14th Mar 2008 07:00
14th March 2008 AGA FOODSERVICE GROUP PLC 2007 PRELIMINARY RESULTS Year to 31st December 2007 2007 2006 IncreaseFinancial highlights ‚£m ‚£m % Continuing Operations - Revenue 291.8 278.6 4.7- EBITDA 39.8 36.8 8.2- Operating profit 25.0 24.3 2.9- Profit before net finance income and tax 31.0 28.3 9.5- Profit before tax 27.6 27.5 0.4- Basic earnings per share 19.4p 16.5p 17.6Dividend per share 11.5p 10.5p 9.5Cash return proposed / paid 140.0 55.6 Shareholders' funds 355.0 333.5 Net cash / (debt) 169.1 (10.9)
Strategic and operational highlights
* Good progress made in the continuing business.
* Successful sale of Foodservice for ‚£265 million.
* 121 pence per share cash return (‚£140 million) in addition to a final
dividend of 7.65 pence per share (‚£8.8 million).
* Framework agreed with Group Pension Scheme Trustee for Scheme to reach a
self-sufficiency funding position by 2020.
* Strategic focus centres on growth for cast iron cookers and development of
the Rangemaster suite of kitchen appliances.
William McGrath, Chief Executive, commented:
"We have produced a sound performance in 2007 as well as delivering on a numberof strategic initiatives, in particular the timely sale of Foodservice, theproposed return of ‚£140 million of cash to shareholders and the appointment ofJohn Coleman to be Chairman.
Looking forward, we have outstanding products and brands headed by Aga and Rangemaster. There is a clear plan to grow the business with measurable targets. The new 'Love Aga' campaign demonstrates the energy behind the relaunched business and we are confident of making further progress in 2008 and beyond."
Enquiries:William McGrath, Chief Executive 0207 404 5959 (today)Shaun Smith, Finance Director 0121 711 6015 (thereafter)
Simon Sporborg/Charlotte Kenyon, Brunswick 0207 404 5959
Aga Foodservice Group plc 2007 Preliminary Statement CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT OverviewOver the last twelve months, we have delivered on key objectives: completed thesuccessful sale of Foodservice for a good price; paid a special dividend of‚£55.6 million and prepared for the substantial cash return of ‚£140 million toshareholders; put in place the long-term financial structure for the GroupPension Scheme; developed a new name and corporate identity for the Group;appointed a new Chairman; and set a clear growth strategy for the focusedconsumer business.This all followed the decision of the Board to sell the Foodservice operations.These operations had been carefully built up over 6 years, and now needed todevelop further through international reach and scale. When the likelihood ofourselves driving change in the sector receded, we concluded that shareholders'interests were best served through their sale. This was achieved at a goodprice of ‚£265 million on an attractive exit multiple, particularly as financialmarkets tightened.During 2007 the continuing business performed satisfactorily with Rangemasteragain achieving record sales and profits. Turnover of the continuing businessrose by 4.7% to ‚£291.8 million (5.7% at constant exchange rates). EBITDA inthe year was ‚£39.8 million (2006 : ‚£36.8 million). Operating profit excludingnet pension credits was ‚£25.0 million, up from ‚£24.3 million in the prior year.Profit before interest and tax including net pension credit was ‚£31.0 million(2006 : ‚£28.3 million). The interest charge of ‚£3.4 million reflects the markedchanges in the cash position in the year with the payment of the specialdividend in June increasing debt levels at the half year to ‚£79.7 millionbefore the cash receipts from the sale of Foodservice, completed in December2007, left us with net cash of ‚£169.1 million at the year end. Earnings pershare from continuing operations were 19.4 pence per share compared with 16.5pence per share in 2006. The Foodservice business made an operating profitafter allocated corporate costs of ‚£14.6 million in 2007 and the reported bookprofit on their sale, taking into account intangibles, was ‚£30.7 million.
Trading performance - continuing operations
Aga, Rayburn and Stanley saw leads and home surveys remain at good levelsthroughout the year. Volumes were ahead at the half year but did slow at theend of 2007 as consumer markets tightened leaving volumes in the yearmarginally down at 19,600. Within the overall numbers the trend continuedtowards our electric models, most notably the new programmable ranges and, forRayburn and Stanley towards carbon-neutral wood burning lines. The year alsosaw our cookware operations from Aga and Divertimenti continue to progresswell, accounting for ‚£9.5 million in revenues.Rangemaster had an excellent year, with volumes over 7% ahead at 76,000 units.The rapid internationalisation of the business continued, accounting for over21% of sales with the Irish and, in particular, the French markets growingstrongly. The sustained growth achieved together with the pipeline of newcooking products made for the Rangemaster, Falcon, La Cornue and Heartlandbrands to add up to a considerable success story.In the USA the consumer markets were difficult. Marvel, after a strong 2006,saw volumes fall during the year. The development of a new generation of Marvelproducts means that Marvel is well placed within the premium appliance sector,particularly in the outdoor market which has the potential to deliver sustainedgrowth. Aga Heartland is optimistic that the growing recognition of our cookingproducts in North America will enable sales growth to be achieved after a tough2007.
