TIDMRGD
RNS Number : 3818V
Real Good Food PLC
07 August 2015
Real Good Food plc (AIM:RGD)
Final results for the year ending 31(st) March 2015
Highlights
-- Transformational disposal of Napier Brown shortly after year
end; repositioning the business away from the volatile sugar
market
-- Continuing Group has positive cash balances and is cash
generative and profitable, creating strong financial platform to
facilitate future growth
-- Successful acquisition and integration of Rainbow Dust Colours
-- Growth in gross profit, EBITDA and operating profit in Continuing Operations
-- Continued strong growth in sales and profitability at Renshaw
-- Successful turnaround at Haydens Bakery driven by operating focus and product innovation
-- Three complementary business areas each with strong and
established management teams and operational strategies to achieve
organic growth
Financial Summary
31 March
31 March 2015 2014
Continuing Operations Continuing Operations
(excluding significant items) GBP'000s GBP'000s
-------------------------------- ---------------------- ----------------------
Revenue 104,580 110,243
Gross profit 25,561 21,981
EBITDA 5,319 4,901
Operating profit 3,202 2,693
The disposal of Napier Brown took place on 19(th) May, seven
weeks after the year end. The reported numbers for the Group
including Napier Brown for the full year to 31 March 2015 are as
follows:
31 March 31 March
2015 2014
GBP'000s GBP'000s
---------------------------- --------- -----------
Revenue 232,868 272,576
Gross profit 35,925 33,389
Delivered Margin
(Gross profit after
distribution costs) 20,415 19,561
EBITDA 1,960 3,296
Operating profit before
significant items
(EBITDA less depreciation) (741) 669
EPS (4.88)p (0.95)p
Net Debt GBP30.1m GBP31.1m
Following the disposal of Napier Brown for a consideration of
GBP34 million plus working capital of GBP10.4 million, the Group
has a net positive cash position.
Pieter Totté, Executive Chairman, comments:
"The total Group figures for last year were dominated by the
market issues in sugar which impacted both Napier Brown and Garrett
Ingredients. Elsewhere performance has been strong, with Renshaw
and Haydens in particular growing both sales and profitability.
Importantly, the Group excluding Napier Brown grew its operating
profit from GBP2.7 million to GBP3.2 million. Net debt was well
controlled at GBP30 million at the balance sheet date and following
the sale of Napier Brown, the business now has significant positive
net cash balances.
Trading in the early months of the new financial year within our
continuing businesses has begun well and with the funds from the
sale of Napier Brown being received in May we are now in a position
to fast-track some of the investment opportunities. This will
include spend on jam, sauce and pie-filling capability at R&W
Scott; infrastructure at Haydens to support its growth; and
increased capacity at the Renshaw site in Liverpool. We will also
look at potential bolt-on acquisitions which will help build our
presence in our chosen markets, but only where there is a sensible
financial and operational investment case.
Overall, the business is in good shape and we look forward with
great optimism."
Pieter Totté
Executive Chairman
About Real Good Food plc
Real Good Food plc is a diversified food business serving a
number of market sectors including retail, manufacturing,
wholesale, foodservice and export. The Company focuses on three
main markets: cake decoration (Renshaw, Rainbow Dust Colours), food
ingredients (Garrett Ingredients and R&W Scott) and premium
bakery (Haydens).
ENQUIRIES:
Real Good Food plc
Pieter Totté, Executive Chairman Tel: 020 3056 1516
Andrew Brown, Marketing Director Tel: 020 3056 1517
Shore Capital & Corporate
(Nomad and Joint Broker) Tel: 020 7408 4090
Stephane Auton
Patrick Castle
Daniel Stewart and Company Plc
(Joint Broker) Tel: 020 7776 6550
Martin Lampshire
Belvedere Communications (PR) Tel: 020 3567 0510
John West
Kim van Beeck
Chairman's Statement
Overview
The sale of our Napier Brown sugar business is a
transformational event for the Group. Our strategy had always been
to invest more in the business to make it a strong strategic asset.
Since the decision by the European Commission to end production
quotas it became obvious that aligning closely with a producer
would be central to a successful strategy for Napier Brown. This
was reaffirmed when it became clear that the competition
authorities no longer felt able to give Napier Brown any protection
as a non-refining independent player in the sugar market.
The sale process took many months but there was interest from a
number of parties and ultimately the sale price demonstrated the
strength of the business which we had built with its strong UK
route to market; the retail packing facilities at Normanton; and
the investment in the new Sugar Hub import facility at
Stallingborough. It is also a tribute to the knowledge and
experience of all the team at Napier Brown and I am pleased that
they can look forward to an exciting future as part of Europe's
second largest sugar group.
The total Group figures for last year were dominated by the
market issues in sugar which impacted both Napier Brown and Garrett
Ingredients. The first half of the year, as previously indicated,
was badly affected by the problems associated with the British
Sugar dispute and while this was resolved from the start of the new
sugar year (the second half of the fiscal year) the sharp fall in
sugar market prices made trading conditions very tough. Despite
this, Napier Brown returned to profitability. Elsewhere performance
has been strong, with Renshaw and Haydens in particular growing
both sales and profitability.
Importantly, the Group excluding Napier Brown grew its operating
profit from GBP2.74m to GBP3.12m. Net debt was well controlled at
GBP30m at the balance sheet date and following the sale of Napier
Brown, the business now has significant positive net cash
balances.
Future plans
The new Group is a smaller entity, but has a much stronger
financial base to grow from and has a clear strategy for
development. We are now focused on three core market sectors: cake
decoration, food ingredients and premium bakery. The ongoing
business is debt free, profitable and cash generative and this will
enable us to invest appropriately both in our existing businesses
and potentially to acquire complementary businesses in our chosen
sectors.
Cake decoration is an attractive added value market both in the
UK and in terms of exports. While it operates within the food
sector, it also shares a number of characteristics with the growing
recreational leisure and fashion markets and this insight will
dictate how we continue to build our presence and market share. The
acquisition of Rainbow Dust Colours Ltd earlier this year is a
prime example of our strategy in action. It is a business which
offers several hundred product lines to meet changing market needs
and prides itself on customer service and product innovation.
Food Ingredients is a much broader sector and we will choose
carefully where we can add value. At Garrett Ingredients the focus
is on the SME sector for commodity ingredients (e.g. sugar and milk
powders) but this service will be increasingly supplemented by
higher added value products such as dairy mixes and emulsifiers. At
Renshaw and R&W Scott the sale of ingredients (sugarpaste,
marzipan, chocolate coatings, jams and sauces) is always
accompanied by 'application' support for the customer as we
recognise that it is the performance of the end product that is all
important.
Finally, the recent success of Haydens has demonstrated how
added value can be achieved in the bakery sector. With the bakery
sector moving from commodity to premium, Haydens is well-placed to
grow and we will investigate further how we can continue this
without moving away from the core skills we have developed.
To support all these three sectors and ensure that we lead in
our markets, we are establishing a new Development Centre in
Liverpool which will house a number of Group employees, in
particular resources for product innovation and a world-class
training facility for cake decorating. Moving these employees away
from the Renshaw site at Crown Street, as well as giving greater
clarity to that operation, will enable Renshaw to configure the
site to meet its growth plans. This is an exciting project which,
as well as saving some costs on infrastructure at Renshaw, will
enable us to develop leadership in our chosen markets.
I would like to mention one further Group initiative which has
been extremely successful. We have undertaken a Leadership
Development programme across all our businesses which has been met
with universal approval by all those involved. I believe strongly
that having the right teams of people in each business, properly
trained and properly motivated, is fundamental to our success and
we will continue to ensure that employee training has a high
priority across all our businesses. Our performance is a tribute to
the hard work and enthusiasm of all our colleagues and I would like
to thank them.
Management Changes
Following the announcement that the Group Finance function is to
move to the London Head Office and the subsequent resignation of
Mike McDonough as Group Finance Director, a new structure for the
finance team is being developed and a further announcement will be
made in due course. Mike McDonough will remain available over the
coming months to provide support as required. The Board would like
to thank him for his contribution to the Group and wishes him every
success in his future career.
