Annual Report 2014

NOTES

Forming part of the financial statements

6. EXCEPTIONAL ITEMS
7. FINANCE INCOME AND EXPENSE
8. INCOME TAX
9. DIVIDENDS
10. EARNINGS PER ORDINARY SHARE

6. EXCEPTIONAL ITEMS

 

2014

2013

 

Total

Total

 

€m

€m

 

Restructuring costs (net of a defined benefit pension scheme curtailment gain)

6.1

1.2

Acquisition costs

1.1

3.3

Integration costs including write off of redundant legacy IT assets

5.6

1.1

Recovery of previously impaired inventory

-

(1.0)

Redeployment of bottling line

7.4

-

Other

0.5

-

 

Total loss before tax

20.7

4.6

Income tax credit

(2.9)

(0.3)

 

Total loss after tax

17.8

4.3

(a) Restructuring costs

Restructuring costs, comprising severance and other initiatives following the acquisition and integration of M. & J. Gleeson (Investments) Limited (“Gleeson”) and its subsidiaries with the Group’s existing business and cost cutting initiatives undertaken at the Group’s manufacturing facilities resulted in an exceptional charge before tax of €6.7m in the current financial year. This charge was reduced by a defined benefit pension scheme curtailment gain of €0.6m due to the reduction in headcount numbers and the reclassification of these employees from active to deferred members. A curtailment gain arises where the value of the pension benefit of a deferred member is less than that of an active member. In the previous financial year, the Group incurred restructuring costs of €1.2m arising from cost cutting initiatives and the consolidation of the Group’s offices in the UK and the US.

(b) Acquisition costs

During the current financial year, the Group incurred €1.1m of costs directly attributable to the current year acquisitions of Gleeson and Biofun and the prior year acquisition of VHCC. These costs primarily relate to professional fees directly incurred in relation to the completion of these acquisitions. Prior year acquisition costs of €3.3m related to the acquisition of VHCC and the pending acquisition of Gleeson which completed on 7 March 2013.

(c) Integration costs including write-off of redundant legacy IT assets

During the current financial year, the Group incurred external consultant fees and other costs associated with the integration of the acquired Gleeson and VHCC businesses with the Group’s existing business. In addition, the Group wrote off redundant IT assets as a consequence of streamlining its IT system requirements following the acquisition and integration of both the Gleeson and VHCC businesses with the Group’s existing business. In the prior year, the Group incurred external consultant fees and other costs associated with the integration of the Hornsby’s brand.

(d) Recovery of previously impaired inventory

During the financial year ended 28 February 2009, the Group’s stock holding of apple juice at circa 36 months of forecasted future sales was deemed excessive in light of anticipated future needs, forward purchase commitments and useful life of the stock on hand. Accordingly the Group recorded an impairment charge in relation to excess apple juice stocks. During the previous financial year, some of the previously impaired juice stocks were recovered and used by the Group. As a result this stock was written back to operating profit in that year at its recoverable value resulting in a gain of €1.0m (2014: nil). The Group has recovered total juice inventory of €1.9m for which an impairment charge was recognised in FY2009.

(e) Redeployment of bottling line

In the current financial year, a bottling line was redeployed from the Group’s Clonmel cider manufacturing plant to its Shepton Mallet cider manufacturing plant and costs of €6.6m were incurred in this regard. As a result of this deployment an existing PET line with a value of €0.8m in Shepton Mallet became redundant and was written off.

(f) Other

During the current financial year, the Group incurred costs of €0.8m in relation to upgrading its listing on the Official List of the UK Listing Authority from a standard listing to a premium listing. Also included within Other in the current financial year is a release of €0.3m with respect to an excess exit provision following the expiration of an onerous lease which originally arose from the consolidation of the Group’s Dublin offices in a previous financial year.

7. FINANCE INCOME AND EXPENSE

 

2014

2013

 

€m

€m

 

Recognised in income statement

Finance income:

Interest income on bank deposits

-

(0.1)

 

Total finance income

-

(0.1)

 

Finance expense:

Interest expense on interest bearing bank borrowings and related costs

10.0

4.0

Movement on derivative financial instruments

0.1

-

Unwinding of discount on provisions

0.9

1.0

 

Total finance expense

11.0

5.0

 

Net finance expense

11.0

4.9

 

2014

2013

 

€m

€m

 

Recognised directly in other comprehensive income

Effective portion of change in fair value of cash flow hedges

-

0.3

Fair value of foreign exchange cash flow hedges transferred to income statement

(1.4)

1.7

Deferred tax on cash flow hedges recognised directly in other comprehensive income

0.2

(0.3)

Foreign currency translation differences arising on foreign currency borrowings

designated as net investment hedges

4.2

(3.2)

Foreign currency translation differences arising on the net investment in foreign operations

12.8

(8.1)

 

Net income/(expense) recognised directly in other comprehensive income

15.8

(9.6)

8.INCOME TAX

 

2014

2013

 

€m

€m

(a) Analysis of charge in year recognised in the income statement

Current tax:

Irish corporation tax

3.5

5.2

Foreign corporation tax

7.1

8.6

Adjustment in respect of previous years

-

(0.3)

 

10.6

13.5

Deferred tax:

Irish

3.2

2.8

Foreign

(1.5)

(0.6)

Adjustment in respect of previous years

(0.1)

-

 

1.6

2.2

 

Total income tax expense recognised in income statement

12.2

15.7

 

Relating to continuing operations

- continuing operations before exceptional items

15.1

16.0

- continuing operations exceptional items

(2.9)

(0.3)

 

Total

12.2

15.7

The tax assessed for the year is different from that calculated at the standard rate of corporation tax in the Republic of Ireland, as explained below.

