TIDMSDG
RNS Number : 4490X
Sanderson Design Group PLC
26 April 2023
26 April 2023
SANDERSON DESIGN GROUP PLC
("Sanderson Design Group", the "Company" or the "Group")
Financial Results for the year ended 31 January 2023
Strong performances from licensing income, US sales and the
Morris & Co. brand
Margin improvement from strategic progress
Sanderson Design Group PLC (AIM: SDG), the luxury interior
design and furnishings group, announces its audited financial
results for the year ended 31 January 2023.
Financial highlights
Year ended 31 January 2023 2022 Change
Revenue GBP112.0m GBP112.2m (0.2%)
---------- ---------- --------
Adjusted underlying profit before tax* GBP12.6m GBP12.5m 0.8%
---------- ---------- --------
Adjusted underlying EPS* 14.18p 13.75p 3.1%
---------- ---------- --------
Statutory profit before tax GBP10.9m GBP10.4m 4.8%
---------- ---------- --------
Statutory profit after tax GBP8.8m GBP7.8m 12.8%
---------- ---------- --------
Basic EPS 12.42p 10.93p 13.6%
---------- ---------- --------
Net cash** GBP15.4m GBP19.1m (19.4%)
---------- ---------- --------
*excluding share-based incentives, defined benefit pension
charge and non-underlying items as summarised in note 7
** Net cash is defined as cash and cash equivalents less
borrowings. For the purpose of this definition, borrowings does not
include lease liabilities
-- Revenue unchanged at GBP112.0m (FY2022: GBP112.2m),
representing a resilient performance in a challenging consumer
environment
-- Licensing momentum continues with revenue up 25.0% at GBP6.5m
(FY2022: GBP5.2m) including accelerated licensing income of GBP2.4m
(FY2022: GBP1.4m)
-- Brand products sales down 0.8% at GBP83.4m (FY2022: GBP84.1m)
and down 2.8% in constant currency
o Morris & Co. brand continuing to perform well with
reported sales up 15.9% and up 13.8% in constant currency
o North America continues to deliver a strong performance with
reported sales up 19.3% in reported currency and 6.3% in constant
currency, driven by the Morris & Co., Sanderson and Clarke
& Clarke brands
-- Third party manufacturing sales performed robustly against a
strong comparator with sales down 3.1% in reported currency
-- Adjusted underlying profit before tax of GBP12.6m (FY2022:
GBP12.5m). Reported profit before tax of GBP10.9m, up GBP0.5m
(FY2022: GBP10.4m)
-- Liquidity and headroom^ of GBP27.9m (FY2022: GBP31.6m) with
net cash of GBP15.4m (FY2022: GBP19.1m)
-- Proposed final dividend of 2.75p per share (FY2022: 2.75p) to
give a total dividend for the year of 3.50p (FY2022: 3.50p)
^ comprising net cash of GBP15.4m and banking facilities of
GBP12.5m
Operational highlights
-- Significant licence renewals in the year including Bedeck, NEXT and Williams Sonoma along with strong generation
of new collaborations and a resilient performance from core bedding and Japanese partnerships
-- Morris & Co. sales driven by the Simply Morris collection with the current year launch of Emery Walker's House
Collection being well received
-- Sanderson extended its National Trust collaboration for a further 2 years and announced an exciting collaboration
with Disney to revive vintage Disney characters in the Sanderson archive from 1936
-- Harlequin's Own the Room campaign gained momentum with colour panel events, colour pods in two top John Lewis
stores and an exclusive edit with Brewers
-- Further investment in digital printing with two new printers installed at the Anstey wallpaper factory,
introducing new capability in design
Sustainability highlights
-- Planet Mark certification for Year 5 of carbon reduction,
reflecting our Live Beautiful sustainability pledge
-- CO(2) emissions reduced by 14.5% in FY2023 on location basis,
ahead of our plan to reach ZeroBy30
-- Energy consumption all from renewables, validated by Planet Mark
-- LED lighting installed across all sites
-- Investment in digital printing greatly reduced water consumption
-- Anstey received ISO45001 certification from BSI in January
2023, an international standard of excellent occupational health
and safety management systems
Dianne Thompson, Sanderson Design Group's Chairman, said:
"Our full year results reflect the strategic progress we have
made in difficult market conditions. We will continue to deliver
our strategy, to control costs carefully and to focus resources on
international market opportunities given the ongoing uncertainty in
the UK consumer environment.
"As we start the current financial year, inflationary pressures
on input costs persist but the US market continues to perform well,
licensing income has performed strongly and hospitality contract
orders are encouraging. We are also excited by recent and upcoming
launches from our brands and through collaborations, including
Sophie Robinson for Harlequin and the vintage Disney Home x
Sanderson collection. The Board's expectations for the year remain
unchanged."
Analyst meeting and webcast
A meeting for analysts and institutional investors will be held
at 9.30am today, 26 April 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/642c5b6209685ed988693680
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
Caroline Geary, Company Secretary
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 / 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.
CHAIRMAN'S STATEMENT
In the financial year ended 31 January 2023 we delivered a
resilient trading performance amid challenging market conditions
and input cost inflation. Whilst the sales performance was solid,
delivering a flat result year-on-year, strategic and operational
initiatives increased margins, overcoming cost increases to deliver
a slight improvement in reported profits against last year.
The profit growth was achieved through the improving efficiency
of the business and a proactive approach to product pricing, with
price increases in February and August last year, along with tight
control of costs. The margin improvement also reflects the strong
contribution from our high margin licensing activities, which had
another excellent year with revenue up by 25.0% to GBP6.5m (FY2022:
GBP5.2m).
Our licensing activities underline the strength of our brands
and of our creative skills in scaling and colouring designs for a
multitude of different products. In addition to royalty income,
licensed products bring wider consumer awareness of our brands
across multiple finished goods categories, thereby potentially
stimulating the sales of our own core products of fabric, wallpaper
and paint.
During the year, we signed a significant number of new licensing
collaborations, including Disney, along with important licence
renewals including NEXT, Bedeck and Williams Sonoma. In Japan,
Sangetsu is preparing to launch the first full collection of
wallcoverings, jacquards and flooring in June 2023, under the
agreement announced in 2021. The momentum has continued into the
current financial year, with the announcement of a further
agreement with NEXT and a new agreement with the Sainsbury's brands
Habitat and Tu. Both of these agreements highlight our strategic
emphasis on collaborating with larger companies.
The US, where the Group's brands have historically been
under-represented, is an area of strategic focus and it is pleasing
to report that product sales were up 6.3% in constant currency
during the year. Consumer confidence in the UK resulted in a
decline of 2.5% in UK brand product sales whilst product sales in
Northern Europe were down 16.5% in constant currency, impacted
particularly by the cessation of trade in Russia where prior year
sales were GBP1.8m.
Our Morris & Co. brand continued its strong growth during
the year, up almost 13.8% in constant currency, whilst the
difficult consumer environment impacted the performance of our
other brands. Clarke & Clarke, our biggest selling brand, was
resilient with sales down 5.7% in constant currency though it
delivered a record performance of market sales in the US.
Our manufacturing operations, which print fabric and wallpaper
for our own brands and third parties, performed robustly against a
strong comparator in the previous year when companies were
restocking after Covid-19. Third party manufacturing sales were
down 3.1% in the year at GBP22.2m.
We have continued to advance our Live Beautiful sustainability
strategy, which has 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. Energy saving measures,
which are also helping to mitigate energy price increases, include
the installation of LED lighting across all our locations. Our
increasing adoption of digital printing contributed to the decrease
in our net carbon footprint during the year.
Further details of the Group's progress are included in the
Chief Executive Officer's Strategy and Operating Review.
Financial results
The results for the year ended 31 January 2023 show that the
Group's strategy is continuing to deliver in challenging market
conditions. Adjusted underlying profit before tax at GBP12.6m was
up 0.8% on the previous year (FY2022: GBP12.5m). Reported profit
before tax of GBP10.9m was up 4.8% on the year ended 31 January
2023 (FY2022: GBP10.4m). The Group's Balance Sheet remains strong
with net cash at the year end of GBP15.4m compared with GBP19.1m at
31 January 2022 and GBP15.0m at 31 July 2022.
Dividend
The Directors recommend a final dividend of 2.75p (FY2022:
2.75p) taking the full year dividend to 3.50p (FY2022: 3.50p). This
payment will be made on 11 August 2023 to the shareholders
registered on the Company's register on 14 July 2023 if approved at
the Company's forthcoming Annual General Meeting. The Board remains
committed to a progressive dividend policy as part of the capital
allocation priorities of the Group.
People
On behalf of the Board, I would like to thank all of our
colleagues for their commitment, energy and adaptability during
another year which has brought challenges both to businesses and
more widely.
Outlook
Our full year results reflect the strategic progress we have
made in difficult market conditions. We will continue to deliver
our strategy, to control costs carefully and to focus resources on
international market opportunities given the ongoing uncertainty in
the UK consumer environment.
As we start the current financial year, inflationary pressures
on input costs persist but the US market continues to perform well,
licensing income has performed strongly and hospitality contract
orders are encouraging. We are also excited by recent and upcoming
launches from our brands and through collaborations, including
Sophie Robinson for Harlequin and the vintage Disney Home x
Sanderson collection. The Board's expectations for the year remain
unchanged.
