REG - Headlam Group PLC - Final Results <Origin Href="QuoteRef">HEAD.L</Origin> - Part 1
RNS Number : 5796GHeadlam Group PLC05 March 20155 March 2015
Headlam Group plc
Preliminary Results for the Year Ended 31 December 2014
Headlam Group plc ("Headlam"), Europe's leading floorcoverings distributor, announces its preliminary results for the year ended 31 December 2014.
Financial highlights
Revenue up 5.3% at 635.2 million (2013: 603.1 million)
Underlying Operating Profit up 13.7% at 31.5 million (2013: 27.7* million)
Underlying Earnings Per Share up 16.7% at 28.6 pence (2013: 24.5* pence)
Earnings Per Share up 58.9% at 28.6 pence (2013: 18.0 pence)
Dividends paid and proposed up 14.4% at 17.50 pence (2013: 15.30 pence)
The group repays 10.0 million on its committed facilities reducing the drawdown to 20.0 million on a facility of 40.0 million and ended the year with net funds of 24.7 million (2013: 14.0 million)
*There are no non-underlying items in 2014. The non-underlying items in 2013 relate to the impairment of intangible and tangible fixed assets, totalling 5.4 million. The underlying measures have been used to provide a better understanding of the business performance.
Operational highlights
Further gains achieved in UK market share with like for like revenues increasing by 5.9% exceeding the estimated market growth of 2.4%
Continental European markets remain weak and the trading environment for our Continental businesses continues to be difficult
Final dividend up 15.5% from 10.65 pence to 12.30 pence
Further bolt-on acquisitions during the year and early 2015 and the service centre network is extended to 27 with the addition of sites in Stoke, Norwich, Hayes and Leicester
Tony Brewer, Headlam's Group Chief Executive, said:
"The momentum created in the UK through the final quarter of 2014, has continued into January and February 2015 with 3.1% like for like growth over the two month period.
As we enter March, our UK businesses are well placed to take advantage of improving market conditions with a comprehensive array of product launches and marketing initiatives.
Whilst our businesses in Continental Europe continue to experience difficult markets, we are confident that the Group, overall, will achieve further progress during the year."
Enquiries:
Headlam Group plc
Tony Brewer, Group Chief Executive Tel: 01675 433000
Stephen Wilson, Group Finance Director
Buchanan Tel: 020 7466 5000
Mark Court / Helen Chan
For further detail on our business please visit:
Notes for editors
About Headlam
Headlam is involved with the marketing, supply and distribution of an extensive range of floorcovering products. The group's activities and facilities are located throughout the UK,France, Switzerland and the Netherlands.
The group's operations are focused on providing customers, principally independent floorcovering retailers and contractors, with a comprehensive and up to date range of competitively priced floorcovering products supported by a next day delivery service.
The approach provides Headlam's suppliers with an opportunity to achieve extensive and, in some territories, unparalleled market access backed by cost effective distribution.
In order to offer this level of service to its customers and suppliers, Headlam has developed a diverse and autonomous operating structure that includes 55 businesses across the UK and a further five in continental Europe.
The autonomous operating structure is a key contributor to the group's success, presenting experienced management teams with an opportunity to develop the individual identity, market presence and profitability of the business for which they are responsible.
Each business is supported by the group's continuing commitment to investment in people, product, operating facilities and IT. This commitment has underpinned the group's overall development and enabled Headlam to establish itself as Europe's leadingfloorcovering distributor.
Chairman's Statement
It is pleasing to be able to report that the group has made good progress during the year, delivering a further increase in revenue and improvement in profitability.
Overview
In the UK, the trading momentum established during the first half of the year continued through the second half with the improvement in organic growth supplemented by the fine full year performances from the businesses acquired during the previous year. Of particular satisfaction was the manner in which the UK businesses responded during the final quarter of the year, with like for like growth of 3.9%, delivering another strong performance on top of the impressive result achieved during the final quarter of 2013.
