TIDMKITW
RNS Number : 5187G
Kitwave Group PLC
27 July 2021
27 July 2021
Kitwave Group plc
("Kitwave", the "Group" or the "Company")
Interim Results for the six months ended 30 April 2021
Kitwave Group plc (AIM: KITW), the independent, delivered
wholesale business, is pleased to announce its financial results
for the six months ended 30 April 2021. The results cover a
financial period prior to the flotation of the Company on 24 May
2021.
During the six months being reported the Group traded in line
with the Board's expectations. The results were impacted by
COVID-19 lockdown restrictions and, in particular, closures within
the leisure and hospitality sector. Since April 2021, trading has
returned close to pre-pandemic levels and the Directors are pleased
to confirm the Group is currently trading in line with market
expectations.
Financial summary
-- Revenues of GBP147.1 million (12 months ended 30 April 2020: GBP399.0 million).
-- Operating profit of GBP0.8 million (12 months ended 30 April 2020: GBP7.6 million).
-- GBP9.8 million cash generated from operations (12 months
ended 30 April 2020: GBP29.1 million).
The Board has declared an interim dividend of 2.25 pence per
share to be paid on 27 August 2021 to shareholders on the register
at the close of business on 6 August 2021. The ex-dividend date
will be 5 August 2021.
Post-period end
-- Significantly over-subscribed Placing and Admission to AIM on
24 May 2021, raising gross proceeds of GBP64.0 million for the
Company and GBP17.6 million for the Selling Shareholders.
-- Gross proceeds for the Company will be used to support the
Group's successful buy-and-build strategy, enhance the profile of
the Group and its brands, improve Kitwave's position with key
suppliers, strengthen the Group's balance sheet, and provide the
Group with greater ability to incentivise and retain key employees
going forward.
-- On Admission, Stephen ("Steve") Smith, Independent
Non-executive Chairman, and Gerard Murray, Independent
Non-executive Director, were appointed to the Board.
-- Trading during June and July 2021 has been strong as a result
of a period of warmer weather and consumer interest in the UEFA
European Championship driving sales, as well as the leisure and
hospitality sectors reopening further as nationwide COVID-19
lockdown restrictions have eased.
Operational highlights
-- The Group opened a new 70,000 sq. ft distribution centre in
Luton. The centre was delivered on time and on budget and
specifically commissioned to cater for Frozen & Chilled product
operations. The ability to store in excess of 5,000 pallets in
highly efficient cold store conditions will ensure that the Group
is well placed to meet future growth expectations and peak summer
demands of Kitwave's independent customers.
Paul Young, Chief Executive Officer of Kitwave, commented:
"I am pleased to report the Group's financial results for the
six months ended 30 April 2021, marking the first set of results to
be reported since Kitwave's successful Admission to trading on AIM
in May 2021.
"All of the Group's divisions have experienced some level of
impact from the stop-start nature of COVID-19 restrictions during
the period. Supply to pubs, restaurants and vending machine
operators was severely disrupted as these businesses were either
closed or operating under constraints. In contrast, our Frozen
& Chilled division was extremely resilient and operated close
to pre-COVID-19 levels throughout the period.
"Since mid-May 2021, COVID-19 lockdown restrictions have been
eased and trade has accelerated. Thanks to a period of warmer
weather and consumer interest in the Euros, we are already
experiencing sales volumes that are moving toward pre-pandemic
levels; this was the case even before the highly anticipated 19
July 2021 'Freedom Day'. As such, we remain confident that the
Group is on track to achieve its full year expectations. This
belief is further supported by the timing of the return to normal,
as it allows the Group to take full advantage of the second half of
our financial year, when trading is traditionally stronger due to
the seasonality of the Frozen & Chilled division.
"The Board anticipates a buoyant market to return once COVID-19
lockdown restrictions are removed fully and has confidence that the
Group will continue to be one of the leading independent delivered
wholesale providers in the UK. The UK grocery and foodservice
wholesale market remains highly fragmented and the Directors
believe this presents Kitwave with numerous additional growth
opportunities."
- Ends -
For further information please contact:
Kitwave Group plc Tel: +44 (0) 191 259 2277
Paul Young, Chief Executive Officer
David Brind, Chief Financial Officer
www.kitwave.co.uk
Canaccord Genuity Limited Tel: +44 (0) 20 7523 8150
(Nominated Adviser and Sole Broker)
Bobbie Hilliam
Alex Aylen
Richard Andrews
Georgina McCooke
Yellow Jersey PR Tel: +44 (0) 20 3004 9512
(Financial media and PR) kitwave@yellowjerseypr.com
Sarah Hollins
Henry Wilkinson
Matthew McHale
Company Overview
Founded in 1987, following the acquisition of a single-site
confectionery wholesale business based in North Shields, United
Kingdom, Kitwave is an independent, delivered wholesale business,
specialising in selling and delivering impulse products, frozen and
chilled foods, alcohol, groceries and tobacco to approximately
38,000, mainly independent, customers.
