TIDMCPR
RNS Number : 5783R
Carpetright PLC
30 June 2015
Carpetright plc
Full Year Results for the 53 weeks ended 2 May 2015
"Substantial growth in Group underlying profit to GBP14.2m,
strong like-for-like sales growth in UK, a return to profit in the
Rest of Europe and a net cash position at period end."
Financial Highlights (on a pro forma 52 week basis)(Note 1)
Group
-- Group revenue increased 3.3% to GBP462.6m
(2014: GBP447.7m).
-- Significant increase in underlying profit
before tax to GBP13.0m (2014: GBP4.6m).
-- Underlying earnings per share of 13.7p
(2014: 4.7p).
UK
-- Like-for-like sales increased by 7.3% (2014:
down 0.2%).
-- Underlying operating profit up 33.6% to
GBP14.3m (2014: GBP10.7m).
-- Store base reduced by a net twelve during
the year to 460 stores.
Rest of Europe
-- Like-for-like sales increased by 0.3% (2014:
down 8.6%).
-- Underlying operating profit of GBP0.3m,
an improvement of GBP4.1m, reversing the
losses experienced in the prior year.
-- Store base reduced by a net five during
the year to 137 stores.
Statutory Results (including 53(rd) week)
-- 53rd week contributed a further GBP7.2m
to revenue and GBP1.2m to pre-tax profit,
resulting in Group underlying profit before
tax of GBP14.2m (2014: GBP4.6m).
-- Exceptional charges of GBP7.6m, predominantly
related to onerous lease provisions.
-- Profit before tax of GBP6.6m, an improvement
of GBP13.8m (2014: loss of GBP7.2m).
-- Basic earnings per share of 6.7p (2014:
5.3p loss per share).
-- Net cash of GBP0.5m (2014: net debt of
GBP11.1m).
Trading Update for the eight weeks to 27 June 2015
-- Encouraging start to the new financial year with
like-for-like sales ahead by 4.9% in the UK and 7.4% in the Rest of
Europe, on a local currency basis.
Commenting on the results Wilf Walsh, Chief Executive, said:
"I am pleased to able to report on a year of significant
progress. The Group has delivered substantial growth in profit,
strong and consistent like-for-like sales growth in the UK, a
return to profit in the Rest of Europe and a net cash position at
the end of the period.
"Today we're giving a progress update on a range of strategic
initiatives that will broaden the appeal of the Carpetright brand
and reposition the business, to ensure it is better able to
capitalise on its market leadership position. We have made a
promising start with these plans, establishing a real momentum for
change within the business.
"I am also pleased to report that customer reaction to the first
phase of activity has been positive, supporting encouraging trading
in the opening period of new financial year, with UK like-for-like
sales being ahead by 4.9% in the eight weeks to 27 June 2015.
"While this is just the beginning of the journey to transform
Carpetright, we have a clear direction and the positive results we
are seeing from a number of our initial activities give us
confidence that we are on the right path."
Group Financial Summary
Pro forma
53 week 52 week 52 week
2015 2015 2014 52 week
GBPm GBPm GBPm change
---------------------------- -------- ---------- -------- ---------
Group revenue (Note
2) 469.8 462.6 447.7 3.3%
---------------------------- -------- ---------- -------- ---------
* UK 403.2 396.0 375.8 5.4%
---------------------------- -------- ---------- -------- ---------
* Rest of Europe 66.6 66.6 71.9 (7.4%)
---------------------------- -------- ---------- -------- ---------
Underlying operating
profit/(loss) (Note
3) 15.8 14.6 6.9 111.6%
---------------------------- -------- ---------- -------- ---------
* UK 15.5 14.3 10.7 33.6%
---------------------------- -------- ---------- -------- ---------
* Rest of Europe 0.3 0.3 (3.8)
---------------------------- -------- ---------- -------- ---------
Underlying profit before
tax (Note 3) 14.2 13.0 4.6 182.6%
---------------------------- -------- ---------- -------- ---------
Underlying earnings
per share 15.5p 13.7p 4.7p 191.5%
---------------------------- -------- ---------- -------- ---------
Exceptional items (Note
5) (7.6) (7.6) (11.8)
---------------------------- -------- ---------- -------- ---------
Statutory profit /(loss)
before tax 6.6 5.4 (7.2)
---------------------------- -------- ---------- -------- ---------
Basic earnings/(loss)
per share 6.7p 5.0p (5.3p)
---------------------------- -------- ---------- -------- ---------
Net cash/(debt) 0.5 - (11.1) GBP11.6m
---------------------------- -------- ---------- -------- ---------
Dividend per share Nil - Nil
---------------------------- -------- ---------- -------- ---------
Notes
1. The 2015 financial year represents the trading period for 53
weeks to 2 May 2015. The comparative period of financial year 2014
represents the 52 weeks to 26 April 2014. We believe that the pro
forma 52 weeks result for the 2015 financial year better reflects
the underlying performance of the business when compared to the
prior year. On this basis, all commentary included in this report
is based on the 52 week period to 25 April 2015 unless otherwise
stated.
2. All sales figures are quoted after deducting VAT.
3. 'Underlying' excludes exceptional items and related tax.
4. Like-for-like sales calculated as this year's net sales
compared to 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.
5. Exceptional items comprises, net losses on disposal of
properties of GBP0.4m; onerous lease provisions of GBP7.0m and
non-cash impairment of other assets of GBP0.2m.
Results presentation
Carpetright plc will hold a presentation to analysts and
investors at Citigate Dewe Rogerson, 3 London Wall Buildings,
London Wall, London EC2M 5SY at 09:00 today.
A conference call facility is available on +44 (0) 20 3003 2666
conference ID: 'Carpetright'
A copy of this statement can be found on our website
www.carpetright.plc.uk
For further enquiries please contact:
Carpetright plc
Wilf Walsh, Chief Executive
Neil Page, Group Finance Director
Tel: 01708 802000
Citigate Dewe Rogerson
Kevin Smith / Nick Hayns
Tel: 020 7638 9571
Forthcoming news flow:
Carpetright will release its first half trading update on 27
October 2015.
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.
FULL YEAR RESULTS
The 2015 financial year represents the trading period for 53
weeks to 2 May 2015. The comparative period for financial year 2014
represents the 52 weeks to 26 April 2014. We believe that the pro
forma 52 week result for the 2015 financial year better reflects
the underlying performance of the business when compared to the
prior year. On this basis, all commentary included in this report
is based on the 52 week period to 25 April 2015 unless otherwise
stated.
A summary of the reported financial results for the year ended 2
May 2015 is set out below:
Pro forma
53 week 52 week 52 week
2015 2015 2014 52 week
GBPm GBPm GBPm change
---------------------- -------- ---------- -------- ---------
Revenue 469.8 462.6 447.7 3.3%
Underlying operating
profit 15.8 14.6 6.9 111.6%
Net finance charges (1.6) (1.6) (2.3)
Underlying profit
before tax 14.2 13.0 4.6 182.6%
Exceptional items (7.6) (7.6) (11.8)
Profit/(loss) before
tax 6.6 5.4 (7.2)
Earnings per share
(pence)
- underlying 15.5p 13.7p 4.7p 191.5%
- basic 6.7p 5.0p (5.3p)
Net cash/(debt) 0.5 - (11.1) GBP11.6m
Dividends per share Nil - Nil -
(pence)
---------------------- -------- ---------- -------- ---------
Note - 'Underlying' excludes exceptional items and related
tax.