On the Continent, when measured in local currency, the revenue performance from our French business was slightly ahead of last year whilst our Dutch businesses achieved reasonable progress in what continues to be a difficult market. The businesses in both territories registered an improvement in underlying earnings. However, the market weakness evident in the first half in Switzerland continued during the second half resulting in a further reduction in annual revenue and profit. As was the case during the first half, the decline in the Swiss performance was sufficient to weaken the collective result from our Continental businesses which was down quite markedly on the previous year.
Whilst the result from our Continental businesses in recent years has been disappointing, the group's overall result for the year, once again, provides further evidence in support of the board's decision to commit to additional investment to expand and improve our facilities as exemplified by the project to extend the Coleshill national distribution hub which was completed and became fully operational in January 2014.
The commitment to investment, along with the decision to continue with our strategy and maintain our structure, has positioned the group in a place where it can quickly and profitably take advantage from an improvement in market activity.
Earnings and dividend
Earnings per share increased by 16.7% to 28.6p compared with last year's underlying result of 24.5p mainly as a result of the group's profit before tax of 30.3 million improving by 14.6% on last year's underlying profit before tax of 26.4 million.
The board is proposing to increase the final dividend by 15.5% from 10.65p to 12.30p resulting in a total dividend for the year of 17.50p, which represents an increase of 14.4% on 2013. The final dividend, if approved by shareholders at the Annual General Meeting ("AGM"), will be paid on 1 July 2015 to shareholders on the register at close of business on 5 June 2015.
Governance and board
We continue to promote a culture of openness and transparency and encourage participation and contribution from all our board members. The board recognises the value derived from good governance and the setting of high standards and the confidence it brings to our shareholders, management, employees, suppliers and customers.
Employees and Shareholders
Once again, our employees' attitude, determination and focused contribution has been pivotal to the continued success of the group.
Thank you to all our employees across the group for their dedication and hard work and our shareholders for their insightful observations and continuing support.
Dick Peters
Chairman
5 March 2015
Chief Executive's Review
Our Strategy
The group continues to follow a strategy focused on developing its floorcovering distribution business in the UK and continental Europe and improving the all round service offering it provides to its customers.
The group's size and structure provides a unique competitive advantage allowing it to deliver a range of benefits, including continuous product development, wide product diversity, extensive marketing support and next day distribution services, all of which are aimed at supporting and enhancing its customers' market position.
The development of the group's overall business is achieved by operating each individual business on an autonomous basis and encouraging the managers of each individual business to develop their own individual trading style, albeit within a well developed and consistently applied framework of operational and financial control.
This diverse business structure, particularly in the UK, covering the retail and commercial sectors, gives the group substantial reach across floorcovering markets and provides suppliers with a flexible channel for the sales, marketing and distribution of their products.
In addition, the structure has allowed the group to be active with a wide and diverse product portfolio across a significant proportion of the floorcovering market and has, to a degree, insulated the business from the downside risk arising from contracting or static markets.
Each individual business is supported by the group's commitment to continued investment in people, product, marketing, distribution facilities, service centres and IT. This structural investment, in conjunction with the development of the identity of each individual business, has enabled us to bring together the benefits of a market facing culture delivering the latest selling, marketing and product initiatives with a comprehensive and sophisticated logistics operation.
Ultimately, the total investment has underpinned the growth and performance of each business thus enabling the group to establish itself as Europe's leading floorcovering distributor.
Performance
One of the group's key performance objectives is aimed at achieving growth in market share. We drive this growth by setting each of our individual businesses, in conjunction with the businesses' management team, an annual growth parameter, which is collectively set to outperform the anticipated underlying growth in the market.
Once again, it is pleasing to record that the growth in UK revenue during 2014, as has consistently been the case for a number of years, outperformed growth in the UK floorcovering market with the like for like growth of 5.9% exceeding the estimated market growth of 2.4%.