Dianne Thompson
Non-executive Chairman
25 April 2023
CHIEF EXECUTIVE OFFICER'S STRATEGY AND OPERATING REVIEW
INTRODUCTION
I am pleased to report a resilient trading performance in the
year ended 31 January 2023. It was reassuring in challenging market
conditions that our strategy continued to deliver: we maintained
Group sales and profits at a similar level to last year's against a
challenging consumer environment whilst also faced with rising
energy, raw material and other input cost inflation. Our decision
to cease trading in Russia, which contributed GBP1.8m in sales in
FY2022, also impacted trading and the year-on-year comparison. The
team performed strongly and I applaud their energy, commitment and
skill in navigating market challenges.
Our profit was driven by strong performances from licensing, US
sales and the Morris & Co. brand, all of which bring further
growth opportunities. Of our three main revenue streams - brand
product sales, licensing, and third-party manufacturing - licensing
was the star performer, with licensing revenue increasing by 25.0%
to GBP6.5m (FY2022: GBP5.2m).
.
Significant strategic and operational progress was made during
the year - progressing our licensing strategy, improving the
efficiency of the business, and investing in manufacturing. We
again finished the year with a strong balance sheet, with net cash
at 31 January 2023 of GBP15.4m, which will protect the business
during the current economic uncertainty and enable us to invest for
growth.
We signed a number of exciting collaborations during the year,
and also launched some superb new collections of wallpapers and
fabrics. This momentum has continued into the current year with the
announcement of important new licensing agreements and product
launches, including the recent launch by Morris & Co. in
celebration of Emery Walker's House Trust - it has been a privilege
to commercialise for the first time some original designs of the
era in a range of 28 wallpapers and 28 fabrics.
Further details of our strategy and operational performance are
given below.
STRATEGY AND PROGRESS
We set out our growth strategy for the Group in October 2019 and
this strategy remains unchanged. The key elements are summarised
below:
Driving the brands: The Group has a strong and broad portfolio
of powerful brands, each with clear market positioning. Our
intention is to focus precisely on the individuality of each brand,
giving each its own market, channel, product, and communications
strategy; thereby strengthening their appeal to drive demand in
their respective marketplaces.
Focusing on core products: The Group has two strong
manufacturing arms that benefit the brands' business. Our strategy
is to focus on our core products of wallpaper, fabric and paint and
to build our finished goods offer with our partners.
Partnering with key customers: The strategic focus on the
individuality of each brand, and our tailored service, will help
cement relationships with key customers, while enhanced
communication will drive demand for both heritage and contemporary
brands from consumers, through our interior design partners, retail
channels and hospitality partners. We will continue to deepen our
relationships with existing licensing partners and seek new
opportunities.
Investing in people: People, and creativity, are at the heart of
our business. In our industry, Sanderson Design Group is a favoured
destination for emerging new designers, and we will benefit from
doing even more to bring in new creative and other talent, nurture
it and create a high-performance culture.
Growing key geographies: Our brands have significant
international market potential, reflected in their being sold in
more than 85 countries worldwide. To maximise return, we are
focused on building market share in three key geographies: the UK,
Northern Europe and the USA. Our approach is tailored to each
individual region.
We have made significant progress during the year in pursuing
this strategy in a challenging marketplace.
Efficiency
Improving the efficiency of the business by reducing the number
of stocked items (SKUs) was an integral part of our strategy set
out in 2019. The target SKU reduction, of approximately 12,000
SKUs, was achieved in FY2022 and the effect of this is shown in the
profitability of the business as it is one of the factors that has
enabled us to report unchanged profits even though input costs have
risen. During the year, we reduced the SKU target to 10,000 and
this further reduction is now complete with all obsolete stock
having been cleared. Our latest thinking is that 11,000 is the
right goal to fill some product demand from customers now that we
can clearly see the gaps. We made a strategic investment in
best-selling SKUs during the year, resulting in a high quality,
year-end inventory of GBP27.8m (FY2022: GBP22.7m).
Our focus continues to be on fewer, stronger collection launches
as historically only a proportion of them sold particularly well
whilst others added to costs and inventory. Our expectation is that
margin improvement from the SKU reduction and strengthened product
management will continue in the current year and beyond.
Launching collections digitally, rather than through pattern
books, and monitoring online sample requests has helped us identify
the most popular designs and colourways in new collections. This
has saved cost on stock, avoided out-of-stocks, and improved
efficiency. The pattern books that we print only include designs
and colourways that are most likely to perform strongly on an
individual SKU ROI basis.
Sustainability
Our Live Beautiful sustainability strategy, launched in April
2021, comprises a broad range of initiatives and two major
commitments: for the Group to be net carbon zero by 2030 and to be
the employer of choice in the interior design and furnishings
industry.
We last carried out our employee engagement survey in 2021,
which gave an overall employee satisfaction rating of 78%, which
compared with 58% in 2019. The two-yearly survey will next be
conducted this year, with the target satisfaction raised to 80%,
compared with 70% in 2021.
Energy efficiency has been an important area of focus. LED
lighting was installed across all our locations and the shift
towards digital printing from traditional methods is also reducing
our energy consumption; an additional focus for us given the
volatility of energy prices.
We were pleased to receive our Planet Mark Year 5 certification
earlier this year, marking the fifth financial year that the
sustainability of our business has been measured by Planet Mark,
the sustainability certification organisation. In the year to 31
January 2023, our total carbon footprint was 6,368.5 tonnes, a
decrease on FY2022's 7,452.9 tonnes reflecting the number of
initiatives across the Group including the greater use of digital
printing, which reduces gas consumption compared with traditional
printing and significantly reduces water consumption.
Digital and direct-to-consumer initiatives
Through a number of incubator projects, we have been
experimenting with digital and direct-to-consumer routes to market
to identify the best opportunities for each of our brands. We have
gained many insights through these projects and we continue to
consider future strategy in this area. However, we would need
confidence in the consumer environment to commit the significant
investment required to scale any of these opportunities directly
and continue to explore partnerships such as the franchise
operation of Scionliving.com.
OPERATIONAL REVIEW
The table below shows the Group's sales performance in the year
ended 31 January 2023, compared with FY2022. The table shows our
three key revenue streams of brand product sales, licensing income
and manufacturing. It also gives the four key geographies of our
brand product sales: the UK, Northern Europe, North America and
Rest of the World.
2023 versus 2022
Year ended 31 January (GBPm)
2023 2022 Reported Constant currency
----------------------------------- --------------- --------------- --------- -------------------
UK Brand product sales 42.6 43.7 (2.5%) (2.6%)
International Brand product sales 40.8 40.4 (1.0%) (3.3%)
- North America 19.8 16.6 19.3% 6.3%
- Northern Europe 10.8 13.2 (18.2%) (16.5%)
- Rest of the World 10.2 10.6 (3.8%) (3.1%)
----------------------------------- --------------- --------------- --------- -------------------
Total Brand product sales
(includes carriage income) 83.4 84.1 (0.8%) (2.8%)
----------------------------------- --------------- --------------- --------- -------------------
Licensing income 6.5 5.2 25.0% 25.1%
----------------------------------- --------------- --------------- --------- -------------------
Total Brand sales including
Licensing 89.9 89.3 0.7% (1.2%)
----------------------------------- --------------- --------------- --------- -------------------
Total Manufacturing sales* 39.0 41.7 (6.5%) -
Intercompany elimination* (16.9) (18.8) (10.1%) -
----------------------------------- --------------- --------------- --------- -------------------
Total Revenue* 112.0 112.2 (0.2%) -
----------------------------------- --------------- --------------- --------- -------------------
*does not report in constant exchange rate
LICENSING
Licensing is the most profitable part of the Group, with royalty
income at a 100% margin. Our licensing activities underline the
strength of our brands and our creative skills in scaling and
colouring designs for a multitude of different products. Licensing
enables us to leverage our design archives and bring wider consumer
awareness of our brands across multiple finished goods categories.
This wider visibility of our designs brings the potential to
stimulate the sales of our core products of fabric, wallpaper and
paint and reinforces our identity as a design-led business.
Our strategy for licensing has been to focus on larger,
long-term partners including high street retailers such as NEXT and
Sainsbury's in the UK, Williams Sonoma in the US and category
specialists such as bedlinen company Bedeck. To support this
strategy, we reorganised our design teams during the year so that
we now have dedicated designers who work solely on licensing
agreements, which are highly collaborative. From our side, we
provide the design and the design expertise to transfer the design
from a wallpaper or fabric, or from our own archives, to a
multitude of different finished products of all sizes, materials
and uses. In essence, we drive the design work, which is a key
value we bring to the collaboration, and the partner drives the
product production and marketing.
Licensing performed strongly during the year, with sales and
profits up 25.0% at GBP6.5m (FY2022: GBP5.2m) including GBP2.4m of
accelerated income (FY2022: GBP1.4m). Accelerated income represents
the total minimum guaranteed sales associated with newly signed
contracts with a discount rate applied to them. It is a requirement
of IFRS 15 that these minimum guarantees are recognised in this way
on contract signature although it is hoped that, once the licensed
products are launched, their sales will potentially exceed the
minimum guarantees.
Notable licensing agreements signed during the year include a
three-year renewal with Bedeck, which has rights in multiple
geographies to a wide range of bedlinen and towelling for the
Morris & Co., Sanderson, Harlequin and Scion brands, and a
renewal with NEXT for up to two years for Morris & Co.
womenswear. The Morris & Co. kitchenware partnership Williams
Sonoma, initially signed in August 2021, was extended by two years
to 2025.
