We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Real Good Food Plc | LSE:RGD | London | Ordinary Share | GB0033572867 | ORD 2P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.45 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2022 to May 2024
TIDMRGD
RNS Number : 4490B
Real Good Food PLC
03 October 2022
3 October 2022
Real Good Food plc
("RGF" or "the Group")
Final Results for the Year Ended 31 March 2022
Real Good Food plc, (AIM: RGD) today announces its final results for the year ended 31 March 2022.
Overview
Financial highlights
-- Revenue from continuing businesses increased by 8.3% to GBP40.4 million (2021: GBP37.3 million).
-- Adjusted underlying EBITDA* from continuing activities for the Group was GBP0.7 million (2021: GBP0.2 million), despite the impact of covid on the continuing business.
-- Brighter Foods sold to The Hut Group (THG) in May 2021 generating GBP36.4 million cash for the Group.
-- Net debt significantly reduced to GBP25.5 million (2021: GBP48.8 million).
Operational highlights
-- Cake Decoration launched 69 new products in the year with in-year revenues of c. GBP1.8 million.
-- Initiated a rebranding, range rationalisation and recipe improvement programme.
-- Unprecedented increases in the cost of raw materials and energy in recent months continue unabated and pose significant challenges.
-- In response, the Group has hunkered down, controlled costs and protected revenues where possible.
Current trading
-- Post year end programme to reduce costs saving GBP1.4 million per year from the end of Q3.
-- FY23 expected to be a very challenging and loss-making year but the business is being strengthened to be more resilient and ready to benefit from a more favourable trading environment.
-- The Group has the support of its Loan Holders and major shareholders to navigate this difficult time.
-- The Board remains open to divesting the continuing businesses for the right value at the right time.
*Underlying adjusted EBITDA (see note 3)
Mike Holt, Executive Chairman commented:
"The Group made a good start to the year and expected to build on this during the seasonally busier second half of the year. Market conditions changed during Q3 and have remained extremely challenging as noted in our trading updates in April and earlier today. To mitigate this, we are putting into effect a more radical programme of reform to reduce costs, protect revenues and preserve the inherent value of the Group. This involves the refinancing of the Group and discussions are underway with potential lenders. "
Chairman's Statement and Business Review
Overview
With the easing of covid restrictions and post-Brexit uncertainty, the Group started the year well. For the first six months to 30 September 2021, revenue and EBITDA were well ahead of last year. Underlying adjusted EBITDA was GBP0.7 million compared to a (covid-impacted) loss of GBP0.8 million in the prior year and an EBITDA profit of GBP0.2 million for the first half of FY20 (our pre-covid benchmark).
Further progress was expected in our seasonally busier second half of the year, but revenue was much lower than had been anticipated (particularly during our peak Q3 period) due to severe shortages and erratic deliveries of certain key ingredients and services, compounded by high absence rates because of the Omicron variant of covid, which affected our ability to fulfil customer orders. Significant input cost increases during Q4 also impacted profitability due to the inevitable lag effect on cost-to-price pass through to customers. These are sector-wide issues but their effect on us was more pronounced due to our seasonality. Underlying adjusted EBITDA was marginally positive for the six months to 31 March 2022, compared to a GBP1.1 million profit in the prior year and GBP1.9 million loss in FY20 (our pre-covid benchmark). International sales, which had been expected to show double digit growth, were 35% lower in the second half of the year and 14% lower for the full year; due to a combination of supply chain shortfalls and the loss of some USA business to local supply.
For the year as a whole the Group improved on its FY21 performance but not FY20, with a GBP0.7 million underlying adjusted EBITDA on continuing activities. Whilst disappointing and frustrating, the results mask improvements that did add value in the year and will add future value once prevailing market conditions normalise. New product revenues from the launch of 69 new products, accounted for 4.5% (GBP1.8 million) of sales, this includes the introduction of bakers' caramel for the retail market and other luxury products, which make stylish and quality cake decorating at home easier and more accessible. Work also started on reformulating product recipes to reduce the cost and complexity of product manufacture and this rather than new product launches will be a key focus area for the new financial year.
Brighter Foods
In May 2021, we sold our majority stake in Brighter Foods Limited to The Hut Group for GBP35.6 million which valued the business at GBP43.0 million. The timing of the sale coincided with the end of the lock-in period of Brighter's Chief Executive and Founder. At GBP43.0 million, the sale represented 8.6 times annualised FY20 EBITDA and 11.7 times FY21 EBITDA. The sale enabled us to effectively halve the level of shareholder loans (from GBP45.6 million to GBP22.0 million) and to eliminate the pension scheme deficit on an "on-going basis" (by the injection of GBP8.5 million into the Scheme's assets).
Renshaw Rebranding
In 2021, Renshaw conducted research on the Cake Decorations Market(1) . Qualitative insights were gathered from a consumer consulting board of 40 bakers, and these were then tested with a group of 1000 UK bakers of various skill levels from beginners to professionals(1) . A study into the beliefs and behaviours of lapsed and declining consumers of RTR (ready to roll) icing(2) was also undertaken; last year, 1.6 million new shoppers entered the category but 1.5million exited(3) , so addressing their key concerns, the greatest being a lack of confidence, could make a transformational difference to the category.
The results have led to a more inclusive brand proposition. The new improved recipe will continue to provide the functionality that regular users love, whilst also making it easier to knead, roll and correct slight imperfections which anyone can make, to ensure a positive experience even for the first-time user. The vanilla flavour has been increased to enhance the eating experience whilst for consumer packs there's also a fun and approachable new look and name change. From September, consumer packs will encourage cake decorators to "just roll with it" if things take a direction they hadn't originally planned, to celebrate the perfectly imperfect creations that make a handmade product so special. In response to consumer feedback the product will be renamed Fondant Icing (after all it's not strictly "ready to roll" as a quick knead wakes up the gum system and makes the product easier to use).
There has also been a range rationalisation, as even professionals were confused at times with which product to use. Each product in the more focused portfolio has a clear description front of pack to help guide the consumer, and on the back, there are simple step by step instructions and top tips plus a QR code with content to educate and inspire.
The objective of the rebrand, supported by ongoing communications throughout the year will be to stem, (and potentially reverse over time) the decline we have seen in fondant icing, retaining more of the new and existing shoppers and encourage greater frequency of purchase.
1. Axis Consulting Quantitative Research of 1000 home bakers
2. Kantar. How do we revolutionise the icing category? 7 Sept 2021
3. Kantar, Market Data Update May 2022 .
Wavertree Property
Shortly after the year end, we sold our Wavertree property to Tutum Property Limited. 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 main 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 GBP0.9 million of which, GBP0.3 million has been spent on creating an Innovation Centre adjacent to the factory at Crown Street.
Dividend
Consistent with previous years, the Board is not recommending the payment of a dividend for the year. The Board's focus is on reducing the level of debt and investing in Renshaw and Rainbow Dust Colours to deliver the best possible returns for shareholders.
Corporate Governance
The Group is governed through the Board and its Audit Committee and Remuneration Committee. The Board is very conscious of its related party connections and dealings. As appropriate, myself, Gail Lumsden (Senior Independent Non-Executive Director) and Maribeth Keeling (Chief Financial Officer) meet independently of the Board to discuss matters concerning Loan Note Holders and major Shareholders.
Strategy
Following the sale of Brighter Foods, the Group now has two trading units focused on the design and manufacture of products for decorating cakes, biscuits and desserts; JF Renshaw and Rainbow Dust Colours. The Group sells branded and private label products across multiple channels.
Within the UK, the main markets are retail products for home bakers, and ingredients for manufacturers of cakes, biscuits, and desserts, along with bakery shops and foodservice outlets serviced via a wholesaler network.
Internationally, CDD, (Cake Decoration Division) operate in retail, and the specialist home bakery market. Here customers are now spending less than they did during covid lockdowns. Although new customers to the category are still baking, they are doing so less often.
In UK retail, CDD has moved with the consumer who is becoming increasingly price conscious. CDD has therefore focused on delivery of appropriate products to not just the major multiples but also specialist retailers and bargain stores. Although the Home Baking market has declined since the growth seen during lockdowns, at GBP1.5 billion RSP(3) (retail sales prices) it remains ahead of pre-covid levels. The prediction for the year ahead is that sales across retail will see a further decline as recessionary spending habits kick in, whilst many will continue to bake as a way of relaxing, for others it may be more economical to switch to a bought in product.
