FROM STRATEGY TO Annual Report and Accounts for the year ended 31 December 2005 DELIVERY GROUP HEADLINES
- Total Revenues of £117.65m (2004 - £44.60m)
- Normalised profit before tax £7.1m (2004 loss of £0.4m)
- Acquisition of Napier Brown Foods plc and its subsidiaries
- Relocation of the Scrumptious division from Glastonbury to Devizes
Highlights 1 Consolidated Profit and Loss Account 22 Strategy 2 - 3 Consolidated Balance Sheet 23 Chairman’s Statement 4 - 6 Company Balance Sheet 24 Operating and Financial Review 7 - 15 Consolidated Cash Flow Statement 25 Directors 16 Notes to the Financial Statements 26 - 52 Report of the Directors 17 - 18 Company Information 53 Statement of Directors’Responsibilities 19 Contact Information 54 Auditor’s Report 21 Notice of Meeting 55 1 The Real Good Food Company plc Divisional Highlights Annual Report 2005
DIVISIONAL HIGHLIGHTS
BAKERY: HAYDEN’S BAKERIES PERCENTAGE OF SERIOUSLY SCRUMPTIOUS GROUP TURNOVER
Total Revenue in 2005 - Hayden’s growth continues - New customers coming on stream £16.1m - Continued margin improvement - Investment in frying capacity Operating Profit* - Seriously Scrumptious successfully integrated £0.4m - Enhanced management team
BAKING RENSHAW PERCENTAGE OF INGREDIENTS: SEFCOL GROUP TURNOVER Total Revenue in 2005 - Implemented RGFC business model - New management team in place by April 2006 £15.7m - Factory efficiency improvement program - Closure of nut plant in Runcorn Operating Profit* - Sale of former “Sefcol”Factory for £2.1m £1.6m - Well positioned for 2006
FISH: FIVE STAR FISH PERCENTAGE OF GROUP TURNOVER
Total Revenue in 2005 - Continued sales/profit growth for the 20th year - New lines launched £25.5m - New investment in freezing,breading line - Capacity utilisation of circa 60% Operating Profit* - Efficiency improvements offset raw material price pressure £3.7m - Bolt-on opportunities
SUGAR: NAPIER BROWN FOODS PERCENTAGE OF GARRETTS GROUP TURNOVER
Total Revenue in 2005 - Implemented RGFC business model - Strong operating margins £61.9m - Focus on profitability rather than volume Operating Profit* - EU Sugar Regime change presents short term volatility, long term opportunity £4.5m - New investment in additional retail capacity
* Divisional operating profit before management charges,exceptionals,goodwill and interest OUR STRATEGY
A Food Group by design...
DYNAMICS:
- Focused food manufacturing group - Acquisitions integrated into devolved accountability model - Strong organic growth - Empowered management - Small central team AREAS:
- Bakery & patisserie - Baking ingredients - Fish - Sugar/dry ingredients TARGETING:
MARKETS: PRODUCTS:
- Retail - Ambient - Foodservice - Chilled - Industrial (B2B) -Frozen
KEY SKILLS:
- Enterprise culture - Product quality - New product development - Commercial innovation - Creative sourcing 3 The Real Good Food Company plc Strategy Annual Report 2005
KEY STRATEGIES
A devolved business structure Developing new markets and empowering local management. winning new customers.
Creating high-quality Identifying purchasing, management teams to distribution and sales synergies generate growth. across the Group.
KEY ACTIVITIES
DIVISION BAKERY BAKING FISH SUGAR INGREDIENTS
Operating Hayden’s Bakeries Renshaw Five Star Fish Napier Brown Foods Companies Seriously Scrumptious Sefcol Garretts
Retail Customers Waitrose Supercook Tesco M&S Sainsbury’s Morrisons Budgens Asda Budgens Tesco Morrisons
Foodservice Welcome Break 3663 Brakes Bako Customers Disotto Foods Brakes M&J Seafood Palmer & Harvey 3663 Bestway Punch Fairway
Industrial Bako Northern Foods Customers BFP Weetabix Lightbody Premier Foods Cadbury RHM Group Greencore
Key Products Danish Marzipan Breaded,battered and Packet/bagged/bulk sugar Doughnuts Sugarpaste dusted cod,haddock, Dairy products Croissants Caramel plaice and pollock Bakery mixes Hot eating desserts Chocolate flavoured Chilled desserts coatings Muffins Diabetic jam BAKERY:
Record sales levels achieved
FISH:
Five Star Fish profits of £3.8m,up 9%
BAKING INGREDIENTS:
New management team
SUGAR:
Strong performance in volatile market 5 The Real Good Food Company plc Chairman’s Statement Annual Report 2005
CHAIRMAN’S STATEMENT I am pleased to report the Group’s Results for the twelve months to 31 December 2005.
“Good progress has been achieved in building a robust platform for future growth.” Pieter Totté,Chairman
Introduction and overview - Bakery - Hayden’s growth continued each of the divisions with the required The key highlight of the year was the Group’s during 2005 with record sales levels resources to deliver above average returns, reverse acquisition for £67.7m of Napier Brown achieved over the pre-Christmas period; however the local managers are Foods plc (“NBF plc”),completed on 27 August Seriously Scrumptious was successfully empowered,thus accountable,for their 2005,which has enabled the Group to achieve integrated into the Devizes site; actions and mandated to drive organic critical mass.The Group now comprises four growth.With a devolved divisional structure, divisions - Bakery,Baking Ingredients,Fish and - Baking Ingredients – a new management aided by a small experienced central team; Sugar,manufacturing ambient,chilled and team was put in place and operational we can respond faster to customer and frozen products for the retail,foodservice and processes refined; market demands.Cross marketing industrial sectors. opportunities are induced by regular - Fish - Five Star Fish exceeded the earn-out divisional meetings chaired by the targets set at the time of its acquisition in Strong progress on a number of fronts has Group Managing Director – John Gibson. May 2004; been achieved in building a robust platform for future growth including strengthening - Sugar – the business was restructured to We have now assembled a strong team at and deepening the management teams give the division more direct responsibility both Board and divisional management across all the operating divisions,in particular for managing its day-to-day affairs. level and are now in the best shape to take the Renshaw business,and creating a new Despite reduced sales as a result of a the Group forward.We have achieved an plc Board. customer margin review,profitability was important scale in each of our divisions and maintained. we are also beginning to yield the benefits of The Group achieved normalised trading cross divisional initiatives in terms of cost profit of £7.1m compared with a loss of £0.4m Strategy reduction,purchasing economies and sales for the comparable period in 2004.This The core of The Real Good Food Company’s opportunities. record result was achieved by driving forward (“RGFC”) corporate strategy is to deliver the organic growth and the resultant benefits of highest levels of quality and customer Our focus for the coming financial year will restructuring the operating companies and satisfaction.Externally,the focus is for each be to concentrate on developing our assets the contribution from the acquired business. of the four divisions to be regarded as a to their maximum potential and to exploit The Group also exited its loss making premium provider to each nominated all commercial opportunities whilst operations of sandwich making and nut market whether it is for ready prepared continuing to identify small bolt-on targets processing (acquired with the acquisition of frozen fish for retail pub chains or yum yums to supplement and develop the activities of NBF plc).The divisional highlights are: for Marks & Spencer.Internally,we provide our operating companies. 6 The Real Good Food Company plc Chairman’s Statement Annual Report 2005
CHAIRMAN’S STATEMENT
We look forward to the coming year with Five Star Fish has performed exceptionally However,the sugar market remains very enthusiasm. well within its market place,with sales competitive and it will be some months during the first nine weeks of the year up before the actions taken in Brussels in both Current trading 15% year on year.The provision of raw regime change,quota cuts and export The Bakery division has made a promising materials from a new supplier has been activity will give rise to a change in the start to the New Year with sales up 3% on the encouraging and the business is well set to competitive environment. same period last year.Sales to Waitrose have deliver another year of volume and profit been particularly encouraging,whilst growth. We are happy with the start to the current deliveries to a new grocery retail customer financial year,albeit with a slow start for the should commence in April. Trading in the Sugar division has so far been Sugar division reflecting market volatility subdued,particularly in the February period. and a late Easter,we look forward to updating Despite market weakness,following some This is likely explained by the result of the shareholders at the forthcoming AGM. customer Christmas stock overhang,like for later than normal Easter and the impact like sales within Bakery Ingredients are again of a post Christmas stock overhang. P W Totté marginally ahead of last year.The re-focused The expected uplift in volumes has not yet Chairman management team is actively addressing occurred and this has had an effect on efficiency improvement programmes and profitability for this period. 27 March 2006 some delayed contracts have now come on stream. 7 The Real Good Food Company plc Financial Review Annual Report 2005
FINANCIAL REVIEW
Lee Camfield, Group Finance Director
John Gibson, Group Managing Director
Trading results for the year Exceptional costs new facility comprised a term loan of £45m,a Group sales on continuing activities were up During the year,the Group incurred £4.6m of revolving facility of £20.5m and an overdraft 228% reflecting year on year organic growth in exceptional costs (2004 £0.5m): facility of £4.0m.These facilities are syndicated both the Fish and Bakery divisions and the through RBS and Rabobank International. acquired revenue (£73.4M) from the NBF plc - The closure of the loss making Sandwich During the period following the acquisition of acquisition.Whilst Group gross margin division incurred £0.8m of exceptional NBF plc,the freehold property of the former percentages have reduced by eight percentage costs relating in the main to the write Sefcol business was sold for £1.9m,net of points,reflecting the significantly changed down of fixed assets,a further £0.8m of disposal costs,this was used to pay down part nature of the business incorporating NBF plc, goodwill was also written down within of the term loan.As at the year-end,the Group margins in the Bakery division have improved amortisation costs; had a net cash position of £7.3m (2004 £2.9m). by one point six percentage points reflecting - The consolidation of the Bakery operations Net debt at the year end was £59.4m, the improved material controls implemented to our Devizes facility saw the closure of incorporating £2.8m of loan notes due to during the year.Profit on ordinary activities our Glastonbury site £0.9m; Napier Brown Ingredients Limited. before exceptional costs and goodwill - The recently announced closure of the amortisation was £7.1m (2004 £0.4m loss). Runcorn nut business has also The Group delivered a strong cash flow for the necessitated the provision of £1.2m year generating £4.5m from operating Acquisition relating to the writting down of assets,site activities,after incurring £4.6m of exceptional During the period under review,the Group sale costs and redundancies; costs.Interest payments were £2.1m,whilst completed the reverse acquisition of NBF plc. - Aborted acquisition costs of £0.3m were the tax losses brought forward reduced the The acquisition was completed via the issue of incurred in the first half; tax payment to £0.5m.Capital expenditure 1.6236 RGFC shares for every NBF plc share.In - Other exceptional costs of £1.4m relate to was £1.2m whilst the sales of the Sefcol addition £3.4m (net of expenses) was raised to the operational management changes property mentioned above generated a £2.0m contribute to the costs incurred in conjunction following the recent acquisitions and the income (before disposal costs).The acquisition with the acquisition.Following the restructuring of the plc Board. of NBF plc along with the £3.4m of share acquisition,NBF plc was de-listed from the placing,net of fund raising costs,combined stock exchange and reregistered as a limited Cash flow and debt with the refinancing of Group debt generated company (“NBF Ltd”).During the four months The size and nature of the acquisition enabled an additional £5.7m,leaving total cash following the merger of the two groups and the Group to restructure its existing bank generation for the year at £10.3m. after a strategic review,the plc Board has been facilities and a new syndicated arrangement restructured along with a number of activities was entered into on the 31 August 2005.The within the operating divisions. * Countryside + Counter From its premises in Wiltshire, Hayden’s Bakeries offers an FROM Hayden’s Bakeries supplies and extensive range of products produces high value bakery products including danishes,doughnuts, * and desserts with strong production croissants,muffins and desserts, skills in hand finishing and all of which can be found on the COUNTRYSIDE laminated yeasted dough products. counters of some of the country’s TO leading quality retailers. COUNTER+ 9 The Real Good Food Company plc Operating Review - Bakery Annual Report 2005
OPERATING REVIEW
BAKERY: Hayden’s Bakeries Seriously Scrumptious
“Our customers recognise our KEY HIGHLIGHTS committment to developing and Sales £’000s
delivering high quality bakery 2004 14.8m products.” 2005 16.2m Phil Wicks,Managing Director Operating profit
2004 (-0.4m)
2005 0.4m * Normalised Profit before exceptional items, goodwill amortisation and central costs
