Final Results

Released : 03 Jul 2014

RNS Number : 2949L
Poundland Group PLC
03 July 2014
 



3rd July 2014

Full Year Results for the year ended 30 March 2014

 

DELIVERED EXPECTATIONS AND A GOOD START TO THE NEW FINANCIAL YEAR

Financial Highlights

Underlying Results

·     Total sales +13.3% to £997.8 million (2013: £880.5 million)

·     Like-for-like sales +1.9% (2013: -1.7%)

·     Underlying pre-tax profits + 23.5% to £36.8 million (2013: £29.8 million)

·     Underlying post-tax profits +25.1% to £27.3 million (2013: £21.8 million)

·     Underlying adjusted EPS + 25.1 % to 10.90p (2013: 8.71p)

Statutory Results

·     Pre-tax profits -18.9% to £21.5 million (2013: £26.5 million)*

·     Net cash from operating activities before IPO costs +59.0% to £53.1 million  (2013: £33.4 million)

·     Net debt of £4.7 million (2013: £9.2 million)

Operational Highlights

·     70 net new stores, growing the estate by 15.3% to 528 stores (2013: 458)

·     Announced Spanish trial of Dealz with a plan to open an initial 10 stores over 2 year period. First store in Spain opened yesterday

·     New 350,000 square foot warehouse in Harlow will open in late August

·     Nearly five million customers served each week, including over 200,000 in Ireland

·     Clear evidence of universal appeal of the Poundland and Dealz brands with over 22% of customers now from the AB demographic

·     Awarded Grocer Variety Discounter of the Year

 

*after IPO costs and other non-underlying charges

 

Andrew Higginson, Chairman of Poundland, said:

"These results show that we are continuing to build on our strong growth record, as set out at the time of the IPO. I expect that Poundland will continue to benefit from its strong trading platform, its universal appeal and the structural change in consumers' shopping behaviour."

Jim McCarthy, Chief Executive of Poundland, said:

"This was a transformational year for Poundland culminating in our successful IPO in March.  I am pleased to report that in our maiden set of results we have delivered excellent growth in sales, as well as in underlying EBITDA and EPS, whilst generating strong cash flow. 

In addition to strong trading in the UK, the next leg of our international expansion is now underway with the opening yesterday of our first Spanish store in Torremolinos."

Results Presentation

A presentation for analysts and investors will be held today at 9am. Please use the following conference call details to listen to the presentation:

Dial in: +44 (0) 20 3003 2666

Password: Poundland

 

 

For further information please contact

Enquiries:

 

Nick Hateley, Chief Financial Officer

0121 568 7000

Philip Dorgan, Head of Investor Relations

0121 568 7000

 

 

Media Enquiries:

 

Citigate Dewe Rogerson

 

Simon Rigby

+44 (0) 207 282 2847

Michael Berkeley

+44 (0) 207 282 2883

 

 

 

FINANCIAL SUMMARY


2014

2013

Growth

Sales (£m)

997.8

880.5

13.3%

Like-for-like sales growth

1.9%

-1.7%


Gross margin (%)

36.9

36.7

up 19 bp

Underlying EBITDA (£m)

54.0

45.5

18.9%

Underlying Pretax profits (£m)

36.8

29.8

23.5%

Underlying adjusted EPS (p)

10.9

8.7

25.1%

Net debt (£m)

4.7

9.2


 

Sales grew by 13.3% and, due to strong margin management and cost control, this translated into an 18.9% increase in underlying EBITDA and a 25.1% increase in underlying EPS, and we managed our cash well. Net debt almost halved, despite costs related to our successful stock market flotation and the redemption of preference shares (£20 million).

 

GUIDANCE FOR 2015

Store rollout:

UK & Ireland: We plan to open a net 60 stores.

Spain: The pilot plans 10 stores over two years.

Underlying costs: After the impact of the costs of being a listed company, we expect our EBITDA margin will be broadly flat.

Non-underlying charges: We will incur double running costs of between £1.0 million and £1.5 million associated with our new distribution centre at Harlow. We will also incur pilot store costs in Spain of between £1.25 million and £1.75 million.

Capital investment: We will spend around £20.0 million, depending on the pace and cost of the pilot in Spain.

