Toggle SGML Header (+)


Section 1: 8-K/A (8-K/A)

8-K/A

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K/A

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 14, 2016

 

 

AMPLIFY SNACK BRANDS, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

 

Delaware   001-37530   47-1254894
(State or Other Jurisdiction
of Incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

500 West 5th Street, Suite 1350

Austin, Texas

  78701
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: 512.600.9893

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


On September 2, 2016, Amplify Snack Brands, Inc. (“Amplify”) filed a Current Report on Form 8-K (the “Original Form 8-K”) reporting that on September 2, 2016, Amplify completed its acquisition of Crisps Topco Limited (“Tyrrells”). This Form 8-K/A amends the Original Form 8-K to include the historical audited financial statements of Tyrrells and the unaudited pro forma condensed combined financial statements required by Items 9.01(a) and 9.01(b) of Form 8-K that were excluded from the Original Form 8-K in reliance on the instructions to those items. All other items in the Original Form 8-K remain the same.

 

Item 9.01. Financial Statements and Exhibits

 

(a) Financial Statements of Businesses Acquired

The audited consolidated financial statements of Tyrrells for the periods ended April 1, 2016 and March 27, 2015 are filed herewith as Exhibit 99.2. The consent of KPMG LLP, Tyrrells’s independent auditors, is attached as Exhibit 23.1 to this Form 8-K/A. Such consolidated financial statements of Tyrrells were prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB).

 

(b) Pro Forma Financial Information

The unaudited pro forma condensed combined financial information of Amplify and Tyrrells for the year ended December 31, 2015 and for the nine months ended September 30, 2016 are filed herewith as Exhibit 99.3.

 

(d) Exhibits

 

Exhibit
No.

  

Description

  2.1*    Share Purchase Agreement by and among Crisps Holdings Limited, individual selling equityholders, Thunderball Bidco Limited and SkinnyPop Popcorn LLC, dated August 6, 2016 (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on From 8-K filed with the Securities and Exchange Commission on August 8, 2016).
  2.2*    Warranty Deed Relating to the Sale and Purchase of Crisps Topco Limited, by and among certain individual warrantors and Thunderball Bidco Limited, dated August 6, 2016 (incorporated herein by reference to Exhibit 2.2 to the Company’s Current Report on From 8-K filed with the Securities and Exchange Commission on August 8, 2016).
  4.1*    Amended and Restated Registration Rights Agreement, by and among the Company and certain of its stockholders.
10.1*    2015 Stock Option and Incentive Plan, and related form agreements thereunder.
10.2*    Credit Agreement, dated as of September 2, 2016, by and among the Company, certain subsidiaries of the Company, the financial institutions and agents listed therein, and Jefferies Finance LLC.
10.3*    Employment Agreement by and between the Company and David Milner dated as of June 24, 2010, as amended August 1, 2013 and September 2, 2016.
23.1    Consent of KPMG LLP, independent auditors of Tyrrells.
99.1*    Press Release, dated September 2, 2016, issued by Amplify Snack Brands, Inc. (regarding the announcement of the closing of the Transaction).
99.2    Audited consolidated financial statements of Tyrrells for the periods ended April 1, 2016 and March 27, 2015.
99.3    Unaudited pro forma condensed combined financial information of Amplify and Tyrrells for the year ended December 31, 2015 and for the nine months ended September 30, 2016.

 

* Incorporated by reference to Exhibits 2.1, 2.2, 4.1, 10.1, 10.2, 10.3, and 99.1 filed with Amplify’s Current Report on Form 8-K, filed on September 2, 2016 (File No. 001-37530).


SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Amplify Snack Brands, Inc.
(Registrant)
By:  

/s/ Brian Goldberg

  Brian Goldberg
  Chief Financial Officer

November 14, 2016


Exhibit Index

 

Exhibit
No.

  

Description

  2.1*    Share Purchase Agreement by and among Crisps Holdings Limited, individual selling equityholders, Thunderball Bidco Limited and SkinnyPop Popcorn LLC, dated August 6, 2016 (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on From 8-K filed with the Securities and Exchange Commission on August 8, 2016).
  2.2*    Warranty Deed Relating to the Sale and Purchase of Crisps Topco Limited, by and among certain individual warrantors and Thunderball Bidco Limited, dated August 6, 2016 (incorporated herein by reference to Exhibit 2.2 to the Company’s Current Report on From 8-K filed with the Securities and Exchange Commission on August 8, 2016).
  4.1*    Amended and Restated Registration Rights Agreement, by and among the Company and certain of its stockholders.
10.1*    2015 Stock Option and Incentive Plan, and related form agreements thereunder.
10.2*    Credit Agreement, dated as of September 2, 2016, by and among the Company, certain subsidiaries of the Company, the financial institutions and agents listed therein, and Jefferies Finance LLC.
10.3*    Employment Agreement by and between the Company and David Milner dated as of June 24, 2010, as amended August 1, 2013 and September 2, 2016.
23.1    Consent of KPMG LLP, independent auditors of Tyrrells.
99.1*    Press Release, dated September 2, 2016, issued by Amplify Snack Brands, Inc. (regarding the announcement of the closing of the Transaction).
99.2    Audited consolidated financial statements of Tyrrells for the periods ended April 1, 2016 and March 27, 2015.
99.3    Unaudited pro forma condensed combined financial information of Amplify and Tyrrells for the year ended December 31, 2015 and for the nine months ended September 30, 2016.

 

* Incorporated by reference to Exhibits 2.1, 2.2, 4.1, 10.1, 10.2, 10.3, and 99.1 filed with Amplify’s Current Report on Form 8-K, filed on September 2, 2016 (File No. 001-37530).
(Back To Top)

Section 2: EX-23.1 (EX-23.1)

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

The Board of Directors

Crisps Topco Limited:

We consent to the incorporation by reference in the registration statement (No. 001-37530) on Form S-8 of Amplify Snack Brands, Inc. of our report dated 14 November 2016, with respect to the consolidated balance sheets of Crisps Topco Limited as of 1 April 2016 and 27 March 2015, and the related consolidated statements of profit and loss and other comprehensive income, changes in equity, and cash flows for the fiscal periods then ended, which report appears in the Form 8-K/A of Amplify Snack Brands, Inc. dated 14 November 2016.

/s/ KPMG LLP

KPMG LLP

Birmingham, United Kingdom

14 November 2016

(Back To Top)

Section 3: EX-99.2 (EX-99.2)

EX-99.2

Exhibit 99.2

Independent Auditors’ Report

The Board of Directors

Crisps Topco Limited:

We have audited the accompanying consolidated financial statements of Crisps Topco Limited and its subsidiaries, which comprise the consolidated balance sheets as of 1 April 2016 and 27 March 2015, and the related consolidated statements of profit and loss and other comprehensive income, changes in equity, and cash flows for the fiscal periods then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Crisps Topco Limited and its subsidiaries as of 1 April 2016 and 27 March 2015, and the results of their operations and their cash flows for the fiscal periods then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ KPMG LLP

KPMG LLP

Birmingham, United Kingdom

14 November 2016

 

1


Consolidated Statement of Profit and Loss and Other Comprehensive Income

 

     Note     

53 week period ended

1 April 2016

   

52 week period ended

27 March 2015

 
            £000     £000  

Revenue

     3         77,843        56,578   

Cost of sales

        (54,147     (39,062
     

 

 

   

 

 

 

Gross profit

        23,696        17,516   

Administrative expenses

     4         (14,463     (9,427
     

 

 

   

 

 

 

Operating profit

        9,233        8,089   

Financial income

     5         3,366        65   

Financial expenses

     5         (15,766     (12,376
     

 

 

   

 

 

 

Net financing expense

        (12,400     (12,311
     

 

 

   

 

 

 

Profit/(loss) before tax

        (3,167     (4,222

Taxation

     6         (706     (618
     

 

 

   

 

 

 

Profit/(loss) for the period

        (3,873     (4,840
     

 

 

   

 

 

 

Other comprehensive income

       

Items that are or may be reclassified subsequently to profit or loss:

       

Foreign currency translation differences – foreign operations

        (24     (25
     

 

 

   

 

 

 

Other comprehensive income for the period, net of income tax

        (24     (25
     

 

 

   

 

 

 

Total comprehensive income for the period

        (3,897     (4,865
     

 

 

   

 

 

 

The notes on pages 6 to 41 form an integral part of these financial statements.