Return of cash to shareholders
In 2001, following the sale of the Group's Pipe Systems business, ‚£335 millionwas returned to shareholders. Following the disposal of our Foodserviceoperations, we are now proposing a cash return of ‚£140 million by way of a'B' / 'C' share scheme, which is intended to give holders, where eligible undertheir prevailing tax regime (such as in the UK), the flexibility so far aspossible to receive the cash either as income or capital or as a combination ofthe two. The total value of the return will equate to approximately 121 penceper existing ordinary share. The Board intends that the market price of theCompany's ordinary shares will, subject to market movements, be approximatelyequal before and after the return and, accordingly, the Board is also proposinga share consolidation in conjunction with the return of cash. After the returnand the accompanying share consolidation, the balance sheet will remain in astrong position. The proposed return of cash is subject to approval byshareholders at an Extraordinary General Meeting to be held on 9th May 2008. Inaddition, we are paying a final ordinary dividend of 7.65 pence per share basedon the number of shares in issue prior to the consolidation, which makes thetotal 2007 dividend 11.5 pence. The proposed final ordinary and specialpayments, totalling approximately 129 pence per existing share, will be made inMay 2008. With respect to future dividends, we expect to keep our long-termpolicy to have a fully taxed dividend cover of around 2.5 times.Including the proposed return of cash, the Group will have returned ‚£614 million(including ‚£74 million in ordinary dividends) since the sale of Pipe Systems,and this reflects our determined efforts over a long period to optimise returnsfor shareholders.
Pension Scheme arrangements
It is important to maintain a strong balance sheet given the relatively largesize of our Group Pension Scheme in relation to the continuing business. TheGroup's strong finances and prospects are important to the Scheme Trustee'sappraisal of the Scheme's position. While the Scheme is well funded andreasonably defensively positioned, when determining the size of the cash returnconsideration had to be given to all circumstances under which additionalfunding might be required.This Scheme together with the smaller defined benefit schemes operated withinthe Group had combined assets of ‚£776.9 million and combined liabilities of‚£697.3 million under IAS 19 at 31st December 2007. Working with KPMG LLPPensions, we have considered the financial strategy for the Scheme and we havenow reviewed this with the Scheme Trustee in light of the proposed return ofcash to shareholders following the sale of the Foodservice operations. Thefinancial modelling highlighted that, with an appropriately balanced investmentstrategy designed to reduce risk, in the majority of long-run outcomes modelledthe Scheme is now likely to be more than fully funded and can be expected to bemore than able to meet the accrued benefits of members.To increase the strength of the Scheme's position the Company paid ‚£14.5 millionof additional contributions into the Scheme and agreed to add a ‚£22.5 millioncash collateralised guarantee to its commitments to the Scheme in 2007 as itreturned cash to shareholders and sold Foodservice. In light of the furtherproposed cash return, an additional guarantee of ‚£27.5 million is now to beadded, subject to implementation of the cash return. The ‚£50 million ofguarantees are expected to remain in place until 2020. In reaching agreementwith the Scheme Trustee on these matters, a long-term financial framework hasbeen developed which aims to move the Scheme systematically to a selfsufficiency funding position by 2020. Should the Scheme be more than fullyfunded on this self sufficiency basis in 2020, 20% of any surplus would beavailable to the Scheme Trustee to augment pension benefits.The Company and the Scheme Trustee believe that the careful and effectivemanagement of the Scheme over the last decade has given rise to a relativelystrong pension scheme and that the long-term financial framework which has beendeveloped will further meet the interests both of the Scheme's members and ofthe Company and its shareholders.
Board and management structure
This is my last statement as Chairman as I retire at the AGM from the Boardwhich I first joined in 2000. The Group is at an exciting point at which muchhard work is set to pay off. I feel particularly pleased that over the years wehave developed and helped to create a strong commercial structure for all ourcontinuing businesses. We are delighted that John Coleman has joined the Boardand will become non-executive Chairman after the AGM. John was Chief Executiveof House of Fraser and is a non-executive director of Travis Perkins plc. Hislong corporate experience, work with premium brands and in retail will assistin the drive to achieve the Group's performance targets. There have been otherchanges to the management structure. We have established an executive committeeincluding the managing directors of Aga and Rangemaster, the Group manufacturingdirector and the new head of marketing. We are grateful to our former colleagueswho joined the Ali Group and in particular to Stephen Rennie, who made a greatcontribution as Chief Operating Officer for over six years.
