REG - Kitwave Group PLC - Final Results
04/03/2025 07:15
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RNS Number : 1830Z Kitwave Group PLC 04 March 2025
4 March 2025
Kitwave Group plc
("Kitwave", the "Group" or the "Company")
Final Results for the 12 months ended 31 October 2024
Kitwave Group plc (AIM: KITW), the delivered wholesale business, is pleased to
announce its audited final results for the 12 months ended 31 October 2024.
Financial summary
The Company is pleased to announce financial results in line with market
expectations. Key highlights include:
· Revenues increased by 10.2% to £663.7 million (FY23: £602.2
million)
· Gross profit margin increased by 0.4% to 22.3% during the
year (FY23: 21.9%)
· Adjusted operating profit increased by 6.3% to £34.0
million (FY23: £32.0 million)*
· £31.4 million net cash generated from operations (FY23: £30.3
million)
· Pre-tax operational cash conversion of 90% (FY23: 90%)*
* For more information on alternative performance measures please see the
glossary at the end of the announcement.
The Board has declared that it is recommending a final dividend of 7.45 pence
per ordinary share, subject to approval at the Annual General Meeting ("AGM")
to be held on 28 March 2025, which will, if approved, result in a total
dividend for the financial year ended 31 October 2024 of 11.30 pence per
ordinary share (FY23: 11.20 pence per ordinary share).
Operational highlights
· Completed three acquisitions, significantly expanding the Group's
Foodservice division and UK network:
o WLG (Holdings) Limited in November 2023 a composite family-run drinks
business based in Oldham,
o Total Foodservice Solutions Limited in March 2024, a leading independent
food wholesaler in the North of England; and
o Creed Catering Supplies Limited in September 2024, a leading independent
family-owned Foodservice Wholesaler in the South of England
· WLG and Total Foodservice have been fully integrated into the Group,
with expected operational and financial synergies starting to be realised
· Like-for-like revenue growth of 5%
· Further investment in automation technology and enhancement of
voice-picking technology, whilst continuing to drive IT security and
resilience
· Completion of new 80,000 square-foot distribution centre in September
2024, adding further capacity for growth of Foodservice operations in the
South West
· Significant investment in fleet, with £1.0 million in new vehicles
and £13.0 million through right-of-use vehicle replacement, resulting in over
150 new vehicles that are Euro 6 compliant
· Joined the Country Range Group in July 2024 to enhance the Group's
buying power and benefit from wide-ranging marketing opportunities
Ben Maxted, Chief Executive Officer of Kitwave, commented:
"Kitwave has delivered another strong full-year performance. We have met
full-year market expectations, achieved organic growth and expanded our
operations, particularly in our Foodservice division.
"The Group had a clear plan for FY24 to invest for growth in three key areas:
IT, delivery infrastructure and strategic M&A opportunities. The
successful execution of this plan saw new warehouse technology enhancing
operational efficiencies, a new state-of-the-art storage and delivery facility
in the South West and three acquisitions completed, which have significantly
increased the scale of the Group's UK network.
"Importantly, the Group continued to deliver growth and maintain its high
levels of customer service, resulting in achieving over 98% satisfaction in
customer service excellence levels. This is testament to our operations model
and the commitment of our team.
"Looking ahead, the Group has started the new financial year well, and the
Board is already working towards its goals for FY25. We believe this will
generate value for our stakeholders, and we would like to thank all our people
for another successful year."
- Ends -
Kitwave Group plc Tel: +44 (0) 191 259 2277
Ben Maxted, Chief Executive Officer
David Brind, Chief Financial Officer
www.kitwave.co.uk (http://www.kitwave.co.uk/)
Canaccord Genuity Limited Tel: +44 (0) 20 7523 8150
(Nominated Adviser and Sole Broker)
Bobbie Hilliam
Elizabeth Halley-Stott
Yellow Jersey PR Tel: +44 (0) 20 3004 9512
(Financial media and PR)
Charles Goodwin
Shivantha Thambirajah
Bessie Elliot
kitwave@yellowjerseypr.com (mailto:kitwave@yellowjerseypr.com)
This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
domain.
Company Overview
Founded in 1987, following the acquisition of a single-site confectionery
wholesale business based in North Shields, United Kingdom, Kitwave is a
delivered wholesale business, specialising in selling and delivering impulse
products, frozen, chilled and fresh foods, alcohol, groceries and tobacco to
approximately 46,000, mainly independent, customers.
With a network of 37 depots, Kitwave is able to support delivery throughout
the UK to a diverse customer base, which includes independent convenience
retailers, leisure outlets, vending machine operators, foodservice providers
and other wholesalers, as well as leading national retailers.
The Group's growth to date has been achieved both organically and through a
strategy of acquiring smaller, predominantly family-owned, complementary
businesses in the fragmented UK grocery and foodservice wholesale market.
Kitwave Group plc (AIM: KITW) was admitted to trading on AIM of the London
Stock Exchange on 24 May 2021.
For further information, please visit: www.kitwave.co.uk
(http://www.kitwave.co.uk) .
Chairman's Statement
Overview
We are delighted to report another year of excellent progress.
In the prior financial year the Group successfully navigated the challenges of
an increasing cost base generated as a result of inflationary pressures in the
wider UK economy. This achievement enabled the Group to continue the momentum
for its growth strategy into the current financial year, in which existing
operations increased revenue by 5% and three further acquisitions were
completed. The acquisitions of Wilds of Oldham, Total Foodservice and Creed
have significantly expanded the Foodservice division.
Results summary
The Group has achieved significant growth in both revenue and adjusted
operating profit during the year. Revenue increased by 10.2% to £663.7
million (FY23: £602.2 million) and adjusted operating profit increased by
6.3% to £34.0 million (FY23: £32.0 million).
Included in the results for the year are part year contributions from Wilds of
Oldham, Total Foodservice and Creed, all of which are in line with our
expectations at the time that they were acquired.
Existing operations
£m Acquisitions FY24 FY23
£m £m £m
Adjusted operating profit *
31.8 2.2 34.0 32.0
*For more information on alternative performance measures please see the
glossary at the end of the announcement.
The Group's Retail & Wholesale Division increased revenue by 3.9% and the
Foodservice Division (including the acquisitions) by 25.2% compared to the
prior year.
As a consequence of a higher proportion of the Group's sales being generated
by the higher margin Foodservice division relative to the prior year, the
gross profit margin of the Group increased by 0.4%.
Despite the continuing inflationary pressures in the Group's cost base, the
distribution costs as a proportion of total revenue only increased marginally
to 9.6% (FY23: 9.1%). This increase includes the impact of the additional
revenue in the higher cost to serve Foodservice division.
The Group's operating profit of £28.8 million (FY23: £29.4 million) has
decreased by £0.6 million, principally due to increased acquisition costs
relating to the three completed acquisitions, increased amortisation of
acquired intangibles and the costs invested in the integration of acquired
entities onto the Group's IT platform.
Operational highlights
After acquiring Wilds of Oldham and Total Foodservice in H1 2024, the
financial year culminated with the acquisition of Creed on 27 September
2024, for an initial consideration of £60.7 million, rising to £70.7
million dependent on certain performance targets being achieved during the
two years following completion. The transaction attracted strong support from
the Group's shareholders and new investors, with £31.5 million raised
through an oversubscribed placing as part of the financing.
The Group continues to invest in its distribution network and is active in
seeking to identify and secure operational efficiencies. In October 2024, the
Group's new 80,000 square-foot Foodservice distribution centre opened in the
South West as planned. The new site will deliver further synergies from the
integration of Westcountry Food Holdings Limited and M.J. Baker Foodservice
Limited, as well as increase the Group's capacity to service a growing
customer base in the region.
Further investments in automation technology were made with the objective to
deliver efficiencies to both administration processes and the physical
movement of goods. During the year the sales order process was enhanced
through improvements in ordering functionality to the Group's online sales
platform. Similarly, voice-picking technology has been expanded across the
Group to improve accuracy of pick, customer satisfaction and operational
efficiency.
The Group continually seeks product ranges and pricing that will be
attractive, from both a value and quality perspective to its diverse customer
base. In July 2024, the Group joined the Country Range Group to benefit from
its buying power and renowned own-label product in the Foodservice sector.
Dividend
The Board has a progressive dividend policy that has the intention to pay a
total annual dividend of between 40% and 50% of profit after tax. In years
where the Group incurs higher cash outflows through its investment activity in
mergers and acquisitions or infrastructure capital expenditure, the aggregate
annual dividend is likely to be at the lower end of the range. For those years
where there is no investment the annual dividend is likely to be at the higher
end of the range.
The Board is recommending a final dividend of 7.45 pence per ordinary share
(FY23: 7.45 pence), subject to approval at the AGM, which, if approved, will
result in an increase in the total dividend for the year of 1% to 11.3 pence
per ordinary share (FY23: 11.2 pence).
The final dividend being proposed for the current financial year will result
in a total dividend of 52% of profit after tax. This is largely the result of
the impact of the additional placing shares being eligible for the final
dividend declared when only one month's earnings contribution arose from the
associated acquisition of Creed. We would expect to return to our targeted
range of 40% to 50% in future periods.
Environmental, Social and Governance (ESG)
We remain of the belief that a long-term sustainable business model is
essential to the success of the Group and are committed to the continued
development of ESG practices across our business.
The largest contributor to the Group's carbon consumption is the use of fuel
for its vehicle fleet, and we continue to examine viable alternative
commercial vehicle solutions. In the meantime, we try to minimise our impact
through delivery optimisation and a replacement vehicle policy which maintains
a modern fleet.
The Group is a significant user of energy to refrigerate and light its
warehouse locations. During the financial year, we continued to invest in the
installation of solar panels. The Group now has solar power generation at 12
of its larger sites producing c.10% of the Group's annual energy requirements.
Feasibility studies are being carried out on additional locations for further
investment in 2025.
Our colleagues are our most valuable asset and their welfare remains our
priority. Working alongside the senior leadership team, the Group's Health and
Safety Director continues to generate further improvements in the control
environment. These include a digital reporting platform to promote proactive
safety management and a bespoke manual handling training package.
The Kitwave One Employee Benefits portal, which provides our colleagues with
access to basic medical cover, death in service life cover and discounts on
retail goods continues to be rolled out across the Group, with over 1,300 of
our colleagues now having access.
The Enterprise Risk Management ("ERM") framework continues to be used as the
tool for the Board to have regular engagement with appointed risk champions.
Risks are scheduled into the Board agenda with the aim of having an in-depth
review of each of the strategic risks at least once in the year. Following the
review of the ERM, two risks were added to the Group's principal risks,
firstly, Sustainability and Climate Change, and secondly, Artificial
Intelligence.
Board
As announced on 6 November 2023, Paul Young, Chief Executive Officer, retired
and stepped down from the Board at the end of the Company's Annual General
Meeting on 22 March 2024. Ben Maxted, previously the Group's Chief Operating
Officer, became Chief Executive Officer on Paul's retirement.
I have been Chairman of Kitwave for approaching nine years and having overseen
the successful IPO and the smooth transition from the previous Chief Executive
Officer to Ben, I believe that it is appropriate to retire from my role during
the current financial year. A search for my successor has commenced and we
will update the market when a new appointment has been approved by the Board.
Our people
Continuing to provide the high-quality service that our customers have come to
expect, evidenced by service levels of over 98%**, can only be achieved
through the hard work and dedication of all our colleagues. I would,
therefore, like to take this opportunity to thank everyone involved in the
Kitwave team for their continued exceptional commitment.
**Service levels are assessed as the number of cases delivered right first
time compared to the number of cases ordered during the financial year.
Outlook
It is now almost four years since Kitwave's IPO in May 2021. In line with the
strategy presented at the time, the Group has grown significantly both
organically and through the five acquisitions completed in this period. The
careful management of this growth has ensured the Group has consistently
delivered results in line with or ahead of market expectations.
As previously reported the impact of the changes to employers NIC and minimum
wage announced in the October 2024 budget will add c.£2 million to the
Group's annual operating costs. Given the changes will only take effect
from April 2025, the Board remains confident that it will be able to mitigate
this additional cost through efficiencies and other savings in the current
financial year.
We continue to pursue our combined organic growth and acquisition-based
strategy and believe there remain many opportunities available to us in what
is a fragmented UK-delivered wholesale market. The successful execution and
integration of our acquisitions to date have demonstrated the viability of
this strategy. The Group continues to identify acquisition opportunities to
combine with its initiatives to drive organic growth.
FY25 has started well and, following the integration of the newly acquired
businesses referred to above, we expect to achieve the significant increase in
profitability expected by the market for the year and to continue to deliver
value to our shareholders.
Steve Smith
Chairman
3 March 2025
Chief Executive Officer's Statement
Overview
I am pleased to report on another milestone year for Kitwave in the 12 months
ending 31 October 2024. The successful execution of our growth strategy has
propelled the business forward and strengthened our position in the
UK-delivered wholesale market.
Completing the acquisitions of Wilds of Oldham, Total Foodservice and Creed
during the period was a major achievement, but importantly the team did not
lose focus on the existing business and its objectives. New investment in
technology and further enhancing our customer offering means we are delivering
an even better customer experience. Consequently, the Group achieved full-year
results in line with market expectations, despite tougher trading conditions
due to the sustained wet weather conditions in the spring and summer.
Divisional summary
Set out below is the financial performance of the business by division for
FY24:
Ambient and Frozen & Chilled divisions
The Group's Ambient and Frozen & Chilled divisions that service the Retail
& Wholesale sectors of the grocery market saw combined revenue increase by
£16.5 million to £440.1 million (FY23: £423.6 million), a 3.9% increase
from the year to October 2023. The gross margin in Frozen & Chilled was
impacted by a significant new in-year contract at lower gross margins than the
existing business, with the underlying business maintaining gross margin year
on year.
Ambient
£000 FY24 FY23
Revenue 204,568 207,195
Gross profit 31,613 30,862
Gross margin % 15% 15%
Frozen & Chilled
£000 FY24 FY23
Revenue 235,511 216,399
Gross profit 52,353 49,037
Gross margin % 22% 23%
Foodservice division
The Group's Foodservice division has also performed well during the period,
resulting in an increase in revenue to £223.6 million (FY23: £178.6
million). The division's organic growth was 7.8%, with an increase in revenue
of £13.9 million.
Foodservice
£000 FY24 FY23
Revenue 223,573 178,626
Gross profit 63,854 52,226
Gross margin % 29% 29%
Facilities
The completion of the three new acquisitions has led to the Group's total
number of depots rising from 30 to 37. Whilst our UK network has significantly
expanded, the addition of Creed has bridged our operations between the North
and the South and created a fully integrated national delivery network.
Back in June 2023, we commenced the construction of our new 80,000 square-foot
Foodservice distribution centre in the South West, which was completed on time
in October 2024. The new high-spec warehouse, which consolidates three
operating sites into one, provides greater vehicle accessibility, logistical
infrastructure and an expanded temperature-controlled storage facility, all of
which lays the foundations to grow our foodservice footprint in the area.
Additionally, in line with our ESG commitments and to ensure our warehouse
facilities are reducing their energy emissions, Kitwave continues to engage
Businesswise Solutions as its energy management partner. The collaboration
aims to mitigate Kitwave's carbon footprint by implementing energy-saving
practices across its warehouses such as investing in solar generation. The
Group now has solar PV capabilities at 12 of its larger sites producing
1,358,920 kWh of energy in the year, offering c.10% self-sufficient energy
generation.
Growth strategy
The UK wholesale market remains highly fragmented, which the Board believes
will continue to present the Group with opportunities to capture further
market share. During the period, the Group significantly expanded its
Foodservice division and UK footprint with three acquisitions: Wilds of Oldham
for £2.7m, Total Foodservice for £21.0 million and Creed for £60.7 million,
rising to £70.7 million depending on performance.