With a network of 26 depots, Kitwave is able to support delivery
throughout the UK to a diverse customer base, which includes
independent convenience retailers, leisure outlets, vending machine
operators, foodservice providers and other wholesalers, as well as
leading national retailers.
The Group's growth to date has been achieved both organically
and through a strategy of acquiring smaller, predominantly
family-owned, complementary businesses in the fragmented UK grocery
and foodservice wholesale market.
Kitwave Group plc (AIM: KITW) was admitted to trading on AIM of
the London Stock Exchange on 24 May 2021.
For further information, please visit www.kitwave.co.uk .
Chief Executive Officer's statement
Introduction
I am pleased to report the Group's financial results for the six
months ended 30 April 2021. Trading throughout the period was
heavily affected by the pandemic and these results reflect those
challenges.
Admission to AIM
On 24 May 2021, the Company announced a significantly
over-subscribed Placing and its Admission to AIM, raising gross
proceeds of GBP64.0 million for the Company and GBP17.6 million for
the Selling Shareholders. The Placing attracted strong support from
high quality institutional investors and, based on the Placing
Price, the Company's market capitalisation was approximately
GBP105.0 million at Admission. The Company intends to use the gross
proceeds of the Placing to reduce the Group's existing debt and to
pay the Group's expenses in connection with the Placing.
The Board believes that the Group's Admission will support its
successful buy-and-build strategy, enhance the profile of the Group
and its brands, improve Kitwave's position with key suppliers,
strengthen the Group's balance sheet, and provide the Group with
greater ability to incentivise and retain key employees going
forward.
Financial summary
In the six months to 30 April 2021, the Group achieved revenues
of GBP147.1 million, ( 12 months ended 30 April 2020 : GBP399.0
million), resulting in an operating profit of GBP0.8 million ( 12
months ended 30 April 2020 : GBP7.6 million). The key factor that
affected the performance in this period were the challenges that
the Group faced because of the COVID-19 restrictions.
6 months to 12 months to 18 months to
30 April 2021 30 April 2020 31 October
2020
Revenue (GBPm) 147.1 399.0 592.0
Gross margin % 17.9% 17.8% 18.1%
Operating profit (GBPm) 0.8 7.6 12.0
Capital expenditure of GBP1.8 million during the period
consisted mainly of the fit out and installation of the freezer
units in the new Luton site. This was funded from cash received
from Luton Borough Council as part of the Compulsory Purchase Order
on the previous Luton warehouse.
Cash generation remained strong in the period with GBP9.8
million generated from operating activities. After all debt
service, cash and cash equivalents increased by GBP6.8 million.
If the outcome of the Group's Admission of the Company to AIM
had been applied to the Group's balance sheet as at 30 April 2021
the pro forma balance sheet would have had equity reserves of
GBP58.5 million and net debt of GBP26.2 million.
Divisional summary
Set out below is the financial performance of the business by
division against the comparable six-month period to 30 April
2020:
6 months *6 months
GBPm to 30 April to 30 April
2021 2020
Group Revenue 147.1 189.5
Ambient 64.5 78.7
Frozen & Chilled 71.7 72.2
Foodservice 10.9 38.6
Head Office - -
Group Adjusted Operating Profit / (Loss)** (0.2) 3.0
Ambient 0.4 1.0
Frozen & Chilled 1.9 2.0
Foodservice (2.3) 0.2
Head Office (0.2) (0.2)
* Six months to 30 April 2020 divisional results are set out
above to provide a more relevant comparison.
** Group Operating Profit / (Loss) adjusted for restructuring,
acquisition and compensation for post combination costs and
income.
The Group's Ambient, Frozen & Chilled and Foodservices
divisions have all experienced some level of impact from the
stop-start nature of COVID-19 lockdown restrictions, as customers
found it more difficult to service consumers. Kitwave focuses on
independent retailers and foodservice providers; many of which were
closed from November 2020 to March 2021. Those that remained open
were undoubtedly affected more severely than larger retailers, as
consumers were told to stay at home.
In our experience, since Kitwave was founded in 1987, these
independents have always proven both determined and resilient,
adapting their businesses where necessary. We anticipate that a
large majority will steer themselves through these difficult times
too, and the long-term goodwill that we have fostered with our
customers has and will continue to stand us in good stead, enabling
us to quickly return to revenue growth as we move out of the
COVID-19 period.
Ambient division
The Ambient business performed in line with expectations during
the year but, as expected, was down on the comparable period as
COVID-19 impacted revenue normally generated through the sale of
impulse products to vending machines.
Frozen & Chilled division
The Frozen & Chilled division has now successfully
integrated the acquisition of Central Supplies, acquired in 2019,
and the division is trading well. The division maintains its strong
presence in the market and more opportunities, both through
acquisitions and customer base, are being presented because of its
strong nationwide infrastructure and capabilities. The results for
the six months to 30 April 2021, whilst affected by COVID-19 and
the restrictions on footfall in the main leisure sites across the
country, were very resilient and comparable with the prior
period.
