Carpetright pension deficit falls £200k following CVA

Carpetright’s pension deficit has decreased by £200,000 year-on-year to £600,000 following last year’s company voluntary arrangement (CVA) approval by the Pension Protection Fund (PPF).

As of 27 April 2019, the scheme’s liabilities declined and its assets increased, while the company paid £1.2m in pension contributions, up from £900,000 in 2017/18.

This would have resulted in a surplus of £1.2m on a technical provision basis, however application of the ‘asset ceiling’ on an IAS 19 basis has resulted in the company “de-recognising the £1.5m surplus from the Storey’s scheme”.

The company reached a CVA agreement with the PPF and its creditors in April 2018 to protect the firm from insolvency, which resulting in the closure of 80 UK stores in September 2018.

Furthermore, following the triennial valuation as of 6 April 2017, Carpetright agreed a recovery plan with the trustees on 27 June 2018.

The company made deficit contributions of £900,000 in the past year and it is expected to continue at this level in the current financial year.

Carpetright’s pension scheme was closed to future accrual on 1 May 2010.

The report stated that the company’s legacy property issues had been “addressed” and that it was “on track to deliver £19m of annualised savings as part of the CVA”.

Commenting on the results, Carpetright chief executive, Wilf Walsh, said: "2018/19 was a transitional year for the business as we took tough but necessary action to address our legacy property issues and restructure the UK store estate.

"From a trading standpoint it was, as expected, a year of two halves, with the first six months reflecting the impact of the CVA implementation, followed by a significant improvement in the second half and, in particular, during Q4.

"Our work is far from finished, and while economic and political uncertainties cloud the near-term outlook for the retail sector, our turnaround plan is very much on track."

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