REG - Sanderson Design Grp - Full Year Results
28/04/2022 07:00
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RNS Number : 6156J Sanderson Design Group PLC 28 April 2022
28 April 2022
SANDERSON DESIGN GROUP PLC
("Sanderson Design Group", the "Company" or the "Group")
Financial Results for the year ended 31 January 2022
A year of strong trading, cash generation and 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 2022.
Financial
highlights
Year ended 31 January 2022 2021 Change 2020 Change
restated** 2022 cf 2021 restated** 2022 cf 2020
Revenue £112.2m £93.8m 19.6% £111.5m 0.6%
Adjusted underlying profit before tax* £12.5m £7.0m 78.6% £7.5m 66.7%
Adjusted underlying EPS* 13.75p 7.89p 74.3% 9.35p 47.1%
Statutory profit before tax £10.4m £4.9m 112.2% £4.5m 131.1%
Statutory profit after tax £7.8m £3.8m 105.3% £3.8m 105.3%
Basic EPS 10.93p 5.39p 102.8% 5.41p 102.0%
Net cash*** £19.1m £15.1m 26.5% £1.3m >1,000%
*excluding share-based incentives, defined benefit pension charge and
non-underlying items as summarised in note 1
** refer to note 12 for details on the prior year restatements
*** Net cash is defined as cash and cash equivalents less borrowings. For the
purpose of this definition, borrowings does not include lease liabilities
· Revenue up 19.6% at £112.2m (FY2021: £93.8m; FY2020: £111.5m),
reflecting the receding impact of Covid-19 and the Group's strategy for
growth.
· Third party manufacturing sales up 30.9% from FY2021 and up 8.0%
against FY2020, with total sales (including sales to Group brands) up 46.8%
from FY21 and up 17.5% against FY2020 contributing substantially to Group
profitability.
· Brand product sales up 17.8% compared with FY2021 and up 0.8%
compared with FY2020 in constant currency:
o Morris & Co. brand performing very well in all regions, up 32.4% on
FY2021 and up 45.1% on FY2020 in constant currency.
o North America has continued to deliver a very strong performance with all
brands.
o Licensing income delivered £5.2m (FY2021: £3.7m; FY2020: £5.5m)
including accelerated licensing income of £1.4m (FY2021: £0.9m; FY2020:
£2.3m) with strong and exciting collaborations with NEXT, Bedeck and
Blinds2Go in the UK, Sangetsu, Nishikawa and Kawashima in Japan and Williams
Sonoma in the US.
· Adjusted underlying profit before tax £12.5m (FY2021: £7.0m;
FY2020: £7.5m), reflecting stronger sales and the full-year impact of the
operational measures introduced to reduce and control discretionary and fixed
costs. Reported profit before tax of £10.4m is up 112.2% on the year ended 31
January 2021 (FY2021: £4.9m; FY2020: £4.5m).
· Liquidity and headroom of £31.6m (FY2021: £27.9m; FY2020: £13.8m)
with a net cash of £19.1m (FY2021: £15.1m; FY2020: £1.3m).
· Proposed final dividend of 2.75p per share (FY2021: nil; FY2020: nil)
to give a total dividend for the year of 3.50p (FY2021: nil; FY2020: 0.52p)
Operational highlights
· Morris & Co. sales driven in part by its 160(th) anniversary year
in 2021 with a compilation of best sellers performing significantly ahead of
management expectations and the Simply Morris collection showing encouraging
sales since its September 2021 launch.
· Sanderson's One Sixty compilation collection of re-worked classic
designs has exceeded management expectations with the positive impact of the
Very Sanderson media campaign, featuring British sports personality Maro
Itoje, launched in April 2021.
· Harlequin's Own The Room TV campaign launched in September 2021
renewed the momentum in the brand.
· Direct-to-consumer digital incubator projects advanced with the launch
our direct-to-consumer website franchise collaboration, Scion Living |
Uplifting Design For Your Home (https://www.scionliving.com/) , and the online
launch of Archive by Sanderson Design, a consumer brand targeting a new
customer demographic for the Group.
· Planet Mark certification for Year 4 of carbon reduction, reflecting
our Live Beautiful sustainability pledge.
Dianne Thompson, Sanderson Design Group's Chairman, said:
"I am extremely pleased to be able to report a strong set of results, not only
delivering substantial growth against a year impacted by COVID-19, but also
against 2020, prior to the pandemic. We delivered an excellent performance
from manufacturing, continued strong growth from the Morris & Co. brand,
strong licensing income and more than 40% sales growth in the USA, a key
target growth market for us.
Trading in the first three months of the current financial year has performed
in line with our expectations, with continued demand for manufacturing and
strong brand sales, particularly Morris & Co. and Sanderson. Licence
income has also performed strongly. As we carefully navigate another
potentially challenging year, the Board remains confident in its strategy and
the results that are being delivered."
Analyst meeting and webcast
A meeting for analysts and institutional investors will be held at 10am today,
28 April 2022, 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://webcasting.buchanan.uk.com/broadcast/62435b9e48e2f937d0543c90
(https://webcasting.buchanan.uk.com/broadcast/62435b9e48e2f937d0543c90)
A replay of the webcast will be made available following the meeting at the
Company's investor website, www.sandersondesign.group
(http://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 Broker) +44 (0) 20 7597 5970
David Anderson / Alex Wright / Ben Farrow / Will Brinkley
Buchanan +44 (0) 20 7466 5000
Mark Court / Sophie Wills / Toto Berger
SDG@buchanan.uk.com
Notes for editors:
About Sanderson Design Group
Sanderson Design Group PLC is a luxury interior furnishings company that
designs, manufactures and markets wallpapers, fabrics and paints. In addition,
the Company derives licensing income from the use of its designs on a wide
range of products such as bed and bath collections, rugs, blinds and
tableware.
Sanderson Design Group's brands include Zoffany, Sanderson, Morris & Co.,
Harlequin, Scion, Clarke & Clarke and Archive by Sanderson Design.
The Company has a strong UK manufacturing base comprising Anstey wallpaper
factory in Loughborough and Standfast & Barracks, a fabric printing
factory, in Lancaster. Both sites manufacture for the Company and for other
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, Amsterdam and
Dubai.
Sanderson Design Group trades on the AIM market of the London Stock Exchange
under the ticker symbol SDG.
For further information please visit: www.sandersondesigngroup.com
(http://www.sandersondesigngroup.com) .
CHAIRMAN'S STATEMENT
The financial year ended 31 January 2022 was a successful year for the
business during which the receding impact of Covid-19 and the Group's strategy
for growth resulted in a year of strong trading and cash generation. Trading
highlights included an excellent performance from manufacturing, continued
strong growth from the Morris & Co. brand, strong licensing income and
more than 40% sales growth in the USA in constant currency, a key growth
market for the Group.
Our business leveraged consumers' growing interest in pattern, colour and
design, which has helped drive our three key revenue streams of manufacturing,
brands and licence income.
Our manufacturing operations, which print fabric and wallpaper for our own
brands and third parties, deserve special mention after a record year, with
sales and profits making a very significant contribution to Group results.
Third party manufacturing sales in the year were up 30.9% compared with the
year ended 31 January 2021 (up 8.0% on FY2020), reflecting the quality and
competitiveness of our printing along with the design strength in our
factories' studios. Manufacturing, particularly digital printing, is a
significant opportunity for the Group and order books remain strong.
Our heritage brands, Morris & Co. and Sanderson, continued to lead the
sales growth in our brands portfolio whilst contemporary Clarke & Clarke,
our biggest selling brand, achieved fantastic sales in the USA.
We have continued to advance our Group strategy with the objective of becoming
a sustainable, efficient, and growing business. Our sustainability strategy,
Live Beautiful, was launched in April 2021 and I am excited by the motivation
across the entire Group to achieve our objectives.
Further details of the Group's progress are included in the Chief Executive
Officer's Strategy and Operational Review.
Financial Results
The results for the year ended 31 January 2022 show a strong recovery from
Covid-19, which had a very significant effect on the first half of the
previous financial year. Adjusted underlying profit before tax at £12.5m is
up 78.6% on the year ended 31 January 2021 (FY2021: £7.0m; FY2020: £7.5m).