Growth strategy
We have now chosen to focus on our exciting range of consumer brands led by Agaand Rangemaster - the brand names out of which we propose to create the name ofthe Group from the AGM in May 2008. Led by Aga and Rangemaster our brandsinclude Divertimenti, Falcon, Fired Earth, Grange, Heartland, La Cornue,Leisure, Marvel, Northland, Rayburn, Stanley and Waterford.
We propose to grow the business through five measurable strands: Increasing sales of Aga and Rangemaster; improving returns of Fired Earth and Grange; growing overseas sales; investing in marketing and customer relationship management (CRM); and reducing costs. This is with the aim of increasing the return on sales to nearer 12% excluding pension credits in the longer term.
Increasing sales of Aga and Rangemaster - in recent years significant investment has been made resulting in products that are more innovative, flexible and efficient than ever before. We are aiming for sales of cast iron cookers to exceed the current level of 19,600 and sales of range cookers to exceed the current level of 76,000.
Improving returns of Fired Earth and Grange - these two brands accounted for a sixth of revenue in 2007 but were not profitable. We have implemented a turnaround programme and are aiming for a return on sales of at least 5% in three years.
Growing overseas sales - 37% of revenue classified by geographic destination isoutside the UK with particular strength in France, Ireland and the US. We aimto increase this to nearer 50% in the longer term through increased displays,expanded sales teams and improved marketing.
Investing in marketing and CRM - in 2008 we will increase marketing spend, directing resources to where they will have most effect. In addition, we will continue to develop and use our database of 800,000 to build strong and profitable relationships with our customers to increase customer lifetime value. Richard Eagleton, our new group marketing director, will drive these projects.
Reducing costs - we are exploring a number of cost improvement programmesincluding specification changes, sourcing more efficiently and plant efficiencyupgrades. We believe there will be a benefit of ‚£3 million per annum startingin 2008. This will help absorb the ‚£2 million overhead costs previouslyabsorbed by Foodservice.We believe that we have the products and routes to market to achieve sustainedgrowth. We have committed substantial resources to product development and havethe capacity to support our plans in both manufacturing and sourcing terms.
Current trading and outlook
Orders at the start of 2008 have been encouraging for our major businesses,although some of the economies in which we operate are clearly slowing. Thisyear the price increase for Aga was on 1st March and this helped stimulatedemand. Rangemaster has seen growth continuing and order intake is up 5% so farthis year. Encouragingly, Fired Earth's orders are up nearly 10%. In the US,Marvel has seen orders fall so far this year by around 20% while Aga Heartlandis ahead. The Group is adjusting to its new scale and focus and expects itscost cutting initiatives to assist in the current drive to achieve a higherreturn on sales.The "Love Aga" and the "Rangemaster Essential Ingredient" themes are alreadybecoming powerful campaigns for us, and are indicative of our optimistic moodin spite of the very uncertain economic backcloth against which we are working.We have delivered on the key objectives set for 2007 and, as the new AgaRangemaster Group, we can expect further progress in 2008.Vic Cocker William McGrathChairman Chief Executive14th March 2008
OPERATIONAL REVIEW - 2007 PRELIMINARY RESULTS FOR AGA FOODSERVICE GROUP PLC
Aga Rangemaster is home to a family of strong brands that, together, tell apowerful consumer story - not just in the UK, but increasingly overseas too.With cooking firmly at the heart, our brands spread out to embrace the kitchengenerally and then yet further into the entire home. We believe that thededicated work of recent years on product development, channel management andproduction is now translating into growth stories which will take the Groupforward in the years ahead.Aga operations remain core to us. While still made in Abraham Darby's foundryin the World Heritage site at Coalbrookdale, today's Aga has changedappreciably. This is seen in the programmable electric Aga which can go intoslumber mode until required to cook the next meal. Production processes aremore efficient, but more particularly, the product itself is more flexible andefficient than ever before. This is seen, for example, in burner efficiencylevels across our ranges and in the new generation of wood burning, carbonneutral products from Rayburn and Stanley.In cautious consumer markets sales of cast iron cookers were slightly down inthe year but leads and enquiry levels continue to rise. We link this to ourwork on our overall objective of being in active contact with as many cast ironcooker owners as possible worldwide by the end of 2009. Our database hassteadily grown and improved but we are now actively tracking down existingowners - many of whom have had our products for tens of years. Owners of Agas,Rayburns and Stanleys are strong advocates for the products themselves, but wewould also like them to know that Aga Rangemaster is the company behind theirmuch loved products.We hope to see more owners in the 76 Aga shops across the UK. We have much thatis new to offer - not just in cookers but in cookware too and more broadly, inthe kitchen and entire home, through our Fired Earth, Grange and Divertimentibrands.We have some well established international markets. Overseas, there are over100 outlets which sell Agas. Around 45% of cast iron cooker sales were outsidethe UK. We now have some well established international positions, notably inIreland where our Waterford Stanley team are making a success of our strongbrand positions. Holland and Belgium are also important markets.Where we are already seeing strong growth is with our Rangemaster brands. Thisexpansion - driven by efficient production and innovation since 2002 when wedecided to focus exclusively on the premium end of the market - has beenremarkable. It now takes around 30% less time to produce a cooker than it didin 2002, with robotics and major layout improvements at our Leamington Spafactory playing important roles.Leamington Spa is now a production hub producing cookers to sell under theRangemaster, Falcon and La Cornue brands and in North America under theHeartland and Aga brands. Growth is coming fast overseas, most notably inIreland and in France where we now have 1,500 displays and a sales team of 8.We have just under a 50% share of the premium range cooker market in France - amarket that has been almost entirely built from scratch by the Rangemasterteam.The broadening of the range to create a Rangemaster suite of products includingcooker hoods, splash backs, sinks and fridges shows where there is stillgreater potential. Further, moves into the built-in market with sourced productas well as expanding in induction models and developing an innovative energysaving panel which allows the customer to have either the largest capacity110cm oven on the market or to divide the area in two to create a smaller, moreenergy efficient oven when only small meals are being cooked.
