24th Sep 2007 10:28
Wolseley PLC24 September 2007 Wolseley plcFinal Results - Amendment------------------------- The following announcement replaces the Final Results announcement released at7:02am this morning under RNS number 3242E. In the Summary of Results, Financial Highlights, the second column should read:"Year to 31 July 2006 £m" The full amended announcement appears below. NEWS RELEASE 24 September 2007 Wolseley plc Preliminary Results for the Year Ended 31 July 2007 Summary of Results Financial highlights Change ------------------------ Year to Year to Reported In constant 31 July 31 July currency (1) 2007 2006 £m £m % %------------------------------------------------------------------------------Group revenue 16,221 14,158 14.6 21.2------------------------------------------------------------------------------ Group trading profit(2) 877 882 (0.6) 5.5 Group operating profit 753 834 (9.7) (4.2)------------------------------------------------------------------------------ Group profit before tax, 758 817 (7.3) (1.5)before amortisation andimpairment of acquiredintangibles Group profit before tax 634 769 (17.6) (12.5)------------------------------------------------------------------------------ Earnings per share, 87.80p 98.90p (11.2) (6.9)before amortisation andimpairment of acquiredintangibles Basic earnings per share 73.52p 90.77p (19.0) (15.1) ------------------------------------------------------------------------------ Total dividend per share 32.40p 29.40p 10.2 10.2(interim paid, final proposed) ------------------------------------------------------------------------------ Overview • Results demonstrate the benefits of the Group's diversity and its ability to react swiftly to the challenging US housing market, the weaker dollar and price deflation in lumber and panels. • Strong revenue growth although trading profit, after currency translation, held back by the above factors and £28 million of restructuring and other one-off costs. Constant currency trading profit up 5.5%. • Operating cash flow up 53% to £1,299 million (2006: £850 million) reflecting increased focus on cash flow to finance future growth. • Strong financial position with gearing(3) of 71.5% (2006: 75.2%) and interest cover(4) of 7 times (2006: 14 times). • Increase in dividend of 10.2% for the full year to 32.40 pence per share (2006: 29.40 pence) reflecting the Board's confidence in the future prospects of the Group. • Benefits of the Group's Earn, Turn, Grow initiative, announced earlier this year, will become increasingly apparent in driving towards the minimum 7% trading margin target by 2011. Operating highlights • Market share gains by all of the Group's principal businesses. • Increased diversity as the Group has expanded its activities into eight new European countries. • North American revenues declined slightly overall. This reflects the difficult trading conditions for Stock caused by the slowing US residential market, partly offset by strong growth in Ferguson which achieved 5.5% organic growth. Trading profit was down 19% due to Stock's lower profitability and the effect of currency translation. • Ferguson's trading margin of 7.2% is a record for the business. • Revenue growth of 46.8% in Europe included 31.4% from the acquisition of DT Group and 8.8% organic growth. Trading profit was up 36.9%, of which 31.4% was DT Group. Trading margin was lower, reflecting restructuring charges in UK and Italy. • Good progress in France with 10.3% increase in local currency revenue and 13.1% in trading profit, with Brossette achieving €1 billion of revenue for the first time. • DT Group performing ahead of expectations and Central and Eastern Europe achieved 22.4% increase in revenue, including 11.7% organic growth. • Further leverage of the Distribution Centre ("DC") investment in the UK, France and Italy. A total of 638 new branches added. • Bolt on acquisition investment of £379 million for 43 acquisitions completed, which are expected to add £671 million of revenues in a full year. This is in addition to the £1,339 million acquisition of DT Group completed on 25 September 2006. Outlook • Recent events relating to the subprime market in the USA and the subsequent concerns over liquidity in global financial markets have created uncertainty which is reflected in less favourable recent sales trends for a number of the Group's businesses. It is too early to assess whether these trends will continue. • There are no signs yet of any upturn in the US housing market and the repairs, maintenance and improvement ("RMI") market is now beginning to soften. The commercial and industrial market should remain positive, albeit at lower rates of growth. The strength and diversity of the Group's US operations and their ability to respond rapidly to the changing operating environment will enable them to continue to outperform the market. • Generally in Europe, the underlying fundamentals of the construction markets remain sound and Wolseley's operations are expected to show further good progress. • Irrespective of market conditions, the Group will continue to execute its strategy of value creation through a combination of organic growth and acquisitions. The Group is confident that it will generate competitive advantage by pursuing the initiatives relating to supply chain, sourcing and private label. The rigorous focus on cash flow maximisation and cost efficiency will continue as will the swift and decisive action in response to prevailing market conditions. The Group is positioned well to benefit from any improvement in business and consumer confidence. Chip Hornsby, Wolseley plc Group Chief Executive said: "Despite the ongoing difficulties in the US housing market, we have produced avery creditable performance. Europe continues to progress, achieving strongprofit improvement and benefiting from acquisitions during the period, whilst inthe US we have been fast and decisive in reducing our cost base in reaction todeteriorating market conditions. We will not be deflected from the rigorousexecution of our long term strategy to create competitive advantage and a trulyworld class company." SUMMARY OF RESULTS As at, and for the year ended 31 July 2007 2006 Change Revenue £16,221m £14,158m +14.6% Operating profit- before amortisation and impairmentof acquired intangibles £877m £882m -0.6%- amortisation of acquired £(124)m £(48)mintangibles Operating profit £753m £834m -9.7%Net finance costs £(119)m £(65)m Profit before tax- before amortisation and impairmentof acquired intangibles £758m £817m -7.3%- amortisation of acquired £(124)m £(48)mintangibles Profit before tax £634m £769m -17.6% Earnings per share- before amortisation and impairmentof acquired intangibles 87.80p 98.90p -11.2%- amortisation of acquired (14.28)p (8.13)pintangibles Basic earnings per share 73.52p 90.77p -19.0% Dividend per share 32.40p 29.40p +10.2% Net debt £2,467m £1,950m Gearing 71.5% 75.2% Interest cover (times) 7x 14x Operating cash flow £1,299m £850m (1) Constant currency percentage changes are calculated by retranslating prioryear amounts at the exchange rates used in the preparation of the financialstatements for the year ended 31 July 2007.(2) Trading profit, a term used throughout this announcement, is defined asoperating profit before the amortisation and impairment of acquired intangibles.Trading margin is the ratio of trading profit to revenues expressed as apercentage. Organic change is the total increase or decrease in the yearadjusted for the impact of exchange rates, new acquisitions in 2007 and theincremental impact of acquisitions in 2006.(3) Gearing ratio is the ratio of net debt, excluding construction loanborrowings, to shareholders' funds.