REG - Howden Joinery Grp - Half Yearly Report <Origin Href="QuoteRef">HWDN.L</Origin> - Part 2
23/07/2015 07:00
- Part 2: For the preceding part double click ID:nRSW8276Ta
52 weeks to 27 December 2014 - (1.9p/share) 12.2
Proposed final dividend for the 52 weeks to 27 December 2014 - (6.5p/share) 41.6
9 Property, plant and equipment
During the period, the Group made additions of £11.6m to property, plant and
equipment (24 weeks to 14 June 2014 - £17.2m; 52 weeks to 27 December 2014 -
£31.6m). It also disposed of property, plant and equipment with a net book
value of £0.8m (24 weeks to 14 June 2014 - £0.3m; 52 weeks to 27 December 2014
- £0.8m) for proceeds of £nil (24 weeks to 14 June 2014 - £0.2m; 52 weeks to
27 December 2014 - £0.3m).
There are non-cancellable commitments to purchase property, plant and
equipment of £8.5m at the current period end (24 weeks to 14 June 2014 -
£4.9m; 52 weeks to 27 December 2014 - £4.3m).
10 Retirement benefit obligations
(a) Total amounts charged in respect of pensions in the period
24 weeks to 13 June 2015unaudited£m 24 weeks to14 June 2014 unaudited£m 52 weeks to27 December 2014audited£m
Charged to the income statement
Defined benefit plan - current service cost (7.5) (5.8) (12.4)
Defined benefit plan - administration costs (0.7) (0.7) (1.7)
Defined benefit plan - total operating charge (8.2) (6.5) (14.1)
Defined benefit plan - net finance charge (1.9) (0.7) (1.5)
Defined contribution plans - total operating charge (1.7) (1.4) (3.5)
French post-employment benefits - - (0.2)
Total net amount charged to profit before tax (11.8) (8.6) (19.3)
Charged/(credited) to equity
Defined benefit scheme - actuarial gains/(losses) net of deferred tax 35.4 (24.0) (95.7)
(b) Other information - defined benefit pension plan
Key assumptions used in the valuation of the plan
24 weeks to 13 June 2015unaudited% 24 weeks to14 June 2014unaudited% 52 weeks to27 December 2014audited%
Rate of increase of pensions in deferment capped at lower of CPI and 5% 2.25 2.50 2.15
Rate of CARE revaluation capped at lower of RPI and 3% 2.50 2.60 2.45
Rate of increase of pensions in payment:
pensions with increases capped at the lower of CPI and 5% 2.55 2.60 2.45
pensions with increases capped at the lower of CPI and 5%, with a 3% minimum 3.55 3.60 3.55
pensions with increases capped at the lower of RPI and 2.5% 2.30 2.30 2.25
Rate of increase in salaries 4.55 4.60 4.45
Inflation assumption - RPI 3.55 3.60 3.45
Inflation assumption - CPI 2.55 2.60 2.45
Discount rate 3.70 4.45 3.50
Balance sheet
Movements in the deficit during the period are as follows:
24 weeks to13 June 2015 unaudited£m 24 weeks to14 June 2014unaudited£m 52 weeks to27 December 2014audited£m
Deficit at start of period (142.6) (54.3) (54.3)
Current service cost (7.5) (5.8) (12.4)
Administration cost (0.7) (0.7) (1.7)
Employer contributions 29.0 19.1 46.9
Other finance charge (1.9) (0.7) (1.5)
Actuarial gains/(losses) gross of deferred tax 44.2 (30.0) (119.6)
Deficit at end of period (79.5) (72.4) (142.6)
Statement of comprehensive income
Amounts taken to equity via the statement of comprehensive income in respect
of the Group's defined benefit plan are shown below.
24 weeks to13 June 2015 unaudited£m 24 weeks to14 June 2014unaudited£m 52 weeks to27 December 2014audited£m
Actuarial gain on plan assets 10.8 19.1 80.9
Actuarial gains/(losses) on plan liabilities 33.4 (49.1) (200.5)
Total actuarial gains/(losses) before tax 44.2 (30.0) (119.6)
11 Provisions
Property £m Warranty£m French post-retirement benefits£m Total£m
At 27 December 2014 - audited 6.8 3.6 0.2 10.6
Created in the period 0.6 1.8 - 2.4
Utilised in the period (0.9) (1.6) - (2.5)
Released in the period (1.5) - - (1.5)
At 13 June 2015 - unaudited 5.0 3.8 0.2 9.0
Property provision
The property provision covers two main area: (i) onerous leases on any
non-trading leased properties, and
(ii) obligations to make dilapidations payments to landlords of leased
properties.
There is a discussion of the main sources of estimation and uncertainty which
apply to this provision at note 3 to the Group's 2014 Annual Report &
Accounts. The amount of the expected future cash flows has been adjusted to
reflect the expected range of possibilities.
The timing of outflows from the provision is variable, and is dependent on
property lease expiry dates, on opportunities to surrender leases, and on the
timing of dilapidations assessments and works.
Warranty provision
The warranty provision relates to amounts due in respect of product
warranties. As products are sold, the Group makes provision for claims under
warranties. As claims are made, the Group utilises the provision and then
uses this historical data to periodically revise the basis on which it makes
further provision.
