Interim Results
Wynnstay Group PLC
20 June 2007
WYN.L
WYNNSTAY GROUP PLC
('Wynnstay' or 'the Group')
Interim Results for the Six Months ended 30 April 2007
Based in Wales, Wynnstay manufactures and supplies agricultural products and
services (including fertiliser, seeds, animal feed, animal health care products,
pet and equine food, clothing etc) to farmers and country dwellers.
KEY POINTS
• Encouraging interim results - demonstrate the advantages of the Group's
balanced spread of activities
• Full contribution in the period from Glasson Group, acquired in August
2006, which performed excellently
• Turnover increased by 52.6% to £79.90m (2006: £52.38m)
• Pre-tax profit rose by 39.0% to £1.96m (2006: £1.41m)
• Basic earnings per share up 15.5% to 12.43p (2006: 10.76p)
• Net assets increased by 9.7% to £26.83m (2006: £24.45m)
• Interim dividend of 1.875p up 7.1% (2006: 1.75p)
• Key trends in period:
- recovery in fertiliser market which benefited Arable Division
where fertiliser sales rose 20%
- rising raw material prices which produced overall net benefit for
Group
• First dedicated pet supplies store - 'Just for Pets' - opened in Telford
in June
• Actively seeking further consolidation opportunities - currently in
negotiations with agricultural distribution companies
• Positive outlook for full year
Chairman, John Davies, commented,
'Trading results for the first six months of the financial year are encouraging
and I am pleased to report that earnings have improved in line with our
expectations. The balanced spread of our activities continues to ensure we are
able to perform robustly in challenging market conditions.
We believe that our twin track strategy of acting as a consolidator in the
agricultural sector while expanding our higher margin retail activities will
continue to bring ongoing benefits. Our position as a low cost, high quality
supplier considerably strengthens this strategic approach. We remain positive
about the outcome for the current financial year.'
Press enquiries:
Wynnstay Group plc Bernard Harris, Managing Director T: 020 7448 1000 today
Paul Roberts, Finance Director Thereafter: 01691 828512
Biddicks Katie Tzouliadis T: 020 7448 1000
WH Ireland Limited David Youngman T: 0161 832 2174
CHAIRMAN'S STATEMENT
Introduction
Trading results for the first six months of the financial year are encouraging
and I am pleased to report that earnings have improved in line with our
expectations. The balanced spread of our activities continues to ensure we are
able to perform robustly in challenging market conditions.
Importantly in the first half, we saw fertiliser ordering return to more
normalised patterns after the sharp decrease in sales during the same period
last year. On a like-for-like basis, fertiliser orders in the first half were
20% higher than the comparable period last year. The recovery was helped by more
stable fertiliser pricing, which last year rose to a 10 year high as the price
of natural gas, a key component in fertiliser manufacture, soared.
While our Arable Division benefited from these better trading conditions, our
Feed Division saw only modest volume increases. The very mild weather conditions
reduced demand for animal feeds and, in addition, margins were adversely
affected by the sharp rise in raw material prices. The feed sector is still
suffering from over capacity; also dairy producers remain under severe financial
pressure and are resisting prices increases from feed suppliers.
I am pleased to report that the Glasson Group, which we acquired in August 2006,
performed very strongly and Glasson's trading results were ahead of our
expectations and budget. Key to Glasson's out-performance over the period were
rising raw materials prices, which greatly benefited its trading activities as
well as our grain trading arm, Shropshire Grain Ltd. The recovery in the
fertiliser market also benefited Glasson's blending activities at Glasson Dock
in Lancashire.
While the considerable increase in raw material prices adversely affected our
feed manufacture and feed sales, the gain for Glasson's trading activities has
meant that these price increases produced a net benefit for the Group.
Our Stores Division performed well and we are continuing to widen our range to
broaden the stores' appeal to all sections of the rural community. In June, we
opened our first dedicated pet store, 'Just for Pets' in Telford and are
planning further openings, subject to lease negotiations.
Financial Results
Including results from Glasson Group, turnover rose by 52.6% to £79.90m (2006:
£52.38m) and operating profit by 40.4% to £2.15m (2006: £1.53m). Pre-tax profit
rose by 39.0% to £1.96m from £1.41m last year. Basic earning per share rose by
approximately 15.5% to 12.43p (2006: 10.76p).
