24th Jul 2014 11:58
LONDON (Alliance News) - United Carpets Group PLC said it plans to conduct a capital reduction to enable it to pay a dividend in the future, as it reported an increase in profit for the full-year.
The UK specialist carpet and floor covering retailer posted pretax profit of GBP937,000 for the year-ended March 31, up from GBP250,000 a year earlier, as revenue rose to GBP21.1 million from GBP11.3 million.
Despite its improved performance the company said it will not pay a dividend due to a "lack of available distributable reserves".
"The board is proposing to undertake a formal capital reduction which will convert some of the existing share capital and the share premium reserve into distributable reserves enabling dividend payments to be reconsidered later in the calendar year," it said.
The company said a capital reduction will eliminate the deficit on its profit and loss account and will create distributable reserves so it can pay a dividend in the future.
Unite Carpets proposed that the nominal amount of each of its 81.4 million issued and fully paid shares of 5.0 pence each be reduced to 1.0 pence per share and that all its share premium account be cancelled.
The capital reduction will result in the creation of GBP4.2 million in distributable reserves. Once the retained earnings deficit is extinguished the sum of up to GBP944,000 will be potentially available to return to shareholders.
The capital reduction is subject to shareholder approval, and the company hopes to achieve this at its forthcoming general meeting on August 20.
In its full-year results, United Carpets said like-for-like sales across the whole of its network rose 2.2%. The group said this is a good indicator that sentiment improved slightly during the year and customer proposition remains attractive.
However, it said gross margin reduced to 61.7% from 62.7% a year earlier. United Carpets said the impact on gross margin was partially offset by an increased proportion of franchise-related income to total revenue as corporate store revenue and beds sales accounted for a smaller proportion of revenue during the year. This was due to a reduction in the average number of corporate stores and the change in the beds sales process.
Looking ahead, United Carpets said it expects to close a small number of further stores over the next 12 months which are either underperforming, or where the company has been unable to negotiate a satisfactory new lease agreement with landlords.
Of the 57 stores currently trading, leases are either in place or agreed in principle pending legal completion for 52 with the remaining stores being occupied under short term tenancies.
United Carpets shares were quoted down 5.7% at 8.72 pence Thursday afternoon.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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