Interim Results
September 04 2001 - 3:01AM
UK Regulatory
RNS Number:3928J
AGA Foodservice Group PLC
4 September 2001
4th September 2001
FOR IMMEDIATE RELEASE
AGA FOODSERVICE GROUP PLC
2001 INTERIM RESULTS
HIGHLIGHTS
Half year to 30th June 2001 2001 2000 2000
_____________________ ____ ____ ____ _____
Continuing Total Continuing Total
#m #m #m #m
Turnover 106.0 244.7 94.2 475.7
Operating profit
before exceptional costs &
goodwill 9.3 15.3 7.6 52.0
Profit before tax 10.7 33.1
Shareholders' funds 261.2 413.8
Net cash / (borrowings) 119.9 (308.7)
____________________________________________________________________________
Earnings per share based on profit
before goodwill amortisation and
disposal of businesses 5.0p 11.1p
Dividend per share 1.7p 4.4p
____________________________________________________________________________
* Aga Foodservice : UK leader in commercial and domestic kitchen products
created by decisive strategic steps taken in 2001. Good first half trading
performance.
* Major developments in 2001 : #786 million pipe systems disposal; #335m
tender offer to shareholders; and #29.5 million Fired Earth acquisition.
* Development plans for Aga and Fired Earth progressing well. Major autumn
2001 marketing and sales initiatives underway.
* Alignment of foodservice operations with national accounts continuing
with important new contracts won. Particularly strong performance from
bakery operations.
* Current trading is satisfactory but the Group is alert to the risks
posed by an economic slowdown.
"While trading conditions are obviously uncertain, we have strong niche and
brand led businesses that make the opportunities available to us exciting :
we also have further resources available for investment. Much has been
achieved in the first half and we expect to maintain the impetus created."
William McGrath
Chief Executive
Enquiries:
William McGrath, Chief Executive 020 7404 5959 (today)
Shaun Smith, Finance Director 0121 742 2366 (thereafter)
Jonathan Glass (Brunswick) 020 74045959
Aga Foodservice Group plc
2001 Interim Results
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
2001 has been an exciting period of change for the Group. Our new strategy is
to focus on commercial, domestic and kitchen products with expanded retail
operations. The turning point was the sale of our pipe systems division for
#786 million in March to Etex. As industrial conditions have toughened since
then the timing of the disposal has proved sound. The sale enabled us to
return #335 million to shareholders by means of a tender offer in which the
Group acquired 130.8 million of its own shares at 255 pence per share. The
Group was also left with the opportunity and resources to develop its core
businesses. The first step was taken in July 2001 with the acquisition of
Fired Earth.
Financial Results
_________________
The results for the half year are heavily affected by the disposal of Glynwed
Pipe Systems, completed on 9th March. However, for the future it is the
results of the continuing businesses which are significant. Total turnover
was #245 million, of which continuing businesses accounted for #106 million.
Glynwed Pipe Systems had a slow start to the year, partly because of
particularly poor weather in Canada, and its operating profits for the period
up to disposal were down on the previous year. Trading profits from
continuing businesses were #9.3 million, compared with #7.6 million in 2000,
with a useful first time contribution from Mono, acquired for #11 million in
July 2000.
The #2.1 million exceptional costs relate largely to Agalinks, our on-line
portal, which is now established as an important complement to our consumer
facing operations. It will be close to self funding next year.
In the first half the Group received net interest of #1.6 million. This
comprised interest payable on debt prior to the disposal in March 2001
followed by interest receivable on cash balances of over #400 million until
the completion of the #335 million tender offer on 21st May 2001.
At the half year the net cash balance was #120 million. Since then the Group
has acquired Fired Earth for #29.5 million of which #23 million was in cash.
The tax rate was 29.2 per cent (25 per cent excluding goodwill) and is
expected to continue marginally below the UK standard rate. EPS was 5.0
pence.
The dividend has been set at 1.7 pence per share, an appropriate level for
the Group as now configured. As set out in the Annual Report the Group has a
benchmark dividend cover of 3 times and expects to have a progressive
dividend policy.
Consumer Products
_________________
Aga Rayburn achieved record first half profitability with Aga volumes up 5
per cent to over 3,600. Rayburn volumes were little changed; cookware was
well ahead. Our objective is to sell over 10,000 Agas worldwide in 2003 up
from a little over 7,000 in 2000 and the business is gearing up to achieve
this as will be seen from a major new advertising programme starting this
autumn based on the theme "Iron Age Man and Woman". Aga is also accelerating
its shop refurbishment programme and upgrading its sales support processes.
