Interim Results

RNS Number : 0720T

Real Good Food Company Plc (The)

22 September 2010

 



The Real Good Food Company plc (AIM: RGD) 

Interim Results for the six months ended 30 June 2010

The Real Good Food Company plc ("the Group"), the sugars, ingredients and bakery company, today announces Interim Results for six months ended 30 June 2010

Highlights

Ø EBITDA in line with expectations and 2009 driven by:

o  Significant sales growth - 13% in Renshaw (Bakery Ingredients) and 20% in Haydens (Bakery)

o  Gross Delivered Margins up 3.2% vs. 2009

o  Overheads up by £319k vs. 2009, in line with plan and reflecting the Group's investment in commercial and operational resource at Hayden's and Renshaw to support the business development plans in each business

o  Sugar sales at Napier Brown down 19% mostly due to reduced Sugar cost levels in the market following the Oct 2009 EU reference price reduction

Ø Much improved outlook for sugar market in second half of 2010 and in 2011

Ø Working capital reduction continues, with trading initiatives driving £1.5m reduction (£2.0m overall including corporate tax repayment and post period end adjustments) vs. June 2009

Ø Continued focus on cash driving reduction in net borrowings of £2.9m* vs. June 2009

(*including £0.5m restatement of currency positions at June 2010)

Pieter Totté, Chairman of The Real Good Food Company plc, comments:

"I am delighted by the progress which the Group has made during the first half. We have achieved significant sales growth at our bakery ingredients and bakery businesses and while sugar has had a more difficult run with lower prices following the end of the EU regime, the summer saw this being reversed to our benefit."

"In sugar we are now seeing tighter and wider supply conditions and improved pricing, while Renshaw and Haydens are well placed entering their key trading season. All this gives me confidence in achieving market expectations for this year and for the further development of all our businesses in the coming years."

22 September 2010

ENQUIRIES:

The Real Good Food Company plc	Tel: [phone]
Pieter Totté, Chairman
Mike McDonough, Group Finance Director
Shore Capital	Tel: [phone]
Stephane Auton
College Hill	Tel: [phone]
Gareth David

CHAIRMAN'S STATEMENT

SUMMARY

I am delighted by the progress the Group has made during the first half with both profitability and borrowings in line with expectations in what, as I have commented previously, remains a transitional year for the Group.

We have weathered the low point in terms of sugar pricing, following the reference price changes of the last two years and have taken the opportunity in the past six months to widen our sugar supply base. Looking forward, we are now starting to see the benefits of tighter supply conditions and a very encouraging order book for the final quarter of this year and into 2011.

KEY FINANCIALS

£'000s	2010 Six Months	2009 Six Months
Sales EBITDA	90,735 580	101,697 591
Working Capital  (Fixed Assets/Stock/Trade Debtors/Trade Creditors) Net Borrowings (Incl Cash Excl Loan Notes)	32,706 25,533	34,717 28,390

While overall group sales in the half year are lower by 11% to £90.7m, this was primarily attributable to lower sugar prices, following the October 2009 reference price change, together with our withdrawal from some lower margin business at the end of last year.

Strong sales growth has been achieved in both our baking ingredients business, Renshaw, and in our cakes and desserts manufacturing business, Hayden's Bakeries.

At Renshaw we are benefiting from the combination of growing export sales, particularly to the US, together with the growing popularity of home baking and sugar craft in the UK. This has driven a 14% increase in sales, together with significantly improved profitability. Plans to further develop Renshaw as a retail brand are making good progress.

Our turn-around plan for the Haydens Bakeries business is on track under the new management team. First half sales rose by 20% and we are investing in the future of this business through a plant modernisation programme and the establishment of a large distribution centre adjacent to the existing premises. 

EBITDA is in line with 2009 despite an increase in overheads of £319k compared to H1 2009, reflecting the Group's planned investment in Commercial and Operational resource at Haydens and Renshaw to support the business development plans in each business. Overall delivered margins this year were £316k, up (3%) on last year.

