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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 : 3212G
United Carpets Group plc
23 July 2019
23 July 2019
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 2019
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 2019.
Key points
-- Revenue increased by 10.4% to GBP23.98m (2018: GBP21.72m) -- Profit before tax was GBP0.59m (2018: GBP1.52m) -- Earnings per share were 0.51p (2018: 1.57p) -- Store numbers increased from 58 to 59 -- Like for like sales* decreased by 0.1%
-- Recommending a maintained final dividend of 0.285p per share (2018: 0.285p per share) payable on 10 October 2019
-- Net funds at 31 March 2019 were GBP2.10m (2018: GBP2.64m) -- Like for like sales* since the period end up 4.6%
*Like for like sales are defined in the Financial Review
Paul Eyre, Chief Executive, said:
"An unusually hot summer last year, combined with the football World Cup and a softer housing market, made this a challenging year. Despite this, sales increased by 10.4% through supporting our existing store network and further developing new business opportunities which helped increase market share, whilst only making a small positive contribution to profit in the year. Profit before tax was within the reduced range anticipated in March 2019 reflecting an increasingly difficult retail environment. The business remains well placed with a largely franchised store portfolio operating under a trusted brand, delivering good quality and great value products, and able to take advantage of any upturn in the broader market. The current financial year has started positively with like for like sales up 4.6% for the first 16 weeks."
Enquiries:
United Carpets Group plc Paul Eyre, Chief Executive Ian Bowness, Finance Director 01709 732 666 Cantor Fitzgerald Europe (NOMAD and Broker) Rick Thompson Michael Boot 020 7894 7000 Novella Communications Limited Tim Robertson Fergus Young 020 3151 7008
The person responsible for arranging the release of this information is Ian Bowness, Finance Director of the Company
Chairman's statement
Overview
As we have highlighted previously, our markets during 2018/19 have been very challenging due to the ongoing political and economic uncertainties which, we believe, have created a generally softer housing market and a reduction in consumer confidence. The year was further affected by an unusually hot summer and a successful run by England in the football World Cup, which together meant we had to work harder and invest more in marketing to generate every sale.
Despite this backdrop, the decrease in like for like sales was modest as we have striven to compete in a tough market, investing in our brand and franchise network. Notwithstanding increased marketing investment, corporate store profitability was adversely affected and the franchise network needed additional support, further increasing costs. We have opened a small number of new stores which are not yet mature and contributing to profit and invested in a new business channel. While this new business channel has helped to increase revenue, it is not yet making a meaningful, positive contribution to Group profitability but has increased the general cost base further.
The result has, however, been to gain market share, achieve a full year result within the reduced range anticipated at our last trading update in March 2019 and also to potentially improve the future prospects of the business.
We anticipate that the market environment will continue to be challenging given the ongoing political uncertainties. However, United Carpets remains profitable, with a healthy balance sheet and a low level of borrowings. We will continue to invest prudently in new opportunities, which supports the Board's belief that United Carpets is well placed to compete and grow in the current year.
Financial review
Revenue, which includes marketing and rental costs incurred by the Group and recharged to franchisees, was GBP23.98m (2018: GBP21.72m).
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 slightly lower by 0.1%. The factors noted above made for a difficult first half, with like for like sales decreasing by 1.8%. Performance improved in the more important second half, generating reasonable like for like increases and resulting in only a small reduction in like for like sales for the year. The significant increase in total revenue during the year principally reflects an increase in the number of corporate stores during the year, which added GBP0.8m to revenue, and the early stage trials of an instalment payment channel which is excluded from like for like sales. The instalment payment model is a transparent offer with no hidden costs or extra charges which is appealing to some of our customers.
Gross margin in the period was 61.6% compared to 61.5% in the prior year. Warehousing gross margins improved as a result of actions taken during the year to improve overall profitability. This more than offset the "mix" impact from an increased proportion of total revenue being derived from corporate stores and new business channels with a corresponding reduction in the proportion of total revenue from franchise related income.
