TIDMKITW
RNS Number : 9458C
Kitwave Group PLC
28 February 2022
28 February 2022
Kitwave Group plc
("Kitwave", the "Group" or the "Company")
Final Results for the twelve months ended 31 October 2021
Kitwave Group plc (AIM: KITW), the delivered wholesale business,
is pleased to announce its final results for the twelve months
ended 31 October 2021.
During the twelve months being reported, the Group traded in
line with the Board's expectations. The results were impacted by
COVID-19 lockdown restrictions and closures within the leisure and
hospitality sectors. Since April 2021, trading has returned close
to pre-pandemic levels and the Directors are pleased to confirm the
Group is currently trading slightly ahead of market
expectations.
Investors should note that the below comparative prior period
was for the 18 months to 31 October 2020.
Financial summary
-- Revenues of GBP380.7 million (FP20: GBP592.02 million)
-- Gross profit margin maintained at 18% during the year (FP20: 18%)
-- Adjusted operating profit of GBP7.1 million (FP20: GBP16.5 million)
-- Profit before tax increased by 63% to GBP2.1 million (FP20: GBP1.3 million)
-- GBP7.9 million net cash generated from operations (FP20: GBP35.9 million)*
-- Pre-tax operational cash conversion of 85% (FP20: 151%)*
* For more information on alternative performance measures
please see the glossary at the end of the announcement.
The Board has declared that it is recommending a final dividend
of 4.5 pence per ordinary share, subject to approval at the Annual
General Meeting to be held on 25 March 2022, which will, if
approved, result in a total dividend for the year of 6.75 pence per
ordinary share.
Admission to AIM
-- Significantly over-subscribed Placing and Admission to AIM on
24 May 2021, raising gross proceeds of GBP64.0 million for the
Company and GBP17.6 million for the Selling Shareholders.
-- Gross proceeds for the Company to be used to support the
Group's successful buy-and-build strategy, enhance the profile of
the Group and its brands, improve Kitwave's position with key
suppliers, strengthen the Group's balance sheet, and provide the
Group with greater ability to incentivise and retain key employees
going forward.
-- On Admission, Stephen ("Steve") Smith, Independent
Non-Executive Chairman, and Gerard Murray, Independent
Non-Executive Director, were appointed to the Board.
Operational highlights
-- The Group opened a new 70,000 sq. ft distribution centre in
Luton as a replacement for the previous site at Luton airport. The
centre was delivered on time and on budget and specifically
commissioned to cater for Frozen & Chilled product operations.
The ability to store in excess of 5,000 pallets in highly efficient
cold store conditions will ensure that the Group is well placed to
meet future growth expectations and peak summer demands of
Kitwave's independent customers. This upgraded facility replaced
the previous Luton distribution centre.
-- Work is progressing on a new foodservice warehouse in
Wakefield, expected to be opened in March 2022. This will replace
the existing inherited site in Wakefield that is no longer fit for
purpose.
Post-period end
-- Appointment of Ben Maxted, Group Operations Director and Head
of the Frozen & Chilled division, to the Board as Chief
Operating Officer.
-- Acquisition of the entire issued share capital of M.J. Baker
Foodservice Limited, the South West's leading independent
foodservice supplier, for a gross consideration of GBP24.5 million
paid in cash, funded from the existing banking facilities available
to the Group.
Paul Young, Chief Executive Officer of Kitwave, commented:
" It gives me great pleasure reporting on the first 12-month
period since the Company's listing on AIM in May 2021.
"While this year has been particularly challenging for our
independent customers, who have been forced to close or operate in
a reduced capacity for sustained periods of time as a result of
COVID-19 restrictions, it is clear that we are nearing a return to
some form of normality. The majority of our customers have
successfully guided themselves through the perils that the pandemic
brought upon us and, as a result, trading, which was heavily
impacted in the first six months of the year, has returned to
pre-pandemic levels over recent months.
"The division least impacted by COVID-19 restrictions was our
Frozen & Chilled division which remained extremely resilient
and operated close to pre-pandemic levels throughout the period.
Each of the Group's Ambient, Frozen & Chilled and Foodservice
divisions, however, experienced some degree of disruption during
the period.
" I would like to take this opportunity to thank all our
colleagues, as it is due to their exceptional commitment and
dedication that we have been able to continue operating and
providing a service to our customers throughout the year.
"In line with our buy-and-build strategy, we were delighted to
announce the acquisition of M.J. Baker post-period end. The Board
believes that the acquisition represents an excellent opportunity
to further develop the Group's reach into South West England and
Kitwave's foodservice offering.
"With the worst of the adverse effects brought about by COVID-19
now behind us, and barring any further lockdowns, the outlook for
Kitwave is a positive one. The Board continues to focus on
capitalising upon the UK's fragmented grocery and foodservice
wholesale market and generating value for the Group and its
shareholders through operational efficiencies, organic growth and
further acquisitions. The current year has started well and we look
forward to providing further updates on our progress in due
course."
- Ends -
For further information please contact:
Kitwave Group plc Tel: +44 (0) 191 259 2277
Paul Young, Chief Executive Officer
David Brind, Chief Financial Officer
www.kitwave.co.uk
Canaccord Genuity Limited Tel: +44 (0) 20 7523 8150
(Nominated Adviser and Sole Broker)
Bobbie Hilliam / Georgina McCooke
Alex Aylen - Sales
Yellow Jersey PR Tel: +44 (0) 20 3004 9512
(Financial media and PR)
Sarah Hollins / Henry Wilkinson /
James Lingfield
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. With the publication of this announcement,
this information is now considered to be in the public domain.
Company Overview
Founded in 1987, following the acquisition of a single-site
confectionery wholesale business based in North Shields, United
Kingdom, Kitwave is a delivered wholesale business, specialising in
selling and delivering impulse products, frozen and chilled foods,
alcohol, groceries and tobacco to approximately 39,000, mainly
independent, customers.
With a network of 27 depots, Kitwave is able to support delivery
throughout the UK to a diverse customer base, which includes
independent convenience retailers, leisure outlets, vending machine
operators, foodservice providers and other wholesalers, as well as
leading national retailers.
The Group's growth to date has been achieved both organically
and through a strategy of acquiring smaller, predominantly
family-owned, complementary businesses in the fragmented UK grocery
and foodservice wholesale market.
Kitwave Group plc (AIM: KITW) was admitted to trading on AIM of
the London Stock Exchange on 24 May 2021.
For further information, please visit www.kitwave.co.uk .
Chairman's statement
Overview
In this maiden Annual Report since the Company's Admission to
AIM in May 2021, it is a pleasure to welcome all our new
shareholders and to report on an excellent performance for Kitwave.
While the year brought a number of challenges as a result of
restrictions put in place by the Government in response to the
COVID-19 pandemic, these have been navigated successfully and we
remain well positioned to capitalise on any growth opportunities
that may arise.
Results summary
The business has demonstrated great resilience in both revenue
and operating profit during the year, with revenue of GBP380.7
million and adjusted operating profit of GBP7.1 million, compared
to GBP592.0 million and GBP16.5 million respectively in FP20 (an
18-month period).
Each of our divisions was disrupted to some degree by the
pandemic with many of our independent customers, particularly in
the hospitality and leisure sectors, forced either to close or to
operate at a reduced capacity. In contrast, our Frozen &
Chilled division was less impacted and operated close to
pre-COVID-19 levels throughout the year.
Since Kitwave was founded in 1987, the convenience and
foodservice customers that we serve have demonstrated their
resilience in the face of adversity. While many felt the effects of
the pandemic, most continue to show that they are capable of
getting through this difficult period and returning to normal
trading levels. This should only help to improve our future
trading.
Dividend
We intend to implement a progressive dividend policy to reflect
the cash flow and earnings potential of the business. Assuming
sufficient distributable reserves are available, and subject to
executing on our growth strategy, the intention is to divide the
total annual dividend between the interim and final dividends in
the approximate proportions one third and two third, respectively.
As a result, we declared an interim dividend of 2.25 pence per
ordinary share, paid on 27 August 2021 to shareholders on the
register at the close of business on 6 August 2021.
We are recommending a final dividend of 4.5 pence per ordinary
share, subject to approval at the AGM.
Admission
Kitwave's Admission to AIM on 24 May 2021 represented a
momentous landmark for the Company and its stakeholders.
Through a significantly over-subscribed Placing, supported by
high quality institutional investors, gross proceeds of GBP64.0
million were raised for the Company and GBP17.6 million for the
Selling Shareholders, giving the Company a market capitalisation of
approximately GBP105.0 million at Admission.
The gross proceeds received by the Company were used to reduce
existing debt and to pay expenses in connection with the
Placing.
We believe that our status as a publicly-traded entity will
support our successful buy-and-build strategy, enhance our profile
and our brands, improve our position with key suppliers, improve
our financial strength, and provide us with greater ability to
incentivise and retain key colleagues going forward.
Environmental, Social and Governance (ESG)
We are committed to ensuring the highest standards of ESG
practices across our business and recognise that we have social and
environmental responsibilities arising from our operations. We
continue to develop this framework and the associated measures that
will need to be considered.
Board
Central to our success has been the highly skilled and committed
management team. The team has a great understanding of the sectors
and customers we serve as well as the energy and leadership to
continue to grow the business.
On Admission of the Company to AIM the Board was strengthened
with the appointment of Gerard Murray as a Non-Executive Director.
On 25 November 2021 Ben Maxted was appointed to the Board as Chief
Operating Officer. We look forward to their continued contribution
in the years ahead.
Our people
I would like to take this opportunity to thank all our
colleagues at this time, as they have responded to these
unprecedented challenges with exceptional commitment. It is due to
their dedication that we have been able to continue operating and
providing a service to our customers throughout the year.
Outlook
Since I joined Kitwave as Chairman in 2016, the Group has
delivered exceptional growth both organically and by acquisition
with turnover increasing by over 40% in the three financial years
prior to the pandemic. While the impact of COVID-19 in the last 18
months has temporarily halted this development, we are well
positioned to recommence our strategy for growth with a strong
balance sheet and a capable management team.
In this regard, we continue to review opportunities for
acquisition that fit with our criteria. Post year end the Group
completed the acquisition of the entire issued share capital of
M.J. Baker Foodservice Limited. The acquisition is in line with
that criteria and will be an excellent addition to our Foodservice
division, expanding the Group's nationwide reach into the South
West. M.J. Baker is renowned for providing a quality delivered
solution to its customers, a key part of the Kitwave Group
ethos.
FY22 has started positively and, subject to no further major
disruptions to the sectors we serve, trading is expected to return
to pre-pandemic levels. Combined with the initiatives implemented
to drive organic growth, this should deliver value to our
shareholders.
Steve Smith
Chairman
25 February 2022
Chief Executive Officer's review
Overview
Having founded Kitwave in 1987, it gives me great pleasure in
reporting on the first period since the Company's listing on AIM in
May 2021. The Group was founded following the acquisition of a
single-site confectionery wholesale business based in North Shields
and has grown to become a leading delivered wholesaler operating
across the UK. From a team of 20 in 1987, we now have over 1,150
employees, 27 depots and a fleet of 430 vehicles servicing
approximately 39,000 customers.
While this year has been particularly challenging for our
independent customers, who have been forced to close or to operate
in a reduced capacity for sustained periods of time, it appears
that we are nearing a return to some form of normality and the
majority of our customers have successfully guided themselves
through the perils that the pandemic brought upon us.
With significant corporate and wholesale expertise and
experience across the Board and senior management team, the Group
is now looking to capitalise upon the fragmented grocery and
foodservice wholesale market in the UK, to drive growth and provide
value to its shareholders.
Divisional summary
Many of the Group's independent retailers and foodservice
provider customers were closed from November 2020 to March 2021 as
a result of COVID-19 lockdown restrictions. As such, the Group's
Ambient, Frozen & Chilled and Foodservices divisions all
experienced some degree of disruption. The least impacted was our
Frozen & Chilled division which was extremely resilient and
operated close to pre-pandemic levels throughout the period.
Ambient division
COVID-19 impacted revenue normally generated through the sale of
impulse products to vending machines so, as expected, trading for
the Ambient business was down versus the comparable period, but in
line with expectations.
FY21 FP20
GBP000 (12 months) (18 months)
Revenue 155,712 249,080
Gross profit 19,280 30,374
Gross margin
% 12% 12%
Frozen & Chilled division
The Frozen & Chilled division has now successfully
integrated the acquisition of Central Supplies, acquired in 2019,
and the division traded well throughout the period, despite some
customers being affected by COVID-19 and the restrictions on
footfall in the main leisure sites across the country. The division
maintains its strong presence in the market and looks set to
capitalise upon further opportunities, both through acquisitions
and growing its customer base, due to its strong nationwide
infrastructure and capabilities.
