ANNUAL
REPORT & ACCOUNTS
2013
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 1
ANNUAL REPORT 2013
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
FINANCIAL CALENDAR 2014
Page
1
2
3 - 4
5 - 6
7 - 8
9
10
11 - 21
22
23 - 24
25 - 26
27
28
29
30 - 76
77
78 - 83
84
Announcement of preliminary results
Annual Report posted to shareholders
Annual General Meeting
6 March 2014
2 April 2014
7 May 2014
Announcement of interim results
11 September 2014
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.
On 5 October 2012 the Group acquired the entire issued share capital of Townview Foods Limited, a
commodity trading company based in Newry, Northern Ireland. It procures supplies of raw and cooked
beef, mutton, lamb, pork and poultry products from around the world in order to supply major food
manufacturing and wholesale companies across the UK, including Northern Ireland. The Group agreed to
pay an aggregate consideration of up to £8.25m subject also to the possible payment of an extra amount
by reference to excess profits in 2013 and 2014. Following re-assessment by the Board of the amount of
contingent consideration to be paid, aggregate consideration is now estimated to be £4.5m.
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 and Segments
North West
Brierley Hill, West Midlands (Cold store)
Wrexham, Clwyd (Cold store)
South East
Bury St. Edmunds, Suffolk (Cold store)
Braintree, Essex (Cold store)
Lympne, Kent (Cold store)
Gillingham, Kent (Cold store)
Commodity Trading
Newry (Townview Foods Limited offices)
Discontinued Operations
Leeds, Yorkshire (Cold store) - discontinued
Shipton by Beningbrough, York (Ambient warehouse) – to be discontinued
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 1
FINANCIAL HIGHLIGHTS
Revenue - Continuing operations
Operating profit-continuing
Profit/(loss) before tax-continuing
Basic earnings per share - continuing
Dividend paid per share
- interim for current year
- final for previous year
Capital employed
Shareholders‟ funds
Net borrowings
2013
£’000
2012
£‟000
22,811
13,552
910
763
8.4p
Nil
1.25c
69
(218)
(2.5)p
Nil
1.25c
1.25c
1.25c
£’000
8,282
7,758
£‟000
8,067
8,003
16,040
16,070
Gearing – excluding goodwill (see Note 1 below)
130%
145%
Note 1
The above gearing figures are expressed as net borrowings (total borrowings less cash) divided by net assets
(excluding goodwill).
2 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
CHAIRMAN’S STATEMENT
I am pleased to present the Annual Report of Norish Plc for 2013.
Results
Norish plc results for the year ended 31st December 2013 as follows:
Turnover from continuing operations increased to £22.8m compared with £13.6m for 2012.
Turnover from Townview Foods Limited amounted to £11.4m compared to £3.2m in the period 5
October 2012 to 31 December 2012.
Turnover from our continuing temperature controlled business increased to £11.2m compared to
£10.1m for 2012.
Profit from continuing operations increased by £981k, from a loss of (£218k) in 2012, to a profit
of £763k in 2013.
Net assets increased to £8.3m from £8.1m in 2012.
Net debt decreased, in the period, to £7.8m compared with £8m in 2012.
Basic Earnings per share increased to 8.4p from a loss of (2.5p) in 2012.
Financial Strength
Shareholders funds at 31 December 2013 were £8.3m compared to £8.1m at 31 December 2012. Net debt
at 31 December 2013 was £7.8m compared to £8m at 31 December 2012.
Operations
During the year we decided to exit our ambient site at York, as this site was not a part of our future plans
for the business. Following the loss of a major customer at our Leeds site, it was decided to exit this site
also and put both properties, at Leeds and York, on the market. A sale price of £1.8m has been agreed for
the site at York and the sale is expected to conclude before 30 June 2014. Losses in respect of these
properties, of £946k, are included under discontinued operations and compare with profits of £163k in
2012.
Following this decision we have split the business into three divisions - North West Cold Stores, South
East Cold Stores and Commodity Trading.
The North West cold store business performed well against last year. The increase of pork exports to
China was a significant factor in the improved performance.
The South East cold store business, performed below 2012 levels, mainly due to increased power costs. It
is expected that these power cost increases will reverse from April 2014.
Our commodity trading division which we purchased in October 2012 contributed £420,000, however this
was below expectations as the results were adversely impacted as a result of the Horse Meat crisis.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 3
CHAIRMAN’S STATEMENT (CONTINUED)
We currently use R22 refrigeration gas at two 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 a supply agreement to purchase 14,228 kg (2012: 24,868 kg) of re-cycled R22 at
£4.05 per kg which is at market value. Under IAS39 we have accounted for a loss of £422,000 on the
proportion of the option still held at 31 December 2013. This is based on a fair value option price of £Nil
per kg at 31st December 2013. The quantity of gas held is expected to be in excess of our own use
requirement.
Our pre-tax profits from continuing operations of £763,000 were adversely affected by a non cash write
off on the R22 option of £422,000 but benefited from an adjustment to the deferred consideration in
respect of our Commodity Trading division of £737,000.
Dividend
The board recommends the payment of a final dividend of 1.25 cent per share. This will be paid on the 24
October 2014 to those shareholders on the register on the 26 September 2014. It will bring the total
dividend in respect of the financial year to 1.25 cent per share unchanged from last year.
Personnel
On behalf of the board, I would like to thanks the management team and staff for their commitment and
contribution in 2013.
Ted O’Neill
Chairman
5 March 2014
4 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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 our continuing operations increased from £13.6m to £22.8m. The significant increase in
revenue has resulted mainly from the acquisition of Townview Foods Limited which accounted for £11.4m
(2012: £3.2m). The group operating profit from continuing operations increased from a profit of £0.1m to a
profit of £0.9m, representing 4% (2012 – loss 0.5%) of revenue. The main reason for the increase in
operating profits was as a result of £315,000 of other income and acquisition costs incurred in the prior
year.
For our continuing operations, the number of pallets into our sites increased by 2% to 386,167, blast
freezing volumes increased by 36% to 78,961 pallets and closing customer stocks at the year end increased
by 14% to 49,459 pallets. Our average energy price per unit increased by 16% in 2013 and the number of
units consumed increased by 6% due mainly to the additional blast freezing volumes.
Gross profit margin for the period in respect of the commodity trading business which is calculated after
taking into account any commissions payable was 5.9% for 2013 (2012: 6%).
At our warehousing divisions we have started 2014 with higher than expected occupancy levels, but are
incurring increased power costs for the first quarter of 2014.
Key ratios and depreciation
Basic earnings and diluted earnings from continuing operations per share increased to 8.4p compared with
(2.5)p in 2012.
Year-end gearing (after eliminating goodwill) was 130% compared with 145% at 31 December 2012.
Depreciation and impairments of intangible assets totalled £1.3m (2012: £0.6m).
Cash position
The Group‟s operating net cash inflow for the year was £0.515m (2012: £0.376m). Net debt decreased to
£7.8m from £8.0m at 31 December 2012.The Group retains adequate term loan and overdraft facilities to
meet its ongoing operating needs to the next renewal date.
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 5
FINANCIAL REVIEW (CONTINUED)
The Group is currently holding a position on refrigerant gas that it uses at 2 of its cold store sites. It is
expecting to continue to trade some of this volume during 2014.
The main risks arising from the Group’s financial instruments are interest rate risk and, liquidity risk. The
Group’s policies for managing each of these risks are summarised below.
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, £5.857m
term loans of which £3.5m are at floating base rate plus a bank margin of 1.2% and £1.233m are at floating
base rate plus a bank margin of 1.75% and £1.124m are floating at bank 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 and £3m at 1.03% against Bank of England base rate which expires in June 2017. 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, 50% of the Group‟s borrowings were due to
mature in more than one year. In respect of the assets held for sale, the group has agreed to repay £1.375m
of term loan borrowings on disposal of York. The Group achieves short-term flexibility by means of
invoice finance and overdraft facilities.
Goodwill
The net book value of goodwill at 31 December 2013 was £2.3m (31 December 2012: £2.5m).
An impairment of £0.2m (2012: £nil) was considered necessary following the classification of the York
site as an asset for sale. The remaining Goodwill relates to the purchase of Townview Foods Limited in
2012 and no impairment is considered necessary.
In 2012, the Group recognised contingent consideration of £1,588,000 in connection with the acquisition
of Townview Foods Limited. Contingent consideration was initially valued using the acquisition business
case. Subsequently, budgets and forecasts have been prepared as part of the Group‟s financial planning
activities which in turn have allowed the estimated amount of contingent consideration that the Group will
need to pay to be recalculated. Actual performance to date has been below that initially forecast and the
events underpinning this will continue to have an impact on the performance of the acquired business.
Consequently, the Board estimate the amount of contingent consideration still to be paid at 31 December
2013 is £754,000. This re-assessment of the fair value of contingent consideration has resulted in a credit
of £737,000 to the Consolidated Statement of Comprehensive Income.
Aidan Hughes
Finance Director
5 March 2014
6 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
SHAREHOLDERS INFORMATION
Shareholder analysis at 5 March 2014
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
116
81
39
15
251
46.2
32.2
15.5
6.1
100
51
330
1,195
9,585
0.5
3.0
10.7
85.8
11,161
100.0
Share price data (€)
Year ended 31 December 2013
61p (€0.72) 33.75p (€0.39)
39.5p (€0.47)
Year ended 31 December 2012
36.75p (€0.46)
32.5p (€0.41)
33.5p (€0.41)
High
Low
31 December
The market capitalisation of Norish plc at 31 December 2013 was £4.4m (€5.2m) compared with £3.4m
(€4.2m) at 31 December 2012, and £4.6m (€5.6m) at 5 March 2014.