 

 

 

CHIEF EXECUTIVE'S REVIEW

Overview

I am pleased to report another record year for Poundland with significant sales and profit growth together with a strong new store opening programme.

We have continued to expand our presence in the UK and Republic of Ireland with the opening of 70 net new stores, taking our overall estate to 528 stores, with total trading space expanding by 18.9%.  We intend to further strengthen our market presence with additional openings during the coming year.

Our entry into Ireland under the Dealz brand demonstrates that we are not only capable of generating attractive financial returns but also of rapidly establishing a successful brand in a new geography. Consequently, as previously advised, Poundland has, following extensive market research, exported the Dealz format into Spain with a low cost, low risk entry. 

The continuing expansion of our retail estate within the United Kingdom, the Republic of Ireland and in Spain has led us to invest in a third, purpose built 350,000 sq.ft. distribution centre at Harlow, which will open later in the year, replacing the 200,000 sq.ft temporary facility at Hoddesdon.  The adjacency of the new site enables us to transfer the majority of existing experienced colleagues to the new operation.

Outlook

Our strong sales and volume increases demonstrate the relevance of our proposition to consumers from all socio economic groups.

Manufacturers recognise the increased demand for value and are working hard to deliver products that meet these requirements. Many forward thinking suppliers are also changing their sales, account structures and supply chains to adapt to these changes.  We will continue to work with our supplier partners to bring amazing value, brands, new products and innovation to our customers.

Poundland remains fully committed to our single price point in the UK. We will continue to develop our multi-price Dealz format outside the UK.

Due to our strong pipeline of new stores we expect to deliver the unique Poundland retail proposition to circa three quarters of a million new customers each week by the end of the current financial year. We are planning to open at least 60 net new stores during the next financial year, including a number of new Dealz stores in Ireland and Spain.  As a result, we estimate that we will create a net 1,000 jobs.

Our single price point continues to help consumers plan their household budgets with certainty and confidence. Our programme of new store openings, international expansion and continuing productivity improvements are all key drivers of growth.

We believe the shopping behaviours adopted during the last five or six years will continue as the economy and consumer confidence improve and that Poundland is well placed to benefit further from increased footfall and discretionary spending.  I look forward to the future with confidence.

Colleagues

I am proud that our colleagues have once again demonstrated that they operate at the heart of their local communities. Macmillan Cancer Care has, for the fifth consecutive year, been voted by our colleagues as their chosen charity. This partnership has worked well and has provided an easy way for our customers and colleagues to support Macmillan. Donations have now exceeded £1 million with money being raised through a number of different events, including the London Marathon, product sample sales and numerous themed fundraising events including dress down days and coffee mornings in Poundland stores, distribution centres and our customer support centre.

In our Republic of Ireland Dealz stores we support Make-A-Wish as our chosen charity. Make-A-Wish has one simple aim, to grant the wishes of children and young people living with life-threatening medical conditions.

Following Admission in March, Poundland has introduced three new employee share plans, the Poundland Performance Share Plan, the Poundland Restricted Share Plan and the Poundland Company Share Option Plan. We will also be introducing the Poundland Save As You Earn Plan for eligible colleagues later this year.

 

CHIEF FINANCIAL OFFICER'S REPORT

Key Performance Indicator performance


2014

2013

Change

Number of stores

528

458

70

Number of new stores (net)

70

69

1

Sales (£m)

997.8

880.5

13.3%

Gross margin (%)

36.93

36.74

up 19 bp

Underlying EBITDA (£m)

54.0

45.5

18.9%

Underlying EBITDA margin (%)

5.41

5.16

25bp

Underlying profit for the period (£m)

27.3

21.8

25.1%

Operating cash flow less maintenance capex (£m)

66.8

37.6

77.7%

Cash conversion (%)*

123.7

82.7


Operating cash flow less maintenance and expansion capex (£m)

52.2

23.2

125.4%

Net debt (£m)

4.7

9.2

-48.3%

 

*Defined as Underlying EBITDA plus changes in working capital minus maintenance capex divided by Underlying EBITDA

We performed strongly across all of the Key Performance Indicators (KPIs) set out in our IPO prospectus, especially in the growth of our store estate and in our strong cash flow.

OTHER OPERATING METRICS


2014

2013

Growth (%)

Average net store size (sq.ft.)

