Final Results

RNS Number : 5796G
Headlam Group PLC
05 March 2015
 



5 March 2015

Headlam Group plc

Preliminary Results for the Year Ended 31 December 2014

Headlam Group plc ("Headlam"), Europe's leading floorcoverings distributor, announces its preliminary results for the year ended 31 December 2014.

Financial highlights

·      Revenue up 5.3% at £635.2 million (2013: £603.1 million)

·      Underlying Operating Profit up 13.7% at  £ 31.5 million (2013: £27.7* million)

·      Underlying Earnings Per Share up 16.7% at 28.6 pence (2013: 24.5* pence)

·      Earnings Per Share up 58.9% at 28.6 pence (2013: 18.0 pence)

·      Dividends paid and proposed up 14.4% at 17.50 pence (2013: 15.30 pence)

 

·      The group repays £10.0 million on its committed facilities reducing the drawdown to £20.0 million on a facility of £40.0 million and ended the year with net funds of £24.7 million (2013: £14.0 million)

 

*There are no non-underlying items in 2014.  The non-underlying items in 2013 relate to the impairment of intangible and tangible fixed assets, totalling £5.4 million.  The underlying measures have been used to provide a better understanding of the business performance.

 

 

Operational highlights

·      Further gains achieved in UK market share with like for like revenues increasing by 5.9% exceeding the estimated market growth of 2.4%

 

·      Continental European markets remain weak and the trading environment for our Continental businesses continues to be difficult

 

·      Final dividend up 15.5% from 10.65 pence to 12.30 pence

 

·      Further bolt-on acquisitions during the year and early 2015 and the service centre network is extended to 27 with the addition of sites in Stoke, Norwich, Hayes and Leicester

 

 

Tony Brewer, Headlam's Group Chief Executive, said:

"The momentum created in the UK through the final quarter of 2014, has continued into January and February 2015 with 3.1% like for like growth over the two month period.

 

As we enter March, our UK businesses are well placed to take advantage of improving market conditions with a comprehensive array of product launches and marketing initiatives.

 

Whilst our businesses in Continental Europe continue to experience difficult markets, we are confident that the Group, overall, will achieve further progress during the year."

 

 

 

Enquiries:

Headlam Group plc    

Tony Brewer, Group Chief Executive                    Tel: 01675 433000

 

Stephen Wilson, Group Finance Director                         

 

Buchanan                                                            Tel: 020 7466 5000

Mark Court / Helen Chan

 

For further detail on our business please visit:

www.headlam.com

 



 

Notes for editors

About Headlam

Headlam is involved with the marketing, supply and distribution of an extensive range of floorcovering products. The group's activities and facilities are located throughout the UK, France, Switzerland and the Netherlands.

The group's operations are focused on providing customers, principally independent floorcovering retailers and contractors, with a comprehensive and up to date range of competitively priced floorcovering products supported by a next day delivery service.

The approach provides Headlam's suppliers with an opportunity to achieve extensive and, in some territories, unparalleled market access backed by cost effective distribution.

In order to offer this level of service to its customers and suppliers, Headlam has developed a diverse and autonomous operating structure that includes 55 businesses across the UK and a further five in continental Europe.

The autonomous operating structure is a key contributor to the group's success, presenting experienced management teams with an opportunity to develop the individual identity, market presence and profitability of the business for which they are responsible.

Each business is supported by the group's continuing commitment to investment in people, product, operating facilities and IT. This commitment has underpinned the group's overall development and enabled Headlam to establish itself as Europe's leading floorcovering distributor.

 



 

Chairman's Statement

It is pleasing to be able to report that the group has made good progress during the year, delivering a further increase in revenue and improvement in profitability.

 

Overview

In the UK, the trading momentum established during the first half of the year continued through the second half with the improvement in organic growth supplemented by the fine full year performances from the businesses acquired during the previous year.  Of particular satisfaction was the manner in which the UK businesses responded during the final quarter of the year, with like for like growth of 3.9%, delivering another strong performance on top of the impressive result achieved during the final quarter of 2013.

