17th Mar 2008 07:00
Headlam Group PLC17 March 2008 17 March 2008 Preliminary Results for the Year Ended 31 December 2007 Headlam Group plc ("Headlam"), Europe's leading floorcoverings distributor,announces its final results for the year ended 31 December 2007. Financial highlights 2007 2006 Change £000 £000 Revenue 544,718 509,899 +6.8% Operating profit 46,013 43,941 +4.7% Profit before tax 45,172 43,558 +3.7% Basic earnings per share 37.1p 35.1p +5.7% Dividend per share 23.10p 20.15p +14.6% Key points • UK revenues increase by 4.0% on a like for like basis • Continental European revenues increase by 7.2% on a like for like basis • Net revenues from UK acquisitions £11.8 million • Further investment in facilities and acquisitions • Proposed final dividend up 16.0% to 17.75p Tony Brewer, Headlam's Group Chief Executive, said: "We are pleased to report that 2007 proved to be another successful year. Eachof our five business sectors and eight product categories in the UK performedpositively and our businesses in Continental Europe maintained the trend ofcontinued improvement. The group continues to invest in developing the infrastructure, to allow ourindividual businesses to take advantage of market opportunities. With themanagement teams of these businesses clearly focused on the objectives beforethem, we are confident of achieving another year of growth." Enquiries: Headlam Group plc Tony Brewer, Group Chief Executive Tel: 01675 433000 Stephen Wilson, Group Finance Director Chairman's Statement I am pleased to report that 2007 proved to be another successful year. Each ofour five business sectors and eight product categories in the UK performedpositively and our businesses in Continental Europe maintained the trend ofcontinued improvement. Revenue from the group's activities amounted to £544.7 million, an increase of6.8% on last year and profit before tax increased by 3.7% to £45.2 million. Earnings and dividend Basic earnings per share increased by 5.7% from 35.1p to 37.1p. Adjusted forthe amortisation of intangibles, which amounted to £1.5 million in 2007 comparedwith £0.7 million for the previous year, earnings increased by 7.6% from 35.6pence to 38.3 pence. As communicated last year, it is our intention to maintain a progressivedividend increase in order to achieve a payout ratio of approximately 67% by theend of 2009. We gave this commitment since we believe the cumulative effect ofincreasing dividends is an important method by which we can enhance shareholderreturns. Therefore, your board is recommending a final dividend of 17.75p per share, anincrease of 16.0% on last year. This increases the total dividend for the yearby 14.6% from 20.15p to 23.10p. This year's proposal, which represents 16 years of continuous improvement, isequivalent to a payout ratio of 62.3% (2006: 57.4%) compared with basic earningsper share and places us ahead of our timetable. If approved by shareholders at the forthcoming Annual General Meeting, the finaldividend will be paid on 1 July 2008 to shareholders on the register at 6 June2008. Strategy The performance in 2007 has further enhanced our position as the leadingdistributor of floorcoverings in the UK and Continental Europe. The group'sstrategy remains unchanged and we will maintain our focus on the development ofour floorcovering business. We will continue to invest in the infrastructure ofthe business to increase capacity and improve material handling techniques whereappropriate. In addition, we will evaluate and make acquisitions offloorcovering businesses where we believe they can contribute to our strategicposition and enhance profitability, whether in the UK or Continental Europe. Operations Fundamental to our ongoing success is the relationship with the leadingworldwide flooring manufacturers, who in conjunction with our individualmanagement teams, continue to develop product for our respective markets. Thisensures that the independent flooring retailer and contractor are at theforefront of all new floorcovering products. The group's structure allows the individual management teams of 50 businesses inthe UK to operate autonomously and focus on their respective geographical andproduct areas. Through a combined total of 364 external sales people, welaunched 3,715 new products into independent flooring retailers and contractors,in conjunction with 794,000 new point of sale displays and sample books. The management teams in our individual businesses are clearly measured andincentivised on the performance of their specific responsibilities. Whilstencouraging the autonomy of business operations, each team operates to astrategy relevant to their businesses' own market position and complies withconsistent operational procedures and financial disciplines. It is particularly encouraging that our three Continental European businesses inFrance, Switzerland and the Netherlands have continued the trend of the lastthree years and further increased revenue and profitability. Employees The autonomous nature of our business operations has allowed us