RNS Number:6776N
Carpetright PLC
12 December 2006
12 December 2006
Carpetright plc
Interim Results Announcement for the 26 weeks ended 28 October 2006
Strong first half profit growth
Carpetright plc, Europe's leading specialist carpet and floor covering retailer
trading within the UK, Republic of Ireland, Belgium, The Netherlands and Poland,
today announces its interim results for the 26 weeks to 28 October 2006.
Highlights
Group
* Profit before tax increased 11.2% to #27.7m (2005: #24.9m)
* Underlying* profit before tax increased 17.6% to #26.0m (2005: #22.1m)
* Underlying* earnings per share increased 17.0% to 26.2p (2005: 22.4p)
* Basic earnings per share increased 10.7% to 28.0p (2005: 25.3p)
* Net debt reduced to #22.9m (2005: #49.7m)
* Interim dividend increased by 5.3% to 20.0p (2005: 19.0p)
UK and Republic of Ireland
* Underlying* operating profit increased 16.7% to #25.2m (2005: #21.6m)
* Total sales increased by 5.7% with like for like sales up by 0.9%
* Gross margin increased to 61.9% (2005: 59.6%)
* 63 stores opened and nine closed taking the total store base to 494
Rest of Europe
* Underlying* operating profit increased by 21.4% to #1.7m (2005: #1.4m)
* Total sales increased 8.1% with like for like sales up by 4.4%
* Three new stores opened taking the total store base to 101
* Poland expansion continues as planned
* 'Underlying' excludes profits / (losses) from the disposal of property, plant
and equipment together with associated tax
Lord Harris, Chairman and Chief Executive, said:
"We are pleased with Carpetright's first half performance. Sales and margin
growth have enabled the Group to deliver a strong increase in underlying
operating profit.
Net debt has reduced by #26.8 million to #22.9 million despite a strong
investment in new stores. We have opened 66 stores in the period and increased
our selling space by 5.3%. These openings include 20 concession stores in House
of Fraser and our third store in Poland.
In the Rest of Europe we have delivered strong underlying profits in Belgium and
The Netherlands of #2.0 million and the initial operating loss in Poland of #0.3
million is in line with our plans.
We are confident about the Group's prospects. Since the end of October we have
opened our 600th store and we are continuing to grow sales in all our markets."
For further enquiries please contact:
Carpetright plc
Lord Harris of Peckham, Chairman and Chief Executive
Ian Kenyon, Group Finance Director
Telephone 020 7638 9571 (until 2pm), 01708 525522 (thereafter)
Citigate Dewe Rogerson
Sara Batchelor / Kevin Smith / Fiona Mulcahy
Telephone 020 7638 9571
A copy of the interim results can be found on our website www.carpetright.plc.uk
today from 7.00am.
There will be a presentation today at 9.00am to analysts and investors at
Deutsche Bank AG London, Winchester House, 1 Great Winchester Street, London,
EC2N 2DB. A copy of the slides used for this presentation can be found on our
website www.carpetright.plc.uk from 9.00am.
Certain statements made in this announcement are forward looking. Such
statements are based on current expectations and are subject to a number of
risks and uncertainties that could cause the actual results to differ
materially.
Overview of Group financial performance
2006 2005 %
Key financial results #m #m Change
Group sales 228.4 215.5 6.0%
Underlying operating profit*
- UK and RoI 25.2 21.6 16.7%
- Rest of Europe 1.7 1.4 21.4%
- Total 26.9 23.0 17.0%
Exceptional items 1.7 2.8 (39.3%)
Operating profit 28.6 25.8 10.9%
Interest (0.9) (0.9) -
Profit before taxation 27.7 24.9 11.2%
Underlying pre tax profit* 26.0 22.1 17.6%
Underlying earnings* per share (pence) 26.2 22.4 17.0%
Basic earnings per share (pence) 28.0 25.3 10.7%
Interim dividend per share (pence) 20.0 19.0 5.3%
* "Underlying" excludes profits / (losses) from the disposal of property, plant
and equipment together with associated tax.
Carpetright has continued to make good progress - during the first half of the
year 66 stores were opened, including our 100th store in the Rest of Europe.
