ANNUAL
REPORT & ACCOUNTS
2011
ANNUAL REPORT 2011
Corporate Profile and Group Operations
Financial Highlights
Chairman’s Statement
Financial Review
Shareholder Information
Board of Directors
Corporate Information
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the consolidated financial statements
Company balance sheet
Notes to the accounts
Consolidated Historical Financial Summary
Page
2
3
4 - 5
6 - 7
8 - 9
10
11
12 - 22
23
24 - 25
26
27
28
29
30 - 66
67
68 - 72
73
FINANCIAL CALENDAR 2011
Announcement of preliminary results
Annual Report posted to shareholders
Record date for Final Dividend
Annual General Meeting
Dividend payment
8 March
30 March
20 April
7 May
18 May
Announcement of interim results
13 September
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 1
CORPORATE PROFILE
Background
Norish plc is a leading warehousing company dedicated to serving the food manufacturing, distribution
and retailing sectors. Norish was founded in 1975 and became a public company in 1986. Its shares are
listed on the Alternative Investment Market of the London Stock Exchange.
Norish mainly operates strategically located temperature controlled storage centres, each of which
provides storage, freezing, picking, order assembly services to food companies engaged in processing,
wholesaling and retailing.
Group Operations
Norman Hatcliff – Managing Director - norman.hatcliff@norish.com
Northern Industrial Estate
Bury St Edmunds
Suffolk IP32 6NL
Tel: 01293 862498
Mob: 07879 447427
Locations
Bury St. Edmunds, Suffolk (Cold store)
Brierley Hill, West Midlands (Cold store)
Wrexham, Clwyd (Cold store)
Braintree, Essex (Cold store)
Lympne, Kent (Cold store)
Gillingham, Kent (Cold store)
Leeds, Yorkshire (Cold store)
Shipton by Beningbrough, York (Ambient warehouse)
2 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
FINANCIAL HIGHLIGHTS
Revenue - Continuing operations
Operating profit
Profit before tax
Basic earnings per share
Dividend paid per share
- interim for current year
- final for previous year
Gearing – excluding goodwill (see Note 1 below)
Capital employed
Shareholders’ funds
Net borrowings
2011
£’000
2010
£’000
11,213
10,654
666
406
4.3p
Nil
1.25c
1.25c
87%
£’000
8,025
6,797
733
552
5.2p
Nil
Nil
Nil
95%
£’000
7,500
6,914
14,822
14,414
Note 1
The above gearing figures are expressed as net borrowings (total borrowings less cash) divided by net assets
(excluding goodwill).
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 3
CHAIRMAN’S STATEMENT
I am pleased to present the Annual Report of Norish Plc for 2011.
Results
Norish plc results for the year ended 31st December 2011 as follows:
Turnover increased to £11.2m compared with £10.7m for 2010.
Pre-tax profits of £406,000 compared to £552,000 for 2010.
Net assets increased to £8m compared with £7.5m for 2010.
Net debt decreased to £6.8m from £6.9m.
Earnings per share decreased to 4.3p from 5.2p
Financial Strength
Shareholders funds at 31 December 2011 were £8m compared with £7.5m at 31 December 2010. Net debt
at 31 December 2011 was £6.8m which decreased from £6.9m as at 31 December 2010.
Operations
Our cold store business performed better this year, primarily due to increased turnover. However, the
business suffered from increased power costs and an increase in labour intensive handling activities for
some of our customers.
Our ambient site at York performed just below 2010 levels. It had a better second half of the year
compared to the first half. This should carry forward into 2012.
We currently use R22 refrigeration gas at 3 of our cold stores. R22 is a Hydrochlorofluorcarbon (HCFC)
which is classed as an ozone depleting gas and with effect from 1st January 2010 it is no longer possible to
purchase virgin R22. However, the use of re-cycled R22 is still permitted until 31st December 2014. We
currently have an option to purchase 44,808 kg of re-cycled R22 at £4.05 per kg which is below the
current market value. Under IAS39 Financial Instruments(Recognition and measurement) we have
accounted for an unrealised profit of £190,000 for the year.
Our pre-tax profits of £406,000 were adversely affected by a non cash derivative amount of £89,000 in
2011 against a credit of £97,000 in 2010.
Dividend
The board recommends the payment of a final dividend of 1.25 cent per share. This will be paid on the
18th May 2012 to those shareholders on the register on the 20th April 2012. It will bring the total
dividend in respect of the financial year to 1.25 cent per share unchanged from last year.
4 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
CHAIRMAN’S STATEMENT (CONTINUED)
Personnel
On behalf of the board, I would like to thank the management team and staff for their commitment and
contribution in 2011.
Ted O’Neill
Chairman
7 March 2012
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 5
FINANCIAL REVIEW
Reporting currency
The Group, the parent company of which is a public limited company incorporated in Ireland, continues to
report its results in Sterling, as all of its operating activities are carried out in the United Kingdom.
Revenue and operating profit
Revenue from operations increased from £10.7m to £11.2m. The group operating profit from operations
remained unchanged at £0.7m, representing 5.9% (2010 – 6.9%) of revenue.
For our operations, the number of pallets into our sites increased by 5% to 421,462, blast freezing volumes
increased by 16% to 45,900 pallets and closing customer stocks at the year end increased by 6% to 49,054
pallets. Our average energy price per unit increased by 44% in 2011 and the number of units consumed
increased by 4% due mainly to the additional blast freezing volumes.
We have started the year with higher than expected occupancy levels, and in the current economic climate
it is difficult to forecast activity levels for the remainder of the year.
Key ratios and depreciation
Basic earnings and diluted earnings per share decreased to 4.3p compared with 5.2p in 2010.
Year-end gearing (after eliminating goodwill) was 87% compared with 95% at 31 December 2010.
Depreciation totalled £0.6m (2010: £0.6m).
Cash position
The Group’s operating net cash inflow for the year was £0.5m (2010: £0.9m). Net debt decreased to
£6.8m from £6.9m at 31 December 2010.The Group retains adequate term loan and overdraft facilities to
meet its ongoing operating needs.
Treasury policy and management
The treasury function, which is managed centrally, handles all Group funding, debt, cash, working capital
and foreign exchange exposures. Group treasury policy concentrates on the minimisation of risk in all of
the above areas and is overseen and approved by the Board. Speculative positions are not taken.
Financial risk management
The Group’s financial instruments comprise borrowings, cash, derivatives, and various items, such as
trade receivables, trade payables etc, that arise directly from its operations. The main purpose of the
financial instruments not arising directly from operations is to raise finance for the Group’s operations.
The Group may enter into derivative transactions such as interest rate swaps, caps or forward foreign
currency transactions in order to minimise its risks. The purpose of such transactions is to manage the
interest rate and currency risks arising from the Group’s operations and its sources of finance.
The Group is currently holding a position on refrigerant gas that it uses at 3 of its cold store sites. It is
expecting to trade some of this volume over the next 1 to 2 years.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and
refrigerant gas price risk. The Group’s policies for managing each of these risks are summarised below
6 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
FINANCIAL REVIEW (CONTINUED)
Interest rate risk
The Group finances its operations through a mixture of retained profits, bank and other borrowings at both
fixed and floating rates of interest, and working capital. The Group determines the level of borrowings at
fixed rates of interest having regard to current market rates and future trends. At the year-end, £6.442m
term loans of which £6m are at floating base rate plus a bank margin of 1.2% and £0.442m are at floating
base rate plus a bank margin of 2.75%. The Group holds an interest rate swap on £3m at 1.45% against
Bank of England base rate which expires in August 2016. It also has a base interest rate cap for £3m at 5%
which expires in April 2014.
Liquidity risk
The Group’s policy is that, in order to ensure continuity of funding, a significant portion of its borrowings
should mature in more than one year. At the year-end, 88% of the Group’s borrowings were due to
mature in more than one year.
The Group achieves short-term flexibility by means of invoice finance and overdraft facilities.
Refrigerant gas price risk
The Group has an option to purchase R22 refrigeration gas which is used at 3 of the cold store sites. R22
is a Hydrochlorofluorcarbon (HCFC) which is classed as an ozone depleting gas and with effect from 1st
January 2010 it is no longer possible to purchase virgin R22. However, the use of re-cycled R22 is still
permitted until 31st December 2014. We currently have an option to purchase 44,808 kg of re-cycled R22
at £4.05 per kg which is below the current market value. Under IAS39 we have accounted for an
unrealised profit of £190,000(2010: £410,000) for the year which is based on a fair value price of £19 per
kg as at 31st December 2011. The contract will be mainly used for commodity trading.
The Group is in close contact with its professional advisors and the main suppliers of R22 gas in the
market and intend to sell some or all of its position over the next 1 to 2 years.
Aidan Hughes
Finance Director
7 March 2012
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 7
SHAREHOLDERS INFORMATION
Shareholder analysis at 7 March 2012
Number of shares
Number of
accounts
Percentage
of accounts
Number of
shares (000)
Percentage
of shares
1 – 1,000
1,001 – 10,000
10,001 – 100,000
Over 100,000
Total
124
83
40
16
263
47.1
31.6
15.2
6.1
100
54
343
1,159
7,757
9,313
0.6
3.7
12.4
83.3
100.0
Share price data (€)
Year ended 31 December 2011
42.5p (€0.51)
36.5p (€0.44)
36.5p (€0.44)
Year ended 31 December 2010
42p (€0.49)
33p (€0.37)
42p (€0.49)
High
Low
31 December
The market capitalisation of Norish plc at 31 December 2011 was £3.4m (€4.1m) compared with £3.6m
(€4.2m) at 31 December 2010, and £3.4m (€4.1m) at 7 March 2012.
Investor relations
Investor enquiries should be addressed to Aidan Hughes, Company Secretary, at:
Norish plc, Northern Industrial Estate, Bury St Edmunds, Suffolk, IP32 6NL
Email: aidan.hughes@norish.com
Registrars
Administrative enquiries relating to the holding of Norish shares should be directed to the Company’s
Registrars whose address is:
Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands,
B63 3DA.
Telephone: +44 (0121) 585 1131
8 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
SHAREHOLDERS INFORMATION (CONTINUED)
Amalgamation of accounts
Shareholders who have multiple accounts in their name and who receive duplicate mailings should contact
the Company’s Registrars in order to have these accounts amalgamated.
Dividends
Dividends due to certain shareholders will be paid net of withholding tax, which is currently 20%.
Provided certain administrative procedures are adhered to, a withholding tax exemption will apply to
certain classes of shareholder.
Individuals who are tax resident in Ireland are not entitled to a withholding tax exemption.
CREST
Norish participates in the CREST share settlement scheme. Shareholders may continue to hold paper
share certificates or they may hold their shares electronically.
Annual General Meeting
The Annual General Meeting will be held at Norish cold store, The Gateway, Pedmore Road, Brierley
Hill, West Midlands, Suffolk, DY5 1LJ, on Wednesday 9 May 2012 at 11am.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 9
BOARD OF DIRECTORS
Executive Directors
Executive Chairman
Ted O’Neill (60) was appointed to the board and became Chairman in 2003. He is an investor in a number
of other companies based in Ireland.
Managing Director
Norman Hatcliff (57) joined the group in January 2000 as Operations Director of the Temperature
Controlled Division and was appointed Managing Director in September 2006. He has been a member of
the board since August 2004. He has extensive experience in the temperature controlled storage industry,
initially with Tempco Severnside and subsequently with Exel Logistics. He joined TDG plc in 1990, and
was Operations and Commercial Director of TDG Novacold from 1996 to 1999.
Finance Director & Company Secretary
Aidan Hughes (47) joined Norish as Group Accountant in 1996 and was appointed Finance Director in
September 2006. He has carried out the role of Company Secretary since 2004. He is a Chartered
Accountant and has previous experience in the travel industry.
Non-Executive Directors
Torgeir Mantor (55) was appointed to the board in 1993. He is Chairman of Norse Group, USA and
VisionMonitor Software LLC, both in Houston, Texas, and is a director of Tore B. Mantor AS and ProPac
AS, both in Norway.
Willie McCarter (64) was appointed to the board in 2004, and was subsequently appointed as the Senior
Independent Non-Executive Director. He was a director of Cooley Distillery plc up to January 2012 and
was formerly Chief Executive of Fruit Of The Loom International, Chairman of the International Fund for
Ireland and the Enterprise Equity Venture Capital Group.