Most of our agreements are out-licensing deals but we also sign
some in-licensing ones, which do not attract accelerated income,
but which are potentially valuable over time. In-licensing
agreements include a Sanderson collaboration with the National
Trust announced in 2020, and which we are excited to have recently
renewed for a further two years, a Clarke & Clarke
collaboration with Wedgwood signed in 2021 and our collaboration
with Emma J Shipley.
During the year, for our Sanderson brand, we signed an exciting
in-licensing collaboration with Disney. Under the terms of the
agreement, the Sanderson brand will be able to create wallpapers
and fabrics based on a wide range of Disney Classic franchises,
based on original Sanderson archives dating back to 1936 and Disney
archival material. Products developed under the agreement will be
distributed internationally through the Group's existing sales
network and are planned for launch this autumn.
All our brands have potential to attract licence income, from
heritage brands Morris & Co. and Sanderson to contemporary,
licensing-focused brand Scion and recently Clarke & Clarke.
By region, the US is an important opportunity for licensing. The
Morris & Co. agreement with Williams Sonoma, signed in 2021,
was our first licensing agreement for the US and has been extended
on initial success. Towards the year end, we announced a second
agreement in the US with a washable rug company, Ruggable, again
with the Morris & Co. brand. A US specific collaboration with
Studio McGee led to a small Morris & Co capsule of exclusive
edits creating high impact at the beginning of this year.
The process of product development, manufacturing and launch
follows all of our licensing announcements, and this pre-launch
period is often a year or more. During the coming weeks and months,
we look forward to product launches resulting from earlier
agreements. These include Sangetsu in Japan, which is launching its
first collection, called Morris Chronicles, following an exclusive
agreement signed in May 2021 for Morris & Co. products in Japan
and 14 countries in east and southeast Asia. NEXT will also be
launching a new range of Morris & Co. womenswear for
Autumn/Winter this year.
Since signing our first licensing agreement with NEXT in March
2020, NEXT has become an increasingly important licensing partner
for the Group across the Morris & Co., Sanderson and Scion
brands and across a broad range of home and apparel products. In
February 2023, we were particularly pleased to announce a major
licensing agreement with NEXT for Clarke & Clarke homewares,
marking the brand's first significant licensing agreement.
In March 2023, we were also delighted to announce a major
agreement with the Habitat homewares brand and the Tu clothing
brand, both of which are owned by Sainsbury's, the supermarket
group. The agreement, with the Morris & Co. and Scion brands,
marked the first time that we have collaborated with Sainsbury's, a
group with a substantial distribution network both online and
in-store.
The Company is continuing to progress a pipeline of further
licensing opportunities, leveraging its brands and design
archives.
THE BRANDS
The Brands segment comprises heritage brands Zoffany, Sanderson,
and Morris & Co; and contemporary brands Harlequin, Scion and
Clarke & Clarke.
Year ended 31 January (GBPm) 2023 versus 2022
Brands 2023 2022 Reported Constant currency
----------------- ----- ----- --------- ------------------
Morris & Co. 19.0 16.4 15.9% 13.8%
----- ----- --------- ------------------
Sanderson 14.0 14.4 (2.8%) (4.6%)
----- ----- --------- ------------------
Zoffany 8.8 8.6 2.3% 1.0%
----- ----- --------- ------------------
Clarke & Clarke 23.6 24.6 (4.1%) (5.7%)
----- ----- --------- ------------------
Harlequin 15.8 17.6 (10.2%) (12.9%)
----- ----- --------- ------------------
Scion 1.8 2.2 (18.2% (18.8%)
----- ----- --------- ------------------
Other 0.4 0.3 (33.3%) (33.3%)
----- ----- --------- ------------------
Total 83.4 84.1 (0.8%) (2.8%)
----- ----- --------- ------------------
Morris & Co.
Morris & Co. had another year of strong growth of its brand
product sales, and it is now our second biggest selling brand with
sales at GBP19.0m in reported currency, up 15.9% compared with
FY2022. By region, sales were up 19.9% in the UK, in Northern
Europe were down 11.7% and in North America were up 36.8% in
constant currency.
Morris & Co. sales were driven by the Simply Morris
collection, a modern interpretation of Morris & Co. designs
using clear grounds as a fresh take on maximalism targeting the
sunshine states. This collection was launched in Autumn 2021 and
has continued to gain momentum.
For the current financial year, the Emery Walker House
Collection is a much more traditional collection which has been
well received. This collection has resulted from a sponsorship
agreement with the Emery Walker Trust, the charity that preserves
the London home of Emery Walker, a typographer and engraver and a
close friend of William Morris.
Marketing initiatives during the year included the first-ever
show garden for the Morris & Co. brand at last year's Chelsea
Flower Show. The Morris & Co. show garden won a gold medal with
the garden's designer, Ruth Wilmott, founding her highly
imaginative design on two of William Morris's best-known
wallpapers, Trellis and Willow Boughs.
Morris & Co. paints were relaunched at the start of the
financial year under review, having been out of production since
2008 though frequently requested by customers.
Studio McGee launched four exclusive wallpapers in a special
edit in their influential USA online store at the beginning of this
year, with great success.
Sanderson
Brand product sales at Sanderson in the UK were down 3.4%, in
Northern Europe were down 27.7% and in North America were up 3.8%
in constant currency compared with FY2022.
In line with our strategy of fewer, stronger launches, Sanderson
collections have been rationalised to one big launch each year.
Water Garden was launched last year and performing well, and this
year's Spring launch Arboretum, which has been very well
received.
This autumn, Salvesen Graham, a renowned British design duo, are
styling Sanderson for an editorial shoot, and launching a small
collection (36 SKUs) of trimmings in collaboration with the brand,
to meet demand in the market.
The Disney capsule announced in August 2022 launches in Autumn
2023, in celebration of the original archival characters in a
sophisticated collection of fabrics and wallpapers, which are sure
to bring a smile to our customers and have been a joy for us to
work on.
With plans already in place for next year, the end of this
current financial year will see the launch of a collaboration with
Giles Deacon, the renowned couture designer and illustrator, who
has innovatively reworked original Sanderson designs.
Zoffany
Zoffany is the Group's interior designer-led brand, which
occupies the top price point of the Group's brands. During the
year, the brand product sales in the UK were down 5.1%, in Northern
Europe down 0.7% but in North America were up 5.1% in constant
currency compared with FY2022.
We hosted a major presentation at Temple Newsam, the stately
home and museum in Leeds, which reminded our top UK customers of
Zoffany's origins in the 1980s restoration projects and in the
redecoration of expansive homes. The brand celebrates the best of
English design and excellence in craftsmanship.
Arcadian Thames is the most recent collection of Zoffany,
celebrated for its artistry and celebration of historic houses
along the river, with special pieces designed in collaboration with
QEST scholar Melissa White and commissioned works Livia Papiernik,
from the Royal School of Needlework and subsequently the Royal
College of Art.
We are further leveraging the brand's heritage and skill with a
new launch later this year, working closely with historic English
silk manufacturers on a collection of damasks and classic woven
stripes, which revisits the brand's Temple Newsam history with the
highest quality of execution, in celebration of our country's best
makers.
Clarke & Clarke
Clarke & Clarke, our biggest selling brand, had an exciting
year and recorded its best ever performance in North America, where
it is distributed by Kravet Inc. Its brand product sales in the UK
were down 7.2%, in Northern Europe were down 10.4% and in North
America were down 1.0% in constant currency compared with
FY2022.
The brand's partnership with heritage tableware company Wedgwood
resulted in the launch of Wedgwood homewares last year, including
fabrics and wallpapers for international distribution through both
brands' networks. The sales performance from this partnership has
been encouraging.
Historically, the Clarke & Clarke brand has been almost
entirely fabric collections so a key strategic ambition for the
brand is to launch complementary wallpapers. We made progress by
launching two small wallpaper collections last year and plan to
launch a further two this financial year.
To further increase the revenue streams from this highly
popular, accessibly priced brand, we were delighted to announce in
February 2023 that Clarke & Clarke had signed its first
significant licensing agreement with NEXT as described in the
Licensing section above.
Harlequin
The year was a year of consolidation for Harlequin, where the
focus was on embedding the colour science initiative into the
brand. This initiative includes the colour quiz, which seeks to
empower consumers to choose the best designs and colours for their
individual emotional and physical well-being. Harlequin collections
are presented as colour stories to suit each of four profiles:
Rewild, Reflect, Retreat and Renew.
Good progress is being made in this journey. Importantly, John
Lewis has embraced the concept with the launch of Harlequin colour
pods in two top stores, which have been well received and give
confidence in the strategy, with further partnership planned in
this current financial year.
Brewers/Wallpaperdirect launched an exclusive special edit of
Harlequin designs in September 2022, which is backed by a stock
commitment and is performing very well.
During the year, Harlequin's brand product sales in the UK were
down 8.1%, in Northern Europe were down 31.3% and in North America
were down 7.1% in constant currency compared with the prior
year.
Further momentum will be added to Harlequin's colour science
this year, when a capsule collection of wallpapers and fabrics in
signature colours and exuberant styling will be launched through a
collaboration with Sophie Robinson, known as the "Queen of Colour",
which is expected to be launched in Autumn 2023.
A new collaboration will follow for Autumn/Winter 2024 with
designer and tastemaker Henry Holland of
henryhollandstudio.com.
Scion
Scion is predominantly a licensing brand, and its licensing
revenue makes a strong contribution to the Group. It's also a
direct-to-consumer brand from the scionliving.com website, which
brings all Scion products onto one platform. Owing to this
positioning, the Company no longer produces full collections of
wallpapers and fabrics but launches capsule collections instead to
bring newness.
