TIDMCPR
RNS Number : 7367U
Carpetright PLC
30 June 2009
Carpetright plc
Preliminary Results Announcement for the 52 weeks ended 2 May 2009
Carpetright plc, Europe's leading specialist carpet and floor coverings retailer
trading within the UK, Republic of Ireland, The Netherlands, Belgium and Poland,
today announces its preliminary results for the 52 weeks to 2 May 2009.
Headlines
Group
* Total Group revenue declined by 7.4% to GBP482.8m (2008: GBP521.5m)
* Underlying profit before tax down 72.3% to GBP17.2m (2008: GBP62.1m)
* Profit before tax of GBP16.7m (2008: GBP59.5m)
* Underlying basic earnings per share of 18.2p (2008: 63.5p)
* Basic earnings per share of 17.6p (2008: 63.2p)
* Proposed final dividend of 4.0p (2008: 30.0p) making full year dividend of 8.0p
(2008: 52.0p)
* Net debt at year end of GBP97.1m (2008: GBP57.5m)
UK and Republic of Ireland
* Total revenue declined 12.9% to GBP394.1m (like-for-like down 13.5%)
* Underlying operating profit decreased 73.1% to GBP15.6m
* Store base increased by 8 to 567
Rest of Europe
* Total revenue increased by 28.9% to GBP88.7m
* Underlying reported operating profit increased by 33.3% to GBP7.2m
* Store base increased by 12 to 128
* 'Underlying' excludes profit / losses on property disposals and other
non-recurring items
Lord Harris, Chairman and Chief Executive, said:
"I have said before that I expected my 51st year of selling carpets to be
extremely challenging and it has proved to be the case. Market conditions and
consumer confidence declined throughout the year, leading to a significant
reduction in sales volume and profitability.
"Our principal markets of UK & RoI are in recession and the likelihood is that
with unemployment set to rise, the housing market will remain weak. Although
there have been a significant number of actions taken by the Government to
improve the economy, we do not expect a return to more normal trading conditions
for at least 12 months.
"Against this backdrop, we have been delighted by the first full year of
operations in the new warehouse and cutting facility, which has provided
additional capacity and enabled us to pursue additional business with the large
insurers and housebuilders. The acquisition of Sleepright and the continued
growth of our European business ensure we are well placed to trade resiliently.
"I remain as passionate as ever about our business and am excited about the
prospects for the Group when trading conditions improve. I am confident our
strategy of providing a comprehensive offer with the widest product range, best
prices and excellent customer service will support future growth."
Lord Harris of Peckham
Chairman and Chief Executive
For further enquiries please contact:
Carpetright plc
Lord Harris of Peckham, Chairman and Chief Executive
Neil Page, Group Finance Director
Telephone 020 7638 9571 (until 2pm), 01708 802000 (thereafter)
Citigate Dewe Rogerson
Kevin Smith / Angharad Couch
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 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.
Group financial performance
A summary of the reported financial results for the year ended 2 May 2009 is set
out below :
+----------------------------------------+----------+----------+------------+
| | 2009 | 2008 | Change |
| | GBPm | GBPm | |
+----------------------------------------+----------+----------+------------+
| Revenue | 482.8 | 521.5 | (7.4%) |
+----------------------------------------+----------+----------+------------+
| Underlying* operating profit | 22.8 | 63.4 | (64.0%) |
+----------------------------------------+----------+----------+------------+
| Net finance charges | (5.6) | (1.3) | - |
+----------------------------------------+----------+----------+------------+
| Underlying* profit before tax | 17.2 | 62.1 | (72.3%) |
+----------------------------------------+----------+----------+------------+
| Profits/losses on property disposals | (0.5) | (2.6) | - |
| and non-recurring items | | | |
+----------------------------------------+----------+----------+------------+
| Profit before tax | 16.7 | 59.5 | (71.9%) |
+----------------------------------------+----------+----------+------------+
| Earnings per share (pence) | | | |
+----------------------------------------+----------+----------+------------+
| - underlying* | 18.2 | 63.5 | (71.3%) |
+----------------------------------------+----------+----------+------------+
| - basic | 17.6 | 63.2 | (72.2%) |
+----------------------------------------+----------+----------+------------+
| Dividends per share (pence) | 8.0 | 52.0 | (84.6%) |
+----------------------------------------+----------+----------+------------+
| Net debt | (97.1) | (57.5) | (GBP39.6m) |
+----------------------------------------+----------+----------+------------+
* Where this review makes reference to "Underlying" these relate to profit /
earnings before profits / losses on property disposals and other non-recurring
items.
Overview
Progress against the Group's financial objectives has been difficult this year.
Total sales declined by 7.4% to GBP482.8m on a reported rate basis. The 53rd
week in the comparatives accounted for 1.3% of the decline. The fall in sales
was driven mainly by the UK and Republic of Ireland, which declined by 13.5% on
a like-for-like basis. During the year, the Group opened 32 stores and closed 24
which, together with the one store acquired with Sleepright and 11 stores with
Ben de Graaff, gave a net increase of 20 stores and a total store base of 695.
The total space grew by 5.8% to just over 6.1m square feet.
The lower level of sales in the UK & RoI was the key driver in underlying
operating profit declining to GBP22.8m, a decrease of 64.0% on last year.
Net finance charges increased to GBP5.6m, primarily from the impact of higher
levels of net debt. These combined to decrease underlying profit before tax by
72.3% to GBP17.2m. As a consequence underlying earning per share declined to
18.2p.
Non-recurring items accounted for a net loss of GBP0.5m (2008: loss of GBP2.6m),
a combination of net profit on property disposals offset by reorganisation costs
from acquisitions.
Profit before tax decreased by 71.9% to GBP16.7m.
Basic earnings per share decreased by 72.2% to 17.6p, reflecting a 72.4%
decrease in post tax earnings. Underlying earnings per share decreased to 18.2p.
Dividend
Whilst the Group has remained profitable in the most challenging of market
conditions, profits have reduced substantially and there remains continued
uncertainty in the economic outlook. Against this background, and being mindful
of retaining some financial flexibility to respond to any opportunities
presented by the downturn, the Board feels it prudent to recommend a final
dividend of 4.0p per share. Having previously paid an interim dividend of 4.0p
per share the total dividend for the period will therefore be 8.0p per share.
The Board appreciates the importance of the dividends to its shareholders and
will seek to return to a greater level of dividend when a sustained recovery is
evident and reflected in the financial results of the Group.
Outlook
In the UK & RoI, the last year has been extremely difficult with a deteriorating
economic environment, a decline in consumer confidence and a reduction in
housing transactions having adversely impacted our performance. We remain
cautious about short-term prospects but are confident that the investments we
have made in our stores, ranges, services, cutting and distribution centre and
IT systems will all support future growth.
The performance in the Rest of Europe over the last year has been strong and the
growth potential remains solid. In The Netherlands and Belgium, we expect
trading conditions to remain challenging but believe we have the strength of
offer to continue to grow.
In Poland, the focus will be on driving sales in the existing stores and
ensuring the format improves its performance.
UK and Republic of Ireland - Operational review
+-----------------------------------+--------------+--------------+--------------+--+
| UK & RoI - Key financial results | 2009 | 2008 | Change | |
| | GBPm | GBPm | | |
+-----------------------------------+--------------+--------------+--------------+--+
| Revenue | 394.1 | 452.7 | (12.9%) | |
+-----------------------------------+--------------+--------------+--------------+--+
| Like-for-like sales | (13.5%) | (2.7%) | (10.8pp) | |
+-----------------------------------+--------------+--------------+--------------+--+
| Gross profit | 244.6 | 284.1 | (13.9%) | |
+-----------------------------------+--------------+--------------+--------------+--+
| Gross profit % | 62.1% | 62.8% | (0.7pp) | |
+-----------------------------------+--------------+--------------+--------------+--+
| Underlying operating profit | 15.6 | 58.0 | (73.1%) | |
+-----------------------------------+--------------+--------------+--------------+--+
| Underlying operating margin % | 4.0% | 12.8% | (8.8pp) | |
+-----------------------------------+--------------+--------------+--------------+--+
Total revenue declined by 12.9% to GBP394.1m (like-for-like decline of 13.5%)
reflecting a significant deterioration in the economic environment which
impacted consumer spending. This performance can be viewed against a market
which, we believe, decreased by around 20% in value terms and so represents a
further increase in market share.