to develop aculture of individuality combined with the benefit of wide ranging opportunitiesderived from a group structure. We have a policy of internal development andpromotion, wherever possible, providing our employees with a variety of optionsto enhance their careers. Over a number of years, this has resulted in manyinstances where employees have developed into senior sales and management roles. We wish to thank all our management and employees for their contribution to thegroup's ongoing success. Purchase of Own Shares During 2007, the board decided to commence a share buy-back programme, to returncash to shareholders and improve balance sheet efficiency. Further to ourannouncement on 25 May 2007 regarding the introduction of a share buy-backprogramme, I can report that as at 31 December 2007, the company has acquired3,838,006 shares at an average price of £5.65 per share. As at 17 March 2008, a further 550,000 shares have been acquired at an averageprice of £4.01 per share, bringing the total expenditure on the purchase of ownshares since May 2007 to £23.9 million. Outlook The group continues to invest in developing the infrastructure, to allow ourindividual businesses to take advantage of market opportunities. With themanagement teams of these businesses clearly focused on the objectives beforethem, we are confident of achieving another year of growth. Graham Waldron, Chairman Chief Executive's Review During 2007, the combined performance of our 50 UK businesses resulted in anincrease in revenue of 4.0% on a like for like basis and in total by 6.8%. Another positive improvement in Continental Europe resulted in the revenue fromour businesses located in France, Switzerland and the Netherlands increasing ona like for like basis by 7.2%. Challenging market conditions, particularly in the UK, have required additionaleffort and creativity from our management teams, sales representatives and staffto ensure that by working closely with suppliers on product development andlaunches, our customers, principally independent flooring retailers andcontractors, retain their market position and subsequent share. Investment - Facilities In December 2007, we completed the 20,000 square feet extension to thedistribution hub of Mercado in Leeds, increasing their total capacity to 205,000square feet. We made a further investment in the infrastructure of Mercado withthe purchase, in February 2007, of an existing 17,000 square feet building inBristol to increase trans-shipping capacity. This building was subsequentlyrefurbished and became operational in September. These two investments haveincreased the capacity and efficiency of Mercado's national operations. The investment in the Bristol facility also created a service centre forRichards, the regional commercial business, to extend its commercial productoffering and customer service in the southwest of England. In December 2007, wepurchased a 6,000 square feet building in Southampton, in order to establish aservice centre to enlarge the Richards commercial presence in the south ofEngland. During 2007, we entered into leasehold agreements to provide two new servicecentres for Faithfulls to increase its presence with flooring contractorsoperating in London. The Dartford 5,000 square feet service centre opened inNovember, followed by the Walthamstow 9,000 square feet service centre openingin January 2008. We currently have under construction, a new purpose-built freehold 42,000 squarefeet distribution facility for MCD Wales in Bridgend, which will be operationalin the spring of 2008. This will enable MCD Wales to develop further itsresidential and commercial business in South Wales and the southwest of England. During July, we acquired the freehold interest in the property occupied byBaileys, our regional multi-product business located in Plymouth. Planningpermission has been granted to extend the distribution centre which will becompleted by the end of 2008. This will allow Baileys to complement itsresidential business by increasing significantly its commercial product offeringand service to flooring contractors in Devon and Cornwall. Following the ongoing improvement in our European businesses, we have decided torelocate our Lethem-Vergeer business in the Netherlands to a new purpose-builtfreehold 65,000 square feet distribution facility, for which we are currentlyawaiting the appropriate planning licence. We anticipate that this facilitywill be operational in the spring of 2009. It is the group's intention to continue the investment programme in newpurpose-built freehold distribution facilities enabling us to relocate a numberof our existing businesses and provide them with increased capacity and moreefficient handling techniques. Investment - Acquisitions The group has continued to acquire businesses where they can enhance our marketposition and contribute to increased profitability, which has resulted in threeacquisitions during 2007. At the end of March, we acquired 3D Flooring Supplies Limited, a distributor ofcommercial flooring in South Wales and the southwest of England. 