Hayden’s Bakeries,located in the heart of the progress has been made with Café Revive. the businesses have been integrated. Wiltshire countryside,produces chilled and Budgens is also now purchasing from Margins have improved significantly ambient premium patisserie and dessert Hayden’s and further new grocery retail benefiting from tighter control in Devizes products to retail grocery customers and customer opportunities are in the pipeline and the activity is establishing a meaningful Seriously Scrumptious supplies a similar for 2006. position in the foodservice patisserie and range frozen to foodservice customers. dessert sectors. Progress continues to be made in reducing During the period under review,Hayden’s the cost of direct labour and a further Tony Harris,who had joined the division in continued to improve its profitability.Whilst substantial investment was made during the spring of 2005,was unable to remain the rate of sales growth slowed in the the year to increase the mechanisation of with us for personal reasons.Following the second half of the year,primarily due to fried products,yum yums and doughnuts. integration of Seriously Scrumptious,a new delays in product launches,overall the year Raw material control also remains a high Managing Director,Phil Wicks,was on year sales improvement for the division priority and investment was undertaken in appointed in the autumn of 2005 and the was close to 10%,following the 23% growth material controls and handling.Both these commercial and operational teams in the previous year. areas have improved gross margins. combined.Significant additional resource has been put into the commercial aspects of Whilst Waitrose remains by some way the The integration of Seriously Scrumptious, the business at the end of the financial year. largest customer,selling to their Bakery, our foodservice area of the Bakery division, Chilled Prepared Food department and into the Devizes site was successfully providing Distribution services,sales to completed in the late summer of 2005 and Marks & Spencer have consolidated where both commercial and operational aspects of * Ingredients + Indulgence With factories in Liverpool and As a leading manufacturer of FROM Carluke,Renshaw produces a wide marzipans,ready to roll icings, range of food ingredients baking chocolate,jam,sugarpaste * predominately for the bakery and caramel,it is no wonder that sector;including major cake Renshaw is the professional’s INGREDIENTS manufacturers,high street bakers choice for producing high quality TO and retailers. luxury products. INDULGENCE+ 11 The Real Good Food Company plc Operating Review - Baking Ingredients Annual Report 2005
OPERATING REVIEW
BAKING INGREDIENTS: Renshaw
“Building upon Renshaw’s KEY HIGHLIGHTS reputation,we intend to become the Sales £’000s
UK’s most innovative baking 2005 15.7m ingredients supplier.” Stephen Heslop,Managing Director Operating profit
2005 1.6m
* Normalised Profit before exceptional items, goodwill amortisation and central costs
Renshaw supplies a range of high quality on the key elements of performance delivery A number of efficiency projects were started food ingredients primarily to the bakery in 2005,which impacted on performance at the end of the year to improve operational sector,comprising craft bakers and major during the last trimester of the year. efficiency,particularly,at the Liverpool site cake manufacturers and also to grocery and external support has been retained to retailers.It operates two facilities,one in As part of the strategic review of NBF Ltd,the ensure timely delivery.Working practices Liverpool and the other in Carluke,South- Group decided to significantly improve the will have to reflect the competitive east of Glasgow. quality of the senior management team and environment in the food sector in the have now put in place a new Managing twenty-first century. Sales for the period were below expectations Director,Stephen Heslop,who has appointed in what is a key trading period for the new Commercial and Operations Directors. Business planning and raw material cost division.Prior to the acquisition,Renshaw We believe that the team,supplemented by reduction programmes have also been put in had been through a period of significant Mike McDonough,Finance Director,are place to improve our service to customers disruption as a result of the integration of the more than capable of meeting the and contribute to profit delivery.We believe former Sefcol activities into the Liverpool site. challenges ahead in maintaining Renshaw’s we now have the processes and The caramel / mallow plant was transferred, position as the leading supplier in the sector. management team capable of delivering responsibility for the nut business moved world class performance. and the establishment of an arms length The announcement of the closure of the nut trading arrangement with Supercook, plant was made in December and only small following the purchase from Hero at the end quantities of products were produced in of 2004,were all completed in the period. January 2006.The entire activity will be Consequently,there was some loss of focus exited by the end of April 2006. * Grimsby + Growth Based at Grimsby,Five Star Fish is After 20 years of consecutive profit FROM the leading supplier of added-value growth,Five Star Fish continues to fish products to the UK foodservice build on its strong customer base, * market.Operating from a purpose increasing sales and delivering built factory with a 5,000 pallet results.World-wide sourcing of raw GRIMSBY cold-store,this facility is at the material and dedication to leading edge of fish processing innovative product development TO technology. ensures Five Star Fish remains a GROWTH+ market leader. 13 The Real Good Food Company plc Operating Review - Fish Annual Report 2005
OPERATING REVIEW
FISH: Five Star Fish
“Our business is well set to build KEY HIGHLIGHTS upon its twentieth consecutive year Sales £’000s
of profit growth.” 2004 23.7m Danny Burton,Managing Director 2005 25.6m
Operating profit
2004 3.5m
2005 3.8m
* Normalised Profit before exceptional items, goodwill amortisation and central costs
Five Star Fish is a leading supplier of added- consequence of additional sales,these There remain a number of small to medium value,prepared frozen fish to the investments will provide significant further sized companies that compete with Five Star foodservice sector. scope for growth in the years ahead. Fish and we believe some of these are likely to exit the sector.Five Star Fish is in an ideal We are delighted to confirm that the During the course of the year,raw material position to take advantage of any sector business has exceeded its second year earn- and finished goods stocks were managed restructuring either to widen customer base out target agreed at the time of acquisition carefully to ensure both excellent availability or product range. in May 2004.Proforma year on year sales for customer orders and to achieve increased growth was 8%,some of which was due to operational efficiency.To facilitate this and to raw material inflation,but the majority was ensure a continuous flow of high quality raw down to winning business with new material,a procurement review was customers and increasing sales of added- undertaken during the year and some new value products.As expected,sales of lower suppliers brought on stream in December.The value commodity lines fell year on year.Two business remains committed to working with new product ranges,“Fish Shop”and established suppliers and to sourcing from “Coddies”,were launched in the year and stable and reliable fishing fleets. have been well received by the market.The business continues to increase its sales, At the end of the year John Fenty,Chairman broaden its customer base,increase sales of and majority shareholder of Five Star Fish at added-value lines and maintain margins in the time of acquisition,indicated that he the light of some raw material inflation. would like to reduce his day-to-day involvement in the business but remain a An investment in increased in line freezing part of the team.Consequently,John has capacity was undertaken towards the end of become a part-time Executive Consultant to the year and this has raised throughput and the business,reporting to Danny Burton, aided operational efficiency.Plans for Managing Director.To supplement the additional capacity in dusting and breading senior management team Pete Tiffney has are in place for 2006 with more battering been appointed Technical Director,after and frying capacity at the end of the year. having worked for the business in a Whilst capacity has reduced as a consulting capacity for a number of years. * Sugar + Solutions Napier Brown Foods sources, Committed to revitalising the FROM manufactures,packs and ingredients market through close distributes from its Normanton customer partnerships and new * Distribution Centre a wide range of product development, Napier ingredients for the industrial,retail Brown Foods provides a SUGAR and foodservice sectors,including comprehensive service, added- sugar,blends and dairy products. value products and independent TO expert advice to sugar buyers. SOLUTIONS+ 15 The Real Good Food Company plc Operating Review - Sugar Annual Report 2005
OPERATING REVIEW
SUGAR: Napier Brown Foods
“We are providing an increasing KEY HIGHLIGHTS range of solutions to our food Sales £’000s
manfacturing customers.” 2005 61.9m John Gibson,Managing Director Group Managing Director Operating profit
2005 4.5m
* Normalised Profit before exceptional items, goodwill amortisation and central costs
Napier Brown Foods (NBF) supplies a range During the second half of the year,the At the end of the year,a significant contract of sugar and dry ingredients to food European Commission tabled and had was won with Wm Morrison plc following manufacturers and packs sugar for retail ratified by the Council of Ministers,a consolidation of their sugar purchasing grocery and foodservice customers. package of wide ranging regime reforms to arrangements.NBF will be supplying sugars reduce the quantity of sugar produced from across the range to all of their depots. Sales revenue at £61.9m for the period beet and to bring EU prices more closely in September to December was below line with world market prices.We commented To enable this additional volume to be expectations but this was a consequence of on this on 1 December 2005 and believe that packaged efficiently,the Board have price deflation in a very competitive market in the medium term these new arrangements authorised the expenditure of £1.6m on new and the decision to exit a number of very low will significantly benefit NBF.As a flexible packaging and material handling projects. margin contracts.At the same time,it non-refiner,we believe we will be well These will come on stream in the third became possible to take advantage of placed to take advantage of the new supply quarter of 2006. cheaper raw materials and widen the arrangements and provide our customers division’s sourcing arrangements. with high quality products from a range of Following the strategic review of NBF’s Consequently,while revenue was down, sources.However,the implementation of trading activity,the NBF business unit was overall profitability was maintained. the reform proposals have been delayed for established in October 2005 and the senior two years and this has clearly had some management team restructured. Prior to RGFC’s ownership,NBF plc had impact on the market in the short term. The decision to relocate the Finance team completed the acquisition of James Budget from London to Normanton was announced Sugars during 2004 from ED&F Man and In the trading area,the decision to integrate on 25 February 2006,as a consequence, Greencore plc.This transaction was referred the Garrett dairy products wholesaling Richard Broadley will be joining in April 2006 to the Competition Commission in activity and Sefcol’s dry blending facilities as Divisional Finance Director. September 2004,but subsequently cleared into NBF began to show positive results as in March 2005.However,this decision major customers saw the benefit of buying a caused considerable disruption to the range of dry ingredients from a single business in the light of these uncertainties reliable and competitive source.We believe and in a very competitive market place the that this will become a significant point of trading result was highly creditable. difference from other suppliers. 16 The Real Good Food Company plc Board of Directors Annual Report 2005
DIRECTORS
1.Pieter Totté 3.Lee Camfield 5.Christopher Thomas (Non-executive Chairman), (Group Finance Director), (Non-executive Director), aged 56,has considerable knowledge of the food aged 38 qualified as a management accountant in aged 61,qualified as a chartered accountant sector and has acted as a corporate finance 1991.He joined the Group in March 2004 from with Harmood Banner,a predecessor firm of adviser in a large number of transactions within Golden West Foods Limited,a subsidiary of Rank PricewaterhouseCoopers in 1969.In 1973,after the food industry over the last 20 years.He is Hovis McDougall,where he was group financial working abroad,he joined Breakmate Limited,a retained as an advisor to various companies controller.He has held a number of financial vending business,which was admitted to the operating in the food sector and is the chairman appointments with food manufacturing Unlisted Securities Market in 1984.Following a of Hill Station Ice Cream and Aquabella. companies including Coca-Cola & Schweppes sale of the business he worked as a financial Beverages Limited,The Cheese Company Limited consultant.In 1992 he joined the NBF Group as 2.John Gibson and H.J.Heinz Limited. group finance director.For the last thirteen years (Group Managing Director), he has been directly involved with the day-to-day aged 54,has spent his entire working life in the 4.Peter Salter operations of the individual businesses within the food industry.He has been employed in both sales (Non-executive Director), NBF Group,and was most recently CEO of NBF plc. and operational roles for a number of UK’s leading aged 57,was until 1998 a partner in Horwath Clark food producers including Grand Metropolitan, Whitehill,Chartered Accountants,initially as a 6.Patrick Ridgwell Unigate plc (renamed Uniq plc) and Muller UK specialist tax partner and latterly as chief (Non-executive deputy Chairman), Limited.Since 1998 he has worked as chief executive of the firm.He then spent some five aged 60,has extensive experience of the sugar executive officer or chief operating officer for a years in international corporate consultancy industry and other food sectors,having acquired number of smaller unquoted and publicly quoted where he was involved in a number of mergers and developed a number of food businesses companies including Elisabeth the Chef Limited and acquisitions,fund raising and other advisory during his career.He joined Napier Brown & and S Daniels plc,several of which have been in work.He has wide experience of working with Company in 1964,became a director in 1969 and turnaround situations.He has also worked with financial institutions and companies and will lead managing director in 1972,following its acquisition several companies that have been engaged in the Group’s Audit and Remuneration Committees. of his family interests in 1970.He is chairman of acquisitive expansion programmes. Napier Brown Holdings Limited which is controlled by his family interests.He is also a director of Napier Brown Ingredients Limited.