The increases in like for like revenue derived from our residential and commercial product in the UK was broadly similar with residential up by 5.8% on the previous year and commercial up by 6.2%. The revenue mix between residential and commercial floorcoverings in the UK has generally remained at the same level for a number of years and 2014 maintained the balance at 68% and 32% respectively.
On the Continent, adverse economic headwinds continue to influence performance and the overall trading result has registered further decline during the year. However, we still believe that more can be made of the opportunities to develop each individual business notwithstanding the market issues in each individual territory. On a brighter note, gross margins are being protected and costs managed diligently. As ever, additional revenue would transform the operating fortunes of these businesses.
During the year, we have maintained our investment in people, marketing, infrastructure and the promotion, support and development of each of our individual business identities. We continue to provide extensive marketing support to our customers and through our well trained and knowledgeable sales teams, seek to gain an increasing share of their business. In addition, our teams are also focused on prospecting for new customers and business opportunities.
Investments
Over the five year period from 2010 to 2014, we have used the group's balance sheet strength allied with its positive cash flow, to invest 36.2 million in property, plant and equipment with a further 18.0 million expenditure forecast for 2015 and 2016. This level of capital expenditure has been running, on average, at a rate of 1.5 times depreciation.
The investment in infrastructure has been and is aimed at supporting our expansion plans, as illustrated by our intention to construct a new distribution facility in Ipswich, and enables us to manage our supply chain and inventory requirements more efficiently, as demonstrated by the recent extension to the Coleshill distribution hub.
Once the Ipswich distribution facility is fully operational, the group will have a well invested portfolio of four national distribution hubs and 14 regional distribution centres in the UK as well as four distribution centres on the Continent. These facilities should be able to satisfy the group's capacity requirements and growth expectations for a number of years and the requirement for further investment in additional or replacement distribution facilities ought to fall away.
During recent years, we have supplemented our distribution network in the UK with a number of service centres with the aim of improving customer service by making product more readily available. This type of investment is particularly helpful for customers who prefer to collect their product needs as opposed to relying on our delivery service.
During the year, we continued to expand the number of service centres we operate across the UK and they now number 27. The provision of a customer collection point is also offered within our distribution centres thereby bringing the number of collection points, or trade counters, in the UK to 42. There are still some locations, where we do not currently have a presence and that would benefit from the opening of a service centre and we anticipate expanding our coverage in the future, subject to the availability of suitable sites.
Acquisitions
We intend to continue to utilise our capital resource to augment the group's organic growth with further acquisitions. We have a history of quickly and successfully integrating small bolt-on acquisitions into our existing structure, achieving overhead synergies and an earnings enhancing performance.
During the year, we completed the acquisition of two small bolt-on businesses one of which, RPS, was transferred into our existing distribution facility in Nottingham and the other, Myttons, has provided us with the opportunity to establish a service centre in Norwich. During January 2015, we added another business, Matty's Wholesale Carpets, and integrated its operations into our distribution facility in Coleshill. Unlike a number of recent acquisitions where the businesses acquired have been losing market position, Matty's Wholesale Carpets has been a very successful business and should prove to be immediately earnings enhancing.
The acquisitions completed during 2013 are now operationally integrated and contributing an earnings enhancing performance to the group's profitability.
Prospects
The momentum created through the final quarter of 2014 has continued into January and February 2015 with 3.1% like for like growth over the two month period.
As we enter March, our UK businesses are well placed to take advantage of improving market conditions with a comprehensive array of product launches and marketing initiatives.
Whilst our businesses in Continental Europe continue to experience difficult markets, we are confident that the Group, overall, will achieve further progress during the year.
Tony Brewer
Group Chief Executive
5 March 2015
Financial Review
Revenue
During the year, group revenue increased by 32.2 million to 635.2 million. As shown in the table below, UK turnover comfortably outperformed the underlying market which was estimated to have grown by 2.4%. The Continental performance was a story of further contraction, which when translated into sterling amounted to a 7.3% decline during the year albeit when measured in constant currency, the reduction was less severe at 2.2%.