 

On the Continent, when measured in local currency, the revenue performance from our French business was slightly ahead of last year whilst our Dutch businesses achieved reasonable progress in what continues to be a difficult market.  The businesses in both territories registered an improvement in underlying earnings.  However, the market weakness evident in the first half in Switzerland continued during the second half resulting in a further reduction in annual revenue and profit.  As was the case during the first half, the decline in the Swiss performance was sufficient to weaken the collective result from our Continental businesses which was down quite markedly on the previous year.

 

Whilst the result from our Continental businesses in recent years has been disappointing, the group's overall result for the year, once again, provides further evidence in support of the board's decision to commit to additional investment to expand and improve our facilities as exemplified by the project to extend the Coleshill national distribution hub which was completed and became fully operational in January 2014.

 

The commitment to investment, along with the decision to continue with our strategy and maintain our structure, has positioned the group in a place where it can quickly and profitably take advantage from an improvement in market activity.

 

Earnings and dividend

Earnings per share increased by 16.7% to 28.6p compared with last year's underlying result of 24.5p mainly as a result of the group's profit before tax of £30.3 million improving by 14.6% on last year's underlying profit before tax of £26.4 million.

The board is proposing to increase the final dividend by 15.5% from 10.65p to 12.30p resulting in a total dividend for the year of 17.50p, which represents an increase of 14.4% on 2013.  The final dividend, if approved by shareholders at the Annual General Meeting ("AGM"), will be paid on 1 July 2015 to shareholders on the register at close of business on 5 June 2015.

 

Governance and board

We continue to promote a culture of openness and transparency and encourage participation and contribution from all our board members.  The board recognises the value derived from good governance and the setting of high standards and the confidence it brings to our shareholders, management, employees, suppliers and customers.

 

Employees and Shareholders

Once again, our employees' attitude, determination and focused contribution has been pivotal to the continued success of the group.

Thank you to all our employees across the group for their dedication and hard work and our shareholders for their insightful observations and continuing support.

 

 

Dick Peters

Chairman

5 March 2015



 

Chief Executive's Review

Our Strategy

The group continues to follow a strategy focused on developing its floorcovering distribution business in the UK and continental Europe and improving the all round service offering it provides to its customers.

 

The group's size and structure provides a unique competitive advantage allowing it to deliver a range of benefits, including continuous product development, wide product diversity, extensive marketing support and next day distribution services, all of which are aimed at supporting and enhancing its customers' market position.

 

The development of the group's overall business is achieved by operating each individual business on an autonomous basis and encouraging the managers of each individual business to develop their own individual trading style, albeit within a well developed and consistently applied framework of operational and financial control.

 

This diverse business structure, particularly in the UK, covering the retail and commercial sectors, gives the group substantial reach across floorcovering markets and provides suppliers with a flexible channel for the sales, marketing and distribution of their products.

 

In addition, the structure has allowed the group to be active with a wide and diverse product portfolio across a significant proportion of the floorcovering market and has, to a degree, insulated the business from the downside risk arising from contracting or static markets.

 

Each individual business is supported by the group's commitment to continued investment in people, product, marketing, distribution facilities, service centres and IT.  This structural investment, in conjunction with the development of the identity of each individual business, has enabled us to bring together the benefits of a market facing culture delivering the latest selling, marketing and product initiatives with a comprehensive and sophisticated logistics operation.

 

Ultimately, the total investment has underpinned the growth and performance of each business thus enabling the group to establish itself as Europe's leading floorcovering distributor.

 

Performance

One of the group's key performance objectives is aimed at achieving growth in market share.  We drive this growth by setting each of our individual businesses, in conjunction with the businesses' management team, an annual growth parameter, which is collectively set to outperform the anticipated underlying growth in the market.

 

Once again, it is pleasing to record that the growth in UK revenue during 2014, as has consistently been the case for a number of years, outperformed growth in the UK floorcovering market with the like for like growth of 5.9% exceeding the estimated market growth of 2.4%.

 

The increases in like for like revenue derived from our residential and commercial product in the UK was broadly similar with residential up by 5.8% on the previous year and commercial up by 6.2%.  The revenue mix between residential and commercial floorcoverings in the UK has generally remained at the same level for a number of years and 2014 maintained the balance at 68% and 32% respectively. 