Outlook
Trading in the early months of the new financial year within our
continuing operations has begun well and with the funds from the
sale of Napier Brown being received in May we are now in a position
to fast-track some of the investment opportunities we had
previously identified. This will include spend on jam, sauce and
pie-filling capability at R&W Scott; infrastructure at Haydens
to support its growth; and increased capacity at the Renshaw site
in Liverpool. We will also look at potential bolt-on acquisitions
which will help build our presence in our chosen markets, but only
where there is a sensible financial and operational investment
case.
Overall, the business is in great shape and we look forward with
great optimism.
Pieter Totté
Executive Chairman
Divisional Business Reviews
Renshaw
2014/15 performance
Sales revenue was up by nearly 9% on the previous year, with all
trade sectors contributing. Export sales were particularly strong,
with growth across the three main territories of Europe (via Real
Good Food Europe), the US and Australia. Operationally the business
coped well with the increased volumes. EBITDA increased to
GBP6.3million, over GBP800,000 up on the previous year.
While there are some indications that overall growth in the home
baking market is beginning to plateau, the interest in cake
decoration continues to be buoyant, with consumers aspiring to
improve their skill levels. The market is also increasingly
influenced by trends in leisure and fashion - the Renshaw product
offerings will reflect this going forward. A number of product
initiatives were developed during the year including soft fondants
and coloured marzipans.
Future plans
While growth is anticipated across all trade channels, the two
major areas of growth opportunity identified for the coming year
are foodservice and export. The foodservice market is large and
fragmented and Renshaw has restructured its sales and marketing
resource to focus on product applications. In export, Renshaw will
work very closely with Real Good Food Europe to ensure that the
product offering is tailored to the local market needs. In all
sectors, the market is fragmenting and the product offering needs
to be increasingly bespoke. This has important implications for our
investment plans so a project is under way to consider the
manufacturing implications to ensure that the business is geared up
operationally to meet the customer needs.
Rainbow Dust Colours
2014/15 performance
The business was acquired in January so traded with the Group
for less than three months in that time, contributing GBP760,000 of
revenue with an EBITDA of GBP400,000. While it operates in a
similar market to Renshaw, its business model is very specific,
with a wide product range focused on the 'sugarcraft' sector both
in the UK and Europe. The brand has a loyal following amongst
expert cake decorators and the business has successfully developed
its range of coloured edible decorations in a number of formats
(dustings, glitters, etc.), all presented in a wide range of
colours. The business also trades strongly through its trade
website and makes good use of social media.
Future plans
While the owners, Gary and Carol Brown, are remaining with the
business, a succession plan has been put in place with the
appointment of David Grieve as Managing Director. David is well
known in the 'sugarcraft' sector and is working up a plan to
develop a specialist offering to these customers across both
Renshaw and Rainbow Dust. Equally, with approximately 50% of sales
exported there is big potential in Europe and plans are being
developed with Real Good Food Europe to maximise this opportunity.
The new 'Paint It!' range of opaque colours was launched earlier
this year and a number of new products are planned.
In line with the growth plans, a more structured management team
is being created with a Finance Manager already appointed.
Garrett Ingredients
2014/15 performance
The business was hit by dramatic deflation in both of its core
commodity markets, dairy and sugar. Excess sugar stocks in Europe
had a particular impact on the 'Spot' market which is Garretts'
main focus, while the dairy market was also hit by price falls
caused by a combination of factors including the weather and the EU
sanctions against Russia. Both volumes and revenue fell
significantly and while trading margins were well managed, EBITDA
fell accordingly. Overheads were well controlled though ahead of
the previous year given the decision to strengthen the management
team.
The new management team is working well, with considerable focus
being given to being able to operate on a fully stand-alone basis
completely independent of Napier Brown. All distribution operations
were withdrawn from the Napier Brown site in the autumn of 2014.
This process was completed by the year end. The business undertook
a new engagement with its customers at the Ice Cream Alliance
Exhibition in February and will look to build on this.
Future plans
The business's vulnerability to significant changes in commodity
prices was exposed during the last year and it is reassuring that,
despite being hit with exceptional circumstances simultaneously in
both dairy and sugar, it still returned a profit. The new
management team is working on a strategy to support its commodity
trading operation with other added value products and services,
with a number of initiatives being pursued focusing on the needs of
its customer base.
R&W Scott
2014/15 performance
Sales volumes were marginally ahead of the previous year though
revenue was slightly down reflecting deflation in chocolate
coatings. EBITDA was just below break-even and below the previous
year reflecting a planned increase in overheads as management was
recruited to build a sustainable stand-alone business. A major
foodservice contract was gained in jam which will give the business
significantly increased scale in this market, which will have
beneficial consequences in terms of purchasing and manufacturing.
Servicing this contract caused a number of operational cost
challenges in the year but these have now been rectified and the
business is now well placed to develop its jam offering to a wider
customer base.
Following the strategy of turning R&W Scott from a purely
manufacturing operation into a fully-fledged stand-alone business,
significant investment was made in sales, technical and finance
resource leading to the increase in overheads which accounts in
full for the decline in EBITDA over the previous year.
Future plans
The development of the foodservice jam business has led to a new
opportunity in pie fillings, sales of which began during the
summer. On the retail side, listings have been achieved for a
Scott's chocolate spread and a re-launch of the jam ranges,
focusing on the 'no added sugar' proposition which has been well
received. Inter-company sales are also increasing, with supplies to
Haydens particularly strong. The business is also working closely
with Renshaw on pursuing opportunities in the foodservice channel
with backing from the Group development team.
Real Good Food Europe
2014/15 performance
Sales grew to GBP1.7 million over the year, with the business
just moving into a break-even EBITDA by the end of the year. The
major product focus has been on the Renshaw ranges of coloured
sugarpastes and marzipans, and the main geographic focus on the
Benelux, France and Spain. The main marketing effort was directed
at trade and consumer cake shows across Europe, which are becoming
increasingly popular.
The development of a multilingual sales team each with a country
focus has worked well and the move to a warehouse on the outskirts
of Brussels was successfully implemented.
Future plans
The great benefit of having a local operation is the increased
market knowledge and understanding gained. It is clear that the
opportunity for cake decoration products is significant but a
degree of bespoke product and packaging (e.g. multilingual labels)
will be required to maximise this opportunity. The Rainbow Dust
Colours range also presents an enormous opportunity both with
existing customers and in attracting new ones.
To this end the business moved to slightly larger premises on
the same industrial estate in June and is investing in local
labelling to ensure the customers receive the product and format
they need. This will increase costs in the short term but will also
help fast-track the growth plans. Marketing investment will again
focus on trade and consumer cake shows where the two brands,
Renshaw and Rainbow Dust, will be presented together.
Haydens Bakery
2014/15 performance
Haydens posted modest sales growth of 4% on last year but this
masks a dramatic change in product mix following the decision to
exit a number of product categories and focus on five main sectors.
Sales in three of these sectors, Danish and viennoiserie, pies and
crumbles and tarts all showed increases of over 20% YOY. This major
strategic change has paid dividends in terms of product quality,
manufacturing efficiencies and profit performance, which showed
solid progress. EBITDA, at GBP1.25 million was up by over
GBP300,000 on the previous year.
The parallel objective of broadening the customer base was also
achieved with three new national customers being served in the
year: Aldi, Caffè Nero and Asda. Considerable investment was made
in training across the business from management leadership training
to health and safety awareness and specific skills training, such
as customer service techniques.
Future plans
With the new strategy now ingrained, the business has reviewed
its vision and identity as it presents itself to a wider customer
base. This new identity will be presented to customers in the
autumn of 2015. There are plans in place to invest in the bakery to
ensure it has the capability to manage the growth as well as
continuing to develop employee skills across the business, with a
particular focus on customer facing functions. The commercial team
is being expanded in line with the growing number of customers and
a number of new products are planned, including mini tarts and
injected yum yums.
Finance Review
Overview
The current year's results to March 15 are still dominated by
the dispute with British Sugar which affected the "sugar year"
October 13 to September 14. The overall reduction in EBITDA from
GBP3.3 million last year to GBP1.9 million this year is driven by
the Napier Brown performance where a loss of (GBP3.4) million was
incurred, a deterioration of (GBP1.8) million over the previous
year.
