TIDMSNAK
RNS Number : 5223I
Snacktime PLC
03 July 2013
This announcement replaces the announcement of audited final
results at 7.00am this morning (RNS number 4607I) in which Note 10
(Segment Information) contained incorrect figures for 2013
"Operating profit/loss" and "Head Office Costs"; the "Group loss
before tax" is unaffected. In all other respects the announcement
is unchanged. The full corrected announcement is set out below.
SNACKTIME PLC
("SnackTime," the "Company" or the "Group")
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2013
SnackTime plc, the third largest vending business in the UK, is
pleased to announce its audited final results for the year ended 31
March 2013.
Financial Highlights
-- Revenues decreased by 7.6% (2012 - increased by 28%)
-- Profit before depreciation, exceptional items, amortisation
& share option charges and tax of GBP0.384m (2012 - profit of
GBP1.123m)*
-- Loss before taxation of GBP8.255m (2012 - Loss of GBP0.732m)
-- Net assets of GBP10.249m following goodwill impairment of GBP5.440m (2012 - GBP18.516m)
-- Net cash outflow from operating activities of GBP0.203m after
exceptional items. (2012 - Inflow of GBP0.241m)
-- Administration expenses, before exceptional items,
amortisation and share option expenses but including depreciation
reduced by 7.3% to GBP11.755m (2012 - GBP12.689m) cash outflow
after exceptional items of GBP0.332m (2012 - inflow of
GBP1.558m)**
* - Arrived at from taking the Loss before tax, exceptional
items, amortisation and share option charges of GBP1.396m from the
Statement of Comprehensive Income and adding back depreciation of
GBP1.780m.
** - As set out on the Statement of Comprehensive Income
Jeremy Hamer, Chairman, commented:
"Trading in the new financial year has started in line with our
expectations. The second half of the financial year should benefit
from new product sales at Drinkmaster and an expectation that our
enlarged sales team and lead generation activities are delivering
some improvement in overall activity. On top of the progress made
in FY13, continued improvements in customer service and tighter
financial controls underpin our optimism of a significant step
towards recovery in FY14."
A copy of the Company's 2013 Report and Accounts will be posted
to shareholders and will be made available on the Company's
website: www.snacktime.com
For further information:
SnackTime plc 020 8879 8300
Jeremy Hamer, Chairman
Tim James, CFO
Westhouse Securities 020 76016100
Tom Griffiths
CHAIRMAN'S STATEMENT
I have pleasure in presenting the results for the year ended 31
March 2013, which has been my first period as your Chairman having
joined in June 2012. It has been a year in which the refinancing of
the Group and the re-setting of our bank facilities which were
completed in April 2013 was the key focus. While that was being
completed, considerable progress was made in stabilising the Group
with a number of new senior appointments being made and significant
reductions in administrative costs which are expected to be lower
again in FY14.
Financials
Turnover was down 7.6% to GBP20.506m (2012: GBP22.191m)
producing an operating loss before amortisation, share option
charges and exceptional costs of GBP1.13m (2012: Loss GBP0.14m)*.
EBITDA before exceptional items and share option charges for the
year was a profit of GBP0.65m (2012: GBP1.392m)**. Following
exceptional costs of GBP6.391m, including a non cash goodwill
impairment charge of GBP5.440m, the pre-tax loss was GBP8.255m
(2012: loss GBP0.73m) and loss after tax attributable to the
shareholders was GBP8.312m (2012: loss GBP0.05m). Gross margins
reduced by 4% to 52% (2012: 56%) while our distribution and
administration costs before exceptional items, amortisation and
share option charges dropped by 7.4% to GBP11.754m (2012:
GBP12.688m)*. Net finance charges before exceptional items remained
largely flat at GBP0.299m (2012: GBP0.268m)* and net borrowings at
31 March 2013 had risen to GBP3.845m (2012: GBP2.718m).
The directors anticipate that the Company will deliver an
improved result in FY14. FY13's results were impacted by our
impairment review of the carrying value of the goodwill acquired
with the acquisition of Vendia Limited in September 2010. This has
resulted in a charge to the consolidated statement of comprehensive
income of GBP5.440m (2012: nil), a non-cash item. During the year,
other exceptional charges of GBP0.951m (2012: profit GBP0.0168m)
were expensed of which GBP0.244m (2012: nil) were non-cash items.
These exceptional charges related to re-organisation costs in
various parts of the Group, which have contributed to annualised
cost savings of GBP1.3m.
*As set out in the Consolidated Statement of Comprehensive
Income
**As set out in the Consolidated Statement of Cash Flows and
arrived at by taking the Operating cash inflow/(outflow)
pre-exceptional costs and subtracting the Loss/(profit) on disposal
of fixed assets
Operations
SnackTime comprises of two traditional vending operations, VMI
based in Blackburn with operating centres in Corby and Newport, and
Simply Drinks based in London. Complementing these operations are a
franchise network trading as Snack in the Box from Wokingham and
Drinkmaster, a specialist supplier of 'in cup' solutions, based in
Liskeard. It has taken another year to tidy up the integration of
the Vendia business, which during the year included closing a depot
in Warrington and the Group's head office in Wokingham.
During 2012, new General Managers/Managing Director have been
appointed at each of VMI, Simply Drinks and Snack in the Box and
together with the Managing Director of Drinkmaster and the two
Group executive Directors, there has been a marked improvement in
the collaboration within the Group, which will continue.
Operated Vending
Cost savings have been necessary in the operated vending
businesses to bring the operator and engineering support in line
with the lower revenue levels and smaller machine estate. During
the year, the operated estate reduced in size by 477 machines, an
8% decline. Considerable cost savings have also been achieved at
head office, which combined with operating businesses savings has
reduced overheads by an annualised GBP1.3m, GBP0.350m of which will
be visible first in FY14.
The market overall, whilst remaining very competitive, is also
creating opportunities as some of our larger vending competitors
withdraw from the smaller end of the market. Downward pressure on
sales remains both through corporate customers continuing to look
for ever better deals and because personal disposable income is
declining. To counteract this, we have doubled our sales team in
London from 2 to 4, worked upon our lead generation activities and
are improving our controls over renewals and pipeline management.
The benefits of these activities are expected to become evident in
the second half of FY14.
Another key operated vending focus, for VMI in particular, has
been the improvement of customer service. The lead times on new
installations and service calls have reduced dramatically; routes
have been significantly re-organised and considerable amounts of
training undertaken particularly in relation to hot drinks. A
portion of the estate involving 400 machines covering the south was
transferred from VMI to Simply Drinks and efforts are on-going to
tidy-up area boundaries.
The implementation of the Vendman operating system for capturing
sales data is progressing and the benefits to be gained in
management information and control are becoming real. 'Intelligent
machines' and 'cloud' based solutions are gathering momentum,
offering significant future opportunities for operating cost
reductions and additional income streams.
Franchise Network
Snack in the Box ended the year with 84 active franchise areas
(2012: 86). The franchise network operates 11,600 sites through a
mix of honesty boxes and snack machines, with almost no hot drink
activity. The franchise network plays a significant role in
supporting our national account customers. Re-organisation of the
operations centre and team has been taking place to improve the
support given to the franchisees.
'In Cup' solutions
Drinkmaster has had another good year although it too had to cut
operating costs when its largest customer William Hill took the
decision to move to central distribution from individual shop
drops. The development of the next generation of 'In Cup' product
has been a priority and by July 2014 Drinkmaster will be in full
production of this new product following a capital spend of
GBP0.330m. This will open new markets to us in the second half of
FY14.
Finished goods and goods for resale
Although raw material and operating cost increases can always be
overcome by increasing vending prices, such moves need to be
handled carefully if volume falls are to be avoided. There is
undoubtedly inflationary pressure in all areas of the business and
gross margins fell in FY13 to 52% (FY12: 56%) which was in part due
to the sales mix and reduced numbers of new franchises sold.
Re-financing
On 5 April 2013, we announced the successful completion of a
GBP1.01m fundraising by way of loan notes and the re-negotiation of
our banking facilities. The loan notes comprise GBP0.50m of 7%
convertible loan stock and GBP0.505m of 12% 5 year redeemable loan
stock. The banking facilities are made up of a GBP3.4m two year
term loan and a GBP0.750m overdraft facility. The principal terms
and conditions of the Loan Notes are as follows:
-- the nominal amount of the Loan Notes shall be GBP1;
-- one half of each Loan Note will be convertible at any time
during the period of five years and one day from the date of issue
into new ordinary shares of 2p each in SnackTime ("Shares") at a
conversion price of 10p per Share (a 25% premium to the Company's
share price at the time terms were agreed). Interest on this
portion of the Loan Note shall accrue at 7% per annum, before
conversion, and shall be paid semi-annually;
-- the other half of each Loan Note will have no right of
conversion and will be redeemed with a 30% redemption premium five
years and one day from the date of issue. Interest on this portion
of the Loan Note shall accrue at 12% per annum, and shall be paid
semi-annually;
-- subscribers will only be allotted Loan Notes with an equal
portion of the redeemable and convertible elements ; and
-- the Loan Notes will not be listed or traded on any stock exchange.
In satisfaction of a further condition of the new banking
facilities detailed below, Unicorn AIM VCT plc and Elderstreet VCT
plc, holders of GBP0.55m and GBP0.050m, respectively, of the
Company's GBP0.6m 2008 convertible loan notes ("2008 CLS"), which
were due for redemption on 16 December 2013, have agreed to defer
the redemption date for 2 years, until 15 December 2015 ("Extension
Period"). Interest shall continue to accrue at 8% per annum during
the Extension Period, and be paid semi-annually. However, a
redemption premium of 6% per annum of the principal amount of the
loan notes will now be paid on redemption up to a maximum of 12%.
The 2008 CLS are now specifically redeemable or convertible at the
option of the holders on a change of control of the Company. All
other material terms of the 2008 CLS remain unchanged.