During all the challenges we have faced in developing the potential in each of our three businesses over the past six months, we have continued to maintain a strong focus on terms of trade and on cash. This has helped us to continue the positive trends in both reducing working capital by £2.0m and borrowings by £2.9m year on year.

Napier Brown (Sugar Division)

Napier Brown Foods supplies a range of sugar and dry ingredients to food manufacturers and packs sugar for retail grocery and foodservice customers from its facilities at Normanton, near Leeds and Garrett Ingredients at Thornbury, near Bristol.

The sugar business has had to operate in a difficult market as it has gone through the transitional period following the final stage of the reform of the EU sugar regime in October 2009. Lower pricing has hit sales value and sales volumes have been down as a result of the business withdrawing from unprofitable contracts later in 2009, however, the number of customers being served has grown. The Garrett Ingredients business, which sells dairy powders, sugar and other ingredients to smaller industrial customers, has performed particularly well following the recruitment in March of a new Managing Director.

We now have a clearly defined strategy for the business, and have begun to implement plans to benefit from the tightening of the market supply position. These plans include:

1.   A broadening of its supply base with new supply partnerships procuring sugar (both beet and cane) from the UK, EU and the rest of the world

2.   A restructuring into four focused business units; bulk, bags, retail and Garrett Ingredients

3.   Investment in the Normanton processing and manufacturing site to ensure maximum flexibility to provide customers with a broad range of sugars in whatever format they require

These initiatives have already begun to bear fruit, as shortages in supply pushed up prices earlier than anticipated during the summer. Sales volumes will rise following the October contract season as customers have increasingly recognised the crucial role that Napier Brown, with its 'multi-sourcing strategy' and distribution flexibility, can play in providing supply security in an uncertain market.

Looking ahead, Napier Brown will be servicing a greater number of customers and is gearing up both operationally and from a customer service perspective to handle this.

Renshaw (Bakery Ingredients Division)

Renshaw supplies a range of high quality food ingredients primarily to the bakery sector, comprising craft bakers and major cake manufacturers and also to grocery retailers. It operates two facilities, one in Liverpool and the other in Carluke, south-east of Glasgow.

Renshaw has enjoyed strong sales growth since the second half of last year driving increased profitability, with all sectors of the business doing well. In particular sales to our retail export and domestic markets continue to grow. The trend in home baking and crafting is continuing in the US and UK, with more shoppers entering the category, shopping more frequently and spending more money. 

Sales in our bakery and wholesale channels remain buoyant, driven by new product developments, particularly for dessert products, and increased focus in the wholesale sector. We have introduced additional shift patterns to cope with this increased demand and to ensure we are well placed for the busier second half of the year, in a business which remains very seasonal, with the bulk of profitability coming in the final quarter of the year.

To further support this rapid growth, we have strengthened our operations and commercial teams, both in terms of level of resource and capabilities. Together with additional investment in plant, we have been able to maintain a high level of service to our customers and are well prepared for our main trading season in the lead up to Christmas.

Our innovations activity has increased and we have invested in our core brands through development of a number of new branded product initiatives. As a result we are in the process of launching a new range of premium jams to the regional retail trade under our R&W Scott brand and have developed an exciting range of new and unique products, which will further enhance our business and that of our customers.

Haydens Bakeries (Bakery Division)

Haydens Bakeries produces chilled and ambient premium-quality patisserie and dessert products, principally for three retail customers: Waitrose, Marks & Spencer and Costa Coffee. It operates from a site in Devizes, Wiltshire.

Haydens Bakery continues to demonstrate sustainable recovery as part of our three-year turn-around plan, and the strong sales growth reflects a growing appetite for the high quality, added value and hand crafted products that Haydens produces. The EBITDA performance was in line with our expectations, and reflects a planned increase in quality management at operating level, to drive and control the future aspirations of the team, together with input cost increases to the business.

