REG - Sanderson Design Grp - Full Year Results
24/04/2024 07:00
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RNS Number : 7700L Sanderson Design Group PLC 24 April 2024
24 April 2024
SANDERSON DESIGN GROUP PLC
("Sanderson Design Group", the "Company" or the "Group")
Financial Results for the year ended 31 January 2024
Record licensing sales reflect the unique intellectual property in the Group's
brands and the strategic focus on licensing as a growth driver
Sanderson Design Group PLC (AIM: SDG), the luxury interior furnishings group,
announces its audited financial results for the year ended 31 January 2024.
Financial highlights
Year ended 31 January 2024 2023 Change
Revenue £108.6m £112.0m -3.0%
Adjusted underlying profit before tax* £12.2m £12.6m -3.2%
Adjusted underlying EPS* 13.74p 14.18p -3.1%
Statutory profit before tax £10.4m £10.9m -5.4%
Basic EPS 11.46p 12.42p -7.7%
Dividends per share 3.5p 3.5p -
Cash** £16.3m £15.4m +5.8%
* Excluding share-based incentives, defined benefit pension charge
and non-underlying items as summarised in note 7.
** Cash is defined as cash and cash equivalents less borrowings. For
the purpose of this definition, borrowings does not include lease liabilities.
· Revenue marginally down 3.0% at £108.6m (FY2023: £112.0m), in
what has been a challenging consumer environment
· A record year for licensing, with sales up 67.7% at £10.9m
(FY2023: £6.5m)
· North America, our strategic growth market, performed strongly in
the year, with brand product sales up 8.2% in reported currency, and up 9.2%
in constant currency
· Total manufacturing sales fell 10.3% to £35.0m (FY2023:
£39.0m)
· Operating cost efficiencies and contribution from licensing
offset volume decline to deliver broadly similar profit before tax for the
year. Adjusted underlying profit before tax of £12.2m (FY2023: £12.6m).
Reported profit before tax of £10.4m, down £0.5m (FY2023: £10.9m)
· Liquidity and headroom of £26.3m (FY2023: £27.9m) with cash
position of £16.3m (FY2023: £15.4m) and banking facilities of £10.0m
(FY2023: £12.5m)
· Proposed final dividend of 2.75p per share (FY2023: 2.75p) to
give a total dividend for the year of 3.50p (FY2023: 3.50p)
Operational highlights
· A significant number of new multi-year licensing agreements with
a wide range of businesses including major retailers such as NEXT and
Sainsbury's
· We announced a direct-to-consumer Morris & Co. online shop
that will showcase the strength of the Morris & Co. full portfolio of core
products and finished goods to the UK, USA and EU. This adds to the Morris
& Co.'s US licensing agreements with Ruggable, the washable rug company,
and the US retailer Williams Sonoma, for tableware and cookware
· Strong product launches from our brands, including a
collaboration for Sanderson with designer and illustrator Giles Deacon and the
Disney Home x Sanderson capsule collection launched in autumn 2023 was well
received
· The Group's head office will relocate later in the year to the
Sanderson brand's historic home in Chiswick, west London at Voysey House
Sustainability highlights
· Planet Mark certification for Year 6 of carbon reduction,
reflecting our Live Beautiful sustainability pledge
· CO2 emissions reduced by 10.4% in FY2024 on location basis, ahead
of our plan to reach ZeroBy30
· Energy consumption all from renewables, validated by Planet Mark
· Product packaging focus at our warehouses, with 15% reduction in
plastic and 12% for cardboard and fabric bags moved from plastic to 100%
recycled/100% recyclable
· Climate-related Financial Disclosure Regulations 2022 will be
reported in this year's annual report for the first time
· We are proud to be a Real Living Wage employer
Dianne Thompson, Sanderson Design Group's Chairman, said:
"The positive momentum in our licensing activities has continued into the
current year with two major renewals, with window coverings company Blinds 2go
and rugmaker Brink & Campman, which together represent accelerated income
of approximately £2.0m.
"Trading conditions overall are expected to remain challenging in the year.
The Board remains focused on its strategic growth drivers, including North
America and licensing, and remains confident in the business's agility to
navigate further market uncertainties, supported by the Company's strong cash
position. The Board's expectations for the current year's performance are
unchanged."
Analyst meeting and webcast
A meeting for analysts and institutional investors will be held at 9.30am
today, 24 April 2024, at the offices of Buchanan, 107 Cheapside, London EC2V
6DN. For details, please contact Buchanan at SDG@buchanan.uk.com
(mailto:SDG@buchanan.uk.com) .
A live webcast of the meeting will be available via the following link:
https://stream.buchanan.uk.com/broadcast/65f2c92d3fde7fad508df685
(https://stream.buchanan.uk.com/broadcast/65f2c92d3fde7fad508df685)
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
David Gracie, Company Secretary
Investec Bank plc (Nominated Adviser and Joint Broker) +44 (0) 20 7597 5970
David Anderson / Ben Farrow
Singer Capital Markets (Joint Broker) +44 (0) 20 7496 3000
Tom Salvesen / Jen Boorer / James Todd
Buchanan +44 (0) 20 7466 5000
Mark Court / Sophie Wills / Toto Berger / Abigail Gilchrist
SDG@buchanan.uk.com (mailto: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
(http://www.sandersondesigngroup.com)
CHAIRMAN'S STATEMENT
During the year ended 31 January 2024, our licensing activities within our
brands business became firmly established as the third strategic pillar for
the Group, complementing our brand sales and manufacturing operations. For the
first time in the Group's history, licensing contributed more than £10m of
sales, at £10.9m for the year ended 31 January 2024 (FY2023: £6.5m). These
record sales reflect the unique intellectual property in the Group's brands
and design archives along with the Board's strategic focus on licensing as a
growth driver.
