live beautiful
Sanderson Design Group
Annual Report & Accounts 2023
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WE ARE A
LUXURY
INTERIOR
FURNISHINGS
GROUP
UNITED IN
A SINGLE
PURPOSE
“ To Bring the Beautiful
into People’s Homes
and Lives.”
CONTENTS
Strategic Report
02 Highlights
04 At a Glance
05 Chairman’s Statement
Chief Executive Officer’s Strategy
and Operating Review
07
12 Our Business Model
13
Live Beautiful
Greenhouse Gas Emission and
18
Energy Consumption Reporting
20
Stakeholder Engagement
22
Section 172 Statement
23 Quintessentially British
24
30
31 Chief Financial Officer’s Review
34 Key Performance Indicators
35
Elevating our Brands
Licensing
Principal Risks
Governance
40
Board of Directors
42 Group Leadership Team
42 Corporate Governance
45
Report of the Directors
46
Statement of Directors’ Responsibilities
47 Nomination Committee Report
48 Directors’ Remuneration Report
52 Audit Committee Report
Financial Statements
54
59
59
60
61
62
Independent Auditors’ Report to the
Members of Sanderson Design Group PLC
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Consolidated
Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
63
90
91
91 Notes to the Company Financial Statements
100 Glossary
101
102
Five-Year Record
Shareholder Information
01
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
HIGHLIGHTS
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 2023.
£112.0m
Revenue
2022: £112.2m (-0.2%)
£12.6m
Adjusted underlying profit before tax*
2022: £12.5m (0.8%)
14.18p
Adjusted underlying EPS*
2022: 13.75p (3.1%)
£10.9m
Statutory profit before tax
2022: £10.4m (4.8%)
£8.8m
Statutory profit after tax
2022: £7.8m (12.8%)
12.42p
Basic EPS
2022: 10.93p (13.6%)
£15.4m
Net cash**
2022: £19.1m (-19.4%)
*
Excluding share-based incentives, defined benefit pension charge
and non-underlying items as summarised in note 12.
** Net cash is defined as cash and cash equivalents less borrowings.
For the purpose of this definition, borrowings does not include
lease liabilities.
02
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section HIGHLIGHTS CONTINUED
FINANCIAL HIGHLIGHTS
• Revenue unchanged at £112.0m (FY2022: £112.2m), representing a resilient performance in a challenging consumer environment
• Licensing momentum continues with revenue up 25.0% at £6.5m (FY2022: £5.2m) including accelerated licensing income of £2.4m (FY2022: £1.4m)
• Brand products sales down 0.8% at £83.4m (FY2022: £84.1m) and down 2.8% in constant currency
– Morris & Co. brand continuing to perform well with reported sales up 15.9% and up 13.8% in constant currency
– North America continues to deliver a strong performance with reported sales up 19.3% in reported currency and 6.3% in constant currency, driven by the Morris & Co., Sanderson and
Clarke & Clarke brands
• Third party manufacturing sales performed robustly against a strong comparator with sales down 3.1% in reported currency
• Adjusted underlying profit before tax of £12.6m (FY2022: £12.5m). Reported profit before tax of £10.9m, up £0.5m (FY2022: £10.4m)
• Liquidity and headroom^ of £27.9m (FY2022: £31.6m) with net cash of £15.4m (FY2022: £19.1m)
• Proposed final dividend of 2.75p per share (FY2022: 2.75p) to give a total dividend for the year of 3.50p (FY2022: 3.50p)
^ Comprising net cash of £15.4m and banking facilities of £12.5m.
OPERATIONAL HIGHLIGHTS
• Significant licence renewals in the year including Bedeck, NEXT and Williams Sonoma along with strong generation of new collaborations and a resilient performance from core bedding and
Japanese partnerships
• Morris & Co. sales driven by the Simply Morris collection with the current year launch of Emery Walker’s House Collection being well received
• Sanderson extended its National Trust collaboration for a further two years and announced an exciting collaboration with Disney to revive vintage Disney characters in the Sanderson archive
from 1936
• Harlequin’s Own the Room campaign gained momentum with colour panel events, colour pods in two top John Lewis stores and an exclusive edit with Brewers
• Further investment in digital printing with two new printers installed at the Anstey wallpaper factory, introducing new capability in design
SUSTAINABILITY HIGHLIGHTS
• Planet Mark certification for Year 5 of carbon reduction, reflecting our Live Beautiful sustainability pledge
• CO2 emissions reduced by 14.5% in FY2023 on location basis, ahead of our plan to reach ZeroBy30
• Energy consumption all from renewables, validated by Planet Mark
• LED lighting installed across all sites
• Investment in digital printing greatly reduced water consumption
• Anstey received ISO45001 certification from BSI in January 2023, an international standard of excellent occupational health and safety management systems
03
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section AT A GLANCE
We are Sanderson Design Group PLC, an international luxury
interior furnishings company that designs, manufactures, and
markets wallpapers and fabrics together with strong licensing
partnerships that produce a wide range of ancillary interior
products. Design is at the heart of everything we do.
OUR VISION
“ T O L E A D T H E I N T E R I O R S I N D U S T R Y I N
T R A N S F O R M I N G T H E W A Y W E D E S I G N , M A N U F A C T U R E
A N D D I S T R I B U T E , E N R I C H I N G P E O P L E ’ S L I V E S ,
H E L P I N G T H E M T O L I V E B E A U T I F U L ”
STARTING THE
JOURNEY OF
SUSTAINABILITY.
0/30
#1
ZeroBy30
We are committed to being
net carbon ZeroBy30.
The employer of choice
We are committed to being a great
and happy place to work.
OUR PURPOSE AND VALUES
As custodians of over 160 years of design experience, our
purpose is to Bring the Beautiful into People’s Homes and
Lives. We do this by being:
INTREPID: WE’RE BRAVE, WE’RE BOLD, WE TAKE THE LEAD,
AND INSPIRE OTHERS AROUND US.
IMAGINATIVE: WE TAKE A CREATIVE AND INNOVATIVE
APPROACH TO EVERYTHING WE DO.
RESPECTFUL: WE CONSIDER CUSTOMERS, COLLEAGUES,
THE PLANET, AND THE PEOPLE WHO LIVE ON IT.
SERVICE PRODUCT OVERVIEW
The Group is home to a collective of six quintessentially
British luxury interior brands targeted at consumers:
Sanderson, Morris & Co., Zoffany, Harlequin, Clarke &
Clarke and Scion as well as two manufacturing brands
which produce fabric and wallpaper for the industry.
We operate in the upper sector of the market, producing
high value products. Our UK domestic market is strongly
penetrated, and our USA subsidiary shows important
growth potential.
LOCATIONS
We employ 630 people globally across our brands and
manufacturing businesses, which are based in the UK in
Loughborough and Lancaster but provide products globally.
04
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section CHAIRMAN’S STATEMENT
In the financial year ended 31 January 2023 we
delivered a resilient trading performance amid
challenging market conditions and input cost
inflation. Whilst the sales performance was solid,
delivering a flat result year-on-year, strategic
and operational initiatives increased margins,
overcoming cost increases to deliver a slight
improvement in reported profits against last year.
The profit growth was achieved through the
improving efficiency of the business and a
proactive approach to product pricing, with
price increases in February and August last year,
along with tight control of costs. The margin
improvement also reflects the strong contribution
from our high margin licensing activities, which
had another excellent year with revenue up by
25.0% at £6.5m (FY2022: £5.2m).
Our licensing activities underline the strength of
our brands and of our creative skills in scaling
and colouring designs for a multitude of different
products. In addition to royalty income, licensed
products bring wider consumer awareness of our
brands across multiple finished goods categories,
thereby potentially stimulating the sales of our own
core products of fabric, wallpaper and paint.
During the year, we signed a significant number
of new licensing collaborations, including Disney,
along with important licence renewals including
NEXT, Bedeck and Williams Sonoma. In Japan,
Sangetsu is preparing to launch the first full
collection of wallcoverings, jacquards and flooring
in June 2023, under the agreement announced
in 2021. The momentum has continued into the
current financial year, with the announcement
of a further agreement with NEXT and a new
agreement with the Sainsbury’s brands Habitat
and Tu. Both of these agreements highlight
our strategic emphasis on collaborating with
larger companies.
The US, where the Group’s brands have historically
been under-represented, is an area of strategic
focus and it is pleasing to report that product
sales were up 6.3% in constant currency during the
year. Consumer confidence in the UK resulted in a
decline of 2.5% in UK brand product sales whilst
product sales in Northern Europe were down 16.5%
in constant currency, impacted particularly by the
cessation of trade in Russia where prior year sales
were £1.8m.
Our Morris & Co. brand continued its strong growth
during the year, up almost 13.8% in constant
currency, whilst the difficult consumer environment
impacted the performance of our other brands.
Clarke & Clarke, our biggest selling brand, was
resilient with sales down 5.7% in constant currency
though it delivered a record performance of
market sales in the US.
Our manufacturing operations, which print fabric
and wallpaper for our own brands and third
parties, performed robustly against a strong
comparator in the previous year when companies
were restocking after Covid-19. Third party
manufacturing sales were down 3.1% in the year
at £22.2m.
We have continued to advance our Live Beautiful
sustainability strategy, which has two major
commitments: for the Company to be net carbon
zero by 2030 and to be the employer of choice
in the interior design and furnishings industry.
Energy saving measures, which are also helping
to mitigate energy price increases, include the
installation of LED lighting across all our locations.
Our increasing adoption of digital printing
contributed to the decrease in our net carbon
footprint during the year.
Further details of the Group’s progress are
included in the Chief Executive Officer’s Strategy
and Operating Review.
05
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section CHAIRMAN’S STATEMENT CONTINUED
Financial results
The results for the year ended 31 January 2023
show that the Group’s strategy is continuing to
deliver in challenging market conditions. Adjusted
underlying profit before tax at £12.6m was up 0.8%
on the previous year (FY2022: £12.5m). Reported
profit before tax of £10.9m was up 4.8% on the
year ended 31 January 2023 (FY2022: £10.4m).
The Group’s Balance Sheet remains strong with
net cash at the year end of £15.4m compared
with £19.1m at 31 January 2022 and £15.0m at
31 July 2022.
Dividend
The Directors recommend a final dividend of 2.75p
(FY2022: 2.75p) taking the full year dividend to
3.50p (FY2022: 3.50p). This payment will be made
on 11 August 2023 to the shareholders registered
on the Company’s register on 14 July 2023 if
approved at the Company’s forthcoming Annual
General Meeting. The Board remains committed to
a progressive dividend policy as part of the capital
allocation priorities of the Group.
People
On behalf of the Board, I would like to thank all
of our colleagues for their commitment, energy
and adaptability during another year which
has brought challenges both to businesses and
more widely.
Outlook
Our full year results reflect the strategic
progress we have made in difficult market
conditions. We will continue to deliver our
strategy, to control costs carefully and to focus
resources on international market opportunities
given the ongoing uncertainty in the UK
consumer environment.
As we start the current financial year, inflationary
pressures on input costs persist but the US market
continues to perform well, licensing income has
performed strongly and hospitality contract orders
are encouraging. We are also excited by recent
and upcoming launches from our brands and
through collaborations, including Sophie Robinson
for Harlequin and the vintage Disney Home x
Sanderson collection. The Board’s expectations
for the year remain unchanged.
Dianne Thompson
Non-executive Chairman
25 April 2023
06
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
CHIEF EXECUTIVE OFFICER’S STRATEGY
AND OPERATING REVIEW
Introduction
I am pleased to report a resilient trading
performance in the year ended 31 January
2023. It was reassuring in challenging market
conditions that our strategy continued to deliver:
we maintained Group sales and profits at a
similar level to last year’s against a challenging
consumer environment whilst also faced with
rising energy, raw material and other input cost
inflation. Our decision to cease trading in Russia,
which contributed £1.8m in sales in FY2022,
also impacted trading and the year-on-year
comparison. The team performed strongly and
I applaud their energy, commitment and skill in
navigating market challenges.
Our profit was driven by strong performances from
licensing, US sales and the Morris & Co. brand, all
of which bring further growth opportunities. Of our
three main revenue streams – brand product sales,
licensing, and third-party manufacturing – licensing
was the star performer, with licensing revenue
increasing by 25.0% at £6.5m (FY2022: £5.2m).
Significant strategic and operational progress was
made during the year – progressing our licensing
strategy, improving the efficiency of the business,
and investing in manufacturing. We again finished
the year with a strong balance sheet, with net
cash at 31 January 2023 of £15.4m, which will
protect the business during the current economic
uncertainty and enable us to invest for growth.
We signed a number of exciting collaborations
during the year, and also launched some superb
new collections of wallpapers and fabrics. This
momentum has continued into the current year
with the announcement of important new licensing
agreements and product launches, including
the recent launch by Morris & Co. in celebration
of Emery Walker’s House Trust – it has been
a privilege to commercialise for the first time
some original designs of the era in a range of
28 wallpapers and 28 fabrics.
Further details of our strategy and operational
performance are given below.
Strategy and progress
We set out our growth strategy for the Group in
October 2019 and this strategy 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 strategy is to focus on our core
products of wallpaper, fabric and paint, and to
build our finished goods offer with our partners.
Partnering with key customers: The strategic
focus on the individuality of each brand, and our
tailored service, will help cement relationships with
key customers, while enhanced communication
will drive demand for both heritage and
contemporary brands from consumers, through
our interior design partners, retail channels and
hospitality partners. We will continue to deepen
our relationships with existing licensing partners
and seek new opportunities.
Investing in people: People, and creativity,
are at the heart of our business. In our industry,
Sanderson Design Group is a favoured destination
for emerging new designers, and we will benefit
from doing even more to bring in new creative
and other talent, nurture it and create a
high-performance culture.
Growing key geographies: Our brands have
significant international market potential, reflected
in their being sold in more than 85 countries
worldwide. To maximise return, we are focused
on building market share in three key geographies:
the UK, Northern Europe and the USA. Our
approach is tailored to each individual region.
We have made significant progress during the
year in pursuing this strategy in a challenging
marketplace.
07
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section CHIEF EXECUTIVE OFFICER’S STRATEGY
AND OPERATING REVIEW CONTINUED
Efficiency
Improving the efficiency of the business by
reducing the number of stocked items (SKUs) was
an integral part of our strategy set out in 2019.
The target SKU reduction, to approximately 12,000
SKUs, was achieved in FY2022 and the effect
of this is shown in the profitability of the business
as it is one of the factors that has enabled us
to report unchanged profits even though input
costs have risen. During the year, we reduced the
SKU target to 10,000 and this further reduction
is now complete with all obsolete stock having
been cleared. Our latest thinking is that 11,000 is
the right goal to fill some product demand from
customers now that we can clearly see the gaps.
We made a strategic investment in best-selling
SKUs during the year, resulting in a high quality,
year-end inventory of £27.8m (FY2022: £22.7m).
Our focus continues to be on fewer, stronger
collection launches as historically only a proportion
of them sold particularly well whilst others added
to costs and inventory. Our expectation is that
margin improvement from the SKU reduction and
strengthened product management will continue
in the current year and beyond.
Launching collections digitally, rather than through
pattern books, and monitoring online sample
requests has helped us identify the most popular
designs and colourways in new collections. This
has saved cost on stock, avoided out-of-stocks,
and improved efficiency. The pattern books that
we print only include designs and colourways that
are most likely to perform strongly on an individual
SKU ROI basis.
Sustainability
Our Live Beautiful sustainability strategy, launched
in April 2021, comprises a broad range of
initiatives and two major commitments: for the
Group to be net carbon zero by 2030 and to be
the employer of choice in the interior design and
furnishings industry.
We last carried out our employee engagement
survey in 2021, which gave an overall employee
satisfaction rating of 78%, which compared with
58% in 2019. The two-yearly survey will next be
conducted this year, with the target satisfaction
raised to 80%, compared with 70% in 2021.
Energy efficiency has been an important area of
focus. LED lighting was installed across all our
locations and the shift towards digital printing from
traditional methods is also reducing our energy
consumption; an additional focus for us given the
volatility of energy prices.
We were pleased to receive our Planet Mark
Year 5 certification earlier this year, marking the
fifth financial year that the sustainability of our
business has been measured by Planet Mark, the
sustainability certification organisation. In the year
to 31 January 2023, our total carbon footprint was
6,368.5 tonnes, a decrease on FY2022’s 7,452.9
tonnes reflecting the number of initiatives across
the Group including the greater use of digital
printing, which reduces gas consumption compared
with traditional printing and significantly reduces
water consumption.
Digital and direct-to-consumer initiatives
Through a number of incubator projects, we have
been experimenting with digital and direct-to-
consumer routes to market to identify the best
opportunities for each of our brands. We have
gained many insights through these projects and
we continue to consider future strategy in this
area. However, we would need confidence in the
consumer environment to commit the significant
investment required to scale any of these
opportunities directly and continue to explore
partnerships such as the franchise operation of
scionliving.com.
Operational review
The table below shows the Group’s sales performance in the year ended 31 January 2023, compared with
FY2022. The table shows our three key revenue streams of brand product sales, licensing income and
manufacturing. It also gives the four key geographies of our brand product sales: the UK, Northern Europe,
North America and Rest of the World.
UK Brand product sales
International Brand product sales
– North America
– Northern Europe
– Rest of the World
Total Brand product sales
(includes carriage income)
Licensing income
Total Brand sales including Licensing
Total Manufacturing sales*
Intercompany elimination*
Total Revenue*
* Does not report in constant exchange rate.
Year ended
31 January (£m)
2023 versus 2022
2023
42.6
40.8
19.8
10.8
10.2
83.4
6.5
89.9
39.0
(16.9)
112.0
2022
Reported
43.7
40.4
16.6
13.2
10.6
84.1
5.2
89.3
41.7
(18.8)
112.2
(2.5%)
(1.0%)
19.3%
(18.2%)
(3.8%)
(0.8%)
25.0%
0.7%
(6.5%)
(10.1%)
(0.2%)
Constant
currency
(2.6%)
(3.3%)
6.3%
(16.5%)
(3.1%)
(2.8%)
25.1%
(1.2%)
–
–
–
Licensing
Licensing is the most profitable part of the Group,
with royalty income at a 100% margin. Our licensing
activities underline the strength of our brands and
our creative skills in scaling and colouring designs
for a multitude of different products. Licensing
enables us to leverage our design archives and
bring wider consumer awareness of our brands
across multiple finished goods categories. This
wider visibility of our designs brings the potential
to stimulate the sales of our core products of
fabric, wallpaper and paint and reinforces our
identity as a design-led business.
specialists such as bedlinen company Bedeck.
To support this strategy, we reorganised our
design teams during the year so that we now have
dedicated designers who work solely on licensing
agreements, which are highly collaborative.
From our side, we provide the design and the
design expertise to transfer the design from a
wallpaper or fabric, or from our own archives, to
a multitude of different finished products of all
sizes, materials and uses. In essence, we drive the
design work, which is a key value we bring to the
collaboration, and the partner drives the product
production and marketing.
Our strategy for licensing has been to focus on
larger, long-term partners including high street
retailers such as NEXT and Sainsbury’s in the
UK, Williams Sonoma in the US and category
Licensing performed strongly during the year,
with sales and profits up 25.0% at £6.5m (FY2022:
£5.2m) including £2.4m of accelerated income
(FY2022: £1.4m).
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Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
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CHIEF EXECUTIVE OFFICER’S STRATEGY
AND OPERATING REVIEW CONTINUED
Accelerated income represents the total minimum
guaranteed sales associated with newly signed
contracts with a discount rate applied to them. It
is a requirement of IFRS 15 that these minimum
guarantees are recognised in this way on contract
signature although it is hoped that, once the
licensed products are launched, their sales will
potentially exceed the minimum guarantees.
Notable licensing agreements signed during the
year include a three-year renewal with Bedeck,
which has rights in multiple geographies to a wide
range of bedlinen and towelling for the Morris &
Co., Sanderson, Harlequin and Scion brands, and
a renewal with NEXT for up to two years for Morris
& Co. womenswear. The Morris & Co. kitchenware
partnership Williams Sonoma, initially signed in
August 2021, was extended by two years to 2025.
Most of our agreements are out-licensing deals
but we also sign some in-licensing ones, which
do not attract accelerated income, but which
are potentially valuable over time. In-licensing
agreements include a Sanderson collaboration
with the National Trust announced in 2020, and
which we are excited to have recently renewed
for a further two years, a Clarke & Clarke
collaboration with Wedgwood signed in 2021
and our collaboration with Emma J Shipley.
During the year, for our Sanderson brand, we
signed an exciting in-licensing collaboration with
Disney. Under the terms of the agreement, the
Sanderson brand will be able to create wallpapers
and fabrics based on a wide range of Disney
Classic franchises, based on original Sanderson
archives dating back to 1936 and Disney archival
material. Products developed under the agreement
will be distributed internationally through the
Group’s existing sales network and are planned
for launch this autumn.
All our brands have potential to attract licence
income, from heritage brands Morris & Co. and
Sanderson to contemporary, licensing-focused
brand Scion and recently Clarke & Clarke.
By region, the US is an important opportunity for
licensing. The Morris & Co. agreement with Williams
Sonoma, signed in 2021, was our first licensing
agreement for the US and has been extended on
initial success. Towards the year end, we announced
a second agreement in the US with a washable rug
company, Ruggable, again with the Morris & Co.
brand. A US specific collaboration with Studio McGee
led to a small Morris & Co capsule of exclusive edits
creating high impact at the beginning of this year.
The process of product development,
manufacturing and launch follows all of our
licensing announcements, and this pre-launch
period is often a year or more. During the coming
weeks and months, we look forward to product
launches resulting from earlier agreements. These
include Sangetsu in Japan, which is launching
its first collection, called Morris Chronicles,
following an exclusive agreement signed in May
2021 for Morris & Co. products in Japan and 14
countries in east and southeast Asia. NEXT will
also be launching a new range of Morris & Co.
womenswear for Autumn/Winter this year.
Since signing our first licensing agreement with
NEXT in March 2020, NEXT has become an
increasingly important licensing partner for the
Group across the Morris & Co., Sanderson and
Scion brands and across a broad range of home
and apparel products. In February 2023, we
were particularly pleased to announce a major
licensing agreement with NEXT for Clarke & Clarke
homewares, marking the brand’s first significant
licensing agreement.
In March 2023, we were also delighted to
announce a major agreement with the Habitat
homewares brand and the Tu clothing brand,
both of which are owned by Sainsbury’s, the
supermarket group. The agreement, with the Morris
& Co. and Scion brands, marked the first time that
we have collaborated with Sainsbury’s, a group
with a substantial distribution network both online
and in-store.
The Company is continuing to progress a pipeline
of further licensing opportunities, leveraging its
brands and design archives.
The Brands
The Brands segment comprises heritage brands
Zoffany, Sanderson, and Morris & Co; and
contemporary brands Harlequin, Scion and
Clarke & Clarke.
Year ended
31 January (£m)
2023 versus 2022
Brands
2023
2022
Reported
Constant
currency
Morris & Co.
19.0
16.4
15.9%
13.8%
Sanderson
14.0
14.4
(2.8%)
(4.6%)
Zoffany
8.8
8.6
2.3%
1.0%
Clarke &
Clarke
23.6
24.6
(4.1%)
(5.7%)
Harlequin
15.8
17.6
(10.2%)
(12.9%)
Scion
Other
Total
1.8
0.4
2.2
(18.2%)
(18.8%)
0.3
(33.3%)
(33.3%)
83.4
84.1
(0.8%)
(2.8%)
Morris & Co.
Morris & Co. had another year of strong growth
of its brand product sales, and it is now our
second biggest selling brand with sales at £19.0m
in reported currency, up 15.9% compared with
FY2022. By region, sales were up 19.9% in the UK,
in Northern Europe were down 11.7% and in North
America were up 36.8% in constant currency.
Morris & Co. sales were driven by the Simply Morris
collection, a modern interpretation of Morris &
Co. designs using clear grounds as a fresh take
on maximalism targeting the sunshine states. This
collection was launched in Autumn 2021 and has
continued to gain momentum.
For the current financial year, the Emery Walker
House Collection is a much more traditional collection
which has been well received. This collection has
resulted from a sponsorship agreement with the
Emery Walker Trust, the charity that preserves the
London home of Emery Walker, a typographer and
engraver and a close friend of William Morris.
Marketing initiatives during the year included
the first-ever show garden for the Morris & Co.
brand at last year’s Chelsea Flower Show. The
Morris & Co. show garden won a gold medal with
the garden’s designer, Ruth Wilmott, founding
her highly imaginative design on two of William
Morris’s best-known wallpapers, Trellis and
Willow Boughs.
Morris & Co. paints were relaunched at the start of
the financial year under review, having been out of
production since 2008 though frequently requested
by customers.
Studio McGee launched four exclusive wallpapers
in a special edit in their influential USA online store
at the beginning of this year, with great success.
Sanderson
Brand product sales at Sanderson in the UK were
down 3.4%, in Northern Europe were down 27.7%
but in North America were up 3.8% in constant
currency compared with FY2022.
In line with our strategy of fewer, stronger
launches, Sanderson collections have been
rationalised to one big launch each year. Water
Garden was launched last year and performing
well, and this year’s Spring launch Arboretum,
which has been very well received.
This Autumn, Salvesen Graham, a renowned British
design duo, are styling Sanderson for an editorial
shoot, and launching a small collection (36 SKUs)
of trimmings in collaboration with the brand, to
meet demand in the market.
The Disney capsule announced in August 2022
launches in Autumn 2023, in celebration of the
original archival characters in a sophisticated
collection of fabrics and wallpapers, which are sure
to bring a smile to our customers and have been a
joy for us to work on.
With plans already in place for next year, the
end of this current financial year will see the
launch of a collaboration with Giles Deacon, the
renowned couture designer and illustrator, who has
innovatively reworked original Sanderson designs.
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AND OPERATING REVIEW CONTINUED
Zoffany
Zoffany is the Group’s interior designer-led brand,
which occupies the top price point of the Group’s
brands. During the year, the brand product sales
in the UK were down 5.1%, in Northern Europe
down 0.7% but in North America were up 5.1% in
constant currency compared with FY2022.