The new management team is undertaking a number of initiatives to strengthen the business and I am pleased to report that all of these are on track, including the addition of 36,000 sq. ft of space, which will enable delivery of our growth plans for this business. Looking to the seasonally-stronger second half, all major sales initiatives for the period have been agreed with customers, action is being taken to recover material cost increases, while completion of the new facility is on track for Q1 of next year.

SIGNIFICANT ITEMS

During the period the Group incurred a number of significant costs primarily people-related in reshaping the Haydens management team and in completing management reorganisation within the Renshaw and Napier Brown businesses.

CASH FLOW AND DEBT

The positive trend in reducing debt continues, driven primarily by reductions in working capital. At 30 June 2010, net assets stood at £32.7m.

Net Borrowings (excluding £2.8m of Loan Notes) at £25.5m on 30 June 2010 follow a similar pattern, and are down £2.9m on 30 June 2009. This reduction has been revised upwards by £0.5m since the trading update in July following a restatement of the Group's currency positions. In line with our normal seasonality both Net Assets and Borrowings are up since the year end, by £3.0M and £4.2m respectively.    

OUTLOOK

I am delighted by the progress which the Group has made during the first half, with a turning point finally reached in our sugar business after several difficult years.  The outlook for sugar is very encouraging, with expectations of increased volumes across all sectors rising further in 2011 as Napier Brown's competitive advantages in terms of product range, service to customers, supply security and ability to manage complexity all come to the fore.

The tighter, and wider, supply conditions and improved pricing in the sugar business along with the significant growth already achieved in both Renshaw and Haydens gives me confidence in anticipating improved trading results for the second half and in the coming years.

PIETER TOTTE

Chairman

22 September 2010

REPORT OF THE AUDITORS

 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010, which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cashflows and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company, as a body, in accordance with our instructions.  Our review has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

 

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

 

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

Horwath Clark Whitehill LLP

Chartered Accountants

10 Palace Avenue

Maidstone

Kent

ME15 6NF

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDING 30 JUNE 2010 (UNAUDITED)

	Notes	Period ended 30 June 2010			Period Ended 30 June 2009
		Before Significant Items	Significant Items	Total	Before Significant Items	Significant Items	Total
		£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
CONTINUING OPERATIONS
REVENUE		90,735	-	90,735	101,697	-	101,697
Cost of sales		(81,620)	-	(81,620)	(92,043)	-	(92,043)
GROSS PROFIT		9,115	-	9,115	9,654	-	9,654
Distribution costs		(3,752)	-	(3,752)	(4,113)	-	(4,113)
Administration expenses		(5,802)	(189)	(5,991)	(5,962)	(84)	(6,046)
OPERATING (LOSS)/PROFIT		(439)	(189)	(628)	(421)	(84)	(505)
Finance income		-	-	-	3	-	3
Finance costs		(709)	-	(709)	(683)	-	(683)
Net Pension finance (cost)/income		39	-	39	(9)	-	(9)
LOSS BEFORE TAXATION		(1,109)	(189)	(1,298)	(1,110)	(84)	(1,194)
Taxation		310	53	363	281	24	305
LOSS FROM CONTINUING OPERATIONS		(799)	(136)	(935)	(829)	(60)	(889)
LOSS FOR THE PERIOD		(799)	(136)	(935)	(829)	(60)	(889)
Other comprehensive income
Actuarial losses on defined benefit plans		(338)	-	(338)	(1,771)	-	(1,771)
Income tax relating to components of other comprehensive income		128	-	128	482	-	482
TOTAL COMPREHENSIVE INCOME FOR THE  PERIOD		(1,009)	(136)	(1,145)	(2,118)	(60)	(2,178)
Basic Loss per share	5	(1.2)		(1.4)	(1.3)		(1.4)
Diluted Loss per share	5	(1.2)		(1.4)	(1.3)		(1.4)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2010 (UNAUDITED)

