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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
United Carpets Group Plc | LSE:UCG | London | Ordinary Share | GB00B05J4D26 | 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% | 5.05 | 0.10 | 10.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMUCG
RNS Number : 5592L
United Carpets Group plc
20 July 2017
20 July 2017
UNITED CARPETS GROUP PLC
Unaudited Preliminary Results for the year ended 31 March 2017
United Carpets Group plc ("the Group" or "the Company" or "United Carpets"), the third largest chain of specialist retail carpet and floor covering stores in the UK, today announces its preliminary results for the year ended 31 March 2017.
Highlights
-- Like for like sales* increased by 1.3% -- Revenue for the year was GBP21.2m (2016: GBP21.4m) -- Profit before tax was GBP1.53m (2016: GBP1.49m) -- Earnings per share were 1.58p (2016: 1.51p) -- Store numbers reduced from 61 to 57 -- Special dividend of 1.0p per share paid 25 May 2017
-- Recommending a final dividend of 0.275p per share (2016: 0.265p per share) payable on 12 October 2017
-- Net funds were GBP2.60m (2016: GBP1.59m)
*Like for like sales are defined in the Financial Review
Paul Eyre, Chief Executive, said:
"These results show a modest improvement on the prior year together with a positive like for like performance up 1.3%. This is a creditable result against a backdrop of increasing economic uncertainty which has tended to damage consumer confidence. We have been helped by the resilience of our franchise model together with the strength of our core customer offering of providing great quality products at attractive price points."
Enquiries:
United Carpets Group plc Paul Eyre, Chief Executive Ian Bowness, Finance Director 01709 732 666 Novella Communications Ltd Tim Robertson Toby Andrews 020 3151 7008 Cantor Fitzgerald Europe Marc Milmo, Catherine Leftley (Corporate Finance) 020 7894 7000
Chairman's statement
Given the wider environment, this has been a good year for United Carpets. Political and economic changes have affected consumer confidence and this has resulted in a more challenging retail environment so a modest improvement in profit before tax represents sound progress.
During the year, we reduced the overall size of the store portfolio to 57, being 4 fewer than at the start of the financial year, maintaining our focus on stores which meet our performance criteria. That said, the Group will continue to seek to open new stores where it believes there is an opportunity to establish a profitable long-term presence.
It remains difficult to predict the full impact that Brexit and other political developments might have on the UK, however a prolonged period of significant uncertainty has meant that the mood of the UK consumer has fluctuated throughout the past year. It appears probable that this state of flux is unlikely to stabilise in the near term as we go through the Brexit process and therefore we expect the challenging market conditions to remain prevalent over the coming year.
Despite some recent weakening, the UK housing market continues to function reasonably positively and this alongside the Group's debt free, stable financial base and strong market positioning makes the Group, in the Board's opinion, well positioned going forward.
Financial review
Revenue, which includes marketing and rental costs incurred by the Group and recharged to franchisees, was GBP21.2m (2016: GBP21.4m). This small overall reduction in revenue reflected the decrease in the average number of corporate stores during the year compared to the prior year, which was largely offset by increased activity through the Group's Warehousing division.
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 1.3%. This was a pleasing result against strong comparatives in the prior year and during what is considered to be a tough trading environment.
Gross margin in the period was 61.2% compared to 63.8% in the prior year. This primarily reflects the change in the mix of revenue attributable to Franchising and Retail and Warehousing due to the reduction in the average number of corporate stores year on year and increasing proportion of total revenue derived from the Warehousing division which operates on relatively low gross margin. Underlying gross margin was little changed year on year with a small improvement in Franchising and Retail gross margin offset by a reduction in Warehousing gross margin.
Distribution costs and administrative expenses, which include rent, rates and staff costs at the corporate stores, decreased by GBP0.8m largely as a result of the reduction in the average number of corporate stores year on year, improved efficiency in marketing expenditure and the release of a provision for deferred consideration of GBP0.15m which is no longer considered necessary. Distribution costs and administrative expenses decreased from 57.2% of revenue to 54.1% principally reflecting the reduction in the proportion of revenue derived from corporate stores.
Profit before tax was GBP1.53m (2016: GBP1.49m) and earnings per share were 1.58p (2016: 1.51p).
The statement of financial position included net funds of GBP2.60m at 31 March 2017 (2016: GBP1.59m).
Dividend
On 11 May 2017, the Group announced a special dividend of 1.0 pence per share. This dividend was paid on 25 May 2017 and demonstrates the continuing, strong cash generation of the Group, reflecting the improvements made in the business over the last few years.
