TIDMCPR
RNS Number : 8293T
Carpetright PLC
13 December 2011
13 December 2011
Carpetright plc
Interim Results for the 26 weeks ended 29 October 2011
Carpetright plc, Europe's leading specialist carpet and floor
coverings retailer, today announces its interim results for the 26
week trading period to 29 October 2011.
Headlines
Group
-- Total Group revenue(1) declined by 3.9% to GBP238.4m (2010: GBP248.0m)
-- Underlying(2) operating profit of GBP3.7m (2010: GBP12.6m)
-- Underlying(2) profit before tax of GBP1.4m (2010: GBP10.0m)
-- Underlying(2) earnings per share of 1.2p (2010: 10.7p)
-- No interim dividend is being declared (2010: 8.0p)
-- Net debt reduced by GBP10.7m to GBP55.0m during the first half
Statutory
-- Loss before tax of GBP0.8m (2010: profit of GBP9.8m)
-- Basic loss per share of 0.9p (2010: 10.4p profit)
UK
-- Total revenue(1) declined by 5.6% to GBP192.1m (2010:
GBP203.4m), with like-for-like sales(3) down 2.4%
-- Gross margin reduced by 430 basis points to 58.0% (2010:
62.3%), reflecting higher levels of promotional discount and
increasing proportion of beds in the sales mix
-- Total costs down by GBP4.8m, a 4.2% reduction in the first half
-- Underlying(2) operating profit of GBP0.8m (2010: GBP11.3m)
-- Store base reduced by a net 36 during the first half to 503 stores
Rest of Europe
-- Total reported revenue(1) increased by 3.8% to GBP46.3m
(2010: GBP44.6m), in local currency this was a decline of 0.9% with
like-for-like(3) sales down by 0.3%
-- Underlying(2) operating profit of GBP2.9m (2010: GBP1.3m)
-- Head office operations consolidated, saving GBP0.5m per annum
-- No net change in store numbers during the first half
Commenting on the results, Lord Harris of Peckham, Chairman and
Chief Executive, said:
"Like many other retailers we are continuing to experience a
very challenging trading environment, with significant sales
volatility and a corresponding decrease in the gross margin.
Against this backdrop, the Group has remained profitable on an
underlying basis and continues to generate net cash.
"With the consumer environment expected to remain difficult, we
are focusing on those opportunities that are under our direct
control. We have reduced our total cost base in the first half and
will continue to take a determined approach to reducing this
further. The development of our beds business under the leadership
of a new management team presents a significant growth opportunity
and the imminent launch of our improved bed offer gives us
confidence in improving the Group's performance in the remainder of
the year. In addition, in floor coverings we will continue to offer
the best prices to our customers by adapting ranges and promotional
activity, whilst simultaneously working with our suppliers to
reduce the level of margin investment in the second half. Finally,
we shall roll out our improved laminate offer to around 200 stores
by our financial year end.
"We are confident that the combination of these factors will
underpin an improved trading performance for the Group in the
second half and our expectations for the year as a whole are
unchanged.
"Although we anticipate the economic environment will remain
challenging for the foreseeable future, we believe the Group is in
a strong position to capitalise on a strong value offer supported
by a superior service proposition, when consumer demand in our
sector improves."
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
compared to 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.
Results Presentation
Carpetright will hold a presentation to analysts and investors
at Deutsche Bank, Winchester House, 1 Great Winchester Street,
London, EC2N 2DB at 9.00 am today.
A listen only conference call facility is available on +44(0)
1452 560297, conference ID: 33708795.
A copy of this interim statement can be found on our website
www.carpetright.plc.uk today from 7.00am.
Enquiries:
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 / Lindsay Noton
Telephone 020 7638 9571
Forthcoming News flow:
Carpetright will release its Interim Management Statement for
the third quarter on 31 January 2012.
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.
Chief Executive's Review
A summary of the reported financial results for the 26 weeks
ended 29 October 2011 is set out below:
2011 2010
GBPm GBPm Change
------------------------------------ ------- -------- --------
Revenue 238.4 248.0 (3.9%)
==================================== ======= ======== ========
Underlying(1) operating profit 3.7 12.6 (70.6%)
==================================== ======= ======== ========
Underlying(1) net finance charges (2.3) (2.6) 11.5%
==================================== ======= ======== ========
Underlying(1) profit before tax 1.4 10.0 (86.0%)
==================================== ======= ======== ========
Exceptional items (2.2) (0.2)
==================================== ======= ======== ========
Profit/(loss) before tax (0.8) 9.8
==================================== ======= ======== ========
Earnings per share (pence)
==================================== ======= ======== ========
- underlying(1) 1.2 10.7
==================================== ======= ======== ========
- basic (0.9) 10.4
==================================== ======= ======== ========
Interim Dividend per share (pence) 0.0 8.0
==================================== ======= ======== ========
Net debt (55.0) (58.5) GBP3.5m
------------------------------------ ------- -------- --------
1 - Where this review makes reference to "Underlying" these
relate to profit / earnings before exceptional items.
Total Group sales decreased by 3.9% to GBP238.4m, with growth in
Europe being offset by a decline in the UK. During the year, the
Group opened five stores and closed 41 which gave a net decrease of
36 stores and a total store base of 643 as at 29 October 2011.
Total store space declined by 3.2% to 5.9 million square feet.
The challenging consumer environment in the UK is continuing to
impact the disposable incomes and spending patterns of our
customers. The sales performance has been volatile with volumes
closely linked to periods when there has been a higher level of
promotional discount. This trend, alongside an increasing
proportion of beds in the sales mix, has diluted the gross margin
by 430 basis points in the first half compared to the prior year
and is the most significant cause of the decline in
profitability.
Good progress has been made in Europe, where we have seen
improved profitability despite a decline in sales in local currency
terms, and costs have been reduced in all of the businesses.
The net impact has been a decline in Group underlying operating
profit to GBP3.7m, a decrease of 70.6% on the prior year.
Underlying net finance charges were GBP0.3m lower at GBP2.3m. These
combined to generate an underlying profit before tax of GBP1.4m, a
decrease of 86.0% on the prior year.
Exceptional charges totalled GBP2.2m (2010: GBP0.2m), being a
combination of restructuring costs, non-cash store impairment and
onerous lease charges, partially offset by net property
profits.
As a result, the loss before tax was GBP0.8m (2010: profit of
GBP9.8m).
The combination of cashflow from continued underlying
profitability, effective management of working capital and the
level of net capital expenditure, enabled net debt to be reduced by
GBP10.7m since the prior year end to close the half year at
GBP55.0m (2010: GBP58.5m). The cashflow strength of the Group is
highlighted by the fact that in the past three years net debt has
been reduced by over 40% from GBP97.1m as at April 2009.
Whilst the Group has remained cash generative in these most
challenging of market conditions the short term economic conditions
remain uncertain. Against this background, the Board feel it is
prudent not to pay an interim dividend and will assess the level of
dividend for the year as a whole, in light of the full year
financial results.