The banking facilities comprise a GBP3.4m two year term loan and
a GBP0.750m overdraft facility. The revised loan repayments
schedule has established a minimum loan repayment of GBP0.180m in
the financial year ending 31 March 2014, and GBP0.890m in the
financial year ending 31 March 2015. The repayments required to be
made by the Company will increase if the Company outperforms its
projections. GBP2.0m of the loan attracts an interest rate of 6%
over LIBOR, plus mandatory costs (expected to add approximately
0.04%). The amount subject to this rate may reduce at the Bank's
discretion by reference to the Company's net asset position. Loan
repayments first reduce this segment of the borrowings. The balance
of the term loan will attract interest at either 5.35% or 4% over
LIBOR plus mandatory costs. The new overdraft facility has an
interest rate of 3.25% above the Bank's base rate (currently
0.5%).
Strategy
Throughout FY13 the focus has been on stabilising sales,
reducing costs and refinancing the business, combined with a much
needed improvement in service levels in the operated vending
business outside of London. On all counts, considerable progress
has been made but, given our high depreciation and amortisation
charges, this alone whilst resulting in positive cash generation
will not be enough to generate a pre-tax profit. Going forward the
priorities are:-
-- Lower cost operations - higher yielding routes, optimal
machine allocation and improved buying are all areas that can
improve our productivity and financial performance and remain the
business priorities at the operations level. To achieve this, there
is increased emphasis upon the sales teams, lead generation and
management of the sales pipeline.
-- More use of technology - when we last reported, the
introduction of handheld data capture technology was our immediate
priority and the completion of that initiative is very close. The
manufacturers of vending equipment in partnership with the telco
and software companies, the arrival of 4G and the increasing
sophistication of telemetry are offering the industry huge
efficiencies going forward as well as additional profit
streams.
-- A growing Franchise network -which with the support of our
key brand partners Mars, Walkers and Britvic offers an attractive
franchise proposition with strong development potential. Our
increasingly professional franchise support team should allow us to
expand our network for several years to come by attracting
franchisees who themselves are committed to growing their own
business.
-- New product development - in our operating businesses we are
dependent upon the innovation of our brand partners and the
innovation we can bring to merchandising. At Drinkmaster, we are
about to launch an 'In Cup' drink concept that is attracting
interest from both manufacturers and retailers.
With limited access to new funding it would be unrealistic for
us to launch an acquisition-based strategy, but it is clear that
many of the objectives above would be more easily achieved by a
company with more throughput and as a result relatively lower fixed
costs.
People
Firstly I would like to thank Steven Garner for his important
contribution to the Board during a difficult period. Steven
resigned as a non-executive director in April 2013 to take up an
executive role with a competitor.
I should like to welcome Sue Sproston, Dennis Ward and Clive
Smith who have taken up the senior roles at VMI, Simply Drinks and
Snack in the Box respectively during this financial year. As a
senior team, together with Tim James (CFO) and Paul Vickers
(Drinkmaster), we have made considerable progress in creating a
common understanding of the Group's objectives. Their effort and
support has been greatly appreciated.
I would also like to thank all of our staff, who have supported
us through a period of intense change and I look forward to working
with them as we continue to develop the business and its
operations.
Current Trading & prospects
Trading in the new financial year has started in line with our
expectations. The second half of the financial year should benefit
from new product sales at Drinkmaster and an expectation that our
enlarged sales team and lead generation activities are delivering
some improvement in overall activity. With no improvement in
consumer spending likely in the short-term, the onus is very much
on us internally to kick-start our own recovery. On top of the
progress made in FY13, the appointment of a group buyer, continued
improvements in customer service and tighter financial controls are
all underpinning our optimism of a significant step towards
recovery in FY14.
Jeremy Hamer
Chairman
Date: 2 July 2013
RESULTS AND DIVIDENDS
The Group revenue for the year was GBP20.506m (2012 -
GBP22.191m). Normalised profit* was GBP0.655m (2012 - GBP1.392m).
The Group's operating loss was GBP7.874m (2012 - loss of
GBP0.464m). Losses after tax were GBP8.312m (2012 - GBP0.051m) and
the loss per share was 50.84p (2012 - loss per share of 0.31p).
The Directors do not recommend payment of a dividend in respect
of the year ended 31 March 2013 (2012: GBPnil).
*Normalised profit is defined as the statutory profit before
interest, tax, amortisation, depreciation, exceptional items and
share option charges. Normalised profit is arrived as set out in
the Consolidated Statement of Cash Flows by taking the Operating
cash inflow/(outflow) pre-exceptional costs and subtracting the
Loss/(profit) on disposal of fixed assets.
GOING CONCERN
Accounting standards require the Directors to consider the
appropriateness of the going concern basis when preparing the
financial statements. The Directors confirm that they consider that
the going concern basis remains appropriate based upon forecasts
which have been reviewed by the Board. The Directors have taken
notice of the Financial Reporting Council guidance 'Going Concern
and Liquidity Risk: Guidance for Directors of UK Companies 2010'
which requires the reasons for this decision to be explained. The
Directors regard the going concern basis as remaining appropriate
as the Group has adequate resources to continue in operational
existence for the foreseeable future. There are cash reserves along
with adequate financing arrangements which were renewed and
renegotiated in March 2013 and can be utilised by the Group as
required. See post balance sheet Note 30. Thus the Directors
continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
capital
The capital structure of the Group consists of debt, which
includes the borrowings, finance leases and convertible loan notes
disclosed in Note 19, cash and cash equivalents, and equity
attributable to equity holders of the parent, comprising issued
capital, warrant reserve, merger reserve, capital redemption
reserve and retained earnings as disclosed in Note 23.
The Group sets the amount of capital it requires in proportion
to risk. The Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions
and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, or sell assets to reduce debt.
RISKS AND UNCERTAINTIES
The operation of a public listed company involves a series of
inherent risks and uncertainties across a range of strategic,
commercial, operational and financial areas. The Board has outlined
their perception of particular risks and uncertainties facing the
Group below. These risks and uncertainties could cause the actual
results to vary from those experienced previously or described in
forward looking statements within the annual report:
-- Changing consumer trends
Since the acquisition of Vendia UK Limited the emphasis of
SnackTime's sales has shifted towards hot drinks. This has reduced
our exposure to the snack market which could be subject to future
regulation relating to healthier eating. It is in the interests of
the brands whose products we stock to develop either healthier
snacks or to amend the recipe of their existing items to, for
example, reduce fat and salt content as consumer tastes and trends
change towards healthier products SnackTime's offering will evolve
to meet that demand.
-- Litigation and dispute risk
From time to time, the Group may be involved in litigation. This
litigation may include, but is not limited to, contractual claims,
personal injury claims, employee claims and environmental claims.
If a successful claim is pursued against the Group, the litigation
may adversely impact the sales, profits or financial performance of
the Group. Any claim, whether successful or not, may adversely
impact on the Company's share price. There is a risk that should
the Group seek redress against another party to its contracts by
way of litigation or other dispute resolution processes, these
processes may incur significant Group resources, the cost of
pursuing such actions may be prohibitive and a successful result is
not assured.
-- General economic conditions
Changes in the general economic climate in which the Group
operates may adversely affect the financial performance of the
Group. Factors which may contribute to that general economic
climate include the level of direct and indirect competition
against the Group, industrial disruption, the rate of growth of the
Group's sectors, interest rates and the rate of inflation.
-- Covenants compliance
The Group's borrowing facilities at the year end date included a
requirement to comply with certain specified covenants in relation
to the level of debt service cover, interest cover, capital
expenditure and minimum tangible net worth. The group breached
their December 2012 covenant for which they obtained a waiver. The
Directors entered into discussions with the bank during Q4
regarding refinancing their banking facilities, they received an
offer for a new financing agreement on 28 March 2013, which
therefore rendered the March 2013 covenant test date as non
applicable given completion took place in early April 2013, before
the March 2013 compliance certificate was due. Forward looking
covenants under the refinanced borrowings in April 2013 include the
following:
- Rolling quarterly EBITDA; and
- Asset cover.
A breach of these covenants could result in a significant
proportion of the Group's borrowings becoming repayable
immediately.
The Group expects to comply with the forward looking covenants
and manages compliance through regular monitoring of cash flows and
forecasts. Sensitivity analysis using various scenarios is applied
to forecasts to assess their impact on covenants.
-- Product price changes
The purchase price of products distributed by the Group can
fluctuate from time to time, thereby potentially affecting the
results of operations. Adverse economic conditions resulting and
rising input prices may impact the Group's revenue and, as a
result, its results.
The Group endeavours, whenever possible, to pass on price
increases from its suppliers to its customers. The Group mitigates
against the risk of holding overvalued inventory in a deflationary
environment by managing stock levels efficiently and ensuring they
are kept to a minimum.
-- Integration of acquisitions
A significant portion of the Group's historical growth has been
achieved through acquisition. The process of integrating the
Group's acquisitions could prove to be more complex, costly and
time consuming.
The Group endeavours to maximise the performance of an
acquisition through the recruitment and retention of high quality
management combined with effective strategic planning, investment
in resources and infrastructure.
The Group's exposure to interest rate risk, credit risk and
liquidity risk are detailed in the Financial Instruments section of
the Directors' report.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
year ended 31 March 2013
Notes 2013 2013 2013 2013 2012 2012 2012 2012
Loss before Loss before
Exceptional Exceptional
Items Amortisation Items Amortisation
Amortisation & Share Exceptional Amortisation & Share Exceptional
& &
Share Option Option Items Share Option Option Items
Charges Charges (Note 5) Total Charges Charges (Note 5) Total
GBP GBP GBP GBP GBP GBP GBP GBP
REVENUE 3 20,506,042 - - 20,506,042 22,190,524 - - 22,190,524
Cost of sales (9,877,115) - - (9,877,115) (9,648,031) - (22,012) (9,670,043)
------------- ------------- -------------- --------------- --------------- --------------- ------------ -------------
GROSS PROFIT 10,628,927 - - 10,628,927 12,542,493 - (22,012) 12,520,481
Administration
expenses (11,754,507) (467,403) (6,280,609) (18,502,519) (12,688,691) (485,947) 190,450 (12,984,188)
(LOSS)/PROFIT
FROM 5 (1,125,580) (467,403) (6,280,609) (7,873,592) (146,198) (485,947) 168,438 (463,707)
OPERATIONS
Finance income 6 28,924 - - 28,924 246 - - 246
Finance costs 7 (299,477) - (110,750) (410,227) (268,718) - - (268,718)
------------- ------------- -------------- --------------- --------------- --------------- ------------ -------------
(LOSS)/PROFIT (1,396,133) (467,403) (6,391,359) (8,254,895) (414,670) (485,947) 168,438 (732,179)
BEFORE TAXATION
Income tax
charge 11 (57,511) 681,631
LOSS AFTER TAXATION AND TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE TO THE OWNERS OF THE PARENT
Loss per share attributable to the owners of
the parent (8,312,406) (50,548)
---------------- -------------
Basic loss per share 12 (50.84) (0.31) pence
pence
Diluted loss 12
per (50.84) (0.31)
share pence pence
All operations are continuing.