The Group was trading from 595 stores at the end of the period. The number of
small stores has nearly doubled in the last year, from 34 to 64, reflecting our
stated strategy of moving to small, less expensive retail units. Sales of cut
length carpet have been strong and we are seeing good growth from new stores and
new products.
Results
Group sales increased by 6.0% to #228.4 million with like for like growth of
0.9% in the UK & RoI and 4.4% in the Rest of Europe. Underlying operating
profit increased by 17.0% to #26.9 million (2005: #23.0 million) which
represents an 11.8%
(2005: 10.7%) return on sales.
The net interest charge remained flat at #0.9 million resulting in the
underlying profit before tax increasing by 17.6% to #26.0 million (2005: #22.1
million).
The Group recorded, as exceptional items, a profit on the disposal of property
assets of #1.7 million (2005: #2.8 million) resulting in a profit before tax of
#27.7 million (2005: #24.9 million). Underlying earnings per share increased by
17.0% to 26.2p whilst basic earnings per share increased by 10.7% to 28.0p.
Cash flow and debt
The Group remains highly cash generative and has continued to invest in its
store opening programme. Net debt has reduced by #26.8 million to #22.9 million
(2005: #49.7 million). This is a reduction of #6.2 million on the April 2006
year-end.
Operating cash-flow was #37.6 million (2005: #33.6 million) and capital payments
totalled #15.3 million. The capital payments include #3.0 million spent on the
acquisition of freehold / long leasehold properties.
Dividend
The Board has declared an interim dividend of 20.0p (2005: 19.0p) an increase of
5.3%. The dividend will be paid on 16 February 2007 to shareholders on the
register on 2 February 2007.
UK and Republic of Ireland
Financial results
2006 2005 %
UK & RoI - Key financial results #m #m Change
Sales 200.5 189.7 5.7%
Gross Profit 124.2 113.0 9.9%
Gross margin % 61.9% 59.6% 2.3pp
Underlying operating profit 25.2 21.6 16.7%
Underlying operating margin % 12.6% 11.4% 1.2pp
The business achieved an underlying operating profit of #25.2 million, an
increase of 16.7% compared to last year.
Total sales increased by 5.7% to #200.5 million and like for like sales
increased by 0.9%. The remainder of the increase came from new stores, with an
overall growth in average space of 7.8%. Sales growth during the period was
interrupted by the summer heatwave.
The promotional programme succeeded in increasing sales of cut-length carpets
whilst the continuing decline in laminate sales was more than offset by the
growth in rug sales.
The gross profit increased by 9.9% with a continued increase in the gross margin
to 61.9%. This is 2.3 percentage points ahead of the first half last year and
30 basis points ahead of the second half. This improvement reflects better
management of the promotional mix, improved supplier rebates and lower levels of
stock loss.
Operating costs increased by 8.3% to #99.0 million. The major increases have
been in labour costs, rates and utilities but these have been offset, in part,
by reductions in advertising spend. Rent costs have continued to increase but
we see signs that the level of increase is reducing and some reviews are now
being settled with no increase.
The underlying operating margin was 12.6% (2005: 11.4%). We expect this to
continue to increase as the new stores mature and like for like sales improve.
Stores
Our store base continues to expand - we have opened 63 stores in the period
including our first outlets in Jersey. The store make-up is now :
April 2006* 26 weeks to October 2006
UK & RoI 28 October 2006
store base Stores Sq ft '000 Openings Closures Stores Sq ft '000
Large 355 3,486 19 (7) 367 3,591
Small 45 230 19 - 64 320
Concession 40 105 25 (2) 63 146
440 3,821 63 (9) 494 4,057
* Restated for recategorisation of stores
20 concession stores in House of Fraser were opened - their early performance is
satisfactory. The small store expansion has accelerated whilst the ongoing
steady reduction in the size of the large stores helps to control rental costs.
Four new stores opened in the Republic of Ireland in the period taking the total
to 23.
We plan to open another 20 stores in the second half and expect to close the
year with over 500 stores in the UK and Republic of Ireland.
Product
The main area of growth in the first half has been the cut-length business with
mocha starting to replace beige in terms of colours. Wool product ranges have
been extended and this has supported a small increase in the average selling
price.
