Final Results & Tender Offer
March 27 2001 - 2:00AM
UK Regulatory
RNS Number:1010B
AGA Foodservice Group PLC
27 March 2001
AGA FOODSERVICE GROUP PLC
2000 PRELIMINARY RESULTS
AND TENDER OFFER TO SHAREHOLDERS
HIGHLIGHTS
2000 1999
---- ----
Continuing Operations
---------------------
Turnover #205m #193m
Profit - trading* #20.1m #16.8m
----- -----
Total Group (including discontinued operations)
-----------
Turnover #969m #878m
Profit - operating #86.4m #71.3m
- trading* #101.5m #81.0m
- pre goodwill amortisation, disposal of #81.9m #71.8m
businesses and tax
Earnings per share based on profit before goodwill 22.6p 22.0p
amortisation
and disposal of businesses
Dividend per share 13.2p 13.2p
Shareholders' funds #380m #395m
Net borrowings #304m #274m
----- -----
* Trading profit is operating profit before disposal of businesses and
goodwill amortisation
- #386 million tender offer to acquire own shares following recent
completion of Pipe Systems disposal.
- Strong balance sheet will enable Aga Foodservice Group to fund growth.
- Shareholders to receive 8.8p final ordinary dividend.
- 2001 started well with satisfactory volumes across the business.
"The tender offer will complete the transformation of the company. We have
the ambition and the resources to make the Group a coming force, building on
our strong market positions. We shall achieve this through a strategy of
growing Aga as a business and making it an international brand, and of
aligning our foodservice operations with major national account customers."
William McGrath
Chief Executive
Aga Foodservice Group plc
Enquiries:
William McGrath, Chief Executive 020 7404 5959 (today)
Shaun Smith, Finance Director 0121 742 2366 (thereafter)
Jonathan Glass, (Brunswick) 020 7404 5959
Aga Foodservice Group Plc
2000 Preliminary Results
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
The last year has been a momentous period for the Group, culminating in the
sale of Pipe Systems and the creation of Aga Foodservice Group.
We successfully implemented the strategy we set out last November of making
the pipe systems and the consumer and foodservice operations independent of
each other. The sale of the pipe systems business to the Belgian company Etex
enabled us to achieve three valuable objectives simultaneously.
First, it permitted the emergence of Aga Foodservice Group plc, a focussed and
attractive investment proposition with powerful brands, strong market
positions and excellent prospects of continuing success.
Secondly, combination of our pipe systems business with that of Etex resulted
in the formation of much the largest pipe systems business in the world. We
were clear that further consolidation in the European pipe systems industry
was necessary and had ourselves been active in its pursuit. The new company
will have a particularly strong competitive position, which will benefit our
former employees.
Lastly, the price paid by Etex, #786m in cash, recognised the strength of our
pipe systems business, realised value for our shareholders and is enabling a
very substantial sum of up to #386m to be returned to them. This is a very
large proportion of the price at which the Group had been valued by the market
during 2000.
We intend to make the return of capital to shareholders in May by means of a
tender offer to buy in shares for cancellation. This mechanism of capital
return will provide shareholders with the opportunity to choose the course
best suited to their circumstances. The detailed proposals will be sent to
shareholders in the near future.
2000: a year of profit growth
Our financial results are once again complicated by a significant corporate
transaction, leading this year to the major part of the Group's activities
during 2000 being shown as discontinued. The final year with Glynwed as the
company's name was one of growth. Turnover increased from #878m to #969m and
trading profit before disposal of businesses and goodwill amortisation
increased from #81.0m to #101.5m, helped by the first full year contribution
from our 1999 acquisition of IPEX. The trading profit exceeded slightly the
expectations set out in our November trading statement. The profit margin was
10.5%; the comparable figure in 1999 was 9.2%.
Interest costs, at #19.6m, were sharply higher following acquisitions. Group
profits before tax, disposal of businesses and goodwill amortisation
nevertheless increased by 14%, from #71.8m to #81.9m. In mixed market
conditions, the overall performance was commendable.
Within these results the activities of the Aga Foodservice Group also grew.
