122 3557 MF_AR Kleeneze Back

Transcription

Kleeneze plc is a rapidly growing specialist retail
group operating in three business areas:
Farepak – food and gifts sold by mail order
and food processing, Kleeneze – home and
personal products marketed through catalogues
and Display Marketing Group – books and gifts
sold in the workplace.
ANNUAL REPORT & ACCOUNTS 2001
www.kleenezeplc.co.uk
Kleeneze plc, Farepak House, Westmead Drive
Westlea, Swindon SN5 7YZ
Financial Calendar
Contents
Financial Calendar
Financial Highlights
Chairman’s Statement
Description of Operations
Financial Review
Questions and Answers
Directors and Advisers
Report of the Directors
Statement of Directors’ Responsibilities
Report of the Auditors
Consolidated Profit and Loss Account
Consolidated Balance Sheet
Company Balance Sheet
Group Cash Flow Statement
Statement of Total Recognised Gains and Losses
Reconciliation of Movement on Shareholders’ Funds
Notes Forming Part of the Financial Statements
1
2
5
10
12
13
14
20
21
22
23
24
25
26
26
27
Preliminary results
announced 5th July 2001
Annual General Meeting
25th September 2001
Final dividend – proposed
announced 5th July 2001
to be paid 1st October 2001
Half year results
to be announced January 2002
Interim dividend
to be paid February 2002
Designed by College Design, London Tel: +44 (020) 7457 2020
122 3557 MF_AR Kleeneze Front
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FINANCIAL HIGHLIGHTS
For the year ended 30th April 2001
The Kleeneze Group operates three retailing
businesses operating in distinct markets and
using common skills and facilities:
Profit before tax (£m)
1991
3.7
1992
4.8
5.0
1993
Kleeneze offers a wide range of products for
the home and personal use through catalogues
distributed by independent distributors;
1994
6.1
7.1
1995
7.9
1996
8.9
1997
Farepak sells food and gifts for Christmas by
mail order;
10.4
1998
11.5
1999
2000
12.7
10.8
2001
Display Marketing Group offers books and
gifts to customers at the workplace through
sales agents.
0
2
4
6
8
10
12
Earnings per share (pence)
5.53
1991
1992
7.15
1993
7.21
1994
8.79
10.26
1995
11.32
1996
12.58
1997
15.27
1998
16.90
1999
2000
18.60
15.86
2001
0
4
8
12
16
18
Dividend (pence)
2001
Year ended 30th April
Turnover*
Profit before taxation*
£m
Increase/
(Decrease)
%
1991
2000
1992
£m
1993
185.7
13.1
164.2
10.8
(15.0)
12.7
1.94
2.50
2.88
1994
3.30
3.85
1995
4.40
1996
4.95
1997
1998
pence
%
pence
Earnings per ordinary share* 15.86
(14.7)
18.60
Dividends per ordinary share 8.36
10.0
7.60
6.00
6.75
1999
2000
7.60
2001
0
8.36
2
4
6
8
* 2000 figures exclude exceptional items
Kleeneze Report & Accounts 2001
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CHAIRMAN’S STATEMENT
This year has proved to be a milestone in the development of
the Group. The acquisition of Display Marketing Group will
strengthen our foundations by adding a substantial new activity
to our traditional mail order and network marketing businesses.
We now operate three retail businesses trading in distinct
markets which benefit from common skills and synergies.
The last twelve months have been a period of transition in our
business, and this inevitably involved some one-off costs.
As announced in March there were a number of adverse factors
which led us to realign market expectations for our results for
the year under review and pre-tax profits fell 15% below last
year to £10.8 million.
Bob Johnson, Chairman
However, the Board’s confidence in prospects for the current year
is reflected in the final dividend recommendation of 6.21 pence
per ordinary share, payable on 1st October 2001 to shareholders
on the register on 13th July 2001. This brings the total dividend
for the year to 8.36 pence, a 10% increase over the 7.60 pence
paid last year.
Kleeneze
Kleeneze sales increased by 22%, an encouraging result given
the external factors constraining growth in the second half.
The number of ordering distributors rose by 3.8%, and sales
per distributor increased by 17.5%. Higher sales reflect the
innovations brought in last summer when our new catalogue,
Kleeneze Plus, was introduced and we completed a substantial
review of our main book and special interest catalogues.
Kleeneze Plus lines are more highly priced than those in our
main catalogue and our new lines have been successful.
Several factors combined to reduce profitability this year leading
to a significantly greater volume of orders resulting in lower average
order values and higher distribution costs. In the first half costs
associated with the introduction of new product ranges were
substantial, and it proved difficult to rapidly adjust overheads
to the lower-than-expected sales growth in the second half.
On a like-for-like basis, operating profits fell by £0.6 million
to £4.2 million from last year’s result.
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Farepak
Lower trading profits from mail order were partly offset by a
sharp increase in interest income arising through re-negotiated
supplier payment terms. In recognition of the decline in hamper
sales we have restructured production and this year’s results
incorporate the costs of this change. There was also a fall-off in
voucher sales, although this had a limited impact on profits, as
margins are lower. Agent numbers fell from 74,000 to 68,000.
Sales of processed foods were expected to advance strongly
this year and would have done so, without the advent of the
foot and mouth epidemic. Having started the year well, there
was a setback to profits in the second half and overall results
were lower than last year.
Display Marketing Group
Display marketing is a fast-growing method of retailing which
involves selling a range of competitively priced products directly
to the public at the workplace. Dealerfield and Colour Library
Direct are well-established brand leaders in display marketing
with a combined market share of 40%. Their acquisition has
introduced a new business segment in a complementary area
to direct selling and mail order.
We have acted quickly to complete the merger of the businesses
into one entity – Display Marketing Group – operating five
independent brands. Fulfilment and administration have been
consolidated in Nottingham and new management has been
recruited. Innovative agent incentive programmes have been
introduced and we expect that these will be expanded
considerably this year with the advent of internet communications,
which will in turn bring considerable efficiencies and improve
agents’ stock turn. These structural changes have established
a firm base for future development. However, results for this
initial five months post-acquisition period reflect the rapid
reorganisation and integration of the business within the Group.
Prospects
Kleeneze’s sales have continued to expand in the current year.
Average order levels have increased leading to lower per unit
despatch costs. We believe that Kleeneze’s management is
well prepared to capitalise on the changes this year and should
achieve strong progress.
Orders for Farepak’s mail order business have declined for
Christmas 2001 and the associated cost base has been
addressed to reduce the effect on Farepak’s profitability. Although
we believe that food processing should make sound progress
it is too early to assess how quickly sales will recover.
Following a year of transition caused by the transfer of ownership
and integration at Nottingham, Display Marketing Group is
poised to make a considerable contribution to Group results
this year. The business is trading in line with expectations and
will achieve considerable expansion for the important Christmas
2001 sales programme.
The Board expects that the Group will achieve good results this
year as a result of strong sales performance at Display Marketing
Group and improved margins and sales at Kleeneze.
R. A. Johnson
Chairman
30th July 2001
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Kleeneze’s network of self-employed distributors sells direct
to customers at their home. The product range includes gifts,
cleaning materials and products for personal and home use
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DESCRIPTION OF OPERATIONS
Kleeneze
Kleeneze operates through a network of self-employed
distributors. They pay a modest fee to join and in return receive
a registration pack, which includes sales aids. Distributors
purchase catalogues from Kleeneze, which they distribute direct
to the homes of their customers. They return to collect customer
orders and recycle the catalogues. Orders are submitted to
Kleeneze via the Internet, by fax and by post and products
are quickly dispatched using an independent carrier network.
Distributors earn a profit upon resale to their customers and
can earn additional income through commissions paid on sales
generated by others that have been recruited into the
programme. Kleeneze operates substantial conference
programmes for its distributors. These are aimed at incentivising
sales and providing training in sales techniques and recruitment.
The “Christmas Sales” conference in September and the
“New Year Start” conference in January supplement the annual
conference in June. Two overseas conferences are held each
year for top achievers.
Kleeneze’s “main book” catalogue is updated in January and
June and a number of seasonal and special interest catalogues,
“specialogues”, are also issued during the year. In July 2000 a
new catalogue, Kleeneze Plus was introduced offering a number
of higher priced products at prices which are usually in excess
of £10. Approximately 60% of products for resale are purchased
abroad principally from Hong Kong, Taiwan and India.
Kleeneze has traded for over 77 years and was purchased by
the Group in 1995. The business is based in Hanham, Bristol
on a six-acre freehold site.
(from left to right)
Richard Reynolds – Commercial Director;
Bert Hulse – Information Technology Manager;
Kim Rawson – Deputy Managing Director – Sales;
Conor O’Malley – Operations Director and
Clive Denning – Finance Director.
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Farepak’s mail order range of food and gifts is specifically
designed for Christmas. Customers pay in advance by
regular instalments
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DESCRIPTION OF OPERATIONS (continued)
Farepak
The mail order business developed from the traditional
Christmas club whereby customers contributed weekly sums
in exchange for meat and grocery foodstuffs, which would
be delivered before Christmas. The product range has been
expanded to include frozen food, drink and confectionery
hampers and also a range of gifts, jewellery, household items
and shopping vouchers.
The business operates two brands:
•
Farepak Food and Gifts, which has traded for more than
30 years.
•
Home Farm Hampers, which operates under a joint venture
agreement with Findel plc: Findel holds 60% and Farepak
40%. Farepak’s interests are safeguarded through an
agreement, which puts both parties on an equal basis as
regards policy decisions. The business principally targets
Findel’s customer database and mailing lists. Farepak
has responsibility for day to day operations while Findel
controls marketing.
Sales are made through agents who distribute catalogues to
relatives, friends and work colleagues. Agents are recruited
through a marketing campaign, which commences in November
for the following year’s Christmas season. Customers generally
place their orders during the first three months of the calendar
year and make their payments over a 45-week period
commencing in January. They must settle their accounts by the
first week of November and goods are usually despatched in
November and December after full payment has been made.
In July, product ranges for the following year’s Christmas season
are determined. At this time suppliers provide indicative prices
and these are confirmed during the first six months of the
following year. Hamper packing commences in August. The
business also supplies hampers to third party customers such
as Marks & Spencer, Provident and Littlewoods Retail.
Farepak is based in Swindon on two freehold sites. It employs
130 staff and up to 150 temporary packers during hamper
production.
Tranfood Meat Company (“Tranfood”) produces cooked beef
and pork in pre-packed and bulk form for sale to supermarkets.
155 clerical and production staff are employed at a purpose-built,
freehold production facility in Birkenhead.
John Hilton – Technical Manager;
Chris Just – Managing Director, Tranfood;
Chris Ramsay – Production Director;
Sheridan Chaffey – Managing Director, Farepak Mail Order and
Steve Hicks – Finance Director.
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Display Marketing Group agents offer a range of books
and gifts to customers direct at the workplace
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DESCRIPTION OF OPERATIONS (continued)
Display Marketing is a sales technique whereby a range of
products is offered to customers in the workplace.
Dealerfield and Colour Library Direct have traded since the mid
1980s. Following acquisition in November 2000 they have merged
to form one business – Display Marketing Group (“DMG”). DMG
trades under five brand names; Easy Choice, Colour Library
Direct, Dealerfield, Natmark and Workshop. Each brand operates
a network of agents in clearly defined territories throughout the
UK and Eire. Agents are self employed and represent the brand
within their territory. They are responsible for holding stocks and
are required to provide secure accommodation and their own van.
Agents generally hold 10 product lines which are carefully
chosen to reflect the time of year and the nature of the particular
territory. Sales volumes are estimated and DMG delivers a new
range covering estimated requirements for the next four to
six weeks at the commencement of each stock cycle. Agents
are responsible for delivering sample ranges to workplace
addresses. They usually return one week later to deliver orders,
collect cash and remove the sample. Daily calls are made to
DMG to confirm sales volumes and cash takings are regularly
banked to DMG’s accounts. At the end of each stock cycle
unsold stocks are returned to DMG and agent accounts are
reconciled. DMG operates around 550 agencies. There is an
ongoing recruitment programme to cover vacancies.
The product range includes books, toys, gifts, videos, compact
discs and household goods. Around 55% of the range is
purchased abroad.
The business employs 230 staff and is now based entirely in
Nottingham. Administrative and fulfilment functions are located
in long leasehold premises at Bulwell, Nottingham and additional
warehousing has been acquired through a 5-year lease on
premises nearby in Bestwood. Products are dispatched using
DMG’s own distribution fleet.
John McMahon – Buying Director;
Colin Parker – Finance Director;
Philip Howes – Business Development Director;
Nigel Jew – Managing Director; and
Derek Chick – Commercial Director.
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FINANCIAL REVIEW
Trading results
The segmental analysis of turnover and profit before tax is
shown in note 2 on page 29. Last year’s turnover included an
exceptional credit of £0.8 million which improved operating
profits by £0.6 million. All references to movements in turnover
and profit from last year in this Review therefore exclude this
item. The results consolidate the display marketing businesses,
Dealerfield and Colour Library Direct from the date of acquisition
on 24th November 2000.
Group turnover increased by £21.5 million; Kleeneze sales
increased £12.6 million; Farepak’s turnover fell by £8.3 million
and Display Marketing Group contributed sales of £17.2 million
over the initial 5-month period of ownership.
Operating profits were £9.1 million; a reduction of £1.4 million
from last year’s £10.5 million.