GROUP FINANCIAL POSITION As at 30 June 2010
		30 June 2010	30 June 2009	31 Dec 2009
		£'000s	£'000s	£'000s
ASSETS Non Current Assets
Goodwill		75,796	75,796	75,796
Intangibles		687	485	651
Property, plant and equipment		14,979	15,644	15,226
Deferred tax asset		959	1,600	431
		92,421	93,153	92,104
Current Assets
Inventory		11,038	10,291	9,570
Trade and other receivables		24,804	23,913	23,452
Financial instruments at fair value		-	25	-
Corporation tax		-	574	-
Cash and cash equivalents		1,796	2,208	5,657
		37,638	37,011	38,679
Total Assets		130,059	130,536	130,783
LIABILITIES Current Liabilities
Borrowings		20,453	20,642	18,373
Trade and other payables		18,644	16,189	19,023
Current tax liabilities		158	-	158
Financial instruments at fair value		92	160	-
		39,347	36,991	37,554
Non Current Liabilities
Borrowings		9,649	12,729	11,430
Deferred tax		3,223	2,963	3,187
Provisions		-	452	-
Retirement benefit obligations		949	1,995	582
		13,821	18,139	15,199
Net Assets		76,891	75,406	78,030
SHAREHOLDERS' EQUITY
Called up share capital		1,300	1,300	1,300
Share premium account		68,870	68,870	68,870
Other reserves		79	83	73
Profit and loss account		6,642	5,153	7,787
Total Equity		76,891	75,406	78,030

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDING 30 JUNE 2010 (UNAUDITED)

	Issued Share Capital	Share Premium Account	IFRS 2 Share Option reserve	Retained Earnings	Total
	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 1 January 2009	1,300	68,870	73	7,331	77,574
Shares to be issued  - Options	-	-	10	-	10
Total comprehensive income for the period	-	-	-	(2,178)	(2,178)
Balances as at 30 June 2009	1,300	68,870	83	5,153	75,406
Balance at 1 January 2010	1,300	68,870	73	7,787	78,030
Shares to be issued - Options	-	-	6	-	6
Total comprehensive income for the period	-	-	-	(1,145)	(1,145)
Balances as at 30 June 2010	1,300	68,870	79	6,642	76,891

STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDING 30 JUNE 2010 (UNAUDITIED)

					6 months to  30 June 2010			6 months to 30 June 2009
					£'000s			£'000s
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period before taxation						(1,298)		(1,194)
Adjusted for:
Finance costs						709		683
Finance income						-		(3)
IAS 19 cost/(income)						(39)		9
Depreciation of property, plant & equipment						956		963
Amortisation of intangibles						63		49
Share based payment expense						6		10
Release of provision						-		(188)
Operating Cash Flow						397		329
Decrease/(Increase) in inventories						(1,468)		667
Decrease/(increase) in receivables						(1,353)		850
(Decrease)/Increase in payables						(216)		(592)
Cash generated from operations						(2,640)		1,254
Income taxes received						-		295
Interest paid						(709)		(1,045)
Net cash from operating activities						(3,349)		504
CASH FLOW FROM INVESTING ACTIVITIES
Interest received						-		-
Income tax paid on disposal of division						-		-
Purchase of intangible assets						(39)		-
Purchase of property, plant & equipment						(772)		(222)
Net cash used in investing activities						(811)		(222)
CASH FLOW USED IN FINANCING ACTIVITIES
Drawdown/(Repayment) of borrowings						441		604
Repayment of obligations under finance leases						(142)		(142)
Net cash used in financing activities						299		462
NET INCREASE/(DECREASE) IN CASH AND CASH  EQUIVALENTS						(3,861)		744
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year						5,657		1,464
Net movement in cash and cash equivalents						(3,861)		744
Cash and cash equivalents at balance sheet date						1,796		2,208
Cash and cash equivalents comprise:
Cash						1,796		2,208
Overdrafts						-		-
						1,796		2,208

NOTES TO THE INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2010

1.    GENERAL INFORMATION

The Real Good Food Company Plc is a public limited company ("company") incorporated in the United Kingdom under the Companies Act (registration number 4666282). The Company is domiciled in the United Kingdom and its registered address is 229, Crown Street, Liverpool, Merseyside. L8 7RF. The Company's shares are traded on the Alternative Investment Market ("AIM").

