TIDMCPR
RNS Number : 1013V
Carpetright PLC
10 December 2013
Carpetright plc
Interim Results Announcement for the 26 weeks ended 26 October
2013
Carpetright plc, Europe's leading specialist carpet and floor
coverings retailer, today announces its interim results for the 26
week trading period ended 26 October 2013.
Group Financial Summary
H1 FY14 H1 FY13 Change
GBPm GBPm
Group revenue (Note 1) 222.2 227.2 (2.2%)
-------- -------- -------------
* UK 185.0 189.1 (2.2%)
-------- -------- -------------
* Rest of Europe (Note 2) 37.2 38.1 (2.4%)
-------- -------- -------------
Underlying operating profit/(loss)
(Note 3) 4.1 5.4 (24.1%)
-------- -------- -------------
* UK 5.5 5.2 5.8%
-------- -------- -------------
* Rest of Europe (1.4) 0.2
-------- -------- -------------
Underlying profit before tax 3.0 4.5 (33.3%)
-------- -------- -------------
Underlying earnings per share 3.2p 3.8p (15.8%)
-------- -------- -------------
Exceptional items (Note 4) (1.1) (12.4)
-------- -------- -------------
Profit/(loss) before tax 1.9 (7.9)
-------- -------- -------------
Basic earnings/(loss) per share 2.8p (9.5p)
-------- -------- -------------
Net debt (14.3) (16.3) Down GBP2.0m
-------- -------- -------------
Dividend per share Nil Nil
-------- -------- -------------
Highlights
UK
-- Self-help initiatives continued to show growth against a
backdrop of volatile trading conditions.
-- Like-for-like revenues (Note 5) decreased by 0.8%. Excluding
the expected contraction in sales from the wholesale business,
like-for-like sales in the core UK retail business were flat
year-on-year.
-- Gross profit percentage increased by 140 basis points to 63.1% (H1 FY13: 61.7%).
-- The number of stores reduced by a net four during the period
to 474 stores, trading from 4.1m sqft, being 2.3% lower
year-on-year.
-- Modernised a further 38 stores, making a total of 224 stores now completed.
Rest of Europe
-- Revenue in local currency declined by 8.4% with like-for-like sales down by 8.6%.
-- Continued difficult trading conditions in the Netherlands,
where the floor coverings market remains weak. Focus remains on our
self-help measures to improve the performance in the second
half.
-- Belgium and Republic of Ireland performing as expected.
-- The number of stores remains unchanged at 142, trading from 1.6m sqft.
Commenting on the results, Lord Harris, Executive Chairman,
said:
"Against a backdrop of volatile trading conditions, our first
half performance reflects an improvement in profits in the UK,
driven by the continued success of our self-help initiatives,
offset by a move into loss in our Rest of Europe business,
primarily from a continuation of very difficult trading conditions
in the Netherlands.
"Historically, the trend in UK mortgage approvals has been a
useful lead indicator of consumer demand in our sector, bearing a
positive correlation with floor covering sales. Approvals began to
show encouraging signs of improvement during the first half,
although this is from a very low base by historic standards. In the
past, we have seen a lag of around six months before the impact of
a change in the mortgage approval trend has been reflected in our
sales.
"The success of our self-help activities in improving Group
performance during the period continues to be encouraging,
demonstrating that a focus on factors within our control can
yield good results. While we anticipate trading conditions will
remain challenging, we expect these self-help initiatives will
underpin an improvement in Group performance in the second half and
our expectations for the year as a whole remain unchanged."
Notes
1. All sales figures are quoted after deducting VAT.
2. Rest of Europe comprises the Netherlands, Belgium and the Republic of Ireland.
3. Where this review makes reference to "Underlying" these
relate to profit / earnings before exceptional items and related
tax.
4. Exceptional items comprise of net losses on disposals of
properties of GBP1.1m. The comparable figure for the prior year of
GBP12.4m comprised of onerous lease provisions of GBP6.5m, net
losses on disposal of properties of GBP1.2m, non-cash impairment of
freehold property assets of GBP4.3m and impairment of other assets
of GBP0.4m.
5. 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. Sales from insurance and house building
contracts are supplied through the stores and included in their
figures.
6. The comparative period for the first half is the 26 week period ended 27 October 2012.
Results presentation
Carpetright plc will hold a presentation to analysts and
investors at Deutsche Bank, Winchester House, 1 Great Winchester
Street, London EC2N 2DB at 9:00am today.
A listen only conference call facility is available on +44
(0)1452 560 297, conference ID: 17063622.
A copy of this interim statement can be found on our website
www.carpetright.plc.uk.
For further enquiries please contact:
Carpetright plc
Lord Harris, Executive Chairman
Neil Page, Group Finance Director
Tel: 01708 802000
Citigate Dewe Rogerson
Kevin Smith / Lindsay Noton
Tel: 020 7638 9571
Forthcoming News flow:
Carpetright will release its Interim Management Statement for
the third quarter on
28 January 2014.
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.
Interim Results
A summary of the reported financial results for the 26 weeks
ended 26 October 2013 is set out below:
H1 FY14 H1 FY13
GBPm GBPm Change
---------------------------------- -------- ------- -------
Revenue 222.2 227.2 (2.2%)
---------------------------------- -------- ------- -------
Underlying operating profit 4.1 5.4 (24.1%)
---------------------------------- -------- ------- -------
Net finance charges (1.1) (0.9) (22.2%)
---------------------------------- -------- ------- -------
Underlying profit before tax 3.0 4.5 (33.3%)
---------------------------------- -------- ------- -------
Exceptional items (1.1) (12.4)
---------------------------------- -------- ------- -------
Profit/(loss) before tax 1.9 (7.9)
---------------------------------- -------- ------- -------
Earnings/(loss) per share (pence)
---------------------------------- -------- ------- -------
- underlying 3.2p 3.8p
---------------------------------- -------- ------- -------
- basic 2.8p (9.5p)
---------------------------------- -------- ------- -------
Dividends per share (pence) Nil Nil
---------------------------------- -------- ------- -------
Net debt (14.3) (16.3) GBP2.0m
---------------------------------- -------- ------- -------
Note - Where this review makes reference to "Underlying" these
relate to profit / earnings before exceptional items.
Overview
Total Group sales decreased by 2.2% to GBP222.2m, with the UK
business down 2.2% and a decline of 2.4% in the Rest of Europe.
During the half year, the Group opened seven stores and closed 11
which gave a net decrease of four stores, resulting in a store base
of 616. Total store space declined by 0.9% to 5.7 million square
feet.
Although UK economic data has begun to indicate improved
prospects, this has yet to impact consumer spending in our
categories, where the retail environment has remained challenging.