Dividend (continued)
Looking ahead, dividend distributions will remain an important part of the Board's strategy going forwards and when deciding on future, regular dividend payments, modest reductions in dividend cover will be considered subject to any overriding requirements of the business to fund future growth.
The Board is therefore pleased to be recommending a final dividend of 0.275p per share (2016: 0.265p per share). Subject to approval at the Annual General Meeting, this dividend will be paid on 12 October 2017 to all shareholders on the register at the close of business on 29 September 2017. The ex-dividend date will be
28 September 2017.
Operations review
The store portfolio is increasingly stable with the majority of stores producing satisfactory or better returns.
At 31 March 2016, there were 61 stores of which 52 were franchised and 9 were corporate stores. Over the following 12 months, 2 franchised stores and 2 corporate stores were closed and 2 franchised stores and a corporate store were re-located within the same town. As a result, at the end of the financial year, the Group had 57 stores of which 50 were franchised and 7 were corporate.
The streamlining of the store portfolio during the year reflects the Group's continuing focus on developing stores that meet or exceed the performance criteria. Of the 4 stores that were closed, 3 were relatively recent openings that were considered unlikely to be strong long-term contributors. The decision to close them was taken quickly, ensuring that they did not detract from the main focus of profitable contribution to the core portfolio.
The Group continues to seek to open new stores where it can establish a profitable long-term presence. It is anticipated that future opportunities will involve sites with modestly higher annual rental charges reflecting the decision to target slightly higher profile locations. The appointment of a new franchise recruitment manager in May 2017 is aimed at increasing the Group's pool of high quality franchisees.
Across the business, the Group continues to develop its marketing capabilities and during the year it invested in building a long-term online presence. The Group's website functionality has now been expanded to include a transactional facility with online sales being fulfilled via our store network to the benefit of franchisees. Further ongoing investments are anticipated to continue the development of the Group's online capabilities. Alongside this, the Group continues to support the network with a centralised programme of marketing, underpinning awareness of the brand and promotional offers on specific products designed to increase footfall across the store network.
Franchising and Retail
Floor coverings are the Group's primary driver of sales (predominantly carpet, laminate and vinyl floorings) through both franchised stores and the Group's own corporate stores. During the year, the Group delivered a reasonable performance relative to the wider market, with sales up 0.8% on a like for like basis. The product mix was extended during the year, with the introduction of a premium vinyl tile that has added to the overall appeal of the store offer.
While still contributing less than 10% of the Group's total revenues, Beds again delivered in the period recording a like for like sales increase of 7.2% against what are now much tougher comparatives. During the year, the bed range was significantly expanded with the introduction of Silent Night, the dominant bed brand in the UK and this has helped to further establish the Group's credentials amongst its target customers.
Warehousing
Our in-house cutting operation continues to support the whole network providing a quick, efficient cutting and delivery service enabling our franchisees to offer attractive retail price points with good margins. This division continues to benefit from the consolidation of the previously separate Flooring and Beds warehouses into adjacent locations which has led to improved delivery efficiencies and better customer service.
Property
The Property division leases properties from third parties and sublets those properties to the store network.
People
The business performed well in a tougher environment during the year and the Board would like to thank all of its franchisees, suppliers, employees and other stakeholders connected to the Group directly and indirectly for their contribution to the business and looks forward to continuing to work together in the future.
Outlook
Since the year end, the trading environment has remained challenging. Like for like sales for the 15 weeks since the period end to 13 July 2017 have continued to be slightly positive, despite a significant increase in marketing activity.
United Carpets has a well-positioned store portfolio and a debt free base to operate from. The market environment continues to be unsettled. The recent general election has done little to change that and the process of Brexit is likely to create ongoing fluctuations in consumer confidence. This adds a note of caution to the Board's outlook for the business but nevertheless, we expect the Group to continue to develop and pursue expansion opportunities on a selective basis and retain its core focus on its customer offering of providing great quality products at attractive price points.
Peter Cowgill
Chairman
Preliminary announcement of results for the year ended 31 March 2017
Consolidated statement of comprehensive income
Year Year ended ended 31 March 31 Note 2017 March 2016 GBP'000 GBP'000 Revenue 2 21,192 21,369 Cost of sales (8,231) (7,730) Gross profit 12,961 13,639 Distribution costs (384) (299) Administrative expenses (11,085) (11,925) Other operating income 27 63 Operating profit 3 1,519 1,478 Financial income 11 12 Financial expenses (3) (3) Profit before tax 1,527 1,487 Income tax expense 4 (243) (258) Profit for the year* 1,284 1,229 Earnings per share 5 - Basic (pence per share) 1.58p 1.51p - Diluted (pence per share) 1.57p 1.49p
*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 section of other comprehensive income has been presented.
