REG - Sanderson Design Grp - Interim Results
16/10/2024 07:00
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RNS Number : 3202I Sanderson Design Group PLC 16 October 2024
16 October 2024
SANDERSON DESIGN GROUP PLC
("Sanderson Design Group", the "Company" or the "Group")
Interim Results for the six months ended 31 July 2024
Sanderson Design Group PLC (AIM: SDG), the luxury interior design and
furnishings group, announces its unaudited financial results for the six
months ended 31 July 2024.
Financial
highlights
Six months % Change Year ended 31 January
ended 31 July (reported)
2024 2023 2024
(H1 FY25) (H1 FY24) (FY24)
Revenue £50.5m £56.7m (11%) £108.6m
Adjusted underlying profit before tax* £2.2m £6.8m (68%) £12.2m
Adjusted underlying basic EPS* 2.21p 7.39p (70%) 13.74p
Statutory profit before tax £1.5m £6.2m (76%) £10.4m
Statutory profit after tax £1.0m £4.7m (78%) £8.2m
Basic EPS 1.46p 6.58p (78%) 11.46p
Net cash** £9.6m £15.9m (40%) £16.3m
Dividend per share 0.50p 0.75p (33%) 3.5p
*excluding share-based incentives, defined benefit pension charge and
non-underlying items as summarised in note 4b
** Net cash is defined as cash and cash equivalents less borrowings. For the
purpose of this definition, borrowings do not include lease liabilities
· Revenue of £50.5m (H1 FY24: £56.7m), down 11% in reported
currency (down 10% in constant currency), reflecting a challenging market in
the UK and elsewhere whilst growth was delivered in North America
· Licensing performance was in line with Board expectations with
revenue at £4.1m in reported currency against a strong comparator (H1 FY24:
£6.9m) - full year licensing revenue remains on track to be approximately the
same as last year's
· Brand product sales down 8.0% in reported currency (down 7.0% in
constant currency) at £37.2m (H1 FY24: £40.3m), impacted by trading in the
UK, down 14.0%
o Positive performance from the strategic growth opportunity of North
America, with sales up 4.0% in reported currency (up 6.0% in constant
currency)
o Strong sales of the Sanderson brand in North America and Northern Europe, up
29% and 8% respectively in reported currency (up 31% and 11% in constant
currency)
· Third party manufacturing broadly similar to H1 last year at £9.2m
(H1 FY24: £9.5m)
· Adjusted underlying profit before tax of £2.2m (H1 FY24: £6.8m),
reflecting the significant licensing income in the comparator period and the
impact of the challenging consumer environment on brand product sales
· Net cash of £9.6m at 31 July 2024 (31 July 2023: £15.9m; 31 January
2024: £16.3m)
o Decrease in net cash includes a £2.3m one-off payment to facilitate an
insurance buy-in transaction for one of the Group's pension schemes as
announced on 19 June 2024 along with an inventory increase and one-off capital
expenditure items
· Interim dividend of 0.50p per share reflecting the result in the
period (H1 FY24: 0.75p), payable on 29 November 2024 to shareholders on the
register on 25 October 2024. The ex-dividend date is 24 October 2024
Operational highlights
· Licensing agreements signed including two major renewals, with window
coverings company Blinds 2go and rugmaker Brink & Campman, along with
multiple other agreements with large retailers and category specialists
· Important collaboration signed with The Huntington museum in
California in which the Group will launch wallpapers and fabrics based on
unfinished work by William Morris
· Continued emphasis on the Group's US strategy:
o Relationship with Kravet Inc. further strengthened with an agreement for
Kravet Inc. to distribute the Scion brand
o Increasing traction in US licensing agreements, including a newly signed
agreement with Ruggable LLC for the Sanderson brand
o Recent appointment of an SVP of sales
· Exciting product launches in the year to date include Sanderson's
Giles Deacon collection, two collections from Morris & Co. and the recent
launch of the Henry Holland x Harlequin collection
Dianne Thompson, Sanderson Design Group's Chairman, said:
"We remain focused on the strategic growth opportunity of North America, on
careful cost control and on implementing strategic changes to respond to
market conditions and to position the Company for future growth. Licensing has
continued to perform well with a number of new contracts signed in the current
half including an agreement between Ruggable and the Sanderson brand and a
two-year extension with Bedeck.
"Trading conditions at the start of the second half have been more challenging
than expected in almost all territories particularly in the UK and Northern
Europe. Total brand product sales for the first eight months of the current
financial year are -10%, which compares with -9% for the first 22 weeks of the
financial year as announced on 27 June 2024. Delivery of the Board's
expectations is reliant on a projected improvement in trading during the
remainder of the financial year, which includes our important pre-Christmas
selling period."
Analyst meeting and webcast
A meeting for analysts and institutional investors will be held at 9.30 a.m.
today, 16 October 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://webcasting.buchanan.uk.com/broadcast/6698dc6836704318d5bd2fdf
(https://webcasting.buchanan.uk.com/broadcast/6698dc6836704318d5bd2fdf)
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
Investec Bank plc (Nominated Adviser and Joint Broker) +44 (0) 20 7597 5970
David Anderson / Ben Farrow / Lydia Zychowska
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 580 people, and its products are
sold worldwide. It has showrooms in London, New York and Chicago.
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) .