The major innovation has been in the areas of vinyls, rugs and laminate. The
vinyl ranges have been simplified and the in-store ranges are moving from five
colours per range to six as new vinyl racks are introduced. The laminate market
appears to have stabilised following two years of decline and the laminate
ranges in store have been simplified into three clear price points. These
ranges are supported by a range of approximately 24 laminates, available to
order, which are typically at higher price points.
During 2006 the business has expanded its range and sales of rugs and is now in
the process of rolling out new rug areas into approximately 200 stores. These
provide more space and appropriate displays to encourage customers to view the
ranges more easily and sales have built steadily. It is our intention to grow
sales from rugs to 5% of the total sales from the current level of approximately
2%.
Operations
The primary focus has been on the successful opening of the 63 new stores by
ensuring that new staff are properly trained to provide great service and that
they are supported by an adequate pool of quality fitters.
At the same time the business has concentrated on the new store system that is
part of the IT infrastructure investment. The system, Navision, has been
piloted during the period and is now operational in 16 stores. The system is
working as anticipated and has been welcomed by the store staff. Roll-out will
commence in February 2007 and will be completed during 2008.
We were delighted to be awarded the prize of Retail IT Team of the Year in the
Retail Systems magazine awards. This recognised the success of the overall IT
infrastructure programme and in particular our sustained efforts with getting
SAP and Navision live.
Rest of Europe
Financial Results
2006 2005 %
Rest of Europe - Key financial results #m #m Change
Sales 27.9 25.8 8.1%
Gross profit 15.1 13.9 8.6%
Gross margin % 54.1% 53.9% 0.2pp
Underlying operating profit 1.7 1.4 21.4%
Underlying operating margin % 6.1% 5.4% 0.7pp
The business achieved an underlying operating profit of #1.7 million, an
increase of 21.4% compared to last year. Included within this result are the
initial operating losses in Poland which totalled #0.3 million. Excluding these
losses the business has increased underlying operating profit by 42.9%.
Total sales increased by 8.1% to #27.9 million. In local currency Belgium and
The Netherlands grew sales by 7.4% with like for like growth of 4.4%. This
performance demonstrates the continuing improvements we are making and the
growing awareness of the Carpetright brand in both countries.
The sales mix in Belgium and The Netherlands has remained relatively stable
although, unlike the UK, we have seen continued increases in laminate sales as
the market is far stronger.
The gross profit increased with the gross margin improving to 54.1% (2005:
53.9%). This represents a 30 basis point improvement in Belgium and The
Netherlands offset by lower margins in Poland. The margin in Poland is above
our initial expectation and continues to improve. We will continue to grow
margins in each country as sales volumes increase.
Average space increased by 7.3% compared to last year whilst operating costs
increased by 7.2% to #13.4 million. Utility costs increased, though not as
sharply as in the UK, and there is not the same pressure on property costs.
Sub-let income fell slightly in the period following the disposal of a sub-let
property which generated an exceptional profit of #0.1 million.
The underlying operating margin (excluding Poland) rose to 7.2% (2005: 5.4%) and
we expect this to continue increasing as the sales continue to grow.
Stores
We opened three stores in the period and now have over 100 stores trading in the
Rest of Europe. The store make-up at the period end is :
April 2006 26 weeks to October 2006
Rest of Europe 28 October 2006
store base Stores Sq ft '000 Openings Closures Stores Sq ft '000
Belgium 28 347 - - 28 347
Netherlands 68 836 2 - 70 854
Poland 2 23 1 - 3 35
98 1,206 3 - 101 1,236
Since the half year two more stores have opened in Poland and we are targeting a
further three more in Poland and three more in The Netherlands before the year
end. This would bring us to eight stores in Poland and 73 in The Netherlands.
Product
The major focus in the period has been to develop our ranges in Belgium to
tailor them more closely to the different customer demands in the French and
Flemish speaking markets.
Across all the stores we have looked to create new marketing initiatives that
stimulate customer demand and we have run successful "spend and save", single
discount and "Madness" promotions in Belgium and The Netherlands.
In Poland we have introduced cut-length product into our third store and believe
this will help to drive sales of roll-stock carpet as well as cut-length. The
sales mix is gradually moving from rugs towards carpet as the Polish customer
becomes more familiar with the product.