Reported profit before tax of £10.4m is up 112.2% on the year ended 31
January 2021 (FY2021: £4.9m; FY2020: £4.5m). The Group's balance sheet
strengthened considerably throughout the year, resulting in net cash at the
year end of £19.1m compared with £15.1m at 31 January 2021 (FY2020: £1.3m).
Dividend
The Directors recommend the payment of a final dividend of 2.75p per share
(FY2021: nil; FY2020: nil) which, subject to shareholder approval at the
Company's forthcoming Annual General Meeting, will be payable on 12 August
2022 to shareholders on the register at 15 July 2022. This brings the total
dividend for the year to 3.50p per share (FY2021: nil; FY2020: 0.52p) 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.
Going Concern
The Directors reviewed a Management Base Case (MBC) model and considered the
uncertainties regarding the 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 have
adequate resources to continue trading for the foreseeable future. For this
reason, they continue to adopt the going concern basis. Further details are
included in note 1.
Board and People
The Company's Board continued to evolve during the year. On 1 November 2021,
we were delighted to welcome Mike Woodcock, who has a strong track record in
consumer and brand-based businesses, as Chief Financial Officer. Mike replaced
Michael Williamson, who stepped down as Chief Financial Officer on 31 October
2021. We thank Michael for his contribution to the Company, particularly
during the challenging periods of Covid-19 and Brexit.
We were also pleased to appoint two new independent Non-Executive Directors,
Juliette Stacey and Patrick Lewis, who joined the Board on 3 November 2021.
They bring a wealth of governance, operational management and consumer sector
experience to the Board. Vijay Thakrar stepped down as a Non-Executive
Director on 27 November 2021 and we thank him for his contribution to the
Company.
The success of any business is built on its people. On behalf of the Board, I
would like to thank all of our colleagues for their commitment, hard work and
adaptability during a year in which Covid-19 continued to impact many aspects
of our lives. I am profoundly grateful for the fortitude and resilience of
colleagues, which has enabled the Company to emerge strongly from the
pandemic.
Outlook
I am extremely pleased to be able to report a strong set of results, not only
delivering substantial growth against a year impacted by COVID-19, but also
against 2020, prior to the pandemic. We delivered an excellent performance
from manufacturing, continued strong growth from the Morris & Co. brand,
strong licensing income and more than 40% sales growth in the USA, a key
target growth market for us.
Trading in the first three months of the current financial year has performed
in line with expectations, with continued demand for manufacturing and strong
brand sales, particularly Morris & Co. and Sanderson. Licence income has
also performed strongly. The simplification of the Group has continued with
the closure of our French subsidiary, with business in France now managed
directly from the UK.
We are mindful of the cost, supply chain and geo-political issues that impact
consumer confidence, along with specific inflationary pressures in our home
market. We are monitoring costs closely and passing on price rises where
appropriate. We suspended all trade with Russia on 24 February 2022, a
distributor-based region that represented only around 2% of global sales for
FY2022.
As we carefully navigate another potentially challenging year, the Board
remains confident in its strategy and the results that are being delivered.
Dianne Thompson
Non-executive Chairman
27 April 2022
CHIEF EXECUTIVE OFFICER'S STRATEGY AND OPERATIONAL REVIEW
Introduction
We have delivered strong financial results compared with both FY2021 and
FY2020, reflecting an improving trading environment and progress delivered
from our strategy for the business. Group sales of £112.2m and adjusted
underlying profit before tax of £12.5m represent significant progress on
FY2020, a year unaffected by Covid-19, in which sales were £111.5m and
adjusted underlying profit before tax were £7.5m (FY2021: revenue of £93.8m
and adjusted underlying profit before tax of £7.0m). Reported profit before
tax was £10.4m (FY2021: £4.9m; FY2020: £4.5m) showing the same trend as the
adjusted measure.
Manufacturing was the star performer of our three key revenue streams of
manufacturing, brands, and licensing during the year. Our two manufacturing
businesses, Standfast & Barracks and Anstey are the printers of choice in
our industry for both UK and international customers. Over the next two to
three years, we intend to increase investment at these factories to deliver a
step change in technology, capability, and productivity and drive capacity to
achieve greater return.
Brand product sales recovered during the year, performing broadly in line with
expectations with a particularly strong performance from Morris & Co., up
32.4% on FY2021 in constant currency and up 45.1% on FY2020 in constant
currency. Licensing income performed strongly during the year, with income up
43.7% compared with FY2021 in constant currency.
Geographically, North America delivered an excellent performance, recording
growth of 42.3% against FY2021 and up 24.1% against FY2020 in constant
currency. Our US subsidiary, Sanderson Design Group Inc., had its best year in
terms of sales and profits since it was founded in 1998. This performance
reflected strategic initiatives, including a greater showroom network and road
sales team presence in the North American market.
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 core 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 and delivered results from
pursuing this strategy.
Efficiency
Improving the efficiency of the business by reducing the number of stocked
items (SKUs) is an integral part of our strategy. Our focus has been on fewer,
stronger collection launches to reduce the number of SKUs. Historically, only
a proportion of them sold particularly well whilst others added to costs and
inventory.
Launching collections digitally, rather than through pattern books, and
monitoring online sample requests has helped us to identify the most popular
designs and colourways in new collections. This has saved cost on stock and
improved efficiency. The pattern books that we print only to include designs
and colourways that are most likely to become best-sellers.
The Group has now reached its target of SKU reduction. The number of
collections launched has reduced and each SKU is much more targeted to the
market's requirements. As a result, the number of sales per SKU is increasing
and a better return on investment is being achieved. The intention is to keep
the number of SKUs at approximately 12,000 live options of fabric and
wallpaper, with a broadly one-in/one-out SKU merchandising policy.
The simplification of the Group structure has continued with the closure on 31
January 2022 of our French subsidiary, with business in France now managed
directly from the UK. The one-off closure cost of £1.1m has been included as
a non-underlying item. The closure of the French subsidiary, which traded only
around break-even at best over the past 25 years, follows the closure in prior
year of our Moscow-based subsidiary as its sales were non-material to the
Group. The Group now has just two trading subsidiaries, one in the UK and one
in the US, and a network of distributors worldwide.
Sustainability
We launched our Live Beautiful sustainability strategy in April 2021 with a
broad range of initiatives including 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.
Our employee engagement survey carried out in 2021 gave an overall employee
satisfaction rating of 78%, which compares with 58% two years before, in 2019,
when the survey was last conducted. We have since raised our target of 70% to
80% for employee satisfaction as we continuously strive for improvement. The
survey will next be conducted in 2023.
We were pleased to receive our Year 4 Planet Mark sustainability
certification, which measures our carbon footprint. In the year to 31 January
2022, our total carbon footprint was 7,452.9 tonnes, an increase on FY2021's
6,359.3 tonnes reflecting the increase in productivity during the year, but a
decrease compared with FY2020's 7,977.8 tonnes despite a sales performance
ahead of that year.
Digital and direct-to-consumer initiatives
Through several incubator projects, we are experimenting with digital and
direct-to-consumer routes to market to identify the best approach for each
brand in our portfolio. During the year, we launched an online shop for the
Scion brand through a franchise partnership at scionliving.com; we launched
our own direct-to-consumer brand, Archive by Sanderson Design; and we have
just opened our first store for Morris & Co. as a directly-operated
concession within Harrods, London, with the intention to also move that offer
online after the initial period. The insights we gain from these projects, and
other initiatives such as selling paint online from our brand websites, will
shape our future strategy in this area.
OPERATIONAL REVIEW
The table below shows the Group's sales performance in the year ended 31
January 2022, compared with FY2021 and with FY2020, the most recent
pre-pandemic year. The table shows our three key revenue streams of
manufacturing, brand product sales, and licensing income. It also gives the
four key geographies of our brand product sales: the UK, Northern Europe,
North America and Rest of the World.