In September 2022, Scion launched a capsule collection of
wallpapers and fabrics created in collaboration with Designs in
Mind, a social enterprise that uses art and design to support
people with mental health challenges. The collection, which was
created through workshops hosted by the Scion design team and is
available via the Scion online shop, demonstrates the Company's
commitment to the positive power of design and its Live Beautiful
commitment.
To celebrate the brand's 10(th) anniversary, Scion launched its
most recent refresh, Going Lohko, a powerful colour edit of Scion
classics comprising a dozen SKUs of wallpaper.
Scion's brand product sales in the UK were down 12.9%, in
Northern Europe were down 37.9% and in North America were down
21.2% in constant currency compared with the prior year.
MANUFACTURING
Our unique, integrated vertical supply chain is an important
pillar in our growth strategy and continues to be the focus of
increased investment, particularly in digital printing
technology.
The two factories, Standfast & Barracks and Anstey Wallpaper
Company, print for our own brands and for third parties,
positioning them at the centre of our industry. Our third-party
sales, in the UK, Europe and the USA, reflect our premium print
technologies and world-class excellence in design, manufacturing,
customer service and innovation.
The performance at the factories during the year was robust
against a strong comparator in FY2022, which included a period of
restocking after Covid.
Year ended 31 January 2023 versus 2022
(GBPm)
2023 2022 Reported
--------------------------- ----------- ----------- -----------------
Sales to Group brands 16.8 18.8 (10.6%)
----------- ----------- -----------------
Third party sales 22.2 22.9 (3.1%)
----------- ----------- -----------------
Total Manufacturing sales 39.0 41.7 (6.5%)
----------- ----------- -----------------
Standfast & Barracks ('Standfast')
Standfast, our fabric printing factory, is widely regarded,
internationally, as the destination for creative, innovative and
high-quality fabric printing. Standfast continues to exploit its
extensive archive and original artwork, with a talented design
studio that reinterprets antique, heritage and classic design into
prints relevant for today.
Investment during the year included the introduction of a new
ERP system. Digital printing at Standfast as a proportion of
factory output was 74% (FY2022: 69%).
Total sales at Standfast in the year were GBP20.7m (FY2022:
GBP21.3m).
Anstey Wallpaper Company ('Anstey')
Anstey, our wallpaper printing and paint-tinting business, is an
unrivalled factory in its range of wallpaper printing techniques on
one site. We continue to invest in new technology to extend the
potential of the factory and to build on its unique capabilities.
Third-party customers reference the unique ability of Anstey to
work consistently across the range of techniques and to combine
them.
Investment in digital printing at Anstey during the year
included two new digital printers, which offer enhanced
capabilities including speed. Digital printing at Anstey as a
proportion of factory output was 16% (FY2022: 18%).
Total sales at Anstey were GBP18.3m (FY2022: GBP20.4m).
SUMMARY
Our strategy has delivered a resilient trading performance
during the year amid challenging market conditions and input cost
inflation. Strategic initiatives during the past four years such as
SKU reduction, coupled with tight cost control, have increased the
profitability of the business. Price increases introduced in
February and August last year, and again in February this year, are
also protecting the margin in an environment of increased input
costs, whilst maintaining value for the customer We continue to
focus on the efficiency and agility of the business along with
investment in growth opportunities for the near and long term. In
the current consumer market, the strength of our balance sheet
provides significant protection in the event of any further
deterioration in trading conditions.
As we start the current financial year, inflationary pressures
on input costs persist but the US market continues to perform well,
licensing income has performed strongly and hospitality contract
orders, are encouraging. We are also excited by upcoming launches
from our own brands and through collaborations, including Sophie
Robinson for Harlequin and the vintage Disney Home x Sanderson
collection. The Company continues to trade in line with Board
expectations for the current financial year.
I would like to express my sincere gratitude and heartfelt
thanks to all of our colleagues for making the business a success
throughout another challenging year as we look forward from a
stronger platform and embrace future opportunities.
Lisa Montague
Chief Executive Officer
25 April 2023
CHIEF FINANCIAL OFFICER'S REVIEW
The Chairman's Statement and the Chief Executive Officer's
Strategic and Operating Review provide analysis of the key factors
contributing to our financial results for the year ended 31 January
2023. The results show a resilient performance in challenging
market conditions.
Revenue
Our reported revenue for the year was GBP112.0m compared with
GBP112.2m in FY2022.
FY2023 FY2022 Change
Revenue GBPm GBPm FY2022
------------------------- ------ ------ -------
Brands 83.4 84.1 (0.8%)
Licensing 6.5 5.2 25.0%
------------------------- ------ ------ -------
Total Brands 89.9 89.3 0.7%
Manufacturing - External 22.1 22.9 (3.5%)
------------------------- ------ ------ -------
Group 112.0 112.2 (0.2%)
------------------------- ------ ------ -------
Gross profit
Gross profit for the full year was GBP74.2m compared with
GBP73.8m in FY2022 whilst the gross profit margin at 66.3%
represents an increase of 50 basis points over FY2022.
2023 2022
------------------------ ----- -----
Brands and Manufacturing
Revenue (GBPm) 105.5 107.0
Gross profit (GBPm) 67.7 68.6
% 64.2% 64.1%
------------------------ ----- -----
Licensing
Revenue (GBPm) 6.5 5.2
Gross profit (GBPm) 6.5 5.2
% 100% 100%
------------------------ ----- -----
Total
Revenue (GBPm) 112.0 112.2
Gross profit (GBPm) 74.2 73.8
% 66.3% 65.8%
------------------------ ----- -----
Excluding the impact of licence income, which generates 100%
gross profit, margins improved to 64.2% in FY2023 versus 64.1% in
FY2022. This margin performance was achieved through the improving
efficiency of the business and a proactive approach to product
pricing, with price increases in February and August last year
along with tight control of costs. These measures allowed us to
offset the inflationary pressure we experienced with our own
factories and third-party suppliers. Our fixed price electricity
contract expired in October 2022 following which we have been
paying at the UK Government capped rate. Our long-term gas fixed
rate agreement will expire in October 2023 which will put further
pressure on margins moving forward.
Profit before tax
Profit before tax was GBP10.9m up from GBP10.4m in FY2022. This
resilient performance is driven by the strength of licensing
revenues, gross margin improvement and a continued focus on cost
control.
2023 2022
GBPm GBPm
---------------------------------- ------ ------
Revenue 112.0 112.2
Gross profit 74.2 73.8
Distribution and selling expenses (25.1) (25.1)
Administration expenses (43.0) (42.8)
Net other income 4.5 4.5
Finance costs - net 0.3 -
Profit before tax 10.9 10.4
---------------------------------- ------ ------
Distribution and selling expenses of GBP25.1m represented 22% of
revenue in line with prior year levels.
Administration expenses grew to GBP43.0m in FY2022 from GBP42.8m
in FY2022. Inflationary pressures impacted all areas of spend,
however we continued to implement cost efficiency measures which
limited this increase to only 1% compared to the prior year.
Administration expenses remain GBP2.7m below the pre-Covid FY2020
levels.
Adjusted underlying profit before tax
Adjusted operating profit was GBP12.6m up from GBP12.5m in
FY2022.
2023 2022
GBPm GBPm
------------------------------------------- ----- -----
Profit before tax 10.9 10.4
Amortisation of acquired intangible assets 0.8 1.0
Restructuring and reorganisation costs - 1.2
Forgiveness of loan - (0.4)
Release of a provision for legal case - (0.6)
------------------------------------------- ----- -----
Underlying profit before tax 11.7 11.6
Share-based payment charge 0.5 0.4
Net defined benefit pension charge 0.4 0.5
------------------------------------------- ----- -----
Adjusted underlying profit before tax 12.6 12.5
------------------------------------------- ----- -----
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 and do not relate to the operating activities of the group.
Share based payment charges are added back in the adjusted
underlying profit as they are non-cash measure.
Adjusted measures are used as way for the Board in monitoring
performance of the Group and are not considered to be superior or a
substitute to statutory measure but are provided to provide further
depth and understanding to the users of the financial information
to allow for improved assessment of performance. The Group
considers adjusted underlying profit before tax to be an important
measure of Group performance and is consistent with how the
business performance is reported and assessed by the Board. This is
a measure used within the Group's incentive plans.
Non-underlying item in the year of GBP0.8m (FY2022: GBP1.0m)
refers to the amortisation of intangible assets in respect of the
acquisition of Clarke & Clarke in October 2016. Please refer to
note 7(b) for the details of the adjusted underlying profit before
tax.
Taxation
Tax for the year 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 year is 19%
(FY2022: 25%).
Capital expenditure
Capital expenditure in the year totalled GBP4.8m (FY2022:
GBP2.1m). As planned, we continue to focus our investment in
digital printing technology, particularly at our Anstey wallpaper
factory, and in projects that reduce our environmental impact and
support our Live Beautiful sustainability strategy.
Minimum Guaranteed Licensing Receivables
In accordance with IFRS 15, the Group recognises the fair value
of fixed minimum guaranteed income that arises under multi-year
licensing agreements, in full upon signature of the agreement
provided that there are no further performance conditions for the
Group to fulfil. A corresponding receivable balance is generated
which then reduces as payments are received from the licence
partner in accordance with the performance obligations laid down in
the agreement (usually the passing of time).
Licensing revenues above the fixed minimum guaranteed amount are
recognised in the period in which they are generated.
