Interim Results
06 11월 2003 - 4:01PM
UK Regulatory
RNS Number:7432R
Big Food Group PLC
06 November 2003
6 November 2003
THE BIG FOOD GROUP PLC
INTERIM RESULTS
FOR THE TWENTY FOUR WEEKS TO 12 SEPTEMBER 2003
HIGHLIGHTS
* Total net sales #2,390.8 million (2002: #2,378.1 million)
* Operating profit #27.4 million (2002: #18.2 million)*
* Profit before tax #15.9 million (2002: #6.6 million)*
* Profit before tax #5.6 milion (2002: #4.9 million)
* Earnings per share 1.7p (2002: 1.5p) and adjusted earnings per share 4.8p
(2002: 1.6p)
* Interim dividend of 1.1p (2002: 1.0p)
* Building on progress in second half of last year as recovery strategy
continues to be implemented to plan and delivers improved performance
* before goodwill amortisation and exceptional items
Commenting on the statement Chief Executive Bill Grimsey said:
"Our customers like our new initiatives and these are beginning to yield results
as we roll out our new Iceland Formats, build our Premier chain of retailers at
Booker and expand the range of products at Woodward."
Enquiries:
The Big Food Group
Bill Grimsey, Chief Executive 0207 796 4133 on 6 November 2003
Bill Hoskins, Finance Director
Hudson Sandler
Andrew Hayes 0207 796 4133
Noemie de Andia
An analyst presentation will be held today at The Brewery, Chiswell Street,
London EC1 from 9:30am
INTERIM RESULTS
FOR THE TWENTY FOUR WEEKS TO 12 SEPTEMBER 2003
The first half of the year saw the Group build on the progress seen in the
second half of last year as our recovery strategy continued to be implemented to
plan. Compared to the prior first half, Iceland returned to profit, Booker
continued its steady growth and Woodward grew its market share. Our strategic
initiatives are beginning to deliver as Iceland's roll out of its new format
programme gathered pace, Booker grew its Premier chain of retailers and Woodward
expanded its full temperature offering to its customers.
SUMMARY
Total net sales for the period were #2,390.8 million (2002: #2,378.1 million).
Operating profit before amortisation of goodwill and exceptional items, was
#27.4 million (2002: #18.2 million), operating profit was #17.1 million (2002:
#4.1 million) and profit before amortisation of goodwill, exceptional items and
tax was #15.9 million (2002: #6.6 million). There are no exceptional items this
year.
Earnings per share were 1.7p (2002: 1.5p) and adjusted earnings per share were
4.8p (2002: 1.6p). An interim dividend of 1.1p (2002.1.0p) per share is
proposed.
SALES
Booker
Booker grew its total sales over the corresponding period last year. In
particular, non tobacco sales were ahead by 1.6% on a like for like basis whilst
tobacco sales recovered strongly with 0.7% increase on a like for like basis
demonstrating that the Spend and Save discount scheme is appealing to our
business customers. The total sales uplift was achieved despite the fall in
phone card sales by #23 million as the technology switches to electronic top up,
which under the draft FRS 5 application note for revenue recognition are
included in turnover on a commission only basis. Electronic top ups and phone
cards are therefore excluded from the like for like figures.
The Spend and Save scheme was launched at the beginning of April. This scheme,
which rewards customers with discounts based on the level of their purchases,
has brought clarity to the Booker price position.
The major product categories of alcohol and grocery both recorded good advances
in sales, benefiting from the warm weather with strong sales of beer and soft
drinks.
Woodward Foodservice
The 19.0 % increase in like for like sales is the result of increased investment
in sales people and was particularly evident in the growth of National Accounts.
Over #2 million of sales of ambient grocery products were achieved through two
new depots.
Iceland Foods
Iceland recorded total sales of similar levels to those achieved in the same
period of last year. Performance continued to improve during the first half
with like for like sales becoming positive in the second quarter with an
increase of 1.4%. A combination of our commitment to great value deals,
particularly on frozen meal solutions for the family, coupled with the increase
in the number of new format stores has proved successful. There were 89 stores
trading in one of the three new formats by the end of the first half. The 48
conversions in the first half this year have sales well above the average for
the estate and continue to produce an average performance in line with the
trials.
OPERATING PROFIT
Operating profit before goodwill amortisation and exceptional items was as
follows:
2003 2002
# million # million
Booker 26.6 26.1
Woodward (2.2) (1.0)
Iceland 3.0 (6.9)
27.4 18.2
These results were achieved after absorbing increased property costs of #1.4
million at Booker and #1.1 million at Iceland following the sale and leaseback
component of last year's re-financing of the Group.