Overall sales patterns remained volatile across the first half,
with the solid sales momentum established early on significantly
impacted by the July heat-wave, and the sales trend remaining
unpredictable in the second quarter. Like-for-like sales in the UK
declined by 0.8%, with core retail stores like-for-like sales being
flat. Against this backdrop, our self-help actions continue to
deliver positive results. Further good progress was made in
increasing the gross profit percentage, which grew by 140 basis
points to 63.1% through a combination of improved sourcing and
promotional planning. Our previous guidance of a full year gross
profit percentage improvement in the range of 60-100 basis points
above the prior year remains unchanged.
The key driver in the performance of the Rest of Europe
continues to be the deterioration of consumer confidence in the
Netherlands, where the floor coverings market remains weak. Sales
in local currency were down 8.4%, with like-for-like sales down
8.6%. Taking into account the depreciation of Sterling relative to
the Euro, this translates to a total sales decline of 2.4%.
Overall, Group underlying operating profit declined to GBP4.1m.
Underlying net finance charges were GBP0.2m higher at GBP1.1m,
primarily the result of changes to accounting for pension costs.
These factors combined to generate an underlying profit before tax
of GBP3.0m (H1 FY13: GBP4.5m).
Exceptional charges totalled GBP1.1m (H1 FY13: GBP12.4m)
reflecting net losses on the disposal of property. As a result, the
profit before tax was GBP1.9m (H1 FY13: pre-tax loss of GBP7.9m).
Basic earnings per share were 2.8p (H1 FY13: loss per share of
9.5p).
The combination of cash flow from continued underlying
profitability and the level of net capital expenditure, enabled
year-on-year net debt to be reduced by GBP2.0m to GBP14.3m (H1
FY13: GBP16.3m). The cash flow strength of the Group is highlighted
by the fact that in the past four and half years, net debt has been
reduced by over 85% from GBP97.1m as at May 2009.
Executive Chairman's review
Although the Group's underlying profits declined in the first
half, the UK business delivered an increased profit in tough
trading conditions, characterised by significant sales volatility
throughout the period. In the Rest of Europe, trading conditions in
the Netherlands remained difficult whilst progress continues to be
made in the recovery plan for the Republic of Ireland and Belgium
continues to trade in line with expectations.
The improvement in UK performance has been driven, in large
part, by the continued success of our programme of self-help
measures. Key areas of focus during the first half have been:
-- Modernising the estate
We are part way through a three year programme of refurbishing
the UK store estate, introducing an updated store design, with a
new, more contemporary feel, in which it is easier for customers to
shop. This has involved improving natural light, updating signage,
developing new layouts, replacing floor coverings and upgrading
in-store lighting.
During the first half we modernised a further 38 stores, making
a total of 224 stores now completed, being 47% of the estate. We
continue to be satisfied with the post-refurbishment sales uplifts
being achieved but, as previously announced, this is diminishing as
we work our way through the estate to 5% when compared to the
un-invested estate. This lower rate of growth was expected and
reflects the prioritisation of the refurbishment of stores with the
greatest potential in the early part of the programme. In the
second half of the year, we expect to complete a further 45
refurbishments to bring the total to 269 stores, being 57% of the
portfolio.
As previously announced, following the success of the UK plan,
we have a similar refurbishment programme in the Rest of Europe to
adapt to changing customer preferences. During the first half, we
refurbished a further three stores with positive initial results,
making a total of 23 completed to date. Although trading conditions
in this business remain challenging, we are planning a further ten
store refurbishments in the Netherlands during the second half of
this financial year.
-- Adjusting the store portfolio
At the end of October 2013 we had 474stores trading in the UK
and during the last six months we opened seven stores and closed
11. This net reduction is primarily the result of implementing the
plan from our catchment analysis work which identified a small
number of overlaps, where having more than one store in a town was
not beneficial to profit or cash flow. In the past six months we
have negotiated exits from two locations where we had onerous
leases, removing us from all future liabilities.
We continue to take a robust view at lease renewal, which
provides an opportunity to secure lower rental cost for future
years. In the period we achieved an average rent reduction at lease
renewal of over 10%. Within the next five years 20% of the estate
has lease renewals scheduled.
In the Rest of Europe we had 142 stores trading as at the end of
October 2013, with no openings or closures in the last six months.
We now have 16 stores operating as 'sample only' with a small
takeaway range format, which has the benefit of lower operating
costs without negatively affecting customer choice. This format is
allowing us to reduce fixed occupancy costs by either sub-letting
or handing back space to the landlord, hence benefiting
profitability.
-- Optimising digital as part of a multi-channel offering
Our UK customer research indicates that the nature of our
product means that the vast majority of customers prefer to visit a
store to make their purchase, to give them the opportunity to see
and touch their choice of floor covering. However, the internet has
become a vital research tool for many customers and the rapid
growth of smart phone and tablet use has made an effective and
integrated multi-channel proposition a necessity.
We have continued to develop our website to improve the customer
experience and drive sales. One specific improvement has been the
recent re-launch of the bed section, with significantly enhanced
navigation filters. We have been encouraged by the increased
visitor numbers and subsequent sales growth this has produced.
By the end of the first half, on a weekly basis we were
achieving an average of over 98,000 unique visitors to our website,
a 22% increase on the same period last year, and this has produced
a corresponding increase in appointment leads and sample requests.
Some of the increase is attributable to an enhanced search engine
optimisation programme and increased investment in pay-per-click.
We have also continued to focus on improving our conversion to
sales ratio, through a call centre and improved follow-up at store
level. Sales from this combination of the call centre and an online
capability have grown significantly during the period and by
October 2013 were the equivalent of one of our top 20 stores.
We are transferring much of this learning to our Dutch business,
with the launch of an updated website. The new site will have the
functionality of sample ordering, booking of appointments, 'call to
buy' via a freephone number and online payment of outstanding
customer balances. We expect to have this operational before the
end of January 2014.
-- Developing our bed proposition
Beds provide an important complementary revenue stream, in our
UK business, to our core floor coverings offer and we believe this
category has significant further growth potential. At the end of
October 2013 the offer 'Sleepright by Carpetright' was trading from
263stores. The business delivered an increase in sales of 4.6% in
the period as a whole, with the sales momentum accelerating to
14.2% in the second quarter. Beds now represent 7.1% of total UK
sales revenue (H1 FY13: 6.6%) and 10.1% of the sales mix in those
stores where they are available. We are pleased with this
performance and are stepping up our investment in marketing to
establish greater customer awareness of the strength of our beds
offer.
Building on the lessons learnt in the UK, we are replicating the
bed proposition in the Netherlands, albeit adjusted to reflect the
needs of the local consumer. We have extended the trial to a
further four stores, bringing the total to six stores. The
performance of these trial stores will be evaluated by the end of
the financial year and a decision on a further roll-out will be
taken at that point.
Board
On 4 October 2013, I was disappointed to have to announce the
departure of Darren Shapland from his role as Chief Executive, but
he left with our thanks and we wish him well for the future. From
that date I have taken on the role of Executive Chairman and am
enthusiastic about tackling the challenges that the business
continues to face in these difficult economic times. I am pleased
that Graham Harris has joined the Board and is working alongside me
as Chief Operating Officer.
