REG - Real Good Food PLC - Half-year Report
16/12/2022 07:00
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RNS Number : 9045J Real Good Food PLC 16 December 2022
16 December 2022
Real Good Food plc
("RGF" or "the Company")
Half year results for six months ended 30 September 2022
Real Good Food plc, (AIM: RGD) the diversified food business, today announces
its half year results for the six months ended 30 September 2022.
Financial highlights:
· Revenue decreased by 20.1% to £15.9 million (2021: £19.9
million) due to macroeconomic headwinds.
· EBTIDA loss of £2.0 million (2021: EBITDA of £0.7m).
· Loss before tax for was £3.8m (2021: loss of £1.2 million
(continuing operations)).
· Additional £2.5m revolving credit facility secured in November
2022 to support the Group's radical reform programme.
Operational highlights:
· Reduced volumes and the lag effect of passing cost increases
through to customers reduced gross margins to 34% (2021: 43%).
· Ongoing availability of key ingredients has also negatively
impacted performance, albeit this has eased in recent weeks.
· A radical reform programme has been launched to return the
business to profitability.
· Evidence based rebranding of Renshaw fondant to "Just roll with
it" launched in September to make products more inclusive.
Current trading and outlook:
· Market conditions are expected to remain challenging in the
near-term.
· The reform programme is well underway and is expected to deliver
sustainable EBITDA of between £2 million and £4 million for the year to 31
March 2024. Further details will be announced in early 2023.
Mike Holt, Executive Chairman, said:
"Market conditions have been very challenging over the last twelve months, and
show no sign of easing in the near-term, due to a perfect storm of rising
costs and lower revenues. The Group is not just hunkering down, it has put
into effect a radical programme of reform to return it to profitability and to
ensure that profits will be sustainable. New funding has been secured to
provide the headroom to make these transformational changes. The Board is
confident that the right actions are being taken and that they will deliver
positive returns. The simple truth, a crisis was needed to enable the required
changes to be possible."
Enquiries:
Real Good Food plc Tel: 0151 541 3790
Mike Holt, Executive Chairman
finnCap Limited (Nomad and Broker) Tel: 020 7220 0500
Carl Holmes / James Thompson (Corporate Finance)
MHP Communications (Financial PR) Tel: 020 3128 8100
Reg Hoare / Katie Hunt rgf@mhpc.com (mailto:rgf@mhpc.com)
About Real Good Food
Real Good Food plc is a food manufacturing business serving several market
sectors including retail (branded and private label), manufacturing and
export. The Group has two businesses that make up the Cake Decoration
division, Renshaw, and Rainbow Dust Colours, with leading brands in their
chosen markets. http://www.realgoodfoodplc.com
(http://www.realgoodfoodplc.com/)
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) No.
596/2014.
Chairman's Statement
As previously reported, trading conditions over the last twelve calendar
months have been very challenging and are unlikely to improve much in the
near-term. The war in Ukraine, continuing cross border trading issues with
Europe (post Brexit) and hyper cost inflation have increased costs, impacted
the availability of key ingredients and services and reduced demand for our
products this year.
For the six months to 30 September 2022, volumes were 29% lower than the first
six months of last year and about 14% lower than our pre-covid benchmark
(H1/FY20). The Group has been able to pass through cost increases to customers
resulting in revenues 20% lower than last year and broadly the same as
H1/FY20, albeit on lower volumes. The cost of sugar has doubled, and costs
overall are about 30% higher. The overall effect of lagging price uplifts and
lower volumes produced a loss of £2.0 million at EBITDA level for H1 and
consequent cash constraints.
Clearly this situation was not sustainable. As reported in our trading update
on 30 September 2022, the Board has put into effect a well-defined plan to
radically reform the Group. The recovery plan includes significant price
re-sets with customers across all sectors (to address market distortions),
circa £3.0 million of overhead cost savings and additional manufacturing
efficiency gains. Successful implementation of the transformation plan is
expected to return between £2.0 million and £4.0 million in EBITDA under
current market conditions.