Distribution costs and administrative expenses, which include rent, rates and staff costs at the corporate stores, increased by GBP1.8m and from 54.4% of revenue to 56.8% reflecting:
- increased costs from non like for like corporate stores opened during the year and in the prior year,
- substantial operating costs associated with the new instalment payment channel,
- continued and increased investment in marketing and support for the store network to assist in competing in a very competitive environment,
- increased depreciation (non-cash charge against profit) as a result of controlled expansion and modest ongoing refurbishment of the existing store estate.
The instalment payment channel suffers an inherently greater risk of default than traditional retailing and an impairment charge of GBP0.42m (2018: GBP0.03m) was made during the year against receivables as this business channel has been developed. The level of charge incurred is in line with the expected levels of default in our original planning model. A further impairment charge of GBP0.16m (2018: GBPnil) was made during the year against receivables, reflecting the impact of the prevailing market environment on the franchise network as the Group continues to support its franchisees.
Profit before tax was GBP0.59m (2018: GBP1.52m) and earnings per share were 0.51p (2018: 1.57p).
The statement of financial position included net funds of GBP2.10m as at 31 March 2019 (2018: GBP2.64m).
Dividend
The Board is pleased to be able to recommend a maintained final dividend of 0.285p per share (2018: 0.285p per share). Subject to approval at the Annual General Meeting, this dividend will be paid on 10 October 2019 to all shareholders on the register at the close of business on 27 September 2019. The ex-dividend date will be 26 September 2019.
Combined with the interim dividend of 0.135p per share (2018: 0.135p per share), the total dividend for the year will be 0.42p per share (2018: 0.42p per share).
Operational review
At 31 March 2018, there were 58 stores of which 50 were franchised and 8 were corporate stores. During the period under review, the total number of stores increased to 59 of which 48 were franchised and 11 were corporate stores. In the course of the year, two new corporate stores were opened and one franchised store was converted to become a corporate store. In addition, a further franchise store was closed.
The Group continues to consider potential new locations and equally importantly potential new franchisees. Matching stores and managers and securing attractive lease terms make up the fundamentals of expanding the portfolio and our approach remains highly selective and focused on waiting for the right opportunities to arise. A further two corporate stores have opened since the year end bringing total store numbers to 61, of which 13 are corporate.
Franchising and Retail
This year has been tough for all retailers and we were no exception. The market was characterised by competing offers with very high levels of discounting across all our key product lines. In response we invested behind our individual stores and brand, increasing marketing budgets and competing aggressively on price as necessary. As we have historically, marketing spend was targeted towards advertising campaigns across radio, television and print media. As a result, we limited the fall in like for like sales to just 0.1% for the year.
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. Over the year, the portfolio reversed a negative 1.6% like for like sales in the first six months with an improved performance in the second half resulting in a 0.3% like for like increase for the year. This was a creditable outcome in a very tough market environment.
The sale of beds reflected the market conditions with like for like sales 4.0% lower. The Group now has over 85% of stores offering beds with the larger stores able to show broader ranges. There is no doubt the retail offer of combining flooring and beds works well but the higher transaction cost of buying a bed compared to new flooring appears to make sales more susceptible to poorer market conditions.
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. The Warehousing division is seen as a key element of service to the store network, and whilst it is not intended to generate a normal, commercial return, a modest ongoing profit is the aim. Actions taken in the second half of the prior year have provided a more sustainable base and successfully delivered a modest recovery in the performance of this division in the current financial year.
Property
The Property division leases properties from third parties and sublets those properties to the store network.
People
On behalf of the Board I would like to thank our franchisees, suppliers, colleagues and all persons connected to the Group for their efforts throughout the twelve months under review. We are grateful for their continued commitment and we look forward to working together to achieve a successful outcome for the current year.
Outlook
The current financial year has begun well, with like for like sales up 4.6% for the first 16 weeks albeit against relatively weak comparatives in the prior year. We have identified some areas where cost savings can be made and others where performance can be improved. While we do not expect trading conditions to improve markedly from last year, we are confident in our ability to compete effectively and profitably. Part of our confidence comes from the strength of our franchise structure with our franchisees bringing a drive and determination for their stores to succeed which is difficult to match in a wholly owned model. The initial trials with instalment payments made a small positive contribution to the year just ended and we believe that this channel should start to make a more significant contribution in the current year.
