New Risk • Jan 29
New minor risk - Shareholder dilution The company's shareholders have been diluted in the past year. Increase in shares outstanding: 2.9% This is considered a minor risk. Shareholder dilution occurs when there is an increase in the number of shares on issue that is not proportionally distributed between all shareholders. Often due to the company raising equity capital or some options being converted into stock. All else being equal, if there are more shares outstanding then each existing share will be entitled to a lower proportion of the company's total earnings, thus reducing earnings per share (EPS). While dilution might not always result in lower EPS (like if the company is using the capital to fund an EPS accretive acquisition) in a lot cases it does, along with lower dividends per share and less voting power at shareholder meetings. Currently, the following risks have been identified for the company: Minor Risks Dividend is not well covered by earnings (113% payout ratio). Profit margins are more than 30% lower than last year (1.4% net profit margin). Shareholders have been diluted in the past year (2.9% increase in shares outstanding). Upcoming Dividend • Nov 09
Upcoming dividend of UK£0.10 per share at 5.4% yield Eligible shareholders must have bought the stock before 16 November 2023. Payment date: 15 December 2023. The company is paying out more than 100% of its profits but is generating plenty of cash to support the dividend. Trailing yield: 5.4%. Lower than top quartile of British dividend payers (6.4%). Higher than average of industry peers (3.4%). Recent Insider Transactions Derivative • Nov 05
Executive Director exercised options and sold UK£87k worth of stock On the 30th of October, Christopher J. Muir exercised options to acquire 68k shares at no cost and sold these for an average price of UK£1.27 per share. This trade did not impact their existing holding. Since March 2023, Christopher J. has owned 179.56k shares directly. Company insiders have collectively sold UK£381k more than they bought, via options and on-market transactions in the last 12 months. Announcement • Oct 26
Poltronesofà S.p.A. reached an agreement to acquire ScS Group plc (LSE:SCS) for £95 million. Poltronesofà S.p.A. reached an agreement to acquire ScS Group plc (LSE:SCS) for £95 million on October 24, 2023. Under the terms of the Acquisition, ScS Shareholders will be entitled to receive: 280 pence for each ScS Share (the "Transaction Value"). The Transaction Value values ScS's entire issued and to be issued share capital at approximately £99,387,946 on a fully diluted basis. It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. As a part of acquisition, Poltronesofà does not intend that there will be any material headcount reductions as a result of the Acquisition. Poltronesofà intends to finance the cash consideration payable to ScS Shareholders pursuant to the Acquisition from existing cash on Poltronesofà's balance sheet. Post completion of the acquisition, it is expected that, on the Effective Date, each non-executive ScS Director will resign with immediate effect. Poltronesofà does not intend to make material changes to places of business, or headquarters of ScS or to redeploy the fixed assets of ScS.
The Acquisition is conditional on, among other things: (i) approval by a majority in number of the ScS Shareholders who are present and vote, either in person or by proxy, at the Court Meeting (and at any separate class meeting which may be required by the Court) and who represent not less than 75 per cent. in value of the ScS Shares (or the relevant class or classes thereof) voted by those ScS Shareholders; (ii) the sanction of the Scheme by the Court; and (iii) satisfaction (or, where applicable, waiver) of the Conditions including the receipt of relevant regulatory approval from the FCA in respect of the Acquisition and approval of not less than 75 per cent. of the votes cast, either in person or by proxy, of the resolutions required to approve and implement the Scheme at the ScS General Meeting. The Acquisition is expected to become Effective in the first quarter of 2024, subject to the satisfaction (or, where applicable, waiver) of the Conditions set out in Appendix I to this Announcement. The Acquisition allows ScS Shareholders to realise their full investment in ScS for cash in the near-term at an attractive valuation, which recognises the quality of ScS's underlying business, cash resources and prospects under its refreshed strategy.