3D willcontinue to operate from its locations in Cardiff, Swansea and Taunton. During April, we acquired Florprotec Limited, a leading supplier throughout theUK of floor protection products for the construction industry and refurbishmentprojects. Florprotec now operates autonomously from the Tamworth distributioncentre. In July, we acquired the trade and assets of Plantation Rug Company, a supplierof rugs to independent retailers throughout the UK. Plantation operatesautonomously from our Stockport distribution centre and complements our existingactivities in rugs, principally through Crucial Trading and National Carpets. UK operations Our 50 businesses in the UK operating from 22 distribution centres and 9 servicecentres are categorised into five separate sectors. Each sector reflects theirrelevant geographical or product focus in the UK floorcovering market. Regional multi-product: The 20 businesses create significant market presenceand represent 59% of UK revenue. They continue to offer a comprehensiveproduct range of both residential and commercial floorcovering and increasedtheir revenue by 3.0% during the year. National multi-product: Mercado, with its extensive product offering ofresidential and commercial floorcovering, increased its revenue by 2.2%. Withthe benefit of investment and enhancements to the infrastructure, we areconfident of the continued development and growth of the Mercado businesses. Regional commercial: This sector continues to prosper and now encompasses 15operations, which are increasing their market presence through organic growth,new service centres and acquisitions, growing their revenues collectively by31.4%. With the recently acquired businesses and new service centres inBristol, Dartford, Walthamstow and Southampton, we would expect this sector tosignificantly enlarge its market presence. Residential specialist: Through product development and continued investment insales and marketing, our 13 businesses selling principally middle to premium endcarpet products, were able to increase their revenues by 12.7%. During 2007, wereintroduced the carpet brands Mr Tomkinson and BMK, which, historically, arewell known with independent retailers. The acquisition of Plantation RugCompany is an opportunity to expand our presence in the UK rug market.Throughout the activities of these 13 specialist businesses, we anticipatecontinued growth in medium to premium products. Commercial specialist: The original three businesses all performed positivelyduring 2007 and with the additional contribution from Florprotec, this sectorincreased revenues by 17.2%. Suppliers The managers of our 50 businesses in the UK and three businesses in ContinentalEurope work closely with the leading worldwide manufacturers of floorcoveringproducts, to ensure that our businesses, and subsequently our customers, are atthe forefront of product into their respective markets. Products Each of our product categories showed growth during 2007. Whilst commercialflooring grew at a faster rate than residential, market information wouldsuggest that we were able to increase our market share in both residential andcommercial flooring. To assist this growth, the number of products launched and point of sale itemsplaced with customers were consistent with previous years. Carpet revenues increased by 1.2%, through the launch of 2,654 new products,which were supported by 604,000 point of sales items. Carpet, which continuesto be dominated by plain products in the UK, represents 47% of revenue. Thevolume of cut lengths was consistent with previous years, with an increase inthe number of rolls sold, reflecting the activity of our individual sales teamsworking to create additional demand in a challenging market. Residential vinyl continues to be enhanced by improved manufacturing techniques,enabling the realistic recreation of various types of natural flooring. Withthe benefit of 727 new ranges marketed through 142,000 new display items, ourrevenues increased by 3.3% with independent flooring retailers. Wood and laminate products enjoyed another positive year, increasing revenue by26.2% and now represent 6% of UK revenue. This reflected an improving productoffer in laminate flooring and an increase in sales of premium products,engineered and solid wood. Commercial Flooring grew by 17.2% due to positive market demand and investmentin new infrastructure and acquisitions. This has continued the increase in ourmarket share in commercial flooring, which now contributes 29% of our UKrevenues. Customers Our customers in the UK, who are principally independent flooring retailers andcontractors, placed 4,624,489 orders during 2007 compared with 4,422,454 in2006. The number of active accounts increased from 36,225 in 2006 to 39,033 in 2007,which reflects that independent flooring retailers and contractors continue toprosper. Average debtor days increased slightly from 41.0 days to 41.9 days, due to theincreased contribution from the sales of commercial products to