Preliminary Results

RNS Number : 4707S

ScS Group PLC

03 October 2017

 



For Immediate Release	3 October 2017

ScS Group plc

("ScS" or the "Group")

Preliminary results for the year ended 29 July 2017

Growth delivered, resilience increased

ScS, one of the UK's largest retailers of upholstered furniture and floorings, is pleased to announce its Preliminary Results for the 52 weeks ended 29 July 2017.

Financial highlights:

·      Gross sales improved 4.4% to £349.5m (2016: £334.7m)

·      Revenue improved 4.9% to £333.0m (2016: £317.3m)

·      EBITDA increased 8.4% to £17.4m (2016: £16.0m)

·      Operating profit increased 8.8% to £12.0m (2016: £11.0m)

·      Like-for-like orders declined 0.7% against very strong comparatives

·      Two year like-for-like order intake growth of 14.3%

·      Earnings per share of 23.5p (2016: 21.8p)

·      Free cash flows in the year of £23.6m, including a £12.5m working capital improvement

·      Strong balance sheet with cash of £40.1m (2016: £22.4m) and no debt

·      Recommended final dividend of 9.80p per share, full year dividend of 14.70p per share (2016: 14.50p), an increase of 1.4%

Operational highlights:

·      Strong progress in all four areas of our strategy for growth:

o  Sales density per square foot at our ScS stores increased 3.2% to £226 (2016: £219)

o  Four new stores opened in the year. The Group now trades from 100 ScS stores and operates 27 House of Fraser concessions

o  House of Fraser concession gross sales up 8.3% to £27.4m (2016: £25.3m)

o  Online gross sales up 12.3% to £11.3m (2016: £10.0m)

·      Overall Trustpilot rating improved and 5-star "Excellent" rating maintained

Current trading and outlook:

·      Sales order intake up 3.0% on a like-for-like basis for the 9 weeks to 30 September 2017

·      Trading since the start of the year in line with the Board's expectations

David Knight, Chief Executive Officer of ScS commented:

"We are delighted to be reporting continued sales growth across all areas of the Group for the third year in a row. The core ScS business has continued to focus on providing excellent choice, value and quality for our customers, and I am pleased to see this delivering record results in furniture and flooring sales.

The Group saw a £15.7m (4.9%) increase in revenue in the year to £333.0m (2016: £317.3m). Gross profit increased to £153.7m (2016: £149.1m), EBITDA increased 8.4% to £17.4m (2016: £16.0m) and profit before tax rose 9.9% to £12.0m (2016: £10.9m).

Since the start of the current financial year, trading performance has been in line with our expectations. Furthermore, we believe the Group's increasing resilience will enable us to manage the continued economic uncertainty and take advantage of opportunities."

Enquiries:

ScS Group PLC David Knight, Chief Executive Officer Chris Muir, Chief Financial Officer	c/o Buchanan [phone]
Buchanan Richard Oldworth Madeleine Seacombe	Tel: [phone] [e-mail]

Investor and Analyst Meeting

A meeting for analysts will be held at the office of Buchanan, 107 Cheapside, London, EC2V 6DN on 3 October 2017 commencing at 9.30am. ScS Group plc's Preliminary Results 2017 are available at www.scsplc.co.uk.

An audio webcast will be available on:

http://vm.buchanan.uk.com/2017/scs031017/registration.htm

Notes to Editors

ScS is one of the UK's largest retailers of upholstered furniture and floorings, promoting itself as the "Sofa Carpet Specialist", seeking to offer value and choice through a wide range of upholstered furniture and flooring products. The Group's product range is designed to appeal to a broad customer base with a mid-market priced offering and is currently traded from 100 stores.

The Company's upholstered furniture business specialises primarily in fabric and leather sofas and chairs. ScS sells a range of branded products which are not sold under registered trade marks and a range of branded products which are sold under registered trade marks owned by ScS (such as Endurance and SiSi Italia). The Group also offers a range of third party brands (which include La-Z-Boy, G Plan and Parker Knoll). The Company's flooring business includes carpets, as well as laminate and vinyl flooring.

In 2014 ScS began to operate the furniture and carpet concession ranges for House of Fraser. ScS currently operates in 27 House of Fraser stores across the UK.

CHAIRMAN'S STATEMENT

Following the strong performance in the year ended 30 July 2016, I am very pleased to report further growth across the business for the year ended 29 July 2017, despite challenging economic conditions.