Net assets at 30 April 2007 stood at £26.83m from £24.46m last year, a rise of
9.7%.
Dividend
Continuing our policy of progressive dividend payments, the Board is pleased to
declare an interim dividend of 1.875p per share, a 7.1% increase on last year
(2006: 1.75p). The interim dividend will be paid on the 31 October 2007 to
shareholders on the register at the 28 September 2007.
Review of Operations
Feed Division
Feed volumes were largely maintained across our numerous activities although the
mild winter and the very early spring reduced demand at the end of the period.
Margins remain under pressure, particularly in dairy feed sales and rapidly
rising ingredient and energy prices were not fully passed on to the market.
Our joint venture business, Bibby Agriculture Ltd, which is run in conjunction
with Carrs Milling Industries Plc, enjoyed another successful period, and
contributed volume to both our Llansantffraid and Carmarthen mills. Dairy feed
volumes were static, with an improvement in general cattle feed, while sheep
feed sales fell for the first time in a number of years; this being attributed
to milder weather conditions and the smaller national flock. Pig feed sales
doubled due to the winning of new contracts. Our three blending operations,
including the new feed blending plant in Rhosfawr, North Wales had a successful
winter. This sector of the market is continuing to grow and sales of blended
products at Llansantffraid mill increased by 42% during the period.
Our raw material trading business had a successful period and worked closely
with new colleagues at Glasson to maximise margins and volumes.
Arable Division
Fertiliser sales returned to a more normal buying pattern and volumes (on an
orders received basis) increased by 20%. We expect this buying pattern to
continue, helped by the increased confidence within the arable sector.
Rationalisation in UK fertiliser manufacturing continues with news that Yara
International, the world's leading producer of mineral fertilisers, has
purchased a 30% stake in Kemira Growhow, who itself is proposing a merger with
Terra Fertiliser. The outcome of this consolidation could be the creation of a
single national fertiliser supplier. Our volumes put us in a good position to
benefit from this development with an additional opportunity to market increased
quantities of blended fertilisers from our Lancashire plant.
Cereal seed sales improved substantially, as did those of herbage, again
benefiting from higher wheat prices. We are seeing new markets develop for
cereals in bio-fuels and starch production alongside the more traditional
outlets.
Shropshire Grain achieved greater volumes; the more variable crop available from
the 2006 harvest benefited the business and generally improved margins.
Stores Division
The Stores Division generally performed well. The mild weather affected the
sales of seasonal animal nutrition products but other key retail product areas
improved, with pet food increasing by 4%, animal health care products by 6% and
equine products by 6%. There was a strong performance from the hardware product
group where sales grew by 12%.
Our store improvement programme is ongoing and we are continuing to widen our
product range to cater for both the traditional agricultural customer and wider
general public. Sales are supported by extensive market research and direct
marketing initiatives, including the pet and equine club where membership is
increasing.
Our first stand-alone pet store, 'Just for Pets', opened in June, at Telford.
Customer reaction is very encouraging, and we hope to have at least one further
outlet open, at Brierley Hill in the West Midlands, before the financial year
end, subject to satisfactory lease negotiations. With the purchase of Glasson
Group, we have acquired a further store situated in Lancashire and this outlet
is currently being remodelled and developed.
Glasson Group
Glasson Group was acquired in August 2006 and enjoyed an excellent first half,
helped considerably by rising raw material markets. Turnover of £23m was
considerably ahead of budget with tonnage increases of 6% across all commodities
traded. Fertiliser volumes from Glasson's blending plant improved substantially
during the spring and the shipping activities handled more cargos and attracted
new clients for the port of Glasson.
Foxmoor
Foxmoor enjoyed considerable sales growth during the first half of the financial
year and the second half, which includes the peak sales months of May and June,
has started well. The business has benefited from lower unit power costs due to
more favourable energy pricing and has a strong order book for the remainder of
the year.
In conjunction with the Ideal Shopping Channel, we have launched a home shopping
gardening offering, which has proved to be highly successful. Sales are
considerably higher than budget and we have established a new packing and
dispatch department in Somerset to deal with the new business. We believe that
there is room for considerable growth in this market where we can offer a wider
range of group products in addition to our standard gardening offering.
