REG - Howden Joinery Grp - 2024 Full Year Results
27/02/2025 07:00
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RNS Number : 5929Y Howden Joinery Group PLC 27 February 2025
27 February 2025
Further market share gains in 2024, new £100m share buyback.
Results summary
£ millions (unless stated) 2024(1) Change
2023 vs 2023
Group revenue 2,322.1 2,310.9 +0.5%
- UK 2,247.4 2,241.1 +0.3%
- International(2) 74.7 69.8 +7.0%
Gross profit margin, % 61.6% 60.8% +80bps
Operating profit 339.2 340.2 -0.3%
Profit before tax 328.1 327.6 +0.2%
Basic earnings per share, p 45.6p 46.5p -1.9%
Total ordinary dividend per share, p 21.2p 21.0p +1.0%
Cash at end of period 343.6 282.8
(1) The information presented relates to the 52 weeks 28 December 2024 and the
53 weeks to 30 December 2023 unless otherwise stated.
(2) Comprises Howdens' depots in France, Belgium and the Republic of Ireland
(ROI).
Highlights(1)
- Group revenue of £2,322.1m was in line with last year.
o UK revenue of £2,247.4m was 0.3% ahead of last year reflecting ongoing
market share gains, despite a contraction in the UK kitchen market
o International revenue was 9.7% ahead of last year in local currency with
good progress in building out the trade-only business model in France and the
Republic of Ireland.
- Maintained our industry leading gross margin of 61.6%, which
included the benefit of purchasing and manufacturing efficiencies.
- We have offset the majority of inflationary costs increases
through efficiency savings and cost control while investing in our medium-term
strategic initiatives.
- Investment included 29 new depots and 76 depot reformats in the
UK, 11 new kitchen ranges, further digital development and upgrades to
manufacturing and supply chain.
- Profit before tax of £328.1m was in line with last year.
- Strong cash generation and robust balance sheet with year-end cash
of £343.6m.
- Proposed final dividend of 16.3p, bringing the total for the year
to 21.2p, up 1.0%.
- New £100m share buyback announced today.
Commenting on the results Andrew Livingston, Chief Executive said:
"Howdens performed well in a challenging market, gaining further market share.
We continued to invest in developing our kitchen and joinery ranges, opening
more depots, and in new digital capabilities. We are also investing in our
manufacturing operations and supply chain to support our trade customers with
high-quality, easy-to-fit products that are reliably in stock.
"Whilst we anticipate the kitchen market is likely to contract further in
2025, we are confident that our differentiated model, combined with our
strategic initiatives, mean we are well placed to gain further market share.
Reflecting the Group's strong financial position, we have announced today a
new £100m share buyback programme while continuing to invest in the
business."
Operational developments in 2024
- Network expansion - opened 29 UK depots and added three in the
international business. At the end of 2024 Howdens operated with 869 UK
depots, 65 in France and Belgium and 13 in the Republic of Ireland.
- Depot revamps and relocations - completed 76 in 2024 (including
relocations) and 8 more in early 2025.
- New product introductions - 11 new kitchen ranges were introduced
in 2024 to suit all budgets.
We continued to develop both our higher priced kitchen portfolio including
Paint To Order, and improved our solid worksurface offering. We ended the year
with 19 bedroom ranges.
- Manufacturing expansion - we expanded our capabilities and
capacity including the first full year of end-panel and kitchen frontal
production, which significantly reduced the volume of bought-in products.
- Supply chain optimisation - stock availability remains a key
differentiator for trade customers. Through our cross docking (XDC) network
and 'Daily Traders' initiatives we achieved a 99.98% service level from our
primary sites to our depots.
- Digital investment - we completed the rollout of a digitised
in-depot stock management system to record and pick deliveries and determine
depot stock levels. This enabled us to introduce a nationwide "Click and
Collect" service for everyday items for customers in the second half.
- International development - we strengthened the leadership team
which has focused on building out our depot teams' capabilities and existing
depot sales in France.
Outlook for 2025
- We expect market conditions to remain challenging in 2025, given
the prevailing macroeconomic environment, and anticipate that the UK kitchen
market is likely to contract again in the year ahead.
- We are well prepared for this, and our differentiated in-stock,
trade-only business model gives us significant competitive advantage. We are
well-planned on our strategic initiatives for 2025 leaving us well-placed to
strengthen our competitive position and gain market share.
- We will maintain a profitable balance between price and volume to
support our customers with great value to suit all budgets.
- We expect a continuation of inflationary pressures, as well as
higher contributions to employers' National Insurance and the increase in the
National Minimum Wage from April. We will tightly control our cost base,
driving efficiency and productivity gains to support near-term profitability.
- Our strong cash generation and robust balance sheet allows us to
invest in the business through the economic cycle, enhancing our competitive
edge while returning surplus capital to shareholders.
- Howdens is in good shape and well-positioned for success in both
current markets and when conditions improve.
Summary of the major strategic initiatives for 2025
- We will open around 20 depots in the UK and reformat around 60
existing depots (including relocations).
- Excluding Paint To Order ranges, we will launch 23 new kitchens
aimed at making more styles available at more price points.
- We will continue to expand our solid work surfaces offer which is
now a leading UK supply and fit business. By the end of 2025 we will have a
comprehensive range of 63 decors on sale.
- We will continue to invest in UK manufacturing, including a
project to upgrade our cabinet and panel manufacturing capabilities at
Runcorn.
- We will launch new Customer Relationship Management software to
make account management more efficient and productive.
Technical guidance for 2025
Income statement
- The expected annualised cost impact of higher contributions to
employers' National Insurance and the increase in the National Minimum Wage
which come into effect in April 2025 is around £18m.
- Foreign exchange sensitivity in COGS of Euro: +/- €0.01 =
£1.8m; US Dollar: +/- $0.01 = £0.8m.
- H1 2024 benefited from an additional 2 trading days which is not
repeated in H1 2025.
Cashflow
- Capital expenditure is anticipated at around £125m including our
ongoing investments to support future growth.
For further information please contact
Howden Joinery Group Plc Media Enquiries
Paul Hayes, CFO Richard Mountain (FTI Consulting)
Tel: +44 (0) 207 535 1162 Tel: +44 (0) 20 3 727 1000
Mark Fearon, Director of IR and Communications hwdn@fticonsulting.com (mailto:hwdn@fticonsulting.com)
Mobile: +44 (0)7711 875070
Results presentation:
There will be an in-person analyst and investor presentation at 0830 GMT today
hosted by Andrew Livingston, Howdens' CEO, and Paul Hayes, Howdens' CFO at:
Deutsche Numis, 45 Gresham St London EC2V 7BF, with light refreshments served
from 0800.
A live video webcast will be available on https://brrmedia.news/HWDN_FY_24
(https://brrmedia.news/HWDN_FY_24)
For more information see: www.howdenjoinerygroupplc.com
(http://www.howdenjoinerygroupplc.com) . The presentation can also be heard by
dialling the phone numbers below:
Location
United Kingdom, Local
Phone Number
United States, Local
+44 (0) 207 544 1375 or toll free +44 (0) 808 238 9064
Confirmation code:
+ 1 412 317 6060 or toll free +1 866 652 5200
Please quote 'Howdens Full Year Results'
The webcast will be recorded and available on our website after the event has
finished at:
www.howdenjoinerygroupplc.com (http://www.howdenjoinerygroupplc.com)
Note to editors:
1. About Howden Joinery Group Plc
Howdens is the UK's number one specialist kitchen and joinery supplier. In the
UK, the company sells kitchens and joinery products to trade customers,
primarily local builders, through 869 depots. In 2024, the Group generated
revenues of around £2.3 billion and profit before tax of £328.1 million.
Howdens is a proud UK-based manufacturer, with a significant proportion of its
kitchen and joinery ranges manufactured in-house at its two principal
factories in Runcorn, Cheshire, and Howden, East Yorkshire. At the end of
2024, Howdens operated from 65 depots in France and Belgium and 13 depots in
the Republic of Ireland.
2. Timetable for the final dividend
The timetable for payment of the proposed final dividend is shown below. A
Dividend Reinvestment Plan ("DRIP") is provided by Equiniti Financial Services
Limited. The DRIP enables the Company's shareholders to elect to have their
cash dividend payments used to purchase the Company's shares. More information
can be found at www.shareview.co.uk/info/drip
(http://www.shareview.co.uk/info/drip) .
