RNS Number:6334W
Big Food Group PLC
30 May 2002
30 May 2002
THE BIG FOOD GROUP PLC
PRELIMINARY UNAUDITED RESULTS FOR THE 52 WEEKS TO 29 MARCH 2002
HIGHLIGHTS
• Strategy established and in action
• New management team in place
• Integration of Iceland, Booker and Woodward Foodservice well advanced
• Best practice corporate governance controls and procedures in place
• Operating profit £76.1 million*
• Profit before tax £42.9 million *
• Debt reduced by £100.2 million
• Adjusted earnings per share 11.4p *
• Final dividend per share 1.5p
• Encouraging results from Iceland Foods segmented store trials
* before exceptional items and goodwill amortisation.
"Although it has been tough we have made tremendous progress over the last 12
months in developing our detailed response not only to the challenges but also
to the huge opportunities that are uniquely open to us as the UK's only
integrated food group. We have put in place a first class management team,
delivered the promised synergy benefits, reduced our debt and produced financial
results that are in line with expectations. Overall, I believe that The Big
Food Group is on target at the end of the first year of our four year recovery
plan, and I remain confident that this plan will both restore shareholder value
and create real growth opportunities in the future."
- Bill Grimsey, Chief Executive
Enquiries:
The Big Food Group
Bill Grimsey - Chief Executive 020 7796 4133 on 30 May 2002
Bill Hoskins - Finance Director
Hudson Sandler
Andrew Hayes 020 7796 4133
Michael Sandler
Noemie de Andia
Chief Executive's Statement
This has been a very tough year for the Group and all its stakeholders, but also
one of considerable progress towards our strategic goals. We have built a
strategic plan, assembled an experienced management team capable of delivering
recovery, formalised the integration process between Iceland, Booker and
Woodward Foodservice, and put in place best practices with regard to corporate
governance controls and procedures. Our experience to date reinforces our
confidence about the potential of the business as the UK's only integrated food
provider.
Our new name of The Big Food Group says exactly what our business is about: big
not only in overall scale, with turnover of more than £5.2bn, but in the breadth
of our channels to market. We have diversified access to the UK consumer, and
our mission is to leverage our unique strengths as the UK's only integrated food
provider to rebuild and grow shareholder value. Last year our focus was on
developing our plans for the future, establishing their costs and benefits and
the means of financing them, and putting in place the right management team to
implement them successfully. Those tasks are now on track, giving us the right
strategy and the right people to implement the next stage of our Four Year
Recovery Plan this year: establishing the Platform for Growth.
A key management objective is the stabilisation of the Iceland business. We
were disappointed not to have achieved flat like-for-like sales during the year
but the performance of Iceland during the year reinforces our view of the need
to implement quickly the key elements of our strategic review.
Results
We have delivered financial results in line with our budgets and market
expectations. Profit before tax, amortisation of goodwill and exceptional items,
was £42.9m, compared with £40.1m in the preceding 65 weeks. Adjusted earnings
per share were 11.4p (65 weeks to 31 March 2001: 10.1p). Net sales were £5.2bn,
compared with £4.9bn (restated) in the preceding 65 weeks. Operating profit
before goodwill amortisation and operating exceptional items was £76.1m (65
weeks to 31 March 2001: £76.0m).
Forecast synergies of £21.1m from the integration of Iceland and Booker were
delivered to plan.
We have also achieved a significant reduction in debt, with net borrowings at
the year end of £404.2m compared with £504.4m at 31 March 2001. This
demonstrates the cash generative nature of our businesses, especially Booker.
Dividend
A final dividend is proposed of 1.5p (2000/01: nil) bringing the total dividend
for the year to 2.5p (2000/01: 2.2p). The final dividend is payable on 26 July
2002 to shareholders on the share register at 28 June 2002.
Sales
Net sales for the 52 weeks were £5,220m (65 weeks to 31 March 2001: £4,950m
(restated)) and can be broken down as follows:
£m
Booker 3,544
Woodward 87
Iceland 1,589
Group 5,220
Like-for-like sales for the same period were as follows:
Group 0.3%
Booker 0.9%
- tobacco 1.0%
- non tobacco 0.8%
Woodward 19.4%
Iceland Foods -1.8%
Key features of performance by the main business units were:
Booker made encouraging progress, with like-for-like sales up 0.9% despite a
generally flat cash and carry market. Non-tobacco sales grew by 0.8%, with
sales of higher margin lines including meat, frozen food and grocery lines for
the catering sector progressing well in the second half. Phonecard sales
continued to fall steeply, in line with market trends, while tobacco was
affected by the fact that the Chancellor did not deliver a Budget speech during
this financial year.
Woodward Foodservice continued to achieve strong like-for-like sales growth,
moderating in the latter part of the year as we reached the anniversary of a
major national account gain.
Iceland Foods. Like-for-like sales (measured net of promotions) for the year
were down 1.8%, reflecting declines over the important Christmas trading period
and in the final quarter. Reduced customer footfall was partially balanced by
an increase in the average basket size. Experience has taught us that we had
underestimated the dependence of the Iceland business on tactical promotions to
sustain like-for-like sales and these will continue as we progressively
implement our long term plan. Performance has reinforced the importance of
launching strategic initiatives to put Iceland Foods on an altogether sounder
footing by responding to the needs of its customers more effectively. This
forms the basis of the new format segmentation programme now under trial.
Home Shopping achieved encouraging like-for-like sales growth whilst making good
progress in establishing a pilot dedicated pick centre based at Booker's Sunbury
site and the successful launch of its new web site.
Operating Profit
The divisional analysis of operating profit was as follows:
Before synergies Synergies After synergies
£m £m £m
Booker 41.4 13.2 54.6
Woodward (1.7) 0.1 (1.6)
Iceland 15.3 7.8 23.1
_______ _______ _______
55.0 21.1 76.1
_______ _______ _______
Realised synergies from the merger of Booker and Iceland at £21.1m were in line
with expectations. Further progress is expected during 2002/03 and these
synergies are expected to annualise at £30 million going forward.
Exceptional Items
Exceptional items for the fifty two weeks included the following:
£m
Integration and strategic review costs 7.9
June 2001 bank facility costs 2.0
Write down of investment 1.3
Other (0.8)
Operating exceptional items 10.4
Profit on disposal of fixed assets (4.2)
6.2
Exceptional interest payable 1.7
7.9
The principal elements of operating exceptional items of £10.4m are integration,
strategic review and rescheduling of June 2001 bank facility costs comprising
principally professional fees.
The write down of investments relates to the mark to market of shares held in an
ESOP trust that are not allocated under the various group share incentive
schemes.
The £1.7m exceptional interest payable represents arrangement fees associated
with renegotiation of our bank facilities in 2001.
Cash Flow
Cash flow generation was strong during the year with the following components:
£m
Operating profit before exceptional items 76.1
Depreciation and LTIP amortisation 81.6
157.7
Interest (40.3)
Tax 8.0
Dividends (3.4)
122.0
Working capital 32.3
Capital expenditure (net) (27.4)
Provisions (8.7)
Operating exceptional items (19.5)
Other 1.5
Net cash flow 100.2
Net debt 1 April 2001 (504.4)
Net debt 29 March 2002 (404.2)
Working capital improvements of £32.3m included the benefit of inventory
reductions, which have been achieved through more effective supply chain
management.
Capital expenditure was constrained whilst strategic initiatives were developed.
