Sanderson Design Group
(formerly Walker Greenbank PLC)
Annual Report and Accounts 2021
live
beautiful
CONTENTS
Strategic Report
2
4
6
Highlights
Chairman’s Statement
Chief Executive Officer’s Strategy
and Operational Review
Live Beautiful
14
32 Chief Financial Officer’s Review
36 Key Performance Indicators
38
Principal Risks
38 Viability Statement
41
Section 172 Statement
Governance
44 Board of Directors
46 Group Leadership Team
47 Corporate Governance
49 Report of the Directors
51
52 Nomination Committee Report
53 Directors’ Remuneration Report
57 Audit Committee Report
Statement of Directors Responsibilities
Financial Statements
59
Independent Auditors’ Report to the
Members of Sanderson Design Group
64 Consolidated Income Statement
65 Consolidated Statement of
Comprehensive Income
66 Consolidated Balance Sheet
67 Consolidated Cash Flow Statement
68 Consolidated Statement of
Changes in Equity
69 Notes to the Consolidated
Financial Statements
98 Company Statement of
Comprehensive Income
99 Company Balance Sheet
100 Company Statement of Changes
in Equity
101 Notes to the Financial Statements
111 Five Year Record
112 Shareholder Information
Sanderson Design Group Annual Report and Accounts 2021
Sanderson Design Group Annual Report and Accounts 2021
HIGHLIGHTS
OPERATIONAL HIGHLIGHTS
– Board and leadership team completed in February 2020.
The new team successfully took the business through the
pandemic and continues to execute the strategy.
– Efficiency and cost-saving initiatives, including restructuring
in August 2020 with the reduction of 68 positions, delivered
£3m of annualised cost savings.
–
Investment to elevate the brands and increase online presence
through new brand websites and collaborations.
– Change of name to Sanderson Design Group PLC* in
December 2020, and simplification of the corporate and
business structures.
–
Launch of Scion online shop expected in early June 2021
following agreement with leading internet retailer
Jane Clayton and Company in November 2020.
– Clarke & Clarke’s partnership with Kravet in North America
performing ahead of expectations.
–
Launch of Live Beautiful sustainability strategy in April 2021
with ESG targets and the second annual Planet Mark
certification.
*
formerly Walker Greenbank PLC
02
Sanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group PLC (AIM: SDG),
the luxury interior furnishings group, is pleased
to announce its financial results for the
12-month period ended 31 January 2021.
£93.8m
Group revenue
2020: £111.5m (-15.9%)
£7.1m
Group adjusted underlying PBT**
2020: £7.4m (-3.7%)
7.5%
Group adjusted underlying
operating margin (%)
2020: 6.6% (+0.9 bps)
£14.4m
Net cash flow
2020: £0.9m (+1,430%)
£15.1m
Net cash excluding leases
2020: £1.3m (+1,033%)
8.00p
Adjusted underlying EPS
2020: 9.26p (-13.6%)
FINANCIAL HIGHLIGHTS
– Revenue of £93.8m (2020: £111.5m), reflecting the difficult global
marketplace in the first half year caused by the effects of lockdowns
worldwide. Trading in the second half recovered to pre-pandemic
levels resulting in the previously announced upwards revision to
Board expectations for the financial year.
– Brand sales down 15.4% during the year but just 1.1% down in
the second half compared with H2 2020:
– Morris & Co. sales continue to exceed expectations, particularly
in Northern Europe.
– Brand product sales in Northern Europe were down just 5.0%
in constant currency, 4.3% in reportable currency, with
Scandinavia’s performance proving resilient.
– Core licensing income*** was up 3.3% despite the pandemic.
– Manufacturing sales down 20.2% reflecting first half-year factory
closures, partly offset by strong demand from UK and export
markets with third party sales of £11.0m in the second half
(H2 2020: £11.7m).
– Adjusted underlying profit before tax £7.1m (2020: £7.4m),
including net £2.7m Coronavirus Job Retention Scheme (‘CJRS’),
with stronger sales in the second half-year, coupled with the effect
of the measures to reduce discretionary and fixed costs.
– Strong cash inflow from operating activities of £18.2m (2020:
£9.6m) leading to increased liquidity and headroom of £30.5m
at 31 January 2021 (2020: £13.8m) with net cash position of
£15.1m (2020: £1.3m).
** Adjusted underlying profit before tax excludes accounting charges relating to share-based incentives, defined benefit pension charge and non-underlying items.
*** Core licensing income excludes the recognition of fixed minimum guaranteed licensing income under IFRS 15.
03
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
CHAIRMAN’S STATEMENT
A COMPANY WITH
EXCELLENT
CORE
STRENGTHS.
04
Sanderson Design Group PLC (formerly Walker Greenbank PLC) Introduction
The financial year ended 31 January 2021
was a challenging year during which Covid-19
was the dominant theme for individuals,
businesses and society.
First, I would like to put on record my
gratitude to all the Group’s employees for
their commitment and adaptability
throughout the pandemic. It has been a
difficult time for everyone but colleagues’
support for each other, for customers and
suppliers has been exemplary, for which I
thank them deeply. The over-riding priority for
the Company throughout the pandemic has
been the health, safety and wellbeing of all at
the Company, and it will continue to be so.
Whilst Covid-19 affected our operational
activity during the year, it accelerated the
strategic development of the Group. It
concentrated our focus on improving the
underlying efficiency, agility and productivity
of the business. It also sharpened our focus
on digital strategy and sustainability.
To prepare the business for the future, we
changed the Company’s name in December
2020 from Walker Greenbank PLC to
Sanderson Design Group PLC. The name
change, which has been well received, is part
of the simplification of the corporate structure
of the Group and gives us a much better
online presence. The new name, which
leverages the international recognition of the
Sanderson brand, better represents our brand
and manufacturing assets and highlights
design as being at the centre of what we do.
Whilst the name has changed, our heritage
continues, and we remain a business that
was first incorporated on 3 May 1899; the
custodian of brands dating back to 1860.
We have a responsibility to protect and
preserve the past, in terms of the heritage
of our business, brands and manufacturing,
and, as importantly, to ensure the longevity
of this heritage for future generations.
Sustainability is, therefore, imperative for
our business and will underpin our growth.
During the year we developed our
sustainability strategy, Live Beautiful,
which was launched on 16 April 2021 this
year with the ambitious but achievable
objective of becoming net carbon zero
by 2030. Sustainability is high on the
Board’s agenda and I am passionate about
Sanderson Design Group leading the industry
on this important issue.
Our strategy for the Group’s growth remains
unchanged and is focused on five key areas:
– Driving the individual brands
– Focusing on core products of wallpaper,
fabric and paint
– Partnering with core customers
– Investing in people
– Growing key geographies – UK, Northern
Europe and US
Whilst inevitably Covid-19 has had an impact
on the delivery of this strategy, considerable
progress was made during the year. Further
details are provided in the Chief Executive
Officer’s Strategy and Operational Review.
Financial results
Our results for the year ended 31 January
2021 reflect the impact of Covid-19 on the
business. This impact was mitigated by
careful cost control, the UK Government’s
Coronavirus Job Retention Scheme (“CJRS”)
and other measures. The first half of the
year saw the greatest impact from lockdown
measures, including temporary factory
closures, whereas trading in the key autumn
selling period in the second half was
better than anticipated. Our balance sheet
strengthened considerably throughout
the year, protecting the business against
uncertainties and reflecting the money saved
through delaying product launches and capital
expenditure and through a restructuring
programme which is expected to deliver
annualised cost savings of £3 million.
Dividend
The Board recognises the importance of
dividend income to shareholders and is
committed to recommencing dividend
payments as soon as conditions allow.
Whilst our financial position improved
during the financial year, there remains
significant uncertainty in the external trading
environment as the result of the ongoing
pandemic globally. We do not, therefore,
believe it would be prudent to declare a final
dividend for the financial year 2021. The
Board will continue to review the dividend
policy during the coming months and an
update will be provided at the time of the
announcement of the Company’s interim
results later in 2021 with the objective of the
Company returning to dividend payments at
the earliest opportunity.
People
The success of any business is built on its
people. On behalf of the Board, I would
like to thank all of our colleagues for their
continued hard work and dedication
during the year, particularly in light of the
exceptionally challenging circumstances that
have characterised the pandemic.
Dianne Thompson
Non-executive Chairman
17 May 2021
05
Sanderson Design Group PLC (formerly Walker Greenbank PLC)Strategic ReportGovernanceFinancial Statements
Sanderson Design Group Annual Report and Accounts 2021
CHIEF EXECUTIVE’S STRATEGIC
AND OPERATING REVIEW
A SUSTAINABLE
GROWTH
STRATEGY.
06
Sanderson Design Group PLC (formerly Walker Greenbank PLC) Covid-19
Our 2021 financial year started well. The new
leadership team was in place and we were
focused on delivering the growth strategy for
the business that we had formulated and
announced during the previous year. Almost
immediately we were affected by Covid-19,
which brought the temporary closure of our
factories in March 2020 along with lockdowns
and severe disruption across our target
markets. Against this challenging backdrop,
I am pleased to report that we made
significant progress across the business
during the year.
Most importantly, we acted quickly to protect
the health and safety of our employees. We
also took significant operational and financial
measures to protect the liquidity of the Group.
Trading was impacted by the three national
lockdowns in the UK, starting on 23 March,
4 November and 28 December 2020, and by
lockdowns in our export markets. During the
first UK lockdown our manufacturing facilities
were closed. With the phased reopening of
our factories and the relaxation of lockdown
measures worldwide, trading improved from
a low in April 2020 and gained momentum
towards the half year end and continued
strongly in the key autumn selling period.
Our manufacturing facilities operated at full
capacity in the second half of the financial
year, during which trading overall was more
in line with prior years.
restructuring exercise completed in August last
year. We have also returned all CJRS monies
(totalling £0.1 million) received in the current
financial year in April 2021.
On 7 May 2020, the Group entered a loan
contract with Wells Fargo for US$565,818
under the US Paycheck Protection Payment
scheme. No repayments have been made in
relation to this loan. On 20 April 2021, the
Group applied for forgiveness of the loan in
accordance with the US Government Small
Business Administration guidance. Whilst we
expect the loan to be forgiven, in the event
that forgiveness is not granted it is the
Group’s intention to repay the loan before
31 January 2022.
Internal communications have been very
important throughout Covid-19. I have
communicated regularly with all colleagues,
which has made us more cohesive as a
business, and used video conferencing
to create a forum for discussion. This
enhanced internal communication will
continue going forwards.
Strategy and progress
It is a credit to everyone at the Company
that we have been able to deliver underlying
pre-tax profits of £7.1 million (2020:
£7.4 million) on sales of £93.8 million
(2020: £111.5 million). I would like to
send my thanks to all colleagues for this
achievement, which reflects everyone’s
hard work and persistence.
We are grateful for the support we received
from the UK Government’s CJRS, particularly
during the critical weeks of the first lockdown.
In April 2020, a total of 510 employees in
the UK were furloughed, which reduced to
just 133 at the half-year end and reduced
further to 15 by 31st January 2021. During
the financial year, we received a total of
£3.1 million from the CJRS. From 1 April 2021,
we have no staff furloughed. We returned £0.4
million to the UK Government in February 2021
relating to 68 employees made redundant in a
We set out our growth strategy for the Group
in October 2019 and it remains unchanged.
The key elements are summarised below:
Driving the brands: The Group has a strong
and broad portfolio of powerful brands, each
with clear market positioning. Our intention is
to focus precisely on the individuality of each
brand, giving each its own market, channel,
product and communications strategy;
thereby strengthening their appeal to drive
demand in their respective marketplaces.
Focusing on core products: The Group
has two strong manufacturing arms that
benefit the brands’ business. Our short- and
medium-term strategy is to focus on our core
products of wallpaper, fabric and paint and
to build our finished-goods offer with our
licensing partners.
Partnering with core customers:
The strategic focus on the individuality
of each brand, and our tailored service,
will help cement relationships with key
customers, while enhanced communication
will drive demand for both heritage and
contemporary brands from consumers,
through our interior design partners, retail
channels and hospitality partners. We will
continue to deepen our relationships with
existing licensing partners and seek
new opportunities.
Investing in people: People, and creativity,
are at the heart of our business. In our
industry, Sanderson Design Group is a
favoured destination for emerging new
designers, and we will benefit from doing
even more to bring in new creative and other
talent, nurture it and create a high-
performance culture. The commitment,
flexibility and agility demonstrated during the
pandemic has already achieved a step
change towards a more responsive
organisation with a strong, aligned team.
Growing key geographies: Our brands have
significant international market potential,
reflected in their being sold in more than 85
countries worldwide. To ensure focus, we are
concentrating our efforts on building market
share in three key geographies: the UK,
Northern Europe and the US. Our approach
is tailored to each individual region.
We have made significant progress during
the year in pursuing this strategy despite
the pandemic.
07
Sanderson Design Group PLC (formerly Walker Greenbank PLC)Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
CHIEF EXECUTIVE’S STRATEGIC
AND OPERATING REVIEW CONTINUED
Efficiency
Historically, the Company has launched
around 55 new collections each year. We
planned to reduce this to 37 collections in the
2021 financial year but, owing to Covid-19,
we launched just 33 collections.
launches that we did proceed with. It enabled
us to accelerate some of our ideas to improve
efficiency in the launch process, particularly
around the use of digital communications to
mitigate the cost of traditional printed
pattern books.
During the year, we received Planet Mark
sustainability certification for measuring and
reporting our carbon footprint. In the year to
31 January 2020, our total carbon footprint
was 7,977.8 tonnes (2019: 9,246.9 tonnes) of
carbon dioxide equivalent.
An important strategic objective to improve
the efficiency of the business is to significantly
reduce the number of colourways and other
options within the collections so there are
fewer, stronger launches. This will give a
corresponding reduction in the number of
new stocked options (SKUs) of fabric
and wallcoverings.
New SKUs launched in financial year 2021
reduced from 2,311 in financial year 2020 to
1,293. It is expected that the number of SKUs
launched will reduce further in the current
financial year to about 1,000 and to remain
around this level each year going forward.
One of our first responses to the pandemic
was to suspend the launch of new collections
as our factories were closed and our markets
severely disrupted. This had the effect of
avoiding a very significant amount of spend
on pattern books, launches and inventory,
therefore strengthening our cash position.
In December 2020, we renamed the
Company from Walker Greenbank PLC to
Sanderson Design Group PLC, to create a
better platform from which to elevate the
Company’s brands and other assets. Walker
Greenbank’s corporate structure had become
over-complicated, with multiple holding
companies and sub-brands. Walker
Greenbank itself was a holding company
with little resonance in the industry.
The Group undertook a restructuring exercise
in August 2020 resulting in a cost saving of
£1.2 million in the year ended 31 January
2021, and is expected to deliver total
annualised savings of £3.0 million going
forwards. The Group is now leaner, more
agile and better prepared for the future.
Whilst Covid-19 impacted our planned
launches, it propelled innovation in the niche
In future, all product pre-launches will be
digital. This is because the customer feedback
from the initial sampling can be used to
inform the launch marketing, pattern book
content and inventory.
The launch of Scion’s online shop, initially
announced in November 2020, is now
planned for early June 2021. The shop,
dedicated solely to Scion, will sell the brand’s
products direct to consumers under a
franchise agreement with Design Online
Limited (“Design Online”), a company formed
by the leading internet retailer Jane Clayton
and Company. The online shop, to be called
Scion Living, will serve customers in the UK
and Europe before potentially expanding
internationally. The shop’s product range is
expected to include all Scion fabrics and
wallcoverings along with bespoke furnishings
and an extensive range of licensed products.
The communication of the Company and its
brand assets has been simplified with the
name change to Sanderson Design Group,
which was implemented ahead of the
relaunch of our brand, trade and corporate
websites. The new websites represent a
major improvement to the online presence
of our brands. They are more engaging for
consumers, which in turn will help drive
sales for our trade customers. The trade site
itself has better functionality to accommodate
the increase in online transactions by
trade customers.
Sustainability
We also unveiled our Company’s purpose
statement during the year: “To Bring the
Beautiful into People’s Homes and Lives.”
This purpose statement has been developed
alongside our Live Beautiful sustainability
strategy and other ESG initiatives, which have
progressed significantly during the year.
On 16 April 2021, we announced ambitious
plans to become net carbon zero by 2030,
which we believe is achievable through our
Live Beautiful strategy of transforming the
way we design, manufacture and distribute
our products. Further details are available
at this link: https://www.sandersondesign.
group/media/1477/live_beautiful_
sustainability_strategy.pdf. In addition to
the net carbon zero target, we have another
major sustainability pledge focused on
ensuring the job satisfaction and fulfilment
of our people, with our ultimate aim to be
the employer of choice in our industry. We
have developed a roadmap for continuous
improvement towards our sustainability goals
and I am excited by the level of interest from
everyone at the Company that this initiative
has prompted.
Operational review
Trading during the year reflected the effects
of the pandemic with the first half being
particularly affected followed by a strong
recovery in the second half.
The Brands
Total Brands comprise Sanderson, Morris &
Co., Harlequin, Zoffany, Scion, Anthology and
Clarke & Clarke. The Brands segment includes
the licensing income derived from the brands
as well as global trading from our brands,
including our overseas subsidiaries in the US,
France, Russia and Germany.
The table above shows the impact of the
pandemic on brand sales, which primarily
affected the first half of the financial year.
Total Brand sales were down 15.4% in
reportable currency at £76.3 million.
Brand product sales in Northern Europe
were down just 4.3% in reportable currency,
reflecting the continued strength of the
Morris & Co. brand in Scandinavia.
08
Sanderson Design Group PLC (formerly Walker Greenbank PLC) WE HAVE A STRONG
PORTFOLIO OF
POWERFUL BRANDS,
EACH WITH
CLEAR MARKET
POSITIONING.
09
Strategic ReportGovernanceFinancial Statements 10
CHIEF EXECUTIVE’S STRATEGIC
AND OPERATING REVIEW CONTINUED
Total Brand sales
Comprising:
Licensing
UK Brand product sales
International Brand product sales
– North America
– Northern Europe
– Rest of the World
Year ended 31 January (£m)
Change (%)
2021
76.3
3.7
38.1
34.5
12.5
12.5
9.5
2020
90.2
5.5
44.9
39.8
14.4
13.0
12.4
Reported
Constant
currency
(15.4)
(15.6)
(33.0)
(15.3)
(13.1)
(13.0)
(4.3)
(22.5)
(33.2)
(15.3)
(13.5)
(13.3)
(5.0)
(22.8)
The performance of the individual brands is
discussed below. To improve transparency,
this report marks the last time that the
Harlequin, Scion and Anthology brands and
the Sanderson and Morris & Co brands will be
grouped together. In future, the trading
performance of each brand will be set out
separately to enable investors to gain a better
insight into the performance of each brand.
Harlequin incorporating Scion and Anthology
Worldwide sales of Harlequin, Scion and
Anthology were £18.4 million in reportable
currency, a decrease of 27.3% on the previous
year (2020: £25.3 million).
Sales in the UK were down 24.2%, sales in
North America were down 14.0% in constant
currency and sales in Northern Europe were
down 18.7% in constant currency.
Harlequin’s children’s collection, the Book of
Little Treasures, was launched in July 2020
and was our first digital launch. We
collaborated with Mumsnet, the internet
forum for parents, on the launch, which was
well received. This launch highlighted the
benefits of a digital launch, particularly in
terms of the feedback from the sampling
process in which we can see which of the
designs and colourways are the most popular
and therefore the ones we should focus on.
The collection was reduced from 76 SKUs to
just 40 and sales are performing as forecast
with strong uptake from John Lewis in
particular for the Little Home offer.
Scion is an upbeat brand conveying fresh
ideas for modern living. In addition to
wallpaper and fabric, Scion is a valuable
brand for licensing, where the contemporary
and graphic nature of the designs have
stretched very successfully to a wide range of
products, ranging from bedding and
bathroom products to window furnishings,
gifting, tableware and stationery. In March
2020, Scion announced a homewares
collection with the major retailer NEXT plc,
underscoring the strength of the brand’s
licensing potential. This collection launched in
the summer of 2020 and has performed well.
Anthology, aimed at the Contract market with
its creative finishes, subtle textures and
sophisticated complexity remained popular
with interior designers and hotel groups
worldwide.
Arthur Sanderson & Sons incorporating
the Morris & Co. brand
Worldwide sales of these two brands were
£24.2 million (2020: £24.1 million) in
reportable currency, almost unchanged
compared with the same period last year,
despite the pandemic, reflecting the trend for
more decorative finishes and the renewed
appeal of Arts & Crafts design.
Sales in the UK were down 9.5%, sales in
North America were up 13.4% in constant
currency and sales in Northern Europe
increased by 11.1% in constant currency.
As one of the oldest surviving English soft
furnishing brands, Sanderson, a Royal
Warrant holder, is famous today for a
signature style that is informed by heritage
and designed for modern living.
In January 2020, we announced Sanderson’s
collaboration with the National Trust to create
a unique collection of fabrics to celebrate the
Trust’s 125th anniversary. The collaboration
was announced prior to Covid-19 and was
well received when previewed at Chelsea
Harbour in March 2020. We were unable to
print the pattern books, which were due to be
printed in April 2020, owing to the temporary
closure of the printer during the first UK
lockdown. We already had inventory and
launch photography, and there was demand
in the market, so we gained our first
experience of using digital communication to
replace a traditional launch. This led also to
our first webinars, which were hosted by
designers and brand managers and were
greatly appreciated by our distributors,
particularly in export markets, who were
struggling to access new collections.
Sanderson’s 160th anniversary was officially
last year but we delayed the launch of an
anniversary collection until April 2021.
A limited preview of 12 styles was launched
exclusively with John Lewis in December 2020
with strong results. Wallpaper Direct, the
online wallpaper business, launched an
exclusive collection of 50 SKUs in honour of
the anniversary and reported strong demand
from its March 2021 launch. The wider
collection launch during London Design Week
in May 2021 will be supported by the first
significant media campaign for many years,
featuring England rugby star Maro Itoje as
the new face of the Sanderson brand. The
media campaign will look back to the Very
Sanderson campaigns of the 1970s, which
featured British celebrities of the day such as
Petula Clark, Diana Rigg and Robert Carrier.
The Morris & Co. brand enjoyed a very strong
sales performance, up 9.0% during the year,
reflecting sustained consumer interest in the
Arts & Crafts movement, particularly in
Scandinavia and the United States.
An exciting collaboration with the highly
regarded designer Ben Pentreath, who
created the Queen Square edit from our
archive using a new and vibrant colour
palette, was our next experience of a digital
launch. The sampling from the pre-launch
showed that 25% of sampling was on one
wallpaper, a green and turquoise colourway.
We focused attention on the colourway for
our inventory and marketing material,
receiving a huge amount of positive media
coverage on launch. Sales of the collection
have exceeded expectations and a follow up
is planned.
Digital communication has been an
important part of marketing all the brands
with the number of Instagram followers
being a key metric. Morris & Co. achieved the
milestone of 100,000 Instagram followers in
December 2020 and that has since increased
to 121,000 Instagram followers in May 2021.
Morris & Co. had 65,000 Instagram followers
at 31 January 2020.
This year marks the 160th anniversary of the
Morris & Co print works. We intend to mark
the anniversary by launching a compilation
collection of his most signature designs this
year. We have several other exciting launches
planned in a calendar of anniversary events
throughout the year.
11
Sanderson Design Group PLC (formerly Walker Greenbank PLC)Strategic ReportGovernanceFinancial Statements
Sanderson Design Group Annual Report and Accounts 2021
CHIEF EXECUTIVE’S STRATEGIC
AND OPERATING REVIEW CONTINUED
Zoffany
Zoffany, positioned at the upper end of the
premium market, is a fusion of luxury and art
and is the lead brand for the Group in North
America. Total worldwide sales fell 18.0% to
£7.8 million in reportable currency (2020: £9.5
million). Sales in the UK decreased by 22.8%,
sales in North America were down 7.5% in
constant currency and sales in Northern
Europe were down 9.7% in constant currency.
Zoffany’s Palladio collection, an exciting,
screen-printed wallpaper collection that
draws on the original Palladio wallpapers
launched in the 1950s, was launched in
September 2020. The collection includes
Precarious Pangolins by the influential
designer and conservationist Sam Wilde.
The design adds a contemporary dimension
to the collection and continues the tradition
established in the 1950s of talented new
designers creating Palladio wallpapers.
We ran the Zoffany Visual Arts Award
championing new design talents. The winner
was announced in April 2021 and will receive
funds towards the second-year studies.
Clarke & Clarke
Clarke & Clarke is positioned at the more
affordable end of our premium target
markets. Total sales were down 14.2% at
£21.7 million compared with the same period
last year (2020: £25.3 million). Sales in the UK
decreased by 4.5%, sales in North America
were down 33.0% in constant currency and
sales in Northern Europe were down 13.3%
in constant currency. The reported sales
decline in North America was due to the
changing contract and operating in financial
year 2020 from a commission agency to a
new distributor.
Clarke & Clarke is distributed in North
America by Kravet Inc, whose sales have
been ahead of expectations. Kravet is
pleased with the first full year’s performance,
which has exceeded all other third- party
brands they distribute, and further growth
is anticipated.
Clarke & Clarke’s Wilderie and Animalia
collections by designer Emma J Shipley
continued their strong growth during the
year across fabric, wallpaper and homewares.
The Emma J Shipley momentum was
reinforced by a new launch into US retailer
Anthropologie and an exclusive bedding
launch in John Lewis. Tess Daly homewares
was launched at the beginning of March
2020, shortly before the first UK lockdown.
Sales were impacted but bounced back in the
second half of the financial year. NEXT is the
main partner for the collection and new
bedding design launches are planned this
financial year and next year.
Clarke & Clarke secured an exciting, exclusive
licence agreement with the heritage brand
Wedgwood with the product launching in
spring 2022. Under the agreement, Clarke &
Clarke will launch up to five bedding designs
with coordinated accessories alongside a
stunning collection of fabrics and wallpapers.
Licensing
Licensing income is a dynamic and high
margin revenue stream for the Company with
further potential for growth.
Core licensing income, excluding the
recognition of fixed minimum guaranteed
licensing income under IFRS 15 and income
from apparel contracts, was up 3.3% in
reportable currency and in constant currency,
by £0.1 million, reflecting a strong
performance from our core bedding, blinds
and Japanese licensees.
As a result of the impact of the pandemic
on our licensees during the financial year,
reported licensing income was down 33.0% in
reportable currency, down 33.2% in constant
currency, to £3.7million (2020: £5.5 million),
including a £400,000 recognition of a
minimum guarantee under IFRS 15 from
NEXT plc in connection with a licensing
agreement signed in November 2020 with
the Sanderson and Morris & Co brands.
This exciting agreement is for an extensive
range of clothing, homeware and accessories.
With the Morris & Co brand, NEXT is
producing apparel, including womenswear,
men’s shirts and childrenswear for summer
2021, some of which are already available
instore. With the Sanderson and Sanderson
Home brands, NEXT is producing a range of
homeware, which is expected to be launched
later this year.
Core licensing income includes bedding
with Bedeck, window-coverings with
Blinds2Go and a number of important
strategic partners across the homewares
sector in Japan, including bedding with
Nishikawa, textiles with Kawashima and
wallcoverings with Sangetsu.
Manufacturing
Covid-19 had a major impact on our
manufacturing operations, Standfast &
Barracks and Anstey, which were both closed
at the start of the first UK lockdown before
being progressively reopened in May 2020.
The factories performed strongly during the
second half of the year.
Our unique integrated vertical supply chain
is an important pillar in our strategy. The
benefits of owning our production capabilities
have been underlined by the pandemic in
that it enabled the Group’s brands to secure
supply. Our manufacturing has also proven to
be an important strategic and competitive
asset under current Brexit arrangements as
supply from Europe and elsewhere is subject
to duties and tariffs.
Total manufacturing sales in the first half
decreased 38.5% to £10.5 million compared
with the corresponding period, with total
third-party sales down 32.5%. In the full year,
total manufacturing sales decreased by just
20.2% to £28.4 million (2020: £35.5 million)
and total third-party sales were down
just 17.9%.
Both factories have continued to attract
export orders as a result of their range of
digital and conventional printing capabilities.
12
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
Standfast & Barracks (‘Standfast’)
Standfast, our fabric printing factory, is widely
regarded, internationally, as the destination
for creative, innovative and high-quality
fabric printing. Standfast, in common with
Anstey, attracts international orders from
countries including the USA. Standfast
continues to exploit its extensive archive and
original artwork, with a talented design studio
that reinterprets antique, heritage and classic
design into prints relevant for today.
Standfast saw a decrease in sales during the
year of 15.5% to £14.4 million (2020: £17.1
million). Third-party sales in the UK decreased
by 15.2%; third-party export sales declined by
2.8%; whilst sales to our own Group brands
decreased by 24.2%. Digital printing at
Standfast increased to £8.8 million accounting
for 62% of factory output during the year
(2020: 49%).
In April 2020, Standfast was awarded the
prestigious Queen’s Award for Enterprise
2020 in the International Trade category,
recognising the factory’s impressive overseas
sales growth in the preceding three years.
Anstey Wallpaper Company (‘Anstey’)
Anstey, our wallpaper printing and paint-
tinting business, is an unrivalled factory in its
range of wallpaper printing techniques on one
site. We continue to invest in new technology
to extend the potential of the factory and to
build on its unique capabilities. Third-party
customers reference the unique ability of
Anstey to work consistently across the range
of techniques and to blend them.
Current trading and outlook
The most significant impact of the Covid-19
pandemic on performance was during the
total initial lockdown and over the first six
months of financial year 2021. Over the
second six months, despite further lockdowns,
our sales recovered to levels in line with prior
periods and enabled us to previously
announce the upwards revision to our
expectations for the financial year.
Sales at Anstey decreased 24.5% to £14.0
million (2020: £18.5 million). Third-party sales
in the UK were down 27.5%; third-party
export sales were down 20.4%; and internal
wallcovering sales to our own Group brands
decreased by 22.7%. Digital printing at Anstey
as a proportion of factory output was 15%
(2020: 12%).
Export sales to the USA and Europe reflect
Anstey’s premium print technologies,
world-class excellence in manufacturing,
customer service, quality and innovation.
Current sales trends in February, March and
April 2021 are slightly ahead of our
expectations reflecting increased demand for
home interiors. The Group has a strong
balance sheet with net cash at 31 January
2021 of £15.1 million, which positions the
business strongly in the event of further
disruption. Overall, we remain cautiously
optimistic in our outlook for the year ahead.
Lisa Montague
Chief Executive Officer
17 May 2021
1313
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
LIVE BEAUTIFUL
STARTING THE
JOURNEY OF
SUSTAINABILITY.
0/30
We have named our sustainability strategy Live
Beautiful, to echo our purpose and to convey
our commitment to people and the planet. This
strategy was launched on 16 April 2021,
marking the start of an ambitious journey of
continuous improvement in which we wish to
lead the interiors industry in transforming the
way we design, manufacture and distribute.
Zero by thirty
We are committed to being net
carbon zero by 2030.
To Live Beautiful means preserving heritage
and craftsmanship for future generations to
enjoy. It means to live well with respect, care
and compassion for our world, and everyone
who lives in it.
We have started our Live Beautiful journey with
two highly ambitious goals: to be net carbon
zero by 2030 and to be the employer of choice
in our industry.
#1
The employer of choice
We are committed to being a great
and happy place to work.
Sustainability is about protecting the future for
people, the planet and business. At Sanderson
Design Group, we have an additional
responsibility to protect the heritage of our
brands and manufacturing so they can be
enjoyed by future generations.
We first looked at the sustainability of our
business in 2019 by appointing consultants to
assist us with Planet Mark certification, a
process for measuring and benchmarking
carbon footprint and social value. At the same
time, owing to the close relationship between
purpose and sustainability, we also began to
develop our purpose statement: To bring the
beautiful into people’s homes and lives.
By reducing our carbon footprint, we are addressing nine
of the United Nations’ Sustainable Development Goals.
14
Sanderson Design Group PLC (formerly Walker Greenbank PLC) LIVE BEAUTIFUL
A SUSTAINABLE
GROWTH STRATEGY.
OU R LIVE B EAUTI FU L FR AM E WORK
BR AN DS
PR ODUCTS
CUSTOMERS
GEOGRAPHIES
E LE VAT E O UR
BRAN DS AN D C RE ATE
CO NSUM ER DE M AN D
RE I MAGINE OUR
PRO DUCTS : FABRIC,
WALL PAPER, PAINT
AN D HOMEWARES
EXCEED OUR
CUSTOMERS’
NEEDS IN A
DIGITAL WORLD
GROW OUR UK , USA
AND NORTHERN
EUROPE BUSINESSES
PEOP LE – EMPOWER OUR PEOPLE
FINANCIAL HEALTH – TIGHTLY M ANAGE OUR INVENTORY, CASH , OVERHEADS
AND COLLECTION MANAGEM ENT (SKU EFFICI ENCY )
P L ANET – INSPI RE OUR WORLD
ANTHOLOGY | CLARKE & CLARKE | HARLEQUIN | MORRIS & CO | SANDERSON | SCION | ZOFFANY | ANSTEY WALLPAPER COMPANY | STANDFAST & BARRACKS
Our Live Beautiful sustainability strategy and our corporate growth
strategy are inextricably linked. The graphic above shows our corporate
growth strategy and, highlighted in peach, are the three Ps of our
Live Beautiful framework: Products, People and Planet.
Reimagining our products
Sanderson Design Group is taking steps
towards more sustainable ways of making
luxury interior furnishings. From stretching
product lifecycles to investigating new ways
of sourcing energy and raw materials, we
commit our processes to positive change.