 

2014

2013 (restated)

 

€m

€m

 

Profit before tax

95.5

105.1

Less Group’s share of equity accounted investees’ profit after tax

(0.5)

-

Adjusted profit before tax

95.0

105.1

Tax at standard rate of corporation tax in the Republic of Ireland of 12.5%

11.9

13.1

Actual tax charge is affected by the following:

Expenses not deductible for tax purposes

0.6

1.0

Adjustments in respect of prior years

(0.1)

(0.3)

Income taxed at rates other than the standard rate of tax

(0.5)

1.5

Other differences

0.3

0.4

Total income tax

12.2

15.7

(b) Deferred tax recognised directly in other comprehensive income

2014

2013

€m

€m

Deferred tax arising on movement in defined benefit pension obligations

(0.7)

(1.6)

Deferred tax arising on movement in derivatives designated as cash flow hedges

(0.2)

0.3

(0.9)

(1.3)

(c) Factors that may affect future charges

Future income tax charges may be impacted by changes to the corporation tax rates and/or changes to corporation tax legislation in force in the jurisdictions in which the Group operates. One such example is the reduction in the UK corporation tax rate to 20% on 1 April 2015.

9.DIVIDENDS

 

2014

2013

 

€m

€m

 

Dividends paid:

Final: paid 4.75c per ordinary share in July 2013 (2013: 4.5c paid in July 2012)

16.3

15.0

Interim: paid 4.3c per ordinary share in December 2013 (2013: 4.0c paid in December 2012)

14.7

13.4

 

Total equity dividends

31.0

28.4

 

Settled as follows:

Paid in cash

27.9

21.2

Accrued with respect to LTIP (Part I) dividend entitlements

0.1

0.1

Scrip dividend

3.0

7.1

 

31.0

28.4

The Directors have proposed a final dividend of 5.7 cent per share (2013: 4.75 cent), to ordinary shareholders registered at the close of business on 30 May 2014, which is subject to shareholder approval at the Annual General Meeting, giving a proposed total dividend for the year of 10.0 cent per share (2013: 8.75 cent). Using the number of shares in issue at 28 February 2014 and excluding those shares for which it is assumed that the right to dividend will be waived, this would equate to a distribution of €19.7m.

In order to achieve better alignment of the interest of share based remuneration award recipients with the interests of shareholders, shareholder approval was given at the 2012 AGM to a proposal that awards made in or after 2012 and that vest under the LTIP (Part I) incentive programme should reflect the equivalent value to that which accrues to shareholders by way of dividends during the vesting period. An amount of €0.1m was accrued during the current financial year in this regard.

Total dividends of 9.05 cent per ordinary share were recognised as a deduction from the retained income reserve in the year ended 28 February 2014 (2013: 8.5 cent).

Final dividends on ordinary shares are recognised as a liability in the financial statements only after they have been approved at an annual general meeting of the Company. Interim dividends on ordinary shares are recognised when they are paid.

10.EARNINGS PER ORDINARY SHARE

Denominator computations

Number

Number

 

‘000

‘000

 

Number of shares at beginning of year

344,332

339,275

Shares issued in lieu of dividend

664

1,934

Shares issued following acquisition of subsidiary

-

1,422

Shares issued in respect of options exercised

1,844

1,701

 

Number of shares at end of year

346,840

344,332

 

 

Weighted average number of ordinary shares (basic)*

337,154

329,067

Adjustment for the effect of conversion of options

6,011

7,135

 

Weighted average number of ordinary shares, including options (diluted)

343,165

336,202

* excludes 7.6m treasury shares (2013: 8.3m)

 

Profit attributable to ordinary shareholders

2014

2013

 

(restated)

 

€m

€m

 

Earnings as reported

83.3

89.4

Adjustment for exceptional items, net of tax (note 6)

17.8

4.3

 

Earnings as adjusted for exceptional items, net of tax

101.1

93.7

Basic earnings per share

Cent

Cent

Basic earnings per share

24.7

27.2

Adjusted basic earnings per share

30.0

28.5

Diluted earnings per share

Diluted earnings per share

24.3

26.6

Adjusted diluted earnings per share

29.5

27.9

Basic earnings per share is calculated by dividing the profit attributable to the ordinary shareholders by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased/issued by the Company and accounted for as treasury shares (at 28 February 2014: 7.6m shares; at 28 February 2013: 8.3m shares).

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potential dilutive ordinary shares. The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period of the year that the options were outstanding.

Employee share awards (excluding awards which were granted under plans where the rules stipulate that obligations must be satisfied by the purchase of existing shares (note5)), which are performance-based are treated as contingently issuable shares because their issue is contingent upon satisfaction of specified performance conditions in addition to the passage of time and continuous employment. In accordance with IAS 33 Earnings per Share, these contingently issuable shares are excluded from the computation of diluted earnings per share where the vesting conditions would not have been satisfied as at the end of the reporting period (1,367,350 at 28 February 2014 and 1,927,156 at 28 February 2013). If dilutive other contingently issuable ordinary shares are included in diluted EPS based on the number of shares that would be issuable if the end of the reporting period was the end of the contingency period.