1 3 5
2 4 17 The Real Good Food Company plc Report of the Directors Annual Report 2005
REPORT OF THE DIRECTORS The Directors present their report and the audited financial statements for the period ended 31 December 2005.
Principal activities Business review and future developments Exceptional items The principal activity of the Company is that These are covered in detail within the During the year the Group incurred of a speciality food business. operating and financial review on pages 7 -15. exceptional costs of £4,302,000 (2004 - £440,000) relating to reorganisation costs The Group trades through its four divisions Results and dividends and the termination of an operation. and their subsidiaries.The Group has four The Group’s turnover for the year was Additionally the Group incurred £274,000 key divisions: £117,650,000 (2004 - £44,608,000), (2004 - £107,000) relating to abortive yielding a gross profit of £24,272,000 acquisition costs which are disclosed within - Bakery - The manufacture and supply of (2004 - £12,782,000) and an operating profit administration expenses.Full details are high quality ambient cakes and desserts, of £5,901,000 (2004 – loss of £656,000). given in note 3 of the accounts. - Baking Ingredients - The manufacture and The Group’s loss for the year after taxation supply of marzipan,ready to roll icing and was £2,237,000 (2004 - £698,000).This gives a Fixed assets baking chocolate to the industrial and basic loss per share of £0.072 (2004 - £0.064). Details of changes in fixed assets are given retail sectors. in note 13 to the financial statements. The Group ended the year with net assets of - Fish - The manufacture and supply of £66,932,000 (2004 - £12,995,000) and cash Report on corporate governance added-value frozen fish to the foodservice balances of £11,999,000 (2004 - £1,420,000). The Financial Services Authority requires sector, Details of the Group’s borrowings are set out listed companies (but not companies traded - Sugar - The distribution of bulk sugar and in note 34. on the Alternative Investment Market manufacture and supply of packed sugar (“AIM”)) incorporated in the UK to state in and powders;and The Directors do not recommend payment their report and accounts whether they of a dividend in respect of the year ended 31 comply with the Combined Code and December 2005 (2004 - £nil). identify and give reasons for any areas of non-compliance.The Group is listed on AIM and therefore no disclosures are required. Directors The beneficial interests of the Directors on 31 December 2005 are set out below:- Ordinary shares £0.02p each £0.02p each 31 December 31 December 2005 2004
P W Totté 1,900,000* 1,750,000* J F Gibson 625,000 625,000 J C Mitchell (resigned 24/01/2006) 146,657** 125,000 L M Camfield - - R Gradowski-Smith (resigned 24/01/2006) - - P C Salter 5,000 - P G Ridgwell (appointed 31/08/2005) 22,302,354*** - C O Thomas (appointed 05/09/2005) 162,363 -
*1,750,000 shares are held directly by Menton Investments Limited which is wholly owned by the Tulip Trust,a discretionary trust,of which P W Totté and certain members of his family are discretionary beneficiaries.In addition 150,000 shares are held by J M Finn Nominees Limited on behalf of Menton Investments Limited.
** J C Mitchell owned 125,000 shares directly and 21,657 via J M Finn Nominees Limited
***Napier Brown Ingredients Limited holds 22,139,998 shares which are controlled by a trust of which P G Ridgwell is a beneficiary. In addition P G Ridgwell holds 162,356 shares directly.
Details of the Directors share options are shown in note 8 to the financial statements. 18 The Real Good Food Company plc Report of the Directors Annual Report 2005
Substantial interests Hedge contracts are used by the Group is to On the 31 December 2005 there were the following substantial interests remove the risk associated with €/£ (3% or more) in the Company’s Ordinary Share Capital. movements when sugar is sold to customers % Holding at a fixed price in Sterling.At the year end In Ordinary Share Capital the Group had a liability of £17,500 to the 31 December 2005 bank in respect of such contracts and premiums due from customers in respect of Napier Brown Ingredients Limited 34.0% these contracts amounted to £16,000. City Gate Nominees Limited 7.0% Agman Holdings Limited 7.0% The financial assets of the Group are surplus Chase Nominees Limited 6.6% funds,which are offset against borrowings Giltspur Nominees Limited 4.2% under the facility,and there is no separate Bank of New York Nominees 3.8% interest rate exposure. JM Finn Nominees 3.3% Liquidity risk The Board is aware of the requirements of Payment of suppliers Short term flexibility is available through the Combined Code and the need for The Group does not follow any code or existing bank facilities and the netting off of appropriate controls and systems to statement on payment practice,but the surplus funds. safeguard the Group’s assets.However,full policy of the Group is to abide by such compliance with the Combined Code is not payment terms as are agreed with suppliers Employee involvement possible because of the size and resource within the terms of supply.At the Balance The Group aims to improve the performance constraints within the Group and because of Sheet date there were 49 (2004 - 49) days’ of the organisation through the the relative cost benefit assessment of purchases outstanding,calculated on the development of its employees.Their putting in place the additional procedures. ratio of trade creditors to total purchases involvement is encouraged by means of The Group operates an effective Board which team working,team briefings,consultative meets on a timely basis. Financial instruments committees and working parties. The Group’s financial instruments,other This is not a statement of compliance as than warrants,comprise a bank term loan Disabled employees required by the Combined Code and should and a revolving credit facility,hire purchase The Group is committed to equality of therefore not be relied upon to give the and finance leases,cash and liquid resources, employment and its policies reflect a disclosure which would normally be made. an overdraft facility and various items disregard of factors such as disability in the arising directly from its operations,such as selection and development of employees. The Board maintains an appropriate trade debtors and creditors.The main The Group is involved in various initiatives relationship with the Group’s auditors purpose of these financial instruments is to which promote a positive understanding of through the Audit Committee.The auditors finance the Group’s operations. disability and the integration of the disabled provide other services in addition to into the workforce. conducting the Group’s audits.Procedures The main risks arising from the Group’s are in place to ensure auditor independence financial instruments are interest rate risk Charitable and political donations is not compromised. and liquidity risk.The Group also has some During the current financial year the Group currency exposure regarding its sugar trade made charitable donations of £2,900 (2004 - The remuneration packages for executive but the majority of this risk is hedged.The £nil).No political donations were made directors are structured to attract,motivate Board reviews and agrees policies,which during the current or previous financial year. and retain directors with the experience, have remained substantially unchanged for capabilities and ambition required to the year under review,for managing these Auditors achieve the Group’s strategic aims.The risks.The policies are summarised below. Horwath Clark Whitehill LLP have expressed Remuneration Committee is responsible for their willingness to continue in office as determining and reviewing the annual Full details of the Group’s financial assets auditors and a resolution proposing their remuneration packages of executive and liabilities are set out in note 34 to the reappointment will be submitted to the directors.The committee comprises of P C financial statements. forthcoming Annual General Meeting. Salter,P W Totté and P G Ridgwell. Interest rate risk This report was approved by the Board on The salaries of executive directors are set by Interest rate swaps are adopted by the 27 March 2006 and is signed on its behalf by the Committee and reviewed annually, Group.The amount of the interest rate swap taking into account the performance of the at the year end was £4,293,250,at 5.67%. P W Totté L M Camfield Group,and the individual,and salary (2004 - £3,750,000 at 5.67%) Chairman Director increases given to other Group employees. 19 The Real Good Food Company plc Statement of Directors’Responsibilities Annual Report 2005
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group at the end of the period and of the profit or loss of the Group for that period.In preparing these financial statements,the directors have:
- selected suitable accounting policies and applied them consistently;
- made judgements and estimates that are reasonable and prudent;
- stated whether applicable accounting standards have been followed,subject to any material departures disclosed and explained in the financial statements;and
- prepared the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy,at any time,the financial position of the Company and Group and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Report of the Directors and other information included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United Kingdom.
In determining how amounts are presented within items in the profit and loss account and balance sheet,the Directors have had regard to the substance of the reported transaction or arrangement,in accordance with generally accepted accounting principles or practice.
21 The Real Good Food Company plc Report of the Independent Auditors Annual Report 2005
REPORT OF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF THE REAL GOOD FOOD COMPANY PLC
We have audited the Group and parent financial statements of Basis of opinion The Real Good Food Company plc for the year ended 31 December We conducted our audit in accordance with International 2005 which comprise of the Group profit and loss account,the Standards on Auditing (UK and Ireland) issued by the Auditing Group and Company balance sheets,the Group cash flow Practices Board.An audit includes examination,on a test basis, statement,the Group statement of total recognised gains and of evidence relevant to the amounts and disclosures in the financial losses and the related notes. statements.It also includes an assessment of the significant estimates and judgements made by the Directors in the This report is made solely to the Company’s shareholders,as a preparation of the financial statements and of whether the body,in accordance with Section 235 of the Companies Act 1985. accounting policies are appropriate to the Group and Company’s Our audit work has been undertaken so that we might state to circumstances,consistently applied and adequately disclosed. the Company’s shareholders those matters we are required to state to them in an Auditor’s Report and for no other purpose. We planned and performed our audit so as to obtain all the To the fullest extent permitted by law,we do not accept or information and explanations which we considered necessary in assume responsibility to anyone other than the Company and order to provide us with sufficient evidence to give reasonable the Company’s shareholders as a body for our audit work,for this assurance that the financial statements are free from material report,or for the opinions we have formed. misstatement,whether caused by fraud or other irregularity or error.In forming our opinion we also evaluated the overall adequacy Respective responsibilities of directors of the presentation of the information in the financial statements. and auditors The Directors’responsibilities for preparing the annual report Opinion and the financial statements in accordance with applicable law In our opinion the financial statements: and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the - give a true and fair view,in accordance with United Kingdom Statement of Directors’Responsibilities. Generally Accepted Accounting Practice,of the state of the Group’s and the parent Company’s affairs as at 31 December Our responsibility is to audit the financial statements in 2005 and of the Group’s loss for the year then ended;and accordance with relevant legal and regulatory requirements - have been properly prepared in accordance with the Companies and International Standards on Auditing (UK and Ireland). Act 1985.