 

On the Continent, adverse economic headwinds continue to influence performance and the overall trading result has registered further decline during the year.  However, we still believe that more can be made of the opportunities to develop each individual business notwithstanding the market issues in each individual territory.  On a brighter note, gross margins are being protected and costs managed diligently.  As ever, additional revenue would transform the operating fortunes of these businesses.

 

During the year, we have maintained our investment in people, marketing, infrastructure and the promotion, support and development of each of our individual business identities.  We continue to provide extensive marketing support to our customers and through our well trained and knowledgeable sales teams, seek to gain an increasing share of their business.  In addition, our teams are also focused on prospecting for new customers and business opportunities.

 

Investments

Over the five year period from 2010 to 2014, we have used the group's balance sheet strength allied with its positive cash flow, to invest £36.2 million in property, plant and equipment with a further £18.0 million expenditure forecast for 2015 and 2016.  This level of capital expenditure has been running, on average, at a rate of 1.5 times depreciation.

 

The investment in infrastructure has been and is aimed at supporting our expansion plans, as illustrated by our intention to construct a new distribution facility in Ipswich, and enables us to manage our supply chain and inventory requirements more efficiently, as demonstrated by the recent extension to the Coleshill distribution hub.

 

Once the Ipswich distribution facility is fully operational, the group will have a well invested portfolio of four national distribution hubs and 14 regional distribution centres in the UK as well as four distribution centres on the Continent.  These facilities should be able to satisfy the group's capacity requirements and growth expectations for a number of years and the requirement for further investment in additional or replacement distribution facilities ought to fall away. 

 

During recent years, we have supplemented our distribution network in the UK with a number of service centres with the aim of improving customer service by making product more readily available.  This type of investment is particularly helpful for customers who prefer to collect their product needs as opposed to relying on our delivery service.

 

During the year, we continued to expand the number of service centres we operate across the UK and they now number 27.  The provision of a customer collection point is also offered within our distribution centres thereby bringing the number of collection points, or trade counters, in the UK to 42.  There are still some locations, where we do not currently have a presence and that would benefit from the opening of a service centre and we anticipate expanding our coverage in the future, subject to the availability of suitable sites.

  

Acquisitions

We intend to continue to utilise our capital resource to augment the group's organic growth with further acquisitions.  We have a history of quickly and successfully integrating small bolt-on acquisitions into our existing structure, achieving overhead synergies and an earnings enhancing performance.

 

During the year, we completed the acquisition of two small bolt-on businesses one of which, RPS, was transferred into our existing distribution facility in Nottingham and the other, Myttons, has provided us with the opportunity to establish a service centre in Norwich.  During January 2015, we added another business, Matty's Wholesale Carpets, and integrated its operations into our distribution facility in Coleshill.  Unlike a number of recent acquisitions where the businesses acquired have been losing market position, Matty's Wholesale Carpets has been a very successful business and should prove to be immediately earnings enhancing.

 

The acquisitions completed during 2013 are now operationally integrated and contributing an earnings enhancing performance to the group's profitability.

 

Prospects

The momentum created through the final quarter of 2014 has continued into January and February 2015 with 3.1% like for like growth over the two month period.

 

As we enter March, our UK businesses are well placed to take advantage of improving market conditions with a comprehensive array of product launches and marketing initiatives.

 

Whilst our businesses in Continental Europe continue to experience difficult markets, we are confident that the Group, overall, will achieve further progress during the year.

 

Tony Brewer

Group Chief Executive

5 March 2015



 

Financial Review

Revenue

During the year, group revenue increased by £32.2 million to £635.2 million.  As shown in the table below, UK turnover comfortably outperformed the underlying market which was estimated to have grown by 2.4%.  The Continental performance was a story of further contraction, which when translated into sterling amounted to a 7.3% decline during the year albeit when measured in constant currency, the reduction was less severe at 2.2%.

 

 


2014


2013


Change


£000


£000


£000


%









UK

548,393


509,340


39,053


7.7









Continental Europe

91,606


93,711


(2,105)


-2.2









Translation affect

(4,757)


-


(4,757)


-









Group

635,242


603,051


32,191


5.3

 

 

The UK growth was attributable to a solid like for like performance amounting to 5.9% during the year coupled with a contribution from acquisitions, which in total amounted to £14.9 million of which £9.2 million was an incremental increase on the previous year.

