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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Poundland | LSE:PLND | London | Ordinary Share | GB00BJ34VB96 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 225.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMPLND
RNS Number : 4963Q
Poundland Group PLC
18 June 2015
18 June 2015
Full Year Results for the year ended 29 March 2015
Very Good First Year as a PLC
Financial Highlights
Underlying Results
Hot Features
Premium
-- Sales +11.8% on a constant currency basis;
breaking GBP1 billion for the first time
-- Sales +11.4% to GBP1,111.5 million on an actual
currency basis (2014: GBP997.8 million),
-- Like-for-like sales +2.4% (2014: +1.9%) on
a constant currency basis
-- Underlying EBITDA +9.9% to GBP59.4 million
(2014: GBP54.0 million)
-- Underlying pre-tax profits +18.6 % to GBP43.7
million (2014: GBP36.8 million)
-- Underlying diluted EPS +24.4 % to 13.6p (2014:
10.9p)
Statutory Results*
-- Total sales +11.9% to GBP1,117.0 million (2014:
GBP997.8 million)
-- Pre-tax profits +68.3% to GBP36.2 million
(2014: GBP21.5 million)*
-- Diluted EPS +104.7% to 11.3p (2014: 5.5p)
-- Net cash of GBP13.9 million (2014: net debt
of GBP4.7 million)
-- Final dividend proposed of 3.0p per share
(2014: nil), giving total dividend payment
for the year of 4.5p per share (2014: nil)
Operational Highlights
-- 60 net new stores, growing the estate in UK
& Ireland to 588 stores (2014: 528)
-- Retail Park stores now total 87 in the UK
& Ireland (2014: 60)
-- Strong FY2016 UK and Ireland store opening
pipeline; at least 60 net new stores planned
for next financial year
-- First Dealz store opened in Spain on a trial
basis; five opened at the end of the financial
year; on track to open 10 stores
-- New 350,000 sq.ft. warehouse operational in
Harlow in September
-- 5.3 million customers served a week, including
nearly 300,000 in Ireland
Strategic Highlights
-- Our proposed acquisition of 99p Stores Ltd
("99p Stores") has moved to Phase 2 of the
CMA review with a decision expected in October
Trading update for the 11 weeks ended 14 June 2015
-- Sales for the 11 weeks ended 14 June 2015
were ahead by 4.1% on a constant currency
basis.
-- On an actual basis, sales increased by 3.5%
to GBP228.9 million (2014: GBP221.3 million)
-- This performance reflects last year's excellent
Q1 trade, when sales were ahead by 18.0%,
reflecting the benefits of a later Easter,
good weather and the loom band craze
-- We opened a net 6 stores during the period,
but expect to open at least a net 40 by the
end of the first half
-- This leaves us very well-placed for the important
Halloween and Christmas trading period
* after non-underlying items
Darren Shapland, Chairman of Poundland, said:
"This has been a year of good progress for Poundland and one where we have delivered on our IPO promises and laid the foundations for future growth. Our store opening programme for the 2016 financial year is strong and I look forward to the future with confidence as we take the Poundland and Dealz offer to even more customers in the UK and abroad."
Jim McCarthy, Chief Executive of Poundland, said:
"I am pleased to report a record year of sales and profit growth for Poundland. We saw strong trading in the UK and Ireland and our international expansion plans in Spain are proceeding well with seven multi-price Dealz stores now open. Notwithstanding a challenging start to the year, I expect to see a year of growth for Poundland as we have a very strong opening programme and we will continue to be the standard bearer for genuine and amazing value on the UK's high streets and retail parks."
Results Presentation
A presentation for analysts and investors will be held today at 9am. Please use the following conference call details to listen to the presentation:
Dial in: +44 (0) 20 3003 2666
Password: Poundland
We plan to announce our interim results for the six months ended 27 September 2015, on 19 November 2015.
For further information please contact
Enquiries:
Nick Hateley, Chief Financial +44 (0) 121 568
Officer 7000
Philip Dorgan, Head of +44 (0) 121 568
Investor Relations 7000
Media Enquiries:
Citigate Dewe Rogerson
+44 (0) 207 282
Simon Rigby 2847
+44 (0) 207 282
Angharad Couch 2941
FINANCIAL SUMMARY
2015 2014 Growth
----------------------- -------- ------ -------
Sales in UK & Ireland
(GBPm) 1,111.5 997.8 11.4%
----------------------- -------- ------ -------
Like-for-like sales
growth 2.4% 1.9%
----------------------- -------- ------ -------
Up 20
Gross margin (%) 37.1 36.9 bp
----------------------- -------- ------ -------
Underlying EBITDA
(GBPm) 59.4 54.0 +9.9%
----------------------- -------- ------ -------
Underlying pre-tax
profits (GBPm) 43.7 36.8 +18.6%
----------------------- -------- ------ -------
Underlying adjusted
diluted EPS (p) 13.6 10.9 +24.4%
----------------------- -------- ------ -------
Net cash /(debt)
(GBPm) 13.9 -4.7
----------------------- -------- ------ -------
Sales in the UK & Ireland and underlying EBITDA grew by 11.4% and 9.9% respectively. Excluding the GBP2.5 million additional PLC costs incurred in our 2015 financial year, underlying EBITDA grew by 14.6%. Underlying adjusted diluted EPS grew by 24.4% and we moved to a net cash position of GBP13.9 million. We also paid our first dividends, with an interim dividend of 1.5p and a proposed final dividend of 3.0p.
PROGRESS AGAINST GUIDANCE FOR FY 2015
Store rollout:
UK & Ireland: We opened a net new 60 Poundland and Dealz stores, in line with guidance.
Spain: As part of our low cost, low risk pilot in Spain, we opened five stores. This is in line with our previous guidance to open 10 stores over two years.
EBITDA margin: After the impact of the costs of being a listed company, our EBITDA margin was flat, in line with guidance.
Non-underlying charges: We incurred double running costs of GBP1.5 million associated with our new distribution centre at Harlow. We also incurred pilot store costs in Spain of GBP2.2 million. This was slightly ahead of guidance for costs of between GBP1.25 million and GBP1.75 million, primarily due to accelerated infrastructure investment, but also due to the weak Euro.
Capital investment: We spent GBP20.7 million, in line with guidance.
GUIDANCE FOR FY 2016
Store pipeline: We have a strong pipeline of stores in place for the 2016 financial year and expect to exit H1 having added at least a net 40 new stores, compared with 28 in the first half of the 2015 financial year. We expect to open at least 60 net new stores in the UK & Ireland in the financial year and we expect our 10 store target in Spain to be achieved by the end of H1.
FX: At current exchange rates, FX impact on EBITDA is estimated at (GBP4) million.
Profit phasing: Our plan expects a strong H2 due to the phasing of our opening programme in H1 and softer sales comparables.
Non underlying charges: Trial store costs in Spain are expected to be similar to FY 2015. We expect additional fees associated with the proposed acquisition of 99p Stores to be GBP1.5m to GBP2.0m. Should we be successful in acquiring 99p Stores, then we will update the market on the costs of integration.