To date, the Group has secured significant price re-sets with most of its UK
Retailer customers which will have some benefit in H2 but mainly repositions
next year, given the seasonality of our business. The cost reduction
components are progressing well, and we expect to make further announcements
on these in early 2023. Several Kaizen events are being planned and the first
starts next week. An external manufacturing consultant will be assisting with
the changes within manufacturing operations starting next month.
On the back of this radical programme of reform, and the progress being made,
the Group was able to secure additional funding of £2.5 million as announced
on 21 November 2022. The new funding is being provided by Hilco Private
Capital for a term of twelve months and supplements the £6.3 million facility
with Leumi ABL. This new funding provides the headroom required to fund the
changes being made and enables the Group to function normally.
With the demise of a key competitor in the Autumn, the Group is well
positioned post these changes to return to profitability and be the
first-choice supplier for all markets served by the Group. New product
development, a key feature of recent years, continues but the focus in the
near-term is to reduce manufacturing complexity and cost.
The Board continues to believe that a listing on AIM is not in the best
interests of the Company or its shareholders, given the Company's size,
capital structure and limited traded volumes of shares. The estimated cost of
maintaining the listing is around £0.25 million per annum.
Overview
Results
Revenue for the first six months of the year was £15.9 million (2021: £19.9
million). Underlying demand for products has weakened during a period of
significant economic turbulence and concern. The Group managed to pass
through cost increases, albeit with a lag effect and continued to place new
products in the market working closely with its customers.
The loss before tax was £3.8 million (2021: loss of £1.2 million; 2020: loss
of £4.1 million). Whilst most cost increases have been passed through to
customers, albeit with a lag, they have lowered margins and reduced demand.
Volumes were 29% lower than the same period last year and this has been
adjusted for by a voluntary redundancy programme which takes effect next week.
As noted above, further cost savings of circa £3.0 million (25%) are being
targeted for FY24.
Based on our review at the half year, there has been no impairment to the
Group. The Directors are confident that the business can be restored to
profitability over the coming trading periods, even if market conditions do
not materially improve.
6 months ended 30 Sept 2022 6 months ended 30 Sept 2021 6 months ended 30 Sept 2020
£000's
£000's
£000's
Loss before tax from continuing operations (3,751) (1,214) (4,699)
Depreciation of property, plant and equipment 614 667 848
Amortisation of intangibles - 7 23
Significant items 303 75 361
Finance costs 851 1,044 2,547
Other finance costs - 75 91
Underlying adjusted EBITDA from continuing operations (1,983) 654 (829)
Outlook and Current Trading
Overall, the Board expects that macroeconomic headwinds and their impact on
trading conditions will not improve much in the near-term. The radical reform
programme which was launched at the end of September 2022 is progressing well
and the Board is confident that the Group can deliver EBITDA of between £2.0
million and £4.0 million next year. It is expected that further losses will
be incurred during H2 of the current financial year, albeit some benefit from
the price resets will dampen losses. Most of the cost savings will begin at
the end of March 2023.
Finance Review
Results of continuing operations: 6 months ended 30 Sept 2022 6 months ended 30 Sept 2021 6 months ended 30 Sept 2020
£000's £000's £000's
External Revenue 15,877 19,949 15,354
Gross profit 5,467 8,655 5,690
Underlying adjusted EBITDA (1,983) 654 (829)
Operating loss (2,900) (95) (2,061)
Operating loss % (18.26)% (0.5)% (13.4)%
Loss before tax (3,751) (1,214) (4,699)
Group revenue for the six months ended 30 September 2022 was £15.9 million
(2021: £19.9 million), £4.1 million (20.1%) behind September 2021, and
slightly ahead of September 2020. At EBITDA level, the Group made a loss of
£2.0 million compared to a profit of £0.7 million for the first six months a
year ago; lower volumes, supply chain problems and higher costs impacted
profitability hard. Loss before tax for the six months ended 30 September 2022
was £3.8 million.
Dividend
No dividend is proposed for the six months ended 30 September 2022 (2021:
nil).
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 assets decreased
by £6.0m million to £15.4 million during the period (March 2022: £21.4m).
The plan liabilities are £14.7 million compared to £19.9 million on 31 March
2022 (see note 6).