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
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 7
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 when payable to 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 the registered office, 6th Floor, South Bank House, Barrow
Street, Dublin, on Wednesday 7 May 2014 at 11.30am.
8 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
BOARD OF DIRECTORS
Executive Directors
Executive Chairman
Ted O’Neill (62) 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 (59) 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 (49) 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 (57) 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 (66) 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.
Seán Savage (67) was appointed to the board in 2012 and has previous experience in the food industry,
having started his career in 1970 with Cadbury plc, where he worked as a plant manager and supervisor
across a number of Cadbury's Irish plants. He was general manager of Manor Farm Chickens from 1985
to 1994, before establishing Eatwell UK in 1995. He sold the company to Goodman Group in 2003 and
remained with the company until 2004. In 2005, Seán established Deasuin Teoranta, a food and
environmental investment consultancy practice, which has undertaken projects on behalf of Enterprise
Ireland amongst others.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 9
CORPORATE INFORMATION
Directors
Ted O‟Neill - Executive Chairman
Norman Hatcliff (British) – Managing Director
Aidan Hughes – Finance Director
Torgeir Mantor (Norwegian) *
Willie McCarter *
Seán Savage*
* 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
10 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
DIRECTORS’ REPORT
The Directors present their Annual Report together with the audited financial statements of the Group for
the year ended 31 December 2013.
Principal Activities and Review of Business
Norish plc is a provider of temperature controlled, ambient storage, commodity trading and related
services to the food industry in the United Kingdom.
Townview Foods Limited is a commodity trading company based in Newry, Northern Ireland. It procures
supplies of raw and cooked beef, mutton, lamb, pork and poultry products from around the world in order
to supply major food manufacturing and wholesale companies across the UK, including Northern Ireland.
The Group agreed to pay an aggregate consideration of up to £8.25m subject also to the possible payment
of an extra amount by reference to excess profits in 2013 and 2014. During 2013, Townview Foods
Limited contributed £11,373,000 to Group revenues and £420,000 to Group operating profit from
continuing operations. In 2013, the Group paid £170,000 in deferred consideration. Following a re-
assessment of the amount that the Group estimates it will need to pay the vendor, the aggregate
consideration has been valued at £754,000 at the date of acquisition. This re-assessment has resulted in a
credit to the Consolidated Statement of Comprehensive Income of £737,000.
Townview Foods known as our commodity division which we purchased in October 2012 contributed
£420,000, however this was below expectations as the results were adversely impacted as a result of the
Horse meat crisis.
Our North West cold store business performed well against last year. This has come about mainly as a
result of some of our customers increasing their sales to China.
Our South West cold store business was below 2012 levels. It suffered mainly from increased power costs
in 2012.
Our commodity division which we purchased in October 2012 contributed £420,000, however this was
below expectations as the results were adversely impacted as a result of the Horse meat crisis.
Details of the Group‟s subsidiary undertakings are set out in Note 30 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 3 to 6.
Dividends
The board recommends the payment of a final dividend of 1.25 cent per share. This will be paid on the
24 October 2014 to those shareholders on the register on the 26 September 2014. 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 £1,000 (2012: £2,000) were provided by a relative of a director during the
year. There was £Nil outstanding as at 31 December 2013 (2012:£nil).
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 11
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 2013 for the Group was 40 days (2012: 43 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 5 – 6 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 11.6% (2012 – 11.2%) of the Group‟s
turnover from continuing operations. However, the directors are satisfied that this business could be
replaced if it was ever lost.
In the event of there being a power supply failure at one of our storage sites, the majority of the operations
in our storage business 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.
In the event of a food related health concern in respect of key products bought and sold by Townview
Foods Limited, there could be a significant decrease in customer demand. To mitigate against this, a range
of products are bought and sold so as not to unnecessarily concentrate risk into one particular food group.
The majority of our commercial arrangements are non contractual. As a result, there is a risk that
customers could terminate agreements to either use Norish facilities or buy Norish goods 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 continuing operations, the number of pallets into our sites increased by 2% to 386,167, blast
freezing volumes increased by 36% to 78,961 pallets and closing customer stocks at the year end
increased by 14% to 49,459 pallets. Our average energy price per unit increased by 16% in 2013 and the
number of units consumed increased by 6% due mainly to the additional blast freezing volumes.
12 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
DIRECTORS’ REPORT (CONTINUED)
Directors
The Board currently comprises the Executive Chairman, Managing Director, Finance Director and three
non-executive Directors. Under the criteria adopted by the Committee on Corporate Governance, Torgeir
Mantor and Sean Savage would not be perceived to be independent due to their 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 2013 together with brief biographical notes are set
out on page 9.
In accordance with Article 87 of the Company‟s Articles of Association, Mr Ted O‟Neill and Mr Torgeir
Mantor retire by rotation, and being eligible, offers themselves for re-election. In accordance with Article
94 of the Company‟s Articles of Association, Mr Aidan Hughes 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 2013 (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
Seán Savage
31 December 2013
Ordinary Shares
31 December 2012
Ordinary Shares
2,838,353
54,027
207,500
12,600
-
893,333
2,668,353
49,116
205,000
12,600
-
833,333
* Torgeir Mantor is a director of T. B. Mantor AS, which also holds 1,243,027 (2012: 1,130,025)
shares and is owned by the Mantor family .Torgeir Mantor is also a director and shareholder of
Vestergyllen AS, which holds 24,168 (2012: Nil).
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 13
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
2013
Granted
in year
31 Dec Exercise
Price
2013
Exercisable Expiry
from date
Norman Hatcliff
140,000
Total
140,000
Aidan Hughes
110,000
Total
110,000
-
-
-
-
-
140,000
58p
June 2011 June 2018
-
140,000
-
110,000
58p
June 2011 June 2018
-
110,000
The mid-market price of an ordinary share on 31 December 2013 was 39.5p (€0.47) and the price range
during the year was between 33.75p (€0.39) and 61p (€0.72). 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 2013 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.
14 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
DIRECTORS’ REPORT (CONTINUED)
Substantial shareholdings
At 5 March 2014 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
Seán Savage
Leslie McCauley
Citigroup Global
Number of shares
2,838,353
Percentage held
25.43
1,318,742
1,243,027
1,014,562
893,333
570,460
475,253
11.82
11.13
9.09
8.0
5.11
4.26
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 30 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 2013 the Company issued no share options.
To date 46,000 options have been exercised and 956,237 options have expired. At 31 December 2013
options were outstanding over 250,000 ordinary shares.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 15
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 has also replaced 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 2013, £2.657m or 11.6% (2012: £1.661m or 11.2%) of the Group‟s revenues from
continued operations depended on a single customer in the cold storage segment.
16 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
DIRECTORS’ REPORT (CONTINUED)
Corporate governance
The Directors are committed to the UK Corporate Governance Code (2012).
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 2012 UK
Corporate Governance Code in Norish plc.
Board of Directors
The Board of Directors comprises an Executive Chairman, Managing Director and Finance Director and
three 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 or Sean Savage would not be perceived to be independent due to their 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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 17
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 2013 are as follows:
Table of attendance
Meetings held
Meetings Attended:
Ted O’Neill
Norman Hatcliff
Aidan Hughes
Torgeir Mantor
Willie McCarter
Seán Savage
Board
Remuneration
Audit
6
6
6
6
6
6
6
1
N/A
N/A
N/A
1
1
N/A
1
N/A
N/A
N/A
1
1
N/A
No nomination meetings were held during the year.
Directors’ Remuneration
The remuneration of Directors and senior management is determined by the Remuneration Committee
consisting of 2 of the non-executive Directors whose names are listed on page 10. 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 (2012). In designing schemes of
performance-related remuneration, the Remuneration Committee has given full consideration to the
provisions in UK Corporate Governance Code (2012).
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 28 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.
18 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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
2012 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; and
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.
Annual report and accounts
The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Group‟s
performance, business model and strategy.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 19
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,
to assess the effectiveness of the external audit and the Group Internal Audit function and to report back to
the Board how it has discharged its responsibilities.
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 2013 with all provisions of the Principles of Good
Governance and Code of Best Practice as contained in the 2012 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 13.
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.
The Group has prepared profit and cash flow forecasts that show that it will be able to trade within the
current facilities. The group borrowings are underpinned by a portfolio of freehold and long leasehold
properties and at the year end there were agreed, but undrawn facilities of £0.7m. The group also has the
ability to raise equity funds through the London Stock Exchange (AIM) market.
The Group renegotiated bank covenants during the year and has had discussions with its bankers in
advance of the annual renewal of facilities in April 2014 about its future funding requirements. The Group
keeps the bank informed on a monthly basis of actual results, forecasts and covenant compliance issues
and continues to have the support of the bank. The directors therefore have a reasonable expectation that
the group's facilities will be renewed.
While the major part of the group's funding is provided by the group's bankers, the directors keep under
review other funding opportunities.
Taking into account all of the above the directors consider it appropriate to adopt the going concern basis
in preparing the financial statements.
20 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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
5 March 2014
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 21
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 2013, 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 2013.