We expect to build further on our sales of 76,000 cookers made in 2007. Our sink operation based in Nottingham also ties closely in with cookers, particularly in the growing number of Rangemaster centres - currently 65 - found in leading Design Centres, as more customers look to have Rangemaster kitchens and not just a Rangemaster or Falcon cooker.
Our wider kitchen offering incorporates our US based Marvel undercounterrefrigeration business. Here, we felt the impact of the weak US consumermarkets in 2007 with revenues falling around 10% (2.6% at constant exchangerates). However, the introduction of our new generation of appliances,including dual temperature zone models and electronic controls across therange, have proved timely, strengthening our competitive position. Marvel has agood profitable track record and we believe that there are still considerableproduction efficiency improvements to be made which can help to raise margins.Aga Heartland has become our US cooker business in North America. We haveworked steadily to develop recognition and understanding of our products. Thatprocess continues and we remain confident that the higher recognition we havewill bring results - particularly as we reach out using the internet to bothnew customers and the considerable Aga owning community.When we look at the overall performance of our operations we recognise thatimproving margins at Fired Earth and Grange, which account for about one sixthof revenue but were not profitable in 2007, is an important challenge. We aretherefore particularly pleased that Fired Earth is making progress and our homedesign team is making an impact. Our tile ranges are innovative; sales of ourpaint, now to be found in Homebase and B&Q, are growing fast and our Grangemade kitchen and bathroom furniture gives us a clear identity in the marketplace in those sectors. Similarly, at Grange a young and enthusiasticmanagement team has successfully updated the product range and marketingimagery and is looking to use more effectively the brands' global dealerstructure. We are also looking to improve production efficiencies now that ournew Romanian plant is fully operational. The US has been the weakest part ofthe Grange business and it is here that we look for a significant rebound inprofitability.
Financial performance and targets
The sale of the Foodservice operations has materially altered the financialprofile of the Group. We have sold businesses accounting for nearly half therevenues and around 40% of the profits. We have moved from being indebted tohaving a strong net cash position. This creates new challenges such as the needto adjust the overheads of the Group to reflect a business with such asubstantial reduction in turnover. Further, there is now the return of cash andfunding agreement with the Group Pension Scheme Trustee. As a consequence wehave reset our financial targets.We believe that, leaving to one side the costs and credits relating to theGroup's pension schemes but absorbing Group costs, the continuing Group shouldbe achieving a 10% return on sales. The equivalent starting number on revenuesof ‚£291.8 million in 2007 was 8.6%. Incorporating the net pension credits thereturn on sales in 2007 was 10.6%. We aim to move to 12% return excluding thesepension credits in the longer term. Such returns would be better than thoseachieved by most appliance manufacturers and reflect the premium nature of ourbrands. In assessing these targets with the improved performance of Fired Earthand Grange which can be expected to achieve over 5% returns makes the overallobjectives achievable.In this process we are continuing to focus on cost improvement programmes. Wehave identified input specification changes; sourcing changes (notably throughaccessing suppliers from the Far East); plant efficiency improvements whichlead to benefits of over ‚£3 million a year starting in 2008. Achieving ourtargets does mean that cost increases we have seen - notably in stainless steeland energy - need to be passed on to customers. We have largely been able toachieve this.In relation to our balance sheet we have also looked again at our targets andconcluded it is best to leave to one side the impact of the Group's pensionschemes in assessing returns. Taking our 2007 balance sheet and excluding the‚£79.6 million net pension surplus, our net assets were ‚£277.5 million. This willfall to ‚£137.5 million on a proforma basis after the capital return. Againstthis base we have set ourselves a return on capital target of 25% - with 15% asour target for incremental investments. We expect to continue to have aconservatively positioned balance sheet. On a proforma basis we had net cash atthe end of 2007 after the proposed return of cash. This represents a strongbase from which to finance our plans.The structural change in the Group over the last decade and our carefulapproach to financial planning have been behind our lower than standard ratetax charge. In 2007 we reported a tax charge of ‚£4.2 million - a rate of 15.2%on the pre-tax profits. We expect the rate to revert to around 20% in 2008. Thetotal cash tax paid by the businesses in 2007 was ‚£4.9 million.Earnings per share from continuing businesses were 19.4 pence per share (2006:16.5 pence) calculated on the average number of shares in issue during the yearof 120.3 million. Future earnings per share will be impacted by the currentproposals to make a cash return of ‚£140 million and then to consolidate thenumber of shares in issue.We are proposing to pay an ordinary dividend of 7.65 pence per share making thetotal for the year 11.5 pence - an increase of nearly 10% over 2006. Looking to2008 we expect to continue with our progressive dividend policy and expect that- after the share consolidation - the trend will continue using the establisheddividend cover policy of 2.5 times out of fully taxed earnings.