Overview
Total Group sales for the year increased by 3.3% to GBP462.6m,
with the UK business up 5.4% and a decline of 7.4% in the Rest of
Europe. Our continued focus on rationalising and repositioning the
store portfolio saw the Group open 15 stores and close 32, giving a
net decrease of 17 stores and a total store base of 597. Total
store space declined by 3.3% to 5.4 million square feet.
Group underlying operating profit increased by 111.6% to
GBP14.6m, supported by solid like-for-like sales growth in the UK
and a return to profit in our Rest of Europe business. Underlying
net finance charges were GBP0.7m lower at GBP1.6m. These factors
combined to generate an underlying profit before tax of GBP13.0m, a
182.6% increase on the prior year.
Exceptional charges totalled GBP7.6m (2014: GBP11.8m), primarily
costs associated with onerous leases and exiting stores.
As a result, all of the above combine to produce Group profit
before tax of GBP5.4m (2014: GBP7.2m loss). Basic earnings per
share were 5.0p (2014: 5.3p loss).
In the UK business, the 53rd week contributed a further GBP7.2m
to revenue and GBP1.2m to Group profit before tax. Our businesses
in the Netherlands and Belgium report on a calendar month basis
and, as a result, there was no impact from the 53rd week in these
operations. Whilst our business in the Republic of Ireland operates
on a similar calendar to the UK, the impact of the 53rd week is not
material. As a consequence, the Group underlying profit before tax
for the 2015 financial period was GBP14.2m, profit before tax was
GBP6.6m and basic earnings per share were 6.7p.
The combination of stronger cash flow from the growth in
underlying profitability and control of capital expenditure,
negated in part by the impact of the 53rd week and the introduction
of interest free credit, enabled the Group to end the year with net
cash of GBP0.5m, a favourable movement of GBP11.6m from the
GBP11.1m net debt reported at the 2014 year-end.
STRATEGIC REVIEW
Overview
The opportunity to revitalise Carpetright after a period of
sustained economic turbulence is significant.
At the time of the interim results in December 2014, we outlined
the key themes of our strategic plan to update and reposition the
business to extend Carpetright's consumer appeal and to ensure that
it is better able to capitalise on its market leadership
position.
Our focus during the second half has been on transferring this
strategic intent into a broad-based operational plan, which
translates each element into action. We are pleased to report we
have made strong progress across a range of initiatives, while
simultaneously continuing to drive forward the trading performance
of the Group.
At the heart of our strategic thinking is an opportunity to
broaden the appeal of the brand by placing a greater emphasis on
the unrivalled breadth and quality of our product range, the
expertise of our colleagues, and the role floor coverings play in
transforming our customers' homes, while retaining our
well-established value heritage. Furthermore, in today's retail
environment, where customers place a high value on convenience and
speed, we need to make buying floor coverings a hassle-free
experience, eliminating those elements of the process that can
confuse or irritate the customer.
The strategic plan identified clear areas of focus which,
together, will be critical in enhancing Carpetright's competitive
position and delivering the turnaround of the business. An update
on progress to date with each element of the plan is provided
below.
The key areas of focus are:
1. Revitalising the Carpetright brand
2. Unrivalled choice of floor coverings
3. Providing an outstanding customer experience
4. Unbeatable value
5. Multi-channel convenience
6. Managing the store portfolio
1. Revitalising the Carpetright brand
While Carpetright enjoys high brand awareness and a strong
reputation for value within its core customer base, encouraging
potential new customers to consider us when they shop for floor
coverings requires a repositioning and updating of the brand.
Having completed a comprehensive review of our brand, sub
brands, tone of voice and identity, work is well-progressed on the
development of an updated brand positioning that is more in tune
with the contemporary retail market.
Key elements of this work include:
-- The introduction of new promotional messaging
in 2015, with revised point-of-sale and advertising
campaigns, which are dramatically different
in style and message from the predominantly
price-led theme adopted historically. The
early signs, evidenced by like-for-like sales
growth, indicate that these changes have been
embraced positively by customers and colleagues
alike.
-- A trial of new retail concepts in four stores
in and around London, beginning in July 2015.
Each store will trial an experimental shop
fit that is a significant departure from existing
stores, with new elements to inspire customers
and encourage experimentation, sampling and
discovery. The emphasis is on a smooth, dedicated
service to customers that takes the pressure
out of selection and purchase. Lessons learnt
from this trial will be used to shape the
development of a new store format which will
be rolled out in full, or in part, across
our estate in due course.
-- As part of the store trial we will be testing
a new identity for the Carpetright brand.
A new logo has been developed to give a more
contemporary feel that will attract customer
groups in which the business has previously
under-indexed, without alienating our loyal
existing customer base.
2. Unrivalled choice of floor coverings
As market leader, we have has long offered the broadest range of
carpets in the marketplace, including premium and specialist lines,
but this capability to offer a full range of floor covering options
is not universally recognised by our potential customer base.
To address this, we are repositioning our ranges and adapting
our sales process to move from a simple functional carpet sale to a
more consultative approach which recognises our important role in
helping customers transform their homes.
Key initiatives include:
-- Strengthening our in-house design/new product
development teams, with a number of key appointments,
to bring a more innovative, contemporary and
inspiring approach to our range selection.
-- Introducing competitive offers on premium,
branded carpets, such as Brintons, Ulster
and Westex, to broaden our customer appeal,
and drive average transaction values and cash
margins.
-- Repositioning our hard flooring selection
in the UK, building on our extensive knowledge
and success in continental Europe, where this
product category makes up a much greater proportion
of the sales mix. A decision to lower price
points in March 2015 generated incremental
sales and profit, and we are introducing the
market leading brands of Balterio, Kronospan
and Quickstep to our range in Summer 2015,
as well as testing re-engineered wood.
-- The introduction of an entirely new rug range,
which is both contemporary in look and at
a lower entry price point, has strengthened
our competitive position in this market significantly,
with very encouraging initial results.
-- The development of a new carpet range in conjunction
with House Beautiful Magazine, which is due
to launch in Autumn 2015. We believe this
kind of high profile brand collaboration has
an important role to play in enhancing the
design and home transformation credentials
of the Carpetright brand.
3. Providing an outstanding Customer Experience
Customers' expectations of service standards have risen
significantly over the past decade and while independent data
identified a significant improvement in our service performance in
recent years, it also identified a need for greater consistency in
this area. The strategic plan puts the customer's needs at the
heart of everything we do and the business is committed to making
customer service a genuine point of sustained competitive
advantage.