We report to you our opinion as to whether the financial Horwath Clark Whitehill LLP statements give a true and fair view and are properly prepared Chartered Accountants in accordance with the Companies Act 1985.We also report to and Registered Auditors you if,in our opinion,the Report of the Directors is not consistent Maidstone with the financial statements,if the Company has not kept proper accounting records,if we have not received all the 27 March 2006 information and explanations we require for our audit,or if information specified by law regarding directors’remuneration and transactions with the Company is not disclosed.
We read the other information contained in the report and consider whether it is consistent with the audited financial statements.This other information comprises only the Highlights, Chairman’s Statement,Operating and Financial Review and the Report of the Directors.We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. 22 The Real Good Food Company plc Consolidated Profit and Loss Account Annual Report 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT 31 December 2005
Year ended 31 December 2005 Year ended 31 December 2004 Before goodwill Goodwill Before goodwill Goodwill amortisation and amortisation and amortisation and amortisation and exceptional items exceptional items Total exceptional items exceptional items Total Notes £’000s £’000s £’000s £’000s £’000s £’000s
Turnover 2 Continuing operations 43,017 - 43,017 28,813 - 28,813 Acquisitions 73,373 - 73,373 15,795 - 15,795 Discontinued Operations 1,260 - 1,260 --- 117,650 - 117,650 44,608 - 44,608 Cost of sales (93,378) - (93,378) (31,826) - (31,826) -
Gross Profit 24,272 - 24,272 12,782 - 12,782 Distribution costs (6,854) - (6,854) (3,185) - (3,185) Administration expenses 3 (8,369) (3,148) (11,517) (9,641) (666) (10,307) Other operating income --- 54 - 54
Operating Profit/(Loss) 4 9,049 (3,148) 5,901 10 (666) (656) Continuing operations 3,604 (1,892) 1,712 (2,008) (666) (2,674) Acquisitions 5,785 (1,256) 4,529 2,018 - 2,018 Discontinued operations (340) - (340) ---
Exceptional Items Reorganisation costs 3 - (3,277) (3,277) - (440) (440) Termination of an operation 3 - (1,025) (1,025) ---
Profit/(Loss) on ordinary actvities before interest and taxation 9,049 (7,450) 1,599 10 (1,106) (1,096)
Interest receivable 6 209 - 209 59 - 59 Interest payable 7 (2,174) - (2,174) (494) - (494)
Loss on ordinary activities before taxation 7,084 (7,450) (366) (425) (1,106) (1,531)
Taxation 10 (1,871) - (1,871) 533 300 833
Loss for the financial year 5,213 (7,450) (2,237) 108 (806) (698)
Basic and diluted loss per share 11 (0.072) (0.064)
There are no recognised gains and losses other than those shown in the above profit and loss account. The notes on pages 26 to 52 form part of these financial statements. 23 The Real Good Food Company plc Consolidated Balance Sheet Annual Report 2005
CONSOLIDATED BALANCE SHEET 31 December 2005
2005 2004 Notes £’000s £’000s
Fixed Assets Intangible assets:- Negative goodwill 12 (410) (433) Positive goodwill 12 89,134 16,737
Tangible fixed assets 13 18,451 6,377 107,175 22,681
Current Assets Stock 16 14,390 4,218 Deferred tax asset 15 253 914 Debtors 17 29,828 6,315 Cash at bank and in hand 11,999 1,420 56,470 12,867
Creditors: Amounts falling due within one year 18 (34,748) (16,132)
Net current assets / (liabilities) 21,722 (3,265) Total assets less current liabilities 128,897 19,416
Creditors: Amounts falling due after more than one year 19 (60,413) (6,421)
Provisions for liabilities 20 (746) - Net assets excluding pension deficit 67,738 12,995
Pension scheme deficit 35 (806) - Net assets including pension deficit 66,932 12,995
Capital and reserves Called up share capital 21 1,297 282 Share premium account 22 68,773 13,643 Profit and loss account 22 (3,138) (930) Shareholders’funds - all equity 23 66,932 12,995
These financial statements were approved by the Board of Directors on 27March 2006 and were signed on its behalf by:
P W Totté L M Camfield Chairman Director
The notes on pages 26 to 52 form part of these financial statements. 24 The Real Good Food Company plc Company Balance Sheet Annual Report 2005
COMPANY BALANCE SHEET 31 December 2005
2005 2004 Notes £’000s £’000s
Fixed Assets Intangible assets:- Negative goodwill 12 (410) (433) Positive goodwill 12 15,129 16,737
Tangible fixed assets 13 5,861 6,377 Investments 14 55,807 1,938 76,387 24,619
Current Assets Stock 16 5,698 4,218 Deferred tax asset 15 728 914 Debtors 17 61,088 6,315 Cash at bank and in hand 4,763 1,420 72,277 12,867
Creditors: Amounts falling due within one year 18 (20,910) (18,070) Net current assets / (liabilities) 51,367 (5,203)
Total assets less current liabilities 127,754 19,416
Creditors: Amounts falling due after more than one year 19 (60,413) (6,421)
Provisions for liabilities 20 (413) - Net assets 66,928 12,995
Capital and reserves Called up share capital 21 1,297 282 Share premium account 22 68,773 13,643 Profit and loss account 22 (3,142) (930) Shareholders’funds - all equity 23 66,928 12,995
These financial statements were approved by the Board of Directors on 27March 2006 and were signed on its behalf by:
P W Totté L M Camfield Chairman Director
The notes on pages 26 to 52 form part of these financial statements. 25 The Real Good Food Company plc Consolidated Cash Flow Statement Annual Report 2005
CONSOLIDATED CASH FLOW STATEMENT 31 December 2005
2005 2004 Notes £’000s £’000s
Net cash Inflow/(outflow) from operating activities 25 4,468 (1,354)
Returns on investment and servicing of finance Interest received 209 59 Interest element of finance lease repayments (29) - Interest paid on bank loans,overdrafts and loan stock (2,145) (391)
Net cash outflow from returns on investments and servicing of finance (1,965) (332)
Taxation paid (482) (10)
Capital expenditure Purchase of tangible fixed assets (1,172) (1,934) Sale of tangible fixed assets 2,059 24 887 (1,910) Acquisitions and disposals 26 (54,849) (15,966)
Net cash outflow before use of liquid resources and financing (51,941) (19,572)
Financing 27 62,229 17,127
Increase / (Decrease) in cash 29 10,288 (2,445)
The notes on pages 26 to 52 form part of these financial statements. 26 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
1.Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group’s financial statements. a) Basis of preparation The financial statements have been prepared in accordance with applicable accounting standards under the historical cost convention. b) Basis of consolidation The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings. The acquisition method of accounting has been adopted.Under this method the results of all the subsidiary undertakings are included in the consolidated profit and loss account from the date of acquisition or up to the date of disposal.Intra-Group sales and profits are eliminated on consolidation and all sales and profit figures relate to external transactions only.
Under Section 230 of the Companies Act 1985 the Company is exempt from the requirement to present its own profit and loss account.The loss for the financial period,of the holding Company,as approved by the Board,was £2,212,000 (2004 - £799,000). c) Goodwill Purchased goodwill (both positive and negative,representing the excess or discount of the fair value of the consideration given over the fair value of the separable net assets acquired) arising on consolidation in respect of acquisitions is capitalised.Positive Goodwill is fully amortised by equal annual instalments over its estimated useful life.The estimated useful life is calculated separately for each acquisition.
The estimated useful economic life of each acquisition has been estimated at 20 years.
Negative goodwill up to the fair values of the associated non-monetary assets acquired is released to the profit and loss account over the period in which the non-monetary assets are recovered.Any negative goodwill in excess of this is recognised through the profit and loss account in the period expected to be benefited.The estimated useful economic life of the current negative goodwill relates to 1 acquisition and has been estimated at 20 years. d) Turnover Turnover comprises the invoiced value of goods and services supplied by the Company,exclusive of Value Added Tax and trade discounts. e) Taxation The charge for taxation is based on the results for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes.
Provision is made in full for all taxation deferred in respect of timing differences that have originated but not reversed by the balance sheet date,except for gains on disposal of fixed assets which will be rolled over into replacement assets.No provision is made for taxation on permanent differences.Deferred tax is not discounted.
Deferred tax assets are recognised to the extent that it is more likely than not that they will be recovered. f) Pension costs The Group operates a defined contribution and a defined benefit pension scheme.Full details are given in note 35 to the accounts. 27 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
g) Fixed assets,depreciation and impairment Tangible fixed assets are stated at historical cost,or fair value at the date of acquisition,less accumulated depreciation and impairment provisions.
Depreciation is provided to write off the cost,less the estimated residual value,of tangible fixed assets by equal instalments over their estimated useful economic lives as follows:
Freehold buildings 2% Short term leasehold buildings Length of lease Plant and equipment 10%-50% Motor vehicles 25% Fixtures and fittings* 7.5%-25% Computer equipment 25%
* Tray and Dollies stock are capitalised and written off to the profit and loss account over 4 and 10 years respectively,these form part of fixtures and fittings.
Impairment reviews of fixed assets are undertaken if there are indications that the carrying values may not be recoverable or that the recoverable amounts may be less than the asset’s carrying value.
Assets in the course of construction relates to plant and machinery in the process of construction which was not complete,and hence was not in use at the end of the year end.Assets in the course of construction are not depreciated until they are completed and are brought in use. h) Leases Where a lease is entered into which entails taking substantially all the risks and rewards of ownership of an asset,the lease is treated as a “finance lease”.The asset is recorded in the balance sheet as a tangible asset and is depreciated over its estimated useful life or the term of the lease.Future instalments under such leases,net of finance charges,are included within creditors. Rentals payable are apportioned between the finance element,which is charged to the profit and loss account,and the capital element,which reduces the outstanding obligation for future instalments.
All other leases are treated as “operating leases”and the rentals payable are charged on a straight line basis to the profit and loss account over the lease term. i) Investments Investments are stated at cost less provision for any permanent diminution in value. j) Stocks and work in progress Stocks and work in progress are stated at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving stocks.Cost includes all direct costs and an appropriate proportion of fixed and variable overheads.Net realisable value is based upon estimated selling price allowing for all further costs of completion and disposal. k) Derivative financial instruments The Group uses derivative financial instruments to reduce exposure to foreign exchange risk and interest rate movements. The Group does not hold or issue derivative financial instruments for speculative purposes. 28 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
1.Accounting policies (continued)
For a forward foreign exchange contract to be treated as a hedge,the instrument must be related to actual foreign currency assets or liabilities or to a probable commitment.It must involve the same currency or similar currencies as the hedged item and must also reduce the risk of foreign currency exchange movements on the Group’s operations.Gains and losses arising on these contracts are deferred and recognised in the profit and loss account,or as adjustments to the carrying amount of fixed assets,only when the hedged transaction has itself been reflected in the Group’s financial statements.
For an interest rate swap to be treated as a hedge,the instrument must be related to actual assets or liabilities or a probable commitment and must change the nature of the interest rate by converting a fixed rate to a variable rate or vice versa.Interest differentials under these swaps are recognised by adjusting net interest payable over the periods of the contracts.
If an instrument ceases to be accounted for as a hedge,for example because the underlying hedged position is eliminated,the instrument is marked to market and any resulting profit or loss recognised at that time. l) Cash and liquid resources Cash,for the purposes of the cash flow statement,comprises cash in hand,any overdraft facility and deposits repayable on demand.
Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are either readily convertible into cash or are traded in an active market.Liquid resources comprise term deposits of less than one year. m)Government grants Government grants relating to tangible fixed assets are treated as deferred income and released to the profit and loss account over the expected useful lives of the assets concerned.Other grants are credited to the profit and loss account as the related expenditure is incurred. n) Foreign currencies Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction or,if hedged,at the forward contract rate. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date or,if appropriate,at the forward contract rate.
