29th Jun 2010 07:00
Carpetright plc
Preliminary Results Announcement for the 52 weeks ended 1 May 2010
Carpetright plc, Europe's leading specialist carpet and floor covering retailer, today announces its preliminary results for the 52 weeks to 1 May 2010.
Headlines
Group
·; Total Group Revenue1 increased by 7.0% to £516.6m (2009: £482.8m)
·; Underlying 2 profit before tax up 64.0% to £28.2m (2009: £17.2m)
·; Profit before tax of £22.3m (2009: £16.7m)
·; Underlying2 earnings per share of 31.6p (2009: 18.2p)
·; Basic earnings per share 23.5p (2009: 17.6p)
·; Proposed final dividend of 8.0p (2009: 4.0p) making a full year dividend of 16.0p (2009: 8.0p)
·; Net debt at year end of £71.3m (2009: £97.1m)
UK and Republic of Ireland
·; Total revenue1 increased by 7.9% to £425.2m (like-for-like3 up 3.1%)
·; Underlying 2 operating profit increased by 67.9% to £26.2m
·; Store base4 increased by 19 to 586
The Netherlands and Belgium
·; Total revenue1 increased by 4.1% to £89.2m
·; Underlying2 reported operating profit increased by 10.3% to £9.6m
Lord Harris, Chairman and Chief Executive, said:
"In a challenging year, I am pleased to report that Carpetright has delivered an improved performance. The Group has grown sales and commenced the development of new revenue streams in the house building and insurance sectors, helping to deliver a significant recovery in profitability over the depressed level reported in the prior year.
"These results have been delivered through a period of economic recession, with fears of unemployment and tax increases adversely affecting consumer confidence. Throughout the period we continued to manage the business by exerting tight control over all costs, capital expenditure, stock and cash flow.
"Although we are planning for consumer demand across Europe to remain subdued, we have market leading positions in all our geographical areas with strong value led retail brands. I believe this enables us to look confidently to the future as and when the economic conditions improve."
Lord Harris of Peckham
Chairman and Chief Executive
For further enquiries please contact:
Carpetright plc
Lord Harris of Peckham, Chairman and Chief Executive
Neil Page, Group Finance Director
Tel: 01708 802000
Citigate Dewe Rogerson
Kevin Smith / Angharad Couch / Lindsay Noton
Tel: 020 7638 9571
There will be a presentation today at 9.00am to analysts and investors at Andaz Liverpool Street, 40 Liverpool Street, London, EC2M 7QN.
A copy of this trading statement will be available on our website www.carpetright.plc.uk today from 7.00am
Notes
1. All sales figures are quoted after deducting VAT.
2. Underlying' excludes exceptional items and related tax.
3. Like-for-like sales calculated as this year's net sales divided by last year's net sales for all stores that are at least 12 months old at the beginning of our financial year. Stores closed during the year are excluded from both years. No account is taken of changes to store size or introduction of third party concessions. Sales from insurance and house building contracts are supplied through the stores and included in their figures.
4. Excludes Sleepright within Carpetright locations.
5. Certain statements in this report are forward looking. Although the Group believes that the expectations reflected in these forward looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements contain risks and uncertainties, actual results may differ materially from those expressed or implied by these forward looking statements. We undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.
Operating and Financial Review
Overview
Total sales increased by 7.0% to £516.6m, with all continuing businesses showing growth. During the year, the Group opened 53 stores and closed 45 which gave a net increase of eight stores and a total store base of 703. The total store space grew by 0.8% to 6.2 million square feet.
The return to sales growth of the UK & Republic of Ireland business was the key driver for the improvement in underlying operating profit to £34.1m, an increase of 49.6% on the last year. Net finance charges were £0.3m higher at £5.9m, reflecting the full year impact of the refinancing arrangements completed in April 2009. These combined to generate an underlying profit before tax of £28.2m, an increase of 64.0% on the prior year.
Exceptional charges totalled £5.9m (2009: £0.5m) and were principally a combination of the cost of exiting the Polish market and non-cash store impairment charges.
As a result, profit before tax increased by 33.5% to £22.3m. Basic earnings per share increased by 33.5% to 23.5p reflecting the increase in post tax earnings.
A summary of the reported financial results for the year ended 1 May 2010 is set out below:
|
|
2010 £m |
2009 £m |
Change |
|
Revenue |
516.6 |
482.8 |
7.0% |
|
Underlying* operating profit |
34.1 |
22.8 |
49.6% |
|
Net finance charges |
(5.9) |
(5.6) |
(5.4%) |
|
Underlying* profit before tax |
28.2 |
17.2 |
64.0% |
|
Exceptional items |
(5.9) |
(0.5) |
|
|
Profit before tax |
22.3 |
16.7 |
33.5% |
|
Earnings per share (pence) |
|
|
|
|
- underlying* |
31.6 |
18.2 |
73.6% |
|
- basic |
23.5 |
17.6 |
33.5% |
|
Dividends per share (pence) |
16.0 |
8.0 |
100.0% |
|
Net debt |
(71.3) |
(97.1) |
£25.8m |
* Where this review makes reference to "Underlying" these relate to profit / earnings before exceptional items.