The segmental analysis includes interest charged on loans by
Farepak to Kleeneze and Display Marketing Group. Farepak’s
interest income benefited from higher interest rates and cash
balances in the first half.
Profit attributable to shareholders was £7.5 million.
Kleeneze
First half turnover improved by £7.8 million (28.8% increase);
during the second half, the increase of £4.8 million (15.8%)
was affected by travel restrictions in rural areas during the first
four months of 2001. In the Republic of Ireland sales were
£4.1 million, an increase of 20.6% over £3.4 million last year.
The average number of distributors ordering was 9,200, a 3.8%
increase on last year.
Operating expenses increased by 24.4% principally due to higher
distributor conference, promotion and storage expenditure.
Pre-tax profits were £4.2 million, a reduction of £0.6 million from
last year.
Farepak
Mail order sales of £81.2 million fell from last year’s £90.5 million
as the number of Farepak and Home Farm agents declined from
74,000 to 68,000. Sales of shopping vouchers fell by £4.8 million
and sales to third parties were £1.1 million lower principally due
to reduced hamper sales to Home Farm. Processed foods sales
advanced by £1.0 million to £17.4 million.
Mail order gross margins were little changed from last year,
however, margins on processed food products fell as raw meat
prices increased in the opening months of 2001 as a result of
the foot and mouth outbreak.
Overall, Farepak’s pre-tax profits decreased by £0.6 million.
10
Dealerfield and Colour Library Direct were acquired for
£31.5 million including acquisition costs of £2.0 million. The
acquisition was financed through the issue of £5.2 million of
guaranteed loan notes and a £45 million secured credit facility
with Bank of Scotland.
Fair value adjustments have been applied to Display Marketing
Group in order to reflect the value of opening assets and
liabilities in line with Kleeneze’s accounting policies.
Display Marketing Group generates a substantial proportion of
its turnover during the period September to December and sales
during the 5-month post acquisition period were relatively low
by comparison. Accordingly operating profits for the period were
£0.4 million – 2.3% of sales.
Capital Expenditure
Capital expenditure was £1.6 million (2000: £2.0 million) and
depreciation charges were £1.7 million (2000: £1.4 million).
Earnings per Share (EPS)
An explanation of the basis of calculation is given in note 11 on
page 32. Basic EPS has reduced by 14.7% over 2000. The level
of dilution is less than 1%.
Dividend
An interim dividend of 2.15 pence per ordinary share was paid
in February 2001. The directors recommend a final dividend of
6.21 pence per ordinary share payable on 1st October 2001.
The final dividend represents an increase of 10% over the final
of 5.65 pence paid last year. The Board’s policy is to increase
dividends in line with expected EPS growth over the medium term.
Dividends paid to preference shareholders are fixed at
£45,000 per annum.
Cash
Average cash balances of £20.4 million during the year were
reduced from £31.6 million last year due to the acquisition payment
of £26.3 million in November. Accordingly, interest receipts were
lower than last year, however, interest income benefited from
higher interest rates which rose to 5.82% (2000: 5.14%).
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Derivatives and other Financial Instruments
The Group’s principal financial instruments, other than derivatives,
comprise preference shares, bank overdrafts and vendor loan
notes issued in relation to the acquisition of Display Marketing
Group, cash and short-term deposits. In addition there are
various other financial instruments, such as trade debtors and
trade creditors, which arise directly from operations.
The Group also enters into derivative transactions (principally
forward currency contracts) in order to manage the currency
risks that arise from trading. The Group does not trade in
financial instruments.
The major risks associated with the Group’s financial instruments
arise from liquidity, interest rate and foreign currency movements.
The Board’s policies in respect of these risks are summarised
below and, with the exception of liquidity risk, are unchanged
from last year. Movements in the market prices of financial
instruments during the year are shown in note 19 on pages
38 to 40.
All of the Group’s principal businesses trade in Great Britain
however Kleeneze and Display Marketing Group also trade in the
Republic of Ireland where income is denominated in Irish punts
and the majority of costs are denominated in sterling. Exchange
differences arise on currency balances held in Irish punts. During
the year adverse exchange differences of £60,000 arose due
to the decline in the value of the Irish punt against sterling (2000:
£150,000). The Group did not hedge against these transactions.
The Group’s only significant foreign subsidiary is Kleeneze Ireland
Limited which is consolidated at the year end on the basis of
the accounting policies shown in note 1 on pages 27 and 28.
The exchange exposure on re-translation is not hedged.
Taxation
An analysis of the taxation charge is set out in note 8 on page 31.
The taxation charge as a percentage of the profit before tax,
excluding exceptional items, was 30.8% (2000: 31.1%).
Liquidity Risk
The acquisition of Display Marketing Group was financed through
a £45 million committed credit facility with the Bank of Scotland
(“BoS”). The facility is secured by a mortgage debenture
covering all the Group’s fixed property and short-term assets.
The acquisition was also funded by the issue to certain vendors
of £5.2 million of loan notes guaranteed by BoS. The maximum
utilisation of the BoS facility occurred in February 2001 when
the combined overdraft and loan guarantee amounted to
£29.7 million.
Interest Rate Risk
Interest income is earned on surplus cash deposits, which are
deposited with UK high street banks. These deposits are designed
to meet funding requirements and maximise interest income.
Cash balances reached a maximum level of £55.0 million in
October 2000.
The directors regularly review cash, loan and overdraft facilities
to ensure they are sufficient to cover the Group’s financing
requirements.
Foreign Currency Risk
Kleeneze and Display Marketing Group purchase between
55% and 60% of their product range from overseas suppliers
who usually invoice in US dollars. Forward currency contracts
are negotiated in order to limit currency exposure. Forward
contracts are sufficient to cover foreign currency requirements
for the next six months. The effect of these contracts at
30th April 2001 is given in note 19 on pages 38 to 40.
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QUESTIONS & ANSWERS
Investors frequently raise certain questions with the
Chairman. These are reproduced below together with
his answers:
1. Why did the shares dive on 28th March 2001?
Kleeneze plc issued a trading statement on 28th March stating
that results for the financial year just ended would be some
£3.0 million below market expectations.
2. Is the Farepak business in terminal decline?
No – however, it is unlikely to grow over the medium-term.
3. Are you over the foot and mouth problems?
Foot and mouth affected Farepak’s food processing business
and sales fell below first half levels. Volumes are improving but
have yet to reach levels achieved before the outbreak.
4. Do you see Kleeneze’s margins being restored in the
current year?
Substantially yes due to the absence of the import costs
associated with last summer’s catalogue launches and improved
product margins. Average order values have also increased.
5. How does the internet affect your business?
Kleeneze receives distributor orders and payments via the
internet. Distributors can also download their account details and
sales information using the internet. Over 7,000 distributors now
use the Kleeneze internet system and on busy days as many
as 80% of orders are received this way. We will shortly introduce
an internet system in Display Marketing Group.
6. Is the Group now as you want it or would you consider
further acquisitions?
I expect Kleeneze and Display Marketing Group to expand
considerably. Whilst we do not require acquisitions to grow, we
are always looking for businesses trading in complementary areas.
7. What is the common theme running through your
businesses?
We operate three retailing businesses which sell direct to the
public. Although the sales methods are different the product
ranges are similar and fulfilment, logistics and information
technology support benefit from common skills.
8. Would you ever consider taking the business private?
No! I believe that public company status adds considerably
to the perception of the Group and our strong growth in the
medium term will be reflected in the price of Kleeneze’s
ordinary shares.
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Advisers
Secretary
C J S Hulland FCA
Registered Office
Farepak House
Westmead Drive, Westlea
Swindon SN5 7YZ
Auditors
Ernst & Young LLP
Becket House
1 Lambeth Palace Road
London SE1 7EU
Solicitors
Nicholson Graham & Jones
110 Cannon Street
London EC4N 6AR
Bankers
Bank of Scotland
38 Threadneedle Street
London EC2P 2EH
National Westminster Bank Plc
City Office, Spring Gardens
Manchester M60 2DB
Stockbrokers
Hoare Govett Limited
250 Bishopsgate
London EC2M 4AA
Registrars
Lloyds TSB Registrars
Worthing
West Sussex BN99 6DA
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DIRECTORS AND ADVISERS
standing: Stephen Roberts, Sir Clive Thompson, Tim Parker
seated: Christopher Hulland, Bob Johnson, George Pollock
Bob Johnson (60) Chairman
Has led the development of the Group since 1969. He holds a
non-executive directorship of City Merchants High Yield Trust plc.
George Pollock (57) Group Managing Director
Appointed Group Managing Director in 1992. He joined the
Group in 1975. Appointed to the Board in 1988. Prior to joining
he held a variety of positions in the meat trade and in frozen
food distribution.
Christopher Hulland (49) Finance Director
Appointed to the Board in 1988 having previously been Finance
Director of H P Bulmer (Overseas Holdings) Limited since 1985.
He previously held positions with Newey & Eyre International
Limited and GKN PLC. He qualified as a chartered accountant
in 1976 with Price Waterhouse in London.
Stephen Roberts (60) Non-executive Director #*
Appointed in 1985. A partner in Nicholson Graham & Jones,
Kleeneze’s solicitors, since 1972. Independent non-executive
director.
Sir Clive Thompson (58) Non-executive Vice Chairman #*+
Appointed in 1988. Chief Executive of Rentokil Initial plc since
1983. Immediate past President of the CBI, Vice President of
the Chartered Institute of Marketing. The senior independent
non-executive director.
# Member of the Remuneration Committee
* Member of the Audit Committee
+ Chairman of Remuneration and Audit Committees
Tim Parker (46) Non-executive Director #*
Appointed in 1998. Chief Executive of C & J Clark Limited and
a Board Member of the South West Regional Development
Agency, formerly Chief Executive of Kenwood Appliances plc.
Independent non-executive director.
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REPORT OF THE DIRECTORS
The directors submit their report together with the audited
financial statements for the year ended 30th April 2001.
Trading Results and Dividends
Profit on ordinary activities before taxation was £10.8 million
(2000: £13.3 million, inclusive of £0.6 million exceptional credit).
An interim dividend of 2.15 pence per 5p ordinary share was
paid on 16th February 2001 (2000: 1.95 pence per 5p ordinary
share). The directors recommend a final dividend of 6.21 pence
per 5p ordinary share (2000: 5.65 pence per 5p ordinary share)
payable on 1st October 2001 to shareholders on the register
on 13th July 2001. The final dividend is subject to shareholders’
approval at the Annual General Meeting and, if approved, will
bring the total dividend payment for the year to 8.36 pence
(2000: 7.60 pence) per ordinary share.
Principal Activities, Trading Review
and Future Developments
A review of the development and activities of the Group is
contained within the Chairman’s Statement on pages 2 and 3
and the Financial Review on pages 10 and 11. During the year
the Group acquired the entire share capital of Marketwing Limited
trading as “Dealerfield” and Castlegate 105 Limited trading as
“Colour Library Direct”.
Directors
The directors and their interests in the share capital of the
Company are set out on pages 17 to 19. Directors retiring by
rotation are C J S Hulland and Sir Clive Thompson who, being
eligible, will be recommended for re-election at the Annual
General Meeting.
Substantial Shareholdings
At 5th July 2001 the following substantial shareholdings, in
addition to those noted below as directors’ interests, had been
notified to the Company:
Ordinary
Shares
of 5p each
Percentage
Interest
%
Codex Trust Company
and Saggart Investments Company
5,554,300
11.8
Fidelity Management
& Research Company
1,600,000
3.4
Phillips & Drew Life Limited
1,571,666
3.4
The directors are not aware of any other holding on 5th July 2001,
which represented 3% or more of the issued ordinary share capital.
14
Employees
The Group encourages the employment of disabled persons
and offers the same employment opportunities to disabled
persons as to others having regard to the requirements of the
position and the abilities of each person.
The Group keeps employees informed of matters affecting
them. Employees have also been encouraged to participate in
the Kleeneze plc Savings Related Share Option Scheme.
Employee Share Schemes
New Guidelines issued by the Association of
British Insurers (“ABI”)
In March 2001, the ABI published further guidelines on share
option and share incentive schemes. It is intended that the
Rules of the Company’s share option schemes (being the
Kleeneze plc Savings Related Share Option Scheme (“the SAYE
Scheme”), the Kleeneze plc Executive Share Option Scheme
(“the Approved Scheme”) and the Kleeneze 1996 Discretionary
Share Option Scheme (“the 1996 Scheme”) will be amended in
light of these guidelines.
The new guidelines of the ABI include a relaxation on the rate
at which options may be granted under share option schemes
(“the flow-rate”), subject to certain safeguards. As a result, it is
proposed that under each Scheme there will continue to be an
overall limit as to the number of shares over which options may
be granted by the Company in any ten year period (ten per cent
of the issued share capital of the Company on the relevant date),
but there will be no other overall limits.
Under their new guidelines, the ABI encourage annual grants of
options to employees and directors. Accordingly, it is proposed
that the limit under the Approved Scheme and the 1996 Scheme
as to the value of shares over which options may be granted to
any one individual, will normally be an annual limit equivalent to
up to two times his remuneration in the relevant or preceding
year, whichever is the greater. However, it may be that there will
be exceptional cases where it would be appropriate to offer an
individual an option over shares worth more than two times his
remuneration in a particular year. Accordingly, it is proposed that
the Rules should give the Remuneration Committee discretion,
in exceptional circumstances, to be able to grant an individual,
in any year, an option over shares worth up to five times his
remuneration in that or the previous year.
