RNS No 8211x
HEYWOOD WILLIAMS GROUP PLC
2 September 1999
Contacts: Michael Broadhead, Chief Executive
Terry Martin, Finance Director
Heywood Williams Group PLC Tel: 0207 831 3113 (2/9/99)
Tel: 01484 487200 (thereafter)
Steve Jacobs/Peter Otero
Financial Dynamics Tel: 0207 831 3113
HEYWOOD WILLIAMS GROUP PLC
Interim Results to 30 June 1999
Heywood Williams Group PLC, the building products group,
announces its interim results for the six months ended 30 June
1999.
The group is UK market leader in the manufacture and
distribution of PVC window and door products and in the USA is a
leading manufacturer and distributor of building and plumbing
products to builders of manufactured houses and recreational
vehicles.
* Turnover and operating profit from continuing activities up
5% to #320.2m (1998: #305.8m) and 19% to #20.6m (1998:
#17.2m) respectively
* Pre-tax profit up 4% to #20.2m (1998: #19.4m)
* Earnings per share (pre-goodwill) up 20% to 15.6p (1998
13.0p)
* Interim dividend up 5% to 5.25p (5.0p)
* Creation of HW Spectus, UK's largest extruder of rigid PVC
window and door profiles, through successful integration of
Spectus and HW Systems operations, enhanced by subsequent
acquisition of Worth Systems
* BCE Cellular Extrusions acquired for #10.5m, strengthening
the PVC foam activities of Spectus-Kestrel
* Pioneer Plastics acquired for #10m and integrated into
Bristolpipe to create USA's 8th largest PVC pipe extruder
Hamish Bryce, Heywood Williams' chairman, comments: "In the UK,
the window and door markets are now gaining momentum. In the
USA, both the PVC pipe and the recreational vehicle markets
remain robust. We continue to grow our share of the
manufactured housing market against the background of a recent
modest slowdown in demand. I expect us to continue to make
satisfactory progress in the remainder of the year."
HEYWOOD WILLIAMS GROUP PLC
Interim report from the Chairman
Results and dividend
I'm delighted to report that the group made very encouraging
progress during the first half of 1999, with operating profit on
continuing operations increased by 19% to #20.6 million on
turnover ahead 5% to #320.2 million.
Pre tax profit for the six months ended 30 June 1999 was #20.2
million, an increase of 4% on the first half of 1998, despite a
goodwill amortisation charge of #1.1 million, some #0.8 million
higher than last year. The increased profit, coupled with the
effect of the share buy back last September, resulted in a 20%
improvement in earnings per share before goodwill amortisation,
to 15.6p. In the light of these encouraging results and
sustained strong trading cash flow, your board has decided to
increase the interim dividend by 5% to 5.25p per ordinary share
payable on 15 October 1999 to shareholders on the register at 17
September 1999.
These results follow the substantial reorganisation of the group
during 1998, when we acquired Spectus-Kestrel, sold Auto
Windscreens, and restructured our interest in our European glass
business. Our balance sheet remains strong with gearing at 30
June 1999 of 10%.
Trading
In the UK, our businesses are now those focused principally on
the #2.5 billion PVC window and door market. With the benefit
of a full six month contribution from Spectus-Kestrel, which was
purchased in April 1998, UK sales and operating profit from
continuing businesses were up 14% to #132.1 million and 10% to
#8.3 million respectively.
In the USA, we achieved a 13% increase in turnover to #184.2
million, with operating profit almost a third higher at #11.6
million. Our businesses supplying the builders of manufactured
houses and recreational vehicles, as well as our growing PVC
pipe extrusion business, all produced excellent results.
Strategy
In addition to investing in new plant and equipment to increase
our capacity and enhance our product range, we continue to seek,
as potential acquisitions, businesses which are complementary
to, and will add value to, our existing businesses. I am
pleased that this year we have been able to buy three businesses
which fulfil these criteria.
In February, we purchased for #10 million, Pioneer Plastics, a
plastic pipe extrusion business based near Atlanta with
annualised sales of #18.5 million. The integration of Pioneer
into our Bristolpipe operation is well under way, making
Bristolpipe the eighth largest extruder of PVC pipe in the USA.
In May, we combined the PVC window and door profile extrusion
activities of Spectus-Kestrel with HW Systems, under the new
name of HW Spectus. This business is the UK's largest extruder
of rigid PVC window and door profiles and it has been further
strengthened by the acquisition in June of Worth Systems.
Worth, which has a turnover of #4 million, brings to HW Spectus
an established additional brand.
In August, we strengthened the PVC foam extrusion activities of
Spectus-Kestrel by the acquisition for #10.5 million of BCE
Cellular Extrusions Limited, a company with annualised sales of
#10 million. PVC foam profile is increasingly used instead of
wood in numerous building applications, including the
installation of windows and doors, and is a fast growing segment
of the UK PVC extrusion market.
