TIDMHEAD
RNS Number : 0048Z
Headlam Group PLC
09 March 2012
9 March 2012
Preliminary Results for the Year Ended 31 December 2011
Headlam Group plc ("Headlam"), Europe's leading floorcoverings
distributor, announces its final results for the year ended 31
December 2011.
Financial highlights
2011 2010 Change
GBP000 GBP000
Revenue 569,795 535,690 +6.4%
Operating profit 28,052 26,066 +7.6%
Profit before tax 27,588 25,006 +10.3%
Basic earnings per share 24.6p 21.5p +14.4%
Dividend per share 14.15p 12.40p +14.1%
Key points
-- UK like for like revenues increase by 7.7% indicating further increase in market share
-- Continental European revenues decrease by 5.0% on a like for like basis
-- Profit before tax increased by 10.3%
-- Group net funds GBP7.6 million
-- Dividend per share increased by 14.1%
Tony Brewer, Headlam's Group Chief Executive, said:
"The first ten weeks of 2012 have continued a positive trend
with all five business sectors and each product category in the UK
continuing to produce increases in revenue against the
corresponding period last year.
Markets remain challenging and somewhat unpredictable due to the
general economic outlook combined with uncertainty over both raw
material prices and currency exchange. However through the group's
strategy and structure combined with extensive product and
marketing initiatives, we are confident that our individual
businesses can collectively outperform the market."
Enquiries:
Headlam Group plc
Tony Brewer, Group Chief Executive Tel: 01675 433000
Steve Wilson, Group Finance Director
Chairman's Statement
I am pleased to report that the group's revenue increased by
6.4% in 2011 from GBP535.7 million to GBP569.8 million. Like for
like revenue increased in the UK by 7.7% and, declined in
Continental Europe by 5.0%. The increase in the UK, achieved in
challenging conditions, represents a continued outperformance
compared with the floorcovering market.
Earnings and dividend
Profit before tax increased by 10.3% from GBP25.0 million to
GBP27.6 million and earnings per share improved by 14.4% from 21.5p
to 24.6p. The board is therefore proposing to increase the final
dividend by 14.9% from 8.57p to 9.85p resulting in a total dividend
for the year of 14.15p, up 14.1% on 2010.
The final dividend, if approved by shareholders at the Annual
General Meeting, will be paid on 2 July 2012 to shareholders on the
register at close of business on 1 June 2012.
Strategy
Our strategy remains focused on the development of our
floorcovering distribution businesses in the UK and Continental
Europe and the continued improvement of the service we provide to
independent floorcovering retailers and contractors.
The strategy is based upon a well defined operating structure
that delivers sustained product development, marketing and
distribution services aimed at supporting and enhancing our
customers' position in their markets. This structure, built upon
over many years, has allowed us to continually outperform the
floorcovering market through various economic cycles. This has been
particularly evident in recent years when conditions have proved to
be particularly challenging and during which time the group has
maintained the ability to increase its market share.
One of the key components of the group's structure is the
deliberate proliferation of autonomous businesses controlled by
dedicated management teams empowered to independently develop and
enlarge their individual business. This decentralised approach, set
within a well developed and consistently applied framework of
operational and financial controls, provides the group with a wide
and penetrating access to the floorcovering market enabling our
businesses to minimise risk in challenging trading environments and
respond swiftly to opportunities.
In the UK, it was particularly encouraging to see this strategy
deliver success in 2011 when each of the five business sectors and
all our product categories showed increases in revenue against the
previous year.
We have a number of investment plans at various stages of
development, aimed at enlarging and improving the infrastructure of
the group. The plans relate to replacing one and extending two
existing distribution centres and establishing additional service
centres, which will enhance our logistics capability and contribute
to the group's long-term future growth objectives.
Employees
2011 represents another year of progress for the group and has
been achieved through the collective endeavour of all our
employees. The board would like to thank our management and
employees for their efforts and contribution in producing another
positive result over the course of the year.
Outlook
With the benefit of the clearly defined strategy and autonomous
structure, the group has made a solid start to 2012. Each of the
management teams in the UK and Continental Europe are clearly
focused on their specific objectives with regard to revenue and
profit contribution.