(4) Interest cover is trading profit divided by net finance costs, excluding netpension related finance costs. ENQUIRIES: Guy Stainer +44 (0)118 929 8744Group Investor Relations Director +44 (0)7739 778187 John English +1 513 771 9000Vice President, Investor Relations, North America +1 513 328 4900 Brunswick +44 (0)20 7404 5959Andrew FenwickKate Miller An interview with Chip Hornsby, Group Chief Executive and Steve Webster, GroupFinance Director, in video/audio and text will be available from 0700 onwww.wolseley.com and www.cantos.com There will be an analyst and investor meeting at 0930 at UBS Presentation Suite,1 Finsbury Avenue, London EC2M 2PP. A live audio cast and slide presentation ofthis event will be available at 0930 on www.wolseley.com. There will also be a conference call at 1500 (UK time): UK free phone dial-in number: 0800 028 1277US free phone dial-in number: 1888 935 4577Rest of the World dial-in number: + 44 (0)20 7806 1957 Password: Wolseley The call will be recorded and available for playback until 8th October 2007 onthe following numbers: UK free phone number: 0800 559 3271 6026405#US free phone number: 1866 239 0765 6026405#UK/European replay dial-in number: +44 (0)20 7806 1970 6026405# Photographs of Chip Hornsby, Group Chief Executive and Steve Webster, GroupFinance Director are available at: www.newscast.co.uk and www.wolseleyimages.com NEWS RELEASE 24 September 2007 Wolseley plc Preliminary Results for the Year Ended 31 July 2007 Announcement of Preliminary Results Wolseley, the world's largest specialist trade distributor of plumbing andheating products to professional contractors and a leading supplier of buildingmaterials and services, today announces its preliminary results. These results demonstrate the benefits of the Group's diversity which has beenincreased during the year by selective acquisitions and its ability to reactswiftly to challenging conditions in the US housing market. In North America, in addition to the impact of the difficult US housing market,the results were adversely affected by price deflation in lumber and panels andthe weakness of the dollar. The Group's European division produced a strongperformance, reflecting the successful integration of acquisitions and goodprogress in most markets. Decisive action has been taken to reduce the Group'scost base, resulting in one-off costs, further details of which are providedbelow. The Group has continued to invest to increase operational efficiency andto implement the actions necessary to achieve the minimum 7% trading margintarget by 2011. After taking account of currency translation, Group revenue increased by 14.6%to £16,221 million (2006: £14,158 million). Trading profit reduced slightly to£877 million (2006: £882 million) including the impact of £28 million of one-offcosts. The Group's trading margin fell to 5.4% (2006: 6.2%) primarily due to thelower margins in Stock and Wolseley UK. After deducting amortisation andimpairment of acquired intangibles of £124 million (2006: £48 million),operating profit declined by 9.7% to £753 million (2006: £834 million). Currency translation reduced Group revenue by £776 million (5.5%) and Grouptrading profit by £51 million (5.8%) in the 12 month period. On a constantcurrency basis, Group revenue increased by 21.2% and trading profit by 5.5% forthe year to 31 July 2007 compared to the prior year. Reported profit before tax and amortisation and impairment of acquiredintangibles reduced by 7.3% to £758 million (2006: £817 million). Reportedprofit before tax, after amortisation and impairment of acquired intangibles,declined by 17.6% to £634 million (2006: £769 million). Net finance costs of£119 million (2006: £65 million) reflect the increase in acquisition spend andhigher interest rates, partly offset by stronger operating cash flow. Interestcover remains strong at 7 times (2006: 14 times).The decrease in earnings pershare before amortisation and impairment of acquired intangibles was 11.2% to87.80 pence (2006: 98.90 pence), reflecting the lower level of profitability andthe increase in the number of shares in issue following the placing on 25September 2006. Basic earnings per share were down 19.0% to 73.52 pence (2006:90.77 pence). Further details of market conditions and financial performance in each of theGroup's businesses are set out below. North America Wolseley's North American division performed well ahead of a market which wassignificantly impacted by a slowdown in the new housing sector, maintaining itsposition as the leading distributor of construction products to the professionalcontractor in North America. Reported revenue, in sterling, of the division decreased 3.8% to £8,662 million(2006: £9,008 million), reflecting the 8.1% negative impact of currencytranslation and organic revenue decline of 4.6%, partly offset by acquisitions.Trading profit, in sterling, declined by 19.2% to £487 million (2006:£603 million), after charging £12 million of one off costs relating to headcountreductions and branch closures. Currency translation reduced divisional revenueby £726 million (8.1%) and trading profit by £49 million (8.1%). The North American operations are being increasingly integrated with a number ofcentral functions now supporting all three businesses. Since 1 August 2007,Wolseley Canada has been integrated into Ferguson, operating with the samebusiness structure which focuses on specific customer types, and will benefitfrom leveraging the US operations, including the DC network. There has been aparticular focus to reduce aggregate corporate costs across the North Americanbusinesses and functions and these have declined by 8%. There was a net increaseof 188 branches in North America to 1,985 (2006:1,797). Two new DCs in FrostProof, Florida and Stockton, California are scheduled to be opened before theend of the 2008 financial year, adding more than 1 million square feet of spaceto the North American DC network. USA In the USA, the new residential market continued to be challenging, but the RMImarket and the commercial and industrial sectors continued to provideopportunities for growth. Aggregate revenue, in dollars, from the Group's USbusinesses, including acquisitions, was 4.8% higher but US trading profit, indollars, was down by 13.2% due to the decline in profits in Stock BuildingSupply ("Stock"). US Dollar weakness led to an 8.2% adverse currency translationimpact when US results are reported in sterling. US Plumbing and Heating Ferguson produced another strong performance with 5.5% organic growth, from itsfocus on core businesses and the advantages gained from its DC network.Commercial and industrial activity remained strong throughout and the RMI marketremained robust for most of the financial year. However, there were increasingsigns of the RMI market slowing towards the end of the period in response toweaker consumer sentiment relating to the problems in the sub-prime sector andconcerns associated with the impact of the deteriorating housing market on theUS economy. Local currency revenue in the US plumbing and heating operations rose by 14.8%to $11,079 million (2006: $9,651 million) with trading profit up by 18.4% to$800 million (2006: $676 million). Organic revenue growth of 5.5% wassignificantly ahead of the market generally, benefiting from the diversity ofthe business across waterworks, heating, ventilation and air conditioning,industrial and commercial as well as residential markets. Gross margin was upslightly and the trading margin also improved from 7.0% to 7.2% and is thehighest ever trading margin achieved. The higher trading margin reflects thebusiness diversity, the