Interim Results
September 06 2002 - 3:01AM
UK Regulatory
6th September 2002
FOR IMMEDIATE RELEASE
AGA FOODSERVICE GROUP PLC
2002 INTERIM RESULTS
HIGHLIGHTS
_______________________________________________________________________________
Half year to 30thJune 2002 2002 2001 2001
Continuing Total Continuing Total
�m �m �m �m
Turnover 143.7 150.7 96.1 244.7
Operating profit before goodwill 13.2 12.7 7.3 13.2
amortisation
Operating profit 10.2 9.7 5.6 9.1
Profit before tax 11.6 10.7
Shareholders' funds 263.3 257.0
Net cash 82.5 119.9
Basic earnings per share 6.4p 3.4p
Dividend per share 1.9p 1.7p
_______________________________________________________________________________
* Strong performances from consumer operations, led by Aga-Rayburn and the
newly acquired US home fashions business, Domain.
* Bakery operations performed well in the UK and USA balancing the impact of
quiet UK prime cooking and refrigeration markets.
* Net cash balance of �82 million available to finance further acquisitions.
* Dividend increased reflecting earnings growth and benchmark policy of 3
times dividend cover.
"A sound performance from established businesses together with the momentum
from new acquisitions resulted in a pleasing first half to the year. The
strategy outlined eighteen months ago of creating a major international brand
led operation is well on track. We have to be cautious given current market
uncertainties, but on the fundamentals of our businesses we are upbeat."
William McGrath
Chief Executive
Enquiries:
William McGrath, Chief 020 7404 5959 (today)
Executive
Shaun Smith, Finance Director 0121 742 2366 (thereafter)
Jonathan Glass (Brunswick) 020 7404 5959
Aga Foodservice Group plc
2002 Interim Results
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
Aga is continuing to deliver the growth strategy set out in March last year.
Good progress with our plans to create a major brand led consumer business and
a strong niche foodservice operation made for a pleasing first half to 2002.
Turnover and operating profits were both well ahead of the prior year in the
first half of 2002 and the continuing financial strength of the business was
seen in the net cash balance of �82 million at 30th June 2002.
The major events in the first half year were:
* The acquisition of Domain, the US East Coast home fashions business, in
March 2002 for $29 million, providing a retail base for expansion in North
America.
* The successful relaunch of our Rangemaster cooker business following the
sale in April of its lower price point brands, Leisure and Flavel, to focus
on design led niche products.
* The acquisition of Belshaw, the world market leading producer of doughnut
making equipment, in April 2002 for $24 million.
Financial Results
Turnover of continuing operations in the six months to June 2002 increased from
�96 million in the prior year to �144 million, an increase of 50 per cent.
Excluding acquisitions made in the last year, organic turnover growth was 8 per
cent. Operating profits before goodwill amortisation in continuing businesses
of �13.2 million were 81 per cent higher than the prior year figure of �7.3
million, which included a �2.1 million exceptional charge largely in relation
to Agalinks. The turnover and operating profit before goodwill amortisation
from Domain and Belshaw, the acquisitions in the first half, were �16.6 million
and �2.4 million respectively, while the loss from the discontinued commodity
cookers and fires operations was �0.5 million. The net disposal proceeds of
�4.8 million were matched by the associated costs including redundancies, sale
expenses and the cost of providing product on a transitional basis to Beko and
Kinder, the purchasers of cookers and fires respectively.
The Group had significant cash balances available during the period to fund its
development programmes. The net interest receivable of �1.9 million accrued at
an interest rate of around 4 per cent.
The tax rate was 29.5 per cent (24.1 per cent excluding goodwill) (2001 : 29.2
per cent) and is expected to remain below the UK standard rate in 2002 and
2003. Basic earnings per share of 6.4 pence were well ahead of 3.4 pence in the
prior year. The dividend has been set at 1.9 pence per share, an increase of 12
per cent over the prior year. The Group has set a benchmark dividend cover of 3
times and expects dividends to rise with profits as this benchmark is achieved.
Consumer Operations
Aga-Rayburn saw the benefits of the higher marketing profile created by the
"Iron Age" advertising campaign and new product launches. The objective is to
make Aga-Rayburn the centre of a business selling to a broadened audience
through a strengthened retail network. Aga volumes, which include the new
Six-Four Series cooker and the Aga Masterchef, were well ahead and our target
continues to be sales of 9,000 cookers this year and 10,000 next. Rayburn
volumes were up by over 10 per cent year on year due to new product
introductions and increased sales to the important Irish market.
