Preliminary Results
June 29 2010 - 2:00AM
UK Regulatory
TIDMCPR
RNS Number : 3845O
Carpetright PLC
29 June 2010
Carpetright plc
Preliminary Results Announcement for the 52 weeks ended 1 May 2010
Carpetright plc, Europe's leading specialist carpet and floor covering retailer,
today announces its preliminary results for the 52 weeks to 1 May 2010.
Headlines
Group
· Total Group Revenue1 increased by 7.0% to GBP516.6m (2009: GBP482.8m)
· Underlying 2 profit before tax up 64.0% to GBP28.2m (2009: GBP17.2m)
· Profit before tax of GBP22.3m (2009: GBP16.7m)
· Underlying2 earnings per share of 31.6p (2009: 18.2p)
· Basic earnings per share 23.5p (2009: 17.6p)
· Proposed final dividend of 8.0p (2009: 4.0p) making a full year dividend of
16.0p (2009: 8.0p)
· Net debt at year end of GBP71.3m (2009: GBP97.1m)
UK and Republic of Ireland
· Total revenue1 increased by 7.9% to GBP425.2m (like-for-like3 up 3.1%)
· Underlying 2 operating profit increased by 67.9% to GBP26.2m
· Store base4 increased by 19 to 586
The Netherlands and Belgium
· Total revenue1 increased by 4.1% to GBP89.2m
· Underlying2 reported operating profit increased by 10.3% to GBP9.6m
Lord Harris, Chairman and Chief Executive, said:
"In a challenging year, I am pleased to report that Carpetright has delivered an
improved performance. The Group has grown sales and commenced the development
of new revenue streams in the house building and insurance sectors, helping to
deliver a significant recovery in profitability over the depressed level
reported in the prior year.
"These results have been delivered through a period of economic recession, with
fears of unemployment and tax increases adversely affecting consumer confidence.
Throughout the period we continued to manage the business by exerting tight
control over all costs, capital expenditure, stock and cash flow.
"Although we are planning for consumer demand across Europe to remain subdued,
we have market leading positions in all our geographical areas with strong value
led retail brands. I believe this enables us to look confidently to the future
as and when the economic conditions improve."
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
Tel: 01708 802000
Citigate Dewe Rogerson
Kevin Smith / Angharad Couch / Lindsay Noton
Tel: 020 7638 9571
There will be a presentation today at 9.00am to analysts and investors at Andaz
Liverpool Street, 40 Liverpool Street, London, EC2M 7QN.
A copy of this trading statement will be available on our website
www.carpetright.plc.uk today from 7.00am
Notes
1. All sales figures are quoted after deducting VAT.
2. Underlying' excludes exceptional items and related tax.
3. Like-for-like sales calculated as this year's net sales divided by last
year's net sales for all stores that are at least 12 months old at the beginning
of our financial year. Stores closed during the year are excluded from both
years. No account is taken of changes to store size or introduction of third
party concessions. Sales from insurance and house building contracts are
supplied through the stores and included in their figures.
4. Excludes Sleepright within Carpetright locations.
5. Certain statements in this report are forward looking. Although the Group
believes that the expectations reflected in these forward looking statements are
reasonable, it 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.
Operating and Financial Review
Overview
Total sales increased by 7.0% to GBP516.6m, with all continuing businesses
showing growth. During the year, the Group opened 53 stores and closed 45 which
gave a net increase of eight stores and a total store base of 703. The total
store space grew by 0.8% to 6.2 million square feet.
The return to sales growth of the UK & Republic of Ireland business was the key
driver for the improvement in underlying operating profit to GBP34.1m, an
increase of 49.6% on the last year. Net finance charges were GBP0.3m higher at
GBP5.9m, reflecting the full year impact of the refinancing arrangements
completed in April 2009. These combined to generate an underlying profit before
tax of GBP28.2m, an increase of 64.0% on the prior year.
Exceptional charges totalled GBP5.9m (2009: GBP0.5m) and were principally a
combination of the cost of exiting the Polish market and non-cash store
impairment charges.
As a result, profit before tax increased by 33.5% to GBP22.3m. Basic earnings
per share increased by 33.5% to 23.5p reflecting the increase in post tax
earnings.
A summary of the reported financial results for the year ended 1 May 2010 is set
out below:
+----------------------------------+------------+----------+------------+
| | 2010 | 2009 | |
| | GBPm | GBPm | Change |
+----------------------------------+------------+----------+------------+
| Revenue | 516.6 | 482.8 | 7.0% |
+----------------------------------+------------+----------+------------+
| Underlying* operating profit | 34.1 | 22.8 | 49.6% |
+----------------------------------+------------+----------+------------+
| Net finance charges | (5.9) | (5.6) | (5.4%) |
+----------------------------------+------------+----------+------------+
| Underlying* profit before tax | 28.2 | 17.2 | 64.0% |
+----------------------------------+------------+----------+------------+
| Exceptional items | (5.9) | (0.5) | |
+----------------------------------+------------+----------+------------+
| Profit before tax | 22.3 | 16.7 | 33.5% |
+----------------------------------+------------+----------+------------+
| Earnings per share (pence) | | | |
+----------------------------------+------------+----------+------------+
| - underlying* | 31.6 | 18.2 | 73.6% |
+----------------------------------+------------+----------+------------+
| - basic | 23.5 | 17.6 | 33.5% |
+----------------------------------+------------+----------+------------+
| Dividends per share (pence) | 16.0 | 8.0 | 100.0% |
+----------------------------------+------------+----------+------------+
| Net debt | (71.3) | (97.1) | GBP25.8m |
+----------------------------------+------------+----------+------------+
* Where this review makes reference to "Underlying" these relate to profit /
earnings before exceptional items.