specialist product offering as well as a focus on costefficiency. Increases in commodity prices, mainly copper, gave rise to one-offprofits amounting to around $20 million in the year (2006: $43 million). Ferguson's total branch numbers increased by 180 to 1,417 locations (2006:1,237). US Building Materials The continued slowdown in the new residential market, which accounted forapproximately 80% of the activity in this business, caused a reduction involumes, increased price competition and also led to significantly lower lumberand structural panel prices. These factors have inevitably impacted Stock'sfinancial performance despite an aggressive cost reduction programme. Stockcontinues to outperform in most of its major markets with a 15% reduction involumes compared to the 25% average decline in housing starts. New housing has continued to be a difficult market with housing starts havingfallen from an average annualised rate of 2.02 million for the 12 months to 31July 2006 to an average of 1.54 million this year, with the figure in August2007 being lower, at 1.33 million. There continues to be significant regionalvariation with the markets in Utah, Idaho, Texas and the Carolinas performingrelatively better than the weakest markets in the north east, Midwest, LasVegas, Colorado and Florida. In local currency, Stock's revenue was down 13.4% to $4,596 million (2006:$5,305 million) with trading profit down 74.9% to $86 million (2006: $343million), after charging the previously announced one off costs of $22 millionrelating to branch closures and headcount reductions. During the year, there wasa reduction of around 3,500 people, representing approximately 20% of the totalworkforce. The decline in organic revenue in the year was 24.2%, reflecting the15% fall in volume and commodity price deflation in lumber and structuralpanels, which fell 20% and 24%, respectively. The deflation in commodities,which account for around 43% of Stock's revenue, had the effect of reducinglocal currency revenue by $470 million (9%). Acquisitions contributed $577million (10.9%) to revenue growth. Stock's gross margin was slightly lower due to pricing pressure in the difficultmarkets. The trading margin declined significantly from 6.5% to 1.9% primarilydue to lower volumes and prices and the effect of one-off restructuring costs. As part of a cost cutting programme, a number of initiatives have beenundertaken including centralising the sourcing of commodity products, headcountreductions and the closure of 46 branches. Stock will continue with its strategy of diversifying its business to reduce itsdependency on the new residential market and expand its presence in thecommercial and industrial and RMI markets by a combination of acquisitions andorganic growth. The Group continues to believe that the US housing market offersgood long term growth opportunities and Stock will continue to expand itsgeographic coverage in selective residential markets where value-creatingopportunities are identified. As previously announced, there was also a $10 million goodwill and intangibleasset impairment provision recorded as a result of market conditions in theMidwest region, where a number of branches were closed. At 31 July 2007, Stockhad 308 branches, although, following the previously announced closure plans,its branch network going forward will comprise 287 branches across 33 states(2006: 314 branches). Wolseley Canada In Canada, although housing markets held up reasonably well and economicactivity remained positive, business from the oil and gas exploration industriesin Western Canada was weak for most of the year as a result of warmer weather,lower natural gas prices and higher gas inventory levels. Against this background, Wolseley Canada's local currency revenue increased by2.1% to C$1,357 million (2006: C$1,330 million) and trading profit was unchangedat C$92 million. The trading margin declined slightly to 6.8% (2006: 6.9%)reflecting the initial start up costs of the new regional DC in Oakville,Ontario. Branch numbers in Canada were increased by 14 to 260 (2006: 246). Europe Most of the European operations achieved good revenue and profit improvementsand the results also benefited from acquisitions which expanded the geographicdiversity of the Group. Reported revenue, in sterling, for this division increased by 46.8% to £7,559million (2006: £5,150 million), of which 8.8% was from organic growth. Recentacquisitions accounted for £2,010 million (39.0%) of revenue growth, includingDT Group in the Nordic region in September 2006. Trading profit, in sterling,increased 36.9% to £433 million (2006: £316 million). Currency translationreduced divisional revenue by £50 million (1.0%) and trading profit by £2million (0.6%). Excluding DT Group, European revenues and trading profit, insterling, were up by 15.4% and 5.5%, respectively. The overall divisional trading margin, after the allocation of central costs,declined from 6.1% to 5.7% of revenue, primarily due to the lower tradingmargins in Wolseley UK and in Italy. Underlying margin improvements wereachieved in France and most of the Central and Eastern European operations. During the year, a further 8 countries and net 450 branches were added to theEuropean network, giving a total of 3,311 locations (2006: 2,861), including 363added through acquisitions UK and Ireland Wolseley UK grew strongly in a market which showed a gradually improving trendover the year, despite rising interest rates. Government spending on schools,hospitals and social housing RMI underpinned the construction market. InIreland, the market saw continued rapid decline in housing starts, with some ofthe shortfall taken up by strong RMI activity. Against this background, Wolseley UK and Ireland recorded a 17.9% increase inrevenue to £3,171 million (2006: £2,690 million). Organic growth of 9.9% was asignificant outperformance compared to the market generally, which is estimatedto have risen by around 3%. Trading profit increased by 5.0% compared to the prior year, including thebenefit from acquisitions. Whilst gross margin improved slightly, the tradingmargin fell from 7.5% to 6.7%. The trading margin was lower due to the effect ofthe £13 million of one-off restructuring costs relating to 40 branch closuresand rationalisation of head offices, the initial dilutive impact of opening 125new branches and the integration of the head offices of Brooks and HeatMerchants in Ireland. During the year, 59 net new locations were added in the UK and Ireland,including 12 branches added as a result of acquisitions, taking the total numberof branches for Wolseley UK to 1,917 (2006: 1,858). France In France, housing starts slowed significantly in the second half but remainedat positive levels, whilst RMI, which represents approximately two thirds ofrevenue for both Brossette and PBM, continues to show only marginal growth. Against this background, Wolseley's French operations showed good growth withrevenue up 10.3% to €2,774 million (2006: €2,515 million), including organicgrowth of 5.9%. Trading profit was up 13.1% to €150 million (2006: €132 million)and trading margin improved to 5.4% (2006: 5.3%). The Wolseley France managementstructure is now fully in place with a number of central functions supportingthe three business divisions, each of which performed well in the period. At theend of June, a 210,000 square feet national DC was opened at Orleans, initiallysupplying complementary building products to more than 300 PBM locations. The two PBM businesses (Heavyside and Import and Wood Solutions) togetherachieved a double digit increase in revenue and underlying improvement intrading margin. In the Brossette