net operating expenses (GBPm) 31.0 23.7 31.8
Profit/(Loss) from operations
(GBPm) 4.9 (0.8) 3.7
------------------------------------------------------------ -------------- ---------- ----------
Gross profit margin in this first half year has improved to
62.4% (2020: 59.0% and 2019: 63.5%). In the first half of 2019,
revenue included licensing income of GBP3.2 million against GBP2.0
million in the current half, which drove up the gross profit margin
percentage in the 2019 period to 63.5%. Distribution and selling
costs, administration costs and net other income are included in
net operating expenses.
Distribution and selling costs have increased to GBP12.0 million
(2020: GBP8.5 million and 2019: GBP12.0 million) on the back of a
recovery in sales and additional costs due to the transportation
and border issues post Brexit. We have experienced higher container
costs and carrier capacity issues.
Administration costs are reported at GBP21.0 million (2020:
GBP17.5 million and 2019: GBP22.7 million) with our costs returning
to normal levels post the pandemic year, when we cut back severely
on discretionary spend. The effects of our restructuring and cost
efficiency measures are seen in our costs against the first half of
2019. We have reinstated marketing and travel and entertaining
spend.
The reported revenue and operating profit by reporting segments
is set out below. Both brands and manufacturing had delivered
improved performance in revenue and profit from operations in the
first half year relative to the prior period of the pandemic and
the first half ended 31 July 2019.
Eliminations
and
Six months ended 31 July Brands Manufacturing unallocated Total
2021 GBPm GBPm GBPm GBPm
------------------------------- ------- -------------- ------------- ------
Total revenue 45.3 21.0 (8.8) 57.5
Profit from operations 6.4 2.3 (3.8) 4.9
------------------------------- ------- -------------- ------------- ------
Six months ended 31 July
2020
Total revenue 32.4 10.5 (4.1) 38.8
Profit/(Loss) from operations 2.3 (0.4) (2.7) (0.8)
------------------------------- ------- -------------- ------------- ------
Six months ended 31 July
2019
Total revenue 46.3 17.1 (7.5) 55.9
Profit from operations 5.6 1.0 (2.9) 3.7
------------------------------- ------- -------------- ------------- ------
Underlying profit before tax
Statutory profit before tax of GBP4.9 million (2020: loss before
tax of GBP0.9 million) includes non-underlying charges of GBP0.5
million (2020: GBP0.9 million) as set out below.
Six months ended 31 July (GBPm)
2021 2020 2019
---------------------------------------------------- ------- ------
Statutory profit/(loss) before tax 4.9 (0.9) 3.5
----------------------------------------------- ---- ------- ------
Add back:
Amortisation of acquired intangible
assets of Clarke & Clarke 0.5 0.5 0.5
Restructuring and reorganisation costs - 0.4 0.7
Anstey net other income - - (0.1)
Total non-underlying charge included
in profit before tax 0.5 0.9 1.1
----------------------------------------------- ---- ------- ------
Underlying profit before tax 5.4 0.0 4.6
Add back:
LTIP accounting charge 0.4 0.1 -
Net defined benefit pension charge 0.2 0.3 0.3
Adjusted underlying profit before tax
excluding LTIP and defined benefit pension
charge 6.0 0.4 4.9
----------------------------------------------- ---- ------- ------
Net finance income was GBP5,000 (2020: GBP0.1 million net
finance costs).
Taxation
Tax expense for the period is GBP1.2 million (2020: credit of
GBP0.1 million).
Earnings per share
Basic reported EPS for the period was 5.31p (2020: -1.10p). The
Group also reports an adjusted underlying EPS which adjusts for the
impact of the LTIP accounting charge, net defined benefit pension
charge and other non-underlying items, as these items can fluctuate
due to external factors outside of the control of the Group. The
adjusted underlying basic EPS for the period was 6.53p (2020:
0.54p).
Liquidity and Cash Flow
We have continued to actively manage cash and control costs in
the first half year. As a result, the Group has reported liquidity
and headroom of GBP27.9 million on 31 July 2021 (2020: GBP17.0
million), with a net cash position of GBP15.4 million (2020: GBP4.5
million) . T he Group generated healthy cash inflow from operating
activities during the period of GBP4.6 million (2020: GBP5.1
million ).
