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Booker Group PLC (BOK)

  Print      Mail a friend       Annual reports

Thursday 22 May, 2008

Booker Group PLC

Preliminary Results

RNS Number : 0060V
Booker Group PLC
22 May 2008
 



For Immediate Release                                                                

22 May 2008

Booker Group plc

Preliminary results of Booker Group plc ended 28 March 2008


This announcement contains the preliminary results of Booker Group plc ('Booker') for the 52 weeks ended 28 March 2008. The results include 43 weeks trading of Blueheath Holdings plc ('Blueheath') which was acquired via a reverse takeover on 4 June 2007.


Financial Highlights

  • Total Sales £3.1bn, +2.3% (including 43 weeks of Blueheath)

  • Like for like sales:-

    -      non-tobacco +3.3% (vs –1.2% last year)
    -      tobacco –5.4% (vs –0.3% last year)
    -      sales to caterers +2.2% (vs –0.2% last year)
    -      sales to retailers –1.5% (vs –1.1% last year)
  • Profit before tax up to £36.2m from £28.5m last year (+27%)

  • Profit after tax up to £29.8m from £12.7m (+135%)

  • Basic earnings per share at 2.04 pence up from 0.94 pence last year

  • Net debt reduced to £47.2m from £76.5m last year (-38%)

  • Given the good results the Board recommends a full year dividend of £8m (0.5375 pence per share) (2007: £nil) to be paid on 11 July 2008


Operating Highlights

  • Conversion of a further 24 branches into the 'Extra' format, taking the total number of Extra branches to 34.  An additional 30 are planned for the current financial year

  • The Blueheath integration is on track

  • Customer satisfaction for choice, price and service improved

  • Internet sales increased to £109m (includes £17m Blueheath) from £44m last year


Outlook

The economy is expected to slow in 2008/09 and the food wholesale market remains very competitive. Despite these challenges we remain optimistic and expect to continue making good progress in a challenging market.


For the first period of 2008/09 turnover, inventory levels and costs are in line with plan. Overall, Booker Group plc continues to trade in line with management expectations.


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

'It has been a year of steady delivery for Booker.  Customer satisfaction has improved, sales have increased, operating profits are up 29%, net debt is down 38% and we integrated Blueheath. We made good progress, but there is a lot more to do.'


For further information contact:


Tulchan Communications (PR Adviser to Booker Group plc)

020 7353 4200

Susanna Voyle

Celia Gordon Shute


Investec Bank UK (Nominated Adviser to Booker Group plc)

020 7597 5970

Keith Anderson


A conference call for analysts will be held at 08.30am on Thursday 22 May. For dial-in details please call Tulchan Communications on 0207 353 4200.


NOTE:    In the Highlights, Chairman's Statement, Chief Executive's Review and Group Finance Director's Report figures stated for 2006/07 are before an exceptional charge of £1.8m

 

Chairman's Statement


I am pleased to report the merger of Blueheath Holdings Plc and Booker to form Booker Group plc has been a success. The merger was completed in June 2007. Since that time market conditions have been challenging due to the cooling in the economy and the smoking ban in public places. Despite these issues, Booker Group plc has performed ahead of expectations. Sales are up 2.3% in the year. Operating profit is up 29% and net debt was cut by 38%. Customer satisfaction has improved and the financial performance is good.


The drive into the catering market is working with like-for-like sales to caterers having increased by 2.2%. Sales to retailers declined by 1.5% due primarily to the smoking ban. Despite product cost inflation in some sectors, our prices have remained competitive and stock availability has been good.


The plans to 'Broaden' the business are going well. We converted a further 24 branches to the 'Extra' format during the year. We now have 34 'Extras' which offer a better range and customer experience. The payback on the conversion costs is less than one year.


Blueheath is being successfully integrated into the Booker network. The cash and cost benefits are being delivered in line with plan. Through combining Blueheath's technology and distribution expertise with Booker's scale and operations capability we are starting to win profitable business in the delivered wholesale market.


I am pleased that Lord Karan Bilimoria and Andrew Cripps have joined the Board as independent non-executive directors. Their experience in relevant market sectors is of great value to the Board.


I should like to thank all our staff for their contribution to the success of the Group in the year just ended.


Basic earnings per share at 2.04 pence is up from 0.94 pence last year. Given the strong operational performance of the business the Board recommends the payment of a £8 million full year dividend on 11 July 2008 equivalent to 0.5375 pence per share.