Key initiatives undertaken to date include:
-- The introduction of 'Do We Measure Up?' a
new web-based customer service programme,
across the entire UK store network in January
2015. We are now receiving an average of 2,500
reviews per week which enables each store
to receive direct customer feedback on their
shopping experience. This important initiative
is driving service standards higher and helping
to improve our online customer ratings. In
the six months since the launch of the initiative
in January 2015 we have received over 70,000
individual customer reviews.
-- People form the essential element in the customer
journey and feedback tells us that friendly,
engaged and knowledgeable staff are key factors
when customers make their purchasing decisions.
We are investing in training programmes with
a medium term plan to develop a Carpetright
'Academy' where all retail team members will
receive the appropriate training in service
and product knowledge to reinforce our position
as the authoritative market leader.
-- The business is investing GBP4.5m in a complete
systems upgrade at store level to ensure quick,
efficient order processing to make buying
from us a smoother, hassle-free experience.
-- The completion of plans to implement a web-based
home appointment booking system for our estimators
has made the service much more efficient for
customers. This service will be further enhanced
by the introduction of a tablet PC-based solution
for the production of cutting plans during
the next year.
-- We have completed the development of a new
debit/credit card-based payment system for
use by our approved fitters in the UK, replacing
the current outdated cash payment process
4. Unbeatable Value
While we have a long-established and well-deserved reputation
for value among our core customer base, the main customer
proposition, with an absolute focus on price, has been unchanged
for many years and the strategic review identified an opportunity
to introduce some important changes to this. However, 'value' is an
important part of our brand's heritage and will remain a key
strategic pillar now and into the future.
Key initiatives include:
-- A Group-wide review of discount levels, which
resulted in a clearer and more consistent
approach for customers.
-- The adoption of a more rounded execution of
our value proposition, which recognised the
importance of factors other than price in
the consumers' decision to purchase. This
includes a focus on range authority and customer
service.
-- The introduction of Interest Free Credit ("IFC"),
which is a common feature across the home
retail sector but which Carpetright had not
offered historically. IFC was rolled-out across
our UK store base from Boxing Day 2014 and
has been received very positively by our customers,
enabling them to purchase the carpet, floor
or bed they really love. This has translated
through to both higher sales and higher average
transaction values.
-- Our now well established "Price Promise",
where customers can be confident that we will
price match competitor deals on the same product.
5. Multi-channel convenience
While physical stores remain crucial in the flooring market,
with almost all customers visiting a store at some point in their
purchase journey, the additional convenience that digital
technology can bring to the process is of growing importance.
While the ability to visit a store to touch and view the product
and to obtain specialist advice prior to making a purchase remain
critical, the internet has become a vital research tool for many
customers and the rapid growth in the use of mobile devices has
made an integrated multi-channel proposition a necessity. With our
extensive geographic coverage, we see an opportunity to leverage
the accessibility of our store estate, combined with the strength
of our marketing reach and supported by an inspirational website,
as a key advantage when compared to the competition.
Key areas of progress include:
-- An average of over 111,000 unique weekly visitors
to our consumer website, a 27.6% increase
on the prior year, with a corresponding rise
in appointment leads and sample requests.
-- A further improvement in our conversion to
sales ratio, through a call centre and improved
follow-up at store level. Sales from this
combination of the call centre and an online
capability have grown significantly during
the year and are equivalent in turnover to
one of our top ten retail stores.
-- Investment in an updated and more inspirational
website, launched at the end of April 2015,
which reflects the new brand messaging discussed
above and which has been successful in driving
more customers from the website to our stores.
The site has also been adapted for compatibility
with mobile devices, which is crucial in a
channel that continues to evolve at a rapid
pace.
-- Inspirational, quirky and entertaining campaigns
on Social Media that are topical and engage
customers on all aspects of home design and
improvement.
6. Managing the store portfolio
While we have been implementing measures to optimise the size of
its store estate for a number of years, these are being accelerated
under the new strategic plan. We are actively managing our store
portfolio to reduce total square footage (but not necessarily store
numbers); to eliminate store catchment overlap; improve the quality
of the estate by relocating to better sites; and to reduce property
costs, to ensure the retail base is better aligned with the needs
of today's customers.
Key initiatives include:
-- At year-end 2015 we had 460 stores trading
in the UK, opening 12 stores and closing 24
during the year. This net reduction is primarily
the result of completing the initial phase
of the previously announced plan to eliminate
stores with overlapping catchments. We will
continue to take advantage of similar opportunities.
In addition, we have negotiated exits from
eight locations where we had onerous leases,
removing us from all future liabilities associated
with those properties.
-- We continue to take a robust view at lease
renewal, which provides an opportunity to
secure lower rents for future years. Within
the next five years 27% of the UK estate has
a lease renewal scheduled, providing further
opportunity to reduce the fixed store operating
costs. By year-end 2015 the average length
of lease had fallen to 7.1 years (2014: 7.7
years).
-- In the Rest of Europe we had 137 stores, opening
three and closing eight during the year. In
line with the UK activity, discussions are
being held with landlords in respect of lease
renewals and this process is delivering rental
reductions.
-- The potential to secure reductions is generally
dictated by the average length of lease remaining,
with this being 3.1 years (2014: 3.2 years)
in the Netherlands and 1.9 years (2014: 1.6
years) in Belgium. In the Republic of Ireland
this period is 10.1 years (2014: 11.2 years),
reflecting the agreement of long term deals
during the expansion into this market in the
period from 2001 to 2008.
-- Following the strategic review and based on
recent evidence, we have made a revised assessment
for the unavoidable onerous lease costs for
loss making stores, resulting in a GBP7.0m
charge. This has been treated as an exceptional
item.
-- By this time next year we anticipate being
able to show the positive results of our accelerated
property activity during 2015/16. Our target
is a combination of a geographic store portfolio
and a digital offer that provides a streamlined,
cost effective solution to enable all customers
to access the Carpetright brand. This will
also include new store openings in locations
where we are under-represented.
Current Trading
The Group has made an encouraging start to the new financial
year with UK like-for-like sales ahead by 4.9% in the eight weeks
to 27 June 2015 and like-for-likes sales in Rest of Europe ahead by
7.4% in the same period.
Outlook
Carpetright has endured a difficult period in the years since
the onset of the financial crisis but retains the fundamentals of a
leading retail business - high brand recognition, critical mass and
a market leadership position. Our task is to build on these strong
foundations and modernise the Group to ensure it exploits these
advantages to the full in the retail market of today.
We have made an encouraging start, establishing a real momentum
for change within the business which is invigorating. While this is
just the beginning of the journey to transform Carpetright, we have
a clear direction and are already seeing positive results from a
number of our initial activities which gives us confidence that we
are on the right path.