Empowering our people
Creating a culture of empowerment enables
us to embrace the full diversity and potential of
our community. Encouraging diversity, inclusivity
and wellbeing throughout Sanderson Design
Group brings the best of new ideas to the
forefront of decision-making.
Being vertically integrated with a UK
manufacturing base, and having very strong
relationships across our supply chain, Sanderson
Design Group is perfectly positioned for
addressing key sustainability issues. Making
products with an enduring appeal requires a
corresponding versatility to inform the entire
design-manufacture process. Leveraging
product lifecycles is enhanced by finding
sustainable sources of raw materials, as well
as the distribution of end products. Mobilising
entire production lines, from design to
installation, embodies the holistic approach
behind the Live Beautiful strategy. We intend
to embrace the circular economy to minimise
the environmental impact of our products.
We will be focusing on health, safety and
wellbeing; on diversity and access to our
profession; on culture and inclusivity; and on
learning and development. This approach will
foster a sustainable workplace and engender
a working culture that empowers all.
Our goal is to be the employer of choice in
our industry. Our target is for at least 70%
engagement of our colleagues based on
workplace culture, diversity and inclusivity.
We intend to continue to develop this
engagement alongside motivating our teams
and reinforcing our values and behaviours
to build a sustainable future.
Inspiring our world
With a global outreach, Sanderson Design
Group can set the standard for international
trade across the interiors market.
As an international luxury furnishings group,
we have obligations which are correspondingly
global, whilst also operating at local levels
with the communities we directly interact
with. These obligations range from reducing
our carbon footprint and the maximisation
of a positive outreach. From supporting our
local communities to finding ways of sourcing
sustainable resources for manufacturing,
Sanderson Design Group recognises that this
responsibility must be upheld in all areas we
may impact.
With a portfolio of historic brands, we also
have a historic duty to protect our heritage
and preserve it for posterity, upholding a
legacy of craftsmanship embedded within
our design-manufacture process.
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Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
LIVE BEAUTIFUL
PLANET MARK CERTIFICATION
COMBATTING
CLIMATE CHANGE.
During 2019, when we first looked at sustainability, Planet Mark
measured our carbon footprint in the year from 1 February 2018
to 31 January 2019 to act as a reference point for future years.
This is what Planet Mark calls Year 1.
We recently received our Planet Mark certification for Year 2, the
year running from 1 February 2019 to 31 January 2020. We are
very pleased to have significantly reduced our carbon footprint
during the year but recognise there is much more to do.
The elements of our carbon footprint and our performance in the
year ended 31 January 2020 compared with the previous year
are detailed in the table below.
Total carbon footprint
(Yearly comparison)
Table head
Business Travel
Electricity
Fleet Travel
Natural Gas
Other Fuel
Total
2020
2019
45.6
1,955.6
349.8
5,621.7
5.1
49.4
2,265.1
263.9
6,833.8
12.5
7,977.8
9,424.8
All rows and tables are rounded to one decimal place. This may lead to slight
discrepancies in totals within the report.
Carbon footprint by emission source for year ending 2020
(tCO2e)
Last year’s carbon footprint has been restated to include scope 3 emissions from
electricity transmission and distribution losses.
16
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
LIVE BEAUTIFUL
ACTIONS AND
PARTNERSHIPS.
The Furniture Makers’ Company
In March 2021, Sanderson Design Group
became corporate members of The Furniture
Makers’ Company, a City of London livery
company and the charity for the furnishing
industry. Corporate membership gives
Sanderson Design Group the opportunity to
support the charity’s work in promoting both
welfare and excellence in the interiors industry.
Cool Earth
We are supporting the UK climate change
charity Cool Earth, which works with rainforest
communities to halt deforestation. Protecting
rainforest is one of the most effective actions
to tackle climate breakdown as deforestation
releases carbon into the atmosphere whilst
destroying the planet’s best carbon capture
and storage mechanism.
Better Cotton Initiative
The not-for-profit Better Cotton Initiative (‘BCI’)
is the largest cotton sustainability programme
in the world. Standfast & Barracks, our fabric
printing factory, prints more than 1.5m of fabric
each year. Our commitment is, in 2021, that the
majority of our 100% cotton base fabrics, along
with our cotton velvet and some cotton linen
blends, will see sourcing become through BCI
contracts, which bring traceability and
accountability to the supply chain.
Ecofast™ digital printing
Also at Standfast & Barracks, we have been
developing the Ecofast™ printing system.
This innovative pigment-based digital
printing system uses a fraction of the water
consumed per metre when compared with
conventional screen printing and only about
half of the water used for reactive digital
printing. The Ecofast™ system has already
achieved Okeo-Tex certification for all
cotton base fabrics.
17
We know that actions speak louder than words,
and we can already show that we are on our
way to delivering our Live Beautiful strategy.
We have big, visionary goals, but a lot of small
steps will help us achieve them. Here are just a
few things we have been working on already:
– 100% of our electricity is renewably
sourced, with plans to expand this to
our gas providers as well.
– We have a proud record of donating fabric to
a range of charitable causes. Last year,
4000m of fabric was distributed to over 20
causes, of which some were put to use as
materials in the fight against coronavirus.
– In 2020 alone, we donated over £1,500 to
foodbanks in communities local to our sites,
representing £250 across six foodbanks.
– The packaging for Sanderson Design Group’s
cut fabrics is made with green polyethylene
– instead of fossil fuels, responsibly sourced
sugar cane is used to reduce the carbon
footprint of the packaging.
– We have an excellent health and safety
record, posting 1,000 and 500 days without
a Lost Time Injury at our manufacturing
brands Standfast & Barracks and Anstey
respectively. During the same period,
we also saw a decline in the cases of
minor incidents.
– Employee wellbeing is a top priority
at Sanderson Design Group. We now
have mental health first aiders located
throughout the business.
Sanderson Design Group PLC (formerly Walker Greenbank PLC)Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
ENERGY AND CARBON
This is the first financial year the Board is required to report under the
Streamlined Energy & Carbon Reporting (‘SECR’) framework. Our SECR
covers the energy consumption and Greenhouse Gas (GHG) emissions
for the period 1 February 2020 to 31 January 2021.
The Group has selected an intensity metric based on the energy
consumption per tonnes of CO2e per UK full time employee.
The Group will use this ratio to monitor our energy efficiency
performance over time.
The new reporting requirements aim to increase awareness of
energy costs within organisations and provide data to inform the
adoption of energy efficiency measures which reduce their impact
on climate change. They also seek to provide greater transparency
for stakeholders.
The Group’s UK energy usage is expressed as an annual quantity of
emissions in tonnes of carbon dioxide equivalent (CO2e). The amounts
disclosed under SECR relate to the total UK energy use from electricity,
gas and from transport where fuel is purchased directly by the
company. Transport does not include emissions where the Group pays
indirectly for fuel consumption, i.e. where the Group uses third party
suppliers for all inbound and outbound deliveries.
Energy emissions are divided into three categories:
1. Direct greenhouse gas emissions from UK activities owned or
controlled by the Group that release emissions into the atmosphere
such as gas heating and fuel for company owned vehicles (scope 1).
2. Indirect greenhouse gas emissions from UK consumption of
purchased electricity (scope 2).
3. Other indirect greenhouse gas emissions resulting from UK activities
where the source is not directly owned or controlled by the Group
such as business travel in private cars (scope 3).
The table below shows the energy and GHG emissions from business
activities involving the combustion of gas and fuels, the purchase of
electricity and business mileage in both kWh and tCO2e.
Year ended 31 January
2021
2020
kWh
tco2e
kWh
tco2e
Scope 1
Scope 2
Scope 3
Total
26,178,629.5
5,890,892.2
55,174.0
4,851.5
1,373.4
131.8
31,950,754.2
7,052,119.3
158,592.6
5,976.7
1,802.5
198.6
32,124,695.7
6,356.7
39,161,466.1
7,977.8
intensity ratio tco2e
per UK employee
11.0
12.9
Energy efficiency actions taken
In 2019, the Group performed its Phase 2 Energy Savings and
Opportunities Scheme (ESOS) which identified over 6,000 MWh
potential energy savings across our UK operations such as boiler
upgrades and optimisation, increased metering and monitoring
and rolling upgrades to LED lighting. The Group is continually seeking
new and innovative solutions to reduce energy consumption, promote
energy efficiency and improve our environmental performance. By
making more use of online meetings, business travel is much reduced.
In addition, the Group is working with Planet Mark to measure and
identify upstream and downstream solutions to become net carbon
zero by 2030.
SECR methodology
The data used to measure annual gas and electricity emissions is
taken directly from utility bills during the year and pro-rated where
appropriate. Company vehicles emissions are based on the size,
fuel type and annual mileage of each company car during the year.
The conversion rates used to calculate CO2e vary according to the
type of energy and vehicle and are taken from the UK Government
GHG conversion factors for company reporting.
Conversion factors used are taken from the ‘2020 UK Government’s
GHG Conversion Factors for Company Reporting’ to calculate
emissions for Scopes 1,2 and 3.
Refunded business mileage has been classed as Scope 3 as the
Group does not own the assets; emissions from UK Electricity
Transmission and Distribution has also been included within
this scope.
An average CV and CO2e factor has been applied to the refunded
business mileage as individual private vehicle details have not
been provided.
18
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
19
Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
DRIVING THE
POWER
BRANDS.
LUXURY AND HERITAGE
ANTHOLOGY
PREMIUM
20
Governance
Financial Statements
DRIVING
BRAND
ENGAGEMENT.
– Market-leading portfolio of British brands
– Extensive historic archive of design gives us
authority, provenance and authenticity
– Unique design expertise, specialised in
colour and scale
– Strong international appeal
– Design solutions for consumers of all ages
– UK’s leading high-end wallcoverings and
printed fabric manufacturers
–
Innovative production techniques
including digital
– Build engagement of the brands in core
markets
– Digital marketing strategy
– Targeted PR
– Social media to attract consumers
– Content plan to tell rich stories
– Events and collaborations
21
Strategic Report Sanderson Design Group Annual Report and Accounts 2021
LUXURIOUS DESIGN
ARTFULLY CRAFTED
TO THE HIGHEST
STANDARDS.
22
By looking back to Zoffany’s first ever
collection, a series of innovatively
reproduced wallpapers inspired by the
Tudor-Jacobean country house, Temple
Newsam, a creative relationship with
the past emerges.
Speaking to a taste for sophisticated artistry,
when Zoffany draws from its extensive archive,
it is never at the expense of producing
exquisite designs for modern settings.
Introducing an undeniable opulence, Zoffany
captivates and inspires with its decadent
fabrics, wallcoverings, paint and furniture
pieces. Produced using the finest materials and
richly coloured pigments, Zoffany’s new and
archive designs are celebrated worldwide for
their artistry, integrity and authenticity.
INSPIRED COLOUR
STORIES AND BOLDLY
EXPRESSIVE PATTERN
CREATIONS.
Inspired colour stories, boldly
expressive pattern creations, and
luxurious production techniques: this,
is Harlequin. Pushing personal and
industry boundaries, Harlequin is the
perfect vehicle for self-expression.
Uniting high-quality collections with vivacious
colours and textures, Harlequin’s ambition is to
empower all people to express their best
selves through creative interior design.
Influenced by fashion and the luxury of
boutique hotels, Harlequin brings innovative
textures and stunning colours to its range of
fabrics and prints. Chosen for interiors the
world over, the brand’s successful design team
are renowned for their forward-thinking
approach to creating a destination style.
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Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
COMBINING A
TIMELESS BRITISH
SENSIBILITY WITH
HAND-DRAWN
PATTERNS.
24
Founded in 1860, Sanderson is
one of the most renowned interiors
brand worldwide.
Combining a timeless British sensibility with
hand-drawn patterns and bold reinterpretations
from a historic archive, every Sanderson design
arrives with the security that befits a brand of
such a prestigious legacy.
Granted a Royal Warrant in 1923, Sanderson
still supplies fabrics, paint and wallcoverings
to HM Queen Elizabeth II. In 2020, Sanderson
celebrated its 160th Anniversary, making it
the oldest surviving English brand in its field.
BEAUTIFULLY CRAFTED
PRODUCTS THAT UPHOLD
THE LEGACY OF AN ARTS
& CRAFTS ICON.
Case study subhead level 1
Case study body text
– Case study text bullet level 1
William Morris (1834–1896) was one of
the single most influential figures of the
nineteenth century. Under his direction
Morris & Co. grew into a flourishing and
Arts & Crafts icon.
Always guided by Morris’s creative intuition, new
designs are inspired by treasures in our archive,
which houses historical log books, samples of
every wallpaper, printed and woven textiles and
original wooden printing blocks.
As custodians of the original company
founded by William Morris in 1861, Morris &
Co. embodies the ethos and decorative style of
this important cultural icon. The incredible Morris
& Co. archive provides a wonderful source of
inspiration to our teams, ensuring that Morris’s
legacy lives on with expertly crafted products
and reimagined designs.
25
Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
PLAYFULLY BRITISH
DESIGNS THAT
BRING JOY TO THE
EVERYDAY.
26
Putting the joy back into the soul of
interior design! Scion presents an
uplifting solution to any domestic
scheme, with fresh Scandi-inspired
designs, zesty colours and rejuvenated
ideas for modern living.
Appealing to a broad audience eager for
vibrancy, Scion collections are full of
spontaneous individuality whilst upholding
an enduring appeal.
Packed with Scandi-inspired influences,
sketchbook looks and flashes of zesty colour,
Scion is a joy to be around. Join Mr Fox and
his friends as they share Scion’s cheerful
personality and upbeat style across a range of
fabrics, wallpapers and home accessories.
As a forerunner of the Transitional
Style, Clarke & Clarke embodies an
agile design ethos.
Recognising that interior design is an
important expression of the self, the brand
responds to the everyday need for versatile,
high-quality designs, as well as products with
a finger on the pulse of recent trends.
With its extensive portfolio of products
appealing to customers and interior designers
alike, Clarke & Clarke’s business has continued
to grow since its inception 20 years ago.
Boasting a global reach underpinned by
impeccable service, the company’s original
creative vision remains.
POLISHED LOOKS
EMBODYING THE
BEST OF BRITISH
ECLECTICISM.
27
Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
ANTHOLOGY
CUTTING-EDGE
DESIGN FOR DYNAMIC
METROPOLITAN
SPACES.
The sleek modernity powering
Anthology’s impressive design ethos
references technological advancements
in production techniques. With designs
that feature a virile minerality and
dignified colour-signatures, Anthology
evokes the lustrous dynamism at the
centre of an exhilarating modernity.
28
Winners of the Queen’s award for
enterprise, Standfast and Barracks
is widely acknowledged as a leader
in its field.
For more than 95 years, Standfast & Barracks
has proudly produced beautiful prints for many
of the world’s finest design-led home furnishing
and apparel brands. Continued investment in
digital printing and innovative techniques
ensure the company’s success, which was
recognised this April with the Queen’s Award
for International Trade – the highest official
UK awards for British businesses.
ONE OF THE
MOST VERSATILE
AND DISTINCTIVE
FABRIC PRINTERS
IN THE WORLD.
29
Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
Anstey Wallpaper Company is the
largest contract wallcovering printer
in the United Kingdom and has the
broadest machine profile in Europe,
backed by all the necessary design
and technical expertise required to
allow us to offer a unique and
unparalleled combination of printing
permutations on a wide variety of
substrates and widths.
Anstey is one of the world’s foremost printers
of wallcoverings, providing unrivalled
versatility and capability throughout its
100-year history. Innovative techniques and
a unique combination of printing methods
are at the heart of the company’s business,
which produces for Sanderson Design Group
as well as many third-party customers in the
UK and around the world.
OFFERING A UNIQUE AND
UNPARALLELED COMBINATION
OF PRINTING PERMUTATIONS.
30
BRINGING THE
BEAUTIFUL
INTO PEOPLE’S
HOMES
AND LIVES.
31
Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
CHIEF FINANCIAL OFFICER’S REVIEW
STRENGTHENED
FINANCIAL
PLATFORM.
32
Sanderson Design Group PLC (formerly Walker Greenbank PLC) The Chairman’s Statement and Chief Executive Officer’s Strategic and
Operating Review provide an analysis of the key factors impacting the
results including the effects of Covid-19. Our business was severely
disrupted in the financial year by the effects of lock downs both in the
UK and in overseas markets.
Revenue performance
Our reported revenue for the year was £93.8 million (2020: £111.5
million), a reduction of £17.7 million or 15.9% on prior year.
Total revenue
Comprising:
Brand product revenue
Manufacturing external revenue
Licensing
Year ended 31 January (£m)
2021
93.8
72.6
17.5
3.7
2020
Change (%)
111.5
(15.9)
84.7
21.3
5.5
(15.4)
(17.9)
(33.0)
Underlying profit performance
Despite the effects of the pandemic on our revenues we have
achieved an adjusted underlying profit before tax of £7.1 million
(2020: £7.4 million). We can report an increase in margin for
adjusted underlying profit before tax to 7.5% (2020: 6.6%). The profit
performance has benefitted from actions to grow revenue in the
second half, reduce the cost base, increase efficiencies and access
government support such as the CJRS.
Our business was severely disrupted in the first half by the effects
of lock downs. In the second half year, despite further lock downs,
we experienced trading more in line with prior years with a strong
performance in our peak selling months of October and November
2020. Our manufacturing and distribution facilities have remained
open since the first lock-down and have operated at full capacity.
The Group believes that this demand reflects a widely reported trend
in the home improvement and furnishings sector, with consumers
having directed discretionary spending on their homes during the
Covid-19 pandemic.
Year ended 31 January (£m)
2021
2020
H1
38.8
0.4
H2
55.0
6.7
H1
55.9
4.9
H2
55.6
2.5
Revenue
Adjusted underlying PBT
The table above demonstrates the extreme effect of the initial lock
down, when we had to close facilities and furlough a significant
number of employees. During the financial year ended 31 January
2021, we received a total of £3.1 million from the CJRS. We repaid
£0.4 million in February 2021 for the 68 employees made redundant
in August 2020.
Income statement
The Group’s income statement is summarised below.
Revenue (£m)
Gross profit (£m)
Gross profit (%)
Net operating expenses (£m)
Profit from operations (£m)
Year ended 31 January
2021
93.8
57.0
60.8
51.8
5.2
2020
111.5
68.1
61.1
63.3
4.8
Gross profit margin has held up at 60.8% (2020: 61.1%), despite the
disruptive effects of Covid-19 and Brexit, and the enforced
manufacturing operation closure for three months in the first half of the
year. Distribution and selling costs, administration costs and net other
income are included in net operating expenses. Distribution and selling
costs have been reduced by £3.8 million to £19.1 million (2020: £22.9
million) on the back of lower volume of transactions and reduced
samples in the first half of the financial year. Administration costs have
decreased by £9.3 million to £36.5 million (2020: £45.8 million) through
efficiency and cost-saving initiatives, which have included staff cost
savings, reduced travel and control of consultancy, legal and
professional and marketing expenditures. Net other income which
represents consideration from the sale of marketing materials and
additional services has reduced by £1.5 million to £3.8 million (2020:
£5.3million), as a result of the closure of non-essential retail for long
periods during the financial year.
The reported revenue and operating profit by reporting segments us
set out below.
Year ended
31 January 2021
Brands
£m
Manufacturing
£m
Eliminations and
unallocated
£m
Total revenue
76.3
28.4
(10.9)
Total
£m
93.8
Profit from
operations
Year ended
31 January 2020
Total revenue
Profit from
operations
7.5
1.7
(4.0)
5.2
90.2
8.2
35.6
2.2
(14.3)
111.5
(5.6)
4.8
Underlying profit before tax
Statutory profit before tax of £5.0 million (2020: £4.4 million) includes
non-underlying charges of £1.2 million (2020: £2.0 million) as set
out below.
33
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
CHIEF FINANCIAL OFFICER’S REVIEW
CONTINUED
Statutory profit before tax
Add back:
Amortisation of acquired intangible assets
Restructuring and reorganisation costs
Anstey net other income
Total non-underlying charge included in
profit before tax
Underlying profit before tax
Add back:
LTIP accounting charge
Net defined benefit pension charge
Adjusted underlying profit before tax
excluding LTIP and defined benefit
pension charge
Year ended 31 January (£m)
2021
5.0
1.0
0.2
–
1.2
6.2
0.3
0.6
7.1
2020
4.4
1.0
1.1
(0.1)
2.0
6.4
0.4
0.6
7.4
The Group generated strong cash inflow from operating activities
during the year of £18.2 million (2020: £9.6 million).
Working capital has improved significantly through the reduction in
inventory and receivables in the year, as tighter working capital
management controls were implemented and the strategy of reducing
SKUs and scale of new collection launches were applied. The tight
control of inventory continues with new operating replenishment rules
and bi-weekly commercial review meetings.
Key working capital balances and their movements year on year are
set out below:
Inventory
Trade debtors
Trade creditors
Year ended 31 January (£m)
2021
20.4
11.7
(8.8)
2020
28.5
13.1
(14.3)
Acquisition-related costs incurred were in respect of the acquisition
of Clarke & Clarke, which completed on 31 October 2016. This
comprises the amortisation of intangible assets of £1.0 million
(2020: £1.0 million).
Restructuring and reorganisation costs of £0.2 million (2020:
£1.1 million) reflect the rationalisation of certain operational and
support functions during the year. These costs mainly comprise
employee severance costs associated with the restructuring and
reorganisation processes.
Net finance costs reduced to £0.2 million (2020: £0.4 million),
as the Group paid down its bank debt during the year.
Taxation
Tax expense for the year is £1.1 million (2020: £0.7 million).
Earnings per share
Basic reported EPS for the year was 5.50p (2020: 5.24p). The Group
also reports an adjusted underlying EPS which adjusts for the impact
of the LTIP accounting charge, net defined benefit pension charge
and other non-underlying items, as these items can fluctuate due to
external factors outside of the control of the Group. The adjusted
underlying basic EPS for the year was 8.00p (2020: 9.26p).
Liquidity and cash flow
We have actively conserved cash and controlled costs to mitigate the
effects of Covid-19. The Group cut its operating costs, marketing and
discretionary expenditure, capital expenditure programs and dividends,
due to uncertainty in the health, economic and political environment.
As a result, despite significant Covid-19 disruption, the Group has
increased liquidity and headroom to £30.5 million at 31 January 2021
(2020: £13.8 million), with a year end net cash position of £15.1 million
(2020: £1.3 million) and repaid its UK bank debt (2020: £1.7 million).
Capital expenditure was £1.0 million (2020: £2.4 million), with tight
cash controls applied in response to Covid-19. The Group made
additional payments to the pension schemes of £2.1 million (2020:
£1.9 million) to reduce the deficit, as part of the ongoing planned
reduction. Tax paid during the year was £23,000 (2020: £0.8 million).
Tax payments have been made shortly after 31 January 2021 of £1.3m.
Banking Facilities
The Group has banking facilities provided by Barclays Bank plc.
In October 2019, the Group renewed its £12.5 million multi-currency
revolving committed credit facility with Barclays Bank plc for a further
five-year period. The agreement also includes a £5 million uncommitted
accordion facility option to further increase available credit which
provides substantial headroom for future growth. Our covenants under
the facility are EBITDA and interest cover measures.
Following the outbreak of Covid-19, the Group obtained a temporary
overdraft facility of £2.5 million to April 2021, to complement the
headroom in our existing £12.5m revolving credit facility. Agreement
was reached with Barclays Bank plc during June 2020 to waive the
interest cover covenant condition for the quarterly tests arising through
to July 2021 and to waive the leverage covenant condition for the
quarterly tests through to April 2021. A liquidity covenant was
introduced, requiring that available headroom within the £12.5 million
facility remains above £5 million through to July 2021. All covenants
were complied with during the year and up to the date of this report.
All of the Group’s bank facilities remain secured by first fixed and
floating charges over the Group’s assets.
Net defined benefit pension
The Group operates two defined benefit schemes in the UK for its
employees. These comprise the Walker Greenbank Pension Plan and
the Abaris Holdings Limited Pension Scheme, which are both closed to
new members and to future service accrual from 30 June 2002 and
1 July 2005 respectively.
34
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
Credit risk
The Group does not generally seek credit insurance as this is not a
commercial solution to reducing credit risk. The Board reviews the
internal credit limits of all major customers and reviews the credit risk
regularly. The ageing profile of trade debtors shows that payments
from customers are close to terms. The current economic environment
still presents a level of risk and in addition to specific provisioning
against individual receivables, a provision has been made of
£0.5 million (2020: £0.4 million), which is a collective assessment of
the risk against non-specific receivables. The Group has experienced
limited bad debts in the last 12 months and has enhanced its credit
management procedures to improve controls and mitigate potential
credit risk.
Going concern
The Directors consider that, having considered forecasts prepared
by the management team which have been stress tested, the Group
and Company have adequate resources to continue trading for the
foreseeable future. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
I would like to thank my finance colleagues across the Group for their
efforts particularly since the start of lock-down from 23 March 2020.
In these difficult circumstances, the teams have been working remotely
and their dedication and professionalism has enabled the Group to
deliver the improved results as presented today.
Michael Williamson
Chief Financial Officer
17 May 2021
Pension deficit
We reported a valuation under IAS 19 at 31 January 2021 of
£5.6 million (2020: £5.7 million), despite the economic uncertainties
and low interest rates for bonds. The valuation improvement from
the interim results was principally due a recovery in equities and
stock markets.
The triennial valuation of the defined benefit schemes is due to be
carried out based upon the schemes’ position on 5 April 2021. The
Group has appointed independent pension and actuarial specialists
to support the company through the valuation process.
The movements in the pension valuation for IAS 19 purposes is set
out below:
Year ended 31 January (£m)
Deficit at beginning of the year
Scheme expenses
Interest cost
Expected return on plan assets
Contributions
Return on scheme assets
Experience adjustments on benefit
obligation
Actuarial loss from the change in financial
assumptions
Actuarial gain from the change in
demographic assumptions
Gross deficit at the end of the year
2021
(5.7)
(0.4)
(1.4)
1.3
2.1
1.6
0.7
(5.2)
1.4
(5.6)
2020
(9.7)
(0.4)
(1.9)
1.6
1.9
11.6
(0.4)
(9.0)
0.5
(5.7)
In 2019, the Company agreed a recovery plan to pay contributions to
eliminate the funding shortfall by October 2026.
Dividends
As a result of the pandemic during the year and in order to protect
the Group’s liquidity, no dividends were declared or paid during the
financial year. The Board will continue to review the dividend policy
during the coming months and an update will be provided at the time
of the announcement of the Company’s interim results later in 2021.
Foreign currency risk
All foreign currencies are bought and sold centrally on behalf of the
Group. Regular reviews take place of the foreign currency cash flows,
unmatched exposures are covered using forward contracts and working
capital exposures are hedged using currency swaps, as appropriate.
The Group does not trade in financial instruments and hedges are used
for highly probable future cash flows and to hedge working capital
exposures.
35
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
KEY PERFORMANCE INDICATORS
REVENUE _ £m
REVENUE GROWTH _ %
21
20
19
18
17
93.8
111.5
113.3
112.2
92.4
21
20
19
18
17
-15.9
-1.6
1.0
21.4
5.2
Total current year revenue.
Growth is the total current year revenue as a percentage of the
previous year’s revenue.
ADJUSTED UNDERLYING PROFIT BEFORE TAX _ £m
ADJUSTED UNDERLYING PROFIT BEFORE TAX _ %
21
20
19
18
17
7.1
7.4
9.5
12.7
10.4
21
20
19
18
17
7.5
6.6
8.4
11.3
11.3
Underlying profit before tax adjusted for the share based incentives,
defined benefit pension charge and non-underlying items.
Underlying earnings adjusted for accounting charges relating to
the share-based incentives, defined benefit pension charge and
non-underlying items expressed as a percentage of revenue.
ADJUSTED EARNINGS PER SHARE _ pence
NET CASH EXCLUDING ‘LEASES’ FUNDS _ £m
21
20
19
18
17
8.00
9.26
10.80
14.77
13.67
21
20
19
18
17
15.1
1.3
0.4
-5.3
-5.1
Underlying earnings adjusted for accounting charges relating to
the share-based incentives, defined benefit pension charge and
non-underlying items, less tax at the effective rate, divided by the
weighted average number of shares in issue during the year.
Year end cash and cash equivalents less borrowings and leases.
NET CASH FLOW _ £m
INVENTORY _ £m
21
20
19
18
17
14.4
0.9
5.7
-0.2
-8.0
21
20
19
18
17
Net increase in cash and cash equivalents.
Year end total inventory, net of provision.
CAPEX _ £m
REPORTED EBITDA _ £m
21
20
19
18
17
1.0
2.4
2.8
3.5
6.8
21
20
19
18
17
Total capital expenditure less proceeds from disposal for the year.
Profit before tax adjusted for interest, depreciation and
amortisation.
20.4
28.5
28.0
29.5
30.3
12.6
12.1
10.4
18.3
11.1
36
Sanderson Design Group PLC (formerly Walker Greenbank PLC) 37
Strategic ReportGovernanceFinancial Statements Sanderson Design Group Annual Report and Accounts 2021
PRINCIPAL RISKS
The Group has put in place an ongoing process to identify, monitor and
manage the risks faced by the Group. Risks are ranked according to
their potential financial impact and probability. The Board regularly
reviews the risks faced by the Group and the controls in place to
mitigate any potential adverse impacts. There are general business
risks faced by the Group that are comparable to those faced by most
other businesses.
General business risks include:
– Marketplace – changes in the economic environment, impact of
Brexit and changes in consumer discretionary spending.
– Financial – availability of bank borrowing and costs of borrowing,
taxation and pension fund liability.
– Operational – market penetration, international expansion and
information security (IT systems, cyber risk and General Data
Protection Regulation).
The Group is a responsible employer, compliant with all relevant human
resources and health and safety regulations. The Group keeps its
employees informed on matters affecting them and on the progress
of the Group by way of informal meetings and consultation with
employees’ representatives. All Group businesses apply the principles
of equal opportunity in recruitment, career progression and
remuneration. Disabled persons are given full and fair consideration
for employment where an appropriate vacancy occurs, having regard
to their particular aptitudes and abilities. Whenever possible,
arrangements are made for the continuing employment of persons
who have become disabled during service and for appropriate training
of all disabled employees, who are given equal consideration with
all other employees in promotion and career development.
In addition, there are a number of more specific risks which are more
relevant to Sanderson Design Group and the industry in which we
operate. These risks are principal risks and uncertainties facing the
Group that are material to our strategy. The Board recognises that
the nature and scope of risks can change; the list is not intended to
be exhaustive, and regular review and monitoring form part of the
Board’s agenda.
VIABILITY STATEMENT
The Group meets its day-to-day working capital requirements
through its £12.5 million committed revolving credit facility to
October 2024, a temporary £2.5 million overdraft facility taken in
light of Covid-19 to April 2021 together with an uncommitted
£5 million accordion. The Group’s forecasts, taking into account
the Board’s future expectations of the Group’s performance,
indicate that there is sufficient headroom within these bank
facilities. The Directors’ assessment has been made with reference
to the resilience of the Group and its strong financial position
as demonstrated by its performance over the past year, the
Group’s current strategy, the Board’s risk appetite and the Group’s
principal risks and how these are managed, as described in the
Strategic Report. As a result of the Group’s strong performance,
the temporary £2.5 million overdraft facility was not renewed
in April 2021.
An assessment period of three years has been chosen as it is
consistent with the Board’s strategic review of the Group’s strategy
at which the prospects of each business segment are discussed;
assumptions are made regarding future growth rates of the existing
business segments, efficiencies and profits and about the acceptable
performance of the Group. Based on the results of this analysis, the
Directors have a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due over
the three-year period of their assessment.
38
Sanderson Design Group PLC (formerly Walker Greenbank PLC) MARKETPLACE
CHANGE
CONTROLS TO MITIGATE
Trading environment
Specific macroeconomic and geopolitical
factors can influence our business and ability
to trade across borders. Governments in key
markets influence cross-border control, which
could make it more difficult for us to source,
buy and move products into and out of the
territories we operate in.
The Group operates in major international
markets which have different drivers and
macro-economic outlooks.
Given that our products may be viewed as
discretionary, there is a risk that these are
impacted by consumer confidence.
Change in consumer trends in interior
decoration.
Brexit
On 31 December 2020, the UK ended the
transition period and exited the EU with a new
trade deal agreed a few days before.
The free trade deal was announced by the UK
and EU governments. However, there are
complications in these tariff free arrangements
which are likely to add costs in the short to
medium term.
The new arrangements also add a layer of
additional documentation required for
shipments between the UK and EU and vice
versa. In early 2021 this has led to some delays
in shipments to the EU largely due to
processing backlogs in Europe.
Competition
The Group operates in markets that are highly
competitive.
We have knowledgeable Tax and Customs advisors who engage with authorities and
regulators in key markets, to keep abreast of local changes or developments globally and
recommend changes or adaptations to our business operations to mitigate the impact.
The Group continues to focus on strong cost control including cost re-engineering to try to
ensure that it remains well positioned to deal with an uncertain environment.
Focus on product diversification through licensing opportunities, new product categories
including ready-made curtains, bedding and furniture all help to strengthen our product
offering.
The Group offers a well-balanced, diverse product range to meet the demands of different
customers. Clarke & Clarke, which is at the affordable end of the market, accelerates the
Group’s market penetration strategy.
The Group is broad based and the design teams constantly monitor trends within and
outside our marketplace.
The Group made extensive preparations for several possible scenarios on expiry of the
transition period.
Management continues to review the impact of the trade agreement regulations on our
business activity.