Foodservice division
COVID-19 had the biggest effect on the Foodservice division,
particularly during the usually very busy Christmas period. The
prior year comparable numbers include trading from December 2019; a
pre-COVID trading period. To mitigate this lost revenue, the
trading divisions administration and distribution expenses were
reduced by 41% to GBP5.2 million after accounting for the benefit
of Coronavirus Job Retention Scheme (CJRS) furlough grants
presented as other income.
Operational review
In February 2021, the new Luton warehouse, specifically designed
and commissioned for dealing with Frozen & Chilled products
operations, was opened. The ability to store in excess of 5,000
pallets in highly efficient cold store conditions will ensure that
the Group is well placed to meet future growth expectations and
peak summer demands of our independent customers.
Strategy
Kitwave's strategy remains focused on the acquisition of smaller
regional players across the fragmented UK grocery and foodservice
wholesale market, while simultaneously driving organic growth. This
strategy has proven highly successful to date, with 10 wholesale
distributors having been acquired and integrated into the Group
since 2011.
The Board is firmly of the opinion that the Group's Admission to
AIM post-period will support this strategy, as well as enhancing
the brands within its portfolio in order to remain one of the
leading independent delivered wholesale providers in the UK.
We feel that, with in excess of 100 years of combined industry
knowledge and expertise, Kitwave has a highly experienced Board and
management team to deliver upon this strategy and generate
shareholder value.
Dividend
The Board intends to implement a progressive dividend policy and
to divide the interim and final dividends approximately on a one
third and two third split respectively. As a result, the Board has
declared an interim dividend of 2.25 pence per share to be paid on
27 August 2021 to shareholders on the register at the close of
business on 6 August 2021. The ex-dividend date will be 5 August
2021.
Summary and outlook
As long as we have known, independent retailers have adapted
their business to best serve consumers and we have seen this during
the pandemic with businesses adapting to government restrictions.
Bars and pubs, for example, have made the most of previously
under-used outdoor space, such as gardens and car parks, to provide
additional seating for customers, while restaurants have
successfully implemented takeaway services in place of 'eating in'.
As a result of these initiatives and the continued easing of the
lockdowns, we firmly believe that the wholesale market will return
strongly as we exit the lockdown phases.
Following the end of the period, thanks to warmer weather,
further easing of restrictions and consumer interest in the UEFA
European Championship, we have already seen stronger trading in
June and July 2021. As a result of the proactive and considerate
measures implemented by the management team, we are confident that
the Group will come out of the lockdown phases strongly and that
trading will continue to return to pre-COVID-19 levels.
We would like to express our thanks to all employees who have
worked tirelessly through this challenging period, without whom we
would not be in the position we are today.
The future looks bright for Kitwave, not only thanks to the
easing of COVID-19-related restrictions, but through organic and
M&A growth opportunities available to the Group due to a highly
fragmented UK grocery and foodservice wholesale market.
We look forward to updating stakeholders on this progress in due
course.
Paul Young
Chief Executive Officer
27 July 2021
Consolidated Statement of Profit and Loss and Other
Comprehensive Income
Note Unaudited Unaudited Audited
6 months 12 months 18 months
ended 30 ended 30 ended 31
April 2021 April 2020 October
2020
GBP000 GBP000 GBP000
Revenue 4 147,112 399,003 592,016
Cost of sales (120,841) (327,836) (484,842)
Gross profit 26,271 71,167 107,174
Other operating income 5 4,423 621 3,020
Distribution expenses (12,712) (29,308) (44,014)
Administrative expenses (17,192) (34,858) (54,156)
Operating profit 790 7,622 12,024
Analysed as:
Adjusted EBITDA 3,834 17,480 27,634
Depreciation (3,940) (6,918) (11,013)
Amortisation of intangible
assets (75) (96) (144)
Restructuring income/(costs) 6 2,192 (859) (1,467)
Acquisition expenses 6 - (570) (628)
Compensation for post combination
services 6 (1,221) (1,415) (2,358)
Operating profit 790 7,622 12,024
Finance expenses (4,269) (6,230) (10,719)
Analysed as:
Interest payable on bank loans
and bank facilities (769) (2,002) (2,805)
Interest and finance charges
payable on loan notes and
debenture loans (2,889) (4,876) (7,788)
Finance charges on financial
leases (611) (995) (1,579)
Fair value movement on financial
liabilities - 1,643 1,453
Finance expenses (4,269) (6,230) (10,719)
(Loss)/profit before tax (3,479) 1,392 1,305
Tax on (loss)/profit 34 (1,119) (1,805)
(Loss)/profit for the financial
period (3,445) 273 (500)
Other comprehensive income - - -
Total comprehensive (loss)/income
for the period (3,445) 273 (500)
Basic earnings per share attributable
to B1 shares 7 (61.51) 4.88 (8.94)
Diluted earnings per share