plumbing and heating business, revenue rose 7.6% to total morethat €1 billion for the first time, with 5.2% organic revenue growth. Theimproved trading margin benefited from the recent reorganisation including thecentralisation of a number of functions such as purchasing and logistics. The number of branches in France increased by 40, to 825 (2006: 785). Nordic DT Group achieved a very strong performance, ahead of expectations at the timeof acquisition by Wolseley on 25 September 2006. For the ten months of Wolseleyownership to 31 July 2007, revenue was DKK17,858 million (£1,617 million) andtrading profit was DKK1,097 million (£99 million). The trading margin was 6.1%.This performance was achieved in markets that remained good, although there weresigns of the new residential market in Denmark softening a little towards theend of the year DT Group's integration was completed ahead of schedule and it has already made avaluable contribution to Group initiatives. During the period, 8 bolt onacquisitions were completed, including expansion into the plumbing and heatingbusiness in Norway and the purchase of the remaining 40% of a builders' merchantin Greenland. DT Group has also started to source and procure private labelproducts with other Group companies and assisted the UK and Irish businesses tointroduce its Craftsman concept into some branches, for clothing, personalprotection equipment and tools. The range of plumbing products in existing DTlocations continues to be expanded.For the 12 months to 31 July 2007, DT Group's management accounts show anunderlying increase in revenue over the prior year of 14.6%, including doubledigit organic growth, and in trading profit, of 26.5%. DT Group had 275 branches as at 31 July 2007. Central and Eastern Europe The Group's other Continental European operations enjoyed generally good resultswith growth significantly ahead of generally flat markets. Revenue, in sterling,in Central and Eastern Europe was up by 22.4% to £899 million (2006: £735million), reflecting organic growth of 11.7% and the benefit of acquisitions.Trading profit, in sterling, was up 9.6% to £35 million (2006: £31 million). Thetrading margin declined to 3.8% (2006: 4.3%) due to the previously announced £3million restructuring charge in Italy following the opening of the newdistribution centre and a lower trading margin in Belgium. In the other Benelux countries, both Wasco in the Netherlands and CFM inLuxembourg made excellent progress with double digit revenue and trading profitgrowth. Tobler, in Switzerland, had another strong year with double digit organic growthwhilst increasing its trading margin. OAG, in Austria, reported double digit organic revenue growth and an improvementin trading margin, despite significant preparation work ahead of theimplementation of its new IT platform which went live in August 2007. In Italy, revenue increased although profits were down, as expected, due to theinitial costs of the new €20 million (£14 million) DC that commenced branchdeliveries at the end of 2006 and the €4 million (£3 million) one-offrestructuring charge, primarily relating to the closure of warehouses no longerrequired. The number of branches fed from the new DC will be further expandedover the next six months. In Eastern Europe, the Woodcote acquisition in October 2006, which took Wolseleyinto Croatia, Slovakia, Poland and Romania for the first time, is performingstrongly across all regions. During the year, 76 net new locations were added in Central and Eastern Europe,including 45 branches through acquisitions, taking the total number to 294(2006: 218). Final Dividend The Board is recommending a final dividend of 21.55 pence per share (2006: 19.55pence per share) to be paid on 30 November 2007 to shareholders registered atclose of business on 5 October 2007. The total dividend for the year is up 10.2%to 32.40 pence per share (2006: 29.40 pence). Dividend cover is 2.3 times (2006:3.1 times). The increase in dividend for the year reflects the Board'sconfidence in the future prospects of the Group and its strong financialposition. The dividend reinvestment plan will continue to be available toeligible shareholders. Strategy At the Interim results in March, the Group outlined its objectives for the nextfew years under the banner "Earn, Turn, Grow". This initiative has been widelycommunicated across the Group with clear objectives at the individual, branch,business and Group levels. Remuneration is also being tied in to performanceagainst each area of focus. The objective of the Earn, Turn, Grow philosophy is to provide a framework fordriving improved performance and expectations across the Group, includingimproved margins from the benefits of the Group's international scale andleverage whilst maintaining double digit growth rates and creating shareholdervalue through producing a return on capital significantly in excess of theGroup's weighted average cost of capital. There will be continued emphasis onenhancing working capital performance and increasing cash flow generation toensure that the Group is able to finance its planned growth rates from internalcash flow. The initial success of this programme is evidenced by the Group'sstrong cash flow performance this year. There will be a particular focus over the next year on organic growth and toestablish the framework to accelerate the development of private label revenues;aiming to double their sales over the next four years. Competitive advantagewill be driven from other Group initiatives relating to supply chain, sourcing,business improvement and human resource development. The planned increase intechnology spending relating to the implementation of the Group's commonenterprise resource planning (ERP) platform should create increased operationalefficiency and provide better information to improve customer service andworking capital performance. Financial Review Net finance costs of £119 million (2006: £65 million) reflect a significantincrease in Group debt as a result of the higher level of acquisition spend andan increase in interest rates, partly offset by strong operating cash flow. Netinterest receivable on construction loans amounted to £11 million (2006: £12million). Group interest cover was 7 times (2006: 14 times). The overall effective tax rate, on profit before tax and amortisation andimpairment of acquired intangibles, decreased from 28.4% to 25.4% . Afterexcluding the effect of one off factors, the underlying tax rate for the year is27% which is expected to be indicative of the tax rate for 2008. Before the amortisation and impairment of acquired intangibles, earnings pershare decreased by 11.2% to 87.80 pence (2006: 98.90 pence), reflecting thelower level of profitability and the placing of 59.5 million shares on 25September 2006. Basic earnings per share were 19.0% lower at 73.52 pence (2006:90.77 pence). The average number of shares in issue during the year was 644million (2006: 592 million). Operating cash flow increased by 53% from £850 million to £1,299 million, due tothe increased focus on improving working capital and cash flow managementthroughout the Group. Free cash flow, after dividends, was £626 million (2006:£285 million), which is a record for the Group. Capital expenditure increased from £346 million to £396 million reflectingcontinued investment in the business, particularly in the DC network, IT and newbranch openings. Capital expenditure is expected to be approaching £500 millionin 2008 and remain at a relatively high level over the next few years withfurther investments in DC's, new branch openings and IT as the Group continuesto put in place the infrastructure required