TIDMRGD
RNS Number : 9646N
Real Good Food Company Plc (The)
01 August 2014
The Real Good Food Company plc (AIM:RGD)
Final Results for the year ended 31 March 2014
The Real Good Food Company plc ("the Group") is a diversified
food business, serving a number of market sectors including retail,
manufacturing, wholesale, foodservice and export. The Group is a
major distributor of sugar in the UK, and manufactures a wide range
of baking ingredients, jams and sweet bakery products. Its
portfolio of brands includes Whitworths Sugar, Renshaw and R&W
Scott.
KEY POINTS 31 March As restated
2014 31 March 2013
GBP'000s GBP'000s
Revenue 272,576 265,754
EBITDA 3,296 10,466
(Loss)/Profit before taxation(1) (992) 6,631
EPS:
Basic (adjusted) (1) (0.34)p 7.50p
Diluted (adjusted) (2) (0.34)p 7.0p
Working Capital (Fixed Assets/Stock/Trade
Debtors & Trade Creditors) 46,941 42,555
Net Borrowings (Incl Cash) 31,133 24,952
Net Debt/EBITDA 9.5 2.4
(1) before significant items
(2) As the group is loss making in the year under review the
diluted earnings per share is the same as the basic earnings per
share
-- Results overshadowed by impact of sugar supply dispute with British Sugar ("BS")
-- Despite the BS dispute, Napier Brown has secured significant
retail and wholesale contracts, driving Whitworths brand growth
-- Stallingborough Sugar Hub now operational, boosting Napier
Brown's capability to handle imported sugar from all sources
-- Focus on establishing commercially led autonomous divisions gaining momentum
-- Renshaw Sales and EBITDA up 4.7% and 10.4% respectively
-- Haydens Sales up 7.6% and improved operational performance
increased EBITDA by GBP0.6 million
-- Real Good Food Europe established in Brussels, offering
better access to opportunities across the EU, initially to Renshaw
and R&W Scott
Pieter Totté, Chairman, comments:
"It would be easy to focus on the impact on our results caused
by what we believe to be anti-competitive behaviour by British
Sugar, but we have previously disclosed the background to this
matter in our 21(st) February Trading Statement.
"The reduction in Group EBITDA to GBP3.3 million hides
significant progress in a number of operating divisions. In
particular, the Renshaw result was very encouraging, while at
Haydens it is clear that the new business model is beginning to
deliver.
"We remain in close dialogue with the Competition and Markets
Authority ("CMA") and are hopeful that the regulator will take the
necessary steps to ensure that competition law is enforced.
However, as we indicated in our recent updates, the current sugar
contract year does not end until 30(th) September, coinciding with
our half year so despite continued strong trading at Renshaw and
Haydens, our first half performance will still be materially
affected. Beyond that, negotiations for the new sugar contract year
are progressing and we are working on a number of strategic
sourcing initiatives on the back of our investment in the
Stallingborough Sugar Hub which will bring long term benefits."
ENQUIRIES
Real Good Food
Pieter Totté, Chairman Tel: 020 3056
1516
Mike McDonough, Finance Director Tel: 0151 706
8200
Shore Capital & Corporate Tel: 020 7408
(Nomad and Joint Broker) 4090
Stephane Auton
Patrick Castle
Daniel Stewart and Company Tel: 020 7776
Plc 6550
(Joint Broker)
Martin Lampshire
Cubitt Consulting Tel: 020 7367
5100
Gareth David
Cebuan Bliss
Chairman's Statement
2013/14 Review
"It would be easy to focus on the impact on our results caused
by what we believe to be anti-competitive behaviour by British
Sugar, but we have previously disclosed the background to this
matter in our 21st February Trading Statement. We strongly believe
in our case and think that British Sugar's actions contravene the
requirements of the regulatory authorities. Napier Brown has a
proud history of bringing competition to the market and we are
simply asking to continue to operate under a regulatory regime
which has been successful for the past 25 years. Once we have some
guidance from the Competition and Markets Authority ("CMA") on our
complaint we will respond accordingly but in the meantime I will
focus on the remainder of the Group where we are pleased to report
significant progress.
The reduction in Group EBITDA to GBP3.3 million hides
significant progress in a number of the operating divisions.
Renshaw's result was very encouraging as we are now beginning to
see the results of the company re-branding exercise flow through
into performance. Sales, margins and EBITDA all recorded
significant YOY growth. The same was true at Haydens where it is
clear that the new business model is beginning to deliver. R&W
Scott is at an earlier stage in the process of becoming a fully
stand-alone business but progress is encouraging. Garrett
Ingredients' performance was clearly affected by the sugar dispute
though the most significant development there was the creation of a
new management structure and team. Real Good Food Europe (RGFE),
which was effectively a start-up during 2013/14, gives us a
platform for additional export sales growth.
Net Debt (after Cash) has increased by GBP6.2 million during the
year largely driven by the planned increase in capital expenditure
and the strategic investment in our Stallingborough Sugar Hub which
is now operational. The negative impact on cash generation arising
from the British Sugar dispute was largely offset by improved
working capital management.
Forward Plans
Our detailed strategy in the sugar market will inevitably be
affected by whatever conclusion the CMA comes to as regards our
complaint. We are undertaking the necessary contingency planning
but most of all are looking for clarity as soon as possible. We
know that the Napier Brown business is viewed by customers within
the UK as performing an important function in the market and we
will build on this. We have appointed two new commercial roles to
the board of Napier Brown with a Sales Director for Industrial and
a Commercial Director for Retail.
Elsewhere, there are two related themes which are central to us
delivering our forward plans: management structures and the
transformation of our operating companies into stand-alone,
market-led businesses.
The Renshaw example is a model for what we are looking to
achieve across all of our businesses. Two years' ago we embarked on
a re-branding of the company which acted as a catalyst for a
transformation of its vision and strategy into the globally
ambitious, market-facing, high added value commercial business
which we see today. The 'Renshaw' brand is both renowned and
respected by its customers as a leader in its categories. The new
management team has been in place for a year and symbolically the
board now includes three commercially focused Directors: a UK Sales
Director, an International Sales Director and a Marketing Director.