Business Review
The first half performance has been impacted by the continued
economic uncertainty and weak consumer demand. The Group remains
committed to delivering long term sustainable growth in earnings
per share and cash flow through the following five strategies:
1. Primarily focusing on floor coverings
2. Developing a competitive bed proposition
3. Managing our UK store portfolio
4. Developing our European proposition
5. Reaching more customers through additional channels
1. Primarily focusing on floor coverings
We believe the foundations of Carpetright's success rest on the
provision of market leading product choice, which offers great
value, backed by excellent customer service. As well as our
experience over many years, this view is supported by externally
conducted market research which indicates both strong brand
recognition and a reputation for being the 'first choice' for
fitted carpet.
To further test this understanding and to monitor performance
against our key customer objectives we introduced a mystery shopper
programme during the first half of the year. The findings from
these visits are a robust measure, enabling recognition of the best
stores and identifying where corrective action is needed when we
have fallen short of our expectations. As the programme develops we
expect to see a reasonable correlation between good mystery shopper
scores and above average sales performance, validating the decision
to measure those factors which are important to the customer in
making their choice of where to purchase.
The roll out of our new laminate offering has continued and as
the end of October 2011 this was in 60 stores. We continue to
believe this will provide an area of growth, supported by the
strength of our value and service proposition. We expect to have
laminate available in around 200 stores by April 2012.
In the current economic environment, it is clear that our
customers are looking harder than ever for value before making
their purchasing decisions. Based on our experience in the first
half, we are adapting our ranges and promotional activity to
continue to offer the best prices, whilst simultaneously working
with our suppliers to reduce the level of margin investment in the
second half.
Historically, trends in housing transactions and mortgage
approvals have been useful lead indicators of consumer demand in
our sector, bearing a positive correlation with our floor covering
sales. Mortgage approvals have recently shown some encouraging
signs of improvement, having demonstrated year on year growth for
the final four months of the first half of our financial year, but
this follows a period of thirteen consecutive months of sustained
decline. Given the short period of improvement seen to date it
remains premature to call a wider recovery in sentiment. Taking the
recent data into account, we remain cautiously optimistic about the
medium term trends in the housing market and will continue to
monitor the statistics closely.
2. Developing a competitive bed proposition
Beds provide an important complementary revenue stream to our
core floor coverings business and, following the appointment in
July 2011 of a new senior management team, with a strong track
record in bed retailing, we believe this business has significant
further growth potential. The new team further developed and
expanded the bed business across the period, and at the end of
October our bed offer 'Sleepright by Carpetright' was trading from
261 locations. The business delivered an increase in sales of 28.3%
in the first half and now represents 6.1% of UK sales revenue
(2010: 4.5%). This will be enhanced by a significantly improved
range being launched at highly competitive price points ahead of
Christmas, in time for the important January sales period.
Accelerated growth of the bed business will be an important area in
the delivery of our sales and margin targets in the second
half.
3. Managing our UK store portfolio
At the end of October we had 503 stores trading in the UK.
During the last six months we have opened four new stores and
closed 40 stores, including 16 concessions in Focus DIY stores,
following that business entering administration. Where
opportunities have been available we have reduced the size of
individual stores, resulting in a corresponding lower rent
payable.
As previously stated, we are seeing an increasing trend for
customers to use the internet to complete a significant proportion
of pre-purchase research online. Having reduced the need to make
multiple store visits to research their purchase, our experience is
that growing numbers of customers appear to be prepared to travel
further to make their single physical store visit to complete the
purchase and we believe that, over time, this will result in a
shift in the required geographic density of our store estate. With
leases on 93 stores due to expire in the next five years there is
opportunity to reshape the portfolio in a cost effective way,
reducing the size of the store footprint and lowering our ongoing
rent roll.
The UK business is now in its 24(th) year and has operated with
a well-proven and consistent retail format since its inception. In
the current tough market conditions we have looked hard at all
aspects of our operations to identify improvements and during the
period commissioned market research into attitudes towards our
store format to assist in this process. Results from the survey
showed strong support for maintaining the key elements of a market
leading choice and value offer, although we recognise there is a
need to refresh some aspects of the store design. In response, we
have commenced a programme of refurbishing those stores that
require the greatest attention. This has involved improving natural
light, updating signage, replacing floor coverings and upgrading
in-store lighting. The initial response has been encouraging and
this activity will continue in the second half.
4. Developing the European proposition
The previously announced actions taken in our business in the
Republic of Ireland delivered an improvement in underlying
profitability. The product range continues to be refined and
adapted to align it more closely to the local market, and
promotional campaigns have also been restructured.
In The Netherlands and Belgium, the businesses are continuing to
gain market share as competitors struggle in the current economic
conditions. Whilst the number of stores has remained constant in
the first half, we expect to open three more stores in The
Netherlands in the second half. To improve operational efficiency
and reduce cost, we have taken the decision to consolidate our
European Head Office functions into The Netherlands and this is
expected to deliver a saving of GBP0.5m per annum.
5. Reaching more customers through additional channels
The internet is playing an ever-increasing role in pre-purchase
behaviour, becoming a vital research tool for many customers and we
continued to develop and improve our online presence during the
first half. On a weekly basis we are now achieving an average of
over 85,000 unique visitors to our website, a 63% increase on the
same period last year and this has produced corresponding increases
in both sample requests and appointment leads. We have focused
activity to improve our conversion to sales ratios with the opening
of a call centre and by more accurate measurement at store level.
This demonstrates the importance of having an effective and
integrated multi-channel proposition.
We have continued to focus on gaining additional sales through
the insurance replacement business. This has proved to be a
challenge as domestic policy excesses have been increased and there
has been a reduction in insurance renewal associated with the
current economic conditions. The volume of business through this
channel is currently small relative to the Group's total revenue,
although we believe it offers an opportunity for profitable sales
growth when market conditions improve.
Summary and Outlook
With the consumer environment expected to remain difficult, we
are focusing on those opportunities that are under our direct
control. We have reduced our total cost base in the first half and
will continue to take a determined approach to reducing this
further. The development of our beds business under the leadership
of a new management team presents a significant growth opportunity
and the imminent launch of our improved bed offer gives us
confidence in improving the Group's performance in the remainder of
the year. In addition, in floor coverings we will continue to offer
the best prices to our customers by adapting ranges and promotional
activity, whilst simultaneously working with our suppliers to
reduce the level of margin investment in the second half. Finally,
we shall roll out our improved laminate offer to around 200 stores
by our financial year end.
We are confident that the combination of these factors will
underpin an improved trading performance for the Group in the
second half and our expectations for the year as a whole are
unchanged.
Although we anticipate the economic environment will remain
challenging for the foreseeable future, we believe the Group is in
a strong position to capitalise on a strong value offer supported
by a superior service proposition, when consumer demand in our
sector improves.
UK - Financial Review
UK - Key financial results
First Half First Half
2011 2010 Change
GBPm GBPm
------------------------------- ----------- ----------- --------
Revenue 192.1 203.4 (5.6%)
=============================== =========== =========== ========
Like-for-like sales (2.4%) (5.4%)
=============================== =========== =========== ========
Gross profit 111.4 126.7 (12.1%)
=============================== =========== =========== ========
Gross profit % 58.0% 62.3% (4.3pp)
=============================== =========== =========== ========
Costs 110.6 115.4 (4.2%)
=============================== =========== =========== ========
Underlying operating profit 0.8 11.3 (92.9%)
=============================== =========== =========== ========
Underlying operating margin % 0.4% 5.5%
------------------------------- ----------- ----------- --------
Total revenue decreased by 5.6% to GBP192.1m. We have opened
four stores and closed 40 stores in the period, which translated
into net space decline of 192,000 sq ft, a decrease of 4.3% since
the start of the year.
