TIDMRGD
RNS Number : 0720T
Real Good Food Company Plc (The)
22 September 2010
The Real Good Food Company plc (AIM: RGD)
Interim Results for the six months ended 30 June 2010
The Real Good Food Company plc ("the Group"), the sugars, ingredients and bakery
company, today announces Interim Results for six months ended 30 June 2010
Highlights
Ø EBITDA in line with expectations and 2009 driven by:
o Significant sales growth - 13% in Renshaw (Bakery Ingredients) and 20% in
Haydens (Bakery)
o Gross Delivered Margins up 3.2% vs. 2009
o Overheads up by GBP319k vs. 2009, in line with plan and reflecting the
Group's investment in commercial and operational resource at Hayden's and
Renshaw to support the business development plans in each business
o Sugar sales at Napier Brown down 19% mostly due to reduced Sugar cost levels
in the market following the Oct 2009 EU reference price reduction
Ø Much improved outlook for sugar market in second half of 2010 and in 2011
Ø Working capital reduction continues, with trading initiatives driving GBP1.5m
reduction (GBP2.0m overall including corporate tax repayment and post period end
adjustments) vs. June 2009
Ø Continued focus on cash driving reduction in net borrowings of GBP2.9m* vs.
June 2009
(*including GBP0.5m restatement of currency positions at June 2010)
Pieter Totté, Chairman of The Real Good Food Company plc, comments:
"I am delighted by the progress which the Group has made during the first half.
We have achieved significant sales growth at our bakery ingredients and bakery
businesses and while sugar has had a more difficult run with lower prices
following the end of the EU regime, the summer saw this being reversed to our
benefit."
"In sugar we are now seeing tighter and wider supply conditions and improved
pricing, while Renshaw and Haydens are well placed entering their key trading
season. All this gives me confidence in achieving market expectations for this
year and for the further development of all our businesses in the coming years."
22 September 2010
ENQUIRIES:
+---------------------------------------+------------------------+
| The Real Good Food Company plc | Tel: 0151 706 8200 |
+---------------------------------------+------------------------+
| Pieter Totté, Chairman | |
+---------------------------------------+------------------------+
| Mike McDonough, Group Finance | |
| Director | |
+---------------------------------------+------------------------+
| | |
+---------------------------------------+------------------------+
| Shore Capital | Tel: 020 7408 4090 |
+---------------------------------------+------------------------+
| Stephane Auton | |
+---------------------------------------+------------------------+
| | |
+---------------------------------------+------------------------+
| College Hill | Tel: 020 7457 2020 |
+---------------------------------------+------------------------+
| Gareth David | |
+---------------------------------------+------------------------+
CHAIRMAN'S STATEMENT
SUMMARY
I am delighted by the progress the Group has made during the first half with
both profitability and borrowings in line with expectations in what, as I have
commented previously, remains a transitional year for the Group.
We have weathered the low point in terms of sugar pricing, following the
reference price changes of the last two years and have taken the opportunity in
the past six months to widen our sugar supply base. Looking forward, we are now
starting to see the benefits of tighter supply conditions and a very encouraging
order book for the final quarter of this year and into 2011.
KEY FINANCIALS
+-----------------------------------------+-----------+------------+
| GBP'000s | 2010 | 2009 |
| | Six | Six Months |
| | Months | |
+-----------------------------------------+-----------+------------+
| | | |
+-----------------------------------------+-----------+------------+
| Sales | 90,735 | 101,697 |
| EBITDA | 580 | 591 |
+-----------------------------------------+-----------+------------+
| Working Capital (Fixed | 32,706 | 34,717 |
| Assets/Stock/Trade Debtors/Trade | 25,533 | 28,390 |
| Creditors) | | |
| Net Borrowings (Incl Cash Excl Loan | | |
| Notes) | | |
+-----------------------------------------+-----------+------------+
While overall group sales in the half year are lower by 11% to GBP90.7m, this
was primarily attributable to lower sugar prices, following the October 2009
reference price change, together with our withdrawal from some lower margin
business at the end of last year.
Strong sales growth has been achieved in both our baking ingredients business,
Renshaw, and in our cakes and desserts manufacturing business, Hayden's
Bakeries.
At Renshaw we are benefiting from the combination of growing export sales,
particularly to the US, together with the growing popularity of home baking and
sugar craft in the UK. This has driven a 14% increase in sales, together with
significantly improved profitability. Plans to further develop Renshaw as a
retail brand are making good progress.
Our turn-around plan for the Haydens Bakeries business is on track under the new
management team. First half sales rose by 20% and we are investing in the future
of this business through a plant modernisation programme and the establishment
of a large distribution centre adjacent to the existing premises.
EBITDA is in line with 2009 despite an increase in overheads of GBP319k compared
to H1 2009, reflecting the Group's planned investment in Commercial and
Operational resource at Haydens and Renshaw to support the business development
plans in each business. Overall delivered margins this year were GBP316k, up
(3%) on last year.