The business's main challenge is prioritising the opportunities
that exist across a number of sales channels and geographies.
The model of investing in management and in the company brand is
also beginning to deliver at R&W Scott although the process is
less well-advanced. We have appointed a Commercial Director and an
Operations Director, a UK B2B sales manager, an export manager and
a product manager. This is a transformation in the quality of
resource which is required to drive sales growth.
The new Haydens team has now been in place for about six months
and there are now two commercially focused Directors on the board.
Haydens, while not ruling out the possibility of producing branded
offerings, will remain a predominantly private label business.
However, it will become a champion of its chosen product categories
and will seek to lead the market in terms of innovation and product
development. This new strategy is generating growth with existing
customers and producing interest from new ones.
Garrett Ingredients has a long history of successfully serving
its customers in its areas of market expertise. What became clear
during the past year was that its management team was far too lean
(effectively only two senior managers) if it were to expand in line
with our ambitions. The new management team again has three
commercially focused Directors as well as a Finance Director. This
investment in management expertise will clearly increase the
business's overheads but is a statement of the confidence we have
in its growth potential.
Finally the decision to set up Real Good Food Europe is a
reflection of our belief that sales growth is dependent on
businesses having dedicated commercially-focused management.
Renshaw was building its presence in European markets but at
arms-length from its UK base in Liverpool. It was clear that if we
were going to serve these customers properly and develop the
business, we needed to better understand their markets and be
represented locally. The new team in Brussels is totally
customer-focused and excited by the opportunities.
Outlook
We remain in close dialogue with the Competition and Markets
Authority ("CMA") and are hopeful that the regulator will take the
necessary steps to ensure that competition law is enforced.
However, as we indicated in our recent updates, the current sugar
contract year does not end until 30(th) September, coinciding with
our half year so despite continued strong trading at Renshaw and
Haydens, our first half performance will still be materially
affected. Beyond that, negotiations for the new sugar contract year
are progressing and we are working on a number of strategic
sourcing initiatives on the back of our investment in the
Stallingborough Sugar Hub which will bring long term benefits."
Pieter Totté
Chairman
1 August 2014
Divisional Business Reviews
Napier Brown
2013/2014 Review
The financial performance was clearly dominated by the dispute
with British Sugar. The business had a busy year with increased
sales volumes across industrial, retail and wholesale. The winning
of the Asda and Booker contracts significantly increased
utilisation of the Normanton packing site and a number of pack
formats were added to the Whitworths range to meet the requirements
of these customers.
Commissioning of the Stallingborough Sugar Hub began in the
final quarter and it started processing sugar from both Europe and
Central America. Much focus was given to gaining customer approvals
for new supply sources which we believe to be in our customers'
interest in the long term. Given the high profile of traceability
in the food industry following recent scares, this process is
taking longer than anticipated.
31 March 2014 31 March 2013
GBP'000s GBP'000s
------------------------ --------------- --------------
Revenue 162,333 157,156
EBITDA (1,605) 4,723
Operating (Loss)/Profit (2,024) 4,353
Operating Profit % n/a 2.8%
------------------------ --------------- --------------
Future Plans
The business has the advantage of entering the new contract
season with the Stallingborough facility operational and will be
able to offer customers fully traceable sugars from various
sources. Plans are in place to increase efficiencies at the
Normanton packing plant following the volume increases last year.
From a sourcing perspective, there seems, in the short term, to be
ample availability of sugar both in Europe and around the world and
advanced discussions on a number of supply arrangements, including
with British Sugar, are currently taking place.
Renshaw
2013/2014 Review
Sales increased by 4.7% while improved channel mix contributed
to 11% growth in delivered margin. This was to an extent offset by
increased overheads as the business continued to invest in
resource, both commercial and operational, to enable the growth
plans. EBITDA was GBP515,000 ahead of last year.
While all channels experienced sales growth, sales to retail
were particularly healthy with Renshaw's expertise in colours
providing the main focus. A number of new product launches, such as
soft icings and 'colour melts', took place towards the end of the
year. Brand marketing continued to focus both online and via
exhibitions with a successful presence at the Coronation Festival
at Buckingham Palace being a particular highlight.
31 March 2014 31 March 2013
GBP'000s GBP'000s
------------------- -------------- --------------
Revenue 42,952 41,033
EBITDA 5,467 4,952
Operating Profit 4,398 4,125
Operating Profit % 10.2% 10.0%
------------------- -------------- --------------
Future Plans
One of the strengths of the Renshaw business is its
multi-channel nature with growth opportunities across all sectors:
manufacturing, wholesale, retail (both specialist and mainstream),
export and now digital. 2014 will see increased presence in export
markets in Europe (via Real Good Food Europe), the US where a
bespoke Renshaw branded range has been launched as well as Asia and
Australasia. On the product side a re-launch of the marzipan ranges
is planned which will build on Renshaw's traditional strengths in
this sector while there will be further range extensions within
both standard and modelling sugarpastes.
Real Good Food Europe
2013/2014 Review
The business has now been established as a stand-alone unit with
2013/14 being effectively the 'set-up' year. A sales office was
established in Brussels and a multi-lingual sales team recruited to
build sales opportunities. A gradual programme of customer
transfers of existing Renshaw business took place across the year
while the business also began a programme of new business
development including successful participation at baking
exhibitions in both Brussels and Paris. The business was pleased to
win the 2013 'Best newcomer' award at the 2013 Golden Bridge Awards
organised by the British and Belgium Chambers of Commerce.
31 March 2014 31 March 2013
GBP'000s GBP'000s
------------------- -------------- --------------
Revenue 481 -
EBITDA (391) -
Operating (Loss) (391) -
Operating Profit % n/a -
------------------- -------------- --------------
Future Plans
Sales have begun to meet our expectations in the early months of
this year. With a strongly motivated sales team fluent in 8
different languages, 2014/15 should generate significant sales
growth, particularly on the Renshaw produced product ranges. A
number of new opportunities are already developing across the
Benelux countries and France in particular, with RGFE able to adapt
to the specific requirements of different markets. A warehouse has
been leased on the outskirts of Brussels which will increase RGFE's
ability to offer a flexible and tailored customer service which is
critical in this added value sector. The second focus will be
exploring opportunities for the R&W Scott ranges.