10 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
CORPORATE INFORMATION
Directors
Ted O’Neill - Executive Chairman
Norman Hatcliff (British) – Managing Director
Aidan Hughes – Finance Director
Torgeir Mantor (Norwegian) *
Willie McCarter *
* non-executive
Company Secretary
Aidan Hughes
Audit Committee
Torgeir Mantor
Willie McCarter
Remuneration Committee
Torgeir Mantor
Willie McCarter
Nomination Committee
Consists of all Directors
Registered Office
6th Floor
South Bank House
Barrow St
Dublin 4
Operational Head Office
Northern Industrial Estate
Bury St Edmunds
Suffolk
IP32 6NL
Domicile
Republic of Ireland
Company Registration
Registered in Ireland under
Registration number - 51842
Solicitors
Mason Hayes & Curran
South Bank House
Barrow St
Dublin 4
Burges Salmon LLP
One Glass Wharf
Bristol, BS2 0ZX
Nomad and Brokers
Davy
Davy House
49 Dawson Street
Dublin 2
Bankers
HSBC Bank plc
Bank of Ireland plc
Auditor
Grant Thornton
Chartered Accountants
24-26 City Quay
Dublin 2
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
West Midlands
B63 3DA
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 11
DIRECTORS’ REPORT
The Directors present their Annual Report together with the audited financial statements of the Group for
the year ended 31 December 2011.
Principal Activities and Review of Business
Norish plc is a provider of temperature controlled, ambient storage and related services to the food
industry in the United Kingdom.
Our cold store business performed better this year, primarily due to increased turnover. However, the
business suffered from increased power costs and an increase in labour intensive handling activities for
some of our customers.
Our ambient site at York performed just below 2010 levels. It had a better second half of the year
compared to the first half. This should carry forward into 2012.
Details of the Group’s subsidiary undertakings are set out in Note 28 to the financial statements.
Further commentaries on the Group’s development and performance, including the principal risks and
uncertainties facing the business, are contained in the Chairman’s Statement and the Financial Review on
pages 4 to 7.
Dividends
The board recommends the payment of a final dividend of 1.25 cent per share. This will be paid on the 18
May 2012 to those shareholders on the register on the 20 April 2012. It will bring the total dividend in
respect of the financial year to 1.25 cent per share unchanged from last year.
Post Balance Sheet Events
No significant events have taken place since the year-end that would result in adjustment to the financial
statements or the inclusion of a note thereto.
Transactions with Related Parties
Consultancy services totalling £2,000 (2010: £4,000) were provided by a relative of a director during the
year.
12 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
DIRECTORS’ REPORT (CONTINUED)
Creditor payment policy
It is the company’s policy to abide by the payment terms agreed with suppliers whenever it is satisfied
that the supplier has provided the goods and services in accordance with agreed terms and conditions.
The average supplier payment terms for 2011 for the Group and the main subsidiary Norish Ltd, was 47
days. This was calculated by taking the year end creditors listing as a percentage of the total supplies and
services invoiced during the year, multiplied by 365 days.
Key risks and uncertainties
Please refer to the Financial Review on pages 6 – 7 to understand the key financial risks facing the
company and management’s approach to same.
In respect of operational risks our largest customer accounts for 14% (2010 – 15.9%) of the Group’s
turnover. However, the directors are satisfied that this business could be replaced if it was ever lost.
In the event of their being a power supply failure at one of our sites, the majority of the operations will
come to a standstill. Refrigeration plant, lights, computer and telephone systems will not operate.
Contingencies in place include alternative site operation for computer systems, portable power generation
for systems and lighting, commitment by power network operators to supply emergency power
generation.
The majority of our commercial arrangements are non contractual. As a result, there is a risk that
customers could terminate agreements to use Norish facilities without giving notice, thus placing revenue
streams at risk. To mitigate against this, regular review meetings are held with all major customers in
order to determine trends and changes in customer's requirements.
Key performance indicators
For our operations, the number of pallets into our sites increased by 5% to 421,462, blast freezing volumes
increased by 16% to 45,900 pallets and closing customer stocks at the year end increased by 6% to 49,054
pallets. Our average energy price per unit increased by 44% in 2011 and the number of units consumed
increased by 4% due mainly to the additional blast freezing volumes.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 13
DIRECTORS’ REPORT (CONTINUED)
Directors
The Board currently comprises the Executive Chairman, Managing Director, Finance Director and two
non-executive Directors. Under the criteria adopted by the Committee on Corporate Governance, Torgeir
Mantor would not be perceived to be independent due to his interests in the Company’s shares. None of
the non-executive Directors are involved in the day-to-day management of the Group.
The names of the Group’s Directors at 31 December 2011 together with brief biographical notes are set
out on page 10.
In accordance with Article 87 of the Company’s Articles of Association, Mr Torgeir Mantor retires by
rotation, and being eligible, offers himself for re-election. In accordance with Article 94 of the
Company’s Articles of Association, Mr Norman Hatcliff retires, and being eligible, offers himself for re-
election.
The Executive Chairman, Managing Director and Finance Director have service contracts with the Group
company’s that are terminable by either party giving 12 months’ notice. None of the non-executive
Directors have service contracts.
All directors have third party indemnity insurance in place.
Interests of Directors and Secretary
There were no contracts or arrangements during the year in which a Director of the Company was
materially interested and which were significant in relation to the Group’s business.
The interests, all of which are beneficial, of the Directors and the Secretary who held office at 31
December 2011 (including their respective family interests) in the share capital of Norish plc were as
follows:
Ted O’Neill
Norman Hatcliff
Aidan Hughes
Torgeir Mantor *
Willie McCarter
31 December 2011
Ordinary Shares
31 December 2010
Ordinary Shares
2,668,353
49,116
205,000
12,600
-
2,453,353
18,903
193,340
12,600
-
* Torgeir Mantor is a director of T. B. Mantor AS, which also holds 1,130,025 (2010: 1,027,295)
shares and is owned by the Mantor family.
14 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
DIRECTORS’ REPORT (CONTINUED)
The interests of the Directors and Secretary in options, granted in accordance with the Company’s share
option scheme, to subscribe for ordinary shares in the Company, are as follows:
Cancelled/
Lapsed
in year
1 Jan
2011
Granted
in year
31 Dec
2011
Exercise Exercisable Expiry
Price
from date
Norman Hatcliff
3,000
140,000
(3,000)
-
-
-
-
140,000
€0.75c May 2004 May 2011
June 2011 June 2018
58p
Total
143,000
(3,000)
-
140,000
Aidan Hughes
3,000
110,000
(3,000)
-
-
-
-
110,000
€0.75c May 2004 May 2011
June 2011 June 2018
58p
Total
113,000
(3,000)
-
110,000
The mid-market price of an ordinary share on 31 December 2011 was 36.5p (€0.44) and the price range
during the year was between 42.5p (€0.51) and 36.5p (€0.44). Apart from the interests disclosed above,
neither the Directors nor the Secretary had an interest at any time during the year in the share capital of
the Company or Group companies. There have been no changes in the above interests between 31
December 2011 and the date of this Report.
Pensions
Executive Directors are entitled to become members of the Group’s defined contribution pension scheme
or, if preferred, to receive payment of a fixed percentage of salary into an approved personal pension
scheme.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 15
DIRECTORS’ REPORT (CONTINUED)
Substantial shareholdings
At 7 March 2012 the Company had been advised of the following shareholdings in excess of 3% of its
issued share capital:
Ted O’Neill
John Teeling
T.B. Mantor AS
Tom Cunningham
Leslie McCauley
Number of shares
2,668,353
Percentage held
28.65
1,145,783
1,130,025
897,511
518,600
12.30
12.13
9.64
5.57
Apart from these holdings, the Company has not been notified of any other interest of 3% or more in its
issued share capital.
Subsidiary companies
The statutory information required by sub-sections (4) and (5) of Section 158 of the Companies Act, 1963
is presented in Note 28 to the financial statements.
Executive share option scheme
The percentage of share capital that can be issued under the scheme and the individual grant limits comply
with the published guidelines of the Irish Association of Investment Managers.
The aggregate nominal value of shares issued under the scheme may not exceed 10% of the nominal value
of the issued ordinary share capital. Between 1989 and 2011 the Company issued a total of 1,252,237
ordinary options. In 2011 the Company issued no share options.
To date 46,000 options have been exercised and 956,237 options have expired. At 31 December 2011
options were outstanding over 250,000 ordinary shares.
16 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
DIRECTORS’ REPORT (CONTINUED)
Group website
Our website, www.norish.com, provides our customers, shareholders and the general public with useful
information on the Group’s facilities and services, together with key financial data, company
announcements etc.
Personnel development
The Group is committed to ensuring that its employees are capable of achieving the highest standards in
their employment by providing training at all levels for current and future business needs. Emphasis is
placed on training in key areas such as computer skills, safe driving of vehicles and the proper utilisation
of materials handling equipment. The Group seeks to ensure that all employees receive up-to-date
information on current business events and developments pertaining to their own work place.
Disabled employees
The policy of Norish plc is to offer the same opportunities to disabled people as to all employees in
respect of recruitment, promotion and career development depending on their skills and abilities.
Employees who become disabled will, wherever possible, be rehabilitated, retrained and redeployed if
necessary.
Electoral Act, 1997
The Group did not make any political contributions during the year.
Environmental policies
The Group continues to implement improved working practices with a view to minimising harmful
environmental impacts. It is committed to maintaining its efforts in the area of energy conservation by
way of improving the insulation within the cold store sites and replacing refrigeration doors with modern
highly efficient refrigeration doors. It is also replanting one of its larger sites, West Midlands in 2012,
with a new highly efficient ammonia refrigeration system which will significantly reduce the power
consumption at the site.
Country of Incorporation
Norish plc was incorporated and is domiciled in the Republic of Ireland under company number
51842.
Significant Customers
During 2011, £1.571m or 14% of the Group’s revenues depended on a single customer in the
cold storage segment. (2010 : £1.697m or 15.9%)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 17
DIRECTORS’ REPORT (CONTINUED)
Corporate governance
The Directors are committed to the UK Corporate Governance Code (2010).
Principles of good corporate governance
The Directors are accountable to the shareholders for good corporate governance and the following
voluntary statement describes how the relevant principles of good governance set out in the 2010 UK
Corporate Governance Code in Norish plc.
Board of Directors
The Board of Directors comprises an Executive Chairman, Managing Director and Finance Director and
two Non-Executive Directors. On appointment all non-executive directors receive comprehensive
briefing documents on the Group and its operations, and further appropriate briefings are provided to non-
executive directors on an ongoing basis. Willie McCarter is the Senior Independent Non-Executive
Director.
It is the practice of the Group that the Board comprises at least two non-executive Directors.
Due to the small size of the board, all Directors are members of the Nomination Committee.
The Board takes the major strategic decisions and retains full effective control while allowing operating
management sufficient flexibility to run the business efficiently and effectively within a centralised
reporting framework.
Torgeir Mantor would not be perceived to be independent due to his interests in the Company’s shares.
However, it is the opinion of the Board that the Non-Executive Directors are independent of management
and have no business or other relationship which could interfere materially with the exercise of their
judgement.
The Board delegates to committees, which have specific terms of reference and which are reviewed
periodically, the responsibility in relation to audit and senior executive remuneration issues. Minutes of
these committees are supplied to all Directors for information and to provide the Board with an opportunity
to have its views taken into account.
The Board has a regular schedule of meetings together with further meetings when required. In addition,
there is a formal schedule of matters reserved specifically to the Board for its decision, including the
approval of the annual financial statements, budgets, significant contracts, significant capital expenditure
and senior management appointments.
The Non-Executive Directors meet with the Executive Chairman separately during the year to discuss the
business and strategy.
The Company Secretary is responsible to the Board for ensuring that Board procedures are followed and
that applicable rules and regulations are complied with. The Group’s professional advisors are available
for consultation by the Board as required. Individual Directors may take independent professional advice,
if necessary, at the Group’s expense.
The Executive Chairman holds regular business review meetings with Senior Management.
18 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
DIRECTORS’ REPORT (CONTINUED)
Attendance
The Board meets regularly and details of attendances by individual Directors at meetings of the Board and
its Committees during the year ended 31 December 2011 are as follows:
Table of attendance
Meetings held
Meetings Attended:
Ted O’Neill
Norman Hatcliff
Aidan Hughes
Torgeir Mantor
Willie McCarter
Board
Remuneration
4
4
4
4
4
4
1
N/A
N/A
N/A
1
1
Audit
1
N/A
N/A
N/A
1
1
No nomination meetings were held during the year.
Directors’ Remuneration
The remuneration of Directors and senior management is determined by the Remuneration Committee
consisting solely of the non-executive Directors whose names are listed on page 11. The Remuneration
Committee is chaired by Mr Willie McCarter. This committee also recommends the granting of share
options to Executive Directors and senior management. In considering and agreeing salaries and benefits
as well as performance related incentives the Committee aims to ensure that remuneration packages are
competitive and that individuals are fairly rewarded relative to their responsibilities, experience and value
to the Group. The committee takes advice where appropriate from external professional advisors in
assessing salary levels and determining its remuneration policy and practice.
