TIDMGFRM
RNS Number : 0602I
Galiform PLC
04 March 2010
GALIFORM Plc
PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 26 DECEMBER 2009
Galiform's Chief Executive, Matthew Ingle, said:
"The strength and flexibility of Howdens' business model, which is focused on
the small builder, and the timely pro-active steps we took in response to the
economic downturn enabled us to deliver a strong set of results, despite
challenging market conditions. Relentless operational focus led to a
significant improvement in gross profit margin, which resulted in an increase in
operating profit. Strong cash flow meant we had net cash at the year-end. This
was despite the costs associated with legacy issues, on which we continue to
make good progress.
"We expect market conditions in 2010 to remain challenging and are cautious
about the outlook for the year. As the year evolves, and we enter the next
stage of Howdens growth and development, we will continue to adapt to any
changes in market and economic conditions."
HIGHLIGHTS
Financial results
· Howden Joinery UK depot revenue decreased by 3.4% to GBP756.4m (down 4.6%
on same depot basis). Group revenue totalled GBP769.5m (2008: GBP805.7m);
· Gross profit margin rose from 53.1% to 56.2%, despite the impact of
adverse currency movements;
· Operating profit before exceptional items increased by GBP3.6m to
GBP79.5m;
· Profit before tax and exceptional items fell by GBP5.6m to GBP68.7m,
mainly reflecting the GBP11.3m increase in the net finance charge in respect of
pensions;
· Basic earnings per share from continuing operations before exceptional
items of 8.3p (2008: 8.5p);
· Basic earnings per share from continuing and discontinued operations of
7.6p (2008: 8.6p loss);
· Net cash inflow from operating activities of GBP71.4m;
· Total net cash inflow of GBP130.8m before cash payments totalling
GBP46.3m relating to 'legacy' properties and a payment, in excess of the
operating charge, of GBP20.9m to the Group's pension schemes (the 'pension
deficit contribution');
· Net cash of GBP2.4m at 26 December 2009 (27 December 2008: GBP61.2m net
borrowings), including the impact of a GBP35.0m reduction in stock levels.
Business developments
Howden Joinery continues to strengthen its competitive position:
· 8 new Howden Joinery UK depots opened in 2009, bringing total to 462,
with 20 to 30 openings planned in 2010;
· Review of kitchen range identified opportunities to improve choice and
service: roll-out has commenced;
· Continuing smooth roll-out of major IT projects with implementation of
upgraded kitchen planning tool.
In addition:
· Group's bank facility extended until May 2014;
· Continuing successful mitigation of legacy issues - two more deals on
legacy properties since November 2009 Interim Management Statement - current
liability c. 30% lower than at end of 2008;
· Continued sourcing improvements in purchasing, manufacturing and
logistics.
Current trading
· In what is the quietest time of year for the business, Howden Joinery UK
depot revenue in the first two periods of 2010 was down by 3.7%* (down 4.1%* on
a same depot basis) compared to the same two periods in 2009, reflecting impact
of snow and prolonged spell of cold weather.
*Note 1: Week 1 sales excluded because of distortion arising from New Year's Day
falling on different days of the week (Thursday in 2009, Friday in 2010), which
meant there was no trading in the first week of this year (2009: GBP0.8m).
Enquiries
Investors/analysts:
Gary Rawlinson
Head of Investor Relations +44 (0)207 404 5959 (4 March 2010
only)
+44 (0)207 535 1127
+44 (0)7989 397527
Media:
Brunswick +44 (0)207 404 5959
Kate Holgate
Wendel Verbeek
SUMMARY OF GROUP RESULTS
The information presented below relates to the 52 weeks to 26 December 2009 and
the 52 weeks to 27 December 2008, unless otherwise stated.
+-------------------------------------------------+-------+---------+
| GBPm unless stated | 2009 | 2008 |
+-------------------------------------------------+-------+---------+
| Continuing operations before exceptional items | | |
| unless stated | | |
+-------------------------------------------------+-------+---------+
| | | |
+-------------------------------------------------+-------+---------+
| Revenue | 769.5 | 805.7 |
| - Group | | |
+-------------------------------------------------+-------+---------+
| - Howden Joinery UK depots | 756.4 | 782.9 |
+-------------------------------------------------+-------+---------+
| Gross profit | 432.1 | 427.5 |
+-------------------------------------------------+-------+---------+
| Gross profit margin, % | 56.2 | 53.1 |
+-------------------------------------------------+-------+---------+
| Operating profit | 79.5 | 75.9 |
+-------------------------------------------------+-------+---------+
| Profit before tax | | |
+-------------------------------------------------+-------+---------+
| - excluding exceptional items | 68.7 | 74.3 |
+-------------------------------------------------+-------+---------+
| - including exceptional items1 | 68.6 | 79.1 |
+-------------------------------------------------+-------+---------+
| | | |
+-------------------------------------------------+-------+---------+
| Loss from discontinued items before tax | | |
+-------------------------------------------------+-------+---------+
| - including exceptional items1 | (4.4) | (108.8) |
+-------------------------------------------------+-------+---------+
| | | |
+-------------------------------------------------+-------+---------+
| Earnings per share from continuing operations | | |
+-------------------------------------------------+-------+---------+
| - basic excluding exceptional items | 8.3p | 8.5p |
+-------------------------------------------------+-------+---------+
| - basic including exceptional items | 8.3p | 9.2p |
+-------------------------------------------------+-------+---------+
| | | |
+-------------------------------------------------+-------+---------+
| Earnings/(loss) per share from continuing and | | |
| discontinued operations | | |
+-------------------------------------------------+-------+---------+
| - basic excluding exceptional items | 8.3p | 8.5p |
+-------------------------------------------------+-------+---------+
| - basic including exceptional items | 7.6p | (8.6)p |
+-------------------------------------------------+-------+---------+
| | | |
+-------------------------------------------------+-------+---------+
| Net cash/(debt) at end of period | 2.4 | (61.2) |
+-------------------------------------------------+-------+---------+
1 Details of exceptional items are given in note 3 to the Condensed Financial
Statements.
FINANCIAL REVIEW
The following discussion relates to continuing operations unless otherwise
stated.
FINANCIAL RESULTS FOR 2009
The financial performance of the Group during 2009 benefited from the strength
of the Group's competitive position and the characteristics of the end-users of
its products. This includes significant exposure to the tenanted housing
sector, both public and private, which are subject to different economic drivers
than the owner-occupied sector, and very limited exposure to the new housing
market. Performance also benefited from actions taken during the course of 2008
and 2009 to enable the business to cope with weaker economic and market
conditions, including rationalising depot costs and pursuing opportunities to
improve gross profit.
Total Group revenue fell by GBP36.2m to GBP769.5m, primarily reflecting a
decrease of GBP26.5m through Howden Joinery UK, and also reflecting the
termination of sales to Hygena Cuisines early in the year.
+-------------------------+--------+--------+
| | | |
| Revenue GBPm | 2009 | 2008 |
+-------------------------+--------+--------+
| Group | 769.5 | 805.7 |
+-------------------------+--------+--------+
| comprising: | | |
| Howden Joinery UK | 756.4 | 782.9 |
| depots | 12.0 | 11.7 |
| Howden Joinery French | 1.1 | 11.1 |
| depots | | |
| Hygena Cuisines* | | |
| * ceased in H1 2009 | | |
+-------------------------+--------+--------+
Howden Joinery UK depot revenue fell by 3.4% to GBP756.4m, declining 4.6% on a
same depot basis. Trading conditions were stable throughout the year, with
evidence of improving market sentiment emerging in the second half. Comparative
sales performance improved as 2009 progressed, reflecting the deteriorating
sales pattern seen during 2008. In the last three periods of the year, from
early October, underlying sales were around 4% higher than in the comparable
periods in 2008.
Sales by our French depots of GBP12.0m were down 8% in constant currency terms.
Gross profit rose by GBP4.6m to GBP432.1m. This reflected an increased focus in
our depots on gross profit margin and the benefit of a small price increase
implemented early in the year. In addition, gross profit benefited from
purchasing and manufacturing efficiencies. These were partly offset by the
impact of the lower underlying sales volume and the GBP11.7m adverse effect of
the exchange rate on the cost of goods purchased from overseas suppliers.
As a result, the gross profit margin for the year was 56.2% (2008: 53.1%).
Selling and distribution costs and administrative expenses increased slightly to
GBP352.6m (2008: GBP351.7m).
Within this, operating costs in Howden Joinery depots opened before 2008 fell as
a result of changes to resource levels made in the middle of 2008. In addition,
logistics (warehouse and transport) costs were reduced. However, these and
other cost savings were partly offset by the impact of inflation on certain
other costs (e.g. payroll, property and energy), the costs of newer depots and
the reversal of one-off cost savings made in 2008.
