RNS Number:6928X
Carpetright PLC
25 June 2002
25 June 2002
Carpetright plc.
Record results and European acquisition
Carpetright plc, the UK's leading specialist carpet retailer with 347 stores
trading at the year end, today announces its preliminary results for the year
ended 27 April 2002 as well as its first venture into the European carpet
retailing market.
Trading Highlights
• Pre-tax profit increased 17.8% to a record £52.5 million
• Like for like sales up by 6.7% against last year
• Total sales of £361.5 million, up 12% overall compared to last year
• Gross margin up against last year by 0.8 percentage points to 58%
• Earnings per share improved by 15.5% to 48.4p
• Recommended final dividend per share of 20p (up 25%), making 33p for
the year
• Cash balances £6.2 million, after £10.6 million freehold purchases,
£16.0 million other capital expenditure and £4.2 million share
repurchases.
Lord Harris, Chairman and Chief Executive, said:
"I am pleased to announce profits for Carpetright at £52.5 million for the last
financial year, an increase of 17.8% and gross margin up to 58%. We have
focused the year on improving the gross margin and on holding our administration
costs which means we finish the year with a net operating margin of 14.4% up
0.6%."
"We continue to gain market share and with our new store opening programme and
our new five metre cutting warehouse facilities at Dolphin Park, West Thurrock
we expect to make further progress this financial year."
"We are also very pleased to announce that Carpetright has acquired 50% in
Carpetland nv, the leading carpet retailer in Belgium, Holland and Luxembourg,
for approximately €15 million. Carpetland nv has 92 stores and a market share
of 5-6%. Carpetland nv last year had sales of €94 million and made a pre-tax
profit of €3.8 million. In addition, Carpetright has acquired certain of the
freehold and long leasehold properties from which Carpetland nv operates for
approximately €35 million ."
"Carpetright will take management control of the joint venture and we expect it
to be earnings enhancing in the current financial year."
Enquiries:
Lord Harris of Peckham, Chairman and Chief Executive
John Kitching, Managing Director
Shena Winning, Finance Director
Tel: 020 7282 8000 (until 3.30pm), thereafter 01708 525522
Patrick Toyne Sewell
Citigate Dewe Rogerson Ltd.
Tel: 020 7282 8000
Chairman's statement
Results
I am pleased to report that Carpetright plc achieved another record pre-tax
profit of £52.5 million for the year to 27 April 2002, an increase of 17.8%
compared to last year. Sales for the year were 12% up on last year to £361.5
million, 6.7% up on a like for like basis.
Gross margin has grown 0.8 percentage points to 58%, driven from the increase in
participation in sales from higher price cut length product cut in our increased
warehouse facilities.
Gross margin improvement combined with ongoing operational efficiencies and cost
management have delivered a net operating margin of 14.4%, an improvement of 0.6
percentage points on last year.
Earnings and Dividend
Earnings per share for the year was up 6.5p to 48.4p a 15.5% increase on the
prior year. The Board is recommending that the final dividend be increased by
25% to 20p per share, which together with the interim dividend of 13p takes the
total for the year to 33p per share (2001: 27p), a 22.2% increase on the prior
year. The dividend will be paid on 27 September 2002, to shareholders on the
register on 13 September 2002.
Stores
Throughout the year we have continued to review our property portfolio which
resulted in property profits of £1.3 million. We expect to generate further
property profits as we move from A1 Parks to Bulky Goods Parks.
All our stores in Scotland are now branded Carpetright. At the year end we were
trading from 347 units and 32 vans.
Finance
Net cash balances at the end of the year were £6.2 million, after property
purchases of £10.6 million, other capital expenditure of £16 million and share
repurchases of £4.2 million, demonstrating the strong cash generation of the
business.
Acquisition
We have entered into an agreement with Interiors for Europe ("IFE") who have 92
stores in Holland, Belgium and Luxemburg. We will be buying a 50% interest in
their subsidiary Carpetland nv for approximately €15 million, with an option to
buy the remaining 50% at a set formula price over the period 2005-2008. In
addition, we are acquiring 12 freehold and 3 long leasehold properties ("
Carpetland Property") from which Carpetland nv operates for approximately €35
million.
Baroness Noakes will be non-executive Chairman, Lord Harris will be Chief
Executive and they will be joined by Andy Corden as Sales Director and Shena
Winning, as a Non-Executive Director, as the Carpetright representatives on the
Board of the joint venture company. There will also be four directors appointed
by IFE on the Board. The Chairman, or Lord Harris, will have the casting vote
in the event of a split Board.