Joint Ventures & Associate Companies
Joint Ventures
Wyro Developments Ltd - Wyro experienced good demand at its largest site in
Newtown, Powys and met sales targets. There has been some slowing in demand for
the more expensive properties on one of the smaller sites; however, demand at
the lower end of the price market remains strong despite the recent rise in
interest rates. We are seeking detailed planning permission on two further major
sites in Mid-Wales with a capacity for 110 dwellings.
Youngs Animal Feeds - The business enjoyed increased demand for its high fibre
equine products produced at our new plant in Staffordshire, which replaced our
production plant in Cheshire. The closure costs associated with this impact on
this year's financial result, but will bring considerable cost and efficiency
benefits for the future. We successfully launched a wild bird food brand,
'Feathered Friends' during the period. We are looking to integrate some of the
Youngs activities with those of Glasson, which operates in a similar market.
Welsh Feed Producers - Welsh Feeds Producers had a successful winter for sales,
but in common with our other feed activities, margins tightened. Extensive work
was carried out in the late spring to improve efficiency of the plant and the
recent closure of a competitor's factory in Mid Wales will help future demand.
Bibby Agriculture Ltd increased its offtake from the plant, which again helped
unit costs.
Associate Company
Wynnstay Fuels - A more volatile market made it difficult to repeat last year's
performance and, owing to the mild winter, the fuels business experienced a
slowing in sales growth for heating oils. However, overall volumes continue to
improve and the operation in North Wales established two years ago has developed
further. We are looking to acquire other distributors in our trading area to
help build market share.
Outlook
Rising costs are still an issue across many of our activities and, in the
livestock sector, the pressure on milk producers continues. Further work is
required to bring feed margins back to more acceptable levels in the second half
of the year; however, I am pleased to report that progress is encouraging.
Demand for most of our products remains good and we continue to win new business
on the basis of quality and value for money.
Our strategy of acting as a consolidator in the agriculture sector while
developing higher margin retail activities and joint ventures, continues. We are
in active negotiations for the purchase of agricultural distribution companies,
with the aim of increasing our geographical trading area and expanding our
product range.
Our 'Just for Pets' stand-alone pet stores will increase in number and we are
working to acquire established outlets to complement organic growth.
In the Arable sector there is much more confidence than the same time last year;
capacity in seed production has been reduced in the Western half of the country
recently, which will help our plant in Shropshire and we remain optimistic with
regard to the outcome of the rationalisation of the fertiliser manufacturing
industry in the UK.
We believe that our twin track strategy of acting as a consolidator in the
agricultural sector while expanding our higher margin retail activities will
continue to bring ongoing benefits. Our position as a low cost, high quality
supplier considerably strengthens this strategic approach. We remain positive
about the outcome for the current financial year.
John Davies
Chairman
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30TH APRIL 2007
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 April 30 April 31 October
2007 2006 2006
(as (as
restated) restated)
Note £'000 £'000 £'000
Revenue from continuing
operations 79,899 52,375 110,883
Cost of sales (67,398) (42,140) (91,397)
--------------------------------------
Gross Profit 12,501 10,235 19,486
Selling and distribution costs (9,109) (7,622) (14,865)
Administrative expenses (574) (556) (1,141)
Depreciation (673) (529) (1,135)
--------------------------------------
Operating profit from
continuing operations 2,145 1,528 2,345
- Share of profits in
joint ventures and
associates 2 0 0 616
--------------------------------------
Profit from continuing
operations 2,145 1,528 2,961
- Interest Receivable 122 63 196
- Interest Payable and similar
charges (304) (179) (426)
--------------------------------------
Profit before tax from
continuing operations 1,963 1,412 2,731
Taxation 3 (530) (343) (664)
--------------------------------------
Profit for the period 1,433 1,069 2,067
======================================
Earnings per share 4
- Headline 12.43p 10.76p 19.98p
- Diluted 4 11.86p 8.89p 17.21p
======================================
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30TH APRIL 2007
Unaudited Unaudited Audited
as at as at as at
30 April 30 April 31 October