During the year, several long-term licensing agreements were
agreed, including those with NEXT Plc and Bedeck. As a result, at
31 January 2023, minimum guaranteed licensing receivables due after
more than one year grew to GBP2.6m (FY2022: GBP1.6m) and those due
within 1 year grew to GBP1.4m (FY2022: GBP0.9m).
Inventories
Net inventories ended the year at GBP27.8m compared to a prior
year GBP22.7m.
This increase on FY2022 reflects a combination of cost increases
(for both finished goods and raw materials) and strategic
investments to assure strong availability of our best-selling
ranges.
Whilst our SKU reduction strategy is substantially complete for
range planning purposes, margin improvement and better product
management will continue to be realised in future years.
We have also recognised GBP0.8m of marketing materials as part
of inventories for FY2022.
Trade receivables
Trade receivables declined to GBP12.0m (FY2022: GBP13.5m).
The ageing profile of trade debtors shows that payments from
customers are close to terms although the current economic
environment presents an enhanced level of credit risk. In addition
to specific provisions against individual receivables, a provision
has been made of GBP0.9m (FY2022: GBP0.8m), which is a collective
assessment of the risk against non-specific receivables calculated
in accordance with IFRS 9.
The Group has experienced limited bad debts in the last year and
continues to focus on its credit management procedures to mitigate
future potential credit risks.
Cash position and banking facilities
Net cash from operating activities was GBP5.6m (FY2022:
GBP9.0m).
Key contributors behind the year-on-year reduction were the
increased investment in inventory (see above) and GBP1.0m (FY2022:
GBPnil) payments related to the restructuring of our French
subsidiary announced in the prior year.
All foreign currencies are bought and sold centrally on behalf
of the Group. Regular reviews take place of our foreign currency
cash flows. The Group undertakes hedging only where there are
highly probable future cash flows and to hedge working capital
exposures. The strong performance of the Group's North American
business during the year created a requirement to put in place a
limited level of hedging contracts against the US dollar surplus
that is expected to arise. The revaluation of the open contracts
generates an asset at year end of GBP0.1m (FY2022: GBPnil).
The Group's banking facilities are provided by Barclays Bank
plc. The Group has a GBP12.5m multi-currency revolving credit
facility which is due for renewal in October 2024. The agreement
also includes a GBP5m uncommitted accordion facility to further
increase available credit. This provides substantial headroom for
future growth. Our covenants under this facility are EBITDA and
interest cover measures. This facility has not been drawn during
the year.
Net defined benefit pension
The Group operates two defined benefit schemes in the UK. These
comprise the Walker Greenbank Pension Plan and the Abaris Holdings
Limited Pension Scheme. These were both closed to new members and
to future service accrual from 30 June 2002 and 1 July 2005
respectively.
During the year, the triennial valuation of the schemes has been
concluded based on the schemes' position on 5 April 2021. New
deficit contribution schedules have been agreed as part of the
valuations and the Group will continue making cash contributions,
at levels similar to historical amounts, into the schemes to make
good any deficits, as well as making contributions towards the
ongoing expenses incurred in the running of the schemes.
The methodology and assumptions prescribed for the purposes of
IAS 19 mean that the Balance Sheet surplus or deficit, the Profit
or Loss figures and the Statement of Comprehensive Income figures
are inherently volatile and vary greatly according to investment
market conditions at each accounting date. As a result of changes
in assumptions (primarily the change in the discount rate),
experience loss (inflation being higher than expected) and asset
returns being lower than expected, the Group reports a net
liability of GBP2.5m at 31 January 2023 compared with a GBP2.6m
surplus at 31 January 2022. Further details of these movements are
disclosed in note 11 to the financial statements.
Dividend
During the financial year, an interim dividend of 0.75p per
share was paid on 25 November 2022. A final dividend of 2.75p is
now proposed taking the full year dividend to 3.50p. This payment
will be made on 11 August 2023 to the shareholders registered on
the Company's register on 14 July 2023 if approved at the Company's
forthcoming Annual General Meeting. The Board remain committed to a
progressive dividend policy as part of the capital allocation
priorities of the Group.
Capital allocation policy
The level of capital investment required in the coming years is
likely to be significantly 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.
We remain committed to retaining a strong balance sheet and
acknowledge that we have two defined benefit pension plans we are
committed to supporting. We continue to look at whether there is
appropriate action which could be taken to help reduce pension
scheme risks within our wider business objectives.
Going concern
The Directors reviewed a Management Base Case model and
considered the uncertainties regarding any further impact of
Covid-19, supply chain and inflationary pressures and the Russian
invasion of Ukraine for the assessment of going concern. The
Directors consider that, having reviewed forecasts prepared by the
management team which have been stress tested, the Group has
adequate resources to continue trading for the foreseeable future.
For this reason, they continue to adopt the going concern basis in
preparing the financial statements. Further details of the review
are disclosed in note 1 to the financial statements.
Mike Woodcock
Chief Financial Officer
25 April 2023
CONSOLIDATED INCOME STATEMENT
YEARED 31 JANUARY 2023
2023 2022
Total Total
Note GBP000 GBP000
---------------------------------------------- ---- -------- --------
Revenue 3 111,978 112,200
Cost of sales (37,761) (38,365)
---------------------------------------------- ---- -------- --------
Gross profit 74,217 73,835
---------------------------------------------- ---- -------- --------
Net operating expenses:
Distribution and selling expenses (25,043) (25,052)
Administration expenses (42,997) (42,796)
Other operating income 4 4,470 4,342
---------------------------------------------- ---- -------- --------
Profit from operations 10,647 10,329
---------------------------------------------- ---- -------- --------
Finance income 445 184
Finance costs (152) (154)
---------------------------------------------- ---- -------- --------
Net finance income 5 293 30
---------------------------------------------- ---- -------- --------
Profit before tax 10,940 10,359
Tax expense 6 (2,115) (2,600)
---------------------------------------------- ---- -------- --------
Profit for the year attributable to owners of
the parent 8,825 7,759
---------------------------------------------- ---- -------- --------
Earnings per share - Basic 7 12.42p 10.93p
---------------------------------------------- ---- -------- --------
Earnings per share - Diluted 7 12.31p 10.80p
---------------------------------------------- ---- -------- --------
Adjusted earnings per share - Basic* 7 14.18p 13.75p
---------------------------------------------- ---- -------- --------
Adjusted earnings per share - Diluted* 7 14.08p 13.59p
---------------------------------------------- ---- -------- --------
All of the activities of the Group are continuing
operations.
* These are alternative performance measures.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEARED 31 JANUARY 2023
2023 2022
GBP000 GBP000
----------------------------------------------------- ------- --------
Profit for the year 8,825 7,759
Other comprehensive (expense)/income:
Items that will not be reclassified to profit
or loss
Remeasurements of defined benefit pension schemes (6,981) 6,492
Tax credit/(charge) relating to pension schemes 1,745 (1,233)
Cash flow hedge 112 -
------------------------------------------------------ ------- --------
Total items that will not be reclassified to
profit or loss (5,124) 5,259
------------------------------------------------------ ------- --------
Items that may be reclassified subsequently
to profit or loss
Currency translation gains 429 70
------------------------------------------------------ ------- --------
Other comprehensive (expense)/income for the
year, net of tax (4,695) 5,329
------------------------------------------------------ ------- --------
Total comprehensive income for the year attributable
to the owners of the parent 4,130 13,088
------------------------------------------------------ ------- --------
CONSOLIDATED BALANCE SHEET
AS AT 31 JANUARY 2023
(restated) (restated)
31 January 31 January 1 February
2023 2022 2021
Note GBP000 GBP000 GBP000
----------------------------------------- ---- ----------- ----------- -----------
Non-current assets
Intangible assets 26,448 26,979 28,325
Property, plant and equipment 12,619 11,258 12,061
Right-of-use assets 4,577 3,923 5,783
Retirement benefit surplus 1 - 2,577 -
Minimum guaranteed licensing receivables 2,637 1,619 1,222
----------------------------------------- ---- ----------- ----------- -----------
46,281 46,356 47,391
----------------------------------------- ---- ----------- ----------- -----------
Current assets
Inventories 27,774 22,652 19,633
Trade and other receivables 8 16,327 16,792 15,885
Minimum guaranteed licensing receivables 1,433 879 1,221
Financial derivate instrument 112 - -
Cash and cash equivalents 15,401 19,050 15,549
----------------------------------------- ---- ----------- ----------- -----------
61,047 59,373 52,288
----------------------------------------- ---- ----------- ----------- -----------
Total assets 107,328 105,729 99,679
----------------------------------------- ---- ----------- ----------- -----------
Current liabilities
Trade and other payables (16,286) (18,282) (19,263)
Lease liabilities (1,701) (1,983) (2,676)
Provision for liabilities and charges 9 - (1,043) (559)
Borrowings - - (412)
----------------------------------------- ---- ----------- ----------- -----------
(17,987) (21,308) (22,910)
----------------------------------------- ---- ----------- ----------- -----------
Net current assets 43,060 38,065 29,378
----------------------------------------- ---- ----------- ----------- -----------
(restated) (restated)
31 January 31 January 1 February
2023 2022 2021
Note GBP000 GBP000 GBP000
Non-current liabilities
Lease liabilities (3,421) (1,920) (3,206)
Deferred income tax liabilities (1,121) (1,998) (514)
Retirement benefit obligation 10 (2,446) - (5,637)
Provision for liabilities and charges 9 (1,037) (790) (650)
----------------------------------------- ---- ----------- ----------- -----------
(8,025) (4,708) (10,007)
----------------------------------------- ---- ----------- ----------- -----------
Total liabilities (26,012) (26,016) (32,917)
----------------------------------------- ---- ----------- ----------- -----------
Net assets 81,316 79,713 66,762
----------------------------------------- ---- ----------- ----------- -----------
Equity
Share capital 715 710 710
Share premium account 18,682 18,682 18,682
Foreign currency translation reserve (367) (796) (866)
Retained earnings 21,779 20,610 7,729
Other reserves 40,507 40,507 40,507
----------------------------------------- ---- ----------- ----------- -----------
Total equity 81,316 79,713 66,762
----------------------------------------- ---- ----------- ----------- -----------
A third consolidated balance sheet as at 1 February 2021 has
been shown above to show the effect of the prior year restatement
as detailed in note 11. Provision for liabilities and charges is
analysed into current and non-current assets as detailed in
note9.
