RNS Number : 9629Z
Cains Beer Company PLC
28 July 2008
28 July 2008
CAINS BEER COMPANY PLC (CBC/L)
('Cains' or 'the Company')
INTERIM RESULTS
Cains Beer Company PLC, the AIM-listed craft brewer and pub operator from Liverpool, announces its interim results for the six month
period ended 28 April 2008
HIGHLIGHTS
* The financial results for the period were disappointing due to a challenging operating environment and the company's results show
a significant loss.
* As previously announced the Group is in advanced negotiations with its bankers regarding its facilities and expects to report on
the conclusion of these negotiations in the near future.
Progress continues to be made in the turnaround of the business:
* Investment in the retail division is generating an uplift in sales from refurbished outlets and the company is pleased with the
early success of its 'Cains Local' pub format.
* New contracts have been won by the company's contracts division, most recently with ASDA .
* The company has launched a new Cains Pilsner Lager which, at 4% ABV, competes with similar strength products from Becks Vier 4%
ABV and Stella Artois 4% ABV.
* Cains Finest lager is now listed nationally in Morrisons Stores
Sudarghara Dusanj, Cains Beer Company Chief Executive, comments:
"As predicted, the smoking ban and reduced levels of consumer confidence have had a significant impact on the short term trading
position of the business. Our retail division is also suffering from a historic lack of investment but positive returns are being made from
our investment in pub refurbishments and Cains brands are increasing their presence nationally.
ENDS
For further information visit: (www.cains.co.uk) or enquiries to:
Cains Beer Company PLC 0151 709 8734
Sudarghara Dusanj, Chief Executive
Ajmail Dusanj, Chief Operating Officer
Charles Stanley Securities (Nominated Adviser) 0207 149 6000
Rick Thompson
Adventis Financial PR 0207 034 4759
Tarquin Edwards 07879 458 364
Chris Steele 07979 604 687
CAINS BEER COMPANY PLC
INTERIM RESULTS FOR THE PERIOD ENDED 28 APRIL 2008
Cains Beer Company Plc, the AIM-listed craft brewer and operator of pubs from Liverpool, is pleased to announce its unaudited interim
results for the six months ended 28 April 2008.
CHAIRMAN'S STATEMENT
Introduction
The first six months of the year have been a busy and very challenging time for the Group. The operating environment has become more
difficult for both the brewery and the pub estate. Indeed, we have seen our whole sector hit hard by a number of factors, including
declining consumer confidence, rising input costs, the effects of the smoking ban and the impact of the penal increase in duty rates. These
factors have led to a significant loss being reported for the six month period.
However, despite these challenges and the result for the period, the Group believes that progress continues to be made in the
turn-around of the business. Cains has added to its growing list of leading UK retail customers by successfully bidding for, and winning,
new contracts, most recently with Asda. It has completely refurbished four of its pubs as part of the Group's investment into its pub estate
and it has successfully trialed its "Cains local" concept, which seeks to capitalise on the longstanding heritage of the 'Traditional
British Local Pub'. The Group has undertaken a full strategic review of its pub estate, which in turn has highlighted a number of
opportunities for investment and it has continued to strengthen its senior management team.
I believe we now have the right management team in place with the relevant experience of turnaround situations to tackle the issues that
now face us in this difficult trading period; and to ensure that we are well placed to take advantage of any changes and opportunities
offered by current economic conditions.
Trading Results
The results show a loss before tax for the six months of �4.5m, compared to a loss of �2.7m for the fourteen month period ended 28
October 2007.
Cains Business Divisions
The Group comprises two principal divisions:-
1) Brewing and Brands division
2) Retail division
Brewing and Brands
Brewery sales (excluding those to retail) for the period total �10.7m vs. �12.5m in the prior year, a reduction of 14.9%. The majority
of the reduction is due to lower own label sales, a trend which has reversed in the 12 weeks following the period end, with some significant
volume increases from major retailers.
Margins on the Brewery are stronger in 2008 at 13.6% vs last year's 9.5%, with most of the difference accounted for by sales to the
Retail Estate including Cains own brands.
In the 12 weeks ended 20th July 2008, excluding sales to retail, Brewery sales have been 17% stronger than in the comparable period last
year.
Retail
Total retail sales for the period on a like for like basis fell by 15% . The core estate continues to suffer from an historic lack of
investment, the smoking ban and the squeeze on customer spend.
