RNS Number:6065J
Carpetright PLC
11 December 2007
Carpetright plc
Interim Results Announcement for the 26 weeks ended 27 October 2007
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 27 October 2007.
Highlights
Group
* Underlying* profit before tax increased 4.6% to #27.2m (2006: #26.0m)
* Profit before tax increased 1.4% to #28.1m (2006: #27.7m)
* Underlying* earnings per share increased 8.4% to 28.4p (2006: 26.2p)
* Basic earnings per share increased 5.4% to 29.5p (2006: 28.0p)
* Store base increased to 658
UK and Republic of Ireland
* Underlying* operating profit increased 1.2% to #25.5m (2006: #25.2m)
* Total sales increased by 9.2%
* Like for like sales reduced by 3.4% due to weak October trading
* Store base, including Storeys, increased to 546
Rest of Europe
* Underlying* operating profit increased by 41.2% to #2.4m (2006: #1.7m)
* Total sales increased by 14.7% with like for like sales up by 7.6%
* Store base increased to 112
* 'Underlying' excludes profits on property disposals and non-recurring items
together with associated tax
Lord Harris, Chairman and Chief Executive, said:
"We have made good progress across the Group in the first half. The acquisition
of Storeys at the start of May and commencement of construction of our new
distribution centre are important strategic developments and both projects are
progressing to plan. They will contribute fully to the Group's performance in
2008/09."
"Our trading performance in Europe has been strong but market conditions in the
UK in October have adversely affected the results for the first half although
the second half has started strongly. We expect the rest of the year will be
challenging. We continue to ensure we focus on profitable growth and anticipate
that net debt will have reduced significantly by the year end."
Possible offer and interim dividend
The consortium headed by Lord Harris and other members of the senior Carpetright
management team (the "Consortium") is in the process of completing its due
diligence exercise. The discussions between the Consortium and the Independent
Committee of the Board of Carpetright regarding the proposal are at an advanced
stage and remain on the same terms as outlined in the announcement of 9 October
2007.
Consequently the Board has not declared an interim dividend at this stage but,
in the absence of a formal recommended offer being made by the Consortium, would
declare an interim dividend of 20.0 pence per share (2006: 20.0 pence) in
respect of the 26 weeks to 27 October 2007. It is intended that any interim
dividend, if declared, would be paid on 22 February 2008 to shareholders on the
register on 8 February 2008.
There can be no certainty that a firm offer will be forthcoming and a further
announcement will be made as and when appropriate.
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
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 in this half year report are forward looking. Although the
Group believes that the expectations reflected in these forward looking
statements are reasonable, we 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.
Overview
Carpetright has enjoyed a successful first half despite difficult market
conditions within the UK. Since the year-end there have been two important
strategic developments:
* The acquisition of Storey Carpets Ltd ("Storeys")
* The commencement of construction of our new cutting and distribution
centre
The acquisition of Storeys was completed on 1 May 2007. This added 30 stores to
the Group, mainly based in North-East England, and has extended our presence in
an area where we were not well represented. Storeys is well known in the region
and the brand has been retained.
Construction of our new cutting and distribution centre, which will also become
our new head office, is progressing to plan and it will be operational in the
early part of 2008. This is a major development for Carpetright and will
provide the necessary capacity to support further growth for the Group.
The key financial results for the 26 weeks ended 27 October 2007 are set out
below :
2007 2006 %
Key financial results #m #m Change
Group sales 251.0 228.4 9.9%
Underlying operating profit*
- UK and RoI 25.5 25.2 1.2%
- Rest of Europe 2.4 1.7 41.2%
- Total 27.9 26.9 3.7%
Profit on property disposals and 0.9 1.7 (47.1%)
non-recurring items
Operating profit 28.8 28.6 0.7%
Interest (0.7) (0.9) 22.2%
Profit before taxation 28.1 27.7 1.4%
Underlying pre tax profit* 27.2 26.0 4.6%
Underlying earnings* per share (pence) 28.4 26.2 8.4%
Basic earnings per share (pence) 29.5 28.0 5.4%
Interim dividend per share (pence) - 20.0 n/a
* "Underlying" excludes profits on property disposals and non-recurring items
together with associated tax.
Group sales increased by 9.9% to #251.0 million (2006 : #228.4 million)
including a contribution of #14.7 million from Storeys. Underlying profit
before tax increased by 4.6% to #27.2 million (2006 : #26.0 million). Profit
before tax increased by 1.4% to #28.1 million (2006 : #27.7 million) with
property profits and non-recurring items, comprising post acquisition
reorganisation costs in Storeys and pre-opening costs of the new depot,
totalling a net #0.9 million.
Underlying earnings per share increased by 8.4% to 28.4p whilst basic earnings
per share increased by 5.4% to 29.5p.