The Remuneration Committee has given careful consideration
to the performance criteria that should apply to the exercise of
share options issued under the 1996 Scheme. The Committee
has established that the performance conditions applicable on
exercise should be based on the increase in earnings per share
between the date of grant and the date of exercise. If earnings
29/8/01
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Page 15
per share increase by more than the increase in RPI plus
3% per annum one third of options may be exercised. This
would increase to two thirds of options where the increase
exceeds RPI plus 4% and all options may be exercised if the
increase is greater than RPI plus 5%.
The ABI previously set a limit as to the number of shares over
which options could be granted to an individual in any ten year
period. This limit was broadly eight times the employee’s
remuneration on the relevant date, of which no more than four
times remuneration could be Basic Options (normally exercisable
after three years from their grant). The balance had to be
Super Options (normally exercisable after five years from grant
and subject to more demanding performance conditions than
Basic Options). Since the ABI’s new approach is to encourage
annual grants of options, subject to performance conditions
which reflect the level of the award, the distinction between
Basic Options and Super Options is no longer so important.
Accordingly, it is proposed that the Rules be amended to
remove this distinction.
Extending the SAYE Scheme
The time limit for granting options under the SAYE Scheme
expired on 27th September 2000. It is proposed that this period
be extended to 2011.
Other amendments
It is proposed that certain other amendments be made to the
above Schemes to improve the administration of the Schemes
and, where necessary, comply with the requirements of the
Inland Revenue.
Further details of the proposed amendments are set out in the
Notice of Meeting.
Allotment of Equity Securities
A resolution will be proposed at the Annual General Meeting
to replace the existing authority of the directors to exercise the
powers of the Company to allot relevant securities with authority
to do the same for a period of one year and to extend for a
further year the authority of the directors to allot equity securities
for cash other than strictly in accordance with the statutory
pre-emption provisions.
Supplier Payment Policy
The Company agrees terms of payment with suppliers prior
to the supply of goods or services. The Company’s policy is to
observe all contracted commitments including terms of payment.
Corporate Governance
The Listing Rules issued by the Financial Services Authority
require directors to report on the degree of compliance with
section 1 of the Combined Code on Corporate Governance
(“the Combined Code”) and to give details and reasons for
non-compliance. Kleeneze complies with most provisions of the
Code but is not in compliance in respect of the following matters:
– R A Johnson, the Chairman, acts as both the Chairman of the
Board and the Chief Executive Officer of the Group. The
Combined Code recommends that these functions should
normally be split in order to ensure a clear division of
responsibilities and a balance of power and authority. At this
stage of the Group’s development the Board believes that it
is advantageous to have an Executive Chairman and a Group
Managing Director. The Board considers that this is in the
best interests of Kleeneze in view of the scope of Mr Johnson’s
duties as Chief Executive.
– The executive directors’ contractual periods of notice are
two years. The Board intends to maintain these notice periods
in respect of the current executive directors but has determined
that notice periods of one year’s duration will apply in respect
of all future appointments.
– The Combined Code introduced a requirement that the Board
review the effectiveness of the Group’s system of internal
control – thus extending the existing requirement in respect
of internal financial controls to cover all controls including
financial, operational, compliance and risk management.
The Board confirm that they have established procedures
necessary to implement the guidance document “Internal
Control: Guidance for Directors on the Combined Code”
(which is known as the Turnbull guidance). The review of the
Group’s existing business was concluded during the financial
year, however, due to the demands on management by the
integration of Dealerfield and Colour Library Direct, full
compliance with this aspect of the Code became effective
on 14th June 2001 following the integration of the Display
Marketing business in Nottingham.
Going Concern
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in
preparing the accounts.
15
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Page 16
REPORT OF THE DIRECTORS (continued)
Internal Control
The directors are responsible for the Group’s systems of internal
control in order to safeguard shareholders’ investment and the
assets of the Group. These control systems are designed to
cover the safeguarding of assets, maintenance of proper
accounting records and reliability of financial information used
by the business. Inevitably there are limitations in any control
system and accordingly even the most effective system can
only provide reasonable and not absolute assurance. These
procedures have been in place throughout the year and up to
the date of approval of this report. In the case of companies
acquired during the year, the internal control procedures were
reviewed on 14th June 2001.
The key procedures that the directors have established are
regularly reviewed and are designed to provide effective control
within the Group and accord with the Internal Control Guidance
on the Combined Code issued by the Institute of Chartered
Accountants in England and Wales.
The major aspects of the Group’s internal control systems are
summarised below:
Control Environment
The executive directors are actively involved in the management
of all Group businesses. Meetings are regularly held with
operating management during which trading results are assessed.
Formal reviews are carried out monthly.
Risk Assessment
There is a re-assessment of business risks on an annual
basis and regular internal and external reports are reviewed by
the executive directors and senior executives covering key
risks which impact upon the trading performance of each
business operation.
Management Information
Detailed monthly accounts are compared against forecast results
and projections for the financial year are made on a quarterly
basis or more often if necessary. Analyses of sales margins and
cash movements are reviewed weekly by the executive directors.
Control Procedures
Procedures exist to ensure the approval of significant financial
commitments and expenses by appropriate executive personnel.
The Audit Committee has considered the effectiveness of the
system of internal control and meets twice a year to review
control procedures and systems.
16
Workings of the Board
The Board comprises three executive directors and three
non-executive directors. On average, Board meetings are held
every six weeks.
The Board has adopted a formal schedule of matters specifically
reserved for its decision. These include the approval of Group
budgets, forecasts, financial results, interim dividends, major
capital expenditure proposals and acquisitions. Procedures
have also been established to allow all members of the Board to
make contact with and discuss matters affecting the Company
with its external auditors and its legal advisers.
Audit Committee
The Audit Committee comprises the non-executive members of
the Board and is chaired by Sir Clive Thompson. The executive
directors and the Group’s external auditors attend by invitation.
The Committee’s terms of reference include the review of
financial reports and accounting policies and the monitoring
of the Group’s internal controls.
Remuneration Report
The Remuneration Committee is responsible to the Board for
establishing remuneration policy and the remuneration of the
executive directors. It consists of the non-executive directors,
chaired by Sir Clive Thompson.
Remuneration Policy
In framing its remuneration policy, the Remuneration Committee
has given full consideration to the Combined Code. The
remuneration policy is designed, by reference to listed public
companies of similar size and financial record, to attract and
retain the executive directors. The policy is intended to provide
both a fixed salary and short term and long term benefits
through inclusion of profit related bonuses and share options
which are linked to earnings per share increases. The executive
directors consider fees in respect of the non-executive directors.
29/8/01
10:54 am
Page 17
Emoluments, excluding pension contributions, paid to each director were:
Fees
£’000
Salary
£’000
Benefitsin-kind
£’000
2001
Total
£’000
2000
Total
£’000
Chairman – R A Johnson
–
194
44
238
288
Group Managing Director – G R Pollock
–
215
17
232
293
Finance Director – C J S Hulland
–
178
13
191
239
Vice Chairman – Sir Clive Thompson*
22
–
–
22
20
Director – P S O Roberts
17
–
–
17
16
Director – T C Parker
17
–
–
17
16
56
587
74
717
872
Non-Executive Directors
*Paid to Rentokil Initial plc
Emoluments consist of annual salary, fees, pension and other non-cash benefits, which include health insurance and car benefits.
A bonus is payable to executive directors dependant on the growth in earnings per share (EPS) over the higher of published EPS in either
of the previous two years and is calculated as a percentage of annual salary.
The percentage of annual salary is calculated from the table below:
EPS growth
Multiple
Percentage of annual salary
Maximum for range
Cumulative
of EPS growth
Maximum
Above 5% and below 10%
3
15
15
4
20
35
5
25
60
Above 20%
6
Unlimited
Unlimited
No bonus is payable if EPS growth is below 5%.
Bonus payments do not form part of pensionable emoluments.
17
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Page 18
REPORT OF THE DIRECTORS (continued)
Remuneration Report (continued)
Pensions
Pension details in respect of the three executive directors were:
Increase, excluding
inflation, in accrued
pension during the year
£
Accrued
Transfer value of
pension at
increase 30th April 2001
£
£
Accrued
pension at
30th April 2000
£
R A Johnson
5,711
72,000
111,002
101,927
G R Pollock
7,002
78,400
91,076
81,389
C J S Hulland
4,446
33,600
37,825
32,313
R A Johnson has a defined benefit pension scheme, which will provide a pension of two-thirds of final salary earned in the year prior
to retirement at age 65. G R Pollock and C J S Hulland are entitled to a pension which is based on one-sixtieth of basic salary in the
year prior to retirement at age 65 in respect of each year of service. A contribution of £20,000 of pensionable salary has been paid to
G R Pollock’s and C J S Hulland’s personal schemes (2000: £20,000 paid to each director). All three executive directors are entitled
to death benefits of three times salary.
Service Contracts
The service contracts of R A Johnson, G R Pollock and C J S Hulland are terminable on 24 month’s notice by the Company. The
Committee considers that these notice periods are in the best interests of the Company as they are necessary to ensure that the
executive directors are retained and motivated in a competitive trading environment. The appointments of non-executive directors
can be terminated by the Company without notice and they are, in addition, subject to tri-ennial re-election. The Board as a whole
considers nominations in respect of Board appointments.
Directors’ Interests
The interests of the directors in the shares of the Company were:
Ordinary Shares of 5p each
At 30th April 2001
At 30th April 2000
Non-Beneficial
Beneficial Non-Beneficial
Beneficial
R A Johnson
11,852,000
13,656,880
11,852,000
13,656,880
C J S Hulland
–
858,396
–
858,396
G R Pollock
–
1,010,184
–
1,010,184
Sir Clive Thompson
–
1,064,000
–
1,064,000
11,852,000
134,475
11,852,000
109,000
–
–
–
–
P S O Roberts
T C Parker
Mrs B B Johnson is beneficially interested in 2,000,000 ordinary shares shown as part of the beneficial interests of R A Johnson.
There have been no changes in directors’ shareholdings since the end of the financial year.
18
29/8/01
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Page 19
Share Option Schemes
Options held by directors during the year are shown below:
G R Pollock
C J S Hulland
Date of grant
Exercise dates
Exercise
price
£
At 30th
April 2001
Number
At 30th
April 2000
Number
(1) 20.01.1997
20.01.2002 to 19.01.2007
1.9625
20,272
20,272
(2) 20.01.1997
20.01.2000 to 19.01.2007
1.9625
187,666
187,666
(1) 28.09.1999
28.09.2002 to 27.09.2009
2.8750
130,348
130,348
(3) 04.10.1999
04.10.2002 to 03.10.2009
2.8750
10,434
10,434
(1) 31.10.2000
31.10.2003 to 30.10.2010
1.8800
156,020
–
(1) 20.01.1997
20.01.2002 to 19.01.2007
1.9625
16,738
16,738
(2) 20.01.1997
20.01.2000 to 19.01.2007
1.9625
191,198
191,198
(1) 28.09.1999
28.09.2002 to 27.09.2009
2.8750
83,652
83,652
(3) 04.10.1999
04.10.2002 to 03.10.2009
2.8750
10,434
10,434
(1) 31.10.2000
31.10.2003 to 31.10.2010
1.8800
127,559
–
Share options awarded by the Remuneration Committee may be conditional on the Company’s future performance.
(1) Options issued under the Kleeneze 1996 Discretionary Share Option Scheme, exercisable in the event that the increase in earnings
per share during the period from the date of grant of options to the date of exercise exceeds the increase in the Retail Price Index
plus 3% per annum.
(2) Options issued under the Kleeneze 1996 Discretionary Share Option Scheme.
(3) Options issued under the Kleeneze plc Executive Share Option Scheme.
The highest and lowest mid-market prices of the Company’s 5p ordinary shares during the year and the price at 30th April 2001
were as follows:
Date
p
Highest
01.05.2000
267.5
Lowest
03.04.2001
160.0
30.04.2001
181.0
Auditors
On 28th June 2001, Ernst & Young, the Company’s auditor, transferred its entire business to Ernst & Young LLP, a limited liability
partnership incorporated under the Limited Liability Partnerships Act 2000. The Directors consented to treating the appointment of
Ernst & Young as extending to Ernst & Young LLP with effect from 28th June 2001. A resolution to re-appoint Ernst & Young LLP
as the Company’s auditor will be put to the members at the forthcoming Annual General Meeting.
By order of the Board
C J S Hulland
Director
30th July 2001
19
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Page 20
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state
of affairs of the Company and of the Group at the end of that financial year and of the profit or loss of the Group for that period.
In preparing those financial statements the directors are required to:
–
select suitable accounting policies and then apply them consistently;
–
make judgements and estimates that are reasonable and prudent; and
–
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained
in the accounts.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial
position of the Group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also
responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
20
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Page 21
REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF KLEENEZE plc
We have audited the accounts on pages 22 to 44 which have been prepared under the historical cost convention as modified by the
revaluation of certain freehold land and buildings and certain investments in subsidiary undertakings and the accounting policies set
out on pages 27 and 28.