5,233

5,143

1.7

Average number of transactions per week (millions)

4.9

4.4

11.4

Average transaction value (£)

4.55

4.44

2.5

Gross sales (£m)

1,160

1,024

13.3

 

The IPO prospectus also identified a number of other key operating metrics and, as the table above shows, our performance was strong in the 2014 financial year.

REVENUE

Group revenue net of VAT was £997.8 million (2013: £880.5 million), which represents growth on the prior year of 13.3%. This improvement was driven by both the impact of a strong opening programme and a return to like-for-like sales growth. We grew like-for-like sales during the year by 1.9% (2013: -1.7%), which was driven by our continued focus on providing our customers with amazing value every day and a return to more normal competitor opening activity.

GROSS MARGIN

Gross profits increased by 13.9% to £368.5 million (2013: £323.5 million) and gross margins increased by 19 basis points to 36.93 % (2013: 36.74%). This increase was driven by a combination of our improved buying power and the greater mix within our store base of Dealz and retail parks. The number of Dealz and retail park stores increased by 35 to 85. These positive factors offset the negative impact of inflation and an increase within our sales mix of branded goods. Consumer price inflation during our financial year was 1.6% (2013: 2.8%; Source: ONS) and the proportion of branded goods within our sales mix increased by 30 basis points to 63.4% (2013: 63.1%).

OPERATING COSTS

Underlying operating costs

(£m)

2014

2013

Distribution expenses

297.0

261.3

Admin expenses

31.5

28.7

Total overheads

328.5

290.0

Wages

144.5

127.1

Underlying D&A

14.0

12.0

Operating leases

78.5

68.7

Other (inc. rates)

91.5

82.2

Total overheads

328.5

290.0




% of sales



Wages

14.48

14.43

Underlying D&A

1.40

1.36

Operating leases

7.87

7.80

Other (inc. rates)

9.17

9.35

Total overheads

32.92

32.94




Total overheads exc D&A (£m)

314.5

278.0

% of sales

31.52

31.57

 

Underlying operating costs in the financial year increased by 13.3% to £328.5 million (2013: £290.0 million). This increase in the cost base in the period was primarily a result of the increase in the number of stores in the portfolio. Operating costs now account for 32.92% of sales (2013: 32.94%). The fact that this was flat year on year reflects continued investment in the business.

Stripping out depreciation and amortisation, costs as a proportion of sales fell by 5 basis points to 31.52% (2013: 31.57%).

EBITDA AND EBIT

Reconciliation to underlying EBITDA (£m)


2014

2013

Reported EBITDA

42.8

43.1

Adjustments



Costs in respect of IPO

10.0


Distribution centre


1.4

New store format trial


0.5

Strategic initiatives

1.3

0.5

Underlying EBITDA

54.0

45.5

 

We report non-underlying items in our income statement to show one-off items and to allow investors to better understand the underlying performance of the business. In relation to the 2014 financial year, these included costs in respect of our IPO (£10.0 million) and costs related to strategic initiatives in ecommerce and in international development (£1.3 million). In the previous financial year, we incurred costs related to strategic initiatives in ecommerce and in international development, costs resulting from the opening of a temporary distribution centre and costs relating to a new store format trial and brand amortisation. Underlying EBITDA grew by 18.9% to £54.0 million (2013: £45.5 million), driven by the strong trading margin performance of the Group.

 

(£m)

2014

2013

Growth (%)

Underlying EBITDA

54.0

45.5

18.9

Underlying depreciation and amortisation

14.0

12.0

16.7

Underlying EBIT

40.0

33.5

19.6

Underlying EBITDA margin (%)

5.41

5.16

25 bp

Underlying EBIT margin (%)

4.01

3.80

21 bp

 

The table above shows underlying EBIT and movement in underlying margins. Underlying EBIT is calculated after stripping out brand amortisation of £1.1 million (2013: £1.1 million) from depreciation and amortisation expenses, as we regard this charge as non-underlying.  Underlying EBIT grew by 19.6% to £40.0 million. Group margins increased at both the underlying EBITDA and the underlying EBIT level, by 25 basis points to 5.41% in the case of the former (2013: 5.16%) and by 21 basis points to 4.01% in the case of the latter (2013: 3.80%).