At the period end, the store portfolio comprised:
Store numbers Sq ft ('000)
-----------
30 April 29 Oct 30 April 29 Oct
UK store base 2011 Openings Closures 2011 2011 2011
--------------------- ----------- ------------ ---------- -------- ----------- -------
Standalone 497 4 (21) 480 4,416 4,275
===================== =========== ============ ========== ======= =========== =======
Concessions 42 - (19) 23 98 46
===================== =========== ============ ========== ======= =========== =======
539 4 (40) 503 4,514 4,321
--------------------- ----------- ------------ ---------- ------- ----------- -------
Included in standalone stores :
------------------------------------------------ ---------- ------- ----------- -------
Bed departments 238 26 (3) 261 311 314
--------------------- ----------- ------------ ---------- ------- ----------- -------
Like for like sales declined by 2.4% in the period. This
performance can be attributed to two key factors:
-- Underlying retail flooring performance was down 3.8%
reflecting the extended period of fragile consumer confidence.
-- The focus on developing the bed offer and introducing it into
more stores contributed 1.4% of growth to the year on year
movement.
Gross profit declined by 12.1% to GBP111.4m, representing 58.0%
of sales, a decrease of 4.3 percentage points. This was due to:
-- A decline in underlying floor covering margin of 3.3
percentage points, with demand higher in periods of stronger
promotional activity.
-- The growth of bed sales, which accounted for a decline of 0.6
percentage points, as this part of the business operates on a lower
gross margin than floor coverings.
-- The impact of fuel inflation on delivery costs and lower
productivity at the Purfleet warehouse, associated with lower
volumes, accounted for 0.4 percentage points of the decline.
The total UK cost base decreased by 4.2% year on year to
GBP110.6m. Store payroll continued to be managed closely to the
volume of sales and we continue to reduce our central support costs
to reflect the current level of business. The focus of marketing
expenditure was to achieve a higher level of media coverage at the
same cost.
All of the above elements combined to produce an underlying
operating profit that declined to GBP0.8m.
Rest of Europe - Financial Review
Rest of Europe - Key financial results
First Half First Half Change Change (Local
2011 2010 (Reported) Currency)
GBPm GBPm
----------------------------- ----------- ----------- ------------ --------------
Revenue 46.3 44.6 3.8% (0.9%)
============================= =========== =========== ============ ==============
Like-for-like sales (local
currency) (0.3%) (3.4%)
============================= =========== =========== ============ ==============
Gross profit 26.6 25.4 4.7% Level
============================= =========== =========== ============ ==============
Gross profit % 57.5% 57.0% 0.5pp
============================= =========== =========== ============ ==============
Costs 23.7 24.1 (1.7%) (6.1%)
============================= =========== =========== ============ ==============
Underlying operating profit 2.9 1.3 123.1% 106.2%
============================= =========== =========== ============ ==============
Underlying operating margin
% 6.3% 2.9%
----------------------------- ----------- ----------- ------------ --------------
In local currency terms, total sales declined by 0.9% with like
for like sales down 0.3%. After allowing for the movement in
exchange rates, total sales translate to a 3.8% increase in
reported revenue.
At the period end, the store portfolio comprised:
Rest of Europe Store Numbers Sq ft ('000)
store base
--------------------- ========================================== ==================
30 April 29 Oct 30 April 29 Oct
2011 Openings Closures 2011 2011 2011
--------------------- --------- ---------- ---------- ------- --------- -------
The Netherlands 92 - - 92 1,078 1,078
===================== ========= ========== ========== ======= ========= =======
Belgium 28 - - 28 335 329
===================== ========= ========== ========== ======= ========= =======
Republic of Ireland 20 1 (1) 20 145 147
===================== ========= ========== ========== ======= ========= =======
140 1 (1) 140 1,558 1,554
--------------------- --------- ---------- ---------- ------- --------- -------
Gross profit remained flat in local currency terms on the
reduced level of sales. The gross profit percentage improved by 0.5
percentage points, reflecting stronger rebate rates in The
Netherlands and an improvement in the Republic of Ireland from
changes to the promotional programme.
Total costs declined by 6.1% in local currency terms. The year
on year decrease was a combination of inflationary pressures from
salary and rent indexation offset by store headcount reductions and
cost management activities.
In local currency terms the underlying operating profit
increased by EUR1.7m, which translated into a GBP1.6m improvement
in reported profit to GBP2.9m with an operating margin of 6.3%.
Group Financial Review
Exceptional items
The Group recorded a net charge of GBP2.2m (2010: GBP0.2m) in
the half year:
(Charge) / Gain
First Half First Half
2011 2010
GBPm GBPm
------------------------------------------- ----------- -----------
Profit on disposal of properties 0.5 0.2
=========================================== =========== ===========
Store impairment charge (0.1) (0.2)
=========================================== =========== ===========
Onerous lease charge - (0.2)
=========================================== =========== ===========
Restructuring costs (2.1) -
=========================================== =========== ===========
Write off of unamortised refinancing fees (0.5) -
------------------------------------------- ----------- -----------
Net Charge (2.2) (0.2)
------------------------------------------- ----------- -----------
We have continued to trade our property portfolio, although
market conditions continue to make this challenging. A net profit
of GBP0.5m was achieved on property disposals during the period
(2010: GBP0.2m).
We have reviewed the carrying value of the store assets in our
balance sheet, consistent with the approach in previous years. 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 charge of GBP0.1m (2010: GBP0.2m).
In this difficult retail environment, the Group has focused on
organisational changes in the last six months aimed at enhancing
our efficiency and leveraging our strengths to provide a solid
framework for growth. This has involved a reduction in management
headcount in the UK and the consolidation of our offices in Europe
at a cost of GBP2.1m. Given the irregular nature and amounts
associated with business restructuring these are treated as
exceptional items.
Taxation
The taxation charge is based on an estimated full year effective
tax rate of 23.7% (2010: 30.4%).
Net debt and cash flow
The Group's net debt at 29 October 2011 was GBP55.0m, a
reduction of GBP10.7m from the prior year end position of GBP65.7m.
This decrease was driven by the operational profit performance, a
decrease in working capital and level of net capital
expenditure.
The average net debt figure in the first half was GBP79.6m
(2010: GBP78.7m) and the Group's average cost of funding was 5.6%
(2010: 7.3%).
Summary cashflow
First Half First Half
2011 2010
GBPm GBPm
---------------------------------------- ----------- -----------
Underlying Operating Profit 3.7 12.6
======================================== =========== ===========
Depreciation and non-cash items 7.5 9.2
======================================== =========== ===========
Exceptional items (0.6) -
======================================== =========== ===========
(Increase)/Decrease in stock (0.3) (1.0)
======================================== =========== ===========
(Increase)/Decrease in working capital 4.6 2.8
---------------------------------------- ----------- -----------
Cash generated by operations 14.9 23.6
======================================== =========== ===========
Net interest paid (3.4) (2.4)
======================================== =========== ===========
Corporation Tax paid (1.7) (0.2)
======================================== =========== ===========
Net capital (expenditure)/proceeds 0.5 (3.6)
---------------------------------------- ----------- -----------
Free cashflow 10.3 17.4
======================================== =========== ===========
Dividends paid - (5.4)
======================================== =========== ===========
Other 0.4 0.8
---------------------------------------- ----------- -----------
Movement in net debt 10.7 12.8
======================================== =========== ===========
Opening net debt (65.7) (71.3)
---------------------------------------- ----------- -----------
Closing net debt (55.0) (58.5)
---------------------------------------- ----------- -----------
Gross capital expenditure was GBP5.9m (2010: GBP4.1m), including
a freehold purchase. After allowing for proceeds from property
disposals, net capital expenditure was a credit of GBP0.5m.
