Howdens' Half Year Results
Statement
Encouraging performance with further
market share gains led by strategic initiatives. On track with 2024
outlook.
|
Results summary
£
millions (unless stated)
|
H1
20241
|
H1 2023
|
vs 2023
|
vs
20192
|
Group revenue
|
966.3
|
926.9
|
+4.3%
|
+48.1%
|
- UK
|
933.7
|
895.1
|
+4.3%
|
|
-
International
|
32.6
|
31.8
|
+2.5%
|
|
Gross profit margin, %
|
60.8%
|
61.0%
|
|
|
Operating profit
|
117.2
|
117.0
|
-
|
|
Profit before tax (PBT)
|
112.3
|
111.9
|
-
|
+43.8%
|
Basic earnings per share,
p
|
15.4p
|
15.4p
|
-
|
|
Interim dividend per share,
p
|
4.9p
|
4.8p
|
+2.1%
|
|
Cash at end of period
|
165.5
|
117.8
|
|
|
1 The information
presented relates to the 24 weeks to 15 June 2024, and the 24 weeks
to 10 June 2023, unless otherwise stated.
2 2019 is shown for
comparison being the last year of trading before the start of the
COVID pandemic.
Highlights
- Revenue of
£966.3m was 4.3% ahead of last year.
o Good UK revenue
growth in H1 in a challenging marketplace, gained market share in
the period.
o International
business on track with an improvement in depot
performance.
- Maintained
industry leading gross margins of 60.8%.
- Profit
before tax of £112.3m in line with last year, after £16m investment
in our strategic initiatives in H1. Majority of cost increases due
to higher inflation offset by productivity and efficiency
improvements.
- Strong balance
sheet with £165.5m of cash at end of the period.
- Interim dividend
increased by 2.1% to 4.9p per share.
- Continued
progress on sustainability. Howdens' Net Zero plan approved by
Science-Based Targets Initiative (SBTi) in January 2024.
- Performance since
the start of the second half in line with management's
expectations. The Group is on track with its outlook for
2024.
Commenting on the results Andrew
Livingston, Chief Executive said:
"Howdens
performance in the first half was encouraging and we gained market
share in a challenging marketplace. We continued to invest in our
strategic initiatives which is strengthening our differentiated
business model and delivering positive results.
"We are
focused on the significant growth opportunities in our core UK
kitchen and joinery markets. To access these, we are progressing
our new depot and reformat programme and making range and product
innovations. We are also manufacturing more of what we sell and,
alongside the provision of unequalled stock availability, we are
adding further digital capabilities to support our trade customers
and depot teams. We continue to see opportunities to develop our
business model internationally and we're making good progress in
establishing Howdens' presence, laying the foundations for future
success."
Operational developments in the
first half
-
Network
expansion - we plan to open c.30 new UK locations and c.5
new international depots this year. To date we have opened 10
depots in the UK and one in the Republic of Ireland.
|
-
Depot revamps and
relocations - we completed 26 in the period and expect to
complete c.85 this year.
|
-
New product
introductions - 11
new kitchen ranges for 2024 and we are refreshing our joinery,
paint to order and solid worksurface offerings and extending our
product line up with new bedroom ranges.
|
-
Manufacturing
expansion - we are expanding our capabilities and capacity.
This year our new kitchen frontal and end-panel line at our Howden
site will produce around 2m pieces up from 600,000 in 2023.
|
-
Supply chain
optimisation -
stock availability remains a key differentiator for why our trade
customers buy from us. We continue to invest in technology and
infrastructure to maintain these high service levels. Through our
cross docking (XDC) network and 'Daily traders' initiatives we are
optimising stock across the network and rebalancing where we hold
it in the most efficient way.
|
-
Digital
investment - we have launched an upgraded click and collect
service enabling customers to see live depot stock which offers
greater surety of availability which is particularly useful for
everyday items.
|
-
International
development - outside of the UK we are building out our
depot teams' capabilities with encouraging results. We have
upgraded our offering of footfall promoting products with aligned
promotional activity and more supplier support.
|
Current trading and outlook for
2024
Despite the continued challenging market
environment, our builder customers remain busy. We are maintaining
our focus on competitive pricing to support them, while balancing
ongoing inflationary pressures to optimise volumes. We are also
maintaining a disciplined approach to managing our cost base to
optimise operational performance, while implementing our strategic
initiatives to support continued market outperformance and
long-term growth. This will stand us in good stead for when market
conditions improve.
While our results are second half weighted given
the Autumn peak trading period, our performance since the start of
the second half, has been in line with our expectations. Despite
the challenging market conditions, the progress of our strategic
initiatives and current trading momentum gives us confidence that
the Group is on track with its outlook for 2024. We remain focused
on delivering growth ahead of our markets, while generating strong
cash flow, and attractive returns for shareholders over the
medium-term.
Technical guidance for
2024
Income
statement
- As a result of
the 53rd week in 2023 there was an earlier start to
trading in 2024 across the Group with our depots open in the first
week of 2024, when they were closed in 2023. This reverses in H2
when there are fewer trading days than in 2023.
- As previously
announced, there is a benefit in H2 2024 from the non-repeat of the
additional 53rd week in 2023 when £17m of additional
costs were incurred.
- We expect a
continuation of higher freight costs due to rising container costs.
At current pricing around £5m of additional costs is expected in
the second half as inventory procured and shipped in H1 is
sold.
- Foreign exchange
sensitivity in COGS of Euro: +/- €0.01 = £1.6m; US Dollar: +/-
$0.01 = £0.7m.
Cashflow
- Receivables are
expected to increase by around £50m due to the later calendar end
of our autumn peak trading period, with a higher proportion of
customer payments not being due until after the
year-end.
- Capital
expenditure is anticipated at around £125m including investments to
support future growth.
For further information please
contact
|
|
Howden Joinery Group Plc
|
Media Enquiries
|
Paul Hayes, CFO
Tel: +44 (0) 207 535 1162
|
Andrew Porter, Clare Motte (Brunswick)
Tel: +44 (0) 207 404 5959
e-mail:
howdens@brunswickgroup.com
|
Mark Fearon, Director of IR and
Communications
Mobile: +44 (0)7711 875070
e-mail: ir@howdens.com
|
|
Results presentation:
There will be an in-person analyst and investor
presentation at 0830 today at Freshfields, 100 Bishopsgate London
EC2P 2SR, with light refreshments served from 0800. A live video
webcast will be available on https://brrmedia.news/HWDN_HY24
For more information visit:
www.howdenjoinerygroupplc.com.
Dial-in numbers are below:
We recommend you register before 0815 (UK
time).
|
Dial in phone numbers:
UK-Wide: +44 (0) 33 0551 0200
|
USA: +1 786 697 3501
|
Quote HOWDENS' HALF YEAR
RESULTS when prompted by the
operator.
|
The webcast will be recorded and
available on our website after the event at: www.howdenjoinerygroupplc.com
|
Notes to editors:
1. About Howden Joinery
Group Plc
Howdens is the UK's number one specialist
kitchen and joinery supplier. In the UK, the company sells kitchens
and joinery products to trade customers, primarily local builders,
through 850 depots. In 2023, the Group generated revenues of around
£2.3 billion and profit before tax of £327.6 million. Around 35% of
Howdens' cost of goods sold are products manufactured in-house at
its two principal factories in Runcorn, Cheshire, and Howden, East
Yorkshire. At the end of 2023, Howdens operated from 65 depots in
France and Belgium and 10 depots in the Republic of
Ireland.