This announcement contains certain forward-looking statements that are based
on management's current expectations or beliefs as well as assumptions about
future events. These are subject to risk factors associated with, amongst
other things, the economic and business circumstances occurring from time to
time in the countries and sectors in which Sanderson Design Group operates. It
is believed that the expectations reflected in these statements are reasonable
but they may be affected by a wide range of variables which could cause actual
results, and Sanderson Design Group's plans and objectives, to differ
materially from those currently anticipated or implied in the forward-looking
statements. Investors should not place undue reliance on any such statements.
Nothing in this announcement should be construed as a profit forecast.
CHIEF EXECUTIVE OFFICER'S STRATEGY AND OPERATIONAL REVIEW
The financial results for the six months ended 31 July 2024 reflect the
challenging consumer environment in the UK and other geographies with the
reduced volume of sales impacting profitability against a strong comparator
that includes two of the largest licensing deals in the Company's history.
During the half year, the Company has continued to pursue its strategy of
focusing on the strategic growth market of North America, on cost control and
on evolving its business model for future growth.
Costs in the business were kept tightly under control in the first half
offsetting inflationary pressures, particularly wage increases which have
averaged 7% a year during the past two years. An initiative to deliver a more
efficient sales model in the UK was completed by the half year end, achieving
annualised savings of approximately £0.6m of which £0.3m will be delivered
in the current financial year.
Group sales in the six-month period were down 11% in reported currency, down
10% in constant currency, at £50.5m (H1 FY24: £56.7m) reflecting the
challenging consumer environment impacting brand product and manufacturing
sales along with the two large licensing deals in the comparator period (which
contributed to accelerated revenue in H1 FY24 of £4.9m).
Our licensing segment performed in line with Board expectations during the
first half year with revenue down 40% at £4.1m (H1 FY24: £6.9m), including
accelerated income of £2.7m (H1 FY24: £5.0m) from new and renewed licensing
agreements signed in the half year. These agreements include two major
renewals, with window coverings company Blinds2go and rugmaker Brink &
Campman, which together represent accelerated income of approximately £2.0m.
In total, more than 10 licensing agreements were signed in the first half with
both large retailers and category specialists.
New licensees include Zara Home with Morris & Co. for a capsule bedding
collection, which launches in January next year for Spring/Summer 2025, Swyft
Home for the Morris & Co. brand on sofas and other furniture, and Pottery
Barn Kids, part of US retailer Williams Sonoma, for a wide range of Morris
& Co. children's homewares and other products. These agreements underline
the continued appeal of the Morris & Co. brand for licensed product whilst
the first products from a new agreement signed in the first half with John
Lewis Partnership for the Sanderson brand, covering a wide range of John Lewis
branded homewares, are expected to launch in Spring 2025.
Sangetsu in Japan delivered a strong performance in the first half following
its launch last year of its Morris & Co. collections. Licensing revenue is
also beginning to gain traction in North America.
We continue in discussions in connection with other licence opportunities and
the Board remains confident that full year licensing revenue remains on track
to be approximately the same as last year.
In addition to out-licensing activities, we have continued to pursue
collaboration opportunities. A particularly exciting collaboration was signed
in March 2024 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 archive includes
more than 50 unfinished designs which the Company is bringing to life and will
begin to launch from September 2025, marking a hugely important moment for
William Morris devotees and a significant opportunity for the Company.
Our strategic segment of North America showed growth of 4.0% in reported
currency, 6.0% in constant currency, at £11.1m (H1 FY24: £10.7m) as we
continue to build our presence in the important US market. A senior vice
president of sales was recently appointed in the US in a newly created role to
drive sales growth. The Sanderson brand has performed particularly well in the
US with sales up 31% in constant currency in the first half driven by enhanced
brand awareness with the Layers of Legacy campaign, last year's Disney Home
and the Giles Deacon collaboration.
The difficult consumer environment in the UK led to domestic brand product
sales being down 14.0% at £16.7m and we have continued to focus on aligning
the business to lower volumes, both in brand products and manufacturing,
mitigating inflationary pressures, while making every effort to support our
customers through this challenging business environment.
Trading in Northern Europe was difficult overall, though Scandinavia,
historically a strong market for the Company, performed well. Brand product
sales in Northern Europe were down 6.0% in reported currency, down 2.0% in
constant currency, at £4.8m. Trading in the Rest of the World was down 9% in
reported and constant currency at £4.6m with a positive performance in Spain
being offset by difficult trading elsewhere.
The Group's net cash balances were £9.6m at 31 July 2024 (31 July 2023:
£15.9m, 31 January 2024: £16.3m) with the strength of our balance sheet
protecting the business during the current macro-economic environment. The
decrease in net cash includes a £2.3m cash payment announced on 19 June 2024
enabling the transfer to an insurer of the liabilities of the Company's Abaris
Holdings Limited Pension Scheme along with one-off capital expenditure items
and a £0.5m inventory build, which is the result of lower than planned sales.
Sustainability
Live Beautiful is the Company's Environmental, Social and Governance strategy
and includes two major commitments: for the Company to be net carbon ZeroBy30
and to be the employer of choice in the interior design and furnishings
industry.
We received Year 6 Planet Mark certification earlier this year for reporting a
reduction in carbon footprint and engaging with stakeholders. We remain on
track to achieve ZeroBy30 through the move to digital printing, investing in a
new steamer at Standfast & Barracks and adapting working patterns along
with other energy efficiency initiatives.
During this year, we have further developed our Work Beautiful strategy, which
is based on building the capabilities of our team and providing the required
infrastructure to enable us to build a successful business where talent
prospers, creativity flourishes and individuals grow.