flooringcontractors. The total cost of doubtful debts as a percentage of revenuereduced from 0.21% to 0.18%. The increase in active accounts, reduction in doubtful debts and underlyingstability in debtor days, demonstrates the performance and strength ofindependent flooring retailers and contractors. Europe The three businesses in Continental Europe again showed a positive performance,culminating in return on sales increasing from 2.7% to 3.6%. LMS in France benefitted from an improving market and through its infrastructureof two principal distribution centres and 21 service centres, increased revenueby 5.4%. Belcolor in Switzerland invested in additional sales personnel, primarilyfocused on commercial flooring and with an increased contribution from Parquet,were able to increase their total revenue by 8.8%. Lethem-Vergeer in the Netherlands delivered another positive performance,principally in residential flooring and increased their revenue by 10.0%. Outlook The group's structure encourages individual businesses to take advantage ofmarket opportunities through the ongoing business development activities of ourmanagement teams and sales representatives. The first ten weeks of 2008 have shown a further positive trend in the UK andContinental Europe and with our strategy of autonomous businesses, we are wellplaced to achieve our objectives for the year. Tony Brewer, Group Chief Executive Financial review Trading Revenue Group revenues increased during the year by 6.8% from £509.9 million to £544.7million. In the UK, which accounts for approximately 85% of group revenues, like for likerevenue increased by 4.0% from £433.5 million to £451.0 million. Theincremental benefit from Concept Flooring Supplies, a business acquired duringOctober 2006,combined with the acquisitions completed during 2007, contributeda further £11.8 million. On the Continent, which accounts for the remaining 15% of group revenues, ourthree businesses collectively achieved a like for like improvement of 7.2% withrevenues increasing from £75.6 million to £81.0 million. Gross margin As already highlighted in the Chief Executive's Review, in the UK, ordersprocessed for rolls of residential carpet increased during the year comparedwith the previous year and the rate of growth in our commercial business wasconsiderably ahead of the year on year revenue increases achieved elsewhere inthe group. Since the gross margin achieved on these two product groups is less than thegroup's overall margin, this change in product mix reduced gross margin by 30basis points from 31.3% to 31.0% Expenses Distribution and administration expenses collectively represented 22.5% ofrevenue, down marginally on last year's comparative of 22.6%. In absoluteterms, distribution expenses increased year on year by 7.5% mainly due to annualpay awards coupled with an increase in the number of employees. Administration expenses increased by 3.5% compared with 2006 principally due tothe higher level of intangible amortisation in 2007. Financing costs The increase during the year from £0.4 million to £0.8 million was attributableto the additional cost associated with funding the group's share buy-backprogramme. Subject to movements in interest rates and further buy-backactivity, we would expect this cost to increase to at least £1.6 million during2008. Taxation The effective rate of taxation remained at 30.0% during the year and is areflection of the group's current mix of business. For 2008, it is anticipatedthat the effective tax rate will fall to 28.5%. Included in the 2007 UK Budget were proposed changes to the capital allowancesregime in respect of Industrial Buildings. The stated intention was to reducethe allowances given from 4% straight line to 3% from April 2008, 2% from April2009, 1% from April 2010 and finally to abolish Industrial Building Allowancesentirely from April 2011. This particular change was not included in Finance Act 2007 and therefore theeffect has not been recognised in these financial statements. Should theseproposed changes become law, there is a possibility that the group's deferredtax liability in respect of property, plant and equipment will increase by £7.8million. This change would also be reflected as part of the group's taxation charge inthe 2008 income statement and therefore, based on the number of shares in issueat 31 December 2007, may give rise to an exceptional dilution in basic earningsper share amounting to 9.4 pence. Property valuation On transition to IFRS, the group elected to restate the carrying value of itsfreehold property to depreciated historical cost instead of using the previousbasis, which was cost or valuation. However, when we changed the basis we decided to maintain our practice of atriennial review of the portfolio's market value. This was completed as at 31December 2007 and reveals that the market value, determined by reference toexisting use, exceeds depreciated historical cost by approximately £12.1million. This valuation excludes our freehold properties located on the Continent and allUK properties