2007 2006 2006
(as (as
restated) restated)
Note £'000 £'000 £'000
Non-current assets
Goodwill 3,156 2,701 3,144
Other intangible assets 10,949 2,975 3,334
Property, plant and
equipment 3,412 8,943 10,946
--------------------------------------------
17,517 14,619 17,424
-------------------------------------------
Current assets
Inventories 11,612 9,497 9,626
Trade and other 28,160 21,522 19,508
receivables
Financial assets:
- loan to joint venture 4,630 2,483 2,750
- cash and cash equivalents 480 6 1,181
-------------------------------------------
44,882 33,508 33,065
-------------------------------------------
Current liabilities
Trade and other payables (21,765) (15,317) (17,760)
Financial liabilities:
- borrowings (9,724) (5,310) (4,316)
Provisions (496) (594) (360)
-------------------------------------------
(31,985) (21,221) (22,436)
-------------------------------------------
Net current assets 12,897 12,287 10,629
Total assets less current
liabilities 30,414 26,906 28,053
-------------------------------------------
Non-current liabilities
Financial liabilities: -
borrowings (3,028) (2,242) (2,061)
Provisions (561) (219) (561)
-------------------------------------------
(3,589) (2,461) (2,622)
-------------------------------------------
Net assets 26,825 24,445 25,431
===========================================
Equity
Issued share capital 5 2,933 2,560 2,867
Share premium 7,976 5,195 7,673
Other reserves 1,582 3,960 1,582
Retained earnings 14,334 12,730 13,309
-------------------------------------------
Total equity attributable
to equity holders of the
parent company 26,825 24,445 25,431
===========================================
CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY
Share Share Profit &
capital Premium Other loss Total
reserves reserve equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 November 2005 2,438 4,253 4,735 12,195 23,621
--------------------------------------------
Inventories fair value
adjustment - IAS 41 (due to
first-time adoption of IFRS) 72 72
Share based payment (due to
first-time adoption of IFRS) (100) (100)
Restated balance sheet at
1 November 2005 2,438 4,253 4,735 12,167 23,593
-------------------------------------------
Prior period adjustment -
equity dividend paid (506) (506)
Net profit 1069 1,069
Shares issued 122 942 (775) 289
-------------------------------------------
Balance at 30 April 2006 2,560 5,195 3,960 12,730 24,445
-------------------------------------------
Net profit 998 998
Equity dividend paid (202) (202)
Shares issued 307 2,478 (2,417) 368
Fair value re-assessment
of goodwill 39 39
Adjustment in respect of ESOP (217) (217)
-------------------------------------------
Balance at 31 October 2006 2,867 7,673 1,582 13,309 25,431
-------------------------------------------
Net profit 1,433 1,433
Equity dividend paid (408) (408)
Shares issued 66 303 369
-------------------------------------------
Total shareholders' equity
at 30 April 2007 2,933 7,976 1,582 14,334 26,825
-------------------------------------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30TH APRIL 2007
Unaudited Unaudited Unaudited
six months six months year ended
ended ended 30 31 October
30 April 2007 April 2006 2006
(as (as
restated) restated)
Note £'000 £'000 £'000
Cash flow from operating
activities
Cash (used in) / generated
from operations 6 (5,914) (5,381) 2,611
Interest paid (302) (179) (426)
Tax paid (331) (240) (482)
------------------------------------------
Net cash used in operating
activities (6,547) (5,800) 1,703
------------------------------------------
Cash flows from investing
activities
Acquisition of subsidiaries,
net of cash acquired 0 0 (3,782)
Purchase of property,
plant and equipment (689) (922) (1,629)
Purchase of intangible assets (12) (200) (604)
Proceeds on sale of
property, plant and
equipment 307 0 44
Interest received 120 63 188
Proceeds on sale of
investments 0 40 40
Purchase of investments (78) 0 (182)
Dividends received 0 0 8
------------------------------------------
Net cash used in investing
activities (352) (1,019) (5,917)
------------------------------------------
Equity dividends paid (408) (508) (708)
Cash flows from financing
activities
Proceeds from the issue of
share capital 369 289 657
Repayments of borrowings (595) (257) (530)
Net proceeds from drawdown
of new loans 1,863 3,000 3,000
Finance lease principal
re-payments (150) (166) (338)
------------------------------------------
Net cash generated from
financing activities 1,487 2,866 2,789
------------------------------------------
Net decrease in cash and cash
equivalents (5,820) (4,461) (2,133)
Cash and cash equivalents
at beginning of period (696) 1,437 1,437
------------------------------------------
Cash and cash equivalents at
end of period (6,516) (3,024) (696)
------------------------------------------
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation.