Outlook

The economy is expected to slow in 2008/09 and the food wholesale market remains very competitive. Despite these challenges we remain optimistic and expect to continue making good progress in a challenging market.


For the first period of 2008/09 turnover, inventory levels and costs are in line with plan. Overall, Booker Group plc continues to trade in line with management expectations.



Annual General Meeting

Our Annual General Meeting will be held on 9 July 2008 and I look forward to welcoming shareholders then.






Richard Rose

Chairman







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.





CHIEF EXECUTIVE'S REVIEW


Booker has improved considerably in the past couple of years. In September 2005 net debt was £361m, sales were dropping at 6%, profits had slumped and our pension liability was £125m. Supplier and customer confidence in the business was very low. In November 2005 the senior management team was changed. At that time we outlined a three phase Recovery Plan which explained how we would 'Focus' the business, then 'Drive' it and then start to 'Broaden' Booker. The plan is working. Today our net debt is £47.2m, sales are up 2.3%, operating profit is up 29% and our pension is in surplus. Despite these improvements we still have a lot to do to fulfil our ambition of becoming the UK's best and biggest supplier to small business.


FOCUS (commenced November 2005) Although most of our 'Focus' activity was completed between November 2005 and March 2006, we continue to improve business efficiency. Colleagues in branches, the distribution centres and the centre are improving cash and cost efficiency. For example, we are moving more products 'by the pallet' so that there is less wasted effort in taking the sales. Throughout the business we are seeking to 'stop, simplify and standardise' work so that we enhance customer service whilst improving efficiency. As a result of a tight operational management our net debt in 2007/08 was cut by £29.3m.


DRIVE (commenced April 2006) We now survey over 40,000 customers per annum to see how each branch and product category is performing. Most branches and categories made significant progress during the year which reflects our efforts to improve choice, price and service:


Choice Up

  • In May 2007 we introduced 'First for Pubs' range. We now sell over 2,000 kegs of beer per week.

  • In July 2007 we launched Euroshopper, a range of 33 lines which allow the independent retailer to benefit from the growth of discount retailing. Euroshopper sales are now over £300k per week. Over 18,500 customers purchase Euroshopper every week and the consumer response has been excellent. Euroshopper complements Booker Basics, our entry price range for caterers which sells over £400k per week.

  • In November 2007 we launched price marked packs of fruit and vegetables for retailers. We also introduced Butcher's Market - a range of price marked fresh meats which are selling very well.


Prices Down

  • In March 2007 we introduced 'cheaper by the case' deals on 33 lines.

  • In April 2007 we launched 'every day essentials', very competitive pricing on milk, bread and other essentials.

  • In May 2007 we offered 'season long' pricing for caterers, where prices were fixed for the entire season.

  • During the year we have seen product cost inflation in several product sectors including cooking oil, rice, pasta and bread. Despite this challenge our prices have remained competitive.


Better Service

  • In October 2007 we extended branch opening hours.

  • In January 2008 we launched free delivery and removed charges for handling credit and direct debit cards.

  • All branch staff have been trained on PRIDE. How we can improve the Parking, Reception, Internal, Delivery and Exit experience for customers.


We now have 2,106 customers trading as Premier. Premier won several awards for its excellent standards and was Symbol Group of the Year in 2006. In 2008 we will improve the scale and execution of Premier in partnership with the Premier retailers.


The combination of improved choice, price and service has enhanced overall customer satisfaction. Improved customer satisfaction has allowed Booker to increase sales in 2007/08 despite the cooling in the economy and the ban on smoking in public places.


BROADEN (commenced April 2007) We are now seeking to 'Broaden' Booker. To achieve this we are:


  • Improving the cash and carry experiencIn January 2006 we converted our first 'Extra' branch. This has now been rolled out to 34 of the 172 branches. The key features are a lighter, brighter branch environment, an improved layout, signage and ranges. The 'Extra' format is a big move forward. Caterers, retailers and small business customers much prefer the environment and the payback on reformatting the branch is less than 12 months.


  • Internet For the last 30 years multiple retailers and caterers have benefited from their superior use of technology. We believe that the internet will help transform the outlook for small business. In June 2007 we launched the improved booker.co.uk site. Customer satisfaction with the new site is excellent. Sales on the site have increased from £44m per annum last year to £109(includes £17m Blueheath) per annum this year. However, this is just the start. Over the next year customers will have internet over their mobile phones, community sites and a lot more.