Norish plc’s remuneration policies and procedures meet with the Best Practice Provisions of the Irish
Stock Exchange’s requirements on Directors’ remuneration. In particular the Company has applied all of
the relevant principles set out in UK Corporate Governance Code (2010). In designing schemes of
performance-related remuneration, the Remuneration Committee has given full consideration to the
provisions in UK Corporate Governance Code (2010).
Details of the interests of Directors and Secretary in shares and options are set out earlier in this Report
and details of Directors’ remuneration are given in Note 26 to the financial statements.
Relations with Shareholders
Recognising the importance of communications with shareholders the Board seeks to provide through its
Annual Report a clear and balanced assessment of Group performance and prospects. The Group’s
Internet website, www.norish.com, provides investors with the full text of the Annual and Interim Reports.
The Chairman and Directors maintain an ongoing dialogue with the Company’s institutional shareholders
on strategic issues. All shareholders are encouraged to attend the Annual General Meeting.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 19
DIRECTORS’ REPORT (CONTINUED)
Internal control
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its
effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve
business objectives, and can only provide reasonable and not absolute assurance against material
misstatement or loss.
The Board confirms that an ongoing process for identifying, evaluating and managing the significant risks
faced by the Group has been put in place for the year under review and up to the date of approval of the
annual report and accounts, and that this process is regularly reviewed by the board and accords with the
2010 UK Corporate Governance Code.
The Board has reviewed the effectiveness of the system of internal control. In particular it has reviewed
the process for identifying and evaluating the significant risks affecting the business and the policies and
procedures by which these risks are managed.
The Group’s overall internal control system includes:
an organisation structure with clearly defined lines of authority and accountability;
appropriate terms of reference for Board committees with clearly stated responsibilities;
a budgeting and monthly financial reporting system for all Group business units, which enables close
monitoring of performance against plan and facilitates remedial action where necessary;
comprehensive policies and procedures in relation to financial controls, capital expenditure,
operational risk and treasury and credit risk management.
The Group’s system of internal financial controls is established to provide reasonable assurance of :
the maintenance of proper accounting records and the reliability of financial information;
the safeguarding of assets against unauthorised use or disposal; and
the prevention or early detection of material errors or irregularities.
The Group’s internal controls, including financial controls, are reviewed systematically by the Audit
Committee. In these reviews the emphasis is placed on areas of significant risk. The Finance Director is
responsible for carrying out detailed risk assessments in all business units and for reporting to divisional
and ultimately senior management on the effectiveness of the internal control system.
20 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
DIRECTORS’ REPORT (CONTINUED)
Audit Committee and Auditors
The Audit Committee is chaired by Willie McCarter. The other member is Torgeir Mantor. Its written
terms of reference deal clearly with its authority and duties. The committee meets to review the group’s
annual financial statements before their submission to the Board, to review the appropriateness and
effectiveness of the Group’s internal controls, accounting policies and procedures and financial reporting
and also to assess the effectiveness of the external audit and the Group Internal Audit function.
The Group’s policy regarding external auditor independence and the provision of non-audit services by
the external auditors is that, where appropriate, non-audit related work is put out to competitive tender.
Details of the year’s fees payable to the external auditors are given in Note 9 to the financial statements.
The Directors and senior management, the Group’s external auditors and internal audit, as appropriate,
attend meetings of the committee.
Compliance statement
Norish has complied during the year to 31 December 2011 with all provisions of the Principles of Good
Governance and Code of Best Practice as contained in the 2010 UK Corporate Governance Code except
for the following matters:
The Board’s Nomination Committee consists of all members of the Board. This decision was taken
because of the small size of the board.
Due to the small size of the Board, performance evaluation of the Board, its Committees and Directors
has not been conducted.
Most of the directors have a direct interest in the share capital of Norish plc as detailed on page 14.
Willie McCarter is the only director who does not have any beneficial interest in the share capital.
Going concern
The Directors, having made appropriate enquiries, have a reasonable expectation that the Group as a
whole has adequate resources to continue in operation for the foreseeable future. This includes sufficient
banking facilities of which £2.1m (2010: £1.3m) were undrawn at the year end and a portfolio of freehold
and long leasehold properties. They have also reviewed the Bank Covenant position for the next 2 years
and it is for this reason they consider it appropriate to adopt the going concern basis in preparing the
financial statements.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 21
DIRECTORS’ REPORT (CONTINUED)
Accounting records
The Directors believe that they have complied with the requirements of Section 202 of the Companies
Act, 1990 with regard to books of account by employing accounting personnel with appropriate expertise
and by providing adequate resources to the financial function. The books of account of the Company are
maintained at Northern Industrial Estate, Bury St Edmunds, Suffolk, IP32 6NL. The Executive Chairman
maintains records in Ireland for the purposes of Section 202(6) of the Companies Act, 1990.
Auditor
In accordance with Section 160(2) of the Companies Act 1963 the auditors, Grant Thornton, Registered
Auditors, will continue in office.
On behalf of the board:
T.J. O’Neill
Chairman
N.A Hatcliff
Managing Director
7 March 2012
22 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT
OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Annual Report and the financial statements, in accordance
with applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each
financial year. Under that law the directors have elected to prepare the group financial statements in
accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union,
and the parent company financial statements in accordance with Generally Accepted Accounting Practice
in Ireland.
The group and parent company financial statements are required by law to give a true and fair view of the
state of affairs of the group and the parent company and of the profit or loss of the group for that period.
In preparing each of the group and parent company financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the group and the parent company will continue in business.
The directors are responsible for keeping proper books of account that disclose with reasonable accuracy
at any time the financial position of the parent company and enable them to ensure that its financial
statements comply with the Companies Acts 1963 to 2009, and the Alternative Investments Market (AIM)
rules. They are also responsible for taking such steps as are reasonably open to them to safeguard the
assets of the group and to prevent and detect fraud and other irregularities.
The directors are also responsible for preparing a Directors’ Report that complies with the requirements of
the Companies Acts 1963 to 2009.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company’s website. Legislation in the Republic of Ireland governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
T.J. O’Neill
Chairman
N.A. Hatcliff
Managing Director
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 23
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC
We have audited the group and parent company financial statements (the ‘financial statements’) of
Norish plc for the year ended 31st December 2011 including the Consolidated Statement of
Comprehensive Income, Consolidated Statement of Financial Position, the Consolidated Statement of
Changes in Equity, the Consolidated Cash Flow Statement and the Company Balance Sheet, and the
related notes. These financial statements have been prepared under the accounting policies set out
therein.
Respective responsibilities of directors and auditors
As set out in the Statement of Directors Responsibilities, the company’s directors’ are responsible for
the preparation of the Annual Report and the group financial statements in accordance with
applicable law and International Financial Reporting Standards (IFRS) as adopted by the European
Union, and the parent company financial statements in accordance with applicable law and Generally
Accepted Accounting Practice in Ireland including the accounting standards issued by the
Accounting Standards Board and published by Chartered Accountants Ireland.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory
requirements and International Standards on Auditing (UK and Ireland).
This report, is made solely to the company’s members, as a body, in accordance with section 193 of
the Companies Act 1990 and Regulations 9 and 13 of the European communities (Directive
2006/46/EC) Regulations, 2009. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. We do not, in giving this opinion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the group financial statements give a true and fair view,
in accordance with IFRS as adopted by the European Union, and the parent company financial
statements give a true and fair view in accordance with Generally Accepted Accounting Practice in
Ireland, and are properly prepared in accordance with the Companies Acts, 1963 to 2009, and the
European Communities (Companies: Group Accounts) Regulations, 1992. We also report to you
whether in our opinion proper books of account have been kept by the company, whether at the
balance sheet date, there exists a financial situation requiring the convening of an Extraordinary
General Meeting of the company; and whether the information given in the Directors’ Report is
consistent with the financial statements. In addition, we state whether we have obtained all the
information and explanations necessary for the purposes of our audit and whether the company’s
balance sheet is in agreement with the books of account.
We also report to you if, in our opinion, any information specified by law regarding directors’
remuneration and directors’ transactions is not disclosed and, where practicable, include such
information in our report.
We read the other information contained in the Annual Report, and consider whether it is consistent with
the audited financial statements. This other information comprises the Corporate Profile and Information,
the Financial Highlights, the Directors’ Report, the Chairman’s Statement, Shareholder and Board of
Directors information, the Financial Review and the Historical Financial Summary. We consider the
implications for our report if we become aware of any apparent misstatements or material inconsistencies
with the financial statements. Our responsibilities do not extend to any other information.
24 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC (CONTINUED)
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland), issued
by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to
the amounts and disclosures in the financial statements. It also includes an assessment of the significant
estimates and judgements made by the directors in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the group’s and company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or other irregularity or
error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in
the financial statements.
Opinion
In our opinion:
the group financial statements give a true and fair view, in accordance with IFRS as adopted by
the European Union, of the state of the group’s affairs as at 31 December 2011 and of the group’s
result for the year then ended; and
the group financial statements have been properly prepared in accordance with the requirements
of the Companies Acts 1963 to 2009 and the European Communities (Companies: Group
Accounts) Regulations, 1992;
the parent company financial statements give a true and fair view in accordance with Generally
Accepted Accounting Practice in Ireland of the state of the company’s affairs as at 31 December
2011; and
the parent company financial statements have been properly prepared in accordance with the
Companies Acts, 1963 to 2009.
We have obtained all the information and explanations that we consider necessary for the purposes of our
audit. In our opinion, proper books of account have been kept by the company. The company’s balance
sheet is in agreement with the books of account.
In our opinion, the information given in the directors’ report is consistent with the financial statements.
The net assets of the company as stated in the balance sheet, are more than half of the amount of its
called-up share capital and, in our opinion, on that basis there did not exist at 31 December 2011 a
financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require
the convening of an extraordinary general meeting of the company.
SINEAD DONOVAN (Senior Statutory Auditor)
For and on behalf of
Grant Thornton
Chartered Accountants &
Statutory Auditor
7 March 2012
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 25
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2011
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Operating profit from continuing operations
Finance expenses-interest paid
Finance expenses- fair value loss swaps/caps
Finance income
Profit on continuing activities before taxation
Income taxes – Corporation tax
Income taxes – Deferred tax
Notes
5
6
8
8
8
9
10
10
Profit for the period attributable to owners of the
parent
Other comprehensive income
Total comprehensive income for the period
attributable to owners of the parent
Earnings per share expressed in pence per share:
From continuing operations
- basic
- diluted
11
2011
£’000
2010
£’000
11,213
(10,375)
10,654
(9,850)
838
804
190
(362)
666
(186)
(89)
15
406
(80)
36
362
-
362
410
(481)
733
(278)
-
97
552
81
(192)
441
-
441
4.3p
4.3p
5.2p
5.2p
The notes on page 30 to 66 are an integral part of these consolidated financial statements.
Approved on behalf of the board on 7 March 2012 by:
T.J. O’Neill
Chairman
N.A. Hatcliff
Managing Director
26 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2011
Assets
Non current assets
Goodwill
Property, plant and equipment
Derivative financial instruments
Current assets
Trade and other receivables
Current tax asset
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Financial liabilities: Fair value of interest rate swaps/caps
Current tax liabilities
Borrowings
Net current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax
Net assets
Equity
Share capital
Share premium account
Capital conversion reserve fund
Retained earnings
Equity attributable to equity holders of the parent
Notes
12
13
14
15
23
17
16
18
18
19
20
21
22
2011
£’000
2010
£’000
216
15,379
669
16,264
2,827
-
50
2,877
216
15,384
479
16,079
2,494
10
194
2,698
(2,892)
(102)
(81)
(991)
(4,066)
(2,556)
(13)
-
(666)
(3,235)
(1,189)
(537)
(5,856)
(139)
(1,055)
(7,050)
8,025
(6,442)
(509)
(1,091)
(8,042)
7,500
1,674
3,229
23
3,099
8,025
1,493
3,156
23
2,828
7,500
The notes on page 30 to 66 are an integral part of these consolidated financial statements.
Approved on behalf of the board on 7 March 2012 by:
T.J. O’Neill
Chairman
N.A. Hatcliff
Managing Director
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 27
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2011
Share
capital
£'000
Capital
Share Conversion
Reserve
£'000
premium
£'000
Retained
earnings
£'000
Total
£'000
At 1 January 2010
1,493
3,156
23
2,373
7,045
Net profit for the year
Total comprehensive income for the year
Credit in respect of employee share schemes
Equity dividends paid (recognised directly in
equity)
-
-
-
-
-
-
-
-
-
441
441
14
-
441
441
14
-
At 31 December 2010
1,493
3,156
23
2,828
7,500
Net profit for the year
Total comprehensive income for the year
Credit in respect of employee share schemes
Issue of share capital
Equity dividends paid (recognised directly in
equity)
At 31 December 2011
-
-
-
181
-
-
-
73
-
-
-
-
1,674
3,229
23
362
362
1
-
(92)
3,099
362
362
1
254
(92)
8,025
The notes on page 30 to 66 are an integral part of these consolidated financial statements.
