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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 |
From Apr 2019 to Apr 2024
TIDMUCG
RNS Number : 3585V
United Carpets Group plc
23 July 2018
23 July 2018
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
UNITED CARPETS GROUP PLC
Unaudited Preliminary Results for the year ended 31 March 2018
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 2018.
Key points
-- Like for like sales* increased by 3.2% -- Revenue increased by 2.5% to GBP21.72m (2017: GBP21.19m) -- Profit before tax was GBP1.52m (2017: GBP1.53m) -- Earnings per share were 1.57p (2017: 1.58p) -- Store numbers increased from 57 to 58 -- Interim dividend of 0.135p per share (2017: 0.13p) paid 19 January 2018
-- Recommending an increased final dividend of 0.285p per share (2017: 0.275p per share) payable on 11 October 2018
-- After having paid another special dividend of 1.0p per share (GBP0.81m) in May 2017, net funds were GBP2.64m (2017: GBP2.60m)
-- Like for like sales* since the period end are down 1.6%
*Like for like sales are defined in the Financial Review
Paul Eyre, Chief Executive, said:
"In the context of today's retail market, achieving a 3.2% like for like sales increase was a pleasing performance. It reflects strong product ranges at attractive price points and a high level of personal commitment from our franchisees to their individual stores, displaying substantial resilience when market conditions become more challenging. While the adverse impact of the recent exceptional weather and the World Cup is unsurprising, the resilience of the franchise network represents a key point of differentiation for United Carpets and one that continues to be important in the current market environment."
Enquiries:
Hot Features
Premium
United Carpets Group plc
Paul Eyre, Chief Executive
Ian Bowness, Finance Director
01709 732 666
Novella Communications Limited
Tim Robertson
Toby Andrews 020 3151 7008
Cantor Fitzgerald Europe
Marc Milmo, Catherine Leftley (Corporate Finance) 020 7894 7000
Chairman's statement
Overview
The challenges in the retail market and within the home furnishings sector in particular have been widely reported. Recording moderate increases in revenue, level profits and positive like for like sales of 3.2% is therefore a satisfactory outcome for the year.
It is difficult to predict the strength or otherwise of the market in the coming months as the political and economic factors are many and ever changing. The Group continues to focus on its core retail offer and supporting the endeavours of the franchise network with new marketing initiatives, new customer financing options and expanded product ranges.
During the year, we added one corporate store taking the total number of stores to 58. Where there is a compelling case, the Group will continue to open new stores alongside seeking new franchisees to operate new and non-core corporate stores.
Activity across the housing market has continued to be sluggish despite support from the ongoing low interest rate environment. However, repair and refurbishment of existing homes continues to be an important factor in helping to support consumer demand for new flooring and beds.
Financial review
Revenue, which includes marketing and rental costs incurred by the Group and recharged to franchisees, was GBP21.72m (2017: GBP21.19m).
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 3.2%. This was a positive result during a period when a number of peers have announced disappointing or negative like for like sales performances.
Gross margin in the period was 61.5% compared to 61.2% in the prior year reflecting a general improvement in underlying gross margins offset by a slight increase in the proportion of total sales derived from the Warehousing division
Distribution costs and administrative expenses, which include rent, rates and staff costs at the corporate stores, increased by GBP0.4m reflecting the additional costs of the corporate store added in the year and the full year impact of the increased investment to support the Group's online and Beds operations during the prior year. Consequently, distribution costs and administrative expenses were 54.6% of revenue, a small increase from 54.1% in the prior year.
Profit before tax was GBP1.52m (2017: GBP1.53m) and earnings per share were 1.57p (2017: 1.58p).
The statement of financial position included net funds of GBP2.64m at 31 March 2018 (2017: GBP2.60m).
Dividend
Notwithstanding the more challenging environment, the Group continues to generate cash and has no borrowings. The Board is pleased, therefore, to be able to recommend an increased final dividend of 0.285p per share (2017: 0.275p per share). Subject to approval at the Annual General Meeting, this dividend will be paid on 11 October 2018 to all shareholders on the register at the close of business on 28 September 2018. The ex-dividend date will be 27 September 2018.
