TIDMUCG

RNS Number : 5614X

United Carpets Group plc

20 December 2019

20 December 2019

UNITED CARPETS GROUP PLC

(the "Group" or "Company" or "United Carpets")

Interim Results for the 6 month period ended 30 September 2019

United Carpets Group plc (LSE: UCG), the third largest chain of specialist retail carpet and floor covering stores in the UK, today announces its interim results for the 6 month period ended 30 September 2019.

Key points

   --      Revenue for the period increased by 36.4% to GBP14.75m (2018: GBP10.81m) 
   --      Like for like sales* were +1.8% 
   --      Profit before tax and IFRS 16 adjustments** was GBP154,000 (2018: GBP121,000) 
   --      Earnings per share before IFRS 16 adjustments were 0.14p (2018: 0.09p) 
   --      Profit before tax after IFRS 16 adjustments was GBPnil (2018: loss before tax of GBP4,000) 
   --      Earnings per share after IFRS 16 adjustments were -0.01p (2018: -0.03p) 
   --      Interim dividend maintained at 0.135p per share (2018: 0.135p) payable 17 January 2020 
   --      Net funds*** were GBP1.09m (2018: GBP2.01m) 
   --      LFL sales for the 11 weeks since the period end were -3.5% 

* Like for like sales are defined in the financial review

** IFRS 16 adjustments are explained in note 1

*** Net funds comprise cash and cash equivalents less borrowings (hire purchase liabilities)

Paul Eyre, Chief Executive, said:

"A small improvement in profit before tax and IFRS 16 adjustments is a satisfactory performance in a challenging market environment with consumer confidence constrained by political uncertainty. Nevertheless, the Group generated a significant increase in revenues, primarily driven by a small increase in the average number of stores trading compared to the prior period and the Group's fledgling instalment payment model, a new business channel for the Group with the potential to become an important future profit centre. Importantly, the fundamentals of the Group remain sound. We have a strong network of mostly franchised stores, offering an excellent range of good quality, great value products making us well placed to benefit from any uptick in the market environment."

Enquiries:

 
 United Carpets Group plc 
  Paul Eyre, Chief Executive 
  Ian Bowness, Finance Director                  01709 732 666 
  Cantor Fitzgerald Europe (NOMAD and Broker) 
   Rick Thompson 
   Michael Boot                                  020 7894 7000 
   Novella Communications Limited 
    Tim Robertson 
    Fergus Young                                 020 3151 7008 
 

Chairman's Statement

Overview

The retail environment continues to be challenging and, combined with an uninspiring housing market, made it a difficult period in which to operate. Given this backdrop, we believe the results achieved for the 6 months to 30 September 2019 are satisfactory being in line with management targets for the financial year and showing a small improvement in profit before tax and IFRS 16 adjustments compared to the same period in the prior year.

During the period under review, the Company continued to focus on implementing good retail practices, expanding the product ranges on offer across the store network and providing strong customer services levels. Flooring ranges have been refreshed, providing new options and keeping abreast of up and coming trends with a number of new lines being successfully introduced.

The significant rise in online shopping has impacted upon all areas of the store-led retail market and the same is true of the flooring and beds sector. However, as with other larger ticket retail items, there is a greater desire amongst consumers to visit and purchase in-store providing some degree of protection to our market place.

Looking ahead, if 2020 sees an improvement in the political and economic outlook for the UK leading to a rally in consumer sentiment, then United Carpets is well placed to benefit.

Financial review

As previously reported (and explained more fully in note 1), from 1 April 2019 the Group has adopted IFRS 16 'Leases' using the full retrospective approach. The adjustments included in this Interim Report are in line with the estimates provided in the Annual Report for the year ended 31 March 2019, reducing profit before tax in the 6 month period ended 30 September 2019 by GBP154,000 (6 month period ended 30 September 2018: GBP125,000, year ended 31 March 2019: GBP319,000).