Disposals in the year
2007 saw us exit from our US consumer home fashions business, Domain, and fromour Foodservice operations. Domain had been struggling for some time indifficult market conditions and we sold the business in June 2007. Subsequentlymarket conditions deteriorated further and the new owners decided in Januarythis year to file under US bankruptcy provisions. We have now written down ourresidual loans of ‚£2.1 million and a receivable of ‚£0.2 million. Where possiblewe took on through Aga Heartland the active customer leads of Domain for ourcooker businesses.The sale of Foodservice was instigated in July and completed in December 2007.We received good interest from both private equity and trade companies and wereable to conclude a transaction before the credit market conditions materiallyimpinged on the process. The initial sale proceeds of ‚£260 million were subjectto adjustment for the net assets at completion over a benchmark net assetfigure and this has seen an additional ‚£4.8 million cash receipt this year.This means the profit on disposal was ‚£30.7 million after costs.
Cash flow
Operating cash flow performance in the year was satisfactory. Working capitalat the 31st December 2007 was ‚£24.9 million, 8.5% of revenue. The continuingbusiness should be more cash generative and has lower capital intensity thanthe previous configuration of the Group.Net capital expenditure including intangibles was ‚£15.7 million. This compareswith a depreciation charge of ‚£11.2 million. We generated ‚£4.7 million in theyear from the sale and leaseback of our factory property in Waterford - areflection of continuing work to optimise the value of our property assets.
The cash tax paid was ‚£4.9 million (2006: ‚£8.5 million) and the dividends paid consumed ‚£69.1 million.
The Group ended the year with a net cash position of ‚£169.1 million. Thiscompares with net debt of ‚£10.9 million at the start of the year and net debtof ‚£79.7 million at the half year after the special dividend of ‚£55.6 million. CONSOLIDATED INCOME STATEMENTYear to 31st December Restated 2007 2006 ‚£m ‚£m Continuing operationsRevenue 291.8 278.6Net operating costs (266.8) (254.3)
_____________________________________________________________________________________
Group operating profit 25.0 24.3Net pension credit 6.0 5.0Non-recurring cost - (1.0)
_____________________________________________________________________________________
Profit before net finance income and income tax 31.0 28.3Finance income 2.0 1.2Finance costs (5.4) (2.0)
_____________________________________________________________________________________
Profit before income tax 27.6
27.5
Income tax expense (4.2)
(6.2)
_____________________________________________________________________________________
Profit for year from continuing operations 23.4
21.3
_____________________________________________________________________________________
Discontinued operations Post tax profit from discontinued operations 40.1
9.8
_____________________________________________________________________________________
Profit for year 63.5
31.1
_____________________________________________________________________________________
Profit attributable to equity shareholders 63.4
31.1
Profit attributable to minority shareholders 0.1
-
_____________________________________________________________________________________
Profit for year 63.5
31.1
_____________________________________________________________________________________
Earnings per share - continuing operations p pBasic 19.4 16.5Diluted 19.2 16.4
_____________________________________________________________________________________
p
p
Dividend per share (See note 1) 11.5
10.5
Cash return proposed / paid 121.4
43.0
_____________________________________________________________________________________
CONSOLIDATED BALANCE SHEET As at 31st December Restated 2007 2006 ‚£m ‚£mNon-current assets Goodwill 60.1 171.5Intangible assets 18.0 29.1Property, plant and equipment 51.7 85.7Retirement benefit surplus 80.4 29.9Deferred tax assets 2.7 6.5
_____________________________________________________________________________________
212.9
322.7
_____________________________________________________________________________________
Current assets Inventories 54.9 94.8Trade and other receivables 46.4 93.3Current tax assets 1.5 7.2Cash and cash equivalents 181.5 43.2
_____________________________________________________________________________________
284.3
238.5
Assets held for sale - 8.1 _____________________________________________________________________________________Total assets 497.2 569.3 Current liabilities Borrowings (4.3) (2.4)Trade and other payables (76.4) (115.2)Current tax liabilities (8.7) (14.4)Current provisions (2.6) (5.4)
_____________________________________________________________________________________
(92.0)
(137.4)
_____________________________________________________________________________________
Net current assets 192.3
101.1
_____________________________________________________________________________________
Non-current liabilities Borrowings (8.1) (51.7)Other payables - (1.0)Retirement benefit obligation (0.8) (5.5)Deferred tax liabilities (29.9) (20.1)Provisions (9.3) (10.1)
_____________________________________________________________________________________
(48.1)
(88.4)
Liabilities held for sale - (8.1) _____________________________________________________________________________________ Total liabilities (140.1)
(233.9)
_____________________________________________________________________________________
Net assets 357.1
335.4
_____________________________________________________________________________________
Shareholders' equity Share capital 32.4 32.3Share premium account 68.8 67.8Other reserves 37.1 28.5Retained earnings 216.7 204.9