Capital investment: We expect that capital expenditure will be similar to last year. We will update the market should we be successful in acquiring 99p Stores.
CHIEF EXECUTIVE'S REVIEW
Overview
I am pleased to report that our first full year as a public company has resulted in a record year for Poundland with good sales and profit growth, together with a strong new store opening programme. We broke through the GBP1 billion revenue milestone for the first time, managed our margins well, with strong cost management and moved to a positive net cash position at the year end.
We have continued to pursue our strategy as defined at the time of our IPO last year. We expanded our presence in the UK and Ireland with the opening of 73 stores in total which, after store closures, normally associated with the end of leases and the closure of temporary stores, resulted in 60 net new stores. This took our overall estate at year end to 588 stores, with total trading space expanding by 12.2% to 3.1m sq ft.
We added a net 50 stores in the UK and, in line with our property strategy, we grew our presence in both retail parks and in the South of England. We now operate from 83 retail park stores, up from 54 last year. In Ireland, we opened 10 stores, including one retail park, taking our store estate to a total of 41 stores and our total number of retail parks to four.
Our average basket grew by 3.7% to GBP4.72 during the financial year and our weekly customer numbers grew by 9.1%. We also continued to develop exceptional new product ranges, including Jane Asher's Kitchen and Make Up Gallery, both of which outperformed our demanding expectations. Jane Asher's Kitchen is now a GBP10 million annualised brand and sales of Make Up Gallery cosmetics have been strong since launch. We were delighted that Make Up Gallery recently won first prize in 'The Grocer Gold' for the best own label launch of the year 2015.
In July, we opened our first store in Spain, ending the year with five stores, halfway through our planned two year 10 store pilot. We are continuing to learn about the Spanish consumer and the market itself and we will update investors on its progress once we have moved to 10 stores and developed our understanding and the potential within this new market.
We intend to further strengthen our presence across all of our markets, with additional openings during the coming year. Our pipeline is especially strong for the current year and we plan to open at least 60 net new stores in the UK & Ireland. In particular, we expect to open at least 40 net new stores in the first half of the year, considerably ahead of last year's 28, which will leave us well positioned for our important third quarter Halloween and Christmas trading period.
Continued investment to support growth
At Poundland, we have always believed in investing ahead of growth. The continuing expansion of our retail estate within the UK, Ireland and Spain - together with our growth plans for the future - led us to invest in a third, purpose built 350,000 sq.ft. distribution centre at Harlow, which became operational in September, replacing as planned the 200,000 sq.ft temporary facility at Hoddesdon. This new facility enables us to grow to 750 stores in the UK and is supporting our business in Spain, during its trial phase. It should also lead to increased efficiencies, allowing us to further improve instore availability and invest appropriately in our offer and service to customers.
We are currently working on a new distribution centre in the North West of England, as we plan to manage future growth towards our long term store target for 1,000 stores in the UK and 70 stores in Ireland. The new distribution centre is scheduled to open in the 2017 financial year.
Spain
Our successful entry into Ireland under the Dealz brand in September 2011 demonstrated that we could generate attractive financial returns whilst rapidly establishing a new brand in a different geography. Therefore, after extensive market research, we commenced a trial of our Dealz format in Spain with a low cost, low risk entry. We announced that we would open 10 stores over two years, as we trialled the opportunity for a value general merchandise concept in the Spanish market.
We opened our first store in Torremolinos in July 2014. Since then, we have added a further six stores, including three in Madrid. The trial is progressing well. We originally planned to open 10 stores in two years, but we will hit that target a little ahead of plan. We will comprehensively evaluate their performance during this financial year before making a decision on our longer term plans.
The customer response has been positive and sales are in line with plan. While we are confident that we will succeed in Spain, there is still work to do in developing the economic model. For example, we need to improve the proportion of general merchandise sales within our mix and we need to increase the local product range, but this is primarily a function of scale. In terms of product, local sourcing currently accounts for around 20% of sales and Spanish suppliers are increasingly identifying the growth opportunity in working in partnership with Dealz.
99p Stores
We believe that we compete on value with all retailers and we were therefore surprised and disappointed with the Competition and Markets Authority's (the CMA) decision not to allow the acquisition of 99p Stores to complete after Phase 1 of its investigation. Nevertheless, we believe that the proposed acquisition will be good for customers and shareholders alike and we are co-operating fully with the CMA in Phase 2 of its investigation. The CMA's decision is expected to be announced on 23 October. Our integration planning, subject to the CMA's Phase 2 findings, is well advanced and the proposed acquisition could result in over 250 stores being added to our network.
Board Changes
We have today made a separate announcement outlining Board Changes. Richard Lancaster, Group Trading Director, is leaving the Board with our best wishes after three years of service. Paul Best has also resigned from the Board as Non-executive Director. Paul has represented Warburg Pincus LLC, the Company's principal shareholder, on Poundland's Board since its investment in the Company in June 2010. We would like to thank him for his excellent advice and service.
Exchange rates
Poundland is experienced at managing currency exposure which, until recently, has largely been products sourced in US dollars. We hedge our exposure 12 to 18 months ahead and, over the last 25 years, have traded through a wide range of exchange rates. However, because of the success of Dealz in Ireland and the commencement of the Dealz trial in Spain, we have become more exposed to the Euro, on both a transactional and a translational basis. The recent weakness of the Euro has therefore been a challenge for us. We are working hard to minimise the risk by hedging our exposure and by increasing purchases executed in Euros. Over time, the latter will provide us with a natural hedging instrument.
Outlook
The market
Structural change has occurred in shopping throughout the UK over the last several years and Poundland has played an important part in that. Consumers across the socio-demographic spectrum now appreciate value more than ever before. Our record of growth reflects the amazing value that we are able to offer through our Poundland and Dealz retail brands. Poundland's single price point will continue to help consumers plan their household budgets with certainty and confidence, even in improving economic conditions.
Our strategy
Poundland is well positioned to benefit from the economic recovery that should drive additional discretionary spending. We expect that improved consumer confidence will work its way through to benefit the retail sector as a whole by the second half of the year.
We will continue to work hard to ensure that we offer amazing value every day to our customers and continue to focus on communicating this effectively. We are committed to our proven strategy and we believe that our volume driven, price led operating model will continue to serve both our shareholders and the consumer well.
We believe that the Poundland brand is still significantly under-exploited in the UK. We will of course continue to develop our multi-price Dealz format outside the UK and to develop and learn from our trial in Spain.
Our strong pipeline of new stores will deliver the unique Poundland retail proposition to well over 5.5 million customers a week by the end of the current financial year. We are planning to open at least 60 net new stores, including 10 Dealz stores in Ireland and we will achieve our target for 10 Dealz stores in Spain.