All amounts relate to continuing activities.

There is no difference between the loss on ordinary activities before taxation and the loss for the financial period stated above and their historical equivalents.

 

2


Consolidated Balance Sheet

 

     Note      1 April 2016     27 March 2015  
            £000     £000  

Non-current assets

       

Property, plant and equipment, net

     7         27,234        13,398   

Intangible assets and goodwill, net

     8         108,317        77,911   

Trade and other receivables

     11         2,437        2,368   
     

 

 

   

 

 

 

Total non-current assets

        137,988        93,677   
     

 

 

   

 

 

 

Current assets

       

Inventories

     10         6,933        4,010   

Tax receivable

        321        —     

Trade and other receivables, net of allowance of £143,000 in 2016 and £137,000 in 2015

     11         22,135        17,991   

Cash and cash equivalents

     12         6,031        6,382   
     

 

 

   

 

 

 

Total current assets

        35,420        28,383   
     

 

 

   

 

 

 

Total assets

        173,408        122,060   
     

 

 

   

 

 

 

Current liabilities

       

Loans and borrowings

     13         1,768        2,157   

Trade and other payables

     14         26,503        15,485   

Derivative financial liabilities

        80        —     

Tax payable

        —          36   
     

 

 

   

 

 

 

Total current liabilities

        28,351        17,678   
     

 

 

   

 

 

 

Non-current liabilities

       

Loans and borrowings

     13         152,635        112,793   

Trade and other payables

     14         6        16   

Derivative financial liabilities

     17         —          213   

Deferred tax liabilities

     9         4,505        241   
     

 

 

   

 

 

 

Total non-current liabilities

        157,146        113,263   
     

 

 

   

 

 

 

Total liabilities

        185,497        130,941   
     

 

 

   

 

 

 

Net liabilities

        (12,089     (8,881
     

 

 

   

 

 

 

Equity

       

Share capital

     16         12        11   

Share premium

        4,200        3,512   

Translation reserve

        (49     (25

Retained earnings

        (16,252     (12,379
     

 

 

   

 

 

 

Total deficit

        (12,089     (8,881
     

 

 

   

 

 

 

The notes on pages 6 to 41 form an integral part of these financial statements.

 

3


Consolidated Statement of Changes in Equity

 

    

Share

capital

    

Share

premium

     Translation
reserve
   

Retained

earnings

   

Total

deficit

 
     £000      £000      £000     £000     £000  

Balance at 29 March 2014

     11         3,500         —          (7,539     (4,028

Total comprehensive income for the period

            

Profit or loss

     —           —           —          (4,840     (4,840

Other comprehensive income

     —           —           (25     —          (25
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

     —           —           (25     (4,840     (4,865
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Transactions with owners, recorded directly in equity

            

Premium on shares issued during the period

     —           12         —          —          12   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total transactions with owners

     —           12         —          —          12   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 27 March 2015

     11         3,512         (25     (12,379     (8,881
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
    

Share

capital

    

Share

premium

     Translation
reserve
   

Retained

earnings

   

Total

deficit

 
     £000      £000      £000     £000     £000  

Balance at 28 March 2015

     11         3,512         (25     (12,379     (8,881

Total comprehensive income for the period

            

Profit or loss

     —           —           —          (3,873     (3,873

Other comprehensive income

     —           —           (24     —          (24
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

     —           —           (24     (3,873     (3,897
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Transactions with owners, recorded directly in equity

            

Issue of shares

     1         —           —          —          1   

Premium on shares issued during the period

     —           688         —          —          688   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total transactions with owners

     1         688         —          —          689   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 1 April 2016

     12         4,200         (49     (16,252     (12,089
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

4


Consolidated Cash Flow Statement

 

     Note     

53 week period
ended

1 April 2016

   

52 week period
ended

27 March 2015

 
            £000     £000  

Cash flows from operating activities

       

Loss for the period

        (3,873     (4,840

Adjustments for:

       

Depreciation and amortisation

        3,006        1,969   

Financial income

        (3,366     (65

Financial expense

        15,766        12,376   

Gain on sale of property, plant and equipment

        (1     (16

Taxation

        706        618   
     

 

 

   

 

 

 
        12,238        10,042   

Changes in operating assets and liabilities, net of acquisition

       

Increase in trade and other receivables

        (1,676     (2,028

Increase in inventories

        (1,389     (773

Increase in trade and other payables

        3,146        2,994   
     

 

 

   

 

 

 
        12,319        10,235   

Interest paid

        (2,744     (2,766

Tax paid

        (672     (166
     

 

 

   

 

 

 

Net cash inflow from operating activities

        8,903        7,303   
     

 

 

   

 

 

 

Cash flows from investing activities

       

Proceeds from sale of property, plant and equipment

        44        37   

Interest received

        528        —     

Acquisition of subsidiary, net of cash acquired

        (19,329     —     

Acquisition of property, plant and equipment

        (11,289     (3,698

Acquisition of other intangible assets

        (207     (251
     

 

 

   

 

 

 

Net cash outflow from investing activities

        (30,253     (3,912
     

 

 

   

 

 

 

Cash flows from financing activities

       

Proceeds from the issue of share capital

        8        12   

Proceeds from new loan

        25,368        908   

Transaction costs related to loans and borrowings

        (906     —     

Issue of other loans

        —          (250

Repayment of borrowings

        (2,695     (1,540

Payment of finance lease liabilities

        (1,047     (41
     

 

 

   

 

 

 

Net cash inflow (outflow) from financing activities

        20,728        (911
     

 

 

   

 

 

 

Net (decrease)/increase in cash and cash equivalents

        (622     2,480   

Cash and cash equivalents at the start of the period

        6,382        3,868   

Effect of exchange rate fluctuations on cash held

        271        34   
     

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

        6,031        6,382   
     

 

 

   

 

 

 

 

5


Notes

(forming part of the financial statements)

 

1 Accounting policies

Crisps Topco Limited (the “Company”) is a company incorporated and domiciled in the UK.

The group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”).

The group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the International Accounting Standards Board (“Adopted IFRSs”). These consolidated financial statements were authorised for issuance by the Board of Directors on 14 November 2016.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these group financial statements and in preparing an opening IFRS balance sheet at 29 March 2014 for the purposes of the transition to Adopted IFRSs.    

Judgements made by the directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next period are discussed in note 1.20.