Meanwhile, the UK sales of ready-made bakery goods have grown by 1.3%/GBP185 million over the last year to GBP14.6 billion RSP. CDD has enhanced its relationship with customers through innovation and cross selling Renshaw and Rainbow Dust products into this channel.
Predictions for the year ahead are more difficult; on the plus side we have seen in previous recessionary environments a strong demand for affordable indulgences, and as mentioned above a potential trade off with home baking. But with unprecedented cost increases across fuel, energy and food, disposable income will be reduced which could lead to a drop in consumption.
In summary, the aim is to maximise value for shareholders by leveraging productive capacity by growing revenue (through product innovation and new customers) and improving operational performance. The Group is open to divesting parts of the remaining and continuing businesses for the right value at the right time. The Group has a valued heritage, and the strategy is to leverage this with new products and class leading service.
Outlook
The unprecedented increases in the cost of raw materials and energy in recent months continue unabated and pose significant challenges to the whole sector. Since 1 January 2022, the cost of sugar has doubled, and glycerine and butter have increased by 87% and 82% respectively. It is anticipated that for the current financial year (to 31 March 2023), the increased cost of raw materials and other costs of production will exceed GBP5 million given current cost levels. These increases are being passed through to customers but, in an environment of spiralling cost inflation, the lag effect is more prominent. Price increases have been secured but they have become incessant. They are also likely to depress demand with household incomes being under pressure from rising energy pricing and other costs. Volumes for the first five months of the new financial year are 29% down on the same period of last year and 16% lower than our pre-covid benchmark (FY20). Assuming the current hyper-cost inflation and its impact on demand continues, the Group will be loss-making at EBITDA level.
The Group is determined to hunker down, control costs, maximise savings opportunities and protect revenues. Wage inflation has been held at 3% and a voluntary redundancy programme was agreed in May 22 which will reduce 51 jobs during Q3 saving GBP1.4 million per year. Given the pressure on the business, a more radical reform of the Group has just been signed off by the Board and Loan Note Holders to significantly reduce overhead costs, re-set pricing and achieve further manufacturing efficiencies in order to return the business to profitable growth. Successful implementation of the recovery plan is expected to return between GBP2 million and GBP4 million in EBITDA under current market conditions. Negotiations with customers have already begun to address the widening gap caused by cost inflation and market distortions that have arisen in recent years.
The Board is confident that the right actions are being taken and has secured the support of Loan Note Holders, including the pledge of additional funding of GBP1.0 million, the documentation has not yet been signed. The Group is also, with the support from advisors, in discussions to secure an additional GBP1.5 million of new funding as part of a refinancing of the asset backed facility with a new funder, currently provided by Leumi ABL.
Mike Holt
Executive Chairman
Finance Review
Revenue
Group revenue of the continuing businesses for the 12 months ended 31 March 2022 was GBP40.4 million (2021: GBP37.3 million), an increase of 8.3% on revenue to 31 March 2021. With the relaxation of covid restrictions, sales in the Wholesale and Manufacturing sectors began to return to pre covid levels. The first half of the year saw strong sales of GBP20.0 million up 29.9% versus H1 in FY21, however sales in Q3 (October to December), and January were much lower than expected due to severe shortages and erratic deliveries of certain raw materials, compounded by high absence rates in the factory due to the Omicron variant, which affected our ability to fulfil customer orders. Sales in the second half were therefore flat year on year.
Profit measure on operations
Gross profit on the continuing businesses for the overall Group was GBP16.1 million (2021: GBP15.2 million). At 39.9%, the gross profit margin was below the prior year by 0.8%, owing to significant increases in key material costs and higher distribution costs for overseas deliveries. The lag effect on passing through cost increases onto customers is on average two to three months, but the impact is more pronounced during our seasonally busier second half.
The operating loss in the year of GBP17.1 million is reported after depreciation and amortisation charges of GBP1.4 million, impairment of GBP16.1 million and significant items of GBP0.3 million. The significant costs arise from further restructuring in the Cake Decoration business and the closure of the Wavertree site.
The adjusted EBITDA profit of the underlying continuing business is GBP0.7million.
The items adjusted for are:
Impairment charge: GBP16.1m Significant Items: GBP0.3m
The impairment charge relates to purchased goodwill and aligns the GBP41.3 million carrying value to what the Board considers recoverable based on current trading forecasts and only the cost saving measures underway at the balance sheet date. Had the full benefits of the recently launched radical reform programme been taken into the account the impairment would only have been GBP0.6 million.
After finance costs of GBP1.9 million (FY21: GBP4.7 million), a significant reduction on FY21 owing to the repayment of some investor loans in FY22, the loss before tax for the year was GBP19.0 million (2021: loss of GBP6.1 million) for continuing businesses. This equates to a loss per share of 21.46 pence on continuing operations (loss of 6.50 pence in 2021), (see note 10).
Cash flow and net debt
Conserving cash is a key objective for the Group. Following the sale of Brighter Foods in May 2021 the Group netted cash proceeds of GBP35.4 million. The proceeds were utilised as follows:
The Group made a payment of GBP8.5 million to the Group's pension scheme (the Napier Brown Retirement Plan) (the "Plan"), broadly equivalent to the Plan's low dependency technical provisions basis.
As such, it is expected that the Group will not have to pay further deficit contributions, until a new schedule of contributions is agreed based on the valuation as at 31 March 2022 for the Plan; such agreement would take into account this cash injection, which may result in payments of up to GBP1.5 million (in aggregate) being paid between 1 January 2023 and 30 June 2025 to close the gap towards a buy-out basis.
The Group paid GBP23.1 million to the Loan Note Holders, reducing the amount repayable from GBP45.6 million to GBP22.5 million, with a further GBP0.5 million waiver from the loan note holders reducing the debt to GBP22.0 million in respect of the loan notes.
Approximately GBP3.0 million of net proceeds was retained to provide working capital to support the financing needs of Renshaw and Rainbow Dust Colours.
The net debt at the end of FY22 stood at GBP25.5 million versus GBP48.8 million in FY21. This predominantly comprises shareholder loans of which GBP16.3 million is in the form of convertible loan notes.
Net debt is a key performance indicator for the Group and is explained in note 9.
12 months 2022 2021 to March GBP'000s GBP'000s -------------------- --------- --------- Revenue 40,431 37,292 Gross profit 16,130 15,164 Delivered margin 12,170 11,549 Delivered margin % 30.0% 31.0% Underlying EBITDA (adjusted)* 659 227 Operating (loss) before impairment and significant items (676) (1,464) Operating loss after impairment and significant items (17,089) (1,261) Operating loss % (42.3%) (3.4%) Loss before tax (18,978) (6,108) -------------------- --------- ---------
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 following reasons.
The forecasts are prepared on a Group basis and therefore include underlying forecasts and assumptions for the subsidiaries and the Parent Company. For this reason, the Group is referred to in the following paragraphs when discussing forecasting and events as all are interdependent on one another.
The Group incurred a loss on continuing operations before tax and impairment of GBP2.9m in the year to 31 March 2022 (2021: GBP6.1m loss) and at 31 March 2022 had net current assets of GBP5.1m (2021: GBP15.0m) and net assets of GBP5.1m (2021: GBP3.3m). The Group manages its day-to-day working capital requirement using various facilities with Leumi ABL. At the year end the available Group finance facilities, provided by Leumi ABL, totalled GBP6.6m, of which GBP5.0m was utilised. The Group shareholder loan notes and convertible loan notes, totalled GBP23.6m and are classified as creditors due after one year, and are repayable on 19 May 2023.
The Directors have prepared financial forecasts for the Group, comprising income statements, balance sheets and cash flows through to March 2024 which have been approved by the Board. In assessing the appropriateness of the Group's accounts being prepared on a going concern basis, the Directors have considered factors likely to affect its planned future performance and reasonably possible downside sensitivity scenarios.