Turnover increased from #193m to #205m and trading profit before goodwill
amortisation rose from #16.8m to #20.1m. The figures include the first
contribution from Mono Equipment, acquired in July 2000.
Earnings per share before disposal of businesses and goodwill amortisation
increased from 22.0 pence to 22.6 pence. The Board has decided to recommend
an unchanged final dividend of 8.8 pence per share. Going forward the
dividend in 2001 and beyond will be based upon the performance of Aga
Foodservice Group and our target dividend cover of 3 times.
The focussing process completed
It is worth reflecting upon recent changes in the Group. Glynwed went through
a long process of strategic refocussing in the period 1996-2000. This
involved the sale of all the Group's former metals and building products
businesses. At the same time the proceeds were reinvested in pipe systems and
foodservice equipment, two substantial growth markets where the Group had
significant positions. Strong positions were built up in each. The Group
became the world's leading pipe systems business and the UK's leading
foodservice equipment business.
Whilst the shape of the Glynwed Group had become much simpler and more
logical, there remained no long term rationale for maintaining Pipe Systems
and Consumer & Foodservice Products within the same corporate entity and there
were prospective benefits for each in being separate. At the same time the
need to improve value for shareholders had become plain and pressing. 2000 had
proved a mixed year for the pipe systems business. A strong first half,
driven by our Canadian operation IPEX, did not continue through into the
second half as the North American economy slowed. In the UK weak utility
spending and lack of industrial investment further affected results from pipe
systems activities. The progress made in integrating and developing pipe
systems in Continental Europe taken with what was still a strong performance
by IPEX did mean that the overall outturn in 2000 was sound, but the need to
maintain strategic momentum was being clearly seen in trading trends. The
decision to separate the businesses was announced in November.
Pipe Systems disposal and share repurchase
The sale of Pipe Systems was completed on 9 March and the 2001 accounts will
therefore include the results of Pipe Systems to that date.
In the 2000 accounts the results of the pipe systems operations are
consolidated, but are shown as discontinued. There was a substantial book
profit on the sale. However, after adding back the #176m goodwill previously
written off and making disposal related provisions, a loss of #36m arises on
the sale. The full effect of the sale will be shown in the 2001 financial
statements when the completion accounts have been prepared and the
consideration adjusted as required under the contract with Etex.
The sale gives Aga Foodservice Group resources above its current requirements.
We have decided to make a capital repayment of up to #386m to shareholders by
means of a tender offer.
The Tender Offer
The form of tender offer we propose allows shareholders to be treated equally
as well as offering them the choice of whether or not to participate.
Shareholders may opt to sell some or all of their shares in return for cash,
or they may choose to retain their shares and thereby increase their pro rata
holding in the company.
All shares that are successfully tendered will be purchased at the same price,
the "Strike Price". This will be the lowest price per share that will allow
the purchase of shares with an aggregate purchase value not exceeding #386m.
Tenders may be made within a price range. All tenders made at a specified
price below the Strike Price and within the Price Range will be accepted in
full.
Full details of the Tender Offer will be included in a circular to
shareholders. The expected timetable covering the tender process is set out
below:
6 April 2001 Annual accounts to be sent to shareholders
w/c 23 April Circular posted
10 May Extraordinary General Meeting to approve Tender Offer
10 May Annual General Meeting
Financial effects on the continuing Group
Aga Foodservice Group's continuing operation emerges from Glynwed with
turnover of #205m and trading profits 20% higher at #20.1m. The proforma
balance sheet position is set out below.
#m
Net assets at 31 December 2000 380.9
Disposal of Pipe Systems net assets, including (611.2)
goodwill
Cash received for Pipe Systems disposal 786.0
-----
Adjusted net assets after disposal 555.7
Exchangeable shares converted into ordinary shares 33.5
Repurchase of own shares (386.0)
------
Proforma net worth after repurchase of own shares 203.2
======
The net debt of the Group at 31 December 2000, excluding Exchangeables
subsequently converted into ordinary shares, was #270.8m. Bank debt was
repaid soon after completion and up to #386m will be committed to the
repurchase. On a proforma basis after the tender offer is completed, Aga
Foodservice Group's net cash would be #93m.