UK and Republic of Ireland
Financial results
2007 2006 %
UK & RoI - Key financial results #m #m Change
Sales 219.0 200.5 9.2%
Gross profit 136.6 124.2 10.0%
Gross margin % 62.4% 61.9% 0.5pp
Underlying operating profit 25.5 25.2 1.2%
Underlying operating margin 11.6% 12.6% (1.0)pp
Sales across the UK & RoI increased by 9.2% with underlying operating profit
increasing by 1.2% to #25.5 million. This growth was achieved in a market that
was, we believe, flat overall and so represents a further increase in market
share.
The market was unusually varied across the first six months. Sales grew
strongly in June and July with the poor weather increasing customer footfall,
but October was particularly disappointing, both for Carpetright and the
industry. Like for like sales declined by 3.4% due to the weak October trading.
Storeys performed in line with our expectations delivering sales of #14.7
million.
The gross profit margin increased by another 50bps to 62.4%. This increase
comprises a 100bp improvement in Carpetright's margin, due to improved supplier
rebates, offset by the lower initial margin in Storeys. The Storeys margin
continues to improve and should be running close to the Carpetright margin by
the year-end.
Operating costs increased by 12.2% to #111.1 million. Excluding Storeys, the
costs increased by 4.3% to #103.3 million. As expected the major increases have
been in rent and rates, reflecting the space growth year on year; in advertising
spend to support stronger promotions; and in depreciation as the new store
system ("Navision") is rolled out.
Staff costs in store reduced in the period under review due to a lower
headcount. Since a peak in February 2007 headcount in Carpetright has reduced,
mostly through natural wastage, by over 150 people with efficiencies achieved in
the stores and the central office.
The roll-out of Navision has continued with over 300 stores now operating the
new software. Roll-out is expected to be completed during the second half of
2008. This software is allowing us to reduce staff numbers as planned.
Rent inflation is being mitigated to some extent by the introduction of
Sleepright, a bed concession, into a number of our stores. These units each
occupy around 1,000 sq ft of space. At the half-year over 50 stores included a
Sleepright concession and we anticipate the format will be rolled out to around
100 stores by the year-end. These concession units help to reduce operating
costs and also provide additional footfall.
In response to the tougher market conditions the pace of new store openings was
slowed down during the period, with only 21 new stores opened. At the same time
we closed 17 stores, either as part of our ongoing programme to move from high
cost to lower cost locations, or as the stores did not contribute to our overall
profitability. A number of the closures were concession units.
At the end of the period there were 546 stores trading, of which 66 stores are
concession units and 35 are Storeys stores. We expect a limited number of new
openings in the second half as we focus on our existing stores and become more
selective in the locations we are prepared to accept.
Since the Group acquired Storeys a large number of changes have been made which
improve the underlying business. Staff numbers have been reduced by over 100
and the store layouts and product ranges have been improved. These changes
have, at times, caused some disruption but leave the business well positioned to
drive sales and margin in the second half.
Rest of Europe
Financial Results
2007 2006 %
Rest of Europe - Key financial results #m #m Change
Sales
- Belgium and The Netherlands 31.1 27.5 13.1%
- Poland 0.9 0.4 125%
32.0 27.9 14.7%
Underlying operating profit
- Belgium and The Netherlands 3.1 2.0 55.0%
- Poland (0.7) (0.3) -
2.4 1.7 41.2%
Underlying operating margin %
- Belgium and The Netherlands 10.0% 7.3% +2.7pp
- Poland - - -
7.5% 6.1% +1.4pp
The Rest of Europe business increased its underlying operating profit by 41.2%
to #2.4 million with total sales growing by 14.7%.
Belgium / The Netherlands
Business in both countries has been strong, building on the good performance we
achieved last year. Our brand awareness continues to grow and this, coupled
with strong promotions, is resulting in increased customer visits and improved
customer conversion.
Total sales have increased by 13.1% with like for like sales increasing by 7.5%.
The remainder of the growth is due to the new stores opened last year with
only one additional store being added since the year-end. At the end of the
period there were 76 stores trading in The Netherlands and 28 in Belgium.
Sales growth has been achieved across all categories with laminate and vinyl
showing slightly better growth. These categories are more important in Europe
than they are in the UK and the larger store size allows more product to be
displayed.
As volumes have grown there has been an increase in the level of supplier
rebates and this has allowed us to increase the gross margin by over 1%.
Coupled with tight cost control this has resulted in management achieving an
operating margin increase to our previously stated target of 10%.
Poland
Progress in Poland continues to be steady. Two new stores were opened in the
period taking the store base to eight. Total sales grew to #0.9 million with
like for like growth of 10.7%.