Performance by Business
For year to 1 May 2010
+------------------------------------+-----------+-----------+------------+------+-----------+
| | Total | Year on Year Growth |
| | GBPm | |
+------------------------------------+ +-------------------------------------------+
| | | Reported | Local Currency | Like-for- |
| | | | | |
| | | | | Like 1 |
+------------------------------------+-----------+-----------+-------------------+-----------+
| | | | | |
| Revenue | | | | |
+------------------------------------+-----------+-----------+-------------------+-----------+
| UK & RoI | 425.2 | 7.9% | 7.9% | 3.1% |
+------------------------------------+-----------+-----------+-------------------+-----------+
| The Netherlands and Belgium | 89.2 | 4.1% | (1.7%) | (1.0%) |
+------------------------------------+-----------+-----------+-------------------+-----------+
| Revenue excluding Poland | 514.4 | 7.2% | | |
+------------------------------------+-----------+-----------+-------------------+-----------+
| Poland | 2.2 | (26.7%) | (23.0%) | |
+------------------------------------+-----------+-----------+-------------------+-----------+
| Total Revenue | 516.6 | 7.0% | | |
+------------------------------------+-----------+-----------+-------------------+-----------+
| | | | | |
+------------------------------------+-----------+-----------+-------------------+-----------+
| | | |
+------------------------------------+-----------+-------------------------------------------+
| Underlying Operating Profit 2 | | | | |
+------------------------------------+-----------+-----------+------------+------------------+
| UK & RoI | 26.2 | 67.9% | 67.9% | |
+------------------------------------+-----------+-----------+------------+------------------+
| The Netherlands and Belgium | 9.6 | 10.3% | 4.9% | |
+------------------------------------+-----------+-----------+------------+------------------+
| Underlying Profit excluding Poland | 35.8 | 49.7% | | |
+------------------------------------+-----------+-----------+------------+------------------+
| Poland | (1.7) | (13.3%) | (14.7%) | |
+------------------------------------+-----------+-----------+------------+------------------+
| Total Underlying Operating Profit | 34.1 | 49.6% | | |
+------------------------------------+-----------+-----------+------------+------------------+
| | | | | |
| | | | | |
+------------------------------------+-----------+-----------+------------+------------------+
| Underlying Operating Profit% | | | | |
+------------------------------------+-----------+-----------+------------+------------------+
| UK & RoI | 6.2% | +2.2%pts | | |
+------------------------------------+-----------+-----------+------------+------------------+
| The Netherlands and Belgium | 10.8% | +0.6% | | |
| | | pts | | |
+------------------------------------+-----------+-----------+------------+------------------+
| Operating Profit excluding Poland | 7.0% | +1.9% | | |
+------------------------------------+-----------+-----------+------------+------------------+
| Poland | (77.3%) | n/a | | |
+------------------------------------+-----------+-----------+------------+------------------+
| Total Underlying Operating Profit | 6.6% | +1.9%pts | | |
| % | | | | |
+------------------------------------+-----------+-----------+------------+------------------+
| | | | | | |
+------------------------------------+-----------+-----------+------------+------+-----------+
1. Like-for-like sales growth - calculated as this year's net sales divided
by last year's net sales for all stores that are at least 12 months old at the
beginning of our financial year. Stores closed during the year are excluded
from both years. No account is taken of changes to store size or the
introduction of third party concessions. Sales from insurance and house
building contracts are supplied through the stores and included in their
figures.
2. Underlying operating profits - operating profit, excluding exceptional
items.
UK & Republic of Ireland - Performance Review
The key financial results for the UK & RoI were:
+----------------------------+--------------+-------------+-------------+
| | 2010 | 2009 | Change |
| | GBPm | GBPm | |
+----------------------------+--------------+-------------+-------------+
| Revenue | 425.2 | 394.1 | 7.9% |
+----------------------------+--------------+-------------+-------------+
| Like-for-like sales | 3.1% | (13.5%) | |
+----------------------------+--------------+-------------+-------------+
| Gross Profit | 263.7 | 244.6 | 7.8% |
+----------------------------+--------------+-------------+-------------+
| Gross Profit % | 62.0% | 62.1% | (0.1pp) |
+----------------------------+--------------+-------------+-------------+
| Underlying Operating | 26.2 | 15.6 | 67.9% |
| Profit | | | |
+----------------------------+--------------+-------------+-------------+
| Underlying Operating | 6.2% | 4.0% | 2.2pp |
| Profit % | | | |
+----------------------------+--------------+-------------+-------------+
In the UK & RoI, total revenue increased year on year by 7.9% to GBP425.2m. The
inclusion of Sleepright for its first full year contributed 2.0% of this
increase. We have opened 51 new stores adding 328k sq ft of selling space
during the year. Including the impact of 32 closures, this translated into net
space growth of 176k sq ft, an increase of 3.8% since the start of the year.
The UK & RoI portfolio is now as follows:
+--------------------+------+----------+----------+------+--------+--------+
| | Store Numbers | Sq Ft ('000) |
+--------------------+-----------------------------------+-----------------+
| | 2 | Openings | Closures | 1 | 2 May | 1 May |
| | May | | | May | 2009 | 2010 |
| | 2009 | | | 2010 | | |
+--------------------+------+----------+----------+------+--------+--------+
| Standalone | 510 | 36 | (9) | 537 | 4,516 | 4,689 |
+--------------------+------+----------+----------+------+--------+--------+
| Concessions | 57 | 15 | (23) | 49 | 116 | 119 |
+--------------------+------+----------+----------+------+--------+--------+
| Total | 567 | 51 | (32) | 586 | 4,632 | 4,808 |
+--------------------+------+----------+----------+------+--------+--------+
The year saw a return to positive sales growth in the first quarter which
accelerated to double digit growth in the period up to December 2009. Sales
since January were more subdued, resulting in a full year like-for-like
performance of +3.1%. This growth reflects an underlying recovery in mortgage
approval figures and the impact of the contraction of a competitor in the UK,
Allied Carpets, in the period since July 2009.
The increase in UK sales has been predominantly carpet, where the proportion of
cut length business has increased relative to the 'pay and take' roll stock.
The vinyl business has also grown. Sales of laminate/wood categories have
continued to decline, which we believe is a reflection of the growing customer
appreciation of the benefits of vinyl and a trend back to carpet.
The fragile state of the economy in the Republic of Ireland inevitably impacted
our business there. We remain committed to continuing to trade in this
geographic market and, in the light of the prevailing economic conditions, have
reduced our prices with the aim of increasing volumes.
We believe much of Carpetright's success is attributed to our focus on offering
the widest range of carpet at the keenest prices. This view was supported
during the year by externally conducted market research which indicated both
strong recognition of the Carpetright brand and a strong association with being
the 'first choice' for fitted carpet. This research has also provided insight
into areas for development. As an example of activity being undertaken, we have
independently assessed 536 independent fitters within the last year to ensure
they are appropriately qualified to carry out their role on our behalf.
In the Autumn of 2009 we re-launched our websites. These offer the consumer the
ability to order samples, book a consultation appointment and order products
on-line. The sites are generating over 40,000 unique visitors each week, which
represents a powerful method of accessing and converting potential customers.
The development and integration of the Sleepright bedding business continued
throughout the year. The focus has been on the product, promotional offers and
reducing delivery times. The introduction of beds to our offer presents an
opportunity to capitalise on the accessibility of our store locations and grow
sales per square foot.
We have continued to focus on gaining additional sales through the insurance
replacement business. This has proved successful, with contracts secured from
three of the largest domestic insurance providers in the country. These
contracts commenced during the year and, after positive feedback about the
quality of our products and service, the volume of business through this
channel, although still small relative to the Group's total revenue, continues
to grow.
During the year significant activity was devoted to developing an appropriate
offer for the house builder market. This is for both the 'contract' side, where
floor coverings are laid in communal areas, and by introducing a 'voucher' offer
for individuals to select products for their own new home. Although the sales
to date have been minimal due to the longer lead time in the development of new
homes, we believe we have the foundations to grow this significantly in the
coming year.
Gross profit increased by 7.8% to GBP263.7m, representing a gross profit margin
of 62.0% (2009: 62.1%). The introduction and development of beds into the
product mix accounted for a 0.7 percentage point decline, as this part of the
business operates on a lower gross margin than floor coverings. The growth of
the insurance business also had a dilutive effect of 0.4 percentage points.