Approximately £19m of capital expenditure projects approved during 2001/02
will be incurred during 2002/03. Disposals of fixed assets, primarily property,
realised £18.4m.
Exceptional items included cash flow amounts relating to items charged to profit
and loss in 2000/01 including provisions in respect of organic vegetables.
The Company received tax refunds in respect of prior periods of £9m.
Refinancing
We have made good progress in putting in place a refinancing package to fund the
remaining three years of our recovery strategy as explained on 6 March 2002.
Further details of the proposed refinancing package were announced with the
release of the Class I circular on 21 May 2002. It is anticipated that the sale
and leaseback of properties for £129.3m, the issue of a 10 year high yield bond
for £150.0m, and a five year senior credit facility of £300m will be completed
shortly after the EGM on 14 June 2002.
With respect to the proposed high yield bond issue, Standard and Poor's and
Moody's have issued corporate (senior implied) credit ratings of BB+ and Ba1
respectively.
Pension Scheme
The triennial valuation of our pension scheme showed that it would cost an
additional £10m per annum from the recommencement of company contributions to
maintain the final salary scheme for approximately 4,400 colleagues. The
continuing decline in world equity markets then left our scheme underfunded by
approximately £65m at 31 December 2001. At that date, the scheme's assets were
invested approximately 30% in bonds following a change by the Trustees to adopt
a more defensive investment policy. Taken together, these developments led us to
the difficult decision to cease benefit accrual under the defined benefit
section of the scheme in respect of service after 31 July 2002. The Company has
committed to making good this deficit over the average working lives of scheme
members. For the next three years this will require contributions of
approximately £7.3m per annum. Thereafter, the position will be reviewed when
the results of the next triennial valuation are known.
Management and Employees
During the year we made a series of senior management appointments. We were
pleased to have succeeded in attracting high calibre people to all parts of the
business. The management teams of each business are concentrating on
implementing our strategic plans.
Further awards are proposed under the Company's Long Term Incentive Plan ("LTIP
") which this year will include approximately 2,000 employees.
Outlook
The Company has made good progress in implementing its strategic initiatives to
recover the business. The first Iceland trial store has been opened in each of
the key formats identified (Core plus, Core, Freezer centre and Convenience) and
early like-for-like sales performance is encouraging.
For the period to 24 May 2002 these stores have achieved the following
like-for-like sales increases
New format Days Like-for-like sales
Core plus 87 31%
Core 66 31%
Freezer centre 60 1%
Convenience store 36 17%
The Company intends to continue the development of these formats by trialing 20
stores this year.
On 21 May 2002 we announced that the Group's trading for the 6 weeks ended 10
May 2002 showed like for like sales (adjusted for Easter) of +2.2%. In order to
keep investors fully informed at this stage of the refinancing process, the
Board is updating its disclosure on sales to the 8 weeks to 24 May 2002. This
shows the Group's like for like sales (adjusted for Easter) for the 8 weeks
ended 24 May 2002 of +0.3%; this result includes the impact of the timing of
this year's late May Bank Holiday in comparison to last year. Like for like
sales for the Group and its business units were as follows:
8 weeks to 24 May 2002 8 weeks to 24 May 2002
Like for like sales Adjusted for Easter
Group -1.0% 0.3%
Booker 1.0% 1.3%
- tobacco 0.2% 0.3%
- non tobacco 1.7% 2.1%
Woodward 8.0% 9.7%
Iceland Foods -6.2% -2.4%
This performance shows that the initiatives currently in place to grow sales at
Booker and to develop Woodward's product ranges are beginning to have an impact
on their trading results.
In addition to the timing of Bank Holidays, Iceland like for like sales during
the period are impacted by comparison to the launch of heavy promotional
activity (including the successful glassware promotion). Moreover, short-term
like for like sales comparisons are by nature volatile and will remain so while
the Group continues to implement strategic initiatives to grow the Iceland
business.
The Board believes that overall The Big Food Group is on target at the end of
the first year of our four year recovery plan, and remains confident that this
plan will both restore shareholder value and create real growth opportunities.
Notes to the financial accounts
This preliminary statement for the 52 weeks to 29 March 2002 includes unaudited
figures. Audited information will be released on 19 June 2002 pending the
satisfactory outcome of the refinancing of the Company's existing bank
facilities. Subject to completion of the refinancing described above, the
accounts have been prepared on a going concern basis.
These unaudited preliminary results were issued in accordance with Rule 12.40 of
the Listing Rules of the UK Listing Authority. Rule 12.40 (a) requires that the
preliminary statement of annual results must:
1. have been agreed with the company's auditors;
2. show the figures in the form of a table consistent with the presentation
to be adopted in the annual accounts for the financial year, including at least
the items required for a half yearly report;
3. if the auditor's report is likely to be qualified, give details of the
nature of the qualification; and
4. include any significant additional information necessary for the purpose
of assessing the results being announced.
We agreed our preliminary announcement of annual results with our auditors, who
performed their work in relation hereto in accordance with the UK Auditing
Practices Board Bulletin 1998/7, "The auditors' association with preliminary
announcements." The directors, having followed the procedures noted above,
believe that the results disclosed herein will not change unless there are post
balance sheet adjusting events and believe that, provided the refinancing
described above (including the sale and leaseback transaction, the new senior
credit facility and the high yield bond) is completed, the audit opinion issued
thereafter by PricewaterhouseCoopers will not be qualified.
This announcement is only for circulation to persons to whom it may lawfully be
issued in circumstances in which Section 21(1) of the Financial Services and
Markets Act 2000 does not apply to the Company.
This announcement is not an offer for sale of securities in the United States.
The High Yield Bonds may not be sold in the United States absent registration or
an exemption from registration under the U.S. Securities Act of 1933, as
amended. The Big Food Group plc does not intend to register the offering of the
High Yield Bonds in the United States or conduct a public offering of these in
the United States. Any offering of the High Yield Bonds in the United States
will be made only by means of an offering memorandum, which will contain
detailed information about the company and its management and financial
statements. In connection with the offering of the High Yield Bonds the
underwriting therefor may engage in transactions that stabilise, maintain or
otherwise affect the price of the High Yield Bonds in accordance with the
stabilising rules of the Financial Services Authority.
Group Profit and Loss Account
For the 52 weeks ended 29 March 2002
52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
Before Exceptional Total (Restated)
exceptional items
items
(Unaudited) (Unaudited) (Unaudited) (Audited)
Note £m £m £m £m
Turnover 1 5,220.4 - 5,220.4 4,949.7
Cost of sales 2 (5,039.4) - (5,039.4) (4,814.7)
---------------- ---------------- ---------------- ----------------
Gross profit 181.0 - 181.0 135.0
Administrative expenses 2 (127.1) (10.4) (137.5) (213.1)
Operating profit before goodwill and operating 1 76.1 - 76.1 76.0
exceptional items
Goodwill amortisation (22.2) - (22.2) (16.9)
Operating exceptional items 5 - (10.4) (10.4) (137.2)
Operating profit/(loss) 1 & 3 53.9 (10.4) 43.5 (78.1)
Profit on disposal of fixed assets 5 - 4.2 4.2 -
---------------- ---------------- ---------------- ----------------
Profit/(loss) on ordinary activities before 53.9 (6.2) 47.7 (78.1)
interest and taxation
Interest payable (net) 6 (33.2) (1.7) (34.9) (43.3)
---------------- ---------------- ---------------- ----------------
Profit/(loss) on ordinary activities before
taxation 20.7 (7.9) 12.8 (121.4)
========= =========
Tax on profit/(loss) on ordinary activities 7 (3.5) 3.1
---------------- ----------------
Profit/(loss) for the period 9.3 (118.3)
Dividends 8 (8.4) (7.2)
---------------- ----------------
Retained profit/(deficit) for the period 0.9 (125.5)
========= =========
Pence Pence
Earnings per ordinary share - basic: 9 2.8 (43.5)
- adjusted: 9 11.4 10.1
- diluted: 9 2.8 (43.5)
All operations in the current and prior period are continuing.