First Half First Half
2011 2010
GBPm GBPm
------------------------------------ ----------- -----------
Capital expenditure (2.2) (4.1)
==================================== =========== ===========
Purchase of freehold properties (3.7) -
------------------------------------ ----------- -----------
Gross capital expenditure (5.9) (4.1)
==================================== =========== ===========
Proceeds from property disposals 6.4 0.5
------------------------------------ ----------- -----------
Net capital (expenditure)/proceeds 0.5 (3.6)
------------------------------------ ----------- -----------
Gross bank borrowings at the balance sheet date were GBP56.0m
(2010: GBP60.8m) of which GBP46.9m is term based with the balance
of GBP9.1m being drawn down from overdraft facilities. The Group
had further undrawn, committed facilities of GBP42.4m at the
balance sheet date. The term of the majority of these facilities is
to July 2015 and they are subject to a number of covenants, against
which the Group monitors compliance. The Group has sufficient
headroom to enable it to comply with covenants on its existing
borrowings.
Pensions
At 29 October 2011 the IAS 19 net retirement benefit deficit was
GBP2.9m (30 April 2011: GBP4.0m). The half year discount rate was
5.1% (30 April 2011: 5.3%), reflecting prevailing corporate bond
rates alongside higher market value of plan assets, which led to a
decrease of GBP1.1m in the calculation of the net pension liability
for accounting purposes at 29 October 2011. As previously
announced, the Company scheme was closed to future accrual with
effect from 1 May 2010.
The Company agreed a recovery plan with the Trustees in 2009 and
this will be reviewed following the completion of the next
triennial valuation, which will be performed as at 5 April
2011.
Lord Harris of Peckham
12 December 2011
Condensed consolidated income statement
for 26 weeks ended 29 October 2011
26 weeks to 29 26 weeks to 30 52 weeks to 30
October 2011 October 2010 April 2011
(unaudited) (unaudited) (audited)
Exceptional Exceptional Exceptional
Before Items Before Items Before Items
Exceptional (note Exceptional (note Exceptional (note
items 5) Total items 5) Total items 5) Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ----- ----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
248
Revenue 4 238.4 - 238.4 248.0 .0 486.8 486.8
Cost of sales (100.4) - (100.4) (95.9) (95.9) (188.8) (188.8)
--------------- ----- ----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Gross profit 138.0 - 138.0 152.1 152.1 298.0 298.0
Administration
expenses (135.5) (2.2) (137.7) (141.4) (0.4) (141.8) (280.7) (10.8) (291.5)
Other operating
income 1.2 0.5 1.7 1.9 0.2 2.1 3.9 0.5 4.4
Operating
profit 4 3.7 (1.7) 2.0 12.6 (0.2) 12.4 21.2 (10.3) 10.9
Finance costs (2.8) (0.5) (3.3) (3.1) (3.1) (5.4) (5.4)
Finance income 0.5 - 0.5 0.5 0.5 1.1 1.1
--------------- ----- ----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Profit/(loss)
before tax 1.4 (2.2) (0.8) 10.0 (0.2) 9.8 16.9 (10.3) 6.6
Tax 6 (0.6) 0.8 0.2 (2.8) (2.8) (4.8) 2.8 (2.0)
--------------- ----- ----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Profit/(loss)
for the
financial
period
attributable
to equity
shareholders
of the Company 0.8 (1.4) (0.6) 7.2 (0.2) 7.0 12.1 (7.5) 4.6
--------------- ----- ----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
Basic earnings
per share
(pence) 7 1.2 (2.1) (0.9) 10.7 (0.3) 10.4 18.0 (11.2) 6.8
Diluted
earnings
per share
(pence) 7 (0.9) 10.4 6.9
--------------- ----- ----------- ----------- ------- ----------- ----------- ------- ----------- ----------- -------
All material items in the income statement arise from continuing
operations.
Condensed consolidated statement of comprehensive income
for 26 weeks ended 29 October 2011
26 weeks 26 weeks 52 weeks
to to to
29 October 30 October 30 April
2011 2010 2011
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
--------------------------------------------------- ----- ------------ ------------ ----------
Profit/(loss) for the financial period (0.6) 7.0 4.6
Actuarial gain/(loss) on defined benefit pension
scheme 11 0.8 0.5 0.4
Fair value gain/(loss) in respect of cash
flow hedges - 0.6 -
Exchange gain/(loss) in respect of hedged
equity investments (1.0) 0.5 2.4
Tax on components of other comprehensive income - (0.4)
--------------------------------------------------- ----- ------------ ------------ ----------
Other comprehensive income for the period (0.2) 1.6 2.4
--------------------------------------------------- ----- ------------ ------------ ----------
Total comprehensive income for the period
attributable to equity shareholders of
the Company (0.8) 8.6 7.0
--------------------------------------------------- ----- ------------ ------------ ----------
The notes on pages 16 to 22 form an integral part of this
consolidated interim financial information.
Condensed consolidated statement of changes in equity
for 26 weeks ended 29 October 2011
Capital
Share Share Treasury redemption Translation Hedging Retained
capital premium shares reserve reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
At 30 April 2011 0.7 15.4 (0.3) 0.1 12.6 (0.1) 38.6 67.0
Loss for the financial period - - - - - - (0.6) (0.6)
Actuarial gain on defined
benefit
pension scheme - - - - - - 0.8 0.8
Fair value gain/(loss) in
respect
of cash flow hedges - - - - - 0.1 (0.1) -
Exchange loss in respect of
hedged
equity investments - - - - (1.0) - - (1.0)
Tax on components of other
comprehensive
income - - - - - - - -
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Total comprehensive income for
the financial period - - - - (1.0) 0.1 0.1 (0.8)
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Purchase of own shares by Employee
Share Trust - - - - - - - -
Transfer of Treasury shares to
participants - - - - - - - -
Share-based payments and related
tax - - - - - - 0.1 0.1
Dividends paid to Group
shareholders - - - - - - - -
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
At 29 October 2011 0.7 15.4 (0.3) 0.1 11.6 - 38.8 66.3
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Capital
Share Share Treasury redemption Translation Hedging Retained
capital premium shares reserve reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
At 1 May 2010 0.7 15.4 (0.2) 0.1 10.2 (1.2) 46.2 71.2
Profit for the financial
period - - - - - - 7.0 7.0
Actuarial gain on defined
benefit
pension scheme - - - - - - 0.5 0.5
Fair value gain in respect of
cash flow hedges - - - - - 0.6 - 0.6
Exchange gain in respect of
hedged
equity
Investments - - - - 0.5 - - 0.5
Tax on components of other
comprehensive
income - - - - - - - -
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Total comprehensive income for
the financial period - - - - 0.5 0.6 7.5 8.6
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Purchase of own shares by Employee
Share Trust - - (0.1) - - - - (0.1)
Share-based payments and related
tax - - - - - - 0.4 0.4
Dividends paid to Group
shareholders - - - - - - (5.4) (5.4)
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
At 30 October 2010 0.7 15.4 (0.3) 0.1 10.7 (0.6) 48.7 74.7
---------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
The notes on pages 16 to 22 form an integral part of this
consolidated interim financial information.
