Carpetright plc. Preliminary Results 25 June 2013

Transcription

1 Carpetright plc Preliminary Results 25 June

2 Agenda Introduction Lord Harris Financial Review Neil Page Group Overview Darren Shapland Questions & Answers 3

3 Neil Page Group Finance Director 4

4 Group Performance - Highlights m Change Revenue (2.9%) Underlying operating profit % Net finance costs (1.7) (4.0) Underlying profit before tax % Exceptional items (14.8) 9.5 Statutory profit/(loss) before tax (5.1) 13.5 Net Debt (10.2) (19.1) 8.9m Underlying EPS 1 9.6p 4.5p Basic EPS (9.8p) 16.4p Dividend per share Nil Nil 1) Underlying excludes exceptional items 5

5 UK - Financial Highlights m Change Revenue Level Like-for-like sales 1 2.2% (0.2%) Gross profit % Gross profit % 61.5% 58.9% 2.6ppts Costs (223.9) (222.0) (0.9%) Underlying Operating Profit % Underlying Operating Profit % 2 2.9% 0.7% 2.2ppts Significant step forward in profit from like-for-like sales growth and gross profit percentage improvement 1) Like-for-like calculated for all stores that are at least 12 months old at the beginning of the financial year. Stores closed during the year excluded from both years. No account taken of changes to store size or profile, or the introduction of third party concessions. 2) Underlying excludes exceptional items 6

6 UK Trading trends m H H FY 2013 Like-for-like sales 1 0.7% 3.6% 2.2% Gross profit % 61.6% 61.4% 61.5% Gross profit % year-on-year 3.7ppts 1.5ppts 2.6ppts Costs (111.4) (112.5) (223.9) Costs year-on-year (0.7%) (1.0%) (0.9%) Underlying Operating Profit Underlying Operating Profit year-on-year % 185.0% 289.3% Good growth in gross profit % in first half, followed by stronger second half sales growth 1) Like-for-like calculated for all stores that are at least 12 months old at the beginning of the financial year. Stores closed during the year excluded from both years. No account taken of changes to store size or profile, or the introduction of third party concessions. 2) Underlying excludes exceptional items 7

7 UK Like-for-like sales trend Momentum of self-help activities Like-for-like calculated for all stores that are at least 12 months old at the beginning of the financial year. Stores closed during the year excluded from both years. No account taken of changes to store size or profile, or the introduction of third party concessions. 8

8 UK Components of Sales Growth Year on year growth % H H Core retail 0.7% 1.1% 0.9% Self-help 2.3% 3.6% 2.8% Retail like-for-like 1 3.0% 4.7% 3.9% Wholesale 2 (2.3%) (1.1%) (1.7%) Total like-for-like 0.7% 3.6% 2.2% Non like-for-like estate (2.3%) (2.0%) (2.2%) Total sales growth (1.6%) 1.6% Level Self-help activities improving like-for-like growth during the year 1) Like-for-like calculated for all stores that are at least 12 months old at the beginning of the financial year. Stores closed during the year excluded from both years. No account taken of changes to store size or profile, or the introduction of third party concessions. 2) Wholesale comprises sales from both insurance replacement and house builders. 9

9 Rest of Europe - Financial Highlights m Change (Reported) Change (Local Currency) Revenue (15.5%) (10.4%) Like-for-like sales 1 (11.0%) (1.2%) Gross profit (15.0%) (9.7%) Gross profit % 57.2% 57.0% 0.2ppts Costs (43.0) (46.0) 6.5% 0.3% Underlying 2 Operating Profit (90.4%) (90.5%) Underlying 2 Operating Profit % 0.7% 5.8% (5.1ppts) Weak market impacts sales in the Netherlands 1) Like-for-like calculated for all stores that are at least 12 months old at the beginning of the financial year. Stores closed during the year excluded from both years. No account taken of changes to store size or profile, or the introduction of third party concessions. 2) Underlying excludes exceptional items 10