We have continued to work closely with partners including the Queen Elizabeth
Scholarship Trust and the Royal Warrant Holders Association as well as
pursuing product re-use and repurposing projects and nature and wildlife
initiatives.
OPERATIONAL REVIEW
The table below shows the Group's sales performance in the six months ended 31
July 2024 (H1 FY25), compared with H1 FY24.
Six months ended 31 July (£m) Change (%)
2024 2023 Reported Constant currency
(H1 FY25) (H1 FY24)
Brand product
UK 16.7 19.5 (14.0%) (14.0%)
North America 11.1 10.7 4.0% 6.0%
Northern Europe 4.8 5.1 (6.0%) (2.0%)
Rest of the World 4.6 5.0 (9.0)% (9.0%)
Total Brand product revenue 37.2 40.3 (8.0%) (7.0%)
Manufacturing*
External 9.2 9.5 (2.0%) -
Internal 8.0 7.6 6.0% -
Total Manufacturing revenue 17.2 17.1 1.0% -
Licensing*
Total Licensing revenue 4.1 6.9 (40.0)% -
Intercompany eliminations* (8.0) (7.6) (6.0%) -
TOTAL REVENUE 50.5 56.7 (11.0%) (10.0%)
*does not report in constant exchange rate
The Brands
The Brands segment comprises the international sales of Clarke & Clarke,
Harlequin, Morris & Co., Sanderson, Scion and Zoffany.
Clarke & Clarke
Clarke & Clarke is the Company's biggest selling brand. Its sales in the
half year were £10.6m, a decrease of 9% in reported and 8% in constant
currency compared with the first half last year. The focus is on building
awareness of the brand in the USA through collaborations, such as the
successful collaboration with Breegan Jane, a designer and influencer with a
strong following on social media, and on building the wallpaper offering in
the USA from a low base.
Harlequin
Harlequin, similarly, is a predominantly UK brand and its sales in the half
year were £6.2m, a decrease of 13% in reported currency and in constant
currency, compared with the first half last year. The Harlequin x Henry
Holland collection was launched in August 2024 and this textural capsule
collection from a renowned designer and tastemaker has been well received. A
roadshow last month with Henry Holland in the USA has increased visibility of
the brand in North America and resulted in an enthusiastic initial response
and high levels of sampling.
Morris & Co.
Morris & Co. is our second biggest selling brand in terms of brand product
volume, and it continues to attract substantial licensing income. Morris &
Co.'s brand product sales in the first half were broadly unchanged at £9.2m
(H1 FY24: £9.4m). The brand had two collection launches in the first half,
Bedford Park and Morris & Friends, both of which have been well received.
The brand continues to perform well in the US and has an exciting pipeline of
brand product and licensed product launches including The Huntington
collaboration mentioned earlier.
Sanderson
The Sanderson brand reported growth in the first half with sales of £7.0m, up
1% in reported currency and 3% in constant currency compared with the first
half last year. The launch of the Sanderson capsule collaboration with Giles
Deacon was highly successful and continues to gain traction, particularly in
the US. Sales of the Sanderson brand are up strongly in North America and
Northern Europe, up 31% and 11% respectively in constant currency, responding
to the strategic emphasis on driving the brand's growth. The wallpapers and
fabrics in the Disney Home x Sanderson collection are selling well and
licensed products based on the designs have already been launched with John
Lewis Partnership selling cushions and a range for children's rooms. The
Disney Home x Sanderson collection with H&M Home is expected to launch
later this year.
Scion
Scion is predominantly a licensing brand, and its licensing revenue makes a
strong contribution to the Group. Its products are also sold from a
direct-to-consumer website, scionliving.com. Sales in the half year were
broadly similar to the first half last year at £0.6m (H1 FY24: £0.7m). As
recently announced, Scion wallpapers and fabrics are now distributed
exclusively in the USA by Kravet Inc., benefiting from Kravet Inc.'s new
initiative to showcase smaller boutique lines throughout its showroom network.
Zoffany
Zoffany, our high-end luxury brand, had sales in the first half of £3.5m,
down 21% in reported currency and down 19% in constant currency compared with
the first half last year. This reflects a major residential project in the USA
in the prior year The pipeline of contract projects in the USA is strong and
we expect some conversion in the current half year.
Manufacturing
Our Manufacturing segment forms a core part of our value proposition as an
integrated design company that showcases British creativity and craft. We
benefit from the full range of printing techniques with the share of digital
printing rising significantly, now over 50%, and creating new opportunities
for the business. We continue to consider the optimal shape of our
manufacturing operations with the dual objectives of delivering a highly
efficient business segment for the Group and the ideal partner for our
industry.
During the half year, third party manufacturing at £9.2m was down 2.0%
compared with the first half last year owing to a lower level of repeat orders
as a result of the UK consumer environment.
At Anstey, our wallpaper factory, the percentage of digital wallpaper printing
compared with traditional techniques decreased to 19% of the factory's output
during the first half (H1 FY24: 22%) and is currently running at about 27%.
Digital printing at Standfast, our fabric printing factory, represented 78% of
the factory's output during the first half (H1 FY23: 76%).
Current order intake remains encouraging, particularly from US customers
STRATEGY UPDATE
As previously communicated, the Company is accelerating its programme of
strategic initiatives to address trading conditions in the UK and position the
Group for growth. These initiatives are summarised below.
· A review started earlier this year of the cost-to-serve in the UK
with the objective of delivering a more efficient sales model was completed in
July with a reduction of 13 roles. The new sales team is in place with renewed
energy and service propositions to benefit the changing customer profile with
more remote and fewer field roles. This initiative achieved annualised savings
of approximately £0.6m of which £0.3m will be delivered in the current
financial year.