FINANCIAL REVIEW
UK
The key financial results for the UK were:
Pro forma
53 week 52 week 52 week
2015 2015 2014 52 week
GBPm GBPm GBPm change
--------------------- ------- --------- ------- ---------
Revenue 403.2 396.0 375.8 5.4%
Like-for-like sales - 7.3% (0.2%)
Gross profit 247.6 243.4 235.1 3.5%
Gross profit % 61.4% 61.4% 62.5% (1.1ppts)
Costs (232.1) (229.1) (224.4) (2.1%)
Cost to sales % 57.6% 57.9% 59.7% 1.8ppts
Underlying operating
profit 15.5 14.3 10.7 33.6%
Underlying operating
profit % 3.8% 3.6% 2.8% 0.8ppts
--------------------- ------- --------- ------- ---------
The UK portfolio is now as follows:
Store numbers Sq ft ('000)
------------ ----------------------------------- ---------------
26 April 2 May 26 April 2 May
2014 Openings Closures 2015 2014 2015
Standalone 457 10 (19) 448 4,039 3,963
Concessions 15 2 (5) 12 27 16
------------ -------- -------- -------- ----- -------- -----
Total 472 12 (24) 460 4,066 3,979
------------ -------- -------- -------- ----- -------- -----
In an improving trading environment revenue increased by 5.4% to
GBP396.0m. We opened 12 stores and closed 24 stores in the year,
which translated into a net space decline of 87,000 sq ft, a
decrease of 2.1%. After taking into account the movement in number
of stores, like-for-like sales grew by 7.3% across the year as a
whole, the second half performance was stronger at 8.1%, following
6.5% growth in the first half. At the close of the year there were
265 stores trading with a bed department (2014: 260). Sales within
the beds category now represent 8.7% of the sales mix (2014:
7.6%).
Gross profit increased by GBP8.3m to GBP243.4m, representing
61.4% of sales, a decrease of 110 basis points. The decline in
margin rate was a result of:
-- Implementing market beating promotions
to drive footfall and top line sales volumes.
-------- -----------------------------------------------
-- An increase in bed sales, which have a
lower gross margin, resulting in an adverse
mix impact
-------- -----------------------------------------------
The total UK cost base increased by 2.1% compared with the prior
year to GBP229.1m (2014: GBP224.4m). Costs as a percentage of sales
were 57.9%, which compared very favourably to 59.7% in the prior
year, reflecting the operational gearing of the business. The
movement in costs was a combination of:
-- A 3.1% increase in store payroll costs to GBP60.6m (2014:
GBP58.8m), reflecting commission payments associated with stronger
sales growth.
-- A reduction in occupancy costs to GBP125.3m (2014:
GBP125.7m). This masked inflationary cost increases being offset by
reductions resulting from the net decrease in the number of stores
and successful rent negotiations. The underlying rent in
like-for-like stores held broadly level with the prior year, with
the majority of rent reviews being settled at or near zero.
-- Marketing and central support costs increased by 8.3% to
GBP43.2m (2014: GBP39.9m), primarily the result of employee profit
share costs increasing by GBP2.1m, due to targets across the
business being exceeded as a result of the strong business
performance, along with GBP1.2m of costs incurred as part of the
initiatives to revitalise the brand.
The culmination of the above factors led to underlying operating
profit increasing by 33.6% to GBP14.3m (2014: GBP10.7m). The 53(rd)
week contributed an additional GBP1.2m to this figure, increasing
it to GBP15.5m for the 2015 financial period.
Rest of Europe
The key financial results for the Rest of Europe were:
Change Change
2015 2014 (Reported (Local
GBPm GBPm currency) currency)
--------------------- ------ ------ ---------- ----------
Revenue 66.6 71.9 (7.4%) level
Like-for-like sales 0.3% (8.6%)
Gross profit 39.6 40.8 (2.9%) 4.5%
Gross profit % 59.5% 56.7% 2.8ppts
Costs (39.3) (44.6) 11.9% 5.2%
Cost to sales % 59.0% 62.0% 3.0ppts
Underlying operating
profit/(loss) 0.3 (3.8)
Underlying operating
profit/(loss) % 0.5% (5.3%) 5.8ppts
--------------------- ------ ------ ---------- ----------
The Rest of Europe portfolio is now as follows:
Store numbers Sq ft ('000)
------------ ----------------------------------- ---------------
26 April 2 May 26 April 2 May
2014 Openings Closures 2015 2014 2015
------------ -------- -------- -------- ----- -------- -----
Netherlands 95 3 (5) 93 1,104 1,046
Belgium 25 - (3) 22 298 257
Republic of
Ireland 22 - - 22 162 162
------------ -------- -------- -------- ----- -------- -----
Total 142 3 (8) 137 1,564 1,465
------------ -------- -------- -------- ----- -------- -----
The flooring market in the Netherlands and Belgium remained
weak, impacted by government austerity measures which reduced
customers' disposable income and lowered consumer confidence. That
said, improvements in a number of economic indicators, such as
rising housing transactions in the Netherlands, give grounds for
cautious optimism for the future. The level of consumer confidence
has also increased in the Republic of Ireland on the back of an
improvement in economic conditions. Sales across the Rest of Europe
business units have shown signs of improvement, with a return to
growth in the second half in local currency terms, after 18
consecutive quarters of decline.
Our Rest of Europe portfolio reduced by a net five stores during
the year, a result of exiting four poor performing sites,
relocating three stores in the Netherlands and one temporary
closure due to fire. The estate is now trading from 137 stores. In
local currency terms, the three businesses combined to produce
total sales that were level with the prior year, with like-for-like
sales increasing by 0.3%. After exchange rate movements, total
sales fell by 7.4% in reported currency.
Gross profit percentage increased by 280 basis points to 59.5%
(2014: 56.7%) resulting principally from improved sourcing and
operational disciplines curtailing local discounting. The
improvement in margin rate was sufficient to offset the impact of
lower sales volumes, resulting in an increase in gross profit of
4.5%. However, after taking account of exchange rate movements this
resulted in a decline of 2.9% in reported currency.
Operating costs in local currency reduced by 5.2%. The majority
of the savings were driven by the consolidation of our offices in
Continental Europe and a reduction in advertising spend. This was
reflected in the decline in the costs as a percentage of sales to
59.0%, a reduction on the prior year figure of 62.0%. In reported
currency, this was a reduction in costs of 11.9% to GBP39.3m.
The net result was an improvement in underlying operating profit
of GBP4.1m to GBP0.3m, reversing the losses experienced in the
prior year.
GROUP FINANCIAL REVIEW
Underlying net finance charges were GBP1.6m (2014: GBP2.3m). The
decrease was principally driven by our lower level of average net
debt over the period.
The taxation charge on profit for the year was GBP2.1m (2014:
GBP3.6m credit). The weighted average annual effective tax rate for
the period is a charge of 31.3% (2014: credit of 52.0%). The
increase is due to current period profitability, mix of tax rates
in different countries, and one off credits recognised in the prior
period not repeated.
Exceptional items
The Group recorded a net charge of GBP7.6m (2014: charge of
GBP11.8m) in the year.
2015 2014
GBPm GBPm
------------------------------- ------ -------
Property profits/(losses) (0.4) (1.6)
=============================== ====== =======
Onerous lease provision (7.0) (6.6)
=============================== ====== =======
Impairment charge:
=============================== ====== =======
Store assets (0.2) (0.5)
=============================== ====== =======
Freehold property - (1.9)
=============================== ====== =======
European office restructuring - (1.2)
------------------------------- ------ -------
Pre tax exceptional items (7.6) (11.8)
------------------------------- ------ -------
A net loss of GBP0.4m was made on property disposals in the year
(2014: GBP1.6m loss). This was principally the result of surrender
premiums being paid to exit loss-making stores.