Ex-dividend date: 10 April 2025
Record date: 11 April 2025
Payment date: 23 May 2025
3. Provisional financial calendar for 2025
Trading update 29 April
Annual General Meeting 1 May
Half Year Results 24 July
Trading update 6 November
End of financial year 27 December
Financial review
Financial results for 2024(1)
Revenue £m (unless stated) 2024 2023 Change # of depots 2024
UK depots - same depot basis(2) 2,204.9 2,231.8 -1.2% 807
UK depots opened in previous two years 42.5 9.3 62
Total - UK depots 2,247.4 2,241.1 +0.3% 869
Total - International depots 74.7 69.8 +7.0% 78
Total - Group 2,322.1 2,310.9 +0.5% 947
Local currency revenue €m (unless stated) 2024 2023 Change # of depots 2024(3)
International - same depot basis(2) 81.3 78.4 +3.7% 64
Depots opened in previous two years 6.8 1.9 14
Total - International depots 88.1 80.3 +9.7% 78
(1) The information presented relates to the 52 weeks to the 28 December 2024
and the 53 weeks to 30 December 2023 unless otherwise stated.
(2) Same depot basis excludes depots opened in 2023 and 2024 and closed
depots.
(3) In International, 3 depots were opened in the Republic of Ireland and one
depot was opened and one closed in France during 2024.
Group revenue was in line with last year at £2,322.1m (2023: £2,310.9m). UK
depot revenue was £2,247.4m (2023: £2,241.1m) and was 1.2% lower on a same
depot basis. Our strong competitive position in the UK enabled the business to
continue to gain market share despite a further contraction in the kitchen
market. Local currency revenue in the international depots was 9.7% ahead of
the prior year and grew 3.7% on a same depot basis. While we continued to
build out our depot network in the Republic of Ireland, we are focused on
improving the performance of the existing estate in France and Belgium. As a
result of these actions revenue growth in France sequentially improved in the
second half, compared to the first half.
Gross profit
We maintained our sector leading margins by appropriately balancing pricing
and volumes. Gross profit was ahead of last year at £1,431.1m (2023:
£1,403.9m). The higher gross margin percentage of 61.6% (2023: 60.8%)
reflected the benefit of the price increase at the start of the year and
ongoing purchasing benefits. During the year we also delivered a number of
productivity improvements in our manufacturing operations. Together, these
offset inflationary pressures, particularly in commodities, wages and energy
costs.
Operating profit and profit before tax
Operating expenses increased by £28.2m to £1,091.9m (2023: £1,063.7m) and
included ongoing investment in our strategic initiatives. These investments
included £16m on new UK depots opened in 2023 and 2024 and £16m of other
investments including warehouse and transportation initiatives, digital
upgrades and expanding our international operations. Higher salary and
inflationary costs of around £25m were partially offset with productivity and
efficiency actions. There was a benefit of around £14m arising from the
non-repeat of the additional costs associated with the 53(rd) week last year
when the depots were closed. Overall, operating profit was in line with last
year at £339.2m (2023: £340.2m)
The net interest charge was £11.1m (2023: £12.6m). Profit before tax of
£328.1m was in line with the prior year (2023: £327.6m).
Tax, profit after tax and basic earnings per share
The tax charge was £78.8m (2023: £73.0m) which represented an effective tax
rate of 24.0% (2023: 22.3%) reflecting the first full year of the increase in
the UK corporate tax rate to 25.0%.
Profit after tax was £249.3m (2023: £254.6m). Basic earnings per share were
45.6p (2023: 46.5p).
Cash
The net cash inflow before movements in working capital was strong at £504.6m
(2023: £470.8m). Overall working capital increased by £65.3m as expected,
with stock £8m higher as a result of depot openings and new product
introductions. Receivables at the end of the period were £70m higher than at
the end of the previous period and included £58m of additional trade
receivables, mainly as a result of the later calendar end of our peak trading
period. This position has already unwound since the start of the new financial
year.
Payables were £13m higher. Capital expenditure was at a similar level to the
prior year at £122.0m (2023: £118.9m) as we continued to invest in growth.
Corporation tax payments were lower at £39.2m (2023: £63.5m), net of a
previously announced backdated tax credit relating to the patent box claim.
Dividends amounted to £115.9m (2023: £114.1m). There were no share buybacks
in the year. The interest and principal paid on lease liabilities totalled
£113.4m (2023: £121.8m).
Reflecting the above, cash increased by £60.8m (2023: decrease of £25.2m),
leaving the Group with cash at the year end of £343.6m (30 December 2023:
£282.8m).
Capital allocation and returns to shareholders
We have a well-established policy for capital allocation. We focus on
achieving sustainable profit growth by investing in and developing our
business model. We aim to maintain and grow our ordinary dividend in line with
earnings to reward shareholders with an attractive ongoing income stream.
After allowing for these uses of cash, Howdens remains committed to returning
any surplus capital to shareholders.
Within its definition of surplus capital, the Board's objective is for the
Group to be able to operate through the annual working capital cycle without
incurring bank debt, noting that there is seasonality in working capital
balances through the year, particularly in advance of our peak trading period
in the second half. We also take into account that the Group has a significant
property lease exposure for the depot network, and a large defined benefit
pension scheme. Our policy remains that when year-end cash is in excess of
£250m we expect to return surplus cash to shareholders. This provides
sufficient headroom to support organic growth, our seasonal working capital
requirements, and ongoing investments in our strategic initiatives, while
maintaining a strong balance sheet.
In July 2024 the Board declared an interim dividend of 4.9p per ordinary share
(2023: 4.8p per ordinary share). The Board is recommending a final dividend
for 2024 of 16.3p per ordinary share (2023: 16.2p per ordinary share),
resulting in a total dividend of 21.2p per ordinary share (2023: 21.0p per
ordinary share). The total dividend represents a year-on-year increase of 1.0%
and, if approved by shareholders at the AGM in May the final dividend will be
paid on 23 May 2025 to shareholders on the register on 11 April 2025.
Reflecting the Group's strong financial position, the Board is announcing
today a new £100m share buyback programme which will be completed over the
next 12 months.
Pensions
At 28 December 2024, the deficit on the defined benefit pension scheme reduced
to £2.1m on an IAS 19 basis (2023: Deficit of £12.6m). The scheme is closed
for future accrual.
The last triennial actuarial valuation of the scheme was conducted as at 31
March 2023 and the scheme was in surplus on a technical provisions basis. The
Company and Trustee agreed a new recovery plan in November 2023, should the
scheme move into a technical deficit. This agreement will run until 31 May
2026. Under this agreement deficit contributions of £1m a month will be made
if the scheme is in a deficit position, on a technical provisions basis, for
more than two consecutive months. In the year to 28 December 2024 there were
no deficit payments.
Board changes
During the year Howdens welcomed three new independent Non-Executive Directors
to the Board: Vanda Murray, Roisin Currie and Suzy Neubert. These new
Directors bring a wealth of strategic, operational and financial experience to
the Board, which complements our existing skill set. Towards the end of the
year we announced the appointment of Tim Lodge who joined the Board in January
2025. This followed a search to identify a successor for Andrew Cripps as
Audit Committee Chair when he retires from the Board at the AGM in May 2025.
Tim is an experienced CFO and Audit Committee Chair and has benefited from a
handover period with Andrew during the 2024 year-end. Vanda Murray will take
over from Andrew Cripps as Senior Independent Director and has significant
Board and operational experience. Andrew Cripps was appointed to the Board in
December 2015 and has served as Audit Committee Chair since May 2016. We thank
him for his wise counsel and significant contribution to Howdens and wish him
all the very best for the future.
Operational review
Strategic initiatives
Howdens has made good progress on its strategic initiatives, which are aimed
at achieving profitable growth and market share gains over the medium term.
The four strategic initiatives are:
1. Evolving our depot model by using space more efficiently to provide
the best environment in which to do business with our customers.
2. Improving our range and supply management to improve choice and
service while enhancing productivity in our manufacturing, sourcing and supply
chain activities.
3. Developing our digital platforms to raise brand awareness, support
the business model and deliver productivity gains and more leads for depots
and customers.
4. Expanding our international presence in countries with attractive
kitchen and joinery markets.
