RNS Number:9856M
Carpetright PLC
01 July 2003
1st July 2003
Carpetright plc
Strong profit growth in the UK business; 12.1% increase in the dividend
Carpetright plc, the UK's leading specialist carpet and floor coverings retailer
with 351 stores in the UK and Southern Ireland and 90 in Continental Europe,
today makes its preliminary announcement of its audited results for the 53 weeks
ended 3 May 2003.
Highlights
Group Summary
* Adjusted profit before tax* increased by 8.7% to #57.1m
* Profit on ordinary activities before taxation was #50.9m (2002: #52.5m)
* Adjusted earnings per share* improved by 16.1% to 56.2p
* Basic earnings per share was 50.7p (2002: 48.4p)
* Recommended final dividend of 22.0p giving a total dividend of 37.0p,
an increase of 12.1% on last year
UK and Southern Ireland Operations
* Profit on ordinary activities before taxation increased by 16.2% to a
record #61.0m
* Total sales increased by 7.0% to #386.8m, with like for like sales up 2.6%
* Operating margin improved by 0.6 percentage points to an industry leading
15.0%
European acquisition (10 months to 30 April 2003)
* Stage one of objectives achieved following first six months of full
ownership
* Adjusted loss before tax* of #3.9m
*Adjusted to exclude exceptional costs and goodwill amortisation, see
consolidated profit and loss account.
Lord Harris, Chairman and Chief Executive, said:
" I am pleased to report another year of strong profit growth in our UK and
Southern Ireland operations. The combination of our scale and continued focus
on investment, innovation and efficiency has enabled us to both increase market
share and improve our gross margins, despite a slowdown in the economic
environment. As a result we have also increased our operating margin to 15% for
the first time. The business has made significant improvement over the last year
and despite uncertain market conditions we believe we can continue to grow sales
and profits going forward."
" I am also pleased with the progress made on our European business especially
following the successful implementation of the restructuring phase. We remain
excited about the market potential both in Holland and Belgium and believe our
business is well positioned to capitalise on this. "
"During the first eight weeks of our current financial year sales in our UK and
Southern Ireland operations have grown by 3.0% with like for like sales
improving by 2.2%. Gross margin growth against the previous year has continued
at similar levels to those achieved for the second half of last year. In Europe
sales are slightly lower than our expectations for the first two months but we
continue to see better gross margin performance and the benefit of the cost
savings coming through."
For further enquiries please contact:
Carpetright plc
Lord Harris of Peckham, Chairman and Chief Executive
Darren Shapland, Finance Director
Telephone: 020 7282 8000 (until 1pm), 01708-525522 (thereafter)
Citigate Dewe Rogerson
Patrick Toyne Sewell / Sara Batchelor
Telephone: 020 7638 9571
Chairman's statement
Trading results and operational review
Group Summary
UK & Europe Total Group
Southern Ireland Acquisition
#'m % growth #'m #'m % growth
Sales 386.8 + 7.0 49.9 436.8 + 20.8
Adjusted operating profit
after interest * 57.2 + 11.9 - 3.9 53.3 + 4.1
Adjusted profit/loss
before tax* 61.0 + 16.2 - 3.9 57.1 + 8.7
Adjusted earnings per
share (pence) * 58.7 + 21.3 - 2.5 56.2 + 16.1
* Adjusted to exclude exceptional costs and amortisation of goodwill, see
consolidated profit and loss account.
UK and Southern Ireland Operations
Results
I am pleased to report that the UK and Southern Ireland operations achieved
another record profit on ordinary activities before taxation of #61.0m for the
53 weeks to 3 May 2003, an increase of 16.2% compared to last year.
Sales for the year were #386.8m, an increase of 7.0% on last year. This growth
was achieved from a like for like sales increase of 2.6%, sales from additional
space of 2.7% with the remainder due to the impact of the additional trading
week in the year. As noted at the interim results in December, the extra
trading week contributed #0.6m of additional profit for the year. The sales
performance was very different over the two halves. In the first half we
achieved an excellent 5.1% increase in like for like sales, whilst in the second
half like for like sales were flat, in line with the slow down seen across much
of the market as a result of worsening consumer confidence and economic
uncertainty. Despite this, we still out performed the market in the period and
we remain confident that our business proposition will enable us to continue to
grow market share.