Combined with the interim dividend of 0.135p per share (2017: 0.13p per share), the total dividend for the year will be 0.42p per share (2017: 0.405p per share).
In addition, on 25 May 2017, the Group paid a special dividend of 1.0 pence per share.
Chairman's statement (continued)
Operations review
The store portfolio is better balanced, more stable and managed by an increasingly experienced network of franchisees. During the financial year under review, one new corporate store was added in a trial format taking the total number of stores to 58 as at 31 March 2018. There have been no further changes to the portfolio since then, although at least one new store is expected to open with an existing, successful franchisee in the current calendar year.
Of the 58 stores 50 are operated by franchisees and 8 are corporate stores of which 3 are considered to be long term corporate stores and 5 could be franchised. The average length a United Carpets franchisee has been with the Group is now 10 years reflecting the stability and experience the Group has accumulated across the network. An expanding group of franchisees are now successfully running multiple stores which brings immediate experience to a new store and a route for the best performing franchisees to grow within the Group.
Building on the work in the previous year, the Group continues to invest in its presence online. The website is transactional and each order is fulfilled by the nearest store to the customer. In addition, the Group continues to explore new opportunities to make its products more affordable to the consumer including interest free credit and other easy payment options. Trials to date have proven popular, expanding our customer appeal more widely and the results will continue to be closely monitored.
Alongside these initiatives, 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. Flooring like for like sales were up by 3.2% for the year which compares favourably to the wider market. The Group is always looking to increase the product range and add to marketing activities but the key driver for this performance came from the effectiveness of the franchise network and the combined commitment of our franchisees who act as individual business owners with the ability to draw upon the resources of the Group. Training of franchisees, managers and staff continues to be a key area of development focussed on improving conversion rates and average transaction values.
While still contributing less than 10% of the Group's total revenues, Beds again delivered a positive performance with a like for like sales increase also of 3.2%. Over 80% of our stores sell beds and it is a firmly established addition to the core flooring offer. There remains further potential and the Group continues to explore the addition of new bed brands and encouraging those remaining franchisees who are still exclusively flooring focused to expand into Beds. The recent introduction of an in-store, digital Beds catalogue has enabled some stores, previously considered too small to stock Beds, the opportunity to participate in this additional product category.
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, improving efficiency and customer service. Actions taken in the second half, to offset the impact of additional costs to better support the service to the store network, were successful in transforming a small first half loss into a modest profit for the full year.
The Warehousing function is seen as a key element of service to our store network and whilst it is not intended to generate a normal, commercial return, a modest ongoing profit is considered to be sustainable.
Property
The Property division leases properties from third parties and sublets those properties to the store network.
People
These results show the benefit of the franchise structure and the Board would like to thank the franchisees, suppliers, employees and all persons connected to the Group for their contribution to these results 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 16 weeks since the period end to 19 July 2018 are down 1.6%. Warm, sunny weather has a significant adverse impact on our sector and conditions over the important bank holidays were poor for us and have deteriorated significantly over the last 4 weeks of that period as the World Cup added further distractions.
While the Board believes that United Carpets is well placed to compete, it does not expect the trading environment to improve dramatically in the short to medium term. Combined with inflationary pressures impacting on the cost base, the first half of the current financial year is expected to be very challenging and the Board do not anticipate the first half profit levels of the previous year to be achieved. However, the store portfolio has, over the years, been significantly streamlined and the remaining stores are well located, generally at competitive rents. The Group has no debt and is committed to investing in promoting the brand in all spheres. Perhaps most significantly, the Board have confidence in the abilities and commitment of the franchise network to ensure their own and the Group's future.