These ongoing investments support the execution of our growth strategy and are
within our overall capital expenditure guidance. Progress on each of these
initiatives is reviewed below:
Evolving our depot model
During the year Howdens opened 29 new depots in the UK. We are opening all new
depots in our updated format. We have line of sight to operate with around
1,000 depots in the UK, versus the 869 trading at the end of 2024. The depots
will be supported by our cross docking (XDC) facilities which enable depots to
optimise their stock holdings and provide high levels of service across the
product range.
We have also continued with our reformatting programme for existing depots.
Depot reformats have a payback of around four years and the programme is
delivering incremental sales. In 2024 we reformatted 76 depots, including
relocations, with a further 8 completed since the year end. At the end of
2024, we had reformatted around 350 of the 670 depots which were opened in the
old format. We plan to reformat around 60 depots in 2025 (including
relocations), which will bring the total proportion of UK depots trading in
the new format to around 70% by the end of 2025.
Improving our product range and supply management
Range Management
Howdens has accelerated new product introductions (NPIs) in recent years to
ensure we are at the forefront of the sector. We have introduced our "Find The
Gap" initiative to test customer feedback on new products in a representative
sample of depots to ensure we can bring more proven styles to market more
quickly. Our NPI for 2024 had an emphasis on value for money and choice at all
price-points, and included 11 new kitchen ranges, of which 10 were aimed at
the entry and mid-market segments:
- In our entry level kitchen ranges we added two new frontal
options, Greenwich in Marine Blue and Witney in Reed Green.
- For our mid-price shaker families, Halesworth and Bridgemere, we
added six new colours for 2024. For our versatile mid-priced family,
Clerkenwell, we introduced two new colours.
- We also continued to develop our higher priced kitchen portfolio,
which is a large segment of the market, where we are under-represented. The
premium Paint To Order service, which we introduced in the second half of
2023, has received excellent customer feedback. In 2024, we had 15 Paint To
Order colour choices, and we refreshed the palette with five new colours in
the second half.
- We introduced 22 decors to our solid surface "template and fit"
business offer giving us a comprehensive range of 58 decors to suit all
budgets. We will increase this to 63 decors in 2025.
- In doors, during 2024 we added more colour and bolder styles at
all price points. Our new own label flooring brand, "Oake & Gray", is
performing very well and new flooring product for 2024 also included a leading
third-party premium priced vinyl brand, Karndean. Our Oake & Gray range
will be expanded further in 2025, following a positive customer response.
- Also for 2025 we have launched a new own label ironmongery range
"Fuller and Forge" featuring door furniture in a range of styles.
- In appliances, we made further additions to our Lamona brand,
which is the leading integrated appliance brand in the UK, alongside
extensions to our range of third party branded product, and in sinks and taps
we added more styles, colours and finishes in line with market trends.
- Our new bedroom ranges were developed utilising our existing
manufacturing and supply infrastructure and comprised 19 ranges in four
leading family designs at the year end. These were drawn from our kitchen
portfolio, and matched with new internal accessories including pull-down
rails, mirrors and internal storage solutions. We are adding six more options
in 2025 to these existing families and will be adding a fifth Clerkenwell
family in four colours.
Manufacturing and supply chain
Howdens is an in-stock business and in 2024 our service level from our primary
distribution sites to depots was 99.98%. Our new stock management, "Daily
Traders", initiative which was implemented in all UK depots last year improves
customer service levels, promotes footfall and increases sales by optimising
in-depot stockholdings of best-selling SKUs and associated "range completers".
Over time we continue to assess opportunities to increase the proportion of
products we make balancing cost with overall supply chain availability,
resilience and flexibility. In 2024 several major investments were completed.
In the first full year of production, volumes on the new panel lines at our
Howden factory site were around 1.7m. These lines give us the ability to make
a variety of kitchen products, principally doors and panels, for more of our
ranges, at a lower cost and at a reduced lead time to delivery than externally
sourced products. Our Paint To Order factory, located in a purpose-built
facility near our Howden factory, gives us an industry leading production
capability. During the Autumn peak trading period we achieved our turnaround
times for customer orders despite a doubling of demand.
Cabinet and panel manufacturing underpins our entire kitchen offering, which
constitutes the principal source of Group sales and a higher proportion of
gross profit. Our Runcorn factory with its high-volume, low-cost panel making
capability has always been an integral part of our manufacturing and logistics
strategy. In line with our growth ambitions for the business, we are in
discussions with all interested parties to develop the site to increase the
capacity and broaden its capabilities. Following successful outcomes to the
planning process, we would expect the works will take several years to
complete. We will provide an update on how our plans are progressing later in
the year. We are also negotiating to acquire the freehold of the Runcorn
factory site which may or may not lead to a transaction.
Developing our digital platform
Our digital strategy reinforces our model of strong local relationships
between depots and their customers by raising brand awareness, supporting the
business model with new services and ways to trade with us and delivering
productivity benefits for depot employees and customers. In 2024, usage of our
online account facilities, which benefits customers and depots, continued to
increase and we now have around 50% of our customers using our digital
platform.
In 2024, we rolled out a digitised in-depot stock management system
"Live-Stock" to all our depots. The stock surety provided by this, and other
initiatives such as "Daily Traders", has enabled us to deliver a new, upgraded
"Click and Collect" service to our trade customers, which is available for
everyday products. The service was launched in the first half of 2024,
enabling online customers to check real-time availability of stock online on a
depot-by-depot basis, review their individual confidential prices and place
orders for collection at a time of their choosing.
In 2025, amongst other initiatives, we will launch a new account management
tool which will help depots manage their customer relationships and business
development activities more efficiently and productively.
Developing our international operations
Our international operations mostly comprise Howdens' kitchen and joinery
businesses in France and Belgium where we operate with a network of 65 depots.
In 2022, we also opened in the Republic of Ireland where we now have 13
depots. In these countries we continue to operate our "a city-based" approach
to depot expansion.
In France, we focused on team development in 2024 to drive greater emphasis on
same depot sales, promoting higher customer footfall and developing
relationships with local trade who may not have come across Howdens'
differentiated model. One of the ways we are achieving this is to invest in
enhanced offerings of "footfall promoting" products to drive walk in trade. In
addition, as is done regularly in the UK, we are now running a schedule of
trade days at all French depots, with aligned promotional activity and more
supplier support. The business has responded well to these actions and its
performance improved significantly in the second half of the year. We will
continue with these actions during 2025.
Sales in the Republic of Ireland were encouraging in the year, and we will be
opening more depots there in 2025. The market is attractive and Howdens' in
stock offer in kitchens and joinery has been well received by local customers.
Environment, Social, and Governance (ESG)
Our Commitment to Sustainability
Our ambition remains to be the UK's leading responsible kitchen and joinery
business. We are well-placed to achieve this with our UK manufacturing focus,
trusted supplier partnerships, and our publicly committed Net Zero plan
approved by the Science Based Targets initiative (SBTi) in January 2024. ESG
governance and reporting requirements continue to expand, and in recent months
we have seen significant escalation in compliance, assurance, and regulatory
requirements on sustainability matters. We are therefore re-evaluating our
future reporting requirements to maintain our leading position and ensure we
are fully compliant with any upcoming legislation. Our plan commits us to
reducing our Scope 1 and 2 emissions by 42% and our Scope 3 supply chain
emissions by 25% by 2030, targeting Net Zero by 2050, against a baseline year
of 2021.
Governance and disclosure
In preparation for our European businesses reporting on the Corporate
Sustainability Reporting Directive (CSRD), we conducted an ESG Double
Materiality Assessment, identifying key areas such as biodiversity and nature,
pollution and the circular economy for greater engagement and future
reporting. This work builds on our SBTi commitments and current Task Force for
Climate-Related Financial Disclosures (TCFD) reporting. Our strategy is
evolving but we remain clear on our ESG strategic pillars and understand many
of the risks, issues, and opportunities. We will publish our transition plan
in 2025. Despite the delay in EU Deforestation Regulation (EUDR)
implementation, we are continuing our preparations to meet the required
obligations for our European businesses operating within the EU. We expect
that EUDR will come into force in December 2025, and we will publish our Zero
Deforestation policy in advance of the regulations coming into force.
Road to Zero Campaign
Our Road to Zero campaign, focusing on Zero Waste and Zero Emissions,
continues to gain wider recognition as a tool for communicating key
sustainability messages both internally and externally.