Performance by Business
For year to 1 May 2010
|
|
Total £m |
Year on Year Growth |
|||
|
|
Reported |
Local Currency |
Like-for- Like 1 |
||
|
Revenue |
|
|
|
|
|
|
UK & RoI |
425.2 |
7.9% |
7.9% |
3.1% |
|
|
The Netherlands and Belgium |
89.2 |
4.1% |
(1.7%) |
(1.0%) |
|
|
Revenue excluding Poland |
514.4 |
7.2% |
|
|
|
|
Poland |
2.2 |
(26.7%) |
(23.0%) |
|
|
|
Total Revenue |
516.6 |
7.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Underlying Operating Profit 2 |
|
|
|
|
|
|
UK & RoI |
26.2 |
67.9% |
67.9% |
|
|
|
The Netherlands and Belgium |
9.6 |
10.3% |
4.9% |
|
|
|
Underlying Profit excluding Poland |
35.8 |
49.7% |
|
|
|
|
Poland |
(1.7) |
(13.3%) |
(14.7%) |
|
|
|
Total Underlying Operating Profit |
34.1 |
49.6% |
|
|
|
|
|
|
|
|
|
|
|
Underlying Operating Profit% |
|
|
|
|
|
|
UK & RoI |
6.2% |
+2.2%pts |
|
|
|
|
The Netherlands and Belgium |
10.8% |
+0.6% pts |
|
|
|
|
Operating Profit excluding Poland |
7.0% |
+1.9% |
|
|
|
|
Poland |
(77.3%) |
n/a |
|
|
|
|
Total Underlying Operating Profit % |
6.6% |
+1.9%pts |
|
|
|
1. Like-for-like sales growth - calculated as this year's net sales divided by last year's net sales for all stores that are at least 12 months old at the beginning of our financial year. Stores closed during the year are excluded from both years. No account is taken of changes to store size or the introduction of third party concessions. Sales from insurance and house building contracts are supplied through the stores and included in their figures.
2. Underlying operating profits - operating profit, excluding exceptional items.
UK & Republic of Ireland - Performance Review
The key financial results for the UK & RoI were:
|
|
2010 £m |
2009 £m |
Change |
|
Revenue |
425.2 |
394.1 |
7.9% |
|
Like-for-like sales |
3.1% |
(13.5%) |
|
|
Gross Profit |
263.7 |
244.6 |
7.8% |
|
Gross Profit % |
62.0% |
62.1% |
(0.1pp) |
|
Underlying Operating Profit |
26.2 |
15.6 |
67.9% |
|
Underlying Operating Profit % |
6.2% |
4.0% |
2.2pp |
In the UK & RoI, total revenue increased year on year by 7.9% to £425.2m. The inclusion of Sleepright for its first full year contributed 2.0% of this increase. We have opened 51 new stores adding 328k sq ft of selling space during the year. Including the impact of 32 closures, this translated into net space growth of 176k sq ft, an increase of 3.8% since the start of the year.
The UK & RoI portfolio is now as follows:
|
|
Store Numbers |
Sq Ft ('000) |
||||
|
|
2 May 2009 |
Openings |
Closures |
1 May 2010 |
2 May 2009 |
1 May 2010 |
|
Standalone |
510 |
36 |
(9) |
537 |
4,516 |
4,689 |
|
Concessions |
57 |
15 |
(23) |
49 |
116 |
119 |
|
Total |
567 |
51 |
(32) |
586 |
4,632 |
4,808 |
The year saw a return to positive sales growth in the first quarter which accelerated to double digit growth in the period up to December 2009. Sales since January were more subdued, resulting in a full year like-for-like performance of +3.1%. This growth reflects an underlying recovery in mortgage approval figures and the impact of the contraction of a competitor in the UK, Allied Carpets, in the period since July 2009.
The increase in UK sales has been predominantly carpet, where the proportion of cut length business has increased relative to the 'pay and take' roll stock. The vinyl business has also grown. Sales of laminate/wood categories have continued to decline, which we believe is a reflection of the growing customer appreciation of the benefits of vinyl and a trend back to carpet.
The fragile state of the economy in the Republic of Ireland inevitably impacted our business there. We remain committed to continuing to trade in this geographic market and, in the light of the prevailing economic conditions, have reduced our prices with the aim of increasing volumes.
We believe much of Carpetright's success is attributed to our focus on offering the widest range of carpet at the keenest prices. This view was supported during the year by externally conducted market research which indicated both strong recognition of the Carpetright brand and a strong association with being the 'first choice' for fitted carpet. This research has also provided insight into areas for development. As an example of activity being undertaken, we have independently assessed 536 independent fitters within the last year to ensure they are appropriately qualified to carry out their role on our behalf.
In the Autumn of 2009 we re-launched our websites. These offer the consumer the ability to order samples, book a consultation appointment and order products on-line. The sites are generating over 40,000 unique visitors each week, which represents a powerful method of accessing and converting potential customers.
The development and integration of the Sleepright bedding business continued throughout the year. The focus has been on the product, promotional offers and reducing delivery times. The introduction of beds to our offer presents an opportunity to capitalise on the accessibility of our store locations and grow sales per square foot.
We have continued to focus on gaining additional sales through the insurance replacement business. This has proved successful, with contracts secured from three of the largest domestic insurance providers in the country. These contracts commenced during the year and, after positive feedback about the quality of our products and service, the volume of business through this channel, although still small relative to the Group's total revenue, continues to grow.
During the year significant activity was devoted to developing an appropriate offer for the house builder market. This is for both the 'contract' side, where floor coverings are laid in communal areas, and by introducing a 'voucher' offer for individuals to select products for their own new home. Although the sales to date have been minimal due to the longer lead time in the development of new homes, we believe we have the foundations to grow this significantly in the coming year.
Gross profit increased by 7.8% to £263.7m, representing a gross profit margin of 62.0% (2009: 62.1%). The introduction and development of beds into the product mix accounted for a 0.7 percentage point decline, as this part of the business operates on a lower gross margin than floor coverings. The growth of the insurance business also had a dilutive effect of 0.4 percentage points. This was offset by an improvement in the underlying floor covering margin of one percentage point, achieved through a combination of management of promotions, negotiation with suppliers and increased productivity in the Purfleet cutting facility.