 
                                                    6 month         6 month        Year 
                                               period ended    period ended       ended 
                                               30 September    30 September    31 March 
                                                       2019            2018        2019 
                                                     GBP000          GBP000      GBP000 
 
 Profit before tax and IFRS 16 adjustments              154             121         595 
 IFRS 16 adjustments                                  (154)           (125)       (319) 
                                             --------------  --------------  ---------- 
 (Loss)/profit before tax after IFRS 
  16 adjustments                                          -             (4)         276 
                                             --------------  --------------  ---------- 
 

Revenue, which as in previous years includes marketing and rental costs incurred by the Group and recharged to franchisees, was GBP14.75m (2018: GBP10.81m). The increase in revenues came primarily from the ongoing development of the recently introduced instalment payment channel, 2 new stores opened in the 6 months to 30 September 2019 offset by a closure, a full period's trading from stores opened in the prior year and a modest increase in like for like sales in the period.

Like for like sales across the whole of the network (based on stores that have traded throughout both the period under review and the corresponding period in the prior year and thus excluding stores that opened or stores that closed during either period) increased by 1.8%, a reasonable performance albeit against relatively weak comparatives from the previous summer period.

Gross margin was 63.4% compared to 62.3% in the same period in 2018. Warehousing gross margins improved as a result of actions taken during the prior year to improve overall profitability. This, together with the inherently higher margin of the instalment payment channel, more than offset the "mix" impact from an increased proportion of total revenue being derived from corporate stores and new business channels with a corresponding reduction in the proportion of total revenue from franchise related income.

Combined distribution costs and administrative expenses increased by GBP1.83m from GBP6.17m in the prior period to GBP8.0m, but reduced from 57.1% of revenue to 54.3% reflecting:

   -       substantial operating costs associated with the new instalment payment channel, 

- increased costs from non like for like corporate stores opened during the period and in the prior year,

- increased property, plant and equipment depreciation (non-cash charge against profit) as a result of controlled expansion and modest ongoing refurbishment of the existing store estate, and

   -       an increase in the charge for the potential cost associated with vacating a small number of underperforming stores. 

The instalment payment channel suffers an inherently greater risk of default than traditional retailing and an impairment charge of GBP0.77m (2018: GBP0.09m) was made during the year against these receivables as this business channel was rapidly expanded. The level of charge incurred is broadly in line with the expected levels of default in our original planning model. A further impairment charge of GBP0.11m (2018: GBPnil) was made during the year against receivables, reflecting the impact of the prevailing market environment on the franchise network as the Group continues to support its franchisees.

Before the IFRS 16 adjustments, operating profit was GBP154,000 (2018: GBP118,000) and profit before tax was GBP154,000 (2018: GBP121,000). As a result, earnings per share before the IFRS 16 adjustments were 0.14p (2018: 0.09p).

After the IFRS 16 adjustments, operating profit was GBP466,000 (2018: GBP487,000) and profit before tax was GBPnil (2018: operating loss before tax of GBP8,000). As a result, basic earnings per share were -0.01p (2018: -0.03p).

The statement of financial position included net funds of GBP1.09m as at 30 September 2019 (2018: GBP2.01m).

Dividend

The Board is pleased to announce an interim dividend of 0.135 pence per share to be paid on 17 January 2020 to all shareholders on the register at the close of business on 3 January 2020. The ex-dividend date will be on 2 January 2020.

Operational review

At 30 September 2019, there were 60 stores of which 48 were franchised and 12 were corporate stores. During the period under review, the Group opened a flagship corporate store in Stockton on Tees operating from a higher profile retail park and another corporate store in Failsworth principally servicing the instalment payment channel in the Manchester region. In addition, a small corporate store in Bristol was closed following a short, unsuccessful trial. Since the period end, a corporate store has been transferred, within the Group, to an experienced franchisee whose existing store lease expires during early 2020 and where the landlord has indicated that they do not wish to renew.

