Interim Results
Headlam Group PLC
09 August 2004
9 August 2004
Interim results for the six month period ended 30 June 2004
Headlam Group plc ('Headlam'), the UK's leading floorcoverings distributor,
announces its interim results for the six months ended 30 June 2004.
Financial highlights
2004 2003 Change
£'000 £'000
Turnover 217,811 194,228 +12.1%
Operating profit before goodwill amortisation 17,177 14,438 +19.0%
Profit before taxation 16,678 13,934 +19.7%
Adjusted earnings per share 13.9p 11.6p +19.8%
Dividend per share 4.0p 3.6p +11.1%
Key points
•UK floorcovering businesses achieve an 11.4% like for like increase in turnover
•Group operating profit before goodwill amortisation increased by 19.0% with UK
floorcovering achieving a 19.4% improvement on a like for like basis
•Cash flow from operating activities increased by 30.1% to £9.5 million
•Investment in facilities during the period amounted to £4.7 million
•Interim dividend increased by 11.1% from 3.6p to 4.0p
Tony Brewer, Chief Executive of Headlam, said:
'Our businesses in the UK and Continental Europe have all contributed to an
encouraging first six months. With the benefit of this, combined with a
constant focus on our suppliers, products, customers and service, we look
forward to the traditional busy autumn trading period and remain confident of
achieving the group's operating objectives for the year.'
Enquiries:
Headlam Group plc
Tony Brewer, Chief Executive Tel: 01675 433000
Stephen Wilson, Finance Director
CHAIRMAN'S STATEMENT
The first six months of 2004 have seen a particularly positive trend, with like
for like sales increasing by 10.3%. This has been achieved by an increase in
sales of all product categories across our geographical locations.
Group turnover for the first six months increased by 12.1% from £194.2 million
to £217.8 million. Operating profits, before goodwill amortisation, increased
by 19.0% from £14.4 million to £17.2 million.
Earnings and dividend
Adjusted earnings per share increased by 19.8% from 11.6p to 13.9p and the board
has declared an interim dividend of 4.0p per share, an increase of 11.1% on last
years interim dividend of 3.6p per share. The dividend will be paid on 3
January 2005 to shareholders on the register at 10 December 2004.
Operations
In the UK, our 45 businesses operating from 21 distribution centres all
contributed to the increased sales performance. We continue with our policy of
operating these businesses autonomously, therefore maximising market presence
and our relationship with customers, principally independent floorcovering
retailers and contractors, ensuring that they have a continual flow of new
products and point of sale material.
Close association with our suppliers has further enhanced the position of each
product category. Carpet improved its market position with like for like sales
increasing by 11.8%. Residential vinyl increased by 10.8% and laminate flooring
by 17.6%. In the commercial market where our focus is on regular small order
business, rather than large contracts, our sales increased by 9.2%.
We currently have under construction an extension to our facility in Thatcham,
which will give the Florco business 40% more capacity. Construction has
commenced on a new 158,000 square feet distribution centre in Tamworth which
will be completed at the end of the first quarter 2005. Planning permission has
been granted for an extension to our Stockport facility and initial agreement
has been made to re-house Wilkies, our regional distribution business in Leeds.
It is pleasing that our Continental European businesses in France, Switzerland
and the Netherlands have continued to show an improving performance. Whilst
they represent a relatively small proportion of our earnings, it is encouraging
that they are out performing local market conditions.
Acquisitions
The acquisition of National Carpets on 30 April 2004 broadened the group's
customer base, to encompass the DIY sector. National Carpets will continue to
be located in its Rochdale distribution centre and has opportunities to further
develop its service and product offering.
We continually evaluate potential acquisitions and these will be made where they
enhance the market position and earnings of the group.
Cash flow
Net cash flow from operating activities increased from £7.3 million to £9.5
million after an investment of £9.4 million (2003: £8.6 million) in working
capital. Investment in working capital usually occurs during the first six
months of the financial year and then subsequently reverses during the second
six months. The increased working capital investment was a result of higher
levels of activity.
As mentioned above, the group has maintained its programme of investment in
facilities. These activities have given rise to a cash outflow of £4.7 million
during the first six months. In the event that planning is received for the
construction of the new Wilkies facility, capital expenditure during the second
six months could reach £12.9 million bringing total expenditure for 2004 to
£17.6 million.
The acquisition of National Carpets has led to an initial cash outflow of £3.5
million. There is a further payment of £0.6 million to be made in connection
with this acquisition in two equal amounts of £0.3 million during April 2005 and
April 2006.
The Group completed the first six months with net cash of £22.6 million (2003:
£21.6 million).
Outlook
Our businesses in the UK and Continental Europe have all contributed to an
encouraging first six months. With the benefit of this, combined with a
constant focus on our suppliers, products, customers and service, we look
forward to the traditional busy autumn trading period and remain confident of
achieving the group's operating objectives for the year.