that may be sold in the short term. Cash flows and net funds Cash generated from operating activities Cash flow from operating activities before movement in working capital increasedby 6.7% during the year from £49.4 million to £52.7 million. Investment in net working capital increased during the year by £8.3 million from£1.7 million to £10.0 million. Inventory increased by £1.9 million underpinningour continuing commitment to high service levels through the maintenance ofextensive product ranges. The £6.4 million decrease in cash inflow arising from trade and other payablesoccurred because of a small reduction in trade credit taken in some of ourbusinesses at the end of 2007 compared with the equivalent position at the endof 2006. Additional contributions to the defined benefit pension plan during the yearamounted to £1.1 million compared with £3.9 million during the previous year. These movements combined with higher interest payments and a small increase intrade and other receivables contributed to net cash from operating activitiesdeclining from £30.1 million to £26.5 million. Cash flows from investing and financing activities Net cash outflows from investing activities totalled £11.3 million compared with£10.4 million during 2006. Investment in property, plant and equipment amountedto £11.0 million compared with £12.9 million for 2006. Unlike expenditurepatterns in previous years where typically a significant proportion of theinvestment had been devoted to one project, this year's investment, ashighlighted in the Chief Executive's Review, has been aimed at a larger numberof relatively smaller projects. We are reasonably confident that we will be able to commence development of anew distribution facility for Faithfulls, our regional multi-product businesslocated in Hadleigh during the final quarter of 2008. The initiation of thisproject combined with the completion of the Bridgend facility, the extension toPlymouth, the relocation of our Dutch business and regular recurring investmentwill give rise to total expenditure during 2008 amounting to £13.2 million. During 2008, we are likely to dispose of two properties, the facilities formerlyoccupied by Wilkies and currently occupied by MCD Wales for a combined total of£3.2 million. These disposals will reduce our net investment in property,plant and equipment to £10.0 million. Expenditure on the three acquisitions completed during the year amounted to £3.2million. Net cash out flow from investing activities almost trebled this year increasingfrom £14.9 million to £39.7 million. The cause and probably the most notablefeature of this year's cash flow was the expenditure incurred on the sharebuy-back programme. Changes in net funds Group net funds decreased from £40.6 million to £16.7 million during the year asdetailed in the table below. Acquisitions At excluding At 1 January Cash cash and Translation 31 December 2007 flows overdrafts differences 2007 £000 £000 £000 £000 £000 Cash at bank and in hand 41,861 (25,313) - 257 16,805Bank overdraft (1,010) 932 - (25) (103) -------- -------- -------- -------- -------- 40,851 (24,381) - 232 16,702Debt due within one year - 246 (246) - -Finance leases and simiarhire purchase contracts (267) 363 (96) - - -------- -------- -------- -------- -------- 40,584 (23,772) (342) 232 16,702 -------- -------- -------- -------- -------- Employee benefits During the year, the net deficit relating to the defined benefit pension plans,as measured under IAS 19, decreased by £5.9 million from £17.2 million to £11.3million. Whilst equity values have shown modest improvement during the year,the principal driver contributing to the reduction is the increase in bondyields. The group continues to make additional contributions to the UK plan. During2007, this amounted to £1.1 million and it is anticipated this will increase to£1.5 million during 2008. However, the UK plan's actuary will undertake avaluation of the scheme as at 31 March 2008 the outcome of which may affect thesize of these additional contributions. Consolidated income statement for the year ended 31 December 2007 Note 2007 2006 £000 £000 Revenue 1 544,718 509,899Cost of sales (375,990) (350,506) ------ -------- -------- Gross profit 168,728 159,393 Distribution expenses (87,711) (81,623)Administrative expenses (35,004) (33,829) ------ -------- -------- Operating profit 1 46,013 43,941 Financial income 6,321 4,926Financial expenses (7,162) (5,309) ------ -------- -------- Net financing costs (841) (383) ------ -------- -------- Profit before tax 45,172 43,558Taxation (13,534) (13,067) ------ -------- -------- Profit for the year attributable to the equityshareholders 31,638 30,491 ------ -------- -------- Dividend paid per share 3 20.15p 18.00p Earnings per shareBasic 2 37.1p 35.1p ------ -------- -------- Diluted 2 36.8p 34.8p ------ -------- -------- All group operations during the financial years were continuing operations. Consolidated statement of recognised income and expense for the year ended 31 December 2007 2007 2006 £000 £000Foreign