Wilds of Oldham, a composite family-run drinks wholesaler, was purchased in
November 2023. With its 11 fleet vehicles, the business has been fully
integrated into the Group's existing Foodservice on-trade business, HB Clark,
and is now assisting with the distribution of alcohol and soft drinks
throughout the North West.
The acquisition of Total Foodservice was completed in March 2024 for £21.0
million. The 130-year-old independent food wholesaler, with its business based
in the North of England, is an excellent strategic fit and has enabled us to
expand our offering, with 4,000 product lines available for our customers.
The acquisition of Creed was completed in September 2024 for a total initial
consideration of £60.7 million, plus contingent consideration of up to £10.0
million. Creed has brought a marked step-change in our Foodservice business
and is our largest acquisition to date. With three large depots providing 600
deliveries per day, six days a week, Creed's delivery network footprint
complements Kitwave's existing Foodservice and wider tri-temperature network.
This creates a fully integrated national delivery network while generating
further organic growth opportunities for the Foodservice business.
To support our organic growth, Kitwave made further investments in technology
to improve both customer services and operational efficiencies. In conjunction
with our eCommerce platform, we have invested in voice-picking technology,
which helps to streamline processes, improve accuracy and most importantly,
provide additional safety for our colleagues in the warehouses. As we are all
focused on enhancing efficiencies, the Group is developing robotic processing
automation technologies for operational and financial repetitive processes.
Achieving service excellence is core to securing our ongoing success. The
Group's strategy is to maintain strong relationships with its suppliers to
offer a route to market partnership to our customers from well-renowned
brands, a fully integrated website and mobile app sales offering and an
expanding fleet to enable us to deliver efficiently and on time to our
customers across the U.K. By implementing this strategy, the Group achieved
98%+ in service levels.
Finally, to help complement our growing Foodservice division, in July 2024 the
Group joined the Country Range Group. The decision was made to become a member
as the Group will benefit from Country Range Group's buying power, renowned
own-label product offering and the ability to be supported in wide-ranging
marketing campaigns and promotions.
Since the IPO the Group has built and nurtured solid foundations which can be
leveraged for continued growth. Looking longer term, it is appropriate to
consider the design and implementation of a strategic plan to build on these
foundations. A comprehensive roadmap designed to strengthen core operations,
leverage data-driven insights, optimise distribution networks and embrace
innovation would, I believe, communicate the vision of what the Group is
capable of delivering.
By adopting technology, expanding our foodservice footprint, and fostering a
culture of collaboration and agility, we aim to exceed the expectations of our
stakeholders. The formulation of such a plan before the end of the current
financial year and its subsequent implementation are pivotal steps in
positioning Kitwave for success in the years ahead.
Colleagues
The success we achieve at Kitwave would not be possible without the dedication
of our colleagues. Over the year, the new acquisitions and investment in
people have seen our numbers grow 36% to over 2,100 people, which now includes
over 300 sales representatives. On behalf of the Board, I would like to thank
all our colleagues for their unwavering commitment.
As stated last year, we wanted to create a platform for our people, with the
launch of the 'Kitwave One' programme. We are pleased to share that the
roll-out of the online portal, initially launched in October 2023, to over 600
colleagues within the Group has now expanded to 1,300. The programme has
fostered greater workplace engagement whilst offering external benefits to
promote the well-being of our colleagues, which is a core principle that the
Group values.
The Group has invested in the training and development of our colleagues and I
would like to congratulate the first cohort of management that completed the
"Licence to Lead" programme and look forward to seeing them develop into
future leaders across the Group.
I was honoured to take over the position of Chief Executive Officer after Paul
Young's retirement in March 2024. I would finally like to thank the other
Board members who have helped me transition into the role, as we remain fully
committed to helping facilitate the best opportunities for all our colleagues
here at Kitwave.
Summary and outlook
Our FY24 results highlight yet another year of delivering investment and
driving growth for our business. We are extremely proud of achieving 98%+ in
our service levels, as well as growing our personnel, our product lines and
our customer base.
The expansion of the Foodservice division with three acquisitions has brought
new opportunities and we anticipate this will generate a series of operational
efficiencies. The new distribution facility was an important strategic
investment to help us capture a greater market share in the South West, whilst
the decision to join Country Range Group signals exciting times in our
Foodservice division.
The Board and senior management team will continue to drive organic growth and
monitor the acquisition opportunities that are available in the UK's
fragmented wholesale market. Kitwave continues to be well-positioned to invest
in businesses that will deliver further value to the Group and its
shareholders.
Despite the implications of the UK Government's Budget as previously disclosed
in the November 2024 trading update, the Group has started the new financial
year well. We continue to remain confident in our strategy and the ability of
the Board and management team to deliver on its growth targets and generate
value for the Group and its stakeholders.
We would like to thank all our investors and stakeholders for their continued
support throughout the period and look forward to updating the market with our
progress in FY25.
Ben Maxted
Chief Executive Officer
3 March 2025
Chief Financial Officer's Statement
Overview
The year has been one of investment for the Group. This has been in the form
of internal investment through infrastructure spend on IT, vehicles and
warehousing, and external investment with the completion of three
acquisitions.
Group revenue increased to £663.7 million, compared to £602.2 million in the
year to October 2023. This included £31.1 million of acquired revenue and on
a like-for-like basis a £30.3 million (5.0%) increase in revenue. Whilst a
positive result, the performance was also curtailed by slower trading in
spring and summer 2024 due to the sustained wet weather conditions.
The Group's Ambient and Frozen & Chilled divisions that service the Retail
& Wholesale sectors of the market saw revenues increase by £16.5 million
to £440.1 million, a 3.9% increase in the year to October 2024.
The Group's Foodservice division, saw revenues increase by £45.0 million to
£223.6 million, an increase of 25.2% in the year to October 2024. This year
saw the acquisition of Wilds of Oldham in November 2023, Total Foodservice in
March 2024 and Creed in September 2024 and included in these numbers is £31.1
million of acquired revenues. On a like-for-like basis, the division achieved
organic growth of 7.8%, with revenues increasing by £13.9 million.
During the last 12 months, the grocery and foodservice market experienced
lower levels of price inflation than in more recent years. Some supply chain
challenges continued to be seen but ultimately the Group continued to grow its
overall unit sales.
Gross profit margin increased by 0.4% to 22.3% during the year. This was
partly due to a mix change with the higher margin Foodservice division trading
at increased revenue levels on a like-for-like basis and further helped by the
acquired operations contributing a gross profit margin of 28.9%.
While inflationary pressure was seen in the cost base, overall distribution
costs as a proportion of revenues only rose slightly. This includes the effect
of the higher service levels in the acquired businesses that had a cost to
serve of 11.2%. Overall distribution costs were 9.6% of Group revenue (FY23:
9.1%).
Investment in our IT infrastructure continued, including the successful
migration of Westcountry, Wilds of Oldham and Total Foodservice onto our Group
ERP platform. Further investment was also made into the online ordering portal
and warehouse voice-picking technology. Increased expenditure was also seen
relating to our IT resilience and security measure and processes.
The Group's adjusted operating profit* of £34.0 million (FY23: £32.0
million) represents 5.1% (FY23: 5.3%) of Group revenue.
Expenses incurred relating to the three acquisitions in the year totalled
£2.2m (FY23: £0.7 million), an increase of £1.5 million compared to the
prior year when there was only one acquisition. Associated with the Group's
acquisitions, amortisation on the acquired intangible assets in the year
totalled £1.4 million (FY23: £0.8 million), an increase of £0.6 million
compared to the prior year.
Share-based payment expense and compensation for post-combination services
increased by £0.4 million to £1.6 million (FY23: £1.2 million), reflecting
the transition to annual grants under the Company's Long-Term incentive plan.
As a result of the investment in IT infrastructure, expenses incurred relating
to the three acquisitions and increased amortisation on acquired intangibles,
operating profit of £28.8 million (FY23: £29.4 million) is £0.6 million
lower than the prior year.
Net finance costs of £6.3 million (FY23: £4.5 million) relate to the costs
associated with the working capital and revolving credit facilities utilised
by the Group of £4.0 million (FY23: £2.8 million) and interest relating to
leased assets accounting of £2.2 million (FY23: £1.7 million).
In the 12 months ended October 2024, the Group's profit before tax decreased
by £2.3 million to £22.5 million (FY23: £24.8 million). This is a result of
the improvement in adjusted operating profit of £2.0 million being outweighed
by the increase in acquisition and share-related payments expenses of £1.9
million and an increase in finance costs of £1.8 million.
The statutory basic earnings per share for FY24 is 23.5 pence (FY23: 27.1
pence) which has been affected by a number of factors including the increases
in acquisition and share-based expenses in the year. The basic underlying
earnings pence per share is 30.0 pence* (FY23: 30.3 pence) and reflects some
operational investment costs incurred during the year internally for which the
associated benefits will be delivered in the future. In addition, the Group's
M&A activity led to some post-acquisition non-recurring expenses being
incurred to achieve future synergies. Combining these investment cost
activities with the additional interest costs described above led to a slight
dilution in basic underlying earnings per share.
The Board is recommending a final dividend of 7.45 pence per ordinary share
(FY23: 7.45 pence), subject to approval at the AGM, which, if approved, will
result in a total dividend for the year of 11.3 pence per ordinary share. This
is a 1% rise in the dividend per share compared to FY23.
KPIs
FY24 FY23
Financial profitability KPIs
Gross margin % 22.3% 21.9%
Adjusted operating profit * £34.0m £32.0m
Adjusted operating margin * 5.1% 5.3%
EPS 23.5 pence 27.1pence
EPS (Underlying)* 30.0 pence 30.3 pence
Financial structure KPIs
Leverage (inc IFRS16 debt) * 2.8x 1.4x
Leverage (exc IFRS16 debt) * 1.9x 0.8x
Pre-tax operational cash conversion * 90% 90%
Return on Investment Capital * 11% 19%
Return on Net assets * 22% 30%
Non-financial KPIs
Service levels 98% 98%
It should be noted that the leverage covenants and return on capital KPIs
above do not include any estimation of the full year benefit from the
businesses acquired during the year.
Accounting for an estimated full year run rate effect of the acquisitions made
during the year, the Group's leverage (inc IFRS 16 debt) would be below our
stated target of 2.5x.
*For more information on alternative performance measures please see the
glossary at the end of the announcement.
Capital expenditure
The Group has continued to invest in its operations over the financial year
with £7.3 million (FY23: £3.9 million) invested in new assets and £20.4
million (FY23: £10.0 million) in right-of-use assets.
A 15-year lease was entered into for the new 80,000 square-foot premises in
the South West creating a right-of-use asset of £6.4 million. In addition,
there was a fit out spend of £3.2 million in relation to this new site.
Supply chain problems and long order times for new vehicles seen in the
previous periods eased with new vehicle orders being delivered on time.
Investment in the vehicle fleet has now caught up with normal order cycles
with £1.0 million (FY23: £1.5 million) of new vehicles acquired and £13.0
million (FY23: £7.7 million) invested through right-of-use vehicle
replacement.
Capital raising
As a result of a successful capital fundraise the Company raised £31.5
million during the year and 10,327,868 new Ordinary Shares were issued and
admitted for trading on 27 September 2024 with the shares issued at a price of
305 pence per share. This represented a discount of approximately 3.9% to the
closing mid-market price of 317.5 pence per Ordinary Share on 23 September
2024. Following Admission, the Company has a total of 80,438,979 Ordinary
Shares in issue.
The costs associated with this raise were £1.4 million, with net proceeds
from the placement of £30.1 million.
Cashflow
The net cash inflow from operating activities for the year was £31.4 million
(FY23: £30.3 million) after net outflow from working capital of £4.3 million
(FY23: £3.9 million outflow) and tax payments of £6.6 million (FY23: £6.1
million). This resulted in operating cash conversion of 74% (FY23: 75%) and
pre-tax operational cash conversion* of 90% (FY23: 90%).
During the period, there was an investment in working capital relating to a
new customer win of £2.4 million. Excluding this investment, the
like-for-like pre-tax operational cash conversion would have been 95%.
Fixed asset investment was £7.3 million, of which £3.2 million relates to
the new distribution centre in the South West. As a result of the move to this
new site, two freehold properties were disposed of with a net cash inflow on
the disposal of £3.2 million.
There was a cash outflow to the Group of £73.3 million in relation to
acquisitions in the year. In November 2023 the Group completed the acquisition
of Wilds of Oldham, with a cash outflow net of cash acquired of £2.5 million,
followed by the acquisition of Total Foodservice in March 2024 for a cash
outflow net of cash acquired of £16.9 million. Both acquisitions were funded
through headroom on existing facilities. These amounts are the full
consideration in relation to the transactions with no further payments due.
In September 2024 the Group completed the acquisition of Creed Catering
Supplies Limited with an initial cash outflow net of cash acquired of £53.4
million. This was funded through the amounts raised from the Capital Placement
of £30.1 million in addition to the utilisation of a further £20.0 million
made available to the Group's revolving credit facility.
The Group paid a final dividend relating to FY23 in April 2024 of 7.45 pence
per ordinary share and an interim dividend in respect of FY24 in August 2024
of 3.85 pence per ordinary share. The total cash outflow relating to dividend
payments was £7.9 million (FY23: £7.4 million) during the year.
The net cash increase in the year was £3.5 million.
Financial position
At 31 October 2024, cash and cash equivalents totalled £4.1 million (FY23:
£0.7 million). In addition to the cash and cash equivalents, there were
undrawn facilities available to the Group of £35.2 million at the year-end
(FY23: £39.6 million).
The Group had a total of £121.4 million (FY23: £59.1 million) of
interest-bearing debt facilities, including £43.2 million (FY23: £26.2
million) of IFRS 16 lease liabilities.
During the period the Group increased the amount available on its CID facility
to £55.0 million and extended the expiry on the facility to September 2028.
At the year-end, the Group's CID facility was drawn to a value of £20.1
million (FY23: £6.4 million). It has one covenant requiring net debt
(including IFRS 16 lease liabilities) not to exceed three times the last 12
months' EBITDA (including proforma results for any mid-year acquisitions)
which was satisfied as at 31 October 2024.
At the same time that the CID facility was increased, the existing £20.0
million revolving credit facility was also increased to £40.0 million with
expiry extended to be co-terminus with the CID facility in September 2028. It
is available to be utilised for permitted acquisition opportunities undertaken
by the Group and was fully drawn at 31 October 2024. This facility includes
the same covenant as the CID facility plus an additional interest cover
covenant set such that the last 12 months' EBITDA is required to cover the
last 12 months' interest charge by at least four times. This covenant was
comfortably satisfied at 31 October 2024.
Taxation
The tax charge for the year was £5.8 million (FY23: £5.9 million) at an
effective rate of 25.8% (FY23: 23.7%). The effective rate is higher than the
pro-rated tax rate mainly due to the non-deductible element of acquisition
costs and compensation for post-combination services. A full reconciliation of
the tax charge is shown in note 9 of the financial statements.
Return on capital*
Utilising an effective tax rate of 25% (FY23: 23%) the adjusted profit after
tax return on investment capital at 31 October 2024 was 11% (FY23: 19%). These
returns exclude the charges relating to share-based payments.
The Group drives its profitability through investment in operational
infrastructure (property leases, IT & motor vehicles) and investment in
working capital. The Board considers the return on this investment in relation
to capital allocation. A second returns measure is therefore included in this
report again utilising an effective tax rate of 25% (FY23: 23%). The adjusted
profit after tax return on net assets at 31 October 2024 was 22% (FY23: 30%).
Both metrics are affected by the timing of the acquisitions during the year.
The discharging of acquisition consideration has increased the investment
capital and net assets in the relevant measure, but the contribution from the
related acquisition has only been taken into account effective from the date
of the acquisitions. This calculation is the principal reason for the
reduction in the return on capital measures compared to the prior year.
*For more information on alternative performance measures including
calculations on return on capital measures please see the glossary at the end
of the announcement.