Fired Earth has led the new store opening programme with four large out of town
inspirational stores opening this year in Peterborough, Knutsford, High Wycombe
and Cobham, all incorporating Aga Studios. While the inspirational stores
performed well the traditional Fired Earth stores faced patchy markets.
Rangemaster adjusted to the repositioning process and with a lower cost base,
new products, new investment in its cooker and sink factories and strong
marketing support the outlook is more optimistic than for some time.
Domain is a strong, growing home fashions retailer with 25 stores on the US
East Coast. Its targeted customer base was looking to Domain to broaden its
product offering into the kitchen. In response Domain has set about devising a
new store format to incorporate its kitchen furniture and Aga ranges in a
single store. The first two stores to stock Aga cookers in Fair Oaks, Virginia
and Princeton, New Jersey open shortly.
Foodservice Operations
The foodservice sector in the UK has been relatively quiet for some time with
low capital spending by major groups notably in the business travel sector.
Consequently the results of both Falcon and Williams were down year on year.
The bakery market was good and both Mono and the recently acquired Millers
performed strongly in support of investment programmes by major customers such
as Marks and Spencer, Safeway, Sainsbury and Somerfield. At Millers, where
performance in the first six months after acquisition was impressive, important
new facilities management contracts were obtained and there are further
opportunities available.
In the USA, both the recent acquisitions, Adamatic and Belshaw, enjoyed strong
trading performances. Belshaw acquired for $24 million in April is world market
leader in doughnut makers and is an international business. Key customers
include local supermarket and specialist doughnut chains. Victory, the
refrigeration operation, achieved turnover growth and feels confident that it
can rebuild profit margins.
Strategic Development and Current Trading
The Group has followed a consistent development plan over the last 18 months to
create a strong international consumer and foodservice operation. With a sound
platform in place in the US in both sectors, attention is being concentrated on
Europe and discussions are underway with a number of possible partners. The
shareholding we are acquiring in Grange is part of this process. We have a
strong financial position which can support organic growth, acquisitions or
share buy backs.
Should consumer markets slow, we will be affected. We do, however, remain
optimistic as we have an exceptional product range for this autumn with new
catalogues for Fired Earth and Elgin & Hall and advertising campaigns notably
for the Aga Six-Four Series and Rangemaster. In foodservice, we expect quiet
prime cooking and refrigeration markets but good trading conditions for our
bakery businesses.
Overall we expect the progress seen from combining acquisitions with the
strengthening of operational performance to make 2002 a further year of
progress for the Group.
C J Farrow W B McGrath
Chairman Chief Executive
6th September 2002
GROUP PROFIT AND LOSS ACCOUNT
Half year Half year Year to
to June to June December
2002 2001 2001
______________________________________
�m �m �m
Turnover
Continuing operations 127.1
Acquisitions 16.6
__________________________________________________________________
Total continuing operations 143.7 96.1 209.8
Discontinued operations 7.0 148.6 160.5
________________________________________________________________________________________________
Total turnover 150.7 244.7 370.3
================================================================================================
Operating profit
________________________________________________________________________________________________
Continuing operations 10.8
Acquisitions 2.4
__________________________________________________________________
Total continuing operating profit before 13.2 9.4 22.6
exceptional costs and goodwill amortisation
Exceptional costs - (2.1) (2.3)
Goodwill amortisation (3.0) (1.7) (4.3)
________________________________________________________________________________________________
Total continuing operations 10.2 5.6 16.0
________________________________________________________________________________________________
Continuing operations 8.1 5.6 16.0
Acquisitions 2.1 - -
________________________________________________________________________________________________
Total continuing operations 10.2 5.6 16.0
Discontinued operations (0.5) 3.5 3.1
________________________________________________________________________________________________
Total operating profit 9.7 9.1 19.1
Profit on disposal of discontinued operations 4.8 - -
Provision for losses and costs of discontinued (4.8) - -
operations
________________________________________________________________________________________________
Profit before interest and tax 9.7 9.1 19.1
Net interest receivable 1.9 1.6 5.6