Whilst we are operating in challenging markets and a
particularly competitive environment persists, the autonomous
structure combined with the experience and tenacity of our
individual management teams, sales representatives and employees
should enable the group to achieve its internal objectives assuming
normal seasonal trends prevail.
Graham Waldron, Chairman
Chief Executive's Review
The 7.7% like for like increase in UK revenue reflects a
particularly positive performance, in a floorcovering market, where
various indicators would suggest that challenging trading
conditions remain.
Market sectors
The 50 businesses in the UK, operating from 18 distribution
centres and 16 service centres, are structured within five market
sectors based on their geographical position or product
offering.
Regional multi-product: These 20 businesses, operating in both
the residential and commercial markets, collectively provide a
comprehensive national coverage. During the year the revenue from
these businesses increased by 5.3% and given that they represent
51% of UK revenue, their positive performance is important since it
provides the group with a solid base from which to expand its
market presence.
National multi-product: The Mercado businesses have been able to
increase revenue by 6.8% across their residential and commercial
activities throughout England, Wales and Northern Ireland. We have
implemented further initiatives to enhance Mercado's geographical
presence and these are covered more fully below.
Regional commercial: This sector, which increased revenue by
10.2%, currently includes 18 operations based in 5 distribution and
13 service centres. During the year, we opened a new service centre
in Carlisle and with modest investment, intend to increase the
number of service centres to expand our UK locations.
Residential specialist: The 14 businesses, operating principally
in the middle to premium quality carpet market, achieved a
successful year increasing their revenue by 16.1%. Further targeted
investment in sales and marketing activities should result in these
businesses gaining additional market share within their sector.
Commercial specialist: These businesses, which increased revenue
by 1.7% during the year operate throughout the commercial markets
but have a primary focus in the healthcare and education sectors.
With additional product development, these businesses can secure
opportunities in other commercial segments.
Suppliers
Our suppliers are integral to the business development of the
group and liaise closely with our senior and operating management
teams. This relationship with the leading floorcovering
manufacturers, principally in the UK and Continental Europe,
ensures that our 50 businesses in the UK and five businesses in
Continental Europe are continuously able to provide independent
floorcovering retailers and contractors with new products. This is
supported by appropriate point of sale displays to present new
floorcovering products and innovations to the ultimate end
user.
One particular innovation, developed during 2011, is the
revolutionary carpet fibre WOLLTEC--. This fibre, which is
exclusive to the group, combines the appearance and luxury
characteristics of wool with the durability and stain resistant
properties of polypropylene. The products manufactured with this
fibre, which have received a particularly positive reaction from
independent floorcovering retailers, are an example of how the
group maintains its position at the forefront of new floorcovering
technology and passes the benefits to its customers.
Market presence
Our external sales representatives are positioning new product
into customers on a daily basis, using various types of display
stands and sample books. In conjunction with the ongoing product
launches, we further improve our supplier and customer
relationships with an extensive programme of promotional events and
customer initiatives.
During 2011, our businesses launched 3,501 (2010: 3,109) new
products and we supplied our customers with 658,188 (2010: 626,637)
sample books and display stands. This level of activity has
contributed to the particularly encouraging trend for 2011 where
our businesses increased revenue in each of the product categories
of carpet, residential vinyl, wood, laminate, commercial flooring
and accessories. Whilst revenue attributable to commercial flooring
increased at a slightly faster rate than residential, the overall
mix remains unchanged compared with last year at 69% residential
and 31% commercial.
Lifestyle Floors is now firmly established as a trade brand in
the UK floorcovering market. The steps taken to significantly
enlarge our market presence, principally through the installation
of display modules and lecterns, have been extremely well received
by independent floorcovering retailers.
We have invested in a management team who are responsible for
enhancing the performance of Lifestyle Floors, by identifying
opportunities to maximise the brand and supervise product
development. They also manage a team of ten merchandisers who are
being utilised to ensure that the modules and lecterns used to
display the product are up to date, complete and in pristine
condition allowing the independent floorcovering retailer to
maximise the potential of the brand.
Customers
We continue to maximise our presence with independent
floorcovering retailers and contractors, through our 383 external
sales people, collectively visiting our customers 488,660 (2010:
475,901) times during the year.