Dividend
The Board feels it is important to see a sustained recovery
reflected in the financial results of the Group before restoring
the dividend and believes the difficult decision not to pay an
interim dividend is in the best interests of the business. The
Board will continue to review the dividend policy on a biannual
basis.
Outlook
Historically, the trend in UK mortgage approvals has been a
useful lead indicator of consumer demand in our sector, bearing a
positive correlation with floor covering sales. Approvals began to
show encouraging signs of improvement during the first half,
although this is from a very low base by historic standards. In the
past, we have seen a lag of around six months before the impact of
a change in the mortgage approval trend has been reflected in our
sales.
The performance of our Rest of Europe segment is predominantly a
reflection of continued difficult trading in the Netherlands.
Whilst this business has reported a loss in the first half, it
remains cash generative. We believe a revised promotional programme
will drive incremental sales and margin in the second half, in a
challenging consumer environment.
The success of our self-help activities in improving Group
performance during the period continues to be encouraging,
demonstrating that a focus on factors within our control can
yield good results. While we anticipate trading conditions will
remain challenging, we expect these self-help initiatives will
underpin an improvement in Group performance in the second half and
our expectations for the year as a whole remain unchanged.
Lord Harris
Executive Chairman
9 December 2013
Financial review
UK
UK - Key financial results
H1 FY14 H1 FY13
GBPm GBPm Change
------------------------------- -------- -------- ---------
Revenue 185.0 189.1 (2.2%)
=============================== ======== ======== =========
Like-for-like sales (0.8%) 0.7%
=============================== ======== ======== =========
Gross profit 116.6 116.6 0.0%
=============================== ======== ======== =========
Gross profit % 63.1% 61.7% 1.4ppts
=============================== ======== ======== =========
Costs (111.1) (111.4) 0.3%
=============================== ======== ======== =========
Underlying operating profit 5.5 5.2 5.8%
=============================== ======== ======== =========
Underlying operating margin % 3.0% 2.7%
------------------------------- -------- -------- ---------
In volatile trading conditions total revenue decreased by 2.2%
to GBP185.0m. The number of stores reduced by a net four during the
period to 474 stores, trading from 4.1m sqft, being 2.3% lower
year-on-year.
At the period end, the store portfolio comprised:
Store numbers Gross Sq ft ('000)
------------
27 April 26 Oct 27 April 26 Oct
UK store base 2013 Openings Closures 2013 2013 2013
---------------------- ----------- ------------- ----------- -------- ----------- --------
Standalone 462 7 (11) 458 4,124 4,071
====================== =========== ============= =========== ======= =========== ========
Concessions 16 - - 16 29 29
====================== =========== ============= =========== ======= =========== ========
478 7 (11) 474 4,153 4,100
---------------------- ----------- ------------- ----------- ------- ----------- --------
As at 27 Oct 2012 480 4,198
------------------------------ -------------- --------------- --------- ---------------------
Included in standalone stores :
-------------------------------------------------- ----------- -------
Bed departments 271 2 (10) 263
---------------------- ----------- ------------- ----------- -------
As at 27 Oct 2012 276
---------------------- ----------- ------------- ----------- -------
Like-for-like sales decreased by 0.8%. Excluding the expected
contraction in sales from the wholesale business, the core retail
business was level with the prior year.
Gross profit was level with the prior year at GBP116.6m, with
the gross profit percentage increasing by 140 basis points to
63.1%. This was the result of:
-- An improvement in the floor covering margin through improved
sourcing and promotional planning.
-- A decline in wholesale sales, which have a lower gross
margin, resulting in a favourable mix impact.
The total UK cost base decreased by GBP0.3m to GBP111.1m. Store
payroll continued to be managed closely to the volume of retail
sales with inflationary increases primarily within utilities and
business rates being offset by rent savings. Marketing expenditure
increased year-on-year reflecting a greater investment in both
digital and traditional media to drive customers to our stores.
All of the above elements combined to produce an underlying
operating profit that increased by GBP0.3m to GBP5.5m.
Rest of Europe
Rest of Europe - Key financial results
H1 FY14 H1 FY13 Change Change
GBPm GBPm (Reported) (Local
Currency)
------------------------------------ -------- -------- ------------ -----------
Revenue 37.2 38.1 (2.4%) (8.4%)
==================================== ======== ======== ============ ===========
Like-for-like sales (local
currency) (8.6%) (10.1%)
==================================== ======== ======== ============ ===========
Gross profit 21.5 21.7 (0.9%) (7.0%)
==================================== ======== ======== ============ ===========
Gross profit % 57.8% 57.0% 0.8ppts
==================================== ======== ======== ============ ===========
Costs (22.9) (21.5) (6.5%) (0.1%)
==================================== ======== ======== ============ ===========
Underlying operating profit/(loss) (1.4) 0.2
==================================== ======== ======== ============ ===========
Underlying operating margin
% (3.8%) 0.5%
------------------------------------ -------- -------- ------------ -----------
Total net sales declined by 2.4% to GBP37.2m with the key driver
being the continued deterioration of consumer confidence and
political and economic uncertainty across the Netherlands. In local
currency terms this was a decline of 8.4% with like-for-like sales
down 8.6%.
At the period end, the store portfolio comprised:
Rest of Europe Store Numbers Sq ft ('000)
store base
--------------------- ============================================ ==================
27 April 26 Oct 27 April 26 Oct
2013 Openings Closures 2013 2013 2013
--------------------- --------- ----------- ----------- ------- --------- -------
Netherlands 95 - - 95 1,104 1,104
===================== ========= =========== =========== ======= ========= =======
Belgium 26 - - 26 307 307
===================== ========= =========== =========== ======= ========= =======
Republic of Ireland 21 - - 21 155 155
===================== ========= =========== =========== ======= ========= =======
142 - - 142 1,566 1,566
--------------------- --------- ----------- ----------- ------- --------- -------
As at 27 Oct
2012 141 1,559
--------------------- --------- ----------- ----------- ------- --------- -------
The gross profit percentage increased by 80 basis points to
57.8%, but was not enough to offset the decline in sales, resulting
in a decline in gross profit to GBP21.5m. In local currency terms,
this represented a 7.0% decline.
Against the background of lower sales, cost management
activities were put in place as part of a profit protection plan
and total costs were broadly level in local currency terms.
In local currency terms the underlying operating profit
decreased by EUR2.0m, which translated into a GBP1.6m decline,
leading to a reported loss of GBP1.4m.