R&W Scott
2013/2014 Review
EBITDA was GBP98,000 below last year, but with the division
better placed to improve going forward. Sales are down as a result
of withdrawing from some low margin business to business contracts
and increased inter-company sales. Delivered margins improved with
the more added value sales mix in line with the strategy while
overheads increased as investment was made in sales, marketing and
technical resources to manage the growth plan. The transition from
a manufacturing site to a stand- alone business is almost complete
with the recruitment of local finance resource now underway. Most
of the overhead increase required to make this transition has now
taken place.
31 March 2014 31 March 2013
GBP'000s GBP'000s
------------------- -------------- ---------------
Revenue 9,144 10,968
EBITDA 327 425
Operating Profit 66 166
Operating Profit % 0.7% 1.5%
------------------- -------------- ---------------
Future Plans
An enormous amount of work was undertaken on new product
development during last year with very little yet reflected in
sales. 2014/15 will see the start of a major industrial jams and
sauces contract and retail product launches in multipacks of jams,
sauces and chocolate spreads. Many of these new products are being
sold both in retail and business to business channels. An export
drive is also underway focusing on the multipacks of jam and
opportunities are being sought with Real Good Food Europe. R&W
Scott is working with a local branding agency to develop a brand
strategy founded on the business's quality reputation and Scottish
heritage.
Garrett Ingredients
2013/2014 Review
Volumes fell in both sugar and dairy. In sugar, dramatic falls
in spot prices also put pressure on margins particularly as Garrett
was caught in the downstream effect of the British Sugar dispute.
In the second half of the year it proved impossible to compete
satisfactorily in the spot market. The Dairy market is prone to
shorter term market fluctuations and while margins were well
managed, volumes were down on the previous year.
It became clear that, in order to meet the growth ambitions,
substantial investment in the management team was required with, in
particular, the splitting of the Dairy Trading and Managing
Director roles. This took place in the second half of the year and
the senior structure was completed with the appointment of an
experienced Commercial Director in April.
31 March 2014 31 March 2013
GBP'000s GBP'000s
------------------- ------------- --------------
Revenue 30,411 31,260
EBITDA 1,204 2,151
Operating Profit 1,169 2,151
Operating Profit % 3.8% 6.9%
------------------- ------------- --------------
Future Plans
The new management team is now in place and is devising a
strategy and plan to get the business back into growth. The review
of the distribution strategy has proved successful and Garretts
will in future be managing its own logistics and customer service
and separating itself from Napier Brown thereby providing a higher
level of customer service. Opportunities for new distributorships
are being pursued and the business now has the breadth of
management capability to deliver these.
Haydens Bakery
2013/2014 Review
Profit performance was encouraging with EBITDA growing by
GBP576,000
Sales increased by 7.6% and favourable material and labour
efficiencies further enhanced margins, more than offsetting
material price inflation. Overheads were ahead of last year, a
combination of inflation and investment in additional resource both
to fulfil customer service and technical requirements and additions
to the sales team as part of the growth plan. The senior management
team was also re-shaped during the year and is now fully in place
to take the business to its next growth phase.
Sales growth came from both existing customers (e.g. Waitrose
and Costa) and new ones with supply beginning to Morrisons in
2013.
31 March 2014 31 March 2013
GBP'000s GBP'000s
-------------------------- ------------- --------------
Revenue 27,255 25,337
EBITDA 917 341
Operating Profit / (Loss) 109 (417)
Operating Profit % 0.4% n/a
-------------------------- ------------- --------------
Future Plans
The new management team has identified a narrower set of product
sectors which represent the business's real areas of expertise and
these will be the focus for growth both with existing and new
customers. These are tarts, Danish pastries, Yum Yums, pies and
crumbles and sweet buns. These will not only provide a focus for
product development, but will also simplify the manufacturing
operation by reducing complexity and increasing scale in core
areas. The re-structure of the sales team is already proving
successful in bringing new business across retail and foodservice
channels.
Finance Director's Report
Overview
The current year's results are dominated by the dispute with
British Sugar. The reduction in EBITDA from GBP10.47 million last
year to GBP3.29 million this year is all within Napier Brown and
Garrett Ingredients trading which are both directly affected.
Revenue
Group revenue from continuing operations for the 12 months to 31
March 2014 was GBP272.6 million, an increase of 2.6% on the 12
months to 31 March 2013 reflecting the overall volume growth across
the group.
Movements in base commodity costs in the year were managed
effectively across the divisions with the exception of Sugar where
the market reductions were not fully reflected in our purchase
price triggering the dispute with British Sugar.
Key Comparatives (continuing
operations excluding significant 31 March 2014 31 March 2013
items) GBP'000s GBP'000s
---------------------------------- --------------- ---------------
Revenue 272,576 265,754
Gross profit 33,389 37,285
Delivered Margin
(Gross profit after distribution
costs) 19,561 25,620
EBITDA * 3,296 10,466
Operating profit * 669 8,241
(EBITDA less depreciation)
Operating profit % 0.2% 3.1%
(Loss)/ Profit before taxation
(After financing & pension costs) (992) 6,631
---------------------------------- --------------- ---------------
(*) before significant items
Margins
Delivered margin for the year at GBP19.6 million was GBP6.1
million down over the prior year with Napier and Garretts, who were
both significantly affected by the BS dispute down GBP6.9 million
and GBP0.5 million respectively. The rest of the Group at GBP15.1
million was up GBP1.3 million on the prior year.
Loss before Tax and Interest
Overall we generated a loss before tax and significant items for
the year of GBP1.0 million (PBT continuing operations including
pension "running costs") a reduction ofGBP7.6 million over the
previous year 12 months driven by a GBP7.2 million EBITDA reduction
mainly in Napier Brown and Garretts as commented previously with
the balance of GBP0.4 million primarily increased depreciation
reflecting the planned increase in capital expenditure in the year.