Operational Achievements in 2024
1. Carbon Trust Accreditation: We transitioned from Carbon Neutral
Status to gaining accreditation from the Carbon Trust with their Route to Net
Zero Standard Certification in December 2024, moving from site-based
accreditation to whole-organisation certification aligned with SBTi best
practice.
2. Zero to Landfill: We maintained zero to landfill in all manufacturing
sites and depots. Waste timber is recycled back to our major chipboard
supplier, and all material is recovered, with much being used to create energy
from waste or recycled into plastic or cardboard. Waste sawdust is used by
Howdens for biomass and heating our factories and warehouses, and quartz
offcuts from our two solid work surfaces factories are used for building
roads.
3. Decarbonisation and Renewable Energy Initiatives: We recently
installed nearly 7,000 solar panels on a single roof at our Howden factory
(our largest site approaching 80 acres), reducing approximately 1,000 TCO2e
annually and 8% of purchased energy. We continue to source 100% renewable
energy across our sites and 96% of all Howdens depots. A waste heat recovery
project implemented in 2024 at our factory sites is saving over 600T of CO2e
annually, and Power Radar meters also fitted have identified savings of over
500T CO2e annually.
Fleet Emissions
5. Cleaner Fuel and Electric Vehicles: We have a clear emissions
reduction plan aligned with our SBTI targets to 2030. We doubled the quantity
of Hydrotreated Vegetable oil (HVO) fuel in 2024 and will increase it to 40%
by the end of 2025. We now have 15 Liquid Natural Gas vehicles and 4 electric
trucks operating across our XDC network which results in a c.80% saving of CO2
versus conventional diesel fuel.
Supplier Emissions
6. As a vertically integrated business Scope 3 emissions account for 95%
of our total emissions, with 40% being emitted indirectly by suppliers. We
have engaged over 100 suppliers, with over 50% submitting data for the last
three years. We continue supplier and industry collaboration to ensure
decarbonisation and in 2024, we focused heavily on supplier engagement.
Initially targeting our top six suppliers, we have since expanded our
programme to include the top 30 and onboarded an additional 70 suppliers
throughout 2024. We conducted webinars with live Q&A sessions, outlining
our expectations for emission reductions, with over 250 supplier
representatives attending. Net Zero obligations are now mandated in all our
Supplier trading terms and conditions.
Sustainable Products and Packaging
7. Design Process: Sustainability is a key pillar of our design process.
The following are examples of activities in 2024 as we continue to re-engineer
our processes to be more sustainable:
- Our bestselling Greenwich matt Kitchen frontals are 100%
recyclable. Made in our UK factories our cabinets and panels are made from a
combination of recycled wood, including old kitchens and new wood, which comes
from a sustainably managed forest in the UK, where for every acre of trees
harvested, an acre or more is planted.
- In our new Paint to Order factory for our best timber kitchens we
are now using water soluble paints, which have much less of an impact on the
environment, rather than solvents.
- We have a Plastic Pledge across the business to remove, reduce, or
replace plastic packaging where possible. This year we removed 39 tonnes of
plastic (equivalent to 110 Tonnes of CO2) by redesigning our tower cabinets
and continuing to remove polystyrene from packaging.
- All Howdens' timber products are Forestry Stewardship Council
(FSC) or Programme for the Endorsement of Forest Certification (PEFC)
certified meaning they are sourced from well managed forests or recycled
sources.
People
Howdens' key asset is its workforce, and we want to attract, train, and retain
great people from the widest possible pool of talent as well as keep them safe
and healthy while at work. Howdens is committed to ensuring that safety is
embedded as a core value in everything we do.
Our safety KPI has remained low at 176 RIDDORs (Reporting of Injuries Diseases
and Dangerous Occurrences Regulation) reportable injuries per 100,000
employees in 2024. This is 19% below the 2023/2024 HSE All-Industry rate of
217. Our accident severity rate has also remained low at 28.8 hours lost to
accidents per 100,000 hours worked.
We are particularly proud of our longstanding commitment to apprenticeships
and the development of homegrown talent, which is essential to our
entrepreneurial model, with more than 1 in 10 of our current UK employee
population starting with the business as an apprentice. In 2023 we recruited
522 apprentices across the depot network and 19 more in our manufacturing and
supply chain operations. We have over 600 apprentices currently on our
development programmes, including 103 existing employees upskilling. There
were 229 apprentices who completed programmes in 2024, with a 78% retention
rate.
Inclusion and Diversity
Our ambition is to be known for being worthwhile for all concerned. We
measured this with our first Howdens diversity census in March 2024, which was
sent to all employees. We received around 3,000 responses with around 70% of
the survey agreeing with the statement that Howdens is a place where everyone
has the opportunity to succeed, 68% agreed it is a great place to work, and
73% were proud to work for Howdens. We intend to run the survey periodically
to help us inform future actions for our inclusion action plan which focuses
on supporting managers and broadening our reach.
During the year we updated our Bullying and Harassment Policy following a
change in legislation and provided further training for managers. This
included over 550 Howdens employees attending our "Leading the Way" training
in 2024, an in-house leadership course which helps potential and existing
managers to lead their teams and create an inclusive team culture while
maintaining our entrepreneurial decentralised depot culture. So far, a further
370 attendees are signed up for 2025.
GOING CONCERN
The Directors have adopted the going concern basis in preparing the financial
statements and have concluded that there are no material uncertainties leading
to significant doubt about the Group's going concern status, and that there
were no significant judgements involved in coming to this conclusion. The
reasons for this are explained below.
Going concern review period
This going concern review period covers the period of 12 months after the date
of approval of these financial statements. The Directors consider that this
period continues to be suitable for the Group as it is the period for which
the Group prepares the most frequently revised forecasts, and which is most
regularly scrutinised by the Executive Committee and Board.
Assessment of principal risks
The Directors have reached their conclusion on going concern after assessing
the Group's principal risks, as set out in detail in the "Principal risks and
uncertainties" section, starting on page 14.
Whilst all the principal risks could have an impact on the Group's
performance, the specific risks which could most directly affect going concern
are the risks relating to continuity of supply, changes in market conditions,
and product relevance. The Group is currently holding additional amounts of
faster-moving inventory as a specific mitigation against supply chain
disruption, and the Directors consider that the effects of the other risks
could result in lower sales and/or lower margins, both of which are built into
the financial scenario modelling described below.
Review of trading results, future trading forecasts and financial scenario modelling
The Directors have reviewed trading results and financial performance in 2024,
as well as early weeks' trading in 2025. They have reviewed the Group balance
sheet at 28 December 2024, noting that the Group is debt-free, has cash and
cash equivalents of £343.6m, and appropriate levels of working capital. They
have also considered three financial modelling scenarios prepared by
management:
1. A "base case" scenario. This is based on the Group forecast, prepared
in December 2024 and including the actual results of the 2024 peak sales
period.
This scenario assumes future revenue and profit in line with management and
market expectations as well as investments in capital expenditure and cash
outflows for dividends and share buybacks in accordance with our capital
allocation model (see page 5).
2. A "severe but plausible" downside scenario based on the worst
12-month year-on-year actual fall ever experienced in the Group's history. For
additional context, this is more significant than the combined effect of COVID
and Brexit on 2020 actual performance.
This scenario models a reduction in most of the variable cost base
proportionate to the reduction in turnover. It includes capital expenditure at
a lower level than in the base case, but which is still in line with our
announced strategic priorities for growth, namely: new depot openings and
refurbishments; investment in our manufacturing sites, investment in digital
and expanding our international operations. It also includes dividends,
reduced from the base case in the same proportion as the reduction in profit,
and share buybacks in line with the Group's capital allocation model.
In this scenario the Board considered the current economic conditions that the
company and its customers are facing and noted that the downside scenario
included allowances for reduced demand and increased costs to reflect such
adverse conditions.
3. A "reverse stress-test" scenario. This scenario starts with the
severe but plausible downside model and reduces sales even further, to find
the maximum reduction in sales that could occur with the Group still having
headroom over the whole going concern period, without the need to take further
mitigating actions.
Capital expenditure in this scenario has been reduced to a "maintenance"
level. Variable costs have been reduced in proportion to the reduction in
turnover on the same basis as described in the severe but plausible downside
scenario. It assumes no dividends or share buybacks.