Year ended 31 January (£m) Change (%) Change (%)
2022 compared with 2021 2022 compared with
2020
2022 2021 2020 Reported Constant currency Reported Constant
currency
UK Brand product sales 43.7 38.1 44.9 14.7% 14.7% (2.7%) (2.8%)
International Brand product sales 40.4 34.5 39.8 17.1% 21.3% 1.5% 5.0%
- North America 16.6 12.5 14.4 32.8% 42.3% 15.3% 24.1%
- Northern Europe 13.2 12.5 13.0 5.6% 7.8% 1.5% 2.5%
- Rest of the World 10.6 9.5 12.4 11.6% 12.8% (14.5%) (13.5%)
Total Brand product sales 84.1 72.6 84.7 15.8% 17.8% (0.7%) 0.8%
(includes carriage income)
Licensing income 5.2 3.7 5.5 40.5% 43.7% (5.5%) (2.2%)
Total Brand sales including 89.3 76.3 90.2 17.0% 19.0% (1.0%) 0.6%
Licensing
Total Manufacturing sales* 41.7 28.4 35.6 46.8% - 17.1% -
Intercompany elimination* (18.8) (10.9) (14.3) 72.5% - 31.5% -
Total Revenue* 112.2 93.8 111.5 19.6% - 0.6% -
*does not report in constant exchange rate
MANUFACTURING
Our unique, integrated vertical supply chain is an important pillar in our
growth strategy and will be the focus of increased investment in the next two
to three years.
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.
Both factories are printing an increasing proportion of their output through
digital printing, which will be the focus of investment in the years ahead.
Year ended 31 January (£m) Change (%) Change (%)
2022 compared with 2022 compared with
2021
2020
2022 2021 2020 Reported Reported
Sales to Group brands 18.8 10.9 14.3 72.5% 31.5%
Third party sales 22.9 17.5 21.2 30.9% 8.0%
Total Manufacturing sales 41.7 28.4 35.5 46.8% 17.5%
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.
Total sales at Standfast increased significantly in the year to £21.3m
(FY2021: £14.4m; FY2020: £17.0m).
Digital printing at Standfast as a proportion of factory output was 69%
(FY2021: 61%; FY2020: 52%).
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.
Total sales at Anstey increased to £20.4m (FY2021: £14.0m; FY2020: £18.5m).
In line with the Group's stated ambition to increase capacity, Anstey has
reviewed shift patterns and completed a restructure that opened a total of 20
new roles in the business to ensure capacity for growth, of which 16 have been
recruited.
Digital printing at Anstey as a proportion of factory output was 18% (FY2021:
15%; FY2020: 13%).
THE BRANDS
The Brands segment comprises heritage brands Sanderson, Morris & Co, and
Zoffany; contemporary brands Harlequin, Scion, Clarke & Clarke and new
consumer brand Archive by Sanderson Design. During the year, the relatively
small Anthology brand was absorbed into Harlequin as detailed in our interim
results announced 13 October 2021. Existing Anthology products will continue
to be sold and supported by Harlequin and no new products will be launched.
The Brands segment includes licensing income as well as global trading from
the brands, including our overseas sales offices in the USA, Dubai,
Netherlands, and Germany.
Year ended 31 January (£m) Change (%) Change (%)
2022 compared with 2022 compared with
2021
2020
Brands 2022 2021 2020 Reported Constant currency Reported Constant
currency
Morris & Co. 16.4 12.6 11.4 30.2% 32.4% 43.9% 45.1%
Sanderson 14.4 11.6 13.1 24.1% 26.2% 9.9% 11.4%
Zoffany 8.6 7.8 9.6 10.3% 11.6% (10.4%) (8.8%)
Clarke & Clarke 24.6 21.7 25.1 13.4% 14.8% (2.0%) (0.5%)
Harlequin 17.6 16.0 21.3 10.0% 11.9% (17.4%) (16.0%)
Scion 2.2 2.4 3.2 (8.3%) (5.9%) (31.3%) (29.4%)
Morris & Co.
Brand product sales for Morris & Co. in the UK were up 31.6%, in Northern
Europe were up 6.6% and in North America were up 89.9% in constant currency
compared with FY2021 and up 24.7%, 37.6% and 136.1% respectively compared with
FY2020.
The brand's sales were driven in part by Morris & Co.'s 160th anniversary
year in 2021, with an anniversary compilation collection of the brand's best
sellers performing significantly ahead of our expectations. Marketing around
the anniversary is continuing into current financial year, with the brand
staging its first-ever show garden at the 2022 Chelsea flower show.
Award-winning garden designer Ruth Willmott has created an exciting and highly
imaginative show garden on the main avenue based on two of William Morris's
best known wallpaper designs, Trellis and Willow Boughs.
The Simply Morris collection, a new design concept for Morris & Co.,
targeted at sunshine states was launched in 25 September 2021. This modern
interpretation of Morris & Co. designs using clear grounds represents a
fresh take on maximalism. Initial sales have been very encouraging.
We have recently announced several new Morris & Co. initiatives to drive
sales in the current year including the launch of a second capsule of
wallpapers and fabrics in collaboration with Ben Pentreath, the influential
architect and designer. This new collection, Cornubia, has just been launched
to critical acclaim and featured in our Chelsea Harbour showroom during London
Design Week last month.
In February 2022, we relaunched Morris & Co. paints, which have been out
of production since 2008 though frequently requested by customers. This new
range of 40 paints are in colours based on historic William Morris colour
recipes and on documents from the Company's extensive Morris & Co. design
archive. Initial sales are exclusive to UK independent retailers for six
months, after which the product will move to general distribution. Retailers
have responded positively with all point-of-sale support material taken up and
subsequent feedback from sampling has been very positive.
We are also excited by the recent opening of the Morris & Co. Home
Emporium, a new shop-in-shop concept at Harrods' flagship Knightsbridge store
in London. In addition to fabric and wallpaper, the concession store will sell
the full breadth of Morris & Co. products across furniture, bedlinen,
cushions, rugs, paint, tableware, scarfs, and leather goods with a range of
limited edition products exclusive to the Emporium.
Sanderson
Brand product sales at Sanderson in the UK were up 23.4%, in Northern Europe
were up 17.5% and in North America were up 58.8% in constant currency compared
with FY2021 and up 6.0%, 6.6% and 63.8% respectively compared with FY2020.
To celebrate the brand's 160(th) anniversary, in June 2021 Sanderson launched
the Sanderson One Sixty compilation collection of re-worked classic designs of
fabrics and wallpapers, sales of which have exceeded expectations. The brand
also began an exciting collaboration with Maro Itoje, the England rugby star,
who, as a modern British icon, features as the new face of the Very Sanderson
media campaign.
In line with our strategy of fewer, stronger launches, Sanderson collections
have been rationalised to one big launch each year. Following the successful
Sanderson One Sixty launch last year, we have just launched Water Garden,
which has been very well received. Water Garden also features the panel
designed by our sponsored QEST scholar, Rachel Spelling.
Zoffany
Zoffany's brand product sales in the UK were up 12.1%, in Northern Europe were
down 8.3% and in North America were up 36.2% in constant currency compared
with FY2021 and down 13.8%, down 15.2% and up 25.9% respectively compared with
FY2020.
The Kensington Walk collection of wallpapers and fabrics was last year's key
launch for the Zoffany brand and was launched in 13 May 2021. Designer Ruth
Blanke's addition to the Palladio collection of wallpapers, Avalonis, was
launched in February 2022. Ruth won last year's Royal College of Art award to
create a new wallpaper for the Palladio wallpaper collection, an award for new
designers offered annually by the Company.
Zoffany also launched a Luxury Coordinates range of fabrics and paints to
complement the brand's wallpapers. The range includes a new paint finish, True
Matt, which has a chalky finish and is environmentally friendly. True Matt,
available in 156 colours, has been very well received, winning the Paint
Collection category in Livingetc Style Awards 2021.
Clarke & Clarke
Clarke & Clarke's brand product sales in the UK were up 12.6%, in Northern
Europe were up 14.5% and in North America were up 32.9% in constant currency
compared with FY2021 and up 2.4%, down 2.1% and down 4.6% respectively
compared with FY2020.
FY2022 was a fantastic year for the brand in North America, where it is
distributed by Kravet Inc. under a very positive relationship.
Clarke & Clarke's collections in the UK with Emma J Shipley and Tess Daly
have continued to grow well. The brand's exciting partnership with heritage
tableware company Wedgwood resulted in the launch of Wedgwood homewares in
March this year, including fabrics and wallpapers for international
distribution through both brands' networks.
Increasing the proportion of the brand's wallpaper output, as historically the
brand has been almost exclusively fabric focused, has been a key strategic
ambition for the brand. Further progress with this important opportunity is
expected later this year with an autumn collection launch.
Harlequin
Harlequin's brand product sales in the UK were up 6.5%, in Northern Europe
were down 4.2% and in North America were up 33.8% in constant currency
compared with FY2021 and down 19.4%, down 20.4% and up 14.9% respectively
compared with FY2020.
