TIDMUCG
RNS Number : 8087T
United Carpets Group plc
23 July 2015
UNITED CARPETS GROUP plc
Unaudited Preliminary Results for the year ended 31 March
2015
United Carpets Group plc ("the Group" or "the Company" or
"United Carpets"), the second largest chain of specialist retail
carpet and floor covering stores in the UK, today announces its
preliminary results for the year ended 31 March 2015.
Highlights
-- Network sales* were GBP54.2m (31 March 2014: GBP55.7m)
-- Like for like sales* increased by 2.7%
-- Revenue for the year was GBP19.1m (31 March 2014: GBP21.1m)
-- Profit before tax was GBP1.21m (31 March 2014: GBP0.94m)
-- Earnings per share were 1.36p (31 March 2014: 1.39p)
-- Store numbers increased by 2 to 61
-- Cash and cash equivalents increased to GBP2.61m (31 March 2014: GBP1.68m)
-- Special dividend of 1.0p per share paid on 19 June 2015 and
recommending a final dividend of 0.25p per share payable 16 October
2015
*Network sales and like for like sales are defined under
Financial Review
Paul Eyre, Chief Executive, said:
"It is very pleasing to report improving results demonstrating
the success of the changes we have made and showing that we have
created a new base for delivering sustainable growth and returns
over the longer-term.
Our like for like sales performance showed a creditable
increase, up 2.7%, contributing to an increase in profit before tax
of 29%. This, together with a strengthened balance sheet and no
material borrowings means the Group is well placed for the future.
This is reflected in our decision to re-introduce a final dividend
for the year as part of our intention to pay a progressive dividend
in line with the future growth of the business."
Enquiries:
United Carpets Group plc
Paul Eyre, Chief Executive
Ian Bowness, Finance Director
01709 732 666
Novella Communications Ltd
Tim Robertson
Ben Heath 020 3151 7008
Cantor Fitzgerald Europe
Catherine Leftley, David Foreman, Michael Reynolds (Corporate
Finance)
David Banks, Tessa Sillars (Corporate Broking) 020 7894 7000
Chairman's statement
Trading during the financial year ended 31 March 2015 has been
positive, benefitting from an improving consumer environment and
the restructuring undertaken in 2012 which has created a more
stable platform from which the Group can develop. I am therefore
pleased to report that the Group recorded a 29% increase in profit
before tax to GBP1.21m, with like for like sales up 2.7% for the
year.
At 31 March 2015, the network of stores totalled 61 (2014: 59),
of which 47 are franchised (2014: 48) and 14 are operated as
corporate stores (2014: 11).
We believe that confidence amongst our target markets has
improved. Activity across the housing market appears to be
generally increasing which is an important indicator for our sector
and this, together with a more stable political environment for the
U.K. than many expected, bodes well for the coming year. While
these factors are positive, we remain cautious given the continuing
uncertainty within the European economy and the expectation that at
some point interest rates will rise again which may well impact on
consumer spending.
Financial review
Network sales across the Group, including the value of retail
sales by our franchisees (to give a measure of the Group's turnover
on a more comparable basis to a conventional retailer), were
GBP54.2m (2014: GBP55.7m). Revenue, which as in previous years
includes marketing and rental costs incurred by the Group and
recharged to franchisees, was GBP19.1m (2014: GBP21.1m).
Like for like sales across the whole of the network (based on
stores that have traded throughout both the period under review and
the corresponding period in the prior year and thus excluding
stores that closed during either period) were up 2.7%. The
combination of a strengthening market and an improving contribution
from Bed sales made this a satisfying result. The reduction in
network sales and revenue in comparison to the prior year
principally reflects the change in the Beds sales process, giving
more ownership of Beds sales to franchisees, and a reduction in the
number of third parties serviced by the warehouse.
Gross margin was 66.8% compared to 61.7% in the prior year
primarily reflecting the change in the mix of revenue between
Franchising and Retail and Warehousing.
Distribution costs and administrative expenses, which include
rent, rates and staff costs at the corporate stores, reduced by
GBP0.5m due to savings in the ongoing cost of supporting the
franchise network as a result of improving performance.