EBITDA at GBP5.3 million for continuing operations was
encouraging, up GBP0.4 million year on year, including three months
of Rainbow Dust Colours which was acquired in January 2015.
The impact of the disposal of Napier Brown in May 15 on the
Group is demonstrated by breaking out the key "Income" comparatives
for continuing operations in the table below and with additional
commentary on the March 15 Working Capital and Net Debt
positions.
The disposal is transformational in removing the uncertainty
around the future of Napier Brown as it approaches further
structural change in the sugar industry in 2017. In addition, it
effectively clears the Group's total debt position of approximately
GBP30 million leaving the Group well placed to focus on the
remaining more added value activities.
At the start of 2015 Rainbow Dust Colours Ltd was acquired for
an initial GBP4.0 million with a contingent consideration of GBP3.5
million. Included in these accounts is Goodwill of GBP6.2 million
based on the GBP1.3 million assets acquired with Sales of GBP0.8
million and GBP0.4 million Operating Profits for the 3 months to
end March 15 with acquisition costs of GBP0.28 million included
within significant items.
Revenue
Group revenue from continuing operations for the 12 months to 31
March 2015 was GBP104.6 million, a reduction of 5.1% on the 12
months to 31 March 2014 mainly driven by the fall in commodity
prices within Garrett Ingredients.
Key Comparatives (excl. significant items)
31 March 31 March
2015 2014
Continuing Napier Total Continuing Napier Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- ----------- --------- --------- ----------- --------- ---------
Revenue 104,580 128,288 232,868 110,243 162,333 272,576
Gross profit 25,561 10,364 35,925 21,981 11,408 33,389
Delivered Margin
(Gross profit after
distribution costs) 19,989 426 20,415 17,696 1,865 19,561
EBITDA(*) 5,319 (3,359) 1,960 4,901 (1,605) 3,296
Operating profit(*)
(EBITDA less depreciation) 3,202 (3,943) (741) 2,693 (2,024) 669
Operating profit % 3.1% (3.1%) (0.3%) 2.4% (1.1%) 0.2%
(Loss)/Profit before
taxation* 2,101 (4,788) (4,477) 2,078 (3,070) (992)
---------------------------- ----------- --------- --------- ----------- --------- ---------
* before significant items
Margins
Overall delivered margin for the year at GBP20.4 million was up
GBP0.9 million on the prior year with extremely positive growth
across continuing operations of GBP2.3 million over the prior year
diluted by the GBP1.4 million reduction in Napier margins.
Loss before Tax and Interest
Overall we generated a loss before tax, finance costs and
significant items for the year of GBP0.7 million (Operating profit
before significant items), an increase in loss of GBP1.4 million
over the previous year driven primarily by the GBP1.9 million
reduction in Napier Brown. It was pleasing to see continuing
operations increase by GBP0.5 million over the prior year.
Financing Costs
Financing costs for the year at GBP1.7 million were largely in
line with the prior year.
Significant Items
During the year the Group incurred one-off costs of GBP0.85
million which included GBP0.28 million of acquisition costs for
Rainbow Dust Colours and GBP0.57 million for changes at executive
level associated with the Napier disposal.
Working Capital & Net Debt (including Napier)
31 March 31 March
2015 2014
GBP'000's GBP'000's
----------------------------------------------------- ---------- ----------
Working Capital 37,013 46,941
(Fixed assets/stock/trade debtors & trade creditors)
Net Borrowings (incl. Cash) 30,140 31,133
Net Debt/EBITDA 15.4 9.5
----------------------------------------------------- ---------- ----------
Cash Flow and Debt (including Napier)
Working Capital levels reduced by GBP10.8 million during the
year with the dominant factor the significant reduction in the cost
of sugar which fell by approximately 25% year on year. Within this
fixed assets were down a net GBP1.0 million with Capital
expenditure less than the GBP2.7 million depreciation &
amortisation level. The balance, a reduction of GBP9.8 million,
being the movements across the more fluid stock, debtor and
creditor positions all dominated by the reduction in sugar prices
year on year.
Net Debt (after Cash) as at 31 March 2015 was at GBP30.1
million, down GBP1.0 million on the prior year (31 March 2014
GBP31.1 million) with the dip in cash generation on lower
profitability offset by lower working capital levels overall.
Our ability to service the debt remained, despite the
significant deterioration in the Debt ratio (Net Debt to EBITDA)
from last year, especially with the subsequent disposal of Napier
Brown which effectively clears the Group's debt leaving it with a
cash surplus after disposal costs.
Pensions
The Group operates one defined benefits scheme which was closed
to new members in 2000. A recovery plan is in place 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 remains confident
it continues to meet the trustees' needs and the pension
regulator's guidance with contributions for the year commencing
April 15 expected to be GBP282k in line with the recovery plan.
The latest IAS19 valuation as at March 2015 indicates a GBP5.7
million deficit, an increase of GBP2.0 million since March 2014.
The scheme assets at GBP16.1 million increased by GBP0.8 million
over the previous year with the increase in the deficit driven by
the reduced discount rate of 3.45% v 4.65% when applied to future
defined benefit obligations.
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 all based on continuing operations are set
out below:
31 March 31 March
2015 2014
GBPm GBPm
---------------------------------- -------- --------
Revenue growth(1) (5.1%) 2.6%
Operating margin(2) 3.1% 0.2%
Debt cover (Net debt / EBITDA)(3) 5.6 9.5
Interest cover(4) 6.0 8.4
Health & Safety score(5) 88% 92%
---------------------------------- -------- --------
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 continuing 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 and in 2014
the measures we reset at higher level effectively toughening the
measures to approximately ten percentage points.
Risks and Uncertainties
The operation of a public listed company involves a series of
inherent risks and uncertainties across a range of strategic,
commercial, operational and financial areas. Below, the board has
outlined our perception of particular risks and uncertainties
facing the group. These risks and uncertainties could cause the
actual results to vary from those experienced previously or
described in forward looking statements within the annual
report:
a) Key Customers
The group has a number of key customers, some of whom operate on
contracts which are subject to annual renewals. As a consequence,
the retention of particular customers may change on a year to year
basis.
b) Raw Materials
Raw materials used by the group are subject to price
fluctuations. The operating divisions typically purchase these
items on forward contracts, providing cover for some months ahead
generally and in particular to lock in commitments with sales
contracts on a "back to back" basis. As during last year our most
recent market experience, and current outlook, for some raw
materials indicates continued pressure for sales prices to be
flexed accordingly although there are some signs of the economy's
slowdown having an impact in certain areas.
c) Sugar Regime
As reported in previous years the Sugar Regime and the reforms
it has being going through including the next key milestone in 2017
when beet production quotas end has presented the group with a
sustained period of uncertainty. Napier Brown isn't a sugar
producer and is reliant on sourcing from competitive and
sustainable sources which proves more challenging in a market going
through structural change. Following the disposal of Napier Brown
in May 2015 the Group still requires sugar for use in all its
production facilities but is no longer exposed as a "re-packer and
distributor." The ongoing procurement of sugar will be subject to
the same risk management steps as with all other major raw
materials.
d) Food Safety
As a reputable food manufacturer our operating divisions
rigorously enforce our technical policies and procedures in
relation to the production and storage of our products. All
divisions are BRC accredited with the exception of Rainbow Dust
Colours Ltd which has SALSA accreditation, which is more
appropriate for a company of its size.
e) Health & Safety
The Group could be adversely impacted if it failed to manage the
safety of its manufacturing facilities effectively.
The Board of Directors believes the safety of its employees,
contractors and suppliers is fundamentally important. A Group
compliance programme is in place ensuring that all legal
obligations are adhered to. Regular third party auditing takes
place to maintain a continuous improvement in standards.
Health and Safety continues to be discussed at all monthly
divisional reviews and reported to the group board twice
annually.