Gross margin improved by 1.6 percentage points to 59.6%. This increase was
weighted towards the second half in which we achieved a 2.5 percentage point
improvement as we benefited from the full impact of our investment, innovation,
buying scale and efficiencies. We continue to make progress with the expansion
of our in-house and new 5 metre cutting facilities combined with our drive to
increase the average transaction value through a combination of product offering
and improved service.
Costs as a percentage of sales grew by 1.0 percentage points to 45.0% during the
year. This is primarily a result of our investment in the 5 metre cutting
facility and taking further cutting in house which in turn has supported some of
the improvement in gross margin. Other variable costs are level as a percentage
of sales year on year supported by the launch of an extensive cost saving
programme in the second half that has offset the investment we continue to make
in our service offering. We expect the full benefits of this cost saving
programme to come through in the current financial year.
Operating margin has increased by 0.6 percentage points to 15.0%, a record for
the business, and a significant achievement in light of the more difficult
trading environment.
Stores
We continue to actively manage our property portfolio as we seek to infill
certain gaps in our national coverage, as well as improving the quality of our
locations overall. We opened 30 stores in the year and closed 26, giving net
space at the year end of 3,411k sqft. Many of these openings and closures were
relocations as part of our ongoing programme to move from A1 sites to bulky
goods sites as out of town developments become available. This remains an
important focus for us as it provides better adjacencies; lower long-term rents;
as well as some one off property profits. Property profits for the year were
#3.8m, which comprised #2.3m from surrender of leasehold properties and #1.5m
from the relocation and subsequent sale of a freehold interest. We expect that
we will continue to make property profits from the changes in our portfolio in
the future. We continue to see good returns on investment on the stores we
opened during the year and believe there are significant opportunities for
further expansion. Our plans for the current year are to open 22 stores and
close six, giving a net increase of 16 stores.
We have also now completed our store modernisation programme. All stores, with
the exception of a handful, which are either awaiting disposal or longer-term
development, are now modernised into the latest Carpetright format. This
provides us with one single brand in the UK and means that over the last four
years all stores have been updated to our latest concept and are in good
condition. With the modernisation programme complete capital expenditure on
this area will reduce significantly compared to previous years and our focus
will now be to work every square foot inside the stores to its maximum.
On 7 June we entered into a trial to trade the carpet departments in four
Allders department stores. We have branded these "Carpets at Allders" and have
tailored our ranges and proposition to the department store environment. Whilst
this is very much a trial we believe there could be significant potential from
this partnership.
New channels
Our newer distribution channels continue to show strong growth as we seek to
leverage our stores, central infrastructure and services to build further
revenue streams. We continue to increase the penetration of our van business,
which serves the Carpetright at home customer as well as providing important
support to some of our insurance customers. The business is now profitable in
its own right while the insurance business has continued to grow strongly over
the last two and a half years. In the last year the insurance business has
serviced over 30,000 individual customers. We continue to improve our systems
and processes as we gain experience from our current operation and are now
actively looking to expand this further.
Service
The service offering, as well as the product we offer, is critical to our
business. We continue to invest in our business to improve the overall service.
This year we invested in more estimators, improved systems, a better delivery
service as well as starting the fitters' assessment and training programme with
FITA (Flooring Industry Training Association). We believe this investment,
whilst adding some incremental cost to the business, will more than pay for
itself over the longer term through repeat custom as well as providing
significant commercial advantages. We have continued to see improvement in both
our qualitative and quantitative measures on service and believe that our
improved service supports our underlying proposition as well as our move into
the higher priced offering.
Product
The business continues to benefit from the diversity of our range and price
points, supported by the concept of highly competitive prices and good service.
