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Share Name | Share Symbol | Market | Type |
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Hitech Snt S.A. (CR) | ASE:HIT | Athens | Ordinary Share |
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RNS Number:1002N Heiton Group PLC 03 July 2003 HEITON GROUP PLC PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS FOR FINANCIAL YEAR ENDED 30TH APRIL 2003 * Turnover Euro479.1m, up 13.4% * Operating profit (pre-restructuring costs) of Euro23.7m, up 13.8% * EPS (pre-restructuring costs and goodwill) of 43.1c per share, an increase of 20% * Net cash inflow increased to Euro46.1m * Net debt reduced to Euro63.2m, a gearing level of 46% * Refocus and reorganisation of Group into three core divisions Heiton Trade, Heiton UK and Heiton Retail Commenting on the results, Leo Martin, Chief Executive of Heiton Group said, "A strong trading performance has been achieved across our Irish operations, reflecting successful organic and acquisition development, particularly in our Heiton Trade business. Earnings are well ahead and cash generation has been very strong. Trading in the UK remains challenging. However, following a strategic review and implementation of a restructuring programme, we are well placed to take advantage of growth opportunities in the drainage segment of the civils market. Further, the restructuring is anticipated to be cash positive for the UK business. We have reorganised the Group into three core divisions Heiton Trade, Heiton UK and Heiton Retail. This will better balance our portfolio to enable us to deliver increased efficiencies and synergies across our various businesses. The current year's trading has begun well. To support the organic growth of our businesses, we will continue to seek new acquisitions and opportunities to open new outlets. This coupled with the benefits of the reorganisation, leaves us optimistic about our future prospects." -Ends- 3 July 2003 For reference: Leo Martin Peter Byers Group Chief Executive Group Finance Director Heiton Group plc Heiton Group plc Tel : 01 403 4000 Tel : 01 403 4000 Mobile : 087 2563296 Mobile : 086 2466755 Issued on behalf of Heiton Group by Drury Communications Contact: Orla Benson/Billy Murphy Drury Communications Tel: 01 260 5000 Mobile : 087 803 3262/087 231 3085 Results The year ended 30 April 2003 produced a very satisfactory increase in earnings per share before exceptional items and a strong cashflow for shareholders in Heiton Group plc. EPS before restructuring costs and goodwill grew to 43.1c per share, an increase of 20% on the previous year. Net cash inflow from operating activities nearly doubled to Euro46.1m, as a result of which net debt at year end was reduced to Euro63.2m, a gearing level of 46%. The latter improvement resulted from tight control of working capital, a prudent approach to capital expenditure as well as improved profit performances in the Group. These results reflect, principally, the successful development during the year of our Group's core Irish builders merchants business, both organically and by acquisition. They include contributions from Cork Builders Providers and Wright Window Systems, both of whose performance exceeded expectations at the time of acquisition. The results for the second half of the year also benefited from a stronger performance by Atlantic Homecare. During the year the Group concluded a major review of its UK businesses which comprise Cooper Clarke Group ('CCG') and Willis Builders Merchants. While the performance of Willis has exceeded expectations at the time of acquisition, the performance of CCG has been disappointing. As a result of this review, the Board has decided to focus the UK business on the Civils market (concentrating on drainage products) where it has a strong market position and to integrate the activities of CCG and Willis. It has also decided to exit those businesses where the Group has limited competitive advantage and which make a marginal contribution. Although there are restructuring costs and write down of assets associated with these businesses amounting to Euro13.1m, asset disposals and the release of working capital associated with the restructuring are likely to give rise to a net cash contribution of approximately Euro3m. The Board believes that as a result of its decision to restructure and refocus the Group's UK operations, these businesses will be well placed to provide consistent positive returns in the future. The Board is committed to its restructured UK business and views its prospects positively. Dividends Your Group has had a consistent policy of maintaining dividend cover in a range between 2.5 and 3.5 times. For this financial year, your Board is recommending a final dividend of 8.2c which would bring the total dividend for the year to 14.4c. This