As reported elsewhere in this annual report the external audit
regime has been reset with tougher benchmarks and safety criteria
to ensure we maintain improvements.
f) Pensions
The group acquired a defined benefits pension scheme as part of
its acquisition of Napier Brown Foods in September 2005. Whilst
this scheme is closed and benefits are no longer accruing, the
valuation of any defined benefits pension scheme is subject to
movements in equity markets, gilt returns and life expectancy. An
adverse movement in any one of these factors may require the group
to increase its level of funding to the scheme. Management is
increasingly proactive in managing the exposure.
g) Changing Consumer Trends
The group could be impacted by changing consumer trends, with
potential risk areas including concerns over obesity and healthier
eating. The Group's proactive product development and technical
teams are well positioned to help mitigate these risks. The Group
purchases consumer market data in order to track changes in trends
in general as well as tracking performance of the Whitworths and
Renshaw brands.
h) Bribery Act
As part of improving governance and to comply with the Bribery
Act the Group has carried out a risk assessment and implemented a
bribery policy throughout the Group. Adherence to this policy is
monitored by the divisional finance directors with updates planned
for the Board on progress and compliance.
Mike McDonough
Finance Director
Consolidated Statement of Comprehensive Income
Year ended 31 March 2015
Year ended 31 March 2015 Year ended 31 March 2014
Continuing Discontinued Continuing Discontinued
Operations operations Total Operations operations Total
Notes GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
REVENUE 4 104,580 128,288 232,868 110,243 162,333 272,576
Cost of sales (79,019) (117,924) 196,943 (88,262) (150,925) (239,187)
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
GROSS PROFIT 25,561 10,364 35,925 21,981 11,408 33,389
Distribution costs (5,572) (9,938) (15,510) (4,285) (9,543) (13,828)
Administration expenses (16,787) (4,369) (22,006) (15,003) (3,889) (19,436)
Significant items (Note
6) (522) (328) (850) (544) - (544)
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
OPERATING PROFIT 8 2,680 (4,271)) (1,591) 2,149 (2,024) 125
Finance income 9 - - - - - -
Finance costs 10 (866) (845) (1,711) (556) (1,046) (1,602)
Other finance costs 11 (235) - (235) (59) - (59)
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
(LOSS)/PROFIT BEFORE TAXATION 1,579 (5,116) (3,537) 1,534 (3,070) (1,536)
Income tax expense/(credit) 14 (1,055) 1,005 (50) 52 706 758
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
Income Tax on significant
Items 14 110 68 178 120 120
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
(LOSS)/PROFIT ATTRIBUTABLE
TO THE EQUITY HOLDERS
OF THE PARENT 634 (4,043) (3,409) 1,706 (2,364) (658)
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
OTHER COMPREHENSIVE LOSS
Items that will not be
reclassified to profit
or loss
Actuarial (losses)/gains
on defined benefit plans (2,237) - (2,237) (394) - (394)
Income tax relating to
components of other comprehensive
income 447 - 447 (3) - (3)
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
OTHER COMPREHENSIVE (LOSS) (1,790) - (1,790) (397) - (397)
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
TOTAL COMPREHENSIVE (LOSS)/INCOME
FOR THE YEAR ATTRIBUTABLE
TO THE EQUITY HOLDERS
OF THE PARENT 1,156 (4,043) (5,199) 1,309 (2,364) (1,055)
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
Earnings per share from
continuing operations:
- basic 15 0.91p (5.81)p (4.90)p 1.61p (2.61)p (0.95)p
- diluted 0.85p (5.81)p (4.90)p 1.53p (2.61)p (0.95)p
---------------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
Consolidated Statement of Changes in Equity
Year ended 31 March 2015
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 2013 1,389 71,244 540 14,932 88,105
Total Comprehensive income
for the year
Profit for the year - - - (658) (658)
Other Comprehensive income
for the year - - - (397) (397)
Total Comprehensive Income
for the year - - - (1,055) (1,055)
---------------------------------- --------- --------- --------- --------- ---------
Transactions with owners
of the Group, recognised
directly in equity
Contributions by and distribution
to owners of the Company
Shares issued in the year - - - - -
Share based payment expense - - 46 - 46
Deferred tax on share options - - (82) - (82)
Total contributions by and
distributions to owners of
the Group - - 36 - (36)
---------------------------------- --------- --------- --------- --------- ---------
Balance as at 31 March 2014
---------------------------------- --------- --------- --------- --------- ---------
Total Comprehensive income
for the year
---------------------------------- --------- --------- --------- --------- ---------
Profit for the year - - - (3,409) (3,409)
---------------------------------- --------- --------- --------- --------- ---------
Other Comprehensive income
for the year - - - (1,790) (1,790)
---------------------------------- --------- --------- --------- --------- ---------
Total Comprehensive Income
for the year - - - (5,199) (5,199)
---------------------------------- --------- --------- --------- --------- ---------
Transactions with owners
of the Group, recognised
directly in equity
---------------------------------- --------- --------- --------- --------- ---------
Contributions by and distribution
to owners of the Company
---------------------------------- --------- --------- --------- --------- ---------
Shares issued in the year 3 28 - - 31
---------------------------------- --------- --------- --------- --------- ---------
Share based payment expense - - 47 - 47
---------------------------------- --------- --------- --------- --------- ---------
Deferred tax on share options - - 26 - 26
---------------------------------- --------- --------- --------- --------- ---------
Total contributions by and
distributions to owners of
the Group 3 28 73 - 104
---------------------------------- --------- --------- --------- --------- ---------
Balance as at 31 March 2014 1,392 71,272 577 8,678 81,919
---------------------------------- --------- --------- --------- --------- ---------
Consolidated Statement of Financial Position
Year ended 31 March 2015
31 March 31 March
2015 2014
Notes GBP'000s GBP'000s
---------------------------------------------- ----- --------- ---------
NON-CURRENT ASSETS
Goodwill 16 70,019 75,796
Other intangible assets 17 841 1,102
Property, plant and equipment 18 13,599 22,291
Deferred tax asset 20 1,866 1,319
---------------------------------------------- ----- --------- ---------
86,325 100,508
---------------------------------------------- ----- --------- ---------
CURRENT ASSETS
Inventories 21 10,328 19,108
Trade and other receivables 22 15,256 34,260
Assets relating to discontinued business 31 41,406 -
Current tax assets - 641
Other financial assets 23 - 499
Cash and cash equivalents 6,687 8,568
---------------------------------------------- ----- --------- ---------
73,677 63,076
---------------------------------------------- ----- --------- ---------
TOTAL ASSETS 160,002 163,584
---------------------------------------------- ----- --------- ---------
CURRENT LIABILITIES
Bank Overdrafts 51 -
Trade and other payables 24 18295 29820
Borrowings 23 17,343 31,221
Liabilities relating to discontinued business 31 27,005 -
Other financial liabilities 23 - 499
Current tax liabilities 613 -
---------------------------------------------- ----- --------- ---------
63,307 61,540
---------------------------------------------- ----- --------- ---------
NON-CURRENT LIABILITIES
Borrowings 23 6,551 8,480
Trade and other payables 24 - 191
Deferred tax liabilities 20 2,537 2,686
Retirement benefit obligations 30 5,688 3,673
---------------------------------------------- ----- --------- ---------
14,776 15,030
---------------------------------------------- ----- --------- ---------
TOTAL LIABILITIES 78,083 76,570
---------------------------------------------- ----- --------- ---------
NET ASSETS 81,919 87,014
---------------------------------------------- ----- --------- ---------
EQUITY
Share capital 25 1,392 1,389
Share premium account 26 71,272 71,244
Share option reserve 26 577 504
Retained earnings 26 8,678 13,877
---------------------------------------------- ----- --------- ---------
TOTAL EQUITY 81,919 87,014
---------------------------------------------- ----- --------- ---------
These financial statements were approved by the Board of
Directors and authorised for issue on 6 August 2015.