10 Rest of Europe Profit Bridge Key driver performance in the Netherlands 11

11 Finance Charges & Tax Net finance charges Average net debt of 21.4m (2012: 67.7m) Underlying net finance charges 1.7m (2012: 4.0m) Group taxation Effective tax rate 29.3%, up 10.6ppts on 2012: 18.7% Combination of non-recurring items in the prior year offset by a change in the UK tax rates Lower finance charges arises from significantly lower average debt 12

12 Exceptional Items m (Charge)/Gain Profit/(loss) on disposal of properties (1.2) 13.4 Onerous lease charge (8.1) (0.3) Impairment charge Store assets (0.3) (1.0) impairment charge Freehold properties (5.2) - Restructuring costs - (2.1) Write off of unamortised refinancing fees - (0.5) Total (14.8) 9.5 Re-focused Storey brand to North East of England to improve underlying profitability. Non-cash charge from weakening of out-of-town retail property market impacting valuations. 13

13 Capital Expenditure m Capital expenditure Refurbishments & Beds (9.6) (6.9) Purchase of Freehold properties (1.6) (3.7) Gross capital expenditure (11.2) (10.6) Proceeds from freehold disposals Proceeds from leasehold disposals Net capital (expenditure)/receipts (6.6) 22.8 Capex focused on refurbishment programme, offset by proceeds from property disposals 14

14 Group Cash Flow m Underlying operating profit Depreciation and other non-cash items Exceptional items 0.0 (1.6) (Increase)/Decrease in stock 1.0 (0.4) (Increase)/Decrease in working capital (6.2) 13.3 Provisions paid (3.4) (5.0) Operating cash flow Net interest paid (1.4) (4.9) Corporation tax paid (1.4) (3.0) Net capital receipts/(expenditure) (6.6) 22.8 Free cash flow Other movements, inc Fx Movement in net debt Opening net debt (19.1) (65.7) Closing net debt (10.2) (19.1) 15

15 Group Summary Balance Sheet m Change Freehold and long leasehold property (8.3) Other non current assets (3.9) Stock (0.7) Trade & other current assets (4.3) Creditors <1 yr (103.2) (110.2) 7.0 Creditors >1 yr (66.6) (63.3) (3.3) Net Debt (10.2) (19.1) 8.9 Pension Deficit (5.1) (4.3) (0.8) Net Assets (5.4) Movement in Freehold and long leasehold property reflects disposal of two freeholds and a impairment charge on selected properties The freehold portfolio is estimated to have a market value of 79.7m compared to a net book value of 73.5m Net debt of 10.2m, total facilities of 62.8m through to July

16 Summary UK Growth in UK like-for-like sales gained momentum driven by self-help measures Improvement in UK profit achieved through like-for-like sales and margin growth Capital spend focused on refurbishments, delivering sales and profit growth Europe Reduced losses in Republic of Ireland Belgium remains profitable in a mature market Weak demand in the Netherlands Balance Sheet Continued reduction of net debt, down 8.9m year on year, a reduction of 90.8% from peak of 97.1m in May 2009 Freehold property valued at 80m 17

17 Darren Shapland Chief Executive 18

18 UK Market Remains Tough Source: ipsos-mori Consumer confidence index shows fragile recovery from lows in 2011, but still negative outlook 19

19 UK Market Remains Tough Source: BBA/CPR Carpetright flooring LFL continues to shadow the mortgage approvals movement UK mortgage approvals have recently shown some encouraging signs of improvement. Recent UK like-for-like sales out-performing mortgage rolling growth rates 20

20 Focus on Self-help 1 - Adjusting the store portfolio To reduce fixed property costs 2 - Modernising the estate 3 Enhancing our range of floor coverings 4 Developing our bed proposition To grow market share in a flat market 5 Optimising digital as part of a multi-channel offering 6 Delivering a step change in service 21

21 Phasing of self-help Scale of Impact 12/13 13/14 14/ Adjusting the store portfolio 2 - Modernising the estate 3 Enhancing our range of floor coverings 4 Developing our bed proposition 5 Optimising digital as part of a multi-channel offering 6 Delivering a step change in service Good start in first year Further opportunity in next couple of years 22