It should be noted that within operating costs there were certain savings in
2009 totalling around GBP4m that were 'one-off' in nature.
There has been no material increase of bad debt write-offs at this stage.
However, the provision for bad debt has increased, reflecting delays in our
ability to recover debt through the judicial system and the consequent increase
in the ageing of the debtor book.
Operating profit before exceptionals rose by GBP3.6m to GBP79.5m.
The net interest charge rose GBP9.2m to GBP10.8m, mainly due to the GBP8.0m
finance expense in respect of pensions (2008: GBP3.3m income). The net result
was profit before tax and exceptional items of GBP68.7m (2007: GBP74.3m).
There was a small exceptional charge before tax of GBP0.1m in respect of
continuing operations and an exceptional charge before tax of GBP4.4m in respect
of discontinued operations. The latter was reported in the first half of the
year and related to the rent and other obligations payable on nine properties
which had been occupied by Sofa Workshop prior to it going in to administration
early in 2009.
The tax charge on profit before exceptional items from continuing operations was
GBP18.5m, an effective rate of tax of 26.9%. This was a result of one-off
adjustments, our underlying effective tax rate being around 32%.
Basic earnings per share excluding exceptional items from continuing operations
were 8.3p (2008: 8.5p) and including exceptional items were 8.3p (2008 9.2p).
Basic earnings per share including exceptional items from continuing and
discontinued operations were 7.6p (2008: loss of 8.6p)
Net cash inflows from operating activities were GBP71.4m.
Within this, stock levels at the end of the year were GBP35.0m lower than at the
end of 2008. The reduction was achieved by bringing stock levels into line with
current trading in the early part of the year and realising the benefit of a
more sophisticated replenishment of stock in depots. The net movement in
creditors and debtors was GBP11.8m. As a result, 'underlying' working capital
fell by GBP46.8m. However, payments relating to 'legacy' properties totalling
GBP46.3m, including rent and rates and payments in respect of early termination
of leases, meant that reported working capital was virtually unchanged.
Also included within net cash flows from operating activities was a cash
contribution to the Group's pension schemes, in excess of the operating charge,
of GBP20.9m (the 'pension deficit contribution') and tax paid totalling GBP5.0m.
Payments to acquire fixed and intangible assets totalled GBP8.1m (2008:
GBP19.4m).
As a result of the above, there was a net cash inflow of GBP63.6m in 2009,
resulting in Group net cash of GBP2.4m at 26 December 2009 (27 December 2008:
GBP61.2m net borrowings). Excluding the payments relating to 'legacy'
properties and the pension deficit contribution, there was a net cash inflow of
GBP130.8m.
At 26 December 2009, the pension deficit shown on the balance sheet was
GBP196.3m (29 December 2008: GBP122.2m). The increase in the deficit has been
driven by the impact of changes in actuarial assumptions used to calculate
liabilities, principally with respect to the discount rate and inflation. This
has been partly offset by better than expected asset returns and the Company's
contribution to clear the actuarial deficit. As announced in July 2009, the
Company has agreed with the trustees of the Group's defined benefit pension
scheme the deficit funding contributions for the three years ending April 2012.
DIVIDEND
The Board is not recommending a final dividend for 2009 (2008: nil).
OPERATIONAL REVIEW
The overriding strategic goal of Galiform was first set out in the original
Howden Joinery business plan and remains unaltered. It is "To supply from local
stock nationwide the small builder's routine kitchen and joinery requirements,
assuring no call back quality and best local price".
Against the background of weak consumer confidence and general concerns about
economic prospects, the Group continues to focus on opportunities to grow sales
through improving its products and service, and increasing awareness of Howdens.
We continue to work to increase profitability through greater efficiencies and
to manage cash flow prudently. Operations throughout the Group are continually
reviewed so as to ensure appropriate resourcing levels.
In pursuing these goals, numerous actions have been taken, the most significant
of which are as follows.
Depot network
Following satisfactory trading in the key period 11, the decision was taken to
recommence our UK depot opening programme and eight new depots were opened in
the last four weeks of the year. During the course of the year, two depots were
also extended. This meant that 462 depots were trading at the end of 2009.
Product review
Last November, we said that we were at the early stages of reviewing our range
of kitchens. The review has been completed.
We have now begun the phased roll-out of the new kitchens we selected, which
will enable us to offer customers improved choice and service. Our selection
process included the engagement of depot managers and designers in a series of
major events that have been held nationwide, incorporating displays of the new
kitchens being introduced.
The changes we are making will not affect the number of kitchen options we
offer.
IT systems
We have introduced a new version of the 'Fusion' kitchen CAD tool that we use in
our depots. This is used to plan kitchens for our customers.
Raw materials and finished products, manufacturing and logistics
We continually look to minimise the cost of raw materials and finished products
that we buy-in, without compromising the quality of our products, their
acceptability to our customers and the need to purchase responsibly. We
regularly benchmark the cost of existing suppliers against alternatives, and we
also look for ways to improve the efficiency of our manufacturing and logistics
operations. If necessary, we change product design and specifications, so that
lowest cost can be accessed. In doing this, we look not just at the direct
purchase costs of raw materials and products but also the indirect costs
incurred. In 2009, we generated sourcing gains of over GBP18m and non-volume
related logistics savings of GBP7m.
GROUP DEVELOPMENTS
Banking arrangements
The Group has successfully renegotiated the terms of its banking facility, which
is provided by Burdale Financial Limited (a member of the Bank of Ireland Group)
and Lloyds TSB Commercial Finance Limited.
Under the new terms, the facility will run for an additional three years, until
May 2014. The facility will enable the Group to borrow up to GBP160m.
As before, any loan under the facility carries interest at a rate of LIBOR plus
a margin. The minimum margin has increased by 25 basis points to 200, while the
maximum of 300 basis points is unchanged.
Apart from a slight amendment to the fixed charge covenant, the existing
covenants will apply for the additional three years.
Legacy properties
The number of 'legacy properties' now stands at 54 (this incorporates all
guaranteed and residual properties, HDC's and Sofa Workshop stores), compared
with 76 at the end of 2008. Included within this are 23 properties that are
fully or part occupied by tenants.
Since November 2009, a tenant was found for one vacant property prior to the
year-end. The lease of one property, a Home Delivery Centre, was terminated
after the year-end at a cost of GBP2.9m, mitigating future rent and rates that
would have totalled over GBP12m at current rates.
The profile of legacy properties remaining and the net annual rent and rates
(current values) for the associated leases, before any mitigating action is
taken, is shown below. The leases on three properties will expire in 2010.
+----------------------+--------+--------+----------+----------+------+------+
| | 31-Dec | 03-Mar | As at 31 | 31 Dec | 31 | 31 |
| | 2008 | 2010 | Dec 2011 | 2014 | Dec | Dec |
| | | | | | 2019 | 2024 |
+----------------------+--------+--------+----------+----------+------+------+
| Number of | 76 | 54 | 49 | 27 | 15 | 33 |
| properties1 | | | | | | |
+----------------------+--------+--------+----------+----------+------+------+
| Net annual rent and | 24.5 | 17.6 | 16.6 | 8.7 | 6.3 | 0.4 |
| rates, GBPm2 | | | | | | |
+----------------------+--------+--------+----------+----------+------+------+
The future costs associated with these properties have been provided for in
exceptional charges incurred in 2009 and previous years.
1. Guaranteed, residual, HDC and ex-Sofa Workshop properties - vacant and
tenanted.
2. Gross rent & rates less payments by tenants.
3. All leases expire during the course of 2025.
Directorate change
Peter Wallis, who has made an invaluable contribution to the Board as a
non-executive director since 2001, has decided to step down at the AGM on 19th
May. We are well advanced in recruiting a successor.
CURRENT TRADING AND OUTLOOK FOR 2010
In what is the quietest time of year for the business, Howden Joinery UK depot
total sales fell by 3.7%* in the first two periods of the year (to 20 February),
with sales on a same depot basis down by 4.1%*. This result reflects the impact
of the heavy snowfall and the prolonged period of cold weather seen in January
and February.
For the rest of 2010, we expect market conditions to continue to be challenging
and we are cautious about the outlook. As in recent years, we will continue to
adapt our business model to the market and economic conditions we encounter.
The Group remains committed to its view that the number of depots in the UK can
be increased to more than 600 in the longer term. During the course of 2010, we
are planning to open between 20 and 30 depots, as part of our investment in the
next stage of Howdens' growth and development.
Since its inception in 1995, Howden Joinery's share of the UK kitchen market is
estimated to have grown to almost one-fifth in just 14 years and it now sells
some 400,000 kitchens a year. Even in these challenging market conditions, we
would expect our market share growth to continue, as the business continues to
benefit from the growth of its depots that have yet to reach maturity and we
open new depots.