Through a number of new initiatives, we are seeking to drive renewed impetus
behind the Harlequin brand. In September 2021, the Group used TV advertising
for the first time to promote the Harlequin brand through a campaign called
Own the Room, which seeks to empower consumers to choose the best designs and
colours for emotional and physical well-being.
The Own the Room campaign was based on a specially commissioned white paper by
Professor Stephen Westland of Leeds university, exploring our emotional and
physical responses to colour. This resulted in a colour quiz being developed
on the Harlequin website, to help consumers identify their ideal colour and
design choices. Harlequin collections are presented as colour stories to suit
each of our four profiles: Rewild, Reflect, Retreat and Renew. The quiz, the
white paper and further details of the Own the Room campaign can be found at
the Harlequin website via this
link: https://harlequin.sandersondesigngroup.com/white-paper/
(https://harlequin.sandersondesigngroup.com/white-paper/)
Scion
Scion's brand product sales in the UK were down 0.2%, in Northern Europe were
down11% and in North America were down 16% in constant currency compared with
FY2021 and down 26%, 28.8% and 25.6% respectively compared with FY2020. The
smallest brand in the portfolio, the strategically reduced investment in new
designs and the important proportion of licensing, lead to a good level of
contribution.
As part of advancing the Group's digital strategy, the Company signed an
agreement in November 2020 with a business formed by the leading internet
retailer Jane Clayton and Company to launch a direct-to-consumer online shop,
Scion Living. The shop, which sells a broad range of Scion's wallpapers,
fabrics and licensed products, went live in June 2021 at www.scionliving.com
(http://www.scionliving.com) . Sales of direct-to-consumer are not material,
but the metrics of visitors to the site, and sales, are beginning to improve
and we will provide a further update with the current year's interim results.
Scion is proud to have recently entered a collaboration with Designs in Mind,
the social enterprise and mental health charity, whose mission is to support
those living with mental health challenges through creativity in art. Scion
will work with Designs in Mind on a capsule collection of designs in a range
of fun and fresh prints, conceptualised through workshops held at the studio.
Archive by Sanderson Design
Archive by Sanderson Design is a completely new, direct-to-consumer brand
launched in September 2021. This maximalist brand, which targets digitally
native consumers, who are new customers for the Group, is an important part of
our experimentation with new routes to market. The brand leverages the
Company's design archive, using heritage designs predominantly from Arts &
Crafts period designers.
The brand's first collection comprised a capsule range of wallpapers, fabrics,
cushions and lampshades. A made-to-measure service for curtains, blinds and
smaller furniture items is provided on the brand's website as part of
developing the brand as a lifestyle offering. Bedding is due to launch in May
2022.
Selfridges, the leading luxury lifestyle retailer, was the exclusive retail
partner for the launch of the brand, which took place in store in mid-October
2021 with distribution widening to selected retailers after the initial
period.
As the brand has only recently launched, its sales in FY2022 were non-material
and we remain excited by its potential and the insights to be gained from a
direct-to-consumer offering.
LICENSING
Licensing income performed strongly during the year, with profits up 43.7%
compared with FY2021 in constant currency. Core categories, including bedding
and window coverings, remained robust and some exciting new licensing
agreements were signed.
Licensing revenue of £5.2m (FY2021: £3.7m; FY2020: £5.5m) includes £1.4m
(FY2021: £0.8m; FY2020: £2.3m) of minimum guaranteed income which is
recognised on contract signature for both new agreements and renewals in
accordance with IFRS 15.
Our core licensing income includes bedding with Bedeck, window-coverings with
Blinds2Go and a number of important strategic partners across the homewares
sector in Japan, including bedding with Nishikawa, textiles with Kawashima and
wallcoverings with Sangetsu. The agreement with Blinds2Go performed very
strongly during the year, particularly with the Harlequin and Scion brands.
Core licensing income also benefits from many smaller agreements across a wide
range of homewares.
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.
NEXT's Morris & Co. womenswear was successful from launch in April 2021
through the autumn/winter seasons and it continues for two further seasons in
the current calendar year. Our most recent licensing deal with NEXT was
announced in October 2021, comprising a homewares collaboration with the
Morris & Co. brand.
We also signed a number of other exciting new licensing deals during the year.
In May 2021, we signed a new exclusive agreement with Sangetsu for Morris
& Co. products in Japan and 14 countries in east and southeast Asia. The
first products under this agreement are expected to be launched in autumn this
year. In August 2021, we signed our first major licensing agreement in the US,
again for the Morris & Co brand. This agreement, with kitchenware
specialist Williams Sonoma, covers a broad range of tableware, cookware and
kitchen accessories, due to launch in August 2022.
A Sanderson collaboration with Paige jeans, the upscale US fashion company,
launched in February 2022 as a capsule that sells in luxury retailers
internationally and on the Paige.com website.
The Company is progressing a pipeline of further licensing opportunities,
leveraging its brands and design archives.
Summary
We are very pleased with the performance of the business during the year and
the strength with which we have emerged from Covid. We were able to accelerate
some of our strategic initiatives during the year, for example in achieving
our five-year SKU reduction in under three years. We now have a much more
efficient and agile business with a strong balance sheet. Investment in the
near term will focus on our manufacturing operations, where we see significant
further opportunities in digital printing. Recent collection launches across
our portfolio of brands have been well received and we continue to support the
brands with exciting marketing initiatives and licensing agreements, which
gives us confidence in the year ahead. Finally, I would like to express my
gratitude and heartfelt thanks to all of our colleagues for making the
business a success throughout another challenging year.
Lisa Montague
Chief Executive Officer
27 April 2022
CHIEF FINANCIAL OFFICER'S REVIEW
The Chairman's Statement and the Chief Executive Officer's Strategic and
Operating Review provide an analysis of the key factors contributing to our
financial results for the year ended 31 January 2022. The results show a
year of strong trading and cash generation, reflecting the receding impact of
Covid-19 on the business and delivery of the Group's strategy for growth.
Revenue
Our reported revenue for the year was £112.2m compared with £93.8m in FY2021
and £111.5m in the pre-Covid year of FY2020.
Year ended 31 January (£m) Change (%) Change (%)
2022 compared 2022 compared
with 2021
with 2020
Revenue 2022 2021 2020 Reported Reported
Brands 84.1 72.6 84.7 15.8% (0.7%)
Licensing 5.2 3.7 5.5 40.5% (5.5%)
Total Brands 89.3 76.3 90.2 17.0% (1.0%)
Manufacturing - External 22.9 17.5 21.3 30.9% 7.5%
Group 112.2 93.8 111.5 19.6% 0.6%
Gross Profit
Gross Profit for the full year was £73.8m, compared with £56.9m in FY2021
and £68.2m in FY2020, whilst the Gross Profit Margin at 65.8% represents an
increase of 510 basis points over FY2021 (60.7%) and 460 basis points over
FY2020 (61.2%).
The Group has adjusted the profit figures for FY2021 and FY2020. See the
section later on prior year adjustments for further details.
Year ended 31 January
2022 2021 2020
restated restated
Products Revenue (£m) 107.0 90.1 106.0
Gross Profit (£m) 68.6 53.2 62.9
% 64.1% 59.1% 59.3%
Licensing Revenue (£m) 5.2 3.7 5.5
Gross Profit (£m) 5.2 3.7 5.5
% 100% 100% 100%
Total Revenue (£m) 112.2 93.8 111.5
Gross Profit (£m) 73.8 56.9 68.2
% 65.8% 60.7% 61.2%
Excluding the impact of licence income, which generates 100% gross profit,
margins improved to 64.1% in FY2022 versus 59.1% in FY2021 and 59.3% in
FY2020. This improvement was a result of a change in the sales mix towards
higher margin brands within the portfolio and volume driven efficiencies at
the Group's two manufacturing sites.
Profit before tax
Profit before tax was £10.4m up from £4.9m in FY2021 and £4.5m in FY2020.
This strong profit performance is driven by sales growth, gross margin
improvement and a continued focus on cost control.