 

1.1 Transition to Adopted IFRSs

The Group is preparing its financial statements in accordance with Adopted IFRS for the first time and consequently has applied IFRS 1. An explanation of how the transition to Adopted IFRSs has affected the reported financial position, financial performance and cash flows of the Group is provided in note 23.

IFRS 1 grants certain exemptions from the full requirements of Adopted IFRSs in the transition period. The following exemptions have been taken in these financial statements:

 

  Business combinations – Business combinations that took place prior to 29 March 2014 have not been restated.

 

1.2 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: derivative financial instruments and financial instruments classified as fair value through the profit or loss.

 

1.3 Going concern

The financial statements have been prepared on the going concern basis notwithstanding the loss before tax for the period of £3.2 million and net liabilities of £12.1 million at 1 April 2016.

At the balance sheet date, the group was funded by bank loans and overdraft facilities totalling £68.4 million, to which a number of covenants were attached. The group was also funded by other loan notes totalling £97.5 million.

On 2 September 2016, the group was acquired debt free by Thunderball Bidco Limited, a wholly-owned subsidiary of Amplify Snack Brands, Inc. As a result, on the date of acquisition the bank loans and other loan notes in place at the balance sheet date were paid up in full.

After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue to operate for the foreseeable future. Amplify Snack Foods, Inc, the ultimate parent company at the date of signing these accounts, have confirmed their intention to provide financial support, if required, to enable the group to continue in operational existence for the foreseeable future by meetings its liabilities as they fall due.

Based on the above, the directors believe that it remains appropriate to prepare the financial statements on a going concern basis.

 

6


Notes (continued)

 

1 Accounting policies (continued)

 

1.4 Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

 

1.5 Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group’s presentational currency, Sterling, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of the transactions.

Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve. When a foreign operation is disposed of, such that control, joint control or significant influence (as the case may be) is lost, the entire accumulated amount in the FCTR, net of amounts previously attributed to non-controlling interests, is recycled to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while still retaining control, the relevant proportion of the accumulated amount is reattributed to non-controlling interests.

 

1.6 Classification of financial instruments issued by the Group

Following the adoption of IAS 32, financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:

 

(a) they include no contractual obligations upon the group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the group; and

 

(b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

 

7


Notes (continued)

 

1 Accounting policies (continued)

 

1.7 Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Trade and other receivables

Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.

Trade and other payables

Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.

Loans and borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

 

1.8 Derivative financial instruments

Derivative financial instruments

Derivative financial instruments are recognised at fair value. The gain or loss on re-measurement to fair value is recognised immediately in profit or loss.

 

1.9 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Where an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Where land and buildings are held under leases the accounting treatment of the land is considered separately from that of the buildings. Leased assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and less accumulated impairment losses. Lease payments are accounted for as described below.

Depreciation is charged to the income statement to write off the cost, less estimated residual values, of all tangible fixed assets over their expected useful lives. Freehold land is not depreciated. Depreciation is calculated at the following rates:

 

•       freehold property

   50 years

•       leasehold property improvements

   Over the remaining period of the lease

•       plant and machinery

   15% on written down value

•       motor vehicles

   25% on written down value

•       fixtures and fittings

   15% on written down value

Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.

 

8


Notes (continued)

 

1 Accounting policies (continued)

 

1.10 Business combinations

Subject to the transitional relief in IFRS 1, all business combinations are accounted for by applying the acquisition method. Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

Acquisitions prior to 1 January 2010

For acquisitions prior to 1 January 2010, the Group measures goodwill at the acquisition date as:

 

  the fair value of the consideration transferred; plus

 

  the recognised amount of any non-controlling interests in the acquiree; plus

 

  the fair value of the existing equity interest in the acquiree; less

 

  the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

Acquisitions between 1 January 2010 and 29 March 2014

For acquisitions between 1 January 2010 and 29 March 2014 goodwill represents the excess of the cost of the acquisition over the Group’s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost of the acquisition.

Acquisitions prior to 29 March 2014 (date of transition to IFRSs)

IFRS 1 grants certain exemptions from the full requirements of Adopted IFRSs in the transition period. The Group elected not to restate business combinations that took place prior to 29 March 2014. In respect of acquisitions prior to 29 March 2014 , goodwill is included at 29 March 2014 on the basis of its deemed cost, which represents the amount recorded under UK GAAP which was broadly comparable save that only separable intangibles were recognised and goodwill was amortised.

 

9


Notes (continued)

 

1 Accounting policies (continued)

 

1.11 Intangible assets and goodwill

Goodwill

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment.

Research and development

Expenditure on research activities is recognised in the income statement as an expense as incurred.

Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Group intends to and has the technical ability and sufficient resources to complete development, future economic benefits are probable and if the Group can measure reliably the expenditure attributable to the intangible asset during its development. Development activities involve a plan or design for the production of new or substantially improved products or processes. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads and capitalised borrowing costs. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated impairment losses.

Other intangible assets

Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred.

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

 

•       trademarks

   10 years

•       computer software

   15% on written down value

•       brands

   10 years

•       customer relationships

   8 years

 

1.12 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity.

Consignment stock is recognised on the balance sheet when the terms of agreement indicate that the principal risks and rewards of ownership rests with the company.

 

10


Notes (continued)

 

1 Accounting policies (continued)

 

1.13 Impairment excluding inventories and deferred tax assets

Financial assets (including receivables)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are tested annually for impairment at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, or (“CGU”). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

 

1.14 Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement in the periods during which services are rendered by employees.

 

11


Notes (continued)

 

1 Accounting policies (continued)

 

1.14 Employee benefits

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

 

1.15 Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.

 

1.16 Revenue and trade receivable

Revenue represents sales to external customers at invoiced amounts, net of discounts and promotional costs, less value added tax or local taxes on sale.

Revenue is recognised when the earnings process is complete and the risks and rewards of ownership have transferred to the customer. Customers are primarily businesses that are stocking the products. The earnings process is generally complete and once the customer order has been placed and approved and the product shipped. In certain circumstances the earnings process is completed when the product is picked up by customers. Product is sold to customers on credit terms established on a customer-by-customer basis. The credit factors used include historical performance, current economic conditions and the nature and volume of the product.

Our customers are offered a variety of sales and incentives programs, including price discounts, slotting fees, in-store displays and trade advertising. The more significant programs offered include:

Price discounts - certain price discounts are provided in the form of allowances at the time of invoicing while others are provided based on future consumer purchasing activity.

In-store displays –in-store displays are authorised and a fee paid to the customer for the promotional feature.

The costs of these programs are recognised at the time the related sales are recorded and are classified as a reduction in revenue. These program costs are recorded based on estimated participation and performance levels of the offered programs, with regard to factors such as historical trends with similar promotions, expectations regarding customer and consumer participation and sales and payment trends with similar previously offered programs. We estimate trade programme costs incurred but unpaid, which is recorded as a reduction in revenue and trade accounts receivable balance. Evaluating these estimates requires management judgement and, as such, actual results may differ from our estimates. Historically, differences between estimated and actual trade program costs are generally not material and are recognised as a change in revenue in the period such differences are determined.

Unsecured credit is extended to customers in the ordinary course of business and efforts are made to mitigate the associated credit risk by performing credit checks and actively pursuing past due accounts. Accounts are charged to bad debt expense as they are deemed uncollectible based upon a period review of aging and collections.

 

1.17 Expenses

Operating lease payments

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.