*Note 1: Week 1 sales excluded because of distortion arising from New Year's Day
falling on different days of the week (Thursday in 2009, Friday in 2010), which
meant there was no trading in the first week of this year(2009: GBP0.8m).
RISKS AND UNCERTAINTIES
MANAGEMENT OF COMMERCIAL RISK AND UNCERTAINTIES
Defined benefit pension scheme
Accounting for pensions and other post-retirement benefits involves judgement
about uncertain events, including estimated retirement dates, salary levels,
mortality rates, inflation rates, rates of return on scheme assets and
determination of discount rates for measuring plan obligations. The assumptions
used from year to year may vary, which will affect future results of operations.
Any difference between these assumptions and the actual outcome also affects
future results of operations. Pension assumptions are discussed and agreed with
the independent actuaries in December each year. These assumptions are used to
determine the projected benefit obligation at the year end and hence the
liability or asset recorded on the Group's balance sheet.
At 26 December 2009, the Group's defined benefit pension scheme had a deficit of
GBP196.3m (2008: GBP122.2m). Changes in this deficit are affected by the
assumptions made in valuing the liabilities and the market performance of the
assets. Most importantly, the discount rate used for measuring the defined
benefit liabilities has decreased from 6.3% in 2008 to 5.6% in 2009.
As part of the secured lending facilities announced on 17 February 2006, the
Company and the Trustees together with the Pensions Regulator reached agreement
with regard to the funding of the remaining deficit. The Trustees have been
granted security over the Group's shares in Howden Joinery Limited.
As part of the triennial valuation, which was completed in 2009, the Group and
its pension trustees agreed a schedule of contributions until April 2012. The
payment schedule is based on the Group's profit performance, which means that
payments will be reduced should performance deteriorate significantly.
Legacy properties
At the end of 2009, the Group was responsible for a total of 55 properties with
a net annual rent and rates liability of GBP18.2m. These properties included
non-trading MFI properties excluded from the sale of MFI in October 2006, and
properties guaranteed by the Group, the liabilities for which reverted to the
Group following the administration of MFI and Sofa Workshops. We have already
substantially reduced the total number of legacy properties for which we are
liable and we continue to work to mitigate our current and future liabilities.
As a result, total property provisions at the 2009 year end totalled GBP84.4m
compared with GBP115.7m in 2008. These provisions are reviewed on a regular
basis to ensure that the Group is adequately covered in respect of reasonably
foreseeable events.
Since the year end we have agreed with a landlord to terminate a lease, reducing
our annual rent and rates liability by a further GBP0.6m.
Market conditions
The Group's products are sold to professional fitters for installation in public
and private housing, predominantly in the repair, maintenance and improvement
market. The results are consequently dependent on levels of activity in these
markets, which in turn are impacted by many factors including general economic
conditions, consumer confidence, interest rates and credit availability,
unemployment, demographic trends and, in the short term, weather. We monitor
the market closely and can take swift management action to address any adverse
change. During the earlier part of 2009, we suspended our depot opening
programme and reduced our staff numbers with a view to conserving cash and
ensuring our ability to work within our borrowing facilities and covenants. The
Group will take action as necessary to ensure that the business is aligned to
market conditions.
IT systems
The business involves high transaction volumes and complex logistics. We are
therefore heavily dependent on the resilience of both the application software
and the data-processing and network infrastructure in our depots, logistics
operations and back-office functions. A serious failure could immediately and
materially affect our business. The Group has a detailed disaster recovery plan
in place. Our main data centre in Northampton has high levels of resilience
built into it and we also have a physically separate third party
disaster-recovery site in Harrogate.
Continuity of supply
Any disruption to the relationship with key suppliers could adversely affect the
Group's ability to meet its sales and profit plans if suitable alternatives
could not be found quickly. The Group strives to maintain dual supply wherever
possible in the event that one supplier is unable to deliver goods or services.
Good supplier relations are maintained by regular communication, an annual
supplier conference and prompt settlement of invoices.
Failure to implement business strategy
The future success of Howden Joinery's business depends on the successful
implementation of the Company's strategy and culture. In particular, if the
Group fails to implement Howdens' business model in the locally enabled,
decentralised manner envisaged, there may be an adverse affect on the Group's
future financial condition and results of operations.
Product design leadership
If there was a misalignment between the products we offer and the requirements
of our customers and the current trends in the market, there may be an adverse
change on the Group's future financial condition and results of operations.
Active engagement with suppliers, independent research and, critically, depot
managers and their designers encourages and enables product development
activity.
Loss of key personnel
The Group's success depends largely on the skills, experience and performance of
some key members of its management team. The loss of any key members of the
Group's management may adversely affect the Group's financial condition and
results of operations. The Group utilises the Remuneration Committee to ensure
that team members are appropriately compensated for their roles.
MANAGEMENT OF FINANCIAL RISK AND UNCERTAINTIES
The Group holds financial instruments for one principal purpose: to finance its
operations. The Group does not currently use derivative financial instruments
to reduce its exposure to interest or exchange rate movements. The Group
finances its operations by a mixture of cash flows from operations and longer
term loans from banks. Treasury operations are managed within policies and
procedures approved by the Board.
The main risks arising from the Group's financial instruments are funding and
liquidity risk, interest rate risk, counterparty risk and foreign currency risk
discussed below.
No speculative use of derivatives, currency or other instruments is permitted.
The Treasury function does not operate as a profit centre and transacts only in
relation to the underlying business requirements.
Funding and liquidity
The Group's objective with respect to managing capital is to maintain a balance
sheet structure that is both efficient in terms of providing long-term returns
to shareholders and safeguards the Group's ability to continue as a going
concern. As appropriate, the Group can choose to adjust its capital structure
by varying the amount of dividends paid to shareholders, returns of capital to
shareholders, issuing new shares or the level of capital expenditure.
During 2009, the Group had a GBP175m asset-backed bank facility which was due to
expire in May 2011. Since the year end, the maturity of the facility has been
extended until May 2014. As part of the extension, the facility has been
reduced to GBP160m, alongside a revised interest rate structure and a slight
amendment to the fixed charge covenant.
The Group's committed borrowing facility contains certain financial covenants
which have been met throughout the 2009 year. The covenants are tested every
four weeks and are based around: (i) fixed charges; (ii) tangible net worth; and
(iii) earnings before interest, tax, depreciation and amortisation (EBITDA) for
Howden Joinery.
In addition, our pension trustees, who carry a charge over the share capital of
Howden Joinery Limited, have a separate covenant test around the EBITDA of
Howden Joinery as a standalone business unit.
The current economic conditions create uncertainty around the Group's trading
position, particularly over the level of demand for the Group's products and the
exchange rate between sterling and both the Euro and the US dollar. The Group's
latest forecasts and projections have been stress-tested for reasonably possible
adverse variations in trading performance and show that the Group will operate
within the terms of its borrowing facility and covenants for the foreseeable
future. The covenant with the lowest headroom is the EBITDA for Howden Joinery,
which is calculated each four-week period on a three or six-period rolling
basis, such that short-term variability in trading performance would increase
the risk of non-compliance. Nevertheless, whilst there can be no absolute
certainty, after due consideration of the impact of a reasonably possible
further decline on the recent trading performance experienced, it is not
considered that this covenant will be breached in the foreseeable future.
The cash drawdown against the bank facility at the year end was GBP11.6m and,
after taking into account other utilisation of the facilities for terminable
indemnities, the Group was left with GBP110.5m of available funds.
Interest rate risk
The Group's exposure to interest rate fluctuations on its borrowings may be
managed when necessary by borrowing on a fixed rate basis and entering into rate
swaps, rate caps and forward rate agreements. The Group's policy objective has
been to undertake transactions of this nature only when net debt exceeds
GBP150m. Net debt has not exceeded GBP150m during the year.
Counterparty risk
Group Treasury policy on investment restricts counterparties to those with a
minimum Standard and Poor's/Moody's long term credit rating of AA- and a short
term credit rating of A-1/P-1. Investments mainly consist of bank deposits and
certificates of deposit. The Group continuously reviews the credit quality of
counterparties, the limits placed on individual credit exposures and categories
of investments.
Foreign currency risk
The most significant currencies for the Group are the US dollar and the Euro.
It is difficult to pass the prescribed tests under IAS 39 'Financial
Instruments: Recognition and Measurement' to ensure the ability to hedge account
for derivative currency transactions. As the resultant volatility cannot be
avoided in the profit and loss account, it is the view of the Board that routine
transactional conversions between currencies are completed at the relevant spot
exchange rate. This policy is reviewed on a regular basis.