It has become apparent that there is potential for tariffs to be charged on trade between
the UK and EU owing to complex rules on the origin of exports to the EU.
The Group has joined with other companies in the sector in lobbying the UK Government to
agree changes to these rules to allow smoother tariff free operations.
The business works closely with its shippers and other advisers to ensure it remains
compliant with the new rules and documentation requirements.
Delivery times are much improved after initial disruption and our customers appreciate
our support.
The Group has sought to differentiate itself through high- quality luxury products and
continues to develop new product categories and extension of market positions.
We have continued to invest in our British manufacturing sites through innovative printing
techniques and including in-house paint tinting and distribution.
There is focus on product extension through global recognition of the Group’s heritage
brands and the contemporary design excellence, broadening the product range including
selling finished products online and exploring worldwide licensing opportunities.
The Group’s focus is on international expansion through the distribution and marketing of
our brands in the important US and Northern Europe markets. Our acquisition of Clarke &
Clarke has helped to enhance our international reach, particularly in the US.
We are continuing to make progress with consumer e-commerce development.
FINANCIAL
CHANGE
CONTROLS TO MITIGATE
Foreign exchange
A large proportion of the Group’s activities
and earnings are denominated in US dollars
and euros, giving rise to foreign currency
exposure.
The Group monitors revenue and earnings to minimise exposure to foreign exchange
losses. Increasing exchange rate volatility may have an adverse effect on the balance
sheet and/or profit and loss account.
We continue to monitor the implications of emerging macroeconomic risks, including Brexit,
to help prepare for any volatility in foreign exchange movements and through natural
hedging in currencies where possible.
Pension funding
A worsening funding position may require the
Group to pay cash contributions or provide
further assurance to cover future liabilities.
This could worsen the Group’s cash flow.
Both of the defined benefit schemes are closed to new members and to future accrual of
benefits.
The Group seeks to agree appropriate investment policies with the Trustees and closely
monitors the funding position of the pension schemes with the Trustees. Both the Company
and the Trustees take advice from independent qualified actuaries and pension specialists.
39
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
PRINCIPAL RISKS CONTINUED
OPERATIONAL
CHANGE
CONTROLS TO MITIGATE
The Group’s employees are its key asset. The depth of their experience is a real benefit to
the business and accordingly the Group focuses on attracting and retaining employees.
The Remuneration Committee monitors the levels and structure of remuneration for
Directors, senior management and colleagues generally, and seeks to ensure that they are
designed to attract, retain and motivate the key personnel to run the Group successfully.
In addition, the Group offers competitive remuneration packages including annual bonus
incentives and long-term incentive schemes designed to retain key individuals.
There is ongoing emphasis on high quality control throughout the various stages, right from
manufacturing through to delivery of the finished product and customer satisfaction.
The Group monitors its carbon emission targets by having relevant KPIs to measure carbon
footprints certified by Planet Mark and embedding the sustainability values across the
organisation.
There are ongoing reviews of environmental legislation through the membership of
professional and trade associations.
Onsite incinerator processes vapours and fumes are installed to ensure that emissions are
within the agreed limits and monitored frequently. Waste solvents are barrelled and taken
off site.
Waste ink is filtered and the solid residue is taken off site.
At our Anstey factory, Severn Trent monitors the water testing samples on a regular basis.
Effluent discharge at the Standfast factory is monitored daily and there are preventative
measures to avoid incidents and appropriate procedures to deal with potential
environmental disasters.
The Group has immediate response capability via the Group Leadership Team when
required especially for Covid-19.
There are fire, health and safety groups on all sites.
The Group publishes, monitors and reports on health and safety incidents internally and in
compliance with regulatory environments. There are established auditing and monitoring
systems.
Business continuity and disaster recovery plans are regularly reviewed to ensure the
uninterrupted operation of the Group’s core business operations.
The Group holds insurance cover to mitigate the financial consequences of a major
incident.
Extensive flood defence measures have been installed at the Standfast site and these
measures are constantly monitored.
For fire safety, the Group has emergency planning procedures in place and adequate
sprinkler systems together with an alarm system linked to the fire brigade.
The segregation of the Group’s central warehousing facility with two warehouses has
helped to mitigate risk to stock.
The Group has appropriate controls in place to mitigate the risk of systems failure,
including an IT disaster recovery plan, off-site back-up routines, virus protection and
network security controls. Security controls and processes are assessed and updated on a
regular basis.
The Group employs a framework of IT controls to protect against unauthorised access to
our systems and data, which includes the maintenance of firewalls and intruder detection
as well as the encryption of data.
The various business units have disparate platforms which helps to reduce the overall risk.
Recruitment and retention of key employees
The Group is reliant upon a number of key
employees to design, manufacture and sell
its products.
Reputation risk
The Group prides itself on the high quality
of its product range.
Environmental risk
The Group strives to become net carbon
zero by 2030, complies with environmental
legislations and seeks to prevent excessive
emissions and effluent discharges resulting
in fines and closures.
Health and safety risk
The Group has robust plans to ensure the
health and safety of all employees and third
parties are maintained on site, especially
during the time of the Covid-19 pandemic.
Major incident or disaster
such as a fire/flood
The Group ensures that appropriate measures
are implemented to prevent and deal with
major incidents or disasters, especially fire
and flood.
IT
The cyber security landscape is continuously
evolving, with threats becoming more
sophisticated and aggressive. A significant
failure of IT infrastructure or key IT systems,
deliberate or accidental, could result in a loss
of information, inability to operate effectively,
financial or regulatory penalties, and
negatively impact our reputation as a result of
the impact on the availability of our products
and consequently reduce sales.
40
Sanderson Design Group PLC (formerly Walker Greenbank PLC) SECTION 172 STATEMENT
ON THE DISCHARGE OF DIRECTORS’ DUTIES
In compliance with the Companies Act 2006, the Board of Directors is
required to act in accordance with a set of general duties. During the
year ended 31 January 2021, the Board of Directors consider they
have, individually and collectively, acted in a way they consider, in
good faith, would be most likely to promote the success of the
Company for the benefit of its shareholders as a whole, having regard
to a number of broader matters including:
– the likely consequences of any decision in the long term;
– the interests of the company’s employees;
– the need to foster the company’s business relationships with
suppliers, customers and others;
– the impact of the company’s operations on the community and the
environment;
– the desirability of the company maintaining a reputation for high
standards of business conduct, and
– the need to act fairly as between members of the company.
The Board recognises the importance of building and maintaining
relationships with its key stakeholders, and considering the external
and internal impact of the Group’s operations, in order to achieve long
term success.
Our Group comprises a number of business units, all of which have
engagement with their own unique stakeholders as well as the other
parts of the business that form the Group. The Group’s governance
delegation of authority framework allows local decision-making at
business unit level up to defined limits and is monitored by the Board.
This allows the individual business units to take account of the needs
of their own stakeholders in their decision-making, whilst the Board
routinely monitors and retains ultimate responsibility.
The Group Leadership Team (“GLT”), which comprises the leaders of
each business unit, meets 3 times a week, and reports and
presentations are made to the Board by the GLT regarding strategy,
performance and key decisions taken. From April 2020 to January
2021, during the heart of the Covid-19 pandemic, the GLT met daily.
In its consideration of decisions and actions to be taken in approval of
business projects and the Group’s strategy, the Board takes care to
have regard to the likely consequences on all stakeholders of the
decisions and actions they take. Where possible, decisions are carefully
discussed with affected groups so as to ensure they are understood
and supported, when actions are implemented.
Details of the Group’s key stakeholders and how we engage with them are set out below.
WHO ARE OUR
STAKEHOLDERS?
Shareholders
WHY WE FOCUS ON
THESE STAKEHOLDERS
HOW DO WE ENGAGE
WITH THEM?
HOW HAS THE BOARD TAKEN
ACCOUNT OF THESE INTERESTS?
As owners of the Group, we rely
on the support of shareholders
and their opinions are important
to us.
Discussions with shareholders cover a
wide range of topics including
financial performance, strategy,
outlook and governance. Shareholder
feedback along with details of
movements in our shareholder base
are regularly reported to and
discussed by the Board and their
views are considered as part of
decision-making.
Our NOMAD has regular discussion
and review with the Board and
advises on wider market-related
sentiment. Feedback received is
considered by the Board where it
impacts on strategy.
The Chief Executive Officer and
Chief Financial Officer have
regular dialogue with institutional
investors in order to develop an
understanding of their views.
Presentations are made bi-
annually to analysts, investors and
prospective investors covering the
annual and interim results.
The AGM is an important
opportunity for private
shareholders to meet the Board
with all the Directors available to
listen to shareholders views
informally immediately following
the meeting.
The Company website has an
investors section giving private
investors direct access to business
information and reports and
presentations; there is also an
enquiries mailbox facility.
41
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
SECTION 172 STATEMENT CONTINUED
WHY WE FOCUS ON
THESE STAKEHOLDERS
HOW DO WE ENGAGE
WITH THEM?
HOW HAS THE BOARD TAKEN
ACCOUNT OF THESE INTERESTS?
WHO ARE OUR
STAKEHOLDERS?
Colleagues
Our people are key to the success
of the Group and we want them to
be successful individually and as a
team. Our investment in our
people protects and strengthens
our culture. Through our Live
Beautiful sustainability strategy,
the Group aims to foster a
sustainable workplace and
engender a working culture that
empowers all.
There are many ways we engage
with and listen to our people
including a bi-annual employee
engagement survey*, Group-wide
newsletters, a weekly note to all
staff from the CEO, as well as
business unit and site briefings,
informal meetings and
consultation with employees’
representatives.
In 2020, a Group internet
employee wellbeing hub was
introduced.
The Group intranet learning-hub
facilitates personal development.
The Group has made known to the
employees its goal is to be the
employer of choice in our industry
with a target of at least 70%
engagement of our colleagues
based on workplace culture,
diversity and inclusivity.
We build strong lasting
relationships with our customers
and spend time with them to
understand their needs and
views and listen to how we can
improve our products and
services for them.
Engagement with suppliers and
business partners is primarily
through regular meetings and
membership of trade sector
organisations.
Refreshed supplier manuals
communicating our values and
expected standards of service and
quality so we have shared goals to
build collective success.
The results of the 2021 employee
engagement survey will be presented
to the Board with a follow-up
programme of two-way engagement
by site and business unit/function by
HR teams across the Group, with
feedback reported regularly to the
Board. A reward and recognition
programme is being introduced across
functional business unit groups.
As part of its regular monthly
reporting pack the Board has
introduced customer and social media
engagement feedback as well as
service level fulfilment statistical
information to better understand the
needs of customers and improve the
customer experience.
The Board recognises that
relationships with suppliers are
important to the Group’s long-term
success. Feedback from
attendance at trade events forms
part of the Board presentations.
Key areas of focus include product
development and innovation, with
focus on health and safety and
sustainability, as well as regular
dialogue between our
management team and those of
our suppliers on increasing
efficiency for all parties.
Customers and Clients
Good relationships with our
customers are important for the
success of our business.
Suppliers
We build strong relationships with
our suppliers to develop mutually
beneficial and lasting
relationships.
* Annual engagement survey – there was no survey in 2020 due to the impact of Covid-19. The 2021 survey is planned for May 2021, with the results planned to be presented to the Board.
42
Sanderson Design Group PLC (formerly Walker Greenbank PLC) WHO ARE OUR
STAKEHOLDERS?
Communities
WHY WE FOCUS ON
THESE STAKEHOLDERS
HOW DO WE ENGAGE
WITH THEM?
HOW HAS THE BOARD TAKEN
ACCOUNT OF THESE INTERESTS?
We operate from a number of
different sites and seek to be a
good neighbour with the local
communities and to build trust and
understand the local issues that
are important to them.
We create opportunities to recruit
and develop local people and help
to support the local economy and
look after the environment. Local
charities and fund-raising are
supported, often through product
and time donations.
Government and regulators
We wish to operate in an ethical
way and in compliance with laws
and regulations.
The Group has professional
advisers in terms of legal, tax and
regulatory compliance and all
Directors have access to
independent advice.
The Board recognises the importance
of good community relations with
both internal and external
stakeholders as well as our wider
social responsibilities. The impact of
our operations from an environmental
perspective, both locally and globally,
is recognised e.g. capital expenditure
projects focused on efficiency and
reducing environmental emissions.
Further details are contained within
our Corporate Responsibility section.
The Board is updated on legal and
regulatory developments and takes
these into account when considering
future actions. Key areas of focus for
the Board are compliance with laws
and regulations, health and safety
and wellbeing of employees and users
of our products.
43
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
BOARD OF DIRECTORS
BOARD OF DIRECTORS
NON-EXECUTIVE DIRECTORS
Dame Dianne Thompson
Non-Executive Chairman
Christopher Rogers
Non-Executive Director
Vijay Thakrar
Non-Executive Director
Terms of employment
Dianne joined the Board in February 2019,
initially as a Non-executive Director. In April
2019, following the appointment of the new
Chief Executive Officer, Dianne became the
Non-executive Chairman. She is a highly
experienced sales and marketing executive and
is currently a non-executive director of NEXT plc
and Pagefield Ltd. From 2000 until 2014, Dianne
was chief executive of Camelot Group plc, the
UK National Lottery provider. Prior to that role,
she held marketing and general management
positions in a number of consumer and building
materials businesses including Signet Group plc,
Sandvik Saws & Tools Ltd and ICI Paints.
Committee membership
– Audit Committee
– Remuneration Committee
– Nomination Committee
Terms of employment
Christopher joined the Board in April 2018 as
a Non-executive Director and Chair of the
Company’s Audit Committee. In October 2018,
on the departure of the CEO, Christopher
became Interim Executive Chairman and held
this role until April 2019 before returning to
being a Non-executive Director and Chair of the
Remuneration Committee. Other non-executive
positions held include Chairman of Wickes plc
and Non-executive Directors at Kerry plc and
Vivo Energy plc. Christopher was an Executive
Director of Whitbread plc for 11 years from
2005, first as Group Finance Director for 7 years
and then as Global MD of Costa Coffee, where
he grew the brand internationally to become the
world’s second largest coffee shop chain.
Christopher is the Senior Independent Director.
Committee membership
– Audit Committee
– Remuneration Committee
– Nomination Committee
Terms of employment
Vijay joined the Board as a Non-executive
Director in November 2018 and became
Chairman of the Audit Committee. He is a
chartered accountant and was previously a
Partner at Deloitte where his clients included
listed brand-based companies. Since leaving
Deloitte, Vijay has served as Non-executive
Director at various public and private businesses
including Quorn Foods and Quoted Companies
Alliance. He is also currently on the Boards of
Alumasc Group plc, RSM Group and Treatt plc.
Committee membership
– Audit Committee
– Remuneration Committee
– Nomination Committee
44
Sanderson Design Group PLC (formerly Walker Greenbank PLC) EXECUTIVE DIRECTORS
Lisa Montague
Chief Executive Officer
Michael Williamson
Chief Financial Officer
Caroline Geary
Company Secretary
Terms of employment
Lisa joined the Group in March 2019 as an
Executive Director and became Chief Executive
Officer on 10 April 2019. Lisa is a highly
experienced luxury goods executive, with
previous roles at Madrid-based international
fashion brand Loewe SA, a Spanish luxury
fashion house owned by the LVMH Group,
Aspinal of London Group Ltd and Mulberry
Group plc. She has significant experience of
leading and developing UK and international
brand-based businesses with manufacturing
and multi-channel distribution.
Terms of employment
Michael joined the Group in December
2019 and became Chief Financial Officer
on 26 February 2020. He has a breadth
of experience across a number of sectors,
including both full-time and interim roles
as Chief Financial Officer at quoted and
private businesses. For the past three years,
Michael has been working on an interim and
consultancy basis for quoted businesses,
private equity firms and entrepreneurs.
Terms of employment
Caroline joined the Group in 2000. She is
a chartered secretary and was appointed
Company Secretary in 2012.
45
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
GROUP LEADERSHIP TEAM
Mauricio Solodujin
Global Commercial Director
Mauricio joined the Group in September 2019 from LVMH, where he had
worked for almost 10 years in roles including Senior Vice President of
LVMH Fashion Group Americas, based in the US, and Retail & Commercial
Director of Loewe, based in Spain. Mauricio’s previous experience includes
more than 10 years at Liberty of London, where he was Director of
Operations. In the role of the Group’s Global Commercial Director,
Mauricio works across all brands, markets and channels to drive sales
growth at the Group.
Nigel Hunt
Group Marketing & Digital Director
Nigel Hunt, a highly experienced marketing executive, joined the Group in
November 2019 as Group Marketing & Digital Director. He previously
worked at Tesco Bank, where he held the role of Brand, Marketing &
Corporate Affairs Director. Prior to Tesco Bank, he worked at Barclays for
17 years in various commercial and marketing roles including Director,
Global Brand & Marketing at Barclays plc.
Ben Naylor
Group Operations Director*
Ben joined the Group in January 2020. Prior to this, Ben worked at Amtico
International, the luxury floorcoverings business, for 13 years, where he
built a track record in manufacturing, procurement and logistics and a
focus on cost, quality and service. Prior to Amtico, he was at Uniq
Prepared Foods and Unipart.
Carla Barnett
Group Human Resources Director
Carla holds an MA from Warwick Business School, is CIPD qualified and
joined the Group in November 2016. She brings a wealth of international
experience in Human Resources across manufacturing and commercial
business units in a variety of roles. Carla has previously worked at
Burberry, Britvic, Scholastic Corporation, Home Group and NEXT.
Claire Vallis
Creative Director
Claire has been with the Group for 25 years. She brings a wealth of
experience and knowledge across manufacturing and design, making
her an unrivalled industry expert. She personifies the integrity and history
of the Brands and uses this to inspire a creative vision for the future.
Mark Kennedy
General Manager
Clarke & Clarke
Mark joined Clarke & Clarke in 2010 and was an integral part of the
success that the brand continues to enjoy today. He brings over 17 years
of industry experience with a strong sales and commercial background in
both the UK as well as international markets.
Stephen Thomas
Managing Director
Standfast & Barracks
Stephen has been with the Group for over 20 years and was appointed
as Managing Director of the fabric printing business in June 2014. He has
significant experience in the car industry, furniture and soft furnishing
manufacturing in both commercial and operational roles.
* also responsible for Anstey Wallpaper Company and Standfast & Barracks, the fabric printing business.
46
Sanderson Design Group PLC (formerly Walker Greenbank PLC) CORPORATE GOVERNANCE
Introduction from the Chairman
All members of the Board recognise the importance of good
governance in reducing risk and adding value to our business.
Delivering growth and long-term shareholder value with effective and
efficient decision-making is of high importance to the Board.
In 2018, it became a requirement for all AIM companies to adopt a
recognised Corporate Governance Code and the Board adopted the
QCA Code in June 2018. The QCA Code includes 10 principles that
focus on the pursuit of medium to long-term value for shareholders.
How the Company has applied these principles is detailed in the
Corporate Governance section of the Company’s website
https://www.sandersondesign.group/.
The Company has complied with the recommendations of the
QCA Code.
This report, together with the information contained in the Audit
Committee Report, the Report of the Directors, Nomination Committee
Report and the Directors Remuneration Report, explains the corporate
governance framework within which the Group operates.
The Board
The Company is supervised by the Board of Directors. The Board
comprises Executive and Non-executive Directors.
On 26 February 2020, Michael Williamson was appointed as the
Chief Financial Officer. He joined the Board as an Executive Director
on 18 December 2019.
Board composition
The Board of Directors who served during the year ended 31 January
2021 and their attendance at meetings is shown in the adjacent table.
Biographical details of the current Board are given on pages 44 and 45.
The Directors bring strong judgement and expertise to the Board’s
deliberations and with diversity achieves a balance of skills and
experience appropriate for the requirements of the business.
Board programme
The Board meets at least ten times each year in accordance with its
scheduled meeting calendar and the attendance by each Board
member at scheduled meetings is shown in the adjacent table.
The role of the Board
The Board is responsible to the shareholders and sets the Group’s
strategy for achieving long-term success. It is responsible for the
management, governance, controls, risk management, direction and
performance of the Group. There is a formal schedule of matters
reserved to ,the Board and formal regulatory announcements, which
includes approval of major capital expenditure projects; approval of
the annual and interim results; setting annual budgets; dividend policy;
and Board structure. It monitors the exposure to key business risks and
reviews the strategic direction of the Group, its annual budget,
performance in relation to the budget and capital expenditure.
The schedule of matters reserved to the Board is available on the
Company’s website.
All Directors receive regular and timely information on the Group’s
operational and financial performance. Relevant information is
circulated to the Directors in advance of meetings. The business
reports monthly on its performance against its agreed budget, and
the Board reviews the monthly update on performance, and any
significant variances are reviewed at each meeting.
Senior executives below Board level attend Board meetings, where
appropriate, to present business updates.
In previous years, the Company’s various sites were visited through
the year, with Board meetings taking place at the sites giving, in
particular, the Non-executive Directors access to the Group’s wider
operations beyond the Head Office to gain a greater understanding
of the Group’s activities and to show the Board’s support of our
colleagues throughout the Group. Owing to Covid-19 during the
financial year, all meetings except one were held virtually and the sole
meeting at a site was held in accordance with social distancing rules.
Directors are expected to attend all meetings of the Board, and of
the committees on which they sit, and to devote sufficient time to the
Group’s affairs to enable them to fulfil their duties as Directors.
Board performance and evaluation
During the year, the Board undertook an internal Board evaluation.
The Board continually reflects on its performance and will initiate a
formal review process in the year ahead.
Attendance at meetings of the Board and its committees
Board
Board –
Covid-19
Audit
Committee
Remuneration
Committee
Nomination
Committee
Total number
of meetings
15
13
3
Meetings attended:
D Thompson
C Rogers
V Thakrar
L Montague
M Williamson
15/15
15/15
15/15
15/15
15/15
13/13
13/13
13/13
13/13
13/13
3/3
3/3
3/3
3/3
3/3
6
6/6
6/6
6/6
–
–
1
1/1
1/1
1/1
–
–
The Board scheduled monthly meetings during the year and additional
meetings were convened to deal with specific matters and approval of
the financial results. Since the Covid-19 pandemic, more frequent
Board meetings have taken place.
Board committees
The Board has Remuneration, Audit and Nomination Committees,
each of which has written terms of reference which are available
on the Company’s website. The committees are composed of the
Non-executive Directors. Details of the composition of each of the
committees are included on page 50 of the Report of the Directors.
The Company Secretary acts as secretary to the committees.
The Board is satisfied that the committees discharged their
responsibilities appropriately.
Independent advice
All Directors are able to take independent professional advice in the
furtherance of their duties, if necessary, at the Company’s expense.
The Board reviews its AIM obligations with its Nominated Advisor
annually. In addition, the Directors have direct access to the advice
and services of the Company Secretary. At the onset of Covid-19,
the Board sought legal advice to ensure the Company had taken
the necessary steps to deal with potential Covid-19 issues.
47
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
CORPORATE GOVERNANCE CONTINUED
Independent Directors
The Board considers that each of the Non-executive Directors bring an
independent judgement to bear. Non-executive Directors are expected
to dedicate a minimum of 25 days per year, plus committee duties. The
Non-executive Directors’ other time commitments are reviewed
regularly.
All Non-executive Directors have contracts that contain six-month
notice clauses. These are available for inspection at the Company’s
registered office and at the Annual General Meeting (‘AGM’). Further
details of each of the independent Directors are set out on page 44.
Nomination Committee
The Nomination Committee is responsible for reviewing the size,
structure and composition of the Board, including consideration of the
skills, knowledge and experience of the Board members. The
Committee also considers the re-election of Directors retiring by
rotation, manages succession planning and selects potential new
Board candidates. The HR Director is invited to attend meetings, when
appropriate. Where necessary, external search consultants are used to
ensure that a wide range of candidates is considered. Where new
Board appointments are considered, the search for candidates is
conducted, and appointments are made, on merit, against objective
criteria and with due regard for the benefits of diversity on the Board,
including gender. Further details of the work of the Committee are
contained in the Nomination Committee Report on page 52.
Remuneration Committee
The Remuneration Committee is responsible for determining the
remuneration policy and the application of the policy in relation to the
Executive Directors’ remuneration. In framing its policy, the
Remuneration Committee may seek advice from external remuneration
consultants and does take into account any factors which it deems
necessary, including industry standard executive remuneration,
differentials between executive and employee remuneration and
differentials between executives. The remuneration of the Non-
executive Directors is determined by the Board, but no Director is
involved in any decisions relating to their own remuneration. Further
details of the work of the Committee are contained in the Directors’
Remuneration Report on page 53.
Audit Committee
The Audit Committee is responsible for monitoring and reviewing the
integrity of the financial reporting process, including the
appropriateness of key judgements and estimates taken in preparing
the financial statements, internal and external audit functions and
internal financial control. Further details of the work of the Committee
are contained in the Audit Committee Report on page 57.
Directors are subject to reappointment at the Company’s AGM
following the year in which they are appointed. The Company’s Articles
of Association stipulate that one third of the Directors, or the nearest
whole number below one third, shall retire each year and that all
Directors retire for re-election at least every third year. In line with best
practice, the Board has decided to adopt voluntarily the practice that
all continuing Directors submit themselves for re-election annually.
Internal control
The Board acknowledges that it is responsible for the Group’s system
of internal control and for reviewing its effectiveness.
The Board keeps its risk control procedures under constant review
particularly with regard to the need to embed internal control and risk
management procedures further into the operations of business, both
in the UK and overseas, and to deal with areas of improvement which
come to management’s and the Board’s attention.
As might be expected in a group of this size, a key control procedure is
the day-to-day supervision of the business by the Executive Directors,
supported by the senior managers with responsibility for key
operations.
The Executive Directors are involved in the budget-setting process,
regularly monitor key performance indicators and review management
accounts on a monthly basis, noting and investigating any major
variances. All significant capital expenditure decisions are approved by
the Board as a whole.
Risk management process
The Group’s significant risks, together with the relevant control and
monitoring procedures, are subject to regular review to enable the
Board to assess the effectiveness of the system of internal control.
During the course of its reviews the Board has not identified nor
been advised of any failings or weaknesses which it has determined
to be significant.
The Group’s system of internal control is designed to manage rather
than eliminate the risk of failure to achieve business objectives, and
can only provide reasonable and not absolute assurance against
material misstatement or loss. The Group’s systems are designed to
provide reasonable assurance as to the reliability of financial
information, ensuring proper control over income and expenditure,
assets and liabilities.
The Board has considered the need for an internal audit function, but
because of the size and nature of its operations does not consider it
necessary at the current time.
Relations with shareholders
The Group encourages two-way communications with both its
institutional and private investors and responds in a timely fashion to
all queries received.
There is regular dialogue with individual institutional investors, in order
to develop an understanding of their views. Presentations are made to
analysts, investors and prospective investors covering the annual and
interim results.
The Company website (https://www.sandersondesign.group/) has an
Investors section giving private investors direct access to business
information and Company reports. There is also an enquiries mailbox
facility.
All shareholders receive notice of the AGM, at which all committee
chairs will be available for questions.
48
Sanderson Design Group PLC (formerly Walker Greenbank PLC) REPORT OF THE DIRECTORS
The total headroom of the Group at 31 January 2021 was £30.5 million
(2020: £13.8 million), including cash and cash equivalents of £15.5
million, the committed facility of £12.5 million and the temporary
overdraft facility of £2.5 million.
In assessing going concern, management has taken account of the
uncertainties caused by Covid 19. A Management Base Case (MBC)
model has been prepared, together with alternative scenarios, given
the uncertainty regarding the impact of Covid 19 (including variants
and further waves of the virus). These indicate that the Company
retains adequate headroom against the borrowing facilities and bank
covenants for the foreseeable future.
There remain significant uncertainties concerning the future effects of
Covid 19 in terms of variants, further restrictions and lockdowns. The
actual results which will be reported will undoubtedly be different from
the MBC and other scenarios modelled by the Company. In the event
that there are significant negative variations from the MBC,
management would act decisively, as they have done in the last year,
to protect the business particularly its cash position. Having taken into
account all of the comments above the Directors consider that the
Group and the Company have adequate resources to continue trading
for the foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
Business review and future developments
A review of the principal activities during the year and likely
developments of the business is contained in the Strategic Report,
together with key performance indicators. A description of the Group’s
exposure to and management of risks is provided in the Strategic
Report.
Section 172(1) statement
A Section 172(1) statement which sets out how the Directors have had
regard to the matters under s172 of Companies Act 2006 is also
included in the Strategic Report on pages 41 to 43.
Financial risk management
Details of the Group’s financial risk management objectives and
policies are contained in the Strategic Report on page 39 and in note 2
to the financial statements.
Research and development
The Group continues to invest in its products to retain and enhance
its market position. Details of the Group’s expenditure on collection
design development costs are set out in note 13 of the financial
statements.
Employees
The statement on our policy for giving full and fair consideration for
disabled employees is shown on page 38 under our Principal Risks
discussion.
The Directors submit their Annual Report together with the audited
financial statements of the Company and its subsidiary undertakings
(‘the Group’) for the year ended 31 January 2021. The Strategic Report
on pages 2 to 43 is incorporated by reference and deemed to form
part of this report.
Group result
The profit before taxation amounted to £5.0 million (2020:
£4.4 million), and profit after tax £3.9 million (2020: £3.7 million).
Change of Name
In December 2020, the Company changed its name to Sanderson
Design Group PLC from Walker Greenbank PLC.
Dividends
No dividend was paid during the year (2020: £0.52p).
The Board recognises the importance of dividend income to
shareholders and is committed to recommencing dividend payments as
soon as conditions allow. Whilst our financial position improved during
the year, there remains significant uncertainty in the external trading
environment as a result of the ongoing pandemic globally. We do not
therefore believe it would be prudent to declare a final dividend for the
financial year 2021. The Board will continue to review the dividend
policy during the coming months with the objective of the Company
returning to dividend payments at the earliest opportunity.
Going concern and Covid-19 impact
The Group has conserved cash throughout the year in light of the
uncertainties caused by the pandemic. This has included the
suspension of dividends, restriction of capital expenditure, tight control
of operating expenditure and access to government support in the UK
and overseas, such as the Coronavirus Job Retention Scheme (“CJRS”).
In the year management has focused on the continuous improvement
of the management of working capital, in particular inventory and
debtors, whilst continuing to meet creditor terms.
In the context of the current Covid-19 outbreak, 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, including the availability and maturity profile of the
Group’s financing facilities and covenant compliance. These financial
statements have been prepared on the going concern basis which the
Directors consider appropriate for the reasons set out below.
The Group funds its operations through cash generated by the
Group and has access to a £12.5 million revolving credit facility (“RCF”)
which is linked to two covenants. These covenants are tested quarterly
at 30 April, 31 July, 31 October and 31 January each year until the
debt matures in October 2024. The Group also agreed a temporary
overdraft facility with Barclays at the start of the pandemic of
£2.5 million, to April 2021, giving total facilities of £15 million until
April 2021 and £12.5m thereafter. In addition, there is an uncommitted
accordion facility of £5 million. In June 2020, the Directors successfully
negotiated a waiver of the Group’s interest cover covenants to July
2021 and leverage covenant to April 2021 and replaced them with a
liquidity covenant that requires the Group to maintain £5m headroom
against the facilities between 1 November 2020 and 31 July 2021.
Throughout the financial year and up to the date of this report, the
Company has met all covenant tests and maintained headroom of
well over £5 million.
49
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
REPORT OF THE DIRECTORS CONTINUED
Directors
The Directors who served during the year ended 31 January 2021 and up to the date of reporting are as follows:
Name
Position
Dianne Thompson
Non-executive
Director, Non-executive Chairman
Christopher Rogers
Non-executive Director
Vijay Thakrar
Lisa Montague
Non-executive Director
Executive Director, CEO
Michael Williamson
Executive Director, CFO
Date
From 01.02.2020
From 01.02.2020
From 01.02.2020
From 01.02.2020
From 26.02.2020 as CFO,
from 18.12.2019 as Executive Director
Committees1
N, A, R
R, N, A
A, R, N
Details of the Directors’ service contracts are set out in the Directors’
Remuneration Report on pages 53-56, together with details of their
interests in ordinary shares of the Company. No Director has any
beneficial interest in the share capital of any subsidiary or associate
undertaking. Biographical details of the Directors are set out on pages
44 and 45.
Appointment and retirement of Directors
Subject to applicable law, from time to time the Board may appoint
any person to be a Director. Under the Articles, any such Director shall
hold office until the next AGM and shall then be eligible for election.
The Articles require that at each AGM one-third of the Board should
retire as Directors by rotation and that each Director stand for
re-election at least every third year.
In our commitment to good corporate governance practice that is
relevant to our business, the Board has voluntarily adopted the policy
that all continuing Directors stand for re-election on an annual basis, in
line with the recommendations of the UK Corporate Governance Code
2018. At the 2021 AGM, all of the Directors will retire and will offer
themselves for re-election.
Directors’ interests in material contracts
None of the Directors had any material interest in any contract during
the year which was significant to the business of the Group.
Directors’ share interests
The interests of the Directors and their families in the shares of the
Company at the beginning and end of the financial year were as
follows:
D Thompson
C Rogers
V Thakrar
L Montague
1p ordinary
shares
31 January
2021
Number
1p ordinary
shares
31 January
2020
Number
15,000
75,000
7,500
46,989
15,000
22,500
7,500
7,500
There have been no changes in the interests set out above between
31 January 2021 and 17 May 2021.
Pension
The Group operates defined benefit and defined contribution schemes
in the UK and overseas for all qualifying employees. Further
information on the schemes and details of the valuations are given in
note 22 to the consolidated financial statements.