They were signed on its behalf by:
P W Totté
Executive Chairman
M J McDonough
Director
Consolidated Cash Flow Statement
Year ended 31 March 2015
12 months 12 months
ended ended
31 March 31 March
2015 2014
GBP'000s GBP'000s
---------------------------------------------- --------- ---------
CASH FLOW FROM OPERATING ACTIVITIES
Adjusted for:
(Loss)/profit before taxation (3,537) (1,536)
Finance costs 1,711 1,602
Other finance costs 235 59
Share based payment expense 47 -
Depreciation of property, plant and equipment 2,341 2,275
Profit on disposal of property, plant and
equipment (11) -
Amortisation of intangibles 360 352
Expenses related to disposal of discontinued
operations, net of tax - -
---------------------------------------------- --------- ---------
Operating Cash Flow 1,146 2,752
(Increase)/decrease in inventories 3,393 (4,071)
(Increase) in receivables 4,678 (4,047)
Pension contributions (457) (320)
Increase in payables (3,955) 8,741
---------------------------------------------- --------- ---------
Cash generated from operations 4,805 3,055
Income taxes received/(paid) 576 (745)
Interest paid (1,711) (1,602)
Net cash from operating activities 3,670 708
---------------------------------------------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from disposal of property, plant
and equipment 11 22
Purchase of intangible assets (99) (42)
Purchase of property, plant and equipment (1,428) (6,903)
Acquisition of business, net of cash acquired (1,243) -
---------------------------------------------- --------- ---------
Net cash used in investing activities (2,759) (6,923)
---------------------------------------------- --------- ---------
CASH FLOW USED IN FINANCING ACTIVITIES
Shares issued in year 32 -
Additional loans 4,000 1,120
Additional finance leases - 517
Repayment of loans (1,954) (1,989)
Net movements on revolving credit facilities (4,832) 8,053
Repayment of obligations under finance leases (89) (52)
---------------------------------------------- --------- ---------
Net cash used in financing activities (2,843) 7,649
---------------------------------------------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS (1,932) 1,434
---------------------------------------------- --------- ---------
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of
period 8,568 7,134
Net movement in cash and cash equivalents (1,932) 1,434
---------------------------------------------- --------- ---------
Cash and cash equivalents at end of period 6,636 8,568
---------------------------------------------- --------- ---------
Cash and cash equivalents comprise:
Cash 6,687 8,568
Overdrafts 51 -
---------------------------------------------- --------- ---------
6,636 8,568
---------------------------------------------- --------- ---------
Notes to the Financial Statements
Year ended 31 March 2015
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.
Dis-
Continuing continued
12 months R&W Rainbow Operations Operations Total
ended Garrett Renshaw Scott Haydens RGFE Dust Total Total Group
31 March 2015 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
Total Revenue 19,982 48,205 10,122 28,367 1,745 755 109,176 137,456 246,632
Revenue -
Internal (1,747) (1,492) (1,357) - - - (4,596) (9,168) (13,764)
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
External
Revenue 18,235 46,713 8,765 28,367 1,745 755 104,580 128,288 232,868
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
EBITDA 541 6,133 (25) 1,252 (42) 432 8,291 (3,359) 4,932
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
Operating
Profit before
Head Office 520 5,149 (260) 444 (48) 418 6,223 (3,943) 2,280
Head Office
and
consolidation
adjustments - - - - - - (3,021) - (3,021)
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
Significant
Items
relating to
Head Office - - - - - - (522) (328) (850)
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
Operating
Profit/(loss) 520 5,149 (260) 444 (48) 418 2,680 (4,271) (1,591)
Net Finance
Costs (153) (420) (53) (203) (2) (35) (866) (845) (1,711)
Pension
Finance
Income - - - - - - (235) - (235)
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
Profit/(loss)
before
tax 367 4,729 (313) 241 (50) 383 1,579 (5,116) (3,537)
Tax - 532 - (48) - (88) 506 1,073 574
Unallocated
Tax (1,451) - (446)
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
Profit/(loss)
after
tax as per
comprehensive
statement of
income 367 5,261 (313) 193 (50) 295 634 (4,043) (3,409)
-------------- --------- ---------- --------- --------- --------- --------- ----------- ----------- ---------
Sales between segments are charged at prevailing market
rates.
Included in the Renshaw and Haydens segments, one single
customer accounts for 18.2% of the continuing Group's external
sales for the year ended 31 March 2015
R&W Rainbow Total
Garrett Renshaw Scott Haydens RGFE Dust Dis-continued Un-allocated Group
31 March 2015 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------- -------- -------- -------- -------- --------- --------- ------------- ------------ ---------
Segment assets 8,438 77,441 7,083 11,332 574 11,133 41,408 - 157,409
Unallocated
assets
Property,
plant
and
equipment 77
Deferred tax
assets -
Trade and
other
receivables 599
Current tax
asset 1,866
---------------- -------- -------- -------- -------- --------- --------- ------------- ------------ ---------
Total assets 8,438 77,441 7,083 11,332 574 11,133 41.408 159,951
---------------- -------- -------- -------- -------- --------- --------- ------------- ------------ ---------
Segment
liabilities 3,372 10,764 1,648 6,936 308 10,930 26,607 - 60,565
Unallocated
liabilities
Trade and
other
payables 922
Borrowings 8,020
Current tax
liabilities -
Deferred tax
liabilities 2,436
Pension
liability 5,688
---------------- -------- -------- -------- -------- --------- --------- ------------- ------------ ---------
Total
liabilities 3,372 10,764 1,648 6,936 308 10,930 26,607 78,032
---------------- -------- -------- -------- -------- --------- --------- ------------- ------------ ---------
Net operating
assets 5,066 66,677 5,435 4,398 266 203 14,401 - 81,919
---------------- -------- -------- -------- -------- --------- --------- ------------- ------------ ---------
Non-current
asset
additions 52 384 166 643 42 215 1,750 3 3,255
Depreciation 4 641 235 808 6 14 584 49 2,341
Amortisation 17 343 - - - - - - 360
---------------- -------- -------- -------- -------- --------- --------- ------------- ------------ ---------
Unallocated
Relates primarily to the Head Office and non-current asset
additions, depreciation and amortisation which cannot be
meaningfully allocated to individual operating divisions.
Geographical segments
The Group earns revenue from countries outside the United
Kingdom, this amounts to 11.1% of the total revenue of the
continuing group but as no individual country is considered to be
material, segmental reporting of a geographical nature is not
considered relevant.
Continuing Dis-continued
R&W Operations Operations Total
12 months ended Garrett Renshaw Scott Haydens RGFE Total Total Group
31 March 2014 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
Total Revenue 31,803 43,495 10,440 27,255 481 113,474 172,089 285,563
Revenue - Internal (1,392) (543) (1,296) - - (3,231) (9,756) (12,987)
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
External Revenue 30,411 42,952 9,144 27,255 481 110,243 162,333 272,576
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
EBITDA 1,204 5,467 327 917 (391) 7,524 (1,605) 5,919
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
Operating Profit
before Head Office 1,169 4,398 66 109 (391) 5,351 (2,024) 3,327
Head Office and
consolidation
adjustments (2,658) - (2,658)
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
Significant Items (307) (175) (62) (544) (544)
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
Operating Profit/(loss) 862 4,223 66 47 (391) 2,149 (2,024) 125
Net Finance Costs (113) (280) (59) (104) - (556) (1,046) (1,602)
Pension Finance
Income - - - - - (59) - (59)
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
Profit/(loss) before
tax 749 3,943 7 (57) (391) 1,534 (3,070) (1,536)
Tax (243) (947) (1) (1) 90 (982) 706 (276)
Unallocated Tax 1,154 1,154
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
Profit/(loss) after
tax as per
comprehensive
statement of income 813 3,171 6 4 (301) 1,706 (2,364) (658)
----------------------- --------- ---------- --------- --------- --------- ----------- ------------- ---------
Inter-segment sales are charged at prevailing market rates.