As noted in the Strategic Report and Business Review, the macroeconomic headwinds are very challenging and are expected to continue for the immediate future given the wider economic outlook. A radical reform of the business has commenced, which requires the support of new funding, in order to return the Group to profitability and to position it for sustainable growth once economic conditions improve. The new funding requirement is GBP2.5m of which GBP1.0m has been pledged, but not yet formally committed, by existing Loan Note Holders.
Due to the current (and severe) inflationary cost pressures impacting consumer demand, and the ongoing difficulty in sourcing key ingredients and services, sales volumes are forecast to be 20% lower than FY22. New customers and product launches during FY22 and FY23, the unwinding of inventory on hand, actions from the restructuring plan including re-setting sales pricing particularly within UK Retail, together with overhead savings and manufacturing operational efficiencies have been factored into FY23 and FY24 projections.
The cash flow forecasts reflect the introduction of a new finance facility of GBP7.5 million, of which GBP1.5 million would be incremental to the Group's current facilities, and an additional GBP1.0 million of shareholder loans. Discussions are underway with asset-backed lenders to provide the new asset-backed facility of circa GBP7.5 million, comprising a term loan of GBP2.3 million and circa GBP5.0 million invoice discount facility, underpinned by asset security and the recovery plan to replace the current ABL Leumi facility. The additional GBP1.0 million of shareholder loans has been pledged and discussions are ongoing as to the pricing of this and the ranking of shareholder loans between Loan Note Holders. No new funding agreements have been formally signed as of the date of signing the financial statements as the two funding arrangements are mutually conditional.
The Board has reviewed the sensitivity of the sales and the effects of these have been modelled.
The Directors considered the potential impact of a reduction in the volume of revenue by 5% throughout the year. Without any mitigating action, Group cash would reduce to GBPnil in March 2023. However, were there to be this level of lower sales, mitigating action would be taken quickly with an immediate cessation of discretionary spend. The short-term plan would be a reduction in the number of factory and overhead staff, and general overheads. Although there could be a 3-month time lag on implementing any people changes, these changes would create liquidity headroom with the low point of cash availability then being June 2023 when cash would reduce to GBP0.2 million as a result of the stock build for Quarter 3 (October to December).
The current banking covenants that are in place for FY23 remain the same as FY22.
The covenants are a rolling 3-month EBITDA being within 80% of the forecast and greater than GBP5 million tangible net worth. The covenants are not breached on the stressed scenarios including mitigating action, referred to above. However, a new finance provider may require different covenants to the above.
The principal shareholders of the Group continue to show considerable support.
Based on the Directors review of the above, there are three key areas which indicate the existence of a material uncertainty which may cast significant doubt on the Group and Parent Company's ability to continue as a going concern, which are as follows:
-- The cash flow forecasts to be achieved by the Group over the next 12 months require several significant actions to be delivered successfully in the short-term, including the Group negotiating customer price uplifts as part of an overall price reset (in addition to the ability to pass on increased inflationary cost pressures to customers), making overhead cost reductions and making improvements in working capital management (specifically inventory reductions). The achievability of the cash flow forecasts based on the restructuring of the business has some execution risk, as well as the impact of wider economic headwinds, particularly in relation to duration and the effect on consumer demand for our products. However, with support from customers and employees, the Directors consider these actions to be achievable.
-- The cash flow forecasts are based upon the approval of new loans totalling GBP2.5 million being obtained, including an additional GBP1.0 million of shareholder loans. In order to secure the incremental GBP1.5 million asset-backed loan, the business requires a re-financing of the facilities currently funded by Leumi ABL to an alternative provider. Discussions have already commenced with asset-backed lenders but are yet to be agreed.
The cash flow forecasts are based upon the extension of the maturity of the shareholder loan notes and convertible loan notes from May 2023 to at least May 2024, which are pledged, however the documentation is not yet formally committed.
If these targeted actions and forecasts are not able to be delivered, or the new bank and shareholder loans identified above are not secured, the Group may not be able to operate within its existing cash and financing facilities and would therefore need alternative and/or additional funding in excess of those noted above.
In light of the above, the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, the factors described above indicate the existence of a material uncertainty which may cast significant doubt on the Group and Parent Company's ability to continue as a going concern and to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
Pension Scheme
The Group offers a defined contribution scheme for all current employees that is funded on a monthly basis. 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 surplus at 27 March 2022 of GBP1.5 million (2021: deficit GBP7.5 million). The Plan assets increased by GBP6.9 million to GBP21.4 million (2021: GBP14.5 million) and the Plan liabilities are GBP19.9 million compared to GBP21.9 million at 31 March 2021. Following the sale of Brighter Foods on the 11 May 2021, a payment of GBP8.5 million was made to the Napier Brown Retirement Plan. This included a pre-payment of GBP1.8 million, through to 1 January 2023, in relation to the deficit recovery schedule agreed as part of the 31 March 2018 valuation. The Trustee and Company have agreed the 31 March 2021 valuation, which has a deficit of GBP1.5 million, and are finalising the deficit recovery and security provisions within the pension funding agreement.
Dividend
The Directors, considering the Group's performance and cash resources, do not recommend the payment of a final dividend for the year ended 31 March 2022 (2021: nil).
Consolidated Statement of Comprehensive Income
Year ended 31 March 2022
Hot Features
Premium
12 months 12 months
ended ended
31 March 31 March
2022 2021
Notes GBP'000s GBP'000s
----------------------------------------------------- ----- --------- ---------
Revenue 2 40,431 37,292
Cost of sales (24,301) (22,128)
----------------------------------------------------- ----- --------- ---------
Gross profit 16,130 15,164
Income from Government Furlough Scheme - 1,205
Other operating income 56 48
Distribution expenses (3,960) (3,615)
Administrative expenses (12,902) (14,266)
----------------------------------------------------- ----- --------- ---------
Operating loss before impairment and significant
items (676) (1,464)
Impairment charge on goodwill 11 (16,103) -
Significant items 4 (310) 203
----------------------------------------------------- ----- --------- ---------
Operating loss after impairment and significant
items 5 (17,089) (1,261)
Finance costs 6 (1,891) (4,665)
Other finance costs 7 2 (182)
----------------------------------------------------- ----- --------- ---------
Loss before tax (18,978) (6,108)
Income tax (charge)/credit (2,384) 27
----------------------------------------------------- ----- --------- ---------
Loss from continuing operations (21,362) (6,081)
Profit from discontinued operations (assets
held for sale) 14 19,986 2,617
----------------------------------------------------- ----- --------- ---------
Net loss (1,376) (3,464)
----------------------------------------------------- ----- --------- ---------
Attributable to:
Owners of the parent (1,376) (3,856)
Non-controlling interests - 392
----------------------------------------------------- ----- --------- ---------
Net loss (1,376) (3,464)
Items that will or may be reclassified to
profit or loss
Foreign exchange differences on translation
of subsidiaries (25) 65
Items that will not be reclassified to profit
or loss
Actuarial profit/(loss) on defined benefit
plan 501 (107)
Tax relating to items which will not be reclassified 527 (102)
----------------------------------------------------- ----- --------- ---------
Other comprehensive profit/(loss) 1,003 (144)
----------------------------------------------------- ----- --------- ---------
Total comprehensive loss for the year (373) (3,608)
----------------------------------------------------- ----- --------- ---------
Attributable to:
Owners of the parent (373) (4,000)
Non-controlling interests - 392
----------------------------------------------------- ----- --------- ---------
Total comprehensive loss for the year (373) (3,608)
----------------------------------------------------- ----- --------- ---------
12 months 12 months
ended ended
31 March 31 March
2022 2021
Notes GBP'000s GBP'000s
----------------------------------------------------- ----- --------- ---------
Basic and diluted loss per share - continuing
operations 10 (21.46)p (6.50)p
Basic earnings per share - discontinued operations 10 20.07p 2.63p
Diluted earnings per share - discontinued operations 10 6.23p 0.82p