Finance lease payments

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

 

12


Notes (continued)

 

1 Accounting policies (continued)

 

1.17 Expenses (continued)

 

Financing income and expenses

Financing expenses comprise interest payable, finance charges on shares classified as liabilities and finance leases recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognised in the income statement (see foreign currency accounting policy). Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that takes a substantial time to be prepared for use, are capitalised as part of the cost of that asset. Financing income comprise interest receivable on funds invested, dividend income, and net foreign exchange gains.

Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Dividend income is recognised in the income statement on the date the entity’s right to receive payments is established. Foreign currency gains and losses are reported on a net basis.

 

1.18 Taxation

Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.

 

1.19 Adopted IFRS not yet applied

The International Accounting Standards Board (“IASB”) have issued the following standards with an effective date for financial periods beginning on or after the dates disclosed below and therefore after the date of these financial statements:

 

  IFRS 9 Financial Instruments is effective for annual reporting periods beginning on or after 1 January 2018.

 

  IFRS 15 Revenue from contracts with customers is effective for annual reporting periods beginning on or after 1 January 2018.

 

  IFRS 16 Leases is effective for annual reporting periods beginning on or after 1 January 2019.

The Group is assessing the potential impact on its consolidated financial statements resulting from the application of the above standards.

 

13


Notes (continued)

 

1 Accounting policies (continued)

 

1.20 Accounting estimates and judgements

The preparation of the consolidated financial statements requires the Directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods impacted.

The key judgements and estimates employed in the financial statements are considered below.

Impairment of goodwill

On an annual basis, the Group is required to perform an impairment review to assess whether the carrying value of goodwill is less than its recoverable amount. Recoverable amount is based on a calculation of expected future cash flows, which include estimates of future performance. Details of assumptions used in the impairment of goodwill are detailed in note 8.

Valuation of other intangible assets

The assessment of fair value in a business combination requires the recognition and measurement of the identifiable assets, liabilities and contingent liabilities in the acquired business. The key judgements required are the identification of intangible assets meeting the recognition criteria of IAS 38 and their attributable fair values. The key assumptions in relation to the brand valuation are the Directors’ best estimate of its life and the royalty and discount rate used in its valuation. The key assumptions in relation to the customer relationship valuation are the Directors’ best estimate of its life and discount rate used in its valuation. The value of both brand and customer relationship assets are based on a calculation of expected future cash flows, which include estimates of future performance.

 

2 Acquisitions of subsidiaries

Acquisitions in the current period – Yarra Valley Snack Foods Pty Limited

On 30 July 2015, the Group acquired all of the shares in Yarra Valley Snack Foods Pty Limited, a manufacturer of snack foods. The primary reasons are as follows: Following the successful launch of the Tyrrells product into the Australian market in March 2015 for the acquisition, the company wanted to acquire an in-market manufacturer in order to simplify the supply chain, optimise quality and satisfy the additional capacity required from rolling out the launch nationally into both major Australian supermarkets. Yarra Valley Snack Foods satisfied this criteria, plus it provided additional expertise in other snack food products such as corn chips and organic crisps. In the 8 months to 1 April 2016 the subsidiary contributed profit before taxation of £239,000 to the consolidated net profit for the period. If the acquisition had occurred on 28 March 2015, Group revenue would have increased by an estimated £2,744,000 and profit before tax would have increased by an estimated £323,000 based on unaudited management accounts. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 28 March 2015.

 

14


Notes (continued)

 

2 Acquisitions of subsidiaries (continued)

 

Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities.

 

    

Recognised
values

on acquisition

 
     £000  

Acquiree’s net assets at the acquisition date:

  

Property, plant and equipment

     1,888   

Intangible assets

     5,380   

Inventories

     640   

Trade and other receivables

     1,295   

Cash and cash equivalents

     97   

Interest-bearing loans and borrowings

     (915

Finance lease liabilities

     (1,010

Trade and other payables

     (1,612

Deferred tax liabilities

     (1,842
  

 

 

 

Net identifiable assets and liabilities

     3,921   
  

 

 

 

Consideration paid:

  

Initial cash price paid

     9,613   

Equity instruments issued

     265   

Loan notes issued

     2,273   

Contingent consideration at fair value

     2,300   
  

 

 

 

Total consideration

     14,451   
  

 

 

 

Goodwill arising from acquisition

     10,530   
  

 

 

 

Goodwill has arisen on the acquisition because of the synergies and lower supply chain costs in respect of servicing the Australian and Asian markets expected to be achieved through integrating this in the existing business as well as the expertise of the assembled workforce both in terms of products and markets. None of the goodwill recognised is expected to be deductible for tax purposes.

21,685 of Ordinary A shares were issued and the fair value determined through an enterprise valuation based on an expected EBITDA multiple.

Contingent consideration

The group has agreed to pay the vendors additional consideration based on a target profit result for the period to 30 June 2016. This target has been achieved and therefore the contingent consideration has been fully provided for.

Fair values determined on a provisional basis

As the acquisition is more than 12 months prior to the authorised for issuance date of the financial statements, all of the fair values are now confirmed.

 

15


Notes (continued)

 

2 Acquisitions of subsidiaries (continued)

 

Acquisition related costs

The group incurred acquisition related cost of £561,400 related to bank finance fees, the cost of due diligence and legal expenses. These costs have been included in administrative expenses in the group’s consolidated statement of comprehensive income.

Acquired trade and other receivables

There is no difference between the gross contractual value and fair value of acquired receivables.

Acquisitions in the current period – Aroma Snack Germany GmbH CO KG and Aroma Verwaltungs Germany GmbH

On 23 March 2016, the Group acquired all of the shares in Aroma Snack Germany GmbH Co KG and Aroma Verwaltungs Germany GmbH, a manufacturer of potato crisps. The primary reason for the acquisition was to garner management’s expertise with regard to the German and wider European snack food market together with their knowledge of organic crisp manufacture. The subsidiary did not have any impact on net profit for the period. If the acquisition had occurred on 28 March 2015, Group revenue would have increased by an estimated £6,997,000 and profit before tax and non-underlying items would have increased by an estimated £292,000 based on unaudited management accounts. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 28 March 2015.

Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities.

 

    

Recognised
values

on acquisition

 
     £000  

Acquiree’s net assets at the acquisition date:

  

Property, plant and equipment

     2,649   

Intangible assets

     7,736   

Inventories

     811   

Trade and other receivables

     998   

Cash and cash equivalents

     64   

Trade and other payables

     (1,194

Deferred tax liabilities

     (2,031
  

 

 

 

Net identifiable assets and liabilities

     9,033   
  

 

 

 

Consideration paid:

  

Initial cash price paid

     6,988   

Equity instruments issued

     375   

Loan notes issued

     1,473   

Deferred consideration

     3,765   

Contingent consideration at fair value

     1,564   
  

 

 

 

Total consideration

     14,165   
  

 

 

 

Goodwill arising from acquisition

     5,132   
  

 

 

 

 

16


Notes (continued)

 

2 Acquisitions of subsidiaries (continued)

 

Goodwill has arisen on the acquisition because of the location of the manufacturing plant and potential to expand this to service the European market thus reducing supply chain costs as well as the expertise of the assembled workforce both in terms of products and markets. None of the goodwill recognised is expected to be deductible for tax purposes.

13,940 of Ordinary A shares were issued and the fair value determined through an enterprise valuation based on an expected EBITDA multiple.

Contingent consideration

The group has agreed to pay the vendors additional consideration on the purchase of land adjoining the manufacturing site, complete with relevant planning permission.

