TIDMRGD
RNS Number : 7597F
Real Good Food PLC
01 August 2016
Strictly embargoed until: 07.00: 1 August 2016
Real Good Food plc
("the Company" or "Real Good Food")
Final Results for the Year Ending 31 March 2016
Real Good Food plc (AIM: RGD) announces Final Results for the
Year Ending 31 March 2016.
Operating Highlights
-- Following the successful disposal of Napier Brown, which
generated a profit of GBP9.1 million the Group made a statutory
profit before tax of GBP12.9* million in the year
-- Disposal transformed the Group balance sheet reducing net
debt from GBP30.1 million down to GBP5.1 million
-- Group restructured into three pillar markets with stand-alone business strategies for each
-- Continuing investment strategy in core markets and across
business assets to drive operating efficiency and future EBITDA
growth
-- Acquisition strategy progressing to plan: Rainbow Dust
Colours (January 2015); ISO2 Nutrition (December 2015); Chantilly
Patisserie (February 2016) successfully completed
-- New Development Centre in Liverpool opened providing a base
for our Group plc support functions (Technical, IT, HR, Operations)
and a state-of-the-art Innovation Centre for new product
development
-- Launch of 'Renshaw Academy' to further monetise the Renshaw
brand and to cement our position as industry leader in the global
cake decorating market
-- Strong financial and operational platform in place for future
growth in all three pillar markets: Cake Decoration, Food
Ingredients and Premium Bakery
Financial Highlights GBP millions
2015/16 2014/15
Continuing Discontinued Total Continuing Discontinued Total
---------------- ---------- ------------ ----- ---------- ------------ -----
Revenue 100.4 13.3 113.7 104.6 128.3 232.9
---------------- ---------- ------------ ----- ---------- ------------ -----
EBITDA 5.0 (0.0) 5.0 5.3 (3.4) 1.9
---------------- ---------- ------------ ----- ---------- ------------ -----
Finance Costs (0.5) (0.9) (1.4) (0.9) (0.8) (1.7)
Depreciation (1.9) (0.1) (2.0) (2.1) (0.6) (2.7)
---------------- ---------- ------------ ----- ---------- ------------ -----
Underlying
Profit 2.6 (1.0) 1.6 2.3 (4.8) (2.5)
---------------- ---------- ------------ ----- ---------- ------------ -----
Significant
Items 2.4 9.1 11.5 (0.5) (0.3) (0.8)
Pension Finance (0.2) - (0.2) (0.2) - (0.2)
---------------- ---------- ------------ ----- ---------- ------------ -----
Profit Before
Tax 4.8 8.1 12.9* 1.6 (5.1) (3.5)
---------------- ---------- ------------ ----- ---------- ------------ -----
Pieter Totté, Executive Chairman, commented:
"The hugely successful disposal of Napier Brown transformed our
balance sheet and has enabled us to begin a strategy of investing
in our core markets. We have spent the time since reviewing our
strategy, clarifying our focus and restructuring the business
accordingly. We now operate in three pillar markets (Cake
Decoration, Food Ingredients and Premium Bakery) and our objective
will be to build scale and strategic positions in each of these
through organic growth, targeted investment and bolt-on
acquisitions as appropriate."
On the outlook for the current financial year, he added:
"The food industry faces challenging times with diversifying
sales channels, increasing legislative burdens, the growth in the
minimum wage and ever-demanding consumers. The response to these
trends require being alert to all these factors and having the
resources to invest and adapt. I am confident that with our clear
strategy and strong balance sheet we are in a good position to
build three increasingly strong businesses in our three pillar
markets.
"Trading in the first three months of the new financial year has
been satisfactory with recent order intake positive, and with the
investments we are making, I am confident that we will deliver
growth across all three divisions."
*-ends-*
* The Group announced in its Trading Update on 26 April 2016
that Statutory PBT would be GBP13.9 million; this figure has now
been revised to GBP12.9 million and is reconciled as follows: -
GBP millions
Original announced Statutory PBT 13.9
Adjustment in profit on sale of Napier
arising due to agreement of working
capital adjustments reducing the profit
from GBP9.4 million to GBP9.1 million (0.3)
Acquisition costs written off (0.4)
Higher pension finance costs (0.2)
Staff compensation costs resulting from
sale of Napier (0.1)
Revised Statutory PBT for the year ended
31 March 2016 12.9
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 and Chantilly Patisserie).
ENQUIRIES:
Real Good Food plc Tel: 020 3857
3900
Pieter Totté, Executive
Chairman
David Newman, Finance Director
Andrew Brown, Marketing
Director
finnCap Limited (Nomad and Tel: 020 7220
Joint Broker) 0500
Matt Goode
Grant Bergman
Daniel Stewart and Company Tel: 020 7776
Plc (Joint Broker) 6550
David Lawman
Jonathon Webb
Belvedere Communications Tel: 020 3567
(PR) 0510
John West
Kim van Beeck
Chairman's Statement
The year to 31(st) March 2016 saw the Group make a pre-tax
profit of GBP12.9 million following the hugely successful disposal
of Napier Brown which generated an exceptional profit of GBP9.1
million. While underlying EBITDA for the continuing businesses was
largely flat, the Napier Brown sale has transformed our balance
sheet (net debt at the year-end improved from GBP30.1 million to
just GBP5.1 million) and thereby enabled us to begin a strategy of
investing in building strategic positions in our core markets. In
this respect the Napier Brown case history (building and investing
strategically for the long term) is a model for what we intend to
do in our remaining markets.
We have spent the time since the Napier Brown disposal reviewing
our strategy, clarifying our focus and restructuring the business
accordingly. We now operate in three pillar markets (Cake
Decoration, Food Ingredients and Premium Bakery) and our objective
will be to build scale and strategic positions in each of these
through organic growth, targeted investment and bolt-on
acquisitions as appropriate.
Each market has different characteristics and will generate
different returns and our plans will reflect this. We will also
evolve our management structures and approach to make sure that the
potential for each of these divisions is maximised.
We have made progress on a number of fronts. In Cake Decoration,
the acquisition of Rainbow Dust Colours in January 2015 has now
been fully integrated and it is a core part of this division. It
will now be selling Renshaw products directly to some of its
specialist customers who would prefer to have a one-stop shop. We
have also recognised increased potential for tackling the cake
decoration market globally and intend during the course of the next
12 months to create a global range under the Renshaw brand. While
there may be the need to tailor locally either for reasons of
different legislation or local tastes, the essential market
positioning of the Renshaw brand and products will be the same. To
provide additional focus for this initiative we have re-named our
European business 'Renshaw Europe' and also set up a US company
(Renshaw US Inc.) to drive this initiative. We see similar
potential in Australasia and elsewhere. The transition from being
just a manufacturer of products for other people to becoming a
market and brand-led player (both with Renshaw and Rainbow Dust
Colours) will be profound.