We hosted a major presentation at Temple
Newsam, the stately home and museum in Leeds,
which reminded our top UK customers of Zoffany’s
origins in the 1980s restoration projects and
in the redecoration of expansive homes. The
brand celebrates the best of English design and
excellence in craftsmanship.
Arcadian Thames is the most recent collection of
Zoffany, celebrated for its artistry and celebration
of historic houses along the river, with special
pieces designed in collaboration with QEST scholar
Melissa White and commissioned works Livia
Papiernik, from the Royal School of Needlework
and subsequently the Royal College of Art.
We are further leveraging the brand’s heritage
and skill with a new launch later this year, working
closely with historic English silk manufacturers on
a collection of damasks and classic woven stripes,
which revisits the brand’s Temple Newsam history
with the highest quality of execution, in celebration
of our country’s best makers.
Clarke & Clarke
Clarke & Clarke, our biggest selling brand, had an
exciting year and recorded a strong performance
in North America, where it is distributed by Kravet
Inc. Its brand product sales in the UK were down
7.2%, in Northern Europe were down 10.4% and
in North America were down 1.0% in constant
currency compared with FY2022.
The brand’s partnership with heritage tableware
company Wedgwood resulted in the launch
of Wedgwood homewares last year, including
fabrics and wallpapers for international
distribution through both brands’ networks.
The sales performance from this partnership
has been encouraging.
Historically, the Clarke & Clarke brand has been
almost entirely fabric collections so a key strategic
ambition for the brand is to launch complementary
wallpapers. We made progress by launching two
small wallpaper collections last year and plan to
launch a further two this financial year.
To further increase the revenue streams from this
highly popular, accessibly priced brand, we were
delighted to announce in February 2023 that
Clarke & Clarke had signed its first significant
licensing agreement with NEXT as described in the
Licensing section above.
Scion
Scion is predominantly a licensing brand, and its
licensing revenue makes a strong contribution to
the Group. It’s also a direct-to-consumer brand
from the scionliving.com website, which brings all
Scion products onto one platform. Owing to this
positioning, the Company no longer produces full
collections of wallpapers and fabrics but launches
capsule collections instead to bring newness.
In September 2022, Scion launched a capsule
collection of wallpapers and fabrics created
in collaboration with Designs in Mind, a social
enterprise that uses art and design to support
people with mental health challenges. The
collection, which was created through workshops
hosted by the Scion design team and is available
via the Scion online shop, demonstrates the
Company’s commitment to the positive power of
design and its Live Beautiful commitment.
To celebrate the brand’s 10th anniversary, Scion
launched its most recent refresh, Going Lohko, a
powerful colour edit of Scion classics comprising a
dozen SKUs of wallpaper.
Scion’s brand product sales in the UK were down
12.9%, in Northern Europe were down 37.9% and
in North America were down 21.2% in constant
currency compared with the prior year.
Harlequin
The year was a year of consolidation for Harlequin,
where the focus was on embedding the colour
science initiative into the brand. This initiative
includes the colour quiz, which seeks to empower
consumers to choose the best designs and colours
for their individual emotional and physical well-
being. Harlequin collections are presented as
colour stories to suit each of four profiles: Rewild,
Reflect, Retreat and Renew.
Good progress is being made in this journey.
Importantly, John Lewis has embraced the concept
with the launch of Harlequin colour pods in two
top stores, which have been well received and give
confidence in the strategy, with further partnership
planned in this current financial year.
Brewers/Wallpaperdirect launched an exclusive
special edit of Harlequin designs in September
2022, which is backed by a stock commitment and
is performing very well.
During the year, Harlequin’s brand product sales in
the UK were down 8.1%, in Northern Europe were
down 31.3% and in North America were down 7.1%
in constant currency compared with the prior year.
Further momentum will be added to Harlequin’s
colour science this year, when a capsule collection
of wallpapers and fabrics in signature colours
and exuberant styling will be launched through
a collaboration with Sophie Robinson, known as
the “Queen of Colour”, which is expected to be
launched in Autumn 2023.
A new collaboration will follow for Autumn/Winter
2024 with designer and tastemaker Henry Holland
of henryhollandstudio.com.
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AND OPERATING REVIEW CONTINUED
Manufacturing
Our unique, integrated vertical supply chain is
an important pillar in our growth strategy and
continues to be the focus of increased investment,
particularly in digital printing technology.
The two factories, Standfast & Barracks and Anstey
Wallpaper Company, print for our own brands and
for third parties, positioning them at the centre
of our industry. Our third-party sales, in the UK,
Europe and the USA, reflect our premium print
technologies and world-class excellence in design,
manufacturing, customer service and innovation.
Standfast & Barracks (‘Standfast’)
Standfast, our fabric printing factory, is widely
regarded, internationally, as the destination
for creative, innovative and high-quality fabric
printing. Standfast continues to exploit its
extensive archive and original artwork, with a
talented design studio that reinterprets antique,
heritage and classic design into prints relevant
for today.
Investment during the year included the
introduction of a new ERP system. Digital printing
at Standfast as a proportion of factory output was
74% (FY2022: 69%).
The performance at the factories during the year
was robust against a strong comparator in FY2022,
which included a period of restocking after Covid.
Total sales at Standfast in the year were £20.7m
(FY2022: £21.3m).
Year ended
31 January (£m)
2023 versus
2022
2023
2022
Reported
16.9
18.8
(10.5%)
22.1
22.9
(3.5%)
39.0
41.7
(6.5%)
Sales to Group
brands
Third party
sales
Total
Manufacturing
sales
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 combine them.
Investment in digital printing at Anstey during the
year included two new digital printers, which offer
enhanced capabilities including speed. Digital
printing at Anstey as a proportion of factory
output was 16% (FY2022: 18%).
Total sales at Anstey were £18.3m (FY2022: £20.4m).
Summary
Our strategy has delivered a resilient trading
performance during the year amid challenging
market conditions and input cost inflation.
Strategic initiatives during the past four years such
as SKU reduction, coupled with tight cost control,
have increased the profitability of the business.
Price increases introduced in February and August
last year, and again in February this year, are
also protecting the margin in an environment of
increased input costs, whilst maintaining value
for the customer We continue to focus on the
efficiency and agility of the business along with
investment in growth opportunities for the near
and long term. In the current consumer market, the
strength of our balance sheet provides significant
protection in the event of any further deterioration
in trading conditions.
As we start the current financial year, inflationary
pressures on input costs persist but the US market
continues to perform well, licensing income has
performed strongly and hospitality contract
orders, are encouraging. We are also excited by
upcoming launches from our own brands and
through collaborations, including Sophie Robinson
for Harlequin and the vintage Disney Home x
Sanderson collection. The Company continues
to trade in line with Board expectations for the
current financial year.
I would like to express my sincere gratitude
and heartfelt thanks to all of our colleagues
for making the business a success throughout
another challenging year as we look forward
from a stronger platform and embrace future
opportunities.
Lisa Montague
Chief Executive Officer
25 April 2023
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section OUR BUSINESS MODEL
One of the biggest fabric and
wallpaper archives in the world
With an archive, of hundreds of thousands
of artefacts, going back to the 18th century,
our archives have grown over the years as we
have incorporated more brands into the group.
We are continually embellishing our Group
archives with new treasures sourced globally.
Design in our heart
Design is at the centre of everything we do
at Sanderson Design Group, as well as taking
inspiration from our own archives, our talented
team of 17 designers, scout globally far ideas
to bring our collections to life. We also work
with external collaborators and international
tastemakers to bring new collections and edits
to market. We are committed to nurturing
design talent in the UK and support QEST,
The Furniture Makers’ Company, Young
Designers amongst others.
Six brands catering to a diverse global market
Each one of our brands contributes a unique
chapter to our story. We represent the full
spectrum of British interior design, catering
from cutting-edge sleek modern styles, to
the hearty warmth of traditional forms. Our 6
brands cater for an ever-growing market
with diverse needs. Our 3 luxury and heritage
powered brands are Zoffany, Morris & Co. and
Sanderson. They all take inspiration
from the past and preserve the artistry of
designs from the past for generations to
come. Harlequin, Scion and Clarke & Clarke
are our premium brands, targeted to a more
contemporary audience.
DESIGNS
ARTEFACTS
PICTURES
ARCHIVE
3RD PARTY
BRANDS
BRAND PORTFOLIO
IN-HOUSE UK MANUFACTURING
(archive & design – end-to-end services)
GLOBAL
SOURCING
LICENSING
WALLPAPER AND FABRIC
PAINT
HOMEWARE AND APPAREL
WHOLESALE
DIRECT TO
CONSUMER
LICENSING
ONLINE
CONCESSIONS
Tableware
Kitchenware
Lighting
Bedding
Flooring
Stationery
Textiles
Wall coverings
INTERIOR
DESIGNERS
DISTRIBUTORS
CONTRACT
SPECIFIERS
SHOWROOMS
SHOPS
ONLINE
CONSUMER
Preserving craftsmanship for generations
to come with two UK manufacturing sites
Between our two manufacturing sites we offer
unique combinations of gravure, rotary screen,
flexographic, surface, surflex, digital, flat screen
and hand block printing as well as some of the
most advanced digital printing techniques available
worldwide. The rich heritage and wealth of printing
knowledge amongst the team is exceptional,
employing only the finest, skilled craftspeople in
designing and printing our fabrics and wallpaper.
We have several routes to market including
57 licensing partners
We work with large international retailers,
global showrooms, carefully selected high street
partners and internet retailers as well as large
contract suppliers. We have developed a strong
licensing business, for which we create exclusive
designs. Licensing has significantly expanded our
brand reach.
RICH
HERITAGE
AND WEALTH
OF PRINTING
KNOWLEDGE
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DELIVERING
SUSTAINABILITY
Our Live Beautiful framework, shown below, was launched externally
in April 2021, outlining our long-term strategies as envisaged in our
Chief Executive Officer’s Strategy and Operating Review and Chief
Financial Officer’s Review. People, Product and Planet are the three
pillars of our Sustainability Strategy and form an integral part of our
overall business strategy.
To Live Beautiful means preserving our
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. Our vision is to “lead the interiors
industry in transforming the way we
design, manufacture and distribute,
enriching people’s lives to Live Beautiful”.
Reimagine
our product
lifecycle
Address nine of the UN’s
Sustainable Development Goals.
#1
The employer of choice
We are committed to being a great
and happy place to work.
0/30
ZeroBy30
We are committed to being
net carbon ZeroBy30.
BRINGING
THE BEAUTIFUL
INTO PEOPLE’S
HOMES
AND LIVES
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REIMAGINING THE
PRODUCT LIFECYCLE
In this pillar of our sustainability strategy, we are
re-examining and reimagining the entire life cycle
of our products, from the sourcing of raw materials
through how products are manufactured on to the
process of sales and distribution. The over-riding
objective is to minimise environmental impact,
whilst protecting and preserving the heritage of
our brands and the legacy of craftsmanship in our
design and manufacturing.
Reimagining our products and processes to
become more sustainable and meet our carbon
reduction targets has resulted in a broad range
of initiatives, which range from printing substrate
through production processes to packaging:
Minimising environmental impact:
• We have continued our focus on packaging and
continued our programme to replace the use of
plastic by using innovative recyclable materials
and paper-based products and are delighted to
say that the vast majority of our packaging is
now in recycled or recyclable materials.
• We continue to use paper tape instead of
• Our Clarke & Clarke brand has launched two
polypropylene for the packing of wallpaper
orders, which are shipped in cardboard, and
pattern books are now packed in cardboard
rather than plastic. Plastic air pockets have also
been replaced by recycled alternatives.
• A sustainable, biodegradable plastic alternative
based on sugar cane is now used for the
packaging of fabrics and we have reduced
the paper we send out with samples and
reuse cardboard boxes where possible in our
supply chain.
• We have expanded the use of reusable fabric
tote bags instead of plastic to package bedding
and ready-made products following the lead
from our Clarke & Clarke brand.
• We continue to source the majority of our
100% cotton base fabrics, along with our
cotton velvet and some cotton linen blends,
through Better Cotton Initiative contracts,
which brings traceability to the supply chain
to ensure sustainability.
further Eco Sustainable Weaves ranges this year,
which use a fabric made entirely from recycled
plastic bottles, using approximately 90 plastic
bottles per metre of fabric.
• We launched our exclusive Eco non-woven
substrate at Anstey Wallpaper, utilising 100%
recycled PET.
• We have continued the investment in production
processes that are more environmentally
friendly. For example, the Ecofast™ pigment-
based printing system, which significantly
reduces water use, developed at Standfast
& Barracks has been adopted for wallpaper
printing at Anstey.
• We have a Zero to Landfill policy and reuse,
repurpose or donate excess product to good
causes in our communities.
We are committed to preserving craftsmanship
through the printing techniques we adopt:
• Block Printing is a highly skilled craft that creates
authentic texture and a handmade feel for a
truly special finished look.
• Flatbed printing is a traditional printing method
where the design is applied to fabric using flat
screens. There can be up to 24 colours on one
design, using up to 24 screens to print a full
design onto fabric. Each screen is used to print
a different colour onto the fabric.
• Long Table Printing is a modern take on silk
screen style. Long table printing was first
introduced in the 1940s and remains a table-top
process to explore a range of substrates and
specialist laminates with opaque, metallic and
pearl inks.
We are currently in the process of digitising our
extensive archives.
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EMPOWERING
PEOPLE
People are at the heart of our Group and a fundamental pillar of our Live Beautiful
strategy, which is unified around our values to be Intrepid, Imaginative and Respectful.
Our employees drive our strategy, from talented creative teams and highly skilled
craftspeople to knowledgeable sales and office-based colleagues; all our people
play an important role.
We are committed to being the employer of choice
in our industry and being a Great Place to Work
for our colleagues in a commercially successful
company. We have designed an Empowering
Our People agenda to deliver this goal, with work
focused on leadership, culture and talent and
capabilities and ways of working. Our people
represent our biggest asset, and so the ability of
the Group to attract, develop and retain talent and
build capability at the pace required is fundamental
to the delivery of the Group’s strategic objectives
and is done through fostering a dynamic and
inclusive culture where all employees feel engaged.
We are committed to empowering and equipping
our leaders, strengthening capabilities and
expanding our talent plans, simplifying how
we work, and driving positive change and a
more sustainable future across every part of
our footprint.
While our programme has a multi-year horizon,
we have shown a significant shift in employee
engagement, increasing from 58% to 78% in our
last employee engagement survey.
We will continue to increase employee engagement
by creating a culture of empowerment. Following
our last survey, all leaders across the organisation
reviewed their team’s feedback, discussed priority
areas and developed actions that teams continue
to work on together. This local activity is driving
informed and positive discussions around how each
of our employees can feel better supported when it
comes to their health and wellbeing.
We strive to create a high-performance culture and
to create an environment where people can do the
best work of their lives. Over the last 12 months,
we continued to focus on evolving strategies for
recruiting and developing key talent within the
business in a way which promotes our cultural
values. We sought to build a diverse, open and
inclusive culture where all perspectives are valued.
Our ambition to foster an inclusive and diverse
workforce that increasingly reflects the array of the
markets in which we operate is key to creating a
purpose-driven culture that ensures everyone feels
a sense of belonging.
Engaging with our employees regularly is
something we are committed to, and we have in
place a broad range of ways we do this. During
2022, we continued to work hard to develop a
culture of listening, where employees feel free to
share their views, see their feedback acknowledged
and acted upon. Activities such as monthly business
briefing sessions and interactive Senior Leader calls
were particularly appreciated, as were our Meet
the Board and other Board engagement sessions
where employees benefit from the chance to ask
questions and hear updates directly from our most
senior leaders.
During the year, we focused on building our
talents capability and driving team engagement.
The Company’s first cohort of SDG’s future team
graduated from a new Leadership Development
Programme built around our values. The Sanderson
Futures Team (‘SFT’) programme is run over nine
months and comprises 360° feedback, coaching
and training on all aspects of leadership. The
second Group will commence the course in
April 2023.
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We have also introduced a structured Group-wide
CMI-accredited Apprenticeship scheme, encouraging
our apprentices to develop their skills and capability
in operational and financial management leadership
and project management.
We support QEST, the Queen Elizabeth Scholarship
Trust, to promote excellence in British craft, offering
scholarships where relevant and fundraising,
including SDG runners in the Royal Parks Half
Marathon, among other activities.
The Furniture Makers Company is the industry’s
livery that Sanderson Design Group is proud to
support as a Corporate Member, sponsoring the
first Textile Award in 2022 for Young Makers, and
taking up the Step2It challenge with walkers
site-wide stepping out to raise funds for
education and access to the industry.
Delivery of our strategy relies on our ability to
ensure our people continue to be driven and
empowered. To facilitate this, we have delivered
training for all colleagues on how to build an
inclusive environment, as well as unconscious
bias training and mental health at work and
provided 144 line managers with training on
developing emotional intelligence, effective
communication and enhancing goal setting and
feedback training. We are committed to being an
agent for positive change. We have also provided
additional resources to drive awareness of support
on menopause, cancer and men’s mental health
and the cost-of-living challenges.
Through our operations, we are reducing our
environmental impact; we aim to stimulate
demand for more sustainable raw materials.
We are also committed to supporting the people
and communities touched by our operations
and beyond. Through our site-based Community
Groups, we have participated in multiple
fundraising events to support local initiatives that
can positively impact as many people as possible.
The Company received a grant of £3,000 from
the Royal Warrant Holders Association to a
charity of our choice to honour the Jubilee of
her late Majesty. Our nominated charity was
Rainbows Hospice for Children and Young People,
Loughborough’s sponsored charity partner for
2022. The RWHA provided an additional grant to
support our nominated charity, Lancaster & District
Homeless Action Service, to provide support for
homeless people’s refurbishment of their new
building to ensure the space is fit for purpose.
We have also provided several local open days to
better understand our operation in collaborations
with local schools and provided fabric and sample
donations made by the Westhoughton team
to homeworkers and homeless charities. The
Company also generously donated the beautifully
curated pergola from the Morris & Co. Garden at
the Chelsea Flower Show to a hospice in Leicester.
Our Standfast & Barracks won the Global award
and Medium Business of the Year at the BIBAs.
We will embrace diversity, inclusivity and
opportunity underpinned by a strong focus on
health, safety, and wellbeing. We are delighted
to be certified to ISO45001 at Anstey Wallpaper
Company. We have also improved our independent
external audit performance at all our other sites.
In addition, we have 42 employees who have now
been trained as qualified Mental Health First Aiders
to be proactive in providing colleagues with an
outlet to support their mental health and welfare.
We have created a collection with the charity
Designs In Mind and Our Executive Committee
ensures a competitive total reward offering, both
financial and non-financial, to retain our people
and attract new hires. During the year the team
benefited from delivery of the all-employee
bonus scheme.
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COMMITTING TO
NET CARBON ZERO
We have been working closely with Planet Mark, and its ZeroBy30
programme, to enable us to become net carbon zero by 2030, an ambitious
target and one of the flagship commitments in our sustainability strategy.
We have made significant developments against our roadmap to move to
a carbon neutral manufacturing process.
We were pleased to receive our Planet Mark Year 5 certification earlier
this year, for the financial year ended 31 January 2023, which marked
the fifth financial year that the sustainability of our business has been
measured by Planet Mark, the sustainability certification organisation.
By reducing our carbon footprint, we are addressing nine of the
United Nations’ Sustainable Development Goals.
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section GREENHOUSE GAS EMISSION AND
ENERGY CONSUMPTION REPORTING
Planet Mark’s ZeroBy30 programme requires organisations to
commit to a rigorous and transparent definition of net zero
carbon, which is aligned to the net zero requirements set out by
the UN Race to Zero and Science Based Targets Initiative (‘SBTI’):
• Direct greenhouse gas emissions from owned or controlled
resources and electricity (Scope 1 & 2) emissions have a
target of zero.
• Indirect emissions (Scope 3) must be reduced by at least 50% by
2030 against the baseline year and must continue to be reduced
after 2030 by at least 90% against the baseline by 2050.
• Residual carbon remaining at the net zero target date must be
balanced by carbon removal schemes (note that these differ
from carbon offsets, which avoid or mitigate carbon).
The carbon reduction forecast/target trajectory each year to
FY2031 has been modelled and provides annual targets for each
element of the roadmap, together with the estimated financial
impact where applicable. The financial forecast is a ‘worst case
scenario’ based on current pricing and technology. Costs, especially
capital investments, may reduce as the marketplace evolves and
technology matures. Impact of business growth has been factored
into the carbon forecast for Supply Chain and Distribution to
Customers, where a direct impact on carbon is anticipated.
CO 2
CH 4
N 2O
HFCs
PFCs
SF 6
NF 3
Buildings
& Fleet
SCOPE 2
INDIRECT
SCOPE 1
DIRECT
Purchased goods
& services
Supply
Chain
Capital
goods
Purchased electricity,
steam, heating &
cooling for own use
Fuel & energy
related activities
Transportion &
distribution
Waste generated
in operations
SCOPE 3
INDIRECT
Leased
assets
Employee
commuting
Transportion &
distribution
Producing of
sold products
Company
facilities
Company
vehicles
Business
travel
Use of sold
products
SCOPE 3
INDIRECT
Investments
Franchises
Leased
assets
End-of-life
treatment of
sold products
UPSTREAM ACTIVITIES
REPORTING COMPANY
DOWNSTREAM ACTIVITIES
Commuting &
Business Travel
Distribution to
Customers
SECR METHODOLOGY
We have reported our GHG emissions and energy consumption in
accordance with the Companies and Limited Liability Partnership
Regulations. To calculate our emissions, we have followed the GHG
Protocol Corporate Accounting and Reporting Standard and the
emissions factors used were from BEIS conversion factors 2022.
Our Scope 1 emissions were calculated through monthly meter
readings and invoice data for stationary emissions and mileage data
for mobile emissions. Company vehicle emissions are based on the
size, fuel type and annual mileage of each company car during
the year.
Our Scope 2 emissions were calculated through monthly meter
readings and invoice data, showing market-based emission factors
to reflect the change in electricity supply to 100% renewable sourced.
We have also calculated our intensity metric both as location and
market based.
Our Scope 3 emissions data is business travel in private cars,
calculated from refunded business mileage, and emissions from
UK Electricity Transmission and Distribution. An average CV and
CO2e factor have been applied to the refunded business mileage
as individual private vehicle details have not been provided.
The Group has reported on greenhouse gas emissions in line with
the UK Government’s Environmental Reporting Guidelines, including
Streamlined Energy and Carbon Reporting (‘SECR’) guidance.
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.
The table on the next page shows the energy and GHG emissions
from business activities involving the combustion of gas and fuels,
the purchase of electricity, and business mileage.
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ENERGY CONSUMPTION REPORTING CONTINUED
We are delighted that the initiatives we have put in place over the last three years
to reduce our carbon footprint has resulted in an over 30% reduction in location
based CO2 equivalent emissions since 2019.
Tonnes CO2e Greenhouse Gas Emissions
FY2023
FY2022
Scope 1
Scope 2
Scope 3
Total Greenhouse Gas Emissions
Carbon intensity (per £1m Revenue)
Location based
Market based
Location based
Market based
Location based
Market based
4,906.8
1,282.1
31.7
179.6
6,368.5
5,118.1
56.9
45.7
5,749.7
1,555.9
18.8
147.3
7,452.9
5,915.8
66.4
52.7
Total Energy Use kWh
33,636,491
38,545,715
We have selected a carbon intensity metric based on the energy consumption per tonnes of CO2e per
£1m of revenue. We will use this ratio to monitor our energy efficiency performance over time.
Location based CO2 emissions and kWh consumption
Our total energy use, greenhouse gas emissions and intensity ratio calculations have been independently
calculated by Planet Mark using activity data collected by us.
Energy efficiency actions taken
Progress against our ZeroBy30 ambition has been underpinned by:
Anstey:
• Installing new digital printers which do not require gas
• Changing to LED lighting
• Introducing new, aligned production plan to run steam equipment concurrently
• Upgrade to key equipment to reduce gas consumption
Standfast:
• Introduction of revised shift patterns to minimise energy consumption from boiler usage and electricity
Sanderson Design Group:
• Switch to renewable energy, validated by Planet Mark
• Move to hybrid or fully electric company cars
• Further removal of short haul express despatch
• Significant reduction on inbound air freight
2
O
C
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
k
W
h
15,000,000
10,000,000
5,000,000
0
18/19
19/20
20/21
21/22
22/23
Location based CO2
Natural Gas CO2
kWh
19
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
STAKEHOLDER ENGAGEMENT
The Board places great emphasis on the consideration of stakeholders in its thinking and decision making. The various needs and views of our stakeholders are considered
by colleagues and leaders throughout the business, and form part of the business updates presented to the Board.
Details of our key stakeholders and how we engage with them are set out in the following table.
Why we focus on these stakeholders
What matters to them
How we engage and respond
How the Board has taken account of these interests
The Board ensures its understanding of colleagues’
interests through a variety of forums which include:
The Board is updated regularly with what is important to our colleagues.
There is regular review of health and safety and wellbeing programmes.
People
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. Our goal is to be the Employer of
Choice in our industry. Through our Live
Beautiful sustainability strategy, the Group
aims to foster a sustainable workplace,
creating a culture of empowerment in a
commercially successful company. We
will embrace diversity, inclusivity and
opportunity underpinned by a strong focus
on health, safety and wellbeing.
• Health and wellbeing. An inclusive,
diverse and respectful working
environment
• Fair and equitable pay and benefits
• Open and transparent communication
and being heard
• Opportunities for personal and
career development
• engagement surveys
• site visits
• face-to-face briefings
• newsletters
•
internal communities
Customers
and Clients
Good relations with our customers are
important for the success of our business.
• Beautiful, good quality and sustainable
products which have been ethically
sourced
We have a diverse customer base across trade,
interior design, contract and hospitality, as well as
the homeowner spread across different geographies.