Group Statement of Total Recognised Gains and Losses
For the 52 weeks ended 29 March 2002
52 weeks 65 weeks
ended ended
29 March 2002 31 March 2001
(Unaudited) (Audited)
£m £m
Profit/(loss) for the financial period 9.3 (118.3)
Exchange movements - (1.6)
-------------- --------------
Total recognised gains/(losses) for the period 9.3 (119.9)
======== ========
Reconciliation of Movement in Shareholders' Funds
For the 52 weeks ended 29 March 2002
52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
(Unaudited) (Audited)
£m £m
Total recognised gains and losses 9.3 (119.9)
Dividends paid and proposed (8.4) (7.2)
New share capital allotted 1.5 347.4
Quest contribution - (0.9)
--------------- ---------------
Net increase in shareholders' funds 2.4 219.4
Shareholders' funds at the beginning of the period 400.1 180.7
--------------- ---------------
Shareholders' funds at the end of the period 402.5 400.1
========= =========
Balance Sheets
At 29 March 2002
Group Company
Note
29 March 2002 31 March 2001 29 March 2002 31 March 2001
(Unaudited) (Audited) (Unaudited) (Audited)
£m £m £m £m
Fixed assets
Intangible assets 10 405.6 427.8 - -
Tangible assets 11 614.6 664.6 - -
Investments 12 11.2 15.1 501.0 504.9
-------------- -------------- -------------- --------------
1,031.4 1,107.5 501.0 504.9
-------------- -------------- -------------- --------------
Current assets
Stocks 13 296.6 360.0 - -
Debtors due within one year 14 142.3 139.6 447.9 471.9
Short term deposits 4.6 5.3 - -
Cash at bank and in hand 36.8 59.1 - -
-------------- -------------- -------------- --------------
480.3 564.0 447.9 471.9
Creditors due within one year 15 (1,049.6) (783.2) (459.3) (119.0)
-------------- -------------- -------------- --------------
Net current (liabilities) / assets (569.3) (219.2) (11.4) 352.9
-------------- -------------- -------------- --------------
Total assets less current liabilities 462.1 888.3 489.6 857.8
Creditors due after one year 16 (9.1) (429.1) (5.3) (375.0)
Provisions for liabilities and charges 17 (50.5) (59.1) - -
-------------- -------------- -------------- --------------
402.5 400.1 484.3 482.8
======== ======== ======== ========
Capital and reserves
Called up share capital 19 34.3 34.1 34.3 34.1
Share premium account 20 17.7 16.4 17.7 16.4
Merger reserve 20 344.5 344.5 330.4 330.4
Profit and loss account 20 6.0 5.1 101.9 101.9
-------------- -------------- -------------- --------------
Equity shareholders' funds 402.5 400.1 484.3 482.8
======== ======== ======== ========
Group Cash Flow Statement
For the 52 weeks ended 29 March 2002
52 weeks ended 65 weeks ended
Note 29 March 2002 31 March 2001
(Unaudited) (Audited)
£m £m
Cash flow from operating activities 24 161.8 100.4
Servicing of finance 25 (40.3) (36.8)
Taxation refunded/(paid) 8.0 (15.6)
Capital expenditure and financial investment 25 (27.4) (49.1)
Acquisitions - (23.5)
Equity dividends paid (3.4) (15.8)
----------------- -----------------
Cash inflow/(outflow) before use of liquid resources and financing 98.7 (40.4)
Management of liquid resources:
Net inflow from short-term deposits 0.7 7.3
Financing 25 (81.0) 17.6
----------------- -----------------
Increase / (decrease) in cash for the period 18.4 (15.5)
========== ==========
Reconciliation of net cash flow to movement in net debt:
Increase / (decrease) in cash for the period 26 18.4 (15.5)
Cash outflow/(inflow) from debt and lease financing 26 82.5 (14.6)
Cash inflow from liquid resources 26 (0.7) (7.3)
Loans acquired with subsidiary 26 - (298.5)
----------------- -----------------
Movement in net debt in the period 100.2 (335.9)
Net debt at start of period 26 (504.4) (168.5)
----------------- -----------------
Net debt at end of period 26 (404.2) (504.4)
========== ==========
The prior year figures have been adjusted to show £6.9m bank facility fees as
servicing of finance rather than an exceptional cost in cash flow from
operating activities.
Basis of Preparation and Accounting Policies
These preliminary accounts, which are unaudited, do not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. The
accounts for the 65 weeks ended 31 March 2001 have been extracted from the full
accounts, modified for the accounting policy change noted below, which have been
filed with the Registrar of Companies. The Auditors' Report on these accounts
was unqualified and did not contain any statement under section 237 of the
Companies Act 1985.
A summary of the Group's principal accounting policies is set out below.
Following the implementation of FRS 18, the group has reviewed its accounting
policies. The only significant effect is to restate the comparative amounts for
turnover and cost of sales by a reduction of £329.2m for the 65 weeks ended 31
March 2001 reflecting the Group's revised policy of excluding sales incentives
from turnover. Turnover and costs of sales for the 52 weeks ended 29 March 2002
would have been £293.3m higher without this change in policy. With the exception
of this change the accounting policies have been applied consistently throughout
the period and the prior period.
In November 2000, the Accounting Standards Board issued FRS 17 "Retirement
Benefits". The Group has continued to account for pensions in accordance with
SSAP 24. The phased transitional disclosures required by FRS 17 are presented in
note 23. Full implementation of FRS 17 will be mandatory for the Group for the
period ending 31 March 2004.
Accounting principles
The accounts have been prepared under the historical cost convention in
accordance with applicable Accounting Standards. A summary of the more
important group accounting policies is set out below.
Basis of consolidation
The Group accounts consolidate the accounts of The Big Food Group plc and all of
its subsidiary undertakings. The results of subsidiaries acquired or sold during
the period are included in the profit and loss account from the date of
acquisition or until the date of disposal, or when the control passes if
different.
No profit and loss account is presented for the parent company, The Big Food
Group plc, as permitted by Section 230 of the Companies Act 1985.
Goodwill
For acquisition made on or after 4th January 1998 goodwill arising in connection
with the acquisitions of subsidiary undertakings and businesses is capitalised
and amortised over its estimated economic life to a maximum of 20 years.
Goodwill arising on acquisition of subsidiary undertakings and businesses prior
to 3rd January 1998 has been written off against reserves, and was not restated
on implementation of FRS10. Goodwill is reviewed for impairment at the end of
the first full year following the acquisition and in subsequent periods if
events or changes in circumstances indicate that the carrying value may not be
recoverable. If a subsidiary, associate or business is subsequently sold or
closed, any goodwill arising on acquisition that was written off directly to
reserves or that has not been amortised through the profit and loss account is
taken into account in determining the profit or loss on sale or closure.