Food Ingredients is a very different market where inevitably
margins are lower but we also see increasing opportunities for
providing added value. The acquisition of ISO2 Nutrition is an
example of finding a niche in an area of our competence (whey
protein is the main ingredient) and thereby providing
diversification for Garrett Ingredients from its commodity base in
dairy powders and sugar. Both these commodity sectors have been
extremely difficult over the past two years with prices hitting
record lows. There are already signs, particularly in sugar, that
prices will rise, but our strategy is to reduce our reliance on
this and seek more lucrative and sustainable sectors. We also
believe that customer service and an efficient supply chain are
important factors in this market and we continue to investigate how
we can build competitive advantage in this way.
In Premium Bakery, the acquisition of Chantilly Patisserie is a
perfect example of the type of business we are keen to acquire and
build on. It operates in a small but fast growing market niche -
high quality out-of-home desserts. The business brings to us great
skills in product and specific customer knowledge while we can help
it grow and extend its technical capabilities and customer reach.
Meanwhile we have determined on a very clear vision for our core
business in this sector, Haydens, by increasingly focusing on fewer
product lines and product sectors -producing many more of fewer
products and thereby doing it better and generating better returns.
Part of this initiative is to produce a branded range from Haydens
in the coming year. We also see a significant opportunity to use
our stronger cash resources to automate non-added value processes
which will both reduce costs and improve quality and
consistency.
We have also been evolving our management model. While we
believe in local accountability for stand-alone businesses we
increasingly see divisional opportunities and the value which
expert Group functions can deliver. To this end the opening of our
new Development Centre in Liverpool is central to our strategy. The
centre provides three things; first, a base for our Group support
functions (Technical, IT, HR, Operations) which previously had been
squeezed into the Renshaw Crown Street site; secondly, a state of
the art Innovation Centre for our Group new product development and
applications teams who previously had to use only site based
equipment. The food industry is fast moving with consumers becoming
ever more demanding in terms of health, quality, shelf life,
convenience and personalisation. The challenge is to find technical
and process solutions to deliver these benefits to consumers and
our Innovation Centre team are fully focused on this with a number
of exciting projects in the pipeline.
Finally the Development Centre houses our new 'Renshaw Academy'.
This initiative is part and parcel of the Renshaw global range
launch and will be the main marketing support vehicle for it.
Consumer aspiration to improve cake decorating skills is a global
phenomenon and the Renshaw brand has the reputation as the expert
and thus is well placed to lead the market both in terms of product
range and customer and consumer inspiration. More detail on our
plans is given later in this report.
Outlook
The food industry faces challenging times with diversifying
sales channels, increasing legislative burdens, the growth in the
minimum wage and ever-demanding consumers. The response to these
trends requires being alert to all these factors and having the
resources to invest and adapt. In this respect I am confident that
with our clear strategy and strong balance sheet we are in a good
position to build three increasingly strong businesses in our three
pillar markets.
Trading in the first three months of the new financial year has
been satisfactory with recent order intake positive, and with the
investments we are making, I am confident that we will deliver
growth across all three divisions.
Pieter Totté
Executive Chairman
Divisional Business Review
Cake Decoration
2015/16 Performance
Sales revenue was slightly down on the previous year as Renshaw
removed a manufacturing contract and Renshaw Europe lost a private
label contract. Sales of Renshaw brand, however, grew as the
company focused on developing its branded proposition. Export sales
outside Europe showed strong growth. At Rainbow Dust Colours sales
of Progel(c) food colouring and metallic food paints in particular
showed good growth; both areas where we have clear product
superiority. As the market matures opportunities are appearing in
more mainstream retailers such as Hobbycraft and John Lewis.
Forward Plans
The new focus on developing a global branded range will take
shape during the course of 2016. A relaunch of the core sugarpaste
range in upgraded packaging is already having a strong impact in
the market as is the introduction of 'Renshaw Extra', a firmer and
more elastic product designed for European tastes and also more
effective in hotter climates. Further significant product
initiatives will be launched in early 2017. At Rainbow Dust Colours
a number of major product initiatives are also in place; a relaunch
of the 'food art' pens, an upgraded recipe on matt food paints and
new multi-lingual packs on Progel(c).
2015/2016 2014/2015
12 months to March GBPms GBPms
------------------- --------- ---------
Revenue 48.3 49.2
EBITDA 7.3 6.5
Operating profit 6.5 5.5
Operating profit % 13.5 11.2
------------------- --------- ---------
Food Ingredients
2015/16 Performance
Revenues were significantly down year on year due to
unprecedented commodity price deflation particularly in sugar and
dairy. Both these markets experienced record low levels of prices;
sugar was impacted not only by weak world prices but also in Europe
ahead of the ending of quotas in 2017, while dairy, where quotas
have already ended, was affected by the Russian export ban. In this
context Garrett Ingredients did well to increase its traded dairy
volumes though sugar sales fell slightly. The acquisition of ISO2
Nutrition generated a modest amount of sales but set up costs led
to a small overall loss in the year. Sales volume was slightly
ahead of the previous year at R&W Scott though again price
deflation led to a marginal revenue decline. Investment in
management teams at both businesses led to higher costs and a
decline in EBITDA. Both businesses are now fully equipped to run on
a stand-alone basis and develop their growth plans.
Forward Plans
Garrett Ingredients is well placed to benefit from any upturn in
sugar and dairy pricing and will build sales in sports nutrition.
At R&W Scott a number of product initiatives (soft fillings,
fruit fillings, sauces, curds, mallows and premium jams) have been
developed and are being sold across all channels. The investment in
jam capacity at R&W Scott, which caused some disruption last
year, should begin to yield benefits. R&W Scott will also
significantly increase its supply into other Real Good Food
companies (especially Haydens) facilitated by the central
Innovations team.
2015/2016 2014/2015
12 months to March GBPms GBPms
-------------------------- --------- ---------
Revenue 22.7 27.0
EBITDA (0.1) 0.5
Operating (loss)/profit (0.4) 0.3
Operating (loss)/profit % (2.0) 1.1
-------------------------- --------- ---------
Premium Bakery
2015/16 performance
Despite narrowing its product range Haydens grew its sales by 4%
year on year with the growth rate quickening to 12% in the second
half of the year. Customer service was excellent over the critical
Christmas and Easter periods but at a cost of significantly
increased labour which impacted margins leading to a decline in
EBITDA over last year. The extension of the customer base had a
positive effect on sales but product complexity remains the
challenge and is being addressed with an even greater focus on
fewer product lines. The impact of this was already being seen in
the final quarter.
The Chantilly acquisition took place late in the year with sales
and margins in line with expectations.
Forward plans
The process of further focusing on core lines and processes
where Haydens has recognised product superiority will continue.
Part of this will be the launch of a small range of branded premium
indulgent sweet treats which will be sold to a range of customers
and generate significant scale. The Chantilly acquisition has
already highlighted a number of cross selling opportunities (both
opportunities for Haydens within foodservice and also Chantilly
within retail) which will be pursued. There are a number of
opportunities for automating non-added value, manual processes and
these will be prioritised against the scale achieved in each
product sector.