Condensed consolidated balance sheet
as at 29 October 2011
29 October 30 October 30 April
2011 2010 2011
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
------------------------------------------------- ----- ------------ ------------ ----------
Assets
Non-current assets
Intangible assets 9 64.2 65.6 65.8
Property, plant and equipment 9 139.8 147.3 147.4
Investment property 25.6 25.8 26.1
Deferred tax assets 2.9 2.8 2.9
Trade and other receivables 1.0 1.3 1.1
------------------------------------------------- ----- ------------ ------------ ----------
233.5 242.8 243.3
------------------------------------------------- ----- ------------ ------------ ----------
Current assets
Inventories 38.9 42.4 38.7
Trade and other receivables 32.7 42.0 32.8
Cash and cash equivalents 10 3.7 5.8 8.3
------------------------------------------------- ----- ------------ ------------ ----------
75.3 90.2 79.8
------------------------------------------------- ----- ------------ ------------ ----------
Total assets 308.8 333.0 323.1
------------------------------------------------- ----- ------------ ------------ ----------
Liabilities
Current liabilities
Trade and other payables (112.8) (120.0) (105.3)
Obligations under finance leases 10 (0.1) (0.1) (0.1)
Borrowings and overdrafts 10 (16.6) (20.9) (21.3)
Current tax liabilities (0.3) (7.9) (2.1)
------------------------------------------------- ----- ------------ ------------ ----------
(129.8) (148.9) (128.8)
------------------------------------------------- ----- ------------ ------------ ----------
Non-current liabilities
Trade and other payables (34.2) (36.6) (35.4)
Obligations under finance leases 10 (2.6) (2.9) (2.9)
Borrowings 10 (39.4) (39.9) (49.6)
Derivative financial instruments 10 - (0.5) (0.1)
Provisions for liabilities and charges (7.7) (1.7) (9.1)
Deferred tax liabilities (25.9) (23.7) (26.2)
Retirement benefit obligations 11 (2.9) (4.1) (4.0)
------------------------------------------------- ----- ------------ ------------ ----------
(112.7) (109.4) (127.3)
------------------------------------------------- ----- ------------ ------------ ----------
Total liabilities (242.5) (258.3) (256.1)
------------------------------------------------- ----- ------------ ------------ ----------
Net assets 66.3 74.7 67.0
------------------------------------------------- ----- ------------ ------------ ----------
Equity
Share capital 0.7 0.7 0.7
Share premium 15.4 15.4 15.4
Treasury shares (0.3) (0.3) (0.3)
Other reserves 50.5 58.9 51.2
------------------------------------------------- ----- ------------ ------------ ----------
Total equity attributable to equity shareholders
of the Company 66.3 74.7 67.0
------------------------------------------------- ----- ------------ ------------ ----------
The notes on pages 16 to 22 form an integral part of this
consolidated interim financial information.
Condensed consolidated statements of cash flow
for 26 weeks ended 29 October 2011
26 weeks 26 weeks 52 weeks
to to to
29 October 30 October 30 April
2011 2010 2011
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
----------------------------------------------------- ----- ------------ ------------ ----------
Operating activities
Profit/(loss) before tax (0.8) 9.8 6.6
Adjusted for:
Depreciation and amortisation 7.4 8.8 15.5
Profit on property disposals (0.5) (0.2) (0.5)
Exceptional non-cash items 2.1 0.4 10.8
Other non-cash items 0.1 0.4 (0.2)
Net finance costs 2.3 2.6 4.3
----------------------------------------------------- ----- ------------ ------------ ----------
Operating cash flows before movements in working
capital 10.6 21.8 36.5
(Increase)/decrease in inventories (0.3) (1.0) 2.9
(Increase)/decrease in trade and other receivables (0.3) (3.9) 5.9
Increase/(decrease) in trade and other payables 4.9 6.7 (13.2)
----------------------------------------------------- ----- ------------ ------------ ----------
Cash generated by operations 14.9 23.6 32.1
Interest paid (3.4) (2.4) (5.0)
Corporation taxes paid (1.7) (0.2) (2.7)
----------------------------------------------------- ----- ------------ ------------ ----------
Net cash flows from operating activities 9.8 21.0 24.4
----------------------------------------------------- ----- ------------ ------------ ----------
Investing activities
Purchases of intangible assets - (0.3) (0.5)
Purchases of property, plant and equipment
and investment property (5.9) (3.8) (9.9)
Proceeds on disposal of property, plant and
equipment and investment property 6.4 0.5 0.9
Interest received - - 0.1
----------------------------------------------------- ----- ------------ ------------ ----------
Net cash flows from investing activities 0.5 (3.6) (9.4)
----------------------------------------------------- ----- ------------ ------------ ----------
Financing activities
Purchase of Treasury shares by Employee Share
Trust - - (0.1)
Repayment of borrowings 10 (14.8) (11.0) (13.2)
New loans advanced - - 12.5
Dividends paid to Group shareholders 8 - (5.4) (10.8)
----------------------------------------------------- ----- ------------ ------------ ----------
Net cash flows from financing activities (14.8) (16.4) (11.6)
----------------------------------------------------- ----- ------------ ------------ ----------
Net increase/(decrease) in cash and cash equivalents
in the period 10 (4.5) 1.0 3.4
Cash and cash equivalents at the beginning
of the period (0.7) (5.0) (5.0)
Exchange differences (0.2) 0.3 0.9
----------------------------------------------------- ----- ------------ ------------ ----------
Cash and cash equivalents at the end of the
period 10 (5.4) (3.7) (0.7)
----------------------------------------------------- ----- ------------ ------------ ----------
For the purposes of the cash flow statement, cash and cash
equivalents are reported net of overdrafts repayable on demand.
Overdrafts are excluded from the definition of cash and cash
equivalents disclosed in the balance sheet.
The notes on pages 16 to 22 form an integral part of this
consolidated interim financial information.
Notes to the accounts
1. General information
This condensed consolidated half-yearly information was approved
for issue on 12 December 2011.
This interim report does not comprise statutory accounts within
the meaning of Section 434(3) of the Companies Act 2006. It has
been reviewed but not audited by the Group's auditors. The
statutory accounts for the year ended 30 April 2011 were approved
by the Board of Directors on 27 June 2011 and delivered to the
Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of
the Companies Act 2006.
2. Basis of preparation
The interim financial report for the 26 weeks ended 29 October
2011 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS
34, 'Interim Financial Reporting' as adopted by the European Union.
It should be read in conjunction with the annual financial
statements for the 52 weeks ended 30 April 2011, which have been
prepared in accordance with IFRSs as adopted by the European
Union.
The Directors confirm that, after reviewing expenditure
commitments, expected cash flows and borrowing facilities, they
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the next year and the
foreseeable future. For this reason they continue to adopt the
going concern basis in preparing the financial statements.