Booker saw an underlying growth in operating profit of 7% which resulted from
the increase in non tobacco sales and an improvement in gross margins supported
by tight cost controls.
Woodward has incurred additional costs through the opening of the two ambient
distribution centres in September 2002 and July 2003 as well as the expansion of
the sales force. The operating loss is in line with expectations for the year.
Iceland returned to profit against the first half of last year. Gross margins
have been fully restored and sales have been stabilised in the core estate
whilst the new format stores capture new sales. Stores refitted during 2002/03
are contributing incremental profits as a result of the sales uplifts.
IMPLEMENTATION OF STRATEGIC INITIATIVES
We are making good progress in implementing our strategic initiatives to develop
our Booker, Iceland and Woodward offers whilst creating lower cost and more
effective central support platforms in line with our integrated food group
strategy.
Business Units
- Booker : Premier fascia customers increased from 1001 to 1172. Total
sales through Premier have increased by over 20% including organic growth in
excess of 5%. Drop Shipment sales were #4 million in the first half from
customer numbers up from 400 to 1,000 during the period. Supplier collaboration
projects moved on apace with the first category, soft drinks, relaunched under
the newly developed category business planning model resulting in improved sales
from a reduction in range.
- Woodward : A second ambient grocery distribution centre was opened in
July and a third is scheduled for the second half. These will provide the
logistic capability for the expanded range of ambient and chilled products. The
sales force was augmented by the recruitment of 46 additional territory sales
managers and a number of new accounts were awarded.
- Iceland : 48 refits were completed of which 28 were in the convenience
format, 17 were in the core plus format and 3 in the core format. These new
formats continue to appeal to our customers with wider ranges in chilled and
fresh foods and the introduction of more services including extended hours and
in store bakeries. Iceland is concentrating this year on converting stores
with above average sales to optimise the cash return on investment. A further
60 stores will be converted this year and the programme will be accelerated to
200 stores in the next financial year. At the end of the first half, new
stores were opened in Birmingham and Belfast, and three underperforming stores
with little potential for improvement were disposed.
Central functions
- The Finance Shared Service Centre has been in operation at Deeside
since the beginning of April with the closure of the accounts departments at
both Booker and Woodward.
- The development was completed on new HR and payroll systems which will
be implemented in the second half.
- The development phase of the Master Data project was completed which
will provide a new central repository of customer data, pricing and promotions,
product and stock. A network for Booker branches was created for roll out
during the second half.
- The Iceland and Booker distribution centres in Scotland were
consolidated into a single facility at Livingston.
INTEREST
Net interest payable was #11.5 million reflecting the impact of the refinancing
completed in June of last year including the amortisation of costs of #0.6
million.
TAX
The Company has agreed with the Inland Revenue the tax position on a number of
issues which have been in dispute. Accordingly there is expected to be no net
tax charge for the year as a whole.
CASH FLOW
The Company generated cash of #66.8 million comprising:
# million
Operating profit before amortisation of goodwill 27.4
Depreciation and amortisation 31.3
58.7
Interest, tax and dividends (16.6)
42.1
Working capital 44.9
Capital expenditure (31.1)
Fixed asset disposals 16.6
Prior period exceptional costs (1.2)
Provisions (1.4)
ESOP share purchase (3.1)
Net cash flow 66.8
Net debt at 28 March 2003 (282.6)
Net debt at 12 September 2003 (215.8)
Average net debt for the twenty four weeks to 12 September was approximately
#241 million.
Working capital inflow arises from the mid month balance sheet date and can be
expected to reverse during the second half.
Capital expenditure at #31 million was similar to the depreciation charge for
tangible fixed assets. The rate of investment is expected to increase during the
second half.
The Company disposed of a freehold property occupied by Booker in Reading for
#15 million. The branch has been relocated.
DIVIDEND
An interim dividend of 1.1p is proposed. The dividend is payable on 9 January
2004 to shareholders on the register at 5 December 2003.
PEOPLE
Shortly after the first half, the Board announced the appointment of Alan
McWalter as non executive director and the retirement of Alan Smith who had
joined the Board in June 2000 with the acquisition of Booker. Jon Grey joined
the Group Executive Board as Logistics Director having successfully developed
the Iceland Home Shopping business.