· As the proportion of printing moves towards digital, we are
identifying opportunities to make manufacturing more efficient by reducing
lead times and reducing minimum quantities and transferring Group brands from
conventional to digital printing where appropriate. As technology continues to
develop, we are confident further efficiencies will be realised.
· Owing to the changing way that our customers and consumers are
buying products, along with the challenges for traditional channels in the
current economic environment, we are introducing an omnichannel solution as
part of the digital transformation of the business. An example of this is
Morris & Co.'s online shop, which is now live at
https://www.wmorrisandco.com/uk/ (https://www.wmorrisandco.com/uk/) . Initial
reaction to the site, which sells a comprehensive range of Morris & Co.
brand and licensed product and also offers a readymade service, has been
encouraging.
Whilst early progress has been made, we will report further as these strategic
initiatives progress. At the same time, we have exercised rigorous cost
control including a reduction in capital expenditure and discretionary spend.
We recently signed an agreement to move to a smaller, ground floor showroom at
the Design Centre Chelsea Harbour, which will both save cost and enable us to
benefit from greater visibility and footfall.
CURRENT TRADING AND OUTLOOK
We remain focused on the strategic growth opportunity of North America, on
careful cost control and on implementing strategic changes to respond to
market conditions and to position the Company for future growth. Licensing has
continued to perform well with a number of new contracts signed in the current
half including an agreement between Ruggable and the Sanderson brand and a
two-year extension with Bedeck.
Trading conditions at the start of the second half have been more challenging
than expected in almost all territories particularly in the UK and Northern
Europe. Total brand product sales for the first eight months of the current
financial year are -10%, which compares with -9% for the first 22 weeks of the
financial year as announced on 27 June 2024. Delivery of the Board's
expectations is reliant on a projected improvement in trading during the
remainder of the financial year, which includes our important pre-Christmas
selling period.
CHIEF FINANCIAL OFFICER'S REVIEW
Key financial indicators
We measure and monitor key performance and financial indicators across the
Group.
Six months ended 31 July
2024 2023
Revenue (£m) 50.5 56.7
Profit before tax (£m) 1.5 6.2
Profit before tax (%) 2.9% 10.9%
Basic earnings per share (pence) 1.46p 6.58p
Adjusted underlying profit before tax* (£m) 2.2 6.8
Adjusted underlying profit before tax* (%) 4.3% 12.0%
Adjusted underlying basic earnings per share* (pence) 2.21p 7.39p
Net cash (£m) 9.6 15.9
Inventory (£m) 27.2 26.2
Capital expenditure (£m) 2.6 1.6
Revenue
Reported revenue for the six months ended 31 July 2024 was £50.5m compared
with £56.7m in H1 FY24.
Six months ended 31 July (£m)
Revenue 2024 2023 Change
Brand Product 37.2 40.3 (8.0%)
Manufacturing - External 9.2 9.5 (2.0%)
Licensing 4.1 6.9 (40.0%)
Group 50.5 56.7 (11.0%)
Brand product revenue in the first half was impacted by the challenging UK
market, which represents approximately 45% of sales. Revenues in our home
territory were 14% down year-on-year. Performance continues to be better in
the targeted growth market of North America with sales up 6% in constant
currency (4% in reported currency).
Third-party manufacturing at £9.2m was 2% lower than the same period last
year, primarily reflecting reduced demand for repeat orders from customers
operating in the subdued UK consumer environment.
Licensing revenue declined to £4.1m, compared with £6.9m in the same period
last year. This is heavily impacted by an exceptional performance in the prior
year when two major licensing deals, with NEXT and Sainsbury's, contributed to
accelerated income of £4.9m in H1 FY24. This year accelerated income of
£2.7m reflects the signing of new licensees along with renewals and
extensions including those with window coverings company Blinds2go and
rugmaker Brink & Campman which together represent accelerated income of
approximately £2.0m.
Gross profit
Gross profit for the period was £34.8m compared with £38.5m in H1 FY24
whilst the gross profit margin at 68.9% represents an increase of 100 basis
points over H1 FY24. Excluding the impact of licence income, which generates
100% gross profit, margins improved by 270 basis points to 66.1% for the
period against 63.4% in H1 FY24.
Six months ended 31 July
2024 2023
Brands and Manufacturing
Revenue (£m) 46.4 49.8
Gross profit (£m) 30.7 31.6
% 66.1% 63.4%
Licensing
Revenue (£m) 4.1 6.9
Gross profit (£m) 4.1 6.9
% 100% 100%
Total
Revenue (£m) 50.5 56.7
Gross profit (£m) 34.8 38.5
% 68.9% 67.9%
Within the Brands division gross margin improvement reflects a lower level of
clearance activity undertaken compared with last year, a shift in market mix
towards the higher margin territory of North America and significantly reduced
sales of lower margin homeware products - with Clarke and Clarke now sold
under licence with Next.
Within our manufacturing division, gross margins have remained largely in line
with H1 FY24. Improved performance at our Anstey wallpaper facility
following the restructuring announced at year-end has been offset by weaker
performance at our Standfast & Barracks fabric factory which has
experienced increased utility prices following the end of our favourable gas
contract which expired in October 2023.
Profit before tax
Profit before tax for the period was £1.5m, down from £6.2m in H1 FY24. The
result was significantly impacted by the £2.8m reduction in H1 licensing
revenue noted above and the reduction in Brand Product revenue.