During the period we have reviewed the store layout and staffing levels for each
store. We have subsequently reduced the number of people employed in each store
and have reorganised the stores to ensure clear category segmentation.
Whilst the business delivered a loss of #0.7 million in the period, as
anticipated, we continue to see signs that it will be successful and we intend
to open a further three stores in the second half.
The Group is now seeking to expand its European operation into Germany and has
entered into a joint venture agreement with a long-established German retailer
to develop this opportunity with the first stores planned to open around Berlin.
Profit on property disposals and non-recurring items
There are three elements to the property profits and non-recurring items :
2007 2006
#m #m
Profit on property disposals 2.9 1.7
Pre-opening costs relating to the new depot (1.5) -
Post acquisition reorganisation of the Storeys business (0.5) -
0.9 1.7
Property profits arise from the surrender of trading leases together with
freehold disposals. The profits disclosed primarily relate to three leasehold
stores which were surrendered. We still anticipate full year property profits
of around #7.5 million.
The reorganisation costs in Storeys cover redundancy costs and asset write-offs.
Pre-opening costs relating to the new depot comprises rent, rates and utility
costs for the site during the fit-out. These will continue to be disclosed
separately until the depot is commissioned. We estimate that the full
reorganisation costs in Storeys and pre-opening costs in the new depot will all
be incurred this financial year and will amount to between #7 million and #10
million.
Cashflow and interest
The Group remains highly cash generative and continues to invest in its future
growth. In the first half net debt has increased to #41.2 million due to the
significant level of investment in the new depot (#12.2 million) the acquisition
of Storeys (#17.1 million) and the acquisition of four freehold / long leasehold
properties (#7.1 million).
The Group's strong underlying cashflow will deliver a significant reduction in
net debt over the second half.
Possible offer and interim dividend
The consortium headed by Lord Harris and other members of the senior Carpetright
management team (the "Consortium") is in the process of completing its due
diligence. The discussions between the Consortium and the Independent Committee
of the Board of Carpetright regarding the proposal are at an advanced stage and
remain on the same terms as outlined in the announcement of 9 October 2007.
Consequently the Board has not declared an interim dividend at this stage but,
in the absence of a formal recommended offer being made by the Consortium, would
declare an interim dividend of 20.0 pence per share (2006: 20.0 pence) in
respect of the 26 weeks to 27 October 2007. It is intended that any interim
dividend, if declared, would be paid on 22 February 2008 to shareholders on the
register on 8 February 2008.
There can be no certainty that a firm offer will be forthcoming and a further
announcement will be made as and when appropriate.
Outlook
The most significant risk for the second half is the economic conditions in the
UK and we expect the rest of the year will be challenging although the second
half has started strongly.
Now that the necessary changes within Storeys have been completed we will target
growth in sales, margin and profit. At the same time the actions we are taking
in Carpetright's UK stores, specifically in relation to the reduction in store
size, will continue and we will target stores that are not contributing
satisfactorily.
Our European operations continue to develop and we are confident that we will
see further growth in sales and profits in the second half.
Lord Harris of Peckham
10 December 2007
Carpetright plc
Condensed consolidated income statement for the 26 weeks ended 27 October 2007
26 weeks 26 weeks 52 weeks
ended 27 ended 28 ended 28
October October April
2007 2006 2007
unaudited unaudited audited
Notes #m #m #m
Revenue 4 251.0 228.4 475.9
Cost of sales (96.4) (89.1) (185.1)
Gross profit 4 154.6 139.3 290.8
Other operating income 5.0 2.5 12.3
Administrative expenses (130.8) (113.2) (234.3)
Operating profit 4 28.8 28.6 68.8
Operating profit before profit on property disposals 27.9 26.9 59.5
and non-recurring items
Profit on property disposals and non-recurring items 5 0.9 1.7 9.3
Interest payable (0.9) (1.0) (2.6)
Interest receivable 0.2 0.1 0.8
Profit before tax 28.1 27.7 67.0
Tax 6 (8.1) (8.7) (20.7)
Profit for the financial period attributable to equity 20.0 19.0 46.3
holders of the Company
Basic earnings per share 8 29.5 28.0 68.2
Diluted earnings per share 8 29.4 28.0 68.2
All material items in the income statement arise from continuing operations.
Condensed consolidated statement of recognised income and expense for the 26
weeks ended 27 October 2007
26 weeks 26 weeks 52 weeks
ended 27 ended 28 ended 28
October October April
2007 2006 2007
unaudited unaudited audited
Notes #m #m #m
Profit for the financial period 20.0 19.0 46.3
Actuarial loss on defined benefit pension scheme - - (0.3)
Fair value losses in respect of cash flow hedges (0.1) - -
Exchange gains/(losses) in respect of hedged equity 0.8 (1.0) (0.3)
investments
Taxation on items taken directly to or transferred from equity - - 0.1
Net gains/(losses) recognised directly in equity 0.7 (1.0) (0.5)
Total recognised income and expense for the financial 20.7 18.0 45.8
period, attributable to equity holders of the Company
The notes on pages 11 to 17 form an integral part of this consolidated interim
financial information.
