Final Results

Wolseley PLC 25 September 2001 NEWS RELEASE 25 September 2001 Wolseley plc Preliminary results for the year ended 31 July 2001 Record trading results for the fifth consecutive year Financial highlights * Group sales up 12% to £7.2 billion, with continuing activities* up 17%. * Group operating profit before goodwill amortisation up 7% to £414.2 million with continuing activities* up 12%. * Group pre-tax profit before exceptionals and goodwill amortisation up 6% to £379 million. * Earnings per share before exceptionals and goodwill amortisation up 13% to 47.43 pence. * Cash flow from operating activities up 33% to £518.0 million, contributing to year end gearing of 46% * Final dividend up by 10% giving an increase in total dividends for the year of over 10% to 16.9 pence. *Continuing activities exclude the manufacturing operations, all of which were disposed of by 2 February 2001. Operating highlights * The group's principal businesses have continued to outperform the market. * £400 million invested in acquisitions with a further £109 million on capital expenditure. * Branch network extended by 502 branches (22%) to 2,746 at 31 July 2001. * Achieved NYSE listing and re-entry into the FTSE 100. Outlook * Recent terrorist events in USA intensify economic uncertainty. Continued consumer confidence is the key to future business activity levels. No significant pick up in activity expected until 2002. * Continental European markets softening, although UK is more encouraging. * Group well positioned for future growth and industry consolidation and expects further market outperformance in 2001/2002. Commenting on the results, Richard Ireland, Non-Executive Chairman, said: 'Our fifth successive year of record sales and operating profits is testimony to the quality of the Wolseley team throughout the eleven countries in which Wolseley operates. Markets have been difficult but with their customary determination and increasing focus on cash generation our thirty-six thousand employees are delivering. It is particularly pleasing to report record trading results in the year in which we achieved our listing on the New York Stock Exchange. The board joins me in thanking all our employees for the contribution they have made in taking Wolseley forward.' Charles Banks, Group Chief Executive , said, 'This is my first set of results since taking over as Group Chief Executive in May and I am pleased to be reporting such a strong set of figures in what has been a tough market. Looking forward, the recent terrorist incidents in the US have created even more economic uncertainty and it will be some months before the true measure of business activity levels and consumer confidence can be assessed. However, we are committed to continuing to add market share in our core business and to further strengthening our market leading positions. Our skill base, coupled with our scale and geographical diversity, position us well for future growth and industry consolidation.' SUMMARY OF RESULTS 2001 2000 Change (Restated*) Sales £7,194.9m £6,403.4m 12.4% Operating profit - before goodwill amortisation £414.2m £385.7m 7.4% - goodwill amortisation £(17.8)m £(12.5)m Total £396.4m £373.2m 6.2% Exceptional loss on disposal of operations £(70.0)m £(42.6)m ________ _________ Profit before interest £326.4m £330.6m (1.3)% Interest £(35.2)m £(28.3)m ________ _________ Profit before tax - before exceptionals & goodwill amortisation £379.0m £357.4m 6.0% - exceptionals & goodwill amortisation £(87.8)m £(55.1)m Total £291.2m £302.3m (3.7)% Earnings per share - before exceptionals & goodwill amortisation 47.43p 41.79p 13.5% - exceptionals and goodwill amortisation (15.26)p (8.55)p Total 32.17p 33.24p (3.2)% Dividend per share 16.90p 15.35p 10.1% * Restated for change in accounting policy on deferred taxation ____________________________________________________ Net borrowings £693.7m £454.3m Gearing 46.4% 34.3% Interest cover (times) 11 13 ENQUIRIES: Charles A Banks ) Wolseley plc Group Chief Executive ) c/o London Underwriting Centre Steve Webster ) Telephone 020 7617 5372 (until midday) Group Finance Director ) ) After midday: Jacqueline Sinclair-Brown ) Steve Webster - Mobile 07802 913485 Director of Corporate Communications ) Jacqueline Sinclair-Brown - Mobile 07889 433872 Tom Wyatt Financial Dynamics Telephone 020 7831 3113 Please note the following timetable of events: 9 am UK Analyst Meeting The Tower Room, 7th Floor The London Underwriting Centre 3 Minster Court Mincing Lane LONDON EC3R 7DD Webcast of presentation available at www.wolseley.com after 6.00 pm (BST) There will be an analyst conference call at 2.30 pm (BST) - European dial in: +44 (0)20 8240 8245 or +44(0)20 8240 8242 Password: Wolseley Please note: Instant replay will be available from 25 September until 27 September 2001 as follows: Dial in +44(0)20 8288 4459 Passcode: 683392 2001 PRELIMINARY RESULTS GROUP RESULTS We are pleased to announce record trading results for the group