Investment in the Stallingborough Sugar Hub accounts for the
increase of this year's spend of GBP6.9 million over the GBP2.7
million invested in the prior year.
Financing Costs
Financing costs for the year at GBP1.6 million were largely in
line with the prior year.
Significant Items
During the year the Group incurred one-off costs of GBP0.5
million which included GBP0.35 million for the complete reshaping
of the executive team at Garrett Ingredients, including the
appointment of a new managing director, commercial director,
business development director and finance director. GBP0.15 million
was also incurred in Renshaw with major changes to the direction
and management in the senior commercial team.
31 March 2014 31 March 2013
Working Capital & Net Debt GBP000's GBP000's
---------------------------------- ------------- -------------
Working Capital 46,941 42,555
(Fixed assets/stock/trade debtors
& trade creditors)
Net Borrowings (Incl Cash) 31,133 24,952
Net Debt/EBITDA 9.5 2.4
---------------------------------- ------------- -------------
Cash Flow and Debt
Working Capital levels increased by GBP4.4 million during the
year. Within this Fixed Assets were up a net GBP4.3 million (GBP6.9
million Capital expenditure less GBP2.6 million depreciation)
reflecting our investment programme with the balance, an increase
of GBP0.1 million, being the movements across the more fluid stock,
debtor and creditor positions.
Net Debt (after Cash) as at 31 March 2014 was GBP31.1 million,
up GBP6.2 million on the prior year (31 March 2013 GBP24.9 million)
largely driven by the increased capital expenditure. The negative
impact on cash generation arising on the British Sugar dispute was
largely offset by improved working capital management.
Our ability to service this debt remains despite the headline
change in the Debt ratio (Net Debt to EBITDA) from last year.
Pensions
The Group operates one defined benefits scheme which was closed
to new members in 2000. As reported last year an extension to the
existing recovery plan has been was agreed with "base" contribution
levels for the year ended 31 March 2013 of GBP265k with annual
increments of 3% for the following two years. In addition to this
the Group has agreed to make an additional, one off, contribution
of GBP166k which is payable at the rate of GBP11k per month
starting from November 2013. The Group is confident this will
continue to meet the trustees' needs and the pension regulator's
guidance.
The latest IAS19 valuation as at March 2014 indicates GBP3.67
million deficit, an increase of GBP0.13 million since March
2013.
Key Performance Indicators
The Board of Directors monitors a range of financial and
non-financial key performance indicators, reported on a periodic
basis, to measure the Group's performance over time. The key
performance indicators are set out below:
31 March 31 March
2014 2013
GBPm GBPm
---------------------------------- -------- --------
Revenue growth(1) 2.6% 2.8%
Operating margin(2) 0.2% 3.1%
Debt cover (Net debt / EBITDA)(3) 9.5 2.4
Interest cover(4) 2.0 7.1
Health & Safety score(5) 92% 88%
---------------------------------- -------- --------
1. Revenue growth is calculated for continuing operations.
2. Operating margin is stated for continuing operations only and
is calculated by dividing operating profit before tax, interest and
significant items by revenue from continuing operations.
3. Debt cover is calculated by dividing total net debt by
continuing EBITDA. EBITDA is defined as earnings before significant
items, interest, tax, depreciation and intangible asset
amortisation.
4. Interest cover is calculated by dividing EBITDA by net
interest payments (gross interest payable less interest
receivables).
5. Health & Safety score represents the weighted average
score across all sites as determined by our health and safety score
index which was introduced in 2006 and is measured by an external
consultant. Figures quoted refer to the calendar year.
Mike McDonough
Finance Director
1 August 2014
Consolidated Statement of Comprehensive Income
Year ended 31 March 2014
Year ended 31 March
Year ended 31 March 2013
2014 as restated
Before Significant Before Significant
significant items significant items
items (Note 6) Total items (Note 6) Total
Continuing Operations GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
REVENUE 272,576 - 272,576 265,754 - 265,754
Cost of sales (239,187) - (239,187) (228,469) - (228,469)
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
GROSS PROFIT 33,389 - 33,389 37,285 - 37,285
Distribution costs (13,828) - (13,828) (11,665) - (11,665)
Administration expenses (18,892) (544) (19,436) (17,379) (505) (17,884)
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
OPERATING PROFIT 669 (544) 125 8,241 (505) 7,736
Finance income - - - - - -
Finance costs (1,602) - (1,602) (1,560) - (1,560)
Other finance income (59) - (59) (50) - (50)
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
(LOSS) / PROFIT BEFORE
TAXATION (992) (544) (1,536) 6,631 (505) 6,126
Income tax expense 758 120 878 (1,467) 121 (1,346)
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
(LOSS)/PROFIT FROM CONTINUING
OPERATIONS ATTRIBUTABLE
TO THE EQUITY HOLDERS
OF THE PARENT (234) (424) (658) 5,164 (384) 4,780
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
OTHER COMPREHENSIVE INCOME
Actuarial (losses)/gains
on defined benefit plans (394) - (394) (2,597) - (2,597)
Income tax relating to
components of other comprehensive
income (3) - (3) 613 - 613
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
OTHER COMPREHENSIVE (LOSS)/INCOME (397) - (397) (1,984) - (1,984)
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD ATTRIBUTABLE
TO THE EQUITY HOLDERS
OF THE PARENT (631) (424) (1,055) 3,180 (384) 2,796
----------------------------------- ------------ ----------- --------- ------------ ----------- ---------
Earnings per share from
continuing operations:
- basic (0.95)p 7.0p
- diluted (0.95)p 6.4p
As the group is loss making in the year under review the diluted
earnings per share is the same as the basic earnings per share
Consolidated Statement of Changes in Equity
Year ended 31 March 2014
Issued Share Share
Share Premium Option Retained
Capital Account Reserve Earnings Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------ --------- --------- --------- --------- ---------
Balance as at 31 March 2012 1,300 68,874 526 12,136 82,836
Share options to be issued - - 45 - 45
Deferred tax on share options - - (31) - (31)
Shares issued in period 89 2,370 - - 2,459
Total comprehensive income
for the period - - - 2,796 2,796
------------------------------ --------- --------- --------- --------- ---------
Balance as at 31 March 2013 1,389 71,244 540 14,932 88,105
------------------------------ --------- --------- --------- --------- ---------
Share options to be issued - - 46 - 46
Deferred tax on share options - - (82) - (82)
Total comprehensive loss
for the period - - - (1,055) (1,055)
------------------------------ --------- --------- --------- --------- ---------
Balance as at 31 March 2014 1,389 71,244 504 13,877 87,014
------------------------------ --------- --------- --------- --------- ---------
.