Financial assets and liabilities and foreign operations are
translated at the following rates of exchange:
26 weeks 26 weeks 52 weeks
to to to
29 October 30 October 30 April
2011 2010 2011
GBPm GBPm GBPm
------------ ----------- ----------- ---------
Euro
Average 1.14 1.19 1.18
Closing 1.14 1.15 1.12
Zloty
Average 4.73 4.76 4.70
Closing 4.91 4.60 4.42
------------ ----------- ----------- ---------
3. Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the 52 weeks ended 30 April 2011,
as described in those annual financial statements.
Taxes on income for interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
The following new standards and amendments to standards are
mandatory for the first time in the financial year beginning on 1
May 2011, but are either not currently relevant or not material for
the Group:
IFRS 1 - First time adoption of IFRS - Limited Exemption from
Comparative IFRS 7 Disclosures for First-time Adopters
IAS 24 - Related Party Disclosures (Revised)
IAS 32 - Financial Instruments: Presentation - Classification of
Rights Issues (Amendment)
IFRIC 14 - Prepayments of a Minimum Funding Requirement
(Amendment)
IFRIC 19 - Extinguishing Financial Liabilities with Equity
Instruments
Improvements to International Financial Reporting Standards
(issued 2010) amending: IFRS 1 - First time adoption of IFRS; IFRS
3 - Business Combinations; IFRS 7 Financial Instruments
Disclosures; IAS 1 - Presentation of Financial Statements; IAS 27
Consolidated and Separate Financial Statements; IAS 34 Interim
Financial Reporting; IFRIC 13 Customer Loyalty Programmes.
New standards and amendments to standards which are mandatory
after 29 April 2012 are currently expected to be not relevant or
not material for the Group other than to change some of the
disclosures required.
4. Segmental analysis
The operating segments have been determined based on reports
reviewed by the Board (the Chief Operating Decision Maker) that are
used to make strategic decisions. Following a review of the
management of the business in the Republic of Ireland this region
was transferred to the European operation from 1 May 2011 and is
included under Europe in the segmental analysis. The comparative
segmental information has been restated to the new basis.
The reportable operating segments derive their revenue primarily
from the retail of floor coverings and beds. Costs associated with
operating the Group are not material to the segmental analysis and
are principally incurred in the UK. Sales between segments are
carried out at arm's length.
The segment information provided to the Board for the reportable
segments for the 26 weeks ended 29 October 2011 is as follows:
26 weeks to 29 October 26 weeks to 30 October
2011 2010 (restated)
-------------------------- --------------------------
UK Europe Group UK Europe Group
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- -------- ------- ------- -------- ------- -------
Gross revenue 194.8 46.3 241.1 206.1 44.6 250.7
Inter-segment revenue (2.7) (2.7) (2.7) - (2.7)
--------------------------------- -------- ------- ------- -------- ------- -------
Revenues from external customers 192.1 46.3 238.4 203.4 44.6 248.0
--------------------------------- -------- ------- ------- -------- ------- -------
Gross profit 111.4 26.6 138.0 126.7 25.4 152.1
--------------------------------- -------- ------- ------- -------- ------- -------
Underlying operating profit 0.8 2.9 3.7 11.3 1.3 12.6
Exceptional items (0.6) (1.1) (1.7) 0.3 (0.5) (0.2)
--------------------------------- -------- ------- ------- -------- ------- -------
Operating profit 0.2 1.8 2.0 11.6 0.8 12.4
Finance income 0.5 0.5 0.5 - 0.5
Intercompany interest (0.3) 0.3 - (0.1) 0.1 -
Finance costs (1) (3.2) (0.1) (3.3) (3.1) - (3.1)
--------------------------------- -------- ------- ------- -------- ------- -------
Profit/(loss) before tax (2.8) 2.0 (0.8) 8.9 0.9 9.8
Tax 0.8 (0.6) 0.2 (2.1) (0.7) (2.8)
--------------------------------- -------- ------- ------- -------- ------- -------
Profit/(loss) for the financial
period (2.0) 1.4 (0.6) 6.8 0.2 7.0
--------------------------------- -------- ------- ------- -------- ------- -------
Segment assets:
Segment assets 235.0 112.7 347.7 263.3 112.3 375.6
Inter-segment balances (24.0) (14.9) (38.9) (34.8) (7.8) (42.6)
--------------------------------- -------- ------- ------- -------- ------- -------
Balance sheet total assets 211.0 97.8 308.8 228.5 104.5 333.0
--------------------------------- -------- ------- ------- -------- ------- -------
Segment liabilities:
Segment liabilities (216.1) (65.3) (281.4) (225.8) (75.1) (300.9)
Inter-segment balances 14.9 24.0 38.9 7.8 34.8 42.6
--------------------------------- -------- ------- ------- -------- ------- -------
Balance sheet total liabilities (201.2) (41.3) (242.5) (218.0) (40.3) (258.3)
--------------------------------- -------- ------- ------- -------- ------- -------
Other segmental items:
Depreciation and amortisation 5.9 1.5 7.4 7.4 1.4 8.8
Additions to non-current assets 2.1 0.4 2.5 4.3 0.8 5.1
--------------------------------- -------- ------- ------- -------- ------- -------
1 Finance costs include GBP0.5m of exceptional finance costs.
Carpetright plc is domiciled in the UK. The Group's revenue from
external customers in the UK is GBP192.1m (2010: GBP203.4m) and the
total revenue from external customers from other countries is
GBP46.3m (2010: GBP44.6m). The total of non-current assets (other
than financial instruments and deferred tax assets) located in the
UK is GBP178.7m (2010: GBP196.2m) and the total of those located in
other countries is GBP90.8m (2010: GBP86.4m).
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.