2014
2013
Change
000
000
000
%
UK
548,393
509,340
39,053
7.7
Continental Europe
91,606
93,711
(2,105)
-2.2
Translation affect
(4,757)
-
(4,757)
-
Group
635,242
603,051
32,191
5.3
The UK growth was attributable to a solid like for like performance amounting to 5.9% during the year coupled with a contribution from acquisitions, which in total amounted to 14.9 million of which 9.2 million was an incremental increase on the previous year.
Gross margin
The group's gross margin declined during the year from 30.1% to 30.0%. Whilst pricing competition continues to be a factor in all our markets, the characteristics of this competitive environment have not changed appreciably compared with the prior year. Product mix remains broadly constant from one year to the next and the slight decline in the year is more a factor of the Continental European businesses, which collectively enjoy a slightly higher margin compared with the UK, contributing less to the 2014 performance compared with 2013.
Expenses
Distribution and administrative expenses increased by 151,000 during the year. However, as illustrated below, when the non-underlying items arising in 2013, relating to the impairment of intangible and tangible fixed assets, which totalled 5,352,000, are added back, the year on year increase amounts to 5,503,000 or 3.6%.
000
Expenses for the year ended 31 December 2014
159,078
Expenses for the year ended 31 December 2013
158,927
Less: Non-underlying items
(5,352)
Adjusted 2013 expenses
153,575
Year on year increase excluding non-underlying items
5,503
The two key components of the increase were the incremental expenses arsing because of the acquisitions, which amounted to 1,807,000 and a 4,438,000 rise in employee costs occurring primarily as a result of performance related incentive awards.
Operating profit
Operating profit for 2014 increased by 13.7% compared with the operating profit for 2013 after adjusting for the non-underlying items. The operating margin for 2014 increased to 5.1% compared with 4.6% achieved in the prior year after adjusting for the non-underlying items.
000
2014 operating profit
31,462
2013 operating profit
22,328
Add back: Non-underlying items
5,352
Adjusted 2013 operating profit
27,680
Year on year operating profit increase excluding non-underlying items
3,782
Earnings and Dividend
Basic earnings per share for 2014 of 28.6p improved by 16.7% on the underlying basic earnings of 24.5p for 2013. The result was derived from a 14.6% increase in profit before tax augmented by a reduction in the effective tax rate during the year which reduced from 23.25% to 21.5%.
Total dividends paid and proposed for 2014 have increased by 14.4% from 15.3p to 17.5p. Dividend cover remains at just above 1.6 times.
Employee benefits
The liability attaching to employee benefits is as follows:
2014
2013
000
000
Current liabilities
2,933
2,842
Non-current liabilities
18,803
12,780
Total
21,736
15,622
The year on year increase in the deficit of 6,114,000 represents 39.1% deterioration over the course of twelve months. The key driver behind the change is the escalation of liabilities in both the UK and Swiss defined benefit pension plans which, in both arrangements, have been driven by falling bond yields.
Cash Flow
Net cash flow from operating activities
Net cash flow from operating activities increased during the year by 3.2 million from 24.0 million to 27.2 million with the contributory factors shown in the table below.
000
2013 net cash flow from operating activity
24,027
Operating profit
3,782
Depreciation
115
Profit on asset disposals
147
Share based payments
404
Working capital
(1,274)
Interest paid
88
Taxation
(13)
Additional pension contributions
(83)
27,193
As can be seen from above, the two principal contributors to the year on year movement are the increase in operating profit of 3.8 million and the additional working capital investment of1.3 million.
During the year, the additional pension contributions, which fund the UK defined benefit pension plan, amounted to 3.0 million. Following the triennial actuarial valuation of the UK plan at 31 March 2014, the additional contributions for 2015 will be 3.0 million but for 2016 they will fall to 2.1 million and thereafter, increase annually at a rate of 3.3% until further review as part of the triennial valuation in 2017.