Consolidated Statement of Financial Position
Year ended 31 March 2014
31 March 31 March
2014 2013
GBP'000s GBP'000s
------------------------------- --------- ---------
NON-CURRENT ASSETS
Goodwill 75,796 75,796
Other intangible assets 1,102 1,412
Property, plant and equipment 22,291 17,685
Deferred tax asset 1,319 1,385
------------------------------- --------- ---------
100,508 96,278
------------------------------- --------- ---------
CURRENT ASSETS
Inventories 19,108 15,037
Trade and other receivables 34,260 30,213
Current tax assets 641 -
Other financial assets 499 -
Cash and cash equivalents 8,568 7,134
------------------------------- --------- ---------
63,076 52,384
------------------------------- --------- ---------
TOTAL ASSETS 163,584 148,662
------------------------------- --------- ---------
CURRENT LIABILITIES
Trade and other payables 29,820 21,282
Borrowings 31,221 23,032
Other financial liabilities 499 -
Current tax liabilities - 750
------------------------------- --------- ---------
61,540 45,064
------------------------------- --------- ---------
NON-CURRENT LIABILITIES
Borrowings 8,480 9,054
Accruals and deferred income 191 -
Deferred tax liabilities 2,686 2,899
Retirement benefit obligations 3,673 3,540
------------------------------- --------- ---------
15,030 15,493
------------------------------- --------- ---------
TOTAL LIABILITIES 76,570 60,557
------------------------------- --------- ---------
NET ASSETS 87,014 88,105
------------------------------- --------- ---------
EQUITY
Share capital 1,389 1,389
Share premium account 71,244 71,244
Share option reserve 504 540
Retained earnings 13,877 14,932
------------------------------- --------- ---------
TOTAL EQUITY 87,014 88,105
------------------------------- --------- ---------
Consolidated Cash Flow Statement
Year ended 31 March 2014
31 March
31 March 2013
2014 GBP'000s
GBP'000s As restated
------------------------------------------------ --------- ------------
CASH FLOW FROM OPERATING ACTIVITIES
Adjusted for:
(Loss)/ profit before taxation (1,536) 6,260
Finance costs 1,602 1,560
Finance income - -
Other finance income 59 (84)
Depreciation of property, plant and equipment 2,275 1,992
Amortisation of intangibles 352 233
------------------------------------------------- --------- ------------
Operating Cash Flow 2,752 9,961
(Increase)/Decrease in inventories (4,071) 2,343
(Increase) in receivables (4,047) (5,533)
Pension contributions (320) (187)
Increase in payables 8,741 1,220
------------------------------------------------- --------- ------------
Cash generated from operations 3,055 7,804
Income taxes paid (745) (1,019)
Interest paid (1,602) (1,560)
------------------------------------------------- --------- ------------
Net cash from operating activities 708 5,225
------------------------------------------------- --------- ------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from disposal of property, plant
and equipment 22 32
Purchase of intangible assets (42) (1,124)
Purchase of property, plant and equipment (6,903) (2,652)
------------------------------------------------- --------- ------------
Net cash used in investing activities (6,923) (3,744)
------------------------------------------------- --------- ------------
CASH FLOW USED IN FINANCING ACTIVITIES 2,459
Shares issued in period - 4,866
Additional loans 1,120 -
Additional finance leases 517 (2,779)
Repayment of loans (1,989) (1,367)
Additional / (Repayment of) Borrowings 8,053 (32)
Repayment of obligations under finance leases (52)
------------------------------------------------- --------- ------------
Net cash used in financing activities 7,649 3,147
------------------------------------------------- --------- ------------
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS 1,434 4,628
------------------------------------------------- --------- ------------
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of
period 7,134 2,506
Net movement in cash and cash equivalents 1,434 4,628
------------------------------------------------- --------- ------------
Cash and cash equivalents at end of period 8,568 7,134
------------------------------------------------- --------- ------------
Cash and cash equivalents comprise:
Cash 8,568 7,134
Overdrafts - -
------------------------------------------------- --------- ------------
8,568 7,134
------------------------------------------------- --------- ------------
Notes to the Financial Statements
Year ended 31 March 2014
1. Segment reporting
Business segments
The divisional structure reflects the management teams in place
and also ensures all aspects of trading activity have the specific
focus they need in order to achieve our growth plans. Real Good
Food Europe (RGFE) has been added for clarity.