The total UK & RoI cost base increased by 3.7% compared to last year to £237.5m. This included the impact of the first full year of Sleepright, which accounted for 1.4% of the growth. In like-for-like stores, the overall costs were level with the prior year. Store payroll costs continue to be managed closely to the volume of sales, rent in like-for-like stores increased by a modest 2.2% reflecting a weakening of the property market in the current economic climate and we continued to increase our advertising spend which was up £1.1m to £11.4m, as we believe it continues to drive consumers to our stores.
Underlying operating profit increased by 67.9% to £26.2m.
The Netherlands and Belgium - Performance Review
The key financial results for The Netherlands and Belgium were:
|
|
2010 £m |
2009 £m |
Change (Reported) |
Change (Constant Currency) |
|
Revenue |
89.2 |
85.7 |
4.1% |
(1.7%) |
|
Like-for-like sales |
(1.0%) |
2.7% |
|
|
|
Gross Profit |
51.6 |
49.5 |
4.2% |
(1.5%) |
|
Gross Profit % |
57.8% |
57.8% |
Level |
|
|
Underlying Operating Profit |
9.6 |
8.7 |
10.3% |
4.9% |
|
Underlying Operating Profit % |
10.8% |
10.2% |
0.6pp |
0.6pp |
In The Netherlands and Belgium, total reported revenue increased year on year by 4.1% to £89.2m benefiting from a favourable move on exchange rates. Sales in local currency declined 1.7%. We opened two new stores adding 17k sq ft of selling space during the year. The second of these was a trial of a 'sample only' store, which is trading ahead of our expectations and may provide an opportunity for future store growth. Including the impact of one closure, this translated into net space decline of 2k sq ft, a decrease of 0.2% since the start of the year. The number of stores trading at the end of the year was 117 (2009: 116). Like-for-like sales in the first half declined by 3.6%, but an encouraging recovery in the second half resulted in a full year performance down only 1.0%. Operationally, we have introduced new products and adapted our promotional offer to consumer demand, resulting in a growth in sales of both laminate and vinyl.
Gross profit increased in both countries on the back of improved rebates and effective management of the promotional mix. Reported operating costs increased by 2.9% to £42.0m, demonstrating the impact of the movement in exchange rates. In local currency terms, costs declined by 2.8% despite inherent inflationary pressures on employment and occupancy costs. This reflected the tight management control and focus on achieving efficiencies within the whole operation.
The net result was an underlying operating profit of £9.6m, an increase of 10.3%. In local currency terms, the underlying profit increased by 4.9%.
Poland - Performance Review
The reported underlying loss in Poland was £1.7m, an increase of £0.2m on the previous year.
As previously announced, following a review of the Polish business by the Board in the Autumn of 2009, the decision was taken to withdraw from trading in this market. In the period since its launch four years ago, the business had failed to establish sufficient trading momentum and critical mass, and the resulting performance had been disappointing. All the stores have now been closed. This has resulted in a non-recurring cost of £3.5m, which is a combination of a non-cash write down of the fixed assets to their realised value and other costs incurred specifically for the closure. This is reported within exceptional items.
Group Financial Review
Net Finance Costs and Taxation
Net finance charges were £5.9m (2009: £5.6m) reflecting lower deposit rates on cash balances. The effective tax rate on profits is 29.5% (2009: 29.8%). This has decreased due to the impact of overseas tax movements.
Exceptional Items
The Group recorded a net charge of £5.9m (2009: £0.5m) in the year.
|
|
(Charge)/Gain |
|
|
|
2010 |
2009 |
|
|
£m |
£m |
|
Profit/(loss) on disposal of properties |
(0.7) |
1.8 |
|
UK & RoI Store Impairment charge |
(1.4) |
(0.9) |
|
UK & RoI Onerous leases |
(1.4) |
- |
|
Poland: Store Impairment Charge |
(1.8) |
- |
|
Closure costs |
(1.7) |
- |
|
Over-provision from pre-opening cost of Purfleet |
1.1 |
- |
|
Re-organisation cost of acquired businesses |
- |
(1.2) |
|
Impairment of investment in joint venture |
- |
(0.2) |
|
|
(5.9) |
(0.5) |
We have continued to trade our property portfolio, although market conditions have made this more challenging. A loss of £0.7m was incurred (2009: gain of £1.8m).
As a result of the challenging retail environment we have reviewed the carrying value of the store assets in our balance sheet. The models used to value these assets include a number of assumptions relating to market growth and inflationary expectations. The tests have led to a net impairment of £1.4m (2009: £0.9m) in relation to 13 stores, principally located in the Republic of Ireland. In addition, there is one vacant leased property and two properties which are occupied by tenants at a rent below the head lease costs. An onerous lease provision has been made on the basis of the difference between the expected inflows and outflows for these properties.
As disclosed earlier, the costs of withdrawing from Poland total £3.5m. The non-recurring pre-opening costs of the Purfleet cutting and distribution centre recognised in 2007/08 were over-provided by £1.1m and have been released.
Balance Sheet and Cash Flow
The Group had net assets of £71.2m (2009: £67.2m) at the end of the year, an increase of £4.0m since 2 May 2009. The cash generative nature of the business in the year has been one of the strengths of the Group, with free cashflow of £32.0m generated in the period (2009: an outflow of £12.1m).