represents an 8.3% increase over the prior year and a cumulative growth of 18% per annum over a five-year period. Strategy Implementation Refocus and Reorganisation of Group Divisions Our strategy is to strengthen and grow all of our businesses both organically and through acquisition in the markets in which we operate. Key to the delivery of this, has been extracting cost efficiencies throughout the Group and ensuring that important synergies can be delivered across our portfolio. To ensure that we continue to deliver on this strategy, we have made the important decision this year to restructure and reorganise the Group into three core divisions: Heiton Trade, Heiton Retail and Heiton UK. This reorganisation will ensure that the businesses: - clearly and cohesively communicate and execute their plans; - deliver a full range of products to our customers; - operate in a cost effective manner; and - optimise the availability of synergies. Group Operations A summary of the Group turnover is set out below: 2003 2002 % Change Eurom Eurom Heiton Trade 314.6 259.0 +21.4 Heiton Retail 85.3 81.7 +4.4 Ireland 399.9 340.7 +17.3 Heiton UK 79.2 81.9 (3.2) Total 479.1 422.6 +13.4 Heiton Trade Heiton Trade comprises HeitonBuckley, Cork Builders Providers, Wright Windows, Heiton Steel, Sam Hire and Hardwoods. The division will be headed by Eddie Kelly who has been Managing Director of the Merchanting division for the last two years. Following their grouping into Heiton Trade, these business units will seek to extract benefits from the significant overlap in their customer bases and to source increased sales opportunities across Heiton's strong geographic presence. We are confident that Heiton Trade will bring us closer to delivering on our key objective of becoming a full solutions provider to the construction industry. Our concentration will be on gaining a larger share of the growing RMI (Repairs, Maintenance and Improvements) sector of the market and we believe that the newly focused Heiton Trade will be in an ideal position to tap into this market. The HeitonBuckley business has had an outstanding year with turnover benefiting from our strong position in the housing and RMI segments of the construction market. A number of significant developments were achieved across our merchanting business to greatly improve our product and service offering leading to an increase in market share and strengthening our position as the No 1 builders merchant business in Ireland. These developments included the completion of new showrooms in a number of our branches around the country and the planned construction of a new purpose built unit at Ballyshannon, Co. Donegal. We are also very pleased with the contribution that has been made by Cork Builders Providers, acquired last year. The business has now been successfully integrated into the merchanting division. Our Cork business has also benefited from the amalgamation of all the Cork region merchanting businesses under one management team. The Steel business has had a good year with like for like turnover growth being underpinned by excellent customer service. Recent product introductions include a new security fencing range, the continued expansion of the shot-blasting facility which commenced business in January 2002 and the roll-out of the Bamtec system, which produces reinforcing steel to highly specified standards, into a new development in Smithfield. The Steel business will benefit from its consolidation into the Heiton Trade business by virtue of the significant overlap in its customer base with the merchanting business, as well as assisting the sales effort of the merchanting division which has steel as a significant product category within the branch network. Wright Window Systems has been an excellent addition to the Heiton Group with sales well ahead of its prior year and yielding strong returns on our investment. Wrights have gained during last year from the strength of the Irish housing market, in particular the apartment sector, and retains a good pipeline of future projects. One of the key synergies which is being delivered from the addition of Wrights to the Heiton Group is the opportunity to use the merchanting branch network to expand its sales outlets. To this end, Wrights has worked hard during the last year to ensure that production capacity is expanded and is now positioned to take advantage of increased sales leads across the Group's network. Sam Hire has also performed satisfactorily this year. Sales have been increasing steadily in the last number of months although not quite sufficiently to offset the decline in the first half of the year. Nevertheless, the earnings performance has been good, gross margin has grown and cost containment has been well managed resulting in another strong year of return on capital employed for