During all the challenges we have faced in developing the potential in each of
our three businesses over the past six months, we have continued to maintain a
strong focus on terms of trade and on cash. This has helped us to continue the
positive trends in both reducing working capital by GBP2.0m and borrowings by
GBP2.9m year on year.
Napier Brown (Sugar Division)
Napier Brown Foods supplies a range of sugar and dry ingredients to food
manufacturers and packs sugar for retail grocery and foodservice customers from
its facilities at Normanton, near Leeds and Garrett Ingredients at Thornbury,
near Bristol.
The sugar business has had to operate in a difficult market as it has gone
through the transitional period following the final stage of the reform of the
EU sugar regime in October 2009. Lower pricing has hit sales value and sales
volumes have been down as a result of the business withdrawing from unprofitable
contracts later in 2009, however, the number of customers being served has
grown. The Garrett Ingredients business, which sells dairy powders, sugar and
other ingredients to smaller industrial customers, has performed particularly
well following the recruitment in March of a new Managing Director.
We now have a clearly defined strategy for the business, and have begun to
implement plans to benefit from the tightening of the market supply position.
These plans include:
1. A broadening of its supply base with new supply partnerships procuring
sugar (both beet and cane) from the UK, EU and the rest of the world
2. A restructuring into four focused business units; bulk, bags, retail and
Garrett Ingredients
3. Investment in the Normanton processing and manufacturing site to ensure
maximum flexibility to provide customers with a broad range of sugars in
whatever format they require
These initiatives have already begun to bear fruit, as shortages in supply
pushed up prices earlier than anticipated during the summer. Sales volumes will
rise following the October contract season as customers have increasingly
recognised the crucial role that Napier Brown, with its 'multi-sourcing
strategy' and distribution flexibility, can play in providing supply security in
an uncertain market.
Looking ahead, Napier Brown will be servicing a greater number of customers and
is gearing up both operationally and from a customer service perspective to
handle this.
Renshaw (Bakery Ingredients Division)
Renshaw supplies a range of high quality food ingredients primarily to the
bakery sector, comprising craft bakers and major cake manufacturers and also to
grocery retailers. It operates two facilities, one in Liverpool and the other in
Carluke, south-east of Glasgow.
Renshaw has enjoyed strong sales growth since the second half of last year
driving increased profitability, with all sectors of the business doing well. In
particular sales to our retail export and domestic markets continue to grow. The
trend in home baking and crafting is continuing in the US and UK, with more
shoppers entering the category, shopping more frequently and spending more
money.
Sales in our bakery and wholesale channels remain buoyant, driven by new product
developments, particularly for dessert products, and increased focus in the
wholesale sector. We have introduced additional shift patterns to cope with this
increased demand and to ensure we are well placed for the busier second half of
the year, in a business which remains very seasonal, with the bulk of
profitability coming in the final quarter of the year.
To further support this rapid growth, we have strengthened our operations and
commercial teams, both in terms of level of resource and capabilities. Together
with additional investment in plant, we have been able to maintain a high level
of service to our customers and are well prepared for our main trading season in
the lead up to Christmas.
Our innovations activity has increased and we have invested in our core brands
through development of a number of new branded product initiatives. As a result
we are in the process of launching a new range of premium jams to the regional
retail trade under our R&W Scott brand and have developed an exciting range of
new and unique products, which will further enhance our business and that of our
customers.
Haydens Bakeries (Bakery Division)
Haydens Bakeries produces chilled and ambient premium-quality patisserie and
dessert products, principally for three retail customers: Waitrose, Marks &
Spencer and Costa Coffee. It operates from a site in Devizes, Wiltshire.
Haydens Bakery continues to demonstrate sustainable recovery as part of our
three-year turn-around plan, and the strong sales growth reflects a growing
appetite for the high quality, added value and hand crafted products that
Haydens produces. The EBITDA performance was in line with our expectations, and
reflects a planned increase in quality management at operating level, to drive
and control the future aspirations of the team, together with input cost
increases to the business.
The new management team is undertaking a number of initiatives to strengthen the
business and I am pleased to report that all of these are on track, including
the addition of 36,000 sq. ft of space, which will enable delivery of our growth
plans for this business. Looking to the seasonally-stronger second half, all
major sales initiatives for the period have been agreed with customers, action
is being taken to recover material cost increases, while completion of the new
facility is on track for Q1 of next year.
SIGNIFICANT ITEMS
During the period the Group incurred a number of significant costs primarily
people-related in reshaping the Haydens management team and in completing
management reorganisation within the Renshaw and Napier Brown businesses.
CASH FLOW AND DEBT
The positive trend in reducing debt continues, driven primarily by reductions in
working capital. At 30 June 2010, net assets stood at GBP32.7m.
Net Borrowings (excluding GBP2.8m of Loan Notes) at GBP25.5m on 30 June 2010
follow a similar pattern, and are down GBP2.9m on 30 June 2009. This reduction
has been revised upwards by GBP0.5m since the trading update in July following a
restatement of the Group's currency positions. In line with our normal
seasonality both Net Assets and Borrowings are up since the year end, by GBP3.0M
and GBP4.2m respectively.