As previously stated, expansion of the store network is focused on finding the right sites rather than just seeking to increase the size of the store network. The Group is always looking for locations where a United Carpets store might excel and, as importantly, matching those sites with potential franchisees. As is the case with the new store in Stockton on Tees, the Group is also open to taking on larger sites in higher profile retail parks with rents above average for the Group but offering higher potential returns.

Challenging and highly competitive market environments increase the importance of ensuring the Group's marketing activities are effective. Whilst the Group continues to deploy advertising campaigns across radio, television and print, the

weighting and timing of these campaigns is under constant review and analysis. Following a review of marketing spend directed at generating online sales, investment has been switched to increasing in-house marketing expertise with the initial result being to significantly reduce costs whilst striving to minimise the impact on revenues.

Franchising and Retail

Floor coverings are the Group's primary driver of sales (predominantly carpet, laminate and vinyl floorings) through both franchised stores and the Group's own corporate stores. In the period under review, the portfolio performed well given the adverse market conditions with like for like sales up 2.4%. New product ranges and lines were successfully introduced to refresh customer options such as water-resistant laminate ranges which have been well received by customers.

Bed sales are an important part of the United Carpets retail proposition with over 85% of stores now offering beds alongside flooring ranges. Like for like sales in the period were 5.0% lower than the same period in the previous year, a disappointing performance reflecting the competitive environment which is not expected to improve markedly in the short term. Bed sales have, in the past, been more volatile but they are a natural combination with flooring and the Group will continue to look to expand the ranges offered and the number of stores from which they are sold.

Interest free credit continues to be a growing and important part of the business although not yet achieving the levels of penetration reported by some of our competitors. It is marketed online and in store and is carefully managed to ensure customer suitability for the product. The offer continues to be popular and tends to lead to substantially higher average transaction values, representing a significant opportunity as we increase our focus in this area.

Instalment payment channel

Following earlier trials, the instalment payment model was rapidly expanded during the period under review and is believed to have the potential to be a significant future profit centre. Targeting a different customer base and offering a separate, limited range of products, this service is available on an interest free pay per week basis in contrast to the traditional monthly interest free credit offer referred to above. While profitable, the costs associated with establishing the service within the Group are still relatively high, however, there is the potential for this to be a valuable new business channel for the Group in the near to medium term.

Warehousing

Our in-house cutting operation supports the whole network providing a quick, efficient cutting and delivery service enabling our franchisees to offer attractive retail price points with good margins. To increase volume and accuracy, the Group has invested in a new cutting and sortation system. This valuable addition to the distribution centre is currently being installed and is expected to be operational in the final quarter of our financial year. The Warehousing division is seen as a key element of service to the store network and, whilst it is not intended to generate a normal, commercial return, a modest ongoing profit is the target.

Property

The Property division leases properties from third parties and sublets those properties to the store network.

People

Once again, on behalf of the Board, I would like to thank our franchisees, supplier partners, employees and everyone connected with the Group for their contribution in the first 6 months of this year and for their continued efforts to ensure a successful outcome for the year as a whole.

Outlook

Demand for our good quality, great value flooring and beds will continue to support this business and its ability to deliver reasonable returns over the long-term. For the business to flourish requires a positive market environment which has not been the case for some time alongside the ongoing political uncertainties which has unsettled consumer confidence and also the housing market. In the face of further Brexit uncertainty and a snap General Election, the important trading period since 30 September has proven to be more difficult with like for like sales for the 11 weeks since the period end 3.5% down. While the Board remain confident in the United Carpets model, the outcome for the full year could be significantly influenced by the ultimate conclusion to Brexit and also in the event of any prolonged period of significant adverse weather conditions. The Board therefore remains cautious over the outcome for the full year.

Importantly, the fundamentals of the business in terms of being virtually debt free, operating from a stable store network, under a well-known and trusted brand means that the business remains well placed to benefit from any potential upturn.