________________________________________________________________________________________________
Profit before tax 11.6 10.7 24.7
Tax on profit on ordinary activities (3.4) (3.1) (7.9)
________________________________________________________________________________________________
Profit on ordinary activities after tax 8.2 7.6 16.8
Equity minority interests - - (0.1)
________________________________________________________________________________________________
Profit attributable to shareholders 8.2 7.6 16.7
Dividends (2.5) (3.5) (7.7)
________________________________________________________________________________________________
Profit retained 5.7 4.1 9.0
================================================================================================
Earnings per share p p p
Before goodwill amortisation 8.7 5.0 13.0
Basic 6.4 3.4 9.5
Diluted 6.3 3.4 9.5
================================================================================================
GROUP BALANCE SHEET
Half year Half year Year to
to June to June December
2002 2001 2001
Restated
__________________________________
�m �m �m
Fixed assets
Goodwill 119.8 58.8 97.7
Tangible assets 53.4 45.9 49.0
_____________________________________________________________________________
Total fixed assets 173.2 104.7 146.7
_____________________________________________________________________________
Current assets
Stocks 48.4 29.1 36.8
Debtors 68.8 80.7 60.7
Cash at bank and in hand 123.2 143.8 157.4
_____________________________________________________________________________
Total current assets 240.4 253.6 254.9
_____________________________________________________________________________
Creditors - amounts falling due within
one year
Operating creditors (67.5) (31.1) (59.0)
Borrowings (32.1) (13.3) (32.7)
Tax and dividends payable (8.8) (9.1) (11.0)
_____________________________________________________________________________
Total amounts falling due within one (108.4) (53.5) (102.7)
year
_____________________________________________________________________________
Net current assets 132.0 200.1 152.2
_____________________________________________________________________________
Total assets less current liabilities 305.2 304.8 298.9
Creditors - amounts falling due after
more than one year
Borrowings (8.6) (10.6) (8.6)
Provisions for liabilities and charges (33.0) (36.9) (31.5)
_____________________________________________________________________________
Total net assets employed 263.6 257.3 258.8
_____________________________________________________________________________
Capital and reserves
Called up share capital 32.0 31.9 31.9
Share premium account 57.4 56.0 56.7
Revaluation reserve 3.8 7.0 5.8
Capital redemption reserve 35.0 35.0 35.0
Profit and loss account 135.1 127.1 129.0
_____________________________________________________________________________
Total shareholders' funds 263.3 257.0 258.4
Equity minority interests 0.3 0.3 0.4
_____________________________________________________________________________
Total funds 263.6 257.3 258.8
=========================================================================
GROUP CASH FLOW STATEMENT
Half year Half year Year to
to June to June December
2002 2001 2001
_________________________________
�m �m �m
Net cash outflow from operating activities (2.1) (51.2) (12.3)
_________________________________________________________________________________
Returns on investments and servicing of
finance
- net interest received 2.4 1.6 4.9
- dividends to minority (0.1) 0.1 -
interests
_________________________________________________________________________________
Net returns on investments and servicing of 2.3 1.7 4.9
finance
_________________________________________________________________________________
Tax paid (3.7) (1.7) (4.3)
_________________________________________________________________________________
Capital expenditure and financial
investment
- capital expenditure (4.4) (8.3) (12.8)
- sale of tangible fixed 3.5 0.1 3.3
assets
_________________________________________________________________________________
Net capital expenditure and financial (0.9) (8.2) (9.5)
investment
_________________________________________________________________________________
Acquisitions and disposals
- cash paid for acquisitions less cash (28.1) - (9.4)
acquired
- disposal proceeds received less costs 2.1 804.7 818.4
incurred
_________________________________________________________________________________
Net cash flow from acquisitions and (26.0) 804.7 809.0
disposals
_________________________________________________________________________________
Equity dividends paid (4.2) (21.9) (24.8)
_________________________________________________________________________________
Cash (outflow) / inflow before financing (34.6) 723.4 763.0
_________________________________________________________________________________
Financing
- issue of ordinary share capital 0.8 34.1 34.8
- buyback of ordinary share capital - (335.1) (336.3)
- decrease in debt (0.4) (312.1) (321.5)
_________________________________________________________________________________
Net financing 0.4 (613.1) (623.0)