Group financial review
Exceptional items
The Group recorded a net charge of GBP1.1m in the half year (H1
FY13: GBP12.4m):
(Charge) / Gain
H1 FY14 H1 FY13
GBPm GBPm
----------------------------------------------- -------- --------
Loss on disposal of properties (1.1) (1.2)
=============================================== ======== ========
Store Impairment charge - freehold properties - (4.3)
=============================================== ======== ========
Store Impairment charge - store assets - (0.4)
=============================================== ======== ========
Onerous lease charge - (6.5)
=============================================== ======== ========
Net Charge (1.1) (12.4)
----------------------------------------------- -------- --------
We continued to trade our property portfolio, although the
weakened UK out-of-town retail property market has made this more
challenging. A net loss on disposal of properties of GBP1.1m was
made in the half year (H1 FY13: GBP1.2m) principally the result of
surrender premiums being paid to exit loss making locations.
At 27 April 2013 there were 25 vacant properties in the UK and
five in the Republic of Ireland (RoI) classed as onerous leases,
against which we carried a provision. During the half, we
successfully disposed of two of these properties, removing us from
all associated future liabilities. In addition, two properties have
now closed but we remain liable for lease costs. The net impact is
not material, resulting in no charge in the financial
statements.
We have reviewed, using a method consistent with the approach
taken in previous years, the carrying value of 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. There was no movement in the impairment provision as
at the half year end.
Net finance charges
Underlying net finance charges were GBP0.2m higher at GBP1.1m
(H1 FY13: GBP0.9m), primarily the result of changes to accounting
for pension costs.
Taxation
The estimated effective tax rate on profits is 0.5% (Actual
FY13: 29.3%). This fall is largely due to a 1.0% reduction in the
UK tax rate to 23.0% effective from April 2013 and a further 3.0%
reduction in future tax rates as enacted in the Treasury Budget
July 2013 which reduces our deferred tax liabilities.
The underlying rate is 28.8% (FY13: 31.3%).
Dividend
The Board has decided not to pay an interim dividend (H1 FY13:
nil).
Balance sheet
The Group hasnet assets of GBP67.9m (Year end FY13: GBP65.3m) an
increase of GBP2.6m since 26 April 2013.
Summary Balance sheet
26 Oct 26 April Movement
2013 2013
GBPm GBPm GBPm
-------------------------------------- -------- --------- ---------
Freehold and long leasehold property 74.4 75.0 (0.6)
====================================== ======== ========= =========
Other non current assets 117.3 118.0 (0.7)
====================================== ======== ========= =========
Stock 37.1 37.6 (0.5)
====================================== ======== ========= =========
Trade & other current assets 27.8 19.8 8.0
====================================== ======== ========= =========
Creditors < 1 year (107.0) (103.2) (3.8)
====================================== ======== ========= =========
Creditors > 1 year (62.7) (66.6) 3.9
====================================== ======== ========= =========
Net debt (14.3) (10.2) (4.1)
====================================== ======== ========= =========
Pension deficit (4.7) (5.1) 0.4
====================================== ======== ========= =========
Net Assets 67.9 65.3 2.6
-------------------------------------- -------- --------- ---------
During the period, one freehold property disposal was completed.
The Group continues to own a significant property portfolio, most
of which is used for trading purposes. The portfolio is estimated
to have a market value of GBP79.2m compared to a net book value of
GBP74.4m.
Net debt and cash flow
The Group's net debt at 26 October 2013 was GBP14.3m, an
increase of GBP4.1m from the year end FY13 position of GBP10.2m.
This increase was driven by the underlying operating profit
performance being offset by a GBP1.8m cash outflow related to
provisions, GBP0.4m contributions to closed defined benefit pension
schemes and a GBP7.6m increase in working capital. The latter was
partly a consequence of a seasonal movement on prepayments, which
is expected to reverse in the second half. The resulting net inflow
of cash generated by operations of GBP1.1m was more than offset by
net capital expenditure, interest and tax net outflows totalling
GBP5.3m.
The Group's average cost of funding was 6.5% (H1 FY13: 6.6%)
with an average net debt of GBP19.1m (H1 FY13: GBP25.8m).
Summary cash flow
H1 FY14 H1 FY13
GBPm GBPm
---------------------------------------- -------- --------
Underlying operating profit 4.1 5.4
======================================== ======== ========
Depreciation and non-cash items 7.1 7.1
======================================== ======== ========
Exceptional items - -
======================================== ======== ========
(Increase)/Decrease in stock 0.5 (2.0)
======================================== ======== ========
(Increase)/Decrease in working capital (8.4) (3.4)
======================================== ======== ========
Provisions paid (1.8) (1.5)
======================================== ======== ========
Post-employment benefits paid (0.4) (0.4)
---------------------------------------- -------- --------
Cash generated by operations 1.1 5.2
======================================== ======== ========
Net interest paid (0.8) (0.9)
======================================== ======== ========
Corporation Tax paid (0.3) (0.9)
======================================== ======== ========
Net capital expenditure (4.2) (1.0)
---------------------------------------- -------- --------
Free cash flow (4.2) 2.4
======================================== ======== ========
Dividends paid - -
======================================== ======== ========
Other 0.1 0.4
---------------------------------------- -------- --------
Movement in net debt (4.1) 2.8
======================================== ======== ========
Opening net debt (10.2) (19.1)
---------------------------------------- -------- --------
Closing net debt (14.3) (16.3)
---------------------------------------- -------- --------
Gross capital expenditure was GBP4.6m (H1 FY13: GBP5.0m), with
the majority of this relating to the store refurbishment programme.
After allowing for proceeds from property disposals, net capital
expenditure was GBP4.2m (H1 FY13: GBP1.0m).
H1 FY14 H1 FY13
GBPm GBPm
------------------------------------ -------- --------
Capital expenditure (4.6) (5.0)
==================================== ======== ========
Proceeds from property disposals 0.4 4.0
------------------------------------ -------- --------
Net capital (expenditure)/receipts (4.2) (1.0)
------------------------------------ -------- --------
Current liquidity
Gross bank borrowings (excluding unamortised fees) at the
balance sheet date were GBP18.2m (H1 FY13: GBP21.4m) of which
GBP0.7m is term based, with the balance of GBP17.5m being drawn
down from overdraft facilities. The Group had further undrawn
facilities of GBP43.8m 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 the covenants on its existing borrowings.
Pensions
At 26 October 2013 the IAS 19 net retirement benefit deficit was
GBP4.7m (27 April 2013: GBP5.1m). The half year discount rate was
4.2% (27 April 2013: 4.2%), reflecting prevailing corporate bond
rates, this alongside the higher market value of plan assets and
additional company contributions led to a decrease of GBP0.4m in
the calculation of the net pension liability for accounting
purposes at 26 October 2013. 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 2012 and
this will be reviewed following the completion of the next
triennial valuation, which will be performed as at 5 April
2014.
