14th March 2008
AGA FOODSERVICE GROUP PLC
2007 PRELIMINARY RESULTS
Year to 31st December 2007
2007 2006 Increase
Financial highlights �m �m %
Continuing Operations
- Revenue 291.8 278.6 4.7
- EBITDA 39.8 36.8 8.2
- Operating profit 25.0 24.3 2.9
- Profit before net finance income and tax 31.0 28.3 9.5
- Profit before tax 27.6 27.5 0.4
- Basic earnings per share 19.4p 16.5p 17.6
Dividend per share 11.5p 10.5p 9.5
Cash return proposed / paid 140.0 55.6
Shareholders' funds 355.0 333.5
Net cash / (debt) 169.1 (10.9)
Strategic and operational highlights
* Good progress made in the continuing business.
* Successful sale of Foodservice for �265 million.
* 121 pence per share cash return (�140 million) in addition to a final
dividend of 7.65 pence per share (�8.8 million).
* Framework agreed with Group Pension Scheme Trustee for Scheme to reach a
self-sufficiency funding position by 2020.
* Strategic focus centres on growth for cast iron cookers and development of
the Rangemaster suite of kitchen appliances.
William McGrath, Chief Executive, commented:
"We have produced a sound performance in 2007 as well as delivering on a number
of strategic initiatives, in particular the timely sale of Foodservice, the
proposed return of �140 million of cash to shareholders and the appointment of
John Coleman to be Chairman.
Looking forward, we have outstanding products and brands headed by Aga and
Rangemaster. There is a clear plan to grow the business with measurable
targets. The new 'Love Aga' campaign demonstrates the energy behind the
relaunched business and we are confident of making further progress in 2008 and
beyond."
Enquiries:
William McGrath, Chief Executive 0207 404 5959 (today)
Shaun Smith, Finance Director 0121 711 6015 (thereafter)
Simon Sporborg/Charlotte Kenyon, Brunswick 0207 404 5959
Aga Foodservice Group plc
2007 Preliminary Statement
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
Overview
Over the last twelve months, we have delivered on key objectives: completed the
successful sale of Foodservice for a good price; paid a special dividend of
�55.6 million and prepared for the substantial cash return of �140 million to
shareholders; put in place the long-term financial structure for the Group
Pension Scheme; developed a new name and corporate identity for the Group;
appointed a new Chairman; and set a clear growth strategy for the focused
consumer business.
This all followed the decision of the Board to sell the Foodservice operations.
These operations had been carefully built up over 6 years, and now needed to
develop further through international reach and scale. When the likelihood of
ourselves driving change in the sector receded, we concluded that shareholders'
interests were best served through their sale. This was achieved at a good
price of �265 million on an attractive exit multiple, particularly as financial
markets tightened.
During 2007 the continuing business performed satisfactorily with Rangemaster
again achieving record sales and profits. Turnover of the continuing business
rose by 4.7% to �291.8 million (5.7% at constant exchange rates). EBITDA in
the year was �39.8 million (2006 : �36.8 million). Operating profit excluding
net pension credits was �25.0 million, up from �24.3 million in the prior year.
Profit before interest and tax including net pension credit was �31.0 million
(2006 : �28.3 million). The interest charge of �3.4 million reflects the marked
changes in the cash position in the year with the payment of the special
dividend in June increasing debt levels at the half year to �79.7 million
before the cash receipts from the sale of Foodservice, completed in December
2007, left us with net cash of �169.1 million at the year end. Earnings per
share from continuing operations were 19.4 pence per share compared with 16.5
pence per share in 2006. The Foodservice business made an operating profit
after allocated corporate costs of �14.6 million in 2007 and the reported book
profit on their sale, taking into account intangibles, was �30.7 million.
Trading performance - continuing operations
Aga, Rayburn and Stanley saw leads and home surveys remain at good levels
throughout the year. Volumes were ahead at the half year but did slow at the
end of 2007 as consumer markets tightened leaving volumes in the year
marginally down at 19,600. Within the overall numbers the trend continued
towards our electric models, most notably the new programmable ranges and, for
Rayburn and Stanley towards carbon-neutral wood burning lines. The year also
saw our cookware operations from Aga and Divertimenti continue to progress
well, accounting for �9.5 million in revenues.
Rangemaster had an excellent year, with volumes over 7% ahead at 76,000 units.
The rapid internationalisation of the business continued, accounting for over
21% of sales with the Irish and, in particular, the French markets growing
strongly. The sustained growth achieved together with the pipeline of new
cooking products made for the Rangemaster, Falcon, La Cornue and Heartland
brands to add up to a considerable success story.