In the UK, the group is focused on encouraging the individual
sales and marketing autonomy of the 50 businesses. We are able to
provide an efficient logistics service to our customers because of
our comprehensive stockholding and availability of next day
delivery. During 2011, our fleet of 371 vehicles completed
1,143,860 (2010: 1,126,676) deliveries to our customers'
premises.
Active accounts in the UK increased from 41,994 to 43,347 during
the year. As reflected in our revenue increase, the independent
sector is in good health and continues to take market share. It is
inevitable that there are business failures and the occurrence of
bad debts has increased compared with the previous year, however,
the average period of credit taken by our independent customer
base, decreased from 42.0 to 40.9 days.
iPads
The introduction of iPads, in conjunction with the development
of bespoke software, to all of our sales people has undoubtedly
been beneficial in further improving their working practices and
time management and ultimately, provides an enhanced service to our
customers.
The iPads provide our sales people with improved visibility of
real time customer data, the ability to access stock files to place
orders and give an immediate flow of information on customer visits
to our sales managers. An additional benefit is that our
businesses' extensive marketing literature and display information
can be contained within the iPad for efficient demonstration to our
customers.
We have launched the iPad initiative in the Netherlands and
intend to extend it to France and Switzerland during 2012.
Continental Europe
In Continental Europe, each of our five businesses has
contributed to an increased level of profitability in mixed market
conditions.
Belcolor, our business based in Switzerland, purchases 44.0% of
its total product requirements in Euros. The appreciation of the
Swiss Franc against the Euro has therefore had a beneficial impact
on the business, improving gross margins during the year,
compensating for reductions in revenue and enabling Belcolor to
produce a satisfactory result compared with last year.
Market conditions were relatively stable in France, allowing LMS
to increase its profitability. Similarly in the Netherlands, Lethem
Vergeer, Interplan and Sylvester were able to produce a solid
result.
Management and employees
In addition to the group's strategy and operating structure, the
other key element underpinning our ongoing success is the strength
and experience of our management teams and employees.
The group has a clear policy of promoting employees from within
wherever possible affording all employees the opportunity to
develop and fulfil their career aspirations. This has enabled
employees to progress from relatively junior positions into middle
and senior management roles and has allowed us to develop an
entrepreneurial culture throughout the business.
The benefit of this approach is that the group has operating
management teams, with in-depth knowledge of their business
objectives and processes, leading the development of our
businesses.
The strength of our management at the individual business level
is supported by the small team of senior executive managers who
through guidance and direction, ensure that our teams are pursuing
the group's strategy and contributing to the achievement of our
operating objectives.
Investments
We currently have a number of plans to further improve and
enlarge the infrastructure of the group.
We have obtained planning permission to extend our distribution
centre in Tamworth, increasing its footprint from 147,400 square
feet to 160,200 square feet. This will allow our Residential and
Commercial specialist businesses to further develop their
activities in the middle to higher market sectors that they
serve.
In Coleshill, we have agreed to acquire, subject to planning
permission, land adjacent to the existing distribution centre in
order to increase the size of the centre from 159,500 square feet
to 283,800 square feet. This will provide the capacity to increase
our central stock holding in certain product sectors to satisfy the
demand from our regional distribution centres and manage our future
working capital investment on a more efficient basis.
We have been involved in a very protracted process to relocate
Faithfulls, our Regional multi-product business in Hadleigh, near
Ipswich. Unfortunately, the planning permission issues proved to be
insurmountable and therefore, we are currently in dialogue with
other parties to acquire an alternative site, to accommodate a
127,000 square feet distribution centre, in close proximity to our
existing operation.
Mercado, our National multi-product business, is currently in
the process of opening a 6,800 square feet service centre in
Liverpool. The service centre will enable Mercado to expand its
position in the area and provides an opportunity to develop its
market share in the commercial sector.
Furthermore, we plan to relocate the trans-shipping depot based
in Chelmsford, which Mercado utilises to service the southeast of
England. The new facility, which is located in the near vicinity,
will also operate as a service centre for Mercado to enlarge its
commercial activities in this region.
We are evaluating other modest investments to increase the
number of service centres in specific geographical locations, which
will expand our regional commercial activities.