the Hire division. The relocation of the Galway hire branch to the merchanting site and a proposed move of the Hire unit in North Dublin to the merchanting site in Santry represent further examples of the synergies that can be gained through close links between those divisions which supply the construction sector. For the division as a whole our vision is to be a full solutions provider to the construction industry in Ireland. We aim to continue to be No. 1 in turnover and market share targeting the highest return on capital employed in the industry. The Irish construction market has performed well in the second half of our financial year and this trend has continued into the early part of the new year. In particular, the housing segment and the RMI segment (Repairs, Maintenance and Improvements) have both performed strongly over the last number of months. Our outlook for the balance of the calendar year is that this pattern of sales growth will remain for the next number of months. However, beyond that, the picture for the housing market is harder to predict. Against that, RMI is forecast to maintain its growth and, as the construction market matures, assume an increasing proportion of total Irish construction. It is our intention therefore to focus increasingly on the strength of the RMI segment. Heiton Retail Heiton Retail comprises the Atlantic Homecare and Panelling Centre elements of our business. The division will be headed by Paul Lynch, who, after a number of years as Corporate Development Director, has been running Wright Window Systems since its acquisition in June 2002. The key objective of Heiton Retail is to meet all expectations of the retail consumer for the DIY and domestic homecare products, both internal and external. There are clear marketing, merchandising and sales benefits to be achieved from this consolidation and we are confident that we can improve operating margins and continue to achieve growth. As mentioned at the time of the Interim Results, Atlantic Homecare suffered from a number of difficult factors in the first half of the year. However, I am delighted to report that the second half resulted in a strong improvement in both turnover and earnings. The Dundalk store opened in August and has performed well, generating a positive contribution. Gross margins have improved and the business has benefited from two good seasons, Christmas and Spring, in the second half of the year. The Panelling Centre has had another excellent year with turnover growth and a very strong earnings contribution. This has occurred despite the adverse impact of a flood in the Richmond Road facility in November. This caused major disruption but was well managed by the Panelling Centre team in that they have now relocated to a new facility in Furry Park in Santry and there has been minimal disruption to the business subsequent to the flood. The retail sector within Ireland is a strong, and vibrant, yet highly competitive, environment. Notwithstanding, Atlantic Homecare has built on its No. 2 position and continued to grow its business overall, and, through its closer alignment with the Panelling Centre outlets, will increase its penetration into the Homecare market with a differentiated product range and commitment continuously to improve customer service. Heiton UK The Heiton UK division comprises all elements of our UK based business. It will continue to be led by Grahame Hall who joined the Group in August 2002. Following a strategic review of the entire UK operations, we believe that a newly refocused and a newly restructured Heiton UK will take advantage of opportunities that exist in the UK market. This business will focus on drainage related products for the Civils marketplace. We are confident that Heiton UK can be a leading player in the drainage segment of the Merchant's market, a market which is worth over Stg#1bn and we aim to deliver a strong return on capital employed on the back of organic growth and suitable acquisitions. Our UK business experienced difficulties in the past year. As reported at the half year, earnings were down, reversing the positive trend which had been exhibited in 2001/2002. As a consequence, the UK managing director and his senior team have now completed a strategic review of the future of the UK business and their proposals have received the backing of the Board. The strategy for the UK business is as follows: * To focus its operations on the core strengths in the Civils (focusing on the distribution of below ground and surface drainage products) segment of the construction market with operations presently in Farnworth (North West), Tamworth (Midlands), Braintree (Essex) and the South. * To expand the Civils operation through acquisition or organic development in the same manner as Willis and Tamworth in recent years. * To exit