The net adverse impact of exchange rates on currency transactions in the year,
compared to the previous year, was to increase cost of sales by GBP11.7m to
GBP337.4m. The Group does not have many overseas assets/liabilities, so the
impact of currency translation is not material.
Set out in the table below are the principal exchange rates affecting the
Group's profits.
+------------------+---------+----------+---------+----------+
| Principal | 2009 | 2009 | 2008 | 2008 |
| exchange rates | Average | Year-end | Average | Year-end |
+------------------+---------+----------+---------+----------+
| | | | | |
+------------------+---------+----------+---------+----------+
| United States | 1.57 | 1.60 | 1.86 | 1.49 |
| dollar (US$) | | | | |
+------------------+---------+----------+---------+----------+
| Euro (EUR) | 1.12 | 1.12 | 1.26 | 1.06 |
+------------------+---------+----------+---------+----------+
DIRECTORS' RESPONSIBILITY STATEMENT
The directors confirm that to the best of their knowledge:
· the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
including the consolidation taken as a whole; and
· the review of operations and finance along with other documents which are
incorporated into the directors' report, together include a fair review of the
development and performance of the business and the position of the Company and
the undertakings including the consolidation taken as a whole together with a
description of the principal risks and uncertainties they face.
By order of the Board
M Ingle M Robson
Chief Executive Officer Chief Financial Officer
3 March 2010 3 March 2010
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Consolidated income statement |
+----------------------------------------------------------------------------------------------------------+
| | | 52 weeks to 26 December | | 52 weeks to 27 December |
| | | 2009 | | 2008 |
+--------------------+-------+-------------------------------------+-+-------------------------------------+
| |Notes | Before | Exceptional | Total | | Before | | Total |
| | | exceptional | items | | | exceptional | Exceptional | |
| | | items | (note 3) | GBPm | | items | items | GBPm |
| | | | GBPm | | | | (note 3) | |
| | | GBPm | | | | GBPm | GBPm | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Continuing | | | | | | | | |
| operations: | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Revenue - sale of | | 769.5 | - | 769.5 | | 805.7 | - | 805.7 |
| goods | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Cost of sales | | (337.4) | - | (337.4) | | (378.2) | 1.0 | (377.2) |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Gross profit | | 432.1 | - | 432.1 | | 427.5 | 1.0 | 428.5 |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Selling & | | (294.0) | - | (294.0) | | (298.3) | 1.5 | (296.8) |
| distribution costs | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Administrative | | (58.6) | - | (58.6) | | (53.4) | 0.4 | (53.0) |
| expenses | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Other operating | | - | (0.1) | (0.1) | | - | 1.9 | 1.9 |
| (expenses)/income | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Share of joint | | - | - | - | | 0.1 | - | 0.1 |
| venture profit | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Operating profit | | 79.5 | (0.1) | 79.4 | | 75.9 | 4.8 | 80.7 |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Finance income | 4 | 0.2 | - | 0.2 | | 1.4 | - | 1.4 |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Finance expense | 5 | (3.0) | - | (3.0) | | (6.3) | - | (6.3) |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Other finance | 5 | (8.0) | - | (8.0) | | 3.3 | - | 3.3 |
| (expense)/income - | | | | | | | | |
| pensions | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Profit before tax | | 68.7 | (0.1) | 68.6 | | 74.3 | 4.8 | 79.1 |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Tax on profit | 6 | (18.5) | - | (18.5) | | (23.3) | (0.8) | (24.1) |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Profit after tax | | 50.2 | (0.1) | 50.1 | | 51. 0 | 4.0 | 55.0 |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Discontinued | | | | | | | | |
| operations: | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Loss before tax | | - | (4.4) | (4.4) | | - | (108.8) | (108.8) |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Tax on loss | 6 | - | - | - | | - | 2.6 | 2.6 |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Loss after tax | | - | (4.4) | (4.4) | | - | (106.2) | (106.2) |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Profit/(loss) for | | 50.2 | (4.5) | 45.7 | | 51. 0 | (102.2) | (51.2) |
| the period | | | | | | | | |
| attributable to | | | | | | | | |
| the equity holders | | | | | | | | |
| of the parent | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Earnings per | | | | pence | | | | pence |
| share: | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| From continuing | | | | | | | | |
| operations | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Basic earnings per | 7 | | | 8.3 | | | | 9.2 |
| 10p share | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Diluted earnings | 7 | | | 8.3 | | | | 9.0 |
| per 10p share | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| From continuing | | | | | | | | |
| and discontinued | | | | | | | | |
| operations | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Basic | 7 | | | 7.6 | | | | (8.6) |
| earnings/(loss) | | | | | | | | |
| per 10p share | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
| Diluted | 7 | | | 7.5 | | | | (8.4) |
| earnings/(loss) | | | | | | | | |
| per 10p share | | | | | | | | |
+--------------------+-------+-------------+-------------+---------+-+-------------+-------------+---------+
+-----------------------------+-------+-+-----------------+-+-------------+
| Consolidated balance sheet |
+-------------------------------------------------------------------------+
| |Notes | | 26 December | | 27 December |
| | | | 2009 | | 2008 |
| | | | GBPm | | GBPm |
+-----------------------------+-------+-+-----------------+-+-------------+
| Non current assets | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Goodwill | | | 2.5 | | 2.5 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Other intangible assets | | | 5.4 | | 6.2 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Property, plant and | | | 79.5 | | 89.4 |
| equipment | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Investments | | | 2.0 | | 4.0 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Deferred tax asset | | | 73.6 | | 52.6 |
+-----------------------------+-------+-+-----------------+-+-------------+
| | | | 163.0 | | 154.7 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Current assets | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Inventories | | | 86.3 | | 121.3 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Trade and other receivables | | | 95.4 | | 99.2 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Other assets | | | 0.7 | | 1.3 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Cash at bank and in hand | | | 14.0 | | 21.2 |
+-----------------------------+-------+-+-----------------+-+-------------+
| | | | 196.4 | | 243.0 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Total assets classified as | | | - | | 1.0 |
| held for sale | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Total assets | | | 359.4 | | 398.7 |
+-----------------------------+-------+-+-----------------+-+-------------+
| | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Current liabilities | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Trade and other payables | | | (119.4) | | (120.4) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Current tax liability | | | (12.8) | | (4.9) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Current borrowings | | | (2.3) | | (3.4) |
+-----------------------------+-------+-+-----------------+-+-------------+
| | | | (134.5) | | (128.7) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Non current liabilities | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Non current borrowings | | | (10.0) | | (80.3) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Pension liability | | | (196.3) | | (122.2) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Deferred tax liability | | | (5.5) | | (5.5) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Provisions | 9 | | (86.8) | | (119.8) |
+-----------------------------+-------+-+-----------------+-+-------------+
| | | | (298.6) | | (327.8) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Total liabilities | | | (433.1) | | (456.5) |
+-----------------------------+-------+-+-----------------+-+-------------+
| | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Net liabilities | | | (73.7) | | (57.8) |
+-----------------------------+-------+-+-----------------+-+-------------+
| | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Equity | | | | | |
+-----------------------------+-------+-+-----------------+-+-------------+
| Called up share capital | 10 | | 63.4 | | 63.4 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Share premium account | 10 | | 85.1 | | 85.1 |
+-----------------------------+-------+-+-----------------+-+-------------+
| ESOP reserve | 10 | | (27.5) | | (27.1) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Other reserves | 10 | | 28.1 | | 28.1 |
+-----------------------------+-------+-+-----------------+-+-------------+
| Retained loss | 10 | | (222.8) | | (207.3) |
+-----------------------------+-------+-+-----------------+-+-------------+
| Total deficit | | | (73.7) | | (57.8) |
+-----------------------------+-------+-+-----------------+-+-------------+
| The financial statements were approved by the Board on 3 March 2010 |
| and were signed on its behalf by Mark Robson - Chief Financial |
| Officer. |
+-----------------------------+-------+-+-----------------+-+-------------+
+-------------------------------------+-------+----------------+-------------+
| Consolidated cash flow statement |
+----------------------------------------------------------------------------+
| |Notes | 52 weeks to | 52 weeks to |
| | | 26 December | 27 December |
| | | 2009 | 2008 |
| | | GBPm | GBPm |
+-------------------------------------+-------+----------------+-------------+
| Net cash flows from operating | 11 | 71.4 | (37.8) |
| activities | | | |
+-------------------------------------+-------+----------------+-------------+
| | | | |
+-------------------------------------+-------+----------------+-------------+
| Cash flows used in investing | | | |
| activities | | | |
+-------------------------------------+-------+----------------+-------------+
| Interest received | | 0.2 | 1.5 |
+-------------------------------------+-------+----------------+-------------+
| Cash flow from acquisition | | - | 3.2 |
+-------------------------------------+-------+----------------+-------------+
| Repayment of investment | | 2.0 | 4.0 |
+-------------------------------------+-------+----------------+-------------+
| Payments to acquire property, plant | | (8.1) | (19.4) |
| and equipment and intangible assets | | | |
+-------------------------------------+-------+----------------+-------------+
| Receipts from sale of property, | | 1.2 | 3.5 |
| plant and equipment and intangible | | | |
| assets | | | |
+-------------------------------------+-------+----------------+-------------+
| Net cash used in investing | | (4.7) | (7.2) |
| activities | | | |
+-------------------------------------+-------+----------------+-------------+
| | | | |
+-------------------------------------+-------+----------------+-------------+
| Cash flows from financing | | | |
| activities | | | |
+-------------------------------------+-------+----------------+-------------+
| Interest paid | | (3.1) | (8.5) |
+-------------------------------------+-------+----------------+-------------+
| Receipts from issue of share | | - | 0.1 |
| capital | | | |
+-------------------------------------+-------+----------------+-------------+
| (Decrease)/increase in loans | | (69.7) | 44.1 |
+-------------------------------------+-------+----------------+-------------+
| Repayment of capital element of | | (1.7) | (1.2) |
| obligations under finance leases | | | |
+-------------------------------------+-------+----------------+-------------+
| Decrease in other assets | | 0.6 | 1.1 |
+-------------------------------------+-------+----------------+-------------+
| Dividends paid to Group | | - | (3.0) |
| shareholders | | | |
+-------------------------------------+-------+----------------+-------------+
| Net cash (used in)/ generated from | | (73.9) | 32.6 |
| financing activities | | | |
+-------------------------------------+-------+----------------+-------------+
| | | | |
+-------------------------------------+-------+----------------+-------------+
| Net decrease in cash and cash | | (7.2) | (12.4) |
| equivalents | | | |
+-------------------------------------+-------+----------------+-------------+
| Cash and cash equivalents at | 11 | 21.2 | 33.6 |
| beginning of period | | | |
+-------------------------------------+-------+----------------+-------------+
| Cash and cash equivalents at end of | 11 | 14.0 | 21.2 |
| period | | | |
+-------------------------------------+-------+----------------+-------------+
For the purpose of the cash flow statement, cash and cash equivalents are
included net of overdrafts payable on demand. These overdrafts are excluded
from the definition of cash and cash equivalents disclosed on the balance sheet.