2015/2016 2014/2015
12 months to March GBPms GBPms
-------------------------- --------- ---------
Revenue 29.4 28.4
EBITDA 0.7 1.3
Operating (loss)/profit (0.1) 0.4
Operating (loss)/profit % (0.5) 1.5
-------------------------- --------- ---------
Key Performance Indicators and Risks
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:
2016 2015 2014
------------------ --------- --------- ---------
Revenue Growth(1)
Revenue GBP100.4m GBP104.6m GBP110.2m
Growth (4.0)% (5.1)% 2.6%
EBITDA (2) GBP5.0ms GBP5.3ms GBP4.9ms
% of Sales 5.0% 5.1% 4.4%
Net Debt (3) GBP5.1ms GBP30.1ms GBP31.1ms
Debt Cover (4) 1.0 5.6 9.5
Health & Safety
Score (5) 90% 82% 92%
(1) Revenue is calculated for continuing business and excludes
sugar for 2014 and is from external sources only. Comment - Revenue
has fallen due to falling commodity prices and removal of
manufacturing contracts
(2) EBITDA is defined as earnings before significant items,
interest, tax depreciation and amortisation. Comment - EBITDA has
held steady in what have been difficult food market conditions
(3) Net Debt is the total Group borrowings less cash at bank.
Comment - With the sale of Napier Brown Net Debt has reduced
significantly
(4) Debt Cover is calculated by dividing total Net Debt by
continuing EBITDA. Comment - With the level of reduced debt and the
maintenance of the EBITDA level debt cover is a comfortable
level
(5) Health & Safety score represents a weighted average
score across all sites and is measured by an external consultant.
Figures are quoted for calendar years. Comment - In 2014 measurers
were reset effectively toughening the measure by approximately ten
percent
Principal Risks
The Group operates in a continually changing environment and
consequently our risks change over time. The assessment of risks
and the development of strategies for dealing with them are dealt
with on an ongoing basis through Group management and control
processes. A formal review is carried out on an annual basis. This
review includes the identification of risks and the likelihood of
them impacting the business and the potential severity of that
impact and the determination of what needs to be done to manage
them effectively.
The Directors have identified the following as principal
risks:
-- Key Customers
-- Customer Requirements
-- Product Quality
-- Labour Costs, Prices and Supply
-- Health and Safety
-- Raw Materials
Risks
Key Customers The Group works with its key customers
The Group has a number to ensure product development and
of key customers from customer service matches expectations
which it derives its and is flexible to meet demands
revenue. Its key customers Sales and Marketing strategies are
tend to work without set to attract new customers and
long term contracts limit any reliance on one particular
customer
----------------------------- ------------------------------------------
Customer Requirements The Group Innovation Centre recently
Changes in overall economy opened and the new product development
and consumer fashions teams at the individual operating
may affect the marketability businesses work together to ensure
of the Group's offering the Group is always looking at new
product areas to be ahead of any
changes in the markets
----------------------------- ------------------------------------------
Product Quality As a reputable food manufacturer
Maintenance of product our operating divisions rigorously
quality standards is enforce our technical policies and
vital to sustained sales procedures in relation to production
performance and storage of our products. Our
larger divisions are all BRC accredited
and our smaller divisions are SALSA
accredited
----------------------------- ------------------------------------------
Labour costs, Prices The Group has established a strong
and Supply HR team across all of its operating
The Group employs an sectors, with strict recruitment
average of 1,058 employees criteria and processes
of which 743 are direct Personal development reviews are
labour employees and carried at every six months to map
its success depends out training and development needs
on attracting and retaining
quality staff at the
correct skill level
----------------------------- ------------------------------------------
Health and Safety The Group has a compliance programme
Any breach of Health in place and this is audited by
and Safety legislation an external party to ensure that
may lead to reputation all legal and internal standards
damage and penalties are met and adhered to
----------------------------- ------------------------------------------
Raw Materials The Group purchasing managers liaise
Raw materials used by regularly to ensure best buying
the Group are subject practices are maintained and volume
to price fluctuations advantages are earned
and market conditions On commodities forward purchase
contracts are entered into to ensure
best prices are obtained and continuation
of supply is maintained
----------------------------- ------------------------------------------
Finance Review
David Newman
Group Finance Director
Overview
During this financial year the Group completed its segregation
programme to achieve its model of each business unit being a
stand-alone legal entity. It has also now fully focused the
business on its three pillar markets and in this annual report will
be reporting on the Group results based on those markets which are
Cake Decorating, Premium Bakery and Food Ingredients. Comparative
figures have been restated to reflect these markets.
Revenue
Group revenue for the 12 months ending March 2016 for continuing
businesses was GBP100.4 million which is a drop of 4% on the
revenue to March 2015. This is the result of a move away from low
margin contract business in Cake Decoration and also the low prices
in the Food Ingredients market.
Profit Measure on continuing operations
Delivered Margin on the continuing businesses for the overall
Group has encouragingly increased to GBP21.1 million from GBP19.9
million. Cake Decoration has increased margins by 4% as it has
concentrated on higher margin business and the benefit of the
Rainbow Dust acquisition is felt for the full year.
Premium Bakery has maintained a 13% margin on increased turnover
whilst the Food Ingredients pillar has maintained a 10% margin even
though turnover has declined in what has been a difficult trading
year.
EBITDA for the 12 months to March 2016 was GBP5.0 million down
by GBP0.3 million from March 2015 as the Group continued to invest
in overheads to continue its drive towards a fully market led
operation.
Statutory profit before tax has been boosted by the profit on
sale of Napier Brown Sugar of GBP9.1 million and an exceptional
write back of a Rainbow Dust liability no longer required of GBP3.2
million, as the contingent conditions were not met. This has
resulted in a statutory profit before tax of GBP12.9 million (2015
loss GBP3.5 million) giving a basic EPS of 18.36p per share (2015
loss per share 4.9p).
31 March 2016 31 March 2015
Continuing Total Continuing Total
GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------------------- ---------- --------- ---------- ---------
Revenue 100,439 113,676 104,580 232,868
Gross profit 26,670 28,023 25,561 35,925
Delivered Margin
(Gross profit after distribution costs) 21,303 21,507 19,989 20,415
EBITDA 5,043 5,027 5,319 1,960
Operating profit
(EBITDA less depreciation) 3,082 2,998 3,202 (741)
Operating profit % 3.1% 2.6% 3.1% (0.3)%
Profit/(loss) before taxation 2,413 1,423 2,101 (2,677)
----------------------------------------- ---------- --------- ---------- ---------
Cash Flow and Net Debt
Following the sale of Napier Brown Sugar Ltd to Tereos in May
2015 and the receipt of the GBP44.4 million disposal proceeds the
Group was able to repay all of its borrowings and to close its
position with PNC Business Capital.
The Group was also at this time able to repay the Loan Note that
had been outstanding with NB Ingredients since the acquisition of
Napier Brown by Real Good Food.
The Group already had a relationship with Lloyds Bank Plc for
its daily banking arrangements and in September 2015 in order to
cover working capital requirements and to fund the Group's
acquisition policy this relationship was extended with the addition
of a GBP10 million invoice finance facility.