Key working capital balances are set out below:
Six months ended 31 July (GBPm)
2021 2020 2019
------------------ --------- ------- ---------
Inventory 19.4 23.4 28.8
Trade debtors 14.0 10.2 13.1
Trade creditors (9.2) (8.2) (12.8)
------------------ --------- ------- ---------
Working capital financial controls have been maintained and we
have seen minimal bad debts across our independent retailers and
designers.
Inventory levels have continued to be tightly controlled and we
are managing effectively supply chain and cost inflation pressures.
We continue to implement the strategy of reducing SKUs and the
scale of new collection launches. New operating replenishment rules
and the introduction of regularised operational reviews has
increased controls.
Capital expenditure was GBP1.2 million (2020: GBP0.4 million ),
bringing it back in line with pre-pandemic levels. There are two
key projects which will arise in the second half of this financial
year relating to the installation of a new ERP platform and the
commencement of enhanced digital print capability in
manufacturing.
The Group made additional payments to the pension schemes of
GBP1.1 million (2020: GBP0.9 million ) to reduce the deficit, as
part of the ongoing planned reduction. Tax paid during the period
was GBP2.1 million (2020: GBP0.1 million of tax refund ), including
tax payments made shortly after 31 January 2021 of GBP1.3
million.
Banking Facilities
The Group has banking facilities provided by Barclays Bank PLC.
In October 2019, the Group renewed its GBP12.5 million
multi-currency revolving committed credit facility with Barclays
Bank PLC for a further five-year period. The agreement also
includes a GBP5.0 million 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.
Following the outbreak of Covid-19, the Group obtained a
temporary overdraft facility of GBP2.5 million to April 2021, to
complement the headroom in our existing GBP12.5 million revolving
credit facility. Agreement was reached with Barclays Bank PLC
during June 2020 to waive the interest cover covenant condition for
the quarterly tests arising through to July 2021 and to waive the
leverage covenant condition for the quarterly tests through to
April 2021. A liquidity covenant was introduced, requiring that
available headroom within the GBP12.5 million facility remains
above GBP5.0 million through to July 2021. All covenants were
complied with during the period and up to the date of this report.
All of the Group's bank facilities remain secured by first fixed
and floating charges over the Group's assets.
Dividends
The Board has decided to pay an interim dividend of 0.75p per
share on 26 November 2021 to the shareholders registered on the
Company's register on 22 October 2021.
Unaudited Consolidated Income Statement
For the six months ended 31 July 2021
6 months 6 months
to 31 July to 31 July
2021 2020
Note GBP000 GBP000
--------------------------------------------- ----- ------------ ------------
Revenue 2,3 57,515 38,842
Cost of sales (21,574) (15,924)
--------------------------------------------- ----- ------------ ------------
Gross profit 35,941 22,918
--------------------------------------------- ----- ------------ ------------
Net operating expenses:
Distribution and selling expenses (12,014) (8,533)
Administration expenses (21,037) (17,517)
Net other income 5 2,034 2,374
--------------------------------------------- ----- ------------ ------------
Profit / (Loss) from operations 4,924 (758)
--------------------------------------------- ----- ------------ ------------
Finance income 11 4
Finance costs (7) (153)
--------------------------------------------- ----- ------------ ------------
Finance income / (costs) - net 4 (149)
--------------------------------------------- ----- ------------ ------------
Profit / (Loss) before tax 4,928 (907)
Tax (expense) / income 7 (1,161) 123
--------------------------------------------- ----- ------------ ------------
Profit / (Loss) for the period attributable
to owners of the parent 3,767 (784)
--------------------------------------------- ----- ------------ ------------
Earnings per share - Basic 8 5.31p (1.10)p
--------------------------------------------- ----- ------------ ------------
Earnings per share - Diluted 8 5.19p (1.10)p
--------------------------------------------- ----- ------------ ------------
Adjusted earnings per share - Basic 8 6.53p 0.54p
--------------------------------------------- ----- ------------ ------------
Adjusted earnings per share - Diluted 8 6.38p 0.53p
--------------------------------------------- ----- ------------ ------------
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 31 July 2021
6 months 6 months
to 31 July to 31 July
2021 2020
GBP000 GBP000
--------------------------------------------------- ------------ ------------
Profit / (Loss) for the period 3,767 (784)
Other comprehensive income / (expense):
Items that will not be reclassified to