Prospects
In the UK, the window and door markets are now gaining momentum.
In the USA, both the PVC pipe and the recreational vehicle
markets remain robust. We continue to grow our share of the
manufactured housing market against the background of a recent
modest slowdown in demand. I expect us to continue to make
satisfactory progress in the remainder of the year.
Hamish Bryce
Chairman
2 September 1999
HEYWOOD WILLIAMS GROUP PLC
Consolidated profit and loss account
Six months ended 30 June 1999
Half year Half Full year
30 June year 31
Note 1999 30 June December
1998 1998
#000 #000 #000
Turnover 1
Continuing operations 320,177 305,823 636,172
Discontinued operations - 40,898 53,922
320,177 346,721 690,094
Costs and overheads less other
income excluding goodwill
amortisation (299,038) (326,349) (644,729)
Goodwill amortisation 2 (1,099) (334) (1,303)
Operating profit 20,040 20,038 44,062
Income from interests in
associated 2 523 369 1,030
undertakings
Operating profit after income
from 1 20,563 20,407 45,092
associated undertakings
Continuing operations 20,563 17,212 41,025
Discontinued operations - 3,195 4,067
Exceptional profits less
losses on
disposal or termination of 3 - - 19,514
operations
Interest (319) (1,016) (1,567)
Profit on ordinary activities
before 20,244 19,391 63,039
taxation
Taxation 3 (6,816) (6,115) (14,390)
Profit after taxation 13,428 13,276 48,649
Equity minority interests (295) (717) (1,408)
Profits attributable to
members of 13,133 12,559 47,241
the parent company
Dividends
Equity 4 (4,470) (4,567) (11,741)
Non-equity (451) (534) (1,068)
Retained profit for the period 8,212 7,458 34,432
Earnings per ordinary share
Basic 15.3p 13.2p 52.1p
Diluted 14.4p 12.7p 49.0p
Diluted - excluding
exceptional 15.6p 13.0p 29.6p
items and goodwill
amortisation
Dividends per ordinary share 4 5.25p 5.0p 14.25p
HEYWOOD WILLIAMS GROUP PLC
Consolidated balance sheet
At 30 June 1999
30 June 30 June 31
December
1999 1998 1998
#000 #000 #000
Fixed assets
Intangible assets 44,915 38,099 37,675
Tangible assets 60,791 70,725 56,296
Investments 11,740 5,653 12,004
117,446 114,477 105,975
Current assets
Stocks 63,225 69,580 56,798
Debtors 82,506 98,506 60,702
Cash at bank and in hand 42,446 11,182 47,775
188,177 179,268 165,275
Creditors: due within one
year
Borrowings 33,520 48,085 16,055
Other creditors 98,594 111,711 85,444
132,114 159,796 101,499
Net current assets 56,063 19,472 63,776
Total assets less current
liabilities 173,509 133,949 169,751
Creditors: due after one
year - 19,267 26,077 25,542
borrowings
Provisions for liabilities
and 2,308 3,033 2,292
charges
21,575 29,110 27,834
151,934 104,839 141,917
Capital and reserves
Called up share capital 23,956 26,741 24,517
Share premium account 5,214 3,410 3,585
Other reserves 5,245 2,995 5,245
Profit and loss account 115,633 64,661 106,734
150,048 97,807 140,081
Minority interests 1,886 7,032 1,836
151,934 104,839 141,917
HEYWOOD WILLIAMS GROUP PLC
Consolidated cash flow statement
Six months ended 30 June 1999
Half Half Full year
year year
30 June 30 June 31
December
1999 1998 1998
#000 #000 #000
Net cash inflow from operating
activities 14,815 19,957 58,142
(analysed below)
Dividends from associated undertakings - 732 1,141
Returns on investments and servicing of
finance
Interest paid (1,797) (1,604) (3,407)
Interest received 1,305 986 2,270
Dividends paid to minority interests (245) (367) (963)
Preference share dividends paid (534) (534) (1,068)
(1,271) (1,519) (3,168)
Taxation (3,894) (3,670) (15,189)
Capital expenditure
Purchase of tangible fixed assets (5,849) (6,329) (12,407)
Sale of tangible fixed assets 166 323 1,408
(5,683) (6,006) (10,999)
Acquisitions and disposals
Acquisition of subsidiary undertakings
and (13,554) (53,780) (54,006)
businesses
Acquisition of other investments (217) (46) -
Disposals of subsidiary undertakings
and 1,180 225 72,061
businesses
(12,591) (53,601) 18,055
Equity dividends paid (7,616) (8,004) (12,130)
Cash (outflow)/inflow before use of
liquid (16,240) (52,111) 35,852
resources and financing
Management of liquid resources 21,895 23,650 (10,283)
Financing
Issues of ordinary share capital 358 484 685
Repurchase of ordinary share capital - - (19,032)
Additional loans 12,905 34,193 34,055
Repayment of loans (2,882) (13,739) (44,453)
10,381 20,938 (28,745)
Net cash inflow/(outflow) 16,036 (7,523) (3,176)
Reconciliation of net cash flow to movement in
net
(debt)/funds
Net cash inflow/(outflow) 16,036 (7,523) (3,176)
(Increase)/decrease in borrowings and
lease (10,023) (20,454) 10,398
financing
(Decrease)/increase in liquid resources (21,895) (23,650) 10,283
(Increase)/decrease in net debt
resulting from (15,882) (51,627) 17,505
cash flows