_________________________________________________________________________________
(Decrease) / increase in cash in the period (34.2) 110.3 140.0
===============================================================================
Reconciliation of net cash flow to movement
in net cash
(Decrease) / increase in cash in the period (34.2) 110.3 140.0
Decrease in debt 0.4 312.1 321.5
_________________________________________________________________________________
Change in net debt resulting from cash (33.8) 422.4 461.5
flows
Borrowings acquired with acquisitions - - (22.3)
Loan notes issued for acquisitions - - (20.2)
Exchange adjustment 0.2 1.8 1.4
_________________________________________________________________________________
(Decrease) / increase in net cash (33.6) 424.2 420.4
Opening net cash / (borrowings) 116.1 (304.3) (304.3)
_________________________________________________________________________________
Closing net cash 82.5 119.9 116.1
===============================================================================
SUPPLEMENTARY STATEMENTS
Half year Half year Year to
to June to June December
2002 2001 2001
_________________________________
Reconciliation of operating profit to net cash �m �m �m
outflow from operating activities
Operating profit 9.7 9.1 19.1
Depreciation/goodwill amortisation 5.9 11.3 17.0
Profit on disposal of fixed assets (1.1) (0.1) (1.4)
(Increase) / decrease in stocks (2.5) (10.7) (12.1)
(Increase) / decrease in debtors (8.4) (44.2) (17.3)
Increase / (decrease) in creditors (5.1) (15.0) (16.2)
Increase / (decrease) in provisions (0.6) (1.6) (1.4)
____________________________________________________________________________________
Net cash outflow from operating activities (2.1) (51.2) (12.3)
===============================================================================
Half year Half year Year to
To June to June December
2002 2001 2001
__________________________________
Statement of total recognised gains and losses �m �m �m
Profit attributable to shareholders 8.2 7.6 16.7
Exchange adjustment on net investments (1.6) 2.7 (0.3)
_________________________________________________________________________________________
Total recognised gains and losses relating 6.6 10.3 16.4
to the period
==============================================================
Prior year adjustment (4.2) (4.2)
_________________________________________________________________________________________
Total recognised gains and losses restated 6.1 12.2
=========================================================================================
Half year Half year Year to
to June to June December
2002 2001 2001
Restated
____________________________
Reconciliation of movements in shareholders' funds �m �m �m
Total recognised gains and losses relating
to the period 6.6 10.3 16.4
Dividends (2.5) (3.5) (7.7)
New share capital
subscribed
- share premium 0.7 30.1 30.8
- share capital 0.1 4.0 4.0
Buy back of share capital - ordinary shares - (32.7) (32.7)
- profit and loss account - (335.1) (336.3)
- capital redemption reserve - 32.7 32.7
Goodwill reinstated on disposals - 175.8 175.8
____________________________________________________________________________________________
Net increase / (decrease) in shareholders' funds 4.9 (118.4) (117.0)
Shareholders' funds at beginning of period
(June 2001: originally �379.6m before prior year
adjustment of
�4.2m) 258.4 375.4 375.4
____________________________________________________________________________________________
Shareholders' funds at end of period 263.3 257.0 258.4
=========================================================================================
The prior year adjustment relates to the implementation of FRS 19 Deferred Tax,
which requires a full provision for deferred tax and has resulted in a �4.2m
reduction to the opening profit and loss reserve at 1st January 2000.
SEGMENTAL ANALYSIS
Half year to Half year to Year to
June 2002 June 2001 December 2001
_____________________________________________________________
By business group Turnover Operating Turnover Operating Turnover Operating
profit profit profit
_____________________________________________________________
�m �m �m �m �m �m
Consumer Products 77.4 6.6 45.8 4.2 107.1 11.9
Foodservice 66.3 6.6 50.3 5.2 102.7 10.7
Products
__________________________________________________________________________________
Continuing 143.7 13.2 96.1 9.4 209.8 22.6
operations
Exceptional costs - - - (2.1) - (2.3)
- continuing
Goodwill - (3.0) - (1.7) - (4.3)
amortisation -
continuing
Discontinued 7.0 (0.5) 148.6 3.5 160.5 3.1
operations
__________________________________________________________________________________
Total Group 150.7 9.7 244.7 9.1 370.3 19.1
=================================================================================
Half year goodwill amortisation of �1.0m (nil) relates to Consumer Products and
�2.0m (�1.7m) relates to Foodservice Products.
Consumer Products includes acquisition turnover of �13.8m and operating profit
before goodwill of �1.8m. Foodservice Products includes acquisition turnover of
�2.8m and operating profit before goodwill of �0.6m.