Borrowing facility and covenants
The Group has a five-year, committed, multi-currency revolving credit facility
of up to £150m which expires in September 2029 and which was not drawn at the
period end. A summary of the facility is set out in note 19 to the December
2024 Group financial statements. As part of the scenario modelling described
above, we have tested the borrowing facility covenants and the facility
remains available under all of the scenarios. We have therefore included the
credit available under the facility in our assessment of headroom.
Results of scenario modelling
In the base case and the severe but plausible downside scenarios, the Group
has significant headroom throughout the going concern period after meeting its
commitments. In the reverse stress-test scenario, the results show that sales
would have to fall by a significant amount over and above the fall modelled in
the severe but plausible downside scenario before the Group would have to take
further mitigating actions. The likelihood of this level of fall in sales is
considered to be remote.
Conclusion on going concern
Taking all the factors above into account, the directors believe that the
Group is well placed to manage its financing and other business risks
satisfactorily and have a reasonable expectation that the Group will continue
to operate and to meet its liabilities in full and as they fall due for the
going concern review period set out above. Accordingly, they continue to adopt
the going concern basis in preparing these financial statements.
LONG-TERM PROSPECTS AND VIABILITY
Assessment of long-term prospects
The Directors have assessed the Group's long-term prospects, solvency and
liquidity, with particular reference to the factors below:
Current position
- History of profitable trading, with strong net profit margins.
- Cash and cash equivalents balance at 28 December 2024 of £343.6m.
- Debt-free. Consistently cash-generative. Proven ability to
maintain strong cash balances whilst also investing for growth and returning
cash to shareholders.
- £150m committed borrowing facility, due to expire in September
2029. Unused, but available if needed.
- Strong relationships with suppliers and customers.
- Proven ability to flex the operating cost base in a severe
economic downturn.
- Robust disaster recovery and business continuity framework.
Strategy and business model
- Proven, successful business model.
- Demonstrated agility and resilience of the business model to
adverse economic conditions.
- Clear strategic direction.
- Robust assessment of principal risks
The Directors' role in the risk identification, management, and assessment
process is outlined on pages 14 to 16, together with details of the principal
risks and mitigations.
The Directors are satisfied that they have carried out a robust assessment of
the Group's principal risks over the viability period on the basis already
described in the going concern disclosure directly above.
ASSESSMENT OF VIABILITY
Time period and scenario modelling
The Directors' review of the Group's long-term viability used a three-year
period to December 2027. This was considered to be the most suitable period as
it aligns with the Group's strategic planning process.
The financial modelling to support the assessment of viability was based on
the three scenarios used for the going concern assessment and detailed above.
We have tested the borrowing facility covenants and the facility remains
available under all of the viability scenarios. We have therefore included the
credit available under the facility in our assessment of headroom.
1. The base case scenario takes the base case described in the discussion of
going concern above and extends it over the viability assessment period. It
assumes future revenue and profit in line with management expectations,
investments in capital expenditure, and cash outflows for dividends and share
buybacks in accordance with our capital allocation model (see page 5).
2. The severe but plausible downside scenario takes the same decline over
the going concern period as described in the discussion of going concern
above, and then assumes a phased recovery over the rest of the three-year
period. It assumes capex at a lower level than in the base case but which is
still in line with our announced strategic priorities for growth. It includes
dividends reduced from the base case in the same proportion as the reduction
in profit, and share buybacks in line with our capital allocation model.
3. In the reverse stress-test scenario, the model assumes a phased recovery
of margin and profit on the same bases as for the severe but plausible
downturn scenario. This is then stress-tested to find the maximum amount by
which sales in the first year would have to fall before the Group would no
longer have headroom at any point in the viability assessment period, without
taking further mitigating actions. It assumes capex at a maintenance level and
no dividends or share buybacks.
The Directors consider that the reasonably foreseeable financial effects of
any reasonably likely combination of the Group's principal risks are unlikely
to be greater than those effects which were modelled in the severe but
plausible downside and reverse stress-test scenarios.
Results of scenario modelling
The results of the base case and plausible downside scenario modelling showed
that the Group would have sufficient headroom over the viability assessment
period.
The reverse stress-test showed that the level of fall in sales required in the
first year of the viability assessment period was significantly more than the
fall modelled in the severe but plausible downturn scenario before the Group
would have to take further mitigating actions. The likelihood of this level of
fall in sales is considered to be remote.
Conclusion on long-term prospects and viability
Having considered the Group's current position, strategy, business model and
principal risks in their evaluation of the prospects of the business, and
having reviewed the outputs of the scenario modelling, the Directors concluded
that they have a reasonable expectation that the Group will continue to
operate and to meet its liabilities in full and as they fall due during the
three-year period to December 2027.
Principal Risks and Uncertainties
When we look at risks, we specifically think about internal and external
drivers of operational, compliance, financial and strategic risk areas over
short, medium, and long-term timescales.
Our principal risks
The following describes our principal risks, the possible impact arising from
them, what we do to mitigate them and our risk appetite.
1. Market Conditions
Risk and impact
We sell our products to independent builders who install them in different
types of housing. Our sales depend on the demand for repair, maintenance, and
improvement services. If activity falls in these areas, it can affect our
sales.
Mitigating factors
- We have proven expertise in managing selling prices and costs.
- We use insights from our depot network, our builders' forums and
other channels to adapt to market changes.
- We use our strong supplier relationships to identify changing
market conditions and trends to adapt.
Risk appetite
We have a low appetite for market condition risks, and we maintain close
relationships with our customers and suppliers to take appropriate action.
2. Supply Chain
Risk and impact
A failure in governance or disruption to our relationship with key suppliers,
manufacturing and distribution operations could affect our ability to service
our customers' needs. If this happened, we could lose customers and sales
Mitigating factors
- We maintain strong relationships with our suppliers.
- We adopt secure supply chain strategies such as long-term
contracts and multiple sourcing to safeguard the supply of key products.
- We have invested in our supply chain and distribution to secure
capacity and agility when it is required.
- We optimise our stock levels to reduce impact of supply chain
constraints.
Risk appetite
We have a low appetite for supply chain risks and put considerable effort into
identifying them early to enable us to prevent stock issues at our depots.
3. Maximising Growth
Risk and impact
Failure to recognise, innovate and exploit opportunities could impact on
growth. We must align our business model, risk appetite, structures, and
skills with opportunities to maximise our growth potential.
Mitigating factors
- We continue to invest in our depot environment, people, services
and systems, and our manufacturing and distribution capabilities to equip them
for growth.
- Growth activities are reviewed in the light of our risk appetite,
values, business model and culture.
Risk appetite
We have a balanced appetite for risk when it comes to growth. We are willing
to accept some risk where we see opportunity but carefully balance that risk
with the potential reward presented.
4. People
Risk and impact
Our business could be adversely affected if we were unable to attract, retain
and develop our staff, or if we lost a key member of our team.
Mitigating factors
- We continue to invest in our employee value proposition, striving
to provide the best possible working environment and growth opportunities for
all our colleagues.
- We work continuously to ensure that appropriate continuity and
succession plans are in place.
- The Remuneration Committee are regularly updated on key people
activity including plans to improve diversity and employee financial
education.
- We support our colleagues with a wide variety of apprenticeships,
accreditations, and development programmes across all areas of our business.
Risk appetite
We have a low appetite for people risk and work hard in ensuring that they
feel valued, rewarded appropriately, and have opportunities to develop and
progress in their Howdens career.
5. Health & Safety
Risk and impact
We have a large estate which employ various activities that could cause harm
to our staff, our customers, their customers, and the communities around us.
Mitigating factors
- We have invested in safe ways of working. We have developed
dedicated health and safety teams and formalised systems that help us stay
safe.
- We monitor, review, and update our practices to take account of
changes in our environment or operations and in line with best practice and
changing legislation.
- We make sure we keep talking about health and safety at every
level of the business, led by the Executive Committee.
Risk appetite
We put a great deal of effort into identifying and managing health and safety
issues before they occur and have a very low appetite for health and safety
risks.
6. Cyber Security
Risk and impact
A major cyber security breach could result in systems being unavailable,
causing operational difficulties, and/or sensitive data to be unavailable or
compromised.
Mitigating factors
- We place continuous focus on training our people in cyber
security, as we recognise that these risks are dynamic, not always technical
and awareness is our first point of mitigation.