The acquisition of Sleepright accounted for a sales increase of 1.5%. This was
offset by the previous year having a 53rd week which contributed a 1.5% sales
decline. The net impact of opening and closing stores added 0.6% to sales year
on year.
Gross profit decreased 13.9% to GBP244.6m representing 62.1% of sales. This is a
0.7 percentage point decline on the previous year. The Sleepright acquisition
accounted for 0.2 percentage points of this decline, as this part of the
business operates on a lower gross margin than floor coverings. The remaining
difference was principally caused by the impact on product cost prices of the
strengthening Euro relative to sterling. Historically, we have always maintained
a policy of moving our retail prices to reflect changes in cost prices. However,
the unprecedented fluctuations in the exchange rate during the past year
resulted in over 10,000 price changes which impacted our promotional programme
and operational efficiencies. In the latter part of the year we moved away from
this policy to facilitate a clearer and more consistent offer to the customer.
The total UK cost base increased by 1.3% across the year to GBP229.0m. This
included the impact of the Sleepright acquisition, which accounted for 1.6% of
the growth. The 53rd week in the prior year accounted for a 1.8% decline year on
year in costs. Consequently, removing these two elements, the cost base grew by
1.5% on a comparable 52 week basis.
Store payroll costs showed a significant year on year saving. Part of this
reduction has come from lower commissions due to lower sales and the rest from a
reduction in headcount. In comparable stores, we have achieved a reduction in
staff costs equal to over 300 full time equivalent positions (FTEs) year on year
through a focus on sales productivity and the impact of completing the roll out
of Navision. Net new store openings added just over 30 new FTEs.
Store occupancy costs increased year on year, through a mixture of underlying
rent and rates inflation and new space. Depreciation was also up with the
completion of the roll out of our in-store computer system.
Underlying operating profit decreased by 73.1% to GBP15.6m.
Sales and marketing
The specialist floor covering market has declined in volume terms over the last
year impacted by a poor economic environment, deteriorating consumer confidence
and a decline in mortgage approvals and resultant housing transactions.
Manufacturers and retailers have seen the decline accelerate over the year and
we believe many independents have ceased trading.
There still remains a surplus of manufacturing capacity to the carpet market
even after some suppliers initiating considerable down sizing or closure
programmes. We have continued our strategy of dealing with a small number of
suppliers but have increased our overall supplier base. This has helped achieve
better pricing and would give us options, if an individual supplier got into
difficulties.
Unsurprisingly, consumers are cutting back on how much they wish to spend. Over
the past year we have worked closely with suppliers to re-engineer products to
lower selling price levels. We have also introduced more Saxony carpets which
are available in many fashionable colour options.
The laminate and wood market appeared to decline over the year. We believe
choice and quality are more important to the customer in this market than price
alone, and we are currently in the process of re-positioning our offer to the
consumer.
Due to large shifts in the exchange rate, the selling prices of rugs from India
and China have increased, impacting on demand. We continue to review our offer
to stay ahead of interior design fashions.
Last year saw the launch of a generic marketing campaign ("Fun on the Floor") to
promote the benefits of carpet, supported by retailers, wholesalers and
manufacturers. Although the initial impact was below everyone's expectations we
remain committed to working within the industry to drive awareness and sales.
This year the plan is to improve on the successful aspects of last year's
campaign.
The new warehouse and cutting facility has provided capacity for the Group to
target incremental sales volume from new business lines outside its core retail
offer. In particular, we see the insurance market as an important area for
future growth. Our insurance business is administered through an independent
third party, allowing us to service this market with a lower central cost and
improved cash flows versus dealing with insurers directly.
Store portfolio development
We continued to develop our store portfolio during the year :
+-----------------------+------+----------+----------+-------+------+--------+---------+
| | Store numbers | Sq ft ('000) |
+-----------------------+-------------------------------------------+------------------+
| UK & RoI store base | 3 | Openings | Closures | Other | 2 | 3 May | 2 May |
| | May | | | | May | 2008 | 2009 |
| | 2008 | | | | 2009 | | |
+-----------------------+------+----------+----------+-------+------+--------+---------+
| Standalone | 498 | 23 | (12) | 1 | 510 | 4,350 | 4,516 |
+-----------------------+------+----------+----------+-------+------+--------+---------+
| Concessions | 61 | 5 | (9) | - | 57 | 121 | 116 |
+-----------------------+------+----------+----------+-------+------+--------+---------+
| | 559 | 28 | (21) | 1 | 567 | 4,471 | 4,632 |
+-----------------------+------+----------+----------+-------+------+--------+---------+
In response to the tougher market conditions, we reduced the pace of store
openings during the year. There have been 28 new openings as well as one from
the acquisition of Sleepright. All our new stores take time to mature and we
expect to see stronger sales from them in future years. At the same time we
closed 21 stores, either as part of our ongoing programme to move to lower cost
locations, or because the stores did not contribute to our overall
profitability.
Total space increased by 3.6% with the average store size now 8,169 sq ft,
(2008: 8,000 sq ft). In the 2009/10 financial year we anticipate opening 20
stores.
Operational initiatives
We continue to invest in the key areas:
* Quality of service
* In-store experience
* Advertising effectively
* Product development
During the year, a number of initiatives were started to ensure we kept pace
with consumer expectations, in particular in respect of the in-store experience.
We are in the process of repositioning our point of sale to focus not just on
price, but also on the quality of our services and product benefits. We aim to
inspire customers with colour, texture and the advantages that come from
particular products. Our intention is for our cut length showrooms to have an
interior design feel, focusing on fashion and colour trends. This will be in
contrast to our roll stock offer which will focus on immediate supply for
consumers on a budget.
We are well known for value, but the high quality of our customer service is
less appreciated. Going forward, greater emphasis is being placed on the
experience of our staff and our independent fitters. Ensuring quality fitters
are available for our customers remains a key priority and the business
continues to invest in the "Fitters' Academy".
Our customers are now able to make comments on service via email as well as the
telephone, and system improvements allow us to capture customer service comments
more easily. We continue to train our Store Managers to handle complaints
effectively and we treat all feedback as an opportunity to improve our service
offering further. Similarly, we have been providing appropriate training and
courses for our estimators to enhance the customer experience. We have an
exceptionally low complaint ratio reflecting the quality service we already
achieve.
This year, our choice of media will determine our creative execution when
advertising. The "one size fits all" approach no longer applies and a number of
new initiatives are being trialled. As an example, we have sponsored our first
TV programme to enhance the communication of the brand.
Our Central Support office and cutting facility has proved to be a real success
story. Not only has it allowed us to improve our environmental performance and
enhanced communication from department to department, it has also allowed us to
become more efficient with the deliveries to our stores resulting in lower costs
to the business. In addition, it has given us the capacity to explore new
business channels without affecting our traditional retail business
opportunities.
Rest of Europe - Operational review
Financial results
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| Rest of Europe - Key financial results | 2009 | 2008 | Change | Change |
| | GBPm | GBPm | (Reported) | (Constant |
| | | | | Currency) |
+-----------------------------------------------------+------------+------------+--------------+---------------+
| Revenue | | | | | | |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| - The Netherlands and Belgium | | | 85.7 | 66.7 | 28.5% | 10.0% |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| - Poland | | | 3.0 | 2.1 | 42.9% | 23.2% |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| - Rest of Europe | | | 88.7 | 68.8 | 28.9% | |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| Underlying operating profit | | | | | | |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| - The Netherlands and Belgium | | | 8.7 | 6.8 | 27.9% | 7.4% |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| - Poland | | | (1.5) | (1.4) | (7.1%) | 8.1% |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| Rest of Europe | | | 7.2 | 5.4 | 33.3% | |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| Underlying operating margin % | | | | | | |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| - The Netherlands and Belgium | | | 10.2% | 10.2% | 0.0% | 0.0% |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| - Poland | | | - | - | - | - |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
| Rest of Europe | | | 8.1% | 7.8% | 0.3% | |
+-----------------------------------------+----+------+------------+------------+--------------+---------------+
Reported revenue in the Rest of Europe was 28.9% ahead of last year at GBP88.7m.
In local currency terms, the increase was 10.0% in The Netherlands and Belgium
and 23.2% in Poland.
In July 2008 the acquisition of Ben de Graaff was completed. This added 11
stores to the portfolio. In the 10 months of the financial year they contributed
7.3% of the year on year sales growth in local currency terms. Of the 11 stores,
three have been closed and the remainder converted to the Carpetright fascia.
This has enabled us to gain the operational and marketing synergies resulting
from a single brand.