Outlook
The first ten weeks of 2012 have continued a positive trend with
all five business sectors and each product category in the UK
continuing to produce increases in revenue against the
corresponding period last year.
Markets remain challenging and somewhat unpredictable due to the
general economic outlook combined with uncertainty over both raw
material prices and currency exchange. However through the group's
strategy and structure combined with extensive product and
marketing initiatives, we are confident that our individual
businesses can collectively outperform the market.
2011 financial review
Results for 2011
Revenue
The revenue result for 2011 is the highest ever recorded by the
group and represents a very satisfactory achievement given the
current trading environment. At GBP569.8 million, it exceeds the
results achieved in 2007 and 2008 respectively amounting to
GBP544.7 million and GBP557.3 million, which were previously the
two best years and were, attained prior to markets being affected
by the current economic issues.
However, whilst we continue to make steady progress in the UK,
in markets that anecdotal evidence suggests remain flat, the
significant impact of currency translation on the evolution of
group revenue should not be overlooked.
By way of illustration, the table below documents the principal
factors giving rise to the changes in group revenue between 2007
and 2011.
GBP000 GBP000
Revenue 2007 544,718
UK growth 3,297
Continental European decline (6,808)
Benefits of currency translation 28,588
--------
21,780
Revenue 2011 569,795
--------
The analysis highlights the benefits of currency gains, which
arise from the depreciation of Sterling against the Euro and Swiss
Franc. Based on the average currency rates used to translate the
results of the Continental businesses in 2007 and 2011, Sterling
has depreciated by 21.1% against the Euro and 40.9% against the
Swiss Franc.
Growth in the UK during the four years since 2007 is the net
result of expansion in the Residential and Commercial specialist
businesses amounting to GBP33.2 million and a net decline of
GBP29.9 million in the traditional distribution businesses.
The Residential specialist businesses represent a sector the
group has invested in during the last ten years, firstly by
acquisition and secondly, through ongoing investment in sales and
marketing, the combination of which has seen this sector continue
to grow notwithstanding market contraction.
The decline in the multi-product businesses has occurred as a
direct consequence of the decrease in UK floorcovering markets.
These businesses collectively represent 63% of UK revenue and as
highlighted in the Chief Executive's Review, the resumption of
growth in these two sectors during 2011 was an important step
forward, since they provide the UK operation with the base of its
market presence.
The impact of the reduction in the floorcovering markets in
Continental Europe has been at its most acute in Switzerland, where
revenues, at constant currency compared with those achieved in
2007, have reduced by 14.7%. Revenue is down in the Netherlands
over the four year period by 9.1% and in France by 4.5%.
Gross margin and expenses
Group gross margin as a percentage of revenue remained unchanged
compared with 2010. In the UK, the ongoing improvement in gross
margin performance was unable to progress because of changes in
product mix and increased price competition, particularly during
the second half of the year. Further price competition is expected
to be a feature of UK trading during 2012.
Total distribution and administration expenses as a percentage
of revenue remained unchanged compared with the last two years at
25.9%. The increase in expenditure during the year, amounting to
GBP8.8 million, was principally due to
-- employment costs, in constant currency terms, up 5.9% to GBP4.4 million,
-- fuel costs, up 14.0% to GBP1.4 million,
-- cost of the delivery fleet up 12.5%, GBP1.0 million and
-- sampling and bad debts up 7.2% to GBP1.1 million
Net finance costs
Net finance costs reduced during the year by GBP0.6 million
compared with 2010. The change during the year was almost entirely
attributable to the net reduction in finance cost associated with
the group's pension plans.
Following renewal of the group's term facility, net finance
costs are likely to increase during 2012 due to pricing changes on
the new facilities.
Taxation
The effective rate of taxation reduced to 26% during the year,
reflecting the decrease in the UK headline corporation tax rate and
also the further future reduction already enacted, which impacts
upon deferred taxation. The anticipated effective rate for 2012 is
expected to reduce to 25% due to announced UK rate reductions.
Dividends
Total dividends paid and proposed for 2011 have increased by
14.1% from 12.40 pence to 14.15 pence. Dividend cover of 1.74 times
is in line with last year and represents a cover ratio the board
anticipate maintaining for the foreseeable future.