This was offset by an improvement in the underlying floor covering margin of one
percentage point, achieved through a combination of management of promotions,
negotiation with suppliers and increased productivity in the Purfleet cutting
facility.
The total UK & RoI cost base increased by 3.7% compared to last year to
GBP237.5m. This included the impact of the first full year of Sleepright, which
accounted for 1.4% of the growth. In like-for-like stores, the overall costs
were level with the prior year. Store payroll costs continue to be managed
closely to the volume of sales, rent in like-for-like stores increased by a
modest 2.2% reflecting a weakening of the property market in the current
economic climate and we continued to increase our advertising spend which was up
GBP1.1m to GBP11.4m, as we believe it continues to drive consumers to our
stores.
Underlying operating profit increased by 67.9% to GBP26.2m.
The Netherlands and Belgium - Performance Review
The key financial results for The Netherlands and Belgium were:
+--------------------------+--------+--------+------------+-----------------+
| | 2010 | 2009 | Change | Change |
| | GBPm | GBPm | (Reported) | (Constant |
| | | | | Currency) |
+--------------------------+--------+--------+------------+-----------------+
| Revenue | 89.2 | 85.7 | 4.1% | (1.7%) |
+--------------------------+--------+--------+------------+-----------------+
| Like-for-like sales | (1.0%) | 2.7% | | |
+--------------------------+--------+--------+------------+-----------------+
| Gross Profit | 51.6 | 49.5 | 4.2% | (1.5%) |
+--------------------------+--------+--------+------------+-----------------+
| Gross Profit % | 57.8% | 57.8% | Level | |
+--------------------------+--------+--------+------------+-----------------+
| Underlying Operating | 9.6 | 8.7 | 10.3% | 4.9% |
| Profit | | | | |
+--------------------------+--------+--------+------------+-----------------+
| Underlying Operating | 10.8% | 10.2% | 0.6pp | 0.6pp |
| Profit % | | | | |
+--------------------------+--------+--------+------------+-----------------+
In The Netherlands and Belgium, total reported revenue increased year on year by
4.1% to GBP89.2m benefiting from a favourable move on exchange rates. Sales in
local currency declined 1.7%. We opened two new stores adding 17k sq ft of
selling space during the year. The second of these was a trial of a 'sample
only' store, which is trading ahead of our expectations and may provide an
opportunity for future store growth. Including the impact of one closure, this
translated into net space decline of 2k sq ft, a decrease of 0.2% since the
start of the year. The number of stores trading at the end of the year was 117
(2009: 116). Like-for-like sales in the first half declined by 3.6%, but an
encouraging recovery in the second half resulted in a full year performance down
only 1.0%. Operationally, we have introduced new products and adapted our
promotional offer to consumer demand, resulting in a growth in sales of both
laminate and vinyl.
Gross profit increased in both countries on the back of improved rebates and
effective management of the promotional mix. Reported operating costs increased
by 2.9% to GBP42.0m, demonstrating the impact of the movement in exchange rates.
In local currency terms, costs declined by 2.8% despite inherent inflationary
pressures on employment and occupancy costs. This reflected the tight
management control and focus on achieving efficiencies within the whole
operation.
The net result was an underlying operating profit of GBP9.6m, an increase of
10.3%. In local currency terms, the underlying profit increased by 4.9%.
Poland - Performance Review
The reported underlying loss in Poland was GBP1.7m, an increase of GBP0.2m on
the previous year.
As previously announced, following a review of the Polish business by the Board
in the Autumn of 2009, the decision was taken to withdraw from trading in this
market. In the period since its launch four years ago, the business had failed
to establish sufficient trading momentum and critical mass, and the resulting
performance had been disappointing. All the stores have now been closed. This
has resulted in a non-recurring cost of GBP3.5m, which is a combination of a
non-cash write down of the fixed assets to their realised value and other costs
incurred specifically for the closure. This is reported within exceptional
items.
Group Financial Review
Net Finance Costs and Taxation
Net finance charges were GBP5.9m (2009: GBP5.6m) reflecting lower deposit rates
on cash balances. The effective tax rate on profits is 29.5% (2009: 29.8%).
This has decreased due to the impact of overseas tax movements.
Exceptional Items
The Group recorded a net charge of GBP5.9m (2009: GBP0.5m) in the year.
+------------------------------------------------+------------+--------+
| | (Charge)/Gain |
+------------------------------------------------+---------------------+
| | 2010 | 2009 |
+------------------------------------------------+------------+--------+
| | GBPm | GBPm |
+------------------------------------------------+------------+--------+
| Profit/(loss) on disposal of properties | (0.7) | 1.8 |
+------------------------------------------------+------------+--------+
| UK & RoI Store Impairment charge | (1.4) | (0.9) |
+------------------------------------------------+------------+--------+
| UK & RoI Onerous leases | (1.4) | - |
+------------------------------------------------+------------+--------+
| Poland: Store Impairment Charge | (1.8) | - |
+------------------------------------------------+------------+--------+
| Closure costs | (1.7) | - |
+------------------------------------------------+------------+--------+
| Over-provision from pre-opening cost of | 1.1 | - |
| Purfleet | | |
+------------------------------------------------+------------+--------+
| Re-organisation cost of acquired businesses | - | (1.2) |
+------------------------------------------------+------------+--------+
| Impairment of investment in joint venture | - | (0.2) |
+------------------------------------------------+------------+--------+
| | (5.9) | (0.5) |
+------------------------------------------------+------------+--------+
We have continued to trade our property portfolio, although market conditions
have made this more challenging. A loss of GBP0.7m was incurred (2009: gain of
GBP1.8m).
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 a net impairment of GBP1.4m
(2009: GBP0.9m) in relation to 13 stores, principally located in the Republic of
Ireland. In addition, there is one vacant leased property and two properties
which are occupied by tenants at a rent below the head lease costs. An onerous
lease provision has been made on the basis of the difference between the
expected inflows and outflows for these properties.
As disclosed earlier, the costs of withdrawing from Poland total GBP3.5m. The
non-recurring pre-opening costs of the Purfleet cutting and distribution centre
recognised in 2007/08 were over-provided by GBP1.1m and have been released.
Balance Sheet and Cash Flow
The Group had net assets of GBP71.2m (2009: GBP67.2m) at the end of the year, an
increase of GBP4.0m since 2 May 2009. The cash generative nature of the
business in the year has been one of the strengths of the Group, with free
cashflow of GBP32.0m generated in the period (2009: an outflow of GBP12.1m).
