Interim Results

RNS Number : 3631U

Booker Group PLC

14 October 2010

 

14 October 2010

Booker Group plc

Interim results of Booker Group plc

for the 24 weeks ended 10 September 2010

 

This announcement contains the interim results of Booker Group plc ('Booker') for the 24 weeks ended 10 September 2010.

 

Financial Highlights

·; Total sales £1.7 billion, +5.5%

·; Like-for-like sales in the half were:

- non-tobacco +5.1% (2009: +9.4%)

- tobacco +5.7% (2009: +5.1%)

- total +5.3% (2009: +7.7%)

·; Like-for-like sales to caterers were +6.4% (2009: +12.6%) and to retailers +4.8% (2009: +5.5%)

·; Operating profit +13.6% to £39.2m (2009: £34.5m)

·; Profit before tax +24.2% to £36.9m (2009: £29.7m)

·; Profit after tax +22.7% to £30.3m (2009: £24.7m)

·; Basic earnings per share +22.3% to 2.03 pence (2009: 1.66 pence)

·; Net cash £10.1m (2009: net debt £4.0m)

·; Interim dividend up 12.5% to 0.27 pence per share (2009: 0.24 pence)

 

Operating Highlights

·; Booker was voted 'best cash and carry for caterers' and 'best cash and carry for retailers' in a survey of independent businesses conducted by him!, the retail research consultancy

·; We were awarded 'Wholesaler of the Year' by The Grocer magazine and Premier was voted 'Symbol Group of the Year' at the Retail Industry Awards

·; Conversion of another 10 branches into the 'Extra' format, taking the total number of 'Extra' branches to 101. An additional 10 are planned for the second half

·; Internet sales +35.4% to £244.8m (2009: £180.8m)

·; Our delivered business continues to grow with sales of £434m (+16.1% versus last year)

·; Our branch in India is performing well. By Spring 2011 we plan to have a further two open

·; We are building a more sustainable business with waste to landfill down 8%

 

Outlook

Group turnover in the second half to date is ahead of the same period last year. Working capital levels and costs are in line with plan. Overall, Booker continues to trade in line with management expectations.

 

Acquisitions

Yesterday we acquired the entire issued share capital of Ritter-Courivaud Limited ("Ritter") and acquired the trading business and assets of Classic Drinks Limited ("Classic"). These acquisitions will support the continued development of Booker's delivered catering business.

 

Ritter is a speciality fine foods supplier to leading restaurants, hotels and contract caterers and was acquired for a total consideration of £14.5m comprising the issue of 29,246,101 new ordinary shares in Booker to Ian le Vesconte. The number of new ordinary shares in Booker being issued has been determined by reference to Booker's mid market closing share price on 8, 11 and 12 October 2010. The new ordinary shares will rank pari passu with the existing ordinary shares in Booker. Application has been made for the admission of the new ordinary shares to the Official List of the UK Listing Authority and to trading on the London Stock Exchange's main market for listed securities. Additionally Booker has assumed approximately £3.3m of net debt funded from Booker's existing resources. Ritter has current annual sales of approximately £30 million.

 

Classic is a specialist "on-trade" wholesaler supplying wine, beer, spirits and non-alcoholic drinks to pubs, clubs and licensed premises and has been acquired from Classic Drinks Limited, a subsidiary of Halewood International Limited, for a cash consideration equivalent to the total gross asset value of £4.0m, funded from Booker's existing resources. Classic operates from eight depots in the Midlands and the North of England and has current annual sales of approximately £30 million.

 

It is intended that each of Ritter and Classic will continue to operate under their existing management teams and brands, as part of Booker Direct, complementing Booker's offering to caterers in the UK.

 

We do not expect these acquisitions to have a material impact on earnings in the year to March 2011.

 

Management Changes

After five years of outstanding service as Commercial Director, Bryan Drew will be retiring from the Board and leaving Booker at the end of the current financial year in order to have more time to pursue his other entrepreneurial interests.

 

Booker also announces that Guy Farrant has joined the Board with immediate effect to become Managing Director of the UK cash and carry business. Guy joins from Provenance Limited which has been working with Booker for the past 2 years helping improve Booker's fruit and vegetable offer. Guy brings a wealth of food experience to the Board, having worked in the food industry for 25 years rising to be Director of M&S Food between 2005 and 2007 followed by Operations and Retail Director between 2007 and 2008. Further details are set out below.