FY21 FP20
GBP000 (12 months) (18 months)
Revenue 163,895 230,546
Gross profit 34,923 52,468
Gross margin
% 21% 23%
Foodservice division
The biggest impact from COVID-19 was experienced in our
Foodservice division, particularly during the Christmas 2020
period, which is usually our busiest season. The prior year
comparable numbers include trading from December 2019; a pre-COVID
trading period. To mitigate this lost revenue, the division's
distribution expenses were reduced by 44% to GBP4.1 million after
accounting for the benefit of Coronavirus Job Retention Scheme
(CJRS) furlough grants presented as other income.
FY21 FP20
GBP000 (12 months) (18 months)
Revenue 61,087 112,390
Gross profit 14,382 24,332
Gross margin
% 24% 22%
Facilities
In February 2021, the Group was pleased to open its new 70,000
sq. ft distribution centre in Luton. The centre was delivered on
time and on budget and was commissioned to cater for Frozen &
Chilled product operations. With the ability to store over 5,000
pallets in highly efficient cold store conditions, the facility
ensures that the Group is well placed to meet future growth
expectations and peak summer demands of independent customers. This
upgraded facility replaced the previous Luton distribution
centre.
Work is continuing on the Group's new Foodservice warehouse in
Wakefield which is due to open in March 2022. This facility
replaces our current site in Wakefield and allows for the
integration of the Leeds depot.
Utilising the Group's own in-house established fleet of delivery
vehicles and drivers ensures we are not reliant on third party
logistics providers.
Strategy
The Group's strategy remains focused on capitalising upon the
fragmented UK grocery and foodservice wholesale market both through
the acquisition of smaller regional players and by driving organic
growth. This strategy has proven highly successful, with 11
wholesale distributors acquired and integrated into the Group since
2011.
The Board strongly believes that the Group's Admission to AIM
will support this strategy, as well as enhancing the Kitwave brand
in order to remain one of the leading delivered wholesale providers
in the UK.
Having operated for over three decades, the Group has a strong
brand presence and the platform from which to grow. With in excess
of 100 years of combined industry knowledge and expertise, we
believe that the Board and senior management team is more than
capable of delivering this strategy and generating value for the
Group and its shareholders.
Colleagues
We would like to take this opportunity to thank all our
colleagues for their hard work over this challenging period, which
has undoubtedly put the Group in the strong position it finds
itself in today. Similarly, we would like to thank all our new
shareholders for their support.
The Board holds its work colleagues in the highest regard. Their
dedication and loyalty have enabled us to weather the storm of
COVID-19. In return, the Group has, where possible, introduced
apprentice schemes and training courses which have enabled
colleagues to enhance their skills and qualifications. The Board
firmly believes that an investment in people is paramount to its
future success.
Summary and outlook
Having overcome what is expected to be the worst of the COVID-19
pandemic, the outlook for the Group's customer base is much more
positive. As we have seen time and time again, our independent
customers have proven their resilience through adapting their
business models where necessary and are now looking to return
trading back to pre-pandemic levels.
Following a strong second half of the year, as is usual for our
business, we look to 2022 with optimism. Barring any further
lockdown restrictions, we expect the Group to operate in the
current year at efficiency and volume levels similar to those prior
to the pandemic. The Group has at its disposal a pipeline of
exciting opportunities and is well placed to accelerate both
organic revenue and profit growth through its buy-and-build
strategy. We look forward to capitalising upon these opportunities
in the year ahead.
In line with this strategy post year end the Group completed the
acquisition of the entire ordinary share capital of M.J. Baker
Foodservice Limited. The acquisition of M.J. Baker is an excellent
addition to our Foodservice division and expands the Group's
nationwide reach into the South West. M.J. Baker is renowned for
providing a quality delivered solution to its customers, a key part
of the Kitwave Group ethos.
Paul Young
Chief Executive Officer
25 February 2022
Chief Financial Officer's review
Overview
Group revenue was GBP380.7 million, compared to GBP592.0 million
in the 18-month period to October 2021. The Group's Ambient, Frozen
& Chilled and Foodservice divisions have all experienced some
level of impact from the COVID-19 restrictions and as a result the
year covers two contrasting periods of trading.
The main adverse impact of COVID-19 restrictions was seen in the
first six months of the year with revenue levels across the
business returning to close to pre pandemic levels during the last
few months of the year. This compared to the prior 18-month period
with normal trading in the first 12 months being followed by
significant reductions in trade from the start of the pandemic in
April 2020 through to October 2020.
Gross profit margin has been maintained at 18% during the year.
Divisional margins are generally in line with expectations,
although the lockdown restrictions impacted the higher margin
Foodservice division more than the other divisions.
In total the Group received GBP2.3 million (FP20: GBP3.0
million) of Government support which has been shown as other income
and relates to CJRS claims made during the period.
In the 12 months ended October 2021 profit before tax increased
by 63% to GBP2.1 million (FP20: GBP1.3 million) despite the
challenges faced due to the COVID-19 restrictions in the first six
months of the year, demonstrating the resilience of the business
model.
Net finance costs of GBP4.3 million relate mainly to the costs
associated with the debt structure in place prior to the IPO and
the unwind of these facilities. Also included within finance costs
is interest relating to IFRS16 accounting of GBP1.1 million.
The statutory basic and diluted earnings per share for FY21 is
GBP0.02.
The Board is recommending a final dividend of 4.5 pence per
ordinary share, subject to approval at the AGM, which, if approved,
will result in a total dividend for the year of 6.75 pence per
share.
The Board intends to continue its progressive dividend policy
with the interim dividend generally being payable in August and the
final dividend normally being paid in April, in the approximate
proportions of one third and two thirds respectively. This
intention is subject to sufficient distributable reserves being
available and the Group being in a position to continue to execute
its growth plans.
Capital expenditure
The Group has continued to invest in its operations over the
financial period with GBP2.9 million invested in new assets and
GBP10.9 million of right-of-use assets. There was an investment of
GBP2.0 million in the new warehouse facility at Butterfield, Luton
that was funded from the proceeds received from the CPO on the
previous Luton site.
Investment in the vehicle fleet also continued with GBP0.3
million of new vehicles acquired and GBP1.2 million invested
through right-of-use vehicle replacement.
New leases were signed for the Butterfield site and three other
leases that created an additional GBP9.4 million of right-of-use
leasehold assets.
Cashflow
The net cashflow inflow from operating activities for the year
was GBP7.9 million after net investment in working capital of
GBP2.4 million. Payments of GBP2.9 million were made in the year to
acquire a further 20.5% shareholding in Central Supplies (Brierley
Hill) Ltd. The Group now owns 95.5% of the ordinary shares in this
company. After tax payments of GBP2.4 million this resulted in
operating cash conversion of 50%. Over the financial periods FP20
and FY21 pre-tax operational cash conversion* is 126%.
As a result of the IPO in May 2021, GBP61.9 million was raised
net of GBP2.1 million of costs. This was utilised to repay GBP51.3
million of debt and accrued interest and a further GBP1.0 million
of costs associated with the IPO. The balance of GBP9.6 million was
brought into the Group to reduce drawings on the existing working
capital facilities.
The Group paid an interim dividend in August 2021 of 2.25 pence
per ordinary share.
The net cash increase in the year was GBP4.6 million.
Financial position
At 31 October 2021, cash and cash equivalents totalled GBP5.0
million (FP20: GBP0.3 million).
The Group had GBP39.2 million of interest-bearing debt
facilities including GBP21.6 million of IFRS 16 lease
liabilities.
The Group renewed its CID facility in May 2021 at the time of
the IPO for a further two years to April 2023. The facility has one
covenant requiring net debt not to exceed three times EBITDA. As at
31 October 2022 this covenant was met.
There were undrawn facilities available to the Group of GBP28.4
million at the year end.
Taxation
The tax charge for the period was GBP1.0 million (FP20: GBP1.8
million) at an effective rate of 48% (FP20: 138%). The effective
rate is higher than the standard UK rate of corporation tax of 19%
(FP20: 19%) mainly due the non-deductible element of interest
charges and fair value adjustments to debt instruments under the
pre Admission debt structure. A full reconciliation of the tax
charge is shown in note 9 of the financial statements.
Share based payments
In the period there was an expense of GBP0.2 million (FP20:
GBPnil) for share-based payments.
This relates to a new Management Incentive Plan (MIP) that
commenced in July 2021 post the completion of the IPO in May 2021.
Under the MIP, which intends to retain and incentivise key
management personnel, the Company has issued Growth Shares in its
subsidiary, Kitwave Limited, to David Brind (Chief Financial
Officer) and Ben Maxted (Chief Operating Officer).
David Brind
Chief Financial Officer
25 February 2022
Consolidated statement of profit and loss and other
comprehensive income
Note Year ended 18 months
31 October ended 31
2021 October
2020
GBP000 GBP000
Revenue 3 380,694 592,016
Cost of sales (312,109) (484,842)
Gross profit 68,585 107,174
Other operating income 4 4,771 3,020
Distribution expenses (31,203) (44,014)
Administrative expenses (35,755) (54,156)
Operating profit 6,398 12,024
Analysed as:
Adjusted EBITDA 15,053 27,634
Amortisation of intangible
assets 11 (150) (144)
Depreciation 12,13 (7,817) (11,013)
CPO income 4 2,255 -
Restructuring costs 5 (1,257) (1,467)
Acquisition expenses 5 (181) (628)
Compensation for post combination
services 5 (1,278) (2,358)
Share based payment expense 5 (227) -
Total operating profit 6,398 12,024
Finance expenses 8 (4,274) (10,719)
Analysed as:
Interest payable on bank loans
and bank facilities 8 (1,327) (2,805)
Interest and finance charges
payable on loan notes and
debenture loans 8 (7,078) (7,788)
Finance charges on leases 8 (1,239) (1,579)
Fair value movement on financial
liabilities 8 5,410 1,453
Other interest 8 (40) -
Financial expenses (4,274) (10,719)
Profit before tax 2,124 1,305
Tax on profit on ordinary activities 9 (1,028) (1,805)
Profit/(loss) for the financial
period 1,096 (500)
Other comprehensive income - -
Total comprehensive income
/ (loss) for the period 1,096 (500)
Basic earnings per share 10 0.02 (0.02)
Diluted earnings per share 10 0.02 (0.02)
Non-GAAP measures
------------------------------------- ----- ----------- ---------
Basic underlying earnings per
share 10 0.08 0.37
Diluted underlying earnings
per share 10 0.08 0.37
Consolidated balance sheet as at 31 October
Note 2021 2020
GBP000 GBP000
Non-current assets
Goodwill 11 31,249 31,249
Intangible assets 11 431 412
Tangible assets 12 10,104 9,310
Right-of-use assets 13 23,188 20,600
Investments 14 20 20
Investment property 15 - 175
64,992 61,766
Current assets
Inventories 17 26,043 23,198
Trade and other receivables 18 52,814 44,558
Cash and cash equivalents 19 4,968 342
83,825 68,098
Total assets 148,817 129,864
Current liabilities
Other interest bearing loans
and borrowings 21 (14,620) (17,681)
Lease liabilities 21 (4,719) (5,202)
Trade and other payables 20 (47,332) (40,307)
Tax payable (370) (1,984)
(67,041) (65,174)
Non-current liabilities
Other interest bearing loans
and borrowings 21 - (43,079)
Lease liabilities 21 (19,917) (16,200)
Other financial liabilities 16 - (5,410)
Deferred tax liabilities 22 (275) (54)
(20,192) (64,743)
Total liabilities (87,233) (129,917)
Net assets/(liabilities) 61,584 (53)
Equity attributable to equity
holders of the
Parent Company
Called up share capital 25 700 1
Share premium account 25 64,183 12,993
Consolidation reserve 25 (33,098) (33,098)
Share based payment reserve 24 227 -
Retained earnings 29,572 20,051
Equity/(accumulated deficit) 61,584 (53)
Company balance sheet as at 31 October
Note 2021 2020
GBP000 GBP000
Non-current assets
Investments 14 12,993 12,993
12,993 12,993
Current assets
Trade and other receivables 18 63,081 7,752
Cash and cash equivalents 19 3,371 -
66,452 7,752
Total assets 79,445 20,745
Current liabilities
Trade and other payables 20 (227) (590)
(227) (590)
Non-current liabilities
Other financial liabilities 16 - (5,410)
Deferred tax assets 22 57 -
57 (5,410)
Total liabilities (170) (6,000)
Net assets 79,275 14,745
Equity attributable to equity
holders of the
Parent Company
Called up share capital 25 700 1
Share premium account 25 64,183 12,993
Share based payment reserve 24 227 -
Retained earnings* 14,165 1,751
Equity 79,275 14,745
*The Company's profit for the year was GBP3,989,000 (FP20:
GBP622,000)
Consolidated statement of change in equity
Called Share Share based Profit
up premium Consolidation payment and loss Total
share account reserve reserve account equity
capital
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 May 2019 1 12,993 (33,098) - 20,551 447
Total comprehensive income
for the period
Loss - - - - (500) (500)
Other comprehensive - - - - - -
income
Total comprehensive
loss for
the period - - - - (500) (500)
Balance at 31 October
2020 1 12,993 (33,098) - 20,051 (53)
Total comprehensive income
for the year
Profit - - - - 1,096 1,096
Other comprehensive - - - - - -
income
Total comprehensive
income for
the year - - - - 1,096 1,096
Transaction with owners, recorded
directly in equity
Share capital reduction - (10,000) - - 10,000 -
New share issuance 699 63,300 - - - 63,999
Costs directly attributable
to new share issuance - (2,110) - - - (2,110)
Transaction with owners
recorded directly in
equity dividends - - - - (1,575) (1,575)
Share based payment
expense - - - 227 - 227
Total contribution
by and transactions 60,541