As noted above with the sale of Napier Brown Sugar Ltd the Group
was able to clear its borrowings with PNC and accordingly net debt
has reduced significantly during the year finishing on 31 March
2016 at GBP5.1 million compared to GBP30.1 million at March
2015.
Cash generated from operations for the year was GBP(1.9) million
compared to GBP4.8 million in 2015 reflecting a higher working
capital investment in the business due to higher commodity prices
and more competitive trading leading to longer credit terms to
customers.
The Group invested GBP6.4 million in tangible fixed assets, an
increase of GBP4.2 million over 2015, reflecting the modernisation
of the Group's factories and its facilities. This sum included
GBP2.4 million on the new Group Innovation Centre.
31 March 31 March
2016 2015
GBP'000's GBP'000's
--------------------------- ---------- ----------
Working Capital 16,154 7,557
(Inventories, trade
and other receivables,
trade and other payables)
Net Borrowings (incl.
Cash) 5,067 30,140
Net Debt/EBITDA 1.0 15.4
--------------------------- ---------- ----------
Acquisitions
The Group has been successful in acquiring two business
throughout the year in accordance with its stated policy of looking
for bolt on acquisitions.
In December 2015 it acquired the ISO2 Nutrition sports
supplement brand from the administrators of Cre8tive Health Ltd.
This business has been integrated into Garrett Ingredients part of
the Food Ingredients sector and is seen as an enabler to the entry
into a new and interesting product and portfolio diversification.
The total consideration was GBP15,995.
In February 2016 it acquired Chantilly Patisserie, based in
Paignton, Devon, employs some 40 staff, and produces high quality,
hand-made frozen desserts, supplying the foodservice sector, with
customers such as Marston's Brewery, Warner Leisure, Brakes, and
Country Range. The business complements the offering of Haydens
extremely well and it is envisaged that significant commercial
opportunities for both businesses will be identified as a result.
The total consideration was GBP1.75 million.
Capital Restructuring
During the year the Group held an extraordinary general meeting
in order to get approval from shareholders to cancel its share
premium reserve and transfer the amount into distributable
reserves. This proposal was approved and an application was then
made to the courts to complete this process. This was approved by
the courts on the 4th May 2016. This will be reflected in the
financial statements for the year ended 31 March 2017.
Pension
The Group operates defined contribution pension schemes with
contributions made to schemes administered by major insurance
companies. Contributions to these schemes are set as a percentage
of employee's earnings.
The Group also operates a defined benefit pension scheme which
has been closed to further benefit accrual since 2000. In
preparation for the disposal of the sugar business it was decided
to transfer the liability for this scheme out of JF Renshaw Ltd
into Real Good Food plc.
The scheme deficit at 31 March 2016 was GBP6.1 million (2015
GBP5.7 million). Cash contributions to the scheme in the year ended
31 March 2016 amounted to GBP282,000 in line with the agreed
recovery plan.
Consolidated Statement of Comprehensive Income
Year ended 31 March 2016
Year ended 31 March 2016 Year ended 31 March 2015
-----
Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
Notes GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
REVENUE 100,439 13,237 113,676 104,580 128,288 232,868
Cost of sales (73,769) (11,884) (85,653) (79,019) (117,924) (196,943)
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
GROSS PROFIT 26,670 1,353 28,023 25,561 10,364 35,925
Distribution costs (5,367) (1,149) (6,516) (5,572) (9,938) (15,510)
Administration expenses (18,221) (288) (18,509) (16,787) (4,369) (21,156)
Significant items 2 (945) - (945) (522) (328) (850)
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
OPERATING PROFIT/(LOSS) 2,137 (84) 2,053 2,680 (4,271) (1,591)
Fair value on contingent
consideration 3,267 - 3,267 - - -
Finance income - - - - - -
Finance costs (478) (906) (1,384) (866) (845) (1,711)
Other finance costs (191) - (191) (235) - (235)
Profit on disposal
of discontinued operation - 9,145 9,145 - - -
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
(LOSS)/PROFIT BEFORE
TAXATION 4,735 8,155 12,890 1,579 (5,116) (3,537)
Income tax (expense)/credit 3 (439) - (439) (1,055) 1,005 (50)
Tax on discontinued
business - 256 256 - - -
Income tax on significant
items 3 113 - 113 110 68 178
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
(LOSS)/PROFIT ATTRIBUTABLE
TO THE EQUITY HOLDERS
OF THE PARENT 4,409 8,411 12,820 634 (4,043) (3,409)
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
OTHER COMPREHENSIVE
LOSS
Items that will not
be reclassified to
profit or loss
Actuarial (losses)/gains
on defined benefit
plans (484) - (484) (2,237) - (2,237)
Income tax relating
to components of
other comprehensive
income 35 - 35 447 - 447
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
OTHER COMPREHENSIVE
(LOSS) (449) - (449) (1,790) - (1,790)
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
TOTAL COMPREHENSIVE
INCOME/(LOSS) FOR
THE YEAR ATTRIBUTABLE
TO THE EQUITY HOLDERS
OF THE PARENT 3,960 8,411 12,371 (1,156) (4,043) (5,199)
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
Earnings per share
from operations:
- basic 4 6.31p 12.05p 18.36p 0.91p (5.81)p (4.90)p
- diluted 5.83p 11.13p 16.96p 0.85p (5.81)p (4.90)p
---------------------------- ----- ----------- ------------ --------- ------------ ------------ ---------
Consolidated Statement of Changes in Equity
Year ended 31 March 2016
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 2014 1,389 71,244 504 13,877 87,014
Total Comprehensive Income for the year
Loss 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 Group
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 2015 1,392 71,272 577 8,678 81,919
-------------------------------------------- --------- --------- --------- --------- ---------
Total Comprehensive Income for the year
Profit for the year - - - 12,820 12,820
Other Comprehensive Income for the year - - - (449) (449)
-------------------------------------------- --------- --------- --------- --------- ---------
Total Comprehensive Income for the year - - - 12,371 12,371
-------------------------------------------- --------- --------- --------- --------- ---------
Transactions with owners of the
Group, recognised directly in equity
Contributions by and distribution to owners
of the Group
Shares issued in the year 10 103 - - 113
Share based payment expense - - 15 - 15
Deferred tax on share options - - - - -
-------------------------------------------- --------- --------- --------- --------- ---------
Total contributions by and distributions
to owners of the Group 10 103 15 - 128
-------------------------------------------- --------- --------- --------- --------- ---------
Balance as at 31 March 2016 1,402 71,375 592 21,049 94,418
-------------------------------------------- --------- --------- --------- --------- ---------
Consolidated Statement of Financial Position
Year ended 31 March 2016
31 March 31 March
2016 2015
Notes GBP'000s GBP'000s
----------------------------------------- ----- --------- ---------
NON-CURRENT ASSETS
Goodwill 71,005 70,019
Other intangible assets 834 841
Property, plant and equipment 18,066 13,599
Deferred tax asset 1,556 1,866
----------------------------------------- ----- --------- ---------
91,461 86,325
----------------------------------------- ----- --------- ---------
CURRENT ASSETS
Inventories 12,360 10,328
Trade and other receivables 17,039 15,229
Assets relating to discontinued business - 41,406
Cash and cash equivalents 2,946 6,687
----------------------------------------- ----- --------- ---------
32,345 73,650
----------------------------------------- ----- --------- ---------
TOTAL ASSETS 123,806 159,975
----------------------------------------- ----- --------- ---------
CURRENT LIABILITIES
Bank Overdrafts 949 51
Trade and other payables 13,243 18,000
Borrowings 5 7,008 17,190
Liabilities relating to discontinued
business - 27,300
Current tax liabilities 127 613
----------------------------------------- ----- --------- ---------
21,327 63,154
----------------------------------------- ----- --------- ---------
NON-CURRENT LIABILITIES
Borrowings 5 55 6,677
Deferred tax liabilities 1,925 2,537
Retirement benefit obligations 6 6,081 5,688
----------------------------------------- ----- --------- ---------
8,061 14,902
----------------------------------------- ----- --------- ---------
TOTAL LIABILITIES 29,388 78,056
----------------------------------------- ----- --------- ---------
NET ASSETS 94,418 81,919
----------------------------------------- ----- --------- ---------
EQUITY
Share capital 1,402 1,392
Share premium account 71,375 71,272
Share option reserve 592 577
Retained earnings 21,049 8,678
----------------------------------------- ----- --------- ---------
TOTAL EQUITY 94,418 81,919
----------------------------------------- ----- --------- ---------
These financial statements were approved by the Board of
Directors and authorised for issue on 1 August 2016.