Cash Flow
+---------------------------------------------+--------------+---------+
| | 2010 | 2009 |
+---------------------------------------------+--------------+---------+
| | GBPm | GBPm |
+---------------------------------------------+--------------+---------+
| Trading Profit | 34.1 | 22.8 |
+---------------------------------------------+--------------+---------+
| Depreciation and other non-cash items | 18.6 | 20.5 |
+---------------------------------------------+--------------+---------+
| Exceptional items | (1.7) | (1.2) |
+---------------------------------------------+--------------+---------+
| (Increase)/Decrease in stock | 1.5 | 2.7 |
+---------------------------------------------+--------------+---------+
| (Increase)/Decrease in working capital | 5.8 | (18.6) |
+---------------------------------------------+--------------+---------+
| Cash generated from operations | 58.3 | 26.2 |
+---------------------------------------------+--------------+---------+
| Net Interest paid | (6.8) | (5.5) |
+---------------------------------------------+--------------+---------+
| Corporation Tax paid | (9.9) | (12.2) |
+---------------------------------------------+--------------+---------+
| Net capital expenditure | (9.6) | (20.6) |
+---------------------------------------------+--------------+---------+
| Free cashflow | 32.0 | (12.1) |
+---------------------------------------------+--------------+---------+
| Dividends Paid | (8.1) | (22.8) |
+---------------------------------------------+--------------+---------+
| Other | 1.9 | (4.7) |
+---------------------------------------------+--------------+---------+
| Movement in Net Debt | 25.8 | (39.6) |
+---------------------------------------------+--------------+---------+
| Opening Net Debt | (97.1) | (57.5) |
+---------------------------------------------+--------------+---------+
| Closing Net Debt | (71.3) | (97.1) |
+---------------------------------------------+--------------+---------+
The Group's operating cash flow was positive at GBP58.3m (2009: GBP26.2m). The
increase was predominantly attributable to the improved profitability. Net
capital expenditure was GBP9.6m (2009: GBP20.6m). This can be broken down into
the following principal categories:
+----------------------------------------------+-------------+---------+
| | 2010 | 2009 |
| | GBPm | GBPm |
+----------------------------------------------+-------------+---------+
| Core capital expenditure | 10.1 | 12.0 |
+----------------------------------------------+-------------+---------+
| Freehold properties | - | 4.3 |
+----------------------------------------------+-------------+---------+
| Acquisitions of new businesses | - | 7.3 |
+----------------------------------------------+-------------+---------+
| Proceeds from property disposals | (0.5) | (3.0) |
+----------------------------------------------+-------------+---------+
| | 9.6 | 20.6 |
+----------------------------------------------+-------------+---------+
After the repayment of borrowings and payment of dividend, net debt decreased by
GBP25.8m to GBP71.3m at the year end (2009: GBP97.1m)
Property
The Group owns a significant property portfolio, most of which is used for
trading purposes. These are estimated by management to have a market value of
GBP139.5m at the year end (2009: GBP127.1m), compared to a net book value of
GBP108.6m recorded in the financial statements.
Pensions
At the year end, the Group had a deficit of GBP4.8m in relation to defined
benefit pension arrangements (2009: GBP2.4m). The approach used to prepare the
pension valuation is in line with current market practice and international
accounting standards. Following the triennial valuation in April 2008, a
revised deficit funding schedule of around GBP0.3m per annum for seven years was
agreed with the Trustees. With effect from the 1 May 2010, the UK defined
benefit scheme was closed to future accrual. This has been completed after a
period of consultation with the affected employees and will reduce the Group's
exposure accordingly.
Current liquidity
At the year end the Group held cash balances of GBP8.3m (2009: GBP17.4m) in a
combination of Sterling, Euros and Polish Zlotys.
Gross bank borrowings at the balance sheet date were GBP75.5m (2009: GBP108.3m)
of which GBP62.2m is term based, with the balance of GBP13.3m being drawn down
from overdraft facilities. The Group had further undrawn, committed facilities
of GBP38.1m at the balance sheet date.
The current banking 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 are being 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.
Dividend
Whilst the underlying profitability has improved in 2009/10, there remains
continued uncertainty on the economic outlook. Balancing these two facts, the
Board believes it is appropriate to increase the final dividend for the year.
The Board has proposed a final dividend of 8.0 pence per share (2009: 4.0
pence), bringing the full year dividend to 16.0 pence (2009: 8.0 pence), a
100.0% increase.
Outlook
The last year has seen a growth in profit performance, despite challenging
trading conditions. Looking forward, we expect the consumer environment to
remain difficult and have adapted our plans accordingly.
Lord Harris of Peckham
29 June 2010
Consolidated income statement
for 52 weeks ended 1 May 2010
+------------------------------------------------------+-------+---------+---------+
| | Notes | Group | Group |
| | | 52 | 52 |
| | | weeks | weeks |
| | | to | to |
| | | 1 May | 2 May |
| | | 2010 | 2009 |
| | | GBPm | GBPm |
+------------------------------------------------------+-------+---------+---------+
| Revenue | 2 | 516.6 | 482.8 |
+------------------------------------------------------+-------+---------+---------+
| Cost of sales | | (200.6) | (187.0) |
+------------------------------------------------------+-------+---------+---------+
| Gross profit | 2 | 316.0 | 295.8 |
+------------------------------------------------------+-------+---------+---------+
| Other operating income | | 2.4 | 1.8 |
+------------------------------------------------------+-------+---------+---------+
| Administrative expenses | | (290.2) | (275.3) |
+------------------------------------------------------+-------+---------+---------+
| Operating profit | 2 | 28.2 | 22.3 |
+------------------------------------------------------+-------+---------+---------+
| Operating profit before exceptional items | 2 | 34.1 | 22.8 |
+------------------------------------------------------+-------+---------+---------+
| Exceptional items | 2,3 | (5.9) | (0.5) |
+------------------------------------------------------+-------+---------+---------+
| Finance costs | | (6.8) | (7.2) |
+------------------------------------------------------+-------+---------+---------+
| Finance income | | 0.9 | 1.6 |
+------------------------------------------------------+-------+---------+---------+
| Profit before tax | | 22.3 | 16.7 |
+------------------------------------------------------+-------+---------+---------+
| Tax | 4 | (6.5) | (4.9) |
+------------------------------------------------------+-------+---------+---------+
| Profit for the financial period attributable to | | 15.8 | 11.8 |
| equity shareholders of the Company | | | |
+------------------------------------------------------+-------+---------+---------+
| Basic earnings per share (pence) | 5 | 23.5p | 17.6p |
+------------------------------------------------------+-------+---------+---------+
| Diluted earnings per share (pence) | 5 | 23.5p | 17.6p |
+------------------------------------------------------+-------+---------+---------+
| | | | |
+------------------------------------------------------+-------+---------+---------+
| Dividend per share - interim paid (pence) | 6 | 8.0p | 4.0p |
+------------------------------------------------------+-------+---------+---------+
| Dividend per share - final proposed (pence) | 6 | 8.0p | 4.0p |
+------------------------------------------------------+-------+---------+---------+
| | | | |
+------------------------------------------------------+-------+---------+---------+
| Dividends paid to equity shareholders in the period | 6 | 8.1 | 22.8 |
| (GBPm) | | | |
+------------------------------------------------------+-------+---------+---------+
| Final dividend proposed to equity shareholders in | 6 | 5.4 | 2.7 |
| respect of the period (GBPm) | | | |
+------------------------------------------------------+-------+---------+---------+
All items in the income statement arise from continuing operations.