During the year we developed further roll stock ranges to meet market demand, in
particular for good quality, great value "Berber" carpets, as well as
recognizing the shift towards more value-conscious attitudes in the second half.
We are already benefiting from the introduction of Kosset Gold to our cut
length business in the second half and this brand now generates weekly sales of
over #200,000.
The increased laminate range rollout has started following successful trials in
the second half. We believe the combination of our broad range of over 30
laminate options, good selection of underlays and accessories, product
knowledge, efficient service and highly competitive pricing will enable us to
take a significant share of this growing market.
European acquisition
We have made significant progress towards our three-year plan for the European
business, which we wholly acquired on 31 October 2002. Once the acquisition was
complete we accelerated the pace of change to ensure all restructuring was
completed during the year to 3 May 2003. We have achieved this and we are now
able to fully focus on the trading platform going forward.
Our focus in the period has been on the stores and the central support
structure, whilst we have also reviewed the suppliers and supply chain
infrastructure, which support the business. In the six months since we have had
full ownership of the European business we have achieved the following key
milestones:
* Closed the distribution centre and rationalised central service functions
by leveraging the wider services and experience within Carpetright;
* Modernised a third of the estate while re-merchandising and re-organising
the balance of the stores, two stores have been closed;
* Removed the decor products from the stores and refocused them on floor
coverings only;
* Invested in price and promotions to drive market share, supported by our
Group sourcing synergies;
* Reviewed and changed working practices to improve sales focus,
communication lines, reward structure and controls across the business.
Our objective in Europe is to create a focused, market-leading, floor covering
specialist, which will sell increased volumes of product to the mass market and
generate good returns over a 3 to 5 year period. The business and, in
particular the sites we have acquired give us this opportunity as they have
provided us with excellent points of entry to trial and develop a market leading
floor covering specialist similar to that which we have established in the UK.
Having now traded in both Holland and Belgium for a number of months we remain
confident that the potential for our proposition in both the market and the
competitive environment is significant and that we can achieve our goals over
the medium term.
We do recognise though that we are early into our plan and the process of taking
our ideas to Europe, but believe the fundamental actions taken so far will
create a much stronger business for the future and provide us with an excellent
platform on which to build.
Results
Trading in Holland has been in line with our expectations and we have seen good
market share growth from the sale of floor covering products. This has offset
the sales lost from the removal of the decor products as well as the investment
in price we have made. In Belgium trading has been slower and, whilst
floor-covering sales have increased, we still have an overall shortfall after
the removal of the decor products. However, we do believe the removal of decor
products is integral to the refocusing of the business and that this will bring
significant benefits going forward.
The business has recorded an adjusted operating loss* for the year of #2.9m with
additional financing costs of a further #1.0m in respect of interest on the loan
we took to acquire the business as well as local borrowings. The loss reflects
both the disruption from the fundamental restructuring we have carried out as
well as the slower trade in Belgium.
* Adjusted to exclude exceptional costs and amortisation of goodwill, see
consolidated profit and loss account.
Exceptional costs and goodwill
As a result of the acceleration of the restructuring of the European business we
have now expensed all the exceptional costs relating to the process in the year
to 3 May 2003, which is in line with our guidance in our post Easter trading
statement. This amounted to a total of #5.4m and was made up of #2.4m relating
to asset write offs from modernisations and updates, as well as #3.0m from
redundancies and the restructuring of the offices and stores. We do not now
expect to take any further exceptional charges for restructuring in the current
financial year.
The goodwill charge for the 10 months to 3 May 2003 is #0.7m, in line with that
indicated at the interim results in December.
Group Results
Earnings per share
The UK and Southern Ireland operations delivered a 21.3% increase in earnings
per share to 58.7p benefiting from a lower tax rate for the year at 27.7%
compared to last years' 30.7%. The adjusted losses* from the European
acquisition contributed an adjusted net loss per share* of 2.5p. The adjusted
Group earnings per share* are up 16.1% to 56.2p. Basic earnings per share was
50.7p (2002: 48.4p).