Peter Cowgill

Chairman

20 December 2019

Consolidated Statement of Comprehensive Income

For the 6 month period ended 30 September 2019

 
                                            Pro forma         Impact 
                                               IAS 17             of 
                                              6 month        IFRS 16 
                                               period        6 month        6 month 
                                                ended         period         period        6 month       Year 
                                         30 September          ended          ended   period ended      ended 
                                                 2019   30 September   30 September   30 September   31 March 
                                            Unaudited           2019           2019           2018       2019 
                                  Note                     Unaudited      Unaudited      Unaudited    Audited 
                                              GBP'000                                     Restated   Restated 
                                                             GBP'000        GBP'000        GBP'000    GBP'000 
 
Revenue                              2         14,749              -         14,749         10,807     23,983 
Cost of sales                                 (5,402)              -        (5,402)        (4,076)    (9,203) 
 
 
Gross profit                                    9,347              -          9,347          6,731     14,780 
 
Distribution costs                              (304)              -          (304)          (195)      (453) 
Administrative expenses                       (8,011)            312        (7,699)        (5,973)   (12,517) 
Impairment of receivables                       (878)              -          (878)           (91)      (579) 
Other operating 
 income                                             -              -              -             15          - 
 
 
Operating profit                                  154            312            466            487      1,231 
 
Financial income                                    4              -              4              5         12 
Financial expenses                                (4)          (466)          (470)          (496)      (967) 
 
 
Profit/(loss) before 
 tax                                              154          (154)              -            (4)        276 
 
Income tax (expense)/credit          3           (37)             29            (8)           (21)      (116) 
 
 
Profit/(loss) for 
 the period*                         2            117          (125)            (8)           (25)        160 
 
 
           Earnings per share        5 
           - Basic (pence per 
            share)                              0.14p        (0.15)p        (0.01)p        (0.03)p      0.20p 
           - Diluted (pence 
            per share)                          0.14p        (0.15)p        (0.01)p        (0.03)p      0.20p 
 
 

*All activities relate to continuing operations and are attributable to the owners of the parent.

There were no other recognized gains and losses for the current period other than shown above and therefore no separate Statement of Other Comprehensive Income has been presented.

Consolidated Statement of Financial Position

At 30 September 2019

 
                                                   At             At         At 
                                         30 September   30 September   31 March 
                                                 2019           2018       2019 
                                            Unaudited      Unaudited    Audited 
                                                            Restated   Restated 
                                  Note        GBP'000        GBP'000    GBP'000 
 
Non-current assets 
Intangible assets                                 108            136        109 
Right-of-use assets                  1         18,338         18,839     18,830 
Property, plant and equipment        4          3,022          2,544      2,846 
Investment property                                91             94         93 
Deferred tax assets                  1            318            310        350 
 
 
                                               21,877         21,923     22,228 
 
 
Current assets 
Inventories                                     2,201          2,053      2,146 
Trade and other receivables                     6,153          2,985      3,663 
Current tax receivable                             38             62         13 
Cash and cash equivalents                       1,215          2,064      2,259 
 
 
                                                9,607          7,164      8,081 
 
 
Total assets                                   31,484         29,087     30,309 
 
 
Capital and reserves 
                Issued capital                    814            814        814 
Retained earnings                               2,880          3,045      3,120 
 
 
Total equity attributable 
 to owners of the parent             1          3,694          3,859      3,934 
 
 
Non-current liabilities 
Lease liabilities                    1         17,071         17,313     17,470 
Borrowings - hire purchase 
 liabilities                                       65             35         96 
Trade and other payables             1            281            384        320 
 
 
                                               17,417         17,732     17,886 
 
 
Current liabilities 
Lease liabilities                    1          3,473          3,221      3,334 
Borrowings - hire purchase 
 liabilities                                       61             18         62 
Trade and other payables                        6,688          4,106      4,942 
Provisions                                        151            151        151 
 
 
                                               10,373          7,496      8,489 
 
 
Total liabilities                              27,790         25,228     26,375 
 
 
Total equity and liabilities                   31,484         29,087     30,309 
 
 