Cash Flow
|
|
2010 |
2009 |
|
|
£m |
£m |
|
Trading Profit |
34.1 |
22.8 |
|
Depreciation and other non-cash items |
18.6 |
20.5 |
|
Exceptional items |
(1.7) |
(1.2) |
|
(Increase)/Decrease in stock |
1.5 |
2.7 |
|
(Increase)/Decrease in working capital |
5.8 |
(18.6) |
|
Cash generated from operations |
58.3 |
26.2 |
|
Net Interest paid |
(6.8) |
(5.5) |
|
Corporation Tax paid |
(9.9) |
(12.2) |
|
Net capital expenditure |
(9.6) |
(20.6) |
|
Free cashflow |
32.0 |
(12.1) |
|
Dividends Paid |
(8.1) |
(22.8) |
|
Other |
1.9 |
(4.7) |
|
Movement in Net Debt |
25.8 |
(39.6) |
|
Opening Net Debt |
(97.1) |
(57.5) |
|
Closing Net Debt |
(71.3) |
(97.1) |
The Group's operating cash flow was positive at £58.3m (2009: £26.2m). The increase was predominantly attributable to the improved profitability. Net capital expenditure was £9.6m (2009: £20.6m). This can be broken down into the following principal categories:
|
|
2010 £m |
2009 £m |
|
Core capital expenditure |
10.1 |
12.0 |
|
Freehold properties |
- |
4.3 |
|
Acquisitions of new businesses |
- |
7.3 |
|
Proceeds from property disposals |
(0.5) |
(3.0) |
|
|
9.6 |
20.6 |
After the repayment of borrowings and payment of dividend, net debt decreased by £25.8m to £71.3m at the year end (2009: £97.1m)
Property
The Group owns a significant property portfolio, most of which is used for trading purposes. These are estimated by management to have a market value of £139.5m at the year end (2009: £127.1m), compared to a net book value of £108.6m recorded in the financial statements.
Pensions
At the year end, the Group had a deficit of £4.8m in relation to defined benefit pension arrangements (2009: £2.4m). The approach used to prepare the pension valuation is in line with current market practice and international accounting standards. Following the triennial valuation in April 2008, a revised deficit funding schedule of around £0.3m per annum for seven years was agreed with the Trustees. With effect from the 1 May 2010, the UK defined benefit scheme was closed to future accrual. This has been completed after a period of consultation with the affected employees and will reduce the Group's exposure accordingly.
Current liquidity
At the year end the Group held cash balances of £8.3m (2009: £17.4m) in a combination of Sterling, Euros and Polish Zlotys.
Gross bank borrowings at the balance sheet date were £75.5m (2009: £108.3m) of which £62.2m is term based, with the balance of £13.3m being drawn down from overdraft facilities. The Group had further undrawn, committed facilities of £38.1m at the balance sheet date.
The current banking facilities provide approximately £110m of debt capacity split between amortising loans, revolving credit facilities and overdrafts in a mixture of Sterling and Euro currencies. The term of these facilities are to July 2012 and involved combined arrangement fees and legal costs of £1.5m. Although paid in cash at the outset, these are being amortised over the life of the facility. The facilities are accompanied by a number of covenants which are believed to be appropriate in the current economic climate. The Group monitors actual and prospective compliance with these on a regular basis.
Dividend
Whilst the underlying profitability has improved in 2009/10, there remains continued uncertainty on the economic outlook. Balancing these two facts, the Board believes it is appropriate to increase the final dividend for the year. The Board has proposed a final dividend of 8.0 pence per share (2009: 4.0 pence), bringing the full year dividend to 16.0 pence (2009: 8.0 pence), a 100.0% increase.
Outlook
The last year has seen a growth in profit performance, despite challenging trading conditions. Looking forward, we expect the consumer environment to remain difficult and have adapted our plans accordingly.
Lord Harris of Peckham
29 June 2010
Consolidated income statement
for 52 weeks ended 1 May 2010
|
|
Notes |
Group 52 weeks to 1 May 2010 £m |
Group 52 weeks to 2 May 2009 £m |
|
Revenue |
2 |
516.6 |
482.8 |
|
Cost of sales |
|
(200.6) |
(187.0) |
|
Gross profit |
2 |
316.0 |
295.8 |
|
Other operating income |
|
2.4 |
1.8 |
|
Administrative expenses |
|
(290.2) |
(275.3) |
|
Operating profit |
2 |
28.2 |
22.3 |
|
Operating profit before exceptional items |
2 |
34.1 |
22.8 |
|
Exceptional items |
2,3 |
(5.9) |
(0.5) |
|
Finance costs |
|
(6.8) |
(7.2) |
|
Finance income |
|
0.9 |
1.6 |
|
Profit before tax |
|
22.3 |
16.7 |
|
Tax |
4 |
(6.5) |
(4.9) |
|
Profit for the financial period attributable to equity shareholders of the Company |
|
15.8 |
11.8 |
|
Basic earnings per share (pence) |
5 |
23.5p |
17.6p |
|
Diluted earnings per share (pence) |
5 |
23.5p |
17.6p |
|
|
|
|
|
|
Dividend per share - interim paid (pence) |
6 |
8.0p |
4.0p |
|
Dividend per share - final proposed (pence) |
6 |
8.0p |
4.0p |
|
|
|
|
|
|
Dividends paid to equity shareholders in the period (£m) |
6 |
8.1 |
22.8 |
|
Final dividend proposed to equity shareholders in respect of the period (£m) |
6 |
5.4 |
2.7 |
All items in the income statement arise from continuing operations.