Patrick Castle, James Thomas, Iain Sexton and Ben Canning of Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited acted as financial advisor to ScS in the transaction. Chris Emmerson and Giuseppe Pipitone of Goldman Sachs International, as financial adviser to Poltronesofà, is satisfied that sufficient resources are available to BidCo to enable it to satisfy in full the cash consideration payable to ScS Shareholders under the terms of the Acquisition. Skadden, Arps, Slate, Meagher & Flom (UK) LLP is acting as legal adviser to Poltronesofà in connection with the Acquisition. Ward Hadaway LLP is acting as legal adviser to ScS in connection with the Acquisition. Reported Earnings • Oct 26
Full year 2023 earnings released: EPS: UK£0.13 (vs UK£0.36 in FY 2022) Full year 2023 results: EPS: UK£0.13 (down from UK£0.36 in FY 2022). Revenue: UK£325.9m (down 1.7% from FY 2022). Net income: UK£4.45m (down 67% from FY 2022). Profit margin: 1.4% (down from 4.1% in FY 2022). The decrease in margin was primarily driven by lower revenue. Revenue is forecast to grow 6.3% p.a. on average during the next 2 years, compared to a 5.4% growth forecast for the Specialty Retail industry in the United Kingdom. Over the last 3 years on average, earnings per share has increased by 7% per year whereas the company’s share price has increased by 12% per year. Announcement • Oct 25
FCA To Be Requested to Cancel the Listing of the ScS Group Shares from the Official List On, or Shortly After, the Effective Date The boards of Poltronesofà S.p.A. (Poltronesofà) and ScS Group plc (ScS) announced that they have reached agreement on the terms of a recommended cash offer by Cerezzola Limited ("BidCo"), a wholly-owned subsidiary of Poltronesofà, for the entire issued and to be issued share capital of ScS (the "Acquisition"). It is intended that the Acquisition be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. Prior to the Scheme becoming Effective, a request will be made by ScS to the London Stock Exchange to cancel the admission to trading in ScS Shares on its Main Market for listed securities to take effect on, or shortly after, the Effective Date and the FCA will be requested to cancel the listing of the ScS Shares from the Official List on, or shortly after, the Effective Date. On the Effective Date, share certificates in respect of ScS Shares will cease to be valid (and should be destroyed) and entitlements to ScS Shares held within the CREST system will be cancelled. As soon as practicable after the Effective Date and after the cancellation of the admission to trading in ScS Shares on the London Stock Exchange's Main Market for listed securities and the cancellation of the listing of the ScS Shares on the Official List, it is intended that ScS will be re-registered as a private limited company under the relevant provisions of the Companies Act. New Risk • Oct 25
New major risk - Share price stability The company's share price has been highly volatile over the past 3 months. It is more volatile than 90% of British stocks, typically moving 17% a week. This is considered a major risk. Share price volatility increases the risk of potential losses in the short-term as the stock tends to have larger drops in price more frequently than other stocks. It may also indicate the stock is highly sensitive to market conditions or economic conditions rather than being sensitive to its own business performance, which may also be inconsistent. Currently, the following risks have been identified for the company: Major Risks Share price has been highly volatile over the past 3 months (17% average weekly change). Earnings are forecast to decline by an average of 16% per year for the foreseeable future. Minor Risk Unstable dividend paying track record with dividend experiencing an annual drop of over 20% in the past. Valuation Update With 7 Day Price Move • Oct 24
Investor sentiment improves as stock rises 68% After last week's 68% share price gain to UK£2.71, the stock trades at a forward P/E ratio of 17x. Average forward P/E is 10x in the Specialty Retail industry in the United Kingdom. Total returns to shareholders of 57% over the past three years. Simply Wall St's valuation model estimates the intrinsic value at UK£4.36 per share. Price Target Changed • Oct 18
Price target decreased by 10% to UK£2.00 Down from UK£2.23, the current price target is provided by 1 analyst. New target price is 22% above last closing price of UK£1.64. Stock is up 13% over the past year. The company is forecast to post earnings per share of UK£0.15 for next year compared to UK£0.36 last year. Announcement • Jul 04