2. Timetable for the interim dividend
The timetable for payment of the proposed
interim dividend of 4.9p per ordinary
share is as follows:
Ex-dividend date:
|
17 October 2024
|
Record date:
|
18 October 2024
|
Payment date:
|
22 November 2024
|
3. Provisional financial calendar
2024
|
|
Trading update
|
7 November 2024
|
End of financial year
|
28 December 2024
|
2025
|
|
Full year results
|
27 February 2025
|
Financial review
Financial results for H1
20241
Revenue £m (unless stated)
|
H1 2024
|
H1 2023
|
Change
|
# depots at period
end
|
UK - same depot basis2
|
919.7
|
894.3
|
+2.8%
|
807
|
UK depots opened in previous two
years
|
14.0
|
0.8
|
|
43
|
|
933.7
|
895.1
|
+4.3%
|
850
|
International
|
32.6
|
31.8
|
+2.5%
|
76
|
Group
|
966.3
|
926.9
|
+4.3%
|
926
|
Local currency revenue €m (unless stated)
|
H1 2024
|
H1 2023
|
Change
|
# depots at period
end
|
International - same depot
basis2
|
36.0
|
36.0
|
-
|
65
|
International depots opened in previous two
years
|
2.0
|
0.3
|
|
11
|
International
|
38.0
|
36.3
|
+4.7%
|
76
|
1 The information
presented relates to the 24 weeks to 15 June 2024, and the 24 weeks
to 10 June 2023, unless otherwise stated.
2 Same depot basis for
any year excludes depots opened in that year and the prior year
Group revenue of £966.3m was 4.3% ahead of the
prior year (2023: £926.9m) which represents a good performance in
challenging market conditions in the UK and France. UK depot
revenue grew 4.3% to £933.7m (2023: £895.1m). Revenue was 2.8%
ahead of the prior year on a same depot basis2 at
£919.7m (2023: £894.3m), this excludes the additional revenue from
depots opened in 2024 and 2023 of £14.0m (2023: £0.8m).
On a local currency basis, the international
depots grew revenue by 4.7% to €38.0m (2023: €36.3m) which was in
line with the prior year on a same depot basis2.
Adjusting for the impact of foreign exchange translation, reported
revenue was 2.5% ahead at £32.6m (2023: £31.8m).
Gross profit
Gross profit of £587.3m (2023: £565.4m) was
ahead of the prior year as we have continued to recover increases
in commodities and energy costs through price increases and
commodity improvements. Gross margin of 60.8% (2023: 61.0%) was in
line with our plans and reflected some additional promotional
support on everyday joinery products with the objective of
increasing customer footfall into the depot network.
Operating profit
Operating profit of £117.2m was in line with
last year (2023: £117.0m) and the operating profit margin was 12.1%
(2023: 12.6%). Our operating expenses increased to £470.1m (2023:
£448.4m) which was predominantly as a result of £16m of planned
investment in our strategic initiatives. Investment included new
depots and reformats, range optimisation, and expanding our digital
platforms. The majority of cost increases due to higher inflation
were broadly offset by productivity and efficiency actions taken in
the first half. This is in addition to the £50m of cost reductions
achieved in 2023 as we continue to protect depot profitability and
investment in future growth.
Profit before and after
tax
The net interest charge was £4.9m (2023:
£5.1m). Profit before tax of £112.3m was in line with the prior
year (2023: £111.9m). The tax charge on profit before tax was
£27.9m (2023: £27.3m) and represented an effective tax rate of
24.8% (2023: 24.4%) including the annual benefits of the previously
announced patent box allowance. While always subject to review by
HMRC, as previously indicated, the Group expects an ongoing
reduction of around 3% to Howdens' effective tax rate. As a result,
profit after tax was £84.4m (2023: £84.6m). Basic earnings per
share were 15.4p (2023: 15.4p).
Cash
The net cash inflow from operating activities
was £189.5m (2023: £170.8m). Net working capital increased by
£106.7m in line with normal seasonal phasing. Receivables at the
end of the period were £62m higher than at the beginning of the
period, with good ageing, which we continue to monitor closely.
Payables were £17m lower and inventory was £27m higher, mainly as a
result of our stock build ahead of the peak trading period. Capital
expenditure was £40.1m (2023: £46.7m) as we continued to invest in
the execution of our strategic initiatives to support growth.
Corporation tax payments were £39.2m (2023: £21.2m), and dividends
amounted to £89.0m (2023: £87.8m). The interest and principal paid
on lease liabilities totalled £38.2m (2023: £50.5m).
As a result, there was a net cash outflow of
£118.5m (2023: outflow of £191.6m), leaving the Group with cash at
the period end of £165.5m (10 June 2023: £117.8m). The Group has in
place a £150m multi-currency, revolving credit facility which
remained undrawn at the balance sheet date.
Capital allocation and returns to
shareholders
Our approach to capital allocation continues to
focus on achieving sustainable profit growth by investing in and
developing our vertically integrated business. We also want to
maintain and grow our ordinary dividend in line with earnings
growth to reward shareholders with an attractive ongoing income
stream. After allowing for these uses of cash, Howdens remains
committed to returning any surplus capital to shareholders. Our
capital allocation policy is that where year-end cash is more than
£250m we expect to return surplus cash to shareholders. This
provides sufficient headroom to support organic growth, our working
capital requirements and ongoing investments in our strategic
priorities. At this level of cash, the balance sheet will remain
strong. The interim dividend for 2024 of 4.9p per ordinary share
(2023: 4.8p per share) represents an increase of 2.1% and will be
paid on 22 November 2024 to shareholders on the register on 18
October 2024.
Board changes
Last year we announced that Karen Caddick,
Non-Executive Director would step down from the Howdens Board at
the end of the Annual General Meeting in May 2024. Vanda Murray was
appointed as a Non-Executive Director with effect from 1 February
2024 and succeeded Karen as Remuneration Committee Chair in May.
She has over 20 years of operational experience across a range of
sectors, including manufacturing, industrial, and support services
in Europe, the USA, and Asia. She is currently the Chair of
Marshalls Plc.
In May we announced the appointments of Roisin
Currie and Suzy Neubert as Non-Executive Directors of the Company
with effect from 1 July 2024. Roisin has been the Chief Executive
of Greggs plc since May 2022 and began her career at Asda where she
spent 20 years, latterly as Retail People Director and then
Distribution People Director. Suzy is currently a Non-Executive
Director of Jupiter Fund Management Plc and Liverpool Victoria
Financial Services Limited. She is also the Senior Independent
Director at LondonMetric Property plc and a trustee of the King's
Trust. Suzy's executive career was spent firstly at Merrill Lynch
and J O Hambro. The Board thanks Karen for her
contribution and welcomes the incoming new directors to
Howdens.
Pensions
At 15 June 2024, the defined benefit pension
scheme had a surplus of £21m (10 June 2023: deficit of £15m) on an
IAS 19 basis. The scheme was closed for future accrual on 31 March
2021. There were no contributions to the scheme in the period in
accordance with the terms of the recovery plan agreed with trustees
last year.
