24 Aug 2012 12:30
24 August 2012
United Carpets Group plc
("the Group" or "the Company" or "United Carpets")
Update on Store Review and Change to Accounting Reference Date
As announced on 15 June 2012, following a prolonged period of tough market conditions, a significant proportion of the Company's franchise network has found trading very challenging, resulting in a situation which has become increasingly unsatisfactory for the Company.
A review of the Group's 85 stores is being undertaken and this has led to the closure of 6 stores and a further 17 franchised stores being either taken back into the Group or refranchised. The review is ongoing and a further 8 stores are expected to close over the next few weeks. Negotiations have also commenced with the landlords of a number of other stores in an attempt to agree rent reductions in order to improve trading prospects and viability.
The impact of the closures to date and those currently anticipated is being quantified and will require a non-cash provision for impairment of property, plant and equipment of £1,012k as well as a significant non-cash increase in the provision against onerous contracts. The future cash impact of these closures will depend upon the terms relating to exit of the leases.
The outcome of the ongoing negotiations with landlords is uncertain as is the possibility of further closures. It may be that more closures than the 14 that have occurred or are already anticipated may be necessary. Depending upon the outcome of the ongoing negotiations and considerations, further, potentially substantial, non-cash provisions may also be required.
In order to allow time to complete this review and to provide shareholders with a full report of all of the actions which it is considered necessary to take, as well as the full financial impact on the Group of those actions, the Company has decided to extend its current accounting reference date from 31 March 2012 to 30 September 2012.The Board believes that not taking this step would result in a set of accounts which would not give a truly representative picture of the Group's ongoing operations. The Board believes that they would not reflect the full financial implications of the present review and the remedial actions which might need to be taken following its conclusion. Following the change to the accounting reference date, the Company's next financial results will be its audited accounts for the 18 months ended 30 September 2012 which the Company intends to publish before 31 January 2013.
Whilst the Board is disappointed by the need to take these actions, the Directors continue to believe that, with appropriately adjusted central costs, the core of locations that will continue following the completion of the review will be able to operate successfully on an ongoing basis.
Since the Company will not be in a position to publish financial results for the year ended 31 March 2012 by 30 September 2012 as required by the AIM Rules, trading in the Company's shares is suspended until the publication of the audited report and accounts for the 18 month period ending 30 September 2012.
Enquiries:
United Carpets 01709 732 666
Paul Eyre, Chief Executive
Ian Bowness, Finance Director
Cardew Group 020 7930 0777
Tim Robertson
Seymour Pierce
Jonathan Wright/Mark Percy (Corporate Finance) 020 7107 8000
Katie Ratner (Corporate Broking)