Cash Flow
During the six months to 30 September 2022, cash and cash equivalents reduced
by £2.5 million. At 30 September 2022, net debt was £28.3 million (2021:
£24.9 million), an increase of £3.1m since 1 April 2022. Net debt includes
the loans and accrued interest from shareholders of £7.5 million, convertible
loan notes ("CLNs") at fair value of £16.9 million, asset financing of £0.8
million, leased asset commitments of £0.2 million and a revolving credit
facility of £3.2 million. Cash in the bank stood at £0.3 million. Net debt
is calculated as total borrowings less cash and cash equivalents (see note 8).
Wavertree property
In April 2022, the Group sold its Wavertree Property. The property was
purchased in 2015 and housed the Renshaw Academy until August 2019. Since
then, it had been used as the New Product Development Centre and by Renshaw's
marketing team. These were relocated onto Renshaw's manufacturing site at
Crown Street, Liverpool bringing the Renshaw business together on one site.
The sale made a small loss but generated net cash proceeds of £0.9 million of
which £0.3m was spent on creating a new Innovation Centre adjacent to the
factory.
Impairment Review
Throughout the last financial year, the Group made a number of operational
improvements but felt it necessary book an impairment charge of £16.1 million
to reflect market conditions and actions already in hand as at 31(st) March
2022. The Company does not require any additional impairments to be reported
in the interim period to 30(th) September 2022 and given the radical reform
being undertaken, does not expect, to book any further impairment this year.
This report was approved by the Board on 15 December 2022 and is signed on its
behalf by:
Mike Holt
Executive Chairman
Consolidated Statement of Comprehensive Income - Continuing operations
unaudited unaudited audited
Notes 6 months ended 6 months 12 months ended
ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
£000's £000's £000's
Revenue 15,877 19,949 40,431
Cost of sales (10,410) (11,294) (24,301)
)
Gross profit 5,467 8,655 16,130
Furlough Income - 24 -
Other operating income 3 12 56
Distribution expenses (1,932) (2,069) (3,960)
Administrative expenses (6,135) (6,642) (12,902)
Impairment charge on goodwill - - (16,103)
Significant items 7 (303) (75) (310)
Operating loss (2,900) (95) (17,089)
Finance costs (851) (1,044) (1,891)
Other finance costs - (75) 2
Loss before tax (3,751) (1,214) (18,978)
Income tax (charge)/credit - - (2,384)
Loss from continuing operations (3,751) (1,214) (21,362)
Profit from discontinued operations - 20,056 19,986
Net profit / (loss) (3,751) 18,842 (1,376)
Attributable to:
Owners of the parent (3,751) 18,842 (1,376)
Net profit / (loss) (3,751) 18,842 (1,376)
Items that will not be reclassified to profit or loss
Foreign exchange differences on translation of subsidiaries 37 (10) (25)
Actuarial gain / (loss) on defined benefit plan (768) (77) 501
Pension provision IFRIC 14 - (7,001) -
Tax relating to items which will not be reclassified 177 75 527
Other comprehensive loss (554) (6,859) 1,033
Total comprehensive profit / (loss) for the period (4,305) 11,983 (373)
30 Sept 2022 30 Sept 2021 31 Mar 2022
Basic and diluted loss per share - continuing operations 3 (4.32)p (8.11)p (21.46)p
Basic earnings per share - discontinued operations - 20.14p 20.07p
Diluted earnings per share - discontinued operations - 6.00p 6.23p
Consolidated Statement of Financial Position
unaudited unaudited audited
Notes 30 Sept 2022 30 Sept 2021 31 Mar 2022 2021
£000's £000's £000's
NON-CURRENT ASSETS
Goodwill 16,619 37,722 16,619
Other intangible assets - 3 -
Tangible fixed assets 7,765 8,084 8,066
Investments - - -
Deferred tax asset 177 1,501 -
24,561 42,310 24,685
CURRENT ASSETS
Inventories 5,277 4,319 4,024
Trade and other receivables 5,590 7,311 6,572
Retirement benefit asset 750 - 1,497
Current tax assets - - -
Cash collateral 50 50 50
Cash and cash equivalents 315 2,650 2,734