Impact on trading outlook
We face a number of headwinds in the current financial year. The most significant of these is the weak Euro. It should also be noted that the first half of the last financial year was an exceptional period. We generated total sales growth of 15.0%, including like-for-like sales growth of 4.7%, as we benefited from a late Easter, fewer competitor openings, warm weather, soft comparables and the 'one-off' loom bands craze.
This means that we expect the seasonally less important first half of the current financial year to be relatively subdued. However, we believe that the second half should benefit from a combination of softer sales comparables, a very strong first half opening programme of at least 40 net new stores, against 28 stores last year, and the annualisation of last year's late-running new store programme.
Summary
I believe that the year just ended has been a good one. We have delivered our IPO commitments and laid the foundations for future growth. We believe that the Poundland and Dealz brands are still under-exploited in the UK and in Ireland, with many more years of new store opening growth. We also believe that the potential acquisition of 99p Stores is an outstanding one-off opportunity for us and makes sense for both our consumers and for our stakeholders. In addition, we have only recently started our trial in Spain. This has got off to an encouraging start, but we need to do some more work on the economic model before taking the decision on roll out. I expect a year of progress and I look forward to the future with confidence.
CHIEF FINANCIAL OFFICER'S REPORT
We performed strongly across all of the Key Performance Indicators (KPIs) set out in our IPO prospectus, especially in the growth of our store estate and in our strong cash flow, as the table below shows.
Key Performance Indicator performance
---------------------------------------------------------------------
2015 2014 Change
-------------------------------------- -------- ------ -----------
Number of stores: UK & Ireland 588 528 +11.4%
-------------------------------------- -------- ------ -----------
Number of new stores: UK & Ireland
(net) 60 70 -10
-------------------------------------- -------- ------ -----------
Sales in UK & Ireland (GBPm) 1,111.5 997.8 +11.4%
-------------------------------------- -------- ------ -----------
Underlying gross margin (%) 37.1 36.9 up 20 bp
-------------------------------------- -------- ------ -----------
Underlying EBITDA (GBPm) 59.4 54.0 +9.9%
-------------------------------------- -------- ------ -----------
Down 7
Underlying EBITDA margin (%) 5.34 5.41 bp
-------------------------------------- -------- ------ -----------
Underlying profit for the period
(GBPm) 34.0 27.3 +24.6%
-------------------------------------- -------- ------ -----------
Operating cash flow less maintenance
capex (GBPm)* 60.1 61.8 -2.8%
-------------------------------------- -------- ------ -----------
Cash conversion (%)** 92.7 123.7
-------------------------------------- -------- ------ -----------
Operating cash flow less maintenance
and expansion capex (GBPm)*** 44.9 47.2 -4.8%
-------------------------------------- -------- ------ -----------
Net cash/(debt) (GBPm) 13.9 (4.7) + GBP18.6m
-------------------------------------- -------- ------ -----------
*Defined as Underlying EBITDA plus/minus changes in working capital adjusted for IPO payables, minus capital expenditure on stores opened in the prior period or earlier.
**Defined as Underlying EBITDA plus changes in working capital minus maintenance capex in the UK & Ireland, divided by Underlying EBITDA
***Defined as Underlying EBITDA plus/minus changes in working capital adjusted for IPO payables, minus all capital expenditure in the UK & Ireland, including investment on existing stores, the roll out of new stores and investment in extensions, IT, warehouses and property.
OTHER OPERATING METRICS
Growth
2015 2014 (%)
-------------------------------- ------ ------ -------
Average net store size
(sq.ft.) 5,328 5,233 1.8
-------------------------------- ------ ------ -------
Average number of transactions
per week (millions) 5.3 4.9 9.1
-------------------------------- ------ ------ -------
Average transaction value
(GBP) 4.72 4.55 3.7
-------------------------------- ------ ------ -------
Underlying gross sales
(GBPm) 1,294 1,160 11.6
-------------------------------- ------ ------ -------
The IPO prospectus also identified a number of other key operating metrics and, as the table above shows, we demonstrated good growth in these metrics in the 2015 financial year.
REVENUE
Group underlying revenue was GBP1,111.5 million (2014: GBP997.8 million), which represents growth on the prior year of 11.4%, or 11.8% on a constant currency basis. This improvement was driven by contributions from both our opening programme and like-for-like sales growth. We grew like-for-like sales during the year by 2.4% on a constant currency basis (2014: 1.9%), which was driven by our continued focus on providing our customers with amazing value every day, as well as some favourable tail winds including a late Easter, the looms jewellery band craze and more favourable weather patterns in the first quarter.
Our new store opening programme was weighted to the second half of the year, with the result that the contribution from new store trading weeks was considerably lower than in the same period last year. However, we achieved our target to open 60 net new stores for the year as a whole and we have a strong pipeline in place for the current financial year.
We also faced some currency headwinds due to the weakening Euro, especially in the second half of the year. If current exchange rates are maintained, then this will be more of a feature in the 2016 financial year.
We recorded non-underlying revenue of GBP5.4 million (2014: nil), which represents our trial in Spain. We opened five stores in Spain in the 2015 financial year and will move towards our target for the trial of 10 in the current financial year. We will then evaluate the performance of these stores before announcing our longer term plans.
UNDERLYING GROSS MARGIN
Gross profits increased by 12.0% to GBP412.7 million (2014: GBP368.5 million) and gross margins increased by 20 basis points to 37.1 % (2014: 36.9%). This increase was primarily driven by a combination of our improved buying power, but also assisted by the improved penetration within our sales mix of our own label products, which increased from 36.6% of sales to 38.0%, or to 37.5%, excluding the sale of loom bands. This was driven by having two Easter trading periods, the looms craze and our improved own label product offer, which included the launch of the highly successful Jane Asher's Kitchen and Make Up Gallery.
These positive factors, together with an effective hedging strategy, helped to limit the negative impact of the unfavourable movement in the Euro exchange rate and enable our gross margin to rise.
OPERATING COSTS
Underlying operating costs (GBPm)
----------------------------------------- ------- -------
Growth Growth
Ex
PLC
2015 2014 costs
------------------------- ------ ------ ------- -------
Distribution expenses 332.1 297.0 +11.8%
------------------------- ------ ------ ------- -------
Administrative expenses 36.3 31.5 +15.2% +7.2%
------------------------- ------ ------ ------- -------
Total overhead 368.4 328.5 +12.1% +11.4%
------------------------- ------ ------ ------- -------
Wages and salaries 163.7 144.5 +13.2%
------------------------- ------ ------ ------- -------
Underlying depreciation
and amortisation 15.0 14.0 +7.1%
------------------------- ------ ------ ------- -------
Operating leases 88.5 78.5 +12.7%
------------------------- ------ ------ ------- -------
Other (inc. rates) 101.2 91.5 +10.6%
------------------------- ------ ------ ------- -------
Total overhead 368.4 328.5 +12.1% +11.4%
------------------------- ------ ------ ------- -------
% of sales
------------------------- ------ ------ ------- -------
Wages 14.7 14.5
------------------------- ------ ------ ------- -------
Underlying depreciation
and amortisation 1.4 1.4
------------------------- ------ ------ ------- -------
Operating leases 8.0 7.9
------------------------- ------ ------ ------- -------
Other (inc. rates) 9.1 9.2
------------------------- ------ ------ ------- -------
+20
Total overhead 33.1 32.9 bp flat
------------------------- ------ ------ ------- -------
Underlying operating costs in the financial year increased by 12.1% to GBP368.4 million (2014: GBP328.5 million). This increase in the cost base in the period was primarily a result of the greater number of stores in our estate, but also reflects the additional costs of being a listed company, which were GBP2.5 million in the financial year. This drove an increase in our operating costs as a percentage of sales of around 20 basis points to 33.1% (2014: 32.9%).