Operational review
Strategic initiatives
Howdens has made good progress on its strategic
initiatives, which are aimed at achieving profitable growth and
market share gains over the medium term. The four strategic
initiatives are:
1. Evolving our depot model
by using space more efficiently to provide the best environment in
which to do business with our customers.
|
2. Improving our range
and supply management to improve choice and service while enhancing
productivity in our manufacturing, sourcing and supply chain
activities.
|
3. Developing our
digital platforms to raise brand awareness, support the business
model and to deliver productivity gains and more leads for depots
and customers.
|
4. Expanding our
presence in selective countries with attractive kitchen and joinery
markets outside the UK.
|
These ongoing investments support the execution
of our growth strategy and are within our overall capital
expenditure guidance. Progress on each of these initiatives is
reviewed below:
Evolving our depot
model
Since the start of the year, we have opened 10
new depots of the 30 or so new depots we are planning to open in
the UK in 2024. We are opening all new depots in our updated format
and at maturity, we expect to operate with around 1,000 depots in
the UK, versus the 840 trading at the end of 2023. This will be
supported by our cross docking (XDC) facility which enables depots
to optimise their stock holdings and provide high levels of service
across the product range.
We have also continued with our reformatting
programme for existing depots. Depot reformats have a payback of
around four years and the programme is delivering incremental
sales. In the first half, we have reformatted 26 depots, and
including relocations we plan to reformat c.85 depots in 2024. By
the end of 2024, we expect to have reformatted around 360 of the
670 depots which were opened in the old format.
Improving our product range and
supply management
Range Management
Howdens has accelerated new product
introductions (NPIs) in recent years to ensure we are at the
forefront of the sector. With an emphasis on value for money and
choice at all price-points, our NPI for 2024 includes 11 new
kitchen ranges of which 10 are aimed at the entry and mid-market
segments:
- In our entry
level kitchen ranges we are adding two new frontal options,
Greenwich in Marine Blue and Witney in Reed Green.
- For our mid-price
shaker families, Halesworth and Bridgemere, we have six new colours
for 2024 including Halesworth in two of the best-selling paint to
order colours Antique Rose and Seafoam, and Bridgemere in Linen and
Sage Green. For our bestselling mid-priced family, Clerkenwell, we
have two new colours, Super Matt Black and Gloss Reed
Green.
- We also continue
to develop our higher priced kitchen portfolio, which is a large
segment of the market, where we are under-represented. The premium
paint-to-order service, which we introduced in the second half of
2023 has received excellent customer feedback. This year we have 15
paint to order colour choices and we will be refreshing the palette
with five new colours for H2 2024.
- This year we will
introduce 22 decors to our solid surface "template and fit" offer
giving us a comprehensive range of 58 decors to suit all budgets.
All of these will be in place well ahead of peak Autumn trading,
during which kitchen sales represent an above average proportion of
the mix.
- In doors, this
year we have added more colour and bolder styles at all price
points. Our new own label flooring brand, "Oake & Gray", is
performing very well and new flooring product for 2024 includes a
leading third-party premium priced vinyl brand,
Karndean.
- In appliances, we
have further additions to our Lamona brand, which is the leading
integrated appliance brand in the UK, alongside extensions to our
range of third party branded product, and in sinks and taps we have
more styles, colours and finishes.
- Installing fitted
bedrooms suits the skills of our trade customers. Our new ranges
were developed utilising our existing manufacturing and supply
infrastructure and currently comprise 16 new bedroom ranges in four
leading family designs. These were drawn from our kitchen
portfolio, and matched with new internal accessories including
pull-down rails, mirrors and internal storage solutions. We are
adding three more options comprising our entry level Greenwich
range in Gloss White and Natural Oak with Hockley in Textured
Oak.
Manufacturing and supply chain
Over time we continue to see opportunities to
increase the proportion of products we make and in 2023 several
major investments were completed. Production on the new panel lines
at our Howden site have a capacity of around 2 million pieces for
2024 and subsequent years. These give us the ability to make a
variety of kitchen products, principally frontals and panels, for
more of our ranges, at the same quality as we can source externally
but at a lower cost and at a reduced lead time to delivery.
Separately we have also invested in two lines to facilitate our
paint to order initiative. Located in a purpose-built facility near
our Howden site, the lines give us an industry leading production
capability in this area and the capacity to supply some 5,000 such
kitchens a year.
Howdens is an in-stock business and in the first
half of 2024 our service level from our primary distribution sites
to depots was 99.97%. In 2023, facilitated by our new stock
management system, we rolled-out our "Daily Traders" initiative to
all UK depots which improves customer service levels, promotes
footfall and increases sales by optimising in-depot stock holdings
of best-selling SKUs and associated "range completers". This year
we maintained improvements in several key metrics, including a
higher proportion of stock being replenished via a depot's core
weekly delivery order than previously.
Developing our digital
platform
Our digital strategy reinforces our model of
strong local relationships between depots and their customers by
raising brand awareness, supporting the business model with new
services and ways to trade with us and delivering productivity
benefits for depot employees and customers. In 2024, usage of our
online account facilities, which benefits customers and depots, has
continued to increase and we now have around 50% of our customers
using our digital platform.
In 2023 we tested a digitised in-depot stock
management system "Live-Stock" to record and pick deliveries, check
allocations and determine depot stock levels. Among other benefits
the system frees up time for depots to use more productively and
the system is now operating in all UK depots. The stock surety
provided by Live-Stock and other initiatives, such as daily traders
have enabled us to deliver a new, upgraded "Click and Collect"
service to our trade customers. It is available for all our
products except those for which a survey or CAD planning is
generally required prior to placing an order, such as a kitchen
range.
Roll-out of the service was completed in H1,
enabling online account customers of all our UK depots
to:
-
|
Check real-time availability of stock on a
depot-by-depot basis.
|
-
|
Review their individual confidential prices at their
selected depot
|
-
|
Place orders for collection at a time of their
choosing.
|
Our initiatives are contributing to an increase
in digitally sourced leads which more than doubled in the period,
albeit from a small base. These represent a source of high-quality
leads for depots and customers including for kitchens. A
significant proportion convert to kitchen sales with above average
order values, and we are looking to promote higher levels of lead
generation online.
Developing our international
operations
Our international operations made good progress
in the first half. The business model for France is similar to the
UK with a market size in kitchens of around €4.0bn, excluding
appliances and we rigorously tested our
ability to access this sizeable market before adopting "a
city-based" approach to depot expansion. By the end of 2022, in a
two-year period, we had doubled the depots trading in France and
Belgium to 60 and we opened a further five depots at the end of
2023. Consequently, when compared with their UK counterparts, many
of our depot managers in France are less experienced in nurturing
trusted trade relationships. For 2024 we are focussing on team
development to foster these. We are also investing elsewhere in the
international business through enhanced offerings of "footfall
promoting" products and in 2024 we have introduced a regular
schedule of "trade days" at all depots with aligned promotional
activity and more supplier support.
Sales in the Republic of Ireland were
encouraging, and we will be opening more depots there in 2024. The
market is attractive and Howdens' in stock offer in kitchens and
joinery has been well received by local customers. In addition to
the ten depots trading in at the year-end, during the first half we
added one new depot serving Waterford and we plan to open up to 5
depots in 2024.
Environment, social and governance (ESG)
Road to Zero
With continuous improvements driving our
reduction in emissions for over 20 years, we remain focused on
being the largest and lowest cost kitchen manufacturer in the most
sustainable way. We have commenced our transition from Carbon
Neutral Status to the Route to Net Zero Standard Certification with
the Carbon Trust and this will be completed by the end of 2024. We
remain well placed to achieve this given our UK manufacturing
focus, our trusted supplier partnerships and our publicly committed
Net Zero plan approved by SBTi in January 2024. Our Plan commits us
to reducing our Scope 1 & 2 emissions by 42% and our Scope 3
supply chain emissions by 25% by 2030 and targeting Net Zero by
2050 against a baseline year of 2021.