Neil Page
Group Finance Director
9 December 2013
Condensed consolidated income statement
for 26 weeks ended 26 October 2013
26 weeks to 26 26 weeks to 27 52 weeks to 27
October 2013 October 2012 April 2013
(unaudited) (unaudited) restated (audited) restated
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
------------------- ----- ----------- ----------- ------- ----------- ----------- -------- ----------- ----------- ----------
Revenue 4 222.2 - 222.2 227.2 - 227.2 457.6 - 457.6
Cost of sales (84.1) - (84.1) (88.9) - (88.9) (179.3) - (179.3)
------------------- ----- ----------- ----------- ------- ----------- ----------- -------- ----------- ----------- ----------
Gross profit 138.1 - 138.1 138.3 - 138.3 278.3 - 278.3
Administration
expenses (134.1) - (134.1) (134.1) (11.2) (145.3) (269.2) (13.6) (282.8)
Other operating
income/(expenses) 0.1 (1.1) (1.0) 1.2 (1.2) - 2.3 (1.2) 1.1
------------------- ----- ----------- ----------- ------- ----------- ----------- -------- ----------- ----------- ----------
Operating
profit/(loss) 4 4.1 (1.1) 3.0 5.4 (12.4) (7.0) 11.4 (14.8) (3.4)
Finance costs(1) (1.1) - (1.1) (0.9) - (0.9) (1.7) - (1.7)
------------------- ----- ----------- ----------- ------- ----------- ----------- -------- ----------- ----------- ----------
Profit/(loss)
before
tax 3.0 (1.1) 1.9 4.5 (12.4) (7.9) 9.7 (14.8) (5.1)
Tax 6 (0.8) 0.8 - (1.9) 3.4 1.5 (3.2) 1.7 (1.5)
------------------- ----- ----------- ----------- ------- ----------- ----------- -------- ----------- ----------- ------
Profit/(loss) for
the
financial period
attributable
to owners of the
parent 2.2 (0.3) 1.9 2.6 (9.0) (6.4) 6.5 (13.1) (6.6)
------------------- ----- ----------- ----------- ------- ----------- ----------- -------- ----------- ----------- ------
Basic earnings
per
share (pence) 7 3.2 (0.4) 2.8 3.8 (13.3) (9.5) 9.6 (19.4) (9.8)
Diluted earnings
per
share (pence) 7 2.8 (9.5) (9.8)
------------------- ----- ----------- ----------- ------- ----------- ----------- -------- ----------- ----------- ------
1 Restated for adoption of IAS 19 (revised).
All material items in the income statement arise from continuing
operations.
Condensed consolidated statement of comprehensive income
for 26 weeks ended 26 October 2013
26 weeks 26 weeks 52 weeks
to to to
26 October 27 October 27 April
2013 2012 2013
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
-------------------------------------------------- ----- ------------ ------------ ----------
Profit/(loss) for the financial period 1.9 (6.4) (6.6)
Other comprehensive income/(loss)
Items that will not be reclassified to the
income statement
Remeasurements of defined benefit plans 11 0.1 (0.8) (1.6)
Tax on items that will not be reclassified
to the income statement 0.1 0.2 0.1
-------------------------------------------------- ----- ------------ ------------ ----------
Total items that will not be reclassified
to income statement 0.2 (0.6) (1.5)
-------------------------------------------------- ----- ------------ ------------ ----------
Items that may be reclassified subsequently
to the income statement
Exchange gain/(loss) in respect of hedged
equity investments 0.7 (1.0) 1.9
Tax on items may be reclassified subsequently
to the income statement - - -
-------------------------------------------------- ----- ------------ ------------ ----------
Total items that may be reclassified subsequently
to the income statement 0.7 (1.0) 1.9
-------------------------------------------------- ----- ------------ ------------ ----------
Other comprehensive income/(loss) for the
period 0.9 (1.6) 0.4
-------------------------------------------------- ----- ------------ ------------ ----------
Total comprehensive income/(loss) for the
period attributable to owners of the parent 2.8 (8.0) (6.2)
-------------------------------------------------- ----- ------------ ------------ ----------
The notes on pages 19 to 24 form an integral part of this
consolidated interim financial information.
Condensed consolidated statement of changes in equity
for 26 weeks ended 26 October 2013
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 27 April 2013 (audited) 0.7 16.6 (0.3) 0.1 7.0 - 41.2 65.3
--------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Total comprehensive income for
the financial period - - - - 0.7 - 2.1 2.8
--------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Issue of new shares - - - - - - - -
Share-based payments and related
tax - - - - - - (0.2) (0.2)
--------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
At 26 October 2013 (unaudited) 0.7 16.6 (0.3) 0.1 7.7 - 43.1 67.9
--------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
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 28 April 2012 (audited) 0.7 16.3 (0.3) 0.1 5.1 - 48.8 70.7
--------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Total comprehensive loss for
the financial period - - - - (1.0) - (7.0) (8.0)
--------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
Issue of new shares - 0.3 - - - - - 0.3
Share-based payments and related
tax - - - - - - 0.1 0.1
--------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
At 27 October 2012 (unaudited) 0.7 16.6 (0.3) 0.1 4.1 - 41.9 63.1
--------------------------------- -------- -------- -------- ----------- ----------- -------- --------- -----
The notes on pages 19 to 24 form an integral part of this
consolidated interim financial information.
Condensed consolidated balance sheet
as at 26 October 2013
26 October 27 October 27 April
2013 2012 2013
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
------------------------------------------- ----- ------------ ------------ ----------
Assets
Non-current assets
Intangible assets 9 60.2 60.4 60.8
Property, plant and equipment 9 107.9 108.5 108.6
Investment property 20.2 19.9 20.2
Deferred tax assets 2.6 2.5 2.6
Trade and other receivables 0.8 0.8 0.8
------------------------------------------- ----- ------------ ------------ ----------
191.7 192.1 193.0
------------------------------------------- ----- ------------ ------------ ----------
Current assets
Inventories 37.1 40.1 37.6
Trade and other receivables 27.8 27.5 19.8
Cash and cash equivalents 10 6.0 7.7 7.9
------------------------------------------- ----- ------------ ------------ ----------
70.9 75.3 65.3
------------------------------------------- ----- ------------ ------------ ----------
Total assets 262.6 267.4 258.3
------------------------------------------- ----- ------------ ------------ ----------
Liabilities
Current liabilities
Trade and other payables (105.3) (111.6) (102.9)
Obligations under finance leases 10 (0.1) (0.1) (0.1)
Borrowings and overdrafts 10 (11.7) (20.3) (12.2)
Current tax liabilities (1.7) (1.0) (0.3)
------------------------------------------- ----- ------------ ------------ ----------
(118.8) (133.0) (115.5)
------------------------------------------- ----- ------------ ------------ ----------
Non-current liabilities
Trade and other payables (31.2) (31.3) (31.6)
Obligations under finance leases 10 (2.4) (2.5) (2.5)
Borrowings 10 (6.1) (1.1) (3.3)
Provisions for liabilities and charges (9.5) (11.2) (11.1)
Deferred tax liabilities (22.0) (20.5) (23.9)
Retirement benefit obligations 11 (4.7) (4.7) (5.1)
------------------------------------------- ----- ------------ ------------ ----------
(75.9) (71.3) (77.5)
------------------------------------------- ----- ------------ ------------ ----------
Total liabilities (194.7) (204.3) (193.0)
------------------------------------------- ----- ------------ ------------ ----------
Net assets 67.9 63.1 65.3
------------------------------------------- ----- ------------ ------------ ----------
Equity
Share capital 0.7 0.7 0.7
Share premium 16.6 16.6 16.6
Treasury shares (0.3) (0.3) (0.3)
Other reserves 50.9 46.1 48.3
------------------------------------------- ----- ------------ ------------ ----------
Total equity attributable to owners of the
parent 67.9 63.1 65.3
------------------------------------------- ----- ------------ ------------ ----------
The notes on pages 19 to 24 form an integral part of this
consolidated interim financial information.