During the year, we signed a significant number of new licensing agreements
with a wide range of businesses including major companies such as NEXT and
Sainsbury's. The visibility of licensing income continues to strengthen, given
recent and upcoming product launches, contract renewals and extensions, and a
strong pipeline of opportunities. The incremental costs to the Group of
licensing sales are very low so licensing is reported at a 100% margin, and
leverages the strength of our brands' performance over recent years.
The excellent performance from licensing during the year mitigated the
challenging consumer environments in the UK and other markets but North
America, the Group's second largest market after the UK, performed strongly
and will continue to be the Group's most important geographic region for
driving growth. The strategy for the UK and other geographic regions is to
control costs and drive efficiency whilst ensuring that the Group is
positioned to take advantage of any upturn in consumer confidence.
During the year, 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. We were pleased to receive our Planet Mark
Year 6 certification earlier this year, marking the sixth financial year that
the sustainability of our business has been measured by Planet Mark, the
sustainability certification organisation. In the year to 31 January 2024, our
total carbon footprint was 5,707 tonnes, a decrease on FY2023's 6,368 tonnes
reflecting continued progress in our journey to net zero.
This year's annual report marks the first time that the Group has been
required to include a report under the Climate-related Financial Disclosure
Regulations 2022. We welcome this opportunity to provide further clarity for
investors and wider stakeholders on how the Group is managing climate-related
risks and opportunities.
Further details of the Group's strategic and operational progress are included
in the Chief Executive Officer's Strategy and Operating Review.
Financial results
The results for the year ended 31 January 2024 reflect strong growth in
licensing income offset by the challenging consumer environment in the UK and
Europe. Adjusted underlying profit before tax at £12.2m was down 3.2% on the
previous year (FY2023: £12.6m). Reported profit before tax of £10.4m was
down 5.4% for the year ended 31 January 2024 (FY2023: £10.9m). The Group's
Balance Sheet remains strong with cash at the year end of £16.3m compared
with £15.4m at 31 January 2023 and £15.9m at 31 July 2023.
Dividend
The Directors recommend a final dividend of 2.75p (FY2023: 2.75p) taking the
full year dividend to 3.50p (FY2023: 3.50p). Payment of the final dividend, if
approved at the Company's forthcoming Annual General Meeting, will be made on
9 August 2024 to shareholders on the Company's register at 12 July 2024, with
an ex-dividend date of 11 July 2024. 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 creativity during another year of challenges and
opportunities for the business.
Outlook
The positive momentum in our licensing activities has continued into the
current year with two major renewals, with window coverings company Blinds 2go
and rugmaker Brink & Campman, which together represent accelerated income
of approximately £2.0m.
Trading conditions overall are expected to remain challenging in the year. The
Board remains focused on its strategic growth drivers, including North America
and licensing, and remains confident in the business's agility to navigate
further market uncertainties, supported by the Company's strong cash position.
The Board's expectations for the current year's performance are unchanged.
Dianne Thompson
Non-executive Chairman
23 April 2024
CHIEF EXECUTIVE OFFICER'S STRATEGY AND OPERATING REVIEW
Introduction
The results for the year ended 31 January 2024 show the strength of our
business model, which has provided the Group with the ability to face into a
generally challenging consumer environment. Our business model has three
pillars - brands, licensing and manufacturing - bringing resilience to the
Group in that the impact of subdued consumer confidence on brand product sales
has been substantially mitigated by licensing, which is now firmly established
as a key part of the business.
It was a record year for licensing, with sales up almost 68% at £10.9m
(FY2023: £6.5m), representing approximately 10% of Group sales. As licensing
is reported at 100% margin, as a result of leveraging the strength of our
brand's performance over recent years, the contribution to Group profits is
substantial.
The strategic growth market of North America performed strongly in the year,
with brand product sales up 8.2% in reported currency, and up 9.2% in constant
currency. Total Group sales for the year were 3.0% below the prior year at
£108.6m (FY2023: £112.0m) in reported currency, down 3.0% in constant
currency.
As part of our continued focus on cost control, we successfully managed
inflationary pressures during the year including pay rises in line with the
Real Living Wage. We are proud to be a Real Living Wage employer and we have
honoured this year's increase for FY2025. We again finished the year with a
strong balance sheet, with cash at 31 January 2024 of £16.3m, which protects
the business in current markets and enables us to invest for growth.
We have entered the current financial year with strong momentum in licensing
and with strong product launches from our brands, including a collaboration
for Sanderson with designer and illustrator Giles Deacon. The Sanderson brand
is a key focus for the current year with a number of initiatives underway to
maximise the success of the brand, starting with Giles Deacon's collection,
which has been well received.
We were pleased to announce recently that the Group's head office will
relocate later in the year to the Sanderson brand's historic home in Chiswick,
West London. The Group has become sole tenant of Voysey House, a building
originally designed by the Arts & Crafts architect and designer CFA
Voysey, in 1902, as a wallpaper factory for Arthur Sanderson & Sons, the
forerunner of the Group's Sanderson brand.
The relocation to London is expected to be cost neutral on a run rate basis as
Voysey House is a smaller building than the current headquarters and the
London location reduces the requirement for showroom space elsewhere. The
strategic benefits of being in London include supporting the sales and
marketing of Group brands, better showcasing the Sanderson and Morris &
Co. archives and assisting in attracting and retaining talent.
Our commitment to developing talent in our industry includes working with the
Queen Elizabeth Scholarship Trust ('QEST'), a charity dedicated to supporting
excellence in British craftsmanship, and we recently announced that we are
sponsoring a new QEST rising star craft award. I am also proud to represent
our Royal Warrant holding brand, Sanderson, as a trustee of QEST and it is a
privilege to be able to contribute on behalf of the Group.