Consolidated STATEMENT OF Changes in equity
year ended 31 March 2013
Convertible
Issued Share Share debt Capital
share premium option option redemption Merger Warrant Retained
capital account reserve reserve reserve reserve Reserve deficit Total
Notes GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance as
at 1 April
2011 326,980 8,347,383 237,491 86,514 1,274,279 6,817,754 2,236,130 (790,775) 18,535,756
Total
comprehensive
loss for the
year - - - - - - - (50,548) (50,548)
Share options
expense 24 - - 30,900 - - - - - 30,900
Balance as
at 31 March
2012 326,980 8,347,383 268,391 86,514 1,274,279 6,817,754 2,236,130 (841,323) 18,516,108
Balance as
at 1 April
2012 326,980 8,347,383 268,391 86,514 1,274,279 6,817,754 2,236,130 (841,323) 18,516,108
Total
comprehensive
loss for the
year - - - - - - - (8,312,406) (8,312,406)
Share options
expense 24 - - 45,329 - - - - - 45,329
Balance as
at 31 March
2013 326,980 8,347,383 313,720 86,514 1,274,279 6,817,754 2,236,130 (9,153,729) 10,249,031
consolidated STATEMENT OF FINANCIAL POSITION
31 March 2013
Notes 2013 2012
GBP GBP
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 13 6,820,600 7,831,935
Intangible assets 14 8,877,780 14,739,854
Deferred tax asset 16 80,577 447,379
------------- -------------
15,778,957 23,019,168
------------- -------------
CURRENT ASSETS
Inventories 17 1,248,569 1,544,124
Trade and other receivables 18 2,869,956 2,979,389
Cash and cash equivalents 1,783,626 2,066,312
Corporation tax asset 12,017 -
------------- -------------
5,914,168 6,589,825
------------- -------------
TOTAL ASSETS 21,693,125 29,608,993
------------- -------------
LIABILITIES
CURRENT LIABILITIES
Borrowings 19 (3,777,500) (1,544,015)
Trade and other payables 20 (4,179,837) (4,091,861)
Corporation tax - (484)
Provisions 21 (66,095) (210,000)
------------- -------------
(8,023,432) (5,846,360)
------------- -------------
NON CURRENT LIABILITIES
Borrowings 19 (1,851,354) (3,240,437)
Provisions 21 - (116,403)
Deferred tax liability 16 (1,569,308) (1,889,685)
------------- -------------
(3,420,662) (5,246,525)
------------- -------------
TOTAL LIABILITIES (11,444,094) (11,092,885)
------------- -------------
NET ASSETS 10,249,031 18,516,108
------------- -------------
EQUITY - ISSUED SHARE CAPITAL ATTRIBUTABLE
TO THE OWNERS OF THE PARENT COMPANY
Share capital 22 326,980 326,980
Share premium account 23 8,347,383 8,347,383
Merger reserve 23 6,817,754 6,817,754
Capital redemption reserve 23 1,274,279 1,274,279
Share option reserve 23 313,720 268,391
Convertible debt option reserve 23 86,514 86,514
Warrant reserve 23 2,236,130 2,236,130
Retained deficit 23 (9,153,729) (841,323)
------------- -------------
TOTAL EQUITY 10,249,031 18,516,108
------------- -------------
These financial statements were approved by the Board of
Directors and authorised for issue
on 2 July 2013.They were signed on its behalf by:
Jeremy Hamer Tim James
Director Director
CONSOLIDATED statement OF cash flowS
Year ended 31 March 2013
2013 2012
CASH FLOW FROM OPERATING ACTIVITIES GBP GBP
Loss Before Tax (8,254,895) (732,179)
Exceptional items (excluding impairment
of goodwill and exceptional finance
expenses) 840,609 (168,438)
Loss before taxation and exceptional
items (7,414,286) (900,617)
Finance costs 410,227 268,718
Finance income (28,924) (246)
Loss/(Profit) on disposal of fixed assets 94,127 (2,665)
Depreciation of property, plant and
equipment 1,780,962 1,538,368
Amortisation of intangible assets 422,074 455,047
Impairment of Goodwill 5,440,000 -
Share based payment expense 45,329 30,900
Operating cash inflow/(outflow) pre-exceptional
costs 749,509 1,389,505
Exceptional items (840,609) 168,438
Operating cash (outflow)/inflow (91,100) 1,557,943
Decrease in inventories 295,555 35,960
Decrease in receivables 149,433 499,616
Increase/(decrease) in payables (44,287) (1,435,054)
Decrease in provisions (260,308) (148,597)
Cash (used)/generated from operations 49,293 509,868
Interest paid (228,788) (268,718)
Income taxes paid (23,585) -
Net cash from operating activities (203,080) 241,150
CASH FLOW FROM INVESTING ACTIVITIES
Interest received 28,924 246
Acquisition of subsidiary, net of cash
acquired - (250,000)
Proceeds on disposal of property, plant
and equipment 17,864 15,856
Purchase of property, plant and equipment (881,618) (1,176,850)
Net cash generated from investing activities (834,831) (1,410,748)
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of borrowings (452,845) -
Net finance lease payments (28,558) (165,689)
Proceeds from long term borrowings - -
Net cash used from financing activities (481,404) (165,689)
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,519,313) (1,335,287)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning
of year 1,471,943 2,807,230
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF
YEAR (47,370) 1,471,943
------------ ------------
Cash and cash equivalents comprise:
Cash 1,783,626 2,066,312
Overdrafts (1,830,996) (594,369)
(47,370) 1,471,943
------------ ------------
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 March 2013
1 presentation of financial statements
General information
SnackTime plc is a public limited company incorporated in
England and Wales under the Companies Act (registered number
06135746). The Company is domiciled in the United Kingdom and its
registered address is 17 Rufus Business Centre, Ravensbury Terrace,
London, SW18 4RL. The Company's shares are traded on the AIM market
of the London Stock Exchange.
Basis of preparation
The financial information set out in this release does not
constitute the Company's full statutory accounts for the year ended
31 March 2013 for the purposes of section 435 of the Companies Act
2006, but it is derived from those accounts that have been audited.
Statutory accounts for 2012 have been delivered to the Registrar of
Companies and those for 2013 will be delivered after the
forthcoming AGM. The auditors have reported on those accounts;
their report was unqualified, did not draw attention to any matters
by way of emphasis without qualifying their report and did not
contain statements under s498(2) or (3) Companies Act 2006 in
either 2013 or 2012.
While the financial information for the year ended 31 March 2013
is prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards (IFRSs)
as endorsed by the European Union and implemented in the UK, this
announcement does not itself contain sufficient information to
comply with IFRSs. These financial statements have also been
prepared in accordance with the accounting policies set out in the
2013 Annual Report and Financial Statements. The adoption of the
interpretations, standards or amendment to standards were either
not relevant for the Group or have not led to any significant
impact on the Group's financial statements.
These consolidated financial statements have been prepared in
accordance with the accounting policies set out in note 2 and under
the historical cost convention, except where modified by the
revaluation of certain financial instruments and commodities.
All companies in the Group use sterling as presentational and
functional currency.
Accounting standards require the Directors to consider the
appropriateness of the going concern basis when preparing the
financial statements. The Directors confirm that they consider that
the going concern basis remains appropriate. The Directors have
taken notice of the Financial Reporting Council guidance 'Going
Concern and Liquidity Risk: Guidance for Directors of UK Companies
2010' which requires the reasons for this decision to be explained.
The Directors regard the going concern basis as remaining
appropriate as the Group has adequate resources to continue in
operational existence for the foreseeable future based upon the
Group's forecasts. The Group has adequate financing arrangements
which can be utilised by the Group as required. Thus they continue
to adopt the going concern basis of accounting in preparing the
annual financial statements.
Changes in accounting policies
Certain new standards, amendments and interpretations of
existing standards that have been published and which are effective
for the Company's accounting periods beginning on or after 1 April
2012 and which are applicable to the Company, but which have not
been adopted early, are:
-- IAS 1 (Amendment) "Presentation of Items of Other Comprehensive Income" effective July 2012
-- IAS 19 (Amendment) "Employee Benefits" effective January 2013
-- IAS 27 "Separate Financial Statements" effective January 2013
-- IAS 28 "Investments in Associates and Joint Ventures" effective January 2013
-- IFRS 10 "Consolidated Financial Statements" effective January 2013
-- IFRS 12 "Disclosure of Interests in Other Entities" effective January 2013
-- IFRS 13 "Fair Value Measurement" effective January 2013
-- IFRS 9 "Financial Instruments" effective January 2013
The directors anticipate that the adoption of these standards,
amendments and interpretations is not expected to have a material
impact on the Company's profit for the year or equity. Application
of these standards may result in some changes in presentation of
information within the Company's financial statements.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. The Group makes estimates and assumptions concerning
the future. The principal areas where judgement was exercised are
as follows:
-- Acquisitions are accounted for in accordance with IFRS 3
'Business Combinations', the directors fair valued the assets and
liabilities acquired. This requires the Directors to estimate the
fair value of the acquired assets and liabilities at the date of
acquisition, including intangible assets.
-- Property, plant and equipment includes the value of the
vending machine estate. The Directors annually assess both the
residual value of these assets and the expected useful life of such
assets.