 

Commenting on the results, Charles Wilson, Chief Executive of Booker, said,

"Booker is helping more customers compete by improving our choice, prices and service. Our sales growth is good and our plans to broaden the business are progressing well. We are delighted to bring Ritter and Classic into the Booker Group. Each company brings new expertise to Booker and will help the Group offer an even better choice and service to caterers in the UK. I am also delighted that Guy Farrant has joined the business. He brings enormous experience in the food industry which will benefit all our customers."

 

 

Booker Group plc will announce its Quarter 3 Interim Management Statement for the 16 weeks to 31 December 2010 on 13 January 2011.

 

 

For further information contact:

Tulchan Communications (PR adviser to Booker Group plc)

020 7353 4200

Susanna Voyle

 

A presentation for analysts will be held at 08.30am on Thursday 14 October 2010 at JP Morgan Cazenove's offices. For further details please call Sandra Cameron at Tulchan Communications on 0207 353 4200.

 

 

Chairman's Statement

 "I am pleased to report on a good performance for the half year to 10 September 2010.

 

Financial Results

Sales for the 24 week period were £1.7 billion, an increase of 5.5%. Half year profit before tax was £36.9 million (2009: £29.7 million), up 24.2%. Basic earnings per share increased by 22.3% to 2.03 pence (2009: 1.66 pence). Net cash improved to £10.1m (2009: Net debt of £4.0 million).

 

Booker is continuing to 'drive' sales by offering 'choice up, prices down and better service'. Like-for-like non-tobacco sales showed an increase of 5.1%. The drive into the catering market is working with sales to caterers having increased by 6.4% to £562m (2009: £528m). Sales to retailers have increased by 5.0% to £1,139m (2009: £1,085m). Fresh departments performed particularly well with fruit and vegetable sales up 46% and meat up by 10%. Premier, our retail symbol group, continued to grow and now has 2,593 outlets (2009: 2,392 outlets). Our prices have remained competitive and stock availability has been good. Booker was voted 'best cash and carry for caterers' and 'best cash and carry for retailers' in a survey of independent businesses conducted by him!, the retail research consultancy. We were also awarded 'Wholesaler of the Year' by The Grocer magazine and Premier was voted 'Symbol Group of the Year' at the Retail Industry Awards.

 

Broadening Booker

The plans to 'broaden' the business are going well. We converted a further 10 branches to the 'Extra' format since we last reported. We now have 101 'Extras', which offer a broader range and better environment for customers, and plan to convert an additional 10 in the second half.

 

Booker.co.uk is performing well with internet sales in the half at £244.8m, up 35.4% versus the same period last year.

 

Our delivered business continues to grow with sales of £434m, up 16.1%.

 

Acquisitions

To support the continued development of our delivered catering business, yesterday we acquired Ritter-Courivaud Limited and the trading business and assets of Classic Drinks Limited. Ritter is a speciality fine foods supplier to leading restaurants, hotels and contract caterers. Classic is an "on-trade" wholesaler supplying wine, beer and spirits. Both businesses will continue to operate under their existing management teams and brands, as part of Booker Direct, and will complement Booker's offering to caterers in the UK. Ritter has current annual sales of approximately £30 million and Classic has current annual sales of approximately £30 million.

 

We do not expect these acquisitions to have a material impact on earnings in the year to March 2011.

 

Management Changes

After five years of outstanding service as Commercial Director, Bryan Drew will be retiring from the Board and leaving Booker at the end of the current financial year in order to have more time to pursue his other entrepreneurial interests. We thank him for his fantastic contribution to Booker.

 

We are also pleased to announce that Guy Farrant has joined the Board of Booker to become Managing Director of the UK cash and carry business. Whilst at Provenance, Guy has been working with Booker for the past 2 years helping improve our fruit and vegetable offer. He brings a wealth of food experience to the Board.

 

Dividend

Booker's strategy to drive and broaden its business is working. In a challenging environment we continue to make good progress. As a result the Board has declared an interim dividend of 0.27 pence per share (2009: 0.24 pence) to be paid on 26 November 2010 to shareholders on the register at the close of business on 29 October 2010. The ex-dividend date will be 27 October 2010.

 

Outlook

Group turnover in the second half to date is ahead of the same period last year. Working Capital levels and costs are in line with plan. Overall, Booker Group plc continues to trade in line with management expectations."

 

 

Richard Rose

Chairman

 

 

 

 

NOTES:

 

MANAGEMENT DETAILS

 

Guy Farrant has worked in the food industry for 25 years rising to be Director of M&S Food between 2005 and 2007 followed by Operations and Retail Director between 2007 and 2008. Since 2008, whilst at Provenance Limited ("Provenance"), Guy has been working with Booker to help improve its fruit and vegetable offer.