Operations
Having completed the re-branding of our existing stores, the operational focus
has been on the successful opening of new stores.
In our existing stores we have continued to drive performance through the
rollout of sales training across The Netherlands, with Belgium to follow in the
second half. Sales skill training has also formed a key part of our initial
investment in the Polish market.
Summary and Outlook
Overall we are pleased with the Group's first half performance. Revenue growth
and margin improvements more than offset the increased costs enabling us to
deliver a strong increase in operating profits.
Since the end of October we have opened our 600th store. Looking ahead, the
Group will continue to focus on delivering sales growth and increased market
share in all its markets through a combination of new stores and same store
growth.
Gross margin is expected to improve further and cost inflation should start to
moderate in 2007. This will be supported by our ongoing relocation strategy as
we exit large, expensive stores in favour of smaller, cheaper units.
Cash generation will also remain a key objective in order to sustain long-term
organic growth in our existing and new markets.
We are confident that these actions will continue to provide our customers with
outstanding service, choice and value and will deliver sustainable growth for
shareholders.
STORE PORTFOLIO
2006 2005
Store Base - Numbers 28 October 29 April 29 October 30 April
2006 2006 2005 2005
UK & RoI
Large 367 355 346 345
Small 64 45 34 28
Concessions 63 40 35 30
494 440 415 403
Rest of Europe
Belgium 28 28 29 28
The Netherlands 70 68 64 61
Poland 3 2 - -
101 98 93 89
Group Total 595 538 508 492
2006 2005
Store Space 28 October 29 April 29 October 30 April
(Sq ft - thousands) 2006 2006 2005 2005
UK & RoI
Large 3,591 3,486 3,421 3,404
Small 320 230 178 146
Concessions 146 105 77 68
4,057 3,821 3,676 3,618
Rest of Europe
Belgium 347 347 368 359
The Netherlands 854 836 814 784
Poland 35 23 799 -
1,236 1,206 1,167 1,143
Group Total 5,293 5,027 4,843 4,761
2006 2005
Store Size 28 October 29 April 29 October 30 April
(Average sq ft per store) 2006 2006 2005 2005
UK & RoI
Large 9,784 9,820 9,887 9,867
Small 5,000 5,111 5,235 5,214
Concessions 2,317 2,625 2,200 2,267
8,213 8,684 8,858 8,978
Rest of Europe
Belgium 12,393 12,393 12,690 12,821
The Netherlands 12,200 12,294 12,484 12,852
Poland 11,667 11,500 - -
12,238 12,306 12,548 12,843
Group Total 8,897 9,344 9,533 9,677
Some historical information has been restated for recategorisation of stores
Carpetright plc
Consolidated income statement (unaudited)
26 weeks to 28 October 2006
Continuing operations Note 26 weeks to 26 weeks to 52 weeks to
28 October 29 October 29 April
2006 2005 2006
#m (restated) (restated)
#m #m
Revenue 2 228.4 215.5 451.4
Cost of sales (89.1) (88.6) (180.8)
Gross profit 2 139.3 126.9 270.6
Other operating income 2.5 3.6 9.2
Administrative expenses (113.2) (104.7) (213.6)
Operating profit 2 28.6 25.8 66.2
Analysed as:
Operating profit before exceptional items 26.9 23.0 58.7
Exceptional items 3 1.7 2.8 7.5
Interest payable (1.0) (1.0) (2.5)
Interest receivable 0.1 0.1 0.5
Profit before tax 27.7 24.9 64.2
Tax 4 (8.7) (7.7) (20.1)
Profit for the financial period, attributable to 19.0 17.2 44.1
equity shareholders of the parent company
Basic earnings per share 6 28.0p 25.3p 65.0p
Diluted earnings per share 6 28.0p 25.3p 65.1p
Interim dividend per share 5 20.0p 19.0p 49.0p
Consolidated statement of recognised income and expenses (unaudited)
26 weeks to 28 October 2006
Note 26 weeks to 26 weeks to 52 weeks to
28 October 29 October 29 April
2006 2005 2006
#m #m #m
Profit for the financial period 19.0 17.2 44.1
Actuarial gains on defined benefit pension scheme 8 - - 0.9
Fair value gains/(losses) in respect of cash flow
hedges:
On first-time adoption of IAS 32 and IAS 39 - - (0.1)
Transferred to hedging reserve - - 0.2
Exchange differences 10 (1.0) 0.1 0.8