Cash flows from discontinuing operating activities are shown in note 11. There
are no cash flows from discontinued investing or financing activities.
+---------------------------------+---+----------------+--------------+
| Consolidated statement of recognised income and expense |
+---------------------------------------------------------------------+
| | | 52 weeks to | 52 weeks to |
| | | 26 December | 27 December |
| | | 2009 | 2008 |
| | | GBPm | GBPm |
+---------------------------------+---+----------------+--------------+
| Actuarial losses on defined | | (87.0) | (66.3) |
| benefit pension schemes | | | |
+---------------------------------+---+----------------+--------------+
| Deferred tax on actuarial | | 24.4 | 18.6 |
| losses on defined benefit | | | |
| pension schemes | | | |
+---------------------------------+---+----------------+--------------+
| Deferred tax on share schemes | | 2.1 | - |
+---------------------------------+---+----------------+--------------+
| Currency translation | | (0.7) | 1.4 |
| differences | | | |
+---------------------------------+---+----------------+--------------+
| Net expense recognised directly | | (61.2) | (46.3) |
| in equity | | | |
+---------------------------------+---+----------------+--------------+
| Profit/(loss) for the financial | | 45.7 | (51.2) |
| period | | | |
+---------------------------------+---+----------------+--------------+
| Total recognised income and | | (15.5) | (97.5) |
| expense for the period | | | |
| attributable to equity holders | | | |
| of the parent | | | |
+---------------------------------+---+----------------+--------------+
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1 Basis of preparation
The Group's accounting period covers the 52 weeks to 26 December 2009. The
comparative period covered the 52 weeks to 27 December 2008.
The preliminary results for the year ended 26 December 2009 have been prepared
in accordance with the recognition and measurement criteria of International
Financial Reporting Standards ("IFRS") adopted for use in the European Union and
International Financial Reporting Interpretations Committee interpretations, and
with those parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The accounting policies, presentation methods and methods of
computation followed are the same as those detailed within the 2008 Annual
Report and Accounts, which is available on the Group's website
(www.galiform.com). Whilst the financial information included in this
preliminary announcement has been computed in accordance with IFRS, this
announcement does not itself contain sufficient information to comply with IFRS.
The financial information set out in this announcement does not constitute the
statutory accounts for the Group within the meaning of Section 435 of the
Companies Act 2006. The statutory accounts for the 52 weeks to 27 December 2008
have been filed with the Registrar of Companies. The statutory accounts for the
52 weeks ended 26 December 2009 will be filed in due course. The auditors'
reports on these accounts was not qualified or modified and did not contain any
statement under sections 498(2) or (3) of the Companies Act 2006 or any
preceding legislation.
2 Segmental results
(a) Basis of segmentation
The Group operates and reports as one business segment, Howden Joinery. Thus,
the segmental revenue and results can all be found in the condensed consolidated
income statement. Other segmental information is as follows:
+-----------------------------------------+--------------+------------+
| | 52 weeks to | 52 weeks |
| | 26 December | to |
| | 2009 | 27 |
| | GBPm | December |
| | | 2008 |
| | | GBPm |
+-----------------------------------------+--------------+------------+
| Other information | | |
+-----------------------------------------+--------------+------------+
| Capital additions | 8.8 | 19.6 |
+-----------------------------------------+--------------+------------+
| Depreciation and amortisation | (18.1) | (17.2) |
+-----------------------------------------+--------------+------------+
3 Exceptional items
Exceptional items charged to the income statement in the 52 weeks to 26 December
2009 are analysed as follows:
+---------------------------+-------+-----------+-------+
| |Notes | Other | Total |
| | | operating | GBPm |
| | | expenses | |
| | | GBPm | |
+---------------------------+-------+-----------+-------+
| Continuing operations: | a | | |
+---------------------------+-------+-----------+-------+
| Loss on disposal of | | 0.1 | 0.1 |
| property, plant and | | | |
| equipment | | | |
+---------------------------+-------+-----------+-------+
| Total charged to | | 0.1 | 0.1 |
| operating profit | | | |
+---------------------------+-------+-----------+-------+
| Tax on exceptional items | | | - |
+---------------------------+-------+-----------+-------+
| Total exceptional items | | | 0.1 |
| after tax | | | |
+---------------------------+-------+-----------+-------+
| | | | |
+---------------------------+-------+-----------+-------+
| Discontinued operations: | b | | |
+---------------------------+-------+-----------+-------+
| Costs and obligations | | | 4.4 |
| relating to empty | | | |
| properties | | | |
+---------------------------+-------+-----------+-------+
| Total exceptional items | | | 4.4 |
| before tax | | | |
+---------------------------+-------+-----------+-------+
| Tax on exceptional items | | | - |
+---------------------------+-------+-----------+-------+
| Total exceptional items | | | 4.4 |
| after tax | | | |
+---------------------------+-------+-----------+-------+
| | | | |
+---------------------------+-------+-----------+-------+
| Continuing and discontinued | | |
| operations: | | |
+-----------------------------------+-----------+-------+
| Total exceptional items | | | 4.5 |
| before tax | | | |
+---------------------------+-------+-----------+-------+
| Tax on exceptional items | | | - |
+---------------------------+-------+-----------+-------+
| Total exceptional items | | | 4.5 |
| after tax | | | |
+---------------------------+-------+-----------+-------+
(a) Continuing operations
The item "Loss on disposal of property, plant and equipment" comprises the net
loss on disposals of property, plant and equipment during the current period.
(b) Discontinued operations
As was disclosed in the Contingent Liabilities note to the Group's Annual Report
and Accounts for the 52 weeks ended 27 December 2008, the Group is guarantor for
certain leases in relation to properties which were held by Sofa Workshop
Limited and which were occupied by Sofa Workshop retail operations. During the
course of the current period, these contingent liabilities have crystallised and
the Group has begun to incur costs in connection with them.
The item "Costs and obligations relating to empty properties" covers the Group's
best estimate of the rent, rates and other associated costs of these properties.
It includes amounts paid under the property guarantees up to the end of the
current period, as well as a provision for expected future amounts payable. The
amounts are discounted to their present value where material. The provision
element of the exceptional item is included as part of the total additions to
the property provision in the current period shown in note 9.