Condensed consolidated statement of cash flows
for 26 weeks ended 26 October 2013
26 weeks 26 weeks 52 weeks
to to to
26 October 27 October 27 April
2013 2012 2013
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
--------------------------------------------------- ---- ------------ ------------ ----------
Operating activities
Profit/(loss) before tax 1.9 (7.9) (5.1)
Adjusted for:
Depreciation and amortisation 6.8 7.0 14.1
Losses on property disposals 1.1 1.2 1.2
Exceptional non-cash items - 11.2 13.6
Other non-cash items 0.3 0.1 0.5
Net finance costs 1.1 0.9 1.7
--------------------------------------------------- ---- ------------ ------------ ----------
Operating cash flows before movements in working
capital 11.2 12.5 26.0
Increase/(decrease) in inventories 0.5 (2.0) 1.0
(Increase)/decrease in trade and other receivables (8.0) (3.9) 3.5
Increase/(decrease) in trade and other payables (0.8) 0.1 (9.7)
Provisions paid (1.8) (1.5) (3.4)
--------------------------------------------------- ---- ------------ ------------ ----------
Cash generated by operations 1.1 5.2 17.4
Interest paid (0.8) (0.9) (1.4)
Corporation taxes paid (0.3) (0.9) (1.4)
--------------------------------------------------- ---- ------------ ------------ ----------
Net cash flows from operating activities - 3.4 14.6
--------------------------------------------------- ---- ------------ ------------ ----------
Investing activities
Purchases of intangible assets (0.1) (0.4) (0.6)
Purchases of property, plant and equipment
and investment property (4.5) (4.6) (10.6)
Proceeds on disposal of property, plant and
equipment and investment property 0.4 4.0 4.6
--------------------------------------------------- ---- ------------ ------------ ----------
Net cash flows from investing activities (4.2) (1.0) (6.6)
--------------------------------------------------- ---- ------------ ------------ ----------
Financing activities
Issue of new shares - 0.3 0.3
New loans 3.5 - -
Repayment of borrowings 10 (0.8) (8.6) (13.9)
--------------------------------------------------- ---- ------------ ------------ ----------
Net cash flows from financing activities 2.7 (8.3) (13.6)
--------------------------------------------------- ---- ------------ ------------ ----------
Net decrease in cash and cash equivalents
in the period 10 (1.5) (5.9) (5.6)
Cash and cash equivalents at the beginning
of the period (4.1) 1.5 1.5
Exchange differences 0.1 (0.2) -
--------------------------------------------------- ---- ------------ ------------ ----------
Cash and cash equivalents at the end of the
period 10 (5.5) (4.6) (4.1)
--------------------------------------------------- ---- ------------ ------------ ----------
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 19 to 24 form an integral part of this
consolidated interim financial information.
Notes to the financial statements
1. General information
This condensed consolidated half-yearly information was approved
for issue on 9 December 2013.
This interim report does not comprise statutory financial
statements 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 financial statements for the year ended 27
April 2013 were approved by the Board of Directors on 24 June 2013
and delivered to the Registrar of Companies. The report of the
auditors on those financial statements 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 26 October
2013 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct 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 27 April 2013, which have been
prepared in accordance with IFRSs as adopted by the European
Union.
The Directors, after reviewing the Group's operating budgets,
forecasts and financing arrangement, consider that the Group has,
at the date of this report, sufficient financing available for the
estimated requirements for the foreseeable future. Accordingly, the
Directors are satisfied that it is appropriate for these financial
statements to be prepared on a going concern basis.
Financial assets and liabilities and foreign operations are
translated at the following rates of exchange:
26 weeks 26 weeks 52 weeks
to to to
26 October 27 October 27 April
2013 2012 2013
GBPm GBPm GBPm
------------ ----------- ----------- ---------
Euro
Average 1.17 1.25 1.23
Closing 1.17 1.25 1.19
Zloty
Average 4.95 5.26 5.12
Closing 4.92 5.12 4.93
------------ ----------- ----------- ---------
3. Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the 52 weeks ended 27 April 2013,
as described in those annual financial statements except where set
out below:
IAS 1 (amendment) 'Presentation of financial statements', the
amendment requires items presented in the statement of other
comprehensive income to be grouped into those items that may be
reclassified subsequently to the income statement and those items
that will not be reclassified. In accordance with the standard the
amendments have been applied retrospectively and the presentation
of the statement of other comprehensive income has been
adjusted.
IAS 19 (revised) 'Employee benefits', amends the accounting for
employment benefits. The Group has applied the standard
retrospectively in accordance with the transition provisions of the
standard. The impact on the group has been:
-- The standard replaces the interest costs on the defined
benefit obligation and the expected return on plan assets with a
net interest cost based on the net defined benefit liability and
the discount rate measured at the beginning of the year. In the
period there is a charge of GBP0.1m to the income statement.
-- There is a new term "remeasurements". This is made up of
actuarial gains and losses and the difference between actual
investment returns and the return implied by the net interest
costs.
-- The impact of IAS 19 (revised) is immaterial and has not
required a restatement of reserves or the plan deficit.
IFRS 13 'Fair value measurement'. The Group has included the
disclosures required by the standard. The application of the
standard has not had a material impact.
Taxes on income for interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
There are no new standards, amendments to existing standards or
interpretations that are effective for the first time in the
financial year beginning on 28 April 2013 that would be expected to
have a material impact on the Group's result.
New standards and amendments to standards which are mandatory
after 27 April 2013 are currently expected to be not relevant or
not material for the Group.
4. Segmental analysis
The operating segments have been determined based on reports
reviewed by the Board that are used to make strategic
decisions.