As a result we have undertaken a full estate review linked to our vision of running local pubs for local people with high quality and
value for money craft-brewed beers and food. This ties in well with our three retail formats:
- Locals - wet led community pubs
- Town centre - wet led town centre locations
- Inns and Taverns - destination pubs with a high percentage of food (some with accommodation)
The review has also highlighted various investment opportunities across at least half of the pub estate to improve the offer and
generate improved sales.
Current funding and going concern
In the announcement of our preliminary results and as disclosed in the financial statements for the year ended 28th October 2007, the
Group advised that its overdraft facility was due for review in June 2008 and that this facility may need to be increased in order for the
group to meet its financing requirements and manage its working capital. It was also reported that there were ongoing negotiations with the
Group's bankers relating to the renegotiation of the financial covenants attaching to the Group's loan and other facilities.
The Group has continued to discuss these issues with its bankers but, at present agreement has not been reached regarding the Group's
funding requirements going forward and the financial covenants attaching to them.
The directors believe that the Group will be able to reach agreement with its bankers regarding appropriate levels of funding and
accordingly this interim financial information has been prepared on a going concern basis. However, the directors do recognise that there is
a material uncertainty related to this situation and the loss reported for the six month period which may cast significant doubt on the
Group's ability to continue as a going concern.
The Group is currently in advanced negotiations with HM Revenue & Customs ("HMRC") regarding outstanding duty and other liabilities.
HMRC has issued and advertised certain petitions in this regard against the Group. However, the Group and HMRC have now agreed in principle
a payment plan for these amounts to be settled. This agreement in principle is subject to approval of the Group's bankers, which is
currently being sought. There can be no guarantee that such bank approval will be forthcoming but shareholders will be kept updated as
appropriate. If approval is forthcoming then a binding agreement would then be finalised between the Group and HMRC.
Dividend
No dividend is proposed but it continues to be our medium to long term aim to deliver dividends to our shareholders and to adopt a
progressive dividend policy in the future.
International Financial Reporting Standards ('IFRS')
This unaudited interim financial information has been prepared for the first time in accordance with IFRS. Details of the impact of this
change are set out in note 3 to the financial information.
People
It is with regret that I announce the resignation of Paul Morgan, Finance Director, who has sadly decided to leave the Group with
immediate effect. The board are in the process of finding a replacement.
Conclusion and Outlook
The last six months have without doubt been the most difficult in the short history of Cains Beer Company. As a consequence of the tough
trading conditions on the high street and the Group's increased cost base, our operating profits for the half year are substantially lower.
In the absence of a significant improvement in trading conditions during the second half, it is therefore anticipated that Group operating
losses for the full year to 28 October 2008 will also be higher than expected.
However, the Board believes that Cains now has the brand, the vision and the entrepreneurial flair and experience to withstand the
present downturn. Going forward, the Board also has confidence in its ability to turn the business around and to successfully grow it and
the Cains brand into a nationwide force in line with our vision to become Britain's favourite beer company.
Roy Morris
Chairman
CAINS BEER COMPANY PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 27 APRIL 2008
Unaudited Unaudited Unaudited
Six Six Fourteen
Months months months
to 27 April to 30 April to 28 October
2008 2007 2007
Continuing operations �000 �000 �000
Revenue 25,412 12,528 43,220
Cost of sales (19,040) (11,471) (33,844)
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Gross profit 6,372 1,057 9,376
Administrative expenses (9,797) (1,682) (11,038)
****** ****** ******
Operating loss (3,425) (625) (1,662)
Finance costs (1,193) (66) (1,166)
****** ****** ******
Loss before taxation (4,618) (691) (2,828)
Income tax expense 6 - 554
****** ****** ******
Loss for the period attributable to (4,612) (691) (2,274)
the equity holders of the parent
****** ****** ******
Loss per share (pence)