with the owners 699 51,190 - 227 8,425
Balance at 31 October
2021 700 64,183 (33,098) 227 29,572 61,584
Company statement of change in equity
Called Share Share based Profit
up premium payment and loss Total
share account reserve account equity
capital
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 May 2019 1 12,993 - 1,129 14,123
Total comprehensive income for the
period
Profit - - - 622 622
Other comprehensive - - - - -
income
Total comprehensive
income for
the period - - - 622 622
Balance at 31 October
2020 1 12,993 - 1,751 14,745
Total comprehensive income for the
year
Profit - - - 3,989 3,989
Other comprehensive - - - - -
income
Total comprehensive
income for
the year - - - 3,989 3,989
Transaction with owners, recorded directly
in equity
Share capital reduction - (10,000) - 10,000 -
New share issuance 699 63,300 - - 63,999
Costs directly attributable
to new share issuance - (2,110) - - (2,110)
Transaction with owners
recorded directly in
equity - dividends - - - (1,575) (1,575)
Share based payment
expense - - 227 - 227
Total contribution
by and transactions
with the owners 699 51,190 227 8,425 60,541
Balance at 31 October
2021 700 64,183 227 14,165 79,275
Consolidated cash flow statement
Note Year ended 18 months
31 October ended 31
2021 October
2020
GBP000 GBP000
Cash flow from operating activities
Profit/(loss) for the period 1,096 (500)
Adjustments for:
Depreciation and amortisation 11,12,13 7,967 11,157
Financial expense 8 4,274 10,719
Profit on sale of property,
plant and equipment 4 (55) (5)
Net gain on remeasurement of
right-of-use assets and lease
liabilities 4 (124) -
Compensation for post combination
services 5 1,278 2,358
Equity settled share based
payment expense 5 227 -
Taxation 9 1,028 1,805
15,691 25,534
(Increase)/decrease in trade
and other receivables (8,244) 19,425
(Increase)/decrease in inventories (2,845) 11,456
Increase/(decrease) in trade
and other payables 8,671 (17,867)
13,273 38,548
Payments in respect of compensation
for post combination services 2 (2,925) -
Tax paid (2,432) (2,693)
Net cash inflow from operating
activities 7,916 35,855
Cash flows from investing activities
Acquisition of property, plant
and equipment (2,961) (3,125)
Proceeds from sale of property,
plant and equipment 248 358
Acquisition of subsidiary undertakings
(including
overdrafts and cash acquired) 2 - (13,535)
Net cash outflow from investing
activities (2,713) (16,302)
Cash flows from financing activities
IPO fund raise (net of expenses) 61,889 -
Proceeds from new loan 21 5,500 5,000
Net movement in invoice discounting 21 4,559 (6,941)
Interest paid 8,21 (5,093) (5,969)
Net movement in bank trade
loans 21 (4,750) (2,270)
Repayment of bank term loans 21 (21,863) (3,063)
Repayment of investor loans 21 (34,176) -
Payment of lease liabilities 21 (5,068) (7,173)
Dividends paid (1,575) -
Net cash outflow from financing
activities (577) (20,416)
Net increase/(decrease) in
cash and cash equivalents 4,626 (863)
Opening cash and cash equivalents 342 1,205
Cash and cash equivalents at
period end 19 4,968 342
Notes
1 Accounting policies
Kitwave Group plc (the "Company") is a public company limited by
shares and incorporated, domiciled and registered in England in the
UK. The registered number is 9892174 and the registered address is
Unit S3, Narvik Way, Tyne Tunnel Trading Estate, North Shields,
Tyne and Wear, NE29 7XJ.
The Group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group"). The
parent Company financial statements present information about the
Company as a separate entity.
The Group financial statements have been prepared and approved
by the Directors in accordance with International Financial
Reporting Standards ("IFRS") in conformity with the requirements of
the Companies Act 2006.
The Company financial statements were prepared in accordance
with the Companies Act 2006 as applicable to companies using
Financial Reporting Standard 101 'Reduced Disclosure Framework'
("FRS 101"). The Company applies the recognition, measurement and
disclosure requirements of IFRS, but makes amendments where
necessary in order to comply with Companies Act 2006.
The financial information set out above does not constitute the
Group or the Company's statutory accounts for the year ended 31
October 2021 or the financial period ended 31 October 2020.
Statutory accounts for the period ended 31 October 2020 have been
delivered to the registrar of companies, and those for the year
ended 31 October 2021 will be delivered in due course. The auditor
has reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under s498 (2) or (3)
of the Companies Act 2006.
In publishing the Company financial statements together with the
Group financial statements, the Company is taking advantage of the
exemption in s408 of the Companies Act 2006 not to present its
individual statement of profit and loss and related notes that form
a part of these approved financial statements.
The Company has applied the following exemptions in the
preparation of its financial statements:
-- A cash flow statement and related notes have not been presented;
-- Disclosures in respect of new standards and interpretations
that have been issued but which are not yet effective have not been
provided;
-- Disclosures in respect of transactions with wholly-owned
subsidiaries have not been made; and
-- Certain disclosures required by IFRS 13 Fair Value
Measurement and the disclosures required by IFRS 7 Financial
Instruments have not been provided.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to both periods presented in
these consolidated financial statements.
The consolidated financial statements include the results of all
subsidiaries owned by the Company per note 14. Certain of these
subsidiaries have taken exemption from an audit for the year ended
31 October 2021 by virtue of s479A Companies Act 2006. To allow
these subsidiaries to take the audit exemption, the Company has
given a statutory guarantee of all the outstanding liabilities as
at 31 October 2021. The subsidiaries which have taken this
exemption from audit are:
-- Alpine Fine Foods Limited;
-- TG Foods Limited;
-- Anderson (Wholesale) Limited;
-- Angelbell Limited;
-- Phoenix Fine Foods Limited; and
-- Supplytech Limited
1.1 Critical accounting estimates and judgements
The preparation of financial statements requires the Directors
to make judgements, estimates and assumptions concerning the future
performance and activities of the Group. There are no significant
judgements applied in the preparation of these financial
statements. Estimates and assumptions are based on the historical
experience and acquired knowledge of the Directors, the result of
which forms the basis of the judgements made about the carrying
value of assets and liabilities that are not clear from external
sources. In concluding that there are no significant risks of
material adjustment from accounting estimates and judgements, the
Directors have reviewed the following:
Impairment of goodwill
In accordance with IAS 36 "Impairment of Assets", the Board
identifies appropriate Cash-Generating Units ("CGU's") and the
allocation of goodwill to these units. Where an indication of
impairment is identified the assessment of recoverable value
requires estimation of the recoverable value of the cash generating
units (CGUs). This requires estimation of the future cash flows
from the CGUs and also the selection of appropriate discount rates
in order to calculate the net present value of those cash flows.
There has been no impairment in the period.
Each of the CGU's has significant headroom under the annual
impairment review and the Directors believe that no reasonable
change in any of the above key assumptions would cause the carrying
value of the unit to materially exceed its recoverable amount.
Impairment of trade receivables
IFRS 9, Financial Instruments, requires that provisioning for
financial assets needs to be made on a forward-looking expected
credit loss model. This requires management to consider historic,
current and forward-looking information to determine the level of
provisioning required.
Management has assessed the ageing of the trade receivables,
their knowledge of the Group's customer base, and other economic
factors as indicators of potential impairment. Further information
is considered in note 27 of these financial statements.
Following review of the above accounting estimates and
judgements the Directors have concluded that there is no
significant risk of material adjustment to the carrying amount of
assets and liabilities within the next financial year.
1.2 Measurement convention
The financial statements are prepared on the historical cost
basis except that the following assets and liabilities are stated
at their fair value: financial instruments classified at fair value
through the statement of profit and loss, unlisted investments and
investment property.
1.3 Going concern
The financial information has been prepared on a going concern
basis which the Directors consider to be appropriate for the
following reasons.
As part of the food supply industry, the Group continued to be
affected by COVID-19 due to the lockdown restrictions that impacted
the Group's customer base during the first six months of the
financial year. Revenue amongst foodservice and vending customers
was adversely impacted by continued Government led lockdowns in the
'out of home' sector covering cafes, restaurants, bars and
hotels.
During the period, the Group continued to make use of the
Coronavirus Job Retention Scheme in divisions affected by lockdown
restrictions. Overall the Group's financial performance has been
robust and its position in the market has enabled a prompt return
to pre COVID-19 trading levels following the easing of trading
restrictions in April 2021.
The Group is cash generative and generated GBP13,273,000 of cash
from operating activities (before tax payments) in FY21,
illustrating the strong underlying operating model of the
Group.
On 24 May 2021, the Company announced a significantly
over-subscribed Placing and its admission to the AIM, raising gross
proceeds of GBP64,000,000 and achieving a market capitalisation of
GBP105,000,000. The Group has used the gross proceeds to de-gear
the balance sheet, fully repaying the investors subordinated loan
notes, investors mezzanine loan notes, the Bank Senior A and Bank
Senior B tranche and reducing the Group's advance under its invoice
discounting facility.
The de-gearing of the Group's balance sheet has significantly
reduced the interest liability to be serviced annually and has
provided a material improvement in the headroom on its remaining
working capital facilities.
Post year end, Kitwave Limited completed the acquisition of the
entire share capital of M.J. Baker Foodservice Limited ("M.J.
Baker"). The acquisition was funded through the Group's existing
facilities. and the acquisition will be incorporated into the
Group's existing Foodservice division.
The Group has prepared financial forecasts and projections for a
period of 12 months from the date of approval of this financial
information (the "going concern assessment period"), which take
into account the acquired balance sheet and trading forecast of
M.J.Baker, possible downsides including any further impact of
COVID-19 on the operations.
These forecasts show that the Group will have sufficient levels
of financial resources available both to meet its liabilities as
they fall due for that period and comply with remaining covenant
requirements on its working capital facilities.
Consequently, the Directors are confident that the Group and
Company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of this financial information and therefore have
prepared the financial statements on a going concern basis.
1.4 Basis of consolidation
The consolidated financial statements include the financial
statements of the Company and its subsidiary undertakings made up
to 31 October 2021. A subsidiary undertaking is an entity that is
controlled by the Company. The results of subsidiary undertakings
are included in the consolidated statement of profit and loss
account from the date that control commences until the date that
control ceases. Control is established when the Company is exposed
to, or has rights to, variable returns from its involvement with an
entity and has the ability to affect those returns through its
power over the entity. In assessing control, the Group takes into
consideration potential voting rights that are currently
exercisable.
In respect of the legal acquisition of Kitwave One Limited by
the Company in the year ended 30 April 2017, the principles of
reverse acquisition have been applied under IFRS 3. The Company,
via its 100% owned subsidiary Kitwave Investments Limited, is the
legal acquirer of Kitwave One Limited but Kitwave One Limited was
identified as the accounting acquirer of the Company. The assets
and liabilities of the Company and the assets and liabilities of
Kitwave One Limited continued to be measured at book value. By
applying the principles of reverse acquisition accounting the Group
is presented as if the Company has always owned Kitwave One
Limited. The comparative consolidated reserves of the Group were
adjusted to reflect the statutory share capital and share premium
of the Company as if it had always existed, adjusted for movements
in the underlying Kitwave One Limited's share capital and reserves
until the date of the acquisition. A consolidation reserve was
created which reflects the difference between the capital structure
of the Company and Kitwave One Limited at the date of acquisition
less any cash and deferred cash consideration for the
transaction.
1.5 Foreign Currency
Transactions in foreign currencies are translated to the Group
companies' functional currency at the foreign exchange rate ruling
at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are
retranslated to the functional currency at the foreign exchange
rate ruling at that date. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated to the
functional currency at foreign exchange rates ruling at the dates
the fair value was determined. Foreign exchange differences arising
on translation are recognised in the statement of profit and
loss.
1.6 Classification of financial instruments
Financial assets
Financial assets are classified at initial recognition, and
subsequently measured at amortised cost, Fair Value through Other
Comprehensive Income ("FVOCI") or Fair Value through the statement
of Profit and Loss ("FVTPL"). The classification of financial
assets under IFRS 9 is based on two criteria:
-- the Group's business model for managing the assets; and
-- whether the instruments' contractual cash flows represent
'Solely Payments of Principal and Interest' on the principal amount
outstanding (the "SPPI criterion").