Consolidated statement of comprehensive income
for 52 weeks ended 1 May 2010
|
|
|
Group 52 weeks to 1 May 2010 £m |
Group 52 weeks to 2 May 2009 £m |
|
Profit for the financial period |
|
15.8 |
11.8 |
|
Actuarial loss on defined benefit pension scheme |
|
(3.0) |
(1.1) |
|
Fair value loss in respect of cash flow hedges |
|
- |
(2.3) |
|
Exchange gain/(loss) in respect of hedged equity investments |
|
(1.7) |
7.2 |
|
Tax on components of other comprehensive income |
|
0.6 |
0.2 |
|
Other comprehensive income for the period |
|
(4.1) |
4.0 |
|
Total comprehensive income for the period attributable to equity shareholders of the Company |
|
11.7 |
15.8 |
Consolidated balance sheet
As at 1 May 2010
|
|
Note |
Group 2010 £m |
Group 2009 £m |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Intangible assets |
|
67.2 |
71.2 |
|
Property, plant and equipment |
|
149.5 |
164.7 |
|
Investment property |
|
26.1 |
25.3 |
|
Investment in subsidiary undertakings |
|
- |
- |
|
Deferred tax assets |
|
2.9 |
3.3 |
|
Trade and other receivables |
|
1.4 |
1.3 |
|
Total non-current assets |
|
247.1 |
265.8 |
|
Current assets |
|
|
|
|
Inventories |
|
41.3 |
43.2 |
|
Trade and other receivables |
|
38.1 |
34.4 |
|
Cash and cash equivalents |
|
8.3 |
17.4 |
|
Total current assets |
|
87.7 |
95.0 |
|
Total assets |
|
334.8 |
360.8 |
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(114.2) |
(110.8) |
|
Obligations under finance leases |
|
(0.1) |
(0.9) |
|
Borrowings and overdrafts |
|
(22.2) |
(17.1) |
|
Current tax liabilities |
|
(5.6) |
(5.7) |
|
Total current liabilities |
|
(142.1) |
(134.5) |
|
Non-current liabilities |
|
|
|
|
Trade and other payables |
|
(34.2) |
(31.5) |
|
Obligations under finance leases |
|
(2.9) |
(3.0) |
|
Borrowings |
|
(53.3) |
(91.2) |
|
Derivative financial instruments |
|
(1.1) |
(2.3) |
|
Provisions for liabilities and charges |
|
(1.8) |
(0.8) |
|
Deferred tax liabilities |
|
(23.4) |
(27.9) |
|
Retirement benefit obligations |
|
(4.8) |
(2.4) |
|
Total non-current liabilities |
|
(121.5) |
(159.1) |
|
Total liabilities |
|
(263.6) |
(293.6) |
|
Net assets |
|
71.2 |
67.2 |
|
Equity |
|
|
|
|
Share capital |
|
0.7 |
0.7 |
|
Share premium |
|
15.4 |
15.4 |
|
Treasury shares |
|
(0.2) |
(0.1) |
|
Other reserves |
|
55.3 |
51.2 |
|
Total equity attributable to equity shareholders of the Company |
|
71.2 |
67.2 |
Consolidated statement of cash flow
for 52 weeks ended 1 May 2010
|
|
Note |
Group 52 weeks to 1 May 2010 £m |
Group 52 weeks to 2 May 2009 £m |
|
Cash flows from operating activities |
|
|
|
|
Profit before tax |
|
22.3 |
16.7 |
|
Adjusted for: |
|
|
|
|
Depreciation and amortisation |
2 |
19.1 |
20.4 |
|
(Profit)/loss on property disposals |
|
0.7 |
(1.8) |
|
Exceptional non cash items |
|
3.5 |
1.1 |
|
Other non-cash items |
|
(0.5) |
0.1 |
|
Net finance costs |
|
5.9 |
5.6 |
|
Operating cash flows before movements in working capital |
|
51.0 |
42.1 |
|
(Increase)/decrease in inventories |
|
1.5 |
2.7 |
|
(Increase)/decrease in trade and other receivables |
|
(3.8) |
(0.9) |
|
Increase/(decrease) in trade and other payables |
|
9.6 |
(17.7) |
|
Cash generated by operations |
|
58.3 |
26.2 |
|
Interest paid |
|
(7.0) |
(6.2) |
|
Corporation taxes paid |
|
(9.9) |
(12.2) |
|
Net cash generated from operating activities |
|
41.4 |
7.8 |
|
Cash flows from investing activities |
|
|
|
|
Proceeds on disposal of property, plant and equipment and investment property |
|
0.5 |
3.0 |
|
Purchases of intangible assets |
|
(1.1) |
(2.0) |
|
Purchases of property, plant and equipment and investment property |
|
(9.0) |
(14.3) |
|
Acquisition of businesses net of cash acquired |
|
- |
(7.3) |
|
Interest received |
|
0.2 |
0.7 |
|
Net cash used in investing activities |
|
(9.4) |
(19.9) |
|
Cash flows from financing activities |
|
|
|
|
Purchase of treasury shares by Employee Share Trust |
|
(0.2) |
(0.2) |
|
Repayment of borrowings |
|
(43.6) |
(20.5) |
|
New loans advanced |
|
2.7 |
72.0 |
|
Intercompany loans |
|
- |
- |
|
Repayment of obligations under finance leases |
|
(0.9) |
(0.8) |
|
Dividends paid to Group shareholders |
6 |
(8.1) |
(22.8) |
|
Net cash used in financing activities |
|
(50.1) |
27.7 |
|
Net increase/(decrease) in cash and cash equivalents in the period |
|
(18.1) |
15.6 |
|
Cash and cash equivalents at the beginning of the period |
|
13.0 |
(2.2) |
|
Exchange differences |
|
0.1 |
(0.4) |
|
Cash and cash equivalents at the end of the period |
7 |
(5.0) |
13.0 |
For the purposes of the cash flow statement, cash and cash equivalents are reported net of overdrafts repayable on demand. Overdrafts are excluded from the definition of cash and cash equivalents disclosed in the balance sheet.