An additional two stores were opened bringing the total in The Netherlands and
Belgium to 116.
The Netherlands and Belgium gross profit increased by 30.3% to GBP49.5m with an
improvement in the gross margin of 0.8 percentage points, a combination of cost
price improvements and managing the product mix.
Costs were tightly controlled with most of the increase attributable to new
space and inflationary pressures.
The region recorded an underlying operating profit of GBP7.2m, an increase of
33.3% on last year. The underlying reported operating profit in The Netherlands
and Belgium increased by 27.9% to GBP8.7m with an operating margin of 10.2%. In
local currency terms the underlying operating profit increased by 7.4%. The
reported loss in Poland was GBP1.5m, marginally below the previous year. In
local currency terms, this loss was an improvement of 8.1% year on year.
The 50/50 joint venture in Germany with TTL, launched in April 2008, with one
store near Berlin, has not provided us with a satisfactory return or the
confidence to expand the operation. Consequently, we and our partner agreed to
discontinue the operation and dissolve the business.
Store portfolio development
The store expansion programme continued during the year with four new stores
opening. The portfolio is now as follows:
+----------------------+--------+----------+----------+--------+--------+--------+---------+
| | Store Numbers | Sq ft ('000) |
+----------------------+------------------------------------------------+------------------+
| Rest of Europe | 3 May | Openings | Closures | Other | 2 May | 3 May | 2 May |
| store base | 2008 | | | | 2009 | 2008 | 2009 |
+----------------------+--------+----------+----------+--------+--------+--------+---------+
| The Netherlands | 77 | 2 | (2) | 11 | 88 | 895 | 1,065 |
+----------------------+--------+----------+----------+--------+--------+--------+---------+
| Belgium | 28 | - | - | - | 28 | 335 | 335 |
+----------------------+--------+----------+----------+--------+--------+--------+---------+
| Poland | 11 | 2 | (1) | - | 12 | 115 | 123 |
+----------------------+--------+----------+----------+--------+--------+--------+---------+
| | 116 | 4 | (3) | 11 | 128 | 1,345 | 1,523 |
+----------------------+--------+----------+----------+--------+--------+--------+---------+
Operational initiatives
The Netherlands and Belgium
The key focus throughout the last year has been the ongoing improvement of
in-store product offers, together with increased promotional activity and the
integration of the Ben de Graaff acquisition. Business in both countries has
been strong, building on the good performance of prior years. Our brand
awareness continues to grow, resulting in increased footfall and sales
conversion.
In The Netherlands, the focus has been on a strong promotional programme. The
strength of our offer, including the use of single day "double discount" events,
continues to enable us to outperform the competition and we have once again
increased our market share, with much of this growth attributable to a continued
improvement in our customer conversion rate. In Belgium we identified, following
market research, that the stores in the French speaking region could be targeted
more specifically to the local consumer. As a result specific changes were made
to the ranges, which has led to improved sales and margin growth.
We have seen a shift in the sales mix in The Netherlands and Belgium towards
rugs, vinyl and laminate in particular. These categories are more important than
in the UK & RoI, with laminate alone representing 20% of total revenue. We have
extended the product range to widen customer choice and our advertising strategy
has evolved to ensure that we are not perceived as just a carpet specialist. We
will look to grow sales from these categories throughout 2009/10 whilst we
continue to develop the best product ranges for these countries.
Integration costs associated with the Ben de Graaff acquisition accounted for
GBP0.7m, which has been included as non-recurring.
Poland
Progress in Poland has been challenging, particularly due to the deterioration
in economic conditions which has impacted consumer demand. The Group was trading
from 12 stores at the year end, a net increase of one in the year. This was
after two openings and one closure.
Encouragingly we have seen total sales increase by 23.2% in local currency
terms. Most sales continue to be in either rugs or take-away roll-stock carpet
but the offer continues to evolve and we have been pleased with the clearer
product segmentation in our most recent openings.
During the year we have continually reviewed the store layouts for each store.
As a result, we have reorganised the stores to ensure clearer category
segmentation.
Financial review 2009
Property disposals and non-recurring items
The Group recorded a net charge of GBP0.5m (2008: charge of GBP2.6m) in the
year.
+---------------------------------------------------------------+----------------+----------------+
| | (Charge) / Gain |
+---------------------------------------------------------------+---------------------------------+
| | 2009 | 2008 |
| | GBPm | GBPm |
+---------------------------------------------------------------+----------------+----------------+
| Profit on disposal of properties | 1.8 | 7.0 |
+---------------------------------------------------------------+----------------+----------------+
| Store Impairment charge | (0.9) | - |
+---------------------------------------------------------------+----------------+----------------+
| Reorganisation costs of acquired businesses | (1.2) | (1.8) |
+---------------------------------------------------------------+----------------+----------------+
| Impairment of investment in joint venture | (0.2) | - |
+---------------------------------------------------------------+----------------+----------------+
| New cutting & distribution facility | - | (7.8) |
+---------------------------------------------------------------+----------------+----------------+
| | (0.5) | (2.6) |
+---------------------------------------------------------------+----------------+----------------+
We continued to trade our property portfolio successfully, although market
conditions have made this more challenging. A non-recurring gain of GBP1.8m was
achieved (2008: GBP7.0m).
Accounting standards require us to perform impairment tests each year. As a
result of the challenging retail environment we have reviewed the carrying value
of the store assets in our balance sheet. The models used to value these assets
include a number of assumptions relating to market growth and inflationary
expectations. The tests have led to an impairment of GBP0.9m in relation to
eight loss making stores.
A non-recurring charge of GBP0.5m has been taken for the integration of UK
acquisitions and of GBP0.7m for European integration.
Following the decision to discontinue the joint venture in Germany, the
investment has been impaired at a charge of GBP0.2m.
Cashflow
+-------------------------------------------+--------------+---------------+
| | 2009 | 2008 |
| | GBPm | GBPm |
+-------------------------------------------+--------------+---------------+
| Underlying Operating Profit | 22.8 | 63.4 |
+-------------------------------------------+--------------+---------------+
| Depreciation and other non-cash items | 20.5 | 17.0 |
+-------------------------------------------+--------------+---------------+
| Non-recurring items | (1.2) | (6.6) |
+-------------------------------------------+--------------+---------------+
| Decrease in stock | 2.7 | 0.8 |
+-------------------------------------------+--------------+---------------+
| (Increase)/Decrease in working capital | (18.6) | (1.9) |
+-------------------------------------------+--------------+---------------+
| Cash generated by operations | 26.2 | 72.7 |
+-------------------------------------------+--------------+---------------+
| Net Interest paid | (5.5) | (2.2) |
+-------------------------------------------+--------------+---------------+
| Corporation Tax paid | (12.2) | (15.1) |
+-------------------------------------------+--------------+---------------+
| Dividends paid | (22.8) | (35.2) |
+-------------------------------------------+--------------+---------------+
| Net Capital Expenditure | (20.6) | (58.9) |
+-------------------------------------------+--------------+---------------+
| Purchase of own shares | - | (6.5) |
+-------------------------------------------+--------------+---------------+
| Other | (4.7) | (5.4) |
+-------------------------------------------+--------------+---------------+
| Movement in net debt | (39.6) | (50.6) |
+-------------------------------------------+--------------+---------------+
| Opening net debt | (57.5) | (6.9) |
+-------------------------------------------+--------------+---------------+
| Closing net debt | (97.1) | (57.5) |
+-------------------------------------------+--------------+---------------+
The Group's operating cash flow remained positive at GBP26.2m (2008: GBP72.7m).
The increase in working capital of GBP18.6m (2008: GBP1.9m) was due to the
reduction in creditors associated with the decline in sales volume.
Net capital expenditure was GBP20.6m (2008: GBP58.9m). This can be broken down
into the following principal categories.
+---------------------------------------------------------+------------------+--------------------+
| | 2009 | 2008 |
| | GBPm | GBPm |
+---------------------------------------------------------+------------------+--------------------+
| Core capital expenditure | 12.0 | 36.6 |
+---------------------------------------------------------+------------------+--------------------+
| Freehold properties | 4.3 | 9.9 |
+---------------------------------------------------------+------------------+--------------------+
| Acquisition of new businesses | 7.3 | 32.4 |
+---------------------------------------------------------+------------------+--------------------+
| Proceeds from property disposals | (3.0) | (20.0) |
+---------------------------------------------------------+------------------+--------------------+
| | 20.6 | 58.9 |
+---------------------------------------------------------+------------------+--------------------+
The year on year reduction in core capital expenditure reflects the significant
prior year investment in the cutting and warehouse facility at Purfleet and roll
out of Navision in stores.