  • Booker Direct Booker distributes £500m of products from our branches to the customer's premises. We recognised the opportunity to improve this service and identified Blueheath Holdings Plc as having technology and expertise that would accelerate this. In May 2007 we announced the reverse take-over of Blueheath. We have achieved the cash and cost benefits outlined last Summer. We have moved Blueheath's biggest customer to the Booker Hatfield distribution centre. We have started to win new business such as Rippleglen, a chain of convenience stores in the Midlands. Booker will now increase deliveries from regional distribution centres and branches to caterers and retailers.



The Focus, Drive, Broaden plan is facilitated by improving staff development and by improving their sustainability of the business:


  • People

    -  The Group is an equal opportunities employer.

    -  Branch colleagues have been trained in PRIDE (Parking, Reception, Internal, Delivery, and

       Exit).  This programme was designed by branch colleagues to help improve customer service.  

    - The role of the branch General Manager has been clearly defined to focus on the customer

       and cash profit.

    -  In 2007 the majority of colleagues received a bonus. The first time this has happened since 2000.

    -  We updated our health and safety standards and in February 2008 held a 'Health and Safety

       Week' to increase awareness. We are committed to making Booker a better and safer

       place to work.


  • Sustainability

    -  Booker has saved over 10,000 tonnes of CO2 (10% of our total carbon 'footprint') in the past

        year due to driving less food miles, using less electricity and improved product packaging.

    -  The Group fulfils its duty to minimise adverse environmental impacts by ensuring efficient

        use of materials and energy, recycling wherever possible, minimising waste and

        ensuring compliance with relevant legislation

    -   We have pioneered a supplier distribution carbon model which is starting to optimise the

        distribution  efficiency for suppliers and ourselves.

    -  Of our private label sales 79% of packaging can be recycled, which is better than many

        of the multiple retailers.


In summary, it has been a year of steady delivery for Booker.  Customer satisfaction has improved, sales have increased, operating profits are up 29%, net debt is down 38% and we integrated Blueheath. We made good progress, but there is a lot more to do.



Charles Wilson

Chief Executive


GROUP FINANCE DIRECTOR'S REPORT


Reverse Acquisition Of Blueheath Holdings PLC

On 4 June 2007 Blueheath Holdings plc became the ultimate legal parent company of Giant Topco Limited (parent company of Booker Limited) in a share-for-share transaction. Due to the relative values of the companies, the former Giant Topco Limited shareholders became the majority shareholders with 90.36% of the enlarged share capital. Following the transaction the Company's continuing operations and executive management were predominantly those of Giant Topco Limited. Accordingly, the substance of the combination was that Giant Topco Limited acquired Blueheath Holdings plc in a reverse acquisition. As part of the business combination Blueheath Holdings plc changed its name to Booker Group plc and changed its accounting reference date to the end of March.


As a consequence of applying reverse acquisition accounting, the balance sheet of the Group at 31 March 2006 and the results for the 52 weeks ended 30 March 2007 are those of Giant Topco Limited. The consolidated financial statements for Giant Topco Limited at 31 March 2006 and 30 March 2007, as reported under UK GAAP, have been filed with the registrar of companies. 


The AIM Rules require that the annual consolidated accounts of the Group for the period ending 28 March 2008 be prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union.


In preparing its opening IFRS balance sheet, the Group has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP to Adopted IFRSs has affected the Group's financial position, financial performance and cash flows is set out in the 'Restatement of financial information under IFRS' which was issued on 30 October 2007.  However, following a detailed review of property leases, it was identified that the Group has a number of leases that contain minimum rental uplifts at predetermined rent review dates. The International Financial Reporting Interpretations Committee ('IFRIC') has clarified that it is necessary to account for these increases on a straight-line basis over the life of the lease. Previously, the Group charged such increases to the income statement in the year they arose. The total amount payable over the life of the lease remains unchanged but the timing of the income statement charge changes.  This has resulted in a pre tax charge of £1.4m in the year ended 28 March 2008 (2007: £1.6m).  These restated financial statements for the 52 weeks ended 30 March 2007 are the comparators for Booker Group plc's annual consolidated financial statements for the 52 weeks ended 28 March 2008.