Political donations
The Group has not made any political donations (2020: nil).
Annual General Meeting
The AGM will be held on 20 July 2021. The notice convening the
meeting will be sent to shareholders by way of a separate circular.
Explanatory notes on each resolution to be proposed at the meeting
will accompany the circular.
Share capital
The Company’s issued capital consists of 70,983,505 ordinary shares
with a nominal value of 1p each, with each share carrying the right to
one vote and the right to distributions from dividends or on winding up
of the Company. There are no restrictions on the transfer of securities.
No person has any special rights of control over the Company’s share
capital and all issued shares are fully paid.
Directors’ authority to issue and purchase shares
At the AGM in 2018, the Directors were authorised to allot ordinary
shares up to a nominal value of £233,955 and were further authorised
to make market purchases of up to 7,089,551 of the Company’s
ordinary shares. No purchases of Company shares were made during
the year. Details of shares allotted during the year are shown in note 24
to the consolidated financial statements.
Substantial shareholdings
As at 7 May 2021, the Company was aware of the following substantial
shareholdings in its ordinary share capital. The percentages are
calculated from the 70,983,505 ordinary 1p shares allotted, called and
fully paid up. Comparatives at 7 May 2020 are shown.
Octopus Investments 12.17% (2020: 12.15%), FIL Investment
International 7.80% (2020: 6.90%), Ennismore Fund Management
7.19% (2020: 6.36%), BGF Investments 5.99% (2020: 1.04%),
Hargreaves Lansdown 5.30% (2020: 3.11%), Schroder Investment
Management 4.99% (2020: 8.00%), Charles Stanley 4.98% (2020:
4.58%), Interactive Investor 3.98% (2020: 2.42%).
Directors’ and officers’ liability insurance
The Group maintains liability insurance for its Directors and officers,
including a qualifying third-party indemnity provision, that has been in
place during the financial year and to date of approval of this report.
Independent auditors
The Company is in the process of re-tendering the audit.
PricewaterhouseCoopers LLP ('PwC') has confirmed that it is not its
intention to participate.
1 Bold type denotes Chair.
50
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
STATEMENT OF DIRECTORS RESPONSIBILITIES
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
The Directors are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have prepared the
Group financial statements in accordance with International Financial
Reporting Standards (‘IFRSs’) as issued by the International Accounting
Standards Board (IASB) and the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 101
‘Reduced Disclosure Framework’, and applicable law).
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Company and of the profit or
loss of the Group for that period.
In preparing the financial statements, the Directors are required to:
– select suitable accounting policies and then apply them consistently;
– state whether applicable IFRSs as issued by the International
Accounting Standards Board (IASB) have been followed for the
Group financial statements and United Kingdom Accounting
Standards, comprising FRS 101, have been followed for the
Company financial statements, subject to any material departures
disclosed and explained in the financial statements;
– make judgements and accounting estimates that are reasonable
and prudent; and
– prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and Company will
continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group and Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable them to
ensure that the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
In the case of each Director in office at the date the Report of the
Directors is approved:
– so far as the Director is aware, there is no relevant audit information
of which the Group’s and Company’s auditors are unaware; and
– they have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit
information and to establish that the Group and Company’s auditors
are aware of that information.
By order of the Board
Lisa Montague
Chief Executive Officer
17 May 2021
Registered Office
Chalfont House
Oxford Road
Denham UB9 4DX
Registered number 61880
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Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
NOMINATION COMMITTEE REPORT
Membership
The Committee is comprised solely of independent Directors, being
myself as Chairman and the other Non-executive Directors, Christopher
Rogers and Vijay Thakrar. The Board is satisfied that I have significant
and relevant experience to chair the Nomination Committee in line with
the Code.
Meetings
The Committee meets at least once a year and otherwise as required.
Each meeting is attended by the Committee’s members. A record of the
meeting attendance at formal meetings by Committee members is set
out in the Corporate Governance Report on page 47.
On 14 February 2020, the Committee considered the selection of
Michael Williamson, who was appointed an Executive Director on
18 December 2019, as the Chief Financial Officer and recommended
his appointment to the Board. There was no further meeting during
the year.
Dianne Thompson
Nomination Committee Chairman
17 May 2021
The Company’s Articles of Association stipulate that one third of the
Directors or the nearest whole number below one third shall retire each
year. The Company requires all Directors to submit themselves for
re-election at least every three years. In line with best practice, the
Board has decided to adopt voluntarily the practice that all continuing
Directors submit themselves for re-election annually.
Roles and responsibilities
The role of the Committee is to support the Board in evaluating the
characteristics and performance of Board members and is responsible
for recommending to the Board on all matters relating to the selection,
number, appointment and removal of Executive and Non-executive
Directors. The Nomination Committee ensures that the Company has
adequate policies and procedures to maintain equality of opportunity
for all. In this context, the Nomination Committee’s responsibilities
are to:
– Review regularly the structure, size and composition, including the
skills, knowledge, experience and diversity, of the Board and make
recommendations to the Board.
– Monitor executive recruitment closely in order to be aware of
succession risks and opportunities.
– Carry out an annual examination of the Board’s performance and
competence in achieving the Company’s objectives and alignment
with the overall strategies, which allows them to make decisions on
the future of the Company.
– Develop clarity over the Company’s long-term strategies and make
Board recruitment decisions based on the needs of the Company
over different time horizons.
– Inform the new Directors about the Company’s strategies, goals,
culture and management and plan the training and development of
the new Directors.
The full terms of reference for the Committee can be found on the
Company’s website.
52
Sanderson Design Group PLC (formerly Walker Greenbank PLC) DIRECTORS’ REMUNERATION REPORT
As a company listed on the Alternative Investment Market (‘AIM’), the
Company is not required to comply with the Directors’ remuneration
report requirements, set out in Schedule 8 of the Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations 2008
as amended in August 2013 (the ‘Regulations’). However, transparency
with our shareholders is important to us. While the Company is not
required to comply with the Regulations, the Company has used them
as guidance and voluntarily presents selected disclosures in this report,
where relevant and appropriate.
None of the Committee has any personal financial interest (other than
as shareholders), conflicts of interests arising from cross directorships,
or day-to-day involvement in running the business.
The Committee keeps itself informed of all relevant developments and
best practice in the field of remuneration. It seeks advice from the
Group HR Director and external advisers when it considers it is
appropriate. Deloitte LLP was retained during the financial year to
provide independent advice to the Committee.
Introduction from the Chairman of the Remuneration Committee
This report aims to provide shareholders with the information to
understand the Remuneration Policy and its linkage to the Group’s
financial performance and delivery of its long-term strategy. The
Remuneration Committee seeks to achieve a fair reward outcome
linked to both the Group’s results and the progress achieved in
delivering the strategy.
Covid-19
During the financial year ending 31 January 2021, Covid-19 had a
material impact on all our stakeholders. With the announcement of the
Government-backed CJRS, the majority of employees were furloughed
in April 2020; a temporary three-month 20% reduction in salary was
introduced across all parts of the business, and the Board unanimously
agreed that both the Executive and Non-executive Directors would
also take a three-month, non-refundable 20% reduction in salary with
effect from 1 April 2020. The Committee also determined, given that no
dividend had been paid for the financial year ended 31 January 2020,
coupled with the fact that the Group accessed the Job Retention
Scheme, it would not be appropriate to operate an annual bonus
scheme for Executive Directors regarding the financial year ending
31 January 2021.
Operation of the Remuneration Committee
The Committee operates under the Group’s agreed terms of
reference. It is responsible for setting the framework and policy for
the remuneration of the Executive Directors and designated senior
managers. It determines specific elements of their remuneration, their
contractual terms and, where necessary, compensation arrangements.
In making remuneration decisions, the Committee considers the
Group’s overall performance against its long-term goals.
The Committee is comprised solely of independent Directors, being
myself as the Chairman and the other Non-executive Directors,
Dame Dianne Thompson and Vijay Thakrar.
The number of meetings held during the year and the attendance
at each meeting is shown in the table on page 47 of the Corporate
Governance Report.
The Chief Executive Officer and the Group HR Director are invited to
attend meetings of the Committee, where relevant. However, no
Director is involved in any decisions relating to their own remuneration.
During the year ending 31 January 2021, the Committee agreed to
the following:
– The introduction of a Real Living Wage policy which is part of the
Live Beautiful Sustainability Strategy and is effective from the
financial year ending 31 January 2022.
– A 1% annual pay award for all colleagues.
– A small discretionary bonus to all colleagues (excluding Executive
Directors) to recognise the hard work and exceptional commitment
during the pandemic.
– The introduction of an all-employee bonus scheme enabling
colleagues to share in the Company’s success with an element of
variable pay. This will operate for the first time in the financial year
ending 31 January 2022.
Remuneration policy
The Group’s remuneration policy is designed to ensure that the main
elements of the remuneration package are linked to the Group’s annual
performance, delivery of its long-term strategy, and as well as being
appropriate in quantum and capable of attracting, motivating and
retaining Executive Directors and senior managers. The policy aims to
reward Executive Directors and senior managers by offering them
competitive remuneration packages which are prudently constructed,
sufficiently stretching and linked to long-term value creation for all
stakeholders.
In particular, the Committee strives to ensure that remuneration
packages are:
– aligned with the Group’s strategic plan;
– aligned with shareholder interests and the performance of
the Group;
– competitive and sufficiently flexible to support the recruitment
and needs of the business; and
– paid in a combination of cash and shares.
The performance measurements of the Executive Directors and the
determination of their annual remuneration package, including
performance targets and underpins, are undertaken by the
Remuneration Committee.
53
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Sanderson Design Group Annual Report and Accounts 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED
Summary of components of Executive Directors’ remuneration
There are four main elements of the remuneration package for
Executive Directors and other senior management:
– basic annual salary and benefits;
– annual bonus payments;
– long-term incentives; and
– pension arrangements.
Basic salary and benefits in kind
Salary is normally reviewed annually in February or when
responsibilities change. In deciding the appropriate levels, the
Committee takes into account factors which it considers necessary,
including Group and individual performance, market levels of, and
trends in executive remuneration and relative pay levels within
the Group. For the forthcoming year ending 31 January 2022, the
Executive Directors were given the same inflationary increase of
c.1% as awarded to most employees. The base salary for the
Chief Executive Officer has been set at £343,400 (2020: £340,000)
per annum. The base salary for the Chief Financial Officer has been
set at £187,355 (2020: £185,500).
In addition to basic salary, each Executive Director is provided with
health care benefits and a car allowance.
Annual performance-related bonus
The Executive Directors’ remuneration package includes a
performance-related bonus with maximum bonus potential of up to
100% of basic salary, for the Chief Executive Officer and up to 75% of
basic salary for the Chief Financial Officer. Bonus achievement is linked
to performance against underlying profit targets. The portion of bonus
paid is then determined based on performance against individual
objectives. In the case of the Executive Directors, there are four
individual targets, one of which relates to free cash flow.
Long-Term Incentive Plan (‘LTIP’)
As reported last year, the Committee undertook an extensive review of
our long-term incentive arrangements to ensure that they continued to
support the sustainable execution of our long-term business strategy
and the creation of value for shareholders.
As a result, the Committee determined that starting in 2020 a restricted
share plan (‘RSP’) would replace the existing long-term incentive plan
for Executive Directors. The Committee believes that the characteristics
of restricted shares better support the business in its execution of
strategy and fully aligns executives with the shareholder experience.
For the year ending 31 January 2021, in line with investors’
expectations and experience, the award sizes were significantly
reduced, with the CEO awarded a maximum opportunity of 58.5% of
salary, and the CFO awarded a maximum opportunity of 45% of salary.
This represented a greater than 50% discount on the previous levels of
the long-term incentive award. In addition, to reflect the reduction in
share price over the year, the awards were made using the share price,
which represented the average share price for three months prior to
1 March 2020 and the average share price for three months prior to the
date of grant. The award will vest 40% in year three, 30% in year four
and 30% in year five, subject to the Committee being satisfied with
achievement of robust underpins which have been detailed on page 56
of this report.
The Committee intends to issue awards under this plan on an annual
basis, with an award to be made to both Executive Directors later this
year in respect of the year ending 31 January 2022. The maximum
award will be 67.5 % of salary for the CEO and 45% of salary for the
CFO. The award vesting will be 40% in year three, 40% in year four and
20% in year five. The vesting of the award will continue to be subject to
the Committee being satisfied that robust underlying profit before tax,
free cash flow, and ESG underpins have been met at each vesting date.
In line with best practice, malus and clawback will apply.
Dilution
All equity-based awards are subject to an overall limit on the number
of new shares issued of 10% within any 10-year period. The current
dilution against this limit is 5.7%.
Pensions
Lisa Montague is a member of a Group Flexible Retirement Plan
(‘the Plan’) sponsored by the Group. For the purposes of determining
employer contributions to that scheme, annual performance related
bonuses are not included in the pensionable pay of the Executive
Directors.
Directors’ contracts
It is the Group’s policy that Executive Directors should have contracts
with an indefinite term providing for a maximum of one year’s notice
for the Chief Executive Officer and six months’ notice for the Chief
Financial Officer.
In the event of early termination, the Executive Directors’ contracts
provide for compensation of an amount equal to the gross salary and
benefits that they would have received during the balance of the
notice period, plus any bonus, once declared, to which they would have
become entitled had contractual notice been given.
Director share holding
To align with best practice, a shareholding requirement of 1 x salary for
Executive Directors is in place, with the shareholding to be built over
time from retaining 50% (net of tax) of any LTIP / RSP awards in shares.
Non-executive Directors
The remuneration of the Non-executive Directors comprises only
Directors’ fees and is determined by the Board.
All Non-executive Directors have service contracts with a three-year
initial term subject to a six-month notice provision. Their remuneration
is determined by the Board taking into account their duties and the
level of fees paid to Non-executive Directors of similar companies. The
Non-executive Directors do not participate in the Company’s bonus or
long-term incentive schemes and no pension contributions are made in
respect of them.
For the forthcoming year ending 31 January 2022, the Non-executive
Directors were given the same inflationary increase of c.1% as had
been awarded to most employees.
54
Sanderson Design Group PLC (formerly Walker Greenbank PLC) Directors’ remuneration (audited)
The following table summarises the total gross remuneration for the reporting period of the Directors who served during the period to 31 January
2021. For the year to 31 January 2021, given that the Group had taken Job Retention Scheme funds and due to the ongoing impact of Covid-19,
the Committee determined that it would not be appropriate to operate an annual bonus for Executive Directors in respect of the financial year.
Year to 31 January 2021
Executive Directors:
L Montague
M Williamson
Non-executive Directors:
D Thompson
C Rogers
V Thakrar
Year to 31 January 2020
Executive Directors:
L Montague1
M Williamson2
M Gant (to 18.12.19)
C Rogers3 (to 10.04.19)
Non-executive Directors:
D Thompson
T Stannard (to 10.04.19)
C Rogers (from 10.04.19)
V Thakrar
Annual
bonus
£000
Compensation
for loss
of office
£000
Salary
£000
LTIP
awards
£000
Benefits
in kind
£000
Pension
contribution
£000
Cash
allowance
in lieu of
pension
£000
339
190
105
48
48
730
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2
2
–
–
–
4
20
–
–
–
–
20
–
7
–
–
–
7
Annual
Bonus
£000
Compensation
for loss
of office
£000
Salary
£000
LTIP
awards
£000
Benefits
in kind
£000
Pension
contribution
£000
Cash
allowance
in lieu of
pension
£000
303
37
213
37
98
10
38
50
53
30
51
30
–
–
–
–
–
–
225
–
–
–
–
–
786
164
225
–
–
–
–
–
–
–
–
–
3
1
13
–
–
–
–
–
17
17
–
–
–
–
–
–
–
–
–
30
–
–
–
–
–
17
30
1,239
2021
Total
£000
361
199
105
48
48
761
2020
Total
£000
376
68
532
67
98
10
38
50
1 For the year to 31 January 2020, the Chief Executive Officer was awarded an annual bonus of £52,598 which would normally be paid in cash. However, in light of the impact of Covid-19 on the
business, the Committee determined that, to support on-going alignment with shareholders and in order to conserve cash, it was appropriate to pay the bonus in the form of shares as opposed
to cash. These shares will vest on or around the announcement of the Group’s results on the 18 May 2021.
2 Michael Williamson was appointed as an interim Executive Director on 18 December 2019 and as the Chief Financial Officer on 26 February 2020. For the year to 31 January 2020, he received a
bonus of £30,000 related to the achievement of key objectives set by the Remuneration Committee and in accordance with the terms of his fixed term contract.
3 For his tenure as Executive Chairman, Christopher Rogers, was eligible to receive a bonus award of up to 100% of the base salary, earned whilst performing the Executive Chairman role based
on the on achievement of specific personal objectives primarily focused on Board restructure. The total bonus earned by the interim Executive Chairman for the period of his tenure from
10 October 2018 to 10 April 2019 amounted to £76,563 and was paid at the completion of his contract.
Directors’ LTIP awards
L Montague
L Montague
M Williamson
Date of
grant
Share price
at grant
21/11/2019
11/11/2020
11/11/2020
77.0p
68.0p
68.0p
Maximum
awards at
1 February
2020
662,337
0
0
Granted
in year
Exercised
in year
Lapsed
in year
0
292,500
122,757
0
0
0
0
0
0
Maximum
awards at
31 January
2021
662,337
292,500
122,757
In accordance with the rules of the LTIP, which were approved by shareholders at the 2015 AGM, shares awarded will vest three years after the
date of grant subject to continued service and the extent to which relevant performance conditions are achieved.
The current Executive Directors joined the business in 2019 and therefore no LTIP award vested to them in respect of performance for the year
ending 31 January 2021.
55
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DIRECTORS’ REMUNERATION REPORT CONTINUED
The performance conditions for the 2019 award are based on a mixture of compound growth in relative TSR and targets set for the financial
performance of the Company for the financial year ending 31 January 2022. 25% of the award is against a measurement of TSR of the Company
against a comparator group of companies chosen from the retail and home goods sector, and 75% of the award is measured against targets set
for the financial performance of the Company based on (i) earnings per share, (ii) revenue and (iii) free cash flow measurements, split 25% each.
As noted above, the 2020 award was made under the restricted share plan. The performance underpins for the 2020 award are based on the
adjusted earnings before interest and tax (‘EBIT’)*, free cash flow achieved for the relevant measurement period and continuous improvement in
sustainability based on a reduction in carbon footprint and contribution to the UN Sustainable Development Goals plus there being no
environmental, social or governance issues which have resulted in material reputational damage to the Company. The vesting dates for the
Executive Directors are split 40% on 11 November 2023, 30% on 11 November 2024, and 30% on 11 November 2025. If at each vesting date the
Company fails to meet one or more of the underpins outlined, then the Committee retains the discretion to determine what level of scale back
would be appropriate. The fair value at the date of grant for this award has been determined based on the share price at the date of grant
discounted by the estimated dividends payable on the shares over the relevant vesting period. The relevant fair values are 61.3p for awards
vesting on 11 November 2023, 59.2p for awards vesting on 11 November 2024 and 57.2p for those vesting on 11 November 2025.
The performance underpins for each award are not disclosed as they are commercially sensitive but represent outperformance against the recent
historical performance of the business.
The share price reached a high of 115.0p and a low of 27.5p during the financial year ended 31 January 2021. The share price on 1 February 2020
was 74.5p and, on 31 January 2021, it was 112.0p.
Total Shareholder Return index for the five financial years ending 31 January 2021
200
180
160
140
120
100
80
60
40
20
0
0
1
o
t
d
e
s
a
b
e
R
-
R
S
T
0
Jan 16
Jul 16
Jan 17
Jul 17
Jan 18
Jul 18
Jan 19
Jul 19
Jan 20
Jul 20
Jan 21
Sanderson Design Group TSR, -35.3%
AIM All-Share TSR, 78.5%
Christopher Rogers
Chairman of the Remuneration Committee
17 May 2021
* excludes accounting charges relating to share-based incentives, defined benefit pension charge and non-underlying items.
56
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
AUDIT COMMITTEE REPORT
On behalf of the Board, I am pleased to present the Audit Committee
Report for the year ended 31 January 2021.
Membership
The Committee is comprised solely of independent Directors, being
myself as Chairman and the other Non-executive Directors, Dianne
Thompson and Christopher Rogers. The Board is satisfied that I have
significant and relevant experience to chair the Audit Committee
in line with the Code.
Roles and responsibilities
The role of the Committee is to support the Board in carrying out its
responsibilities for oversight and governance of the Group’s financial
reporting, its key internal controls/ risk management systems and the
relationship with the external auditors. In this context, the Audit
Committee’s responsibilities are to:
– Monitor the integrity of the financial statements of the Company,
reviewing any significant reporting issues and key judgements
they contain.
– Review the clarity of disclosure and information contained in the
Annual Report and Accounts.
– Challenge management on the effectiveness of the Group’s
internal control and risk management systems.
– Oversee the relationship with the external auditors, reviewing
performance and advising the Board on their appointment,
independence and remuneration.
– Monitor the statutory audit of the Annual Report and financial
statements.
Each meeting is attended by the Committee’s members as well as,
by invitation, the Executive Directors and the external auditors where
appropriate. A record of the meeting attendance at formal meetings
by Committee members is set out in the Corporate Governance Report
on page 47.
At each formal meeting, the Committee held a private meeting with
the external auditors, PricewaterhouseCoopers LLP (‘PwC’), without
management being present, to receive feedback from them.
The Committee is kept up to date with changes to accounting
standards and developments in financial reporting, company law
and other regulatory matters through attendance at external technical
presentations and updates from the external auditors and the
Company Secretary.
The Committee undertook the following activities during the year:
Financial reporting
The Committee reviewed the Annual and Interim reports, including
the significant financial reporting issues and key judgements contained
therein. The Committee confirms that appropriate accounting
standards have been applied and that the financial statements give a
true and fair view and the disclosures made are balanced. In reaching
this conclusion, the Committee gave due regard to a report prepared
by the external auditors which included significant reporting and key
accounting matters, summarised below.
– Ensure appropriate arrangements are in place for individuals
to raise concerns regarding breach of conduct and legal and
regulatory compliance. A copy of the policy is available on the
corporate intranet.
Tax
The Committee held two annual meetings with the tax advisers, KPMG,
to discuss matters relating to tax compliance, risks, governance and
advisory services.
The full terms of reference for the Committee can be found on the
Company’s website.
Meetings
The Committee meets at least three times a year to review the
external auditors’ audit plan for the annual audit; the draft Annual
Report and Accounts; and the Interim Report. At meetings, the findings
of the external auditors are discussed and key risks are reviewed with
management and the auditors, including how management are
mitigating key risks. During the year ended 31 January 2021, as a
result of the onset of Covid-19, a number of ad-hoc and informal
meetings of the Committee were also held, to oversee and guide the
Executive Directors in taking appropriate action to protect the interests
of the Company and its employees and other stakeholders, such as
scenario planning, enhancing controls over cash/expenditure, driving
efficiencies and greater focus in the Company’s activities, including
digitalisation and collection releases. These meetings were held as part
of the Covid-19 meetings set out on page 47. Steps were also taken to
enhance visibility and controls in respect of the Company’s defined
benefit pension obligations, as set out below.
Key accounting estimates and judgements
The major accounting issues discussed by the Committee with the
auditors and management in relation to the performance in the
financial year to 31 January 2021 were as follows:
a. Going concern and impact of Covid-19
As Covid-19 challenges remained high on the agenda, the Group’s
and Company’s ability to continue as a going concern was discussed
extensively by the Committee and the Board as a whole with
management and PwC, with particular emphasis on the impact of
Covid-19. As set out in the Report of the Directors on page 49 and the
Board decisions specific to the impact of Covid-19 as contained within
the Covid-19 crises section, management has taken measures
to conserve cash and modelled various stress tested trading and
cash flow scenarios, which have been shared with the auditors.
These have been reviewed by the Audit Committee and Board, and
the Board’s conclusion as a whole is set out in the Report of the
Directors at page 49. In addition, the Committee has discussed
with management and PwC appropriate disclosures relating to the
Group’s funding position at note 21.
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Sanderson Design Group Annual Report and Accounts 2021
AUDIT COMMITTEE REPORT CONTINUED
b. Inventory
Due to the significant quantum of stock held, there is an ongoing
focus by management on inventory levels. The Group has consciously
reduced its inventory level through reduction of products and number
of collection launches. Inventory is discussed at both Board and
Committee level. Management applies a consistent provisioning
methodology. There is also an additional management judgement
overlay based on specific factors. The continuing appropriateness
of the provisioning methodology is tested by both management
and the auditors.
The Committee reviewed the appropriateness of management’s
accounting in relation to each of these significant risks and PwC
reported to the Committee on the work performed in assessing
each during their audit. Details of this work are provided in PwC’s
Auditors’ Report on pages 59-63.
c. Receivables
The Committee has had continued extensive discussions with
management on the recoverability of the Group’s Debtors in light of
Covid-19, including controls and procedures over cash collections.
As a result, specific focus has been put by management on debtor
collections and credit control, with enhanced focus and reporting.
d. Non-underlying income and expenses
The Committee reviewed the appropriateness of management’s split
of income and expenses in the front end of the financial statements
between underlying and non-underlying and the relevant disclosures
to provide sufficient transparency. Items that are both material and
whose nature is sufficient to warrant separate disclosure and
identification as non-underlying were discussed with the auditors.
Non-underlying items typically include amounts in relation to
acquisitions, unexpected external events, significant restructuring
and reorganisation or material one-off accounting charges.
e. Defined benefit pension schemes
Details of the Company’s defined benefit pension plans are set out at
note 22. Given the potential volatility and long-term risks arising from
the cost of funding these plans, the Committee undertook an exercise
to appoint an independent firm of pension advisors to the Company in
the year. After a thorough tendering process, LCP were appointed and
are now working with the Company and the Trustees of the pension
schemes to help manage the Company’s costs going forward, while
ensuring that the Company’s obligations to scheme members are
appropriately met.
The Committee received guidance from PwC that the valuation of the
Company’s defined benefit pension scheme liabilities continues to be
based on reasonable assumptions and PwC does not have any
significant observations to report around pensions.
f. Long term incentive plans
The Committee and PwC discussed the controls around calculating
the estimated costs of the Company’s long term incentive plans.
PwC does not have any significant observations to report around
these incentive plans.
The Company has an established internal control framework, the key
factors of which include a comprehensive monthly reporting process,
regular business performance review, authorisation limits, monthly
reconciliations and a comprehensive budgeting process. This was
further enhanced in the year following the pandemic’s onset, as set out
elsewhere in this report. All significant capital expenditure is approved
by the Board.
External audit and consultancy fees
The Committee has primary responsibility for making a recommendation
to the Board on the appointment, reappointment and removal of the
external auditors. The Committee considers a number of areas in
discharging this responsibility, including the scope of the audit and
terms of engagement, the auditors’ performance in executing the
audit, their independence and objectivity and their remuneration.
The external auditors report to the Committee on actions taken to
comply with professional and regulatory requirements, including
independence, and are required to rotate the lead audit partner
every five years.
PwC provision of other non-audit services is restricted to tax
compliance and advisory services for our operations in Ireland.
To ensure auditor objectivity and independence, the Committee
has adopted a policy on the engagement of external auditors for
the provision of non-audit services, which include financial limits
above which the Audit Committee must pre-approve. The policy is
available on the website.
Any work by PwC where the fees are likely to be in excess of £10,000
above the agreed annual audit fees must be pre-approved by the
Committee before the work commences. Details of fees paid to PwC
during the year are disclosed in note 7 of the financial statements.
To help enhance the Company’s controls over discretionary spending
following the pandemic’s onset, the Committee implemented a further
policy in respect of consulting/professional fees generally. This requires
management to prepare an annual budget of such fees, itemising all
amounts of £10,000 and above with reasons, and to report spend
against budget at each Committee meeting, with material variations
needing prior Committee approval.
At its meetings, the Committee had discussions with the external
auditors on audit planning, fees, accounting policies, audit findings
and internal controls. This included a review with the auditors and
management on how management are addressing control
recommendations made by the auditors. The effectiveness of the
audit was assessed through the review of audit plans, reports and
conclusions and through discussions with management and the
external auditors.
The Committee has confirmed it is satisfied with the independence,
objectivity and effectiveness of PwC. PwC has confirmed that it is not
their intention to be part of the audit tendering process and will not be
reappointed at the forthcoming Annual General Meeting.
Internal controls and risk management
Management has an ongoing process to identify, evaluate and manage
the risks faced by the Group. Each business unit reports monthly on
key risks identified and measures that are being taken to mitigate the
risk. The Strategic Report includes further detail as to the business
risks identified and actions being taken.
Vijay Thakrar
Audit Committee Chairman
17 May 2021
58
Sanderson Design Group PLC (formerly Walker Greenbank PLC) INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF SANDERSON DESIGN GROUP PLC
Report on the audit of the financial statements
Opinion
In our opinion:
– Sanderson Design Group PLC’s group financial statements and company financial statements (the “financial statements”) give a true and fair
view of the state of the Group’s and of the Company’s affairs as at 31 January 2021 and of the Group’s and Company’s profit and the Group’s
cash flows for the year then ended;
– the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006;
– the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: Consolidated and Company Balance Sheets as at
31 January 2021; the Consolidated Income Statement, the Consolidated and Company Statements of Comprehensive Income, the Consolidated
Cash Flow Statement, and the Consolidated and Company Statements of Changes in Equity for the year then ended; and the notes to the financial
statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in
the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our audit approach
Overview
Audit scope
– Following our assessment of the risks of material misstatement of the Group financial statements we identified specific sites, divisions and
balances to audit. We performed audits of the complete financial information of Sanderson Design Group PLC, Brands divisions in the UK,
Anstey manufacturing and Standfast manufacturing;
– In addition, the Group engagement team audited certain centralised activities, including those covering corporate taxation, goodwill and
intangible asset impairment assessments; and
– The components on which audits of the complete financial information and centralised activities were performed accounted for 86% of Group
revenue and 98% of profit before tax.
Key audit matters
– Adequacy of inventory provision (Group)
– Covid pandemic impact (Group and Company)
– Accounting for retirement benefit obligations (Group)
Materiality
– Overall group materiality: £937,000 (2020: £557,000) based on 1% (2020: 0.5%) of revenue.
– Overall company materiality: £465,000 (2020: £461,000) based on 0.5% of total assets.
– Performance materiality: £702,000 (Group) and £348,000 (Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular,
we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our audit.
Accounting for retirement benefit obligations is a new key audit matter this year. Otherwise, the key audit matters below are consistent with
last year.
59
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF SANDERSON DESIGN GROUP PLC CONTINUED
Key audit matter
How our audit addressed the key audit matter
Adequacy of inventory provision (Group)
Refer to the Chief Financial Officer’s review, the critical accounting
estimates and judgements in note 3 and note 17 (Inventories).
The Group has material inventory provisions on a material level of
inventory. The provision is calculated based on a formula driven
factor table including whether the inventory lines are classed as
discontinued, the age of the inventory and sales history. There is an
additional management judgement overlay in relation to the
inventory provision based on specific factors.
Covid pandemic impact (Group and Company)
Refer to the Chief Executive Officer’s Strategy and Operational
Review, the Basis of preparation statement within note 1.
The impact of Covid-19 on the Group has been significant with
revenue reducing 15.9% to £93.8m. Management have taken several
actions to mitigate this revenue reduction. Impacts and operational
changes that have had a material impact on the audit are:
– The timing of our year-end stock count verification at Standfast
(which contributes £3.0m gross stock), had to be delayed as the
site was closed to visitors at the time due to the pandemic, had to
be rearranged. Management were able to perform their required
year end procedures in January 2021, but our audit physical
verification procedures could not be undertaken until 6 April 2021
and additional roll back testing was performed.
– Applying for the UK Government’s Coronavirus Job Retention
Scheme (CJRS), including income of £2.7m as a reduction to
payroll costs in the income statement. In addition, management
have taken out a loan of £0.6m under the Paycheck Protection
Program (‘PPP’) of the CARES Act.
– In order to conclude that it is appropriate for the financial
statements to be drawn up on a going concern basis and on the
viability of the Group, management performed a detailed
bottom-up analysis of the impact of Covid-19 for the Group’s
going concern assessment. This considered a base case scenario
and stress tested scenarios, a ‘severe but plausible’ scenario, for
trading performance and liquidity including possible mitigations.
In doing so, management made estimates and judgements that
are critical to the outcome of these considerations.
– There was no significant impact on the systems or controls of
the Group.
We have understood and challenged the appropriateness of
management’s provisioning method and reviewed the consistency of
application. We performed ‘look back’ testing on the prior year
inventory provision to establish how accurate the provision was and
considered historical sales to support management’s conclusions.
We agreed that the Group has consistently applied the provisioning
methodology and that this has been accurately calculated. We
performed testing to see if inventory was sold for less than it’s
carrying value during the year and after year end to determine if
there was an issue with realisable value.
This did not indicate any material understatement in the provision.
The Standfast inventory count could not be completed in the last
week of January as originally planned with management due to the
site being closed to visitors at that time. The count was rescheduled
to a point that was considered appropriate, allowing for Covid-19
protocols to be adhered to. As the count we attended was
undertaken on the 6 April 2021, there was a material level of stock
movement in the intervening period, which required roll back testing
to be performed. We obtained a reconciliation of the movements in
inventory for the roll back period and performed substantive testing
on a sample of the inventory received, dispatches made and the
movement of inventory within the business (through production). All
other inventory counts were completed in line with the planned
timetable for the year-end.
