ScS Group Plc - scsplc.co.uk

ScS Group Plc
Interim Results For The 26 Weeks Ended 24 January 2015
March 2015
October 2014
H1 2015 Highlights
Financial Highlights:
•
Like for like sales order intake up 7.8%
• Flooring up 13.0%
•
Total sales up 14.5% to £132.0m (2014: £115.3m)
•
Gross profit up 13.2% to £57.4m (2014: £50.7m)
•
Operating loss (excluding exceptional costs re IPO) £5.2m (2014 loss:
£3.4m)
• Reflects seasonality of business – higher revenue, lower media
costs and higher profits occur in H2
• Impact of launch of House of Fraser concession
•
Results in line with expectations
•
Interim Dividend of 2.8p
•
Cash £26.6m and no debt
•
£12.0m revolving credit facility
2
H1 2015 Highlights
Operational Highlights:
•
3 new stores opened in Glasgow, Croydon and Slough
•
Launch of concession in 30 House of Fraser stores – “For Living”
• Bespoke website developed and launched
•
New e-commerce platform for ScS website
• Online sales up 27.6% to £3.7m (2014: £2.9m)
•
Tenth DC opened in West Thurrock (August 2014)
• Strategic position to support growth in House of Fraser,
predominantly Southern based, and ScS store expansion
3
Summary Income Statement
Income Statement
•
•
•
•
H1 FY15
£m
132.0
H1 FY14
£m
115.3
FY2014
£m
258.2
57.4
(7.1)
50.7
(5.9)
113.0
(12.3)
Administration expenses*
(55.5)
(48.2)
(94.1)
Focus on sales saw margin % reduced by 50bps to 43.5%
but gross profit increased by £6.7m (13.2%)
Total operating expenses*
(62.6)
(54.1)
(106.4)
Operating (loss)/profit*
(5.2)
(3.4)
6.6
Operating costs increased to support future growth
• Distribution costs 5.4% of sales (2014: 5.1%) – West
Thurrock opened
• Admin expenses 42.0% of sales (2014: 41.8%) –
House of Fraser
Net finance (costs)/income
Exceptional items
(3.9)
(4.0)
0.9
-
0.5
-
(Loss)/profit before tax
(13.1)
(2.5)
7.1
Tax
(Loss)/profit after tax
Interim dividend per share
(pence)
1.4
(11.7)
0.8
(1.7)
(1.2)
5.9
2.80p
-
-
(2.7)
(0.7)
13.7
Revenue up £16.7m (14.5%) due to:
• Sofa sales up £5.0m, 5.1%
• Flooring up £1.6m, 12.7%
• New stores of £2.0m
• House of Fraser up from £1.5m to £8.8m
• Online up £0.8m, 27.6%
Revenue
Gross profit
Distribution costs
Operating loss* and Adjusted EBITDA,** in line with
expectations
Adjusted EBITDA**
* Excludes exceptional items
* *Adjusted to exclude management fees payable to Sun European Partners and other non-recurring costs
4
Cash flow
Operating Cash Flow statement
H1 FY15
•
•
•
Negative working capital model generates strong cash
flow
• Cash/card sales, deposits received at point of
order, balance settled before delivery
• Credit sales, loan provider pays ScS approx. 7-10
days after delivery
• Majority of suppliers paid at end of month
following delivery into DCs
£m
H1 FY14
£m
Operating loss before exceptional items
(5.2)
(3.4)
Depreciation and amortisation
Working capital
Capital expenditure
Loan payments / dividends
Other
2.3
14.8
(3.4)
(0.7)
-
2.1
14.8
(1.1)
(13.1)
(0.2)
7.8
(0.9)
Working capital reflects seasonality
Net increase / (decrease) in cash
Capex includes £2.4m for 3 new stores, low underlying
capex ongoing
5
Balance sheet
Consolidated Balance Sheet
H1 FY15
£m
• Strong cash position and debt free (2014: net debt)
Intangible assets
Fixed assets
Lease incentives
Deferred tax
Total non-current assets
• Group re-organisation pre IPO capitalised debt due to
principal shareholder
• Customer deposits £19.0m (2014: £16.8m)
• Company distributable reserves £66.0m
• £12.0m committed revolving credit facility from
Lloyds Bank plc
6
H1 FY14
£m
1.4
26.6
(5.6)
(1.0)
21.4
0.6
26.4
(5.5)
(1.6)
19.9
Cash
Debt
Working capital
Total current liabilities
26.6
0
(29.7)
(3.1)
20.3
(22.3)
(21.3)
(23.3)
Net assets
(18.3)
(3.4)
Strategy and growth opportunities
Growth opportunities:
Increasing sales per square foot in existing stores:
•
Upholstered furniture
•
c.7.9% share in a £3.1bn market (2014)*
•
Flooring
•
c.2.1% share in a £1.7bn market (2014)* following
launch in 2012
•
Aim to double market share over the next five years
Concessions – House of Fraser
•
More diverse customer base and broader geographic reach
•
Exciting medium term growth
•
Additional opportunity through new House of Fraser
website
New Stores
•
Currently under-represented in SE England
•
30 potential new store locations currently identified
•
Targeting to open 2-3 new stores per year
Online
•
New online platform launched in 2014
•
Dedicated online sales team
*Source: Verdict
7
Current Trading and Outlook
ScS – The Sofa Carpet Specialist
A
transformational
six months for
ScS
Strong cash flow
and new
committed
facilities support
growth and yield
Sales order
intake is up
7.5% on a likefor-like basis for
the first 33
weeks of FY
2015
Growing
markets and
confidence in
consumer
environment
8
Confident of
meeting full year
market
expectations
Maiden Interim
dividend of
2.80p per share
Appendices
Introduction to ScS
9
The evolution of ScS
2008
-Prolonged
economic downturn
-Business exposed
to credit insurance
risk
-ScS placed into
administration and
sold to Sun Capital
2009
2010
2011
2012
2013
-Transactional
online website
launched
-ScS 5.0% of total
upholstered
furniture market*
- La-Z-Boy, the first
third party brand is
added to the
product range
- Occasional tables,
lamps and dining
furniture added
-G Plan, the second
third party brand is
added
- SiSi Italia, the first
own brand is added
to the range
- Interest free credit
offered on all
products in every
store
- Flooring added to
range
- Re-brand as the
“Sofa Carpet
Specialist”
-Endurance, the
second own brand
is added to the
range
-3 store House of
Fraser pilot
- ScS 7.9% of total
upholstered
furniture market*
KPI growth:
+9.8%
+55.0%
+2.9%
2 Year Gross
Profit CAGR
Gain in Sales
per square foot
since 2009
Gain in
upholstered
furniture
Market share
since 2009
10
+11.3%
2 Year Sales
CAGR
2014
- Parker Knoll, the
third, third party
brand is added to the
range
-£6.7m of online
sales
-£75m in branded
sales
-£30m of flooring
sales
-New website
launched
-30 House of Fraser
concession stores
launched under the
House of Fraser “For
Living” brand
+33.5%
2 Year Adjusted
EBITDA CAGR
*Source: Verdict
Sales channels: Stores
Well maintained estate
•
•
•
ScS
Distribution Centres
97 stores, 94 on out-of-town retail parks, 3
opened in 2014, average store retail space of
14,700 square foot
High quality fit-outs – majority of stores
refurbished in past 5 years
Stores in regional clusters supported by 10
distribution centres
•
Average remaining leasehold term of 10 years
•
Payback target on all new stores – 2 years
Aim to provide high quality customer experience
•
•
Skilled sales staff – incentivised remuneration
packages
End to end customer service – In-house
distribution, service and upholstery teams
11
Sales channels: House of Fraser
•
30 stores rolled out by August 2014 plus one trial store
opened in December 2014
•
Strong long term sales opportunity
•
All products under the House of Fraser ‘For Living’ Brand
•
Plus 5 “Lifestyle” stores
•
Dedicated management infrastructure
•
Low capital investment
•
Sales based commission model
•
Target mid and premium market segments
•
ScS
House of Fraser
Distribution Centres
New House of Fraser website – additional sales
opportunity
12
Sale channels: Online
Online Sales:
2009 = c. £0.5m
2014 = c. £6.7m
2015 H1 = £3.7m (up 27.6%)
•
£0.6m investment in 2014 developed new
website designed to:
•
•
•
13
Increase store sales and drive store footfall
Create a good buying experience for online
shoppers
Web exclusives include fabric ranges and offers
faster delivery times