attributable to B1 shares 7 (61.51) 4.88 (8.94)
Non-GAAP measures
-------------------------------------- ---- ----------- ----------- ----------
Basic underlying earnings per
share attributable to B1 shares 7 (71.40) 26.25 42.72
Diluted underlying earnings
per share attributable to B1
shares 7 (71.40) 26.25 42.72
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 April 30 April 31 October
2021 2020 2020
GBP000 GBP000 GBP000
Non-current assets
Goodwill 31,249 31,267 31,249
Intangible assets 336 461 412
Property plant and equipment 9,854 9,629 9,310
Right-of-use assets 22,987 22,202 20,600
Investments 20 20 20
Investment Property 175 175 175
64,621 63,754 61,766
Current assets
Inventories 32,961 27,270 23,198
Trade and other receivables 47,945 48,273 44,558
Cash and cash equivalents 7,117 - 342
88,023 75,543 68,098
Total assets 152,644 139,297 129,864
Current liabilities
Bank overdrafts - 703 -
Interest bearing loans and
borrowings 16,661 19,686 17,681
Lease liabilities 4,448 5,445 5,202
Trade and other payables 59,255 49,535 40,307
Tax payable 1,472 1,258 1,984
81,836 76,627 65,174
Non-current liabilities
Interest bearing loans and
borrowings 49,507 38,179 43,079
Lease liabilities 19,335 16,848 16,200
Other financial liabilities 5,410 6,863 5,410
Deferred tax liabilities 54 60 54
74,306 61,950 64,743
Total liabilities 156,142 138,577 129,917
Net (liabilities)/assets (3,498) 720 (53)
Equity attributable to equity
holders of the
parent
Called up share capital 50 1 1
Share premium account 2,944 12,993 12,993
Consolidation reserve (33,098) (33,098) (33,098)
Retained earnings 26,606 20,824 20,051
(Accumulated deficit)/Equity (3,498) 720 (53)
Consolidated Statement of Changes in Equity
12 months ended 30 April Called Share Profit
2020 up premium Consolidation and loss Total
share account reserve account equity
capital
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 May 2019
(audited) 1 12,993 (33,098) 20,551 447
Total comprehensive income
for the
period
Profit - - - 273 273
Total comprehensive income
for
the period - - - 273 273
Total contribution by
and distribution - - - - -
to owners
Balance at 30 April 2020
(unaudited) 1 12,993 (33,098) 20,824 720
6 months ended 31 October
2020
Balance at 1 May 2020
(unaudited) 1 12,993 (33,098) 20,824 720
Total comprehensive loss
for the
period
Loss - - - (773) (773)
Total comprehensive loss
for
the period - - - (773) (773)
Total contribution by
and distribution - - - - -
to owners
Balance at 31 October
2020 (audited) 1 12,993 (33,098) 20,051 (53)
6 months ended 30 April Called Share Profit
2021 up premium Consolidation and loss Total
share account reserve account equity
capital
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 November
2020 (audited) 1 12,993 (33,098) 20,051 (53)
Total comprehensive loss
for the
period
Loss - - - (3,445) (3,445)
Total comprehensive loss
for
the period - - - (3,445) (3,445)
Transactions with owners
recorded directly in
equity
Bonus issue of shares 49 (49) - - -
Reduction in capital
- share premium - (10,000) - 10,000 -
Total contribution by
and distribution
to owners 49 (10,049) - 10,000 -
Balance at 30 April 2021
(unaudited) 50 2,944 (33,098) 26,606 (3,498)
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 12 months 18 months
ended 30 ended 30 ended 31
April 2021 April 2020 October 2020
GBP000 GBP000 GBP000
Cash flow statement
Cash flow from operating activities
(Loss)/profit for the period (3,445) 273 (500)
Adjustments for:
Depreciation and impairment 4,016 7,014 11,157
Finance expenses 4,269 6,230 10,719
Profit on sale of property,
plant and equipment (25) (23) (5)
Gain on remeasurement of lease
liabilities (98) - -
Compensation for post contribution
services 1,221 1,415 2,358
Taxation (34) 1,119 1,805
5,904 16,028 25,534
(Increase)/decrease in trade
and other receivables (1,667) 11,349 19,425
(Increase)/decrease in inventories (9,763) 8,555 11,456
Increase/(decrease) in trade
and other payables 15,791 (4,146) (17,867)
10,265 31,786 38,548
Tax paid (469) (2,693) (2,693)
Net cash inflow from operating
activities 9,796 29,093 35,855
Cash flows from investing
activities
Acquisition of property, plant
and equipment (1.772) (2,664) (3,125)
Proceeds from sale of property,
plant and equipment 43 236 358
Acquisition of subsidiary
undertakings (including
overdrafts and cash acquired) - (13,535) (13,535)
Net cash outflow from investing
activities (1,729) (15,963) (16,302)
Cash flows from financing
activities
Proceeds from new loan 5,500 5,000 5,000
Net movement in invoice discounting
facility (429) (8,363) (6,941)
Interest paid (2,513) (3,719) (5,969)
Net movement in bank trade
loans 57 (880) (2,270)
Repayment of bank term loans (1,390) (1,768) (3,063)
Payment of lease liabilities (2,517) (5,308) (7,173)
Net cash outflow from financing
activities (1,292) (15,038) (20,416)
Net increase/(decrease) in
cash and cash equivalents 6,775 (1,908) (863)
Opening cash and cash equivalents 342 1,205 1,205
Cash and cash equivalents
at the end of the period 7,117 (703) 342
Notes
1 General information
Kitwave Group plc ("Company") is a public limited company
incorporated, domiciled and registered in England in the UK under
the Companies Act 2006. The Company's ordinary shares are traded on
the Alternative Investment Market ("AIM").