for the fifth consecutive year. All of our continuing operations, the three distribution divisions, produced strong growth despite a more difficult business environment in the second half both in the USA and continental Europe. Group sales increased by 12.4% from £6,403 million to £7,195 million. Operating profit increased by 6.2% from £373.2 million to £396.4 million. The increase in profit before tax (before exceptionals and goodwill amortisation) was 6.0% from £357.4 million to £379.0 million. Sales and operating profits before goodwill amortisation ('trading profit') on continuing activities increased by 16.9% and 11.9%, respectively. Currency translation benefited sales and profits of these activities by 5.8% and 5.6%, respectively. The interest charge increased from £28.3 million to £35.2 million, reflecting further substantial investment in the development of the group through acquisitions, notably Westburne, and other capital expenditure, partially offset by the benefits of lower interest rates and tight control over working capital. The exceptional loss of £75.0 million on the disposal of the remaining businesses in the manufacturing division reported at the interim stage has reduced to £70.0 million following the receipt of £5.0 million of additional funds in the second half. Further proceeds are possible depending on the future performance of these businesses. The increase in earnings per share before exceptionals and goodwill amortisation was 13.5%, incorporating a reduction in the effective tax rate from 32.8% last year (as restated) and 30% in the first half to 28% for the year as a whole. It is expected that our tax planning measures will enable the group to hold the 28% rate for at least the next two financial years, provided the geographical contribution to group profits remains broadly the same and there are no significant changes to tax rates in individual territories. DIVIDENDS In line with the strong financial performance of the group and its confidence in the future the board is recommending a final dividend of 12.35 pence (2000 - 11.225 pence) per share, an increase of 10%. With the interim dividend of 4.55 pence already paid, total dividends for the year will amount to 16.90 pence per share, an increase of 10.1% over dividends declared in respect of last year. The dividend reinvestment plan will continue to be available to shareholders. STRATEGIC DEVELOPMENT Charles Banks has completed a strategic review of the group's businesses following his appointment as Group Chief Executive in May. Wolseley's strategic direction will continue to be built on the solid foundations that have produced the strong track record to date underpinned by financial strength. There will be an enhanced focus on providing leadership from the corporate centre supported by management initiatives in a number of areas to increase the opportunities for growth: * With effect from 1 August 2001, Wolseley's three separate US plumbing and heating companies, Ferguson Enterprises, Familian Northwest and Westburne USA are being merged into one single operation. The integration process is likely to take two years to complete. Increasing synergies and cost savings from the integration will arise over this period. * Additional management resource will be added to achieve a more integrated approach to doing business in Europe, including the UK. This recognises the increasing opportunities available for purchasing leverage and other synergies on a European wide basis. * An international career development programme has been established at University of Virginia, Darden School, to increase the pool of management talent. * Senior appointments have already been announced at the corporate level, with further appointments planned to ensure that a stronger resource infrastructure is in place to effectively manage the planned rate of organic and acquisitive growth. The group strategy will remain focused on expansion through a combination of organic growth and acquisition in existing and new distribution markets. Increasing emphasis will be placed on leveraging the group's unique international spread of businesses and scale of operations. Wolseley will continue to seek out new opportunities to attain industry leadership in each market in which it operates. The objective will be to produce consistent profitable growth, earning a return on capital well in excess of the group's cost of capital. Wolseley's operating strategy is to provide for customer needs in local markets and foster entrepreneurial skills amongst our local employees, whilst leveraging the procurement and cost benefits of a major international group. BUSINESS EXPANSION A total of 25 acquisitions was completed during the year for an aggregate consideration, including debt, of £399.6 million. The most significant acquisition was that of the Westburne Group which was completed on 1 July 2001 for an estimated consideration of C$550 million (£255 million). Westburne operates