profit or loss
Remeasurement of defined benefit pension
schemes - (3,724)
Corporation tax credits recognised in
equity - 70
Reduction of deferred tax asset relating
to pension scheme liability - 708
---------------------------------------------------- ------------ ------------
Total items that will not be reclassified
to profit or loss - (2,946)
---------------------------------------------------- ------------ ------------
Items that may be reclassified subsequently
to profit or loss
Currency translation losses (115) (31)
---------------------------------------------------- ------------ ------------
Total items that may be reclassified subsequently
to profit or loss (115) (31)
---------------------------------------------------- ------------ ------------
Other comprehensive expense for the period,
net of tax (115) (2,977)
Total comprehensive income / (expense)
for the period attributable to the owners
of the parent 3,652 (3,761)
---------------------------------------------------- ------------ ------------
Unaudited Consolidated Balance Sheet
As at 31 July 2021
Unaudited Unaudited Audited
As at As at As at
31 July 31 July 31 January
2021 2020 2021
Note GBP000 GBP000 GBP000
--------------------------------- ----- ---------- ---------- ------------
Non-current assets
Intangible assets 27,624 29,051 28,325
Property, plant and equipment 11,768 13,123 12,061
Right-of-use assets 4,913 7,008 5,783
Deferred income tax assets - 147 -
--------------------------------- ----- ---------- ---------- ------------
44,305 49,329 46,169
--------------------------------- ----- ---------- ---------- ------------
Current assets
Inventories 19,383 23,383 20,350
Trade and other receivables 23,411 17,068 18,328
Cash and cash equivalents 9 15,440 4,549 15,549
--------------------------------- ----- ---------- ---------- ------------
58,234 45,000 54,227
--------------------------------- ----- ---------- ---------- ------------
Total assets 102,539 94,329 100,396
--------------------------------- ----- ---------- ---------- ------------
Current liabilities
Trade and other payables (20,572) (16,785) (20,472)
Lease liabilities (2,246) (2,130) (2,676)
Borrowings 9 - - (412)
--------------------------------- ----- ---------- ---------- ------------
(22,818) (18,915) (23,560)
--------------------------------- ----- ---------- ---------- ------------
Net current assets 35,416 26,085 30,667
--------------------------------- ----- ---------- ---------- ------------
Non-current liabilities
Lease liabilities (2,806) (5,036) (3,206)
Deferred income tax liabilities (669) - (514)
Retirement benefit obligation (4,740) (9,209) (5,637)
--------------------------------- ----- ---------- ---------- ------------
(8,215) (14,245) (9,357)
--------------------------------- ----- ---------- ---------- ------------
Total liabilities (31,033) (33,160) (32,917)
--------------------------------- ----- ---------- ---------- ------------
Net assets 71,506 61,169 67,479
--------------------------------- ----- ---------- ---------- ------------
Equity
Share capital 710 710 710
Share premium account 18,682 18,682 18,682
Foreign currency translation
reserve (981) (596) (866)
Retained earnings 12,588 1,866 8,446
Other reserves 40,507 40,507 40,507
--------------------------------- ----- ---------- ---------- ------------
Total equity 71,506 61,169 67,479
--------------------------------- ----- ---------- ---------- ------------
Unaudited Consolidated Cash Flow Statement
For the six months ended 31 July 2021
6 months 6 months
to 31 July to 31 July
2021 2020
Note GBP000 GBP000
---------------------------------------------- ----- ------------ ------------
Cash flows from operating activities
Cash generated from operations 10 4,590 5,057
Interest paid (72) (209)
Corporation tax (paid) / refunds (2,123) 59
---------------------------------------------- ----- ------------ ------------
Net cash generated from operating activities 2,395 4,907
---------------------------------------------- ----- ------------ ------------
Cash flows from investing activities
Interest received 11 4
Purchase of intangible assets (174) (110)
Purchase of property, plant and equipment (1,016) (315)
Net cash used in investing activities (1,179) (421)
---------------------------------------------- ----- ------------ ------------
Cash flows from financing activities
Payment of lease liabilities (1,263) (1,371)
---------------------------------------------- ----- ------------ ------------
Net cash used in financing activities (1,263) (1,371)
---------------------------------------------- ----- ------------ ------------
Net increase in cash and cash equivalents (47) 3,115
Cash and cash equivalents and bank overdraft
at beginning of period 15,549 1,336
Effect of exchange rate fluctuations on
cash held (62) 98
Cash and cash equivalents and bank overdraft
at end of period 9 15,440 4,549
---------------------------------------------- ----- ------------ ------------
