Share premium €’000
Cashflow hedge reserve €’000
Revaluation reserve €’000 Share-based payment reserve €’000 Reorganisation reserve €’000 Foreign currency translation reserve €’000
Retained earnings €’000 (Note A)
Minority interest €’000Total €’000 At August 2006--(,04)---(3,277)93,6392,0339,354 Reclassification of prior years retained earnings---93,639-(93,639)-- Revaluation of investment properties---87,380---87,380 Deferred tax on revaluation---(5,208)---(5,208) Issue of shares,38253,855---55,237 Share issue expenses-(,69)---(,69) Movement on reorganisation reserve-3,08---(290,523)---(77,505) Share-based payments----205----205 Foreign exchange translation---2,053--2,053 Group defined benefit pension schemes---7,039-7,039 Deferred tax on group defined benefit schemes---(895)-(895) Net actuarial gain on associate defined benefit pension scheme---3,745-3,745 Losses related to cash flow hedges and other--(,027)---(,027) Deferred tax relating to cash flow hedges and other--298---298 Profit/(loss) for the period---32,686(37)32,649 At 31 July 20071,382265,182(1,770)72,172205(196,884)(1,224)42,5751,996183,634 Note A: Prior year figures have been reclassified to correctly state the balance on minority interest.
Notes (continued)
for the year ended 31 July 2008
26 Statement of changes in shareholders’ equity (continued)
Cash flow hedge reserveThe hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred since August 2005.
Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences from August 2005, arising from the translation of the net assets of the Group’s non-euro denominated operations, including the translation of the profits of such operations from the average exchange rate for the year to the exchange rate at the balance sheet date.
Reorganisation reserve
As outlined in the basis of preparation note, the difference between the fair value of the investment recorded in the Company balance sheet and the carrying value in IAWS Group plc of the assets and liabilities transferred has been recognised as a reorganisation reserve in other reserves within equity together with the currency translation reserve, cash flow reserve and revaluation reserve.
Share-based payment reserve
This reserve comprises amounts credited to reserves in connection with equity awards less the effect of any exercises of such awards.
Revaluation reserve
The revaluation reserve relates to revaluation surpluses arising on revaluations of investment property and previously held interest in associate.
Capital management
The Board regularly reviews and monitors the Group’s capital structure with a view to maintaining a strong capital base in order to sustain market confidence in the business. This involves considering dividends paid to shareholders, demographic spread of shareholders, the amount of liquid assets on the balance sheet and return on capital.
27 Minority interest
2008
€’000
2007
€’000
At August 1,996 2,033
Share of result for the year (239) (37)
Translation adjustment (262)
-At 3 July 1,495 ,996
Notes (continued)
for the year ended 31 July 2008
28 Commitments under operating leases
Non-cancellable operating lease rentals are payable as set out below. These amounts represent minimum future lease payments, in aggregate, that the Group are required to make under existing lease agreements.
2008
€’000
2007
€’000 Operating leases which expire:
Within one year 1,098 359
In two to five years 7,919 4,468
After more than five years 4,501
-13,518 4,827
29 Contingent liabilities
2008
€’000
2007
€’000
(a) Government grants repayable if grant conditions are not met 3,910 3,676
(b) In order to avail of the exemption under Section 7 of the Companies (Amendment) Act, 986 the Group has guaranteed the liabilities of all of its subsidiaries registered in Ireland. Where the Group has entered into financial guarantee contracts to guarantee the indebtedness of such subsidiaries, the Group considers these to be insurance contracts and accounts for them as such. The Group treats the guarantee contract as a contingent liability until such time as it becomes probable that the Group will be required to make a payment under the guarantee.
(c) The Group and its principal subsidiaries have given composite guarantees and indemnities to secure obligations of fellow subsidiary undertakings on all sums due in respect of bank loans and bank advances. The Group considers these to be insurance contracts and accounts for them as such.
30 Related party transactions
In the normal course of business, the Group undertakes arms-length transactions with its associates and other related parties.
Related parties include IAWS Group plc and its subsidiaries. Included in sale of goods below are sales to associates of €5,927,000 (2007: €71,002,000). A summary of transactions with these related parties during the year are as follows:
2008
€’000
2007
€’000
Sale of goods 68,649 72,57
Purchase of goods 3,834 3,32
Provision of services - 325
Receiving of services 3,180 5,09
The trading balances owing to the Group from related parties were €2,465,000 (2007: €3,506,000) and the trading balances owing from the Group to these related parties were €5,035,000 (2007: €1,787,000). All outstanding balances with related parties are on an arms-length basis.
Compensation of key management personnel
For the purposes of the disclosure requirements of IAS 24, Related Party Disclosures, the term “key management personnel” (i.e. those persons having authority and responsibility for planning, directing and controlling the activities of the Group) comprises the Board of Directors which manages the business and affairs of the Group. Full disclosure in relation to the compensation entitlements of the
Notes (continued)
for the year ended 31 July 2008
31 Acquisition of subsidiary undertakings
During the year the Group completed two acquisitions:
. On 30 August 2007, the Group acquired the remaining 50% interest in the Odlum Group not previously owned.
2. On February 2008, the Group completed the acquisition of 00% of Masstock Group Holdings Limited (“Masstock”). Masstock, with operations in the United Kingdom and Poland, is the leading provider of specialist agronomy services directly to arable and grassland farm enterprises.
