Final Results - Part 2
MFI Furniture Group PLC
19 March 2001
PART 2
1.Basis Of Preparation
The financial information set out does not constitute statutory financial
statements for the 52 week period ended 30 December 2000 and the 36 week
period ended 1 January 2000, but is derived from those accounts. Statutory
accounts for the 36 weeks ended 1 January 2000 have been delivered to the
Registrar of Companies and those for the 52 weeks ended 30 December 2000
will be sent to shareholders and filed with the Registrar of Companies on
18 April 2001. The auditors have reported on those accounts, their reports
were unqualified and did not contain statements under Section 237(2) or (3)
of the Companies Act 1985.
2.Format 1 Presentation
As the Group has internally moved to a one company culture with performance
managed by function rather than by division, we now consider it more
appropriate, as permitted by the Companies Act 1985, to adopt a Format 1
profit and loss account rather than a Format 2 version. This brings the
Group into line with most other companies in the general retailers sector.
This change has been adopted for the first time this year, and pro-forma
numbers under Format 2 have been included to aid comparison with previous
years.
3.Segmental Analysis
Before Except 52 52 weeks 36 weeks
excepti ional weeks to to
onal items to 1 Jan 1 Jan
items 30 Dec 2000 Pro- 2000
2000 forma
Unaudited
Restated Restated
(note 5) (note 5)
£m £m £m £m £m
TURNOVER
UK Retail 671.4 597.8 396.4
Howdens 145.2 95.9 70.3
France and Spain 79.7 73.5 45.0
Other operations 4.3 3.7 2.6
------ -------- --------
Continuing
Operations 900.6 770.9 514.3
Discontinued
Operations - 26.0 18.0
------ ------- ------
900.6 796.9 532.3
------ ------- ------
Profit Before
Taxation
UK Retail 20.6 8.7 29.3 13.2 0.2
Howdens 15.3 - 15.3 8.9 5.5
France and Spain 5.4 (0.5) 4.9 7.1 2.4
Other operations (0.4) - (0.4) 0.5 0.2
------ ----- ------ ------- --------
Continuing
Operations 40.9 8.2 49.1 29.7 8.3
Discontinued
Operations - - - 3.5 2.1
------ ----- ------ ------- --------
Operating profit 40.9 8.2 49.1 33.2 10.4
Profit on disposal
of a subsidiary - 11.2 11.2 - -
Profit on disposal
of fixed assets 0.5 - 0.5 4.2 4.8
Net interest
receivable/
(payable) 4.0 - 4.0 (8.2) (6.1)
------ ----- ------ ------- ------
Profit before
taxation 45.4 19.4 64.8 29.2 9.1
------ ----- ------ ------- ------
Net Assets
/(Liabilities)
UK Retail 233.4 232.8 232.8
Howdens 58.5 43.3 43.3
France and Spain 23.5 22.7 22.7
Other operations * 1.1 10.7 10.7
------ ------- -------
316.5 309.5 309.5
Unallocated net
assets/
(liabilities) 30.1 (0.3) (0.3)
------ ------- -------
346.6 309.2 309.2
------ ------- -------
* Includes the net assets of the discontinued operation.
Manufacturing operating profit has been apportioned across the separate
divisions in proportion to the external sales of those divisions of in-house
manufactured product. This method of apportionment is revised from previous
periods and is considered to be more appropriate as we develop a single
pricing
structure.
Unallocated net assets / (liabilities) comprise balances in respect of
dividends, cash and borrowings.
The analysis of turnover by destination is not materially different to the
analysis of turnover by origin.
4.Exceptional Items
The exceptional items credited in the consolidated profit and loss account for
the 52 weeks to 30 December 2000 arose principally from the restructuring of
the UK Retail business. They are analysed as follows:
£m
Re-occupation of Northampton Distribution
Centre 12.7
Reorganisation of supply chain and
structural change costs (4.0)
Disposal of Spanish operations (0.5)
------
Total operating exceptionals 8.2
Sale of Hygena Packaging Limited 11.2
------
Total exceptionals 19.4
======
5.Tax
The Group has adopted FRS 19 'Deferred Taxation' early with a prior year
adjustment. This has resulted in a £1m credit to opening reserves (note 7),
together with the 36 weeks to 1 January 2000 tax charge being restated from a
£1.3m charge to a £1.3m credit. If FRS 19 was not adopted the deferred tax
charge for the period would be £nil (1999 - £nil).