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 31 July 2021
Attributable to equity owners of the parent company
----------------------------------------------------------------------------------------
Other reserves
-----------------------
Foreign
Share currency
Share premium Retained Capital Merger translation Total
capital account earnings reserve reserve reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ----------- --------- ---------- ------------ --------- ------------ -------------
Balance at 1
February
2021 710 18,682 8,446 43,457 (2,950) (866) 67,479
Profit for the
period - - 3,767 - - - 3,767
Other
comprehensive
income /
(expense):
Remeasurements - - - - - - -
of defined
benefit
pension schemes
Deferred tax - - - - - - -
relating
to pension
scheme
liability
Currency
translation
differences - - - - - (115) (115)
Total
comprehensive
income /
(expense) - - 3,767 - - (115) 3,652
Transactions
with
owners,
recognised
directly in
equity:
Long-term
incentive
plan charge - - 217 - - - 217
Related tax
movements
on long-term
incentive
plan - - 158 - - - 158
---------------- ----------- --------- ---------- ------------ --------- ------------ -------------
Balance at 31
July
2021 710 18,682 12,588 43,457 (2,950) (981) 71,506
---------------- ----------- --------- ---------- ------------ --------- ------------ -------------
Attributable to equity owners of the parent company
----------------------------------------------------------------------------------------
Other reserves
-----------------------
Foreign
Share currency
Share premium Retained Capital Merger translation Total
capital account earnings reserve reserve reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ----------- --------- ---------- ------------ --------- ------------ -------------
Balance at 1
February
2020 710 18,682 5,495 43,457 (2,950) (565) 64,829
Loss for the
period - - (784) - - - (784)
Other
comprehensive
income /
(expense):
Remeasurements
of defined
benefit
pension
schemes - - (3,724) - - - (3,724)
Corporation tax
credits
recognised
in equity - - 70 - - - 70
Deferred tax
relating
to pension
scheme
liability - - 708 - - - 708
Currency
translation
differences - - - - - (31) (31)
Total
comprehensive
expense - - (3,730) - - (31) (3,761)
Transactions
with
owners,
recognised
directly in
equity:
Long-term
incentive
plan charge - - 101 - - - 101
Balance at 31
July
2020 710 18,682 1,866 43,457 (2,950) (596) 61,169
---------------- ----------- --------- ---------- ------------ --------- ------------ -------------
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 2022.
On 31 December 2020, International Financial Reporting Standards
as adopted by the European Union were brought into UK law and
became UK-adopted international accounting standards, with future
changes being subject to endorsement by the UK Endorsement
Board.
The Group's accounting policies are based on UK-adopted
international accounting standards in conformity with the
requirements of the Companies Act 2006 ('IFRS') and IFRS
Interpretations Committee ("IFRS IC") interpretations. The
consolidated financial statements have been prepared under the
historical cost convention, except for those assets and liabilities
measured at fair value.
These interim financial statements for the six months ended 31
July 2021 have been prepared in accordance with IAS 34, 'Interim
Financial Reporting', as adopted by the UK. The interim financial
statements should be read in conjunction with the annual financial
statements for the year ended
31 January 2021 prepared in accordance with IFRS. All
comparative information is for the six-month period ended 31 July
2020, unless otherwise stated.
The accounting policies adopted in the preparation of these
interim financial statements to 31 July 2021 are consistent with
the accounting policies applied by the Group in its Annual Report
and Accounts as at, and for the year ended, 31 January 2021.
Since the Group's previous annual financial statements for the
year ended 31 January 2021, several amendments to standards issued
by the International Accounting Standards Board and IFRS IC are now
effective for financial years beginning on or after 1 February
2021. These do not have a significant impact on these interim
financial statements. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective.
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
2021 is based on the statutory accounts for the financial year
ended 31 January 2021, 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 2021 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
2021 - going concern which is explained in further details below,
retirement benefit pension obligations, impairment of non-financial
assets including inventories, revenue recognition including
licensing income, share-based plan and deferred tax recognition,
except for changes in estimates that are required in determining
the provision for income taxes.