Consumer and Foodservice operations
The operations that now comprise the Aga Foodservice Group traded strongly in
2000.
Radical operational initiatives have been taken in these operations in the
last three years, as well as major corporate changes. The operational changes
have produced a cohesive business, costs have been reduced and the businesses
made more efficient. This progress now enables the Group to undertake a more
expansive development plan, with confidence that operations can respond to the
growing demands placed upon them.
Consumer profits 27% higher
The Group's consumer operations made steady progress in 2000. Profits were
27% ahead at #9.8m on turnover of #111.3m as compared to profits of #7.7m on
turnover of #114.6m in 1999.
At Aga-Rayburn progress was achieved while completing a #2.3m production
upgrade programme which has seen the creation of one of Europe's most modern
foundries at Coalbrookdale in Shropshire. Production can now be increased and
the enlarged range of cast-iron cookware can be produced in-house. Aga sales
increased in 2000, both in the UK and more particularly in export markets.
The Millennium special edition Aga and the recently introduced Classic Aga
have both been successful. Rayburn sales were less buoyant, particularly of
the oil fired product typically found in rural areas.
At Leisure, market conditions were competitive with margin pressure from
distributors continuing. The business showed its usual resilience and the
combination of new products and cost reductions enabled profits to rise.
Leisure's Classic range of cookers won critical acclaim and strengthened its
position in the range cooker market. The sink operations have adjusted to
exchange rate pressures and have confirmed their UK market leading position.
Trading has started well in 2001.
Growth in foodservice equipment
Foodservice operations moved ahead, boosted by the well-timed acquisition of
Mono Equipment in July. Trading profit was #10.3m on turnover of #93.3m, up
from #9.1m on turnover of #78.2m in 1999.
Mono recently won an order to replace in-store baking facilities in every
store of a large multiple food retailer and is achieving record output.
Williams Refrigeration won its first order for its potentially market-changing
glycol secondary refrigeration system, and its new technically advanced
product range was well received in the market. For Victory Refrigeration in
the USA the combination of planned production upgrades and competitive markets
affected margins. At Falcon market conditions for prime cooking equipment were
subdued but market shares improved in core product areas.
The creation of a cohesive market facing structure covering the foodservice
equipment businesses facilitated cross-selling and established strong supply
links with market leading groups in the catering sector. Supporting the
activities with online capability is now established as an important feature
of the overall package being offered.
A strategy for growth
Aga Foodservice Group starts life as an independent company with a strong
balance sheet, a young and energetic management team, a strategy for growth
and the determination to push it through. We shall invest in the businesses,
both internally and through acquisitions. Challenging targets for organic
growth have been set across the Group.
Expansion at Aga
Aga is an outstanding UK brand and has considerable potential. Making Aga into
an international brand is a central objective for the Group. It is ready to
take on the task. The substantial programme of investment at the
Coalbrookdale foundry carried out during the last five years has increased
capacity such that output can be doubled when necessary. Our plan is to make
Aga-Rayburn more accessible and the purchasing process more straightforward.
Improving the ratio of sales to leads will bring an appreciable benefit to
performance. We plan to address the London market more vigorously. Our
Knightsbridge shop opened in February and has already proved a great success.
Further Aga Shops in Greater London and elsewhere are planned, and we are
expanding our contacts with specialist kitchen designers.
Sales in North America are increasing, but our dealer coverage has hitherto
been too thin. We now have our own much greater presence in the USA alongside
our Victory Refrigeration operation near Philadelphia and more distributors
are joining our team. We are also expanding in Europe, where sales to
Belgium, Holland and adjacent parts of France and Germany are growing
strongly. The potential is great.
Rayburn is more concentrated on the traditional UK market. The appeal of the
brand will be widened. With cooker only, cooker with hot water and cooker
with hot water and central heating versions, Rayburn is very versatile in
addition to being aesthetically pleasing. It is capable of offering many
kitchen design solutions where a single appliance is desirable.
We are rapidly developing our online capability. Aga-Rayburn's site is much
visited and our online retail activities, Agacookshop.com and Cookcraft.com,
are expanding. Agalinks.com is a major initiative and given its balance of
community, content and commerciality, we are confident that it will prove an
exciting and successful venture.