The overall purchase price is subject to reduce based on the net debt position of the company at an agreed date. The audit of this net debt position is still to be finalised. The amount recognised in these financial statements represents management’s best estimate of the adjustment at £nil.

Fair values determined on a provisional basis

Given the proximity of the acquisition to the period-end, the fair values of the assets and liabilities of the companies is provisional and continue to be assessed. Should further information be obtained within one year of the acquisition date about facts and circumstances existing at acquisition, those provisional amounts may require adjustments.

Acquisition related costs

The group incurred acquisition related cost of £250,600 related to due diligence costs, tax advice and legal fees. These costs have been included in administrative expenses in the group’s consolidated statement of comprehensive income.

Acquired trade and other receivables

There is no difference between the gross contractual value and fair value of acquired receivables.

 

3 Revenue

 

    

53 week period
ended

1 April 2016

    

52 week period
ended

27 March 2015

 
     £000      £000  

Analysis by geographical market

     

United Kingdom

     55,028         44,237   

Europe

     12,096         9,076   

Rest of the World

     10,719         3,265   
  

 

 

    

 

 

 

Total revenues

     77,843         56,578   
  

 

 

    

 

 

 

Revenue is wholly attributable to the principal activity of the company.

 

17


Notes (continued)

 

4 Expenses

Included in profit/loss are the following:

 

    

53 week period
ended

1 April 2016

    

52 week period
ended

27 March 2015

 
     £000      £000  

Depreciation of tangible fixed assets

     2,524         1,933   

Amortisation of intangible assets

     482         36   

Operating lease rentals

     300         161   

Gain on disposal of tangible fixed assets

     (1      (16

Amortisation of government grants

     (10      (10
  

 

 

    

 

 

 

 

5 Finance income and expenses

Recognised in profit or loss

 

    

53 week period
ended

1 April 2016

£000

    

52 week period
ended

27 March 2015

£000

 

Finance income

     

Change in fair value of derivatives

     133         —     

Interest income on other loans

     69         65   

Net foreign exchange gain

     2,636         —     

Payment protection insurance repayment in respect of hedging agreement

     528         —     
  

 

 

    

 

 

 

Total finance income

     3,366         65   
  

 

 

    

 

 

 

Finance expense

     

Change in fair value of derivatives

     —           (116

Interest of bank loans and overdrafts

     (2,734      (2,250

Interest on obligations under finance lease

     (5      (5

Interest on other loans and borrowings

     (10,264      (9,017

Amortisation of finance charges

     (534      (705

Net foreign exchange loss

     —           (283

Fees associated with amendments to banking facility

     (2,229      —     
  

 

 

    

 

 

 

Total finance expense

     (15,766      (12,376
  

 

 

    

 

 

 

 

18


Notes (continued)

 

6 Taxation

Recognised in the income statement

 

    

53 week period
ended

1 April 2016

    

52 week period
ended

27 March 2015

 
     £000      £000  

Current tax expense

     

Current period tax on losses for the period

     369         345   

Adjustments in respect of prior periods

     (54      152   
  

 

 

    

 

 

 

Current tax expense

     315         497   

Deferred tax expense

     

Origination and reversal of temporary differences

     438         120   

Reduction in tax rate

     (57      (5

Adjustments in respect of prior periods

     10         6   
  

 

 

    

 

 

 

Deferred tax expense

     391         121   
  

 

 

    

 

 

 

Total tax expense

     706         618   
  

 

 

    

 

 

 

Reconciliation of effective tax rate

 

    

53 week period
ended

1 April 2016

    

52 week period
ended

27 March 2015

 
     £000      £000  

Loss for the period

     (3,873      (4,840

Total tax expense

     706         618   
  

 

 

    

 

 

 

Loss on ordinary activities before taxation

     (3,167      (4,222
  

 

 

    

 

 

 

Tax using the UK corporation tax rate of 20.25% (period ended 27 March 2015: 21.01%)

     (641      (887

Tax rate differences

     (99      (4

Non-deductible expenses

     1,451         1,245   

Depreciation on ineligibles

     46         106   

Adjustment in prior period

     (45      158   

Current period losses for which no deferred tax was recognised

     (6      —     
  

 

 

    

 

 

 

Total tax expense

     706         618   
  

 

 

    

 

 

 

Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015. The deferred tax asset and liabilities at 1 April 2016 have been calculated based on these rates.

An additional reduction to 17% (effective from 1 April 2020) was announced in the Budget on 16 March 2016. This will reduce the company’s future current tax charge accordingly.

 

19


Notes (continued)

 

7 Property, plant and equipment

 

     Freehold
property
     Leasehold
buildings
     Plant and
machinery
     Motor
Vehicles
   

Fixtures &

fittings

    Total  
     £000      £000      £000      £000     £000     £000  

Cost

               

Balance at 29 March 2014

     1,827         3,000         11,739         329        974        17,869   

Additions

     472         500         2,570         19        155        3,716   

Disposals

     —           —           —           (100     —          (100
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 27 March 2015

     2,299         3,500         14,309         248        1,129        21,485   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 28 March 2015

     2,299         3,500         14,309         248        1,129        21,485   

Acquisitions through business combinations

     831         173         3,216         170        147        4,537   

Additions

     677         305         9,880         66        400        11,328   

Disposals

     —           —           —           (43     (29     (72

Effect of movements in foreign exchange

     —           47         501         —          23        571   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 1 April 2016

     3,807         4,025         27,906         441        1,670        37,849   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Depreciation and impairment

               

Balance at 29 March 2014

     163         1,349         4,164         183        376        6,235   

Depreciation charge for the period

     29         478         1,288         36        102        1,933   

Disposals

     —           —           —           (81     —          (81
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 27 March 2015

     192         1,827         5,452         138        478        8,087   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 28 March 2015

     192         1,827         5,452         138        478        8,087   

Depreciation charge for the period

     41         211         2,058         83        131        2,524   

Disposals

     —           —           —           (24     (5     (29

Effect of movements in foreign exchange

     —           2         25         5        1        33   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 1 April 2016

     233         2,040         7,535         202        605        10,615   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net book value

               

At 29 March 2014

     1,664         1,651         7,575         146        598        11,634   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

At 27 March 2015

     2,107         1,673         8,857         110        651        13,398   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

At 1 April 2016

     3,574         1,985         20,371         239        1,065        27,234   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Leased property, plant and machinery

At of 1 April 2016 the net carrying amount of property, plant and machinery held under finance leases was £85,182 (27 March 2015: £53,000). The leased property, plant and machinery secures lease obligations (see note 13).