The Interim Report was approved by the Board of Directors on 19th June 2007.
The consolidated interim financial statements have been prepared in accordance
with the IFRS accounting policies that are set out below and are those that are
expected to apply for the full year 2007 financial statements. A summary of
these key accounting policies is set out below in the Appendix to this report.
In selecting the accounting policies, the Directors have made assumptions about
the IFRS expected to be applied when the first annual IFRS statements are
prepared for the year ending 31 October 2007.
Further standards and interpretations may be issued that could be applicable for
the financial years beginning on or after 1 January 2007 or that are applicable
to later accounting periods but with the option for companies to adopt for
earlier periods. The Group's first annual financial statements prepared under
IFRS may, therefore, be prepared in accordance with different accounting
policies to those used in the preparation of the financial information in this
document.
The financial information for the Group for the year ended 31 October 2006 set
out above does not constitute 'statutory accounts' within the meaning of Section
240 of the Companies Act 1985. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditors report was not
qualified and did not contain statements under section 237(2) or (3) of the
Companies Act 1985. The information for the year ended 31st October 2006 has
been extracted from the statutory accounts of Wynnstay Group plc and restated
under IFRS.
The financial information for the six months ended 30th April 2007 and for the
six months ended 30th April 2007 is unaudited.
2. Consolidation of share of results of profits in joint ventures & associates.
As the Group has a policy of using audited accounts for the consolidation of its
share of the profits of joint venture & associate activities, no such
consolidation has occurred during the six months to April 2007. Relevant results
will be accounted for during the second half of the financial year.
3. Taxation.
The tax charge for the six months to 30th April 2007 is based on an
apportionment of the estimated tax charge for the full year.
4. Earnings per Share.
Earnings per share have been calculated based on the profit attributable to
ordinary shareholders of £1,433,000 (six months ended 30 April 2006 : profit of
£1,069,000) and the weighted average number of shares in issue of 11,526,432
(2006: 9,931,675). Diluted earnings per share are based on the aggregate
weighted average number of shares and all potential shares, adjusted for the
proposed issue price, of 12,080,448 (2006: 12,016,324).
5. Share capital and Convertible Loanstock.
During the current period a total of 263,957 (2006: 491,950) shares were issued
with an aggregate nominal value of £65,990 (2006: £122,988) fully paid up for
equivalent cash of £369,402 (2006: £1,064,508). Included in these issues were
64,517 (2006: 73,943) shares allotted to shareholders exercising their rights to
receive dividends under the Company's scrip dividend scheme and nil (2006:
410,132) allotted to holders of Convertible Loanstock in the Company. At the
date of this report a total of 11,731,257 shares are in issue.
6. Cash (used in) / generated from operations.
Unaudited Unaudited Audited
as at as at as at
30 April 30 April 31 October
2007 2006 2006
(as (as
restated) restated)
£'000 £'000 £'000
Profit for the period from
operations 1,433 1,069 2,067
Taxation 331 240 482
Depreciation of tangible fixed
assets 673 529 1,135
Amortisation of other intangible
fixed assets 0 125 1
Profit on sale of property,
plant and equipment (156) 0 (27)
Interest payable 302 179 426
Interest receivable (120) (63) (188)
Dividends received 0 0 (8)
Group share of associates and
joint ventures' operating profit 0 0 (616)
Loans made to joint venture (1,880) (1,233) (1,500)
(Increase) / decrease in
inventories (1,986) (1,141) 728
(Increase) / decrease in trade
and other receivables (8,652) (3,614) 1,701
Increase / (decrease) in
creditors 4,141 (1,472) (1,340)
Increase / (decrease) in
provisions 0 0 (250)
-----------------------------------------
Cash (used in) / generated from
operations (5,914) (5,381) 2,611
=========================================
7. Glasson Group (Lancaster) Limited
The Group purchased Glasson Group (Lancaster) Limited on 4 August 2006. Glasson
Group (Lancaster) Limited contributed £22,868,829 to turnover and £488,952 to
operating profit in the half year to 30 April 2007.