Supply Chain Emissions
Scope 3 emissions account for 95% of Howdens'
total emissions, 54% of which comes from our suppliers and their
supply chains. A further 28% of emissions come from the use of our
products once they have been sold. Net Zero Obligations are now
mandated in our Supplier Trading Terms and Conditions (for all
Direct Suppliers). Since engaging with our top 28 suppliers in 2023
we subsequently adopted a more focused approach with the top 6 (by
purchase spend) to understand their challenges. We have used these
learnings to engage with over 100 suppliers (40% of total purchase
spend) and since January 2024 these suppliers have been submitting
their emissions data and shared their decarbonisation plans. Over
50% of these have now submitted data and we are aligning these
suppliers with our emission reduction targets. We continue to
collaborate with our suppliers and the wider industry through
webinars and events to support their decarbonisation
plans.
Managing waste
We have maintained zero to landfill in all
manufacturing sites and all our depots. Some of our waste timber is
recycled back to Egger, a major supplier, for production of our
chipboard which has a recycled content of around 35%. All waste
material is recovered with much of it being recycled into more
plastic, cardboard, or metal. Howdens' waste sawdust is used for
biomass and heating our own factories and warehouses, with quartz
offcuts from our solid surface factories being recycled for
hardcore to build roads.
Reducing our own emissions
We view emission reductions as a
business-as-usual activity, and we have several new initiatives
underway. Our waste heat recovery project has gone live in H1 2024,
recovering heat from our generators and heating our factories, and
saving around 600 Tonnes of CO2 per year. The Installation of Power
Radar meters to monitor energy consumption in our factories and
warehouses is also proving successful and we have identified
savings, in excess of 500 Tonnes of CO2 a year.
Renewable energy
Following the move to transition to renewable
energy sources for all our UK sites, we are now installing the
first phase of solar panels at our finished goods distribution
centre at our Howden factory. Solar panels will cover 350k ft2 and
reduce our carbon emissions by around 1,000 tonnes per year.
Benefits will start to be realised in early 2025, when we will
review the viability of second phase solar installations. We
continue to source 100% renewable energy across our manufacturing
and distribution sites and 96% of all depots.
Fleet
We have continued to purchase cleaner fuel for
our primary fleet and there are now four electric trucks operating
in our XDC network. HVO (Hydrotreated Vegetable Oil) enables a 90%
reduction in CO2 emissions compared with diesel fuel and represents
around 10% of all Howdens' fuel consumption. There are also 6 LNG
(Liquified Natural Gas) vehicles operating in our delivery network
which generate an 80% saving of CO2 versus diesel. We have
committed to lease a further 9 LNG vehicles in H2 2024.
Product design
Sustainability is now a key consideration in our
design process, both for in-house and bought-in products. We remain
committed to improving quality and service while controlling costs.
We are also listening to our depots and customers to build
sustainable considerations into the lifecycle of our products. For
example, our bestselling Greenwich Matt Kitchen frontals are now
100% recyclable. We also have a Plastic Pledge initiative across
all product categories to remove, reduce, or replace plastic
packaging where possible. This has included reducing polystyrene
content and replacing it with more sustainable alternatives such as
carboard or plant-based materials. We are also switching from
Polyvinyl Chloride (PVC) to Polypropylene (PP) in our foils which
uses 50% less plastic producing 50% less CO2 emissions. Our
Halesworth kitchen range was the first to transition to this
approach last year. 100% of our kitchens, both cabinets and
frontals, are produced using certified (FSC or PEFC)
timber.
Going concern
The directors have adopted the going concern
basis in preparing these half-yearly condensed financial statements
and have concluded that there are no material uncertainties leading
to significant doubt about the Group's going concern status. The
reasons for this are explained below.
Going concern review period
This going concern review period covers the
period of at least 12 months after the date of approval of these
financial statements. The directors consider that this period
continues to be suitable for the Group.
Assessment of principal risks
The directors have reached their conclusion on
going concern after assessing the Group's principal risks, as set
out immediately below this going concern statement. While all the
principal risks could have an impact on the Group's performance,
the specific risks which could most directly affect going concern
are the risks relating to continuity of supply, changes in market
conditions, and product relevance. The Group is currently holding
adequate amounts of fast-moving inventory as a specific mitigation
against supply chain disruption and considers that the other
effects of these risks would be reflected in lower sales and/or
lower margins, both of which are built into the financial scenario
modelling described below.
Review of trading results, future
trading forecasts and financial scenario modelling
The directors have reviewed trading results and
financial performance in the first half of 2024, as well as trading
in the weeks between the half-year end and the date of approval of
the half-year results. They have reviewed the Group's balance sheet
at the half-year end, noting that the Group is debt-free, has cash
and cash equivalents of £165.5m, and appropriate levels of working
capital.
They have also considered three financial
modelling scenarios prepared by management:
1)
|
A "base case" scenario. This is based on the latest
2024 Group forecast, made in June 2024. The basis of this scenario
has been approved by the Board.
|
|
This scenario assumes future revenue and profit in
line with management and market expectations as well as investments
in capital expenditure and cash outflows for dividends and share
buybacks in accordance with our announced capital allocation
model.
|
2)
|
A "severe but plausible" downside scenario based on
the worst 12-month year-on-year actual fall ever experienced in the
Group's history. For additional context, this is more significant
than the combined effect of COVID and Brexit on 2020 actual
performance.
|
|
This scenario models a reduction in most of the
variable cost base proportionate to the reduction in turnover. It
includes capital expenditure at a lower level than in the base
case, but which is still in line with our announced strategic
priorities for growth, namely: new depot openings and
refurbishments; investment in our manufacturing sites, investment
in digital and expanding our international operations. It also
includes dividends and share buybacks in line with the Group's
stated capital allocation model.
|
|
In this scenario the Board considered the current
economic conditions that the company and its customers are facing
and noted that the downside scenario included allowances for
reduced demand and increased costs to reflect such adverse
conditions.
|
3)
|
A "reverse stress-test" scenario. This scenario starts
with the severe but plausible downside model and reduces sales even
further, to find the maximum reduction in sales that could occur
with the Group still having headroom over the whole going concern
period, without the need to take further mitigating actions.
This has involved modelling a reduction in sales to the maximum
level before any lending covenants are breached or there is no
headroom.
|
|
Capital expenditure in this scenario has been reduced
to a "maintenance" level. Variable costs have been reduced in
proportion to the reduction in turnover on the same basis as
described in the severe but plausible downside scenario. It assumes
no dividends or share buybacks.
|
Borrowing facility and
covenants
The Group has a five-year, committed,
multi-currency revolving credit facility of up to £150m which
expires in September 2027, and which was not drawn at any point in
the half-year. A summary of the main terms of the facility is set
out in note 19 to the December 2023 Group financial statements. As
part of the scenario modelling described above, we have tested the
borrowing facility covenants and the facility remains available
under all of the scenarios. We have therefore included the credit
available under the facility in our assessment of
headroom.
Results of scenario modelling
In the base case and the severe but plausible
downside scenarios, the Group has significant headroom throughout
the going concern period after meeting its commitments. In the
reverse stress-test scenario, the results show that sales would
have to fall by a significant amount over and above the fall
modelled in the severe but plausible downside scenario before the
Group would have to take further mitigating actions. The likelihood
of this level of fall in sales is considered to be
remote.
Conclusion
Taking all the factors above into account, the
directors believe that the Group is well placed to manage its
financing and other business risks satisfactorily and they have a
reasonable expectation that the Group will have adequate resources
to continue in operational existence for the going concern review
period set out above. Accordingly, they continue to adopt the going
concern basis in preparing these half-yearly condensed
financial statements.