Financial and strategic objectives

The Group continues to pursue the following objectives:

·      Deliver profitable and sustainable growth;

·      Improve the quality of earnings;

·      Improve business resilience through the economic cycle, and

·      Increase shareholder returns.

The business has continued to deliver against these objectives, growing revenue and gross profit, diligently controlling costs and maximising cash flow. I am particularly pleased with this result given the toughening trading environment since the turn of the year, and believe it demonstrates the increasingly resilient business we are building, and the commitment of our Board and staff to achieving the objectives we set.

Reaching the milestone of 100 ScS stores was a further highlight of this financial year, with our new stores in Aberdeen, Thanet, Edinburgh (Straiton) and Plymouth contributing towards the increase in revenue, gross profit and EBITDA. These stores will help the Group continue to target sustainable growth and improve the overall resilience of the business.

Result and dividend

I am pleased to report that the Group delivered a result slightly ahead of market expectations. The first half of the financial year saw the Group trade strongly and continue the momentum from the previous financial year. However, as we noted in our trading outlook in March, the second half of the year brought with it more challenging conditions across the market, with decreased footfall and reduced consumer confidence. Against this backdrop, and very strong prior year comparatives, I am proud of our two-year like-for-like order intake growth of 14.3%. We have also continued to identify and implement various business efficiencies, which have helped to increase our EBITDA margin and resulted in a 7.8% increase in earnings per share (EPS) from 21.8p to 23.5p.

The Group continues to hold no debt, had cash reserves of £40.1m at 29 July 2017 and generated free cash flows in the year of £23.6m, benefiting from a £12.5m working capital movement. Underlying cash flows, together with continued expansion in our store network, show the Group's ability to continue to grow and strengthen its balance sheet.  The Group continues to maintain a £12.0m committed revolving credit facility. This provides  further resilience, whilst also allowing the Group to maximise opportunities as they arise.

Despite the continued uncertain economic environment, the improved operating results year on year, the strength of the Group's balance sheet and the Board's confidence in the outlook for the Group, has resulted in the Board proposing a full year dividend of 14.70p, a 1.4% increase on the full year dividend for 2016. If approved, this would result in a final dividend of 9.80p.

Final thoughts

Finally, I would like to record the Board's thanks to all of our 1,952 team members throughout the business. Particularly against more challenging trading conditions, it is their commitment, expertise and enthusiasm that allows the Group to continue to grow and improve each year, and deliver our mission to provide our customers with excellent service, value and quality.

The Group has a clear strategy for growth, underpinned by strong cash flows and the increasing resilience of the Group's balance sheet. The Group is positioned to take advantage of future opportunities and whilst there remains a level of uncertainty in the wider economy, the Board remains positive about the long-term prospects for the business.

CHIEF EXECUTIVE'S REPORT

Overview

We are delighted to be reporting continued sales growth across all areas of the Group for the third year in a row. The core ScS business has continued to focus on providing excellent choice, value and quality for our customers, and I am pleased to see this delivering record results in furniture and flooring sales. Furthermore, our targeted investment in key growth areas continue to prove successful, with an 8.3% increase in sales from our House of Fraser concessions and 12.3% growth in our online business.

Results

The Group saw a £15.7m (4.9%) increase in revenue in the year to £333.0m (2016: £317.3m). Gross profit increased to £153.7m (2016: £149.1m), EBITDA increased 8.4% to £17.4m (2016: £16.0m) and profit before tax rose 9.9% to £12.0m (2016: £10.9m).

Strategy for growth

The Group continues to focus on four key areas in its strategy for growth:

Area 1 - Increase sales densities

Sales density per square foot at our ScS stores for the last twelve months was £226. This represents an increase of £7 per square foot or 3.2% on the £219 achieved in the 12 months ended 30 July 2016. This increase was achieved by continued focus on the following:

·      The ongoing targeting and maximisation of a branded range of products and the continued development of our flooring offering;

·      Maximising our average order value, with furniture order values rising 1.1% in the year to £1,575, and flooring order values rising 3.5% in the year to £629;

·      Continued investment in our online capability, resulting in both the benefit of direct sales through the website and the indirect benefit of improving the quality of footfall, with customers often entering our stores having already researched their choices. This has ensured that despite decreases in footfall noted industry-wide, customers are more engaged and more likely to place an order;

·      Improving the customer journey, experience and confidence, evidenced by an improved Trustpilot satisfaction score. The Group has over 73,000 reviews and is proud to have improved its overall score and maintained its maximum 5-star "Excellent" rating.