R&W Total
Garrett Renshaw Scott Haydens RGFE Discontinued Unallocated Group
31 March 2014 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------ --------- --------- --------- --------- --------- ------------- ----------- ---------
Segment assets 9,489 76,741 9,986 11,383 208 51,955 - 159,772
Unallocated assets
Property, plant and
equipment 1,650
Deferred tax assets 1,319
Trade and other
receivables 202
Current tax asset 641
------------------------ --------- --------- --------- --------- --------- ------------- ----------- ---------
Total assets 9,489 76,741 9,986 11,383 208 51,955 163,584
------------------------ --------- --------- --------- --------- --------- ------------- ----------- ---------
Segment liabilities 3,989 11,264 4,718 6,378 55 39,939 - 66,343
Unallocated liabilities
Trade and other
payables 341
Borrowings 7,200
Current tax
liabilities -
Deferred tax
liabilities 2,686
------------------------ --------- --------- --------- --------- --------- ------------- ----------- ---------
Total liabilities 3,989 11,264 4,718 6,378 55 39,939 76,570
------------------------ --------- --------- --------- --------- --------- ------------- ----------- ---------
Net operating assets 5,500 65,477 5,268 5,005 153 12,016 - 87,014
------------------------ --------- --------- --------- --------- --------- ------------- ----------- ---------
Non-current asset
additions - 999 302 1,603 - 2,397 1,644 6,945
Depreciation - 752 261 808 - 419 35 2,275
Amortisation 35 317 - - - - - 352
------------------------ --------- --------- --------- --------- --------- ------------- ----------- ---------
Unallocated
Relates primarily to the Head Office and non-current asset
additions, depreciation and amortisation which cannot be
meaningfully allocated to individual operating divisions.
Geographical segments
The Group earns revenue from countries outside the United
Kingdom, but as these only represent 3% of the total revenue of the
Group, segmental reporting of a geographical nature is not
considered relevant. The Renshaw division accounts for the majority
of this turnover.
2. Significant items
12 months 12 months
ended ended
31 March 31 March
2015 2014
GBP'000s GBP'000s
------------------------------------- --------- ---------
Management restructuring costs 568 544
Acquisition costs 282 -
------------------------------------- --------- ---------
850 544
Taxation credit on significant items (178) (120)
------------------------------------- --------- ---------
652 424
------------------------------------- --------- ---------
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 Sugar division and
Head Office. The acquisition costs relates to the purchase of
Rainbow Dust Colours Ltd.
3. Taxation
31 March 31 March
2015 2014
GBP'000s GBP'000s
----------------------------------------------------- --------- ---------
Current tax
UK Current tax on profit of the period 201 (356)
UK Current tax on significant items (178) (120)
Adjustments in respect of prior years 85 (170)
----------------------------------------------------- --------- ---------
Total current tax 108 (646)
----------------------------------------------------- --------- ---------
Deferred tax
Deferred tax charge re pension scheme 44 52
Origination and reversal of timing differences (260) 53
Adjustments in respect of prior years (20) (6)
Adjustment in respect of change in deferred tax rate - (331)
----------------------------------------------------- --------- ---------
Total deferred tax (236) (232)
----------------------------------------------------- --------- ---------
Total tax - continuing operations (128) (878)
Tax on discontinued operations - -
----------------------------------------------------- --------- ---------
Total tax (128) (878)
----------------------------------------------------- --------- ---------
Tax on profit on ordinary activities (128) (878)
----------------------------------------------------- --------- ---------
4. Earnings per share
Basic earnings per share
Basic earnings per share is calculated on the basis of dividing
the (loss)/profit attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares in issue
during the year.
12 months 12 months
ended ended
31 March 31 March
2015 2014
GBP'000s GBP'000s
Continuing Continuing
operations operations
-------------------------------------------------------------------- ----------- -----------
Earnings after tax attributable to ordinary shareholders (GBP'000s) (3,409) (658)
- Continuing operations 634 1,154
- Discontinued operations (4,043) (1,812)
Weighted average number of shares in issue ('000s) 69,568 69,466
- Continuing operations 0.91p 1.61p
- Discontinued operations (5.81)p (2.61)p
-------------------------------------------------------------------- ----------- -----------
Basic earnings per share (4.90)p (0.95)p
-------------------------------------------------------------------- ----------- -----------
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
2015 2014
GBP'000s GBP'000s
-------------------------------------------------------------------- --------- ---------
Earnings after tax attributable to ordinary shareholders (GBP'000s) (3,409) (658)
- Continuing operations 634 1,154
- Discontinued operations (4,043) (1,812)
Weighted average number of shares in issue ('000s) 74,203 75,575
- Continuing operations 0.85p 1.53p
- Discontinued operations n/a n/a
-------------------------------------------------------------------- --------- ---------
Diluted earnings per share n/a n/a
-------------------------------------------------------------------- --------- ---------
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
2015 2014
GBP'000s GBP'000s
----------------------------------------------------------------------------- --------- ---------
Earnings after tax attributable to ordinary shareholders (GBP'000s) (3,409) (658)
- Continuing operations 1,379 1,154
- Discontinued operations (4,788) (1,812)
Add back significant items (note 6) 850 544
Add back tax on significant items (178) (120)
----------------------------------------------------------------------------- --------- ---------
Adjusted earnings after tax attributable to ordinary shareholders (GBP'000s) (2,737) (234)
----------------------------------------------------------------------------- --------- ---------
Weighted average number of shares in issue ('000s) 69,568 69,466
----------------------------------------------------------------------------- --------- ---------
Basic earnings per share (3.66)p (0.34)p
----------------------------------------------------------------------------- --------- ---------
Total potential weighted average number of shares in issue ('000s) 74,203 75,579
----------------------------------------------------------------------------- --------- ---------
Basic diluted earnings per share* n/a n/a
----------------------------------------------------------------------------- --------- ---------
* 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 2014 75,796
Addition in year (note 32) 6,223
Carried forward 31 March 2015 82,019
------------------------------ ---------
Goodwill acquired on business combinations is allocated at
acquisition to the Cash Generating Units that are expected to
benefit from that business combination. Before any recognition of
impairment losses, the carrying amount of goodwill has been
allocated as follows:
31 March 31 March
2015 2014
GBP'000s GBP'000s
--------------------------------------- --------- ---------
Sugar and Bakery Ingredients divisions
Napier Brown 12,000 12,000
Garrett Ingredients 5,000 5,000
Renshaw 57,796 57,796
R&W Scott 1,000 1,000
Rainbow Dust Colours Ltd 6,223 -
--------------------------------------- --------- ---------
Carried forward 31 March 2015 82,019 75,796
--------------------------------------- --------- ---------
Continuing business 70,019
--------------------------------------- --------- ---------
Discontinued business 12,000
--------------------------------------- --------- ---------
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, until 17 March 2015 when
Napier Brown Sugars Ltd was formed, the trading activity of
Renshaw, R&W Scott, Napier Brown and Garrett Ingredients
resided. On acquisition, in 2005, they were all part of one legal
entity without any separate evaluation or consideration.
As previously reported the strategy in recent years has been to
establish each of these as separate trading businesses,
"divisions", with their own management teams leading to them all
being re-established as separate Limited companies. It's expected
Renshaw. R&W Scott and Garrett Ingredients will now be in
separate legal entities in Oct 2015.
The goodwill on Rainbow Dust Colours Ltd arises out of the
acquisition in January 2015
An assessment of the underlying cash generation, based on
current EBITDA performance less ongoing maintenance capital
expenditure, has been used to determine the future cash generation
profile for each of the divisions. In line with the established
impairment tests logic this profile has been used in establishing
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.
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 7.07% (2014 - 6.67%). A
period of 19 years has been applied to the projected cash flows,
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
GBP36.7 million for continuing operations. This is based on our
base expectations for the trading period to end March 2016 as well
as the existing Net Debt levels pre the disposal of Napier Brown in
order to be consistent with the prior year. Applying the estimated
WACC of approximately 5% after clearing the Net Debt increases the
surplus to the order of GBP57.8 million
For Napier Brown the key test centres around the disposal in May
2015 which post completion accounts is expected to deliver a
surplus over net assets, excluding goodwill, of approximately GBP23
million. This effectively "doubles" the goodwill valuation we
assumed in March 2014 and still reflected at March 2015
An increase in the Group's weighted average cost of capital to
above 10.5% (2014 10.5%) would cause the Board to impair the
carrying value of goodwill across all continuing divisions.