Carpetright plc
Condensed consolidated balance sheet at 27 October 2007
At 27 October At 28 October At 28 April
2007 2006 2007
unaudited unaudited audited
Notes #m #m #m
Assets
Non-current assets
Intangible assets 55.9 36.7 38.9
Property, plant and equipment 149.8 125.4 123.8
Investment property 19.8 20.4 19.5
Deferred tax assets 0.9 0.9 1.0
Derivative financial instruments 10 - 0.1 0.1
Trade and other receivables 1.4 1.6 1.6
Total non-current assets 227.8 185.1 184.9
Current assets
Inventories 37.4 34.2 35.9
Trade and other receivables 34.7 28.9 26.7
Cash and cash equivalents 10 5.1 9.5 20.7
Total current assets 77.2 72.6 83.3
Total assets 305.0 257.7 268.2
Liabilities
Current liabilities
Trade and other payables (126.1) (126.6) (120.1)
Obligations under finance leases 10 (0.8) (0.7) (0.8)
Borrowings and overdrafts 10 (22.4) (15.1) (12.2)
Current tax liabilities (9.1) (9.1) (9.7)
Total current liabilities (158.4) (151.5) (142.8)
Non-current liabilities
Trade and other payables (26.7) (13.9) (17.6)
Obligations under finance leases 10 (3.3) (4.1) (3.7)
Borrowings 10 (19.8) (12.6) (11.0)
Provisions (0.7) (0.1) -
Deferred tax liabilities (25.4) (20.6) (23.3)
Retirement benefit obligations 11 (1.8) (1.5) (1.8)
Total non-current liabilities (77.7) (52.8) (57.4)
Total liabilities (236.1) (204.3) (200.2)
Net assets 68.9 53.4 68.0
Equity
Share capital 12 0.7 0.7 0.7
Share premium 12 15.3 14.8 14.8
Treasury shares 12 (0.5) (0.5) (0.5)
Other reserves 12 53.4 38.4 53.0
Total equity attributable to equity 68.9 53.4 68.0
holders of the Company
The notes on pages 11 to 17 form an integral part of this consolidated interim
financial information.
Carpetright plc
Condensed consolidated cash flow statement for the 26 weeks ended 27 October
2007
26 weeks 26 weeks 52 weeks
ended 27 ended 28 ended 28
October October April
2007 2006 2007
unaudited unaudited audited
Notes #m #m #m
Cash flows from operating activities
Profit before tax 28.1 27.7 67.0
Adjusted for:
Depreciation and amortisation 8.1 6.6 13.1
Share-based payments 0.1 0.2 0.5
Profit on property disposals 5 (2.9) (1.7) (9.3)
Net interest payable 0.7 0.9 1.8
Operating cash flows before movements in working capital 34.1 33.7 73.1
(Increase)/decrease in inventories 1.7 (1.8) (3.3)
Increase in trade and other receivables (5.1) (4.0) (3.0)
Increase in trade and other payables 4.9 18.1 15.0
Cash generated by operations 35.6 46.0 81.8
Interest paid (1.1) (1.0) (1.9)
Interest received 0.2 0.1 0.3
Corporation taxes paid (7.4) (7.5) (15.9)
Net cash generated from operating activities 27.3 37.6 64.3
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment 9 3.0 3.7 24.8
and investment property
Purchases of intangible assets 9 (1.9) (3.3) (5.8)
Purchases of property, plant and equipment and 9 (24.6) (12.0) (27.4)
investment property
Acquisition of shares in subsidiary net of cash acquired 13 (17.1) - -
Net cash used in investing activities (40.6) (11.6) (8.4)
Cash flows from financing activities
Purchase of own shares - (0.4) (0.4)
Repayment of borrowings (6.2) (4.9) (8.8)
New loans advanced 13.5 - -
Repayment of obligation under finance leases (0.4) (0.4) (0.7)
Dividends paid to Group shareholders 7 (20.4) (20.4) (33.9)
Net cash used in financing activities (13.5) (26.1) (43.8)
Net increase/(decrease) in cash and cash equivalents 10 (26.8) (0.1) 12.1
in period
Cash and cash equivalents at the beginning of the period 19.2 6.8 6.8
Exchange differences 0.3 - 0.3
Cash and cash equivalents at the end of the period 10 (7.3) 6.7 19.2
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.