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 segment. 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 26 October 2013 is as follows:
26 weeks to 26 October 26 weeks to 27 October
2013 2012 (restated)
UK Europe Group UK Europe Group
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- -------- ------- ------- -------- ------- -------
Gross revenue 187.1 37.2 224.3 191.4 38.1 229.5
Inter-segment revenue (2.1) - (2.1) (2.3) - (2.3)
--------------------------------- -------- ------- ------- -------- ------- -------
Revenues from external customers 185.0 37.2 222.2 189.1 38.1 227.2
--------------------------------- -------- ------- ------- -------- ------- -------
Gross profit 116.6 21.5 138.1 116.6 21.7 138.3
--------------------------------- -------- ------- ------- -------- ------- -------
Underlying operating profit 5.5 (1.4) 4.1 5.2 0.2 5.4
Exceptional items (1.1) - (1.1) (12.3) (0.1) (12.4)
--------------------------------- -------- ------- ------- -------- ------- -------
Operating profit/(loss) 4.4 (1.4) 3.0 (7.1) 0.1 (7.0)
Intercompany interest (0.1) 0.1 - (0.1) 0.1 -
Finance costs(1) (1.0) (0.1) (1.1) (0.9) - (0.9)
--------------------------------- -------- ------- ------- -------- ------- -------
Profit/(loss) before tax 3.3 (1.4) 1.9 (8.1) 0.2 (7.9)
Tax (0.1) 0.1 - 1.6 (0.1) 1.5
--------------------------------- -------- ------- ------- -------- ------- -------
Profit/(loss) for the financial
period 3.2 (1.3) 1.9 (6.5) 0.1 (6.4)
--------------------------------- -------- ------- ------- -------- ------- -------
Segment assets:
Segment assets 206.7 99.9 306.6 213.8 96.7 310.5
Inter-segment balances (23.7) (20.3) (44.0) (22.5) (20.6) (43.1)
--------------------------------- -------- ------- ------- -------- ------- -------
Balance sheet total assets 183.0 79.6 262.6 191.3 76.1 267.4
--------------------------------- -------- ------- ------- -------- ------- -------
Segment liabilities:
Segment liabilities (191.6) (47.1) (238.7) (200.9) (46.5) (247.4)
Inter-segment balances 20.3 23.7 44.0 20.6 22.5 43.1
--------------------------------- -------- ------- ------- -------- ------- -------
Balance sheet total liabilities (171.3) (23.4) (194.7) (180.3) (24.0) (204.3)
--------------------------------- -------- ------- ------- -------- ------- -------
Other segmental items:
Depreciation and amortisation 5.6 1.2 6.8 5.9 1.1 7.0
Additions to non-current assets 4.8 0.7 5.5 3.5 0.7 4.2
--------------------------------- -------- ------- ------- -------- ------- -------
1 Restated for adoption of IAS 19 (revised).
Carpetright plc is domiciled in the UK. The Group's revenue from
external customers in the UK is GBP185.0m (H1 FY13: GBP189.1m) and
the total revenue from external customers from other countries is
GBP37.2m (H1 FY13: GBP38.1m). The total of non-current assets
(other than financial instruments and deferred tax assets) located
in the UK is GBP152.1m (H1 FY13: GBP153.7m) and the total of those
located in other countries is GBP81.1m (H1 FY13: GBP79.0m).
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.
5. Exceptional items
26 weeks 26 weeks 52 weeks
to to to
26 October 27 October 27 April
2013 2012 2013
GBPm GBPm GBPm
-------------------------------------------- ----------- ----------- ---------
Loss on property disposals (1.1) (1.2) (1.2)
Impairment of property, plant and equipment - (4.7) (5.5)
Onerous lease provision - (6.5) (8.1)
-------------------------------------------- ----------- ----------- ---------
Exceptional items before tax (1.1) (12.4) (14.8)
-------------------------------------------- ----------- ----------- ---------
The onerous lease provision relates to 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.
In accordance with IAS 36 assets are reviewed for impairment
whenever changes in circumstances indicate that the carrying value
may not be recoverable. No impairments recognised in the 26 weeks
to 26 October 2013 (H1 FY13 an impairment provision of GBP4.3m was
recognised on certain freehold properties belonging to the Group,
and GBP0.4m for other store related assets).
26 weeks 26 weeks 52 weeks
to to to
26 October 27 October 27 April
2013 2012 2013
GBPm GBPm GBPm
-------------------------------------------------- ----------- ----------- ---------
Included within administration expenses
Impairment of property, plant and equipment - (4.7) (5.5)
Onerous lease provision - (6.5) (8.1)
-------------------------------------------------- ----------- ----------- ---------
- (11.2) (13.6)
-------------------------------------------------- ----------- ----------- ---------
Included within other operating income/(expenses)
Loss on property disposals
UK and Europe (1.1) (1.2) (1.2)
-------------------------------------------------- ----------- ----------- ---------
(1.1) (1.2) (1.2)
-------------------------------------------------- ----------- ----------- ---------
Exceptional items before tax (1.1) (12.4) (14.8)
Tax on exceptional items 0.1 2.6 1.7
Exceptional tax benefit from tax rate change 0.7 0.8 -
-------------------------------------------------- ----------- ----------- ---------
Exceptional items after tax (0.3) (9.0) (13.1)
-------------------------------------------------- ----------- ----------- ---------
6. Tax
The Finance Act 2012 included legislation to reduce the main
rate of corporation tax from 26% to 24% from 1 April 2012 and to
23% from April 2013. The December 2012 budget statement announced
that the main corporation tax rate would be reduced to 21% from 1
April 2014 and then 20% from 1 April 2015. These rate reductions
were substantively enacted in July 2013 and have therefore be
reflected in the interim consolidated financial statements.
The tax charge is recognised based on management's best estimate
of the full year weighted average annual tax rate based on the
estimated full year profits. The estimated average annual tax rate
for the year to 26 April 2014 is 0.5% (Actual rate 2013: 29.3%).
The decrease on last year is mainly due to the reduction in the
main rate of corporation tax and its impact on deferred tax
balances. The reduction on the main tax rate has resulted in a
deferred tax credit of GBP2.7m in the financial year to 26 April
2014.
7. 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 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
26 October 2013 27 October 2012 27 April 2013
------------------- ------------------------------- ------------------------------- -------------------------------
Weighted Weighted Weighted
average Earnings/ average Earnings/ Average Earnings/
number (loss) number (loss) number (loss)
Earnings/ of per Earnings/ of per Earnings/ of per
(loss) shares share (loss) shares share (loss) shares share
GBPm Millions Pence GBPm Millions Pence GBPm Millions Pence
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Basic earnings per
share 1.9 67.6 2.8 (6.4) 67.5 (9.5) (6.6) 67.5 (9.8)
Effect of dilutive
share
options - 0.3 - - 0.3 - - 0.3 -
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Diluted earnings
per share 1.9 67.9 2.8 (6.4) 67.8 (9.5) (6.6) 67.8 (9.8)
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
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
26 October 2013 27 October 2012 27 April 2013
---------------- -------------------------------- -------------------------------- --------------------------------
Weighted Earnings/ Weighted Earnings/ Weighted Earnings/
average (loss) average (loss) average (loss)
Earnings/ number per Earnings/ number per Earnings/ number per
(loss) of shares share (loss) of shares share (loss) of shares share
GBPm Millions Pence GBPm Millions Pence GBPm Millions Pence
---------------- --------- ---------- --------- --------- ---------- --------- --------- ---------- ---------
Basic earnings
per share 1.9 67.6 2.8 (6.4) 67.5 (9.5) (6.6) 67.5 (9.8)
Adjusted for the
effect
of exceptional
items:
Exceptional
items 1.1 1.6 12.4 18.4 14.8 21.9
Tax thereon (0.1) (0.1) (2.6) (3.9) (0.9) (1.3)
Exceptional
tax benefit
from tax rate
change (0.7) (1.1) (0.8) (1.2) (0.8) (1.2)
---------------- --------- ---------- --------- --------- ---------- --------- --------- ---------- ---------
Underlying
earnings per
share 2.2 67.6 3.2 2.6 67.5 3.8 6.5 67.5 9.6
---------------- --------- ---------- --------- --------- ---------- --------- --------- ---------- ---------
8. Dividends
No dividends were paid or proposed in the 26 weeks to 26 October
2013 or in the 26 weeks to 27 October 2012.