NET FINANCE COSTS

In the 2014 financial year, the Group incurred a non-underlying charge of £2.9m, relating to the renegotiation of its debt facility, which included the write off of unamortised fees associated with the debt facility agreed in August 2010. Underlying net finance costs reduced by 11.7% (£0.4 million), at £3.2 million. This was a consequence of the Group's strong trading performance and high cash conversion rates.

STATUTORY PROFIT BEFORE TAX

Reconciliation to underlying profit before tax

(£m)

2014

2013

Reported profit before tax

21.5

26.5

Adjustments



Deal costs

10.0


Amortisation

1.1

1.1

Distribution centre


1.4

New store format trial


0.4

Strategic initiatives

1.3

0.5

Net financing expense

2.9

-0.1

Underlying profit before tax

36.8

29.8

 

Underlying profit before tax was £36.8 million, which represented an increase of 23.5% on last year (2013: £29.8 million). Statutory profit before tax fell by 18.9% to £21.5 million (2013: £26.5 million), due to an increase in net non-underlying charges, primarily costs associated with the Group's stock market flotation.

TAXATION

The underlying tax charge for the period was £9.6 million (2013: £8.0 million). The full year underlying effective tax rate was 26.0% (2013: 27.0%). There was a non-underlying adjustment to the tax charge in the 2013 financial year of £4.9 million, principally relating to a one-off corporation tax refund (£4.0 million).

STATUTORY PROFIT AFTER TAX

Underlying profit after tax was £27.3 million, which represented an increase of 25.1% on last year (2013: £21.8 million). Statutory profit after tax fell by 40.7% to £13.9 million (2013: £23.4 million), due to an increase in net non-underlying charges, primarily costs associated with the Group's stock market flotation.

ADJUSTED EARNINGS PER SHARE

Underlying basic and fully diluted earnings per share increased by 25.1% to 10.90p per share (2013: 8.71p per share). Non-underlying basic and diluted earnings per share fell by 40.7% to 5.54p per share (2013: 9.35p per share). The weighted average number of shares in issue during the period was 250m.

CAPITAL EXPENDITURE

(£m)

2014

2013

New stores

13.0

12.4

Existing stores

3.0

2.0

Other

1.6

2.0

Total

17.6

16.4

% of sales

1.8

1.9

 

During the 2014 financial year, we invested £17.6 million in capital expenditure, primarily related to the opening of new stores. We continued to roll out the Poundland format in the UK and the Dealz format in Ireland. We opened a total of 82 stores in the 2014 financial year, or 70 net of closures and resites.

We ended the year with 528 stores (2013: 458), including 495 Poundland stores in the UK and 33 Dealz stores, including 31 in Ireland and 2 in the Isle of Man and Orkney and have a long-term target of 1,000 stores in the UK and 70 in Ireland. We plan to open 60 net new stores a year in the UK and Ireland and our pipeline is strong for the current year.

We continue to invest in our infrastructure to support our planned growth and we will open our new purpose-built 350,000 square feet distribution centre in Harlow in August.

NET DEBT AND CASHFLOW

(£m)

2014

2013

EBITDA

42.8

43.1

Change in net working capital

15.8

-5.8

Operating cashflow

58.6

37.3

Tax paid

-10.4

-3.9

Net cash from operating activities

48.2

33.4

Capital expenditure

-16.6

-15.2

Acquisition of intangible assets

-1.0

-1.3

Net cash from investing activities

-17.6

-16.5

Proceeds from new loan

29.3

-

Repayment of borrowings

-54.9

-7.2

Redemption of preference shares

-20.0

-

Net financial expenses paid

-2.5

-2.8

Net cash from financing activities

-48.1

-10.0

Net increase in cash

-17.6

6.9

Net debt

-4.7

-9.2

Cash conversion (%)

123.7

82.7

 

Net debt at the end of the year was £4.7 million (2013: £9.2 million). This is after paying £20m redeeming preference shares and the payment of £4.9 million in costs associated with our successful stock market flotation. We received no cash benefit from the IPO, as all proceeds went to selling shareholders. Operating cash flow of £58.6 million represented an increase of 57.2% on last year (2013: £37.3 million). This reflects Poundland's strong trading performance and our continued focus on day to day cash management.

Working capital was well managed, with a £15.8 million inflow in the year (2013: outflow of £5.8 million). Cash conversion during the year was strong at 123.7% (2013: 82.7%).