Cash flows from investing and financing activities
The table below summarises the cash flow movements from investing and financing activities during the year. Whilst the overall cash outflow from the activities was broadly the same in 2013 and 2014, the difference amounting to 0.5 million, the emphasis in the two years was quiet different. During the year, investing activity was considerably reduced compared with 2013 giving rise to a positive cash flow variance of 9.1 million. However, financing activity centred on the reduction of borrowings giving rise to an increased cash outflow of 9.6 million.
000
2013 cash flows from investing activity
(14,149)
2013 cash flows from financing activity
(12,280)
(26,429)
Movement in investing activity:
Net investment in tangible fixed assets
7,212
Interest received
233
Acquisitions
1,643
9,088
Movement in financing activity:
Treasury share issues
785
Repayment of borrowings
(9,987)
Dividends paid
(389)
(9,591)
Net movement
(503)
2014 cash flows from investing activity
(5,061)
2014 cash flows from financing activity
(21,871)
(26,932)
In isolation, 2014 is an illustration of the group's capacity to reduce its requirement for debt as the need for investment in large capital projects comes to the end of its current cycle.
Net debt
Group net funds at the end of the year increased by 10.5 million compared with the previous year, from 14.0 million to 24.5 million, as detailed in the table below.
At 1 January
2014
000
Cash
flows
000
Foreign
exchange
Translation
000
At
31 December
2014
000
Cash at bank and in hand
47,477
261
(149)
47,589
Debt due within one year
(218)
-
14
(204)
Debt due after one year
(33,239)
10,210
211
(22,818)
14,020
10,471
76
24,567
Funding and going concern
The group maintains sufficient banking facilities to fund its operations and investments and, as at31 December 2014, the utilisation of the group's total facilities was as shown in the table below. 73.2% of the group's facilities were undrawn.
Drawn
000
Undrawn
000
Total
facility
000
Less than one year
-
42,883
42,883
Over one year and less than five years
21,019
20,000
41,019
Over five and less than seven years
2,003
-
2,003
23,022
62,883
85,905
Having reviewed the group's resources and a range of likely out-turns, the directors believe there are reasonable grounds for stating that the group has adequate resources to continue in operational existence for the foreseeable future and it is appropriate to adopt the going concern basis in preparing the group's financial accounts.
Steve Wilson
Group Finance Director
5 March 2015
Consolidated Income Statement
for the year ended 31 December 2014
2014
Underlying
2013
Non-underlying
Items *
2013
Total
2013
000
000
000
000
Revenue
1
635,242
603,051
-
603,051
Cost of sales
(444,702)
(421,796)
-
(421,796)
Gross profit
190,540
181,255
-
181,255
Distribution expenses
(117,458)
(115,067)
-
(115,067)
Administrative expenses
(41,620)
(38,508)
(5,352)
(43,860)
Operating profit
1
31,462
27,680
(5,352)
22,328
Finance income
819
629
-
629
Finance expenses
(1,981)
(1,870)
-
(1,870)
Net finance costs
(1,162)
(1,241)
-
(1,241)
Profit before tax
30,300
26,439
(5,352)
21,087
Taxation
(6,515)
(6,146)
-
(6,146)
Profit for the year attributable to the equity shareholders
23,785
20,293
(5,352)
14,941
Dividend paid per share
3
15.30p
14.85p
Earnings per share
Basic
2
28.6p
24.5p
-
18.0p
Diluted
2
28.5p
24.3p
-
17.9p
* Included within administrative expenses in the results for the year ended 31 December 2013 are non-underlying items that relate to the impairment of intangible and tangible fixed assets, totalling 5,352,000.