The registered number is 9892174 and the registered address is
Unit S3, Narvik Way, Tyne Tunnel Trading Estate, North Shields,
Tyne and Wear, NE29 7XJ. The Company's principal activity is to act
as a holding company for its subsidiaries (together "the Group"),
which together make up the Group's consolidated financial
information.
2 Basis of preparation
The condensed interim financial information presented in this
statement is for the six-month period ended 30 April 2021 and the
comparative figures for the 12-month period ended 30 April 2020,
both unaudited, and the audited 18-month period ended 31 October
2020.
The condensed financial information does not constitute
statutory accounts as defined in Section 435 of the Companies Act
2006. The statutory accounts for the 18-month period ended 31
October 2020 have been delivered to the Registrar of Companies and
the report of the auditor was (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006.
The condensed financial information has been prepared in
accordance with IAS 34 Interim Financial Reporting and should be
read in conjunction with the Group's last annual consolidated
financial statements as included in the Company's Admission
Document, dated 7 May 2021.
The condensed financial information does not include all the
information required for the full annual financial statements,
however, selected explanatory notes are included to explain events
and transactions that are significant to an understanding of the
changes in the Group's financial position and performance since the
last annual consolidated financial statements.
3 Accounting policies
3.1 Critical accounting estimates and judgements
The preparation of financial information requires the Directors
to make judgements, estimates and assumptions concerning the future
performance and activities of the Group. These estimates and
assumptions are based on the historical experience and acquired
knowledge of the Directors, the result of which forms the basis of
the judgements made about the carrying value of assets and
liabilities that are not clear from external sources. Actual
results may differ from these estimates and those that may have a
material impact on the financial information are as follows:
Fair valuation of the put option liability
The fair value of the put option liability has been assessed by
the Group. The valuation is based on estimates of the forecast
Group Enterprise Value, net of debt, as at March 2023. The
estimates also take into account the historical accuracy of
forecasting and the sensitivity of the valuation to changes in
forecasts.
Impairment of trade receivables
IFRS 9, Financial Instruments, requires that provisioning for
financial assets needs to be made on a forward-looking expected
credit loss model. This requires management to consider historic,
current and forward-looking information to determine the level of
provisioning required.
Management has assessed the ageing of the trade receivables,
their knowledge of the Groups customer base, and other economic
factors as indicators of potential impairment.
3.2 Measurement convention
The financial statements are prepared on the historical cost
basis except that the following assets and liabilities are stated
at their fair value; financial instruments are classified at fair
value through profit or loss and unlisted investments.
3.3 Going concern
The condensed financial information has been prepared on a going
concern basis which the Directors consider to be appropriate for
the following reasons:
As part of the food supply industry, the Group continued to
trade throughout the COVID-19 pandemic and the financial position
and performance of the Group has remained robust through this
challenging period. The impact of COVID-19 on the Group's customers
has been most notable in the Foodservice division and for Vending
customers in the Ambient division. Revenue amongst this customer
base has been adversely impacted following Government-led closures
of customers' operations in the 'out of home' sector covering
cafes, restaurants, bars and hotels. Conversely, revenue in the
Group's other divisions and market segments has been robust. The
Group has continued to make use of the Coronavirus Job Retention
Scheme in affected divisions. The Group is cash generative and
generated GBP9,799,000 of cash from operating activities in the six
months ended 30 April 2021, illustrating the strong underlying
operating model of the Group.
On 24 May 2021, the Company was admitted to the AIM with
GBP64,000,000 of funds raised. These funds were used to pay down
interest bearing loans and borrowings of GBP51,217,000 with the
balance used to reduce the Groups draw on its working capital
facilities.
The Directors have produced and analysed a detailed cash flow
forecast for a period of 12 months from the date of approval of
this financial information and have taken into account known and
forecast developments in trading.
This forecast shows that the Group is expected to have
sufficient levels of financial resources available both to fund
operations and to pursue its stated growth strategy, even after
reasonable sensitivities of these forecasts.