Year ended 31 January (£m)
2022 2021 2020
restated restated
Revenue 112.2 93.8 111.5
Gross Profit 73.8 56.9 68.2
Distribution and selling expenses (25.1) (19.1) (22.9)
Administration expenses (42.8) (36.5) (45.8)
Net other income 4.5 3.8 5.4
Finance costs - net 0.0 (0.2) (0.4)
Profit before tax 10.4 4.9 4.5
Distribution and selling expenses of £25.1m represented 22% of revenue in the
year compared with 20% in FY2021 and 21% in FY2020. A combination of Covid 19
impacts and Brexit contributed to higher container costs and carrier related
capacity issues, particularly in the first half of the financial year.
Administration expenses grew to £42.8m in FY2022 from £36.5m in FY2021. In
the prior year, as a response to Covid-19, the business cut back on
discretionary expenditure, with significant reductions in marketing and travel
and a hiring freeze across the business. Although many of these activities
recommenced in FY22, the benefits of our restructuring and ongoing cost
efficiency and control measures are evident in that administration expenses
are £3.1m below FY2020 of £45.8m.
Other operating income of £4,342,000 (FY2021: £3,822,000; FY2020:
£5,358,000) comprises consideration received from marketing materials of
£4,046,000 (FY2021: £3,822,000; FY2020: £5,358,000) and a research and
development expenditure credit ("RDEC") of £296,000 (FY2021: nil; FY2020:
nil).
Adjusted underlying profit before tax
Adjusted underlying profit before tax was £12.5m up from £7.0m in FY2021 and
£7.5m in FY2020.
Year ended 31 January (£m)
2022 2021 2020
restated restated
£m £m £m
Profit before tax 10.4 4.9 4.5
Amortisation of acquired intangible assets 1.0 1.0 1.0
Restructuring and reorganisation costs 1.2 0.2 1.0
Forgiveness of loan (0.4) - -
Release of a provision for legal case (0.6) - -
Underlying profit before tax 11.6 6.1 6.5
LTIP Accounting Charge 0.4 0.4 0.4
Net defined benefit pension charge 0.5 0.5 0.6
Adjusted underlying profit before tax 12.5 7.0 7.5
Non underlying items comprise:
· Amortisation of intangible assets: £1.0m in respect of the
acquisition of Clarke & Clarke in October 2016.
· Restructuring and reorganisation costs: As part of the Group's
policy to rationalise certain operational and support functions, the decision
was taken to close our French subsidiary and to manage all French operations
from the UK. This resulted in a charge of £1.1m to reflect the costs of this
reorganisation. Other reorganisations in the UK cost £0.1m
· Forgiveness of loan: On 7 May 2020 the Group entered a loan
contract with Wells Fargo for $0.6m (£0.4m) under the US Paycheck Protection
Programme. On 20 April 2021, our application for forgiveness of the loan in
accordance with the US Government Small Business Administration guidance was
successful.
· Release of an accrual for a legal case: £0.6m release following
the settlement of a legal claim in the USA with a former distributor.
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 was 25% (FY2021:18%; FY2020: 15%).
The key driver behind the higher effective tax rate is the impact of the rate
at which deferred tax is being recognised (from 19% to 25%) following the
announcement in the March 2021 Budget that a Corporation Tax rate of 25% will
apply with effect from 1 April 2023.
During the year, the Group successfully applied for £0.3m of research and
development expenditure credit ('RDEC') in respect of FY2021 and FY2020. This
amount is recognised in other operating income.
Earnings Per Share
Basic reported EPS for the year was 10.93p (FY2021 restated: 5.39p; FY2020
restated: 5.41p). The Group also reports an adjusted underlying EPS which
adjusts for the impact of the LTIP accounting charge, net defined benefit
pension charge and other non-underlying items. The adjusted underlying basic
EPS for the year was 13.75p (FY2021 restated: 7.89p; FY2020 restated: 9.35p).
The diluted EPS for the year was 10.80p (FY2021 restated: 5.27p; FY2020
restated: 5.37p).
Capital Expenditure
Capital expenditure in the year totalled £2.1m (FY2021 £1.0m; FY2020
£2.4m). Overall capital expenditure was slightly lower than planned due to
the later timing of projects. For FY2023 we expect capital expenditure to be
around £6-7m as we step up our investment in digital printing technology and
initiatives to reach our Zeroby30 pledge.
Inventories
Net inventory ended the year at £22.7m compared with FY2021 £19.6m and
FY2020 at £27.8m.
This increase on FY2021 reflects a combination of stock re-build following
Covid-19 supply chain disruption together with investment to assure strong
availability of best sellers as we move into our Spring/Summer FY2022 trading
season. The reduction versus FY2020 is evidence of the success of our SKU
reduction programme in which we have already achieved our five-year target,
set in October 2019, of approximately 12,000 SKUs.
The Group has adjusted the inventory values for FY2021 and FY2020. See the
section below on prior year adjustments for further details.
Trade Receivables
Trade receivables increased to £13.5m (FY2021: £11.7m; FY2020: 13.1m) due to
increases in Brands and Manufacturing revenues.
The ageing profile of trade debtors shows that payments from customers are
close to terms. The current economic environment still presents a level of
expected credit risk and in addition to specific provisioning against
individual receivables, a provision has been made of £0.5m (FY2021; £0.5m;
FY2020: £0.4m), 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 and in the last 12 months and has enhanced its
credit management procedures to improve controls and mitigate potential credit
risk.
Cash position and banking facilities
Year-end net cash was £19.1m compared to FY2021 of £15.1m and FY2020 of
£1.3m.
In the prior year, owing to Covid-19, the business significantly reduced
expenditure and inventory levels and deferred corporation tax payments. Over
the course of FY2022 these positions have unwound, and we end the year with
what we consider to be a normal level of working capital for the business.
This contributed to the fall in operating cash flow from £18.2m to £12.7m.
All foreign currencies are bought and sold centrally on behalf of the Group.
Regular reviews take place of the foreign currency cash flows. The Group does
not trade in financial instruments and hedges are only used for highly
probable future cash flows and to hedge working capital exposures. No hedging
contracts were put in place in the year but the Group will keep this
assessment under review in light of levels of trade in foreign currency and
volatility.
The Group has banking facilities provided by Barclays Bank plc. The Group has
a £12.5m multi-currency revolving committed credit facility which is due for
renewal in October 2024. The facility remained undrawn during the year. The
agreement also includes a £5m uncommitted accordion facility option to
further increase available credit which provides substantial headroom for
future growth. Our covenants under the facility are EBITDA and interest
cover measures. 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 £440,000.
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.
The triennial valuation of the schemes, based on the position of the schemes
on 5 April 2021, is in the process of being completed. Independent pension and
actuarial specialists are supporting the Group through the valuation process.
New deficit contribution schedules will be agreed as part of finalising the
valuations and the business expects to continue making cash contributions 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 business
also intends to continue actively looking at whether there are appropriate
actions which could be taken to help reduce pension scheme risks within our
wider business objectives.
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 based on the conditions at the balance sheet date, it is able to run the
Schemes until there are no remaining members; wind up the Schemes at that
point; and reclaim any remaining monies. Consequently, the Company is able to
recognise in FY2022 the full surplus of £2.6m (FY2021:net liability of
£5.6m; FY2020: net liability of £5.7m) calculated in accordance with IAS 19
and IFRIC 14.
Dividend
As a result of the pandemic and in order to protect the Group's liquidity, no
dividends were declared or paid during FY2021. For FY2022, an interim
dividend of 0.75p per share was paid on 26 November 2021. A final dividend
of 2.75p is now proposed taking the full year dividend to 3.50p. This payment
will be made on 12 August 2022 to the shareholders on the Company's register
on 15 July 2022 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.
Capital allocation policy
The improvement in the underlying performance of the business in recent years
has created a business that is now consistently cash generative.
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 that we are committed to
supporting. We continue to look at whether there are appropriate actions
which could be taken to help reduce pension scheme risks within our wider
business objectives.
Prior year adjustments
The Group has rectified the error in previous years of its cost absorption
methodology of the manufacturing units for establishing the profit elimination
within inter-group inventories held at the year end. As a result of this
error, the value of inventory at 31 January 2021 has reduced by £717,000, the
cost of sales for the financial year ended 31 January 2021 has increased by
£80,000 and opening retained earnings and inventory at 1 February 2020 have
reduced by £637,000 The total impact of these adjustments for the financial
year ended 31 January 2022 is a reduction of opening retained earnings of
£717,000 with equivalent reduction in the value of opening inventories. In
addition, the cash flow statement for the year ended 31 January 2021 and 31
January 2020 has been restated to show a reduced profit before tax by £80,000
with a compensating adjustment to the movement in inventories. There is no
overall change to the reported operating cashflow.