Principal risks and uncertainties
The principal risks and
uncertainties that could have a material impact on the Group's
performance over the remaining half of the financial year have not
changed from those which are set out in detail in the Group's 2023
Annual Report & Accounts.
Market
conditions - Challenging market conditions
could affect our ability to achieve sales and profit forecasts,
impacting on our cash position. Exchange rates fluctuation could
increase our cost of goods sold.
Business model
and culture - if we lose sight of our model and
culture during challenging market conditions, we may not serve our
customers successfully and our long-term profitability may
suffer.
Maximising
growth - if we do not understand and exploit
our growth opportunities in line with our business model and risk
appetite, or if we do not meet the related challenges, we will not
get maximum benefit from our growth potential.
People - Our
operations could be adversely affected if we were unable to
attract, retain and develop our colleagues; or, if we lost a key
member of our team without succession.
Supply
chain - Any disruption to our relationship with
key suppliers or interruption to manufacturing and distribution
operations could affect our ability to deliver the in-stock
business model and to service our customer's needs. If this
happened, we could lose customers and sales. This risk has
decreased as our supply-base continues to improve, reducing the
likelihood of a significant impact.
Health and
Safety - Poor management or an incident could
compromise the safety and wellbeing of individuals, and the
reputation and viability of the business.
Cyber
security - Events such as ransomware attacks
continue to rise globally. A major security breach could cause a
key system to be unavailable and/or sensitive data to be
compromised.
Product - If we do
not offer the builder the products that they and their customers
want, we could lose sales and customers.
Business
continuity and resilience - We have some
business operations and locations in our infrastructure that are
critical to business continuity and are essential for ensuring our
customers can get the product and services they want when they need
them.
Cautionary statement
Certain statements in this Half Year results
announcement are forward-looking. Although the Group believes that
the expectations reflected in these forward-looking statements are
reasonable, we can give no assurance that these expectations will
prove to have been correct. Because these statements contain risks
and uncertainties, actual results may differ materially from those
expressed or implied by these forward-looking statements. We
undertake no obligation to update any forward-looking statements
whether as a result of new information, future events or
otherwise.
Responsibility statement
We confirm that, to the best of our
knowledge:
(a) the condensed consolidated set of financial
statements has been prepared in accordance with IAS 34 'Interim
Financial Reporting';
(b) the
interim management report includes a fair review of the
information required by DTR 4.2.7R
(indication of important events during the first 24 weeks and
description of principal risks and uncertainties for the remaining
28 weeks of the year); and
(c) the interim management report
includes a fair review of the information required by DTR
4.2.8R
(disclosure of related parties' transactions and changes
therein).
The directors are responsible for the
maintenance and integrity of the corporate and financial
information included in the company's website. Legislation in the
United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other
jurisdictions.
By order of the Board
Andrew Livingston
|
Paul Hayes
|
Chief Executive Officer
|
Chief Financial Officer
|
24
July 2024
Independent review report to Howden Joinery Group
Plc
Conclusion
We have been engaged by Howden Joinery Group Plc
("the Company") to review the condensed set of financial statements
in the half-yearly financial report for the 24 weeks ended 15 June
2024 which comprises the condensed consolidated balance sheet,
condensed consolidated income statement, condensed consolidated
statement of comprehensive income, condensed consolidated statement
of changes in equity and condensed consolidated cash flow
statement, and the related explanatory notes.
Based on our review, nothing has come to our
attention that causes us to believe that the condensed set of
financial statements in the half-yearly financial report for the 24
weeks ended 15 June 2024 is not prepared, in all material respects,
in accordance with IAS 34 Interim Financial Reporting as adopted
for use in the UK and the Disclosure Guidance and Transparency
Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA").
Basis for
conclusion
We conducted our review in accordance with
International Standard on Review Engagements (UK) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity ("ISRE (UK) 2410") issued for use in the UK. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusions
relating to going concern
Based on our review procedures, which are less
extensive than those performed in an audit as described in the
Basis for conclusion section of this report, nothing has come to
our attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately
disclosed.
This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However,
future events or conditions may cause the Group/Company to cease to
continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors'
responsibilities
The half-yearly financial report is the
responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the half-yearly
financial report in accordance with the DTR of the UK
FCA.
As disclosed in note 2, the annual financial
statements of the Group are prepared in accordance with UK-adopted
international accounting standards.
The directors are responsible for preparing the
condensed set of financial statements included in the half-yearly
financial report in accordance with IAS 34 as adopted for use in
the UK.
In preparing the condensed set of financial
statements, the directors are responsible for assessing the Group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
Our
responsibility
Our responsibility is to express to the Company
a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review. Our conclusion,
including our conclusions relating to going concern, are based on
procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this
report.
The purpose of
our review work and to whom we owe our
responsibilities
This report is made solely to the Company in
accordance with the terms of our engagement to assist the Company
in meeting the requirements of the DTR of the UK FCA. Our review
has been undertaken so that we might state to the Company those
matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company
for our review work, for this report, or for the conclusions we
have reached.
Zulfikar
Walji
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
