Retailer price pressure, cold weather in Kenya and disruption caused by last year’s ash cloud culminated in World Flowers posting a £4.4m loss before it ceased trading on 2 May 2011, The Grocer can reveal.

World Flowers was a major supplier of cut flowers to UK multiples. Its closure followed a complex corporate restructuring which led to its business transferring to Dutch Flower Group.

The company’s accounts for the year to 31 August 2010, published last week, shed new light on the extraordinary events that occurred prior to its closure.

The accounts reveal pre-tax losses rocketed 225.4%, to £4.38m despite a decrease of only 5.4% in turnover, to £79.14m.

The directors blamed last year’s poorer performance on a decline in volumes of stems traded and increased pressure on raw materials.

They admitted the company had lost some product lines to competitors during the period and that profit margins had been reduced on several key category lines in the wake of price pressure from UK multiples.

Atypical weather patterns had caused a spike in the company’s costs after an unusually cold period in Kenya, a key supply hub, tightened supply and forced the company to source more expensive flowers from elsewhere.

The ash from the eruption of the Icelandic volcano Eyjafjallajökull in April 2010 had also disrupted supply, but estimated losses of £360,000 had been mitigated by a £285,000 insurance recovery, the directors added.

There was also an internal investigation into company funds being misappropriated, but this had had little financial impact on the business, the directors said.

“Steps have been taken to terminate the employment of the individual concerned,” they added.

On 5 April, World Flowers Owner Mavuno announced a “strategic alliance” with Dutch Flower Group, resulting in World Flowers’ trade book and selected assets transferring to Westflora BV, a Dutch Flower Group subsidiary.

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