All group operations during the financial years were continuing operations.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2014
2014
000
2013
000
Profit for the year attributable to the equity shareholders
23,785
14,941
Other comprehensive income:
Items that will never be reclassified to profit or loss
Remeasurement of defined benefit plans
(8,900)
450
Related tax
1,789
(529)
(7,111)
(79)
Items that are or may be reclassified to profit or loss
Foreign exchange translation differences arising on translation of overseas operations
(742)
397
Effective portion of changes in fair value of cash flow hedges
(177)
115
Transfers to profit or loss on cash flow hedges
132
137
Related tax
18
(65)
(769)
584
Other comprehensive (expense)/income for the year
(7,880)
505
Total comprehensive income attributable to the equity shareholders for the year
15,905
15,446
Statements of Financial Position
at 31 December 2014
Note
2014
000
2013
000
Assets
Non-current assets
Property, plant and equipment
103,461
103,079
Intangible assets
10,013
10,013
Deferred tax assets
2,726
2,388
116,200
115,480
Current assets
Inventories
116,569
115,678
Trade and other receivables
118,816
119,488
Cash and cash equivalents
47,589
47,477
282,974
282,643
Total assets
1
399,174
398,123
Liabilities
Current liabilities
Other interest-bearing loans and borrowings
(204)
(218)
Trade and other payables
(166,266)
(164,519)
Employee benefits
(2,933)
(2,842)
Income tax payable
(6,073)
(7,022)
(175,476)
(174,601)
Non-current liabilities
Other interest-bearing loans and borrowings
(22,818)
(33,239)
Employee benefits
(18,803)
(12,780)
(41,621)
(46,019)
Total liabilities
1
(217,097)
(220,620)
Net assets
182,077
177,503
Equity attributable to equity holders
of the parent
Share capital
4,268
4,268
Share premium
53,512
53,512
Other reserves
(1,786)
(4,742)
Retained earnings
126,083
124,465
Total equity
182,077
177,503
These financial statements were approved by the board of directors on 5 March 2015 and were signed on its behalf by:
Tony Brewer Steve Wilson
Director Director
Company Number: 460129
Statement of Changes in Equity
for the year ended 31 December 2014
Share
capital
000
Share
premium
000
Capital
redemption
reserve
000
Translation
reserve
000
Cash flow
hedging
reserve
000
Treasury
reserve
000
Retained
earnings
000
Total
equity
000
Balance at
1 January 2013
4,268
53,512
88
5,768
(339)
(11,329)
121,361
173,329
Profit for the year attributable to the equity shareholders
-
-
-
-
-
-
14,941
14,941
Other comprehensive income
-
-
-
397
252
-
(144)
505
Total comprehensive income for the year
-
-
-
397
252
-
14,797
15,446
Transactions with equity shareholders, recorded directly in equity
Share-based payments
-
-
-
-
-
-
288
288
Share options exercised by employees
-
-
-
-
-
421
(178)
243
Deferred tax on share options
-
-
-
-
-
-
497
497
Dividends to equity holders
-
-
-
-
-
-
(12,300)
(12,300)
Total contributions by and distributions to equity shareholders
-
-
-
-
-
421
(11,693)
(11,272)
Balance at
31 December 2013
4,268
53,512
88
6,165
(87)
(10,908)
124,465
177,503
Balance at
1 January 2014
4,268
53,512
88
6,165
(87)
(10,908)
124,465
177,503
Profit for the year attributable to the equity shareholders
-
-
-
-
-
-
23,785
23,785
Other comprehensive income
-
-
-
(742)
(45)
-
(7,093)
(7,880)
Total comprehensive income for the year
-
-
-
(742)
(45)
-
16,692
15,905
Transactions with equity shareholders, recorded directly in equity
Share-based payments
-
-
-
-
-
-
692
692
Share options exercised by employees
-
-
-
-
-
3,808
(2,780)
1,028
Current tax on share options
-
-
-
-
-
-
183
183
Deferred tax on share options
-
-
-
-
-
-