28 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2011
Profit on continuing activities before taxation
Adjustments for:
Finance expenses
Finance income
Fair value (losses)/gains on interest rate swaps/caps
Depreciation – property, plant and equipment
Employee share schemes
Changes in working capital and provisions:
Increase in trade and other receivables
Increase in payables
Decrease in provisions
Cash generated from operations
Interest paid - bank loans and overdrafts
Taxation refund/(paid)
Net cash from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities
Dividends paid to shareholders
Share issue proceeds
Invoice finance receipts
Finance lease funding
Finance lease capital repayments
Term loan advance
Term loan repayments
Net cash used in financing activities
Notes
2011
£’000
2010
£’000
406
552
275
(15)
(89)
569
1
1,147
(523)
425
(370)
679
(186)
11
504
15
(564)
(549)
(92)
254
278
155
(28)
-
(666)
(99)
278
(97)
97
608
14
1,452
(413)
186
(60)
1,165
(278)
(13)
874
-
(966)
(966)
-
-
-
-
-
500
(659)
(159)
24
Net decrease in cash and cash equivalents
(144)
(251)
Cash and cash equivalents and bank overdrafts,
beginning of period
Cash and cash equivalents end of period
23
23
194
50
445
194
The notes on page 30 to 66 are an integral part of these consolidated financial statements.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 29
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
General information
1
Norish plc is a provider of temperature controlled, ambient storage and related services to the
food industry in the United Kingdom.
The company is listed on the Alternative Investments Market (“AIM”), and is incorporated and
domiciled in the Republic of Ireland. The address of its registered office is Norish plc, 6th Floor,
South Bank House, Barrow Street, Dublin 4, Republic of Ireland.
Summary of significant accounting policies
2
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements of Norish plc have been prepared in accordance with
International Financial Reporting Standards (IFRS), as adopted by the European Union,
applicable Irish law and the AIM rules.
The financial statements have been prepared under the historical cost convention as modified by
the revaluation of financial assets and financial liabilities (including derivative instruments) at
fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies.
Going concern
The Directors, having made appropriate enquiries, have a reasonable expectation that the Group
as a whole has adequate resources to continue in operation for the foreseeable future. This
includes sufficient banking facilities of which £2.1m (2010 : £1.3m) were undrawn at the year
end and a portfolio of freehold and long leasehold properties. They have also reviewed the Bank
Covenant position for the next 2 years and it is for this reason they consider it appropriate to
adopt the going concern basis in preparing the financial statements.
30 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Forthcoming accounting standards
Amendment to IAS 12 Income Taxes (effective 1 January 2012)
Amendment to IAS 32 Presentation and classification of rights issue (effective 1 January 2012)
IFRS 9 Financial instruments (effective 1 January 2013)
Changes in accounting policies
The Group has adopted the following new interpretations, revision and amendments to IFRS
issued by the IASB, which are relevant to and effective for the Group’s financial statements for
the annual period beginning 1 January 2011:
Improvements to IFRS’s 2010
Improvements to IFRS’s 2010
The Improvements to IFRS’s 2010 made several minor amendments to IFRS’s. None of the
improvements are relevant to the Group and have not resulted in a change of accounting policy or
presentation.
Standards, amendments and interpretations to existing standards that are not yet effective
and have not been adopted early by the Group
At the date of authorisation of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published by the IASB but are not yet effective,
and have not been adopted early by the Group.
Management anticipates that all of the pronouncements will be adopted in the Group's accounting
policies for the first period beginning after the effective date of the pronouncement. Information
on new standards, amendments and interpretations that are expected to be relevant to the Group’s
financial statements is provided below. Certain other new standards and interpretations have been
issued but are not expected to have a material impact on the Group's financial statements.
IFRS 9 Financial Instruments (effective from 1 January 2013)
The IASB aims to replace IAS 39 Financial Instruments: Recognition and Measurement in its
entirety. The replacement standard (IFRS 9) is being issued in phases. To date, the chapters
dealing with recognition, classification, measurement and derecognition of financial assets and
liabilities have been issued. These chapters are effective for annual periods beginning 1 January
2013. Further chapters dealing with impairment methodology and hedge accounting are still
being developed.
Management have yet to assess the impact that this amendment is likely to have on the financial
statements of the Group. However, they do not expect to implement IFRS 9 until all of its
chapters have been published and they can comprehensively assess the impact of all changes.
Consolidation Standards
A package of consolidation standards are effective for annual periods beginning on or after 1
January 2013. Information on these new standards is presented below. The Group’s management
have yet to assess the impact of these new and revised standards on the Group’s Consolidated
Financial Statements.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 31
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
IFRS 10 Consolidated Financial Statements (IFRS 10)
IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements (IAS 27) and SIC
12 Consolidation – Special Purpose Entities. It revised the definition of control together with
accompanying guidance to identify an interest in a subsidiary. However, the requirements and
mechanics of consolidation and the accounting for any non-controlling interests and changes in
control remain the same.
IFRS 11 Joint Arrangements (IFRS 11)
IFRS 11 supersedes IAS 31 Interests in Joint Ventures (IAS 31). It aligns more closely the
accounting by the investors with their rights and obligations relating to the joint arrangement. In
addition, IAS 31’s option of using proportionate consolidation for joint ventures has been
eliminated. IFRS 11 now requires the use of the equity accounting method, which is currently
used for investments in associates.
IFRS 12 Disclosure of Interests in Other Entities (IFRS 12)
IFRS 12 integrates and makes consistent the disclosure requirements for various types of
investments,
introduces new disclosure
requirements about the risks to which an entity is exposed from its involvement with structured
entities.
including unconsolidated structured entities. It
Consequential amendments to IAS 27 and IAS 28 Investments in Associates and Joint
Ventures (IAS 28)
IAS 27 now only deals with separate financial statements. IAS 28 brings investments in joint
ventures into its scope. However, IAS 28’s equity accounting methodology remains unchanged.
IFRS 13 Fair Value Measurement (IFRS 13)
IFRS 13 does not affect which items are required to be fair-valued, but clarifies the definition of
fair value and provides related guidance and enhanced disclosures about fair value
measurements. It is applicable for annual periods beginning on or after 1 January 2013. The
Group’s management have yet to assess the impact of this new standard.
Amendments to IAS 1 Presentation of Financial Statements (IAS 1 Amendments)
The IAS 1 Amendments require an entity to group items presented in other comprehensive
income into those that, in accordance with other IFRSs: (a) will not be reclassified subsequently
to profit or loss and (b) will be reclassified subsequently to profit or loss when specific
conditions are met. It is applicable for annual periods beginning on or after 1 July 2012. The
Group’s management expects this will change the current presentation of items in other
comprehensive income; however, it will not affect the measurement or recognition of such items.
Amendments to IAS 19 Employee Benefits (IAS 19 Amendments)
The IAS 19 Amendments include a number of targeted improvements throughout the Standard.
The main changes relate to defined benefit plans. They:
• eliminate the ‘corridor method’, requiring entities to recognise all gains and losses arising in the
reporting period
• streamline the presentation of changes in plan assets and liabilities
• enhance the disclosure requirements, including information about the characteristics of defined
benefit plans and the risks that entities are exposed to through participation in them.
The amended version of IAS 19 is effective for financial years beginning on or after 1 January
2013. The Group’s management have yet to assess the impact of this revised standard on the
Group’s Consolidated Financial Statements.
32 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Basis of consolidation
The Group’s Consolidated Financial Statements include the results of Norish plc and its
subsidiary undertakings for that period.
Subsidiaries are all entities over which the Group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are de-consolidated
from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated but considered an impairment
indicator of the asset transferred.
The accounting policies of the subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group. Where necessary, consolidation adjustments
have been made to ensure that the Group accounts apply consistent accounting policies.
Business combinations and goodwill
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
Group.
Goodwill represents the excess of the fair value of the purchase consideration for the subsidiary
undertakings over the fair value of the identifiable assets, including any intangible assets
identified, and liabilities of a subsidiary at the date of acquisition.
Goodwill arising on acquisitions is capitalised and subject to impairment review at least
annually, but also when there are indications that the carrying value may not be recoverable.
Any impairment is recognised immediately in the Consolidated Statement of Comprehensive
Income and is not subsequently reversed.
Prior to 1 January 1997, goodwill was written off to reserves in the year of acquisition. Goodwill
after this date until the adoption of IFRS on 1 January 2006 was capitalised and amortised over
its useful economic life, which was presumed to be 20 years. The Group has elected not to apply
IFRS 3 “Business combinations”(as updated by IFRS 3(R)) retrospectively to business
combinations that took place before 1 January 2006 and, as a result, all goodwill arising from
prior business combinations has been frozen at this date. Any goodwill remaining on the
consolidated statement of financial position at transition is no longer being amortised but is
subject to impairment review.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 33
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any
impairment in value. Historical cost includes all expenditure that is directly attributable to the
acquisition of the assets. Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when the costs provide enhancement, it is
probable that future economic benefits associated from the item will flow to the Group and the
cost of the enhancement can be measured reliably. The asset’s residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of each reporting period. Assets carrying amount
is written down immediately to its recoverable amount if the assets carrying amount is greater
than the estimated recoverable amount. All other repair and maintenance costs are charged to the
profit or loss during the financial period in which they are incurred.
With the exception of freehold land, depreciation is provided to write off the cost less the
estimated residual value of property, plant and equipment by equal annual instalments over their
estimated useful economic lives (or lease terms if shorter) which are as follows:
Freehold buildings
Leasehold buildings
Plant and equipment
Freehold land is not depreciated.
50 to 55 years
35 years
3 to 10 years
Impairment charges
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value,
reflecting market conditions less costs to sell, and value in use based on an internal discounted cash
flow evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been
allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is
charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all
assets are subsequently reassessed for indications that an impairment loss previously recognised may
no longer exist.
The goodwill relates solely to the York site which is a separate cash-generating unit within the ambient
storage division, where an impairment review is carried out annually.
Any impairment recognised are recorded in the Consolidated Statement of Comprehensive Income.
Revenue recognition
Revenue, which arises principally from storage and handling income, represents net sales to
customers outside the Group, and excludes Value Added Tax. Income from sub-letting of
warehouses is also included in revenue.
Handling revenue when invoiced relates to the receipt and eventual delivery of goods. The
portion that relates to the delivery is recognised when the goods are delivered out of store.
Revenue in respect of the storage is invoiced in advance and is recognised over the period that
the storage is provided
Revenue from all other activities is recognised in the periods in which the services are provided.
34 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Financial assets/liabilities
The Group classifies its financial assets/liabilities in the following categories: at fair value
through profit or loss, loans and receivables, or available for sale. The classification depends on
the purpose for which the financial assets/liabilities were acquired. Management determines the
classification of its financial assets/liabilities at initial recognition.
An assessment of whether a financial asset is impaired is made at least at each reporting date.
Receivables are non derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Receivables are considered for impairment on a case for case basis
when they are past due at the Consolidated Statement of Financial Position date or when
objective evidence is received that a specific counterparty will default.
a) Financial assets/liabilities at fair value through profit or loss
The financial assets/liabilities relate to derivatives. The Group utilises interest rate swaps
to hedge against its interest rate exposure. The Group has also protected its interest in
refrigerant gas by way of an option to purchase. The interest rate swaps and refrigerant
gas are initially recorded at fair value and the fair value is re-measured at each
consolidated statement of financial position date. Fair value is obtained from external
market valuations on the basis that there is an active market for the refrigerant gas and the
interest rate swaps and caps. Gains and losses arising from changes in fair value are
recognised in the profit or loss in the period in which they arise. All recognised gains or
losses resulting from the settlement of the interest rate swap contract are recorded within
Finance Expenses in the profit or loss. All recognised gains or losses resulting from the
option to purchase refrigerant gas are recorded in Other Income in the profit or loss. The
Group does not hedge account.
b) Loans and receivables
These are non derivative financial assets with fixed or determinable payments that are not
quoted on an active market. They are included in current assets, except for maturities
greater than 12 months after the Consolidated Statement of Financial Position date, which
are classified as non-current assets. Loans and receivables are carried at amortised cost.