In the USA the consumer markets were difficult. Marvel, after a strong 2006,
saw volumes fall during the year. The development of a new generation of Marvel
products means that Marvel is well placed within the premium appliance sector,
particularly in the outdoor market which has the potential to deliver sustained
growth. Aga Heartland is optimistic that the growing recognition of our cooking
products in North America will enable sales growth to be achieved after a tough
2007.
Return of cash to shareholders
In 2001, following the sale of the Group's Pipe Systems business, �335 million
was returned to shareholders. Following the disposal of our Foodservice
operations, we are now proposing a cash return of �140 million by way of a
'B' / 'C' share scheme, which is intended to give holders, where eligible under
their prevailing tax regime (such as in the UK), the flexibility so far as
possible to receive the cash either as income or capital or as a combination of
the two. The total value of the return will equate to approximately 121 pence
per existing ordinary share. The Board intends that the market price of the
Company's ordinary shares will, subject to market movements, be approximately
equal before and after the return and, accordingly, the Board is also proposing
a share consolidation in conjunction with the return of cash. After the return
and the accompanying share consolidation, the balance sheet will remain in a
strong position. The proposed return of cash is subject to approval by
shareholders at an Extraordinary General Meeting to be held on 9th May 2008. In
addition, we are paying a final ordinary dividend of 7.65 pence per share based
on the number of shares in issue prior to the consolidation, which makes the
total 2007 dividend 11.5 pence. The proposed final ordinary and special
payments, totalling approximately 129 pence per existing share, will be made in
May 2008. With respect to future dividends, we expect to keep our long-term
policy to have a fully taxed dividend cover of around 2.5 times.
Including the proposed return of cash, the Group will have returned �614 million
(including �74 million in ordinary dividends) since the sale of Pipe Systems,
and this reflects our determined efforts over a long period to optimise returns
for shareholders.
Pension Scheme arrangements
It is important to maintain a strong balance sheet given the relatively large
size of our Group Pension Scheme in relation to the continuing business. The
Group's strong finances and prospects are important to the Scheme Trustee's
appraisal of the Scheme's position. While the Scheme is well funded and
reasonably defensively positioned, when determining the size of the cash return
consideration had to be given to all circumstances under which additional
funding might be required.
This Scheme together with the smaller defined benefit schemes operated within
the Group had combined assets of �776.9 million and combined liabilities of
�697.3 million under IAS 19 at 31st December 2007. Working with KPMG LLP
Pensions, we have considered the financial strategy for the Scheme and we have
now reviewed this with the Scheme Trustee in light of the proposed return of
cash to shareholders following the sale of the Foodservice operations. The
financial modelling highlighted that, with an appropriately balanced investment
strategy designed to reduce risk, in the majority of long-run outcomes modelled
the Scheme is now likely to be more than fully funded and can be expected to be
more than able to meet the accrued benefits of members.
To increase the strength of the Scheme's position the Company paid �14.5 million
of additional contributions into the Scheme and agreed to add a �22.5 million
cash collateralised guarantee to its commitments to the Scheme in 2007 as it
returned cash to shareholders and sold Foodservice. In light of the further
proposed cash return, an additional guarantee of �27.5 million is now to be
added, subject to implementation of the cash return. The �50 million of
guarantees are expected to remain in place until 2020. In reaching agreement
with the Scheme Trustee on these matters, a long-term financial framework has
been developed which aims to move the Scheme systematically to a self
sufficiency funding position by 2020. Should the Scheme be more than fully
funded on this self sufficiency basis in 2020, 20% of any surplus would be
available to the Scheme Trustee to augment pension benefits.
The Company and the Scheme Trustee believe that the careful and effective
management of the Scheme over the last decade has given rise to a relatively
strong pension scheme and that the long-term financial framework which has been
developed will further meet the interests both of the Scheme's members and of
the Company and its shareholders.
Board and management structure
This is my last statement as Chairman as I retire at the AGM from the Board
which I first joined in 2000. The Group is at an exciting point at which much
hard work is set to pay off. I feel particularly pleased that over the years we
have developed and helped to create a strong commercial structure for all our
continuing businesses. We are delighted that John Coleman has joined the Board
and will become non-executive Chairman after the AGM. John was Chief Executive
of House of Fraser and is a non-executive director of Travis Perkins plc. His
long corporate experience, work with premium brands and in retail will assist
in the drive to achieve the Group's performance targets. There have been other
changes to the management structure. We have established an executive committee
including the managing directors of Aga and Rangemaster, the Group manufacturing
director and the new head of marketing. We are grateful to our former colleagues
who joined the Ali Group and in particular to Stephen Rennie, who made a great
contribution as Chief Operating Officer for over six years.