Marketing spend increased to £24.7m in the year (2016: £23.1m) as the Group continued to operate in an increasingly competitive and challenging marketplace, and to drive sales conversion, being the proportion of customers who purchased a product after entering a store, which further increased this year.

Area 2 - Maximise the opportunity with House of Fraser customers

The Group operates 27 House of Fraser concessions, targeting those customers who prefer to shop in department stores and town centres and enabling the Group to access a wider demographic. Despite being integrated into the Group for over three years, gross sales continued to rise strongly in the year, increasing by 8.3% to £27.4m (2016: £25.3m).

Contribution to the Group's EBITDA is a continued focus as these concessions become established, and following their first positive contribution in the prior year, the House of Fraser concession EBITDA continued to strengthen in 2017. As with the ScS store network, individual concession performance is regularly reviewed to ensure all locations make an appropriate level of return.

Both ScS and House of Fraser management teams continue to recognise the ongoing potential that the partnership offers and continually work together on how to improve sales and margins.

Area 3 - Optimise online presence

Whilst relatively large ticket home furnishings continue to be predominantly a store based sale, we know that a high proportion of our customers continue to research our products online before they visit the store to make their final purchase decision. Continued website investment has therefore been a key part of the Group's strategy for growth. In addition, as the Group continues to improve its online presence and provide a higher quality responsive web platform, an increasing number of customers are choosing to make their purchase directly online. This has been supported by continued investment in website development and maintenance of £1.8m (2016: £1.4m) and increased digital marketing spend, which has successfully driven improvements in our website visitor count and conversion.

Online gross sales increased 12.3% to £11.3m (2016: £10.0m).

Area 4 - Achieve strong financial returns from new store openings

During the first half of the financial year, the Group opened four new stores in Aberdeen (September 2016) and Thanet, Edinburgh (Straiton) and Plymouth (all on Boxing Day 2016). All four stores have performed in line with the targets set within their initial investment analysis and have contributed positively to EBITDA in the year.

We now operate from 100 stores across the UK, almost all of which are in modern out of town retail parks, often alongside competing furniture and floorcoverings retailers. A new store in Chelmsford is targeted to open on Boxing Day 2017.

We continue to hold a list of sites identified for potential new stores, and opportunities are consistently pursued and monitored, with plans for further expansion in the coming financial year.

Additionally, we continue to closely monitor the performance of our network and actively manage the portfolio.

Current trading and outlook

Since the start of the current financial year, trading performance has been in line with our expectations. Furthermore, we believe the Group's increasing resilience will enable us to manage the continued economic uncertainty and take advantage of opportunities.

The continued successful self-financed expansion of the ScS network, ongoing growth in the concession agreement with House of Fraser and double digit online growth, together with the Group's strong cash flow dynamics, demonstrate the ability of the Group to maintain a strong financial position and continue to deliver value for our shareholders.

David Knight

Chief Executive Officer

FINANCIAL REVIEW

		Year ended     29 July 2017		Year ended     30 July 2016
		£m		£m
	Gross sales	349.5		334.7
	Revenue	333.0		317.3
	Gross profit	153.7		149.1
	Distribution costs	(16.5)		(15.5)
	Administration expenses	(125.2)		(122.6)
	Total operating expenses	(141.7)		(138.1)
	Operating profit	12.0		11.0
	Net finance costs	-		(0.1)
	Profit before tax	12.0		10.9
	Tax	(2.6)		(2.2)
	Profit after tax	9.4		8.7
	Earnings per share	23.5p		21.8p
	EBITDA	17.4		16.0
Gross sales and revenue

Gross sales increased by £14.8m (4.4%) to £349.5m (2016: £334.7m) and is attributable to:

·      An increase in furniture sales in ScS stores of 3.7% to £270.9m;

·      An increase in flooring sales in ScS stores of 5.0% to £39.9m;

·      An increase in online sales of 12.3% to £11.3m; and

·      An increase in sales from the House of Fraser concession of 8.3% to £27.4m.

Gross sales in the year benefited from three main factors:

·      The increased order intake seen at the end of the previous financial year (which was delivered in this period);

·      The increased sales order intake seen in the first half of the current year, and

·      Four new stores, with gross sales of £7.4m.

Revenue, which represents gross sales less charges relating to interest free credit sales (see note 3 - Segmental Information), increased by 4.9% to £333.0m (2016: £317.3m).