_____________________________________________________________________________________
Shareholders' equity 355.0
333.5
Minority interest in equity 2.1
1.9
_____________________________________________________________________________________
Total equity 357.1
335.4
_____________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT Year to 31st December 2007 2006 ‚£m ‚£m Cash flows from operating activities Cash generated from operations post pensions items 12.4 38.5Finance income 1.8 1.3Finance costs (5.0) (2.0)Tax payment (4.9) (8.5)
_____________________________________________________________________________________
Net cash generated from operating activities 4.3
29.3
_____________________________________________________________________________________
Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired -
(31.8)
Purchase of property, plant and equipment (17.1)
(14.5)
Expenditure on intangibles (3.9)
(4.1)
Proceeds from disposal of property, plant and equipment and 5.3
4.6intangibles Disposal proceeds less costs 259.8 -
_____________________________________________________________________________________
Net cash from investing activities 244.1
(45.8)
_____________________________________________________________________________________
Cash flows from financing activities Dividends paid to shareholders (69.1)
(12.5)
Net proceeds from issue of ordinary share capital 1.1
2.2
Repayment of borrowings acquired with acquisitions - (3.0)Finance lease repayment - (1.8)Repayment of borrowings (43.4) -New bank loans raised 1.7 21.6
_____________________________________________________________________________________
Net cash used in financing activities (109.7)
6.5
_____________________________________________________________________________________
Effects of exchange rate changes (0.4)
(2.2)
_____________________________________________________________________________________
Net increase / (decrease) in cash and cash equivalents 138.3
(12.2)
Cash and cash equivalents at beginning of year 43.2
55.4
_____________________________________________________________________________________
Cash and cash equivalents at end of year 181.5
43.2
_____________________________________________________________________________________
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Year to 31st December 2007 2006 ‚£m ‚£mProfit for year 63.5 31.1
_____________________________________________________________________________________
Exchange adjustments on net investments 3.1
(9.8)
Actuarial gains on defined benefit pension schemes 27.4
33.3
Deferred tax on items taken direct to reserves (10.8)
(9.9)
_____________________________________________________________________________________
Income and expenses recognised directly in equity 19.7
13.6
_____________________________________________________________________________________
Transfers to income statement Movement on exchange gains as a result of disposals 5.5
-
_____________________________________________________________________________________
Total recognised income for year 88.7
44.7
_____________________________________________________________________________________
Attributable to: Equity shareholders 88.6 44.7Minority interests 0.1 -
_____________________________________________________________________________________
Total recognised income for the year 88.7
44.7
_____________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT - RECONCILIATIONCash generated from operations Continuing Total 2007 2006 2007 2006 ‚£m ‚£m ‚£m ‚£m
Profit before income tax - continuing operations 27.6 27.5
27.6 27.5Profit before income tax - discontinued operations - - 12.7 12.6Net finance costs 3.4 0.8 3.0 0.9Share based payments expense 0.5 0.2 0.9 0.4Amortisation of intangibles 1.2 1.4 2.2 2.5Impairment of assets held for sale - - - 3.0Depreciation 7.6 7.1 11.2 11.1Profit on disposal of property, plant and equipment (1.3) (0.2) (1.3) (2.4)(Increase) / decrease in inventories (7.1) 0.9 (24.4) (8.6)Increase in receivables (2.2) (2.9) (9.7) (0.7)Increase in payables 0.7 6.6 17.1 5.7Decrease in provisions (0.1) (3.4) (0.3) (3.7)Increase in pensions (9.8) (6.8) (12.1) (8.8)Pension scheme additional cash contributions (14.5) (1.0) (14.5) (1.0)______________________________________________________________________________________________
Cash generated from operations post pensions items 6.0 30.2
12.4 38.5______________________________________________________________________________________________ SEGMENTAL ANALYSIS Following the sale of the Foodservice operations the directors havere-organised the way in which the businesses report internally. Based on risksand returns the directors still consider that the primary reporting format isby business segment. The directors consider that there is only one businesssegment being the manufacture and sale of range cookers and related equipment.Therefore the majority of the disclosures for the primary segment have alreadybeen given in these financial statements with the exception of some restatedcomparatives. These are detailed below.Segment liabilities 2007 2006 ‚£m ‚£m Continuing operations 81.3 68.8Discontinued operations - 71.0
______________________________________________________________
Segment liabilities 81.3 139.8Provision for businesses sold 7.8 5.5Tax 38.6 34.5Borrowings 12.4 54.1
______________________________________________________________
Total liabilities 140.1 233.9
Segment assets include property, plant and equipment, intangibles, inventories, retirement benefit surpluses and receivables. Segment liabilities comprise operating payables, retirement obligations and provisions on continuing businesses. Cash, borrowings and taxation are not included.