A summary of the Group's financial assets is as follows:
Trade and other receivables* Amortised cost - hold to collect
business model and SPPI met
Cash and short-term deposits Amortised cost
Financial liabilities
Financial instruments issued by the Group are treated as equity
only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the
Company's exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability. Where the instrument
so classified takes the legal form of the Company's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares.
A summary of the Group's financial liabilities is as
follows:
Compensation for post combination services Fair value through
the statement of profit and loss
Bank loans and overdrafts Amortised cost
Trade and other payables* Amortised cost
*Prepayments, other receivables, other taxation and social
security payables and other payables do not meet the definition of
financial instruments.
Further information is included in note 27.
1.7 Non derivative financial instruments
Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose only of the
cash flow statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised
cost using the effective interest method.
Invoice discounting
The Group is party to an invoice discounting arrangement which
provides additional working capital up to the value of a set
proportion of its trade receivables balances. The advances are
secured against trade receivables (note 18). These are repayable
within 90 days of the invoice and carry interest at a margin of
2.25%. This is a committed facility expires in 2023. The net
movement of the balance is disclosed in the cash flow
statement.
Equity investments
Equity investments are instruments that meet the definition of
equity from the issuer's perspective: that is they do not contain
an obligation to pay and provide a residual interest in the assets
of the issuer. Equity investments are held at fair value through
the statement of profit and loss.
Investment property
Investment properties are properties which are held either to
earn rental income or for capital appreciation or for both.
Investment properties are stated at fair value. Any gain or loss
arising from a change in fair value is recognised in the statement
of profit and loss.
1.8 Other financial instruments
Derivative financial instruments
Derivative financial instruments are recognised at fair value.
The gain or loss on remeasurement to fair value is recognised
immediately in the statement of profit and loss. No hedge
accounting has been applied.
1.9 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Depreciation is charged to the statement of profit and loss on a
straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. Land is not depreciated.
The estimated useful lives are as follows:
-- Leasehold improvements straight line over the term of the lease
-- Freehold property 2% straight line
-- Plant and machinery 10-25% reducing balance and straight line
-- Fixtures and fittings 15-20% reducing balance and straight line
-- Motor vehicles 15-25% reducing balance and straight line
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
1.10 Business combinations
Business combinations are accounted for by applying the
acquisition method. Business combinations are accounted for using
the acquisition method as at the acquisition date, which is the
date on which control is transferred to the Group.
At the acquisition date, the Group measures goodwill at the
acquisition date as:
-- the fair value of the consideration (excluding contingent consideration) transferred; plus
-- estimated amount of the contingent consideration (see below): plus
-- the fair value of the existing equity interest in the acquiree; less
-- the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities and contingent
liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in the statement of profit and loss.
Any contingent consideration payable is recognised at fair value
at the acquisition date. Subsequent changes to the fair value of
the contingent consideration are recognised in the statement of
profit and loss.
Acquisitions prior to the date of transition to IFRSs
IFRS 1 grants certain exemptions from the full requirements of
Adopted IFRSs in the transition period. The Group and Company
elected not to restate business combinations that took place prior
to transition date of 1 May 2015. In respect of acquisitions prior
to 30 April 2015, goodwill is included at transition date on the
basis of its deemed cost, which represents the amount recorded
under UK GAAP which was broadly comparable save that goodwill was
amortised. On transition, amortisation of goodwill ceased as
required by IFRS 1.
1.11 Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units ("CGUs") and
is not amortised but is tested annually for impairment.
Intangible assets
Intangible assets are stated at costs less accumulated
amortisation. They relate to capitalised software and development
costs and are being amortised on a straight line basis over 4-5
years.
1.12 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is based on the weighted average principle.
The Group participates in rebate schemes with their suppliers.
Rebates are principally earned from suppliers on purchase of
inventory and are recognised at point of delivery to the Group.
Where the rebate earned relates to inventories which are held by
the Group at the period end, the rebates are deducted from the cost
of those inventories. Any rebates based on a volume of purchases
over a period are only recognised when the volume target has been
achieved.
1.13 Impairment excluding inventories and deferred tax assets
Non derivative financial assets - trade receivables
The Group recognises loss allowance for Expected Credit Losses
("ECLs") on trade receivables measured at amortised cost.
The Group measures loss allowances at an amount equal to
lifetime ECLs as the term of the asset is considered short.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECLs, the Group considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Group's historical experience and
informed credit assessment including forward looking
information.
The Group utilises the practical expediency for short term
receivables by adopting the simplified 'matrix' approach to
calculate expected credit losses. The provision matrix is based on
an entity's historical default rates over the expected life of the
trade receivables as adjusted for forward looking estimates.
The Group assumes that the credit risk on a financial asset has
increased if it is aged more than 90 days since delivery. This is
not relevant in all cases and management use its historical
experience and knowledge of the customer base to assess whether
this is an indicator of increased risk on a customer by customer
basis.
The Group considers the financial asset to be in default when
the borrower is unlikely to pay its obligations or has entered a
formal insolvency process or other financial reorganisation.
Loss allowances for financial assets measured at amortised costs
are deducted from the gross carrying amount of the assets.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset's
recoverable amount is estimated. For goodwill, and intangible
assets that have indefinite useful lives or that are not yet
available for use, the recoverable amount is estimated each year at
the same time.
The recoverable amount of an asset or CGU is the greater of its
value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the asset. For the purpose of impairment testing,
assets that cannot be tested individually are grouped together into
the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of
other assets or groups of assets (the "cash-generating unit" or
"CGU"). The goodwill acquired in a business combination, for the
purpose of impairment testing, is allocated to CGUs. Subject to an
operating segment ceiling test, for the purposes of goodwill
impairment testing, CGUs to which goodwill has been allocated are
aggregated so that the level at which impairment is tested reflects
the lowest level at which goodwill is monitored for internal
reporting purposes. Goodwill acquired in a business combination is
allocated to groups of CGUs that are expected to benefit from the
synergies of the combination.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in the statement of profit and
loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to
the units, and then to reduce the carrying amounts of the other
assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
1.14 Employee benefits
Defined contribution plans and other long term employee
benefits
A defined contribution plan is a post-employment benefit plan
under which the Group pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the
statement of profit and loss in the periods during which services
are rendered by employees.
Share-based payment transactions
Share-based payment arrangements in which the Company receives
goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions, regardless of how the equity instruments are obtained
by the Company.
The Group operates a Management Incentive Plan for certain
employees that incorporates a put option on the Company's ordinary
shares. The fair value at the grant date of the options is
recognised as an employee expense with a corresponding increase in
equity, over the period in which the employee becomes
unconditionally entitled to the awards.
The fair value of the awards granted is measured using an option
valuation model, taking into account the terms and conditions upon
which the awards were granted. The Monte Carlo option valuation
model was adopted for share based payment arrangements entered into
in the period ended 31 October 2021.
The amount recognised as an expense is adjusted to reflect the
actual number of awards for which the related service and
non-market vesting conditions are expected to be met, such that the
amount ultimately recognised as an expense is based on the number
of awards that do meet the related service and non-market
performance conditions at the vesting date. For share-based payment
awards with non-vesting conditions, the grant date fair value of
the share-based payment is measured to reflect such conditions and
there is no true-up for differences between expected and actual
outcomes.
Under IFRS 3 the contingent payment which has been agreed for
the remaining 5% of the share in Central Supplies (Brierley Hill)
Ltd is classified as remuneration for post-combination services, as
consideration for the shares is linked to an employment
condition.
1.15 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, that can be reliably measured, and it is probable that
an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects risks specific to
the liability.
1.16 Revenue
IFRS 15 "revenue from contracts with customers" has been
adopted. The standard establishes a principles-based approach for
revenue recognition and is based on the concept of recognising
revenue for performance obligations only where they are satisfied,
and the control of goods or service is transferred. In doing so,
the standard applies a five-step approach to the timing of revenue
recognition and applies to all contracts with customers, except
those in the scope of other standards. It replaces the separate
models for goods, services and construction contracts under the
previous accounting standards. Following an assessment of the
impact of IFRS 15 and based on the straight forward nature of the
Group's revenue streams with the recognition of revenue at the
point of sale and the absence of significant judgement required in
determining the timing of transfer of control, the adoption of IFRS
15 has not had a material impact on the timing or nature of the
Group's revenue recognition.
The principal performance obligation is discharged on
delivery/collection of the products by the customer at which point
control of the goods has transferred. Customer discounts and
rebates comprise variable consideration and are accounted for as a
reduction in the transaction price, based on the most likely
outcome basis.
The most likely outcome model is used due to the simple nature
of rebate agreements and the limited number of possible outcomes -
principally whether or not the customer achieved the required level
of purchases.
1.17 Financing income and expenses
Financing expenses comprise interest payable, finance charges on
put option liabilities and finance leases recognised in the
statement of profit and loss using the effective interest method,
unwinding of the discount on provisions, and net foreign exchange
losses that are recognised in the statement of profit and loss (see
foreign currency accounting policy). Borrowing costs that are
directly attributable to the acquisition, construction or
production of an asset that takes a substantial time to be prepared
for use, are capitalised as part of the cost of that asset.
Financing income comprise interest receivable on funds invested,
finance income on the put option liability, and net foreign
exchange gains.
Interest income and interest payable is recognised in the
statement of profit and loss as it accrues, using the effective
interest method. Dividend income is recognised in the statement of
profit and loss on the date the entity's right to receive payments
is established. Foreign currency gains and losses are reported on a
net basis.
1.18 Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the statement of profit and loss
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
1.19 Leases
IFRS 16, Leases, became effective in the period ended 31 October
2020. The Group adopts the requirements of IFRS 16 as follows:
The Group has lease arrangements in place for properties,
vehicles, fork lift trucks and other equipment including plant and
machinery. At the inception of the lease agreement, the Group
assesses whether the contract conveys the right to control the use
of an identified assets for a certain period of time and whether it
obtains substantially all of the economic benefits from the use of
that assets in exchange for consideration. The Group recognises a
lease liability and a corresponding right-of-use asset with respect
to all such lease arrangements.
A right-of-use asset is capitalised on the balance sheet at
cost, which comprises the present value of the future lease
payments at inception of the lease. For those leases commencing
prior to adoption of IFRS 16, the modified retrospective approach
has been adopted on transition to value the right-of-use asset and
lease liability.
Right-of-use assets are depreciated using a straight line method
over the shorter of the life of the asset or the lease term and are
assessed in accordance with IAS 36 'Impairment of Assets' to
determine whether the asset is impaired.
The lease liability is initially measured at the present value
of the lease payments as outlined above for the right-of-use asset
and is increased by the interest cost on the lease liability,
subsequently reduced by the lease payments made. Lease liabilities
are classified between current and non-current on the balance
sheet.
The key estimate applied by the Directors relates to the
assessment of the incremental borrowing rate adopted by the Group
to discount the future lease rentals to present value in order to
measure the lease liabilities. A rate has been applied to each
asset class supported by quotes from manufacturers for financing
and the Group's weighted average cost of capital.
The Group has relied upon the exemption under IFRS 16 to exclude
the impact of low-value leases and leases that are short-term in
nature (defined as leases with a term of 12 months or less). Costs
on these leases are recognised on a straight-line basis as an
operating expense within the statement of profit and loss. All
other leases are accounted for in accordance with this policy as
determined by IFRS 16.
1.20 Government Grants
The Group has elected to present grants related to income
separately under the heading "Other income" within the statement of
profit and loss. This income represents the funding provided by the
Government in relation to the Coronavirus Job Retention Scheme.
This funding is applicable on furlough of employees subject to
Government criteria which has been met in each operating entity.
The Directors do not consider there to be a material risk that any
funding received will be repayable.
1.21 Exceptional items
Exceptional items are defined as income or expenses that arise
from events or transactions that are clearly distinct from the
normal activities of the Group and therefore are not expected to
recur frequently or regularly.
Such items have been separately presented to enable a better
understanding of the Group's operating performance. Details of
exceptional income relating to the CPO is presented in note 4,
exceptional expenses are presented in note 5.
1.22 Investments
Investments in subsidiaries are carried at cost less impairment
in the parent Company financial statements.
2 Acquisitions
Acquisitions in the 18 month period ended 31 October 2020
Central Supplies (Brierley Hill) Ltd
On 5 August 2019, the Group acquired 75% of the share capital of
Central Supplies (Brierley Hill) Ltd for a total consideration of
GBP6,558,000. The remaining share capital is subject to an
agreement to acquire it within 4 years of the acquisition, further
details are given below. The resulting goodwill of GBP1,248,000 was
capitalised and is subject to annual impairment testing under IAS
36.
The acquisition had the following effect on the Group's assets
and liabilities:
Fair value
GBP000
Non-current assets
Tangible assets 2,970
Investment property 175
Right-of-use assets 2,155
Current assets
Inventories 1,407
Trade and other receivables 7,131
Other receivables 3,135
Total assets 16,973
Current liabilities
Interest bearing loans and borrowings (3,487)
Lease liabilities (512)
Trade and other payables (5,495)
Corporation tax (437)
Non-current liabilities
Lease liabilities (1,643)
Deferred tax (89)
Total liabilities (11,663)
Net identifiable assets and liabilities 5,310
Goodwill 1,248
Purchase consideration and costs of acquisition paid
in period 6,558
The business was acquired as part of the Group's growth
strategy. Significant control was obtained through the acquisition
of 75% of the share capital.