Growth strategy
We have now chosen to focus on our exciting range of consumer brands led by Aga
and Rangemaster - the brand names out of which we propose to create the name of
the Group from the AGM in May 2008. Led by Aga and Rangemaster our brands
include Divertimenti, Falcon, Fired Earth, Grange, Heartland, La Cornue,
Leisure, Marvel, Northland, Rayburn, Stanley and Waterford.
We propose to grow the business through five measurable strands: Increasing
sales of Aga and Rangemaster; improving returns of Fired Earth and Grange;
growing overseas sales; investing in marketing and customer relationship
management (CRM); and reducing costs. This is with the aim of increasing the
return on sales to nearer 12% excluding pension credits in the longer term.
Increasing sales of Aga and Rangemaster - in recent years significant
investment has been made resulting in products that are more innovative,
flexible and efficient than ever before. We are aiming for sales of cast iron
cookers to exceed the current level of 19,600 and sales of range cookers to
exceed the current level of 76,000.
Improving returns of Fired Earth and Grange - these two brands accounted for a
sixth of revenue in 2007 but were not profitable. We have implemented a
turnaround programme and are aiming for a return on sales of at least 5% in
three years.
Growing overseas sales - 37% of revenue classified by geographic destination is
outside the UK with particular strength in France, Ireland and the US. We aim
to increase this to nearer 50% in the longer term through increased displays,
expanded sales teams and improved marketing.
Investing in marketing and CRM - in 2008 we will increase marketing spend,
directing resources to where they will have most effect. In addition, we will
continue to develop and use our database of 800,000 to build strong and
profitable relationships with our customers to increase customer lifetime
value. Richard Eagleton, our new group marketing director, will drive these
projects.
Reducing costs - we are exploring a number of cost improvement programmes
including specification changes, sourcing more efficiently and plant efficiency
upgrades. We believe there will be a benefit of �3 million per annum starting
in 2008. This will help absorb the �2 million overhead costs previously
absorbed by Foodservice.
We believe that we have the products and routes to market to achieve sustained
growth. We have committed substantial resources to product development and have
the capacity to support our plans in both manufacturing and sourcing terms.
Current trading and outlook
Orders at the start of 2008 have been encouraging for our major businesses,
although some of the economies in which we operate are clearly slowing. This
year the price increase for Aga was on 1st March and this helped stimulate
demand. Rangemaster has seen growth continuing and order intake is up 5% so far
this year. Encouragingly, Fired Earth's orders are up nearly 10%. In the US,
Marvel has seen orders fall so far this year by around 20% while Aga Heartland
is ahead. The Group is adjusting to its new scale and focus and expects its
cost cutting initiatives to assist in the current drive to achieve a higher
return on sales.
The "Love Aga" and the "Rangemaster Essential Ingredient" themes are already
becoming powerful campaigns for us, and are indicative of our optimistic mood
in spite of the very uncertain economic backcloth against which we are working.
We have delivered on the key objectives set for 2007 and, as the new Aga
Rangemaster Group, we can expect further progress in 2008.
Vic Cocker William McGrath
Chairman Chief Executive
14th March 2008
OPERATIONAL REVIEW - 2007 PRELIMINARY RESULTS FOR AGA FOODSERVICE GROUP PLC
Aga Rangemaster is home to a family of strong brands that, together, tell a
powerful consumer story - not just in the UK, but increasingly overseas too.
With cooking firmly at the heart, our brands spread out to embrace the kitchen
generally and then yet further into the entire home. We believe that the
dedicated work of recent years on product development, channel management and
production is now translating into growth stories which will take the Group
forward in the years ahead.
Aga operations remain core to us. While still made in Abraham Darby's foundry
in the World Heritage site at Coalbrookdale, today's Aga has changed
appreciably. This is seen in the programmable electric Aga which can go into
slumber mode until required to cook the next meal. Production processes are
more efficient, but more particularly, the product itself is more flexible and
efficient than ever before. This is seen, for example, in burner efficiency
levels across our ranges and in the new generation of wood burning, carbon
neutral products from Rayburn and Stanley.
In cautious consumer markets sales of cast iron cookers were slightly down in
the year but leads and enquiry levels continue to rise. We link this to our
work on our overall objective of being in active contact with as many cast iron
cooker owners as possible worldwide by the end of 2009. Our database has
steadily grown and improved but we are now actively tracking down existing
owners - many of whom have had our products for tens of years. Owners of Agas,
Rayburns and Stanleys are strong advocates for the products themselves, but we
would also like them to know that Aga Rangemaster is the company behind their
much loved products.
We hope to see more owners in the 76 Aga shops across the UK. We have much that
is new to offer - not just in cookers but in cookware too and more broadly, in
the kitchen and entire home, through our Fired Earth, Grange and Divertimenti
brands.