52 weeks to 36 weeks
to
Pre Excepti 30 Dec 2000 1 Jan 2000
exception onals
al
Restated
£m £m £m £m
Taxation on profit for the
period comprises:
UK corporation tax at 30.0%
(1999 - 30.0%) 9.2 2.6 11.8 2.6
Adjustments relating to prior
periods 1.5 - 1.5 (1.3)
Deferred tax - origination and
reversal of timing differences 2.0 - 2.0 (2.6)
----- ------ -----
12.7 2.6 15.3 (1.3)
===== ===== ====== =======
The taxation charge is calculated at 28.0% on profits before exceptional
items.
Factors affecting Current Period Corporation Tax
The current period corporation tax assessed for the period is lower than the
standard rate of corporation tax of 30% (1999 - 30%) for the following
reasons:
52 weeks to 36 weeks to
30 Dec 2000 1 Jan 2000
Restated
£m £m
Profit before tax for the period 64.8 9.1
====== =======
Corporation tax at the standard rate 19.4 2.7
Tax effect arising on the following:
Non tax deductable expenditure 2.9 1.9
(including depreciation)
Net profits covered by available losses (8.5) (4.6)
Provision for prior taxation matters 1.5 (1.3)
------ -------
15.3 (1.3)
====== =======
Factors that may affect future tax charges
The effective rate of tax is liable to rise to nearer the current rate of
corporation tax of 30% due to the implementation of FRS 19 whereby all timing
differences are fully recognised.
6. Equity Dividends
52 Weeks To 36 Weeks To
30 Dec 2000 1 Jan 2000
£m £m
Interim paid - 0.9 pence per
share
(1999 - 0.7 pence per share) 5.3 4.2
Final proposed - 1.0 pence per
share
(1999 - 0.7 pence per share) 5.9 4.1
------ ------
Total dividend - 1.9 pence per
share 11.2 8.3
(1999 - 1.4 pence per share) ====== ======
7.Reserves
Share Profit and
premium Other Revaluation Loss
account reserves reserve account
£m £m £m £m
At 1 January 2000 43.9 17.0 44.3 143.5
Prior period
adjustment(note 5) - - - 1.0
------ ------- ------- -------
At 1 January 2000
restated 43.9 17.0 44.3 144.5
Retained profit for the
period - - - 38.3
Realised revaluation of
properties - - (2.2) 2.2
Amortisation of
goodwill - 2.4 - (2.4)
Foreign exchange and
other adjustments - - - (0.9)
------ ------- ------ ------
AT 30 DECEMBER 2000 43.9 19.4 42.1 181.7
====== ======= ====== ======
8.Creditors
Amounts Falling Due Within One Year
Group
30 Dec 2000 1 Jan 2000
£m £m
Borrowings 3.1 18.8
Trade creditors 66.7 45.9
Corporation tax 10.9 1.8
Other taxes and social security 9.4 15.7
Obligations under finance
leases 0.3 0.1
Proposed dividends 5.9 8.3
Other creditors 4.7 10.0
Accruals and deferred income 83.2 87.7
----- -----
184.2 188.3
===== =====
9.Creditors
Amounts Falling Due After More Than One Year
Group
30 Dec 2000 1 Jan 2000
£m £m
Borrowings 0.8 3.8
Obligations under finance
leases - within five years 0.2 0.3
Other creditors 0.3 0.5
----- -----
1.3 4.6
===== =====
10.Provisions For Liabilities And Charges
Pension Onerous Restructuring Deferred
provisi leases provision taxation Total
on
(note (note 4) Restated
4) (note 5)
£m £m £m £m £m
At 1 January 2000
(restated) 5.3 12.3 0.5 (1.0) 17.1
Created in the
period 2.1 - - 2.0 4.1
Utilised in the
period - - (0.1) - (0.1)
Written back in the
period - (12.3) (0.4) - (12.7)
----- ----- ------ ------ ------
At 30 December 2000 7.4 - - 1.0 8.4
===== ===== ====== ====== ======
11.Consolidated Cash Flow Statement
a)Reconciliation of operating profit net cash inflow from operating
activities.