Respective Responsibilities of Directors and Auditors
The directors are responsible for preparing the annual report. As described on page 20 this includes responsibility for preparing the
accounts in accordance with applicable United Kingdom law and accounting standards. Our responsibilities, as independent auditors,
are established in the United Kingdom by statute, the Auditing Practices Board, the Listing Rules of the Financial Services Authority
and by our profession’s ethical guidance.
We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with the
Companies Act. We also report to you if, in our opinion, the directors’ report is not consistent with the accounts, if the Company has
not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if the
information specified by law or the Listing Rules regarding directors’ remuneration and transactions with the Group is not disclosed.
We review whether the corporate governance statement on page 15 reflects the Company’s compliance with the seven provisions
of the Combined Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider
whether the Board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of either the
Group’s corporate governance procedures or its risk and control procedures.
We read the other information contained in the annual report, including the corporate governance statement, and consider whether it
is consistent with the audited accounts. We consider the implications for our report if we become aware of any apparent misstatements
or material inconsistencies with the accounts.
Basis of Audit Opinion
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant
estimates and judgements made by the directors in the preparation of the accounts, and of whether the accounting policies are
appropriate to the Group’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order
to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement, whether
caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of
information in the accounts.
Opinion
In our opinion the accounts give a true and fair view of the state of affairs of the Company and of the Group as at 30th April 2001
and of the profit of the Group for the year then ended and have been properly prepared in accordance with the Companies Act 1985.
Ernst & Young LLP
Registered Auditor
London
30th July 2001
21
CONSOLIDATED PROFIT AND LOSS ACCOUNT
CONSOLIDATED BALANCE SHEET
At 30th April 2001
2001
Notes
Turnover excluding exceptional item
Exceptional item
Group turnover including exceptional item
Cost of sales
Gross profit
Selling and distribution expenses
Administrative expenses
Exceptional administrative expenses
Other operating expenses
2
3
2
3
Ongoing
Activities
£’000
168,548
–
2000
Acquisitions
£’000
17,155
–
Total
£’000
185,703
–
164,155
808
168,548
(133,939)
17,155
(12,420)
185,703
(146,359)
164,963
(129,160)
34,609
(8,560)
(7,906)
–
(10,266)
4,735
(1,352)
(1,433)
–
(1,521)
39,344
(9,912)
(9,339)
–
(11,787)
35,803
(8,488)
(7,212)
(171)
(9,708)
2
4
7,877
749
429
–
8,306
749
10,224
928
Total operating profit
2
8,626
429
9,055
11,152
Net interest receivable
Share of interest receivable of associated company
5
1,291
462
1,828
362
8
10,808
(3,326)
13,342
(4,136)
10
7,482
(3,965)
9,206
(3,608)
3,517
5,598
Profit on ordinary activities before taxation
Tax on profit on ordinary activities
Profit for the year attributable to shareholders
Dividends including non-equity dividends
2,6
Retained profit for the year
Earnings per ordinary share – basic
11
Earnings per ordinary share – diluted
11
15.86p
15.84p
£’000
2000
£’000
£’000
£’000
Total
£’000
Group operating profit
Share of operating profit of associated company
4
2001
Notes
19.56p
Fixed assets:
Intangible assets
Tangible assets
Investments
Current assets:
Stocks
Debtors
Cash at bank and in hand
Creditors: Amounts falling due within one year
12
13
14
33,171
14,623
81
–
13,022
81
47,875
13,103
17
17,718
14,674
3,095
6,657
11,165
26,180
20
35,487
(57,595)
44,002
(34,846)
15
16
Net current (liabilities)/assets
(22,108)
9,156
Total assets less current liabilities
Provision for liabilities and charges:
Deferred taxation
25,767
22,259
(51)
(81)
25,716
22,178
Capital and reserves:
Called up share capital
Ordinary
Preference
Share premium account
Revaluation reserve
Profit and loss account
21
22
22
2,344
500
23
23
23
19.47p
Shareholders’ funds:
Equity
Non-equity
2,344
500
2,844
1,139
411
21,322
2,844
1,139
411
17,784
25,716
22,178
25,216
500
21,678
500
25,716
22,178
C J S Hulland
Director
Approved by the Board on 30th July 2001
22
23
CONSOLIDATED PROFIT AND LOSS ACCOUNT
CONSOLIDATED BALANCE SHEET
At 30th April 2001
2001
Notes
Turnover excluding exceptional item
Exceptional item
Group turnover including exceptional item
Cost of sales
Gross profit
Selling and distribution expenses
Administrative expenses
Exceptional administrative expenses
Other operating expenses
2
3
2
3
Ongoing
Activities
£’000
168,548
–
2000
Acquisitions
£’000
17,155
–
Total
£’000
185,703
–
164,155
808
168,548
(133,939)
17,155
(12,420)
185,703
(146,359)
164,963
(129,160)
34,609
(8,560)
(7,906)
–
(10,266)
4,735
(1,352)
(1,433)
–
(1,521)
39,344
(9,912)
(9,339)
–
(11,787)
35,803
(8,488)
(7,212)
(171)
(9,708)
2
4
7,877
749
429
–
8,306
749
10,224
928
Total operating profit
2
8,626
429
9,055
11,152
Net interest receivable
Share of interest receivable of associated company
5
1,291
462
1,828
362
8
10,808
(3,326)
13,342
(4,136)
10
7,482
(3,965)
9,206
(3,608)
3,517
5,598
Dividends including non-equity dividends
2,6
Earnings per ordinary share – basic
11
Earnings per ordinary share – diluted
11
15.86p
15.84p
£’000
2000
£’000
£’000
£’000
Total
£’000
Group operating profit
Share of operating profit of associated company
4
2001
Notes
19.56p
Fixed assets:
Intangible assets
Tangible assets
Investments
Current assets:
Stocks
Debtors
Cash at bank and in hand
12
13
14
33,171
14,623
81
–
13,022
81
47,875
13,103
17
17,718
14,674
3,095
6,657
11,165
26,180
20
35,487
(57,595)
44,002
(34,846)
15
16
(22,108)
9,156
Provision for liabilities and charges:
Deferred taxation
25,767
22,259
(51)
(81)
25,716
22,178
Capital and reserves:
Called up share capital
Ordinary
Preference
Revaluation reserve
21
22
22
2,344
500
23
23
23
19.47p
Shareholders’ funds:
Equity
Non-equity
2,344
500
2,844
1,139
411
21,322
2,844
1,139
411
17,784
25,716
22,178
25,216
500
21,678
500
25,716
22,178
C J S Hulland
Director
22
23
COMPANY BALANCE SHEET
At 30th April 2001
GROUP CASH FLOW STATEMENT
2001
Notes
Fixed assets
Tangible assets
Investments
£’000
13
14
Current assets
Debtors
16
20
2000
£’000
£’000
151
18,674
224
3,306
18,825
3,530
4,633
4,405
(18,243)
(2,854)
2001
£’000
Notes
Net cash inflow from operating activities
Dividends received from associated company
Returns on investments and servicing of finance:
Interest received
Interest paid
Facilities costs
Preference dividends paid
2,005
(377)
(300)
(45)
Net cash inflow from returns on investments
and servicing of finance
(13,610)
1,551
5,215
5,081
22
22
2,344
500
23
23
Shareholders’ funds
Equity
Non-equity
2,344
500
Taxation:
UK corporation tax paid
2,844
1,139
1,098
5,215
5,081
4,715
500
4,581
500
5,215
Acquisitions:
Purchase of subsidiary undertakings
Net overdraft acquired with subsidiary undertakings
14
14
1,283
1,633
(4,108)
(3,432)
(2,041)
119
(26,341)
(5,169)
(1,922)
–
–
Net cash outflow from acquisitions
Equity dividends paid
(31,510)
(3,657)
–
(3,254)
Net cash (outflow)/inflow before use of liquid resources
and financing
(36,898)
2,968
Management of liquid resources:
Decrease/(increase) in short term bank deposits
23,650
(1,908)
–
120
18
(13,248)
1,180
14
18
(13,248)
(5,205)
(23,650)
1,180
–
1,908
Movement in net (debt)/funds
Net funds at start of year
18
(42,103)
26,180
3,088
23,092
Net (debt)/funds at end of year
18
(15,923)
26,180
5,081
(Decrease)/increase in cash
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Loan notes issued on acquisition of subsidiaries
Cash (inflow)/outflow from short term bank deposits
24
£’000
8,893
1,050
(1,482)
Financing:
Issue of ordinary share capital
C J S Hulland
Director
£’000
1,680
(2)
–
(45)
(1,562)
80
Net cash outflow from capital expenditure
2,844
1,139
1,232
2000
£’000
1,672
904
18
Capital expenditure:
Purchase of tangible assets
Proceeds from sale of tangible assets
Capital and reserves
Called up share capital:
Ordinary
Preference
£’000
25
COMPANY BALANCE SHEET
At 30th April 2001
GROUP CASH FLOW STATEMENT
2001
Notes
Fixed assets
Tangible assets
Investments
£’000
13
14
Current assets
Debtors
16
20
2000
£’000
£’000
151
18,674
224
3,306
18,825
3,530
4,633
4,405
(18,243)
(2,854)
2001
£’000
Notes
Dividends received from associated company
Returns on investments and servicing of finance:
Interest received
Interest paid
Facilities costs
Preference dividends paid
2,005
(377)
(300)
(45)
Net cash inflow from returns on investments
and servicing of finance
(13,610)
1,551
5,215
5,081
22
22
2,344
500
23
23
Shareholders’ funds
Equity
Non-equity
2,344
500
Taxation:
UK corporation tax paid
2,844
1,139
1,098
5,215
5,081
4,715
500
4,581
500
5,215
Acquisitions:
Purchase of subsidiary undertakings
Net overdraft acquired with subsidiary undertakings
14
14
1,283
1,633
(4,108)
(3,432)
(2,041)
119
(26,341)
(5,169)
(1,922)
–
–
Net cash outflow from acquisitions
Equity dividends paid
(31,510)
(3,657)
–
(3,254)
Net cash (outflow)/inflow before use of liquid resources
and financing
(36,898)
2,968
Management of liquid resources:
Decrease/(increase) in short term bank deposits
23,650
(1,908)
–
120
18
(13,248)
1,180
14
18
(13,248)
(5,205)
(23,650)
1,180
–
1,908
Movement in net (debt)/funds
Net funds at start of year
18
(42,103)
26,180
3,088
23,092
Net (debt)/funds at end of year
18
(15,923)
26,180
5,081
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Loan notes issued on acquisition of subsidiaries
Cash (inflow)/outflow from short term bank deposits
24
£’000
8,893
1,050
(1,482)
Financing:
Issue of ordinary share capital
C J S Hulland
Director
£’000
1,680
(2)
–
(45)
(1,562)
80
Net cash outflow from capital expenditure
2,844
1,139
1,232
2000
£’000
1,672
904
18
Capital expenditure:
Purchase of tangible assets
Proceeds from sale of tangible assets
Capital and reserves
Called up share capital:
Ordinary
Preference
£’000
25
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
2001
£’000
2000
£’000
Profit for the financial year excluding share of profits of associate
Share of associate’s profit for the year
6,634
848
8,303
903
Profit for the financial year attributable to shareholders
Exchange difference on re-translation of net assets of subsidiary company
7,482
21
9,206
(2)
Total recognised gains for the year
7,503
9,204
RECONCILIATION OF MOVEMENT ON SHAREHOLDERS’ FUNDS
2001
£’000
2000
£’000
Net gain for the year
Dividend
New shares issued
7,503
(3,965)
–
9,204
(3,608)
120
Net addition to shareholders’ funds
Opening shareholders’ funds
3,538
22,178
5,716
16,462
Closing shareholders’ funds
25,716
22,178
1. Accounting Policies
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain freehold
land and buildings and certain investments in subsidiary undertakings. The Group and Company accounts have been prepared in
accordance with applicable accounting standards.
Basis of Consolidation
For the purpose of the preparation of the Group accounts, references made to Group subsidiary companies and the associated
company relate to subsidiary undertakings and the associated undertaking of the Group respectively, as defined by the Companies Act 1985.
The consolidated financial statements incorporate the accounts of Kleeneze plc and all its subsidiary companies made up to
30th April 2001 together with its associated company made up to 31st March 2001.
Goodwill
Goodwill on consolidation arises under acquisition accounting and represents the excess of the fair value of purchase consideration
over the fair value of the underlying net assets of subsidiaries at the time of acquisition.
Goodwill arising on acquisitions prior to 30th April 1998 has been transferred to reserves in the year in which it arose. Goodwill
previously eliminated against reserves has not been re-instated but will be charged to the profit and loss account if the businesses
to which it relates were to be disposed of.
Goodwill arising on acquisitions since 1st May 1998 is capitalised and classified as an asset on the balance sheet. A review is carried
out every financial period to assess the carrying value of goodwill. Any reduction in the value of goodwill is charged to the profit and
loss account. The directors have reviewed the acquisition made in the year and determined that this business has an indefinite useful
life and, hence, goodwill is not being amortised. The accounts depart from the specific requirement of companies legislation to amortise
goodwill over a finite period in order to give a true and fair view. The directors consider this necessary for the reasons noted above.
Associated Company
A company is treated as an associated company when the Group:
–
–
holds a participating interest in it for the long term; and
exercises a significant influence over its operating and financial policy decisions.
The Group’s share of the results of its associated company is included in the consolidated profit and loss account. The investment in
the associated company included in the consolidated balance sheet is based on the Group’s share of the net assets of that company.