• Excellent service and ease of buying
• Employees and suppliers to be
treated fairly
Considerable time is spent analysing customer trends
and reviewing customer feedback to understand their
needs and how we can improve our customer service
and new product development.
During the year the board has reviewed the reward, recognition, benefit
and employee support programmes available to all employees as well as
upholding the commitment to the Real Living Wage, and the all employee
bonus scheme, enabling all colleagues to share in the Company’s success.
A focused review of talent, succession planning and inclusivity
programmes form part of the board’s meeting calendar.
Read more about how we engage with our people in our Live Beautiful
sustainability strategy.
As part of regular monthly reporting, the Board is appraised of customer
and social media engagement after feedback and information, as well
as service level fulfilment statistical information to better understand the
needs and wants of customers and improve the customer experience.
The Board has continued with the programme of investment in IT systems
and projects to improve the order process for customers and suppliers.
The board has reviewed continued cost-effective investment in
Digital marketing systems to enhance communication both internally
and externally.
Read more about how we engage with customers and product
development within the CEO Report and our Live Beautiful
sustainability strategy.
Shareholders
As owners of the Group, we rely on the
support of shareholders and their opinions
are important to us.
• Robust operating and financial
performance supported by a
strong strategy
We aim to secure long-term sustainable
growth and returns by delivering
our strategy.
• Sustainable income and capital growth
• Progressive dividend policy
• ESG performance
We maintain a regular dialogue with our shareholders
and actively engage with them as part of our investor
roadshows following our half year and full year results
presentations.
Communication methods include investor presentations,
regulatory reports and market announcements.
The AGM is an important opportunity for private
shareholders to meet with the Board.
The Company website has an investors section
giving access to business information, reports and
presentations; there is also an enquiry mailbox facility.
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.
Read more about how we engage with shareholders in our Corporate
Governance Report.
20
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Why we focus on these stakeholders
What matters to them
How we engage and respond
How the Board has taken account of these interests
Suppliers
An excellent supply chain is key to
our business and we look for genuine
partnerships that provide a real point
of difference.
• Ethical and fair dealings that
protect human rights
• Prompt and fair payments
• Open communication and transparency
We aim to build strong long-term relationships with
our key suppliers to develop mutually beneficial and
lasting relationships.
We work with our suppliers to monitor consumer trends
and changing tastes allowing us to evolve and offer
differentiated product offerings.
Communities
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.
• Supporting community and charitable
causes
• Providing employment opportunities
• Reducing the environmental impacts
of our activities including carbon
emissions, energy and water
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.
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 as well as regular dialogue between our management team
and those of our suppliers on increasing efficiency.
Key areas of focus include product development and innovation, with
focus on health and safety and sustainability.
Read more about how we engage with our suppliers in our Live Beautiful
sustainability strategy.
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.
Read more about how we engage with our local communities in our Live
Beautiful sustainability strategy.
Government
and regulators
We wish to operate in an ethical way and
in compliance with laws and regulations.
• Compliance with legislation
• Acting fairly and ethically
The Group has professional advisers in terms of legal,
tax and regulatory compliance and all Directors have
access to independent advice.
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.
Read more about how we ensure compliance in our Live Beautiful
sustainability strategy and in our Corporate Governance report.
21
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section 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 2022, 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 weekly and
reports and presentations are made to the Board by the GLT regarding strategy, performance and key
decisions taken.
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.
The board recognises the value of engaging with all of its stakeholders and building strong relationships with
them, to understand what matters to them and their changing needs, which helps inform strategic decision
making and ensures our long-term success.
More information about our key stakeholders and how we engage with them can be found on pages 20
and 21, Stakeholder Engagement.
Principal decisions taken during the year
Principal decision
Stakeholders
Commentary
Withdrawal of sales to Russia
Customers
Suppliers
Colleagues
Shareholders
With the Russian war on Ukraine, the decision
was taken in February 2022 to withdraw from
all product sales to Russia, which has resulted
in reduced turnover of circa £2m.
Capital investment
All
Further investments in digital printers at both
manufacturing sites has resulted in significant
reduction in energy and water use and further
progress to our ZeroBy30 pledge, as well as
enhancing manufacturing efficiencies.
Strategic product offering
Customers
Suppliers
Colleagues
Shareholders
Streamline our own-produced product portfolio
to our core categories of fabrics, wallpapers and
paints and further grow our licensing partnerships
to widen our brands’ reach on household
accessory items.
22
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section QUINTESSENTIALLY BRITISH
HERITAGE
CONTEMPORARY
ELEVATING
OUR BRANDS
AND CREATING
CONSUMER
DEMAND
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
•
•
•
•
•
23
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Inspired by cultural history, Zoffany
provides architects and interior designers
with a wide range of high-quality
wallcoverings, woven, printed and
embroidered fabrics. Founded during the
restoration of Temple Newsam, an English
Jacobean estate and home to treasures
dating back to the 17th century, Zoffany
archived and restored these lost creations,
breathing new life into historic designs.
Today, Zoffany partners with the world’s finest
artisans, producing collections that exceed
expectation in a manner that’s luxurious and globally
attuned. Wonderful archive documents, repurposed
and given a new lease of life, sit alongside beautiful
original pieces produced on incredible elevated
substrates. A richly pigmented paint range completes
the Zoffany portfolio, ensuring the brand remains the
go-to resource for interior designers.
COMBINING
ARTISTRY,
INTEGRITY
AND A RICH,
ILLUSTRIOUS
HERITAGE
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Sanderson Design Group Annual Report & Accounts 2023
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section ELEVATING OUR BRANDS
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.
Guided by Morris’s creative intuition,
new collections are inspired by archival
treasures, including historical logbooks,
wallpaper documents, printed and woven
textiles and 19th century wooden printing
blocks. Additionally, licensing partnerships
continue the opportunity to expand
Morris’s reach.
BEAUTIFULLY
CRAFTED PRODUCTS
THAT UPHOLD THE
LEGACY OF AN ARTS
& CRAFTS ICON
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Known the world over for its iconic
florals and explosive botanicals,
Sanderson pushes the boundaries
of heritage design.
Holders of the Royal Warrant, it produces
quality fabrics and wallcoverings for interiors
of all styles. Completing the brand’s timeless
appeal, Sanderson paint is available in over
150 colours and three finishes.
In recent years, Sanderson has successfully
extended its product offering into homeware
and gifting, in addition to collaborating
with a range of licensing partners. In 2020,
Sanderson celebrated its 160th anniversary,
subsequently becoming the oldest surviving
English brand in its field.
WITH A
QUINTESSENTIALLY
ENGLISH FEEL
AND TIMELESS,
HAND DRAWN
AESTHETIC
26
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section ELEVATING OUR BRANDS
ELEVATING OUR BRANDS
Bringing the joy of self-expression
into the home, Harlequin makes
it easier than ever to create a
space that represents who you
are. A proudly British brand that
strives to encourage interior design
confidence, its vivacious palette
uplifts and inspires.
Across wallpaper, fabric and a wide range
of homeware, including kids, bedding and
rugs, discover your design personality and
make your space your own.
Combining contemporary patterns with
classical and architectural influences,
Harlequin’s statement motifs have become
icons of their time. From bold geometrics
to painterly florals, metallic highlights to
chalky grounds, its wide range of styles
offers something for everyone.
EMOTIVE COLOUR
STORIES INSPIRE
EXPRESSIVE,
PATTERNED
INTERIORS
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With its fresh ideas for modern
living, Scion’s bold motifs and
statement colour meld with
Scandi influences to create
a playful, upbeat range of
contemporary wallpaper,
fabrics and home accessories.
With a design story that reaches from
clean lines and statement geometrics
to delicate sketchbook looks, Scion
wouldn’t be Scion without its iconic
Mr Fox mascot, who together with pals
Spike and Pedro Penguin, can’t resist
bringing a smile to the everyday.
BRING HAPPINESS
TO THE EVERYDAY
WITH UPLIFTING
DESIGN
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A leading name in the design of
fabric, wallpaper and homewares,
Clarke & Clarke is at the heart of
transitional style.
Recognising that interior design is an
expression of who we are, its range of
trend led looks are varied and versatile.
Perfectly suited to modern life, this
Manchester based brand is at the
forefront of interior design, creating
contemporary spaces with an eccentric,
glamourous twist.
THE EMBODIMENT
OF ECLECTIC
BRITISH SPIRIT
AND TREND
LED STYLE
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section LICENSING
Licensing enables us to leverage our design archives and bring wider consumer
awareness of our brands across multiple finished goods categories. The wider visibility
of our designs brings the potential to stimulate the sales of our core products of fabric,
wallpaper and paint and reinforces our identity as a design-led business.
Some notable agreements this year
have included Morris & Co. with Williams
Sonoma, signed in 2021, as our first
licensing agreement for the US and has
been extended on initial success. Since
signing our first licensing agreement
with NEXT in March 2020, NEXT has
become an increasingly important
licensing partner for the Group across
Morris & Co., Sanderson, Scion and
most recently adding Clarke & Clarke,
marking the brand’s first significant
licensing agreement.
In March this year, we were also
delighted to announce a major
agreement with the Habitat homewares
brand and the Tu clothing brand, both
of which are owned by Sainsbury’s, the
supermarket group. The agreement,
with the Morris & Co. and Scion brands,
marked the first time that we have
collaborated with Sainsbury’s, a group
with a substantial distribution network
both online and in-store.
The Company is continuing to
progress a pipeline of further licensing
opportunities, leveraging its brands and
design archives, with a strategic push
towards larger, long-term partnerships.
30
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section CHIEF FINANCIAL OFFICER’S REVIEW
The Chairman’s Statement and the Chief Executive Officer’s Strategic and Operating Review provide
analysis of the key factors contributing to our financial results for the year ended 31 January 2023.
The results show a resilient performance in challenging market conditions.
Revenue
Our reported revenue for the year was £112.0m compared with £112.2m in FY2022.
Revenue
Brands
Licensing
Total Brands
Manufacturing – External
Group
FY2023
£m
83.4
6.5
89.9
22.1
112.0
FY2022
£m
84.1
5.2
89.3
22.9
112.2
Change
FY2022
(0.8%)
25.0%
0.7%
(3.5%)
(0.2%)
Gross profit
Gross profit for the full year was £74.2m compared with £73.8m in FY2022 whilst the gross profit margin
at 66.3% represents an increase of 50 basis points over FY2022.
2023
2022
Brands and Manufacturing
Revenue (£m)
Gross profit (£m)
%
Licensing
Revenue (£m)
Gross profit (£m)
%
Total
Revenue (£m)
Gross profit (£m)
%
105.5
67.7
64.2%
6.5
6.5
100%
112.0
74.2
66.3%
107.0
68.6
64.1%
5.2
5.2
100%
112.2
73.8
65.8%
Excluding the impact of licence income, which generates 100% gross profit, margins improved to 64.2% in
FY2023 versus 64.1% in FY2022. This margin performance was achieved through the improving efficiency
of the business and a proactive approach to product pricing, with price increases in February and August
last year along with tight control of costs. These measures allowed us to offset the inflationary pressure we
experienced with our own factories and third-party suppliers. Our fixed price electricity contract expired in
October 2022 following which we have been paying at the UK Government capped rate. Our long-term gas
fixed rate agreement will expire in October 2023 which will put further pressure on margins moving forward.
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Profit before tax
Profit before tax was £10.9m, up from £10.4m in FY2022. This resilient performance is driven by the
strength of licensing revenues, gross margin improvement and a continued focus on cost control.
Revenue
Gross profit
Distribution and selling expenses
Administration expenses
Net other income
Finance costs – net
Profit before tax
2023
£m
112.0
74.2
(25.1)
(43.0)
4.5
0.3
10.9
2022
£m
112.2
73.8
(25.1)
(42.8)
4.5
–
10.4
Distribution and selling expenses of £25.1m represented 22% of revenue in line with prior year levels.
Administration expenses grew to £43.0m in FY2022 from £42.8m in FY2022. Inflationary pressures
impacted all areas of spend, however we continued to implement cost efficiency measures which limited
this increase to only 1% compared to the prior year. Administration expenses remain £2.7m below the
pre-Covid FY2020 levels.
Adjusted underlying profit before tax
Adjusted operating profit was £12.6m, up from £12.5m in FY2022.
Profit before tax
Amortisation of acquired intangible assets
Restructuring and reorganisation costs
Forgiveness of loan
Release of a provision for legal case
Underlying profit before tax
Share-based payment charge
Net defined benefit pension charge
Adjusted underlying profit before tax
2023
£m
10.9
0.8
–
–
–
11.7
0.5
0.4
12.6
2022
£m
10.4
1.0
1.2
(0.4)
(0.6)
11.6
0.4
0.5
12.5
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 and do not relate
to the operating activities of the group. Share-based payment charges are added back in the adjusted
underlying profit as they are a non-cash measure.
Adjusted measures are used as way for the Board in monitoring performance of the Group and are not
considered to be superior or a substitute to statutory measure but are provided to provide further
depth and understanding to the users of the financial information to allow for improved assessment
of performance. The Group considers adjusted underlying profit before tax to be an important measure
of Group performance and is consistent with how the business performance is reported and assessed
by the Board. This is a measure used within the Group’s incentive plans – see the Remuneration Report.
Non-underlying item in the year of £0.8m (FY2022: £1.0m) refers to the amortisation of intangible assets
in respect of the acquisition of Clarke & Clarke in October 2016. Please refer to note 7(b) for the details
of the adjusted underlying profit before tax.
Taxation
Tax for the year is charged on profit before tax based on the forecast effective tax rate for the full year.
The estimated effective tax rate (before adjusting items) for the year is 19% (FY2022: 25%).
Capital expenditure
Capital expenditure in the year totalled £4.8m (FY2022: £2.1m). As planned, we continue to focus our
investment in digital printing technology, particularly at our Anstey wallpaper factory, and in projects that
reduce our environmental impact and support our Live Beautiful sustainability strategy.
Minimum guaranteed licensing receivables
In accordance with IFRS 15, the Group recognises the fair value of fixed minimum guaranteed income
that arises under multi-year licensing agreements, in full upon signature of the agreement provided that
there are no further performance conditions for the Group to fulfil. A corresponding receivable balance is
generated which then reduces as payments are received from the licence partner in accordance with the
performance obligations laid down in the agreement (usually the passing of time).
Licensing revenues above the fixed minimum guaranteed amount are recognised in the period in which
they are generated.
During the year, several long-term licensing agreements were agreed, including those with NEXT Plc and
Bedeck. As a result, at 31 January 2023, minimum guaranteed licensing receivables due after more than
one year grew to £2.6m (FY2022: £1.6m) and those due within one year grew to £1.4m (FY2022: £0.9m).
Inventories
Net inventories ended the year at £27.8m compared to a prior year £22.7m.
This increase on FY2022 reflects a combination of cost increases (for both finished goods and raw
materials) and strategic investments to assure strong availability of our best-selling ranges.
Whilst our SKU reduction strategy is substantially complete for range planning purposes, margin
improvement and better product management will continue to be realised in future years.
We have also recognised £0.8m of marketing materials as part of inventories for FY2022.
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CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
Trade receivables
Trade receivables declined to £12.0m (FY2022: £13.5m).
The ageing profile of trade debtors shows that payments from customers are close to terms although the
current economic environment presents an enhanced level of credit risk. In addition to specific provisions
against individual receivables, a provision has been made of £0.9m (FY2022: £0.8m), which is a collective
assessment of the risk against non-specific receivables calculated in accordance with IFRS 9.
The Group has experienced limited bad debts in the last year and continues to focus on its credit
management procedures to mitigate future potential credit risks.
Cash position and banking facilities
Net cash from operating activities was £5.6m (FY2022: £9.0m).
Key contributors behind the year-on-year reduction were the increased investment in inventory (see
above) and £1.0m (FY2022: £nil) payments related to the restructuring of our French subsidiary announced
in the prior year.
All foreign currencies are bought and sold centrally on behalf of the Group. Regular reviews take place
of our foreign currency cash flows. The Group undertakes hedging only where there are highly probable
future cash flows and to hedge working capital exposures. The strong performance of the Group’s North
American business during the year created a requirement to put in place a limited level of hedging
contracts against the US dollar surplus that is expected to arise. The revaluation of the open contracts
generates an asset at year end of £0.1m (FY2022: £nil).
The Group’s banking facilities are provided by Barclays Bank plc. The Group has a £12.5m multi-currency
revolving credit facility which is due for renewal in October 2024. The agreement also includes a £5m
uncommitted accordion facility to further increase available credit. This provides substantial headroom for
future growth. Our covenants under this facility are EBITDA and interest cover measures. This facility has
not been drawn during the year.
Net defined benefit pension
The Group operates two defined benefit schemes in the UK. These comprise the Walker Greenbank
Pension Plan and the Abaris Holdings Limited Pension Scheme. These were both closed to new members
and to future service accrual from 30 June 2002 and 1 July 2005 respectively.
During the year, the triennial valuation of the schemes has been concluded based on the schemes’ position
on 5 April 2021. New deficit contribution schedules have been agreed as part of the valuations and the
Group will continue making cash contributions, at levels similar to historical amounts, into the schemes
to make good any deficits, as well as making contributions towards the ongoing expenses incurred in the
running of the schemes.
The methodology and assumptions prescribed for the purposes of IAS 19 mean that the Balance Sheet
surplus or deficit, the Profit or Loss figures and the Statement of Comprehensive Income figures are
inherently volatile and vary greatly according to investment market conditions at each accounting date.
As a result of changes in assumptions (primarily the change in the discount rate), experience loss (inflation
being higher than expected) and asset returns being lower than expected, the Group reports a net liability
of £2.5m at 31 January 2023 compared with a £2.6m surplus at 31 January 2022. Further details of these
movements are disclosed in note 22 to the financial statements.
Dividend
During the financial year, an interim dividend of 0.75p per share was paid on 25 November 2022. A final
dividend of 2.75p is now proposed taking the full year dividend to 3.50p. This payment will be made on
11 August 2023 to the shareholders registered on the Company’s register on 14 July 2023 if approved
at the Company’s forthcoming Annual General Meeting. The Board remains committed to a progressive
dividend policy as part of the capital allocation priorities of the Group.
Capital allocation policy
The level of capital investment required in the coming years is likely to be significantly above historical
levels as we look to boost our digital printing capacity in both our factories whilst also investing in
improved systems to improve our customer service proposition. Our forward expenditure programme
is closely aligned to our Live Beautiful strategy with capital maintenance projects only being approved
if they can be proven to support us on our journey to ZeroBy30.
We remain committed to retaining a strong balance sheet and acknowledge that we have two defined
benefit pension plans we are committed to supporting. We continue to look at whether there is appropriate
action which could be taken to help reduce pension scheme risks within our wider business objectives.
Going concern
The Directors reviewed a Management Base Case model and considered the uncertainties regarding any
further impact of Covid-19, supply chain and inflationary pressures and the Russian invasion of Ukraine for
the assessment of going concern. The Directors consider that, having reviewed forecasts prepared by the
management team which have been stress tested, the Group has adequate resources to continue trading
for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the
financial statements. Further details of the review are disclosed in note 1 to the financial statements.
Mike Woodcock
Chief Financial Officer
25 April 2023
33
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section KEY PERFORMANCE INDICATORS
REVENUE _ £M
PROFIT BEFORE TAX _ £M
INVENTORY _ £M
23
22
21
112.0
112.2
93.8
23
22
21
10.9
10.4
4.9
23
22
21
Total current year revenue.
Statutory profit before tax.
Year end total inventory, net of provision.
PROFIT BEFORE TAX _ %
BASIC EARNINGS PER SHARE _ PENCE
NET CASH _ £M
23
22
21
9.7
9.2
5.2
23
22
21
12.42
10.93
5.39
23
22
21
Statutory profit before tax expressed as a percentage of
revenue.
Profit after tax, divided by the weighted average number of
shares in issue during the year.
Year end cash and cash equivalents less borrowings and
leases. Borrowings do not include lease liabilities.
ADJUSTED EARNINGS PER SHARE _ PENCE
ADJUSTED UNDERLYING PROFIT BEFORE TAX _ %
ADJUSTED UNDERLYING PROFIT BEFORE TAX _ £M
23
22
21
14.18
13.75
7.89
23
22
21
11.3
11.1
7.5
23
22
21
27.8
22.7
19.6
15.4
19.1
15.1
12.6
12.5
7.0
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.
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.
Underlying profit before tax adjusted for the share-based
incentives, defined benefit pension charge and
non-underlying items.
CAPITAL EXPENDITURE _ £M
23
22
21
4.8
2.1
1.0
Total capital expenditure less proceeds from disposal for the year.
The Group is committed to its sustainability strategy, Live Beautiful
and further details of the relevant key performance measures and
targets are set out on page 19.
34
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 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.
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.
KEY
Risk level
increased
Risk level
maintained
Risk level
decreased
New
New Risk
identified
MARKETPLACE
Risk Category
Risk description
Change
Controls to Mitigate
Competition
• The Group operates in markets that are highly
• With six key Brands, the Group has sought to differentiate itself through high quality luxury
competitive.
• The Group owns a rich design archive that
supports its heritage brands. There have always
existed various external credible sources of
historic designs globally. As the visibility of
the Group’s brands increases through our own
marketing activities, there is an inevitable,
growing risk of market competition that is
difficult to predict and impossible to control.
• Change in consumer behaviour towards
purchasing more ready-made and less
made-to-measure items.
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, 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 particular the US market.
• Continued focus on enhanced positioning with launches of new, authentic, heritage and
archival designs, such as the partnership with Emery Walker’s House and Sanderson’s National
Trust collections.
• Create new contemporary edits such as Simply Morris and Pure Morris, explore innovation and
invest in new print techniques to refresh traditional patterns.
• To mitigate the threat of competitors launching similar looking products, the Group is
reinforcing its integrity and authority by investing in the nurturing of its design archive assets,
strengthening the organisation’s reputation as the destination for high-quality, authentic design
capability. This is further supported by our in-house manufacturing skill that enables the Group
to make high-value product that upholds the legacy of the historic founders.
• The Board continually reviews strategy and performance and will realign rapidly to deal with
major threats.
Focus for FY2024
• Licensing of non-core
product categories.
• Continue investment
in innovative digital
printing capacity in our
manufacturing site.
35
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section PRINCIPAL RISKS CONTINUED
KEY
Risk level
increased
Risk level
maintained
Risk level
decreased
New
New Risk
identified
MARKETPLACE CONTINUED
Risk Category
Risk description
Change
Controls to Mitigate
Focus for FY2024
Trading
environment
• Specific macroeconomic and geopolitical factors
can influence our business and ability to trade
across borders such as Russia’s invasion of
Ukraine. 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 in which we operate.
• Our products may be viewed as discretionary
spending.
• The UK accounts for approximately half of the
Group sales and increasing inflation rates in the
market risks impacting consumer confidence.
• The Group monitors key markets closely to keep abreast of local changes or developments
globally, such as the impact and duration of the war in Ukraine, and recommends changes
or adaptations to our business operations to mitigate the impact, and these are under
constant review.
• Focus on product diversification through licensing opportunities, new product categories
including ready-made curtains, bedding and furniture all help to strengthen our product
offering and adapt to the increasing online homewares share of the market.
• Continue to focus on profit
improvements from better
purchasing decisions
linked to customer-centric
strategies.
• Develop further licensing
opportunities.
• Global inflationary pressure is a reality in FY2023. The Group offers a well-balanced
portfolio of brands and products at the upper end of the market. Cost pressures are
carefully monitored and price increases passed on to protect margins.
• The Group is broad-based and the design teams constantly monitor trends within and
outside our marketplace.
FINANCIAL
Risk Category
Risk description
Change
Controls to Mitigate
Foreign
exchange
• An increasing 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 to help
prepare for any volatility in foreign exchange movements with focus on the US dollar. The
Group has specific hedging contracts in US dollars and employs natural hedging in other
currencies where possible.
Focus for FY2024
• Increase natural hedging
by sourcing in USD where
possible.
• Continue USD hedging
programme.
36
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section PRINCIPAL RISKS CONTINUED
KEY
Risk level
increased
Risk level
maintained
Risk level
decreased
New
New Risk
identified
OPERATIONAL
Risk Category
Risk description
Change
Controls to Mitigate
Focus for FY2024
Supply chain
pressure
• The Group’s manufacturing operations are
• The Group negotiates annual/biennial utility contracts to protect against volatility in
• Enhance supplier
exposed ta global supply chain issues such as
disruptions from geopolitical instability, Covid-19,
trade restrictions, extreme weather events and
key supplier or sourcing issues which could impact
an its ability to receive raw materials, purchased
goods and deliver orders on a timely basis.
• Higher energy, labour, raw materials and other
input casts have a direct impact on product
margins. This risk may be influenced by global
supply and demand, supply chain challenges,
weather events, political uncertainties, changes
in regulations and a new wave of Covid-19.
• Higher input costs will lead to either reduction in
margin or increased prices for our customers.
energy prices.
• Gas and electricity for various business units are negotiated on a collective basis.
• A strong commercial focus on procurement, pricing and cost improvement initiatives is
maintained along with ongoing monitoring of pricing performance.
• The Group is monitoring raw material costs and expects to pass on product price increases
for margin protection as necessary.
relationship management.
• Improvement in collection
management processes.
• Continue reduction in
waste management of
manufacturing processes
to enhance operational
efficiencies.
• Secure new long-term gas
contract when the current
agreement expires in
October 2023.
Recruitment &
retention of key
employees
The Group is reliant upon a number of key
employees to design, manufacture and sell
its products.
• 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 far
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 ta retain key individuals.
• Develop and expand the
Group’s apprenticeship
programme.
• Invest in internal training
and development modules
of a wide range of
skill sets.
• The Group made a commitment to the Real Living Wage and introduced an all-employee
• Continue high potential
bonus scheme in 2020. The Group aims to be the employer of choice in the industry.
Reputation risk
The Group prides itself on the high quality of its
product range.