The net debt increased by GBP39.6m over the year and totalled GBP97.1m at the
year end.
Taxation
The effective tax rate on profits is 29.8% (2008: 28.1%). This has increased due
to the impact of one off credits in 2008 (+2.2 pp) and the lower profitability
magnifying the impact of non-qualifying depreciation (+3.1 pp). These have been
partially offset by the reduction in the UK corporation tax to 28% from 30%
(-2.0 pp) and various overseas tax movements (-1.6 pp).
Current liquidity
At the year end the Group held cash balances of GBP17.4m (2008: GBP8.9m) in a
combination of Sterling, Euros and Polish Zlotys.
Gross bank borrowings at the balance sheet date were GBP108.3m (2008: GBP61.7m)
of which GBP103.9m is term based with the balance of GBP4.4m being drawn down
from overdraft facilities. The Group has further undrawn, committed facilities
of GBP24.5m at the balance sheet date. These are principally available as
on-demand overdraft facilities and are subject to annual review.
In April 2009, the Group completed a refinancing arrangement with its principal
bank, the Royal Bank of Scotland. The revised facilities provide approximately
GBP110m of debt capacity split between amortising loans, revolving credit
facilities and overdrafts in a mixture of Sterling and Euro currencies. The term
of these facilities are to July 2012 and involved combined arrangement fees and
legal costs of GBP1.5m. Although paid in cash at the outset, these will be
amortised over the life of the facility. The facilities are accompanied by a
number of covenants which are believed to be appropriate in the current economic
climate. The Group monitors actual and prospective compliance with these on a
regular basis and are in the process of renegotiating financing agreements with
its other bankers to align the covenant requirements with those of the principal
bankers.
Group income statement
For the 52 weeks ended 2 May 2009
+--+------------------------------------+------+--+--------+--+-------+---------+---------+
| | | | | | | Note | 52 | 53 |
| | | | | | | | weeks | weeks |
| | | | | | | | to 2 | to 3 |
| | | | | | | | May | May |
| | | | | | | | 2009 | 2008 |
| | | | | | | | GBPm | GBPm |
+--+------------------------------------+------+--+--------+--+-------+---------+---------+
| Revenue | | | | | 2 | 482.8 | 521.5 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Cost of sales | | | | | | (187.0) | (198.4) |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Gross profit | | | | | 2 | 295.8 | 323.1 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Other operating income | | | | | | 1.8 | 10.1 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Administrative expenses | | | | | | (275.3) | (272.4) |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Operating profit | | | | | 2 | 22.3 | 60.8 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Operating profit before profit on property disposals and | 2 | 22.8 | 63.4 |
| non-recurring items | | | |
+-------------------------------------------------------------+-------+---------+---------+
| (Losses)/profits on property disposals and | | | | 3 | (0.5) | (2.6) |
| non-recurring items | | | | | | |
+----------------------------------------------+--+--------+--+-------+---------+---------+
| Finance costs payable | | | | | | (7.2) | (2.8) |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Finance income receivable | | | | | | 1.6 | 1.5 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Profit before tax | | | | | | 16.7 | 59.5 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Tax | | | | | 4 | (4.9) | (16.7) |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Profit for the financial period attributable to equity | | 11.8 | 42.8 |
| holders of the Company | | | |
+-------------------------------------------------------------+-------+---------+---------+
| | | | | | | Note | 2009 | 2008 |
| | | | | | | | Pence | Pence |
+--+------------------------------------+------+--+--------+--+-------+---------+---------+
| Basic earnings per share | | | | | 5 | 17.6 | 63.2 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Diluted earnings per share | | | | | 5 | 17.6 | 63.2 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Dividend per share - interim paid | | | | | 6 | 4.0 | 22.0 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Dividend per share - final proposed | | | | | 6 | 4.0 | 30.0 |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| | | | | | | Note | 2009 | 2008 |
| | | | | | | | GBPm | GBPm |
+--+------------------------------------+------+--+--------+--+-------+---------+---------+
| Dividends paid to equity shareholders | | | | | | 22.8 | 35.2 |
| in the year (GBPm) | | | | | | | |
+---------------------------------------+------+--+--------+--+-------+---------+---------+
| Final dividend proposed to equity shareholders in | | | 2.7 | 20.2 |
| respect of the year (GBPm) | | | | |
+--+------------------------------------+------+--+--------+--+-------+---------+---------+
All items in the income statement arise from continuing operations.
Statement of recognised income and expense
For the 52 weeks ended 2 May 2009
+--+--------------------------------------+------+--+------+--+-------+---------+-+---------+
| | | | | | | Note | 52 | 53 weeks |
| | | | | | | | weeks | to 3 May |
| | | | | | | | to 2 | 2008 GBPm |
| | | | | | | | May | |
| | | | | | | | 2009 | |
| | | | | | | | GBPm | |
+--+--------------------------------------+------+--+------+--+-------+---------+-----------+
| Profit for the financial period | | | | | | 11.8 | 42.8 |
+-----------------------------------------+------+--+------+--+-------+---------+-----------+
| Actuarial gains/(losses) on defined benefit | | | | 8 | (1.1) | 0.5 |
| pension schemes | | | | | | |
+------------------------------------------------+--+------+--+-------+---------+-----------+
| Fair value losses in respect of cash | | | | | 8 | (2.3) | (0.2) |
| flow hedges | | | | | | | |
+-----------------------------------------+------+--+------+--+-------+---------+-----------+
| Exchange gains/(losses) in respect of hedged equity | | 8 | 7.2 | 4.4 |
| investments | | | | |
+----------------------------------------------------------+--+-------+---------+-----------+
| Tax on items taken directly to or transferred | | | | 8 | 0.3 | (0.1) |
| from equity | | | | | | |
+------------------------------------------------+--+------+--+-------+---------+-----------+
| Net gains/(losses) recognised directly | | | | | | 4.1 | 4.6 |
| in equity | | | | | | | |
+-----------------------------------------+------+--+------+--+-------+---------+-----------+
| Total recognised income for the financial period attributable to | 15.9 | 47.4 |
| equity holders of the Company | | |
+--+--------------------------------------+------+--+------+--+-------+---------+-+---------+
Group balance sheet
At 2 May 2009
+-----------------------------------------------------------+--------+---------+---------+
| | Note | 2009 | 2008 |
| | | GBPm | GBPm |
+-----------------------------------------------------------+--------+---------+---------+
| Assets | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Non-current assets | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Intangible assets | | 71.2 | 62.7 |
+-----------------------------------------------------------+--------+---------+---------+
| Property, plant and equipment | | 164.7 | 165.8 |
+-----------------------------------------------------------+--------+---------+---------+
| Investment property | | 25.3 | 21.0 |
+-----------------------------------------------------------+--------+---------+---------+
| Investment in joint ventures | | - | 0.2 |
+-----------------------------------------------------------+--------+---------+---------+
| Deferred tax assets | | 3.3 | 3.2 |
+-----------------------------------------------------------+--------+---------+---------+
| Trade and other receivables | | 1.3 | 1.3 |
+-----------------------------------------------------------+--------+---------+---------+
| Total non-current assets | | 265.8 | 254.2 |
+-----------------------------------------------------------+--------+---------+---------+
| | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Current assets | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Inventories | | 43.2 | 40.1 |
+-----------------------------------------------------------+--------+---------+---------+
| Trade and other receivables | | 34.4 | 32.8 |
+-----------------------------------------------------------+--------+---------+---------+
| Cash and cash equivalents | 7 | 17.4 | 8.9 |
+-----------------------------------------------------------+--------+---------+---------+
| Total current assets | | 95.0 | 81.8 |
+-----------------------------------------------------------+--------+---------+---------+
| | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Total assets | | 360.8 | 336.0 |
+-----------------------------------------------------------+--------+---------+---------+
| | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Liabilities | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Current liabilities | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Trade and other payables | | (110.8) | (123.8) |
+-----------------------------------------------------------+--------+---------+---------+
| Obligations under finance leases | | (0.9) | (0.8) |
+-----------------------------------------------------------+--------+---------+---------+
| Borrowings and overdrafts | | (17.1) | (22.4) |
+-----------------------------------------------------------+--------+---------+---------+
| Current tax liabilities | | (5.7) | (11.6) |
+-----------------------------------------------------------+--------+---------+---------+
| Total current liabilities | | (134.5) | (158.6) |
+-----------------------------------------------------------+--------+---------+---------+
| | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Non-current liabilities | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Trade and other payables | | (31.5) | (28.3) |
+-----------------------------------------------------------+--------+---------+---------+
| Obligations under finance leases | 7 | (3.0) | (3.9) |
+-----------------------------------------------------------+--------+---------+---------+
| Borrowings | 7 | (91.2) | (39.3) |
+-----------------------------------------------------------+--------+---------+---------+
| Derivative financial instruments | | (2.3) | - |
+-----------------------------------------------------------+--------+---------+---------+
| Provisions for liabilities and charges | | (0.8) | (1.4) |
+-----------------------------------------------------------+--------+---------+---------+
| Deferred tax liabilities | | (27.9) | (28.9) |
+-----------------------------------------------------------+--------+---------+---------+
| Retirement benefit obligations | | (2.4) | (1.3) |
+-----------------------------------------------------------+--------+---------+---------+
| Total non-current liabilities | | (159.1) | (103.1) |
+-----------------------------------------------------------+--------+---------+---------+
| | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Total liabilities | | (293.6) | (261.7) |
+-----------------------------------------------------------+--------+---------+---------+
| | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Net assets | | 67.2 | 74.3 |
+-----------------------------------------------------------+--------+---------+---------+
| | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Equity | | | |
+-----------------------------------------------------------+--------+---------+---------+
| Share capital | 8 | 0.7 | 0.7 |
+-----------------------------------------------------------+--------+---------+---------+
| Share premium | 8 | 15.4 | 15.4 |
+-----------------------------------------------------------+--------+---------+---------+
| Treasury shares | 8 | (0.1) | (0.2) |
+-----------------------------------------------------------+--------+---------+---------+
| Other reserves | 8 | 51.2 | 58.4 |
+-----------------------------------------------------------+--------+---------+---------+
| Total equity attributable to equity holders of the | 8 | 67.2 | 74.3 |
| Company | | | |
+-----------------------------------------------------------+--------+---------+---------+
Group cash flow statement
for the 52 weeks ended 2 May 2009
+-----------------------------------------------------------+------+---------+--------+
| | Note | 52 | 53 |
| | | weeks | weeks |
| | | to 2 | to 3 |
| | | May | May |
| | | 2009 | 2008 |
| | | GBPm | GBPm |
+-----------------------------------------------------------+------+---------+--------+
| | | | |
+-----------------------------------------------------------+------+---------+--------+
| Operating activities | | | |
+-----------------------------------------------------------+------+---------+--------+
| Profit before tax | | 16.7 | 59.5 |
+-----------------------------------------------------------+------+---------+--------+
| Adjusted for: | | | |
+-----------------------------------------------------------+------+---------+--------+
| Depreciation and amortisation | | 20.4 | 17.0 |
+-----------------------------------------------------------+------+---------+--------+
| Non-recurring non cash items | | 1.1 | 3.0 |
+-----------------------------------------------------------+------+---------+--------+
| Share-based payments | | 0.1 | - |
+-----------------------------------------------------------+------+---------+--------+
| Profits on property disposals | | (1.8) | (7.0) |
+-----------------------------------------------------------+------+---------+--------+
| Net finance costs | | 5.6 | 1.3 |
+-----------------------------------------------------------+------+---------+--------+
| Operating cash flows before movements in working capital | | 42.1 | 73.8 |
+-----------------------------------------------------------+------+---------+--------+
| Decrease/(increase) in inventories | | 2.7 | 0.8 |
+-----------------------------------------------------------+------+---------+--------+
| (Increase)/decrease in trade and other receivables | | (0.9) | (1.0) |
+-----------------------------------------------------------+------+---------+--------+
| (Decrease)/increase in trade and other payables | | (17.7) | (0.9) |
+-----------------------------------------------------------+------+---------+--------+
| Cash generated from operations | | 26.2 | 72.7 |
+-----------------------------------------------------------+------+---------+--------+
| Interest paid | | (6.2) | (2.9) |
+-----------------------------------------------------------+------+---------+--------+
| Corporation taxes paid | | (12.2) | (15.1) |
+-----------------------------------------------------------+------+---------+--------+
| Net cash from operating activities | | 7.8 | 54.7 |
+-----------------------------------------------------------+------+---------+--------+
| | | | |
+-----------------------------------------------------------+------+---------+--------+
| Investing activities | | | |
+-----------------------------------------------------------+------+---------+--------+
| Proceeds on disposal of property, plant and equipment and | 3.0 | 20.0 |
| investment property | | |
+------------------------------------------------------------------+---------+--------+
| Purchases of intangible assets | | (2.0) | (2.0) |
+-----------------------------------------------------------+------+---------+--------+
| Purchases of property, plant and equipment and investment | (14.3) | (44.5) |
| property | | |
+------------------------------------------------------------------+---------+--------+
| Acquisition of shares in subsidiary net of cash acquired | | (7.3) | (32.2) |
+-----------------------------------------------------------+------+---------+--------+
| Acquisition of shares in joint ventures | | - | (0.2) |
+-----------------------------------------------------------+------+---------+--------+
| Interest received | | 0.7 | 0.7 |
+-----------------------------------------------------------+------+---------+--------+
| Net cash used in investing activities | | (19.9) | (58.2) |
+-----------------------------------------------------------+------+---------+--------+
| | | | |
+-----------------------------------------------------------+------+---------+--------+
| Financing activities | | | |
+-----------------------------------------------------------+------+---------+--------+
| Purchase and cancellation of own shares | | - | (6.5) |
+-----------------------------------------------------------+------+---------+--------+
| Purchase of treasury shares by employee share trust | | (0.2) | - |
+-----------------------------------------------------------+------+---------+--------+
| Repayment of borrowings | | (20.5) | (13.4) |
+-----------------------------------------------------------+------+---------+--------+
| New loans advanced | | 72.0 | 38.5 |
+-----------------------------------------------------------+------+---------+--------+
| Repayment of obligation under finance leases | | (0.8) | (0.8) |
+-----------------------------------------------------------+------+---------+--------+
| Dividends paid to Company shareholders | | (22.8) | (35.2) |
+-----------------------------------------------------------+------+---------+--------+
| Net cash generated by/(used in) financing activities | | 27.7 | (17.4) |
+-----------------------------------------------------------+------+---------+--------+
| | | | |
+-----------------------------------------------------------+------+---------+--------+
| Net increase/(decrease) in cash and cash equivalents in | | 15.6 | (20.9) |
| the period | | | |
+-----------------------------------------------------------+------+---------+--------+
| Cash and cash equivalents at the beginning of the period | | (2.2) | 19.2 |
+-----------------------------------------------------------+------+---------+--------+
| Exchange differences | | (0.4) | (0.5) |
+-----------------------------------------------------------+------+---------+--------+
| Cash and cash equivalents at the end of the period | 7 | 13.0 | (2.2) |
+-----------------------------------------------------------+------+---------+--------+
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.
Notes to the accounts
1 Accounting policies
Basis of preparation
The financial statements of the Group are made up to the Saturday nearest to 30
April. The financial year for 2009
represents the 52 weeks ended 2 May 2009. The comparative financial year for
2008 was 53 weeks ended 3 May
2008.
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs)
and International Financial Reporting Interpretations Committee (IFRIC)
interpretations endorsed by the European
Union, together with those parts of the Companies Acts 1985 and 2006 applicable
to companies reporting under IFRS.
The information is derived from the full Group financial statements for the 52
week period to 2 May 2009 and does not constitute full accounts within the
meaning of section 435 of the Companies Act 2006. The Group's Annual Report and
Financial Statements, on which the auditors have given an unqualified report
which does not contain a statement under section 498(2) or (3) of the Companies
Act 2006, will be delivered to the Registrar of Companies in due course and
posted to shareholders in July 2009.
The financial information for the 53 weeks to 3 May 2008 is derived from the
Annual Report for that year which has
been delivered to the Registrar of Companies. The independent auditors reported
on those accounts, their report was
unqualified and did not contain a statement under either Section 498(2) or
Section 498(3) of the Companies Act 2006.