The Group has analysed its minimum guaranteed licensing receivable into its
current and non-current assets at 31 January 2022 and restated the 31 January
2021 and 31 January 2020 comparatives. This determination is based on the
assessment of the operating cycle of the licensing arrangement after
considering the nature of the agreement and the cash and invoicing cycle. This
assessment was not carried out in the previous year and there have been no
changes in the facts and circumstances and therefore a prior year adjustment
has been processed to reflect the split in the previous year.
Going concern
The Directors reviewed a Management Base Case (MBC) model and considered the
uncertainties regarding the 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 have
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.
Mike Woodcock
Chief Financial Officer
27 April 2022
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 JANUARY 2022
(restated)
Note 2022 2021
Total Total
£000 £000
Revenue 112,200 93,760
Cost of sales (38,365) (36,855)
Gross profit 73,835 56,905
Distribution and selling expenses (25,052) (19,129)
Administration expenses (42,796) (36,502)
Other operating income 4 4,342 3,822
Profit from operations 3 10,329 5,096
Finance income 184 139
Finance costs (154) (300)
Net finance income/(costs) 5 30 (161)
Profit before tax 10,359 4,935
Tax expense 6 (2,600) (1,109)
Profit for the year attributable to owners of the parent 7,759 3,826
Earnings per share - Basic 7 10.93p 5.39p
Earnings per share - Diluted 7 10.80p 5.27p
Adjusted earnings per share - Basic* 7 13.75p 7.89p
Adjusted earnings per share - Diluted* 7 13.59p 7.71p
All of the activities of the Group are continuing operations.
Note 12 explains the effect of the prior year restatements for the year ended
31 January 2021.
A credit of £139,000 relating to unwind of discount on minimum guaranteed
licensing income was presented as part of interest expense in the prior year.
The comparative has been represented to aid comparability.
* these are alternative performance measures
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 JANUARY 2022
(restated)
Note 2022 2021
£000 £000
Profit for the year 7,759 3,826
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension schemes 6,492 (1,565)
Deferred tax (charge)/credit relating to pension schemes (1,233) 297
Total items that will not be reclassified to profit or loss 5,259 (1,268)
Items that may be reclassified subsequently to profit or loss
Currency translation gains/(losses) 70 (301)
Other comprehensive income/(expense) for the year, net of tax 5,329 (1,569)
13,088 2,257
Total comprehensive income for the year attributable to the owners of the
parent
Note 12 explains the effect of the prior year restatements for the year ended
31 January 2021.
CONSOLIDATED BALANCE SHEET
as at 31 JANUARY 2022
(restated) (restated)
Note 2022 31/01/2021 01/02/2020
£000 £000 £000
Non-current assets
Intangible assets 26,979 28,325 29,815
Property, plant and equipment 11,258 12,061 14,101
Right-of-use assets 3,923 5,783 8,392
Retirement benefit surplus 10 2,577 - -
Minimum guaranteed licensing receivable 9 1,619 1,222 1,455
46,356 47,391 53,763
Current assets
Inventories 22,652 19,633 27,819
Trade and other receivables 8 16,792 15,885 18,593
Minimum guaranteed licensing receivable 9 879 1,221 495
Cash and cash equivalents 19,050 15,549 3,055
59,373 52,288 49,962
Total assets 105,729 99,679 103,725
Current liabilities
Trade and other payables (20,115) (20,472) (22,940)
Lease liabilities (1,983) (2,676) (2,810)
Borrowings - (412) (1,719)
(22,098) (23,560) (27,469)
Net current assets 37,275 28,728 22,493
Non-current liabilities
Lease liabilities (1,920) (3,206) (5,603)
Deferred income tax liabilities (1,998) (514) (802)
Retirement benefit obligation 10 - (5,637) (5,659)
(3,918) (9,357) (12,064)
Total liabilities (26,016) (32,917) (39,533)
Net assets 79,713 66,762 64,192
Equity
Share capital 710 710 710
Share premium account 18,682 18,682 18,682
Foreign currency translation reserve (796) (866) (565)
Retained earnings 20,610 7,729 4,858
Other reserves 40,507 40,507 40,507
Total equity 79,713 66,762 64,192
A third consolidated balance sheet as at 1 February 2020 has been included
above to show the effect of the prior year restatements as detailed in note
12. Minimum guaranteed income is analysed into current and non-current assets
as detailed in note 12.
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 JANUARY 2022
(restated)
Note 2022 2021
£000 £000
Profit before tax 10,359 4,935
Defined benefit pension charge 487 531
Net finance (income)/costs (30) 161
Depreciation and impairment of property, plant and equipment and right-of-use 5,065 5,697
assets
Amortisation 1,725 1,735
Loss on disposal of fixed assets - 72
Charge for LTIP recognised in equity 253 294
Unrealised foreign exchange gains/(losses) included in operating profit 468 (52)
Forgiveness of loan into a grant (412) -
Defined benefit pension cash contributions (2,209) (2,118)
Cash generated from operating activities 15,706 11,255
Changes in working capital:
(Increase)/decrease in inventories (3,018) 8,186
(Increase)/decrease in trade and other receivables (669) 2,310
Increase/(decrease) in trade and other payables 716 (3,529)
Cash generated from operations 12,735 18,222
Corporation tax paid (3,754) (23)
Net cash generated from operating activities 8,981 18,199
Cash flows from investing activities
Interest received 5 1
Purchase of intangible assets (379) (245)
Purchase of property, plant and equipment (1,750) (830)
Proceeds from disposal of property, plant and equipment - 75
Net cash used in investing activities (2,124) (999)
Cash flows from financing activities
Payment of lease liabilities (2,686) (2,958)
Interest paid (76) (279)
Proceeds from borrowings - 412
Dividends paid to Company's shareholders (532) -
Net cash used in financing activities (3,294) (2,825)
Net increase in cash and cash equivalents 3,563 14,375
Cash and cash equivalents at beginning of year 15,549 1,336
Effect of exchange rate fluctuations on cash held (62) (162)
Cash and cash equivalents at end of year 11 19,050 15,549
Note 12 explains the effect of the prior year restatements for the year ended
31 January 2021.
Interest paid was presented as part of net cash generated from operations in
the prior year. The comparative has been represented to aid comparability.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 31 JANUARY 2022
Attributable to owners of the parent
Other reserves
Share capital Share premium account (restated) Retained Capital Merger Foreign currency translation reserve (restated) Total
earnings
reserve
£000 £000
reserve
£000 equity
£000
£000
£000 £000
Balance at 1 February 2020 as previously stated 710 18,682 5,495 43,457 (2,950) (565) 64,829
Prior period restatement (note 12) - - (637) - - - (637)
Balance at 1 February 2020 as restated 710 18,682 4,858 43,457 (2,950) (565) 64,192
Profit for the year - - 3,826 - - - 3,826
Other comprehensive income/(expense):
Remeasurements of defined benefit pension schemes - - (1,565) - - - (1,565)
Deferred tax relating to pension scheme liability - - 297 - - - 297
Currency translation differences - - - - - (301) (301)
Total comprehensive income/(expense) - - 2,558 - - (301) 2,257
Transactions with owners, recognised directly in equity:
Dividends - - - - - - -
Long-term incentive plan charge - - 294 - - - 294
Related tax movements on long-term incentive plan - - 19 - - - 19
Balance at 31 January 2021 710 18,682 7,729 43,457 (2,950) (866) 66,762
Attributable to owners of the parent
Other reserves
Share capital Share premium account (restated) Retained Capital Merger Foreign currency translation reserve (restated) Total
earnings
reserve
£000 £000
reserve
£000 equity
£000
£000
£000 £000
Balance at 1 February 2021 as previously stated 710 18,682 8,446 43,457 (2,950) (866) 67,479
Prior period restatement (note 12) - - (717) - - - (717)
Balance at 1 February 2021 as restated 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
Deferred tax charge relating to pension scheme asset - - (1,233) - - - (1,233)
Currency translation differences - - - - - 70 70
Total comprehensive income - - 13,018 - - 70 13,088
Transactions with owners, recognised directly in equity:
Dividends - - (532) - - - (532)
Long-term incentive plan charge - - 253 - - - 253
Related tax movements on long-term incentive plan - - 142 - - - 142
Balance at 31 January 2022 710 18,682 20,610 43,457 (2,950) (796) 79,713
Note 12 explains the effect of the prior year restatements as at 31 January
2021 and 31 January 2020.