Basic and diluted 3.05 1.04 2.39
****** ****** ******
CAINS BEER COMPANY PLC
CONSOLIDATED BALANCE SHEET
AT 27 APRIL 2008
Unaudited Unaudited Unaudited
at 27 April at 30 April at 28 October
2008 2007 2007
�000 �000 �000
Non-current assets
Intangible assets 6,225 30 6,225
Property, plant and equipment 44,305 8,970 45,182
Investments - - 180
****** ****** ******
50,530 9,000 51,587
****** ****** ******
Current assets
Held for sale 180 - -
Inventories 2,274 818 2,167
Trade and other receivables 7,460 4,823 7,284
Cash and cash equivalents 2,375 - 2,669
****** ****** ******
12,289 5,641 12,120
****** ****** ******
Total assets 62,819 14,641 63,707
****** ****** ******
Current liabilities
Trade and other payables (18,200) (6,623) (12,774)
Tax liabilities (521) - (521)
Financial liabilities (8,652) (3,274) (10,344)
****** ****** ******
(27,373) (9,897) (23,639)
****** ****** ******
Non-current liabilities
Financial liabilities (26,612) (40) (26,596)
Other payables (40) (78) (60)
Deferred tax liabilities (7,709) (2,138) (7,715)
****** ****** ******
(34,361) (2,256) (34,371)
****** ****** ******
Total liabilities (61,734) (12,153) (58,010)
****** ****** ******
Net assets 1,085 2,488 5,697
****** ****** ******
CAINS BEER COMPANY PLC
CONSOLIDATED BALANCE SHEET (CONTINUED)
AT 27 APRIL 2008
Unaudited Unaudited Unaudited
at 27 April at 30 April at 28 October
2008 2007 2007
�000 �000 �000
Equity
Share capital 1,511 667 1,511
Share premium account 19,239 - 19,239
Other reserves (16,106) (657) (16,106)
Retained earnings (3,559) 2,478 1,053
****** ****** ******
Equity attributable to equity 1,085 2,488 5,697
holders of the parent
****** ****** ******
CAINS BEER COMPANY PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 27 APRIL 2008
Unaudited Unaudited Unaudited
Six Six Fourteen
months Months months
To 27 April 2008 to 30 April 2007 to 28 October 2007
�000 �000 �000
Cash flows from operating
activities
Operating loss for the period (3,425) (625) (1,662)
Adjustments for:
Depreciation of property, 1,278 160 1,146
plant and equipment
Release of government grant (20) (20) (50)
Increase in trade and other (176) (209) (418)
receivables
(Increase)/decrease in (107) 43 (444)
inventories
Increase in trade payables and 5,426 1,279 413
provisions
****** ****** ******
Net cash flows from operating 2,976 628 (1,015)
activities
****** ****** ******
Cash flows from investing
activities
Reverse acquisition of legal - - (1,603)
parent undertaking
Net overdraft in Cains Beer - - (2,774)
Company PLC at acquisition
Purchases of property, plant (401) (173) (527)
and equipment
****** ****** ******
Net cash flows used in (401) (173) (4,904)
investing activities
****** ****** ******
Cash flows from financing
activities
Proceeds from issue of shares - - 2,600
Proceeds from issue of loan - - 2,500
stock
Net movements in borrowings (1,676) (389) 4,476
Interest paid (1,193) (66) (1,091)
****** ****** ******
Net cash flows from financing (2,869) (455) 8,485
activities
****** ****** ******
Net (decrease) /increase in (294) - 2,566
cash and cash equivalents
****** ****** ******
Opening cash and cash 2,669 - 103
equivalents
****** ****** ******
Closing cash and cash 2,375 - 2,669
equivalents
****** ****** ******
CAINS BEER COMPANY PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 27 APRIL 2008
Share capital Share premium Reverse acquisition Convertible loan Retained earnings
Total
account reserve equity reserve
�000 �000 �000 �000 �000
�000
At 29 October 2007 1,511 19,239 (16,207) 101 1,053
5,697
Loss for the period - - - - (4,612)
(4,612)
****** ****** ****** ****** ******
******
At 27 April 2008 1,511 19,239 (16,207) 101 (3,559)
1,085
****** ****** ****** ****** ******
******
At 1 September 2006 667 - (657) - 3,327
3,337
Arising on reverse takeover 314 17,119 (15,550) - -
1,883
Arising on issue of shares 530 2,120 - - -
2,650
Equity component of loan - - - 101 -
101
stock issued
Loss for the period - - - - (2,274)
(2,274)
****** ****** ****** ****** ******
******
At 28 October 2007 1,511 19,239 (16,207) 101 1,053
5,697
****** ****** ****** ****** ******
******
At 1 November 2006 667 - (657) - 3,169
3,179
Loss for the period - - - - (691)
(691)
****** ****** ****** ****** ******
******
At 30 April 2007 667 - (657) - 2,478
2,488
****** ****** ****** ****** ******
******
CAINS BEER COMPANY PLC
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 27 APRIL 2008
1 Statement of accounting policies
General Information
Cains Beer Company PLC is a public limited company incorporated in the United Kingdom, whose shares are publicly traded on the
Alternative Investment Market (AIM). The company is domiciled in the United Kingdom and its registered address is The Robert Cain Brewery,
Stanhope Street, Liverpool, L8 5XJ, United Kingdom.