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
22 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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 2013 which comprise of 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. The financial reporting framework that has been applied in their preparation of the group
financial statement is Irish law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union. The financial reporting framework that has been applied in preparation of the parent
company financial statements is Irish law and accounting standards issued by the Financial Reporting
Council and promulgated by the Institute of Chartered Accountants in Ireland (Generally Accepted
Accounting Practice in Ireland).
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 giving a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with
the Auditing Practices Board‟s [APB‟s] Ethical Standards for Auditors.
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 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.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of: whether the accounting policies are
appropriate to the group and the parent company‟s circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and
the overall presentation of the financial statements. In addition, we read all the financial and non-financial
information in the Annual Report to identify material inconsistencies with the audited financial statements
and to identify any information that is apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 23
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS
OF NORISH PLC (CONTINUED)
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 2013 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 2013 and the European Communities (Companies: Group
Accounts) Regulations, 1992 and Article 4 of the IAS Regulations;
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
2013; and
the parent company financial statements have been properly prepared in accordance with the
Companies Acts, 1963 to 2013.
Matters on which we are required to report by the Companies Acts 1963 to 2013
We have obtained all the information and explanations which we consider necessary for the
purposes of our audit.
In our opinion proper books of account have been kept by the parent company.
The parent company 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 parent company, as stated in the parent company 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 2013 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
parent company.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Acts 1963 to 2013 we are required to report to you if, in our opinion the
disclosures of directors‟ remuneration and transactions specified by law are not made.
SINEAD DONOVAN FCA (Senior Statutory Auditor)
For and on behalf of
Grant Thornton
Chartered Accountants &
Statutory Auditor
5 March 2014
24 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013
Notes
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Acquisition expenses
Administrative expenses
Operating profit from continuing operations
Finance income – fair value gain swaps/caps
Finance expenses – interest paid
Finance expenses – fair value loss swaps/caps
Finance expenses – notional interest
5
6
9
9
8
8
8
8
Profit/(loss) on continuing activities before taxation 9
Income taxes – Corporation tax
Income taxes – Deferred tax
10
10
Profit/(Loss) for the period attributable to owners
of the parent from continuing operations
(Loss)/profits from discontinued operations
32
Loss for the period
Other comprehensive income
Total comprehensive expense for the period
attributable to owners of the parent
2013
£’000
2012
£‟000
22,811
(21,744)
13,552
(12,857)
1,067
695
315
-
(472)
910
134
(236)
-
(45)
109
(317)
(418)
69
-
(215)
(44)
(28)
763
(218)
(79)
183
(33)
9
867
(242)
(946)
(79)
-
(79)
163
(79)
-
(79)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 25
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013
Earnings per share expressed in pence per share:
From continuing operations
- basic
- diluted
From discontinued operations
- basic
- diluted
Notes
2013
2102
11
11
8.4p
8.4p
(2.5)p
(2.5)p
(9.1)p
(9.1)p
1.7p
1.7p
The notes on page 30 to 76 are an integral part of these consolidated financial statements.
Approved on behalf of the board on 5 March 2014 by:
T.J. O‟Neill
Chairman
N.A. Hatcliff
Managing Director
26 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2013
Assets
Non current assets
Goodwill
Property, plant and equipment
Derivative financial instruments
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
Assets of disposal group classified as held for sale
Liabilities
Current liabilities
Trade and other payables
Financial liabilities at fair value through profit or loss
Current tax liabilities
Borrowings
Borrowings of disposal group classified as held for sale
Liabilities of disposal group classified as held for sale
Net current liabilities
Non-current liabilities
Borrowings
Financial liabilities at fair value through profit or loss
Provisions
Deferred tax
Net assets
Notes
2013
£’000
2012
£‟000
12
13
14
15
16
25
32
18
17
19
20
32
32
20
17
21
22
2,338
12,951
-
15,289
3,560
5
49
2,434
6,048
(3,314)
(172)
(28)
(2,531)
(1,375)
(92)
(7,512)
2,554
16,299
422
19,275
4,244
84
103
-
4,431
(3,904)
(450)
(566)
(2,216)
-
-
(7,136)
(1,464)
(2,705)
(3,901)
(594)
(185)
(863)
(5,543)
8,282
(5,890)
(1,422)
(145)
(1,046)
(8,503)
8,067
Equity
Share capital
Share premium account
Capital conversion reserve fund
Retained earnings
Equity attributable to equity holders of the parent
The notes on page 30 to 76 are an integral part of these consolidated financial statements.
2,056
3,463
23
2,740
8,282
23
23
24
1,841
3,276
23
2,927
8,067
Approved on behalf of the board on 5 March 2014 by:
T.J. O‟Neill
Chairman
N.A. Hatcliff
Managing Director
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 27
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2013
Share
capital premium
£'000
Capital
Share Conversion Retained
earnings
£'000
Reserve
£'000
£'000
Total
£'000
At 1 January 2012
1,674
3,229
23
3,099
8,025
Net loss for the year
Total comprehensive income for the year
Issue of share capital
Transactions with owners
Share issue costs
Equity dividends paid (recognised directly in
equity)
At 31 December 2012
Net loss for the year
Total comprehensive income for the year
Issue of share capital
Transactions with owners
Share issue costs
Equity dividends paid (recognised directly in
equity)
At 31 December 2013
-
-
167
167
-
-
-
83
83
(36)
-
1,841
-
3,276
-
-
215
215
-
-
-
190
190
(3)
-
2,056
-
3,463
-
-
-
-
-
-
23
-
-
-
-
-
-
23
(79)
(79)
-
(79)
-
(79)
(79)
250
171
(36)
(93)
2,927
(93)
8,067
(79)
(79)
-
(79)
-
(79)
(79)
405
326
(3)
(108)
2,740
(108)
8,282
The notes on page 30 to 76 are an integral part of these consolidated financial statements.
28 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2013
Notes
Profit/(loss) on continuing activities before taxation
Loss on discontinued activities
Finance expenses
Finance income
Other Income
Unrealised gain on derivative financial instrument
Deferred consideration
Goodwill impairment
Depreciation – property, plant and equipment-net
Changes in working capital and provisions:
Decrease/(increase) in inventories
Decrease in trade and other receivables
Increase in current liabilities held for sale
Decrease in payables
Increase in provisions
Cash generated from operations
R22 income received
Interest paid – bank loans and overdrafts
Taxation paid
Net cash from operating activities
Investing activities
Payments to acquire subsidiary
Cash acquired as part of acquisition
Disposal of plant and equipment
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities
Dividends paid to shareholders
Deferred consideration payments
Share issue proceeds
Share issue costs
Invoice finance receipts
Overdraft receipts
Finance lease capital repayments
Term loan advance
Term loan repayments
Net cash (used)/from in financing activities
Net (decrease/( increase) in cash and cash equivalents
Cash and cash equivalents and bank overdrafts,
Beginning of period
Cash and cash equivalents end of period
26
25
25
2013
£’000
763
(946)
281
(134)
-
422
(737)
216
1,331
1,196
79
550
92
(589)
40
1,368
-
(236)
(617)
515
(110)
-
41
(324)
(393)
(108)
(171)
405
(3)
370
128
(51)
-
(746)
(176)
(54)
103
2012
£‟000
(218)
163
287
-
(109)
49
-
-
595
767
(39)
676
-
(1,106)
6
304
356
(215)
(69)
376
(3,500)
3,312
-
(1,515)
(1,703)
(93)
-
250
(36)
1,142
-
(46)
900
(737)
1,380
53
50
49
103
The notes on page 30 to 76 are an integral part of these consolidated financial statements.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 29
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
General information
1
Norish plc is a provider of temperature controlled, ambient storage, supplies of commodity to
major food manufacturing and wholesale companies and other 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.
The Group has prepared profit and cashflow forecasts that show that it will be able to trade
within the current facilities. The group borrowings are underpinned by a portfolio of freehold and
long leasehold properties and at the year end there were agreed, but undrawn facilities of £0.7m.
The Group renegotiated bank covenants during the year and has had discussions with its bankers
in advance of the annual renewal of facilities in April 2014 about its future funding requirements.
The Group keeps the bank informed on a monthly basis of actual results, forecasts and covenant
compliance issues and continues to have the support of the bank. The directors therefore have a
reasonable expectation that the group's facilities will be renewed.
While the major part of the group's funding is provided by the group's bankers, the directors keep
under review other funding opportunities.
Taking into account all of the above the directors consider it appropriate to adopt the going
concern basis in preparing the financial statements.
30 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Changes in accounting policies
The Group has adopted the following new standards, 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 2013:
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. Accordingly, there has been no impact on the Group.
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. The Group has no such arrangements.
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. The Group has no interests which fall into the scope of this standard.
including unconsolidated structured entities. It
Consequential amendments to IAS 27 Separate Financial Standards (Revised 2011) and
IAS 28 Investments in Associates and Joint Ventures (Revised).
As a result of the publication of IFRS 10, IFRS 11 and IFRS 12 above, IAS 27 now only deals
with separate financial statements, and IAS 28 brings investments in joint ventures into its
scope. The requirements for separate financial statements are substantially unchanged from the
previous version of IAS 27, and the requirements on how to apply equity accounting are
unchanged from the previous version of IAS 28. There has been no impact on the Group‟s
consolidated financial statements.
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. There has been no impact on the Group as a result of the adoption of this
standard.
Amendments to IAS 1 Presentation of Items of Other Comprehensive Income (IAS 1)
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. However, it will not affect the measurement or recognition of such items.