12 months Continuing Sig-
ended R&W Operations nificant Total
31 March Napier Garrett Renshaw Scott Haydens RGFE Total items Group
2014 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------- --------- --------- ---------- --------- --------- --------- ----------- --------- ---------
Total Revenue 172,089 31,803 43,495 10,440 27,255 481 285,563 - 285,563
Revenue -
Internal (9,756) (1,392) (543) (1,296) - - (12,987) - (12,987)
---------------- --------- --------- ---------- --------- --------- --------- ----------- --------- ---------
External
Revenue 162,333 30,411 42,952 9,144 27,255 481 272,576 - 272,576
---------------- --------- --------- ---------- --------- --------- --------- ----------- --------- ---------
Operating
(Loss)/Profit
before Head
Office (2,024) 1,169 4,398 66 109 (391) 3,327 (544) 2,783
Head Office
and
consolidation
adjustments - - - - - - (2,658) - (2,658)
---------------- --------- --------- ---------- --------- --------- --------- ----------- --------- ---------
Operating
(Loss)/Profit (2,024) 1,169 4,398 66 109 (391) 669 (544) 125
Net Finance
Costs (1,046) (113) (280) (59) (104) - (1,602) - (1,602)
Pension Finance
Income - - - - - - (59) - (59)
---------------- --------- --------- ---------- --------- --------- --------- ----------- --------- ---------
Profit/(loss)
before tax (3,070) 1,056 4,118 7 5 (391) (992) (544) (1,536)
Tax 706 (243) (947) (1) (1) 90 (396) - (396)
Unallocated
Tax - - - - - - 1,154 120 1,274
---------------- --------- --------- ---------- --------- --------- --------- ----------- --------- ---------
Profit/(loss)
after tax
as per
comprehensive
statement
of income (2,364) 813 3,171 6 4 (301) (234) (424) (658)
---------------- --------- --------- ---------- --------- --------- --------- ----------- --------- ---------
Sales between segments are charged at prevailing market
rates.
There are no customers that contributed more than 10% of the
Group's external sales from continuing operations for the year
ended 31 March 2014
2. Significant items
31 March 31 March
2014 2013
GBP'000s GBP'000s
------------------------------------- --------- ---------
Management restructuring costs (544) (395)
Group refinancing costs - (110)
------------------------------------- --------- ---------
(544) (505)
Taxation credit on significant items 120 121
------------------------------------- --------- ---------
(424) (384)
------------------------------------- --------- ---------
During the year the Group incurred a number of significant costs
as detailed above. The management restructuring costs reflect a
number of fundamental reorganisations within Garrett Ingredients
and Renshaw during the period. Refinancing costs, last year relate
to "break costs" associated with the refinancing exercise we
completed with PNC, our existing provider in December 2012.
3. Taxation
31 March 31 March
2014 2013
GBP'000s GBP'000s
----------------------------------------------------- --------- ---------
Current tax
UK Current tax on profit of the period (356) 1,404
UK Current tax on significant items (120) (121)
Adjustments in respect of prior years (170) (59)
----------------------------------------------------- --------- ---------
Total current tax (646) 1,224
----------------------------------------------------- --------- ---------
Deferred tax
Deferred tax charge re pension scheme 52 58
Origination and reversal of timing differences 53 114
Adjustments in respect of prior years (6) 49
Adjustment in respect of change in deferred tax rate (331) (99)
----------------------------------------------------- --------- ---------
Total deferred tax (232) (122)
----------------------------------------------------- --------- ---------
Tax on (loss) / profit on ordinary activities (878) 1,346
----------------------------------------------------- --------- ---------
31 March 31 March
2014 2013
GBP'000s GBP'000s
---------------------------------------------------------------- --------- ----------
Tax reconciliation
(Loss)/profit per accounts before taxation (1,536) 6,126
Tax on (Loss)/profit on ordinary activities at standard CT rate
of 23% (2013 - 24%) (354) 1,470
Expenses not deductible for tax purposes 21 48
Additional deduction for R&D expenditure (17) (18)
Share option relief - (39)
Losses carried back at higher marginal rate (20) -
Adjustment in respect of change in deferred tax rate (331) (102)
Adjustments to tax in respect of prior years (177) (13)
---------------------------------------------------------------- --------- ----------
Tax charge for the period (878) 1,346
---------------------------------------------------------------- --------- ----------
4. Earnings per share
Basic earnings per share
Basic earnings per share is calculated on the basis of dividing
the profit/(loss) attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares in issue
during the year.
31 March 31 March
2014 2013
GBP'000s GBP'000s
Continuing Continuing
operations operations
---------------------------------------------------------------- ------------ ------------
(Loss)/Earnings after tax attributable to ordinary shareholders
(GBP000's) (658) 4,780
Weighted average number of shares in issue (000's) 69,466 68,405
---------------------------------------------------------------- ------------ ------------
Basic earnings per share (0.95)p 7.0p
---------------------------------------------------------------- ------------ ------------
Diluted earnings per share
Diluted earnings 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 total potential dilutive weighted average
number of shares considers the number of shares that would have
been issued assuming the exercise of the share options.
31 March 31 March
2014 2013
GBP'000s GBP'000s
Continuing Continuing
operations operations
-------------------------------------------------------------------- ----------- -----------
Earnings after tax attributable to ordinary shareholders (GBP'000s) (658) 4,7804
Total potential weighted average number of shares in issue (000's) 75,575 74,111
-------------------------------------------------------------------- ----------- -----------
Diluted earnings per share* (0.95)p 6.4p
-------------------------------------------------------------------- ----------- -----------
Adjusted earnings per share
An adjusted earnings per share and a diluted adjusted earnings
per share, which exclude significant items, have also been
calculated as in the opinion of the Board this allows shareholders
to gain a clearer understanding of the trading performance of the
Group.
31 March 31 March
2014 2013
GBP'000s GBP'000s
Continuing Continuing
operations operations
-------------------------------------------------------------------- ----------- ------------
Earnings after tax attributable to ordinary shareholders (GBP'000s) (658) 4,780
Add back significant items (note 2) 544 505
Add back tax on significant items (120) (121)
-------------------------------------------------------------------- ----------- ------------
Adjusted earnings after tax attributable to ordinary shareholders
(GBP'000s) (234) 5,164
-------------------------------------------------------------------- ----------- ------------
Weighted average number of shares in issue (000's) 69,466 68,405
-------------------------------------------------------------------- ----------- ------------
Basic earnings per share (0.34)p 7.50p
-------------------------------------------------------------------- ----------- ------------
Total potential weighted average number of shares in issue (000's) 75,579 74,111
-------------------------------------------------------------------- ----------- ------------
Basic diluted earnings per share* (0.34)p 7.0p
-------------------------------------------------------------------- ----------- ------------
* As the Group is loss making in the year under review the
diluted earnings per share is the same as basic earnings per
share.