The Group purchased 1.58m of its own shares on 29 April at a price of 581.2p, at
a total transaction value of #9.3m including fees and tax. This transaction only
had a marginal impact on the earnings per share calculation above. The payment
for these shares was made after the year-end.
* Adjusted to exclude exceptional costs and amortisation of goodwill, see
consolidated profit and loss account.
Dividend
The Board is recommending that the final dividend be increased by 10% to 22p per
share, which together with the interim dividend of 15p takes the total dividend
for the year to 37p per share, an increase of 12.1% on the prior year. At this
level the dividend cover on the UK and Southern Ireland operations will be 1.61
times; at the adjusted Group level* it will be 1.54 times, in line with our
dividend policy. The final dividend will be paid on 26 September 2003 to
shareholders on the register on 12 September 2003.
* Adjusted to exclude exceptional costs and amortisation of goodwill, see
consolidated profit and loss account.
Finance and cash flow
The UK and Southern Ireland operations generated an operating cash flow of
#67.2m during the year. This included the adverse impact of the 53rd week with
additional payments to staff and suppliers of #4.0m which would have normally
rolled over into the new financial year. This strong operating cash flow funded
capital expenditure of #15.3m made up of #6.0m of freehold purchases, #6.8m of
capital on new and modernised stores as well as other capital expenditure of
#2.5m.
The European business generated an operating cash flow of #5.4m. This was net
of a #3.0m outflow for exceptional costs and reflects the improvements in stock
and other working capital. This funded capital expenditure of #5.2m made up of
#1.5m of freehold purchases and #3.7m on store modernisations and other works.
The Group generated an operating cash flow of #72.6m and additionally a further
#9.5m of cash inflow from property disposals, plus #0.1m from shares issued.
This was used to fund total capital expenditure of #20.5m, dividends of #26.3m
and tax of #18.7m. After taking account of the European acquisition of #34.2m,
the net debt taken on at the time of the acquisition of #10.3m, net interest
paid of #1.8m as well as the adverse book movement on exchange for the euro debt
at the year end of #4.5m the net movement in debt was #34.1m. At the end of the
year the group had net debt of #33.8m, made up of a 5-year term loan of #32.4m,
loans and overdrafts in Europe of #11.6m, finance leases of #3.0m and cash
balances in the UK of #11.6m, and Europe of #1.6m.
Calendar
In line with best practice we will be providing additional trading updates to
the market over the coming financial year. We will make our normal trading
announcement at our AGM on 12 August 2003 (first 14 weeks of financial year) as
well as an early autumn announcement on 7 October 2003 (first 22 weeks of
financial year). The first half closes on 1 November 2003.
Outlook
In the first eight weeks of the current financial year, the UK and Southern
Ireland operation has achieved sales up 3.0% with like for like sales up 2.2%.
Gross margin continues to show good growth against the previous year and for the
first 8 weeks has shown a similar percentage point improvement to that achieved
in the second half of the last financial year. May and June are, though,
relatively low periods for the business and a more accurate indication of
progress for the half will be given at our AGM and in the early autumn
announcement later in the year. However, we remain confident that the
strategies we continue to adopt will enable us to grow market share and improve
profits going forward.
In our European operations the sales performance is slightly below our
expectations for the first two months of the year. Nevertheless we are
continuing to see good growth in the meterage of floor coverings sold. As a
result we continue to gain market share and improve margins on the back of the
sourcing deals with the UK, as well as benefiting from the completion of the
stock clearance which lowered margins last year. Our focus for the coming
period will be to grow our market share and benefit from the improved margins
and lower costs that we have put in place. Whilst we are still early in the
process we remain confident of the market potential and our strategies for both
Holland and Belgium.
The Group has made significant progress in the last 12 months and we look
forward to the current year with confidence.