Peter Cowgill
Chairman
Preliminary announcement of results for the year ended 31 March 2018
Consolidated statement of comprehensive income
Year Year
ended ended
31 March 31 March
Note 2018 2017
GBP'000 GBP'000
Revenue 2 21,721 21,192
Cost of sales (8,361) (8,231)
Gross profit 13,360 12,961
Distribution costs (404) (384)
Administrative expenses (11,447) (11,085)
Other operating income 10 27
Operating profit 3 1,519 1,519
Financial income 8 11
Financial expenses (3) (3)
Profit before tax 1,524 1,527
Income tax expense 4 (242) (243)
Profit for the year* 1,282 1,284
Earnings per share 5
- Basic (pence per share) 1.57p 1.58p
- Diluted (pence per share) 1.57p 1.57p
*All activities relate to continuing operations and are attributable to the owners of the parent.
There were no other recognised gains and losses for the current year other than shown above and therefore no separate statement of other comprehensive income has been presented.
Preliminary announcement of results for the year ended 31 March 2018
Consolidated statement of financial position
At At
31 March 31 March
2018 2017
GBP'000 GBP'000
Non-current assets
Intangible assets -
software 143 -
Property, plant and
equipment 2,399 2,017
Investment property 95 97
Deferred tax assets 99 184
2,736 2,298
Current assets
Inventories 1,890 1,721
Trade and other receivables 2,242 1,836
Cash and cash equivalents 2,640 2,621
6,772 6,178
Total assets 9,508 8,476
Capital and reserves
Issued capital 814 814
Retained earnings 4,457 4,323
Total equity attributable
to owners of the parent 5,271 5,137
Non-current liabilities
Borrowings - finance
leases - 3
Trade and other payables 519 519
519 522
Current liabilities
Borrowings - finance
leases 3 20
Trade and other payables 3,433 2,406
Provisions 151 156
Current tax liabilities 131 235
3,718 2,817
Total liabilities 4,237 3,339
Total equity and liabilities 9,508 8,476
Preliminary announcement of results for the year ended 31 March 2018
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
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
Profit for
the year - 1,282 1,282
Equity
dividends
paid 6 - (1,148) (1,148)
At 31
March
2018 814 4,457 5,271
Preliminary announcement of results for the year ended 31 March 2018
Consolidated statement of cash flows
Year
ended Year ended
31 March 31 March
Note 2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 7 2,210 1,986
Interest paid (3) (3)
Income tax paid (261) (232)
Net cash flows from operating activities 1,946 1,751
Cash flows from investing activities
Acquisition of intangible assets (143) -
Acquisition of property, plant
and equipment (624) (437)
Interest received 8 11
Net cash flows from investing activities (759) (426)
Cash flows from financing activities
Payment of finance lease liabilities (20) (53)
Equity dividends paid (1,148) (322)
Net cash flows from financing activities (1,168) (375)
Increase in cash and cash equivalents
in the year 19 950
Cash and cash equivalents at the
start of the year 2,621 1,671
Cash and cash equivalents at the
end of the year 2,640 2,621
Preliminary announcement of results for the year ended 31 March 2018
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 2017 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 2018 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 2018 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 2017.
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 some 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 and the final dividend received from the liquidators of UNCN Realisations 2012 Limited (as note 3).
Franchising Warehousing Property Consolidated
and Retail
Year Year
ended ended
31 March 31 March
2018 2017 2018 2017 2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gross sales 12,046 11,633 9,092 8,823 3,062 2,957 24,200 23,413
Inter-segment - - (1,751) (1,710) (728) (511) (2,479) (2,221)
sales ____ ____ ____ ____ ____ ____ ____ ____
Segment 12,046 11,633 7,341 7,113 2,334 2,446 21,721 21,192
revenue ____ ____ ____ ____ ____ ____ ____ ____
Segment 1,319 1,373 82 63 (79) (11)
results ____ ____ ___ ____ ___ ____ 1,322 1,425
Unallocated
income 187 67
Other 10 27
operating ____ ____
income
Operating
profit 1,519 1,519
Financial
income 8 11
Financial
expenses (3) (3)
Income tax (242) (243)
expense ____ ____
Profit for 1,282 1,284
the year _____ _____
Preliminary announcement of results for the year ended 31 March 2018
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
2018 2017
GBP'000 GBP'000
UNCN Realisations 2012 Limited
- final dividend (115) -
- deferred consideration release - (148)
Provision for the estimated costs associated
with vacating properties - 206
Charge/(release of provision) for impairment
of trade receivables 31 (132)
During the year a first and final dividend of 3.56p in the pound was received from the liquidators of UNCN Realisations 2012 Limited (formerly United Carpets (Northern) Limited) in respect of amounts owed to United Carpets Group plc by United Carpets (Northern) Limited. The Directors considered that the provision previously held in respect of deferred consideration was no longer required and this was released in the comparative period.