Notes to the unaudited interim financial statements
(continued)
1. Basis of preparation of interim financial statements ( continued)
Going concern
A key accounting judgement for these interim financial
statements for the six months ended 31 July 2021 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. 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 debt matures in October 2024. In addition,
there is an uncommitted accordion facility of GBP5m. In June 2020,
the Directors successfully negotiated a waiver of the Group's
interest cover covenants to July 2021 and leverage covenant to
April 2021 and replaced them with a liquidity covenant that
requires the Group to maintain GBP5m headroom against the
facilities between 1 November 2020 and 31 July 2021. 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 at 31 July 2021 was GBP27.9m (31
January 2021: GBP30.5m), including cash and cash equivalents of
GBP15.4m (31 January 2021: GBP15.5m) and the committed facility of
GBP12.5m.
Having considered all of the comments above, the Directors
consider that the Group and the Company have adequate resources to
continue trading for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing these
interim financial statements.
Financial 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, liquidity risk and capital risk. The
interim financial statements do not include all 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 as at 31 January 2021. In particular,
information on the principal risks can be found on page 38 to 40 of
the Group's 2021 Annual Report which comprise of trading
environment, Brexit, competition, foreign exchange, pension
funding, recruitment and retention of key employees, reputation
risk, environmental risk, health and safety risk, major incident or
disaster such as a fire or flood and IT. There have been no changes
in either the principal risks or risk management policies since the
year end.
The Board approved the interim financial statements on 13
October 2021.
Notes to the unaudited interim financial statements
(continued)
2. Segmental analysis
Sanderson Design Group PLC 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 Sanderson, Morris &
Co., Harlequin, Zoffany, Anthology, Scion and Clarke & Clarke
brands operated from the UK and its foreign subsidiaries in the US,
France, Russia and Germany;
-- Manufacturing - comprising the wallcovering and printed
fabric manufacturing businesses operated by Anstey and Standfast
respectively.
This is the basis on which the Group presents its operating
results to the Board of Directors which is considered to be the
Chief Operating Decision Maker (CODM) 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 plans expenses, taxation and eliminations of
inter-segment items, are presented within 'Eliminations and
unallocated'.
a) Principal measures of profit and loss - Income Statement segmental information
6 months to 31 July Eliminations
2021 Brands Manufacturing and unallocated Total
GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------------- ----------------- --------
UK revenue 22,263 7,253 - 29,516
International revenue 20,976 4,987 - 25,963
Licence revenue 2,036 - - 2,036
------------------------ -------- -------------- ----------------- --------
Revenue - external 45,275 12,240 - 57,515
Revenue - internal - 8,807 (8,807) -
------------------------ -------- -------------- ----------------- --------
Total revenue 45,275 21,047 (8,807) 57,515
------------------------ -------- -------------- ----------------- --------
Profit / (Loss) from
operations 6,379 2,294 (3,749) 4,924
Net finance income - - 4 4
------------------------ -------- -------------- ----------------- --------
Profit / (Loss) before
tax 6,379 2,294 (3,745) 4,928
Tax expense - - (1,161) (1,161)
------------------------ -------- -------------- ----------------- --------
Profit / (Loss) for
the period 6,379 2,294 (4,906) 3,767
------------------------ -------- -------------- ----------------- --------
Inter-segment revenue earned by Manufacturing from sales to
Brands is determined on normal commercial trading terms as if
Brands were any other third-party customer. Tax charges have not
been allocated to a segment.
6 months to 31 July Eliminations
2020 and
Brands Manufacturing unallocated Total
GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------------- ------------- --------
UK revenue 15,445 4,137 - 19,582
International revenue 15,597 2,330 - 17,927
Licence revenue 1,333 - - 1,333
------------------------ -------- -------------- ------------- --------
Revenue - external 32,375 6,467 - 38,842
Revenue - internal - 4,071 (4,071) -
------------------------ -------- -------------- ------------- --------
Total revenue 32,375 10,538 (4,071) 38,842
------------------------ -------- -------------- ------------- --------
Profit / (Loss) from
operations 2,343 (437) (2,664) (758)
Net finance costs - - (149) (149)
------------------------ -------- -------------- ------------- --------
Profit / (Loss) before
tax 2,343 (437) (2,813) (907)
Tax credit - - 123 123
------------------------ -------- -------------- ------------- --------
Profit / (Loss) for
the period 2,343 (437) (2,690) (784)
------------------------ -------- -------------- ------------- --------
Notes to the unaudited interim financial statements
(continued)
2. Segmental analysis (continued)
b) Additional segmental revenue information
The segmental revenues of the Group are reported to the CODM in
more detail. One of the analysis presented is revenue by export
market for Brands.
