REG - Howden Joinery Grp - Half Yearly Report <Origin Href="QuoteRef">HWDN.L</Origin> - Part 1
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Howden Joinery Group PLC
24 July 2014
The information presented in this document relates to the 24 weeks to 14 June
2014 and the 24 weeks to 15 June 2013, unless otherwise stated. Figures for
2013 have been restated to reflect the implementation of IAS19 (revised) this
period.
HOWDEN JOINERY GROUP PLC
2014 HALF-YEARLY REPORT
HIGHLIGHTS
Chief Executive, Matthew Ingle, said:
"Howdens has performed well, with sales and profit increasing significantly,
as the improved trading conditions seen since last summer continued.
"Feedback from our depots is positive and we've seen a good start to the
second half of the year."
Financial results (continuing operations)1
· Howden Joinery UK depot revenue increased by 11.6% to £428.2m (up 8.7%
on a same depot basis). Group revenue was £435.4m (2013: £390.8m);
· Gross profit margin was 63.2% (2013: 61.5%);
· Operating profit rose to £57.6m (2013: £44.2m);
· Profit before tax increased to £57.2m (2013: £41.6m);
· Basic earnings per share increased to 6.6p (2013: 4.8p);
· Net cash of £161.1m at 14 June 2014 (28 December 2013: £140.5m net
cash,
15 June 2013: £102.0m net cash);
· Interim dividend of 1.9p per share declared (2013: 1.0p).
Business developments
· We continue to invest in future growth across the whole business:
- in line with our plans, 17 new UK depots opened so far in 2014, bringing
total to 576;
- capital expenditure totalled £17.2m (2013: £8.8m), reflecting increased
investment in depots.
Current trading and outlook
· Howden Joinery UK depot revenue increased by 14.0% in the first four
week period of the second half of the year;
· The Board is pleased with the good first half performance and, while
we still have our important "Period 11" to come and face risks to gross margin
from exchange rates and cost inflation, the Group is well placed to achieve
its expectations for the full year.
1. 2013 comparatives exclude exceptional items.
Enquiries
Investors/analysts:
Gary Rawlinson
Head of Investor Relations +44 (0)7989 397527
+44 (0)207 535 1127 (not on 24 July)
Media:
Maitland +44 (0)207 379 5151
Liz Morley/Angus Maitland
Note for editors:
Howden Joinery Group Plc is the parent company of Howden Joinery (Howdens) and
employs over 6,600 people, primarily in the UK. Howdens is engaged in the
sale of kitchens and joinery products to trade customers, primarily small
local builders, through over 575 UK depots, and is the UK's leading supplier
of kitchens. Around one-third of the products it sells are manufactured in
the company's own factories in Runcorn, Cheshire, and Howden, East Yorkshire.
The business also has a small operation in northern France.
SUMMARY OF GROUP RESULTS
Continuing operations before exceptional items 1, £m unless stated 2014 20132
Revenue Group 435.4 390.8
including: - Howden Joinery UK depots 428.2 383.7
Gross profit 275.2 240.4
Gross profit margin, % 63.2 61.5
Operating profit 57.6 44.2
Profit before tax 57.2 41.6
Basic earnings per share 6.6p 4.8p
Dividend per share 1.9p 1.0p
Net cash at end of period 161.1 102.0
1. There were no exceptional items from continuing operations in the first
half of 2014. In the first half of 2013, there was an exceptional operating
cost before tax of £4.5m.
In the first half of 2014, there was an exceptional profit after tax on
discontinued operations of £9.8m. There were no discontinued operations in
2013.
2. 2013 figures have been restated to reflect IAS19 (revised), which has
been implemented in the current period (see Note 2).
INTERIM MANAGEMENT REPORT
FINANCIAL REVIEW
The information presented below relates to the 24 weeks to 14 June 2014 and
the 24 weeks to 15 June 2013, unless otherwise stated. Figures for 2013 have
been restated to reflect the implementation of IAS19 (revised) this period.