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
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, Scion and
Archive by Sanderson Design. 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.
The consolidated financial information and announcement of Sanderson Design
Group plc for the year ended 31 January 2022 were authorised for issue by the
Board of Directors on 27 April 2022.
Basis of preparation
The financial information contained within this final results announcement for
the year ended 31 January 2022 and the year ended 31 January 2021 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 2021 have been filed with the Registrar of Companies and
those for the year ended 31 January 2022 will be filed following the Company's
annual general meeting.
The auditors' report on the statutory accounts for the year ended 31 January
2022 and the year ended 31 January 2021 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 2021.
Going concern
In the context of the continuing Covid-19 outbreak and the impact of the
invasion of Ukraine by Russia, 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 date of signing of the report to 31 January 2024,
including the availability and maturity profile of the Group's financing
facilities and covenant compliance. This financial information has 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 £12.5m 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 debt 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 of well over £5m.
The total headroom of the Group at 31 January 2022 was £31.6m (2021:
£30.5m), including cash and cash equivalents of £19.1m and the committed
facility of £12.5m. The Group has also access to an uncommitted accordion
facility of £5.0m with Barclays. The Group had ended a temporary overdraft
facility of £2.5m with Barclays during the financial year.
In assessing going concern management has taken account of the uncertainties
caused by Covid-19and the war in Ukraine, a Management Base Case (MBC) model
has been prepared, together with alternative stress tested scenarios, given
the uncertainty regarding the impact of Covid-19 (including variants, further
waves of the virus, disruption to supply chain and inflationary pressures) and
the Russian invasion of Ukraine (including impact of sanctions, duration of
war and inflationary pressures). We suspended all trade with Russia on 24
February 2022, a distributor-based region that represented only around 2% of
global sales for FY2022. These forecasts indicate that the Company retains
adequate headroom against its borrowing facilities and bank covenants for the
foreseeable future.
There remain significant uncertainties concerning the future effects of Covid
19 in terms of variants and the possible escalation of the Ukraine war to
other Eastern European countries. The actual results which will be reported
will be undoubtedly different from the MBC and other scenarios modelled by the
Company. In the event that there are significant negative variations from the
MBC, management would act decisively, as they have done in the last year, to
protect the business particularly its cash position. Having considered all of
the comments above the Directors consider that the Group and the Company have
adequate resources to continue trading for the foreseeable future 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 information. For this
reason, they continue to adopt the going concern basis in preparing the
financial information.
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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
2. Critical accounting estimates and judgements (cont'd)
b) Retirement benefit obligations (cont'd)
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, based on facts and circumstances at the balance sheet date, it is able,
without condition or restriction placed on it by the trustees, to run the
Schemes until there are no more remaining members; wind up the Schemes at that
point; and reclaim any remaining monies. Consequently, the Group is able to
recognise the full 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.
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, Scion and Archive by Sanderson Design brands operated from
the UK, the US, France, Netherlands and Germany.
- Manufacturing - comprising the wallcovering and printed fabric
manufacturing businesses operated by Anstey and Standfast respectively.
This is the basis on which the Group presents its operating results to the
Board of Directors, which is considered to be the 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 elimination and unallocated'.
a) Principal measures of profit and loss - Income Statement segmental
information
Year ended 31 January 2022 Brands Manufacturing Intercompany Total
£000 £000 elimination and unallocated £000
£000
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
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
3. Segmental analysis (cont'd)
a) Principal measures of profit and loss - Income Statement segmental
information (cont'd)
Year ended 31 January 2021 (restated) Brands Manufacturing Intercompany elimination and unallocated Total
£000 £000 £000 £000
UK revenue 38,077 11,339 - 49,416
International revenue 34,549 6,111 - 40,660
Licence revenue 3,684 - - 3,684
Revenue - external 76,310 17,450 - 93,760
Revenue - internal - 10,911 (10,911) -
Total revenue 76,310 28,361 (10,911) 93,760
Profit/(loss) from operations 4,987 1,664 (1,555) 5,096
Net finance costs - - (161) (161)
Profit/(loss) before tax 4,987 1,664 (1,716) 4,935
Tax expense - - (1,109) (1,109)
Profit/(loss) for the year 4,987 1,664 (2,825) 3,826
The segmental Income Statement disclosures are measured in accordance with the
Group's accounting policies as set out in note 1. The Group has revised its
segmental methodology during the year by reviewing the allocation of central
costs to the Brands unit and restated the prior year's comparatives to improve
usefulness of the segmentation. The amount reclassified from central costs to
Brands for the year ended 31 January 2021 is £2.4m relating to majority of
the Company's administrative cost, LTIP expenses and IT costs. The reason this
is considered to be more appropriate is the senior management of the Company
spend significant amount of time on developing Brands' strategies and managing
its day-to-day operations daily and IT costs are mainly incurred by Brands.
Note 12 explains the effect of the prior year restatements as at 31 January
2021 and 31 January 2020.
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 LTIP expenses, are recognised for
internal reporting to the CODM as part of Group-wide activities and are
included within 'Intercompany elimination 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.
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 analysis presented is revenue by export market for Brands.
Brands international revenue by export market: 2022 2021
£000 £000
North America 16,644 12,521
Northern Europe 13,189 12,480
Rest of the World 10,592 9,548
40,425 34,549
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
3. Segmental analysis (cont'd)
b) Additional segmental revenue information (cont'd)
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:
Brand revenue analysis*: 2022 2021
£000 £000
Harlequin 17,623 16,043
Scion 2,210 2,391
Sanderson 14,421 11,606
Morris & Co. 16,444 12,619
Zoffany 8,564 7,827
Clarke & Clarke 24,554 21,704
Archive by Sanderson Design and other brands 291 436
Licensing 5,159 3,684
89,266 76,310
*The Brands reportable segments for the year ended 31 January 2022 have been
redefined to provide additional focus on each Brand.
Revenue of the Manufacturing reportable segment - including revenues from
internal sales to the Group's Brands:
Manufacturing revenue analysis: 2022 2021
£000 £000
Standfast 21,310 14,410
Anstey 20,431 13,951
41,741 28,361
4. Other operating income
Other operating income of £4,342,000 (2021: £3,822,000) comprises
consideration received from marketing materials of £4,046,000 (2021:
£3,822,000) and a research and development expenditure credit (RDEC) of
£296,000 (2021: nil).
5. Net finance income/(costs)
2022 2021
£000 £000
Finance income:
Interest received on bank deposits 5 1
Unwind of discount on minimum guaranteed licensing income 179 138
Total finance income 184 139
Finance cots:
Interest payable on bank borrowings (22) (97)
Amortisation of issue costs of bank loans - (21)
Lease interest (132) (182)
Total finance costs (154) (300)
Net finance income/(costs) 30 (161)
Unwind of discount on minimum guaranteed licensing income was presented as
part of interest expense in the prior year. The comparative has been
represented to aid comparability.
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
6. Tax expense
2022 2021
£000 £000
Current tax:
- UK current tax 1,973 1,018
- UK adjustments in respect of prior years 224 39
- overseas, current tax 117 24
- overseas, adjustments in respect of prior years (107) -
Corporation tax 2,207 1,081
Deferred tax:
- current year 157 7
- adjustments in respect of prior years 57 21
- effect of changes in corporation tax rates 179 -
Deferred tax 393 28
Total tax charge for the year 2,600 1,109
Reconciliation of total tax charge for the year 2022 2021
£000 £000
Profit on ordinary activities before tax 10,359 4,935
Tax on profit on ordinary activities at 19.00% (2021: 19.00%) 1,968 938
Fixed asset differences 42 (27)
Non-deductible expenditure 173 63
Income not subject to tax (2) (2)
Share based payment 40 1
Group income - (11)
Adjustments in respect of prior years 117 39
Adjustments in respect of prior years - deferred tax 57 21
Overseas tax suffered 2 (33)
Movement in deferred tax not recognised (170) 141
Current tax - other - 47
Effect of changes in corporation tax rates 373 (68)
Total tax charge for year 2,600 1,109
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
7. Earnings per share
(a) Earnings per share
Basic earnings per share ('EPS') is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number of shares
outstanding during the 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.