Brands international revenue by export 6 months 6 months
market to 31 July to 31 July
2021 2020
GBP000 GBP000
---------------------------------------- ------------ ------------
North America 8,643 5,450
Northern Europe 6,847 5,655
Rest of the World 5,486 4,492
----------------------------------------- ------------ ------------
20,976 15,597
---------------------------------------- ------------ ------------
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
2021 2020
GBP000 GBP000
------------------------- ------------ ------------
Harlequin* 8,019 5,967
Scion* 1,204 1,107
Anthology* 1,079 1,184
Sanderson* 7,504 4,933
Morris & Co.* 8,192 5,200
Zoffany* 4,485 3,523
Clarke & Clarke* 12,582 8,859
Other brands 174 269
Licensing 2,036 1,333
-------------------------- ------------ ------------
45,275 32,375
------------------------- ------------ ------------
*The Brands reportable segments for the six months ended 31 July
2020 have been redefined in line with the Group's strategy.
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
2021 2020
GBP000 GBP000
Standfast 10,124 5,961
Anstey 10,923 4,577
--------------------------------- ------------ ------------
21,047 10,538
-------------------------------- ------------ ------------
Notes to the unaudited interim financial statements
(continued)
3. Analysis of revenue by category
6 months 6 months
to 31 July to 31 July
2021 2020
GBP000 GBP000
Sale of goods 55,479 37,509
Licence royalty income 2,036 1,333
------------------------- ------------ ------------
57,515 38,842
------------------------ ------------ ------------
4. Seasonality and cyclicality
There is no material seasonality or cyclicality impacting the
interim financial statements.
5. Net other income
Net other income comprises consideration received from the sale
of marketing materials and additional services of GBP2,034,000
(2020: GBP2,374,000).
6. Net defined benefit pension charge
6 months 6 months
to 31 July to 31 July
2020 2019
GBP000 GBP000
Expected return on pension scheme assets 531 662
Interest on pension scheme liabilities (565) (703)
Scheme expenses met by the Group (199) (255)
------------------------------------------- ------------ ------------
(233) (296)
------------------------------------------ ------------ ------------
The Group paid contributions of GBP931,000 (2020: GBP215,000)
and scheme administration costs of GBP199,000 (2020: GBP255,000) to
the Group's two defined benefit schemes, further details of which
can be found in the 2021 Annual Report.
7. Tax expense
6 months 6 months
to 31 July to 31 July
2021 2020
GBP000 GBP000
Current tax:
- UK, current tax (848) (118)
Corporation tax (848) (118)
--------------------------------------- ------------ ------------
Deferred tax:
- current period (313) 291
- adjustments in respect of prior
years - (50)
Deferred tax (313) 241
--------------------------------------- ------------ ------------
Total tax (expense) / income for the
period (1,161) 123
--------------------------------------- ------------ ------------
Notes to the unaudited interim financial statements
(continued)
7. Tax expense (continued)
The March 2021 Budget announced that a rate of 25% will apply
with effect from 1 April 2023, and this change was substantively
enacted on 11 March 2021. This will increase the Group's future
current tax charge accordingly.
The deferred tax balance at 31 July 2021 included within these
interim financial statements has been calculated at a rate of 25%,
as this is the rate at which the balances are expected to
unwind.
A net deferred tax charge of GBP313,000 arose in the period to
31 July 2021 (2020: credit of GBP241,000) on the profits for the
period and adjustments in respect of prior years.