Tax on items taken directly to or transferred from
equity - - (0.3)
Net gains/(losses) recognised directly in equity (1.0) 0.1 1.5
Total recognised income and expense for the financial
period, attributable to equity shareholders of the
parent company 18.0 17.3 45.6
Carpetright plc
Group balance sheet (unaudited)
As at 28 October 2006
Note 29 October 29 April
28 October 2005 2006
2006 (restated) (restated)
#m #m #m
Assets
Non-current assets
Intangible assets 36.7 32.4 34.3
Property, plant and equipment 125.4 119.7 122.0
Investment property 20.4 23.0 21.3
Deferred tax asset 0.9 1.1 1.0
Derivative financial instruments 11(ii) 0.1 - 0.1
Trade and other receivables 1.6 - 1.7
Total non-current assets 185.1 176.2 180.4
Current assets
Inventories 34.2 28.8 32.6
Trade and other receivables 28.9 27.1 25.7
Cash and cash equivalents 11(ii) 9.5 3.6 9.3
Total current assets 72.6 59.5 67.6
Total assets 257.7 235.7 248.0
Liabilities
Current liabilities
Trade and other payables (127.3) (107.3) (112.3)
Borrowings and overdrafts 11(ii) (15.1) (24.1) (13.3)
Current tax liabilities (9.1) (4.9) (8.9)
Total current liabilities (151.5) (136.3) (134.5)
Non-current liabilities
Trade and other payables (13.9) (11.1) (11.8)
Obligation under finance leases 11(ii) (4.1) (4.8) (4.4)
Borrowings 11(ii) (12.6) (23.7) (20.0)
Provisions (0.1) (0.3) (0.1)
Deferred tax liabilities (20.6) (17.8) (19.7)
Retirement benefit obligation (1.5) (2.4) (1.5)
Total non-current liabilities (52.8) (60.1) (57.5)
Total liabilities (204.3) (196.4) (192.0)
Net assets 53.4 39.3 56.0
Equity
Share capital 9 0.7 0.7 0.7
Share premium 9 14.8 14.1 14.8
Treasury share reserve 9 (0.5) (0.1) (0.1)
Other reserves 10 38.4 24.6 40.6
Total equity, attributable to equity shareholders of 53.4 39.3 56.0
the parent company
Carpetright plc
Consolidated cash flow statement (unaudited)
26 weeks to 28 October 2006
Note 26 weeks to 26 weeks to 52 weeks to
28 October 29 October 29 April
2006 2005 2006
#m #m #m
Cash flows from operating activities
Profit before tax 27.7 24.9 64.2
Adjusted for:
Depreciation and amortisation 6.6 6.4 13.6
Share based payments 0.2 0.1 0.4
Profit on sale of property, plant and equipment and 3 (1.7) (2.8) (7.5)
investment property
Net interest payable 0.9 0.9 2.0
Operating cash flows before movements in working capital 33.7 29.5 72.7
(Increase)/decrease in inventories (1.8) 1.9 (1.9)
Increase in trade and other receivables (4.0) (6.4) (5.3)
Increase in trade and other payables 18.1 15.9 20.9
Cash generated by operations 46.0 40.9 86.4
Interest paid (1.0) (0.8) (2.4)
Interest received 0.1 0.1 0.7
Corporation taxes paid (7.5) (6.6) (12.9)
Net cash from operating activities 37.6 33.6 71.8
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment
and investment property 3 3.7 7.9 19.0
Purchases of intangible assets (3.3) (5.3) (8.5)
Purchases of property, plant and equipment and investment property (12.0) (14.3) (27.0)
Acquisition of shares in subsidiary net of cash acquired - (5.2) (5.2)
Net cash used in investing activities (11.6) (16.9) (21.7)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital to satisfy
share option scheme exercises 9 - - 0.7
Purchase of own shares (ii) 9 (0.4) (9.3) (9.3)
Repayment of borrowings (4.9) - (1.5)
Receipt of funds from finance company - 3.7 3.7
Repayment of obligation under finance leases (0.4) (0.3) (0.7)
Dividends paid to Group shareholders 5 (20.4) (19.0) (31.9)
Net cash used in financing activities (26.1) (24.9) (39.0)
Net increase/(decrease) in cash and
cash equivalents in the period 11(i) (0.1) (8.2) 11.1
Cash and cash equivalents at beginning of period 6.8 (4.2) (4.2)
Exchange differences - (0.1) (0.1)
Cash and cash equivalents at end of period (i) 11(ii) 6.7 (12.5) 6.8
(i) For the purposes of the consolidated cash flow statement, cash and cash
equivalents include bank overdrafts of #2.8m (#16.1m at 29 October 2005, #2.5m
at 29 April 2006) shown within borrowings on the balance sheet.
