REG - Real Good Food PLC - Final Results for the Year Ended 31 March 2023
21/09/2023 07:00
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RNS Number : 1288N Real Good Food PLC 21 September 2023
21 September 2023
Real Good Food plc
("RGF" or "the Group")
Final Results for the Year Ended 31 March 2023
Real Good Food plc, (AIM: RGD), the food manufacturing business specialising
in cake decoration, today announces its final results for the year ended 31
March 2023.
Overview
Financial highlights
• Revenue decreased by 19.8% to £32.4 million (2022: £40.4
million) due to macroeconomic headwinds.
• EBITDA loss of £4.8 million (2022: £0.2 million profit)
reflected reduced gross margins and operating leverage.
• Loss before tax was £9.0 million (2022: £19.0 million loss,
including £16.1 million goodwill impairment).
• Additional £2.5 million revolving credit facility secured from
Hilco Private Capital in November 2022 and £0.55 million in short-term
shareholder loans (from Downing and Omnicane) on 6 April 2023 to support the
Group's radical reform programme.
• Total net debt increased to £31.2m (2022: £25.5m).
Operational highlights
• Volumes were about 26% lower year-on-year, the most severe
reductions being US sales (32% lower) and sales into Europe (22% lower). The
reductions were market driven rather than customer losses.
• Key input costs continued to rise during the year with costs on
average being 30% higher. The impact on the business was partly mitigated with
prices to customers being increased, averaging 21% with increases ranging
between 5% and 34% (overall in-year impact being 10.6%). Limited availability
of key ingredients across the sector also affected performance.
• The impact of reduced volumes and the lag effect of passing cost
increases through to customers reduced gross margins from 39.9% to 33.3%;
margins in the current year are better and continue to improve (currently
35.9%).
• A radical reform programme, which was launched in September 2022
to return the business to profitability, is almost complete and tracking in
line with expectations. To date, circa £8.0 million of price resets,
efficiency gains and cost savings have been secured for FY24.
• Evidence based rebranding of Renshaw fondant to "just roll with
it" was launched in September 2022, making products more accessible to all
customers whilst launching new products and diversifying into complementary
products.
Current trading
• Market conditions remain challenging albeit the self-help
improvements made since September 2022 have been transformational.
• New management in place to continue to drive the radical reform
programme.
• After five months of trading in FY24, demand is higher than last
year and despite sales being broadly the same due to cash constraints, EBITDA
is better.
• The Group has recently agreed terms for a 12-month extension of the
Hilco loan facility through to 18 November 2024. The facility is being renewed
at £2.3m. A further announcement will be made in due course.
• The Board expects to issue the Group's half year results to 30
September and an update on current trading in December 2023
Mike Holt, Executive Chair commented:
"Market conditions remain challenging; we are however starting to see volumes
in some segments beginning to slowly rebuild and we are gradually trading our
way into a better place as the busier autumn season kicks in. The radical
reform programme we have implemented over the last year has been
transformational and, with new management now in place, the Group is well
positioned to make further gains, particularly in manufacturing efficiencies,
sales, and customer focus. We have recently agreed a loan extension with Hilco
which provides a more secure platform to continue our journey to sustainable
and satisfactory profitability."
Enquiries:
Real Good Food plc Tel: 0151 541 3790
Mike Holt, Executive Chair
Cavendish Capital Markets Ltd (Nomad and Broker) Tel: 020 7220 0500
Carl Holmes / Abigail Kelly (Corporate Finance)
MHP (Financial PR) Tel: 020 3128 8793
Reg Hoare / Katie Hunt rgf@mhpgroup.com
Chair's Statement and Business Review
Overview
Trading conditions for the year ended 31 March 2023 were challenging
throughout the year due to the perfect storm of rising costs and lower
revenues following a brief recovery post-Covid. The war in Ukraine, continuing
cross border trading issues with Europe (post Brexit) and significant cost
inflation impacted the availability of key ingredients and services, increased
costs and, with fears of recession and prolonged austerity for consumers,
reduced demand for our products. This resulted in the Group incurring an
adjusted EBITDA loss of £4.8 million on revenue of £32.4 million, £8.0
million (19.8%) lower than the previous year.
As announced in October 2022, the Board has put into effect a well-defined
plan to radically reform the Group. As part of the radical reform, key
functions were systematically re-engineered to improve business processes and
create smarter ways of working throughout the business. The recovery plan
included significant price resets with customers across all sectors to address
market distortions, overhead cost savings and further manufacturing efficiency
gains. In total, the price reset delivered a benefit of £0.7 million in FY23
and should deliver circa £3.9 million in FY24. Cost savings of £0.1 million
were realised in FY23 and circa £2.1 million has been secured for FY24
(making the total circa £2.6 million when added to savings actioned earlier
in FY23) against a plan of £3.0 million; about £0.4 million remains
unrealisable whilst the Group continues to be AIM listed. About a third of the
manufacturing efficiencies have been actioned to date. The cost of the
recovery plan was £1.1 million, including £0.8 million of redundancy
payments. As part of the plan, employee numbers decreased by 45% from 318 to
201 and have since reduced to 186 (106 in production related activities and 80
in business support functions).
During FY23, input costs increased by circa 20%. In response, the Group
increased selling prices and for most customers also reset prices for certain
products to deliver satisfactory margins. On average, prices were increased by
21% of which the in-year effect was 10.6% due to timing, many contracts having
set annual pricing dates. Current selling prices are circa 27% higher than
they were at the start of FY23. Volumes for the year were about 26% lower than
the year ended 31 March 2022, albeit performance during H2 was marginally
better. Whilst increased selling prices may have contributed, we believe that
the volume reduction is more generally a recessionary response to household
incomes being lower in real terms. The Group continues to work collaboratively
with customers to win new business, notable examples being a new range (Bake
& Create) for B&M, new products for Hobbycraft, Lakeland, Asda and
Lidl, and new business following the demise of a competitor (Food
Innovations).
Renshaw Rebranding
Following research conducted in 2021, Renshaw's own brand products were
rebranded in September 2022 with a new improved recipe providing the
functionality that regular users love, whilst making it easier to knead, roll
and correct slight imperfections which anyone can make, to ensure a positive
experience for every user, including first-time users. The "just roll with it"
rebrand has been well received and product range rationalisation has made
choosing the right product easier for all users. We are hopeful that this will
add sales in more normal market conditions.
Product Launches
In total the business has launched 69 new products into the market, across
Retail, Renshaw brand, International and B2B channels. In 2021 we were
first to market with a ready to use on trend drip icings range which has
continued to be a focus with retail and international customers this year.
We have expanded all year-round lines of frostings with exciting trending
flavours and colours to tap into key occasions to drive consumer interest.
