Released: 29/09/2009
http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20090929:Rnsc7922Z
.
RNS Number : 7922Z
Real Good Food Company Plc (The)
29 September 2009
The Real Good Food Company plc (AIM: RGD)
Interim Results for the six months ended 30 June 2009
The Real Good Food Company plc ("the Group"), the sugars, ingredients and bakery
company, today announces Interim Results for six months ended 30 June 2009
Highlights
* Trading conditions stabilizing in core sugar business
* Improved Operating Profitability in Bakery Ingredients and Bakery Division
* Total Group sales from continuing operations down 2.2% to £101.7m (2008:
£104.0m) reflecting the price and volume pressures in the Sugar Division as a
result of regime change
* Loss from Continuing Operations of £0.889m (2008: loss of £1.159m)
* Loss per share (basic and diluted) of 1.3p (2008: loss per share of 1.8p)
* Net Cash from Operating activities £0.504m versus (£1.467m) deficit in 2008
Pieter Totte, Chairman of The Real Good Food Company plc, comments:
"The group continues to trade in line with its plan and with its commitments
associated with its banking arrangements. We are currently benefiting from the
consolidation of Renshaw Napier business with underlying overheads reducing with
a full year impact flowing through 2010. The business is focussed on cash
generation by further reducing Working Capital levels and focusing on EBITDA
performance.
"With further stability expected in the sugar market, improved profitability in
both ingredients and bakery, we remain quietly confident regarding the remainder
of the year as we move into our busiest seasonal period."
29 September 2009
ENQUIRIES:
The Real Good Food Company plc Tel: 0151 706 8200
Stephen Heslop, Chief Executive Officer
Mike McDonough, Chief Financial Officer
Shore Capital Tel: 020 7408 4090
Guy Peters
College Hill Tel: 020 7457 2020
Gareth David
CHAIRMAN'S STATEMENT
Overview
As I indicated in my comments at the time of our Annual General Meeting in July,
the first six months of the current year have seen welcome signs of stability
returning to our markets, after lengthy period in which we have had to cope with
the combination of changes to the EU sugar regime, high raw materials and fuel
prices and a fiercely competitive market-place.
Total Group turnover for this period was down slightly at £101.7m (2008:
£104.0m), with sales improvements at our Bakery Ingredients and Bakery
Divisions, which both improved their operating performance year-on-year, driven
by increased margins and lower overheads. This was offset by a 4.3% reduction in
sales at our Sugar Division to £78.1m (2008: £81.7m).
The loss from continuing operations of £0.889m represents an improvement from
the comparable figure of £1.159m.
For the purposes of clarity, we will continue to report our results under the
three previous segmental headings: Sugar, Bakery Ingredients and Bakery.
Within Renshawnapier, where our core sugar trading business has experienced
three years of difficult trading, I can report that overall we feel that our
group is starting to turn the corner and we look with more confidence towards
the future. EU Sugar regime changes are in their last phase, with the final
adjustment of the reference price on 1 October 2009.
Having seen some restoration of stability this year in the sugar market, with
the European sugar market more or less in balance as far as offer and demand is
concerned, we now expect it to strengthen as we go forward. We do expect still
further rationalisation in the EU marketplace, but the biggest adjustments have
been made.
Our Bakery Ingredients Division has had a good start to the year with sales up
1.4% driving increased profitability in what is its "off season".
Our Bakery Division has also had a good first half of the year, with sales up
12% year on year and the business trading ahead of budget. We have enjoyed
considerable success in new product development, achieving more product launches
with all our customers for Quarter Four and early next year than ever during our
ownership. We are looking forward to second half 2009 and believe that the
business is well placed to grow both sales and profitability in 2010.
SUGAR DIVISION
Napier Brown Foods supplies a range of sugar and dry ingredients to food
manufacturers and packs sugar for retail grocery and foodservice customers from
its facilities at Normanton, near Leeds.
£'000s 2009 2008
Six Months Six Months
Sales 78,145 81,653
EBITDA 520 2,126
Operating Profit* 218 1,838
The Board is pleased to be able to confirm we have since seen some stability
during 2009 with our trading in line with budget and latest estimates both in
terms of Operating Profits and Cash generation following the margin pressures
encountered in the second half of last year. Operating Profits however are down
for the period as the six months to June 2008 was unaffected.
BAKERY INGREDIENTS DIVISION
Renshaw supplies a range of high quality food ingredients primarily to the
bakery sector, comprising craft bakers and major cake manufacturers and also to
grocery retailers. It operates two facilities, one in Liverpool and the other in
Carluke, south-east of Glasgow.