from 198 locations in Canada and 99 in the USA involved in the distribution of plumbing, waterworks and refrigeration products and industrial supplies. In Canada, Westburne occupies the number two position in the market with a market share of approximately 19%. The Canadian business will be expanded by a combination of bolt-on acquisitions, branch openings and product diversification. In the USA, Westburne's operations will be integrated into the group's existing US plumbing operations over the next two years involving estimated one-off costs of £7 million. The integration will generate synergies and cost savings as well as additional focus on growing Westburne's US business. A further £19 million was spent on acquisitions in US plumbing and heating, including further expansion of the fire protection equipment business which is a growing part of Ferguson's business. A total of £73.3 million was invested in the acquisition of seven US building materials distribution businesses. These acquisitions are in line with Carolina's strategy of increased geographic diversity, to widen exposure to different housing markets and to expand its value added capability in terms of fabrication, millwork and component assembly. Carolina now has four stand-alone millwork plants, 38 component facilities and operates in 24 states. A total of £52.1 million was spent on eight acquisitions in the European distribution division, five of which were in the UK. The £22 million acquisition of Nationwide Refrigeration Supplies helped to establish Wolseley Centers as a leader in the growing UK air conditioning market and the refrigeration market. The other UK acquisitions were all in the heavyside division and further expanded Builder Center's geographic coverage and specialist timber offering. Further details of acquisitions are set out in note 7. Branch numbers increased by 502 (22.4%) to a total of 2,746 at 31 July 2001. 180 new branches were opened during the year. Further investment in distribution centres and IT in the USA was reflected in the capital expenditure of £108.8 million for the year. REVIEW OF OPERATIONS European Distribution The division produced 33.0% (2000 34.3%) of the group's turnover and 38.2% (2000 37.7%) of the group's trading profit. Sales for the division increased by 8.0%, including an organic increase of 5.7%. Trading profits increased by 8.9% from £145.3 million to £158.2 million. The resulting trading margin was higher at 6.7% (2000 6.6%) of sales. Wolseley Centers in the UK produced another outstanding performance with an increase in sales of 12.6% to over £1.5 billion, including organic growth of over 8.0%. Each of the four divisions of Wolseley Centers achieved double digit increases in profits and gained market share. Trading profit for Wolseley Centers increased by 13.9% to over £115 million. The trading margin was slightly higher at 7.5%. In lightside, Plumb Center and Drainage Center added 56 new branches, including 4 for Heatmerchants in Ireland. Organic growth in lightside at over 13% was well ahead of the market according to statistics from the Builders Merchant Federation. The move from Dunstable to the new feeder at Marston Gate, Bedfordshire, was successfully completed in August and a further new feeder at Melmerby, North Yorkshire, replacing Ripon is scheduled for completion early next year. In heavyside, Builder Center recovered strongly in the second half from the effect of the wet weather in the first half. Heavyside grew sales by over 10% and increased its trading margin, producing a 17% increase in trading profits. The 20% growth in hire sales reflects the addition of 17 new hire branches during the year with a further 22 planned for next year. Heavyside's timber center offering continues to expand with 16 new branches added, including 12 from the acquisition of RK Timber in May. The increase in trading profits in the Commercial and Industrial division was even more marked at 19.5%, reflecting an enhanced trading margin of over 6%. Controls Center completed another record year driven by growth of 28% in air conditioning sales and the successful opening of implants within existing Pipeline branches. The Spares division recorded a sales increase of 12.6% while maintaining its trading margin. The creation of a new, all picture spare parts' catalogue for domestic and commercial heating and commercial catering spares is an industry first. A sales office was opened in Holland and further development is planned in continental Europe. In continental Europe, market conditions for the group's plumbing and heating companies in the final quarter of the financial year softened in response to slowing economies. In France, Brossette achieved 1% sales growth over the prior year's figures which were boosted by the end of a sales incentive programme and the benefits of a reduction in the rate of VAT on sales to contractors. The heating market was weaker due to the warmer weather and price deflation. Sales of other