1
11,982 14,330 14,877
Assets in disposal groups classified as held for sale 9 148 1,148 1,078
TOTAL ASSETS 36,691 57,788 40,640
CURRENT LIABILITIES
Trade and other payables 6,657 6,548 6,665
Current tax liability 4 4 4
Borrowings 8 3,243 3,907 3,718
Lease liabilities 8 35 43 48
NCI put option - - -
9,939 10,502 10,435
NON-CURRENT LIABILITIES
Borrowings 8 25,144 23,596 24,293
Lease liabilities 8 155 - 155
Derivative liability - Convertible Loan Notes - - -
Deferred tax liabilities 648 216 647
Retirement benefit obligation 6 - 6,005 -
25,947 29,817 25,095
TOTAL LIABILITIES 35,886 40,319 35,530
NET ASSETS 805 17,469 5,110
EQUITY
Share capital 1,991 1,991 1,991
Share premium account 3,294 3,294 3,294
Share option reserve - 3 -
38
Other reserve 540 - 540
Foreign exchange translation reserve (48) (70) (85)
Retained earnings (4,972) 12,251 (630)
TOTAL EQUITY 805 17,469 5,110
Consolidated Statement of Changes in
Equity
For the six months ended 30 September 2022 (unaudited) Issued Share Capital Share Premium Account Share Option Reserve Other Reserve Foreign Retained Earnings Total Non-Controlling Interest Total Equity
Exchange Translation Reserve
£'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
Balances on 1 April 2022 1,991 3,294 - 540 (85) (630) 5,110 - 5,110
Total comprehensive profit/(loss) for the period
Profit/(loss) for the period - - - - - (3,751) (3,751) - (3,751)
Other comprehensive loss for the period - - - - 37 (591) (554) - - (554)
Total comprehensive profit/(loss) for the period - - - - 37 (4,342) (4,305) - (4,305)
Balances at 30 September 2022 1,991 3,294 - 540 (48) (4,972) 805 - 805
For the six months ended 30 September 2021 (unaudited) Issued Share Capital Share Premium Account Share Option Reserve Other Reserve Foreign Retained Earnings Total Non-Controlling Interest Total Equity
Exchange
Translation Reserve
£'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
Balances at 1 April 2021 1,991 3,294 3 (4,796) (60) (282) 150 3,198 3,348
Total comprehensive (loss)/profit for the period
(Loss)/profit for the period - - - - - 18,842 18,842 - 18,842
Other comprehensive loss for the period - - - - (10) (6,849) (6,859) - (6,859)
Total comprehensive (loss)/profit for the period - - - - (10) 11,993 11,983 - 11,983
Transactions with owners of the Group, recognised directly in equity
Loan Waiver - - - - - 540 540 - 540
Reserves on sale of Brighter Foods 4,796 - - 4,796 - 4,796
(3,198) (3,198)
Total contributions by and distributions to owners of the Group - - - 4,796 - 540 5,336 (3,198) 2,138
Balances at 30 September 2021 1,991 3,294 3 - (70) 12,251 17,469 - 17,469
For the twelve months ended 31 March 2022 (audited) Issued Share Capital Share Premium Account Share Option Reserve Other Reserve Foreign Retained Earnings Total Non-Controlling Interest Total Equity
Exchange Translation Reserve
£'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
Balances at 1 April 2021 1,991 3,294 3 (4,796) (60) (282) 150 3,198 3,348
Total comprehensive loss for the period
Loss for the year - - - - - (1,376) (1,376) (3,198) (4,574)
Other comprehensive (loss)/gain for the period - - - - (25) 1,028 1,003 - 1,003
Total comprehensive loss for the period - - - (25) (348) (373) (3,198) (3,571)
Transactions with owners of the Group, recognised directly in equity
Release of put option reserve - - - 4,796 - - 4,796 - 4,796
Share options lapsed in year - - (3) - - - (3) - 3
Waiver of debt by loan note holders - - - 540 - - 540 - 540
Total contributions by and distributions to owners of the Group - - (3) 5,336 - (348) 5,333 - 5,333
Balances at 31 March 2022 1,991 3,294 - 540 (85) (630) 5,110 - 5,110
Consolidated Cashflow Statement
unaudited unaudited audited
6 months ended 6 months ended 12 months ended
Notes 30 Sept 2022 30 Sept 2021 31 Mar 2022
£000's £000's £000's
CASH FLOW FROM OPERATING ACTIVITIES
Adjusted for:
Profit / (Loss) before taxation (3,751) 18,842 1,008
Finance and other finance costs 852 1,119 1,889