Refinancing
The group has entered into two separate agreements with Barclays
Bank and The Royal Bank of Scotland and completed the re-financing
of its existing term facility.
The new facilities, provided equally by the two banks and
totalling GBP40.0 million, are for a term of four years, which can
be extended to five on the exercise of a separate option by each
bank.
The former facility, amounting to GBP30.0 million has been
repaid in full and cancelled.
In addition to the above, the group has extended its uncommitted
UK facilities, amounting to GBP35.0 million, for another 12
months.
Cash flows
Operating cash flows before changes in working capital
Operating cash flows before changes in working capital increased
during the year by GBP2.3 million from GBP31.5 million to GBP33.8
million.
Net working capital investment during the year amounted to
GBP12.9 million compared with GBP0.2 million during the previous
year. The group continues to provide its customers with a wide
range of product. This commitment, coupled with price increases
introduced by suppliers during the first quarter of 2011, which
averaged 3.6%, has resulted in an additional GBP8.7 million
investment in inventory.
The additional funding required in connection with trade
receivables has arisen due to the increase in revenue during the
year. However, as already noted in the Chief Executive's Review,
the average period of credit taken by our independent customer
base, as measured at the end of the year, has reduced compared with
the previous year.
The additional net working capital investment is the reason for
cash generated from operations reducing by GBP10.5 million during
the year. However, the decrease in cash payments relating to tax,
GBP4.1 million, and the enhanced transfer value exercise, GBP4.2,
was the principal reason for the reduction in net cash from
operating activities to GBP2.2 million.
Cash flows from investing and financing activities
Additions to property, plant and equipment during the year were
modest compared with previous years. However, as highlighted in the
Chief Executive's Review, the group intends to embark on further
investment over the next few years with approximately GBP24.0
million being committed to the development of the Coleshill
extension and the new distribution centre for Faithfulls. It is too
early in the process to comment on the detailed timing of the cash
flows.
Cash out flows relating to financing activities amounted to
GBP12.1 million compared with GBP10.0 million in the previous year.
The main component of the cash flow relates to dividends but during
the year, GBP1.6 million was utilised to acquire shares in the
company to crystallise the cost of satisfying potential awards
under the employee share plan arrangements.
Net debt
Group net funds at the end of the year decreased compared with
the previous year by GBP2.9 million from GBP10.5 million to GBP7.6
million. The details are shown in the table below.
At At
1 January Cash Translation 31 December
2011 flows differences 2011
GBP000 GBP000 GBP000 GBP000
Cash at bank and
in hand 44,758 (3,211) (53) 41,494
Debt due within one
year (225) (30,000) 6 (30,219)
Debt due after one
year (34,011) 30,228 92 (3,691)
10,522 (2,983) 45 7,584
----------- --------- ------------- -------------
Employee benefits
As disclosed in the Cash Flow Statement, the group made further
payments totalling GBP3.3 million in connection with the enhanced
transfer value exercise during the first quarter of 2011, enabling
deferred members of the UK defined benefit pension plan the
opportunity to transfer out.
The group does not anticipate repeating this exercise in the
foreseeable future.
The results of the triennial review of the UK defined benefit
pension plan revealed a net deficit reduction from GBP22.4 million
to GBP11.5 million. The reduction has been appreciably facilitated
by both the additional contributions to the plan and the transfer
of deferred members.
The company has agreed with the plan trustee to maintain
additional contributions in line with the arrangement agreed in
2008, which means that each year's contribution will continue to
increase on the previous year at a rate of 3.2%. This commitment
gave rise to a cash payment of GBP2.8 million during the year and
should result, all else being equal, in the plan deficit being
completely eliminated by December 2015.
Going concern
Having reviewed the group's resources and a range of likely
out-turns, the directors believe they have reasonable grounds for
stating that the group has adequate resources to continue in
operational existence for the foreseeable future and that it is
appropriate to adopt the going concern basis in preparing the
group's financial accounts.