We will be merchandising the stores with our ranges, cut from our Rainham
warehouse which will help to improve our gross margin immediately. We will be
refurbishing the stores over the coming months at a cost of €8 million and this
is expected to be financed by reducing the current stock levels. With our keen
prices and marketing we expect to grow our market share from 5% to 10% over the
next 3 years.
Carpetland is the market leader in Holland, Belgium and Luxemburg with a market
share of approximately 5-6%. We believe there is a significant opportunity for
Carpetright in selected European markets and this first carefully planned step
should be earnings enhancing in the current financial year.
The aggregate consideration of approximately €50 million will be satisfied out
of existing cash resources and new bank facilities and will be subject to
completion audits and finalisation of the property valuations.
Carpetland nv made a profit before interest and tax of €3.8 million on turnover
of €94 million for the year to 31 December 2001 and had net assets of €24.9
million as at 31 December 2001. Carpetland Property made a profit before
interest and tax of €1.7 million for the year to 31 December 2001 and had net
assets of €21.2 million as at 31 December 2001.
Board
The Company has agreed that Shena Winning will, for personal and family reasons,
relinquish the post of Finance Director and leave the Company at the end of
October 2002. I would like to thank Shena for all the hard work she has put in
over the last few years.
I am pleased to announce the appointment of Darren Shapland FCCA as the new
Finance Director to succeed Shena with effect from 1 November 2002.
Darren is very experienced in retail having worked for the Burton Group, Arcadia
and is currently Finance Director for Superdrug Stores plc.
Outlook
Like for like sales for the first eight weeks of the current year are 4.2% ahead
of last year with total sales up 9.4% and margin performance continues to be
higher than the same period last year.
The opening of our new five metre cutting warehouse in late May 2002 gives us
the opportunity to extend the range of our five metre wide carpets and to give
us a trading advantage over our competition.
We expect to open 32 new stores this year and we will continue to develop our
insurance and domestic contract business in the year.
Carpetright plc
Profit and loss account
Year to 27 April 2002
Year to Year to
27 April 2002 28 April 2001
£'000 £'000
(Restated)
Turnover 361,500 322,917
Cost of Sales (151,828) (138,275)
------------- -------------
Gross Profit 209,672 184,642
Distribution costs (4,822) (3,440)
Administrative expenses (154,100) (137,499)
Other operating income 1,243 974
------------- -------------
Operating profit 51,993 44,677
Profit on disposal of fixed assets 1,336 154
Net interest payable (844) (279)
------------- -------------
Profit on ordinary activities before taxation 52,485 44,552
Tax on profit on ordinary activities (16,099) (12,904)
------------- -------------
Profit for the financial period 36,386 31,648
Dividend - paid and proposed (24,795) (20,428)
------------- -------------
Retained profit for the period 11,591 11,220
------------- -------------
Basic earnings per share 48.4p 41.9p
Diluted earnings per share 48.4p 41.8p
There are no differences between the Company's historical cost profit and that
recorded in the profit and loss account (2001: £nil). All turnover, operating
profit and the profit on disposal of fixed assets of the Company arise from the
continuing operations.