Purchases and sales of financial assets are recognised on the trade date (the date at which the
Group commits to purchase or sell the asset). Financial assets are derecognised when the rights
to receive the cash flows have expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership. Any impairment recognised are recorded in
the Consolidated Statement of Comprehensive Income.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently re-measured at amortised
cost, less provision for impairment. Trade receivables are first assessed individually for
impairment, or collectively where the receivables are not individually significant. Where there is
no objective evidence of impairment for an individual receivable, it is included in a group of
receivables with similar credit risk characteristics and these are collectively assessed for
impairment. Movements in the provision for impairment of trade receivables are recorded in the
profit or loss.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 35
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred
tax is generally provided on the difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill,
nor on the initial recognition of an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on temporary differences associated
with shares in subsidiaries is not provided if reversal of these temporary differences can be
controlled by the group and it is probable that reversal will not occur in the foreseeable future. In
addition, tax losses available to be carried forward as well as other income tax credits to the group
are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised
to the extent that it is probable that the underlying deductible temporary differences will be able to
be offset against future taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of realisation, provided they are
enacted or substantively enacted at the Consolidated Statement of Financial Position date.
The Group have applied the dual recovery method of deferred tax, where deemed appropriate, with
regard to properties which are expected to be disposed of in the near future. This allows the Group
to calculate the basis of recovery of the depreciable amount through use, followed by the recovery
of the residual value through disposal.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the
profit or loss, except where they relate to items that are charged or credited directly to other
comprehensive income in which case the related deferred tax is also charged or credited directly to
other comprehensive income.
Foreign currencies
Transactions in foreign currencies by individual entities are recorded using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are translated using the rate of exchange ruling at the Consolidated Statement of
Financial Position date and the gains or losses on translation are included in the other
comprehensive income.
Non-monetary items measured at historical cost are translated using the exchange rates at the
date of the transaction (not retranslated). Non-monetary items measured at fair value are
translated using the exchange rates at the date when fair value was determined. The gains or
losses on translation are included in the other comprehensive income.
36 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Leased assets
Leases are classified as finance leases whenever the terms of the lease transfer substantially all
the risks and rewards of ownership to the lessee. All other leases are classified as operating
leases.
Expenditure on operating leases is charged to the profit or loss on a basis representative of the
benefit derived from the asset, normally on a straight-line basis over the lease period. Benefits
received as an incentive to enter into an operating lease are also spread on a straight-line basis
over the lease term.
Assets held under finance leases are capitalised and included in property, plant and equipment at
fair value. Leases of land and buildings are classified separately and are split into a land and
building element in accordance with the relative fair values of the leasehold interest at the date
the asset is recognised initially. Depreciation is calculated using expected useful lives on the
same basis as owned assets or, where shorter, over the term of the relevant lease. The capital
elements of obligations under finance leases are recorded as liabilities. The interest elements is
charged to the profit or loss over the lease term to give a constant periodic rate of interest on the
outstanding liability.
Pension costs
The costs of providing defined contribution pensions are charged to administrative expenses as
they fall due. The scheme funds are administered by trustees and are independent of the Group’s
finances. Differences between the amounts charged to the profit or loss and payments made to
the pension scheme are treated as prepayments or accruals, as necessary.
Dividends
Distributions to equity holders are not recognised in the profit or loss, but are disclosed as a
component of the movement in shareholders’ equity. Dividends unpaid at the consolidated
statement of financial position date are only recognised as a liability at that date to the extent that
they are appropriately authorised and no longer at the discretion of the Company. Unpaid
dividends that do not meet these criteria are disclosed in the notes to the financial statements.
Dividends are paid in Euros. Under the Twin Share Scheme Shareholders can opt to receive their
dividends in Sterling if they make the appropriate election in time to the company register. The
Euro amount is converted to Sterling at the official exchange rate 14 days before the payment
date.
Net cash and cash equivalents
Net cash and cash equivalents in the Consolidated Statement of Financial Position and
Consolidated Cash Flow Statement comprise of cash at bank and in hand and short-term deposits
with an original maturity of less than three months.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 37
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Share based payments
The Group issues equity-settled share-based payments to certain employees. In accordance with
IFRS 2, “Share-based payments”, equity-settled share-based payments are measured at fair value
at the date of grant. Fair value is measured by use of the Black-Scholes pricing model. The fair
value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of the number of shares
that will eventually vest.
The Group has applied the exemption available, and has applied the provisions of IFRS 2 only to
those options granted after 7 November 2002 and which were outstanding at 1 January 2006 and
all options issued since that date.
The share-based payments charge is allocated to administrative expenses on the basis of
headcount.
Employer’s taxes on share options
Employer’s National Insurance in the UK and equivalent taxes in other jurisdictions are payable
on the exercise of certain share options. In accordance with IFRS 2, this is treated as a cash-
settled transaction. A provision is made, calculated using the fair value of the Group’s shares at
the Consolidated Statement of Financial Position date, pro-rated over the vesting period of the
options.
Equity
Share capital represents the nominal value of shares that have been issued.
Share Premium includes any premiums received on issue of share capital. Any transaction costs
associated with the issuing of shares are deducted from share premium, net of any related income tax
benefits.
Retained earnings include all current and prior period retained profits.
All transactions with owners of the parent are recorded separately with equity.
38 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3
Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency
risk, fair value interest rate risk, cash flow interest rate risk, fair value refrigerant gas risk)
credit risk and liquidity risk. The Group’s overall risk management programme seeks to
minimise potential adverse effects on the Group’s financial performance. The Group uses
certain derivative instruments to minimise certain risk exposures.
a) Market risk
i) Foreign exchange risk
As the group has no major transactions in currency other than Pounds sterling, it is not
subject to foreign exchange risk. The only foreign currency transaction is in respect of
those dividends that are paid in Euros.
ii) Cash flow and fair value interest rate risk
As the Group has no significant interest bearing assets, the Group’s income and operating
cash flows are substantially independent of changes to market interest rates.
The Group’s interest rate risk arises from long term borrowings. Borrowings issued at
variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed
rates expose the Group to fair value interest rate risk. During 2011 and 2010, the Group’s
borrowings at variable rate were denominated in Pounds Sterling.
The Group manages its cash flow interest rate risk by using interest rate swaps and caps.
Such interest rate swaps have the economic effect of converting borrowings from floating
rates to fixed rates. Under the interest rate swap, the Group agrees with HSBC Bank plc
to exchange, at quarterly intervals, the difference between fixed contract rates and
floating-rate interest amounts by reference to the agreed notional amounts.
At 31 December 2011, if interest rates had been 1% higher with all other variables held
constant, post tax profit for the year would have been £32,000 lower, mainly as a result of
higher interest expenses on floating rate borrowings.
At 31 December 2010, if interest rates had been 1% higher with all other variables held
constant, post tax profit for the year would have been £30,000 lower, mainly as a result of
higher interest expenses on floating rate borrowings.
b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash
equivalents, derivative financial instruments and deposits with banks, as well as credit
exposure to customers, including outstanding receivables and committed transactions.
The credit risk in relation to trade receivables is reduced because, in most cases, the
Group has physical custody of the customer’s inventory. While this does not legally
constitute collateral in respect of trade receivables, it does provide the Group with a
degree of leverage over customers with overdue receivables balances.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 39
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash
equivalents, the availability of funding through an adequate amount of committed credit
facilities and the ability to close out market positions. The Group aims to maintain
flexibility in funding by keeping committed credit lines available.
The Group aims to ensure that a significant portion of its borrowings should mature in
more than one year.
The table below analyses the Group’s financial liabilities which will be settled on a net
basis into relevant maturity groupings based on the remaining period at the Consolidated
Statement of Financial Position to the contractual maturity period. The amounts
disclosed in the table below are the contractual undiscounted cash flows.
At 31 December 2011:
Trade payables
Bank overdraft
Invoice finance
Finance Leases
Term loan Interest
SWAP Interest
Bank loans
Within
1 year
£’000
1,559
-
278
56
110
44
667
2,714
At 31 December 2010:
Trade payables
Bank overdraft
Invoice finance
Term loan Interest
Bank loans
Within
1 year
£’000
1,166
-
-
173
666
2,005
1 to 2
years
£’000
-
-
-
56
112
44
667
879
1 to 2
years
£’000
-
-
-
172
666
838
2 to 5
years
£’000
-
-
-
31
314
116
2,000
2,461
2 to 5
years
£’000
-
-
-
540
2,000
2,540
Greater
than 5 years
£’000
-
-
-
-
272
-
3,108
Total
£’000
1,559
-
278
143
808
204
6,442
3,380
9,434
Greater
than 5 years
£’000
-
-
-
629
3,776
Total
£’000
1,166
-
-
1,514
7,108
4,405
9,788
d) Refrigerant gas risk
Refrigerant gas risk is evaluated regularly by management to ensure that sufficient
supplies are available to meet day to day requirements together with ensuring that the
groups asset is not exposed to adverse market rate risk. Professional advisors are engaged
to advise management on the market conditions.
At 31 December 2011 and 31 December 2010, if refrigerant R22R gas price per kg had
been £1 lower, post tax profit for the year would have been £39,000 lower.
40 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to
continue as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, to return capital to shareholders, issue new shares or sell
assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio, calculated as net borrowings
(cash less total borrowings) divided by shareholders equity (excluding goodwill). The group
has managed to increase shareholders funds from £7.5m to £8m. This has resulted in the
gearing ratio reducing from 95% to 87% as detailed below.
The Group’s strategy is to reduce the net borrowings as soon as possible.
The gearing ratios at 31 December 2011 and 2010 were as follows:
Total borrowings
Less cash and cash equivalents
Net borrowings
Net assets
Less goodwill
Capital employed
Gearing ratio
2011
£’000
6,847
50
6,797
8,025
216
7,809
87%
2010
£’000
7,108
194
6,914
7,500
216
7,284
95%
3.3 Fair value estimation
The fair value of interest rate swaps is calculated as the present value of the estimated future
cash flows.
The carrying value less impairment provision of trade receivables and payables are assumed
to approximate their fair values due to the short term nature of trade receivables and payables.
Assets measured at fair value as at 31 December 2011
Total
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Financial assets at fair value
through profit or loss
Interest rate swaps/caps
Available for sale financial assets
Derivative financial instruments
Total
102
102
-
669
771
-
102
669
669
-
-
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 41
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The group has had two independent valuations obtained on the fair value option price of the R22
refrigeration gas. One of these valuations was in the form of a Black Scholes calculation, and the
other a discounted cash flow model. The annual discount factor applied was 7.3% and a critical
assumption was that the R22 refrigeration gas will be disposed of within the 2012 and 2013
financial years when the full value will be realised.
4
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectation of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates, will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of carrying a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are in relation to the impairment
review of goodwill.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the
accounting policy set out in Note 2. The recoverable amounts of cash generating units have been
based on the fair value of the sites less costs to sell. (Note 12)
The Group provides for dilapidations in respect of properties that it leases where a repairing
obligation exists. The Group takes professional advice in this area and uses its best judgement to
provide for these where necessary under provisions and accruals. It is uncertain as to when they
are likely to be paid.
The Group recognises revenue in the period which the services are provided. An appropriate
proportion of handling revenue invoiced in advance is deferred until the inventory is despatched.
As disclosed in note 14 to the financial statements, the group hold an option to purchase
44,808kg of re-cycled R22 at £4.05 per kg which is below current market value. Under IAS 39
the group must assign a fair value to this option and this must be done by applying a recognised
valuation technique. In order to assess the valuation at 31 December 2011, the group obtained an
independent valuation of the option which was calculated by applying the Black Scholes model.
Key assumptions used in this calculation were, maturity being within 2 years; risk free interest
rate of 2.5% and annual volatility factor of 50%.
In order to further support the above valuation, the group prepared a discounted cash-flow, with
the assistance of a valuation expert. The key assumptions applied to this calculation were an
annual discount factor of 7.3%; price points were selected based on the Groups stated strategy for
sale which is within 2 years; price trajectories set based on current market information with an
assumed maximum price of £30 per kg applied and probabilities assigned based on the current
market knowledge of the R22 market.
The Group has made a critical judgement and applied the dual recovery method with regard to
deferred tax in respect of its property portfolio. This could materially impact on future results if
this fails to materialise. It is expected to sell one of its freehold properties within the next 3
years, which if this does not materialise then it will have an impact on the deferred tax
calculation in future years.
The Group has carried out an impairment review at its Wrexham site in 2011. It has made an
assumption of increasing the contribution at the site by way of cost reduction in 2012 and expects
the contribution to grow by 2.5% per annum thereafter. The annual discount factor applied in this
review was 7.3% and a critical assumption is that the site will be disposed of within 3 years.
42 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Segmental information
5
Management currently identifies the Group's two service lines as operating segments. These
operating segments are monitored and strategic decisions are made on the basis of segment operating
results. The Group operates in one geographical segment, being the United Kingdom.