product segments showed good volume growth. As the market softened, the pressure on prices increased and Brossette's added value percentage ended marginally down on last year. Trading profit was also slightly down. Twenty new branches were opened during the year. Against the background of a deteriorating market, OAG in Austria continued its recent trend of progress, achieving an increase in sales of over 3% and an increase in profits of more than 22%. As with Brossette, the heating market was weaker but OAG benefited from stronger industrial and DIY sectors and from the cost reduction programme instituted in the prior year. Development of the businesses in Hungary and the Czech Republic, which now account for over 11% of OAG group sales, continued with the opening of 7 new branches. In Italy, Manzardo recorded 4% sales growth but profits dropped back slightly with additional costs due to the opening of 2 new 'express' store locations which will move into profit over the next year. A further 7 locations are planned for 2002. A delay in the announcement by the government of new tax incentives for repairs and refurbishment work impacted activity levels in the final quarter of the financial year. CFM in Luxembourg made progress in both sales and profits. North American Plumbing & Heating The division produced 41.7% (2000 39.8%) of the group's turnover and 37.5% (2000 35.2%) of the group's trading profit. Sales for the division increased by 17.6% from £2,551 million to £3,000 million, including a one month contribution of £59 million from the Westburne acquisition in the USA and Canada. Acquisitions, including Westburne, accounted for £105 million of the increase in sales and exchange translation for a further £242 million. The rate of organic growth was lower in the second half than the first half as the US economy slowed. For the year as a whole the organic increase in sales was 3.7% which was well in excess of the market. Trading profits for the division increased by 14.4% from £135.9 million to £ 155.5 million, including a contribution of £3.0 million from Westburne after charging one-off costs of £0.2 million relating to the integration of Westburne's US operations into Wolseley's other US plumbing and heating activities. Other identified one-off costs of approximately £7.0 million relating to the integration of Westburne are likely to be charged against earnings in 2001/2 in accordance with FRS 12. The one-month contribution from Westburne was in excess of expectations at the time of the acquisition. The trading margin of the division reduced marginally. Ferguson's markets exhibited a mixed pattern with trading strongest in the west coast of the USA and weakest in the mid-west. Demand weakened in the second half in the commercial and industrial sector but remained strong throughout in waterworks on which increasing emphasis is being placed. Ferguson's sales growth for the year as a whole was 5.3%. Despite headcount reductions in response to weakening market conditions, trading profit growth was slightly lower. Sales and profit growth at Familian Northwest was similar to Ferguson. Familian Northwest added a net 6 branches to increase its market penetration. Ferguson and Familian Northwest have completed their current plans for the roll out of distribution centres. These centres continue to improve customer service and give increased reliability of delivery to branches. Benefits have been achieved during the year from improved inventory turns and the easing of duplicated inventory holdings in branches and distribution centres which is necessary during the early phases of establishing a distribution centre infrastructure. The infrastructure, which is unique in the industry, will be used, where appropriate, for Westburne's US operations and should help to enhance the added value percentage for the acquired business. The need for any additional distribution centres in the future will be assessed by reference to market penetration and volumes in other regions. US Building Materials Distribution The division produced 24.6% (2000 21.3%) of the group's turnover and 23.4% (2000 22.2%) of the group's trading profit. Sales for the division increased by 29.9% from £1,363 million to £1,770 million. Approximately £409 million of the increase arose from acquisitions in line with the strategy of expanding the geographic and product diversity of the business. These acquisitions helped consolidate Carolina's position as the market leader in the distribution of building materials to professional contractors across the USA. A benefit to sales of £129 million arose from exchange translation. Deflation in lumber, panels and gypsum reduced sales by approximately £170 million and accounted for the organic decline in sales. Organic sales volumes were up by approximately 1%. The housing market remained resilient throughout the year at an annual rate of around 1.6 million starts. Trading profits for the division increased by 13.2% from £85.5 million to £ 96.8 million. The decline in the trading margin from 6.3% to 5.5% reflected the significant price deflation of the products referred to above. The trend in the trading margin improved in the second half as lumber prices recovered from a seven year low in January 2001. The average lumber price for the year as a whole was 16.2% below that of the previous financial year. However, the lumber price at 31 July 2001 was 6.6% higher than 31 July 2000. As expected in times of commodity price deflation, Carolina's added value percentage increased. The increase achieved was nearly 2% higher than the prior year, also reflecting more sales of added value products. Carolina has started to change the trading names it uses nationally across the USA to Stock Building Supply. This is likely to take two to three years to complete. This new national identity, together with the completion of the implementation of the NX Trend computer system, will deliver additional benefits to the business in terms of enhanced customer service, greater brand recognition, more efficient management of working capital, improved buying opportunities and reduced costs. Further benefits are likely to arise from increasing co-operation between Carolina and the US Plumbing and Heating operations in servicing major home building customers requiring a range of product types and services. FINANCIAL Net interest payable of £35.2 million (2000 £28.3 million) reflects the higher level of acquisition spend during the last two financial years partially offset by the benefits of lower interest rates on the group's borrowings and a lower working capital to sales ratio. The pre-exceptional item interest cover is over 11 times (2000 13 times). Before exceptionals and goodwill amortisation, earnings per share increased by 13.5% from 41.79 pence to 47.43 pence. Total (FRS3) earnings per share were lower, reflecting the exceptional loss on disposal of the remaining manufacturing operations. The average number of shares in issue during the year was 575.3 million (2000 574.3 million). The cost of dividends paid and proposed in respect of the financial year is £ 97.4 million (2000 £88.3 million). Based on pre-exceptional earnings, the cover is 2.6 times, unchanged from the previous year. Shareholders' funds increased by £173.2 million (13.1%) from £1,323.2 million (as restated) to £1,496.4 million. Particular focus on the control of working capital contributed to a strong cash flow performance for the year as a whole. Cash flow from operating activities increased by 32.8% from £390.0 million to £518.0 million. The average working capital to sales ratio reduced from 16.4% last year to 16.1%. The group is targeting a further reduction in this ratio by 31 July 2002. Net borrowings, excluding construction loan borrowings, increased by approximately £239.4 million to £693.7 million due to the acquisition spend of £400.6 million and the adverse effect of currency translation of £41.6 million, giving year-end gearing of 46.4%. Construction loan borrowings relating to our US building distribution activities amounted to £215.2 million (2000 £192.1 million) and finance secured construction loans receivable of £ 215.5 million (2000 £193.0 million). Return on gross capital employed, including goodwill, is 16.5%, well ahead of the group's weighted average cost of capital. The unamortised balance of acquisition goodwill in the balance sheet as at 31 July 2001 is £474.3 million (2000 £277.0 million). The increase reflects the acquisition spend in the current year and includes estimated goodwill of £124 million relating to the Westburne acquisition. Further adjustments to the Westburne goodwill may be necessary in the next financial year as initial estimates are refined and once the completion balance sheet has been agreed with the sellers. OUTLOOK Recent terrorist events in the USA have inevitably increased the uncertainty as to how world economies, particularly the USA, will perform. It is likely to be some time before the true measure of business activity levels and consumer confidence can be accurately assessed. The market in continental Europe, which accounts for 11% of the group's sales, softened in the last quarter of the group's financial year and business conditions are unlikely to rebound in the near term. On a more positive note, in the UK, which accounts for 22% of the group's sales, prospects remain encouraging. Providing consumer and business confidence holds up, we expect the housing and construction market to retain its positive momentum, underpinned by public sector spending. We will continue with our branch development and logistics' investment programme to expand our market share. The short term prospects in North America, which accounts for 67% of group sales, are clearly more difficult to call. A feature of the last year was the resilience of the US housing market. The future direction of this market will, once again, depend upon the strength of