(ii) The cash outflow for the period to 29 October 2005 includes a #9.3m payment
for shares bought back from the market before 30 April 2005, but not paid for
until the period ended 29 October 2005.
Carpetright plc
Notes to the interim financial statements
26 weeks to 28 October 2006
1. Basis of preparation
This financial information comprises the consolidated interim balance sheets as
at 28 October 2006 and 29 October 2005 and related consolidated interim
statements of income, recognised income and expenses and cash flows for the six
months then ended of Carpetright plc ("financial information"). This financial
information has been prepared in accordance with the Listing rules of the
Financial Services Authority. This financial information has been prepared using
the principal accounting policies as set out on pages 44 to 51 of the Group's
annual financial statements for the year ended 29 April 2006. In preparing these
interim financial statements the Group has chosen not to adopt IAS 34 - 'Interim
Financial Reporting' early and, therefore, they are not in full compliance with
IFRS.
Following a review of the classifications of some items changes in presentation
have been made in the current accounting period. Comparative periods have been
restated to conform with current presentation. The effects on the period to 29
October 2005 are:
i) To move #0.3m (April 2006; #0.3m) of costs in Rest of Europe from
administrative expenses to cost of sales to treat distribution costs
consistently with UK & RoI.
ii) To move #0.7m from borrowings and overdrafts to current trade and other
payables to consistently disclose the current portion of finance lease
obligations.
iii) To move #11.1m (April 2006; #11.8m) from current trade and other payables
to non-current trade and other payables to correctly analyse deferred income
relating to lease incentives.
iv) To move #23.0m from property, plant and equipment to investment property.
This interim report does not constitute statutory accounts as defined by Section
240 of the Companies Act 1985. It has been reviewed but not audited by the
Group's auditors. The statutory accounts for the year ended 29 April 2006, which
were prepared under IFRS, have been delivered to the Registrar of Companies. The
auditors opinion on those accounts was unqualified and did not contain a
statement made under Section 237 (2) or (3) of the Companies Act 1985.
2. Segment information
The Group's primary reporting segment is geographic, as this is the basis on
which the Group is organised and managed. The Group does not report a secondary
segment on the basis of business operations because business operations
throughout the Group are the same. The geographical sectors are: United Kingdom
& Republic of Ireland ("UK & RoI"), and Poland, Belgium and The Netherlands
("Rest of Europe"). Central costs are incurred principally in the UK and are
immaterial. As such these costs are included within the UK & RoI segment.
Segment revenue and result include transfers between geographical segments.
Such transfers are priced at arm's length and are eliminated on consolidation.