FINANCIAL RESULTS FOR FIRST HALF OF 2014 (CONTINUING OPERATIONS BEFORE
EXCEPTIONAL ITEMS UNLESS STATED1)
The financial results of the Group during the first half of 2014 benefited
from the Group's competitive position, actions taken to improve performance,
ongoing investment in our people, products and service, and the continuation
of the improved market conditions seen since last summer.
Total Group revenue increased by £44.6m to £435.4m.
Revenue £m 2014 2013
Group 435.4 390.8
comprising:Howden Joinery UK depotsHowden Joinery French depots 428.27.2 383.77.1
Howden Joinery UK depots' revenue rose by 11.6%, increasing 8.7% on a same
depot basis.
As well as reflecting improved market conditions, this growth has been
achieved through a number of factors and is testament to the strength of our
business model. It reflects the benefit of a price increase that was
implemented early in the year, as was the case in 2013. In addition, the
number of customer accounts has continued to grow.
Sales by our French depots of £7.2m increased by more than 5% in constant
currency terms.
Gross profit rose by £34.8m to £275.2m. The gross profit margin of 63.2%
(2013: 61.5%) reflects the benefit of the price increase implemented early in
the year. It also includes a currency gain of £2.7m, reflecting the
strengthening of the pound against the E and the US$ seen so far this year.
Selling and distribution costs, administrative expenses and other income
increased by £21.4m to £217.6m. This reflects the costs of new depots, the
impact of inflation, particularly on payroll costs, and additional costs
incurred to support the growth of the business.
Operating profit increased by £13.4m to £57.6m.
The net interest charge decreased by £2.2m to £0.4m, reflecting a lower
finance expense in respect of pensions. The net result was that profit before
tax rose by £15.6m to £57.2m. The tax charge on profit before tax was £14.9m,
an effective rate of tax of 26.0%.
In 2014, there was an exceptional profit after tax from discontinued
operations of £9.8m. This mainly comprised an income of £11.5m arising from
the release of a tax creditor, following partial resolution of a dispute with
HMRC regarding the tax treatment of certain expenses relating to our legacy
properties. In addition, it included a charge of £1.8m relating to an
increase in the provision for our remaining legacy properties.
Basic earnings per share were 6.6p (2013: 4.8p).
At 14 June 2014, the pension deficit shown on the balance sheet was £72.4m (28
December 2013: £54.3m). The increase in the deficit in the period was due to
higher liabilities arising from a decrease in the discount rate, which more
than offset the Group's contribution to fund the deficit and better than
expected returns on the scheme's assets.
There was a net cash inflow from operating activities of £35.6m. This was
after a cash contribution to the Group's pension deficit of £12.6m.
Excluding legacy property payments (£1.2m), underlying working capital
increased by £6.9m. Within this, debtors at the end of the period were £17.1m
higher than at the beginning of the period and stock levels increased by
£11.4m, reflecting the seasonality of sales. Offsetting this, creditors
increased by £21.6m, and included the then still to be paid 2013 final
dividend.
Also included within net cash flows from operating activities was tax paid
totalling £13.9m.
Payments to acquire fixed and intangible assets totalled £17.2m (2013: £8.8m),
reflecting the increased number of depots opened in the first half of 2014 and
investment in existing depots.
Reflecting the above, there was a £20.6m net cash inflow in the first half of
the year, the Group having net cash at the end of the period of £161.1m (28
December 2013: £140.5m net cash,
15 June 2013: £102.0m net cash). Excluding payments in respect of the
contribution to the pension deficit, there was a cash inflow of £33.2m.
DIVIDEND
In our 2013 Preliminary Results, we said that the Group intended to pay an
interim dividend equal to one third of the previous year's full dividend
(2013: 5.5p).
Reflecting this, the Board has approved the payment of an interim dividend of
1.9p per share (2013: 1.0p). It will be paid on 21 November 2014 to
shareholders on the register at close of business on 24October 2014.
Note 1 There were no exceptional items from continuing operations in the
first half of 2014. In the first half of 2013, there was an exceptional cost
before tax from continuing operations of £4.5m.
OPERATIONAL REVIEW
The business model of Howden Joinery is "To supply from local stock nationwide
the small builder's ever-changing, routine, integrated kitchen and joinery
requirements, assuring no-call-back quality and best local price".