Financial Review 

Overall Group revenue increased by 2.3% including 43 weeks of sales from Blueheath. Non tobacco like-for-like sales increased by 3.3% and like-for-like tobacco sales fell by 5.4% due to the introduction of the smoking ban in public places in England and Wales.


Group operating profit increased by £10.4m to £46.1m lifting operating margins by 0.3% to 1.50%. The improvement in margin was due to a better product mix and good control of costs.


The interest charge of £9.9m (2007: £7.2m) comprises the cash interest cost of borrowing of £9.5m (2007: £11.4m), the amortisation of fees and discounting of provisions of £4.2m (2007: £4.9m), a credit relating to the expected return on pension scheme assets less unwind on the liabilities of £3.6m (2007: £5.5m) and an IAS39 credit relating to interest hedge instruments of £0.2m (2007: £3.6m). Despite interest margins increasing by 0.5%, the cash interest cost of borrowing has fallen due to the repayment in 2007 of two tranches of mezzanine debt, which carried relatively high coupon rates, and a lower level of net debt carried throughout the year relative to the prior year.


Profit before tax is up £7.7m at £36.2m (2007: £28.5m), an increase of 27.0%


The effective tax rate (being the tax charge as a percentage of profit on ordinary activities before taxation) for the Group of 17.7% was below the standard rate of corporation tax in the UK, due principally to the utilisation of tax assets not recognised in prior years. We expect, in the current conditions, to hold this effective rate of tax at around this level through to 2011.


Profit after tax was £29.8m, an increase of £17.1m compared to 2007.


Basic earnings per share rose to 2.04p up from 0.94p.


proposed dividend of £8m for the year ended 28 March 2008 was recommended by the Board on 21 May 2008at 0.5375p per share. Subject to shareholder approval at the AGM, to be held on 9 July 2008, the dividend will be paid on 11 July 2008 to shareholders on the register at 6 June 2008. The shares will go ex-dividend on 4 June 2008.


Cash Flow

Management has continued to focus on cash generation resulting in a net debt improvement of £29.3m to £47.2m. Strong earnings before interest, tax, depreciation and amortisation (EBITDA) of £62.3m, up from £53.1m in the prior year and a further improvement in working capital (£11.9m) allowed a step up on last year's capital expenditure to £11.0m (2007: £6.0m) and the acquisition of the Blueheath Group (£11.0m including fees and debt repayments on acquisition). 



Pensions

The Booker Pension Scheme, a defined benefit scheme that was closed to new members in July 2002, had a small gross IAS 19 surplus of £9.8m (2007gross deficit of £27.3m). The net surplus after allowing for deferred tax was £7.1m (2007: net deficit of £16.5m).  


The significant improvement in the pension fund position is the result of improved asset returns, more favourable corporate bond rates reducing liabilities, £9.7m of company contributions and a better than expected take up of the Company Offer made in December 2006 to deferred members to leave the Scheme. Those deferred members who had accepted the offer by the close date of 30 March 2007 were transferred to a scheme of their choice in this financial year. In aggregate over 2,700 deferred members transferred out of the Booker Pension Scheme.


During the year an agreement was reached with the pension fund trustees to fund the Scheme Funding deficit of £89m at 30 March 2007 over a nine year period at £10m per annum from April 2008, a reduction from the underlying contribution rate of £14.5m in the year just ended.


Goodwill

The net book value of goodwill in the balance sheet is £423.9m. Additions to goodwill in the year totalled £13.8m arising from the reverse acquisition of Blueheath Holdings plc.


Capital Structure

The Group finances its operations through a combination of bank borrowings, leases and retained profits. Its capital base is structured to meet the ongoing requirements of the business. As at 28 March 2008 the Group had net debt of £47.2m (2007: £76.5m).


Included within net debt are £1.1m of finance leases (2007: £1.5m) relating mainly to Information Technology equipment.


Borrowing Facilities

The Group has a £89.8m term loan which is due to be repaid in total in March 2011 and a £161.0m revolving credit facility available until March 2010.


The Group's borrowings are subject to covenants set by the lenders. Covenant compliance is measured quarterly and semi-annually using financial results prepared under UK GAAP.  


The financial covenants are Interest Cover, measured by the ratio of earnings before interest, tax, depreciation and amortisation ('EBITDA') to interest, and Cash Cover, measured by the ratio of cash inflow to interest.