CONSOLIDATED CASH FLOW STATEMENT
YEARED 31 JANUARY 2023
(restated)
2023 2022
----------------------------------------------- --- --- -------- -----------
Cash flows from operating activities GBP000 GBP000
Profit from operations 10,647 10,329
Intangible asset amortisation 1,493 1,725
Property, plant and equipment depreciation 2,429 2,545
Right-of-use asset depreciation 2,407 2,520
Loss on disposal of fixed assets 86 -
Share-based payment equity charge 493 253
Defined benefit pension charge 500 487
Employer contributions to pension schemes (2,382) (2,209)
Increase in inventories (4,911) (3,018)
Decrease/(increase) in trade and other
receivables 28 (614)
Increase in minimum guaranteed licencing
receivables (1,231) (55)
Decrease/(increase) in trade and other
payables (2,111) 92
(Decrease)/increase in provision for
liabilities and charges (822) 624
Tax paid (1,009) (3,754)
Forgiveness of loan into grant - (412)
Unrealised foreign exchange losses* - 468
Net cash from operating activities 5,617 8,981
--------------------------------------------------------- -------- -----------
Cash flows from investing activities
Finance income received 28 5
Purchase of intangible assets (686) (379)
Purchase of property, plant and equipment (4,103) (1,750)
--------------------------------------------------------- -------- -----------
Net cash used in investing activities (4,761) (2,124)
--------------------------------------------------------- -------- -----------
Cash flow from financing activities
Repayment of lease liability (1,984) (2,686)
Interest paid - (76)
Repurchase of shares vesting from share-based
payment (430) -
Dividends paid (2,484) (532)
--------------------------------------------------------- -------- -----------
Net cash used in financing activities (4,898) (3,294)
--------------------------------------------------------- -------- -----------
Net decrease in cash and cash equivalents (4,042) 3,563
Net foreign exchange movement 393 (62)
Cash and cash equivalents at beginning
of year 19,050 15,549
--------------------------------------------------------- -------- -----------
Cash and cash equivalents at end of
year 15,401 19,050
--------------------------------------------------------- -------- -----------
* In the prior year, the unrealised foreign exchange losses
related to overseas entities were not allocated to their Individual
cash flow lines.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 JANUARY 2023
Attributable to owners of the parent
------------------------------------- ----------------------------------------------------------------------------
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 7,729 43,457 (2,950) (866) 66,762
Profit for the year - - 7,759 - - - 7,759
Other comprehensive income/(expense):
Remeasurements of defined
benefit pension schemes - - 6,492 - - - 6,492
Tax credit relating to
pension schemes - - (1,233) - - - (1,233)
Currency translation differences - - - - - 70 70
-------------------------------------- -------- -------- --------- ------------ -------- ------------ -------
Total comprehensive income/(expense): - - 13,018 - - 70 13,088
Transactions with owners,
recognised directly in
equity:
Dividends - - (532) - - - (532)
Share-based payment equity
charge - - 253 - - - 253
Related tax movements on
share-based payme nt - - 142 - - - 142
-------------------------------------- -------- -------- --------- ------------ -------- ------------ -------
Balance at 31 January
2022 710 18,682 20,610 43,457 (2,950) (796) 79,713
-------------------------------------- -------- -------- --------- ------------ -------- ------------ -------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 JANUARY 2023
Attributable to owners of the parent
------------------------ -----------------------------------------------------------------------------------------
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
2022 710 18,682 20,610 43,457 (2,950) (796) 79,713
Profit for the year 8,825 8,825
Other comprehensive
income/(expense):
Remeasurements of defined
benefit pension schemes - - (6,981) - - - (6,981)
Tax charge relating to
pension schemes - - 1,745 - - - 1,745
Cash flow hedge - - 112 - - - 112
Currency translation
differences - - - - - 429 429
------------------------- -------- -------- --------- ------------- -------- ------------ -------------------
Total comprehensive
income/(expense): - - (5,124) - - 429 (4,695)
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 - - 493 - - - 493
Related tax movements on
share-based payment - - (106) - - - (106)
Share-based payment
vesting - - (430) - - - (430)
------------------------- -------- -------- --------- ------------- -------- ------------ -------------------
Balance at 31 January
2023 715 18,682 21,779 43,457 (2,950) (367) 81,316
------------------------- -------- -------- --------- ------------- -------- ------------ -------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting policies and general information
General information
Sanderson Design Group PLC ('the Company') and its subsidiaries
(together 'the Group') is a luxury interior furnishing group whose
brands include Morris & Co., Sanderson, Zoffany, Clarke &
Clarke, Harlequin and Scion. The brands are targeted at the mid to
upper end of the premium market. They have worldwide distribution
including prestigious showrooms at Chelsea Harbour, London and the
D&D Building, Manhattan, New York. Part of the Brand's
inventory is sourced in-house from the Group's own specialist
manufacturing facilities of Standfast & Barracks, the fabric
printing business situated in Lancaster, and Anstey Wallpaper
Company, situated in Loughborough. The manufacturing businesses
produce for other interior furnishing businesses both in the UK and
throughout the world. The Company is a public limited company which
is listed on the Alternative Investment Market of the London Stock
Exchange and is registered, domiciled and incorporated in the UK.
The Company registration number is 61880 and the address of its
registered office is Chalfont House, Oxford Road, Denham, UB9
4DX.
Basis of preparation
The financial information contained within this final results
announcement for the year ended 31 January 2023 and the year ended
31 January 2022 is derived from but does not comprise statutory
financial statements within the meaning of section 435 of the
Companies Act 2006. Statutory accounts for the year ended 31
January 2022 have been filed with the Registrar of Companies and
those for the year ended 31 January 2023 will be filed following
the Company's Annual General Meeting.
The auditors' report on the statutory accounts for the year
ended 31 January 2023 and the year ended 31 January 2022 is
unqualified, does not draw attention to any matters by way of
emphasis, and does not contain any statement under section 498 of
the Companies Act 2006. The statutory consolidated financial
statements, from which the financial information in this
announcement has been extracted have been prepared in accordance
with UK-adopted international accounting standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The accounting policies applied
are consistent with those set out in the Sanderson Design Group PLC
Annual Report and Accounts for the year ended 31 January 2022.
Going concern
In the context of the continuing invasion of Ukraine by Russia
and the current economic difficulties but with Covid-19 impact
ebbing away, 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 from the date of signing
of the report to 31 January 2025, including the availability and
maturity profile of the Group's financing facilities and covenant
compliance. These 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 at 30 April, 31 July, 31 October and 31 January
each year until the facility matures in October 2024. Throughout
the financial year and up to the date of this report the Company
has met all required covenant tests and maintained headroom over
GBP5m. The total headroom of the Group at 31 January 2023 was
GBP27.9m (2022: GBP31.6m), including cash and cash equivalents of
GBP15.4m and the committed facility of GBP12.5m. The Group has also
access to an uncommitted accordion facility of GBP5.0m with
Barclays.
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 continuing
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 be undoubtedly
different from the MBC and other scenarios modelled by the Company.
If there are significant negative variations from the MBC,
management would act decisively, as they have done in recent years,
to protect the business, particularly its cash position. Having
considered all the comments above the Directors consider that the
Group and the Company have 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.
2. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning future
events. The resulting accounting estimates will seldom precisely
equal the related actual results. The Group applies its best
endeavours in setting accounting estimates, and uses historical
experience and other factors, including input from experienced and
specialist management. Estimates and assumptions are periodically
re-evaluated and the resulting accounting balances updated as new
information, including actual outcomes, become apparent.
The estimates and judgements that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
a) Retirement benefit obligations
The Group recognises its obligations to employee retirement
benefits. The quantification of these obligations is subject to
significant estimates and assumptions regarding life expectancy,
discount and inflation rates, wage and salary changes, the rate of
increase in pension payments, and the market values of equities,
bonds and other pension assets. In making these assumptions the
Group takes advice from a qualified actuary about which assumptions
reflect the nature of the Group's obligations to employee
retirement benefits. The assumptions are regularly reviewed to
ensure their appropriateness.
Under IAS 19, the net defined benefit pension scheme asset that
can be recognised is the lower of the surplus and the asset ceiling
i.e. the economic benefits available in the form of refunds or
reductions in future contributions or a combination of both, in
accordance with IFRIC 14 'IAS 19-The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their Interaction'. In
order to determine whether there are any restrictions on the
surplus as outlined in IFRIC 14, the Schemes' Trust Deeds and Rules
were reviewed, and legal advice was acquired. It is the Group's
understanding that, it is able, without condition or restriction
placed on it by the trustees, to run the Schemes until there are no
remaining members; wind up the Schemes at that point; and reclaim
any remaining monies. Consequently, the Group can recognise in full
any surplus calculated in accordance with IAS 19 and IFRIC 14.