6. Borrowings and capital management
31 March 31 March 31 March 31 March
2015 2015 2014 2014
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 9,196 5,246 7,200 7,200
Revolving credit facilities 24,430 - 29,262 -
Hire purchase 376 - 465 -
-------------------------------------------- --------- --------- --------- ---------
36,776 5,246 39,701 7,200
-------------------------------------------- --------- --------- --------- ---------
Amounts due for settlement within 12 months 30,099 1,567 31,221 1,836
Amounts due for settlement after 12 months 6,677 3,679 8,480 5,364
-------------------------------------------- --------- --------- --------- ---------
36,776 5,246 39,701 7,200
-------------------------------------------- --------- --------- --------- ---------
Continuing business 23,893
-------------------------------------------- --------- --------- --------- ---------
Discontinued business 12,883
-------------------------------------------- --------- --------- --------- ---------
Features of the Group's borrowings are as follows:
The Group's financial instruments comprise cash, a term loan,
hire purchase and finance leases, revolving credit facility,
overdraft and various items arising directly from its operations
such as trade payables and receivables. The main purpose of these
financial instruments is to finance the Group's operations. The
facilities with PNC Business Credit were renewed in December 2012
for a period of five years.
The main risks from the Group's financial instruments are
interest rate risk and liquidity risk. The Group also has some
currency exposure in relation to its sugar trade and also some
currency exposure in relation to the purchase of almonds from the
United States. However, this is mitigated by matching against
foreign currency sales. The Board reviews and agrees policies,
which have remained substantially unchanged for the year under
review, for managing these risks.
The Group's policies on the management of interest rate,
liquidity and currency exposure risks are set out in the Report of
the Directors.
The Group operates a number of term loans and revolving credit
facilities with PNC Business Credit. The property term loan
currently bears interest at 3% above base rate and is repayable via
monthly instalments of GBP37,888 and then a bullet repayment of
GBP2,273,308 in December 2017. At the year end, GBP3.5 million was
outstanding under this facility. Our fixed asset term loan also
currently bears interest at 3% above base rate and is repayable by
monthly instalments of GBP41,710 until December 2017. At the year
end, GBP1.2 million was outstanding under this loan. Our final term
loan currently bears interest at 3.5% above base rate and is
repayable via monthly instalments of GBP85,720 up to December 2015.
At the year end, GBP0.7 million was outstanding under this
facility.
The Group's revolving credit facilities, which are available
until December 2017, comprise sterling and euro denominated invoice
discounting facilities and an inventory asset facility. The invoice
discounting facilities currently bear interest at 2.65% above
sterling and euro base rates respectively and are secured against
the underlying trade receivables. The total amount outstanding
under these facilities at the end of the period was GBP24.4
million, whilst the maximum permitted borrowings are GBP28.5
million. The inventory finance facility currently bears interest at
2.95% above base rate and at the period end GBP6.9 million was
outstanding under this facility which has a maximum borrowing limit
of GBP11 million and is secured upon the finished goods and certain
raw material inventories of the Group.
The fixed interest rate liabilities relate to amounts payable on
hire purchase agreements GBP0.4 million. The weighted average
interest rate of these liabilities was 2% (2014 - 2%) and the
weighted average period for which the interest rates are fixed was
40 months (2014 - 52 months).
The Group had outstanding loan notes amounting to GBP2,773,908
(2014 - GBP2,773,908) due to Napier Brown Ingredients Limited as
disclosed in note 29. The loan note holders have previously agreed
to waive the accrued interest in relation to these notes. Agreement
has been reached in principle that interest will be paid from April
2014 at 10% per annum.
The financial assets of the Group are surplus funds, which are
offset against borrowings under the facility, and there is no
separate interest rate exposure.
PNC Business Credit has a debenture incorporating a fixed and
floating charge over the undertaking and all property and assets
present and future including goodwill, book debts, uncalled
capital, buildings, fixtures, intangible assets, fixed plant and
machinery. In addition, our banking arrangements with Lloyds TSB
plc contain certain cross guarantees.
During the year the group took out a 365 day term loam loan with
Lloyds Bank Plc of GBP3 million to finance the acquisition of
Rainbow Dust Colours Ltd. This loan bears interest of 2.75% per
annum above LIBOR and is repayable by 3 quarterly payments of
GBP0.25 million and a final payment due in January 2016 of GBP3.25
million
Hire purchase and finance lease liabilities are secured upon the
underlying assets.
Forward foreign exchange contracts
During the year the Group entered into contracts to sell sugar
to customers at a fixed price in GBP. The group also enters into
commodity contracts to purchase sugar and the price varies with
movements in the Unofficial Sugar Conversion Rate (USCR) which is
directly linked to movements in the EUR/GBP exchange rate. In order
to hedge against risk of variable returns on the contract as a
result of movements in the exchange rate the Group has entered into
a series of forward contracts to buy euros. The contracts mature at
regular intervals until 30 September 2014 when the contract
ends.
The notional amount outstanding on forward exchange contracts at
31 March 2015 was GBP6 million (2014 - 15,576,921).
The fair value of these foreign exchange contracts at 31 March
2015 was GBP398k and this amount has been recorded as a loss within
administration expenses and a derived financial liability on the
statement of financial position. Offsetting against this, the fair
value of the highly probable forecast transaction under the
commodity contract was GBP398k and this amount has been recorded as
a gain within administration expenses and a derived financial asset
on the Statement of financial position.
Capital management
The Group is subject to the risk that its capital structure will
not be sufficient to support the growth of the business. The
Group's objectives when managing capital are to safeguard the
Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
There were no changes to the Group's approach to capital
management during the year although the Group has extended its
facilities with its funders in previous years, most recently in
December 2012 to provide additional capacity. The Group has made
several changes within the facilities over recent years to "fine
tune" them to meet its capital investment plans and also to allow
flexibility between the invoice discounting and stock financing
elements, where most of the facilities' capacity is available, to
provide a more dynamic solution particularly in its sugar business
but also managing its seasonal requirements.
Liquidity risk management
The Board reviews the Group's liquidity position on a monthly
basis and monitors its forecast and actual cash flows against
maturing profiles of its financial assets and liabilities.
The following table details the Group's maturity profile of its
financial liabilities:
Less than 1-3 3 months 1-5 5+
1 month months to 1 year years years Total
2015 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- --------- --------- ---------- --------- --------- ---------
Trade and other payables 24,657 3,675 3,687 - - 32,019
Loan notes - - - 2,774 - 2,774
Bank term loans 403 556 4,709 3,528 - 9,196
Revolving credit facilities - 24,430 - - - 24,430
Finance leases 10 20 122 224 - 376
---------------------------- --------- --------- ---------- --------- --------- ---------
25,070 28,681 8,518 6,526 - 68,795
Interest 148 338 451 1,845 - 2,782
---------------------------- --------- --------- ---------- --------- --------- ---------
Total 25,218 29,019 8,969 8,371 - 71,577
---------------------------- --------- --------- ---------- --------- --------- ---------
Less than 1-3 3 months 1-5 5+
1 month months to 1 year years years Total
2014 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- --------- --------- ---------- --------- --------- ---------
Trade and other payables 29,804 3 13 191 - 30,011
Loan notes - - - 2,774 - 2,774
Bank term loans 153 306 1,377 5,364 - 7,200
Revolving credit facilities - 29,262 - - - 29,262
Finance leases 10 20 92 343 - 465
---------------------------- --------- --------- ---------- --------- --------- ---------
29,967 29,591 1,482 8,672 - 69,712
Interest 133 266 1,197 4,387 - 5,983
---------------------------- --------- --------- ---------- --------- --------- ---------
Total 30,100 29,857 2,679 13,059 - 75,695
---------------------------- --------- --------- ---------- --------- --------- ---------
The profile of the trade payables has been taken as being
consistent with the Group's payment terms to suppliers.
Analysis of market risk sensitivity
Currency risks:
The Group is exposed to currency risk on purchases made of
almonds from the United States. The risk associated with these
purchases is mitigated by matching with sales in foreign
currencies. The effect of a 10c strengthening of the US dollar
against sterling exchange rate at the balance sheet date on the
trade payables carried at that date would, with all other variables
being held constant, have resulted in a decrease in pre-tax profits
of GBP9k. The impact of a 10c strengthening of the US dollar
against sterling at the balance sheet date on our trade receivables
carried at that date would, all other variables being held
constant, have resulted in an increase in pre-tax profits of
GBP87k.