There has been no impact on the Group of the adoption of this standard.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 31
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Amendments to IAS 19 Employee Benefits (IAS 19)
The IAS 19 Amendments include a number of changes relating 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; and 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 Group has no
defined benefit pension arrangements.
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.
Certain standards and interpretations that have been issued but are not expected to have a
material impact on the Group‟s consolidated financial statements include:
IFRIC 21 Levies
Information on new standards, amendments and interpretations that are expected to be relevant to
the Group‟s consolidated financial statements is provided below. The effective date on all is
from periods commencing 1 January 2014 unless otherwise stated.
IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)
This amendment adds application guidance to IAS 32 to address inconsistencies in applying the
criteria for offsetting financial assets and financial liabilities. Management have yet to assess the
impact of these amendments to the Group‟s consolidated financial statements.
IFRS 10, 12 & IAS 27 Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
Many commentators have long held the view that consolidating the financial statements of an
investment entity and its investees does not provide the most useful information. Consolidation
makes it more difficult for investors to understand what they are most interested in – the value of
the entity‟s investments. This amendment therefore defines an investment entity and provides
detailed application guidance on that definition. Entities that meet the definition are required to
measure investments that are controlling interests in another entity (in other words, subsidiaries)
at fair value through the profit or loss instead of consolidating them. The amendments also
introduce new disclosure requirements for investment entities. Management have still to assess
any impact of this new standard on the Group‟s consolidated financial statements.
IFRS 9 Financial Instruments (effective from 1 January 2015)
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
2015. Further chapters dealing with impairment methodology and hedge accounting are still
being developed.
32 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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.
Annual Improvements to IFRSs: 2010 – 2012 Cycle and 2011-2013 Cycle
This is a collective of amendments to IFRSs resulting from issues discussed and subsequently
included in Exposure Drafts published during 2012. Management have yet to assess the impact
of these issues on the Group‟s consolidated financial statements.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 33
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 using the equity method 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. Contingent consideration is
recognised at its fair value at the acquisition date. It is both classified and subsequently measured
in accordance with the Group‟s accounting policy for financial instruments. Transactions costs
that are directly attributable to the business combination are expensed as incurred and included
within Administrative Expenses.
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.
34 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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.
Impairment reviews of goodwill are carried out annually and any impairment recognised is recorded in
the Consolidated Statement of Comprehensive Income.
Revenue recognition
Revenue, which arises principally from storage and handling income and the sale of goods,
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 the sale of goods in the commodity trading business is
recognised on an invoice basis which coincides with dispatch of goods and is the point when the
Group earns its right to consideration.
Revenue from all other activities is recognised in the periods in which the services are provided.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 35
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Financial assets/liabilities and available for sale assets
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 profit or loss.
Contingent consideration has been classified as a financial liability at fair value through
profit or loss. All gains and losses resulting from changes in the fair value of contingent
consideration are recognised in Other Income in 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.
36 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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. The gains or losses on translation are included in the profit and
loss. 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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 37
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 element 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.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost includes all expenditure
incurred in the normal course of business in bringing the products to their present location and
condition.
38 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 39
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
The Group has exposure to foreign exchange risk in respect of its commodity trading
division. It manages this risk by mainly purchasing euros at a fixed rate forward and
using this rate in establishing a selling price for its goods in order to maintain an
acceptable margin.
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 2013 and 2012, 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 2013, if interest rates had been 1% higher with all other variables held
constant, post tax profit for the year would have been £26,000 lower, mainly as a result of
higher interest expenses on floating rate borrowings.
At 31 December 2012, if interest rates had been 1% higher with all other variables held
constant, post tax profit for the year would have been £40,000 lower, mainly as a result of
higher interest expenses on floating rate borrowings.
iii) Refrigerant gas price risk
Refrigerant gas price 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 2013, if refrigerant R22R gas price per kg had been £1 lower, post tax
profit for the year would have been £Nil.
At 31 December 2012, if refrigerant R22R gas price per kg had been £1 lower, post tax
profit for the year would have been £22,000 lower.
40 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
iv) Contingent consideration market risk
The Group recognised contingent consideration of £1,588,000 in connection with the
acquisition of Townview Foods Limited (see note 31). Following a re-assessment of the
performance of the acquired business this has been reduced to £754,000. The directors
have valued the contingent consideration using a probability weighted discounted cash
flow model. The most significant assumption is the quantum of earnings before interest
and tax of Townview Foods Limited for each of the next four years. Should the expected
level of earnings before interest and tax of Townview Foods Limited be 5% lower than
that modelled, post tax profit for the year would be £46,000 higher.
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.
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 2013:
Within
1 year
£’000
Trade payables
Bank overdraft
Invoice finance
Finance Leases
Term loan Interest
SWAP Interest
Bank loans
Deferred consideration
2,196
128
1,791
30
116
105
749
160
1 to 2
years
£’000
-
-
-
-
113
105
752
167
2 to 5
years
£’000
-
-
-
-
282
122
2,272
427
Greater
than 5 years
£’000
-
-
-
-
147
-
2,085
-
Total
£’000
2,196
128
1,791
30
658
332
5,858
754
5,275
1,137
3,103
2,232
11,747
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 41
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
At 31 December 2012:
Within
1 year
£’000
Trade payables
Bank overdraft
Invoice finance
Finance Leases
Term loan Interest
SWAP Interest
Bank loans
Deferred consideration
2,554
-
1,420
51
168
44
745
207
1 to 2
years
£’000
-
-
-
30
167
44
745
334
2 to 5
years
£’000
-
-
-
-
402
71
2,234
1,451
Greater
than 5 years
£’000
-
-
-
-
234
-
2,881
-
Total
£’000
2,554
-
1,420
81
971
159
6,605
1,992
5,189
1,320
4,158
3,115
13,782
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 £8.1m to £8.3m. In 2013, we managed to
reduce the Gearing ratio from 145% to 131%.
The Group‟s strategy is to reduce the net borrowings as soon as possible.
The gearing ratios at 31 December 2013 and 2012 were as follows:
Total borrowings
Less cash and cash equivalents
Net borrowings
Net assets
Less goodwill
Capital employed
Gearing ratio
2013
£’000
7,807
(49)
7,758
8,282
2,338
5,944
131%
2012
£‟000
8,106
(103)
8,003
8,067
2,554
5,513
145%
42 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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 2013
Total
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Financial assets/liabilities at fair
Value through profit or loss
Interest rate swaps/caps
Contingent consideration
Available for sale financial assets
Total
12
754
766
-
-
-
12
754
766
-
-
-
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. Further details are set out in 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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 43
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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 recognised contingent consideration of £1,588,000 in the year 31 December 2012, in
connection with the acquisition of Townview Foods Limited (see note 31). This has been re-
evaluated and has resulted in a credit to the income statement of £737,000. The directors have
valued the contingent consideration using a probability weighted discounted cash flow model. A
key assumption used in the calculation was an annual discount factor of 7.3%. The most
significant assumption is the quantum of earnings before interest and tax of Townview Foods
Limited for each of the next four years. Initially, the directors used the acquisition model to
determine the fair value as this provided the business case to support the acquisition of Townview
Foods Limited. Subsequently, budgets and forecasts have been prepared as part of the Group‟s
financial planning activities which in turn have allowed the estimated amount of contingent
consideration that the Group will need to pay to be recalculated. Actual performance to date has
been below that initially forecast and the events underpinning this will continue to have an impact
on the performance of the acquired business. Consequently, the Board estimate the amount of
contingent consideration that needs to be paid has reduced. The Board will continue to assess the
performance of Townview Foods Limited, both in the light of actual performance to date and
expected future performance, which may require further adjustments to contingent consideration.
The Group values its SWAP/CAP arrangements with the bank using the Mark to market for the
period representing the unexpired period of the SWAP/CAP. The basis of the formula for
calculating a Swap valuation is that current swap rate on the "bid" side against the Group
SWAP/CAP rate.
44 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Segmental information
5
In previous years we analysed our results into the segments of Protein trading, Ambient storage
and Cold storage. The board changed the segmental reporting to reflect the new structure of the
business. The comparatives for 2012 have been restated.
The three continued operating segments during the year are disclosed below. During the year the
Group discontinued operations from the north segment (see note 32). 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:
Commodity trading business
North west cold storage
South east cold storage
During 2013, £2.657m or 11.6% (2012: £1.661m or 11.2%) of the Group‟s revenues from
continued operations depended on a single customer in the cold storage segment.
Revenue from continuing operations in 2013 includes £206,000 (2012: £206,000) in relation to the
sub-letting of Felixstowe warehouses. This is attributed to the unallocated.
The segment results from continuing operations for the year ended 31 December 2013 are:
Commodity
Trading
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Total segment revenue
11,373
5,432
5,796
210
22,811
Revenue
11,373
5,432
5,796
210
22,811
Operating profit
Finance income-fair value gain
Finance cost-Interest paid
Finance cost – notional interest
420
267
1,218
(45)
-
-
-
-
(995)
134
(236)
-
910
134
(236)
(45)
Profit before income tax
375
267
1,218
(1,097)
763
Income tax – corporation tax
Income tax – deferred tax
(9)
-
(5)
-
(25)
-
(40)
183
(79)
183
Profit for the year
366
262
1,193
(954)
867
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 45
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Other segment items:
Commodity
Trading
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Depreciation – continued operations (Note 13)
-
300
214
42
556
The segment results for the year ended 31 December 2012 are:
Commodity
Trading
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Total segment revenue
3,231
4,410
5,705
206
13,552
Revenue
3,231
4,410
5,705
206
13,552
Operating profit
Finance cost-fair value loss
Finance cost-Interest paid
Finance cost – notional interest
131
41
1,322
-
(28)
-
-
-
-
(1,425)
(44)
(215)
-
69
(44)
(215)
(28)
Loss before income tax
103
41
1,322
(1,684)
(218)
Income tax – corporation tax
Income tax – deferred tax
(1)
-
-
-
(13)
-
(19)
9
(33)
9
Loss for the year
102
41
1,309
(1,694)
(242)
Other segment items:
Commodity
Trading
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Depreciation – continued operations (Note 13)
-
250
209
41
500
46 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Segment assets in respect of the trading divisions, consists 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, and financial liabilities at fair value through
consolidated statement of comprehensive income, provisions and borrowings.