OUTLOOK
The food retail environment served directly by Iceland and indirectly by Booker
and Woodward remains as competitive as ever. It is possible that further
industry consolidation following the report in September by the Competition
Commission will see further price competitiveness over the coming months.
Growth in sales coupled with cost efficiencies remain the key to success. The
Company will continue to implement its strategic initiatives to achieve those
aims. In the meantime, the important Christmas period lies ahead in the third
quarter and our business units have developed their plans, in conjunction with
suppliers, for a successful value for money campaign.
Group Profit and Loss Account
For the 24 weeks ended 12 September 2003
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
Note #m #m #m
Turnover 2 2,390.8 2,378.1 5,060.9
--------------- --------------- --------------
------------------------------------------------------------------------------------------------------------------------
Operating profit before goodwill
amortisation and operating
exceptional items
27.4 18.2 62.4
Goodwill amortisation (10.3) (10.2) (22.2)
Operating exceptional items 3 - (3.9) (13.0)
------------------------------------------------------------------------------------------------------------------------
Operating profit 2 17.1 4.1 27.2
Profit on disposal of fixed assets - 17.6 17.8
--------------- --------------- --------------
Profit on ordinary activities before
interest and taxation 17.1 21.7 45.0
Interest payable (net) 4 (11.5) (16.8) (30.5)
--------------- --------------- --------------
Profit on ordinary activities
before taxation 5.6 4.9 14.5
Tax on profit on ordinary
activities 5 - - (2.8)
--------------- --------------- --------------
Profit for the financial period 5.6 4.9 11.7
Dividends 6 (3.6) (3.3) (8.3)
--------------- --------------- ---------------
Retained profit for the period 2.0 1.6 3.4
=============== =============== ===============
Pence Pence Pence
Earnings per ordinary
share - basic 7 1.7 1.5 3.5
- adjusted 7 4.8 1.6 9.3
- diluted 7 1.7 1.4 3.5
Group Statement of Total Recognised Gains and Losses
For the 24 weeks ended 12 September 2003
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#m #m #m
Profit for the financial period 5.6 4.9 11.7
Exchange movements (0.2) 0.5 0.6
--------------- --------------- ---------------
Total recognised gains for the period 5.4 5.4 12.3
=============== =============== ===============
Reconciliation of Movement in Shareholders' Funds
For the 24 weeks ended 12 September 2003
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#m #m #m
Total recognised gains and losses 5.4 5.4 12.3
Dividends paid and proposed (3.6) (3.3) (8.3)
New share capital allotted, including premium - 0.1 -
--------------- --------------- ---------------
Net increase in shareholders' funds 1.8 2.2 4.0
Shareholders' funds at the beginning of the period 406.5 402.5 402.5
--------------- --------------- ---------------
Shareholders' funds at the end of the period 408.3 404.7 406.5
=============== =============== ===============
Group Balance Sheet
At 12 September 2003
12 September 13 September 28 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#m #m #m
Fixed assets
Intangible assets 373.1 395.4 383.4
Tangible assets 491.5 498.9 483.8
Investments 9.9 11.4 9.1
--------------- --------------- --------------
874.5 905.7 876.3
--------------- --------------- --------------
Current assets
Stocks 290.5 346.3 290.8
Debtors due within one year 120.7 116.1 138.9
Short-term deposits 1.1 10.5 14.6
Cash at bank and in hand 81.8 50.9 43.8
--------------- --------------- --------------
494.1 523.8 488.1
Creditors due within one year (640.1) (653.6) (635.6)
--------------- --------------- --------------
Net current liabilities (146.0) (129.8) (147.5)
--------------- --------------- --------------
Total assets less current liabilities 728.5 775.9 728.8
Creditors due after one year (267.2) (321.5) (267.2)
Provisions for liabilities and charges (53.0) (49.7) (55.1)
--------------- --------------- --------------
408.3 404.7 406.5
=============== =============== ==============
Capital and reserves
Called up share capital 34.3 34.3 34.3
Share premium account 17.7 17.7 17.7
Merger reserve 330.4 344.5 330.4
Profit and loss account 25.9 8.2 24.1
--------------- --------------- --------------
Equity shareholders' funds 408.3 404.7 406.5
=============== =============== ==============
Group Cash Flow Statement
For the 24 weeks ended 12 September 2003
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
Note #m #m #m
Cash flow from operating activities 8 101.0 47.8 95.7
Servicing of finance 9 (11.1) (16.2) (29.5)
Tax (paid)/refunded (0.1) 0.4 4.8
Capital expenditure and financial investment 9 (17.6) 96.4 58.9
Equity dividends paid (4.8) (5.0) (8.3)
---------------- ---------------- --------------
Cash inflow before use of liquid resources and
financing 67.4 123.4 121.6
Management of liquid resources:
Net inflow/(outflow) from short-term deposits 13.5 (5.9) (10.0)
Financing 9 (3.0) (112.8) (143.8)
---------------- ---------------- --------------
Increase/(decrease) in cash for the period 77.9 4.7 (32.2)
================ ================ ==============
Reconciliation of net cash flow to movement in net
debt 10
Increase/(decrease) in cash for the period 77.9 4.7 (32.2)
Cash outflow from debt and lease financing 3.0 112.9 143.8
Cash (inflow)/outflow from liquid resources (13.5) 5.9 10.0
Non-cash movements (0.6) - -
---------------- ---------------- --------------
Movement in net debt in the period 66.8 123.5 121.6
Net debt at start of the period (282.6) (404.2) (404.2)
---------------- ---------------- --------------
Net debt at end of the period (215.8) (280.7) (282.6)
================ ================ ==============
Notes to the Accounts
At 12 September 2003
1. Basis of preparation and accounting policies
The interim accounts have been prepared on the basis of the accounting policies
set out in the Group's statutory accounts for the period ended 28 March 2003.