Half year to Half year to Year to
June 2002 June 2001 December 2001
____________________ _________________ __________________
By geographical Turnover Operating Turnover Operating Turnover Operating
origin
profit profit profit
______________________________________________________________
�m �m �m �m �m �m
United Kingdom 106.8 10.2 83.4 7.3 182.9 20.1
North America 33.1 2.7 10.9 - 22.0 (0.1)
Rest of World 3.8 0.3 1.8 - 4.9 0.3
__________________________________________________________________________________
Total continuing 143.7 13.2 96.1 7.3 209.8 20.3
operations
Goodwill - (3.0) - (1.7) - (4.3)
amortisation
Discontinued 7.0 (0.5) 148.6 3.5 160.5 3.1
operations
__________________________________________________________________________________
Total Group 150.7 9.7 244.7 9.1 370.3 19.1
================================================================================
Half year goodwill amortisation relates to United Kingdom �2.3m (�1.3m) and
North America �0.7m (�0.4m) and for the year 2001 �3.5m and �0.8m respectively.
North America includes turnover of �16.0m and operating profit before goodwill
of �2.3m and Rest of World includes turnover of �0.6m and operating profit of �
0.1m relating to acquisitions.
Turnover by Half year to Half year to Year to
geographical
destination
June 2002 June 2001 December 2001
______________________________________________________________
�m % �m % �m %
United Kingdom 101.4 70.6 77.8 81.0 171.1 81.6
North America 34.1 23.7 11.0 11.4 22.3 10.6
Rest of World 8.2 5.7 7.3 7.6 16.4 7.8
____________________________________________________________________________________
Total continuing 143.7 100.0 96.1 100.0 209.8 100.0
operations
====================================================================================
North America and Rest of World includes turnover of �16.2m and �0.4m,
respectively, relating to acquisitions.
EARNINGS PER SHARE
Earnings Half year to Half year Year to
June To June December
2002 2001 2001
____________________________________
�m �m �m
Profit on ordinary activities after tax 8.2 7.6 16.8
Minority interests - - (0.1)
Goodwill amortisation net of tax 3.0 3.5 6.0
_____________________________________________________________________________________
Earnings before goodwill amortisation 11.2 11.1 22.7
=====================================================================================
Profit on ordinary activities after tax 8.2 7.6 16.8
Minority interests - - (0.1)
_____________________________________________________________________________________
Earnings - for basic and diluted EPS 8.2 7.6 16.7
=====================================================================================
Weighted average number of shares in million million million
issue
For basic EPS calculation 128.1 223.3 174.9
Dilutive effect of share options 1.1 0.8 -
_____________________________________________________________________________________
For diluted EPS calculation 129.2 224.1 174.9
=====================================================================================
Earnings per share p p p
Before goodwill amortisation 8.7 5.0 13.0
Basic 6.4 3.4 9.5
Diluted 6.3 3.4 9.5
=====================================================================================
NOTES
1. Dividends
The Board has approved the payment of an interim dividend amounting to 1.9p per
share (2001 1.7p). The dividend will be paid on 4th December 2002 to
shareholders registered on 8th November 2002.
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
2002 2001 2001
_______________________________
Average
EUR 1.58 1.64 1.61
USD 1.48 1.42 1.44
Period end
EUR 1.54 1.66 1.63
USD 1.52 1.41 1.46
3. Tax
Tax on profit on ordinary activities in respect of the half year to June 2002
has been charged at the estimated rates chargeable for the full year in the
respective jurisdictions, and includes a charge of �0.4m (2001 half year credit
of �0.3m, full year charge of �1.1m) in respect of overseas operations.
4. Comparative figures for the year 2001
The figures for the full year 2001 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 to 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 directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which 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 for use in the United Kingdom. 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 2002.
PricewaterhouseCoopers
Chartered Accountants
Birmingham
6th September 2002
MAIN ADDRESSES AND ADVISERS
Head Office and Registered Office
Aga Foodservice Group plc
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 Advisers and Joint Stockbrokers
Dresdner Kleinwort Wasserstein
Joint Stockbrokers
Old Mutual
2002 financial calendar
Record date for interim ordinary 8th November
dividend
Interim ordinary dividend 4th December
payable
2002 year end 31st December
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