No stores were vacated during the year and the existing provision for the estimated costs associated with vacating properties was considered adequate.
Progress continues to be made working with franchisees to recover historic debts A charge for impairment of trade receivables of GBP31,000 was made in the year (2017: GBP132,000 credit).
4. Income tax expense
Analysis of charge for the year:
Year
Year ended ended
31 March 31 March
2018 2017
GBP'000 GBP'000
Current tax:
Current year 219 265
Adjustment in respect of prior years (61) (46)
158 219
Deferred tax:
Current year 45 38
Adjustment in respect of prior years 39 (14)
Total income tax expense recognised in the
current year 242 243
Preliminary announcement of results for the year ended 31 March 2018
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 19% (2017: 20%). The differences are explained below:
Year Year
ended ended
31 March 31 March
2018 2017
GBP'000 GBP'000
Profit before tax 1,524 1,527
Profit before tax multiplied by the rate
of corporation tax in the UK of 19% (2017:
20%) 290 305
Effect of:
Expenses not deductible for tax purposes 8 13
Non taxable income (22) -
Adjustments to tax charge in respect of
prior years (22) (60)
Other (12) (15)
Total tax 242 243
================ ===========
5. Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the year ended 31 March 2018 was based on the profit attributable to ordinary shareholders of GBP1,282,000 (2017: GBP1,284,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2018 of 81,400,000 (2017: 81,400,000).
Diluted earnings per share
The calculation of diluted earnings per share for the year ended 31 March 2018 was based on the profit attributable to ordinary shareholders of GBP1,282,000 (2017: GBP1,284,000) and a weighted average number of ordinary shares outstanding and potential ordinary shares due to options during the year ended 31 March 2018 of 81,668,952 (2017: 81,784,987).
Preliminary announcement of results for the year ended 31 March 2018
Notes to the preliminary announcement (continued)
6. Equity dividends paid
Year Year
ended ended
31 March 31 March
2018 2017
GBP'000 GBP'000
Special dividend paid during the year on ordinary 814 -
shares of 1.0p per share
Final dividend in respect of 2016/17 paid during 224 -
the year on ordinary shares of 0.275p per share
Interim dividend in respect of 2017/18 paid 110 -
during the year on ordinary shares of 0.135p
per share
Final dividend in respect of 2015/16 paid during
the year on ordinary shares of 0.265p per share - 216
Interim dividend in respect of 2016/17 paid
during the year on ordinary shares of 0.13p
per share - 106
------------ -----------
1,148 322
A final dividend of 0.285p per share in respect of the year ended 31 March 2018 has been recommended.
7. Cash generated from operations
Year
Year ended ended
31 March 31 March
2018 2017
GBP'000 GBP'000
Profit before tax 1,524 1,527
Depreciation and other non-cash items:
Depreciation of property, plant and equipment 242 221
Impairment of property, plant and equipment - 304
Depreciation of investment property 2 3
Changes in working capital:
Increase in inventories (169) (93)
(Increase)/decrease in trade and other receivables (406) 815
Increase/(decrease) in trade and other payables 1,027 (699)
Decrease in provisions (5) (84)
Financial income (8) (11)
Financial expenses 3 3
Cash generated from operations 2,210 1,986
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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July 23, 2018 02:00 ET (06:00 GMT)
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