Six months ended 31 July (£m)
2024 2023
Revenue 50.5 56.7
Gross profit 34.8 38.5
Distribution and selling expenses (14.5) (12.8)
Administration expenses (22.3) (22.1)
Other operating income 3.1 2.4
Finance income - net 0.4 0.2
Profit before tax 1.5 6.2
Distribution and selling expenses increased by £1.7m compared with H1 FY24.
Given the timing of our product launch schedules, patterning and sampling
costs in H1 FY25 have been higher by £1.7m versus H1 FY24 although this was
partially offset by a £0.7m increase in patterning revenues reported as other
operating income.
Administration expenses grew slightly by £0.2m compared with H1 FY24 entirely
down to the restructuring and reorganisation of the UK sales support function
(which is eliminated in arriving at adjusted underlying profit before tax).
We continue to be impacted by increases in the Real Living Wage which has seen
our average salary grow 7% a year during the past two years. We have continued
to implement cost efficiency measures to minimise the impact of this increase.
Adjusted underlying profit before tax
The adjusted underlying profit before tax was £2.2m, down from £6.8m in H1
FY24.
Six months ended 31 July (£m)
2024 2023
Statutory profit before tax 1.5 6.2
Amortisation of acquired intangible assets 0.1 0.1
Restructuring and reorganisation costs 0.3 0.1
Total non-underlying charge included in statutory profit before tax 0.4 0.2
Underlying profit before tax 1.9 6.4
Share-based payment charge 0.1 0.2
Defined benefit pension charge 0.2 0.2
Adjusted underlying profit before tax 2.2 6.8
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.
Non-underlying items in the year of £0.4m (H1 FY24: £0.2m) refer to the
amortisation of intangible assets in respect of the acquisition of Clarke
& Clarke in October 2016 of £0.1m (H1 FY24: £0.1m) and the restructuring
and reorganisation of the UK sales and sales support function of £0.3m (H1
FY24: £0.1m. Please refer to note 4(b) to the financial statements for
further details of the adjusted underlying profit before tax.
Taxation
Tax for the period is charged on profit before tax based on the forecast
effective tax rate for the full year. The estimated effective tax rate (before
adjusting items) for the period was 29.9% (H1 FY24: 23.7%) as a result of
permanent differences such as ineligible depreciation and share-based payment
charges.
Capital expenditure
Capital expenditure in the period totalled £2.6m (H1 FY24: £1.6m). Key
expenditure in the period included continued investment at Standfast and
Barracks (including a new digital pigment printer) and the fitting out of the
Group's new head office and archive at Voysey House.
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 first half of FY25, the group recognised £2.7m of accelerated
licencing income. Despite cash inflows from agreements signed in previous
periods, on 31 July 2024, minimum guaranteed licensing receivables had grown
with the amount due after more than one year at £8.5m (year-end 31 January
2024: £7.3m; H1 FY24: £6.9m) and those due within one year grew to £2.7m
(year-end 31 January 2024: £2.1m; H1 FY24: £1.5m).
Inventories
Net inventories of £27.2m were higher than both H1 FY24 of £26.2m and
year-end 31 January 2024 of £26.7m.
Lower than planned Brand Product sales and reduced production volumes in our
factories has meant that inventories remain above their optimum level, and
this will be an area of focus for us in the remainder of FY25.
Trade and other receivables
Net trade and other receivables increased to £15.6m against the year-end 31
January 2024 of £14.0m. The majority of the balance relates to trade
receivables (H1 FY25: £11.3m, year-end 31 January 2024: £10.8m).
Our business model means that most of our customers do not hold inventory.
We can quickly react to any aged accounts to mitigate potential credit risks.
As a result, despite the current economic environment, we have experienced
limited bad debts in the last year.
The aging profile of trade debtors shows that most 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 (year-end 31 January 2024: £0.6m) which is a
collective assessment of the risk against non-specific receivables calculated
in accordance with IFRS9.
Other receivables (including prepayments) were £4.7m versus £3.2m at 31
January 2024 due to a number of annual costs relating to Insurance and IT
licences being invoiced early in the Group's financial year.
Cash position and banking facilities
Net cash used in operating activities was £3.3m (H1 FY24: net cash from
operating activities: £3.5m).
The principal drivers for the year-on-year decline include a lower level of
Profit from Operations, working capital movements and a £2.1m increase in
pension contributions (see below).
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 period.
Defined benefit pension
The Group operates two defined benefit schemes in the UK. These comprise the
Walker Greenbank Pension Plan and the Abaris Holdings Limited Pension Scheme.
These were both closed to new members and to future service accrual from 30
June 2002 and 1 July 2005 respectively.
During the period, the Group has made a one-off contribution of £2.3m to the
Abaris Holdings Pension Scheme to support a Trustee decision to transfer all
of the scheme's risks to an insurer under a buy-in insurance policy
investment. In addition to the agreed cash amount, the insurer has also
received the Abaris Scheme's existing investments. Scheme administration and
advisory costs will continue to be paid by the Group over the life of the
pension scheme but the core financial and demographic risks associated with
funding member benefits has transferred to the insurer. The ongoing costs will
not impact the Group's adjusted profit before tax. The agreement means that
the Group will no longer be required to fund shortfalls to the Abaris Scheme,
which might arise from changes in market conditions.
Contributions to the Walker Greenbank Pension Plan will continue based on the
deficit contribution schedules previously agreed with the schemes' trustees.