The principal activities of the group are the brewing, packaging and distribution of beers and lagers and the management of public
houses.
Basis of accounting
The financial information has been prepared on the historical cost basis, modified to include the fair valuation of derivative financial
instruments. The accounting policies set out below have been applied consistently to all periods presented in this consolidated half yearly
report and in preparing an opening International Financial Reporting Standards ('IFRS') balance sheet at 1 September 2006 for the purposes
of the transition to IFRS.
Basis of preparation
This consolidated financial information of Cains Beer Company PLC has been prepared on the basis of IFRS and IFRIC interpretations
adopted for use in the European Community that the directors expect to be in issue and effective at 26 October 2008, the group's first
annual reporting date in accordance with IFRS.
This half yearly report has been prepared in accordance with the accounting policies set out below (which are expected to be applied in
preparing the annual financial statements), taking into account the requirements and options in IFRS 1 "First-time adoption of International
Financial Reporting Standards" (IFRS 1), as detailed below. The group has not adopted the reporting requirements of International Accounting
Standard (IAS) 34 "Interim Financial Reporting". The transition date for the group's application of IFRS is 1 September 2006 and the
comparative figures for the six month period ended 30 April 2007 and the fourteen month period ended 28 October 2007 have been restated
accordingly. Reconciliations of the income statement (previously profit and loss account) and the balance sheet from previously reported UK
GAAP to IFRS are shown in note 3.
The information relating to the six months ended 27 April 2008 and 30 April 2007 is unaudited and does not constitute statutory
accounts. The comparative figures for the financial period ended 28 October 2007 are based on the UK GAAP financial statements of Cains Beer
Company PLC for that financial period. Those financial statements have been reported on by the company's auditors and delivered to the
registrar of companies. The report of the auditors on such accounts was unqualified, but did include an emphasis of matter paragraph in
relation to going concern. It did not contain any statement under Sections 237(2) or 237(3) of the Companies Act 1985.
Going concern
HM Revenue and Customs have issued a petition to wind up Cains Beer Company PLC in respect of unpaid liabilities, the hearing of the
petition to be held on 12 August 2008. Since the issue of this petition the group and HMR & C have reached an agreement for the settlement
of the sums claimed. This agreement is subject to the approval of the group's bankers. The group continues to negotiate with its bankers
regarding an increase in its borrowing facilities which is required to manage this position and are also considering alternative sources of
finance. In addition, certain financial covenants relating to the group's bank borrowings were breached subsequent to the half year period
end.
The directors believe that the group will be able to reach agreement with its bankers regarding appropriate levels of funding or find
alternative sources of finance and accordingly this interim financial information has been prepared on a going concern basis. However, the
directors do recognise that there is a material uncertainty related to this situation which, together with the loss reported for the six
month period may cast significant doubt on the group's ability to continue as a going concern.
Transition to IFRS
IFRS 1 grants certain exemptions from the full requirements of IFRS in the transition period. The following exemptions have been taken
in these consolidated financial statements:-
i. IFRS 3 - Business Combinations
The group has elected not to apply IFRS 3 "Business Combinations" retrospectively to acquisitions that took place prior to 1 September
2006. As a result, the carrying amount of goodwill in the UK GAAP balance sheet at 31 August 2006 is brought forward to the IFRS opening
balance sheet without adjustment.
ii. IFRS 1 - Fair value or revaluation as deemed cost (IFRS 1)
As permitted under IFRS 1 the group has elected to measure certain items of property, plant and equipment at the date of transition to
IFRS at their fair value and for that fair value to be used as the asset's deemed cost at that date. The "Revaluation reserve" arising under
UK GAAP has been reclassified within "Retained earnings".
Basis of consolidation
The consolidated financial information incorporates that of Cains Beer Company PLC and all of its subsidiary undertakings for the
period.
In preparing this half yearly report, any intra-group balances, unrealised gains and losses or income and expenses arising from
intra-group trading are eliminated. Where accounting policies used in individual financial statements of a subsidiary company differ from
group policies, adjustments are made to bring these policies in line with group policies.
Subsidiaries are entities over which the group has the power to govern the financial and operating policies to obtain economic benefit
to the group. Subsidiary companies acquired during the period are consolidated using the purchase method. The results of subsidiary
companies acquired are included in the consolidated income statement from the effective date of acquisition.
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.
The excess of cost of acquisition over the fair values of the group's share of identifiable net assets acquired is recognised as
goodwill. Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition)
is recognised directly in the Income Statement.