Foreign exchange rates
Financial assets and liabilities and foreign operations are translated at the
following rates of exchange:
+------------------------+-----------+--+---------+---------+---------+---------+
| | | | Euro | Euro | Zloty | Zloty |
| | | | 2009 | 2008 | 2009 | 2008 |
+------------------------+-----------+--+---------+---------+---------+---------+
| Average rate | | | 1.19 | 1.40 | 4.53 | 5.25 |
+------------------------+-----------+--+---------+---------+---------+---------+
| Closing rate | | | 1.12 | 1.28 | 4.89 | 4.42 |
+------------------------+-----------+--+---------+---------+---------+---------+
2 Segmental analysis
The Group's primary reporting segment is geographic, as this is the basis on
which the Group is both 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 The Netherlands, Belgium,
Poland and the joint venture arrangement in Germany ("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, expense, result,
assets and liabilities include transfers between geographical segments. Such
transfers are priced at arm's length and are eliminated on consolidation.
Analysis by geography:
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| | 52 weeks to 2 May 2009 | 53 weeks to 3 May 2008 |
| | | |
+-----------------------------------+--------------------------+--------------------------+
| | UK & | Rest | Group | UK & | Rest | Group |
| | RoI | of | | RoI | of | |
| | | Europe | | | Europe | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Gross Revenue | 397.3 | 88.7 | 486.0 | 456.0 | 68.8 | 524.8 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Inter-segment revenue | (3.2) | - | (3.2) | (3.3) | - | (3.3) |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Segment Revenue (by origin and | 394.1 | 88.7 | 482.8 | 452.7 | 68.8 | 521.5 |
| destination) | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Gross profit | 244.6 | 51.2 | 295.8 | 284.1 | 39.0 | 323.1 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Operating profit before | 15.6 | 7.2 | 22.8 | 58.0 | 5.4 | 63.4 |
| profits/(losses) on property | | | | | | |
| disposals and non-recurring items | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Segment Result: operating profit | 15.9 | 6.4 | 22.3 | 55.4 | 5.4 | 60.8 |
| after profits/(losses) on | | | | | | |
| property disposals and | | | | | | |
| non-recurring items | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Net finance costs payable | | | (5.6) | | | (1.3) |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Profit before tax | | | 16.7 | | | 59.5 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Tax | | | (4.9) | | | (16.7) |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Profit for the financial period | | | 11.8 | | | 42.8 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Other segmental items: | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Depreciation and amortisation | 16.6 | 3.8 | 20.4 | 13.6 | 3.4 | 17.0 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Share-based payments | 0.1 | - | 0.1 | - | - | - |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Segment Assets: | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Gross assets (by origin and | 245.4 | 105.2 | 350.6 | 240.7 | 88.9 | 329.6 |
| destination) (1)(2) | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Inter-segment balances | (10.5) | - | (10.5) | (6.2) | - | (6.2) |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Segment assets | 234.9 | 105.2 | 340.1 | 234.5 | 88.9 | 323.4 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Unallocated assets | | | 20.7 | | | 12.1 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Total assets | | | 360.8 | | | 335.5 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Segment Liabilities: | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Gross liabilities (by origin and | 123.4 | 32.6 | 156.0 | 135.8 | 24.8 | 160.6 |
| destination) (1) | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Inter-segment balances | - | (10.5) | (10.5) | - | (6.2) | (6.2) |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Segment liabilities | 123.4 | 22.1 | 145.5 | 135.8 | 18.6 | 154.4 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Unallocated liabilities | | | 148.1 | | | 106.8 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Total liabilities | | | 293.6 | | | 261.2 |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Capital Expenditure: | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
| Capital expenditure (by origin | 14.1 | 2.2 | 16.3 | 38.0 | 8.5 | 46.5 |
| and destination) | | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+--------+
(1) Segment assets and liabilities exclude interest-bearing balances and tax
assets and liabilities.
(2) Segment assets for Rest of Europe include the equity investment in the
German joint venture. 3 Profits/(losses) on property disposals and
non-recurring items
+--------------------------------------+-------+------+---------+-------+------+-------+
| | | | 2009 | 2008 |
| | | | GBPm | GBPm |
+--------------------------------------+--------------+---------+-------+--------------+
| Disclosed in the income statement: | | | | |
+--------------------------------------+--------------+---------+-------+--------------+
| Profits on property disposals | | | 1.8 | 7.0 |
+--------------------------------------+--------------+---------+-------+--------------+
| Impairment of property plant and equipment | | (0.9) | - |
+-----------------------------------------------------+---------+-------+--------------+
| Post acquisition reorganisation of the acquired | | (1.2) | (1.8) |
| businesses | | | |
+-----------------------------------------------------+---------+-------+--------------+
| Impairment of investment in Joint venture | | (0.2) | - |
+-----------------------------------------------------+---------+-------+--------------+
| Pre-opening costs relating to the new cutting and | - | (7.8) |
| distribution centre | | |
+---------------------------------------------------------------+-------+--------------+
| | | | (0.5) | (2.6) |
+--------------------------------------+-------+----------------+-------+--------------+
| The post acquisition reorganisation costs of the Storeys, Ben de Graaff and |
| Sleepright businesses are primarily redundancy and other costs arising from the |
| integration of the support functions into Carpetright. |
| The pre-opening costs relating to the new cutting and distribution centre were the |
| dual running costs incurred in the start-up phase of the new site while the four, |
| now closed, existing centres were also in operation, together with the costs of |
| exiting those four sites. |
+--------------------------------------------------------------------------------------+
| 4 Tax |
| (i) Analysis of the charge in the period |
+--------------------------------------------------------------------------------------+
| | | | 2009 | 2008 |
| | | | GBPm | |
| | | | | GBPm |
+--------------------------------------+-------+----------------+--------------+-------+
| UK current tax | | | 3.6 | 14.9 |
+--------------------------------------+-------+----------------+--------------+-------+
| Overseas current tax | | | 2.1 | 1.4 |
+--------------------------------------+-------+----------------+--------------+-------+
| Total current tax | | | 5.7 | 16.3 |
+--------------------------------------+-------+----------------+--------------+-------+
| UK deferred tax | | | (2.2) | 3.8 |
+--------------------------------------+-------+----------------+--------------+-------+
| Overseas deferred tax | | | 1.4 | (1.9) |
+--------------------------------------+-------+----------------+--------------+-------+
| Adjustments in respect of changes in | | | - | (1.5) |
| tax rates | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| Total deferred tax | | | (0.8) | 0.4 |
+--------------------------------------+-------+----------------+--------------+-------+
| | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| Total tax charge in the income | | | 4.9 | 16.7 |
| statement | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| (ii) Reconciliation of profit before | | | | |
| tax to total tax | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| | | | 2009 GBPm | 2008 |
| | | | | GBPm |
+--------------------------------------+-------+----------------+--------------+-------+
| Profit before tax | | | 16.7 | 59.5 |
+--------------------------------------+-------+----------------+--------------+-------+
| Tax charge at UK Corporation Tax rate of 28% | | 4.7 | 17.7 |
| (2008: 29.83%) | | | |
+----------------------------------------------+----------------+--------------+-------+
| Adjusted for the effects of: | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| Overseas tax rates | | | (0.2) | (0.3) |
+--------------------------------------+-------+----------------+--------------+-------+
| Recognition of historic overseas tax | | | - | (2.3) |
| losses | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| Non-qualifying depreciation | | | 0.7 | 0.7 |
+--------------------------------------+-------+----------------+--------------+-------+
| Foreign exchange movements on | | | 0.3 | 0.9 |
| foreign deferred tax | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| Other permanent differences | | | (0.3) | 1.9 |
+--------------------------------------+-------+----------------+--------------+-------+
| Adjustments in respect of changes in tax | | - | (1.5) |
| rates on deferred tax | | | |
+----------------------------------------------+----------------+--------------+-------+
| Adjustments in respect of prior | | | (0.3) | (0.4) |
| periods | | | | |
+--------------------------------------+-------+----------------+--------------+-------+
| Total tax charge in the income | | | 4.9 | 16.7 |
| statement | | | | |
+--------------------------------------+-------+------+---------+-------+------+-------+
Tax of GBP0.1m has been credited to the income statement (2008: GBP0.9m credit)
in respect of profits/(losses) on property disposals and non-recurring items.
The 2008 adjustment of GBP1.5m in respect of the change in the UK Corporation
tax rate has been treated as a non-recurring tax credit.
5 Earnings per share
Basic earnings per share is calculated by dividing earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the period, excluding those held by Equity Trust (Guernsey) Limited which
are treated as cancelled.
In order to compute diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all potentially
dilutive ordinary shares. Those share options granted to employees and Executive
Directors where the exercise price is less than the average market price of the
Company's ordinary shares during the period, represent potentially dilutive
ordinary shares.