Distribution costs and administrative expenses excluding
exceptional items increased from 58.1% of revenue to 61.1%
principally reflecting the reduction in Warehousing revenue.
Profit before tax was GBP1.21m (2014: GBP0.94m) and earnings per
share was 1.36p (2014: 1.39p). During the prior year, earnings per
share benefitted from a deferred tax asset arising in connection
with the acquisition of the trade from United Carpets (Northern)
Limited in October 2012.
The balance sheet included net funds of GBP2.53m at 31 March
2015 (31 March 2014: GBP1.68m).
Dividend
In May 2015, the Board announced, in recognition of the support
shown by shareholders and the improved financial position of the
Company, a special dividend of 1.0p per share which was paid on 19
June 2015.
As part of the Board's intention to pay a progressive dividend
in line with the future growth of the business, the Board is
pleased to be recommending a final dividend of 0.25p per share.
Subject to approval at the Annual General Meeting, this dividend
will be paid on 16 October 2015 to all shareholders on the register
at the close of business on 2 October 2015. The ex-dividend date
will be on 1 October 2015.
Operations review
Our store network has remained largely unchanged. At the start
of the period under review the Group operated 59 stores of which 48
were franchised and 11 were corporate stores. At 31 March 2015,
there were 61 stores of which 47 were franchised and 14 were
corporate stores. Since then, a new franchised store has opened, a
franchised store has relocated to new premises, a corporate store
is in the process of relocating, one franchised store has been
taken back as a corporate store and one corporate store has been
franchised, so that today the Group operates 63 stores.
While the majority of stores are showing encouraging signs for
the future, there remains a handful of stores which are
underperforming. We are evaluating ways to address this, which may
include a small number of further store closures. At the same time
we are employing a small and highly selective store opening policy
including the opening of our smaller format store concept which,
while still in its infancy, is showing some promising signs.
We continue to advertise the United Carpets brand across a range
of outlets from TV to radio, focusing on the Group's key points of
differentiation in terms of delivering great products and great
value for money.
Franchising and Retail
Floor coverings are the Group's primary driver of sales
(predominantly carpet, laminate and vinyl flooring) through both
franchised stores and the Group's own corporate stores. As shown by
the like for like sales performance up 2.7% this was a good retail
performance especially when compared with the overall trading
performance of the last few years. The main driver for change has
been an improving consumer market with confidence gently coming
back into the market.
Alongside this, we believe the introduction last year of the new
Beds sales process which we aligned with the sale of Flooring
thereby improving the potential return to franchisees, has helped
increase sales. Those changes combined with further improvements to
the Beds ranges and presentation during the year have meant that,
while still only a small proportion of overall sales, volumes have
increased significantly.
Warehousing
Our in-house cutting operation continues to support the whole
network and a small number of third parties, providing a quick,
efficient cutting and delivery service enabling attractive retail
price points with good margins. The reduction in sales in the year
compared to the prior year reflects a reduction in the number of
third parties serviced by the warehouse as the demands of our
network have grown.
Property
The property division leases properties from third parties and
sublets those properties to the store network.
People
The Board would like to emphasise its gratitude to all
franchisees, suppliers, employees and other stakeholders connected
to the Group for their continued and ongoing support and looks
forward to working closely together during the current financial
year.
Outlook
Like for like sales for the 15 weeks since the period end to 16
July 2015 have continued the positive trend.
United Carpets is well positioned for the future. Demand for the
Group's products has been consistent and the store network is
becoming increasingly well balanced. The balance sheet is
strengthened, there are no borrowings other than a small number of
immaterial finance leases and the marketplace is improving. Just as
importantly, the management team are also now able to focus on
developing the business and implement changes such as the new sales
process for Beds, introduction of the smaller store format and
interest free credit all of which are contributing to an improving
performance. While there are still ongoing challenges which will no
doubt impact the business, the Board is confident that the Group is
once again well positioned and looks forward to delivering
sustainable growth and returns for shareholders.