During the year there were no breaches of the covenant limits.  At 28 March 2008 under UK GAAP the Group achieved Interest Cover of 7.3 and Cash Cover of 6.3 comfortably exceeding its covenant obligations. The Group must have also not required its revolving credit facility for a total of eight working days within the financial year, a target that was also exceeded.  


In addition to these financial covenants the Group's borrowing agreements include general covenants and potential events of default. The Group has complied in all respects with the terms of its borrowing agreements at the date of this report. 


Interest Rates 

The Group's hedging policy is to maintain the profile of borrowings within a collar of interest rates. The Group currently has an amortising interest rate swap at 4.98% for £130m expiring in March 2011. In addition there are two option caps and a floor, also at £130m and an option at 4.98% exercisable in March 2011 for two years.


Liquidity

As at 28 March 2008 £41.0m was held in cash and cash equivalents. The Group's only bank borrowings related to the £89.8m term loan.  


The peak level of drawdown on the revolving credit facility on a cleared basis in the year to 28 March 2008 was £53.5m (2007: £65m) giving a minimum facility headroom in the year of £76.0m. At 28 March 2008 the Group had in issue £31.5m of guarantees (2007: £70.5m) leaving undrawn facilities of £129.5m.



Jonathan Prentis

Group Finance Director


 

 

Consolidated Income Statement

For the 52     weeks ended 28 March 2008




Note

52 weeks ended

28 March 2008

52 weeks ended

30 March 2007



Before exceptional costs


Exceptional items 



Total

Before exceptional costs

Exceptional costs

Note 4



Total











£m

£m

£m

£m

£m

£m









Revenue


3,078.2

-

3,078.2

3,009.8

-

3,009.8









Cost of sales








 - excluding IAS 17 non cash item


(2,985.7)

-

(2,985.7)

(2,926.5)

-

(2,926.5)

 - IAS 17 non cash tem

13

(1.4)

-

(1.4)

(1.6)

-

(1.6)









Total cost of sales


(2,987.1)

-

(2,987.1)

(2,928.1)

-

(2,928.1)



----------

----------

----------

----------

----------

----------

Gross profit


91.1

-

91.1

81.7

-

81.7









Administrative expenses


(45.0)

-

(45.0)

  (46.0)

  (1.8)

(47.8)



----------

----------

----------

----------

----------

----------

Operating profit


46.1

-

46.1

35.7

(1.8)

33.9









Finance income

5

3.8

-

3.8

10.7

-

10.7

Finance expenses

5

(13.7)

-

(13.7)

(17.9)

-

(17.9)



----------

----------

----------

----------

----------

----------

Net financing costs


(9.9)

-

(9.9)

(7.2)

-

(7.2)









Profit before tax


36.2

-

36.2

28.5

(1.8)

26.7









Tax

6

(6.4)

-

(6.4)

(15.8)

-

(15.8)











----------

----------

----------

----------

----------

----------

Profit for the period attributable to equity holders of the company



29.8


-


29.8


12.7


(1.8)


10.9



======

======

======

======

======

======









Basic and adjusted basic earnings per share (Pence)


7


2.04p


-


2.04p


0.94p


(0.13p)


0.81p



======

======

======

======

======

======

Diluted and adjusted diluted earnings per share (Pence)


7


2.03p


-


2.03p


0.94p


(0.13p)


0.81p



======

======

======

======

======

======


Consolidated Statement of Recognised Income and Expense

For the 52     weeks ended 28 March 2008



52 weeks ended 

28 March 2008

£m

52 weeks ended 

30 March 2007

£m




Actuarial gain on defined benefit plans

23.8

31.4

(March 2007: the actuarial gain is shown net of £12.1m of payments to deferred members)






Tax recognised on income and expenses recognised directly in equity

(6.6)

(13.0)




Effective portion of changes in the fair value of interest rate  hedge

(2.9)

-


----------

----------

Net income recognised directly in equity

14.3

18.4




Profit for the period

29.8

10.9


----------

----------

Total recognised income and expense for the period

44.1

29.3


======

======



Consolidated Balance Sheet

As a28 March 2008




28 March 2008

30 March 2007


Note

£m

£m

ASSETS




Non-current assets




Property, plant and equipment


60.2

65.1

Intangible assets


423.9

410.1

Retirement benefit assets

11

9.8

-

Deferred tax asset


5.6

13.4



----------

----------



499.5

488.6

Current assets




Inventories


184.7

176.2

Trade and other receivables


54.3

55.0

Cash and cash equivalents


41.0

29.9

Other financial assets


-

0.7



----------

----------



280.0

261.8







----------

----------

Total assets


779.5

750.4



----------

----------

LIABILITIES




Current liabilities




Bank overdraft


-

(18.9)