This year we have gained shelf presence within the dessert sector with
innovative dessert sauces driving new consumers to purchase our products. We
will continue to review and tap into new and innovative trends to keep
customers engaged and excited about what's up and coming within the home
baking category and to gain listings within new channels.
Wavertree Property
At the beginning of the financial year in May 2022, the Group sold its former
Wavertree property. The sale made a small loss but generated net cash proceeds
of £0.9 million, £0.3 million of which was spent on creating an Innovation
Centre on the Crown Street site next to the main factory. The Wavertree
property was purchased in 2015 and housed the Renshaw Academy (until August
2019), the New Product Development team and Renshaw's marketing team.
Cash management
The Group secured an additional £2.5 million in funding on 21 November 2022
from Hilco Private Capital to support its turnround plan and supplement the
existing £6.3 million facility with Leumi ABL. The new facility was on a
twelve-month term, but we are pleased to report that within the last few days
£2.3 million of this has been extended by another year to November 2024. The
Group also received a £0.55 million short-term loan from Downing LLP and
Omnicane Investors Ltd on 5 April 2023. During H1 of the new financial year
(FY24), cash has been tight adding to some of our supply chain issues, but we
are pleased to report that near-term projections forecast an improving trend
with a reduction in borrowings by the end of the calendar year (Q3/FY24).
Dividend
No dividend is being proposed for the year. The Group is highly leveraged and
the Board's focus is on reducing the total level of debt.
Board & Management Changes
In September 2022, Maribeth Keeling who had been appointed as Group Finance
Director in July 2019 left the business to pursue other interests. Maribeth
was replaced by John Tennant on an interim basis. Gail Lumsden, having served
three years as an independent non-executive director, stepped down from the
Board to dedicate more time to other non-executive commitments in December
2022. Gail was replaced by Andy Richardson in January 2023. Andy has a wealth
of experience across a range of organisations and a strong track record of
business transformation and is making valued contributions to the Board. As I
did with Gail, Andy and I meet independently of the Board to discuss matters
concerning Loan Note Holders and major Shareholders. In August 2022, Anthony
Ridgwell stepped down as a non-executive director having served a term of
three years.
During October 2023, Joe Beardwood will be joining the Group and will replace
John Tennant at the end of December as Group Finance Director. Like John,
Joe has significant Finance Director experience in turnround and private
equity situations.
Since year-end, John Tague joined the Group to replace Steve Moon who stepped
down as Managing Director of JF Renshaw and Rainbow Dust Colours in July 2023.
John has relevant, and highly successful, experience in similar roles at Halo
Foods and Seabrook Crisps.
Strategy
The Group's strategy is to maximise value for shareholders by leveraging
productive capacity. The Group has a valued heritage, and the strategy is to
leverage this with new products and class leading service.
As Renshaw celebrates its 125th Anniversary, the aim is to consolidate its
market leading position in the UK, build sales in the USA, accelerate growth
in caramels and sauces, and diversify into products that use the same
equipment or process know-how. Growth in these areas should counterbalance the
gradual decline in fondant icing and marzipan.
Further improvements in profitability, building on the recent and successful
radical reform programme noted earlier, will be targeted by additional
manufacturing efficiencies. Our Crown Street factory is old but is in
reasonable condition and space is becoming available to improve its
configuration and workflow.
The Group remains open to divesting parts of its business for the right value
at the right time.
Outlook
The successful implementation of our transformation plan has positioned the
Group to deliver between £3 million and £4 million in EBITDA annually beyond
FY24.
Market conditions remain challenging. We are however starting to see volumes
in some segments slowly rebuild. Over the last few months, our trading
performance has been affected by our tight cash position, but we are gradually
trading our way into a better place as the seasonally busier autumn season
kicks in. After five months of trading, demand is higher than last year and
despite sales being broadly the same due to cash constraints, EBITDA is
better. The radical reforms we have made over the last eight to nine months
have been transformational and, with new management now in place, the Group is
well positioned to make further gains, particularly in manufacturing
efficiencies, sales, and customer focus.
Finally, I would like to thank our employees who have worked hard to overcome
various challenges, to ensure that products and customer service continued
(and continue) to be delivered and embraced the necessary changes for a
sustainable future.
Mike Holt
Executive Chair
Finance Review
Revenue
Group revenue for the 12 months ending 31 March 2023 was £32.4 million (2022:
£40.4 million), a decrease of 19.8% on revenue to 31 March 2022. Trading
conditions were challenging throughout the year with significant increases in
costs, restricted availability of key ingredients, and lower demand due to
macroeconomic headwinds and fears of recession and an extended period of
austerity.
Profit measure on operations
Gross profit for the Group was £10.8 million (2022: £16.1 million),
resulting in a gross profit margin of only 33% compared to 40% in the prior
year. This reflects the lag effect of increased prices and costs and the
operational leverage from lower volumes.
The operating loss in the year of £7.1 million is reported after depreciation
charges of £1.1m and significant items of £1.3m. The significant costs
incurred relate to redundancy payments totalling £0.8 million, consultancy
costs of £0.3 million associated with the programme of radical reform and the
loss on the sale of Wavertree amounting to £0.2 million.
The adjusted EBITDA of the underlying continuing business was a loss of
£4.8m.
The items adjusted for are:
Significant Items: £1.3m
Depreciation and amortisation: £1.1m
After finance costs of £1.9 million, this resulted in a loss before tax for
the year of £9.9 million (loss 2021: £18.9m).
Cash flow and net debt
The Group secured an additional £2.5 million in funding on 21 November 2022
from Hilco Private Capital to support its turnround plan and supplement the
existing £6.3 million facility with Leumi ABL. The new facility was on a
twelve-month term, but we are pleased to report that within the last few days
£2.3 million of this has been extended by another year to November 2024. The
Group also received a £0.55 million short-term loan from Downing LLP and
Omnicane Investors Ltd announced on 5 April 2023. During H1 of the new
financial year (FY24), cash has been tight adding to some of our supply chain
issues, but we are pleased to report that near-term projections forecast an
improving trend with a reduction in borrowings by the end of the calendar year
(Q3/FY24).
Net debt is a key performance indicator for the Group and increased to
£31.243m (2022: £25.480m) over the course of the year which reflected
increased borrowings and reduced cash. Net debt is explained in note 9.
12 months to March 2023 2022
£'000s £'000s
Revenue 32,441 40,431
Gross profit 10,810 16,130
Delivered margin 7,359 12,170
Delivered margin % 22.68% 30.0%
Underlying EBITDA (adjusted)* (4,757) 227
Operating (loss) before impairment and significant items (5,814) (679)
Operating loss after impairment and significant items (7,100) (17,089)
Operating loss % (21.89%) (42.4%)
Loss before tax (9,003) (18,978)
All figures refer to continuing businesses.