Peter Cowgill
Chairman
Preliminary announcement of results for the year ended 31 March
2015
Consolidated statement of comprehensive income
Year Year
ended ended
31 March 31 March
Note 2015 2014
GBP'000 GBP'000
Revenue 3 19,141 21,059
Cost of sales (6,346) (8,073)
Gross profit 12,795 12,986
Distribution costs (334) (546)
Administrative expenses (11,352) (11,634)
Other operating income 98 128
Operating profit 2 1,207 934
Financial income 7 13
Financial expenses (3) (10)
Profit before tax 1,211 937
Income tax (expense)/ credit 4 (104) 195
Profit for the year* 1,107 1,132
Earnings per share 5
- Basic (pence per share) 1.36p 1.39p
- Diluted (pence per share) 1.36p 1.39p
*All activities relate to continuing operations and are
attributable to the owners of the parent. There were no items of
other comprehensive income and therefore no separate statement of
other comprehensive income has been presented.
Preliminary announcement of results for the year ended 31 March
2015
Consolidated statement of financial position
At 31
At 31 March March
2015 2014
GBP'000 GBP'000
Non-current assets
Property, plant and
equipment 1,122 567
Deferred tax assets 231 396
1,353 963
Current assets
Inventories 1,374 1,100
Trade and other receivables 2,363 2,628
Current tax debtor 123 -
Cash and cash equivalents 2,610 1,678
6,470 5,406
Total assets 7,823 6,369
Capital and reserves
Issued capital 814 4,070
Share premium - 1,106
Retained earnings* 3,251 (2,218)
Total equity attributable
to owners of the parent 4,065 2,958
Non-current liabilities
Borrowings - finance
leases 44 -
Trade and other payables 394 476
Provisions 144 -
582 476
Current liabilities
Borrowings - finance
leases 38 -
Trade and other payables 3,034 2,799
Provisions 104 -
Current tax liabilities - 136
3,176 2,935
Total liabilities 3,758 3,411
Total equity and liabilities 7,823 6,369
* See consolidated statement of changes in equity for details of
presentational changes in the year.
Preliminary announcement of results for the year ended 31 March
2015
Consolidated statement of changes in equity
Total equity
attributable
Issued Retained to owners of
capital Share premium earnings the parent
GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2013 4,070 1,106 (3,350) 1,826
Profit for the year - - 1,132 1,132
At 31 March 2014 4,070 1,106 (2,218) 2,958
Profit for the year - - 1,107 1,107
Capital restructuring (3,256) (1,106) 4,362 -
At 31 March 2015 814 - 3,251 4,065
Following approval by shareholders on 20 August 2014 and by the
High Court on 17 September 2014, the nominal value of the Company's
issued share capital was reduced from 5 pence to 1 pence each and
the share premium reserve was cancelled.
The share-based payment reserve of GBP598,000, previously shown
separately, has been combined with retained earnings for
presentational purposes.
Preliminary announcement of results for the year ended 31 March
2015
Consolidated statement of cash flows
Year
ended Year ended
31 March 31 March
Note 2015 2014
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 7 1,720 1,338
Interest paid (3) (10)
Income tax paid (198) (212)
Net cash flows from operating activities 1,519 1,116
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 23 2
Acquisition of property, plant and equipment (562) (362)
Interest received 7 13
Net cash flows from investing activities (532) (347)
Cash flows from financing activities
Payment of finance lease liabilities (55) -
Net cash flows from financing activities (55) -
Increase in cash and cash equivalents
in the year 932 769
Cash and cash equivalents at the start
of the year 1,678 909
Cash and cash equivalents at the end
of the year 2,610 1,678
Preliminary announcement of results for the year ended 31 March
2015
Notes to the preliminary announcement
1. Basis of preparation
The financial information contained in this unaudited
preliminary announcement does not constitute accounts as defined by
section 434 of the Companies Act 2006. The financial information
for the year ended 31 March 2014 is derived from the statutory
accounts for that period which have been delivered to the Registrar
of Companies. The auditors reported on those accounts; their report
was unqualified and did not contain a statement under either
section 498(2) or section 498(3) of the Companies Act 2006. The
statutory accounts for the year ended 31 March 2015 will be
finalised based on the information in this unaudited preliminary
announcement and will be delivered to the Registrar of Companies in
due course. The Group has prepared its consolidated financial
statements for the year ended 31 March 2015 in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. The accounting policies applied are consistent
with those included in the financial statements of the Group for
the year ended 31 March 2014.