Consolidated Statement of Changes in Equity

For the 6 month period ended 30 September 2019

 
                                                                                                                                                                          Total equity 
                                                                                                                                                                          attributable 
                                                                                                                                Retained                                     to owners 
                                                                                               Issued                           earnings                                 of the parent 
                                                                                              capital                           Restated                                      Restated 
                                                               Note                           GBP'000                            GBP'000                                       GBP'000 
 
                         At 31 
                          March 
                          2018                                                                    814                              3,302                                         4,116 
 
                         Profit for 
                          the 
                          period                                                                    -                               (25)                                          (25) 
                         Equity                                   6                                 -                              (232)                                         (232) 
                         dividends 
 
 
                         At 30                                                                    814                              3,045                                         3,859 
                         September 
                         2018 
 
                         Profit for 
                          the 
                          period                                                                    -                                185                                           185 
                         Equity 
                          dividends                               6                                 -                              (110)                                         (110) 
 
 
                         At 31 
                          March 
                          2019                                                                    814                              3,120                                         3,934 
 
                         Loss for 
                          the 
                          period                                                                    -                                (8)                                           (8) 
                         Equity                                   6                                 -                              (232)                                         (232) 
                         dividends 
 
 
                         At 30 
                          September 
                          2019                                                                    814                              2,880                                         3,694 
 
 

Consolidated Statement of Cash Flows

For the 6 month period ended 30 September 2019

 
                                                         6 month        6 month       Year 
                                                    period ended   period ended      ended 
                                                    30 September   30 September   31 March 
                                                            2019           2018       2019 
                                                       Unaudited      Unaudited    Audited 
                                                                       Restated   Restated 
                                             Note        GBP'000        GBP'000    GBP'000 
 
Cash flows from operating activities 
Cash generated from operations                  7            709          1,068      3,131 
Income tax paid                                              (1)          (189)      (275) 
 
 
Net cash flows from operating activities                     708            879      2,856 
 
 
Cash flows from investing activities 
Acquisition of intangible assets                            (18)           (11)       (15) 
Acquisition of property, plant and 
 equipment                                                 (397)          (206)      (516) 
Proceeds from sale of property, plant 
 and equipment                                                 -              8         39 
Interest received                                              4              5         12 
 
 
Net cash flows from investing activities                   (411)          (204)      (480) 
 
 
Cash flows from financing activities 
Payment of lease liabilities                             (1,305)        (1,230)    (2,350) 
Payment of hire purchase liabilities                        (32)           (19)       (60) 
Interest paid                                                (4)            (2)        (5) 
Equity dividends paid                           6              -              -      (342) 
 
 
Net cash flows from financing activities                 (1,341)        (1,251)    (2,757) 
 
 
Increase in cash and cash equivalents 
 in the period                                           (1,044)          (576)      (381) 
Cash and cash equivalents at the 
 start of the period                                       2,259          2,640      2,640 
 
 
Cash and cash equivalents at the 
 end of the period                                         1,215          2,064      2,259 
 
 

Notes to the Condensed Consolidated Interim Financial Statements

   1.   Basis of preparation 

United Carpets Group plc (the "Company") is a public limited company incorporated in England and Wales. The Condensed Consolidated Interim Financial Statements of the Company for the 6 month period ended 30 September 2019 comprise the Company and its subsidiary undertakings (together referred to as the "Group").

The Group financial statements for the year ended 31 March 2019 were prepared in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee pronouncements as adopted by the European Union, approved by the Board of Directors on 23 August 2019 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) and 498(3) of the Companies Act 2006. These Condensed Consolidated Interim Financial Statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. These Condensed Consolidated Interim Financial Statements for the 6 month period ended 30 September 2019 are unaudited.

The accounting policies applied are consistent with those of the financial statements for the year ended 31 March 2019 and those that are expected to be adopted in the financial statements for the year ending 31 March 2020.

IFRS 16 'Leases'

IFRS 16 'Leases' has been applied in preparing these financial statements for the first time. IFRS 16 'Leases' replaces IAS 17 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Subject to exceptions, a right-of-use asset is capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a right-of-use asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease is recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition is replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs).