OUTLOOK
I am delighted by the progress which the Group has made during the first half,
with a turning point finally reached in our sugar business after several
difficult years. The outlook for sugar is very encouraging, with expectations
of increased volumes across all sectors rising further in 2011 as Napier Brown's
competitive advantages in terms of product range, service to customers, supply
security and ability to manage complexity all come to the fore.
The tighter, and wider, supply conditions and improved pricing in the sugar
business along with the significant growth already achieved in both Renshaw and
Haydens gives me confidence in anticipating improved trading results for the
second half and in the coming years.
PIETER TOTTE
Chairman
22 September 2010
REPORT OF THE AUDITORS
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2010, which comprises the consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of changes
in equity, consolidated statement of cashflows and the related notes. We have
read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company, as a body, in accordance with our
instructions. Our review has been undertaken so that we might state to the
company those matters we are required to state to them in a review report and
for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company, for our work, for
this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting," as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union.
Horwath Clark Whitehill LLP
Chartered Accountants
10 Palace Avenue
Maidstone
Kent
ME15 6NF
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDING 30 JUNE 2010 (UNAUDITED)
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| |Notes | Period ended 30 June | Period Ended 30 |
| | | 2010 | June 2009 |
| | | | |
+--------------------+-------+---------------------------------------+---------------------------------------+
| | | Before | Significant | Total | Before | Significant | Total |
| | | Significant | Items | | Significant | Items | |
| | | Items | | | Items | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| CONTINUING | | | | | | | |
| OPERATIONS | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| REVENUE | | 90,735 | - | 90,735 | 101,697 | - | 101,697 |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Cost of sales | | (81,620) | - | (81,620) | (92,043) | - | (92,043) |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| GROSS PROFIT | | 9,115 | - | 9,115 | 9,654 | - | 9,654 |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Distribution | | (3,752) | - | (3,752) | (4,113) | - | (4,113) |
| costs | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Administration | | (5,802) | (189) | (5,991) | (5,962) | (84) | (6,046) |
| expenses | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| OPERATING | | (439) | (189) | (628) | (421) | (84) | (505) |
| (LOSS)/PROFIT | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Finance income | | - | - | - | 3 | - | 3 |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Finance costs | | (709) | - | (709) | (683) | - | (683) |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Net Pension | | 39 | - | 39 | (9) | - | (9) |
| finance | | | | | | | |
| (cost)/income | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| LOSS BEFORE | | (1,109) | (189) | (1,298) | (1,110) | (84) | (1,194) |
| TAXATION | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Taxation | | 310 | 53 | 363 | 281 | 24 | 305 |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| LOSS FROM | | | | | | | |
| CONTINUING | | (799) | (136) | (935) | (829) | (60) | (889) |
| OPERATIONS | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| LOSS FOR THE | | (799) | (136) | (935) | (829) | (60) | (889) |
| PERIOD | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Other | | | | | | | |
| comprehensive | | | | | | | |
| income | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Actuarial losses | | | | | | | |
| on defined benefit | | (338) | - | (338) | (1,771) | - | (1,771) |
| plans | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Income tax | | | | | | | |
| relating to | | 128 | - | 128 | 482 | - | 482 |
| components of | | | | | | | |
| other | | | | | | | |
| comprehensive | | | | | | | |
| income | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| TOTAL | | | | | | | |
| COMPREHENSIVE | | (1,009) | (136) | (1,145) | (2,118) | (60) | (2,178) |
| INCOME FOR THE | | | | | | | |
| PERIOD | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Basic Loss per | 5 | (1.2) | | (1.4) | (1.3) | | (1.4) |
| share | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
| Diluted Loss | 5 | (1.2) | | (1.4) | (1.3) | | (1.4) |
| per share | | | | | | | |
+--------------------+-------+-------------+-------------+-----------+-------------+-------------+-----------+
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2010 (UNAUDITED)
+-------------------------------+-+----------+----------+----------+
| GROUP FINANCIAL POSITION | | | | |
| As at 30 June 2010 | | | | |
+-------------------------------+-+----------+----------+----------+
| | | 30 June | 30 June | 31 Dec |
| | | 2010 | 2009 | 2009 |
+-------------------------------+-+----------+----------+----------+
| | | GBP'000s | GBP'000s | GBP'000s |
+-------------------------------+-+----------+----------+----------+
| ASSETS | | | | |
| Non Current Assets | | | | |
+-------------------------------+-+----------+----------+----------+
| Goodwill | | 75,796 | 75,796 | 75,796 |
+-------------------------------+-+----------+----------+----------+
| Intangibles | | 687 | 485 | 651 |
+-------------------------------+-+----------+----------+----------+
| Property, plant and equipment | | 14,979 | 15,644 | 15,226 |
+-------------------------------+-+----------+----------+----------+
| Deferred tax asset | | 959 | 1,600 | 431 |
+-------------------------------+-+----------+----------+----------+
| | | 92,421 | 93,153 | 92,104 |
+-------------------------------+-+----------+----------+----------+
| | | | | |