Share-based payments
In the year there was an expense of £1.2 million (FY23: £1.0 million) for
share-based payments comprising:
· £0.9 million relating to shares under the Management Incentive Plan
(MIP) that commenced in July 2021 post the completion of the IPO in May 2021.
· £0.3 million relating to shares under the Long-Term incentive plan
(LTIP) that were granted in March 2023 and March 2024.
David Brind
Chief Financial Officer
3 March 2025
Consolidated statement of profit and loss and other comprehensive income for
the year ended 31 October
Note 2024 2023
£000 £000
Revenue 3 663,652 602,220
Cost of sales (515,832) (470,095)
Gross profit 147,820 132,125
Other operating income 4 603 183
Distribution expenses (63,473) (54,570)
Administrative expenses (56,146) (48,375)
Operating profit 28,804 29,363
Analysed as:
Adjusted EBITDA 45,229 41,141
Amortisation of intangible assets 11 (1,527) (975)
Depreciation 12,13 (11,068) (8,992)
Acquisition expenses 5 (2,153) (648)
Compensation for post combination services 5 (324) (199)
Share based payment expense 5 (1,244) (964)
Restructuring expenses 5 (109) -
Total operating profit 28,804 29,363
Finance expenses 8 (6,276) (4,505)
Analysed as:
Interest payable on bank loans and bank facilities 8 (4,024) (2,842)
Finance charges on leases 8 (2,167) (1,656)
Other interest 8 (85) (7)
Financial expense (6,276) (4,505)
Profit before tax 22,528 24,858
Tax on profit on ordinary activities 9 (5,810) (5,902)
Profit for the financial year 16,718 18,956
Other comprehensive income - -
Total comprehensive income for the year 16,718 18,956
Basic earnings per share (pence) 10 23.5 27.1
Diluted earnings per share (pence) 10 22.5 26.0
Consolidated balance sheet as at 31 October
2024 2023
Note £000 £000
Non-current assets
Goodwill 11 105,717 58,680
Intangible assets 11 30,554 4,878
Tangible assets 12 29,096 16,614
Right-of-use assets 13 50,869 29,716
Investments 14 42 45
216,278 109,933
Current assets
Inventories 15 47,749 35,410
Trade and other receivables 16 91,122 63,569
Cash and cash equivalents 17 4,137 673
143,008 99,652
Total assets 359,286 209,585
Current liabilities
Other interest bearing loans and borrowings 19 (27,821) (6,405)
Lease liabilities 19 (10,244) (6,402)
Trade and other payables 18 (102,083) (63,596)
Tax payable (1,127) (594)
(141,275) (76,997)
Non-current liabilities
Other interest bearing loans and borrowings 19 (40,000) (20,000)
Lease liabilities 19 (43,323) (26,267)
Deferred tax liabilities 20 (10,143) (1,876)
(93,466) (48,143)
Total liabilities (234,741) (125,140)
Net assets 124,545 84,445
Equity attributable to equity holders of the parent Company
Called up share capital 23 804 700
Share premium account 23 94,185 64,183
Consolidation reserve (33,098) (33,098)
Share based payment reserve 22 3,240 2,042
Retained earnings 59,414 50,618
Equity 124,545 84,445
Company balance sheet as at 31 October
2024 2023
Note £000 £000
Non-current assets
Investments 14 12,993 12,993
Deferred tax assets 20 804 514
13,797 13,507
Current assets
Trade and other receivables 16 93,259 60,033
Cash and cash equivalents 17 259 3
93,518 60,036
Total assets 107,315 73,543
Current liabilities
Trade and other payables 18 (138) (94)
Tax payable (218) (45)
(356) (139)
Total liabilities (356) (139)
Net assets 106,959 73,404
Equity attributable to equity holders of the parent Company
Called up share capital 23 804 700
Share premium account 23 94,185 64,183
Share based payment reserve 22 3,240 2,042
Retained earnings* 8,730 6,479
Equity 106,959 73,404
*The Company's profit after tax for the year was £10,173,000 (FY23:
£5,017,000)
Consolidated statement of changes in equity as at 31 October
Called up share capital Share premium account Consolidation Share based payment reserve Profit and loss account Total equity
£000
reserve
£000
£000
£000
£000
£000
Balance at 1 November 2022 700 64,183 (33,098) 1,090 39,012 71,887
Total comprehensive income for the year
Profit - - - - 18,956 18,956
Other comprehensive income - - - - - -
Total comprehensive income for the year - - - - 18,956 18,956
Transactions with owners, recorded directly in equity
Dividends - - - - (7,350) (7,350)
Share based payment expense - - - 952 - 952
Total contribution by and transactions with owners - - - 952 (7,350) (6,398)
Balance at 31 October 2023 700 64,183 (33,098) 2,042 50,618 84,445
Total comprehensive income for the year
Profit - - - - 16,718 16,718
Other comprehensive income - - - - - -
Total comprehensive income for the year - - - - 16,718 16,718
Transactions with owners, recorded directly in equity
New share issuance 104 31,563 - - - 31,667
Costs directly attributable to new shares issues - (1,561) - - - (1,561)
Dividends - - - - (7,922) (7,922)
Share based payment expense - - - 1,198 - 1,198
Total contribution by and transactions with the owners 104 30,002 - 1,198 (7,922) 23,382
Balance at 31 October 2024 804 94,185 (33,098) 3,240 59,414 124,545
Company statement of changes in equity as at 31 October
Called up share capital Share premium account Share based payment reserve Profit and loss account Total equity
£000 £000 £000 £000 £000
Balance at 1 November 2022 700 64,183 1,090 8,812 74,785
Total comprehensive income for the year
Profit - - - 5,017 5,017
Other comprehensive income - - - - -
Total comprehensive loss for the year - - - 5,017 5,017
Transactions with owners, recorded directly in equity
Dividends - - - (7,350) (7,350)
Share based payment expense - - 952 - 952
Total contribution by and distribution to owners - - 952 (7,350) (6,398)
Balance at 31 October 2023 700 64,183 2,042 6,479 73,404
Total comprehensive income for the year
Profit - - - 10,173 10,173
Other comprehensive income - - - - -
Total comprehensive income for the year - - - 10,173 10,173
Transactions with owners, recorded directly in equity
New share issuance 104 31,563 - - 31,667
Costs directly attributable to new share issues - (1,561) - - (1,561)
Dividends - - - (7,922) (7,922)
Share based payment expense - - 1,198 - 1,198
Total contribution by and transactions with the owners 104 30,002 1,198 (7,922) 23,382
Balance at 31 October 2024 804 94,185 3,240 8,730 106,959
Consolidated cash flow statement for the year ended 31 October
2024 2023
Note £000 £000
Cash flow statement
Cash flow from operating activities
Profit for the year 16,718 18,956
Adjustments for:
Depreciation and amortisation 11,12,13 12,595 9,967
Financial expense 8 6,276 4,505
Profit on sale of property, plant and equipment 4 (573) (179)
Net gain on remeasurement of right-of-use assets and lease liabilities 4 (30) (4)
Compensation for post combination services 5 324 199
Equity settled share based payment expense 5 1,244 964
Taxation 9 5,810 5,902
42,364 40,310
Increase in trade and other receivables (8,712) (3,737)
Increase in inventories (2,392) (2,553)
Increase in trade and other payables 6,755 2,353
38,015 36,373
Tax paid (6,612) (6,075)
Net cash inflow from operating activities 31,403 30,298
Cash flows from investing activities
Acquisition of property, plant and equipment (7,275) (3,915)
Proceeds from sale of property, plant and equipment 3,513 473
Acquisition of subsidiary undertakings (net of overdrafts and cash acquired) 2 (73,329) (19,593)
Net cash outflow from investing activities (77,091) (23,035)
Cash flows from financing activities
Proceeds from share issuance (net of expenses) 30,106 -
Proceeds from new loan 19 20,000 20,000
Net movement in bank trade loan 19 7,750 -
Net movement in invoice discounting 19 13,666 (13,948)
Interest paid 8,19 (6,121) (4,248)
Repayment of lease liabilities 19 (8,327) (6,555)
Dividends paid (7,922) (7,350)
Net cash inflow/(outflow) from financing activities 49,152 (12,101)
Net increase/(decrease) in cash and cash equivalents 3,464 (4,838)
Opening cash and cash equivalents 673 5,511
Cash and cash equivalents at year end 17 4,137 673
Notes to the financial statements
1. Accounting policies
Kitwave Group plc (the "Company") is a public company limited by shares and
incorporated, domiciled and registered in England in the UK. The registered
number is 09892174 and the registered address is Unit S3, Narvik Way, Tyne
Tunnel Trading Estate, North Shields, Tyne and Wear, NE29 7XJ.
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group"). The parent Company
financial statements present information about the Company as a separate
entity.
The Group financial statements have been prepared and approved by the
Directors in accordance with UK adopted international accounting standards.
The financial information set out above does not constitute the Group or the
Company's statutory accounts for the year ended 31 October 2024 or the
financial year ended 31 October 2023. Statutory accounts for the year ended 31
October 2023 have been delivered to the registrar of companies, and those for
the year ended 31 October 2024 will be delivered in due course. The auditor
has reported on those accounts; their reports were (i) unqualified, (ii) did
not include a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report and (iii) did not contain a
statement under s498 (2) or (3) of the Companies Act 2006.
The Group and Company financial statements are presented in pounds sterling
which is the functional currency of the Group. All values are rounded to the
nearest thousand (£000), except when otherwise indicated.
The Company financial statements were prepared in accordance with the
Companies Act 2006 as applicable to companies using Financial Reporting
Standard 101 'Reduced Disclosure Framework' ("FRS 101"). The Company applies
the recognition, measurement and disclosure requirements of IFRS, but makes
amendments where necessary in order to comply with Companies Act 2006.
In publishing the Company's financial statements together with the Group's
financial statements, the Company is taking advantage of the exemption in s408
of the Companies Act 2006 not to present its individual statement of profit
and loss and related notes that form a part of these approved financial
statements.
The Company has applied the following exemptions in the preparation of its
financial statements:
• A cash flow statement and related notes have not been
presented;
• Disclosures in respect of new standards and
interpretations that have been issued but which are not yet effective have not
been provided;
• Disclosures in respect of transactions with wholly-owned
subsidiaries have not been made; and
• Certain disclosures required by IFRS 13 Fair Value
Measurement and the disclosures required by IFRS 7 Financial Instruments have
not been provided.
• Disclosures in respect of share-based payments as required
by IFRS 2 Share-based Payment have not been provided
The accounting policies set out below have, unless otherwise stated, been
applied consistently to both periods presented in these consolidated financial
statements.
The consolidated financial statements include the results of all subsidiaries
owned by the Company listed in note 14. Certain of these subsidiaries have
taken exemption from an audit for the year ended 31 October 2024 by virtue of
s479A Companies Act 2006. To allow these subsidiaries to take the audit
exemption, the Company has given a statutory guarantee of all the outstanding
liabilities as at 31 October 2024.
The subsidiaries which have taken this exemption from audit are:
• TG Foods Limited - (CRN 04083532)
• Westcountry Food Holdings Limited - (CRN 04126070)
• HB Clark Holdings Limited - (CRN 10434640)
• FW Bishop & Son Limited - (CRN 00751477)
• WLG (Holdings) Limited - (CRN 12169927)
• Kitwave Investments Limited - (CRN 09891335)
• Kitwave One Limited - (CRN 07562615)
1.1 Critical accounting estimates and judgements
The preparation of financial statements requires the Directors to make
judgements, estimates and assumptions concerning the future performance and
activities of the Group. There are no significant judgements applied in the
preparation of these financial statements. Estimates and assumptions are based
on the historical experience and acquired knowledge of the Directors, the
result of which forms the basis of the judgements made about the carrying
value of assets and liabilities that are not clear from external sources. In
concluding that there are no significant risks of material adjustment from
accounting estimates and judgements, the Directors have reviewed the
following:
Impairment of goodwill
In accordance with IAS 36 "Impairment of Assets", the Board identifies
appropriate Cash-Generating Units ("CGUs") and the allocation of goodwill to
these units. Where an indication of impairment is identified, assessment and
estimation of the recoverable value of the CGUs is required. This process
involves estimation of the future cash flows from the CGUs and also the
selection of appropriate discount rates in order to calculate the net present
value of those cash flows. The discount rate is a key area of judgement and
the forecast cash flow includes significant accounting estimates.
Each of the CGUs has significant headroom under the annual impairment review
and the Directors believe that no reasonable change in any of the above key
assumptions would cause the carrying value of the unit to materially exceed
its recoverable amount. More information on the assumptions and sensitivities
applied are set out in note 11 to these financial statements.
Impairment of trade receivables
IFRS 9, Financial Instruments, requires that provisioning for financial assets
needs to be made on a forward-looking expected credit loss model. This is an
accounting estimate requiring significant judgement of management to consider
historic, current and forward-looking information to determine the level of
provisioning required.
The Directors have assessed the ageing of the trade receivables, applying
their knowledge of the Group's customer base, and other economic factors as
indicators of potential impairment. Further information is considered in note
25 of these financial statements.
Following a review of the above accounting estimates and judgements, the
Directors have concluded that there is no significant risk of material
adjustment to the carrying amount of assets and liabilities within the next
financial year.
Valuation of share-based payments
IFRS 2, Share-based Payments, requires judgement on the classification of the
share-based payment under the Management Incentive Plan ("MIP"), which
Directors have determined to be equity-settled.
The grant date fair value of the MIP is based on a Monte Carlo option
valuation model, performed by independent experts, factoring in a number of
significant accounting estimates and judgements. Further information is
considered in note 22 of these financial statements.
Following review of the judgements and estimates applied to the valuation of
the MIP, the Directors have concluded that there is no significant risk of
material adjustment to the charge to the statement of profit and loss and
other comprehensive income in the year.
Valuation of intangible assets arising on acquisition
Under IFRS 3 Business Combinations, when an acquisition takes place the Group
is required to assess whether there are any additional intangible assets
arising separately from goodwill. This requires significant accounting
estimates and judgements to be applied to the valuation of brands and customer
relationships.
In the year ended 31 October 2024, the Group acquired the entire share capital
of WLG (Holdings) Limited ("Wilds of Oldham"), Total Foodservice Solutions
Limited ("Total Foodservice") and Creed Catering Supplies Limited ("Creed").
An independent valuation of the acquired intangible assets relating to the
Total Foodservice and Creed acquisitions was performed by experts, requiring
estimates of weighted average cost of capital and estimate future cash flows
utilising the multi-period excess earnings methodology.
An internal valuation of the acquired intangible assets relating to Wilds of
Oldham was performed and no material intangible assets were identified.
The intangibles identified are set out in note 2 and the Directors have
concluded that there is no significant risk of material adjustments to the
fair value of assets acquired in the year.
1.2 Measurement convention
The financial statements are prepared on the historical cost basis except that
the following assets and liabilities are stated at their fair value: financial
instruments classified at fair value through the statement of profit and loss,
unlisted investments and investment property.
1.3 Going concern
The Group has continued to deliver on its growth strategy, both operationally
and financially, in the year ended 31 October 2024, with the acquisitions of
Wilds of Oldham, Total Foodservice and Creed contributing to increased
profitability and continued positive cash generation.
All three acquisitions have delivered positive trading performances since
their acquisitions. Both Wilds of Oldham and Total Foodservice have been fully
integrated into the On-trade and Foodservice operations respectively, with
both entities operating on the Group IT infrastructure and ERP platform. The
Creed acquisition completed just before year end and the Directors are
confident that as one of the UK's leading foodservice wholesalers, it will
expand the Group's geographical presence and provide an effective distribution
link between our existing Foodservice operations.
The Group has seen an increase in cases delivered during the period led by the
continued focus on service excellence and increased geographic delivery
footprint. Cost of living increases have not had a material impact on demand,
with less significant consumer cost of living increases being borne in this
period mitigated in part by continued wage inflation. Sustained wet weather
over spring and summer 2024 resulted in a reduction in cases to the leisure
and out-of-home markets, but this was mitigated by the successful onboarding
of new customers. These initiatives resulted in the Group exceeding the prior
year's adjusted EBITDA, excluding the three in year acquisitions.