8. 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
2021 2020
Weighted Weighted
average average
number Per share number Per share
Earnings of shares amount Earnings of shares amount
GBP000 (000s) Pence GBP000 (000s) Pence
Basic earnings
per share 3,767 70,935 5.31 (784) 70,984 (1.10)
---------------- --------- ---------- ---------- --------- ---------- ----------
Effect of
dilutive
securities:
Shares under
LTIP 1,652 545
---------------- --------- ---------- ---------- --------- ---------- ----------
Diluted
earnings
per share 3,767 72,587 5.19 (784) 71,529 (1.10)
---------------- --------- ---------- ---------- --------- ---------- ----------
Adjusted
underlying
basic and
diluted
earnings per
share:
Add back LTIP
accounting
charge 353 106
Add back Net
defined
benefit
pension
charge 233 296
Non-underlying
items
(see below) 508 870
Tax effects of
non-underlying
items and
other
addbacks (230) (106)
---------------- --------- ---------- ---------- --------- ---------- ----------
Adjusted
underlying
basic earnings
per share 4,631 70,935 6.53 382 70,984 0.54
---------------- --------- ---------- ---------- --------- ---------- ----------
Adjusted
underlying
diluted
earnings
per share 4,631 72,587 6.38 382 71,529 0.53
---------------- --------- ---------- ---------- --------- ---------- ----------
Notes to the unaudited interim financial statements
(continued)
8. Earnings per share (continued)
Sanderson Design Group PLC's issued ordinary share capital with
voting rights consists of 70,983,505 (2020: 70,983,505) ordinary
shares of which no ordinary shares are held in treasury (2020: nil)
and 220 (2020: nil) ordinary shares are 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
2021 2020
GBP000 GBP000
---------------------------------------- ------------ ------------
Statutory profit / (loss) before tax 4,928 (907)
----------------------------------------- ------------ ------------
Amortisation of acquired intangible
assets 508 508
Restructuring and reorganisation costs - 362
Total non-underlying charge included
in
statutory profit before tax 508 870
----------------------------------------- ------------ ------------
Underlying profit / (loss) before tax 5,436 (37)
LTIP accounting charge 353 106
Net defined benefit pension charge 233 296
----------------------------------------- ------------ ------------
Adjusted underlying profit before tax 6,022 365
----------------------------------------- ------------ ------------
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) Restructuring and reorganisation costs
These relate to last year's reorganisation of the Group and
comprise of the rationalisation of certain operational and support
functions. The costs mainly comprise employee severance costs and
professional fees associated with the reorganisation process. There
is no such cost this year (2020: GBP362,000).
(b) Amortisation of acquired intangible assets GBP508,000 (2020:
GBP508,000).
Notes to the unaudited interim financial statements (continued)
9. Analysis of net funds / (debt)
Other
1 February non-cash 31 July
2021 Cash flow changes 2021
GBP000 GBP000 GBP000 GBP000
--------------------------- ----------- ---------- ---------- --------
Cash and cash equivalents 15,549 (47) (62) 15,440
Bank overdraft - - - -
--------------------------- ----------- ---------- ---------- --------
Cash and cash equivalents
and
bank overdraft 15,549 (47) (62) 15,440
Short term loan (412) - 412 -
Lease liabilities (5,882) 1,328 (498) (5,052)
--------------------------- ----------- ---------- ---------- --------
Net debt 9,255 1,281 (148) 10,388
--------------------------- ----------- ---------- ---------- --------
In October 2019, the Group renewed its committed GBP12,500,000
multi-currency revolving credit facility with Barclays Bank plc for
a further five-year period. The agreement also includes a
GBP5,000,000 uncommitted accordion facility option to further
increase available credit which provides substantial headroom for
future growth. The bank arrangement fee of GBP106,250 is amortised
over the life of the loan. During the year ended 31 January 2021,
the Group agreed a temporary overdraft facility of GBP2,500,000
which expired in April 2021. The total committed facilities from
Barclays Bank plc at the period end comprise of the revolving
credit facility secured on the Group's freehold property which may
be drawn down in either sterling or euro.
Under the Barclays Bank plc facilities, the Group is subject to
compliance of two financial covenants, interest cover and leverage.
Any noncompliance with covenants could, if not remedied or waived,
constitute an event of default with respect to any such
arrangements.
Due to Covid-19 during 2020, Management modelled possible
downside scenarios to its base case trading forecast during the
year. Having considered these models, formal agreement was reached
with Barclays Bank plc to waive the interest cover covenant
condition for the tests arising in July 2020, October 2020, January
2021, April 2021 and July 2021 and to waive the leverage covenant
condition for October 2020, January 2021 and April 2021. This was
replaced by a liquidity covenant requirement that available
headroom in the facility needs to remain above GBP5,000,000 between
1 November 2020 and 31 July 2021. The Group has reported to
Barclays Bank plc that it was in full compliance with its agreed
covenants at each of the testing points during the period ended 31
July 2021 and up to the date of this report.
The total Barclays Bank plc facilities are capped at
GBP17,500,000 (2020: GBP20,000,000); the utilisation of the
facilities at 31 July 2021 was GBPnil (31 January 2021: GBPnil).
The revolving credit facility bears interest at a variable rate
based on a margin above LIBOR (for sterling loans) or the EURIBOR
(for euro loans).