Capital expenditure comprises additions to property, plant and equipment.
The segment assets and liabilities at 31 December 2013 and the capital expenditure for the year then
ended are as follows:
Commodity
Trading
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Assets
Liabilities
3,529
2,256
8,469
4,206
6,795
2,174
2,544 21,337
4,419 13,055
Capital expenditure (Note 13)
Capital disposals (Note 13)
-
-
117
-
193
-
14
70
324
70
The segment assets and liabilities at 31 December 2012 and the capital expenditure for the year then
ended are as follows:
Commodity
Trading
£’000
North
West
£’000
South
East Unallocated Total
£’000
£’000
£’000
Assets
Liabilities
4,277
4,381
8,505
4,734
6,794
2,096
4,130 23,706
4,428 15,639
Capital expenditure (Note 13)
Capital disposals (Note 13)
-
-
1,339
467
75
-
101
1,515
2
469
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 47
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6
Other income
Fair value (loss)/gain
Option price payable at exercise date
Price paid to obtain option
Profit on realised sale
Less: gain recognised in prior years
Contingent consideration (see note 17)
2013
£’000
(422)
-
-
-
-
737
2012
£‟000
522
(101)
-
60
(372)
-
315
109
We currently use R22 refrigeration gas at two 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 a supply agreement to purchase 14,228 kg (2012: 24,868 kg) of re-
cycled R22 at £4.05 per kg which is at market value. Under IAS39 we have accounted for a loss
of £422,000 on the proportion of the option still held at 31 December 2013. This is based on a
fair value option price of £Nil per kg at 31st December 2013. The quantity of gas held is
expected to be in excess of our own use requirement.
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 23)
Social security costs
Other pension costs
2013
2012
15
21
8
98
15
17
8
99
142
139
2013
£’000
3,424
-
318
142
2012
£‟000
3,292
-
310
149
3,884
3,751
There was an accrual for £12,000 (2012 £nil) included above for pension costs at 31 December 2013.
48 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIALSTATEMENTS
(CONTINUED)
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 28.
8
Financial income and expenses
Interest income
Fair value gains on interest rate swaps/caps
Finance expense - fair value losses on interest rate swaps/caps
Finance expense - interest expense on bank overdrafts and loans
Finance expense - notional interest on deferred consideration
Finance costs
Net finance costs
2013
£’000
-
134
-
(236)
(45)
2012
£‟000
-
-
(44)
(215)
(28)
(281)
(287)
(147)
(287)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 49
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9
Profit/(loss) before tax
The following items have been charged/(credited) to the Consolidated Statement of Comprehensive
Income in arriving at profit/(loss) before tax:
Depreciation of property, plant and equipment (Cost of Sales)
Depreciation of property, plant and equipment (discontinued)
2013
£’000
556
775
2012
£‟000
500
95
Staff costs, including share based payments (Note 7)
3,884
3,751
Foreign exchange loss/(gains)
Townview Foods Limited acquisition costs
4
-
(10)
317
Rental Income
(206)
(206)
Rentals payable under operating leases
- Buildings
- Plant and machinery
Auditors‟ remuneration - audit
- other assurance
- tax advisory
972
997
30
-
-
943
891
35
-
-
50 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
10
Income taxes
(a) Analysis of charge/(credit) in year
UK
Corporation tax at 23.25% (2012: 24.5%)
Adjustment in respect of previous periods
Ireland
Corporation tax at 12.5% (2012: 12.5%)
Adjustment in respect of previous periods
Current tax charge
Deferred tax credit (Note 22)
Deferred tax in respect of IBA
Deferred tax credit
(b) Factors affecting tax charge for year
Profit/(loss)on ordinary activities before taxation
Profit/(loss) on ordinary activities multiplied
by standard UK tax rate 23.25%(24.5%)
Effects of:
Other expenses not deductible for tax purposes
Adjustment for tax effect of discontinued operations
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
Total tax (credit)/charge for year
2013
£’000
37
5
36
1
79
(122)
(61)
(183)
2013
£’000
763
177
151
(220)
33
5
(250)
(104)
2012
£‟000
17
(29)
45
-
33
(1)
(8)
(9)
2012
£‟000
(218)
(53)
45
40
38
(29)
(17)
24
The deferred tax credit of £183,000 (2012: credit £9,000) 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 2013 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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 51
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Earnings per share
11
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/(Loss) attributable to owners of parent – continuing (£‟000)
2013
867
(Loss)/profit attributable to owners of parent – discontinuing (£‟000)
(946)
2012
(242)
163
Weighted average number of
ordinary shares outstanding
(79)
(79)
10,371,347
9,532,431
Basic earnings per share
- continuing operations
Basic earnings per share – discontinuing operations
Basic earnings per share
8.4p
(9.1)p
(0.7)p
(2.5)p
1.7p
(0.8)p
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/(Loss) attributable to owners of parent – continuing (£‟000)
2013
867
(Loss)/profit attributable to owners of parent – discontinuing (£‟000)
(946)
2012
(242)
163
(79)
(79)
Weighted average number of ordinary shares outstanding
Dilutive effect of share options
10,371,347
-
9,532,431
-
Weighted average number of shares for the calculation
of diluted earnings per share
10,371,347
9,532,431
Diluted earnings per share -continuing operations
Diluted earnings per share – discontinuing operations
Diluted earnings per share- total
8.4p
(9.1)p
(0.7)p
(2.5)p
1.7p
(0.8)p
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.
52 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12
Goodwill
Group
Cost
At 1 January 2013
Impairment
At 31 December 2013
Group
Cost
At 1 January 2012
Acquisition
At 31 December 2012
Ambient
£’000
Commodity
Trading
£’000
216
(216)
Nil
2,338
-
2,338
Ambient
£’000
Commodity
Division
£’000
216
-
216
-
2,338
2,338
Total
£’000
2,554
(216)
2,338
Total
£’000
216
2,338
2,554
The net book value of goodwill at 31 December 2013 was £2,338,000 (31 December 2012:
£2,554,000). The goodwill at 31 December 2013 relates to the acquisition of Townview Foods
Limited in 2012.
Goodwill has been allocated to the Group‟s cash generating units (CGUs) identified at each
warehouse location and now including Townview Foods Limited.
Of the goodwill at 31 December 2012, £216,000 has been allocated to the York warehouse. This
warehouse forms part of the Group‟s ambient storage business segment. Due to the planned disposal
of the ambient division this has been fully written off.
The addition of goodwill in 2012 of £2,338,000 has been fully allocated to Townview Foods Limited
which the directors consider represents a single CGU, being commodity trading. The recoverable
amount of the CGU is based upon value in use. The key assumption in determining value in use is
the underlying profitability of the acquired business which depends upon a number of factors
including prices and volumes negotiated with both key suppliers and customers. The business has an
established trading history, which together with input from both the board and existing management
team of Townview Foods Limited, has allowed cash flows to be derived for each of the next ten
years. A discount rate of 7.3% has been used.
The accumulated impairment at 31 December 2013 was £216,000 (2012: £Nil). This has been
included in the loss from discontinued activities in the Consolidated Statement of Comprehensive
Income in 2013.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 53
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
13
Property, plant and equipment
Group
Freehold
Land
£’000
Leasehold
Buildings
£’000
Plant and
Equipment
£’000
Cost
At 1 January 2013
Additions
Disposals
Transfer to assets held for sale (note 32)
3,166
-
-
(613)
14,436
-
(71)
(2,568)
7,621
324
-
(556)
Total
£’000
25,223
324
(71)
(3,737)
At 31 December 2013
2,553
11,797
7,389
21,739
Depreciation
At 1 January 2013
Charge for year
Disposal
Transfer to assets held for sale (note 32)
At 31 December 2013
Net book value
31 December 2013
Group
Cost
At 1 January 2012
Additions
Disposals
At 31 December 2012
Depreciation
At 1 January 2012
Charge for year
Disposal
At 31 December 2012
Net book value
31 December 2012
-
-
-
-
-
3,900
942
(30)
(1,084)
5,024
389
-
(353)
8,924
1,331
(30)
(1,437)
3,728
5,060
8,788
2,553
8,069
2,329
12,951
Freehold
Land
£’000
Leasehold
Buildings
£’000
Plant and
Equipment
£’000
Total
£’000
3,166
-
-
3,166
-
-
-
-
14,436
-
-
6,575
1,515
(469)
24,177
1,515
(469)
14,436
7,621
25,223
3,633
267
-
5,165
328
(469)
8,798
595
(469)
3,900
5,024
8,924
3,166
10,536
2,597
16,299
54 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Included within the net book value of £13m is £137,000 (2012: £137,000) relating to assets held under
finance lease. The depreciation charged in the financial statements in the year in respect of such assets
amount to £16,000 (2012: £16,000).