24 July 2024
Condensed consolidated income statement
|
Note
|
24 weeks to
15 June 2024
unaudited
£m
|
24 weeks to
10 June 2023
unaudited
£m
|
53 weeks to 30 December
2023
audited
£m
|
Continuing operations:
|
|
|
|
|
Revenue
|
4
|
966.3
|
926.9
|
2,310.9
|
Cost of sales
|
|
(379.0)
|
(361.5)
|
(907.0)
|
Gross profit
|
|
587.3
|
565.4
|
1,403.9
|
Operating expenses
|
|
(470.1)
|
(448.4)
|
(1,063.7)
|
Operating profit
|
|
117.2
|
117.0
|
340.2
|
Finance income
|
7
|
4.3
|
2.4
|
5.5
|
Finance costs
|
7
|
(9.2)
|
(7.5)
|
(18.1)
|
Profit before tax
|
|
112.3
|
111.9
|
327.6
|
Tax on profit
|
6
|
(27.9)
|
(27.3)
|
(73.0)
|
Profit for the period attributable to the equity holders of
the parent
|
|
84.4
|
84.6
|
254.6
|
Earnings per share
|
|
pence
|
pence
|
pence
|
Basic earnings per 10p
share
|
8
|
15.4
|
15.4
|
46.5
|
Diluted earnings per 10p
share
|
8
|
15.4
|
15.3
|
46.3
|
Condensed consolidated statement of comprehensive
income
|
Note
|
24 weeks to
15 June 2024 unaudited
£m
|
24 weeks to
10 June 2023 unaudited
£m
|
53 weeks to 30 December 2023
audited
£m
|
Profit for the period
|
|
84.4
|
84.6
|
254.6
|
Items of other comprehensive income:
|
|
|
|
|
Items that will not be reclassified
subsequently to profit or loss:
|
|
|
|
|
Actuarial gains on defined benefit
pension plan
|
11
|
34.3
|
15.5
|
13.3
|
Deferred tax on actuarial gains and
losses on defined benefit pension scheme
|
|
(8.6)
|
(3.7)
|
(2.9)
|
Change of rate on deferred
tax
|
|
-
|
(0.2)
|
(0.4)
|
Items that may be reclassified
subsequently to profit or loss:
|
|
|
|
|
Currency translation
differences
|
|
(1.5)
|
(0.7)
|
(0.5)
|
Other comprehensive income for the period
|
|
24.2
|
10.9
|
9.5
|
Total comprehensive income for the period, attributable to
equity holders of the parent
|
|
108.6
|
95.5
|
264.1
|
Condensed consolidated balance sheet
|
Note
|
15 June
2024
unaudited
£m
|
10 June
2023
unaudited
£m
|
30 December
2023
audited
£m
|
Non-current assets
|
|
|
|
|
Intangible assets
|
|
48.6
|
40.0
|
43.5
|
Property, plant and
equipment
|
10
|
460.2
|
410.6
|
456.9
|
Lease right-of-use assets
|
|
638.4
|
624.4
|
647.9
|
Pension asset
|
11
|
20.7
|
-
|
-
|
Deferred tax asset
|
|
6.4
|
23.4
|
15.6
|
Long term prepayments
|
|
0.6
|
-
|
0.8
|
|
|
1,174.9
|
1,098.4
|
1,164.7
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
|
410.1
|
413.5
|
382.8
|
Corporation tax
|
|
56.7
|
34.9
|
39.7
|
Trade and other
receivables
|
|
256.3
|
239.1
|
194.5
|
Cash and cash equivalents
|
|
165.5
|
117.8
|
282.8
|
|
|
888.6
|
805.3
|
899.8
|
|
|
|
|
|
Total assets
|
|
2,063.5
|
1,903.7
|
2,064.5
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Lease liabilities
|
|
(87.6)
|
(81.1)
|
(85.3)
|
Trade and other payables
|
|
(350.8)
|
(367.4)
|
(373.2)
|
Provisions
|
|
(8.5)
|
(9.4)
|
(9.5)
|
|
|
(446.9)
|
(457.9)
|
(468.0)
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Pension liability
|
11
|
-
|
(15.1)
|
(12.6)
|
Lease liabilities
|
|
(602.7)
|
(591.3)
|
(599.2)
|
Deferred tax liability
|
|
(8.5)
|
(3.8)
|
(3.3)
|
Provisions
|
|
(4.3)
|
(3.3)
|
(3.0)
|
|
|
(615.5)
|
(613.5)
|
(618.1)
|
|
|
|
|
|
Total liabilities
|
|
(1,062.4)
|
(1,071.4)
|
(1,086.1)
|
Net
assets
|
|
1,001.1
|
832.3
|
978.4
|
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
|
55.4
|
55.4
|
55.4
|
Capital redemption reserve
|
|
9.8
|
9.8
|
9.8
|
Share premium
|
|
87.5
|
87.5
|
87.5
|
ESOP and share-based
payments
|
|
15.6
|
14.6
|
16.6
|
Treasury shares
|
|
(19.9)
|
(25.5)
|
(24.0)
|
Retained earnings
|
|
852.7
|
690.5
|
833.1
|
Total equity
|
|
1,001.1
|
832.3
|
978.4
|
Condensed consolidated statement of changes in
equity
24
weeks to 15 June 2024
|
Share
capital
£m
|
Capital redemption
reserve
£m
|
Share premium
account
£m
|
ESOP and share-based
payments
£m
|
Treasury
shares
£m
|
Retained
earnings
£m
|
TOTAL
£m
|
As at 30 December 2023 -
audited
|
55.4
|
9.8
|
87.5
|
16.6
|
(24.0)
|
833.1
|
978.4
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
84.4
|
84.4
|
Other comprehensive income in the
period
|
-
|
-
|
-
|
-
|
-
|
24.2
|
24.2
|
Total comprehensive income for the
period
|
-
|
-
|
-
|
-
|
-
|
108.6
|
108.6
|
Movement in ESOP
|
-
|
-
|
-
|
3.1
|
-
|
-
|
3.1
|
Transfer of shares from treasury into
share trust
|
-
|
-
|
-
|
(4.1)
|
4.1
|
-
|
-
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
(89.0)
|
(89.0)
|
As
at 15 June 2024 - unaudited
|
55.4
|
9.8
|
87.5
|
15.6
|
(19.9)
|
852.7
|
1,001.1
|
The item "Movement in ESOP" consists of the
share-based payment charge in the period, together with any
receipts of cash from employees on exercise of share
options.
At the current period end there were 4.1
million ordinary shares held in treasury, each with a nominal value
of 10p (June 2023: 5.2 million shares, December 2023: 4.9 million
shares).
The company's share capital consists of 10p
ordinary shares. The company did not buy any shares back during the
period (period to June 2023 and period to December 2023: bought
back and cancelled 7,324,329 shares).
Condensed consolidated statement of changes in
equity - continued
24
weeks to 10 June 2023
|
Share
capital
£m
|
Capital redemption
reserve
£m
|
Share premium
account
£m
|
ESOP and share-based
payments
£m
|
Treasury
shares
£m
|
Retained
earnings
£m
|
TOTAL
£m
|
At 24 December 2022 -
audited
|
56.1
|
9.1
|
87.5
|
11.7
|
(25.5)
|
732.8
|
871.7
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
84.6
|
84.6
|
Other comprehensive income in the
period
|
-
|
-
|
-
|
-
|
-
|
10.9
|
10.9
|
Total comprehensive income for the
period
|
-
|
-
|
-
|
-
|
-
|
95.5
|
95.5
|
Movement in ESOP
|
-
|
-
|
-
|
2.9
|
-
|
-
|
2.9
|
Buyback and cancellation of
shares
|
(0.7)
|
0.7
|
-
|
-
|
-
|
(50.0)
|
(50.0)
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
(87.8)
|
(87.8)
|
As
at 10 June 2023 - unaudited
|
55.4
|
9.8
|
87.5
|
14.6
|
(25.5)
|
690.5
|
832.3
|
53
weeks to 30 December 2023
|
Share
capital
£m
|
Capital redemption
reserve
£m
|
Share premium
account
£m
|
ESOP and share-based
payments
£m
|
Treasury
shares
£m
|
Retained
earnings
£m
|
TOTAL
£m
|
At 24 December 2022 -
audited
|
56.1
|
9.1
|
87.5
|
11.7
|
(25.5)
|
732.8
|
871.7
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
254.6
|
254.6
|
Other comprehensive income for the
period
|
-
|
-
|
-
|
-
|
-
|
9.5
|
9.5
|
Total comprehensive income for the
period
|
-
|
-
|
-
|
-
|
-
|
264.1
|
264.1
|
Current tax on share
schemes
|
-
|
-
|
-
|
-
|
-
|
0.2
|
0.2
|
Deferred tax on share
schemes
|
-
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
Movement in ESOP
|
-
|
-
|
-
|
6.4
|
-
|
-
|
6.4
|
Buyback and cancellation of
shares
|
(0.7)
|
0.7
|
-
|
-
|
-
|
(50.0)
|
(50.0)
|
Transfer of shares from treasury into
share trust
|
-
|
-
|
-
|
(1.5)
|
1.5
|
-
|
-
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
(114.1)
|
(114.1)
|
At
20 December 2023 - audited
|
55.4
|
9.8
|
87.5
|
16.6
|
(24.0)
|
833.1
|
978.4
|
Condensed consolidated cash flow
statement
|
Note
|
24 weeks to
15 June 2024
unaudited
£m
|
24 weeks to
10 June 2023
unaudited
£m1
|
53 weeks to
30 Dec 2023
