Last checked at 27 Aug 2014 07:00
27 August 2014
Flying Brands Limited (the "Company" or the "Group")
Interim Results Announcement
For the 26 weeks ended 27 June 2014
Flying Brands Limited today announces its interim financial results for the 26 weeks ended 27 June 2014.
Summary Information
About us
The primary focus of the Group since the disposal of its operating divisions in 2012 has been the maximisation of the long-term value of Retreat Farm.
Chairman's statement
During the first six months of this financial year the Group, together with its advisors, continued its discussions with the planning authorities on the development of Retreat Farm. These pre-application discussions have indicated that obtaining planning permission for the development of this property is likely to be more difficult and protracted than the Board had anticipated. Given the Group's limited financial resources and following approaches from parties interested in acquiring the property, the Board has instructed local property agents to explore a possible sale of the property and will make a decision as to how best to proceed when that exercise has been completed. This is expected to be by the end of September.
The Group has agreed in principle a settlement with Jersey Choice Marketing Limited regarding the payment of the outstanding deferred consideration for the Gardening Direct business and Jersey Choice's warranty claim arising out of the same transaction, with no further sum being due to or by either party. As part of that settlement, Jersey Choice has agreed to extend its lease of the greenhouses and despatch centre at Retreat Farm for a further year. The settlement proposals are currently being documented and the Directors anticipate finalising the settlement by the end of September 2014.
Paul DavidsonChairman27 August 2014
For further information please contact:
Smithfield Consultants 020 7360 4900
John Kiely
Responsibility Statement
We confirm that to the best of our knowledge:
a) The condensed set of financial statements, which has been prepared in accordance with IAS34 Interim Financial Reporting as adopted by the EU, gives a true and fair view of the assets, liabilities and financial position as required by DTR 4.2.4R.
b) The interim management report includes a fair review of the information required by DTR 4.2.7R, being an indication of important events that have occurred during the 26 weeks of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties in the remaining 26 weeks of the year.
c) The interim management report includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first 26 weeks of the current financial year and that have materially affected the financial position or performance of the entity during the period and any changes in the related party transactions described in the last annual report that could do so.
By Order of the Board,
S S Cook P Davidson
Chief Executive Officer Chairman
27 August 2014 27 August 2014
Definitions
The Company | Flying Brands Limited |
The Group | Flying Brands Limited and its subsidiaries and associates |
FFA | Flying Flowers Pty Ltd |
Retreat Farm | Freehold property based in Jersey |
Business Review
To the members of Flying Brands Limited
Cautionary statementThis interim management report (IMR) has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose. The IMR contains certain forward looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward looking information. |
This IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Flying Brands Limited and its subsidiary undertakings when viewed as a whole.
Continuing operations
The continuing operations relate to rental income from the lease of the glasshouses at Retreat Farm.
Overheads have been substantially reduced to a level that will enable the group to operate whilst the options for maximising the value of Retreat Farm continue to be explored.
Long-term strategy and business objectives
In the 2013 Annual Report and Accounts the Group reported that its main objective was to maximise the long term value of its Retreat Farm site.
During the first six months of this financial year the Group, together with its advisors, continued its discussions with the planning authorities on the development of Retreat Farm. These pre-application discussions have indicated that obtaining planning permission for the development of this property is likely to be more difficult and protracted than the Board had anticipated. Given the Group's limited financial resources and following approaches from parties interested in acquiring the property, the Board has instructed local property agents to explore a possible sale of the property and will make a decision as to how best to proceed when that exercise has been completed. This is expected to be by the end of September.
Loss for the period
The Group's loss for the period was £0.3m (26 weeks to 28.06.13: £0.4m).
Results for the first half of 2014
A summary of the key financial results is set out in the table below.
Revenue | Loss | ||||
26 weeks | 26 weeks | 26 weeks | 26 weeks | ||
ended | ended | ended | ended | ||
27.06.14 | 28.06.13 | 27.06.14 | 28.06.13 | ||
£'000 | £'000 | £'000 | £'000 | ||
Continuing: | 26 | 50 | (302) | (435) | |
Group Total
| 26 | 50 | (302) | (435) | |
Financial position
The Group's balance sheet as at 27 June 2014 can be summarised as set out in the table below:
Assets
£'m | Liabilities | Net assets | |
£'000 | £'000 | £'000 | |
Investment property | 2,985 | - | 2,985 |
Current assets and liabilities | 48 | (279) | (231) |
Non-current liabilities | - | (1,307) | (1,307) |
Total as at 27 June 2014 | 3,033 | (1,586) | 1,447 |
Total as at 28 June 2013 | 3,889 | (1,314) | 2,575 |
Total as at 27 December 2013 | 3,127 | (1,378) | 1,749 |
Capital structure
The Group has no bank debt (28 June 2013: £nil).