Range cookers from Leisure
Leisure is the leading UK supplier of range cookers and of sinks. Its
flagship cookers are the Rangemaster and Classic range models and their
derivatives. New designs and new model introductions are essential to
maintain leadership and one new model per month will be introduced in the
first nine months of 2001.
The sink business too produces new designs at regular intervals. Stainless
steel and synthetic models have been well received in the market. Recently
the innovative illuminated "Swink" was launched and attracted immediate
interest.
Further expansion in Foodservice Equipment
Falcon and Williams are the UK's leading suppliers of prime cooking and
refrigeration equipment for commercial catering. Mono Equipment is the
leading bakery equipment supplier. These have been strong companies in their
own right, and they are becoming much stronger when they offer a large
combined product range. New business is also being won with groups such as
Sainsbury, Safeway and McDonalds.
The growth is being supported by our wholesale distribution business, which
has been reconfigured as an internet B2B supplier and renamed AFE Online. The
proportion of business as yet carried out online is small, but the capability
has attracted the interest of the largest catering companies in the UK.
Compass Group have already contracted with AFE Online to supply an increasing
range of products to its many outlets.
The service company AFE Serviceline completes the UK grouping and provides a
further means of reaching and serving the UK catering industry.
A global refrigeration business
We have the foundations of a global refrigeration business which we intend to
develop. Williams Refrigeration has its base in the UK, but it also has
manufacturing centres in Australia and China and a distribution company in
France, with agents and distributors in a number of other territories.
Victory Refrigeration is located near Philadelphia, USA.
There is a continuing programme of product development in refrigeration. Our
temperature controls are now technically the best available in the sector,
following a complete renewal of Williams' product range in 2000. Our glycol-
based secondary refrigeration system enables the refrigeration plant to be
remote from the kitchen: this allows kitchens to be quieter, with less local
heat generation.
Prospects
Aga Foodservice Group operates in niche markets and has excellent brands.
Much work has been done to modernise these businesses as they move to the
forefront of the Group. There are commercial and business development plans
in place which have the potential to give us higher real earnings. These
plans are matched by a determination on the part of the management to deliver
growth from the Group's businesses.
The Group that has emerged from the shadow of the much larger pipe systems
business is a growth company. 2001 has started well with satisfactory volumes
across the businesses and with some important new orders won. Despite current
uncertainties facing the UK market there are clear opportunities available to
us and we believe that the Group can look forward with confidence.
Kit Farrow William McGrath
Chairman Chief Executive 27 March 2001
Part one
GROUP PROFIT AND LOSS ACCOUNT
2000
Year to 31 December
-------------------
Continuing Discontinued Total
operations operations #m
#m #m
Turnover
Acquisitions 7.7 23.9 31.6
Other continuing 196.9 740.6 937.5
operations ------ ------ ------
Total turnover 204.6 764.5 969.1
====== ====== ======
Operating profit (after
goodwill amortisation)
Acquisitions 0.9 1.1 2.0
Other continuing 16.1 68.3 84.4
operations ----- ----- -----
Total operating profit 17.0 69.4 86.4
Provision for loss on - (36.0) (36.0)
disposal of businesses
Profit on disposal of - - -
businesses ----- ----- -----
Profit before interest and 17.0 33.4 50.4
tax ----- -----
Interest payable (net) (19.6)
-----
Profit before tax 30.8
Tax on profit on ordinary (22.1)
activities -----
Profit on ordinary 8.7
activities after tax