We have some well established international markets. Overseas, there are over
100 outlets which sell Agas. Around 45% of cast iron cooker sales were outside
the UK. We now have some well established international positions, notably in
Ireland where our Waterford Stanley team are making a success of our strong
brand positions. Holland and Belgium are also important markets.
Where we are already seeing strong growth is with our Rangemaster brands. This
expansion - driven by efficient production and innovation since 2002 when we
decided to focus exclusively on the premium end of the market - has been
remarkable. It now takes around 30% less time to produce a cooker than it did
in 2002, with robotics and major layout improvements at our Leamington Spa
factory playing important roles.
Leamington Spa is now a production hub producing cookers to sell under the
Rangemaster, Falcon and La Cornue brands and in North America under the
Heartland and Aga brands. Growth is coming fast overseas, most notably in
Ireland and in France where we now have 1,500 displays and a sales team of 8.
We have just under a 50% share of the premium range cooker market in France - a
market that has been almost entirely built from scratch by the Rangemaster
team.
The broadening of the range to create a Rangemaster suite of products including
cooker hoods, splash backs, sinks and fridges shows where there is still
greater potential. Further, moves into the built-in market with sourced product
as well as expanding in induction models and developing an innovative energy
saving panel which allows the customer to have either the largest capacity
110cm oven on the market or to divide the area in two to create a smaller, more
energy efficient oven when only small meals are being cooked.
We expect to build further on our sales of 76,000 cookers made in 2007. Our
sink operation based in Nottingham also ties closely in with cookers,
particularly in the growing number of Rangemaster centres - currently 65 -
found in leading Design Centres, as more customers look to have Rangemaster
kitchens and not just a Rangemaster or Falcon cooker.
Our wider kitchen offering incorporates our US based Marvel undercounter
refrigeration business. Here, we felt the impact of the weak US consumer
markets in 2007 with revenues falling around 10% (2.6% at constant exchange
rates). However, the introduction of our new generation of appliances,
including dual temperature zone models and electronic controls across the
range, have proved timely, strengthening our competitive position. Marvel has a
good profitable track record and we believe that there are still considerable
production efficiency improvements to be made which can help to raise margins.
Aga Heartland has become our US cooker business in North America. We have
worked steadily to develop recognition and understanding of our products. That
process continues and we remain confident that the higher recognition we have
will bring results - particularly as we reach out using the internet to both
new customers and the considerable Aga owning community.
When we look at the overall performance of our operations we recognise that
improving margins at Fired Earth and Grange, which account for about one sixth
of revenue but were not profitable in 2007, is an important challenge. We are
therefore particularly pleased that Fired Earth is making progress and our home
design team is making an impact. Our tile ranges are innovative; sales of our
paint, now to be found in Homebase and B&Q, are growing fast and our Grange
made kitchen and bathroom furniture gives us a clear identity in the market
place in those sectors. Similarly, at Grange a young and enthusiastic
management team has successfully updated the product range and marketing
imagery and is looking to use more effectively the brands' global dealer
structure. We are also looking to improve production efficiencies now that our
new Romanian plant is fully operational. The US has been the weakest part of
the Grange business and it is here that we look for a significant rebound in
profitability.
Financial performance and targets
The sale of the Foodservice operations has materially altered the financial
profile of the Group. We have sold businesses accounting for nearly half the
revenues and around 40% of the profits. We have moved from being indebted to
having a strong net cash position. This creates new challenges such as the need
to adjust the overheads of the Group to reflect a business with such a
substantial reduction in turnover. Further, there is now the return of cash and
funding agreement with the Group Pension Scheme Trustee. As a consequence we
have reset our financial targets.
We believe that, leaving to one side the costs and credits relating to the
Group's pension schemes but absorbing Group costs, the continuing Group should
be achieving a 10% return on sales. The equivalent starting number on revenues
of �291.8 million in 2007 was 8.6%. Incorporating the net pension credits the
return on sales in 2007 was 10.6%. We aim to move to 12% return excluding these
pension credits in the longer term. Such returns would be better than those
achieved by most appliance manufacturers and reflect the premium nature of our
brands. In assessing these targets with the improved performance of Fired Earth
and Grange which can be expected to achieve over 5% returns makes the overall
objectives achievable.
In this process we are continuing to focus on cost improvement programmes. We
have identified input specification changes; sourcing changes (notably through
accessing suppliers from the Far East); plant efficiency improvements which
lead to benefits of over �3 million a year starting in 2008. Achieving our
targets does mean that cost increases we have seen - notably in stainless steel
and energy - need to be passed on to customers. We have largely been able to
achieve this.