Preliminary announcement of results for the year ended 31 March 2017
Consolidated statement of financial position
At At 31 31 March March 2017 2016 GBP'000 GBP'000 Non-current assets Property, plant and equipment 2,017 2,105 Investment property 97 100 Deferred tax assets 184 208 2,298 2,413 Current assets Inventories 1,721 1,628 Trade and other receivables 1,836 2,651 Cash and cash equivalents 2,621 1,671 6,178 5,950 Total assets 8,476 8,363 Capital and reserves Issued capital 814 814 Retained earnings 4,323 3,361 Total equity attributable to owners of the parent 5,137 4,175 Non-current liabilities Borrowings - finance leases 3 24 Trade and other payables 519 640 522 664 Current liabilities Borrowings - finance leases 20 52 Trade and other payables 2,406 2,984 Provisions 156 240 Current tax liabilities 235 248 2,817 3,524 Total liabilities 3,339 4,188 Total equity and liabilities 8,476 8,363
Preliminary announcement of results for the year ended 31 March 2017
Consolidated statement of changes in equity
Total equity attributable to owners Note Issued Retained of the capital earnings parent GBP'000 GBP'000 GBP'000 At 31 March 2015 814 3,251 4,065 Profit for the year - 1,229 1,229 Equity dividends paid 6 - (1,119) (1,119) At 31 March 2016 814 3,361 4,175 Profit for the year - 1,284 1,284 Equity dividends paid 6 - (322) (322) At 31 March 2017 814 4,323 5,137
Preliminary announcement of results for the year ended 31 March 2017
Consolidated statement of cash flows
Year Year ended ended 31 March 31 March Note 2017 2016 GBP'000 GBP'000 Cash flows from operating activities Cash generated from operations 7 1,986 1,396 Interest paid (3) (3) Income tax (paid)/received (232) 136 Net cash flows from operating activities 1,751 1,529 Cash flows from investing activities Acquisition of property, plant and equipment (437) (1,216) Acquisition of investment property - (100) Proceeds from sale of property, plant and equipment - 5 Interest received 11 12 Net cash flows from investing activities (426) (1,299) Cash flows from financing activities Payment of finance lease liabilities (53) (50) Equity dividends paid (322) (1,119) Net cash flows from financing activities (375) (1,169) Increase/(decrease) in cash and cash equivalents in the year 950 (939) Cash and cash equivalents at the start of the year 1,671 2,610 Cash and cash equivalents at the end of the year 2,621 1,671
Preliminary announcement of results for the year ended 31 March 2017
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 2016 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 2017 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 2017 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 2016.
2. Segment reporting
Segment information is presented in the financial statements 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.
Franchising and Retail is the income that the Group receives from its franchise activities together with the results of its corporate stores. Warehousing reflects the results of the Group's in-house cutting operation which services the franchised and corporate stores and a small number of third parties. The Property division leases properties from third parties and sublets those to the store network.
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.
Unallocated income includes rent receivable from investment property.
Franchising Warehousing Property Consolidated and Retail Year Year ended ended 31 March 31 March 2017 2016 2017 2016 2017 2016 2017 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Gross sales 11,633 13,004 8,823 8,393 2,957 3,076 23,413 24,473 Inter-segment - - (1,710) (2,426) (511) (678) (2,221) (3,104) sales ____ ____ ____ ____ ____ ____ ____ ____ Segment 11,633 13,004 7,113 5,967 2,446 2,398 21,192 21,369 revenue ____ ____ ____ ____ ____ ____ ____ ____ Segment 1,373 1,005 63 311 (11) 31 results ____ ____ ___ ____ ___ ____ 1,425 1,347 Unallocated income 67 68 Other operating 27 63 income ____ ____ Operating profit 1,519 1,478 Financial income 11 12 Financial expenses (3) (3) Income (243) (258) tax expense ____ ____ Profit 1,284 1,229 for the _____ _____ year
Preliminary announcement of results for the year ended 31 March 2017
Notes to the preliminary announcement (continued)
3. Operating profit
Operating profit is arrived at after charging/(crediting):
Year Year ended ended 31 March 31 March 2017 2016 GBP'000 GBP'000 Release of the deferred consideration (148) - creditor relating to the acquisition of the trade, assets and certain liabilities of United Carpets (Northern) Limited Provision for the estimated costs associated with vacating properties 206 84 (Release of provision)/charge for impairment of trade receivables (132) 42 Release of provision for impairment of inventories - (110)
The liquidators of UNCN Realisations 2012 Limited (formerly United Carpets (Northern) Limited) have indicated that the potential dividend owed to United Carpets Group plc is likely to exceed the remaining deferred consideration of GBP148,000 owed by United Carpets Group plc. While the final amount of the dividend has not yet been announced, the Directors consider that the provision previously held in respect of the deferred consideration is no longer required.