NEW DEBT FACILITY

On 17 March 2014, we entered into a new banking facility consisting of a revolving credit and a working capital facility of £55 million. We utilised £30 million of the revolving credit facility, together with cash generated from operating activities to repay our term debt.

DIVIDEND

We intend to adopt a dividend policy which reflects our long-term earnings and cash flow potential, targeting a level of annual dividend cover of 2.5 to 3.5 times based on earnings. We intend that the first dividend to be declared will be the interim dividend in respect of the first half of the 2015 financial year, payable in January 2015.

 

 

 

Consolidated Income Statement

For the period ended 30 March 2014

 

All activities were continuing throughout the current and preceding period

Non-underlying items include brand amortisation and non-recurring exceptional costs and income (see note 6)

 

 

 

Consolidated Statement of Other Comprehensive Income

For the period ended 30 March 2014




52 weeks

2014



52 weeks

2013





Non-



Non-




Underlying

Underlying

Total

Underlying

Underlying

Total


Note

£'000

£'000

£'000

£'000

£'000

£'000

Profit for the period


27,253

-13,393

13,860

21,781

1,604

23,385

Other comprehensive income








Items that are or may be recycled








subsequently to profit or loss








Foreign currency translation








differences - foreign operations



-47

-47


26

26

Effective portion of changes in








fair value of cash flow hedges



-14,154

-14,154


5,182

5,182

Net change in fair value of cash








flow hedges recycled to profit








or loss



 3,791

3,791


-421

- 421

Income tax on items that are or








may be recycled subsequently to








profit or loss

8


2,203

2,203


-1,100

-1,100




-8,207

-8,207


3,687

3,687

Other comprehensive income








for the period, net of income








tax



-8,207

-8,207


3,687

3,687

Total comprehensive income








attributable to equity holders








of the parent


27,253

-21,600

5,653

21,781

5,291

27,072

 

 

 

Consolidated Statement of Financial Position

at 30 March 2014


30March 2014

31 March 2013


£'000

£'000

Non-current assets



Property, plant and equipment

41,607

38,283

Intangible assets and goodwill

183,711

184,506

Trade and other receivables

425

792

Other financial assets

-

403

Deferred tax asset

645

-




Total non-current assets

226,388

223,984




Current assets



Inventories

89,561

81,004

Other financial assets

519

4,212

Tax receivable

365

-

Trade and other receivables

24,960

20,734

Cash and cash equivalents

25,268

42,861




Total current assets

140,673

148,811




Total assets

367,061

372,795




Current liabilities



Other interest-bearing loans and borrowings

-

-1,532

Trade and other payables

-120,571

-94,576

Tax payable

-3,807

-4,295

Provisions

-787

-366

Other financial liabilities

-5,110

-397




Total current liabilities

-130,275

-101,166




Non-current liabilities



Other interest-bearing loans and borrowings

-30,000

-50,486

Other payables

-18,617

-16,931

Provisions

-138

-138

Other financial liabilities

-1,556

-

Deferred tax liabilities

-

-3,491




Total non-current liabilities

-50,311

-71,046




Total liabilities

-180,586

-172,212




Net assets

186,475

200,583




Equity attributable to equity holders of the parent



Share capital

425,050

152,474

Merger reserve

-259,642

-

Reserves

-4,849

16,097

Retained earnings

25,916

32,012




Total equity

186,475

200,583

 

 

 

Consolidated Statement of Changes in Equity

for the period ended 31 March 2013





Capital


Cash flow


Total


Share

Share

Merger

redemption

Translation

hedge

Retained

equity


capital

premium

reserve

reserve

reserve

reserve

earnings



£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 2 April 2012

152,341



12,739

-17

-312

8,627

173,378

Total comprehensive income for the period









Profit for the period







23,385

23,385

Other comprehensive income





26

3,661


3,687

Total comprehensive income for the period

-

-

-

-

26

3,661

23,385

27,072

Transactions with owners









recorded directly in equity









Issue of shares

133







133

Total transactions with owners

133

-

-

-

-

-

-

133

Balance at 31 March 2013

152,474

-

-

12,739

9

3,349

32,012

200,583










 

 

 