At 26 April 2014 there were 22 vacant properties in the UK and
three in the Republic of Ireland classed as onerous leases, against
which we carried a provision. During the year we disposed of eight
stores, relieving us from all future liabilities associated with
these properties. The charge associated with exiting these stores
equalled the provisions carried for the named locations. There were
no additions or re-openings of onerous stores during the period
therefore there were 17 onerous stores remaining at the end of the
financial period.
Following the strategic review, we have made a revised
assessment of the unavoidable onerous lease costs for loss-making
stores, resulting in a charge of GBP7.0m. There was no charge
against other property related provisions (2014: GBP6.6m
charge).
We have reviewed the carrying value of the store assets in our
balance sheet, consistent with the approach in previous years.
These tests have led to a net charge of GBP0.2m (2014:
GBP0.5m).
As with previous years, we have reviewed the carrying value of
the Group's freehold properties. As part of this review we
commissioned an independent valuation of the Group's freehold. The
review concluded that the carrying values of our freehold assets
are appropriate and therefore there is no change to the impairment
provisions held (2014: GBP1.9m).
Earnings per share
Underlying earnings per share, for 52 week period to 25 April
2015, was 13.7 pence (2014: 4.7 pence), an increase of 191.5%.
Underlying earnings per share, for the 53 week period to 2 May
2015, was 15.5 pence.
Basic earnings per share, for the 52 week period, was 5.0 pence
(2014: loss of 5.3 pence) and for the 53 week period, 6.7
pence.
Dividend
The Board has decided not to pay a final dividend (2014: nil).
In taking this decision, the Board has considered that whilst there
has been an improvement in profitability during the year, the
priority for the use of cash is to accelerate activity to reduce
the fixed occupancy costs and to invest in the remaining stores to
broaden the appeal of the brand. That said, if we maintain our
current progress the Board would look favourably on restoring the
dividend in due course.
Balance sheet
The Group had net assets of GBP59.5m at the end of the year
(2014: GBP61.1m), a year-on-year decrease of GBP1.6m.
2 May 2015 26 April
GBPm 2014
GBPm
------------------------------ ------------ ---------
Freehold & long leasehold
property 64.9 71.0
============================== ============ =========
Other non-current assets 106.5 114.4
============================== ============ =========
Stock 34.1 33.9
============================== ============ =========
Trade & other current assets 25.2 19.8
============================== ============ =========
Creditors < 1 year (97.9) (93.5)
============================== ============ =========
Creditors > 1 year (69.8) (70.1)
============================== ============ =========
Net Debt 0.5 (11.1)
============================== ============ =========
Pension Deficit (4.0) (3.3)
============================== ============ =========
Net Assets 59.5 61.1
------------------------------ ------------ ---------
During the period, two freehold property disposals were
completed. The Group owns a significant property portfolio, most of
which is used for retail purposes. The carrying values are
supported by a combination of value in use and independent
valuations.
Cash flow
Group net cash at 2 May 2015 was GBP0.5m, a favourable movement
of GBP11.6m on the prior year-end position of GBP11.1m net debt.
The reduction in debt was driven by the underlying operating profit
performance being offset in part by a GBP4.6m cash outflow related
to provisions, GBP0.9m contributions to closed defined benefit
pension schemes and a GBP1.2m increase in working capital. This
increase in working capital was attributable to a combination of
higher merchandise creditors (a consequence of higher sales),
offset by the amortisation of property lease incentives, the timing
impact of the 53rd week and the introduction of interest free
credit.
The resulting net inflow of cash generated by operations of
GBP23.0m was partially negated by net capital expenditure, interest
and tax net outflows totalling GBP11.7m.
The Group's average net debt was GBP4.9m over the period (2014:
GBP16.4m).
Cash flow statement
2015 2014
GBPm GBPm
--------------------------------------- ------ ------
Underlying operating profit 15.8 6.9
Depreciation and other non-cash items 14.0 13.9
(Increase)/Decrease in stock (1.0) 3.5
(Increase)/Decrease in working capital (1.2) (8.1)
Provisions paid (4.6) (4.9)
--------------------------------------- ------ ------
Operating cash flow 23.0 11.3
Net interest paid (1.6) (1.4)
Corporation tax paid (4.4) (0.7)
Net capital expenditure (5.7) (10.2)
--------------------------------------- ------ ------
Free cash flow 11.3 (1.0)
Other 0.3 0.1
--------------------------------------- ------ ------
Movement in net debt 11.6 (0.9)
Opening net debt (11.1) (10.2)
--------------------------------------- ------ ------
Closing net debt 0.5 (11.1)
--------------------------------------- ------ ------
Net capital expenditure was GBP5.7m (2014: GBP10.2m). This can
be broken down into the following principal categories:
2015 2014
GBPm GBPm
------------------------------------------ ----- ------
Capital expenditure (8.8) (10.8)
Proceeds from freehold property disposals 1.2 0.4
Proceeds from leasehold property
disposals 1.9 0.2
------------------------------------------ ----- ------
Net capital expenditure (5.7) (10.2)
------------------------------------------ ----- ------
The majority of the capital expenditure was focused on new
stores and refurbishing existing stores, along with a GBP0.9m cost
of re-platforming the UK website. The latter to provide an updated
and more inspirational online customer experience.
Current liquidity
At the year-end the Group held cash balances of GBP7.3m (2014:
GBP6.3m), principally a combination of Sterling and Euros. Gross
bank borrowings at the balance sheet date were GBP4.4m (2014:
GBP14.9m), all of which were drawn down from overdraft facilities.
The Group had further undrawn facilities of GBP53.6m at the balance
sheet date.
In April 2015, the Group completed a refinancing arrangement of
its principal facilities, providing approximately GBP58m of debt
capacity split between revolving credit facilities and overdrafts
in a mixture of Sterling and Euro currencies. The revolving credit
facility matures in July 2019. Arrangement fees and legal costs
will be amortised over the life of the facility, although paid in
cash at the outset. The facilities contain financial covenants
which are believed to be appropriate in the current economic
climate and tested on a quarterly basis, against which the Group
monitors compliance.
Pensions
At 2 May 2015 the IAS 19 net retirement benefit deficit was
GBP4.0m (2014: GBP3.3m). The discount rate was 3.4% (2014: 4.2%),
reflecting prevailing corporate bond rates. The higher market value
of plan assets and additional Company contributions have been more
than offset by increases in scheme liabilities during the period, a
result of the lower discount rate. As previously announced, the
Company scheme was closed to future accrual with effect from 1 May
2010. The Company agreed a recovery plan with the Trustees in 2015
and this will be reviewed following the completion of the next
triennial valuation, which will be performed as at 5 April
2017.