Gross profit

Gross margin (as a percentage of gross sales) in the year was 44.0% (2016: 44.6%). The margin decreased by 0.6% when compared to the previous year largely due to a focus in the year to reduce stocks of older product, which improved store appearance and created a working capital inflow. Quality of earnings remains a key area of focus.

The increased revenue resulted in an increase in gross profit of £4.6m or 3.1%.

Operating profit

Operating profit for the year increased by 8.8% to £12.0m (2016: £11.0m).

Distribution costs

Distribution costs comprise the total cost of the in-house distribution function and includes employment costs, the cost of leasing vehicles and related running costs and property costs (principally rent, rates and utilities) for the ten distribution centres, as well as costs of third party delivery services contracted to support peak delivery periods. Distribution costs expressed as a percentage of revenue for the year were 5.0%, 0.1% higher than the prior year.

As part of the ongoing review of distribution efficiencies, the Group has taken the decision post year-end to close two warehouses in Thanet and West Thurrock and move to a single new warehouse in Basildon. The Group will see the cost benefit of this in the year to 28 July 2018.

Administrative expenses

Administrative expenses comprise:

·      Store operating costs, principally employment costs and property related costs (rent and rates, utilities, store repairs and depreciation of capital investment) and costs associated with the concession agreement with House of Fraser;

·      Marketing expenditure, and

·      General administrative expenditure which includes the employment costs for the directors, senior management and all head office based functions (customer call centre, finance, human resources, IT, merchandising, online sales support, flooring administration, administrative support for House of Fraser concession), company pension contributions, legal and professional costs, insurance, company car costs, IT systems support and telecommunications.

Administration costs for the year totalled £125.2m, compared to £122.6m in the prior year. Administrative costs as a percentage of revenue were 37.6%, compared to 38.6% in the prior year.

The year saw an increase in administrative costs of £2.6m, with the majority of the increase being driven by the following:

·      £1.6m increase (including £0.2m in relation to launch of new stores) in marketing investment;

·      £1.6m reduction in payroll costs resulting from:

o  £4.5m decrease in performance related bonuses;

o  £2.0m increase driven by an inflationary wage increase, resourcing to support growth, succession planning, and

o  £0.9m from new stores;

·      £1.3m rent and rates increase due to the new store openings;

·      £0.4m increase in website development and maintenance costs, and

·      £0.4m increase in depreciation and amortisation.

EBITDA

An analysis of EBITDA is as follows:

		Year ended     29 July 2017	Year ended     30 July 2016
		£m	£m
Operating profit		12.0	11.0
Depreciation		4.8	4.5
Amortisation		0.6	0.5
EBITDA		17.4	16.0

Taxation

The tax charge for the financial year is higher than if the standard rate of corporation tax had been applied, mainly due to charges not deductible for tax purposes, principally depreciation on capital expenditure that does not qualify for capital allowances.

Earnings per share (EPS)

EPS for the year ended 29 July 2017 was 23.5p compared to earnings per share of 21.8p in the previous year.

Cash and cash equivalents

A strong cash flow has been generated from operations reflecting the negative working capital business model whereby:

·      For cash/card sales, customers pay deposits at the point of order and settle outstanding balances before delivery;

·      For consumer credit sales, the loan provider pays ScS approximately seven days after delivery, and

·      The majority of product suppliers are paid at the end of the month following the month of delivery into the distribution centres.

A summary of the Group's cash flows is shown below:

		Year ended     29 July 2017	Year ended     30 July 2016
		£m	£m
Cash generated from operating activities		30.1	13.2
Net capital expenditure		(5.2)	(3.4)
Net taxation and interest payments		(1.3)	(2.2)
Free cash flow		23.6	7.6
Dividends		(5.9)	(6.3)
Net cash generated		17.7	1.3

Cash generated from operating activities in the year benefited by £10.6m from the timing of the July supplier payment run due to the slightly earlier year-end date.

Net capital expenditure in the year includes £3.1m on four new stores (2016: £0.7m on one new store).

Dividend

An interim dividend of 4.90p per ordinary share was paid in May 2017. The Group has continued to strengthen and deliver very positive results, with very strong cash generation and a balance sheet that is growing in resilience. Despite the continued uncertain economic environment, the Board is confident in the outlook for the Group and therefore proposes a full year dividend of 14.70p, a 1.4% increase on the full year dividend for 2016. If approved, this would result in a final dividend of 9.80p. 