 

Booker has acquired Guy's 50% shareholding in Provenance Too Limited ("Provenance Too") which holds the intellectual property in Provenance for a total cash consideration of £500,000, funded out of Booker's existing resources. Provenance provides procurement services to Booker. Guy was a founding shareholder in Provenance and Provenance Too and, upon his appointment to the Booker Board, has resigned as a director of both companies and has also divested his shareholding in Provenance. Guy will use the net proceeds from the sale of his shareholding in Provenance Too to acquire shares in Booker. In connection with his appointment to the board, Guy has been granted a special performance share award (in the form of a nil-cost option) over 3.9 million ordinary shares in the Company ("the Option"). The Option is in two parts: one part relates to 2.1 million shares in Booker and the other part relates to 1.8m shares. A third of the 2.1 million shares will vest on reaching each of the share prices of 52p, 56p and 58p. This part of the Option can be exercised in three annual instalments, assuming that the relevant share price target has been reached by the end of each year (otherwise, the Option can be exercised after 3 years to the extent that the targets have subsequently been reached by that time). A quarter of the 1.8m shares will vest on reaching each of the share prices of 60p, 62.5p, 70p and 90p. To the extent that these share price targets are met, this part of the Option can be exercised after 3 years. For each part of the Option, each share price target has to be sustained over a consecutive 60 day period in order for the relevant part of the Option to vest. Other than as set out above, the vesting and exercise terms applying to the Option are the same as if it had been granted under the Company's Performance Share Plan.

 

The Booker Board currently consists of Richard Rose (Chairman), Charles Wilson (Chief Executive), Jonathan Prentis (Group Finance Director), Mark Aylwin (MD Booker Direct), Bryan Drew (Commercial Director), Bryn Satherley (Operations Director), Guy Farrant (MD Booker Cash and Carry), Lord Bilimoria (Non Executive Director), Andrew Cripps (Non Executive Director), Richard Farr (Non Executive Director) and Karen Jones (Non Executive Director).

 

Save as disclosed below there is nothing further to disclose in relation to the appointment of Guy Farrant under LR 9.6.11 of the Listing Rules.

 

 

Full name: 

Guy Farrant

 

Current directorships:

Booker Group plc

 

Previous directorships:

Provenance Limited

Provenance Too Limited

 

Schedule of previous directorships:

None

 

Unspent Convictions:

None

 

Receiverships/Liquidations in past 12 months:

None

 

Public Criticism in last 12 months:

None

 

Shareholding in Booker Group plc:

None

 

 

ENDS

 

 

 

 

 

 

Any forward looking statements made throughout this document represent management's best judgement as to what may occur in the future. However, the group's actual results for the current and future fiscal periods and corporate developments will depend on a number of economic, competitive and other factors, some of which will be outside the control of the group. Such factors could cause the group's actual results for future periods to differ materially from those expressed in any forward looking statements made in this document.

Condensed consolidated income statement

 

	Note	24 weeks ended 10 September 2010	24 weeks ended 11 September 2009	52 weeks ended 26 March 2010
		£m	£m	£m
Revenue		1,701.0	1,612.6	3,386.9
Cost of sales		(1,640.4)	(1,555.8)	(3,271.9)
		----------	----------	----------
Gross profit		60.6	56.8	115.0
Administrative expenses		(21.4)	(22.3)	(48.4)
		---------	---------	---------
Operating profit		39.2	34.5	66.6
Finance income	2	1.6	0.5	1.2
Finance expenses	2	(3.9)	(5.3)	(10.6)
		----------	----------	----------
Net financing costs		(2.3)	(4.8)	(9.4)
Profit before tax		36.9	29.7	57.2
Tax	3	(6.6)	(5.0)	(9.6)
		----------	----------	----------
Profit for the period		30.3	24.7	47.6
		======	======	======
Earnings per share (Pence)
Basic	4	2.03p	1.66p	3.19p
		======	======	======
Diluted	4	1.98p	1.62p	3.11p
		======	======	======

 

 

 

Condensed consolidated statement of comprehensive income

 

		24 weeks ended 10 September 2010	24 weeks ended 11 September 2009	52 weeks ended 26 March 2010
		£m	£m	£m
Defined benefit plan actuarial losses		(4.9)	(36.2)	(32.6)
Tax relating to actuarial losses		1.4	10.1	9.1
Effective portion of changes in fair value of cash flow hedge		0.3	0.1	1.4
Tax relating to effective cash flow hedge		(0.1)	-	(0.8)
Ineffective hedge transferred to income statement		-	1.4	1.4
Tax relating to Ineffective hedge transferred to income statement		-	(0.4)	-
		----------	----------	----------
Other comprehensive loss for the period		(3.3)	(25.0)	(21.5)
Profit for the period		30.3	24.7	47.6
		----------	----------	----------
Total comprehensive income for the period		27.0	(0.3)	26.1
		======	======	======