 

Gross margin

The group's gross margin declined during the year from 30.1% to 30.0%.  Whilst pricing competition continues to be a factor in all our markets, the characteristics of this competitive environment have not changed appreciably compared with the prior year.  Product mix remains broadly constant from one year to the next and the slight decline in the year is more a factor of the Continental European businesses, which collectively enjoy a slightly higher margin compared with the UK, contributing less to the 2014 performance compared with 2013.

 

Expenses

Distribution and administrative expenses increased by £151,000 during the year.  However, as illustrated below, when the non-underlying items arising in 2013, relating to the impairment of intangible and tangible fixed assets, which totalled £5,352,000, are added back, the year on year increase amounts to £5,503,000 or 3.6%.

 

 


£000



Expenses for the year ended 31 December 2014

159,078



Expenses for the year ended 31 December 2013

158,927



Less: Non-underlying items

(5,352)



Adjusted 2013 expenses

153,575



Year on year increase excluding non-underlying items

5,503



 

 

The two key components of the increase were the incremental expenses arsing because of the acquisitions, which amounted to £1,807,000 and a £4,438,000 rise in employee costs occurring primarily as a result of performance related incentive awards.

 

Operating profit

Operating profit for 2014 increased by 13.7% compared with the operating profit for 2013 after adjusting for the non-underlying items.  The operating margin for 2014 increased to 5.1% compared with 4.6% achieved in the prior year after adjusting for the non-underlying items.

 

 


£000



2014 operating profit

31,462



2013 operating profit

22,328



Add back: Non-underlying items

5,352



Adjusted 2013 operating profit

27,680



Year on year operating profit increase excluding      non-underlying items

 

3,782



 

 

Earnings and Dividend

Basic earnings per share for 2014 of 28.6p improved by 16.7% on the underlying basic earnings of 24.5p for 2013.  The result was derived from a 14.6% increase in profit before tax augmented by a reduction in the effective tax rate during the year which reduced from 23.25% to 21.5%.

 

Total dividends paid and proposed for 2014 have increased by 14.4% from 15.3p to 17.5p. Dividend cover remains at just above 1.6 times.

 

Employee benefits

The liability attaching to employee benefits is as follows:

 

 


2014


2013


£000


£000









Current liabilities

2,933


2,842





Non-current liabilities

18,803


12,780





Total

21,736


15,622

 

 

The year on year increase in the deficit of £6,114,000 represents 39.1% deterioration over the course of twelve months.  The key driver behind the change is the escalation of liabilities in both the UK and Swiss defined benefit pension plans which, in both arrangements, have been driven by falling bond yields.

  

 

Cash Flow

 

Net cash flow from operating activities

Net cash flow from operating activities increased during the year by £3.2 million from £24.0 million to £27.2 million with the contributory factors shown in the table below.

 

 


£000



2013 net cash flow from operating activity

24,027



Operating profit

3,782



Depreciation

115



Profit on asset disposals

147



Share based payments

404



Working capital

(1,274)



Interest paid

88



Taxation

(13)



Additional pension contributions

(83)




27,193

 

As can be seen from above, the two principal contributors to the year on year movement are the increase in operating profit of £3.8 million and the additional working capital investment of £1.3 million.

 

During the year, the additional pension contributions, which fund the UK defined benefit pension plan, amounted to £3.0 million.  Following the triennial actuarial valuation of the UK plan at 31 March 2014, the additional contributions for 2015 will be £3.0 million but for 2016 they will fall to £2.1 million and thereafter, increase annually at a rate of 3.3% until further review as part of the triennial valuation in 2017.

 

  

Cash flows from investing and financing activities

The table below summarises the cash flow movements from investing and financing activities during the year.  Whilst the overall cash outflow from the activities was broadly the same in 2013 and 2014, the difference amounting to £0.5 million, the emphasis in the two years was quiet different.  During the year, investing activity was considerably reduced compared with 2013 giving rise to a positive cash flow variance of £9.1 million.  However, financing activity centred on the reduction of borrowings giving rise to an increased cash outflow of £9.6 million.