The acquisition of Fired Earth, a growing and clearly empathetic brand-driven
business with synergistic opportunities, will enhance the Group's consumer
market focus. It has an energetic and imaginative management team which is
growing sales not only in tiles and paints but also now in the newly launched
bathroom products. Fired Earth has traded well through the summer with its
three large "inspirational" format stores performing particularly strongly.
Aga and Fired Earth's management teams are planning formats involving both
brands. Tiles for example, are being matched to Aga's expanding colour
ranges.
Leisure continues to work hard in the tough UK cooker and sink markets.
Volumes were satisfactory but margins have not yet improved in spite of
impressive cost reduction work. The strong, current product offering and the
introduction of new products including a remodelled Rangemaster and an
up-market sink range demonstrate continuing progress.
Foodservice Products
____________________
Foodservice markets in the UK have been relatively quiet with the difficult
conditions for manufacturers adding to current concerns for the tourism
sector. Against that background the operations have performed well. Williams
Refrigeration is benefitting from last year's restyling of its products and
has picked up significant new contracts with Sainsbury and with Compass in
the UK and France. Victory, our comparable refrigeration business in the US,
has held its own in spite of weak US markets. Falcon, the prime cooking
business, has found markets slow, but is looking to the public sector to
provide renewed impetus in the second half. Mono, the bakery operation, had
an excellent first half year as it undertook roll out programmes for Safeway
and Marks and Spencer. With further contracts won in the growing bakery
market, Mono's prospects are good for the remainder of the year. Our
distribution arms, AFE Online and AFE Serviceline, also won new major
accounts.
Strategic Development
_____________________
Aga Foodservice has excellent core operations which are in growth sectors and
capable of expansion. Investment in organic growth will continue at a higher
rate.
In the UK consumer markets we have a greater retail focus and improved
accessibility, while overseas we are putting resources into enhancing the
distribution network. This will be backed across our consumer operations by
further new product introductions. In Foodservice we have a strong UK
presence which we are again supporting with new products. In looking to
develop overseas the need is to identify the growth segments for the next few
years, particularly as the fast food market has slowed.
The strong financial position of the Group enables us to look actively at
development opportunities.
Current trading is satisfactory but we are alert to the risks which a market
slow down would present for our business in which the second half year
generates the larger part of sales and profits. For Aga the opportunities
outweigh the risks, while for Leisure the momentum from new products has to
counter volume and margin concerns. In Foodservice the strong current order
book, notably of Williams and Mono, helps underpin prospects. The Group has
achieved much in the first half year and is well placed to maintain the
impetus created.
C J Farrow W B McGrath
Chairman Chief
Executive
4th September 2001
GROUP PROFIT AND LOSS ACCOUNT
Half year Half year Year to
to June to June December
2001 2000 2000
_________ _________ __________
#m #m #m
Turnover
Continuing operations 106.0 94.2 204.6
Discontinued operations 138.7 381.5 764.5
____________________________________________________________
Total turnover 244.7 475.7 969.1
============================================================
Operating profit
____________________________________________________________
Continuing operating
profit before exceptional
costs and goodwill 9.3 7.6 21.4
Exceptional costs (2.1) (0.6) (1.3)
Goodwill amortisation (1.7) (1.5) (3.1)
_____________________________________________________________
Continuing operations 5.5 5.5 17.0
_____________________________________________________________
Discontinued operations 3.6 37.3 69.4
_____________________________________________________________
Total operating profit 9.1 42.8 86.4
Provision for loss on
disposal of businesses - - (36.0)
_____________________________________________________________
Profit before interest and
tax 9.1 42.8 50.4
Net interest receivable /
(payable) 1.6 (9.7) (19.6)
_____________________________________________________________
Profit before tax 10.7 33.1 30.8
Tax on profit on ordinary
activities (3.1) (11.8) (22.1)
_____________________________________________________________
Profit on ordinary 7.6 21.3 8.7
activities after tax
Equity minority interests - (0.3) (0.2)
_____________________________________________________________
Profit attributable to
shareholders 7.6 21.0 8.5
Dividends (3.5) (10.7) (32.0)
_____________________________________________________________
Profit retained /
(transfer from reserves) 4.1 10.3 (23.5)