-- The Directors have estimated the useful economic lives of
intangible assets in Note 14. The economic lives and the
amortisation rates are reviewed annually by the directors.
-- The Group receives branding fees to contribute to the
installation and refurbishment of vending machines. The Directors
are required to assess the amounts receivable at each reporting
date and whether all the conditions have been met to enable these
to be recognised.
-- The sales from vending machines disclosed in Note 10 are
recognised at the point of sale to the customer. At each year end,
the Directors are required to make an estimate of sales where the
vending machine has not been emptied or inspected at the year end
date.
-- The convertible loan notes disclosed in Note 19 have been
split between the debt and equity element in accordance with IAS
32. This requires calculating the present value of the debt element
using an effective interest rate. 12% was assumed to be an
effective interest rate that would be charged on a similar loan by
a third party.
-- Share based payment and warrant valuations are based upon a
Black-Scholes based model which requires various assumptions to be
made as set out in Note 24.
-- The dilapidation provisions set out in Note 21 are calculated
as a percentage of annual rents plus specific costs.
-- An impairment of goodwill has the potential to significantly
impact upon the Group's statement of comprehensive income for the
year. In order to determine whether impairments are required the
Directors estimate the recoverable amount of the goodwill disclosed
in Note 15. This calculation is based on the cash flow forecasts
applicable to the Group of cash-generating units for the following
financial year extrapolated over an eight year period assuming
growth rates in the region of 2-3%. A terminal value has been
included which extrapolates the growth of the year 8 cash flow at
2.0% in perpetuity. A discount factor, based upon the Group's
weighted average cost of capital is applied to obtain a current
value ('value in use'). The fair value less costs to sell of the
cash generating unit is used if this results in an amount in excess
of value in use.
Estimated future cash flows for impairment calculations are
based on management's expectations of future volumes and margins
based on plans and best estimates of the productivity of the income
generating unit in their current condition. Future cash flows
therefore exclude benefits from major expansion projects requiring
future capital expenditure.
Future cash flows are discounted using a discount rate based on
the Group's weighted average cost of capital. The weighted average
cost of capital is impacted by estimates of interest rates, equity
returns and market related risks. The Group's weighted average cost
of capital is reviewed on an annual basis.
Further details are set out in Note 15.
2. significant 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 consolidation
The Group financial statements consolidate the financial
statements of the Company and its subsidiary undertakings. The
merger method of accounting was adopted in respect of the group
reconstruction involving Snacktime Plc and Snacktime UK Limited.
The acquisitions of Snack in a Box Limited and Vendia UK Limited
were accounted for using acquisition accounting in accordance with
IFRS 3 "Business Combinations (Revised)".
Intra-group revenues and profits are eliminated on consolidation
and all revenue and profit figures relate to external transactions
only.
b) Revenue recognition
Revenue is measured by reference to the fair value of
consideration received or receivable by the group for goods and
services supplied, excluding VAT and trade discounts. Revenue for
goods sold from vending machines is recognised at the date of sale.
Revenue in respect of installation and refurbishment of branded
vending machines (branding fees) is recognised at the date of
installation or refurbishment. Franchising fees are recognised when
the franchisee starts trading. Managed estate sales are recognised
in full once the customer has taken over operation of the
machine.
c) Income tax
Current income tax assets and/or liabilities comprise those
obligations to, or claims from, fiscal authorities relating to the
current or prior reporting periods, that are unpaid at the balance
sheet date. They are calculated according to the tax rates and tax
laws applicable to the fiscal periods to which they relate, based
on the taxable profit for the year.
Deferred tax is recognised on all temporary differences. This
involves comparison of the carrying amount of assets and
liabilities in the consolidated financial statements with their
respective tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, or on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit.
Deferred tax liabilities are provided for in full. Deferred tax
assets and liabilities are calculated without discounting, at tax
rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates (tax laws)
that have been enacted or substantively enacted by the balance
sheet date. All changes in deferred tax assets or liabilities are
recognised as a component of tax expense in the income statement,
except where they relate to items that are charged or credited
directly to equity in which case the related deferred tax is also
charged or credited directly to equity.
Tax losses available to be carried forward as well as other
income tax credits to the Group are assessed for recognition as
deferred tax assets. Deferred tax assets are only recognised to the
extent that it is probable that future taxable profits will be
available against which the asset can be recognised and are reduced
to the extent that it is no longer probable that the related tax
benefit will be realised.
d) Cost of sales
Cost of sales represents amounts payable for supplies of
products for resale.
e) Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and impairment provisions.
Depreciation is provided to write off the cost, less the
estimated residual value of property, plant and equipment by equal
instalments over their estimated useful economic lives as
follows:
Leasehold improvements - over the term of the lease
Plant & machinery - 10 - 25% straight line basis
Fixtures, fittings & equipment - 25% straight line basis
Motor vehicles - 25% straight line basis
Land and buildings - 2 - 4% straight line basis
Material residual value estimates are updated as required, but
at least annually, whether or not the asset is revalued.
Impairment reviews of property, plant and equipment 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.
f) Intangible assets
In accordance with 'IFRS 3 Business Combinations(Revised)', an
intangible asset acquired in a business combination is deemed to
have a cost to the Group of its fair value at the acquisition
date.
After initial recognition, intangible assets are carried at
deemed cost less any accumulated amortisation and any accumulated
impairment losses. Impairment reviews are conducted annually from
the first anniversary following acquisition, where indicators of
impairment arise.
Brands are amortised to the income statement over their
estimated economic life on a reducing balance basis. The average
useful economic life of brands has been estimated at 10-15 years.
The customer relationships are amortised on a straight line basis
over its 15 year useful economic life.
g) Goodwill
Goodwill is calculated as the difference between the fair value
of the consideration exchanged and the net fair value of the
identifiable assets and liabilities acquired and is capitalised.
Goodwill is tested for impairment annually and whenever there is an
indication of impairment. Goodwill is carried at cost less
accumulated impairment losses.
When the acquired interest in the net fair value of the
identifiable assets and liabilities exceeds the cost of the
business combination, the excess is recognised immediately in the
income statement.
Gains and losses on the disposal of a business combination
include the carrying amount of goodwill relating to the entity
sold.
h) Impairment of assets
Assets that have a finite useful life but that are not yet in
use and are therefore not subject to amortisation or depreciation
are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment annually and when events
or circumstances suggest that the carrying amount may not be
recoverable, an impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable
amount.
Goodwill is allocated to cash-generating units ('CGU') for the
purpose of impairment testing to the extent that it is possible to
allocate goodwill to a CGU on a non-arbitrary basis. A CGU is
identified at the lowest aggregation of assets that generate
largely independent cash inflows, and that which is looked at by
management for monitoring and managing the business.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
immediately in the statement of comprehensive income, unless the
relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss is recognised immediately in the
statement of comprehensive income, unless the relevant asset is
carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase. Impairment
losses on goodwill are not reversed.
The gain or loss arising on the disposal of an asset is
determined as the difference between the disposal proceeds and the
carrying amount of the asset and is recognised in the income
statement.
i) 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 an item of property, plant and equipment and is
depreciated over the shorter of its estimated useful life or the
term of the lease.
Future instalments under such leases, net of finance charges,
are included within payables. Rentals payable are apportioned
between the finance element, which is charged to the income
statement, and the capital element, which reduces the outstanding
obligation for future instalments. Land and building elements of
lease agreements are separately assessed in accordance with IAS
17.
All other leases are treated as operating leases and the rentals
payable are charged on a straight line basis to the income
statement over the lease term.
j) Inventories
Inventories are stated at the lower of purchase cost from third
parties and net realisable value on a first in first out basis.
Costs of ordinarily interchangeable items are assigned using the
first in, first out cost formula.
k) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value.
l) Share-based payments
The Group has applied the requirements of IFRS 2 'Share-based
payment', as amended by IFRIC Interpretation 2 - IFRS 2 Group and
Treasury share transactions.
The Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair
value (excluding the effect of non market-based vesting conditions)
at the date of grant. Where services are from employees fair value
is determined indirectly by reference to the fair value of the
instrument granted. The fair value determined at the grant date of
the equity settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. Estimates are
subsequently revised if there is any indication that the number of
share options expected to vest differs from previous estimates. Any
cumulative adjustment prior to vesting is recognised in the current
period. No adjustment is made to any expense recognised in prior
periods if share options ultimately exercised are different to that
estimated on vesting.
Upon exercise of share options the proceeds received net of
attributable transaction costs are credited to share capital.
Fair value is measured based upon a Black-Scholes pricing
model.
m) Financial instruments
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the group becomes a party
to the contractual provisions of the instrument. Financial
liabilities are recorded initially at fair value, net of direct
issue costs as an expense in the income statement with a
corresponding credit to equity.
Financial liabilities are subsequently recorded at amortised
cost using the effective interest method, with interest-related
charges recognised as an expense in finance costs in the income
statement. Finance charges, including premiums payable on
settlement or redemption and direct issue costs, are charged to the
income statement on an accruals basis using the effective interest
method and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which they
arise.
A financial liability is derecognised only when the obligation
is extinguished, that is, when the obligation is discharged or
cancelled or expires.
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual terms of the instrument.
All financial assets are classified as loans and
receivables.
Bank borrowings
Bank loans and overdrafts are initially recorded at fair value
net of transaction costs. Finance charges including premiums
payable on settlement or redemption and direct issue costs, are
accounted for on an accruals basis to the income statement using
the effective interest method and are added to the carrying value
of the instrument to the extent that they are not settled in the
period in which they arise.
Convertible Loan
Convertible loan notes, as disclosed in Note 19, have been split
between debt and equity elements in accordance with IAS 32.
Trade payables
Trade payables are not interest bearing and are stated at their
fair value on initial recognition. They are then accounted for
using the effective interest rate method.
n) Equity instruments
Equity instruments, which are detailed below, issued by the
Group are recorded at the proceeds received, net of direct costs
except for warrants, share options and convertible loans which are
recorded at fair value at the time of issue.
Equity comprises the following:
-- "Share capital" represents the nominal value of equity shares.