- We employ industry standard IT security controls and regularly
engage external specialists to validate the effectiveness of our controls
against best practice.
- We have robust disaster recovery and business continuity plans
that are tested regularly.
- We adopt a continuous improvement approach to IT security and
continue to invest in the security of our systems.
Risk appetite
We have a low appetite for cyber security risk and manage IT security closely
to secure the confidentiality, integrity, and availability of our systems.
7. Business Model and Culture
Risk and impact
If we lose sight of our values, model, or culture we will not successfully
service the needs of the local independent builder and their customers, and
our long-term profitability may suffer.
Mitigating factors
- Our values, business model and culture are at the centre of our
activities and decision-making processes, and they are led by the actions of
the Board, Executive Committee, and senior management.
- The Board and Executive Committee regularly visit our depots and
factories, our logistics and support locations and hold events to reinforce
the importance of our values, model, and culture.
- Regular 'Town Hall' meetings, Regional Board meetings and Staff
Forums are held to bring together teams and discuss our successes and
challenges ahead.
Risk appetite
We have a low appetite for risks that can adversely impact on our business
model and culture and put great emphasis on identifying issues and addressing
them early.
8. Product
Risk and impact
If we do not support the builder with products that they, and their customers,
want we could lose their loyalty and sales could diminish.
Mitigating Factors
- Our product team regularly refresh our offerings to meet builders'
and end-users' expectations for design, price, quality, availability, and
sustainability.
- We work with our suppliers, external design and brand specialists
and attend product design fairs to monitor likely future trends.
- Our local depot staff have close relationships with their
customers and end-users, and we actively gather feedback from them about
changes in trends.
Risk appetite
We have a balanced appetite for product risk and are willing to take some
calculated risks when selecting new products to continue to meet the needs of
our customers.
9. Business Continuity & Resilience
Risk and impact
We have some key business operations and locations in our infrastructure that
are critical to the continuity of our business operations.
Mitigating factors
- We maintain and regularly review our understanding of what our
critical operations are.
- We ensure resilience by design, building high levels of protection
into key operations and spreading risk across multiple sites where possible.
- We ensure appropriate business continuity plans are in place for
these and have a Group wide incident management team and procedures
established.
- We regularly review our continuity plans covering our sourcing and
logistics to support peak trading.
Risk appetite
We have a low appetite for business continuity risk, ensuring that critical
functions are resilient and appropriate plans are in place to protect them.
Cautionary Statement
Certain statements in this Full Year results announcement are forward-looking.
Although the Group believes that the expectations reflected in these
forward-looking statements are reasonable, we can give no assurance that these
expectations will prove to have been correct. Because these statements contain
risks and uncertainties, actual results may differ materially from those
expressed or implied by these forward-looking statements. We undertake no
obligation to update any forward-looking statements whether as a result of new
information, future events or otherwise.
Directors' Responsibility Statement
The 2024 Annual Report and Accounts, which will be issued in March 2025, will
contain a responsibility statement in compliance with DTR 4.1.12 of the
Listing Rules which sets out that as at the date of approval of the Annual
Report and Accounts the Directors confirm to the best of their knowledge:
- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Group and
Company, and the undertakings included in the consolidation taken as a whole;
- the Annual Report and Accounts includes a fair review of the
development and performance of the business and the position of the Group and
the undertakings including the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they face; and
- the Annual Report and Accounts, taken as a whole, is fair,
balanced, and understandable and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
This responsibility statement was approved by the Board of Directors and is
signed on its behalf by:
Andrew Livingston Paul Hayes
Chief Executive Officer Chief Financial Officer
26 February 2025
Consolidated income statement
Notes 52 weeks to 53 weeks to
28 December
30 December
2024
2023
£m £m
Continuing operations:
Revenue 2 2,322.1 2,310.9
Cost of sales (891.0) (907.0)
Gross profit 1,431.1 1,403.9
Operating expenses (1,091.9) (1,063.7)
Operating profit 3 339.2 340.2
Finance income 9.9 5.5
Finance costs (21.0) (18.1)
Profit before tax 328.1 327.6
Tax on profit 4 (78.8) (73.0)
Profit for the period attributable to the equity holders of the parent 249.3 254.6
Earnings per share:
Basic earnings per 10p share 5 45.6p 46.5p
Diluted earnings per 10p share 5 45.4p 46.3p
Consolidated statement of comprehensive income
Notes 52 weeks to 53 weeks to
28 December 2024
30 December 2023
£m £m
Profit for the period 249.3 254.6
Items of other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Actuarial gains on defined benefit pension scheme 12.7 13.3
Deferred tax on actuarial losses on defined benefit pension scheme (3.2) (2.9)
Change of tax rate on deferred tax - (0.4)
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (3.1) (0.5)
Other comprehensive income for the period 6.4 9.5
Total comprehensive income for the period attributable 255.7 264.1
to equity holders of the parent
Consolidated balance sheet
Notes 28 December 2024 30 December 2023
£m £m
Non-current assets
Intangible assets 58.1 43.5
Property, plant and equipment 500.6 456.9
Lease right-of-use assets 642.3 647.9
Deferred tax asset 10.5 15.6
Long term prepayments 1.4 0.8
1,212.9 1,164.7
Current assets
Inventories 390.7 382.8
Corporation tax 25.7 39.7
Trade and other receivables 264.6 194.5
Cash and cash equivalents 343.6 282.8
1,024.6 899.8
Total assets 2,237.5 2,064.5
Current liabilities
Lease liabilities (89.3) (85.3)
Trade and other payables (386.8) (373.2)
Provisions (8.3) (9.5)
(484.4) (468.0)
Non-current liabilities
Pension liability 7 (2.1) (12.6)
Lease liabilities (591.7) (599.2)
Deferred tax liability (26.4) (3.3)
Provisions (4.2) (3.0)
(624.4) (618.1)
Total liabilities (1,108.8) (1,086.1)
Net assets 1,128.7 978.4
Equity
Share capital 55.4 55.4
Capital redemption reserve 9.8 9.8
Share premium 87.5 87.5
ESOP and share-based payments 21.3 16.6
Treasury shares (18.8) (24.0)
Retained earnings 973.5 833.1
Total equity 1,128.7 978.4
The financial statements were approved by the Board and authorised for issue
on 26 February 2025 and were signed on its behalf by
Paul Hayes
Chief Financial Officer
Consolidated statement of changes in equity
Share capital Capital redemption reserve Share premium account ESOP and share-based payments Treasury shares Retained earnings Total
£m £m £m £m £m £m £m
At 24 December 2022 56.1 9.1 87.5 11.7 (25.5) 732.8 871.7
Accumulated profit for the period - - - - 254.6 254.6
Other comprehensive income for the period - - - - - 9.5 9.5
Total comprehensive income for the period - - - - - 264.1 264.1
Current tax on share schemes - - - - - 0.3 0.3
Movement in ESOP - - - 6.4 - - 6.4
Buyback and cancellation (0.7) 0.7 - - - (50.0) (50.0)
of shares
Transfer of shares from treasury into share trust - - - (1.5) 1.5 - -
Dividends - - - - - (114.1) (114.1)
At 30 December 2023 55.4 9.8 87.5 16.6 (24.0) 833.1 978.4
Accumulated profit for - - - - 249.3 249.3
the period
Other comprehensive income for the period - - - - - 6.4 6.4
Total comprehensive income for the period - - - - - 255.7 255.7
Current tax on share schemes - - - - - 0.5 0.5
Deferred tax on share schemes - - - - - 0.1 0.1
Movement in ESOP - - - 9.9 - - 9.9
Transfer of shares from treasury into share trust - - - (5.2) 5.2 - -
Dividends - - - - - (115.9) (115.9)
At 28 December 2024 55.4 9.8 87.5 21.3 (18.8) 973.5 1,128.7
The item "Movement in ESOP" consists of the share-based payment charge in the
year, together with any receipts of cash from employees on exercise of share
options.
At the current period end there were 3,844,331 ordinary shares held in
treasury, each with a nominal value of 10p (2023: 4,918,375 shares of 10p
each).