Segment information can be analysed as follows for the reporting periods under review:
Ambient storage locations
Cold storage locations
During 2011 £1.571m or 14% of the Group’s revenues depended on a single customer in the cold
storage segment.(2010 £1.697m or 15.9%).
Revenue from continuing operations in 2011 includes £206,000 (2010: £206,000) in relation to the
sub-letting of Felixstowe warehouses. This is attributed to the ambient storage segment.
The segment results for the year ended 31 December 2011 are:
Total segment revenue
Ambient
Storage
£’000
890
Cold
Storage Unallocated
£’000
-
£’000
10,323
Total
£’000
11,213
Revenue
890
10,323
-
11,213
Operating profit
Finance income
Finance cost-fair value loss
Finance cost-Interest paid
Profit before income tax
Income tax – corporation tax
Income tax – deferred tax
134
-
-
134
-
-
532
-
-
532
-
-
-
15
(89)
(186)
666
15
(89)
(186)
(260)
406
(80)
36
(80)
36
Profit for the year
134
532
(304)
362
Other segment items:
Ambient
Storage
£’000
Cold
Storage Unallocated
£’000
£’000
Depreciation (Note 13)
61
508
-
Total
£’000
569
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 43
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The segment results for the year ended 31 December 2010 are:
Total segment revenue
Ambient
Storage
£’000
865
Cold
Storage Unallocated
£’000
-
£’000
9,789
Total
£’000
10,654
Revenue
865
9,789
-
10,654
Operating profit
Finance income
Finance cost
Profit before income tax
Income tax – corporation tax
Income tax – deferred tax
Profit for the year
Other segment items:
185
-
-
185
-
-
185
548
-
-
548
-
-
548
-
97
(278)
(181)
81
(192)
733
97
(278)
552
81
(192)
(292)
441
Ambient
Storage
£’000
Cold
Storage Unallocated
£’000
£’000
Depreciation (Note 13)
62
546
-
Total
£’000
608
Segment assets consist primarily of property, plant and equipment, goodwill, refrigerant gas, trade
and other receivables. Unallocated assets comprise financial assets at fair value through profit or
loss.
Segment liabilities consist primarily of trade and other payables. Unallocated liabilities comprise
items such as current tax liabilities, deferred tax, financial liabilities at fair value through
consolidated statement of comprehensive income, provisions and borrowings.
Capital expenditure comprises additions to property, plant and equipment.
44 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The segment assets and liabilities at 31 December 2011 and the capital expenditure for the year then
ended are as follows:
Assets
Liabilities
Ambient
Storage
£’000
Cold
Storage Unallocated
£’000
£’000
2,724
337
15,414
2,075
1,003
8,704
Total
£’000
19,141
11,116
Capital expenditure (Note 13)
3
561
-
564
The segment assets and liabilities at 31 December 2010 and the capital expenditure for the year then
ended are as follows:
Assets
Liabilities
Ambient
Storage
£’000
Cold
Storage Unallocated
£’000
£’000
2,789
509
15,702
1,983
286
8,785
Total
£’000
18,777
11,277
Capital expenditure (Note 13)
-
966
-
966
6
Other income
Fair value gain
Option price payable at exercise date
Price paid to obtain option
Less: gain recognised in prior years
2011
£’000
851
(181)
(70)
(410)
2010
£’000
661
(181)
(70)
-
190
410
We currently use R22 refrigeration gas at 3 of our cold stores. R22 is a Hydrochlorofluorcarbon (HCFC)
which is classed as an ozone depleting gas and with effect from 1st January 2010 it is no longer possible to
purchase virgin R22. However, the use of re-cycled R22 is still permitted until 31st December 2014. We
currently have an option to purchase 44,808 kg of re-cycled R22 at £4.05 per kg which is below the
current market value. Under IAS39 we have accounted for an unrealised profit of £190,000 for the year
which is based on a fair value option price of £14.95 per kg at 31st December 2011. The quantity of gas is
expected to be in excess of our own use requirement.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 45
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
7
Staff costs
The average number of persons employed by the Group including executive directors is analysed
into the following categories:
Management
Administration
Technical
Operational
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Share based payments (Note 21)
Social security costs
Other pension costs
2011
2010
15
16
7
84
16
13
6
83
122
118
2011
£’000
2,951
1
286
130
2010
£’000
2,938
14
286
101
3,368
3,339
There was an accrual for £Nil (2010 £Nil) included above for pension costs at 31 December 2011.
Key management personnel
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, directly or indirectly, including any director
(whether executive or otherwise) of that entity.
The Group is of the opinion that there are no other key management personnel other than the
executive and non-executive directors. Details of directors’ remuneration are set out in Note 26.
46 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIALSTATEMENTS
(CONTINUED)
8
Financial income and expenses
Interest income
Fair value gains on interest rate swaps/caps
Finance income
2011
£’000
2010
£’000
15
-
15
-
97
97
Fair value losses on interest rate swaps/caps
Finance expense - Interest expense on bank overdrafts and loans
(89)
(186)
-
(278)
Finance costs
Net finance costs
9
Profit before tax
(275)
(278)
(260)
(181)
The following items have been charged to the Consolidated Statement of Comprehensive Income in
arriving at profit before tax:
Depreciation of property, plant and equipment (Cost of Sales)
569
2011
£’000
2010
£’000
608
Staff costs, including share based payments (Note 7)
3,368
3,339
Rental Income
(206)
(206)
Rentals payable under operating leases
- Buildings
- Plant and machinery
Auditors’ remuneration - audit
- non-audit services
931
814
23
-
1,302
636
23
-
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 47
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
10
Income taxes
(a) Analysis of charge/(credit) in year
UK
Corporation tax at 26.5% (2010: 21%)
Adjustment in respect of previous periods
Ireland
Corporation tax at 12.5% (2010: 12.5%)
Adjustment in respect of previous periods
Current tax charge/(credit)
Deferred tax (credit)/charge (Note 20)
Deferred tax in respect of IBA
Deferred tax (credit)/charge
(b) Factors affecting tax charge for year
Profit on ordinary activities before taxation
Profit on ordinary activities multiplied
by standard UK tax rate 26.5%(21%)
Effects of:
Other expenses not deductible for tax purposes
Adjustment in respect tax payable on Irish Income (12.5%)
Adjustments in respect of previous periods
Adjustments in respect of IBA and tax rate change
2011
£’000
2010
£’000
74
(2)
8
-
80
(17)
(19)
(36)
3
(81)
(3)
-
(81)
191
1
192
2011
£’000
406
2010
£’000
552
108
(116)
27
8
(2)
(97)
(16)
(1)
81
(59)
Total tax charge for year
44
(111)
The group did not qualify for small companies corporation tax in 2011 and pays tax mainly at the
higher rate of 26.5%.(2010 : 21%).
The deferred tax credit of £36,000 (2010: charge £192,000) has arisen under IAS 12. In 2009 the
company applied the dual recovery method in respect of one of its main assets which triggered a tax
credit. The credit in 2011 relates to the temporary difference between the carrying value of the asset
in the consolidated statement of financial position and its tax base. The dual recovery method
continues to be applied as disposal of the asset is anticipated.
48 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11
Earnings per share
Basic earnings per share figures are calculated by dividing the weighted average number of
Ordinary Shares in issue during the period into the profit after taxation attributable to the owners
of the parent for the year.
Profit attributable to owners of parent (£’000)
Weighted average number of
ordinary shares outstanding
2011
362
2010
441
8,510,301
8,466,230
Basic earnings per share
- continuing operations
4.3p
5.2p
For the purposes of calculating diluted earnings per share, dilutive potential ordinary shares are
deemed to have been converted into ordinary shares at the beginning of the period.
Profit attributable to owners of parent (£’000)
2011
362
2010
441
Weighted average number of ordinary shares outstanding
Dilutive effect of share options
8,510,301
-
8,466,230
-
Weighted average number of shares for the calculation
of diluted earnings per share
8,510,301
8,466,230
Diluted earnings per share - total
4.3p
5.2p
The exercise prices of all share options in issue are above the market share price and hence have no
dilutive effect in the current year.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 49
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12
Goodwill
The cost and net book value of goodwill at 31 December 2011 and 31 December 2010 was £216,000.
The goodwill relates to the acquisition of the ambient storage business, acquired in 2000.
The goodwill has been allocated to the Group’s cash generating units (CGUs) identified at each
warehouse location. The cold storage warehouses throughout the United Kingdom are aggregated to
form the cold storage business segment.
The goodwill has been fully allocated to the York warehouse. This warehouse forms part of the
Group’s ambient storage business segment.
The recoverable amount of the CGU is based on the fair value of the site less costs to sell. The fair
value is calculated with reference to the active land market.
No impairment was recorded in 2011 (2010: £nil) and no reasonably foreseeable change in a key
assumption would have given rise to an impairment, in either year.
The accumulated impairment at 31 December 2011 and 31 December 2010 was Nil.
13
Property, plant and equipment
Group
Cost
At 1 January 2011
Additions
Transfer
Freehold
and
Leasehold
Buildings
£’000
Plant and
Equipment
£’000
14,884
-
(448)
6,011
564
-
Land
£’000
2,718
-
448
Total
£’000
23,613
564
-
At 31 December 2011
3,166
14,436
6,575
24,177
Depreciation
At 1 January 2011
Charge for year
At 31 December 2011
Net book value
31 December 2011
-
-
-
3,364
269
4,865
300
8,229
569
3,633
5,165
8,798
3,166
10,803
1,410
15,379
Included within the net book value of £15,379,000 is £155,000 (2010: £nil) relating to assets held
under finance lease. The depreciation charged in the financial statements in the year in respect of such
assets amount to £3,000 (2010: £nil).
50 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Freehold
and
Leasehold
Buildings
£’000
Plant and
Equipment
£’000
14,094
790
5,835
176
Land
£’000
2,718
-
Total
£’000
22,647
966
Cost
At 1 January 2010
Additions
At 31 December 2010
2,718
14,884
6,011
23,613
Depreciation
At 1 January 2010
Charge for year
At 31 December 2010
Net book value
31 December 2010
-
-
-
3,097
267
4,524
341
7,621
608
3,364
4,865
8,229
2,718
11,520
1,146
15,384
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 51
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14 Derivative financial instruments
Refrigerant gas
At 1 January 2011
Fair value gain
Price paid to obtain option
2011
£’000
479
190
-
2010
£’000
-
410
69
At 31 December 2011
669
479
The Group currently use R22 refrigeration gas at 3 of its cold stores. R22 is a
Hydrochlorofluorcarbon (HCFC) which is classed as an ozone depleting gas and with effect from
1st January 2010 it is no longer possible to purchase virgin R22. However, the use of re-cycled
R22 is still permitted until 31st December 2014. The Group have an option to purchase 44,808 kg
of re-cycled R22 at £4.05 per kg which is below the current market value. Under IAS39 an
unrealised profit of £190,000 for the year has been accounted which is based on a fair value
option price of £14.95 per kg as at 31st December 2011.
Under IAS 39 the group must assign a fair value to this option and this must be done by applying
a recognised valuation technique. In order to assess the valuation at 31 December 2011, the
group obtained an independent valuation of the option which was calculated by applying the
Black Scholes model. Key assumptions used in this calculation were, maturity being within 2
years; risk free interest rate of 2.5% and annual volatility factor of 50%.
In order to further support the above valuation, the group prepared a discounted cash-flow, with
the assistance of a valuation expert. The key assumptions applied to this calculation were an
annual discount factor of 7.3%; price points were selected based on the Groups stated strategy for
sale which is within 2 years; price trajectories set based on current market information with an
assumed maximum price of £30 per kg applied and probabilities assigned based on the current
market knowledge of the R22 market.
Some of this gas will be required for our own use but it is difficult to quantify the volume at this
stage, however the majority of the contract will be used for commodity trading. As the majority
of the contract is for commodity trading, it cannot be regarded as an own use contract and
therefore the whole contract is within the scope of IAS 39.
An amount of £69,000 was paid to obtain the option in the 2010 financial year.
52 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
15
Trade and other receivables
Trade receivables
Less: Provision for impairment of trade receivables
Trade receivables - net
Other receivables
Prepayments
2011
£’000
1,729
-
1,729
144
954
2010
£’000
1,563
-
1,563
-
931
2,827
2,494
All amounts fall due within one year therefore the fair value is considered to be approximately
equal to the carrying value. All of the Group’s trade and other receivables are denominated in
Pounds sterling.
The maximum exposure to credit risk at the reporting date is the fair value of each class of
receivables mentioned above. The Group does not hold any collateral as security.
The group has entered into a confidential invoice discounting facility. This facility is secured on
the trade receivables above.
As at 31 December 2011 no trade receivables (2010: £nil) were impaired. There have been no
movements to the provision for impairment of trade receivables in the year. The other classes
within trade and other receivables do not contain impaired assets.