We also incurred extra costs due to our interpretation of an ongoing legislative process regarding average holiday pay and this increased our wage bill by GBP2.4 million, before mitigating action involving improved labour efficiency in our stores.
In order to aid a better understanding of the underlying growth of the business, for this year only, we have included information to demonstrate the effect of the additional costs of being a PLC, which were GBP2.5 million. If these costs were to be excluded, then operating costs as a percentage of sales were unchanged at 32.9% (2014: 32.9%).
EBITDA AND EBIT
Reconciliation to underlying
EBITDA (GBPm)
-----------------------------------
2015 2014
--------------------- ----- -----
Reported EBITDA 53.5 42.8
--------------------- ----- -----
Adjustments
--------------------- ----- -----
Costs in respect of
IPO 0.3 10.0
--------------------- ----- -----
Harlow warehouse 1.5
--------------------- ----- -----
Costs in respect of
99p Stores 2.0
--------------------- ----- -----
Spain e-commerce 2.1 1.3
--------------------- ----- -----
Underlying EBITDA 59.4 54.0
--------------------- ----- -----
We report non-underlying items in our income statement to show one-off items and to allow investors to better understand the underlying performance of the business. In relation to the 2015 financial year, these included double running costs associated with our new warehouse at Harlow (GBP1.5 million) and strategic initiatives in launching our pilot stores in Spain (GBP2.1 million). In the previous financial year, we incurred costs related to our successful IPO and to strategic initiatives in ecommerce and international development. Underlying EBITDA grew by 9.9% to GBP59.4 million (2014: GBP54.0 million), driven by good margin management and cost control.
Growth
ex PLC
Growth costs
(GBPm) 2015 2014 (%) (%)
-------------------------- ----- ----- ------- --------
Underlying EBITDA 59.4 54.0 9.9 14.6
-------------------------- ----- ----- ------- --------
Underlying depreciation
and amortisation 15.0 14.0 7.1 7.1
-------------------------- ----- ----- ------- --------
Underlying EBIT 44.4 40.0 10.8 17.1
-------------------------- ----- ----- ------- --------
Underlying EBITDA margin Down Up 16
(%) 5.34 5.41 7 bp bp
-------------------------- ----- ----- ------- --------
Underlying EBIT margin Up 21
(%) 4.0 4.0 flat bp
-------------------------- ----- ----- ------- --------
The table above shows underlying EBIT and movement in underlying margins. Underlying EBIT excludes brand amortisation of GBP1.1 million (2014: GBP1.1 million) from depreciation and amortisation expenses (including charges associated with Spain), as we regard this charge as non-underlying. Underlying EBIT grew by 10.8% to GBP44.4 million. The underlying Group EBITDA margin fell by 7 basis points and the Group EBIT margin was flat.
Once again, these numbers are distorted by the additional costs of becoming a PLC, which were GBP2.5 million. Excluding these costs, the underlying growth in EBITDA and EBIT was 14.6% and 17.1% respectively and both saw underlying increases in margin.
We believe that this is a good performance, especially given the impact of adverse changes in average annual holiday pay and also the effects of the weakening Euro.
NET FINANCE COSTS
In the 2015 financial year, the Group saw its underlying net finance cost reduce significantly, by 78% to GBP0.7 million (2014: GBP3.2 million). This was a consequence of the Group's good trading performance, lower financing charges related to the new loan facility and high cash conversion rates.
STATUTORY PROFIT BEFORE TAX
Reconciliation to underlying profit before tax ---------------------------------------- (GBPm) 2015 2014 -------------------------- ----- ----- Reported profit before tax 36.2 21.5 -------------------------- ----- ----- Adjustments -------------------------- ----- ----- Costs in respect of IPO 0.3 10.0 -------------------------- ----- ----- Amortisation 1.1 1.1 -------------------------- ----- ----- Distribution centre 1.5 -------------------------- ----- ----- Costs in respect of 99p Stores 2.0 -------------------------- ----- ----- Spain/e-commerce 2.2 1.3 -------------------------- ----- ----- Net financing expense 0.3 2.9 -------------------------- ----- ----- Underlying profit before tax 43.7 36.8 -------------------------- ----- -----
Underlying profit before tax was GBP43.7 million, which represented an increase of 18.6% on last year (2014: GBP36.8 million). Statutory profit before tax increased by 68.3% to GBP36.2 million (2014: GBP21.5 million), due to a reduction in net non-underlying charges, primarily costs in the previous year associated with the Group's stock market flotation.
TAXATION
The underlying tax charge for the period was GBP9.7 million (2014: GBP9.6 million). The full year underlying effective tax rate was 22.2% (2014: 26.0%), with the reduction primarily due to the fall in UK corporation tax rates from 23% to 21%.
STATUTORY PROFIT AFTER TAX
Underlying profit after tax was GBP34.0 million, which represented an increase of 24.6% on last year (2014: GBP27.3 million). Statutory profit after tax increased by 104.9% to GBP28.4 million (2014: GBP13.9 million), due to a reduction in net non-underlying charges, primarily due to costs associated with the Group's stock market flotation in the previous financial year.
ADJUSTED EARNINGS PER SHARE
Adjusted earnings per share Increase (p) 2015 2014 (%) ------------------------------- ------ ------ --------- Basic earnings per ordinary share 11.36 5.54 105.1 ------------------------------- ------ ------ --------- Diluted earnings per ordinary share 11.34 5.54 104.7 ------------------------------- ------ ------ --------- Basic earnings per ordinary share before non-underlying items 13.58 10.90 24.6 ------------------------------- ------ ------ --------- Diluted earnings per ordinary share before non-underlying items 13.56 10.90 24.4 ------------------------------- ------ ------ ---------
Underlying fully diluted earnings per share increased by 24.4% to 13.56p per share (2014: 10.90p per share). Fully diluted earnings per share increased by 104.7% to 11.34p per share (2014: 5.54p per share). The weighted average number of shares in issue during the period was 250 million and the weighted average number of fully diluted shares was 250.4 million.
IMPACT OF FOREIGN EXCHANGE
Our exposure to changes in foreign exchange rates is twofold. First, we source products overseas, primarily in US dollars. This relates primarily to the sourcing of our own label products. Because we are a single price retailer, and therefore cannot pass on price increases, we seek to mitigate changing exchange rates by hedging our exposure 12 to 18 months ahead.