Consolidated Statement of Changes in Equity

for the period ended 30 March 2014





Capital


Cash flow




Share

Share

Merger

redemption

Translation

hedge

Retained

Total


capital

premium

reserve

reserve

reserve

reserve

earnings

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 April 2013

152,474

-

-

12,739

9

3,349

32,012

200,583

Total comprehensive income for the period









Profit for the period







13,860

13,860

Other comprehensive income





-47

-8,160


-8,207

Total comprehensive income for the period

-

-

-

-

-47

-8,160

13,860

5,653

Transactions with owners









recorded directly in equity









Redemption of preference share









capital - (subsidiary)

-14,564



14,564



-20,000

-20,000

Issue of shares - (subsidiary)

97

48






145

Capital transaction - subsidiary









share capital restructure and share for share exchange

286,993

-48

-259,642

-27,303





Issue of shares -









Poundland Group plc

50







50

Share based payment transactions







44

44

Total transactions with owners

272,576

-

-259,642

-12,739

-

-

-19,956

-19,761

Balance at 30 March 2014

425,050

-

-259,642

-

-38

-4,811

25,916

186,475

 

 

 

Consolidated Cash Flow Statement

for the period ended 30 March 2014


52 weeks

52 weeks


2014

2013


£'000

£'000

Cash flows from operating activities



Profit for the year, before non-underlying items

27,253

21,781

Costs in respect of IPO

-9,954

-

Other non-underlying items

-3,439

1,604




Profit for the year

13,860

23,385

Adjustments for:



Depreciation and amortisation

15,096

13,080

Financial income

-252

-371

Financial expense

6,470

3,945

Equity settled share based payment transactions

44

-

Taxation

7,624

3,092


42,842

43,131




Increase in trade and other receivables

-3,645

-627

Increase in inventories

-8,557

-11,450

Increase in trade and other payables excluding IPO costs

22,537

7,168

Increase/(decrease) in provisions

422

-953

Increase in payables in respect of IPO costs

5,012

-


58,611

37,269




Tax paid

-10,409

-3,852




 Net cash from operating activities

48,202

33,417




Costs in respect of IPO

4,942

-




Net cash from operating activities before IPO costs

53,144

33,417




Cash flows from investing activities



Acquisition of property, plant and equipment

-16,563

-15,181

Acquisition of other intangible assets

-1,062

-1,257




Net cash from investing activities

-17,625

-16,438




Cash flows from financing activities



Proceeds from new loan

29,268

-

Repayment of borrowings

-54,914

-7,200

Redemption of preference shares - subsidiary

-20,000

-

Net financial expenses paid

-2,524

-2,834




Net cash from financing activities

-48,170

-10,034




Net (decrease)/increase in cash and cash equivalents

-17,593

6,945

Cash and cash equivalents at start of period

42,861

35,916

Effects of exchange rate changes on cash held

-

-




Cash and cash equivalents

25,268

42,861




Net debt

4,732

9,157

 

 

 

1              Basis of preparation and significant accounting policies

The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs").  The financial statements are prepared on the historical cost basis except where Adopted IFRSs require an alternative treatment. The principal variations relate to financial instruments.

2.            Basis of consolidation

On 17 March 2014, the Company obtained control of the entire share capital of Poundland Group Holdings Limited via a share for share exchange. There were no changes in rights or proportion of control exercised as a result of this transaction.  Although the share for share exchange resulted in a change of legal ownership, in substance these financial statements reflect the continuation of the pre-existing group, headed by Poundland Group Holdings Limited.  As a result, the comparatives presented in these financial statements are the consolidated results of Poundland Group Holdings Limited.

The prior period statement of financial position reflects the share capital structure of Poundland Group Holdings Limited. The current period statement of financial position presents the legal change in ownership of the Group, including the share capital of Poundland Group plc and the merger reserve arising as a result of the share for share exchange transaction.

3.            Earnings per share

Poundland Group Holdings Limited had preference shares, the holders of which were entitled to a cumulative dividend at the discretion of the Directors. In accordance with IAS 33, for the comparative period, and for the current period to the date of the share restructure, the accrued preference share dividend has been deducted from profit for the period to compute the earnings attributable to ordinary shareholders. The conversion factor applied in the share for share reorganisation has been applied to calculate the number of ordinary shares of Poundland Group Holdings Limited used to compute the weighted average number of ordinary shares for the comparative period and for the current period to the date of the share restructure. In this way the impact of the preference shares has been excluded from both earnings and the weighted average number of shares.