Wilf Walsh Neil Page
Chief Executive Group Finance Director
29 June
2015
Consolidated income statement
for 53 weeks ended 2 May 2015
Group 52 weeks
Group 53 weeks to 26 April
to 2 May 2015 2014
---------------------------------- ----------------------------------
Exceptional Exceptional
Before items Before items
exceptional (Note exceptional (Note
items 5) Total items 5) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ------------ ----------- ------- ------------ ----------- -------
Revenue 469.8 - 469.8 447.7 - 447.7
Cost of sales (182.6) - (182.6) (171.8) - (171.8)
------------------------------- ------------ ----------- ------- ------------ ----------- -------
Gross profit 287.2 - 287.2 275.9 - 275.9
Administration expenses (273.5) (7.2) (280.7) (271.1) (10.2) (281.3)
Other operating income/(loss) 2.1 (0.4) 1.7 2.1 (1.6) 0.5
------------------------------- ------------ ----------- ------- ------------ ----------- -------
Operating profit/(loss) 15.8 (7.6) 8.2 6.9 (11.8) (4.9)
------------------------------- ------------ ----------- ------- ------------ ----------- -------
Finance costs (1.6) - (1.6) (2.3) - (2.3)
------------------------------- ------------ ----------- ------- ------------ ----------- -------
Profit/(loss) before
tax 14.2 (7.6) 6.6 4.6 (11.8) (7.2)
Tax (3.7) 1.6 (2.1) (1.4) 5.0 3.6
------------------------------- ------------ ----------- ------- ------------ ----------- -------
Profit/(loss) for
the financial period
attributable to equity
shareholders of the
Company 10.5 (6.0) 4.5 3.2 (6.8) (3.6)
------------------------------- ------------ ----------- ------- ------------ ----------- -------
Basic earnings/(losses)
per share (pence) 15.5 (8.8) 6.7 4.7 (10.0) (5.3)
Diluted earnings/(losses)
per share (pence) 6.7 (5.3)
------------------------------- ------------ ----------- ------- ------------ ----------- -------
Consolidated statement of comprehensive income
for 53 weeks ended 2 May 2015
Group
Group 52
53 weeks
weeks to
to 26
2 May April
2015 2014
GBPm GBPm
--------------------------------------------- ------ ------
Profit/(loss) for the financial period 4.5 (3.6)
---------------------------------------------- ------ ------
Items that may not be classified to
the income statement:
Re-measurement of defined benefit
plans (1.4) 1.1
Tax on items that may not be reclassified
to the income statement 0.1 (0.5)
---------------------------------------------- ------ ------
Total items that may not be reclassified
to the income statement (1.3) 0.6
---------------------------------------------- ------ ------
Items that may be classified to the
income statement:
Exchange gains/(losses) (5.3) (1.6)
Tax on items that may be reclassified
to the income statement - -
--------------------------------------------- ------ ------
Total items that may be reclassified
to the income statement (5.3) (1.6)
---------------------------------------------- ------ ------
Other comprehensive income/(expense)
for the period (6.6) (1.0)
---------------------------------------------- ------ ------
Total comprehensive income/(expense)
for the period attributable to equity
shareholders
of the Company (2.1) (4.6)
---------------------------------------------- ------ ------
The notes on pages 21 to 25 form an integral part of this
consolidated financial information.
Consolidated statement of changes in equity
For 53 weeks ended 2 May 2015
Capital
Share Share Treasury redemption Translation Retained
capital premium shares reserve reserve earnings Total
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
At 27 April 2013 0.7 16.6 (0.3) 0.1 7.0 41.2 65.3
Loss for the period - - - - - (3.6) (3.6)
Other comprehensive income/(expense)
for the financial period - - - - (1.6) 0.6 (1.0)
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
Total comprehensive income/(expense)
for the financial period - - - - (1.6) (3.0) (4.6)
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
Issue of new shares - 0.6 - - - - 0.6
Share based payments and
related tax - - - - - (0.2) (0.2)
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
At 26 April 2014 0.7 17.2 (0.3) 0.1 5.4 38.0 61.1
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
Profit for the period - - - - - 4.5 4.5
Other comprehensive income/(expense)
for the financial period - - - - (5.3) (1.3) (6.6)
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
Total comprehensive income/(expense)
for the financial period - - - - (5.3) 3.2 (2.1)
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
Issue of new shares - 0.2 - - - - 0.2
Purchase of own shares
by employee benefit trust - - (0.1) - - - (0.1)
Share based payments and
related tax - - - - - 0.4 0.4
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
At 2 May 2015 0.7 17.4 (0.4) 0.1 0.1 41.6 59.5
------------------------------------- -------- -------- -------- ----------- ----------- --------- -----
Consolidated balance sheet
As at 26 April 2014
Group Group
2015 2014
GBPm GBPm
------------------------------- ------- -------
Assets
Non-current assets
Intangible assets 56.1 58.6
Property, plant and equipment 94.6 103.6
Investment property 17.9 19.6
Investment in subsidiary
undertakings - -
Deferred tax assets 2.2 2.9
Trade and other receivables 0.6 0.7
-------------------------------- ------- -------
Total non-current assets 171.4 185.4
-------------------------------- ------- -------
Current assets
Inventories 34.1 33.9
Trade and other receivables 25.2 19.8
Cash and cash equivalents 7.3 6.3
-------------------------------- ------- -------
Total current assets 66.6 60.0
-------------------------------- ------- -------
Total assets 238.0 245.4
-------------------------------- ------- -------
Liabilities
Current liabilities
Trade and other payables (95.6) (89.3)
Obligations under finance
leases (0.1) (0.1)
Borrowings and overdrafts (4.4) (11.1)
Current tax liabilities (2.3) (4.2)
-------------------------------- ------- -------
Total current liabilities (102.4) (104.7)
-------------------------------- ------- -------
Non-current liabilities
Trade and other payables (37.7) (38.6)
Obligations under finance
leases (2.3) (2.4)
Borrowings - (3.8)
Provisions for liabilities
and charges (16.9) (14.9)
Deferred tax liabilities (15.2) (16.6)
Retirement benefit obligations (4.0) (3.3)
-------------------------------- ------- -------
Total non-current liabilities (76.1) (79.6)
-------------------------------- ------- -------
Total liabilities (178.5) (184.3)
-------------------------------- ------- -------
Net assets 59.5 61.1
-------------------------------- ------- -------
Equity
Share capital 0.7 0.7
Share premium 17.4 17.2
Treasury shares (0.4) (0.3)
Other reserves 41.8 43.5
-------------------------------- ------- -------
Total equity attributable
to equity shareholders of
the Company 59.5 61.1
-------------------------------- ------- -------
Consolidated statement of cash flows
for 53 weeks ended 2 May 2015
Group
Group 52
53 weeks
weeks to
to 26
2 May April
2015 2014
GBPm GBPm
----------------------------------- ------ ------
Cash flows from operating
activities
Profit/(loss) before tax 6.6 (7.2)
Adjusted for:
Depreciation and amortisation 13.6 13.9
Loss on property disposals 0.4 1.6
Exceptional non-cash items 7.2 10.1
Share based compensation
and other non-cash items 0.4 0.1
Net finance costs 1.6 2.3
------------------------------------ ------ ------
Operating cash flows before
movements in working capital 29.8 20.8
(Increase)/decrease in inventories (1.0) 3.5
(Increase)/decrease in trade
and other receivables (5.7) (0.3)
Increase/(decrease) in trade
and other payables 4.5 (7.8)
Provisions paid (4.6) (4.9)
------------------------------------ ------ ------
Cash generated by operations 23.0 11.3
Interest paid (1.6) (1.4)
Corporation taxes paid (4.4) (0.7)
------------------------------------ ------ ------
Net cash generated from operating
activities 17.0 9.2
------------------------------------ ------ ------
Cash flows from investing
activities
Purchases of intangible assets (1.7) (0.2)
Purchases of property, plant
and equipment and investment
property (7.1) (10.6)
Proceeds on disposal of property,
plant, equipment & investment
property 3.1 0.6
Interest received - -
----------------------------------- ------ ------
Net cash generated from/(used)
in investing activities (5.7) (10.2)
------------------------------------ ------ ------
Cash flows from financing
activities
Issue of new shares 0.2 0.6
Purchase of treasury shares
by employee benefit trust (0.1) -
Movement in borrowings (4.1) 0.1
------------------------------------ ------ ------
Net cash used in financing
activities (4.0) 0.7
------------------------------------ ------ ------
Net increase/(decrease) in
cash and cash equivalents
in the period 7.3 (0.3)
Cash and cash equivalents
at the beginning of the period (4.5) (4.1)
Exchange differences 0.1 (0.1)
------------------------------------ ------ ------
Cash and cash equivalents
at the end of the period 2.9 (4.5)
------------------------------------ ------ ------
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.