exchange translation differences arising on translation of overseas operations 1,090 (419)Actuarial gains and losses on defined benefit pension plans 5,000 (173) -------- --------Tax recognised on income and expensesrecognised directly in equity (1,660) 1,057 -------- -------- Net income recognised directly in equity 4,430 465 Profit for the year 31,638 30,491 -------- -------- Total recognised income and expense attributable to the equity shareholders 36,068 30,956 -------- -------- Consolidated balance sheet at 31 December 2007 Note 2007 2006 £000 £000 Non-current assets Property, plant and equipment 92,097 85,032 Intangible assets 13,210 13,210 Deferred tax assets 5,942 9,182 ------- -------- -------- 111,249 107,424 ------- -------- -------- Current Assets Inventories 101,491 94,217 Trade and other receivables 100,830 91,284 Cash and cash equivalents 16,805 41,861 ------- -------- -------- 219,126 227,362 ------- -------- -------- Total assets 1 330,375 334,786 ------- -------- -------- Current liabilities Bank overdraft (103) (1,010) Other interest-bearing loans and - (267) borrowings Trade and other payables (154,320) (149,422) Employee benefits (1,491) (1,102) Income tax payable (10,747) (10,184) ------- -------- -------- (166,661) (161,985) ------- -------- -------- Non-current liabilities Employee benefits (9,837) (16,124) Deferred tax liabilities (3,836) (3,665) ------- -------- -------- (13,673) (19,789) ------- -------- -------- Total liabilities 1 (180,334) (181,774) ------- -------- -------- Net assets 150,041 153,012 ------- -------- -------- Equity attributable to equity holders of the parent Share capital 4 4,268 4,354 Share premium 4 53,512 53,428 Other reserves 4 (11,042) (616) Retained earnings 4 103,303 95,846 ------- -------- -------- Total equity 150,041 153,012 ------- -------- -------- Consolidated cash flow statement for the year ended 31 December 2007 2007 2006 £000 £000Cash flows from operating activitiesProfit before tax for the year 45,172 43,558 Adjustments for: Depreciation, amortisation and impairment 6,227 4,974 Financial income (6,321) (4,926) Financial expense 7,162 5,309 (Profit)/loss on sale of property, plant and equipment (18) 10 Equity settled share-based payment expenses 501 472 -------- -------- Operating profit before changes in working capital 52,723 49,397 Increase in trade and other receivables (6,849) (6,810) Increase in inventories (4,781) (2,930) Increase in trade and other payables 1,587 7,987 -------- -------- Cash generated from the operations 42,680 47,644 Interest paid (3,325) (2,023) Tax paid (11,729) (11,622) Additional contributions to defined benefit pension plans (1,098) (3,927) -------- -------- Net cash from operating activities 26,528 30,072 -------- -------- Cash flows from investing activities Proceeds from sale of property, plant and equipment 159 1,816 Interest received 2,757 2,001 Acquisition of subsidiaries, net of cash acquired (3,190) (1,369) Acquisition of property, plant and equipment (10,980) (12,884) -------- -------- Net cash from investing activities (11,254) (10,436) -------- -------- Cash flows from financing activities Proceeds from the issue of share capital 86 1,176 Proceeds from the issue of treasury shares 10 - Payment to acquire own shares (21,687) - Repayment of borrowings (246) - Payment of finance lease liabilities (363) (497) Dividends paid (17,455) (15,612) -------- --------Net cash from financing activities (39,655) (14,933) -------- -------- Net (decrease)/increase in cash and cash equivalents (24,381) 4,703 Cash and cash equivalents at 1 January 40,851 36,193 Effect of exchange rate fluctuations of cash held 232 (45) -------- --------Cash and cash equivalents at 31 December 16,702 40,851 -------- -------- Notes 1. Segment reporting The group's activities are wholly aligned to the sales, marketing, supply anddistribution of floorcovering products. These activities are carried out frombusiness centres located in both the UK and Continental Europe. The group'sinternal management structure and financial reporting systems treat the UK andContinental Europe as two separate segments because of the difference in rewardarising from these two markets and this forms the basis for the geographicalpresentation of the primary segment information given below. UK Continental Europe Total 2007 2006 2007 2006 2007 2006 £000 £000 £000 £000 £000 £000RevenueExternal sales 463,671 434,321 81,047 75,578 544,718 509,899 -------- -------- -------- -------- -------- -------- ResultSegment result 46,092 43,670 2,916 2,044 49,008 45,714 -------- -------- -------- --------Unallocatedcorporate expenses (2,995) (1,773) -------- -------- -------- -------- -------- -------- Operating profit 46,013 43,941 Financial income 6,321 4,926Financial expense (7,162) (5,309)Taxation (13,534) (13,067) -------- -------- -------- -------- -------- -------- Profit for the year 31,638 30,491 -------- -------- -------- -------- -------- -------- Other information Segment assets 287,552 293,280 36,881 32,324 324,433 325,604 