Under IFRS 16, the Group has recognised right-of-use assets of GBP18,338,000, capitalised lease liabilities of GBP20,544,000 and released a lease incentive accrual of GBP342,000 which in total, after an associated tax credit of GBP326,000, has reduced net assets by GBP1,538,000. The Group has recognised financial expenses on the lease liabilities of GBP466,000, reversed lease costs of GBP1,383,000 and recognised depreciation on the right-of-use assets of GBP1,071,000. The net impact on the Consolidated Statement of Comprehensive Income for the 6 month period ended 30 September 2019 being a reduction in profit before tax of GBP154,000. The following tables summarise the impacts of adopting IFRS 16 on the Group's Consolidated Statement of Financial Position at 30 September 2019 and its Consolidated Statement of Comprehensive Income for the 6 month period ended 30 September 2019.

Impact on the Consolidated Statement of Financial Position at 30 September 2019

 
                                                               Amounts 
                                                               without 
                                                              adoption 
                                                               of IFRS 
                               As reported     Adjustments          16 
                                    GBP000          GBP000      GBP000 
 
 Non-current assets 
 Right-of-use assets                18,338        (18,338)           - 
 Deferred tax assets                   318           (318)           - 
 
 Non-current liabilities 
 Lease liabilities                  17,071        (17,071)           - 
 Trade and other payables              281             342         623 
 Deferred tax liabilities                -               8           8 
 
 Current liabilities 
 Lease liabilities                   3,473         (3,473)           - 
 
 Total 
  equity 
  attributable 
  to 
  owners 
  of 
  the 
  parent 
 Retained 
  earnings                           3,694           1,538       5,232 
                            --------------  --------------  ---------- 
 

Impact on the Consolidated Statement of Comprehensive Income for the 6 month period ended 30 September 2019

 
                                                     Amounts 
                                                     without 
                                                    adoption 
                                                     of IFRS 
                     As reported     Adjustments          16 
                          GBP000          GBP000      GBP000 
 
 Administrative 
  expenses               (7,699)           (312)     (8,011) 
 Financial 
  expenses                 (470)             466         (4) 
                  --------------  --------------  ---------- 
 

Reconciliation of total equity attributable to owners of the parent

 
                         At              At          At 
                   31 March    30 September    31 March 
                       2018            2018        2019 
                     GBP000          GBP000      GBP000 
 
 Total 
  equity 
  attributable 
  to 
  owners 
  of 
  the 
  parent 
  as 
  previously 
  reported            5,271           5,115       5,347 
 IFRS 
  16 
  adjustments       (1,155)         (1,256)     (1,413) 
 
 
 Equity 
  as 
  reported            4,116           3,859       3,934 
 
 

Reconciliation of (loss)/profit for the financial period

 
                          6 month        Year 
                     period ended       ended 
                     30 September    31 March 
                             2018        2019 
                           GBP000      GBP000 
 
 Profit 
  for 
  the 
  period 
  as 
  previously 
  reported                     76         418 
 IFRS 
  16 
  adjustments               (101)       (258) 
 
 
 (Loss)/profit 
  for 
  the 
  period 
  as 
  reported                   (25)         160 
 
 
   2.   Segment reporting 

Segment information is presented in the Condensed Consolidated Interim Financial Statements in respect of the Group's business segments, which are the primary basis of segment reporting. The business segment reporting format reflects the Group's management and internal reporting structure.

Franchising and Retail is the income that the Group receives from its franchise activities together with the results of its corporate stores. The Instalment Payment Channel offers customers fixed, weekly payments with no hidden costs or extra charges. Warehousing reflects the results of the Group's in-house cutting operation which services the franchised and corporate stores and some third parties. The Property division leases properties from third parties and sublets those properties to the store network.

Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

 
                  Franchising        Instalment 
                   and Retail      Payment Channel     Warehousing                 Property                    Consolidated 
                                                                                                            6 month 
                                                                                                             period 
                                                                                                              ended       6 month 
                                                                                                                 30  period ended 
                                                                                                          September  30 September 
                   2019     2018     2019      2018     2019     2018     2019                      2018       2019          2018 
                                                             Restated                           Restated                 Restated 
                GBP'000  GBP'000  GBP'000   GBP'000  GBP'000  GBP'000  GBP'000                   GBP'000    GBP'000       GBP'000 
 
Gross sales       7,933    6,079    2,238         -    5,609    4,392    1,723                     1,592     17,503        12,063 
Inter-segment 
 sales                -        -     (71)         -  (2,113)    (851)    (570)                     (405)    (2,754)       (1,256) 
 
 
Segment 
 revenue          7,933    6,079    2,167         -    3.496    3,541    1,153                     1,187     14,749        10,807 
 
 
Segment 
 results           (15)      104       78         -      117       68      257                       255        437           427 
 
 
Unallocated 
 income                                                                                                          29            45 
Other 
 operating 
 income                                                                                                           -            15 
 
 
Operating 
 profit                                                                                                         466           487 
Financial 
 income                                                                                                           4             5 
Financial 
 expenses                                                                                                     (470)         (496) 
Income tax 
 expense                                                                                                        (8)          (21) 
 
 
Loss for the 
 period                                                                                                         (8)          (25) 
 
 
   3.   Income tax expense/(credit) 
    (a)    Analysis of charge for the period 
 
                                                                                   6 month             Year 
                                                             6 month          period ended            ended 
                                                        period ended          30 September         31 March 
                                                        30 September                  2018             2019 
                                                                2019              Restated         Restated 
                                                             GBP'000               GBP'000          GBP'000 
 Current tax: 
 Current year                                                      -                   (4)               87 
 Adjustment in respect of prior periods                         (24)                     -               44 
                                                             _______               _______          _______ 
 
                                                                (24)                   (4)              131 
                                                             _______               _______          _______ 
 Deferred tax: 
 Current year                                                     32                     9             (22) 
 Adjustment in respect of prior periods                            -                    16                7 
                                                             _______               _______          _______ 
 
                                                                  32                    25             (15) 
                                                             _______               _______          _______ 
 
                Total income tax expense recognised 
                 in the current period                             8                    21              116 
                                                             _______               _______          _______ 
 
   (b)     Reconciliation of total tax charge for the period 

The tax charge for the period differs from the standard rate of corporation tax in the UK of 19% (2018: 19%). The differences are explained below:

 
                                                                                   6 month             Year 
                                                             6 month          period ended            ended 
                                                        period ended          30 September         31 March 
                                                        30 September                  2018             2019 
                                                                2019              Restated         Restated 
                                                             GBP'000               GBP'000          GBP'000 
 
 (Loss)/profit before tax                                          -                   (4)              276 
                                                             _______               _______          _______ 
 
                Profit before tax multiplied by 
                 the rate of corporation tax in the 
                 UK of 19% (2018: 19%)                             -                   (1)               52 
 
                Effect of: 
   Expenses not deductible for tax 
    purposes                                                       5                     6                8 
 Adjustments in respect of prior years                          (24)                    16               51 
 Other                                                            27                     -                5 
                                                             _______               _______          _______ 
 
 Total tax                                                         8                    21              116 
                                                             _______               _______          _______ 
 
   4.   Property, plant and equipment 
 
                                                                               Fixtures, 
                                                                                fittings 
                                                              Short             and 
                      Freehold                            leasehold             office                                      Motor 
 Group                 property                            property             equipment                                   vehicles                 Total 
                            GBP'000                         GBP'000                  GBP'000                      GBP'000                          GBP'000 
 
 Cost 
 At 31 March 
  2019                          888                             922                            1,706                             285                 3,801 
 
 Additions                        -                              77                              320                               -                   397 
 Disposals                        -                            (18)                             (32)                               -                  (50) 
                      (___________)                   (___________)                    (___________)                   (___________)         (___________) 
 At 30 
  September 
  2019                          888                             981                            1,994                             285                 4,148 
                      (___________)                   (___________)                    (___________)                   (___________)         (___________) 
 