Notes to the accounts
1. Basis of preparation
Carpetright plc ('the Company') and its subsidiaries (together,
'the Group') are retailers of floor coverings and beds. The Company
is listed on the London Stock Exchange and incorporated in England
and Wales and domiciled in the United Kingdom. The address of its
registered office is Harris House, Purfleet Bypass, Purfleet,
Essex, RM19 1TT.
The financial statements of the Group are drawn up to within
seven days of the accounting record date being 30 April of each
year. The financial period for 2015 represents the 53 weeks ended 2
May 2015. The comparative financial period for 2014 was the 52
weeks ended 26 April 2014.
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) and
International Financial Reporting Interpretations Committee (IFRS
IC) interpretations as adopted by the European Union, together with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
The Directors, after reviewing the Group's operating budgets,
forecasts and financing arrangement, consider that the Group has,
at the date of this report, sufficient financing available for the
estimated requirements for the foreseeable future. Accordingly, the
Directors are satisfied that it is appropriate for these financial
statements to be prepared on a going concern basis.
The consolidated financial statements have been prepared on the
historical cost basis except for pension assets and liabilities and
share based payments which are measured at fair value.
The financial information on the following pages is derived from
the full Group Financial Statements for the 53 week period to 2 May
2015 and does not constitute full accounts within the meaning of
section 435 of the Companies Act 2006. The Groups 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 26 April 2014 is
delivered from the Annual Report for that year which has been
delivered to the Registrar of Companies. The independent auditors
reported on these accounts, their report was unqualified and did
not contain a statement under either section 498 (2) or (3) of the
Companies Report 2006.
Foreign Exchange rates
Financial assets and liabilities and foreign operations are
translated at the following rates of exchange:
Euro Euro Zloty Zloty
2015 2014 2015 2014
-------------- ------ ------ ------ ------
Average rate 1.28 1.18 5.38 5.00
Closing rate 1.36 1.21 5.51 5.10
-------------- ------ ------ ------ ------
2. Segmental analysis
The Group's operating segments are determined on the basis of
information provided to the chief decision maker - the Board - to
review performance and make decisions. The reporting segments
are:
-- UK
-- Rest of Europe (comprising of Belgium, The Netherlands and Republic of Ireland)
The reportable operating segments derive their revenue primarily
from the retailing of floor coverings and beds. Central costs of
the Group are incurred principally in the UK. As such, these costs
are included within the UK segment. Sales between segments are
carried out at arm's length.
The segment information provided to the Board of Directors for
the reportable segments for the 53 weeks ended 2 May 2015 is as
follows:
53 weeks to 2 May 52 weeks to 26
2015 April 2014
------------------------ ------------------------
UK Europe Group UK Europe Group
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------- ------ ------- ------- ------ -------
Gross revenue 409.1 66.6 475.7 379.5 71.9 451.4
Inter-segment revenue (5.9) - (5.9) (3.7) - (3.7)
------------------------- ------- ------ ------- ------- ------ -------
Revenues from external
customers 403.2 66.6 469.8 375.8 71.9 447.7
------------------------- ------- ------ ------- ------- ------ -------
Gross profit 247.6 39.6 287.2 235.1 40.8 275.9
------------------------- ------- ------ ------- ------- ------ -------
Underlying operating
profit/(loss) 15.5 0.3 15.8 10.7 (3.8) 6.9
Exceptional items (4.9) (2.7) (7.6) (7.5) (4.3) (11.8)
------------------------- ------- ------ ------- ------- ------ -------
Operating profit/(loss) 10.6 (2.4) 8.2 3.2 (8.1) (4.9)
Intercompany interest (0.1) 0.1 - (0.1) 0.1 -
Finance costs (1.5) (0.1) (1.6) (2.2) (0.1) (2.3)
------------------------- ------- ------ ------- ------- ------ -------
Profit/(loss) before
tax 9.0 (2.4) 6.6 0.9 (8.1) (7.2)
Tax (2.4) 0.3 (2.1) 1.8 1.8 3.6
------------------------- ------- ------ ------- ------- ------ -------
Profit/(loss) for
the financial period 6.6 (2.1) 4.5 2.7 (6.3) (3.6)
------------------------- ------- ------ ------- ------- ------ -------
Segment assets:
Segment assets 200.2 80.6 280.8 197.3 91.0 288.3
Inter-segment balances (25.8) (17.0) (42.8) (24.0) (18.9) (42.9)
------------------------- ------- ------ ------- ------- ------ -------
Balance sheet total
assets 174.4 63.6 238.0 173.3 72.1 245.4
------------------------- ------- ------ ------- ------- ------ -------
Segment liabilities:
Segment liabilities (175.6) (45.7) (221.3) (180.4) (46.8) (227.2)
Inter-segment balances 17.0 25.8 42.8 18.9 24.0 42.9
------------------------- ------- ------ ------- ------- ------ -------
Balance sheet total
liabilities (158.6) (19.9) (178.5) (161.5) (22.8) (184.3)
------------------------- ------- ------ ------- ------- ------ -------
Other segmental
items:
Depreciation and
amortisation 11.5 2.1 13.6 11.6 2.3 13.9
Additions to non-current
assets 7.1 1.4 8.5 9.1 1.6 10.7
------------------------- ------- ------ ------- ------- ------ -------
Carpetright plc is domiciled in the UK. The Group's revenue from
external customers in the UK is GBP403.2m (2014: GBP375.8m) and the
total revenue from external customers from other countries is
GBP66.6m (2014: GBP71.9m). The total of non-current assets (other
than financial instruments and deferred tax assets) located in the
UK is GBP147.4m (2014: GBP151.8m) and the total of those located in
other countries is GBP64.6m (2014: GBP73.6m).