No material intangible assets were identified. Goodwill
represents buying and other operating synergies.
The acquired undertaking made a profit of GBP780,000 from the
beginning of its financial year to the date of acquisition. In its
previous financial year the profit was GBP818,000 before
revaluations.
Following acquisition, the business contributed revenue of
GBP80,493,000 and operating profit of GBP2,644,000 to the Group for
the period ended 31 October 2020.
If the business had been acquired at the start of the Group's
financial period, being 1 May 2019, it would have added
GBP96,635,000 to Group revenue and GBP3,185,000 to Group operating
profit for the period ended 31 October 2020
A contingent payment, based on a fixed formula, has been agreed
for the remaining 25% of the share in Central Supplies (Brierley
Hill) Ltd. The payment is based on an employment condition under
IFRS 3 and is therefore classed as compensation for
post-combination services. Consequently, no non-controlling
interest is recognised, and goodwill is measured as the difference
between the initial consideration and 100% of the acquired
company's net assets. Further detail on the calculation of this
liability is detailed within note 27.
In the year ended 31 October 2021 an additional payment of
GBP2,925,000 was made to purchase the entire shareholding of one
minority shareholder and a proportion of the other remaining
minority shareholder's shareholding. The remaining shareholding
held by one minority shareholder is 5%.
This expense is accrued in administrative expenses as
compensation for post combination services.
There have been no subsequent adjustments made to the fair
values recognised on acquisition.
Alpine Fine Foods Limited
On 29 October 2019, the Group acquired the entire share capital
of Alpine Fine Foods Limited for a total consideration of
GBP2,505,000. The resulting goodwill of GBP2,690,000 was
capitalised and is subject to annual impairment testing under IAS
36.
The acquisition had the following effect on the Group's assets
and liabilities:
Fair value
GBP000
Non-current assets
Tangible assets 1,321
Right-of-use assets 355
Current assets
Inventories 625
Trade and other receivables 1,323
Total assets 3,624
Current liabilities
Interest bearing loans and borrowings (981)
Lease liabilities (261)
Trade and other payables (1,060)
Other payables (1,341)
Corporation tax (50)
Non-current liabilities
Lease liabilities (144)
Deferred tax 28
Total liabilities (3,809)
Net identifiable assets and liabilities (185)
Goodwill 2,690
Purchase consideration and costs of acquisition paid
in period 2,505
The business was acquired as part of the Group's growth
strategy. Significant control was obtained through the acquisition
of 100% of the share capital.
No material intangible assets were identified. Goodwill
represents buying and other operating synergies.
The acquired undertaking made a profit of GBP232,000 from the
beginning of its financial year to the date of acquisition. In its
previous financial year the loss after tax was GBP38,000.
Following acquisition, the business contributed revenue of
GBP3,831,000 and operating profit of GBP11,000 to the Group for the
period ended 31 October 2020.
If the business had been acquired at the start of the Group's
financial period, being 1 May 2019, it would have added
GBP10,537,000 to Group revenue and GBP222,000 to Group operating
profit for the period ended 31 October 2020
The trade and assets of Alpine Fine Foods Limited were hived up
into David Miller Frozen Foods Limited on 24 February 2020.
There have been no subsequent adjustments made to the fair
values recognised on acquisition.
3 Segmental information
The following analysis by segment is presented in accordance
with IFRS 8 on the basis of those segments whose operating results
are regularly reviewed by the Board (the Chief Operating Decision
Maker as defined by IFRS 8) to assess performance and make
strategic decisions about allocation of resources
The Group has the following operating segments:
-- Ambient: Provides delivered wholesale of ambient food, drink and tobacco products;
-- Frozen & Chilled: Provides delivered wholesale of frozen and chilled food products; and
-- Foodservice: Provides delivered wholesale of alcohol, frozen
and chilled food to trade customers.
Corporate contains the central functions that are not devolved
to the business units
These segments offer different products and services to
different customers types, attracting different margins. They each
have separate management teams.
The segments share a commonality in service being delivered
wholesale of food and drink products. The Group therefore benefits
from a range of expertise, cross selling opportunities and
operational synergies in order to run each segment as competitively
as possible.
Each segment is measured on its EBITDA, adjusted for acquisition
costs and reconstruction costs, and internal management reports are
reviewed monthly by the Board. This performance measure is deemed
the most relevant by the Board to evaluate the results of the
segments relative to entities operating in the same industry.
Ambient Frozen & Foodservice Corporate Total
Chilled
GBP000 GBP000 GBP000 GBP000 GBP000
FY21
Revenue 155,712 163,895 61,087 - 380,694
Inter-segment revenue 12,340 - 226 - 12,566
Segment revenue 168,052 163,895 61,313 - 393,260
Adjusted EBITDA* 4,347 9,275 2,000 (569) 15,053
CPO income - 2,255 - - 2,255
Amortisation of intangibles - (144) (6) - (150)
Depreciation (2,106) (3,910) (1,801) - (7,817)
Restructuring costs (53) (41) (42) (1,121) (1,257)
Acquisition expense - (19) - (162) (181)
Compensation for post
combination services - (1,278) - - (1,278)
Share based payment
expense - - - (227) (227)
Interest expense (564) (1,286) (288) (2,136) (4,274)
Segment profit/(loss)
before tax 1,624 4,852 (137) (4,215) 2,124
Segment assets 38,790 49,979 22,888 37,160 148,817
Segment liabilities (28,559) (41,323) (16,508 (843) (87,233)
Segment net assets 10,231 8,656 6,380 36,317 61,584
Within Corporate segment assets is GBP31,349,000 of goodwill on consolidation.
This is allocated to the trading segments as follows (see note 11
for further information)
Goodwill by segment 12,499 5,234 13,516 31,249
Ambient Frozen & Foodservice Corporate Total
Chilled
GBP000 GBP000 GBP000 GBP000 GBP000
FP20
Revenue 249,080 230,546 112,390 - 592,016
Inter-segment revenue 20,107 636 595 - 21,338
Segment revenue 269,187 231,182 112,985 - 613,354
Adjusted EBITDA* 7,327 17,155 3,949 (797) 27,634
Amortisation of intangibles - (140) (4) - (144)
Depreciation (3,210) (5,006) (2,797) - (11,013)
Restructuring costs (58) (26) (548) (835) (1,467)
Acquisition expense - (400) (228) - (628)
Compensation for post
combination services - (2,358) - - (2,358)
Interest income - - - 1,453 1,453
Interest expense (961) (1,668) (556) (8,987) (12,172)
Segment profit/(loss)
before tax 3,098 7,557 (184) (9,166) 1,305
Segment assets 37,635 37,380 20,237 34,611 129,864
Segment liabilities (28,200) (34,435) (15,389) (51,893) (129,917)
Segment net assets
/ (liabilities) 9,435 2,945 4,848 (17,282) (53)
Within Corporate segment assets is GBP31,349,000 of goodwill on consolidation.
This is allocated to the trading segments as follows (see note 11
for further information)
Goodwill by segment 12,499 5,234 13,516 31,249
An analysis of revenue by destination is given below:
Geographical information:
FY21 FP20
GBP000 GBP000
United Kingdom 373,690 579,436
Overseas 7,004 12,580
Group Revenue 380,694 592,016
No one customer accounts for more than 6% of Group revenue.
4 Other operating income/(expense)
FY21 FP20
GBP000 GBP000
Net gain on disposal of fixed
assets 55 5
Net gain/(loss) on foreign
exchange (2) 5
Net gain on remeasurement of right-of-use
assets and lease liabilities 124 -
CPO income 2,255 -
Grant income 2,339 3,010
4,771 3,020
Grant income comprises amounts received from the Government with
respect to the Coronavirus Job Retention Scheme. These totalled
GBP2,339,000 (FP20: GBP3,010,000).
CPO income is in relation to the compulsory purchase order of a
property lease in Luton enacted by the Local Authority. It has been
classified as exceptional income in the statement of profit and
loss as it is not income relating to the Group's principal
activities and is not expected to recur in in the ordinary course
of business.
5 Expenses
Included in profit/loss are the following:
FY21 FP20
GBP000 GBP000
Depreciation of tangible assets:
Owned 1,975 3,120
Right-of-use assets 5,842 7,893
Amortisation of intangible
assets 150 144
Expense relating to short term
and low value assets 715 1,024
Impairment loss on trade receivables 1,288 1,563
Dilapidation provision 570 -
The Group incurred a number of expenses not relating to the
principal trading activities of the Group as follows:
FY21 FP20
Exceptional expenses GBP000 GBP000
Restructuring expenses 1,257 897
COVID-19 related restructuring
costs - 570
Acquisition expenses 181 628
Compensation for post combination
services 1,278 2,358
Total exceptional expenses 2,716 4,453
Share based payment expense 227 -
Total exceptional expenses
and share based payments 2,943 4,453
The Board consider the exceptional items to be non-recurring in
nature. Both exceptional and share based payment expenses are
adjusted for in the statement of profit and loss to arrive at the
adjusted EBITDA. This measure provides the Board with a better
understanding of the Group's operating performance.
Restructuring expenses include transaction fees in relation to
the IPO of GBP1,121,000 (FP20: 834,000). Other expenses related to
the restructuring of the Group's operations in the period.
COVID-19 related restructuring costs include a modest workforce
reduction in response to the reduced demand during Government led
closure of customers' operations.
Acquisition expenses include the legal and professional fees
connected to the actual and potential acquisitions of subsidiaries
in the period.
Compensation for post combination services relates to the value
of a liability in connection the acquisition of the remaining share
capital of Central Supplies (Brierley Hill) Ltd which is subject to
an agreement to acquire it within two years of the acquisition, see
note 2.
Share based payments relate to the MIP and are non cash
expenses. For further information see note 24.
FY21 FP20
GBP000 GBP000
Auditor's remuneration
Audit of these financial statements 6 9
Amounts receivable by auditors and
their associates in respect of:
Audit of financial statements of
subsidiaries of the Company 380 250
Taxation compliance services 44 39
Tax advisory services 109 30
Corporate finance services 218 370
6 Staff numbers and costs
The average number of persons employed by the Group (including
Directors) during the period is analysed as follows:
FY21 FP20
Number of staff 1,079 1,157
Directors 3 2
1,082 1,159
The aggregate payroll costs of these persons were as
follows:
FY21 FP20
GBP000 GBP000
Wages and salaries 29,259 44,897
Social security costs 2,673 4,094
Other pension costs (note 23) 769 1,151
32,701 50,142
7 Directors' remuneration
Included within staff costs (note 6) are the following amounts
in respect of Directors' emoluments
FY21 FP20
GBP000 GBP000
Directors' emoluments 636 873
Company contribution to personal
pension scheme 32 83
668 956
Retirement benefits are accruing to two Directors under money
purchase pension schemes (FP20: two).
Amounts accrued under the share based payment plan for one of
the Directors was GBP85,000 (FP20: GBPnil).
FY21 FP20
Highest paid Director GBP000 GBP000
Directors' emoluments 312 515
Company contribution to personal
pension scheme 19 63
331 578
8 Finance income and expense
FY21 FP20
GBP000 GBP000 GBP000 GBP000
Interest payable and similar
charges - cash items
Interest payable on bank loans and
invoice discount facilities 1,327 2,805
Finance charges payable in
respect of leases 1,239 1,579
Other finance interest payable
on investor loans 551 -
Other finance charges payable
on debenture loans 1,936 1,585
Other interest 40 -
5,093 5,969
Interest payable and similar charges
-non-cash items
Other finance interest payable
on investor loans - 4,327
Other finance charges payable
on debenture loans 4,591 1,876
Fair value movement on financial
liabilities (note 16) (5,410) (1,453)
(819) 4,750
4,274 10,719
Other finance charges on debenture loans comprise the
amortisation of transaction costs in respect of the Pricoa Capital
Group. A significant proportion of the interest payable and similar
expenses arise from amortised transaction costs in respect to
investor loans and liabilities and movements in the fair value of
the financial liabilities which have no cash impact in the period.
The above analysis has been presented to clearly identify which
elements have a cash impact.