As of 31 December 2011, trade receivables of £509,000, were past due but not impaired. These
relate to a number of independent customers for whom there is no recent history of default. The
ageing analysis of these receivables is as follows:
Up to 3 Months
Over 3 Months
2011
£’000
504
5
509
2010
£’000
453
3
456
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 53
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
16
Financial liabilities: Fair value of interest rate swaps/caps
The notional principal amount of the outstanding interest rate swaps contract at 31 December
2011 was £3m (2010: £3m).
The Group has an interest rate Cap in place for £3m (2010 : £3m) at 5% until 28 April 2014.
Financial assets/liabilities at fair value though profit or loss are presented within the section on
investing activities in the Cash Flow Statement.
Changes in fair value of financial assets/liabilities through profit or loss are recorded within
finance income/expense in the Consolidated Statement of Comprehensive Income see note 8.
Movement on the fair value of the interest rate swap is as follows:
Balance as at beginning of year
Fair vale gain/(loss) on interest rate swaps/caps – as presented in the
Consolidated Statement of Comprehensive Income
2011
£’000
(13)
(89)
2010
£’000
(110)
97
Balance as at end of year
(102)
(13)
The above assessment has been performed applying valuation techniques derived from quoted
prices.
This assessment has been consistent between periods and as such it is considered that level 2 of
the fair value hierarchy as defined in IFRS 7 has been applied consistently.
54 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
17
Trade and other payables
Trade payables
Value added tax and payroll taxes
Accruals and deferred income
2011
£’000
1,559
352
981
2010
£’000
1,166
352
1,038
2,892
2,556
All amounts are short term. The net carrying value of trade receivables is considered a reasonable
approximation of fair value.
18
Borrowings
Current
Finance Leases
Invoice finance
Term Loans
Non Current
Finance Leases
Non-current bank borrowings
2011
£’000
46
278
667
991
81
5,775
2010
£’000
-
-
666
666
-
6,442
5,856
6,442
Total Borrowings
6,847
7,108
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 55
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Group arranged the following borrowing facilities with HSBC Bank plc and its subsidiary
HSBC Invoice Finance Limited.
(a) HSBC Bank plc agreed to a term loan of £7.5 million drawn down in December 2005 over a
maximum period of 15 years and an overdraft facility of £0.3 million which is reviewed
annually.
(b) HSBC Bank plc agreed to a term loan of £2 million drawn down in March 2008 over a
maximum period of 15 years.
(c) HSBC Bank plc agreed to a term loan of £0.5 million drawn down in February 2010 over a
maximum period of 15 years
(d) HSBC Bank plc agreed to a term loan of £0.9 million drawn down in January 2012 over a
maximum period of 10 years
(e) HSBC Invoice Finance Limited agreed to allow the Group to borrow up to an amount
equivalent to 80% (2010 – 70%) of trade debtors subject to a maximum limit of £1.2m(2010 –
£1m) which is reviewed annually.
Overdraft interest is charged quarterly at an interest rate of bank base rate plus 2% (2010 - 2%).
Invoice finance interest is charged on a daily basis at bank base rate plus 2.05%( 2010 – 2.05%).
Term Loans (a) & (b) are charged quarterly at an interest rate of base rate plus 1.2%. (2010 -
1.2%). Term Loan (c) & (d) above are charged quarterly at an interest rate of base rate plus
2.75% (2010 – 2.75%).
The group has the following SWAPS and CAPS in place:
(a) £3m (2010 £3m ) base rate cap fixing of 5% which expires on the 28th April 2014.
(b) £3m (2010 £Nil) swap at a fixed rate of 1.45% against base expiring on the 10th August
2016.
The liabilities of Norish Plc pursuant to these facilities agreements are secured by:
(1) debentures creating first fixed and floating charges over all the assets, past present and
future of Norish Limited and its subsidiaries;
(2) unlimited multilateral guarantees given by all Group companies each guaranteeing
payment of the liabilities of the other;
(3) legal mortgages held over the Bury St. Edmunds, Wrexham, York, Gillingham and Leeds
properties.
56 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The fair value of the Group’s financial liabilities as at 31 December 2011 was as follows:
2010
2011
Current bank borrowings
Non-current bank borrowings
Book
Value
£’000
991
5,856
Fair
Value
£’000
991
5,856
Book
Value
£’000
666
6,442
Fair
Value
£’000
666
6,442
6,847
6,847
7,108
7,108
The Group pays interest at the base rate plus a margin of 1.20% and 2.75% which is reviewed
quarterly. It is assumed that the Book Value reflects the Fair Value.
The carrying amounts of the Groups borrowings are all denominated in Pounds Sterling.
The un-drawn committed facilities available to the Group are set out below:
Floating rate, expiring within one year
Term Loan
Invoice finance
Bank overdraft
The term loan was drawn down in January 2012.
19 Provisions
At 1 January 2011
Utilisation of provision(transfer to accruals on settlement agreement)
Charged to the Consolidated Statement of Comprehensive income
Utilisation of provision(expenditure incurred in year)
2011
£’000
900
922
300
2010
£’000
-
1,000
300
2,122
1,300
2011
£’000
509
(237)
25
(158)
2010
£’000
568
20
(44)
(35)
At 31 December 2011
139
509
The provisions are in respect of property dilapidation costs at four of the group’s sites.
The provisions relate solely to property dilapidations. It is uncertain as to what the final amounts
will be and when they are likely to be paid. The board have taken professional advice when
calculating the extent of the provision.
As the dilapidations will not fall due until a period of at lest twelve months after the Consolidated
Statement of Financial Position, they are held as non-current liabilities.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 57
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
20
Deferred tax
2011
£’000
2010
£’000
Deferred tax assets:
Deferred tax asset to be recovered after more than 12 months
Deferred tax asset to be recovered within 12 months
-
-
-
Deferred tax liabilities:
Deferred tax liabilities to be recovered after more than 12 months
Deferred tax liabilities to be recovered within 12 months
1,010
45
-
-
-
1,064
27
Deferred tax liabilities (net)
1,055
1,091
1,055
1,091
The movement in deferred tax liabilities and assets during the year, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax liabilities
At 1 January 2010
Charged to
the Consolidated Statement of Comprehensive Income
At 31 December 2010
Charged/(credited) to
the Consolidated Statement of Comprehensive Income
At 31 December 2011
Accelerated
capital
allowances
£’000
930
Fair value
gains
£’000
(31)
78
47
2
49
Total
£’000
899
192
1,091
(36)
1,055
114
1,044
(38)
1,006
The deferred tax liability due after more than one year prior to offsetting is £1,010,000 (2010:
£1,064,000)
58 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The gross movement on the deferred income tax amount is as follows:
At 1 January
Consolidated Statement of Comprehensive Income (credit)/charge
Tax charged directly to equity
2011
£’000
1,091
(36)
-
2010
£’000
899
192
-
1,055
1,091
As a result of using the deferred tax dual recovery method in regard to the sale of assets it could
potentially give rise to a deferred tax asset totalling £66,000(2010:£66,000). However the board
feels that it is highly unlikely that this will ever be recoverable and have not provided this
amount in the accounts.
21
Share capital
Authorised
2011
£’000
2010
£’000
20,000,000 Ordinary shares of €25c each
3,527
3,527
Allotted, called up and fully paid
Ordinary shares of €25c each
At 1 January 2010
Issued during the year
At 31 December 2010
Issued during the year
Number
£’000
8,466,230
-
____
8,466,230
846,622
____
1,493
-
1,493
181
At 31 December 2011
9,312,852
1,674
The total Ordinary shares in issue are 9,312,852 (2010: 8,466,230). These are all fully paid up.
During the year, the company issued 846,622 Ordinary shares of €25c each for a total cash
consideration of £253,987.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 59
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Share options
The Board shall in its absolute discretion select any number of individuals who may at the intended
date of grant be participants and invite them to apply for the grant of options to acquire shares in
the company. The subscription price at which shares may be acquired on the exercise of any option
granted in response to the application shall be determined by the Board but shall not be less than
the mid-market value of the share on the day the invitation to apply for the option is issued or the
nominal value of the share.
The shares can be exercised between the third and the tenth anniversary of the date of grant,
provided the Board is satisfied that there has been an increase in the earnings per share at least
equivalent to the percentage increase in the Consumer Price Index plus 5% (or such greater
percentage as is fixed by the Board) compound per annum;
The Group has applied the exemption available, and has applied the provisions of IFRS 2 only to
those options granted after 7 November 2002 and which were not vested at 1 January 2006 and
all options granted since that date.
Movements in the number of share options outstanding and their related weighted average
exercise price are as follows:
2011
2010
Weighted
Average
Exercise
Price
Options
Number
Weighted
Average
Exercise
Price
Options
Number
Outstanding at 1 January
Granted
Cancelled
Lapsed
Exercised
256,000 0.58
-
-
(6,000) 0.65
-
-
261,000
-
-
(5,000)
-
Outstanding at 31 December
250,000 0.58
256,000
0.59
-
-
1.12
-
0.58
Exercisable at 31 December
250,000 0.58
6,000
0.65
The share options outstanding at the end of the year expire June 2018 at an exercise price of 58p.
60 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The fair value of options granted was estimated on the date of grant using the Black-Scholes option
pricing model. While the Black-Scholes model does not take into account the performance
conditions attached to the award, the directors are of the opinion that the charge recorded would not
be materially different if a lattice model (which would take such conditions into account) had been
employed. The following assumptions were used for the option grant in 2007:
Modification date
Grant date
Share price at grant date
Exercise price
Shares under option
Vesting period (years)
Expected volatility
Expected life (years)
Risk free rate
Dividend yield
Fair value per option
27th June 2008
18th September 2007
£0.58
£0.58
250,000
3
40%
3.5
5%
3%
£42,500
A modification was carried out on the 27th June 2008 so that the shares would qualify under the
Enterprise Management Incentive Scheme (EMI).The original shares issued under a HMRC
unapproved company share option scheme were cancelled and new shares were issued to replace
these under the EMI scheme.
Expected volatility was calculated at 40% which was relatively typical at the time of the grant of
shares for a FTSE 100 company. The company has a 18% volatility over the past 5 years in
September 2008 and November 2010.
22
Capital conversion reserve fund
Capital conversion reserve fund
2011
£’000
23
2010
£’000
23
During 1999 the company re-denominated the authorised share capital of the company from Irish
Punts to Euro in accordance with Section 26 of the European Monetary Union Act 1998. This
resulted in a reduction in respect of the issued shares which was transferred to the Capital
conversion fund.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 61
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
23
Cash and cash equivalents
Cash at bank and on hand
24
Dividends
Final dividend paid in respect of the previous year
of 1.25cent (2010: €Nil) per ordinary share
Interim dividend paid in respect of the current year
of Nil cent (2010: €Nil) per ordinary share
Total dividends paid
2011
£’000
50
50
2010
£’000
194
194
2011
£’000
2010
£’000
92
-
92
-
-
-
The board recommends the payment of a final dividend of 1.25 cent per share. This will be paid on the
18th May 2012 to those shareholders on the register on the 20th April 2012. It will bring the total
dividend in respect of the financial year to 1.25 cent per share unchanged from last year.
62 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
25
Commitments and contingencies
(a) Operating leases
The Group leases various warehouses under non-cancellable operating lease agreements.
The leases have varying lease terms, escalation clauses and renewal rights.
The Group also leases various plant and equipment under operating lease agreements.
The lease expenditure charged in the year is shown in Note 9.
The future aggregate minimum lease payments under non-cancellable operating leases
are as follows:
2011
2011
Other
Land and operating
leases
Buildings
£’000
£’000
2010
2011
2010
Other
Land and operating
leases
£’000
Total Buildings
£’000
£’000
Expiring:
Within one year
Between two and five years
Beyond five years
917
3,278
4,794
515
814
-
1,432
4,092
4,794
1,248
4,795
5,012
595
1,080
-
2010
Total
£’000
1,843
5,875
5,012
8,989
1,329
10,318
11,055
1,675 12,730
(b) Guarantees on leasehold properties
The annual operating lease commitment on land and buildings of £917,000
(2010: £1,233,000) arises on leasehold properties, of which £370,000 (2010: £700,000)
is subject to parent company guarantees.
The operating lease commitment is stated gross of annual sub-lease income of £206,000
(2010: £206,000).
(c) Capital commitments
At 31 December 2010, the Group had £929,000 (2010 : £43,000) of capital projects
authorised of which £929,000 (2010 : £43,000) was contracted at 31 December 2011.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 63
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
26
Directors’ remuneration
Ted O’Neill
Norman Hatcliff
Aidan Hughes
Torgeir Mantor
William McCarter
Aggregate emoluments
Company pension contributions
2011
£’000
118
143
98
12
12
383
2011
£’000
324
59
383
2010
£’000
151
173
128
12
12
476
2010
£’000
457
19
476
Details of directors’ interests in shares and share options are set out on pages 14 and 15.