Equity minority interests (0.2)
----
Profit attributable to 8.5
shareholders
Dividends (32.0)
-----
(Transfer from (23.5)
reserves)/profit retained -----
Part two
Year to 31 December 1999
-------------------
Continuing Discontinued Total
operations #m operations #m #m
Turnover
Acquisitions
Other continuing
operations
Total turnover 192.8 685.5 878.3
------ ------ -----
Operating profit (after
goodwill amortisation)
Acquisitions
Other continuing
operations
Total operating profit 14.4 56.9 71.3
Provision for loss on - - -
disposal of businesses
Profit on disposal of - 32.5 32.5
businesses ---- ---- ----
Profit before interest and 14.4 89.4 103.8
tax ---- ----
Interest payable (net) (9.2)
-----
Profit before tax 94.6
Tax on profit on ordinary (18.8)
activities -----
Profit on ordinary 75.8
activities after tax
Equity minority interests (0.7)
-----
Profit attributable to 75.1
shareholders
Dividends (32.0)
-----
(Transfer from 43.1
reserves)/profit retained -----
Part one
2000
Year to 31 December
-------------------
Continuing Discontinued Total
operations operations #m
#m #m
Reconciliation of profits before disposal of businesses
Trading profit 20.1 81.4 101.5
Goodwill amortisation (3.1) (12.0) (15.1)
----- ----- -----
Operating profit 17.0 69.4 86.4
----- -----
Interest payable (net) (19.6)
Add back goodwill 15.1
amortisation -----
Profit before tax, 81.9
disposal of businesses and -----
goodwill amortisation
Part two
Year to 31 December 1999
-------------------
Continuing Discontinued Total
operations #m operations #m #m
Reconciliation of profits before disposal of businesses
Trading profit 16.8 64.2 81.0
Goodwill amortisation (2.4) (7.3) (9.7)
---- ---- ----
Operating profit 14.4 56.9 71.3
---- ----
Interest payable (net) (9.2)
Add back goodwill 9.7
amortisation ----
Profit before tax, 71.8
disposal of businesses and ----
goodwill amortisation
Part one
2000
Year to 31 December
-------------------
Continuing Discontinued Total
operations operations #m
#m #m
Earnings per share
p
Before disposal of
businesses and goodwill
amortisation
22.6
Basic 3.5
Diluted 4.1
----
Part two
Year to 31 December 1999
-------------------
Continuing Discontinued Total
operations #m operations #m #m
Earnings per share
P
Before disposal of
businesses and goodwill
amortisation 22.0
Basic 31.0
Diluted 30.5
----
GROUP BALANCE SHEET
2000 1999
----- -----
As at 31 December
----------------
#m #m
Fixed assets
Goodwill 275.8 272.6
Tangible assets 288.2 272.1
Investments - 1.2
----- -----
Total fixed assets 564.0 545.9
----- -----
Current assets
Stocks 194.4 166.6
Operating debtors 177.3 171.3
Tax recoverable 15.6 9.7
Cash at bank and in hand 33.5 34.7
----- -----
Total current assets 420.8 382.3
----- -----
Creditors - amounts falling due
within one year
Operating creditors (163.9) (158.4)
Borrowings (56.8) (25.4)
Exchangeable shares (33.5) -
Tax and dividends payable (33.6) (27.9)
----- -----
Total amounts falling due within one (287.8) (211.7)
year ------ ------
Net current assets 133.0 170.6
----- -----
Total assets less current 697.0 716.5
liabilities
Creditors - amounts falling due after more than one
year
Borrowings (247.5) (251.1)
Exchangeable shares - (32.1)
Provisions for liabilities and (68.6) (37.1)
charges ----- -----
Total net assets employed 380.9 396.2
----- -----
Capital and reserves
Called up share capital 60.6 60.6
Share premium account 25.9 25.8
Revaluation reserve 7.0 7.6
Capital redemption reserve 2.3 2.3
Profit and loss account 283.8 298.5
----- -----
Total shareholders' funds 379.6 394.8
Equity minority interests 1.3 1.4
----- -----
Total funds 380.9 396.2
----- -----
GROUP CASH FLOW STATEMENT
Year to 31 December 2000 1999
------------------
#m #m
Net cash inflow from operating 106.0 96.0
activities
Net returns on investments and (17.0) (6.9)
servicing of finance
Tax paid (20.9) (37.2)
Net capital expenditure and (27.4) (24.6)
financial investment
Net cash flow from acquisitions and (19.1) (18.4)
disposals
Equity dividends (32.0) (32.0)
paid ----- -----