Details of the net assets acquired and goodwill arising from the business combinations are as follows:
Acquiree’s carrying
amount
€’000
Fair value adjustments
€’000
Provisional fair value
€’000
Split of fair value Masstock
€’000 Odlums
€’000 Net assets acquired:
Property, plant and equipment 40,305 (954) 39,35 4,095 25,256
Investments properties - 4,000 4,000 - 4,000
Intangible assets 5,76 38,442 43,68 4,78 28,900
Inventory 27,333 (500) 26,833 8,456 8,377
Trade and other receivables 74,02 (586) 73,56 52,992 20,524
Trade and other payables (6,633) (895) (62,528) (53,926) (8,602)
Debt assumed (63,86) - (63,86) (36,776) (27,085)
Finance leases (2,44) - (2,44) (2,44)
-Deferred tax 03 (0,983) (0,880) (3,276) (7,604)
Employee benefit liability (4,28) - (4,28) (,794) (2,424)
Corporation tax 25 (9) (66) 90 (56)
Government grants (248) - (248) - (248)
Net assets acquired 53,373 2,435 50,938
Goodwill arising on acquisition 63,823 53,804 0,09
7,96 56,239 60,957
Satisfied by:
Cash consideration (including acquisition expenses of €1,900,000) 77,387 42,037 35,350
(Cash)/overdraft (,589) ,25 (2,804)
Fair value of previously held 50% interest in Odlum Group 28,4 - 28,4
Deferred consideration 2,987 2,987
-7,96 56,239 60,957
Notes (continued)
for the year ended 31 July 2008
31 Acquisitions of subsidiary undertakings (continued)
Post acquisition revenues and operating profit relating to these acquisitions amounted to €383,37,000 and €6,90,000 respectively.
Masstock contributed revenue of €300,63,000 and operating profit of €2,04,000. Odlums contributed revenue of €82,758,000 and operating profit of €4,797,000.
If the acquisitions had occurred on August 2007, management estimates that consolidated revenue would have been
€,72,,000 and consolidated operating profit for the period would have been €67,824,000. In determining these amounts management has assumed that the fair value adjustments that arose on the dates of acquisition would have been the same if the acquisition occurred on August 2007.
The goodwill recognised on the acquisitions is attributable to the skills and technical talent of the acquired business’s work force, and the synergies expected to be achieved from integrating the company into the Group’s existing business.
32 Accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses.
Particular areas which are subject to accounting estimates and judgements in these financial statements are areas such as impairment testing, post employment benefits, financial instruments, shares based payments, intangible assets, deferred tax, fair value of properties and in relation to judgemental accruals and deferred consideration obligations.
Impairment testing of assets, particularly of goodwill, involves estimating the future cash flows for a cash generating unit and an appropriate discount rate to determine a recoverable value. The estimation of employee benefit costs requires the use of actuaries and the determination of appropriate assumptions such as discount rates and expected future rates of return as set out in note 24.
33 Controlling Party
At 3 July 2008 the Group’s ultimate controlling party was IAWS Group plc. On 2 August 2008, ARYZTA AG completed the acquisition of IAWS Group plc. On 22 August 2008, IAWS Group plc resolved to re-register as a private company.
34 Subsequent events
There have been no significant events, outside the ordinary course of business, affecting the Group since 3 July 2008.
Notes (continued)
for the year ended 31 July 2008
At 3 July 2008 the Group had the following significant subsidiaries and associates:
Name Nature of Group Registered
business % share office
(a) Subsidiaries – Ireland
Goulding Chemicals Limited Fertiliser blending and distribution 00
R. & H. Hall Limited Grain and feed trading 00
Shamrock Foods Limited Food distribution 00
Odlum Group Flour Milling 00 8
United Fish Industries Limited Fish processing 00
Torrox Limited Holding company 00
(b) Subsidiaries – United Kingdom
Hall Silos Limited Grain handling 00 4
Origin Fertilisers (UK) Limited Fertiliser blending and distribution 00 2
SFP (Shetland Fish Products) Limited Fish processing 50(i) 5
United Fish Industries (UK) Limited Fish processing 00 6
Masstock Group Holdings Limited Specialist agronomy services 00 9
(c) Associates:
BHH Limited Provender millers 50 3
North West Silos Limited Feed processing 50 7
West Twin Silos Limited Silo operation 50 4
Continental Farmers Group plc Producer of agriculture crops 20 0
(i) SFP (Shetland Fish Products) Limited is consolidated on the basis of the Group having the power to control the financial and operating policies of this undertaking.
Registered offices
. 5 Thomas Street, Dublin 8, Ireland.
2. Orchard Road, Royston, Hertfordshire SG8 5HW, England.
3. 35/39 York Road, Belfast BT5 3GW, Northern Ireland.
4. 7 McCaughey Road, Belfast BT3 9AG, Northern Ireland.
5. Greenwell Place, Aberdeen AB2 3AY, Scotland.
6. Gilbey Road, Grimsby, South Humberside DN3 2SL, England.
7. Clarendon House, 23 Clarendon Road, Belfast BT 3BG, Northern Ireland.
8. Alexandra Road, Dublin , Ireland.
9. Andoversford, Cheltenham, Gloucestershire, GL54 4LZ.
0. Athol Street, Douglas, Isle of Man IMI LB.
The country of registration is also the principal location of activities in each case other than in respect of Continental Farmers Group Plc whose operations are based in Poland and the Ukraine.