£'000s 2009 2008
Six Months Six Months
Sales 13,977 13,784
EBITDA 552 428
Operating Profit* 188 78
Sales in the period were in line with last year overall, with operating profit
benefiting from reduced overheads and reduced material costs in some
commodities. Industrial volumes are lower but there has been growth in the
Retail and Export sectors. Being a seasonal business, with the majority of the
profitability in the second half of the year, the Board is pleased to be able to
report the business is robust and well placed in delivering expectations for the
remainder of the year
BAKERY DIVISION
Hayden's Bakeries produces chilled and ambient premium patisserie and dessert
products to retail grocery customers. It operates from a site in Devizes,
Wiltshire.
£'000s 2009 2008
Six Months Six Months
Sales 9,575 8,535
EBITDA 144 22
Operating Loss* (198) (275)
The 12% increase in sales was driven by continued development of our Foodservice
offering into the coffee shop sector, new product launches, range extensions and
promotional activity with leading customers. Overall, profitability has improved
on the prior period and is now making a positive contribution. Operationally,
the team continues to refine production methodologies, which has seen an
improvement in material variances, which has offset the labour necessary to
affect the improvements.
SIGNIFICANT ITEMS
During the period under review, the Group incurred a number of significant
items. The principal cost relating to the restructuring of the Groups operations
to form Renshawnapier.
CASH FLOW AND DEBT
Net cashflow from operating activities was £0.5m, up £1.971m on prior year
reflecting the focus on working capital. Overall borrowings at £31.163m are at a
similar level to last year and in line with expectations.
PENSIONS
The £1.771m deterioration in the IAS 19 pension valuation is the result of two
factors, reduction in plan asset values as a result of changes in the financial
markets during the interim period, together with an increased long term outlook
for inflation which has increased the scheme liabilities. The scheme has been
closed to new entrants since April 2004
CURRENT TRADING
The Group continues to trade in line with its plan and with its commitments
associated with its banking arrangements.
We are currently benefiting from the consolidation of the Renshaw and Napier
businesses with underlying overheads reduced and expect these to continue to
flow through into 2010. With further stability expected in the sugar market,
improved profitability in both ingredients and bakery, we remain quietly
confident regarding the remainder of the year as we move into our busiest
seasonal period.
PIETER TOTTE
Chairman
29 September 2009
REPORT OF THE AUDITORS
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2009, which comprises the consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of changes
in equity, consolidated statement of cashflows and the related notes. We have
read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company, as a body, in accordance with our
instructions. Our review has been undertaken so that we might state to the
company those matters we are required to state to them in a review report and
for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company, for our work, for
this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting," as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union.
Horwath Clark Whitehill LLP
Chartered Accountants10 Palace AvenueMaidstone
Kent
ME15 6NF
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDING 30 JUNE
2009 (UNAUDITED)
Notes Period ended 30 June 2009 Period Ended 30 June 2008
Before Significant Items Significant Items Total Before Significant Items Significant Items Total
£'000s £'000s £'000s £'000s £'000s £'000s
CONTINUING OPERATIONS
REVENUE 101,697 - 101,697 103,972 - 103,972
Cost of sales (92,043) - (92,043) (92,821) - (92,821)
GROSS PROFIT 9,654 - 9,654 11,151 - 11,151
Distribution costs (4,113) - (4,113) (4,371) - (4,371)
Administration expenses (5,962) (84) (6,046) (5,859) (1,365) (7,224)
OPERATING (LOSS)/PROFIT (421) (84) (505) 921 (1,365) (444)
Finance income 264 - 264 106 - 106
Finance costs (944) - (944) (1,407) - (1,407)
Net Pension finance (cost)/income (9) - (9) 157 - 157
LOSS BEFORE TAXATION (1,110) (84) (1,194) (223) (1,365) (1,588)
Taxation 281 24 305 19 410 429
LOSS FROM CONTINUING OPERATIONS (829) (60) (889) (204) (955) (1,159)
LOSS FROM DISCONTINUED OPERATIONS - - - - - -
LOSS FOR THE PERIOD (829) (60) (889) (204) (955) (1,159)
Other comprehensive income
Actuarial losses on defined benefit plans (1,771) - (1,771) (201) - (201)
Income tax relating to components of other comprehensive 482 - 482 56 - 56
income
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (2,118) (60) (2,178) (349) (955) (1,304)