Our second exposure is a consequence of our growing European business, Dealz in Ireland and in Spain. Besides the obvious translational risk, we also have transactional risk because we mostly buy in Sterling and sell in Euros, although we are making progress in sourcing products from European markets. In our 2014 financial year, the EUR to GBP ratio averaged 1.19, whereas in our 2015 financial year, it averaged EUR1.27.
Over the last six months, the Euro has weakened considerably, to the extent that, if current exchange rates were to be sustained, then we are guiding that the risk to EBITDA in the 2016 financial year will be around GBP4 million.
CAPITAL EXPENDITURE
(GBPm) 2015 2014 ------------ ----- ----- New stores 12.8 13.0 ------------ ----- ----- Spain 2.2 ------------ ----- ----- Existing stores 3.4 3.0 ------------ ----- ----- Other 2.3 1.6 ------------ ----- ----- Total 20.7 17.6 ------------ ----- ----- % of sales 1.9 1.8 ------------ ----- -----
During the 2015 financial year, we invested GBP20.7 million in capital expenditure, primarily related to the opening of new stores. We continued to roll out the Poundland format in the UK and the Dealz format in Ireland. We opened a total of 73 stores in the UK & Ireland in the 2015 financial year, or 60 net of closures. We also opened 5 stores in our trial in Spain.
We ended the year with 593 stores (2014: 528), including 545 Poundland stores in the UK and 48 Dealz stores, including 41 in Ireland, 2 in the Isle of Man and Orkney and 5 in Spain. We have a long-term target of 1,000 stores in the UK and 70 in Ireland. We plan to open 60 net new stores a year in the UK and Ireland and our pipeline is strong for the current year.
We continued to invest in our infrastructure to support our planned growth and our new purpose-built 350,000 square feet distribution centre in Harlow became operational in September.
NET DEBT AND CASHFLOW
(GBPm) 2015 2014 --------------------------- ------ ------ EBITDA 54.7 42.8 --------------------------- ------ ------ Change in net working capital -1.0 15.8 --------------------------- ------ ------ Operating cashflow 53.8 58.6 --------------------------- ------ ------ Tax paid -10.9 -10.4 --------------------------- ------ ------ Net cash from operating activities 42.9 48.2 --------------------------- ------ ------ Capital expenditure -19.1 -16.6 --------------------------- ------ ------ Acquisition of intangible assets -0.7 -1.0 --------------------------- ------ ------ Net cash from investing activities -19.8 -17.6 --------------------------- ------ ------ Proceeds from new loan 29.3 --------------------------- ------ ------ Repayment of borrowings -28.0 -54.9 --------------------------- ------ ------ Redemption of preference shares -20.0 --------------------------- ------ ------ Dividend paid -3.8 --------------------------- ------ ------ Net financial expenses paid -0.6 -2.5 --------------------------- ------ ------ Net cash from financing activities -32.4 -48.1 --------------------------- ------ ------ Net decrease in cash and cash equivalents -9.3 -17.6 --------------------------- ------ ------ Cash and cash equivalents at start of period 25.3 42.9 --------------------------- ------ ------ Cash and cash equivalents at end of period 15.9 25.3 --------------------------- ------ ------ Other interest bearing loans and borrowings -2.0 -30.0 --------------------------- ------ ------ Net cash/(debt) 13.9 -4.7 --------------------------- ------ ------ Cash conversion* (%) 92.7 123.7 --------------------------- ------ ------
*Defined as Underlying EBITDA plus changes in working capital minus maintenance capex in the UK & Ireland divided by Underlying EBITDA
Net cash at the end of the year was GBP13.9 million (2014: debt of GBP4.7 million). This is after payment of GBP5.3 million in costs associated with our successful stock market flotation. Operating cash flow fell slightly to GBP53.8 million, due to the fact that we invested working capital in both our new warehouse in Harlow and in our pilot in Spain. These latter two points also led to our cash conversion ratio falling slightly, as expected, to 92.7% (2014: 123.7%).
DIVIDEND
The Directors are pleased to propose a final dividend of 3.0p, which will be paid on 2 October 2015 to shareholders whose names are on the Register of Members at the close of business on 18 September 2015. The ordinary shares will be quoted ex dividend on 17 September 2015. As set out at IPO, we have adopted a dividend policy which reflects our long-term earnings and cash flow potential, targeting a level of annual dividend cover of 2.5 to 3.5 times based on earnings. Together with the previously announced interim dividend of 1.5p per share, this would give a total dividend for the year of 4.5p and represents cover of 3.0.
FINANCIAL CALENDAR
The table below summarises our planned reporting dates for the current financial year.
Event Date ---------------- ------------------- AGM 17 September 2015 ---------------- ------------------- Q2 sales Early October 2015 ---------------- ------------------- Interim results 19 November 2015 ---------------- ------------------- Q3 sales Mid January 2016 ---------------- ------------------- Year end update Early April 2016 ---------------- -------------------
Consolidated Income Statement
For the period ended 29 March 2015
52 weeks 52 weeks
2015 2014
Non- Non-
Underlying Underlying
Underlying (note Total Underlying (note 7) Total
7)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 6 1,111,526 5,420 1,116,946 997,803 - 997,803
Cost of sales (698,801) - (698,801) (629,279) - (629,279)
Gross profit 412,725 - 412,725 368,524 - 368,524
Distribution costs (332,050) (7,527) (339,577) (296,979) - (296,979)
Administrative
expenses (36,303) (5,060) (41,363) (31,500) (12,343) (43,843)
Operating profit 44,372 (7,167) 37,205 40,045 (12,343) 27,702
Financial income 8 74 - 74 252 - 252
Financial expenses 8 (791) (337) (1,128) (3,488) (2,982) (6,470)
Net financing
expense (717) (337) (1,054) (3,236) (2,982) (6,218)
Profit before
tax 43,655 (7,504) 36,151 36,809 (15,325) 21,484
Taxation 9 (9,704) 1,950 (7,754) (9,556) 1,932 (7,624)
Profit for the
period 33,951 (5,554) 28,397 27,253 (13,393) 13,860
Earnings per share
(p) basic 3 13.58 11.36 5.20 (1.82)
diluted 3 13.56 11.34 5.20 (1.82)
Adjusted earnings
per share (p) basic 3 13.58 11.36 10.90 5.54
diluted 3 13.56 11.34 10.90 5.54
------------------------------ ----- ----------- ----------- ----------- ----------- ----------- ----------
All activities were continuing throughout the current and preceding period.
The accounting policy for non-underlying items is defined in note 7. For further details of current period items, see note 7.