APPENDIX
Reporting under International Financial Reporting Standards (IFRS)
For the year ended 31 October 2007, Wynnstay Group plc will produce its
consolidated financial statements in accordance with the IFRS for the first
time. The financial information presented in its interim financial statements
for the six months ended 30 April 2007 has been prepared on the basis of the
IFRS expected to be applicable at 31 October 2007.
To help understand the impact of the likely transition to IFRS, reconciliations
have been produced to show the changes made to statements previously reported
under UK GAAP in arriving at the equivalent statements under IFRS. The following
are the six unaudited reconciliations which are included in this Appendix:
a) Consolidated balance sheet and equity at 1 November 2005
b) Consolidated income statement for the six months ended 30 April
2006
c) Consolidated balance sheet and equity at 30 April 2006
d) Consolidated income statement for the year ended 31 October 2006
e) Consolidated balance sheet at 31 October 2006
f) Consolidated cash flows
First time adoption
IFRS 1 'First time adoption of International Financial Reporting Standards' sets
out the approach to be followed when IFRS are applied for the first time. In
general, IFRS 1 requires that accounting policies be applied retrospectively
although there are certain exceptions where the cost of compliance is deemed to
exceed the benefits to the users of financial statements. Where applicable, the
options selected by management under IFRS 1 are set out in the footnotes to the
IFRS reconciliation and later in this Appendix.
RECONCILIATION BETWEEN UK GAAP REPORTING & IFRS
a) Reconciliation of consolidated balance sheet and equity at 1 November 2005
UK GAAP Opening IFRS
balance
adjustment
- Effect of
transition
to IFRS
Footnote £'000 £'000 £'000
Non-current assets
Goodwill 2,501 2,501
Other intangible assets 2,763 2,763
Property, plant & equipment 8,769 8,769
-------------------------------------
14,033 14,033
-------------------------------------
Current assets
Inventories ii 8,284 72 8,356
Trade and other receivables 17,908 17,908
Financial assets: 1,250 1,250
- cash and cash equivalents 1,646 1,646
-------------------------------------
29,088 72 29,160
-------------------------------------
Current liabilities
Trade and other payables iii (16,411) (100) (16,511)
Financial liabilities -
borrowings (1,789) (1,789)
Provisions (516) (516)
-------------------------------------
(18,716) (100) (18,816)
-------------------------------------
Net current assets 10,372 (28) 10,344
-------------------------------------
Total assets less current
liabilities 24,405 (28) 24,377
-------------------------------------
Non-current liabilities
Financial liabilities -
borrowings (345) (345)
Provisions (439) (439)
-------------------------------------
(784) (784)
-------------------------------------
Net assets 23,621 (28) 23,593
-------------------------------------
Equity
Issued share capital 2,438 2,438
Share premium 4,253 4,253
Other reserves 1,582 1,582
Loanstock redemption 3,153 3,153
Retained earnings ii, iii 12,195 (28) 12,167
-------------------------------------
Total equity attributable to
equity holders of the parent
company 23,621 (28) 23,593
-------------------------------------
b) Reconciliation of consolidated income statement for the six months ended 30
April 2006
UK GAAP Effect of IFRS
transition
to IFRS
(current
period)
Footnote £'000 £'000 £'000
Revenue from continuing
operations 52,375 52,375
Cost of sales ii (42,140) (42,140)
------------------------------------
Gross Profit 10,235 10,235
Selling and distribution
costs (7,622) (7,622)
Administrative expenses i, iii (536) (20) (556)
Depreciation (529) (529)
Amortisation of intangible
assets (125) 125 0
------------------------------------
Operating profit 1,423 105 1,528
Share of profits in joint
ventures 0 0
Net interest payable (116) (116)
------------------------------------
Profit before taxation 1,307 105 1,412
Tax on profit (313) (30) (343)
------------------------------------
Profit for the period 994 75 1,069
====================================
Attributable to:
Equity holders of the parent
company 994 75 1,069
------------------------------------
Profit for the period 994 75 1,069
====================================
c) Reconciliation of consolidated balance sheet and equity at 30 April 2006
UK GAAP Opening Effect of IFRS
balance transition
adjustment to IFRS
to IFRS (current
period)
Footnote £'000 £'000 £'000 £'000
Non-current assets
Goodwill i 2,576 125 2,701
Other intangible
assets 2,975 2,975
Property, plant &
equipment 8,943 8,943
-------------------------------------------------------
14,494 125 14,619