Cash outflow before financing (10.4) (23.1)
----- -----
Financing
- issue of ordinary share capital 0.1 0.2
- buyback of preference share - (1.4)
capital
- increase in debt 3.4 16.2
---- ----
Net financing 3.5 15.0
---- ----
Decrease in cash in the year (6.9) (8.1)
---- ----
Reconciliation of net cash flow to
movement in net borrowings
Decrease in cash in the year (6.9) (8.1)
Increase in debt (3.4) (16.2)
---- -----
Change in net debt resulting from (10.3) (24.3)
cash flows
Borrowings acquired with (4.5) (64.6)
acquisitions
Exchangeable shares issued for - (32.1)
acquisitions
Loan notes issued for acquisitions (7.1) -
Exchange adjustment (8.5) 5.6
---- -----
Increase in net borrowings (30.4) (115.4)
Opening net borrowings (273.9) (158.5)
------ ------
Closing net borrowings (304.3) (273.9)
------ ------
Reconciliation of operating profit
to net cash inflow from operating
activities
Operating profit 86.4 71.3
Depreciation and goodwill 41.8 37.2
amortisation
Profit on disposal of fixed assets (2.4) -
(Increase)/decrease in stocks (13.1) (7.3)
(Increase)/decrease in debtors 5.7 13.1
Increase/(decrease) in creditors (5.8) (12.6)
Increase/(decrease) in provisions (6.6) (5.7)
---- ----
Net cash inflow from operating 106.0 96.0
activities ----- -----
SUPPLEMENTARY STATEMENTS
Year to 31 December 2000 1999
-------------------
#m #m
Statement of total recognised
gains and losses
Profit attributable to 8.5 75.1
shareholders
Exchange adjustment on net 8.2 (11.8)
investments ----- -----
Total recognised gains and losses 16.7 63.3
relating to the year ----- -----
Year to 31 December 2000 1999
#m #m
Reconciliation of movements in
shareholders' funds
Total recognised gains and losses 16.7 63.3
relating to the year
Dividends (32.0) (32.0)
New share capital - share premium 0.1 0.2
subscribed
Buy back of share preference - (1.3)
capital shares
profit and - (1.4)
loss account
capital - 1.3
redemption
reserve
Goodwill reinstated on disposals - 39.1
---- ----
Net (decrease)/increase in (15.2) 69.2
shareholders' funds
Opening shareholders' funds 394.8 325.6
----- -----
Closing shareholders' funds 379.6 394.8
----- -----
Part one
SEGMENTAL ANALYSIS
The figures for 1999 in this analysis have been restated for the disposal of
Pipe Systems in March 2001.
2000
By business group Turnover Operating Net
profit operating
assets
#m #m #m
Consumer Products 111.3 9.8 34.5
Foodservice Products 93.3 10.3 32.3
----- ---- ----
Total continuing operations 204.6 20.1 66.8
Goodwill amortisation - - (3.1) -
continuing operations
Discontinued operations 764.5 69.4 362.6
----- ---- -----
Total Group 969.1 86.4 429.4
----- ----- -----
Turnover between business groups is immaterial. Net assets for Consumer
Products and Foodservice Products in 1999 included allocations of central
assets and liabilities. The allocations shown above are based on assets and
liabilities retained by the continuing operations. Net operating assets
exclude net debt, dividends payable, taxation balances and goodwill.
Goodwill amortisation on continuing operations relates entirely to
Foodservice Products.
Part two
SEGMENTAL ANALYSIS
The figures for 1999 in this analysis have been restated for the disposal of
Pipe Systems in March 2001.
1999
By business Turnover Operating Net
group profit operating
assets
#m #m #m
Consumer 114.6 7.7 39.2
Products
Foodservice 78.2 9.1 24.2
Products ----- ---- ----
Total continuing 192.8 16.8 63.4
operations
Goodwill - (2.4) -
amortisation -
continuing
operations
Discontinued
operations 685.5 56.9 352.3
----- ---- -----
Total Group 878.3 71.3 415.7
----- ---- -----
Turnover between business groups is immaterial. Net assets for Consumer
Products and Foodservice Products in 1999 included allocations of central
assets and liabilities. The allocations shown above are based on assets and
liabilities retained by the continuing operations. Net operating assets
exclude net debt, dividends payable, taxation balances and goodwill.
Goodwill amortisation on continuing operations relates entirely to
Foodservice Products.