Geographical segments:
26 weeks to 28 October 2006 26 weeks to 29 October 2005
Rest of (restated)
UK & RoI Europe Total UK & Rest of
RoI Europe Total
#m #m #m #m #m #m
Gross Revenue 201.8 27.9 229.7 191.0 25.8 216.8
Inter-segment revenue (1.3) - (1.3) (1.3) - (1.3)
Segment Revenue (by origin and destination) 200.5 27.9 228.4 189.7 25.8 215.5
Gross profit 124.2 15.1 139.3 113.0 13.9 126.9
Operating profit before exceptional items 25.2 1.7 26.9 21.6 1.4 23.0
Segment result: operating profit after exceptional
items 26.8 1.8 28.6 24.4 1.4 25.8
Net interest payable (0.9) (0.9)
Profit before tax 27.7 24.9
Tax (8.7) (7.7)
Profit for the financial period 19.0 17.2
Carpetright plc
Notes to the interim financial statements
26 weeks to 28 October 2006
3. Exceptional items
26 weeks to 26 weeks to 52 weeks to
28 October 29 October 29 April
2006 2005 2006
#m #m #m
Disclosed in the income statement:
Profit on disposal of property, plant and equipment and investment
property 1.7 2.8 7.5
Recognised in the balance sheet:
Property debtors 2.3 2.9 1.7
Reported in the cash flow statement:
Within investing activities 3.7 7.9 19.0
4. Tax
26 weeks to 26 weeks to 52 weeks to
28 October 29 October 29 April
2006 2005 2006
#m #m #m
Current 7.7 6.0 16.7
Deferred 1.0 1.7 3.4
8.7 7.7 20.1
The estimated tax rates on the profits of the Group are as follows:
52 weeks to 52 weeks to
28 April 29 Apri
2007 2006
% %
Estimated average annual underlying tax rate 31.4 31.4
Estimated average annual effective tax rate 31.3 31.2
The effective tax rate is defined as the tax charged or credited as a percentage
of the accounting profit before tax. The underlying tax rate is defined as the
effective tax rate after adjusting for, when relevant, exceptional items and tax
adjustments in respect of one-off items and prior periods.
5. Dividends
26 weeks to 28 October 2006 26 weeks to 29 October 2005
Pence/share #m Pence/share #m
Final prior year dividend paid (see note 10) 30.0 20.4 28.0 19.0
Current year interim dividend 20.0 13.6 19.0 12.9
The current year interim dividend of 20.0p per share was declared by the Board
of Directors on 11 December 2006 but has not been included as a liability in
these financial statements. The dividend will be paid on 16 February 2007 to
shareholders who are on the register of members on 2 February 2007.
Carpetright plc
Notes to the interim financial statements
26 weeks to 28 October 2006
6. Earnings per share
26 weeks to 28 October 2006 26 weeks to 29 October 2005 52 weeks to 29 April 2006
Earnings Weighted Earnings Earnings Weighted Earnings Earnings Weighted Earnings
#m Average Per #m Average per share #m Average per share
number of Share Number Pence Number Pence
shares Pence of shares of shares
Millions Millions Millions
Basic
earnings
per share 19.0 67.9 28.0 17.2 67.8 25.3 44.1 67.8 65.0
Effect of
dilutive
share
options - - - - - - 0.1 0.1 0.1
Diluted
earnings
per share 19.0 67.9 28.0 17.2 67.8 25.3 44.2 67.9 65.1
The Directors have presented an additional measure of earnings per share based
on underlying earnings, in accordance with the practice adopted by most major
retailers, as they believe this provides a more comparable measure on an ongoing
basis. Underlying earnings is defined as profit after adjusting for post tax
exceptional items.
26 weeks to 26 weeks to 52 weeks to
28 October 29 October 29 April
2006 2005 2006
Pence Pence Pence
Basic earnings per share 28.0 25.3 65.0
Adjusted for the effect of exceptional items:
Profit on disposal of property, plant and equipment and investment (2.5) (4.2) (11.1)
property
Tax 0.7 1.3 3.6
Underlying earnings per share 26.2 22.4 57.5
7. Intangible assets, property, plant and equipment and investment property
During the period, the Group spent #15.3m on the acquisition of assets #12.0m of
which related to new and existing stores, with most of the remainder arising on
the capitalisation of software costs.
During the period the Group disposed of a number of properties in the UK & RoI
and one property in the Rest of Europe. The proceeds from these disposals were
#3.7m giving a profit of #1.7m.
8. Retirement benefit obligation
The assets and liabilities of the Group's UK defined benefit pension scheme were
valued on an IAS 19 basis at 29 April 2006 by a qualified actuary. The amount
recognised in the income statement in the period reflects the expected service
costs, the expected return on assets and the expected interest cost on the
pension scheme obligations. As there has been no valuation of the pension fund
at 28 October 2006 no actuarial gains or losses have been recognised in the
Statement of recognised income and expenses.