to drive improved margins and createsustainable competitive advantage. The Group's branch network has been extended through acquisitions and branchopenings by a net of 638 branches, bringing the total to 5,296 at 31 July 2007(2006: 4,658 branches). Investment in bolt-on acquisitions completed during the year, including deferredconsideration and net debt, amounted to £379 million (2006: £914 million). These43 acquisitions are expected to add around £671 million per annum of incrementalrevenues in a full year. Goodwill and intangible assets related to theseacquisitions is estimated to be around £270 million. In addition, on 25September 2006, Wolseley plc completed the acquisition of DT Group for aconsideration of £1,339 million, which brings aggregate acquisition spend forthe year ended 31 July 2007 to £1,718 million. Further details regardingacquisitions are included in note 12. Net borrowings, excluding construction loan borrowings, at 31 July 2007 amountedto £2,467 million compared to £1,950 million at 31 July 2006, giving gearing of71.5% compared to 75.2% at the previous year end and 89.6% at 31 January 2007.The decrease reflects the benefits of strong operating cash flow. In the USA, construction loan receivables, financed by an equivalent amount ofconstruction loan borrowings, were £286 million (2006: £313 million). Thedecrease reflects a more cautious approach to lending following the decline inthe US new housing market and the impact of the US dollar. Return on gross capital employed (ROGCE) was 13.7% (2006: 18.8%) primarily as aresult of the initial impact of the DT Group acquisition and reducedprofitability, particularly in Stock. The ROGCE remains well above the Group'sweighted average cost of capital. Provisions in the balance sheet include the estimated liability for asbestosclaims on a discounted basis. This liability has been determined as at 31 July2007 by independent professional actuarial advisors. The asbestos relatedlitigation is fully covered by insurance and accordingly an equivalent insurancereceivable has been included in receivables. The level of insurance coveravailable significantly exceeds the expected level of future claims and noprofit or cash flow impact is therefore expected to arise in the foreseeablefuture. There were 320 claims outstanding at 31 July 2007 (2006: 246). Outlook Recent events relating to the subprime market in the USA and the subsequentconcerns over liquidity in global financial markets have created uncertaintywhich is reflected in less favourable recent sales trends for a number of theGroup's businesses. It is too early to assess whether these trends willcontinue. There are no signs yet of any upturn in the US housing market and the RMI marketis now beginning to soften. The commercial and industrial market should remainpositive, albeit at lower rates of growth. The strength and diversity of theGroup's US operations and their ability to respond rapidly to the changingoperating environment will enable them to continue to outperform the market. Generally in Europe, the underlying fundamentals of the construction marketsremain sound and Wolseley's operations are expected to show further goodprogress. Irrespective of market conditions, the Group will continue to execute itsstrategy of value creation through a combination of organic growth andacquisitions. The Group is confident that it will generate competitive advantageby pursuing the initiatives relating to supply chain, sourcing and privatelabel. The rigorous focus on cash flow maximisation and cost efficiency willcontinue as will the swift and decisive action in response to prevailing marketconditions. The Group is positioned well to benefit from any improvement inbusiness and consumer confidence. Notes to Editors Wolseley plc is the world's largest specialist trade distributor of plumbing andheating products to professional contractors and a leading supplier of buildingmaterials in North America, the UK and Continental Europe. Group revenue for theyear ended 31 July 2007 was approximately £16.2 billion and operating profit,before amortisation and impairment of acquired intangibles, was £877 million.Wolseley has around 79,000 employees operating in 28 countries namely: UK, USA,France, Canada, Ireland, Italy, The Netherlands, Switzerland, Austria, CzechRepublic, Hungary, Belgium, Luxembourg, Denmark, Sweden, Finland, Norway, SlovakRepublic, Poland, Romania, Croatia, San Marino, Panama, Puerto Rico, Trinidad &Tobago, Mexico, Barbados and Greenland. Wolseley is listed on the London and NewYork Stock Exchanges (LSE: WOS, NYSE: WOS) and is in the FTSE 100 index oflisted companies. Certain information included in this release is forward-looking and involvesrisks and uncertainties that could cause actual results to differ materiallyfrom those expressed or implied by forward looking statements. Forward-lookingstatements include, without limitation, projections relating to results ofoperations and financial conditions and the Company's plans and objectives forfuture operations, including, without limitation, discussions of expected futurerevenues, financing plans and expected expenditures and divestments. Allforward-looking statements in this release are based upon information known tothe Company on the date of this report. The Company undertakes no obligation topublicly update or revise any forward-looking statement, whether as a result ofnew information, future events or otherwise. It is not reasonably possible to itemise all of the many factors and specificevents that could cause the Company's forward looking statements to be incorrector that could otherwise have a material adverse effect on the future operationsor results of an international Group such as Wolseley. Information on somefactors which could result in material difference to the results is available inthe Company's SEC filings, including, without limitation, the Company's Reporton Form 20-F for the year ended 31 July 2006. FINANCIAL CALENDAR FOR 2007/20082007 3 October - Shares quoted ex-dividend5 October - Record date for final dividend9 November - Final date for DRIP elections28 November - Annual General Meeting and Interim Management Statement30 November - Final dividend payment date 2008 21 January - Trading update for five months to 31 December 200717 March - Interim Results for six months to 31 January 200826 March - Shares quoted ex-dividend28 March - Record date for final dividend21 May - Interim Management Statement30 May - Interim dividend payment date14 July - Trading update for 11 months to 30 June 200831 July - Financial year end22 September - Announcement of Preliminary results for year to 31 July 20081 October - Shares quoted ex-dividend3 October - Record date for final dividend7 November - Final date for DRIP elections18 November - Annual General Meeting and Interim Management Statement1 December - Final dividend payment date A copy of this release, together with all other recent public announcements canbe found on Wolseley's web site at www.wolseley.com. Copies of the presentationgiven to institutional investors and analysts are also available on this site. Group Income Statement Year ended Year ended 31 July 31 July 2007 2006 £m £m Revenue 16,221 14,158Cost of Sales (11,702) (10,222) ------------------------------Gross Profit 4,519 3,936Distribution costs (2,958) (2,413) ------------------------------Administrative expenses: amortisation and (124) (48)impairment of acquired intangibles Administrative expenses: other (723) (665) ------------------------------Administrative expenses: total (847) (713)Other income 39 24 ------------------------------Operating profit 753 834 Finance revenue (note 