Other interest bearing loans and borrowings


(0.3)

(0.6)

Trade and other payables


(347.9)

(338.9)

Tax


(16.5)

(11.3)

Other financial liabilities


(2.0)

-



----------

----------



(366.7)

(369.7)

Non-current liabilities




Interest bearing loans and borrowings


(87.9)

(86.9)

Other payables


(27.9)

(27.7)

Retirement benefit liabilities

11

-

(27.3)

Provisions


(42.4)

(42.4)



----------

----------



(158.2)

(184.3)







----------

----------

Total liabilities


(524.9)

(554.0)



----------

----------





Net assets


254.6

196.4



======

======

EQUITY




Share capital

12

14.9

275.9

Share premium account

12

30.8

16.7

Merger reserve

12

260.8

-

Share option reserve

12

0.2

-

Hedge reserve

12

(1.6)

-

Retained earnings

12

(50.5)

(96.2)



----------

----------

Total equity attributable to equity holders


254.6

196.4



======

======


Consolidated Cash Flow Statement 

For the 52 weeks ended 28 March 2008




52 weeks ended 

28 March 2008

£m

52 weeks ended 

30 March 2007

£m




Cash flows from operating activities



Profit before tax

36.2

26.7

Depreciation

16.2

17.4

Finance income

(3.8)

(10.7)

Finance expenses

13.7

17.9

Increase in inventories

(4.4)

(8.1)

Decrease in debtors

15.2

8.0

Increase in creditors

1.1

26.7

Decrease in provisions

(2.7)

(3.5)

Contributions to pension scheme

(9.7)

(8.3)


----------

----------

Net cash flow from operating activities

61.8

66.1

Net interest paid

(9.2)

(7.5)

Tax paid

-

(0.1)


----------

----------

Cash generated from operating activities

52.6

58.5


----------

----------

Cash flows from investing activities



Acquisition of property, plant and equipment

(11.0)

(6.0)

Sale of property, plant and equipment

0.4

-

Acquisition of subsidiary 

(11.0)

-


----------

----------

Net cash outflow from investing activities

(21.6)

(6.0)


----------

----------

Cash flows from financing activities



Payment of finance lease liabilities

(0.6)

(0.4)

Repayment of borrowings

(0.4)

(73.5)


----------

----------

Net cash outflow from financing activities

(1.0)

(73.9)


----------

----------




Net increase/(decrease) in cash and cash equivalents

30.0

(21.4)




Cash and cash equivalents at the start of the period

11.0

32.4


----------

----------

Cash and cash equivalents at the end of the period

41.0

11.0


======

======




Cash and cash equivalents consist of:



Cash and cash equivalents

41.0

29.9

Bank overdrafts

-

(18.9)


----------

----------


41.0

11.0


======

======


Notes to the Group Financial Statements


1. Status of financial information


The financial information set out above is derived from the full Group financial statements for the 52 weeks ended 28 March 2008 and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985.


The accounts for the period ended 28 March 2008 have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ('adopted IFRS')The company's auditors, KPMG Audit Plc, have given an unqualified report on these accounts and do not include a statement made under section 237(2) or (3) of the Companies Act 1985. They will be delivered to the Registrar of Companies in due course and made available to shareholders in June 2008.



2. Basis of preparation

On 4 June 2007 the Company, then named Blueheath Holdings plc, became the legal parent company of Giant Topco Limited in a share-for-share transaction. Due to the relative values of the companies, the former Giant Topco Limited shareholders became the majority shareholders with 90.36% of the enlarged share capital. As part of the business combination Blueheath Holdings plc changed its name to Booker Group plc and changed its accounting reference date to March. Following the transaction the Company's continuing operations and executive management were predominantly those of Giant Topco Limited.

IFRS3 'Business Combinations' defines the acquirer in a business combination as the entity that obtains control. Accordingly, the combination was accounted as a reverse acquisition i.e. as if Giant Topco Limited had acquired Blueheath Holdings plc in return for consideration equal to the shares issued.