*See note 3 for reconciliation
Going Concern
The financial statements are prepared on a going concern basis, which the
Directors believe to be appropriate for the reasons set out below.
As described in the Business Review, the current economic environment remains
difficult, and losses have led to cash constraints which is impacting current
trading. The Directors have prepared financial forecasts for the Group,
comprising income statements, balance sheets and cash flows through to March
2025. In assessing the appropriateness of the Group's accounts being prepared
on a going concern basis, the Directors have considered short-term
constraints, and how to manage through these, and factors likely to affect its
planned future performance.
As noted in the Strategic Report and Business Review, the radical reform of
the business has been successful, and the Group expects to be EBITDA positive
at similar volume levels to last year. Volumes are expected to be better in
FY24, albeit the Group is currently unable to fulfil sales orders in full due
to shortages of key ingredients and services because of cash constraints. The
Group is slowly working through this and is looking to sell some assets to
help boost cash resources. Critical to success is the ability to pass through
ongoing cost increases to customers. Price increases have already been agreed
with a number of UK Retailers, most international customers and several
wholesale and B2B customers with more expected in the next couple of months.
The forecasts anticipate cash balances of circa £2 million by 31 December
2024, £3.5 million by 31 December 2025 with average cash balances of about
£1 million. Based on current projections, the lowest point next year will be
in September 2024, but a collaboration is being sought with the Group's
largest customer to more evenly phase deliveries during calendar year 2024,
which will alleviate this dip.
In recent months, several key management roles have been refreshed and these
are already making a very positive contribution to performance, upskilling,
and organisational culture.
The cash flow forecasts reflect the extension of £2.3 million of the £2.5
million loan facility with Hilco Private Capital to 18 November 2024 and
continuation of the £6.6 million facility with Leumi ABL
On 6 April 2023, the Group secured a £550,000 short-term loan from Downing
LLP and Omnicane Investors Ltd, two of it principal shareholders and loan note
holders. Interest rate of 12% annualised is payable on repayment together with
a redemption premium. If the loan is repaid before 6 October 2024 a 100%
redemption premium is payable if repayment is after 5 October 2024 the
redemption premium is 200%.
In July 2023, John Tague was appointed as MD of JF Renshaw and Rainbow Dust
Colours replacing Steve Moon. John has significant expertise and a track
record of managing successful business transformations.
A 12-month extension has been agreed with Hilco Private Capital to roll-over
£2.3 million of the £2.5 million facility dated 18 November 2022.
Pension Scheme
The Group offers a defined contribution scheme for all current employees that
is funded monthly. In addition, the Company operates a defined benefit scheme
that was closed to new members in 2000. The defined benefit scheme is the
Napier Brown Retirement Pension Plan (the Plan). The IAS 19 pension scheme
valuation reported a net deficit at 31 March 2023 of £0.7 million (2022:
surplus £1.5 million). The Plan assets decreased by £6.0 million to £15.4
million (2022: £21.4 million) and the Plan liabilities are £16.1 million
compared to £19.9 million at 31 March 2022.
Dividend
The Directors do not recommend the payment of a final dividend for the year
ended 31 March 2023 (2022: nil).
Consolidated Statement of Comprehensive Income
Year ended 31 March 2023
12 months ended 12 months ended
31 March 2023 31 March 2022
£'000s £'000s
Revenue 32,441 40,431
Cost of sales (21,631) (24,301)
Gross profit 10,810 16,130
Other operating income 7 56
Distribution expenses (3,458) (3,960)
Administrative expenses (13,173) (12,902)
Operating loss before impairment and significant items (5,814) (676)
Impairment charge on goodwill - (16,103)
Significant items (1,286) (310)
Operating loss after impairment and significant costs (7,100) (17,089)
Finance costs (1,945) (1,891)
Net finance income 42 2
Loss before tax (9,003) (18,978)
Income tax credit - (2,384)
Loss from continuing operations (9,003) (21,362)
Profit from discontinued operations (assets held for sale) - 19,986
Net loss (9,003) (1,376)
Attributable to:
Owners of the parent (9,003) (1,376)
Net loss (9,003) (1,376)
Items that will or may be reclassified to profit or loss
Foreign exchange differences on translation of subsidiaries 80 (25)
Items that will not be reclassified to profit or loss
Actuarial losses on defined benefit plan (2,222) 501
Deferred tax relating to other comprehensive losses 477 527
Other comprehensive loss (1,665) 1,003
Total comprehensive loss for the year (10,668) (373)
Attributable to:
Owners of the parent (10,668) (373)
Non-controlling interests - -
Total comprehensive loss for the year (10,668) (373)
12 months ended 12 months ended
31 March 2023 31 March 2022
£'000s £'000s
Basic and diluted loss per share - continuing operations (9.92)p (21.46)p
Basic earnings per share - discontinued operations - 20.07p
Diluted earnings per share - discontinued operations - 6.23p
Consolidated Statement of Changes in Equity
Issued Share Capital Share Premium Account Other Reserves Share Option Reserve Foreign Exchange Translation Reserve Restated Restated Restated
£'000s £'000s £'000s £'000s £'000s Retained Earnings Total Non-Controlling Interest Total
£'000s £'000s £'000s Equity
£'000s
Restated balance as at 31 March 2022 1,991 3,294 540 - (85) (2,302) 3,438 - 3,438
Total comprehensive (loss)/gain
for the year
Loss for the year (9,003) (9,003) - (9,003)
Other comprehensive (loss)/gain for the year 80 (1,745) (1,665) - (1,665)
Total comprehensive (loss)/gain 80 (10,748) (10,668) - (10,668)
for the year
Transactions with owners of the Group, recognised directly in equity
Balance as at 31 March 2023 1,991 3,294 540 - (5) (13,049) (7,229) - (7,229)
Consolidated Statement of Financial Position
Year ended 31 March 2023
31 March Restated
2023 31 March
£'000s 2022
£'000s
NON-CURRENT ASSETS
Goodwill 16,619 16,619
Other intangible assets - -
Tangible fixed assets 6,256 6,970
22,875 23,589
CURRENT ASSETS
Inventories 3,695 4,024
Trade and other receivables 4,711 6,572
Retirement benefit asset 1,497
Cash collateral 50 50
Cash and cash equivalents 93 2,734
8,549 14,877
Assets classed as held for sale 148 1,078
TOTAL ASSETS 31,572 39,544
CURRENT LIABILITIES
Trade and other payables 6,609 6,950
Borrowings 5,310 4,009
Lease liabilities 46 48
Current tax liability 4 4
11,969 11,011
Liabilities classed as held for sale - -
NON-CURRENT LIABILITIES
Borrowings 25,869 24,293
Lease liabilities 110 155
Deferred tax liabilities 170 647
Retirement benefit obligation 683 -
26,832 25,095
TOTAL LIABILITIES 38,801 36,106
NET ASSETS (7,229) 3,438
EQUITY
Share capital 1,991 1,991
Share premium account 3,294 3,294
Other reserves 540 540
Share option reserve - -
Foreign exchange translation reserve (5) (85)
Retained earnings (13,049) (2,302)
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (7,229) 3,438
TOTAL EQUITY (7,229) 3,438