The Group received funds of £3.1m from the UK Government’s
Coronavirus Job Retention Scheme (CJRS) for the staff furloughed in
the year. Repayments were made after the year end of £0.4m. To
obtain an understanding of how management has calculated their
claims, we obtained evidence of the processes involved in the
submissions. The cash for all claims made during the year and
subsequent repayments has been agreed to a bank statement. We
confirm we agree with the disclosure of the net £2.7m furlough
income disclosed in the financial year.
We obtained the documentation for the Small Business
Administration (‘SBA’) loan under the PPP to confirm the origination
of the loan and the year-end accounting treatment. We verified the
post year end waiver submission presented by management and
considered the accounting, confirming it should continue to be
disclosed as a loan at the year end.
We assessed both the base case going concern model prepared by
management, and the adjustments, which were used to sensitise the
base case model for a ‘severe but plausible’ scenario. In addition,
we considered the historical accuracy of the budgeting process to
assess the reliability of the process. We discussed the underlying
assumptions used in the model with management. This included
consideration of trading performance during the UK lockdowns in
the financial year and subsequent trading post lockdowns. We
challenged these assumptions based on our understanding of the
business. We reviewed management’s analysis of the interest cover
covenant condition and leverage cover covenant condition and
satisfied ourselves that in the base case and the ‘severe but
plausible’ scenario no breaches were forecast. Our conclusions
relating to going concern are set out later in this report.
60
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
Key audit matter
How our audit addressed the key audit matter
Accounting for retirement benefit obligations (Group)
Refer to the Chief Financial Officer’s review, the critical accounting
estimates and judgements in note 3 and note 22 (Retirement benefit
obligation).
The Group has a material retirement benefit obligation, the Walker
Greenbank Pension Plan and the Abaris Holdings Limited Pension
Scheme. The obligation is calculated based on estimates and
assumptions related to life expectancy, discount and inflation rates,
wages and salary changes, the rate of increase in pensions
payments, the market value of equities bonds and other pension
assets.
We understood and challenged the appropriateness of
management’s assumptions in calculating the liability and reviewed
the consistency of these assumptions with the prior year. We
confirmed the final assumptions applied are consistent and within a
reasonable range. We performed testing of the assets, that are
predominantly included in Pooled Investment Vehicles (PIVs). We
obtained a control report in relation to the asset fund manager,
direct confirmation of the assets held and performed price testing of
the PIVs. This work did not indicate any material misstatement in the
recognition of the retirement benefit obligation.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.
We have performed full scope audits of all of the significant divisions within the Group. Following our assessment of the risks of material
misstatement of the Group financial statements we performed audits of the complete financial information of Sanderson Design Group PLC
Company, Brands, Anstey manufacturing and Standfast manufacturing. In addition, the Group engagement team audited certain centralised
activities, including those covering corporate taxation, goodwill and intangible asset impairment assessments. The components on which audits of
the complete financial information and centralised work were performed accounted for 86% of Group revenue and 98% of profit before tax.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the
financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - Group
Financial statements - Company
Overall materiality
£937,000 (2020: £557,000).
£465,000 (2020: £461,000).
How we determined it
1% (2020: 0.5%) of revenue
0.5% of total assets
Rationale for
benchmark applied
Based on the benchmarks used in the annual
report, revenue is the most consistent measure
used by the shareholders in assessing the
performance of the Group, is a generally accepted
auditing benchmark and given fluctuations in
profit measures (both underlying and statutory)
has been adopted in the current year.
We believe that total assets is the primary
measure used by the shareholders in assessing the
performance of the entity, and is a generally
accepted auditing benchmark.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of
materiality allocated across components was £338,000 and £843,000. Certain components were audited to a local statutory audit materiality that
was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and
extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance
materiality was 75% of overall materiality, amounting to £702,000 for the Group financial statements and £348,000 for the Company financial
statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation
risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit above £46,850 (Group
audit) (2020: £50,000) and £46,850 (Company audit) (2020: £50,000) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of
accounting included:
– the procedures as described in our Covid pandemic impact key audit matter
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
61
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF SANDERSON DESIGN GROUP PLC CONTINUED
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the Company’s
ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK Companies Act
2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Report of the Directors
for the year ended 31 January 2021 is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and Report of the Directors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act
2006.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial statements
in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
62
Sanderson Design Group PLC (formerly Walker Greenbank PLC) Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related
to breaches of health and safety legislation, employment legislation, data protection legislation and tax legislation and we considered the extent
to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a
direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for
fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related
to posting inappropriate journal entries to increase revenue or profits and management bias in significant accounting estimates and judgements.
Audit procedures performed by the engagement team included:
– Discussions with management, at the Group and operating division level, including those outside of the finance function and the Audit
Committee, including consideration of known or suspected instances of non-compliance with laws and regulation or fraud;
– Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or posted by
senior management;
– Challenging assumptions and judgements made by management in their significant accounting estimates and judgements, in particular in
relation to inventory provision (see related key audit matter).
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target
particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not obtained all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not
visited by us; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns.
We have no exceptions to report arising from this responsibility.
David Beer (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Watford
10 June 2021
63
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 JANUARY 2021
Revenue
Cost of sales
Gross profit
Net operating expenses:
Distribution and selling expenses
Administration expenses
Net other income
Profit from operations
Finance income
Finance costs
Finance costs – net
Profit before tax
Tax expense
Profit for the year attributable to owners of the parent
Earnings per share – Basic
Earnings per share – Diluted
Adjusted earnings per share – Basic
Adjusted earnings per share – Diluted
All of the activities of the Group are continuing operations.
The notes on pages 69 to 97 form an integral part of the consolidated financial statements.
2021
Total
£000
93,760
(36,775)
56,985
(19,129)
(36,502)
3,822
5,176
1
(162)
(161)
5,015
(1,109)
3,906
5.50p
5.38p
8.00p
7.82p
2020
Total
£000
111,453
(43,324)
68,129
(22,921)
(45,788)
5,358
4,778
3
(403)
(400)
4,378
(655)
3,723
5.24p
5.20p
9.26p
9.19p
Note
4,5(a)
6
4–7
8
11
12
12
12
12
64
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 JANUARY 2021
Profit for the year
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension schemes
Corporation tax credits recognised in equity
Increase/(reduction) of deferred tax asset relating to pension scheme liability
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Currency translation (losses)/gains
Total items that may be reclassified subsequently to profit or loss
Other comprehensive (expense)/income for the year, net of tax
Total comprehensive income for the year attributable to the owners of the parent
The notes on pages 69 to 97 form an integral part of the consolidated financial statements.
Note
22
2021
£000
3,906
(1,565)
–
297
(1,268)
(301)
(301)
(1,569)
2,337
2020
£000
3,723
2,727
–
(558)
2,169
(156)
(156)
2,013
5,736
65
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
CONSOLIDATED BAL ANCE SHEET
AS AT 31 JANUARY 2021
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Net current assets
Non-current liabilities
Lease liabilities
Deferred income tax liabilities
Retirement benefit obligation
Total liabilities
Net assets
Equity
Share capital
Share premium account
Foreign currency translation reserve
Retained earnings
Other reserves
Total equity
Note
2021
£000
2020
£000
13
14
15
17
18
19
20
15
21
15
16
22
24
28,325
12,061
5,783
46,169
20,350
18,328
15,549
54,227
29,815
14,101
8,392
52,308
28,456
20,543
3,055
52,054
100,396
104,362
(20,472)
(2,676)
(412)
(23,560)
30,667
(3,206)
(514)
(5,637)
(9,357)
(32,917)
67,479
710
18,682
(866)
8,446
40,507
67,479
(22,940)
(2,810)
(1,719)
(27,469)
24,585
(5,603)
(802)
(5,659)
(12,064)
(39,533)
64,829
710
18,682
(565)
5,495
40,507
64,829
The financial statements on pages 69 to 97 were approved by the Board of Directors on 17 May 2021 and signed on its behalf by
Lisa Montague
Director
Registered number: 61880
Michael Williamson
Director
66
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 JANUARY 2021
Cash flows from operating activities
Cash generated from operations
Interest paid
Corporation tax paid
Net cash generated from operating activities
Cash flows from investing activities
Interest received
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Payment of lease liabilities
Proceeds from borrowings
Dividends paid to Company’s shareholders
Net cash used in financing activities
Note
27
13
14
Net increase in cash and cash equivalents
Cash and cash equivalents and bank overdraft at beginning of year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents and bank overdraft at end of year
28
The notes on pages 69 to 97 form an integral part of the consolidated financial statements.
2021
£000
18,222
(279)
(23)
17,920
1
(245)
(830)
75
(999)
(2,958)
412
–
(2,546)
14,375
1,336
(162)
15,549
2020
£000
9,588
(564)
(798)
8,226
17
(736)
(1,752)
77
(2,394)
(2,735)
–
(2,179)
(4,914)
918
434
(16)
1,336
67
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 JANUARY 2021
Attributable to owners of the parent
Other reserves
Share capital
(note 24)
£000
710
–
Share
premium
account
£000
18,682
–
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£000
1,392
3,723
2,727
(558)
–
5,892
(2,179)
390
Capital
reserve
(note 25)
£000
43,457
–
Foreign
currency
translation
reserve
£000
Total
equity
£000
(409)
–
60,882
3,723
Merger
reserve
£000
(2,950)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(156)
(156)
2,727
(558)
(156)
5,736
–
–
(2,179)
390
Balance at 1 February 2019
Profit for the year
Other comprehensive income/(expense):
Remeasurements of defined benefit pension
schemes (note 22)
Deferred tax relating to pension scheme liability
Currency translation differences
Total comprehensive income
Transactions with owners, recognised directly in
equity:
Dividends
Long-term incentive plan charge
Balance at 31 January 2020
710
18,682
5,495
43,457
(2,950)
(565)
64,829
Attributable to owners of the parent
Other reserves
Share capital
(note 24)
£000
710
–
Share
premium
account
£000
18,682
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£000
5,495
3,906
(1,565)
297
–
2,638
–
294
19
Capital
reserve
(note 25)
£000
43,457
–
Foreign
currency
translation
reserve
£000
Total
equity
£000
(565)
–
64,829
3,906
Merger
reserve
£000
(2,950)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(301)
(301)
–
–
–
(1,565)
297
(301)
2,337
–
294
19
Balance at 1 February 2020
Profit for the year
Other comprehensive income/(expense):
Remeasurements of defined benefit pension schemes
(note 22)
Deferred tax relating to pension scheme liability
Currency translation differences
Total comprehensive income
Transactions with owners, recognised directly in
equity:
Dividends
Long-term incentive plan charge
Related tax movements on long-term incentive plan
Balance at 31 January 2021
710
18,682
8,446
43,457
(2,950)
(866)
67,479
68
Sanderson Design Group PLC (formerly Walker Greenbank PLC) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting policies and general information
General information
Sanderson Design Group PLC (formerly Walker Greenbank PLC (‘the Company’)) and its subsidiaries (together ‘the Group’) is a luxury interior
furnishing group whose brands include Sanderson, Morris & Co., Harlequin, Zoffany, Scion, Anthology and Clarke & Clarke. The brands are targeted
at the mid to upper end of the premium market. They have worldwide distribution including prestigious showrooms at Chelsea Harbour, London
and the D&D Building, Manhattan, New York. Around one-third of the Brand’s turnover is sourced in-house from the Group’s own specialist
manufacturing facilities of Standfast & Barracks, the fabric printing business situated in Lancaster, and Anstey Wallpaper Company, situated in
Loughborough. The manufacturing businesses produce for other interior furnishing businesses both in the UK and throughout the world. The
Company is a public limited company which is listed on the Alternative Investment Market of the London Stock Exchange and is registered,
domiciled and incorporated in the UK. The Company registration number is 61880 and the address of its registered office is Chalfont House,
Oxford Road, Denham, UB9 4DX.
Basis of preparation
The consolidated financial statements have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 (‘IFRS’) and the applicable legal requirements of the Companies Act 2006. The consolidated financial
statements have been prepared under the historical cost convention, except for those assets and liabilities measured at fair value, as described
in the accounting policies. The accounting policies set out below have been consistently applied to all periods presented unless otherwise indicated.
The Group meets its day-to-day working capital requirements through its banking facilities. The Group’s forecasts and projections, taking account
of reasonably possible changes in trading performance, show that the Group will be able to operate within the level of its current facilities as
disclosed in note 21.
A key accounting judgement for the year ended 31 January 2021 is the adoption of the going concern basis of preparation. This is described
further in note 3. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the
foreseeable future. Therefore, the Group continues to adopt the going concern basis in preparing its consolidated financial statements.
Adoption of new and revised accounting standards and interpretations
On 31 December 2020 EU-adopted IFRS was brought into UK law and became UK-adopted international accounting standards, with
future changes to IFRS being subject to endorsement by the UK Endorsement Board. The Consolidated Financial Statements will
transition to UK-adopted international accounting standards for financial periods beginning 31 January 2021.
IFRS 3
An amendment to IFRS 3 ‘Business Combinations’ relating to the definition of a business was endorsed by the EU in April 2020 with an effective
date of 1 January 2020, which the Group has adopted from the effective date.
The change in definition of a business within IFRS 3 introduces an optional concentration test to perform a simplified assessment of whether an
acquired set of activities and assets is or is not a business on a transaction by transaction basis. This change is expected to result in more
consistency in accounting for substantially similar transactions that, under the previous definition, may have been accounted for in different ways
despite limited differences in substance.
The change would not have resulted in a different accounting treatment for the prior year.
Basis of consolidation
The consolidated financial information incorporates the financial statements of the Company and all its subsidiary undertakings made up to
31 January each year. Subsidiaries are entities where the Company has the power to govern the financial and operating policies, generally
accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another entity.
The results of subsidiaries acquired or disposed of during the year are included in the Income Statement from the effective date on which control is
transferred to or from the Group, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with those used by
the Group.
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured as the aggregate of the fair
values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued by the Group, in exchange for
control of the acquiree. Any acquisition costs are expensed as incurred. The identifiable assets, liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair
value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 ‘Financial
Instruments: Recognition and Measurement’ either in profit or loss or as a change to other comprehensive income. Contingent consideration that is
classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
Goodwill arising on acquisition is recognised as an asset in accordance with the policy described below.
All inter-company transactions and balances are eliminated on consolidation. Profits and losses resulting from inter-company transactions that are
recognised in assets, such as inventory, are eliminated in full. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the assets transferred.
69
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
1. Accounting policies and general information continued
The Employee Benefit Trust (‘EBT’) controlled by the Group is also included by consolidation. Until shares held by the EBT vest unconditionally in
and are transferred to employees, the consideration paid for those shares is deducted from equity. No gain or loss is recognised in the statement
of comprehensive income on the purchase, sale, issue or cancellation of shares, including transfers to and from treasury shares. Dividends
receivable on shares held by the EBT are excluded from the Income Statement, and are excluded from amounts recognised as dividends payable
by the Group.
In addition, a number of exposure drafts of new or amended standards and interpretations have been announced by the International Accounting
Standards Board (‘IASB’). Until final details of these exposure drafts have been concluded by the IASB the Group is not able to evaluate the
potential impact on the Group of these pronouncements.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in
note 3.
The financial statements of the Company as an entity are prepared in accordance with Financial Reporting Standard 101, ‘Reduced Disclosure
Framework’ (‘FRS 101’) and the Companies Act 2006 and are presented separately from the consolidated financial statements (pages 98 to 110).
Revenue
The Group derives its revenue principally from the following:
– Design, manufacture and sale of home furnishings e.g. wallpaper, fabrics and ancillary interior products
– Licensing arrangements. These comprise a combination of both minimum guaranteed incomes and time and sales-based royalties receivable
from Licensing Partners under contracts for the licensing of our products and designs.
Deposits received from customers in advance of the delivery of goods or services are recognised as deferred revenue. Amounts receivable from
customers representing the recovery of expenses incurred by the Group for design and set-up costs, delivery and marketing materials are not
considered to be revenue, and are credited to the relevant expense within the Income Statement. Revenue and cost of sales are adjusted for
expected returns values, which are estimated on historical returns experience. A refund liability is recognised within ‘trade and other payables’, and
the asset to be recovered is recognised within stock. The validity of the historical data and assumptions and estimates are assessed at each
reporting date.
Fixed minimum guaranteed income amounts receivable under multi-year licensing agreements from Licensing partners are recognised from the
point the licence and hence control has transferred to the licensee, provided there are no further performances obligation to fulfil, and the
recoverability of the income is deemed highly probable. The income is recognised as revenue and accrued income reduces as the balance is
settled.
Carriage costs relating to the delivery of the supply of goods, are classified within ‘revenue’ as these are contractual sales of distinct services with
a separate performance obligation from which consideration is received.
Consideration received from the sale of marketing materials and additional services to support the sale of the Group’s core products are classified
within ‘Net other income’.
Foreign currencies
For the purpose of the consolidated financial statements, the results and financial position are expressed in sterling, which is the functional
currency of the Company, and the presentation currency for the consolidated financial statements.
Transactions in foreign currencies, which are those other than the functional currency of the Company, are recorded at the rate ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the rate ruling at the Balance Sheet date. All
unhedged exchange differences are recognised in the Income Statement for the period within administration expenses.
The assets and liabilities of the Group’s overseas subsidiaries on consolidation are translated at the rates of exchange ruling at the Balance Sheet
date. The income and expenses are translated at the weighted average rate during the period. Differences on translation are recognised in a
separate foreign currency translation reserve within equity.
Intangible assets – Goodwill
Goodwill arising on acquisition of subsidiaries is initially measured at cost, being the excess of the fair value of the consideration for the
acquisition, which includes the amount of any non-controlling interest recognised, over the Group’s interest in the net fair value of the acquired
entity’s identifiable assets and liabilities and any non-controlling interest in the acquiree at the date of acquisition.
Goodwill is not amortised, but reviewed for impairment annually, any impairment is recognised immediately in the Income Statement and is not
subsequently reversed. If a significant event occurs that may affect the carrying value of goodwill, an impairment review will be carried out. No
such events have occurred in the current or previous financial year. Goodwill is allocated to cash-generating units for the purpose of impairment
testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination in which the goodwill
arose. The measurement basis for goodwill is cost less accumulated impairment.
On disposal of a subsidiary or cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
70
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED Intangible assets – Arthur Sanderson and William Morris Archive
The Arthur Sanderson and William Morris Archive comprises an historical record of unique designs that can be used at any point going forward
and is regularly used to generate a significant royalty income in the business. The Directors believe that the Archive has an indefinite useful life and
is therefore not subject to amortisation. The carrying value of this asset is reviewed annually and provision made for any impairment in the
carrying value if required. If a significant event occurs that may affect the carrying value of the Archive, an additional impairment review will be
carried out. No such events have occurred in the current or previous financial year. The measurement basis used for the Archive is historical cost
less accumulated impairment.
Intangible assets – Software
Acquired computer software licences are capitalised at the cost incurred to bring the asset into use, including where relevant directly attributable
internal costs incurred in preparing the software for operation. The costs are amortised to their estimated residual value, over their estimated
useful life, which range from three to ten years on a straight-line basis. Software amortisation commences when the asset goes into operational
use by the business. The measurement basis used for software is cost less accumulated amortisation and impairment.
Intangible assets – Collection design
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects relating to the design of new collections
are recognised as intangible assets when the following criteria are fulfilled:
– It is technically feasible to complete the new collection so that it will be available for use or sale.
– Management intends to complete the new collection and use it or sell it.
– There is an ability to use or sell the new collection.
– It can be demonstrated how the new collection will generate probable future economic benefits.
– Adequate technical, financial and other resources to complete the development and to use or sell the new collection are available.
– The expenditure attributable to the new collection during its development can be reliably measured.
Any costs relating to design of new collections that do not meet these criteria are recognised as an expense as incurred. Any such costs
recognised as an expense in previous periods are not recognised as an asset in a subsequent period. Capitalised collection design costs are
recognised as intangible assets and are amortised to their estimated residual value which is 25% of their historical cost, on a straight-line basis
over the life of the asset, and are tested for impairment if any impairment trigger events are identified in accordance with IAS 36. The
measurement basis used for Collection design is cost less accumulated amortisation and impairment.
Intangible assets – Brands
Brands acquired, separately or as part of a business combination, are capitalised if they meet the definition of an intangible asset and the
recognition criteria are satisfied. Strategic brands are well-known international/local brands with a strong market position and an established
brand name.
Strategic brands have a finite useful economic life and are carried at cost less accumulated amortisation. Brands are amortised on an individual
straight-line basis over the estimated useful life of the brands, being 20 years.
Intangible assets – Customer-related intangibles
Customer-related intangibles are capitalised if they meet the definition of an intangible asset and the recognition criteria are satisfied. If the
amounts are not material, these are included in the brand valuation. The relationship between brands and customer-related intangibles is carefully
considered so that brands and customer-related intangibles are not both recognised on the basis of the same cash flows.
Customer-related intangibles acquired as part of a business combination are valued at fair value. Customer-related intangibles acquired
separately are measured at cost. Customer-related intangibles are amortised on a straight-line basis over the remaining useful life of the customer
relationships, currently being six years.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any recognised impairment loss. Historical cost
comprises the purchase price and costs directly incurred in bringing the asset into use. The assets’ residual values and useful lives are reviewed
annually and adjusted, if appropriate, at each Balance Sheet date.
Depreciation is charged on a straight-line basis on the original costs (excluding freehold land) after deduction of any estimated residual value. The
principal annual rates are:
Freehold buildings
Leasehold improvements
Plant, equipment and vehicles
Computer hardware
2%
Over the length of the lease
Between 5% and 33%
33%
Government grants received for property, plant and equipment are included within other payables and deferred revenue and released to the
Income Statement over the life of the asset.
Impairment of non-financial assets
Intangible assets with finite useful lives and property, plant and equipment are tested for impairments if events or changes in circumstances
(assessed at each reporting date) indicate that the carrying amount may not be recoverable. When an impairment test is conducted, the
recoverable amount is assessed by reference to the higher of the value in use (net present value of expected future cash flows of the relevant
cash-generating unit), or the fair value less cost to sell.
Goodwill and other intangible assets with an indefinite useful life are tested for impairment at least annually.
71
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
1. Accounting policies and general information continued
If a cash-generating unit is impaired, provision is made to reduce the carrying amount of the related assets to their estimated recoverable amount.
Impairment losses are allocated firstly against goodwill, and secondly on a pro rata basis against intangible and other assets.
Non-financial assets other than goodwill that suffer impairment are reviewed for possible reversal of the impairment at each reporting date.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials, on a first-in, first-out basis, and direct labour,
plus attributable production overheads based on a normal level of activity. Net realisable value is based on estimated selling prices less
anticipated costs of disposal. Provision is made for any slow-moving and obsolete inventory.
Marketing materials
Marketing materials consist of patterning books and other saleable marketing assets used to support the sale of the Group’s products. They are
recognised at the lower of cost and net realisable value. Cost comprises direct materials plus costs of production.
Net realisable value is based on estimated recoveries from customers and distributors for those pattern books expected to be sold, less the
anticipated cost of disposal.
As books are sold or otherwise utilised and are no longer within the control of the Group, their cost is charged to the Income Statement as an
expense. An impairment allowance is made for any slow-moving and obsolete marketing materials including those expected to be given away free
of charge. The Group’s policy is to classify marketing materials on the Balance Sheet within trade and other receivables. Non-saleable marketing
materials are expensed to the Income Statement once the collection that these marketing materials relate to has been launched. Any subsequent
costs or development expenditure are expensed as incurred.
Trade and other receivables
Trade and other receivables are initially measured at fair value, which for trade receivables is equal to the consideration expected to be received
from the satisfaction of performance obligations, plus any directly attributable transaction costs. Subsequent to initial recognition these assets are
measured at amortised cost less any provision for impairment losses including expected credit losses. In accordance with IFRS 9 the Group applies
the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure
the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics such as the ageing of the debt and the
credit risk of the customers. An historical credit loss rate is then calculated for each group and then adjusted to reflect expectations about future
credit losses. The Group does not have any significant contract assets.
Financial assets and liabilities – measurement basis
Financial assets and liabilities are recognised on the date on which the Group becomes a party to the contractual provisions of the instrument
giving rise to the asset or liability. Financial assets and liabilities are initially recognised at fair value plus transaction costs and are continually
reviewed for impairment going forward. Any impairment of a financial asset is charged to the Income Statement when incurred. Financial assets
are derecognised when the Group’s rights to cash inflows from the asset expire; financial liabilities are derecognised when the contractual
obligations are discharged, cancelled or expired.
Non-derivative financial assets are classified as either amortised cost or fair value through profit and loss. This category includes:
– ‘trade and other receivables’ – these are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They arise when the Group provides goods directly to a customer, or advances money, with no intention of trading the loan or
receivable. Trade receivables are recognised initially at the amount of consideration that is unconditional. Subsequent to initial recognition,
loans and receivables are included in the Balance Sheet at amortised cost using the effective interest method less any amounts written off to
reflect impairment, with changes in the carrying amount recognised in the Income Statement within distribution and selling or administration
expenses.
The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and days
past due. The expected loss rates are based on the payment profiles of sales over a period of 12 months before 31 January 2021 or 31 January
2020 respectively and the corresponding historical credit losses experiences within this period. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
We use historical credit loss experience for trade receivables to estimate the lifetime expected credit losses as relevant. We apply specific fixed
provision rates depending on the number of days that a receivable is past due. We group historical credit loss experience for different customer
segments being customer rating and type of customer. The carrying amount of the asset is reduced through the use of a provision account and
the amount of the loss is recognised in the Income Statement within distribution and selling expenses. When a trade receivable is uncollectible,
it is written off against the provision account for trade receivables. Subsequent recoveries of amounts previously written off are credited against
distribution and selling expenses in the Income Statement.
– ‘cash and cash equivalents’ – these comprise deposits with an original maturity of three months or less with banks and financial institutions,
bank balances, bank overdrafts with the right of offset and cash in hand.
72
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED
The Group’s non-derivative financial liabilities are classified as ‘Other liabilities’. Other liabilities are financial liabilities with fixed or determinable
payments that are not quoted in an active market. They arise when the Group receives goods or services directly from a payable or supplier, or
borrows money, with no intention of trading the liability. This category includes:
– ‘trade and other payables’ – these are typically non-interest bearing and following initial recognition are included in the Balance Sheet at
amortised cost using the effective interest method;
– ‘bank loans and overdrafts’ – these are initially recorded at fair value based on proceeds received net of issue costs and subsequently held at
amortised cost using the effective interest method; and
– ‘borrowings’ – these are recorded initially at the fair value, net of direct issue costs, and are subsequently stated at amortised cost. Finance
charges, including premiums payable on settlement, or redemption and direct issue costs, are accounted for in the Income Statement, using the
effective interest method, and are included within the carrying amount of the instrument to the extent that they are not settled in the period in
which they arise. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the end of the reporting period. Borrowing costs are capitalised as an increase to the carrying value of software or
property, plant and equipment on major projects where their impact is material.
Derivative financial instruments and hedge accounting – measurement basis
The Group’s activities expose it to the financial risks of changes in exchange rates, and the Group uses forward exchange rate contracts and swap
exchange rate contracts to manage these exposures where deemed appropriate. The use of derivative financial instruments is governed by the
Group’s policies approved by the Board of Directors, which provide written principles on the use of derivative financial instruments.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged items. The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is recognised in equity.
The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement within ‘Other operating income/(expense)’.
Amounts accumulated in equity are released to the Income Statement when the hedged item affects the Income Statement, and are also classified
in the Income Statement within ‘Other operating income/(expense)’.
Derivatives that do not qualify for hedge accounting under IAS 39 ‘Financial Instruments: Recognition and Measurement’ are classified as ‘financial
assets or liabilities at fair value through profit or loss’. They are initially recognised at fair value, with fair value being remeasured at each reporting
date. The fair value of the derivative is based on market price of comparable instruments at the Balance Sheet date. Changes in fair value are
included in the Income Statement within finance costs.
The Group has no embedded derivatives that are not closely related to the host instrument.
Cash and cash equivalents
Cash and cash equivalents represent only liquid assets with original maturity of 90 days or less. Cash and cash equivalents include cash in hand,
deposits held at call with banks and bank overdrafts. Bank overdrafts that cannot be offset against other cash balances are shown within
borrowings in current liabilities on the Balance Sheet.
For the purposes of the Cash Flow Statement it is the Group’s policy to classify interest received within ‘cash flows from investing activities’ and
interest paid within ‘cash flows from operating activities’.
Offsetting financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is a legally enforceable right to offset the
recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the company or the counterparty.
Leases
Definition of a lease
Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in
exchange for consideration.
Lessee accounting
At the lease commencement date, a right-of-use asset is recognised for the leased item with a corresponding lease liability for any payments due.
The right-of-use asset is initially measured at cost, being the present value of the lease payments paid or payable (net of any incentives received
from the lessor), plus any initial direct costs and/or restoration costs.
Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease to the earlier of the end of the asset’s
useful life or the end of the lease term. The lease term is the noncancellable period of the lease plus any periods for which the Group is ‘reasonably
certain’ to exercise any extension options. If right-of-use assets are considered to be impaired, the carrying value is reduced accordingly.
For assets where the lessor transfers ownership of the underlying asset to the Group by the end of the lease term, or where the lease contains a
purchase option at a nominal/notional value, then these assets will be initially classified as property, plant and equipment, and subsequently be
depreciated in accordance with the depreciation policy.
73
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
1. Accounting policies and general information continued
The lease liability is initially measured at the value of future lease payments, discounted using the interest rate implicit in the lease. Where this rate
is not determinable, the Group’s incremental borrowing rate is used, which is then adjusted to reflect an estimate of the interest rate the Group
would have to pay to borrow the amount necessary to obtain an asset of similar value, in a similar economic environment, and with similar terms
and conditions.
After initial recognition, the lease liability is recorded at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate (e.g. an inflation related increase) or if the Group’s assessment of the
lease term changes. Any change in the lease liability as a result of these changes also results in a corresponding change in the recorded right-of-
use asset. Payments in respect of short-term and/or low-value leases continue to be charged to the income statement on a straight-line basis over
the lease term.
Employee benefits – retirement benefit obligations
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
For defined benefit retirement schemes, the funding of benefits is determined using the projected unit credit method, with full actuarial valuations
being carried out triennially.
The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for
unrecognised service cost, and as reduced by the fair value of the scheme assets. Any asset resulting from this calculation is limited to past service
cost, plus present value of available refunds and reductions in future contributions to the plan.
The defined benefit obligation is calculated annually by qualified independent actuaries using the projected unit credit method. The present value
of the defined benefit obligation is determined by discounting the future cash outflows using interest rates of high quality corporate bonds that
have terms to maturity approximating to the terms of the related pension liability.
Scheme expenses met by the Group, expected returns on plan assets, and interest on pension scheme liabilities are classified within ‘Net defined
benefit pension charge’ within the Income Statement as the scheme is now closed to future accruals.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in full in the period in which
they occur. They are recognised outside the Income Statement and presented in the Statement of Comprehensive Income.
Past service costs are recognised immediately to the extent that the benefits are already vested, and otherwise are amortised on a straight-line
basis over the average period until the benefits become vested.
Employee benefits – share-based payments under Long-Term Incentive Plans (‘LTIP’)
The Group issues equity-settled share-based payments to certain employees which must be measured at fair value and recognised as an expense
in the Income Statement with a corresponding increase in equity.
The fair values of these payments are measured at the date of grant, taking into account the terms and conditions upon which the awards are
granted. The fair value is recognised over the period during which employees become conditionally entitled to the awards, subject to the Group’s
estimate of the number of awards which will lapse, either due to employees leaving the Group prior to vesting or due to non-market based
performance conditions not being met.
The total amount recognised in the Income Statement as an expense is adjusted to reflect the actual number of awards that vest. National
insurance contributions related to the awards are recognised as an expense in the Income Statement with a corresponding liability on the
Balance Sheet.
Employee benefits – short-term bonus plans
The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a
constructive obligation.
Provisions for liabilities and charges
Provisions are required for restructuring costs and employment related benefits when the Group has a present legal or constructive obligation
at the reporting date as a result of a past event and it is probable that settlement will be required of an amount that can be reliably estimated.
Other provisions reflect the Directors’ best estimate of future obligations relating to legal claims and litigation, together with dilapidation costs
for the maintenance of leasehold properties arising from past events such as lease renewals and terminations. These estimates are reviewed at
the reporting date and updated as necessary.
Share capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction,
net of tax, from the proceeds. Dividend distribution is set by the Board on a regular basis so long as sufficient funds are available.
Share premium
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
74
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED Treasury shares
Consideration paid, including any directly attributable incremental costs (net of income taxes) on the purchase of the Company’s equity share
capital (treasury shares), is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where
such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the Company’s equity shareholders. The EBT is treated as an agent of the Group and, as
such, EBT transactions are treated as being those of the Group.
Taxation including deferred income tax
The tax expense represents the sum of the current tax and deferred tax charges or credits.
Current tax is based on the taxable profit for the year. Taxable profits differs from the net profit as reported in the Income Statement because
it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance
Sheet date. Current tax includes withholding taxes from sales and licensing income in overseas territories.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences and such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in
a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
IAS 12 ‘Income taxes’ requires that the measurement of deferred tax should have regard to the tax consequences that would follow from the
manner of expected recovery or settlement at the Balance Sheet date of the carrying amount of its assets and liabilities. In calculating its deferred
tax liability the Group’s policy is to regard the depreciable amount of the carrying value of its property, plant and equipment to be recovered
through continuing use in the business, unless included within assets held for resale, where the policy is to regard the carrying amount as being
recoverable through sale.
Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which temporary
differences can be utilised. The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax
is charged or credited in the Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity. Deferred tax relating to retirement benefit obligations is also recognised in equity where the tax relief arises from
contributions paid to fund deficits arising in previous periods that were recognised in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and
when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities and there is an intention to settle the balances on a net basis.
Segmental reporting
The Group is a designer, manufacturer and distributor of furnishings, fabrics and wallpaper and manages its operations as two reportable
segments, which are Brands and Manufacturing.
Reportable segments consist of one or more operating segments. Aggregation of operating segments into reportable segments occurs when
aggregation criteria, as laid down in IFRS 8 ‘Operating Segments’ are satisfied, including similar economic characteristics or when operating
segments are less than the quantitative limits as laid down in IFRS 8.
The Group considers its Chief Operating Decision Maker (‘CODM’) to be the Board of Directors, who are responsible for the allocation of resources
and assessing performance of the operating segments.
Interest received
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
2. Financial risk management
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 Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out at Board level under policies approved by the Board of Directors. Executive Directors identify, evaluate and where
appropriate hedge financial risks in close cooperation with the Group’s operating units.
a) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the
US dollar and the euro. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a
currency that is not the entity’s functional currency.
75
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
2. Financial risk management continued
The Group’s policy is, where possible, to allow the Group’s entities to settle liabilities in their functional currency with the cash generated from their
operations in that currency. Where the Group’s entities have liabilities denominated in a currency other than their functional currency (and have
insufficient reserves of that currency to settle them) cash already denominated in that currency will, where possible, be transferred from elsewhere
in the Group.
To manage the foreign exchange risk arising on future transactions, it is the Group’s policy to enter into forward currency contracts to hedge the
exposure where deemed appropriate.
For the year ended 31 January 2021, the average sterling to US dollar translation rate applied by the Group was £1: US$1.31. If the rate had been
£1: US$1.21 with all other variables held constant, profit before tax would have been higher by £199,000. If the rate had been £1: US$1.41 with all
other variables held constant, profit before tax would have been lower by £171,000.
For the year ended 31 January 2021, the average sterling to Euro translation rate applied by the Group was £1: €1.09. If the rate had been
£1: €0.99 with all other variables held constant, profit before tax would have been higher by £291,000. If the rate had been £1: €1.19 with all
other variables held constant, profit before tax would have been lower by £242,000.
The sensitivities tested above reflect movements in the foreign currency exchange rates over the financial year. The sensitivity of movements in
other currencies is not considered material to the performance of the Group.
b) Interest rate risk
As the Group has no significant interest bearing assets its revenue and cash generated from operations are substantially independent of changes
in market interest rates.
The Group’s interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The
Group’s borrowings at variable rate are denominated in either sterling or euros. The Group regularly analyses its interest rate exposure, calculating
the impact on profit and loss of a defined interest rate shift. Based on the calculations the Board considers refinancing, renewal of existing
positions, alternative financing and hedging. The Group has not felt there has been a requirement during the current or previous financial year
to enter into any of these options.
In October 2019, the Group renewed its multi-currency revolving credit facility with Barclays Bank plc for a further five-year period. Variable
interest rates were negotiated on all the loans. The Board continues to monitor the interest rates monthly.
For the year ended 31 January 2021, had the benchmark interest rate levels been 0.5% higher/(lower) than the actual experience, with all other
variables held constant, the profit before tax of the Group would have been (lower)/higher by £4,000 due to the change in interest rate expense
on variable rate borrowings. The 0.5% sensitivity is deemed a reasonable sensitivity analysis based on expected movements in the base rate for
the next financial year.
c) Credit risk
Credit risk arises from the Group’s trade receivables, cash held with banks and derivative financial instruments. It is the risk that the counterparty
fails to discharge its obligation in respect of the instrument. Cash at bank and derivative financial instruments are predominantly held with the
Group’s major relationship bank, Barclays Bank plc, and the Group considers this credit risk to be minimal.
Prior to accepting new customers, an independent credit check is obtained. Based on this information individual credit limits and payment terms
are established. If no independent credit ratings are available, customers are asked to pay on a proforma basis until creditworthiness can be
established. The Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period of one to three months
for its customers. The utilisation of credit limits is regularly monitored. Credit limits may only be exceeded with the authorisation from key
management: this is dependent on the amount expected to exceed the limit and the Group’s trading history with that customer.
There is no difference between the carrying amount and the maximum credit risk exposure. No collateral is held as security by the Group.
Impairment of financial assets
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in
making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as
well as forward looking estimates at the end of each reporting period.
d) Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt instruments. It
is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The maturity profile of the Group’s debt and
other financial liabilities is disclosed in note 23.
During the year the Group had facilities with Barclays Bank plc which are disclosed in note 21.
Management monitors rolling forecasts of the Group’s cash and loan facility utilisation on a monthly basis. The Group ensures that it has adequate
facilities available to cover both its short-term and medium-term commitments and complies with bank covenants. In addition, the Group’s liquidity
management policy is to project cash flows in major currencies and consider the level of liquid assets necessary to meet these liabilities as they
fall due. Surplus cash held over and above the balance required for working capital requirements is transferred to the Group treasury and held in
interest bearing accounts.
76
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED e) Capital risk management
The Group’s objectives when managing capital are:
– to safeguard the entity’s ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other
stakeholders; and
– to provide an adequate return for shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in light of
changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, buy back issued shares, or sell assets to
reduce debt.
The Group monitors capital on the basis of the average net debt to adjusted capital ratio (or ‘gearing ratio’). The ratio is calculated as average net
debt divided by adjusted capital. Average net debt is calculated as the total debt less cash and cash equivalents during the year. Adjusted capital
comprises all components of equity (i.e. share capital, share premium, retained earnings, and other reserves) other than amounts recognised in
equity relating to cash flow hedges and forward currency contracts. The average gearing ratios for 2021 and 2020 were as follows:
Average net (funds)/debt
Total equity
Average net (funds)/debt to adjusted capital ratio
Year end net (funds)/debt to adjusted capital ratio
Year ended 31 January
2021
£000
(3,728)
67,479
(5.5)%
(22.4)%
2020
£000
3,790
64,829
5.8%
(1.9)%
The Group considers the average net debt to adjusted capital ratio to be appropriate at this time, but it will continue to consider its dividend policy
as the external environment develops and will also to invest within the Group through capital expenditure and working capital.
f) Fair value estimation
The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the Balance Sheet date provided by
relationship banks. Under the revisions to IFRS 7 these amounts are classified within Level 2 of the fair value hierarchy.
The carrying value less impairment provision of trade receivables and payables and cash and cash equivalents approximate their fair values.
3. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning future events. The resulting accounting estimates will seldom precisely equal the related
actual results. The Group applies its best endeavours in setting accounting estimates, and uses historical experience and other factors, including
input from experienced and specialist management. Estimates and assumptions are periodically re-evaluated and the resulting accounting
balances updated as new information, including actual outcomes, become apparent.
The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
a) Retirement benefit obligations
The Group recognises its obligations to employee retirement benefits. The quantification of these obligations is subject to significant estimates
and assumptions regarding life expectancy, discount and inflation rates, wage and salary changes, the rate of increase in pension payments, and
the market values of equities, bonds and other pension assets. In making these assumptions the Group takes advice from a qualified actuary
about which assumptions reflect the nature of the Group’s obligations to employee retirement benefits. The assumptions are regularly reviewed to
ensure their appropriateness.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present
value of estimated future cash outflows expected to be required to settle pension obligations. In determining the appropriate discount rate, the
Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that
have terms to maturity approximating the terms of the related pension liability. Details of the estimates and assumptions applied, and carrying
amounts of retirement benefit obligations and pension assets, are set out in note 22.
b) Impairment of non-financial assets
The Group tests annually whether goodwill or its indefinite life intangible asset has suffered any impairment, in accordance with its accounting
policy. Other intangibles and property, plant and equipment are also reviewed whenever impairment triggers are apparent. The recoverable
amounts of cash-generating units have been determined based on value in use (‘VIU’) calculations. These calculations require use of estimates of
future sales, margins, and other operating and administration expenses, and of discount rates. Further disclosures relating to the estimates and
assumptions applied, and carrying amounts of the non-financial assets, are set out in notes 13 and 14.
77
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
3. Critical accounting estimates and judgements continued
The Group makes provision for impairment in the carrying amount of its inventories and marketing materials. The nature of the Group’s products
are exposed to changes in taste and attitudes from time to time, which can affect the demand for those products. The Group has skilled and
experienced management who utilise historical sales information, and exercise their judgement, in making estimates about the extent of provisions
necessary based on the realisable value of inventory and expected future benefit to the Group of marketing materials taking into account the
estimated price and volume of future sales or usage, less the further costs of sale and holding costs. Further disclosures relating to the effect on
the Income Statement of the establishment and reversal of such provisions against inventory are included in note 7. Details of the carrying amount
of inventories are disclosed in note 17 and of marketing materials in note 18. The carrying values of the non-financial assets are not considered to
be sensitive due to the nature of the assets.
c) Deferred tax recognition
The Group considers it appropriate to recognise at the Balance Sheet date deferred tax assets resulting from historical trading losses and other
temporary differences including pension deficits and the impact of awards under the Long-Term Incentive Plan (‘LTIP’). The amount of deferred tax
recognised is based on estimates of the timing and amount of future taxable profits of companies within the Group, which in turn relies upon
estimates of future operating profits and the occurrence, timing and tax treatment of significant items of income and expenditure including
contributions to pension schemes and the vesting of LTIP payment awards. Further disclosures relating to the effect on the Income Statement of
the recognition of deferred tax assets are included in note 11 and the amount of deferred tax liability recognised and other relevant disclosures
are included in note 16. The Group considers the sensitivity on deferred tax recognition to be based on profits generated by the Group and tax
rates substantively enacted. There has been no material impact on sensitivity in the current or previous financial year.
d) Going concern
A key accounting judgement for the year ended 31 January 2021 is the adoption of the going concern basis of preparation.
In the context of the current Covid-19 outbreak, 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, including the availability and maturity profile of the Group’s financing facilities and
covenant compliance. These financial statements have been prepared on the going concern basis which the directors consider appropriate for the
reasons set out below.
The Group funds its operations through cash generated by the Group and has access to a £12.5m Revolving Credit Facility (“RCF”) which is linked
to two covenants. These covenants are tested quarterly at 30 April, 31 July, 31 October and 31 January each year until the debt matures in
October 2024. The Group also agreed a temporary overdraft facility with Barclays at the start of the pandemic of £2.5m, to April 2021, giving total
facilities of £15m until April 2021 and £12.5m thereafter. In addition, there is an uncommitted accordion facility of £5m. In June 2020, the Directors
successfully negotiated a waiver of the Group’s interest cover covenants to July 2021 and leverage covenant to April 2021 and replaced them with
a liquidity covenant that requires the Group to maintain £5m headroom against the facilities between 1 November 2020 and 31 July 2021.
Throughout the financial year and up to the date of this report the Company has met all required covenant tests and maintained headroom of well
over £5m.
The total headroom of the Group at 31 January 2021 was £30.5m (2020: £13.8m), including cash and cash equivalents of £15.5m, the committed
facility of £12.5m and the temporary overdraft facility of £2.5m.
In assessing going concern management has taken account of the uncertainties caused by Covid 19. A Management Base Case (MBC) model has
been prepared, together with alternative stress tested scenarios, given the uncertainty regarding the impact of Covid 19 (including variants and
further waves of the virus). These indicate that the Company retains adequate headroom against its borrowing facilities and bank covenants for
the foreseeable future.
There remain significant uncertainties concerning the future effects of Covid 19 in terms of variants, further restrictions and lockdowns. The actual
results which will be reported will be undoubtedly different from the MBC and other scenarios modelled by the Company. In the event that there
are significant negative variations from the MBC, management would act decisively, as they have done in the last year, to protect the business
particularly its cash position. Having taken into account all of the comments above the Directors consider that the Group and the Company have
adequate resources to continue trading for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the
financial statements.
4. Segmental analysis
The Group is a designer, manufacturer and distributor of luxury interior furnishings, fabrics and wallpaper. The reportable segments of the Group
are aggregated as follows:
– Brands – comprising the design, marketing, sales and distribution, and licensing activities of Sanderson, Morris & Co., Harlequin, Zoffany,
Anthology, Scion and Clarke & Clarke brands operated from the UK and its foreign subsidiaries in the US, France, Russia and Germany.
– Manufacturing – comprising the wallcovering and printed fabric manufacturing businesses operated by Anstey and Standfast respectively.
This is the basis on which the Group presents its operating results to the Board of Directors, which is considered to be the CODM for the purposes
of IFRS 8. Other Group-wide activities and expenses, predominantly related to corporate head office costs, defined benefit pension costs,
long-term incentive plan expenses, taxation and eliminations of inter-segment items, are presented within ‘Eliminations and unallocated’.
78
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED a) Principal measures of profit and loss – Income Statement segmental information
Year ended 31 January 2021
UK revenue
International revenue
Licence revenue
Revenue – external
Revenue – internal
Total revenue
Profit/(loss) from operations
Net finance costs
Profit/(loss) before tax
Tax charge
Profit/(loss) for the year
Year ended 31 January 2020
UK revenue
International revenue
Licence revenue
Revenue – external
Revenue – internal
Total revenue
Profit/(loss) from operations
Net finance costs
Profit/(loss) before tax
Tax charge
Profit/(loss) for the year
Brands
£000
Manufacturing
£000
Eliminations
and unallocated
£000
38,077
34,549
3,684
76,310
–
76,310
7,494
–
7,494
–
7,494
11,339
6,111
–
17,450
10,911
28,361
1,664
–
1,664
–
1,664
–
–
–
–
(10,911)
(10,911)
(3,982)
(161)
(4,143)
(1,109)
(5,252)
Brands
£000
Manufacturing
£000
Eliminations
and unallocated
£000
44,945
39,754
5,502
90,201
–
90,201
8,161
–
8,161
–
8,161
14,443
6,809
–
21,252
14,291
35,543
2,235
–
2,235
–
2,235
–
–
–
–
(14,291)
(14,291)
(5,618)
(400)
(6,018)
(655)
(6,673)
Total
£000
49,416
40,660
3,684
93,760
–
93,760
5,176
(161)
5,015
(1,109)
3,906
Total
£000
59,388
46,563
5,502
111,453
–
111,453
4,778
(400)
4,378
(655)
3,723
The segmental Income Statement disclosures are measured in accordance with the Group’s accounting policies as set out in note 1.
Inter-segment revenue earned by Manufacturing from sales to Brands is determined on normal commercial trading terms as if Brands were any
other third party customer.
All defined benefit pension costs, and LTIP expenses, are recognised for internal reporting to the CODM as part of Group-wide activities and are
included within ‘Eliminations and unallocated’ above. Other costs, such as Group insurance, rent and auditors’ remuneration which are incurred on
a Group-wide basis are recharged by the head office to segments on a reasonable and consistent basis for all periods presented and are included
within segment results above.
Tax charges have not been allocated to a segment.
b) Additional segmental revenue information
The segmental revenues of the Group are reported to the CODM in more detail. One of the analysis presented is revenue by export market
for Brands.
Brands international revenue by export market:
North America
Northern Europe
Rest of the World
2021
£000
12,521
12,480
9,548
34,549
2020
£000
14,393
13,039
12,322
39,754
79
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
4. Segmental analysis continued
Revenue of the Brands reportable segment – revenue from operations in all territories where the sale is sourced from the Brands operations,
together with contract and licence revenue:
Brand revenue analysis:
Harlequin, incorporating Anthology and Scion
Sanderson, incorporating Morris & Co.
Zoffany
Clarke & Clarke, incorporating Studio G
Other brands
Licensing
Revenue of the Manufacturing reportable segment – including revenues from internal sales to the Group’s Brands:
Manufacturing revenue analysis:
Standfast
Anstey
2021
£000
18,439
24,220
7,827
21,704
436
3,684
76,310
2021
£000
14,410
13,951
28,361
c) Other Income Statement segmental information
The following additional items are included in the measures of profit and loss reported to the CODM and are included within (a) above:
Year ended 31 January 2021
Depreciation and impairments
Amortisation
Impairment losses – trade receivables
Reversal of impairment losses – trade receivables
Net impairment losses – inventory
LTIP payment charge
Year ended 31 January 2020
Depreciation and impairments
Amortisation
Impairment losses – trade receivables
Reversal of impairment losses – trade receivables
Net impairment losses – inventory
LTIP payment charge
Brands
£000
3,502
429
381
(390)
1,338
–
Brands
£000
3,572
707
478
(405)
2,353
–
Manufacturing
£000
Eliminations
and unallocated
£000
1,423
15
8
(30)
396
–
772
1,291
938
(854)
534
345
Manufacturing
£000
Eliminations
and unallocated
£000
1,414
11
38
(38)
87
–
645
1,016
1,194
(889)
–
395
2020
£000
25,311
24,081
9,548
25,333
426
5,502
90,201
2020
£000
17,061
18,482
35,543
Total
£000
5,697
1,735
1,327
(1,274)
2,268
345
Total
£000
5,631
1,734
1,710
(1,332)
2,440
395
d) Principal measures of assets and liabilities – Balance Sheet segmental information
Segment assets consist primarily of goodwill, intangible assets, property, plant and equipment, trade and other receivables including inter-segment
receivables, and inventories. Segment liabilities consist primarily of trade and other payables including inter-segment payables. Unallocated assets
and liabilities consist primarily of cash, deferred tax assets, borrowings, derivative financial instruments, and retirement benefit obligations and
elimination of inter-segment balances. Segment assets and liabilities and unallocated assets and liabilities are measured in accordance with the
Group’s accounting policies as set out in note 1.
Year ended 31 January 2021
Assets
Liabilities
Total net assets
Capital expenditure – intangible assets
Capital expenditure – property, plant and equipment
80
Brands
£000
Manufacturing
£000
Eliminations
and unallocated
£000
49,636
(16,465)
33,171
227
353
17,443
(6,535)
10,908
–
459
Total
£000
100,396
(32,917)
67,479
33,317
(9,917)
23,400
18
18
245
830
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED Brands
£000
Manufacturing
£000
Eliminations
and unallocated
£000
55,211
(19,735)
35,476
736
1,261
17,376
(6,693)
10,683
–
639
Year ended 31 January 2020
Assets
Liabilities
Total net assets
Capital expenditure – intangible assets
Capital expenditure – property, plant and equipment
e) Additional entity-wide disclosures
Revenue by geographical location of customers:
United Kingdom
Northern Europe
North America
Rest of the World
No single customer of the Group accounts for 10% or more of total revenue.
Non-current assets by geographical territory:
United Kingdom
Northern Europe
North America
Non-current assets included above comprise intangible assets, property, plant and equipment and right-of-use assets.
5. (a) Analysis of revenue by category
Sale of goods
Licence royalty income
5. (b) Analysis of expense by nature
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefit expense
Government covid-19 employee related support
Depreciation and amortisation charges
Transportation expenses
Advertising costs
Other selling costs
Establishment costs
Operating lease payments
Repairs and maintenance
Other expenses
Total cost of sales, distribution and selling costs and administration expenses included within underlying results
* The total employee benefit expense reported for 2020 has been restated upwards by £1,564,000 as these costs were included elsewhere in the income statement. Other expenses have been
restated downwards by the same amount.
6. Net Other Income
Net other income comprises consideration received from the sale of marketing materials and additional services of £3,822,000 (2020: £5,268,000),
and business interruption reimbursements to cover loss of profits of £nil (2020: £54,000). In addition, there was non-underlying net other income of
£nil (2020: £144,000 as per note 12(b)).
81
Total
£000
104,848
(40,019)
64,829
736
1,938
2020
£000
62,947
15,153
18,627
14,726
111,453
2020
£000
50,011
427
1,870
52,308
2020
£000
105,951
5,502
111,453
2020*
£000
3,165
34,651
29,589
–
6,349
3,758
2,209
11,536
6,653
154
1,201
10,693
109,958
32,261
(13,591)
18,670
–
38
2021
£000
51,535
14,329
16,811
11,085
93,760
2021
£000
44,736
394
1,039
46,169
2021
£000
90,076
3,684
93,760
2021
£000
7,816
23,532
26,911
(2,772)
7,432
5,094
1,920
10,433
3,400
117
920
7,603
92,406
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
7. Profit from operations
Group profit from operations is stated after charging/(crediting):
Depreciation and impairments of property, plant and equipment and right-of-use assets
Amortisation of intangibles
Amortisation of acquired intangibles
Cost of inventories recognised as expense in cost of sales
Net impairment of inventories
Impairment of trade receivables
Reversal of impairment of trade receivables
Government covid-19 employee related support
Net foreign exchange (gains)/losses
Losses/(gains) on sale of fixed assets
Rental expense:
– Hire of motor vehicles and plant and machinery
– Land and buildings
Auditors’ remuneration:
Fees payable to the Company’s auditors for the audit of the Parent Company and consolidated
financial statements
Fees payable to the Company’s auditors for other services: Audit of the Company’s subsidiaries
pursuant to legislation
Other non-audit services
Compliance services
Taxation services
Payroll related services
8. Finance costs
Interest income:
Interest received on bank deposits
Interest expense:
Interest payable on bank borrowings
Amortisation of issue costs of bank loans
Unwind of discount on minimum guaranteed licensing income
Lease interest
Total finance costs
Net finance costs
2021
£000
5,697
719
1,016
27,941
2,268
1,327
(1,274)
(2,772)
(191)
72
72
46
2021
£000
78
197
–
–
–
3
278
2021
£000
1
(97)
(21)
138
(182)
(162)
(161)
2020
£000
5,631
718
1,016
33,815
2,440
1,710
(1,332)
–
108
(9)
46
108
2020
£000
62
156
2
2
20
11
253
2020
£000
3
(255)
(50)
147
(245)
(403)
(400)
9. Emoluments of Directors
Information on the remuneration of the Directors is included in the Directors’ Remuneration Report set out on pages 53 to 56.
10. Employee Information
Wages and salaries
Social security costs
Other pension costs
LTIP awards, including NIC thereon
Employee benefit expense
2021
£000
22,987
2,144
1,435
345
26,911
2020*
£000
25,234
2,550
1,410
395
29,589
The 2021 employee benefit expense above is shown before deduction of net UK government Coronavirus Job Retention Support (CJRS) in the year
of £2,772,000 which has been set against the related employee wages and salaries in the income statement.
* The total employee benefit expense reported for 2020 has been restated upwards by £1,564,000 as these costs were included in the other expenses in income statement.
82
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED The average monthly number of employees (including Directors) during the year
Brands, including warehousing
Manufacturing
Overseas
Corporate and administration
Compensation of key management personnel
Short-term employee benefits (including short-term incentives)
Post-employment benefits (including pension costs)
LTIP awards
2021
287
272
39
21
619
2021
£000
2,548
137
339
3,024
2020
324
270
42
24
660
2020
£000
3,384
168
395
3,947
The Group regards its key management personnel to be its Directors and senior management having authority and responsibility for planning,
directing and controlling the activities of the Group, either directly or indirectly. LTIP awards reflect the charge in the Income Statement and do not
reflect the market value of shares expected to vest.
11. Tax expense
Current tax:
– UK current tax
– UK adjustments in respect of prior years
– overseas, current tax
Corporation tax
Deferred tax:
– current year
– adjustments in respect of prior years
– effect of changes in corporation tax rates
Deferred tax
Total tax charge for the year
Reconciliation of total tax charge for the year
Profit on ordinary activities before tax
Tax on profit on ordinary activities at 19% (2020: 19%)
Fixed asset differences
Non-deductible expenditure
Impact of rate difference between deferred and current tax
Income not subject to tax
Share based payment
Group income
Adjustments in respect of prior years
Adjustments in respect of prior years – deferred tax
Overseas tax suffered
Timing differences not recognised
Movement in deferred tax not recognised
Current tax – other
Effect of changes in corporation tax rates
Total tax charge for year
2021
£000
1,018
39
24
1,081
7
21
–
28
1,109
2021
£000
5,015
953
(27)
63
–
(2)
1
(11)
39
21
(33)
–
141
32
(68)
1,109
2020
£000
744
557
40
1,341
(26)
(660)
–
(686)
655
2020
£000
4,378
832
2
119
20
–
75
–
557
(660)
(337)
(958)
916
60
29
655
Factors affecting current and future tax charges
The March 2021 Budget announced that a rate of 25% will apply with effect from 1 April 2023, and this change was substantively enacted on
11 March 2021. This will increase the Group’s future current tax charge accordingly and increase the deferred tax liability by £162,000.
83
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
12. Earnings per share
12. (a) Earnings per share
Basic earnings per share (‘EPS’) is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of
shares outstanding during the year, excluding those held in the Employee Benefit Trust (‘EBT’) and those held in treasury (note 24), 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.
Basic earnings per share
Effect of dilutive securities:
Shares under LTIP
Diluted earnings per share
2021
Weighted
average
number of
shares
(000s)
Earnings
£000
Per share
amount
Pence
Earnings
£000
2020
Weighted
average
number of
shares
(000s)
Per share
amount
Pence
3,906
70,980
5.50
3,723
70,984
5.24
1,652
545
3,906
72,632
5.38
3,723
71,529
5.20
Adjusted underlying basic and diluted earnings per share:
Add back LTIP accounting charge
Add back net defined benefit pension charge
Non-underlying items (see below)
Tax effect of non-underlying items and other add backs
Adjusted underlying basic earnings per share
Adjusted underlying diluted earnings per share
345
531
1,187
(287)
5,682
5,682
395
593
1,985
(126)
6,570
6,570
70,984
71,529
9.26
9.19
70,980
72,632
8.00
7.82
Sanderson Design Group PLC’s issued ordinary share capital with voting rights consists of 70,983,505 (2020: 70,983,505) ordinary shares of which
no (2020: nil) ordinary shares are held in treasury and 50,000 (2020: nil) ordinary shares are held by the Walter Greenbank PLC EBT. Shares held in
treasury or by the EBT are treated as cancelled when calculating EPS.
The market value of shares held by the EBT at 31 January 2021 was £56,000 (2020: £nil). The total number of shares held in the EBT at the year
end represented 0.1% (2020: 0%) of the issued shares.
In calculating the adjusted earnings the Group adjusts for non-underlying items which are material non-recurring items or items considered to be
non-operational in nature. The nature of these adjustments is outlined in note 12 (b) below.
12. (b) Adjusted underlying profit before tax
The Group uses an Alternative Performance Measure “adjusted underlying profit before tax”. This is defined as statutory profit before tax adjusted
for the exclusion of share-based incentives, defined benefit pension charge and non-underlying items. This is recognised by the investment
community as an appropriate measure of performance for the Group and is used by the Board of Directors as a key performance measure.
The table below reconciles statutory profit before tax to adjusted underlying profit before tax.
Adjusted underlying profit before tax
Statutory profit before tax
Amortisation of acquired intangible assets
Restructuring and reorganisation costs
Anstey net other income
Total non-underlying charge included in statutory profit before tax
Underlying profit before tax
LTIP accounting charge
Net defined benefit pension charge
Adjusted underlying profit before tax
2021
£000
5,015
1,016
171
–
1,187
6,202
345
531
7,078
2020
£000
4,378
1,016
1,059
(90)
1,985
6,363
395
593
7,351
In calculating the adjusted underlying profit before tax the Group adjusts for non-underlying items which are material non-recurring items or items
considered to be non-operational in nature. The nature of these adjustments is outlined as follows:
(a) Restructuring and reorganisation costs
These relate to the reorganisation of the Group and comprise of the rationalisation of certain operational and support functions. The costs
mainly comprise employee severance and professional fees associated with the reorganisation process of £171,000 (2020: £702,000);
compensation for loss of office and associated costs to the former Chief Financial Officer of £nil (2020: £330,000) as well as a further £nil
(2020: £27,000) in respect of property termination and asset impairment costs associated with the Clarke & Clarke Haslingden site exit.
(b) Anstey fire-related net other income
This comprises £nil (2020: £144,000) of proceeds arising from reimbursement of repair costs in respect of plant and equipment and related
costs following a minor fire, less repair costs £nil (2020: £54,000).
(c) Amortisation of acquired intangible assets £1,016,000 (2020: £1,016,000).
84
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED
13. Intangible assets
Cost
1 February 2019
Additions
Disposals
31 January 2020
Additions
Reclassifications
Disposals
31 January 2021
Accumulated amortisation
1 February 2019
Charge
Disposal
31 January 2020
Charge
Reclassifications
Disposal
31 January 2021
Net book amount
31 January 2021
31 January 2020
31 January 2019
Arthur Sanderson
and William
Morris Archive
£000 (b)
Goodwill
£000 (a)
Collection
design
£000
17,091
–
–
17,091
–
–
–
17,091
841
–
–
841
–
–
–
841
16,250
16,250
16,250
4,300
–
–
4,300
–
–
–
4,300
–
–
–
–
–
–
–
–
4,300
4,300
4,300
4,404
568
(1,284)
3,688
225
(19)
–
3,894
2,732
417
(1,281)
1,868
418
(15)
–
2,271
1,623
1,820
1,672
Customer-
related
intangibles
£000
Software
£000
Total
£000
4,427
–
–
4,427
–
–
–
4,427
1,724
738
–
2,462
738
–
–
3,200
1,227
1,965
2,703
3,031
168
–
3,199
20
19
(19)
3,219
2,056
301
–
2,357
301
15
(19)
2,654
565
842
975
38,819
736
(1,284)
38,271
245
–
(19)
38,497
8,003
1,734
(1,281)
8,456
1,735
–
(19)
10,172
28,325
29,815
30,816
Brand
£000
5,566
–
–
5,566
–
–
–
5,566
650
278
–
928
278
–
–
1,206
4,360
4,638
4,916
(a) Goodwill (£15,691,000), brand (£5,566,000) and customer-related intangibles (£4,427,000) were recognised on the business combination of
Clarke & Clarke during the year ended 31 January 2017.
(b) The Arthur Sanderson and William Morris Archive was purchased as part of the acquisition of Arthur Sanderson & Sons on 29 August 2003. It
comprises an historical record of unique designs that are used to generate royalty income in the business.
The total amortisation expense of £1,735,000 (2020: £1,734,000) is split between administration expenses £739,000 (2020: £707,000), distribution
and selling costs £nil (2020: £11,000) and £1,016,000 (2020: £1,016,000) in non-underlying items. The amount included in non-underlying items
relates to the amortisation of acquired intangible assets.
Impairment tests for Goodwill and Arthur Sanderson and William Morris Archive
Within the total carrying value of goodwill at year end of £16,250,000 (2020: £16,250,000), £15,691,000 (2020: £15,691,000) is attributable to the
Brands segment and £559,000 (2020: £559,000) to the Manufacturing segment.
The carrying value of the Archive at the year end of £4,300,000 (2020: £4,300,000) is attributable to the Brands segment.
The Group tests goodwill and the Archive for impairment annually or more frequently if there are indications that they might be impaired. There
was no impairment charge recognised in the year (2020: £nil).
In assessing whether an impairment of goodwill is required the carrying value of the cash-generating unit (‘CGU’) or group of CGUs is compared
with its recoverable amount. The recoverable amounts for each CGU, being a division of the business operated at a separate site, and collectively
for groups of CGUs that make up the segments of the Group’s business, have been based on the value in use (‘VIU’).
The Group estimates the VIU using a discounted cash flow model (‘DCF’), where the projected cash flows for separate or collective groups of CGUs
are discounted using a pre-tax rate of 10.1% (2020: 9.4%). The discount rate used is the same across all segments.
The Group has used formally approved budgets for the first two years (2020: two years) of its VIU calculation, with extrapolation beyond the last
explicit year using an assumption of growth for future years ranging from 1% to 2% (2020: 1% to 2%) depending upon the CGU being tested.
The cash flows used in the calculation of the VIU are derived from past experience and are based on operating profit forecasts, which in turn rely
upon assumptions relating to sales growth, price increases, margins and operating and administration expenses. The cash flows have not included
the benefits arising from any future asset enhancement expenditure and therefore exclude significant benefits anticipated from future capital
expenditure. The 2% growth rates included within the assumptions supporting the VIU calculations do not therefore represent the Group’s
anticipated total forecast growth, but rather only the growth deriving from capital expenditure completed at the Balance Sheet date.
The recoverable amount of the Archive intangible asset is estimated based on VIU, and comprises estimated future cash flows from royalty income
relating to the Archive. A discount rate of 10.1% (2020: 9.4%) is applied.
The Group does not consider it reasonably possible that any significant changes to the key assumptions will arise that would result in impairment
of either goodwill or the Archive as at 31 January 2021.
85
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
14. Property, plant and equipment
Cost
1 February 2019
Additions
Disposals
Currency movements
31 January 2020
Additions
Disposals
Reclassifications
Currency movements
31 January 2021
Accumulated depreciation and impairment
1 February 2019
Charge
Impairments
Disposals
Currency movements
31 January 2020
Charge
Impairments
Disposals
Reclassifications
Currency movements
31 January 2021
Net book amount
31 January 2021
31 January 2020
31 January 2019
Freehold
land and
buildings
£000
Leasehold
improvements
£000
Plant,
equipment
and vehicles
£000
Computer
hardware
£000
6,030
92
(63)
–
6,059
9
–
(15)
(8)
6,045
2,096
125
–
(48)
–
2,173
109
–
–
35
(1)
2,316
3,729
3,886
3,934
557
–
–
–
557
–
–
15
–
572
78
–
–
–
–
78
112
–
–
125
–
315
257
479
479
35,791
1,517
(2,486)
(18)
34,804
793
(1,598)
(34)
(23)
33,942
25,340
2,454
–
(2,475)
(9)
25,310
2,367
–
(1,457)
(194)
(18)
26,008
7,934
9,494
10,451
2,342
71
(100)
(1)
2,312
28
(141)
34
(1)
2,232
1,979
192
–
(100)
(1)
2,070
129
–
(141)
34
(1)
2,091
141
242
363
The total depreciation expense of £2,717,000 (2020: £2,771,000) has been allocated to the following categories: administration expenses
£2,666,000 (2020: £2,720,000) and distribution and selling costs £51,000 (2020: £51,000).