STRATEGY AND PROGRESS
Our core strategy for the Group, which is set out below, was reaffirmed at the
time of our half year results in October 2023 when we also highlighted
particular strategic priorities including a focus on international growth,
licensing, re-energising the Sanderson brand and investment in technology to
drive innovation, efficiency and environmental benefits. Our strategy is
underpinned and guided by our Live Beautiful sustainability strategy in which
we are focused on achieving net zero by 2030.
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 and fabric, 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,
strategically targeted by brand, category and market.
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 them being sold in more than 85 countries worldwide.
To maximise return, we are focused on building market share in key
geographies: the USA, France, Germany and Japan, while supporting our UK base.
Our approach is tailored to each individual region.
OPERATIONAL REVIEW
The table below shows the Group's sales performance in the year ended 31
January 2024, compared with FY2023. 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.
Year to 31 January % Change
(£m) FY
20
24
v
FY
20
23
2024 2023 Reported Constant Currency
Brands
UK 37.9 42.6 (11.0)% (11.0)%
North America 21.4 19.8 8.2% 9.2%
Northern Europe 9.9 10.8 (8.8)% (9.1)%
Rest of the World 9.6 10.2 (5.8)% (6.8)%
Total Brand product revenue 78.8 83.4 (5.6)% (5.5)%
Manufacturing
External 18.9 22.1 (14.5)% (14.5)%
Internal (eliminated on consolidation) 16.1 16.9 (4.7)% (4.7)%
Total Manufacturing revenue 35.0 39.0 (10.3)% (10.3)%
Total Licence revenue 10.9 6.5 67.7% 67.7%
TOTAL GROUP REVENUE 108.6 112.0 (3.1)% (3.0)%
BRANDS
The Brands segment comprises heritage brands Morris & Co., Sanderson, and
Zoffany and contemporary brands Clarke & Clarke, Harlequin, and Scion.
Year ended 31 January
(£m) 2024 versus 2023
Brands 2024 2023 Reported Constant currency
Morris & Co. 19.1 19.0 0.3% 0.8%
Sanderson 13.6 14.0 (3.2)% (3.2)%
Zoffany 8.2 8.8 (7.3)% (7.2)%
Clarke & Clarke 22.4 23.6 (4.9)% (5.1)%
Harlequin 14.0 15.8 (11.2)% (11.2)%
Scion 1.3 1.8 (29.4)% (29.6)%
Other 0.2 0.4 (35.5)% (33.7)%
Total 78.8 83.4 (5.6)% (5.5)%
Morris & Co.
Morris & Co. is our leading heritage brand. Founded by William Morris in
1860 and powered by a substantial archive of designs, wallpapers, fabrics,
printing blocks and fragments, Morris & Co. has authority and integrity as
the home of William Morris.
Brand product sales during the year at £19.1m in reported currency were
broadly unchanged compared with FY2023.
By region, sales were up strongly in North America with an increase of 24% in
constant currency, as a result of initiatives including a special edit in a
collaboration with McGee & Co, a direct-to-consumer website created by the
influential interiors company Studio McGee.
In addition to brand product sales, Morris & Co. makes a substantial
contribution to the Group through licensing agreements, examples of which are
discussed in the Licensing section below.
The momentum behind the Morris & Co. brand has continued in the current
financial year. In March 2024, we announced a direct-to-consumer collaboration
in which Morris & Co. wallpapers, fabrics and licensed products will be
made available from a dedicated online shop serving customers in the UK, USA
and other countries worldwide. The Morris & Co. online shop will be
launched in the second half of FY2025 and will be developed and operated in
collaboration with Design Online Limited ('Design Online'), a business that
already operates an online shop for the Scion brand.
We have also recently announced an exciting collaboration agreement for the
Morris & Co. brand with The Huntington Library, Art Museum, and Botanical
Gardens ('The Huntington'), a renowned education and research institution in
San Marino, California, with a vast archive of William Morris's work,
including textiles, wallpapers, tapestries, books and other items. The
Huntington archive includes unique, unfinished designs by William Morris and,
under the terms of the collaboration agreement, Sanderson Design Group will
use this unfinished work as the inspiration for an entirely new collection of
Morris & Co. wallpapers and fabrics, expected to launch in September 2025.
Sanderson
The Sanderson brand is a strategic focus for the Group with a number of
initiatives underway or planned to elevate the brand during the course of this
year and next. The heightened focus on the brand in the current year has
started with the launch of a capsule collection through a collaboration with
Giles Deacon, the renowned couture designer and illustrator, who has
innovatively reworked original Sanderson designs.
Sanderson's brand product sales were £13.6m in reported currency during the
year, slightly down on £14.0m in the prior year. The brand grew well in North
America, with sales up 10% in constant currency compared with FY2023.
The Disney Home x Sanderson capsule collection of fabrics and wallpapers,
based on original Sanderson wallpapers, launched in autumn 2023 and has been
well received. We remain positive about the future potential of this
collection.
Other collaborations during the year included a trimmings launch by Salvesen
Graham, a renowned British design duo, who have created a small collection of
trimmings to complement the brand's fabrics and wallpapers.
Zoffany
Zoffany is the Group's luxury, interior designer-led brand, which occupies the
highest quality positioning of the Group's brands. We have reconnected the
brand to its roots in the restoration of grand houses, positioning it for
high-end bespoke projects. During the year, Zoffany's brand product sales were
£8.2m in reported currency, down from £8.8m in the prior year. In North
America, the brand's sales were up 12% in constant currency.