 

 


£000



2013 cash flows from investing activity

(14,149)

2013 cash flows from financing activity

(12,280)


(26,429)

Movement in investing activity:




Net investment in tangible fixed assets

7,212



Interest received

233



Acquisitions

1,643


9,088

Movement in financing activity:




Treasury share issues

785



Repayment of borrowings

(9,987)



Dividends paid

(389)


(9,591)



Net movement

(503)



2014 cash flows from investing activity

(5,061)

2014 cash flows from financing activity

(21,871)


(26,932)

 

In isolation, 2014 is an illustration of the group's capacity to reduce its requirement for debt as the need for investment in large capital projects comes to the end of its current cycle.

  

Net debt

Group net funds at the end of the year increased by £10.5 million compared with the previous year, from £14.0 million to £24.5 million, as detailed in the table below.

 


 

At 1 January

2014

£000

 

 

Cash

flows

£000

 

Foreign

exchange

Translation

£000

At

31 December

2014

£000

Cash at bank and in hand

47,477

261

(149)

47,589

Debt due within one year

(218)

-

14

(204)

Debt due after one year

(33,239)

10,210

211

(22,818)


14,020

10,471

76

24,567

Funding and going concern

The group maintains sufficient banking facilities to fund its operations and investments and, as at 31 December 2014, the utilisation of the group's total facilities was as shown in the table below.  73.2% of the group's facilities were undrawn.

 


 

Drawn

£000

 

Undrawn

£000

Total

facility

£000

Less than one year

-

42,883

42,883

Over one year and less than five years

21,019

20,000

41,019

Over five and less than seven years

2,003

-

2,003


23,022

62,883

85,905

Having reviewed the group's resources and a range of likely out-turns, the directors believe there are reasonable grounds for stating that the group has adequate resources to continue in operational existence for the foreseeable future and it is appropriate to adopt the going concern basis in preparing the group's financial accounts.

 

Steve Wilson

Group Finance Director

5 March 2015

 

 


Consolidated Income Statement

for the year ended 31 December 2014

 

 

 



 

 

 

2014

 

 

Underlying

2013

Non-underlying

Items *

2013

 

 

Total

2013



£000

£000

£000

£000







Revenue

1

635,242

603,051

-

603,051

Cost of sales


(444,702)

(421,796)

-

(421,796)







Gross profit


190,540

181,255

-

181,255







Distribution expenses


(117,458)

(115,067)

-

(115,067)

Administrative expenses


(41,620)

(38,508)

(5,352)

(43,860)







Operating profit

1

31,462

27,680

(5,352)

22,328







Finance income


819

629

-

629

Finance expenses


(1,981)

(1,870)

-

(1,870)







Net finance costs                                                                          


(1,162)

(1,241)

-

(1,241)







Profit before tax


30,300

26,439

(5,352)

21,087

Taxation


(6,515)

(6,146)

-

(6,146)







Profit for the year attributable to the equity shareholders


 

23,785

 

20,293

 

(5,352)

 

14,941













Dividend paid per share

3

15.30p



14.85p







Earnings per share






Basic

2

28.6p

24.5p

-

18.0p







Diluted

2

28.5p

24.3p

-

17.9p







 

* Included within administrative expenses in the results for the year ended 31 December 2013 are non-underlying items that relate to the impairment of intangible and tangible fixed assets, totalling £5,352,000. 

 

All group operations during the financial years were continuing operations.

 

 



Consolidated Statement of Comprehensive Income

for the year ended 31 December 2014

 

 

 










2014

£000

2013

£000





Profit for the year attributable to the equity shareholders


23,785

14,941





Other comprehensive income:




Items that will never be reclassified to profit or loss




Remeasurement of defined benefit plans


(8,900)

450

Related tax


1,789

(529)



(7,111)

(79)





Items that are or may be reclassified to profit or loss




Foreign exchange translation differences arising on translation of overseas operations


 

(742)

 

397

Effective portion of changes in fair value of cash flow hedges


(177)

115

Transfers to profit or loss on cash flow hedges


132

137

Related tax


18

(65)







(769)

584

Other comprehensive (expense)/income for the year


(7,880)

505









Total comprehensive income attributable to the equity shareholders for the year


 