======================================================
Trading profit 15.3 52.0 104.5
Exceptional reorganisation
costs (2.1) (1.9) (3.0)
Goodwill amortisation (4.1) (7.3) (15.1)
_____________________________________________________________
Operating profit 9.1 42.8 86.4
Net interest receivable /
(payable) 1.6 (9.7) (19.6)
Goodwill amortisation 4.1 7.3 15.1
_____________________________________________________________
Profit before tax,
disposal of businesses and
goodwill amortisation 14.8 40.4 81.9
=============================================================
Earnings per share p p p
Before disposal of
businesses and goodwill
amortisation 5.0 11.1 22.6
Before disposal of
businesses, reorganisation
costs and goodwill 5.6 11.5 23.4
Basic 3.4 8.7 3.5
Diluted 3.4 8.4 4.1
==========================================================
GROUP BALANCE SHEET
Half year Half year Year to
to June to June December
2001 2000 2000
____________ ___________ _________
#m #m #m
Fixed assets
Goodwill 58.8 275.8 275.8
Tangible assets 45.9 283.0 288.2
______________________________________________________________
Total fixed assets 104.7 558.8 564.0
______________________________________________________________
Current assets
Stocks 29.1 204.3 194.4
Operating debtors 80.7 208.0 177.3
Tax recoverable - 5.2 15.6
Cash at bank and in hand 143.8 39.9 33.5
_____________________________________________________________
Total current assets 253.6 457.4 420.8
_____________________________________________________________
Creditors - amounts
falling due within one year
Operating creditors (31.1) (172.2) (163.9)
Borrowings (13.3) (47.3) (56.8)
Exchangeable shares - (33.5) (33.5)
Tax and dividends payable (9.1) (12.6) (33.6)
_____________________________________________________________
Total amounts falling due
within one year (53.5) (265.6) (287.8)
______________________________________________________________
Net current assets 200.1 191.8 133.0
______________________________________________________________
Total assets less current 304.8 750.6 697.0
liabilities
Creditors - amounts falling due after
more than one year
Borrowings (10.6) (301.3) (247.5)
Provisions for liabilities
and charges (32.7) (33.9) (68.6)
______________________________________________________________
Total net assets employed 261.5 415.4 380.9
==============================================================
Capital and reserves
Called up share capital 31.9 60.6 60.6
Share premium account 56.0 25.8 25.9
Revaluation reserve 7.0 7.6 7.0
Capital redemption reserve 35.0 2.3 2.3
Profit and loss account 131.3 317.5 283.8
______________________________________________________________
Total shareholders' funds 261.2 413.8 379.6
Equity minority interests 0.3 1.6 1.3
______________________________________________________________
Total funds 261.5 415.4 380.9
==============================================================
GROUP CASH FLOW STATEMENT
Half year Half year Year to
to June to June December
2001 2000 2000
_______ _________ _________
#m #m #m
Net cash (outflow) /
inflow from operating
activities (51.2) 19.2 106.0
______________________________________________________________
Returns on investments and
servicing of finance
- net interest received /
(paid) 1.6 (9.7) (16.8)
- dividends to minority
interests 0.1 - (0.2)
______________________________________________________________
Net returns on investments
and servicing of finance 1.7 (9.7) (17.0)
______________________________________________________________
Tax paid (1.7) (12.0) (20.9)
______________________________________________________________
Capital expenditure and
financial investment
- capital expenditure (8.3) (21.1) (37.5)
- sale of tangible fixed
assets 0.1 3.6 10.1
______________________________________________________________
Net capital expenditure
and financial investment (8.2) (17.5) (27.4)
______________________________________________________________
Acquisitions and disposals
- cash paid for
acquisitions less cash
acquired - (18.0) (19.3)
- disposal proceeds
received less costs
incurred 804.7 - 0.2
______________________________________________________________
Net cash flow from
acquisitions and disposals 804.7 (18.0) (19.1)
______________________________________________________________
Equity dividends paid (21.9) (21.3) (32.0)
______________________________________________________________
Cash inflow / (outflow)
before financing 723.4 (59.3) (10.4)
______________________________________________________________
Financing
- issue of ordinary shares 34.1 - 0.1
- buyback of ordinary (335.1) - -
share capital
- increase / (decrease) in
debt (312.1) 69.0 3.4
______________________________________________________________
Net financing (613.1) 69.0 3.5
______________________________________________________________
Increase / (decrease) in
cash in the period 110.3 9.7 (6.9)
==============================================================
Reconciliation of net cash
flow to movement in net cash
Increase / (decrease) in
cash in the period 110.3 9.7 (6.9)