22 Adjusting The Store Portfolio UK Stores Sq ft 000s Stores at 28 April ,270 New stores 6 35 Closures (18) (141) Downsize (5 stores) - (10) Net movement (12) (116) Stores at 27 April ,154 Achieving average rent reductions of over 10% at lease renewal 20% lease renewals in next five years provides opportunity to reshape portfolio and reduce costs Consumer shift to Do it For Me provides opportunity for smaller footprint stores 23

23 Modernising The Estate UK 478 Stores Large Format stores 36 stores Format 3 63 stores Storeys 22 stores Full Aqua refurbishments Typical spend c 55k, c10% uplift, payback in a year 129 completed by year end 2013 Aqua refresh Lower spend of c 20k 57 completed by year end

24 Modernising The Estate Format 5 36 mid-sized locations Circa 4,000 6,000 sqft Sample and small takeaway range Trialled in Lewes, Longwell Green, Kirkstall Initial performance encouraging Refine format H1, roll out H2 25

25 Modernising The Estate Format 3 47 Small high street / 16 concessions Circa 2,000-4,000 sqft Sample only Trialled in Clapham and Penge Good results, commenced roll out Completed: Cannock - new Camden - relocation Epping - new Borehamwood new 26

26 Enhancing Our Range of Floor Coverings Wider distribution of prestige carpet brands Broader selection of roll stock available in more stores via samples Sisal and Seagrass now in all stores 27

27 Enhancing Our Range of Floor Coverings Smooth flooring Sample laminate now in all stores Stocked laminate in over 340 stores Luxury Vinyl Tile in over 300 stores Engineered wood roll out by July

28 Developing Our Beds Proposition Beds available in 271 (2012: 272) stores in UK: Now 6.7% of sales mix (2012: 6.1%) 10.8% of sales in stores where available Compelling offer Range of between beds plus take aways Market leading prices Good delivery service Building customer awareness Improve look & feel in-store More top brands Investment in marketing 29

29 Optimising Digital as Part of a Multi-Channel Offering UK website an important pre-purchase research tool 87,000 unique visitors in quarter 4 Sample requests up 70% year on year Appointments up 40% year on year Pure E-commerce c1% sales, but circa 7% originating online Call centre integral to drive up conversion ratios Upgraded bed site coming in September 30

30 Delivering a Step Change In Service 1 In store display Better clearer point of sale, advisory information, new layout 2 Sales via trusted advisors Monthly mystery shop driving consistent improvements Estimating and measuring in home Refined processes in trial Market leading logistics Purfleet cutting operations support fast turnaround of stocked product Recommended fitters 1,284 approved and trained fitters, happy calls driving improvements New after sales process Focus on always getting it right for the customer 31

31 Rest of Europe RoI and Belgium Republic of Ireland Belgium Continued improvement in trade Full year benefit of consolidated central support office Re-opening one store as sample only format Better sales and margin but still loss making Trial of two sample only stores, reducing property and operating costs Remains profitable in mature market 32

32 Rest of Europe - Netherlands Economy Government dissolved April 2012 New coalition government formed September 2012 Austerity measures proving unpopular and impacting both disposable income and housing market Flooring market Declining consumer intention to purchase Housing transactions remain low despite reduction in stamp duty House prices in decline, average house price back to 2004 levels 33

33 Rest of Europe - Netherlands Modernisation Refurbishments positive initial results Trial of sample only format, reducing property costs and stockholding Developing range Branded carpets LVT and distressed wood collection Sisal and Seagrass Trial of beds continues Profit protection Improved product sourcing Reduce store footprint and occupancy costs Reduce overhead costs 34

34 Summary UK Clear self-help plans working with team in place Improving profitability 2013/14 is about self-help in a subdued market Europe Republic of Ireland better but still loss making Belgium remains profitable in mature market Netherlands, action taken, market conditions uncertain 35

35 Questions & Answers 36

36 Appendix: Calendar (provisional) Quarter 1 Interim Management Statement Tuesday 23 July 2013 Annual General Meeting Thursday 5 September 2013 First half pre-close announcement Tuesday 15 October 2013 First half ends Saturday 26 October 2013 Interim results announced Tuesday 10 December 2013 Quarter 3 Interim Management Statement Tuesday 28 January 2014 Second half pre-close announcement Tuesday 22 April 2014 Year ends Saturday 26 April