Consolidated Statement of Other Comprehensive Income
For the period ended 29 March 2015
52 weeks 52 weeks
2015 2014
Non- Non-
Underlying Underlying
Underlying Total Underlying Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit for the period 33,951 (5,554) 28,397 27,253 (13,393) 13,860
----------- ---------
Other comprehensive
income
Items that are or
may be recycled
subsequently to
the income statement
Foreign currency
translation
differences - foreign
operations - 67 67 - (47) (47)
Effective portion
of changes in
fair value of cash
flow hedges - 22,874 22,874 - (14,154) (14,154)
Net change in fair
value of cash
flow hedges recycled
to the
Income statement - (5,079) (5,079) - 3,791 3,791
Income tax on items
that are or
may be recycled
subsequently to
the income statement - (3,559) (3,559) - 2,203 2,203
- 14,303 14,303 - (8,207) (8,207)
----------------------- ----------- ----------- -------- ----------- ----------- ---------
Other comprehensive
income
for the period,
net of income
tax - 14,303 14,303 - (8,207) (8,207)
----------- ---------
Total comprehensive
income
attributable to
equity holders
of the parent 33,951 8,749 42,700 27,253 (21,600) 5,653
----------------------- ----------- ----------- -------- ----------- ----------- ---------
Consolidated Statement of Financial Position
at 29 March 2015
29 March 30 March
2015 2014
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 47,118 41,607
Intangible assets and goodwill 182,568 183,711
Trade and other receivables 428 425
Other financial assets 451 -
Deferred tax asset 686 645
Total non-current assets 231,251 226,388
Current assets
Inventories 113,314 89,561
Other financial assets 11,550 519
Tax receivable 821 365
Trade and other receivables 25,796 24,960
Cash and cash equivalents 15,932 25,268
Total current assets 167,413 140,673
-------------------------------- ---------- ----------
Total assets 398,664 367,061
Current liabilities
Trade and other payables (144,140) (120,571)
Tax payable (3,255) (3,807)
Provisions (523) (787)
Other financial liabilities (574) (5,110)
Total current liabilities (148,492) (130,275)
Non-current liabilities
Other interest-bearing loans
and borrowings (2,000) (30,000)
Other payables (19,794) (18,617)
Provisions (138) (138)
Other financial liabilities (117) (1,556)
Deferred tax liabilities (1,450) -
-------------------------------- ---------- ----------
Total non-current liabilities (23,499) (50,311)
Total liabilities (171,991) (180,586)
-------------------------------- ---------- ----------
Net assets 226,673 186,475
Equity attributable to equity
holders of the parent
Share capital 2,550 425,050
Merger reserve (259,642) (259,642)
Reserves 9,454 (4,849)
Retained earnings 474,311 25,916
Total equity 226,673 186,475
-------------------------------- ---------- ----------
Consolidated Statement of Changes in Equity
for the period ended 30 March 2014
Capital Cash flow
Share Share Merger redemption Translation hedge Retained Total
capital premium reserve reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- -------- ---------- ----------- ------------ ---------- --------- ---------
Balance at 1 April
2013 152,474 - - 12,739 9 3,349 32,012 200,583
Total comprehensive
income for
the period
Profit for the period - - - - - - 13,860 13,860
Other comprehensive
income - - - - (47) (8,160) - (8,207)
------------------------ --------- -------- ---------- ----------- ------------ ---------- --------- ---------
Total comprehensive
income for
the period - - - - (47) (8,160) 13,860 5,653
------------------------ --------- -------- ---------- ----------- ------------ ---------- --------- ---------
Transactions with
owners
recorded directly
in equity
Redemption of
preference
share capital -
(subsidiary) (14,564) - - 14,564 - - (20,000) (20,000)
Issue of shares -
(subsidiary) 97 48 - - - - - 145
Capital transaction
- subsidiary
share capital
restructure
and share
for share exchange 286,993 (48) (259,642) (27,303) - - - -
Issue of shares -
Poundland Group plc 50 - - - - - - 50
Share based payment
transactions - - - - - - 44 44
Total transactions
with owners 272,576 - (259,642) (12,739) - - (19,956) (19,761)
------------------------ --------- -------- ---------- ----------- ------------ ---------- --------- ---------
Balance at 30 March
2014 425,050 - (259,642) - (38) (4,811) 25,916 186,475
------------------------ --------- -------- ---------- ----------- ------------ ---------- --------- ---------
Consolidated Statement of Changes in Equity
for the period ended 29 March 2015
Capital Cash flow
Share Share Merger redemption Translation hedge Retained Total
capital premium reserve reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------- -------- ---------- ----------- ------------ ---------- --------- --------
Balance at 31 March
2014 425,050 - (259,642) - (38) (4,811) 25,916 186,475
Total comprehensive
income for
the period
Profit for the period - - - - - - 28,397 28,397
Other comprehensive
income - - - - 67 14,236 - 14,303
------------------------ ---------- -------- ---------- ----------- ------------ ---------- --------- --------
Total comprehensive
income for
the period - - - - 67 14,236 28,397 42,700
------------------------ ---------- -------- ---------- ----------- ------------ ---------- --------- --------
Transactions with
owners
recorded directly
in equity
Court approved
reduction
in
share capital (422,500) - - - - - 422,500 -
Dividends paid (3,750) (3,750)
Share based payment
transactions - - - - - - 1,248 1,248
------------------------ ---------- -------- ---------- ----------- ------------ ---------- --------- --------
Total transactions
with owners (422,500) - - - - - 419,998 (2,502)
------------------------ ---------- -------- ---------- ----------- ------------ ---------- --------- --------
Balance at 29 March
2015 2,550 - (259,642) - 29 9,425 474,311 226,673
------------------------ ---------- -------- ---------- ----------- ------------ ---------- --------- --------
Consolidated Cash Flow Statement
for the period ended 29 March 2015
52 weeks 52 weeks
2015 2014
GBP'000 GBP'000
Cash flows from operating activities
Profit for the period, before non-underlying
items 33,951 27,253
Costs in respect of IPO (263) (9,954)
Other non-underlying items (5,291) (3,439)
---------------------------------------------- --------- ---------
Profit for the period 28,397 13,860
Adjustments for:
Depreciation and amortisation 16,283 15,096
Financial income (74) (252)
Financial expense 1,128 6,470
Equity settled share based payment
transactions 1,248 44
Taxation 7,754 7,624
---------------------------------------------- --------- ---------
54,736 42,842
Increase in trade and other receivables (837) (3,645)
Increase in inventories (23,753) (8,557)
Increase in trade and other payables
excluding IPO costs 29,216 22,537
(Decrease)/increase in provisions (570) 422
(Decrease)/increase in payables
in respect of IPO costs (5,012) 5,012
---------------------------------------------- --------- ---------
53,780 58,611
Tax paid (10,912) (10,409)
---------------------------------------------- --------- ---------
Net cash from operating activities 42,868 48,202
Costs in respect of IPO 5,275 4,942
---------------------------------------------- --------- ---------
Net cash from operating activities
before IPO costs 48,143 53,144
---------------------------------------------- --------- ---------
Cash flows from investing activities
Acquisition of property, plant
and equipment (19,112) (16,563)
Acquisition of other intangible
assets (708) (1,062)
---------------------------------------------- --------- ---------
Net cash from investing activities (19,820) (17,625)
---------------------------------------------- --------- ---------
Cash flows from financing activities
Proceeds from new loan - 29,268
Repayment of borrowings (28,000) (54,914)
Redemption of preference shares
- subsidiary - (20,000)
Net financial expenses paid (634) (2,524)
Dividends paid (3,750) -
---------------------------------------------- --------- ---------
Net cash from financing activities (32,384) (48,170)
---------------------------------------------- --------- ---------
Net decrease in cash and cash equivalents (9,336) (17,593)
Cash and cash equivalents at start
of period 25,268 42,861
Effects of exchange rate changes - -
on cash held
Cash and cash equivalents at end
of period 15,932 25,268
Other interest bearing loans and
borrowings (2,000) (30,000)
---------------------------------------------- --------- ---------
Net funds (debt) 13,932 (4,732)
---------------------------------------------- --------- ---------
1 Basis of preparation and significant accounting policies
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). The financial statements are prepared on the historical cost basis except where Adopted IFRSs require an alternative treatment. The principal variations relate to financial instruments.