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 surplus of £1.1m on 31 July 2024 compared with a £0.9m
net liability on 31 January 2024.
Dividend
A final dividend of 2.75p in respect of the year ended 31 January 2024 was
paid on 9 August 2024 to the shareholders on the Company's register on 12 July
2024.
The Board is announcing an interim dividend, reflective of the result achieved
in the period, of 0.50p for the six months ended 31 July 2024 (H1 FY24:
0.75p), payable on 29 November 2024 to shareholders on the register on 25
October 2024. The ex-dividend date is 24 October 2024.
Capital allocation policy
Capital investment required in the coming years will be focused on boosting
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. As
noted above, we have taken steps to reduce the risk of one of the schemes and
will continue to look at whether there are appropriate actions which could be
taken to help reduce the risk of the Walker Greenbank Pension Plan 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 interim financial statements. Further details of the review are disclosed
in note 1 to the interim financial statements.
Unaudited Consolidated Income Statement
For the six months ended 31 July 2024
Note 6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
Revenue 2 50,547 56,689
Cost of sales (15,736) (18,198)
Gross profit 34,811 38,491
Net operating (expenses)/income:
Distribution and selling expenses (14,534) (12,820)
Administration expenses (22,343) (22,079)
Other operating income 3,106 2,363
Profit from operations 2 1,040 5,955
Finance income 582 345
Finance costs (131) (148)
Net finance income 451 197
Profit before tax 1,491 6,152
Tax expense 3 (446) (1,453)
Profit for the period attributable to owners of the parent 1,045 4,699
Earnings per share - Basic 4 1.46 6.58
Earnings per share - Diluted 4 1.45 6.52
Adjusted earnings per share - Basic* 4 2.21 7.39
Adjusted earnings per share - Diluted* 4 2.20 7.33
* These are alternative performance measures.
All of the activities of the Group are continuing operations.
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 31 July 2024
6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
Profit for the period 1,045 4,699
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension schemes (1,024) 121
Deferred tax charge relating to pension scheme liabilities (504) (30)
Corporation tax credit relating to pension scheme contributions 811 -
Investment-related defined benefit pension costs (201) -
Cash flow hedge 7 (61)
Total items that will not be reclassified to profit or loss (911) 30
Items that may be reclassified subsequently to profit or loss
Currency translation losses (35) (251)
Other comprehensive expense for the period, net of tax (946) (221)
Total comprehensive income for the period attributable to the owners of the 99 4,478
parent
Unaudited Consolidated Balance Sheet
As at 31 July 2024
31 July 2024 £000 31 January 2024 £000
Non-current assets
Intangible assets 26,896 26,695
Property, plant and equipment 13,248 12,444
Right-of-use assets 11,134 4,986
Retirement benefit surplus 1,120 -
Minimum guaranteed licensing receivables 8,530 7,304
60,928 51,429
Current assets
Inventories 27,228 26,706
Trade and other receivables 15,598 13,996
Minimum guaranteed licensing receivables 2,676 2,144
Corporation tax debtor 248 -
Financial derivative instruments 33 26
Cash and cash equivalents 9,556 16,342
55,339 59,214
Total assets 116,267 110,643
Current liabilities
Trade and other payables (14,645) (14,077)
Corporation tax payable - (806)
Lease liabilities (1,646) (1,450)
Provision for liabilities and charges (502) (1,437)
(16,793) (17,770)
Net current assets 38,546 41,444
Non-current liabilities
Lease liabilities (9,978) (3,696)
Deferred income tax liabilities (2,143) (1,747)
Retirement benefit obligations - (897)
Provision for liabilities and charges (650) -
(12,771) (6,340)
Total liabilities (29,564) (24,110)
Net assets 86,703 86,533
Equity
Share capital 718 717
Share premium account 18,682 18,682
Retained earnings 27,600 27,396
Other reserves 39,703 39,738
Total equity 86,703 86,533
Unaudited Consolidated Cash Flow Statement
For the six months ended 31 July 2024
6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
Cash flows from operating activities
Profit from operations 1,040 5,955
Intangible asset amortisation 388 368
Property, plant and equipment depreciation 1,150 1,164
Right-of-use asset depreciation 1,249 1,167
Share-based payment charge 65 181
Defined benefit pension charge 185 164
Employer contributions to pension schemes (3,412) (1,355)
(Increase)/decrease in inventories (522) 1,526
(Increase)/decrease in trade and other receivables (1,617) 475
Increase in minimum guaranteed licensing receivables (1,325) (4,042)
Increase/(decrease) in trade and other payables 592 (1,829)
(Decrease)/increase in provision for liabilities and charges (285) 100
Tax paid (823) (418)
Net cash (used in)/from operating activities (3,315) 3,456
Cash flows from investing activities
Finance income received 134 80
Purchase of intangible assets (589) (219)
Purchase of property, plant and equipment (1,962) (1,404)
Net cash used in investing activities (2,417) (1,543)
Cash flows from financing activities
Repayment of lease liabilities (1,047) (1,281)
Interest paid (14) -
Net cash used in financing activities (1,061) (1,281)
Net (decrease)/increase in cash and cash equivalents (6,793) 632
Net foreign exchange movement 7 (174)
Cash and cash equivalents at beginning of period 16,342 15,401
Cash and cash equivalents at end of period 9,556 15,859
Unaudited Consolidated Statement Of Changes in Equity
For the six months ended 31 July 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 2023 715 18,682 21,779 40,140 81,316
Profit for the period - - 4,699 - 4,699
Other comprehensive income/(expense):
Remeasurements of defined benefit pension schemes - - 121 - 121
Deferred tax charge relating to pension scheme assets - - (30) - (30)
Cash flow hedge - - (61) - (61)
Currency translation losses - - - (251) (251)
Total comprehensive income - - 4,729 (251) 4,478
Transactions with owners, recognised directly in equity:
Share-based payment equity charge - - 181 - 181
Related tax movements on share-based payment - - (76) - (76)
Balance at 1 August 2023 715 18,682 26,613 39,889 85,899
Profit for the period - - 3,498 - 3,498
Other comprehensive income/(expense):
Remeasurements of defined benefit pension schemes - - (237) - (237)