The Group determines the appropriate discount rate at the end of
each year. This is the interest rate that should be used to
determine the present value of estimated future cash outflows
expected to be required to settle pension obligations. In
determining the appropriate discount rate, the Group considers the
interest rates of high-quality corporate bonds that are denominated
in the currency in which the benefits will be paid, and that have
terms to maturity approximating the terms of the related pension
liability.
b) Impairment of non-financial assets
The Group tests annually whether goodwill or its indefinite life
intangible asset has suffered any impairment, in accordance with
its accounting policy. Other intangibles and property, plant and
equipment are also reviewed whenever impairment triggers are
apparent. The recoverable amounts of cash-generating units have
been determined based on value in use ('VIU') calculations. These
calculations require use of estimates of future sales, margins, and
other operating and administration expenses, and of discount
rates.
In assessing whether an impairment of goodwill is required the
carrying value of the cash-generating unit ('CGU') or group of CGUs
is compared with its recoverable amount. The recoverable amounts
for each CGU, being a division of the business operated at a
separate site, and collectively for groups of CGUs that make up the
segments of the Group's business, have been based on the value in
use ('VIU').
The Group estimates the VIU using a discounted cash flow model
('DCF'), where the projected cash flows for separate or collective
groups of CGUs are discounted using a post-tax rate of 10% (2022:
9.25%). The discount rate used is the same across all segments.
The Group has used formally approved budgets for the first two
years (2022: two years) of its VIU calculation, with extrapolation
beyond the last explicit year using an assumption of growth for
future years ranging from 1% to 2% (2022: 1% to 2%) depending upon
the CGU being tested.
The cash flows used in the calculation of the VIU are derived
from experience and are based on operating profit forecasts, which
in turn rely upon assumptions relating to sales growth, price
increases, margins and operating and administration expenses. The
cash flows have not included the benefits arising from any future
asset enhancement expenditure and therefore exclude significant
benefits anticipated from future capital expenditure. The 2% growth
rates included within the assumptions supporting the VIU
calculations do not therefore represent the Group's anticipated
total forecast growth, but rather only the growth deriving from
capital expenditure completed at the Balance Sheet date.
The Group makes provision for impairment in the carrying amount
of its inventories and marketing materials. The nature of the
Group's products are exposed to changes in taste and attitudes from
time to time, which can affect the demand for those products. The
Group has skilled and experienced management who utilise historical
sales information, and exercise their judgement, in making
estimates about the extent of provisions necessary based on the
realisable value of inventory and expected future benefit to the
Group of marketing materials considering the estimated price and
volume of future sales or usage, less the further costs of sale and
holding costs.
3. 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
operated from the UK and its foreign subsidiaries in the US,
France, the Netherlands and Germany.
- Manufacturing - comprising the wallcovering and printed fabric
manufacturing businesses operated by Anstey and Standfast &
Barracks respectively.
This is the basis on which the Group presents its operating
results to the Board of Directors, which is the 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 plan expenses, taxation
and eliminations of inter-segment items, are presented within
'intercompany eliminations and unallocated'.
a) Principal measures of profit and loss - Income Statement
segmental information
Intercompany
eliminations
Brands Manufacturing and unallocated Total
Year ended 31 January 2023 GBP000 GBP000 GBP000 GBP000
------------------------------ ------- ------------- ---------------- --------
UK revenue 42,612 15,024 - 57,636
International revenue 40,800 7,093 - 47,893
Licence revenue 6,449 - - 6,449
------------------------------ ------- ------------- ---------------- --------
Revenue - external 89,861 22,117 - 111,978
Revenue - internal - 16,953 (16,953) -
------------------------------ ------- ------------- ---------------- --------
Total revenue 89,861 39,070 (16,953) 111,978
------------------------------ ------- ------------- ---------------- --------
Profit/(loss) from operations 7,811 3,713 (877) 10,647
Net finance income - - 293 293
------------------------------ ------- ------------- ---------------- --------
Profit/(loss) before tax 7,811 3,713 (584) 10,940
Tax expense - - (2,115) (2,115)
------------------------------ ------- ------------- ---------------- --------
Profit/(loss) for the year 7,811 3,713 (2,699) 8,825
------------------------------ ------- ------------- ---------------- --------
Intercompany
eliminations
Brands Manufacturing and unallocated Total
Year ended 31 January 2022 GBP000 GBP000 GBP000 GBP000
------------------------------ ------- ------------- ---------------- -------
UK revenue 43,682 14,173 - 57,855
International revenue 40,425 8,761 - 49,186
Licence revenue 5,159 - - 5,159
------------------------------ ------- ------------- ---------------- -------
Revenue - external 89,266 22,934 - 112,200
Revenue - internal - 18,807 (18,807) -
------------------------------ ------- ------------- ---------------- -------
Total revenue 89,266 41,741 (18,807) 112,200
------------------------------ ------- ------------- ---------------- -------
Profit/(loss) from operations 5,479 6,602 (1,752) 10,329
Net finance income _ - 30 30
------------------------------ ------- ------------- ---------------- -------
Profit/(loss) before tax 5,479 6,602 (1,722) 10,359
Tax expense - - (2,600) (2,600)
------------------------------ ------- ------------- ---------------- -------
Profit/(loss) for the year 5,479 6,602 (4,322) 7,759
------------------------------ ------- ------------- ---------------- -------
The segmental Income Statement disclosures are measured in
accordance with the Group's accounting policies as set out in note
1. 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.
All defined benefit pension costs, and share-based award
expenses, are recognised for internal reporting to the CODM as part
of Group-wide activities and are included within 'intercompany
eliminations and unallocated' above. Other costs, such as Group
insurance, rent and auditors' remuneration which are incurred on a
Group-wide basis are recharged by the head office to segments on a
reasonable and consistent basis for all periods presented and are
included within segment results above. Tax charges have not been
allocated to a segment.
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.
2023 2022
Brands international revenue by export market: GBP000 GBP000
----------------------------------------------- -------- -------
North America 19,762 16,644
Northern Europe 10,809 13,189
Rest of the World 10,229 10,592
----------------------------------------------- -------- -------
40,800 40,425
----------------------------------------------- -------- -------
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:
2023 2022
Brand revenue analysis: GBP000 GBP000
------------------------ -------- -------
Harlequin 15,757 17,623
Scion 1,824 2,210
Sanderson 14,039 14,421
Morris & Co. 19,025 16,444
Zoffany 8,821 8,564
Clarke & Clarke 23,577 24,554
Other brands 369 291
Licensing 6,449 5,159
------------------------ -------- -------
89,861 89,266
------------------------ -------- -------
Revenue of the Manufacturing reportable segment - including
revenues from internal sales to the Group's Brands:
2023 2022
Manufacturing revenue analysis: GBP000 GBP000
-------------------------------- -------- -------
Standfast & Barracks 20,732 21,310
Anstey 18,338 20,431
-------------------------------- -------- -------
39,070 41,741
-------------------------------- -------- -------
4. Other Operating income
2023 2022
GBP000 GBP000
----------------------------------------------------- ------- -------
Sale of marketing materials and other services 4,470 4,046
Research and development expenditure credit ("RDEC") - 296
----------------------------------------------------- ------- -------
4,470 4,342
----------------------------------------------------- ------- -------
5. Net finance income
2023 2022
GBP000 GBP000
---------------------------------------------------------- ------- --------------------------
Interest income:
Interest received on bank deposits 28 5
Unwind of discount on minimum guaranteed licensing income 341 179
Total interest received 369 184
Net pension interest income 76 -
---------------------------------------------------------- ------- --------------------------
Total finance income 445 184
---------------------------------------------------------- ------- --------------------------
Interest expense:
Bank facility fee (22) (22)
Lease interest (130) (132)
Total interest paid/finance costs (152) (154)
Net finance income 293 30
---------------------------------------------------------- ------- --------------------------
In the current financial year, GBP76,000 relating to net pension
income in administration expenses has been presented as part of net
finance income. The comparative for this item has not been
represented.
6. Tax expense
2023 2022
GBP000 GBP000
------------------------------------------------------ ------- -------
Corporation tax:
* UK current tax 1,433 1,973
* UK adjustments in respect of prior years (278) 224
* overseas, current tax 198 117
* overseas, adjustment in respect of prior year - (107)
------------------------------------------------------ ------- -------
Corporation tax 1,353 2,207
------------------------------------------------------ ------- -------
Deferred tax:
* current year 697 157
* adjustments in respect of prior years 65 57
* effect of changes in corporation tax rates - 179
------------------------------------------------------ ------- -------
Deferred tax 762 393
------------------------------------------------------ ------- -------
Total tax charge for the year 2,115 2,600
------------------------------------------------------ ------- -------
2023 2022
Reconciliation of total tax charge for the year GBP000 GBP000
------------------------------------------------------ ------- -------
Profit on ordinary activities before tax 10,940 10,359
------------------------------------------------------ ------- -------
Tax on profit on ordinary activities at 19.00% (2022:
19.00%) 2,079 1,968
Fixed asset differences 173 42
Non-deductible expenditure 129 173
Income not subject to tax - (2)
Share-based payment - 40
Adjustments in respect of prior years - corporation
tax (278) 117
Adjustments in respect of prior years - deferred tax 65 57
Overseas tax suffered - 2
Movement in deferred tax not recognised (246) (170)
Effect of changes in corporation tax rates 193 373
------------------------------------------------------ ------- -------
Total tax charge for the year 2,115 2,600
------------------------------------------------------ ------- -------
7. Earnings per share
7. (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 year, 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.