Turnover
Turnover is the sales value of goods and services sold in the ordinary course of
business, excluding sales incentives and value added tax. All turnover arises
from continuing activities in the United Kingdom and Republic of Ireland.
Cost of sales
Cost of sales represents all costs incurred up to the point of sale including
the operating expenses of the trading outlets.
Accounting Policies (continued)
Stocks
Stocks are stated at the lower of cost and net realisable value. Cost is
calculated using the retail method in the Retail business and by reference to
purchase prices in the other businesses. Net realisable value is defined as
selling price less further costs expected to be incurred to disposal.
Appliance repair and food insurance commission
The revenue from the sale of appliance repair and food insurance contracts
entered into by customers is credited to the profit and loss account in
instalments over the period of the contracts.
Pension costs
The Group operates defined benefit and defined contribution pension schemes to
which it makes contributions on the advice of actuaries to fund the retirement
benefits of employees within the schemes. The expected cost in respect of
defined benefit schemes is charged against profit over the expected service
lives of current employees in the schemes, based on the advice of independent
actuaries. Variations to the regular cost, arising from periodic actuarial
valuations, are charged or credited to profit over the remaining service lives
of scheme members.
The cost in respect of defined contribution schemes is charged to profit in the
period in which contributions become payable.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction or at the contracted rate if the transaction is covered by a
forward exchange contract. Monetary assets and liabilities denominated in
foreign currencies are translated at the rate of exchange ruling at the balance
sheet date or if appropriate at the forward contract rate. All differences are
taken to the profit and loss account.
The accounts of overseas subsidiary undertakings are translated at the rate of
exchange ruling at the balance sheet date. The exchange differences arising on
the retranslation of opening net assets are taken directly to reserves.
Leasing commitments
Assets held under finance leases, which are those where substantially all the
risks and rewards of ownership of the asset have passed to the Group, are
capitalised in the balance sheet and are depreciated over their useful lives.
The capital element of future obligations under the leases is included as a
liability in the balance sheet. The interest element of the rental obligations
is charged to the profit and loss account over the period of the lease and
represents a constant proportion of the balance of capital repayments
outstanding.
Rentals payable under operating leases are charged to the profit and loss
account on a straight line basis over the term of the lease.
Property provisions
Where leasehold properties are no longer used in the business, a provision is
made for the present value of the directors' estimate of future cash flows for
each lease. The discount unwinds on a systematic basis. The provision is
reviewed on a regular basis.
Accounting Policies (continued)
Fixed assets
Fixed assets are stated at cost less accumulated depreciation.
Depreciation is provided on a straight line basis at rates which write off the
cost less estimated residual value of each asset evenly over its expected useful
life as follows:
Plant and equipment 4% to 20% per annum
Motor vehicles 25% per annum
All freehold property, other than freehold land, is depreciated over 50 years.
Leasehold premiums and improvements are depreciated in equal annual instalments
over the lesser of the unexpired term of the lease and 50 years. However, that
element of leasehold premium paid to acquire a beneficial rental is written off
over the period to the first open market rent review.
Investment in own shares held in trust
Shares held in the ESOP trust are amortised over the period of the awards to
which they relate. Shares that are not yet allocated to individuals are carried
at cost or marked to market value, if the directors consider there has been a
permanent diminution in their value.
Deferred taxation
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date, with the following
exceptions:
• deferred taxation assets are only recognised if it is considered more
likely than not that there will be suitable profits from which the future
reversal of the underlying timing differences can be deducted
• provision is made for gains on disposal of fixed assets that have been
rolled over into replacement assets only where, at the balance sheet date, there
is a commitment to dispose of the replacement assets
• provision is made for the tax that would arise on remittance of the
retained earnings of overseas subsidiaries only to the extent that, at the
balance sheet date, dividends have been accrued as receivable
Deferred taxation is measured on a non-discounted basis at the tax rates that
are expected to apply in the periods in which timing differences reverse, based
on tax rates and laws enacted or substantively enacted at the balance sheet
date.
Financial instruments
The Group uses financial instruments such as interest rate swaps and forward
currency contracts to hedge against movements in both interest and currency
rates on the Group's underlying business activities.
Interest rate swaps
Interest rate swaps have been used to protect the Group from fluctuations in
interest rates on a proportion of its borrowings. Interest payable or
receivable on such swaps is accrued in the accounts in the same way as interest
arising on the underlying deposits or borrowings.
Forward exchange contracts
Forward exchange contracts are used to protect the Group from fluctuations in
exchange rates on forecast receipts and payments in foreign currencies. Gains
or losses on forward exchange contracts are recognised in the profit and loss
account in the year the underlying transaction occurs.
Notes to the Unaudited Accounts
At 29 March 2002
1. Segmental analysis of continuing operations
Turnover Profit before Net assets Turnover Loss before Net assets
tax tax
52 weeks 52 weeks 29 March 2002 65 weeks 65 weeks 31 March 2001
ended ended ended ended
29 March 2002 29 March 2002 31 March 2001 31 March 2001
(Restated)
£m £m £m £m £m £m
Wholesale 3,544.4 54.6 112.6 2,805.1 45.3 166.6
Food service 87.0 (1.6) 29.4 88.3 (4.8) 22.4
Retail 1,589.0 23.1 295.1 2,056.3 35.5 300.9
------------ ------------- ------------- ------------ ------------- -------------
5,220.4 76.1 437.1 4,949.7 76.0 489.9
======= =======
Goodwill amortisation (22.2) (16.9)
Operating exceptional items
Wholesale (3.8) (79.5)
Food service (0.2) -
Retail (6.4) (57.7)
------------ -------------
Operating profit/(loss) 43.5 (78.1)
Profit on disposal of fixed 4.2 -
assets (note 5)
Interest payable (note 6) (34.9) (43.3)
Other net liabilities (29.6) (89.8)
------------- ------------- ------------- -------------
12.8 407.5 (121.4) 400.1
======= ======= ======= =======
The goodwill amortisation relates principally to the wholesale business. £2.8m
of the profit on disposal of fixed assets relates to the wholesale business and
the balance to the retail business.
All operations are continuing and are carried out in the United Kingdom and the
Republic of Ireland.
The prior period results included only 9 months for the wholesale operation
acquired in that period.
Other net liabilities comprise: Goodwill, investments, corporation and deferred
tax, net borrowings, interest and dividends payable.
2. Cost of sales and administrative expenses
Cost of sales Administrative expenses
52 weeks 65 weeks 52 weeks 65 weeks
ended ended ended ended
29 March 2002 31 March 2001 29 March 2002 31 March 2001
(Restated)
£m £m £m £m
Before exceptional items and goodwill amortisation 5,039.4 4,760.7 104.9 113.0
Goodwill amortisation - - 22.2 16.9
Exceptional items - 54.0 10.4 83.2
------------- ------------- ------------- -------------
Total 5,039.4 4,814.7 137.5 213.1
======= ======= ======= =======
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
3. Operating profit/(loss)
52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
This is stated after charging: £m £m
Depreciation of owned assets 68.9 82.7
Depreciation of assets held under finance leases 10.1 9.3
--------------- ---------------
Total depreciation charge 79.0 92.0
Amortisation of goodwill 22.2 16.9
Amortisation of own shares held in trust 2.6 1.6
Operating leases - plant and machinery 8.0 4.4
Rent and other operating lease charges 65.0 70.0
Employee costs (note 4) 333.4 369.0
Operating exceptional items (note 5) 10.4 137.2
Auditors' remuneration for audit services 0.4 0.4
Auditors' remuneration for non audit services 0.2 0.3
========= =========
Non audit services comprises taxation and accounting advice. In addition fees of
£6.0m (2001:£0.5m) are included within operating exceptional items for
assistance in relation to consultancy services in respect of the integration and
strategy reviews.