those businesses which either do not fit with this strategy or are offering a marginal or negative contribution. The major restructuring work which was recently completed by the UK executive team will also result in a one time restructuring cost. There are three elements to this cost - cash items such as redundancy amounting to Euro2.8m, non-cash costs associated with the write-down of certain stocks and fixed assets amounting to Euro1.7m and a write-off of goodwill associated with those businesses which will either be disposed of or closed as a result of this restructuring amounting to Euro8.6m. Although the total restructuring cost amounts to Euro13.1m, only Euro2.8m of this is a cash expenditure. When the benefit of asset realisations and the release of working capital are included, it is expected that the project will be cash positive in the amount of Euro3.0m. Positive trading features of last year have been the encouraging progress made by the new branch in Tamworth and the continued strong performance of the Willis business which continued its high sales levels throughout the financial year. The outlook for the UK is for GDP growth of 2.0% in 2003 followed by 2.0% in 2004 with construction growth broadly matching that pattern. This, therefore, is a good market for our UK division to operate in and we are confident that the changes presently being made will lead to significant improvement in performance in this business over the coming year and beyond. Board of Directors During the year we announced a non-executive director appointment. Sir John Gains, Chief Executive of Mowlem Plc, a leading UK construction and support services group, joined the Board in November 2002. John is past president of the Construction Federation, the principal representative body of the UK contracting industry. His experience of the industry generally, and of the UK in particular, is invaluable. I am also delighted to announce the appointment of Eddie Kelly, who has just taken on the position of Managing Director of the Heiton Trade division, to the Board with effect from today, 3 July 2003. We will be very sorry to lose the services of John Bourke who will be retiring from the Board at this year's Annual General Meeting on 18 September 2003. John has been a member of the Board and has chaired the Audit Committee for many years, and has been a source of tremendous counsel and advice throughout that time. We wish John well in the future. Management and Staff Our staff throughout all of the businesses within the Group have reacted well to the challenge presented by the competitive environments in which we operate and have performed outstandingly well in the year gone by. I would like to thank them for their commitment and energy and encourage them to continue those efforts in the coming year. Other Developments Property Our drive to enhance the Group's return on capital employed and to release cash from under-utilised assets resulted in the disposal during the year of our site in Mullingar and the Panelling Centre Richmond Road premises. These have been disposed of at a small surplus to their re-valued amount (as at April 2002). This programme will continue and we would expect further disposals in the coming year. We continue to liaise with the authorities in Cork to obtain the optimum planning permission for our site in Bishopstown. This has been a long process but we would expect to be well positioned to complete an appropriate transaction within the next 24 months. The site received a positive re-zoning in December 2002 under the Cork Regional Development Plan, with an indicative valuation suggesting that the value of the site has risen by approx. Euro7m. Poland We retain our investment with a view to determining its future in 2004. We remain optimistic that the economic climate in Poland for the latter half of this decade will be very positive following accession to the European Union. Outlook In recent months the trading in Irish Construction and in particular Irish housing and RMI (Repairs, Maintenance and Improvements) has been buoyant. This trend has given the Group a very satisfactory start to the new financial year. It is our expectation that trading will remain positive throughout 2003. The focus on cost controls, working capital management and containment of capital expenditure, which has been a feature of the Group over the last year, will continue. In the UK, the construction market continues to deliver modest growth. We believe our streamlined and restructured UK operations are well placed to take advantage of those growth segments. The Heiton Group has been successful in identifying, acquiring and integrating new businesses over the last ten years. To underpin the organic growth of our businesses, we will continue to seek new acquisitions and opportunities to open new outlets