consumer spending and confidence. As in the past, the regional trading pattern across the USA will be variable. We do not expect any significant pick up in activity levels until 2002 when the full force of interest rate reductions should have taken effect. The group's skill base, coupled with its scale and geographical diversity means that it is well positioned for future growth and industry consolidation. We continue to expect our businesses to outperform in each of our major markets over the next financial year. 25 September 2001 GROUP PROFIT AND LOSS ACCOUNT Year to (Restated) 31 July 2001 Year to 31 July 2000 ___________ ___________ £m £m Turnover (note 5) Continuing operations 6,907.1 6,110.1 Acquisitions 234.5 - ____________ ____________ 7,141.6 6,110.1 Discontinued activities 53.3 293.3 ____________ ____________ 7,194.9 6,403.4 =========== =========== Operating profit before goodwill amortisation 414.2 385.7 (note 6) Goodwill amortisation (17.8) (12.5) Operating profit Continuing operations 380.3 354.2 Acquisitions 12.4 ____ 392.7 354.2 Discontinued activities 3.7 19.0 396.4 373.2 ___________ ___________ Loss on disposal of operations (note 4) (70.0) (42.6) ___________ ___________ Profit on ordinary activities before interest 326.4 330.6 Net interest payable (35.2) (28.3) ___________ ___________ Profit on ordinary activities before tax 291.2 302.3 Taxation Current tax charge (102.8) (114.4) Deferred tax charge (3.3) (2.7) Exceptional credit - 6.0 ___________ ___________ (106.1) (111.1) ___________ ___________ Profit after tax 185.1 191.2 Minority interests - (0.4) ___________ ___________ Profit for the period attributable to ordinary 185.1 190.8 shareholders Dividends (97.4) (88.3) ___________ ___________ Profit retained 87.7 102.5 =========== =========== Earnings per share Before exceptionals and goodwill amortisation 47.43 p 41.79 p Goodwill amortisation (3.09)p (2.17)p Exceptionals (12.17)p (6.38)p ___________ ___________ FRS 3 basis 32.17 p 33.24 p ___________ ___________ Diluted earnings per share 32.12p 33.20 p Dividends per share 16.90p 15.35 p Translation rates US dollars 1.4464 1.5836 Euro 1.6299 1.6017 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year to (Restated) 31 July Year to 2001 31 July 2000 ___________ ___________ £m £m Profit for the period 185.1 190.8 Currency translation difference 35.6 42.2 Total gains and losses recognised during the year 220.7 233.0 Prior year adjustment (note 1) 14.3 Total gains and losses recognised since last annual 235.0 report GROUP BALANCE SHEET AT 31 JULY 2001 (Restated) 2001 2000 Total Total ______________ _____________ £m £m FIXED ASSETS Intangible assets 474.3 277.0 Tangible assets 592.5 531.6 ______________ 1,066.8 808.6 ______________ CURRENT ASSETS Stocks 1,093.8 977.7 Debtors and property awaiting disposal 1,362.0 1,133.1 Construction loans receivable (secured) 215.5 193.0 Investments 14.3 8.3 Cash at bank, in hand and on deposit 243.4 128.2 ______________ 2,929.0 2,440.3 ______________ CREDITORS: amounts falling due within one year Bank loans, overdrafts and other loans 274.4 186.1 Construction loan borrowings (unsecured) 215.2 192.1 Corporation tax 59.8 43.1 Proposed dividend 71.2 64.6 Other 1,116.0 963.0 ______________ 1,736.6 1,448.9 ______________ NET CURRENT ASSETS 1,192.4 991.4 ______________ TOTAL ASSETS LESS CURRENT LIABILITIES 2,259.2 1,800.0 ______________ CREDITORS: amounts falling due after one year Borrowings 677.0 404.7 PROVISIONS FOR LIABILITIES AND CHARGES 85.8 70.6 ______________ 762.8 475.3 ______________ 1,496.4 1,324.7 ============== CAPITAL AND RESERVES Called up share capital 144.1 143.7 Share premium account 161.9 156.7 Profit and loss account 1,190.4 1,022.8 ______________ SHAREHOLDERS' FUNDS 1,496.4 1,323.2 Minority interests - 1.5 ______________ 1,496.4 1,324.7 ============== Translation rates: US Dollars 1.4252 1.4977 Euro 1.6289 1.6163 SUMMARISED GROUP CASH FLOW STATEMENT Year to Year to 31 July 2001 31 July 2000 ______________ ______________ £m £m CASH FLOW FROM OPERATING ACTIVITIES* 518.0 390.0 Returns on investments and servicing of finance (36.9) (24.1) Taxation paid (90.9) (112.6) Capital expenditure and financial investment (108.8) (117.0) Acquisitions (400.6) (285.7) Purchase of minorities (1.5) - Disposals 13.0 122.7 Equity dividends paid (90.8) (81.1) Financing - Issue of shares 5.5 2.0 _____________ ______________ CHANGE IN NET DEBT RESULTING FROM CASH FLOWS (193.0) (105.8) New loans and finance leases (4.8) (5.8) Translation difference (41.6) (33.7) _____________ ______________ Movement in net debt in period (239.4) (145.3) Opening net debt (454.3) (309.0) ______________ ______________ Closing net debt (693.7) (454.3) ============== ============== * RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS Year to Year to 31 July 2001 31 July 2000 ______________ ______________ £m £m Operating profit 396.4 373.2 Depreciation charges 85.4 73.9 Goodwill amortisation 17.8 12.5 Decrease/(Increase) in stocks 