They were signed on its behalf by:
P W Totté
Executive Chairman
D Newman
Finance Director
Consolidated Cash Flow Statement
Year ended 31 March 2016
12 months 12 months
ended ended
31 March 31 March
2016 2015
GBP'000s GBP'000s
---------------------------------------------- --------- ---------
CASH FLOW FROM OPERATING ACTIVITIES
Adjusted for:
(Loss)/profit before taxation 12,890 (3,537)
Finance costs 1,384 1,711
Other finance costs 191 235
Share based payment expense 15 47
Depreciation of property, plant and equipment 1,917 2,341
Profit on disposal of Napier Brown (9,061) -
Fair value gain on contingent consideration (3,267) -
Profit on disposal of property, plant and
equipment - (11)
Amortisation of intangibles 113 360
---------------------------------------------- --------- ---------
Operating Cash Flow 4,182 1,146
(Increase)/decrease in inventories (1,900) 3,393
(Increase)/decrease in receivables (2,034) 4,678
Pension contributions (282) (457)
(Decrease)/increase in payables (1,866) (3,955)
---------------------------------------------- --------- ---------
Cash generated from operations (1,900) 4,805
Income taxes received/(paid) (614) 576
Interest paid (1,661) (1,711)
---------------------------------------------- --------- ---------
Net cash from operating activities (4,175) 3,670
---------------------------------------------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from disposal of property, plant
and equipment 160 11
Purchase of intangible assets - (99)
Purchase of property, plant and equipment (6,408) (1,428)
Disposal of discontinued business 37,201 -
Acquisition of business, net of cash acquired (1,666) (1,243)
---------------------------------------------- --------- ---------
Net cash used in investing activities 29,287 (2,759)
---------------------------------------------- --------- ---------
CASH FLOW USED IN FINANCING ACTIVITIES
Shares issued in year 113 32
Additional loans - 4,000
Repayment of borrowings (33,447) -
Repayment of loans - (1,954)
Net movements on revolving credit facilities 3,705 (4,832)
Repayment of obligations under finance leases (122) (89)
---------------------------------------------- --------- ---------
Net cash used in financing activities (29,751) (2,843)
---------------------------------------------- --------- ---------
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS (4,639) (1,932)
---------------------------------------------- --------- ---------
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of
period 6,636 8,568
Net movement in cash and cash equivalents (4,639) (1,932)
---------------------------------------------- --------- ---------
Cash and cash equivalents at end of period 1,997 6,636
---------------------------------------------- --------- ---------
Cash and cash equivalents comprise:
Cash 2,946 6,687
Overdrafts (949) (51)
---------------------------------------------- --------- ---------
1,997 6,636
---------------------------------------------- --------- ---------
Notes to the Financial Statements
Year ended 31 March 2016
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.
Continuing Discontinued
Cake Food Premium Operations Operations Total
12 months ended Decoration Ingredients Bakery Total Total Group
31 March 2016 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------- ----------- ------------- ---------- ----------- ------------ ---------
Total Revenue 49,231 25,799 29,446 104,476 13,237 117,713
Revenue - Internal (933) (3,104) - (4,037) - (4,037)
-------------------------------------- ----------- ------------- ---------- ----------- ------------ ---------
External Revenue 48,298 22,695 29,446 100,439 13,237 113,676
-------------------------------------- ----------- ------------- ---------- ----------- ------------ ---------
Underlying adjusted EBITDA (see
table below) 7,350 (147) 758 7,961 (15) 7,946
-------------------------------------- ----------- ------------- ---------- ----------- ------------ ---------
Operating Profit before
Head Office 6,579 (413) (162) 6,005 (84) 5,921
Head Office and consolidation
adjustments (2,923) - (2,923)
Significant Items (81) (38) (119) (119)
Significant Items relating to head
office (826) - (826)
-------------------------------------- ----------- ------------- ---------- ----------- ------------ ---------
Operating Profit/(loss) 6,498 (451) (162) 2,137 (84) 2,053
Fair value gain on contingent
consideration 3,267 - - 3,267 - 3,267
Net finance costs (270) - (47) (478) (906) (1,384)
Pension finance costs (191) - (191)
Profit on disposal of discontinued
operation - - - - 9,145 9,145
-------------------------------------- ----------- ------------- ---------- ----------- ------------ ---------
Profit/(loss) before tax 9,495 (451) (209) 4,735 8,155 12,890
Tax (1,377) 49 101 (1227) 256 (971)
Unallocated Tax - - - 901 - 901
-------------------------------------- ----------- ------------- ---------- ----------- ------------ ---------
Profit/(loss) after tax as per
comprehensive statement of income 8,118 (402) (108) 4,309 8,411 12,820
-------------------------------------- ----------- ------------- ---------- ----------- ------------ ---------
Sales between segments are charged at prevailing market
rates.
Included in the Premium Bakery segment, one single customer
accounts for 17.1% of the continuing Group's external sales for the
year ended 31 March 2016.