An unfavourable incident relating to a senior
executive, individuals or businesses associated
with the Group, erroneous media coverage on
products, failure to understand social and cultural
issues in marketing contents or negative discussions
on social networks could damage the Group’s
reputation.
• There is ongoing emphasis on high quality control throughout the business, right from
manufacturing through to delivery of the finished product and customer satisfaction.
• Monitoring of adherence by employees, contractors, suppliers and other associated
individuals and businesses to the requirements in the Group’s business principles.
• The Group has established corporate responsibility standards, which aim to ensure
compliance with labour, human rights, health and safety and environmental standards
across our operations and extended supply chain and has put in place a process to conduct
regular supplier audits.
• Uphold our approval processes and editorial controls to ensure all product and content is
reviewed and signed off prior to external release.
programme ‘Accelerate’ to
create bench strength for
key employees.
• Ensure that the high
quality of our products
is emphasised in our
marketing features.
• Enhance the robustness
of our supply chain and
supplier audit.
37
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section PRINCIPAL RISKS CONTINUED
KEY
Risk level
increased
Risk level
maintained
Risk level
decreased
New
New Risk
identified
OPERATIONAL CONTINUED
Risk Category
Risk description
Change
Controls to Mitigate
Environmental
risk
The Group fails to comply with environmental
legislations and seeks to prevent excessive carbon
emissions and effluent discharges resulting in fines
and closures. Lack of development and availability
of new technology will result in failure to deliver our
environmental objectives.
• The Group monitors its carbon emission targets by having relevant KPls to measure carbon
footprints certified by Planet Mark and embedding the sustainability values across the
organisation.
• To deliver on the Group’s ZeroBy30 pledge, investment is planned with a medium ta
long-term plan to adopt new technologies that will reduce energy consumption and
environmental impact, improve efficiency and increase capacity, keeping both factories at
the forefront of printing in the UK.
• There are ongoing reviews of environmental legislation through the membership of
professional and trade associations.
• Onsite incinerators (which 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.
Focus for FY2024
• Maintain our ZeroBy30
commitment through
strategic review with
Planet Mark for the
medium to longer term.
• Work with key suppliers
to understand the product
lifecycle ta focus an Scope
3 improvements.
• Continue to work with
regional bodies to ensure
full compliance with
environmental legislation.
Health and
safety risk
The Group fails to adhere to health and safety
standards risking injuries and lives of employees.
• The Group has immediate response capability via the Group Leadership Team when
required.
• There are fire, health and safety marshalls and 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.
• Retention and extension of
ISO45001 certification.
• Building on mental health
first aiders.
Major incident
or disaster
Fire and flood occur again in the manufacturing
sites causing damages to stocks and buildings,
affecting sales and risking lives.
• 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
• Ongoing inspection of
defence measures.
• Continued planned
maintenance on all sites.
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.
38
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section PRINCIPAL RISKS CONTINUED
KEY
Risk level
increased
Risk level
maintained
Risk level
decreased
New
New Risk
identified
OPERATIONAL CONTINUED
Risk Category
Risk description
Change
Controls to Mitigate
IT
A significant failure of IT infrastructure or key IT
systems, deliberate or accidental, could result in a
lass 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.
• The Group has appropriate controls in place to mitigate the risk of systems failure,
including an IT disaster recovery plan, off-site and cloud back-up routines, virus protection
and network security controls. Security controls and processes are assessed and
updated on a regular basis with a continuous improvement plan. IT capability has been
strengthened to improve defences, taking account of increased cyber risk to businesses of
our size.
• The Group employs a framework of IT controls to protect against unauthorised access to
our systems and data, which includes the maintenance of firewalls, intruder detection and
encryption of data.
• The implementation of the new ERP system at Standfast is progressing within budget and
under the supervision of a dedicated project manager.
Focus for FY2024
• Work with industry leaders
in the cyber security space
to achieve government
approved Cyber Essentials
certification.
• Deliver the ERP system
for Standfast & Barracks.
The Strategic Report was approved by the Board on 25 April 2023.
Lisa Montague
Chief Executive Officer
25 April 2023
39
Sanderson Design Group Annual Report & Accounts 2023
Strategic Report
Contents Generation – PageContents Generation – Sub PageContents Generation – Section BOARD OF DIRECTORS
NON-EXECUTIVE DIRECTORS
Dame Dianne Thompson
NON-EXECUTIVE CHAIRMAN
Christopher Rogers
NON-EXECUTIVE DIRECTOR
Juliette Stacey
NON-EXECUTIVE DIRECTOR
Patrick Lewis
NON-EXECUTIVE DIRECTOR
C
C
C
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. 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.
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
Director at Kerry plc. Christopher was an Executive
Director of Whitbread plc for 11 years from 2005,
first as Group Finance Director for seven years and
then as Global MD of Costa Coffee. Christopher is
the Senior Independent Director.
Juliette joined the Board in November 2021 as
a Non-executive Director and chairs the Audit
Committee. Other non-executive positions she
holds include Senior Independent Director and
Chair of the Audit Committee at Fuller, Smith &
Turner PLC, the hospitality group, Non-executive
Director and Chair of the Audit Committee of
Renishaw plc and Willmott Dixon. Prior to her
non-executive career, Juliette held executive
leadership roles as Group CEO of the engineering
services group Mabey Holdings Ltd and COO UK
and Europe of property group Savills Plc, having
gained experience of advisory work at EY, where
she qualified as a Chartered Accountant.
Patrick joined the Board as a Non-executive
Director in November 2021. Prior to joining
the Group, Patrick gained extensive consumer
and retail experience with the John Lewis
Partnership, whom he joined in 1994, holding
management roles across the business before
becoming CFO in 2015. Patrick’s early career
was at the management consultants Bain &
Company followed by a move into industry at
Proctor & Gamble.
40
Sanderson Design Group Annual Report & Accounts 2023
Governance
KEY
Audit Committee
Remuneration Committee
Nomination Committee
Chair
C
Contents Generation – PageContents Generation – Sub PageContents Generation – Section BOARD OF DIRECTORS CONTINUED
EXECUTIVE DIRECTORS
Lisa Montague
CHIEF EXECUTIVE OFFICER
Mike Woodcock
CHIEF FINANCIAL OFFICER
Caroline Geary
COMPANY SECRETARY
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. Lisa is also a Non-executive Director
at The Royal Mint.
Mike joined the Group in October 2021 and
became Chief Financial Officer in November 2021.
Mike qualified as an accountant with KPMG and
has significant experience of international luxury
and consumer brands in the quoted and private
sectors. Prior to joining the Group, Mike was at
Richemont Group, where his increasingly senior
roles included CFO at Alfred Dunhill and CFO
at Montblanc. Since leaving Richemont Group,
Mike has served as CFO in a number of private
equity backed businesses.
Caroline joined the Group in 2000. She is a
Chartered Secretary and was appointed Company
Secretary in 2012.
41
Sanderson Design Group Annual Report & Accounts 2023
Governance
KEY
Audit Committee
Remuneration Committee
Nomination Committee
Chair
C
Contents Generation – PageContents Generation – Sub PageContents Generation – Section GROUP LEADERSHIP TEAM
CORPORATE GOVERNANCE
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.
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.
Mauricio Solodujin
Group 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 Group Commercial Director,
Mauricio works across all brands, markets and
channels to drive sales growth at the Group.
Shailini Revel
Group Marketing & Digital Director
Shailini, a highly experienced marketing
executive, joined the Group in July 2022
as Group Marketing & Digital Director. She
previously worked for start-up companies,
Rnwl and CityFibre, where she held the role
of Marketing Campaigns Director. Prior to
this, she worked at BT for nearly 15 years in
various commercial marketing roles, including
Consumer, Marketing Agile Transformation
Director and Director of Household
Growth Marketing.
Beth Holman
President, Sanderson Design Group, Inc.
Beth joined the Group in October 2019 with
more than 20 years of experience working for
subsidiaries of European luxury fashion houses
in the United States. Prior to joining the Group,
her most recent position was with Celine, the
LVMH luxury fashion house, where she was
Vice President of Wholesale. In the role of
President of SDG Inc, Beth manages the sales,
distribution, marketing and operations for the
USA and Canada.
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 commercial business units
and manufacturing in a variety of HR roles.
Carla has previously worked at Burberry
based in London and Dubai, Britvic, Scholastic
Corporation, Home Group and NEXT.
Claire Vallis
Design 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.
INTRODUCTION FROM
THE CHAIRMAN
The Board is committed to ensuring the
highest legal and ethical standards
are upheld, and aims to ensure that the
Company and its employees conduct
themselves respectfully and honestly.
A healthy corporate culture is promoted
within the business in various ways,
including linking employees’ appraisal
objectives and reward and recognition
schemes to our vision and values.
The Board assesses the culture of the Group
through engagement with employees and
other stakeholders, further details of which
can be found in the Section 172 statement.
This report, together with the information
contained in the Audit Committee Report,
the Nomination Committee Report, the
Report of the Directors and the Directors’
Remuneration Report, explains the corporate
governance framework within which the
Group operates.
Dame Dianne Thompson
Non-executive Director
As Chairman of the Board, I am responsible
for ensuring that the Company has
corporate governance arrangements in
place which are appropriate for the size
and complexity of the Company and
that these arrangements are followed
in practice.
The Board is committed to ensuring high
standards of governance for the Company
and considers that the Quoted Company
Alliance Corporate Governance Code
2018 (the ‘QCA Code’) provides the most
appropriate framework of governance
arrangements for a public company of
our size and complexity.
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.com.
We have complied with all principles of
the QCA Code throughout the year.
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.
42
Sanderson Design Group Annual Report & Accounts 2023
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section CORPORATE GOVERNANCE CONTINUED
The Board
The Company is supervised by the Board of
Directors. The Board comprises Executive and
Non-executive Directors.
Board composition
The Board of Directors which served during
the year ended 31 January 2023 and their
attendance at meetings is shown in the adjacent
table. Biographical details of the current Board
are given on pages 40 and 41. 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 10 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. As explained fully within our
Strategic Report, our strategy is focused around
five key areas, and the Board is responsible for
the management, governance, controls, risk
management, direction and performance of the
Group to ensure it promotes long-term value for
shareholders, whilst being mindful of its impact
on others and the threats and opportunities faced.
There is a formal schedule of matters reserved
to the Board 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 all trading subsidiaries,
their annual budgets, their performance in relation
to those budgets and their 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.
The Company’s various sites are visited through
the year, with Board meetings taking place at
the sites giving, in particular, the Non-executive
Directors access to the Group’s operations to gain
a greater understanding of the Group’s activities
and to show the Board’s support of our colleagues
throughout the Group.
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.
Attendance at meetings of the Board and its committees
Board Audit Committee
Remuneration
Committee
Nomination
Committee
4
4/4
4/4
4/4
4/4
5
5/5
5/5
5/5
5/5
–
–
–
–
–
14
14/14
14/14
14/14
14/14
14/14
14/14
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 pages
40 to 41.
Total Number of Meetings
Meetings attended
D Thompson
C Rogers
J Stacey
P Lewis
L Montague
M Woodcock
The Board scheduled 10 meetings during the
year and additional meetings were convened
to deal with specific matters and approval of
the financial results.
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
45 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 (‘NOMAD’) annually.
In addition, the Directors have direct access to
the advice and services of the Company Secretary.
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Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section CORPORATE GOVERNANCE CONTINUED
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 47.
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 48.
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 52.
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 other than disclosed in the Strategic
Report and the Report of the Directors.
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.
Board performance and evaluation
The Board continually reflects on its performance
and during the year completed an externally
facilitated evaluation. Following a selection
process, Fidelio Partner LLP was appointed to
conduct the evaluation based on its extensive
experience with other evaluations and its practical
focus on effectiveness and value. Fidelio has
no other connection with the Company or
individual Directors.
The process was completed between October
and January this year. The scope and objectives
of the review were agreed with Fidelio following
consultation with the Chairman. In person,
one-to-one interviews were held with each of the
Directors, the HR Director, the Company Secretary
and the Company’s NOMAD. Board members were
also required to complete a quantitative survey
to provide feedback on the performance of the
Board. Fidelio were invited to observe the Directors
in action and attended a meeting of the Board,
and also the Audit Committee. Board, Audit and
Remuneration Committee papers and governance
documents were also analysed and reviewed.
Outcome and recommendations from
FY2023 evaluation
The findings of the evaluation were presented
to the Board at its meeting in February 2023.
Overall, Fidelio concluded that the Board and
its Committees were considered to be working
effectively. The Board was considered to comprise
relevant skills and experience. The working
relationship between Executive and Non-executive
Directors is strong and all are committed to the
success of the Company.
As would be expected, there were some
opportunities identified by Fidelio to increase
effectiveness to ensure that the Company benefits
from the combined expertise and insight of the
Board. These recommendations were reviewed by
the Board, and will be further considered as part of
the Board’s strategy day in FY2024. Areas for focus
include continuing to provide further opportunities
for Board members to connect with the business,
reviewing the approach to Board learning, further
developing the Board’s oversight of ESG matters
and supporting succession planning below
Board level and developing a strong, diverse
talent pipeline.
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.
44
Sanderson Design Group Annual Report & Accounts 2023
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section REPORT OF THE DIRECTORS
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 2023. The
Strategic Report on pages 2 to 39 is incorporated by
reference and deemed to form part of this report.
Group result
Reported profit before taxation amounted to
£10.9m (2022: £10.4m), and profit after tax £8.8m
(2022: £7.8m).
Dividend
The Directors recommend payment of a final
ordinary dividend of 2.75p per share (excluding
dividends on shares held by the employee benefit
trust) which will be recognised in the financial
statements for the following year (2022: 2.75p per
share). Subject to shareholders’ approval at the
Annual General Meeting (‘AGM) the final dividend
is expected to be paid on 11 August 2023 to
shareholders on the register at 14 July 2023.
An interim dividend of 0.75p per share was paid
during the year.
Going concern
The Directors reviewed a Management Base Case
model and considered the uncertainties regarding
any further impact of Covid-19, supply chain and
inflationary pressures and the Russian invasion of
Ukraine for the assessment of going concern. The
Directors consider that, having reviewed forecasts
prepared by the management team which have
been stress tested, the Group has adequate
resources to continue trading for the foreseeable
future. For this reason, they continue to adopt
the going concern basis in preparing the financial
statements. Further details of the review are
disclosed in note 1 to the financial statements.
Post balance sheet events
The board considers that no material post balance
sheet events occurred between the end of the
period and the date of publication of this report.
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 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 the Companies Act 2006 is also included
in the Strategic Report on page 22.
Financial risk management
Details of the Group’s financial risk management
objectives and policies are contained in the
Strategic Report on page 36 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 Group is a responsible employer, compliant
with all relevant human resources and health and
safety regulations. Further information regarding
employment policies, engagement and reward
are contained within the Directors Remuneration
Report and the Live Beautiful and S172 statement
within the Strategic Report.
Directors
The Board of Directors who served during the year ended 31 January 2023 and up to the date of reporting
were as follows:
Name
Position
Date
Committees*
Dianne Thompson
Non-executive Director and Chairman
From 01.02.2022
Christopher Rogers
Non-executive Director
Juliette Stacey
Patrick Lewis
Lisa Montague
Mike Woodcock
* Bold type denotes Chair.
Non-executive Director
Non-executive Director
Executive Director, CEO
Executive Director, CFO
Details of the Directors’ service contracts are set
out in the Directors’ Remuneration Report on pages
40 and 41. 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 page 49.
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
2023 AGM, all of the Directors will retire and 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.
N, A, R
R, A, N
A, R, N
A, R, N
From 01.02.2022
From 01.02.2022
From 01.02.2022
From 01.02.2022
From 01.02.2022
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:
1p ordinary
shares
31 January 2022
Number
1p ordinary
shares
31 January 2022
Number
D Thompson
C Rogers
L Montague
15,000
110,000
371,376
15,000
110,000
108,097
There have been no changes in the interests
set out above between 31 January 2023 and
25 April 2023.
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.
Pensions
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.
45
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section REPORT OF THE DIRECTORS CONTINUED
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Political donations
The Group has not made any political donations
(2022: nil).
Emissions and energy consumption
Details of the Group’s energy usage and
disclosures under the SECR framework are
contained in the Strategic Report on page 19.
Annual General Meeting
The AGM will be held on 22 June 2023.
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
71,468,206 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 2022, the Directors were
authorised to allot ordinary shares up to a
nominal value of £234,245 and were further
authorized to make market purchases of up to
7,098,351 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 6 April 2023, the Company was aware
of the following substantial shareholdings in
its ordinary share capital. The percentages
are calculated from the 71,468,206 ordinary
1p shares allotted, called and fully paid up.
Comparatives at 7 April 2022 are shown.
6 April 2023
7 April 2022
Octopus Investments
13.41%
13.91%
Close Asset
Management
Ennismore Fund
Management
BGF Investments
Interactive Investor
Schroder Investment
Management
Charles Stanley
Allianz Global
Investments
9.47%
8.92%
7.11%
5.95%
5.43%
4.96%
4.63%
7.54%
5.99%
5.07%
4.94%
4.99%
5.09%
3.92%
Not
Applicable
Hargreaves Lansdown
5.22%
Independent auditors
BDO LLP has expressed its willingness to
continue in office as auditors, and a resolution
to reappoint them will be proposed at the AGM.
46
Sanderson Design Group Annual Report & Accounts 2023
The Directors are responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulations.
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 UK
adopted International Accounting Standards 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 and Company 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 UK adopted
international accounting standards 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
statements and the Directors’ Remuneration Report
comply with the Companies Act 2006.
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.
The Directors are responsible for ensuring the
annual report and financial statements are made
available on a website. Financial statements are
published on the Company’s website in accordance
with legislation in the United Kingdom governing
the preparation and dissemination of financial
statements, which may vary from legislation in
other jurisdictions.
The maintenance and integrity of the Company’s
website is the responsibility of the Directors.
The Directors’ responsibility also extends to the
ongoing integrity of the financial statements
contained therein.
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
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.
that are reasonable and prudent; and
By order of the Board
• 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
Caroline Geary
Company Secretary
25 April 2023
Registered Office
Chalfont House
Oxford Road
Denham UB9 4DX
Registered number
61880
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
NOMINATION COMMITTEE REPORT
Membership
The Committee is comprised solely of independent
Directors, being myself as Chairman and the other
Non-executive Directors, Christopher Rogers,
Juliette Stacey and Patrick Lewis. The Board is
satisfied that I have significant and relevant
experience to chair the Nomination Committee
in line with the Code.
• 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.
Meetings
The Committee generally meets at least once a
year and otherwise as required. During FY2023,
assessment of the Board composition and its
performance was reviewed as part of an externally
facilitated Board evaluation. Further detail of the
process and findings can be found in the Corporate
Governance Report.
Meetings are attended by the Committee’s
members, with the CEO and HR Director invited to
attend, where required. A record of the meeting
attendance at formal meetings by Committee
members is set out in the Corporate Governance
Report on page 43.
Dianne Thompson
Nomination Committee Chairman
25 April 2023
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.
47
Sanderson Design Group Annual Report & Accounts 2023
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 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. Whilst 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.
Introduction from the Chair 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.
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 Chair and the other
Non-executive Directors, Dame Dianne Thompson,
Juliette Stacey and Patrick Lewis.
The number of meetings held during the year
and the attendance at each meeting is shown
in the table on page 43 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. 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.
During the year ending 31 January 2023, the
Committee agreed for the following to be effective
from 1 February 2023:
• In keeping with the Real Living Wage policy
introduced in 2021, the Committee has agreed
an uplift for all Real Living Wage colleagues
in line with the rates announced by the Living
Wage Commission, equating to an increase
of 10.1%;
• An annual cost of living increase to all other
employees based on a sliding scale dependent
on hourly rates, ranging from 4% for higher
earners, to 10% for lower earners, with the
majority of UK employees receiving an increase
of 8%;
• An annual cost of living increase for overseas
employees, based on the same principle as the
UK increase, with adjustment for local rates of
inflation; and
• A continuation of the all-employee bonus
scheme enabling colleagues to share in
the Company’s success with an element of
variable pay.
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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, 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.
For the forthcoming year ending 31 January 2024,
the Executive Directors were given an increase
of 4% in line with the increase for other senior
employees, which is below the average increase
for the UK workforce. Effective from 1 February
2023, the base salary for the Chief Executive
Officer has been set at £367,850 (2023: £353,702)
per annum. The base salary for the Chief Financial
Officer has been set at £214,240 (2023: £206,000).
In addition to basic salary, each Executive Director
is provided with health care benefits and a car
allowance, where applicable.
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.
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 level trends in executive remuneration
and relative pay levels within the Group.
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 normally
three individual objectives, one of which normally
relates to cash flow generation and one of which
normally relates to ESG.
Long-Term Incentive Plan (‘LTIP’)
As previously reported, in 2020 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. The Committee decided
to replace the existing long-term incentive plan
for Executive Directors with a restricted share
plan (‘RSP’).
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 2023, the CEO was awarded
a maximum opportunity of 75% of salary, and the
CFO awarded a maximum opportunity of 50%
of salary. The award will vest following the end
of year three, with 40% released on vesting, 40%
released in year four and 20% released in year five,
subject to the Committee being satisfied with the
achievement of robust underpins at the date of
vesting. These underpins are detailed on page 51
of this report.
The Committee intends to continue to issue awards
under this RSP plan, with an award to be made to
both Executive Directors later this year in respect
of the year ending 31 January 2024. The maximum
award will be 75% of salary for the CEO and 50% of
salary for the CFO. Subject to the Committee being
satisfied with the achievement of robust underpins,
the award will vest following the end of year three,
with 40% released on vesting, 40% released in year
four and 20% released in year five. 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 5.69%.
Pensions
Both Lisa Montague and Mike Woodcock are
members 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 shareholding
To align with best practice, a shareholding guidance
of 1x 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.
As at 31 January Lisa Montague’s shareholding of
371,376 shares equates to 125% of salary based
on the average share price during the three-
month period to 31 January 2023 of 119p. Mike
Woodcock joined the Company in October 2021
and all share awards granted to him have yet to
reach maturity, therefore his current shareholding
is nil.
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:
1p ordinary
shares
31 January 2023
Number
1p ordinary
shares
31 January 2022
Number
15,000
110,000
371,376
15,000
110,000
108,097
D Thompson
C Rogers
L Montague
There have been no changes in the interests set out
above between 31 January 2023 and 25 April 2023.
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.
49
Sanderson Design Group Annual Report & Accounts 2023
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section DIRECTORS’ REMUNERATION REPORT CONTINUED
For the forthcoming year ending 31 January 2024, the Non-executive Directors were given an increase
of 4% in line with the increase for senior executives which is below the average increase for the UK
workforce, effective from 1 February 2023.
Title
Chairman
Non-executive Director
FY2023
Fee
FY2024
Fee
Committee Chair
Fee
£114,433
£46,813
£119,010
£48,685
£5,000
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 2023.
During the year, the Directors have decided to change the presentation of the amounts awarded under
LTIP arrangements. Instead of presenting gains made on LTIP awards at the point of vesting, the Directors
are choosing to present based on the “single figure” methodology, as calculated in accordance with the
Regulations. The Directors’ feel this is a more meaningful and transparent way of presentation.
Using the single figure methodology, awards are recognised and disclosed in the year when the
performance measures or targets set have been achieved, or substantially achieved, during the year
being reported on.
Year to 31 January 2023
Executive Directors:
Lisa Montague
Mike Woodcock
Non-executive Directors:
Dianne Thompson
Christopher Rogers
Juliette Stacey
Patrick Lewis
Salary
£000
Bonus
£000
LTIP*
£000
Benefits
£000
Pension
£000
369
205
114
52
52
47
839
–
–
–
–
–
–
–
261
–
–
–
–
–
261
2
2
–
–
–
–
4
22
9
–
–
–
–
31
Cash
allowance
in lieu of
pension
£000
–
–
–
–
–
–
–
Total
£000
654
216
114
52
52
47
1,135
*
The LTIP column provides the value of the 2020 RSP award based on the average share price during the three-month period to
31 January 2023 of 119p and a vesting outcome of 75% of maximum. The awards will vest and be released 40% on 11 November 2023,
30% on 11 November 2024 and 30% on 11 November 2025.
Year to 31 January 2022
Executive Directors:
Lisa Montague
Mike Woodcock
(from 1/11/21)
Michael Williamson
(up to 31/10/21)
Non-executive Directors:
Dianne Thompson
Christopher Rogers
Juliette Stacey
(from 3/11/21)
Patrick Lewis
(from 3/11/21)
Vijay Thakrar
(up to 27/11/21)
Salary
£000
Annual
bonus
£000
LTIP*
£000
Benefits
£000
Pension
£000
Cash
allowance
in lieu of
pension
£000
358
190
561
50
255**
20
58
111
51
12
11
42
–
–
–
–
–
–
–
–
–
–
–
–
890
268
561
2
1
1
–
–
–
–
–
4
22
2
–
–
–
–
–
–
24
–
–
6
–
–
–
–
–
6
Total
£000
1,133
73
320
111
51
12
11
42
1,753
*
The LTIP column provides the value of the 2019 LTIP award based on the share price at the date of vesting of 113p and a vesting
outcome of 75% of maximum.
** Includes notice pay and accrued holiday pay of £107,000.
Annual bonus for the year ended 31 January 2023
The Chief Executive Officer’s maximum bonus potential for the year ended 31 January 2023 was 100%
of base salary and the Chief Financial Officer’s maximum bonus potential was 75% of base salary. Bonus
achievement was linked to performance against underlying profit targets with the portion of bonus paid
then determined based on performance against individual objectives. Despite good performance during
the year, in the context of macroeconomic challenges, the Company did not achieve the stretching profit
growth targets set, there was therefore no bonus paid to Executive Directors.
2019 LTIP award
The LTIP awards granted in 2019 vested on 24 November 2022. The performance conditions attached to
this award were based on a mixture of relative TSR performance to 21 November 2022 and targets set
for the financial performance of the Company for the year ending 31 January 2022. 25% of the award
was 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 was 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.