TG Larman, Chairman
9 August 2004
Headlam Group plc
Consolidated profit and loss account (unaudited)
Six months Six months The year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Note £'000 £'000 £'000
Turnover 1
Continuing operations 215,106 194,228 412,295
Acquisitions 2,705 - -
-------- -------- --------
217,811 194,228 412,295
Cost of sales (153,074) (136,624) (289,315)
-------- -------- --------
Gross profit 64,737 57,604 122,980
Net operating expenses (48,020) (43,576) (90,301)
-------- -------- --------
Operating profit
Continuing operations 16,717 14,028 32,679
Acquisitions - - -
-------- -------- --------
Operating profit before goodwill
amortisation 1 17,177 14,438 33,514
Goodwill amortisation (460) (410) (835)
-------- -------- --------
Profit on ordinary activities before
interest 16,717 14,028 32,679
Net interest payable and other
similar items (39) (94) (86)
-------- -------- --------
Profit on ordinary activities before
taxation 16,678 13,934 32,593
Taxation on profit on ordinary
activities (5,312) (4,590) (10,464)
-------- -------- --------
Profit for the financial period 11,366 9,344 22,129
Dividends paid and proposed on equity
shares (3,421) (3,026) (11,657)
-------- -------- --------
Retained profit for the financial
period 7,945 6,318 10,472
======== ======== ========
Earnings per share
Basic 2 13.3p 11.1p 26.3p
======== ======== ========
Diluted 2 13.2p 11.0p 25.9p
======== ======== ========
Adjusted 3 13.9p 11.6p 27.3p
======== ======== ========
Headlam Group plc
Consolidated balance sheet (unaudited)
At At At
30 June 30 June 31 December
2004 2003 2003
£'000 £'000 £'000
Fixed assets
Intangible assets 14,445 13,357 13,210
Tangible assets 67,368 52,465 64,236
-------- -------- --------
81,813 65,822 77,446
-------- -------- --------
Current assets
Stocks 80,835 72,875 73,889
Debtors: amounts falling due within one
year 74,994 75,621 72,419
Debtors: amounts falling due after more than
one year 1,500 1,500 1,500
Total debtors 76,494 77,121 73,919
Cash at bank and in hand 26,309 27,123 32,336
-------- -------- --------
183,638 177,119 180,144
Creditors: amounts falling due within one
year (145,556) (136,784) (147,378)
-------- -------- --------
Net current assets 38,082 40,335 32,766
-------- -------- --------
Total assets less current liabilities 119,895 106,157 110,212
Creditors: amounts falling due after more
than one year (1,273) (1,610) (1,175)
Provisions for liabilities and charges (749) (779) (777)
-------- -------- --------
Net assets 117,873 103,768 108,260
======== ======== ========
Capital and reserves
Called up share capital 4,281 4,209 4,213
Share premium account 51,118 48,946 49,061
Revaluation reserve 2,814 4,013 2,844
Profit and loss account 59,660 46,600 52,142
-------- -------- --------
Equity shareholders' funds 117,873 103,768 108,260
======== ======== ========
Headlam Group plc
Consolidated cash flow statement (unaudited)
Six months Six months The year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Note £'000 £'000 £'000
Net cash inflow from operating
activities 4 9,488 7,258 36,046
Returns on investments and servicing
of finance (39) (94) (105)
Taxation (6,432) (3,499) (8,750)
Capital expenditure (4,675) (9,200) (16,952)
Acquisitions and disposals (3,452) - (1,189)
Equity dividends paid (3,030) (2,734) (10,550)
-------- -------- --------
Cash outflow before financing (8,140) (8,269) (1,500)
-------- -------- --------
Financing
Issue of equity share capital 2,125 47 166
Repayment of amounts borrowed - (23) (591)
Capital element of finance leases and
similar hire purchase contract payments (243) (618) (935)
-------- -------- --------
Cash inflow/(outflow) from financing 1,882 (594) (1,360)
Decrease in cash in period (6,258) (8,863) (2,860)
======== ======== ========
Headlam Group plc
Reconciliation of net cash flow to movements in net cash (unaudited)
Six months Six months The year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
£'000 £'000 £'000
Decrease in cash in period (6,258) (8,863) (2,860)
Cash outflow from reduction in debt 243 641 1,526
-------- -------- --------
Change in debt resulting from cash
flows (6,015) (8,222) (1,334)
Translation difference (26) (39) 75
-------- -------- --------
Movement in net cash in the period (6,041) (8,261) (1,259)
Net cash at beginning of period 28,616 29,875 29,875
-------- -------- --------
Net cash at end of period 22,575 21,614 28,616
======== ======== ========
Consolidated statement of total recognised gains and losses (unaudited)
Six months Six months The year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
£'000 £'000 £'000
Profit for the financial period 11,366 9,344 22,129
Currency translation differences on foreign
currency net investments (457) (7) 212
-------- -------- --------
Total recognised gains and losses for the
financial period 10,909 9,337 22,341
======== ======== ========
Headlam Group plc
Reconciliation of movements in consolidated shareholders' funds (unaudited)
Six months Six months The year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