2.Turnover
The turnover for the current year arose from the manufacture and supply of added-value frozen fish to the foodservice sector,the manufacture and supply of high quality ambient cakes and desserts,the distribution of bulk sugar and manufacture and supply of packed sugar and powders and the manufacture and supply of marzipan,ready to roll icing and baking chocolate to the industrial and retail sectors.
A geographical analysis of turnover is given below: Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
United Kingdom 114,861 43,627 Europe 2,304 981 Rest of the world 485 - 117,650 44,608
In the opinion of the Directors a geographical analysis of profit before tax could be seriously prejudicial to the interests of the Group. This information is therefore not given in accordance with the provisions of SSAP 25 ‘Segmental Reporting’. 29 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
3.Exceptional items
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Exceptional costs*:- Reorganisation costs 3,277 427 Termination of an operation 1,025 - Loss on disposal - 13 4,302 440
Other exceptional costs and amortisation:- Amortisation 2,874 559 Abortive acquisitions** 274 107 3,148 666
* During the year the Company incurred costs in respect of reorganisation costs and the closure of the Sandwich division.In accordance with FRS 3 ‘Reporting Financial Performance’ these have been classified as exceptional items after the operating loss and before interest.These costs were allowed for taxation purposes which resulted in a reduction of the overall tax charge of £1.2M.
** These costs relate to abortive acquisition costs and due to their size and nature are considered by the Directors to be exceptional.However,they do not fall into the category of exceptional items,as defined by FRS 3 ‘Reporting Financial Performance’,which must be shown separately on the face of the profit and loss account.These costs have therefore been included within administration costs.These costs were allowed for taxation purposes which resulted in a reduction of the overall tax charge of £0 .8M.
4.Operating profit / (loss)
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
This is stated after charging/(crediting):
Auditors’remuneration - audit 132 45 - corporation tax 31 20 - other assurance assignments 162 22 Depreciation of tangible fixed assets - owned 1,902 890 - financed 76 49 Amortisation of intangible assets 2,874 559 Income from government grants - (18) Hire of plant and machinery 329 652 Rentals under operating leases – Land and buildings 410 463 Rentals under operating leases – Other assets 384 72
Fees of £162,442 (2004 - £133,000) were paid to the auditors in connection with acquisitions in the year and have been capitalised.In addition fees of £107,523 (2004 - £35,547) were paid to the auditors in connection with the issue of shares and were written off to the share premium account.As noted in the Report of the Directors the Board has taken steps to ensure that auditor independence is not compromised. 30 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
5.Segmental analysis
A segmental analysis by business segment is give below: Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Turnover Bakery 16,196 19,727 Sandwiches 1,260 9,086 Fish processing 25,561 15,795 Sugar 59,127 - Sugar based ingredients 15,506 - 117,650 44,608
Profit/(loss) on ordinary activities before tax Bakery (1,044) (1,237) Sandwiches (1,069) (1,706) Fish processing 3,172 1,412 Sugar 2,710 - Sugar based ingredients 187 - Head office (4,322) - (366) (1,531)
Net assets Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Bakery 1,942 3,395 Sandwiches (72) 1,547 Fish processing 21,514 22,277 Sugar 61,987 - Sugar based ingredients 24,445 - Head office 16,404 - 126,220 27,219
Unallocated liabilities 102 (36) Deferred consideration (notes 18 and 19) - (5,181) Net debt (59,390) (9,007) Group net assets 66,932 12,995 31 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
6.Interest receivable
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Bank interest receivable 209 59
7.Interest payable and similar charges
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Bank loans and overdrafts 1,877 267 On finance lease and hire purchase agreements 29 14 Other loans 268 213 2,174 494
8.Directors’remuneration
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Fees 216 98 Executive salaries and benefits 357 319 573 417
The emoluments of the Directors for the year were as follows:
Year ended Period ended 31 December 31 December Fees Salary Benefits Pension 2005 2004 £’000s £’000s £’000s £’000s £’000s £’000s
J F Gibson - 177 17 - 194 202 L M Camfield - 109 9 17 135 40 P W Totté* 51 - - - 51 82 J C Mitchell 9 28 - - 37 67 P C Salter 36 - - - 36 12 R Gradowski-Smith 36 - - - 36 14 P Ridgwell 25 - - - 25 - C O Thomas 59---59 - 216 314 26 17 573 417
* Fees in relation to P W Totté are paid to Menton Investments Limited.Menton Investments Limited held 2.7% of the Company’s share capital at the 31 December 2005. 32 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
8.Directors’remuneration (continued)
Directors’interests in share options
Number of Number of options at options at Earliest Exercise Date of 31 December 1 January Exercise exercise expiry Option Type Grant 2005 2005 price date date
J F Gibson Approved options 2003 Mar 2003 90,909 90,909 110.00p Sept 2005 Sept 2013 Un-approved options 2003 Mar 2003 162,495 162,495 110.00p Sept 2005 Sept 2013 Un-approved options 2005 Sept 2005 200,000 - 115.00p Sept 2008 Sept 2015 P W Totté Un-approved options 2003 Mar 2003 126,702 126,702 110.00p Sept 2005 Sept 2013 Un-approved options 2005 Sept 2005 500,000 - 115.00p Sept 2008 Sept 2015 L M Camfield Approved options 2004 Apr 2004 70,000 70,000 136.50p June 2006 June 2014 Un-approved options 2005 Sept 2005 175,000 - 115.00p Sept 2008 Sept 2015 J C Mitchell Un-approved options 2003 Mar 2003 50,680 50,680 110.00p Sept 2005 Sept 2013 Un-approved options 2005 Sept 2005 20,000 - 115.00p Sept 2008 Sept 2015 P C Salter Un-approved options 2004 Apr 2004 25,000 25,000 136.50p June 2006 June 2014 Un-approved options 2005 Sept 2005 30,000 - 115.00p Sept 2008 Sept 2015 R Gradowski- Smith Un-approved options 2004 Apr 2004 25,000 25,000 136.50p June 2006 June 2014 Un-approved options 2005 Sept 2005 20,000 - 115.00p Sept 2008 Sept 2015 P Ridgwell Un-approved options 2005 Sept 2005 150,000 - 115.00p Sept 2008 Sept 2015 C O Thomas Approved options 2003 Dec 2003 44,278 - 67.75p Sept 2005 Dec 2013 Un-approved options 2003 Dec 2003 324,720 - 67.75p Sept 2005 Dec 2013 Un-approved options 2005 Sept 2005 20,000 - 115.00p Sept 2008 Sept 2015 Warrants Dec 2003 369,000 - 67.75p Sept 2005 Dec 2013
Options over 1,095,000 shares (2004:550,786) were granted to Directors during the year.Options have been granted to Directors, whose performances and potential contribution were judged to be important to the operations of the Group,as incentives to maximise their performance and contribution.
The mid-market price of the ordinary shares on 31 December 2005 was 79p and the range during the year was 79p to 191.25p.
During the year retirement benefits were accruing to 3 (2004 - 1) Directors in respect of money purchase pension schemes. Gains made by the Directors on the exercise of share options were £nil. 33 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
9.Staff numbers and costs
The average monthly number of people employed by the Group (including Directors) during the year,analysed by category, were as follows:
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Production staff 800 598 Selling and distribution 112 84 Directors and administrative staff 90 23 1,002 705
The aggregate payroll costs were as follows:
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Wages,salaries and fees 12,848 12,402 Social security costs 1,204 1,155 Other pension costs 350 167 14,402 13,724
10.Taxation
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Analysis of tax charge for the year Current tax (see note below) UK Corporation tax at 30% 16 54 Adjustments in respect of prior periods 94 - 110 54
Deferred Tax Origination and reversal of timing differences 1,761 (887) UK corporation tax charge on profits of the year 1,871 (833) 34 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
10.Taxation (continued)
Factors affecting tax charge for the year:
The tax assessed for the year is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below:-
Year ended Period ended 31 December 31 December 2005 2004 £’000s £’000s
Loss on ordinary activities before tax (366) (1,531)
Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (2004 - 30%) (110) (459)
Effects of: Expenses not deductible for tax purposes 329 9 Ineligible depreciation 3 86 Loss on disposal of ineligible assets 57 437 Differences in fixed assets transfer value (168) (464) Capital allowances for the year less than depreciation 367 405 Additional deduction for R&D expenditure (17) - Other short term timing differences (6) 6 Marginal relief (55) (16) Consolidation adjustments - (515) Income not taxable for tax purposes - (28) Under provision of tax from previous years 93 - Utilisation of tax losses and other deductions (383) - Unrelieved tax losses and other deductions arising in the year - 593
Current tax charge for the year 110 54 35 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
11.Loss per share
The calculation of the basic loss per share is based on a loss on ordinary activities after taxation of £2,237,000 (2004 - £698,000),and on the weighted average number of ordinary shares in issue during the year of 30,969,560 (2004 - 10,964,662).