Directors’ remuneration shown above comprises all of the fees, salaries, pensions and other
benefits and emoluments paid to Directors.
The basis of the Directors’ remuneration and the level of bonuses paid are fixed by the
Remuneration Committee of the Board.
27
Pensions
The Group operates a defined contribution scheme. The assets of the scheme are independent of
the assets of Norish plc and are invested with assurance companies and are held in trusts for the
employees concerned.
Total pension costs for the year were £130,000 (2010: £101,000).
There was an accrual for £Nil (2010 £Nil) included above for pension costs at 31 December
2011.
64 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
28
Group undertakings
Subsidiary undertakings
Holding
Nature of business
Direct
Indirect
Incorporated in Northern Ireland
Norish (U.K.) plc
Norish (N.I.) Limited
Incorporated in England
Norish Limited
(subsidiary of Norish (N.I.) Limited)
Belvedere Warehousing Limited
(subsidiary of Norish Limited)
Norish Warehousing Limited
(subsidiary of Belvedere Warehousing Limited)
100%
100%
Investment company
Property management
100%
Property management
100%
Non-trading
100%
Non-trading
(a) The registered offices of Norish plc and its subsidiary undertakings are set out below:
Norish plc
South Bank House,
Barrow Street, Dublin 4, Republic of Ireland
Norish (U.K.) plc,
Norish (N.I.) Limited
4 Royal Lodge Park
Belfast BT8 7YP
Norish Limited,
Belvedere Warehousing Limited,
Norish Warehousing Limited
Northern Industrial Estate,
Bury St Edmunds, Suffolk, IP32 6NL
(b) The issued share capital of the subsidiary undertakings is as follows:
Norish (U.K.) plc
50,000 Ordinary shares of £1 each
Norish (N.I.) Limited
480,000 Ordinary shares of £1 each
Norish Limited
60,000 Ordinary shares of £1 each
Belvedere Warehousing Limited
8,000 Ordinary shares of £1 each
Norish Warehousing Limited
4,000 Ordinary shares of £0.25 each
29 Post-reporting date events
No significant events have taken place since the year-end that would result in adjustment to the
financial statements or the inclusion of a note thereto.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 65
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
30 Related party transactions
Consultancy services totalling £2,000 (2010 : £4,000) were provided by a relative of a director
during the year.
31 Approval of financial statements
The Board of Directors approved these financial statements on 7 March 2012.
66 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
COMPANY BALANCE SHEET
at 31 December 2011
Fixed assets
Investments – Shares in group undertakings
Current assets
Debtors
Creditors: amounts falling due within one year
Net current assets
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital conversion reserve fund
Profit and loss account
Shareholders’ funds
Note
4
5
6
7
8
8
8
9
Approved on behalf of the board on 7th March 2012 by:
T.J. O’Neill
Chairman
N.A Hatcliff
Managing Director
2011
£’000
2010
£’000
651
650
4,830
4,598
(476)
(468)
4,354
4,130
5,005
4,780
1,674
3,229
23
79
1,493
3,156
23
108
5,005
4,780
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 67
NOTES TO THE ACCOUNTS
1
Accounting policies
The following accounting policies have been applied consistently in dealing with items which are
considered material in relation to the Group’s financial statements.
Basis of preparation
The financial statements are prepared in accordance with generally accepted accounting
principles under the historical cost convention and comply with financial reporting standards of
the Accounting Standards Board, as promulgated by The Institute of Chartered Accountants in
Ireland.
Financial fixed assets
Investments in subsidiary undertakings are shown at cost less provisions for impairment in value.
Taxation
Current tax, including Irish corporation tax and foreign tax, is provided on the Group’s taxable
profits, at amounts expected to be paid using the tax rates and laws that have been enacted or
substantially enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not
reversed at the balance sheet date. Provision is made at the rates expected to apply when the
timing differences reverse. Timing differences are differences between the Group’s taxable
profits and its results as stated in the financial statements that arise from the inclusion of gains
and losses in taxable profits in periods different from those in which they are recognised in the
financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the
basis of all available evidence, it can be regarded as more likely than not that there will be
suitable taxable profits from which the future reversal of the underlying timing differences can be
deducted.
Foreign currencies
Transactions in foreign currencies are recorded in pounds sterling at the rate ruling at the date of
the transactions or at a contracted rate. The resulting monetary assets and liabilities are translated
into pounds sterling at the balance sheet rate or the contracted rate and the exchange differences
are dealt with in the profit and loss account. Non-monetary assets are translated at the rate
prevailing at the date of the transaction.
Share capital and share premium were translated at the historic rate on the date when the Group
changed its functional currency to pounds sterling.
68 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES TO THE ACCOUNTS (CONTINUED)
Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the
extent that they are appropriately authorised and no longer at the discretion of the Company.
Unpaid dividends that do not meet these criteria are disclosed in the notes to the financial
statements.
Share based payments
The Company issues equity-settled share-based payments to certain employees. In accordance
with FRS 20, “Share-based payments”, equity-settled share-based payments are measured at fair
value at the date of grant. Fair value is measured by use of the Black-Scholes pricing model. The
fair value determined at the grant date of the equity-settled share-based payments is expensed on
a straight-line basis over the vesting period, based on the Group’s estimate of the number of
shares that will eventually vest.
The Group has applied the exemption available, and has applied the provisions of FRS 20 only to
those options granted after 7 November 2002 and which were not vested by 1 January 2006.
It is the company policy to debit the annual charge to investments and credit reserves.
Financial instruments
Financial instruments are classified and accounted for in accordance to the substance of the
contractual arrangement, either as financial assets, financial liabilities or equity instruments. An
equity instrument is any contract that evidences a residual interest in the assets of the company
after deducting all of its liabilities.
Shares are included in shareholders’ funds. Other instruments are classified as liabilities if not
included in shareholders funds and if they contain an obligation to transfer economic benefits.
The finance cost recognised in the profit and loss account in respect of capital instruments other
than equity shares is allocated to periods over the term of the instrument at a constant rate on the
carrying amount.
Profits of the company
2
In accordance with Section 148(8) of the Companies Act, 1963 a separate profit and loss account
for the Company has not been presented. The profit for the year arising in Norish plc amounted
to £53,000 (2010: loss of £31,000).
3
Dividends paid and proposed
Final dividend paid in respect of the previous year
of 1.25 cent(cid:31)(2010: Nil cent) per ordinary share
Interim dividend paid in respect of the current year
of Nil cent (2010: Nil cent) per ordinary share
Total dividends paid
2011
£’000
2010
£’000
(92)
-
(92)
-
-
-
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 69
NOTES TO THE ACCOUNTS (CONTINUED)
4
Investments – Shares in group undertakings
Cost and net book value at 1 January 2011
Capital contributions arising from FRS 20 charges
Cost and net book value at 31 December 2011
£’000
650
1
651
In the opinion of the Directors, the value of shares in subsidiary undertakings is not less than the
original book value.
Details of the Company’s subsidiary undertakings are presented in Note 26 to the consolidated IFRS
accounts within these financial statements
5
Debtors
Amount receivable from subsidiary undertakings
Other debtors
Current tax asset
2011
£’000
4,760
70
-
2010
£’000
4,516
70
12
4,830
4,598
The balance included in other debtors falls due after one year.
All other amounts fall due within one year and no interest is payable by the subsidiaries.
6
Creditors: Amounts falling due within one year
Amounts owed to subsidiary undertakings
Corporation tax
2011
£’000
468
8
2010
£’000
468
-
476
468
70 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
NOTES TO THE ACCOUNTS (CONTINUED)
7 Called up share capital
Authorised
2011
£’000
2010
£’000
20,000,000 Ordinary shares of €25c each
3,527
3,527
Allotted, called up and fully paid
Number
£’000
Ordinary shares of €25c each
At 1 January 2010
Issued during the year
At 31 December 2010
Issued during the year
8,466,230
-
____
8,466,230
846,622
____
1,493
-
1,493
181
At 31 December 2011
9,312,852
1,674
The total Ordinary shares in issue are 9,312,852 (2010: 8,466,230). These are all fully paid up.
During the year, the company issued 846,622 Ordinary shares of €25c each for a total cash
consideration of £253,987.
8
Reserves
Capital
Share Conversion
Reserve
Profit
and
Loss
Fund Account
£’000
£’000
Premium
Account
£’000
At 1 January 2011
Profit for the financial year
Dividends paid (Note 3)
Share placing
Credit in respect of share based payments – FRS20 charge
At 31 December 2011
3,156
-
-
73
-
3,229
23
-
-
-
-
23
108
53
(83)
-
1
79
Details of the share based payment charge in accordance with FRS 20 are fully disclosed in Note
21 to the consolidated IFRS accounts within these financial statements.
The treatment under FRS 20 “Share Based Payments” is consistent with the treatment under
IFRS.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 71
NOTES TO THE ACCOUNTS (CONTINUED)
9
Reconciliation of movements in shareholders’ funds
Profit/(loss) for the financial year
Dividends paid
Share equity
Credit in respect of share based payments
Net decrease in shareholders’ funds
Opening shareholders’ funds
2011
£’000
53
(83)
254
1
225
4,780
2010
£’000
(31)
-
-
14
(17)
4,797
Closing shareholders’ funds
5,005
4,780
The group paid a total dividend in 2011 of £92,000 ( 2010 : £Nil) , of which £83,000 (2010 : £Nil
was paid through the company and £9,000 (2010 : £Nil) was paid through Norish UK plc under
the Twin Share Option Scheme.
Financial commitments
10
At the 31 December 2011, the Group had £929,000 (2010: £43,000) of capital projects authorised
of which £929,000 (2010 £43,000) was contracted at 31 December 2011.
Financial commitments and contingencies
11
At the 31 December 2011, the Company has exposure for the debts of Norish Ltd totalling
£6,847,000(2010: £7,108,000) to HSBC Bank plc.
The liabilities of Norish Limited pursuant to these facilities agreements are secured by:
(1) debentures creating first fixed and floating charges over all the assets, past present and
future of Norish Limited and its subsidiaries;
(2) unlimited multilateral guarantees given by all Group companies each guaranteeing
payment of the liabilities of the other;
(3) legal mortgages held over the Bury St. Edmunds, Wrexham, York , Gillingham and Leeds
properties.
Related party transactions
12
The company has taken advantage of the exemptions within FRS 8 “Related Party Disclosures”
not to disclose transactions and balances between 100% owned group companies.
72 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011
HISTORICAL FINANCIAL SUMMARY
Consolidated income statement
Revenue
Trading profit - continuing
- discontinued
Other Income
Goodwill – amortisation
Profit on sale of property
Other exceptional items
Net finance expenses
Depreciation
Profit before taxation
Taxation
2007
£’000
IFRS
10,994
1,553
-
-
-
-
-
(409)
(527)
617
(112)
2008
£’000
IFRS
9,693
1,002
-
326
-
-
-
(676)
(541)
111
(467)
2009
£’000
IFRS
10,539
1,246
-
-
-
-
-
(198)
(576)
472
359
2010
£’000
IFRS
10,654
931
-
410
-
-
-
(181)
(608)
552
(128)
Profit for the financial year
505
(356)
831
424
2011
£’000
IFRS
11,213
1,045
-
190
-
-
-
(260)
(569)
406
(44)
362
Dividends
-
(84)
(192)
-
(92)
Consolidated balance sheet
Total assets less current liabilities
Non-current assets
Current assets
Current liabilities
Financed by
Share capital
Share premium account
Capital conversion reserve fund
Retained earnings
Shareholders’ funds - equity
Provisions
Deferred tax
Long term liabilities
2007
£’000
IFRS
12,717
3,543
(2,921)
2008
£’000
IFRS
15,501
2,941
(3,062)
2009
£’000
IFRS
15,242
3,005
(3,101)
2010
£’000
IFRS
2011
£’000
IFRS
16,079
2,698
(3,235)
16,264
2,877
(4,066)
13,339
15,380
15,146
15,542
15,075
1,493
3,156
23
2,144
6,816
-
523
6,000
1,493
3,156
23
1,718
6,390
391
1,332
7,267
1,493
3,156
23
2,373
7,045
568
899
6,634
1,493
3,156
23
2,828
7,500
509
1,091
6,442
1,674
3,229
23
3,099
8,025
139
1,055
5,856
13,339
15,380
15,146
15,542
15,075
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011 73
N O R I S H P L C
Registered Office
6th Floor
South Bank House
Barrow Street
Dublin 4
Operational Head Office
Northern Industrial Estate
Bury St Edmunds
Suffolk
IP32 6NL
74 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2011