Consolidated statement of comprehensive income
for 52 weeks ended 1 May 2010
+------------------------------------------------------+------+-------+-------+
| | | Group | Group |
| | | 52 | 52 |
| | | weeks | weeks |
| | | to | to |
| | | 1 May | 2 May |
| | | 2010 | 2009 |
| | | GBPm | GBPm |
+------------------------------------------------------+------+-------+-------+
| Profit for the financial period | | 15.8 | 11.8 |
+------------------------------------------------------+------+-------+-------+
| Actuarial loss on defined benefit pension scheme | | (3.0) | (1.1) |
+------------------------------------------------------+------+-------+-------+
| Fair value loss in respect of cash flow hedges | | - | (2.3) |
+------------------------------------------------------+------+-------+-------+
| Exchange gain/(loss) in respect of hedged equity | | (1.7) | 7.2 |
| investments | | | |
+------------------------------------------------------+------+-------+-------+
| Tax on components of other comprehensive income | | 0.6 | 0.2 |
+------------------------------------------------------+------+-------+-------+
| Other comprehensive income for the period | | (4.1) | 4.0 |
+------------------------------------------------------+------+-------+-------+
| Total comprehensive income for the period | | 11.7 | 15.8 |
| attributable to equity shareholders of the Company | | | |
+------------------------------------------------------+------+-------+-------+
Consolidated balance sheet
As at 1 May 2010
+----------------------------------------------------+--------+---------+---------+
| | Note | Group | Group |
| | | 2010 | 2009 |
| | | GBPm | GBPm |
+----------------------------------------------------+--------+---------+---------+
| Assets | | | |
+----------------------------------------------------+--------+---------+---------+
| Non-current assets | | | |
+----------------------------------------------------+--------+---------+---------+
| Intangible assets | | 67.2 | 71.2 |
+----------------------------------------------------+--------+---------+---------+
| Property, plant and equipment | | 149.5 | 164.7 |
+----------------------------------------------------+--------+---------+---------+
| Investment property | | 26.1 | 25.3 |
+----------------------------------------------------+--------+---------+---------+
| Investment in subsidiary undertakings | | - | - |
+----------------------------------------------------+--------+---------+---------+
| Deferred tax assets | | 2.9 | 3.3 |
+----------------------------------------------------+--------+---------+---------+
| Trade and other receivables | | 1.4 | 1.3 |
+----------------------------------------------------+--------+---------+---------+
| Total non-current assets | | 247.1 | 265.8 |
+----------------------------------------------------+--------+---------+---------+
| Current assets | | | |
+----------------------------------------------------+--------+---------+---------+
| Inventories | | 41.3 | 43.2 |
+----------------------------------------------------+--------+---------+---------+
| Trade and other receivables | | 38.1 | 34.4 |
+----------------------------------------------------+--------+---------+---------+
| Cash and cash equivalents | | 8.3 | 17.4 |
+----------------------------------------------------+--------+---------+---------+
| Total current assets | | 87.7 | 95.0 |
+----------------------------------------------------+--------+---------+---------+
| Total assets | | 334.8 | 360.8 |
+----------------------------------------------------+--------+---------+---------+
| Liabilities | | | |
+----------------------------------------------------+--------+---------+---------+
| Current liabilities | | | |
+----------------------------------------------------+--------+---------+---------+
| Trade and other payables | | (114.2) | (110.8) |
+----------------------------------------------------+--------+---------+---------+
| Obligations under finance leases | | (0.1) | (0.9) |
+----------------------------------------------------+--------+---------+---------+
| Borrowings and overdrafts | | (22.2) | (17.1) |
+----------------------------------------------------+--------+---------+---------+
| Current tax liabilities | | (5.6) | (5.7) |
+----------------------------------------------------+--------+---------+---------+
| Total current liabilities | | (142.1) | (134.5) |
+----------------------------------------------------+--------+---------+---------+
| Non-current liabilities | | | |
+----------------------------------------------------+--------+---------+---------+
| Trade and other payables | | (34.2) | (31.5) |
+----------------------------------------------------+--------+---------+---------+
| Obligations under finance leases | | (2.9) | (3.0) |
+----------------------------------------------------+--------+---------+---------+
| Borrowings | | (53.3) | (91.2) |
+----------------------------------------------------+--------+---------+---------+
| Derivative financial instruments | | (1.1) | (2.3) |
+----------------------------------------------------+--------+---------+---------+
| Provisions for liabilities and charges | | (1.8) | (0.8) |
+----------------------------------------------------+--------+---------+---------+
| Deferred tax liabilities | | (23.4) | (27.9) |
+----------------------------------------------------+--------+---------+---------+
| Retirement benefit obligations | | (4.8) | (2.4) |
+----------------------------------------------------+--------+---------+---------+
| Total non-current liabilities | | (121.5) | (159.1) |
+----------------------------------------------------+--------+---------+---------+
| Total liabilities | | (263.6) | (293.6) |
+----------------------------------------------------+--------+---------+---------+
| Net assets | | 71.2 | 67.2 |
+----------------------------------------------------+--------+---------+---------+
| Equity | | | |
+----------------------------------------------------+--------+---------+---------+
| Share capital | | 0.7 | 0.7 |
+----------------------------------------------------+--------+---------+---------+
| Share premium | | 15.4 | 15.4 |
+----------------------------------------------------+--------+---------+---------+
| Treasury shares | | (0.2) | (0.1) |
+----------------------------------------------------+--------+---------+---------+
| Other reserves | | 55.3 | 51.2 |
+----------------------------------------------------+--------+---------+---------+
| Total equity attributable to equity shareholders | | 71.2 | 67.2 |
| of the Company | | | |
+----------------------------------------------------+--------+---------+---------+
Consolidated statement of cash flow
for 52 weeks ended 1 May 2010
+------------------------------------------------------+------+--------+--------+
| | Note | Group | Group |
| | | 52 | 52 |
| | | weeks | weeks |
| | | to | to |
| | | 1 May | 2 May |
| | | 2010 | 2009 |
| | | GBPm | GBPm |
+------------------------------------------------------+------+--------+--------+
| Cash flows from operating activities | | | |
+------------------------------------------------------+------+--------+--------+
| Profit before tax | | 22.3 | 16.7 |
+------------------------------------------------------+------+--------+--------+
| Adjusted for: | | | |
+------------------------------------------------------+------+--------+--------+
| Depreciation and amortisation | 2 | 19.1 | 20.4 |
+------------------------------------------------------+------+--------+--------+
| (Profit)/loss on property disposals | | 0.7 | (1.8) |
+------------------------------------------------------+------+--------+--------+
| Exceptional non cash items | | 3.5 | 1.1 |
+------------------------------------------------------+------+--------+--------+
| Other non-cash items | | (0.5) | 0.1 |
+------------------------------------------------------+------+--------+--------+
| Net finance costs | | 5.9 | 5.6 |
+------------------------------------------------------+------+--------+--------+