12.Goodwill
GROUP COMPANY 31 December 31 December 2005 2005 £’000s £’000s
Positive Goodwill Cost Brought forward 1 January 2005 17,337 17,337 Retrospective adjustment* 37 37 Acquired 75,257 -
Carried forward 31 December 2005 92,631 17,374
Amortisation Brought forward 1 January 2005 600 600 Amortisation for the year 2,897 1,645
Carried forward 31 December 2005 3,497 2,245
Net book value 2005 89,134 15,129
Net book value 2004 16,737 16,737
GROUP COMPANY 31 December 31 December 2005 2005 £’000s £’000s
Negative goodwill Cost Brought forward 1 January 2005 (468) (468)
Carried forward 31 December 2005 (468) (468)
Amortisation Brought forward 1 January 2005 35 35 Amortisation for the year 23 23
Carried forward 31 December 2005 58 58
Net book value 2005 (410) (410)
Net book value 2004 (433) (433)
* A retrospective adjustment in accordance with FRS 7 ‘Fair values in acquisition accounting’was made in relation to the fair value of the consideration paid for the prior year acquisitions.An adjustment in respect of amortisation was made accordingly,as directed by FRS 7,which has been recognised in the current year’s profit and loss account. 36 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
13.Tangible fixed assets
GROUP Freehold Leasehold Furniture, Assets in the land and land and Plant and Motor fittings and course of buildings buildings machinery vehicles equipment construction Total £’000s £’000s £’000s £’000s £’000s £’000s £’000s
Cost At 1 January 2005 2,635 1,961 6,189 234 860 190 12,069 Additions - 96 943 - 190 317 1,546 Reclassifications 433 - (284) - - (149) - Acquired with subsidiary 10,453 - 13,729 109 2,071 - 26,362 Disposals (2,798) (364) (1,181) (154) (100) (9) (4,606) At 31 December 2005 10,723 1,693 19,396 189 3,021 349 35,371
Depreciation At 1 January 2005 607 847 3,579 177 482 - 5,692 Charge 76 141 739 17 191 - 1,164 Acquired with subsidiary 1,379 - 8,982 99 1,140 - 11,600 Disposals (885) (107) (870) (142) (67) - (2,071) Impairment 255 - 280 - - - 535 At 31 December 2005 1,432 881 12,710 151 1,746 - 16,920
Net Book Value At 31 December 2005 9,291 812 6,686 38 1,275 349 18,451 At 31 December 2004 2,028 1,114 2,610 57 378 190 6,377
COMPANY Freehold Leasehold Furniture, Assets in the land and land and Plant and Motor fittings and course of buildings buildings machinery vehicles equipment construction Total £’000s £’000s £’000s £’000s £’000s £’000s £’000s
Cost At 1 January 2005 2,635 1,961 6,189 234 860 190 12,069 Additions - 96 689 - 129 - 914 Disposals - (364) (1,181) (129) (100) (9) (1,783) Reclassifications - - 149 - - (149) - At 31 December 2005 2,635 1,693 5,846 105 889 32 11,200
Depreciation At 1 January 2005 607 847 3,579 177 482 - 5,692 Charge 20 141 525 14 115 - 815 Disposals - (107) (870) (124) (67) - (1,168) At 31 December 2005 627 881 3,234 67 530 - 5,339
Net Book Value At 31 December 2005 2,008 812 2,612 38 359 32 5,861 At 31 December 2004 2,028 1,114 2,610 57 378 190 6,377 37 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
The net book value of assets held under finance leases or hire purchase contracts,included on the previous page,are as follows:
GROUP AND COMPANY 31 December 31 December 2005 2004 £’000s £’000s
Plant and machinery 1,173 - Motor vehicles 38 26 1,211 26
14.Investments
COMPANY Investments in shares of subsidiary undertakings:
Eurofoods Five Star plc/ Fish Limited/ Napier Haydens Coolfresh Cakes.co.uk Tom Darwood Brown Foods 31 December 31 December Limited Limited Limited Limited Limited 2005 2004 £’000s £’000s £’000s £’000s £’000s £’000s £’000s
At 1 January 2005 1,248 79 1 610 - 1,938 1,429
Additions ----53,869 53,869 20,751
Written off during year** ------(20,242) At 31 December 2005 1,248 79 1 610 53,869 55,807 1,938
(**) Following the hive up of the trade and assets to The Real Good Food Company plc the investment values were written down to the value of the non distributable reserves of the subsidiaries. 38 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
14.Investments (continued)
COMPANY
Subsidiary Description and Proportion of number of nominal value Principal activities shares held of shares held
Hayden’s Bakeries Limited* Dormant 4,052,659 Ordinary £1 100% Eurofoods plc* Dormant 260,000 Ordinary £1; 100% 50,000 Preference £1 Coolfresh Distribution Limited* Dormant 10,000 Ordinary £1 100% Cakes.co.uk Limited* Dormant 100 Ordinary £1 100% Five Star Fish Limited* Dormant 11,112 Ordinary £1 100% Tom Darwood Limited Dormant 5,000 Ordinary £1 100% Napier Brown Foods Limited* Sugar sales 28,248,096 Ordinary 50p 100% Napier Brown & Ingredient Company Limited supplier 15,685,000 Ordinary £1 100% Advanced Sweeteners Limited Dormant 2,000 Ordinary £1 100% Bextra Limited Dormant 3,100,000 Ordinary £1 100% Bextra Foods Limited Dormant 11,113 Ordinary £1 100% Borlands & Sclanders Limited Dormant 74,000 Ordinary £1 100% Garret Ingredients Limited Dormant 100 Ordinary £1 100% Gaywood Sugars Limited Dormant 200,000 Ordinary £1 100% James Budgett Sugars Limited Dormant 250,000 Ordinary £1 100% JF Renshaw Limited Dormant 1 Ordinary £1 100% Renshaw Scott Limited Dormant 1 Ordinary £1 100% The Standardized Food Dormant 5,000 Ordinary £1; 100% Products Company Limited 42,000 Preference £1 Sefcol Limited Dormant 3,000 Ordinary £1 100% Treelink (Ireland) Limited Dormant 75,000 Ordinary £1 100% Whitworths Sugars Limited Dormant 2 Ordinary £1 100%
All subsidiaries are registered in England and Wales with the exception of Borland & Sclanders Limited which is registered in Scotland and Treelink (Ireland) Limited which is registered in Northern Ireland.All subsidiaries have been included in these consolidated Financial Statements.
(*) Held directly by The Real Good Food Company plc. 39 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
15.Deferred taxation asset
The movements in deferred tax are as follows:
2005 2005 2004 2004 Group Company Group Company £’000s £’000s £’000s £’000s
At 1 January 2005 914 914 158 158 Acquired in year 753 - (131) (131) Profit and loss account credit (1,414) (186) 887 887 At 31 December 2005 253 728 914 914
The deferred tax asset is made up as follows:
2005 2005 2004 2004 Group Company Group Company £’000s £’000s £’000s £’000s
Accelerated capital Allowances (1,004) 131 292 292 Tax losses 593 4 612 612 Short term timing 664 593 10 10 Differences 253 728 914 914
The deferred tax asset has been recognised on the basis that the Directors believe that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted on the basis the Group’s forecasts and strategy.
16.Stocks
2005 2005 2004 2004 Group Company Group Company £’000s £’000s £’000s £’000s
Raw materials 6,990 2,673 1,564 1,564 Work in progress 852 852 548 548 Finished goods and goods for resale 6,548 2,173 2,106 2,106 14,390 5,698 4,218 4,218 40 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
17.Debtors
2005 2005 2004 2004 Group Company Group Company £’000s £’000s £’000s £’000s
Trade debtors 25,396 3,924 5,252 5,252 Other debtors 1,823 175 467 467 Amounts owed by group undertakings -55,874 -- Corporation tax 888 - -- Prepayments and accrued income 1,721 1,115 596 596 29,828 61,088 6,315 6,315
18.Creditors:amounts falling due within one year
2005 2005 2004 2004 Group Company Group Company £’000s £’000s £’000s £’000s
Overdrafts 4,652 917 1,639 1,639 Bank Loans 3,500 3,500 -- Convertible loan stock 2,774 - -- Amounts due under finance leases and hire purchase 225 225 214 214 Trade creditors 16,089 4,350 4,966 4,966 Corporation tax -19373 373 Amounts owed to group undertakings - 8,581 - 1,938 Other taxation and social security costs 725 269 346 346 Other creditors 2,590 1,406 7,869 7,869 Accruals and deferred income 4,193 1,643 725 725 34,748 20,910 16,132 18,070
The National Westminster Bank plc,The Royal Bank of Scotland plc and Cooperatieve Centrale Raiffeisen Bank BA London bank has a debenture incorporating a fixed and floating charge over the undertaking and all property and assets present and future including goodwill,book debts,uncalled capital,buildings,fixtures,fixed plant and machinery.
Tower Bridge Piazza Limited has a rent deposit deed secured against all monies due or becoming due from the company to the chargee under the terms of the rent deposit added creating or evidencing the charge.
The National Westminster Bank plc has a charge over the assignment of life policies as follows:-
Policy holder Policy number Policy provider J F Gibson 001191-515-DHS Allied Dunbar Assurance plc J F Gibson L0199493452 Scottish Equitable plc D R Burton 001190-516-DHS Allied Dunbar Assurance plc D R Burton L0199783452 Scottish Equitable plc L M Camfield L0194393452 Scottish Equitable plc P G Ridgwell L0191576272 Scottish Equitable plc 41 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
The National Westminster Bank plc,The Royal Bank of Scotland plc and Cooperatieve Centrale Raiffeisen Bank BA London bank have a legal charge over land and property in Grimsby and the associated plant,machinery,fixtures and fittings,furniture,equipment and goodwill and the proceeds of any insurance affecting the property or assets.
Hire purchase and finance lease creditors are secured upon the underlying assets.
Included within creditors is an amount of £nil (2004 - £3,346,562) in relation to the balance on the Group’s invoice discounting facilities.This was secured upon the underlying trade debtors.
Also included within other creditors is deferred consideration of £1,000,000 (2004 - £4,081,000) in respect of the acquisition of Five Star Fish Limited and its subsidiary,Tom Darwood Limited.
In addition £nil (2004 - £100,000) is included in other creditors in respect of deferred consideration for the acquisition of Eurofoods plc.
19.Creditors:amounts falling due in more than one year
2005 2005 2004 2004 Group Company Group Company £’000s £’000s £’000s £’000s
Bank loans 60,035 60,035 5,100 5,100 Amounts due under finance leases and hire purchase 203 203 127 127 Other creditors 175 175 1,194 1,194 60,413 60,413 6,421 6,421
Included within other creditors falling due in more than one year is deferred consideration of £nil (2004 - £1,000,000) in respect of the acquisition of Five Star Fish Limited and its subsidiary,Tom Darwood Limited.
Group Company Group Company 2005 2005 2004 2004 £’000s £’000s £’000s £’000s
1 - 2 years 4,574 4,574 1,407 1,407 2 - 5 years 32,407 32,407 4,388 4,388 Over 5 years 23,432 23,432 626 626 Total 60,413 60,413 6,421 6,421 42 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
20.Provisions
2005 2005 2004 2004 Group Company Group Company £’000s £’000s £’000s £’000s
At 1 January 2005 --276 276 Additions 746 413 -- Released during the year --(276) (276) At 31 December 2005 746 413 --
Included in provisions is £346,000 (2004 - £nil) relating to an onerous lease commitment on a building no longer used by the Group. Also included in provisions is £66,593 (2004 - £nil) relating to dilapidation provisions on buildings no longer utilised by the Group,and a provision amounting to £333,000 (2004 - £nil) in relation to administration costs of the acquired pension scheme which is in deficit.
21.Share capital
2005 2004 £’000s £’000s
Authorised equity share capital 75,000,000 ordinary shares of £0.02 each 1,500 400
Allotted,called up and fully paid equity share capital At 1 January 2005 282 79 ordinary shares issued during the year 1,015 203
At 31 December 2005 1,297 282
During the year the Company made the following issues of ordinary shares:-
Ordinary Nominal Total Total Shares Value per Nominal Consideration Date of issue Issued Share Value £ £’000s
31 August 2005 50,032,758 £0.02 1,000,655 57,368 6 October 2005 326,117 £0.02 6,522 221 18 October 2005 317,959 £0.02 6,359 215 26 November 2005 49,170 £0.02 983 33 29 November 2005 3,000 £0.02 60 2 6 December 2005 44,278 £0.02 886 30 43 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
22.Share premium and reserves
Share Profit Premium and loss Account account GROUP £’000s £’000s Balance at 1 September 2004 1,329 (232) Premium on issue of shares (nominal value £202,689) 13,197 - Share issue expenses (883) - Retained loss for the year - (698)
Balance at 31 December 2004 13,643 (930)
Premium on issue of shares (nominal value £1,015,466) 56,855 - Share issue expenses (1,725) - Retained loss for the year - (2,237)
Balance at 31 December 2005 excluding pension deficit 68,773 (3,167) Pension scheme deficit * -29 Balance at 31 December 2005 including pension deficit 68,773 (3,138)
* The Group acquired a company during the year which had a defined benefit pension scheme,full details of which can be found in note 35,the amount included here represents the post acquisition movement on the FRS 17 deficit which was acquired in the year.
Share Profit Premium and loss Account account COMPANY £’000s £’000s Balance at 1 September 2004 1,329 (131) Premium on issue of shares (nominal value £202,689) 13,197 - Share issue expenses (883) - Retained loss for the year - (799) Balance at 31 December 2004 13,643 (930) Premium on issue of shares (nominal value £1,015,466) 56,855 - Share issue expenses (1,725) - Retained loss for the year - (2,212) Balance at 31 December 2005 68,773 (3,142) 44 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
23.Reconciliation of movement of shareholders’funds
Group Company Group Company 2005 2005 2004 2004 £’000s £’000s £’000s £’000s
Retained loss for the year (2,237) (2,212) (698) (799) Pension scheme deficit* 29 - -- Shares issued during the period 57,870 57,870 13,400 13,400 Share issue expenses (1,725) (1,725) (883) (883) 53,937 53,933 11,819 11,718
Opening shareholders’funds 12,995 12,995 1,176 1,277
Closing shareholders’funds 66,932 66,928 12,995 12,995
* The Group acquired a company during the year which had a defined benefit pension scheme,full details of which can be found in note 35,the amount included here represents the post acquisition movement on the FRS 17 deficit which was acquired in the year.