The acquisitions follow the Group's strategy of acquiring profitable, well-run
businesses and as such added £31,102,000 of revenue and £2,220,000 of
operating profit to the Group post acquisition. This contributed to the
improvement in the Group's cash flow from operating activities (before changes
in working capital and tax payments) from £40,310,000 in FY23 to £42,364,000
in FY24.
The Wilds of Oldham and Total Foodservice acquisitions were funded via
existing facilities and Group cash flow. Both acquisitions enabled the Group
to expand its geographical footprint and leverage operations between existing
and acquired operations.
The Creed acquisition was strategically significant due to its market position
as one of the UK's leading foodservice wholesalers and represents the largest
transaction completed by the Group. The acquisition was funded through a new
equity raise of £31,500,000, which was oversubscribed in the market with
strong support from existing shareholders, and an increase in committed debt
facilities with its existing lenders.
Prior to the Creed acquisition, the Group had in place a £20,000,000
Revolving Credit Facility ("RCF") and a £38,000,000 Confidential Invoice
Discounting Facility ("CID") with terms committed to 2025. The RCF was
increased to £40,000,000 and the CID was increased to £55,000,000 with
committed terms to 2028. The facilities include an option for the Group to
extend them by a further year.
The Group has prepared financial forecasts and projections for a 12 month
period from the date of this report (the "going concern assessment period"). A
'severe but plausible' downside sensitivity has been prepared to support the
Directors conclusion regarding going concern. In addition, a reverse stress
test has been performed the results of which have not changed the conclusion
around going concern. These sensitivities include a possible downside scenario
to Group trading as a result of further inflationary pressure in 2025.
The Group has significant headroom on banking facilities at the year end and
throughout the forecast period. These facilities are committed beyond the
forecast period under review.
These forecasts show that the Group will have sufficient levels of financial
resources available both to meet its liabilities as they fall due for that
period and comply with remaining covenant requirements on its working capital
facilities.
Consequently, the Directors are confident that the Group and Company will have
sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of this financial information and
therefore have prepared the financial statements on a going concern basis.
1.4 Basis of consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiary undertakings made up to 31 October 2024. A
subsidiary undertaking is an entity that is controlled by the Company. The
results of subsidiary undertakings are included in the consolidated statement
of profit and loss account from the date that control commences until the date
that control ceases. Control is established when the Company is exposed to, or
has rights to, variable returns from its involvement with an entity and has
the ability to affect those returns through its power over the entity. In
assessing control, the Group takes into consideration potential voting rights
that are currently exercisable.
In respect of the legal acquisition of Kitwave One Limited by the Company in
the year ended 30 April 2017, the principles of reverse acquisition have been
applied under IFRS 3. The Company, via its 100% owned subsidiary Kitwave
Investments Limited, is the legal acquirer of Kitwave One Limited but Kitwave
One Limited was identified as the accounting acquirer of the Company. The
assets and liabilities of the Company and the assets and liabilities of
Kitwave One Limited continued to be measured at book value. By applying the
principles of reverse acquisition accounting the Group is presented as if the
Company has always owned Kitwave One Limited. The comparative consolidated
reserves of the Group were adjusted to reflect the statutory share capital and
share premium of the Company as if it had always existed, adjusted for
movements in the underlying Kitwave One Limited's share capital and reserves
until the date of the acquisition. A consolidation reserve was created which
reflects the difference between the capital structure of the Company and
Kitwave One Limited at the date of acquisition less any cash and deferred cash
consideration for the transaction.
1.5 Foreign currency
Transactions in foreign currencies are translated to the Group companies'
functional currency at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies
at the balance sheet date are retranslated to the functional currency at the
foreign exchange rate ruling at that date. Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign currencies that are
stated at fair value are retranslated to the functional currency at foreign
exchange rates ruling at the dates the fair value was determined.
Foreign exchange differences arising on translation are recognised in the
statement of profit and loss.
1.6 Classification of financial instruments
Financial assets
Financial assets are classified at initial recognition, and subsequently
measured at amortised cost, Fair Value through Other Comprehensive Income
("FVOCI") or Fair Value through the statement of Profit and Loss ("FVTPL").
The classification of financial assets under IFRS 9 is based on two criteria:
• the Group's business model for managing the assets; and
• whether the instruments' contractual cash flows represent
'Solely Payments of Principal and Interest on the principal amount outstanding
(the "SPPI criterion").
A summary of the Group's financial assets is as follows:
Trade and other receivables* Amortised cost - hold to collect business model and SPPI met
Cash and short-term deposits Amortised cost
Financial liabilities
Financial instruments issued by the Group are treated as equity only to the
extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial assets or
financial liabilities with another party under conditions that are potentially
unfavourable to the Group; and
(b) where the instrument will or may be settled in the Company's own
equity instruments, it is either a non-derivative that includes no obligation
to deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company's exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability. Where the instrument so classified takes
the legal form of the Company's own shares, the amounts presented in these
financial statements for called-up share capital and share premium account
exclude amounts in relation to those shares.
A summary of the Group's financial liabilities is as follows:
Bank loans and overdrafts Amortised cost
Trade and other payables* Amortised cost
Contingent consideration Fair value through the statement of profit and loss
*Prepayments, other receivables, other taxation and social security payables
and other payables do not meet the definition of financial instruments.
Further information is included in note 25.
1.7 Non-derivative financial instruments
Trade and other receivables
Trade and other receivables are recognised initially at transaction price.
Subsequent to initial recognition they are measured at amortised cost using
the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to
initial recognition they are measured at amortised cost using the effective
interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and cash
equivalents for the purpose only of the cash flow statement. For payments
received through electronic payment systems, the Group recognises cash, and
derecognises the relevant trade receivable, when the payment is completed, and
the cash is received. For payments made via electronic payment systems, the
Group recognises the cash outflow, and derecognises the relevant trade
payable, when the payment is completed and cash has been transferred.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective
interest method.
Invoice discounting
The Group is party to an invoice discounting arrangement which provides
additional working capital up to the value of a set proportion of its trade
receivables balances. The advances are secured against trade receivables (note
16). These are repayable within 90 days of the invoice and carry interest at a
margin of 1.75%. This is a committed facility which expires in September 2028.
The net movement of the balance is disclosed in the cash flow statement.
Equity investments
Equity investments are instruments that meet the definition of equity from the
issuer's perspective: that is they do not contain an obligation to pay and
provide a residual interest in the assets of the issuer. Equity investments
are held at fair value through the statement of profit and loss.
1.8 Other financial instruments
Derivative financial instruments
Derivative financial instruments are recognised at fair value. The gain or
loss on remeasurement to fair value is recognised immediately in the statement
of profit and loss. No hedge accounting has been applied.
1.9 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses. Where parts of an item of property, plant
and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment.
Depreciation is charged to the statement of profit and loss on a straight-line
basis over the estimated useful lives of each part of an item of property,
plant and equipment. Land is not depreciated. The estimated useful lives are
as follows:
· Leasehold improvements 5-10% straight line or straight line over the term of the lease
· Freehold property 2% straight line
· Plant and machinery 10-20% reducing balance and straight line
· Fixtures and fittings 10-25% reducing balance and straight line
· Motor vehicles 15-25% reducing balance and straight line
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date.
1.10 Business combinations
Business combinations are accounted for using the acquisition method as at the
acquisition date, which is the date on which control is transferred to the
Group.
At the acquisition date, the Group measures goodwill at the acquisition date
as:
• the fair value of the consideration (excluding contingent
consideration) transferred; plus
• estimated amount of the contingent consideration (see
below): plus
• the fair value of the existing equity interest in the
acquiree; less
• the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities and contingent liabilities
assumed.
When the excess is negative, a bargain purchase gain is recognised immediately
in the statement of profit and loss.
Any contingent consideration payable is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent
consideration are recognised in the statement of profit and loss.
1.11 Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units ("CGUs") and is not amortised but is tested
annually for impairment.
Intangible assets arising on acquisition and other intangible assets
Intangible assets arising on acquisition are capitalised at fair value as
determined at the date of acquisition and are stated at fair value less
accumulated amortisation.
Amortisation is charged to the income statement on a straight-line basis over
the estimated useful lives of acquired intangible assets from the date they
are acquired. The period of amortisation relating to the acquired intangibles
of Westcountry Food Holdings Limited and Total Foodservice Solutions Limited
is as follows:
· Customer relationships 6 years
· Brands 2 years
The period of amortisation relating to the acquired intangibles of Creed
Catering Supplies Limited is as follows:
· Customer relationships 8- 15 years
· Brands 5 years
The cost of computer software purchased or developed in-house which has the
capacity to generate economic benefits for a period in excess of one year is
capitalised as an intangible asset.
1.12 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
based on the weighted average principle.
The Group participates in rebate schemes with its suppliers. Rebates are
principally earned from suppliers on purchase of inventory and are recognised
at point of delivery to the Group. Where the rebate earned relates to
inventories which are held by the Group at the period end, the rebates are
deducted from the cost of those inventories. Any rebates based on a volume of
purchases over a period are only recognised when the volume target has been
achieved.
1.13 Impairment excluding inventories and deferred tax assets
Non-derivative financial assets - trade receivables
The Group recognises loss allowance for Expected Credit Losses ("ECLs") on
trade receivables measured at amortised cost.
The Group measures loss allowances at an amount equal to lifetime ECLs as the
term of the asset is considered short.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECLs, the Group
considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Group's historical
experience and informed credit assessment including forward-looking
information.
The Group utilises the practical expediency for short-term receivables by
adopting the simplified 'matrix' approach to calculate ECLs. The provision
matrix is based on an entity's historical default rates over the expected life
of the trade receivables as adjusted for forward-looking estimates.
The Group assumes that the credit risk on a financial asset has increased if
it is aged more than 90 days since delivery. This is not relevant in all
cases, and management uses its historical experience and knowledge of the
customer base to assess whether this is an indicator of increased risk on a
customer-by-customer basis.
The Group considers the financial asset to be in default when the borrower is
unlikely to pay its obligations or has entered a formal insolvency process or
other financial reorganisation.
Loss allowances for financial assets measured at amortised costs are deducted
from the gross carrying amount of the assets.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other than
inventories and deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such
indication exists, then the asset's recoverable amount is estimated. For
goodwill, and intangible assets that have indefinite useful lives or that are
not yet available for use, the recoverable amount is estimated each year at
the same time.
The recoverable amount of an asset or CGU is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For the purpose of
impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other
assets or groups of assets. The goodwill acquired in a business combination,
for the purpose of impairment testing, is allocated to CGUs. Subject to an
operating segment ceiling test, for the purposes of goodwill impairment
testing, CGUs to which goodwill has been allocated are aggregated so that the
level at which impairment is tested reflects the lowest level at which
goodwill is monitored for internal reporting purposes. Goodwill acquired in a
business combination is allocated to groups of CGUs that are expected to
benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. Impairment losses are recognised in
the statement of profit and loss. Impairment losses recognised in respect of
CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to the units, and then to reduce the carrying amounts of the other
assets in the unit (group of units) on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other
assets, impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
1.14 Employee benefits
Defined contribution plans and other long-term employee benefits
A defined contribution plan is a post-employment benefit plan under which the
Group pays fixed contributions into a separate entity and will have no legal
or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution pension plans are recognised as an
expense in the statement of profit and loss in the periods during which
services are rendered by employees.
Share-based payment transactions
Share-based payment arrangements in which the Company receives goods or
services as consideration for its own equity instruments are accounted for as
equity-settled share-based payment transactions, regardless of how the equity
instruments are obtained by the Company.
The Group operates a Management Incentive Plan ("MIP") for certain directors
and two Long Term Incentive Plans ("LTIP") for certain directors and senior
staff members, granting them equity-settled share option rights to the
Company's equity instruments. The fair value at the grant date of the options
is recognised as an employee expense with a corresponding increase in equity,
on a straight-line basis over the vesting period.
Under both the MIP and LTIP schemes, the fair value of the awards granted is
measured using an option valuation model, taking into account the terms and
conditions upon which the awards were granted. The Monte Carlo option
valuation model was adopted for all schemes and independent expert advice was
sought for both the MIP and principal LTIP schemes. The LTIP awards granted in
2024 were valued on the same basis as the LTIP awards granted in 2023 as they
adopt the same principal vesting conditions across a materially similar amount
of options.
The amount recognised as an expense is adjusted to reflect the actual number
of awards for which the related service and non-market vesting conditions are
expected to be met, such that the amount ultimately recognised as an expense
is based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date
fair value of the share-based payment is measured to reflect such conditions
and there is no true-up for differences between expected and actual outcomes.
Further information is included in note 22.
Under IFRS 3 the contingent payment which has been agreed for the remaining 3%
of the share in Central Supplies (Brierley Hill) Ltd is classified as
remuneration for post-combination services, as consideration for the shares is
linked to an employment condition. The amount recognised in the statement of
profit and loss and other comprehensive income was £324,000 (FY23:£199,000).
1.15 Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, that can be
reliably measured, and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects
risks specific to the liability.
1.16 Revenue
IFRS 15 "revenue from contracts with customers" establishes a principles-based
approach for revenue recognition and is based on the concept of recognising
revenue for performance obligations only where they are satisfied, and the
control of goods or service is transferred. In doing so, the standard applies
a five-step approach to the timing of revenue recognition and applies to all
contracts with customers, except those in the scope of other standards.
The principal performance obligation of delivery and sale of goods is
discharged on delivery/collection of the products by the customer at which
point control of the goods has transferred. Customer discounts and rebates
comprise variable consideration and are accounted for as a reduction in the
transaction price, based on the most likely outcome basis.
The most likely outcome model is used due to the simple nature of rebate
agreements and the limited number of possible outcomes - principally whether
or not the customer achieved the required level of purchases.
1.17 Financing income and expenses
Financing expenses comprise interest payable, finance charges on put option
liabilities and finance leases recognised in the statement of profit and loss
using the effective interest method, unwinding of the discount on provisions,
and net foreign exchange losses that are recognised in the statement of profit
and loss (see foreign currency accounting policy). Borrowing costs that are
directly attributable to the acquisition, construction or production of an
asset that takes a substantial time to be prepared for use, are capitalised as
part of the cost of that asset. Financing income comprises interest receivable
on funds invested, finance income on the put option liability, and net foreign
exchange gains.
Interest income and interest payable is recognised in the statement of profit
and loss as it accrues, using the effective interest method. Dividend income
is recognised in the statement of profit and loss on the date the entity's
right to receive payments is established. Foreign currency gains and losses
are reported on a net basis.
1.18 Taxation
Current tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax
is recognised in the statement of profit and loss except to the extent that it
relates to items recognised directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the temporary
difference can be utilised. Deferred tax is recognised on an undiscounted
basis.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
1.19 Leases
The Group adopts the requirements of IFRS 16 as follows:
The Group has lease arrangements in place for properties, vehicles, forklift
trucks and other equipment including plant and machinery. At the inception of
the lease agreement, the Group assesses whether the contract conveys the right
to control the use of an identified assets for a certain period of time and
whether it obtains substantially all of the economic benefits from the use of
that assets in exchange for consideration. The Group recognises a lease
liability and a corresponding right-of-use asset with respect to all such
lease arrangements.
A right-of-use asset is capitalised on the balance sheet at cost, which
comprises the present value of the future lease payments at inception of the
lease.
Right-of-use assets are depreciated using a straight-line method over the
shorter of the life of the asset or the lease term and are assessed in
accordance with IAS 36 'Impairment of Assets' to determine whether the asset
is impaired.
The lease liability is initially measured at the present value of the lease
payments as outlined above for the right-of-use asset and is increased by the
interest cost on the lease liability, subsequently reduced by the lease
payments made. Lease liabilities are classified between current and
non-current on the balance sheet.