-- "Share premium" represents the excess over nominal value of
the fair value of consideration received for equity shares, net of
expenses of the share issue.
-- "Merger reserve" represents an amount arising on the
consolidation which was accounted for in accordance with FRS 6.
-- "Capital redemption reserve" which arose on the redemption of shares.
-- "Retained earnings" represents retained profits.
-- "Share option reserve" relates to the company's share option scheme detailed in Note 24.
-- "Equity element of compound financial instruments" represents
the equity element of the convertible loan notes (Note 19).
-- "Warrants reserve" represents the fair value at the time the warrants were issued.
o) Pensions
The Group contributed to personal pension plans of one of the
directors as detailed in note 9 and defined contribution pension
schemes for certain employees in 2012. The amount charged to the
Income Statement in the year represents the amount payable in
respect of that year.
p) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the
management team including the Executive Chairman and Chief
Financial Officer.
q) Exceptional Costs
It is the Group's policy to show items that it considers are of
a significant nature separately on the face of the Consolidated
Statement of Comprehensive Income in order to assist the reader to
understand the accounts. The Group defines exceptional costs as
items that are material in respect of their size and nature, for
example, a major restructuring of the activities of the Group.
Summary details of exceptional costs are shown in Note 5.
r) Provisions
The Group recognises a provision where a legal or constructive
obligation exists at the balance sheet date and a reliable estimate
can be made of the likely outcome.
3. REVENUE
The Company operates wholly within the United Kingdom.
4. AUDITOR'S REMUNERATION
The analysis of auditor's remuneration is as follows:
2013 2012
GBP GBP
Fees payable to the Company's auditors
for the
audit of the Company's annual accounts.
Total audit fees 21,000 20,000
Fees payable to the Group's auditors
for other
services to the Group
The audit of the Company's subsidiaries
pursuant to legislation 48,500 53,500
Other services in relation to taxation 14,000 13,250
All other services 6,000 20,000
68,500 86,750
89,500 106,750
-------- ---------
5. Loss from operations
2013 2012
GBP GBP
This is stated after charging/(crediting):
Depreciation of property, plant and
equipment
- owned by the group 1,740,024 1,354,670
- held under finance leases 40,938 183,698
Loss/(profit) on disposal of property,
plant and equipment 34,229 (2,665)
Exceptional costs 6,391,359 (168,438)
Amortisation of intangible assets 422,074 455,047
Rentals under operating leases:
- Land and building 125,305 278,143
- Plant and machinery 314,145 433,432
Exceptional costs/(income) comprise of:
2013 2012
GBP GBP
Contract close out costs as a result
of restructuring - 22,012
Exceptional costs included in cost
of sales - 22,012
Restructuring and redundancy costs 145,068 -
Onerous lease provisions 33,000 (112,950)
Dilapidations provisions 10,770 (56,000)
Professional fees on restructuring 109,208 (21,500)
Reorganisation of national accounts 68,654 -
EBT termination provision 243,836 -
Directors compensation for loss of 230,073 -
office (including NIC paid)
Impairment of intangible assets 5,440,000 -
Exceptional costs/(income) included
in administration costs and operating
profit 6,280,609 (190,450)
Write-off of arrangement fees and 110,750 -
related refinancing costs included
in interest payable
Total exceptional costs/(income) 6,391,359 (168,438)
----------- -----------
Exceptional costs in 2013 denoted as restructuring and
redundancy, onerous lease provisions, dilapidation provisons,
professional fees on restructuring and reorganisation of national
accounts represent further essential restructuring of the
group.
The impairment of intangible assets relates to an impairment
charge over of the goodwill in the Vending division which has
arisen due to a difficult 12 months of trading. As such upon the
annual impairment review it was recognised that the value in use
did not support the carrying value of goodwill, see note 15.
On 30 May 2012, Blair Jenkins stepped down as Chief Executive
Officer. Included within exceptional costs in 2013 are settlement
costs in respect of his compensation for loss of office and the
write off of GBP223k of his EBT balance.
Exceptional finance expenses have arisen in respect of
accelerated arrangement fees and legal and professional fees not
capitalised on the refinance of the bank loans, loan notes and
overdraft facilities.
Exceptional costs in 2012 represented items arising primarily
from the acquisition of Vendia UK Limited and its subsidiaries on
22 September 2011 and the essential restructuring of the group
following the acquisition to streamline operations and align the
acquired businesses. This represents a major change to the group
structure with two of the newly acquired entities now heading up
the Vending operations, being VMI in the North and Midlands and
Simply Drinks in London and the South. Snack in the Box remains our
national franchise operation and the newly acquired Drinkmaster
producing and marketing 'in cup' solutions. Included in the item
are professional and other fees relating to the acquisition which
are expensed in line with IFRS 3, Business Combinations.
6. FINANCE income
2013 2012
GBP GBP
Bank interest receivable 28,924 246
-------- ------
7. Finance CoSTS
2013 2012
Normal GBP GBP
Interest on bank loans and overdrafts 229,937 186,698
Interest on convertible loan notes 49,189 48,000
Interest on obligations under finance
leases 20,351 34,020
299,477 268,718
Exceptional finance costs - Write off 110,750 -
of arrangement fees and related refinance
costs
Total finance costs 410,227 268,718
--------- ---------
8. dIRECTORS' REMUNERATION
The emoluments of the Directors for the year were as
follows:
Compensation Total
for loss Total 2012
Salary of office Fees Benefits Share options 2013
GBP GBP GBP GBP GBP GBP GBP
Non-Executive Directors
D Lowe - - - - - - 8,786
M Jackson - - 25,000 - - 25,000 25,000
M Slinkert - - 22,500 - - 22,500 25,000
I Forde 20,000 - 85,372 2,863 - 108,235 31,640
S Garner 8,750 8,750
Executive Directors
J Hamer 83,333 - - - 4,385 87,718 -
B Jenkins - 174,279 - 1,087 - 175,366 248,459
T James 142,500 - - 1,505 4,591 148,596 165,226
254,583 174,279 132,872 5,455 8,976 576,165 504,111
Key management personnel are considered to be only the Company's
Directors.
Details of the EBT loans and payments to other related parties
are disclosed in Note 27.
During the year ended 31 March 2013 pension contributions of
GBPNil (2012 - GBP133,992) were paid in respect of the then highest
paid director.
Directors' interests in share options
Number of
options Earliest Exercise
at
Option Date of 31 March Exercise exercise expiry
type grant 2013 price date date
J Hamer EMI Option 27/07/2012 500,000 28.50p 28/07/2015 27/07/2022
T James EMI Option 24/09/2012 500,000 26.00p 24/09/2015 24/09/2022
B Jenkins EMI Option 17/03/2011 32,727 110.00p 16/03/2014 13/03/2024
T James EMI Option 17/03/2011 27,273 110.00p 16/03/2014 13/03/2024
B Jenkins EMI Option 14/12/2010 187,836 132.50p 14/12/2013 14/12/2023
T James EMI Option 14/12/2010 80,000 132.50p 14/12/2013 14/12/2023
B Jenkins EMI Option 19/12/2007 69,444 144.00p 19/12/2010 19/12/2020
I Forde EMI Option 19/12/2007 69,444 144.00p 19/12/2010 19/12/2020
1,000,000 (2012 - 60,000) options were granted to Directors
during the year to 31 March 2013. Options have been granted to
Directors whose performance 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 March 2013 was
8p and the range during the year was 6.5p to 50p.
During the current year retirement benefits were accruing to 1
Director (2012 - 1) in respect of money purchase pension
schemes.
No Directors exercised any options during the year.
9. Staff numbers and costs
The average monthly number of people employed by the Group
(including Executive Directors) during the year, analysed by
category, were as follows:
2013 2012
Operational staff 214 220
Administrative staff 46 55
260 275
The aggregate payroll costs were as follows: 2013 2012
GBP GBP
Wages, salaries and fees 5,596,809 6,112,326
Pension costs 65,071 196,371
Social security costs 499,848 543,736
Cost of options issued (see Note 24) 45,329 30,900
6,207,057 6,883,333
10 segment information
The Group has three main reportable segments:
-- Specialist drinks - The manufacture and sale of single
portion beverages called 'Drinkpacs' together with the sale of
associated food and drink products.
-- Franchising - The marketing and franchising of operations in
the provision of snack solutions.
-- Vending - Vending activities.
Factors that management used to identify the Group's reportable
segments
The Group's reportable segments are strategic business units
that offer different products and services. They are managed
separately because each business requires different technology and
marketing strategies.
Measurement of operating segment profit or loss, assets and
liabilities
The accounting policies of the operating segments are the same
as those described in the summary of significant accounting
policies.
The Group evaluates performance on the basis of profit or loss
from operations but excluding non-recurring profits/losses, such as
goodwill impairment, and the effects of share-based payments.
Inter-segment sales are priced on the same basis as sales to
external customers, with an appropriate discount being applied to
encourage use of group resources at a rate acceptable to local tax
authorities. This policy was applied consistently throughout the
period.
Segment assets exclude tax assets and assets used primarily for
corporate purposes. Segment liabilities exclude tax liabilities.
Loans and borrowings are allocated to the segments based on
relevant factors (e.g. funding requirements). Details are provided
in the reconciliation from segment assets and liabilities to the
group position.
