Slide 1: 2006 Preliminary Results
2006 Preliminary Results 6 March 2007
Slide 2: A new Group with a new future
A new Group with a new future Retail sales and margin down 30% in Q4 Borrowings £200m CRISIS 2005 Pension deficit £300m Defective systems Share price collapsed Stabilized the Group TRANS- Created strategic opportunity FORMATION 2006 Revealed & instigated strategic plan Continued to grow Howdens Exec
Slide 3: Mark Robson, Chief Financial Officer
Mark Robson Chief Financial Officer
Slide 4: Highlights
Highlights 2005 £m unless stated 2006 restated Continuing operations: Revenue 733.0 621.8 Gross profit* 362.5 322.5 Operating profit* 65.7 54.1 Profit before tax* 57.2 42.5 Net debt (4.1) (55.5) * Before exceptionals
Slide 5: Profit before tax and exceptional items
Profit before tax and exceptional items* £m Change Supply £14.7m 9.2 Interest, etc 3.1 57.2 Howdens 9.2 Corporate Other (6.2) operating losses (0.6) 42.5 2005 2006 * Continuing operations
Slide 6: Howden Joinery operating performance
Howden Joinery operating performance Operating Revenue £676.3m profit £m - total +9.5% - LFL +5.9% Sales & margin Gross margin +110bp 32.3 Change +£9.2m Employee costs Property 132.6 (9.4) costs 123.4 (5.2) Other costs (8.5) 2005 2006
Slide 7: Supply and Corporate
Supply and Corporate  Net cost of Supply down £9.2m to £39.6m • External sourcing of fascias and appliances  Corporate cost up £6.2m to £24.2m • share plan costs
Slide 8: Income Statement
Income Statement 2005 £m 2006 restated Continuing operations: Operating profit 65.7 54.1 Net interest and other finance charges (8.5) (11.6) Profit before tax and exceptional items 57.2 42.5 Tax (20.9) (14.6) Profit after tax before exceptional items 36.3 27.9 Discontinued operations: Loss after tax
Slide 9: Continuing operations – exceptional items
Continuing operations – exceptional items 2005 £m 2006 restated Restructuring costs (30.2) Factory closure costs (36.5) Inventory provision (6.0) Gain from lower pension liabilities 38.0 Profit on disposal 2.5 Exceptional items pre tax (32.2) (12.7) Tax credit/(charge) on exceptional items 2.0 (8.9)
Slide 10: Discontinued operations
Discontinued operations 2005 £m 2006 restated Operating loss before exceptionals after tax (39.7) (56.8) Loss on disposal of Retail (155.7) Provisions on disposal of Retail (31.7) Cost of closure of factory (9.4) Profit on disposal of Hygena Cuisines 62.5 Other (0.5) Exceptional items pre tax (134.8
Slide 11: Borrowings and cash flow
Borrowings and cash flow 2005 £m 2006 restated Opening net borrowings (55.5) (62.2) Operating cashflows before movements in working capital 64.6 73.7 Working capital * 37.2 (26.4) Tax 1.6 (3.4) Capital expenditure (30.3) (47.9) Asset disposals 12.0 57.4 Sale of Hygena Cuisines 74.6 - Sale of MFI (78
Slide 12: Working capital
Working capital  Working capital* down £37.2m • Stock up £18.6m • Debtors up £59.6m • Creditors up £115.4m * Stock, debtors and creditors
Slide 13: Pension scheme deficit
Pension scheme deficit £m 297* * IAS19 basis April 2005 actuarial valuation £182m Scheme benefits (38) Change £108m Corporate bond rate (40) 189 Asset returns Deficit Other (24) funding 5 (11) Dec Dec 2005 2006
Slide 14: Current trading and outlook
Current trading and outlook  Howdens continues to trade well • sales up 8.2% (same depot up 4.4%) • gross margin similar to 2006  Transitional arrangements with MFI operating satisfactorily  Howdens in 2007 • favourable market dynamics so far • benefit of maturing depots • 60 new depots • relativ
Slide 15: Matthew Ingle, Chief Executive
Matthew Ingle Chief Executive
Slide 16: A foundation for growth
A foundation for growth  A strong and growing core business  LFL sales increased  Gross margin improved  Net debt reduced Unlocking profit and value
Slide 17: What’s special about Howden?
What’s special about Howden? To provide from local stock nationwide the small builder’s routine Our mission kitchen / joinery requirements: assuring best local price (confidential trade price) and no call back quality Co-ordinating components that are assembled and installed, by customers, in divers
Slide 18: Expanding Howden
Expanding Howden Growing depots successfully  Managed expansion • Depots developed locally • 6 -12 staff per depot  Accountability • Local profit • Depot managers have responsibility for: • Tailoring stock selection to customers’ needs • Managing stock loss • Local marketing • Creating an effectiv
Slide 19: Expanding Howden
Expanding Howden Significant potential for sales and margin growth  Layers of depot growth, supported by market trends • Good LFL growth in mature depots (>7 yrs) • Progressive growth in more recently opened depots (<7 yrs) • Incremental growth from new depots • Aiming to open 60 new depots in 2007
Slide 20: Building a focused Supply business
Building a focused Supply business  Appropriate mix of manufacture / % manufactured bought in 100 bought in 80 50 • All doors and appliances now bought in 60 62 • Rigid box manufacture continues and is 40 20 50 increasing 38 0 • Lower transport and storage costs 2005 Today • Not a commodity product
Slide 21: In summary …
In summary …  Business on completely different footing from one year ago  Re-centred on Howdens • A cash-generative business with growing sales and margins • Strong position in rapidly developing market • Simple customer proposition • Proven business model • Further potential to grow A focused bus
Slide 22: 2006 Preliminary Results
2006 Preliminary Results 6 March 2007
Slide 23: Appendix – Continuing operations
Appendix – Continuing operations
Slide 24: Revenue
Revenue 2005 £m unless stated 2006 restated Total Same depot Howden Joinery 676.3 617.8 +9.5% +5.9% Supply 50.8 3.1 Other 5.9 0.9 Total 733.0 621.8
Slide 25: Operating profit/(loss)*
Operating profit/(loss)* 2005 £m 2006 restated Howden Joinery 132.6 123.4 Supply (39.6) (48.8) Corporate (24.2) (18.0) Other (4.1) (3.1) 64.7 53.5 Share of joint venture 1.0 0.6 Operating profit 65.7 54.1 * Before exceptionals
Slide 26: Capital expenditure
Capital expenditure £m 2006 2005 Howden Joinery 6.9 9.1 Supply 2.9 7.8 Corporate 3.3 7.1 Other 0.3 2.0 13.4 26.0
Slide 27: Depreciation and amortisation
Depreciation and amortisation £m 2006 2005 Howden Joinery 5.1 4.6 Supply 8.7 10.3 Corporate 9.3 11.2 Other 0.5 0.2 23.6 26.3