The Suffolk Damasks and Stripes collection was launched in autumn 2023,
celebrating the work of traditional English silk manufacturers, and the
Arcadian Thames collection has continued to sell well.
Zoffany has performed particularly well in the US, where the Company has been
working directly with designers on major residential projects.
Clarke & Clarke
Clarke & Clarke, our biggest selling brand, reported brand product sales
of £22.4m in reported currency, down from £23.6m in the prior year. In North
America, sales were down 5% in constant currency but the brand finished the
year strongly after the renewal for a further five years of the distribution
agreement with Kravet Inc., which distributes the brand in North America.
The brand, which historically did not have licensing partners, is also
beginning to make an important contribution to the Group's licensing sales
thanks to the NEXT agreement launching in spring/summer 2024.
During the year, Clarke & Clarke formed an important collaboration in the
USA with Breegan Jane, the California-based interior designer and lifestyle
commentator.
Harlequin
Harlequin remains the biggest selling wallpaper and fabric brand in John
Lewis, which in the autumn last year launched its own Harlequin-licensed
products including cushions. Harlequin collections are presented as colour
stories to suit each of four design pillars - Rewild, Reflect, Retreat and
Renew - and the Group is gaining traction in promoting the brand through this
initiative.
Harlequin's brand product sales were £14.0m in the year in reported currency
compared with £15.8m in the prior year. In North America, the brand's sales
were up 4% in constant currency.
The Sophie Robinson collection was launched in the autumn last year and has
been well received. A new collaboration will follow for autumn/winter 2024
created by 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. Scion is 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
seasonal collections of wallpapers and fabrics but launches capsule
collections instead to bring newness. The brand's product sales during the
year were £1.3m in reportable currency, down from £1.8m in the prior year.
MANUFACTURING
Our two factories, Standfast & Barracks textiles 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.
Reducing energy consumption as part of our net zero commitments has been a
continued focus in our manufacturing operations along with positive steps to
improve biodiversity, including staff-based initiatives such as allotments and
flower growing at the Anstey wallpaper factory.
Year ended 31 January (£m) 2024 versus 2023
2024 2023 Reported
Sales to Group brands 16.1 16.9 (4.7)%
Third party sales 18.9 22.1 (14.5)%
Total Manufacturing sales 35.0 39.0 (10.2)%
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.
2024 is a landmark year for Standfast in that the factory celebrates its
100(th) anniversary. A programme of events is planned to celebrate a century
in business and to promote the factory's capabilities.
Total sales at Standfast in the year were £19.1m (FY2023: £20.7m) and
digital printing as a proportion of factory output was 77% (FY2023: 74%).
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.
Total sales at Anstey were £15.9m (FY2023: £18.3m) and digital printing as a
proportion of factory output was 18% (FY2023: 16%).
In the current financial year, we have continued to focus on efficiency and,
reflecting lower volumes and the growing proportion of less labour-intensive
digital production at Anstey, we have completed a consultation exercise
resulting in a reduction of 24 of the 126 roles at the factory.
This reduction in roles will lead to annualised cost savings of £1.1m at an
exceptional cost in the current financial year of £0.5m. The estimated cost
saving in the current year is approximately £0.7m. I thank all colleagues at
Anstey and across the Group for their understanding as we make these important
changes to evolve the business for future success.
LICENSING
Licensing is the most profitable part of the Group and a key area of strategic
focus. Our licensing activities leverage our designs and design archives and
bring wider consumer awareness of our brands across multiple categories of
finished goods. Licensing brings additional visibility for our brands and the
potential to stimulate sales of our core products of fabric, wallpaper and
paint.
The Group has strong creative skills in scaling and colouring designs so that
they can be transferred successfully to a multitude of different licensed
products and works closely with licensing partners throughout the product
development process.
Licensing had a record year, with sales and profits up 67.7% at £10.9m
(FY2023: £6.5m) including £6.5m of accelerated income (FY2023: £2.4m) from
licence agreements signed during the year, including major new deals along
with a number of smaller deals, contract renewals and extensions. Accelerated
income, recognition of which is a requirement of IFRS 15, represents the total
minimum guaranteed sales associated with newly signed contracts with a
discount rate applied to them.
Major licensing agreements signed in the year included NEXT with the Clarke
& Clarke brand for a wide range of homewares. This five-year agreement,
the first products from which have already been launched, included accelerated
income of £3.0m. A major, multi-year agreement was also signed with J
Sainsbury plc, in which the supermarket group's Habitat homewares brand and Tu
clothing brand will develop a wide range of licensed products in collaboration
with the Morris & Co. and Scion brands respectively.
Renewals signed during the year include a three-year renewal with Bedeck
starting February 2024, which was extended by a further two years to 2029, and
the Morris & Co. deal with US retailer Williams Sonoma, which was extended
by a further year until August 2026 with new product categories added. In
addition, Williams Sonoma's monogrammed gifting brand Mark & Graham has
signed a three-year agreement with the Sanderson brand for the USA and Canada.
Close to the year end, we announced a direct-to-consumer Morris & Co.
online shop that will showcase the strength of the Morris & Co. full
portfolio of core products and finished goods to the UK, USA and EU. We expect
the site to launch in the second half of FY2025 and are working with our
operating partner, who will act as an agent, to build the proposition and halo
the brand for the benefit of all our customers.
Morris & Co.'s US agreement with Ruggable LLC, the washable rug company,
performed strongly during the year, providing a larger than expected
contribution. The agreement was also expanded to include European countries
including the UK, Ireland, Germany, France and Austria.
The Company is continuing to progress a pipeline of further licensing
opportunities, leveraging its brands and design archives.