2022 2021 (restated)
Earnings Weighted average number of shares Per share amount Earnings Weighted average number of shares Per share amount
£000 (000s) Pence £000 (000s) Pence
Basic earnings per share 7,759 70,983 10.93 3,826 70,980 5.39
Effect of dilutive securities:
Shares under LTIP* 850 1,652
Diluted earnings per share 7,759 71,833 10.80 3,826 72,632 5.27
Adjusted underlying basic and diluted earnings per share:
Add back LTIP accounting charge 406 345
Add back net defined benefit pension charge 487 531
Non-underlying items (see below) 1,207 1,187
Tax effect of non-underlying items and other add backs (96) (287)
Adjusted underlying basic earnings per share 9,763 70,983 13.75 5,602 70,980 7.89
Adjusted underlying diluted earnings per share 9,763 71,833 13.59 5,602 72,632 7.71
*In calculating the diluted earnings per share, shares under LTIP arrangements
have been included to the extent that performance conditions had been
satisfied at the balance sheet date. Awards of shares that are contingent on
future performance conditions have been excluded. When preparing the
calculation for the current year it was noted that the prior year dilutive
shares were subject to performance conditions that had not been satisfied at
the previous year end and therefore there should not have been a dilutive
impact of the outstanding LTIP shares. The prior year reported results have
not been restated as the impact is not material
Sanderson Design Group PLC's issued ordinary share capital with voting rights
consists of 70,983,505 (2021: 70,983,505) ordinary shares of which nil (2021:
nil) ordinary shares are held in treasury and 220 (2021: 50,000) 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.
The market value of shares held by the EBT at 31 January 2022 was £370 (2021:
£56,000). The total number of shares held in the EBT at the year end
represented less than 0.1% (2020: 0.1%) of the issued shares.
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 Note 12 explains the effect of the prior year restatement as at 31
January 2021 and 31 January 2020.
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
7. Earnings per share (cont'd)
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
restated
2022 2021
£000 £000
Statutory profit before tax 10,359 4,935
Restructuring and reorganisation costs (a) 1,190 171
Amortisation of acquired intangible assets (b) 1,016 1,016
Forgiveness of loan under the US Paycheck Protection Programme (c) (440) -
Release of an accrual for a legal case (d) (559) -
Total non-underlying charge included in statutory profit before tax 1,207 1,187
Underlying profit before tax 11,566 6,122
LTIP accounting charge 406 345
Net defined benefit pension charge 487 531
Adjusted underlying profit before tax 12,459 6,998
In calculating the adjusted underlying profit before tax, the Group adjusts
for non-underlying items which are material non-recurring items or items
considered to be non-operational in nature. The nature of these adjustments is
outlined as follows:
(a) Restructuring and reorganisation costs
These relate to the reorganisation of the Group and comprise of the
rationalisation of certain operational and support functions. The costs mainly
comprise employee severance and professional fees associated with the closure
of Sanderson Design Group Brands SARL in France of £1,100,000 and other
reorganisation costs of £90,000 (2021: £171,000). See further details in the
Chief Financial Officer's Review.
(b) Amortisation of acquired intangible assets £1,016,000 (2021:
£1,016,000).
(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
£440,000.
(d) Release of an accrual of £559,000 for a legal case in the US that had
concluded during the financial year.
Note 12 explains the effect of the prior year restatements as at 31 January
2021 and 31 January 2020.
8. Trade and other receivables
Current 2022 2021
£000 £000
Trade receivables 14,262 12,632
Less: provision for impairment of trade receivables (775) (903)
Net trade receivables 13,487 11,729
Corporation tax debtor 339 -
Other taxes and social security 842 1,346
Other receivables 307 849
Prepayments 1,817 1,961
16,792 15,885
There is no material difference between the carrying amount and the fair value
of the trade and other receivables. The only financial asset that is subject
to IFRS 9's expected credit loss model is trade receivables for sales of
inventory.
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
9. Minimum guaranteed licensing receivable
The Group has analysed the minimum guaranteed licensing receivable 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
assessment of the operating cycle of the licensing arrangement , taking into
consideration the nature of the agreement and the cash and invoicing cycle.
This assessment was not carried out in the previous year and as such all
amounts receivable were shown as current in error. A prior period adjustment
has been processed to reflect the split in the previous year (see note
12).
The following table analyses the Group's minimum guaranteed licensing
receivable into relevant maturity groupings based on the remaining period to
contractual maturity at the Balance Sheet date.
Current Non-current Over Total
Less than 1 year £000
1 year £000
£000
31 January 2022 879 1,619 2,498
31 January 2021 1,221 1,222 2,443
1 February 2020 495 1,455 1,950
10. Retirement benefit obligation
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 2022 are expected to be £2,391,000.
2022 2021
£000 £000
Present value of funded obligations (74,124) (84,926)
Fair value of scheme assets 76,701 79,289
Surplus/(deficit) in funded scheme (net asset/(liability) in Balance Sheet) 2,577 (5,637)
Reconciliation of opening and closing balances of the present value of the
defined benefit obligation
2022 2021
£000 £000
Benefit obligation at beginning of year 84,926 83,767
Interest cost 1,122 1,395
Remeasurement (gains)/losses - changes in financial assumptions (6,086) 5,266
Remeasurement gains - changes in demographic assumptions (51) (1,347)
Remeasurement gains - experience (1,797) (719)
Benefits paid (3,646) (3,436)
Settlements (344) -
Benefit obligation at end of year 74,124 84,926
Reconciliation of opening and closing balances of the fair value of plan
assets
2022 2021
£000
£000
Fair value of plan assets at beginning of year 79,289 78,108
Interest income on scheme assets 1,055 1,313
(Loss)/return on assets, excluding interest income (1,442) 1,635
Contributions by employers 2,209 2,118
Benefits paid (3,646) (3,436)
Scheme administrative cost (420) (449)
Settlements (344) -
Fair value of scheme assets at end of year 76,701 79,289
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
11. Analysis of net funds/(debt)
1 February Cash flow Other 31 January
2021 £000 non-cash 2022
£000 changes £000
£000
Cash and cash equivalents 15,549 3,562 (61) 19,050
Total funds 15,549 3,562 (61) 19,050
Short term loan (412) - 412 -
Finance lease liabilities (5,882) 2,685 (706) (3,903)
Total debts (6,294) 2,685 (294) (3,903)
Net funds/(debts) 9,255 6,247 (355) 15,147
Other non-cash changes are exchange gains/(losses) from the retranslation of
bank balances held in non-sterling bank accounts and new additions to right of
use assets.
12. Explanation of prior year adjustments for the years ended 31 January 2021
and 31 January 2020
The Group has rectified the error in previous years of its cost absorption
methodology of the manufacturing units for establishing the profit elimination
within inter-group inventories held at the year end. As a result of this
error, the value of inventory at 31 January 2021 has reduced by £717,000, the
cost of sales for the financial year ended 31 January 2021 has increased by
£80,000 and opening retained earnings and inventory at 1 February 2020 have
reduced by £637,000
The total impact of these adjustments for the financial year ended 31 January
2022 is a reduction of opening retained earnings of £717,000 with equivalent
reduction in the value of opening inventories. In addition, the cash flow
statement for the year ended 31 January 2021 has been restated to show a
reduced profit before tax by £80,000 with a compensating adjustment to the
moment in inventories. There is no overall change to the reported operating
cashflow.
The Group has analysed the minimum guaranteed licensing receivable 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
assessment of the operating cycle of the licensing arrangement, taking into
consideration the nature of the agreement and he cash and invoicing cycle.
This assessment was not carried out in the previous year and as such all
amounts receivable were shown as current in error. A prior period adjustment
has been processed to reflect the split in the previous year. This restatement
has no effect on the result, equity or retained earnings brought forward in
the prior year.
The following table analyses the Group's minimum guaranteed licensing
receivable into relevant maturity groupings based on the remaining period to
contractual maturity at the Balance Sheet date. The impact is to increase
non-current assets and reduce net current assets by £1,222,000 as at 31
January 2021 and by £1,455,000 as at 31 January 2020.
Current Non-current Over Total
Less than 1 year £000
1 year £000
£000
31 January 2021 1,221 1,222 2,443
31 January 2020 495 1,455 1,950
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