The Group has a £1.0m loan from Acorn Finance that is repayable on 18 January 2015. It has also received working capital loans from West Coast Capital Trading Limited amounting to £0.15m (28 June 2013: £nil).
Cash flow
The net cash outflow for the first 26 weeks relating to operating activities was £0.15m (26 weeks to 28.06.13: £0.4m).
Principal risks and uncertainties
The principal risks are those risks that the Board believes the Group faces at the date of this report. They include certain risks relating to the Retreat Farm property in Jersey.
Risks/uncertainties to the continuing Group
| ||
Issue | Risk/Uncertainty | Mitigation |
Economic Conditions | The Group's remaining asset is the Retreat Farm property in Jersey. Economic conditions could reduce demand for this type of property and impact any future sale. | The Group would look to dispose of this property in an orderly manner. Whilst the Group cannot influence the economic conditions in Jersey, the Directors are confident in the demand for the Retreat Farm site. The Directors are looking at alternative uses for the site which would take into account economic demand.
|
Adverse weather conditions & damage to property
| The Group is dependent on its facility at Retreat Farm in Jersey for both rental income and future value in the event of its disposal. If the facility were destroyed or severely damaged as a result of adverse weather, accidental or malicious actions, then this could impact on the running of the rental business and also the value of the property.
| The Group maintains insurance to cover damage to production facilities. The property is secured at all times.
|
Raising emergency funding | In the event of a significant issue arising for which the Group is required to access substantial liquid funds in excess of its available cash balances, it may not be easy to obtain additional funds as and when required.
| The Group monitors its cash requirements carefully and in the need of significant additional funds would look to increase its financing or expedite the sale of all or part of Retreat Farm. |
Going concern basis
The Group continues to meet its day-to-day working capital requirements through its cash reserves and on-going cash flows. The Directors have prepared detailed cash flow forecasts to support the decision to prepare the financial statements on a going concern basis. The working capital projections include the receipt of the rent for Retreat Farm and estimates of the on-going costs of the business.
The largest shareholder in Flying Brands Limited, West Coast Capital Trading Limited has agreed to extend some short term loans to help bridge the funding gap identified from the detailed cashflow forecasts and thus the working capital projections include these sums and estimates of the on-going costs of the business.
As referred to in note 9, the loan advanced by Acorn Finance is repayable in January 2015. It is anticipated this will be repaid from proceeds on the sale of Retreat Farm or otherwise the Group will enter into discussions to extend or refinance the loan.
The continued support from West Coast Capital Trading Limited in providing working capital has enabled the business to trade through to this point. However, this support is on a non-binding basis and may be withdrawn at any point. The Board is seeking to dispose of all or part of the Group's interest in Retreat Farm as soon as possible. There is, however, no certainty that a disposal could be achieved in the necessary timeframes. Therefore for the reasons outlined above there is a material uncertainty in relation to going concern.
The Group's forecasts and projections, taking into account the uncertainties above, show that the Group has a reasonable expectation of maintaining sufficient working capital to enable the Group to meet its liabilities as they fall due for the foreseeable future, being a period of not less than 12 months from the date of approval of this report. Thus the Directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Consolidated income statement
26 weeks ended 27 June 2014
26 weeks | 26 weeks | 52 weeks | ||
ended | ended | ended | ||
27.06.14 | 28.06.13 | 27.12.13 | ||
Notes | £'000 | £'000 | £'000 | |
Revenue | 26 | 50 | 78 | |
Cost of sales | (2) | (12) | (21) | |
Gross profit | 24 | 38 | 57 | |
Operating expenses | (276) | (429) | (1,238) | |
Operating loss | (252) | (391) | (1,181) | |
Net finance expense | (50) | (44) | (95) | |
Loss before tax | (302) | (435) | (1,276) | |
Taxation | 3 | - | - | 15 |
Loss for the period | (302) | (435) | (1,261) | |
Loss attributable to non - controlling interest | - | - | - | |
Loss attributable to the Group | (302) | (435) | (1,261) |
Loss per share expressed in pence per share | ||||