Turnover
Group turnover represents sales to external customers at invoiced amounts less value-added tax. Sales by the associated company
are not included.
Depreciation
Depreciation is provided to write off the cost or valuation, less estimated residual value, of all tangible fixed assets over their expected
useful lives on a straight-line basis. Freehold land is not depreciated.
Depreciation is calculated at the following rates:
Freehold buildings
Leasehold land and buildings
Plant and equipment
Motor vehicles
26
–
–
–
–
2% per annum
Depreciated over the remaining life of the leases
10% - 25% per annum
25% per annum
27
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
2001
£’000
2000
£’000
Profit for the financial year excluding share of profits of associate
Share of associate’s profit for the year
6,634
848
8,303
903
Profit for the financial year attributable to shareholders
Exchange difference on re-translation of net assets of subsidiary company
7,482
21
9,206
(2)
Total recognised gains for the year
7,503
9,204
RECONCILIATION OF MOVEMENT ON SHAREHOLDERS’ FUNDS
2001
£’000
2000
£’000
Net gain for the year
Dividend
New shares issued
7,503
(3,965)
–
9,204
(3,608)
120
Net addition to shareholders’ funds
Opening shareholders’ funds
3,538
22,178
5,716
16,462
Closing shareholders’ funds
25,716
22,178
1. Accounting Policies
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain freehold
land and buildings and certain investments in subsidiary undertakings. The Group and Company accounts have been prepared in
accordance with applicable accounting standards.
Basis of Consolidation
For the purpose of the preparation of the Group accounts, references made to Group subsidiary companies and the associated
company relate to subsidiary undertakings and the associated undertaking of the Group respectively, as defined by the Companies Act 1985.
The consolidated financial statements incorporate the accounts of Kleeneze plc and all its subsidiary companies made up to
30th April 2001 together with its associated company made up to 31st March 2001.
Goodwill
Goodwill on consolidation arises under acquisition accounting and represents the excess of the fair value of purchase consideration
over the fair value of the underlying net assets of subsidiaries at the time of acquisition.
Goodwill arising on acquisitions prior to 30th April 1998 has been transferred to reserves in the year in which it arose. Goodwill
previously eliminated against reserves has not been re-instated but will be charged to the profit and loss account if the businesses
to which it relates were to be disposed of.
Goodwill arising on acquisitions since 1st May 1998 is capitalised and classified as an asset on the balance sheet. A review is carried
out every financial period to assess the carrying value of goodwill. Any reduction in the value of goodwill is charged to the profit and
loss account. The directors have reviewed the acquisition made in the year and determined that this business has an indefinite useful
life and, hence, goodwill is not being amortised. The accounts depart from the specific requirement of companies legislation to amortise
goodwill over a finite period in order to give a true and fair view. The directors consider this necessary for the reasons noted above.
Associated Company
A company is treated as an associated company when the Group:
–
–
holds a participating interest in it for the long term; and
exercises a significant influence over its operating and financial policy decisions.
The Group’s share of the results of its associated company is included in the consolidated profit and loss account. The investment in
the associated company included in the consolidated balance sheet is based on the Group’s share of the net assets of that company.
Turnover
Group turnover represents sales to external customers at invoiced amounts less value-added tax. Sales by the associated company
are not included.
Depreciation
Depreciation is provided to write off the cost or valuation, less estimated residual value, of all tangible fixed assets over their expected
useful lives on a straight-line basis. Freehold land is not depreciated.
Depreciation is calculated at the following rates:
Freehold buildings
Leasehold land and buildings
Plant and equipment
Motor vehicles
26
–
–
–
–
2% per annum
Depreciated over the remaining life of the leases
10% - 25% per annum
25% per annum
27
NOTES FORMING PART OF THE FINANCIAL STATEMENTS (continued)
2.
1. Accounting Policies (continued)
Segmental Analysis
Turnover
2001
£’000
2000
£’000
Kleeneze
Exceptional item
69,938
–
57,329
808
Kleeneze including exceptional item
Farepak
69,938
98,610
17,155
58,137
106,826
–
185,703
164,963
Other Operating Expenses
Costs and expenses grouped under Other Operating Expenses include marketing expenditure, depreciation and property costs.
Stocks
Stocks are valued at the lower of cost and net realisable value. Cost includes direct expenditure and a proportion of overhead
expenses where applicable.
Pensions
Pension costs for the Group’s defined benefit pension schemes are charged to the profit and loss account so as to spread the cost
of pensions over the employees’ estimated working lives with the Group.
Contributions payable in respect of the Group’s defined contribution schemes are charged to the profit and loss account during the
accounting period to which they relate.
Deferred Taxation
Provision is made for timing differences between the treatment of certain items for taxation and accounting purposes to the extent
that it is probable that a liability or asset will crystallise.
Leasing Commitments
Rentals paid under operating leases are charged to income on a straight-line basis over the term of the lease.
Foreign Currencies
Foreign currency transactions are recorded at the exchange rates ruling at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are translated at year-end exchange rates and resulting exchange differences are dealt
with through the profit and loss account.
Operating Profit
2001
2000
£’000
£’000
Interest
Income/(Expense)
2001
2000
£’000
£’000
Profit Before Tax
2001
2000
£’000
£’000
Kleeneze
Exceptional item
4,198
–
4,819
637
(10)
–
(15)
–
4,188
–
4,804
637
Farepak
4,198
4,428
429
5,456
5,696
–
(10)
2,856
(1,093)
(15)
2,205
-
4,188
7,284
(664)
5,441
7,901
–
9,055
11,152
1,753
2,190
10,808
13,342
Net Assets
The profit and loss account of Kleeneze Ireland, the Group’s only significant overseas subsidiary company, is translated at the average
exchange rate for the year. The balance sheet is translated at the exchange rate ruling at the year end date. The exchange difference
arising on re-translation is taken to the statement of total recognised gains and losses.
The Group uses forward foreign currency contracts to reduce exposure to foreign exchange rates. The Group considers its derivative
instruments qualify for hedge accounting when certain criteria are met.
2001
£’000
Kleeneze
Farepak
The criteria for forward foreign currency contracts are:
–
–
–
the instrument must be related to a foreign current asset or liability that is probable and whose characteristics have been identified;
it must involve the same currency as the hedged item; and
it must reduce the risk of foreign currency exchange movements on the Group’s operations.
The rates under such contracts are used to record the hedged item. As a result, gains and losses are offset against the foreign exchange
gains and losses on the related financial assets and liabilities, or where the instrument is used to hedge a committed, or probable,
future transaction are deferred until the transaction occurs.
2000
£’000
9,280
16,655
(219)
7,879
14,299
–
25,716
22,178
With the exception of £4,878,000 (2000: £3,366,000) which was generated within the Republic of Ireland, all turnover originated
within the United Kingdom. All turnover derived from continuing activities and turnover by destination was not materially different
from turnover by source.
Within the interest income included in the above analysis is an allocation of £1,093,000 to Display Marketing Group, which reflects
the financing costs of the acquisition.
Group turnover excludes the Group’s share of the turnover of its associated company, Home Farm Hampers Limited. The Group’s
share of the turnover of Home Farm Hampers Limited for the year ended 31st March 2001 was £15,182,000 (2000: £15,932,000).
Turnover of the Group including Home Farm Hampers was £200,885,000 (2000: £180,895,000).
The Group’s share of Home Farm Hampers Limited’s pre-tax profit is shown within Farepak in the Segmental Analysis above.
28
29
2.
1. Accounting Policies (continued)
Segmental Analysis
Turnover
2001
£’000
2000
£’000
Kleeneze
Exceptional item
69,938
–
57,329
808
Farepak
69,938
98,610
17,155
58,137
106,826
–
185,703
164,963
Other Operating Expenses
Costs and expenses grouped under Other Operating Expenses include marketing expenditure, depreciation and property costs.
Stocks
Stocks are valued at the lower of cost and net realisable value. Cost includes direct expenditure and a proportion of overhead
expenses where applicable.
Pensions
Pension costs for the Group’s defined benefit pension schemes are charged to the profit and loss account so as to spread the cost
of pensions over the employees’ estimated working lives with the Group.
Contributions payable in respect of the Group’s defined contribution schemes are charged to the profit and loss account during the
accounting period to which they relate.
Deferred Taxation
Provision is made for timing differences between the treatment of certain items for taxation and accounting purposes to the extent
that it is probable that a liability or asset will crystallise.
Leasing Commitments
Rentals paid under operating leases are charged to income on a straight-line basis over the term of the lease.
Foreign Currencies
Foreign currency transactions are recorded at the exchange rates ruling at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are translated at year-end exchange rates and resulting exchange differences are dealt
with through the profit and loss account.
Operating Profit
2001
2000
£’000
£’000
Interest
Income/(Expense)
2001
2000
£’000
£’000
Profit Before Tax
2001
2000
£’000
£’000
Kleeneze
Exceptional item
4,198
–
4,819
637
(10)
–
(15)
–
4,188
–
4,804
637
Farepak
4,198
4,428
429
5,456
5,696
–
(10)
2,856
(1,093)
(15)
2,205
-
4,188
7,284
(664)
5,441
7,901
–
9,055
11,152
1,753
2,190
10,808
13,342
Net Assets
The profit and loss account of Kleeneze Ireland, the Group’s only significant overseas subsidiary company, is translated at the average
exchange rate for the year. The balance sheet is translated at the exchange rate ruling at the year end date. The exchange difference
arising on re-translation is taken to the statement of total recognised gains and losses.
The Group uses forward foreign currency contracts to reduce exposure to foreign exchange rates. The Group considers its derivative
instruments qualify for hedge accounting when certain criteria are met.
2001
£’000
Kleeneze
Farepak
The criteria for forward foreign currency contracts are:
–
–
–
the instrument must be related to a foreign current asset or liability that is probable and whose characteristics have been identified;
it must involve the same currency as the hedged item; and
it must reduce the risk of foreign currency exchange movements on the Group’s operations.
The rates under such contracts are used to record the hedged item. As a result, gains and losses are offset against the foreign exchange
gains and losses on the related financial assets and liabilities, or where the instrument is used to hedge a committed, or probable,
future transaction are deferred until the transaction occurs.
2000
£’000
9,280
16,655
(219)
7,879
14,299
–
25,716
22,178
With the exception of £4,878,000 (2000: £3,366,000) which was generated within the Republic of Ireland, all turnover originated
within the United Kingdom. All turnover derived from continuing activities and turnover by destination was not materially different
from turnover by source.
Within the interest income included in the above analysis is an allocation of £1,093,000 to Display Marketing Group, which reflects
the financing costs of the acquisition.
Group turnover excludes the Group’s share of the turnover of its associated company, Home Farm Hampers Limited. The Group’s
share of the turnover of Home Farm Hampers Limited for the year ended 31st March 2001 was £15,182,000 (2000: £15,932,000).
Turnover of the Group including Home Farm Hampers was £200,885,000 (2000: £180,895,000).
The Group’s share of Home Farm Hampers Limited’s pre-tax profit is shown within Farepak in the Segmental Analysis above.
28
29
3. Exceptional Item
The exceptional item in the year ended 30th April 2000 related to the recovery of VAT output tax paid in respect of previous years
amounting to £808,000. This was an operating exceptional credit, as defined by FRS3, from which consequential expenses of
£171,000 were deducted.
6.
2001
£’000
2000
£’000
37,956
39,830
Operating Profit
Interest receivable
1,872
1,155
2,319
905
3,027
(908)
3,224
(967)
2,119
2,257
2001
£’000
2000
£’000
Total assets
13,721
12,515
Total liabilities
(13,520)
(12,313)
201
202
Net assets
5.
Net Interest Receivable
Interest payable on bank loans and overdrafts
Other interest payable
Amortisation of facilities costs
Bank interest receivable
Other interest receivable
Depreciation
Auditors’ remuneration:
Audit
Other services
Operating lease rentals:
Land and buildings
Plant and machinery
Profit on sale of fixed assets
2000
£’000
1,722
1,361
112
47
74
38
251
76
48
14
–
45
In addition to the amounts shown above, the auditors received £410,000 in respect of acquisition services. This amount has been
included as part of the cost of the acquisition.
7. Employees
The average monthly number of employees of the Group during the year, including executive directors, was as follows:
Administration
Production and sales
2001
number
2000
number
285
469
237
368
754
605
2001
£’000
2000
£’000
12,408
999
493
9,869
787
443
13,900
11,099
Staff costs for all employees, including the executive directors, consist of:
Wages and salaries
Social security costs
Pension costs
2001
£’000
2000
£’000
(367)
(88)
(43)
1,527
262
–
(2)
–
1,657
173
Details of the remuneration, pension entitlements and share options for each director are shown within the Remuneration Report on
pages 16 to 19.
1,291
1,828
8.
Tax on Profit on Ordinary Activities
UK corporation tax
Share of associated company’s tax charge
Transfer (from)/to deferred taxation account (note 21)
Over provision in previous years
30
2001
£’000
This is arrived at after charging:
4. Associated Company
The results of Home Farm Hampers Limited, the Group’s associated company, for the year ended 31st March were:
Turnover
Profit on Ordinary Activities Before Taxation
2001
£’000
2000
£’000
3,005
363
(30)
(12)
3,759
387
2
(12)
3,326
4,136
31
3. Exceptional Item
The exceptional item in the year ended 30th April 2000 related to the recovery of VAT output tax paid in respect of previous years
amounting to £808,000. This was an operating exceptional credit, as defined by FRS3, from which consequential expenses of
£171,000 were deducted.