The secondary reporting format is by geographical analysis. Revenue is shown bygeographical destination. Segment assets and capital expenditure are shown byorigin. 2007 Restated 2006 Segment Capital Segment Capital Revenue assets expenditure Revenue assets expenditure ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mUnited Kingdom 182.9 218.1 6.9 174.2 159.5 6.5North America 42.1 37.4 1.4 44.9 35.3 2.6Europe 63.2 56.0 2.0 56.3 51.9 5.1Rest of World 3.6 - - 3.2 - -
____________________________________________________________________________________________________
Total continuing operations 291.8 311.5 10.3 278.6 246.7 14.2Discontinued operations 279.9 - 10.7 289.1 265.7 4.4Tax - 4.2 - - 13.7 -Cash - 181.5 - - 43.2 -
____________________________________________________________________________________________________
Total 571.7 497.2 21.0 567.7
569.3 18.6
____________________________________________________________________________________________________
NOTES 1. DividendsThe Board are proposing a final dividend amounting to 7.65p per share (2006:7.0p). An interim dividend of 3.85p per share (2006: 3.5p) has already beenpaid, making the total dividend for the year 11.5p per share (2006: 10.5p). Thefinal ordinary dividend will be paid on 30th May 2008 to shareholdersregistered on 25th April 2008. A special dividend was also paid of 43.0p pershare on 1st June 2007, followed by a share consolidation.
2. Exchange rates
The income statements of overseas subsidiaries are translated into sterling using average exchange rates and balance sheets are translated at year-end rates. The main currencies and exchange rates are:
Year to 31st December 2007 2006Average EUR 1.46 1.47USD 2.00 1.84Year end EUR 1.36 1.48USD 1.99 1.963. Net pension credit 2007 2006 ‚£m ‚£mPension cost (3.9) (4.3)Curtailment gain 0.3 0.9Pensions returns on assets and interest costs 9.6 8.4
____________________________________________________________________
Net pension credit 6.0 5.0
____________________________________________________________________
4. Income tax 2007 2006 ‚£m ‚£m United Kingdom corporation tax based on arate of 30% (2006:30%): Current tax on income for year 2.1
2.4
Adjustments in respect of prior years (0.3)
0.7
_____________________________________________________________________________________
United Kingdom corporation tax 1.8
3.1
Overseas current tax on income for year 3.6
4.3
_____________________________________________________________________________________
Total current tax 5.4
7.4
_____________________________________________________________________________________
United Kingdom deferred tax charge in year 2.6
2.2
Overseas deferred tax credit in year (1.7)
(0.6)
_____________________________________________________________________________________
Total deferred tax 0.9
1.6
_____________________________________________________________________________________
Total United Kingdom tax 4.4
5.3
Total overseas tax 1.9
3.7
_____________________________________________________________________________________
Total income tax 6.3
9.0
_____________________________________________________________________________________
Income tax charge Continuing 4.2 6.2Discontinued 2.1 2.8
_____________________________________________________________________________________
Total income tax 6.3
9.0
_____________________________________________________________________________________
5. Earnings per share 2007 2006 ‚£m ‚£mEarnings Profit for year from continuing operations 23.4
21.3
Minority interests (0.1)
-
_____________________________________________________________________________________
Earnings from continuing operations - for basic anddiluted eps 23.3
21.3
Profit from discontinued operations 40.1
9.8
_____________________________________________________________________________________
Profit attributable to equity shareholders 63.4
31.1
_____________________________________________________________________________________
Weighted average number of shares in issue million
million
For basic EPS calculation 120.3
128.9
Dilutive effect of share options 1.1
1.1
_____________________________________________________________________________________
For diluted EPS calculation 121.4
130.0
_____________________________________________________________________________________
Earnings per share p pContinuing operations Basic 19.4 16.5Diluted 19.2 16.4
_____________________________________________________________________________________
Total operations Basic 52.7 24.1Diluted 52.2 23.96. Discontinued operationsThe operations of Domain Inc, which operated in the soft furnishings market inthe US, was sold on 21st June 2007 for a consideration of ‚£4.1m of which ‚£2mwas received in cash and a further ‚£2.1m in the form of loan notes. Since thatdate the purchaser has defaulted on repayment of the first tranche of loannotes. As a result the remaining loan notes have been impaired in the books.The Foodservice operations of the Group, which included Williams, Falcon,Eloma, Amana, Belshaw, Victory, Bongard, Pavailler, Adamatic, Millers,Serviceline and Mono Equipment were sold on 18th December 2007 for an initialconsideration of ‚£260m all of which was paid in cash. In addition a further‚£5.5m is receivable in respect of a net asset adjustment.