Since it started in autumn 1995, the business has opened new depots and
increased turnover continuously, except for a 12-month period in 2008-9.
Even today, with over 575 depots across the UK, we continue to see the
opportunity to transform the scale of the business, seeing scope for at least
700 depots. We continue to invest in all aspects of the growth and
performance of the business, including new depots and depot operations, new
and existing employees, product development, and manufacturing and
distribution.
Depot network
17 new depots have been opened in the UK so far this year, bringing the total
to 576. A number of other depots are at various stages of the
acquisition/shopfitting process, the opening programme being in line with our
expectations to open 30 depots this year.
In the summer of 2012, we began trials of a 'virtual showroom' that is
designed to support our 1,000 depot-based kitchen designers. When working
with our builder-customers' clients in our depots, this allows kitchen designs
to be shown on a large HD television screen or projected on to a wall in the
depot in a large high definition format, as well as showing other material
designed to support product sales. Often, this will be accompanied by a
refurbishment of the office in which the designers work. This project to
roll-out 'virtual showrooms' across all of our depots has been completed.
To support further our builder-customers and improve our service to their
clients, we are undertaking a project to install A3 printers in all of our
depots. These provide our builder-customers with a technical drawing of each
kitchen design that is much more usable on-site. They also allow more
impressive visualisations of the kitchen to be provided to the builder's
client. This project will be completed by the autumn.
Product and marketing
We continue to enhance our product offering, having introduced a number of new
products in the first half of the year across all of our product categories.
Notable amongst these were: eleven new kitchens - six additional gloss colour
options and two more matt options in our Greenwich family, a blue option in
our premium Tewkesbury family, a new ivory tongue and grooved panel kitchen
called Hartwell, and our first regionally stocked kitchen, Farringdon, a new
premium gloss range. We have also introduced a collection of premium kitchen
handles, a range of more contemporary stainless steel sinks, some new large
print laminate worktops and expanded the backboard range into new colours and
designs. With our joinery collection, we have launched a range of grey oak
laminate flooring, a collection of more contemporary external door designs and
focused our hardware handle development on a range of competitively priced
rose handles.
We continue to invest in our marketing communications. As well as updating
our range of marketing literature and the Howdens website (www.howdens.com),
we embarked on a partnership with pottery designer and manufacturer Emma
Bridgewater. Emma designed for us a pair of Howdens mugs that were given away
with every kitchen plan during April and May, the partnership being featured
in our adverts and on the Howdens website. To further raise awareness of the
Howdens brand, we are attending 13 county shows and agriculture fairs
throughout the UK this summer.
Manufacturing and logistics operations
We will shortly be replacing the 90 'tractor units' for our fleet of lorries.
These will be Euro 6 compliant and will be fitted with the latest technology
for environmental compliance. In addition, they will have enhanced safety
features, including:
· crash avoidance technology that assists the driver when it detects the
risk of a collision;
· forward facing cameras for incident recording, to help with accident
investigation and insurance claims.
IT infrastructure
We have completed a project to refresh a large part of our central IBM and HP
hardware infrastructure in our two datacentres.
France
In France, we have seen an improvement in the financial performance of the
depots, after amending the pricing strategy. This has given us the confidence
to extend the trial in two directions. First, we plan to open two depots in
Belgium that will be the same format as our existing French depots and will
allow us to learn about a slightly different market. Second, we plan to open
an outlet with a new format and name further south in France. This will be
larger than existing depots, and will be open to both trade and retail
customers.
GROUP DEVELOPMENTS
Legacy properties
Since the 2013 Preliminary Results, the lease of one legacy property has
expired. This means that there are now seven legacy properties remaining,
with net annual rent and rates of less than £2m.
Corporate website
The Group's corporate website (www.howdenjoinerygroupplc.com) has been
re-launched. The 'About us' section now includes a number of short films that
give an overview of the business, show how our depots operate and how we
interact with our builder-customers, and give an insight into our supply
operations.