On 7 June 2007 Cains Beer Company PLC acquired Robert Cain & Company Limited. This was accounted for as a reverse acquisition with
Robert Cain & Company Limited being deemed to be the acquirer. A reverse acquisition reserve of �16,207,000 arose as a result of this
transaction. Goodwill amounting to �6,195,000 arose on the difference between the fair value of the consideration and the fair value of the
net assets acquired in Cains Beer Company PLC at the date of the reverse acquisition.
Revenue recognition
Revenue in respect of sales is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and
the amount of revenue can be measured reliably. Revenue comprises sales net of discounts, rents receivable and services rendered excluding
value added tax.
Pensions
The group operates two defined contribution pension schemes. Contributions payable by the group to these schemes are charged to the
income statement in the period to which they relate. All such schemes are defined contribution arrangements, the assets of which are held
separately from the group.
Finance costs
Finance costs are charged to the profit and loss account over the term of the debt so that the amount charged is at a constant rate on
the carrying amount. Finance costs include issue costs, which are initially recognised as a reduction in the proceeds of the associated
capital instrument.
Taxation
Current tax is based on taxable profit for the period and any adjustment to tax payable in respect of previous periods. Taxable profit
differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not accounted for if it arises
from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised. The carrying amount of the deferred tax asset is reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax
assets and liabilities on a net basis.
Goodwill
Goodwill represents the difference between the cost of the business combination and the fair value of identifiable assets, liabilities
and contingent liabilities acquired. Identifiable intangibles are those which can be sold separately or which arise from legal rights
regardless of whether those rights are separable. Goodwill is recognised in the balance sheet as an intangible asset and is not amortised.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for
impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. Goodwill is
allocated to cash generating units and is tested annually for impairment. Any impairment is recognised immediately in the income statement
and is not subsequently reversed.
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation. Depreciation is calculated to write off the cost of each asset in
equal annual instalments over its expected useful life, as follows:
Freehold Property - 50 years
Leasehold property
- long lease - 50 years
- short lease - period of lease
Brewery plant, equipment, fixtures and vehicles - 5 - 25 years
No depreciation is provided on freehold land
The carrying values of fixed assets are reviewed for impairment when a triggering event arises that indicates assets might be impaired.
Impairment is assessed by comparing the carrying value of the asset against the higher of its realisable value and its value in use. Any
provision for impairment is charged to the profit and loss account in the year concerned. Useful lives and residual values are reviewed
annually.
Business Combinations
Business combinations are accounted for using the purchase method. The cost of acquisition is measured as the aggregate of the fair
values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange
for control of the acquiree, plus any costs attributable to the business combination. The acquiree's identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition under IFRS 3 'Business Combinations' are recognised at fair value at the
acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5
'Non-Current Assets Held for Sale and Discontinued Operations', which are recognised and measured at fair value less costs to sell.
Inventories
Inventories are stated at the lower of cost incurred in bringing each product to its present location and condition and net realisable
value, as follows:
Raw materials and goods for resale - purchase cost on a first-in first-out basis.
Work in progress and finished goods - cost of direct materials, direct labour and attributable overheads based on a normal level of
activity.
Net realisible value is based on estimated selling price less any further costs of sale.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprises cash at bank and short term deposits with an original maturity of three months
or less. For the purposes of the consolidated cash flow statement, cash and cash equivalents consists of cash and cash equivalents, as
previously defined, net of outstanding bank overdrafts.
Provisions
A provision is recognised in the balance sheet when the group has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the event is material,
provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability.
Leases and hire purchase contracts
Assets acquired under leases and hire purchase contracts are capitalised and disclosed under property, plant and equipment at their
estimated fair value, or, if lower, the present value of the minimum lease payments on the inception of each lease or contract and
depreciated over their estimated useful lives. The capital element of the future payments is treated as a liability and the total finance
charge is allocated over the period of the lease or contract in such away as to give a constant charge on the outstanding liability.
Operating lease rentals payable or receivable are charged or credited to the income statement over the lease term.
Loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction
costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method. Gains and losses are recognised in net profit or loss when the liabilities are derecognised as well as through the
amortisation process. Borrowing costs are recognised as an expense when incurred.
Convertible loans
The component of the convertible loan that exhibits the characteristics of a liability is recognised as a liability in the balance
sheet, net of transaction costs. On issuance of the convertible loan, the fair value of the liability component is determined using a market
rate for an equivalent non-convertible bond and this amount is carried as a long term liability on the amortised cost basis until
extinguished on conversion or redemption.