(545)
(545)
Dividends to equity holders
-
-
-
-
-
-
(12,689)
(12,689)
Total contributions by and distributions to equity shareholders
-
-
-
-
-
3,808
(15,139)
(11,331)
Balance at
31 December 2014
4,268
53,512
88
5,423
(132)
(7,100)
126,018
182,077
Cash Flow Statements
for the year ended 31 December 2014
2014
000
2013
000
Cash flows from operating activities
Profit before tax for the year
30,300
21,087
Adjustments for:
Depreciation, amortisation and impairment
4,900
10,136
Finance income
(819)
(629)
Finance expense
1,981
1,870
Profit on sale of property, plant and equipment
(30)
(177)
Share-based payments
692
288
Operating cash flows before changes in working
capital and other payables
37,024
32,575
Change in inventories
(1,514)
1,967
Change in trade and other receivables
(143)
(9,114)
Change in trade and other payables
2,656
9,421
Cash generated from the operations
38,023
34,849
Interest paid
(1,477)
(1,565)
Tax paid
(6,357)
(6,344)
Additional contributions to defined benefit plan
(2,996)
(2,913)
Net cash flow from operating activities
27,193
24,027
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
92
479
Interest received
846
613
Acquisition of subsidiaries, net of cash acquired
(331)
(1,974)
Acquisition of property, plant and equipment
(5,668)
(13,267)
Net cash flow from investing activities
(5,061)
(14,149)
Cash flows from financing activities
Proceeds from the issue of treasury shares
1,028
243
Repayment of borrowings
(10,210)
(223)
Dividends paid
(12,689)
(12,300)
Net cash flow from financing activities
(21,871)
(12,280)
Net increase/(decrease) in cash and cash equivalents
261
(2,402)
Cash and cash equivalents at 1 January
47,477
49,798
Effect of exchange rate fluctuations on cash held
(149)
81
Cash and cash equivalents at 31 December
47,589
47,477
Notes
1 Segment reporting
The group has 55 operating segments in the UK and 5 operating segments in Continental Europe. Each segment represents an individual trading operation, and each operation is wholly aligned to the sales, marketing, supply and distribution of floorcovering products. The operating results of each operation are regularly reviewed by the Chief Operating Decision Maker, which is deemed to be the Group Chief Executive. Discrete financial information is available for each segment and used by the Group Chief Executive to assess performance and decide on resource allocation.
The operating segments have been aggregated to the extent that they have similar economic characteristics, with relevance to products and services, type and class of customer, methods of sale and distribution and the regulatory environment in which they operate. The group's internal management structure and financial reporting systems differentiate the operating segments on the basis of the differing economic characteristics in the UK and Continental Europe and accordingly present these as two separate reportable segments. This distinction is embedded in the construction of operating reports reviewed by the Group Chief Executive, the board and the executive management team and forms the basis for the presentation of operating segment information given below.
UK
Continental Europe
Total
2014
000
2013
000
2014
000
2013
000
2014
000
2013
000
Revenue
External revenues
548,393
509,340
86,849
93,711
635,242
603,051
Reportable segment operating profit
30,695
26,877
1,183
1,678
31,878
28,555
Reportable segment assets
256,274
233,913
34,444
35,708
290,718
269,621
Reportable segment liabilities
(151,566)
(148,457)
(14,568)
(15,975)
(166,134)
(164,432)
During the year there are no inter-segment revenues for the reportable segments (2013: nil).