 

Condensed consolidated balance sheet

 

	Note	10 September 2010	11 September 2009	26 March 2010
		£m	£m	£m
ASSETS
Non-current assets
Property, plant and equipment		58.6	59.4	59.5
Intangible assets		423.9	423.9	423.9
Deferred tax asset		16.9	19.5	17.1
		----------	----------	----------
		499.4	502.8	500.5
Current assets
Inventories		205.5	192.4	214.1
Trade and other receivables		64.5	58.1	72.2
Cash and cash equivalents	7	47.6	42.0	43.7
		----------	----------	----------
		317.6	292.5	330.0
		----------	----------	----------
Total assets		817.0	795.3	830.5
		----------	----------	----------
LIABILITIES
Current liabilities
Other interest bearing loans and borrowings	7	-	(0.1)	-
Trade and other payables		(385.3)	(373.3)	(408.8)
Tax liabilities		(19.9)	(19.5)	(18.0)
Other financial liabilities		(1.3)	(2.9)	(1.6)
		----------	----------	----------
		(406.5)	(395.8)	(428.4)
Non-current liabilities
Other interest bearing loans and borrowings	7	(37.5)	(45.9)	(36.7)
Other payables		(28.3)	(28.3)	(28.2)
Retirement benefit liabilities	6	(19.6)	(32.2)	(21.8)
Provisions		(35.6)	(39.6)	(38.2)
		----------	----------	----------
		(121.0)	(146.0)	(124.9)
		----------	----------	----------
Total liabilities		(527.5)	(541.8)	(553.3)
		----------	----------	----------
Net assets		289.5	253.5	277.2
		======	======	======
EQUITY
Share capital		15.0	14.9	14.9
Share premium account		31.0	30.9	31.0
Merger reserve		260.8	260.8	260.8
Share option reserve		2.8	2.2	3.0
Hedge reserve		(1.0)	(2.6)	(1.2)
Retained earnings		(19.1)	(52.7)	(31.3)
		----------	----------	----------
Total equity attributable to equity holders		289.5	253.5	277.2
		======	======	======

 

Condensed consolidated statement of changes in equity

 

24 weeks ended 10 September 2010	Share capital	Share premium	Merger reserve	Share option reserve	Hedge reserve	Retained earnings	Total
	£m	£m	£m	£m	£m	£m	£m
At 26 March 2010	14.9	31.0	260.8	3.0	(1.2)	(31.3)	277.2
Profit for the period	-	-	-	-	-	30.3	30.3
Defined benefit plan actuarial losses	-	-	-	-	-	(4.9)	(4.9)
Effective portion of changes in fair value of cash flow hedge	-	-	-	-	0.3	-	0.3
Tax relating to components of other comprehensive income	-	-	-	-	(0.1)	1.4	1.3
	----------	----------	----------	----------	----------	----------	----------
Total comprehensive income for the period	-	-	-	-	0.2	26.8	27.0
Shares issued	0.1	-	-	(0.8)	-	0.8	0.1
Share based payments	-	-	-	0.6	-	-	0.6
Dividends to shareholders	-	-	-	-	-	(15.4)	(15.4)
	----------	----------	----------	----------	----------	----------	----------
At 10 September 2010	15.0	31.0	260.8	2.8	(1.0)	(19.1)	289.5
	======	======	======	======	======	======	======

 

24 weeks ended 11 September 2009	Share capital	Share premium	Merger reserve	Share option reserve	Hedge reserve	Retained earnings	Total
	£m	£m	£m	£m	£m	£m	£m
At 27 March 2009	14.9	30.8	260.8	1.6	(4.0)	(41.0)	263.1
Profit for the period	-	-	-	-	-	24.7	24.7
Defined benefit plan actuarial losses	-	-	-	-	-	(36.2)	(36.2)
Effective portion of changes in fair value of cash flow hedge	-	-	-	-	0.1	-	0.1
Ineffective hedge transferred to income statement	-	-	-	-	1.4	-	1.4
Tax relating to components of other comprehensive income	-	-	-	-	(0.4)	10.1	9.7
	----------	----------	----------	----------	----------	----------	----------
Total comprehensive income for the period	-	-	-	-	1.1	(1.4)	(0.3)
Shares issued	-	0.1	-	-	-	-	0.1
Share based payments	-	-	-	0.6	-	-	0.6
Dividends to shareholders	-	-	-	-	-	(10.0)	(10.0)
Reserves reclassification	-	-	-	-	0.3	(0.3)	-
	----------	----------	----------	----------	----------	----------	----------
At 11 September 2009	14.9	30.9	260.8	2.2	(2.6)	(52.7)	253.5
	======	======	======	======	======	======	======