Consolidated Cash Flow Statement
Year ended 31 March 2023
31 March 31 March
2023 2022
£'000s £'000s
CASH FLOW FROM OPERATING ACTIVITIES
Adjusted for:
(Loss) before taxation (9,003) 1,008
Finance and other finance costs 1,903 1,889
Share options reserve credit - (3)
Foreign Exchange movement 2 (3)
Goodwill impairment charge - 16,103
Impairment charge on fixed assets - 70
Share based payment expense - (19,986)
Loss on disposal of property, plant and equipment 159 -
Depreciation of property, plant, and equipment 1,057 1,326
Amortisation of intangibles - 9
Operating Cash Flow (5,881) 413
Decrease in inventories 328 (915)
Decrease/(increase) in receivables 1,862 2,606
Pension contributions - (8,500)
Decrease in cash collateral - 165
Increase/(Decrease) in payables (685) (2,518)
Cash from operations (4,731) (8,749)
Interest paid (345) (139)
Interest on leases (10) -
Net cash inflow from operating activities (4,731) (8,888)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (397) (844)
Proceeds from sale of investment 931 33,153
Disposal of discontinued business, net of cash disposed of - (1,138)
Net cash outflow from investing activities 534 31,171
CASH FLOW USED IN FINANCING ACTIVITIES
Repayment of lease liabilities (102) (113)
Repayment / (Inflow) of term loans (466) (865)
Interest paid on investor loans (5,310)
Repayment of investor loans - (17,790)
Drawdown on new credit facility 2,582 -
Drawdowns on revolving credit facilities 14,203 36,045
Repayments on revolving credit facilities (15,034) (34,571)
Net cash outflow from financing activities 1,475 (22,604)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (2,721) (321)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of period 2,734 3,080
Effects of currency translations on cash and cash equivalents 80 (25)
Net movement in cash and cash equivalents (2,721) (321)
Cash and cash equivalents at end of period 93 2,734
Notes to the Financial Information
Year ended 31 March 2023
1. Presentation of financial statements
General information
Real Good Food plc is a public limited company incorporated in England and
Wales under the Companies Act (registered number 04666282). The Company is
domiciled in England and Wales and its registered address is 229 Crown Street,
Liverpool L8 7RF. The Company's shares are traded on the Alternative
Investment Market (AIM). The principal activity of the company is the
manufacture of icings, frostings, marzipan, sauces and caramels serving the
global cake decoration market.
As permitted by section 408 of the Companies Act 2006, the profit and loss
account of the company is not presented as part of these financial statements.
The Company's total comprehensive loss for the financial year was £4.1m (2022
£45.5m).
Basis of preparation
This financial information is presented on the basis of international
accounting standards and have been prepared in accordance with AIM rules and
the Companies Act 2006, as applicable to companies reporting under IFRS. The
accounts are prepared on a going concern basis.
Any references to discontinued operations throughout this report refers to
Brighter Foods Limited.
IFRS standards and interpretations adopted
New standards and amendments which are effective from 1 January 2022, and have
been adopted within the Group's accounting policies are:
• Amendments to IFRS 3 Business combinations - the Conceptual
Framework;
• Amendments to IAS Amendments to IAS 16 - Property, Plant and
Equipment, The amendments prohibit deducting the amounts received from selling
items produced from the cost of PPE while the asset is being prepared for its
intended use;
• Amendment to IAS 37 - Provisions, Contingent Liabilities and
Contingent Assets, The amendments specify that the costs of fulfilment are
those that relate directly to the contract, consisting of both: the
incremental costs of fulfilling that contract - for example, direct labour and
materials; and an allocation of other costs that relate directly to fulfilling
contracts - for example, an allocation of the depreciation charge for an item
of property, plant and equipment used in fulfilling that contract among
others.
The adoption of the amendments to IFRS 3, IAS 1, IAS16 and IAS37 have not had
an impact on the financial statements of the Group.
The Group does not expect any standards issued by the IASB, but not yet
effective, to have a material impact on the Group.
2. Revenue
The revenue for the Group for the current year arose from the sale of goods in
the following areas:
Cake Decoration £32.4 million Manufactures, sells, and supplies cake decorating products and ingredients
(2022 £40.4m)
for the baking sector.
3. Segment reporting
Business segments
The divisional structure reflects the management teams in place and ensures
all aspects of trading activity have the specific focus they need in order to
achieve our growth plans.
The Group operates in one main division: Cake Decoration. The Head Office has
a finance function that supports the subsidiary as required.
12 months ended 31 March 2023 Cake Decoration Head Office and non-trading subsidiaries Total Group
£'000s £'000s £'000s
Total revenue 33,804 - 33,804
Intercompany sales (1,363) - (1,363)
External revenue 32,441 - 32,441
Cost of sales (20,631) - (21,631)
Gross profit 10,810 - 10,810
Other operating income 4 3 7
Distribution expenses (3,458) - (3,458)
Administrative expenses (12,523) (650) (13,173)
Operating (loss) / profit before impairment and significant items (5,167) (647) (5,814)
Significant Items (738) (548) (1,286)
Operating (loss)/profit after impairment and significant items (5,905) (1,195) (7,100)
Finance costs (355) (1,548) (1,903)
Other finance costs - - -
(Loss)/profit before tax (6,260) (2,743) (9,003)
Income tax credit/(expense) - - -
(Loss)/profit after tax as per comprehensive statement of income (6,260) (2,743) (9,003)
12 months ended 31 March 2022 Continuing Operations Discontinued Operations Total
£'000s £'000s Group
£'000s
Total revenue 42,545 1,275 43,820
Intercompany sales (2,114) - (2,114)
External revenue 40,431 1,275 41,706
Cost of sales (24,301) (1,063) (25,364)
Gross profit 16,130 212 16,342
Income from Furlough Scheme - 137 137
Other operating income 56 - 56
Distribution expenses (3,960) (47) (4,007)
Administrative expenses (12,902) (403) (13,305)
Operating (loss) / profit before impairment and significant items (676) (101) (777)
Impairment charge (16,103) - (16,103)
Significant Items (310) (229) (539)
Operating (loss)/profit after impairment and significant items (17,089) (330) (17,419)
Finance costs (1,891) - (1,891)
Other finance costs 2 - 2
(Loss)/profit before tax (18,978) (330) (19,308)
Income tax credit/(expense) (2,384) - (2,384)
Profit on disposal 20,316 - 20,316
(Loss)/profit after tax as per comprehensive statement of income (1,046) (330) (1,376)
Geographical segments
The Group earns revenue from countries outside the United Kingdom, as shown
below:
12 months ended 31 March 2023 Group
£'000s
UK 23,825
Europe 3,654
USA 3,606
Rest of World 1,356
Total 32,441
The Group has one customer which constitutes over 13% of revenue in the Cake
Decoration division.:
12 months ended 31 March 2022 Group Discontinued Operations
£'000s £'000s
UK 26,992 1,275
Europe 5,722 -
USA 6,892 -
Rest of World 825 -
Total 40,431 1,275
For the year ended 31 March 2022 two customers accounted for 10% of revenue.