Specialist drinks Franchising Vending Total
2013 2013 2013 2013
GBP GBP GBP GBP
Revenue
Total revenue 4,596,632 1,732,262 15,516,864 21,845,758
Inter-segmental revenue - - (1,339,716) (1,339,716)
---------- ------------ ------------ ------------
Group's revenue per consolidated 4,596,632 1,732,262 14,177,148 20,506,042
---------- ------------ ------------ ------------
statement of comprehensive
income
Depreciation 160,196 11,162 1,609,604 1,780,962
Amortisation 83,533 142,467 196,074 422,074
---------- ------------ ------------ ------------
Operating profit/(loss)
before exceptional items 420,928 (63,818) (849,832) (492,722)
---------- ------------ ------------
Exceptional costs included within administration expenses
and finance expense (Note 5) (6,280,609)
Head office costs (1,145,590)
Share-based payments 45,329
Finance expense (including exceptional
finance costs (Note 5) (410,227)
Finance income 28,924
Group loss before tax (8,254,895)
------------
Specialist drinks Franchising Vending Total
2012 2012 2012 2012
GBP GBP GBP GBP
Revenue
Total revenue 4,696,792 1,790,822 15,978,148 22,465,762
Inter-segmental revenue - - (275,238) (275,238)
-------------- ------------ --------------- -------------
Group's revenue per consolidated
statement of comprehensive
income 4,696,792 1,790,822 15,702,910 22,190,524
-------------- ------------ --------------- -------------
Depreciation 142,108 6,183 1,390,077 1,538,368
Amortisation 88,386 152,642 214,019 455,047
-------------- ------------ --------------- -------------
Operating profit/(loss)
before exceptional items 572,536 203,412 240,715 1,106,503
-------------- ------------ ---------------
Exceptional credits included within administration
expenses (Note 5) 168,438
Head office costs (1,617,908)
Share-based payments (30,900)
Finance expense (268,718)
Finance income 246
Group loss before tax (732,179)
-------------
Specialist
drinks Franchising Vending Head office Total
2013 2013 2013 2013 2013
GBP GBP GBP GBP GBP
Additions to non-current
assets 199,603 107,845 468,380 105,790 881,618
----------- ------------ ------------ ------------ -------------
Reportable segment
assets 4,405,331 1,345,587 5,930,110 9,931,520 21,612,548
----------- ------------ ------------ ------------ -------------
Tax assets - 30,139 50,438 - 80,577
----------- ------------ ------------ ------------ -------------
Total group assets 4,405,331 1,375,726 5,980,548 9,931,520 21,693,125
----------- ------------ ------------ ------------ -------------
Reportable segment
liabilities (884,486) (247,322) (6,023,338) 327,525 (6,827,621)
----------- ------------ ------------ ------------
Loans and borrowings
(excluding leases,
loan notes and overdrafts) (3,047,155)
Deferred tax liabilities (1,569,318)
Total group liabilities (11,444,094)
-------------
As at 31 March 2013 there were no non-current assets held
outside of the United Kingdom (2012: GBPNil).
Specialist
drinks Franchising Vending Head office Total
2012 2012 2012 2012 2012
GBP GBP GBP GBP GBP
Additions to non-current
assets 199,189 13,866 147,609 933,286 1,293,950
------------- -------------- ------------ ------------ --------------
Reportable segment
assets 3,953,251 3,779,222 1,125,000 20,304,141 29,161,614
------------- -------------- ------------ ------------ --------------
Tax assets - 13,859 433,520 - 447,379
------------- -------------- ------------ ------------ --------------
Total group assets 3,953,251 3,793,081 1,558,520 20,304,141 29,608,993
------------- -------------- ------------ ------------ --------------
Reportable segment
liabilities (563,090) (271,211) (3,197,000) (1,711,899) (5,743,200)
------------- -------------- ------------ ------------
Loans and borrowings (excluding leases
and overdrafts) (3,460,000)
Deferred tax liabilities (1,889,685)
Total group liabilities (11,092,885)
--------------
11 Taxation
2013 2012
GBP GBP
Corporation tax
Current tax expense - -
Adjustment to corporation tax for prior
period 10,907 (139,454)
Deferred tax
Origination and reversal of timing differences (213,563) (257,276)
Deferred tax income relating to change
in rate (74,043) (135,050)
Adjustments in respect of prior periods 334,210 (149,851)
Tax on loss on ordinary activities 57,511 (681,631)
Factors affecting tax charge/(credit) for the year:
The tax assessed for the year differs from the standard rate of
corporation tax in the UK of 24% (2012: 26%). The differences are
explained below:
2013 2012
GBP GBP
TAX RECONCILIATION
Loss per accounts before taxation (8,254,895) (732,179)
------------- -----------
Tax on loss on ordinary activities at standard
rate of 24% (2012 - 26%) (1,981,175) (190,372)
Expenses not deductible for tax purposes 194,670 19,693
Ineligible depreciation 48,494 106,425
Unrecognised deferred tax 218,848 (69,970)
Change in rate (74,043) (135,050)
Income not taxable - (123,052)
Impairment of goodwill 1,305,600 -
Adjustments to deferred tax for prior years 334,210 (149,851)
Adjustments to corporation tax for prior
years 10,907 (139,454)
Current tax charge/(credit) for the year 57,511 (681,631)
The rate change from 24% to 23% had been substantively enacted
by the balance sheet date, so deferred tax is provided for at a
rate of 23%.
The other proposed changes had not been substantively enacted by
the balance sheet date and it is not yet possible to quantify the
full effect of the announced further 1% rate reduction, per year
until it reaches 20% from 1 April 2015. This will further reduce
the company's future current tax charges and reduce the deferred
tax assets accordingly.
12 Loss per share
The calculation of basic loss per share is calculated on the
basis of the result for the year after tax, divided by the weighted
average number of shares in issue for the year ended 31 March 2013
of 16,349,014 (2012 - 16,349,014).
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all potential dilutive ordinary shares (16,349,014
shares). Potential dilutive ordinary shares arise from share
options and convertible loans. For these, a calculation is
performed to determine the number of shares that could have been
acquired at fair value (determined as the average annual market
share price of the Company's shares) based on the monetary value of
the exercise price attached to outstanding share options. Thus the
dilutive weighted average number of shares considers the number of
shares that would have been issued assuming the exercise of the
share options. If these are proved to be anti-dilutive (increase
the potential earnings per share) they are omitted from the
calculation. As the group has made a loss in the current year the
options, warrants and convertible loan notes are therefore
anti-dilutive and diluted earnings per share are therefore not
provided for the current year.
Year ended 31 March 2013 Year ended 31 March
2012
Loss Weighted Amount Loss Weighted Amount
(GBP) average per share (GBP) average per share
no. of (pence) no. of (pence)
shares shares
Loss and diluted
loss attributable
to ordinary
shareholders (8,312,406) 16,349,014 (50.84) (50,548) 16,349,014 (0.31)
13 Property Plant and equipment
Furniture,
Land and Leasehold Plant and Motor fittings
and
Buildings improvements machinery vehicles equipment Total
GBP GBP GBP GBP GBP GBP
Cost
At 1 April 2011 491,756 179,438 10,750,153 171,321 313,935 11,906,603
Additions 2,220 6,665 1,190,149 36,509 58,407 1,293,950
Disposals - - (28,142) (44,962) (8,176) (81,280)
---------- ------------- ------------ ----------- ----------- ------------
At 1 April 2012 493,976 186,103 11,912,160 162,868 364,166 13,119,273
Additions 6,440 2,542 746,147 - 126,489 881,618
Disposals (15,617) - (290,760) (126,725) - (433,102)
At 31 March 2013 484,799 188,645 12,367,547 36,143 490,655 13,567,789
Depreciation
At 1 April 2011 4,123 91,453 3,439,396 98,873 184,620 3,818,465
Charge for the year 12,328 14,254 1,363,448 46,588 101,750 1,538,368
Disposals - - (19,322) (44,325) (5,848) (69,495)
At 1 April 2012 16,451 105,707 4,783,522 101,136 280,522 5,287,338
Charge for the year 37,739 14,812 1,642,769 30,399 55,243 1,780,962
Disposals (14,999) - (196,926) (109,186) - (321,111)
At 31 March 2013 39,191 120,519 6,229,365 22,349 335,765 6,747,189
Net Book Value
At 31 March 2013 445,608 68,126 6,138,182 13,794 154,890 6,820,600
---------- ------------- ------------ ----------- ----------- ------------
At 31 March 2012 477,525 80,396 7,128,638 61,732 83,644 7,831,935
---------- ------------- ------------ ----------- ----------- ------------
At 31 March 2011 487,633 87,985 7,310,757 72,448 129,315 8,088,138
---------- ------------- ------------ ----------- ----------- ------------
The net book value of assets held under finance leases or hire
purchase contracts, included above, are as follows:
2013 2012
GBP GBP
Plant and machinery 216,784 1,010,178
--------- -----------
14 INTANGIBLE ASSETS
Goodwill Customer Brands Total
Relationships
Cost GBP GBP GBP GBP
At 31 March 2012
and 31 March 2013 9,546,375 1,116,087 4,957,883 15,620,345
------------ -------------- ---------- ------------
Amortisation
At 1 April 2011 - 37,203 388,241 425,444
Amortisation charge
for - 74,405 380,642 455,047
the year
At 31 March 2012 - 111,608 768,883 880,491
------------ -------------- ---------- ------------
At 1 April 2012 - 111,608 768,883 880,491
Amortisation charge
for - 74,406 347,668 422,074
the year
Impairment charge for
the year 5,440,000 - - 5,440,000
At 31 March 2013 5,440,000 186,014 1,116,551 6,742,565
------------ -------------- ---------- ------------
Net book value
At 31 March 2013 4,106,375 930,073 3,841,332 8,877,780
------------ -------------- ---------- ------------
At 31 March 2012 9,546,375 1,004,479 4,189,000 14,739,854
------------ -------------- ---------- ------------
At 31 March 2011 9,546,375 1,078,884 4,569,642 15,194,901
------------ -------------- ---------- ------------
Current estimates of useful economic lives of intangible assets
are as follows:
Goodwill Indefinite
Customer relationships Amortised over 15 years
Snack In The Box brands Amortised over 15 years
Vendia brands Amortised over 10 years
15 Goodwill and impairment
Goodwill acquired in a business combination is allocated at
acquisition to the cash generating units (CGUs) that are expected
to benefit from that business combination as follows:
Goodwill carrying amount
2013 2012
GBP GBP
Specialist drinks 1,957,187 1,957,187
Vending 2,149,188 7,589,188
4,106,375 9,546,375
------------- -------------
The group tests annually for impairment or more frequently if
there are indications that goodwill may be impaired. The
recoverable amounts of all the above CGUs have been determined from
value in use calculations based on cash flow projections from
formally approved budgets for 2013, which are then extrapolated
over 8 years and a terminal value applied to the year 8 cashflow.