Statement of total recognised gains and losses
for the year to 27 April 2002
Year to Year to
27 April 2002 28 April 2001
£'000 £'000
Profit for the financial period 36,386 31,648
Exchange rate movement 8 1
------------- ------------
Total recognised gain for the year 36,394 31,649
Prior Year Adjustment (2,079)
-------------
Total recognised gain for the year 34,315
=======
Restated for FRS19 Provision for Deferred Tax
Carpetright plc
Balance sheet
at 27 April 2002
Year to Year to
27 April 2002 28 April 2001 (Restated)
£'000 £'000 £'000 £'000
Tangible fixed assets 106,459 90,297
Current assets
Stock 30,880 28,453
Debtors 16,530 11,144
Cash at bank and in hand 6,197 16,220
----------- -----------
53,607 55,817
Creditors: amounts falling due within one
Year (99,689) (93,474)
----------- -----------
Net current liabilities (46,082) (37,657)
----------- -----------
Total assets less current liabilities 60,377 52,640
Creditors: amounts falling due after more
than one year (3,042) (4,699)
Provisions for liabilities and charges (2,916) (2,411)
----------- -----------
Net assets 54,419 45,530
----------- -----------
Capital and reserves
Called up share capital 751 756
Share premium account 13,872 12,395
Capital redemption reserve 51 42
Profit and loss account 39,745 32,337
----------- -----------
Equity shareholders' funds 54,419 45,530
----------- -----------
Notes
Restated for FRS19 Provision for Deferred Tax
Carpetright plc
Cash flow statement
Year to 27 April 2002
Year to Year to
27 April 2002 28 April 2001
£'000 £'000 £'000 £'000
Net cashflow from operating activities 56,365 58,832
(note 4)
Returns on investments and servicing of finance
Interest received 63 286
Interest paid (451) (243)
Interest on finance leases (456) (300)
----------- -----------
Net cash outflow from investments and servicing of
finance (844) (257)
Taxation
UK Corporation Tax paid (15,338) (10,504)
----------- -----------
Tax paid (15,338) (10,504)
Capital expenditure
Payments to acquire tangible fixed assets (24,331) (23,624)
Receipts from sales of tangible fixed assets 2,255 1,092
----------- -----------
Net cash outflow for capital expenditure (22,076) (22,532)
Equity dividends paid (21,867) (18,515)
------------ ------------
Net cash (outflow)/inflow before financing (3,760) 7,024
Financing
Issue of ordinary share capital 1,481 743
Purchase of own shares (4,191) -
Capital element of finance lease rentals (2,454) (1,218)
----------- -----------
Net outflow from financing (5,164) (475)
------------ ------------
(Decrease)/Increase in cash in the period (8,924) 6,549
------------ ------------
2002 2001
£'000 £'000
Reconciliation of net cash flow to movement in net funds
(Decrease)/Increase in cash in the period (8,924) 6,549
Opening net funds 8,302 5,119
---------- ----------
(622) 11,668
Exchange difference 4 3
Finance leases 931 (3,369)
---------- ----------
Net funds 313 8,302
====== ======
2001 Cash Flow Other Exchange 2002
Difference
£'000 £'000 £'000 £'000 £'000
Cash at Bank and in Hand 16,220 (10,027) - 4 6,197
Overdraft (1,103) 1,103 - - -
15,117 (8,924) - 4 6,197
Finance Leases (6,815) 2,454 (1,523) - (5,884)
Net funds 8,302 (6,470) (1,523) 4 313
===== ===== ===== = ======
Notes
1. Earnings per share
The calculated basic and diluted earnings per share for the year to 27 April
2002 is based on earnings of £36,386,000 (2001: £31,648,000).
The weighted average number of shares used in the calculation of basic earnings
per share for the year to 27 April 2002 was 75,226,402 (2001: 75,541,628). The
weighted average number of shares used in the calculation of diluted earnings
per share was 75,241,488 (2001: 75,624,153).
Share options outstanding at less than fair market value of 84,000 (2001:
82,525) represent the difference between the basic and diluted weighted average
number of shares.
2. Basis of preparation
The financial information does not constitute the Company's statutory accounts
for the years ended 27 April 2002 or 28 April 2001 but is derived from those
accounts. Statutory accounts for 2001 have been delivered to the Registrar of
Companies, and those for 2002 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those accounts; their reports
were unqualified and did not include statements under section 237(2) or (3) of
the Companies Act 1985.
3. Dividends
The final ordinary dividend of 20p per share (2001: 16p) will be paid on 27
September 2002 to shareholders registered at the close of business on 13
September 2002, subject to shareholders' approval at the Annual General Meeting
to be held on 13 August 2002. An interim ordinary dividend of 13.0p (2001:
11.0p) per share was paid on 22 February 2002 giving a total ordinary dividend
for the year of 33p (2001: 27p) per share.
Copies of the full accounts for the year ended 27 April 2002 will be circulated
to shareholders for approval at the Annual General Meeting which will be held on
13 August 2002. Further copies of the Annual Report will be available from that
date from the registered office of Carpetright plc, Amberley House, New Road,
Rainham, Essex, RM13 8QN.
4. Net cashflow from operating activities
2002 2001
£'000 £'000
Operating profit 51,993 44,677
Depreciation 9,790 8,147
Increase in stocks (2,427) (6,187)
Increase in debtors (5,385) (745)
Increase in creditors 2,394 12,940
Net cash inflow from operating activities 56,365 58,832
===== =====
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