2. Basis of consolidation
On 17 March 2014, the Company obtained control of the entire share capital of Poundland Group Holdings Limited via a share for share exchange. There were no changes in rights or proportion of control exercised as a result of this transaction.
Although the share for share exchange resulted in a change of legal ownership, in substance these financial statements reflect the continuation of the pre-existing group, headed by Poundland Group Holdings Limited.
Both the current and the prior period statement of financial position reflect the share capital structure of Poundland Group plc and the merger reserve arising as a result of the share for share exchange transaction. The prior period consolidated statement of changes in equity explains the impact of the share for share exchange in more detail.
The income statement presented for the prior period includes the results prior to 17 March 2014 when the group was headed by Poundland Group Holdings Limited.
3. Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares outstanding during the period. For diluted EPS, the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary shares.
As explained in the basis of consolidation accounting policy, the Group's financial statements reflect the continuation of the pre-existing group headed by Poundland Group Holdings Limited. That company had preference shares, the holders of which were entitled to a cumulative dividend at the discretion of the Directors. In accordance with IAS 33, for the comparative period, to the date of the share restructure, the accrued preference share dividend has been deducted from profit for the period to compute the earnings attributable to ordinary shareholders. The conversion factor applied in the share reorganisation has been applied to calculate the number of ordinary shares of Poundland Group Holdings Limited used to compute the weighted average number of ordinary shares for the comparative period. In this way the impact of the preference shares has been excluded from both earnings and the weighted average number of shares.
As a precursor to the share for share exchange, the preference shares in Poundland Group Holdings Limited were converted to ordinary shares and any entitlement to a dividend on these shares was forfeited. For the periods reported, the Group has chosen to present an adjusted EPS calculation to aid comparability and to provide a consistent measure of performance, by excluding the impact of the preference shares from both earnings and the weighted average number of shares. For this adjusted measure, in both reported periods, the weighted average number of shares is based on the share capital structure of Poundland Group plc and assumes that this structure was in place from 1 April 2013 (i.e. the beginning of the prior period).
For both EPS measures (statutory and adjusted), the Group has also presented an alternative version with profit adjusted for non-underlying items.
Statutory earnings per share
52 weeks 52 weeks
2015 2014
No of No of
shares shares
------------------------------------------- ------------- -------------
Weighted average number of ordinary
shares in issue, being
weighted average number 250,000,000 190,792,314
of shares for calculating basic
earnings per share
Effect of share options on issue 387,303 917
------------------------------------------- ------------- -------------
Weighted average number of ordinary
shares
in issue for calculating diluted
earnings per share 250,387,303 190,793,231
------------------------------------------- ------------- -------------
52 weeks 52 weeks
2015 2014
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Profit for the period 28,397 13,860
Non-accrued preference share
dividends - (11,891)
Premium paid on preference share
capital redeemed - (5,436)
------------------------------------------- ------------- -------------
Basic earnings attributable to
ordinary shareholders 28,397 3,467
Non-underlying items (see note
7)
Operating profit and finance
costs 7,504 15,325
Tax on non-underlying items (1,950) (1,932)
Underlying earnings before non-underlying
items 33,951 9,926
------------------------------------------- ------------- -------------
Earnings per share is calculated
as follows:
52 weeks 52 weeks
2015 2014
p p
------------------------------------------- ------------- -------------
Basic earnings per ordinary share 11.36 (1.82)
Diluted earnings per ordinary
share 11.34 (1.82)
Basic earnings per ordinary share
before non-underlying items 13.58 5.20
Diluted earnings per ordinary
share before non-underlying items 13.56 5.20
------------------------------------------- ------------- -------------
Adjusted earnings per share
52 weeks 52 weeks
2015 2014
No of No of
shares shares
------------------------------------------- ------------------ -------------------
Weighted average number of ordinary
shares in issue, being
weighted average number 250,000,000 250,000,000
of shares for calculating basic
earnings per share
Effect of share options on issue 387,303 917
------------------------------------------- ------------------ -------------------
Weighted average number of ordinary
shares
in issue for calculating diluted
earnings per share 250,387,303 250,000,917
------------------------------------------- ------------------ -------------------
52 weeks 52 weeks
2015 2014
GBP'000 GBP'000
------------------------------------------- ------------------ -------------------
Profit for the period, being
basic earnings attributable to
ordinary equity 28,397 13,860
shareholders
Non-underlying items (see note
7)
Operating profit and finance
costs 7,504 15,325
Tax on non-underlying items (1,950) (1,932)
Underlying earnings before non-underlying
items 33,951 27,253
------------------------------------------- ------------------ -------------------
Earnings per share is calculated
as follows:
52 weeks 52 weeks
2015 2014
p p
------------------------------------------- ------------------ -------------------
Basic earnings per ordinary share 11.36 5.54
Diluted earnings per ordinary
share 11.34 5.54
Basic earnings per ordinary share
before non-underlying items 13.58 10.90
Diluted earnings per ordinary
share before non-underlying items 13.56 10.90
------------------------------------------- ------------------ -------------------
4 Dividends
52 weeks 52 weeks 52 weeks 52 weeks
2015 2015 2014 2014
Pence GBP'000 Pence GBP'000
per per
share share
Amounts recognised as distributions
to owners
in the financial period:
Current financial period
interim dividend 1.5 3,750 - -
------------------------------------- --------- --------- --------- ---------
Dividends paid to equity
holders in the financial
period 1.5 3,750 - -
------------------------------------- --------- --------- --------- ---------
After the reporting date, a final dividend of 3.0 pence per share was proposed by the Directors in respect of the period ended 29 March 2015, resulting in a total final proposed dividend of GBP7.5 million (2014: GBPNil). The proposed final dividend has not been included as a liability at 29 March 2015.
5 Reconciliation of adjusted profit measure (EBITDA)
The Directors consider EBITDA to be a more consistent measure of operating performance. Operating profit is adjusted to exclude the impact of finance costs, taxation, amortisation and depreciation.