5. Goodwill
Group
GBP'000s
------------------------------ ---------
Cost
Carried forward 31 March 2013 75,796
Carried forward 31 March 2014 75,796
------------------------------ ---------
The Goodwill originally arose on the acquisition of Napier Brown
Foods Ltd and its subsidiary RenshawNapier Ltd (formerly Napier
Brown & Company Ltd) in 2005 in which, then as now, the trading
activity of Renshaw, R&W Scott, Napier Brown and Garrett
Ingredients resides. They all are part of one legal entity and were
acquired as such at the time without any separate evaluation or
consideration.
The strategy in recent years has been to establish each of these
as separate trading businesses, "divisions", with their own
management teams and increasing autonomy leading in the near future
to the likely re-establishment of them as separate Limited
companies.
The board believe the time is now right to consider them as
separate entities and allocate the Goodwill across the divisions
based on an assessment of their individual ongoing cash generating
performance.
An assessment of the underlying cash generation, based on
current EBITDA performance less ongoing maintenance capex, has been
used to determine the future cash generation profile for each of
the divisions with the exception of Napier Brown where the ongoing
performance has been assessed setting aside the effect of the
dispute with BS which affects the "sugar year" October 2013 to
September 2014. In line with the established impairment tests logic
this profile has been used to establish the Net Present Value of
the individual future income streams.
The board is keen to point out the outcome reflects the specific
dynamics and nature of each division and that the respective values
should not be viewed as a "judgement" on each. All the divisions
have exciting growth plans that are being implemented and all will
contribute to the future success of the Group.
31 March 31 March
2014 2013
GBP'000s GBP'000s
--------------------------------------- --------- ---------
Sugar and Bakery Ingredients divisions - 75,796
Napier Brown 12,000 -
Garrett Ingredients 5,000 -
Renshaw 57,796 -
R&W Scott 1,000 -
Carried forward 31 March 2014 75,796 75,796
--------------------------------------- --------- ---------
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill may be
impaired.
The recoverable amounts of the Cash Generating Units are
determined from value in use calculations. The key assumptions for
the value in use calculations are those regarding discount rates
and expected changes to selling prices and direct costs.
The rate used to discount the forecast cash flows is the Group's
pre-tax weighted average cost of capital of 6.67% (2013 - 4.88%). A
period of 19 years has been applied to the projected cashflows,
based on the logic above assuming no annual growth, as the
Directors used this period to assess the viability of the
acquisition when the business was acquired in 2005. Changes in
selling prices and direct costs are based on past practices and
expectations of future changes in the market. Using these
parameters and allowing for disposal income at the end of this
timescale the recoverable amounts exceed the carrying value by
GBP29.8 million. Actual EBITDA results this year were in line, with
the exception of Napier Brown, with the projections used in the new
divisional assessment. This year's results overall were not in line
with the assumptions used for last year's impairment as a result of
the BS dispute which has been commented on in the Chairman's
statement and the Napier Brown and Garrett Ingredients business
reviews.
An increase in the Group's weighted average cost of capital to
above 10.5% (2013 17.11%) would cause the Board to impair the
carrying value of goodwill.
6. Borrowings and capital management
31 March 31 March 31 March 31 March
2014 2014 2013 2013
Group Company Group Company
GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------- --------- --------- --------- ---------
Unsecured borrowings at amortised cost
Loan notes 2,774 - 2,774 -
Secured borrowings at amortised cost
Bank term loans 7,200 7,200 8,103 8,103
Revolving credit facilities 29,262 - 21,209 -
Hire purchase 465 - - -
-------------------------------------------- --------- --------- --------- ---------
39,701 7,200 32,086 8,103
-------------------------------------------- --------- --------- --------- ---------
Amounts due for settlement within 12 months 31,221 1,836 23,032 1,823
Amounts due for settlement after 12 months 8,480 5,364 9,054 6,280
-------------------------------------------- --------- --------- --------- ---------
39,701 7,200 32,086 8,103
-------------------------------------------- --------- --------- --------- ---------
7. Pensions arrangements
The group operates one defined benefits scheme which was closed
to new members in 2000. As reported last year an extension to the
existing recovery plan has been was agreed with "base" contribution
levels for the year ended 31 March 2014 of GBP264k with annual
increments of 3% for the following two years. In addition to this
the group has agreed to make an additional, one off, contribution
of GBP166k which is payable at the rate of GBP11k per month
starting from November 2013. The group is confident this will
continue to meet the trustees' needs and the pension regulator's
guidance.
For the purposes of IAS 19 the data provided for the 1 April
2009 actuarial valuation has been approximately updated to reflect
liabilities on the accounting basis at 31 March 2014. This has
resulted in a deficit in the scheme of GBP3,673,000.
It is the policy of the Group to recognise all actuarial gains
and losses in the year in which they occur in the statement of
comprehensive income.
Present values of defined benefit obligations, fair value of
assets and deficit
31 March 31 March 31 March 31 December 31 December
2014 2013 2012 2010 2009
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------- --------- --------- --------- ----------- -----------
Present value of defined
benefit obligation 19,033 19,153 17,085 16,212 15,945
Fair value of plan assets (15,360) (15,613) (16,005) (16,308) (15,363)
-------------------------- --------- --------- --------- ----------- -----------
Deficit/(surplus) in plan 3,673 3,540 1,080 (96) 582
Amount not recognised
in accordance with
IAS 19 paragraph 58b - - - 96 -
Gross amount recognised 3,673 3,540 1,080 - 582
Deferred tax at 20% (2013
- 23%) (735) (814) (259) - (163)
-------------------------- --------- --------- --------- ----------- -----------
Net liability 2,938 2,726 821 - 419
-------------------------- --------- --------- --------- ----------- -----------
Reconciliation of opening and closing balances of the present
value of the defined benefit obligations
31 March 31 March
2014 2013
GBP'000s GBP'000s
-------------------------------------------- --------- ---------
Defined benefit obligation at start of
period 19,153 17,085
Interest cost 879 816
Actuarial losses 12 2,805
Benefits paid, death in service insurance
premiums, expenses and past service costs (1,011) (1,553)
-------------------------------------------- --------- ---------
Defined benefit obligation at end of period 19,033 19,153
-------------------------------------------- --------- ---------
Reconciliation of opening and closing balances of the fair value
of plan assets
31 March 31 March
2014 2013
GBP'000s GBP'000s
------------------------------------------ --------- ---------
Fair value of scheme assets at start of
the period 15,613 16,005
Expected return on scheme assets 720 766
Actuarial (losses)/gains (382) 208
Contributions paid by the Group 320 187
Benefits paid, death in service insurance
premiums and expenses (911) (1,553)
------------------------------------------ --------- ---------
Fair value of scheme assets at end of the
period 15,360 15,613
------------------------------------------ --------- ---------
The actual return on the scheme assets over the period ended 31
March 2014 was GBP338,000 (2013 - GBP974,000).