Consolidated cash flow statement
Notes 52 weeks to 53 weeks to
28 December 2024
30 December 2023
£m £m
Profit before tax 328.1 327.6
Adjustments for:
Finance income (9.9) (5.5)
Finance costs 21.0 18.1
Depreciation and amortisation of owned assets 57.1 50.8
Depreciation, impairment and loss on termination of leased assets 97.0 90.1
Share-based payments charge 9.6 6.0
(Increase)/decrease in long term prepayments (0.6) 0.3
Difference between pensions operating charge and cash paid 1.9 (16.9)
Loss on disposal of property, plant and equipment and intangible assets 0.4 0.3
Operating cash flows before movements in working capital 504.6 470.8
Movements in working capital
Increase in inventories (7.9) (9.5)
(Increase)/decrease in trade and other receivables (70.1) 38.8
Increase / (decrease) in trade and other payables and provisions 12.7 (64.3)
(65.3) (35.0)
Cash generated from operations 439.3 435.8
Tax paid (39.2) (63.5)
Net cash flow from operating activities 400.1 372.3
Cash flows used in investing activities
Payments to acquire property, plant and equipment and intangible assets (122.0) (118.9)
Receipts from sale of property, plant and equipment and intangible assets 0.1 -
Interest received 9.8 4.7
Net cash used in investing activities (112.1) (114.2)
Cash flows used in financing activities
Payments to acquire own shares - (50.0)
Receipts from release of shares from share trust 0.4 0.5
Dividends paid to Group shareholders 6 (115.9) (114.1)
Interest paid - including on lease liabilities (20.7) (16.8)
Repayment of capital on lease liabilities (92.7) (105.0)
Net cash used in financing activities (228.9) (285.4)
Net increase / (decrease) in cash and cash equivalents 59.1 (27.3)
Cash and cash equivalents at beginning of period 282.8 308.0
Effect of movements in exchange rates on cash held 1.7 2.1
Cash and cash equivalents at end of period 343.6 282.8
(
)
Notes to the consolidated financial statements
1 General Information
Accounting period
The Group's accounting period covers the 52 weeks to 28 December 2024. The comparative period covered the 53 weeks to 30 December 2023.
Statement of compliance and basis of preparation
The Group financial statements have been prepared in accordance with UK-adopted international accounting standards.
The financial statements have been prepared on the historical cost basis, modified for certain items carried at fair value, as stated in the accounting policies.
These consolidated financial statements include the accounts of the Company and all entities controlled by the Company (its subsidiaries, together referred to as "the Group") from the date control commences until the date that control ceases.
"Control" is defined as the Group having power over the subsidiary, exposure or rights to variable returns from the subsidiary, and the ability to use its power to affect the amount of returns from the subsidiary. Further details of all subsidiaries are given in the "Additional Information" section at the back of the Annual Report and Accounts. All subsidiaries are 100% owned and the Group considers that it has control over them all.
The financial information set out above does not constitute the company's
statutory accounts for the 52 week period ended 28 December 2024 or 53 weeks
period ended 30 December 2023 but is derived from those accounts. Statutory
accounts for 2023 have been delivered to the registrar of companies, and those
for 2024 will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified4, (ii) did not include a
reference to any matters to which the auditor 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.
Going concern
The Directors have undertaken a robust assessment and concluded that it is
appropriate to prepare the financial statements on the going concern basis.
They have not identified any material uncertainties and there were no
significant judgements involved in coming to this conclusion. Full details are
set out on pages 10 to 11.
2 Segmental reporting
(a) Basis of segmentation, and other general information
Information reported to the Group's Executive Committee, which is regarded as
the chief operating decision maker, is focused on one operating segment,
Howden Joinery. Thus, the information required in respect of profit or loss,
assets and liabilities, can all be found in the relevant primary statements
and notes of these consolidated financial statements. The Howden Joinery
business derives its revenue from the sale of kitchens and joinery products,
and related services.
(b) Geographical information
The Group's operations are mainly located in the UK, with a smaller presence
in France, Belgium and the Republic of Ireland. The Group has depots in each
of these locations. The number of depots in each location at the current and
prior period ends is shown in the five year record which is located towards
the back of the Annual Report and Accounts. The Group's manufacturing and
sourcing operations are located in the UK.
The following table analyses the Group's revenues from external customers by
geographical market, irrespective of the origin of the goods:
Revenues from external customers
52 weeks to 53 weeks to
28 December 2024
30 December 2023
£m £m
UK 2,247.4 2,241.1
France, Belgium and Ireland 74.7 69.8
2,322.1 2,310.9
The following is an analysis of the carrying amount of assets, and additions
to property, plant and equipment and intangible assets, analysed by the
geographical area in which the assets are located.
Carrying amount of assets
28 December 2024 30 December 2023
£m £m
UK 2,119.6 1,935.6
France, Belgium and Ireland 117.9 128.9
2,237.5 2,064.5
Non-current assets (excluding non-current deferred tax)
28 December 2024 30 December 2023
£m £m
UK 1,129.4 1,068.3
France, Belgium and Ireland 73.0 80.8
1,202.4 1,149.1
Additions to property plant and equipment and intangible assets
52 weeks to 53 weeks to
28 December 2024
30 December 2023
£m £m
UK 114.2 108.3
France, Belgium and Ireland 3.3 9.1
117.5 117.4
3 Operating profit
Operating profit has been arrived at after (charging)/crediting:
52 weeks to 53 weeks to
28 December 2024 30 December 2023
£m £m
Cost of inventories recognised as an expense (889.5) (900.9)
Write down of inventories (1.5) (6.1)
Loss on disposal of fixed assets (0.4) (0.3)
Auditor's remuneration for audit services (1.4) (1.3)
All of the items above relate to continuing operations.
4 Current tax
(a) Tax in the income statement
52 weeks to 53 weeks to
28 December 2024 30 December 2023
£m £m
Current tax:
Current year 60.5 64.7
Adjustments in respect of previous periods (6.8) (8.2)
Total current tax 53.7 56.5
Deferred tax:
Current year 21.2 14.9
Adjustments in respect of previous periods 3.9 0.9
Effect of changes in tax rate - 0.7
Total deferred tax 25.1 16.5
Total tax charged in the income statement 78.8 73.0
UK Corporation tax is calculated at 25.0% (2023: 23.5%) of the estimated
assessable profit for the period. Tax for other countries is calculated at the
rates prevailing in the respective jurisdictions.
(b) Tax relating to items of other comprehensive income or changes in equity
52 weeks to 53 weeks to
28 December 2024
30 December 2023
£m
£m
Deferred tax charge to other comprehensive income on actuarial difference on 3.2 2.9
pension scheme
Change of rate effect on deferred tax - 0.4
Deferred tax credit to equity on share schemes (0.1) -
Current tax credit to equity on share schemes (0.5) (0.3)
Total charge to other comprehensive income or changes 2.6 2.9
in equity
(c) Reconciliation of the total tax charge
The total tax charge for the period can be reconciled to the result per the
income statement as follows:
52 weeks to 53 weeks to
28 December 2024 30 December 2023
£m £m
Profit before tax 328.1 327.6
Tax at the UK corporation tax rate of 25.0% (2023: 23.5%) 82.0 77.0
IFRS2 share scheme charge 0.1 0.5
Expenses not deductible for tax purposes 1.7 2.9
Overseas losses not utilised 6.3 6.2
Non-qualifying depreciation 1.6 1.0
Rate change - 0.7
Patent box claim (10.0) (8.0)
Other tax adjustments in respect of previous years (2.9) (7.3)
Total tax charged in the income statement 78.8 73.0
The Group's effective rate of tax is 24.0% (2023: 22.3%).
5 Earnings per share
From continuing operations 52 weeks to 28 December 2024 53 weeks to 30 December 2023
Earnings Weighted average number of shares Earnings Earnings Weighted average number of shares Earnings
per share
per share
£m m
£m m
p p
Basic earnings per share 249.3 546.7 45.6 254.6 548.1 46.5
Effect of dilutive share options - 2.1 (0.2) - 2.1 (0.2)
Diluted earnings per share 249.3 548.8 45.4 254.6 550.2 46.3
The difference between the weighted average number of shares used in the
calculation of basic earnings per share and the total number of shares in
issue at the period end is due to the net effect of time-apportioned
adjustments for shares held in treasury, shares held in trust which are not
unconditionally vested, and shares bought back and cancelled in the period.