24.Operating leases and other commitments
At the balance sheet date:
(a)At 31 December 2005,the Group had £699,689 of capital expenditure commitments contracted but not provided for,and £230,000 which were authorised,but not contracted.
(b)At 31 December 2005 the Group had annual commitments under non-cancellable operating leases as follows:
Land and Land and Buildings Other Buildings Other 2005 2005 2004 2004 £’000s £’000s £’000s £’000s
Expiry date Within one year -4373 13 Between 2 and 5 years 494 298 194 200 More than 5 years 292 - 52 - 786 341 319 213 45 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
25.Reconciliation of operating profit to net cashflow from operating activities
2005 2004 £’000s £’000s
Operating profit/(loss) 5,901 (656) Amortisation of goodwill 2,874 559 Depreciation 1,164 939 Bad debts - 125 Loss on disposal of fixed assets 475 - Exceptional items (note 30) (4,302) (440) Movement in working capital: Increase in stocks (157) (1,073) Decrease/(Increase) in debtors 3,215 (349) Decrease in creditors (4,702) (459) Net cash inflow/(outflow) from operating activities 4,468 (1,354)
26.Acquisitions and disposals
2005 2004 £’000s £’000s
Cash paid for the acquisitions or subsidiary undertakings (note 32) - (13,719) Costs of acquiring subsidiary undertakings (note 32) (1,577) (859) Additional cost on prior year acquisition or subsidiary undertaking (37) - Payment of deferred consideration in respect of previous acquisitions or subsidiary undertakings - (600) Loans acquired with subsidiary undertaking (30,500) - Loan notes acquired with subsidiary undertaking (9,274) - Deferred consideration acquired with subsidiary undertaking (500) - Net overdraft acquired with subsidiary undertaking (12,961) (788) (54,849) (15,966)
27.Financing
2005 2004 £’000s £’000s
Issue of ordinary share capital 5,577 12,400 Expenses paid in connection with share issues (870) (883) New secured loan 65,500 6,100 Repayment of loan capital (7,690) (375) Capital element of finance leases (288) (115) Net cash inflow from financing 62,229 17,127 46 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
28.Reconciliation of net cashflow to net debt
2005 2004 £’000s £’000s
Increase/(decrease) in cash during the year 10,288 (2,445) Cash flow from movement in liquid funds (57,522) (5,610)
Change in net debt arising from cash flow (47,234) (8,055) Other loan notes & finance leases acquired with subsidiary (2,774) (32) New finance leases (375) (408)
Movement in net debt in the year (50,383) (8,495)
Net debt brought forward (9,007) (512) Net debt at end of year (59,390) (9,007)
29.Analysis of net debt
As restated at Acquisition Non-cash At 1 January (excluding movements 31 December 2005 Cash flow Cash & overdraft) (note 31) 2005 £££££
Cash at bank and in hand 1,420 10,579 - - 11,999 Overdraft (1,014) (3,638) - - (4,652) Invoice discounting (3,347) 3,347 - - - (2,941) 10,288 - - 7,347 Bank loan (5,725) (57,810) - - (63,535) Other loans - - (2,774) - (2,774) Hire purchase (341) 288 - (375) (428) (9,007) (47,234) (2,774) (375) (59,390)
30.Cash flow relating to exceptional items
The operating cash outflows include an outflow of £4,302,000 (2004 - £427,000) relating to exceptional costs as described in note 3.
31.Major cash transactions
During the year the Group entered into finance lease arrangements in respect of assets with a total capital value at the inception of the lease of £375,000 (2004 - £408,331).
32.Purchase of subsidary undertaking
On 27 August 2005 the Group acquired the entire share capital of Napier Brown Foods Limited (formerly Napier Brown Foods plc),a sugar wholesaler and processor,and its wholly owned subsidiaries.The consideration is set out below.This purchase has been accounted for by the acquisition method of accounting.The consolidated turnover,operating profit and taxation charge for Napier Brown Foods Limited (formerly Napier Brown Foods plc) from 1 January 2005 to acquisition was £95,182,725,£3,521,906 and £451,204 respectively.Its profit after taxation and dividends for the period ended 31 December 2005 was £2,143,756. 47 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
The fair values acquired were as follows:
Fair value Book values adjustments Fair values £’000s £’000s £’000s
Fixed assets Tangible assets 15,351 (588) 14,763 Current Assets Stock 10,014 - 10,014 Debtors 27,086 - 27,086 Cash at bank and in hand 1,632 - 1,632
Creditors due within one year (41,083) - (41,083)
Creditors due after more than one year (33,107) - (33,107) Pension provision (1,752) 859 (893) Net assets (21,859) 271 (21,588) Goodwill capitalised 75,457 53,869
Satisfied by: Issue of shares 52,292 Acquisition costs 1,577 53,869
The Directors do not believe that the book values are materially different from fair values,other than as adjusted above.
33.Related party transactions
The Group has taken advantage of the exemption under Financial Reporting Standard 8 not to disclose details of transactions with other entities that are part of the same Group,where Group accounts are publicly available and 90% or more of the voting rights are controlled within the Group.
During the year rent and management charges of £22,121 was recharged by Lafone Corporate Services Limited.P C Salter is a director of both The Real Good Food Company plc and Lafone Corporate Services Limited.The above transaction was on normal commercial terms.
Napier Brown and Company Limited,a subsidiary,trades with Nextus Employment Limited.C O Thomas was a director of both Napier Brown & Company Limited and Nextus Employment Limited.Following the acquisition of Napier Brown Foods Limited (formerly Napier Brown Foods plc) by The Real Good Food Company plc,Nextus Employment Limited provided services to Napier Brown & Company Limited amounting to £16,847.As at the year end Napier Brown and Company Limited owed Nextus Employment Limited £1,332.C O Thomas resigned as a director of Napier Brown & Company Limited on 31 August 2005 and was appointed as a director of The Real Good Food Company plc on 5 September 2005.
P G Ridgwell and A Ridgwell were directors of Napier Brown & Company Limited.They also have a controlling interest in Napier Brown Holdings Limited which in the period following the acquisition invoiced Napier Brown & Company Limited for services amounting to £11,750.Napier Brown & Company Limited also invoiced Napier Brown Holdings Limited £30,134 in the period following the acquisition. Both P G Ridgwell and A Ridgwell resigned as directors of Napier Brown & Company Limited on 31 August 2005.P G Ridgwell was appointed as a director of The Real Good Food Company plc on 31 August 2005.As at the year end Napier Brown Holdings Limited owed Napier Brown & Company Limited £2,793. 48 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
33.Related party transactions (continued)
P W Totté and P C Salter are Directors of The Real Good Food Company plc,they are also D irectors of Hill Station plc.Hill Station plc and its subsidiaries purchased goods totalling £96,827 from Napier Brown & Company Limited in the period following the acquisition by The Real Good Food Company plc.As at the year end Hill Station plc and its subsidiaries owed Napier Brown & Company Limited £36,227.
P G Ridgwell resigned as a Director of Napier Brown Foods Limited on 31 August 2005.
Napier Brown Foods Limited (formerly Napier Brown Foods plc),was a former subsidiary of Napier Brown Ingredients Limited.At the year end a loan note of £2,773,908 was owed to Napier Brown Ingredients Limited in which P G Ridgwell,who was a Director of Napier Brown Foods Limited during the year,has a beneficial interest.Interest of £240,898 was paid to Napier Brown Ingredients Limited during the year in relation to this.Accrued interest on the loan amounted to £593,225.
P C Salter,a Director of The Real Good Food Company plc,was owed £4,027 (2004 - £Nil) from the Company at the year end.
34.Financial assets and liabilities
The Group’s financial instruments comprise cash,a term loan,hire purchase and finance leases,revolving credit facility,overdraft and various items arising directly from its operations such as trade debtors and creditors.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.The Group also has some currency exposure in relation to its sugar trade but the majority of this risk is hedged.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.
Total Fixed floating rate Rate Total £’000s £’000s £’000s
Financial liabilities
Repayable by instalments: Within one year 3,500 225 3,725 Between one and two years 4,500 55 4,555 Between two and five years 32,200 148 32,348 Over five years 23,335 - 23,335
Repayable other than by instalments Overdraft facility 4,652 - 4,652 Convertible loan stock 2,774 - 2,774
The term loan bears interest at 2% over base rate and is repayable by instalments every 6 months ranging from £1,750,000 to £5,000,000.The final repayment is due on 1 December 2012.At the year end the amount outstanding in respect of the facility was £43,035,000.
The revolving credit facility bears interest at a rate of between 1.5% and 2.0% based upon the ratio of senior net debt to earnings before interest,tax,depreciation and amortisation (EBITDA) over base rate and is to be repaid via instalments as follows:December 2009 - £2,600,000;December 2010 - £2,600,000;December 2011 - £2,600,000 and December 2012 - £12,700,000.The maximum facility is £20,500,000.At the year end the amount outstanding in respect of the facility was £20,500,000. 49 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
The fixed interest rate liabilities relate to amounts payable on hire purchase agreements.The weighted average interest rate of these liabilities was 5.41% and the weighted average period for which the interest rates are fixed was 30 months.
The Group had outstanding loan notes amounting to £2,774,908 due to Napier Brown Ingredients Limited as disclosed in note 33. Interest is being charged on them at 0.5% over LIBOR from the date of issue.The loan notes are due for repayment on 31 December 2006.The loan note is convertible into fully paid ordinary shares of the company,at the option of the holder,after the redemption date should the company not have satisfied the loan note.The redemption can only take place up to 6 months after the redemption date.Conversion to ordinary shares will be calculated by reference to the middle market quotation of the Company’s shares for the 5 business days prior to conversion.The loan note also allows for partial redemption in cash at the redemption date.
The financial assets of the Group are surplus funds,which are offset against borrowings under the facility,and there is no separate interest rate exposure.
35.Pensions arrangements
A subsidiary of the Group,Napier Brown Foods Limited (formerly Napier Brown Foods plc) operates a defined benefit pension scheme, The Napier Brown Retirement Benefits scheme.The assets of the scheme are held separately from those of the Group in an independently administered fund.The pension cost charge represents contributions payable by the Group.Contributions paid to the scheme amounted to £58,000.At the year end contributions of £nil were owed by the Group to the scheme.
Full disclosure on the movements in the pension fund is shown below covering the period from the date of acquisition to 31 December 2005.The assets of the scheme are held separately from those of the Group companies in independently administered funds.The plan was closed to new members from 1 June 2000.
The last full actuarial valuation of this scheme was carried out by a qualified independent actuary as at 1 April 2003 and was updated on an approximate basis to 31 August 2005 and 31 December 2005.
The full actuarial valuation as at 1 April 2003 showed that the market value of the scheme’s assets was £10,084,000.The actuarial value for the scheme’s assets at 1 April 2003 represented 66% of the benefits that had accrued to the members,after allowing for expected future increases in earnings.As at 31 December 2005 the total assets represented approximately 93% of the total liabilities on the accounting basis.
Assumptions The assets of the scheme have been taken at market value and the liabilities have been calculated using the following principal actuarial assumptions:
31 December 31 August 2005 2004 % %
Rate of increase in pensions in payment 3.00 3.00 Discount rate 4.75 5.00 Inflation assumption 2.85 2.80 Revaluation rate for deferred pensions 2.85 2.80 50 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
35.Pensions arrangements (continued)
The fair value of the assets in the scheme,the present value of the liabilities in the scheme and the expected rate of return at each balance sheet date were:
31 December 31 August 31 December 31 August 2005 2005 2005 2005 % % £’000s £’000s
Equities 8.50 8.50 11,790 11,077 Bonds 4.50 4.75 3,710 3,496 Cash 4.00 4.00 579 518 Total fair value of assets 16,079 15,091 Present value of scheme liabilities (17,230) (16,367) Deficit in the scheme (1,151) (1,276) Related deferred tax asset 345 383 (806) (893)
The scheme is a closed scheme and therefore under the projected unit method the current service cost would be expected to increase as the members of the scheme approach retirement.