(Increase) / decrease in
debt 312.1 (69.0) (3.4)
______________________________________________________________
Change in net debt
resulting from cash flows 422.4 (59.3) (10.3)
Borrowings acquired with
acquisitions - - (4.5)
Loan notes issued for
acquisitions - - (7.1)
Exchange adjustment 1.8 (9.0) (8.5)
______________________________________________________________
Increase / (decrease) in
net cash 424.2 (68.3) (30.4)
Opening net borrowings (304.3) (273.9) (273.9)
______________________________________________________________
Closing net cash / (debt) 119.9 (342.2) (304.3)
==============================================================
SUPPLEMENTARY STATEMENTS
Half year Half year Half year Half year Year to
Continuing Discontinued to June to June December
2001 2001 2001 2000 2000
___________ _____________ _________ _________ _________
Reconciliation of
operating profit to #m #m #m #m #m
net cash (outflow)
/ inflow from
operating
activities
Operating profit 5.5 3.6 9.1 42.8 86.4
Depreciation/goodwill
amortisation 4.0 7.3 11.3 23.6 41.8
Profit on disposal
of fixed assets (0.1) - (0.1) - (2.4)
(Increase) /
decrease in stocks (2.6) (8.1) (10.7) (24.7) (13.1)
(Increase) /
decrease in debtors (0.4) (43.8) (44.2) (27.7) 5.7
Increase /
(decrease) in
creditors (6.3) (8.7) (15.0) 8.4 (5.8)
Increase /
(decrease) in
provisions (0.8) (0.8) (1.6) (3.2) (6.6)
_____________________________________________________________________________
Net cash (outflow)
/ inflow from
operating
activities (0.7) (50.5) (51.2) 19.2 106.0
============================================================================
Half year Half year Year to
to June to June December
2001 2000 2000
_________ _________ ________
Statement of total #m #m #m
recognised gains and
losses
Profit attributable to
shareholders 7.6 21.0 8.5
Exchange adjustment on net
investments 2.7 8.7 8.2
______________________________________________________________________________
Total recognised gains and
losses relating to the
period 10.3 29.7 16.7
====================================================================
Half year Half year Year to
to June to June December
2001 2000 2000
__________ __________ _________
Reconciliation of movements in #m #m #m
shareholders' funds
Total recognised gains and losses
relating to the period 10.3 29.7 16.7
Dividends (3.5) (10.7) (32.0)
New share capital - share premium 30.1 - 0.1
subscribed
- share capital 4.0 - -
Buy back of share - ordinary shares (32.7) - -
capital
- profit and
loss account (335.1) - -
- capital redemption
reserve 32.7 - -
Goodwill reinstated on disposals 175.8 - -
______________________________________________________________________________
Net (decrease) / increase in
shareholders' funds (118.4) 19.0 (15.2)
Shareholders' funds at beginning of
period 379.6 394.8 394.8
______________________________________________________________________________
Shareholders' funds at end of
period 261.2 413.8 379.6
============================================================================
SEGMENTAL ANALYSIS
Half year to Half year to Year to
June 2001 June 2000 December 2000
___________________ ___________________ ____________________
By Operating Operating Operating
business Turnover profit Turnover profit Turnover profit
group
___________ ____________________ ___________________ ____________________
#m #m #m #m #m #m
Consumer
Products 55.7 4.1 52.7 3.3 111.3 10.5
Foodservice
Products 50.3 5.2 41.5 4.3 93.3 10.9
______________________________________________________________________________
Continuing
operations 106.0 9.3 94.2 7.6 204.6 21.4
Exceptional
costs - continuing - (2.1) - (0.6) - (1.3)
Goodwill
amortisation
continuing - (1.7) - (1.5) - (3.1)
Discontinued
operations 138.7 3.6 381.5 37.3 764.5 69.4
______________________________________________________________________________
Total Group 244.7 9.1 475.7 42.8 969.1 86.4
============================================================================
Half year goodwill amortisation relates entirely to Foodservice Products.
Half year to Half year to Year to
June 2001 June 2000 December 2000
___________________________ ____________________ ____________________
By geographical Operating Operating Operating
Origin Turnover profit Turnover profit Turnover profit
__________________________________ ____________________ ____________________
#m #m #m #m #m #m
United Kingdom 93.3 7.2 80.0 6.8 177.4 19.2
North America 10.9 - 11.5 0.1 21.5 0.4
Rest of World 1.8 - 2.7 0.1 5.7 0.5
____________________________________________________________________________
Total continuing
operations 106.0 7.2 94.2 7.0 204.6 20.1
Goodwill amortisation - (1.7) - (1.5) - (3.1)
Discontinued
operations 138.7 3.6 381.5 37.3 764.5 69.4
____________________________________________________________________________
Total Group 244.7 9.1 475.7 42.8 969.1 86.4
============================================================================
Half year goodwill amortisation relates to United Kingdom #1.3m (#1.1m) and
North America #0.4m (#0.4m) and for the year 2000 #2.3m and #0.8m
respectively.