Head
Office Discontinued
Reconciliation of underlying EBITDA Cake Food Premium & Consol Operations Total
to Operating Decoration Ingredients Bakery Total Total Group
Profit GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------ ----------- ------------- ---------- --------- ------------ ---------
Operating Profit/(loss) 6,498 (451) (162) (3,748) (84) 2,053
Significant Items (Note 2) 81 38 826 - 945
Depreciation 771 255 818 4 69 1,917
Amortisation 11 102 - 113
------------------------------------ ----------- ------------- ---------- --------- ------------ ---------
Underlying adjusted EBITDA 7,350 (147) 758 (2,918) (15) 5,028
------------------------------------ ----------- ------------- ---------- --------- ------------ ---------
Head Office 2,918 2,918
------------------------------------ ----------- ------------- ---------- --------- ------------ ---------
Underlying adjusted EBITDA as above 7,350 (147) 758 - (15) 7,946
------------------------------------ ----------- ------------- ---------- --------- ------------ ---------
Cake Food Premium Total
Decoration Ingredients Bakery Discontinued Unallocated Group
31 March 2016 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Segment assets 85,133 19,763 13,818 - - 118,714
Unallocated assets
Property, plant
and equipment 3,204
Deferred tax assets 1,479
Trade and other
receivables 409
Current tax asset -
------------------------- ----------- ------------- --------- ------------ ----------- ---------
Total assets 85,133 19,763 13,813 - - 123,806
------------------------- ----------- ------------- --------- ------------ ----------- ---------
Segment liabilities 7,601 3,905 5,890 - - 17,496
Unallocated liabilities
Trade and other
payables 765
Borrowings 4,146
Current tax liabilities (913)
Deferred tax liabilities 1,813
Pension liability 6,081
------------------------- ----------- ------------- --------- ------------ ----------- ---------
Total liabilities 7,601 3,905 5,890 - 29,388
------------------------- ----------- ------------- --------- ------------ ----------- ---------
Net operating
assets 77,532 15,858 7,923 - - 94,418
------------------------- ----------- ------------- --------- ------------ ----------- ---------
Non-current asset
additions 1,626 991 1,077 - 2,783 6,855
Depreciation 771 255 818 69 4 1,917
Amortisation - 11 102 - - 113
------------------------- ----------- ------------- --------- ------------ ----------- ---------
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 11.3% 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 Discontinued
Cake Food Premium Operations Operations Total
12 months ended Decoration Ingredients Bakery Total Total Group
31 March 2015 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------ ----------- ------------- --------- ----------- ------------ ---------
Total Revenue 50,705 30,104 28,367 109,176 137,456 246,632
Revenue - Internal (1,492) (3,104) - (4,596) (9,168) (13,764)
------------------------------ ----------- ------------- --------- ----------- ------------ ---------
External Revenue 49,213 27,000 28,367 104,580 128,288 232,868
------------------------------ ----------- ------------- --------- ----------- ------------ ---------
EBITDA 6,523 516 1,252 8,291 (3,359) 4,932
------------------------------ ----------- ------------- --------- ----------- ------------ ---------
Operating profit before
Head Office 5,519 260 444 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) 5,519 260 444 2,680 (4,271) (1,591)
Net Finance Costs (457) (206) (203) (866) (845) (1,711)
Pension Finance Income - - - (235) - (235)
------------------------------ ----------- ------------- --------- ----------- ------------ ---------
Profit/(loss) before
tax 5,062 54 241 1,579 (5,116) (3,537)
Tax 532 - (48) 506 1,073 574
Unallocated Tax - - (1,451) - (446)
------------------------------ ----------- ------------- --------- ----------- ------------ ---------
Profit/(loss) after
tax as per comprehensive
statement of income 5,594 54 193 634 (4,043) (3,409)
------------------------------ ----------- ------------- --------- ----------- ------------ ---------
Inter segment sales are charged at prevailing market rates.
Cake Food Premium Total
Decoration Ingredients Bakery Discontinued Unallocated Group
31 March 2015 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Segment assets 89,199 15,521 11,333 41,406 - 157,459
Unallocated assets
Property, plant and equipment 77
Deferred tax assets -
Trade and other receivables 573
Current tax asset 1,866
------------------------------ ----------- ------------- --------- ------------ ----------- ---------
Total assets 89,199 15,521 11,333 41,406 159,975
------------------------------ ----------- ------------- --------- ------------ ----------- ---------
Segment liabilities 22,053 5,020 6,936 27,005 - 61,014
Unallocated liabilities
Trade and other payables 924
Borrowings 7,994
Current tax liabilities -
Deferred tax liabilities 2,436
Pension liability 5,688
------------------------------ ----------- ------------- --------- ------------ ----------- ---------
Total liabilities 22,053 5,020 6,936 27,005 78,056
------------------------------ ----------- ------------- --------- ------------ ----------- ---------
Net operating assets 67,146 10,501 4,397 14,401 - 81,919
------------------------------ ----------- ------------- --------- ------------ ----------- ---------
Non-current asset additions 641 218 643 1,750 3 3,255
Depreciation 661 239 808 584 49 2,341
Amortisation 343 17 - - - 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, but as these only represent 11.1% 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
2016 2015
GBP'000s GBP'000s
---------------------------------------- --------- ---------
Management restructuring costs (119) (568)
Head office relocation following Napier
disposal (446)
Acquisition costs (380) (282)
Taxation credit on significant items 113 178
---------------------------------------- --------- ---------
(832) (672)
---------------------------------------- --------- ---------
During the year the Group incurred a number of significant items
as detailed above. The management restructuring costs reflect a
number of fundamental reorganisations within Cake Decorating and
Head Office. The current year acquisition costs relates to the
purchase of Chantilly Patisserie, GBP306k, plus additional costs
for the acquisition of Rainbow Dust Colours Ltd of GBP74k.
3. Taxation
31 March 31 March
2016 2015
GBP'000s GBP'000s
----------------------------------------------------- --------- ---------
Current tax
UK Current tax on profit of the period 134 201
UK Current tax on significant items - (178)
Adjustments in respect of prior years (7) 85
----------------------------------------------------- --------- ---------
Total current tax 127 108
----------------------------------------------------- --------- ---------
Deferred tax relating to sale of Napier (256) -
Deferred tax charge re pension scheme 17 44
Origination and reversal of timing differences 198 (260)
Adjustments in respect of prior years 73 (20)
Adjustment in respect of change in deferred tax rate (89) -
----------------------------------------------------- --------- ---------
Total deferred tax (57) (236)
----------------------------------------------------- --------- ---------
Total tax - continuing operations 326 945
Tax on discontinued operations (256) (1,073)
----------------------------------------------------- --------- ---------
Total tax 70 (128)
----------------------------------------------------- --------- ---------
Tax on profit 70 (128)
----------------------------------------------------- --------- ---------
Factors affecting tax charge for the period:
The tax assessed for the period is lower (2015 - higher) than
the standard rate of corporation tax in the UK 20% (2015 -
21%).
The differences are explained below:
12 months 12 months
ended ended
31 March 31 March
2016 2015
GBP'000s GBP'000s
------------------------------------------------------------------- --------- ---------
Tax reconciliation
(Loss)/profit per accounts before taxation 12,890 (3,521)
Tax on (loss)/profit on ordinary activities at standard CT rate of
20% (2015 - 21%) 2,559 (732)
Expenses not deductible for tax purposes 226 77
Additional deduction for R&D expenditure - (47)
Share option relief (26) (3)
Current year losses not recognised - deferred tax 77 502
Income not taxable (2,482) -
Adjustment in respect of change in deferred tax rate (94) 11
Adjustments to tax in respect of prior years 66 64
Deferred tax relating to sale of Napier Brown Sugar Ltd (256) -
------------------------------------------------------------------- --------- ---------
Total tax 70 (128)
Tax on continuing operations 326 945
Tax on discontinued operations (256) (1,073)
------------------------------------------------------------------- --------- ---------
Tax charge for the period 70 (128)
------------------------------------------------------------------- --------- ---------
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.