----------------------------------------------------- ----- --------- ---------
Consolidated Statement of Changes in Equity
Year ended 31 March 2022
Foreign
Issued Share Share Exchange
Share Premium Other Option Translation Retained Non-Controlling Total
Capital Account Reserves Reserve Reserve Earnings Total Interest Equity
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Balance as at
31
March 2020 1,991 3,294 (4,796) 203 (125) 3,783 4,350 2,806 7,156
Loss for the
year - - - - - (3,856) (3,856) 392 (3,464)
Other
comprehensive
(loss)/gain
for the
year - - - - 65 (210) (145) - (145)
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Total
comprehensive
(loss)/gain
for the year - - - - 65 (4,065) (4,000) 392 (3,608)
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Transactions
with
owners of the
Group,
recognised
directly
in equity
Share options
lapsed
in year - - - (200) - - (200) - (200)
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Total
contributions
by and
distributions
to owners of
the Group - - - (200) - - (200) - (200)
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Balance as at
31
March 2021 1,991 3,294 (4,796) 3 (60) (282) 150 3,198 3,348
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Total
comprehensive
loss
for the year
Loss for the
year - - - - - (1,376) (1,376) (3,198) (4,574)
Other
comprehensive
(loss)/gain
for the
year - - - - (25) 1,028 1,003 - 1,003
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Total
comprehensive
(loss)/gain
for the year - - - - (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 holders - - 540 - - - 540 - 540
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Total
contributions
by and
distributions
to owners of
the Group - - 5,336 (3) - (348) 5,333 - 5,333
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Balance as at
31
March 2022 1,991 3,294 540 - (85) (630) 5,110 - 5,110
-------------- -------- -------- -------- --------- ----------- --------- --------- --------------- ---------
Consolidated Statement of Financial Position
Year ended 31 March 2022
31 March 31 March
2022 2021
Notes GBP'000s GBP'000s
---------------------------------------------- ----- --------- ---------
NON-CURRENT ASSETS
Goodwill 11 16,619 32,722
Other intangible assets - 9
Tangible fixed assets 8,066 8,548
Investments - -
Deferred tax asset - 1,426
---------------------------------------------- ----- --------- ---------
24,685 42,705
---------------------------------------------- ----- --------- ---------
CURRENT ASSETS
Inventories 4,024 3,597
Trade and other receivables 6,572 7,248
Retirement benefit asset 13 1,497 -
Cash collateral 50 215
Cash and cash equivalents 2,734 622
---------------------------------------------- ----- --------- ---------
14,877 11,682
---------------------------------------------- ----- --------- ---------
Assets classed as held for sale 1,078 20,157
---------------------------------------------- ----- --------- ---------
TOTAL ASSETS 40,640 74,544
---------------------------------------------- ----- --------- ---------
CURRENT LIABILITIES
Trade and other payables 6,665 8,087
Current tax liability 4 -
Borrowings 12 3,718 2,659
Lease liabilities 48 93
NCI put option - 1,553
---------------------------------------------- ----- --------- ---------
10,435 12,392
---------------------------------------------- ----- --------- ---------
Liabilities classed as held for sale - 4,442
---------------------------------------------- ----- --------- ---------
NON-CURRENT LIABILITIES
Borrowings 12 24,293 46,624
Lease liabilities 155 -
Derivative liability - convertible loan notes - 17
Deferred tax liabilities 647 216
Retirement benefit obligation 13 - 7,505
---------------------------------------------- ----- --------- ---------
25,095 54,362
---------------------------------------------- ----- --------- ---------
TOTAL LIABILITIES 35,530 71,196
---------------------------------------------- ----- --------- ---------
NET ASSETS 5,110 3,348
---------------------------------------------- ----- --------- ---------
EQUITY
Share capital 1,991 1,991
Share premium account 3,294 3,294
Other reserves 540 (4,796)
Share option reserve - 3
Foreign exchange translation reserve (85) (60)
Retained earnings (630) (282)
---------------------------------------------- ----- --------- ---------
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT 5,110 150
Non-controlling Interest - 3,198
---------------------------------------------- ----- --------- ---------
TOTAL EQUITY 5,110 3,348
---------------------------------------------- ----- --------- ---------
Consolidated Cash Flow Statement
Year ended 31 March 2022
31 March 31 March
2022 2021
Notes GBP'000s GBP'000s
---------------------------------------------------- ----- --------- ---------
CASH FLOW FROM OPERATING ACTIVITIES
Adjusted for:
Profit/(loss) before taxation 1,008 (3,491)
Finance and other finance costs 6,7 1,889 4,856
Share options reserve credit (3) (200)
Foreign exchange movement (3) 308
Goodwill impairment charge 11 16,103 -
Impairment charge on assets held for sale 70 -
Waiver of shareholder loans (19,986) -
Profit on disposal of subsidiary - 31
Loss on disposal of property, plant and equipment - 7
Fair value of derivative liability - 17
Fair value of NCI put option - (1,302)
Depreciation of property, plant, and equipment 1,326 2,435
Amortisation of intangibles 9 52
---------------------------------------------------- ----- --------- ---------
Operating Cash Flow 413 2,713
(Increase)/decrease in inventories (915) 676
Decrease in receivables 2,606 23
Pension contributions 13 (8,500) (720)
Decrease in cash collateral 165 -
(Decrease)/increase in payables (2,518) 953
---------------------------------------------------- ----- --------- ---------
Cash (used by)/from operations (8,749) 3,645
Interest paid (139) (86)
Interest on leases - (26)
---------------------------------------------------- ----- --------- ---------
Net cash (outflow)/inflow from operating activities (8,888) 3,533
---------------------------------------------------- ----- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (844) (567)
Disposal of subsidiary, net of cash disposed
of 14 33,153 -
Cost of disposal of subsidiary (1,138) 50
---------------------------------------------------- ----- --------- ---------
Net cash inflow/(outflow) from investing activities 31,171 (517)
---------------------------------------------------- ----- --------- ---------
CASH FLOW USED IN FINANCING ACTIVITIES
Repayment of lease liabilities (113) (402)
Outflow of term loans (865) (865)
Interest paid on investor loans (5,310) -
Inflow of other loans 12 - (35)
Repayment of investor loans 12 (17,790) -
Drawdowns on revolving credit facilities 36,045 42,816
Repayments on revolving credit facilities (34,571) (42,876)
---------------------------------------------------- ----- --------- ---------
Net cash outflow from financing activities (22,604) (1,362)
---------------------------------------------------- ----- --------- ---------
NET (DECREASE) / INCREASE IN CASH AND CASH
EQUIVALENTS (321) 1,654
---------------------------------------------------- ----- --------- ---------
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of period 3,080 1,363
Effects of currency translations on cash and
cash equivalents (25) 63
Net movement in cash and cash equivalents (321) 1,654
---------------------------------------------------- ----- --------- ---------
Cash and cash equivalents at end of period 2,734 3,080
---------------------------------------------------- ----- --------- ---------
Continuing operations 2,734 622
Discontinued operations - 2,458
---------------------------------------------------- ----- --------- ---------
Cash and cash equivalents at end of period 2,734 3,080
---------------------------------------------------- ----- --------- ---------
Notes to the Financial Information
Year ended 31 March 2022
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).
Basis of preparation
The consolidated financial information is presented on the basis of international accounting standards and has been prepared in accordance with AIM rules and the Companies Act 2006, as applicable to companies reporting under international accounting standards.
The financial information set out in this preliminary statement does not constitute the Group's statutory accounts for the years ended 31 March 2022 or 2021. Statutory accounts for 2021 have been delivered to the Registrar of Companies, and those for 2022 will be delivered in due course. The auditor has reported on those accounts; their report for the year ended 31 March 2022 was (i) unqualified (ii) included a Material uncertainty related to going concern paragraph, as
-- The cash flow forecasts to be achieved over the next 12 months require several significant actions to be delivered successfully in the short term;
-- The cash flow forecasts are based upon the approval of new loans totalling GBP2.5 million being obtained, which are yet to be agreed; and
-- The cash flow forecasts are based upon the extension of the maturity of the shareholder loan notes and convertible loan notes from May 2023 to at least May 2024, which is not yet formally committed.
(iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The accounts are prepared on a going concern basis.
These results were approved by the Board of Directors on 30 September 2022
Discontinued operations
A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operation that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification of a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is presented as if the operation had discontinued from the start of the comparative period.
During the twelve months to 31 March 2022, the Group sold Brighter Foods Limited to THG plc on the 11 May 2021.