Turnover by Half year to Half year to Year to
geographical June 2001 June 2000 December 2000
destination
______________ _______________ ________________
#m % #m % #m %
United Kingdom 87.7 82.7 75.1 79.7 165.2 80.7
North America 11.0 10.4 11.4 12.1 22.3 10.9
Rest of World 7.3 6.9 7.7 8.2 17.1 8.4
____________________________________________________________________________
Total continuing
operations 106.0 100.0 94.2 100.0 204.6 100.0
===========================================================================
EARNINGS PER SHARE
Earnings before disposal Half year Half year Year to
of businesses to June to June December
2001 2000 2000
__________ _________ _________
#m #m #m
Profit on ordinary activities
after tax 7.6 21.3 8.7
Minority interests - (0.3) (0.2)
Disposal of businesses
net of tax - - 34.3
Goodwill amortisation net
of tax 3.5 5.8 12.0
____________________________________________________________________________
Earnings before disposal
of businesses and
goodwill amortisation 11.1 26.8 54.8
============================================================================
Reorganisation costs net
of tax 1.5 1.2 2.0
____________________________________________________________________________
Earnings before disposal
of businesses,
reorganisation costs and
goodwill amortisation 12.6 28.0 56.8
============================================================================
Earnings
Profit on ordinary activities
After tax 7.6 21.3 8.7
Minority interests - (0.3) (0.2)
____________________________________________________________________________
Earnings - for basic EPS 7.6 21.0 8.5
Dilutive effect of
exchangeable shares - 0.7 2.0
____________________________________________________________________________
Earnings - for diluted
EPS 7.6 21.7 10.5
============================================================================
Weighted average number million million million
of shares in issue
For basic EPS calculation 223.3 242.5 242.5
Dilutive effect of
exchangeable shares - 14.9 14.9
Outstanding share options 0.8 - -
____________________________________________________________________________
For diluted EPS
calculation 224.1 257.4 257.4
Earnings per share p p p
Before disposal of
businesses and goodwill
amortisation 5.0 11.1 22.6
Before disposal of businesses,
reorganisation costs and
goodwill amortisation 5.6 11.5 23.4
Basic 3.4 8.7 3.5
Diluted 3.4 8.4 4.1
===========================================================================
NOTES
1. Dividends
The Board has approved the payment of an interim dividend amounting to 1.7p
per share (2000 4.4p). The dividend will be paid on 5th December 2001 to
shareholders registered on 19th October 2001.
2. Exchange rates
The profit and loss accounts of overseas subsidiaries are translated into
sterling using average exchange rates, balance sheets are translated at
period end rates. The main currencies and exchange rates are:
Half year Half year Year to
to June to June December
2001 2000 2000
__________ _________ _________
Average
EUR 1.64 1.64 1.64
USD 1.42 1.57 1.52
Period end
EUR 1.66 1.58 1.59
USD 1.41 1.51 1.49
3. Tax
Tax on profit on ordinary activities in respect of the half year to June 2001
has been charged at the estimated rates chargeable for the full year in the
respective jurisdictions, and includes a credit of #0.3m (2000 half year
charge of #10.2m, full year #16.9m) in respect of overseas operations.
4. Comparative figures for the year 2000
The figures for the full year 2000 have been extracted from the Company's
statutory accounts which have been filed with the Registrar of Companies and
which contain an unqualified audit report. The half year figures have not
been audited but have been reviewed and reported on by
PricewaterhouseCoopers.
INDEPENDENT REVIEW REPORT TO AGA FOODSERVICE GROUP plc
Introduction
We have been instructed by the company to review the financial information
set out on pages 4-10 in this document and we have read the other information
contained in the interim report for any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the Financial Services Authority require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where
any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board. A review consists principally
of making enquiries of group management and applying analytical procedures to
the financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed
in accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 30th June 2001.
PricewaterhouseCoopers
Chartered Accountants
Birmingham
4th September 2001
MAIN ADDRESSES AND ADVISERS
Head Office and Registered Office
Headland House, 54 New Coventry Road,
Sheldon, Birmingham B26 3AZ
Telephone: 0121 742 2366
Fax: 0121 742 0403
e-mail: info@agafoodservice.com
Website: www.agafoodservice.com
Registered in England No. 354715
Registrars
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 6DA
Telephone (Helpline): 0870 600 3953
Auditors
PricewaterhouseCoopers
Financial Adviser and Joint Stockbrokers
Dresdner Kleinwort Wasserstein
Joint Stockbrokers
Hoare Govett
2001 FINANCIAL CALENDAR
Record date for interim ordinary dividend 19th October
Interim ordinary dividend payable 5th December
2001 year end 31st December
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