Consolidated Profit and loss account for the period 3 May 2003
Total for
53 Weeks Year to
to 3 May 27 April
Continuing Acquired 2003 2002
Note #'000 #'000 #'000 #'000
Group Turnover 386,839 49,927 436,766 361,500
Cost of sales (156,200) (29,287) (185,487) (151,828)
Gross profit 230,639 20,640 251,279 209,672
Distribution costs (5,513) - (5,513) (4,822)
Administrative expenses (see (168,591) (30,096) (198,687) (154,100)
note below)
Other operating income 1,396 432 1,828 1,243
Group Operating 57,931 (2,895) 55,036 51,993
profit before
exceptional costs
and goodwill
amortisation (see
note below)
Exceptional items* 3 - (5,448) (5,448) -
Goodwill 7 - (681) (681) -
amortisation*
Group Operating profit 57,931 (9,024) 48,907 51,993
Profit on disposal of fixed 3,797 - 3,797 1,336
assets
Profit on ordinary activities 61,728 (9,024) 52,704 53,329
before interest
Net interest payable (715) (1,053) (1,768) (844)
Profit on ordinary activities 61,013 (10,077) 50,936 52,485
before taxation
Tax on profit on ordinary (16,919) 2,697 (14,222) (16,099)
activities
Profit on ordinary activities 44,094 (7,380) 36,714 36,386
after taxation
Minority interests - 1,360 1,360 -
Profit for the financial 44,094 (6,020) 38,074 36,386
period
Dividends 4 (27,461) - (27,461) (24,795)
Retained profit 16,633 (6,020) 10,613 11,591
Note: Operating profit before exceptional items and goodwill amortisation is
after adding back the items marked (*), which are included within
Administrative expenses.
There are no differences between the Group's historical cost profit and that
recorded in the profit and loss account (2002: #nil).
Note Continuing Acquired 2003 2002
pence pence pence pence
Earnings per share (pre 5 58.7 (2.5) 56.2 48.4
exceptionals and
goodwill)
Basic earnings per 5 58.7 (8.0) 50.7 48.4
share
Fully diluted earnings 5 58.7 (8.0) 50.7 48.4
per share
Dividend per ordinary 4 37.0 33.0
share
Consolidated statement of total recognised gains and
losses for the year to 3 May 2003
Year to Year to
3 May 27 April
2003 2002
#'000 #'000
Profit for the financial period 38,074 36,386
Exchange rate movement 609 8
Total recognised gain relating to the 38,683 36,394
year
Consolidated Balance sheet at 3 May 2003
3 May 3 May 27 April 27 April
2003 2003 2002 2002
Note #'000 #'000 #'000 #'000
Fixed assets
Intangible 7 16,866
fixed assets
Tangible fixed 140,152 106,459
assets
157,018 106,459
Current assets
Stock 40,672 30,880
Debtors 20,296 16,530
Cash at bank 13,266 6,197
and in hand
74,234 53,607
Creditors: amounts (139,346) (99,689)
falling due within one
year
Net current
liabilities (65,112) (46,082)
Total assets 91,906 60,377
less current
liabilities
Creditors: amounts falling due after more than (31,836) (3,042)
one year
Provisions for liabilities and charges (3,627) (2,916)
Net assets 56,443 54,419
Capital and reserves
Called up share capital 736 751
Share premium account 13,938 13,872
Capital redemption reserve 67 51
Profit and loss account 41,702 39,745
Equity shareholders' funds 56,443 54,419
Consolidated cash flow statement for the year to 3 May 2003
Year to Year to Year to
Continuing Acquired 3 May 27 April 27 April
2003 2003 2003 2002 2002
Note #'000 #'000 #'000 #'000 #'000
Net cash flow 6 67,225 5,386 72,611 56,365
from operating
activities
Returns on investments
and servicing of
finance
Interest received 106 145 251 63
Interest paid (505) (1,198) (1,703) (451)
Interest on (316) - (316) (456)
finance leases
Net cash outflow (715) (1,053) (1,768) (844)
from investments
and
servicing of
finance
Taxation (17,686) (973) (18,659) (15,338)
Payments to (15,268) (5,217) (20,485) (24,331)