An assessment of the discount rate used in the present value calculation for
new lease additions is performed at the inception of the lease to ensure it
reflects the Group's incremental borrowing rate. The selected rate is
supported by quotes from third parties for financing the asset and the Group's
weighted average cost of capital. The Directors believe that no reasonable
change in this accounting estimate would cause the carrying value of leases to
be materially misstated.
The Group has relied upon the exemption under IFRS 16 to exclude the impact of
low-value leases and leases that are short-term in nature (defined as leases
with a term of 12 months or less). Costs on these leases are recognised on a
straight-line basis as an operating expense within the statement of profit and
loss. All other leases are accounted for in accordance with this policy as
determined by IFRS 16.
1.20 Exceptional items
Exceptional items are defined as income or expenses that arise from events or
transactions that are clearly distinct from the normal activities of the Group
and therefore are not expected to recur frequently or regularly.
Such items have been separately presented to enable a better understanding of
the Group's operating performance. Details of exceptional expenses are
presented in note 5.
1.21 Investments
Investments in subsidiaries are carried at cost-less impairment in the parent
Company's financial statements.
1.22 Adopted IFRSs not yet applied
There are a number of new standards and amendments issued by the International
Accounting Standards Board ("IASB") that will be effective for financial
statements after this reporting period, once endorsed by the UK Endorsement
Board. IFRS 18 "Presentation and Disclosure in Financial Statements" is
effective for periods beginning on or after 1 January 2027 and will introduce
new disclosure requirements. This standard is not expected to have a material
impact on the Group's results or financial position.
2. Acquisitions in the period
Acquisitions in the year ended 31 October 2024
WLG (Holdings) Limited
On 17 November 2023, the Group acquired the entire share capital of WLG
(Holdings) Limited for a total consideration of
£2,700,000. After recognition of the book and fair value of the acquired net
assets, the resulting goodwill of £1,948,000 was capitalised and is subject
to annual impairment testing under IAS 36.
The acquisition had the following effect on the Group's assets and
liabilities:
Consolidated balance sheet as at 17 November 2023
Book and fair value
£000
Non-current assets
Tangible assets 92
Right-of-use assets 239
Investments 15
Current assets
Inventories 1,051
Trade and other receivables 748
Cash and cash equivalents 192
Total assets 2,337
Current liabilities
Lease liabilities (38)
Trade and other payables (1,180)
Corporation tax (138)
Non-current liabilities
Lease liabilities (199)
Deferred tax (30)
Total liabilities (1,585)
Net identifiable assets and liabilities 752
Goodwill 1,948
Total net assets acquired 2,700
Purchase consideration and costs of acquisition paid in period 2,700
Cash acquired (192)
Purchase consideration net of cash acquired 2,508
The business and its trading subsidiary, WLG Limited, were acquired as part of
the Group's growth strategy. Significant control was obtained through the
acquisition of 100% of the share capital of WLG (Holdings)
Limited.
An internal valuation was performed to identify any intangible assets on
acquisition per IFRS 3. As a result of this valuation, no material intangible
assets were identified.
Immediately prior to acquisition, the business and its trading subsidiary
extended its accounting period by one month to 31 October 2023. In this
13-month period immediately prior to acquisition, the consolidated profit
after tax was £266,000.
Following acquisition, the business contributed revenue of £3,619,000 and
operating profit of £177,000 to the Group for the period to 29 February 2024
at which point the trade and assets of the business and its trading subsidiary
were hived up into H.B. Clark & Co (Successors) Limited, with the acquired
business continuing within the trade of this Group
subsidiary.
Total Foodservice Solutions Limited
On 27 March 2024, the Group acquired the entire share capital of Total
Foodservice Solutions Limited for a total consideration of £21,000,000. After
recognition of acquired intangible assets and associated deferred tax
liabilities, the resulting goodwill of
£8,944,000 was capitalised and is subject to annual impairment testing under
IAS 36.
The acquisition had the following effect on the Group's assets and
liabilities:
Consolidated balance sheet as at 27 March 2024
Book value Fair value adjustments Fair value
£000
£000
£000
Non-current assets
Tangible assets 3,701 - 3,701
Intangible assets - 4,489 4,489
Right-of-use assets 1,096 - 1,096
Investments 1 - 1
Current assets
Inventories 1,791 - 1,791
Trade and other receivables 1,962 - 1,962
Cash and cash equivalents 4,138 - 4,138
Total assets 12,689 4,489 17,178
Current liabilities
Lease liabilities (203) - (203)
Trade and other payables (2,360) - (2,360)
Corporation tax (319) - (319)
Non-current liabilities
Lease liabilities (753) - (753)
Deferred tax (361) (1,126) (1,487)
Total liabilities (3,996) (1,126) (5,122)
Net identifiable assets and liabilities 8,693 3,363 12,056
Goodwill 8,944
Total net assets acquired 21,000
Purchase consideration and costs of acquisition paid in period 21,000
Cash acquired (4,138)
Purchase consideration net of cash acquired 16,862
The business and its dormant subsidiaries were acquired as part of the Group's
growth strategy. Significant control was obtained
through the acquisition of 100% of the share capital of Total Foodservice
Solutions Limited.
An independent valuation was performed to identify any intangible assets on
acquisition per IFRS 3. As a result of this valuation, intangible assets in
relation to brand and customer relationships were identified, and recognised,
with attributable fair values of
£183,000 and £4,306,000 respectively. The recognition of these intangible
assets resulted in deferred tax liabilities of £46,000 for the
brand intangible and £1,080,000 for the customer relationships intangible
also being recognised at acquisition.
The acquired undertaking made a profit after tax of £957,000 from the
beginning of its financial year on 1 May 2023 to the date of acquisition. In
its previous financial year, the profit after tax was £1,544,000.
Following acquisition, the business contributed revenue of £14,350,000 and
operating profit of £983,000 to the Group for year ended 31 October 2024.
If the business had been acquired at the start of the Group's financial
period, being 1 November 2023, it would have added
£24,215,000 to Group revenue and £666,000 to Group operating profit for the
year ended 31 October 2024.
On acquisition, an assessment was made regarding the fair value of tangible
assets which includes a freehold property. The result of an independent
assessment was no change to the net book value held in Total Foodservice
Solutions Limited's accounts.
Creed Catering Supplies Limited
On 27 September 2024, the Group acquired the entire share capital of Creed
Catering Supplies Limited for a total initial consideration of £60,660,000
plus contingent consideration of up to £10,000,000. After recognition of
acquired intangible assets and associated deferred tax liabilities, and fair
valuation adjustments in accordance with IFRS 3, the resulting goodwill of
£36,101,000 was capitalised and is subject to annual impairment testing under
IAS 36.
The acquisition had the following effect on the Group's assets and
liabilities:
Consolidated balance sheet as at 27 September 2024 Book value Fair value adjustments Fair value
£000 £000 £000
Non-current assets
Tangible assets 5,712 1,461 7,173
Intangible assets - 22,694 22,694
Right-of-use assets 7,922 - 7,922
Current assets
Inventories 7,105 - 7,105
Trade and other receivables 16,039 - 16,039
Cash and cash equivalents 7,263 - 7,263
Total assets 44,041 24,155 68,196
Current liabilities
Lease liabilities (1,958) - (1,958)
Trade and other payables (18,516) - (18,516)
Corporation tax (939) - (939)
Non-current liabilities
Lease liabilities (5,964) - (5,964)
Deferred tax (644) (6,045) (6,689)
Total liabilities (28,021) (6,045) (34,066)
Net identifiable assets and liabilities 16,020 18,110 34,130
Goodwill 36,102
Total net assets acquired 70,232
Initial purchase consideration 60,660
Fair value of contingent consideration at acquisition 9,572
Total purchase consideration 70,232
Cash acquired (7,263)
Fair value of contingent consideration at acquisition (9,572)
Purchase consideration paid in the period 53,397
The business, and its trading subsidiary Creed Foodservice Limited, were
acquired as part of the Group's growth strategy. Significant control was
obtained through the acquisition of 100% of the share capital of Creed
Catering Supplies Limited.
An independent valuation was performed to identify and intangible assets on
acquisition in accordance with IFRS 3. As a result of this valuation,
intangible assets in relation to brand and customer relationships were
identified, and recognised, with attributable fair values of
£2,415,000 and £20,279,000 respectively. The recognition of these intangible
assets resulted in deferred tax liabilities of £604,000 for the brand
intangible and £5,076,000 for the customer relationships intangible also
being recognised at acquisition.
The purchase consideration includes two contingent payments, each for
£5,000,000 payable on achievement of pre-determined criteria. The fair value
of the contingent consideration has been assessed via an independent valuation
in accordance with IFRS 13 as £9,572,000. Post year end a £5,000,000 cash
payment has been made to the former shareholders to satisfy the first
contingent consideration under the terms of the share purchase agreement
following achievement of pre-determined criteria.
The acquired undertakings made a profit after tax of £3,281,000 from the
beginning of its financial year on 1 January 2024 to the date of acquisition.
In the previous financial year, the profit after tax of the acquired
undertakings was £5,943,000.
Following acquisition, the business contributed revenue of £13,131,000 and
operating profit of £1,058,000 to the Group for the year ended 31 October
2024.
If the business had been acquired at the start of the Group's financial
period, being 1 November 2023, it would have added
£134,195,000 to Group revenue and £8,027,000 to Group operating profit for
year ended 31 October 2024.
On acquisition, an assessment was made regarding the fair value of tangible
assets which includes two freehold properties that required a fair valuation
adjustment. The result of an independent assessment of the freehold properties
was an uplift in value of £1,461,000 to the net book value held in Creed
Foodservice Limited's accounts and is reflected in the above table of acquired
assets and liabilities. This fair valuation has created a temporary difference
with the tax base of the asset resulting in the recognition of a deferred tax
liability of £365,000. This value of this liability has been derived using
the UK corporation tax rate that is expected to be applicable when the
reversal of this timing difference occurs. No further fair valuation
adjustments were identified.
3. Segmental information
The following analysis by segment is presented in accordance with IFRS 8 on
the basis of those segments whose operating results are regularly reviewed by
the Board of Directors (the Chief Operating Decision Maker as defined by IFRS
8) to assess performance and make strategic decisions about allocation of
resources.
The Group has the following operating segments defined by products and their
associated margins:
• Ambient: Provides delivered wholesale of ambient food,
drink and tobacco products;
• Frozen and chilled: Provides delivered wholesale of frozen
and chilled food products;
• Foodservice: Provides delivered wholesale of alcohol,
frozen, chilled and fresh food to trade customers.
Corporate contains the central functions that are not devolved to the business
units.
These segments offer different products and services to different customer
types, attracting different margins. They each have separate management teams.
The segments share a commonality in service being delivered wholesale of food
and drink products. The Group, therefore, benefits from a range of expertise,
cross-selling opportunities and operational synergies in order to run each
segment as competitively as possible.
The Group's forward-look strategy is to provide an enhanced customer service
by making available the wider Group product range to its existing customer
base. As a result, the Board will be assessing the segments based on customer
type going forward with the customers in the Ambient and Frozen & Chilled
divisions operating in the retail and wholesale channel.
The presentation convention adopted in these financial statements is to show
the three operating segments as this is how the Board of Directors has
assessed performance during the year.
The following analysis shows how this development will be monitored in future
periods whilst demonstrating the link to the existing segmental information.
Each segment is measured on its EBITDA, adjusted for acquisition costs and
reconstruction costs, and internal management reports are reviewed monthly by
the Board. This performance measure is deemed the most relevant by the Board
to evaluate the results of the segments relative to entities operating in the
same industry.
FY24 Ambient Frozen & Chilled Retail and Wholesale Foodservice Corporate Total
£000
£000
£000
£000
£000
£000
Revenue 204,568 235,511 440,079 223,573 - 663,652
Inter-segment revenue 18,463 4,355 22,818 1,242 - 24,060
Segment revenue 223,031 239,866 462,897 224,815 - 687,712
Segment gross profit 31,613 52,353 83,966 63,854 - 147,820
Adjusted EBITDA* 13,125 15,215 28,340 22,797 (5,908) 45,229
Amortisation of intangibles - (74) (74) (6) (50) (130)
Depreciation (2,010) (4,781) (6,791) (4,118) (159) (11,068)
Adjusted operating profit* 11,115 10,360 21,475 18,673 (6,117) 34,031
Group management charge (1,968) (2,051) (4,019) (2,751) 6,770 -
Amortisation of intangible assets arising on acquisition - - (1,397) (1,397)
Acquisition expense - - - (447) (1,706) (2,153)
Compensation for post combination services - (324) (324) - - (324)
Share based payment expense - - - - (1,244) (1,244)
Restructuring costs - (103) (103) (6) - (109)
Interest expense (1,099) (1,948) (3,047) (1,204) 2,025 (6,276)
Segment profit/(loss) before tax 8,048 5,934 13,982 14,265 (5,719) 22,528
Segment assets 49,876 61,691 111,567 111,927 135,792 359,286
Segment liabilities (37,363) (58,531) (95,894) (79,212) (59,635) (234,741)
Segment net assets 12,513 3,160 15,673 32,715 76,157 124,545
Within Corporate segment assets is £115,717,000 of goodwill on consolidation.
This is allocated to the trading segments as follows (see note 11 for further
information):
Goodwill by segment 13,516 12,539 26,055 79,662 - 105,717
*For more information on alternative performance measures please see the
glossary at the end of the announcement.
FY23 Ambient Frozen & Chilled Retail and Wholesale Foodservice Corporate Total
£000
£000
£000
£000
£000
£000
Revenue 207,195 216,399 423,594 178,626 - 602,220
Inter-segment revenue 15,561 3,392 18,953 625 - 19,578
Segment revenue 222,756 219,791 442,547 179,251 - 621,798
Segment gross profit 30,862 49,037 79,899 52,226 - 132,125
Adjusted EBITDA* 12,291 14,115 26,406 20,030 (5,295) 41,141
Amortisation of intangibles - (80) (80) (6) (47) (133)
Depreciation (1,773) (4,130) (5,903) (2,995) (94) (8,992)
Adjusted operating profit* 10,518 9,905 20,423 17,029 (5,436) 32,016
Group management charge (1,230) (840) (2,070) (1,750) 3,820 -
Amortisation of intangible assets arising on acquisition - - - - (842) (842)
Acquisition expense - - - - (648) (648)
Compensation for post combination services - (199) (199) - - (199)
Share based payment expense - - - - (964)) (964)
Interest expense (918) (1,344) (2,262) (689) (1,554) (4,505)
Segment profit before tax 8,370 7,522 15,892 14,590 (5,624) 24,858
Segment assets 43,697 56,373 100,070 44,586 64,929 209,585
Segment liabilities (28,380) (45,691) (74,071) (29,288) (21,781) (125,140)
Segment net assets 15,317 10,682 25,999 15,298 43,148 84,445
Within Corporate segment assets is £58,680,000 of goodwill on consolidation.
This is allocated to the trading segments as follows (see note 11 for further
information):
Goodwill by segment 13,516 12,499 26,015 32,665 - 58,680
*For more information on alternative performance measures please see the
glossary at the end of the announcement.
An analysis of revenue by destination is given below:
Geographical information FY24 FY23
£000
£000
United Kingdom 659,833 597,292
Overseas 3,819 4,928
Group revenue 663,652 602,220
No one customer accounts for more than 8% (FY23: 9%) of Group revenue.