Reconciliations of reportable segment profit, assets and liabilities and other material items:
2014
000
2013
000
Profit for the year
Total profit for reportable segments
31,878
28,555
Impairment of intangibles and assets
-
(5,352)
Unallocated expense
(416)
(875)
Operating profit
31,462
22,328
Finance income
819
629
Finance expense
(1,981)
(1,870)
Profit before taxation
30,300
21,087
Taxation
(6,515)
(6,146)
Profit for the year
23,785
14,941
Notes continued
1 Segment reporting- continued
2014
000
2013
000
Assets
Total assets for reportable segments
290,718
269,621
Unallocated assets:
Properties, plant and equipment
91,493
93,883
Deferred tax assets
2,726
2,388
Cash and cash equivalents
14,237
32,231
Total assets
399,174
398,123
Liabilities
Total liabilities for reportable segments
(166,134)
(164,432)
Unallocated liabilities:
Employee benefits
(21,736)
(15,622)
Other interest-bearing loans and borrowings
(23,022)
(33,457)
Income tax payable
(6,073)
(7,022)
Derivative liabilities
(132)
(87)
Total liabilities
(217,097)
(220,620)
UK
000
Continental
Europe
000
Reportable segment total
000
Unallocated
000
Consolidated total
000
Other material items 2014
Capital expenditure
2,586
421
3,007
2,661
5,668
Depreciation
2,260
567
2,827
1,998
4,825
Amortisation
-
-
-
75
75
Other material items 2013
Capital expenditure
3,043
649
3,692
9,847
13,539
Depreciation
2,171
666
2,837
1,797
4,634
Amortisation
-
-
-
150
150
Impairment of assets
-
-
-
2,155
2,155
Impairment of intangible assets
-
-
-
3,197
3,197
In the UK the group's freehold properties are held within Headlam Group plc and a rent is charged to the operating segments for the period of use. Therefore the operating reports reviewed by the Group Chief Executive show all the UK properties as unallocated and the operating segments report a segment result that includes a property rent. This is reflected in the above disclosure.
Each segment is a continuing operation.
The Group Chief Executive, the board and the senior executive management team have access to information that provides details on revenue by principal product group for the two reportable segments, as set out in the following table:
Notes continued
1 Segment reporting - continued
Revenue by principal product group and geographic origin is summarised below:
UK
Continental Europe
Total
2014
000
2013
000
2014
000
2013
000
2014
000
2013
000
Revenue
Residential
378,910
350,020
43,415
47,608
422,325
397,628
Commercial
169,483
159,320
43,434
46,103
212,917
205,423
548,393
509,340
86,849
93,711
635,242
603,051
2 Earnings per share
2014
000
2013
000
Earnings
Earnings per underlying basic and underlying diluted earnings per share
23,785
20,293
Earnings for basic and diluted earnings per share
23,785
14,941
2014
2013
Number of shares
Issued ordinary shares at 31 December
85,363,743
85,363,743
Effect of shares held in treasury
(2,053,036)
(2,383,937)
Weighted average number of ordinary shares for the purposes of basic earnings per share
83,310,707
82,979,806
Effect of diluted potential ordinary shares:
Weighted average number of ordinary shares at 31 December
83,310,707
82,979,806
Dilutive effect of share options
264,178
646,209
Weighted average number of ordinary shares for the purposes of diluted earnings per share
83,574,885
83,626,015
Notes continued
3 Dividends
2014
000
2013
000
Interim dividend for 2013 of 4.65p paid 2 January 2014
3,856
-
Final dividend for 2013 of 10.65p paid 1 July 2014
8,833
-
Interim dividend for 2012 of 4.65p paid 2 January 2013
-
3,850
Final dividend for 2012 of 10.20p paid 1 July 2013
-
8,450
12,689
12,300
The final proposed dividend of 12.30p per share (2013: 10.65p per share) will not be provided for until authorised by shareholders at the forthcoming AGM. There are no income tax consequences.
Interim dividends of 5.20p per share (2013: 4.65p per share) are provided for when the dividend is paid. The dividend was paid on 2 January 2015 and totalled 4,355,000.
The total value of dividends proposed but not recognised at 31 December 2014 is 14,655,000 (2013: 12,689,000).
4. Additional information
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2014 or 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
We anticipate that the company's statutory accounts will be posted to shareholders during April 2015 and will be displayed on the company's website at www.headlam.com early April 2015. Copies of the statutory accounts will also be available from the company's registered office at Headlam Group plc, PO Box 1, Gorsey Lane, Coleshill, Birmingham, B46 1LW.
This preliminary announcement of results for the year ended 31 December 2014 was approved by the board on
5 March 2015.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR JIMRTMBIMBJA
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