Underlying EBITDA excludes the impact of those distribution costs and administrative expenses which do not contribute to current trading activities. The Directors consider that this measure more fairly reflects actual operating performance.
52 weeks 52 weeks
2015 2014
----------------------------- --------- ---------
Operating profit 37,205 27,702
Exclude:
Amortisation 1,851 1,857
Depreciation 14,432 13,239
----------------------------- --------- ---------
EBITDA 53,488 42,798
Exclude:
Non-underlying items
excluding brand 5,871 11,231
amortisation, depreciation,
financial
expenses and taxation
Underlying EBITDA 59,359 54,029
----------------------------- --------- ---------
6 Revenue
52 weeks 52 weeks
2015 2014
GBP'000 GBP'000
----------- ---------- ---------
Sale of
goods 1,116,946 997,803
Total
revenues 1,116,946 997,803
----------- ---------- ---------
7 Non-underlying items
Non underlying items are those items that are unusual because of their size, nature or incidence. The Directors consider that these items should be separately identified within their relevant income statement category to enable a full understanding of the Group's results.
In the period ended 29 March 2015, the Group incurred GBP2,242,000 of net cost related to strategic initiatives (international expansion) (2014:GBP1,277,000). These costs relate to the new store trial in Spain, which was announced in February 2014 and is planned to continue until the end of FY2016. Included within these costs are the revenue and profit generated by the five stores that opened in the period. Total revenue of GBP5,420,000 has been generated. Once costs of distribution from the UK distribution centres, and store operating expenses have been included, these stores generated a small positive contribution to Group operating profit. Additionally set up costs, including the costs incurred prior to stores opening for trade, have been incurred to support the trial.
The Group incurred GBP1,541,000 (2014: GBPNil) of one off costs relating to the relocation of the distribution facility in the South East of England, together with the costs to dispose of the existing temporary facility.
On the acquisition of Poundland Holdings Limited in June 2010, the Group recognised an intangible asset relating to the Poundland brand. This is being amortised over 20 years and the amortisation expense is presented as a non-underlying item of GBP1,112,000 (2014: GBP1,112,000).
The Group incurred further fees relating to its listing of GBP263,000 (2014: GBP9,954,000). It also incurred fees of GBP2,009,000 (2014: GBPNil) relating to the proposed acquisition of 99p Stores Limited.
The ineffective portion of foreign exchange hedging contracts is recognised as a financial expense and disclosed as a non-underlying item of GBP337,000 (2014: GBP1,000).
The associated tax implications of the above items are presented as a non-underlying item of GBP1,950,000 (2014: GBP1,932,000).
52 weeks 52 weeks
2015 2014
GBP'000 GBP'000
------------------------------- ----------- ---------
Revenue
Strategic initiatives 5,420 -
5,420 -
------------------------------- ----------- ---------
Distribution Expenses
Relocation of distribution (1,541) -
facility in the South East
Strategic initiatives (5,986) -
(7,527) -
------------------------------- ----------- ---------
Administrative Expenses
Amortisation expense (brand) (1,112) (1,112)
Strategic initiatives (1,676) (1,277)
Costs in respect of the
IPO (263) (9,954)
Costs in respect of proposed (2,009) -
acquisition of 99p Stores
Ltd
(5,060) (12,343)
------------------------------- ----------- ---------
Financial income and expense
Financial Instruments (337) (1)
Bank fees - refinancing - (2,981)
------------------------------- ----------- ---------
(337) (2,982)
------------------------------- ----------- ---------
Taxation
Non-underlying items impact 1,351 1,390
Adjustments for prior periods 599 -
Intangible assets - change
in tax rate - 542
1,950 1,932
------------------------------- ----------- ---------
Total non-underlying items (5,554) (13,393)
------------------------------- ----------- ---------
8 Financial income and expense
52 weeks 52 weeks
Interest charge 2015 2014
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Financial income
Interest income on unimpaired financial assets 74 252
Total financial income 74 252
------------------------------------------------- --------- ---------
Financial expense
Interest expense on financial liabilities
measured at amortised cost (791) (3,432)
Non-underlying fees associated with refinancing
(note 7) - (2,981)
Net change in fair value of interest rate
swap cash flow hedges recycled from equity - (56)
Ineffective portion of changes in fair value
of cash flow hedges (337) (1)
Total financial expense (1,128) (6,470)
------------------------------------------------- --------- ---------
9 Taxation
Recognised in the income statement
52 weeks 52 weeks
2015 2014
GBP'000 GBP'000
--------------------------------------- --------- ---------
Current taxation
Corporation tax charge for the period 10,876 9,371
Adjustments for prior periods (972) 186
9,904 9,557
--------------------------------------- --------- ---------
Deferred tax income
Origination and reversal of temporary
differences (2,136) (1,766)
Reduction in tax rate 113 (107)
Adjustments for prior periods (127) (60)
--------------------------------------- --------- ---------
(2,150) (1,933)
--------------------------------------- --------- ---------
Total tax charge for the period 7,754 7,624
--------------------------------------- --------- ---------
The tax charge is reconciled with the standard rates of UK corporation tax as follows:
52 weeks 52 weeks
2015 2014
GBP'000 GBP'000
------------------------------------------ ------------ ------------
Profit before tax 36,151 21,484
------------------------------------------ ------------ ------------
UK corporation tax at standard rate
of 21% (52 weeks 2014: 23%) 7,592 4,941
Factors affecting the charge for
the period:
Depreciation on expenditure not eligible
for tax relief 437 316
Disallowable expenses 1,156 2,608
Adjustments in respect of prior periods (1,099) 126
Impact of overseas tax rates (449) (260)
Impact of reduction in tax rate on
deferred tax balance 113 (107)
Others 4 -
------------------------------------------ ------------
Total tax charge for the period 7,754 7,624
------------------------------------------ ------------ ------------
Recognised in other comprehensive income
52 weeks 52 weeks
2015 2014
GBP'000 GBP'000
-------------------------------------- --------- -----------
Effective portion of changes in fair
value of cash flow hedges (4,575) 3,071
Net change in fair value of cash
flow hedges recycled to profit or
loss 1,016 (868)
---------
(3,559) 2,203
-------------------------------------- --------- -----------
Factors that may affect future current and total tax charges
A reduction in the UK corporation tax rate to 21% (effective from 1 April 2014) was substantively enacted on 2 July 2013. A further reduction to 20% (effective 1 April 2015) was also substantively enacted on 2 July 2013. This will reduce the Group's future current tax charge accordingly. The deferred tax liability at 29 March 2015 has been calculated based on the rate of 20% substantively enacted at the reporting date (30 March 2014 asset calculated at 20%).
10. Other information
The financial information set out above does not constitute the Company's statutory accounts for the 52 weeks ended 29 March 2015 within the meaning of section 435 of the Companies Act 2006 ("The Act"). Statutory accounts for 2014 have been delivered to the Registrar of Companies, and those for 2015 will be delivered to the Registrar of Companies in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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