The net book amount of freehold land and buildings comprises:
Freehold land
Freehold buildings
Net book amount
2021
£000
450
3,279
3,729
Total
£000
44,720
1,680
(2,649)
(19)
43,732
830
(1,739)
–
(32)
42,791
29,493
2,771
–
(2,623)
(10)
29,631
2,717
–
(1,598)
–
(20)
30,730
12,061
14,101
15,227
2020
£000
450
3,436
3,886
Land and buildings are stated at historical cost less impairment where applicable.
All of the Group’s banking facilities remain secured by a fixed and floating charge over the carrying value of assets (land and buildings) of
£3,729,000 (2020: £3,886,000).
15. Leases
As a lessee
As a lessee Information about leases for which the Group is a lessee is presented below:
Amounts recognised in the balance sheet
Right-of-use assets
Leasehold properties
Plant, equipment and vehicles
2021
£000
5,036
747
5,783
2020
£000
7,083
1,309
8,392
Additions to right-of-use assets during 2021 were £427,000 (2020: 1,693,000). Depreciation of right-of-use assets during 2021 was £2,980,000
(2020: £2,860,000).
86
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED
2021
£000
2020
£000
Lease liabilities
Maturity analysis – contractual undiscounted cash flows
Less than one year
One to five years
More than five years
Total undiscounted cash flows
Current
Non-current
Total lease liabilities
16. Deferred income tax
2,719
3,544
40
6,303
2,676
3,206
5,882
A net deferred tax liability of £514,000 (2020: £802,000) is recognised in respect of future deductions for LTIP payments and other
temporary differences.
Taxable temporary differences on property, plant and equipment
Taxable temporary differences on intangible assets
Taxable temporary differences on share based payments
Other temporary differences
Retirement benefit obligations
2021
£000
(647)
(1,060)
83
39
(1,585)
1,071
(514)
2,949
5,643
85
8,677
2,810
5,603
8,413
2020
£000
(677)
(1,121)
–
14
(1,784)
982
(802)
A deferred tax charge of £297,000 (2020: tax charge £558,000) arising on retirement benefit obligations has been recognised within the Statement
of Comprehensive Income.
At 31 January 2021 the Group had gross unused UK tax losses of £3,225,000 (2020: £3,225,000) available for offset against future profits.
Potential deferred tax assets at 31 January 2021 of £622,000 (2020: £557,000) relating to UK tax losses and deductible temporary differences
have not been recognised as it is not considered probable that recovery of the potential deferred tax asset will arise under existing tax legislation.
These are summarised in the table below and comprise the following:
– No deferred tax has been recognised on £3,225,000 (2020: £3,225,000) of gross UK losses as these are not readily available for offset against
the Group’s future profits under existing tax legislation and therefore the realisation of these losses is not considered probable.
– Other deductible temporary differences which predominantly arise on LTIP payment reserves.
Unutilised tax losses – UK
Unutilised tax losses – overseas
Other deductible temporary differences – UK
2021
£000
613
–
9
622
2020*
£000
548
473
9
1,030
* The unutilised tax losses disclosed in the 2020 results had been largely utilised in prior years.
There are also unutilised capital tax losses at 31 January 2021 of £4,881,000 (2020: £4,881,000) but no deferred tax asset has been recognised as
it is not considered probable that these losses will be utilised.
Movements on the deferred income tax account are as follows:
Net deferred tax liability
At 1 February
Income Statement (charge)/credit
Tax credit/(charge) relating to components of other comprehensive income
Tax credited directly to equity
At 31 January
2021
£000
(802)
(28)
297
19
(514)
2020
£000
(970)
686
(558)
40
(802)
87
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
17. Inventories
Raw materials
Work in progress
Finished goods
2021
£000
3,035
1,628
15,687
20,350
2020
£000
3,324
2,081
23,051
28,456
There is no significant difference between the replacement cost of work in progress and finished goods and goods for resale and their carrying
amounts. Inventories are stated after provisions for impairment of £9,682,000 (2020: £8,205,000).
The cost of inventories recognised as an expense and included in cost of sales amounted to £27,941,000 (2020: £33,815,000).
18. Trade and other receivables
Current
Trade receivables
Less: provision for impairment of trade receivables
Net trade receivables
Other taxes and social security
Minimum guaranteed licensing income
Other receivables
Marketing materials
Prepayments
2021
£000
12,632
(903)
11,729
1,346
2,442
268
581
1,962
18,328
2020
£000
14,171
(1,025)
13,146
1,071
1,954
381
1,184
2,807
20,543
There is no material difference between the carrying amount and the fair value of the trade and other receivables. The only impaired assets are
within trade receivables, minimum guaranteed licensing income and marketing materials.
The only financial asset that is subject to IFRS 9’s expected credit loss model is trade receivables for sales of inventory.
The IFRS 9 simplified approach has been applied to measure lifetime expected credit losses for all trade receivables. Trade receivables have been
grouped based on shared credit risk characteristics and days past due. The expected loss rates are based on the payment profiles of sales over a
period of 12 months before 31 January 2021 or 31 January 2020 respectively and the corresponding historical credit losses experiences within this
period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of
the customers to settle the receivables.
On this basis, the total loss allowance for trade receivables as at 31 January 2021 is determined as follows:
£000
Trade Receivables
Loss Allowance
Current
10,611
(514)
1-30 days
past due
172
(7)
More than
30 days
past due
815
(57)
More than
60 days
past due
502
(31)
More than
90 days
past due
532
(294)
Total
12,632
(903)
Under IFRS 9, the Directors believe that in the current economic environment there is objective evidence of credit deterioration and an impairment
of £451,000 (2020: £430,000) is required, representing a collective assessment of risk against receivables that are yet to be specifically identified.
Due to the nature of the Group’s products, there is a limited amount of inventory left in the possession of customers that could act as collateral
under terms of trade. As the value of this inventory is immaterial, it has not been disclosed in the financial statements.
Credit quality of financial assets
(i) Not past due
Included in the Group’s trade receivable balances are receivables with a carrying value of £10,611,000 (2020: £10,630,000) which are not past
due. Under the expected credit loss model a provision is held for the lifetime credit loss on these balances of £451,000 (2020: £460,000). The
nature of the Group’s business means that it has a long standing relationship with the majority of its customers, who either have no experience of
historical default or only temporary late payments with full recovery of balances due.
(ii) Past due
Included in the Group’s trade receivable balances are receivables with a carrying value of £1,475,000 (2020: £3,031,000) which are past due at the
reporting date for which the Group does not consider the need to create a specific impairment provision against individually identified receivables,
but an expected credit loss provision has been made of £126,000 (2020: £361,000).
(iii) Past due – individually impaired
As at 31 January 2021, trade receivables of £546,000 (2020: £510,000) were individually determined to be impaired and provided for. The amount
of the provision was £326,000 (2020: £204,000). The main factor used to assess the impairment of trade receivables is the circumstances of the
individual customer.
88
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED The Group considers that any exposure to concentrations of credit risk will be impacted principally by underlying economic conditions in the
principal geographical territories in which the Group operates. As at the Balance Sheet date the carrying value of trade receivables by
geographical territory of the customer was:
United Kingdom
Northern Europe
USA
Rest of the World
The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:
Sterling
US dollars
Euros
Other
2021
£000
6,208
2,338
1,954
1,229
11,729
2021
£000
10,269
1,530
2,049
591
14,439
The closing loss allowances for trade receivables as at 31 January 2021 reconcile to the opening loss allowances as follows:
At 1 February
Increase in allowance recognised in income statement
Receivables written off in the year as uncollectible
Unused amounts reversed
At 31 January
Lifetime
ECL
£000
(430)
(938)
–
854
(514)
Credit
Impaired
£000
(595)
(389)
175
420
(389)
2021
£000
(1,025)
(1,327)
175
1,274
(903)
2020
£000
7,507
2,029
1,934
1,676
13,146
2020
£000
11,747
1,450
2,016
268
15,481
2020
£000
(888)
(1,710)
241
1,332
(1,025)
The creation and release of provisions for impaired trade receivables have been included within distribution and selling costs in the Income
Statement.
19. Cash and cash equivalents
Cash at bank and in hand
2021
£000
15,549
2020
£000
3,055
There is a set-off arrangement for bank accounts held with the UK clearing bank, and accordingly the amounts stated as bank overdraft in note 23
represent the net of accounts in funds and in overdraft.
20. Trade and other payables
Trade payables
Corporation tax payable
Other taxes and social security
Other payables and deferred revenue
Accruals
2021
£000
8,773
1,208
3,045
2,267
5,179
20,472
2020
£000
14,296
150
1,918
–
6,576
22,940
89
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
21. Borrowings
Bank overdraft
Bank loans
Total borrowings
2021
£000
–
412
412
2020
£000
1,719
–
1,719
In October 2019, the Group renewed its committed £12,500,000 multi-currency revolving credit facility with Barclays Bank plc for a further five
year period. The agreement also includes a £5,000,000 uncommitted accordion facility option to further increase available credit which provides
substantial headroom for future growth. The bank arrangement fee of £106,250 is amortised over the life of the loan. During the year the Group
agreed a temporary overdraft facility of £2,500,000 which expired in April 2021, to complement the headroom in our existing £12,500,000
revolving committed credit facility. The total facilities from Barclays Bank plc in the year ended 31 January 2021 comprised the revolving credit
facility and overdraft facility secured on the Group’s freehold property which may be drawn down in either sterling or euro.
Under the Barclays Bank plc facilities, the Group is subject to compliance of two financial covenants, interest cover and leverage. Any non-
compliance with covenants could, if not remedied or waived, constitute an event of default with respect to any such arrangements.
Due to Covid-19, Management modelled possible downside scenarios to its base case trading forecast during the year. Having taken into account
these models, formal agreement was reached with Barclays Bank plc to waive the interest cover covenant condition for the tests arising in July
2020, October 2020, January 2021, April 2021 and July 2021 and to waive the leverage covenant condition for October 2020, January 2021 and
April 2021. This was replaced by a liquidity covenant requirement that available headroom in the facility needs to remain above £5,000,000
between 1 November 2020 and 31 July 2021. The Group has reported to Barclays Bank plc that it was in full compliance with its agreed covenants
at each of the testing points during the financial year ended 31 January 2021 and up to the date of this report.
Excluding the temporary bank overdraft facility between April 2020 and April 2021 the total Barclays Bank plc facilities are capped at £17,500,000
(2020: £17,500,000); the utilisation of the facilities at 31 January 2021 was £nil (2019: £1,719,000). The revolving credit facility bears interest at a
variable rate based on a margin above LIBOR (for sterling loans) or the EURIBOR (for euro loans).
On 7 May 2020 the Group entered into a loan contract with Wells Fargo for US$565,818 under the US Paycheck Protection Payment scheme. No
repayments have been made in relation to this loan. In April 2021 the Group applied for forgiveness of the loan in accordance with the US
government Small Business Administration guidance. In the event that forgiveness is not granted, it is the Group’s intention to repay the loan
before 31 January 2022 and it has therefore been treated as repayable within 1 year.
For the Group’s cash at bank, and the receivable component of derivative financial instruments, the counterparty to the financial instruments is a
major UK bank, and the Group does not consider there to be any significant credit risk from holding these financial assets.
The fair value of current borrowings approximates to their carrying amount, as the impact of discounting is not significant.
The following table analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period to contractual maturity
at the Balance Sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows. The maturity profile of undiscounted
cash flows on variable interest rate borrowings has assumed interest rates as at the Balance Sheet date.
31 January 2021
Borrowings
Trade and other payables
31 January 2020
Borrowings
Trade and other payables
Less than
1 year
£000
412
20,472
20,884
Less than
1 year
£000
1,719
22,940
24,659
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
Sterling
US Dollars
90
Between
1 to 2 years
£000
Between
2 to 5 years
£000
–
–
–
–
–
–
Between
1 to 2 years
£000
Between
2 to 5 years
£000
–
–
–
–
–
–
2021
£000
–
412
Over
5 years
£000
–
–
–
Over
5 years
£000
–
–
–
2020
£000
1,719
–
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED 22. Retirement benefit obligation
Defined contribution schemes
The Group contributes to the defined contribution section of the Abaris Holdings Limited Pension Scheme and to a Group Personal Pension Plan
which is also a defined contribution scheme. Contributions are charged to the Income Statement as incurred and amounted to £389,000 (2020:
£464,000). There are no outstanding or prepaid contributions at 31 January 2021 (2020: nil). Active members of the schemes are also able to make
contributions.
Defined benefit schemes
Sanderson Design Group PLC operates two defined benefit schemes in the UK which both offer pensions in retirement and death benefits to
members: the Walker Greenbank Pension Plan and the Abaris Holdings Limited Pension Scheme. Pension benefits are related to the members’ final
salary at retirement and their length of service. The schemes are closed to new members and to future accrual of benefits, although deferred
members still in-service have a salary link to their benefits. This disclosure excludes any defined contribution assets and liabilities.
The Group’s contributions to the schemes for the year beginning 1 February 2021 are expected to be £2,278,000.
Plan assets held in the fund are governed by local regulations and practice in the UK. Responsibility for the governance of the plan, including
investment decisions and contributions schedules, lies with the Trustees of the schemes.
Actuarial valuations of the schemes were carried out as at 31 January 2021, based on membership data at 5 April 2018, updated to take account
of benefit outgoings since 5 April 2018, using actuarial assumptions at 31 January 2021. The major assumptions used by the actuary were (in
nominal terms) as follows:
Discount rate
Inflation assumption (RPI)
Inflation assumption (CPI)
Rate of increase in salaries
Rate of increase to pensions in payment, that increase in line with RPI subject to a maximum of 5% p.a.
Rate of increase to pensions (in excess of GMP) in deferment
The mortality assumptions imply the expected future lifetime from age 65 as follows:
Non-pensioner male currently 45
Pensioner male currently 65
Non-pensioner female currently 45
Pensioner female currently 65
2021
1.35%
2.90%
2.10%
2.90%
2.80%
2.10%
2021
22.8
21.8
25.3
24.1
2020
1.70%
2.90%
1.90%
2.90%
2.80%
1.90%
2020
22.8
21.8
25.3
24.0
The fair value of the assets, which are not intended to be realised in the short term and may be subject to significant change before they are
realised, and the present value of the schemes’ liabilities, which are derived from cash flow projections over long periods and thus inherently
uncertain, were:
Equities, absolute return and property
Gilts
Fixed interest bonds
Liability driven investments
Insured annuities
Cash and cash equivalents
Fair value of scheme assets
2021
£000
29,505
6,006
15,289
22,474
690
5,325
79,289
All assets are invested in the UK. The assets do not include the Group’s financial instruments or property connected with the Group.
The actual return on assets over the year was a gain of £2,948,000 (2020: gain of £13,208,000).
Present value of funded obligations
Fair value of scheme assets
Deficit in funded scheme
Net liability in Balance Sheet
2021
£000
(84,926)
79,289
(5,637)
(5,637)
2020
£000
27,060
6,354
19,470
21,375
775
3,074
78,108
2020
£000
(83,767)
78,108
(5,659)
(5,659)
91
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
22. Retirement benefit obligation continued
Reconciliation of opening and closing balances of the present value of the defined benefit obligation
Benefit obligation at beginning of year
Interest cost
Remeasurement losses – changes in financial assumptions
Remeasurement (gains) – changes in demographic assumptions
Remeasurement (gains)/losses– experience
Benefits paid
Past service cost
Benefit obligation at end of year
Reconciliation of opening and closing balances of the fair value of plan assets
Fair value of plan assets at beginning of year
Interest income on scheme assets
Return on assets, excluding interest income
Contributions by employers
Benefits paid
Scheme administrative cost
Fair value of scheme assets at end of year
Analysis of amounts charged against profits
Amounts recognised in the income statement in respect of defined benefit retirement plans are as follows
Expected return on pension scheme assets
Interest on pension scheme liabilities
Scheme expenses met by the Group
Net charge
Remeasurements of the net defined benefit liability/(asset) to be shown in the Statement of Comprehensive Income
Net remeasurement – financial
Net remeasurement – demographic
Net remeasurement – experience
Return on assets, excluding interest income
Total remeasurements of the net defined benefit liability
2021
£000
83,767
1,395
5,266
(1,347)
(719)
(3,436)
–
84,926
2021
£000
78,108
1,313
1,635
2,118
(3,436)
(449)
79,289
2021
£000
1,313
(1,395)
(449)
(531)
2021
£000
5,266
(1,347)
(719)
(1,635)
1,565
2020
£000
76,505
1,870
8,996
(521)
359
(3,442)
–
83,767
2020 £
000
66,842
1,647
11,561
1,870
(3,442)
(370)
78,108
2020
£000
1,647
(1,870)
(370)
(593)
2020
£000
(8,996)
521
(359)
11,561
2,727
Sensitivity analysis
The table below shows the impact on the defined benefit obligation of changing each of the most significant assumptions in isolation. The figures
in the table as at 31 January 2021 have been calculated using the same valuation method that was used to calculate the defined benefit
obligation above and are consistent year on year.
Impact on scheme liabilities
2021 (£m)
Impact on scheme liabilities
2020 (£m)
Change in assumption
Increase
Decrease
Increase
Decrease
Discount rate
Rate of inflation (RPI)*
Rate of inflation (CPI)*
Assumed life expectancy
Estimated impact of Covid-19 on life expectancy**
0.25% movement
0.25% movement
0.25% movement
1 year movement
(3.4)
1.5
0.6
4.8
N/A
3.6
(1.5)
(0.6)
(4.8)
(1.9)
(3.4)
1.5
0.7
4.4
N/A
3.6
(1.5)
(0.7)
(4.4)
N/A
Extrapolation of the sensitivity analysis beyond the ranges shown may not be appropriate.
* With corresponding changes to the salary and pension increase assumptions.
** The Group with its advisors has assessed the potential impact of Covid-19 on the mortality assumptions used to calculate the deficit. The figure above represents a best estimate of the
long-term impact at 31 January 2021. Given the continuing uncertainties around Covid-19, the Group has not made any adjustment to the reported deficit for the effect of the pandemic.
92
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED Risk exposure
Through its defined benefit pension plans, the Group is exposed to a number of risks, the most significant of which are detailed below:
– Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield, this
will create a deficit.
– Changes in bond yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’
bond holdings.
– Inflation risks
Some of the Group’s pension obligations are linked to salary inflation, and higher inflation will lead to higher liabilities (although, in most cases,
caps on the level of inflationary increases are in place to protect the plan against extreme inflation). The majority of the plan’s assets are either
unaffected by fixed interest bonds or loosely correlated with equities inflation, meaning that an increase in inflation will also increase the deficit.
– Life expectancy
The majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase
in the plans’ liabilities.
The weighted average duration of defined benefit obligations is 16 years.
23. Financial instruments
The accounting policies for financial instruments have been applied to the line items below:
31 January 2021
Assets as per Balance Sheet
Trade and other receivables
Cash and cash equivalents
Total
31 January 2021
Liabilities as per Balance Sheet
Borrowings
Lease liabilities
Trade and other payables
Total
31 January 2020
Assets as per Balance Sheet
Trade and other receivables
Cash and cash equivalents
Total
31 January 2020
Liabilities as per Balance Sheet
Borrowings
Lease liabilities
Trade and other payables
Total
Amortised
cost
£000
Assets at
fair value
£000
14,439
15,549
29,988
Liabilities at
fair value
£000
–
–
–
–
Amortised
cost
£000
15,481
3,055
18,536
Liabilities at
fair value
£000
–
–
–
–
–
–
–
Other
financial
liabilities
£000
412
5,882
16,219
22,513
Assets at
fair value
£000
–
–
–
Other
financial
liabilities
£000
1,719
8,413
22,940
33,072
Derivatives
used for
hedging
£000
–
–
–
Derivatives
used for
hedging
£000
–
–
–
–
Derivatives
used for
hedging
£000
–
–
–
Derivatives
used for
hedging
£000
–
–
–
–
Total £000
14,439
15,549
29,988
Total
£000
412
5,882
16,219
22,513
Total
£000
15,481
3,055
18,536
Total
£000
1,719
8,413
22,940
33,072
93
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
23. Financial instruments continued
Offsetting of financial assets and liabilities
The following financial assets/(liabilities) are subject to offsetting, enforceable master netting arrangements and similar arrangements.
31 January 2021
Cash and cash equivalents
Bank overdraft
31 January 2020
Cash and cash equivalents
Bank overdraft
Gross
amounts
of recognised
financial
assets/(liabilities)
£000
15,549
–
Gross
amounts
of recognised
financial
assets/(liabilities)
£000
Gross
amounts
of recognised
financial assets
set off in the
Balance Sheet
£000
Net
amounts of
financial
assets/(liabilities)
included in the
Balance Sheet
£000
–
–
15,549
–
Gross
amounts of
recognised
financial assets
set off in the
Balance Sheet
£000
Net
amounts of
financial
assets/(liabilities)
included in the
Balance Sheet
£000
6,000
(7,000)
(6,000)
6,000
–
(1,000)
For the financial assets and liabilities, subject to enforceable master netting arrangements or similar arrangements above, each agreement
between the Group and the counterparty allows for the net settlement of the relevant financial assets and liabilities when both elect to settle on a
net basis. In the absence of such an election, financial assets and liabilities will be settled on a gross basis; however, each party to the master
netting agreement or similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party.
24. Share capital
Ordinary shares of 1p each:
Allotted and fully paid:
Number
of shares
£
31 January 2021, 31 January 2020 and 1 February 2019
70,983,505
709,835
Sanderson Design Group PLC’s issued ordinary share capital with voting rights consists of 70,983,505 (2020: 70,983,505) ordinary shares of which
no (2020: nil) ordinary shares are held in treasury and 50,000 (2020: nil) ordinary shares are held by the Walter Greenbank Plc EBT. Shares held in
treasury or by the EBT are treated as cancelled when calculating EPS.
The market value of shares held by the EBT at 31 January 2021 was £56,000 (2020: £nil). The total number of shares held in the EBT at the year
end represented 0.1% (2020: 0%) of the issued shares.
Shares held by the EBT and the treasury shares are held for the purpose of satisfying awards under incentive plans to Executive Directors and
senior management.
Long Term Incentive Plans (‘LTIPs’)
The Group operates an LTIP. There have been 13 awards under this plan, and its predecessor, in which Executive Directors and senior management
of the Group participate. The first award vested during 2009, the second vested during 2011, the third, fourth, fifth, sixth, seventh, eighth, ninth,
tenth and eleventh vesting in subsequent years. The LTIP has previously been approved by the shareholders at an Annual General Meeting.
Awards under the scheme are granted in the form of nil-priced share options, and are to be satisfied either using market-purchased shares or by
the issuing of new shares. The awards vest in full or in part dependent on the satisfaction of specified performance targets at the end of the
vesting period applying to each award. The number of awards that vest is dependent upon the performance underpinned at the date of grant.
Award 12 criteria is based on revenue, adjusted profit before tax (‘PBT’), the adjusted earnings before interest and tax (‘EBIT’), free cash flow
achieved for the relevant measurement period, and the Group’s Total Shareholder Return (‘TSR’) during the vesting period within a comparator
group. Award Thirteen criteria is based on revenue, adjusted profit before tax (‘PBT’), the adjusted earnings before interest and tax (‘EBIT’), free
cash flow achieved for the relevant measurement period and continuous improvement in sustainability based on a reduction in carbon footprint
and contribution to the UN Sustainable Development Goals.
94
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED Details are set out below:
Award Twelve
Award Twelve
Award Twelve
Award Twelve
Award Thirteen
Award Thirteen
Award Thirteen
Grant date of awards
21 Nov 2019
21 Nov 2019
21 Nov 2019
21 Nov 2019
11 Nov 2020
11 Nov 2020
11 Nov 2020
Grant date fair value of award
(pence per award)
42.5
70.0
70.0
70.0
See below
See below
See below
Vesting date of awards
20 Nov 2022
20 Nov 2022
20 Nov 2022
20 Nov 2022
See below
See below
See below
Maximum number of awards
404,638
404,638
Vesting condition based on
Relevant date for
determination of vesting
conditions
TSR with
PBT floor
TSR as at
20 Nov 2022
PBT for year
ending
31 Jan 2022
EPS
404,638
Revenue
404,638
344,361
344,361
344,361
Free
cash flow
EBIT
Free
cash flow
Sustainability
Improvement
EPS for year
ending
31 Jan 2022
Revenue for
year ending
31 Jan 2022
Free cash flow
for year
ending
31 Jan 2022
EBIT for the
year ending
31 Jan 2023
Free cash flow
for year
ending
31 Jan 2023
Sustainability
improvement
for year
ending
31 Jan 2023
The vesting dates for Award Thirteen are split 40% on 11 November 2023, 36% on 11 November 2024, and 24% on 11 November 2025. The fair
value at the date of grant for this award has been determined based on the share price at the date of grant discounted by the estimated dividends
payable on the shares over the relevant vesting period. The relevant fair values are 61.3p for awards vesting on 11 November 2023, 59.2p for
awards vesting on 11 November 2024 and 57.2p for those vesting on 11 November 2025.
Further details of vesting conditions are set out in the Directors’ Remuneration Report on pages 53 to 56.
Award Eleven completed during the year ended 31 January 2021 with no awards being paid as neither of the specified performance targets were
satisfied at the end of vesting period.
Award Twelve has a quarter of the award based on vesting conditions that are market based and with a further quarter based on each of the
absolute adjusted EPS, revenue and free cash flow respectively. The weighted average fair value of options granted during the year (Award
Twelve) that related to market-based vesting conditions (TSR) was determined using the Monte-Carlo valuation model was 42.50p per option. The
significant inputs into the model were weighted average share price of 77p at the grant date, exercise price shown above, dividend yield of 3.28%,
an expected option life of three years, and an annual risk-free interest rate of 0.56%. The volatility measured at the standard deviation of
continuously compounded share returns is based on statistical analysis of daily share prices over the last three years. The fair value of the options
granted based on vesting conditions of absolute adjusted EPS, revenue and free cash flow was determined using the Black-Scholes valuation
model was 70.0p.
The expense recognised in the Income Statement for share options granted to employees is disclosed in note 10.
Movements in the number of awards outstanding, assuming maximum achievement of vesting conditions are as follows:
At 1 February
Granted
Exercised
Forfeiture
Lapsed
At 31 January
25. Capital reserve
Capital reserve represents:
Share premium of companies acquired under merger accounting principles
Capital reserve arising on consolidation
Capital redemption reserve on capital restructurings
At 31 January 2021 and 2020
2021 Number
2020 Number
1,587,588
1,033,084
–
(72,989)
(347,461)
1,041,976
1,618,541
–
(449,816)
(623,113)
2,200,222
1,587,588
£000
1,276
293
41,888
43,457
95
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
26. Dividends
During the year to 31 January 2021, the Group has not paid any dividends. In the prior year the Group paid a final dividend of 2.55p (£1,810,079)
for the financial year ended 31 January 2019 and an interim dividend of 0.52p (£369,000) for the year to 31 January 2020.
During 2020, in light of the Covid-19 pandemic, the Board did not propose payment of a final dividend for the year ended 31 January 2020 or an
interim dividend for the year ended 31 January 2021. The Board do not propose a final dividend for the year ended 31 January 2021, due to the
ongoing Covid-19 pandemic.
The Board intends to reinstate dividends for the year ending 31 January 2022, depending on how the trading environment develops, particularly
with regard to the impact of the ongoing pandemic globally.
27. Cash generated from operations
Profit before tax
Defined benefit pension charge
Net finance costs
Depreciation and impairment of property, plant and equipment and right-of-use assets
Amortisation
Loss/(gain) on disposal of fixed assets
Insurance reimbursements
Charge/(credit) for LTIP recognised in equity
Unrealised foreign exchange (losses) included in operating profit
Defined benefit pension cash contributions
Cash generated from operating activities pre insurance proceeds
Insurance proceeds relating to operating activities
Cash generated from operating activities post insurance proceeds
Changes in working capital:
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
28. Analysis of net funds/(debt)
Cash and cash equivalents
Bank overdraft
Cash and cash equivalents and bank overdraft
Short term loan
Finance lease liabilities
Net (debt)/funds
1 February
2020
£000
3,055
(1,719)
1,336
–
(8,413)
(7,077)
Cash flow
£000
12,656
1,818
14,474
(412)
2,958
17,020
2021
£000
5,015
531
161
5,697
1,735
72
–
294
(52)
(2,118)
11,335
–
11,335
8,106
2,310
(3,529)
18,222
Other
non-cash
changes
£000
(162)
(99)
(261)
–
(427)
(688)
2020
£000
4,378
593
400
5,631
1,734
(51)
(144)
390
(112)
(1,870)
10,949
144
11,093
(436)
(1,957)
888
9,588
31 January
2021
£000
15,549
–
15,549
(412)
(5,882)
9,255
Other non-cash changes are exchange gains/(losses) from the retranslation of bank balances held in non-sterling bank accounts and new
additions to right of use assets. The non-cash change to the bank overdraft reflects the prepaid 5 year facility fee.
The Group took a loan under the US Paycheck Protection Plan on 7 May 2020, under a scheme for businesses affected by the US lockdown.
No repayments have been made in relation to this loan and it has been treated as repayable within 1 year (Sterling equivalent at 31 January 2021
£412,000).
96
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINUED 29. Commitments
a) Capital commitments
Capital expenditure contracted for at the Balance Sheet date but not yet incurred is as follows:
Property, plant and equipment
2021
£000
711
2020
£000
–
b) Lease commitments
The Group previously categorised the majority of its leases as operating leases. As of 1 February 2019 the Group has adopted IFRS 16 and
recognised right-of-use assets and lease liabilities for operating leases, except for short-term (12 months or less) and low-value (<£3,000) leases.
There were no short term or low value lease commitments due under non-cancellable operating leases during financial year ended 31 January
2021 (2020: £nil).
30. Principal subsidiary undertakings
The principal Group operating companies that traded during the year, and are wholly owned, and which are included in these consolidated
financial statements are as follows:
Name of subsidiary undertaking
Sanderson Design Group Brands Limited
Globaltex 2015 Limited
Globaltex Limited, trading as Clarke & Clarke*
Sanderson Design Group Inc*
Sanderson Design Group Brands SARL*
Sanderson Design Group Brands Gmbh*
Style Library (Rus) LLC*
Investments in Group companies are ordinary shares.
* Shares held by subsidiary company.
Country of
incorporation and
place of business
Registered office
UK
UK
UK
US
France
Germany
Russia
Chalfont House, Oxford Road, Denham, UB9 4DX
Chalfont House, Oxford Road, Denham, UB9 4DX
Chalfont House, Oxford Road, Denham, UB9 4DX
800 Huyler Street, Teterboro, New Jersey, 07608
19 Rue de Mail, Paris, 75002
Thurn-und-Taxis Platz 6 60313, Frankfurt am Maine, Germany
Room 46, Floor 8, Building 1, 16A Leningradskoe shosse,
Moscow 125171, The Russian Federation
The principal activities of the Group, including all subsidiaries, are design, manufacture, marketing and distribution of wallcoverings, furnishing
fabrics and associated products for the consumer market.
During the year the Group changed the names of the following companies listed above:
Sanderson Design Group Brands Limited (formerly Abaris Holdings Limited)
Sanderson Design Group Inc (formerly Walker Greenbank Inc)
The name changes of Sanderson Design Group Brands SARL (formerly Arthur Sanderson & Sons SARL) and Sanderson Design Group Brands Gmbh
(formerly Style Library Gmbh) took place after 31 January 2021.
In order to simplify the Group structure, on 29 November 2020 the business and assets of Globaltex Limited were transferred to Sanderson Design
Group Brands Limited.
For a full list of subsidiary companies refer to note 7 to the financial statements of the Company as an entity (pages 106 to 107).
97
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
COMPANY STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 JANUARY 2021
Profit for the year*
Total comprehensive income for the year
* See note 19 for explanation of adjustment for the year ended 31 January 2020.
The notes on pages 101 to 110 form an integral part of these financial statements.
2021
£000
630
630
2020
£000
238
238
98
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
COMPANY BAL ANCE SHEET
AS AT 31 JANUARY 2021
Fixed assets
Tangible assets
Right-of-use assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Deferred income tax asset
Creditors: amounts falling due within one year*
Net current liabilities
Total assets less current liabilities
Creditors: amounts falling due after one year
Net assets
Capital and reserves
Called-up share capital
Share premium account
Retained earnings*
Capital redemption reserve
Total shareholders’ funds
Note
2021
£000
2020
£000
5
6
7
8
9
10
11
6
14
15
4
1,371
80,441
81,816
3,356
7,791
113
11,260
(23,624)
(12,364)
69,452
(758)
68,694
710
18,682
7,414
41,888
68,694
6
1,649
80,441
82,096
1,638
–
–
1,638
(14,740)
(13,102)
68,994
(1,243)
67,751
710
18,682
6,471
41,888
67,751
* See note 19 for explanation of adjustment for the year ended 31 January 2020.
A profit of £630,000 (2020: £238,000*) has been included within these financial statements.