FX movement (1) (17) (3)
Profit on sale of discontinued business - (20,386) (19,986)
Net loss on sale of property 159 - -
Impairment on Asset held for sale - - 70
Impairment of Goodwill - - 16,103
Share option reserve credit - - (3)
Fair value of derivative liability - (17) -
Depreciation of property, plant and equipment 587 746 1,326
Amortisation of intangibles - 7 9
Operating Cash Flow (2,154) 328 413
(Increase)/decrease in inventories (1,253) (1,222) (915)
Decrease in receivables 983 2,047 2,606
Pension contributions - (8,500) (8,500)
(Decrease)/increase in payables (8) (2,800) (2,518)
Reduction in cash collateral (increase in cash) - -165 165
Cash (used in) /from operations (2,432) (9,982) (8,749)
Income taxes paid - - -
Interest paid (82) (53) (139)
Interest on lease liabilities (4) (7) -
Net cash (outflow)/inflow from operating activities (2,518) (10,042) (8,888)
CASH FLOW FROM INVESTING ACTIVITIES
(Purchase), plant, and equipment (402) (223) (844)
Proceeds from disposal of property 931
Disposal of discontinued business, net of cash disposed of - 32,085 33,153
Cost of disposal of Subsidiary (1,138)
Net cash inflow/(outflow) from investing activities 529 31,862 31,171
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of lease liabilities 8 (56) (57) (113)
(Repayment)/Interest of Investor Loans 8 - (23,100) (17,790)
Repayment of term loans (387) (433) (865)
Interest paid on investor loans (5,310)
Drawdowns on revolving credit facilities 8 14,203 19,390 36,045
Repayments of revolving credit facilities 8 (14,227) (18,084) (34,571)
Inflow / (repayment) of other loans - 44 -
Net cash (outflow)/ inflow from financing activities (467) (22,240) (22,604)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (2,456) (420) (321)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of period 2,734 3,080 3,080
Effects of currency translation on cash and cash equivalents 37 (10) (25)
Net movement in cash and cash equivalents (2,456) (420) (321)
Cash and cash equivalents at end of period 315 2,650 2,734
Notes to the Interim Statements
1. Preparation of the interim 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 activities of the Group are the sourcing, manufacture,
marketing and distribution of food and industrial ingredients.
The interim report will be posted on the Company's website and will be
released via the Stock Exchange. Further copies of the interim report and
Annual Report and Accounts may be obtained from the address above.
Basis of preparation
These condensed consolidated interim statements are compliant with the
recognition and measurement principles of United Kingdom adopted International
Financial Reporting Standards (IFRS) and interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC) but does
not include all disclosures required by IAS 34. The unaudited financial
information for the six months ended 30 September 2022 and 30 September 2021
are not statutory accounts and as such, have not been audited. The comparative
financial information for the year ended 31 March 2022 included within this
report does not constitute the full statutory accounts for that period. The
statutory Annual Report and Accounts for 2022 have been filed with the
Registrar of Companies.
Going Concern
With the radical reform project currently ongoing and the company securing
additional funding of £2.5m form Hilco Capital to support the turnaround of
the business on the 18 November 2022, the financial statements have been
prepared on a going concern basis which the directors feel is appropriate.
Assets held for sale
Following the sale of the trade and assets of Real Good Food Ingredients
Limited, the Group was left with an office building near Bristol, which was no
longer required. The property has been advertised for sale with local estate
agents since July 2018, and we hope to find a suitable buyer.
As such, the asset is classified as held for sale within the consolidated
statement of financial position on 30 September 2022.