CURRENT TRADING AND OUTLOOK
The good sales performance seen in the first half of 2014 has continued in the
first four weeks of the second half of the year. In this period, total sales
of Howden Joinery UK depots rose by 14.0% on the same period in 2013, albeit
at a slightly moderated rate of growth than seen recently, reflecting the
increasingly challenging comparatives faced in the second half.
The Board is pleased with the good first half performance and, while we still
have our important "Period 11" to come and face risks to gross margin from
exchange rates and cost inflation, the Group is well placed to achieve its
expectations for the full year.
GOING CONCERN
The Group meets its day to day working capital requirements through cash
generated from operations, and, if required, by utilising an asset-backed
lending facility of £140m which expires in July 2016.
The Group's forecasts and projections have been stress-tested for reasonably
possible adverse variations in economic conditions and trading performance.
The results of this testing show that the Group should be able to operate
within the level of its current facility and covenants. After making due
enquiries the directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the half-yearly condensed financial statements.
RELATED PARTIES
Related Party transactions are disclosed in Note 15 to the condensed set of
financial statements. There have been no material changes to the related
party transactions described in the last Annual Report & Accounts.
RISKS AND UNCERTAINTIES
The Board continually assesses and monitors the key risks of the business.
The principal risks and uncertainties that could have a material impact on the
Group's performance over the remaining 28 weeks of the financial year have not
changed from those which are set out in detail on pages 22 to 23 of the
Group's 2013 Annual Report & Accounts, and which are summarised below:
· Market conditions - a severe downturn in market conditions could put
pressure on the Group's ability to meet sales and profit forecasts, which in
turn could put pressure on cash availability and banking covenants;
· Failure to implement the Group's business model and culture - could
have an adverse effect on the Group's future financial condition and
profitability;
· Failure to maximise exploiting the growth potential of the businesses -
could adversely affect the Group's ability to obtain maximum benefit from its
growth potential;
· Continuity of supply - could adversely affect the Group's ability to
implement the business model;
· Loss of key personnel - could adversely affect the Group's operations.
A copy of the Group's 2013 Annual Report & Accounts is available on the
Group's website, www.howdenjoinerygroupplc.com.
CAUTIONARY STATEMENT
Certain statements in this Half-Yearly Report 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.
RESPONSIBILITY STATEMENT
We confirm that, to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance
with IAS 34 'Interim Financial Reporting';
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first 24
weeks and description of principal risks and uncertainties for the remaining
28 weeks of the year); and
(c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
The directors are responsible for the maintenance and integrity of the
corporate and financial information included in the company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial information differs from legislation in other jurisdictions.
By order of the Board
Matthew Ingle Mark Robson
Chief Executive Officer Deputy Chief Executive and Chief Financial Officer
23 July 2014
Condensed consolidated income statement
24 weeks to 15 June 2013 - unauditedrestated* 52 weeks to 28 December 2013 - auditedrestated*
Notes 24 weeks to 14 June 2014£munaudited Before exceptional items£m Exceptional items**£m Total£m Before exceptional items£m Exceptional items**£m Total£m
Continuing operations:
Revenue - sale of goods 435.4 390.8 - 390.8 956.5 - 956.5
Cost of sales (160.2) (150.4) - (150.4) (366.3) - (366.3)
Gross profit 275.2 240.4 - 240.4 590.2 - 590.2
Selling & distribution costs (183.0) (163.5) - (163.5) (375.5) - (375.5)
Administrative expenses (34.5) (32.7) (4.5) (37.2) (74.0) (4.5) (78.5)
Other operating income (0.1) - - - - - -
Operating profit 57.6 44.2 (4.5) 39.7 140.7 (4.5) 136.2
Finance income 7 0.3 0.2 - 0.2 0.4 - 0.4
Finance expense 8 - (0.2) - (0.2) (0.4) - (0.4)
Other finance expense - pensions 8 (0.7) (2.6) - (2.6) (5.7) - (5.7)
Profit before tax 57.2 41.6 (4.5) 37.1 135.0 (4.5) 130.5
Tax charge for the period 9 (14.9) (10.8) 0.4 (10.4) (33.7) 0.5 (33.2)
Profit after tax 42.3 30.8 (4.1) 26.7 101.3 (4.0) 97.3
*Restated for amendments to IAS19 - see Note 2. ** See Note 6.