Consolidated Income Statement
for the year ended 31 December 2011
Note 2011 2010
GBP000 GBP000
Revenue 1 569,795 535,690
Cost of sales (394,056) (370,731)
----------------------------------------- ----- ---------- ----------
Gross profit 175,739 164,959
Distribution expenses (110,623) (102,016)
Administrative expenses (37,064) (36,877)
----------------------------------------- ----- ---------- ----------
Operating profit 1 28,052 26,066
Finance income 4,520 4,637
Finance expenses (4,984) (5,697)
----------------------------------------- ----- ---------- ----------
Net finance costs (464) (1,060)
----------------------------------------- ----- ---------- ----------
Profit before tax 27,588 25,006
Taxation (7,184) (7,127)
----------------------------------------- ----- ---------- ----------
Profit for the year attributable to the
equity shareholders 20,404 17,879
----------------------------------------- ----- ---------- ----------
Dividend paid per share 3 12.40p 11.00p
Earnings per share
Basic 2 24.6p 21.5p
----------------------------------------- ----- ---------- ----------
Diluted 2 24.4p 21.5p
----------------------------------------- ----- ---------- ----------
All group operations during the financial years were continuing
operations.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2011
Note 2011 2010
GBP000 GBP000
Profit for the year attributable to the equity
shareholders 20,404 17,879
Other comprehensive income:
Foreign exchange translation differences arising
on translation of overseas operations (234) 1,094
Actuarial losses and gains on defined benefit
plans (7,839) 356
Effective portion of changes in fair value
of cash flow hedges - (1)
Transfers to profit or loss on cash flow hedges - 225
Income tax on other comprehensive income 1,855 9
----------------------------------------------------------- -------- --------
Other comprehensive (expense)/income for the
year (6,218) 1,683
Total comprehensive income attributable to
the equity shareholders for the year 14,186 19,562
Statements of Financial Position
at 31 December 2011
2011 2010
Note GBP000 GBP000
Assets
Non-current assets
Property, plant and equipment 94,201 97,215
Intangible assets 13,210 13,210
Investments in subsidiary undertakings - -
Deferred tax assets 962 896
108,373 111,321
Current assets
Inventories 114,196 105,694
Trade and other receivables 111,656 102,240
Cash and cash equivalents 41,494 44,758
Assets held for sale 362 362
267,708 253,054
Total assets 1 376,081 364,375
--------------------------------------------- ------ ---------- ----------
Liabilities
Current liabilities
Other interest-bearing loans and borrowings (30,219) (225)
Trade and other payables (154,490) (149,476)
Employee benefits (2,669) (2,586)
Income tax payable (6,678) (4,201)
(194,056) (156,488)
Non-current liabilities
Other interest-bearing loans and borrowings (3,691) (34,011)
Employee benefits (11,789) (10,138)
(15,480) (44,149)
--------------------------------------------- ------ ---------- ----------
Total liabilities 1 (209,536) (200,637)
Net assets 166,545 163,738
--------------------------------------------- ------ ---------- ----------
Equity attributable to equity holders
of the parent
Share capital 4,268 4,268
Share premium 53,512 53,512
Other reserves (7,013) (6,571)
Retained earnings 115,778 112,529
---------------------------------------------- ------ ---------- ----------
Total equity 166,545 163,738
---------------------------------------------- ------ ---------- ----------
Statement of Changes in Equity
for the year ended 31 December 2011
Capital Cash
Share Share redemption Translation flow Treasury Retained Total
capital premium reserve reserve hedging reserve earnings equity
GBP000 GBP000 GBP000 GBP000 reserve GBP000 GBP000 GBP000
GBP000
Balance at
1 January 2010 4,268 53,512 88 5,297 (224) (13,057) 102,745 152,629
Profit for the
year attributable
to the equity
shareholders - - - - - - 17,879 17,879
Other comprehensive
income - - - 1,094 224 - 365 1,683
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Total comprehensive
income for the
year - - - 1,094 224 - 18,244 19,562
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Transactions
with equity
shareholders,
recorded directly
in equity
Share-based
payments - - - - - - 448 448
Share options
exercised by
employees - - - - - 7 - 7
Deferred tax
on share options - - - - - - 224 224
Dividends to
equity holders - - - - - - (9,132) (9,132)