Where applicable the remainder of the proceeds is allocated either to the conversion option that is recognised and included in
shareholders' equity or the fair value of the derivative element that is recognised as a financial liability in the balance sheet, where it
meets the definition of a financial liability. Any movement in the derivative element is recorded in the income statement, within finance
costs.
On redemption the loan is repaid at par and any derivative element is released through the income statement.
Financial Instruments
In relation to the disclosures made in the financial information:
- short term receivables and payables are treated as financial assets and liabilities; and
- the group does not hold or issue derivative financial instruments for trading purposes.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or
losses on translation are included in the income statement. Non-monetary items carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated but remain at the exchange rate at the date of the transaction.
Government Grants
Government grants received towards capital expenditure are treated as deferred income and credited to the income statement over the
expected useful economic lives of the relevant assets. Government grants received towards revenue expenditure are credited to the income
statement in the year of receipt.
Standards, Interpretations and Amendments to Published Standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards applicable to the group have been published that are
mandatory for the group's accounting periods beginning on or after 27 October 2008 or later periods but which the group has not early
adopted, as follows:
IAS 1, Presentation of financial statements, revised 2007 (effective 1 January 2009)
IAS 1, Presentation of financial statements, revised 2008 (effective 1 January 2009)
IAS 23, Borrowing Costs, revised 2007 (effective 1 January 2009)
IAS 27, Consolidated and Separate Financial Statements, revised 2008 (effective 1 July 2009)
IAS 27, Consolidated and Separate Financial Statements, revised 2008 (effective 1 January 2009)
IAS 28, Investment in Associates, revised 2008 (effective 1 July 2009)
IAS 31, Interests in Joint Ventures, revised 2008 (effective 1 July 2009)
IAS 32, Financial Instruments: Presentation, revised 2008 (effective 1 January 2009)
IFRS 1, First-time Adoption of International Financial Reporting Standards, revised 2008 (effective 1 January 2009)
IFRS 2, Share-based Payment, revised 2008 (effective 1 January 2009)
IFRS 3, Business Combinations, revised 2008 (effective 1 January 2009)
IFRS 8, Operating Segments (effective 1 January 2009)
The Directors also do not consider that the adoption of the amendments resulting from the May 2008 Annual Improvements Project will
result in a material impact on the financial information of the group. These amendments are effective for accounting periods beginning on or
after 1 January 2009, with the exception of the amendment to IFRS 5 which is effective for accounting periods beginning on or after 1 July
2009.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the group's accounting policies, the directors are required to make judgements, estimates and assumptions about
the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised.
2 Loss per share
The calculation of the loss per ordinary share is based on the losses for the period and the weighted average number of ordinary shares
deemed to be in issue during the period on a reverse acquisition accounting basis as set out below.
Six Six Fourteen
months months months
to 27 April 2008 to 30 April 2007 to 28 October 2007
Loss for the period (�000) (4,612) (691) (2,274)
Interest on loan stock 106 - 88
****** ****** ******
Loss before interest on loan (4,506) (691) (2,186)
stock
****** ****** ******
Weighted average number of 151,107,403 66,713,034 95,178,593
shares for basic earnings per
share
Issuable on conversion of loan 50,000,000 - 16,864,608
stock
****** ****** ******
Weighted average number of 201,107,403 66,713,034 112,043,201
shares for diluted earnings
per share
****** ****** ******
Basic loss per share (pence) 3.05 1.04 2.39
****** ****** ******
Diluted loss per share (pence) 3.05 1.04 2.39
****** ****** ******
Shares issuable on the conversion of loan stock have an anti-dilutive effect on loss per share therefore basic and diluted loss per
share for the periods are the same.
3 Reconciliation between UK GAAP and IFRS
For all periods up to and including the fourteen month period ended 28 October 2007 the group prepared its financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP). The group's financial statements for the year ending 26
October 2008 will be the first annual statements that will comply with International Financial Reporting Standards (IFRS). This financial
information for the six months ended 27 April 2008 has been prepared on the basis set out in the accounting policies. In preparing its
opening IFRS balance sheet at 1 September 2006 (the group's date of transition to IFRS), and comparative information for the six months
ended 30 April 2007 and the fourteen months ended 28 October 2007, the group has adjusted amounts previously reported in the financial
statements prepared in accordance with UK GAAP.