As a result of this detailed analysis, the Directors consider
that the Group has access to sufficient resources to meet its
existing liabilities as they fall due and to ensure it is able to
meet its future liabilities for at least 12 months from the date of
the approval of this condensed financial information.
4 Segmental information
The following analysis by segment is presented in accordance
with IFRS 8 on the basis of those segments whose operating results
are regularly reviewed by the Board (the Chief Operating Decision
Maker as defined by IFRS 8) to assess performance and make
strategic decisions about allocation of resources.
The Group has the following operating and reporting
segments:
-- Ambient: Provides delivered wholesale of ambient food, drink and tobacco products;
-- Frozen & Chilled: Provides delivered wholesale of frozen and chilled food products;
-- Foodservice: Provides delivered wholesale of alcohol, frozen
and chilled food to trade customers;
-- Corporate: Contains the central functions that are not devolved to the business units.
These segments offer different products and services to
different customer types, attracting different margins. They each
have separate management teams.
The segments share a commonality in service, being delivered
wholesale of food and drink products. The Group therefore benefits
from a range of expertise, cross selling opportunities and
operational synergies in order to run each segment as competitively
as possible.
Each segment is measured on its adjusted EBITDA and internal
management reports are reviewed monthly by the Board. This
performance measure is deemed the most relevant by the Board to
evaluate the results of the segments relative to entities operating
in the same industry.
Prior to admission to AIM the Group and its segments reported
their monthly management accounts under FRS102. The below
information is therefore reported in FRS102 format with the
adjustments to convert to IFRS reporting also set out.
Ambient Frozen & Foodservice Corporate Total
Chilled
GBP000 GBP000 GBP000 GBP000 GBP000
6 months to 30 April
2021
Revenue 64,495 71,729 10,888 - 147,112
Inter-segment revenue 5,622 - 94 - 5,716
Segment revenue 70,117 71,729 10,982 - 152,828
Adjusted EBITDA (pre
IFRS 16) 754 2,458 (1,748) (167) 1,297
IFRS 16 adjustment 2,537
Adjusted EBITDA 3,834
Depreciation (3,940)
Amortisation (75)
Restructuring income 2,192
Compensation for post
combination services (1,221)
Interest expense (4,269)
Loss before tax (3,479)
Segment assets (under
UK GAAP) 32,877 50,525 18,112 24,159 125,673
Segment liabilities
(under UK GAAP) (23,437) (43,703) (10,121) (56,831) (134,092)
IFRS adjustments
Goodwill amortisation 10,327 10,327
Negative goodwill 122 122
Capitalised transaction
costs (760) (461) (1,221)
IFRS 16 (190) (502) (188) (880)
Compensation for post
combination services (3,427) (3,427)
IFRS net assets/(liabilities) 9,250 2,133 7,342 (22,223) (3,498)
Capital expenditure 283 1,448 33 - 1,765
* In the 6 months to 30 April 2021 there was no difference
between Adjusted EBITDA under IFRS and UK GAAP except for the
application of IFRS 16.
Ambient Frozen & Foodservice Corporate Total
Chilled
GBP000 GBP000 GBP000 GBP000 GBP000
12 months to 30 April
2020
Revenue 175,437 138,418 85,148 - 399,003
Inter-segment revenue 13,459 - 455 - 13,914
Segment revenue 188,896 138,418 85,603 - 412,917
Adjusted EBITDA (pre
IFRS 16) 3,626 7,303 2,725 (449) 13,205
IFRS 16 adjustment 4,275
Adjusted EBITDA 17,480
Depreciation (6,918)
Amortisation (96)
Restructuring costs (859)
Acquisition expense (570)
Compensation for post
combination services (1,415)
Interest income 1,643
Interest expense (7,873)
Profit before tax 1,392
Segment assets (under
UK GAAP) 32,178 40,986 19,003 20,478 112,645
Segment liabilities
(under UK GAAP) (20,523) (32,693) (13,998) (49,990) (117,204)
IFRS adjustments
Goodwill amortisation 8,095 8,095
Negative goodwill 122 122
Capitalised transaction
costs (724) (438) (1,162)
IFRS 16 (110) (156) (95) (361)
Compensation for post
combination services (1,415) (1,415)
IFRS net assets/ (liabilities) 11,545 5,998 4,472 (21,295) 720
Capital expenditure 1,015 1,148 311 - 2,474
* In the 12 months to 30 April 2020 there was no difference
between Adjusted EBITDA under IFRS and UK GAAP except for the
application of IFRS 16.