The financial statements on pages 98 to 110 were approved by the Board of Directors on 17 May 2021 and signed on its behalf by
Lisa Montague
Director
Registered number: 61880
Michael Williamson
Director
99
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
COMPANY STATEMENT OF CHANGES IN EQUITY
AS AT 31 JANUARY 2021
Balance at 1 February 2019
Loss for the year as reported
Adjustment for the year ended 31 January 2020 (note 19)
Total comprehensive income
Transactions with owners, recognised
directly in equity:
Dividends
Long-term incentive plan charge
Balance at 31 January 2020
Profit for the year
Total comprehensive income
Transactions with owners, recognised
directly in equity:
Long-term incentive plan charge
Related tax movements on long-term incentive plan
Called-up
share capital
£000
710
–
–
–
–
–
710
–
–
–
–
Share
premium
account
£000
18,682
–
–
–
–
–
18,682
–
–
–
–
Balance at 31 January 2021
710
18,682
The notes on pages 101 to 110 form an integral part of these financial statements.
Retained
earnings
£000
8,022
(1,515)
1,753
238
(2,179)
390
6,471
630
630
294
19
7,414
Capital
redemption
reserve
(note 15)
£000
41,888
–
–
–
–
–
41,888
–
–
–
–
Total
shareholders’
funds
£000
69,302
(1,515)
1,753
238
(2,179)
390
67,751
630
630
294
19
41,888
68,694
100
Sanderson Design Group PLC (formerly Walker Greenbank PLC)
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies and general information
Basis of consolidation
These financial statements present information relating to the entity Sanderson Design Group PLC (formerly Walker Greenbank PLC) (‘the
Company’), and are not consolidated. The consolidated financial statements of Sanderson Design Group PLC and its subsidiaries (’the Group’) of
which the Company is the parent are separately presented within the Annual Report and Accounts and are prepared in accordance with
International Financial Reporting Standards as adopted by the European Union (‘IFRSs’).
Basis of preparation
The financial statements have been prepared in accordance with The Companies Act 2006 as applicable to companies using FRS 101. The financial
statements have been prepared under the historical cost convention, and with the accounting policies set out below, which have been consistently
applied to all periods presented unless otherwise indicated.
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable
future. Therefore, the Company continues to adopt the going concern basis in preparing its financial statements.
No Income Statement is presented for the Company as it has applied the exemption provided by Section 408 of the Companies Act 2006.
In accordance with FRS 101, the following exemptions from the requirements of IFRSs have been applied in the preparation of these
financial statements:
– Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted average exercise prices of share options,
and how the fair value of goods or services received was determined)
– IFRS 7, ‘Financial Instruments: Disclosures’
– Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for fair value measurement of
assets and liabilities)
– Paragraph 38 of IAS 1, ‘Presentation of financial statements’ comparative information requirements in respect of:
(i) paragraph 79(a)(iv) of IAS 1;
(ii) paragraph 73(e) of IAS 16 ‘Property, plant and equipment’;
(iii) paragraph 118(e) of IAS 38 ‘Intangible assets’ (reconciliations between the carrying amount at the beginning and end of the period); and
(iv) paragraphs 76 and 79(d) of IAS 40 ‘Investment Property’
– The following paragraphs of IAS 1, ‘Presentation of financial statements’:
(i) 10(d) (statement of cash flows)
(ii) 10(f) (a statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy
retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial
statements)
(iii) 16 (statement of compliance with all IFRS)
(iv) 38A (requirement for minimum of two primary statements, including cash flow statements)
(v) 111 (cash flow statement information); and
(vi) 134-136 (capital management disclosures)
– IAS 7, ‘Statement of cash flows’
– Paragraphs 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the disclosure of information
when an entity has not applied a new IFRS that has been issued but is not yet effective)
– Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation)
– The requirements in IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into between two or more members
of a group
– Paragraphs 130(f)(ii), 130(f)(iii), 134(d) to 134(f) and 135(c) to 135(e) of IAS 36, ‘Impairment of Assets’
– The requirements of paragraphs 62, B64(d), B64(e), B64(g), B64(h), B64(j) to B64(m), B64(n)(ii), B64(o)(ii), B64(p), B64(q)(ii), B66 and B67
of IFRS 3 ‘Business Combinations’
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial statements, are disclosed in note 2.
Adoption of new and revised accounting standards and interpretations
On 31 December 2020 EU-adopted IFRS was brought into UK law and became UK-adopted international accounting standards, with future
changes to IFRS being subject to endorsement by the UK Endorsement Board.
IFRS 3
An amendment to IFRS 3 ‘Business Combinations’ relating to the definition of a business was endorsed by the EU in April 2020 with an effective
date of 1 January 2020, which the Company has adopted from the effective date.
The change in definition of a business within IFRS 3 introduces an optional concentration test to perform a simplified assessment of whether an
acquired set of activities and assets is or is not a business on a transaction by transaction basis. This change is expected to result in more
consistency in accounting for substantially similar transactions that, under the previous definition, may have been accounted for in different ways
despite limited differences in substance.
The change would not have resulted in a different accounting treatment for the prior year.
Foreign currencies
For the purpose of the financial statements, the results and financial position are expressed in sterling, which is the functional and presentation
currency of the Company.
101
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
1. Accounting policies and general information continued
Transactions in foreign currencies, which are those other than the functional currency of the Company, are recorded at the rate ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the rate ruling at the Balance Sheet date. All
unhedged exchange differences are recognised in the Income Statement for the period within administration expenses.
Further disclosures of the Group’s financial risk management policies are included in note 1 to the consolidated financial statements of the Group,
which are presented separately from these financial statements.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any recognised impairment loss. Historical cost
comprises the purchase price and costs directly incurred in bringing the asset into use. The assets’ residual values and useful lives are reviewed
annually and adjusted, if appropriate, at each Balance Sheet date.
Depreciation is charged on a straight-line basis on the original costs after deduction of any estimated residual value.
The principal annual rates are:
Plant, equipment and vehicles
Computer hardware
Between 5% and 33%
33%
Investments
Investments in subsidiary undertakings are recorded at cost plus incidental expenses less any provision for impairment. Impairment reviews are
performed by the Directors when there has been an indication of potential impairment. In accordance with IAS 39, the Company has adopted the
cost-based approach for subsequent changes in the value of contingent consideration which represent a financial liability or asset. These are
treated as part of the cost or a reduction in the cost of the investment.
Impairment of non-financial assets
Property, plant and equipment are tested for impairment if events or changes in circumstances (assessed at each reporting date) indicate that the
carrying amount may not be recoverable. When an impairment test is conducted, the recoverable amount is assessed by reference to the higher of
the value in use (net present value of expected future cash flows of the relevant cash-generating unit), or the fair value less cost to sell. If a
cash-generating unit is impaired, provision is made to reduce the carrying amount of the related assets to their estimated recoverable amount.
Non-financial assets that suffer impairment are reviewed for possible reversal of the impairment at each reporting date.
Financial assets and liabilities – measurement basis
Financial assets and liabilities are recognised on the date on which the Company becomes a party to the contractual provisions of the instrument
giving rise to the asset or liability. Financial assets and liabilities are initially recognised at fair value plus transaction costs and are continually
reviewed for impairment going forward. Any impairment of a financial asset is charged to the Income Statement when incurred. Financial assets
are derecognised when the Company’s rights to cash inflows from the asset expire; financial liabilities are derecognised when the contractual
obligations are discharged, cancelled or expired.
Non-derivative financial assets are classified as either amortised cost or fair value through profit and loss. This category includes:
– ‘trade and other receivables’ – these are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They arise when the Company provides goods directly to a customer, or advances money, with no intention of trading the loan or
receivable. Trade receivables are recognised initially at the amount of consideration that is unconditional. Subsequent to initial recognition,
loans and receivables are included in the Balance Sheet at amortised cost using the effective interest method less any amounts written off to
reflect impairment, with changes in the carrying amount recognised in the Income Statement within administration expenses; and
– ‘cash and cash equivalents’ – these comprise deposits with an original maturity of three months or less with banks and financial institutions,
bank balances, bank overdrafts with the right of offset and cash in hand.
The Company’s non-derivative financial liabilities are classified as ‘Other liabilities’. Other liabilities are financial liabilities with fixed or
determinable payments that are not quoted in an active market. They arise when the Company receives goods or services directly from a payable
or supplier, or borrows money, with no intention of trading the liability. This category includes:
– ‘creditors’ – these are typically non-interest bearing and following initial recognition are included in the Balance Sheet at amortised cost using
the effective interest method;
– ‘bank overdrafts’ – these are initially recorded at fair value based on proceeds received net of issue costs and subsequently held at amortised
cost using the effective interest method; and
– ‘borrowings’ - these are recorded initially at the fair value, net of direct issue costs, and are subsequently stated at amortised cost. Finance
charges, including premiums payable on settlement, or redemption and direct issue costs, are accounted for in the Income Statement, using the
effective interest method, and are included within the carrying amount of the instrument to the extent that they are not settled in the period in
which they arise. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for at least 12 months after the end of the reporting period. Borrowing costs are capitalised as an increase to the carrying value of software or
property, plant and equipment on major projects where their impact is material.
Derivative financial instruments and hedge accounting – measurement basis
The Group’s activities expose it to the financial risks of changes in exchange rates, and the Company uses forward exchange rate contracts and
swap exchange rate contracts to manage these exposures. The use of derivative financial instruments is governed by the Group’s policies
approved by the Board of Directors, which provide written principles on the use of derivative financial instruments.
102
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE FINANCIAL STATEMENTSCONTINUED
The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items. The Company also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged items. The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is recognised in equity.
The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement within administration expenses. Amounts
accumulated in equity are released to the Income Statement when the hedged item affects the Income Statement, and are also classified in the
Income Statement within administration expenses.
Derivatives that do not qualify for hedge accounting under IAS 39 ‘Financial Instruments: Recognition and Measurement’ are classified as ‘financial
assets or liabilities at fair value through profit or loss’. They are initially recognised at fair value, with fair value being remeasured at each reporting
date. The fair value of the derivative is based on the market price of comparable instruments at the Balance Sheet date. Changes in fair value are
included in the Income Statement within finance costs.
The Company has no embedded derivatives that are not closely related to the host instrument.
Cash and cash equivalents
Cash and cash equivalents represent only liquid assets with original maturity of 90 days or less. Cash and cash equivalents include cash in hand,
deposits held at call with banks and bank overdrafts. Bank overdrafts that cannot be offset against other cash balances are shown within
borrowings in current liabilities on the Balance Sheet.
Offsetting financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is a legally enforceable right to offset the
recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the Company or the counterparty.
Leases
Definition of a lease
Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in
exchange for consideration.
Lessee accounting
At the lease commencement date, a right-of-use asset is recognised for the leased item with a corresponding lease liability for any payments due.
The right-of-use asset is initially measured at cost, being the present value of the lease payments paid or payable (net of any incentives received
from the lessor), plus any initial direct costs and/or restoration costs.
Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease to the earlier of the end of the asset’s
useful life or the end of the lease term. The lease term is the noncancellable period of the lease plus any periods for which the Company is
‘reasonably certain’ to exercise any extension options. If right-of-use assets are considered to be impaired, the carrying value is reduced
accordingly.
For assets where the lessor transfers ownership of the underlying asset to the Company by the end of the lease term, or where the lease contains a
purchase option at a nominal/notional value, then these assets will be initially classified as property, plant and equipment, and subsequently be
depreciated in accordance with the depreciation policy.
The lease liability is initially measured at the value of future lease payments, discounted using the interest rate implicit in the lease. Where this rate
is not determinable, the Company’s incremental borrowing rate is used, which is then adjusted to reflect an estimate of the interest rate the
Company would have to pay to borrow the amount necessary to obtain an asset of similar value, in a similar economic environment, and with
similar terms and conditions.
After initial recognition, the lease liability is recorded at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate (e.g. an inflation related increase) or if the Company’s assessment of the
lease term changes. Any change in the lease liability as a result of these changes also results in a corresponding change in the recorded right-of-
use asset. Payments in respect of short-term and/or low-value leases continue to be charged to the income statement on a straight-line basis over
the lease term.
Employee benefits – retirement benefit obligations
Sanderson Design Group operates both defined benefit and defined contribution pension schemes for the benefit of its employees. Further details
of these schemes are included in note 22 of the consolidated financial statements of the Group.
Defined benefit pension schemes are accounted for within the separate financial statements of the Company’s trading subsidiary, Sanderson
Design Group Brands Limited (formerly Abaris Holdings Limited). The Company recognises contributions to defined contribution schemes in respect
of its employees as expenses when incurred.
Employee share ownership plan (’ESOP’)
Where the Company’s issued share capital is acquired by an ESOP trust sponsored by the Company, the cost of acquisition is deducted from
retained earnings.
103
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
1. Accounting policies and general information continued
Employee benefits – share-based payments under Long Term Incentive Plans (’LTIPs’)
The Company issues equity-settled share-based payments to certain employees which must be measured at fair value and recognised as an
expense in the Income Statement with a corresponding increase in equity.
The fair values of these payments are measured at the date of grant, taking into account the terms and conditions upon which the awards are
granted. The fair value is recognised over the period during which employees become conditionally entitled to the awards, subject to the
Company’s estimate of the number of awards which will lapse, either due to employees leaving the Company prior to vesting or due to non-market
based performance conditions not being met.
The total amount recognised in the Income Statement as an expense is adjusted to reflect the actual number of awards that vest. National
insurance contributions related to the awards are recognised as an expense in the Income Statement with a corresponding liability on the
Balance Sheet.
The financial effect of awards by the Company of options over its equity shares to employees of subsidiary undertakings are recognised by the
Company as an increase in its investment in subsidiaries with a credit to equity equivalent to the IFRS 2 cost in subsidiary undertakings.
Employee benefits – short-term bonus plans
The Company recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a
constructive obligation.
Provisions for liabilities and charges
Provisions are required for restructuring costs and employment related benefits when the Company has a present legal or constructive obligation
at the reporting date as a result of a past event and it is probable that settlement will be required of an amount that can be reliably estimated.
Other provisions reflect the Directors’ best estimate of future obligations relating to legal claims and litigation, together with dilapidation costs for
the maintenance of leasehold properties arising from past events such as lease renewals and terminations. These estimates are reviewed at the
reporting date and updated as necessary.
Share capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction,
net of tax, from the proceeds. Dividend distribution is set by the Board on a regular basis so long as sufficient funds are available.
Share premium
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
Treasury shares
Consideration paid including any directly attributable incremental costs (net of income taxes) on the purchase of the Company’s equity share
capital (treasury shares) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where
such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the Company’s equity shareholders. The EBT is treated as an agent of the Company and as
such EBT transactions are treated as being those of the Company.
Taxation including deferred tax
The tax expense represents the sum of the current tax and deferred tax charges or credits.
Current tax is based on the taxable profit for the year. Taxable profit differs from the net profit as reported in the Income Statement because it
excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance
Sheet date. Current tax includes withholding taxes from sales and licensing income in overseas territories.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences and such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in
a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries except where the Company is able to control the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future.
IAS 12 ‘Income taxes’ requires that the measurement of deferred tax should have regard to the tax consequences that would follow from the
manner of expected recovery or settlement at the Balance Sheet date of the carrying amount of its assets and liabilities. In calculating its deferred
tax liability the Company’s policy is to regard the depreciable amount of the carrying value of its property, plant and equipment to be recovered
through continuing use in the business, unless included within assets held for resale, where the policy is to regard the carrying amount as being
recoverable through sale.
104
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE FINANCIAL STATEMENTSCONTINUED
Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which temporary
differences can be utilised. The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax
is charged or credited in the Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity. Deferred tax relating to retirement benefit obligations is also recognised in equity where the tax relief arises from
contributions paid to fund deficits arising in previous periods that were recognised in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and
when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities and there is an intention to settle the balances on a net basis.
Dividend income
Dividend income is recognised when the right to receive payment is established.
Dividend distributions
Dividend distributions to the Company’s shareholders are recognised as a liability in the Company’s financial statements in the period in which the
dividends are approved by the Company’s shareholders.
2. Critical accounting estimates and assumptions
The Company makes estimates and assumptions concerning future events. The resulting accounting estimates will seldom precisely equal the
related actual results. The Company applies its best endeavours in setting accounting estimates, and uses historical experience and other factors,
including input from experienced and specialist management. Estimates and assumptions are periodically re-evaluated and the resulting
accounting balances updated as new information, including actual outcomes, become apparent.
The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
a) Deferred tax recognition
The Company considers it appropriate to recognise at the Balance Sheet date deferred tax assets resulting from historical trading losses and other
temporary differences including pension deficits and the impact of awards under the Long-Term Incentive Plan. The amount of deferred tax
recognised is based on estimates of the timing and amount of future taxable profits of the Company, which in turn relies upon estimates of future
operating profits and the occurrence, timing and tax treatment of significant items of income and expenditure including contributions to pension
schemes and the vesting of LTIP payment awards. Further disclosures relating to the amount of deferred tax asset recognised and other relevant
disclosures are included in note 10. The Company considers the sensitivity on deferred tax recognition to be based on profits generated by the
Company and tax rates substantively enacted. There has been no material impact on sensitivity in the current or previous financial year.
3. Auditors’ remuneration
Audit fee - fees payable to the Company’s auditor for the audit of the Parent Company and the
consolidation of the Group financial statements
4. Employee Information
Wages and salaries
Social security costs
Other pension costs
Share-based payment awards, including NIC thereon
Employee benefit expense
The average monthly number of employees (including Directors) during the year
Corporate and administration
The Directors’ emoluments are disclosed in the Remuneration report on pages 53 to 56 of these financial statements.
2021
£000
78
2021
£000
2,058
170
115
345
2,688
2021
Number
15
2020
£000
62
2020
£000
2,045
208
97
395
2,745
2020
Number
16
105
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
5. Tangible assets
Cost
31 January 2019
Additions
31 January 2020 and 30 January 2021
Accumulated depreciation
31 January 2019
Charge
31 January 2020
Charge
31 January 2021
Net book amount
31 January 2021
31 January 2020
31 January 2019
The total depreciation expense of £2,000 (2020: £1,000) is included in administration expenses.
6. Leases
As a lessee
Information about leases for which the Company is a lessee is presented below:
Amounts recognised in the balance sheet
Right-of-use assets
Leasehold properties
Plant, equipment and vehicles
Plant,
equipment
and vehicles
£000
Computer
hardware
£000
90
7
97
90
1
91
2
93
4
6
–
34
–
34
34
–
34
–
34
–
–
–
Total
£000
124
7
131
124
1
125
2
127
4
6
–
2021
£000
1,355
16
1,371
2020
£000
1,595
54
1,649
Additions to right-of-use assets during 2021 were £303,000 (2020: £nil). Depreciation of right-of-use assets during the year was £581,000
(2020: £435,000).
Lease liabilities
Maturity analysis – contractual undiscounted cash flows
Less than one year
One to five years
More than five years
Total undiscounted cash flows
Current (note 11)
Non-current
Total lease liabilities
7. Investments
Shares in subsidiary undertakings:
Cost
31 January 2020 and 31 January 2021
Provision for impairment
31 January 2020 and 31 January 2021
Net book amount at 31 January
106
2021
£000
2020
£000
515
1,042
–
1,557
562
758
1,320
449
1,299
–
1,748
425
1,243
1,668
2021
£000
2020
£000
80,441
80,441
–
–
80,441
80,441
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE FINANCIAL STATEMENTSCONTINUED
Sanderson Design Group PLC is registered and domiciled in the United Kingdom. It is the Parent Company of the Sanderson Design Group.
The Company’s subsidiary undertakings at 31 January 2021, all of which are wholly owned, were as follows:
Name of subsidiary undertaking
Sanderson Design Group Brands Limited
(formerly Abaris Holdings Limited)
Globaltex 2015 Limited
Globaltex Limited*, trading as Clarke & Clarke
Sanderson Design Group Inc*
(formerly Walker Greenbank Inc)
Clarke & Clarke Inc*
Sanderson Design Group Brands SARL*
(formerly Arthur Sanderson & Sons SARL)
Sanderson Design Group Brands B.V.*
(formerly Abaris Trading Company B.V.)
Sanderson Design Group Brands Gmbh*
(formerly Style Library Gmbh)
Style Library (Rus) LLC*
Abaris Holdings Limited*
(formerly Sanderson Design Group Brands Limited)
Abaris (Overseas) Holdings Limited*
Anstey Wallpaper Company Limited*
Anthology Fabrics and Wallcoverings Limited*
Arthur Sanderson & Sons Limited*
Barracks Fabric Printing Company Limited*
Cirka Limited*
Design Edition Limited*
Harlequin Fabrics & Wallcoverings Limited*
Morris & Co. (Artworkers) Limited*
Sanderson of London Limited*
Scion Fabrics & Wallcoverings Limited*
Scion Living Limited*
Standfast Dyers and Printers Limited
Strines Textiles Limited*
Style Library Limited*
Walker Greenbank Distribution Limited*
Walker Greenbank Limited*
(formerly Sanderson Design Group Limited)
William Morris Wallpapers Limited*
Zoffany Limited*
* Indicates that the shares are held by a subsidiary company.
Country of
incorporation and
place of business
Holding
Proportion of voting
rights/shares held
by the Company
Nature of business
UK
UK
UK
US
US
Ordinary shares
Ordinary shares
Ordinary shares
100%
100%
100%
Luxury interior furnishings
Holding company
Luxury interior furnishings
Ordinary shares
Ordinary shares
100%
100%
Luxury interior furnishings
Sales support
France
Ordinary shares
100%
Luxury interior furnishings
Netherlands
Ordinary shares
100%
Sales support
Germany
Russia
Ordinary shares
Ordinary shares
100%
100%
Sales support
Sales support
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
In order to simplify the Group structure, on 29 November 2020 the business and assets of Globaltex Limited were transferred to Sanderson Design
Group Brands Limited.
Registered offices of the Company’s related undertakings, all of which are wholly owned, are as follows:
Name of subsidiary undertaking
Registered office
Sanderson Design Group Inc*
Clarke & Clarke Inc*
Sanderson Design Group Brands SARL*
Sanderson Design Group Brands B.V. *
Sanderson Design Group Brands Gmbh*
Style Library (Rus) LLC*
All undertakings other than the ones listed above Chalfont House, Oxford Road, Denham, UB9 4DX, UK
800 Huyler Street, Teterboro, New Jersey, 07608, USA
2416 Camino Oleada, San Clemente, California, 92673, USA
19 Rue de Mail, Paris, 75002, France
Postbus 372, 1970 AJ IJMUIDEN, Netherlands
Thurn-und-Taxis Platz 6 60313, Frankfurt am Maine, Germany
Room 46, Floor 8, Building 1, 16A Leningradskoe shosse, Moscow 125171, The Russian Federation
* Indicates that the shares are held by a subsidiary company.
107
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC)
Sanderson Design Group Annual Report and Accounts 2021
8. Trade and other receivables
Current
Other taxes and social security
Prepayments and other receivables
9. Cash and cash equivalents
Cash at bank and in hand
2021
£000
1,297
2,059
3,356
2021
£000
7,791
7,791
2020
£000
1,363
275
1,638
2020
£000
–
–
10. Deferred income tax
A net deferred tax asset of £113,000 (2020: £nil) is recognised in respect of future deductions for LTIP payments and other temporary differences.
At 31 January 2021 the Company had gross unused UK tax losses of £3,225,000 (2020: £3,225,000) available for offset against future profits.
Potential deferred tax assets at 31 January 2021 of £613,000 (2020: £557,000) relating to UK tax losses and deductible temporary differences
have not been recognised as it is not considered probable that recovery of the potential deferred tax asset will arise under existing tax legislation.
Unutilised tax losses – UK
Other deductible temporary differences – UK
2021
£000
613
–
613
2020
£000
548
9
557
There are also unutilised capital tax losses at 31 January 2021 of £4,881,000 (2020: £4,881,000) but no deferred tax asset has been recognised as
it is not considered probable that these losses will be utilised.
The March 2021 Budget announced that a rate of 25% will apply with effect from 1 April 2023, and this change was substantively enacted on
11 March 2021. This will likely increase the potential deferred tax asset in future years.
11. Creditors: amounts falling due within one year
Bank overdraft
Trade creditors
Amounts owed to subsidiary undertakings*
Other creditors
Leases (note 6)
Accruals
2021
£000
–
111
21,052
–
562
1,899
23,624
2020
£000
399
87
11,366
–
425
2,463
14,740
* See note 19 for explanation of adjustment for the year ended 31 January 2020.
Amounts owed to subsidiary undertakings are non-interest bearing and are unsecured. These loans are payable by the Company on demand
should payment be required but have no fixed date of repayment.
There is a set-off arrangement for bank accounts held with the UK clearing bank, and accordingly the amount stated as bank overdraft represents
the net of accounts in funds and in overdraft.
12. Borrowings
In October 2019, the Group renewed its committed £12,500,000 multi-currency revolving credit facility with Barclays Bank plc for a further five
year period. The agreement also includes a £5,000,000 uncommitted accordion facility option to further increase available credit which provides
substantial headroom for future growth. The bank arrangement fee of £106,250 is amortised over the life of the loan. During the year the Group
agreed a temporary overdraft facility of £2,500,000 which expired in April 2021, to complement the headroom in our existing £12,500,000
revolving committed credit facility. The total facilities from Barclays Bank plc in the year ended 31 January 2021 comprised the revolving credit
facility and overdraft facility secured on the Group’s freehold property which may be drawn down in either sterling or euro.
Under the Barclays Bank plc facilities, the Group is subject to compliance of two financial covenants, being interest cover and leverage. Any
non-compliance with covenants could, if not remedied or waived, constitute an event of default with respect to any such arrangements.
Due to Covid-19, Management modelled possible downside scenarios to its base case trading forecast during the year. Having taken into account
these models, formal agreement was reached with Barclays Bank plc to waive the interest cover covenant condition for the tests arising in July
2020, October 2020, January 2021, April 2021 and July 2021 and to waive the leverage covenant condition for October 2020, January 2021 and
April 2021. This was replaced by a liquidity covenant requirement that available headroom in the facility needs to remain above £5,000,000
between 1 November 2020 and 31 July 2021.
108
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE FINANCIAL STATEMENTSCONTINUED The Group has reported to Barclays Bank plc that it was in full compliance with its agreed covenants at each of the testing points during the
financial year ended 31 January 2021 and up to the date of this report.
Excluding the temporary bank overdraft facility between April 2020 and April 2021 the total Barclays Bank plc facilities are capped at £17,500,000
(2020: £17,500,000); the utilisation of the facilities at 31 January 2021 was £nil (2020: £1,719,000). The revolving credit facility bears interest at a
variable rate based on a margin above LIBOR (for sterling loans) or the EURIBOR (for euro loans).
For the Group’s cash at bank, and the receivable component of derivative financial instruments, the counterparty to the financial instruments is a
major UK bank, and the Group does not consider there to be any significant credit risk from holding these financial assets.
The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period to contractual maturity
at the Balance Sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows. The maturity profile of undiscounted
cash flows on variable interest rate borrowings has assumed interest rates as at the Balance Sheet date.
31 January 2021
Creditors: amounts falling due within one year
31 January 2020
Creditors: amounts falling due within one year*
Less than
1 year
£000
23,624
23,624
Less than
1 year
£000
14,740
14,740
Between
1 to 2 years
£000
Between
2 to 5 years
£000
–
–
–
–
Between
1 to 2 years
£000
Between
2 to 5 years
£000
–
–
–
–
* See note 19 for explanation of adjustment for the year ended 31 January 2020.
13. Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
31 January 2021
Assets as per Balance Sheet
Trade and other receivables
Cash at bank and in hand
Total
31 January 2021
Liabilities as per Balance Sheet
Creditors: amounts falling due within one year
Total
31 January 2020
Assets as per Balance Sheet
Trade and other receivables
Cash at bank and in hand
Total
31 January 2020
Liabilities as per Balance Sheet
Creditors: amounts falling due within one year*
Total
* See note 19 for explanation of adjustment for the year ended 31 January 2020.
At amortised
cost
£000
Assets at
fair value
£000
–
7,791
7,791
Liabilities
at fair value
£000
–
–
At amortised
cost
£000
275
–
275
Liabilities
at fair value
£000
–
–
–
–
–
Other
financial
liabilities
£000
23,624
23,624
Assets at
fair value
£000
–
–
–
Other
financial
liabilities
£000
14,740
14,740
Derivatives
used for
hedging
£000
–
–
–
Derivatives
used for
hedging
£000
–
–
Derivatives
used for
hedging
£000
–
–
–
Derivatives
used for
hedging
£000
Over
5 years
£000
–
–
Over
5 years
£000
–
–
Total
£000
–
7,791
7,791
Total
£000
23,624
23,624
Total
£000
275
–
275
Total
£000
–
–
14,740
14,740
109
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group Annual Report and Accounts 2021
14. Called up share capital
Ordinary shares of 1p each:
Called up and fully paid:
31 January 2021
31 January 2020
31 January 2019
Number of shares
£
70,983,505
70,983,505
70,893,505
709,835
709,835
708,835
Sanderson Design Group PLC’s issued ordinary share capital with voting rights consists of 70,983,505 (2020: 70,983,505) ordinary shares of which
no (2020: nil) ordinary shares are held in treasury and 50,000 (2020: nil) ordinary shares are held by the Walker Greenbank Plc EBT. Shares held in
treasury or by the EBT are treated as cancelled when calculating EPS.
The market value of shares held by the EBT at 31 January 2021 was £56,000 (2020: £nil). The total number of shares held in the EBT at the year
end represented 0.1% (2020: 0%) of the issued shares.
Shares held by the EBT and the treasury shares are held for the purpose of satisfying awards under incentive plans to Executive Directors and
senior management.
Long-Term Incentive Plans (‘LTIPs’)
The Group operates an LTIP. There have been 13 awards under this plan, in which Executive Directors and senior management of the Group
participate. Further details are included in note 24 of the consolidated financial statements of the Group, which are separately included within the
Annual Report and Accounts.
15. Capital redemption reserve
Capital reserve represents:
Capital redemption reserve on capital restructurings
At 31 January 2021 and 2020
£000
41,888
41,888
16. Dividends
During the year to 31 January 2021, the Company has not paid any dividends. In the prior year the Company paid a final dividend of 2.55p
(£1,810,079) for the financial year ended 31 January 2019 and an interim dividend of 0.52p (£369,000) for the year to 31 January 2020.
During 2020, in light of the Covid-19 pandemic, the Board did not propose payment of a final dividend for the year ended 31 January 2020 or an
interim dividend for the year ended 31 January 2021. The Board do not propose a final dividend for the year ended 31 January 2021, due to the
ongoing Covid-19 pandemic.
The Board intends to reinstate dividends for the year ending 31 January 2022, depending on how the trading environment develops, particularly
with regard to the impact of the ongoing pandemic globally.
17. Contingent liability
The Company is party to a cross-guarantee relating to the borrowings of its subsidiary undertakings in the UK under funding arrangements with
Barclays Bank plc.
18. Related party transactions
The Company made contributions to the Walker Greenbank Group Personal Pension Plan of £61,000 for the year ended 31 January 2021 (2020:
£61,000).
19. Explanation of adjustment for the year ended 31 January 2020
A dividend receivable of £1,753,000 from a subsidiary undertaking for the year ended 31 January 2020 has been adjusted from amounts owed to
subsidiary undertakings to correct the accounting for the prior year, with totals and subtotals amended for this change. Amounts impacted have
been identified throughout these financial statements with the use of an asterisk on the financial statement line and a footnote reference to this
note. The reported profit for the year ended 31 January 2020 has been adjusted from a loss of £1,515,000 to a profit of £238,000 with overall
retained earnings position increased by £1,753,000. There was no impact on the reported profits and retained earnings position of the Group for
the same period.
110
Sanderson Design Group PLC (formerly Walker Greenbank PLC)NOTES TO THE FINANCIAL STATEMENTSCONTINUED FIVE YEAR RECORD
Revenue
Overseas revenue by location of customer
Underlying profit from operations
Profit from operations
Underlying EBITDA
Underlying profit before income tax
Capital expenditure before proceeds from disposal
Earnings per ordinary share
Average number of employees
Dividends paid in year
Shareholders’ funds
Dividend per share
– Final (prior year end) – paid
– Interim (current year end) – paid
– Final (current year end) – proposed
2017
£000
92,373
36,309
9,842
7,859
12,164
9,129
6,768
8.55p
681
1,818
51,293
2.45p
0.55p
3.06p
2018
£000
112,185
46,531
11,991
13,647
15,067
11,731
3,497
16.95p
689
2,659
61,793
3.06p
0.69p
3.68p
2019
£000
113,286
48,214
9,111
5,851
12,660
8,831
3,002
6.15p
684
3,102
60,882
3.68p
0.69p
2.55p
2020
£000
111,453
48,506
6,763
4,778
13,124
6,363
2,488
5.24p
660
2,179
64,829
2.55p
0.52p
–
2021
£000
93,760
42,225
6,363
5,176
12,779
6,202
1,075
5.50p
619
-
67,479
–
–
–
111
Strategic ReportGovernanceFinancial StatementsSanderson Design Group PLC (formerly Walker Greenbank PLC) Sanderson Design Group
Annual Report and Accounts 2021
SHAREHOLDER INFORMATION
Financial calendar
Annual General Meeting
Announcement of half-year results
Sanderson Design Group
Chalfont House
Oxford Road
Denham, UB9 4DX
T: 0845 126 5582
F: 0845 126 5583
www.sandersondesign.group
20 July 2021
October 2021
112
Sanderson Design Group PLC (formerly Walker Greenbank PLC) S
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