acquire tangible
fixed assets
Receipts from 9,462 - 9,462 2,255
sales of tangible
fixed assets
Net cash outflow (5,806) (5,217) (11,023) (22,076)
for capital
expenditure
Purchase of (34,227) - (34,227) -
subsidiary
undertakings
Acquisitions and (34,227) - (34,227) -
disposals
Equity dividends (26,301) - (26,301) (21,867)
paid
Net cash outflow (17,510) (1,857) (19,367) (3,760)
before financing
Financing
Issue of Ordinary 67 - 67 1,481
shares
Purchase of own - - - (4,191)
shares
Increase in debt 28,830 - 28,830 -
Capital element (2,864) - (2,864) (2,454)
of finance lease
rentals
Net cash 26,033 - 26,033 (5,164)
inflow/(outflow)
from financing
Increase/(decrease) 8,523 (1,857) 6,666 (8,924)
in cash in the
period
Note - Reconciliation of net cash flow to movement in net funds
2003 2002
#'000 #'000
Increase/(decrease) 6,666 (8,924)
in cash in the
period
Opening net funds 313 8,302
6,979 (622)
Exchange difference (4,470) 4
Finance leases 2,864 931
Loans acquired with (10,389) -
subsidiary
Cash acquired with 86 -
subsidiary
Change in net debt (28,830) -
Closing net (33,760) 313
(debt)/funds
Note - Analysis of changes in net funds during the year
Cash Exchange
2002 flow Acquisition difference 2003
#'000 #'000 #'000 #'000 #'000
Cash at 6,197 6,909 86 74 13,266
bank and in
hand
Overdraft - (243) (10,389) (1,007) (11,639)
and loan
Loan to - (28,830) - (3,537) (32,367)
finance
acquisition
6,197 (22,164) (10,303) (4,470) (30,740)
Finance (5,884) 2,864 - - (3,020)
leases
Net 313 (19,300) (10,303) (4,470) (33,760)
funds/(debt)
Note 1: Basis of preparation
The financial information does not constitute the Group's statutory accounts
for the years ended 3 May 2003 or 27 April 2002 but is derived from those
accounts. Statutory accounts for 2002 have been delivered to the Registrar of
Companies, and those for 2003 will be delivered following the Group's Annual
General Meeting. The auditors have reported on those accounts; their reports
were unqualified and did not include statements under section 237(2) or (3)
of the Companies Act 1985.
Note 2: Basis of consolidation
The consolidated accounts include the accounts of the Company made up to 3
May 2003 and those of its subsidiary undertakings made up to 30 April 2003.
Unless otherwise stated, the acquisition method of accounting has been
adopted for acquisitions made during the period. Under this method, the
results of subsidiary undertakings acquired or disposed of in the period are
included in the consolidated profit and loss account from the date of
acquisition or up to the date of disposal. Intra group transactions are
eliminated fully on consolidation
Note 3: Exceptional costs
Exceptional items relate to the one off restructuring costs of the business
acquired and can be broken down as follows:
2003
#'000
Redundancy and restructuring 3,003
Asset write downs 2,445
5,448
Note 4: Dividends
The final ordinary dividend of 22p per share (2002: 20p) will be paid on 26
September 2003 to shareholders registered at the close of business on 12
September 2003 subject to shareholders' approval at the Annual General
Meeting to be held on 12 August 2003. An interim ordinary dividend of 15p
(2002: 13p) per share was paid on 21 February 2003 giving a total ordinary
dividend for the year of 37p per share (2002: 33p).
Copies of the full accounts for the year ended 3 May 2003 will be circulated
to shareholders for approval at the Annual General Meeting. Further copies of
the Annual Report will be available from that date from the registered office
of Carpetright plc Amberley House, New Road, Rainham, Essex, RM13 8QN.