Condensed consolidated income statement - continued
24 weeks to 15 June 2013 - unauditedrestated* 52 weeks to 28 December 2013 - auditedrestated*
Notes 24 weeks to 14 June 2014£munaudited Before exceptional items£m Exceptional items**£m Total£m Before exceptional items£m Exceptional items**£m Total£m
Discontinued operations:
Exceptional item - loss on discontinued operations 17 (1.7) - - - - - -
Exceptional item - tax on discontinued operations 17 11.5 - - - - - -
Profit after tax 9.8 - - - - - -
Profit for the period attributable to the equity holders of the parent 52.1 30.8 (4.1) 26.7 101.3 (4.0) 97.3
Earnings per share:
From continuing operations
Basic earnings per 10p share 10 6.6p 4.2p 15.3p
Diluted earnings per 10p share 10 6.6p 4.2p 15.2p
From continuing and discontinued operations
Basic earnings per 10p share 10 8.1p 4.2p 15.3p
Diluted earnings per 10p share 10 8.1p 4.2p 15.2p
* Restated for amendments to IAS19 - see Note 2. ** See Note 6.
Condensed consolidated statement of comprehensive income
Notes 24 weeks to14 June 2014 unaudited£m 24 weeks to15 June 2013unauditedrestated*£m 52 weeks to28 December 2013auditedrestated*£m
Profit for the period 52.1 26.7 97.3
Items of other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Actuarial (loss)/gain on defined benefit pension scheme 13 (30.0) 51.1 73.0
Deferred tax on actuarial loss/gain on defined benefit pension scheme 6.0 (11.8) (16.8)
Effect of change in UK tax rate on deferred tax on cumulative actuarial loss - - (1.6)
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (0.2) 0.4 0.5
Other comprehensive income for the period (24.2) 39.7 55.1
Total comprehensive income for the period attributable to equity holders of the parent 27.9 66.4 152.4
*Restated for amendments to IAS19 - see Note 2.
Condensed consolidated balance sheet
Notes 14 June 2014unaudited£m 15 June 2013unaudited£m 28 December 2013audited£m
Non-current assets
Other intangible assets 3.6 3.8 3.7
Property, plant and equipment 12 103.1 90.2 95.5
Deferred tax asset 22.4 29.5 23.2
Bank borrowings net of prepaid fees 0.6 1.2 0.9
129.7 124.7 123.3
Current assets
Bank borrowings net of prepaid fees 0.6 - 0.1
Inventories 134.8 120.6 123.4
Trade and other receivables 139.5 121.0 122.4
Cash at bank and in hand 160.0 101.7 139.7
434.9 343.3 385.6
Total assets 564.6 468.0 508.9
Current liabilities
Trade and other payables (208.8) (173.5) (158.4)
Current tax liability (0.4) (9.2) (18.7)
Current borrowings (0.1) (0.9) (0.1)
(209.3) (183.6) (177.2)
Non-current liabilities
Non-current borrowings - - (0.1)
Pension liability 13 (72.4) (93.3) (54.3)
Deferred tax liability (3.6) (4.2) (3.6)
Provisions 14 (12.7) (16.2) (12.0)
(88.7) (113.7) (70.0)
Total liabilities (298.0) (297.3) (247.2)
Net assets 266.6 170.7 261.7
Equity
Share capital 64.6 64.3 64.3
Share premium account 87.5 87.5 87.5
ESOP reserve (1.5) (12.9) (6.3)
Other reserves 28.1 28.1 28.1
Retained earnings 87.9 3.7 88.1
Total equity 266.6 170.7 261.7
Condensed consolidated statement of changes in equity
Share capital£m Share premium account£m ESOP reserve£m Other reserves£m Retained earnings£m Total£m
24 weeks to 14 June 2014
As at 28 December 2013 - audited 64.3 87.5 (6.3) 28.1 88.1 261.7
Accumulated profit for the period - - - - 52.1 52.1
Dividend declared - - - - (28.8) (28.8)
Net actuarial loss on defined benefit pension scheme - - - - (24.0) (24.0)
Deferred tax on share schemes - - - - (3.6) (3.6)
Current tax on share schemes - - - - 4.6 4.6
Currency translation differences - - - - (0.2) (0.2)
Net movement in ESOP - - 4.8 - - 4.8
Issue of new shares 0.3 - - - (0.3) -
As at 14 June 2014 - unaudited 64.6 87.5 (1.5) 28.1 87.9 266.6
During the current period, the Group issued 3,662,341 shares.