14 Derivative financial instruments
Refrigerant gas
At 1 January
Opening fair value of sale in year
Fair value (loss)/gain on remaining R22R gas
2013
£’000
422
-
(422)
2012
£‟000
669
(296)
49
At 31 December
-
422
We currently use R22 refrigeration gas at two 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 a supply agreement to purchase 14,228 kg (2012: 24,868 kg) of re-
cycled R22 at £4.05 per kg which is at market value. Under IAS39 we have accounted for a loss
of £422,000 on the proportion of the option still held at 31 December 2013. This is based on a
fair value option price of £Nil per kg at 31st December 2013. The quantity of gas held is
expected to be in excess of our own use requirement.
Some of this gas will continue to 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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 55
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
Transfer to disposal group (note 32)
2013
£’000
3,060
(15)
3,045
-
649
(134)
2012
£‟000
3,426
-
3,426
67
751
-
3,560
4,244
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 2013 trade receivables of £15,000 (2012: £nil) were impaired. The other
classes within trade and other receivables do not contain impaired assets.
As of 31 December 2013, trade receivables of £366,000 (2012: £562,000), were past due of
which £15,000(2012: £Nil) were 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
2013
£’000
336
30
366
2012
£‟000
540
22
562
56 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
16
Inventories
Goods for resale
2013
£’000
2012
£‟000
5
5
84
84
Goods for resale consist of commodity products purchased by Townview Foods Limited for
resale.
17
Financial liabilities
Contingent Swaps/Caps
gains
Consideration
£’000
£’000
102
-
At 1 January 2012
Charged to
the Consolidated Statement of Comprehensive Income
Acquisition – Townview Foods Limited
Acqusition (net assets)
28
1,588
110
At 31 December 2012
Acquisition (net assets) paid
Deferred consideration paid
Charged to
45
the Consolidated Statement of Comprehensive Income
(737)
Credit to
the Consolidated Statement of Comprehensive Income
1,726
(110)
(170)
At 31 December 2013
Current fair value financial liabilities
Non-current fair value financial liabilities
At 31 December 2013
754
160
594
754
44
-
-
146
-
-
-
(134)
12
12
-
12
Total
£’000
102
72
1,588
110
1,872
(110)
(170)
45
(871)
766
172
594
766
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 57
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Fair value of interest rate swaps/caps
The notional principal amount of the outstanding interest rate swaps contract at 31 December
2013 was £6m (2012: £3m).
The Group has an interest rate Cap in place for £3m (2012 : £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.
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 13 has been applied consistently.
Contingent consideration
See note 31 in respect of contingent consideration.
The Group recognised contingent consideration of £1,588,000 in connection with the acquisition of
Townview Foods Limited (see note 31). The directors have valued the contingent consideration
using a probability weighted discounted cash flow model. The most significant assumption is the
quantum of earnings before interest and tax of Townview Foods Limited for each of the next four
years.
At date of acquisition the Group paid £2,750,000 for the net assets on completion. The net assets
acquired were £2,858,000 and the balance of £110,000 was paid in January 2013. During the year,
£170,000 of contingent consideration has been paid.
As explained in note 31, the Board have re-assessed the remaining amount of contingent
consideration to be paid resulting in a credit of £737,000 to the Consolidated Statement of
Comprehensive Income. Interest of £45,000 has been charged to the Consolidated Statement of
Comprehensive Income representing unwinding of the discount. There has been no change to the fair
value on the contingent consideration as a result of changes in the assessment of credit risk.
Of the total amount of contingent consideration recognised at 31 December 2013, £160,000 (2012:
£304,000) has been included within current liabilities and £593,000 (2012: 1,422,000) has been
included in non-current liabilities. The gross undiscounted payments equate to £887,000.
In respect of the above assessment it is considered that level 2 of the fair value hierarchy as
defined in IFRS 13 has been applied.
58 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
18
Trade and other payables
Trade payables
Value added tax and payroll taxes
Accruals and deferred income
Transfer to disposal group (note 32)
2013
£’000
2,196
334
876
(92)
2012
£‟000
2,554
366
984
-
3,314
3,904
All amounts are short term. The net carrying value of trade payables is considered a reasonable
approximation of fair value.
19
Current tax liabilities
Corp oration tax - UK
Corporation tax - Ireland
The above liabilities are all payable within 1 year.
2013
£’000
38
(10)
28
2012
£‟000
529
37
566
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 59
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
20
Borrowings
Current
Finance Leases
Invoice finance
Bank overdraft
Term Loans
Transfer to disposal group (note 32)
Current
Disposal group transferred from current
Disposal group transferred from non current
Non Current
Finance Leases
Non-current bank borrowings
Transfer to disposal group (note 32)
2013
£’000
30
1,791
128
749
(167)
2012
£‟000
51
1,420
745
-
2,531
2,216
167
1,208
-
-
1,375
2,216
-
5,109
(1,208)
30
5,860
-
3,901
5,890
Total Borrowings
7,807
8,106
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 £0.4 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
60 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(e) HSBC Invoice Finance Limited agreed to allow the Group to borrow up to an amount
equivalent to 90% of trade debtors in respect of Norish Limited debtors and 85% in respect of
Townview Foods Limited debtors subject to an overall maximum limit of £3.25m (2012:
£3.25m) which is reviewed annually.
Overdraft interest is charged quarterly at an interest rate of bank base rate plus 2.25% (2012:
2.25%). Invoice finance interest is charged on a daily basis at bank base rate plus 2.2% (2012:
2.2%). Term Loan (a) above is charged quarterly at an interest rate of bank base rate plus 1.2%
(2012: 1.2%). Term Loan (b) above is charged quarterly at an interest rate of bank base rate plus
1.75% (2012:1.2%).Term Loan (c) above is charged quarterly at an interest rate of bank base rate
plus 2.75% (2012: 2.75%). Term Loan (d) above is charged monthly at an interest rate of bank
base rate plus 2.75% (2012: 2.75%).
The group has the following SWAPS and CAPS in place:
(a) £3m (2012: £3m) base rate cap fixing of 5% which expires on the 28th April 2014.
(b) £3m (2012: £3m) swap at a fixed rate of 1.45% against base expiring on the 10th August
2016.
(c) £3m (2012: £3m) at a fixed rate of 1.03% expiring on the 14 June 2017.
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 61
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The fair value of the Group‟s financial liabilities as at 31 December 2013 was as follows:
2012
2013
Current bank borrowings
Non-current bank borrowings
Book
Value
£’000
2,699
5,109
Fair
Value
£’000
2,699
5,109
Book
Value
£‟000
2,216
5,890
Fair
Value
£‟000
2,216
5,890
7,808
7,808
8,106
8,106
The Group pays interest at the base rate plus a margin of 1.2% to 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
21 Provisions
At 1 January
Utilisation of provision (transfer to accruals on settlement agreement)
Charged to the Consolidated Statement of Comprehensive income
Utilisation of provision (expenditure incurred in year)
At 31 December
2013
£’000
-
459
272
2012
£‟000
-
808
400
731
1,208
2013
£’000
145
-
40
-
185
2012
£‟000
139
-
6
-
145
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 least twelve months after the
Consolidated Statement of Financial Position, they are held as non-current liabilities.
62 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
22
Deferred tax
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
2013
£’000
2012
£‟000
-
-
-
843
20
863
-
-
-
1,026
20
1,046
Deferred tax liabilities (net)
863
1,046
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 2012
Charged/(credited) to
the Consolidated Statement of Comprehensive Income
At 31 December 2012
Credited to
the Consolidated Statement of Comprehensive Income
Accelerated
capital
allowances
£’000
1,006
Fair value
gains
£’000
49
(33)
16
(19)
Total
£’000
1,055
(9)
1,046
(183)
24
1,030
(164)
At 31 December 2013
866
(3)
863
The deferred tax liability due after more than one year prior to offsetting is £843,000 (2012:
£1,026,000)
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 63
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
Tax charged directly to equity
2013
£’000
1,046
(183)
-
2012
£‟000
1,055
(9)
-
At 31 December
863
1,046
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 £372,000 (2012 : £348,000). However, the
board feels that it is highly unlikely that this will ever be recoverable and have not provided this
amount in the accounts.
23
Share capital
Authorised
2013
£’000
2012
£‟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 2012
Issued during the year
At 31 December 2012
Issued during the year
Number
£’000
9,312,852
833,333
____
10,146,185
1,014,618
____
1,674
167
1,841
215
At 31 December 2013
11,160,803
2,056
During the year, the company issued 1,014,618 (2012: 833,333) Ordinary shares of €25c each
for a total cash consideration of £405,000. The excess over nominal value of £190,000 (2012:
£83,000) less share issue costs of £3,000 (2012: £36,000) has been transferred to the share
premium account.
64 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Share Premium
At 1 January
Share Issue
Funding costs
At 31 December
Share options
2013
£’000
3,276
190
(3)
2012
£‟000
3,229
83
(36)
3,463
3,276
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 65
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Movements in the number of share options outstanding and their related weighted average
exercise price are as follows:
2013
2012
Weighted
Average
Exercise
Price
Options
Number
Weighted
Average
Exercise
Price
Options
Number
Outstanding at 1 January
Granted
Cancelled
Lapsed
Exercised
250,000 0.58
-
-
-
-
-
-
-
-
250,000
-
-
-
-
Outstanding at 31 December
250,000 0.58
250,000
0.58
-
-
-
-
0.58
Exercisable at 31 December
250,000 0.58 250,000
0.58
The share options outstanding at the end of the year expire June 2018 at an exercise price of 58p.