audited
£m
|
Profit before tax
|
|
112.3
|
111.9
|
327.6
|
Adjustments for:
|
|
|
|
|
Finance income
|
|
(4.3)
|
(2.4)
|
(5.5)
|
Finance costs
|
|
9.2
|
7.5
|
18.1
|
Depreciation and amortisation of
owned assets
|
|
24.8
|
21.6
|
50.8
|
Depreciation, impairment and loss on
termination of leased assets
|
|
43.8
|
40.0
|
90.1
|
Share-based payments
charge
|
|
2.7
|
2.7
|
6.0
|
Decrease in long term
pre-payments
|
|
0.1
|
1.0
|
0.3
|
Difference between pension operating
charge and cash paid
|
|
0.9
|
(11.5)
|
(16.9)
|
Profit on disposal of property, plant
and equipment and intangible assets
|
|
-
|
-
|
0.3
|
Operating cash flows before movements in working
capital
|
|
189.5
|
170.8
|
470.8
|
Movements in working capital
|
|
|
|
|
Increase in inventories
|
|
(27.3)
|
(40.2)
|
(9.5)
|
(Increase)/decrease in trade and
other receivables
|
|
(62.3)
|
(5.8)
|
38.8
|
Decrease in trade and other payables
and provisions
|
|
(17.1)
|
(62.9)
|
(64.3)
|
|
|
(106.7)
|
(108.9)
|
(35.0)
|
Cash generated from operations
|
|
82.8
|
61.9
|
435.8
|
Tax paid
|
|
(39.2)
|
(21.2)
|
(63.5)
|
Net
cash flows from operating activities
|
|
43.6
|
40.7
|
372.3
|
Cash flows used in investing activities
|
|
|
|
|
Payments to acquire property, plant
and equipment and intangible assets
|
|
(40.1)
|
(46.7)
|
(118.9)
|
Interest received
|
|
4.8
|
2.4
|
4.7
|
Net
cash used in investing activities
|
|
(35.3)
|
(44.3)
|
(114.2)
|
Cash flows from financing activities
|
|
|
|
|
Payments to acquire own
shares
|
|
-
|
(50.0)
|
(50.0)
|
Receipts from release of shares from
share trust
|
|
0.4
|
0.3
|
0.5
|
Dividends paid to Group
shareholders
|
9
|
(89.0)
|
(87.8)
|
(114.1)
|
Repayment of capital on lease
liabilities
|
|
(29.1)
|
(43.6)
|
(105.0)
|
Interest paid - including on lease
liabilities
|
|
(9.1)
|
(6.9)
|
(16.8)
|
Net
cash used in financing activities
|
|
(126.8)
|
(188.0)
|
(285.4)
|
Net
decrease in cash and cash equivalents
|
|
(118.5)
|
(191.6)
|
(27.3)
|
Cash and cash equivalents at
beginning of period
|
|
282.8
|
308.0
|
308.0
|
Effect of exchange rate fluctuations
on cash held
|
|
1.2
|
1.4
|
2.1
|
Cash
and cash equivalents at end of period
|
|
165.5
|
117.8
|
282.8
|
|
|
|
|
|
| |
1 In the second half of
2023 the Directors determined that it was appropriate for the
consolidated cash flow statement to start from profit before tax
and to present "Difference between pension operating change and
cash paid" as an adjustment to profit before tax. 2023 half year
comparatives have been re-presented as a result.
Notes to the condensed financial statements
1 General information
The results for the 24-week periods ended 15
June 2024 and 10 June 2023 are unaudited but have been reviewed by
the Group's auditor, whose report on the current period forms part
of this document. The information for the 53-week period
ended 30 December 2023 does not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. A copy of
the statutory accounts for that period has been delivered to the
Registrar of Companies, and is available via the Group's website at
www.howdenjoinerygroupplc.com.
The auditor's report on those accounts was not qualified or
modified, did not draw attention to any matters by way of emphasis,
and did not contain statements under section 498(2) or (3) of the
Companies Act 2006.
2 Accounting policies and basis of
preparation
The condensed consolidated set of financial
statements included in this half-yearly report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting", as adopted for use in the UK.
Basis of preparation
These condensed consolidated financial
statements are prepared on the going concern basis, as we explain
in detail in the "Going Concern" section of the interim management
report, above. The Group's business activities, together with the
factors likely to affect its future development, performance, and
position are set out in the interim management report, which
precedes these condensed consolidated financial statements and
includes a summary of the Group's financial position, its cash
flows, and borrowing facilities, its principal risks, and a
discussion of why the directors consider that the going concern
basis is appropriate.
The annual financial statements of the group for
the 52 weeks ended 20 December 2024 will be prepared in accordance
with UK-adopted international accounting standards. This condensed
set of financial statements has been prepared applying the
accounting policies, methods of computation, and presentation that
were applied in the preparation of the company's published
consolidated financial statements for the 53 weeks ended 30
December 2023 which were prepared in accordance with UK-adopted
international accounting standards, except that the taxation
charge for the half-year is calculated by applying the annual
estimated effective tax rate to the profit for the
period.
3 Segmental results
Basis of segmentation
Information reported to the Group's Executive
Committee, which is regarded as the chief operating decision maker,
is focused on one operating segment, Howden Joinery. Thus the
information required in respect of segmental disclosure can all be
found in the condensed consolidated income statement and condensed
consolidated balance sheet.
4 Seasonality of revenue
In a typical year, Howden Joinery sales are more
heavily weighted to the second half of the financial year.
This partly reflects the fact that there are 24 weeks in the first
half of the financial year and 28 weeks in the second half.
It also reflects that our peak trading period falls in the second
half of the year. Historically, the typical trend has been that
approximately 60% of sales have been in the second half of the
year.
5 Write down of inventories
During the period, the Group has recognised a
net charge of £0.5m in respect of writing inventories down to their
net realisable value (24 weeks to 10 June 2023 - net credit of
£0.7m; 53 weeks to 30 December 2023 - net charge of
£6.1m).
6 Tax
The half year effective tax rate is 24.8% (24
weeks to 10 June 2023: 24.4%). This is arrived at by applying the
estimated full year effective tax rate to the actual half year
profit, after adjusting for the tax effect of items which are
recognised entirely in the current period and are not spread over
the full year (such as actual share option exercises and payments
to the pension scheme). The effective tax rate includes the benefit
of the previously announced claim under the Patent Box tax relief
scheme and is subject to review by HMRC.
Global minimum tax legislation - Pillar Two
The Group is in scope of this legislation. The
assessment of the potential exposure to Pillar Two income taxes is
based on the most recent tax filings, country-by-country reporting
and financial statements for the Group entities. Based on this
assessment, the Pillar Two effective tax rates in most of the
jurisdictions in which the Group operates are above 15%.
Consequently, the Group does not estimate a significant impact
derived from this new regulation.