The notes on pages 11 to 17 form an integral part of this consolidated interim
financial information.
Carpetright plc
Notes to the condensed consolidated financial information for the 26 weeks ended
27 October 2007
1. General information
The Company is a limited liability company incorporated and domiciled in the UK.
The address of its registered office is Amberley House, New Road, Rainham, Essex
RM13 8QN. The Company is listed on the London Stock Exchange.
This condensed consolidated half-yearly financial information was approved for
issue on 10 December 2007.
This interim financial information does not comprise statutory accounts within
the meaning of 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
28 April 2007 were approved by the Board of Directors on 25 June 2007 and
delivered to the Register 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 made under section 237 of the Companies Act 1985.
The auditors independent review report on the consolidated interim financial
information is included in the interim report which will be made available to
shareholders.
2. Basis of preparation
This condensed consolidated half-yearly financial information for the 26 weeks
ended 27 October 2007 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim
financial reporting' as adopted by the European Union. The half-yearly condensed
consolidated financial information should be read in conjunction with the annual
financial statements for the 52 weeks ended 28 April 2007, which have been
prepared in accordance with IFRSs as adopted by the European Union.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the 52 weeks ended 28 April 2007, as described in those
annual financial statements except in relation to the capitalisation of
interest.
During the period the Group has changed its accounting policy to capitalise
interest on qualifying tangible fixed assets. Interest of #0.3m has been
capitalised during the period of which #0.1m related to the prior year. As the
adjustment is immaterial the comparatives for the prior year have not been
restated.
The following new standards and amendments to standards are mandatory for the
first time for the 53 weeks ending 3 May 2008:
* IFRS 7 'Financial Instruments Disclosures', (effective for annual
accounting periods beginning on or after 1 January 2007) and the complementary
amendment to IAS 1, 'Presentation of financial statements - capital
disclosures'. IFRS 7 introduces new disclosures relating to financial
instruments. As this interim financial information contains only condensed
financial statements, and as there are no material financial instruments related
transactions in the period, full IFRS 7 disclosures are not required at this
stage. The full IFRS 7 disclosures, including the sensitivity analysis to market
risk and capital disclosures required by the amendment of IAS 1, will be given
in the annual financial statements.
The following new interpretations are mandatory for the first time for the 53
weeks ending 3 May 2008 but have had no effect on the interim financial
information.
* IFRIC 8 'Scope of IFRS 2', effective from annual periods beginning on
or after 1 May 2006).
* IFRIC 9 'Reassessment of embedded derivatives', (effective for annual
periods beginning on or after 1 June 2006).
* IFRIC 10 'Interim financial reporting and impairments', (effective
from annual periods beginning on or after 1 November 2006).
* IFRIC 11 'IFRS 2 - Group and treasury share transactions', (effective
from annual periods beginning on or after 1 March 2007).
Carpetright plc
Notes to the condensed consolidated financial information for the 26 weeks ended
27 October 2007
4. 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.
Analysis by geography:
26 weeks ended 27 October 26 weeks ended 28 October
2007 2006
UK & RoI Rest of Total UK & RoI Rest of Total
#m Europe #m #m Europe #m
#m #m
Gross Revenue 220.4 32.0 252.4 201.8 27.9 229.7
Inter-segment revenue (1.4) - (1.4) (1.3) - (1.3)
Segment Revenue (by origin and destination) 219.0 32.0 251.0 200.5 27.9 228.4
Gross profit 136.6 18.0 154.6 124.2 15.1 139.3
Operating profit before profits on property 25.5 2.4 27.9 25.2 1.7 26.9
disposals
and non-recurring items
Segment result: operating profit after profits on 26.4 2.4 28.8 26.8 1.8 28.6
property disposals and non-recurring items
Net interest payable (0.7) (0.9)
Profit before taxation 28.1 27.7
Tax (8.1) (8.7)
Profit for the financial period 20.0 19.0
On 1 May 2007 the Group acquired Storey Carpets Ltd, included above in 'UK &
RoI'. Details of the acquisition are contained in note 13.
Carpetright's trade has historically shown no distinct pattern of seasonality
with trade cycles more closely following economic indicators such as interest
rates and consumer confidence.
5. Profit on property disposals and non-recurring items
26 weeks 26 weeks 52 weeks
ended 27 ended 28 ended 28
October October April
2007 2006 2007
#m #m #m
Disclosed in the income statement:
Profit on property disposals 2.9 1.7 9.3
Pre-opening costs relating to the new depot (1.5) - -
Post acquisition reorganisation of the Storey's business (0.5) - -
0.9 1.7 9.3
Carpetright plc
Notes to the condensed consolidated financial information for the 26 weeks ended
27 October 2007
6. Taxation
26 weeks 26 weeks 52 weeks
ended 27 ended 28 ended 28
October October April
2007 2006 2007
#m #m #m
Current 6.8 7.7 16.9
Deferred 1.3 1.0 3.8
8.1 8.7 20.7
The estimated tax rates on the profits of the Group are as follows:
53 weeks 52 weeks
ended 3 Ended 28
May 2008 April 2007
% %
Weighted average annual underlying tax rate 27.6 31.4
Weighted average annual effective tax rate 28.6 30.8
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, profit on property
disposals and non-recurring items and tax adjustments in respect of such items.