 

52 weeks ended 26 March 2010	Share capital	Share premium	Merger reserve	Share option reserve	Hedge reserve	Retained earnings	Total
	£m	£m	£m	£m	£m	£m	£m
At 27 March 2009	14.9	30.8	260.8	1.6	(4.0)	(41.0)	263.1
Profit for the period	-	-	-	-	-	47.6	47.6
Defined benefit plan actuarial losses	-	-	-	-	-	(32.6)	(32.6)
Effective portion of changes in fair value of cash flow hedge	-	-	-	-	1.4	-	1.4
Ineffective portion of cash flow hedge recycled to income statement	-	-	-	-	1.4	-	1.4
Tax relating to components of other comprehensive income	-	-	-	-	(0.8)	9.1	8.3
	----------	----------	----------	----------	----------	----------	----------
Total comprehensive income for the period	-	-	-	-	2.0	24.1	26.1
Share options exercised	-	0.2	-	-	-	-	0.2
Share based payments	-	-	-	1.4	-	-	1.4
Dividends to shareholders	-	-	-	-	-	(13.6)	(13.6)
Reserves reclassification	-	-	-	-	0.8	(0.8)	-
	----------	----------	----------	----------	----------	----------	----------
At 26 March 2010	14.9	31.0	260.8	3.0	(1.2)	(31.3)	277.2
	======	======	======	======	======	======	======

 

Condensed consolidated cash flow statement

 

	24 weeks ended 10 September 2010	24 weeks ended 11 September 2009	52 weeks ended 26 March 2010
	£m	£m	£m
Cash flows from operating activities
Profit before tax	36.9	29.7	57.2
Depreciation	6.0	6.5	14.0
Finance income	(1.6)	(0.5)	(1.2)
Finance expenses	3.9	5.3	10.6
Loss on disposal of property, plant and equipment	-	-	0.1
Equity settled share based payments	0.6	0.6	1.4
Decrease/(increase) in inventories	8.6	4.4	(17.3)
Decrease/(increase) in debtors	7.7	5.5	(8.6)
(Decrease)/increase in creditors	(24.0)	8.5	44.6
Decrease in provisions	(3.4)	(1.1)	(3.7)
Contributions to pension scheme	(5.5)	(5.5)	(11.6)
	----------	----------	----------
Net cash flow from operating activities	29.2	53.4	85.5
Interest paid	(1.7)	(3.3)	(7.4)
Partial settlement of interest swap (see note 8)	-	(7.2)	(7.2)
Tax paid	(3.2)	(3.6)	(8.6)
	----------	----------	----------
Cash generated from operating activities	24.3	39.3	62.3
	----------	----------	----------
Cash flows from investing activities
Acquisition of property, plant and equipment	(5.1)	(7.7)	(15.5)
Disposal of property, plant and equipment	-	-	0.1
	----------	----------	----------
Net cash outflow from investing activities	(5.1)	(7.7)	(15.4)
	----------	----------	----------
Cash flows from financing activities
Proceeds from issue of shares	0.1	0.1	0.2
Payment of finance lease liabilities	-	(0.1)	(0.2)
Repayment of borrowings	-	-	(10.0)
Dividends paid	(15.4)	(10.0)	(13.6)
	----------	----------	----------
Net cash outflow from financing activities	(15.3)	(10.0)	(23.6)
	----------	----------	----------
Net increase in cash and cash equivalents	3.9	21.6	23.3
Cash and cash equivalents at the start of the period	43.7	20.4	20.4
	----------	----------	----------
Cash and cash equivalents at the end of the period (see note 7)	47.6	42.0	43.7
	======	======	======

 

Notes to the interim financial statements

 

1. General information

 

Reporting entity

Booker Group plc (the "Company") is a public limited company incorporated in the United Kingdom (Registration number 05145685). The Company's ordinary shares are traded on the London Stock Exchange.

 

The condensed consolidated interim financial statements of the Company as at and for the 24 weeks ended 10 September 2010 comprise the Company and its subsidiaries (together referred to as the "Group"). The financial statements are presented in Sterling and rounded to the nearest hundred thousand.