Reconciliation of operating (loss)/profit to underlying adjusted EBITDA to 31 Cake Head Office Group
March 2023
Decoration and non-trading subsidiaries £'000s
£'000s £'000s
Operating (loss)/profit (5,905) (1,195) (7,100)
Significant items 738 548 1,286
Depreciation 1,057 - 1,057
Underlying adjusted EBITDA (4,110) (647) (4,757)
Reconciliation of operating (loss)/profit to underlying adjusted EBITDA to 31 Cake Head Office Continuing Operations Discontinued Operations Total
March 2022
Decoration and non-trading subsidiaries £'000s £'000s Group
£'000s £'000s £'000s
Operating (loss)/profit (1,666) 405 (1,261) 2,626 1,365
Significant items 763 (966) (203) 169 (34)
Depreciation 1,614 25 1,639 796 2,435
Amortisation 87 (35) 52 - 52
Underlying adjusted EBITDA 798 (571) 227 3,591 3,818
31 March 2023 Cake Head Office Group
Decoration and non-trading subsidiaries £'000s
£'000s £'000s
Segment assets 14,336 17,237 31,572
Segment liabilities 13,214 25,587 38,801
Net operating assets / (liabilities) 1,122 (8,350) (7,229)
Non-current asset additions - - -
Depreciation (1,057) (4) (1,061)
31 March 2022 Cake Head Office Continuing Operations Discontinued Operations Total
Decoration and non-trading subsidiaries £'000s £'000s Group
£'000s £'000s £'000s
Segment assets 36,017 4,623 40 19,009 74,544
Segment liabilities 11,305 55,449 66,754 4,442 71,196
Net operating assets / (liabilities) 40,875 (52,094) (11,219) 14,567 3,348
Non-current asset additions 444 - 444 185 629
Depreciation (1,614) (25) (1,639) (796) (2,435)
Amortisation (87) 35 (52) - (52)
4. Significant items
12 months ended 12 months ended
31 March 31 March
2023 2022
£'000s £'000s
Professional fees in relation to refinancing costs (349) (62)
Loss on sale of Wavertree site (199)
Professional fees in relation to Liverpool factory - (90)
Closure of Renshaw US warehouse (48) (15)
Management restructuring (690) (143)
Significant items - Continuing business (1,286) (310)
Continuing business (1,286) (310)
Discontinued business - (229)
Total significant items (1,286) (539)
5. Operating loss
Operating loss for continuing operations
12 months ended 12 months ended
31 March 31 March
2023 2022
£'000s £'000s
External Sales 32,411 40,431
Staff Costs (11,023) (11,696)
Inventories:
- cost of inventories as an expense (included in cost of sales) (16,642) (18,577)
Depreciation of property, plant, and equipment (1,057) (1,326)
Amortisation of intangible assets - (9)
Significant items (1,286) (310)
Impairment charges - (16,103)
Research and development expenditure - (646)
Impairment of trade receivables - (53)
Foreign exchange gains/(losses) - 3
Other net operating expenses (9,532) (8,803)
Total (39,723) (57,520)
Operating loss (7,100) (17,089)
6. Finance costs
12 months ended 12 months ended
31 March 31 March
2023 2022
£'000s £'000s
Interest on bank loans, overdrafts, and investor loans (1,895) (1,896)
Interest on Pension scheme (42) -
Interest on lease liabilities (8) (12)
Finance cost on substantial modification of convertible loan notes** - 17
(1,945) (1,891)
Total (1,945) (1,891)
7. Other finance (income)/costs
12 months ended 12 months ended
31 March 31 March
2023 2022
£'000s £'000s
Interest on pension scheme liabilities (546) (429)
Interest on pension scheme assets 588 431
42 2
8. Directors' remuneration
12 months ended 12 months ended
31 March 31 March
2023 2022
£'000s £'000s
Directors' salaries, benefits, and fees (484) (650)
(484) (650)
The emoluments of the Directors for the period were as follows:
Fees/Salaries Taxable Bonus Pension 12 months ended 12 months
inc. Er's NIC Benefits £'000s Contributions 31 March ended
£'000s £'000s £'000s 2023 31 March
£'000s 2022
£'000s
M J Holt 224 - 63 - 287 281
J M d'Unienville 25 - - - 25 25
M Keeling (to 30 September 2022) 88 5 - 93 250
J A Mackenzie 25 - - - 25 25
A Ridgwell (to 23 August 2022) 10 - - - 10 27
G Lumsden (to 28 February 2023) 34 - - - 34 42
A Richardson (from 1 January 2023) 10 - - - 11 -
416 5 63 - 484 650
The current Company Directors disclosed are considered as key management
personnel.
9. Notes supporting the cash flow statement
The cash collateral figure for the Group is £0.05 million (FY22: £0.5m).
This has been provided to Lloyds Bank plc as security for insurance claims of
the Group. This amount is not included in the cash flow.
Group
Real Good Food plc (Group) Non-current Loans and Borrowings Current Loans Total
£'000s and Borrowings £'000s
(Note 23) £'000s
(Note 23)
At 31 March 2021 46,624 2,659 49,283
Cash Flows (23,100) 899 (22,201)
Non-cash flows
- Interest accruing on loans 1,760 - 1,760
- Waiver of shareholder loans (540) _ (540)
Loans and borrowings classified as non-current at March 2021 becoming current (451) 451 -
before March 2022
At 31 March 2022 24,293 4,009 28,302
Cash Flows 374 1,301 1,966
Non-cash flows
- Interest accruing on loans 1,202 1,202
At 31 March 2023 25,869 5,310 31,179
Net Debt
Net debt is a key performance indicator for the Group. It is defined as short
term and long-term borrowings less cash. See table below:
31 March 31 March
2023 2022
Group Group
£'000s £'000s
Short term borrowings (5,310) (4,009)
Short term lease liabilities (46) (48)
Long term borrowings (25,896) (24,293)
Long term lease liabilities (110) (155)
Cash 93 2,734
Total Net Debt (31,243) (25,771)
Group
Net cash Non-current Net debt
and current borrowings £'000s
borrowings £'000s
£'000s
At 1 April 2021 2,130 46,624 48,754
Cash flow(1) (1,617) (23,100) (24,717)
Other non-cash movements(2) 519 1,215 1,734
At 31 March 2022 1,032 24,739 25,771
Cash flow 4,912 566 5,478
Other non-cash movements (2) (45) (47)
At 31 March 2023 5,982 25,301 31,243
10. Earnings per share
Basic earnings per share
Basic earnings per share is calculated on the basis of dividing the loss
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares in issue during the year.