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Total contributions
by and
distributions
to equity
shareholders - - - - - 7 (8,460) (8,453)
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Balance at
31 December 2010 4,268 53,512 88 6,391 - (13,050) 112,529 163,738
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Balance at
1 January 2011 4,268 53,512 88 6,391 - (13,050) 112,529 163,738
Profit for the
year attributable
to the equity
shareholders - - - - - - 20,404 20,404
Other comprehensive
income - - - (234) - - (5,984) (6,218)
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Total comprehensive
income for the
year - - - (234) - - 14,420 14,186
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Transactions
with equity
shareholders,
recorded directly
in equity
Share-based
payments - - - - - - 871 871
Consideration
for purchase
of own shares - - - - - (1,575) - (1,575)
Share options
exercised by
employees - - - - - 1,367 (1,357) 10
Deferred tax
on share options - - - - - - (390) (390)
Dividends to
equity holders - - - - - - (10,295) (10,295)
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Total contributions
by and
distributions
to equity
shareholders - - - - - (208) (11,171) (11,379)
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Balance at
31 December 2011 4,268 53,512 88 6,157 - (13,258) 115,778 166,545
-------------------- --------- --------- ------------ ------------- --------- ---------- ---------- ----------
Cash Flow Statements
for the year ended 31 December 2011
Note 2011 2010
GBP000 GBP000
Cash flows from operating activities
Profit before tax for the year 27,588 25,006
Adjustments for:
Depreciation, amortisation and impairment 4,883 5,519
Net settlement loss/(gain) on enhanced transfer
value exercise 56 (176)
Finance income (4,520) (4,637)
Finance expense 4,984 5,697
Profit on sale of property, plant and equipment (86) (314)
Share-based payments 871 448
Operating cash flows before changes in working
capital and other payables 33,776 31,543
Change in inventories (8,700) (5,770)
Change in trade and other receivables (9,764) (1,405)
Change in trade and other payables 5,544 6,947
Cash generated from the operations 20,856 31,315
Interest paid (1,342) (1,344)
Tax paid (3,380) (7,506)
Additional contributions to defined benefit
plan (2,781) (2,706)
Enhanced transfer value exercise payments (3,302) (7,488)
Net cash flow from operating activities 10,051 12,271
--------------------------------------------------------- --------- --------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment 110 3,167
Interest received 751 834
Dividends received - -
Acquisition of property, plant and equipment (2,035) (6,995)
Net cash flow from investing activities (1,174) (2,994)
--------------------------------------------------------- --------- --------
Cash flows from financing activities
Proceeds from the issue of treasury shares 10 7
Payment to acquire own shares (1,575) -
Repayment of borrowings (228) (866)
Dividends paid (10,295) (9,132)
Net cash flow from financing activities (12,088) (9,991)
--------------------------------------------------------- --------- --------
Net decrease in cash and cash equivalents (3,211) (714)
Cash and cash equivalents at 1 January 44,758 44,979
Effect of exchange rate fluctuations on cash
held (53) 493
Cash and cash equivalents at 31 December 41,494 44,758
--------------------------------------------------------- --------- --------
Notes
1. Segment reporting
The group has 50 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 Total
Europe
2011 2010 2011 2010 2011 2010
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
External revenues 466,968 432,815 102,827 102,875 569,795 535,690
-------------------- ---------- ---------- --------- --------- ---------- ----------
Reportable segment
operating profit 25,696 24,662 2,830 2,553 28,526 27,215
-------------------- ---------- ---------- --------- --------- ---------- ----------
Reportable segment
assets * 220,878 205,655 45,427 47,589 266,305 253,244
Reportable segment
liabilities (136,358) (129,365) (18,132) (20,111) (154,490) (149,476)
-------------------- ---------- ---------- --------- --------- ---------- ----------
During the year there are no inter-segment revenues for the
reportable segments (2010: GBPnil).
* Reportable segment assets have been restated for the year
ended 31 December 2010 to allocate relevant cash and cash
equivalents between the reportable segments.