Consolidated statement of comprehensive income for the year ended 29 July 2017

	Note	2017                 £'000	2016                 £'000
Gross sales	3	349,502	334,660
Revenue	3	332,965	317,305
Cost of sales		(179,224)	(168,177)
Gross profit		153,741	149,128
Distribution costs		(16,503)	(15,491)
Administrative expenses		(125,249)	(122,622)
Operating profit		11,989	11,015
Finance costs	4	(96)	(217)
Finance income	5	70	86
Net finance costs		(26)	(131)
Profit before taxation		11,963	10,884
Taxation	6	(2,561)	(2,155)
Profit and total comprehensive income for the year attributable to owners of the parent		9,402	8,729
Earnings per share (expressed in pence per share):
Basic	7	23.5p	21.8p
Diluted	7	22.9p	21.3p

All results arise from continuing operations. There are no other sources of comprehensive income.

Consolidated statement of changes in equity for the year ended 29 July 2017

 

		Share capital	Share premium	Capital Redemption reserve	Merger reserve	Retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000
At 26 July 2015		37	-	13	25,511	1,219	26,780
Total comprehensive income		-	-	-	-	8,729	8,729
Share-based payments		-	-	-	-	437	437
Proceeds from shares issued		3	16	-	-	-	19
Dividend paid		-	-	-	-	(6,349)	(6,349)
At 30 July 2016		40	16	13	25,511	4,036	29,616
At 31 July 2016		40	16	13	25,511	4,036	29,616
Total comprehensive income		-	-	-	-	9,402	9,402
Share-based payments		-	-	-	-	154	154
Dividend paid		-	-	-	-	(5,893)	(5,893)
At 29 July 2017		40	16	13	25,511	7,699	33,279

Consolidated statement of financial position as at 29 July 2017

	Note	2017 £'000	2016 £'000
Non-current assets
Intangible assets		1,077	1,145
Property, plant and equipment		23,878	23,501
Total non-current assets		24,955	24,646
Current assets
Inventories		22,084	23,188
Trade and other receivables		9,699	9,014
Cash and cash equivalents		40,126	22,379
Total current assets		71,909	54,581
Total assets		96,864	79,227
Current liabilities
Current income tax liabilities		2,121	210
Trade and other payables	8	53,794	42,232
Total current liabilities		55,915	42,442
Non-current liabilities
Trade and other payables		7,140	6,068
Deferred tax liability		530	1,101
Total non-current liabilities		7,670	7,169
Total liabilities		63,585	49,611
Capital and reserves attributable to the owners of the parent
Share capital		40	40
Share premium		16	16
Capital redemption reserve		13	13
Merger reserve		25,511	25,511
Retained earnings		7,699	4,036
Equity attributable to the owners of the parent		33,279	29,616
Total equity		33,279	29,616
Total equity and liabilities		96,864	79,227

Consolidated statement of cash flows for the year ended 29 July 2017

	2017 £'000	2016 £'000
Cash flows from operating activities
Profit before taxation	11,963	10,884
Adjustments for:
Depreciation of property plant and equipment	4,806	4,478
Amortisation of intangible assets	599	556
Share-based payments	154	437
Finance costs	96	217
Finance income	(70)	(86)
	17,548	16,486
Changes in working capital:
Decrease / (increase) in inventories	1,104	(2,483)
Increase in trade and other receivables	(685)	(127)
Increase / (decrease) in trade and other payables	12,123	(658)
Cash generated from operating activities	30,090	13,218
Interest paid	(96)	(217)
Income taxes paid	(1,220)	(2,049)
Net cash flow generated from operating activities	28,774	10,952
Cash flows used in investing activities
Purchase of property, plant and equipment	(4,728)	(2,974)
Payments to acquire intangible assets	(476)	(410)
Interest received	70	86
Net cash flow used in investing activities	(5,134)	(3,298)
Cash flows used in financing activities
Dividends paid	(5,893)	(6,349)
Proceeds of share issue	-	19
Net cash flow used in financing activities	(5,893)	(6,330)
Net increase in cash and cash equivalents	17,747	1,324
Cash and cash equivalents at beginning of year	22,379	21,055
Cash and cash equivalents at end of year	40,126	22,379

Notes to the audited consolidated financial statements

1.             General information

ScS Group plc (the "Company") is a company limited by shares incorporated and domiciled in England, within the UK (Company registration number 03263435). The Company's principal activity is to act as a holding company for its subsidiaries. The Company and its subsidiaries' (the 'Group') principal activity is the provision of furniture and flooring, trading under the names ScS and "House of Fraser Made to Order Sofas, Furniture and Flooring".