As a precursor to the share for share exchange, the preference shares in Poundland Group Holdings Limited were converted to ordinary shares and any entitlement to a dividend on these shares was forfeited. For the periods reported, the Group has chosen to present an adjusted EPS calculation to aid comparability and to provide a consistent measure of performance, by excluding the impact of the preference shares from both earnings and the weighted average number of shares. For this adjusted measure, in both reported periods, the weighted average number of shares is based on the share capital structure of Poundland Group plc and assumes that this structure was in place from 2 April 2012 (i.e. the beginning of the prior period).

For both EPS measures (statutory and adjusted), the Group has also presented an alternative version with profit adjusted for non-underlying items.

Statutory earnings per share


52 weeks

52 weeks


2014

2013


No of shares

No of shares

Weighted average number of ordinary shares in issue, being weighted average number of shares for calculating basic earnings per share

190,792,314

189,599,437

Effect of share options on issue

917

-

Weighted average number of ordinary shares in issue for calculating diluted earnings per share

190,793,231

189,599,437





52 weeks

52 weeks


2014

2013


£'000

£'000

Profit for the period

13,860

23,385

Non-accrued preference share dividends

-11,891

-17,377

Premium paid on preference share capital redeemed

-5,436

-

Basic earnings attributable  to ordinary equity shareholders

-3,467

6,008




Non-underlying items (see note 6)



Operating expenses and finance costs

15,325

3,338

Tax on non-underlying items

-1,932

-4,942

Underlying earnings before non-underlying items

9,926

4,404




Earnings per share is calculated as follows:




52 weeks

52 weeks


2014

2013


p

p

Basic earnings per ordinary share

-1.82

3.19

Diluted earnings per ordinary share

-1.82

3.19




Basic earnings per ordinary share before non-underlying items

5.20

2.33

Diluted earnings per ordinary share before non-underlying items

5.20

2.33

 

 

 

Adjusted earnings per share


52 weeks

52 weeks


2014

2013


No of shares

No of shares

Weighted average number of ordinary shares in issue, being weighted average number of shares for calculating basic earnings per share

250,000,000

250,000,000

Effect of share options on issue

917

-

Weighted average number of ordinary shares in issue for calculating diluted earnings per share

250,000,917

250,000,000





52 weeks

52 weeks


2014

2013


£'000

£'000

Profit for the period, being basic earnings attributable

to ordinary equity shareholders

13,860

23,385

Non-underlying items (see note 6)



Operating expenses and finance costs

15,325

3,338

Tax on non-underlying items

-1,932

-4,942

Underlying earnings before non-underlying items

27,253

21,781




Earnings per share is calculated as follows:




52 weeks

52 weeks


2014

2013


p

p

Basic earnings per ordinary share

5.54

9.35

Diluted earnings per ordinary share

5.54

9.35




Basic earnings per ordinary share before non-underlying items

10.90

8.71

Diluted earnings per ordinary share before non-underlying items

10.90

8.71

 

4              Reconciliation of adjusted profit measure (EBITDA)

 

The Directors consider EBITDA to be a more consistent measure of operating performance. Operating profit is adjusted to exclude the impact of finance costs, taxation, amortisation and depreciation.

 

Underlying EBITDA excludes the impact of those distribution costs and administrative expenses which do not contribute to current trading activities. The Directors consider that this measure more fairly reflects actual operating performance.


52 weeks

52 weeks


2014

2013


£'000

£'000

Operating profit

27,702

30,051

Exclude:



    Amortisation

1,857

1,839

    Depreciation

13,239

11,241

EBITDA

42,798

43,131

Exclude:



    Non-underlying items excluding brand amortisation, financial expenses and taxation

11,231

2,319




Underlying EBITDA

54,029

45,450

 

5              Revenue


52 weeks

52 weeks


2014

2013


£'000

£'000

Sale of goods

997,803

880,491




Total revenues

997,803

880,491

 

6              Non-underlying items

In the period ended 30 March 2014, the Group incurred fees relating to its listing of £9,954,000. It has also incurred £2,981,000 relating to the renegotiation of its debt facility, which includes the write off of unamortised fees associated with the debt facility agreed in August 2010.