+-------------------------------+-+----------+----------+----------+
| Current Assets | | | | |
+-------------------------------+-+----------+----------+----------+
| Inventory | | 11,038 | 10,291 | 9,570 |
+-------------------------------+-+----------+----------+----------+
| Trade and other receivables | | 24,804 | 23,913 | 23,452 |
+-------------------------------+-+----------+----------+----------+
| Financial instruments at fair | | - | 25 | - |
| value | | | | |
+-------------------------------+-+----------+----------+----------+
| Corporation tax | | - | 574 | - |
+-------------------------------+-+----------+----------+----------+
| Cash and cash equivalents | | 1,796 | 2,208 | 5,657 |
+-------------------------------+-+----------+----------+----------+
| | | 37,638 | 37,011 | 38,679 |
+-------------------------------+-+----------+----------+----------+
| Total Assets | | 130,059 | 130,536 | 130,783 |
+-------------------------------+-+----------+----------+----------+
| | | | | |
+-------------------------------+-+----------+----------+----------+
| LIABILITIES | | | | |
| Current Liabilities | | | | |
+-------------------------------+-+----------+----------+----------+
| Borrowings | | 20,453 | 20,642 | 18,373 |
+-------------------------------+-+----------+----------+----------+
| Trade and other payables | | 18,644 | 16,189 | 19,023 |
+-------------------------------+-+----------+----------+----------+
| Current tax liabilities | | 158 | - | 158 |
+-------------------------------+-+----------+----------+----------+
| Financial instruments at fair | | 92 | 160 | - |
| value | | | | |
+-------------------------------+-+----------+----------+----------+
| | | 39,347 | 36,991 | 37,554 |
+-------------------------------+-+----------+----------+----------+
| | | | | |
+-------------------------------+-+----------+----------+----------+
| Non Current Liabilities | | | | |
+-------------------------------+-+----------+----------+----------+
| Borrowings | | 9,649 | 12,729 | 11,430 |
+-------------------------------+-+----------+----------+----------+
| Deferred tax | | 3,223 | 2,963 | 3,187 |
+-------------------------------+-+----------+----------+----------+
| Provisions | | - | 452 | - |
+-------------------------------+-+----------+----------+----------+
| Retirement benefit | | 949 | 1,995 | 582 |
| obligations | | | | |
+-------------------------------+-+----------+----------+----------+
| | | 13,821 | 18,139 | 15,199 |
+-------------------------------+-+----------+----------+----------+
| | | 76,891 | 75,406 | 78,030 |
| Net Assets | | | | |
+-------------------------------+-+----------+----------+----------+
| | | | | |
+-------------------------------+-+----------+----------+----------+
| SHAREHOLDERS' EQUITY | | | | |
+-------------------------------+-+----------+----------+----------+
| Called up share capital | | 1,300 | 1,300 | 1,300 |
+-------------------------------+-+----------+----------+----------+
| Share premium account | | 68,870 | 68,870 | 68,870 |
+-------------------------------+-+----------+----------+----------+
| Other reserves | | 79 | 83 | 73 |
+-------------------------------+-+----------+----------+----------+
| Profit and loss account | | 6,642 | 5,153 | 7,787 |
+-------------------------------+-+----------+----------+----------+
| | | | | |
+-------------------------------+-+----------+----------+----------+
| Total Equity | | 76,891 | 75,406 | 78,030 |
+-------------------------------+-+----------+----------+----------+
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDING 30 JUNE 2010
(UNAUDITED)
+--------------------------+----------+----------+----------+----------+----------+
| | Issued | Share | IFRS 2 | Retained | Total |
| | | Premium | Share | Earnings | |
| | Share | Account | Option | | |
| | Capital | | reserve | | |
+--------------------------+----------+----------+----------+----------+----------+
| | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| Balance at 1 January | 1,300 | 68,870 | 73 | 7,331 | 77,574 |
| 2009 | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| Shares to be issued - | - | - | 10 | - | 10 |
| Options | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| Total comprehensive | - | - | - | (2,178) | (2,178) |
| income for the period | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| Balances as at 30 June | 1,300 | 68,870 | 83 | 5,153 | 75,406 |
| 2009 | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| Balance at 1 January | 1,300 | 68,870 | 73 | 7,787 | 78,030 |
| 2010 | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| Shares to be issued - | - | - | 6 | - | 6 |
| Options | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| Total comprehensive | - | - | - | (1,145) | (1,145) |
| income for the period | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
| Balances as at 30 June | 1,300 | 68,870 | 79 | 6,642 | 76,891 |
| 2010 | | | | | |
+--------------------------+----------+----------+----------+----------+----------+
STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDING 30 JUNE 2010 (UNAUDITIED)
+--------------------------------+---+--+----------+---+-+------------+----------+------------+
| | | 6 months to | | 6 months |
| | | 30 June | | to |
| | | 2010 | | 30 June |
| | | | | 2009 |
+--------------------------------+---------------------+--------------+----------+------------+
| | | GBP'000s | | GBP'000s |
+--------------------------------+---------------------+--------------+----------+------------+
| CASH FLOW FROM OPERATING ACTIVITIES | | | |
+------------------------------------------------------+--------------+----------+------------+
| Loss for the period before taxation | | (1,298) | | (1,194) |
+---------------------------------------+----------------+------------+----------+------------+
| Adjusted for: | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| Finance costs | | 709 | | 683 |
+---------------------------------------+----------------+------------+----------+------------+
| Finance income | | - | | (3) |