The audit fee for the Company was £0.1m.
4. Employee costs and directors' remuneration 52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
£m £m
i) Employee costs
Wages and salaries 300.1 331.7
Social security costs 21.0 21.7
Other pension costs 12.3 15.6
------------ ------------
333.4 369.0
======= =======
The average number of persons employed by the Group was:
Number Number
Total employed 30,346 27,718
======= =======
Full time equivalent 21,703 17,298
======= =======
ii) Directors' remuneration
Total directors' emoluments for the period were £2.2m (2001: £7.3m)
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
5. Exceptional items before interest 52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
£m £m
Integration and strategic review costs 7.9 1.5
Refinancing costs 2.0 1.7
Write down of investment 1.3 0.5
Pension fund debtor write down - 71.6
Organic foods - 20.3
Property provisions - 10.9
Insurance costs - 2.5
Stock valuation - 2.8
Fixed asset write downs - 16.6
Reorganisation and redundancy costs - 5.3
Other (0.8) 3.5
------------ ------------
10.4 137.2
Profit on disposal of fixed assets (4.2) -
------------ ------------
6.2 137.2
======= =======
Integration and strategic review costs are principally professional fees,
together with some reorganisation and redundancy costs and asset write downs.
Refinancing costs arose from the June 2001 rescheduling of bank facilities and
comprise principally professional fees.
The write down of investment relates to the mark to market of own shares held in
the ESOP trust that are not allocated under the various Group share incentive
schemes.
The profit on sale of fixed assets relates principally to sales of properties no
longer used by the business.
6. Interest payable (net) 52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
£m £m
Interest receivable and similar income (2.8) (4.4)
--------------- ---------------
Interest payable:
Interest on bank loans and overdrafts 33.2 36.0
Loan note interest 0.2 0.5
Finance charges payable under finance leases 1.4 3.1
Capitalised interest - (0.1)
Unwinding of discount on provisions 0.6 0.6
Other interest payable 0.6 0.2
--------------- ---------------
Total interest payable 36.0 40.3
---------------- ---------------
Exceptional costs:
Bank fees related to the syndicated facility 1.7 6.9
Termination fee for US dollar interest rate swaps - 0.5
--------------- ---------------
34.9 43.3
========= =========
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
7. Tax on profit/(loss) on ordinary activities 52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
£m £m
Current year
UK Corporation tax 3.4 3.7
Overseas corporation tax 2.3 1.0
Adjustment in respect of previous years' UK corporation tax - 0.9
--------------- ---------------
5.7 5.6
Deferred tax:
Origination and reversal of timing differences (note 17) (2.2) (8.7)
-------------- --------------
3.5 (3.1)
======== ========
Reconciliation of the current taxation charge
Tax on total profits at 30% (UK standard rate) 3.8 (36.4)
Goodwill amortisation not allowed for tax 6.6 5.1
Expenses not deductible for tax purposes 4.4 5.1
Depreciation in excess of capital allowances 0.9 2.0
Other short term timing differences 1.3 6.7
Overseas tax rate 1.4 0.3
Unrecognised tax losses arising in the period - 23.7
Prior periods' tax - 0.9
ACT offset - (1.8)
Utilisation of previously unrecognised losses (12.9) -
Property transactions 0.2 -
-------------- --------------
Current tax charge 5.7 5.6
======== ========
The taxation attributable to exceptional items is a credit of £1.5m (2001:
£15.7m credit).
8. Dividends 52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
£m £m
Interim dividend on ordinary equity shares 3.4 7.2
Final dividend on ordinary equity shares 5.0 -
------------ ------------
8.4 7.2
======= =======
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
9. Earnings per ordinary share
Basic and diluted
The basic and diluted earnings per share are calculated based on the following
data:
52 weeks ended 65 weeks ended
29 March 31 March
2002 2001
£m £m
Profit/(loss) for the financial period 9.3 (118.3)
======== ========
No. (m) No. (m)
Basic weighted average number of shares 332.1 272.2
Dilutive potential ordinary shares:
Employee share options 4.0 -
------------ ------------
Diluted weighted average number of shares 336.1 272.2
======= =======
The basic weighted average excludes shares held in the Employee share trust, as
required by FRS14. The effect of this is to reduce the average by 9,874,861
(2001: 9,847,000).
Adjusted
Adjusted earnings per share of 11.4p (2001: 10.1p) are presented in
addition to the basic EPS of 2.8p (2001:(43.5)p) required by FRS 14
since, in the opinion of the directors, this represents a clearer year
on year comparison of the earnings of the Group. The adjusting items
are : Exclusion of goodwill amortisation 6.7p(2001: 6.2p), Exceptional
items 2.4p (2001: 53.1p) and associated tax credit of (0.5)p
(2001: (5.7)p).
10. Intangible fixed assets
Goodwill
£m
Cost:
At 1 April 2001 444.8
----------------
At 29 March 2002 444.8
----------------
Amortisation:
At 1 April 2001 (17.0)
Provided during the period (22.2)
----------------
At 29 March 2002 (39.2)
----------------
Net book value:
At 29 March 2002 405.6
=========
At 31 March 2001 427.8
=========
The goodwill arising on acquisitions since 1998 is being amortised over a period
of 20 years which is the directors' estimate of its useful economic life.
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
11. Tangible fixed assets
--------------Land and Buildings---------
Long Short Plant & Motor
Freehold Leasehold Leasehold Equipment Vehicles Total
£m £m £m £m £m £m
Cost:
At 1 April 2001 303.4 45.5 122.0 580.7 57.3 1,108.9
Additions 2.9 0.4 2.6 26.7 10.7 43.3
Disposals (5.9) (4.7) (0.8) (13.1) (8.5) (33.0)
Exchange difference - - - (0.1) - (0.1)
------------ ------------ ------------ ------------ ------------ ------------
At 29 March 2002 300.4 41.2 123.8 594.2 59.5 1,119.1
------------ ------------ ------------ ------------ ------------ ------------
Depreciation:
At 1 April 2001 10.4 4.5 45.9 362.3 21.2 444.3
Provided during the period 2.2 0.8 6.1 57.7 12.2 79.0
Disposals (0.3) (0.3) (0.6) (10.6) (7.0) (18.8)
------------ ------------ ------------ ------------ ------------ ------------
At 29 March 2002 12.3 5.0 51.4 409.4 26.4 504.5
------------ ------------ ------------ ------------ ------------ ------------
Net book value:
At 29 March 2002 288.1 36.2 72.4 184.8 33.1 614.6
======= ======= ======= ======= ======= =======
At 31 March 2001 293.0 41.0 76.1 218.4 36.1 664.6
======= ======= ======= ======= ======= =======
The cost of freehold properties includes land of £59.2m (2001 - £64.0m) on which
depreciation is not provided.
Interest capitalised during the period amounted to £nil (2001 - £0.1m), and
accumulated to date is £7.0m (2001 - £7.0m).
The net book value of plant and equipment and motor vehicles above include
amounts of £15.6m and £0.5m respectively (2001 - £23.7m and £5.8m) in respect of
assets held under finance leases.