6 Dividends
Amounts recognised as distributions to equity holders in 52 weeks to 53 weeks to
the period:
28 December 2024 30 December 2023
£m £m
Final dividend for the 52 weeks to 24 December 2022 - 15.9p/share - 87.8
Interim dividend for the 53 weeks to 30 December 2023 - 4.8p/share - 26.3
Final dividend for the 53 weeks to 30 December 2023 - 16.2p/share 89.0
Interim dividend for the 52 weeks to 28 December 2024 - 4.9p/share 26.9
115.9 114.1
Dividends proposed at the end of the period (but not recognised in the 52 weeks to
period):
28 December 2024
£m
Proposed final dividend for the 52 weeks to 28 December 2024 - (16.3p/share) 89.2
The Directors propose a final dividend in respect of the 52 weeks to 28
December 2024 of 16.3p per share, payable to ordinary shareholders who are on
the register of shareholders on 11 April 2025, and payable on 23 May 2025.
The proposed final dividend for the current period is subject to the approval
of the shareholders at the 2025 Annual General Meeting, and has not been
included as a liability in these financial statements.
Dividends have been waived indefinitely on all shares held by the Group's
employee share trusts which have not yet been awarded to employees.
7 Retirement benefit obligations
The Group operates both a defined benefit and defined contribution pension
plan. The defined benefit pension plan was closed to new entrants from April
2013, and closed to future accrual on 31 March 2021.
(a) Total amounts charged in respect of pensions in the period
52 weeks to 53 weeks to
28 December 2024 30 December 2023
£m £m
Charged to the income statement:
Defined benefit plan - administration cost 1.9 2.3
Defined benefit plan - total service cost 1.9 2.3
Defined benefit plan - net finance charge 0.3 1.3
Defined contribution plans - total operating charge 43.5 42.5
Total net amount charged to profit before tax 45.7 46.1
Charged to equity:
Defined benefit plan - actuarial gain (12.7) (13.3)
Total charge 33.0 32.8
(b) Other information - defined benefit pension plan
Key assumptions used in the valuation of the plan 52 weeks to 53 weeks to
28 December 2024 30 December 2023
Discount rate 5.50% 4.55%
Inflation assumption - RPI 3.15% 3.05%
Inflation assumption - CPI 2.75% 2.60%
Rate of increase of pensions in deferment capped at lower of CPI and 5% 2.75% 2.60%
Rate of CARE revaluation capped at lower of RPI and 3% 2.30% 2.40%
Rate of increase of pensions in payment:
- pensions with increases capped at lower of CPI and 5% 2.70% 2.60%
- pensions with increases capped at lower of CPI and 5%, with a 3.55% 3.40%
3% minimum
- pensions with increases capped at the lower of LPI and 2.5% 2.00% 2.15%
- pensions with increases capped at the lower of CPI and 3% 2.15% 2.20%
Life expectancy (yrs): pensioner aged 65
- male 85.7 85.7
- female 88.0 88.0
Life expectancy (yrs): non-pensioner aged 45
- male 86.7 86.7
- female 89.6 89.6
Sensitivities
Present value of Projected 2025 pension cost
scheme liabilities at
28 December 2024
£m
Total service Net interest Net pension
cost
(credit)/cost
(credit)/
expense
£m £m
£m
Assumption
Current valuation, using the assumptions above 808 2.1 0.1 2.2
0.5% decrease in discount rate 860 2.1 3.0 5.1
0.5% increase in inflation 829 2.1 1.3 3.4
1 year increase in longevity 836 2.1 1.7 3.8
The sensitivities above are applied to the defined benefit obligation at the
end of the reporting period, and the projected total service cost for 2025.
Whilst the analysis does not take account of the full distribution of cash
flows expected under the scheme, it does provide a reasonable approximation.
The same amount of movement in the opposite direction would produce a broadly
equal and opposite effect.
To address the requirements of both IAS 1 and IAS 19, we note that the effect
on the discount rate and inflation sensitivities of flexing them down by 0.25%
or up by 1% in a linear manner would give materially correct results.
28 December 2024 30 December 2023
Analysis of plan assets Quoted market price in an active market No quoted market price in an active market Quoted market price in an active market No quoted market price in an active market
£m £m £m £m
LDI*
- fixed income 315.8 - 282.9 -
- derivatives (38.0) - 20.5 -
- cash 8.3 - 12.7 -
Equities
- passive equities - - - 49.8
Alternative growth assets
- insurance-linked securities - 78.9 - 70.8
Corporate bonds - - 0.1 -
Commercial property funds - 210.2 - 233.4
Other secure income 113.9 107.0 60.0 161.9
Asset-backed securities 0.5 - 0.5 -
Cash and cash equivalents 9.3 - 8.3 -
Total 409.8 396.1 385.1 515.9
The plan assets do not include any of the Group's own financial instruments
nor any property occupied by, or other assets used by, the Group.
*LDI - Liability Driven Investments - is a portfolio of investments chosen
with the aim that its value is expected to move in line with movements in the
value of the underlying liabilities. The LDI portfolio can include a variety
of investments, the simplest being conventional and index-linked gilts with
appropriate maturities. LDI portfolios often use a degree of leverage to
achieve the same aim but to allow more return-seeking assets to be invested in
at the same time. Derivatives and repurchase agreements are the main tools
used to employ leverage.
Balance sheet
The amount included in the balance sheet arising from the Group's obligations
in respect of defined benefit retirement benefit plan is as follows:
28 December 2024 30 December 2023
£m £m
Present value of defined benefit obligations (808.0) (913.6)
Fair value of scheme assets 805.9 901.0
Deficit in the scheme, recognised in the balance sheet (2.1) (12.6)
Movements in the present value of defined benefit obligations were as follows:
52 weeks to 53 weeks to
28 December 2024
30 December 2023
£m £m
Present value at start of period 913.6 930.5
Administration cost 1.9 2.3
Interest on obligation 40.6 42.8
Actuarial losses/(gains):
- changes in financial assumptions (102.7) 14.2
- changes in demographic assumptions (1.6) (26.5)
- experience 0.3 (9.2)
Benefits paid, including expenses (44.1) (40.5)
Present value at end of period 808.0 913.6
Movements in the fair value of the plan's assets is as follows:
52 weeks to 53 weeks to
30 December 2023
28 December 2024
£m
£m
Fair value at start of period 901.0 889.0
Interest income on plan assets 40.3 41.5
Employer contributions - 19.2
Loss on assets excluding amounts included in net interest (91.3) (8.2)
Benefits paid, including expenses (44.1) (40.5)
Fair value at end of period 805.9 901.0
Movements in the deficit during the period are as follows:
52 weeks to 53 weeks to
28 December 2024 30 December 2023
£m £m
Deficit at start of period (12.6) (41.5)
Administration cost (1.9) (2.3)
Employer contributions - 19.2
Other finance charge (0.3) (1.3)
Total remeasurements recognised in other comprehensive income 12.7 13.3
Deficit at end of period (2.1) (12.6)
Income statement
Amounts recognised in the income statement arising from the Group's
obligations in respect of the defined benefit plan are shown below.
Amount charged to operating profit: 52 weeks to 53 weeks to
28 December 2024
30 December 2023
£m £m
Current service cost - -
Administration cost 1.9 2.3
Total pensions cost 1.9 2.3
The total pensions cost is included in Staff Costs.
Amount credited to other finance charges: 52 weeks to 53 weeks to
28 December 2024
30 December 2023
£m
£m
Interest income on plan assets (40.3) (41.5)
Interest cost on defined benefit obligation 40.6 42.8
Net charge 0.3 1.3
The actual return on plan assets was a loss of £51.0m (53 weeks to 30
December 2023: gain of £33.5m).
Virgin Media case
In June 2023, the High Court issued a decision in the case of Virgin Media
Limited v NTL Pension Trustees II Limited and others, concerning the validity
of certain historical pension changes due to the absence of the actuarial
confirmation required by law. In July 2024, the Court of Appeal dismissed the
appeal brought by Virgin Media Ltd against aspects of the June 2023 decision.
The conclusions reached by the court in this case may have implications for
other UK defined benefit plans.
The plan's legal advisors are currently carrying out a review to identify any
relevant pension changes and, for any such changes identified, to verify
whether there is actuarial confirmation. This review is in progress. The
defined benefit obligation presented below reflects the plan benefits
currently being administered, i.e. it treats all past rule changes as being
valid.
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