Consolidated statement of changes in equity
for 52 weeks ended 1 May 2010
Group
|
|
Share capital £m |
Share premium £m |
Treasury shares £m |
Capital redemption reserve £m |
Translation reserve £m |
Hedging reserve £m |
Retained earnings £m |
Total £m |
|
At 3 May 2008 |
0.7 |
15.4 |
(0.2) |
0.1 |
4.7 |
- |
53.6 |
74.3 |
|
Total comprehensive income for the financial period |
- |
- |
- |
- |
7.2 |
(2.3) |
10.9 |
15.8 |
|
Purchase of own shares by Employee Share Trust |
- |
- |
(0.2) |
- |
- |
- |
- |
(0.2) |
|
Transfer of Treasury shares to participants |
- |
- |
0.3 |
- |
- |
- |
(0.3) |
- |
|
Share based payments and related tax |
- |
- |
- |
- |
- |
- |
0.1 |
0.1 |
|
Dividends paid to Group shareholders |
- |
- |
- |
- |
- |
- |
(22.8) |
(22.8) |
|
At 2 May 2009 |
0.7 |
15.4 |
(0.1) |
0.1 |
11.9 |
(2.3) |
41.5 |
67.2 |
|
Total comprehensive income for the financial period |
- |
- |
- |
- |
(1.7) |
1.1 |
12.3 |
11.7 |
|
Purchase of own shares by Employee Share Trust |
- |
- |
(0.2) |
- |
- |
- |
- |
(0.2) |
|
Transfer of Treasury shares to participants |
- |
- |
0.1 |
- |
- |
- |
(0.1) |
- |
|
Share based payments and related tax |
- |
- |
- |
- |
- |
- |
0.6 |
0.6 |
|
Dividends paid to Group shareholders |
- |
- |
- |
- |
- |
- |
(8.1) |
(8.1) |
|
At 1 May 2010 |
0.7 |
15.4 |
(0.2) |
0.1 |
10.2 |
(1.2) |
46.2 |
71.2 |
Notes to the accounts
1 Accounting policies
Basis of preparation
The financial statements of the Group are made up to the Saturday nearest to 30 April. The financial year for 2010 represents the 52 weeks ended 1 May 2010. The comparative financial year for 2009 was 52 weeks ended 2 May 2009.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed by the European Union, together with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The information is derived from the full Group financial statements for the 52 week period to 1 May 2010 and does not constitute full accounts within the meaning of section 435 of the Companies Act 2006. The Group's Annual Report and Financial Statements on which the auditors have given an unqualified report which does not contain a statement under section 498(2) or (3) of the Companies Act 2006, will be delivered to the Registrar of Companies and posted to shareholders in due course.
The financial information for the 52 weeks to 2 May 2009 is derived from the Annual Report for that year which has been delivered to the Registrar of Companies. The independent auditors reported on those accounts, their report was unqualified and did not contain a statement under either Section 498(2) or (3) of the Companies Act 2006.
Foreign exchange rates
Financial assets and liabilities and foreign operations are translated at the following rates of exchange:
|
|
Euro 2010 |
Euro 2009 |
Zloty 2010 |
Zloty 2009 |
|
Average rate |
1.13 |
1.19 |
4.71 |
4.53 |
|
Closing rate |
1.15 |
1.12 |
4.50 |
4.89 |
2 Segmental analysis
The operating segments have been determined based on reports reviewed by the Board that are used to make strategic decisions. The Group's business comprises only a retail business and the Board considers that business on the basis of the four geographic units of the UK and Republic of Ireland (UK & RoI), The Netherlands, Belgium and Poland. Neither Belgium nor Poland is significant enough to meet the quantitative thresholds to require separate reporting and they have been aggregated as 'All other segments'.
The reportable operating segments derive their revenue primarily from the retail of floor coverings and beds. Central costs are incurred principally in the UK and are immaterial. As such these costs are included within the UK & RoI segment. Sales between segments are carried out at arm's length.