2.             Accounting Policies

Basis of preparation

The Board approved the preliminary announcement on 2 October 2017.

The results for the year ended 29 July 2017, including comparative financial information, have been prepared in accordance with EU endorsed International Financial Standards ("IFRS"), IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. ScS Group plc will publish full financial statements that comply with IFRS in October 2017.

The financial information does not constitute the Company's statutory accounts for the years ended 2016 or 2017, but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) of the Companies Act 2006.

The financial information presented in respect of the year ended 29 July 2017 has been prepared on a basis consistent with that presented in the annual report for the year ended 30 July 2016.

Going concern

The Group generates strong cash flows, reflecting the negative working capital requirements of the business model. In addition, the Group has a committed £12.0m revolving credit facility in place. The Group's forecasts and projections show that the Group has adequate resources to continue in operational existence for the foreseeable future.

Having considered the Group's current trading and cash flow generation including severe but plausible stress testing scenarios, the Directors have concluded that it is appropriate to prepare the Group Financial statements on a going concern basis.

New standards, amendments and interpretations

Amendments to and interpretation of standards effective and adopted by the Group will be disclosed in the 2017 annual financial statements.

Critical accounting judgements and estimates

The preparation of the financial statements under IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Relevant accounting judgement and estimates will be disclosed in the 2017 annual financial statements.

3.             Segment information

The Directors have determined the operating segments based on the operating reports reviewed by the senior management team (the Executive Directors and the other Directors of the trading subsidiary, A. Share & Sons Limited) that are used to assess both performance and strategic decisions. The Directors have identified that the senior management team are the chief operating decision makers in accordance with the requirements of IFRS 8 'Segmental reporting'.

The Directors consider the Group operates one type of  business generating gross sales and revenue from the retail of furniture and flooring. All gross sales and revenue, profit before taxation, assets and liabilities are attributable to the principal activity of the Group and other related services. All gross sales and revenues are generated in the United Kingdom.

An analysis of gross sales and revenue is as follows:

				Year ended 29 July 2017 £'000	Year ended 30 July 2016 £'000
Sale of goods				328,381	312,776
Associated sale of warranties				21,121	21,884
Gross sales				349,502	334,660
Less: costs of interest free credit				(16,537)	(17,355)
Revenue				332,965	317,305

4.             Finance costs                       

		Year ended 29 July 2017                 £'000	Year ended 30 July 2016 £'000
Bank facility renewal fees		-	71
Bank facility non-utilisation fees		96	146
		96	217

5.             Finance income                               

		Year ended 29 July 2017                 £'000	Year ended 30 July 2016 £'000
Bank interest received		70	86

6.             Taxation

The total tax charge for the financial year of £2.6m (2016: £2.2m) comprises a corporation tax charge of £3.2m (2016: £1.6m) and a deferred tax credit of £0.6m (2016: charge £0.6m). The tax charge is an effective rate of 21.4%, which is higher than if the standard rate of corporation tax had been applied due to charges not deductible for tax purposes, principally depreciation on capital expenditure that does not qualify for capital allowances (2016: 19.8% - which was in line with the standard rate of corporation tax).

7.             Earnings per share

			Year ended 29 July 2017                 £'000			Year ended 30 July 2016 £'000
Profit attributable to owners of the Company			9,402			8,729
Weighted average number of shares in issue for the purposes of basic earnings per share				40,009,109	40,006,654
Effect of dilutive potential Ordinary shares:
-       share options			1,085,096			965,889
Weighted average number of Ordinary shares for the purpose of diluted earnings per share				41,094,205	40,972,543
Basic earnings per share				23.5p	21.8p
Diluted earnings per share				22.9p	21.3p

8.             Trade and other payables                 

	Year ended 29 July 2017                 £'000	Year ended 30 July 2016 £'000
Trade payables	29,142	14,430
Payments received on account	11,506	12,825
Other taxation and social security payable	4,775	4,862
Accruals	8,371	10,115
	53,794	42,232

The fair value of financial liabilities approximates their carrying value due to short maturities. Financial liabilities are denominated in pounds sterling.

9.             Dividends

An interim dividend of 4.90p per ordinary share was declared by the Board of Directors on 21 March 2017 and paid on 11 May 2017. It has been recognised in shareholders' equity in the year to 29 July 2017.

A final dividend of 9.80p per ordinary share has been proposed by the Board of Directors.

At 29 July 2017 the retained earnings of the parent Company amounted to £65.8m.

 

END

 

 

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