From continuing operations: | ||||
Basic and Diluted | 5 | (1.09) | (1.57) | (4.56) |
Consolidated statement of comprehensive income
26 weeks ended 27 June 2014
26 weeks | 26 weeks | 52 weeks | ||
ended | ended | ended | ||
27.06.14 | 28.06.13 | 27.12.13 | ||
£'000 | £'000 | £'000 | ||
Loss for the period | (302) | (435) | (1,261) | |
Total comprehensive loss for the period | (302) | (435) | (1,261) | |
Total comprehensive loss attributed to non-controlling interest
| - | - | - | |
Total comprehensive loss attributable to the Group | (302) | (435) | (1,261) | |
Consolidated balance sheet
As at 27 June 2014 |
Notes |
27.06.14
£'000 |
28.06.13
£'000 |
27.12.13
£'000 | |
Non - current assets | |||||
Investment property | 2,985 | 3,095 | 3,040 | ||
Total non - current assets | 2,985 | 3,095 | 3,040 | ||
Current assets | |||||
Trade and other receivables | 7 | 32 | 577 | 65 | |
Cash | 16 | 217 | 22 | ||
Total current assets | 48 | 794 | 87 | ||
Current liabilities | |||||
Current income tax payable | - | (14) | - | ||
Trade and other payables
| 8
|
| (279) | (298) | (223) |
Total current liabilities | (279) | (312) | (223) | ||
Net current assets/(liabilities) | (231) | 482 | (136) | ||
Non - current liabilities | |||||
Loans | 9 | (1,157) | (1,002) | (1,005) | |
Provision | 10 | (150) | - | (150) | |
Net assets | 1,447 | 2,575 | 1,749 | ||
Share capital | 282 | 282 | 282 | ||
Share premium | 18,059 | 18,059 | 18,059 | ||
Capital reserve | (17) | (17) | (17) | ||
Capital redemption reserve | 22 | 22 | 22 | ||
Treasury shares | (840) | (840) | (840) | ||
Non - controlling interest | (48) | (48) | (48) | ||
Revaluation reserve | 1,484 | 1,484 | 1,484 | ||
Retained earnings | (17,495) | (16,367) | (17,193) | ||
Total equity attributable to equity holders of the parent
| 1,447 | 2,575 | 1,749 | ||
Consolidated statement of changes in equity
26 weeks ended 27 June 2014
Share | Share | Revaluation | Capital | Capital | Treasury | Retained | Non- | Total | ||
capital | premium | reserve | reserve | redemption | shares | earnings | controlling | equity | ||
reserve | interest | |||||||||
Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 28 December 2012 | 282 | 18,059 | 1,484 | (17) | 22 | (840) | (15,932) | (48) | 3,010 | |
Loss for the period | - | - | - | - | - | - | (435) | - | (435) | |
Total comprehensive loss | - | - | - | - | - | - | (435) | - | (435) | |
Balance at 28 June 2013 | 282 | 18,059 | 1,484 | (17) | 22 | (840) | (16,367) | (48) | 2,575 | |
Loss for the period | - | - | - | - | - | - | (826) | - | (826) | |
Total comprehensive income | - | - | - | - | - | - | (826) | - | (826) | |
Balance at 27 December 2013 | 282 | 18,059 | 1,484 | (17) | 22 | (840) | (17,193) | (48) | 1,749 | |
Loss for the period | - | - | - | - | - | - | (302) | - | (302) | |
Total comprehensive loss | - | - | - | - | - | - | (302) | - | (302) | |
| ||||||||||
Balance at 27 June 2014 | 282 | 18,059 | 1,484 | (17) | 22 | (840) | (17,495) | (48) | 1,447 | |
Consolidated cash flow statement
26 weeks ended 27 June 2014
26 weeks | 26 weeks | 52 weeks | ||
ended | ended | ended | ||
27.06.14 | 28.06.13 | 27.12.13 | ||
Notes | £'000 | £'000 | £'000 | |
Loss for the period | (302) | (435) | (1,261) | |
Adjustment for: | ||||
Impairment of receivables | - | - | 375 | |
Depreciation | 55 | 55 | 110 | |
Decrease in receivables | 34 | 9 | 71 | |
Increase/(decrease) in payables | 57 | (33) | (120) | |
Increase in provisions | - | - | 150 | |
Net finance expenditure | 50 | 44
| 95 | |
Cash used in operations
| (106)
| (360)
| (580)
| |
Interest paid
| (50) | (44) | (95) | |
Tax refunded | - | 23 | 24 | |
Net cash absorbed in operating activities | (156) | (381) | (651) | |
Cash flows from investing activities: | ||||
Proceeds from disposal of property, plant and equipment | - | 13 | 13 | |
Disposal of trade and assets of Gardening Direct businesses | - | - | 200 | |
Deferred consideration on Gardening Direct disposal | - | 125 | - | |
Net cash from investing activities
| -
| 138
| 213
| |
Repayment of borrowings | 9 | - | (750) | (750) |
New loan raised | 9 | 150 | 1,000 | 1,000 |
Net cash from financing activities
| 150
| 250
| 250
| |
Net increase/(decrease) in cash and cash equivalents
| (6)
| 7
| (188)
| |
Cash and cash equivalents at beginning of period
| 22
| 210
| 210
| |
Cash and cash equivalents at the end of the period
| 16
| 217
| 22
|
Notes to the financial statements
1 Accounting policies
1.1 Reporting entity
These Financial Statements are the unaudited Consolidated Interim Financial Statements (hereafter "the Interim Financial Statements") of Flying Brands Limited, a company registered in Jersey, and its subsidiaries (hereafter "the Group") for the 26 weeks ended 27 June 2014.