In relation to our balance sheet we have also looked again at our targets and
concluded it is best to leave to one side the impact of the Group's pension
schemes in assessing returns. Taking our 2007 balance sheet and excluding the
�79.6 million net pension surplus, our net assets were �277.5 million. This will
fall to �137.5 million on a proforma basis after the capital return. Against
this base we have set ourselves a return on capital target of 25% - with 15% as
our target for incremental investments. We expect to continue to have a
conservatively positioned balance sheet. On a proforma basis we had net cash at
the end of 2007 after the proposed return of cash. This represents a strong
base from which to finance our plans.
The structural change in the Group over the last decade and our careful
approach to financial planning have been behind our lower than standard rate
tax charge. In 2007 we reported a tax charge of �4.2 million - a rate of 15.2%
on the pre-tax profits. We expect the rate to revert to around 20% in 2008. The
total cash tax paid by the businesses in 2007 was �4.9 million.
Earnings per share from continuing businesses were 19.4 pence per share (2006:
16.5 pence) calculated on the average number of shares in issue during the year
of 120.3 million. Future earnings per share will be impacted by the current
proposals to make a cash return of �140 million and then to consolidate the
number of shares in issue.
We are proposing to pay an ordinary dividend of 7.65 pence per share making the
total for the year 11.5 pence - an increase of nearly 10% over 2006. Looking to
2008 we expect to continue with our progressive dividend policy and expect that
- after the share consolidation - the trend will continue using the established
dividend cover policy of 2.5 times out of fully taxed earnings.
Disposals in the year
2007 saw us exit from our US consumer home fashions business, Domain, and from
our Foodservice operations. Domain had been struggling for some time in
difficult market conditions and we sold the business in June 2007. Subsequently
market conditions deteriorated further and the new owners decided in January
this year to file under US bankruptcy provisions. We have now written down our
residual loans of �2.1 million and a receivable of �0.2 million. Where possible
we took on through Aga Heartland the active customer leads of Domain for our
cooker businesses.
The sale of Foodservice was instigated in July and completed in December 2007.
We received good interest from both private equity and trade companies and were
able to conclude a transaction before the credit market conditions materially
impinged on the process. The initial sale proceeds of �260 million were subject
to adjustment for the net assets at completion over a benchmark net asset
figure and this has seen an additional �4.8 million cash receipt this year.
This means the profit on disposal was �30.7 million after costs.
Cash flow
Operating cash flow performance in the year was satisfactory. Working capital
at the 31st December 2007 was �24.9 million, 8.5% of revenue. The continuing
business should be more cash generative and has lower capital intensity than
the previous configuration of the Group.
Net capital expenditure including intangibles was �15.7 million. This compares
with a depreciation charge of �11.2 million. We generated �4.7 million in the
year from the sale and leaseback of our factory property in Waterford - a
reflection of continuing work to optimise the value of our property assets.
The cash tax paid was �4.9 million (2006: �8.5 million) and the dividends paid
consumed �69.1 million.
The Group ended the year with a net cash position of �169.1 million. This
compares with net debt of �10.9 million at the start of the year and net debt
of �79.7 million at the half year after the special dividend of �55.6 million.
CONSOLIDATED INCOME STATEMENT
Year to 31st December Restated
2007 2006
�m �m
Continuing operations
Revenue 291.8 278.6
Net operating costs (266.8) (254.3)
_____________________________________________________________________________________
Group operating profit 25.0 24.3
Net pension credit 6.0 5.0
Non-recurring cost - (1.0)
_____________________________________________________________________________________
Profit before net finance income and income tax 31.0 28.3
Finance income 2.0 1.2
Finance costs (5.4) (2.0)
_____________________________________________________________________________________
Profit before income tax 27.6 27.5
Income tax expense (4.2) (6.2)
_____________________________________________________________________________________
Profit for year from continuing operations 23.4 21.3
_____________________________________________________________________________________
Discontinued operations
Post tax profit from discontinued operations 40.1 9.8
_____________________________________________________________________________________
Profit for year 63.5 31.1
_____________________________________________________________________________________
Profit attributable to equity shareholders 63.4 31.1
Profit attributable to minority shareholders 0.1 -
_____________________________________________________________________________________
Profit for year 63.5 31.1
_____________________________________________________________________________________
Earnings per share - continuing operations p p
Basic 19.4 16.5
Diluted 19.2 16.4
_____________________________________________________________________________________
p p
Dividend per share (See note 1) 11.5 10.5
Cash return proposed / paid 121.4 43.0
_____________________________________________________________________________________
CONSOLIDATED BALANCE SHEET
As at 31st December Restated
2007 2006
�m �m
Non-current assets
Goodwill 60.1 171.5
Intangible assets 18.0 29.1
Property, plant and equipment 51.7 85.7
Retirement benefit surplus 80.4 29.9
Deferred tax assets 2.7 6.5
_____________________________________________________________________________________
212.9 322.7
_____________________________________________________________________________________
Current assets
Inventories 54.9 94.8
Trade and other receivables 46.4 93.3
Current tax assets 1.5 7.2
Cash and cash equivalents 181.5 43.2
_____________________________________________________________________________________
284.3 238.5