ScS Group plc Appoints of Mark Fleetwood as Chief Financial Officer ScS Group plc announced the appointment of Mark Fleetwood as Chief Financial Officer. He will join the Board of the Group and take up his role as CFO on 4 September 2023. Mark has significant retail and PLC experience. He most recently served a five-year term as CFO of END, the digital-led global fashion retailer based in the North East, where he supported the high-growth ambitions with revenue more than doubling to circa £220m. Prior to this, he was Corporate Finance Director at Grainger plc, the UK's largest listed residential landlord. Before Grainger, he held senior roles at N+1 Singer and Brewin Dolphin. Mark is a chartered accountant having qualified with KPMG in 2005. Chris Muir, the Group's incumbent CFO who notified the Board of his intention to step down in December 2022, will remain actively involved with the business as Executive Director to ensure an orderly transition and to oversee publication of the Group's Preliminary Results in October. Chris will remain available until late 2023, when he will step down from the Board and depart having served his 12-month notice. Upcoming Dividend • Apr 13
Upcoming dividend of UK£0.045 per share at 7.6% yield Eligible shareholders must have bought the stock before 20 April 2023. Payment date: 11 May 2023. Payout ratio is a comfortable 44% and this is well supported by cash flows. Trailing yield: 7.6%. Within top quartile of British dividend payers (5.9%). Higher than average of industry peers (2.9%). Major Estimate Revision • Mar 28
Consensus EPS estimates fall by 11%, revenue upgraded The consensus outlook for fiscal year 2023 has been updated. 2023 revenue forecast increased from UK£330.7m to UK£340.8m. EPS estimate fell from UK£0.165 to UK£0.147 per share. Net income forecast to shrink 49% next year vs 0.6% growth forecast for Specialty Retail industry in the United Kingdom . Consensus price target up from UK£2.23 to UK£2.30. Share price fell 9.4% to UK£1.72 over the past week. Reported Earnings • Mar 21
First half 2023 earnings released: UK£0.15 loss per share (vs UK£0.076 loss in 1H 2022) First half 2023 results: UK£0.15 loss per share (further deteriorated from UK£0.076 loss in 1H 2022). Revenue: UK£147.9m (up 2.6% from 1H 2022). Net loss: UK£5.20m (loss widened 81% from 1H 2022). Revenue is forecast to grow 4.1% p.a. on average during the next 3 years, compared to a 6.2% growth forecast for the Specialty Retail industry in the United Kingdom. Over the last 3 years on average, earnings per share has increased by 22% per year but the company’s share price has only increased by 8% per year, which means it is significantly lagging earnings growth. Price Target Changed • Feb 02
Price target increased by 14% to UK£2.23 Up from UK£1.95, the current price target is an average from 2 analysts. New target price is approximately in line with last closing price of UK£2.20. Stock is down 2.2% over the past year. The company is forecast to post earnings per share of UK£0.17 for next year compared to UK£0.36 last year. Announcement • Jan 12
ScS Group plc (LSE:SCS) acquired SNUG HQ from Snug Shack Limited for £0.87 million. ScS Group plc (LSE:SCS) acquired SNUG HQ from Snug Shack Limited for £0.87 million on January 10, 2023. This acquisition includes brand, domain names, website, intellectual property and stock of Snugsofa.com. Snug 53 employees will join into ScS Group as a part of acquisition.
ScS Group plc (LSE:SCS) completed the acquisition of SNUG HQ from Snug Shack Limited on January 10, 2023 Buying Opportunity • Nov 28
Now 22% undervalued after recent price drop Over the last 90 days, the stock is down 3.8%. The fair value is estimated to be UK£1.94, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has been flat over the last 3 years. Earnings per share has grown by 10%. Board Change • Nov 16
Less than half of directors are independent Following the recent departure of a director, there are only 2 independent directors on the board. The company's board is composed of: 2 independent directors. 4 non-independent directors. Independent Non-Executive Director Angela Luger was the last independent director to join the board, commencing their role in 2019. The company's minority of independent directors is a risk according to the Simply Wall St Risk Model. Upcoming Dividend • Nov 03
Upcoming dividend of UK£0.09 per share Eligible shareholders must have bought the stock before 10 November 2022. Payment date: 09 December 2022. Payout ratio is a comfortable 37% and this is well supported by cash flows. Trailing yield: 8.9%. Within top quartile of British dividend payers (6.0%). Higher than average of industry peers (3.5%). Valuation Update With 7 Day Price Move • Oct 21
Investor sentiment improved over the past week After last week's 15% share price gain to UK£1.50, the stock trades at a forward P/E ratio of 9x. Average forward P/E is 9x in the Specialty Retail industry in the United Kingdom. Total loss to shareholders of 31% over the past three years. Reported Earnings • Oct 12