15,905

 

15,446






 

 



Statements of Financial Position

at 31 December 2014

 

 


 

Note

2014

£000

2013

£000

 

Assets




 

Non-current assets




 

Property, plant and equipment


103,461

103,079

 

Intangible assets


10,013

10,013

 

Deferred tax assets


2,726

2,388

 



116,200

115,480

 





 

Current assets




 

Inventories


116,569

115,678

 

Trade and other receivables


118,816

119,488

 

Cash and cash equivalents


47,589

47,477

 





 



282,974

282,643

 





 

Total assets

1

399,174

398,123

 





 

Liabilities




 

Current liabilities




 

Other interest-bearing loans and borrowings


(204)

(218)

 

Trade and other payables


(166,266)

(164,519)

 

Employee benefits


(2,933)

(2,842)

 

Income tax payable


(6,073)

(7,022)

 





 



(175,476)

(174,601)

 





 

Non-current liabilities




 

Other interest-bearing loans and borrowings


(22,818)

(33,239)

 

Employee benefits


(18,803)

(12,780)

 



(41,621)

(46,019)

 

Total liabilities

1

(217,097)

(220,620)

 





 

Net assets


182,077

177,503





 

Equity attributable to equity holders




 

of the parent




 

Share capital


4,268

4,268

 

Share premium


53,512

53,512

 

Other reserves


(1,786)

(4,742)

 

Retained earnings


126,083

124,465

 





 

Total equity


182,077

177,503

 

 

These financial statements were approved by the board of directors on 5 March 2015 and were signed on its behalf by:

 

 

Tony Brewer                                      Steve Wilson

Director                                               Director

Company Number: 460129



Statement of Changes in Equity

for the year ended 31 December 2014


 

Share

capital

£000

 

Share

premium

£000

Capital

redemption

reserve

£000

 

Translation

reserve

£000

Cash flow

hedging

reserve

£000

 

Treasury

reserve

£000

 

Retained

earnings

£000

 

Total

equity

£000






Balance at

 

4,268

 

53,512

 

88

 

5,768

 

(339)

 

(11,329)

 

121,361

 

173,329

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

14,941

 

 

14,941

 

-

 

-

 

-

 

397

 

252

 

-

 

(144)

 

505

Total comprehensive income for the year

 

-

 

-

 

-

 

397

 

252

 

-

 

14,797

 

15,446









Transactions with equity shareholders, recorded directly in equity









-

-

-

-

-

-

288

288

 

-

 

-

 

-

 

-

 

-

 

421

 

(178)

 

243

 

-

 

-

 

-

 

-

 

-

 

-

 

497

 

497

 

-

 

-

 

-

 

-

 

-

 

-

 

(12,300)

 

(12,300)

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

421

 

 

(11,693)

 

 

(11,272)

Balance at

31 December 2013

 

4,268

 

53,512

 

88

 

6,165

 

(87)

 

(10,908)

 

124,465

 

177,503






 

4,268

 

53,512

 

88

 

6,165

 

(87)

 

(10,908)

 

124,465

 

177,503

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

23,785

 

 

23,785

 

-

 

-

 

-

 

(742)

 

(45)

 

-

 

(7,093)

 

(7,880)

Total comprehensive income for the year

 

-

 

-

 

-

 

(742)

 

(45)

 

-

 

16,692

 

15,905









Transactions with equity shareholders, recorded directly in equity









-

-

-

-

-

-

692

692

 

-

 

-

 

-

 

-

 

-

 

3,808

 

(2,780)

 

1,028

 

-

 

-

 

-

 

-

 

-

 

-

 

183

 

183

 

-

 

-

 

-

 

-

 

-

 

-

 

(545)

 

(545)

 

-

 

-

 

-

 

-

 

-

 

-

 

(12,689)

 

(12,689)

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

3,808

 

 

(15,139)

 

 

(11,331)

Balance at

31 December 2014

 

4,268

 

53,512

 

88

 

5,423

 

(132)

 

(7,100)

 

126,018

 

182,077



Cash Flow Statements

for the year ended 31 December 2014










2014

£000

2013

£000

Cash flows from operating activities




Profit before tax for the year


30,300

21,087

Adjustments for:




Depreciation, amortisation and impairment


4,900

10,136

Finance income


(819)

(629)

Finance expense


1,981

1,870

Profit on sale of property, plant and equipment


(30)

(177)

Share-based payments


692

288





Operating cash flows before changes in working




capital and other payables


37,024

32,575

Change in inventories


(1,514)

1,967

Change in trade and other receivables


(143)

(9,114)

Change in trade and other payables


2,656

9,421





Cash generated from the operations


38,023

34,849

Interest paid


(1,477)

(1,565)

Tax paid


(6,357)

(6,344)

Additional contributions to defined benefit plan


(2,996)

(2,913)





Net cash flow from operating activities


27,193

24,027





Cash flows from investing activities




Proceeds from sale of property, plant and equipment


92

479

Interest received


846

613

Acquisition of subsidiaries, net of cash acquired


(331)

(1,974)

Acquisition of property, plant and equipment


(5,668)

(13,267)





Net cash flow from investing activities


(5,061)

(14,149)





Cash flows from financing activities




Proceeds from the issue of treasury shares


1,028

243

Repayment of borrowings


(10,210)

(223)

Dividends paid


(12,689)

(12,300)





Net cash flow from financing activities


(21,871)

(12,280)





Net increase/(decrease) in cash and cash equivalents


261

(2,402)

Cash and cash equivalents at 1 January


47,477

49,798

Effect of exchange rate fluctuations on cash held


(149)

81

Cash and cash equivalents at 31 December


47,589

47,477

 

 



Notes

 

 

1 Segment reporting

 

The group has 55 operating segments in the UK and 5 operating segments in Continental Europe.  Each segment represents an individual trading operation, and each operation is wholly aligned to the sales, marketing, supply and distribution of floorcovering products.  The operating results of each operation are regularly reviewed by the Chief Operating Decision Maker, which is deemed to be the Group Chief Executive.  Discrete financial information is available for each segment and used by the Group Chief Executive to assess performance and decide on resource allocation.

 

The operating segments have been aggregated to the extent that they have similar economic characteristics, with relevance to products and services, type and class of customer, methods of sale and distribution and the regulatory environment in which they operate.  The group's internal management structure and financial reporting systems differentiate the operating segments on the basis of the differing economic characteristics in the UK and Continental Europe and accordingly present these as two separate reportable segments.  This distinction is embedded in the construction of operating reports reviewed by the Group Chief Executive, the board and the executive management team and forms the basis for the presentation of operating segment information given below.

 


UK

Continental Europe

Total


2014

£000

2013

£000

2014

£000

2013

£000

2014

£000

2013

£000

Revenue







External revenues

548,393

509,340

86,849

93,711

635,242

603,051








Reportable segment operating profit

 

30,695

 

26,877

 

1,183

 

1,678

 

31,878

 

28,555















Reportable segment assets

256,274

233,913

34,444

35,708

290,718

269,621








Reportable segment liabilities

(151,566)

(148,457)

(14,568)

(15,975)

(166,134)

(164,432)

 

During the year there are no inter-segment revenues for the reportable segments (2013: £nil).

 

Reconciliations of reportable segment profit, assets and liabilities and other material items:








 






2014

£000

2013

£000

 

Profit for the year







Total profit for reportable segments




31,878

28,555

Impairment of intangibles and assets





-

(5,352)

 

Unallocated expense





(416)

(875)








Operating profit





31,462

22,328








Finance income





819

629

Finance expense





(1,981)

(1,870)








Profit before taxation





30,300

21,087

Taxation





(6,515)

(6,146)








Profit for the year





23,785

14,941








 

 



Notes continued

 

1 Segment reporting - continued

 






2014

£000

2013

£000

 

Assets







 

Total assets for reportable segments




290,718

269,621

 

Unallocated assets:







 

Properties, plant and equipment





91,493

93,883

 

Deferred tax assets





2,726

2,388

 

Cash and cash equivalents





14,237

32,231

 








 

Total assets





399,174

398,123

 








 

Liabilities







 

Total liabilities for reportable segments




(166,134)

(164,432)

 

Unallocated liabilities:







 

Employee benefits





(21,736)

(15,622)