24 weeks to 15 June 2013
As at 29 December 2012 - audited 64.2 87.2 (19.0) 28.1 (47.7) 112.8
Accumulated profit for the period* - - - - 26.7 26.7
Dividend declared - - - - (17.0) (17.0)
Net actuarial gain on defined benefit pension scheme* - - - - 39.3 39.3
Deferred tax on share schemes - - - - (2.0) (2.0)
Current tax on share schemes - - - - 4.0 4.0
Currency translation differences - - - - 0.4 0.4
Net movement in ESOP - - 6.1 - - 6.1
Issue of new shares 0.1 0.3 - - - 0.4
As at 15 June 2013 - unaudited 64.3 87.5 (12.9) 28.1 3.7 170.7
During the period above, the Group issued 766,298 shares.
*Restated for amendments to IAS19 - see Note 2.
Condensed consolidated statement of changes in equity - continued
Share capital£m Share premium account£m ESOP reserve£m Other reserve£m Retained earnings£m Total£m
52 weeks to 28 December 2013
As at 29 December 2012 - audited 64.2 87.2 (19.0) 28.1 (47.7) 112.8
Accumulated profit for the period* - - - - 97.3 97.3
Dividends declared and paid - - - - (23.3) (23.3)
Net actuarial gain on defined benefit scheme* - - - - 56.2 56.2
Effect of change in UK tax rate on deferred tax on cumulative actuarial loss - - - - (1.6) (1.6)
Current tax on share schemes - - - - 4.6 4.6
Deferred tax on share schemes - - - - 3.1 3.1
Effect of change in UK tax rate on deferred tax on cumulative balance on share schemes - - - - (1.0) (1.0)
Currency translation differences - - - - 0.5 0.5
Net movement in ESOP - - 12.7 - - 12.7
Issue of new shares 0.1 0.3 - - - 0.4
As at 28 December 2013 - audited 64.3 87.5 (6.3) 28.1 88.1 261.7
During the period above, the Group issued 766,298 shares.
*Restated for amendments to IAS19 - see Note 2.
Condensed consolidated cash flow statement
Notes 24 weeks to14 June 2014 unaudited£m 24 weeks to15 June 2013unauditedrestated*£m 52 weeks to28 December 2013auditedrestated*£m
Group operating profit before tax and interest:
continuing operations 57.6 39.7 136.2
discontinued operations (1.7) - -
55.9 39.7 136.2
Adjustments for:
Depreciation and amortisation included in operating profit 9.4 8.1 18.7
Share-based payments charge 3.1 2.4 8.4
Profit on disposal of property, plant and equipment, and intangible assets 0.1 - -
Exceptional items (before tax) 1.7 4.5 4.5
Operating cash flows before movements in working capital and exceptional items 70.2 54.7 167.8
Movements in working capital and exceptional items
Increase in stock (11.4) (4.7) (7.5)
Increase in trade and other receivables (17.1) (25.0) (26.4)
Increase in trade and other payables and provisions 20.4 13.1 11.7
Difference between pensions operating charge and cash paid* (12.6) (12.7) (32.9)
Net cash outflow - exceptional items - (3.9) (4.5)
(20.7) (33.2) (59.6)
Cash generated from operations 49.5 21.5 108.2
Tax paid (13.9) (11.3) (21.0)
Net cash flows from operating activities 35.6 10.2 87.2
*Restated for amendments to IAS19 - see Note 2.