6.
2001
£’000
2000
£’000
37,956
39,830
Operating Profit
Interest receivable
1,872
1,155
2,319
905
3,027
(908)
3,224
(967)
2,119
2,257
2001
£’000
2000
£’000
Total assets
13,721
12,515
Total liabilities
(13,520)
(12,313)
201
202
Net assets
5.
Net Interest Receivable
Interest payable on bank loans and overdrafts
Other interest payable
Amortisation of facilities costs
Bank interest receivable
Other interest receivable
Depreciation
Auditors’ remuneration:
Audit
Other services
Operating lease rentals:
Land and buildings
Plant and machinery
Profit on sale of fixed assets
2000
£’000
1,722
1,361
112
47
74
38
251
76
48
14
–
45
In addition to the amounts shown above, the auditors received £410,000 in respect of acquisition services. This amount has been
included as part of the cost of the acquisition.
7. Employees
The average monthly number of employees of the Group during the year, including executive directors, was as follows:
Administration
Production and sales
2001
number
2000
number
285
469
237
368
754
605
2001
£’000
2000
£’000
12,408
999
493
9,869
787
443
13,900
11,099
Staff costs for all employees, including the executive directors, consist of:
Wages and salaries
Social security costs
Pension costs
2001
£’000
2000
£’000
(367)
(88)
(43)
1,527
262
–
(2)
–
1,657
173
Details of the remuneration, pension entitlements and share options for each director are shown within the Remuneration Report on
pages 16 to 19.
1,291
1,828
8.
Tax on Profit on Ordinary Activities
UK corporation tax
Share of associated company’s tax charge
Transfer (from)/to deferred taxation account (note 21)
Over provision in previous years
30
2001
£’000
This is arrived at after charging:
4. Associated Company
The results of Home Farm Hampers Limited, the Group’s associated company, for the year ended 31st March were:
Turnover
Profit on Ordinary Activities Before Taxation
2001
£’000
2000
£’000
3,005
363
(30)
(12)
3,759
387
2
(12)
3,326
4,136
31
9.
13. Tangible Fixed Assets
Profit for the Year Attributable to the Members of Kleeneze plc
Dealt with in the financial statements of the parent company
2001
£’000
2000
£’000
4,099
3,673
The profit and loss account of Kleeneze plc is not presented in accordance with the exemptions permitted by Section 230 of the
Companies Act 1985.
10. Dividends
2001
£’000
Non equity dividends:
Cumulative preference shares – paid
Equity dividends:
Ordinary shares of 5p each:
Interim paid
Final proposed
2000
£’000
45
45
1,008
2,912
914
2,649
3,965
3,608
11. Earnings per Ordinary Share
Basic Earnings per Share
Basic earnings per share has been calculated on the average number of ordinary shares in issue during the financial year of 46,885,047
(2000: 46,846,998). Earnings is defined as profit after taxation and preference dividends.
Diluted Earnings per Share
Diluted earnings per share has been calculated using an average number of shares of 46,964,427 (2000: 47,050,386). The average
number of shares has been adjusted for the fair value of shares under the three Kleeneze plc share option schemes totalling
79,380 shares (2000: 203,388 shares). Details of these schemes are given in note 22 – Share Capital.
12. Intangible Fixed Assets
Group
54
4
1,074
–
10,507
1,361
719
(390)
21,411
1,562
1,793
(390)
At 30th April 2001
11,047
1,132
12,197
24,376
Depreciation
At 1st May 2000
Provision for the year
Disposals
1,431
228
–
10
11
–
6,948
1,483
(358)
8,389
1,722
(358)
At 30th April 2001
1,659
21
8,073
9,753
Net book value
At 30th April 2001
9,388
1,111
4,124
14,623
At 30th April 2000
9,419
44
3,559
13,022
The Company has adopted the transitional provisions contained within FRS15 – Tangible Fixed Assets. The revalued assets will
continue to be stated at their valuation, which has not been updated.
The Group’s freehold and long leasehold land and buildings (excluding those acquired during the year) were valued by Gerald Eve,
Chartered Surveyors as at 30th April 1997 at £7.3 million on the basis of their existing use value in accordance with the Appraisal and
Valuation Manual of the Royal Institution of Chartered Surveyors. This compared with a book value of £7.3 million, inclusive of the
previous revaluation, in the accounts at that date.
Cost
At 1st May 2000
Acquisition of subsidiary undertakings
–
33,171
Freehold
Long leasehold
At 30th April 2001
33,171
Total
£’000
10,850
197
–
–
The historical cost of land and buildings is as follows:
32
Plant,
Equipment
and Vehicles
£’000
Cost or valuation
At 1st May 2000
Additions
Disposals
Goodwill
£’000
A charge of £691,000 would have been made to the profit and loss account in the year ended 30th April 2001 if the goodwill arising on
the acquisition was being amortised over a period of 20 years, the presumed maximum under FRS 10 – Goodwill and Intangible
Assets. This would have reduced earnings per share by 1.48p.
Land and buildings
Freehold
Long
Leasehold
£’000
£’000
Net Book Value
2001
2000
£’000
£’000
8,977
1,111
9,008
44
10,088
9,052
At 30th April 2001 the Group had contracted commitments for capital expenditure of £689,000 (2000: £360,000) which are not
provided in these accounts.
33
9.
13. Tangible Fixed Assets
Profit for the Year Attributable to the Members of Kleeneze plc
Dealt with in the financial statements of the parent company
2001
£’000
2000
£’000
4,099
3,673
The profit and loss account of Kleeneze plc is not presented in accordance with the exemptions permitted by Section 230 of the
Companies Act 1985.
10. Dividends
2001
£’000
Non equity dividends:
Cumulative preference shares – paid
Equity dividends:
Ordinary shares of 5p each:
Interim paid
Final proposed
2000
£’000
45
45
1,008
2,912
914
2,649
3,965
3,608
11. Earnings per Ordinary Share
Basic Earnings per Share
Basic earnings per share has been calculated on the average number of ordinary shares in issue during the financial year of 46,885,047
(2000: 46,846,998). Earnings is defined as profit after taxation and preference dividends.
Diluted Earnings per Share
Diluted earnings per share has been calculated using an average number of shares of 46,964,427 (2000: 47,050,386). The average
number of shares has been adjusted for the fair value of shares under the three Kleeneze plc share option schemes totalling
79,380 shares (2000: 203,388 shares). Details of these schemes are given in note 22 – Share Capital.
12. Intangible Fixed Assets
Group
54
4
1,074
–
10,507
1,361
719
(390)
21,411
1,562
1,793
(390)
At 30th April 2001
11,047
1,132
12,197
24,376
Depreciation
At 1st May 2000
Disposals
1,431
228
–
10
11
–
6,948
1,483
(358)
8,389
1,722
(358)
At 30th April 2001
1,659
21
8,073
9,753
Net book value
At 30th April 2001
9,388
1,111
4,124
14,623
At 30th April 2000
9,419
44
3,559
13,022
The Company has adopted the transitional provisions contained within FRS15 – Tangible Fixed Assets. The revalued assets will
continue to be stated at their valuation, which has not been updated.
The Group’s freehold and long leasehold land and buildings (excluding those acquired during the year) were valued by Gerald Eve,
Chartered Surveyors as at 30th April 1997 at £7.3 million on the basis of their existing use value in accordance with the Appraisal and
Valuation Manual of the Royal Institution of Chartered Surveyors. This compared with a book value of £7.3 million, inclusive of the
previous revaluation, in the accounts at that date.
Cost
At 1st May 2000
–
33,171
Freehold
Long leasehold
At 30th April 2001
33,171
Total
£’000
10,850
197
–
–
The historical cost of land and buildings is as follows:
32
Plant,
Equipment
and Vehicles
£’000
Cost or valuation
At 1st May 2000
Additions
Disposals
Goodwill
£’000
A charge of £691,000 would have been made to the profit and loss account in the year ended 30th April 2001 if the goodwill arising on
the acquisition was being amortised over a period of 20 years, the presumed maximum under FRS 10 – Goodwill and Intangible
Assets. This would have reduced earnings per share by 1.48p.
Land and buildings
Freehold
Long
Leasehold
£’000
£’000
Net Book Value
2001
2000
£’000
£’000
8,977
1,111
9,008
44
10,088
9,052
At 30th April 2001 the Group had contracted commitments for capital expenditure of £689,000 (2000: £360,000) which are not
provided in these accounts.
33
The following were principal subsidiary and associated companies at the end of the year:
13. Tangible Fixed Assets (continued)
Company
Plant, Equipment
and Vehicles
£’000
Cost or valuation
At 1st May 2000
Additions
Disposals
350
14
(13)
At 30th April 2001
351
Depreciation
At 1st May 2000
Disposals
126
87
(13)
At 30th April 2001
200
Net book value
At 30th April 2001
151
At 30th April 2000
224
At 30th April 2001 the Company had no contracted commitments for capital expenditure (2000: £nil).
Name
Subsidiaries:
Farepak Mail Order Limited
Display Marketing Group Limited
Kleeneze Europe Limited
Kleeneze Ireland Limited
Proportion of Ordinary Share Capital Held
Directly
Indirectly
100%
100%
Associated company:
Home Farm Hampers Limited
Nature of Business
100%
100%
Mail order retailer
Direct marketing retailer
Network marketing retailer
40%
Mail order retailer
All companies are registered and operate in the United Kingdom with the exception of Kleeneze Ireland Limited, which is registered
and operates in the Republic of Ireland.
On 24th November 2000 the Group acquired the entire share capital of Castlegate 105 Limited, trading as “Colour Library Direct”
and Marketwing Limited, trading as “Dealerfield”, together with a number of non-trading subsidiaries. These two companies now
comprise the Display Marketing Group.
Goodwill arising on the acquisition has been capitalised as an intangible asset. The directors have reviewed the businesses acquired
as to their quality and sustainability and have concluded that the goodwill associated with this acquisition does not have a finite life.
The directors believe the contribution from this acquisition will be further enhanced as the business is developed and synergies are
achieved with other parts of the Group.
Analysis of the acquisition of Display Marketing Group:
Book Value
Colour Library Direct
Dealerfield
£’000
£’000
14. Fixed Asset Investments
Group
2001
£’000
Associated company:
Cost
Retained profit
2000
£’000
40
41
40
41
81
81
Company
2001
£’000
2000
£’000
Shares in subsidiary undertakings
Cost
1987 valuation
Acquisition of subsidiary undertaking at cost
1,811
1,495
15,368
1,811
1,495
–
At 30th April 2001
18,674
3,306
34
Fair Value
Adjustments
£’000
Fair Value
to Group
£’000
Net assets at date of acquisition:
Intangible fixed assets
Tangible fixed assets
Stocks
Debtors
Creditors due within one year
Bank overdraft
1,789
138
6,778
995
(6,014)
(3,149)
9,012
1,820
11,289
1,949
(5,775)
(2,020)
(10,801)
(165)
(3,841)
(880)
(2,750)
–
–
1,793
14,226
2,064
(14,539)
(5,169)
Net assets/(liabilities)
Goodwill arising on acquisition
537
4,724
16,275
10,010
(18,437)
18,437
(1,625)
33,171
5,261
26,285
–
31,546
Discharged by:
Cash paid
Costs associated with the acquisition
3,393
772
20,967
1,209
–
–
24,360
1,981
Loan notes
4,165
1,096
22,176
4,109
–
–
26,341
5,205
5,261
26,285
–
31,546
35
The following were principal subsidiary and associated companies at the end of the year:
13. Tangible Fixed Assets (continued)
Company
Plant, Equipment
and Vehicles
£’000
Cost or valuation
At 1st May 2000
Additions
Disposals
350
14
(13)
At 30th April 2001
351
Depreciation
At 1st May 2000
Disposals
126
87
(13)
At 30th April 2001
200
Net book value
At 30th April 2001
151
At 30th April 2000
224
At 30th April 2001 the Company had no contracted commitments for capital expenditure (2000: £nil).
Name
Subsidiaries:
Farepak Mail Order Limited
Display Marketing Group Limited
Kleeneze Europe Limited
Kleeneze Ireland Limited
Proportion of Ordinary Share Capital Held
Directly
Indirectly
100%
100%
Associated company:
Home Farm Hampers Limited
Nature of Business
100%
100%
Mail order retailer
Direct marketing retailer
40%
Mail order retailer
All companies are registered and operate in the United Kingdom with the exception of Kleeneze Ireland Limited, which is registered
and operates in the Republic of Ireland.
On 24th November 2000 the Group acquired the entire share capital of Castlegate 105 Limited, trading as “Colour Library Direct”
and Marketwing Limited, trading as “Dealerfield”, together with a number of non-trading subsidiaries. These two companies now
comprise the Display Marketing Group.
Goodwill arising on the acquisition has been capitalised as an intangible asset. The directors have reviewed the businesses acquired
as to their quality and sustainability and have concluded that the goodwill associated with this acquisition does not have a finite life.
The directors believe the contribution from this acquisition will be further enhanced as the business is developed and synergies are
achieved with other parts of the Group.