Note 5: Earnings per share
2003 2002
Earnings Weighted Earnings Earnings Weighted Earnings
#'000 average per #'000 average per
number share number share
of pence of pence
shares shares
'000 '000
Basic
earnings
per
share:
Profit 38,074 75,128 50.7 36,386 75,226 48.4
for the
financial
year
Effect of - 12 - - 15 -
dilutive
share
options
Fully 38,074 75,140 50.7 36,386 75,241 48.4
diluted
earnings
per share
Reconciliation of earnings per share to exclude exceptional
costs and goodwill amortisation:
2003 2002
Basic earnings per 38,074 75,128 50.7 36,386 75,226 48.4
share
Exceptional costs 3,993 - 5.3 - - -
after tax
Goodwill 681 - 0.9 - - -
amortisation
Minority interest (547) - (0.7) - - -
in adjustments
Basic earnings per 42,201 75,128 56.2 36,386 75,226 48.4
share before
exceptional costs
and goodwill
amortisation
The directors have presented an additional measure of earnings per share
based on profit before exceptional costs and goodwill amortisation as they
consider this will provide a more comparable measure on an ongoing basis.
Note 6: Reconciliation of operating profit to net cash inflow from operating
activities
Period to
Continuing Acquired 3 May
2003 2003 2003 2002
#'000 #'000 #'000 #'000
Operating 57,931 (9,024) 48,907 51,993
profit/(loss)
Exceptional asset - 2,445 2,445 -
write off
Depreciation 10,745 2,108 12,853 9,790
Amortisation - 681 681 -
Decrease/(Increase) in (1,387) 2,006 619 (2,427)
stocks
Decrease/(Increase) in (326) 1,779 1,453 (5,386)
debtors
Increase in creditors 262 5,391 5,653 2,395
Net cash inflow from 67,225 5,386 72,611 56,365
operating activities
Note 7: Goodwill
Purchased goodwill (representing the excess of the fair value of the
consideration over the fair value of the separable net assets acquired)
arising on consolidation in respect of acquisitions during the period is
capitalised. Positive goodwill is amortised to nil by equal annual
installments over its estimated useful life not exceeding 20 years. The
goodwill arising on the European acquisition has been accounted for in Euros.
#'000
Cost:
Additions 16,147
Effect of currency changes 1,452
At 3 May 2003 17,599
Amortisation:
Provided during year 681
Effect of currency changes 52
At 3 May 2003 733
Net book value:
At 3 May 2003 16,866
Net book value:
At 27 April 2002 -
Note 8: Purchase of subsidiary undertaking
On 1 July 2002, the business purchased 50% of the shares, with management
control, of Carpetland NV, a company registered in Belgium, and its
subsidiaries. It also purchased 100% of two property companies owning
freehold property rented by Carpetland NV and its subsidiary Carpetland BV as
well as other tenants. On 31 October the remaining 50% of the shares were
acquired. The results of these companies have been consolidated for the
period from 1 July 2002 to 3 May 2003 in line with the basis in Note 2. The
total purchase cost of #34.2 million including fees gives rise to goodwill on
acquisition of #16.1 million after accounting for the fair value of the
assets acquired and minority interest of #1.4 million. A breakdown of the
fair value of the assets acquired is as follows:
Book
Value Accounting Fair
prior to policy value to
acquisition Revaluation alignment Carpetright
Note on #000 #000 #'000 #'000
Net assets
acquired
Tangible 21,996 8,327 (669) 29,654
fixed
assets
Stocks 10,162 (95) (576) 9,491
Debtors 2,754 - - 2,754
Cash at 86 - - 86
bank and
in hand
Total 34,998 8,232 (1,245) 41,985
assets
Creditors (10,481) 68 - (10,413)
Bank (3,581) - - (3,581)
overdrafts
Loans (6,808) - - (6,808)
Deferred (2,838) - 1,095 (1,743)
taxation
Liabilities (23,708) 68 1,095 (22,545)
Net assets 11,290 8,300 (150) 19,440
acquired
Minority (1,360)
interest
Goodwill 7 16,147
Purchase 34,227
consideration
and
costs of
acquisition
This information is provided by RNS
The company news service from the London Stock Exchange
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