Part one
2000
By geographical Turnover Operating profit Net
origin operating
assets
#m #m #m
United Kingdom 177.4 19.2 63.9
North America 21.5 0.4 1.3
Rest of World 5.7 0.5 1.6
---- ---- ----
Total continuing 204.6 20.1 66.8
operations
Goodwill - (3.1) -
amortisation -
continuing
operations
Discontinued 764.5 69.4 362.6
operations ----- ---- -----
Total Group 969.1 86.4 429.4
----- ---- -----
Goodwill amortisation relates to United Kingdom #2.3m (1999: #2.1m) and
North America #0.8m (1999: #0.3m).
Part two
1999
By geographical Turnover Operating Net
origin profit operating
assets
#m #m #m
United Kingdom 176.6 16.2 62.8
North America 10.9 0.2 (0.7)
Rest of World 5.3 0.4 1.3
---- ---- ----
Total continuing operations 192.8 16.8 63.4
Goodwill amortisation - - (2.4) -
continuing operations
Discontinued operations 685.5 56.9 352.3
----- ---- -----
Total Group 878.3 71.3 415.7
----- ---- -----
Goodwill amortisation relates to United Kingdom #2.3m (1999: #2.1m) and
North America #0.8m (1999: #0.3m).
Turnover by geographical 2000 1999
destination
#m % #m %
United Kingdom 165.2 80.7 165.1 85.6
North America 22.3 10.9 11.4 5.9
Rest of World 17.1 8.4 16.3 8.5
---- ---- ---- ----
Total continuing operations 204.6 100.0 192.8 100.0
----- ----- ----- -----
EARNINGS PER SHARE
Year to 31 December 2000 1999
#m #m
Earnings - before disposal of businesses
Profit on ordinary activities after tax 8.7 75.8
Minority interests (0.2) (0.7)
Disposal of businesses net of tax 34.3 (31.5)
Goodwill amortisation net of tax 12.0 9.7
---- ----
Earnings - before disposal of businesses 54.8 53.3
and goodwill amortisation ----- -----
Earnings
Profit on ordinary activities after tax 8.7 75.8
Minority interests (0.2) (0.7)
----- ----
Earnings - for basic EPS 8.5 75.1
Dilutive effect of exchangeable shares 2.0 0.6
---- ----
Earnings - for diluted EPS 10.5 75.7
---- ----
Weighted average number of shares in
issue million million
For basic EPS calculation 242.5 242.4
Dilutive effect of exchangeable shares 14.9 6.2
----- ----
For diluted EPS calculation 257.4 248.6
----- -----
Earnings per share p p
Before disposal of businesses and
goodwill amortisation 22.6 22.0
Basic 3.5 31.0
Diluted 4.1 30.5
---- ----
NOTES
1. Dividends
The Board has approved the payment of a final dividend amounting to 8.8p
per share (1999: 8.8p). An interim dividend of 4.4p per share (1999: 4.4p)
has already been paid, making the total dividend for the year 13.2p per
share (1999: 13.2p). The final dividend will be paid on 1st June 2001 to
shareholders registered on 17 April 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
year end rates. The main currencies and exchange rates are:
Year to 31 December 2000 1999
------------------- ----- -----
Average
CAD 2.26 2.41
EUR 1.64 1.52
USD 1.52 1.62
Period end
CAD 2.24 2.34
EUR 1.59 1.61
USD 1.49 1.61
3. Tax
2000 1999
#m #m
United Kingdom corporation tax based on a
rate of 30% (1999: 30.25%)
Current tax on income for year 27.4 5.7
Adjustments in respect of prior years (1.6) 1.1
---- ----
25.8 6.8
Double taxation relief (20.6) (1.0)
Deferred tax - (3.5)
---- ----
Total United Kingdom tax 5.2 2.3
---- ----
Overseas tax
Current tax on income for year 15.5 15.8
Adjustments in respect of prior years (0.3) 0.5
----- ----
15.2 16.3
Deferred tax 1.7 0.2
---- ----
Total overseas tax 16.9 16.5
---- ----
Tax on profit on ordinary activities 22.1 18.8
---- ----
Including tax on exceptional items:
- Disposal of businesses (1.7) 1.0
- Exceptional reorganisation costs (1.0) (3.0)
---- ----
Tax on exceptional items (2.7) (2.0)
---- ----
4. Post balance sheet events
On 9th March 2001 the Group disposed of Pipe Systems for an initial
consideration of #786m received in cash. The initial consideration will be
adjusted, on a pound for pound basis, to the extent that the tangible net
assets set out in the completion balance sheet exceed or fall short of
#401.1m.