3) 58 49Finance costs (note 3) (177) (114) ------------------------------Profit before tax 634 769 Tax expense (note 4) (160) (232) ------------------------------Profit for the period attributable toequity shareholders 474 537 ------------------------------ Earnings per share (note 6)Basic earnings per share 73.52p 90.77p ------------------------------ Diluted earnings per share 73.17p 90.02p ------------------------------ Dividends per share (interim paid, finalproposed) (note 5) 32.40p 29.40p----------------------------------------------------------------------------- Non-GAAP measures of performance (notes 6 and 7)Trading profit 877 882Profit before tax and the amortisationand impairment of acquired intangibles 758 817Basic earnings per share before theamortisation and impairment of acquiredintangibles 87.80p 98.90p ------------------------------ Translation ratesUS dollars 1.9487 1.7885Euro 1.4823 1.4577 ------------------------------ Group Statement of Recognised Income and Expense Year ended Year ended 31 July 31 July 2007 2006 £m £m Profit for the financial year 474 537Net exchange adjustments offset inreserves (132) (124) Cash flow hedges • fair value gains and loses 2 14 • reclassified and reported in net profit for the year (1) (1) Actuarial gains on retirement benefits 70 7Change in fair value of available forsale investments (5) (7)Tax charge not recognised in the incomestatement (17) (13) -----------------------------Net losses not recognised in the incomestatement (83) (124) -----------------------------Total recognised income and expense 391 413 ----------------------------- Group Balance Sheet As at As at 31 July 31 July 2007 2006 £m £mASSETSNon-current assetsIntangible fixed assets: goodwill 1,890 1,173Intangible fixed assets: other 790 333Property, plant and equipment 1,718 1,144Deferred tax assets 9 16Trade and other receivables 91 36Financial assets: available for saleinvestments 12 21 ----------------------------- 4,510 2,723 -----------------------------Current assetsInventories 2,069 1,954Trade and other receivables 2,829 2,650Current tax receivable 8 1Financial assets: trading investments 4 4Derivative financial assets 10 10Financial receivables: constructionloans (secured) 286 313Cash and cash equivalents 244 416 ----------------------------- 5,450 5,348 -----------------------------Assets held for resale 10 7 -----------------------------Total assets 9,970 8,078 ----------------------------- LIABILITIESCurrent liabilitiesTrade and other payables 2,796 2,294Current tax payable 133 91Borrowings: construction loans(unsecured) 286 313Bank loans and overdrafts 530 192Obligations under finance leases 17 18Derivative financial liabilities 18 29Provisions (note 9) 31 29Retirement benefit obligations 24 29 ----------------------------- 3,835 2,995 -----------------------------Non-current liabilitiesTrade and other payables 63 25Bank loans 2,097 2,084Obligations under finance leases 63 57Deferred tax liabilities 275 88Provisions (note 9) 99 77Retirement benefit obligations 87 160 ----------------------------- 2,684 2,491 ----------------------------- -----------------------------Total liabilities 6,519 5,486 ----------------------------- -----------------------------Net assets 3,451 2,592 -----------------------------EQUITYCalled up share capital and sharepremium account 1,110 437Foreign currency translation reserve (181) (49)Retained earnings 2,522 2,204 -----------------------------Equity shareholders' funds 3,451 2,592 ----------------------------- Translation ratesUS dollars 2.0285 1.8673Euro 1.4835 1.4628 ----------------------------- Group Cash Flow Statement Year ended Year ended 31 July 31 July 2007 2006 £m £mCash flows from operating activitiesCash generated from operations 1,299 850Interest received 57 45Interest paid (174) (102)Tax paid (167) (206) -----------------------------Net cash generated fromoperating activities 1,015 587 ----------------------------- Cash flows from investing activitiesAcquisitions of businesses(net of cash acquired) (1,346) (822)Disposals of businesses (netof cash disposed of) - 2Purchases of property, plantand equipment (346) (326)Proceeds from sale ofproperty, plant and equipment 62 52Purchases of intangible assets (50) (20)Purchases of investments - (23) -----------------------------Net cash used in investingactivities (1,680) (1,137) ----------------------------- Cash flows from financing activitiesProceeds from the issue ofshares to shareholders 673 31Purchases of shares byEmployee Benefit Trusts (27) (27)Proceeds from new borrowings 1,143 2,486Repayments of borrowings andderivatives (1,134) (1,405)Finance lease capital payments (12) (17)Dividends paid to shareholders (198) (162) -----------------------------Net cash generated fromfinancing activities 445 906 ----------------------------- Net cash generated (220) 356Effects of exchange ratechanges (12) (8) -----------------------------Net (decrease)/increase incash, cash equivalents andbank overdrafts (232) 348Cash, cash equivalents andbank overdrafts at thebeginning of the year 292 (56) -----------------------------Cash, cash equivalents andbank overdrafts at the end ofthe year (note 11) 60 292 ----------------------------- Reconciliation of Profit to Net Cash Flow from Operating Activities Year ended Year ended 31 July 31 July 2007 2006 £m £m Profit for the financial year 474 537Net finance costs 119 65Tax expense 160 232Depreciation of property,plant and equipment 182 134Amortisation of non-acquiredintangibles 9 6Profit on disposal ofproperty, plant and equipment (27) (16)Amortisation and impairment ofacquired intangibles 124 48Decrease/(increase) ininventories 88 (171)Decrease/(increase) in tradeand other receivables 4 (243)Increase in trade and otherpayables 149 217(Decrease)/increase inprovisions and otherliabilities (3) 19Share based payments and othernon cash items 20 22 ------------------------------Cash generated from operations 1,299 850 ------------------------------ Notes to the preliminary results for the year ended 31 July 2007 1 Basis of preparation The preliminary results for the year ended 31 July 2007, which are an abridgedstatement of the full Annual Report, have been prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion, and those parts of the Companies Act 1985 applicable to companiesreporting under IFRS. The preliminary results do not constitute the statutory accounts of the Groupwithin the meaning of Section 240 of the Companies Act 1985. The statutoryaccounts for the year ended 31 July 2006 have been filed with the Registrar ofCompanies. The auditors have reported on those accounts and on the statutoryaccounts for the year ended 31 July 2007, which will be filed with the Registrarof Companies following the Annual General Meeting. Both the audit reports wereunqualified and did not contain any statement under sections 237(2) or (3) ofthe Companies Act 1985. 