Reconciliations of reportable segment profit, assets and
liabilities and other material items:
2011 2010
GBP000 GBP000
Profit for the year
Total profit for reportable
segments 28,526 27,215
Impairment of assets - (466)
Unallocated expense (474) (683)
----------------------------- -------- --------
Operating profit 28,052 26,066
Finance income 4,520 4,637
Finance expense (4,984) (5,697)
----------------------------- -------- --------
Profit before taxation 27,588 25,006
Taxation (7,184) (7,127)
----------------------------- -------- --------
Profit for the year 20,404 17,879
----------------------------- -------- --------
Notes (continued)
1. Segment reporting - continued
2011 2010
GBP000 GBP000
Assets
Total assets for reportable
segments 266,305 253,244
Unallocated assets:
Properties, plant and
equipment 84,531 86,504
Deferred tax assets 962 896
Assets held for sale 362 362
Cash and cash equivalents 23,921 23,369
Total assets 376,081 364,375
-------------------------------- -------- ------------- --- ------------ ----------- --------------
Liabilities
Total liabilities for reportable
segments (154,490) (149,476)
Unallocated liabilities:
Employee benefits (14,458) (12,724)
Other interest-bearing loans and borrowings (33,910) (34,236)
Income tax payable (6,678) (4,201)
Total liabilities (209,536) (200,637)
-------------------------------- -------- ------------- --- ------------ ----------- --------------
Reportable
Continental segment Consolidated
UK Europe total Unallocated total
GBP000 GBP000 GBP000 GBP000 GBP000
Other material items
2011
Capital expenditure 1,358 593 1,951 84 2,035
Depreciation 2,240 798 3,038 1,845 4,883
Other material items
2010
Capital expenditure 784 553 1,337 5,658 6,995
Depreciation 2,503 747 3,250 1,803 5,053
Impairment of assets - - - 466 466
-------------------------------- -------- ------------- ------------- --------------- --------------
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:
Revenue by principal product group and geographic origin is
summarised below:
UK Continental Total
Europe
2011 2010 2011 2010 2011 2010
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Residential 320,290 297,606 50,047 51,992 370,337 349,598
Commercial 146,678 135,209 52,780 50,883 199,458 186,092
------------- -------- -------- -------- -------- -------- --------
466,968 432,815 102,827 102,875 569,795 535,690
------------- -------- -------- -------- -------- -------- --------
Notes (continued)
2. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2011 2010
GBP000 GBP000
Earnings
Earnings for the purposes of basic earnings per
share being profit attributable to equity holders
of the parent 20,404 17,879
---------------------------------------------------- ------------ ------------
2011 2010
Number of shares
Issued ordinary shares at 1 January 85,363,743 85,363,743
Effect of shares held in treasury (2,423,159) (2,246,489)
Weighted average number of ordinary shares for
the purposes of basic earnings per share 82,940,584 83,117,254
---------------------------------------------------- ------------ ------------
Effect of diluted potential ordinary shares:
Weighted average number of ordinary shares at
31 December 82,940,584 83,117,254
Dilutive effect of share options 596,479 113,570
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 83,537,063 83,230,824
---------------------------------------------------- ------------ ------------
At 31 December 2011, the company held 2,841,197 shares in
treasury and these are excluded from the calculation of earnings
per share.
3. Dividends
2011 2010
GBP000 GBP000
Interim dividend for 2010 of 3.83p paid 4 January 3,180 -
2011
Final dividend for 2010 of 8.57p paid 1 July 2011 7,115 -
Interim dividend for 2009 of 3.70p paid 2 January
2010 - 3,072
Final dividend for 2009 of 7.30p paid 1 July 2010 - 6,060
10,295 9,132
--------------------------------------------------- -------- --------
The final proposed dividend of 9.85p per share (2010:8.57p per
share) will not be provided for until authorised by shareholders at
the forthcoming AGM.
Interim dividends of 4.30p per share (2010: 3.83p per share) are
provided for when the dividend is paid.
The total value of dividends proposed but not recognised at 31
December 2011 is GBP11,663,000 (2010: GBP10,294,000).
Notes (continued)
4. Additional information
The financial information set out above does not constitute the
company's statutory accounts for the years ended
31 December 2011 or 2010 but is derived from those accounts.
Statutory accounts for 2010 have been delivered to the registrar of
companies, and those for 2011 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 2012 and will be displayed on
the company's website at www.headlam.com during March 2012. 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 2011 was approved by the board on 9 March 2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JPMRTMBMMBFT
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