2. Segment analysis
Geographical Segments
The Group earns revenue from countries outside the United Kingdom, these
represent 31.5% of the total revenue of the Group to 30 September 2022 (6
months to 30 September 2021: 34.4% and 6 months to September 2020: 25.6%).
3. Earnings per ordinary share
Basic earnings per share
Basic earnings per share is calculated based on the loss attributable to
ordinary shareholders of the Company divided by the weighted average number of
ordinary shares in issue at the end of the period.
unaudited unaudited unaudited audited audited
6 months ended 6 months ended 6 months ended 12 months ended 12 months ended
30 Sept 2022
30 Sept 30 Sept 31 March 2022 31 March 2022
2021 2021
Continuing Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations
Operations
Loss/profit after tax attributable to ordinary shareholders (£'000s) (4,32) (8,073) (20,056) (21,362) 19,986
Weighted average number of shares in issue for basic EPS ('000s) 99,564 99,564 99,564 99,564 99,564
Employee share options & Convertible loan notes (CLNs) ('000s) 239,408 234,434 234,434 220,980 220,980
Weighted average number of shares in issue for diluted EPS ('000s) 338,973 333,998 333,998 320,544 320,544
Basic (loss)/profit per share - pence (4.32)p (8.11)p 20.14p (21.46)p 20.07p
Diluted (loss)/profit per share - pence (4.32)p (8.11)p 6.00p (21.46)p 6.23p
The total basic loss per share at 30 September 2022 was (4.32)p for continuing
operations (at 30 September 202 continuing operations basic loss per share:
(8.11)p).
For the six months to 30 September 2022, the weighted average number of shares
in issue was 99,564,430. There were also 8,806,571 convertible loan notes
outstanding, of which the weighted average was 239,408,452. Therefore, the
weighted average number of dilutive potential ordinary shares is 338,972,882
Diluted earnings per share
As at Sep 2022 there were no outstanding share options available to exercise.
The comparative years included share options and the diluted earnings per
share above assumees that these would have been exercised. For continuing
operations, the potential ordinary shares are considered anti-dilutive as they
decrease the loss per share. Therefore, diluted EPS is the same as basic EPS
for continuing operations. For the discontinued operations, however, the
earnings per share can be diluted. In the comparative, If all the shares had
been exercised before the end of the period, the loss per share would then
have been (8.11)p on the continuing operations and there would have been an
earnings per share of 6.00p on discontinued operations (2020: earnings of
0.73p on continuing and 0.23p on discontinued operations).
4. Dividends
The Directors are not recommending an interim dividend (2021: nil).
5. Taxation
The charge for taxation is based on the results for the period and takes into
account taxation deferred because of timing differences between the treatment
of certain items for taxation and accounting purposes.
Provision is made in full for taxation deferred in respect of timing
differences that have originated but not reversed by the balance sheet date,
except for gains on disposal of fixed assets which will be rolled over into
replacement assets. No provision is made for taxation on permanent
differences. Deferred tax is not discounted.
6. 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 Group operates a defined benefit scheme, the Napier Brown
Retirement Benefits Scheme, which closed to new members in 2000. The assets
of the scheme are held separately from those of the Group in an independently
administered fund. Following the sale of Brighter Foods, the Group injected
£8.5 million into the scheme to eliminate the pension scheme deficit on an
ongoing funded basis at that time. Contributions in the first six months of
last year were £249,999.
On 8 November 2022 the Company entered into a funding agreement with the
Trustee and agreed to pay £50,000 each month with effect from 1 January 2023
to repair the pension deficit of £1,523,000 based on the agreed actuarial
valuation as at 31 March 2021. As this agreement was not in place last
year, under IFRIC14 accounting rules a liability of £6.0 million was
recognised at 30 September 2021 being the value of contributions which were
due under the old contribution schedule. As the valuation of the pension
assets at 30 September 2022 exceeded the present value of liabilities at that
date, an asset of £751,000 is on the balance sheet.