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; -- Amendments to IAS 16 Property, Plant and Equipment; -- Amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets;
The adoption of the amendments to IFRS 1, IFRS 9 and IAS 41, 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:
Manufactures, sells, and supplies cake
GBP40.4 million decorating products and ingredients
Cake Decoration (2021 GBP37.3m) for the baking sector.
----------------- ---------------- --------------------------------------
Discontinued
Operations (Food GBP1.3 million Manufactures and supplies a range of
Ingredients) (2021 GBP19.8m) snack bars to the retail 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.
Head Office
Cake and non-trading Continuing Discontinued Total
Decoration subsidiaries Operations Operations Group
12 months ended 31 March 2022 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------- ----------- ---------------- ----------- ------------ ---------
Total revenue 42,545 - 42,545 1,275 43,820
Intercompany sales (2,114) - (2,114) - (2,114)
---------------------------------- ----------- ---------------- ----------- ------------ ---------
External revenue 40,431 - 40,431 1,275 41,706
Cost of sales (24,301) - (24,301) (1,063) (25,364)
---------------------------------- ----------- ---------------- ----------- ------------ ---------
Gross profit 16,130 - 16,130 212 16,342
Income from Furlough Scheme - - - 137 137
Other operating income 25 31 56 - 56
Distribution expenses (3,960) - (3,960) (47) (4,007)
Administrative expenses (12,396) (506) (12,902) (403) (13,305)
---------------------------------- ----------- ---------------- ----------- ------------ ---------
Operating (loss) / profit before
impairment and significant items (201) (475) (676) (101) (777)
Impairment charge - (16,103) (16,103) - (16,103)
Significant Items (254) (56) (310) (229) (539)
---------------------------------- ----------- ---------------- ----------- ------------ ---------
Operating (loss)/profit after
impairment and significant items (455) (16,634) (17,089) (330) (17,419)
Finance costs (138) (1,752) (1,891) - (1,891)
Other finance costs - 2 2 - 2
---------------------------------- ----------- ---------------- ----------- ------------ ---------
(Loss)/profit before tax (593) (18,384) (18,978) (330) (19,308)
Income tax credit/(expense) - (2,384) (2,384) - (2,384)
---------------------------------- ----------- ---------------- ----------- ------------ ---------
Profit on disposal - - 20,316 - 20,316
---------------------------------- ----------- ---------------- ----------- ------------ ---------
(Loss)/profit after tax as
per comprehensive statement
of income (593) (20,768) (1,046) (330) (1,376)
---------------------------------- ----------- ---------------- ----------- ------------ ---------
Head Office
Cake and non-trading Continuing Discontinued Total
Decoration subsidiaries Operations Operations Group
12 months ended 31 March 2021 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------------------------------- ----------- ---------------- ----------- ------------ ---------
Total revenue 40,206 - 40,206 19,788 59,994
Intercompany sales (2,914) - (2,914) - (2,914)
--------------------------------- ----------- ---------------- ----------- ------------ ---------
External revenue 37,292 - 37,292 19,788 57,080
Cost of sales (22,128) - (22,128) (12,992) (35,120)
--------------------------------- ----------- ---------------- ----------- ------------ ---------
Gross profit 15,164 - 15,164 6,796 21,960
Income from Furlough Scheme 1,205 - 1,205 461 1,666
Other operating income - 48 48 49 97
Distribution expenses (3,615) - (3,615) (411) (4,026)
Administrative expenses (13,657) (609) (14,266) (4,100) (18,366)
--------------------------------- ----------- ---------------- ----------- ------------ ---------
Operating (loss) / profit before
impairment
and significant items (903) (561) (1,464) 2,795 1,331
Significant Items (763) 966 203 (169) 34
--------------------------------- ----------- ---------------- ----------- ------------ ---------
Operating (loss)/profit after
impairment
and significant items (1,666) 405 (1,261) 2,626 1,365
Finance costs (95) (4,570) (4,665) (9) (4,674)
Other finance costs - (182) (182) - (182)
--------------------------------- ----------- ---------------- ----------- ------------ ---------
(Loss)/profit before tax (1,761) (4,347) (6,108) 2,617 (3,491)
Income tax credit/(expense) - 27 27 - 27
--------------------------------- ----------- ---------------- ----------- ------------ ---------
(Loss)/profit after tax as
per
comprehensive statement of
income (1,761) (4,320) (6,081) 2,617 (3,464)
--------------------------------- ----------- ---------------- ----------- ------------ ---------
Geographical segments
The Group earns revenue from countries outside the United Kingdom, as shown below:
Cake Discontinued
Decoration Operations
12 months ended 31 March 2022 GBP'000s GBP'000s
------------------------------ ----------- ------------
UK 26,992 1,275
Europe 5,722 -
USA 6,892 -
Rest of World 825 -
------------------------------ ----------- ------------
Total 40,431 1,275
------------------------------ ----------- ------------
The Group has two customers which constitute over 10% of revenue: one providing 21% of revenue, and the other 13%.
Cake Discontinued
Decoration Operations
12 months ended 31 March 2021 GBP'000s GBP'000s
------------------------------ ----------- ------------
UK 25,795 19,788
Europe 4,465 -
USA 6,191 -
Rest of World 841 -
------------------------------ ----------- ------------
Total 37,292 19,788
------------------------------ ----------- ------------
The Group has two customers which constitute over 10% of revenue: one providing 17% of revenue, and the other 10%.
Reconciliation of operating Head Office
(loss)/profit to underlying Cake and non-trading Continuing Discontinued Total
adjusted EBITDA to 31 March Decoration subsidiaries Operations Operations Group
2022 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------- ----------- ---------------- ----------- ------------ ---------
Operating loss (455) (16,634) (17,089) (330) (17,419)
Significant items 254 56 310 229 539
Impairment charge - 16,103 16,103 - 16,103
Depreciation 1,209 117 1,326 - 1,326
Amortisation 9 - 9 - 9
----------------------------- ----------- ---------------- ----------- ------------ ---------
Underlying adjusted EBITDA 1,017 (358) 659 (101) 558
----------------------------- ----------- ---------------- ----------- ------------ ---------
Reconciliation of operating Head Office
(loss)/profit to underlying Cake and non-trading Continuing Discontinued Total
adjusted EBITDA to 31 March Decoration subsidiaries Operations Operations Group
2021 GBP'000s GBP'000s GBP'000s GBP'000s GBP'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
----------------------------- ----------- ---------------- ----------- ------------ ---------
Head Office
Cake and non-trading Continuing Discontinued Total
Decoration subsidiaries Operations Operations Group
31 March 2022 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------- ----------- ---------------- ----------- ------------ ---------
Segment assets 36,017 4,623 40,640 - 40,640
------------------------------------- ----------- ---------------- ----------- ------------ ---------
Segment liabilities 10,606 24,924 35,530 - 35,530
------------------------------------- ----------- ---------------- ----------- ------------ ---------
Net operating assets / (liabilities) 25,411 (20,301) 5,110 - 5,110
------------------------------------- ----------- ---------------- ----------- ------------ ---------
Non-current asset additions 844 - 844 - 844
Depreciation (1,209) (117) (1,326) - (1,326)
Amortisation (9) - (9) - (9)
------------------------------------- ----------- ---------------- ----------- ------------ ---------
Head Office
Cake and non-trading Continuing Discontinued Total
Decoration subsidiaries Operations Operations Group
31 March 2021 GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------- ----------- ---------------- ----------- ------------ ---------
Segment assets 52,180 3,355 55,535 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)
------------------------------------- ----------- ---------------- ----------- ------------ ---------
In line with the Group strategy of allowing each business to understand its true cost base as a stand-alone business, during the 12 months ended 31 March 2022, Head Office costs of GBP1.2 million (2021: GBP0.8m) have been re-allocated to the Cake Decoration division.