Carpetright's trade has historically shown no distinct pattern
of seasonality, with trade cycles more closely following economic
indicators such as consumer confidence.
3. Exceptional items
Group Group
2015 2014
GBPm GBPm
------------------------------ ----- ------
Property profits/(losses) (0.4) (1.6)
Onerous lease provisions (7.0) (6.6)
Impairment charge:
Store assets (0.2) (0.5)
Freehold properties - (1.9)
European office restructuring - (1.2)
------------------------------- ----- ------
Pre tax exceptional items (7.6) (11.8)
------------------------------- ----- ------
The Group has undertaken a review of the onerous lease
provisions recognised in prior periods for stores that have ceased
to trade and made a revised assessment for the unavoidable onerous
lease costs for loss-making stores, resulting in a charge of
GBP7.0m in the period (2014: GBP6.6m charge).
In accordance with IAS 36, assets are reviewed for impairment
whenever changes in circumstances indicate that the carrying value
may not be recoverable. The Group commissioned an external
valuation of freehold properties in November 2014. These
valuations, along with value in use calculations, have not resulted
in an impairment in the current period. In the prior period there
was a charge of GBP2.6m for freehold properties in the Netherlands
and a release of GBP0.7m in the UK was recognised. In determining
whether impairment triggers existed at the period end, the
Directors treated each store as a separate cash-generating unit
(CGU) and valued it at the higher of the value in use calculations
or the market value of the properties and their assets.
4. Tax
Group Group
(i) Analysis of the charge in the 2015 2014
period GBPm GBPm
---------------------------------------- ----- -----
UK current tax 2.1 1.3
Adjustment for prior years 0.1 -
Overseas current tax - (0.2)
----------------------------------------- ----- -----
Total current tax 2.2 1.1
----------------------------------------- ----- -----
UK deferred tax (0.7) (3.1)
Overseas deferred tax 0.6 (1.6)
----------------------------------------- ----- -----
Total deferred tax (0.1) (4.7)
----------------------------------------- ----- -----
Total tax charge/(credit) in the income
statement 2.1 (3.6)
----------------------------------------- ----- -----
The main rate of corporation tax decreased to 21% from 1 April
2014 and will further decrease to 20%. From 1 April 2015. Deferred
tax balances are measured using the tax rates in effect in the
period in which the deferred tax balances are expected to reverse.
This resulted in a tax credit of GBP2.7m in the prior period. There
was no material impact in the current period.
Group Group
(ii) Reconciliation of profit/(loss) before 2015 2014
tax to total tax GBPm GBPm
-------------------------------------------- ----- -----
Profit/(loss) before tax 6.6 (7.2)
-------------------------------------------- ----- -----
Tax charge/(credit) at UK corporation
tax rate of 21% (2014: 23%) 1.4 (1.6)
Adjusted for the effects of:
Overseas tax rates 0.2 (0.2)
Deferred tax impact of fall in UK tax
rates - (2.7)
Non-qualifying depreciation 0.5 0.5
Other permanent differences (0.1) 0.2
Adjustments in respect of prior periods 0.1 0.2
-------------------------------------------- ----- -----
Total tax charge/(credit) in the income
statement 2.1 (3.6)
-------------------------------------------- ----- -----
The weighted average annual effective tax rate for the period is
a charge of 31.3% (2014: credit of 52.0%). The increase is due to
current period profitability, one off credits recognised in the
prior period not repeated, as well as the constant level of
permanently disallowed expenditure.
Group Group
(iii) Tax on items taken directly to or 2015 2014
transferred from equity GBPm GBPm
-------------------------------------------- ----- -----
Deferred tax on actuarial losses recognised
in other comprehensive income 0.1 (0.5)
Deferred tax on share based payments (0.1) -
-------------------------------------------- ----- -----
Total tax recognised in equity - (0.5)
-------------------------------------------- ----- -----
5. Dividends
The Directors decided that no final dividend will be paid (2014:
No final dividend paid). This results in no dividend in the period
to 2 May 2015 (2014: No dividend paid).
6. 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 (Jersey) 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.
53 weeks to 52 weeks to
2 May 2015 26 April 2014
------------------------------ ------------------------------
Weighted Weighted
average Earnings average Earnings
number per number per
Earnings of shares share Earnings of shares share
GBPm Millions Pence GBPm Millions Pence
-------------------------- -------- ---------- -------- -------- ---------- --------
Basic earnings/(losses)
per share 4.5 67.7 6.7 (3.6) 67.6 (5.3)
Effect of dilutive share
options - 0.4 - - 0.4 -
-------------------------- -------- ---------- -------- -------- ---------- --------
Diluted earnings/(losses)
per share 4.5 68.1 6.7 (3.6) 68.0 (5.3)
-------------------------- -------- ---------- -------- -------- ---------- --------
Reconciliation of earnings per share excluding post tax profit
on exceptional items
53 weeks to 52 weeks to
2 May 2015 26 April 2014
------------------------------ ------------------------------
Weighted Weighted
average Earnings average Earnings
number per number per
Earnings of shares share Earnings of shares share
GBPm Millions Pence GBPm Millions Pence
----------------------------- -------- ---------- -------- -------- ---------- --------
Basic earnings/(losses)
per share 4.5 67.7 6.7 (3.6) 67.6 (5.3)
Adjusted for the effect
of exceptional items:
Exceptional items 7.6 - 11.1 11.8 - 17.4
Tax thereon (1.6) - (2.3) (2.3) - (3.4)
Exceptional tax benefit
from tax rate change - - - (2.7) - (4.0)
----------------------------- -------- ---------- -------- -------- ---------- --------
Underlying earnings/(losses)
per share 10.5 67.7 15.5 3.2 67.6 4.7
----------------------------- -------- ---------- -------- -------- ---------- --------
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.
7. Movement in net debt
Group Group
2015 2014
GBPm GBPm
--------------------------------- ----- ------
Current assets:
Cash and cash equivalents 7.3 6.3
--------------------------------- ----- ------
7.3 6.3
--------------------------------- ----- ------
Current liabilities:
Bank overdrafts (4.4) (10.8)
Bank borrowings - (0.3)
Obligations under finance leases (0.1) (0.1)
--------------------------------- ----- ------
(4.5) (11.2)
--------------------------------- ----- ------
Non-current liabilities:
Borrowings - (3.8)
Obligations under finance leases (2.3) (2.4)
--------------------------------- ----- ------
(2.3) (6.2)
--------------------------------- ----- ------
Total cash/(net debt) 0.5 (11.1)
--------------------------------- ----- ------
Reconciliation of movements in the periods ended 2 May 2015
Group Group
2015 2014
GBPm GBPm
--------------------------- ----- -----
Net increase/(decrease) in
cash and cash equivalents 7.4 (0.3)
Net (increase)/decrease in
borrowings 4.1 0.1
Other non-cash movements 0.1 (0.7)
---------------------------- ----- -----
11.6 (0.9)
--------------------------- ----- -----
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUBWQUPAGMB
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