Analysis of the acquisition of Display Marketing Group:
Book Value
Dealerfield
£’000
£’000
14. Fixed Asset Investments
Group
2001
£’000
Associated company:
Cost
Retained profit
2000
£’000
40
41
40
41
81
81
Company
2001
£’000
2000
£’000
Shares in subsidiary undertakings
Cost
1987 valuation
Acquisition of subsidiary undertaking at cost
1,811
1,495
15,368
1,811
1,495
–
At 30th April 2001
18,674
3,306
34
Fair Value
Adjustments
£’000
Fair Value
to Group
£’000
Net assets at date of acquisition:
Intangible fixed assets
Tangible fixed assets
Stocks
Debtors
Creditors due within one year
Bank overdraft
1,789
138
6,778
995
(6,014)
(3,149)
9,012
1,820
11,289
1,949
(5,775)
(2,020)
(10,801)
(165)
(3,841)
(880)
(2,750)
–
–
1,793
14,226
2,064
(14,539)
(5,169)
Net assets/(liabilities)
Goodwill arising on acquisition
537
4,724
16,275
10,010
(18,437)
18,437
(1,625)
33,171
5,261
26,285
–
31,546
Discharged by:
Cash paid
Costs associated with the acquisition
3,393
772
20,967
1,209
–
–
24,360
1,981
Loan notes
4,165
1,096
22,176
4,109
–
–
26,341
5,205
5,261
26,285
–
31,546
35
16. Debtors
14. Fixed Asset Investments (continued)
The fair value adjustments relate to increases in provisions for depreciation, stock and debtors in order to bring them into line with
Kleeneze plc’s accounting policies and a revised estimate of liabilities in respect of accruals recognised in the acquired companies.
Also included within fair value adjustments is an accrual of £2,468,000 for a bonus payable to a former director of Dealerfield.
Group
The combined loss after tax for the year ended 31st March 2001 was £8,722,000. Following acquisition, the companies were merged
and accordingly it would not be meaningful to show the split of profit between the companies. In the year ended 31st March 2000
Dealerfield produced profit after tax of £1,825,000. Colour Library Direct produced a profit after tax of £27,000 for the 15 month
period ended 31st March 2000.
The summarised profit and loss accounts for the two companies for the period from 1st April 2000 until the date of acquisition were:
£’000
Dealerfield
£’000
Total
£’000
Turnover
9,424
15,932
25,356
Operating (loss)/profit
Interest payable
(2,137)
(219)
1,488
(672)
(649)
(891)
(Loss)/profit before tax
Taxation
(2,356)
(854)
816
(211)
(1,540)
(1,065)
(Loss)/profit for the period ended 24th November 2000
(3,210)
605
(2,605)
Trade debtors
Amount owed by associated company – trading
Dividend receivable from associated company
Dividend receivable from subsidiary company
Amounts owed by subsidiaries
Other debtors
Prepayments
Company
2001
£’000
2000
£’000
2001
£’000
2000
£’000
8,449
109
848
–
–
755
4,513
4,913
136
904
–
–
1,449
3,763
–
–
–
4,375
–
–
258
–
–
–
3,618
787
–
–
14,674
11,165
4,633
4,405
17. Cash at Bank and in Hand
Group
The figures above shown for Colour Library Direct refer to the consolidated profit and loss account and balance sheet of Castlegate
105 Limited and its subsidiaries. Figures for Dealerfield refer to the consolidated profit and loss account and balance sheet for
Dealerfield Limited (formerly Marketwing Limited) and its subsidiaries.
Cash
Short term bank deposits
2001
£’000
2000
£’000
3,095
–
2,530
23,650
3,095
26,180
18. Cash Flow Statement
a) Reconciliation of operating profit to net cash inflow from operating activities:
2001
£’000
2000
£’000
£’000
£’000
There were no other gains or losses in the period from 1st April 2000 to 24th November 2000 other than those shown above.
Operating profit
8,306
10,224
15. Stocks
Group
Finished goods
Frozen meat stocks
Packing materials and other
2001
£’000
2000
£’000
16,685
818
215
4,601
1,822
234
17,718
6,657
Depreciation
Increase in operating debtors and prepayments
Decrease/(increase) in stocks
Decrease in operating creditors and accruals
Profit on sale of tangible fixed assets
1,722
(1,460)
3,165
(10,013)
(48)
1,361
(528)
(1,492)
(627)
(45)
(6,634)
(1,331)
1,672
8,893
The difference between purchase price or production cost of stocks and their replacement cost is not material.
Included within the net cash inflow from operating activities in the year ended 30th April 2001, is £637,000 relating to the exceptional
item referred to in note 3. This amount was provided for in the accounts for the year ended 30th April 2000 and the net amount was
received in 2001.
36
37
16. Debtors
14. Fixed Asset Investments (continued)
The fair value adjustments relate to increases in provisions for depreciation, stock and debtors in order to bring them into line with
Kleeneze plc’s accounting policies and a revised estimate of liabilities in respect of accruals recognised in the acquired companies.
Also included within fair value adjustments is an accrual of £2,468,000 for a bonus payable to a former director of Dealerfield.
Group
The combined loss after tax for the year ended 31st March 2001 was £8,722,000. Following acquisition, the companies were merged
and accordingly it would not be meaningful to show the split of profit between the companies. In the year ended 31st March 2000
Dealerfield produced profit after tax of £1,825,000. Colour Library Direct produced a profit after tax of £27,000 for the 15 month
period ended 31st March 2000.
The summarised profit and loss accounts for the two companies for the period from 1st April 2000 until the date of acquisition were:
£’000
Dealerfield
£’000
Total
£’000
Turnover
9,424
15,932
25,356
Operating (loss)/profit
Interest payable
(2,137)
(219)
1,488
(672)
(649)
(891)
(Loss)/profit before tax
Taxation
(2,356)
(854)
816
(211)
(1,540)
(1,065)
(Loss)/profit for the period ended 24th November 2000
(3,210)
605
(2,605)
Trade debtors
Amount owed by associated company – trading
Dividend receivable from associated company
Dividend receivable from subsidiary company
Amounts owed by subsidiaries
Other debtors
Prepayments
Company
2001
£’000
2000
£’000
2001
£’000
2000
£’000
8,449
109
848
–
–
755
4,513
4,913
136
904
–
–
1,449
3,763
–
–
–
4,375
–
–
258
–
–
–
3,618
787
–
–
14,674
11,165
4,633
4,405
17. Cash at Bank and in Hand
Group
The figures above shown for Colour Library Direct refer to the consolidated profit and loss account and balance sheet of Castlegate
105 Limited and its subsidiaries. Figures for Dealerfield refer to the consolidated profit and loss account and balance sheet for
Dealerfield Limited (formerly Marketwing Limited) and its subsidiaries.
Cash
2001
£’000
2000
£’000
3,095
–
2,530
23,650
3,095
26,180
18. Cash Flow Statement
a) Reconciliation of operating profit to net cash inflow from operating activities:
2001
£’000
2000
£’000
£’000
£’000
There were no other gains or losses in the period from 1st April 2000 to 24th November 2000 other than those shown above.
Operating profit
8,306
10,224
15. Stocks
Group
Finished goods
Frozen meat stocks
Packing materials and other
2001
£’000
2000
£’000
16,685
818
215
4,601
1,822
234
17,718
6,657
Depreciation
Increase in operating debtors and prepayments
Decrease/(increase) in stocks
Decrease in operating creditors and accruals
Profit on sale of tangible fixed assets
1,722
(1,460)
3,165
(10,013)
(48)
1,361
(528)
(1,492)
(627)
(45)
(6,634)
(1,331)
1,672
8,893
The difference between purchase price or production cost of stocks and their replacement cost is not material.
Included within the net cash inflow from operating activities in the year ended 30th April 2001, is £637,000 relating to the exceptional
item referred to in note 3. This amount was provided for in the accounts for the year ended 30th April 2000 and the net amount was
received in 2001.
36
37
Interest rate risk profile of financial assets
The interest rate exposure of the financial assets of the Group at 30th April was:
18. Cash Flow Statement (continued)
b) Analysis of net debt:
2001
£’000
Cashflow
£’000
Acquisition
£’000
2000
£’000
Cash Flow
£’000
1999
£’000
Cash in hand and at bank
Bank overdrafts
3,095
(13,813)
565
(13,813)
–
–
2,530
–
1,180
–
1,350
–
Net cash
Loan notes
(10,718)
–
(5,205)
(13,248)
(23,650)
–
–
–
(5,205)
2,530
23,650
–
1,180
1,908
–
1,350
21,742
–
(15,923)
(36,898)
(5,205)
26,180
3,088
23,092
19. Derivatives and Other Financial Instruments
An explanation of the Group’s objectives, policies and strategies for the role of derivatives and other financial instruments, is given in
the Financial Review on pages 10 and 11. The disclosure below excludes short term debtors and creditors, except where liabilities are
denominated in foreign currencies.
Interest rate risk profile of financial liabilities
The interest rate exposure and currency profile of the financial liabilities of the Group at 30th April was:
Group
2001
£’000
Sterling floating rate liabilities:
Overdraft
Loan notes
2000
£’000
13,813
5,205
–
–
Group
Cash at bank and in hand:
Sterling
Other currencies
Short term deposits:
Sterling
The overdraft bears interest at a floating rate based on the Bank of Scotland base rate. The loan notes bear interest at a rate based
on LIBOR.
Borrowing facilities
Details of the Group’s borrowing facilities are given in the Financial Review on page 11.
Interest rate risk profile of non-equity shares
The Company has in issue £500,000 of cumulative preference shares with a fixed coupon rate of 9%. These shares are denominated
in sterling. The fair values of the preference shares are not materially different to the carrying values.
–
685
2,410
2,010
520
–
23,650
3,095
26,180
Currency exposures
With the exception of Kleeneze Ireland Limited where the functional currency is the Irish Punt, all of the other Group companies operate
in Sterling. The principal differences on exchange which are taken to the profit and loss account arise where purchases are made by
Group companies in a currency different to their reporting currency. At 30th April 2001, Kleeneze Ireland Limited did not hold any
assets or liabilities not denominated in Irish Punts.
The table below shows the Group’s currency exposure, being the monetary assets of the Group that are not denominated in the
operating currency of the relevant operating unit as at 30th April:
Operating Currency – Sterling
2001
2000
£’000
£’000
IR£
US$
HK$
535
1,557
55
–
210
185
Total
2,147
395
Fair values of financial assets and financial liabilities
At 30th April, the book value and fair value of the Group’s financial assets and liabilities (excluding short term debtors and trading
creditors) was as follows:
Book Value and Fair Value
2001
2000
£’000
£’000
Primary financial instruments:
Short term borrowings:
Overdraft
Loan notes
Cash and short term deposits:
Sterling
Foreign currencies
38
2000
£’000
As at 30th April 2001, there were no fixed rate deposits. At 30th April 2000, £23,650,000 was on fixed rate deposit with high street
banks. The average interest rate in force at 30th April 2000 was 6.25% and the average length of the deposit period was 96 days.
Base rate at 30th April 2000 was 6.00% and the benefit of these cash deposits compared with the base rate at the year end date
was £16,000.
Currency of assets
19,018
2001
£’000
(13,813)
(5,205)
–
–
685
2,410
25,660
520
39
Interest rate risk profile of financial assets
The interest rate exposure of the financial assets of the Group at 30th April was:
18. Cash Flow Statement (continued)
b) Analysis of net debt:
2001
£’000
Cashflow
£’000
Acquisition
£’000
2000
£’000
Cash Flow
£’000
1999
£’000
Cash in hand and at bank
Bank overdrafts
3,095
(13,813)
565
(13,813)
–
–
2,530
–
1,180
–
1,350
–
Net cash
Loan notes
(10,718)
–
(5,205)
(13,248)
(23,650)
–
–
–
(5,205)
2,530
23,650
–
1,180
1,908
–
1,350
21,742
–
(15,923)
(36,898)
(5,205)
26,180
3,088
23,092
19. Derivatives and Other Financial Instruments
An explanation of the Group’s objectives, policies and strategies for the role of derivatives and other financial instruments, is given in
the Financial Review on pages 10 and 11. The disclosure below excludes short term debtors and creditors, except where liabilities are
denominated in foreign currencies.
Interest rate risk profile of financial liabilities
The interest rate exposure and currency profile of the financial liabilities of the Group at 30th April was:
Group
2001
£’000
Sterling floating rate liabilities:
Overdraft
Loan notes
2000
£’000
13,813
5,205
–
–
Group
Cash at bank and in hand:
Sterling
Other currencies
Short term deposits:
Sterling
The overdraft bears interest at a floating rate based on the Bank of Scotland base rate. The loan notes bear interest at a rate based
on LIBOR.
Borrowing facilities
Details of the Group’s borrowing facilities are given in the Financial Review on page 11.
Interest rate risk profile of non-equity shares
The Company has in issue £500,000 of cumulative preference shares with a fixed coupon rate of 9%. These shares are denominated
in sterling. The fair values of the preference shares are not materially different to the carrying values.
–
685
2,410
2,010
520
–
23,650
3,095
26,180
Currency exposures
With the exception of Kleeneze Ireland Limited where the functional currency is the Irish Punt, all of the other Group companies operate
in Sterling. The principal differences on exchange which are taken to the profit and loss account arise where purchases are made by
Group companies in a currency different to their reporting currency. At 30th April 2001, Kleeneze Ireland Limited did not hold any
assets or liabilities not denominated in Irish Punts.