7. Dividends
26 weeks ended 27 October 2007 26 weeks ended 28 October 2006
Pence/share #m Pence/share #m
Final prior year dividend paid 30.0 20.4 30.0 20.4
Proposed current year interim dividend - - 20.0 13.6
The consortium headed by Lord Harris and other members of the senior Carpetright
management team (the "Consortium") is in the process of completing its due
diligence. The discussions between the Consortium and the Independent Committee
of the Board of Carpetright regarding the proposal are at an advanced stage and
remain on the same terms as outlined in the announcement of 9 October 2007.
Consequently the Board has not declared an interim dividend at this stage but,
in the absence of a formal recommended offer being made by the Consortium, would
declare an interim dividend of 20.0 pence per share
(2006: 20.0 pence) in respect of the 26 weeks to 27 October 2007. It is
intended that any interim dividend, if declared, would be paid on 22 February
2008 to shareholders on the register on 8 February 2008.
8. Earnings per share
26 weeks ended 27 October 2007 26 weeks ended 28 October 52 weeks ended 28 April 2007
2006
Earnings Weighted Earnings Earnings Weighted Earnings Earnings Weighted Earnings
#m average per share #m average Per #m average per share
number of Pence number share number Pence
shares of Pence of
Millions shares shares
Millions Millions
Basic 20.0 67.9 29.5 19.0 67.9 28.0 46.3 67.9 68.2
earnings per
share
Effect of - 0.1 (0.1) - - - 0.1 0.1 -
dilutive
share
options
Diluted 20.0 68.0 29.4 19.0 67.9 28.0 46.4 68.0 68.2
earnings per
share
Carpetright plc
Notes to the condensed consolidated financial information for the 26 weeks ended
27 October 2007
8. Earnings per share (continued)
The Directors have presented an additional measure of earnings per share based
on underlying earnings as they believe this provides a more comparable measure
on an ongoing basis. Underlying earnings is defined as profit after adjusting
for post tax profits on property disposals and non-recurring items.
26 weeks 26 weeks 52 weeks
ended 27 ended 28 ended 28
October October April
2007 2006 2007
Pence Pence Pence
Basic earnings per share 29.5 28.0 68.2
Adjusted for the effect of profit on property disposals and non-recurring
items:
Profit on property disposals (4.3) (2.5) (13.7)
Pre-opening costs relating to the new depot 2.2 - -
Post acquisition reorganisation of the Storey's business 0.7 - -
Tax 0.3 0.7 3.8
Underlying earnings per share 28.4 26.2 58.3
9. Capital expenditure
During the period, the Group spent approximately #1.9m (2006 - #3.3m) on
intangible assets in respect of the final stage of the new stores system, #12.4m
(2006 - #12.0m) on the acquisition and fit out of new stores and #12.2m on
fitting out the new depot.
A number of properties were vacated during the period giving rise to net
proceeds of #3.0m (2006 - #3.7m).
10. Borrowings
During the period the Group agreed a new 5 year bank loan of Euro20.0m. An
interest rate swap was entered into to fix the interest rate on 75% of the
outstanding balance on this loan.
During the period loans of #6.2m were repaid under the terms of the loan
agreements.