12 Related party transactions
There have been no changes to related party arrangements or transactions as
reported in the 2014 Annual Report and Accounts.
Transactions between Group companies, which are related parties, have been
eliminated on consolidation and are therefore not disclosed. Other
transactions which fall to be treated as related party transactions are: those
relating to the remuneration of key management personnel, which are not
disclosed in the Half-Yearly Report and which will be disclosed in the Group's
next Annual Report and Accounts; in addition, transactions between the Group
and the Group's defined benefit pension plan, which are disclosed in Note 10.
13 Notes to the cash flow statement
(a) Net cash flows from operating activities
Net cash flows related to continuing activities alone in each of the periods
presented.
(b) Reconciliation of movement in net cash
24 weeks to13 June 2015 unaudited£m 24 weeks to14 June 2014unaudited£m 52 weeks to27 December 2014audited£m
Net cash at start of period 217.7 140.5 140.5
Increase/(decrease) in cash and cash equivalents 45.8 20.3 (7.8)
(Decrease)/increase in short term investments (40.0) - 85.0
(Decrease)/increase in bank loans/prepaid fees (0.2) 0.2 (0.1)
Decrease in finance leases - 0.1 0.1
Net cash at end of period 223.3 161.1 217.7
Represented by:
Cash 177.7 160.0 131.9
Short-term investments 45.0 - 85.0
Bank loans 0.7 1.2 0.9
Finance leases (0.1) (0.1) (0.1)
223.3 161.1 217.7
(c) Analysis of net cash
Cash atbank and in hand£m Short-term investments*£m Subtotal:Cash and cash equivalents£m Bank loans/prepaid fees**£m Finance leases£m Netcash£m
At 27 December 2014 - audited 131.9 85.0 216.9 0.9 (0.1) 217.7
Cash flow 45.8 (40.0) 5.8 (0.2) - 5.6
At 13 June 2015 - unaudited 177.7 45.0 222.7 0.7 (0.1) 223.3
* The short-term investments have a maturity of less than three months and, as
such, are considered to be cash equivalents for the purposes of the cash flow
statement.
** Closing bank loans at 13 June 2015 comprise £0.6m disclosed in current
assets and a non-current asset of £0.1m. Both of these items represent the
excess of prepaid loan fees over the amount of current and non-current
borrowings which are drawn down at the period end.
As previously announced, the Group's debt facilities are due to expire in July
2016.
14 Discontinued operations
There were no discontinued operations in the current period.
All discontinued operations in the prior periods are discontinued exceptional
items and are analysed as follows:
Notes 24 weeks to 14 June 2014 unaudited 52 weeks to27 December 2014audited
£m £m
Increase to discontinued operations property provision (a) (1.8) (2.2)
Release of discontinued interest accrual (b) 0.1 0.1
Exceptional item - loss on discontinued operations (1.7) (2.1)
Release of tax creditor for discontinued operations (c) 11.5 11.1
Tax credit on increase to discontinued property provision - 0.1
Exceptional profit after tax 9.8 9.1
(a) Increase to discontinued property provisions
During the 52 weeks to 27 December 2014, we increased the provision for our
remaining legacy properties.
(b) Release of discontinued interest accrual
In prior periods, the Group had been accruing for possible interest which
would be due in relation to overdue tax in the event that we were unsuccessful
in our dispute with HMRC relating to discontinued operations (see (c) below).
Following the partial resolution of this dispute in the prior period, we
obtained certainty that some of this accrual was no longer needed. We
therefore released this amount.
(c) Release of tax creditor for discontinued operations
During the 52 weeks to 27 December 2014, the Group received a First Tier
Tribunal judgement which gave a partial resolution of a dispute with HMRC,
regarding the tax treatment of certain expenses relating to our legacy
properties which had been incurred in prior periods.
In prior years, we had prepared our tax computations for accounts purposes on
the basis that the disputed expense items would not be deductible for tax, and
we provided for tax on that basis. The judgement gave us certainty that
particular expenses may be treated as deductible for tax and we therefore
recognised a tax credit based on our best estimate of the deductible
expenses.
INDEPENDENT REVIEW REPORT TO HOWDEN JOINERY GROUP PLC
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly report for the 24 week period ended 13 June
2015, which comprises the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated balance sheet, the
consolidated statement of changes in equity, the consolidated cash flow
statement and related notes 1 to 14. We have read the other information
contained in the half-yearly report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. Our work has been undertaken so that
we might state to the Company those matters we are required to state to it in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company for our review work, for this report or for the conclusions
we have formed.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the half-yearly report
in accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in Note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly report has
been prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity", issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
report for the 24 week period ended 13 June 2015 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor, London
22 July 2015
FINANCIAL CALENDAR
2015
Trading update 12 November 2015
End of financial year 26 December 2015
2016
2015 Preliminary Results 25 February 2016
Trading update 28 April 2016
Half-Yearly Report 21 July 2016
Trading update 10 November 2016
End of financial year 24 December 2016
This information is provided by RNS
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