This section explains the principal adjustments made by the group in restating its UK GAAP balance sheet at 1 September 2006, its half
year results for the six months ended 30 April 2007 and its previously published UK GAAP financial statements for the fourteen months ended
28 October 2007.
Reconciliation of Equity as at 1 September 2006
UK GAAP Effect of transition to IFRS IFRS
IAS 12 Income Taxes IFRS 1 Deemed Cost
�000 �000 �000 �000
Non-current assets
Intangible assets 30 - - 30
Property, plant and equipment 8,984 - - 8,984
****** ****** ****** ******
9,014 - - 9,014
****** ****** ****** ******
Current assets
Inventories 875 - - 875
Trade and other receivables 4,544 - - 4,544
Cash and cash equivalents 103 - - 103
****** ****** ****** ******
5,522 - - 5,522
****** ****** ****** ******
Total assets 14,536 - - 14,536
****** ****** ****** ******
Current liabilities
Trade and other payables (6,059) - - (6,059)
Financial liabilities (2,843) - - (2,843)
****** ****** ****** ******
(8,902) - - (8,902)
****** ****** ****** ******
Non-current liabilities
Financial liabilities (56) - - (56)
Other payables (103) - - (103)
Deferred tax liabilities - (2,138) - (2,138)
****** ****** ****** ******
(159) (2,138) - (2,297)
****** ****** ****** ******
Total liabilities (9,061) (2,138) - (11,199)
****** ****** ****** ******
Net assets 5,475 (2,138) - 3,337
****** ****** ****** ******
Equity
Share capital 667 - - 667
Other reserves (657) - - (657)
Revaluation reserve 7,126 (2,138) (4,988) -
Retained earnings (1,661) - 4,988 3,327
****** ****** ****** ******
Equity attributable to equity 5,475 (2,138) - 3,337
holders of the parent
****** ****** ****** ******
Reconciliation of results for the six months ended 30 April 2007
UK GAAP Effect of transition to IFRS
IFRS
IFRS 3 Business
Combinations
�000 �000 �000
Continuing operations
Revenue 12,528 - 12,528
Cost of sales (11,471) - (11,471)
Selling and distribution costs (1,685) 3 (1,682)
and administrative expenses
****** ****** ******
Operating loss (628) 3 (625)
Finance costs (66) - (66)
****** ****** ******
Loss before tax (694) 3 (691)
****** ****** ******
Taxation - - -
****** ****** ******
Loss for the period (694) 3 (691)
****** ****** ******
Reconciliation of Equity at 30 April 2007
UK GAAP Effect of transition to IFRS IFRS
IAS 12 Income Taxes IFRS 1 Deemed Cost IFRS 3 Business
Combinations
�000 �000 �000 �000 �000
Non-current assets
Intangible assets 27 - - 3 30
Property, plant and equipment 8,970 - - - 8,970
****** ****** ****** ****** ******
8,997 - - 3 9,000
****** ****** ****** ****** ******
Current assets
Inventories 818 - - - 818
Trade and other receivables 4,823 - - - 4,823
Cash and cash equivalents - - - - -
****** ****** ****** ****** ******
5,641 - - - 5,641
****** ****** ****** ****** ******
Total assets 14,638 - - 3 14,641
****** ****** ****** ****** ******
Current liabilities
Trade and other payables (6,623) - - - (6,623)
Financial liabilities (3,274) - - - (3,274)
****** ****** ****** ****** ******
(9,897) - - - (9,897)
****** ****** ****** ****** ******
Non-current liabilities
Financial liabilities (40) - - - (40)
Other payables (78) - - - (78)
Deferred tax liabilities - (2,138) - - (2,138)
****** ****** ****** ****** ******
(118) (2,138) - - (2,256)
****** ****** ****** ****** ******
Total liabilities (10,015) (2,138) - - (12,153)
****** ****** ****** ****** ******
Net assets 4,623 (2,138) - 3 2,488
****** ****** ****** ****** ******
Equity
Share capital 667 - - - 667
Other reserves (657) - - - (657)
Revaluation reserve 7,126 (2,138) (4,988) - -
Retained earnings (2,513) - 4,988 3 2,478
****** ****** ****** ****** ******
Equity attributable to the 4,623 (2,138) - 3 2,488
equity holders of the parent
****** ****** ****** ****** ******
Reconciliation of results for the fourteen months ended 28 October 2007
UK GAAP Effect of transition to IFRS IFRS
IAS 12 IFRS 3 Business IAS 39 Financial
Income Combinations Instruments
Taxes
�000 �000 �000 �000 �000
Continuing operations
Revenue 43,220 - - - 43,220
Cost of sales (33,844) - - - (33,844)
Selling and distribution costs (11,058) - 20 - (11,038)
and administrative expenses
****** ****** ****** ****** ******
Operating loss (1,682) - 20 - (1,662)