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
12. Investments Group Company
29 March 2002 31 March 2001 29 March 2002 31 March 2001
£m £m £m £m
Subsidiary undertakings (a) - - 489.8 489.8
Own shares held under trust (b) 11.2 15.1 11.2 15.1
------------ ------------ ------------ ------------
11.2 15.1 501.0 504.9
======= ======= ======= =======
(a) Subsidiary undertakings
Company Shares Loans Total
£m £m £m
Cost:
At 1 April 2001 397.7 94.0 491.7
Reclassification 4.4 (4.4) -
------------ ------------ ------------
At 29 March 2002 402.1 89.6 491.7
------------ ------------ ------------
Provision for diminution in value:
At 29 March 2002 and 31 March 2001 0.7 1.2 1.9
------------ ------------ ------------
Net book value:
At 29 March 2002 401.4 88.4 489.8
======= ======= =======
At 31 March 2001 397.0 92.8 489.8
======= ======= =======
The Company's principal subsidiary undertakings, which are wholly owned and
registered in the United Kingdom, except as stated, are as at 29 March 2002 as
follows:-
Principal activities
Bejam Group PLC* Property holding
BF Limited* Intermediate holding Company
Booker plc* Intermediate holding Company
Booker Cash and Carry Limited Wholesale
Burgundy Ltd* Property development
Iceland Foods plc* Retail
Iceland Foods (Ireland) Limited (registered in the Republic of Ireland) Retail
Iceland Foodstores Limited Retail
Trans European Insurance Limited (registered in Guernsey) Insurance
Woodward Foodservice Limited* Food services
*Direct subsidiary of The Big Food Group plc
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
12. Investments (continued)
(b) Own shares held under trust
Group and Company Cost Amortisation Net book value
£m £m £m
At 1 April 2001 19.5 (4.4) 15.1
Amortisation - (2.6) (2.6)
Transfers to employees (0.2) 0.2 -
Adjust unallocated shares to market value - (1.3) (1.3)
------------- -------------- --------------
At 29 March 2002 19.3 (8.1) 11.2
======== ======== ========
The Iceland Group Employee Share Ownership Plan (ESOP) is a discretionary trust
for the benefit of employees, including awards under the Company's share
schemes. The ESOP may subscribe for new shares or acquire shares in the market
for this purpose. Awards under the Company's long term incentive scheme (LTIP)
are in respect of shares held by the ESOP.
The ESOP held 9,904,951 ordinary shares in the Company at 29 March 2002 (2001:
9,908,150 ordinary shares).
The market value of these shares, which are listed on the London Stock Exchange,
at 29 March 2002 was £11.3m (2001: £15.3m). 117,500 ordinary shares were
transferred during the period to employees in respect of entitlements under
Company share schemes and 114,301 shares were transferred from a Booker plc
ESOP.
Dividends on the shares, the purchase of which was funded by an interest free
loan to the ESOP, are waived. Expenses incurred by the ESOP are settled
directly by Iceland Foods plc.
At 29 March 2002 the Group Qualifying Employee Share Trust (Quest) held 73,646
ordinary shares of the Company (2001: 80,296). These are included at a book
value of £nil (2001: £nil). The market value of these shares, which are listed
on the London Stock Exchange, on that date was £0.1m (2001: £0.1m).
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
13. Stocks 29 March 2002 31 March 2001
£m £m
Goods for resale 295.5 355.7
Other consumables 1.1 4.3
------------ ------------
296.6 360.0
======= =======
14. Debtors due within one year Group Company
29 March 2002 31 March 2001 29 March 2002 31 March 2001
£m £m £m £m
Trade debtors 71.6 61.3 - -
Amounts owed by subsidiary undertakings - - 447.9 471.8
Tax debtors 0.5 7.2 - -
Other debtors 23.3 9.2 - -
Prepayments and accrued income 46.9 61.9 - 0.1
------------ ------------ ------------ ------------
142.3 139.6 447.9 471.9
======= ======= ======= =======
15. Creditors due within one year Group Company
29 March 2002 31 March 2001 29 March 2002 31 March 2001
£m £m £m £m
Bank overdrafts 2.0 42.7 - -
Current instalments on loans 427.0 95.1 422.8 67.0
Obligations under finance leases 7.8 5.1 - -
Trade creditors 448.0 473.9 - -
Amounts owed to subsidiary undertakings - - 26.1 39.2
Corporation tax 21.0 14.0 0.7 0.7
Other taxes and social security costs 29.3 30.2 - -
Other creditors 17.0 9.6 - -
Accruals and deferred income 92.5 112.6 4.7 12.1
Proposed dividends 5.0 - 5.0 -
------------ ------------ ------------ ------------
1,049.6 783.2 459.3 119.0
======= ======= ======= =======
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
16. Creditors due after one year Group Company
29 March 2002 31 March 2001 29 March 2002 31 March 2001
£m £m £m £m
Amounts owed to subsidiary undertakings - - 5.3 -
Bank and other loans 2.1 403.7 - 375.0
Obligations under finance leases 6.7 22.2 - -
Accruals and deferred income 0.3 3.2 - -
------------ ------------ ------------ ------------
9.1 429.1 5.3 375.0
======= ======= ======= =======
17. Provisions for liabilities and charges
Group Property Rationalisation & Deferred Total
provisions other provisions taxation
£m £m £m £m
At 31 March 2001 37.6 2.0 19.5 59.1
Provided in the period 1.1 - - 1.1
Reclassification from other creditors 1.7 - - 1.7
Unwinding of discount 0.6 - - 0.6
Write-back to profit and loss account (2.7) - (2.2) (4.9)
Utilised (5.8) (1.3) - (7.1)
------------- ------------- ------------- -------------
At 29 March 2002 32.5 0.7 17.3 50.5
======= ======= ======= =======
The property provision principally relates to expected future costs of
leasehold properties no longer used by the business and dilapidations to
leasehold properties. These provisions and the rationalisation
provision are expected to be settled as follows: under one year,
£10.7m; within 1-2 years, £6.5m; in 2-5 years £9.1m and over 5 years
£6.9m. The discount rate used on property provisions was 6.0%.
The provision for deferred tax comprises
29 March 2002 31 March 2001
£m £m
Excess of tax allowances over book
depreciation 20.3 21.2
Other (3.0) (1.7)
-------------- --------------
17.3 19.5
======== ========
Deferred tax of £1.7m has not been provided on rolled over capital gains, as
there is no commitment to dispose of the replacement assets.
There are unrecognised deferred tax assets in respect of trading tax losses of
approximately £24m (2001: £60m) and unrecovered ACT of approximately £45m (2001:
£30m). These are recoverable against future taxable profits of the relevant
businesses. There are also capital losses available in certain subsidiaries.
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
18. Financial instruments
The Group's key objectives and policies for the use of financial
instruments in managing the risks of the Group are to minimise risk by
hedging currency risk and maintain a balance of fixed and floating rate interest
charges.
Debtors receivable and creditors payable within one year, other than
borrowings, are excluded from the following analysis. Details on provisions
are included on note 17.