-------------------------------------------------------
Current assets
Inventories ii 9,425 72 0 9,497
Trade and other
receivables 21,522 21,522
Financial assets 2,483 2,483
- cash and cash
equivalents 6 6
-------------------------------------------------------
33,436 72 0 33,508
-------------------------------------------------------
Current liabilities
Trade and other iii
payables (15,197) (100) (20) (15,317)
Financial liabilities
- borrowings (5,310) (5,310)
Current tax
liabilities (594) (594)
-------------------------------------------------------
(21,101) (100) (20) (21,221)
-------------------------------------------------------
Net current assets 12,335 (28) (20) 12,287
-------------------------------------------------------
Total assets less
current liabilities 26,829 (28) 105 26,906
-------------------------------------------------------
Non-current
liabilities
Financial liabilities -
borrowings (2,242) (2,242)
Provisions (189) (30) (219)
-------------------------------------------------------
(2,431) 0 (30) (2,461)
-------------------------------------------------------
Net assets 24,398 (28) 75 24,445
=======================================================
Equity
Issued share capital 2,560 2,560
Share premium 5,195 5,195
Other reserves 1,582 1,582
Loanstock redemption 2,378 2,378
Retained earnings i, ii,iii 12,683 (28) 75 12,730
-------------------------------------------------------
Total equity
attributable to
equity holders of the
parent company 24,398 (28) 75 24,445
=======================================================
d) Reconciliation of consolidated income statement for the year ended 31 October
2006
UK GAAP Effect of IFRS
transition
to IFRS
(current
period)
Footnote £'000 £'000 £'000
Revenue from continuing
operations 110,883 110,883
Cost of sales ii (91,394) (3) (91,397)
-------------------------------------
Gross Profit 19,489 (3) 19,486
Selling and distribution
costs (14,865) (14,865)
Administrative expenses (1,135) (6) (1,141)
Depreciation (1,135) (1,135)
Amortisation of intangible i
assets (262) 262 0
-------------------------------------
Operating profit 2,092 253 2,345
Net interest payable (230) (230)
Share of profits in joint
ventures 672 (56) 616
Profit before taxation 2,534 197 2,731
Tax on profit (664) (664)
-------------------------------------
Profit for the period iii 1,870 197 2,067
-------------------------------------
Attributable to:
Equity holders of the parent
company 1,870 197 2,067
-------------------------------------
Profit for the period 1,870 197 2,067
-------------------------------------
e) Reconciliation of consolidated balance sheet and equity at 31 October 2006
UK GAAP Opening Effect of IFRS
balance transition to
adjustment IFRS (current
to IFRS period)
Footnote £'000 £'000 £'000 £'000
Non-current assets
Goodwill i 2,882 262 3,144
Other intangible
assets 3,390 (56) 3,334
Property, plant &
equipment 10,946 10,946
--------------------------------------------------
17,218 0 206 17,424
--------------------------------------------------
Current assets
Inventories ii 9,557 72 (3) 9,626
Trade and other
receivables 19,508 19,508
Financial assets 2,750 2,750
- cash and cash
equivalents 1,181 1,181
--------------------------------------------------
32,996 72 (3) 33,065
--------------------------------------------------
Current liabilities
Trade and other iii
payables (17,654) (100) (6) (17,760)
Financial liabilities -
borrowings (4,316) (4,316)
Provisions (393) 33 (360)
--------------------------------------------------
(22,363) (100) 27 (22,436)
--------------------------------------------------
Net current assets 10,633 (28) 24 10,629
--------------------------------------------------
Total assets less
current liabilities 27,851 (28) 230 28,053
--------------------------------------------------
Non-current liabilities
Financial liabilities -
borrowings (2,061) (2,061)
Deferred tax ii
liabilities (528) (33) (561)
--------------------------------------------------
(2,589) (33) (2,622)
--------------------------------------------------
Net assets 25,262 (28) 197 25,431
==================================================
Equity
Issued share capital 2,876 2,867
Share premium 7,673 7,673
Other reserves 1,582 1,582
Retained earnings i,ii,iii 13,140 (28) 197 13,309
--------------------------------------------------
Total equity
attributable to equity
holders of the parent
company 25,262 (28) 197 25,431
==================================================
f) Reconciliation of cashflows
There is no difference between the cash flows previously reported under UK GAAP
and those reported under IFRS. Certain presentational difference between UK GAAP
and IFRS have been reflected in the 30 April 2007 cash flow statement.