Loans and finance leases acquired with
subsidiaries - (8,041) (8,041)
Loans and finance leases disposed of
with - - 768
subsidiaries
Exchange fluctuations (637) 97 (645)
(Increase)/decrease in net debt (16,519) (59,571) 9,587
Opening net funds/(debt) 6,178 (3,409) (3,409)
Closing net (debt)/funds (10,341) (62,980) 6,178
Analysis of cash inflow from operating
activities
Operating profit before income from
interests 20,040 20,038 44,062
in associated undertakings
Depreciation and goodwill amortisation
less
profit on fixed asset disposals and 6,151 5,991 13,291
other
adjustments
26,191 26,029 57,353
(Increase)/decrease in working capital (11,376) (6,072) 789
14,815 19,957 58,142
HEYWOOD WILLIAMS GROUP PLC
Notes on the financial statements
1. Segmental analysis for the six months ended 30 June 1999
Half year - 1999 Half year - 1998 Full year - 1998
Turnover Profit* Turnover Profit* Turnover Profit*
#000 #000 #000 #000 #000 #000
By geographical
location
UK and Ireland 132,129 8,299 115,824 7,528 254,412 19,462
Mainland Europe 3,848 637 26,440 920 49,592 1,699
USA 184,200 11,627 163,559 8,764 332,168 19,864
Continuing
operations 320,177 20,563 305,823 17,212 636,172 41,025
Discontinued
operations - - 40,898 3,195 53,922 4,067
320,177 20,563 346,721 20,407 690,094 45,092
* Operating profit including income from interests in associated
undertakings and after goodwill amortisation - note 2
2. The turnover for Mainland Europe for the 1998 half year
included #23.456m (1998 full year - #43.196m) in respect of HWS
Holdings BV which was converted to an associated undertaking in
December 1998. Income from associates all related to activities
in Mainland Europe. The geographical split of goodwill
amortisation for the 1999 half year was UK and Ireland #0.986m and
USA #0.113m (1998 half and full year all related to UK and
Ireland).
3. The 1998 full year exceptional items were after goodwill
reversals on disposals of #33.424m and there was no taxation
charge arising in respect of the exceptional items.
4. The interim equity dividend of 5.25p per ordinary share
will be paid on 15 October 1999 to ordinary shareholders on the
Register on 17 September 1999.
5. The following statement in respect of the group's current
assessment of the Year 2000 computer problem has been approved
by the group board:
"For over two years, the group board has monitored progress by
local management teams in dealing with the risks to their
businesses from the use of date sensitive microchip based
equipment. These teams have prepared details of computer based
systems which affect all aspects of our operations. Exposures
to each business have been identified as either high, medium or
low risk and programmes have been developed to limit any adverse
effects on the group's businesses caused by the inadequacies in
these systems.
Our review procedures have also involved identifying risks
arising from disruption of the supply of critical goods and
services and also whether our major customers and suppliers have
systems that will enable them to continue to trade.
We have absorbed most of the cost of year 2000 compliance as
part of the ongoing improvement in our computer based systems
because of the early identification of this risk to our
businesses. Therefore additional costs are not considered to be
material.
We believe that, within our own businesses, we will have taken
appropriate steps to minimise the year 2000 computer risk but
risks arising from the approach of our external customers and
suppliers to this problem are harder to assess."
6. Other than the results for the full year to 31 December 1998,
the financial information included in the Interim Report is
unaudited. The accounts for the year ended 31 December 1998
received an unqualified audit report and have been filed with the
Registrar of Companies.
7. Accounting policies applied to the interim financial
information are consistent with those used for the year ended 31
December 1998 except for the implementation of FRS 12 which
resulted in balances totalling #2.308m at 30 June 1999, previously
held in creditors in respect of surplus property and after-date
sales obligations, being reclassified as provisions. Prior period
balance sheets have been restated accordingly (30 June 1998 -
#2.168m, 31 December 1998 - #2.292m).
8. A copy of the Interim Report will be despatched on 10
September 1999 to shareholders and details will also be available
on the Company's website, www.heywoodwilliams.com. Copies of the
Interim Report will also be available to the public at Waverley,
Edgerton Road, Huddersfield, West Yorkshire, HD3 3AR, the
registered office of the company.
END
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