The segment information provided to the Board for the reportable
segments for the 52 weeks ended 30 April 2011 is as follows:
52 weeks to 30 April 52 weeks to 30 April
2011 as restated 2011 as reported
------------------------ ------------------------
UK &
UK Europe Group RoI Europe Group
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------- ------ ------- ------- ------ -------
Gross revenue 402.2 90.2 492.4 408.3 82.3 490.6
Inter-segment revenue (5.6) (5.6) (3.8) - (3.8)
--------------------------------- ------- ------ ------- ------- ------ -------
Revenues from external customers 396.6 90.2 486.8 404.5 82.3 486.8
--------------------------------- ------- ------ ------- ------- ------ -------
Gross profit 246.5 51.5 298.0 250.8 47.2 298.0
--------------------------------- ------- ------ ------- ------- ------ -------
Underlying operating profit 17.8 3.4 21.2 14.4 6.8 21.2
Exceptional items (5.1) (5.2) (10.3) (10.3) - (10.3)
--------------------------------- ------- ------ ------- ------- ------ -------
Operating profit 12.7 (1.8) 10.9 4.1 6.8 10.9
Finance income 1.1 - 1.1 1.1 - 1.1
Intercompany interest (0.3) 0.3 - (0.3) 0.3 -
Finance costs (5.3) (0.1) (5.4) (5.3) (0.1) (5.4)
--------------------------------- ------- ------ ------- ------- ------ -------
Profit before tax 8.2 (1.6) 6.6 (0.4) 7.0 6.6
Tax (0.5) (1.5) (2.0) (0.5) (1.5) (2.0)
--------------------------------- ------- ------ ------- ------- ------ -------
Profit for the financial period 7.7 (3.1) 4.6 (0.9) 5.5 4.6
--------------------------------- ------- ------ ------- ------- ------ -------
Segment assets:
Segment assets 248.5 112.1 360.6 225.4 109.2 334.6
Inter-segment balances (26.0) (11.5) (37.5) - (11.5) (11.5)
--------------------------------- ------- ------ ------- ------- ------ -------
Balance sheet total assets 222.5 100.6 323.1 225.4 97.7 323.1
--------------------------------- ------- ------ ------- ------- ------ -------
Segment liabilities:
Segment liabilities (224.8) (68.8) (293.6) (233.4) (34.2) (267.6)
Inter-segment balances 11.5 26.0 37.5 11.5 - 11.5
--------------------------------- ------- ------ ------- ------- ------ -------
Balance sheet total liabilities (213.3) (42.8) (256.1) (221.9) (34.2) (256.1)
--------------------------------- ------- ------ ------- ------- ------ -------
Other segmental items:
Depreciation and amortisation 12.4 3.1 15.5 12.5 3.0 15.5
Additions to non-current assets 11.6 1.5 13.1 11.7 1.4 13.1
--------------------------------- ------- ------ ------- ------- ------ -------
5. Exceptional items
26 weeks 26 weeks 52 weeks
to to to
29 October 30 October 30 April
2011 2010 2011
GBPm GBPm GBPm
-------------------------------------------- ----------- ----------- ---------
Profits on property disposals 0.5 0.2 0.5
Impairment of property, plant and equipment (0.1) (0.2) (2.0)
Onerous lease provision - (0.2) (8.8)
Restructuring costs (2.1) - -
Finance charges (0.5) - -
-------------------------------------------- ----------- ----------- ---------
Exceptional items before tax (2.2) (0.2) (10.3)
-------------------------------------------- ----------- ----------- ---------
The onerous lease provision relates to properties 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.
26 weeks 26 weeks 52 weeks
to to to
29 October 30 October 30 April
2011 2010 2011
GBPm GBPm GBPm
------------------------------------------------ ----------- ----------- ---------
Included within administration expenses
UK & RoI impairment of property, plant and
equipment (0.1) (0.2) (2.0)
Onerous lease provision - (0.2) (8.8)
Restructuring costs (2.1) - -
------------------------------------------------ ----------- ----------- ---------
(2.2) (0.4) (10.8)
------------------------------------------------ ----------- ----------- ---------
Included within other operating income
Profits on property disposals 0.5 0.2 0.5
------------------------------------------------ ----------- ----------- ---------
0.5 0.2 0.5
------------------------------------------------ ----------- ----------- ---------
Included within finance costs
Exceptional finance costs arising from debt
refinancing (0.5) - -
------------------------------------------------ ----------- ----------- ---------
(0.5) - -
------------------------------------------------ ----------- ----------- ---------
Exceptional items before tax (2.2) (0.2) (10.3)
Tax on exceptional items 0.8 - 1.7
Exceptional tax - - 1.1
Exceptional items after tax (1.4) (0.2) (7.5)
------------------------------------------------ ----------- ----------- ---------
6. Tax
26 weeks 26 weeks 52 weeks
to to to
29 October 30 October 30 April
2011 2010 2011
GBPm GBPm GBPm
-------------------------- ----------- ----------- ---------
Current tax (0.1) 2.5 3.5
Deferred tax (0.1) 0.3 (1.5)
-------------------------- ----------- ----------- ---------
Total tax charge/(credit) (0.2) 2.8 2.0
-------------------------- ----------- ----------- ---------
The estimated tax rates on the profits of the Group are as
follows:
52 weeks 52 weeks
to to
28 April 30 April
2012 2011
GBPm GBPm
-------------------------------------------- --------- ---------
Weighted average annual underlying tax rate 27.6% 27.6%
Weighted average annual effective tax rate 23.7% 30.4%
-------------------------------------------- --------- ---------
The effective tax rate is defined as the tax charged or credited
as a percentage of the accounting profit before tax. The underlying
tax rate is defined as the effective tax rate after adjusting for,
when relevant, profit/(loss) on property disposals and other
exceptional items and tax adjustments in respect of such items.
7. Earnings/(loss) 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 the Group's LTIP Trust 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.
26 weeks ended 26 weeks ended 52 weeks ended
29 October 2011 30 October 2010 30 April 2011
---------------------- ------------------------------ ------------------------------ ------------------------------
Weighted Weighted Weighted
average Earnings average Earnings average Earnings
number per number per number per
Earnings of shares share Earnings of shares share Earnings of shares share
GBPm Millions Pence GBPm Millions Pence GBPm Millions Pence
---------------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
Basic earnings/(loss)
per
share (0.6) 67.2 (0.9) 7.0 67.2 10.4 4.6 67.2 6.8
Effect of dilutive
share
options 0.5 - 0.4 - 0.1 0.4 0.1
---------------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
Diluted
earnings/(loss)
per share (0.6) 67.7 (0.9) 7.0 67.6 10.4 4.7 67.6 6.9
---------------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
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.
26 weeks ended 26 weeks ended 52 weeks ended
29 October 2011 30 October 2010 30 April 2011
---------------------- ------------------------------ ------------------------------ ------------------------------
Weighted Weighted Weighted
average Earnings average Earnings average Earnings
number per number per number per
Earnings of shares share Earnings of shares share Earnings of shares share
GBPm Millions Pence GBPm Millions Pence GBPm Millions Pence
---------------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
Basic earnings/(loss)
per
share (0.6) 67.2 (0.9) 7.0 67.2 10.4 4.6 67.2 6.8
Adjusted for the
effect
of exceptional items:
Exceptional items 2.2 3.3 0.2 0.3 10.3 15.3
Tax thereon (0.8) (1.2) - - (1.7) (2.5)
Exceptional tax
benefit
from tax rate
change - - - - (1.1) (1.6)
---------------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
Underlying earnings
per
share 0.8 67.2 1.2 7.2 67.2 10.7 12.1 67.2 18.0
---------------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
8. Dividends
26 weeks to 26 weeks to
29 October 30 October
2011 2010
--------------------------------------- ---------------- ----------------
Pence Pence
per share GBPm per share GBPm
--------------------------------------- ---------- ---- ---------- ----
Final prior year dividend paid - - 8.0 5.4
Proposed current year interim dividend - - 8.0 5.4
--------------------------------------- ---------- ---- ---------- ----
The Directors have decided that no interim dividend will be paid
(2010: 8.0 pence per share; GBP5.4m).
9. Capital expenditure
During the period, additions were GBPnil (2010: GBP0.3m) on
intangible assets and GBP5.9m (2010: GBP3.8m) on the acquisition
and fit out of stores. Net proceeds from vacating properties during
the period were GBP6.4m (2010: GBP0.5m).
Capital commitments contracted but not provided for at the end
of the period are GBP2.2m (2010: GBP2.9m).