Exceptional
items charged to the income statement in the 52 weeks to 27 December 2008 are
analysed as follows:
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| |Notes | Cost | | Selling | Other | Total |
| | | of | Administration | and | operating | GBPm |
| | | sales | expenses | distribution | expenses | |
| | | GBPm | GBPm | costs | GBPm | |
| | | | | GBPm | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Continuing operations: | a | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Provision for future rent | | - | - | (1.5) | - | (1.5) |
| payable on vacated sites | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Redundancies and other | | - | (0.2) | - | - | (0.2) |
| staff costs | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Other administrative | | - | (0.2) | - | - | (0.2) |
| costs | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Release of exceptional | | (1.0) | - | - | - | (1.0) |
| stock provision made in | | | | | | |
| 2006 | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Profit on disposal of | | - | - | - | (1.9) | (1.9) |
| property, plant and | | | | | | |
| equipment | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Total credited to | | (1.0) | (0.4) | (1.5) | (1.9) | (4.8) |
| operating profit | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Tax on exceptional items | | | | | | 0.8 |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Total exceptional items | | | | | | (4.0) |
| after tax | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Discontinued operations: | b | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Costs and obligations | | | | | | 99.7 |
| relating to empty | | | | | | |
| properties | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Redundancies and other | | | | | | 3.0 |
| staff costs | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Associated legal and | | | | | | 2.1 |
| professional costs | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Product warranty | | | | | | 2.0 |
| liabilities | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Bad debts written off | | | | | | 2.0 |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Total exceptional items | | | | | | 108.8 |
| before tax | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Tax on exceptional items | | | | | | (2.6) |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Total exceptional items | | | | | | 106.2 |
| after tax | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Continuing and discontinued operations: |
+-----------------------------------------------------------------------------------------------+
| Total exceptional items | | | | | | 104.0 |
| before tax | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Tax on exceptional items | | | | | | (1.8) |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
| Total exceptional items | | | | | | 102.2 |
| after tax | | | | | | |
+---------------------------+-------+-------+----------------+--------------+-----------+-------+
(a) Continuing operations
All of the items in continuing operations, with the exception of "Profit on
disposal of property, plant and equipment", represent releases of provisions
made in prior periods. The release of the exceptional stock provision is a
release against a provision booked as an exceptional item in continuing
operations in the 52 weeks to 30 December 2006. The other releases are releases
against provisions booked as continuing exceptional items in the 52 weeks to 29
December 2007 for the purposes of Supply restructuring. The 2007 Supply
restructuring provision is shown in the 2007 consolidated accounts. The 2006
exceptional stock provision is shown in the 2006 consolidated accounts.
The item "Profit on disposal of property, plant and equipment" comprises the net
profit on disposals of property plant and equipment during the 2008 period.
(b) Discontinued operations
The items in discontinued operations are connected to the Group's former MFI
Retail operations which were sold and treated as discontinued in 2006 and which
went into administration in the 2008 period.
As the Group disclosed at the time of the sale of the MFI business in 2006, and
as the Group has disclosed in the Contingent Liabilities notes to its 2007 and
2008 Annual and Half-Yearly Reports, the Group is the guarantor on leases in
relation to properties which were held by MFI Properties Ltd and which were
occupied by the MFI UK Retail operations. During the course of the 2008 period,
these contingent liabilities crystallised and the Group began to incur costs in
connection with them. The developments which took place during the 2008 period
were detailed in various of the Group's regulatory announcements made on 29 and
30 September, 13 and 26 November, and 23 December 2008.
The item "Costs and obligations relating to empty properties" covers the Group's
best estimate of the rent, rates, and other associated costs of these
properties. It includes amounts paid under the property guarantees up to the
end of the 2008 period, as well as a provision for future amounts payable. It
also includes the payments made to landlords of 6 of the Guaranteed Properties
in order to release the Group from all obligations in respect of those
properties, as detailed in the Group's regulatory announcement made on 23
December 2008. The amounts are discounted to their present value. The
provision element of the exceptional item is included as part of the total
additions to the property provision in the 2008 period as shown in note 9.
The Group is indemnified by MEP Mayflower Limited for payments made in respect
of the guaranteed properties. Claims have or will be submitted under this
indemnity for payments made to date. However, all amounts due have been fully
provided against as at the 2008 year end as MEP Mayflower Limited itself went
into administration in November 2008.
The other items are as described in the analysis of discontinued items, above,
and they are all connected to the administration of the Group's former MFI
Retail operations during the 2008 period.
4 Finance income
+-----------------------------------------+------------+----------+
| | 52 weeks | 52 |
| | to | weeks |
| | 26 | to |
| | December | 27 |
| | 2009 | December |
| | GBPm | 2008 |
| | | GBPm |
+-----------------------------------------+------------+----------+
| Bank interest receivable | 0.2 | 0.5 |
+-----------------------------------------+------------+----------+
| Other interest receivable | - | 0.9 |
+-----------------------------------------+------------+----------+
| Total finance income | 0.2 | 1.4 |
+-----------------------------------------+------------+----------+
5 Finance expenses and other finance (expense)/income - pensions
+-----------------------------------------+------------+----------+
| | 52 weeks | 52 |
| | to | weeks |
| | 26 | to |
| | December | 27 |
| | 2009 | December |
| | GBPm | 2008 |
| | | GBPm |
+-----------------------------------------+------------+----------+
| Finance expenses | | |
+-----------------------------------------+------------+----------+
| Interest payable on bank loans | (2.6) | (5.6) |
+-----------------------------------------+------------+----------+
| Finance charge on remeasuring creditors | (0.2) | (0.2) |
| to fair value | | |
+-----------------------------------------+------------+----------+
| Interest charge on finance lease | (0.2) | (0.1) |
| payments | | |
+-----------------------------------------+------------+----------+
| Other interest | - | (0.4) |
+-----------------------------------------+------------+----------+
| Total finance expenses | (3.0) | (6.3) |
+-----------------------------------------+------------+----------+
Further details of the finance charge on remeasuring creditors to fair value in
the current period are given in note 9
+-----------------------------------------+------------+----------+
| | 52 weeks | 52 |
| | to | weeks |
| | 26 | to |
| | December | 27 |
| | 2009 | December |
| | GBPm | 2008 |
| | | GBPm |
+-----------------------------------------+------------+----------+
| Other finance (expense)/income - | | |
| pensions | | |
+-----------------------------------------+------------+----------+
| Pension finance (expense)/income | (8.0) | 3.3 |
+-----------------------------------------+------------+----------+
6 Tax
(a) Tax in the income statement
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| | Continuing operations | | Discontinued | Total |
| | | | operations | |
+----------------------------+------------------------+--+-----------------------+-----------------------+
| | | | | | | | |
| | 52 weeks | 52 weeks | | 52 weeks | 52 | 52 weeks | 52 |
| | to 26 | to | | to 26 | weeks | to 26 | weeks |
| | December | 27 | | December | to | December | to |
| | 2009 | December | | 2009 | 27 | 2009 | 27 |
| | GBPm | 2008 | | GBPm | December | GBPm | December |
| | | GBPm | | | 2008 | | 2008 |
| | | | | | GBPm | | GBPm |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Current tax | | | | | | | |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Current year | 15.2 | 12.0 | | - | (2.6) | 15.2 | 9.4 |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Adjustments in respect of | (2.2) | (2.1) | | - | - | (2.2) | (2.1) |
| previous years | | | | | | | |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Total current tax | 13.0 | 9.9 | | - | (2.6) | 13.0 | 7.3 |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| | | | | | | | |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Deferred tax | | | | | | | |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Current year | 4.3 | 16.2 | | - | - | 4.3 | 16.2 |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Adjustments in respect of | 1.2 | (2.0) | | - | - | 1.2 | (2.0) |
| previous years | | | | | | | |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Total deferred tax | 5.5 | 14.2 | | - | - | 5.5 | 14.2 |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| | | | | | | | |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
| Total tax | 18.5 | 24.1 | | - | (2.6) | 18.5 | 21.5 |
| charged/(credited) in the | | | | | | | |
| income statement | | | | | | | |
+----------------------------+------------+-----------+--+------------+----------+------------+----------+
UK Corporation tax is calculated at 28% (2008: 28.5%) of the estimated
assessable profit for the period.
(b) Tax relating to items credited to equity
+---------------------------------+------------+-----------+
| | 52 weeks | 52 weeks |
| | to | to |
| | 26 | 27 |
| | December | December |
| | 2009 | 2008 |
| | GBPm | GBPm |
+---------------------------------+------------+-----------+
| Deferred tax | | |
+---------------------------------+------------+-----------+
| Actuarial loss on pension | (24.4) | (18.6) |
| scheme | | |
+---------------------------------+------------+-----------+
| Credit to equity on share | (2.1) | - |
| schemes | | |
+---------------------------------+------------+-----------+
| Total tax credited to statement | (26.5) | (18.6) |
| of recognised income and | | |
| expense | | |
+---------------------------------+------------+-----------+
The tax relating to items credited to equity all relates to continuing
operations.