| Operating cash flows before movements in working | | 51.0 | 42.1 |
| capital | | | |
+------------------------------------------------------+------+--------+--------+
| (Increase)/decrease in inventories | | 1.5 | 2.7 |
+------------------------------------------------------+------+--------+--------+
| (Increase)/decrease in trade and other receivables | | (3.8) | (0.9) |
+------------------------------------------------------+------+--------+--------+
| Increase/(decrease) in trade and other payables | | 9.6 | (17.7) |
+------------------------------------------------------+------+--------+--------+
| Cash generated by operations | | 58.3 | 26.2 |
+------------------------------------------------------+------+--------+--------+
| Interest paid | | (7.0) | (6.2) |
+------------------------------------------------------+------+--------+--------+
| Corporation taxes paid | | (9.9) | (12.2) |
+------------------------------------------------------+------+--------+--------+
| Net cash generated from operating activities | | 41.4 | 7.8 |
+------------------------------------------------------+------+--------+--------+
| Cash flows from investing activities | | | |
+------------------------------------------------------+------+--------+--------+
| Proceeds on disposal of property, plant and | | 0.5 | 3.0 |
| equipment and investment property | | | |
+------------------------------------------------------+------+--------+--------+
| Purchases of intangible assets | | (1.1) | (2.0) |
+------------------------------------------------------+------+--------+--------+
| Purchases of property, plant and equipment and | | (9.0) | (14.3) |
| investment property | | | |
+------------------------------------------------------+------+--------+--------+
| Acquisition of businesses net of cash acquired | | - | (7.3) |
+------------------------------------------------------+------+--------+--------+
| Interest received | | 0.2 | 0.7 |
+------------------------------------------------------+------+--------+--------+
| Net cash used in investing activities | | (9.4) | (19.9) |
+------------------------------------------------------+------+--------+--------+
| Cash flows from financing activities | | | |
+------------------------------------------------------+------+--------+--------+
| Purchase of treasury shares by Employee Share Trust | | (0.2) | (0.2) |
+------------------------------------------------------+------+--------+--------+
| Repayment of borrowings | | (43.6) | (20.5) |
+------------------------------------------------------+------+--------+--------+
| New loans advanced | | 2.7 | 72.0 |
+------------------------------------------------------+------+--------+--------+
| Intercompany loans | | - | - |
+------------------------------------------------------+------+--------+--------+
| Repayment of obligations under finance leases | | (0.9) | (0.8) |
+------------------------------------------------------+------+--------+--------+
| Dividends paid to Group shareholders | 6 | (8.1) | (22.8) |
+------------------------------------------------------+------+--------+--------+
| Net cash used in financing activities | | (50.1) | 27.7 |
+------------------------------------------------------+------+--------+--------+
| Net increase/(decrease) in cash and cash equivalents | | (18.1) | 15.6 |
| in the period | | | |
+------------------------------------------------------+------+--------+--------+
| Cash and cash equivalents at the beginning of the | | 13.0 | (2.2) |
| period | | | |
+------------------------------------------------------+------+--------+--------+
| Exchange differences | | 0.1 | (0.4) |
+------------------------------------------------------+------+--------+--------+
| Cash and cash equivalents at the end of the period | 7 | (5.0) | 13.0 |
+------------------------------------------------------+------+--------+--------+
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.
Consolidated statement of changes in equity
for 52 weeks ended 1 May 2010
Group
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| | Share | Share | Treasury | Capital | Translation | Hedging | Retained | Total |
| | capital | premium | shares | redemption | reserve | reserve | earnings | GBPm |
| | GBPm | GBPm | GBPm | reserve | GBPm | GBPm | GBPm | |
| | | | | GBPm | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| At 3 May 2008 | 0.7 | 15.4 | (0.2) | 0.1 | 4.7 | - | 53.6 | 74.3 |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Total comprehensive income for | - | - | - | - | 7.2 | (2.3) | 10.9 | 15.8 |
| the financial period | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Purchase of own shares by | - | - | (0.2) | - | - | - | - | (0.2) |
| Employee Share Trust | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Transfer of Treasury shares to | - | - | 0.3 | - | - | - | (0.3) | - |
| participants | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Share based payments and | - | - | - | - | - | - | 0.1 | 0.1 |
| related tax | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Dividends paid to Group | - | - | - | - | - | - | (22.8) | (22.8) |
| shareholders | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| At 2 May 2009 | 0.7 | 15.4 | (0.1) | 0.1 | 11.9 | (2.3) | 41.5 | 67.2 |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Total comprehensive income for | - | - | - | - | (1.7) | 1.1 | 12.3 | 11.7 |
| the financial period | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Purchase of own shares by | - | - | (0.2) | - | - | - | - | (0.2) |
| Employee Share Trust | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Transfer of Treasury shares to | - | - | 0.1 | - | - | - | (0.1) | - |
| participants | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Share based payments and | - | - | - | - | - | - | 0.6 | 0.6 |
| related tax | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| Dividends paid to Group | - | - | - | - | - | - | (8.1) | (8.1) |
| shareholders | | | | | | | | |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
| At 1 May 2010 | 0.7 | 15.4 | (0.2) | 0.1 | 10.2 | (1.2) | 46.2 | 71.2 |
+---------------------------------+---------+---------+----------+------------+-------------+---------+----------+--------+
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 2010 represents the 52 weeks ended 1 May 2010. The
comparative financial year for 2009 was 52 weeks ended 2 May 2009.
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 Act 2006 applicable to
companies reporting under IFRS.
The information is derived from the full Group financial statements for the 52
week period to 1 May 2010 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 and posted to
shareholders in due course.
The financial information for the 52 weeks to 2 May 2009 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 (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 |
| | 2010 | 2009 | 2010 | 2009 |
+------------------------------------------------+------+------+-------+-------+
| Average rate | 1.13 | 1.19 | 4.71 | 4.53 |
+------------------------------------------------+------+------+-------+-------+
| Closing rate | 1.15 | 1.12 | 4.50 | 4.89 |
+------------------------------------------------+------+------+-------+-------+
2 Segmental analysis
The operating segments have been determined based on reports reviewed by the
Board that are used to make strategic decisions. The Group's business comprises
only a retail business and the Board considers that business on the basis of the
four geographic units of the UK and Republic of Ireland (UK & RoI), The
Netherlands, Belgium and Poland. Neither Belgium nor Poland is significant
enough to meet the quantitative thresholds to require separate reporting and
they have been aggregated as 'All other segments'.
The reportable operating segments derive their revenue primarily from the retail
of floor coverings and beds. Central costs are incurred principally in the UK
and are immaterial. As such these costs are included within the UK & RoI
segment. Sales between segments are carried out at arm's length.