SUMMARY
We have confidence in our brands, products and strategy and particularly in
our people, who are the foundation of the Company. Whilst the consumer
environment in the year ahead will bring challenges, we intend to maximise the
many opportunities available to the Group, particularly through the strategic
priorities outlined at the time of our half year results in October 2023
including a focus on international growth, licensing income and re-energising
the Sanderson brand.
Lisa Montague
Chief Executive Officer
23 April 2024
CHIEF FINANCIAL OFFICER'S REVIEW
The Chairman's Statement and the Chief Executive Officer's Strategic and
Operating Review both provide analysis of the key factors contributing to our
financial results for the year ended 31 January 2024. In a challenging
consumer environment, profits have been underpinned by the exceptional
performance of the Licensing channel. The Balance Sheet remains a key
strength of the Group with net cash of £16.3m on hand at year-end.
Revenue
Our reported revenue for the year was £108.6m compared with £112.0m in
FY2023.
Revenue FY2024 FY2023 Change
£m
£m
FY2023
Brand Product 78.8 83.4 (5.6%)
Manufacturing - External 18.9 22.1 (14.5%)
Licensing 10.9 6.5 67.7%
Group 108.6 112.0 (3.1%)
Gross profit
Gross profit for the full year was £73.7m compared with £74.2m in FY2023
whilst the gross profit margin at 67.9% represents an increase of 160 basis
points over FY2023. Excluding the impact of licence income, which generates
100% gross profit, margins improved slightly to 64.3% in FY2024 versus 64.2%
in FY2023.
FY2024 FY2023
Brands and Manufacturing
Revenue (£m) 97.7 105.5
Gross profit (£m) 62.8 67.7
% 64.3% 64.2%
Licensing
Revenue (£m) 10.9 6.5
Gross profit (£m) 10.9 6.5
% 100% 100%
Total
Revenue (£m) 108.6 112.0
Gross profit (£m) 73.7 74.2
% 67.9% 66.3%
Within the Brands division gross margin improved by 1.0%. Now that our SKU
reduction programme is largely complete and sales per SKU are growing, we are
starting to realise volume-related sourcing efficiencies and have been able to
reduce the level of promotional activity required to clear slow-selling
collections.
Conversely, our Manufacturing division has been impacted by reduced volumes of
both internal and external orders. Given the relatively high fixed cost base
of both of our factories, gross margins fell by nearly 4% despite a number of
cost-saving measures that were implemented during the year. Following the
year-end we have completed a restructuring of our Anstey Wallpaper facility to
reflect both lower volumes and a growing proportion of less labour-intensive,
digital production.
Profit before tax
Profit before tax was £10.4m, down from £10.9m in FY2023. This resilient
performance is driven by the strength of licensing revenues, gross margin
improvement and a continued focus on cost control.
FY2024 FY2023
£m
£m
Revenue 108.6 112.0
Gross profit 73.7 74.2
Distribution and selling expenses (25.3) (25.1)
Administration expenses (43.5) (43.0)
Other operating income 4.9 4.5
Finance income - net 0.6 0.3
Profit before tax 10.4 10.9
Distribution and selling expenses increased by £0.2m compared to FY2023
although this was entirely due to an increase in the cost of marketing
materials (mainly pattern books). Income from the sales of these pattern
books is responsible for the increase of £0.4m in Other Operating Income.
Administration expenses grew to £43.5m in FY2024 from £43.0m in FY2023.
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 £2.1m below the
pre-Covid FY2020 levels.
Adjusted underlying profit before tax
The adjusted underlying profit before tax was £12.2m, down from £12.6m in
FY2023.
2024 2023
£m
£m
Profit before tax 10.4 10.9
Amortisation of acquired intangible assets 0.3 0.8
Restructuring and reorganisation costs 0.6 -
Share-based payment charge 0.5 0.5
Net defined benefit pension charge 0.4 0.4
Adjusted underlying profit before tax 12.2 12.6
In calculating the adjusted underlying profit before tax, the Group excludes
material non-recurring items or items considered to be non-operational in
nature and that do not relate to the operating activities of the Group.
Share-based payment charges are excluded as they are a non-cash measure.
Adjusted measures are used as a way for the Board to monitor the performance
of the Group and are not considered to be superior to, or a substitute for,
statutory definitions. They are provided to add further depth and
understanding to the users of the financial information and 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 is reported to and assessed by the Board.
This measure is used within the Group's incentive plans - see the Directors'
Remuneration Report.
Non-underlying items in the year of £0.9m (FY2023: £0.8m) refer to the
amortisation of intangible assets in respect of the acquisition of Clarke
& Clarke in October 2016 and the restructuring and reorganisation of
Anstey. Please refer to note 7(b) for further 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 21% (FY2023: 19%).
Capital expenditure
Capital expenditure in the year totalled £3.3m (FY2023: £4.8m). We continue
to focus our investment on digital printing technology, across both of our
factories, and in projects that reduce our environmental impact and support
our Live Beautiful sustainability strategy. Significant investments in the
year included a new, more efficient Steamer at Standfast & Barracks, and
the commissioning of our new Durst Digital Wallpaper Printer at Anstey.
The reduced level of spend compared to FY2023 was due to delays in a number of
planned projects including the installation of solar panels and the new ERP
system at Standfast and the relocation of the Group's head office, all of
which will now be completed in FY2025.
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 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, Sainsbury/Habitat and envogue. As a result, on 31 January
2024, minimum guaranteed licensing receivables due after more than one year
grew to £7.3m (FY2023: £2.6m) and those due within one year grew to £2.1m
(FY2023: £1.4m).