Basic Loss per share 5 (1.3) (1.4) (0.3) (1.8)
Diluted Loss per share 5 (1.3) (1.4) (0.3) (1.8)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2009 (UNAUDITED)
GROUP FINANCIAL POSITION
As at 30 June 2009
30 June 2009 30 June 2008 31 Dec 2008
£'000s £'000s £'000s
ASSETS
Non Current Assets
Goodwill 75,796 75,796 75,796
Intangibles 485 587 513
Property, plant and equipment 15,644 16,770 16,408
Deferred tax asset 1,600 - 853
93,525 93,153 93,570
Current Assets
Inventory 10,291 11,970 10,963
Trade and other receivables 23,913 24,749 24,763
Financial instruments at fair value 25 1 117
Corporation tax 574 556 839
Cash and cash equivalents 2,208 7,769 1,464
37,011 45,045 38,146
Total Assets 130,536 138,198 131,716
LIABILITIES
Current Liabilities
Borrowings 20,642 22,223 19,258
Trade and other payables 16,189 19,580 16,787
Financial instruments at fair value 160 37 524
36,991 41,840 36,569
Non Current Liabilities
Borrowings 12,729 16,921 13,652
Deferred tax 2,963 982 2,973
Provisions 452 545 684
Retirement benefit obligations 1,995 - 264
18,139 18,448 17,573
Net Assets 75,406 77,910 77,574
SHAREHOLDERS' EQUITY
Called up share capital 1,300 1,300 1,300
Share premium account 68,870 68,870 68,870
Other reserves 83 79 73
Profit and loss account 5,153 7,661 7,331
Total Equity 75,406 77,910 77,574
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDING 30 JUNE 2009
(UNAUDITED)
Issued Share Premium Account IFRS 2 Retained Earnings Total
Share Share Option reserve
Capital
£'000s £'000s £'000s £'000s £'000s
Balance at 1 January 2008 1,300 68,870 66 8,965 79,201
Shares to be issued - Options - - 13 - 13
Total comprehensive income for the period - - - (1,304) (1,304)
Balances as at 30 June 2008 1,300 68,870 79 7,661 77,910
Balance at 1 January 2009 1,300 68,870 73 7,331 77,574
Shares to be issued - Options - - 10 - 10
Total comprehensive income for the period - - - (2,178) (2,178)
Balances as at 30 June 2009 1,300 68,870 83 5,153 75,406
STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDING 30 JUNE 2009 (UNAUDITIED)
6 months to 30 June 2009 6 months to 30 June 2008
£'000s £'000s
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period before taxation (1,194) (1,588)
Adjusted for:
Finance costs 944 1,407
Finance income (264) (106)
IAS 19 cost/(income) 9 (157)
Depreciation of property, plant & equipment 963 895
Amortisation of intangibles 49 47
Share based payment expense 10 13
Release of provision (188) -
Operating Cash Flow 329 511
Decrease/(Increase) in inventories 667 (2,617)
Decrease in receivables 850 35
(Decrease)/Increase in payables (592) 2,430
Cash generated from operations 1,254 359
Income taxes received/(paid) 295 (696)
Interest paid (1,045) (1,130)
Net cash from operating activities 504 (1,467)
CASH FLOW FROM INVESTING ACTIVITIES
Interest received - 100
Income tax paid on disposal of division - (2,919)
Purchase of intangible assets - (87)
Purchase of property, plant & equipment (222) (944)
Net cash used in investing activities (222) (3,850)
CASH FLOW USED IN FINANCING ACTIVITIES
Drawdown/(Repayment) of borrowings 604 (812)
Repayment of obligations under finance leases (142) (129)
Net cash used in financing activities 462 (941)
744 (6,258)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year 1,464 10,785
Net movement in cash and cash equivalents 744 (6,258)
Cash and cash equivalents at balance sheet date 2,208 4,527
Cash and cash equivalents comprise:
Cash 2,208 7,769
Overdrafts - (3,242)
2,208 4,527
NOTES TO THE INTERIM RESULTS
1. GENERAL INFORMATION
The Real Good Food Company Plc is a public limited company ("company")
incorporated in the United Kingdom under the Companies Act 1985 (registration
number 4666282). The Company is domiciled in the United Kingdom and its
registered address is 229 Crown Street Liverpool Merseyside L8 7RF. The
Company's shares are traded on the Alternative Investment Market ("AIM").
The principal activities of the Group are the sourcing, manufacture, marketing
and distribution of food and industrial ingredients.
Copies of the interim report are being sent to shareholders. Further copies of
the interim report and Annual Report and Accounts may be obtained from the
address above.
2. BASIS OF PREPARATION
These consolidated financial statements are presented on the basis of
International Financial Reporting Standards (IFRS) as adopted by the European
Union and interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) and have been prepared in accordance with AIM
rules and the Companies Act 1985, as applicable to companies reporting under
IFRS.
The financial information set out in this document does not comprise of the
statutory accounts of the Company within the meaning of section 240(5) of the
Companies Act 1985.
