12 January 2012
Howden Joinery Group Plc ('the Group') is today issuing an update on trading and other matters for the year ended 24 December 2011.
The Board is pleased to report that the business continued to perform well and has seen good performance on all key measures for the year as a whole in what were demanding trading conditions.
In the last three periods of the year, from 3rd October to 24th December, total sales of Howden Joinery UK depots were over 5% higher than in the corresponding period in 2010. Total sales of Howden Joinery UK depots for the year of £838.7m (2010: £795.1m) were up 5.5%, rising 3.1% on a same depot basis.
It is expected that profit before tax (and exceptional items) for 2011 will be in line with current market expectations1.
Despite increases in the Group's pension deficit contribution, tax payments to HMRC, capital expenditure and working capital, the Group now expects net cash at the end of the year to be over £50m, compared with £35m at the end of 2010.
We continue to be pleased with the performance of our newer depots, 20 having been opened in 2011, bringing the total to 509.
Since October 2008, the Group has cost-effectively reduced its legacy property portfolio by four-fifths: the number of legacy properties has fallen from 89 to 20 and the net annual rent and rates has reduced from £33m to £6m. In the two months after the release of our Interim Management Statement on 10 November 2011, the leases of two more properties were terminated at a cost of £4.3m, thereby mitigating future costs that would have totalled over £13m. With regard to the 20 remaining legacy properties, we are reviewing the adequacy of the provision to cover expected future costs, which could increase by around £7m. This would be treated as an exceptional charge in the 2011 accounts and the expectation is that it would be sufficient to cover all estimated future costs that will be incurred in respect of exiting these properties.
Note 1: The current range of market expectations is believed to be £103m to £111m.
We are encouraged by the strength of our performance in 2011 but remain cautious about the outlook for 2012, given the continuing uncertainty about the prospects for the economy. We will continue to focus on developing the business, building on the solid foundations that underpin it. In the short term, it should be noted that we will not be repeating last year's initiative to target the busy post-Christmas trading period of the non-trade kitchen market, which pulled sales forward in to the first two periods of 2011.
Next scheduled announcement
The Group will release its 2011 Preliminary Results on 1 March 2012.
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