Inventories
Despite cost increases driven by the continued impact of salary, utility, and
raw material inflation for both our in-house factories and third-party
suppliers, net inventories fell by £1.1m ending the year at £26.7m compared
to £27.8m for FY2023.
Now that our SKU reduction strategy has been completed, we have been able to
reduce our investment in finished goods inventory whilst also increasing the
availability of our best-selling ranges. Reduced production volumes in our
factories has meant that raw material and work-in-progress levels remain above
their optimum level and this will be an area of focus for us in FY2025.
Trade receivables
Trade receivables declined to £10.8m (FY2023: £12.0m) reflecting the lower
level of Brand and Manufacturing sales.
Our business model means that most of our customers do not hold inventory.
We are able to quickly react to any aged accounts in order to mitigate
potential credit risks. As a result, despite the current economic environment,
we have experienced limited bad debts in the last year.
The ageing profile of trade debtors shows that the majority of customers are
close to terms although the wider economy presents an enhanced level of credit
risk. In addition to specific provisions against individual receivables, a
provision has been made of £0.6m (FY2023: £0.9m), which is a collective
assessment of the risk against non-specific receivables calculated in
accordance with IFRS 9.
Cash position and banking facilities
Net cash from operating activities was £9.1m (FY2023: £5.6m).
The principal driver for the year-on-year improvement was a £1.1m fall in
inventory compared to a £4.9m increase in FY2023.
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 creates a requirement to put in place a limited level
of hedging contracts against the US dollar surplus that is expected to arise.
The Group's banking facilities are provided by Barclays Bank plc. The Group
has a £10.0m multi-currency revolving credit facility which was renewed in
February 2024. The agreement also includes a £7.5m 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.
Deficit contribution schedules have been agreed with the schemes' trustees.
The Group will continue making cash contributions, at levels similar to
historical amounts, 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. The
Group has reported a net liability of £0.9m on 31 January 2024 compared with
a £2.4m net liability on 31 January 2023.
Dividend
During the financial year, an interim dividend of 0.75p per share was paid on
2 November 2023. A final dividend of 2.75p is now proposed taking the full
year dividend to 3.50p. This payment will be made on 9 August 2024 to the
shareholders registered on the Company's register on 12 July 2024 if approved
at the Company's forthcoming Annual General Meeting, with an ex-dividend date
of 11 July 2024. The Board remains 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
uncertain political and economic environment that we are operating in. In our
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
23 April 2024
Consolidated Income Statement
Year ended 31 January 2024
Note 2024 2023
£000 £000
Revenue 3 108,636 111,978
Cost of sales (34,954) (37,761)
Gross profit 73,682 74,217
Net operating (expenses)/income:
Distribution and selling expenses (25,320) (25,043)
Administration expenses (43,559) (42,997)
Other operating income 4 4,932 4,470
Profit from operations 9,735 10,647
Finance income 847 445
Finance costs (228) (152)
Net finance income 5 619 293
Profit before tax 10,354 10,940
Tax expense 6 (2,157) (2,115)
Profit for the year attributable to owners of the parent 8,197 8,825
Earnings per share - Basic 7 11.46p 12.42p
Earnings per share - Diluted 7 11.34p 12.31p
Adjusted earnings per share - Basic* 7 13.74p 14.18p
Adjusted earnings per share - Diluted* 7 13.59p 14.08p
* These are alternative performance measures.
All of the activities of the Group are continuing operations.
Consolidated Statement of Comprehensive Income
Year ended 31 January 2024
2024 2023
£000 £000
Profit for the year 8,197 8,825
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension schemes (116) (6,981)
Deferred tax (charge)/credit relating to pension scheme liabilities (404) 1,745
Corporation tax credit relating to pension scheme contributions 399 -
Investment-related defined benefit pension costs (218) -
Cash flow hedge (86) 112
Total items that will not be reclassified to profit or loss (425) (5,124)
Items that may be reclassified subsequently to profit or loss
Currency translation differences (402) 429
Other comprehensive expense for the year, net of tax (827) (4,695)
Total comprehensive income for the year attributable to the owners of the 7,370 4,130
parent
Consolidated Balance Sheet
As at 31 January 2024
31 January 31 January
2024 2023
£000 £000
Non-current assets
Intangible assets 26,695 26,448
Property, plant and equipment 12,444 12,619
Right-of-use assets 4,986 4,577
Minimum guaranteed licensing receivables 7,304 2,637
51,429 46,281
Current assets
Inventories 26,706 27,774
Trade and other receivables 13,996 16,327
Minimum guaranteed licensing receivables 2,144 1,433
Financial derivative instruments 26 112
Cash and cash equivalents 16,342 15,401
59,214 61,047
Total assets 110,643 107,328
Current liabilities
Trade and other payables (14,077) (16,280)
Corporation tax payable (806) (6)
Lease liabilities (1,450) (1,701)
Provision for liabilities and charges (1,437) -
(17,770) (17,987)
Net current assets 41,444 43,060
Non-current liabilities
Lease liabilities (3,696) (3,421)
Deferred income tax liabilities (1,747) (1,121)
Retirement benefit obligations (897) (2,446)
Provision for liabilities and charges - (1,037)
(6,340) (8,025)
Total liabilities (24,110) (26,012)
Net assets 86,533 81,316
Equity
Share capital 717 715
Share premium account 18,682 18,682
Retained earnings 27,396 21,779
Other reserves 39,738 40,140
Total equity 86,533 81,316
Consolidated Cash Flow Statement
Year ended 31 January 2024
2024 2023
£000 £000
Cash flows from operating activities
Profit from operations 9,735 10,647
Intangible asset amortisation 817 1,493
Property, plant and equipment depreciation and impairment 2,333 2,429
Right-of-use asset depreciation 2,381 2,407
Loss on disposal of fixed assets - 86
Share-based payment charge 480 493
Defined benefit pension charge 360 500
Employer contributions to pension schemes (2,314) (2,382)
Decrease/(increase) in inventories 1,068 (4,911)
Decrease in trade and other receivables 2,000 28