Assets held for sale - 8.1
_____________________________________________________________________________________
Total assets 497.2 569.3
Current liabilities
Borrowings (4.3) (2.4)
Trade and other payables (76.4) (115.2)
Current tax liabilities (8.7) (14.4)
Current provisions (2.6) (5.4)
_____________________________________________________________________________________
(92.0) (137.4)
_____________________________________________________________________________________
Net current assets 192.3 101.1
_____________________________________________________________________________________
Non-current liabilities
Borrowings (8.1) (51.7)
Other payables - (1.0)
Retirement benefit obligation (0.8) (5.5)
Deferred tax liabilities (29.9) (20.1)
Provisions (9.3) (10.1)
_____________________________________________________________________________________
(48.1) (88.4)
Liabilities held for sale - (8.1)
_____________________________________________________________________________________
Total liabilities (140.1) (233.9)
_____________________________________________________________________________________
Net assets 357.1 335.4
_____________________________________________________________________________________
Shareholders' equity
Share capital 32.4 32.3
Share premium account 68.8 67.8
Other reserves 37.1 28.5
Retained earnings 216.7 204.9
_____________________________________________________________________________________
Shareholders' equity 355.0 333.5
Minority interest in equity 2.1 1.9
_____________________________________________________________________________________
Total equity 357.1 335.4
_____________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
Year to 31st December 2007 2006
�m �m
Cash flows from operating activities
Cash generated from operations post pensions items 12.4 38.5
Finance income 1.8 1.3
Finance costs (5.0) (2.0)
Tax payment (4.9) (8.5)
_____________________________________________________________________________________
Net cash generated from operating activities 4.3 29.3
_____________________________________________________________________________________
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - (31.8)
Purchase of property, plant and equipment (17.1) (14.5)
Expenditure on intangibles (3.9) (4.1)
Proceeds from disposal of property, plant and equipment and 5.3 4.6
intangibles
Disposal proceeds less costs 259.8 -
_____________________________________________________________________________________
Net cash from investing activities 244.1 (45.8)
_____________________________________________________________________________________
Cash flows from financing activities
Dividends paid to shareholders (69.1) (12.5)
Net proceeds from issue of ordinary share capital 1.1 2.2
Repayment of borrowings acquired with acquisitions - (3.0)
Finance lease repayment - (1.8)
Repayment of borrowings (43.4) -
New bank loans raised 1.7 21.6
_____________________________________________________________________________________
Net cash used in financing activities (109.7) 6.5
_____________________________________________________________________________________
Effects of exchange rate changes (0.4) (2.2)
_____________________________________________________________________________________
Net increase / (decrease) in cash and cash equivalents 138.3 (12.2)
Cash and cash equivalents at beginning of year 43.2 55.4
_____________________________________________________________________________________
Cash and cash equivalents at end of year 181.5 43.2
_____________________________________________________________________________________
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Year to 31st December 2007 2006
�m �m
Profit for year 63.5 31.1
_____________________________________________________________________________________
Exchange adjustments on net investments 3.1 (9.8)
Actuarial gains on defined benefit pension schemes 27.4 33.3
Deferred tax on items taken direct to reserves (10.8) (9.9)
_____________________________________________________________________________________
Income and expenses recognised directly in equity 19.7 13.6
_____________________________________________________________________________________
Transfers to income statement
Movement on exchange gains as a result of disposals 5.5 -
_____________________________________________________________________________________
Total recognised income for year 88.7 44.7
_____________________________________________________________________________________
Attributable to:
Equity shareholders 88.6 44.7
Minority interests 0.1 -
_____________________________________________________________________________________
Total recognised income for the year 88.7 44.7
_____________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT - RECONCILIATION
Cash generated from operations
Continuing Total
2007 2006 2007 2006
�m �m �m �m
Profit before income tax - continuing operations 27.6 27.5 27.6 27.5
Profit before income tax - discontinued operations - - 12.7 12.6
Net finance costs 3.4 0.8 3.0 0.9
Share based payments expense 0.5 0.2 0.9 0.4
Amortisation of intangibles 1.2 1.4 2.2 2.5
Impairment of assets held for sale - - - 3.0
Depreciation 7.6 7.1 11.2 11.1
Profit on disposal of property, plant and equipment (1.3) (0.2) (1.3) (2.4)
(Increase) / decrease in inventories (7.1) 0.9 (24.4) (8.6)
Increase in receivables (2.2) (2.9) (9.7) (0.7)
Increase in payables 0.7 6.6 17.1 5.7
Decrease in provisions (0.1) (3.4) (0.3) (3.7)
Increase in pensions (9.8) (6.8) (12.1) (8.8)
Pension scheme additional cash contributions (14.5) (1.0) (14.5) (1.0)
______________________________________________________________________________________________
Cash generated from operations post pensions items 6.0 30.2 12.4 38.5
______________________________________________________________________________________________
SEGMENTAL ANALYSIS
Following the sale of the Foodservice operations the directors have
re-organised the way in which the businesses report internally. Based on risks
and returns the directors still consider that the primary reporting format is
by business segment. The directors consider that there is only one business
segment being the manufacture and sale of range cookers and related equipment.