Ambient Frozen & Foodservice Corporate Total
Chilled
GBP000 GBP000 GBP000 GBP000 GBP000
18 months to 31 October
2020
Revenue 249,080 230,546 112,390 - 592,016
Inter-segment revenue 20,107 636 595 - 21,338
Segment revenue 269,187 231,182 112,985 - 613,354
Adjusted EBITDA (pre
IFRS 16) 5,280 13,547 2,700 (797) 20,730
IFRS 16 adjustment 6,904
Adjusted EBITDA 27,634
Depreciation (11,013)
Amortisation (144)
Restructuring costs (1,467)
Acquisition expense (628)
Compensation for post
combination services (2,358)
Interest income 1,453
Interest expense (12,172)
Profit before tax 1,305
Segment assets (under
UK GAAP) 35,066 32,620 20,894 19,502 108,082
Segment liabilities
(under UK GAAP) (23,477) (25,675) (12,488) (51,891) (113,531)
IFRS adjustments
Goodwill amortisation 9,306 9,306
Negative goodwill 122 122
Capitalised transaction
costs (760) (461) (1,221)
IFRS 16 (167) (270) (167) (604)
Compensation for post
combination services (2,207) (2,207)
IFRS net assets / (liabilities) 11,422 3,708 7,778 (22,961) (53)
Capital expenditure 1,395 2,256 1,165 - 4,816
* In the 18 months to 31 October 2020 there was no difference
between Adjusted EBITDA under IFRS and UK GAAP except for the
application of IFRS 16.
Geographical information: 6 months to 12 months 18 months
Group revenue 30 April to to
2021 30 April 31 October
2020 2020
GBP000 GBP000 GBP000
United Kingdom 143,838 389,914 579,436
Overseas 3,274 9,089 12,580
147,112 399,003 592,016
No one customer accounts for more than 10% of Group revenue.
5 Other operating income
6 months to 12 months 18 months
30 April to to
2021 30 April 31 October
2020 2020
GBP000 GBP000 GBP000
Net gain on disposal of fixed
assets 25 23 5
Net (loss)/ gain on foreign exchange (2) 5 5
Net gain on remeasurement of
lease liabilities and right-of-use
assets 98 - -
Property restructure 2,260 - -
Grant income 2,042 593 3,010
4,423 621 3,020
Grant income represents funding claimed through the Coronavirus
Job Retention Scheme.
The property restructure income arises as the result of a
Compulsory Purchase Order ("CPO") enacted by Luton Borough Council
relating to the Cargo 10 distribution facility. The result of the
CPO is that Eden Farm Limited and Squirrels (UK) Limited have
relocated to a new purpose-built warehouse on a neighbouring site
to Cargo 10 in Luton. Income to the Group during the period under
the terms of the CPO was GBP2,850,000 and was offset by costs
incurred, which include legal and professional fees and relocation
expenses, of GBP590,000.
6 Exceptional items
The Board considers the following items as exceptional items in
determining the adjusted EBITDA and forming the basis of the
Alternative Performance Measure ("APM") of basic underlying
earnings per share (Note 7). Exceptional items are defined as
income or expenses that arise from events or transactions that are
clearly distinct from the normal activities of the Group and
therefore are not expected to recur frequently.
The Board believes that this APM provides the readers with
important additional information regarding the earnings per share
performance of the Group. The following items comprise the
exceptional charges/(credits) during the periods.
6 months to 12 months 18 months
30 April to to
Exceptional cost/(income) comprises: 2021 30 April 31 October
2020 2020
GBP000 GBP000 GBP000
Transaction fees - 859 834
Restructuring - - 63
COVID-19 related restructuring
costs 68 - 570
Property restructure (2,260) - -
Acquisition expenses - 570 628
Compensation for post combination
services 1,221 1,415 2,358
(971) 2,844 4,453
COVID-19 related restructuring costs include a modest workforce
reduction as the subsidiaries have restructured to match customer
demand following Government-led trading restrictions. This cost was
largely incurred in the 18 months ended 31 October 2020 and the
additional costs incurred in the 6 months ended 30 April 2021 were
a result of extensions to Government-led trading restrictions.
Property restructure income is as set out in Note 5.
Compensation for post-combination services relates to the value
of the put option liability in connection the acquisition of the
remaining share capital of Central Supplies (Brierley Hill) Ltd
which is subject to an agreement to acquire it within two years of
the acquisition. As at 30 April 2021, this expense is materially
accrued in line with the 2-year vesting period.
7 Earnings per share
Basic earnings per share
Basic earnings per share for the six-month period ended 30 April
2021, 12-month period ended 30 April 2020 and the 18-month period
ended 31 October 2020 is calculated by dividing profit attributable
to ordinary shareholders by the weighted average number of ordinary
shares outstanding during each period as calculated below.
Diluted earnings per share
Diluted earnings per share for the six-month period ended 30
April 2021, 12-month period ended 30 April 2020 and the 18-month
period ended 31 October 2020 is calculated by dividing profit
attributable to ordinary shareholders by the weighted average
number of ordinary shares, adjusted for the effects of all dilutive
potential ordinary shares (which comprise a put option) outstanding
during each period as calculated below.