The segment information provided to the Board for the reportable segments for
the 52 weeks ended 1 May 2010 is as follows:
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| | 52 weeks to 1 May 2010 | 52 weeks to 2 May 2009 |
+-----------------------+--------------------------------------------+--------------------------------------------+
| | UK & | The | All | Group | UK & | The | All | Group |
| | RoI | Netherlands | other | GBPm | RoI | Netherlands | other | GBPm |
| | GBPm | GBPm | segments | | GBPm | GBPm | segments | |
| | | | GBPm | | | | GBPm | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Gross Revenue | 428.8 | 65.5 | 25.9 | 520.2 | 397.3 | 63.6 | 25.1 | 486.0 |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Inter-segment revenue | (3.6) | - | - | (3.6) | (3.2) | - | - | (3.2) |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Revenues from | 425.2 | 65.5 | 25.9 | 516.6 | 394.1 | 63.6 | 25.1 | 482.8 |
| external customers | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Gross profit | 263.7 | 38.3 | 14.0 | 316.0 | 244.6 | 37.2 | 14.0 | 295.8 |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Underlying operating | 26.2 | 7.8 | 0.1 | 34.1 | 15.6 | 7.6 | (0.4) | 22.8 |
| profit | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Exceptional items | (2.4) | - | (3.5) | (5.9) | 0.3 | (0.7) | (0.1) | (0.5) |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Operating profit | 23.8 | 7.8 | (3.4) | 28.2 | 15.9 | 6.9 | (0.5) | 22.3 |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Finance income | 0.9 | - | - | 0.9 | 1.5 | 0.1 | - | 1.6 |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Intercompany interest | - | (0.1) | 0.1 | - | 0.2 | - | (0.2) | - |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Finance costs | (6.6) | (0.1) | (0.1) | (6.8) | (6.4) | (0.6) | (0.2) | (7.2) |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Profit before tax | 18.1 | 7.6 | (3.4) | 22.3 | 11.2 | 6.4 | (0.9) | 16.7 |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Tax | (4.3) | (1.8) | (0.4) | (6.5) | (1.8) | (2.9) | (0.2) | (4.9) |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Profit for the | 13.8 | 5.8 | (3.8) | 15.8 | 9.4 | 3.5 | (1.1) | 11.8 |
| financial period | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Segment Assets: | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Segment assets | 244.3 | 78.1 | 33.1 | 355.5 | 256.0 | 87.2 | 29.1 | 372.3 |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Inter-segment | (11.4) | (0.1) | (9.2) | (20.7) | (10.5) | (0.2) | (0.8) | (11.5) |
| balances | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Balance sheet total | 232.9 | 78.0 | 23.9 | 334.8 | 245.5 | 87.0 | 28.3 | 360.8 |
| assets | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Segment Liabilities: | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Segment liabilities | (232.9) | (23.9) | (27.5) | (284.3) | (248.7) | (36.8) | (19.6) | (305.1) |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Inter-segment | 5.2 | 5.6 | 9.9 | 20.7 | - | 4.2 | 7.3 | 11.5 |
| balances | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Balance sheet total | (227.7) | (18.3) | (17.6) | (263.6) | (248.7) | (32.6) | (12.3) | (293.6) |
| liabilities | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Other segmental | | | | | | | | |
| items: | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Depreciation and | 15.5 | 2.6 | 1.0 | 19.1 | 16.6 | 2.5 | 1.3 | 20.4 |
| amortisation | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
| Additions to | 6.5 | 0.7 | 0.9 | 8.1 | 14.3 | 1.5 | 0.7 | 16.5 |
| non-current assets | | | | | | | | |
+-----------------------+---------+-------------+----------+---------+---------+-------------+----------+---------+
Carpetright plc is domiciled in the UK. The Group's revenue from external
customers in the UK is GBP416.5m (2009 : GBP381.8m) and the total revenue from
external customers from other countries is GBP100.1m (2009 : GBP101.0m). The
total of non-current assets (other than financial instruments and deferred tax
assets) located in the UK is GBP175.8m (2009 : GBP179.6m) and the total of those
located in other countries is GBP89.2m (2009 : GBP94.4m).
Carpetright's trade has historically shown no distinct pattern of seasonality
with trade cycles more closely following economic indicators such as consumer
confidence and mortgage approvals.
3 Exceptional items
+------------------------------------------------------------+-------+-------+
| | Group | Group |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------------------------------+-------+-------+
| Disclosed in the income statement: | | |
+------------------------------------------------------------+-------+-------+
| Profits/(loss) on property disposals | (0.7) | 1.8 |
+------------------------------------------------------------+-------+-------+
| UK & RoI impairment of property, plant and equipment (see | (1.4) | (0.9) |
| note 11) | | |
+------------------------------------------------------------+-------+-------+
| Onerous lease provision | (1.4) | - |
+------------------------------------------------------------+-------+-------+
| Poland: | | |
+------------------------------------------------------------+-------+-------+
| Impairment of property, plant and equipment (see note 11) | (1.8) | - |
+------------------------------------------------------------+-------+-------+
| Closure costs | (1.7) | - |
+------------------------------------------------------------+-------+-------+
| Over provision for pre-opening costs of Purfleet | 1.1 | - |
+------------------------------------------------------------+-------+-------+
| Post acquisition reorganisation of new businesses | - | (1.2) |
+------------------------------------------------------------+-------+-------+
| Impairment of investment in Joint venture | - | (0.2) |
+------------------------------------------------------------+-------+-------+
| | (5.9) | (0.5) |
+------------------------------------------------------------+-------+-------+
The onerous lease provision relates to 3 properties in the UK that are not
trading and are either empty or leased at below the passing rent. The provision
covers the period until, full cost recovery is expected
The costs relating to Poland reflect the impairment of assets to disposal value
and the costs of closure of the 11 stores trading at the start of the year.
The exceptional pre-opening costs of the cutting and distribution centre
recognised in 2007/8 were over-provided by GBP1.1m which has been released.
The post acquisition reorganisation costs of the new businesses are primarily
redundancy and other costs arising from the integration of the support functions
into Carpetright.
4 Tax
(i) Analysis of the charge in the period
+------------------------------------------------------------+-------+-------+
| | Group | Group |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------------------------------+-------+-------+
| UK current tax | 4.4 | 2.0 |
+------------------------------------------------------------+-------+-------+
| Overseas current tax | 1.6 | 2.1 |
+------------------------------------------------------------+-------+-------+
| Total current tax | 6.0 | 4.1 |
+------------------------------------------------------------+-------+-------+
| UK deferred tax | (0.1) | (0.6) |
+------------------------------------------------------------+-------+-------+
| Overseas deferred tax | 0.6 | 1.4 |
+------------------------------------------------------------+-------+-------+
| Total deferred tax | 0.5 | 0.8 |
+------------------------------------------------------------+-------+-------+
| Total tax charge in the income statement | 6.5 | 4.9 |
+------------------------------------------------------------+-------+-------+
Tax of GBP0.4m has been credited to the income statement (2009: GBP0.1m credit)
in respect of exceptional items.