+---------------------------------------+----------------+------------+----------+------------+
| IAS 19 cost/(income) | | (39) | | 9 |
+---------------------------------------+----------------+------------+----------+------------+
| Depreciation of property, plant & | | 956 | | 963 |
| equipment | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| Amortisation of intangibles | | 63 | | 49 |
+---------------------------------------+----------------+------------+----------+------------+
| Share based payment expense | | 6 | | 10 |
+---------------------------------------+----------------+------------+----------+------------+
| Release of provision | | - | | (188) |
+---------------------------------------+----------------+------------+----------+------------+
| Operating Cash Flow | | 397 | | 329 |
+---------------------------------------+----------------+------------+----------+------------+
| | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| Decrease/(Increase) in inventories | | (1,468) | | 667 |
+---------------------------------------+----------------+------------+----------+------------+
| Decrease/(increase) in receivables | | (1,353) | | 850 |
+---------------------------------------+----------------+------------+----------+------------+
| (Decrease)/Increase in payables | | (216) | | (592) |
+---------------------------------------+----------------+------------+----------+------------+
| Cash generated from operations | | (2,640) | | 1,254 |
+---------------------------------------+----------------+------------+----------+------------+
| | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| Income taxes received | | - | | 295 |
+---------------------------------------+----------------+------------+----------+------------+
| Interest paid | | (709) | | (1,045) |
+---------------------------------------+----------------+------------+----------+------------+
| Net cash from operating activities | | (3,349) | | 504 |
+---------------------------------------+----------------+------------+----------+------------+
| | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| CASH FLOW FROM INVESTING ACTIVITIES | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| Interest received | | - | | - |
+---------------------------------------+----------------+------------+----------+------------+
| Income tax paid on disposal of | | - | | - |
| division | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| Purchase of intangible assets | | (39) | | - |
+---------------------------------------+----------------+------------+----------+------------+
| Purchase of property, plant & | | (772) | | (222) |
| equipment | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| Net cash used in investing activities | | (811) | | (222) |
+---------------------------------------+----------------+------------+----------+------------+
| | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| CASH FLOW USED IN FINANCING | | | | |
| ACTIVITIES | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| Drawdown/(Repayment) of borrowings | | 441 | | 604 |
+---------------------------------------+----------------+------------+----------+------------+
| Repayment of obligations under | | (142) | | (142) |
| finance leases | | | | |
+---------------------------------------+----------------+------------+----------+------------+
| | | | | |
+------------------------------------+-------------------+------------+----------+------------+
| Net cash used in financing activities | | 299 | | 462 |
+--------------------------------------------------+-----+------------+----------+------------+
| | | (3,861) | | 744 |
| NET INCREASE/(DECREASE) IN CASH AND CASH | | | | |
| EQUIVALENTS | | | | |
+--------------------------------------------------+-----+------------+----------+------------+
| | | | | |
+--------------------------------------------------+-----+------------+----------+------------+
| CASH AND CASH EQUIVALENTS | | | | |
+--------------------------------------------------+-----+------------+----------+------------+
| Cash and cash equivalents at beginning of year | | 5,657 | | 1,464 |
+--------------------------------------------------+-----+------------+----------+------------+
| Net movement in cash and cash equivalents | | (3,861) | | 744 |
+--------------------------------------------------+-----+------------+----------+------------+
| | | |
+--------------------------------------------------+-----+------------------------------------+
| Cash and cash equivalents at balance sheet date | | 1,796 | | 2,208 |
+--------------------------------------------------+-----+------------+----------+------------+
| | | | | |
+--------------------------------------------------+-----+------------+----------+------------+
| | | | | |
| Cash and cash equivalents comprise: | | | | |
+--------------------------------------------------+-----+------------+----------+------------+
| Cash | | 1,796 | | 2,208 |
+--------------------------------------------------+-----+------------+----------+------------+
| Overdrafts | | - | | - |
+--------------------------------------------------+-----+------------+----------+------------+
| | | 1,796 | | 2,208 |
+--------------------------------------------------+-----+------------+----------+------------+
| | | | | |
+--------------------------------------------------+-----+------------+----------+------------+
| | | |
+---------------------------------------------------------------------+----------+------------+
| | | | | | | | | |
+--------------------------------+---+--+----------+---+-+------------+----------+------------+
NOTES TO THE INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2010
1. GENERAL INFORMATION
The Real Good Food Company Plc is a public limited company ("company")
incorporated in the United Kingdom under the Companies Act (registration number
4666282). The Company is domiciled in the United Kingdom and its registered
address is 229, Crown Street, Liverpool, Merseyside. L8 7RF. The Company's
shares are traded on the Alternative Investment Market ("AIM").