 

The comparative figures for the period ended 26 March 2010 are not the statutory accounts for that financial year. Those accounts were prepared in accordance with IFRSs as adopted by the EU, have been reported on by the auditors and delivered to the Registrar of Companies. Copies are available upon request from the Company's registered office at Equity House, Irthlingborough Road, Wellingborough, Northamptonshire, NN8 1LT or from the website www.booker.co.uk. The report of the auditors was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

 

 

Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'.

They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the period ended 26 March 2010. These condensed consolidated interim financial statements were approved by the Board of Directors on 13 October 2010.

 

 

Basis of preparation

As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed set of accounts has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated accounts for the period ended 26 March 2010 other than as noted below and except for the Group's tax measurement basis (see note 3).

 

 

New IFRS and amendments to IAS and interpretations

There are a number of standards and interpretations issued by the International Accounting Standards Board that became effective during the period. The following have been adopted and have had no impact on the Group's reported results or financial position.

 

International Financial Reporting Standards
IAS 39	Embedded derivatives (amendment)
IFRS 1	First time adoption of IFRS (revised)
IAS 27	Consolidated and separate financial statements (amended)
IAS 39	Financial instruments: Recognition and measurement: Eligible hedged items
IFRS 3	Business combinations (revised)
IFRS 2	Group cash-settled share-based payment transactions (amendment)
IFRS 1	Additional exemptions for first time adopters (amendment)

 

International Financial Reporting Interpretations Committee

IFRIC 9	Embedded derivatives (amendment)
IFRIC 17	Distribution of non-cash assets to owners
IFRIC 18	Transfers of assets from customers

 

Going concern

The Directors consider that the risks noted in this Report are those known to the Directors at the date of such Report which the Directors consider to be material to the Group but these do not necessarily comprise all risks to which the Group is exposed. In particular, the Group's performance could be adversely affected by poor economic conditions. Additional risks and uncertainties currently unknown to the Directors, or which the Directors currently believe are immaterial, may also have a material adverse effect on the business, financial condition or prospects of the Group.

 

The Group's forecasts and projections, taking account of possible changes in trading performance and considering the risks identified, show that the Group should be able to operate within the level of its current facility. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the group and company financial statements.

 

Use of assumptions and estimates

The preparation of accounts in accordance with generally accepted accounting principles requires the Directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Some of these policies require a high level of judgement and the Directors and the Audit Committee believes that the most critical accounting policies and significant areas of judgement and estimation arise from the accounting for:

 

·; IAS19 'Employee benefits'. Defined benefit schemes are accounted for in accordance with the advice of an independent qualified actuary but significant judgements are required in relation to the assumptions for future salary and pension increases, inflation, investment returns and mortality that underpin their valuations.

 

·; IAS37 'Provisions, contingent liabilities and contingent assets'. The Group is party to a number of leases on properties that are no longer required for trading. Whilst every effort is made to profitably sub-let these properties, it is not always possible. Where a lease is onerous to the Group, a provision is established for the difference between amounts contractually payable to the landlord and amounts contractually receivable from the tenant (if any) for the period up until the point it is judged that the lease will no longer be onerous. In addition, provisions exist for the expected future dilapidation cost on leasehold properties and the expected future costs of removing asbestos from leasehold properties. The Directors believe that their estimates, which are based upon the advice of an in house property department who monitor the UK property market, are appropriate.

 

·; IAS36 'Impairment of assets'. In testing for impairment of goodwill, the Directors have made certain assumptions concerning the future development of the business that are consistent with its annual budget and forecast into perpetuity. Should these assumptions regarding the discount rate or growth in the profitability be unfounded then it is possible that goodwill included in the balance sheet could be impaired. The Directors do not consider that any reasonably likely changes in key assumptions would cause the carrying value of the goodwill to become impaired.

 

·; IAS12 'Income Taxes'. In applying the Group's accounting policy in relation to deferred tax, as set out below, the Directors are required to make assumptions regarding the Group's ability to utilise historical tax assets following an assessment of the likely quantum and timing of future taxable profits. A deferred tax asset is recognised to the extent that the Directors are confident that the Group's future profits will utilise historical tax assets.

 

 

Operating segments

IFRS 8 "Operating Segments" requires that the segments should be reported on the same basis as the internal reporting information that is provided to the chief operating decision maker. The chief operating decision maker has been identified as the CEO. Internal reports reviewed regularly by the CEO focus on the operations of the Group as a whole and do not identify individual operating segments. Whilst turnover is reported by customer and product type, it is not possible to analyse profitability and balance sheets in this way. Products flow through the same distribution channels and there are a large amount of expenses and assets/ (liabilities) that are not specific. None of these possible segments have a unique management structure responsible for getting the product from the supplier to the customer. The Directors therefore present the financial statements as a single reportable segment, being wholesaling and associated activities.