£'000 £'000 £'000
Profit for the financial period 11,366 9,344 22,129
Dividends on equity shares (3,421) (3,026) (11,657)
-------- -------- --------
Retained profit for the financial period 7,945 6,318 10,472
Equity share capital issued 2,125 47 166
Currency translation differences on foreign
currency net investments (457) (7) 212
-------- -------- --------
Net addition to shareholders' funds 9,613 6,358 10,850
Shareholders' funds at beginning of period 108,260 97,410 97,410
-------- -------- --------
Shareholders' funds at end of period 117,873 103,768 108,260
======== ======== ========
Headlam Group plc
Notes to the Interim Financial Statements (unaudited)
1. Segmental analysis
Six months Six months The year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
£'000 £'000 £'000
Turnover
By origin
UK 184,695 161,531 345,300
Continental Europe 33,116 32,697 66,995
-------- -------- --------
217,811 194,228 412,295
======== ======== ========
Operating profit before interest and
taxation
By activity
Floorcoverings 17,610 14,596 34,464
Central operations (433) (158) (950)
-------- -------- --------
17,177 14,438 33,514
Less goodwill amortisation (460) (410) (835)
-------- -------- --------
16,717 14,028 32,679
======== ======== ========
By origin
UK 16,399 13,759 31,974
Continental Europe 778 679 1,540
-------- -------- --------
17,177 14,438 33,514
Less goodwill amortisation (460) (410) (835)
-------- -------- --------
16,717 14,028 32,679
======== ======== ========
2. Earnings per share
The calculation of earnings per share is based on the average number of ordinary
shares in issue during the first six months of the year of 85,313,350 (2003:
84,175,606). The weighted average number of ordinary shares used for the diluted
earnings per share calculation is 86,379,550 (2003: 85,238,259). The
calculation of profit for the financial period used for the adjusted earnings
per share is shown in note 3 below.
Headlam Group plc
Notes to the Interim Financial Statements (unaudited)
3. Adjusted earnings per share
Six months Six months The year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
£'000 £'000 £'000
Operating profit before goodwill
amortisation 17,177 14,438 33,514
Net interest payable and other similar
items (39) (94) (86)
-------- -------- --------
Profit on ordinary activities before
taxation 17,138 14,344 33,428
Taxation on profit on ordinary
activities (5,312) (4,590) (10,464)
-------- -------- --------
Adjusted profit for the financial period 11,826 9,754 22,964
======== ======== ========
The effective rate of taxation for the period ended 30 June 2004 was 31%. For
the period ended 30 June 2003 and 31 December 2003 the rate was 32%.
Adjusted earnings are shown above and exclude the effects of goodwill
amortisation.
4. Reconciliation of group operating profit to net cash inflow from
operating activities
Six months Six months The year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
£'000 £'000 £'000
Profit on ordinary activities before
interest 16,717 14,028 32,679
Depreciation of tangible fixed assets 1,689 1,380 2,947
Goodwill amortisation 460 410 835
Profit on sale of fixed tangible assets (13) (5) (26)
Movement in stocks (6,160) (5,999) (5,619)
Movement in debtors 715 (3,003) (3,667)
Movement in creditors (3,920) 447 8,897
-------- -------- --------
Net cash inflow from operating
activities 9,488 7,258 36,046
======== ======== ========
Headlam Group plc
Notes to the Interim Financial Statements (unaudited)
5. Analysis of changes in net funds
At At
1 January Cash Translation 30 June
2004 flows differences 2004
£'000 £'000 £'000 £'000
Cash at bank and in hand 32,336 (5,954) (73) 26,309
Bank overdraft (217) (304) 1 (520)
-------- -------- -------- --------
32,119 (6,258) (72) 25,789
Debt due within one year (1,829) - 46 (1,783)
Finance leases and similar hire
purchase contracts (1,674) 243 - (1,431)
-------- -------- -------- --------
28,616 (6,015) (26) 22,575
======== ======== ======== ========
The interim financial statements have been prepared using accounting policies
stated in the group's report and accounts for the year ended 31 December 2003
and are unaudited. The summary of results for the year ended 31 December 2003
does not constitute full financial statements within the meaning of the
Companies Act 1985. The report and full financial statements for that period
have been filed with the Registrar of Companies and contain an unqualified audit
report within the meaning of the Companies Act 1985 and the auditors have not
made any statement under section 237(2) or 237(3) of the Companies Act 1985.
The interim financial statements for the six months ended 30 June 2004 will be
posted to shareholders on 18 August 2004 and copies will be available from that
date from the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 2 days ago The Renewables Infrastructure Group Limited
- 2 days ago The Renewables Infrastructure Group Limited
- 2 days ago Smurfit Westrock (DI)
- 2 days ago Menhaden Resource Efficiency
- 2 days ago BP