The principal activities of the Group are the sourcing, manufacture, marketing
and distribution of food and industrial ingredients.
Copies of the interim report are being sent to shareholders. Further copies of
the interim report and Annual Report and Accounts may be obtained from the
address above.
2. BASIS OF PREPARATION
These consolidated financial statements are presented on the basis of
International Financial Reporting Standards (IFRS) as adopted by the European
Union and interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) and have been prepared in accordance with AIM
rules and the Companies Act 2006, as applicable to companies reporting under
IFRS.
The financial information set out in this document does not comprise of the
statutory accounts of the Company within the meaning of Part 15 of the Companies
Act 2006.
New IFRS standards and interpretations not adopted
Certain new standards, amendments and interpretations of existing standards that
have been published and which are effective for the Company's accounting periods
beginning on or after 1 December 2010 and which are applicable to the company,
but which have not been adopted early are:
· IAS 39 Financial instruments: Recognition and measurement (amendment) -
Eligible Hedged Items
· IFRS 7 Improving disclosures about financial instruments (amendments and
disclosures)
· IRIC 18 Transfers of Assets from Customers
· Amendment to IAS 32 Classification of Rights Issues
· Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions
· Improvements to IFRS (covering IFRS 3 & 7 and IAS 1 & 34 and IFRIC 13)
· Improvements to IFRS (covering IFRS 2 & 8 and IAS 1, 7, 17, 18, 36, 38 &
39 and IFRIC 9)
The adoption of these standards, amendments and interpretations is not expected
to have a material impact on the Company's profit for the year or its equity.
Application of these standards will result in some changes in presentation of
information within the consolidated financial statements.
3. SIGNIFICANT ITEMS
It is the Company's policy to show items that it considers being of a
significant nature separately on the face of the Consolidated Statement of
Comprehensive Income in order to assist the reader to understand the accounts.
The Company defines the term significant as items that are material in respect
to their size and nature, for example a major restructuring of the activities of
the Group. Summary details of significant items are shown in the Chairman's
statement which forms part of this half yearly financial report.
4. SEGMENT ANALYSIS
Business segments
The Group's operating segments are Sugar, Bakery Ingredients and Bakery as the
Group's management and reporting structure is set out along these lines.
The following table shows the Group's revenue and results for the period under
review analysed by operating segment. Segment profit represents the trading
profit after depreciation but before any interest and significant items.
+-----------+---------+-------------+----------+-------------+----------+-------------+-------------+-------------+
| Six months to 30 June 2010 | Bakery | Bakery | Total | | Total |
| | Ingredients | | Before | | After |
| | | | Significant | | Significant |
| | | | Items | | Items |
+----------------------------------------------+ + + +-------------+ +
| | | | | Sugar | | Significant |
| | | | | | | Items |
+---------------------+-------------+----------+-------------+------------------------+-------------+-------------+
| | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| | | | | | | |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| Total revenue | 63,887 | 16,950 | 11,516 | 92,353 | - | 92,353 |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| Revenue - internal | (1,452) | (166) | - | (1,618) | - | (1,618) |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| | | | | | | |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| External Revenue | 62,435 | 16,784 | 11,516 | 90,735 | - | 90,735 |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| | | | | | | |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| Operating | 31 | 647 | (477) | 201 | (189) | 12 |
| Profit/(Loss) | | | | | | |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| | | | | | | |
+---------------------+------------------------+-------------+----------+-------------+-------------+-------------+
| Finance costs (net of interest | | | (709) | - | (709) |
| received) | | | | | |
+----------------------------------------------+-------------+----------+-------------+-------------+-------------+
| Pension finance costs | | | 39 | - | 39 |
+----------------------------------------------+-------------+----------+-------------+-------------+-------------+
| Head office and consolidated | | | (640) | - | (640) |
| adjustments | | | | | |
+----------------------------------------------+-------------+----------+-------------+-------------+-------------+
| | | (1,109) | (189) | (1,298) |
| Loss before tax | | | | |
| | | | | |
+------------------------------------------------------------+----------+-------------+-------------+-------------+
| Tax | | | | 310 | 53 | 363 |
+-----------+-----------------------+------------------------+----------+-------------+-------------+-------------+
| | | | | | | |
+-----------+-----------------------+------------------------+----------+-------------+-------------+-------------+
| Loss after tax as per income | | (799) | (136) | (935) |
| statement | | | | |
+------------------------------------------------------------+----------+-------------+-------------+-------------+
| | | | | | | | | |
+-----------+---------+-------------+----------+-------------+----------+-------------+-------------+-------------+
Inter-segment sales are charged at prevailing market rates.