 

 

Seasonality

The Group's operations are mainly unaffected by seasonal factors. In 2009/10, the 24 weeks to 11 September 2009 accounted for 47.6% of the annual turnover (2008/09: 47.1%). It should be noted that, in line with internal management reporting, the first half consists of 24 weeks whilst the second half consists of 28 weeks.

 

 

2. Net financing costs	24 weeks ended 10 September 2010	24 weeks ended 11 September 2009	52 weeks ended 26 March 2010
	£m	£m	£m
Finance income
Expected return on pension scheme assets	16.3	13.8	30.0
Interest on pension liabilities	(14.7)	(13.3)	(28.8)
	----------	----------	----------
Net credit on pension	1.6	0.5	1.2
Finance expenses
Interest on bank loans and overdrafts	(2.3)	(3.5)	(6.8)
Unwinding of discount on provisions	(0.8)	(1.0)	(2.2)
Amortisation of financing costs	(0.8)	(0.8)	(1.6)
	----------	----------	----------
	(3.9)	(5.3)	(10.6)
	----------	----------	----------
	(2.3)	(4.8)	(9.4)
	======	======	======

 

 

3. Tax

Tax on the profit before taxation for the 24 weeks ended 10 September 2010 is based on an effective rate of 17.9%, which has been calculated by reference to the projected charge for the full financial year. The rate for the 24 weeks ended 11 September 2009 and 52 weeks ended 26 March 2010 was 17.0% and 16.8% respectively.

 

 

4. Earnings per share	24 weeks ended 10 September 2010			24 weeks ended 11 September 2009
	Earnings	Weighted average shares	Earnings per share	Earnings	Weighted average shares	Earnings per share
	£m	Number m	Pence	£m	Number m	Pence
Basic earnings	30.3	1,495.6	2.03	24.7	1,491.5	1.66
Share options	-	36.8	(0.05)	-	35.8	(0.04)
	----------	----------	----------	----------	----------	----------
Diluted earnings	30.3	1,532.4	1.98	24.7	1,527.3	1.62
	======	======	======	======	======	======

 

	52 weeks ended 26 March 2010
	Earnings	Weighted average shares	Earnings per share
	£m	Number m	Pence
Basic earnings	47.6	1,491.2	3.19
Share options	-	36.8	(0.08)
	----------	----------	----------
Diluted earnings	47.6	1,528.0	3.11
	======	======	======

 

 

5. Dividends

Declared and paid during the period		24 weeks ended 10 September 2010	24 weeks ended 11 September 2009	52 weeks ended 26 March 2010
	per share	£m	£m	£m
Final dividend for 2008/09	0.67 pence	-	10.0	10.0
Interim dividend for 2009/10	0.24 pence	-	-	3.6
Final dividend for 2009/10	1.03 pence	15.4	-	-
		----------	----------	----------
		15.4	10.0	13.6
		======	======	======

 

After the balance sheet date the Directors declared an interim dividend of 0.27p per share (£4.1m in total) payable on 26 November 2010 to shareholders on the register at the close of business on 29 October 2010. This dividend has not been provided for and therefore there is no difference between the dividends charged to reserves and dividends paid in the period.

 

 

6. Retirement benefit assets	10 September 2010	11 September 2009	26 March 2010
	£m	£m	£m
Total market value of assets	519.9	512.7	563.5
Present value of scheme liabilities	(539.5)	(544.9)	(585.3)
	----------	----------	----------
Deficit in the scheme	(19.6)	(32.2)	(21.8)
	======	======	======

 

The principal assumptions adopted for the valuation at 10 September 2010 are the same as those adopted at 26 March 2010, other than changes to the discount rate (from 5.7% to 5.2%) and inflation (from 3.5% to 3.1%) which are in line with market indicators.

 

 

7. Analysis of net cash/(debt)	10 September 2010	11 September 2009	26 March 2010
	£m	£m	£m
Cash and cash equivalents	47.6	42.0	43.7
Short term interest bearing loans and borrowings	-	(0.1)	-
Long term interest bearing loans and borrowings	(37.5)	(45.9)	(36.7)
	----------	----------	----------
	10.1	(4.0)	7.0
	======	======	======

 

 

8. Interest swap

On 12 June 2009, to reflect the lower level of debt carried by the Group, the Group amended the terms of the interest rate swap. The option caps, the floor and the extension option were removed and the amount of interest rate swap was reduced from £130m to £50m. The interest rate swap remains at 4.98 per cent. £10m of the interest rate swap expired in March 2010 with the remaining £40m expiring in March 2011. The Group spent £7.2m in settlement of this liability, which is shown separately in the consolidated cash flow statement.