Peter Cowgill
Chairman
Preliminary announcement of results for the year ended 31 March 2019
Consolidated statement of comprehensive income
Hot Features
Premium
Year Year
ended ended
31 March 31 March
Note 2019 2018
GBP'000 GBP'000
Revenue 2 23,983 21,721
Cost of sales (9,203) (8,361)
Gross profit 14,780 13,360
Distribution costs (453) (404)
Administrative expenses (13,160) (11,416)
Impairment of receivables (579) (31)
Other operating income - 10
Operating profit 3 588 1,519
Financial income 12 8
Financial expenses (5) (3)
Profit before tax 595 1,524
Income tax expense 4 (177) (242)
Profit for the year* 418 1,282
Earnings per share 5
- Basic (pence per share) 0.51p 1.57p
- Diluted (pence per share) 0.51p 1.57p
*All activities relate to continuing operations and are attributable to the owners of the parent.
There were no other recognized 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 2019
Consolidated statement of financial position
At At
31 March 31 March
2019 2018
GBP'000 GBP'000
Non-current assets
Intangible assets 109 143
Property, plant and
equipment 2,846 2,399
Investment property 93 95
Deferred tax assets 53 99
3,101 2,736
Current assets
Inventories 2,146 1,890
Trade and other receivables 3,663 2,242
Current tax receivable 13 -
Cash and cash equivalents 2,259 2,640
8,081 6,772
Total assets 11,182 9,508
Capital and reserves
Issued capital 814 814
Retained earnings 4,533 4,457
Total equity attributable
to owners of the parent 5,347 5,271
Non-current liabilities
Borrowings - finance
leases 96 -
Trade and other payables 584 519
680 519
Current liabilities
Borrowings - finance
leases 62 3
Trade and other payables 4,942 3,433
Provisions 151 151
Current tax liabilities - 131
5,155 3,718
Total liabilities 5,835 4,237
Total equity and liabilities 11,182 9,508
Preliminary announcement of results for the year ended 31 March 2019
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
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
Profit for
the year - 418 418
Equity
dividends
paid 6 - (342) (342)
At 31
March
2019 814 4,533 5,347
Preliminary announcement of results for the year ended 31 March 2019
Consolidated statement of cash flows
Year
ended Year ended
31 March 31 March
Note 2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 7 781 2,210
Interest paid (5) (3)
Income tax paid (275) (261)
Net cash flows from operating activities 501 1,946
Cash flows from investing activities
Acquisition of intangible assets (15) (143)
Acquisition of property, plant
and equipment (516) (624)
Proceeds from sale of property,
plant and equipment 39 -
Interest received 12 8 Net cash flows from investing activities (480) (759) Cash flows from financing activities Payment of finance lease liabilities (60) (20) Equity dividends paid 6 (342) (1,148) Net cash flows from financing activities (402) (1,168) (Decrease)/increase in cash and cash equivalents in the year (381) 19 Cash and cash equivalents at the start of the year 2,640 2,621 Cash and cash equivalents at the end of the year 2,259 2,640
Preliminary announcement of results for the year ended 31 March 2019
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 2018 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 2019 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 2019 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 2018 with the exception of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers which the Group is required to adopt in the financial statements for the year ended 31 March 2019. There was no impact on the reported results in the current or previous years as a result of the adoption of IFRS 9 and IFRS 15.
IFRS 16 'Leases' - to be adopted in the 2020 financial year
This standard is applicable to annual reporting periods beginning on or after 1 January 2019 and the Group will adopt this standard in the accounts for the year ending 31 March 2020. The standard replaces IAS 17 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration or removal costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17. However, results from operating activities before depreciation, amortisation and share-based payment charges will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under IFRS 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component.
Given the complexity of the standard and the number of leases held by the Group, the implementation project remains work in progress and the figures quoted below are therefore illustrative at this stage.
The Group is proposing to adopt the full retrospective approach. The expected impact on the year ended 31 March 2019 is to recognise a right of use asset of GBP18.6m and a capitalised lease liability of GBP20.6m and reduce the profit before tax for the year by GBP0.3m.