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| | | | 2009 | | | 2008 |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| | Earnings | Weighted | Earnings | Earnings | Weighted | Earnings |
| | GBPm | average | per | GBPm | average | per |
| | | number | share | | number | share |
| | | of | Pence | | of | Pence |
| | | shares | | | shares | |
| | | Millions | | | Millions | |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Basic earnings per share | 11.8 | 67.2 | 17.6 | 42.8 | 67.7 | 63.2 |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Effect of dilutive share options | 0.1 | 0.4 | - | 0.1 | 0.2 | - |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Diluted earnings per share | 11.9 | 67.6 | 17.6 | 42.9 | 67.9 | 63.2 |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| | | | | | | |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Reconciliation of earnings per share excluding post tax profit on property disposals and |
| non-recurring items: |
+-------------------------------------------------------------------------------------------------------+
| | | | 2009 | | | 2008 |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| | Earnings | Weighted | Earnings | Earnings | Weighted | Earnings |
| | GBPm | average | per | GBPm | average | per |
| | | number | share | | number | share |
| | | of | Pence | | of | Pence |
| | | shares | | | shares | |
| | | Millions | | | Millions | |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Basic earnings per share | 11.8 | 67.2 | 17.6 | 42.8 | 67.7 | 63.2 |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Adjusted for the effect of profit | (1.8) | - | (2.7) | (7.0) | - | (10.3) |
| on property disposals | | | | | | |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Adjusted for the effect of | 2.3 | - | 3.4 | 9.6 | - | 14.1 |
| non-recurring items | | | | | | |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Tax thereon | (0.1) | - | (0.1) | (0.9) | - | (1.3) |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Non-recurring tax benefit from the | - | - | - | (1.5) | - | (2.2) |
| impact of the decrease in UK | | | | | | |
| Corporation Tax rates on the | | | | | | |
| opening deferred tax provision | | | | | | |
| (note 4) | | | | | | |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
| Underlying earnings per share | 12.2 | 67.2 | 18.2 | 43.0 | 67.7 | 63.5 |
+------------------------------------+----------+-----------+----------+----------+----------+----------+
The Directors have presented an additional measure of earnings per share based
on underlying earnings. This is in accordance with the practice adopted by most
major retailers. Underlying earnings is defined as profit excluding profit on
property disposals and non-recurring items and related tax.
6 Dividends
+--------------------------------------+-------+------+--------+--------+--------+--------+
| | | | | 2009 | | 2008 |
+--------------------------------------+-------+------+--------+--------+--------+--------+
| | | | Pence | GBPm | Pence | GBPm |
| | | | per | | per | |
| | | | share | | share | |
+--------------------------------------+-------+------+--------+--------+--------+--------+
| Prior year final dividend paid | | | 30.0 | 20.2 | 30.0 | 20.4 |
+--------------------------------------+-------+------+--------+--------+--------+--------+
| Current year interim dividend paid | | | 4.0 | 2.6 | 22.0 | 14.8 |
+--------------------------------------+-------+------+--------+--------+--------+--------+
| | | | 34.0 | 22.8 | 52.0 | 35.2 |
+--------------------------------------+-------+------+--------+--------+--------+--------+
The Directors propose a final dividend of 4.0 pence per share amounting to
GBP2.7m (2008: 30.0 pence per share; GBP20.2m) which is not included as a
liability in these financial statements. Subject to approval by the shareholders
at the Annual General Meeting, the proposed dividend will be paid on 25
September 2009 to shareholders who are on the register of members on 11
September 2009.
This would take the 2009 interim and final dividend payments to 8.0 pence
amounting to GBP5.3m (2008: 52.0 pence; GBP35.0m).
7 Movement in cash and net borrowings
Net debt incorporates the Group's borrowings, bank overdrafts and obligations
under finance leases, less cash and cash equivalents.
Group
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | 2008 | | | | | 2009 |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | Total | Cash | Acquisitions | Exchange | Revaluation | Total |
| | GBPm | flow | GBPm | | | GBPm |
| | | GBPm | | differences | GBPm | |
| | | | | GBPm | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Cash and cash equivalents per the | 8.9 | | | | | 17.4 |
| balance sheet | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Bank overdrafts | (11.1) | | | | | (4.4) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Cash and cash equivalents per the | (2.2) | 15.6 | - | (0.4) | - | 13.0 |
| cash flow statement | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Borrowings | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Borrowings (current) | (11.3) | | | | | (12.7) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Borrowings (non-current) | (39.3) | | | | | (91.2) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | (50.6) | (51.5) | - | (1.8) | - | (103.9) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Obligation under finance leases | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Obligation under finance leases | (0.8) | | | | | (0.9) |
| (current) | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Obligation under finance leases | (3.9) | | | | | (3.0) |
| (non-current) | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | (4.7) | 0.8 | - | - | - | (3.9) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Derivative financial instruments | - | - | - | - | (2.3) | (2.3) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Net borrowings | (57.5) | (35.1) | - | (2.2) | (2.3) | (97.1) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | 2007 | | | | | 2008 |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | Total | Cash | Acquisitions | Exchange | Revaluation | Total |
| | GBPm | flow | GBPm | | | GBPm |
| | | GBPm | | differences | GBPm | |
| | | | | | | |
| | | | | GBPm | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Cash and cash equivalents per the | 20.7 | | | | | 8.9 |
| balance sheet | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Bank overdrafts | (1.5) | | | | | (11.1) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Cash and cash equivalents per the | 19.2 | (20.9) | - | (0.5) | - | (2.2) |
| cash flow statement | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Borrowings | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Borrowings (current) | (10.7) | | | | | (11.3) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Borrowings (non-current) | (11.0) | | | | | (39.3) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | (21.7) | (25.1) | - | (3.8) | - | (50.6) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Obligation under finance leases | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Obligation under finance leases | (0.8) | | | | | (0.8) |
| (current) | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Obligation under finance leases | (3.7) | | | | | (3.9) |
| (non-current) | | | | | | |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| | (4.5) | 0.8 | (1.0) | - | - | (4.7) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Derivative financial instruments | 0.1 | - | - | - | (0.1) | - |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
| Net borrowings | (6.9) | (45.2) | (1.0) | (4.3) | (0.1) | (57.5) |
+--------------------------------------+--------+--------+---------------+-------------+-------------+---------+
8 Statement of changes in shareholders' equity
+------------------------------------------+------+---------+---------+----------+----------+--------+
| | Note | Share | Share | Treasury | Other | Total |
| | | | premium | shares | reserves | |
| | | capital | | GBPm | GBPm | GBPm |
| | | | GBPm | | | |
| | | GBPm | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| At 29 April 2007 | | 0.7 | 14.8 | (0.5) | 53.0 | 68.0 |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Actuarial gain on defined benefit | | - | - | - | 0.5 | 0.5 |
| pension scheme | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Exchange difference in respect of hedged | - | - | - | 4.4 | 4.4 |
| equity investments | | | | | |
+-------------------------------------------------+---------+---------+----------+----------+--------+
| Tax on items taken directly to or | | - | - | - | (0.1) | (0.1) |
| transferred from equity | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Fair value losses in respect of cash | | - | - | - | (0.2) | (0.2) |
| flow hedges | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Profit for the financial period | | - | - | - | 42.8 | 42.8 |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Total recognised income and expense for the | - | - | - | 47.4 | 47.4 |
| financial period | | | | | |
+-------------------------------------------------+---------+---------+----------+----------+--------+
| Transfer of Treasury shares to | | - | - | 0.3 | (0.3) | - |
| participants | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Purchase and cancellation of own shares | | - | - | - | (6.5) | (6.5) |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Issue of Ordinary shares on acquisition of | - | 0.5 | - | - | 0.5 |
| Storey Carpets Ltd | | | | | |
+-------------------------------------------------+---------+---------+----------+----------+--------+
| Issue of Ordinary shares to satisfy share | - | 0.1 | - | - | 0.1 |
| option scheme exercises | | | | | |
+-------------------------------------------------+---------+---------+----------+----------+--------+
| Dividend paid to Company shareholders | 6 | - | - | - | (35.2) | (35.2) |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| At 3 May 2008 | | 0.7 | 15.4 | (0.2) | 58.4 | 74.3 |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Actuarial loss on defined benefit | | - | - | - | (1.1) | (1.1) |
| pension scheme | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Exchange difference in respect of hedged | - | - | - | 7.2 | 7.2 |
| equity investments | | | | | |
+-------------------------------------------------+---------+---------+----------+----------+--------+
| Tax on items taken directly to or | | - | - | - | 0.3 | 0.3 |
| transferred from equity | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Fair value losses in respect of cash | | - | - | - | (2.3) | (2.3) |
| flow hedges | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Profit for the financial period | | - | - | - | 11.8 | 11.8 |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Total recognised income and expense for the | - | - | - | 15.9 | 15.9 |
| financial period | | | | | |
+-------------------------------------------------+---------+---------+----------+----------+--------+
| Transfer of Treasury shares to | | - | - | 0.3 | (0.3) | - |
| participants | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Purchase of own shares by employee share | | - | - | (0.2) | - | (0.2) |
| trust | | | | | | |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| Dividend paid to Company shareholders | | - | - | - | (22.8) | (22.8) |
+------------------------------------------+------+---------+---------+----------+----------+--------+
| At 2 May 2009 | | 0.7 | 15.4 | (0.1) | 51.2 | 67.2 |
+------------------------------------------+------+---------+---------+----------+----------+--------+
9 Acquisition of subsidiaries
Ben de Graaff Tapijt
On 30 June 2008, the Group acquired the trade and assets of Ben de Graaff
Tapijt. The consideration paid for the acquisition was GBP5.7m. The principal
activity of Ben De Graaff Tapijt 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 2 May 2009, the acquisition contributed GBP5.7m
to revenue, GBP0.1m to underlying operating profit before tax and GBP0.1m in
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 for profit or operating cash flow.