The segment information provided to the Board for the reportable segments for the 52 weeks ended 1 May 2010 is as follows:
|
|
52 weeks to 1 May 2010 |
52 weeks to 2 May 2009 |
||||||
|
|
UK & RoI £m |
The Netherlands £m |
All other segments £m |
Group £m |
UK & RoI £m |
The Netherlands £m |
All other segments £m |
Group £m |
|
Gross Revenue |
428.8 |
65.5 |
25.9 |
520.2 |
397.3 |
63.6 |
25.1 |
486.0 |
|
Inter-segment revenue |
(3.6) |
- |
- |
(3.6) |
(3.2) |
- |
- |
(3.2) |
|
Revenues from external customers |
425.2 |
65.5 |
25.9 |
516.6 |
394.1 |
63.6 |
25.1 |
482.8 |
|
Gross profit |
263.7 |
38.3 |
14.0 |
316.0 |
244.6 |
37.2 |
14.0 |
295.8 |
|
Underlying operating profit |
26.2 |
7.8 |
0.1 |
34.1 |
15.6 |
7.6 |
(0.4) |
22.8 |
|
Exceptional items |
(2.4) |
- |
(3.5) |
(5.9) |
0.3 |
(0.7) |
(0.1) |
(0.5) |
|
Operating profit |
23.8 |
7.8 |
(3.4) |
28.2 |
15.9 |
6.9 |
(0.5) |
22.3 |
|
Finance income |
0.9 |
- |
- |
0.9 |
1.5 |
0.1 |
- |
1.6 |
|
Intercompany interest |
- |
(0.1) |
0.1 |
- |
0.2 |
- |
(0.2) |
- |
|
Finance costs |
(6.6) |
(0.1) |
(0.1) |
(6.8) |
(6.4) |
(0.6) |
(0.2) |
(7.2) |
|
Profit before tax |
18.1 |
7.6 |
(3.4) |
22.3 |
11.2 |
6.4 |
(0.9) |
16.7 |
|
Tax |
(4.3) |
(1.8) |
(0.4) |
(6.5) |
(1.8) |
(2.9) |
(0.2) |
(4.9) |
|
Profit for the financial period |
13.8 |
5.8 |
(3.8) |
15.8 |
9.4 |
3.5 |
(1.1) |
11.8 |
|
Segment Assets: |
|
|
|
|
|
|
|
|
|
Segment assets |
244.3 |
78.1 |
33.1 |
355.5 |
256.0 |
87.2 |
29.1 |
372.3 |
|
Inter-segment balances |
(11.4) |
(0.1) |
(9.2) |
(20.7) |
(10.5) |
(0.2) |
(0.8) |
(11.5) |
|
Balance sheet total assets |
232.9 |
78.0 |
23.9 |
334.8 |
245.5 |
87.0 |
28.3 |
360.8 |
|
Segment Liabilities: |
|
|
|
|
|
|
|
|
|
Segment liabilities |
(232.9) |
(23.9) |
(27.5) |
(284.3) |
(248.7) |
(36.8) |
(19.6) |
(305.1) |
|
Inter-segment balances |
5.2 |
5.6 |
9.9 |
20.7 |
- |
4.2 |
7.3 |
11.5 |
|
Balance sheet total liabilities |
(227.7) |
(18.3) |
(17.6) |
(263.6) |
(248.7) |
(32.6) |
(12.3) |
(293.6) |
|
Other segmental items: |
|
|
|
|
|
|
|
|
|
Depreciation and amortisation |
15.5 |
2.6 |
1.0 |
19.1 |
16.6 |
2.5 |
1.3 |
20.4 |
|
Additions to non-current assets |
6.5 |
0.7 |
0.9 |
8.1 |
14.3 |
1.5 |
0.7 |
16.5 |
Carpetright plc is domiciled in the UK. The Group's revenue from external customers in the UK is £416.5m (2009 : £381.8m) and the total revenue from external customers from other countries is £100.1m (2009 : £101.0m). The total of non-current assets (other than financial instruments and deferred tax assets) located in the UK is £175.8m (2009 : £179.6m) and the total of those located in other countries is £89.2m (2009 : £94.4m).
Carpetright's trade has historically shown no distinct pattern of seasonality with trade cycles more closely following economic indicators such as consumer confidence and mortgage approvals.
3 Exceptional items
|
|
Group 2010 £m |
Group 2009 £m |
|
Disclosed in the income statement: |
|
|
|
Profits/(loss) on property disposals |
(0.7) |
1.8 |
|
UK & RoI impairment of property, plant and equipment (see note 11) |
(1.4) |
(0.9) |
|
Onerous lease provision |
(1.4) |
- |
|
Poland: |
|
|
|
Impairment of property, plant and equipment (see note 11) |
(1.8) |
- |
|
Closure costs |
(1.7) |
- |
|
Over provision for pre-opening costs of Purfleet |
1.1 |
- |
|
Post acquisition reorganisation of new businesses |
- |
(1.2) |
|
Impairment of investment in Joint venture |
- |
(0.2) |
|
|
(5.9) |
(0.5) |
The onerous lease provision relates to 3 properties in the UK that are not trading and are either empty or leased at below the passing rent. The provision covers the period until, full cost recovery is expected
The costs relating to Poland reflect the impairment of assets to disposal value and the costs of closure of the 11 stores trading at the start of the year.
The exceptional pre-opening costs of the cutting and distribution centre recognised in 2007/8 were over-provided by £1.1m which has been released.
The post acquisition reorganisation costs of the new businesses are primarily redundancy and other costs arising from the integration of the support functions into Carpetright.
4 Tax
(i) Analysis of the charge in the period
|
|
Group 2010 £m |
Group 2009 £m |
|
UK current tax |
4.4 |
2.0 |
|
Overseas current tax |
1.6 |
2.1 |
|
Total current tax |
6.0 |
4.1 |
|
UK deferred tax |
(0.1) |
(0.6) |
|
Overseas deferred tax |
0.6 |
1.4 |
|
Total deferred tax |
0.5 |
0.8 |
|
Total tax charge in the income statement |
6.5 |
4.9 |
Tax of £0.4m has been credited to the income statement (2009: £0.1m credit) in respect of exceptional items.
(ii) Reconciliation of profit before tax to total tax
|
|
Group 2010 £m |
Group 2009 £m |
|
Profit before tax |
22.3 |
16.7 |
|
Tax charge at UK Corporation Tax rate of 28.0% (2009: 28.0%) |
6.2 |
4.7 |
|
Adjusted for the effects of: |
|
|
|
Overseas tax rates |
(0.3) |
(0.2) |
|
Non-qualifying depreciation |
0.9 |
0.7 |
|
Foreign exchange movements on foreign deferred tax |
- |
0.3 |
|
Other permanent differences |
0.3 |
(0.3) |
|
Adjustments in respect of prior periods |
(0.6) |
(0.3) |
|
Total tax charge in the income statement |
6.5 |
4.9 |
The weighted average annual effective tax rate for the period is 29.5% (2009: 29.8%). This decrease arises primarily from one off credits in the year offset by overseas tax movements.