 

20


Notes (continued)

 

8 Intangible assets

 

     Brand      Customer
relationship
     Trademark      Software
costs
     Goodwill      Total  
     £000      £000      £000      £000      £000      £000  

Cost or valuation

                 

Balance at 29 March 2014

     —           —           —           190         77,561         77,751   

Additions

     —           —           50         201         —           251   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at 27 March 2015

     —           —           50         391         77,561         78,002   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at 28 March 2015

     —           —           50         391         77,561         78,002   

Acquisitions through business combinations

     4,040         9,040         —           36         15,662         28,778   

Additions

     —           —           —           207         —           207   

Effects of movements in foreign exchange

     —           —           —           —           1,903         1,903   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at 1 April 2016

     4,040         9,040         50         634         95,126         108,890   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Amortisation and impairment

                 

Balance at 29 March 2014

     —           —           —           55         —           55   

Amortisation for the period

     —           —           —           36         —           36   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at 27 March 2015

     —           —           —           91         —           91   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at 28 March 2015

     —           —           —           91         —           91   

Amortisation for the period

     116         303         5         58         —           482   

Effects of movements in foreign exchange

     —           —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at 1 April 2016

     116         303         5         149         —           573   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net book value

                 

At 29 March 2014

     —           —           —           135         77,561         77,696   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

At 27 March 2015

     —           —           50         300         77,561         77,911   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

At 1 April 2016

     3,924         8,737         45         485         95,126         108,317   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Amortisation and impairment charge

The amortisation and impairment charge is recognised in the following line items in the income statement:

 

    

53 week period
ended

1 April 2016
£000

    

52 week period
ended

27 March 2015

£000

 

Other operating expenses

     482         36   
  

 

 

    

 

 

 

 

21


Notes (continued)

 

8 Intangible assets (continued)

 

Impairment loss and subsequent reversal

Goodwill considered significant in comparison to the Group’s total carrying amount of such assets have been allocated to cash generating units as follows:

 

    

Goodwill

1 April 2016

£000

    

27 March 2015

£000

 

Yarra Valley Snack Foods

     12,433         —     

Aroma Snacks

     5,132         —     

Tyrrells Potato Crisps and Glennans

     77,561         77,561   

The recoverable amount of Yarra Valley Snack Foods has been calculated with reference to its value in use. The key assumptions of this calculation are shown below:

 

     1 April 2016  

Period on which management approved forecasts are based

     5yrs   

Growth rate applied beyond approved forecast period

     2.6

Discount rate

     13.9

The growth rates used in value in use calculation reflect the average growth rate in Australian GDP over the next 40 years.

In assessing the value in use a pre-tax discount rate of 13.9% has been applied, being based on the CGUs weighted average cost of capital.

The recoverable amount of Aroma Snacks has been calculated with reference to its value in use. The key assumptions of this calculation are shown below:

 

     1 April 2016  

Period on which management approved forecasts are based

     5yrs   

Growth rate applied beyond approved forecast period

     1.0

Discount rate

     10.7

The growth rates used in value in use calculation reflect the average growth rate in German GDP over the next 40 years.

In assessing the value in use a pre-tax discount rate of 10.7% has been applied, being based on the CGUs weighted average cost of capital

The recoverable amount of Tyrrells Potato Crisps & Glennans has been calculated with reference to its value in use. The key assumptions of this calculation are shown below:

 

    

1 April

2016

   

27 March

2015

 

Period on which management approved forecasts are based

     5yrs        5yrs   

Growth rate applied beyond approved forecast period

     2.1     2.1

Discount rate

     10.0     10.0

The growth rates used in value in use calculation reflect the average growth rate in UK GDP over the next 40years.

In assessing the value in use a pre-tax discount rate of 10.0% has been applied, being based on the CGUs weighted average cost of capital.

 

22


Notes (continued)

 

9 Deferred tax assets and liabilities

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

 

     Assets
1 April 2016
£000
     27 March 2015
£000
     Liabilities
1 April 2016
£000
     27 March 2015
£000
 

Property, plant and equipment

     —           —           723         607   

Intangible assets

     —           —           3,798         —     

Interest-bearing loans and borrowings

     (14      —           —           (355

Provisions

     (2      (11      —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Tax (assets) / liabilities

     (16      (11      4,521         252   

Net of tax liabilities/(assets)

     16         11         (16      (11
  

 

 

    

 

 

    

 

 

    

 

 

 

Net tax liabilities

     —           —           4,505         241   
  

 

 

    

 

 

    

 

 

    

 

 

 

Movement in deferred tax during the period

 

     27 March
2015
£000
    

Recognised

in income
£000

    

Acquired in

business
combination
£000

    

1 April

2016
£000

 

Property, plant and equipment

     607         116         —           723   

Intangible assets

     —           (75      3,873         3,798   

Interest-bearing loans and borrowings

     (355      341         —           (14

Tax value of loss carry-forwards utilised

     (11      9         —           (2
  

 

 

    

 

 

    

 

 

    

 

 

 
     241         391         3,873         4,505   
  

 

 

    

 

 

    

 

 

    

 

 

 

Movement in deferred tax during the prior period

 

    

29 March

2014
£000

    

Recognised

in income
£000

    

27 March

2015
£000

 

Property, plant and equipment

     482         125         607   

Interest-bearing loans and borrowings

     —           (355      (355

Provisions

     (74      63         (11

Tax value of loss carry-forwards utilised

     (288      288         —     
  

 

 

    

 

 

    

 

 

 
     120         121         241   
  

 

 

    

 

 

    

 

 

 

 

23


Notes (continued)

 

10 Inventories

 

     1 April 2016      27 March 2015  
     £000      £000  

Raw materials and consumables

     4,113         3,236   

Finished goods and goods for resale

     2,820         774   
  

 

 

    

 

 

 
     6,933         4,010   
  

 

 

    

 

 

 

Raw materials, consumables and changes in finished goods recognised as cost of sales in the period amounted to £34,863,000 (27 March 2015: £24,856,000). The write-down of inventories to net realisable value amounted to £54,000 (27 March 2015: £19,000). The write-down is included in cost of sales.

 

11 Trade and other receivables

 

     1 April 2016      27 March 2015  
     £000      £000  

Trade receivables, net of allowance of £143,000 in 2016 and £137,000 in 2015

     20,166         15,288   

VAT recoverable

     216         363   

Amounts owed by related parties

     2,437         2,368   

Other receivables and prepayments

     1,753         2,340   
  

 

 

    

 

 

 

Non-current

     2,437         2,368   

Current

     22,135         17,991   
  

 

 

    

 

 

 
     24,572         20,359   
  

 

 

    

 

 

 

 

12 Cash and cash equivalents

 

     1 April 2016      27 March 2015  
     £000      £000  

Cash and cash equivalents per balance sheet

     6,031         6,382   
  

 

 

    

 

 

 

Cash and cash equivalents per cash flow statement

     6,031         6,382   
  

 

 

    

 

 

 

 

24


Notes (continued)

 

13 Loans and borrowings

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 17.

 

     1 April 2016      27 March 2015  
     £000      £000  

Non-current liabilities

     

Secured bank loans

     55,137         29,443   

Unsecured loan notes

     95,284         81,214   

Loan from Crisps Holdings Limited

     2,184         2,120   

Finance lease liabilities

     30         16   
  

 

 

    

 

 

 
     152,635         112,793   
  

 

 

    

 

 

 

Current liabilities

     

Current portion of secured bank loans

     1,746         2,123   

Current portion of finance lease liabilities

     22         34   
  

 

 

    

 

 

 
     1,768         2,157   
  

 

 

    

 

 

 

Terms and debt repayment schedule

 

     Currency     

Nominal

interest rate

   

Year of

maturity

     Face value      Carrying
amount
     Face value      Carrying
amount
 
                         1 April 2016      1 April 2016      27 March 2015      27 March 2015  
                         £000      £000      £000      £000  