12 months 12 months
ended ended
31 March 31 March
2016 2015
GBP'000s GBP'000s
Continuing Continuing
operations operations
-------------------------------------------- ----------- -----------
Earnings after tax attributable to ordinary
shareholders (GBP'000s) 12,820 (3,409)
- Continuing operations 4,409 634
- Discontinued operations 8,411 (4,043)
Weighted average number of shares in issue
('000s) 69,818 69,568
- Continuing operations 6.31p 0.91p
- Discontinued operations 12.05p (5.81)p
-------------------------------------------- ----------- -----------
Basic earnings per share 18.36p (4.90)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. The number of shares calculated as above is compared
with the number of shares that would have been issued assuming the
exercise of all the outstanding share options. This difference
represents the dilutive potential ordinary shares.
31 March 31 March
2016 2015
GBP'000s GBP'000s
-------------------------------------------------------------------- --------- ---------
Earnings after tax attributable to ordinary shareholders (GBP'000s) 12,820 (3,409)
- Continuing operations 4,409 634
- Discontinued operations 8,411 (4,043)
Weighted average number of shares in issue ('000s) 75,564 74,203
- Continuing operations 5.83p 0.85p
- Discontinued operations 11.13p (5.8)p
-------------------------------------------------------------------- --------- ---------
Diluted earnings per share 16.96p (4.9)p
-------------------------------------------------------------------- --------- ---------
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
2016 2015
GBP'000s GBP'000s
----------------------------------------------------------------------------- --------- ---------
Earnings after tax attributable to ordinary shareholders (GBP'000s) 12,820 (3,409)
- Continuing operations 4,409 634
- Discontinued operations 8,411 (4,043)
Add back significant items (note 2) 945 850
Add Back Fair value gain (3,267) -
Add Back Profit on Napier disposal (9,145) -
Add back tax on significant items 113 (178)
----------------------------------------------------------------------------- --------- ---------
Adjusted earnings after tax attributable to ordinary shareholders (GBP'000s) 1,466 (2,737)
----------------------------------------------------------------------------- --------- ---------
Weighted average number of shares in issue ('000s) 69,818 69,568
----------------------------------------------------------------------------- --------- ---------
Basic earnings per share 2.10p (3.93)p
----------------------------------------------------------------------------- --------- ---------
Total potential weighted average number of shares in issue ('000s) 75,564 74,203
----------------------------------------------------------------------------- --------- ---------
Basic diluted earnings per share* 1.94p (3.93)p
----------------------------------------------------------------------------- --------- ---------
5. Borrowings and capital management
31 March 31 March
2016 2015
Group Group
GBP'000s GBP'000s
------------------------------------- --------- ---------
Unsecured borrowings at amortised
cost
Loan notes - 2,774
Secured borrowings at amortised cost
Bank term loans 3,200 9,170
Revolving credit facilities 3,705 24,430
Hire purchase 158 376
------------------------------------- --------- ---------
7,063 36,750
------------------------------------- --------- ---------
Amounts due for settlement within
12 months 7,008 30,073
Amounts due for settlement after
12 months 55 6,677
------------------------------------- --------- ---------
7,063 36,750
------------------------------------- --------- ---------
Continuing business 7,063 23,867
------------------------------------- --------- ---------
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.
Following the sale of Napier Brown Sugar in May 2015 the facilities
with PNC Business Credit have been fully repaid along with the loan
note that was due to Napier Brown Ingredients Ltd. During the year
a new revolving credit invoice discount facility has been entered
into with Lloyds Bank Plc
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.
At the end of March 2016 the group has one term loan and a
revolving credit facility with Lloyds Bank Plc. The term loan was
taken out in January 2015 to assist with the acquisition of Rainbow
Dust Colours Ltd, the original term was for 365 days and due for
repayment in January 2016, this has been extended and is repayable
in July 2016. The balance outstanding was GBP3.2 million (2015
GBP3.95 million).
During the year the group negotiated a GBP10 million revolving
credit facility comprising Sterling Euro and US Dollar invoice
discounting facilities which bears interest at 1.5% above base rate
and at the year-end GBP3.7 million was outstanding under this
facility. This facility is secured primarily on the debtors of JF
Renshaw Ltd and Haydens Bakery Ltd.
Since the year end the Group has successfully negotiated
extended borrowing facilities with Lloyds Bank plc to enable it to
continue its acquisition and investment strategy. The Group has
entered into an invoice finance facility of GBP20 million on a
revolving basis with a minimum term of 12 months and a 3 months'
notice period. This facility is secured against the debtors across
the whole of the Groups UK businesses, and comprise a Sterling,
Euro and US Dollar facility with an interest rate of 1.5% above
base rate.
In addition a new term loan of GBP3 million has been agreed with
Lloyds Bank plc to replace the loan taken out to finance the
acquisition of Rainbow Dust Colours Ltd. The new loan has a term of
3 years expiring in July 2019 and is repayable in quarterly
instalments of GBP250k. Interest on this loan is charged at 2.75%
above base rate.
To aid the capital expenditure growth planned for the Group it
has also entered into a GBP4 million facility secured against
specific items of plant and machinery with Lloyds Bank plc. This
loan is for a term of 5 years ending July 2021 and is repayable in
monthly instalments of GBP73k plus VAT. Interest on this loan is
charged at 3.5% above base rate.
The fixed interest rate liabilities relate to amounts payable on
hire purchase agreements GBP0.2 million. The weighted average
interest rate of these liabilities was 2% (2015 - 2%) and the
weighted average period for which the interest rates are fixed was
28 months (2015 - 40 months).
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.
Lloyds Bank Plc has a debenture incorporating a 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 Bank plc contain
certain cross guarantees.
Hire purchase and finance lease liabilities are secured upon the
underlying assets.
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.
The sale of Napier Brown Sugar enabled the Group to repay all of
its borrowings at the time, however there has been no change to the
Group's approach to capital management, which is to fund its
working capital requirements by trading generated cash flows
supplemented by asset based lending, which is the most favourable
source of finance available to the business at this time, to assist
in 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:
3 months
Less than 1-3 to 1 1-5 5+
1 month months year years years Total
2016 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------- --------- --------- --------- --------- --------- ---------
Trade and other
payables 3,640 4,167 517 - - 8,324
Bank term loans - - 3,200 - - 3,200
Revolving credit
facilities - 3,705 - - - 3,705
Finance leases 10 20 73 55 - 158
----------------- --------- --------- --------- --------- --------- ---------
3,650 7,892 3,790 55 - 15,387
Interest 19 57 153 15 - 244
----------------- --------- --------- --------- --------- --------- ---------
Total 3,669 7,945 3,943 70 - 15,631
----------------- --------- --------- --------- --------- --------- ---------
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 4,532 3,679 - 9,170
Revolving credit facilities - 24,430 - - - 24,430
Finance leases 10 20 122 224 - 376
---------------------------- --------- --------- ---------- --------- --------- ---------
25,070 28,681 8,341 6,677 - 68,769
Interest 148 338 451 1,845 - 2,782
---------------------------- --------- --------- ---------- --------- --------- ---------
Total 25,218 29,019 8,792 8,522 - 71,551
---------------------------- --------- --------- ---------- --------- --------- ---------
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 GBP32k. 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
GBP41k.