Deferred tax charge relating to pension scheme liabilities - - (374) - (374)
Corporation tax credit relating to pension scheme contributions - - 399 - 399
Investment-related defined benefit pension costs - - (218) - (218)
Cash flow hedge - - (25) - (25)
Currency translation losses - - - (151) (151)
Total comprehensive income - - 3,043 (151) 2,892
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 - - 241 - 241
Related tax movements on share-based payment - - 2 - 2
Balance at 31 January 2024 717 18,682 27,396 39,738 86,533
*other reserves represent capital reserve, merger reserve and foreign currency
translation reserve
Unaudited Consolidated Statement Of Changes in Equity
For the six months ended 31 July 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 2024 717 18,682 27,396 39,738 86,533
Profit for the period - - 1,045 - 1,045
Other comprehensive income/(expense):
Remeasurements of defined benefit pension schemes - - (1,024) - (1,024)
Investment-related defined benefit pension costs - - (201) - (201)
Deferred tax charge relating to pension scheme liabilities - - (504) - (504)
Corporation tax credit relating to pension scheme contributions - - 811 - 811
Cash flow hedge - - 7 - 7
Currency translation differences - - - (35) (35)
Total comprehensive income/(expense) - - 134 (35) 99
Transactions with owners, recognised directly in equity:
Issuance of share capital for share-based payment vesting 1 - (1) - -
Share-based payment equity charge - - 94 - 94
Related tax movements on share-based payment - - (23) - (23)
Balance at 31 July 2024 718 18,682 27,600 39,703 86,703
*other reserves represent capital reserve, merger reserve and foreign currency
translation reserve
Notes to the Consolidated Financial Statements
1. Basis of preparation
The interim financial statements have been prepared in accordance with the
accounting policies that the Group expects to apply in its annual financial
statements for the year ending 31 January 2025.
The accounting policies adopted in the preparation of these interim financial
statements to 31 July 2024 are consistent with the accounting policies applied
by the Group in its Annual Report and Accounts for the year ended, 31 January
2024.
The interim financial statements should be read in conjunction with the annual
financial statements for the year ended 31 January 2024 prepared in accordance
with UK adopted International Accounting Standards. All comparative
information is for the six-month period ended 31 July 2024, except for the
Balance Sheet information which is as at 31 January 2024.
No new standards and interpretations issued and effective for the period have
had any significant impact on the preparation of the financial statements.
The interim financial statements do not represent statutory accounts for the
purposes of section 434 'Requirements in connection with publication of
statutory accounts' of the Companies Act 2006. The financial information for
the year ended 31 January 2024 is based on the statutory accounts for the
financial year ended 31 January 2024, on which the auditors issued an
unqualified opinion and did not contain a statement under section 498 'Duties
of auditor' of the Companies Act 2006 and have been delivered to the Registrar
of Companies. The interim financial statements for the six-month period ended
31 July 2024 have not been audited.
Critical accounting estimates and judgements
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses. Actual results may differ from these estimates. In preparing
these interim financial statements, the significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the consolidated
financial statements for the year ended 31 January 2024 - going concern
assessment which is explained in further detail below, retirement benefit
pension obligations, impairment of non-financial assets and absorption of
overhead into inventory.
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 interim financial statements have been prepared on the going
concern basis which the Directors consider appropriate for the reasons set out
below.
The Group funds its operations through cash generated by the Group and has
access to a £10.0m (31 January 2024: £10.0m) 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 period and up to the date of this report, the Company has met
all required covenant tests and maintained headroom of over £5.0m (31 January
2024: £5.0m). The total headroom of the Group at 31 July 2024 was £19.6m (31
January 2024: £26.3m), including cash and cash equivalents of £9.6m (31
January 2024: £16.3m) and the committed facility of £10.0m (31 January 2024:
£10.0m). The Group has access to an uncommitted accordion facility of £7.5m
(31 January 2024: £7.5m).
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 high interest rates) and a lack of
consumer confidence (with the pending general election in the US and the
upcoming Chancellor's budget in the UK). 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 15 months from the date of approval of the interim
financial statements. For this reason, they continue to adopt the going
concern basis in preparing the interim financial statements.
Principal risks
The Group's activities expose it to a variety of financial risks: market risk
(including foreign exchange risk and interest rate risk), credit risk and
liquidity risk. The interim financial statements do not include all of the
risk management information and disclosures required in the annual report and
accounts; they should be read in conjunction with the Group's Annual Report
and Accounts on 31 January 2024. Information on the principal risks can be
found on page 43 to 47 of the Group's 2024 Annual Report and Accounts on 31
January 2024 which comprise of competition, trading environment, foreign
exchange, supply chain pressure, recruitment and retention of key employees,
reputation risk, environmental risk, health and safety risk, major incident or
disaster and IT. The Group has aligned its climate-related financial
disclosures to the Climate-related Financial Disclosure Regulations 2022 (SI
2022/31) and reported climate-related risks and opportunities for the first
time in the Group's Annual Report and Accounts on 31 January 2024. There have
been no changes in either the nature of the principal risks or risk management
policies since the year end, however some of the risks have become heightened
during the period.