2 Segmental analysis of results The Group has a single business segment, the distribution and supply ofconstruction materials and services. The Group's geographical segments are Europe, consisting of UK and Ireland,France, Nordic and Central and Eastern Europe, and North America. The Group hasdetermined that its geographical segments are its primary segments for IFRSreporting purposes. The revenue, trading profit and operating profit of theGroup's geographical segments are detailed in the following three tables: Revenue by geographical segment Year ended Year ended 31 July 31 July 2007 2006 £m £m UK and Ireland 3,171 2,690France 1,872 1,725Nordic 1,617 -Central and Eastern Europe 899 735 ---------------------------Europe 7,559 5,150 --------------------------- ---------------------------North America 8,662 9,008 --------------------------- ---------------------------Total 16,221 14,158 --------------------------- Trading profit by geographical segment (note 7) Year ended Year ended 31 July 31 July 2007 2006 £m £m UK and Ireland 211 201France 101 91Nordic 99 -Central and Eastern Europe 35 31European central costs (13) (7) ---------------------------Europe 433 316 --------------------------- ---------------------------North America 487 603 --------------------------- Group central costs (43) (37) --------------------------- ---------------------------Total trading profit (note 7) 877 882 --------------------------- Notes to the preliminary results for the year ended 31 July 2007 2 Segmental analysis of results (continued) Operating profit by geographical segment Year ended Year ended 31 July 31 July 2007 2006 £m £m UK and Ireland 193 188France 100 90Nordic 58 -Central and Eastern Europe 33 30European central costs (13) (7) --------------------------Europe 371 301 -------------------------- --------------------------North America 425 570 -------------------------- --------------------------Group central costs (43) (37) -------------------------- Total 753 834 -------------------------- The Group will prepare segmental disclosures in accordance with US GAAP andinclude them in its Form 20-F for the year ended 31 July 2007. The disclosurerequirements under US GAAP differ from those under IFRS, such that revenue andoperating profit for North America will be further analysed by operating segmentin the Form 20-F. In order to ensure consistency of information disclosed to allinvestors, the following table is included in these preliminary results: Year ended Year ended 31 July 31 July 2007 2006 £m £m ------------------------------- -------- -------- RevenueUS Plumbing and Heating 5,685 5,396US Building Materials 2,358 2,966Canada 619 646 -----------------------North America 8,662 9,008 ----------------------- Trading profitUS Plumbing and Heating 411 378US Building Materials 44 192Canada 42 44North American central costs (10) (11) -----------------------North America 487 603 ----------------------- Operating ProfitUS Plumbing and Heating 386 369US Building Materials 8 168Canada 41 44North American central costs (10) (11) -----------------------North America 425 570 ----------------------- Notes to the preliminary results for the year ended 31 July 2007 2 Segmental analysis of results (continued) Analysis of movement in revenue New Acquisitions Acquisitions Increment Organic Change 2007 2006 Exchange 2007 2006 £m £m £m £m £m % £m-------------- ------- -------- -------- -------- ------ ------ ------ UK and Ireland 2,690 (5) 22 199 265 9.9 3,171France 1,725 (28) 28 47 100 5.9 1,872Nordic - - 1,617 - - - 1,617Central andEastern Europe 735 (17) 68 29 84 11.7 899 ------- -------- ------- -------- ------ ------ -----Europe 5,150 (50) 1,735 275 449 8.8 7,559 ------- -------- ------- -------- ------ ------ -----US Plumbingand Heating 5,396 (443) 302 156 274 5.5 5,685US BuildingMaterials 2,966 (244) 27 269 (660) (24.2) 2,358Canada 646 (39) 3 2 7 1.2 619 ------- -------- -------- -------- ------ ------ -----North 9,008 (726) 332 427 (379) (4.6) 8,662America ------- -------- -------- -------- ------ ------ ----- ------- -------- -------- -------- ------ ------ -----Total 14,158 (776) 2,067 702 70 0.5 16,221revenue ------- -------- -------- -------- ------ ------ ----- Organic change is the total increase or decrease in the year adjusted for theimpact of exchange, new acquisitions in 2007 and the incremental impact ofacquisitions in 2006. Analysis of movement in trading profit New Acquisitions Acquisitions Increment Organic Change 2007 2006 Exchange 2006 2007 £m £m £m £m £m % £m-------------- ------- -------- -------- -------- ------ ------ ------ UK and Ireland 201 - 2 15 (7) (3.7) 211France 91 (1) 1 - 10 11.9 101Nordic - - 99 - - - 99Central andEastern Europe 31 (1) 4 4 (3) (10.6) 35Europeancentral costs (7) - - - (6) (85.3) (13) ------- -------- -------- -------- ------ ------ ------Europe 316 (2) 106 19 (6) (1.9) 433 ------- -------- -------- -------- ------ ------ ------ US Plumbingand Heating 378 (31) 25 11 28 8.0 411US BuildingMaterials 192 (16) - 13 (145) (82.6) 44Canada 44 (3) 1 - - - 42North Americancentral costs (11) 1 - - - - (10) ------- -------- -------- -------- ------ ------ ------North 603 (49) 26 24 (117) (21.2) 487America ------- -------- -------- -------- ------ ------ ------ ------- -------- -------- -------- ------ ------ ------Group centralcosts (37) - - - (6) (16.5) (43) ------- -------- -------- -------- ------ ------ ------ ------- -------- -------- -------- ------ ------ ------Total tradingprofit 882 (51) 132 43 (129) (15.6) 877 ------- -------- -------- -------- ------ ------ ------ Notes to the preliminary results for the year ended 31 January 2007 3 Net finance costs Year ended Year ended 31 July 31 July 2007 2006 £m £m-------------------------------------------------------------------------------- Interest receivable 58 49 -------- --------Finance revenue 58 49 -------- -------- Bank interest payable on loansand overdrafts (171) (110)Finance leases charges (5) (3)Net pension finance cost (2) (1)Valuation gains/(losses) on financial instruments • Derivatives held at fair value through profit and loss 2 (27) • Loans in a fair value hedging relationship (2) 26 • Recycled from equity 1 1 -------- --------Finance costs (177) (114) -------- -------- -------- --------Net finance costs (119) (65) -------- -------- Net interest receivable on construction loans included in finance revenue andfinance costs amounted to £11 million (2006: £12 million). 4 Taxation Year ended Year ended 31 July 31 July 2007 2006 £m £m--------------------------------------------------------------------------------Tax on profit for the period • UK 20 18 • Overseas 154 205 -------- ------- 174 223Deferred tax (14) 9 -------- -------- 160 232 -------- -------- 5 Dividends Year ended Year ended 31 July 31 July 2007 2006 £m £m-------------------------------------------------------------------------------- Final paid for the year ended 31 July 2006: 19.55 penceper share (2005: 17.6 pence per share) 128 104Interim paid for the year ended 31 July 2007 : 10.85pence per share (2006: 9.85 pence per share) 70 58 -------- --------Dividends charge for the period 198 162 -------- -------- A final dividend of 21.55 pence per share for the year ended 31 July 2007 (2006:19.55 pence per share) has been recommended by the Board. This dividend, whichwill result in a cash outflow of £141 million, is recommended for approval byshareholders at the Annual General Meeting to be held on 28 November 2007 and asthe approval will be after the balance sheet date it has not been included as aliability. Notes to the preliminary results for the year ended 31 July 2007 6 Earnings per share Basic earnings per share of 73.52 pence (2006: 90.77 pence) is calculated on theprofit for the year attributable to equity shareholders of £474 million (2006:£537 million) on a weighted average number of ordinary shares in issue duringthe year of 644 million (2006: 592 million). As detailed in Note 7 below, theGroup believes that profit measures before the amortisation and impairment ofacquired intangibles provide valuable additional information for users of thefinancial statements. Basic earnings per share before the amortisation andimpairment of acquired intangibles (net of deferred tax), has therefore beenpresented in the following table. Year ended Year ended 31 July 31 July 2007 2006 Pence per Pence per share share --------------------------------------------------------------------------------Before