4. Significant items
12 months 12 months
ended ended
31 March 31 March
2022 2021
GBP'000s GBP'000s
------------------------------------------------------------- --------- ---------
Costs relating to disposal of Brighter Foods - (269)
Professional fees in relation to refinancing costs (62) (38)
Movement in provisions relating to the non-controlling
interest put option - 1,302
Professional fees in relation to Liverpool factory/Wavertree
closure (90) (113)
Closure of Renshaw US warehouse (15) (171)
Management restructuring (143) (508)
------------------------------------------------------------- --------- ---------
Significant items - Continuing business (310) 203
------------------------------------------------------------- --------- ---------
Continuing business (310) 203
Discontinued business (229) (169)
------------------------------------------------------------- --------- ---------
Total significant items (539) 34
------------------------------------------------------------- --------- ---------
The Group's underlying profit figure excludes a number of items which are material and non-recurring and are detailed separately to ensure the underlying operating performance of the businesses is clearly visible, without the distortions of these non-recurring costs.
The year to 31 March 2022 had the following significant costs:
1. Professional fees in relation to the refinancing of the Investor Loan Notes and CLNs.
2. Professional fees in relation to the closure of the Wavertree property and relocation to Crown Street Liverpool.
3. Professional fees in relation to the closure of the Renshaw US warehouse. 4. Redundancy costs associated with the restructuring of the Cake Decoration business.
The year to 31 March 2021 had the following significant costs:
1. The legal and due diligence costs involved in preparing the Brighter Food business for disposal.
2. The legal costs associated with including Brighter Foods in the CID facility with ABL Leumi. 3. Project management costs for projects running in the Crown Street factory.
4. Costs associated with closing the Renshaw US warehouse, the lease terminating in July 2021, with stockholding relocated to Crown Street Liverpool.
5. Redundancy costs of the restructuring plan started in FY20.
6. Brighter Foods incurred costs in relation to a proposed sale, as the disposal has occurred, Brighter Foods is now shown as a discontinued operation.
5. Operating loss
Operating loss for continuing operations
12 months 12 months
ended ended
31 March 31 March
2022 2021
Notes GBP'000s GBP'000s
----------------------------------------------- ----- --------- ---------
External Sales 40,431 37,292
----------------------------------------------- ----- --------- ---------
Staff Costs (11,696) (12,276)
Inventories:
- cost of inventories as an expense (included
in cost of sales) (18,577) (16,294)
Depreciation of property, plant, and equipment (1,326) (1,639)
Amortisation of intangible assets (9) (52)
Significant items 4 (310) 203
Impairment charges 11 (16,103) -
Research and development expenditure (646) (626)
Impairment of trade receivables (53) (230)
Foreign exchange gains/(losses) 3 (308)
Other net operating expenses (8,803) (7,523)
Total (57,520) (38,553)
----------------------------------------------- ----- --------- ---------
Operating loss (17,089) (1,261)
----------------------------------------------- ----- --------- ---------
6. Finance costs
12 months 12 months
ended ended
31 March 31 March
2022 2021
GBP'000s GBP'000s
-------------------------------------------------------- --------- ---------
Interest on bank loans, overdrafts, and investor loans (1,896) (4,600)
-------------------------------------------------------- --------- ---------
Interest on lease liabilities (12) (26)
Interest on non-controlling interest put option - 43
Finance cost on substantial modification of convertible
loan notes 17 (91)
(1,891) (4,674)
-------------------------------------------------------- --------- ---------
Continuing business (1,891) (4,665)
-------------------------------------------------------- --------- ---------
Discontinued business - (9)
-------------------------------------------------------- --------- ---------
7. Other finance (income)/costs
12 months 12 months
ended ended
31 March 31 March
2022 2021
GBP'000s GBP'000s
------------------------------------------------- --------- ---------
Interest on pension scheme liabilities (note 13) (429) (465)
Interest on pension scheme assets (note 13) 431 312
Interest on effect of asset ceiling/IFRIC 14 - (29)
------------------------------------------------- --------- ---------
2 (182)
------------------------------------------------- --------- ---------
8. Directors' remuneration
12 months 12 months
ended ended
31 March 31 March
2022 2021
GBP'000s GBP'000s
---------------------------------------- --------- ---------
Directors' salaries, benefits, and fees (650) (482)
---------------------------------------- --------- ---------
(650) (482)
---------------------------------------- --------- ---------
The emoluments of the Directors for the period were as follows:
12 months 12 months
Fees/Salaries ended ended
inc. Er's Taxable Pension 31 March 31 March
NIC Benefits Bonus Contributions 2022 2021
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------- ------------- --------- --------- -------------- --------- ---------
M J Holt 175 - 106 - 281 160
J M d'Unienville 25 - - - 25 25
M Keeling 178 10 62 - 250 203
J A Mackenzie 25 - - - 25 25
A Ridgwell 27 - - - 27 27
G Lumsden 42 - - - 42 42
----------------- ------------- --------- --------- -------------- --------- ---------
472 10 168 - 650 482
----------------- ------------- --------- --------- -------------- --------- ---------
This includes salaries and fees (including Employer's NI) received as an officer of the Company. Taxable benefits include car allowance, health and other taxable payments for expenses paid by the Company.
All salaries and fees disclosed are included in current year trading results.
M Keeling's salary above represents 100%, however 50% of the salary costs are recharged from J F Renshaw to Group.
Directors' fees paid to J A MacKenzie are charged and paid to Downing LLP.
Consultancy fees and expenses paid to entities in which Directors hold a beneficial interest, for services provided to the Group by the Directors.
The bonus paid to M J Holt relates to the sale of Brighter Foods Limited and was fully funded by the Loan Note Holders via a debt waiver.
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 GBP0.05 million (FY21: GBP0.2m). 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
Non-current Current
Loans and Loans
Borrowings and Borrowings
GBP'000s GBP'000s
(Note (Note Total
Real Good Food plc (Group) 12) 12) GBP'000s
-------------------------------------------------- ----------- --------------- ---------
At 31 March 2020 43,059 2,717 45,776
-------------------------------------------------- ----------- --------------- ---------
Cash Flows (37) (923) (960)
Non-cash flows
- Interest accruing on loans 4,376 - 4,376
- Finance loss on change of terms for convertible
loan notes 91 _ 91
Loans and borrowings classified as non-current
at March 2020 becoming current before March
2021 (865) 865 -
-------------------------------------------------- ----------- --------------- ---------
At 31 March 2021 46,624 2,659 49,283
-------------------------------------------------- ----------- --------------- ---------
Cash Flows (23,100) 608 (22,492)
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 before March
2022 (451) 451 -
-------------------------------------------------- ----------- --------------- ---------
At 31 March 2022 24,293 3,718 28,011
-------------------------------------------------- ----------- --------------- ---------
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
2022 2021
Group Group
Note GBP'000s GBP'000s
----------------------------- ---- --------- ---------
Short term borrowings 12 (3,718) (2,659)
Short term lease liabilities 12 (48) (93)
Long term borrowings 12 (24,293) (46,624)
Long term lease liabilities 12 (155) -
Cash 2,734 622
----------------------------- ---- --------- ---------
Total Net Debt (25,480) (48,754)
----------------------------- ---- --------- ---------
Group
Net cash
and current Non-current
borrowings borrowings Net debt
GBP'000s GBP'000s GBP'000s
------------------------- ------------ ----------- ---------
At 1 April 2020 1,744 43,626 45,370
Cash flow 386 (1,748) (1,362)
Other non-cash movements - 4,746 4,746
------------------------- ------------ ----------- ---------
At 31 March 2021 2,130 46,624 48,754
Cash flow (1,617) (23,100) (24,717)
Other non-cash movements 519 924 1,443
------------------------- ------------ ----------- ---------
At 31 March 2022 1,032 24,448 25,480
------------------------- ------------ ----------- ---------
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 12 months 12 months 12 months
ended ended ended ended
31 March 31 March 31 March 31 March
2022 2022 2021 2021
Continuing Discontinued Continuing Discontinued
Operations Operations Operations Operations
------------------------------------- ----------- ------------- ----------- -------------
(Loss)/profit after tax attributable
to ordinary shareholders (GBP'000s) (21,362) 19,986 (6,473) 2,617
Weighted average number of shares in
issue for basic EPS ('000s) 99,564 99,564 99,564 99,564
Employee share options ('000s) - - 340 340
Convertible loan notes ('000s) 220,980 220,980 220,980 220,980
Weighted average number of shares in
issue for diluted EPS ('000s) 320,544 320,544 320,884 320,884
------------------------------------- ----------- ------------- ----------- -------------
Basic (loss)/earnings per share (21.46)p 20.07p (6.50)p 2.63p
------------------------------------- ----------- ------------- ----------- -------------
The total loss per share for 2022 is (1.39)p for continuing and discontinued operations (2021 continuing and discontinued loss per share: (3.87)p).