Group Company
29 March 2002 31 March 2001 29 March 2002 31 March 2001
£m £m £m £m
(a) Borrowings and finance leases
Due within one year:
Bank overdraft 2.0 42.7 11.1 -
Bank and other loans 427.0 95.1 411.7 67.0
Finance leases 7.8 5.1 - -
Due after one and within two years:
Bank and other loans 0.4 50.4 - 50.0
Finance leases 6.6 1.6 - -
Due after two and within five years:
Bank and other loans 1.5 351.1 - 325.0
Finance leases 0.1 20.6 - -
Due after five years:
Bank and other loans 0.2 2.2 - -
Finance leases - - - -
------------ ------------ ------------ ------------
Gross debt 445.6 568.8 422.8 442.0
Less: Cash at bank and in hand (36.8) (59.1) - -
Short term deposits (4.6) (5.3) - -
------------ ------------ ------------ ------------
Net debt 404.2 504.4 422.8 442.0
======= ======= ======= =======
Analysis of bank and other loans
Bank and other loans
- secured 3.6 - - -
- unsecured 427.5 441.5 422.8 442.0
------------ ------------ ------------ ------------
431.1 441.5 422.8 442.0
======= ======= ======= =======
For secured bank and other loans, a £1.2m loan note is cash collateralised
against a bank deposit of £1.1m and the remaining £2.4m loan is secured on
property.
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
18. Financial instruments (continued)
(b) Interest rate profile on borrowings
29 March 2002 31 March 2001
At fixed At floating At fixed At floating
interest rates interest rates interest rates interest rates
£m £m Total £m £m Total
£m £m
Sterling 139.5 306.1 445.6 141.2 427.3 568.5
Irish Punt - - - - 0.3 0.3
------------ ------------ ------------ ------------ ------------ ------------
139.5 306.2 445.6 141.2 427.6 568.8
======= ======= ======= ======= ======= =======
The weighted average fixed interest rate for sterling was 7.06% (2001: 7.81%).
The weighted average period for which sterling rates are fixed is 2.2 years
(2001: 3.2 years). Floating financial liabilities bear interest at commercial
rates, predominately based on LIBOR.
(c) Financial assets
29 March 2002 31 March 2001
At floating On which no At floating On which no
interest interest is interest interest is
rates receivable Total rates receivable Total
£m £m £m £m £m £m
Sterling 4.6 35.2 39.8 16.5 42.3 58.8
US dollar - 0.1 0.1 1.2 0.3 1.5
Irish punt - - - 0.4 - 0.4
Euro - 1.5 1.5 3.4 0.3 3.7
------------ ------------ ------------ ------------ ------------ ------------
4.6 36.8 41.4 21.5 42.9 64.4
======= ======= ======= ======= ======= =======
Financial assets on which no interest is received are cash in hand and at bank.
(d) Undrawn committed facilities:
At 29 March 2002 the Group had undrawn committed facilities:
29 March 2002 31 March 2001
£m £m
Expiring within one year 153.9 -
Expiring between two years and within five years - 81.0
----------- ------------
153.9 81.0
====== =======
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
18. Financial instruments (continued)
(e) Fair value of financial instruments
29 March 2002 31 March 2001
Book value Fair value Book value Fair value
£m £m £m £m
Investments 11.2 11.3 15.1 15.3
Net borrowings (404.2) (404.2) (504.4) (504.4)
Interest rate swaps - (5.5) (0.5) (6.3)
------------ ------------ ------------ ------------
(393.0) (398.4) (489.8) (495.4)
======= ======= ======= =======
The fair value of interest rate swaps is the estimated amount which the Group
would have to pay to terminate the agreement, taking into consideration current
interest rates. Approximately £2.2m would have been payable in the next
financial year in respect of these swaps. However the swaps contracts were
closed on 21 May 2002 at a cost of £5.2m.
The nominal value of interest rate swaps at 29 March 2002 was £225m (2001:
£281m).
(f) Gains and losses on foreign currency hedging
As at 29 March 2002 there were no unrecognised gains or losses on
foreign currency hedging (2001:£nil).
In addition the Group had net monetary assets/(liabilities) in overseas
subsidiaries denominated in Euro of £0.8m and US dollars of £(2.5)m.
Gains and losses arising from net assets in overseas subsidiaries are
recognised in the statement of total recognised gains and losses.
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
19. Share capital 29 March 2002 31 March 2001
£m £m
Authorised:
380,724,472 ordinary shares of 10p each
(2001: 380,724,472 shares) 38.1 38.1
59,637,764 convertible cumulative redeemable
preference shares of 20p each
(2001: 59,637,764 shares) 11.9 11.9
------------ ------------
50.0 50.0
======= =======
Allotted, called up and fully paid:
342,969,087 ordinary shares of 10p each
(2001: 341,297,225 shares) 34.3 34.1
======= =======
During the period 1,667,607 ordinary shares of 10p each were issued on exercise
of options under the Group's SAYE, Executive and Performance Related share
option schemes for a consideration of £1.5m.
On 29 March 2002 the following options to subscribe for ordinary shares of 10p
each had been granted and were outstanding:
Number of shares Exercise price Exercisable until
SAYE 181,796 152.26 - 612.24p 2002
SAYE 285,227 81.07 - 470.52p 2003
SAYE 3,093,390 153.50 - 198.41p 2004
Executive 1,943,611 76.67 - 295.00p 2010
Performance Related 629,000 149.95 - 170.00p 2008
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
20. Reserves Share premium Profit and loss
account Merger reserve account
£m £m £m
(a) Group
Balance at 31 March 2001 16.4 344.5 5.1
Retained profit for the period - - 0.9
Arising on issue of shares 1.3 - -
------------ ------------ ------------
Balance at 29 March 2002 17.7 344.5 6.0
======= ======= =======
The cumulative amount of goodwill written off directly to reserves
since 1 January 1989 is £182.9m (2001 - £182.9m). The amount prior to
this date is immaterial. This goodwill would be charged to the profit
and loss account if the businesses to which it relates were sold.
(b) Company
Balance at 31 March 2001 16.4 330.4 101.9
Retained loss for the period - - -
Arising on issue of shares 1.3 - -
------------ ------------ ------------
Balance at 29 March 2002 17.7 330.4 101.9
======= ======= =======
The profit for the financial period of the Company was £8.4m (2001:
£61.8m). After dividends paid of £8.4m the retained profit was £nil. No
separate profit and loss account is provided for the Company, as
permitted by Section 230 of the Companies Act 1985.
21. Lease commitments
At 29 March 2002 the minimum lease payments due in the following year
under operating leases to which the Group was committed were as follows:
Land and buildings Others
29 March 2002 31 March 2001 29 March 2002 31 March 2001
£m £m £m £m
Leases due to expire:
Within 1 year 1.5 1.7 1.3 -
Within 2 - 5 years 6.9 6.1 5.4 2.4
In more than 5 years 64.2 59.6 - -
------------ ------------ ------------ ------------
72.6 67.4 6.7 2.4
======= ======= ======= =======
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
22. Capital commitments
The outstanding commitments at 29 March 2002 in respect of contracted
capital expenditure not provided for, amounted to approximately £18.6m
(2001: £8.1m).
23. Pension schemes
The Group operates a defined benefit scheme and a number of defined
contribution schemes to provide benefits to both full-time and
part-time employees. With effect from 1 April 2001 all defined benefit
schemes within the Group were merged with the Booker scheme, which was
renamed the Iceland Group Pension Scheme. The assets of the schemes are
held separately from those of the Group and are invested by independent
fund managers appointed by the Trustees.
Defined benefit scheme
The latest actuarial valuation of the defined benefit scheme was
carried out by Messrs Punter Southall & Co.,consulting actuaries, as at
30 June 2001. The results of the valuation have been used for the
purposes of calculating the pension cost up to 31 December 2001.