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.
66 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
24
Capital conversion reserve fund
Capital conversion reserve fund
2013
£’000
23
2012
£‟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.
25
Cash and cash equivalents
Cash at bank and on hand
26
Dividends
Final dividend paid in respect of the previous year
of 1.25 cent (2012: 1.25cent) per ordinary share
Interim dividend paid in respect of the current year
of Nil cent (2011: €Nil) per ordinary share
Total dividends paid
2013
£’000
49
49
2013
£’000
108
-
108
2012
£‟000
103
103
2012
£‟000
93
-
93
The board recommends the payment of a final dividend of 1.25 cent per share. This will be paid on the 24
October 2014 to those shareholders on the register on the 26 September 2014. It will bring the total
dividend in respect of the financial year to 1.25 cent per share unchanged from last year.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 67
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
27
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:
2013
2013
Other
Land and operating
leases
Buildings
£’000
£’000
2012
2013
2012
Other
Land and operating
leases
£‟000
Total Buildings
£‟000
£’000
Expiring:
Within one year
Between two and five years
Beyond five years
900
2,835
2,536
837
1,981
811
1,737
4,816
3,347
955
3,221
3,245
800
2,067
826
2012
Total
£‟000
1,755
5,288
4,071
6,271
3,629
9,900
7,421
3,693 11,114
(b) Guarantees on leasehold properties
The annual operating lease commitment on land and buildings of £900,000 (2012:
£955,000) arises on leasehold properties, of which £370,000 (2012: £370,000) is subject
to parent company guarantees.
The operating lease commitment is stated gross of annual sub-lease income of £194,000
(2012: £194,000).
(c) Capital commitments
At 31 December 2013, the Group had £Nil (2012: £46,000) of capital projects
authorised of which £Nil (2012:£46,000) was contracted at 31 December 2013.
68 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
28
Directors’ remuneration
Ted O‟Neill
Norman Hatcliff
Aidan Hughes
Torgeir Mantor
Willie McCarter
Sean Savage (Joined Oct 2012)
Aggregate emoluments
Company pension contributions
2013
£’000
115
165
109
13
13
13
428
2013
£’000
362
66
428
2012
£‟000
121
159
111
15
15
3
424
2012
£‟000
358
66
424
Details of directors‟ interests in shares and share options are set out on pages 13 and 14.
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.
29
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 £142,000 (2012: £149,000).
There was an accrual for £12,000 (2012: £nil) included above for pension costs at 31 December
2013.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 69
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
30
Group undertakings
Subsidiary undertakings
Holding
Nature of business
Incorporated in Republic of Ireland
Direct
Indirect
Roebuck Investments Limited
95% (note 1)
Intermediate holding company
Incorporated in Northern Ireland
Norish (U.K.) plc
Norish (N.I.) Limited
100%
100%
Townview Foods Limited
(subsidiary of Roebuck Investments Limited)
100%
Incorporated in England
Norish Limited
(subsidiary of Norish (N.I.) Limited)
Belvedere Warehousing Limited
(subsidiary of Norish Limited)
100%
100%
Norish Warehousing Limited
100%
(subsidiary of Belvedere Warehousing Limited)
Investment company
Property management
Meat import
Property management
Non-trading
Non-trading
Note 1: As part of the transaction to acquire Townview Foods Limited in 2012, the vendor acquired a
5% interest in the ordinary shares of the acquisition vehicle, Roebuck Investments Limited, a
subsidiary undertaking of Norish plc. Subject to certain conditions, Norish plc has the right to acquire
these shares at their nominal value (£5) on or after 1 August 2018. Furthermore, through the
ownership of the preferred ordinary shares in Roebuck Investments Limited, Norish plc has secured
the entire equity interest in Townview Foods Limited to 1 August 2018 and beyond. Accordingly, the
board consider that a financial liability of £5 should be recorded in these consolidated financial
statements in respect of the vendor‟s interest and that Norish plc should account for 100% of the
equity interest in Townview Foods Limited.
70 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(a) The registered offices of Norish plc and its subsidiary undertakings are set out below:
Norish plc
Roebuck Investments Limited
South Bank House,
Barrow Street, Dublin 4, Republic of Ireland
Norish (U.K.) plc,
Norish (N.I.) Limited
79 Chichester Street
Belfast BT1 4JE
Norish Limited,
Belvedere Warehousing Limited,
Norish Warehousing Limited
Townview Foods Limited
Northern Industrial Estate,
Bury St Edmunds, Suffolk, IP32 6NL
7 Carrivekeeney Road
Newry, County Down, BT35 7LU
(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
Townview Foods Limited
100 Ordinary shares of £1 each
Roebuck Investments Limited
95 Ordinary shares of €1 each
5 Preferred ordinary shares of €1 each
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 71
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
31 Business Combination
On 5 October 2012, the Group acquired the entire issued share capital of Townview Foods
Limited, a meat import company based in Newry, Northern Ireland. Townview Foods Limited
procures supplies of raw and cooked beef, mutton, lamb, pork and poultry products from around
the world in order to supply major food manufacturing and wholesale companies across the UK,
including Northern Ireland.
Townview Foods Limited operates in the food servicing industry which is complimentary to the
Group‟s existing business. The combination of Townview Foods Limited with the existing
business provides a number of commercial and strategic advantages to the Group going forward.
Goodwill of £2,338,000 arose as a result of the transaction as follows:
Cash
Contingent consideration
Total consideration
Inventories
Trade receivables
Other receivable
Cash and cash equivalents
Trade payables
Other payables
Corporation tax liabilities
Total fair value of identifiable assets and liabilities acquired
Goodwill arising
Book Value &
Fair Value
£’000
3,610
1,588
5,198
45
2,110
34
3,312
(1,915)
(205)
(521)
2,860
2,338
The goodwill reflects the anticipated synergy benefits from both operating Townview Foods
Limited and Norish plc together in addition to profits expected to be generated by the underlying
performance of the acquired business. As goodwill arises on consolidation it will not be tax
deductible. The Group finalised its assessment of fair value during the year and no adjustments
have been made to the provisional value reported in the 2012 Annual Report.
72 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Contingent consideration is payable at the rate of 50% of Townview Foods Limited‟s earnings
before interest and tax payable in six monthly instalments for each of the five years ending
following the bid subject to a maximum amount payable to the vendor of £8.25m. In addition to
these amounts, in the six month periods ending 30 June 2014 and 31 December 2014 amounts
become payable to the vendor if earnings before interest and tax in any given six month period
exceeds £868,000 and £970,000 respectively. During the year, contingent consideration of
£170,000 was paid.
The amount included as consideration above represented the Board‟s estimate of fair value of the
purchase consideration, valuing the contingent consideration using a probability weighted
discounted cash flow model consistent with level 2 of the fair value hierarchy as defined in IFRS
7. Earnings before interest and tax were initially extracted from the acquisition model and a
discount rate of 7.3% was applied. Subsequently, budgets and forecasts have been prepared as
part of the Group‟s financial planning activities which in turn have allowed the estimated amount
of contingent consideration that the Group will need to pay to be recalculated. Actual
performance to date has been below that initially forecast and the events underpinning this will
continue to have an impact on the performance of the acquired business. Consequently, the Board
estimate the amount of contingent consideration still to be paid at 31 December 2013 is
£754,000. This re-assessment of the fair value of contingent consideration has resulted in a credit
of £737,000 to the Consolidated Statement of Comprehensive Income. A discount rate of 7.3%
has been applied.
The undiscounted range of outcomes can range from a low of £225,000 to £4,642,000 and
possibly in addition to these amounts, in the six month periods ending 30 June 2014 and 31
December 2014 amounts become payable to the vendor if earnings before interest and tax in any
given six month period exceeds £868,000 and £970,000 respectively.
The Group incurred acquisition related costs of £317,000 which were expensed in 2012. The
group also incurred £36,000 in equity funding costs which were expensed against the share
premium account in 2012.
The fair value of trade and other receivables disclosed above equated to the gross contractual
amounts receivable and were all collected.
As part of the transaction, the vendor acquired a 5.0% interest in the ordinary shares of the
acquisition vehicle, Roebuck Investments Limited, a subsidiary undertaking of Norish plc.
Subject to certain conditions, Norish plc has the right to acquire these shares at their nominal
value (£5) on or after 1 August 2018. Furthermore, through the ownership of preference shares in
Roebuck Investments Limited, Norish plc has secured the entire equity interest in Townview
Foods Limited to 1 August 2018 and beyond. Accordingly, the board consider that a financial
liability of £5 should be recorded in these consolidated financial statements in respect of the
vendor‟s interest and that Norish plc should account for 100% of the equity interest in Townview
Foods Limited.
In the period from 5 October 2012 to 31 December 2012, Townview Foods Limited contributed
£3,231,000 to the Group‟s revenue and £131,000 to the Group‟s profit for the period.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 73
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Had Townview Foods Limited been a subsidiary undertaking for the entire of 2012, unaudited
Group revenue would have been £27,858,000 and unaudited Group profit for the period would
have been £568,000. These amounts have been derived using the actual consolidated results for
the year plus pre-acquisition trading results for Townview Foods Limited extracted from
unaudited management information.