50
Sanderson Design Group Annual Report & Accounts 2023
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section DIRECTORS’ REMUNERATION REPORT CONTINUED
The revenue performance target was not met but
the earnings per share, free cash flow target and
TSR performance were met in full resulting in a
vesting level of 75% of the award. The share price
on the vesting date was 113p.
2020 RSP award
As noted above, from 2020 onwards, awards have
been made under the restricted share plan.
The performance underpins for the 2020 award
were based on the adjusted underlying profit
before tax*, 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.
For the 2020 award, the Remuneration Committee
assessed performance against the underpin
conditions up to 31 January 2023. Despite strong
performance over the period, particularly the
relative TSR as shown in the adjacent column, the
underpin performance criteria were not met in full.
Whilst the sustainability underpin was met with
continued reduction in carbon emissions, improved
sustainability across the group and no environmental,
social or governance issues occurring to potentially
incur reputational damage, the free cash flow and
profit underpins fell short of their criteria.
Directors’ LTIP awards
Date of grant
Share price
at grant
Exercise
price
L Montague
L Montague
21/11/20191
11/11/20202
14/06/20212
30/05/20222
L Montague
M Woodcock 30/05/20222
L Montague
77.0p
68.0p
175.0p
140.83
140.83
nil
nil
nil
nil
nil
Despite there being strong cash generation of
£17m, the outcome fell short of the underpin by
£3m. Profit at £12.6m fell short of the underpin of
£16.7m. Both financial underpins were set before
the current economic and political upheaval which
impacted the last year of the measurement period.
The Committee reflected on the outcomes, taking into
account the stretching nature of the underpins (which
were set in a way which was more stretching than
typical market practice) and the significant financial
progress which the Company has achieved over the
last three years and determined that a scale-back of
25% of maximum would be appropriate, resulting in
final award size of 75% of maximum for the
Executive Directors.
The award will vest following the end of three
years from the date of grant, with 40% released on
11 November 2023, 30% released on 11 November
2024 and 30% on 11 November 2025.
As disclosed in last year’s Remuneration Report,
Michael Williamson stepped down from the Board
effective 31 October 2021. The Committee judged
that he should be treated as a good leaver for the
purpose of his outstanding incentive awards and
he will therefore be entitled to receive his pro-rated
2020 RSP award. The award will be released to him
40% on 11 November 2023, 30% on 11 November
2024 and 30% on 11 November 2025.
*
Underlying earnings adjusted for accounting charges relating
to share-based incentives, defined benefit pension charge and
non-underlying items.
The performance underpins for the 2021 and 2022 awards are based on underlying profit before
tax* and free cash flow achieved for the relevant measurement periods 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.
Subject to the achievement of underpins, the 2021 awards will vest following the end of year three, for the
2021 awards they will be released 40% on 14 June 2024, 40% on 14 June 2025 and 20% on 14 June 2026,
and for the 2022 awards they will be released 40% on 30 May 2025, 40% on 30 May 2026 and 20% on
30 May 2027.
Total Shareholder Return index for the five financial years ending 31 January 2023
250
200
150
100
50
0
Feb 18
Oct 18
Jun 19
Feb 20
Oct 20
Jun 21
Feb 22
Oct 22
Sanderson Design Group TSR: 16.1%
AIM All-Share TSR (13.8%)
Granted
in year
Exercised
in year
Lapsed
in year
Maximum
awards at
31 January
2023
496,753
165,584
0
Christopher Rogers
Chairman of the Remuneration Committee
25 April 2023
Maximum
awards at
1 February
2022
662,337
292,500
132,454
0 188,366
0
73,138
292,500
132,454
188,366
73,138
1 In accordance with the rules of the LTIP, which were approved by shareholders at the 2015 AGM, shares awarded vest three years
after the date of grant subject to continued service and the extent to which the relevant performance conditions are achieved.
2 As noted above, the 2020, 2021 and 2022 awards were made under the Restricted Share Plan.
51
Sanderson Design Group Annual Report & Accounts 2023
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
AUDIT COMMITTEE REPORT
On behalf of the Board, I am pleased to present
the Audit Committee Report for the year ended
31 January 2023.
Membership
The Committee is comprised solely of independent
Directors, being myself as Chairman and the
other Non-executive Directors, Dianne Thompson,
Christopher Rogers and Patrick Lewis. The Board
is satisfied that I have significant and relevant
experience to chair the Audit Committee in line
with the QCA 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.
• 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.
The full terms of reference for the Committee can
be found on the Company’s website and were last
reviewed and updated in November 2021.
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. Audit Committee review
of the annual report and accounts for the year
ended January 2022 required two meetings, and
therefore there were four meetings in the period
to January 2023.
Each meeting is attended by the Committee’s
members and the Company Secretary as well as, by
invitation, the Executive Directors and the external
auditors, or other advisors, where appropriate.
A record of the meeting attendance at formal
meetings by Committee members is set out in the
Corporate Governance Report on page 43.
At each formal meeting, the Committee held a
private meeting with the external auditors, without
management being present, to receive feedback
from them. The Audit Committee Chair also meets
separately with the Chief Financial Officer and
auditors outside of the formal meeting programme
which helps to identify key areas of focus and
emerging issues that may need to be added to the
Audit Committee’s agenda.
The Committee is kept up to date with changes
to accounting standards and developments
in financial reporting, company law and other
regulatory matters through updates from the
external auditors, other advisors and the Company
Secretary.
The effectiveness of the Audit Committee formed
part of the Board evaluation process described in
the Corporate Governance Report on page 44.
The Committee undertook the following activities
during the year:
Financial reporting
The Committee reviewed the Annual and Interim
reports, including the significant financial reporting
52
Sanderson Design Group Annual Report & Accounts 2023
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
AUDIT COMMITTEE REPORT CONTINUED
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.
Tax
The Committee received tax updates from the
finance team at regular intervals throughout the
year, which included commentary on the areas
supported by our tax advisers, KPMG, relating to
tax compliance, risks, governance and advisory
services.
Key accounting estimates and judgements
The Committee reviewed the appropriateness of
management’s accounting in relation to each of
these significant risks and BDO reported to the
Committee on the work performed in assessing
each during their audit. Details of this work
are provided in BDO’s Auditors’ Report on
pages 54 to 58.
a. Inventory
Due to the significant quantum of stock held,
there is an ongoing focus by management on
inventory levels. Inventory is discussed at both
Board and Committee level. Management applies
a consistent provisioning methodology with
regard to the ageing of inventory. 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.
b. Defined benefit pension schemes
Details of the Group’s defined benefit pension
plans are set out at note 22. An independent firm
of pension advisors continues to work with the
Group and the Trustees of the pension schemes
to help manage the Group’s costs going forward,
while ensuring that the Group’s obligations to
scheme members are appropriately met.
Management also engaged a third-party actuary
to assist them in the preparation of the pension
accounting and financial statements disclosures.
As at 31 January 2023, there was a deficit of
assets over liabilities of £2.5m (FY2022: surplus
of £2.5m). BDO consider the accounting for
the retirement benefit obligation and related
disclosures are consistent with accounting rules
and have reported as such in their Auditors report
on page 55.
c. Going concern
As set out in the Report of the Directors on
page 45 and the Board decisions specific to the
uncertainties regarding any further impact of
Covid-19, supply chain and inflationary pressures
and the Russian invasion of Ukraine, the Group
continues to manage cash in light of these
uncertainties. Management 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
the Board, and the Board’s conclusion as a whole
is set out in the Report of the Directors at page
45. In addition, the Committee has discussed with
management and BDO the disclosures relating to
going concern included in note 1.
d. Intangibles and Goodwill impairment
The capitalisation of collection design costs
and the valuation of intangible assets require
significant judgement and BDO reported to the
Committee on the work performed in assessing
each during their audit and the review and
appropriateness of management’s impairment
model in the valuation of intangible assets.
e. Long term incentive plans
The Committee and BDO discussed the judgements
around calculating the estimated costs of the
Company’s long term incentive plans. BDO does
not have any significant observations to report
around these incentive plans.
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. As part of the year-end
preparation, management did a full refresh of
the risk register. This included a bottom up review
of risks across all sites and areas of operation,
revising or reconfirming ownership and updating
mitigating actions and controls. The Strategic
Report includes further detail as to the business
risks identified and actions being taken.
The Group has an established internal control
framework, the key factors of which include clearly
defined levels of responsibility and delegation
of authority, a comprehensive monthly reporting
process, monthly business performance review
of actual results against budget, together with
commentary on significant variances and updates
of both profit and cashflow, and a comprehensive
budgeting process. All significant capital
expenditure is approved by the Board.
Throughout the period, the Executive Directors
provided relevant and timely financial commentary
to the Board to supplement the financial reporting,
ensuring the Board and Audit Committee were
informed of the financial position and result of
the Group.
Internal Audit
The Group does not have a formal internal audit
function and the Committee considers that
management is able to derive assurance as to the
adequacy and effectiveness of internal controls
and risk management procedures without one.
External Audit
BDO were first appointed in 2021, following a
tender process, to conduct the audit of the Group’s
financial statements for the financial year ending
31 January 2022, and this is their second year
auditing the Group’s Annual Report. In accordance
with best practice and professional standards, the
external auditor is required to adhere to a rotation
policy whereby the audit engagement partner is
rotated at least every five years. The FY2023 audit
is the second year of Gareth Singleton’s tenure as
lead audit engagement partner.
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 Audit Committee reviewed the effectiveness
of BDO’s performance of the external audit
process taking into account the quality and scope
of the audit plan, and evaluation of delivery and
performance against the plan; qualifications,
efficiency and performance of the audit team; the
communication between the Company and BDO
and BDO’s understanding of the Group’s business
and industry sector. After considering these
matters, the Audit Committee was satisfied with
the effectiveness of the year end audit process
and recommended that BDO be re-appointed at
the Company’s AGM.
Auditor Independence
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 the Audit Committee must
pre-approve. The policy is available on the website.
Any work by BDO must be pre-approved by the
Committee before the work commences. There has
been no engagement of BDO for provision of non-
audit services during the reporting period. Details
of fees paid to BDO during the year are disclosed
in note 6 of the financial statements.
The Committee has confirmed it is satisfied with
the independence, objectivity and effectiveness
of BDO.
Juliette Stacey
Audit Committee Chair
25 April 2023
53
Sanderson Design Group Annual Report & Accounts 2023
Governance
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF SANDERSON DESIGN GROUP PLC
Opinion on the financial statements
In our opinion
• the financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 January 2023 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted
• Performing data verification and logic checks to confirm the mathematical accuracy of the
forecast model;
• Reviewing the Directors’ ‘stress tested’ sensitivity analysis to assess the quantum of adverse variance
against forecast that could be sustained without breaching its bank covenants or indicating other
material uncertainties over the going concern assumption;
• Analysing post year end trading results compared to forecast and current year to evaluate the accuracy
international accounting standards;
and achievability of forecasts; and
• the Parent Company financial statements have been properly prepared in accordance with United
• Evaluating the adequacy of disclosures in relation to going concern and whether they accurately capture
Kingdom Generally Accepted Accounting Practice; and
the basis on which the Directors have reached their conclusions and key judgements taken.
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Sanderson Design Group Plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 31 January 2023 which comprise the Consolidated Income
Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Cash Flow Statement,
the Consolidated and Company Balance Sheets, the Consolidated and Company Statements of Changes in
Equity and notes to the financial statements, including a summary of significant accounting policies.
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 and the
Parent 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.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in
the relevant sections of this report.
The financial reporting framework that has been applied in the preparation of the Group financial
statements is applicable law and UK adopted international accounting standards. The financial reporting
framework that has been applied in the preparation of the Parent Company financial statements is
applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101
Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Overview
Coverage
94% (2022: 97%) of Group profit before tax
99% (2022: 99%) of Group revenue
99% (2022: 98%) of Group total assets
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
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.
Key audit matters
Inventory valuation and adequacy of inventory provision
Accounting for retirement benefit obligations
2023
2022
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
Conclusions relating to going concern
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. Our evaluation of the Directors’
assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis
of accounting included:
• Obtaining an understanding of how the Directors undertook the going concern assessment process to
determine if we considered it to be appropriate for the circumstances by way of enquiry with the Directors
in regards to who prepared the assessment and the information and individuals consulted in the process;
• Obtaining the Directors’ trading forecasts underlying the going concern assessment and challenging
the Directors on the key estimates and assumptions within the forecasts being the forecast levels of
revenue, gross profit and working capital cycles, through analysis and comparison of forecasts with prior
year actuals. This assessment included a consideration of the impact of current macroeconomic factors
and impacts in respect of cost inflation and market demand;
Materiality
Group financial statements as a whole
£542,000 (2022: £518,000) based on 5% (2022: 5%) of profit before tax
An overview of the scope of our audit
including the Group’s system of internal control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have represented a risk of
material misstatement.
We determined that the Group had 4 significant components, being the UK Brands, US Brands, Anstey
manufacturing and Standfast manufacturing trading divisions. A full scope audit was performed by the
Group engagement team in respect of each of the significant components and the Sanderson Design
Group Plc parent company.
We determined that the remaining components of the group were not individually financially significant
enough to require a full scope audit for Group purposes, however we performed specific risk-focused audit
procedures in respect of cash verification, along with analytical procedures in order to obtain sufficient
appropriate audit evidence to support our opinion on the Group financial statements as a whole.
All audit work was performed by the Group engagement team and we did not utilise component auditors.
54
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF SANDERSON DESIGN GROUP PLC CONTINUED
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our 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) that we identified, 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 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.
Key audit matter
Inventory valuation and
adequacy of inventory
provision
(see accounting policies,
critical accounting estimates
and judgements in Note 3
(b) and Note 16 Inventories)
The Group has inventory balances of £27.8m
which is stated net of material inventory
provisions. The provision is calculated based
on a formula driven factor table including
inputs relating to whether the inventory
lines are classed as discontinued, the age
of the inventory and sales history. There is
management judgement in relation to the
inventory provisioning methodology.
There is a significant amount of judgement
involved in determining an appropriate basis
of inventory value and provision. There is
also a risk of fraud through manipulation
of the inventory provision. We therefore
determined the valuation of inventory as a
key audit matter.
Accounting for retirement
benefit obligations
(see accounting policies,
critical accounting
estimated and judgements
in Note 3 (a) and Note
22 Retirement benefit
obligation)
The pension obligation is calculated based
on actuarial estimates and assumptions
related to life expectancy, discount and
inflation rates, wages and salary changes,
and the rate of increase in pensions
payments.
Owing to the magnitude of the pension
liability, the level of estimation and complex
judgement involved in determining the
present value of funding obligations, we
determined the accounting for pension
scheme liabilities to be a Key Audit Matter.
How the scope of our audit addressed the key audit matter
We challenged management on their inventory costing methodology, by testing overheads absorbed into the cost of inventory and
assessing whether they were directly attributable product costs. On a sample basis we substantiated the costs absorbed into inventory
and considered the eligibility of costs included as production overheads. Our assessment was based on both the nature of the costs
corroborated by supporting evidence and also a physical inspection of the manufacturing site. We also benchmarked profit margins
used to eliminate unrealised profit arising from intergroup sales from inventory against historic levels.
We reviewed the provisioning model and tested the mathematical accuracy of the calculations and verified that the provision was
being appropriately calculated in line with the factor tables. We performed data integrity tests on the model to verify that the key
inputs to the calculation were appropriately derived from underlying system data.
We considered the appropriateness of the provisioning methodology applied in the factor tables by quantifying exposures to inventory
lines without sales in the last 12 months and inventory lines designated by management as ‘obsolete’. We specifically tested that the
provisioning methodology had been applied on a consistent basis year on year to mitigate the risk of manipulation of earnings.
We assessed the reasonableness of the provisions by performing a ‘look-back’ assessment, which involved comparing inventory written
off in the year against the prior year provision as well as inventory provisions that were written back in the current year.
We considered the results of the procedures above and concluded whether the accounting treatment was consistent with the
requirements of IAS 2 Inventories.
Key observations:
We consider the assumptions and methodology underpinning the inventory valuation and provision to be reasonable, and in line with
the requirements of the accounting standards.
We assessed the competence, capabilities and objectivity of the actuary used by management to assist them in valuing the
pension obligation.
With the assistance of an actuary, whom we engaged as an “auditor’s expert”, we tested the actuarial assumptions applied in
valuing pension obligations. We challenged the appropriateness of management’s assumptions used in calculating the liability by
benchmarking key assumptions to available industry data and reviewed the consistency of the nature of these assumptions with the
prior year. We checked that the final assumptions applied are consistent and within a reasonable range.
We performed tests to verify employer contributions made during the year by verify payment to bank statement and agreed scheme
membership data to the latest audited pension scheme financial statements.
Key observations:
The assumptions applied in valuing the present value of funded obligations were found to be reasonable.
55
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF SANDERSON DESIGN GROUP PLC CONTINUED
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Materiality
Basis for determining
materiality
Group financial statements
Parent Company financial statements
2023
£000
542
2022
£000
518
2023
£000
270
2022
£000
259
5% profit before tax
5% profit before tax
50% of group materiality
50% of group materiality
Rationale for the
benchmark applied
Profit before tax is considered to be the key driver of the Group’s value and is considered to
be the measure of most importance to the shareholders.
The materiality of the Parent company was capped at a percentage of Group materiality to
respond to aggregation risk.
Performance materiality
406
343
202
168
Basis for determining
performance materiality
Rationale for the
percentage applied for
performance materiality
Set at 75% of materiality
Set at 65% of materiality
Set at 75% of materiality
Set at 65% of materiality
A higher threshold was applied than prior
year. Our rationale for this increase is that
it is the second year of our appointment
as auditor and the experience gained in
the previous year on the level and nature
of unadjusted differences.
A lower threshold was applied in recognition
of this being the first year we audited
the group.
A higher threshold was applied than prior
year. Our rationale for this increase is that
it is the second year of our appointment as
auditor and the experience gained in the
previous year on the level and nature of
unadjusted differences.
A lower threshold was applied in recognition
of this being the first year we audited the
Parent company.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, based on a percentage of between 37% and 88% (2022: 39% and 73%) of Group materiality dependent on
the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £200,000 to £475,000 (2022: £201,000 to £375,000). In the audit of each component, we further
applied performance materiality levels of 75% (2022: 65%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £10,000 (2022: £20,000). We also agreed to report differences below this threshold that, in our view,
warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual report and accounts other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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 course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the
financial statements themselves. 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 in this regard.
56
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF SANDERSON DESIGN GROUP PLC CONTINUED
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit,
we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as
described below.
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.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
Matters on which we
are required to report
by exception
• the information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the Strategic report or the
Directors’ report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company,
or returns adequate for our audit have not been received from branches
not visited by us; or
• the Parent Company financial statements are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not
made; or
• we have not received all the information and explanations we require for
our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and
for such internal control as the Directors 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 Parent
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 Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for 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 auditor’s 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.
Extent to which the audit was capable of detecting irregularities, including fraud
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:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Group and the industry in which it operates;
• Discussion with management and those charged with governance, including the Audit Committee; and
• Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws
and regulations;
we considered the significant laws and regulations to be the applicable accounting framework, UK tax
legislation, the Companies Act 2006, the AIM listing rules and the principles of the Quoted Companies
Alliance Corporate Governance Code.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a
material effect on the amount or disclosures in the financial statements, for example through the imposition
of fines or litigation. We identified such laws and regulations to be UK employment and health and safety
legislation.
Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with governance for any instances of non-compliance with
laws and regulations;
• Review of correspondence with regulatory and tax authorities for any instances of non-compliance with
laws and regulations;
• Review of financial statement disclosures and agreeing to supporting documentation;
• Involvement of tax specialists in the audit;
• Review of legal expenditure accounts to understand the nature of expenditure incurred; enquiries of
management and those charged with governance of known or suspected non-compliance with laws and
regulations or fraud in the period and other unusual transactions. We corroborated our enquires through a
review of minutes of Board meetings throughout the year; and
• Obtaining an understanding of the control environment in monitoring compliance with laws
and regulations.
57
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF SANDERSON DESIGN GROUP PLC CONTINUED
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk
assessment procedures included:
• verification, on a sample basis, of costs capitalised as collection design costs to check that the relevant
recognition criteria had been met and costs were not being capitalised to manipulate reported earnings;
• consideration of management’s assessment of related parties and any unusual transactions and
• Enquiry with management and those charged with governance regarding any known or suspected
• consideration of the total unadjusted audit differences for indications of bias or deliberate
evaluating the process for identifying and monitoring any such transactions; and
instances of fraud;
• Obtaining an understanding of the Group’s policies and procedures relating to:
– Detecting and responding to the risks of fraud; and
– Internal controls established to mitigate risks related to fraud.
• Review of minutes of meeting of those charged with governance for any known or suspected instances
of fraud;
misstatement.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members who were all deemed to have appropriate competence and capabilities and remained alert
to any indications of fraud or non-compliance with laws and regulations throughout the audit.
• Discussion amongst the engagement team as to how and where fraud might occur in the financial
statements;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate
risks of material misstatement due to fraud; and
• Considering remuneration incentive schemes and performance targets and the related financial
statement areas impacted by these.
Our audit procedures were designed to respond to risks of material misstatement in the financial
statements, recognising that 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, misrepresentations or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we are to become aware of it.
Based on our risk assessment, we considered the areas most susceptible to fraud to be the key audit matter
relating to inventory valuation, a fraud risk in relation to revenue recognition particularly in the period just
before year and the accelerated revenue recognised on licence income, the costs capitalised as collection
design costs, and the risk of management override of controls.
Our procedures in respect of the above included:
• challenge of key estimates and judgements, including those applied to key audit matters by
management in the financial statements to test that they are free from management bias;
• identifying and testing to supporting documentation, a sample of journal entries for the following
journal types:
– any journals outside of the normal course of business or indicative of manipulation of the financial
statements;
– all journals posted to revenue to ascertain if any unusual transactions exist which are outside the
normal course of business; and
– any manual or late journals posted at a consolidated level;
• performing, amongst others, the following revenue tests:
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Parent Company’s members those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Gareth Singleton
Senior Statutory Auditor
For and on behalf of BDO LLP, Statutory Auditor
Birmingham, UK
– review of the revenue nominal accounts for any unusual transactions;
– testing a sample of transactions posted to the nominal ledger in January 2023 to check that revenue
Date: 25 April 2023
had been recorded in the correct period;
– review of the elimination of intra-group revenue and associated unrealised profit within inventories at
BDO LLP is a limited liability partnership registered in England and Wales (with registered
number OC305127).
consolidation level;
– review of transfer prices applied on a sample of intra-group revenue transactions to verify that arm’s
length prices had been applied;
– reperforming the calculation of accelerated income on all contracts such that an immaterial amount
remained untested; and
– verifying rebate arrangements and substantiating calculations of accrued rebates at the year end and
reviewing historic rebate/credit notes to check for completeness of rebate accruals;
58
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 JANUARY 2023
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
YEAR ENDED 31 JANUARY 2023
Profit for the year
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension schemes
Tax credit/(charge) relating to pension schemes
Cash flow hedge
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Note
22
11
23
2023
£000
8,825
(6,981)
1,745
112
(5,124)
2022
£000
7,759
6,492
(1,233)
–
5,259
Currency translation gains
429
70
Other comprehensive (expense)/income for the year, net of tax
(4,695)
5,329
Total comprehensive income for the year attributable to the
owners of the parent
4,130
13,088
The notes on pages 63 to 89 form an integral part of the consolidated financial statements.
Revenue
Cost of sales
Gross profit
Net operating expenses:
Distribution and selling expenses
Administration expenses
Other operating income
Profit from operations
Finance income
Finance costs
Net finance income
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*
2023
Total
£000
2022
Total
£000
111,978
(37,761)
112,200
(38,365)
74,217
73,835
(25,043)
(42,997)
4,470
(25,052)
(42,796)
4,342
10,647
10,329
445
(152)
293
184
(154)
30
10,940
(2,115)
10,359
(2,600)
8,825
7,759
12.42p
10.93p
12.31p
10.80p
14.18p
14.08p
13.75p
13.59p
Note
4
5
4–6
7
10
12
12
12
12
* These are alternative performance measures as defined in the Glossary on pages 100 and 101.
All of the activities of the Group are continuing operations.
The notes on pages 63 to 89 form an integral part of the consolidated financial statements.
59
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section CONSOLIDATED BALANCE SHEET
YEAR ENDED 31 JANUARY 2023
31 January
2023
£000
Note
(restated)
31 January
2022
£000
(restated)
1 February
2021
£000
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Retirement benefit surplus
Minimum guaranteed licensing receivables
Current assets
Inventories
Trade and other receivables
Minimum guaranteed licensing receivables
Financial derivate instrument
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provision for liabilities and charges
Borrowings
Net current assets
Non-current liabilities
Lease liabilities
Deferred income tax liabilities
Retirement benefit obligation
Provision for liabilities and charges
Total liabilities
Net assets
13
14
15
22
18
16
17
18
23
19
20
15
21
15
11
22
21
26,448
12,619
4,577
–
2,637
26,979
11,258
3,923
2,577
1,619
28,325
12,061
5,783
Equity
Share capital
Share premium account
Foreign currency translation reserve
–
Retained earnings
1,222
Other reserves
46,281
46,356
47,391
Total equity
Note
24
31 January
2023
£000
(restated)
31 January
2022
£000
(restated)
1 February
2021
£000
715
18,682
(367)
21,779
40,507
81,316
710
18,682
(796)
20,610
40,507
710
18,682
(866)
7,729
40,507
79,713
66,762
A third consolidated balance sheet as at 1 February 2021 has been shown above to show the effect of the
prior year restatement as detailed in note 31. Provision for liabilities and charges is analysed into current
and non-current assets as detailed in note 21.