28 April 27 October
2007 2007
Cash flow Exchange Revaluation
#m Movement
#m #m #m #m
Cash and cash equivalents per the balance sheet 20.7 (15.8) 0.2 - 5.1
Bank overdrafts (1.5) (11.0) 0.1 - (12.4)
Cash and cash equivalents per the cash flow 19.2 (26.8) 0.3 - (7.3)
statement
Borrowings
Borrowings (10.7) 0.7 - - (10.0)
Borrowings (non-current) (11.0) (8.0) (0.8) - (19.8)
Obligation under finance leases
Obligation under finance leases (0.8) - - - (0.8)
Obligation under finance leases (non-current) (3.7) 0.4 - - (3.3)
Derivative financial instruments 0.1 - - (0.1) -
Net debt (6.9) (33.7) (0.5) (0.1) (41.2)
Carpetright plc
Notes to the condensed consolidated financial information for the 26 weeks ended
27 October 2007
10. Borrowings (continued)
29 April 28 October
2006 2006
Cash Exchange Revaluation
#m Flow Movement #m #m
#m #m
Cash and cash equivalents per the balance sheet 9.3 0.2 - - 9.5
Bank overdrafts (2.5) (0.3) - - (2.8)
Cash and cash equivalents per the cash flow 6.8 (0.1) - - 6.7
statement
Borrowings
Borrowings (10.8) (1.5) - - (12.3)
Borrowings (non-current) (20.0) 6.4 1.0 - (12.6)
Obligation under finance leases
Obligation under finance leases (0.8) 0.1 - - (0.7)
Obligation under finance leases (non-current) (4.4) 0.3 - - (4.1)
Derivative financial instruments 0.1 - - - 0.1
Net debt (29.1) 5.2 1.0 - (22.9)
11. Retirement benefit obligation
The assets and liabilities of the Group's UK defined benefit pension scheme were
valued on an IAS 19 basis at 28 April 2007 by a qualified actuary. The amount
recognised in the income statement in the year ended 28 April 2007 of #0.5m
forms the basis of the estimated cost for the 26 weeks to 27 October 2007. The
change in the valuation is considered to be immaterial so no actuarial gain or
loss has been recognised in the period.
The Group assumed responsibility for the Storey Carpets pension scheme when it
acquired Storeys. This scheme was valued using FRS 17 at the date of acquisition
and there was no surplus or deficit. The change in the valuation is considered
to be immaterial so no actuarial gain or loss has been recognised in the period.
A valuation under IAS 19 will be carried out at the end of the financial year.
12. Statement of changes in shareholders' equity
Share Share Treasury Other Total
Capital Premium Shares Reserves #m
#m #m #m #m
At 28 April 2007 0.7 14.8 (0.5) 53.0 68.0
Issue of ordinary shares on the acquisition of Storey Carpets - 0.5 - 0.5
Ltd
Change in fair value of cash flow hedges - - - (0.1) (0.1)
Exchange difference in respect of hedged equity investments - - - 0.8 0.8
Profit for the financial period - - - 20.0 20.0
Total recognised income and expense for the financial period - 0.5 - 20.7 21.2
Share-based payments net of tax - - - 0.1 0.1
Dividend paid to Group shareholders - - - (20.4) (20.4)
At 27 October 2007 0.7 15.3 (0.5) 53.4 68.9
Share Share Treasury Other Total
Capital premium Shares Reserves #m
#m #m #m #m
At 29 April 2006 0.7 14.8 (0.1) 40.6 56.0
Purchase of own shares by employee share trust - - (0.4) (0.4)
Exchange difference in respect of hedged equity investments - - - (1.0) (1.0)
Profit for the financial period - - - 19.0 19.0
Total recognised income and expense for the financial period - - (0.4) 18.0 17.6
Share-based payments net of tax - - - 0.2 0.2
Dividend paid to Group shareholders - - - (20.4) (20.4)
At 28 October 2006 0.7 14.8 (0.5) 38.4 53.4
Carpetright plc
Notes to the condensed consolidated financial information for the 26 weeks ended
27 October 2007
13. Acquisition of subsidiary
On 1 May 2007, the Group acquired 100% of the issued share capital of Storey
Carpets Ltd. The initial consideration paid comprised #18.0m cash and #0.5m of
shares in Carpetright plc. There is up to a further #1.0m conditional
consideration payable, the conditions for which must be satisfied within 12
months of 1 May 2007. Storey Carpets Ltd's principal activity is the retailing
of carpet and other floor covering. The transaction has been accounted for in
accordance with IFRS 3 Business Combinations.
Brand values were assessed as part of the acquisition fair value but were
immaterial. No brand value has been recognised in the cost of the investment.
From the date of acquisition to 27 October 2007, the acquisition contributed
#14.7m to turnover, #0.3m to profit and #0.4m to net operating cash flow. There
is no material difference between the amounts included in these accounts and the
amount that would have been recognised had the acquisition been made at the
start of the financial year.
Details of net assets acquired and goodwill are as follows:
#m
Purchase consideration:
Cash paid 18.0
Deferred consideration 1.0
Value of shares issued 0.5
Direct costs relating to the acquisition 0.5
Total purchase consideration 20.0
Fair value of net identifiable assets acquired (4.5)
Goodwill 15.5
The goodwill is attributable to the significant synergies expected to arise
after acquisition by the Group.
Part of the consideration for the acquisition comprised 47,529 shares in
Carpetright plc with a value of #0.5m. The number of shares issued was
determined using the market price of the shares on the date the acquisition was
concluded.