As a consequence of applying reverse acquisition accounting, the results of the Group at 28 March 2008 comprise the results of Giant Topco Limited for the 52 weeks ended 28 March 2008 and those of Blueheath Holdings plc from 4 June 2007. The comparative figures for the Group are those of Giant Topco Limited for the 52 weeks to 30 March 2007.


Statutory accounts for Giant Topco Limited for the period ended 30 March 2007, which were prepared under UK GAAP, have been delivered to the Registrar of Companies.


The group financial statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group').  



3. Segmental reporting


The Group operates as a wholesale business in one geographical segment, the United Kingdom.


4. Exceptional items
2008
£m
2007
£m
 
 
 
Business restructuring costs
-
0.6
Professional fees in respect of pensions
-
1.2
 
----------
----------
Total exceptional charge
-
1.8
 
======
======

 



Business restructuring costs relate to redundancy costs.

During the prior period, the Group undertook two exercises with the objective of reducing the risk in relation to it's defined benefit pension scheme, and incurred £1.2m of professional fees as a consequence.

 

5. Finance income and expense
2008
£m
2007
£m
 
 
 
Expected return on pension scheme assets
(35.8)
(40.2)
Interest on pension liabilities
32.2
34.7
 
----------
----------
 
(3.6)
(5.5)
Interest receivable and similar income
-
(1.6)
Net gain on re-measurement of interest rate swap to fair value
(0.2)
(3.6)
 
----------
----------
Finance income
(3.8)
(10.7)
 
----------
----------
 
 
 
Interest on bank loans and overdrafts
9.4
12.6
Loan note interest
-
0.1
Other interest payable
0.1
0.3
Unwinding of discount on provisions
2.5
2.6
Amortisation of financing costs
1.7
2.3
 
----------
----------
Finance expense
13.7
17.9
 
----------
----------
 
 
 
Net financing costs
9.9
7.2
 
======
======


6. Tax
 
2008
£m
2007
£m
Arising in respect of current period
 
 
Current tax
-
9.0
Deferred tax
6.0
6.8
 
----------
----------
 
6.0
15.8
Arising in respect of prior periods
 
 
Understatement of prior period
5.2
-
Benefit of recognition of deferred tax asset
(4.8)
-
 
----------
----------
 
0.4
-
 
 
 
 
----------
----------
Total tax charge
6.4
15.8
 
======
======




7. Earnings per share


2008

2007




Earnings

 Weighted average shares 


Earnings per share



Earnings

 Weighted average shares 


Earnings per share


£m

 Number m

Pence

£m

 Number m

Pence








Basic earnings

29.8

1,462.8

2.04

10.9

1,344.3

0.81

Share options

-

4.7

(0.01)

-

-

-


----------

----------

----------

----------

----------

----------

Diluted earnings

29.8

1,467.5

2.03

10.9

1,344.3

0.81


======

======

======

======

======

======


As described in the basis of preparation note, this transaction has been accounted for as a reverse acquisition.


To enable a meaningful comparison, the weighted average number of shares for the current and prior period have been based on the 1,344,910,958 new shares issued on 4 June 2007.


The actual Giant Topco Limited shares in issue in the period from 1 April 2006 to 30 March 2007 have been proportionately applied to the 1,344,910,958 shares deemed to be in issue at 4 June 2007 to derive a weighted average number of shares for the period to 30 March 2007.


The 143,488,122 of Blueheath Holdings plc previously issued shares are deemed to have been issued on 3 June 2007 and have been used to calculate the weighted average number of shares for the period to 28 March 2008


In aggregate, the number of shares in issue at 28 March 2008 are 1,488,399,080.


The share options relate to options that were granted by Blueheath Holdings plc prior to the reverse acquisition.



8. Dividends


There are no dividends recognised in the financial statements for the current or prior period. The proposed dividend of £8.0m (0.5375p per share) is subject to approval by shareholders at the AGM.



9. Acquisition of subsidiary


On 4 June 2007, Giant Topco Limited completed the reverse acquisition of Blueheath Holdings plc in a share-for-share transaction. The consideration was £20.6m, reflecting the fair value of the acquired business having a market value of 9.75p at the date of acquisition and transaction costs of £6.6m. Following the acquisition, the borrowings of £4.4m were repaid, giving a total cash outflow of £11.0m.