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 and instalment payment channel. 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 properties 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 in the prior year included 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
2019 2018 2019 2018 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gross sales 14,479 12,046 9,676 9,092 3,236 3,062 27,391 24,200
Inter-segment - - (2,521) (1,751) (887) (728) (3,408) (2,479)
sales ____ ____ ____ ____ ____ ____ ____ ____
Segment 14,479 12,046 7,155 7,341 2,349 2,334 23,983 21,721
revenue ____ ____ ____ ____ ____ ____ ____ ____
Segment 561 1,319 120 82 (198) (79)
results ____ ____ ___ ____ ___ ____ 483 1,322
Unallocated
income 105 187
Other - 10
operating ____ ____
income
Operating
profit 588 1,519
Financial
income 12 8
Financial
expenses (5) (3)
Income tax (177) (242)
expense ____ ____
Profit for 418 1,282
the year _____ _____
3. Operating profit
Operating profit is arrived at after crediting:
Year Year
ended ended
31 March 31 March
2019 2018
GBP'000 GBP'000
UNCN Realisations 2012 Limited - final
dividend - (115)
During the prior 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.
4. Income tax expense
Analysis of charge for the year
Year
Year ended ended
31 March 31 March
2019 2018
GBP'000 GBP'000
Current tax:
Current year 87 219
Adjustment in respect of prior years 44 (62)
131 157
Deferred tax:
Current year 39 45
Adjustment in respect of prior years 7 40
46 85
Total income tax expense recognised in the
current year 177 242
Reconciliation of total tax charge for the year
The tax charge for the year differs to the standard rate of corporation tax in the UK of 19% (2018: 19%). The differences are explained below:
Year Year
ended ended
31 March 31 March
2019 2018
GBP'000 GBP'000
Profit before tax 595 1,524
Profit before tax multiplied by the rate
of corporation tax in the UK of 19% (2018:
19%) 113 290
Effect of:
Expenses not deductible for tax purposes 8 8
Non-taxable income - (22)
Adjustments in respect of prior years 51 (22)
Other 5 (12)
Total tax 177 242
================ ===========
5. Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the year ended 31 March 2019 was based on the profit attributable to ordinary shareholders of GBP418,000 (2018: GBP1,282,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2019 of 81,400,000 (2018: 81,400,000).
Diluted earnings per share
The calculation of diluted earnings per share for the year ended 31 March 2019 was based on the profit attributable to ordinary shareholders of GBP418,000 (2018: GBP1,282,000) and a weighted average number of ordinary shares outstanding and potential ordinary shares due to options during the year ended 31 March 2019 of 81,400,000 (2018: 81,668,952).
6. Equity dividends paid
Year Year
ended ended
31 March 31 March
2019 2018
GBP'000 GBP'000
Special dividend of 1.0p per ordinary share - 814
Final dividend in respect of 2017/18 of 232 -
0.285p per ordinary share
Interim dividend in respect of 2018/19 of 110 -
0.135p per ordinary share
Final dividend in respect of 2016/17 of
0.275p per ordinary share - 224
Interim dividend in respect of 2017/18 of
0.135p per ordinary share - 110
342 1,148
A final dividend of 0.285p per share in respect of the year ended 31 March 2019 has been recommended.
7. Cash generated from operations
Reconciliation of the result for the year to cash generated from operations:
Year
Year ended ended
31 March 31 March
2019 2018
GBP'000 GBP'000
Profit before tax 595 1,524
Depreciation and other non-cash items:
Amortisation of intangible assets 33 -
Depreciation of property, plant and equipment 292 242
Profit on disposal of property, plant and (31) -
equipment
Depreciation of investment property 2 2
Changes in working capital:
Increase in inventories (256) (169)
Increase in trade and other receivables (1,421) (406)
Increase in trade and other payables 1,574 1,027
Decrease in provisions - (5)
Financial income (12) (8)
Financial expenses 5 3
Cash generated from operations 781 2,210
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
FR SEMFLEFUSEEW
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July 23, 2019 02:00 ET (06:00 GMT)
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