9. Capital commitment
During the period, additions were GBP0.1m (H1 FY13: GBP0.3m) on
intangible assets and GBP5.4m (H1 FY13: GBP3.9m) on the acquisition
and fit out of stores. Net proceeds from the sale of freehold
property interests during the period were GBP0.4m (H1 FY13:
GBP4.0m).
Capital commitments contracted but not provided for at the end
of the period are GBP2.1m (H1 FY13: GBP1.5m) principally for store
fit outs.
10. Movement in cash and net debt
27 April 26 October
2013 2013
------------------------------------------- -------- ----- ------------ ------------ ----------
Cash Exchange
Total flow differences Revaluation Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------------- -------- ----- ------------ ------------ ----------
Cash and cash equivalents in the balance
sheet 7.9 6.0
Bank overdrafts (12.0) (11.5)
-------- ----------
Cash and cash equivalents in the cash
flow statement (4.1) (1.5) 0.1 (5.5)
Borrowings
-------- ----------
Current borrowings (0.2) (0.2)
Non-current borrowings (3.3) (6.1)
-------- ----------
(3.5) (2.7) (0.1) (6.3)
Obligations under finance leases
-------- ----------
Current obligations under finance leases (0.1) (0.1)
Non-current obligations under finance
leases (2.5) (2.4)
-------- ----------
(2.6) 0.1 (2.5)
Net debt (10.2) (4.2) - 0.1 (14.3)
------------------------------------------- -------- ----- ------------ ------------ ----------
28 April 27 October
2012 2012
------------------------------------------- -------- ------ ------------ ------------ ----------
Cash Exchange
Total flow differences Revaluation Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------------- -------- ------ ------------ ------------ ----------
Cash and cash equivalents in the balance
sheet 9.6 7.7
Bank overdrafts (8.1) (12.3)
-------- ----------
Cash and cash equivalents in the cash
flow statement 1.5 (5.9) (0.2) (4.6)
Borrowings
-------- ----------
Current borrowings (1.4) (8.0)
Non-current borrowings (16.5) (1.1)
-------- ----------
(17.9) 8.6 0.2 (9.1)
Obligations under finance leases
-------- ----------
Current obligations under finance leases (0.1) (0.1)
Non-current obligations under finance
leases (2.6) (2.5)
-------- ----------
(2.7) 0.1 (2.6)
Net debt (19.1) 2.7 - 0.1 (16.3)
------------------------------------------- -------- ------ ------------ ------------ ----------
11. Retirement benefit obligation
26 weeks 26 weeks 52 weeks
to to to
26 October 27 October 27 April
2013 2012 2013
GBPm GBPm GBPm
-------------------------------------------- ----------- ----------- ---------
Deficit in scheme at beginning of period (5.1) (4.3) (4.3)
Net interest expense (0.1) - -
Employer contributions 0.4 0.4 0.8
Actuarial gains/(losses) 0.1 (0.8) (1.6)
-------------------------------------------- ----------- ----------- ---------
Deficit in scheme at end of period (4.7) (4.7) (5.1)
-------------------------------------------- ----------- ----------- ---------
Fair value of pension scheme assets 22.7 19.6 21.7
Present value of pension scheme obligations (27.4) (24.3) (26.8)
-------------------------------------------- ----------- ----------- ---------
Retirement benefit obligations (4.7) (4.7) (5.1)
-------------------------------------------- ----------- ----------- ---------
The key assumptions used, determined in conjunction with
independent qualified actuaries, are:
26 weeks 26 weeks 52 weeks
to to to
26 October 27 October 27 April
2013 2012 2013
% % %
--------------------------------- ----------- ----------- ---------
RPI inflation 3.5 2.2 3.4
Discount rate 4.2 4.0 4.2
Expected return on scheme assets N/A 4.7 4.4
--------------------------------- ----------- ----------- ---------
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 GBP0.4m.
12. Financial instruments
The condensed interim financial statements do not include all
the financial risks management information and disclosures required
in the annual financial statements, this should be read in
conjunction with the Group's annual financial statements as at 27
April 2013. There have been no changes in the risk management since
the year end.
The Group has no financial assets or liabilities that are
measured at fair value.
Borrowings are measured at amortised costs, and the Directors'
are of the opinion that the carrying value of the borrowings
approximate to their fair value. The carrying amount of all other
financial assets and liabilities approximate their fair value.
13. 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 and/or M J 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
to 26 26 weeks to 26 26 weeks to 26 26 weeks
October to 27 October October to 27 October October to 27 October
2013 2012 2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------------- --------- --------------- --------- ---------------
Edinburgh Retail LLP 150 137 - - - -
Greenock Retail LLP 127 135 - - - -
Harris Ventures Ltd 31 31 3 2 - -
Hull Unit Trust 193 193 - - - -
--------------------- -------- -------------- --------- --------------- --------- ---------------
As at 26 October 2013 the Group owed related parties GBPnil (H1
FY13: GBPnil).
Principal risks and uncertainties
The Board has considered the principal risks and uncertainties
for the remaining six months of the financial year and determined
that the risks presented on pages 15 -16 of the 2013 Annual Report,
described below, remain for the rest of the financial year:
Development and execution of a strategy
Economic uncertainty
Cost control
Reputation
People
Product and service quality
Compliance
Finance and treasury
These are detailed on pages 15 and 16 of the 2013 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 the Group's
corporate website www.carpetright.plc.uk.
By order of the Board
Neil Page
Group Finance Director
9 December 2013
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 week period ended 26 October 2013, which comprises the Condensed
consolidated income statement, Condensed consolidated statement of
comprehensive income, Condensed consolidated statement of changes
in equity, Condensed consolidated balance sheet, Condensed
consolidated statements of cash flows and the 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 Conduct 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
Conduct 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 26 week period ended 26
October 2013 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 Conduct Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
9 December 2013
1 Embankment Place, London, WC2N 6RH
Notes:
a. 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.
b. 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
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