The principal activities of the Group are the sourcing, manufacture, marketing and distribution of food and industrial ingredients.

Copies of the interim report are being sent to shareholders. Further copies of the interim report and Annual Report and Accounts may be obtained from the address above.

2.    BASIS OF PREPARATION

These consolidated financial statements are presented on the basis of International Financial Reporting Standards (IFRS) as adopted by the European Union and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) and have been prepared in accordance with AIM rules and the Companies Act 2006, as applicable to companies reporting under IFRS.

The financial information set out in this document does not comprise of the statutory accounts of the Company within the meaning of Part 15 of the Companies Act 2006.

New IFRS standards and interpretations not adopted

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 December 2010 and which are applicable to the company, but which have not been adopted early are:

·      IAS 39 Financial instruments: Recognition and measurement (amendment) - Eligible Hedged Items

·      IFRS 7 Improving disclosures about financial instruments (amendments and disclosures)

·      IRIC 18 Transfers of Assets from Customers

·      Amendment to IAS 32 Classification of Rights Issues

·      Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions

·      Improvements to IFRS (covering IFRS 3 & 7 and IAS 1 & 34 and IFRIC 13)

·      Improvements to IFRS (covering IFRS 2 & 8 and IAS 1, 7, 17, 18, 36, 38 & 39 and IFRIC 9)

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 its equity.  Application of these standards will result in some changes in presentation of information within the consolidated financial statements.

3.    SIGNIFICANT ITEMS

It is the Company's policy to show items that it considers being 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 Company defines the term significant as items that are material in respect to their size and nature, for example a major restructuring of the activities of the Group. Summary details of significant items are shown in the Chairman's statement which forms part of this half yearly financial report.

4.    SEGMENT ANALYSIS

Business segments

The Group's operating segments are Sugar, Bakery Ingredients and Bakery as the Group's management and reporting structure is set out along these lines.

The following table shows the Group's revenue and results for the period under review analysed by operating segment. Segment profit represents the trading profit after depreciation but before any interest and significant items.

Six months to 30 June 2010				Bakery Ingredients	Bakery	Total Before Significant Items		Total After Significant Items
		Sugar					Significant Items
		£'000s		£'000s	£'000s	£'000s	£'000s	£'000s
Total revenue		63,887		16,950	11,516	92,353	-	92,353
Revenue - internal		(1,452)		(166)	-	(1,618)	-	(1,618)
External Revenue		62,435		16,784	11,516	90,735	-	90,735
Operating Profit/(Loss)		31		647	(477)	201	(189)	12
Finance costs (net of interest received)						(709)	-	(709)
Pension finance costs						39	-	39
Head office and consolidated adjustments						(640)	-	(640)
Loss before tax						(1,109)	(189)	(1,298)
Tax						310	53	363
Loss after tax as per income statement						(799)	(136)	(935)

Inter-segment sales are charged at prevailing market rates.

The Group operates a central function; therefore finance costs cannot be meaningfully allocated to individual operating segment

5.         SEGMENT REPORTING (continued)

As At 30 June 2010	Sugar	Bakery Ingredients	Bakery	Unallocated	Total Group
	£'000s	£'000s	£'000s	£'000s	£'000s
Segment assets	25,947	19,942	6,106		51,995
Unallocated assets
Goodwill					75,796
Other intangible assets					-
Property, plant and  equipment					7
Deferred tax assets					959
Inventory					-
Trade and other receivables					526
Derived financial assets					-
Current tax assets					705
Cash and cash equivalents					71
Total assets					130,059
Segment liabilities	(25,995)	(8,849)	(3,852)		(38,696)
Unallocated liabilities
Trade and other payables					(197)
Borrowings					(11,544)
Derived financial instruments					(-)
Current tax liabilities					(158)
Deferred tax liabilities					(2,573)
Provisions					(-)
Total liabilities					(53,168)
Net operating (liabilities)/assets	(48)	11,093	2,254		76,891
Non current asset additions	51	347	413	-	811
Depreciation	239	395	320	2	956
Amortisation	10	38	14	1	63