12 months ended 12 months ended
31 March 31 March
2023 2022
Group Group
(Loss)/profit after tax attributable to ordinary shareholders (£'000s) (9,003) (21,362)
Weighted average number of shares in issue for basic EPS ('000s) 99,564 99,564
Employee share options ('000s) - -
Convertible loan notes ('000s) 246,291 220,980
Weighted average number of shares in issue for diluted EPS ('000s) 345,855 320,544
Basic and diluted (loss)/earnings per share (9.04)p (21.46)p
The total loss per share for 2023 is (2.85)p for continuing and discontinued
operations (2022 continuing and discontinued loss per share: (6.66)p).
The weighted average number of shares in issue for the year was 99,564,430 and
no options outstanding.
There were also 8,806,571 convertible loan notes outstanding, of which the
weighted average number of shares was 246,290,606. Therefore, the weighted
average number of dilutive potential ordinary shares is 345,855,036
11. Goodwill
Goodwill acquired on business combinations is allocated at acquisition to the
cash generating units that are expected to benefit from that business
combination (2022: Impairment charge of £16.1m). The carrying amount of
goodwill has been allocated as follows:
Group
£'000s
Cost
At 1 April 2022 16,619
Impairment -
At 31 March 2023 16,619
Assumptions:
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill may be impaired. The recoverable amount of any
cash generating unit is determined based on the higher of fair value less
costs of disposal and value-in-use calculations. The cash flows used in the
value-in-use calculation are EBITDA (adjusted) performance less capital
expenditure based on the latest Board-approved forecasts in respect of the
following three years.
Long-term growth rate assumptions:
For the purposes of impairment testing, the cash flows are extrapolated over 5
years with a terminal value applied to the fifth year. The terminal value is
calculated using the fifth year forecasted EBITDA (adjusted) performance and
applying a 0% growth rate due to decline in market.
Discount rate assumptions:
The discount rate applied to the cash flows is 15% (2022: 10%). This rate is
in line with the Company's actual weighted average cost of capital of 14.37%
which takes account of the increased risk of being listed on AIM rather than
the main market. It is representative of businesses operating within the food
sector.
Impairment charge:
The impairment review did not result in an impairment of the goodwill held for
Cake Decoration (2022: £16.1mil). Cake Decoration is a core division for the
Group and is currently in turnaround. The investments made in manufacturing
capability in recent years have not yet started to deliver the returns that
could be expected, for example, and the Board believes that the current
valuation, reflected here, necessarily, and materially underplays the
potential value of this division. Plans to improve the strategic positioning,
service delivery and commercial performance of this business are also in
progress.
Sensitivity analysis:
An illustration of the sensitivity to reasonable possible changes in the
discount rate assumption or the long-term growth rate are shown below:
• An increase of 5% in the Group's weighted average cost of capital
of 15% to 20% would not cause an impairment.
12. Borrowings and capital management
31 March 2023 31 March 2023 31 March 2022 31 March 2022
Group Company Group Company
£'000s £'000s £'000s £'000s
Secured borrowings at amortised cost
Bank term loans 719 - 1,476 -
Revolving credit facilities 5,310 - 3,267 -
Leases 156 - 203 -
Investor loans* 7,725 7,725 7,256 7,256
Convertible loan notes** 17,425 17,425 16,103 16,103
Government grants - - - -
31,335 25,151 28,505 23,559
Borrowings due for settlement within 12 months 6,029 - 4,009 -
Lease liabilities due for settlement within 12 months 46 - 48 -
Borrowings due for settlement after 12 months 25,150 25,151 24,293 23,559
Lease liabilities due for settlement after 12 months 110 - 155 -
Total 31,335 25,151 28,505 23,559
* The investor loans shown consists of £4.7
million principal amount, £2.3 million accrued interest up to 31 March 2023
and redemption premiums of £0.7 million
** Convertible loan notes shown at 31 March 2023
consist of £8.8 million investment (2021: £8.8 million), £8.6 million
accrued interest (2022: £7.5 million),
All existing shareholder loans are due to be paid in May 2024
All existing shareholder loans are due to be paid in May 2024.
Convertible loan notes
In May 2018, the Company secured further funding from each of its major
shareholders totalling £8.8 million. NB Holdings Ltd and Omnicane Investors
Ltd each providing £3.4 million, and funds managed by Downing LLP provided
£1.9 million. This instrument has since, with shareholder approval, been
replaced with convertible loan notes ("CLN's") of £8.8 million with a
conversion price of 5 pence. The loan is repayable in 3 years from the date of
issue or can be converted at any time into shares at the holder's option. The
loan note holders agreed to amend the repayment date of the loans to May 2024,
however the documentation is not yet signed. The instrument accrues interest
at a rate of 12 percent per annum accruing daily and will mature and be due
for repayment in full on 19 May 2023, unless they are redeemed before that
date. The loan note holders have pledged to amend the repayment date to the 19
May 2024; however, the documentation is not yet signed. On that date, unless
the convertible loan notes are converted into ordinary shares on the
conversion date, a redemption premium fee will be payable. The redemption fee,
which stopped accruing from 1 January 2021, will be an amount which, when
added to the interest accrued on the relevant notes, provides a total return
equal to the amount which would have accrued in respect of such notes from the
date of the convertible loan note instrument until and including the date the
notes are redeemed in full had the interest rate been 12 per cent per annum. A
host loan at amortised cost and an embedded derivative liability, being
measured at fair value with changes in value being recorded in profit or loss,
have been recognised. At 31 March 2023, the derivative liability was valued at
£0.02 million (2022: £0.02 million). The convertible loan notes shown
consist of a host loan at amortised cost of £17.4 million, £8.6 million of
accrued finance costs. There were no substantial modifications to the loan
notes in the period ended 31 March 2023.