9 Taxation
FY21 FP20
GBP000 GBP000 GBP000 GBP000
UK corporation tax
Current tax charge on income
for the period 620 1,765
Adjustment in respect of prior
periods 187 95
Total current tax 807 1,860
Deferred tax (see note 22)
Origination/(reversal) of timing
differences 281 (66)
Adjustment in respect of prior
periods 4 10
Effect of changes in tax rate 107 1
Share based payment (57) -
IFRS 16 timing differences (114) -
Total deferred tax charge /
(credit) 221 (55)
Tax charge on profit on ordinary
activities 1,028 1,805
FY21 FP20
GBP000 GBP000
Current tax reconciliation
Profit/(loss) on ordinary activities
after tax 1,096 (500)
Tax charge 1,028 1,805
Profit on ordinary activities
before tax 2,124 1,305
Tax using the UK corporation
tax of 19% (FP20: 19%) 404 248
Effect of:
Expenses not deductible for
tax purposes 1,571 1,455
Income not taxable (1,109) -
Adjustments in respect of prior
periods 187 95
Change in tax rate on deferred
tax balances 111 10
Share based payment (57) -
Other tax adjustments (79) (3)
Total current tax charge 1,028 1,805
A UK corporation rate of 19% (effective 1 April 2020) was
substantively enacted on 17 March 2020, reversing the previously
enacted reduction in the rate from 19% to 17%.
An increase in the UK corporation rate from 19% to 25%
(effective 1 April 2023) was substantively enacted on 24 May 2021.
This will increase the Group's future current tax charge
accordingly. The deferred tax liability at 31 October 2021 has been
calculated based on these rates, reflecting the expected timing of
reversal of the related timing differences (FP20: 19%).
10 Earnings per share
Basic earnings per share
Basic earnings per share for the period ending 31 October 2021,
and the previous 18 month period ending 31 October 2020 is
calculated by dividing profit attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding
during each period as calculated below.
Diluted earnings per share
Diluted earnings per share for the period ending 31 October
2021, and previous 18 month period ending 31 October 2020 is
calculated by dividing profit attributable to ordinary shareholders
by the weighted average number of ordinary shares, adjusted for the
effects of all dilutive potential ordinary shares, in this case
issued equity warrants, outstanding during each period as
calculated below.
Profit attributable to ordinary shareholders
FY21 FP20
GBP000 GBP000
Profit/(loss) attributable
to all shareholders 1,096 (500)
GBP GBP
Basic earnings per ordinary
share 0.02 (0.02)
Diluted earnings per ordinary
share 0.02 (0.02)
Weighted average number of ordinary shares
FY21 FP20
Number Number
Weighted average number of ordinary shares
(basic) during the period 46,036,531 27,333,323
Weighted average number of ordinary shares
(diluted) during the period 46,055,901 27,333,323
The following Alternative Performance Measure ("APM") for
earnings per share is not defined or specified under the
requirements of International Financial Reporting Standards. The
Board believes that this APM provides the readers with important
additional information regarding the earnings per share performance
of the Group:
Basic underlying earnings per share
Profit attributable to the equity holders of the Group prior to
exceptional items and the fair value movement of the put option
liability measured through the consolidated statement of profit and
loss, divided by the weighted average number of ordinary shares
during the financial period.
FY21 FP20
GBP000 GBP000
Profit/(loss) attributable
to all shareholders 1,096 (500)
Exceptional and share based
payment expenses net of tax* 2,819 4,346
CPO income net of tax (1,827) -
Interest and finance charges
payable on loans and debenture
notes 7,078 7,788
Fair value adjustments on the
put option liability (5,410) (1,453)
Underlying profit attributable
to ordinary shareholders 3,756 10,181
GBP GBP
Basic underlying earnings per
ordinary share 0.08 0.37
*Exceptional expenses include restructuring fees, acquisition
costs and compensation for post combination services which are
deemed to be non-recurring. For full detail of exceptional and
share based payment expenses see note 5. For further details on
exceptional income relating to the CPO see note 4.
11 Intangible assets
Group Intangible Goodwill Total
assets
GBP000 GBP000 GBP000
Cost
Balance at 1 May 2019 - 32,823 32,823
Additions 501 3,938 4,439
Transferred from tangible assets 55 - 55
Balance at 31 October 2020 556 36,761 37,317
Amortisation
Balance at 1 May 2019 - 5,512 5,512
Charge in period 144 - 144
Balance at 31 October 2020 144 5,512 5,656
Net book value
At 31 October 2020 412 31,249 31,661
At 30 April 2019 - 27,311 27,311
Group Intangible Goodwill Total
assets
GBP000 GBP000 GBP000
Cost
Balance at 1 November 2020 556 36,761 37,317
Additions 169 - 169
Balance at 31 October 2021 725 36,761 37,486
Amortisation
Balance at 1 November 2020 144 5,512 5,656
Charge in period 150 - 150
Balance at 31 October 2021 294 5,512 5,806
Net book value
At 31 October 2021 431 31,249 31,680
At 31 October 2020 412 31,249 31,661
Goodwill acquired through business combinations has been
allocated to cash generating units ("CGUs"), as follows:
2021 2020
GBP000 GBP000
Frozen & Chilled 12,499 12,499
Foodservice 5,234 5,234
Ambient 13,516 13,516
31,249 31,249
Under IAS 36 the Group is required to test goodwill for
impairment at least annually or more frequently if indicators of
impairment exist.
The recoverable amount of a CGU has been calculated with
reference to its value in use, using financial forecasts approved
by the Board covering a 4 year period with the final period taken
into perpetuity.
The key assumptions of this calculation are shown below:
CGUs Ambient Frozen & Foodservice
Chilled
Period forecasts are based 4 years 4 years 4 years
on:
Growth rate applied: 0% 0% 0%
Discount rate applied: 8.32% 8.32% 8.32%
Impairment testing at 31 October 2021 has considered a further
impact of COVID-19 on the CGU's. The Board expect trading to return
to pre COVID-19 levels in the forecast period. Having operated
through two financial periods affected by COVID-19 trading
restrictions the Directors believe no reasonable prospective
COVID-19 impact to trading would result in a material impairment. A
sensitivity has been tested in the event of further COVID-19
restrictions on trade.
No growth rate assumption has been made on the terminal value in
the impairment calculation. The Group has demonstrated year on year
growth outside of COVID-19 impacted financial periods and growth in
consumer spending on food and drink was 2.5% in 2019, being the
last period unaffected by COVID-19. There is a demonstrable link
between consumer spending on food and drink and GDP trends. GDP is
expected to grow to 2.1% by 2023. Notwithstanding the zero growth
assumption there is significant headroom under the annual
impairment review.
The discount rate is per the Group's current weighted average
cost of capital adjusted to reflect the pre tax rate at 25%
corporation tax and a risk premium from comparable listed entities
to approximate a market based discount rate. A specific risk
premium has not been applied to each CGU as they all operate in the
wholesale of food and drinks and are therefore exposed to the same
macroeconomic risks. This would be reassessed if the discount rate
indicated potential impairment of any individual CGU.
Other than changes to the discount or growth rate the key
assumption in the forecast model is the gross margin generated by
each CGU. The sensitivities vary by CGU but no reasonable
sensitivity would result in impairment on any CGU.
The following sensitivities have been tested and do not result
in an impairment in ay CGU:
-- Change in the pre-tax discounts rate by 300 bps
-- Further impact to trade from COVID-19 by way of a two month lock down
-- Wage and fuel inflation
-- Loss of a significant customer, which represents 6% of Group revenue
Each of the CGU's has significant headroom under the annual
impairment review. The Directors believe that no reasonable change
in any of the above key assumptions would cause the carrying value
of the unit to materially exceed its recoverable amount.
12 Tangible assets
Group Freehold Leasehold Fixtures Motor Plant and Total
property improvements and Fittings vehicles machinery
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
Balance at 1 May
2019 - 2,289 4,314 6,679 4,459 17,741
Additions - 107 432 722 1,274 2,535
Disposals - - (1) (1,655) (62) (1,718)
Transferred to intangible
assets - - - - (55) (55)
Acquired on business
combinations 2,894 306 159 346 586 4,291
Transferred to right-of-use
assets - (671) - (4,490) - (5,161)
Balance at 31 October
2020 2,894 2,031 4,904 1,602 6,202 17,633
Depreciation
Balance at 1 May
2019 - 621 3,007 1,730 2,448 7,806
Charge in period 50 172 726 1,018 1,154 3,120
Disposals - - (1) (1,312) (52) (1,365)
Transferred to right-of-use
assets - (62) - (1,176) - (1,238)
Balance at 31 October
2020 50 731 3,732 260 3,550 8,323
Net book value
At 31 October 2020 2,844 1,300 1,172 1,342 2,652 9,310
At 30 April 2019 - 1,668 1,307 4,949 2,011 9,935
Group Freehold Leasehold Fixtures Motor Plant and Total
property improvements and Fittings vehicles machinery
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
Balance at 1 November
2020 2,894 2,031 4,904 1,602 6,202 17,633
Additions - 200 719 299 1,510 2,728
Disposals - - - (467) (71) (538)
Transferred from
right-of-use assets - - - 749 - 749
Transfer between
classifications 28 (28) (144) (21) 165 -
Balance at 31 October
2021 2,922 2,203 5,479 2,162 7,806 20,572
Depreciation
Balance at 1 November
2020 50 731 3,732 260 3,550 8,323
Charge in year 43 127 466 639 700 1,975
Disposals - - - (431) (55) (486)
Transferred from
right-of-use assets - - - 656 - 656
Transfer between
classifications 28 (671)- -(4,490) -(5,161) - - (120) (16) 136 -
Balance at 31 October
2021 93 858 4,078 1,108 4,331 10,468
Net book value
At 31 October 2021 2,829 1,345 1,401 1,054 3,475 10,104
At 31 October 2020 2,844 1,300 1,172 1,342 2,652 9,310
13 Right-of-use assets
From 1 May 2019 and following the adoption of IFRS 16, Leases,
leased assets are presented as right-of-use assets in the balance
sheet per the following schedule:
Leasehold Motor vehicles Plant and Total
Group Property machinery
GBP000 GBP000 GBP000 GBP000
Cost
Transition to IFRS
16 12,111 1,455 1,075 14,641
Transferred from
tangible assets 671 4,490 - 5,161
Additions 1,715 5,377 327 7,419
Acquired through business
combinations 101 2,313 96 2,510
Balance at 31 October
2020 14,598 13,635 1,498 29,731
Depreciation
Transferred from
tangible assets 62 1,176 - 1,238
Charge in period 3,301 4,003 589 7,893
Balance at 31 October
2020 3,363 5,179 589 9,131
Net book value
At 31 October 2020 11,235 8,456 909 20,600
Group Leasehold Motor vehicles Plant and Total
Property machinery
GBP000 GBP000 GBP000 GBP000
Cost
Balance as at 1
November 2020 14,598 13,635 1,498 29,731
Additions 9,414 1,158 308 10,880
Transferred to tangible
assets - (749) - (749)
Disposals (1,886) (470) (105) (2,461)
Loss on remeasurement (2,212) (130) (83) (2,425)
Balance at 31 October
2021 19,914 13,444 1,618 34,976
Depreciation
Balance as at 1
November 2020 3,363 5,179 589 9,131
Charge in year 2,479 2,990 373 5,842
Transferred to tangible
assets - (656) - (656)
Disposals (1,886) (467) (105) (2,458)
Loss on remeasurement - (57) (14) (71)
Balance at 31 October
2021 3,956 6,989 843 11,788
Net book value
At 31 October 2021 15,958 6,455 775 23,188
At 31 October 2020 11,235 8,456 909 20,600
14 Investments
Unlisted Unlisted
investments investments
2021 2020
GBP000 GBP000
Group
Cost and net book value
At beginning and end of period 20 20
Shares in Shares in
Group undertakings Group undertakings
2021 2020
GBP000 GBP000
Company
Cost and net book value
At beginning and end of period 12,993 12,993
The Company has the following investments in subsidiaries:
Country of Class of Ownership Ownership
incorporation Shares hold 2021 2020
Subsidiary undertaking
Kitwave Investments Limited United Kingdom Ordinary 100% 100%
Kitwave One Limited* United Kingdom Ordinary 100% 100%
Kitwave Limited* United Kingdom Ordinary 100% 100%
M&M Value Limited* United Kingdom Ordinary 100% 100%
Turner & Wrights Limited* United Kingdom Ordinary 100% 100%
FW Bishop & Son Limited* United Kingdom Ordinary 100% 100%
Westone Wholesale Limited* United Kingdom Ordinary 100% 100%
Automatic Retailing (Northern)
Limited* United Kingdom Ordinary 100% 100%
Andersons (Wholesale) Limited* United Kingdom Ordinary 100% 100%
Teatime Tasties Limited* United Kingdom Ordinary 100% 100%
TG Foods Limited* United Kingdom Ordinary 100% 100%
Eden Farm Limited* United Kingdom Ordinary 100% 100%
Squirrels UK Limited* United Kingdom Ordinary 100% 100%
Thurston's Food's Limited* United Kingdom Ordinary 100% 100%
Angelbell Limited* United Kingdom Ordinary 100% 100%
David Miller Frozen Foods Limited* United Kingdom Ordinary 100% 100%
Phoenix Fine Foods Limited* United Kingdom Ordinary 100% 100%
MAS Frozen Foods Limited* United Kingdom Ordinary 100% 100%
Supplytech Limited* United Kingdom Ordinary 100% 100%
HB Clark Holdings Limited* United Kingdom Ordinary 100% 100%
HB Clark & Co (Successors) Limited* United Kingdom Ordinary 100% 100%
Churnet Valley Drinks Limited* United Kingdom Ordinary 100% 100%
Clarks Fine Wines Limited* United Kingdom Ordinary 100% 100%
FAM Soft Drinks Limited* United Kingdom Ordinary 100% 100%
Thorne Licence Wholesale Limited* United Kingdom Ordinary 100% 100%
Alpine Fine Foods Limited* United Kingdom Ordinary 100% 100%
Central Supplies (Brierley Hill)
Ltd* United Kingdom Ordinary 95% 75%
*Held indirectly through Kitwave Investments Limited and its
subsidiaries
The registered office of all the above companies is: Unit 3,
Narvik Way, Tyne Tunnel Trading Estate, North Shields, Tyne and
Wear, NE29 7XJ
15 Investment property
2021 2020
Group GBP000 GBP000
Cost and net book value
At beginning of period 175 -
Added through business combinations - 175
Disposal (175) -
At end of period - 175
The investment property was valued at GBP175,000 in 2018 by an
external, independent valuer. The property was disposed of in the
year to an unconnected third party.