The acquisition had the following effect on the Group's assets and liabilities:


Acquiree's book values

Fair value

adjustments

Accounting policy

Acquisition amounts


£m

£m

£m

£m






Property, plant and equipment

0.8

(0.1)

-

0.7

Stocks

4.5

-

(0.4)

4.1

Trade and other receivables

15.8

(0.5)

(0.8)

14.5

Interest-bearing borrowings

(4.4)

-

-

(4.4)

Trade and other payables

(7.9)

-

-

(7.9)

Provisions

-

-

(0.2)

(0.2)


----------

----------

----------

----------

Net identifiable assets and liabilities

8.8

(0.6)

(1.4)

6.8


======

======

======



Goodwill on acquisition


13.8



----------



20.6



======

Consideration



Fair value of the 143,488,122 ordinary shares issued


14.0

Transaction costs


6.6



----------



20.6



======



10. Analysis of net debt


At 30 March 2007

£m

Debt acquired on acquisition

£m

Cash flow


£m

Non cash items

£m

At 28 March 2008

£m







Cash and cash equivalents

29.9

-

11.1

-

41.0

Overdrafts

(18.9)

-

18.9

-

-


----------

----------

----------

----------

----------


11.0

-

30.0

-

41.0







Loan notes

(1.7)

-

0.6

-

(1.1)

Finance leases

(1.5)

-

0.4

-

(1.1)

Bank loans

(89.8)

(4.4)

4.4

-

(89.8)

Unamortised arrangement fees

5.5

-

-

(1.7)

3.8


----------

----------

----------

----------

----------


(87.5)

(4.4)

5.4

(1.7)

(88.2)








----------

----------

----------

----------

----------

Net debt

(76.5)

(4.4)

35.4

(1.7)

(47.2)


======

======

======

======

======



11. Retirement benefit assets/(liabilities)


2008

2007


£m

£m

Total fair value of scheme assets

516.8

619.8

Present value of scheme liabilities

(507.0)

(647.1)


----------

----------

Surplus/(deficit) in the scheme

9.8

(27.3)


  ======

  ======


12. Reconciliation of movement in capital and reserves



Share capital


Share premium


Merger reserve

Share option reserve


Hedge reserve


Retained earnings



Total


£m

£m

£m

£m

£m

£m

£m









Balance at 31 March 2006

275.9

16.7

-

-

-

(125.5)

167.1

Total recognised income and expense

-

-

-

-

-

29.3

29.3


----------

----------

----------

----------

----------

----------

----------

Balance at 30 March 2007

275.9

16.7

-

-

-

(96.2)

196.4









Reverse acquisition capital adjustment

(261.0)

14.1

260.8

0.2

-

-

14.1

Total recognised income and expense

-

-

-

-

(2.4)

46.5

44.1

Reserves reclassification

-

-

-

-

0.8

(0.8)

-


----------

----------

----------

----------

----------

----------

----------

Balance at 28 March 2008

14.9

30.8

260.8

0.2

(1.6)

(50.5)

254.6


======

======

======

======

======

======

======


13. Explanation of transition to Adopted IFRSs 

As stated in note 1, these are the Group's first consolidated financial statements prepared in accordance with Adopted IFRSs.


In preparing its opening IFRS balance sheet, the Group has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP to Adopted IFRSs has affected the Group's financial position, financial performance and cash flows is set out in the 'Restatement of financial information under IFRS' which was issued on 30 October 2007.


However, following a detailed review of property leases, it was identified that the Group has a number of leases that contain minimum rental uplifts at predetermined rent review dates. The International Financial Reporting Interpretations Committee ('IFRIC') has clarified that it is necessary to account for these increases on a straight-line basis over the life of the lease. Previously, the Group charged such increases to the income statement in the year they arose. The total amount payable over the life of the lease remains unchanged but the timing of the income statement charge changes.


The affect of this change is as follows:


2007


Operating profit (before exceptionals)

£m





Previously stated in IFRS restatement

37.3


IAS 17 - non cash item

(1.6)



----------



35.7



  ======






2007

2006

Net assets

£m

£m




Previously stated in IFRS restatement

203.1

172.2

IAS 17 - non cash item

(6.7)

(5.1)


----------

----------


196.4

167.1


  ======

  ======


This information is provided by RNS
The company news service from the London Stock Exchange
 
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