Full year 2022 earnings: EPS exceeds analyst expectations while revenues lag behind Full year 2022 results: EPS: UK£0.36 (down from UK£0.50 in FY 2021). Revenue: UK£331.6m (up 6.8% from FY 2021). Net income: UK£13.6m (down 29% from FY 2021). Profit margin: 4.1% (down from 6.1% in FY 2021). The decrease in margin was driven by higher expenses. Revenue missed analyst estimates by 1.6%. Earnings per share (EPS) exceeded analyst estimates by 7.7%. Revenue is forecast to grow 1.1% p.a. on average during the next 3 years, compared to a 5.3% growth forecast for the Specialty Retail industry in the United Kingdom. Over the last 3 years on average, earnings per share has increased by 10% per year but the company’s share price has fallen by 18% per year, which means it is significantly lagging earnings. Price Target Changed • Apr 27
Price target decreased to UK£2.90 Down from UK£3.20, the current price target is an average from 3 analysts. New target price is 66% above last closing price of UK£1.75. Stock is down 33% over the past year. The company is forecast to post earnings per share of UK£0.29 for next year compared to UK£0.50 last year. Board Change • Apr 27
Less than half of directors are independent Following the recent departure of a director, there are only 2 independent directors on the board. The company's board is composed of: 2 independent directors. 3 non-independent directors. Independent Non-Executive Director Angela Luger was the last independent director to join the board, commencing their role in 2019. The company's minority of independent directors is a risk according to the Simply Wall St Risk Model. Upcoming Dividend • Apr 14
Upcoming dividend of UK£0.045 per share Eligible shareholders must have bought the stock before 21 April 2022. Payment date: 12 May 2022. The company is paying out more than 100% of its profits but is generating plenty of cash to support the dividend. Trailing yield: 5.8%. Within top quartile of British dividend payers (4.6%). Higher than average of industry peers (2.6%). Major Estimate Revision • Mar 29
Consensus forecasts updated The consensus outlook for 2022 has been updated. 2022 revenue forecast fell from UK£372.7m to UK£358.5m. EPS estimate rose from UK£0.19 to UK£0.29. Net income forecast to grow 428% next year vs 4.0% decline forecast for Specialty Retail industry in the United Kingdom. Consensus price target down from UK£3.20 to UK£2.90. Share price rose 5.6% to UK£1.99 over the past week. Price Target Changed • Mar 22
Price target decreased to UK£2.90 Down from UK£3.35, the current price target is an average from 3 analysts. New target price is 60% above last closing price of UK£1.82. Stock is down 24% over the past year. The company is forecast to post earnings per share of UK£0.19 for next year compared to UK£0.50 last year. Valuation Update With 7 Day Price Move • Mar 07
Investor sentiment deteriorated over the past week After last week's 18% share price decline to UK£1.57, the stock trades at a forward P/E ratio of 8x. Average forward P/E is 11x in the Specialty Retail industry in the United Kingdom. Total loss to shareholders of 23% over the past three years. Simply Wall St's valuation model estimates the intrinsic value at UK£2.55 per share. Buying Opportunity • Feb 14
Now 20% undervalued after recent price drop Over the last 90 days, the stock is down 25%. The fair value is estimated to be UK£2.55, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has declined by 4.1% per annum over the last 3 years. The company has become profitable over the last year. Buying Opportunity • Jan 24
Now 21% undervalued after recent price drop Over the last 90 days, the stock is down 22%. The fair value is estimated to be UK£2.55, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has declined by 4.1% per annum over the last 3 years. The company has become profitable over the last year. Board Change • Dec 04
Less than half of directors are independent Following the recent departure of a director, there are only 2 independent directors on the board. The company's board is composed of: 2 independent directors. 3 non-independent directors. Independent Non-Executive Director Angela Luger was the last independent director to join the board, commencing their role in 2019. The company's minority of independent directors is a risk according to the Simply Wall St Risk Model. Upcoming Dividend • Nov 04
Upcoming dividend of UK£0.07 per share Eligible shareholders must have bought the stock before 11 November 2021. Payment date: 10 December 2021. Trailing yield: 3.6%. Lower than top quartile of British dividend payers (4.1%). Higher than average of industry peers (1.7%). Recent Insider Transactions Derivative • Oct 21
CFO & Executive Director exercised options and sold UK£206k worth of stock On the 15th of October, Christopher J. Muir exercised options to acquire 163k shares at no cost and sold these for an average price of UK£1.26 per share. This trade did not impact their existing holding. Since December 2020, Christopher J. has owned 50.47k shares directly. Company insiders have collectively sold UK£521k more than they bought, via options and on-market transactions in the last 12 months. Reported Earnings • Oct 06