Profit attributable to ordinary 6 months to 12 months 18 months
shareholders 30 April to to
2021 30 April 31 October
2020 2020
GBP000 GBP000 GBP000
(Loss)/profit attributable to
all shareholders (3,445) 273 (500)
GBP GBP GBP
Basic earnings per B1 share (61.51) 4.88 (8.94)
Diluted earnings per B1 share (61.51) 4.88 (8.94)
Weighted average number of ordinary 6 months to 12 months 18 months
shares 30 April to to
2021 30 April 31 October
2020 2020
Number Number Number
Issued ordinary shares at the
start of the period (see below) 101,100 100,710 101,100
Effect of shares subject to written
put (24,000) (24,000) (24,000)
Effect of shares without dividend
rights (21,100) (20,710) (21,100)
Weighted average number of ordinary
shares (basic) during
the period 56,000 56,000 56,000
Weighted average number of ordinary
shares (diluted) during the period 56,000 56,000 56,000
The ordinary A shares are those subject to the put option
liability.
The following Alternative Performance Measure ("APM") for
earnings per share is not defined or specified under the
requirements of International Financial Reporting Standards. The
Board believes that this APM provides the readers with important
additional information regarding the earnings per share performance
of the Group:
Basic underlying earnings per share
Profit attributable to the equity holders of the Group prior to
exceptional items and the fair value movement of the put option
liability measured through the Consolidated Statement of Profit or
Loss, divided by the weighted average number of ordinary shares
during the financial period.
6 months to 12 months 18 months
30 April to to
2021 30 April 31 October
2020 2020
GBP000 GBP000 GBP000
(Loss)/profit attributable to
all shareholders (3,445) 273 (500)
Exceptional items net of tax
(Note 6) (554) 2,840 4,346
Fair value adjustments on the
put option liability - (1,643) (1,453)
Underlying (loss)/profit attributable
to B1 shareholders (3,999) 1,470 2,393
GBP GBP GBP
Basic underlying (loss)/earnings
per B1 share (71.40) 26.25 42.72
Ordinary A shares have an associated redemption option held by
Pricoa Capital Group. The option is only exercisable from 1 March
2023 or in the instance of one or more of certain events occurring,
as set out in the Investor Agreement. These events include:
repayment of all of the Mezzanine notes, voluntary or involuntary
winding up of the company, sale of the business or change of
control. The option has been accounted for as a compound financial
instrument. This option was extinguished at the time of the Initial
Public Offering via the secondary placing (Note 8).
8 Post balance sheet events
Initial Public Offering and Listing
The Company placed 42,666,677 of new ordinary shares at 150
pence per share and existing shareholders placed 11,753,327 via a
secondary placing at 150 pence per share. The Company received net
proceeds of GBP60,700,000.
The Company's ordinary shares were admitted to trading on AIM on
24 May 2021, under the ticker "KITW", and the ISIN
GB00BNYKB709.
The table below sets out a pro-forma balance sheet to re-state
the 30 April 2021 financial position considering the effects of the
listing for illustrative purposes.
Unaudited Bonus Release Cash receipt Repayment Unaudited
30 April issue of amortised on issue of interest pro-forma
2021 of ordinary deal costs of placing bearing 30 April
shares and written shares loans and 2021
put option borrowings
and deal
costs
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-current assets
Goodwill 31,249 31,249
Intangible assets 336 336
Property plant and
equipment 9,854 9,854
Right-of-use assets 22,987 22,987
Investments 20 20
Investment property 175 175
64,621 - - - - 64,621
Current assets
Inventories 32,961 32,961
Trade and other receivables 47,945 47,945
Cash and cash equivalents 7,117 64,000 (59,113) 12,004
88,023 - - 64,000 (59,113) 92,910
Total assets 152,644 - - 64,000 (59,113) 157,531
Current liabilities
Interest bearing loans
and borrowings 16,661 (2,222) 14,439
Lease liabilities 4,448 4,448
Trade and other payables 59,255 59,255
Tax payable 1,472 1,472
81,836 - - - (2,222) 79,614
Non-current liabilities
Interest bearing loans
and borrowings 49,507 3,884 (53,391) -
Lease liabilities 19,335 19,335
Other financial liabilities 5,410 (5,410) -
Deferred tax liabilities 54 54
74,306 - (1,526) - (53,392) 19,389
Total liabilities 156,142 - (1,526) (55,614) 99,003
Net (liabilities)/assets (3,498) - 1,526 64,000 (3,500) 58,528
Equity attributable
to equity holders of
the parent
Called up share capital 50 223 427 700
Share premium account 2,944 (223) 63,573 66,294
Consolidation reserve (33,098) (33,098)
Retained earnings 26,606 1,526 (3,500) 24,632
(Accumulated deficit)/Equity (3,498) - 1,526 64,000 (3,500) 58,528
9 Ultimate controlling party
As at 30 April 2021, the ultimate controlling party of the Group
was PV Young. Following the completion of the IPO in May 2021,
there is no ultimate controlling party of the Group.
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END
IR DKABKOBKDNOB
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July 27, 2021 02:00 ET (06:00 GMT)
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