The Group is also exposed to currency risk on purchases of sugar
from Europe. The risk associated with these purchases is mitigated
by matching with sales in foreign currencies. These sales form part
of our Invoice Discounting facilities with PNC, which generate a
euro loan obligation. The effect of a EUR0.05 strengthening of the
euro versus sterling exchange rate at the balance sheet date on our
overall euro net position carried at that date would, all other
variables being held constant, have resulted in a decrease in
pre-tax profits of GBP18k.
Interest rate risks:
The Group has an exposure to interest rate risk arising from
fluctuations in sterling and euro base rates. The impact of a 1%
increase in the applicable interest rates at the balance sheet date
on the variable rate debt carried at that date would, all other
factors remaining unchanged, have resulted in a decrease in pre-tax
profits of GBP369k.
Obligation under finance leases
31 March 31 March
2015 2014
GBP'000s GBP'000s
-------------------------------------------------------------- --------- ---------
Finance lease liabilities - minimum lease payments
Due within one year 152 122
Due within one to five years 224 343
-------------------------------------------------------------- --------- ---------
376 465
Future finance charges on finance leases 27 36
-------------------------------------------------------------- --------- ---------
Present value of finance lease liabilities 349 399
-------------------------------------------------------------- --------- ---------
The present value of finance lease liabilities is as follows:
Due within one year 143 114
Due within one to five years 206 285
-------------------------------------------------------------- --------- ---------
349 399
-------------------------------------------------------------- --------- ---------
It is the Group's policy to lease certain property, plant and
equipment under finance leases. For the period ended 31 March 2015
the average effective borrowing rate was 4.01% (2014 - 4.01%).
Interest rates are fixed at the contract dates. All leases are on a
fixed repayment basis and no arrangements have been entered into
for contingent rental payments. All lease obligations are
denominated in sterling.
The fair value of the Group's lease obligations approximates to
their carrying amount.
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 agreed with "base" contribution
levels for the year ended 31 March 2014 of GBP264k with annual
increases 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 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 31 March
2012 actuarial valuation has been approximately updated to reflect
liabilities on the accounting basis at 31 March 2015. This has
resulted in a deficit in the scheme of GBP5,688,000.
It is the policy of the Company 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
2015 2014 2013 2012 2010
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------- --------- --------- --------- ----------- -----------
Present value of defined benefit obligation 21,799 19,033 19,153 17,085 16,212
Fair value of plan assets (16,111) (15,360) (15,613) (16,005) (16,308)
-------------------------------------------- --------- --------- --------- ----------- -----------
Deficit/(surplus) in plan 5,688 3,673 3,540 1,080 (96)
Amount not recognised in accordance with
IAS 19 - - - - 96
Gross amount recognised 5,688 3,673 3,540 1,080 -
Deferred tax at 20% (2014 - 23%) (403) (735) (814) (259) -
-------------------------------------------- --------- --------- --------- ----------- -----------
Net liability 5,285 2,938 2,726 821 -
-------------------------------------------- --------- --------- --------- ----------- -----------
Reconciliation of opening and closing balances of the present
value of the defined benefit obligations
31 March 31 March
2015 2014
GBP'000s GBP'000s
---------------------------------------------------------------------- --------- ---------
Defined benefit obligation at start of period 19,033 19,153
Interest cost 857 879
Actuarial losses 3,122 12
Benefits paid, death in service insurance premiums, expenses and past
service costs (1,213) (1,011)
---------------------------------------------------------------------- --------- ---------
Defined benefit obligation at end of period 21,799 19,033
---------------------------------------------------------------------- --------- ---------
Reconciliation of opening and closing balances of the fair value
of plan assets
12 months 12 months
ended ended
31 March 31 March
2015 2014
GBP'000s GBP'000s
---------------------------------------------------------------- --------- ---------
Fair value of scheme assets at start of the period 15,360 15,613
Expected return on scheme assets 695 720
Actuarial (losses)/gains 885 (382)
Contributions paid by the Group 457 320
Benefits paid, death in service insurance premiums and expenses (1,286) (911)
---------------------------------------------------------------- --------- ---------
Fair value of scheme assets at end of the period 16,111 15,360
---------------------------------------------------------------- --------- ---------
The actual return on the scheme assets over the period ended 31
March 2015 was GBP1,580k (2014 - GBP338k)
Total expense recognised in the Statement of Comprehensive
Income within other finance income
31 March 31 March
2015 2014
GBP'000s GBP'000s
--------------------------------- ---------- ---------
Interest on liabilities 857 879
Expected return on scheme assets (695) (720)
Past service cost 73 (100)
--------------------------------- ---------- ---------
Total income 235 59
--------------------------------- ---------- ---------
Statement of recognised income and expenses
31 March 31 March
2015 2014
GBP'000s GBP'000s
---------------------------------------------------------------------------- --------- ---------
Difference between expected and actual return on scheme assets: gain/(loss) 885 (382)
Experience gains and losses arising on the scheme liabilities: loss - -
Actuarial gains/(losses) arising from changes in demographic assumptions (11) 352
Actuarial gains/(losses) arising from changes in financial assumptions (3,111) (364)
---------------------------------------------------------------------------- --------- ---------
Total amount recognised in Statement of Other Comprehensive Income (2,237) (394)
---------------------------------------------------------------------------- --------- ---------
Assets
31 March 31 March 31 March
2015 2014 2013
GBP'000s GBP'000s GBP'000s
--------------------- --------- --------- ---------
UK equity 1,759 1,977 869
Overseas equity 4,634 5,141 4,058
Absolute return fund 4,126 3,929 3,444
Bonds 933 1,798 2,588
Gilts 1,382 645 406
Property 354 301 390
Cash 1,444 748 1,889
Alternative assets 1,479 821 1,969
--------------------- --------- --------- ---------
Total assets 16,111 15,360 15,613
--------------------- --------- --------- ---------
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
2015 2014 2013 2012
% per annum % per annum % per annum % per annum
-------------------------------------------------- ------------ ------------ ------------ ------------
Inflation 2.90 3.30 3.20 2.90
Salary increases - - - -
Rate of discount 3.45 4.65 4.70 5.00
Allowance for pension in payment increases of RPI
or 5% p.a. if less 2.80 3.20 3.10 2.80
Allowance for revaluation of deferred pensions of
RPI or 5% p.a. if less 1.90 2.20 1.90 1.90
Allowance for commutation of pension for cash at 90% of max 75% of max 75% of max 75% of max
retirement allowance allowance allowance allowance
-------------------------------------------------- ------------ ------------ ------------ ------------
Assumption Change in assumption Change in liability
----------------- ------------------------- -------------------------
Discount rate Increase/decrease of 0.5% Decrease/increase by 7.0%
p.a.
Rate of inflation Increase/decrease of 0.5% Increase/decrease by 2.0%
p.a.
Rate of mortality 1 year increase in life Increase by 4.0%
expectancy
----------------- ------------------------- -------------------------
The mortality assumptions adopted at 31 March 2014 imply the
following life expectancies:
Male retiring at age 65
in 2015 21.8 years
Female retiring at age 65
in 2015 23.8 years
Male retiring at age 65
in 2035 22.7 years
Female retiring at age 65
in 2035 24.9 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.
Expected long term rates of return
The expected long term rates of return applicable at the start
of each period are as follows:
31 March 31 March 31 March 31 March 31 December
2015 2014 2013 2012 2011
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------- --------- --------- --------- --------- -----------
Fair value of assets 16,111 15,360 15,613 16,005 16,308
Defined benefit obligation (21,799) (19,033) (19,153) (17,085) (16,212)
-------------------------------------------- --------- --------- --------- --------- -----------
Surplus/(deficit) in scheme (5,658) (3,673) (3,540) (1,080) 96
-------------------------------------------- --------- --------- --------- --------- -----------
Experience adjustment on scheme assets 885 (382) 208 (984) 578
Experience adjustment on scheme liabilities - - (1,923) (46) 387
-------------------------------------------- --------- --------- --------- --------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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