Full year 2021 earnings released: EPS UK£0.50 (vs UK£0.058 loss in FY 2020) The company reported a strong full year result with improved earnings, revenues and profit margins. Full year 2021 results: Revenue: UK£310.6m (up 22% from FY 2020). Net income: UK£19.1m (up UK£21.3m from FY 2020). Profit margin: 6.1% (up from net loss in FY 2020). Over the last 3 years on average, earnings per share has increased by 8% per year whereas the company’s share price has increased by 5% per year. Price Target Changed • Oct 05
Price target increased to UK£3.60 Up from UK£3.30, the current price target is an average from 3 analysts. New target price is 33% above last closing price of UK£2.70. Stock is up 34% over the past year. Price Target Changed • Aug 07
Price target increased to UK£3.60 Up from UK£3.30, the current price target is an average from 3 analysts. New target price is 16% above last closing price of UK£3.11. Stock is up 83% over the past year. Upcoming Dividend • Jul 01
Upcoming dividend of UK£0.03 per share Eligible shareholders must have bought the stock before 08 July 2021. Payment date: 23 July 2021. Trailing yield: 2.0%. Lower than top quartile of British dividend payers (4.1%). Higher than average of industry peers (1.5%). Price Target Changed • Jun 16
Price target increased to UK£3.40 Up from UK£2.43, the current price target is an average from 2 analysts. New target price is 17% above last closing price of UK£2.90. Stock is up 94% over the past year. Valuation Update With 7 Day Price Move • Jun 15
Investor sentiment improved over the past week After last week's 18% share price gain to UK£3.03, the stock trades at a trailing P/E ratio of 9.1x. Average forward P/E is 23x in the Specialty Retail industry in the United Kingdom. Total returns to shareholders of 47% over the past three years. Reported Earnings • Mar 17
First half 2021 earnings released: EPS UK£0.38 (vs UK£0.014 loss in 1H 2020) The company reported a strong first half result with improved earnings, revenues and profit margins. First half 2021 results: Revenue: UK£173.9m (up 14% from 1H 2020). Net income: UK£14.2m (up UK£14.8m from 1H 2020). Profit margin: 8.2% (up from net loss in 1H 2020). Over the last 3 years on average, earnings per share has fallen by 22% per year but the company’s share price has increased by 4% per year, which means it is well ahead of earnings. Recent Insider Transactions • Mar 17
Corporate Services Director recently sold UK£85k worth of stock On the 16th of March, Marie Liston sold around 35k shares on-market at roughly UK£2.43 per share. This was the largest sale by an insider in the last 3 months. Insiders have been net sellers, collectively disposing of UK£140k more than they bought in the last 12 months. Is New 90 Day High Low • Mar 09
New 90-day high: UK£2.30 The company is up 6.0% from its price of UK£2.16 on 09 December 2020. The British market is up 4.0% over the last 90 days, indicating the company outperformed over that time. However, it underperformed the Specialty Retail industry, which is up 8.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is UK£3.87 per share. Recent Insider Transactions • Feb 10
Logistics Director recently sold UK£75k worth of stock On the 8th of February, Gary Kemp sold around 36k shares on-market at roughly UK£2.08 per share. This was the largest sale by an insider in the last 3 months. Insiders have been net sellers, collectively disposing of UK£55k more than they bought in the last 12 months. Is New 90 Day High Low • Jan 19
New 90-day high: UK£2.17 The company is up 8.0% from its price of UK£2.00 on 21 October 2020. The British market is up 16% over the last 90 days, indicating the company underperformed over that time. However, it outperformed the Specialty Retail industry, which is up 5.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is UK£6.12 per share. Analyst Estimate Surprise Post Earnings • Oct 30
Annual earnings released: Revenue beats expectations Annual revenue exceeded analyst estimates by 0.06% at UK£268.1m. Revenue is forecast to grow 30% over the next year, compared to a 3.5% growth forecast for the Specialty Retail industry in the United Kingdom. Reported Earnings • Oct 30
Full year earnings released - UK£0.058 loss per share Over the last 12 months the company has reported total losses of UK£2.22m, with earnings decreasing by UK£13.6m from the prior year. Total revenue was UK£255.5m over the last 12 months, down 20% from the prior year. Price Target Changed • Sep 29
Price target raised to UK£2.75 Up from UK£2.08, the current price target is an average from 2 analysts. The new target price is 35% above the current share price of UK£2.04. As of last close, the stock is down 7.5% over the past year. Reported Earnings • Sep 29
Full year earnings released - UK£0.058 loss per share Over the last 12 months the company has reported total losses of UK£2.22m, with earnings decreasing by UK£13.6m from the prior year. Total revenue was UK£255.5m over the last 12 months, down 20% from the prior year.