52 weeks to 36 weeks to
30 Dec 2000 1 Jan 2000
£m £m
Operating profit before exceptional
items 40.9 10.4
Depreciation of tangible fixed assets 30.4 24.9
Amortisation of fixed asset
investment 1.1 0.4
Increase in stocks (35.4) (7.2)
Increase in debtors (28.4) (1.4)
Increase / (decrease) in creditors
and provisions 21.3 (15.5)
------ ------
Net cash inflow - pre-exceptional
operating activities 29.9 11.6
Net cash outflow - operating -
exceptionals (4.5)
------ ------
Net cash inflow from operating
activities 25.4 11.6
====== ======
b) Analysis of cash flows for headings netted in the cash flow statement
52 weeks to 36 weeks to
30 Dec 2000 1 Jan 2000
£m £m
Returns on investments and servicing
of finance
Interest received 4.8 1.8
Interest paid (0.9) (8.3)
--------- ---------
Net (outflow) / inflow / (outflow) on
investments and servicing of finance 3.9 (6.5)
===== =====
Capital expenditure and financial
investment
Payments to acquire tangible fixed
assets (35.4) (16.9)
Receipts from sales of tangible fixed
assets 35.0 135.6
Payment to acquire fixed asset
investments (2.5) (1.6)
--------- ---------
Net (outflow)/inflow for capital
expenditure and financial investment (2.9) 117.1
===== =====
Financing
Decrease in bank finance (18.7) (144.2)
Capital element of finance lease
rental payments 0.1 (0.3)
--------- ---------
Net outflow from financing (18.6) (144.5)
===== =====
c) Analysis of net debt
Current Revolving Net Total
Cash credit Term (borrow Finance net
at asset facility loans ings) / leases (debt) /
bank invest cash cash
ments
£m £m £m £m £m £m £m
As at 24 April
1999 52.9 0.6 (150.0) (16.8) (113.3) (0.7) (114.0)
Cash flow (22.4) (0.2) 135.0 9.2 121.6 0.3 121.9
Exchange
movement (0.3) - - - (0.3) - (0.3)
----- ------ -------- ------ ------- ------- -------
As at 1 January
2000 30.2 0.4 (15.0) (7.6) 8.0 (0.4) 7.6
Cash flow 9.4 (0.1) 15.0 3.7 28.0 (0.1) 27.9
----- ------ -------- ------ ------- ------- --------
As at 30 December
2000 39.6 0.3 - (3.9) 36.0 (0.5) 35.5
==== ==== ==== ==== ==== ==== ====
12.Sale Of Hygena Packaging Limited
Net assets disposed £m £m
of:
Fixed assets Cash (net of expenses of
11.0 £1.5m) 14.0
Stocks 0.8 Cash sold with business (0.3)
Debtors 7.1 --------
Creditors (16.4) 13.7
-------- ====
2.5
Profit on
disposal 11.2
--------
13.7
====
On 4 January 2000 the Group completed its disposal of Hygena Packaging
Limited for consideration amounting to £37.0m in cash and assumed
debt. This comprised £7.6m for the sale of land and buildings from
another subsidiary company, £13.9m of assumed debt and £15.5m for the
sale of the company.
PRO-FORMA FORMAT 2 CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 52 weeks ended 30 December 2000
Pro-Forma 52 Weeks to 30 December 2000
Continuing
operations Exceptional
Pre- items Total
exceptional
Notes (note 4)
£m £m £m
Turnover 3 900.6 - 900.6
Change in stocks 35.6 - 35.6
Other operating income 19.8 - 19.8
------ ------ ------
956.0 - 956.0
------ ------ ------
Raw materials and -
consumables 443.2 443.2
Staff costs 209.0 (0.4) 208.6
Depreciation of
tangible fixed assets 30.4 - 30.4
Other operating 232.5 (7.8) 224.7
charges
------ ------ ------
915.1 (8.2) 906.9
------ ------ ------
Operating profit 3 40.9 8.2 49.1
Net profit on disposal
of fixed assets 0.5 - 0.5
Profit on disposal of
discontinued - 11.2 11.2
operations
------ ------- -------
Profit on ordinary
activities before
interest 41.4 19.4 60.8
Interest receivable
and similar income 4.8 - 4.8
Interest payable and
similar charges (0.8) - (0.8)
------ ------- -------
Profit on ordinary
activities before
taxation 45.4 19.4 64.8
Tax 5 (12.7) (2.6) (15.3)
------ ------- ------
Profit for the
financial period 32.7 16.8 49.5
Dividends 6 (11.2) - (11.2)
------ ------- ------
Amount transferred to
reserves 7 21.5 16.8 38.3
======= ======= =======
Earnings per share
Basic earnings per 10p 8.3p
ordinary share 5.5p 2.8p
====== ====== =======
Diluted earnings per 8.2p
10p ordinary share 5.4p 2.8p
====== ======= =======
PRO-FORMA FORMAT 2 CONSOLIDATED PROFIT AND LOSS ACCOUNT