Features of the Group's borrowings are as follows: The Group's financial
instruments comprised cash, leases, a revolving credit facility, investor
loans and various items arising directly from its operations, such as trade
payables and receivables. The main purpose of these financial instruments is
to finance the Group's operations. The main risks from the Group's financial
instruments are interest rate risk and liquidity risk. Liquidity risk arises
from the Group's management of working capital and the finance charges and
principal repayments on its debt instruments. The Group's policy is to ensure
that it will always have sufficient cash to allow it to meet its liabilities
when they become due. The Group also has some currency exposure in relation to
its Euro and US Dollar commodity purchases. However, this is mitigated by
matching in part against foreign currency sales. The Board reviews and agrees
policies, which have remained substantially unchanged for the year under
review, for managing these risks. The Group's policies on the management of
interest rate, liquidity and currency exposure risks are set out in the Report
of the Directors. During the year ended 31 March 2022, the Group continued
with the borrowing facilities in place and secured loans from investors. As at
31 March 2022, the borrowings comprised: {revolving credit facility of £5.45
million with Leumi ABL Limited on a revolving basis with a term of 60 months.
This facility is secured against the debtors of JF Renshaw Limited and Rainbow
Dust Colours Limited with an interest rate of 2.25% above Sterling Overnight
Index Average for Sterling Advances. Because the group retains the risks and
rewards of ownership of the underlying debts, these continue to be recognised
in these financial statements. {The Group secured facilities against specific
plant and machinery with Leumi ABL Limited £2.1 million for 36 months ending
August 2022. The facilities interest payable is 2.75% above Sterling Overnight
Index Average for Sterling Advances. {The Group secured a £1.3m term loan
facility with the term being 60 months. The three major shareholders, NB
Holdings Ltd, Omnicane Investors Ltd, and certain funds managed by Downing
LLP, supported the business, and provided significant funding to the Group by
way of loans.
The loan principals at 31 March 2023 were as follows:
Date Principal Amount Method of Funding Major Shareholder(s)
May 2018 £8.8m Secured convertible loan notes NB Holdings Ltd (£3.4m), Omnicane Investors Ltd (£3.4m),
Funds managed by Downing LLP (2.0m)
March 2018 £2.3m Secured loan notes NB Holdings Ltd (£0.9m), Omnicane Investors Ltd (£0.9m),
Funds managed by Downing LLP (£0.6m)
January 2018 £0.3m Secured loan notes Funds managed by Downing LLP (£0.3m)
September 2017 £0.8m Secured loan notes Funds managed by Downing LLP (£0.8m)
June 2017 £1.3m Secured loan notes Funds managed by Downing LLP (£1.3m)
Total £13.5m
Liquidity risk management
Liquidity risk arises from the Group's management of working capital and the
finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The Board reviews the Group's liquidity position monthly and monitors its
forecast and actual cash flows against maturing profiles of its financial
assets and liabilities.
The following table details the Group's maturity profile of its financial
liabilities:
Less than 1-3 months 3 months to 1-5 years 5+ years Total
1 month £'000s 1 year £'000s £'000s £'000s
£'000s £'000s
2023
Trade and other payables 5,247 852 510 - - 6,609
Investor loans - - - 4,704 - 4,704
Convertible loan notes - - - 8,807 - 8,807
Bank term loans - - - 714 - 714
Revolving credit facilities - - 5,310 - - 5,310
5,247 852 5,820 14,225 - 26,144
Interest - - - 10,938 - 10,938
Redemption premiums - - - 706 - 706
Total 5,247 852 5,820 25,865 - 37,788
Less than 1-3 months 3 months to 1-5 years 5+ years Total
1 month £'000s 1 year £'000s £'000s £'000s
£'000s £'000s
2022
Trade and other payables 4,904 1,044 427 195 - 6,570
Investor loans - - - 4,704 - 4,704
Convertible loan notes - - - 8,800 - 8,800
Bank term loans 72 216 163 734 - 1,184
Revolving credit facilities - - 3,558 - - 3,558
Leases 4 8 36 155 - 203
4,980 1,268 4,184 14,588 - 25,019
Interest - - - 9,349 - 9,349
Redemption premiums - - - 706 - 706
Total 4,980 1,268 4,184 24,643 - 35,074
The profile of the trade payables has been taken as being consistent with the
Group's payment terms to suppliers.
Analysis of market risk sensitivity
Currency risks:
The Group is exposed to currency risks on purchases of commodities from USA
and Europe. The risk associated with these purchases is mitigated by sales
also made to customers in these countries, however, to the extent that these
do not cover each other there is a risk of exposure to the Group.
Interest rate risks:
The Group has an exposure to interest rate risk arising from borrowings based
upon the Bank of England base rate. However, at the balance sheet date, the
Group did not have any outstanding balance on these borrowing facilities, and
so the impact of an increase in the applicable interest rates would, all other
factors remaining unchanged, not have impacted profits.
13. Pension arrangements
The Group operates a defined contribution scheme for all employees, including
provision to comply with auto-enrolment requirements laid down by law. In
addition, the Company operates one defined benefits scheme which was closed to
new members in 2000 and closed to future accrual with effect from 5 April
2004. The Defined Benefit scheme is a funded arrangement with assets held in a
separate trustee-administered fund. Members of the Plan are entitled to
retirement benefits based on their final salary at the date of leaving the
Plan (or 5 April 2004 if earlier), and length of service. A pension funding
agreement has been agreed with the Trustee under which employer contributions
to the scheme will total £1.5 million between 1 January 2023 and 30 June
2025. For the purposes of IAS 19 the data provided for the 31 March 2023
actuarial valuation, has been approximately updated to reflect defined benefit
obligations on the accounting basis at 31 March 2023. This has resulted in a
Liability of 682k.