During the year, 4 stores and a small warehouse/store closed and 3 stores relocated resulting in a charge to the provision for vacating properties of GBP206,000 in the year.
Progress continues to be made working with franchisees to recover historic debts resulting in a release of provision for impairment of trade receivables of GBP132,000 in the year.
In the prior year, the basis for impairing inventories was reconsidered resulting in a release of provision for impairment of inventories of GBP110,000.
4. Income tax expense
Analysis of charge for the year:
Year Year ended ended 31 March 31 March 2017 2016 GBP'000 GBP'000 Current tax: Current year 265 269 Adjustment in respect of prior periods (46) (34) ---------- ---------- 219 235 Deferred tax: Current year 38 41 Adjustment in respect of prior periods (14) (18) ---------- ---------- Total income tax expense recognised in the current year 243 258 ========== ==========
Preliminary announcement of results for the year ended 31 March 2017
Notes to the preliminary announcement (continued)
4. Income tax expense (continued)
The tax charge for the year differs to the standard rate of corporation tax in the UK of 20% (2016: 20%). The differences are explained below:
Year Year ended ended 31 March 31 March 2017 2016 GBP'000 GBP'000 Profit before tax 1,527 1,487 Profit before tax multiplied by the rate of corporation tax in the UK of 20% (2016: 20%) 305 297 Effect of: Expenses not deductible for tax purposes 13 12 Adjustments to tax charge in respect of prior periods (60) (52) Other (15) 1 Total tax 243 258 ================ =========== 5. Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the year ended 31 March 2017 was based on the profit attributable to ordinary shareholders of GBP1,284,000 (2016: GBP1,229,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2017 of 81,400,000 (2016: 81,400,000).
Diluted earnings per share
The calculation of diluted earnings per share for the year ended 31 March 2017 was based on the profit attributable to ordinary shareholders of GBP1,284,000 (2016: GBP1,229,000) and a weighted average number of ordinary shares outstanding and potential ordinary shares due to options during the year ended 31 March 2017 of 81,784,987 (2016: 82,286,571).
Preliminary announcement of results for the year ended 31 March 2017
Notes to the preliminary announcement (continued)
6. Equity dividends Year Year ended ended 31 March 31 March 2017 2016 GBP'000 GBP'000 Special dividend paid during 2015/16 on ordinary shares of 1.0p per share - 814 Final dividend in respect of 2014/15 paid during the year on ordinary shares of 0.25p per share - 203 Interim dividend in respect of 2015/16 paid during the year on ordinary shares of 0.125p per share - 102 Final dividend in respect of 2015/16 216 - paid during the year on ordinary shares of 0.265p per share Interim dividend in respect of 2016/17 106 - paid during the year on ordinary shares of 0.13p per share ------------ ----------- 322 1,119 ============ ===========
A special dividend of 1.0p per share was paid on 25 May 2017.
A final dividend of 0.275p per share in respect of the year ended 31 March 2017 has been recommended.
7. Cash generated from operations Year Year ended ended 31 March 31 March 2017 2016 GBP'000 GBP'000 Profit before tax 1,527 1,487 Depreciation and other non-cash items: Depreciation of property, plant and equipment 221 208 Impairment of property, plant and equipment 304 62 Loss on disposal of property, plant and equipment - 2 Depreciation of investment property 3 - Changes in working capital: Increase in inventories (93) (254) Decrease/(increase) in trade and other receivables 815 (288) (Decrease)/increase in trade and other payables (699) 196 Decrease in provisions (84) (8) Financial income (11) (12) Financial expenses 3 3 ------------ ----------- Cash generated from operations 1,986 1,396 ============ ===========
This information is provided by RNS
The company news service from the London Stock Exchange
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