These Interim Financial Statements have been prepared under IFRS applying the accounting policies published in the Group's IFRS Financial Statements for the 52 weeks ended 27 December 2013, published on 29 April 2014.
1.2 Basis of preparation
The Consolidated Financial Statements for the 52 weeks ended 27 December 2013 (hereafter "the Annual Report and Accounts"), are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this Interim Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.
The audit report contained in the Annual Report and Accounts did not include a statement under section 498(2) or (3) of the Companies Act 2006. However, it did contain a modified opinion with an emphasis of matter over going concern.
1.3 Significant accounting policies
The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.
1.4 Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. An operating segment's operating results, for which discrete financial information is available, is reviewed regularly by the Group's Board to make decisions about resources to be allocated to the segment and assess its performance.
1.5 Going concern
Following consideration of the disclosures in relation to going concern in the Chairman's Statement, the Directors continue to adopt the going concern basis in preparing the Interim Financial Statements.
2 Segmental analysis
Segmentation by geographical area |
| |||||||
26 weeks ended 27.06.14 | 26 weeks ended 28.06.13 | 52 weeks ended 27.12.13 | ||||||
£'000 | £'000 | £'000 | ||||||
Jersey, Channel Islands | 26 | 39 | 67 | |||||
United Kingdom
| - | 11 | 11
| |||||
26
| 50
| 78
|
3 Taxation
The interim tax charge has been estimated based on a full year forecast tax rate of nil% for underlying tax (2013: nil%).
4 Dividends
26 weeks | 26 weeks | 52 weeks | |
ended | ended | ended | |
27.06.14 | 28.06.13 | 27.12.13 | |
£'000 | £'000 | £'000 | |
Amounts recognised as distributions to equity holders in the period:
| |||
No final dividend for 2013 was proposed (2012: nil) | - | - | - |
No interim dividend (2013: nil) is proposed due to the performance of the Group in the first half of 2014.
5 Earnings per share
Basic and Diluted
Basic earnings per share is calculated by dividing the loss attributable to the equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period, excluding Ordinary Shares purchased by the Company and held as treasury shares. The Company previously had one category of dilutive potential Ordinary Shares: LTIP Awards. These have all lapsed.
Basic and Diluted |
| |||
26 weeks ended 27.06.14 | 26 weeks ended 28.06.13 | 52 weeks ended 27.12.13 | ||
Loss attributable to equity holders of the Company (£'000)
| (302) | (435) | (1,261) | |
Weighted average number of shares in issue, less Weighted average number of treasury shares ('000)
|
27,671 |
27,671 |
27,671 | |
Loss per share (pence) | (1.09) | (1.57) | (4.56) | |
| ||||
6 Related party
The Group has received working capital loans from West Coast Capital Trading Limited amounting to £150,000 (2013: £nil), a company in which the Group's Chairman, Paul Davidson, is also a Director.
7 Trade and other receivables
27.06.14 | 28.06.13 | 27.12.13 | |
£'000 | £'000 | £'000 | |
Amounts falling due within one year: | |||
Other receivables | 8 | 8 | 1 |
Trade receivables | 1 | 18 | 50 |
Deferred consideration receivable on disposal of Gardening Direct | - | 500 | 11 |
Prepayments | 23 | 51 | 3 |
32 | 577 | 65 | |
8 Trade and other payables
27.06.14 | 28.06.13 | 27.12.13 | |
£'000 | £'000 | £'000 | |
Trade payables and accruals | 279 | 298 | 223 |
279 | 298 | 223 | |
9 Loans
As previously disclosed, the Group entered into a new loan agreement to refinance existing debt with a loan of £1.0m from Acorn Finance. The Facility is secured by a charge over the freehold of Retreat Farm and is repayable in full on 18 January 2015. The loan attracts an annual interest rate of 9.95%.
The Group has received working capital loans from West Coast Capital Trading Limited amounting to £150,000. These loans are repayable on demand.
10 Provision
In 2012 the Group announced it was in a contractual dispute with Flying Flowers Pty Ltd ("FFA"), an Australian company, arising from matters relating to the disposal of the Group's gifts business which FFA allege amounted to breaches of contract by the Group. The Group has settled this dispute and has agreed a payment of £150,000 (2013: £150,000) to be made on the earlier of refinancing the business, disposing of Retreat Farm or 30 April 2015.