The results are presented below:
Domain Foodservice to to Total Total 21st Jun 18th Dec discont'd discont'd 2007 2007 2007 2006 ‚£m ‚£m ‚£m ‚£mRevenue 12.7 267.2 279.9 289.1Net operating costs (15.0) (252.6)
(267.6) (276.4) ____________________________________________________________________________________________________ Operating profit / (loss)
(2.3) 14.6 12.3 12.7Finance income / (costs) - 0.4
0.4 (0.1) ____________________________________________________________________________________________________ Profit / (loss) before income tax
(2.3) 15.0 12.7 12.6Income tax expense - (2.1)
(2.1) (2.8) ____________________________________________________________________________________________________ Profit / (loss) for period
(2.3) 12.9 10.6 9.8Profit / (loss) on disposal (1.2) 30.7 29.5 -
____________________________________________________________________________________________________
Post tax profit / (loss) from discontinued operations (3.5) 43.6
40.1 9.8____________________________________________________________________________________________________
7. Impact of IFRS - Restatement of comparative information
Since transition to IFRS the Group has continued to assess the detailed impactof IFRS on the presentation of the Group's consolidated financial statements.It has now been concluded that the deferred taxation liabilities on brandsacquired, since the transition date, which are deemed to have an indefinitelife should be recognised, and in accordance with IAS 8, the 2006 deferredtaxation and goodwill balances have been restated by ‚£3.0m.Under IFRS 3 fair values of the net assets of acquired businesses are finalisedwithin twelve months of the acquisition date. All fair value adjustments arerecorded with effect from the date of acquisition and as a consequence mayresult in the restatement of previously reported financial results. Fair valuesof the net assets acquired for Eloma and Amana, both 2006 acquisitions, havenow been finalised. This has resulted in a restatement of 2006 deferredtaxation and goodwill balances, relating to the brands, of ‚£0.5m and ‚£2.0m forEloma and Amana respectively.
The above adjustments do not affect the consolidated income statement, cash flow or retained earnings.
8. Post balance sheet eventThe Group announced on 14th March 2008 that it was proposing to return ‚£140m toshareholders, a substantial portion of the proceeds from the sale of theFoodservice operations, representing approximately 121.4 pence per share. Thiswill be accompanied by a share consolidation.2008 FINANCIAL CALENDARReport and accounts posted 28th March 2008Record date for final ordinary dividend 25th April 2008Annual General Meeting 9th May 2008Final ordinary dividend payable 30th May 20082008 half year end 30th
June 2008
RETURN OF CASH - EXPECTED TIMETABLE Record time / date for consolidation of existingordinary shares and entitlement to 'B' / 'C' shares (6pm) 9th May 2008
New ordinary shares admitted to Official List and to trading (8am) 12th May 2008 Fractional entitlement payable
22nd May 2008'B' / 'C' share capital and dividend alternative payable
29th May 2008
The financial information set out in this announcement does not constitute theCompany's statutory accounts for the years ended 31st December 2007 and 2006.The financial information within this announcement is prepared in line with theaccounting policies presented within the Company's statutory accounts includingthe adoption of IFRS 7, a new standard in the year. Statutory accounts for 2006have been delivered to the Registrar of Companies and those for 2007 will bedelivered following the Company's Annual General Meeting. The Company's auditorhas reported on these accounts; its reports were unqualified and did notcontain statements under section 237(2) or (3) of the Companies Act 1985.
AGA FOODSERVICE GROUP PLCRelated Shares:
AGA.L