Diluted earnings per share
The discontinued operations in the period can be diluted. The impact of this is a diluted earnings per share of 6.23p (2021 0.82p) for discontinued operations. If all of the share options had been exercised before the period end, the earnings per share would then have been a loss per share of (21.46)p on the continuing operations and earnings of 6.23p on the discontinued operations. The weighted average number of shares in issue for the period was 99,564,430 and there are no options outstanding. There were also 8,806,571 convertible loan notes outstanding, of which the weighted average number of shares was 220,979,796. Therefore, the weighted average number of dilutive potential ordinary shares is 320,544,226.
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. The carrying amount of goodwill has been allocated as follows:
Group
GBP'000s
----------------- ---------
Cost
At 1 April 2021 32,722
----------------- ---------
Impairment (16,103)
----------------- ---------
At 31 March 2022 16,619
----------------- ---------
31 March 31 March
2022 2021
GBP'000s GBP'000s
---------------- --------- ---------
Cake Decoration 16,619 32,722
---------------- --------- ---------
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 2% growth rate.
Discount rate assumptions:
The discount rate applied to the cash flows is 10% (2021: 10%). This rate is in line with the Company's actual weighted average cost of capital of 9.67% 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 resulted in an impairment of the goodwill held for Cake Decoration of GBP16.1 million (2021: nil). 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 0.5% in the Group's weighted average cost of capital of 10% to 10.5% would cause a further impairment of GBP1.6 million on the carrying value of goodwill on Cake Decoration.
-- A reduction of 0.5% to the growth rate from 2.0% to 1.5% would cause a further impairment of GBP1.0 million on the carrying value of goodwill on Cake Decoration.
The Board has considered these sensitivities and believe that, owing to trading expectations and a strong brand, the recoverable amount would support the value.
Book value Estimated
of recoverable
cash generating amount/value
unit in use
GBP'000s GBP'000s
---------------- ---------------- -------------
Cake Decoration 25,249 36,547
---------------- ---------------- -------------
12. Borrowings and capital management
31 March 31 March 31 March 31 March
2022 2022 2021 2021
Group Company Group Company
GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------- --------- --------- --------- ---------
Secured borrowings at amortised cost
Bank term loans 1,185 - 2,050 -
Revolving credit facilities 3,267 - 1,794 -
Leases 203 - 93 -
Investor loans* 7,256 7,256 30,240 30,240
Convertible loan notes** 16,303 16,303 15,199 15,199
28,214 23,559 49,376 45,439
------------------------------------- --------- --------- --------- ---------
Borrowings due for settlement within
12 months 3,718 - 2,659 -
Lease liabilities due for settlement
within 12 months 48 - 93 -
Borrowings due for settlement after
12 months 24,293 23,559 46,624 45,439
Lease liabilities due for settlement
after 12 months 155 - -- -
------------------------------------- --------- --------- --------- ---------
Total 28,214 23,559 49,376 45,439
------------------------------------- --------- --------- --------- ---------
* The investor loans shown consists of GBP4.7 million principal amount, GBP1.8 million accrued interest up to 31 March 2022 and redemption premiums of GBP0.7 million.
** Convertible loan notes shown at 31 March 2022 consist of GBP8.8 million investment (2021: GBP8.8 million), GBP7.5 million accrued interest (2021: GBP6.3 million), and GBP0.02k of transaction costs (2021: nil) being spread over the remaining life of the liability and a finance cost of GBP0.7m and a fair value adjustment of (GBP0.7m), resulting from a substantial modification to the Convertible Loan Note terms requiring de-recognition of the existing loans and recognition of new loans.
All existing shareholder loans are due to be paid in May 2023, however the Loan note holders have pledged to extend them to May 2024, however the documentation is not yet in place.
Convertible loan notes
In May 2018, the Company secured further funding from each of its major shareholders totalling GBP8.8 million. NB Holdings Ltd and Omnicane Investors Ltd each providing GBP3.4 million, and funds managed by Downing LLP provided GBP1.9 million. This instrument has since, with shareholder approval, been replaced with convertible loan notes ("CLN's") of GBP8.8 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 have pledged to amend the repayment date of the loans to May 2024, however the documentation has not yet been 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 2022, the derivative liability was valued at GBP0.1k (2021: GBP17k).
The convertible loan notes shown consist of a host loan at amortised cost of GBP8.8 million, GBP7.5 million of finance costs and GBP0.7 million of costs and a fair value adjustment of (GBP0.7m) resulting from substantial modification to the convertible loan notes up to 31 March 2022.
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 GBP5.45 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 GBP2.1 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 GBP1.3m 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 loans at 31 March 2022 were as follows:
Date Amount Method of Funding Major Shareholder(s)
May 2018 GBP8.8m Secured convertible NB Holdings Ltd (GBP3.4m), Omnicane
loan notes Investors Ltd (GBP3.4m),
Funds managed by Downing LLP (2.0m)
------------ -------- ------------------- ---------------------------------------
March 2018 GBP2.3m Secured loan notes NB Holdings Ltd (GBP0.9m)), Omnicane
Investors Ltd (GBP0.9m),
Funds managed by Downing LLP (GBP0.6m)
------------ -------- ------------------- ---------------------------------------
January 2018 GBP0.3m Secured loan notes Funds managed by Downing LLP (GBP0.3m)
------------ -------- ------------------- ---------------------------------------
September GBP0.8m Secured loan notes Funds managed by Downing LLP (GBP0.8m)
2017
------------ -------- ------------------- ---------------------------------------
June 2017 GBP1.3m Secured loan notes Funds managed by Downing LLP (GBP1.3m)
------------ -------- ------------------- ---------------------------------------
Total GBP13.5m
------------ -------- ------------------- ---------------------------------------
At 31 March 2022, Leumi ABL Limited had a debenture incorporating a floating charge over the undertaking and all property and assets present and future including goodwill, book debts, uncalled capital, buildings, fixtures, intangible assets, fixed plant, and machinery. In addition, the banking arrangements with Lloyds Bank plc had a guarantee over the Wavertree property.
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 on a monthly basis and monitors its forecast and actual cash flows against maturing profiles of its financial assets and liabilities.
The following table details the Group's maturity profile of its financial liabilities:
3 months
Less than to
1 month 1-3 months 1 year 1-5 years 5+ years Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'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 - 1,185
Revolving credit facilities - - 3,267 - - 3,267
Leases 4 8 36 155 - 203
4,980 1,268 3,893 14,588 - 24,729
Interest - - - 9,349 - 9,349
Redemption premiums - - - 706 - 706
--------------------------- --------- ---------- --------- --------- --------- ---------
Total 4,980 1,268 3,893 24,643 - 34,784
--------------------------- --------- ---------- --------- --------- --------- ---------
3 months
Less than to
1 month 1-3 months 1 year 1-5 years 5+ years Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- --------- ---------- --------- --------- --------- ---------
2021
Trade and other payables 7,138 893 56 - - 8,087
Investor loans - - - 20,562 - 20,562
Convertible loan notes - - - 8,807 - 8,807
Bank term loans 72 144 649 1,185 - 2,050
Revolving credit facilities - - 1,794 - - 1,794
Leases 8 15 70 - - 93
NCI put option liability 1,553 - - - - 1,553
---------------------------- --------- ---------- --------- --------- --------- ---------
8,771 1,052 2,569 30,554 - 42,946
Interest - - - 13,029 - 13,029
Redemption premiums - - - 3,084 - 3,084
---------------------------- --------- ---------- --------- --------- --------- ---------
Total 8,771 1,052 2,569 46,667 - 59,059
---------------------------- --------- ---------- --------- --------- --------- ---------
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.
The effect of the exposure is calculated as being:
-- With an excess of $ assets to $ liabilities, a 10% strengthening of the US dollar would result in an increase in pre-tax profits of GBP616k. A 10% weakening of the US dollar would result in a decrease of pre-tax profits of GBP504k.