 Depreciation 
 At 31 March 
  2019                           66                             252                              541                   96                              955 
 
 Charge for 
  the year                       11                              48                               87                              27                   173 
 Eliminated on 
  disposal                        -                             (1)                              (1)                               -                   (2) 
                      (___________)                   (___________)                    (___________)                   (___________)         (___________) 
 At 30 
  September 
  2019                           77                             299                              627                             123                 1,126 
                      (___________)                   (___________)                    (___________)                   (___________)         (___________) 
 
 Net book 
 value 
 At 30 
  September 
  2019                          811                             682                            1,367                             162                 3,022 
                      (___________)                   (___________)                    (___________)                   (___________)         (___________) 
 At 31 March 
  2019                          822                             670                            1,165                             189                 2,846 
                      (___________)                   (___________)                    (___________)                   (___________)         (___________) 
 
   5.   Earnings per share 

Basic earnings per share

The calculation of basic earnings per share for the 6 month period ended 30 September 2019 was based on the loss attributable to ordinary shareholders of GBP8,000 (6 month period ended 30 September 2018: loss of GBP25,000, year ended 31 March 2019: profit of GBP160,000) and a weighted average number of ordinary shares outstanding of 81,400,000 for each period.

Diluted earnings per share

The calculation of diluted earnings per share for the 6 month period ended 30 September 2019 was based on the loss attributable to ordinary shareholders of GBP8,000 (6 month period ended 30 September 2018: loss of GBP25,000, year ended 31 March 2019: profit of GBP160,000) and a weighted average number of ordinary shares outstanding and potential ordinary shares during the 6 month period ended 30 September 2019 of 81,400,000 (6 month period ended 30 September 2018: 81,400,000, year ended 31 March 2019: 81,400,000).

   6.   Equity dividends 
 
                                                  6 month         6 month        Year 
                                             period ended    period ended       ended 
                                             30 September    30 September    31 March 
                                                     2019            2018        2019 
                                                  GBP'000         GBP'000     GBP'000 
 
 Final dividend in respect of 2017/18 
  approved during the period of 0.285p 
  per ordinary share, paid on 11 October 
  2018                                                  -             232         232 
 Interim dividend in respect of 2018/19 
  of 0.135p per ordinary share                          -               -         110 
 Final dividend in respect of 2018/19 
  approved during the period of 0.285p 
  per ordinary share, paid on 10 October 
  2019                                                232 
 
 
                                                      232             232         342 
 
 
 

An interim dividend in respect of 2019/20 of GBP110,000 (2018: GBP110,000) being 0.135p per share (2018: 0.135p per share) has been declared but not provided in these financial statements.

   7.   Cash generated from operations 

Reconciliation of the result for the period to cash generated from operations:

 
                                                     6 month         6 month        Year 
                                                period ended    period ended       ended 
                                                30 September    30 September    31 March 
                                                        2019            2018        2019 
                                                                    Restated    Restated 
                                                     GBP'000         GBP'000     GBP'000 
 
 (Loss)/profit before tax                                  -             (4)         276 
 Depreciation and other non-cash items: 
    Amortisation of intangible assets                     19              18          33 
    Depreciation of right-of-use assets                1,071             946       1,877 
    Depreciation of property, plant and 
     equipment                                           173             130         292 
 Depreciation of investment property                       2               1           2 
 Loss/(profit) on disposal of property, 
  plant and equipment                                     48             (8)        (31) 
 Changes in working capital: 
    Increase in inventories                             (55)           (163)       (256) 
    Increase in trade and other receivables          (2,490)           (743)     (1,421) 
    Increase in trade and other payables               1,475             400       1,404 
 Financial income                                        (4)             (5)        (12) 
 Financial expenses                                      470             496         967 
 
 
 Cash generated from operations                          709           1,068       3,131 
 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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December 20, 2019 02:00 ET (07:00 GMT)

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