10. Movement in cash and net debt
30 April 29 October
2011 2011
-------- ----- ------------ --------- ----------
Cash Exchange Released
Total flow differences to P&L Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------------- -------- ----- ------------ --------- ----------
Cash and cash equivalents in the balance
sheet 8.3 3.7
Bank overdrafts (9.0) (9.1)
------------------------------------------- -------- ----- ------------ --------- ----------
Cash and cash equivalents in the cash
flow statement (0.7) (4.5) (0.2) - (5.4)
Borrowings
-------- ----------
Current borrowings (12.3) (7.5)
Non-current borrowings (49.6) (39.4)
-------- ----------
(61.9) 14.8 0.2 (46.9)
Obligations under finance leases
-------- ----------
Current obligations under finance leases (0.1) (0.1)
Non-current obligations under finance
leases (2.9) (2.6)
-------- ----------
(3.0) 0.3 (2.7)
Derivative financial instruments (0.1) 0.1 -
------------------------------------------- -------- ----- ------------ --------- ----------
Net debt (65.7) 10.3 - 0.4 (55.0)
------------------------------------------- -------- ----- ------------ --------- ----------
1 May 30 October
2010 2010
------ ------ ------------ --------- ----------
Cash Exchange Released
Total flow differences to P&L Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------------- ------ ------ ------------ --------- ----------
Cash and cash equivalents in the balance
sheet 8.3 5.8
Bank overdrafts (13.3) (9.5)
------------------------------------------- ------ ------ ------------ --------- ----------
Cash and cash equivalents in the cash
flow statement (5.0) 1.0 0.3 - (3.7)
Borrowings
------ ----------
Current borrowings (8.9) (11.4)
Non-current borrowings (53.3) (39.9)
------ ----------
(62.2) 11.0 (0.1) - (51.3)
Obligations under finance leases
------ ----------
Current obligations under finance leases (0.1) (0.1)
Non-current obligations under finance
leases (2.9) (2.9)
------ ----------
(3.0) - - - (3.0)
Derivative financial instruments (1.1) - - 0.6 (0.5)
------------------------------------------- ------ ------ ------------ --------- ----------
Net debt (71.3) 12.0 0.2 0.6 (58.5)
------------------------------------------- ------ ------ ------------ --------- ----------
11. Retirement benefit obligations
26 weeks 26 weeks 52 weeks
to to to
29 October 30 October 30 April
2011 2010 2011
GBPm GBPm GBPm
-------------------------------------------- ----------- ----------- ---------
Deficit in scheme at beginning of period (4.0) (4.8) (4.8)
Interest on defined benefit obligation (0.5) (0.5) (1.1)
Expected return on pension scheme assets 0.5 0.5 1.1
Employer contributions 0.3 0.2 0.4
Actuarial gains/(losses) 0.8 0.5 0.4
Deficit in scheme at end of period (2.9) (4.1) (4.0)
-------------------------------------------- ----------- ----------- ---------
Fair value of pension scheme assets 17.2 16.6 17.4
Present value of pension scheme obligations (20.1) (20.7) (21.4)
-------------------------------------------- ----------- ----------- ---------
Retirement benefit obligations (2.9) (4.1) (4.0)
-------------------------------------------- ----------- ----------- ---------
The key assumptions used, determined in conjunction with
independent qualified actuaries, are:
26 weeks 26 weeks 52 weeks
to to to
29 October 30 October 30 April
2011 2010 2011
GBPm GBPm GBPm
---------------------------------------------------- ----------- ----------- ---------
Inflation linked pension escalation (Carpetright
scheme) 3.4 3.1 3.7
Inflation linked pension escalation (Storey scheme) 2.3 3.1 3.2
Discount rate 5.1 5.2 5.3
Expected return on scheme assets 5.5 6.5 6.2
---------------------------------------------------- ----------- ----------- ---------
The amount of the deficit varies if the main financial
assumptions change, particularly the discount rate. If the discount
rate increased/decreased by 0.1% the IAS 19 deficit would
decrease/increase by approximately GBP0.3m.
12. Related party transactions
Details of transactions during the period with Companies of
which Lord Harris and/or M J Harris is a director and/or in which
Lord Harris holds a material interest are set out below:
Lease and concession
agreement payments Supply of goods/services Supply of goods/services
made payments made payments received
--------------------------------- ------------------------ -------------------------- --------------------------
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks
to to to to to to
29 October 30 October 29 October 30 October 29 October 30 October
2011 2010 2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ----------- ------------ ------------ ------------ ------------
Clacton Property Investments Ltd - 17 - - - -
Edinburgh Retail LLP 133 135 - - - -
Glenrothes Retail LLP - 28 - - - -
Greenock Retail LLP 113 113 - - - -
Harris Ventures Ltd 31 31 22 19 2 -
Hull Unit Trust 194 177 - - - -
Islandview Properties Ltd - - - - - -
Neath Retail LLP - 2 - - - -
Wick Retail Ltd - 27 - - - -
--------------------------------- ----------- ----------- ------------ ------------ ------------ ------------
As at 29 October 2011 the Group had no outstanding balances due
to or from related parties (2010: GBP1,000 due to related
parties).
Principle risks and uncertainties
The Board has considered the principle risks and uncertainties
for the remaining six months of the financial year and determined
that the risks presented in the 2011 Annual Report, described
below, remain for the rest of the financial year:
-- Economic and market conditions
-- Business strategy development and implementation
-- Employee risk - management and customer service
-- Entering new markets
-- Cost inflation
-- Supply chain and business continuity
-- IT systems
-- Management of liquidity risk and financing
-- Legislative and regulatory risk
These are detailed on pages 11 and 12 of the 2011 Annual Report,
a copy of which is available on the Group's website
www.carpetright.plc.uk.
Forward looking statements
Certain statements in this half year report are forward looking.
Although the Group believes that the expectations reflected in
these forward looking statements are reasonable, we can give no
assurance that these expectations will prove to have been correct.
Because these statements contain risks and uncertainties, actual
results may differ materially from those expressed or implied by
these forward looking statements. We undertake no obligation to
update any forward looking statements whether as a result of new
information, future events or otherwise.
Statement of Directors' responsibilities
The condensed financial information has been prepared in
accordance with IAS 34, as adopted by the European Union, and the
interim management report herein includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8 namely:
An indication of important events that have occurred during the
period and their impact on the interim financial statements, and a
description of the principal risks and uncertainties for the
remainder of the financial year.
Material related party transactions in the period and any
material changes in the related party transactions described in the
last annual report.
The Directors of Carpetright plc are listed on page 15 of the
Group's 2011 Annual Report. Since the date of the Annual Report
there have been a number of changes to the composition of the
Board:
-- Guy Weston resigned 8 September 2011
-- Darren Shapland appointed 8 September 2011
-- David Clifford appointed 1 December 2011
By order of the Board
Neil Page
Group Finance Director
12 December 2011
Independent review report to Carpetright plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 29 October 2011, which comprises the condensed
consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated statement of changes
in equity, condensed consolidated statement of financial position,
condensed consolidated statement of cash flows, comparative figures
and related notes. We have read the other information contained in
the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. This report, including the
conclusion, has been prepared for and only for the Company for the
purpose of the Disclosure and Transparency Rules of the Financial
Services Authority and for no other purpose. We do not, in
producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 weeks ended 29
October 2011 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP Chartered Accountants
12 December 2011 London
Notes:
The maintenance and integrity of the Carpetright plc website is
the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR TTBPTMBIBBJB
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