Included in liabilities in 2012 was an amount totalling £1,726,000 which was split between
deferred consideration of £1,588,000 and the balance of the net assets of £110,000 and the
notional interest of £28,000 for the period of acquisition to 31st December 2012. At 31 December
2013, liabilities include £753,000 comprising deferred consideration of £680,000 and notional
interest of £73,000.
32 Discontinued operations and assets classified as held for sale
During the year, the Board made the decision to focus the Group‟s storage operations exclusively
on cold storage in both the South East and North West of the United Kingdom. Consequently, the
Board agreed to exit the Group‟s storage operations in the North of England comprising both the
York ambient storage site and Leeds cold store. The York ambient storage site‟s carrying value
will be recovered by a sale of the site post year end and accordingly, these activities have been
classified as held for sale. Heads of terms have been agreed and the sale is expected to complete
in the Spring of 2014. Operations ceased at the Leeds cold store during the year and the site is
currently being marketed for sale which we expect to complete in 2014. Prior to the transfer of
these sites to assets held for sale, the group impaired the carrying value by £677,022 to £2.3m.
Financial information in respect of this component of the Group is summarised below.
Operating cash flows
Investing cash flows
Financing cash flows
2013
£’000
45
41
(167)
2012
£‟000
306
(24)
(167)
Total cash flows
(81)
115
Property, plant and equipment
Intangible assets
Inventories
Other current assets
2013
£’000
2,300
-
-
134
Total assets of the disposal group classed as held for sale
2,434
2012
£‟000
-
-
-
-
-
74 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Incorporated within the During the year, the Board made the decision to focus the Group‟s
storage operations exclusively on cold storage in both the South East and North West of the
United Kingdom. Consequently, the Board agreed to exit the Group‟s storage operations in the
North of England comprising both the
2013
£’000
2012
£‟000
Trade and other payables
Other current liabilities
Provisions
Total liabilities of the disposal group classed as held for sale
Term loans repayable
92
-
-
92
2013
£’000
1,375
Total borrowings of the disposal group classed as held for sale
1,375
Revenue
Expenses
Tax
2013
£’000
720
(1,666)
-
-
-
-
-
2012
£‟000
-
-
2012
£‟000
1,324
(1,161)
-
(Loss)/profit after tax of discontinued operations
(946)
163
Pre-tax loss on re-measurement of assets of disposal group
Tax
(946)
-
163
(40)
Profit/loss after tax of discontinued operations
(946)
123
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 75
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
33 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.
34 Related party transactions
Consultancy services totalling £1,000 (2012:£2,000) were provided by a relative of a director
during the year. There was £nil outstanding as at 31 December 2013 (2012:£nil).
35 Approval of financial statements
The Board of Directors approved these financial statements on 5 March 2014.
76 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
COMPANY BALANCE SHEET
at 31 December 2013
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 5 March 2014 by:
T.J. O‟Neill
Chairman
N.A Hatcliff
Managing Director
2013
£’000
2012
£‟000
651
651
5,431
5,005
(388)
(496)
5,043
4,509
5,694
5,160
2,056
3,463
23
152
1,841
3,276
23
20
5,694
5,160
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 77
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 Financial Reporting Council, as promulgated by The Institute of Chartered Accountants in
Ireland (Generally Accepted Accounting Practice 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.
78 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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.
Details of share options that were granted by the company are presented in note 23 to the
consolidated IFRS financial accounts within these financial statements.
The treatment under FRS20 “Share Based Payments” is consistent with the treatment under
IFRS.
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 £230,000 (2012: £24,000).
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 79
NOTES TO THE ACCOUNTS (CONTINUED)
3
Dividends paid and proposed
Final dividend paid in respect of the previous year
of 1.25 cent (2012: 1.25 cent) per ordinary share
Interim dividend paid in respect of the current year
of nil cent (2012: nil cent) per ordinary share
Total dividends paid
4
Investments – Shares in group undertakings
Cost and net book value at 1 January 2013
Cost and net book value at 31 December 2013
2013
£’000
2012
£‟000
(98)
(83)
-
-
(98)
(83)
£’000
651
651
In the opinion of the Directors, the value of shares in subsidiary undertakings is not less than the
original book value. During 2012 the company acquired 90 €1 ordinary shares and 5 €1 preferred
ordinary shares of Roebuck Investments Limited for £95.
Details of the Company‟s subsidiary undertakings are presented in Note 30 to the consolidated IFRS
accounts within these financial statements
5
Debtors
Amount receivable from subsidiary undertakings
Corporation tax
2013
£’000
5,419
12
2012
£‟000
5,005
-
5,431
5,005
All 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
2013
£’000
388
-
2012
£‟000
468
28
388
496
80 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES TO THE ACCOUNTS (CONTINUED)
7 Called up share capital
Authorised
2013
£’000
2012
£‟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 2012
Issued during the year
At 31 December 2012
Issued during the year
9,312,852
833,333
____
10,146,185
1,014,618
____
1,674
167
1,841
215
At 31 December 2013
11,160,803
2,056
The total Ordinary shares in issue are 11,160,803 (2012: 10,146,185). These are all fully paid up.
During the year, the company issued 1,014,618 Ordinary shares of €25c each for a total cash
consideration of £405,000. The excess over nominal value of £190,000 (2012: £83,000) less
share issue costs of £3,000 (2012: £36,000) has been transferred to the share premium account.
The proceeds were used to finance working capital.
Details of share options that were granted by the company are presented in note 23 to the
consolidated IFRS financial accounts within these financial statements.
The treatment under FRS20 “Share Based Payments” is consistent with the treatment under
IFRS.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 81
NOTES TO THE ACCOUNTS (CONTINUED)
Share Premium
At 1 January
Share Issue
Funding costs
At 31 December
8
Reserves
2013
£’000
3,276
190
(3)
2012
£‟000
3,229
83
(36)
3,463
3,276
Capital
Share Conversion
Reserve
Profit
and
Loss
Fund Account
£’000
£’000
Premium
Account
£’000
At 1 January 2013
Profit for the financial year
Dividends paid (Note 3)
Share placing
Share equity fund raising costs
At 31 December 2013
3,276
-
-
190
(3)
3,463
23
-
-
-
-
23
20
230
(98)
-
-
152
During the year, the company issued 1,014,618 (2012: 833,333) Ordinary shares of €25c each
for a total cash consideration of £405,000. The excess over nominal value of £190,000 (2012:
£83,000) less share issue costs of £3,000 (2012: £36,000) has been transferred to the share
premium account.
Details of the share based payment charge in accordance with FRS 20 are fully disclosed in Note
23 to the consolidated IFRS accounts within these financial statements.
The treatment under FRS 20 “Share Based Payments” is consistent with the treatment under
IFRS.
82 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
NOTES TO THE ACCOUNTS (CONTINUED)
9
Reconciliation of movements in shareholders’ funds
Profit for the financial year
Dividends paid
Share equity
Share equity fund raising costs
Credit in respect of share based payments
Net increase in shareholders‟ funds
Opening shareholders‟ funds
2013
£’000
230
(98)
405
(3)
-
534
5,160
2012
£‟000
24
(83)
250
(36)
-
155
5,005
Closing shareholders‟ funds
5,694
5,160
The group paid a total dividend in 2013 of £108,000 (2012: £93,000), of which £98,000 (2012:
£83,000 was paid through the company and £10,000 (2012: £10,000) was paid through Norish
UK plc under the Twin Share Option Scheme.
10
Financial commitments and contingencies
At the 31 December 2013, the Group had £Nil (2011: £46,000) of capital projects authorised of
which £Nil (2012: £46,000) was contracted at 31 December 2013.
At the 31 December 2013, the Company has exposure for the debts of Norish Limited and
Townview Foods Limited totalling £7,777,000 (2012: £8,106,000) 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.
11
Related party transactions
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.
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 83
HISTORICAL FINANCIAL SUMMARY
Consolidated income statement
Revenue – continuing
– discontinuing
Trading profit – continuing
– discontinued
Other Income
Goodwill – amortisation
Profit on sale of property
Other exceptional items
Net finance expenses
Depreciation
Profit/(loss) before taxation
Taxation
Profit/(loss) for the financial year
2009
£‟000
2010
£‟000
2011
£‟000
IFRS
10,539
IFRS
10,654
IFRS
11,213
-
1,246
-
-
-
-
-
(198)
(576)
472
359
831
-
931
-
410
-
-
-
(181)
(608)
552
(128)
-
1,045
-
190
-
-
-
(260)
(569)
406
(44)
424
362
2012
£‟000
IFRS
13,552
1,324
1,035
-
109
-
-
(317)
(287)
(595)
(55)
(24)
(79)
2013
£‟000
IFRS
22,811
720
1,151
(946)
315
-
-
-
(147)
(556)
(183)
104
(79)
Dividends
(192)
-
(92)
(93)
(108)
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
Deferred consideration
Long term liabilities
2009
£‟000
2010
£‟000
2011
£‟000
IFRS
IFRS
IFRS
2012
£‟000
IFRS
2013
£‟000
IFRS
15,242
3,005
(3,101)
16,079
2,698
(3,235)
16,264
2,877
(4,066)
19,275
4,431
(7,136)
15,289
6,048
(7,512)
15,146
15,542
15,075
16,570
13,825
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
1,841
3,276
23
2,927
8,067
145
1,046
1,422
5,890
2,056
3,463
23
2,740
8,282
185
863
594
3,901
15,146
15,542
15,075
16,570
13,825
84 NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013
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
NORISH PLC - ANNUAL REPORT & ACCOUNTS 2013 85