Therefore the majority of the disclosures for the primary segment have already
been given in these financial statements with the exception of some restated
comparatives. These are detailed below.
Segment liabilities 2007 2006
�m �m
Continuing operations 81.3 68.8
Discontinued operations - 71.0
______________________________________________________________
Segment liabilities 81.3 139.8
Provision for businesses sold 7.8 5.5
Tax 38.6 34.5
Borrowings 12.4 54.1
______________________________________________________________
Total liabilities 140.1 233.9
Segment assets include property, plant and equipment, intangibles, inventories,
retirement benefit surpluses and receivables. Segment liabilities comprise
operating payables, retirement obligations and provisions on continuing
businesses. Cash, borrowings and taxation are not included.
The secondary reporting format is by geographical analysis. Revenue is shown by
geographical destination. Segment assets and capital expenditure are shown by
origin.
2007 Restated 2006
Segment Capital Segment Capital
Revenue assets expenditure Revenue assets expenditure
�m �m �m �m �m �m
United Kingdom 182.9 218.1 6.9 174.2 159.5 6.5
North America 42.1 37.4 1.4 44.9 35.3 2.6
Europe 63.2 56.0 2.0 56.3 51.9 5.1
Rest of World 3.6 - - 3.2 - -
____________________________________________________________________________________________________
Total continuing operations 291.8 311.5 10.3 278.6 246.7 14.2
Discontinued operations 279.9 - 10.7 289.1 265.7 4.4
Tax - 4.2 - - 13.7 -
Cash - 181.5 - - 43.2 -
____________________________________________________________________________________________________
Total 571.7 497.2 21.0 567.7 569.3 18.6
____________________________________________________________________________________________________
NOTES
1. Dividends
The Board are proposing a final dividend amounting to 7.65p per share (2006:
7.0p). An interim dividend of 3.85p per share (2006: 3.5p) has already been
paid, making the total dividend for the year 11.5p per share (2006: 10.5p). The
final ordinary dividend will be paid on 30th May 2008 to shareholders
registered on 25th April 2008. A special dividend was also paid of 43.0p per
share on 1st June 2007, followed by a share consolidation.
2. Exchange rates
The income statements of overseas subsidiaries are translated into sterling
using average exchange rates and balance sheets are translated at year-end
rates. The main currencies and exchange rates are:
Year to 31st December 2007 2006
Average
EUR 1.46 1.47
USD 2.00 1.84
Year end
EUR 1.36 1.48
USD 1.99 1.96
3. Net pension credit
2007 2006
�m �m
Pension cost (3.9) (4.3)
Curtailment gain 0.3 0.9
Pensions returns on assets and interest costs 9.6 8.4
____________________________________________________________________
Net pension credit 6.0 5.0
____________________________________________________________________
4. Income tax
2007 2006
�m �m
United Kingdom corporation tax based on a
rate of 30% (2006:30%):
Current tax on income for year 2.1 2.4
Adjustments in respect of prior years (0.3) 0.7
_____________________________________________________________________________________
United Kingdom corporation tax 1.8 3.1
Overseas current tax on income for year 3.6 4.3
_____________________________________________________________________________________
Total current tax 5.4 7.4
_____________________________________________________________________________________
United Kingdom deferred tax charge in year 2.6 2.2
Overseas deferred tax credit in year (1.7) (0.6)
_____________________________________________________________________________________
Total deferred tax 0.9 1.6
_____________________________________________________________________________________
Total United Kingdom tax 4.4 5.3
Total overseas tax 1.9 3.7
_____________________________________________________________________________________
Total income tax 6.3 9.0
_____________________________________________________________________________________
Income tax charge
Continuing 4.2 6.2
Discontinued 2.1 2.8
_____________________________________________________________________________________
Total income tax 6.3 9.0
_____________________________________________________________________________________
5. Earnings per share
2007 2006
�m �m
Earnings
Profit for year from continuing operations 23.4 21.3
Minority interests (0.1) -
_____________________________________________________________________________________ Earnings from
continuing operations - for basic and
diluted eps 23.3 21.3
Profit from discontinued operations 40.1 9.8
_____________________________________________________________________________________
Profit attributable to equity shareholders 63.4 31.1
_____________________________________________________________________________________
Weighted average number of shares in issue million million
For basic EPS calculation 120.3 128.9
Dilutive effect of share options 1.1 1.1
_____________________________________________________________________________________
For diluted EPS calculation 121.4 130.0
_____________________________________________________________________________________
Earnings per share p p
Continuing operations
Basic 19.4 16.5
Diluted 19.2 16.4
_____________________________________________________________________________________
Total operations
Basic 52.7 24.1
Diluted 52.2 23.9
6. Discontinued operations
The operations of Domain Inc, which operated in the soft furnishings market in
the US, was sold on 21st June 2007 for a consideration of �4.1m of which �2m
was received in cash and a further �2.1m in the form of loan notes. Since that
date the purchaser has defaulted on repayment of the first tranche of loan
notes. As a result the remaining loan notes have been impaired in the books.