The Group operates a central function; therefore finance costs cannot be
meaningfully allocated to individual operating segment
5. SEGMENT REPORTING (continued)
+----------------------+----------+-------------+----------+-------------+----------+
| As At 30 June 2010 | Sugar | Bakery | Bakery | Unallocated | Total |
| | | Ingredients | | | Group |
+----------------------+----------+-------------+----------+-------------+----------+
| | GBP'000s | GBP'000s | GBP'000s | GBP'000s | GBP'000s |
+----------------------+----------+-------------+----------+-------------+----------+
| | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Segment assets | 25,947 | 19,942 | 6,106 | | 51,995 |
+----------------------+----------+-------------+----------+-------------+----------+
| Unallocated assets | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Goodwill | | | | | 75,796 |
+----------------------+----------+-------------+----------+-------------+----------+
| Other intangible | | | | | - |
| assets | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Property, plant | | | | | 7 |
| and equipment | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Deferred tax | | | | | 959 |
| assets | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Inventory | | | | | - |
+----------------------+----------+-------------+----------+-------------+----------+
| Trade and other | | | | | 526 |
| receivables | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Derived | | | | | - |
| financial assets | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Current tax | | | | | 705 |
| assets | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Cash and cash | | | | | 71 |
| equivalents | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Total assets | | | | | 130,059 |
+----------------------+----------+-------------+----------+-------------+----------+
| | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Segment | (25,995) | (8,849) | (3,852) | | (38,696) |
| liabilities | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Unallocated | | | | | |
| liabilities | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Trade and other | | | | | (197) |
| payables | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Borrowings | | | | | (11,544) |
+----------------------+----------+-------------+----------+-------------+----------+
| Derived | | | | | (-) |
| financial | | | | | |
| instruments | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Current tax | | | | | (158) |
| liabilities | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Deferred tax | | | | | (2,573) |
| liabilities | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Provisions | | | | | (-) |
+----------------------+----------+-------------+----------+-------------+----------+
| | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Total | | | | | (53,168) |
| liabilities | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Net operating | (48) | 11,093 | 2,254 | | 76,891 |
| (liabilities)/assets | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Non current asset | 51 | 347 | 413 | - | 811 |
| additions | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
| Depreciation | 239 | 395 | 320 | 2 | 956 |
+----------------------+----------+-------------+----------+-------------+----------+
| Amortisation | 10 | 38 | 14 | 1 | 63 |
+----------------------+----------+-------------+----------+-------------+----------+
| | | | | | |
+----------------------+----------+-------------+----------+-------------+----------+
Geographical segments
The Group earns revenue from countries outside the United Kingdom, but as these
only represent 2.6% of the total revenue of the Group, segmental reporting of a
geographical nature is not considered relevant.
6. EARNINGS PER ORDINARY SHARE
Earnings per share is calculated on the basis of the loss for the period after
tax, divided by the weighted average number of shares in issue for 2010
of 65,014,348 (2009: 65,014,348).
Diluted loss per share is calculated by adjusting the weighted average number of
ordinary shares outstanding to assume conversion of all potential dilutive
ordinary shares. Potential dilutive ordinary shares arise from share options and
warrants. For these, a calculation is performed to determine the number of
shares that could have been acquired at fair value (determined as the average
annual market share price of the Company's shares) based on the monetary value
of the exercise price attached to outstanding share options. Thus the dilutive
weighted average number of shares considers the number of shares that would have
been issued assuming the exercise of the share options.
An adjusted loss per share and a diluted adjusted loss per share, which exclude
significant items, has also been calculated as in the opinion of the Board this
will allow shareholders to gain a clearer understanding of the trading
performance of the Group.