16 Other financial liabilities
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Non-current
Financial liabilities designated as fair
value through the statement of profit and
loss
Put option liability - 5,410 - 5,410
On admission to AIM the put option liability in relation to the
Pricoa Group Capital option was extinguished in full.
17 Inventories
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Goods for resale 26,043 23,198 - -
26,043 23,198 - -
Goods for resale recognised as cost of sales in the year amount
to GBP312,109,000 (FP20: GBP484,842,000).
18 Trade and other receivables
Group Company
2021 2020 2021 2020
GBP000 GBP000
Trade receivables 44,365 34,316 - -
Amounts owed by Group undertakings - - 63,074 7,557
Other debtors 1,881 2,304 - -
Corporation tax - - - 195
Prepayments and accrued income 6,568 7,938 7 -
52,814 44,558 63,081 7,752
Due within one year 51,697 43,915 63,081 7,752
Due after more than one year 1,117 643 - -
52,814 44,558 63,081 7,752
GBP17,200,000 (FP20: GBP11,836,000) of Group trade receivables
are used as security against invoice discounting advances (note
21).
19 Cash and cash equivalents
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Cash at bank and in hand 4,968 342 3,371 -
Cash and cash equivalents per
cashflow statement 4,968 342 3,371 -
20 Trade and other payables: amounts falling due within one year
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Trade payables 36,093 27,832 - -
Other creditors 2,852 3,302 - -
Accruals 7,676 6,815 173 536
Amounts owed to Group undertakings - - 54 54
Compensation for post combination
services 711 2,358 - -
47,332 40,307 227 590
21 Interest-bearing loans and borrowings
This note provides information about the contractual terms of
the Group's loans and borrowings. For more information about the
Group's exposure to interest rate and foreign currency risk, see
note 27.
Group Company
2021 2020 2021 2020
Non current liabilities GBP000 GBP000 GBP000 GBP000
Investor loans - 29,586 - -
Lease liabilities 19,917 16,200 - -
Bank and term loans - 13,493 - -
19,917 59,279 - -
Put option liability - 5,410 - 5,410
19,917 64,689 - 5,410
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Current liabilities
Lease liabilities 4,719 5,202 - -
Bank trade loans - 4,750 - -
Invoice discounting advances 14,620 10,061 - -
Bank term loans - 2,870 - -
19,339 22,883 - -
Group Company
Lease liabilities 2021 2020 2021 2020
Lease liabilities payable as GBP000 GBP000 GBP000 GBP000
follows:
Within one year 4,719 5,202 - -
In the second to fifth years 9,941 11,295 - -
Over 5 years 9,976 4,905 - -
24,636 21,402 - -
Terms and debt repayment schedule
2021 2021 2020 2020
Currency Nominal Year Face Carrying Face Carrying
interest of maturity value value value value
rate
GBP000 GBP000 GBP000 GBP000
Lease liabilities Sterling 3% - 5% 2022-2040 24,636 24,636 21,402 21,402
3.5% +
Bank Senior A Sterling LIBOR 2021 - - 3,613 3,613
4.0% +
Bank Senior B Sterling LIBOR 2021 - - 12,750 12,750
Invoice discounting 2.25% +
advances Sterling Base 2023 14,620 14,620 10,061 10,061
2.65% +
Bank trade loans Sterling Base 2023 - - 4,750 4,750
Put option liability Sterling - - - 5,410
Non-investor loans 39,256 39,256 52,576 57,986
Investor mezzanine Sterling 14% 2021 - - 23,575 21,014
Amortised deal
costs Sterling (650)
Investor subordinated Sterling 9% 2021 - - 10,601 9,222
Sub-total investor
loans Sterling - - 34,176 29,586
39,256 39,256 86,752 87,572
Amortised deal costs are directly attributable to all of the
investor instruments as they were all issued at fair value as part
of the same financing transaction. Therefore these costs have been
included as a single line to reconcile the debt carrying value to
the value in these financial statements.
Changes in liabilities from Loans and Lease liabilities
financing activities borrowings Total
GBP000 GBP000 GBP000
Balance at 1 May 2019 - pre
IFRS 16 adoption 69,108 4,043 73,151
Initial application of IFRS
16 - 14,641 14,641
Balance restated 1 May 2019 69,108 18,684 87,792
Changes from financing cash
flows
Repayment of borrowings (12,274) - (12,274)
Payment of lease liabilities - (7,173) (7,173)
Interest paid (4,390) (1,579) (5,969)
Total changes from financing
cash flows (16,664) (8,752) (25,416)
Other changes
New borrowing 5,000 9,671 14,671
Interest expense 10,593 1,579 12,172
Movement in fair value of
put option liability (1,453) - (1,453)
Interest included in accruals
at period end (414) - (414)
Added through business combination - 220 220
Total other changes 13,726 11,470 25,196
Total debt at 31 October 2020 66,170 21,402 87,572
Changes from financing cash
flows
Repayment of borrowings (60,790) - (60,790)
Payment of lease liabilities - (5,068) (5,068)
Interest paid (3,854) (1,239) (5,093)
Total changes from financing
cash flows (64,644) (6,307) (70,951)
Other changes
New borrowing 10,059 10,784 20,843
Interest expense 8,445 1,239 9,684
Release of the put option
liability (5,410) - (5,410)
Remeasurement of lease liability - (2,482) (2,482)
Total other changes 13,094 9,541 22,635
Total debt at 31 October 2020 14,620 24,636 39,256
All borrowings are denominated in Sterling.
Bank trade loans are secured by means of debenture and cross
guarantees over the assets of all Group undertakings. These are
generally repayable within 35 days of drawdown and form an integral
part of the Group's day to day short term cash management.
Receipts and payments from trade loans are disclosed on a net
basis in the cash flow statement under IAS 7 22(b) on the basis
they are short maturity.
The invoice discounting advances are secured against trade
receivables (note 18). These are repayable within 90 days of the
date of the invoice and carry interest at a margin of 2.25%. This
is a fixed facility expiring in 2023.
Under this arrangement trade customers remit cash directly to
the Group companies and the Group companies use the trade
receivables as security to draw down funds from finance providers.
Cash receipts and cash payments with the finance provider are
disclosed on a net basis in the cashflow statement as allowed under
IAS 7 22(b) on the basis that they are short maturity.
During the year the Company was admitted to AIM, raising gross
proceeds for the Company of GBP64,000,000 on listing.
Following settlement of transaction fees, the proceeds of the
listing were used to de-gear the Group by paying down the external
debt structure. This included the repayment of Facility A and
Facility B held as bank term loans, and repayment of the investors
mezzanine and investors subordinated loan notes.
Remaining free cash following discharge of the bank term loans
and investor mezzanine and investor subordinated loans was used to
reduce the Group's indebtedness on its invoice discount advances
and trade loans.
The Bank trade loans and invoice discounting advances rank pari
passu and without preference between them in priority of
payment.
22 Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the
following:
Group Assets Liabilities
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Property, plant and equipment 429 295 (906) (397)
Tax value of loss carry forwards 31 48 - -
Share based payment expense 57 - - -
IFRS 16 timing differences 114 - - -
Tax assets / (liabilities) 631 343 (906) (397)
Movement in deferred tax during the period:
Group 31 October Recognised 31 October
2020 in income 2021
GBP000 GBP000 GBP000
Property, plant and equipment (102) (375) (477)
Tax value of loss carry forwards 48 (17) 31
Share based payment expense - 57 57
IFRS 16 timing differences - 114 114
Tax assets/(liabilities) (54) (221) (275)
Company Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Share based payment expense 57 - - -
Tax assets 57 - - -
Company 31 October Recognised 31 October
2020 in income 2021
GBP000 GBP000 GBP000
Property, plant and equipment - - -
Tax value of loss carry forwards - - -
Share based payment expense - 57 57
IFRS 16 timing differences - - -
Tax assets - 57 57
23 Employee benefits
Defined contribution plans
The Group operates a defined contribution pension scheme. The
pension cost charge for the period represents contributions payable
by the Group to the scheme and to other personal pensions schemes
and amounted to GBP769,000 (FP20: GBP1,151,000)
24 Employee share scheme
The Group has in place a Management Incentive Plan ("MIP")
whereby the option is expected to be equity settled. This was
established following the Company listing on AIM on 24 May 2021.
Prior to this there were no other material employee share schemes
in place.
The MIP is accounted for as a share-based payment under IFRS 2
and is expected to be settled by physical delivery of shares.
Group and Date of Employees Number Principal vesting Contractual
Company Grant entitled of shares conditions life
granted
Management July 2021 Selected Nil Service during vesting 3 years 6
incentive senior period months
plan employees EPS performance
hurdle
Market capitalisation
hurdle
---------- ----------- ----------- ----------------------- ------------
The shares outstanding in relation 2021 2021
to the MIP are:
Weighted Number of
average options
exercise
price
GBP
Outstanding at the beginning -
of the year
Granted during the year - 10,000
Outstanding at the end of the
year - 10,000
None of the share options outstanding at the end of the year are
exercisable. Growth shares were issued in Kitwave Limited with a
subscription price of GBP5.24 per option was paid on subscription.
The growth shares are exchangeable for shares in the Company
subject to achieving the principal vesting conditions. The options
are not exercisable before 1 March 2025.
The MIP has incurred an expense under employee expenses of
GBP227,000 (FP20: GBPnil).
The share based payment reserve represents the accumulation of
this cost in accordance with the treatment of equity settled share
based payment expense under IFRS 2. As at 31 October 2021 the
balance on this reserve is GBP227,000 (FP20: GBPnil).
25 Called up share capital
Group and Company 2020
GBP
Authorised, called up and fully
paid
24,000 ordinary A shares of
GBP0.01 each 240
56,000 ordinary B1 shares of
GBP0.01 each 560
10,666 ordinary B2 shares of
GBP0.01 each 107
9,334 ordinary B3 shares of
GBP0.01 each 93
100 ordinary C1 share of GBP0.01
each 1
1,000 ordinary C3 shares of
GBP0.001 each 0
1,001
Several adjustments have been made to share capital and share
premium during the year in preparation for the Company's listing on
AIM. These include bonus issues and subdivisions applied to A, B1,
B2, B3, C1 and C3 share classes as well as a reduction to share
premium into distributable reserves.
Immediately prior to IPO, all pre-existing share classes were
converted to the new class of ordinary shares. Upon IPO, 42,666,667
of these new ordinary shares were created for issue.
Group and Company 2021
GBP
Authorised, called up and fully
paid
70,000,000 ordinary shares
of GBP0.01 each 700,000
700,000
Share premium
The share premium account increased for the premium paid on the
new shares issued over their nominal value being GBP63,300,000.
Under IAS 32 the transaction costs associated with the issuance of
new equity on IPO of the Company have been deducted from the share
premium account, being a total of GBP2,110,000.
26 Contingent liabilities
Group bank borrowings (including invoice discounting advances)
are subject to cross guarantee and debenture agreements over Group
companies.
The Company is party to a cross guarantee and debenture
agreement to secure the GBP14,620,000 (2020: GBP31,000,000) bank
borrowings of its subsidiary companies.
27 Financial instruments
27 (a) Fair values of financial instruments
The carrying value of all financial assets and financial
liabilities by class, are shown below. The carrying value
approximates to each asset and liabilities fair value:
Group 2021 2020
GBP000 GBP000
Financial assets held at amortised
cost
Trade receivables 44,365 34,316
Cash and cash equivalents 4,968 342
49,333 34,658
Financial liabilities measured
at fair value through the statement
of profit and loss
Put option liability - 5,410
Compensation for post combination
services 711 2,358
711 7,768
Financial liabilities measured
at amortised cost
Trade payable 36,093 27,832
Bank trade loans - 4,750
Bank term loans - 16,363
Investor loans - 29,586
Invoice discounting advances 14,620 10,061
Obligations under lease liabilities 24,636 21,402
75,349 109,994
Financial instruments - IFRS 9
The Group holds a financial asset instrument, being trade
receivables.