Geographical segments

The Group earns revenue from countries outside the United Kingdom, but as these only represent 2.6% of the total revenue of the Group, segmental reporting of a geographical nature is not considered relevant.

6.      EARNINGS PER ORDINARY SHARE

Earnings per share is calculated on the basis of the loss for the period after tax, divided by the weighted average number of shares in issue for 2010 of 65,014,348 (2009: 65,014,348).

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potential dilutive ordinary shares. Potential dilutive ordinary shares arise from share options and warrants. For these, a calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the exercise price attached to outstanding share options. Thus the dilutive weighted average number of shares considers the number of shares that would have been issued assuming the exercise of the share options.

An adjusted loss per share and a diluted adjusted loss per share, which exclude significant items, has also been calculated as in the opinion of the Board this will allow shareholders to gain a clearer understanding of the trading performance of the Group.

			Six months to 30 June 2010				Six months to 30 June 2009
			Earnings £'000s	Weighted Average No. of shares	Per share amount pence		Earnings   £'000s	Weighted Average No. of shares	Per share amount pence
Loss attributable to ordinary shareholders			(935)	65,014,348	(1.4)		(889)	65,014,348	(1.4)
Significant items			136	-	-		60	-	-
Adjusted Loss per share			(799)	65,014,348	(1.2)		(829)	65,014,348	(1.3)
Dilutive effect of options			-	-	-		-	-	-
Dilutive effect of warrants			-	-	-		-	-	-
Diluted loss per share			(935)	65,014,348	(1.4)		(889)	65,014,348	(1.4)
Diluted adjusted loss per share			(799)	65,014,348	(1.2)		(829)	65,014,348	(1.3)

7.         DIVIDENDS

No dividend is proposed for the six months ended 30 June 2010 (2009 Nil).

8.         TAXATION

The charge for taxation is based on the results for the period and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes.

Provision is made in full for taxation deferred in respect of timing differences that have originated but not reversed by the balance sheet date, except for gains on disposal of fixed assets which will be rolled over into replacement assets.  No provision is made for taxation on permanent differences.  Deferred tax is not discounted.

Deferred tax assets are recognised to the extent that it is more likely than not that they will be recovered.

9.        PENSION ARRANGEMENTS

A subsidiary of the Group, Renshaw Napier Limited, operates a defined benefit pension scheme, the Napier Brown Retirement Benefits Scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The contributions made by the employer over the six-month period have been £48,870.

Assumptions

The assets of the scheme have been taken at market value and the liabilities have been calculated using the following principal actuarial assumptions:

	30 June 2010 % per annum	31 December 2009 % per annum
Rate of increase in pensions in payment	3.00	3.10
Discount rate	5.70	6.00
Inflation assumption	2.80	3.10
Revaluation rate for deferred pensions	2.80	3.10

The fair value of the assets in the scheme, the present value of the liabilities in the scheme and the expected rate of return at each balance sheet date were:

	30 June 2010 %	31 December 2009 %
Equities	7.50	6.90
Bonds	5.60	5.64
Gilts	4.40	5.64
Property	6.50	5.90
Cash	4.20	3.50

	30 June 2010 £'000s	31 December 2009 £'000s
Total fair value of assets	15,623	15,363
Present value of scheme liabilities	(16,572)	(15,945)
Deficit in the scheme	(949)	(582)

The scheme is a closed scheme and therefore under the projected unit method the current service cost would be expected to increase as the members of the scheme approach retirement.

 

END

 

 

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