Total expense recognised in the Statement of Comprehensive
Income within other finance income
31 March 31 March
2014 2013
GBP'000s GBP'000s
--------------------------------- --------- ---------
Interest on liabilities 879 816
Expected return on scheme assets (720) (766)
Past service cost (100) -
--------------------------------- --------- ---------
Total income 59 50
--------------------------------- --------- ---------
Statement of recognised income and expenses
31 March 31 March
2014 2013
GBP'000s GBP'000s
---------------------------------------- --------- ---------
Actual return on assets less interest (382) 208
Experience gains and losses arising on
the scheme liabilities: loss - (1,923)
Actuarial gains /(losses) arising from
changes in demographic assumptions 352 (26)
Actuarial gains / (losses) arising from
changes in financial assumptions (364) (856)
Total amount recognised in Statement of
Other Comprehensive Income (394) (2,597)
---------------------------------------- --------- ---------
Assets
31 March 31 March 31 March
2014 2013 2012
GBP'000s GBP'000s GBP'000s
--------------------- --------- --------- ---------
UK equity 1,977 869 483
Overseas equity 5,141 4,058 5,107
Absolute return fund 3,929 3,444 -
Bonds 1,798 2,588 2,260
Gilts 645 406 2,655
Property 301 390 434
Cash 748 1,889 1,041
Alternative assets 821 1,969 4,025
Total assets 15,360 15,613 16,005
--------------------- --------- --------- ---------
None of the fair values of the assets shown above include any of
the Group's own financial instruments or any property occupied by,
or other assets used by, the Group.
Assumptions
31 March 31 March 31 March 31 December
2014 2013 2012 2010
% per annum % per annum % per annum % per annum
------------------------------------------- -------------- -------------- -------------- --------------
Inflation 3.30 3.20 2.90 3.10
Salary increases - - - -
Rate of discount 4.65 4.70 5.00 5.70
Allowance for pension in payment increases
of RPI or 5% p.a. if less 3.20 3.10 2.80 3.10
Allowance for revaluation of deferred
pensions of RPI or 5% p.a. if less 2.20 1.90 1.90 3.10
Allowance for commutation of pension 75% of 75% of 75% of 75% of
for cash at retirement max allowance max allowance max allowance max allowance
------------------------------------------- -------------- -------------- -------------- --------------
Assumption Change in assumption Change in liability
----------------- -------------------- -------------------
Discount rate Increase/decrease Decrease/increase
of 0.5% p.a. by 7.0%
Rate of inflation Increase/decrease Increase/decrease
of 0.5% p.a. by 2.0%
Rate of mortality 1 year increase Increase by 4.0%
in life expectancy
----------------- -------------------- -------------------
The mortality assumptions adopted at 31 March 2014 imply the
following life expectancies:
Male retiring at age 65 in
2014 21.6 years
Female retiring at age 65
in 2014 23.8 years
Male retiring at age 65 in
2033 22.6 years
Female retiring at age 65
in 2033 25.0 years
The long term expected rate of return on cash is determined by
reference to UK long dated government bond yields at the balance
sheet date. The long term expected return on bonds is determined by
reference to UK long dated government and corporate bond yields at
the balance sheet date. The long term expected rate of return on
equities is based on the rate of return on bonds with an allowance
for outperformance.
31 March 31 March 31 March 31 December 31 December
2014 2013 2012 2010 2009
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------- --------- --------- --------- ----------- -----------
Fair value of assets 15,360 15,613 16,005 16,308 15,363
Defined benefit
obligation (19,033) (19,153) (17,085) (16,212) (15,945)
----------------------- --------- --------- --------- ----------- -----------
Surplus/(deficit)
in scheme (3,673) (3,540) (1,080) 96 (582)
----------------------- --------- --------- --------- ----------- -----------
Experience adjustment
on scheme assets (382) 208 (984) 578 113
Experience adjustment
on scheme liabilities - (1,923) (46) 387 18
----------------------- --------- --------- --------- ----------- -----------
Audit Status
The preliminary announcement has been prepared under the
historical cost convention, on a going concern basis and in
accordance with the recognition and measurement principles of
International Financial Reporting Standards and IFRIC
interpretations as adapted by the EU ("IFRS"), but this
announcement does not in itself contain sufficient information to
comply fully with IFRS.
The directors have considered the working capital requirements
of the group for a period of one year from the date of this
announcement and believe that the going concern basis is
appropriate due to the current cash balance and future
prospects.
The preliminary announcement has been prepared on the basis of
the same accounting policies as published in the audited financial
statements of the group for the year ended 31 March 2014 and the
accounting policies adopted in the audited financial statements of
the group for the period ended 31 March 2014.
The financial information in this announcement does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006.
The audited statutory financial statements for the period ended
31 March 2014, which have not yet been delivered to The Registrar
of Companies, contain an unqualified audit report, do not include a
reference to any matters to which the auditor might draw attention
by way of emphasis and do not contain a statement under section
498(2) or 493 (3) of the Companies Act 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR RBMPTMBAJBJI
Real Good Food (LSE:RGD)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Real Good Food (LSE:RGD)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024