Condensed consolidated cash flow statement - continued
Notes 24 weeks to14 June 2014 unaudited£m 24 weeks to15 June 2013unauditedrestated*£m 52 weeks to28 December 2013auditedrestated*£m
Net cash flows from operating activities 35.6 10.2 87.2
Cash flows used in investing activities
Payments to acquire property, plant and equipment, and intangible assets (17.2) (8.8) (24.7)
Receipts from sale of property, plant and equipment, and intangible assets 0.2 - -
Interest received 0.2 0.2 0.4
Net cash used in investing activities (16.8) (8.6) (24.3)
Cash flows from financing activities
Interest paid - (0.1) (0.1)
Receipts from issue of own share capital - 0.4 0.4
Receipts from release of shares from share trust 1.7 3.7 4.3
Decrease in loans (0.2) (0.6) (1.1)
Repayment of capital element of finance leases - - (0.1)
Dividends paid to Group shareholders 11 - - (23.3)
Net cash from/(used in) financing activities 1.5 3.4 (19.9)
Net increase in cash and cash equivalents 20.3 5.0 43.0
Cash and cash equivalents at beginning of period 16 139.7 96.7 96.7
Cash and cash equivalents at end of period 16 160.0 101.7 139.7
*Restated for amendments to IAS19 - see Note 2.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1 General information
The results for the 24 week periods ended 14 June 2014 and 15 June 2013 are
unaudited but have been reviewed by the Group's auditor, whose report on the
current period forms part of this document. The information for the 52 week
period ended 28 December 2013 does not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. A copy of the statutory
accounts for that period has been delivered to the Registrar of Companies and
is available via the Group's website at www.howdenjoinerygroupplc.com. The
auditors' report on those accounts was not qualified or modified, did not draw
attention to any matters by way of emphasis and did not contain statements
under section 498(2) or (3) of the Companies Act 2006.
2 Accounting policies
The annual financial statements of Howden Joinery Group Plc are prepared in
accordance with IFRSs as adopted by the European Union. The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34 "Interim
Financial Reporting", as adopted by the European Union.
Basis of preparation
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out on pages 4 to 8,
which include a summary of the Group's financial position, its cash flows and
borrowing facilities, and a discussion of why the directors consider that the
going concern basis is appropriate.
The same accounting policies, presentation methods, and methods of computation
are followed in the condensed set of financial statements as applied in the
Group's latest annual audited financial statements, except for the adoption of
the revisions to IAS19 (see below), and that the taxation charge for the
half-year is calculated by applying the annual estimated effective tax rate to
the profit for the period.
Adoption of new accounting standard in the period
The Group has implemented IAS19 (revised) for the first time in the current
period. The revised standard has been adopted retrospectively and in
accordance with the transitional provisions set out in IAS19.173. The two
comparative periods have been restated where relevant. The main effects of
adopting this standard are outlined below:
· The administration costs of the defined benefit pension scheme, which
were previously deducted from returns on assets, are now added to the pension
expense and thus form part of administrative expenses.
· The interest income on plan assets, which forms part of the net
pensions finance charge, is now calculated at the same rate used to calculate
the interest expense on the pension liability. The rate was previously based
on the expected returns on the various asset types held in the investment
portfolio, but it is now based on the discount rate and derived from
high-quality corporate bond yields.
· As the Group has always recognised actuarial gains and losses in full
and immediately, there is no effect on the prior period defined benefit
obligation.
The result of the restatement was to give a decrease in the profit for the
period for each of the periods presented, and an equal and opposite increase
in other comprehensive income for each period. This resulted in no change to
total comprehensive income or to net assets. As the profit for the period
decreased, so did the restated EPS for each period. Further details of the
amounts of these changes and the line items affected are given in Note 13
(a).
3 Segmental results
Basis of segmentation
Information reported to the Group's Chief Executive is focussed on one
operating segment, Howden Joinery. Thus, the information required in respect
of segmental disclosure can all be found in the condensed consolidated income
statement and condensed consolidated balance sheet.
4 Seasonality of revenue
Howden Joinery sales are more heavily weighted to the second half of the
financial year. This partly reflects the fact that there are 24 weeks in the
first half of the financial year and 28 weeks in the second half. It also
reflects sales in the peak October trading period. In the last two financial
years, approximately 60% of sales
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