-- With an excess of EUR liabilities to EUR assets a 10% strengthening of the Euro would result in a decrease in pre-tax profits of GBP686k. A 10% weakening of the Euro would result in an increase of pre-tax profits of GBP561k.
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
Defined Contribution Scheme. 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.
An arrangement was previously agreed with the Trustees under which employer contributions to the scheme are GBP1 million per year from 1 August 2019. For the purposes of IAS 19 the data provided for the 31 March 2018 actuarial valuation, has been approximately updated to reflect defined benefit obligations on the accounting basis at 31 March 2022. This has resulted in a surplus in the Plan of GBP1,497k. The present value of the fair plan assets is in excess of the contribution's payable exceeds the net liability.
Present values of defined benefit obligations, fair value of assets and deficit
31 March 31 March 31 March 31 March 31 March
2022 2021 2020 2019 2018
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------------------------------- --------- --------- --------- --------- ---------
Present value of defined benefit
obligation 19,929 21,885 20,750 21,177 21,448
Fair value of Plan assets (21,426) (14,527) (13,735) (13,774) (13,529)
--------------------------------- --------- --------- --------- --------- ---------
(Surplus)/deficit in Plan (1,497) 7,358 7,015 7,403 7,919
Effect of asset ceiling/IFRIC14 - 147 921 - -
--------------------------------- --------- --------- --------- --------- ---------
Gross amount recognised (1,497) 7,505 7,936 7,403 7,919
Deferred tax* - (1,426) (1,508) (1,258) (1,094)
--------------------------------- --------- --------- --------- --------- ---------
Net (asset)/liability (1,497) 6,079 6,428 6,145 6,825
--------------------------------- --------- --------- --------- --------- ---------
* 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
2022 2021
GBP'000s GBP'000s
---------------------------------------------- --------- ---------
Defined benefit obligation at start of period 21,885 20,750
Interest cost 429 465
Actuarial losses / (gains) (1,536) 1,698
Past service cost - -
Benefits paid (849) (1,028)
---------------------------------------------- --------- ---------
Defined benefit obligation at end of period 19,929 21,885
---------------------------------------------- --------- ---------
Reconciliation of opening and closing balances of the fair value of Plan assets
31 March 31 March
2022 2021
GBP'000s GBP'000s
--------------------------------------------------- --------- ---------
Fair value of Plan assets at start of period 14,527 13,735
Interest income on Plan assets 431 312
Return on assets less interest income (1,182) 788
Contributions paid by the Group 8,500 720
Benefits paid, death-in-service insurance premiums
and expenses (850) (1,028)
--------------------------------------------------- --------- ---------
Fair value of Plan assets at end of period 21,426 14,527
--------------------------------------------------- --------- ---------
UK equities - 2,408
Other investments 21,426 12,119
--------------------------------------------------- --------- ---------
Total plan assets at end of period 21,426 14,527
--------------------------------------------------- --------- ---------
The actual return on the Plan assets over the period ended 31 March 2022 was (GBP1,687k) (2021: GBP1,100k).
Total expense recognised in the Statement of Comprehensive Income within other finance income
31 March 31 March
2022 2021
GBP'000s GBP'000s
----------------------------------------------- --------- ---------
Interest on liabilities 429 465
Interest on assets (431) (312)
Interest on effect of asset ceiling / IFRIC 14 - 29
----------------------------------------------- --------- ---------
Net interest cost/(gain) (2) 182
Past service cost - -
----------------------------------------------- --------- ---------
Total cost (2) 182
----------------------------------------------- --------- ---------
Statement of recognised income and expenses
31 March 31 March
2022 2021
GBP'000s GBP'000s
------------------------------------------------------------ --------- ---------
Actuarial gain/(loss) on the Plan assets (1,182) 788
Actuarial gain/(loss) on the Plan liabilities arising
from changes in demographic assumptions 199 17
Actuarial (loss)/gain on the Plan liabilities arising
from changes in financial assumptions 1,620 (1,715)
Actuarial (loss)/gain experience (283)
Change in the effect of the asset ceiling / IFRIC14 147 803
------------------------------------------------------------ --------- ---------
Total amount recognised in Statement of Other Comprehensive
Income 501 (107)
------------------------------------------------------------ --------- ---------
Assets
31 March 31 March 31 March
2022 2021 2020
GBP'000s GBP'000s GBP'000s
------------------------- --------- --------- ---------
UK equity - 2,408 2,210
Absolute return fund 4,113 1,412 1,522
Corporate Bonds - 2,936 2,746
Gilts 3,427 2,769 3,112
Credit Funds 7,220 175 218
Sterling Liquidity Funds 1,822 - -
Cash/Net current assets 223 - -
Multi-Asset Funds 4,621 4,827 3,927
------------------------- --------- --------- ---------
Total assets 21,426 14,527 13,735
------------------------- --------- --------- ---------
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
2022 2021 2020 2019
GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------------- ---------- ---------- ---------- ----------
Inflation 3.80 3.40 2.70 3.30
Salary increases - - - -
Rate of discount 2.80 2.00 2.30 2.40
Allowance for pension in payment increases
RPI max 5% 3.70 3.30 2.70 3.10
RPI min 3% max 5% 3.90 3.60 3.20 3.50
Allowance for revaluation of deferred
pensions 3.30 2.70 2.20 2.30
------------------------------------------- ---------- ---------- ---------- ----------
Allowance for commutation of pension 90% of 90% of 90% of 90% of
for cash at retirement max max max 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 2018 and then making appropriate adjustments for known experience and for differences in assumptions.
The mortality assumptions adopted at 31 March 2022 and 31 March 2021 imply the following life expectancies from age 65:
31 March 31 March
2022 2021
------------------------------------------- -------- --------
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 12 months 12 months 12 months 12 months
ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March
2022 2021 2020 2019 2018
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------- --------- --------- --------- --------- ---------
Fair value of assets 21,426 14,527 13,735 13,774 13,529
Defined benefit obligation (19,929) (21,885) (20,750) (21,177) (21,448)
Effect of asset ceiling / IFRIC14 - (147) (921) - -
---------------------------------- --------- --------- --------- --------- ---------
Asset/(Liability) in scheme 1,497 (7,505) (7,936) (7,403) (7,919)
Experience adjustment on scheme
assets - - (168) 518 (232)
---------------------------------- --------- --------- --------- --------- ---------
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
Possible Obligation Obligation
Change Increase Decrease
------------------------ ---------- ---------- ----------
Discount Rate (+/- 0.5%) 8% 7%
RPI Inflation (+/- 0.5%) 3% 3%
(+/-) 1
Assumed Life expectancy Year 5% 5%
------------------------ ---------- ---------- ----------
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. Disposal of Brighter Foods Limited
On 11 May 2021, Brighter Foods Limited was sold to The Hut Group plc (THG) for a cash consideration of GBP43.0 million. RGF through its subsidiary NBF, had an interest of 84.334 percent of the issued share capital of Brighter Foods Limited with the balance owned by Brighter's managers. The Group received cash proceeds of GBP35.64 million. The table below shows the profit on sale.
Profit on Sale
31 March
2022
GBP'000s
------------------------------------------------------- ---------
Cash consideration received 35,732
Cash disposed of (2,579)
------------------------------------------------------- ---------
Net cash inflow on disposal of discontinued operations 33,153
------------------------------------------------------- ---------
Net assets disposed of (other than cash):
Property, plant and equipment (5,766)
Inventories (2,784)
Trade and other receivables (1,520)
Trade and other payables 3,176
------------------------------------------------------- ---------
Other long-term borrowing 338
------------------------------------------------------- ---------
(6,556)
------------------------------------------------------- ---------
Goodwill (5,031)
Disposal costs (1,138)
------------------------------------------------------- --------- Put option (3,243) ------------------------------------------------------- --------- Minority interest 3,131 ------------------------------------------------------- --------- Result for period until disposal (330) ------------------------------------------------------- --------- Profit on disposal of Brighter Foods Limited 19,986 ------------------------------------------------------- ---------
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
END
FR UAVBRURURRAA
(END) Dow Jones Newswires
October 03, 2022 02:00 ET (06:00 GMT)
1 Year Real Good Food Chart |
1 Month Real Good Food Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