 

Other interest-bearing loans and borrowings



(23,022)

(33,457)

 

Income tax payable





(6,073)

(7,022)

 

Derivative liabilities





(132)

(87)

 








 

Total liabilities





(217,097)

(220,620)

 








 








 

 

 

 

 


 

 

UK

£000

 

Continental

Europe

£000

Reportable segment total

£000

 

 

Unallocated

£000

 

Consolidated total

£000

 

Other material items 2014







 

Capital expenditure


2,586

421

3,007

2,661

5,668

 

Depreciation


2,260

567

2,827

1,998

4,825

 

Amortisation


-

-

-

75

75

 








 








 

Other material items 2013







 

Capital expenditure


3,043

649

3,692

9,847

13,539

 

Depreciation


2,171

666

2,837

1,797

4,634

 

Amortisation


-

-

-

150

150

 

Impairment of assets


-

-

-

2,155

2,155

 

Impairment of intangible assets


-

-

-

3,197

3,197

 








 

In the UK the group's freehold properties are held within Headlam Group plc and a rent is charged to the operating segments for the period of use.  Therefore the operating reports reviewed by the Group Chief Executive show all the UK properties as unallocated and the operating segments report a segment result that includes a property rent.  This is reflected in the above disclosure.

 

Each segment is a continuing operation.

 

The Group Chief Executive, the board and the senior executive management team have access to information that provides details on revenue by principal product group for the two reportable segments, as set out in the following table:

 

 

Notes continued

 

 

1 Segment reporting - continued

 

Revenue by principal product group and geographic origin is summarised below:

 


UK

Continental Europe

Total


2014

£000

2013

£000

2014

£000

2013

£000

2014

£000

2013

£000

Revenue







Residential

378,910

350,020

43,415

47,608

422,325

397,628

Commercial

169,483

159,320

43,434

46,103

212,917

205,423









548,393

509,340

86,849

93,711

635,242

603,051

 

 

2 Earnings per share

 





2014

£000

2013

£000

Earnings



Earnings per underlying basic and underlying diluted earnings per share

23,785

20,293

Earnings for basic and diluted earnings per share

23,785

14,941





2014

2013

Number of shares



Issued ordinary shares at 31 December

85,363,743

85,363,743

Effect of shares held in treasury

(2,053,036)

(2,383,937)




Weighted average number of ordinary shares for the purposes of basic earnings per share

 

83,310,707

 

82,979,806




Effect of diluted potential ordinary shares:



Weighted average number of ordinary shares at 31 December

83,310,707

82,979,806

Dilutive effect of share options

264,178

646,209




Weighted average number of ordinary shares for the purposes of diluted earnings per share

 

83,574,885

 

83,626,015

 

 


Notes continued

 

3 Dividends

 


2014

£000

2013

£000




Interim dividend for 2013 of 4.65p paid 2 January 2014

3,856

-

Final dividend for 2013 of 10.65p paid 1 July 2014

8,833

-

Interim dividend for 2012 of 4.65p paid 2 January 2013

-

3,850

Final dividend for 2012 of 10.20p paid 1 July 2013

-

8,450





12,689

12,300

 

The final proposed dividend of 12.30p per share (2013: 10.65p per share) will not be provided for until authorised by shareholders at the forthcoming AGM.  There are no income tax consequences.

 

Interim dividends of 5.20p per share (2013: 4.65p per share) are provided for when the dividend is paid.  The dividend was paid on 2 January 2015 and totalled £4,355,000.

 

The total value of dividends proposed but not recognised at 31 December 2014 is £14,655,000 (2013: £12,689,000).

 

 

4. Additional information

 

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2014 or 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 will be delivered in due course. The auditors have reported on those accounts; their reports were (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.

 

We anticipate that the company's statutory accounts will be posted to shareholders during April 2015 and will be displayed on the company's website at www.headlam.com early April 2015.  Copies of the statutory accounts will also be available from the company's registered office at Headlam Group plc, PO Box 1, Gorsey Lane, Coleshill, Birmingham, B46 1LW.

 

This preliminary announcement of results for the year ended 31 December 2014 was approved by the board on

5 March 2015.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR JIMRTMBIMBJA
UK 100