(iii) Tax on items taken directly to or transferred from equity
|
|
Group 2010 £m |
Group 2009 £m |
|
Deferred tax on actuarial gains, recognised in other comprehensive income |
0.6 |
0.2 |
|
Deferred tax on share-based payments |
0.1 |
0.1 |
|
Total tax recognised in equity |
0.7 |
0.3 |
5 Earnings per share
Basic earnings per share is calculated by dividing earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, excluding those held by Equity Trust (Guernsey) Limited which are treated as cancelled.
In order to compute diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares. Those share options granted to employees and Executive Directors where the exercise price is less than the average market price of the Company's ordinary shares during the period, represent potentially dilutive ordinary shares.
|
|
2010 |
2009 |
||||
|
|
Earnings £m |
Weighted average number of shares Millions |
Earnings per share Pence |
Earnings £m |
Weighted average number of shares Millions |
Earnings per share Pence |
|
Basic earnings per share |
15.8 |
67.2 |
23.5 |
11.8 |
67.2 |
17.6 |
|
Effect of dilutive share options |
0.1 |
0.4 |
- |
0.1 |
0.4 |
- |
|
Diluted earnings per share |
15.9 |
67.6 |
23.5 |
11.9 |
67.6 |
17.6 |
Reconciliation of earnings per share excluding post tax profit on exceptional items:
|
|
52 weeks ended 1 May 2010 Pence |
52 weeks ended 2 May 2009 Pence |
|
Basic earnings per share |
23.5 |
17.6 |
|
Adjusted for the effect of exceptional items: |
|
|
|
Exceptional items |
8.7 |
0.7 |
|
Tax thereon |
(0.6) |
(0.1) |
|
Underlying earnings per share |
31.6 |
18.2 |
The Directors have presented an additional measure of earnings per share based on underlying earnings. This is in accordance with the practice adopted by most major retailers. Underlying earnings is defined as profit excluding exceptional items and related tax.
6 Dividends
|
|
2010 |
2009 |
||
|
Group and Company |
Pence per share |
£m |
Pence per share |
£m |
|
Prior year final dividend paid |
4.0 |
2.7 |
30.0 |
20.1 |
|
Current year interim dividend paid |
8.0 |
5.4 |
4.0 |
2.7 |
|
|
12.0 |
8.1 |
34.0 |
22.8 |
The Directors propose a final dividend of 8.0 pence per share amounting to £5.4m (2009: 4.0 pence per share; £2.7m) which is not included as a liability in these financial statements. Subject to approval by the shareholders at the Annual General Meeting, the proposed dividend will be paid on xx September 2010 to shareholders who are on the register of members on xx September 2010.
This would take the 2010 interim and final dividend payments to 16.0 pence amounting to £10.8m (2009: 8.0 pence; £5.4m).
7 Group movement in cash and net debt
|
|
2009 |
2010 |
||||
|
|
Total £m |
Cash flow £m |
Acquisitions £m |
Exchange differences £m |
Revaluation £m |
Total £m |
|
Cash and cash equivalents in the balance sheet |
17.4 |
|
|
|
|
8.3 |
|
Bank overdrafts |
(4.4) |
|
|
|
|
(13.3) |
|
Cash and cash equivalents in the cash flow statement |
13.0 |
(18.1) |
- |
0.1 |
- |
(5.0) |
|
Borrowings |
|
|
|
|
|
|
|
Current borrowings |
(12.7) |
|
|
|
|
(8.9) |
|
Non-current borrowings |
(91.2) |
|
|
|
|
(53.3) |
|
|
(103.9) |
40.9 |
- |
0.8 |
- |
(62.2) |
|
Obligations under finance leases |
|
|
|
|
|
|
|
Current obligations under finance leases |
(0.9) |
|
|
|
|
(0.1) |
|
Non-current obligations under finance leases |
(3.0) |
|
|
|
|
(2.9) |
|
|
(3.9) |
0.9 |
- |
- |
- |
(3.0) |
|
Derivative financial instruments |
(2.3) |
- |
- |
- |
1.2 |
(1.1) |
|
Net debt |
(97.1) |
23.7 |
- |
0.9 |
1.2 |
(71.3) |
|
|
2008 |
2009 |
||||
|
|
Total £m |
Cash flow £m |
Acquisitions £m |
Exchange differences £m |
Revaluation £m |
Total £m |
|
Cash and cash equivalents in the balance sheet |
8.9 |
|
|
|
|
17.4 |
|
Bank overdrafts |
(11.1) |
|
|
|
|
(4.4) |
|
Cash and cash equivalents in the cash flow statement |
(2.2) |
15.6 |
- |
(0.4) |
- |
13.0 |
|
Borrowings |
|
|
|
|
|
|
|
Current borrowings |
(11.3) |
|
|
|
|
(12.7) |
|
Non-current borrowings |
(39.3) |
|
|
|
|
(91.2) |
|
|
(50.6) |
(51.5) |
- |
(1.8) |
- |
(103.9) |
|
Obligations under finance leases |
|
|
|
|
|
|
|
Current obligations under finance leases |
(0.8) |
|
|
|
|
(0.9) |
|
Non-current obligations under finance leases |
(3.9) |
|
|
|
|
(3.0) |
|
|
(4.7) |
0.8 |
(1.0) |
- |
- |
(3.9) |
|
Derivative financial instruments |
- |
- |
- |
- |
(2.3) |
(2.3) |
|
Net debt |
(57.5) |
(35.1) |
(1.0) |
(2.2) |
(2.3) |
(97.1) |
Related Shares:
CPR.L