Thereafter an updated interim valuation has been adopted to reflect the
major drop in equity values and switch of the fund portfolio towards
bonds.
For the purposes of assessing pension costs under SSAP24 the principal
actuarial assumptions adopted for the periods from 1 April to 30 June
2001, 1 July to 31 December 2001 and 1 January to 29 March 2002 were
respectively: a long-term rate of return on investments of 6.0%, 6.7%,
6.4% per annum pre-retirement and 6.0%,5.2%,5.8% post-retirement,
increases to pensions in payment of 3.0%,2.6%,2.5% per annum and salary
growth of 4.5%,4.1%,4.0% per annum.
Pension costs have been determined using the projected unit method in
the principal scheme and the attained age method in three smaller
arrangements. The surplus/deficit disclosed by the calculations is
being amortised over employees' anticipated service lives as a level
percentage of pensionable salaries.
The pension charge for the Group was £12.3m (2001:£15.6m) including a
credit of £2.0m (2001:£2.9m) in respect of variations from regular cost.
A provision of £0.8m (2001-£0.8m) is included in accruals representing
outstanding contributions at 29 March 2002 and there is a SSAP24
creditor of £8.6m (2001: £3.4m), at that date.
The June valuation results show the market value of the assets of the
defined section of the Iceland Group Pension Scheme were £580m and were
sufficient to cover 102% of the benefits accrued to members after
allowing for full pensionable salary projection and pension increases
on the stated assumptions. The interim valuation showed a decline to
89% and a market value of assets of £510m. The next valuation will be
carried out in June 2004.
Benefits will cease to accrue under the defined benefit section of the
scheme in respect of service after 31 July 2002 and employees will be
provided with defined contribution arrangements. It is not expected
that this will result in a significant change to pension costs in the
year ended 31 March 2003.
FRS 17 Disclosures for the year to 29 March 2002
The company has continued to account for pensions in accordance with
SSAP 24. FRS 17 (Requirement Benefits) will not be mandatory for the company
until the year ending March 2004, however, the following transitional
disclosures are required.
Independent qualified actuaries have updated the results of the most
recent actuarial valuations for the defined benefit scheme from 30 June 2001 to
29 March 2002.
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
23. Pension Schemes continued
The main financial assumptions used in the valuation of the liabilities of
the company's pension schemes under FRS 17 are:
At 29 March
2002
Rate of increase in salaries 4.0%
Rate of increase in pensions in payment 2.5%
Discount rate 5.8%
Retail prices inflation assumption 2.5%
The assets in the scheme and the expected rate of return were:
Long term rate of return Value at 29 March
expected in 2002
2002
£m
Equities 6.75% 365
Bonds 5.50% 147
Other 4.75% 12
---------------
Total 524
---------------
The following amounts at 29 March 2002 were measured in accordance
with the requirements of FRS 17.
At 29 March
2002
£m
Total market value of assets 524
Present value of scheme liabilities (560)
---------------
Deficit in the scheme (36)
Related deferred tax asset 11
---------------
Net pension liability (25)
---------------
Net assets and reserves At 29 March
2002
£m
Net assets excluding net pension liability under SSAP 24 416
Pension liability (25)
---------------
Net assets including net pension liability under FRS 17 391
---------------
Profit and loss reserve excluding net pension reserve under SSAP 24 20
Pension liability (25)
---------------
Profit and loss account including net pension reserve under FRS 17 (5)
---------------
Contributions to the scheme by the company 7
---------------
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
23. Pension Schemes continued
Defined contribution schemes
The assets of the defined contribution scheme are held separately from
the Group. The pensions cost of £1.6m in the period (2001: £1.3m)
represents contributions paid and is included in the total pension cost
of £12.3m shown above. There were no material amounts outstanding at
the period end.
24. Reconciliation of operating profit to operating cash flows 52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
£m £m
Operating profit/(loss) 43.5 (78.1)
Operating exceptional items 10.4 137.2
---------------- ----------------
Operating profit before operating exceptional items 53.9 59.1
Depreciation 79.0 92.0
Amortisation of goodwill 22.2 16.9
Amortisation of investments 2.6 1.6
Exceptional costs cash flow (19.5) (7.5)
Decrease/(increase) in stocks 63.4 (11.2)
(Increase)/decrease in debtors (10.4) 8.5
Decrease in creditors (20.7) (51.2)
Decrease in provisions (8.7) (7.8)
---------------- ----------------
Net cash inflow from operating activities 161.8 100.4
========= =========
In the 2001 comparatives £6.9m of bank facility fees related to new
financing have been moved from exceptional costs cashflow to servicing of
finance.
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
25. Analysis of cash flows 52 weeks ended 65 weeks ended
29 March 2002 31 March 2001
£m £m
Servicing of finance
Net interest paid (36.7) (26.8)
Interest element of finance lease rental payments (1.4) (3.1)
Bank fees related to the syndicated facility (2.2) (6.9)
---------------- ----------------
Net cash outflow for servicing of finance (40.3) (36.8)
========= =========
Capital expenditure and financial investment
Purchase of tangible fixed assets (45.8) (87.7)
Sale of tangible fixed assets 18.4 33.0
Sale of intangible fixed assets - 3.1
Sale of investments - 5.4
Purchase of shares for ESOP - (2.9)
---------------- ----------------
Net cash outflow for capital expenditure and financial investment (27.4) (49.1)
========= =========
Financing
Issue of share capital 1.5 3.9
Purchase of shares for Quest - (0.9)
Proceeds from new borrowings - 30.3
Repayment of borrowings (69.7) -
Capital element of finance lease repayments (12.8) (15.7)
---------------- ----------------
Net cash (outflow)/inflow from financing (81.0) 17.6
========= =========
26. Analysis of net debt At 31 March At 29 March
2001 Cashflow 2002
£m £m £m
Cash at bank and in hand 59.1 (22.3) 36.8
Overdrafts (42.7) 40.7 (2.0)
--------------- -------------- ---------------
16.4 18.4 34.8
Debt due within 1 year (95.1) (331.9) (427.0)
Debt due after 1 year (403.7) 401.6 (2.1)
Finance leases (27.3) 12.8 (14.5)
--------------- -------------- ---------------
(509.7) 100.9 (408.8)
Liquid resources - short term deposits 5.3 (0.7) 4.6
--------------- -------------- ---------------
(504.4) 100.2 (404.2)
======== ======== ========
Notes to the Unaudited Accounts
At 29 March 2002 (continued)
27. Contingent liabilities
The Group is currently defending two legal claims, one in respect of an
organic supply contract and one pursuant to a sale of business agreement.
The directors do not believe these claims will have any significant
financial effect on the Group.
28. Post balance sheet event
Following the year end, the Group has entered into a sale and leaseback
agreement, subject to shareholder approval at an EGM on 14 June 2002,for
31 of its properties, with Axa Sun Life plc, for a cash value of £129.3m
generating a profit after costs of approximately £18m. This transaction
will replace the yearly charge of approximately £1.6m of depreciation
and £7m of interest expense with annual rent charges of £10.9m
increasing at 3% per annum. The Group has also conditionally obtained a
new senior credit facility of £300m and has proposed the issue of a 10
year high yield bond for £150m.
29. Related party transactions
The Group recharges its pension schemes with the costs of administration
and independent advisers borne by the Group. The total amount recharged
during the period was £1.4m (2001: £0.7m).
This information is provided by RNS
The company news service from the London Stock Exchange
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