2. Operating profit
Operating profit is arrived at after charging/(crediting):
Year ended Year ended
31 March 31 March
2015 2014
GBP'000 GBP'000
Costs of reducing the number of operational
stores - 117
Net gains arising in the current period
relating to the Group reorganisation - (73)
Other exceptional income - (97)
============= ===========
During the year ended 31 March 2015, no items charged/(credited)
to operating profit were considered to require separate disclosure
as exceptional items either as a result of their nature or size.
Other exceptional income in the prior year was compensation
received as a result of the compulsory purchase of one of the
properties operated by the Group.
3. Segment reporting
Segment information is presented in respect of the Group's
business segments, which are the primary basis of segment
reporting. The business segment reporting format reflects the
Group's management and internal reporting structure.
Inter-segment pricing is determined on an arm's length
basis.
Segment results include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis.
Franchising Warehousing Property Consolidated
and Retail
Year Year
ended ended
31 March 31 March
2015 2014 2015 2014 2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 11,644 10,397 5,266 8,250 2,231 2,412 19,141 21,059
____ ____ ____ ____ ____ ____ ____ ____
724 593 174 (3) 135 164
Segment results ____ ____ ____ ____ ____ ____ 1,033 754
Unallocated
income 76 52
Other operating 98 128
income ____ ____
Operating profit 1,207 934
Financial income 7 13
Financial expenses (3) (10)
Income tax (expense)/ (104) 195
credit ____ ____
Profit for the 1,107 1,132
year _____ _____
4. Income tax expense/(credit)
Analysis of charge for the year:
Year ended Year ended
31 March 31 March
2015 2014
GBP'000 GBP'000
Current tax:
Current year 120 131
Prior periods (181) 43
----------- -----------
(61) 174
Deferred tax:
Current year 131 118
Prior periods 34 (487)
----------- -----------
Total income tax expense/(credit)recognised
in the current year 104 (195)
=========== ===========
The tax charge for the year differs to the standard rate of
corporation tax in the UK of 21% (2014: 23%). The differences are
explained below:
Year Year
ended ended
31 March 31 March
2015 2014
GBP'000 GBP'000
Profit before tax 1,211 937
Profit before tax multiplied by the rate
of corporation tax in the UK of 21% (2014:
23%) 254 216
Effect of:
Expenses not deductible for tax purposes 10 12
Change in tax rate - 21
Timing differences (13) -
Prior period adjustments (147) (444)
Total tax 104 (195)
================ ===========
The acquisition of the trade from a connected company (United
Carpets (Northern) Ltd) gave rise to a deferred tax asset in United
Carpets (Franchisor) Ltd. The prior period adjustments in the
comparative year principally reflects an estimate of that deferred
tax asset following the submission of tax computations for the
period to 5 October 2012 by UNCN Realisations 2012 Ltd (formerly
United Carpets (Northern) Ltd).
5. Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the year ended
31 March 2015 was based on the profit attributable to ordinary
shareholders of GBP1,107,000 (2014: GBP1,132,000) and a weighted
average number of ordinary shares outstanding during the year ended
31 March 2015 of 81,400,000 (2014: 81,400,000).
Diluted earnings per share
Diluted earnings per share for the years ended 31 March 2015 and
31 March 2014 was the same as basic earnings per share as the share
options in issue were non-dilutive in either year.
6. Dividends
A special dividend of 1.0 pence per share was paid on 19 June
2015.
A final dividend of 0.25 pence per share in respect of the year
ended 31 March 2015 has been recommended.
7. Cash generated from operations
Year ended Year ended
31 March 31 March
2015 2014
GBP'000 GBP'000
Profit before tax 1,211 937
Depreciation of property, plant and equipment 138 70
(Profit)/loss on disposal of property, plant
and equipment (17) 71
(Increase)/decrease in inventories (274) 326
Decrease/(increase) in trade and other receivables 265 (53)
Increase/(decrease) in trade and other payables 153 (10)
Increase in provisions 248 -
Financial income (7) (13)
Financial expenses 3 10
------------ -----------
Cash generated from operations 1,720 1,338
8. Contingencies
There have been no material changes to the assessment of any
potential liability arising in connection with Employee Benefit
Trusts since the financial statements for the year ended 31 March
2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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