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 Lloyds Bank plc, 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 GBP22k.
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 GBP70k.
Obligation under finance leases
31 March 31 March
2016 2015
GBP'000s GBP'000s
-------------------------------------------------------------- --------- ---------
Finance lease liabilities - minimum lease payments
Due within one year 103 152
Due within one to five years 55 224
-------------------------------------------------------------- --------- ---------
158 376
Future finance charges on finance leases (11) (27)
-------------------------------------------------------------- --------- ---------
Present value of finance lease liabilities 147 349
-------------------------------------------------------------- --------- ---------
The present value of finance lease liabilities is as follows:
Due within one year 98 143
Due within one to five years 49 206
-------------------------------------------------------------- --------- ---------
147 349
-------------------------------------------------------------- --------- ---------
It is the Group's policy to lease certain property, plant and
equipment under finance leases. For the period ended 31 March 2016
the average effective borrowing rate was 2.6% (2015 - 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.
6. Pensions arrangements
The Group operates one defined benefits scheme which was closed
to new members in 2000. From 1 April 2016 the Group annual
contributions were agreed at GBP320k for 4 years 7 months. 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 2016. This has
resulted in a deficit in the scheme of GBP6,081k.
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 March 31 December
2016 2015 2014 2013 2012
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------------------------------------------- --------- --------- --------- --------- -----------
Present value of defined benefit obligation 21,094 21,799 19,033 19,153 17,085
Fair value of plan assets (15,013) (16,111) (15,360) (15,613) (16,005)
--------------------------------------------- --------- --------- --------- --------- -----------
Deficit/(surplus) in plan 6,081 5,688 3,673 3,540 1,080
Amount not recognised in accordance with IAS - - - - -
19
Gross amount recognised 6,081 5,688 3,673 3,540 1,080
Deferred tax at 19% (2014 - 20%) (1,155) (1,138) (735) (814) (259)
--------------------------------------------- --------- --------- --------- --------- -----------
Net liability 4,926 4,550 2,938 2,726 821
--------------------------------------------- --------- --------- --------- --------- -----------
Reconciliation of opening and closing balances of the present
value of the defined benefit obligations
31 March 31 March
2016 2015
GBP'000s GBP'000s
---------------------------------------------------------------------- --------- ---------
Defined benefit obligation at start of period 21,799 19,033
Interest cost 738 857
Actuarial losses (638) 3,122
Benefits paid, death in service insurance premiums, expenses and past
service costs (805) (1,213)
---------------------------------------------------------------------- --------- ---------
Defined benefit obligation at end of period 21,094 21,799
---------------------------------------------------------------------- --------- ---------
Reconciliation of opening and closing balances of the fair value
of plan assets
12 months 12 months
ended ended
31 March 31 March
2016 2015
GBP'000s GBP'000s
--------------------------------------------------- --------- ---------
Fair value of scheme assets at start of the
period 16,111 15,360
Expected return on scheme assets 547 695
Actuarial (losses)/gains (1,122) 885
Contributions paid by the Group 282 457
Benefits paid, death in service insurance premiums
and expenses (805) (1,286)
--------------------------------------------------- --------- ---------
Fair value of scheme assets at end of the period 15,013 16,111
--------------------------------------------------- --------- ---------
The actual return on the scheme assets over the period ended 31
March 2016 was GBP(575)k (2015 - GBP1,580k).
Total expense recognised in the Statement of Comprehensive
Income within other finance income
31 March 31 March
2016 2015
GBP'000s GBP'000s
------------------------ ---------- ---------
Interest on liabilities 738 857
Interest on assets (547) (695)
Past service cost - 73
------------------------ ---------- ---------
Total income 191 235
------------------------ ---------- ---------
Statement of recognised income and expenses
31 March 31 March
2016 2015
GBP'000s GBP'000s
------------------------------------------------------------------------- --------- ---------
Actuarial (losses)/gains (1,122) 885
Experience gains and losses arising on the scheme liabilities: loss - -
Actuarial gains/(losses) arising from changes in demographic assumptions (42) (11)
Actuarial gains/(losses) arising from changes in financial assumptions 680 (3,111)
------------------------------------------------------------------------- --------- ---------
Total amount recognised in Statement of Other Comprehensive Income (484) (2,237)
------------------------------------------------------------------------- --------- ---------
Assets
31 March 31 March 31 March
2016 2015 2014
GBP'000s GBP'000s GBP'000s
--------------------- --------- --------- ---------
UK equity 1,608 1,759 1,977
Overseas equity 4,462 4,634 5,141
Absolute return fund 3,826 4,126 3,929
Bonds 1,020 933 1,798
Gilts 2,104 1,382 645
Property 72 354 301
Cash 473 1,444 748
Alternative assets 1,448 1,479 821
--------------------- --------- --------- ---------
Total assets 15,013 16,111 15,360
--------------------- --------- --------- ---------
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 March
2016 2015 2014 2013
% per annum % per annum % per annum % per annum
------------------------------------------------- ------------ ------------ ------------ ------------
Inflation 2.80 2.90 3.30 3.20
Salary increases - - - -
Rate of discount 3.65 3.45 4.65 4.70
Allowance for pension in payment increases 2.70 2.80 3.20 3.10
Allowance for revaluation of deferred pensions 1.80 1.90 2.20 1.90
Allowance for commutation of pension for cash at 90% of max 90% 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 2016 imply the
following life expectancies:
Male retiring at 21.9 years
age 65 in 2016
Female retiring at 23.9 years
age 65 in 2016
Male retiring at 23.2 years
age 65 in 2036
Female retiring at 25.4 years
age 65 in 2036
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 March
2016 2015 2014 2013 2012
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------- --------- --------- --------- --------- ---------
Fair value of assets 15,013 16,111 15,360 15,613 16,005
Defined benefit obligation (21,094) (21,799) (19,033) (19,153) (17,085)
-------------------------------------------- --------- --------- --------- --------- ---------
Surplus/(deficit) in scheme (6,081) (5,688) (3,673) (3,540) (1,080)
-------------------------------------------- --------- --------- --------- --------- ---------
Experience adjustment on scheme assets (1,122) 885 (382) 208 (984)
Experience adjustment on scheme liabilities - - - (1,923) (46)
-------------------------------------------- --------- --------- --------- --------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UAOORNNABOAR
(END) Dow Jones Newswires
August 01, 2016 02:00 ET (06:00 GMT)
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