Assumptions
The assets of the scheme have been included at market value and the
liabilities have been calculated using the following principal actuarial
assumptions:
unaudited Unaudited audited
30 Sept 2022 30 Sept 2021 31 Mar 2022
% per annum % per annum % per annum
Rate of increase in pension payment 3.60 34 3.70
Discount rate 5.20 2.00 2.80
Inflation assumption 3.70 3.60 3.80
Revaluation rate for deferred pensions 3.20 2.90 3.30
Scheme deficit
The fair value of the assets in the scheme and the present value of the
liabilities in the scheme are:
unaudited unaudited audited
30 Sept 2022 30 Sept 2021 31 Mar 2022
£'000s £'000s £'000s
Total fair value of assets 15,482 23,388 21,426
Present value of scheme liabilities (14,731) (22,186) (19,929)
Effect of IFRIC14 - (7,207) -
Surplus/(Deficit) in the scheme 751 (6,005)) 1,497
The scheme is a closed scheme and therefore under the projected unit method
the current service cost would be expected to increase as the members of the
scheme approach retirement.
The present value of contributions payable exceeds the net liability and in
accordance with IFRIC14, we have recognized this additional liability.
7. Significant Items and Impairments
The Group's underlying profit figure excludes several items which are material
or non-recurring and are detailed separately to ensure the underlying
operating performance of the business is clearly visible, without the
distortion of these costs. The significant costs incurred by the Group, are
summarised below:
unaudited unaudited audited
30 Sept 2022 30 Sept 2021 31 Mar 2022
£000's £000's £000's
Professional fees in relation to Liverpool factory (41) - -
Professional fees in relation to refinancing costs - - (62)
Loss on disposal of Wavertree property (159) - (90)
Other legal Costs - (75)
Closure of Renshaw US warehouse - - (15)
Management restructuring (103) - (143)
Total significant items and impairments (303) (75) (310)
8. Borrowings
The table below shows the movement on the Borrowings over the past 12 months.
unaudited unaudited audited
30 Sept 2022 30 Sept 2021 31 Mar 2022
£000's £000's £000's
Revolving credit facility 3,243 3,100 3,267
Investor loans 7,491 7,022 7,256
Other loans - - -
Convertible loan notes 16,856 15,763 16,303
Asset finance 798 1,618 1,185
Lease liabilities (IFRS 16) 190 43 203
Government grants - - -
Total Borrowings 28,577 27,546 28,214
Amount due for settlement within 12 months 3,243 3,950 3,766
Amount due for settlement after 12 months 25,334 23,596 24,448
Convertible Loan Notes
The Company had issued loan notes with a conversion price of 5 pence to its
major shareholders, NB. Ingredients Limited ("Napier Brown"), Omnicane
International Investors Limited ("Omnicane") and funds managed by Downing LLP
("Downing") totalling £8.8 million during 2018. The loans are due to be
repaid on 19 May 2024.
Investor Loans
The repayment date of the investor loans was amended on the 18 November 2022.
All loans, including the Convertible Loan Notes, are now repayable in full on
19 May 2024.
9. Assets classed as held for sale
The group owns an office building near Bristol, previously used by a business
sold in the year to 31 March 2019. The building has been put up for sale and
is classed as held for sale within the consolidated statement of financial
position as of 30 September 2022.
The property in Wavertree, Liverpool has now been sold. The asset was held
within the Head office operating segment. The asset is classified as held
for sale within the consolidated statement of financial position as of 30
September 2021 and 31 March 2022.
unaudited unaudited audited
30 Sept 2021 30 Sept 2021 31 Mar 2022
£000's £000's £000's
Property near Bristol 148 148 148
Property in Wavertree, Liverpool - 1,000 930
Assets held for sale 148 -
1,148 1,078
10. Contingent Liability
The Group carries a wide range of insurance cover, and no separate disclosure
is made of the detail of claims, or the costs covered by insurance. There
have been no further claims raised since the publication of the FY22 Annual
Accounts.
11. Post period end
On 18 November 2022 the Company secured additional funding of £2.5m to
support the company's programme of radical reform. The new funding is being
provided by Hilco Private Capital for a term of twelve months and supplements
the existing £6.3m facility with Leumi ABL.
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