7 Finance income and finance
costs
Finance income
|
24 weeks to
15 June 2024
£m
|
24 weeks to
10 June 2023
£m
|
53 weeks to 30 December
2023
£m
|
Bank interest
|
4.3
|
2.4
|
5.5
|
Total finance income
|
4.3
|
2.4
|
5.5
|
Finance costs
|
24 weeks to
15 June 2024
£m
|
24 weeks to
10 June 2023
£m
|
53 weeks to 30 December
2023
£m
|
Interest expense on lease
liabilities
|
(9.1)
|
(6.9)
|
(16.8)
|
Other finance expense -
pensions
|
(0.1)
|
(0.6)
|
(1.3)
|
Total finance costs
|
(9.2)
|
(7.5)
|
(18.1)
|
8 Earnings per
share
|
24 weeks to 15 June
2024
|
|
24 weeks to 10 June
2023
|
|
53 weeks to 30 December
2023
|
|
Earnings
£m
|
Weighted
average
number
of
shares
m
|
Earnings
per share
p
|
|
Earnings
£m
|
Weighted
average number
of
shares
m
|
Earnings
per
share
p
|
|
Earnings
£m
|
Weighted
average number
of
shares
m
|
Earnings
per
share
p
|
Basic earnings per share
|
84.4
|
546.6
|
15.4
|
|
84.6
|
550.7
|
15.4
|
|
254.6
|
548.1
|
46.5
|
Effect of dilutive share
options
|
-
|
2.2
|
-
|
|
-
|
2.3
|
(0.1)
|
|
-
|
2.1
|
(0.2)
|
Diluted earnings per share
|
84.4
|
548.8
|
15.4
|
|
84.6
|
552.9
|
15.3
|
|
254.6
|
550.2
|
46.3
|
9 Dividends
(a) Amounts recognised as distributions to equity holders
in the period
|
24 weeks to
15 June 2024
£m
|
24 weeks to
10 June 2023
£m
|
53 weeks to
30 December 2023
£m
|
Final dividend for the 52 weeks
to 24 December 2022 - 15.9p/share
|
-
|
87.8
|
87.8
|
Interim dividend for the 53 weeks
to 30 December 2023 - 4.8p/share
|
-
|
-
|
26.3
|
Final dividend for the 53 weeks
to 30 December 2023 - 16.2p/share
|
89.0
|
-
|
-
|
|
89.0
|
87.8
|
114.1
|
(b) Declared and proposed dividends
On 24 July 2024, the Board approved the payment
of an interim dividend of 4.9p/share to be paid on 22 November 2024
to ordinary shareholders on the register on 18 October
2024.
|
24 weeks to
15 June 2024
£m
|
24 weeks to
10 June 2023
£m
|
53 weeks to
30 December 2023
£m
|
Declared interim dividend for the 52
weeks
to 28 December 2024 - 4.9p/share
|
27.2
|
|
|
Declared interim dividend for the 53
weeks
to 30 December 2023 - 4.8p/share
|
|
26.2
|
|
Proposed final dividend for the 53
weeks
to 30 December 2023 - 16.2p/share
|
|
|
88.4
|
10 Property, plant and equipment
During the period, the Group made additions to
property, plant and equipment ("PPE") of £36.4m (24 weeks to 10
June 2023 - £31.8m; 53 weeks to 30 December 2023 -
£103.8m).
There were no disposals of PPE in the current or
prior periods which had any significant net book value.
There are non-cancellable commitments to
purchase PPE of £17.3m at the current period end (15 June 2023 -
£17.1m; 30 December 2023 - £15.2m).
11 Retirement benefit obligations
(a) Total amounts in respect of pensions in the
period
|
24 weeks to
15 June 2024
£m
|
24 weeks to
10 June 2023
£m
|
53 weeks to
30 December 2023
£m
|
Charged to the income
statement:
|
|
|
|
Defined benefit plan - administrative
costs
|
(0.9)
|
(1.0)
|
(2.3)
|
Defined benefit plan - total
operating charge
|
(0.9)
|
(1.0)
|
(2.3)
|
Defined benefit plan - net finance
charge
|
(0.1)
|
(0.6)
|
(1.3)
|
Total defined benefit charge to profit before
tax
|
(1.0)
|
(1.6)
|
(3.6)
|
|
|
|
|
Included in other comprehensive
income:
|
|
|
|
Defined benefit plan - actuarial gains
|
34.3
|
15.5
|
13.3
|
(b) Other information - defined benefit
pension plan
The Group operates a funded defined benefit
pension plan which provides benefits based on the career average
pensionable pay of participating employees. This plan was
closed to new entrants from April 2013, and closed to future
accrual on 31 March 2021.
Key
assumptions used in the valuation of the plan
|
24 weeks to
15 June 2024
|
24 weeks to
10 June 2023
|
53 weeks to
30 December 2023
|
Discount rate
|
5.05%
|
5.20%
|
4.55%
|
Inflation assumption - RPI
|
3.15%
|
3.20%
|
3.05%
|
Inflation assumption - CPI
|
2.70%
|
2.75%
|
2.60%
|
Life expectancy (years): pensioner
aged 65
|
|
|
|
- male
|
85.8
|
86.7
|
85.7
|
- female
|
88.0
|
88.5
|
88.0
|
Life expectancy (years):
non-pensioner aged 45
|
|
|
|
- male
|
86.7
|
87.7
|
86.7
|
- female
|
89.6
|
90.3
|
89.6
|
Balance sheet
The amount included in the balance sheet arising
from the Group's obligations in respect of defined benefit
retirement benefit scheme is as follows:
|
15 June
2024
£m
|
10 June
2023
£m
|
30 December
2023
£m
|
Present value of defined benefit
obligations
|
(854.7)
|
(876.9)
|
(913.6)
|
Fair value of scheme
assets
|
875.4
|
861.8
|
901.0
|
Surplus/(deficit) recognised in the balance
sheet
|
20.7
|
(15.1)
|
(12.6)
|
In recognising a pension surplus at the end of
the an accounting period, the Group has considered the conditions
and guidance given in IAS 19 and IFRIC 14 and has concluded that:
it is appropriate to recognise a surplus in full; there is no issue
affecting the availability of a refund or reduction in future
contributions due to minimum funding requirements, and there is no
requirement to recognise an associated liability.
Movements in this amount during the period are
as follows:
|
24 weeks to
15 June 2024
£m
|
24 weeks to
10 June 2023
£m
|
53 weeks to 30 December
2023
£m
|
Deficit at start of period
|
(12.6)
|
(41.5)
|
(41.5)
|
Administration cost
|
(0.9)
|
(1.0)
|
(2.3)
|
Employer contributions
|
-
|
12.5
|
19.2
|
Other finance charge
|
(0.1)
|
(0.6)
|
(1.3)
|
Actuarial gains
|
34.3
|
15.5
|
13.3
|
Surplus/(deficit) at end of period
|
20.7
|
(15.1)
|
(12.6)
|
Statement of comprehensive income
Amounts taken to equity via the statement of
comprehensive income in respect of the Group's defined benefit plan
are shown below:
Actuarial differences
|
24 weeks to
15 June 2024
£m
|
24 weeks to
10 June 2023
£m
|
53 weeks to 30 December
2023
£m
|
Actuarial loss on plan
assets
|
(25.8)
|
(42.3)
|
(8.2)
|
Decrease/(increase) in plan
liabilities due to financial assumptions
|
59.4
|
63.8
|
(14.2)
|
Decrease/(increase) in plan
liabilities due to experience
|
0.7
|
(6.0)
|
9.2
|
Decrease in plan liabilities due to
demographic assumptions
|
-
|
-
|
26.5
|
Total actuarial gains
|
34.3
|
15.5
|
13.3
|
Virgin Media
pensions case
In June 2023, the English High Court issued a
judgment involving the Virgin Media NTL Pension Plan which held
that amendments to the plan's rules in relation to benefit changes
were invalid in the absence of a confirmation from the scheme
actuary under Section 37 of the Pension Schemes Act 1993. Virgin
Media has appealed the judgment which was heard in June 2024 and it
may take some time for the outcome of the appeal to be
known.
The Company has not assessed the extent of any
likely impacts from this ruling and considers that there is
sufficient uncertainty not to warrant recognition of any potential
obligation in respect of this in the balance sheet at 15 June 2024.
Any subsequent developments following this ruling will be monitored
by the Company.