Approval of interim financial statements
The Board approved the interim financial statements on 15 October 2024.
2. Segmental analysis
The Group is a designer, manufacturer and distributor of luxury interior
furnishings, fabrics and wallpaper. The reportable segments of the Group are
aggregated as follows:
· Brands - comprising the design, marketing, sales and distribution 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, are presented within 'unallocated'.
a) Principal measures of profit and loss - Income Statement segmental
information
Six months to 31 July 2024 Brands Licensing Manufacturing Unallocated Total
£000 £000 £000 £000 £000
UK revenue 16,737 2,207 5,761 - 24,705
International revenue 20,427 1,936 3,479 - 25,842
Revenue - external 37,164 4,143 9,240 - 50,547
Revenue - internal - - 8,016 (8,016) -
Total revenue 37,164 4,143 17,256 (8,016) 50,547
Profit/(loss) from operations before intercompany management charge (283) 4,143 (726) (2,094) 1,040
Profit/(loss) from operations (283) 4,143 (726) (2,094) 1,040
Net finance income/(expense) (103) 433 - 121 451
Profit/(loss) before tax (386) 4,576 (726) (1,973) 1,491
Tax expense - - - (446) (446)
Profit/(loss) for the period (386) 4,576 (726) (2,419) 1,045
Six months to 31 July 2023 Brands Licensing Manufacturing Unallocated Total
£000 £000 £000 £000 £000
UK revenue 19,512 5,296 6,411 - 31,219
International revenue 20,769 1,654 3,047 - 25,470
Revenue - external 40,281 6,950 9,458 - 56,689
Revenue - internal - - 7,576 (7.576) -
Total revenue 40,281 6,950 17,034 (7,576) 56,689
Profit/(loss) from operations before intercompany management charge 1,585 6,950 (485) (2,095) 5,955
Profit/(loss) from operations (444) 6,950 (485) (66) 5,955
Net finance income/(costs) (56) 264 - (11) 197
Profit/(loss) before tax (500) 7,214 (485) (77) 6,152
Tax expense - - - (1,453) (1,453)
Profit/(loss) for the period (500) 7,214 (485) (1,530) 4,699
b) Additional segmental revenue information
Brands revenue by geography 6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
United Kingdom 16,737 19,512
North America 11,071 10,687
Northern Europe 4,788 5,083
Rest of the World 4,568 4,999
37,164 40,281
Brands revenue by brand 6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
Clarke & Clarke 10,562 11,576
Morris & Co. 9,221 9,357
Sanderson 6,967 6,887
Harlequin 6,233 7,185
Zoffany 3,483 4,433
Scion 641 697
Other brands 57 146
37,164 40,281
Manufacturing revenue by division (including internal revenue) 6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
Standfast & Barracks 9,227 8,900
Anstey 8,029 8,134
17,256 17,034
3. Tax expense
6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
Corporation tax:
- UK current tax (558) (1,029)
- UK adjustments in respect of prior period - (256)
- Overseas, current tax (21) (45)
Corporation tax (579) (1,330)
Deferred tax:
- Current period 133 (339)
- Adjustments in respect of prior period - 216
Deferred tax 133 (123)
Total tax charge for the period (446) (1,453)
4. Earnings per share
4. (a) Earnings per share
Basic earnings per share ('EPS') is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number of shares
outstanding during the period, excluding those held in the Employee Benefit
Trust ('EBT') and those held in treasury, which are treated as cancelled. The
adjusted basic earnings per share is calculated by dividing the adjusted
earnings by the weighted average number of shares.
6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
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 1,045 71,785 1.46 4,699 71,468 6.58
Effect of dilutive securities:
Shares under share-based payment 472 592
Diluted earnings per share 1,045 72,257 1.45 4,699 72,060 6.52
Adjusted underlying basic and diluted earnings per share:
Add back share-based payment charge 65 183
Add back defined benefit pension charge 185 164
Add back non-underlying items (see below) 439 269
Tax effect of non-underlying items and other add backs (147) (33)
Adjusted underlying basic earnings per share 1,587 71,785 2.21 5,282 71,468 7.39
Adjusted underlying diluted earnings per share 1,587 72,257 2.20 5,282 72,060 7.33
4. (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.
6 months to 6 months to
31 July 2024 31 July 2023
£000 £000
Statutory profit before tax 1,491 6,152
Amortisation of acquired intangible assets 138 138
Restructuring and reorganisation costs* 301 131
Total non-underlying charge included in statutory profit before tax 439 269
Underlying profit before tax 1,930 6,421
Share-based payment charge 65 183
Defined benefit pension charge 185 164
Adjusted underlying profit before tax 2,180 6,768
* Restructuring and reorganisation costs of £301,000 (31 July 2023:
£131,000). These relate to the rationalisation of certain Brands' operational
and support functions during the financial period.
5. Dividend
A final dividend of 2.75p in respect of the year ended 31 January 2024 was
paid on 9 August 2024 to the shareholders on the Company's register on 12 July
2024.
The Board is announcing an interim dividend of 0.50p for the six months ended
31 July 2024 (H1 FY24: 0.75p), payable on 29 November 2024 to shareholders on
the register on 25 October 2024. The ex-dividend date is 24 October 2024.
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