The financial statements on pages 59 to 89 were approved by the Board of Directors on 25 April 2023 and
signed on its behalf by
Lisa Montague
Director
Registered number: 61880
Mike Woodcock
Director
27,774
16,327
1,433
112
15,401
61,047
22,652
16,792
879
–
19,050
59,373
107,328
105,729
(16,286)
(1,701)
–
–
(18,282)
(1,983)
(1,043)
–
19,633
15,885
1,221
–
15,549
52,288
99,679
(19,263)
(2,676)
(559)
(412)
(17,987)
(21,308)
(22,910)
43,060
38,065
29,378
(3,421)
(1,121)
(2,446)
(1,037)
(1,920)
(1,998)
–
(790)
(3,206)
(514)
(5,637)
(650)
(8,025)
(4,708)
(10,007)
(26,012)
(26,016)
(32,917)
81,316
79,713
66,762
60
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
Note
2023
£000
(restated)
2022
£000
10,647
10,329
Repayment of lease liability
Cash flows from financing activities
Interest paid
Repurchase of shares vesting from share-based payment
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Net foreign exchange movement
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
15
7
24
26
2023
£000
(restated)
2022
£000
(1,984)
(2,686)
–
(430)
(2,484)
(76)
–
(532)
(4,898)
(3,294)
(3,741)
92
3,563
(62)
19,050
15,549
15,401
19,050
(Decrease)/increase in provision for liabilities and charges
21
The notes on pages 63 to 89 form an integral part of the consolidated financial statements.
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 JANUARY 2023
Cash flows from operating activities
Profit from operations
Intangible asset amortisation
Property, plant and equipment depreciation
Right-of-use asset depreciation
Loss on disposal of fixed assets
Share-based payment equity charge
Defined benefit pension charge
Employer contributions to pension schemes
Increase in inventories
Decrease/(increase) in trade and other receivables
Increase in minimum guaranteed licensing receivables
Decrease/(increase) in trade and other payables
Tax paid
Forgiveness of loan into grant
Unrealised foreign exchange losses*
Net cash from operating activities
Cash flows from investing activities
Finance income received
Purchase of intangible assets
Purchase of property, plant and equipment
Net cash used in investing activities
13
14
15
24
22
22
1,493
2,429
2,407
86
493
500
(2,382)
(4,911)
28
(1,231)
(2,111)
(822)
(1,009)
–
–
1,725
2,545
2,520
–
253
487
(2,209)
(3,018)
(614)
(55)
92
624
(3,754)
(412)
468
5,617
8,981
7
13
14
28
(686)
(4,103)
(4,761)
5
(379)
(1,750)
(2,124)
*
In the prior year, the unrealised foreign exchange losses related to overseas entities were not allocated to their Individual cash
flow lines.
61
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 JANUARY 2023
Attributable to owners of the parent
Other reserves
Share
capital
(note 24)
£000
Share
premium
account
£000
Retained
earnings
£000
Capital
reserve
(note 25)
£000
Note
Foreign
currency
translation
reserve
£000
Merger
reserve
£000
Total
equity
£000
Attributable to owners of the parent
Other reserves
Share
capital
(note 24)
£000
Share
premium
account
£000
Retained
earnings
£000
Capital
reserve
(note 25)
£000
Merger
reserve
£000
Note
Foreign
currency
translation
reserve
£000
Total
equity
£000
Balance at 1 February 2021
710
18,682
7,729
43,457
(2,950)
(866) 66,762
Balance at 1 February 2022
710
18,682
20,610
43,457
(2,950)
(796) 79,713
–
7,759
Profit for the year
8,825
8,825
Profit for the year
Other comprehensive
income/(expense):
Remeasurements of
defined benefit pension
schemes
Tax credit relating to
pension schemes
Currency translation
differences
Total comprehensive
income/(expense):
Transactions with owners,
recognised directly in equity:
Dividends
Share-based payment
equity charge
Related tax movements
on share-based payment
–
–
7,759
22
11
26
24
11
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,492
(1,233)
–
13,018
(532)
253
142
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,492
(1,233)
70
70
70
13,088
–
–
–
(532)
253
142
Balance at 31 January 2022
710
18,682
20,610
43,457
(2,950)
(796) 79,713
Other comprehensive
income/(expense):
Remeasurements of
defined benefit pension
schemes
Tax charge relating to
pension scheme asset
Cash flow hedge
Currency translation
differences
Total comprehensive
income/(expense):
Transactions with owners,
recognised directly in equity:
Dividends
Issuance of share capital
for share-based payment
vesting
Share-based payment
equity charge
Related tax movements
on share-based payment
Share-based payment
vesting
22
11
23
26
24
24
11
24
–
–
–
–
–
–
5
–
–
–
–
–
–
–
–
(6,981)
1,745
112
–
(5,124)
–
(2,484)
–
–
–
–
(5)
493
(106)
(430)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(6,981)
1,745
112
429
429
429
(4,695)
–
(2,484)
–
–
–
–
–
493
(106)
(430)
Balance at 31 January 2023
715
18,682
21,779
43,457
(2,950)
(367) (81,316)
62
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND GENERAL INFORMATION
General information
Sanderson Design Group PLC (‘the Company’) and its subsidiaries (together ‘the Group’) is a luxury
interior furnishing group whose brands include Morris & Co., Sanderson, Zoffany, Clarke & Clarke,
Harlequin and Scion. The brands are targeted at the mid to upper end of the premium market. They have
worldwide distribution including prestigious showrooms at Chelsea Harbour, London and the D&D Building,
Manhattan, New York. Part of the Brand’s inventory is sourced in-house from the Group’s own specialist
manufacturing facilities of Standfast & Barracks, the fabric printing business situated in Lancaster, and
Anstey Wallpaper Company, situated in Loughborough. The manufacturing businesses produce for other
interior furnishing businesses both in the UK and throughout the world. 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 UK-adopted international
accounting standards and with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. On 31 December 2020, IFRS as adopted by the European Union at that
date was brought into the law in the UK and became UK-adopted international accounting standards,
with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned
to UK-adopted international accounting standards in its consolidated financial statements on 1 January
2021. There was no impact or changes in accounting from the transition. 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.
Going concern
In the context of the continuing invasion of Ukraine by Russia and the current economic difficulties but with
Covid-19 impact ebbing away, the Board of Sanderson Design Group PLC has undertaken an assessment
of the ability of the Group and Company to continue in operation and meet its liabilities as they fall due
over the period of its assessment. In doing so, the Board considered events throughout the period of
their assessment from the date of signing of the report to 31 January 2025, 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 facility matures in October 2024.
Throughout the financial year and up to the date of this report the Company has met all required covenant
tests and maintained headroom over £5m. The total headroom of the Group at 31 January 2023 was
£27.9m (2022: £31.6m), including cash and cash equivalents of £15.4m and the committed facility of
£12.5m. The Group has also access to an uncommitted accordion facility of £5.0m with Barclays.
A Management Base Case (‘MBC’) model has been prepared, together with alternative stress tested
scenarios, given the uncertainty regarding the impact of economic difficulties (including continuing
inflationary pressures and interest rate rises) and the Ukraine war (including impact of sanctions, duration
of war and inflationary pressures). These scenarios indicate that the Company retains adequate headroom
against its borrowing facilities and bank covenants for the foreseeable future.
The actual results which will be reported will be undoubtedly different from the MBC and other scenarios
modelled by the Company. If there are significant negative variations from the MBC, management would act
decisively, as they have done in recent years, to protect the business, particularly its cash position. Having
considered all the comments above the Directors consider that the Group and the Company have adequate
resources to continue trading for the foreseeable future and will be able to continue operating as a going
concern for a period of at least 12 months from the date of approval of the financial statements. For this
reason, they continue to adopt the going concern basis in preparing the financial statements.
Adoption of new and revised accounting standards and interpretations
No new standards and interpretations issued and effective for the year have had any significant impact
on the preparation of the financial statements.
Basis of consolidation
The Group financial statements incorporate the financial statements of the Company and all its
subsidiaries made up to the year-end date. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used in line with those used by the Group.
Subsidiary undertakings are all entities over which the Company has control. Control is achieved when the
Company has the power over the entity; is exposed, or has rights to, variable returns from its involvement
with the entity; and can use its power to affect its returns. The Company reassesses whether it controls an
entity if facts and circumstances indicate that there are changes to one or more of these three elements of
control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and
ceases when the Company loses control of the subsidiary. Subsidiary undertakings acquired during the
year are recorded using the acquisition method of accounting and their results are included from the date
of acquisition. The separable net assets, including property, plant and equipment and intangible assets,
of the newly acquired subsidiary undertakings are incorporated into the consolidated financial statements
based on the fair value as at the effective date of control. Intercompany transactions, balances and
unrealised gains on transactions between Group companies are eliminated on consolidation.
At the time of the Group formation, the acquisition of the trading subsidiaries was achieved principally by
way of share for share exchange transactions. The Group determined an accounting policy based on the
pooling of interest method provided the most relevant, reliable and representative accounting treatment,
which reflected the economic substance of the transaction. In applying this policy when preparing the
Group financial statements, to the extent the carrying value of the assets and liabilities acquired is
different to the cost of investment, the difference is recorded in equity within the merger reserve in the
statement of financial position. Under this method, the results of the Group entities were combined from
the beginning of the comparative presented as though the combining entities had always been part of
the same group. Comparatives were restated on a combined basis and adjustments made as necessary
to achieve consistency of accounting principles.
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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.
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 90 to 100).
Revenue
The Group derives its revenue principally from the following:
• Manufacturing sales. These comprise the sale of wallpaper and fabrics to third-party customers.
• Brand sales. 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.
Revenue comprises sales of goods to customers outside the Group less an appropriate deduction for
actual and expected returns, discounts and volume-related rebates, and is stated net of value added tax
and other sales taxes. Revenue is recognised when performance obligations are satisfied and goods are
delivered to our franchise partners or the customer and the control of goods is transferred to the buyer.
Online sales are recognised when items are delivered, as this is when the performance obligation is
deemed to have been satisfied.
Deposits received from customers in advance of the delivery of goods or services are recognised as
deferred revenue. 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.
Licensing contracts give rise to performance-based variable consideration. Income dependent on the
performance of the third-party operations is recognised when it is highly probable that a significant
reversal in the amount of income recognised will not occur. Fixed minimum guaranteed income amounts
receivable under single-year or 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
performance obligations 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 in accordance with
the terms of the contractual agreement.
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 or expenses relating to marketing materials and additional services to support
the sale of the Group’s core products are classified within ‘Other operating 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 Group, and the presentation currency for
the consolidated financial statements.
Transactions in foreign currencies, which are those other than the functional currency of the Group, 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.
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.
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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.
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:
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:
Freehold buildings
Leasehold improvements
Plant, equipment and vehicles
Computer hardware
2%
Over the length of the lease
Between 5% and 33%
33%
• 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 and 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 they are
not both recognised based on 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.
Land is not depreciated. 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.
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 have been impaired 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. Inventories include marketing materials
consisting of patterning books and other saleable marketing assets used to support the sale of the
Group’s products.
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.
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Non-derivative financial assets are classified as either amortised cost or fair value through profit and loss.
This category includes:
Derivative financial instruments
The Group applies IFRS 9 ‘Financial Instruments’. Where qualifying for hedge accounting, derivative
financial instruments are held at fair value through other comprehensive income, non-qualifying
derivatives are held at fair value through profit or loss.
• ‘Trade and other receivables’ and ‘minimum guarantee licensing 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 2023 or 31 January 2022 respectively and the corresponding historical
credit losses experienced 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; 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 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.
The Group designates certain hedging instruments, which include derivatives, in respect of foreign
currency risk, as cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted
for as cash flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging
instrument and the hedged item, along with its risk management objectives and its strategy for
undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in
fair values or cash flows of the hedged item.
The Group uses derivative financial instruments to manage certain exposures to fluctuations in foreign
currency exchange rates, these have been designated as qualifying cash flow hedges.
In accordance with IFRS 9, the effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated
in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit
or loss. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged
item affects profit or loss (for instance when the forecast sale that is hedged takes place).
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 in exchange for consideration.
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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.
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.
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
non-cancellable 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 impaired, the carrying value is reduced accordingly.
Employee benefits – share-based payments under Long-Term Incentive Plans (‘LTIP’) and Restricted
Share Plans (‘RSP’)
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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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 differ 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 recognised in equity where the tax relief
arises from contributions paid to fund deficits arising in previous periods that were recognised in equity.
A deferred tax asset is recognised relating to share-based payments equal to the intrinsic value (market
price at the year-end less the exercise price). Deferred tax is recognised in profit and loss based on the
temporary difference between the tax base of the fair value of the employee’s services received in the
year. The amount recognised in equity is the excess deduction based on the difference between the
intrinsic value and the cumulative fair value of share-based payments recognised in profit and loss.
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, which
is 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’s principal functional currency is Pounds Sterling. 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.
The Group’s policy is, where possible, to allow the Group’s entities to settle liabilities in their functional
currency through natural hedges 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. Hedging instruments are put in place to mitigate
foreign currency risk.
For the year ended 31 January 2023, the average sterling to US dollar translation rate applied by the
Group including the impact of hedging contracts for GBP to USD was 1=1.22. If the GBP to USD rate had
been 1=1.12 with all other variables being held constant, profit before tax would have been higher by
£322,078. If the GBP to USD rate had been 1=1.32 with all other variables being held constant, profit
before tax would have been lower by £273,153.
68
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. FINANCIAL RISK MANAGEMENT CONTINUED
For the year ended 31 January 2023, the average sterling to euro translation rate applied by the Group
including the impact of hedging contracts for GBP to EUR was 1=1.15. If the GBP to EUR rate had been
1=1.05 with all other variables being held constant, profit before tax would have been higher by £107,379.
If the GBP to EUR rate had been 1=1.25 with all other variables being held constant, profit before tax
would have been lower by £90,184.
For the year ended 31 January 2022, had the benchmark interest rate levels been 0.5% higher/(lower) than
the actual experience, with all other variables held constant, the impact on profit before tax of the Group
would have been negligible as the Group has no borrowings. The 0.5% sensitivity is deemed a reasonable
sensitivity analysis based on expected movements in the base rate for the next financial year.
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 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 2023, had the benchmark interest rate levels been 0.5% higher or lower
than the actual experience, with all other variables held constant, the impact on profit before tax of the
Group would have been negligible as the Group has no 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.
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.
Management monitors rolling forecasts of the Group’s cash and loan facility utilisation monthly.
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.
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
adjusts 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.
f) Fair value estimation
The carrying value less impairment provision of trade receivables and payables and cash and cash
equivalents approximate their fair values.
g) 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.
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Financial Statements
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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.
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.
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.
Under IAS 19, the net defined benefit pension scheme asset that can be recognised is the lower of the
surplus and the asset ceiling i.e. the economic benefits available in the form of refunds or reductions in
future contributions or a combination of both, in accordance with IFRIC 14 ‘IAS 19—The Limit on a Defined
Benefit Asset, Minimum Funding Requirements and their Interaction’. In order to determine whether there
are any restrictions on the surplus as outlined in IFRIC 14, the Schemes’ Trust Deeds and Rules were
reviewed, and legal advice was acquired. It is the Group’s understanding that, it is able, without condition
or restriction placed on it by the trustees, to run the Schemes until there are no remaining members; wind
up the Schemes at that point; and reclaim any remaining monies. Consequently, the Group can recognise
in full any surplus calculated in accordance with IAS 19 and IFRIC 14.
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 post-tax rate of 10% (2022: 9.25%). The discount rate
used is the same across all segments.
The Group has used formally approved budgets for the first two years (2022: 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% (2022: 1% to 2%) depending upon the CGU being tested.
The cash flows used in the calculation of the VIU are derived from experience and are based on operating
profit forecasts, which in turn rely upon assumptions relating to sales growth, price increases, margins and
operating and administration expenses. The cash flows have not included the benefits arising from any
future asset enhancement expenditure and therefore exclude significant benefits anticipated from future
capital expenditure. The 2% growth rates included within the assumptions supporting the VIU calculations
do not therefore represent the Group’s anticipated total forecast growth, but rather only the growth
deriving from capital expenditure completed at the Balance Sheet date.
The Group 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.
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 considering the estimated price and volume of future sales
or usage, less the further costs of sale and holding costs.
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
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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 Morris
& Co., Sanderson, Zoffany, Clarke & Clarke, Harlequin and Scion brands operated from the UK and its
foreign subsidiaries in the US, France, the Netherlands and Germany.
• Manufacturing – comprising the wallcovering and printed fabric manufacturing businesses operated
by Anstey and Standfast & Barracks respectively.
This is the basis on which the Group presents its operating results to the Board of Directors, which is the
CODM for the purposes of IFRS 8. Other Group-wide activities and expenses, predominantly related to
corporate head office costs, defined benefit pension costs, long-term incentive plan expenses, taxation
and eliminations of inter-segment items, are presented within ‘intercompany eliminations and unallocated’.
a) Principal measures of profit and loss – Income Statement segmental information
Year ended 31 January 2023
UK revenue
International revenue
Licence revenue
Revenue – external
Revenue – internal
Total revenue
Profit/(loss) from operations
Net finance income
Profit/(loss) before tax
Tax expense
Profit/(loss) for the year
Brands
£000
Manufacturing
£000
Intercompany
eliminations
and unallocated
£000
42,612
40,800
6,449
89,861
–
15,024
7,093
–
22,117
16,953
–
–
–
–
(16,953)
Total
£000
57,636
47,893
6,449
111,978
–
89,861
39,070
(16,953)
111,978
7,811
–
7,811
–
3,713
–
3,713
–
(877)
293
(584)
(2,115)
10,647
293
10,940
(2,115)
7,811
3,713
(2,699)
8,825
Year ended 31 January 2022
UK revenue
International revenue
Licence revenue
Revenue – external
Revenue – internal
Total revenue
Profit/(loss) from operations
Net finance income
Profit/(loss) before tax
Tax expense
Profit/(loss) for the year
Brands
£000
Manufacturing
£000
Intercompany
eliminations and
unallocated
£000
43,682
40,425
5,159
89,266
–
14,173
8,761
–
22,934
18,807
–
–
–
–
(18,807)
Total
£000
57,855
49,186
5,159
112,200
–
89,266
41,741
(18,807)
112,200
5,479
–
5,479
–
5,479
6,602
–
6,602
–
6,602
(1,752)
10,329
30
30
(1,722)
(2,600)
(4,322)
10,359
(2,600)
7,759
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 share-based award expenses, are recognised for internal reporting
to the CODM as part of Group-wide activities and are included within ‘intercompany 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 analyses
presented is revenue by export market for Brands.
Brands international revenue by export market:
North America
Northern Europe
Rest of the World
2023
£000
19,762
10,809
10,229
40,800
2022
£000
16,644
13,189
10,592
40,425
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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
Scion
Sanderson
Morris & Co.
Zoffany
Clarke & Clarke
Other brands
Licensing
2023
£000
15,757
1,824
14,039
19,025
8,821
23,577
369
6,449
2022
£000
17,623
2,210
14,421
16,444
8,564
24,554
291
5,159
89,861
89,266
Revenue of the Manufacturing reportable segment – including revenues from internal sales to the
Group’s Brands:
Year ended 31 January 2022
Depreciation and impairments
Amortisation
Net impairment charge/(reversal) – trade
receivables
Net impairment charge/(reversal) – inventory
Share-based award payment charge
Share-based award payment charge
Brands
£000
Manufacturing
£000
Unallocated
£000
3,795
418
(242)
539
–
–
1,270
12
50
(271)
–
–
–
1,295
–
–
406
406
Total
£000
5,065
1,725
(192)
268
406
406
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.
Manufacturing revenue analysis:
Standfast & Barracks
Anstey
2023
£000
20,732
18,338
2022
£000
21,310
20,431
Year ended 31 January 2023
Assets
Liabilities
39,070
41,741
Total net assets
Brands
£000
Manufacturing
£000
Unallocated
£000
Total
£000
58,415
(16,760)
14,195
(5,234)
34,718
(4,018)
107,328
(26,012)
41,655
8,961
30,700
81,316
Capital expenditure – intangible assets
480
206
–
686
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:
Capital expenditure – property, plant and
equipment
Year ended 31 January 2023
Depreciation and impairments
Amortisation
Net impairment charge/(reversal) – trade
receivables
Net impairment charge – inventory
Share-based payment charge
Brands
£000
Manufacturing
£000
Unallocated
£000
3,680
712
577
1,070
–
1,156
9
(51)
3
–
–
772
–
–
508
Total
£000
4,836
1,493
526
1,073
508
Year ended 31 January 2022
Assets
Liabilities
Total net assets
1,682
2,233
188
4,103
Brands
£000
Manufacturing
£000
Unallocated
£000
Total
£000
44,267
(16,506)
15,249
(5,788)
46,213
(3,722)
105,729
(26,016)
27,761
9,461
42,491
79,713
Capital expenditure – intangible assets
290
–
Capital expenditure – property, plant and
equipment
546
1,200
89
4
379
1,750
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Sanderson Design Group Annual Report & Accounts 2023
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4. SEGMENTAL ANALYSIS CONTINUED
e) Additional entity-wide disclosures
Revenue by geographical location of customers:
United Kingdom
North America
Northern Europe
Rest of the World
6. PROFIT FROM OPERATIONS
2023
£000
62,304
21,950
15,808
11,916
2022
£000
60,347
22,199
15,892
13,762
Group profit from operations is stated after charging/(crediting):
Depreciation and impairments of property, plant and equipment
Depreciation and impairments of right-of-use assets
Amortisation of intangibles
Amortisation of acquired intangibles
111,978
112,200
Cost of inventories recognised as expense in cost of sales
No single customer of the Group accounts for 10% or more of total revenue for either the current
or prior year.
Non-current assets by geographical territory:
United Kingdom
North America
2023
£000
43,119
3,162
2022
£000
45,625
731
46,281
46,356
Non-current assets included above comprise intangible assets, property, plant and equipment, right-of-use
assets, retirement benefit surplus and minimum guaranteed licensing receivables.
5. OTHER OPERATING INCOME
Sale of marketing materials and other services
Research and development expenditure credit (‘RDEC’)
2023
£000
4,470
–
4,470
2022
£000
4,046
296
4,342
Net impairment charge – inventory
Net impairment charge/(reversal) – trade receivables
Government Covid-19 employee related support
Provision for closure of Sanderson Design Group Brands SARL in France
Transportation expenses
Advertising costs
Other selling costs
Establishment costs
Net foreign exchange losses
Forgiveness of a loan into a grant
Loss on disposal of fixed assets
Short-term 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
2023
£000
2022
£000
2,429
2,407
721
772
27,993
1,073
526
–
–
8.047
3,979
11,570
4,005
174
–
86
32
5
2023
£000
65
224
289
2,545
2,520
709
1,016
29,548
268
(192)
103
1,100
9,126
5,176
10,994
3,476
468
(412)
–
38
39
2022
£000
60
195
255
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
7. NET FINANCE INCOME
Interest income:
Interest received on bank deposits
Unwind of discount on minimum guaranteed licensing income
Total interest received
Net pension interest income
Total finance income
Interest expense:
Bank facility fee
Lease interest
Total interest paid/finance costs
Net finance income
Note
22
2023
£000
28
341
369
76
445
(22)
(130)
(152)
293
2022
£000
5
179
184
–
184
(22)
(132)
(154)
30
In the current financial year, £76,000 relating to net pension income in administration expenses has been
presented as part of net finance income. The comparative for this item has not been represented.
8. EMOLUMENTS OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
Information on the remuneration of the Directors, including the highest paid Director, is included in the
Directors’ Remuneration Report.
The emoluments of the Directors are detailed below:
2023
2022
Emoluments
for qualifying
services
£000
Gains on
exercise of
share options
£000
Contributions
to pension
schemes
£000
Emoluments
for qualifying
services
£000
Gains on
exercise of
share options
£000
Contributions
to pension
schemes
£000
Lisa Montague
Mike Woodcock
Michael Williamson
Dianne Thompson
Christopher Rogers
Juliette Stacey
Vijay Thakrar
Patrick Lewis
371
207
–
114
52
52
–
47
843
561
22
–
–
–
–
–
–
–
9
–
–
–
–
–
–
550
71
314
111
51
12
42
11
561
31
1,162
The emoluments of the key management personnel are detailed below:
Short-term employee benefits (including short-term incentives)
Post-employment benefits (including pension costs)
Share-based payment charge*
–
–
–
–
–
–
–
–
–
2023
£000
2,078
94
402
2,574
22
2
6
–
–
–
–
–
30
2022
£000
3,226
98
359
3,683
*
Reflects the charge in the Income Statement and does not reflect the market value of shares expected to vest.
Key management personnel include only the Board of Directors and members of the Group Leadership Team.
74
Sanderson Design Group Annual Report & Accounts 2023
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9. EMPLOYEE INFORMATION
Wages and salaries
Social security costs
Other pension costs
Share-based payment charge*
Employee benefit expense
10. TA X EXPENSE
2022
£000
24,179
Corporation tax:
2023
£000
25,086
2,737
912
493
2,382
1,002
406
29,228
27,969
* Reflects the charge in the Income Statement and does not reflect the market value of shares expected to vest.
The average monthly number of employees (including Directors) during the year
Brands, including warehousing
Manufacturing
Overseas
Corporate and administration
2023
£000
294
282
35
22
633
2022
£000
286
270
32
25
613
– UK current tax
– UK adjustments in respect of prior years
– Overseas, current tax
– Overseas, adjustment in respect of prior year
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 19.00% (2022: 19.00%)
Fixed asset differences
Non-deductible expenditure
Income not subject to tax
Share-based payment
Adjustments in respect of prior years – corporation tax
Adjustments in respect of prior years – deferred tax
Overseas tax suffered
Movement in deferred tax not recognised
Effect of changes in corporation tax rates
2023
£000
2022
£000
1,433
(278)
198
–
1,353
697
65
–
762
1,973
224
117
(107)
2,207
157
57
179
393
2,115
2,600
2023
£000
2022
£000
10,940
10,359
2,079
173
129
–
–
(278)
65
–
(246)
193
1,968
42
173
(2)
40
117
57
2
(170)
373
Total tax charge for the year
2,115
2,600
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. DEFERRED INCOME TA X
Deferred tax (liabilities)/assets
Taxable temporary differences on property, plant and equipment
Taxable temporary differences on intangible assets
Taxable temporary differences on unutilised tax losses
Taxable temporary differences on share-based payments
Retirement benefit obligations
2023
£000
(1,173)
(947)
198
218
(1,704)
583
2022
£000
(899)
(1,140)
332
353
(1,354)
(644)
(1,121)
(1,998)
A tax credit of £1,745,000 (2022: tax charge £1,233,000) arising on retirement benefit obligations has
been recognised within the Statement of Other Comprehensive Income.