The table below shows the Group’s currency exposure, being the monetary assets of the Group that are not denominated in the
operating currency of the relevant operating unit as at 30th April:
Operating Currency – Sterling
2001
2000
£’000
£’000
IR£
US$
HK$
535
1,557
55
–
210
185
Total
2,147
395
Fair values of financial assets and financial liabilities
At 30th April, the book value and fair value of the Group’s financial assets and liabilities (excluding short term debtors and trading
creditors) was as follows:
Book Value and Fair Value
2001
2000
£’000
£’000
Primary financial instruments:
Short term borrowings:
Overdraft
Loan notes
Cash and short term deposits:
Sterling
Foreign currencies
38
2000
£’000
As at 30th April 2001, there were no fixed rate deposits. At 30th April 2000, £23,650,000 was on fixed rate deposit with high street
banks. The average interest rate in force at 30th April 2000 was 6.25% and the average length of the deposit period was 96 days.
Base rate at 30th April 2000 was 6.00% and the benefit of these cash deposits compared with the base rate at the year end date
was £16,000.
Currency of assets
19,018
2001
£’000
(13,813)
(5,205)
–
–
685
2,410
25,660
520
39
21. Deferred Taxation
19. Derivatives and Other Financial Instruments (continued)
Hedges
The Group’s policy is to only hedge transactional currency exposures on future purchases denominated in a currency other than
Sterling. Gains and losses on hedging instruments are not recognised until the exposure that is being hedged is itself recognised.
Unrecognised gains and losses on hedges were as follows:
Gains unrecognised at 30th April, expected to be recognised in the following year
Gains included in the profit and loss account that arose in previous years
Notional amount of forward contracts outstanding at 30th April
Average exchange rate of forward contracts
2001
Provided in
Unprovided
Accounts
£’000
£’000
2001
£’000
2000
£’000
330
84
84
49
12,670
2,209
US$1.48
US$1.63
20. Creditors: Amounts Falling Due Within One Year
Group
Trade creditors
Amounts owed to subsidiaries
Social security and other taxes
Accruals and sundry creditors
Proposed dividend
Corporation tax
Loan notes
Bank overdraft
Group
Capital allowances in advance of depreciation
Other timing differences
2000
Provided in
Unprovided
Accounts
£’000
£’000
1,000
(794)
51
–
1,101
–
81
–
206
51
1,101
81
£’000
At 1st May 2000
Transfer from profit and loss account
81
(30)
At 30th April 2001
51
Company
2001
£’000
2000
£’000
2001
£’000
2000
£’000
27,994
–
2,193
3,957
2,912
1,521
5,205
13,813
27,394
–
337
1,803
2,649
2,663
–
–
–
9,642
–
329
2,912
–
5,205
155
–
106
–
77
2,649
18
–
4
57,595
34,846
18,243
2,854
The overdraft and the loan notes are secured by a mortgage debenture in favour of Bank of Scotland covering all the Group’s fixed
property and short term assets.
No deferred tax has been provided on the revaluation reserve shown in note 23 as the Group has no plans to sell the revalued assets.
22. Share Capital
Authorised
63,000,000 (2000: 63,000,000) ordinary shares of 5p each
499,980 9% cumulative preference shares of £1 each
Allotted, called up and fully paid
2001
£’000
2000
£’000
3,150
500
3,150
500
3,650
3,650
2,344
500
2,344
500
2,844
2,844
9% cumulative preference shareholders are entitled to a total fixed dividend of £3,750 per month payable in arrears. Preference
shareholders are entitled to attend general meetings of the Company but have no voting rights. There is no redemption entitlement.
40
41
21. Deferred Taxation
19. Derivatives and Other Financial Instruments (continued)
Hedges
The Group’s policy is to only hedge transactional currency exposures on future purchases denominated in a currency other than
Sterling. Gains and losses on hedging instruments are not recognised until the exposure that is being hedged is itself recognised.
Unrecognised gains and losses on hedges were as follows:
Gains unrecognised at 30th April, expected to be recognised in the following year
Gains included in the profit and loss account that arose in previous years
Notional amount of forward contracts outstanding at 30th April
Average exchange rate of forward contracts
2001
Provided in
Unprovided
Accounts
£’000
£’000
2001
£’000
2000
£’000
330
84
84
49
12,670
2,209
US$1.48
US$1.63
20. Creditors: Amounts Falling Due Within One Year
Group
Trade creditors
Amounts owed to subsidiaries
Social security and other taxes
Accruals and sundry creditors
Proposed dividend
Corporation tax
Loan notes
Bank overdraft
Group
Capital allowances in advance of depreciation
Other timing differences
2000
Provided in
Unprovided
Accounts
£’000
£’000
1,000
(794)
51
–
1,101
–
81
–
206
51
1,101
81
£’000
At 1st May 2000
Transfer from profit and loss account
81
(30)
At 30th April 2001
51
Company
2001
£’000
2000
£’000
2001
£’000
2000
£’000
27,994
–
2,193
3,957
2,912
1,521
5,205
13,813
27,394
–
337
1,803
2,649
2,663
–
–
–
9,642
–
329
2,912
–
5,205
155
–
106
–
77
2,649
18
–
4
57,595
34,846
18,243
2,854
The overdraft and the loan notes are secured by a mortgage debenture in favour of Bank of Scotland covering all the Group’s fixed
property and short term assets.
No deferred tax has been provided on the revaluation reserve shown in note 23 as the Group has no plans to sell the revalued assets.
22. Share Capital
Authorised
Allotted, called up and fully paid
2001
£’000
2000
£’000
3,150
500
3,150
500
3,650
3,650
2,344
500
2,344
500
2,844
2,844
9% cumulative preference shareholders are entitled to a total fixed dividend of £3,750 per month payable in arrears. Preference
shareholders are entitled to attend general meetings of the Company but have no voting rights. There is no redemption entitlement.
40
41
22. Share Capital (continued)
At 30th April 2001 options outstanding were as follows:
24. Pensions
The Group operates two funded defined benefit pension schemes for certain employees.
Ordinary Shares
Number
Kleeneze plc Savings Related Share Option Scheme
Kleeneze 1996 Discretionary Share Option Scheme:
Performance related +
Non-performance related
Kleeneze plc Executive Share Option Scheme
Dates Exercisable
Exercise Price
£
128,213
01.05.2003 to 31.10.2003
1.8900
37,010
214,000
165,298
283,579
378,864
20.01.2002
28.09.2002
30.06.2003
31.10.2003
20.01.2000
19.01.2007
27.09.2009
29.06.2010
30.10.2010
19.01.2007
1.9625
2.8750
2.1900
1.8800
1.9625
04.10.2000 to 03.10.2009
30.06.2003 to 29.06.2010
2.8750
2.1900
20,868
41,094
to
to
to
to
to
+ Performance related options are exercisable in the event that the increase in earnings per share during the period from the date of
grant of options to the date of exercise exceeds the increase in the Retail Price Index plus 3% per annum.
The assets of the major funded defined benefit scheme are administered by a trustee company and are held in a separate fund. The
pension cost and funding arrangements relating to this scheme are assessed in accordance with the advice of a qualified actuary using
the aggregate method. The latest actuarial valuation was carried out as at 30th April 1998 when the market value of the assets was
£1,159,100. The valuation was prepared on the basis that investment returns would be 8% per annum and salary increases would
average 7% per annum. The valuation showed that the value of the assets of the scheme was about 126% of the minimum required
by legislation and sufficient to cover 84% of the benefits accruing to members after allowing for future salary increases. The directors
believe that the revised contribution rate of 21.3% of the pensionable payroll, which has increased from 18.9% of pensionable pay will
be sufficient to cover future liabilities of the scheme.
The other funded defined benefit scheme relates to the Chairman and is fully funded.
The Group also operates defined contribution pension schemes for certain employees. The assets of these schemes are held
separately from those of the Group in independently administered funds.
25. Commitments Under Operating Leases
At 30th April 2001 the Group had the following annual commitments under non-cancellable operating leases:
23. Reserves
Share
Premium
Account
£’000
Revaluation
Reserve
£’000
2001
Profit
and Loss
Account
£’000
Group
At 1st May 2000
Exchange difference on re-translation of net assets of subsidiary undertaking
1,139
–
–
411
–
–
17,784
3,517
21
At 30th April 2001
1,139
411
21,322
Company
At 1st May 2000
1,139
–
–
–
1,098
134
At 30th April 2001
1,139
–
1,232
Operating leases which expire:
Within one year
In two to five years
After five years
Other
£’000
Land and
Buildings
£’000
2000
Land and
Buildings
£’000
22
57
–
–
393
8
–
–
8
79
401
8
26. Related Party Transactions
During the year the Group provided the following goods and services in the ordinary course of business to Home Farm Hampers Limited,
its associated company:
2001
£’000
2000
£’000
4,229
1,613
5,550
1,641
5,842
7,191
The cumulative amount of goodwill written off by the Group at 30th April 2001 is £19,994,000 (2000: £19,994,000).
Goods
Services
The interests of the directors in the ordinary shares of the Company, including R A Johnson, the controlling party, are shown in the
Remuneration Report on pages 18 and 19.
42
43
22. Share Capital (continued)
At 30th April 2001 options outstanding were as follows:
24. Pensions
The Group operates two funded defined benefit pension schemes for certain employees.
Ordinary Shares
Number
Kleeneze plc Savings Related Share Option Scheme
Kleeneze 1996 Discretionary Share Option Scheme:
Performance related +
Non-performance related
Kleeneze plc Executive Share Option Scheme
Dates Exercisable
Exercise Price
£
128,213
01.05.2003 to 31.10.2003
1.8900
37,010
214,000
165,298
283,579
378,864
20.01.2002
28.09.2002
30.06.2003
31.10.2003
20.01.2000
19.01.2007
27.09.2009
29.06.2010
30.10.2010
19.01.2007
1.9625
2.8750
2.1900
1.8800
1.9625
04.10.2000 to 03.10.2009
30.06.2003 to 29.06.2010
2.8750
2.1900
20,868
41,094
to
to
to
to
to
+ Performance related options are exercisable in the event that the increase in earnings per share during the period from the date of
grant of options to the date of exercise exceeds the increase in the Retail Price Index plus 3% per annum.
The assets of the major funded defined benefit scheme are administered by a trustee company and are held in a separate fund. The
pension cost and funding arrangements relating to this scheme are assessed in accordance with the advice of a qualified actuary using
the aggregate method. The latest actuarial valuation was carried out as at 30th April 1998 when the market value of the assets was
£1,159,100. The valuation was prepared on the basis that investment returns would be 8% per annum and salary increases would
average 7% per annum. The valuation showed that the value of the assets of the scheme was about 126% of the minimum required
by legislation and sufficient to cover 84% of the benefits accruing to members after allowing for future salary increases. The directors
believe that the revised contribution rate of 21.3% of the pensionable payroll, which has increased from 18.9% of pensionable pay will
be sufficient to cover future liabilities of the scheme.
The other funded defined benefit scheme relates to the Chairman and is fully funded.
The Group also operates defined contribution pension schemes for certain employees. The assets of these schemes are held
separately from those of the Group in independently administered funds.
25. Commitments Under Operating Leases
At 30th April 2001 the Group had the following annual commitments under non-cancellable operating leases:
23. Reserves
Share
Premium
Account
£’000
Revaluation
Reserve
£’000
2001
Profit
and Loss
Account
£’000
Group
At 1st May 2000
Exchange difference on re-translation of net assets of subsidiary undertaking
1,139
–
–
411
–
–
17,784
3,517
21
At 30th April 2001
1,139
411
21,322
Company
At 1st May 2000
1,139
–
–
–
1,098
134
At 30th April 2001
1,139
–
1,232
Operating leases which expire:
Within one year
In two to five years
After five years
Other
£’000
Land and
Buildings
£’000
2000
Land and
Buildings
£’000
22
57
–
–
393
8
–
–
8
79
401
8
26. Related Party Transactions
During the year the Group provided the following goods and services in the ordinary course of business to Home Farm Hampers Limited,
its associated company:
2001
£’000
2000
£’000
4,229
1,613
5,550
1,641
5,842
7,191
The cumulative amount of goodwill written off by the Group at 30th April 2001 is £19,994,000 (2000: £19,994,000).
Goods
Services
The interests of the directors in the ordinary shares of the Company, including R A Johnson, the controlling party, are shown in the
Remuneration Report on pages 18 and 19.
42
43
27. Contingent Liabilities
The Company and certain of its subsidiaries have given joint and several guarantees in connection with all monies from time to time
owing to Bank of Scotland. These facilities are secured on all the Group’s fixed property and short term assets.
At 30th April 2001, Kleeneze plc and certain subsidiary companies had outstanding guarantees issued to National Westminster Bank Plc
amounting to £400,000 (2000: £400,000) in respect of guarantees issued by National Westminster Bank Plc to the Intervention Board
for Agricultural Produce.
At 30th April 2001, the Group had letters of credit outstanding of £383,000 (2000: £nil).
44
Kleeneze plc is a rapidly growing specialist retail
group operating in three business areas:
Farepak – food and gifts sold by mail order
and food processing, Kleeneze – home and
personal products marketed through catalogues
and Display Marketing Group – books and gifts
sold in the workplace.
ANNUAL REPORT & ACCOUNTS 2001
Kleeneze plc, Farepak House, Westmead Drive
Westlea, Swindon SN5 7YZ

122 3557 MF_AR Kleeneze Back

Transcription

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