These statements, which are unaudited, do not constitute statutory accounts
within the meaning of section 240 of the Companies Act 1985. The accounts for
the 52 weeks ended 28 March 2003 have been extracted from the full accounts,
which have been filed with the Registrar of Companies. The Auditors' Report on
these accounts was unqualified and did not contain any statement under section
237 of the Companies Act 1985.
2. Segmental analysis
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
#m #m #m
a) Turnover
Wholesale 1,658.6 1,656.9 3,455.4
Foodservice 54.2 46.0 95.9
Retail 678.0 675.2 1,509.6
------------- ------------- -------------
2,390.8 2,378.1 5,060.9
============= ============= =============
b) Profit before tax
Wholesale 26.6 26.1 56.9
Foodservice (2.2) (1.0) (2.6)
Retail 3.0 (6.9) 8.1
------------- ------------- -------------
27.4 18.2 62.4
Goodwill amortisation (10.3) (10.2) (22.2)
Operating exceptional items:
Wholesale - (2.1) (5.8)
Foodservice - - -
Retail - (1.8) (7.2)
------------- ------------- -------------
Operating profit 17.1 4.1 27.2
Profit on disposal of fixed assets - 17.6 17.8
Interest payable (net) (11.5) (16.8) (30.5)
------------- ------------- -------------
Profit before tax 5.6 4.9 14.5
============= ============= =============
All operations are continuing and carried out in the United Kingdom and the
Republic of Ireland.
Notes to the Accounts
At 12 September 2003 (continued)
3. Exceptional items before interest
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
#m #m #m
Integration and strategic review costs - 1.7 7.1
Business closure - 1.3 2.1
Write down of assets - - 1.1
Onerous lease provisions - - 2.2
Write down of investment - 0.3 -
Other - 0.6 0.5
------------ ------------ ------------
Total operating exceptional items - 3.9 13.0
Profit on disposal of fixed assets - (17.6) (17.8)
------------ ------------ ------------
- (13.7) (4.8)
============ ============ ============
4. Interest payable (net)
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
#m #m #m
Interest receivable and similar income (0.3) (0.4) (2.2)
Interest payable and similar costs:
Interest on bank loans and overdrafts 4.2 7.5 12.0
Senior note interest 6.9 3.6 11.4
Finance charges payable under finance leases 0.4 0.4 0.9
Unwinding of discount on provisions 0.3 0.5 1.2
Other interest payable - - 2.0
--------------- --------------- --------------
11.5 11.6 25.3
Exceptional costs:
Interest rate swap closure costs - 5.2 5.2
--------------- --------------- --------------
11.5 16.8 30.5
=============== =============== ==============
5. Taxation on profit on ordinary activities
The charge for the period is based on the expected tax charge for the full year.
The Company has estimated the charge on profits for the year to be reduced to
nil by losses brought forward and prior year credits arising from the agreement
with the Inland Revenue upon a number of disputed issues.