4. Other operating income
FY24 FY23
£000
£000
Net gain on disposal of fixed assets 573 179
Net gain on remeasurement of right-of-use assets and lease liabilities 30 4
603 183
5. Expenses
FY24 FY23
£000
£000
Included in profit/loss are the following:
Depreciation of tangible assets
Owned 3,052 2,253
Right-of-use assets 8,016 6,739
Amortisation of intangible assets 1,527 975
Expense relating to short term and low value assets 2,155 1,992
Impairment loss on trade receivables - 675
The Group incurred a number of expenses not relating to the principal trading
activities of the Group as follows:
FY24 FY23
£000
£000
Exceptional expenses
Acquisition expenses 2,153 648
Compensation for post combination services 324 199
Restructuring expenses 109 -
Total exceptional expenses 2,586 847
Share based payment expense 1,244 964
Total exceptional expenses and share based payments 3,830 1,811
The Board consider the exceptional items to be non-recurring in nature. Both
exceptional and share-based payment expenses are adjusted for in the statement
of profit and loss to arrive at the adjusted EBITDA. This measure provides the
Board with a better understanding of the Group's operating performance.
Acquisition expenses in both periods include the legal and professional fees
connected to the acquisition of WLG (Holdings) Limited, Total Foodservice
Solutions Limited and Creed Catering Supplies Limited in the current year and
Westcountry Food Holdings Limited in the prior year.
Compensation for post-combination services relates to the value of a liability
in connection with the acquisition of the remaining share capital of Central
Supplies (Brierley Hill) Ltd. This option is subject to an agreement to
acquire, which can now be exercised at any time. During the year, this option
was part exercised, with the Group purchasing 2% of the remaining share
capital for £424,000.
Share-based payments relate to the MIP and LTIP and are non-cash expenses. For
further information see note 22.
Auditor's
remuneration:
FY24 FY23
£000
£000
Audit of these financial statements 105 51
Amounts receivable by auditors and their associates in respect of:
Audit of financial statements of subsidiaries of the Company 488 364
Other assurance services 6 5
In the current and prior years, audit and non-audit fees were paid to Grant
Thornton UK LLP. In addition to the fee disclosed above, direct disbursements
were paid to Grant Thornton UK LLP of £11,000 (FY23: £9,000).
6. Staff numbers and costs
The average number of persons employed by the Group (including Directors)
during the year is analysed as follows:
FY24 FY23
Management and administration 261 227
Sales 282 241
Warehouse 528 533
Distribution 606 508
Directors 2 3
1,679 1,512
The aggregate payroll costs of these persons were as follows;
FY24 FY23
£000
£000
Wages and salaries 57,021 49,475
Social security costs 5,715 4,790
Other pension costs (note 21) 2,004 1,066
64,740 55,331
Staff costs accruing in the Group total £1,244,000 (FY23: £964,000) in
relation to the Management Incentive Plan and Long-Term incentive plan, see
note 22 for further details.
7. Directors' remuneration
Included within staff costs (note 6) are the following amounts in respect of
Directors' emoluments
FY24 FY23
£000
£000
Directors' emoluments 1,123 1,164
Company contribution to personal pension scheme 11 15
1,134 1,179
Retirement benefits are accruing to two Directors under money purchase pension
schemes (FY23: three)
Amount accrued under the MIP for the two Directors was £863,000 (FY23:
£863,000). Amount accrued under the LTIP schemes for the two Directors was
£177,000 (FY23: £40,000)
A detailed breakdown of the Director's total emoluments is included within the
Remuneration Committee report.
FY24 FY23
£000
£000
Highest paid Director
Directors' emoluments 418 389
Company contribution to personal pension scheme 1 7
419 396
8. Finance income and
expense
FY24 FY23
£000
£000
Interest payable and similar charges
Interest payable on bank loans and invoice discount facilities 4,024 2,842
Finance charges payable in respect of leases 2,167 1,656
Other interest 85 7
6,276 4,505
Included in the above is £371,000 of interest accrued not paid as at 31
October 2024 in relating to the Revolving Credit Facility (FY23: £257,000).
Other interest includes £42,000 (FY23: £nil) of interest on contingent
consideration in relation to the acquisition of Creed Catering Supplies
Limited in accordance with IFRS 3, which is a non-cash interest cost.
9. Taxation
FY24 FY23
£000
£000
UK corporation tax
Current tax charge on income for the year 5,847 6,193
Adjustment in respect of prior periods (99) (39)
Total current tax 5,748 6,154
Deferred tax (see note 20)
Reversal of timing differences (98) (290)
Adjustment in respect of prior periods 160 38
Total deferred tax charge / (credit) 62 (252)
Tax charge on profit on ordinary activities 5,810 5,902
FY24 FY23
£000
£000
Current tax reconciliation
Profit on ordinary activities after tax 16,718 18,956
Tax charge 5,810 5,902
Profit on ordinary activities before tax 22,528 24,858
Tax using the UK corporation tax of 25% (FY23: 23%) 5,632 5,631
Effect of:
Expenses not deductible for tax purposes 674 455
Fixed asset differences (415) 46
Income not taxable (13) (27)
Adjustments in respect of prior periods - current tax (156) (39)
Adjustment in respect of prior period - deferred tax 160 38
Share based payment (290) (217)
Other tax adjustments 218 15
Total current tax charge 5,810 5,902
The corporate tax rate increased from 19% to 25% on 1 April 2023. There are no
known changes planned for the rate of UK corporate tax.
The deferred tax liability at 31 October 2024 has been calculated based on the
25% UK corporate tax rate, reflecting the expected timing of reversal of the
related timing differences (FY23: 25%).
10. Earnings per share
Basic earnings per share
Basic earnings per share for the year ended 31 October 2024, and the previous
year ended 31 October 2023 is calculated by dividing profit attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during each period as calculated below.
Diluted earnings per share
Diluted earnings per share for the year ended 31 October 2024, and previous
year ended 31 October 2023 is calculated by dividing profit attributable to
ordinary shareholders by the weighted average number of ordinary shares,
adjusted for the effects of all dilutive potential ordinary shares, in this
case issued equity warrants, outstanding during each period as calculated
below.
Profit attributable to ordinary
shareholders
FY24 FY23
£000
£000
Profit attributable to all shareholders 16,718 18,956
pence pence
Basic earnings per ordinary share 23.5 27.1
Diluted earnings per ordinary shares 22.5 26.0
Weighted average number of ordinary shares
FY24 FY23
Number Number
Weighted average number of ordinary shares (basic) during the year 71,034,498 70,000,000
Weighted average number of ordinary shares (diluted) during the year 74,453,758 73,047,991
The following Alternative Performance Measure ("APM") for earnings per share
is not defined or specified under the requirements
of International Financial Reporting Standards. The Board believes that this
APM provides the readers with important additional information regarding the
earnings per share performance of the Group:
Basic underlying earnings per share
Profit attributable to the equity holders of the Group prior to exceptional
items and share-based payments through the consolidated statement of profit
and loss, divided by the weighted average number of ordinary shares during the
financial year.
Profit attributable to ordinary shareholders
FY24 FY23
£000
£000
Profit attributable to all shareholders 16,718 18,956
Exceptional and share based payment expenses net of tax* 4,559 2,248
Underlying profit attributable to ordinary shareholders 21,277 21,204
pence pence
Basic underlying earnings per ordinary share 30.0 30.3
*Exceptional expenses include restructuring fees, acquisition costs,
compensation for post-combination services and amortisation of acquired
intangibles, which are deemed to be non-operating costs. For full details of
exceptional and share-based payment expenses, see note 5.
11. Intangible assets
Group
Acquired Intangible assets Goodwill Total
intangibles
£000 £000 £000 £000
Cost
Balance at 1 November 2022 - 1,130 49,854 50,984
Additions - 124 - 124
Recognised through business combinations 4,992 - 14,338 19,330
Balance at 31 October 2023 4,992 1,254 64,192 70,438
Amortisation
Balance at 1 November 2022 - 393 5,512 5,905
Charge in year 842 133 - 975
Balance at 31 October 2023 842 526 5,512 6,880
Net book value
At 31 October 2023 4,150 728 58,680 63,558
At 31 October 2022 - 737 44,342 45,079
Group
Acquired Intangible assets Goodwill Total
intangibles
£000 £000 £000 £000
Cost
Balance at 1 November 2023 4,992 1,254 64,192 70,438
Additions - 20 - 20
Recognised through business combinations 27,183 - 47,037 74,220
Balance at 31 October 2024 32,175 1,274 111,229 144,678
Amortisation
Balance at 1 November 2023 842 526 5,512 6,880
Charge in year 1,397 130 - 1,527
Balance at 31 October 2024 2,239 656 5,512 8,407
Net book value
At 31 October 2024 29,936 618 105,717 136,271
At 31 October 2023 4,150 728 58,680 63,558
Included in acquired intangibles are customer relationships with a net book
value of £27,430,000 (2023: £4,009,000) and brands
with a net book value of £2,506,000 (2023: 141,000). At the year ended 31
October 2023 both the customer relationship and brand acquired intangibles
relate to the acquisition of Westcountry Food Holdings Limited. No intangibles
have been recognised in respect to acquisitions in the periods prior to the
financial year ended 31 October 2023.
Impairment testing
Goodwill arising on business combinations is assessed separately under IFRS 3
in the period of acquisition. Each acquisition provides the Group with an
additional CGUs.
The Group allocates goodwill to groups of CGUs based on their operating
segment as set out in note 3 as they leverage and share from each other's
operational infrastructure, centrally negotiate supplier terms and cross-sell
products to the Group's wider customer base. The operating segments therefore
represent the lowest level at which goodwill is monitored by the Board.
Goodwill has been assessed as follows:
2024 2023
£000
£000
Ambient 13,516 13,516
Frozen & Chilled 12,539 12,499
Foodservice 79,662 32,665
105,717 58,680
Under IAS 36 the Group is required to test goodwill for impairment at least
annually or more frequently if indicators of impairment exist.
The recoverable amount of a CGU has been calculated with reference to its
value in use, using financial forecasts approved by the Board covering a
four-year period with the final period taken into perpetuity.
The key assumptions of this calculation are shown below:
2024 2023
Period forecasts are based on: 4 years 4 years
Growth rate applied: 2% 2%
Discount rate applied: 11.47% 11.58%
Impairment testing at 31 October 2024 has considered cost inflation and its
potential impact on demand and overhead costs of the CGUs. The Directors
believe there is no reasonable prospect of a reduction in demand as a result
of product price inflation that would result in a material impairment.
A 2% growth rate assumption has been made on the terminal value in the
impairment calculation. There is a demonstrable link between consumer spending
on food and drink and GDP trends. The Group has demonstrated year-on-year
growth, with existing operations delivering 5.0% revenue growth in FY24.
The discount rate is per the Group's current weighted average cost of capital
adjusted to reflect the pre-tax rate at 25% corporation tax, a risk premium
and leverage ratio from comparable listed entities in order to reflect a
market participant discount rate in line with IAS 36.
A specific risk premium has not been applied to each CGU as they all operate
in the wholesale of food and drinks materially within the UK and are therefore
exposed to the same macroeconomic risks. This would be reassessed if the
discount rate indicated potential impairment of any individual CGU.
The reduction in the discount rate from prior year is due to the reduction in
the risk-free rate and the cost of debt as the interest rates have reduced in
the year. Additionally, the change in the market participant capital
structure, with an increase in debt as a proportion of debt and equity, has
reduced the discount rate.
Other than changes to the discount or growth rate the key assumption in the
forecast model is the gross margin generated by each CGU. The sensitivities
vary by CGU but no reasonable sensitivity would result in impairment on any
CGU.
Each of the CGUs has significant headroom under the annual impairment review.
The Directors believe that no reasonable change in any of the above key
assumptions would cause the carrying value of the unit to materially exceed
its recoverable amount.
12. Tangible assets
Group Freehold property Leasehold improvements Fixtures & fittings Motor vehicles Plant & machinery Total
£000 £000 £000 £000 £000 £000
Cost
Balance at 1 November 2022 5,725 2,246 6,178 2,261 8,572 24,982
Additions 95 271 772 1,459 1,191 3,788
Disposals - (40) (113) (167) (49) (369)
Transferred from Right-of-use assets - 673 - 778 - 1,451
Acquired through business combinations 1,270 - 135 186 247 1,838
Balance at 31 October 2023 7,090 3,150 6,972 4,517 9,961 31,690
Depreciation
Balance at 1 November 2022 212 1,014 4,544 1,155 5,020 11,945
Charge in year 171 171 558 624 729 2,253
Disposals - - (88) (59) (4) (151)
Transferred from right-of-use assets - 359 - 670 - 1,029
Balance at 31 October 2023 383 1,544 5,014 2,390 5,745 15,076
Net book value
At 31 October 2023 6,707 1,606 1,958 2,127 4,216 16,614
At 31 October 2022 5,513 1,232 1,634 1,106 3,552 13,037
Group Freehold property Leasehold improvements Fixtures & fittings Motor vehicles Plant & machinery Total
£000 £000 £000 £000 £000 £000
Cost
Balance at 1 November 2023 7,090 3,150 6,972 4,517 9,961 31,690
Additions 281 1,841 906 967 3,260 7,255
Disposals (2,801) (30) (1,649) (2,136) (4,720) (11,336)
Transferred from Right-of-use - - - 337 98 435
Acquired through business combinations 7,083 147 196 1,534 2,007 10,967
Balance at 31 October 2024 11,653 5,108 6,425 5,219 10,606 39,011
Depreciation
Balance at 1 November 2023 383 1,544 5,014 2,390 5,745 15,076
Charge in year 180 314 625 937 996 3,052
Disposals (273) (30) (1,643) (1,849) (4,622) (8,417)
Transferred from right-of-use - - - 141 63 204
Balance at 31 October 2024 290 1,828 3,996 1,619 2,182 9,915
Net book value
At 31 October 2024 11,363 3,280 2,429 3,600 8,424 29,096
At 31 October 2023 6,707 1,606 1,958 2,127 4,216 16,614
13. Right-of-use assets
Group Leasehold Motor Plant & Total
property
vehicles
Machinery
£000 £000 £000 £000
Cost
Balance at 1 November 2022 24,212 16,125 2,510 42,847
Additions 1,922 7,704 402 10,028
Transferred to tangible assets (673) (778) - (1,451)
Disposals (683) (2,131) (692) (3,506)
Loss on remeasurement (133) (167) (36) (336)
Acquired through business combinations 242 307 20 569
Balance at 31 October 2023 24,887 21,060 2,204 48,151
Depreciation
Balance at 1 November 2022 5,672 9,567 1,156 16,395
Charge in year 2,113 4,161 465 6,739
Transferred to tangible assets (359) (670) - (1,029)
Disposals (683) (2,055) (692) (3,430)
Loss on remeasurement (107) (111) (22) (240)
At 31 October 2023 6,636 10,892 907 18,435
Net book value
At 31 October 2023 18,251 10,168 1,297 29,716
At 31 October 2022 18,540 6,558 1,354 26,452
Group Leasehold Motor Plant & Total
property
vehicles
Machinery
£000
£000
£000
£000
Cost
Balance at 1 November 2023 24,887 21,060 2,204 48,151
Additions 6,919 12,951 542 20,412
Transferred to tangible assets - (337) (98) (435)
Disposals (277) (4,058) (256) (4,591)
Loss on remeasurement (469) (38) - (507)
Acquired through business combinations 2,116 6,936 208 9,260
Balance at 31 October 2024 33,176 36,514 2,600 72,290
Depreciation
Balance at 1 November 2023 6,636 10,892 907 18,435
Charge in year 2,105 5,494 417 8,016
Transferred to tangible assets - (141) (63) (204)
Disposals (277) (4,038) (256) (4,571)
Loss on remeasurement (235) (20) - (255)
Balance at 31 October 2024 8,229 12,187 1,005 21,421
Net book value
At 31 October 2024 24,947 24,327 1,595 50,869
At 31 October 2023 18,251 10,168 1,297 29,716
14. Investments
Unlisted investments
Group 2024 2023
£000
£000
Cost and net book value
At beginning of year 45 35
Additions - 3
Acquired on business combinations 16 7
Disposals (19) -
At end of year 42 45
Shares in Group undertakings
Company 2024 2023
£000
£000
Cost and net book value
At beginning and end of year 12,993 12,993
The Company has the following investments in subsidiaries
Subsidiary undertaking Country of incorporation Class of Ownership Ownership
shares held
2024
2023
Kitwave Investments Limited UK Ordinary 100% 100%
Kitwave One Limited* UK Ordinary 100% 100%
Kitwave Limited* UK Ordinary 100% 100%
M&M Value Limited* UK Ordinary 100% 100%
Turner & Wrights Limited* UK Ordinary 100% 100%
FW Bishop & Son Limited* UK Ordinary 100% 100%
Westone Wholesale Limited* UK Ordinary 100% 100%
Automatic Retailing (Northern) Limited* UK Ordinary 100% 100%
Teatime Tasties Limited* UK Ordinary 100% 100%
TG Foods Limited* UK Ordinary 100% 100%
Eden Farm Limited* UK Ordinary 100% 100%
Squirrels UK Limited* UK Ordinary 100% 100%
Thurston's Food's Limited* UK Ordinary 100% 100%
David Miller Frozen Foods Limited* UK Ordinary 100% 100%
HB Clark Holdings Limited* UK Ordinary 100% 100%
HB Clark & Co (Successors) Limited* UK Ordinary 100% 100%
Clarks Fine Wines Limited* UK Ordinary 100% 100%
FAM Soft Drinks Limited* UK Ordinary 100% 100%
Central Supplies (Brierley Hill) Ltd UK Ordinary 97% 95%
M.J. Baker Foodservice Limited UK Ordinary 100% 100%
Westcountry Food Holdings Limited* UK Ordinary 100% 100%
Westcountry Fruit Sales Limited* UK Ordinary 100% 100%
WLG Holdings Limited* UK Ordinary 100% 0%
WLG Limited* UK Ordinary 100% 0%
Total Foodservice Solutions Limited* UK Ordinary 100% 0%
Nextbuy Limited* UK Ordinary 100% 0%
Fred Lawson (Clitheroe) Limited* UK Ordinary 100% 0%
Opaledge Limited* UK Ordinary 100% 0%
Howarth Foodservice Limited* UK Ordinary 100% 0%
Creed Catering Supplies Limited* UK Ordinary 100% 0%
Creed Foodservice Limited* UK Ordinary 100% 0%
Andersons (Wholesale) Limited** UK Ordinary 0% 100%
Angelbell Limited** UK Ordinary 0% 100%
Phoenix Fine Foods Limited** UK Ordinary 0% 100%
MAS Frozen Foods Limited** UK Ordinary 0% 100%
Supplytech Limited** UK Ordinary 0% 100%
Churnet Valley Drinks Limited** UK Ordinary 0% 100%
Thorne Licence Wholesale Limited** UK Ordinary 0% 100%
Alpine Fine Foods Limited** UK Ordinary 0% 100%
Veggies & More Limited * UK Ordinary 0% 100%
Westcountry Fine Foods Limited* UK Ordinary 0% 100%
*held indirectly through Kitwave Investments Limited and its subsidiaries.