Details of net assets acquired and goodwill are as follows:
+---------------------------------------------+-------------+-------------+---------+
| | | | GBPm |
+---------------------------------------------+-------------+-------------+---------+
| Purchase consideration: | | | |
+---------------------------------------------+-------------+-------------+---------+
| Cash paid | | | 5.7 |
+---------------------------------------------+-------------+-------------+---------+
| Direct costs relating to the acquisition | | | 0.1 |
+---------------------------------------------+-------------+-------------+---------+
| Total purchase consideration | | | 5.8 |
+---------------------------------------------+-------------+-------------+---------+
| Fair value of net identifiable assets | | | (1.3) |
| acquired | | | |
+---------------------------------------------+-------------+-------------+---------+
| Goodwill | | | 4.5 |
+---------------------------------------------+-------------+-------------+---------+
| The goodwill is attributable to the significant synergies expected to arise |
| after acquisition by the Group. |
| The assets and liabilities arising from the acquisition together with their |
| provisional fair values are as follows: |
| |
+-----------------------------------------------------------------------------------+
| | Acquiree's | Fair | Fair |
| | carrying | value | value |
| | amount | adjustments | GBPm |
| | before | GBPm | |
| | business | | |
| | combination | | |
| | GBPm | | |
+---------------------------------------------+-------------+-------------+---------+
| Net assets acquired: | | | |
+---------------------------------------------+-------------+-------------+---------+
| Inventories | 2.6 | (0.8) | 1.8 |
+---------------------------------------------+-------------+-------------+---------+
| Trade and other payables | (0.1) | - | (0.1) |
+---------------------------------------------+-------------+-------------+---------+
| Other provisions | - | (0.4) | (0.4) |
+---------------------------------------------+-------------+-------------+---------+
| Net identifiable assets/(liabilities) | 2.5 | (1.2) | 1.3 |
| acquired | | | |
+---------------------------------------------+-------------+-------------+---------+
| |
+-----------------------------------------------------------------------------------+
| Outflow of cash to acquire business, net of cash | | |
| acquired | | |
+-----------------------------------------------------------+-------------+---------+
| Cash consideration | | | 5.8 |
+---------------------------------------------+-------------+-------------+---------+
| Cash flow on acquisition of shares in subsidiary net of cash | 5.8 |
| acquired | |
+---------------------------------------------+-------------+-------------+---------+
Sleepright UK Ltd
On 5 December 2008, the Group acquired 100% of the issued share capital of
Sleepright UK Ltd (Sleepright). The initial consideration was GBP0.8m cash. The
principal activity of Sleepright is the retailing of beds and mattresses. 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 2 May 2009, the acquisition contributed GBP6.6m
to revenue, GBP(0.2)m to profit before tax and GBP(0.2)m in cash flow. Had the
acquisition taken place at the start of the financial year an additional GBP7.0m
in revenue would have been recognised. There would have been no material
difference between the amounts included in these accounts and the amounts that
would have been recognised for profit or operating cash flow. Details of net
assets acquired and goodwill are as follows:
+-----------------------------------------+------+-------------+---------+------+---------+
| | | | GBPm |
+------------------------------------------------+-------------+----------------+---------+
| Purchase consideration: | | | |
+------------------------------------------------+-------------+----------------+---------+
| Cash paid | | | 0.8 |
+------------------------------------------------+-------------+----------------+---------+
| Direct costs relating to the acquisition | | | 0.2 |
+------------------------------------------------+-------------+----------------+---------+
| Total purchase consideration | | | 1.0 |
+------------------------------------------------+-------------+----------------+---------+
| Fair value of net identifiable liabilities | | | 1.9 |
| acquired | | | |
+------------------------------------------------+-------------+----------------+---------+
| Goodwill | | | 2.9 |
+------------------------------------------------+-------------+----------------+---------+
| The goodwill is attributable to the significant synergies expected to arise after |
| acquisition by the Group. |
| The assets and liabilities arising from the acquisition together with their |
| provisional fair values are as follows: |
+-----------------------------------------------------------------------------------------+
| | Acquiree's | Fair value | Fair |
| | carrying | adjustments | value |
| | amount | GBPm | GBPm |
| | before | | |
| | business | | |
| | combination | | |
| | GBPm | | |
+------------------------------------------------+-------------+----------------+---------+
| Net assets acquired: | | | |
+------------------------------------------------+-------------+----------------+---------+
| Property, plant and equipment | 0.4 | - | 0.4 |
+------------------------------------------------+-------------+----------------+---------+
| Inventories | 1.2 | (0.4) | 0.8 |
+------------------------------------------------+-------------+----------------+---------+
| Trade and other receivables | 0.6 | - | 0.6 |
+------------------------------------------------+-------------+----------------+---------+
| Trade and other payables | (3.7) | - | (3.7) |
+------------------------------------------------+-------------+----------------+---------+
| Net identifiable assets/(liabilities) acquired | (1.5) | (0.4) | (1.9) |
+------------------------------------------------+-------------+----------------+---------+
| Outflow of cash to acquire business, net of cash acquired |
+-----------------------------------------------------------------------------------------+
| Cash consideration | | | 1.0 |
+------------------------------------------------+-------------+----------------+---------+
| Cash flow on acquisition of shares in subsidiary net of cash acquired | 1.0 |
+-------------------------------------------------------------------------------+---------+
| Melford Commercial Properties Ltd |
| On 31 March 2008, the group acquired 100% of the issued share capital of Melford |
| Commercial Properties Ltd. During the current period the purchase consideration and |
| the acquirees book values have been finalised and the fair values have been |
| reviewed. The revised details of net assets acquired and goodwill are as follows: |
+-----------------------------------------------------------------------------------------+
| | | | GBPm |
+-----------------------------------------+--------------------+---------+----------------+
| Purchase consideration: | | | |
+-----------------------------------------+--------------------+---------+----------------+
| Cash paid | | | 6.6 |
+-----------------------------------------+--------------------+---------+----------------+
| Direct costs relating to the | | | 0.4 |
| acquisition | | | |
+-----------------------------------------+--------------------+---------+----------------+
| Total purchase consideration | | | 7.0 |
+-----------------------------------------+--------------------+---------+----------------+
| Fair value of net identifiable | | | 0.1 |
| liabilities acquired | | | |
+-----------------------------------------+--------------------+---------+----------------+
| Goodwill | | | 7.1 |
+-----------------------------------------+------+-------------+---------+------+---------+
Since the initial estimates were reported the total purchase consideration has
been reduced by GBP0.2m as a result of the finalisation of the direct costs. The
fair value of the assets acquired has been reduced by GBP0.7m to a net liability
acquired of GBP0.1m, GBP0.3m as a result of the review of the book values in the
acquired company and GBP0.4m as a result of the review of the fair value
adjustments.
A net GBP0.2m was received in cash during the period as a result of the
finalisation of the working capital adjustment relating to this acquisition and
the payment of direct costs.
Storey Carpets Ltd
GBP0.7m of deferred consideration was paid during the period relating to the
acquisition of Storey Carpets Ltd on 1 May 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IFFIVREIAFIA
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