The Group will finalise the amount of the fair value of the net identifiable
assets acquired once the value of the deferred consideration is fixed. The
assets and liabilities arising from the acquisition together with the
provisional fair values are as follows:
Acquiree's Accounting Fair value Fair
carrying policy adjustments Value
amount alignment #m #m
before #m
business
combination
#m
Net assets acquired:
Intangible assets
Property, plant and equipment 3.0 3.6 6.6
Inventories 3.3 (0.4) 2.9
Trade and other receivables 2.9 (0.6) (0.1) 2.2
Cash and cash equivalents 1.4 1.4
Trade and other payables (6.8) (0.4) (7.2)
Retirement benefit obligations - -
Tax asset 0.2 0.2
Deferred tax liabilities (0.7) (0.7)
Other provisions (0.9) (0.9)
Net identifiable assets acquired 4.0 (0.6) 1.1 4.5
Outflow of cash to acquire business, net of cash acquired
Cash consideration 18.5
Cash and cash equivalents acquired (1.4)
Cash flow on acquisition of shares in subsidiary net of cash 17.1
acquired
Carpetright plc
Notes to the condensed consolidated financial information for the 26 weeks ended
27 October 2007
14. Capital and other commitments
Capital commitments of #16.5m at 27 October 2007 for which no provision has been
made in the accounts relate to the acquisition of tangible and intangible assets
(26 weeks to 28 October 2006: #12.7m; 52 weeks to 28 April 2007 #13.6m).
15. Related party transactions
Details of transactions during the period with Companies of which Lord Harris
and/or M J Harris is a director and/or in which Lord Harris holds a material
interest are set out below.
Lease and concession Lease and concession Supply of
agreement payments agreement payments goods/services
made received payments made
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks
ended 27 ended 28 ended 27 ended 28 ended 27 ended 28
October October October October October October
2007 2006 2007 2006 2007 2006
#'000 #'000 #'000 #'000 #'000 #'000
Bridgewater Retail LLP - 17
Edinburgh Retail LLP 281 176 450
Glenrothes Retail LLP 58 58 400
Greenock Retail Ltd 108 80 865
Harris Ventures Ltd 130 129 4 4
Hull Unit Trust 105 105
Islandview Properties Ltd 136 61
Neath Retail LLP 75 300
Wick Retail LLP 27
As at 27 October 2007 the Group owed related parties #nil (2006 - #nil).
16. Foreign exchange
The principal exchange rates used were as follows:
26 weeks 26 weeks 52 weeks
ended 27 ended 28 ended 28
October October April
2007 2006 2007
Euro
Average 1.46 1.47 1.48
Closing 1.43 1.49 1.47
Zloty
Average 5.57 5.77 5.77
Closing 5.23 5.78 5.54
Store Portfolio
2007 2006
Store Base - Numbers 27 October Openings Closures Other 28 April 28 October 29 April
2007 2007 2006 2006
UK & RoI
Carpetright 445 12 (6) - 439 431 400
Storeys 35 5 - 30 - - -
Concessions 66 4 (11) - 73 63 40
546 21 (17) 30 512 494 440
Rest of Europe
Belgium 28 - - - 28 28 28
The Netherlands 76 2 (1) - 75 70 68
Poland 8 2 - - 6 3 2
112 4 (1) - 109 101 98
Group Total 658 26 (19) 30 621 595 538
2007 2006
Store Space 27 October Openings Closures Other 28 April 28 October 29 April
(Sq ft'000) 2007 2007 2006 2006
UK & RoI
Carpetright 3,888 76 (52) (66) 3,930 3,911 3,716
Storeys 370 46 - 324 - - -
Concessions 139 11 (24) (2) 154 146 105
4,397 133 (76) 256 4,084 4,057 3,821
Rest of Europe
Belgium 337 - - (10) 347 347 347
The Netherlands 888 18 (13) (20) 903 854 836
Poland 83 20 - - 63 35 23
1,308 38 (13) - 1,313 1,236 1,206
Group Total 5,705 171 (89) 226 5,397 5,293 5,027
2007 2006
Average Store Size (sq 27 October Openings Closures Other 28 April 28 October 29 April
ft) 2007 2007 2006 2006
UK & RoI
Carpetright 8,737 - - - 8,952 9,074 9,290
Storeys 10,570 - - - - - -
Concessions 2,106 - - - 2,110 2,317 2,625
8,050 - - - 7,977 8,213 8,684
Rest of Europe
Belgium 12,036 - - - 12,393 12,393 12,393
The Netherlands 11,684 - - - 12,040 12,200 12,294
Poland 10,375 - - - 10,500 11,667 11,500
11,679 - - - 12,046 12,238 12,306
Group Total 8,670 - - - 8,691 8,897 9,344
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR TMBLTMMTBBIR
Carpetright (LSE:CPR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Carpetright (LSE:CPR)
Historical Stock Chart
From Jul 2023 to Jul 2024