33.1 (75.7) Increase in debtors (70.1) (19.9) Increase in creditors & provisions 54.8 26.5 Decrease/(Increase) in net construction loans 0.6 (0.5) ______________ ______________ Net cash flow from operating activities 518.0 390.0 ============== ============== NOTES ON THE ATTACHED PROFIT AND LOSS AND BALANCE SHEET 1 These accounts have been prepared on the basis of the accounting policies set out in the group's 2000 Annual Report and Accounts except for a change in the deferred tax policy. Comparative figures for the year ended 31 July 2000 have been restated following the adoption of FRS 19, Accounting for Deferred Taxation. This has resulted in the recognition of a deferred taxation asset of £ 14.3 million at 31 July 2000 and an increase in the taxation charge reported in the year ended 31 July 2000 of £2.7 million. The impact of the change in accounting policy for the year ended 31 July 2001 is to reduce reported profit after taxation by £3.3 million. Comparative figures for 31 July 2000 have been restated as follows: Profit for the period after Net assets dividends £m £m As previously reported 105.2 1,310.4 Implementation of FRS19 (2.7) 14.3 As restated 102.5 1,324.7 2 The financial information set out above is extracted from the group's full accounts for the years ended 31 July 2000 and 31 July 2001. Statutory accounts for 2000 have been delivered to the Registrar of Companies, and those for 2001 will be delivered following the Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 3 Segmental disclosure Following the disposal of the group's manufacturing operations, the directors have reviewed the reportable segments of the group's businesses and have adopted a new form of segmental disclosure in notes 5 and 6 of this statement. Comparative figures have been restated accordingly. The directors believe that this new form of disclosure is likely to be more helpful in gaining an understanding of the group's principal business streams and in interpreting the financial information in relation thereto. The same form of segmental disclosure was adopted in the group's Interim Announcement except that, following the acquisition of the Westburne group with operations in Canada, the segment previously reported as US Plumbing and Heating is now shown as North American Plumbing and Heating. 4 Loss on disposal of operations The group completed the disposal of its remaining manufacturing businesses on 2 February 2001. The total loss on disposal amounted to £70 million, comprising a £25.6 million loss on assets (including estimated costs of disposal) plus goodwill of £44.4 million previously written off to reserves. 5 Analysis of change in sales Move- ment Acqui- in New sitions Sales in Acqui- Incre- Dis- sitions ment continued Organic 2000 Exchange 2001 2000 Operations Change 2001 £m £m £m £m £m £m % £m European 2,196.4 (14.4) 54.2 11.8 - 123.4 5.7% 2,371.4 Distribution North American Plumbing 2,551.2 242.0 77.2 27.9 - 102.2 3.7% 3,000.5 & Heating Distribution US 1,362.5 129.2 103.1 306.1 - (131.2) (8.8)% 1,769.7 Building Materials Distribution ______ _____ _____ _____ ____ ______ _____ ________ 6,110.1 356.8 234.5 345.8 - 94.4 1.5% 7,141.6 Discontinued Operations 293.3 4.3 - - (244.3) - 53.3 6,403.4 361.1 234.5 345.8 (244.3) 94.4 7,194.9 ======= ===== ===== ===== ===== ==== ==== ======= 6 Analysis of change in operating profit before goodwill amortisation Move- ment Acqui- in New sitions Profit Acqui- Incre- in Dis- sitions ment continued Organic 2000 Exchange 2001 2000 Operations Change 2001 £m £m £m £m £m £m % £m European 145.3 (0.8) 2.9 0.6 - 10.2 7.1% 158.2 Distribution North American Plumbing & Heating 135.9 13.1 4.5 1.4 - 0.6 0.4% 155.5 Distribution US Building Materials Distribution 85.5 8.3 8.0 17.9 - (22.9) (24.4)% 96.8 366.7 20.6 15.4 19.9 - (12.1) (3.1)% 410.5 Discontinued Operations 19.0 0.1 - - (15.4) - 3.7 385.7 20.7 15.4 19.9 (15.4) (12.1) 414.2 ===== ==== ==== ==== ====== ====== ===== ===== 7 Summary of acquisitions An analysis of the consideration, including debt, and the expected contribution to turnover in a full year is as follows: Consideration Full year contribution to £m turnover £m Division European Distribution 52.1 121 North American Plumbing & Heating 274.2 687 Distribution US Building Materials Distribution 73.3 167 399.6 975 In certain of the above acquisitions, principally the Westburne acquisition completed on 1 July 2001, the consideration is subject to adjustment. TIMETABLE FOR AGM AND DIVIDENDS 2001 14 December - Annual General Meeting 2002 9 January - Shares quoted ex dividend 11 January - Record date for dividend 31 January - Dividend paid A copy of this Preliminary Announcement, together with other recent public announcements can be found on Wolseley's web site at www.wolseley.com. Copies of the Preliminary Results' presentation given to stockbrokers' analysts are also available on the site. - Ends -

Companies

Ferguson (FERG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today