Notes to the Accounts
At 12 September 2003 (continued)
6. Dividends
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
#m #m #m
Interim dividend 1.1p per share (2002/3: 1.0p) 3.6 3.3 3.3
Final dividend (2002/3: 1.5p) - - 5.0
------------ ------------ ------------
3.6 3.3 8.3
============ ============ -----=======
7. Earnings per ordinary share
Basic and diluted
The basic and diluted earnings per share are calculated based on the following
data:
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
#m #m #m
Profit for the financial period 5.6 4.9 11.7
======== ======== ========
No. (m) No. (m) No. (m)
Basic weighted average number of shares 328.9 332.3 331.6
Dilutive potential ordinary shares:
Employee share awards and options 0.9 5.6 0.5
------------ ------------ ------------
Diluted weighted average number of shares 329.8 337.9 332.1
============ ============ ============
The basic weighted average excludes shares held in the employee share trust, as
required by FRS 14.
The effect of this is to reduce the average by 14,252,916 (13 September 2002:
10,701,000;
28 March 2003: 11,426,458).
Notes to the Accounts
At 12 September 2003 (continued)
7. Earnings per ordinary share (continued)
Adjusted
Adjusted earnings per share are presented in addition to the basic required by FRS 14 since, in the
opinion of the directors, this represents a clearer year on year comparison of the earnings of the Group.
The adjusting items are the exclusion of goodwill amortisation, exceptional items and associated tax
credit.
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
Pence Pence Pence
Base earnings per share 1.7 1.5 3.5
Goodwill amortisation 3.1 3.1 6.7
Exceptional items - (2.6) 0.1
Associated tax - (0.4) (1.0)
------------ ------------ ------------
Adjusted earnings per share 4.8 1.6 9.3
============ ============ ============
8. Reconciliation of operating profit to operating
cash flows
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
#m #m #m
Operating profit 17.1 4.1 27.2
Operating exceptional items - 3.9 13.0
---------------- ---------------- --------------
Operating profit before operating exceptional items 17.1 8.0 40.2
Depreciation 29.0 33.0 73.3
Amortisation of goodwill 10.3 10.2 22.2
Amortisation of investments 2.3 1.9 4.5
Exceptional costs cash flow (1.2) (2.5) (5.6)
(Increase)/decrease in stocks (0.7) (49.7) 5.8
Decrease in debtors 3.0 25.7 4.4
Increase/(decrease) in creditors 42.6 23.5 (44.6)
Cash flow relating to provisions (1.4) (2.3) (4.5)
---------------- ---------------- --------------
Net cash inflow from operating activities 101.0 47.8 95.7
================ ================ ==============
Notes to the Accounts
At 12 September 2003 (continued)
9. Analysis of cash flows
24 weeks 24 weeks 52 weeks
ended ended ended
12 September 13 September 28 March
2003 2002 2003
#m #m #m
Servicing of finance
Interest paid (10.7) (10.6) (23.5)
Interest element of finance lease rental payments (0.4) (0.4) (0.8)
Interest rate swap closure costs - (5.2) (5.2)
---------------- ---------------- ---------------
Net cash outflow for servicing of finance (11.1) (16.2) (29.5)
================ ================ ===============
Capital expenditure and financial investment
Purchase of tangible fixed assets (31.1) (27.7) (68.7)
Sale of tangible fixed assets 16.6 126.5 130.0
Purchase of shares for ESOP (3.1) (2.4) (2.4)
---------------- ---------------- --------------
Net cash (outflow)/inflow for capital expenditure and
financial investment
(17.6) 96.4 58.9
================ ================ ==============
Financing
Issue of share capital - 0.1 -
Proceeds from new borrowings - 260.4 260.4
Repayment of borrowings (0.2) (369.3) (396.4)
Capital element of finance lease repayments (2.8) (4.0) (7.8)
---------------- ---------------- --------------
Net cash outflow from financing (3.0) (112.8) (143.8)
================ ================ ==============
10. Analysis of net debt
At At
28 March Non-cash 12 September
2003 Cashflow movements 2003
#m #m #m #m
Cash at bank and in hand 43.8 38.0 - 81.8
Overdrafts (41.2) 39.9 - (1.3)
--------------- -------------- -------------- --------------
2.6 77.9 - 80.5
Debt due within 1 year (26.6) - - (26.6)
Debt due after 1 year (266.5) 0.2 (0.6) (266.9)
Finance leases (6.7) 2.8 - (3.9)
--------------- -------------- -------------- --------------
(297.2) 80.9 (0.6) (216.9)
Liquid resources
- short-term deposits 14.6 (13.5) - 1.1
--------------- -------------- -------------- --------------
(282.6) 67.4 (0.6) (215.8)
=============== ============== ============== ==============
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IR FSWESISDSESF