Analysis of the amount charged to operating profit under FRS 17:
31 December 31 August 2005 2005 £’000s £’000s
Current service cost - -
Analysis of the amount credited to net finance charges:
31 December 31 August 2005 2005 £’000s £’000s
Expected return on pension scheme assets (340) (437) Interest on pension scheme liabilities 265 342 Net finance charge (75) (95)
Analysis of the actuarial gain recognised in the statement of total recognised gains and losses.
Movement in scheme deficit during the year:
31 December 31 August 2005 2005 £’000s £’000s
At 1 January 2005 (893) -
Net deficit acquired on acquisition (note 32) - (893) Contributions 58 - Net finance costs 75 - Actuarial gain (46) -
At 31 December 2005 (806) (893) 51 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
History of experience gains and losses:
31 December 31 August 2005 2005
Difference between the expected and actual return on scheme assets: Amount (£’000s) 1,397 621 Percentage of the present value of scheme assets 9% 4%
Experience gains and losses on scheme liabilities: Amount (£’000s) 121 (53) Percentage of the present value of scheme liabilities 1% (0.3)%
Total actuarial gain in the statement of total recognised gains and losses: Amount (£’000s) 2,139 (613) Percentage of the present value of scheme liabilities (4)% (4)% Total amount recognised in STRGL (46) (45) Percentage of scheme liabilities (0.4)% (0.3)%
The Group also operates a defined contribution pension scheme.The assets are held separately from those of the Group in an independently administered fund.The pension cost charge represents contributions payable by the Group.Contributions paid to the scheme during the period amounted to £293,834 (2004 - £166,657).At the period end contributions of £12,794 (2004 - £32,556) were owed by the Group to the scheme. 52 The Real Good Food Company plc Notes to the Financial Statements Annual Report 2005
NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2005
36.Divisional information
Operating divisions Head Bakery Bakery Fish Sugar Consolidation Continuing Euro Foods Total Office Ingredients adjustments operations
Turnover - 16,196 15,703 25,561 61,942 (3,139) 116,263 1,386 117,650 Cost of sales 41 (11,233) (11,735) (19,432) (52,825) 3,012 (92,171) (1,207) (93,378) Gross Margin 41 4,963 3,968 6,129 9,117 (127) 24,092 179 24,272 Distribution costs - (308) (639) (642) (2,037) - (3,626) (153) (3,778) Administration costs (963) (4,267) (1,691) (1,699) (2,586) 127 (11,078) (367) (11,445) Normalised Profit / (loss) (922) 388 1,638 3,788 4,494 - 9,388 (341) 9,049 Goodwill amortisation (2,874) Exceptional costs (4,302) Abortive acquisition costs (274) Earnings before interest & Tax 1,599 Interest (1,965) Tax (1,871) (Loss) after Tax (2,237) 53 The Real Good Food Company plc Company Information Annual Report 2005
COMPANY INFORMATION
Directors: P W Totté J F Gibson J C Mitchell (resigned 24/01/2006) L M Camfield R Gradowski-Smith (resigned 24/01/2006) P C Salter P G Ridgwell (appointed 31/08/2005) C O Thomas (appointed 05/09/2005)
Secretary: L M Camfield
Registered office: International House 1 St Katharine’s Way London E1W 1XB
Registered number: 4666282
Auditors: Horwath Clark Whitehill LLP 10 Palace Avenue Maidstone Kent ME15 6NF
Solicitors: Joelson Wilson & Co 70 New Cavendish Street London W1G 8AT
Bankers: Royal Bank of Scotland plc Coöperatieve Centrale Raiffeisen as agent for Boerenleenbank B.A. National Westminster Bank plc (trading as Rabobank International, Corporate & Structured Finance Office London Branch) Abbey Gardens Thames Court 4 Abbey Street One Queenhithe Reading London EC4V 3RC Berkshire RG1 3BA
Brokers and Nomads: Shore Capital Stockbrokers Ltd Shore Capital and Corporate Ltd 26a Albemarle Street Bond Street House London W1S 4HY 14 Clifford Street London W1S 4JU
Registrars: Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU 54 The Real Good Food Company plc Contact Information Annual Report 2005
CONTACT INFORMATION
The Real Good Food Company plc Renshaw Napier Brown & Company Limited International House Clyde St Ripely Drive 1 St.Katharine’s Way Carluke Normanton Industrial Estate London ML8 5BD Normanton E1W 1XB Tel 01555 777 908 West Yorkshire Tel 020 7335 2500 Fax 01555 777 901 WF6 1RY Fax 020 7335 2501 www.renshaw-nbf.co.uk Tel 01924 896550 www.realgoodfoodplc.com [email protected] Fax 01924 896920 [email protected] www.napierbrown.co.uk Five Star Fish Limited [email protected] Hayden’s Bakeries Great Grimsby Business Park Hopton Industrial Estate Grimsby Napier Brown & Company Limited London Road DN37 9SY 3 Mead Court Devizes Tel 01472 344962 Cooper Road Wiltshire Fax 01472 250113 Thornbury SN10 2EU www.fivestarfish.co.uk BS35 3UW Tel 01380 727222 [email protected] Tel 01454 411446 Fax 01380 733131 Fax 01454 418958 [email protected] Napier Brown & Company Limited www.napierbrown.co.uk International House [email protected] Renshaw 1 St.Katharine’s Way Crown Street London Liverpool E1W 1XB L8 7RF Tel 020 7335 2500 Tel 0151 7068200 Fax 020 7335 2501 Fax 0151 7068201 www.napierbrown.co.uk www.renshaw-nbf.co.uk [email protected] [email protected] 55 The Real Good Food Company plc Notice of Meeting Annual Report 2005
NOTICE OF MEETING
The Real Good Food Company plc (Incorporated in England and Wales with registered number 4666282)
NOTICE IS HEREBY GIVEN that an Annual General Meeting of the Company will be held at The City Conference Centre, 80 Coleman Street,London EC2R 5BJ on 24 May 2006,at 10.00 a.m.for the purpose of considering and,if thought fit,passing the following resolutions:
Ordinary Resolutions 1. To receive and consider the directors report and accounts of the Company for the year ended 31 December 2005 and the auditors report thereon.
2. To re-elect as a director John Frederick Gibson who retires by rotation.
3. To re-elect as a director Lee Mark Camfield who retires by rotation.
4. To re-appoint Horwath Clark Whitehill LLP as Auditors and authorise the directors to fix their remuneration.
5. That for the purposes of section 80 of the Companies Act 1985 (“the Act”) (and so that expressions used in this resolution shall bear the same meanings as in the said section 80):
(i) the Directors be and are hereby generally and unconditionally authorised to exercise all powers of the Company to allot relevant securities up to a maximum nominal amount of £471,169 on such terms and at such times as they think proper during the period expiring at the end of the next annual general meeting of the Company to be held after the date of the passing of this resolution or,if earlier,fifteen months from the date of the passing of this resolution;and
(ii) the Company be and is hereby authorised to make prior to the expiry of such period referred to in sub-paragraph (i) above any offer or agreement which would or might require relevant securities to be allotted after the expiry of the said period that the Directors may allot relevant securities in pursuance of any such offer or agreement notwithstanding the expiry of the authority given by this resolution;
so that all previous authorities of the Directors pursuant to the said section 80 be and they are hereby revoked provided that this resolution shall not affect the right of the Directors to allot relevant securities in pursuance of any offer or agreement entered into prior to the date hereof.
Special Resolution 6. That,subject to Resolution 5 being passed,the Directors be and are empowered in accordance with Section 95 of the Act to allot equity securities (as defined in Section 94 of the Act) for cash pursuant to the authority conferred on them to allot relevant securities (as defined in section 80 of the Act) by that resolution,as if Section 89 (1) of the Act did not apply to such allotment provided that the power conferred by this resolution shall be limited to:
(i) the allotment and issue of equity securities in connection with an issue or offering by way of rights in favour of holders of equity securities and any other persons entitled to participate in such issue or offering where the equity securities respectively attributable to the interests of such holders and persons are proportionate (as nearly as may be) to the respective numbers of equity securities held by or deemed to be held by them on the record date of such allotment subject only to such exclusions or other arrangements as the Directors may consider necessary or expedient to deal with fractional entitlements or legal or practical problems under the laws or requirements of any recognised regulatory body or any territory;and 56 The Real Good Food Company plc Notice of Meeting Annual Report 2005
NOTICE OF MEETING
(ii) the allotment (otherwise than pursuant to sub-paragraphs (i) above) of equity securities for cash up to an aggregate nominal value not exceeding £129,733 and this power,unless renewed,shall expire at the end of the next annual general meeting of the Company to be held after the date of the passing of this resolution or,if earlier,fifteen months from the date of the passing of this resolution but shall extend to the making,before such expiry,of an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired.
By order of the Board
L M Camfield Company Secretary
Registered office: International House 1 St.Katharine’s Way London E1W 1XB
21 April,2006
Notes to the Notice of Annual General Meeting 1) A member entitled to attend and vote at the annual general meeting (‘AGM’) may appoint a proxy (who need not be a member of the Company) to attend and,on a poll,to vote on his or her behalf.In order to be valid an appointment of proxy must be returned by one of the following methods:
• in hard copy form by post,by courier or by hand to the Company’s registrars,Capita Registrars, Proxy Department,The Registry,34 Beckenham Road,Beckenham,Kent,BR3 4TU; or
• In the case of CREST members,by utilising the CREST electronic proxy appointment service in accordance with the procedures set out below.
and in each case must be received by the Company not less than 48 hours before the time of the meeting.
CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so by utilising the procedures described in the CREST Manual.CREST Personal Members or other CREST sponsored members,and those CREST members who have appointed a voting service provider(s),should refer to their CREST sponsor or voting service provider(s),who will be able to take the appropriate action on their behalf.In order for a proxy appointment made by means of CREST to be valid,the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with CRESTCo’s specifications and must contain the information required for such instructions,as described in the CREST Manual.The message,regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must,in order to be valid,be transmitted so as to be received by the issuer’s agent (ID RA10) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting.For this purpose,the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.CREST members and,where applicable,their CREST sponsors or voting service providers should note that CRESTCo does not make available special procedures in CREST for any particular messages.Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions.It is the responsibility of the CREST member concerned to take (or,if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s),to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.In this connection,CREST members and,where applicable,their CREST sponsors or voting service providers are referred,in particular,to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
2) A form of proxy is enclosed for use by shareholders and,if appropriate,must be deposited with the Company’s registrars,Capita Registrars,Proxy Department,The Registry,34 Beckenham Road,Beckenham,Kent,BR3 4TU not less than 48 hours before the time of the AGM.Appointment of a proxy does not preclude a shareholder from attending the AGM and voting in person.
3) Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001,in order to be able to attend and vote at the AGM or any adjourned meeting,(and also for the purposes of calculating how many votes a person may cast),a person must have his/her name entered on the register of members of the Company by 6.00pm on 22 May 2006 (or 6.00pm on the date two days before any adjourned meeting).Changes to entries on the register of members after this time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
4) Copies of the Directors’service contracts with the Company and the register of interests of the Directors and their families in the share capital of the Company are available for inspection at the registered office of the Company during usual business hours (Saturdays,Sundays and public holidays excepted) and will be available at the place of the AGM from 15 minutes prior to and during the AGM.
The Real Good Food Company plc
International House 1 St.Katharine’s Way London E1W 1XB Tel 020 7335 2500 Fax 020 7335 2501 www.realgoodfoodplc.com [email protected]