2023 2022
------------------------------- -------------------------------
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 8,825 71,074 12.42 7,759 70,983 10.93
Effect of dilutive securities:
Shares under share-based
payment 606 850
------------------------------- -------- ---------- --------- -------- ---------- ---------
Diluted earnings per share 8,825 71,680 12.31 7,759 71,833 10.80
------------------------------- -------- ---------- --------- -------- ---------- ---------
Adjusted underlying basic
and diluted earnings per
share:
Add back share-based payment
charge 508 406
Add back net defined benefit
pension charge (including
National Insurance) 424 487
Non-underlying items (see
below) 772 1,207
Tax effect of non-underlying
items and other add backs (453) (96)
------------------------------- -------- ---------- --------- -------- ---------- ---------
Adjusted underlying basic
earnings per share 10,076 71,074 14.18 9,763 70,983 13.75
------------------------------- -------- ---------- --------- -------- ---------- ---------
Adjusted underlying diluted
earnings per share 10,076 71,680 14.08 9,763 71,833 13.59
------------------------------- -------- ---------- --------- -------- ---------- ---------
Sanderson Design Group PLC's issued ordinary share capital with
voting rights consists of 71,468,206 (2022: 70,983,505) ordinary
shares of which nil (2021: nil) ordinary shares are held in
treasury and 1* (2022: 220) ordinary shares are held by the Walter
Greenbank PLC EBT. Shares held in treasury or by the EBT are
treated as cancelled when calculating EPS.
*rounded up
The market value of shares held by the EBT at 31 January 2023
was approximately GBP1 (2022: GBP370). The total number of shares
held in the EBT at the year end represented less than 0.1% (2022:
0.1%) of the issued shares. The number of potentially dilutive
shares is 716,000 (2022: 850,000).
In calculating the adjusted earnings 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 in note 7(b) below.
7. (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
2023 2022
GBP000 GBP000
----------------------------------------------------------- ------- -----------
Statutory profit before tax 10,940 10,359
----------------------------------------------------------- ------- -----------
Amortisation of acquired intangible assets (a) 772 1,016
----------------------------------------------------------- ------- -----------
Restructuring and reorganisation costs (b) - 1,190
----------------------------------------------------------- ------- -----------
Forgiveness of loan under the Payment Protection Programme
(c) - (440)
----------------------------------------------------------- ------- -----------
Release of a provision for a legal case (d) - (559)
----------------------------------------------------------- ------- -----------
Total non-underlying charge included in statutory profit
before tax 772 1,207
----------------------------------------------------------- ------- -----------
Underlying profit before tax 11,712 11,566
Share-based payment charge 508 406
Net defined benefit pension charge 424 487
----------------------------------------------------------- ------- -----------
Adjusted underlying profit before tax 12,644 12,459
----------------------------------------------------------- ------- -----------
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 GBP772,000 (2022: GBP1,016,000).
(b) Restructuring and reorganisation costs
These relate to the reorganisation of the Group and comprise of
the rationalisation of certain operational and support functions in
the prior year. The costs mainly comprise employee severance and
professional fees associated with the closure of Sanderson Design
Group Brands SARL in France of GBP1,100,000 and other
reorganisation costs of GBP90,000. There were no such costs in the
current financial year.
(c) In May 2020, the Group entered into a loan contract with
Wells Fargo for US$565,818 under the US Paycheck Protection
Programme scheme. In June 2021, this loan was forgiven and the
Group treated the forgiveness as a grant for GBP440,000.
(d) Release of an accrual of GBP559,000 for a legal case in the
US that had concluded in the prior year.
8. Trade and other receivables
2023 2022
Current GBP000 GBP000
---------------------------------------------------- ------- -----------------
Trade receivables 12,928 14,262
Less: provision for impairment of trade receivables (921) (775)
---------------------------------------------------- ------- -----------------
Net trade receivables 12,007 13,487
Corporation tax debtor - 339
Other taxes and social security 1,274 842
Other receivables 827 307
Prepayments 2,219 1,817
---------------------------------------------------- ------- -----------------
16,327 16,792
---------------------------------------------------- ------- -----------------
There is no material difference between the carrying amount and
the fair value of the trade and other receivables.
9. PROVISION FOR LIABILITIES AND CHARGES
Property Other Total
GBP000 GBP000 GBP000
------------------------------ -------- ------- -----------------
1 February 2021 (as restated) 650 559 1,209
Charged 140 1,043 1,183
Released - (559) (559)
31 January 2022 790 1,043 1,833
Charged 247 - 247
Utilised - (1,043) (1,043)
------------------------------- -------- ------- -----------------
31 January 2023 1,037 - 1,037
------------------------------- -------- ------- -----------------
2023 2022
GBP000 GBP000
----------------------------------------- ------- -----------------
Current - 1,043
Non-Current 1,037 790
Total 1,037 1,833
-------- ----- -----
Property
Property-related provisions consist of estimated rectification
costs arising from wear and tear that will fall due on exiting
property leases.
Other provisions
Other provisions include provisions for certain legal claims
brought against the Group during the ordinary course of business
and provisions for the Group's obligations arising from committed
restructuring activities. Restructuring provisions and employee
termination payments are recognised when a detailed, formal plan
has been established and communicated to those parties directly
affected by the plan. Provisions for legal claims represent
management's best estimate of the likely outcome of the claim at
the Balance Sheet date. During the year, the France restructuring
costs of GBP1,043,000 provided in the previous
year were fully utilised.
In the current year, provision for other liabilities and charges
is analysed into its own category and has been reclassified from
other payables and accruals. The maturity of the expected
liabilities has also been restated into less than or more than one
year. Note 11 explains the effect of this prior year restatement
for the year ended 31 January 2022 and 1 February 2021.
10. Retirement benefit SURPLUS/(obligations)
Defined benefit schemes
Sanderson Design Group PLC 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. Pension benefits are
related to the members' final salary at retirement and their length
of service. The schemes are closed to new members and to future
accrual of benefits, although deferred members still in service
have a salary link to their benefits. This disclosure excludes any
defined contribution assets and liabilities.
The Group's contributions to the schemes for the year beginning
1 February 2023 are expected to be GBP2,404,000.
2023 2022
GBP000 GBP000
---------------------------------------------------------- -------- --------
Present value of funded obligations (54,229) (74,124)
Fair value of scheme assets 51,783 76,701
---------------------------------------------------------- -------- --------
(Deficit)/surplus in funded scheme (net (liability)/asset
on the Balance Sheet) (2,446) 2,577
---------------------------------------------------------- -------- --------
The fair value of the assets, which are not intended to be
realised in the short term and may be subject to significant change
before they are realised, and the present value of the schemes'
liabilities, which are derived from cash flow projections over long
periods and thus inherently uncertain, were:
2023 2022
GBP000 GBP000
--------------------------------------- ------- -------
Equities, absolute return and property 12,831 30,698
Gilts 8,744 16,294
Fixed interest bonds 3,628 3,573
Liability driven investments 24,260 21,085
Insured annuities 114 145
Cash and cash equivalents 2,206 4,906
--------------------------------------- ------- -------
Fair value of scheme assets 51,783 76,701
--------------------------------------- ------- -------
Reconciliation of opening and closing balances of the present
value of the defined benefit obligation
2023 2022
GBP000 GBP000
--------------------------------------------------------- -------- -------
Benefit obligation at beginning of year 74,124 84,926
Interest cost 1,597 1,122
Remeasurement (gains)/losses - changes in financial
assumptions (21,601) (6,086)
Remeasurement gains - changes in demographic assumptions (10) (51)
Remeasurement gains - experience 3,244 (1,797)
Benefits paid (3,125) (3,646)
Settlements - (344)
--------------------------------------------------------- -------- -------
Benefit obligation at end of year 54,229 74,124
--------------------------------------------------------- -------- -------
11. Explanation of prior year adjustment for the year ended 31
January 2022
The Group has separated the provision for other liabilities and
charges from accruals in trade and other payables and analysed the
provision into its current and non-current components and made a
prior year adjustment to reflect similar analysis in the
comparatives. This determination is based on the Directors' best
estimate of the timing of the release or utilisation of the
provision, taking into consideration the types of the provision
which are related to property, employee benefit and other charges.
This assessment was not carried out in the previous year and as
such all provisions were shown as other payables and accruals in
error. A prior period adjustment has been processed to reflect the
split in the previous year. This restatement has an impact on the
working capital movements on the cash flow statement but no effect
on the result, equity or retained earnings brought forward in the
prior year. The amounts reclassified as provisions are no longer
classified as financial liabilities.
The following table analyses the Group's provision for other
liabilities and charges into relevant maturity groupings based on
the types of the provision and their estimated release or
utilisation dates at the Balance Sheet date. The impact is to
increase non-current liabilities and reduce current liabilities by
GBP790,000 as at 31 January 2022 and by GBP650,000 as at 31 January
2021.
Current Non-current
Less than Over
1 year 1 year Total
GBP000 GBP000 GBP000
---------------- ---------- ----------- -------
31 January 2022 1,043 790 1,833
31 January 2021 559 650 1,209
---------------- ---------- ----------- -------
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