 

 

9. Related party transactions 

The Group has a related party relationship with its subsidiaries and with its directors. Transactions between group companies, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There have been no material related party transactions with directors.

 

Risks and uncertainties

 

The Group's business may be affected by a number of risks, trends, factors and uncertainties, not all of which are in our control. The specific principal risks, trends, factors and uncertainties (which could impact the Group's revenues, profits and reputation), and relevant mitigating factors, as currently identified by Booker's risk management process, which were faced at the time of the last annual report, have not changed since the year end and are expected to remain for the following six months. The list below sets out the most significant risks to the achievement of the Group's business goals. The list does not include all the risks that the Group faces and it does not list the risks in any order of priority.

 

• Competition

The industry is extremely competitive with the market being served by numerous competitors, ranging from national multiple retailers to regional independent wholesalers. The Group competes by closely monitoring the activities of competitors and ensuring it continues to improve the choice, price and service to its customers.

 

• Economic environment

The economy is expected to remain difficult in the year ahead with potential tax rises and the public reducing their levels of discretionary spend. Customers will seek to obtain "best" value from products and the Group aims to provide a wide range of products that meet this requirement.

 

• Employee engagement and retention

The continued success of the Group relies heavily on the investment in the training and development of our employees. The Group's employment policies, remuneration and benefits packages are designed to be competitive, as well as providing colleagues with fulfilling career opportunities. The Group continually engages with colleagues across the business to ensure that we keep strengthening our team at every level.

 

• Financial and treasury

The Group's financial results may be subject to volatility arising from movements in commodity prices, foreign currencies, interest rates and the availability of sources of funding.

 

• Information technology (IT)

The Group is exposed to the risk that the IT systems upon which it relies fail. The Group has appropriate controls in place to mitigate the risk of systems failure, including systems back up procedures and disaster recovery plans, and also has appropriate virus protection and network security controls.

 

• Pensions

The Group operates a defined benefit scheme, where judgements are required to determine the assumptions for future salary and pension increases, discount rate, inflation, investment returns and member longevity. There is a risk of underestimating this liability. This risk is mitigated by: maintaining a relatively strong funding position over time, taking advice from independent qualified actuaries, agreeing appropriate investment policies with the Trustees and closely monitoring the funding position with the Trustees.

 

• Product quality and safety

The quality and safety of our products is of critical importance and any failure in this regard would affect the confidence of our customers in us. We work with our suppliers to ensure the integrity of the products supplied. Food hygiene practices are taken very seriously throughout the Group, and are monitored both through internal audit procedures and by external bodies such as environmental health departments. We have well prepared procedures for crisis management in order to act quickly when required. We are aware that if we fail or are perceived to have failed to deliver, to our customers' satisfaction, the expected standards of quality and safety in our products this has the potential to impact on their loyalty to us. This in turn could adversely impact on our market share and our financial results.

 

• Regulation

The Group operates in an environment governed by strict regulations to ensure the safety and protection of customers, shareholders, staff and other stakeholders and the operation of an open and competitive market. These regulations include food hygiene, health and safety, data protection, the rules of the London Stock Exchange and competition law. In all cases, the Board takes its responsibilities very seriously, and recognises that any breach of regulation could cause reputational and financial damage to the Group.

 

• Supplier credit

Availability of supplier credit is essential for the Group's financial performance. Any reduction in the availability of supplier credit could adversely impact the Group. The Group regularly meet key credit insurers to ensure that they have an up to date view of the Group's financial position.

 

 

Responsibility statement of the directors in respect of the half-yearly financial report

 

We confirm that to the best of our knowledge:

 

·; the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

·; the interim management report includes a fair review of the information required by

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first 24 weeks of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining 28 weeks of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first 24 weeks of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

By order of the Board

 

 

 

Charles Wilson Jonathan Prentis

Chief Executive Finance Director

 

13 October 2010

Independent auditors' report on review of condensed consolidated interim financial information to Booker Group plc

 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the 24 weeks ended 10 September 2010 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed statement of changes in equity and the condensed consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

 

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 24 weeks ended 10 September 2010 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

 

 

 

 

Nicola Quayle

For and on behalf of KPMG Audit Plc

Chartered Accountants

St James Square

Manchester

M2 6DS

13 October 2010

 

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