The major assumptions are as follows:
Specialist
drinks Vending
% %
2013
Discount rate 12.0 12.0
------------ ---------
Growth rates in periods 2-8 2.8 to
2.0 to 3.0 3.0
------------ ---------
Terminal value 2.0 2.0
------------ ---------
2012
Discount rate 12.0 12.0
------------ ---------
Growth rates in periods 2-8 2.8 to
2.0 to 3.0 3.0
------------ ---------
Terminal value 2.3 2.3
------------ ---------
Operating margins have been based on past experience and future
expectations in the light of anticipated economic and market
conditions. Discount rates are based on the Group's weighted
average cost of capital, this is then adjusted to reflect
management's assessment of specific risks related to the cash
generating unit. Growth rates beyond the first eight years are
based on economic data pertaining to the region concerned.
The recoverable amount for the CGU is set out below:
-- Specialist drinks exceeded its carrying amount by GBP74,000 (2012 - GBP247,000)
-- Vending exceeded its carrying amount by GBPNil (2012 - GBP812,000)
If any one of the following changes were made to the above key
assumptions, the carrying amount and recoverable amount would be
equal.
Specialist
drinks Vending
2013 2013
% %
Discount rate Increase from
12.0 to 12.2 N/A
-------------- ---------
Growth rate year 2 Reduction
from
3.0 to 1.4 N/A
-------------- ---------
Terminal value Reduction
from
2.0 to 1.6 N/A
-------------- ---------
Specialist
drinks Vending
2012 2012
% %
Discount rate Increase from Increase from
12.0 to 12.9 12.0 to 13.4
-------------- ---------------
Growth rate year 2 Reduction
from Reduction from
3.0 to (3.9) 6.0 to (5.0)
-------------- ---------------
Terminal value Reduction
from Reduction from
2.3 to 0.5 2.3 to 1.0
-------------- ---------------
At 31 March 2013, an impairment charge of GBP5,440,000 was
recognised against the Vending division's goodwill which arose from
the acquisition of Vendia UK Limited in 2010. The cash flow
forecasts were reassessed during the fourth quarter as a result of
declining operating performance in the Northern Vending operations.
The year one cash flow was substantially reduced from GBP1.9m to
GBP951k to more accurately reflect the directors forecast
assessment. The subsequent annual growth rates were reduced to
2.8-3.0% and the terminal value was reduced to 2.0%. Based on these
assumptions the value-in-use was no longer able to support the full
recognition of goodwill and therefore an impairment charge was
recognised at 31 March 2013.
16 deferred taxation
The gross movements on the deferred tax account are as
follows:
2013 2012
GBP GBP
At the start of the year (1,442,306) (1,986,701)
Income statement credit 213,742 544,395
Change in tax rate 74,043 -
Prior year adjustment (334,210) -
At the end of the year (1,488,731) (1,442,306)
------------- -------------
deferred tax assets
The deferred tax balances arise from temporary differences in
respect of the following:
Losses Provisions Total
GBP GBP GBP
At 1 April 2012 365,444 81,935 447,379
Credit to income (3,828) (1,868) (5,696)
Prior year adjustment (313,391) (47,715) (361,106)
At 31 March 2013 48,225 32,352 80,577
---------- ----------- ----------
Deferred tax provisions
Intangible Tangible
assets assets Total
GBP GBP GBP
At 1 April 2012 1,246,435 643,250 1,889,685
Charged to income - current year (97,077) (122,360) (219,437)
Prior year adjustment - (26,897) (26,897)
Change in tax rate (51,935) (22,108) (74,043)
At 31 March 2013 1,097,423 471,885 1,569,308
----------- ---------- ----------
See Note 11 for details of the applicable tax rates applied.
Within the group as at 31 March 2013 there were deferred tax
assets of GBP936,824 (2012 - GBP539,160) which have not been
recognised as the directors do not foresee the utilisation of these
assets in the foreseeable future. The deferred tax assets
recognised at 31 March 2013 are within subsidiaries who expect to
generate sufficient taxable profits to utilise them in the
foreseeable future.
17 INVENTORIES
2013 2012
GBP GBP
Finished goods and goods for resale 1,248,569 1,544,124
----------- -----------
GBP3,980 of inventory was written down in the current year (2012
- GBP87,161). The value of inventory consumed and recognised as an
expense was GBP9,645,559 (2012 - GBP9,464,123).
18 Trade and other receivables
2013 2012
GBP GBP
Trade receivables 1,970,572 2,282,834
Other receivables, prepayments and accrued
income 899,384 696,555
2,869,956 2,979,389
----------- -----------
The recoverability of receivables is not considered to be a
significant issue to the Group. Many of the Group's customers have
a long standing relationship with the Group and debtors are
reviewed on a regular basis, with appropriate credit checks being
carried out on new customers entering into contracts with the
Group. On-going management service fees to the franchisees are
secured over franchisees' properties in the event of
non-payment.
Some of the trade receivables are past due but not impaired as
at 31 March 2013. The ageing analysis of these trade receivables is
as follows:
2013 2012
GBP GBP
Current 881,849 1,038,235
One month overdue 591,773 717,181
Two to six months overdue 241,900 184,347
Over six months overdue 255,050 343,071
1,970,572 2,282,834
----------- -----------
Revenues from one customer total GBP2,039,000 (2012 -
GBP2,059,422). The major customer purchases goods from the
specialist drinks segment.
As at 31 March 2013 trade receivables of GBP90,297 (2012-
GBP122,236) were past due and impaired. The receivables due at the
end of the financial year relate to trading customers, brands and
franchisees.
19 BoRrowings
2013 2012
GBP GBP
Secured borrowings at amortised cost
Bank overdrafts 1,830,996 594,369
Bank loans 3,047,155 3,460,000
Convertible loan notes 592,045 542,856
Finance leases 158,658 187,227
----------- -----------
5,628,854 4,784,452
----------- -----------
Amounts due for settlement within 12 months
Bank overdrafts 1,830,996 594,369
Bank loans 1,297,155 865,000
Finance leases 57,304 84,646
Convertible loan notes 592,045 -
3,777,500 1,544,015
----------- -----------
Amounts due for settlement after 12 months
Bank loans 1,750,000 2,595,000
Convertible loan notes - 542,856
Finance leases 101,354 102,581
1,851,354 3,240,437
----------- -----------
5,628,854 4,784,452
----------- -----------
Terms and conditions of outstanding loans at the year end were
as follows:
Interest rate Year of maturity 2013 2012
% GBP GBP
Convertible
Loan notes* 8% Fixed 2013 592,045 542,856
2.75% over base
Bank overdraft rate 2013 1,830,996 594,369
Bank loan 2.25% over LIBOR 2016 1,523,578 1,730,000
Bank loan 5.2% Fixed 2016 1,523,577 1,730,000
The fair value in each case equates to the carrying book value
with the exception of the convertible loan note. All loans are
denominated in sterling.
The group did breach at December 2012 and subequently obtained a
waiver. The Directors entered into discussions with the bank during
Q4 and obtained an offer for the new financing arrangements on 28
March 2013 which completed in early April, this rendered the
testing of the March 2013 covenant as non applicable. The bank
loans, loan notes and bank overdrafts were all renegotiated in
April 2013. See Note 30 for further details. All loans and
overdrafts are secured by a fixed and floating charge over the
assets of the Group.
* Convertible loan stock of GBP600,000 was issued on 16 December
2008. Fundraising costs of GBP45,620 were offset against the loan
stock. Of this GBP86,514 as treated as equity with the remainder of
GBP536,331 being included in long term borrowings. The convertible
loan stock bears interest at a rate of 8% per annum. The loan stock
is convertible to Ordinary shares at GBP1.10 per share. The
conversion date is the earlier of 5 years or at the loan note
holder's request from the 3rd anniversary of the date of issue. The
present value of the debt element has been calculated using an
effective interest rate of 12%.
Obligation under finance leases
2013 2012
GBP GBP
Amounts payable under finance leases
Within one year 57,304 101,057
Two to five years 112,601 125,949
Less future finance charges (11,247) (39,779)
---------- ----------
Present value of lease obligations 158,658 187,227
---------- ----------
Less amounts due for settlement within
12 months 57,304 84,646
Amounts due for settlement after 2 - 5
years 101,354 102,581
---------- ----------
Hire purchase and finance lease liabilities are secured upon the
underlying assets.
It is the Group's policy to lease certain parts of its property,
plant and equipment under finance leases. For the year ended 31
March 2013 the average effective borrowing rate was 7.0%. Interest
rates are fixed at the contract dates. All leases are on a fixed
repayment basis and no arrangements have been entered into for
contingent rental payments. All lease obligations are denominated
in sterling.
The fair value of the Group's lease obligations approximates to
their carrying amount.
The analysis below shows the gross cash flows for the bank loan
and loan notes, which may differ to the carrying values of the
liabilities at the balance sheet date.
2013 2012
GBP GBP
Amounts payable under bank loans & loan
notes
Within one year 1,897,155 875,000
1-2 years 875,000 1,475,000
2-5 years 875,000 1,750,000
----------- -----------
20 TRADE AND OTHER PAYABLES
2013 2012
GBP GBP
Due within one year
Trade payables 2,377,673 2,446,586
Social security and other taxes 774,433 534,055
Other payables 37,494 -
Accruals and deferred income 990,237 1,111,220
4,179,837 4,091,861
----------- -----------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and on-going costs. The Directors
consider that the carrying amount of trade payables approximates to
their fair value.
21 PROVISIONS
Onerous contracts Leasehold Total
dilapidations
GBP GBP GBP
At 1 April 2011 231,000 244,000 475,000
Additions in the year - 20,353 20,353
Released in the year (112,950) (56,000) (168,950)
At 1 April 2012 118,050 208,353 326,403
Additions in the year 33,000 10,770 43,770
Utilised in the year (148,043) (156,035) (304,078)
At 31 March 2013 3,007 63,088 66,095
------------------- ---------------- -----------
Due within one year or less 3,007 63,088 66,095
------------------- ---------------- -----------
Due after more than one year - - -
------------------- ---------------- -----------
Leasehold dilapidations - Provision is made for the estimated
cost of refurbishing properties in line with the requirements of
the various leases, prior to returning them to the landlord. The
exact amount may vary as final necessary repairs are determined.