**relates to dormant entities voluntarily struck off the companies register
during the year that were previously held indirectly through Kitwave
Investments Limited and its subsidiaries.
The registered office of all the above companies is: Unit S3 Narvik Way, Tyne
Tunnel Trading Estate, North Shields, Tyne and Wear, NE29 7XJ.
15. Inventories
Group Company
2024 2023 2023
£000
£000
£000
2024
£000
Goods for resale 47,749 35,410 - -
47,749 35,410 - -
Goods for resale recognised as cost of sales in the year amount to
£515,832,000 (FY23: £470,095,000).
16. Trade and other receivables
Group Company
2024 2023 2023
£000
£000
£000
2024
£000
Trade receivables 70,888 50,985 - -
Amounts owed by Group undertakings - - 93,188 59,958
Other debtors 1,569 1,383 - -
Prepayments and accrued income 18,665 11,201 71 75
91,122 63,569 93,259 60,033
Due within one year 90,250 62,692 93,259 60,033
Due after more than one year 872 877 - -
91,122 63,569 93,259 60,033
£22,301,000 (2023: £7,539,000) of Group trade receivables are used as
security against invoice discounting advances (note 19).
17. Cash and cash equivalents
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Cash at bank and in hand 4,137 673 259 3
Cash and cash equivalents 4,137 673 259 3
18. Trade and other payables: amounts falling due within
one year
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Trade payables 69,520 45,679 - -
Other creditors 10,514 6,773 - -
Contingent consideration 9,614 - - -
Accruals 12,435 11,144 101 57
Amounts owed to Group undertakings - - 37 37
102,083 63,596 138 94
19. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's
loans and borrowings. For more information about the Group's exposure to
interest rate and foreign currency risk, see note 25.
Group Company
Non-current liabilities 2024 2023 2024 2023
£000
£000
£000
£000
Lease liabilities 43,323 26,267 - -
Revolving Credit Facility 40,000 20,000 - -
83,323 46,267 - -
Group Company
Current liabilities 2024 2023 2024 2023
£000
£000
£000
£000
Lease liabilities 10,244 6,402 - -
Invoice discounting advances 20,071 6,405 - -
Trade loan 7,750 - - -
38,065 12,807 - -
Group Company
Lease liabilities 2024 2023 2024 2023
£000
£000
£000
£000
Lease liabilities payable as follows:
Within one year 10,244 6,402 - -
In the second to fifth years 26,051 14,106 - -
Over five years 17,272 12,161 - -
53,567 32,669 - -
Company
Current liabilities
2024
£000
2023
£000
2024
£000
2023
£000
Lease liabilities
10,244
6,402
-
-
Invoice discounting advances
20,071
6,405
-
-
Trade loan
7,750
-
-
-
38,065
12,807
-
-
Group
Company
Lease liabilities
2024
£000
2023
£000
2024
£000
2023
£000
Lease liabilities payable as follows:
Within one year
10,244
6,402
-
-
In the second to fifth years
26,051
14,106
-
-
Over five years
17,272
12,161
-
-
53,567
32,669
-
-
Terms and debt repayment schedule
Currency Nominal interest rate Year of maturity 2024 2024 2023 2023
Face value
Carrying
Face value
Carrying
£000
value
£000
value
£000
£000
Lease liabilities Sterling 4.0% -11.0% 2024-2041 68,682 53,567 41,333 32,669
Invoice discounting advances Sterling 1.75% + Base 2028 20,071 20,071 6,405 6,405
Bank trade loans Sterling 2.65% + Base 2025 7,750 7,750 - -
Revolving Credit Facility Sterling 2.40% + SONIA 2028 40,000 40,000 20,000 20,000
136,503 121,388 67,738 59,074
Changes in liabilities from financing activities Loans and borrowings Lease liabilities Total
£000 £000 £000
Total debt at 31 October 2022 20,354 28,749 49,103
Changes from financing cash flows
Repayment of borrowings (13,949) - (13,949)
Payment of lease liabilities - (6,555) (6,555)
Interest paid (2,585) (1,656) (4,241)
Total changes from financing cash flows (16,534) (8,211) (24,745)
Other changes
New borrowing 20,000 10,025 30,025
Interest expense 2,585 1,656 4,241
Remeasurement of lease liabilities - (99) (99)
Added through business combination - 549 549
Total other changes 22,585 12,131 34,716
Total debt at 31 October 2023 26,405 32,669 59,074
Changes from financing cash flows
Repayment of borrowings - - -
Payment of lease liabilities - (8,327) (8,327)
Interest paid (4,024) (2,167) (6,191)
Total changes from financing cash flows (4,024) (10,494) (14,518)
Other changes
New borrowing 41,416 20,393 61,809
Interest expense 3,911 2,167 6,078
Interest included in accruals at year end 113 - 113
Remeasurement of lease liability - (282) (282)
Added through business combinations - 9,114 9,114
Total other changes 45,440 31,392 76,832
Total debt at 31 October 2024 67,821 53,567 121,388
All borrowings are denominated in Sterling.
Bank trade loans are secured by means of debenture and cross guarantees over
the assets of all Group undertakings. These are generally repayable within 35
days of drawdown and form an integral part of the Group's day to day short
term cash management.
Receipts and payments from trade loans are disclosed on a net basis in the
cash flow statement under IAS 7 22(b) on the basis they are short maturity.
The invoice discounting advances are secured against trade receivables (note
16). These are repayable within 90 days of the date of the invoice and carry
interest at a margin of 1.75%. This is a committed facility due to expire
September 2028 and the Group has an option to extend this by one year to
September 2029.
Under this arrangement trade customers remit cash directly to the Group
companies and the Group companies use the trade receivables as security to
draw down funds from finance providers. Cash receipts and cash payments with
the finance provider are disclosed on a net basis in the cashflow statement as
allowed under IAS 7 22(b) on the basis that they are short maturity.
An extended £40,000,000 Revolving Credit Facility ("RCF") was entered into in
September 2024 as part of the funding for the Creed Catering Supplies Limited
acquisition. The permitted use of the RCF is to fund acquisitions and it is
not part of the Group's working capital finance. The facility is in place
until September 2028 and the Group has an option to extend this by one year to
September 2029. The interest margin is based on leverage and at the year end
the interest margin was 2.40% over SONIA.
The Bank trade loans, invoice discounting and RCF advances rank pari passu and
without preference between them in priority of payment.
20. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Group
Assets Liabilities
2024 2023 2024 2023
£000 £000 £000 £000
Property, plant and equipment 125 208 (2,911) (1,224)
Intangible assets arising on acquisition - - (7,859) (1,477)
Tax value of loss carry forwards - - (342) -
Share based payment expense 804 514 - -
IFRS 16 timing differences 40 103 - -
Tax assets / (liabilities) 969 825 (11,112) (2,701)
Movement in deferred tax during the period:
Group
31 October Amounts arising from business combinations Recognised in 31 October 2024
2023
income
£000 £000 £000 £000
Property, plant and equipment (1,244) (910) (862) (2,786)
Intangible assets arising on acquisition (1,477) (7,171) 789 (7,859)
Capital gains - (124) (218) (342)
Share based payment expense 514 - 290 804
IFRS 16 timing differences 101 - (61) 40
Tax liabilities (1,876) (8,205) (62) (10,143)
Company
Assets Liabilities
2024 2023 2024 2023
£000
£000
£000
£000
Share based payment expense 804 514 - -
Tax assets 804 514 - -
Company
Movement in deferred tax during the period:
31 October Amounts arising from business combinations Recognised in 31 October
2023
income
2024
£000 £000 £000 £000
Share based payment 514 - 290 804
Tax assets 514 - 290 804
21. Employee benefits
Defined contribution plans
The Group operates a defined contribution pension scheme. The pension cost
charge for the year represents contributions payable by the Group to the
scheme and to other personal pensions schemes and amounted to £2,004,000
(FY23: £1,066,000).
22. Employee share schemes
The Group has in place a MIP and a LTIP scheme whereby the options are
expected to be equity-settled. The charge for the year in respect of the
schemes, excluding NIC costs in relation to the LTIP scheme for which there
has been two awards as follows:
2024 2023
£000 £000
MIP 863 863
LTIP 335 89
1,198 952
The MIP is accounted for as a share-based payment under IFRS 2 and is capable
of being settled by the delivery of Company shares to the participants upon
exercise of the MIP put option.
Group and Company Date of grant Employees entitled Number of shares granted Principal vesting conditions Contractual life
Management Incentive Plan July 2021 Selected senior Nil Service during vesting period EPS performance hurdle Market capitalisation 3 years,
employees hurdle
6 months
Long term Incentive Plan 2023 March 2023 Selected senior Nil Service during vesting period EPS performance hurdle 3 years,
employees
Total Shareholder return hurdle
Long term Incentive Plan 2024 March 2024 Selected senior Nil Service during vesting period EPS performance hurdle 3 years
employees
Total Shareholder Return hurdle
MIP 2024 2024 2023 2023
Weighted average exercise price
Number of options
Weighted average exercise price
Number of options
£
£
Outstanding at the beginning of the year - 10,000 - 10,000
Granted during the year - - - -
Outstanding at the end of the year - 10,000 - 10,000
Under the MIP, Growth shares were issued in Kitwave Limited with a
subscription price of £5.24 per option paid on subscription. The 10,000
growth shares in Kitwave Limited are exchangeable for shares in the Company
subject to achieving the principal vesting conditions. The maximum number of
Company shares that are currently exchangeable under the MIP based on the
Company's issued share capital as at the balance sheet date is 3,217,559.
LTIP 2023 2024 2024 2023 2023
Weighted average exercise price
Number of options
Weighted average exercise price
Number of
£
£
option
Outstanding at the beginning of the year - 225,000 - -
Granted during the year - - - 225,000
Outstanding at the end of the year - 225,000 - -
LTIP 2024 2024 2024 2023 2023
Weighted average exercise price
Number of options
Weighted average exercise price
Number of
£
£
option
Outstanding at the beginning of the year - - - -
Granted during the year - 338,000 - -
Outstanding at the end of the year - 338,000 - -
Under both the LTIP schemes, the participants are offered the opportunity to
acquire shares in Kitwave Group plc at nil cost subject to achieving the
principal vesting conditions.
The LTIP scheme granted in 2024 has a three-year performance period ending
March 2027. The scheme comprises two separate conditions for awarding shares:
one for achieving an earnings per share ("EPS") hurdle; and the other is for
achieving a total shareholder return ("TSR") hurdle. The share price at grant
date was 353 pence. The risk-free rate adopted was 4% being the ten-year UK
government bond yield at grant date. Volatility based on the Group's daily
share price volatility was 36%. Adopting a Monte Carlo option valuation model
the grant date fair value of the EPS hurdle award was 355 pence and the grant
date fair value of the TSR award was 112 pence.
The LTIP schemes have incurred an expense under employee expenses of £381,000
(FY23: £101,000). Of this expenditure, £335,000 has been taken to the
share-based payment reserve, the other £46,000 representing an accrual of
employer NIC on the value of the options has been recognised through the
statement of profit and loss.
The share-based payment reserve represents the accumulation of the cost of the
MIP and LTIP in accordance with the treatment of equity-settled share-based
payment expense under IFRS 2. As at 31 October 2024, the balance on this
reserve is £3,240,000 (2023: £2,042,000).
23. Called up share capital
Group and Company 2024 2023
£000
£000
Authorised, called up and fully paid
80,438,979 (2023: 70,000,000) ordinary shares of £0.01 each 804 700
804 700
Share premium
The share premium account increased by £31,563,000 representing the premium
paid on the new shares issued over their nominal value. Under IAS 32 the
transaction costs associated with the issuance of new equity of the Company
have been deducted from the share premium account, being a total of
£1,561,000.
24. Contingent liabilities
Group bank borrowings (including invoice discounting advances) are subject to
cross guarantee and debenture agreements over Group companies.
The Company is party to a cross guarantee and debenture agreement to secure
the £20,071,000 (2023: £6,405,000) bank borrowings of its subsidiary
companies.
25. Financial Instruments
25 (a) Fair values of financial instruments
The carrying value of all financial assets and financial liabilities by class,
are shown below. The carrying value is in line with each asset and liability's
fair value:
Group
2024 2023
£000
£000
Financial assets that are debt instruments held at amortised cost
Trade receivables 70,888 50,985
Cash and cash equivalents 4,137 673
75,025 51,658
Financial liabilities measured at fair value through the statement of profit
and loss
Contingent consideration 9,614 -
9,614 -
Financial liabilities measured at amortised cost
Trade payables 69,520 45,679
Accruals 12,435 11,144
Invoice discounting advances 20,071 6,405
Trade loan 7,750 -
Obligations under lease liabilities 53,567 32,669
RCF Facility 40,000 20,000
203,343 115,897
The Group holds a financial asset instrument, being trade receivables.
The trade receivables are held at amortised cost. The objective of the
business model for realising trade receivables is by collecting contractual
cash flows for genuine debts. The considerations of Solely Principal Payments
and Interest ("SPPI") have also been considered and the criteria met for
holding at amortised cost as the trade receivables are for fixed payments due
by fixed dates with no variable element of payment required.