Footnotes to the reconciliation of equity
i) Goodwill
Goodwill on business combinations (from date of transition to IFRS ) is not
amortised under IFRS 3, but is tested annually for impairment. Goodwill
amortisation charged under UK GAAP has been written back by:
* £125,000 for the six months ended 30 April 2006, and
* £262,000 for the year ended 31 October 2006.
Annual impairment reviews have not resulted in any adjustments to the carrying
values of goodwill.
ii) Inventories
Included within inventories are saleable growing stocks, comprising potted
plants and shrubs. In accordance with IAS 41 - Agriculture, these stocks, which
are classed as biological assets, have been uplifted to reflect their fair value
less estimated point-of-sale costs at the balance sheet date.
iii) Share based payments
Share based payments included Executive and employee share option schemes. Fair
value is determined at the date of the grant and is calculated using the
Black-Scholes method. Under UK GAAP an expense would have been recorded in
respect of share options granted based upon their intrinsic value (which was
considered nil as options were granted at market value). In restating the
financial results of the Group, an expense has been recorded based upon the fair
value of the share options granted.
IFRS 2 requires the fair value of all share-based payments to be charged against
the income statement over the respective vesting periods. The Group has taken
advantage of the transitional provisions of IFRS 1 not to recalculate equity
settled awards granted before 7 November 2002.
SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in the preparation of the interim
financial statements for the six months ended 30 April 2007 are set out below.
Basis of consolidation
The Group's consolidated financial statements include the results of the Parent
Company and its subsidiaries up to the relevant balance sheet date. Intra-group
sales, profits and balances are eliminated on consolidation.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of the
acquisition over the fair value of the identifiable assets, liabilities and
contingent liabilities of the acquired entity at the date of acquisition.
Goodwill is recognised as an asset and reviewed for impairment annually.
Goodwill is carried at cost less any accumulated impairment losses. Any
impairment is recognised in the period in which it is identified.
Property, plant & equipment
Tangible assets are stated at cost, net of depreciation and any provision for
impairment. Depreciation is provided on all tangible fixed assets at rates
calculated to write off the cost less their estimated residual value of each
asset over its expected useful life as follows:
Freehold property 2.5% - 5% per annum straight line
Leasehold land and buildings 3% per annum straight line
Plant and machinery / office 10% - 33% per annum straight line
equipment
Motor vehicles 20% - 30% per annum straight line
Inventories
Inventories are stated at the lower of cost and net realisable value for all
stocks, with the exception of biological growing stock which is stated at fair
value less estimated point-of-sales costs.
Taxation
Current tax, including corporation tax is provided to at amounts expected to be
paid (or recovered) using tax rates enacted or substantially enacted at the
balance sheet date.
Deferred tax is accounted for using the liability method in respect of temporary
timing differences arising from differences between the carrying value of assets
and liabilities in the financial statements and the corresponding tax base used
in the computation of taxable profits.
Deferred tax assets are recognised to the extent that it is more likely than not
that they will be recovered.
Revenue recognition
Revenue (excluding VAT) from the sale of goods or services is measured at the
fair value of the consideration. Revenue is recognised when the group has
transferred the significant risks and rewards of ownership of the goods to the
buyer.
Share based payments
The Group operates a number of share option and save schemes. For all grants of
share options and awards, the date of the grant is calculated using the
Black-Scholes option pricing model and the corresponding expense is recognised
over the vesting period.
Financial instruments
Borrowings are measured at amortised cost. Trade and other receivables are
measured at cost less any provision for impairment.
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