(ii) Reconciliation of profit before tax to total tax
+------------------------------------------------------------+-------+-------+
| | Group | Group |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------------------------------+-------+-------+
| Profit before tax | 22.3 | 16.7 |
+------------------------------------------------------------+-------+-------+
| Tax charge at UK Corporation Tax rate of 28.0% (2009: | 6.2 | 4.7 |
| 28.0%) | | |
+------------------------------------------------------------+-------+-------+
| Adjusted for the effects of: | | |
+------------------------------------------------------------+-------+-------+
| Overseas tax rates | (0.3) | (0.2) |
+------------------------------------------------------------+-------+-------+
| Non-qualifying depreciation | 0.9 | 0.7 |
+------------------------------------------------------------+-------+-------+
| Foreign exchange movements on foreign deferred tax | - | 0.3 |
+------------------------------------------------------------+-------+-------+
| Other permanent differences | 0.3 | (0.3) |
+------------------------------------------------------------+-------+-------+
| Adjustments in respect of prior periods | (0.6) | (0.3) |
+------------------------------------------------------------+-------+-------+
| Total tax charge in the income statement | 6.5 | 4.9 |
+------------------------------------------------------------+-------+-------+
The weighted average annual effective tax rate for the period is 29.5% (2009:
29.8%). This decrease arises primarily from one off credits in the year offset
by overseas tax movements.
(iii) Tax on items taken directly to or transferred from equity
+------------------------------------------------------------+-------+-------+
| | Group | Group |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------------------------------+-------+-------+
| Deferred tax on actuarial gains, recognised in other | 0.6 | 0.2 |
| comprehensive income | | |
+------------------------------------------------------------+-------+-------+
| Deferred tax on share-based payments | 0.1 | 0.1 |
+------------------------------------------------------------+-------+-------+
| Total tax recognised in equity | 0.7 | 0.3 |
+------------------------------------------------------------+-------+-------+
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.
+-----------------------------------+----------+----------+----------+----------+----------+----------+
| | 2010 | 2009 |
+-----------------------------------+--------------------------------+--------------------------------+
| | 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 | 15.8 | 67.2 | 23.5 | 11.8 | 67.2 | 17.6 |
+-----------------------------------+----------+----------+----------+----------+----------+----------+
| Effect of dilutive share options | 0.1 | 0.4 | - | 0.1 | 0.4 | - |
+-----------------------------------+----------+----------+----------+----------+----------+----------+
| Diluted earnings per share | 15.9 | 67.6 | 23.5 | 11.9 | 67.6 | 17.6 |
+-----------------------------------+----------+----------+----------+----------+----------+----------+
Reconciliation of earnings per share excluding post tax profit on exceptional
items:
+------------------------------------------------------------+-------+-------+
| | 52 | 52 |
| | weeks | weeks |
| | ended | ended |
| | 1 May | 2 May |
| | 2010 | 2009 |
| | Pence | Pence |
+------------------------------------------------------------+-------+-------+
| Basic earnings per share | 23.5 | 17.6 |
+------------------------------------------------------------+-------+-------+
| Adjusted for the effect of exceptional items: | | |
+------------------------------------------------------------+-------+-------+
| Exceptional items | 8.7 | 0.7 |
+------------------------------------------------------------+-------+-------+
| Tax thereon | (0.6) | (0.1) |
+------------------------------------------------------------+-------+-------+
| Underlying earnings per share | 31.6 | 18.2 |
+------------------------------------------------------------+-------+-------+
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 exceptional
items and related tax.
6 Dividends
+------------------------------------------------+-------+------+-------+------+
| | 2010 | 2009 |
+------------------------------------------------+--------------+--------------+
| Group and Company | Pence | GBPm | Pence | GBPm |
| | per | | per | |
| | share | | share | |
+------------------------------------------------+-------+------+-------+------+
| Prior year final dividend paid | 4.0 | 2.7 | 30.0 | 20.1 |
+------------------------------------------------+-------+------+-------+------+
| Current year interim dividend paid | 8.0 | 5.4 | 4.0 | 2.7 |
+------------------------------------------------+-------+------+-------+------+
| | 12.0 | 8.1 | 34.0 | 22.8 |
+------------------------------------------------+-------+------+-------+------+
The Directors propose a final dividend of 8.0 pence per share amounting to
GBP5.4m (2009: 4.0 pence per share; GBP2.7m) 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 xx September 2010 to shareholders who are on the register of members on xx
September 2010.
This would take the 2010 interim and final dividend payments to 16.0 pence
amounting to GBP10.8m (2009: 8.0 pence; GBP5.4m).
7 Group movement in cash and net debt
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| | 2009 | 2010 |
+-----------------------------------+---------+------------------------------------------------------------+
| | Total | Cash | Acquisitions | Exchange | Revaluation | Total |
| | GBPm | flow | GBPm | differences | GBPm | GBPm |
| | | GBPm | | GBPm | | |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Cash and cash equivalents in the | 17.4 | | | | | 8.3 |
| balance sheet | | | | | | |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Bank overdrafts | (4.4) | | | | | (13.3) |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Cash and cash equivalents in the | 13.0 | (18.1) | - | 0.1 | - | (5.0) |
| cash flow statement | | | | | | |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Borrowings | | | | | | |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Current borrowings | (12.7) | | | | | (8.9) |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Non-current borrowings | (91.2) | | | | | (53.3) |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| | (103.9) | 40.9 | - | 0.8 | - | (62.2) |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Obligations under finance leases | | | | | | |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Current obligations under finance | (0.9) | | | | | (0.1) |
| leases | | | | | | |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Non-current obligations under | (3.0) | | | | | (2.9) |
| finance leases | | | | | | |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| | (3.9) | 0.9 | - | - | - | (3.0) |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Derivative financial instruments | (2.3) | - | - | - | 1.2 | (1.1) |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
| Net debt | (97.1) | 23.7 | - | 0.9 | 1.2 | (71.3) |
+-----------------------------------+---------+--------+--------------+-------------+-------------+--------+
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| | 2008 | 2009 |
+-----------------------------------+--------+-------------------------------------------------------------+
| | Total | Cash | Acquisitions | Exchange | Revaluation | Total |
| | GBPm | flow | GBPm | differences | GBPm | GBPm |
| | | GBPm | | GBPm | | |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Cash and cash equivalents in the | 8.9 | | | | | 17.4 |
| balance sheet | | | | | | |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Bank overdrafts | (11.1) | | | | | (4.4) |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Cash and cash equivalents in the | (2.2) | 15.6 | - | (0.4) | - | 13.0 |
| cash flow statement | | | | | | |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Borrowings | | | | | | |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Current borrowings | (11.3) | | | | | (12.7) |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Non-current borrowings | (39.3) | | | | | (91.2) |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| | (50.6) | (51.5) | - | (1.8) | - | (103.9) |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Obligations under finance leases | | | | | | |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Current obligations under finance | (0.8) | | | | | (0.9) |
| leases | | | | | | |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Non-current obligations under | (3.9) | | | | | (3.0) |
| finance leases | | | | | | |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| | (4.7) | 0.8 | (1.0) | - | - | (3.9) |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Derivative financial instruments | - | - | - | - | (2.3) | (2.3) |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
| Net debt | (57.5) | (35.1) | (1.0) | (2.2) | (2.3) | (97.1) |
+-----------------------------------+--------+--------+--------------+-------------+-------------+---------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFITRSITFII
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