The standard requires impairment of trade receivables held at amortised cost
is considered by reference to the expected credit loss method, discussed in
the credit risk section of the financial information.
Financial instruments measured at fair value through the statement of profit
and loss IFRS 9 analyses financial instruments into a fair value hierarchy
based on the valuation technique used to determine fair value.
• Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
• Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived from prices)
• Level 3: inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
All financial instruments other than contingent consideration for the year
ended 31 October 2024 were categorised as level 1. The following table shows
the valuation techniques used for contingent consideration, which is
categorised as level 3 as well as the significant unobservable inputs to fair
value the instrument through the statement of profit and loss:
Level 3 liability Valuation technique Significant unobservable inputs
Contingent consideration The fair value of the contingent consideration is based on two pre-determined Discount rate of 5.4%
earn out requirements relating to the future trade of Creed Foodservice
Limited Forecast operating profit
25 (b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group's receivables from
customers.
The Group has a well-established and diverse portfolio of customers including
a large number of customers paying direct debit and cash on delivery.
Management do not believe there is a significant concentration risk as
evidenced with no one customer accounting for more than 8% of Group revenue.
All customers who wish to trade on credit terms are subject to credit
verification procedures.
The Group establishes an allowance for impairment that represents its estimate
of incurred losses which is based on historical levels of impairment and
assessment of the quality of the receivable book to calculate a
forward-looking estimate. The following table shows the ageing of trade
receivables from invoice date and the allocation of the bad debt provision.
2024 Gross Impairment Net
£000
£000
£000
Current 57,176 - 57,176
31-60 days from invoice 12,122 - 12,122
61-90 days from invoice 1,822 (232) 1,590
90+ days 1,215 (1,215) -
72,335 (1,447) 70,888
The maximum Group exposure to credit risk in the period ended 31 October 2024
was £70,888,000 (2023: £50,985,000) being the total carrying amount of trade
receivables and other receivables net of provision.
The Directors assess the risk to trade receivables by reviewing the ageing of
debt. The expected credit loss on invoices less than 90 days old is not
material or significant.
The utilisation of provision for the year ended was 0.14% of Group revenue.
The average annual bad debt expense of the prior two financial years was
0.14%, therefore applying the historic bad debt expense factor would result in
a year end provision of c.£913,000 for the year ended 31 October 2024.
Whilst the Directors are confident no single trade receivable will have a
material impact on the Group's cash flow, they continue to take a prudent
approach in relation to provisioning as seen in FY24. There have been no
significant increases in the incidence of bad debt expense from prior years.
Trade receivables are reviewed regularly by dedicated credit control teams
within each division and information from credit rating agencies is often used
to assess a customer's ability to meet its obligations.
If there is significant doubt regarding a receivable a specific provision is
created. In addition, a provision is created to account for the estimated
losses that may be incurred in future periods. The Directors consider the
level of provisioning to be materially correct based on these factors.
Movement in bad debt provision
2024 2023
£000
£000
At beginning of the year 2,154 2,088
Provided during the year - 675
Added on acquisition 206 107
Utilised during the year (913) (716)
At the end of the year 1,447 2,154
25 (c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due.
The Group manages its liquidity risk by monitoring existing facilities and
cash flows against forecast requirements based on a rolling cash forecast.
The following are the contractual maturities of financial liabilities,
including estimated interest payments and excluding the effect of netting
agreements:
2024
Carrying amount Contractual 1 year or less 1-2 2-5 More than
£000
cashflow
£000
years
years
5 years
£000
£000
£000
£000
Financial liabilities
Trade payables 69,520 69,520 69,520 - - -
Accruals 12,435 12,435 12,435 - - -
Contingent consideration 9,614 10,000 10,000 - - -
Lease liabilities 53,567 68,682 13,195 11,667 21,091 22,729
Invoice discounting advances* 20,071 20,071 20,071 - - -
Bank trade loans* 7,750 7,750 7,750 - - -
RCF* 40,000 40,000 - - 40,000 -
212,957 228,458 132,971 11,667 61,091 22,729
2023 Carrying amount Contractual cashflow 1 year or less 1-2 2-5 More than
years
years
5 years
£000 £000 £000 £000 £000 £000
Financial liabilities
Trade payables 45,679 45,679 45,679 - - -
Accruals 11,144 11,144 11,144 - - -
Lease liabilities 32,669 41,333 7,775 6,140 11,548 15,870
Invoice discounting advances* 6,405 6,405 6,405 - - -
RCF* 20,000 20,000 - 20,000 - -
115,897 124,561 71,003 26,140 11,548 15,870
*The invoice discounting, Revolving Credit Facility ("RCF") and bank trade
loan facilities are all revolving facilities.
The invoice discounting facility is available to draw down up to a limit of
£55,000,000 and is available until September 2028, with an option for the
Group to extend it for a further year to September 2029. The trade loan
facility is for £8,000,000 and operates on a revolving basis, with balances
repayable within 35 days of drawdown. Once repaid the facility is immediately
available for draw down up to the facility limit. Both the invoice discounting
and trade loan facility form an integral part of the Group's day-to-day
short-term cash management.
The RCF is available up to £40,000,000 and is committed until September 2028,
with an option for the Group to extend it for a further year to September
2029. The permitted use of the RCF is to fund acquisitions and it is presently
fully drawn following the acquisition of Creed Catering Supplies Limited in
September 2024.
25 (d) Market risk
Market risk is the risk that changes in market prices, such as foreign
exchange rates, interest rates and equity prices will affect the Group's
income or the value of its holdings of financial instruments.
The Group has an immaterial exposure to currency risk on purchases denominated
in a currency other than the functional currency of the Group since the
balance owed to non-UK business is immaterial at each period end.
The Group is exposed to interest rate risk principally where its borrowings
are at variable interest rates.
At the balance sheet date the interest rate profile of the Group's
interest-bearing financial instruments was:
Group
2024 2023
Fixed rate instruments £000 £000
Financial liabilities (53,567) (32,669)
(53,567) (32,669)
Variable rate instruments 2024 2023
£000
£000
Financial liabilities (67,821) (26,405)
(67,821) (26,405)
Sensitivity analysis
An increase of 25 basis points in interest rates throughout the period would
have affected the statement of profit and loss by the amounts shown below.
This calculation assumes that the charge occurred at all points in the period
and had been applied to the average risk exposures throughout the period:
2024 2023
£000
£000
Profit or loss decreases (170) (66)
The above assumes the rate change is applicable on financial liabilities
accruing interest on base rate and SONIA and effects them in the same way.
25 (e) Capital management
The primary objective of the Group is to manage its capital to ensure it is
able to continue as a going concern, whilst maximising shareholder value.
The capital structure of the Group consists of debt, which includes leasing
related borrowings of £53,567,000 (2023: £32,669,000), a cash position of
£4,137,000 (2023: £673,000), an invoice discounting facility with a limit of
£55,000,000 drawn at £20,071,000 (2023: £6,405,000), a trade loan facility
with a limit of £8,000,000 draw at £7,750,000 (2023: £nil), a revolving
credit facility drawn at £40,000,000 (2023: £20,000,000) and equity
attributable to the equity holders of the Group of £124,545,000 (2023:
£84,445,000).
The capital structure is reviewed regularly by the Directors. The Group's
policy is to maintain gearing at levels appropriate to the business and its
funders. The Directors take consideration of gearing by reference to the
leverage calculation including IFRS 16 lease liability and without. The Group
produces annual forecasts to enable the Board to assess the level of working
capital needed in
the business, taking careful account of working capital cycles, which are
predictable, and the Board have significant experience of managing them.
The Group has headroom on its working capital facilities of £35,179,000 at
the year end (2023: £39,600,000).
26. Related party transactions
Kitwave One Limited, Kitwave Investments Limited, Kitwave Limited, Turner
& Wrights Limited, FW Bishop & Son Limited, M & M Value Limited,
Westone Wholesale Limited, Teatime Tasties Limited, TG Foods Limited, Eden
Farm Limited, Squirrels UK Limited, Thurston's Food's Limited, David Miller
Frozen Foods Limited, Automatic Retailing (Northern) Limited, H B Clark
(Successors) Limited, H B Clark Holdings Limited, F.A.M Soft Drinks Limited,
M.J. Baker Foodservice Limited, Westcountry Food Holdings Limited, Westcountry
Fruit Sales Limited, WLG Holdings Limited, WLG Limited, Total Foodservice
Solutions Limited, Nextbuy Limited, Fred Lawson (Clitheroe) Limited, Opaledge
Limited, Howarth Foodservice Limited, Creed Catering Supplies Limited and
Creed Foodservice Limited are all 100% owned subsidiaries of this Company.
Central Supplies (Brierley Hill) Ltd is a 97% owned subsidiary of this
Company.
Key management personnel
Total compensation of key management personnel in the period amounts to
£1,156,000 (FY23: £1,179,000) in respect of short-term employment benefits,
£nil (FY23: £nil) in respect of past-employment benefits and £nil (FY23:
£nil) in respect of termination benefits.
27. Ultimate controlling party
The Company is listed on the Alternative Investment Market of the London Stock
Exchange. Material shareholders are detailed within the Directors' report.
There is no ultimate controlling party of the Group.
28. Post balance sheet events
Post year end a £5,000,000 cash payment has been made to the former
shareholders of Creed Catering Supplies Limited following achievement of
pre-determined criteria under the terms of the acquisition that requires
contingent consideration to be discharged.
Alternative performance measure glossary
This report provides alternative performance measures ("APMs"), which are note
defined or specified under the requirements of International Financial
Reporting Standards. The Board believes that these APMs provide readers with
important additional information on the Group.
Alternative performance measure Definition and purpose
Adjusted operating profit Represents the operating profit prior to exceptional (income) / expenses and
share based payment expenses. This measure is consistent with how the Group
measures performance and is reported to the Board.
Note FY24 FY23
£000
£000
Total operating profit 28,804 29,363
Amortisation of intangible assets arising on acquisition 3 1,397 842
Acquisition expenses 5 2,153 648
Compensation for post combination services 5 324 199
Share based payment expense 5 1,244 964
Restructuring expenses 5 109 -
Adjusted operating profit 34,031 32,016
Adjusted EBITDA Represents the operating profit prior to exceptional expenses, share based
payment expenses, fixed asset depreciation and intangible amortisation. This
measure is consistent with how the Group measures trading and cash generative
performance and is reported to the Board.
Note FY24 FY23
£000
£000
Total operating profit 28,804 29,363
Amortisation of intangible assets 11 1,527 975
Depreciation 12,13 11,068 8,992
Acquisition expenses 5 2,153 648
Compensation for post combination services 5 324 199
Share based payment expense 5 1,244 964
Restructuring expenses 5 109 -
Adjusted EBITDA 45,229 41,141
Pre tax operational cash conversion Represents the cash generated from operating activities pre tax as a
proportion of cash flow from operating activities pre movements in working
capital and tax. This measure informs the Board of the Group's cash conversion
from operating activities, is used to monitor liquidity and is reported to the
Board.
FY24 FY23
£000
£000
Net cash inflow from operating activities 31,403 30,298
Tax paid 6,612 6,075
Cash flow from operating activities pre tax and compensation for post 38,015 36,373
combination services (1)
Movement in working capital 4,349 3,937
Cash flow from operating activities pre tax and compensation for post 42,364 40,310
combination services and movement in working capital (2)
Pre tax operational cash conversion (1) divided by (2) 90% 90%
Alternative performance measure Definition and purpose
After tax return on invested capital Represents adjusted profit after tax as a proportion of invested capital. This
measure informs the Board of how effective the Group is in generating returns
from the capital invested.
FY24 FY23
£000
£000
Adjusted operating profit 34,031 32,016
Lease interest (2,167) (1,656)
31,864 30,360
Tax charge at effective rate of tax of 25% (FY23: 23%) (7,966) (6,831)
Adjusted operating profit after tax (1) 23,898 23,529
Invested capital comprising:
Invoice discounting advances 20,071 6,405
Lease liabilities 53,567 32,669
Revolving Credit Facility 40,000 20,000
Trade loan 7,750 -
Share capital 804 700
Share premium 94,185 64,183
Cash at bank and in hand (4,137) (673)
Total invested capital (2) 212,240 123,284
After tax return on invested capital (1) divided by (2) 11% 19%
Return on net assets Represents adjusted profit after tax as a proportion of the Group's investment
in fixed assets and working capital. This measure informs the Board of how
effective the Group is in generating returns from its fixed assets and net
working capital.
FY24 FY23
£000
£000
Adjusted operating profit 34,031 32,016
Tax charge at effective rate of tax of 25% (FY23: 23%) (8,508) (7,204)
Adjusted operating profit after tax (1) 25,523 24,812
Invested capital comprising:
Intangible assets* 618 728
Fixed assets 29,096 16,614
Right-of-use assets 50,869 29,716
Investments 42 45
Inventories 47,749 35,410
Trade and other receivables 91,122 63,569
Trade and other payables (102,083) (63,596)
Liability for post combination services** 906 1,006
Total invested capital (2) 118,319 83,492
After tax return on invested capital (1) divided by (2) 22% 30%
Alternative performance measure Definition and purpose
Leverage Management assess leverage by reference to adjusted EBITDA against net debt
including and excluding IFRS 16 lease liabilities and including the liability
for post combination services held within other creditors. This indicates how
much income is available to service debt before interest, tax, depreciation
and amortisation.
FY24 FY23
£000 £000
Adjusted EBITDA (1) 45,229 41,141
Invoice discounting advances 20,071 6,405
Lease liabilities 53,567 32,669
Revolving Credit Facility 40,000 20,000
Trade Loan 7,750 -
Liability for post combination services 906 1,006
Contingent consideration 9,614 -
Cash at bank and in hand (4,137) (673)
Net debt 127,771 59,407
Leverage (including IFRS 16 debt) 2.8 1.4
IFRS 16 lease liabilities 43,151 26,197
Net debt excluding IFRS 16 lease liabilities 84,620 33,210
Leverage (excluding IFRS 16 lease debt) 1.9 0.8
Basic underlying earnings per share Profit attributable to the equity holders of the Group prior to exceptional
items and share based payments through the consolidated statement of profit
and loss, divided by the weighted average number of ordinary shares during the
financial year.
FY24 FY23
£000 £000
Profit attributable to all shareholders 16,718 18,956
Amortisation of intangible assets arising on acquisition 1,397 842
Acquisition expenses 2,153 648
Compensation for post combination services 324 199
Share based payment expense 1,244 964
Restructuring expenses 109 -
Tax effect of exceptional items and share based payments (668) (405)
Underlying profit attributable to ordinary shareholders 21,277 21,204
Number Number
Weighted average number of ordinary shares (basic) during the year 71,034,498 70,000,000
pence pence
Basic underlying earnings per ordinary share 30.0 30.3
Reconciliation between existing and acquired operating profit for the year Consolidated statement of profit and loss and other comprehensive income
Note Existing operations Acquisitions Year ended 31 October Year ended 31 October
2024
2024
2024
2023
£000
£000
£000
£000
Revenue 3 632,550 31,102 663,652 602,220
Cost of sales (493,717) (22,115) (515,832) (470,095)
Gross profit 138,833 8,987 147,820 132,125
Other operating income / (expense) 4 577 26 603 183
Distribution expenses (59,979) (3,494) (63,473) (54,570)
Administrative expenses (52,847) (3,299) (56,146) (48,375)
Operating profit 26,584 2,220 28,804 29,363
Analysed as:
Adjusted EBITDA 42,370 2,859 45,229 41,141
Amortisation of intangible assets 11 (1,527) - (1,527) (975)
Depreciation 12,13 (10,429) (639) (11,068) (8,992)
Acquisition expenses 5 (2,153) - (2,153) (648)
Compensation for post combination services 5 (324) - (324) (199)
Share based payment expense 5 (1,244) - (1,244) (964)
Restructuring expenses 5 (109) - (109) -
Total operating profit 26, 584 2,220 28,804 29, 363
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