Finance costs (1,091) - - (75) (1,166)
****** ****** ****** ****** ******
Loss before tax (2,773) - 20 (75) (2,828)
****** ****** ****** ****** ******
Taxation - 554 - - 554
****** ****** ****** ****** ******
Loss for the period (2,773) 554 20 (75) (2,274)
****** ****** ****** ****** ******
Reconciliation of equity at 28 October 2007
UK GAAP Effect of transition to IFRS IFRS
IAS 12 Income Taxes IFRS 1 Deemed Cost IFRS 3 Business IAS 39 Financial
Combinations Instruments
�000 �000 �000 �000 �000 �'000
Non-current assets
Intangible assets 732 - - 5,493 - 6,225
Property, plant and equipment 45,182 - - - - 45,182
Investments 180 - - - - 180
****** ****** ****** ****** ****** ******
46,094 - - 5,493 - 51,587
****** ****** ****** ****** ****** ******
Current assets
Inventories 2,167 - - - - 2,167
Trade and other receivables 7,284 - - - - 7,284
Cash and cash equivalents 2,669 - - - - 2,669
****** ****** ****** ****** ****** ******
12,120 - - - - 12,120
****** ****** ****** ****** ****** ******
Total assets 58,214 - - 5,493 - 63,707
****** ****** ****** ****** ****** ******
Current liabilities
Trade and other payables (12,774) - - - - (12,774)
Current tax liabilities (521) - - - - (521)
Financial liabilities (10,344) - - - - (10,344)
****** ****** ****** ****** ****** ******
(23,639) - - - - (23,639)
****** ****** ****** ****** ****** ******
Non-current liabilities
Financial liabilities (26,675) - - 154 (75) (26,596)
Other payables (60) - - - - (60)
Deferred tax liabilities (465) (1,623) - (5,627) - (7,715)
****** ****** ****** ****** ****** ******
(27,200) (1,623) - (5,473) (75) (34,371)
****** ****** ****** ****** ****** ******
Total liabilities (50,839) (1,623) - (5,473) (75) (58,010)
****** ****** ****** ****** ****** ******
Net assets 7,375 (1,623) - 20 (75) 5,697
****** ****** ****** ****** ****** ******
Equity
Share capital 1,511 - - - - 1,511
Share premium 19,239 - - - - 19,239
Other reserves (16,067) (39) - - - (16,106)
Revaluation reserve 6,919 (2,138) (4,781) - - -
Retained earnings (4,227) 554 4,781 20 (75) 1,053
****** ****** ****** ****** ****** ******
Equity attributable to the 7,375 (1,623) - 20 (75) 5,697
equity holders of the parent
****** ****** ****** ****** ****** ******
Description of Key IFRS Adjustments
The following commentary describes the most significant adjustments arising from the transition to IFRS.
Business Combinations (IFRS 3)
Under IFRS 3, goodwill is not amortised on a straight-line basis but instead is subject to annual impairment testing.
The fair value of the assets and liabilities acquired were adjusted to reflect deferred tax liabilities (as detailed below) with a
consequent increase of �5,627k in the goodwill recognised on acquisition.
Income Taxes (IAS 12)
IAS 12 'Income Taxes' requires deferred tax to be accounted for on all temporary differences rather than just timing differences as
under UK GAAP. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against
which temporary differences can be utilised.
No deferred tax asset was recognised under UK GAAP in respect of losses on the ground that the availability of such future profits
remains uncertain. This treatment remains the same under IFRS.
Under UK GAAP deferred tax liabilities were not normally recognised on revaluations of property, plant and equipment or on previous
gains rolled over into property, plant and equipment. Under IFRS these liabilities are recognised. The deferred tax liability on
revaluations at 1 September 2006 is �2,138k.
Additional deferred tax liabilities recognised on the reverse acquisition of Cains Beer Company PLC comprise �3,045k on revaluations and
�2,582k on previous gains rolled over.
The deferred tax rate applicable at 1 September 2006, 30 April 2007 and at the reverse acquisition of Cains Beer Company PLC was 30% and
at 28 October 2007 was 28%.
Cash flow
None of the IFRS adjustments relate to cash and therefore there is no impact on cash flows.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Cains Beer (LSE:CBC)
過去 株価チャート
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Cains Beer (LSE:CBC)
過去 株価チャート
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