+-------+------------+-------+----------+------------+--------+------------+----------+------------+--------+
| | | | Six months to 30 June | | Six months to 30 June |
| | | | 2010 | | 2009 |
+-------+------------+-------+--------------------------------+------------+--------------------------------+
| | | | Earnings | Weighted | Per | | Earnings | Weighted | Per |
| | | | | Average | share | | GBP'000s | Average | share |
| | | | GBP'000s | No. | amount | | | No. of | amount |
| | | | | of | pence | | | shares | pence |
| | | | | shares | | | | | |
+-------+------------+-------+----------+------------+--------+------------+----------+------------+--------+
| | | | | | | | | |
+--------------------+-------+----------+------------+--------+------------+----------+------------+--------+
| Loss attributable | | (935) | 65,014,348 | (1.4) | | (889) | 65,014,348 | (1.4) |
| to ordinary | | | | | | | | |
| shareholders | | | | | | | | |
+ +-------+ + + +------------+ + + +
| | | | | | | | | |
+--------------------+-------+----------+------------+--------+------------+----------+------------+--------+
| | | | | | | | | | |
+-------+------------+-------+----------+------------+--------+------------+----------+------------+--------+
| Significant items | | 136 | - | - | | 60 | - | - |
+--------------------+-------+----------+------------+--------+------------+----------+------------+--------+
| | | | | | | | | |
+--------------------+-------+----------+------------+--------+------------+----------+------------+--------+
| Adjusted Loss per | | (799) | 65,014,348 | (1.2) | | (829) | 65,014,348 | (1.3) |
| share | | | | | | | | |
+--------------------+-------+----------+------------+--------+------------+----------+------------+--------+
| | | | | | | | | | |
+-------+------------+-------+----------+------------+--------+------------+----------+------------+--------+
| Dilutive effect of | | - | - | - | | - | - | - |
| options | | | | | | | | |
+--------------------+-------+----------+------------+--------+------------+----------+------------+--------+
| Dilutive effect of | | - | - | - | | - | - | - |
| warrants | | | | | | | | |
+--------------------+-------+----------+------------+--------+------------+----------+------------+--------+
| | | | | | | | | | |
+-------+------------+-------+----------+------------+--------+------------+----------+------------+--------+
| Diluted loss per | | (935) | 65,014,348 | (1.4) | | (889) | 65,014,348 | (1.4) |
| share | | | | | | | | |
+--------------------+-------+----------+------------+--------+------------+----------+------------+--------+
| | | | | | | | |
+----------------------------+----------+------------+--------+------------+----------+------------+--------+
| | | | | | | | |
+----------------------------+----------+------------+--------+------------+----------+------------+--------+
| Diluted adjusted loss | (799) | 65,014,348 | (1.2) | | (829) | 65,014,348 | (1.3) |
| per share | | | | | | | |
+----------------------------+----------+------------+--------+------------+----------+------------+--------+
| | | | | | | | |
| | | | | | | | |
+-------+------------+-------+----------+------------+--------+------------+----------+------------+--------+
7. DIVIDENDS
No dividend is proposed for the six months ended 30 June 2010 (2009 Nil).
8. TAXATION
The charge for taxation is based on the results for the period and takes into
account taxation deferred because of timing differences between the treatment of
certain items for taxation and accounting purposes.
Provision is made in full for taxation deferred in respect of timing differences
that have originated but not reversed by the balance sheet date, except for
gains on disposal of fixed assets which will be rolled over into replacement
assets. No provision is made for taxation on permanent differences. Deferred
tax is not discounted.
Deferred tax assets are recognised to the extent that it is more likely than not
that they will be recovered.
9. PENSION ARRANGEMENTS
A subsidiary of the Group, Renshaw Napier Limited, operates a defined benefit
pension scheme, the Napier Brown Retirement Benefits Scheme. The assets of the
scheme are held separately from those of the Group in an independently
administered fund. The contributions made by the employer over the six-month
period have been GBP48,870.
Assumptions
The assets of the scheme have been taken at market value and the liabilities
have been calculated using the following principal actuarial assumptions:
+--------------------------------+-------------+--------------+
| | 30 June | 31 December |
| | 2010 | 2009 |
| | % per annum | % per annum |
+--------------------------------+-------------+--------------+
| Rate of increase in pensions | 3.00 | 3.10 |
| in payment | | |
+--------------------------------+-------------+--------------+
| Discount rate | 5.70 | 6.00 |
+--------------------------------+-------------+--------------+
| Inflation assumption | 2.80 | 3.10 |
+--------------------------------+-------------+--------------+
| Revaluation rate for deferred | 2.80 | 3.10 |
| pensions | | |
+--------------------------------+-------------+--------------+
The fair value of the assets in the scheme, the present value of the liabilities
in the scheme and the expected rate of return at each balance sheet date were:
+--------------------------------+-------------+--------------+
| | 30 June | 31 December |
| | 2010 | 2009 |
| | % | % |
+--------------------------------+-------------+--------------+
| Equities | 7.50 | 6.90 |
+--------------------------------+-------------+--------------+
| Bonds | 5.60 | 5.64 |
+--------------------------------+-------------+--------------+
| Gilts | 4.40 | 5.64 |
+--------------------------------+-------------+--------------+
| Property | 6.50 | 5.90 |
+--------------------------------+-------------+--------------+
| Cash | 4.20 | 3.50 |
+--------------------------------+-------------+--------------+
+--------------------------------+-------------+--------------+
| | 30 June | 31 December |
| | 2010 | 2009 |
| | GBP'000s | GBP'000s |
+--------------------------------+-------------+--------------+
| Total fair value of assets | 15,623 | 15,363 |
+--------------------------------+-------------+--------------+
| Present value of scheme | (16,572) | (15,945) |
| liabilities | | |
+--------------------------------+-------------+--------------+
| Deficit in the scheme | (949) | (582) |
+--------------------------------+-------------+--------------+
The scheme is a closed scheme and therefore under the projected unit method the
current service cost would be expected to increase as the members of the scheme
approach retirement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KKDDDABKDQCB
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