to help deliver our vision. These factors, coupled with the benefits of the refocusing and reorganisation of the various divisions, cause us to be optimistic about the future prospects of your Group. Richard Keatinge Chairman 3 July 2003 Heiton Group plc GROUP PROFIT AND LOSS ACCOUNT Year Ended 30 April 2003 2003 2002 Euro'000 Euro'000 Turnover Continuing operations 457,837 422,630 Acquisitions 21,240 479,077 422,630 Operating profit before exceptional item Continuing operations 25,283 23,988 Acquisitions 2,021 - Total operating profit before exceptional item 27,304 23,988 Exceptional goodwill write-off and restructuring costs (13,098) (4,320) Operating profit 14,206 19,668 Interest payable (5,083) (4,123) Profit before taxation 9,123 15,545 Taxation (3,214) (2,620) Profit for the financial year 5,909 12,925 Dividends paid (3,056) (2,881) Dividends proposed (4,029) (3,705) Retained for the year (1,176) 6,339 Basic earnings per share in cents 11.99 25.84 Diluted earnings per share in cents 11.97 25.81 Basic earnings per share pre-exceptional items in cents 38.33 32.87 Pre-goodwill and pre-exceptional items earnings per share in cents 43.08 35.85 On behalf of the Board R Keatinge LJ Martin Heiton Group plc GROUP BALANCE SHEET 30 April 2003 2003 2002 Euro'000 Euro'000 Fixed assets Tangible assets 128,987 129,048 Intangible assets 30,641 38,540 Financial assets 2,831 2,790 162,459 170,378 Current assets Stocks 62,650 62,756 Debtors 99,796 93,273 Cash at bank and in hand 17,965 19,196 180,411 175,225 Creditors - amounts falling due within one year (133,177) (122,060) Net current assets 47,234 53,165 Total assets less current liabilities 209,693 223,543 Creditors - amounts falling due after more than one year (71,257) (82,983) Provisions for liabilities and charges Deferred taxation (868) (741) 137,568 139,819 Capital and reserves Called-up share capital 15,869 15,954 Share premium 15,506 15,423 Revaluation reserve 35,698 38,007 Capital redemption reserve fund 560 456 Profit and loss account 69,935 69,979 137,568 139,819 Equity shareholders' funds 137,424 139,672 Non-equity shareholders' funds 144 147 137,568 139,819 On behalf of the Board R Keatinge LJ Martin Heiton Group plc GROUP CASH FLOW STATEMENT Year Ended 30 April 2003 2003 2002 Euro'000 Euro'000 Net cash inflow from operating activities 46,088 23,805 Returns on investments and servicing of finance: Interest and preference dividends paid (4,904) (4,137) Taxation paid: Corporation tax (5,422) (8,386) Capital expenditure and financial investment (5,375) (3,480) Acquisitions and disposals: Purchase of new undertakings (5,082) (27,575) Equity dividends paid (6,752) (5,765) Net cash inflow/(outflow) before financing 18,553 (25,538) Financing (Purchase of own shares)/issue of new share capital (685) (2,751) (Decrease)/increase in debt (14,268) 32,373 (14,953) 29,622 Increase in cash 3,600 4,084 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Year Ended 30 April 2003 2003 2002 Euro'000 Euro'000 Increase in cash above 3,600 4,084 Decrease/(increase) in debt above 14,268 (32,373) New finance leases (849) (411) Finance leases acquired with new undertakings (22) (30) Debt acquired with new undertakings (207) (808) Change in net debt 16,790 (29,538) Net debt at beginning of year (80,005) (50,467) Net debt at end of year (63,215) (80,005) On behalf of the Board R Keatinge LJ Martin Heiton Group plc NOTES TO THE FINANCIAL STATEMENTS 1 Segmental analysis 2003 2002 Euro'000 Euro'000 Turnover Heiton Trade 314,522 259,026 Heiton Retail 85,317 81,712 Total Ireland 399,839 340,738 Heiton UK 79,238 81,892 Total 479,077 422,630 Operating profit before goodwill amortisation and restructuring costs Ireland 28,944 23,348 United Kingdom 698 2,128 29,642 25,476 The group operates in the Republic of Ireland and the United Kingdom. Additional segmental information analysed by class of business or geographic location, under Statement of Standard Accounting Practice No.25 Segmental Reporting, is not disclosed because in the opinion of the Directors the disclosure of such information would be prejudicial to the interests of the Group. DIVIDENDS ORDINARY SHARES Final Dividend proposed: Euro8.2c gross per share Dividend payment date: 19 September 2003 Ex Dividend date: 9 July 2003 Record date: 11 July 2003 6% CUMULATIVE PREFERENCE SHARES Dividend: Euro3.81c gross per share in respect of the half-year period 1 April 2003 to 30 September 2003 Dividend payment date: 1 October 2003 Ex Dividend date: 9 July 2003 Record date: 11 July 2003 The Annual General Meeting will be held on 18th September 2003 at 12 noon at Jurys Hotel, Ballsbridge, Dublin 4. 3 July 2003 Richard Keatinge Chairman This information is provided by RNS The company news service from the London Stock Exchange END FR EAXXAELFDEFE
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