(c) Reconciliation of the total tax charge
The total tax charge for the year can be reconciled to the result per the income
statement as follows:
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| | | | | | | | | |
| | 52 | | 52 | | | | | |
| | weeks | | weeks | | | | | |
| | to 26 | | to | | | | | |
| Profit/(loss) before tax: | December | | 27 | | | | | |
| | 2009 | | December | | | | | |
| | GBPm | | 2008 | | | | | |
| | | | GBPm | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+-------------+-------------+----------+
| Continuing operations | 68.6 | | 79.1 | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+-------------+-------------+----------+
| Discontinued operations | (4.4) | | (108.8) | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+-------------+-------------+----------+
| | 64.2 | | (29.7) | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+-------------+-------------+----------+
| | | | | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+-------------+-------------+----------+
| | Continuing operations | | Discontinued | | Total |
| | | | operations | | |
+--------------------------------------+--------------------------------+--+------------------------+--+---------------------+
| | 52 | | 52 | | 52 | | 52 | | 52 weeks | 52 |
| | weeks | | weeks | | weeks | | weeks | | to 26 | weeks |
| | to | | to | | to | | to | | December | to |
| | 26 | | 27 | | 26 | | 27 | | 2009 | 27 |
| | December | | December | | December | | December | | GBPm | December |
| | 2009 | | 2008 | | 2009 | | 2008 | | | 2008 |
| | GBPm | | GBPm | | GBPm | | GBPm | | | GBPm |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| Tax at the UK Corporation tax rate | 19.2 | | 22.5 | | (1.2) | | (31.0) | | 18.0 | (8.5) |
| of 28% (2008: 28.5%) | | | | | | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| Non-qualifying depreciation | 1.1 | | 0.9 | | - | | - | | 1.1 | 0.9 |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| Expenses not deductible for tax | 0.5 | | 0.7 | | 1.2 | ***| 27.8 | ***| 1.7 | 28.5 |
| purposes | | | | | | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| Tax adjustment in respect of | (1.0) | | (4.1) | | - | | - | | (1.0) | (4.1) |
| previous years | | | | | | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| IFRS2 share scheme charge* | (1.0) | | 2.9 | | - | | 0.6 | | (1.0) | 3.5 |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| Abolition of industrial building | - | | 1.5 | **| - | | - | | - | 1.5 |
| allowances | | | | | | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| Others | (0.3) | | (0.3) | | - | | - | | (0.3) | (0.3) |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
| Total tax charged/(credited) in the | 18.5 | | 24.1 | | - | | (2.6) | | 18.5 | 21.5 |
| income statement | | | | | | | | | | |
+--------------------------------------+----------+----------+----------+--+----------+--+----------+--+----------+----------+
* Permanent differences arise in relation to share schemes, resulting from a
difference between the accounting and tax treatments. In accordance with IAS
12, the excess of current and deferred tax over and above the related cumulative
remuneration expense under IFRS 2 has been recognised directly in equity.
** In July 2008, the House of Commons approved the Finance Bill which abolished
Industrial Building Allowances (IBAs). This resulted in a deferred tax charge
of GBP1.5m in the prior year.
*** The Group has assumed no tax relief for the payments and provisions made in
association with the MFI and Sofa Workshop guarantees until the tax position is
agreed with HMRC.
7 Earnings per share
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| | 52 weeks to 26 December | | 52 weeks to 27 December |
| | 2009 | | 2008 |
+-------------------------+--------------------------------+-+--------------------------------+
| | Earnings | Weighted | Earnings | | Earnings | Weighted | Earnings |
| | GBPm | average | per | | GBPm | average | per |
| | | number | share | | | number | share |
| | | of | p | | | of | p |
| | | shares | | | | shares | |
| | | m | | | | m | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| From continuing operations |
+---------------------------------------------------------------------------------------------+
| Basic earnings per | 50.1 | 602.8 | 8.3 | | 55.0 | 598.0 | 9.2 |
| share | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Effect of dilutive | - | 3.2 | - | | - | 11.5 | (0.2) |
| share options | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Diluted earnings per | 50.1 | 606.0 | 8.3 | | 55.0 | 609.5 | 9.0 |
| share | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| |
| From discontinued operations |
+---------------------------------------------------------------------------------------------+
| Basic loss per share | (4.4) | 602.8 | (0.7) | | (106.2) | 598.0 | (17.8) |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Effect of dilutive | - | 3.2 | - | | - | 11.5 | 0.4 |
| share options | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Diluted loss per share | (4.4) | 606.0 | (0.7) | | (106.2) | 609.5 | (17.4) |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| |
| From continuing and discontinued operations |
+---------------------------------------------------------------------------------------------+
| Basic earnings/(loss) | 45.7 | 602.8 | 7.6 | | (51.2) | 598.0 | (8.6) |
| per share | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Effect of dilutive | - | 3.2 | (0.1) | | - | 11.5 | 0.2 |
| share options | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Diluted earnings/(loss) | 45.7 | 606.0 | 7.5 | | (51.2) | 609.5 | (8.4) |
| per share | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| |
| From continuing operations excluding exceptional items |
+---------------------------------------------------------------------------------------------+
| Basic earnings per | 50.2 | 602.8 | 8.3 | | 51.0 | 598.0 | 8.5 |
| share | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Effect of dilutive | - | 3.2 | - | | - | 11.5 | (0.1) |
| share options | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Diluted earnings per | 50.2 | 606.0 | 8.3 | | 51.0 | 609.5 | 8.4 |
| share | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| From continuing and discontinued operations excluding exceptional items |
+---------------------------------------------------------------------------------------------+
| Basic earnings per | 50.2 | 602.8 | 8.3 | | 51.0 | 598.0 | 8.5 |
| share | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Effect of dilutive | - | 3.2 | - | | - | 11.5 | (0.1) |
| share options | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
| Diluted earnings per | 50.2 | 606.0 | 8.3 | | 51.0 | 609.5 | 8.4 |
| share | | | | | | | |
+-------------------------+----------+----------+----------+-+----------+----------+----------+
8 Dividends
+------------------------------------------+--------------+------------+
| | 52 weeks to | 52 weeks |
| | 26 December | to |
| | 2009 | 27 |
| | GBPm | December |
| | | 2008 |
| | | GBPm |
+------------------------------------------+--------------+------------+
| Amounts recognised as distributions to | | |
| equity holders in the period: | | |
+------------------------------------------+--------------+------------+
| Final dividend for the 52 weeks to 27 | - | 3.0 |
| December 2008 - nil (Final dividend for | | |
| the 52 weeks to 29 December 2007: 0.5p) | | |
+------------------------------------------+--------------+------------+
9 Provisions
+------------------------+-----------+------------+--------+
| | Property | Other | |
| | provision | provisions | Total |
| | GBPm | GBPm | GBPm |
+------------------------+-----------+------------+--------+
| At 29 December 2007 | 38.4 | 1.0 | 39.4 |
+------------------------+-----------+------------+--------+
| Additional provision | 90.5 | 4.4 | 94.9 |
| in the period | | | |
+------------------------+-----------+------------+--------+
| Provision released in | (2.8) | - | (2.8) |
| the period | | | |
+------------------------+-----------+------------+--------+
| Utilisation of | (10.4) | (1.3) | (11.7) |
| provision in the | | | |
| period | | | |
+------------------------+-----------+------------+--------+
| At 27 December 2008 | 115.7 | 4.1 | 119.8 |
+------------------------+-----------+------------+--------+
| Additional provision | 12.4 | 2.1 | 14.5 |
| in the period | | | |
+------------------------+-----------+------------+--------+
| Provision released in | (0.2) | (1.4) | (1.6) |
| the period | | | |
+------------------------+-----------+------------+--------+
| Utilisation of | (43.5) | (2.4) | (45.9) |
| provision in the | | | |
| period | | | |
+------------------------+-----------+------------+--------+
| At 26 December 2009 | 84.4 | 2.4 | 86.8 |
+------------------------+-----------+------------+--------+
The property provision mainly covers onerous leases. For any such leases, the
Group provides for any shortfall between rent payable and rent receivable on any
non-trading leased properties. The provision is based on the period until the
end of the lease, or until the Group can cover the shortfall by subletting,
assigning or surrendering the lease. The property provision also includes
amounts for any related shortfalls in business rates on these properties,
dilapidations, agents' fees and other professional fees.
During the current period, the property provision has been increased by GBP0.2m
arising from an unwinding of the discount rate over time. None of this amount
relates to changes in the discount rate. This amount is shown as a finance
charge in note 5. The amount of the expected future cash flows has been
adjusted to reflect the expected range of possibilities and, as the outflows
under this provision are expected to take place over a number of years, the
provision has been discounted to its present value.