The anticipated loss on disposal of these businesses is calculated as follows:
#m #m
Sale proceeds 786.0
Less professional fees (7.0)
----
779.0
Tangible net assets disposed (401.1)
of
Minority interest 1.0
Capitalised goodwill at (210.1)
completion ------
Total net assets sold (610.2)
Provision for additional (29.0)
costs
Goodwill previously written (175.8)
off ------
Net loss on disposal (36.0)
=====
Tax on loss on disposal 1.7
=====
The cash proceeds will be used to pay down the Group's debt and to undertake a
tender offer to return up to #386m to shareholders.
The exchangeable shares ("Exchangeables") were exchanged for ordinary shares
in
Aga Foodservice Group plc on 9th March 2001.
The effect of the above transactions had they occurred at 31st December 2000
would have been
Part one
Actual balance Disposal of 2000
sheet assets disposal
31 December provision
2000 expensed
#m #m #m
Note (i) (ii)
Fixed assets 288.2 (256.0) -
Stocks 194.4 (173.4) -
Operating debtors less (53.2) 28.3 36.0
creditors and provisions ----- ----- -----
Total net operating assets 429.4 (401.1) 36.0
Goodwill 275.8 (216.2) -
Tax 3.3 2.4 -
Deferred tax (2.0) 3.7 -
Dividends (21.3) - -
Cash/(borrowings) (304.3) 786.0 (36.0)
------ ----- -----
Total net assets employed 380.9 174.8 -
------ ----- -----
Share capital and reserves 379.6 175.8 -
Minority interests 1.3 (1.0) -
----- ----- -----
Total funds 380.9 174.8 -
----- ----- -----
The above proforma balance sheet has been prepared on the following basis:
i Assets and liabilities relating to Pipe Systems as at 31 December 2000
disposed of in exchange for initial consideration of #786m.
ii Transactions cost and estimated additional costs arising on the disposal
are assumed to have been settled in cash.
iii Exchangeables converted to shares in Aga Foodservice Group.
iv Proposed return of capital to shareholders excluding associated
transaction costs.
Part two
The effect of the above transactions had they occurred at 31 December 2000
would
have been
Convert Cash returned to Proforma
Exchange- shareholders balance
ables sheet
#m #m #m
Note (iii) (iv)
Fixed assets - - 32.2
Stocks - - 21.0
Operating debtors
less creditors and
provisions - - 11.1
---- ----- -----
Total net operating
assets - - 64.3
Goodwill - - 59.6
Tax - - 5.7
Deferred tax - - 1.7
Dividends - - (21.3)
Cash/(borrowings) 33.5 (386.0) 93.2
---- ------ -----
Total net assets
employed 33.5 (386.0) 203.2
---- ------ -----
Share capital and
reserves 33.5 (386.0) 202.9
Minority interests - - 0.3
---- ------ -----
Total funds 33.5 (386.0) 203.2
---- ------ -----
The above proforma balance sheet has been prepared on the following basis:
i Assets and liabilities relating to Pipe Systems as at 31st December 2000
disposed of in exchange for initial consideration of #786m.
ii Transactions cost and estimated additional costs arising on the disposal
are assumed to have been settled in cash.
iii Exchangeables converted to shares in Aga Foodservice Group.
iv Proposed return of capital to shareholders excluding associated
transaction costs.
First Half 2001 Financial Calendar
Report and accounts posted 6 April
Record date for final ordinary 17 April
dividend
Annual General Meeting 10 May
Final ordinary dividend 1 June
payable
The financial information set out in this announcement
does not constitute the Company's statutory accounts for
the years ended 31st December 2000 and 1999 but is derived
from those accounts. Statutory accounts for 1999 have
been delivered to the Registrar of Companies and those for
2000 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.
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