Increase in minimum guaranteed licensing receivables (4,747) (1,231)
Decrease in trade and other payables (2,611) (2,111)
Increase/(decrease) in provision for liabilities and charges 400 (822)
Tax paid (810) (1,009)
Net cash from operating activities 9,092 5,617
Cash flows from investing activities
Finance income received 216 28
Purchase of intangible assets (1,064) (686)
Purchase of property, plant and equipment (2,195) (4,103)
Net cash used in investing activities (3,043) (4,761)
Cash flows from financing activities
Repayment of lease liabilities (2,434) (1,984)
Interest paid (17) -
Repurchase of shares vesting from share-based payment - (430)
Dividends paid (2,501) (2,484)
Net cash used in financing activities (4,952) (4,898)
Net increase/(decrease) in cash and cash equivalents 1,097 (4,042)
Net foreign exchange movement (156) 393
Cash and cash equivalents at beginning of year 15,401 19,050
Cash and cash equivalents at end of year 16,342 15,401
Consolidated Statement Of Changes in Equity
Year ended 31 January 2024
Attributable to owners of the parent
Share capital Share premium account Retained earnings Other Total equity
reserves
£000 £000 £000
£000
£000
Balance at 1 February 2022 710 18,682 20,610 39,711 79,713
Profit for the year - - 8,825 - 8,825
Other comprehensive income/(expense):
Remeasurements of defined benefit pension schemes - - (6,981) - (6,981)
Deferred tax credit relating to pension scheme assets - - 1,745 - 1,745
Cash flow hedge - - 112 - 112
Currency translation differences - - - 429 429
Total comprehensive income - - 3,701 429 4,130
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 40,140 81,316
Consolidated Statement Of Changes in Equity
Year ended 31 January 2024
Attributable to owners of the parent
Share capital Share premium account £000 Retained earnings £000 Other reserves Total equity £000
£000 £000
Balance at 1 February 2023 715 18,682 21,779 40,140 81,316
Profit for the year - - 8,197 - 8,197
Other comprehensive income/(expense):
Remeasurements of defined benefit pension schemes - - (116) - (116)
Deferred tax charge relating to pension scheme liabilities - - (404) - (404)
Corporation tax credit relating to pension scheme contributions - - 399 - 399
Investment-related defined benefit pension costs - - (218) - (218)
Cash flow hedge - - (86) - (86)
Currency translation differences - - - (402) (402)
Total comprehensive income/(expense) - - 7,772 (402) 7,370
Transactions with owners, recognised directly in equity:
Dividends - - (2,501) - (2,501)
Issuance of share capital for share-based payment vesting 2 - (2) - -
Share-based payment equity charge - - 422 - 422
Related tax movements on share-based payment - - (74) - (74)
Balance at 31 January 2024 717 18,682 27,396 39,738 86,533
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 brands'
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. Licensing business has grown to become the
third revenue pillar of the Group. 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 2024 and the year ended 31 January 2023 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 2023 have been filed with the Registrar of Companies and
those for the year ended 31 January 2024 will be filed following the Company's
Annual General Meeting.
The auditors' report on the statutory accounts for the year ended 31 January
2024 and the year ended 31 January 2023 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 2023.
Going concern
In the context of the continuing economic and political uncertainties, 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 2026, 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 £10.0m (2023: £12.5m) Revolving Credit Facility ('RCF') which is
linked to two covenants and was renewed on 1 February 2024. These covenants
are tested quarterly at 30 April, 31 July, 31 October and 31 January each year
until the facility matures on 31 January 2029. Throughout the financial year
and up to the date of this report, the Company has met all required covenant
tests and maintained headroom of over £5m. Assuming the new facility applied
on 31 January 2024, the total headroom of the Group at 31 January 2024 was
£26.3m (2023: £27.9m), including cash and cash equivalents of £16.3m (2023:
£15.4m) and the committed facility of £10.0m (2023: £12.5m). The Group has
access to an uncommitted accordion facility of £7.5m (2023: £5.0m).
A Management Base Case ('MBC') model has been prepared, together with
alternative stress tested scenarios, given the uncertainties regarding the
impact of economic difficulties (including continuing inflationary pressures
and high interest rates) and a lack of consumer confidence (with pending
general elections in several core markets especially the UK and the USA).
These scenarios indicate that the Group 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 Group. 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 21 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.
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. Details of the
estimates and assumptions applied, and carrying amounts of retirement benefit
obligations and pension assets, are set out in the note to the consolidated
financial statements.
b) Impairment of non-financial assets
The Group tests annually whether goodwill or its indefinite life intangible
asset have 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 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 11.18% (2023: 10.00%). The discount rate
used is the same across all segments.
The Group has used formally approved budgets for the first two years (2023:
two years) of its VIU calculation, with extrapolation beyond the last explicit
year using an assumption of growth for future years at 2% (2023: 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 is
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.
c) Absorption of overhead into inventory
The Group determines the basis of allocation of fixed production overhead
based on the actual performance of the manufacturing components of the Group
and arms-length sales prices when actual performance is considered to
approximate normal capacity. Where actual performance in the year is not
considered to represent normal levels, the Group uses the next year's budgeted
results to ensure operating inefficiencies are not included in the carrying
value of inventory.
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 of
Morris & Co., Sanderson, Zoffany, Clarke & Clarke, Harlequin and Scion
brands.