At 31 January 2023, the Company had gross unused UK tax losses of £793,000 (2022: £3,064,000)
available for offset against future profits. The change of UK corporation tax rate from 19% to 25%,
effective from 1 April 2023 and substantively enacted last year, has also increased the amount of
deferred tax asset in future years.
There are also unutilised capital tax losses at 31 January 2023 of £4,881,000 (2022: £4,881,000) but no
deferred tax asset has been recognised as it is not considered probable that these losses will be utilised
in the foreseeable future.
Movements on the deferred income tax account are as follows:
Net deferred tax asset/(liability)
At 1 February
Income Statement charge
Tax credit/(charge) relating to components of other comprehensive income
Tax (charged)/credited directly to equity
At 31 January
2023
£000
(1,998)
(762)
1,745
(106)
2022
£000
(514)
(393)
(1,233)
142
(1,121)
(1,998)
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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.
2023
Weighted
average
number of
shares
(000s)
Earnings
£000
Per share
amount
Pence
Earnings
£000
2022
Weighted
average
number of
shares
(000s)
Per share
amount
Pence
Shares under share-based payment
606
850
Diluted earnings per share
8,825
71,680
12.31
7,759
71,833
10.80
Adjusted underlying basic and diluted
earnings per share:
Add back share-based payment charge
Add back net defined benefit pension charge
(including National Insurance)
Non-underlying items (see below)
Tax effect of non-underlying items and other
add backs
508
424
772
(453)
406
487
1,207
(96)
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 (a)
Forgiveness of loan under the
Payment Protection Programme (c)
Release of a provision for a legal case (d)
2023
£000
2022
£000
10,940
10,359
772
–
–
–
1,016
1,190
(440)
(559)
Total non-underlying charge included in statutory profit before tax
772
1,207
Underlying profit before tax
Share-based payment charge
Net defined benefit pension charge
Adjusted underlying profit before tax
11,712
11,566
508
424
406
487
12,644
12,459
Basic earnings per share
Effect of dilutive securities:
8,825
71,074
12.42
7,759
70,983
10.93
Restructuring and reorganisation costs (b)
Adjusted underlying basic earnings per share 10,076
71,074
14.18
9,763
70,983
13.75
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:
Adjusted underlying diluted earnings per share 10,076
71,680
14.08
9,763
71,833
13.59
(a) Amortisation of acquired intangible assets of £772,000 (2022: £1,016,000).
(b) Restructuring and reorganisation costs
Sanderson Design Group PLC’s issued ordinary share capital with voting rights consists of 71,468,206
(2022: 70,983,505) ordinary shares of which nil (2021: nil) ordinary shares are held in treasury and 1*
(2022: 220) 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.
* Rounded up.
The market value of shares held by the EBT at 31 January 2023 was approximately £1 (2022: £370).
The total number of shares held in the EBT at the year end represented less than 0.1% (2022: 0.1%) of
the issued shares. The number of potentially dilutive shares is 716,000 (2022: 850,000).
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) opposite.
These relate to the reorganisation of the Group and comprise of the rationalisation of certain operational and support functions
in the prior year. The costs mainly comprise employee severance and professional fees associated with the closure of Sanderson
Design Group Brands SARL in France of £1,100,000 and other reorganisation costs of £90,000. There were no such costs in the current
financial year.
(c) In May 2020, the Group entered into a loan contract with Wells Fargo for US$565,818 under the US Paycheck Protection Programme
scheme. In June 2021, this loan was forgiven and the Group treated the forgiveness as a grant for £440,000.
(d) Release of an accrual of £559,000 for a legal case in the US that had concluded in the prior year.
77
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
13. INTANGIBLE ASSETS
Arthur Sanderson
and William
Morris Archive
£000(b)
Goodwill
£000(a)
Collection
design
£000
Brand
£000
Customer-
related
intangibles
£000
Software
£000
Assets under
construction
£000
Total
£000
Cost
31 January 2021
17,091
4,300
3,894
5,566
4,427
3,219
Additions
–
–
290
–
–
89
31 January 2022
17,091
4,300
4,184
5,566
4,427
3,308
–
–
–
38,497
379
38,876
Additions
Reclassification
from property, plant
and equipment
(note 14)
Disposals
–
–
–
–
–
–
443
–
(2,335)
–
–
–
–
–
–
37
206
686
–
(551)
276
276
–
(2,886)
31 January 2023
17,091
4,300
2,292
5,566
4,427
2,794
482
36,952
The total amortisation expense of £1,493,000 (2022: £1,725,000) in administration expenses is split
£724,000 (2022: £709,000) in underlying items and £772,000 (2022: £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
The total carrying value of goodwill at year end of £16,250,000 (2022: £16,250,000) is attributable to the
Brands segment.
The carrying value of the Arthur Sanderson and William Morris Archive at the year end of £4,300,000
(2022: £4,300,000) is attributable to the Brands segment.
The Group does not consider it reasonably possible that changes to the key assumptions will arise that
would result in impairment of either Goodwill or the Arthur Sanderson and William Morris Archive as at
31 January 2023. As explained in note 3, the key assumptions in the impairment review are a post-tax
discount rate of 10% (2022: 9.25%) and a long-term growth rate of 1% to 2% (2022: 1% to 2%). A 2%
sensitivity increase in the discount rate would lead to a potential impairment. The financial impact of
climate change and the ‘Live Beautiful’ strategy is not anticipated to be material within the timeframe
of the forecasts used for impairment reviews and as such is not included. This will be kept under review
as the strategy progresses.
Accumulated
amortisation
31 January 2021
Charge
31 January 2022
Charge
Disposal
841
–
841
–
–
31 January 2023
841
Net book amount
–
–
–
–
–
–
2,271
1,206
3,200
2,654
418
278
738
291
2,689
1,484
3,938
2,945
469
(2,335)
283
–
489
–
252
(551)
823
1,767
4,427
2,646
–
–
–
–
–
–
10,172
1,725
11,897
1,493
(2,886)
10,504
31 January 2023
16,250
4,300
1,469
3,799
–
31 January 2022
16,250
4,300
1,495
4,082
489
31 January 2021
16,250
4,300
1,623
4,360
1,227
148
363
565
482
26,448
–
–
26,979
28,325
(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.
78
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The total depreciation expense of £2,429,000 (2022: £2,546,000) has been allocated to the following
categories: administration expenses of £2,378,000 (2022: £2,495,000) and distribution and selling costs
of £51,000 (2022: £51,000).
Freehold land
Freehold buildings
Net book amount
2023
£000
450
3,595
4,045
2022
£000
450
3,368
3,818
14. PROPERTY, PL ANT AND EQUIPMENT
Cost
31 January 2021
Additions
Disposals
Reclassifications
Currency movements
31 January 2022
Additions
Disposals
Reclassification to intangible
assets (note 13)
Currency movements
Freehold
land and
buildings
£000
Leasehold
improvements
£000
Plant,
equipment
and vehicles
£000
Computer
hardware
£000
Assets under
construction
£000
Total
£000
6,045
167
–
35
–
6,247
352
(89)
–
–
572
–
–
125
–
697
–
–
–
–
33,942
1,527
(344)
(194)
1
34,932
2,696
(6,229)
(276)
148
2,232
56
–
34
(1)
2,321
205
(256)
–
10
–
–
–
–
–
–
850
–
–
–
42,791
1,750
(344)
–
–
44,197
4,103
(6,574)
(276)
158
31 January 2023
6,510
697
31,271
2,280
850
41,608
Accumulated depreciation
and impairment
31 January 2021
Charge
Disposals
Currency movements
31 January 2022
Charge
Disposals
Currency movements
31 January 2023
Net book amount
31 January 2023
31 January 2022
31 January 2021
2,316
113
–
–
2,429
125
(89)
–
2,465
4,045
3,818
3,729
315
112
–
–
427
–
–
–
427
270
270
257
26,008
2,234
(344)
5
27,903
2,210
(6,155)
113
2,091
87
–
2
2,180
94
(256)
8
24,071
2,026
–
–
–
–
–
–
–
–
–
30,730
2,546
(344)
7
32,939
2,429
(6,500)
121
28,989
7,200
7,029
7,934
254
141
141
850
12,619
–
–
11,258
12,061
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
15. LEASES
As a lessee
Information about leases for which the Group is a lessee is presented below:
Right-of-use assets
Cost
31 January 2021
Additions
Disposals
Currency movements
31 January 2022
Additions
Disposals
Currency movements
31 January 2023
Accumulated depreciation and impairment
31 January 2021
Charge
Disposals
Currency movements
31 January 2022
Charge
Disposals
Currency movements
31 January 2023
Net book amount
31 January 2023
31 January 2022
31 January 2021
Leasehold
properties
£000
Vehicles
£000
Plant and
equipment
£000
Total
£000
9,441
421
(174)
28
9,716
2,470
(128)
273
12,331
4,405
2,086
(108)
24
6,407
1,996
(128)
232
8,507
3,824
3,309
5,036
936
208
(368)
–
776
409
(271)
1
915
703
200
(354)
–
549
228
(267)
(21)
489
426
227
233
1,107
11,484
108
(179)
(2)
1,034
131
(91)
5
737
(721)
26
11,526
3,010
(490)
279
1,079
14,325
593
234
(179)
(1)
647
183
(83)
5
752
327
387
514
5,701
2,520
(641)
23
7,603
2,407
(478)
216
9,748
4,577
3,923
5,783
Lease liabilities
Balance
31 January 2021
Additions
Amounts paid
Effect of discounting
Currency movements
31 January 2022
Additions
Amounts paid
Effect of discounting
Currency movements
31 January 2023
Maturity analysis – contractual lease liabilities
Current
Non-current
Total lease liabilities
Leasehold
properties
£000
Vehicles
£000
Plant and
equipment
£000
5,103
421
(2,226)
7
(20)
3,285
2,470
(1,545)
102
65
4,377
233
197
(232)
3
–
201
408
(222)
15
–
402
546
98
(228)
5
(6)
417
128
(216)
13
1
343
2023
£000
1,701
3,421
5,122
Total
£000
5,882
716
(2,686)
15
(26)
3,903
3,006
(1,983)
130
66
5,122
2022
£000
1,983
1,920
3,903
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
16. INVENTORIES
Raw materials
Work in progress
Finished goods
Marketing materials
2023
£000
5,038
1,478
20,431
827
2022
£000
3,042
2,064
17,546
–
27,774
22,652
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
£4,545,000 (2022: £7,979,000).
The cost of inventories recognised as an expense and included in cost of sales amounted to £27,993,000
(2022: £29,548,000).
In the current financial year, marketing materials of £827,000 has been presented as part of inventories.
The comparative relating to this item is included in other receivables in the prior period which is not in line
with the Group’s accounting policy has not been restated as it is not material.
17. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: provision for impairment of trade receivables
Net trade receivables
Corporation tax debtor
Other taxes and social security
Other receivables
Prepayments
2023
£000
12,928
(921)
2022
£000
14,262
(775)
12,007
13,487
–
1,274
827
2,219
339
842
307
1,817
16,327
16,792
There is no material difference between the carrying amount and the fair value of the trade and
other receivables.
The total loss allowance for trade receivables is determined as follows:
31 January 2023
£000
Trade receivables
Loss allowance
31 January 2022
£000
Trade receivables
Loss allowance
1-30 days
past due
More than
30 days
past due
More than
60 days
past due
More than
90 days
past due
Total
554
(15)
708
(46)
318
(56)
851
12,928
(588)
(921)
1-30 days
past due
More than
30 days
past due
More than
60 days
past due
More than
90 days
past due
Total
482
(14)
1,105
(32)
277
(17)
523
14,262
(223)
(775)
Current
10,497
(216)
Current
11,875
(489)
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) Current
Included in the Group’s trade receivable balances are receivables with a carrying value of £10,497,000
(2022: £11,875,000) which are not past due. Under the expected credit loss model a provision is held for
the lifetime credit loss on these balances of £216,000 (2022: £489,000). 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 £2,141,000
(2022: £2,063,000) 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 £415,000 (2022: £36,000).
(iii) Past due – individually impaired
As at 31 January 2023, trade receivables of £290,000 (2022: £324,000) were individually determined
to be impaired and provided for. The amount of the provision was £290,000 (2022: £250,000). The main
factor used to assess the impairment of trade receivables is the circumstances of the individual customer.
These receivables are analysed separately from IFRS 9’s expected credit loss model.
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Sanderson Design Group Annual Report & Accounts 2023
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17. TRADE AND OTHER RECEIVABLES CONTINUED
As at the Balance Sheet date the carrying value of trade receivables by geographical territory of the
customer was:
18. MINIMUM GUARANTEED LICENSING RECEIVABLES
The following table analyses the Group’s minimum guaranteed licensing receivables into relevant maturity
groupings based on the remaining period to contractual maturity at the Balance Sheet date.
United Kingdom
Northern Europe
North America
Rest of the World
2023
£000
6,565
2,371
2,226
845
2022
£000
7,226
2,753
2,217
1,291
12,007
13,487
31 January 2023
31 January 2022
19. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
20. TRADE AND OTHER PAYABLES
Trade payables
Corporation tax payable
Other taxes and social security
Other payables
Accruals
Current
Less than
1 year
£000
1,433
879
Non-current
Over 1 year
£000
2,637
1,619
Total
£000
4,070
2,498
2023
£000
2022
£000
15,401
19,050
2023
£000
2022
£000
10,399
11,713
6
2,426
743
2,712
–
1,571
613
4,385
16,286
18,282
In the current year, provision for other liabilities and charges is analysed into its own category and has
been reclassified from other payables and accruals which is explained in note 21.
The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:
Sterling
US dollars
Euros
Other
2023
£000
11,356
2,565
1,834
572
16,327
(represented)
2022
£000
12,427
1,546
2,030
789
16,792
The comparatives have been represented to reflect all trade and other receivables to aid comparability.
The closing loss allowances for trade receivables as at 31 January 2023 reconcile to the opening loss
allowances as follows:
Lifetime
ECL
£000
Credit
impaired
£000
2023
£000
At 1 February
(525)
(250)
(775)
Increase in allowance recognised in income
statement
Receivables written off in the year as
uncollectible
Unused amounts reversed
(486)
(40)
(526)
380
–
–
–
380
–
2022
£000
(903)
(97)
50
175
At 31 January
(631)
(290)
(921)
(775)
The creation and release of provisions for impaired trade receivables have been included within
distribution and selling costs in the Income Statement.
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
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21. PROVISION FOR LIABILITIES AND CHARGES
1 February 2021 (as restated)
Charged
Released
31 January 2022
Charged
Utilised
31 January 2023
Current
Non-current
Total
Property
£000
650
140
–
790
247
–
Other
£000
559
1,043
(559)
1,043
–
(1,043)
Total
£000
1,209
1,183
(559)
1,833
247
(1,043)
1,037
–
1,037
2023
£000
–
1,037
1,037
2022
£000
1,043
790
1,833
22. RETIREMENT BENEFIT SURPLUS/(OBLIGATIONS)
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 £366,000 (2022: £285,000). There are no
outstanding or prepaid contributions at 31 January 2023 (2022: £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 2023 are expected to be
£2,404,000.
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.
Property
Property-related provisions consist of estimated rectification costs arising from wear and tear that will fall
due on exiting property leases.
Actuarial valuations of the schemes were carried out as at 31 January 2023, based on membership data at
5 April 2022, updated to take account of benefit outgoings since 5 April 2022, using actuarial assumptions
at 31 January 2023. The major assumptions used by the actuary were (in nominal terms) as follows:
Other provisions
Other provisions include provisions for certain legal claims brought against the Group during the ordinary
course of business and provisions for the Group’s obligations arising from committed restructuring
activities. Restructuring provisions and employee termination payments are recognised when a detailed,
formal plan has been established and communicated to those parties directly affected by the plan.
Provisions for legal claims represent management’s best estimate of the likely outcome of the claim at the
Balance Sheet date. During the year, the France restructuring costs of £1,043,000 provided in the previous
year were fully utilised.
In the current year, provision for other liabilities and charges is analysed into its own category and has
been reclassified from other payables and accruals. The maturity of the expected liabilities has also been
restated into less than or more than one year. Note 30 explains the effect of this prior year restatement for
the year ended 31 January 2022 and 1 February 2021.
2023
2022
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
4.50%
3.00%
2.50%
2.50%
2.90%
2.50%
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
2023
22.9
21.9
25.5
24.3
2.20%
3.65%
3.15%
3.15%
3.50%
3.15%
2022
22.8
21.8
25.4
24.2
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
22. RETIREMENT BENEFIT SURPLUS/(OBLIGATIONS) CONTINUED
Reconciliation of opening and closing balances of the fair value of plan assets
Present value of funded obligations
Fair value of scheme assets
(54,229)
51,783
(74,124)
76,701
Fair value of plan assets at beginning of year
Interest income on scheme assets
2023
£000
2022
£000
(Deficit)/surplus in funded scheme (net (liability)/asset on the Balance Sheet)
(2,446)
2,577
Reconciliation of (deficit)/surplus in funded scheme (net (liability)/asset on the Balance Sheet)
1 February
Contributions by employers
Defined benefit pension charge
Total remeasurements of the net defined benefit (liability)/asset
31 January
2023
£000
2,577
2,382
(424)
(6,981)
2022
£000
(5,637)
2,209
(487)
6,492
(2,446)
2,577
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
2023
£000
12,831
8,744
3,628
24,260
114
2,206
51,783
2022
£000
30,698
16,294
3,573
21,085
145
4,906
76,701
All assets are invested with managers in the UK investing in the UK and overseas investments.
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 loss of £23,675,000 (2022: loss of £387,000).
2023
£000
76,701
1,673
(25,348)
2,382
(3,125)
(500)
–
2022
£000
79,289
1,055
(1,442)
2,209
(3,646)
(420)
(344)
Loss on return on assets, excluding interest income
Contributions by employers
Benefits paid
Scheme administrative cost
Settlements
Fair value of scheme assets at end of year
51,783
76,701
Reconciliation of opening and closing balances of the present value of the defined benefit obligation
Benefit obligation at beginning of year
Interest cost
Remeasurement (gains)/losses – changes in financial assumptions
Remeasurement gains – changes in demographic assumptions
Remeasurement gains – experience
Benefits paid
Settlements
2023
£000
74,124
1,597
(21,601)
(10)
3,244
(3,125)
–
2022
£000
84,926
1,122
(6,086)
(51)
(1,797)
(3,646)
(344)
Benefit obligation at end of year
54,229
74,124
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
Net pension interest income/(costs)
Scheme expenses met by the Group
Defined benefit pension charge, including net pension interest
2023
£000
1,673
(1,597)
76
(500)
(424)
2022
£000
1,055
(1,122)
(67)
(420)
(487)
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
22. RETIREMENT BENEFIT SURPLUS/(OBLIGATIONS) CONTINUED
Remeasurements of the net defined benefit liability/(asset) to be shown in the Statement
of Comprehensive Income
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 plans against extreme inflation). The majority of the plans’ 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.
Net remeasurement – financial
Net remeasurement – demographic
Net remeasurement – experience
Return/(loss) on assets, excluding interest income
Total remeasurements of the net defined benefit liability/(asset)
2023
£000
(21,601)
(10)
3,244
25,348
6,981
2022
£000
(6,086)
(51)
(1,797)
1,442
(6,492)
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 2023 have been calculated
using the same valuation method that was used to calculate the defined benefit obligation above and
are consistent year on year.
Discount rate
Rate of inflation (RPI)*
Rate of inflation (CPI)*
Assumed life expectancy
Estimated impact of Covid-19
on life expectancy**
Impact on scheme liabilities
2023 (£m)
Impact on scheme liabilities
2022 (£m)
Change in assumption
Increase
Decrease
Increase
Decrease
0.25% movement
0.25% movement
0.25% movement
1 year movement
(1.6)
0.6
0.4
2.3
1.7
(0.7)
(0.4)
(2.4)
(2.8)
1.3
0.7
3.8
2.9
(1.3)
(0.7)
(3.8)
N/A
N/A
N/A
N/A
* With corresponding changes to the salary and pension increase assumptions.
** The Group with its advisers 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 2023.
Extrapolation of the sensitivity analysis beyond the ranges shown may not be appropriate.
85
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
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23. FINANCIAL INSTRUMENTS
The accounting policies for financial instruments have been applied to the line items below:
31 January 2023
Assets as per Balance Sheet
Net trade receivables and other receivables
Minimum guaranteed licensing receivables
Financial derivative instrument
Cash and cash equivalents
Total
31 January 2023
Liabilities as per Balance Sheet
Lease liabilities
Trade and other payables
Total
31 January 2022
Assets as per Balance Sheet
Net trade receivables and other receivables
Minimum guaranteed licensing receivables
Cash and cash equivalents
Total
31 January 2022 (restated – refer to note 31)
Liabilities as per Balance Sheet
Lease liabilities
Trade and other payables
Total
Amortised
cost
£000
Assets at
fair value
£000
Financial derivative
Instruments for
hedging
£000
15,165
4,070
–
15,401
34,636
Other
financial
liabilities
£000
5,122
13,854
18,976
Amortised
cost
£000
13,794
2,498
19,050
35,342
Other
financial
liabilities
£000
3,903
16,711
20,614
–
–
–
–
–
–
–
112
–
112
Liabilities at
fair value
£000
Financial derivative
Instruments for
hedging
£000
–
–
–
–
–
–
Assets at
fair value
£000
Financial derivative
Instruments for
hedging
£000
–
–
–
–
–
–
–
–
Liabilities at
fair value
£000
Financial derivative
instruments for
hedging
£000
–
–
–
–
–
–
Total
£000
15,165
4,070
112
15,401
34,748
Total
£000
5,122
13,854
18,976
Total
£000
13,794
2,498
19,050
35,342
Total
£000
3,903
16,711
20,614
The financial instruments in place are to mitigate the risks associated with net future US dollar receipts.
The Group uses fixed forward hedging instruments. The fixed forward contracts are fixed agreements to
exchange currency at the hedged rate. To manage the foreign exchange risk arising on future transactions,
it is the Group’s policy to enter forward currency contracts to hedge the exposure. The details of the
notional amount’s hedged rate and spot rate at 31 January 2023 are outlined below.
USD/GBP spot rate at 31 January
Fixed forward contracts
Weighted average forward rate
Maturing in the next year (Notional amount in US dollars 000's)
The hedge ratio is 1:1.
2023
£000
2022
£000
1.2073
1.3401
1.1139
1,800
–
–
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 2023
Trade and other payables
Leases (undiscounted cash flows)
31 January 2022
Trade and other payables
Leases (undiscounted cash flows)
Less than
1 year
£000
13,854
1,814
15,668
Less than
1 year
£000
16,499
2,077
18,576
Between
1 to 2 years
£000
Between
2 to 5 years
£000
Over
5 years
£000
–
2,501
2,501
–
942
942
–
–
–
Between
1 to 2 years
£000
Between
2 to 5 years
£000
Over
5 years
£000
–
1,417
1,417
–
532
532
–
–
–
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
24. SHARE CAPITAL
Ordinary shares of 1p each:
Called up and fully paid:
31 January 2023
31 January 2022
31 January 2021
Number of
shares
£
71,468,206
714, 682
70,983,505
709,835
70,983,505
709,835
Sanderson Design Group PLC’s issued ordinary share capital with voting rights consists of 71,468,206
(2022: 70,983,505) ordinary shares of which nil (2021: nil) ordinary shares are held in treasury and 1*
(2022: 220) 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.
* Rounding difference.
The market value of shares held by the EBT at 31 January 2023 was £1 (2022: £370). The total number
of shares held in the EBT at the year end represented less than 0.1% (2022: 0.1%) 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’) and Restricted Share Plans (‘RSPs’)
The Group operates LTIPs and RSPs. There have been 15 awards under this plan and its predecessor,
in which Executive Directors and senior management of the Group participate. The LTIP and RSP scheme
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.
On 24 November 2022, 484,701 shares vested under the Company’s LTIP Award Twelve. To satisfy
the vesting, 484,481 shares of 113p each were allotted and 220 shares were Issued from the Walker
Greenbank PLC EBT. The Company paid £430,000 of personal taxes on behalf of the Individuals In lieu of
Issuance of shares on vesting which was charged to equity.
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.
The vesting dates for Award Fourteen are split 40% on 14 June 2024, 40% on 14 June 2025, and 20% on
14 June 2026. 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 164.5p for awards vesting on 14 June 2024, 161.1p for awards
vesting on 14 June 2025 and 157.8p for those vesting on 14 June 2026.
The vesting dates for Award Fifteen are split 40% on 30 May 2025, 40% on 30 May 2026, and 20% on
30 May 2027. 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 132.2p for awards vesting on 30 May 2025, 129.4p for awards
vesting on 30 May 2026 and 126.7p for those vesting on 30 May 2027.