Present values of defined benefit obligations, fair value of assets and
deficit
31 March 31 March 31 March 31 March 31 March
2023 2022 2021 2020 2019
£'000s £'000s £'000s £'000s £'000s
Present value of defined benefit obligation 16,123 19,929 21,885 21,750 21,177
Fair value of Plan assets (15,440) (21,426) (14,527) (13,735) (13,774)
Deficit in Plan 683 (1,497) 7,358 7,015 7,403
Effect of asset ceiling/IFRIC14 - - 147 921 -
Gross amount recognised 683 (1,497) 7,505 7,936 7,403
Deferred tax* - - (1,426) (1,508) (1,258)
Net liability 683 (1,497) 6,079 6,428 6,145
* Deferred tax rate 2022 at 25%; 2021 and 2020: 19%, and 2017, 2018 &
2019: 17%
Reconciliation of opening and closing balances of the present value of the
defined benefit obligations
31 March 31 March
2023 2022
£'000s £'000s
Defined benefit obligation at start of period 19,929 21,855
Interest cost 546 429
Actuarial losses / (gains) (3,482) (1,536)
Past service cost - -
Benefits paid (871) (849)
Defined benefit obligation at end of period 16,123 19,929
Reconciliation of opening and closing balances of the fair value of Plan
assets
31 March 31 March
2023 2022
£'000s £'000s
Fair value of Plan assets at start of period 21,427 14,527
Interest income on Plan assets 588 431
Return on assets less interest income (5,704) (1,182)
Contributions paid by the Group - 8,500
Benefits paid, death-in-service insurance premiums and expenses (871) (850)
Fair value of Plan assets at end of period 15,540 21,426
UK equities - -
Other investments 15,540 21,426
Total plan assets at end of period 15,540 21,426
Total expense recognised in the Statement of Comprehensive Income within other
finance income
31 March 31 March
2023 2022
£'000s £'000s
Interest on liabilities 546 429
Interest on assets (588) (431)
Interest on effect of asset ceiling / IFRIC 14 - -
Net interest cost (42) (2)
Past service cost - -
Total cost (42) (2)
Statement of recognised income and expenses
31 March 31 March
2023 2022
£'000s £'000s
Actuarial gain/(loss) on the Plan assets (5,704) (1,182)
Actuarial gain/(loss) on the Plan liabilities arising from changes in (238) 199
demographic assumptions
Actuarial (loss)/gain on the Plan liabilities arising from changes in 4,481 1,620
financial assumptions
Actuarial (loss)/gain experience (761) (283)
Change in the effect of the asset ceiling / IFRIC14 - 147
Total amount recognised in Statement of Other Comprehensive Income (2,222) 501
Assets
31 March 31 March 31 March
2023 2022 2021
£'000s £'000s £'000s
UK equity - - 2,408
Absolute return fund 2,575 4,113 1,412
Corporate Bonds - - 2,936
Gilts 4,299 3,427 2,769
Multi-Asset Funds 1,716 4,621 4,827
Cash 6,850 9,265 175
Total assets 15,440 21,426 14,527
The investment strategy for the Plan is controlled by the Trustees, in
consultation with the Company. None of the fair values of the assets shown
above includes any of the Group's own financial instruments or any property
occupied by, or other assets used by, the Group. Absolute return funds are
invested in a diverse range of assets in order to achieve equity-like returns
with reduced volatility. Alternative assets include infrastructure and
derivatives.
Assumptions
31 March 31 March 31 March 31 March
2023 2022 2021 2020
£'000s £'000s £'000s £'000s
Inflation 3.10 3.80 3.40 2.70
Salary increases - - - -
Rate of discount 4.50 2.80 2.00 2.30
Allowance for pension in payment increases
RPI max 5% 3.10 3.70 3.30 2.70
RPI min 3% max 5% 3.50 3.90 3.60 3.20
Allowance for revaluation of deferred pensions 2.60 3.30 2.70 2.20
Allowance for commutation of pension for cash at retirement 90% of max 90% of max 90% of max 90% of max
allowance allowance allowance allowance
The obligations of the Plan have been calculated by projecting forwards the
figures from the initial results of the latest valuation as at
31 March 2021 and then making appropriate adjustments for known experience and
for differences in assumptions.
The mortality assumptions adopted at 31 March 2023 and 31 March 2022 imply the
following life expectancies from age 65:
31 March 31 March
2023 2022
Male retiring at age 65 in current year 21 years 21 years
Female retiring at age 65 in current year 23 years 23 years
Male retiring at age 65 in 20 years' time 22 years 22 years
Female retiring at age 65 in 20 years' time 25 years 25 years
The weighted-average duration of the defined benefit obligation at 31 March
2022 was 15 years (2021: 15 years).
Historic funding positions
The funding positions applicable at the start of each period are as follows:
12 months ended 12 months ended 12 months ended 12 months ended 12 months ended
31 March 31 March 31 March 31 March 31 March
2023 2022 2021 2020 2019
£'000s £'000s £'000s £'000s £'000s
Fair value of assets 15,440 21,426 14,527 13,735 13,774
Defined benefit obligation (16,122) (19,929) (21,885) (20,750) (21,177)
Effect of asset ceiling / IFRIC14 (147) - (147) (921) -
(Deficit) in scheme (682) 1,497 (7,505) (7,936) (7,403)
Experience adjustment on scheme assets - - - (168) 518
Experience adjustment on scheme liabilities - - - - 427
Risks
The scheme is exposed to a number of risks, including:
Asset volatility: The Plan's defined benefit obligation is calculated using a
discount rate set with reference to corporate bond yields; however, the Plan
invests significantly in equities. These assets are expected to outperform
corporate bonds in the long-term but provide volatility and risk in the short
term.
Changes in bond yields: a decrease in corporate bond yields would increase the
Plan's defined benefit obligation; however, this would be partially offset by
an increase in the value of the Plan's bond holdings.
Inflation risk: a proportion of the Plan's defined benefit obligation is
linked to inflation; therefore, higher inflation will result in a higher
defined benefit obligation (subject to the appropriate caps in place). The
majority of the Plan's assets are either unaffected by inflation, or only
loosely correlated with inflation, therefore an increase in inflation would
also increase the deficit.
Life expectancy: if Plan members live longer than expected, the Plan's
benefits will need to be paid for longer, increasing the Plan's defined
benefit obligation.
The Trustees and Company manage risks in the Plan through the following
strategies:
Diversification: In order to counter asset volatility and changes in bond
yields, investments are well diversified, such that the failure of any single
investment would not have a material impact on the overall level of assets.
Investment Strategy: The Trustees are required to review their investment
strategy on a regular basis and consult with the Company on any changes. The
Trustees' investment strategy is set out in the Statement of Investment
Principles.
Funding positions: The Trustees are required to assess the funding position
annually by means of a formal actuarial report which must be shared with the
Company.
Sensitivity analysis
The impact to the value of the defined benefit obligation of a reasonably
possible change to one actuarial assumption, holding all other assumptions
constant, is presented in the table below:
Reasonably Obligation Obligation
Possible Change Increase Decrease
Discount Rate (+/- 0.5%) 6% 6%
RPI Inflation (+/- 0.5%) 3% 3%
Assumed Life expectancy (+/-) 1 Year 4% 4%
Small changes to other assumptions, such as the allowance for commutation of
pension for cash at retirement, and the proportion of members assumed to be
married at retirement, do not have such a significant effect on the
obligations of the Plan.
14. Post balance sheet events
On 6 April 2023, the Group secured a £550,000 short-term loan from Downing
LLP and Omnicane Investors Ltd, two of it principal shareholders and loan note
holders. Interest rate of 12% annualised is payable on repayment together with
a redemption premium. If the loan is repaid before 6 October 2024 a 100%
redemption premium is payable if repayment is after 5 October 2024 the
redemption premium is 200%.
In July 2023, John Tague was appointed as MD of JF Renshaw and Rainbow Dust
Colours replacing Steve Moon. John has significant expertise and a track
record of managing successful business transformations.
A 12-month extension has been agreed with Hilco Private Capital to roll-over
£2.3 million of the £2.5 million facility dated 18 November 2022.
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. END FR FLFLDATIIFIVRecent news on Real Good Food
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