· Licensing - comprising the licensing activities of Morris & Co.,
Sanderson, Zoffany, Clarke & Clarke, Harlequin and Scion brands. Licensing
business formed part of the Brands business previously, but is now segmented
with its own revenue and profit stream to highlight its significance to the
Group's strategy.
· 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, stock consolidation adjustments in Brands and eliminations
of inter-segment items, and are presented within 'unallocated'.
a) Principal measures of profit and loss - Income Statement segmental
information
Year ended 31 January 2024 Brands Licensing Manufacturing Unallocated Total
£000 £000 £000 £000 £000
UK revenue 37,902 6,424 11,900 - 56,226
International revenue 40,870 4,496 7,044 - 52,410
Revenue - external 78,772 10,920 18,944 - 108,636
Revenue - internal - - 16,065 (16,065) -
Total revenue 78,772 10,920 35,009 (16,065) 108,636
Profit/(loss) from operations 642 10,920 (1,002) (825) 9,735
Net finance income/(expense) (98) 631 (10) 96 619
Profit/(loss) before tax 544 11,551 (1,012) (729) 10,354
Tax expense - - - (2,157) (2,157)
Profit/(loss) for the year 544 11,551 (1,012) (2,886) 8,197
Year ended 31 January 2023 Brands Licensing Manufacturing Unallocated Total
£000 £000 £000 £000 £000
UK revenue 42,612 4,147 15,024 - 61,783
International revenue 40,800 2,302 7,093 - 50,195
Revenue - external 83,412 6,449 22,117 - 111,978
Revenue - internal - - 16,953 (16,953) -
Total revenue 83,412 6,449 39,070 (16,953) 111,978
Profit/(loss) from operations (restated) 2,336 6,449 2,367 (505) 10,647
Net finance income (restated) (81) 341 - 33 293
Profit/(loss) before tax 2,255 6,790 2,367 (472) 10,940
Tax expense - - - (2,115) (2,115)
Profit/(loss) for the year 2,255 6,790 2,367 (2,587) 8,825
b) Additional segmental revenue information
Brands revenue by geography 2024 2023
£000 £000
United Kingdom 37,902 42,612
North America 21,380 19,762
Northern Europe 9,857 10,809
Rest of the World 9,633 10,229
78,772 83,412
Brands revenue by brand 2024 2023
£000 £000
Clarke & Clarke 22,420 23,577
Morris & Co. 19,073 19,025
Harlequin 13,989 15,757
Sanderson 13,590 14,039
Zoffany 8,174 8,821
Scion 1,288 1,824
Other brands 238 369
78,772 83,412
Manufacturing revenue by division (including internal revenue) 2024 2023
£000 £000
Standfast & Barracks 19,103 20,732
Anstey 15,906 18,338
35,009 39,070
4. Other operating income
Other operating income of £4,932,000 (2023: £4,470,000) comprises
consideration received from the sale of marketing materials to support the
Group's core products.
5. Net finance income
2024 2023
£000 £000
Interest income:
Interest received on bank deposits 216 28
Unwind of discount on minimum guaranteed licensing income 631 341
Total interest received 847 369
Net pension interest income - 76
Total finance income 847 445
Interest expense:
Bank facility fee (34) (22)
Interest paid (17) -
Lease interest (106) (130)
Total interest paid (157) (152)
Net pension interest costs (71) -
Total finance costs (228) (152)
Net finance income 619 293
6. Tax expense
2024 2023
£000 £000
Corporation tax:
- UK current tax 2,168 1,433
- UK adjustments in respect of prior years (186) (278)
- Overseas, current tax 27 198
Corporation tax 2,009 1,353
Deferred tax:
- Current year 356 697
- Adjustments in respect of prior years (208) 65
Deferred tax 148 762
Total tax charge for the year 2,157 2,115
Reconciliation of total tax charge for the year: 2024 2023
£000 £000
Profit on ordinary activities before tax 10,354 10,940
Tax on profit on ordinary activities at 24.03%, pro-rated (2022: 19.00%) 2,488 2,079
Fixed asset differences 1 173
Non-deductible expenditure 6 129
Share-based payment (30) -
Adjustments in respect of prior years - corporation tax (186) (278)
Adjustments in respect of prior years - deferred tax (208) 65
Movement in deferred tax not recognised 41 (246)
Effect of changes in corporation tax rates, including overseas 45 193
Total tax charge for the year 2,157 2,115
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.
2024 2023
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 8,197 71,520 11.46 8,825 71,074 12.42
Effect of dilutive securities:
Shares under share-based payment 788 606
Diluted earnings per share 8,197 72,308 11.34 8,825 71,680 12.31
Adjusted underlying basic and diluted earnings per share:
Add back share-based payment charge (including National Insurance) 480 508
Add back defined benefit pension charge 431 424
Add back non-underlying items (see below) 905 772
Tax effect of non-underlying items and other add backs (185) (453)
Adjusted underlying basic earnings per share 9,828 71,520 13.74 10,076 71,074 14.18
Adjusted underlying diluted earnings per share 9,828 72,308 13.59 10,076 71,680 14.08
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.
2024 2023
£000 £000
Statutory profit before tax 10,354 10,940
Amortisation of acquired intangible assets 281 772
Restructuring and reorganisation costs* 624 -
Total non-underlying charge included in statutory profit before tax 905 772
Underlying profit before tax 11,259 11,712
Share-based payment charge 480 508
Defined benefit pension charge 431 424
Adjusted underlying profit before tax 12,170 12,644
* Restructuring and reorganisation costs of £624,000 (2023: £nil). These
relate to the reorganisation of Anstey and the rationalisation of certain
Brands' operational and support functions during the financial year.
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