amortisation and impairment of acquiredintangibles 87.80p 98.90pAmortisation and impairment ofacquired intangibles (14.28)p (8.13)p -------- --------Basic earnings per share 73.52p 90.77p -------- -------- The impact of all potentially dilutive share options on earnings per share wouldbe to increase the weighted average number of shares in issue to 647 million(2006: 597 million) and to reduce basic earnings per share to 73.17p (2006:90.02p). Diluted earnings per share before amortisation and impairment ofacquired intangibles is 87.39p (2006: 98.08p) 7 Non-GAAP measures of performance Trading profit is defined as operating profit before the amortisation andimpairment of acquired intangibles and is a non-GAAP measure. The currentbusinesses within the Group have arisen through internal organic growth andthrough acquisition. Operating profit includes only the amortisation andimpairment of acquired intangibles arising on those businesses that have beenacquired subsequent to 31 July 2004 and as such does not reflect equally theperformance of businesses acquired prior to 31 July 2004 (where no amortisationof acquired intangibles was recognised), businesses that have developedorganically (where no intangibles are attributed) and those businesses morerecently acquired (where amortisation of acquired intangibles is charged). TheGroup believes that trading profit provides valuable additional information forusers of the preliminary results in assessing the Group's performance since itprovides information on the performance of the business that local managers aremore directly able to influence and on a basis consistent across the Group. TheGroup uses trading profit and certain key performance indicators calculated byreference to trading profit for planning, budgeting and reporting purposes andfor its internal assessment of the operating performance of individualbusinesses within the Group. Year ended Year ended 31 July 31 July 2007 2006 £m £m-------------------------------------------------------------------------------Operating profit 753 834Add back: amortisation and impairment of acquiredintangibles 124 48 -------- --------Trading profit 877 882 -------- -------- Profit before tax 634 769Add back: amortisation and impairment of acquiredintangibles 124 48 -------- --------Profit before tax and theamortisation and impairment ofacquired intangibles 758 817 -------- -------- 8 Capital Expenditure Intangible Property, Tangible and Assets plant and intangible equipment assets £m £m £m ---------------------- --------- --------- --------Net book value at 1August 2006 1,506 1,144 2,650Acquisitions 1,316 491 1,807Additions 50 360 410Disposals - (51) (51)Depreciation andamortisation (133) (182) (315)Exchange rateadjustment (59) (44) (103) --------- --------- --------Net book value at 31July 2007 2,680 1,718 4,398 --------- --------- -------- 9 Provisions Environmental Wolseley Restructuring Other Total and legal Insurance provisions £m £m £m £m £m ------------ --------- -------- --------- -------- --------At 1 August2006 39 47 2 18 106Utilised inthe year (4) (16) (5) (3) (28)Charge for theyear 9 20 18 - 47New businesses 2 - - 8 10Exchangedifference (4) (3) - 2 (5) --------- -------- --------- -------- --------At 31 July2007 42 48 15 25 130 --------- -------- --------- -------- -------- Environmental and legal liabilities include known and potential legal claims andenvironmental liabilities arising from past events where it is probable that apayment will be made and the amount of such payment can be reasonably estimated.Included in this provision is an amount of £35 million (2006: £31 million)related to asbestos litigation involving certain Group companies. This liabilityis fully covered by insurance and accordingly an equivalent insurance receivablehas been recorded in 'Trade and other receivables'. The liability has beenactuarially determined as at 31 July 2007 based on advice from independentprofessional advisors. The provision and the related receivable have been statedon a discounted basis using a long term discount rate of 5.0% (2006: 5.2%). Thelevel of insurance cover available significantly exceeds the expected level offuture claims and no profit or cash flow impact is therefore expected to arisein the foreseeable future. 10 Reconciliation of movements in shareholders' funds Year ended Year ended 31 July 31 July 2007 2006 £m £m------------------------------- -------- --------Profit for the yearattributable to equityshareholders 474 537Other recognised income andexpense (83) (124)Dividends paid (198) (162)Credit to equity for sharebased payments 20 36New share capital subscribed 673 31Purchase of own shares (27) (27) -------- --------Net addition to shareholders'funds 859 291Opening shareholders' funds 2,592 2,301 -------- --------Closing shareholders' funds 3,451 2,592 -------- -------- Included in new share capital subscribed above are net proceeds of £646 millionfrom the placing of 59,500,000 new ordinary shares on 25 September 2006.Notes to the preliminary results for the year ended 31 July 2007 11 Analysis of change in net debt At New At 31 July Finance Fair value Exchange 31 July 2006 Cashflow Acq leases adjustments movement 2007 £m £m £m £m £m £m £m------------- ------ ------- ------ ------- ------- -------- ----- Cash and cashequivalents 416 (154) - - - (18) 244Bankoverdrafts (124) (66) - - - 6 (184) ------ ------- ------- ------- ------- -------- ------ 292 (220) - - - (12) 60 Financialassets:tradinginvestments 4 - - - - - 4Derivativefinancialinstruments (19) 5 - - 4 2 (8)Bank loans (2,152) (14) (369) - (2) 94 (2,443)Obligationsunder financeleases (75) 12 (4) (15) - 2 (80) ------ ------- ------- ------- ------- -------- ------Total net (1,950) (217) (373) (15) 2 86 (2,467)debt ------ ------- ------- ------- ------- -------- ------ Cash and cash equivalents includes £24 million of cash held in escrow relatingto deferred consideration payable for acquisitions made in the year ended 31July 2007. 12 Acquisitions In all acquisitions during the year to 31 July 2007, the Group acquired 100% ofthe issued share capital, and has accounted for the transaction by the purchasemethod of accounting. Book values Fair value Provisional acquired alignments fair values acquired All Acquisitions £m £m £mIntangiblefixed assets - 297 297- Customerrelationships - 241 241- Trade namesand brands - 15 15- OtherProperty,plant andequipment 263 228 491Inventories 316 (27) 289Receivables 349 (4) 345Cash, cashequivalentsand bankoverdrafts 15 - 15Borrowings (373) - (373)Payables andprovisions (493) (23) (516)Deferred tax (16) (175) (191)Retirementbenefitobligations (15) (1) (16) --------- --------- -------- Total 46 551 597Goodwillarising 763 --------Consideration 1,360 -------- Satisfied by:Cash 1,314Deferred andcontingentconsideration 37Directlyattributablecosts 9 --------Totalconsideration 1,360 --------The fair value adjustments shown above are provisional figures, being the bestestimates currently available. Further adjustments to goodwill and otherintangible fixed assets may be necessary when additional information becomesavailable. Notes to the Preliminary Results for the year ended 31 July 2007 13 Exchange rates The results of overseas subsidiaries have been translated into sterling usingaverage rates of exchange. The period end rates of exchange have been used toconvert balance sheet amounts. The average profit and loss account translation rate for the year was $1.9487 tothe £1 compared to $1.7885 for the comparable period last year, a decrease of8.2%, and €1.4823 to the £1 compared to €1.4577, a decrease of 1.7%. - Ends - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ferguson