Provisions are also made for related professional fees.
Onerous contracts - Provision is made for the onerous element of
property lease rentals in respect of vacated premises. The exact
amount may vary should the group secure a sublet for the properties
or utilise them in the business.
22 SHARE CAPITAL
2013 2012
GBP GBP
Allotted, called up and fully paid equity
share capital
At 31 March (ordinary
shares of GBP0.02 each) 326,980 326,980
Ordinary shares issued during the year
(ordinary shares of GBP0.02 each) - -
--------- ---------
At 31 March (16,349,014 ordinary shares
of GBP0.02 each) 326,980 326,980
--------- ---------
23 Share Premium and reserves
Reserves
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital in excess of
nominal
value.
Merger The merger reserve, which arises on consolidation,
represents the difference between the fair value and nominal value
of shares issued on the acquisition of subsidiary companies where
the company has elected to take advantage of merger relief.
Capital redemption reserve Amounts transferred from share
capital on redemption of issued shares which arose following a
share reorganisation
Share option Cumulative share option expense recognised.
Convertible debt option Amount of proceeds on issue of
convertible debt relating to the equity component (i.e. option to
convert the debt into share capital).
Warrant Cumulative fair value of warrants in issue.
Retained earnings Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income.
Issued Share Capital Share Convertible
GROUP share premium Merger redemption option debt option Warrant Retained
capital account reserve reserve reserve reserve reserve deficit
GBP GBP GBP GBP GBP GBP GBP GBP
Balance as at
31 March 2011 326,980 8,347,383 6,817,754 1,274,279 237,491 86,514 2,236,130 (790,775)
Share option - - - - 30,900 - - -
expense
Retained loss
for the year - - - - - - - (50,548)
Balance at 31
March 2012 326,980 8,347,383 6,817,754 1,274,279 268,391 86,514 2,236,130 (841,323)
-------- ---------- ---------- ----------- -------- ------------ ---------- ------------
Share option - - - - 45,329 - - -
expense
Retained loss
for the year - - - - - - - (8,312,406)
-------- ---------- ---------- ----------- -------- ------------ ---------- ------------
Balance at 31
March 2013 326,980 8,347,383 6,817,754 1,274,279 313,720 86,514 2,236,130 (9,153,729)
-------- ---------- ---------- ----------- -------- ------------ ---------- ------------
24 EQUITY-SETTLED SHARE OPTION SCHEME
Options are exercisable at a price equal to the average quoted
market price of the Company's shares at the date of grant or as
agreed by the directors on the date of the grant. The vesting
period is up to three years. If the options remain unexercised
after a period of ten years from the date of grant the options
expire. Options are forfeited if the option holder leaves the Group
before the options vest.
Details of the share options outstanding during the year are as
follows:
2013 2013 2012 2012
Number Weighted Number Weighted
of share average of share average
options exercise options exercise
price (GBP) price (GBP)
Outstanding at the beginning
of the year 902,528 1.31 940,352 1.39
Granted during the year 1,000,000 0.27 191,674 1.04
Forfeited during the year - - (229,498) 1.41
Outstanding at the end of
the year 1,902,528 0.73 902,528 1.31
----------- ------------- ----------- -------------
Exercisable at the end of
the year 309,722 1.44 251,388 1.44
----------- ------------- ----------- -------------
The weighted average remaining contractual life of the options
outstanding at the year end, for the options with a weighted
average exercise price of GBP1.31, is 196 days.
The weighted average remaining contractual life of the options
outstanding at the year end, for the options with a weighted
average exercise price of GBP0.27, is 877 days. The weighted
average fair value of the options when issued was GBP0.11.
2013 2012
IFRS 2 Fair value charge recognised as GBP45,329 GBP30,900
an expense
Average share price 22.9p 77.8p
The inputs into the Black-Scholes option pricing model for each
of the share options issues were as follows:
Issue Date 14 December 16 October 10 December
2008 2009 2010
Expected volatility 50% 30.43% 47.18%
Expected life 3 years 3 years 3 years
Risk-free rate 4% 2.73% 2.36%
Dividend yield N/A N/A N/A
Weighted average share GBP1.44 GBP1.10 GBP1.25
price on the grant
date
Exercise price GBP1.44 GBP1.44 GBP1.33
Issue Date 17 March 31 May 2011 30 June 2011 1 February
2011 2012
Expected volatility 47% 60% 51% 60%
Expected life 3 years 3 years 3 years 3 years
Risk-free rate 2.36% 0.83% 2.36% 0.83%
Dividend yield N/A N/A N/A N/A
Weighted average share GBP1.02 GBP1.25 GBP0.62
price on the grant
date GBP1.04
Exercise price GBP1.10 GBP1.10 GBP1.00 GBP0.61
Issue Date 27 July 2013 24 September
2013
Expected volatility 76% 84%
Expected life 3 years 3 years
Risk-free rate 0.83% 0.83%
Dividend yield N/A N/A
Weighted average share
price on the grant
date GBP0.35 GBP0.35
Exercise price GBP0.29 GBP0.26
Expected volatility was determined by calculating the historical
volatility of the Company's share price over the previous 3 years.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
25 financial instruments
The accounting policies for financial instruments have been
applied to the line items below:
Financial assets by category
2013 2012
GBP GBP
Loans and receivables
Trade and other receivables 1,970,572 2,282,834
Cash and cash equivalents 1,783,626 2,066,312
----------- -----------
3,754,198 4,349,146
----------- -----------
The maximum credit risk exposure is GBP1,970,572 (2012 -
GBP2,282,834).
Financial liabilities by category
2013 2012
GBP GBP
Current liabilities
Other financial liabilities 9,707,337 5,635,876
Non current liabilities
Other financial liabilities 101,354 3,240,437
---------- ----------
9,808,691 8,876,313
---------- ----------
Interest rate sensitivity
The Group's policy is to minimise interest rate cash flow risk
exposures on their hire purchase and finance lease arrangements by
fixing the interest rate on the agreements. However, the bank
overdraft has a variable interest rate. The bank loan of GBP1.5M
has an interest rate of 2.25% above LIBOR. The balance of the bank
loan is fixed at 5.2%
The following table illustrates the sensitivity of the net
result for the year and equity to a reasonably possible change in
interest rates of +1% and -1% (2012 - +1% / -1%), with effect from
the beginning of the year. These changes are considered to be
reasonably possible based on observation of current market
conditions. The calculations are based on the Group's bank loan and
overdraft, which have variable interest rates, at each balance
sheet date. All other variables are held constant.
2013 2013 2012 2012
GBP GBP GBP GBP
+1% -1% +1% -1%
Adjusted net result
for
the year 8,396,368 8,230,103 73,994 27,106
Adjusted equity 10,332,993 10,331,331 18,492,662 18,539,549
----------- ----------- ----------- -----------
Information on the Group's risk and capital structure is
included within the Directors' Report.
26 OPERATING LEASE ARRANGEMENTS
2013 2012
GBP GBP
Minimum lease payments under operating
leases
recognised as an expense in the year 439,450 711,575
--------- ---------
At the balance sheet date the Group had commitments for future
minimum lease payments under non-cancellable operating leases which
fall due as follows:
2013 2012
GBP GBP
Within one year 393,677 465,050
2 to 5 years 610,274 351,640
Over 5 years 36,625 37,625
----------- ---------
1,040,576 854,315
----------- ---------
Operating lease payments represent rentals payable by the Group
in respect of its properties and for plant and machinery.
27 related party transactions
In the year ended 31 March 2013 there were the following related
party transactions:
An amount of GBP85,372 (2012: GBP246,400) was paid and GBP80,166
(2012: GBP152,097) was accrued as at 31 March 2013 to Bretforton
Marketing Services Limited for marketing consultancy and brand fee
commission. Ian Forde is a director of this company.
An amount of GBP223,836 (2012 - GBPnil) was written off in
respect of EBT loans to Directors:
2013 2012
GBP GBP
B Jenkins 223,836 -
T James 20,000 -
A company that Blair Jenkins is a related party of received
GBP223,836 from the EBT during 2012 which was written off for at 31
March 2013 (2012: GBPnil). This amount was included within the
total debtor outstanding as at 31 March 2012 from the EBT.
28 capital commitments
There were no capital expenditure commitments as at the year
end.
29 ULTIMATE CONTROLLING PARTY
Due to shareholdings in the parent company there is no ultimate
controlling party. Substantial interests in the parent company are
disclosed in the Directors' Report.
30 POST BALANCE SHEET EVENTS
On 5 April the group signed a revised banking agreement with the
Co-operative Bank. The New Bank Facility comprises a two-year
GBP3.40 million term loan, with a revised repayment schedule and
covenants, and a one-year GBP0.75 million overdraft facility. These
new banking arrangements follow an extensive review by the Bank of
SnackTime's business and reflect both the current and projected
performance of the Company. The New Bank Facility replaces a loan
of GBP3.05 million and an overdraft facility of GBP1.10 million,
originally set up in September 2010.
On 5 April the group successfully completed a GBP1.01m
fundraising by way of a loan note. The loan notes comprise GBP0.05m
of 7% convertible loan stock and GBP0.0505m of 12% 5 year
redeemable loan stock.
On 5 April and in satisfaction of a further condition of the new
banking facilities detailed above, Unicorn AIM VCT plc and
Elderstreet VCT plc, holders of GBP550,000 and GBP50,000,
respectively, of the Company's GBP600,000 2008 convertible loan
notes ("2008 CLS"), which were due for redemption on 16 December
2013, have agreed to defer the redemption date for 2 years, until
15 December 2015 ("Extension Period"). Interest shall continue to
accrue at 8% per annum during the Extension Period, and be paid
semi-annually. However, a redemption premium of 6% per annum of the
principal amount of the loan notes will now be paid on redemption
up to a maximum of 12%. The 2008 CLS are now specifically
redeemable or convertible at the option of the holders on a change
of control of the Company. All other material terms of the 2008 CLS
remain unchanged.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR RJMBTMBAMBFJ
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