The Group incurred £1,277,000 of expenditure related to strategic initiatives (e-commerce and international expansion) (2013: £459,000).

In the period ended 31 March 2013, the Group incurred £1,424,000 of one-off costs relating to the opening of a new distribution facility in the South East of England and a further £435,000 relating to a new store format trial.

On the acquisition of Poundland Holdings Limited in June 2010, the Group recognised an intangible asset relating to the Poundland brand. This is being amortised over 20 years and the amortisation expense is presented as a non-underlying item (2014: £1,112,000, 2013: £1,112,000).

The ineffective portion of foreign exchange hedging contracts is recognised as a financial expense and disclosed as a non-underlying item (2014: £1,000 expense, 2013: £92,000 income).

The associated tax implications of the above items are presented as a non-underlying item and are summarised below.

Additionally, in the prior period, the Group received a one-off corporation tax refund of £3,950,000 in respect of prior years, which has been presented as a non-underlying item.


52 weeks

52 weeks


2014

2013


£'000

£'000

Administrative expenses



Costs in respect of IPO

-9,954

-

Amortisation expense (brand)

-1,112

-1,112

Other administrative expenses

-1,277

-459




Distribution expenses


-1,859


-12,343

-3,430

Financial income and expenses



Bank fees - refinancing

-2,981

-

Financial instruments

-1

92


-2,982

92

Taxation



Non-underlying items tax impact

1,390

800

Intangible assets - change in tax rate

542

192

Prior period adjustment

-

3,950




Total non-underlying items

-13,393

1,604

 

7              Financial income and expense


52 weeks

52 weeks


2014

2013


£'000

£'000

Financial income



Interest income on unimpaired financial assets

252

279

Ineffective portion of changes in fair value of cash flow hedges

-

92




Total financial income

252

371




Financial expense



Total interest expense on financial liabilities measured at amortised cost

-3,432

-3,865

Non-underlying fees associated with refinancing (note 6)

-2,981

-

Net change in fair value of interest rate swap cash flow hedges recycled from equity

-56

-80

Ineffective portion of changes in fair value of cash flow hedges

-1

-




Total financial expense

-6,470

-3,945




 

8              Taxation

Recognised in the income statement


52 weeks

52 weeks


2014

2013


£'000

£'000

Current taxation



Corporation tax charge in the period

9,371

8,642

Adjustments for prior periods

186

-3,843


9,557

4,799

Deferred tax income



Origination and reversal of temporary differences

-1,766

-1,566

Reduction in tax rate

-107

-141

Adjustments for prior periods

-60

-




Deferred tax income

-1,933

-1,707




Total tax charge for the period

7,624

3,092

 

The tax charge is reconciled with the standard rates of UK corporation tax as follows:


52 weeks

52 weeks


2014

2013


£'000

£'000

Profit before tax

21,484

26,477




UK corporation tax at standard rate of 23% (52 weeks 2013: 24%)

4,941

6,354




Factors affecting the charge for the period:



Depreciation on expenditure not eligible for tax relief

316

295

Disallowable expenses

2,608

434

Adjustments in respect of prior periods

126

-3,843

Impact of overseas tax rates

-260

-7

Impact of reduction in tax rate on deferred tax balance

-107

-141




Total tax charge for the period

7,624

3,092

 

Recognised in other comprehensive income


52 weeks

52 weeks


2014

2013


£'000

£'000

Effective portion of changes in fair value of cash flow hedges

3,071

-1,201

Net change in fair value of cash flow hedges recycled to profit or loss

-868

101


2,203

-1,100

 

Factors that may affect future current and total tax charges

Reductions in the UK corporation tax rate from 26% to 24% (effective from 1 April 2012) and to 23% (effective 1 April 2013) were substantively enacted on 26 March 2012 and 3 July 2012 respectively. Further reductions to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. This will reduce the Group's future current tax charge accordingly. The deferred tax asset at 30 March 2014 has been calculated based on the rate of 20% (31 March 2013 liability calculated at 21%) substantively enacted at the reporting date.

 

9.            Other information

The financial information set out above does not constitute the Company's statutory accounts for the 52 weeks ended 30 March 2014 within the meaning of section 435 of the Companies Act 2006 ("The Act"). Statutory accounts for 2014 will be delivered to the Registrar of Companies in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2014.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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