Carpetright plc
Notes to the interim financial statements
26 weeks to 28 October 2006
9. Share capital, share premium and treasury share reserve
Number of Share Share Treasury
Shares Capital Premium Shares Total
Million #m #m #m #m
At 30 April 2005 67.8 0.7 14.1 (0.1) 14.7
Issue of ordinary share capital to satisfy share
option scheme exercises 0.1 - 0.7 - 0.7
At 29 April 2006 67.9 0.7 14.8 (0.1) 15.4
Purchase of own shares by employee share trust - - - (0.4) (0.4)
At 28 October 2006 67.9 0.7 14.8 (0.5) 15.0
There were no movements in the period to 29 October 2005.
During the period the Group funded the purchase of 30,000 Company shares by the
Group's LTIP trust via an interest-free loan amounting to #0.4m. These shares
are classified as treasury shares.
10. Other reserves
Capital
Redemption Translation Hedging Retained
Reserve Reserve Reserve Earnings Total
#m #m #m #m #m
At 30 April 2006 0.1 0.6 0.2 39.7 40.6
Exchange difference in respect of hedged equity
investments - (1.0) - - (1.0)
Profit for the period - - - 19.0 19.0
Total recognised income and expense for the period - (1.0) - 19.0 18.0
Share-based payments net of tax - - - 0.2 0.2
Dividend paid to Group shareholders - - - (20.4) (20.4)
At 28 October 2006 0.1 (0.4) 0.2 38.5 38.4
Capital
Redemption Translation Hedging Retained
Reserve Reserve Reserve Earnings Total
#m #m #m #m #m
At 1 May 2005 0.1 (0.2) - 26.3 26.2
Exchange difference in respect of hedged equity
investments - 0.1 - - 0.1
Profit for the period - - - 17.2 17.2
Total recognised income and expense for the period - 0.1 - 17.2 17.3
Share-based payments net of tax - - - 0.1 0.1
Dividend paid to Group shareholders - - - (19.0) (19.0)
At 29 October 2005 0.1 (0.1) - 24.6 24.6
Carpetright plc
Notes to the interim financial statements
26 weeks to 28 October 2006
11. Notes to cash flow statement
i) Reconciliation of Net debt
26 weeks to 26 weeks to 52 weeks to
28 October 29 October 29 April
2006 2005 2006
#m #m #m
Net debt at the beginning of the period (29.1) (37.9) (37.9)
Net increase/(decrease) in cash and cash equivalents (0.1) (8.2) 11.1
(Increase)/decrease in borrowings, obligations under finance leases and 5.3 (3.4) (1.4)
derivative financial instruments (1)
Exchange differences 1.0 (0.2) (0.9)
Net debt at the end of the period (22.9) (49.7) (29.1)
ii) Components of net debt
Cash and cash equivalents per the balance sheet 9.5 3.6 9.3
Bank overdrafts (2.8) (16.1) (2.5)
Cash and cash equivalents per the cash flow statement 6.7 (12.5) 6.8
Borrowings less than one year (12.3) (8.0) (10.8)
Borrowings over one year (12.6) (23.7) (20.0)
Obligation under finance leases less than one year (0.7) (0.7) (0.8)
Obligation under finance leases over one year (4.1) (4.8) (4.4)
Derivative financial instruments 0.1 - 0.1
Net debt (22.9) (49.7) (29.1)
(1) Comparatives have been restated to include derivative financial
instruments
12. Foreign Exchange
The principle exchange rates used were as follows:
Euro 26 weeks to 26 weeks to 52 weeks to
28 October 29 October 29 April
2006 2005 2006
Average 1.47 1.47 1.46
Closing 1.49 1.47 1.44
Independent review report to Carpetright Plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 28 October 2006 which comprises the consolidated interim
balance sheet as at 28 October 2006 and the related consolidated interim
statements of income, cash flows and statements of recognised income and expense
then ended and related notes. We have read the other information contained in
the interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing Rules
of the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
This interim report has been prepared in accordance with the basis set out in
Note 1.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of the Listing Rules of the Financial Services Authority
and for no other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
The maintenance and integrity of the Carpetright plc's web site is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information may differ from legislation in other jurisdictions.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 28 October 2006.
PricewaterhouseCoopers LLP
Chartered Accountants
London
11th December 2006
This information is provided by RNS
The company news service from the London Stock Exchange
END
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