Other provisions relate to amounts due in respect of contractual terminations.
10 Reconciliation of movement in reserves
+----------------------+---------+---------+---------+----------+----------+--------+
| | Called | Share | ESOP | Other | Retained | Total |
| | up | premium | reserve | reserves | earnings | GBPm |
| | share | account | GBPm | GBPm | GBPm | |
| | capital | GBPm | | | | |
| | GBPm | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| As at 29 December | 63.4 | 85.0 | (32.6) | 28.1 | (106.8) | 37.1 |
| 2007 | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| Net actuarial loss | - | - | - | - | (47.7) | (47.7) |
| on defined benefit | | | | | | |
| scheme | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| Foreign exchange | - | - | - | - | 1.4 | 1.4 |
+----------------------+---------+---------+---------+----------+----------+--------+
| Accumulated loss for | - | - | - | - | (51.2) | (51.2) |
| the period | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| Issue of new shares | - | 0.1 | - | - | - | 0.1 |
+----------------------+---------+---------+---------+----------+----------+--------+
| Net movement in ESOP | - | - | 5.5 | - | - | 5.5 |
+----------------------+---------+---------+---------+----------+----------+--------+
| Dividends declared | - | - | - | - | (3.0) | (3.0) |
| and paid | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| As at 27 December | 63.4 | 85.1 | (27.1) | 28.1 | (207.3) | (57.8) |
| 2008 | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| Net actuarial loss | - | - | - | - | (62.6) | (62.6) |
| on defined benefit | | | | | | |
| scheme | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| Foreign exchange | - | - | - | - | (0.7) | (0.7) |
+----------------------+---------+---------+---------+----------+----------+--------+
| Accumulated profit | - | - | - | - | 45.7 | 45.7 |
| for the period | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| Net movement in ESOP | - | - | (0.4) | - | - | (0.4) |
+----------------------+---------+---------+---------+----------+----------+--------+
| Deferred tax on | - | - | - | - | 2.1 | 2.1 |
| share schemes | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
| As at 26 December | 63.4 | 85.1 | (27.5) | 28.1 | (222.8) | (73.7) |
| 2009 | | | | | | |
+----------------------+---------+---------+---------+----------+----------+--------+
The ESOP Reserve includes shares in Galiform Plc with a market value on the
balance sheet date of GBP22.5m (2008: GBP5.3m), which have been purchased in the
open market and which are held by the Group's Employee Share Trusts in order to
satisfy share options and awards made under the Group's various share-based
payment schemes.
The Other Reserve was created in the year to 30 April 1994, following a Group
reconstruction.
11 Notes to the cash flow statement
(a) Net cash flows from operating activities
+--------------------------------------------+----------------+-------------+
| | 52 weeks to | 52 weeks to |
| | 26 December | 27 December |
| | 2009 | 2008 |
| | GBPm | GBPm |
+--------------------------------------------+----------------+-------------+
| | | |
+--------------------------------------------+----------------+-------------+
| Group operating profit/(loss) before tax | | |
| and interest | | |
+--------------------------------------------+----------------+-------------+
| Continuing operations | 79.4 | 80.7 |
+--------------------------------------------+----------------+-------------+
| Discontinued operations | (4.4) | (108.8) |
+--------------------------------------------+----------------+-------------+
| Group operating profit/(loss) before tax | 75.0 | (28.1) |
| and interest | | |
+--------------------------------------------+----------------+-------------+
| | | |
+--------------------------------------------+----------------+-------------+
| Adjustments for: | | |
+--------------------------------------------+----------------+-------------+
| Depreciation and amortisation included in | 18.1 | 17.2 |
| operating profit | | |
+--------------------------------------------+----------------+-------------+
| Share-based payments (credit)/charge | (0.4) | 5.5 |
+--------------------------------------------+----------------+-------------+
| Share of joint venture profits | - | (0.1) |
+--------------------------------------------+----------------+-------------+
| Loss/(profit) on disposal of property, | 0.1 | (1.9) |
| plant and equipment and intangible assets | | |
+--------------------------------------------+----------------+-------------+
| Other exceptional items (before tax) | 4.4 | 105.9 |
+--------------------------------------------+----------------+-------------+
| Operating cash flows before movements in | 97.2 | 98.5 |
| working capital | | |
+--------------------------------------------+----------------+-------------+
| | | |
+--------------------------------------------+----------------+-------------+
| Movements in working capital and | | |
| exceptional items | | |
+--------------------------------------------+----------------+-------------+
| Decrease/(increase) in stock | 35.0 | (19.3) |
+--------------------------------------------+----------------+-------------+
| Decrease in trade and other receivables | 3.8 | 22.4 |
+--------------------------------------------+----------------+-------------+
| Decrease in trade and other payables and | (38.3) | (92.6) |
| provisions | | |
+--------------------------------------------+----------------+-------------+
| Difference between pensions operating | (20.9) | (24.3) |
| charge and cash paid | | |
+--------------------------------------------+----------------+-------------+
| Net cash flow - exceptional items | (0.4) | (11.7) |
+--------------------------------------------+----------------+-------------+
| | (20.8) | (125.5) |
+--------------------------------------------+----------------+-------------+
| Cash generated from/(used in) operations | 76.4 | (27.0) |
+--------------------------------------------+----------------+-------------+
| Tax paid | (5.0) | (10.8) |
+--------------------------------------------+----------------+-------------+
| Net cash flow from/(used in) operating | 71.4 | (37.8) |
| activities | | |
+--------------------------------------------+----------------+-------------+
| | | |
+--------------------------------------------+----------------+-------------+
| Net cash flow from/(used in) operating activities | |
| comprises: | |
+-------------------------------------------------------------+-------------+
| Continuing operating activities | 71.8 | (26.1) |
+--------------------------------------------+----------------+-------------+
| Discontinued operating activities | (0.4) | (11.7) |
+--------------------------------------------+----------------+-------------+
| | 71.4 | (37.8) |
+--------------------------------------------+----------------+-------------+
(b) Reconciliation of net cash/(debt)
+--------------------------------------------+----------------+-------------+
| | 52 weeks to | 52 weeks to |
| | 26 December | 27 December |
| | 2009 | 2008 |
| | GBPm | GBPm |
+--------------------------------------------+----------------+-------------+
| Net debt at start of period | (61.2) | (3.3) |
+--------------------------------------------+----------------+-------------+
| Net decrease in cash and cash equivalents | (7.2) | (12.4) |
+--------------------------------------------+----------------+-------------+
| Net decrease in current asset investments | (0.6) | (1.1) |
+--------------------------------------------+----------------+-------------+
| Decrease/(increase) in bank borrowings | 69.7 | (44.1) |
+--------------------------------------------+----------------+-------------+
| Decrease/(increase) in finance leases | 1.7 | (0.3) |
+--------------------------------------------+----------------+-------------+
| Net cash/(debt) at end of period | 2.4 | (61.2) |
+--------------------------------------------+----------------+-------------+
| | | |
+--------------------------------------------+----------------+-------------+
| Represented by: | | |
+--------------------------------------------+----------------+-------------+
| Cash and cash equivalents | 14.0 | 21.2 |
+--------------------------------------------+----------------+-------------+
| Investments | 0.7 | 1.3 |
+--------------------------------------------+----------------+-------------+
| Bank loans | (10.5) | (80.2) |
+--------------------------------------------+----------------+-------------+
| Finance leases | (1.8) | (3.5) |
+--------------------------------------------+----------------+-------------+
| | 2.4 | (61.2) |
+--------------------------------------------+----------------+-------------+
(c) Analysis of net cash/(debt)
+---------------------------+-------------+------------+--------+---------+-------------+
| | Cash | Current | Bank | Finance | Net |
| | and | asset | loans | leases | cash/(debt) |
| | cash | investment | GBPm | GBPm | GBPm |
| | equivalents | GBPm | | | |
| | GBPm | | | | |
+---------------------------+-------------+------------+--------+---------+-------------+
| As at 27 December 2008 | 21.2 | 1.3 | (80.2) | (3.5) | (61.2) |
+---------------------------+-------------+------------+--------+---------+-------------+
| Cash flow | (7.2) | (0.6) | 69.7 | 1.7 | 63.6 |
+---------------------------+-------------+------------+--------+---------+-------------+
| As at 26 December 2009 | 14.0 | 0.7 | (10.5) | (1.8) | 2.4 |
+---------------------------+-------------+------------+--------+---------+-------------+
APPENDIX 1
FINANCIAL CALENDAR
2010
Interim Management Statement 29 April 2010
Half Yearly Report 21 July 2010
Interim Management Statement 11 November 2010
End of financial year 25 December
2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KXLFBBXFFBBV
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