Further details of Award Thirteen, Award Fourteen and Award Fifteen are set out below:
Award Thirteen
Award Thirteen
Award Thirteen
Award Fourteen
Award Fourteen
Award Fourteen
Grant date of
awards
Grant date fair
value of award
(pence per award)
Vesting date of
awards
Maximum number
of awards
Vesting condition
based on
Relevant date for
determination of
vesting conditions
11 Nov 2020
11 Nov 2020
11 Nov 2020
14 Jun 2021
14 Jun 2021
14 Jun 2021
See above
See above
See above
See above
See above
See above
See above
See above
See above
See above
See above
See above
344,361
344,361
344,361
143,725
143,725
143,725
Adjusted PBT
Free cash
flow
Sustainability
improvement
Adjusted PBT
Free cash
flow
Sustainability
improvement
Adjusted
PBT for the
year ending
31 Jan 2023
Free cash
flow for the
year ending
31 Jan 2023
Sustainability
improvement
for the year
ending
31 Jan 2023
Adjusted
PBT for the
year ending
31 Jan 2024
Free cash
flow for the
year ending
31 Jan 2024
Sustainability
improvement
for the year
ending
31 Jan 2024
Grant date of awards
30 May 2022
30 May 2022
30 May 2022
Award Fifteen
Award Fifteen
Award Fifteen
See above
See above
See above
Grant date fair value of award
(pence per award)
Vesting date of awards
Maximum number of awards
See above
184,686
See above
184,686
See above
184,686
Sustainability
improvement
Vesting condition based on
Adjusted PBT
Cash generated from
operations
Relevant date for determination
of vesting conditions
Adjusted PBT for the year
ending 31 Jan 2025
Cash generated from
operations for the year
ending 31 Jan 2025
Sustainability
improvement for the year
ending 31 Jan 2025
Further details of vesting conditions are set out in the Directors’ Remuneration Report on pages 48 to 51.
87
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24. SHARE CAPITAL CONTINUED
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.
26. DIVIDENDS
During the year to 31 January 2023, the Group paid a final dividend of 2.75p (£1,952,000) on 12 August
2022 and an interim dividend of 0.75p (£532,000) on 26 November 2022.
A final dividend of 2.75p is now proposed taking the full year dividend to 3.50p. This payment will be made
on 11 August 2023 to the shareholders registered on the Company’s register on 14 July 2023 if approved
at the Company’s forthcoming Annual General Meeting. The Board remains committed to a progressive
dividend policy as part of the capital allocation priorities of the Group.
The expense recognised in the Income Statement for share options granted to employees is disclosed
in note 9.
27. ANALYSIS OF NET FUNDS
Movements in the number of awards outstanding, assuming maximum achievement of vesting conditions,
are as follows:
Cash and cash equivalents
2023
Number
2022
Number
Total funds
2,388,944
2,200,222
Finance lease liabilities
At 1 February
Granted
Exercised
Shares not Issued in exchange for cash award for payment of personal taxes
Forfeiture
Lapsed
At 31 January
554,058
(484,701)
(376,090)
431,175
–
–
(209,179)
(242,453)
(180,574)
–
1,692,458
2,388,944
Total debts
Net funds
1 February
2022
£000
Cash flow
£000
Other non-cash
changes
£000
31 January
2023
£000
19,050
19,050
(3,903)
(3,903)
(4,042)
(4,042)
1,984
1,984
393
393
15,401
15,401
(3,204)
(5,123)
(3,204)
(5,123)
15,147
(2,058)
(2,811)
10,278
The share-based payment charge in the Income Statement can be analysed as follows:
Equity charge
Accrual of employer's National Insurance contribution
Share-based payment charge
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 2023 and 2022
2023
£000
493
15
508
2022
£000
253
153
406
£000
1,276
293
41,888
43,457
28. COMMITMENTS
Capital commitments
Capital expenditure contracted for at the Balance Sheet date but not yet incurred is as follows:
Property, plant and equipment
2023
£000
162
2022
£000
957
Contractual commitments
The Group has entered into a contract to take on a lease on 1 October 2023. The lease is £654,000 per
annum for a minimum of two years and includes a rent-free period of two years and an option to extend.
The Group will recognise a right-of-use asset and associated lease liability at the point the lease is signed
and the right to use the asset commences.
Contingent liabilities
The Group has a guarantee to a third party in place of £900,000 (FY2022: £900,000) with
Barclays Bank PLC.
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
29. 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
Country of incorporation
and place of business
Registered office
Sanderson Design Group Brands Limited
UK
Globaltex Limited, trading as Clarke & Clarke* UK
Sanderson Design Group Inc*
US
Chalfont House, Oxford Road,
Denham, UB9 4DX
Chalfont House, Oxford Road,
Denham, UB9 4DX
800 Huyler Street, Teterboro,
New Jersey, 07608
Sanderson Design Group Brands SARL*
France
19 Rue de Mail, Paris, 75002
Sanderson Design Group Brands B.V.*
Netherlands
Sanderson Design Group Brands GmbH*
Germany
Postbus 372, 1970 AJ IJMUIDEN,
Netherlands
Thurn-und-Taxis Platz 6 60313,
Frankfurt am Maine, Germany
30. EXPL ANATION OF PRIOR YEAR ADJUSTMENT
FOR THE YEAR ENDED 31 JANUARY 2022
The Group has separated the provision for other liabilities and charges from accruals in trade and other
payables and analysed the provision into its current and non-current components and made a prior year
adjustment to reflect similar analysis in the comparatives. This determination is based on the Directors’
best estimate of the timing of the release or utilisation of the provision, taking into consideration the
types of the provision which are related to property, employee benefit and other charges. This assessment
was not carried out in the previous year and as such all provisions were shown as other payables and
accruals in error. A prior period adjustment has been processed to reflect the split in the previous year.
This restatement has an impact on the working capital movements on the cash flow statement but no
effect on the result, equity or retained earnings brought forward in the prior year. The amounts reclassified
as provisions are no longer classified as financial liabilities.
The following table analyses the Group’s provision for other liabilities and charges into relevant maturity
groupings based on the types of the provision and their estimated release or utilisation dates at the
Balance Sheet date. The impact is to increase non-current liabilities and reduce current liabilities by
£790,000 as at 31 January 2022 and by £650,000 as at 31 January 2021.
Current
Less than
1 year
£000
1,043
559
Non-current
Over
1 year
£000
790
650
Total
1,833
1,209
* Shares held by subsidiary company.
Investments in Group companies are ordinary shares.
31 January 2022
31 January 2021
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.
For a full list of subsidiary companies refer to note 8 to the financial statements of the Company as an
entity (pages 96 and 97).
89
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section COMPANY BALANCE SHEET
AS AT 31 JANUARY 2023
Note
2023
£000
Non-current assets
Tangible assets
Right-of-use assets
Investments
Deferred income tax asset
Current assets
Other receivables
Cash and cash equivalents
Total assets
Current liabilities
Creditors: amounts falling due within one year
Provision for liabilities and charges
Non-current liabilities
Lease liabilities
Provision for liabilities and charges
Total liabilities
Net assets
Capital reserves
Called-up share capital
Share premium account
Retained earnings
Capital redemption reserves
Total shareholders’ funds
The Company made a profit after tax of £1,030,000 (2022: loss of £1,195,000).
Provision for liabilities and charges is analysed into current and non-current assets as detailed in note 13.
The financial statements on pages 90 to 100 were approved by the Board of Directors on 25 April 2023
and signed on its behalf by
(restated)
2022
£000
2
919
80,441
689
–
466
80,441
756
6
7
8
11
9
10
12
13
13
Lisa Montague
Director
Registered number: 61880
Mike Woodcock
Director
81,663
82,051
1,294
473
1,767
2,894
927
3,821
83,430
85,872
(17,034)
–
(16,587)
(1,043)
(17,034)
(17,630)
–
(650)
(650)
(349)
(650)
(999)
(17,684)
(18,629)
65,746
67,243
1 4
715
18,682
4,461
15
41,888
65,746
710
18,682
5,963
41,888
67,243
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Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
COMPANY STATEMENT OF CHANGES IN EQUITY
AS AT 31 JANUARY 2023
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Called-up
share capital
(note 14)
£000
Share
premium
account
£000
Retained
earnings
£000
Capital
redemption
reserve
(note 15)
£000
Total
shareholders’
funds
£000
Balance at 31 January 2021
710
18,682
7,414
41,888
68,694
Loss for the year
Other comprehensive expense:
Currency translation differences
Total comprehensive expense
Transactions with owners, recognised
directly in equity:
Dividends
Share-based payment charge
Related tax movements on share-based
payment charge
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 January 2022
710
18,682
Profit for the year
Total comprehensive income
Transactions with owners, recognised
directly in equity:
Issuance of share capital for share-based
payment vesting
Dividends
Share-based award equity charge
Related tax movements on share-based award
Share-based award payment on vesting
–
–
5
–
–
–
–
–
–
–
–
–
–
–
(1,195)
(119)
(1,314)
(532)
253
142
5,963
1,030
1,030
(5)
(2,484)
493
(106)
(430)
–
–
–
–
–
–
41,888
–
–
–
–
–
–
–
(1,195)
(119)
(1,314)
(532)
253
142
67,243
1,030
1,030
–
(2,484)
493
(106)
(430)
Balance at 31 January 2023
715
18,682
4,461
41,888
65,746
The notes on pages 91 to 100 form an integral part of these financial statements.
1. ACCOUNTING POLICIES AND GENERAL INFORMATION
Basis of consolidation
These financial statements present information relating to the entity Sanderson Design Group 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 UK adopted
International accounting standards.
Basis of preparation
The financial statements have been prepared in accordance with the 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 as detailed in the Group’s going concern analysis.
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
paragraph 79(a)(iv) of IAS 1;
in respect of:
(i)
(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
paragraphs 76 and 79(d) of IAS 40 ‘Investment Property’.
• The following paragraphs of IAS 1, ‘Presentation of financial statements’:
(iv)
(i)
(ii)
10(d) (statement of cash flows);
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’.
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1. ACCOUNTING POLICIES AND GENERAL INFORMATION CONTINUED
• 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).
• IFRS 7 financial instrument disclosure.
• 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
No new standards and interpretations issued and effective for the year have had any significant impact.
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.
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.
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.
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NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
1. ACCOUNTING POLICIES AND GENERAL INFORMATION CONTINUED
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.
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.
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.
Employee benefits – share-based payments under Long Term Incentive Plans (‘LTIPs’) and Restricted
Share Plans (‘RSPs’)
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, considering 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.
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 non-cancellable
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.
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.
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.
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.
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.
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.
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.
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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, becomes apparent.
In the current year, there are no estimates and judgements of the Company that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next 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
2023
£000
65
2022
£000
60
1. ACCOUNTING POLICIES AND GENERAL INFORMATION CONTINUED
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.
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.
A deferred tax asset is recognised relating to share-based payments equal to the intrinsic value (market price
at the year-end less the exercise price). Deferred tax is recognised in the profit and loss based on the temporary
difference between the tax base of the fair value of the employee’s services received in the year. The amount
recognised in equity is the excess deduction based on the difference between the intrinsic value and the
cumulative fair value of the share-based payments recognised in profit and loss.
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.
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4. EMPLOYEE INFORMATION
6. TANGIBLE ASSETS
Wages and salaries
Social security costs
Other pension costs
Share-based payment awards, including NIC thereon
Employee benefit expense
2023
£000
2022
£000
1,969
2,995
209
108
508
212
95
406
Cost
31 January 2021 and 31 January 2022
Disposal
2,794
3,708
31 January 2023
The average monthly number of employees (including Directors) during the year
Corporate and administration
2023
£000
22
2022
£000
26
The Directors’ emoluments are disclosed in the Directors’ Remuneration Report on pages 48 to 51 of these
financial statements.
5. EMOLUMENTS OF DIRECTORS
Information on the remuneration of the Directors, including the highest paid director, is provided In note 8
to the Group’s financial statements.
Accumulated depreciation
31 January 2021
Charge
Disposal
31 January 2022
Charge
Disposal
31 January 2023
Net book amount
31 January 2023
31 January 2022
31 January 2021
Plant,
equipment
and vehicles
£000
Computer
hardware
£000
97
–
97
93
2
–
95
2
–
97
–
–
2
4
34
(34)
–
34
–
(34)
–
–
(34)
–
–
–
–
–
Total
£000
131
(34)
97
127
2
(34)
95
2
(34)
97
–
–
2
4
The total depreciation expense of £2,000 (2022: £2,000) is included in administration expenses.
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Lease liabilities
Maturity analysis – contractual lease liabilities
Current (note 12)
Non-current
Total lease liabilities
8. INVESTMENTS
Shares in subsidiary undertakings:
Cost
Provision for impairment
Net book amount at 31 January
2023
£000
356
–
356
2023
£000
2022
£000
489
349
838
2022
£000
80,441
80,441
–
–
80,441
80,441
7. LEASES
As a lessee
Information about leases for which the Company is a lessee is presented below:
Cost
31 January 2023 and 31 January 2022
Accumulated depreciation and impairment
31 January 2022
Charge
31 January 2023
Net book amount
31 January 2023
31 January 2022
31 January 2021
Lease liabilities
Balance
31 January 2022
Additions
Amounts paid
Effect of discounting
31 January 2023
Leasehold
properties
£000
Vehicles
£000
Total
£000
2,292
1,382
445
1,827
465
910
1,352
18
9
8
17
1
9
19
Leasehold
properties
£000
Vehicles
£000
828
–
(500)
28
356
10
–
(10)
–
–
2,310
1,391
453
1,844
466
919
1,371
Total
£000
838
–
(510)
28
356
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8. INVESTMENTS CONTINUED
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 2023, all of which
are wholly owned, were as follows:
Shares in subsidiary undertakings:
Country of
incorporation
and place of
business
Proportion of
voting
rights/shares
held
by the Company
Holding
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*
800 Huyler Street, Teterboro, New Jersey, 07608, USA
2416 Camino Oleada, San Clemente, California, 92673, USA
Sanderson Design Group Brands SARL*
19 Rue de Mail, Paris, 75002, France
Sanderson Design Group Brands B.V.*
Postbus 372, 1970 AJ IJMUIDEN, Netherlands
Nature of business
Sanderson Design Group Brands (Ireland) Limited
12 Merrion Square, Dublin 2, Dublin, DO2 H79, Ireland
Sanderson Design Group Brands GmbH*
Wiesenhüttenstrasse 11, 60329 Frankfurt am Main, Germany
Sanderson Design Group Brands Limited
UK Ordinary shares
100%
Luxury interior furnishings
All undertakings other than the ones listed above
Chalfont House, Oxford Road, Denham, UB9 4DX, UK
Globaltex 2015 Limited
Globaltex Limited*
Sanderson Design Group Inc*
Clarke & Clarke Inc*
UK Ordinary shares
UK Ordinary shares
100%
100%
Holding company
Inactive
US Ordinary shares
100%
Luxury interior furnishings
US Ordinary shares
100%
Dormant
Sanderson Design Group Brands SARL*
France Ordinary shares
100%
Luxury interior furnishings
*
Indicates that the shares are held by a subsidiary company.
9. OTHER RECEIVABLES
Sanderson Design Group Brands B.V.*
Netherlands Ordinary shares
Sanderson Design Group Brands GmbH
Germany Ordinary shares
Abaris Holdings 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*
William Morris Wallpapers Limited*
Zoffany Limited*
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
UK Ordinary shares
Sanderson Design Group Brands (Ireland) Limited*
Ireland Ordinary shares
*
Indicates that the shares are held by a subsidiary company.
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Sales support
Sales support
Current
Other taxes and social security
Prepayments and other receivables
10. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
2023
£000
1,274
20
1,294
2023
£000
473
2022
£000
843
2,051
2,894
2022
£000
927
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Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 13. PROVISION FOR OTHER LIABILITIES AND CHARGES
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
11. DEFERRED INCOME TA X
A deferred tax asset of £756,000 (2022: £689,000) is recognised in respect of unutilised tax losses, future
deductions for share-based payments and other temporary differences.
At 31 January 2023, the Company had gross unused UK tax losses of £2,138,000 (2022: £3,064,000)
available for offset against future profits. The change of UK corporation tax rate from 19% to 25%,
effective from 1 April 2023.
Taxable temporary differences on property, plant and equipment
Taxable temporary differences on deductible tax losses carried forward
Taxable temporary differences on share-based payments
2023
£000
3
535
218
756
2022
£000
4
332
353
689
1 February 2021 (as restated)
Charged
Released
31 January 2022
Utilised
31 January 2023
There are also unutilised capital tax losses at 31 January 2023 of £4,881,000 (2021: £4,881,000) but no
deferred tax asset has been recognised as it is not considered probable that these losses will be utilised.
12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Current
Non-current
Total
Property
£000
650
–
–
650
–
650
Other
£000
559
1,043
Total
£000
1,209
1,043
(559)
(559)
1,043
(1,043)
1,693
(1,043)
–
650
2023
£000
–
650
650
2022
£000
1,043
650
1,693
Trade creditors
Corporation tax creditor
Amounts owed to subsidiary undertakings
Other creditors
Leases (note 7)
Accruals
2023
£000
14
1
15,385
517
356
761
(restated)
2022
£000
47
–
14,159
187
489
1,705
17,034
16,587
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.
Property
Property-related provisions consist of estimated rectification costs arising from wear and tear that will fall
due on exiting property leases.
Other provisions
Other provisions include provisions for certain legal claims brought against the Group during the ordinary
course of business and provisions for the Group’s obligations arising from committed restructuring activities.
Restructuring provisions and employee termination payments are recognised when a detailed, formal plan has
been established and communicated to those parties directly affected by the plan. Provisions for legal claims
represent management’s best estimate of the likely outcome of the claim at the Balance Sheet date. During the
year, the France restructuring costs of £1,043,000 provided in the previous year were fully utilised. In the current
year, provision for other liabilities and charges is analysed into its own category and has been reclassified from
other payables and accruals. The maturity of the expected liabilities has also been restated into less than or
more than one year. Note 18 explains the effect of this prior year restatement for the year ended 31 January
2022 and 1 February 2021.
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Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
14. CALLED UP SHARE CAPITAL
15. CAPITAL REDEMPTION RESERVE
Ordinary shares of 1p each:
Called up and fully paid:
31 January 2023
31 January 2022
31 January 2021
Number of
shares
£
The capital redemption reserve represents:
Capital redemption reserve on capital restructurings
At 31 January 2023 and 2022
£
41,888
41,888
71,468,206
714,682
70,983,505
709,835
70,983,505
709,835
16. DIVIDENDS
During the year to 31 January 2023, the Group paid a final dividend of 2.75p (£1,952,000) on 12 August
2022 and an interim dividend of 0.75p (£532,000) on 26 November 2022.
Sanderson Design Group PLC’s issued ordinary share capital with voting rights consists of 71,468,206
(2022: 70,983,505) ordinary shares of which nil (2021: nil) ordinary shares are held in treasury and 1*
(2022: 220) 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.
A final dividend of 2.75p is now proposed taking the full year dividend to 3.50p. This payment will be made
on 11 August 2023 to the shareholders registered on the Company’s register on 14 July 2023 if approved
at the Company’s forthcoming Annual General Meeting. The Board remains committed to a progressive
dividend policy as part of the capital allocation priorities of the Group.
* Round up.
The market value of shares held by the EBT at 31 January 2023 was £1 (2022: £370). The total number
of shares held in the EBT at the year end represented less than 0.1% (2022: 0.1%) 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’) and Restricted Share Plans (‘RSPs’)
The Group operates LTIPs and RSPs share-based award schemes. There have been fifteen 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.
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 and a guarantee to a third party in place of £900,000 (FY2022: £900,000) with
Barclays Bank plc.
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Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES TO THE COMPANY FINANCIAL
STATEMENTS CONTINUED
GLOSSARY
18. EXPL ANATION OF PRIOR YEAR ADJUSTMENT
FOR THE YEAR ENDED 31 JANUARY 2022
The Company has separated the provision for other liabilities and charges from accruals in trade and other
payables and analysed the provision into its current and non-current components and made a prior year
adjustment to reflect similar analysis in the comparatives. This determination is based on the Directors’
best estimate of the timing of the release or utilisation of the provision, taking into consideration the
types of the provision which are related to property, employee benefit and other charges. This assessment
was not carried out in the previous year and as such all provisions were shown as other payables and
accruals in error. A prior period adjustment has been processed to reflect the split in the previous year.
This restatement has an impact on the working capital movements on the cash flow statement but no
effect on the result, equity or retained earnings brought forward in the prior year. The amounts reclassified
as provisions are no longer classified as financial liabilities.
The following table analyses the Group’s provision for other liabilities and charges into relevant maturity
groupings based on the types of the provision and their estimated release or utilisation dates at the
Balance Sheet date. The impact is to increase non-current liabilities and reduce current liabilities by
£650,000 as at 31 January 2022 and by £650,000 as at 31 January 2021.
The Group monitors several alternative performance measures (‘APMs’) in managing its business, which
are not defined or specified under the requirements of IFRS because they exclude amounts that are
included in, or include amounts that are excluded from, the most directly comparable measure calculated
and presented in accordance with IFRS or are calculated using financial measures that are not calculated
in accordance with IFRS.
The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS
measures, provide stakeholders with additional helpful information on the performance of the business.
These APMs are consistent with how the business performance is planned and reported within the internal
management reporting to the Board. Some of these APMs are also used for the purpose of setting
remuneration targets.
These APMs should be viewed as supplemental to, but not as a substitute for, measures presented in the
consolidated financial information relating to the Group, which are prepared in accordance with IFRS.
The Group believes that these APMs are useful indicators of its performance. The Group may have some
APMs bearing the same names as reported by other companies but they may not be comparable due to
differences in the way they are calculated.
31 January 2022
31 January 2021
Current
Less than
1 year
£000
1,043
559
Non-current
Over
1 year
£000
650
650
Total
£000
1,693
1,209
CLOSEST
EQUIVALENT
STATUTORY
MEASURE
RECONCILING
ITEMS TO
STATUTORY
MEASURE
DEFINITION AND PURPOSE
APM
Income Statement
measures
Revenue growth at constant
currency
None
Not
applicable
The Group reports some financial measures, primarily
international sales and licensing income, on both a
reported and constant currency basis. The constant
currency basis retranslates the previous year revenues
at the average actual periodic exchange rates used in
the current financial year. This measure is presented
as a means of eliminating the effects of exchange rate
fluctuations on the year-on-year reported results.
Underlying profit from
operations
Profit from
operations
Adjusting items
(see note 12)
Profit from operations before the impact of non-
underlying adjusting items.
Adjusted underlying profit
before tax
Profit
before tax
Adjusting items
(see note 12)
Profit before the impact of non-underlying adjusting
items and tax. The Group considers this to be an
important measure of Group performance and is
consistent with how the business performance is
reported and assessed by the Board.
This is a measure used within the Group’s incentive
plans – see the Remuneration Report.
100
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section GLOSSARY CONTINUED
FIVE-YEAR RECORD
DEFINITION AND PURPOSE
2019
2020
2021
2022
2023
Profit after tax attributable to owners of the parent
and before the impact of non-underlying adjusting
items, divided by the weighted average number of
ordinary shares in issue during the financial year.
Revenue (£m)
Adjusted underlying profit before tax (£m)
Adjusted underlying profit before tax (%)
Adjusted EPS (p)
Profit before tax (£m)
Profit before tax (%)
Profit after tax (£m)
Basic EPS (p)
EBITDA (£m)
Free cash flow (£m)
Net cash (£m)
Inventory (£m)
Capital expenditure (£m)
Average number of employees
Dividends paid in year (£m)
Shareholders’ funds (£m)
Dividend per share
– Final (prior year end) – paid
– Interim (current year end) – paid
– Final (current year end) – proposed
113.3
9.5
8.4%
10.80
5.6
4.9%
4.4
6.15
10.4
8.6
0.4
28.0
3.0
684
3.1
60.9
3.68p
0.69p
2.55p
111.5
7.5
6.7%
9.35
4.5
4.0%
3.8
5.41
12.2
3.1
1.3
27.8
2.4
660
2.2
64.2
2.55p
0.52p
–
93.8
7.0
7.5%
7.89
4.9
5.2%
3.8
5.39
12.6
14.0
15.1
19.6
1.0
619
–
66.8
–
–
–
112.2
12.5
11.1%
13.75
10.4
9.2%
7.8
10.93
16.8
4.5
19.1
22.7
2.1
613
0.5
79.7
–
0.75p
2.75p
112.0
12.6
11.3%
14.18
10.9
9.7%
8.8
12.42
17.0
(1.1)
15.4
27.8
4.8
635
2.5
81.3
–
0.75p
2.75p
APM
CLOSEST
EQUIVALENT
STATUTORY
MEASURE
RECONCILING
ITEMS TO
STATUTORY
MEASURE
Adjusted underlying basic
earnings per share
Earnings
per share
Adjusting items
(see note 12)
Adjusted underlying diluted
earnings per share
Diluted
earnings
per share
Adjusting items
(see note 12)
Underlying EBITDA1
Reported
EBITDA1
Not
applicable
This is a measure used within the Group’s incentive
plans – see the Remuneration Report.
Profit after tax attributable to owners of the parent
and before the impact of non-underlying adjusting
items, divided by the weighted average number of
ordinary shares in issue during the financial year
adjusted for the effects of any potentially dilutive
options.
Calculated as profit before the impact of adjusting
items, net finance costs, tax, depreciation and
amortisation as disclosed on the face of the
consolidated income statement. This measure is
used in calculating the return on capital employed
for the Group.
Balance Sheet measure
Net cash
None
Cash flow measures
Free cash flow
None
Capital expenditure
None
Analysis
of net funds
(see note 27)
Calculated as year end cash and cash equivalents
less borrowings. This measure is a good indication
of the strength of the Group’s Balance Sheet position
and is widely used by credit rating agencies.
Analysis
of net funds
(see note 27)
The cash generated from the Group’s operating
activities less capital expenditure, cash lease
payments and interest paid but excluding
dividends paid. This is a measure of cash retained
by the Group.
Not applicable
(see Group
Cash Flow
Statement)
Calculated as the purchase of property, plant and
equipment, investment property and intangible
assets during the year, less proceeds from asset
disposals excluding any assets acquired or disposed
of as part of a business combination or through an
investment in an associate.
1
EBITDA is not defined within IFRS but is a widely accepted profit measure being earnings before interest, tax, depreciation
and amortisation.
101
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 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
22 June 2023
October 2023
102
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
Contents Generation – PageContents Generation – Sub PageContents Generation – Section NOTES
103
Sanderson Design Group Annual Report & Accounts 2023
Financial Statements
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