The Foodservice operations of the Group, which included Williams, Falcon,
Eloma, Amana, Belshaw, Victory, Bongard, Pavailler, Adamatic, Millers,
Serviceline and Mono Equipment were sold on 18th December 2007 for an initial
consideration of �260m all of which was paid in cash. In addition a further
�5.5m is receivable in respect of a net asset adjustment.
The results are presented below:
Domain Foodservice
to to Total Total
21st Jun 18th Dec discont'd discont'd
2007 2007 2007 2006
�m �m �m �m
Revenue 12.7 267.2 279.9 289.1
Net operating costs (15.0) (252.6) (267.6) (276.4)
____________________________________________________________________________________________________
Operating profit / (loss) (2.3) 14.6 12.3 12.7
Finance income / (costs) - 0.4 0.4 (0.1)
____________________________________________________________________________________________________
Profit / (loss) before income tax (2.3) 15.0 12.7 12.6
Income tax expense - (2.1) (2.1) (2.8)
____________________________________________________________________________________________________
Profit / (loss) for period (2.3) 12.9 10.6 9.8
Profit / (loss) on disposal (1.2) 30.7 29.5 -
____________________________________________________________________________________________________
Post tax profit / (loss) from discontinued operations (3.5) 43.6 40.1 9.8
____________________________________________________________________________________________________
7. Impact of IFRS - Restatement of comparative information
Since transition to IFRS the Group has continued to assess the detailed impact
of IFRS on the presentation of the Group's consolidated financial statements.
It has now been concluded that the deferred taxation liabilities on brands
acquired, since the transition date, which are deemed to have an indefinite
life should be recognised, and in accordance with IAS 8, the 2006 deferred
taxation and goodwill balances have been restated by �3.0m.
Under IFRS 3 fair values of the net assets of acquired businesses are finalised
within twelve months of the acquisition date. All fair value adjustments are
recorded with effect from the date of acquisition and as a consequence may
result in the restatement of previously reported financial results. Fair values
of the net assets acquired for Eloma and Amana, both 2006 acquisitions, have
now been finalised. This has resulted in a restatement of 2006 deferred
taxation and goodwill balances, relating to the brands, of �0.5m and �2.0m for
Eloma and Amana respectively.
The above adjustments do not affect the consolidated income statement, cash
flow or retained earnings.
8. Post balance sheet event
The Group announced on 14th March 2008 that it was proposing to return �140m to
shareholders, a substantial portion of the proceeds from the sale of the
Foodservice operations, representing approximately 121.4 pence per share. This
will be accompanied by a share consolidation.
2008 FINANCIAL CALENDAR
Report and accounts posted 28th March 2008
Record date for final ordinary dividend 25th April 2008
Annual General Meeting 9th May 2008
Final ordinary dividend payable 30th May 2008
2008 half year end 30th June 2008
RETURN OF CASH - EXPECTED TIMETABLE
Record time / date for consolidation of existing
ordinary shares and entitlement to 'B' / 'C' shares (6pm) 9th May 2008
New ordinary shares admitted to Official List and to trading (8am) 12th May 2008
Fractional entitlement payable 22nd May 2008
'B' / 'C' share capital and dividend alternative payable 29th May 2008
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31st December 2007 and 2006.
The financial information within this announcement is prepared in line with the
accounting policies presented within the Company's statutory accounts including
the adoption of IFRS 7, a new standard in the year. Statutory accounts for 2006
have been delivered to the Registrar of Companies and those for 2007 will be
delivered following the Company's Annual General Meeting. The Company's auditor
has reported on these accounts; its reports were unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985.
END
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