Pro-Forma 52 Weeks to 1 January 2000
Continuing Discontinued Total
operations
Pre- Operations(notes) Restated
exceptional
Notes
Unaudited Unaudited Unaudited
£m £m £m
Turnover 3 770.9 26.0 796.9
Change in stocks 7.8 - 7.8
Other operating income 22.8 - 22.8
------ ------ ------
801.5 26.0 827.5
------ ------ ------
Raw materials and 355.4 8.5 363.9
consumables
Staff costs 173.0 5.5 178.5
Depreciation of 33.5 1.9 35.4
tangible fixed assets
Other operating 209.9 6.6 216.5
charges
------ ------ ------
771.8 22.5 794.3
------ ------ ------
Operating profit 3 29.7 3.5 33.2
Net profit on disposal 4.1 0.1 4.2
of fixed assets
Profit on disposal of - - -
discontinued
operations
------- ------ ------
Profit on ordinary 33.8 3.6 37.4
activities before
interest
======= ========
Interest receivable 2.7
and similar income
Interest payable and (10.9)
similar charges
------
Profit on ordinary 29.2
activities before
taxation
Tax 5 (5.0)
-------
Profit for the 24.2
financial period
Dividends 6 (8.3)
------
Amount transferred to 7 15.9
reserves
======
Earnings per share
Basic earnings per 10p 4.1p
ordinary share
=====
Diluted earnings per 4.1p
10p ordinary share
=====
PRO-FORMA FORMAT 2 CONSOLIDATED PROFIT AND LOSS ACCOUNT
36 Weeks to 1 January 2000
Continuing Discontinued Total
Operations Operations Restated
Notes (note 5)
£m £m £m
Turnover 3 514.3 18.0 532.3
Change in stocks 5.9 - 5.9
Other operating income 15.4 - 15.4
------ ------ ------
535.6 18.0 553.6
------ ------ ------
Raw materials and 239.5 6.2 245.7
consumables
Staff costs 118.8 3.9 122.7
Depreciation of 23.6 1.3 24.9
tangible fixed assets
Other operating 145.4 4.5 149.9
charges
------ ------ ------
527.3 15.9 543.2
------ ------ ------
Operating profit 3 8.3 2.1 10.4
Net profit on disposal 4.7 0.1 4.8
of fixed assets
Profit on disposal of - - -
discontinued
operations
------- ------- ------
Profit on ordinary 13.0 2.2 15.2
activities before
interest
======= =======
Interest receivable 1.8
and similar income
Interest payable and (7.9)
similar charges
------
Profit on ordinary 9.1
activities before
taxation
Tax 5 1.3
------
Profit for the 10.4
financial period
Dividends 6 (8.3)
------
Amount transferred to 7 2.1
reserves
=======
Earnings per share
Basic earnings per 10p 1.7p
ordinary share
=======
Diluted earnings per 1.7p
10p ordinary share
=======
Notes To The Pro-Forma Statement
Basis Of Preparation
As the Group has internally moved to a one company culture with performance
managed by function rather than by division, we now consider it more
appropriate, as permitted by the Companies Act, to adopt a Format 1 profit
and loss account rather than a Format 2 version. This change has been adopted
for the first time this year, and pro-forma numbers under Format 2 have been
included to aid comparison with previous years.
In addition, following the change in the financial year end in December 1999,
pro forma consolidated profit and loss accounts and segmental information
have been provided for the 52 week comparative period ended 1 January 2000 in
order to provide a better understanding of the Group's performance. The
information, which is unaudited, has been derived from previously published
results and internal management accounts with adjustments being made for the
adoption of FRS 12, FRS 19 and the change in sales accounting policy.
Exceptional items have been excluded from the analysis.
Hygena Packaging has been separated as a discontinued activity in the
comparatives as it was sold on 4 January 2000. The Group's interest charge
for the 52 weeks to 1 January 2000 and 36 weeks to 1 January 2000 has not
been restated to show the effect of Hygena Packaging being sold at the
beginning of the period. As a result the pro-forma profit and loss account
for continuing and discontinued activities is not disclosed beyond profit on
ordinary activities before interest and tax. The Taxation charge has been
calculated under FRS 19 principles and recognises in full losses available
from previous years.
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