The trade receivables are held at amortised cost. The objective
of the business model for realising trade receivables is by
collecting contractual cash flows for genuine debts. The
considerations of Solely Principal Payments and Interest ("SPPI")
have also been considered and the criteria met for holding at
amortised cost as the trade receivables are for fixed payments due
by fixed dates with no variable element of payment required.
The standard requires impairment of trade receivables held at
amortised cost is considered by reference to the expected credit
loss method, discussed in the credit risk section of the financial
information.
Financial instruments measured at fair value through profit and
loss The table below analyses financial instruments into a fair
value hierarchy based on the valuation technique used to determine
fair value.
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (ie, as prices) or indirectly (ie, derived from
prices)
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The following table shows the valuation techniques used for
Level 3 fair values as well as the significant unobservable inputs
used for Level 3 items.
Valuation technique Significant unobservable
inputs
Put option liability The fair value of the
option is based on the Forecast EBITDA per annum
forecast Group enterprise Forecast net debt position
value less the value as at the option date
of net debt as at March Discount rate of 7.43%
2023. being the Group discount
rate pre IPO
Contingent consideration The fair value of the Net asset position
option is based on Central Discount rate of 5.19%
Supplies (Brierley Hill)
Ltd's EBITDA for the
last 12 months and net
assets at the balance
sheet date of redemption
On admission to AIM the put option liability in relation to the
Pricoa option was extinguished in full.
The Group has a liability in relation to 5% shareholding in
Central Supplies (Brierley Hill) Ltd retained by which is
exercisable two years from acquisition. The redemption value at
maturity date is based on a fixed formula relating to last 12
months EBITDA and net assets at the date of redemption.
The Group has considered the sensitivity on the fair value of
the liability which are as follows:
-- A 25 basis point increase in discount rate would reduce the
fair value of the put option liability by GBP4,000.
-- A GBP500,000 reduction in forecast EBITDA would reduce the
fair value of the put option liability by GBP276,000.
The reconciliation between opening and closing balances for
Level 3 is detailed in the table below:
2021 2020
GBP000 GBP000
Liabilities - level 3
Opening balance 7,768 6,863
Amounts charged to the statement
of profit and loss 1,278 905
Payments made (2,925) -
Release on IPO (5,410) -
711 7,768
27 (b) Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers.
The Group has a well-established and diverse portfolio of
customers including a large number of customers paying cash on
delivery. The Directors do not believe there is a significant
concentration risk as evidenced with no one customer accounting for
more than 6% of Group revenue.
All customers who wish to trade on credit terms are subject to
credit verification procedures.
The Group establishes an allowance for impairment that
represents its estimate of incurred losses using a provision matrix
which is based on historical levels of impairment and assessment of
the quality of the receivable book to calculate a forward looking
estimate.
2021 Gross Impairment Net
GBP000 GBP000 GBP000
Current 33,075 - 33,075
31-60 days from invoice 10,230 - 10,230
61-90 days from invoice 1,612 (552) 1,060
90+ days 1,465 (1,465) -
46,382 (2,017) 44,365
The maximum Group exposure to credit risk in the period ended 31
October 2021 was GBP44,365,000 (2020: GBP34,316,000) being the
total carrying amount of trade receivables and other receivables
net of provision.
The Directors assess the risk to trade receivables by reviewing
the ageing of debt rather than by reference to the amount overdue.
Many customers operate on terms requiring payment for the previous
delivery on receipt of their next order, referred to as 'one over
one'. As such a large population of debt would be classed as
overdue due to the parameters of the Group's accounting software
with debt operating under the agreement made with the customer. The
expected credit loss on invoices less than 90 days old is
immaterial.
For the last two financial periods, the annual bad debt expense
has been c.0.25% of Group revenue. Applying the historic factor
would result in a provision of c.GBP950,000 for the year ended 31
October 2021.
The impairment charge on trade receivables in the 12 month
period ended 31 October 2021 GBP1,288,000 (note 5) with the
impairment charged in the prior 18 month period to 31 October 2020
being GBP1,563,000. During FP20 the Group reduced trade receivables
significantly with collections from customers affected by COVID-19
materially collected with minimal bad debt levels. The Directors
continue to take a prudent approach in relation to provisioning due
to potential additional COVID-19 impacts on the Group's customer
base.
Debt is reviewed regularly by dedicated credit control teams
within each division and information from credit rating agencies is
often used to assess a customer's ability to meet its
obligations.
If there is significant doubt regarding a receivable a specific
provision is created. In addition, a provision is created to
account for the estimated losses that may be incurred in future
periods. Management consider the level of provisioning to be
materially correct based on these factors.
Group 2021 2020
GBP000 GBP000
As at 1 November 2020 2,011 1,422
Provided during the period 1,288 1,563
Utilised during the period (1,282) (974)
As at 31 October 2021 2,017 2,011
27 (c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
The Group manages its liquidity risk by monitoring existing
facilities and cash flows against forecast requirements based on a
rolling cash forecast.
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the effect of netting agreements:
Group = 2021 Carrying Contractual 1 year 1-2 years 2-5 years More than
amount cashflow or less 5 years
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Financial liabilities
Trade payables 36,093 36,093 36,093 - - -
Lease liabilities 24,636 31,571 5,697 5,129 7,754 12,991
Bank Senior A - - - - - -
Bank Senior B - - - - - -
Investor mezzanine - - - - - -
loan notes
Investor subordinated - - - - - -
loan notes
Invoice discounting
advances* 14,620 14,620 14,620 - - -
Bank trade loans* - - - - - -
Put option liability - - - - - -
Compensation for post
combination services 711 711 711 - - -
76,060 82,995 57,121 5,129 7,754 12,991
Group - 2020 Carrying Contractual 1 year 1-2 years 2-5 years More than
amount cashflow or less 5 years
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Financial liabilities
Trade payables 27,832 27,832 27,832 - - -
Lease liabilities 21,402 24,917 6,044 5,066 8,272 5,535
Bank Senior A 3,613 3,781 3,011 770 - -
Bank Senior B 12,750 14,015 542 542 12,931 -
Investor mezzanine
loan notes 20,364 35,485 2,385 2,482 30,618 -
Investor subordinated
loan notes 9,222 14,266 - - 14,266 -
Invoice discounting
advances* 10,061 10,061 10,061 - - -
Bank trade loans* 4,750 4,750 4,750 - - -
Put option liability 5,410 6,871 - - 6,871 -
Compensation for post
combination services 2,358 3,143 3,143 - - -
117,762 145,121 57,768 8,860 72,958 5,535
* Both the invoicing discounting and bank trade loan facilities
are revolving. The invoice discounting facility is available up to
GBP35,000,000 of drawn down and is available until 2023. The trade
loan facility is for GBP8,000,000 and repayable within 35 days of
draw down. It forms an integral part of the Group's day to day
short term cash management.
27 (d) Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments.
The Group has an immaterial exposure to currency risk on
purchases denominated in a currency other than the functional
currency of the Group since the balance owed to non UK business is
immaterial at each period end.
The Group is exposed to interest rate risk principally where its
borrowings are at variable interest rates.
At the balance sheet date the interest rate profile of the
Group's interest-bearing financial instruments was:
Group
2021 2020
GBP000 GBP000
Fixed rate instruments
Financial assets - -
Financial liabilities (24,636) (50,987)
(27,835) (50,987)
Group
2021 2020
GBP000 GBP000
Variable rate instruments
Financial assets - -
Financial liabilities (14,620) (31,174)
(14,620) (31,174)
Sensitivity analysis
An increase of 25 basis points in interest rates throughout the
period would have affected the statement of profit and loss by the
amounts shown below. This calculation assumes that the charge
occurred at all points in the period and had been applied to the
average risk exposures throughout the period:
Group
2021 2020
GBP000 GBP000
Profit or loss decreases 37 78
The above assumes the rate change is applicable on financial
liabilities accruing interest on base rate and LIBOR and affects
them in the same way.
27 (e) Capital management
The primary objective of the Group is to manage its capital to
ensure it is able to continue as a going concern, whilst maximising
shareholder value.
The capital structure of the Group consists of debt, which
includes borrowings, cash and cash equivalents and equity
attributable to the equity holders of the Group.
The Group's policy is to maintain gearing at levels appropriate
to the business and its funders. The Group produces annual
forecasts to enable the Board to assess the level of working
capital needed in the business, taking careful account of working
capital cycles, which are predictable, and the Board have
significant experience of managing them.
28 Related party transactions
Kitwave One Limited, Kitwave Investments Limited, Kitwave
Limited, Turner & Wrights Limited, FW Bishop & Son Limited,
M & M Value Limited, Westone Wholesale Limited, Andersons
(Wholesale) Limited, Teatime Tasties Limited, TG Foods Limited,
Eden Farm Limited, Squirrels UK Limited, Thurston's Food's Limited,
David Miller Frozen Foods Limited, Angelbell Limited, MAS Frozen
Foods Limited, Supplytech Limited, Automatic Retailing Limited,
Phoenix Fine Foods Limited, H B Clark (Successors) Limited, H B
Clark Holdings Limited, Churnet Valley Drinks Limited, Clarks Fine
Foods Limited, F.A.M Soft Drinks Limited and Alpine Fine Foods
Limited are all 100% owned subsidiaries of this Company. Central
Supplies (Brierley Hill) Ltd is a 95% owned subsidiary of this
Company
Details of interest payable and other finance charges in
relation to the former debenture holders (Pricoa Capital Group) are
disclosed in notes 7 and 21. Fees totalling GBP25,000 (FP20:
GBP60,000) were payable to Pricoa Capital Group in respect of the
period.
From 1 March 2016, Pricoa Capital Group (and entities related to
Pricoa Capital Group) were the holders of all the A ordinary shares
of GBP0.01 each. Following admission to AIM the Pricoa Capital
Group no longer hold any shares in the Company.
Key management personnel
Total compensation of key management personnel in the period
amounts to GBP714,114 (FP20: GBP1,073,593) in respect of short-term
employment benefits, GBPnil (FP20: GBPnil) in respect of
past-employment benefits and GBPnil (FP20: GBPnil) in respect of
termination benefits.
29 Ultimate controlling party
The Company is listed on the Alternative Investment Market of
the London Stock Exchange. Material shareholders are detailed
within the Directors' report. There is no ultimate controlling
party of the Group.
30 Post balance sheet events
Post year end the Group completed the acquisition of the entire
ordinary share capital of M.J. Baker Foodservice Limited. The
acquisition was funded through existing bank facilities and will be
incorporated into the existing Foodservice division.
Alternative performance measure glossary
This report provides alternative performance measures ("APMs"),
which are note defined or specified under the requirements of
International Financial Reporting Standards. The Board believes
that these APMs provide readers with important additional
information on the Group.
Alternative performance Definition and purpose
measure
------------------------ ----------------------------------------------------------------------------------
Adjusted operating Represents the operating profit prior to
profit exceptional (income) / expenses and share
based payment expenses. This measure is consistent
with how the Group measures performance and
is reported to the Board.
FY21 FP20
Note GBP000 GBP000
Total operating
profit 6,398 12,204
CPO income 4 (2,255) -
Restructuring costs 5 1,257 1,467
Acquisition expenses 5 181 628
Compensation for
post combination
services 5 1,278 2,358
Share based payment
expense 5 227 -
Adjusted operating
profit 7,086 16,477
Adjusted EBITDA Represents the operating profit prior to
exceptional (income) / expenses, share based
payment expenses, fixed asset depreciation
and intangible amortisation. This measure
is consistent with how the Group measures
trading and cash generative performance and
is reported to the Board.
FY21 FP20
Note GBP000 GBP000
Total operating
profit 6,398 12,204
Amortisation of
intangible assets 11 150 144
Depreciation 12,13 7,817 11,013
CPO income 4 (2,255) -
Restructuring
costs 5 1,257 1,467
Acquisition expenses 5 181 628
Compensation for
post combination
services 5 1,278 2,358
Share based payment
expense 5 227 -
Adjusted EBITDA 15,053 27,634
Pre tax operational Represents the cash generated from operating
cash conversion activities pre tax as a proportion of cash
flow from operating activities pre movements
in working capital and tax. This measure
informs the Board of the Group's cash conversion
from operating activities, is used to monitor
liquidity and is reported to the Board. FY21 FP20
GBP000 GBP000
Net cash inflow from
operating activities 7,916 35,855
Tax paid 2,432 2,693
Payments in respect
of compensation for
post combination services 2,925 -
Cash flow from operating
activities pre tax and
compensation for post
combination services
(1) 13,273 38,548
Movement in working
capital 2,418 (13,014)
Cash flow from operating
activities pre tax and
compensation for post
combination services
and movement in working
capital (2) 15,691 25,534
Pre tax operational
cash conversion (1)
divided by (2) 85% 151%
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END
FR TRMTTMTJTTFT
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February 28, 2022 02:00 ET (07:00 GMT)
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