Unallocated assets 5,942 9,182 -------- -------- -------- -------- -------- --------Consolidated total assets 330,375 334,786 -------- -------- -------- -------- -------- -------- Segment liabilities (135,868) (133,493) (18,555) (17,206) (154,423) (150,699) Unallocated liabilities (25,911) (31,075) -------- -------- -------- -------- -------- -------- Consolidated total liabilities (180,334) (181,774) -------- -------- -------- -------- -------- -------- Capital expenditure 10,617 10,882 663 2,002 11,280 12,884Depreciation 4,044 3,610 666 674 4,710 4,284Amortisation 1,517 690 - - 1,517 690 Each segment is a continuing operation. Unallocated assets comprise deferred tax assets. Unallocated liabilitiescomprise income tax, deferred tax liabilities and employee benefits. Management has access to information that provides details on sales and grossmargin by principal product group and across the five principal business sectorswhich comprise Regional multi-product, National multi-product, Regionalcommercial, Residential specialist and Commercial specialist. However, thisinformation is not provided as a secondary segment since the group's operationsare not managed by reference to these sub classifications and the presentationwould require an arbitrary allocation of overheads, assets and liabilitiesundermining the presentations validity and usefulness. Notes (continued) 2. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data: 2007 2006 £000 £000EarningsEarnings for the purposes of basic and diluted earnings per share being profit attributable to equity holders of the parent 31,638 30,491 ---------- ---------- 2007 2006Number of sharesIssued ordinary shares at 1 January 87,079,521 86,512,854Effect of share movement during the period (1,709,414) 416,237 ----------- -----------Weighted average number of ordinary shares for the purposes of basic earnings per share 85,370,107 86,929,091 ----------- ----------- Effect of diluted potential ordinary shares: Weighted average number of ordinary shares at 31 December 85,370,107 86,929,091 Share options 2,114,930 2,046,461 Number of shares that would have been issued at fair value (1,471,286) (1,422,270) ----------- -----------Weighted average number of ordinary shares for the purposes of diluted earnings per share 86,013,751 87,553,282 ----------- ---------- 3. Dividends 2007 2006 £000 £000 Interim dividend for 2006 of 4.85p paid 3 January 2007 4,218 -Final dividend for 2006 of 15.30p paid 3 July 2007 13,237 -Interim dividend for 2005 of 4.40p paid 3 January 2006 - 3,789Final dividend for 2005 of 13.60p paid 3 July 2006 - 11,823 --------- ---------- 17,455 15,612 --------- ---------- The final proposed dividend of 17.75p per share (2006: 15.30p per share) willnot be provided for until authorised by shareholders at the forthcoming AnnualGeneral Meeting. Interim dividends of 5.35p per share (2006: 4.85p per share) are provided forwhen the dividend is paid. The total value of dividends proposed but not recognised at 31 December 2007 is£19,219,000 (2006: £17,455,000). Notes (continued) 4. Capital and reserves Share Share Capital Translation Treasury Retained Total capital premium redemption reserve reserve earnings equity reserve £000 £000 £000 £000 £000 £000 £000 Balance at 1 January 2006 4,326 52,280 - (577) - 79,798 135,827Transfer between reserves - - - 380 - (380) -Total recognised income and expense - - - (419) - 31,375 30,956Equity-settled share based payment transactions - - - - - 472 472Share options exercised by employees 28 1,148 - - - - 1,176Deferred tax on Schedule 23 share options (pre Nov 2002) - - - - - 193 193Dividends - - - - - 15,612) (15,612) -------- -------- -------- -------- -------- -------- -------- Balance at 31 December 2006 4,354 53,428 - (616) - 95,846 153,012 -------- -------- -------- -------- -------- -------- -------- Balance at 1 January 2007 4,354 53,428 - (616) - 95,846 153,012Total recognised income and expense - - - 1,090 - 34,978 36,068Equity-settled share based payment transactions - - - - - 501 501Share options exercised by employees 2 84 - - 10 - 96Cancellation of own shares (88) - 88 - - 10,073) (10,073)Consideration for purchase of own shares - - - - (11,614) - (11,614)Deferred tax on Schedule 23 share options (pre Nov 2002) - - - - - (494) (494)Dividends - - - - - (17,455) (17,455) -------- -------- -------- -------- -------- -------- -------- Balance at 31 December 2007 4,268 53,512 88 474 (11,604) 103,303 150,041 -------- -------- -------- -------- -------- -------- -------- The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2007 or 2006. Statutoryaccounts for 2006 have been delivered to the registrar of companies, and thosefor 2007 will be delivered in due course. The auditors have reported on thoseaccounts; their reports were (i) unqualified, (ii) did not include references toany matters to which the auditors drew attention by way of emphasis withoutqualifying their reports, and (iii) did not contain statements under section 237(2) or (3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Headlam