New IFRS standards and interpretations not adopted
The following IFRS standards, amendments and interpretations are not yet
effective and have not been adopted early by the Group:
* Revised IAS 27 Consolidated and Separate Financial Statements (effective 1
July 2009)
* IFRS 3 (revised) Business Combinations (effective 1 July 2009)
* IAS 32 Financial Instruments - Presentation (Amendments)
* IAS 23 Borrowing Costs
* IAS 27 Consolidated and Separate Financial Statements (effective 1 July 2009)
* IAS 39 Financial Instruments: Recognition and Measurement (Amendment):
Eligible Hedged Items
The adoption of these standards, amendments and interpretations is not expected
to have a material impact on the Group's loss for the period or equity. The
adoptions may affect disclosures in the Group's financial statements.
3. SIGNIFICANT ITEMS
It is the company's policy to show items that it considers being of a
significant nature seperately on the face of the Consolidated Statement of
Comprehensive Income in order to assist the reader to understand the accounts.
The company defines the term significant as items that are material in respect
to their size and nature. For example a major restructuring of the activities of
the Group. Summary details of significant items are shown in the Chairman's
statement which forms part of this half yearly financial report.
4. SEGMENT ANALYSIS
Business segments
The Group's operating segments are Sugar, Bakery Ingredients and Bakery as the
Group's management and reporting structure is set out along these lines.
The following table shows the Group's revenue and results for the period under
review analysed by operating segment. Segment profit represents the trading
profit after depreciation but before any interest and significant items.
Six months to 30 June 2009 Bakery Ingredients Bakery Total Before Significant Items Significant Items Total After Significant Items
Sugar
£'000s £'000s £'000s £'000s £'000s
Total revenue 82,113 14,837 9,575 106,525 - 106,525
Revenue - internal (3,968) (860) - (4,828) - (4,828)
External Revenue 78,145 13,977 9,575 101,697 - 101,697
Operating Profit/(Loss) 218 188 (198) 208 (84) 124
Finance costs (net of interest received) (680) - (680)
Pension finance costs (9) - (9)
Head office and consolidated adjustments (629) - (629)
Loss before tax (1,110) (84) (1,194)
Tax 281 24 305
Loss after tax as per income statement (829) (60) (889)
Inter-segment sales are charged at prevailing market rates.
The Group operates a central function; therefore finance costs cannot be
meaningfully allocated to individual operating segment.
5. SEGMENT REPORTING (continued)
As At 30 June 2009 Sugar Bakery Ingredients Bakery Unallocated Total Group
£'000s £'000s £'000s £'000s £'000s
Segment assets 27,916 18,841 5,114 51,871
Unallocated assets
Goodwill 75,796
Other intangible assets 3
Property, plant and equipment 13
Deferred tax assets 1,600
Inventory (26)
Trade and other receivables 515
Derived financial assets 25
Current tax assets 574
Cash and cash equivalents 165
Total assets 130,536
Segment liabilities (26,919) (7,539) (3,156) (37,614)
Unallocated liabilities
Trade and other payables (489)
Borrowings (14,294)
Derived financial instruments (160)
Current tax liabilities (188)
Deferred tax liabilities (2,209)
Provisions (176)
Total liabilities (55,130)
Net operating assets 997 11,302 1,958 75,406
Non current asset additions 31 158 33 - 222
Depreciation 308 327 325 3 963
Amortisation (6) 37 17 1 49
Geographical segments
The Group earns revenue from countries outside the United Kingdom, but as these
only represent 2.6% of the total revenue of the Group, segmental reporting of a
geographical nature is not considered relevant.
6. EARNINGS PER ORDINARY SHARE
Earnings per share is calculated on the basis of the loss for the period after
tax, divided by the weighted average number of shares in issue for 2009 of
65,014,348 (2008: 65,014,348).
Diluted loss per share is calculated by adjusting the weighted average number of
ordinary shares outstanding to assume conversion of all potential dilutive
ordinary shares. Potential dilutive ordinary shares arise from share options and
warrants. For these, a calculation is performed to determine the number of
shares that could have been acquired at fair value (determined as the average
annual market share price of the Company's shares) based on the monetary value
of the exercise price attached to outstanding share options. Thus the dilutive
weighted average number of shares considers the number of shares that would have
been issued assuming the exercise of the share options.
An adjusted loss per share and a diluted adjusted loss per share, which exclude
significant items, has also been calculated as in the opinion of the Board this
will allow shareholders to gain a clearer understanding of the trading
performance of the Group.
Six months to 30 June 2009 Six months to 30 June 2008
Earnings Weighted Average No.
More to follow, for following part double-click [nRn2c7922Z]