On 7 May 2020, the Group entered into a loan contract with Wells
Fargo for US$565,818 under the US Paycheck Protection Payment
scheme. In June 2021, the Group was granted forgiveness in full of
the loan by the US government Small Business Administration and
this amount has been credited to the Group Income Statement for the
6 months to 31 July 2021.
Notes to the unaudited interim financial statements (continued)
10. Cash generated from operations
6 months 6 months
to 31 July to 31 July
2021 2020
GBP000 GBP000
-------------------------------------------- ------------ ------------
Profit / (Loss) before tax 4,928 (907)
Defined benefit pension charge 233 296
Net finance (income) / costs (4) 149
Depreciation and impairment of property,
plant and equipment and right-of-use
assets 2,588 2,838
Amortisation 872 872
Charge for LTIP recognised in equity 217 101
Unrealised foreign exchange losses
included in
operating profit (10) (150)
Defined benefit pension cash contributions (1,130) (470)
Forgiveness of loan under the US Paycheck (412) -
Protection Payment scheme (note 9)
-------------------------------------------- ------------ ------------
Cash generated from operating activities 7,282 2,729
Changes in working capital
Decrease in inventories 967 5,073
(Increase) / Decrease in trade and
other receivables (5,036) 3,510
Increase / (Decrease) in trade and
other payables 1,377 (6,255)
--------------------------------------------- ------------ ------------
Cash generated from operations 4,590 5,057
--------------------------------------------- ------------ ------------
11. Retirement benefit obligations
The Group operates two defined benefit schemes in the UK which
both offer pensions in retirement and death benefits to members:
the Walker Greenbank Pension Plan and the Abaris Holdings Limited
Pension Scheme. The Walker Greenbank Pension Plan is the biggest
scheme. All schemes contain defined benefits sections, which are
closed to new members and to future accrual of benefits, although
deferred members still in-service have a salary link to their
benefits. The Abaris Holdings Limited Pension Scheme also contains
a defined contribution section; however this section is relatively
small.
The pension costs relating to the UK defined benefit schemes are
assessed in accordance with the advice of an independent qualified
actuary using the projected unit method. These schemes are subject
to triennial actuarial reviews with the most recent one having been
in April 2018. An updated funding valuation for IAS 19 financial
reporting purposes was completed as at 31 July 2021.
In the first half of 2021, the Group paid contributions of
GBP931,000 (2020: GBP215,000).
The assumptions applied for valuation of the defined benefit
schemes are fully disclosed in the annual financial statements for
the year ended 31 January 2021 and continue to be applied in the
half year ended 31 July 2021. The net defined benefit pension
charge recognised in the half year represents the relevant
proportion of the annual amounts expected to be recognised for the
year ending 31 January 2022 and are based on previous actuarial
estimates. The net retirement benefit obligation recognised at 31
July 2021 is based on the updated funding valuation under IAS 19
'Employee Benefits' at 31 July 2021. An updated funding valuation
for IAS 19 financial reporting purposes will be completed for the
next annual financial statements for the year ending 31 January
2022, at which time any actuarial gains/losses arising throughout
the year will be recognised, including those arising from a change
in the underlying assumptions applied for valuation of the defined
benefit schemes.
Notes to the unaudited interim financial statements
(continued)
12. Dividends
During the period to 31 July 2021, the Group has not paid any
dividends.
The Group paid an interim dividend of 0.52p for the year ended
31 January 2020. In light of the Covid-19 pandemic, the Board did
not propose payment of a final dividend for the year ended 31
January 2020 or an interim / final dividend for the year ended 31
January 2021.
The Board has decided to pay an interim dividend of 0.75p per
share on 26 November 2021 to the shareholders registered on the
Company's register on 22 October 2021.
13. Related party transactions
Transactions between Group companies, which are related parties,
have been eliminated on consolidation and are therefore not
disclosed. Other transactions which fall to be treated as related
party transactions are those relating to the remuneration of key
management personnel, which are not disclosed in the interim
financial statements, and which will be disclosed in the Group's
next annual report; and transactions between the Group and the
Group's defined benefit pension plan, which are disclosed in note
6.
These interim financial statements have not been audited or
reviewed by auditors pursuant to the Financial Reporting Council
guidance on Review of Interim Financial Information.
By order of the Board
Lisa Montague Michael Williamson
Chief Executive Officer Chief Financial Officer
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END
IR BIBDGLSBDGBD
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