Bank loan facility A

     GBP         LIBOR+ 3.5-4.25     2020         10,400         10,312         12,180         11,373   

Bank loan facility B

     GBP         LIBOR+ 4.5-4.75     2020         26,000         25,753         21,000         19,442   

Capital expenditure facility

     GBP         LIBOR+ 3.5-4.25     2020         12,099         11,977         750         750   

Uncommitted accordion facility

     GBP         LIBOR+ 4.25-4.5     2020         9,000         8,915         —           —     

Redeemable PIK notes

     GBP         12     2023         97,610         95,210         83,646         81,215   

Crisps Holdings Limited loan

     GBP         3-4     2023         2,184         2,184         2,120         2,120   

Finance lease liabilities

     GBP         5-6     2018         52         52         50         50   
          

 

 

    

 

 

    

 

 

    

 

 

 
             157,345         154,403         119,746         114,950   
          

 

 

    

 

 

    

 

 

    

 

 

 

Finance lease liabilities

Finance lease liabilities are payable as follows:

 

    

Minimum
lease
payments

1 April 2016

    

Interest

1 April 2016

    

Principal

1 April 2016

    

Minimum
lease
payments

27 March
2015

    

Interest

27 March
2015

    

Principal

27 March
2015

 
     £000      £000      £000      £000      £000      £000  

Less than one year

     22         2         20         34         4         30   

Between one and five years

     30         3         27         16         2         14   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     52         5         47         50         6         44   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

25


Notes (continued)

 

14 Trade and other payables

 

     1 April 2016      27 March 2015  
     £000      £000  

Current

     

Trade payables

     14,158         9,736   

Other tax and social security

     937         993   

Other trade payables

     67         167   

Accruals and deferred income

     11,331         4,579   

Government grants

     10         10   
  

 

 

    

 

 

 
     26,503         15,485   

Non-current

     

Government grants

     6         16   
  

 

 

    

 

 

 
     26,509         15,501   
  

 

 

    

 

 

 

 

15 Employee benefits

Defined contribution plans

The Group operates a defined contribution pension scheme. The pension cost charge for the 53 week period represents contributions payable by the company to the scheme and amounts to £233,765 (52 week period ended 27 March 2015: £44,000). As of 1 April 2016, contributions amounting to £81,250 (27 March 2015: £8,000) were payable to the scheme and are included in trade and other payables.

 

16 Capital and reserves

Share capital

 

     Ordinary “A” Shares      Ordinary “B” Shares      Ordinary “C” Shares      Deferred shares  
In number of shares   

1 April

2016

     27 March
2015
    

1 April

2016

     27 March
2015
    

1 April

2016

     27 March
2015
     1 April
2016
     27 March
2015
 

On issue at the start of the period

     878,704         876,536         101,700         100,800         5         5         1         1   
                          —     

Issued for cash

     238         2,168         9,090         900         3         —           —           —     

Issued as consideration (see note 2)

     35,625         —           —           —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

On issue at the end of the period – fully paid

     914,567         878,704         110,790         101,700         8         5         1         1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     1 April 2016      27 March 2015  
     £000      £000  

Allotted, called up and fully paid

     

Ordinary “A” shares of £0.01 each

     9         9   

Ordinary “B” shares of £0.01 each

     1         1   

Ordinary “C” shares of £250 each

     2         1   
  

 

 

    

 

 

 
     12         11   
  

 

 

    

 

 

 

 

26


Notes (continued)

 

16 Capital and reserves (continued)

 

During the period the Company issued 35,863 £0.01 ordinary “A” shares, 9,090 £0.01 ordinary “B” shares and three £250 ordinary “C” shares for consideration of £48,201, settled in cash (£41,098 received post period-end), and £640,000 as part of consideration for acquisitions (see note 2).

Particulars of the Company’s share capital

Deferred shares:

The deferred shares have no voting rights nor any right to receive any distribution which the company may determine to distribute. The deferred shares are not redeemable.

Class A Ordinary shares:

Each holder of A ordinary shares and B ordinary shares who is an individual or a corporate entity has one vote for each A ordinary share and B ordinary share of which that person is the holder. On any shareholder vote in respect of any resolution of the company in order to effect an emergency share issue or an acquisition issue, the shares held by the investors shall confer on the investors the right to exercise no less than 76% of the total number of votes of shareholders exercisable at any general meeting, provided that this shall not affect the voting rights of the C ordinary shares. Subject to the Board recommending (with Investor consent) payment of the same, holders of A ordinary shares and B ordinary shares shall have the right to receive any distribution which the company may determine to distribute pari passu with the holders of all A ordinary shares, and B ordinary share such that that distribution shall be paid pro-rata to the relevant holder’s holding of A ordinary shares and B ordinary shares as if the A ordinary shares and B ordinary shares constituted one class of share. The A ordinary shares are not redeemable.

Class B Ordinary shares:

Each holder of A ordinary share and B ordinary shares who is an individual or a corporate entity has one vote for each A ordinary share and B ordinary share of which that person is the holder. On any shareholder vote in respect of any resolution of the company in order to effect an emergency share issue or an acquisition issue, the shares held by the investors shall confer on the investors the right to exercise no less than 76% of the total number of votes of shareholders exercisable at any general meeting, provided that this shall not affect the voting rights of the C ordinary shares. Subject to the Board recommending (with Investor Consent) payment of the same, holders of A ordinary shares and B ordinary shares shall have the right to receive any distribution which the company may determine to distribute pari passu with the holders of all A ordinary shares and B ordinary shares, such that distributions shall be paid pro-rata to the relevant holder’s holding of A ordinary shares and B ordinary shares as if the A ordinary shares and B ordinary shares constituted one class of share. The B ordinary shares are not redeemable.

Class C Ordinary shares:

Each holder of C ordinary shares has such number of votes (if any) for the C ordinary shares (divided pro-rata between the C ordinary shares held) so as to ensure that each holder of each such C ordinary shares has (together with any voting rights such holder has pursuant to the holding of any other shares), in aggregate, 5% of the votes at a general meeting (such percentage to be calculated by reference to those other shares the holders of which are present and voting in respect of such shares), provided that if a holder of C ordinary shares has 5% or more of the voting rights as a result of his holding of other shares, then the C ordinary shares held by such holder shall carry no voting rights . Upon the transfer of a C ordinary share held by a manager, all rights attaching to such C ordinary share shall cease to have effect and such transferred C ordinary share shall have no voting or economic rights and shall be automatically treated as a deferred share for the purposes of the Articles. The C ordinary shares have no right to receive any distribution which the company may determine to distribute. The C ordinary shares are not redeemable.

 

27


Notes (continued)

 

16 Capital and reserves (continued)

 

Particulars of Topco’s share capital (continued)

 

Return of Capital rights

On a winding-up, liquidation or other return of capital (except on a redemption or purchase by the company of any shares), the surplus assets of the company available for distribution amongst the holders of shares after the payment of its liabilities shall be applied in the following order of priority:

 

a) First, in paying to each shareholder of A ordinary shares and B ordinary shares the acquisition cost of each A ordinary share and B ordinary share, in respect of which each such A ordinary share and B ordinary share shall rank parri passu, such that the distribution shall be paid pro-rata to the relevant shareholder’s holding of A ordinary shares and B ordinary shares;

 

b) Second, in paying to each shareholder of C ordinary shares the acquisition cost of each C ordinary share, in respect of which each C ordinary share shall rank parri passu in respect of any such distribution being made, such that any distribution being made in respect of the C ordinary shares shall be made pro-rata to the relevant shareholder’s holding of C ordinary shares;

 

c) Third, in paying to the holders of A ordinary shares and B ordinary shares the aggregate sum of up to £500,000 in respect of which each such A or share and B ordinary share shall rank parri passu such that the distribution shall be paid pro-rata to the relevant holder’s holding of A ordinary shares and B ordinary share;

 

d) Fourth, in paying each holder of deferred shares (if any) in issue, an amount in respect of each deferred share held by them which is equal to the acquisition cost of the A ordinary share from which such deferred share was converted in accordance with the company’s articles; and

 

e) The balance of such assets, if any, shall be distributed to the holders of the A ordinary shares , the B ordinary shares and the C ordinary shares, in respect of which each such A ordinary share, B ordinary share and C ordinary share shall rank parri passu such that the distribution shall be paid pro rata to the relevant holder’s holding of A ordinary shares, B ordinary shares and C ordinary shares provided that the maximum amount payable to the holders of C ordinary shares pursuant to this paragraph (e) shall not exceed £5,000 in aggregate.

Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary.

 

28


Notes (continued)

 

17 Financial instruments

The Group has exposure to the following risks arising from financial instruments:

 

  Credit risk

 

  Liquidity risk

 

  Currency risk

 

  Interest rate risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objective, policies and processes for measuring and managing risk, and the group’s management of capital.

Risk management framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Board of Directors oversees how management monitor compliance with the Group risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

 

(a) Credit risk

Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligation, and arises principally from the Group’s receivables from customers and investment securities.

It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The Group has established a credit policy under which each new customer is analysed individually for creditworthiness before each Group business’ standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when available, and in some cases bank references. The Group only offers terms to recognised, creditworthy third parties. In addition to this, the Group will credit insure all customers with credit limits which exceed £1,000.

Cash and debt management is a crucial part of this business and cash collection and balances due are closely monitored to ensure write-downs are minimised. Debtor days outstanding are closely monitored throughout the period and action is taken promptly when payment terms are breached. As a result of this, the Group’s history of bad debt losses is not significant.

 

29


Notes (continued)

 

17 Financial instruments (continued)

 

Exposure to credit risk

The maximum exposure to credit risk at the balance sheet date by class of financial instrument was:

 

     1 April 2016      27 March 2015  
     £000      £000  

Trade and other receivables

     24,572         20,359   

Cash and cash equivalents

     6,031         6,382   
  

 

 

    

 

 

 
     30,603         26,741   
  

 

 

    

 

 

 

The concentration of credit risk for trade receivables at the balance sheet date by geographic region was:

 

     1 April 2016      27 March 2015  
     £000      £000  

United Kingdom

     13,081         12,769   

Europe

     4,223         1,992   

Rest of the world

     2,862         527   
  

 

 

    

 

 

 
     20,166         15,288   
  

 

 

    

 

 

 

Credit quality of financial assets and impairment losses

The aging of trade receivables at the balance sheet date was:

 

     Gross      Impairment      Gross      Impairment  
     1 April 2016      1 April 2016      27 March 2015      27 March 2015  
     £000      £000      £000      £000  

Not past due

     11,603         —           7,853         —     

Past due 0-30 days

     6,944         —           5,570         —     

Past due 31- 60 days

     1,242         —           1,007         —     

Past due 61-120 days

     213         —           443         —     

More than 120 days

     307         (143      549         (137
  

 

 

    

 

 

    

 

 

    

 

 

 
     20,309         (143      15,425         (137
  

 

 

    

 

 

    

 

 

    

 

 

 

 

30


Notes (continued)

 

17 Financial instruments (continued)

 

(a) Credit risk (continued)

 

The Group believes that the unimpaired amounts that are past due by more than 60 days are still collectible, based on historic payment behaviour and extensive analysis of customer credit risk, including underlying customers’ credit ratings, when available. Based on the Group’s monitoring of customer credit risk, the Group believes that, except as indicated above, no impairment allowance is necessary in respect of trade receivables not past due. The movement in the allowance for impairment in respect of trade receivables during the period was as follows:

 

     1 April 2016      27 March 2015  
     £000      £000  

Balance at the start of the period

     137         244   

Impairment recognised

     (4      (8

Impairment provided/(released)

     10         (99
  

 

 

    

 

 

 

Balance at the end of the period

     143         137   
  

 

 

    

 

 

 

The allowance account for trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, both under normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The group has access to a revolving cash flow facility of £5 million, on which the company bears a charge of LIBOR + between 3.5% and 4.25% per annum. The group also has access to a Capex facility of £18 million, on which the Company bears a charge of LIBOR + between 3.5% and 4.25% per annum. At 1 April 2016, the capital expenditure facility had been partly utilised and the balance at this date was £12,100,000 (27 March 2015: £750,000). Interest accrued on these facilities at 1 April 2016 amounted to £50,000 (27 March 2015: £32,000).

The table below summarises the maturity profile of the Group’s financial liabilities at 1 April 2016 and 27 March 2015 based on contractual undiscounted payments of interest and principal.

1 April 2016

 

     Carrying
amount
     Contractual
cash flows
     Within 1
year
     1-2 years      2-5 years     

More than

5 years

 
     £000      £000      £000      £000      £000      £000  

Non-derivative financial liabilities

                 

Secured bank loans

     56,957         70,411         4,724         4,970         34,270         26,447   

Finance lease liabilities

     52         52         22         18         12         —     

Unsecured redeemable PIK notes

     95,210         224,284         —           —           —           224,284   

Loan from parent

     2,184         3,146         —           —           —           3,146   

Trade and other payables*

     26,509         26,509         26,503         6         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     180,912         324,402         31,249         4,994         34,282         253,877   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial liabilities

                 

Interest rate swaps

     80         80         80         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     80         80         80         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

31


Notes (continued)

 

17 Financial instruments (continued)

 

(b) Liquidity risk (continued)

 

27 March 2015

 

     Carrying
amount
     Contractual
cash flows
    

Within

1 year

    

1-2

years

    

2-5

years

    

More
than

5 years

 
     £000      £000      £000      £000      £000      £000  

Non-derivative financial liabilities

                 

Secured bank loans

     31,565         54,179         3,449         3,509         11,435         35,786   

Finance lease liabilities

     50         50         34         9         7         —     

Unsecured redeemable PIK notes

     81,215         215,203         —           —           —           215,203   

Management loan notes

     2,120         3,146         —           —           —           3,146   

Trade and other payables*

     15,501         15,501         15,485         10         6         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     130,451         288,079         18,968         3,528         11,448         254,135   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial liabilities

                 

Interest rate swaps

     213         213         —           213         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     213         213         —           213         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* Excludes derivatives (shown separately).

 

(c) Currency risk

In addition to the functional currency (Sterling), the Group buys and sells in other currencies. The Group manages the movement of funds via individual bank accounts relating to each currency, thereby reducing its exposure to exchange rate fluctuations.

Exposure to currency risk

The Group’s exposure to foreign currency risk denominated in foreign currency is as follows:

1 April 2016

 

     Sterling     Euro     US Dollar     AUD     Other     Total  
     £000     £000     £000     £000     £000     £000  

Cash and cash equivalents

     3,272        1,490        184        675        410        6,031   

Trade receivables

     14,247        3,043        722        2,021        133        20,166   

Secured bank loans

     (50,358     (6,599     —          —          —          (56,957

Unsecured loans

     (95,210     —          —          —          —          (95,210

Trade payables

     (10,468     (2,274     (133     (1,281     (2     (14,158
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net balance sheet exposure

     (138,517     (4,340     773        1,415        541        (140,128
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

32


Notes (continued)

 

17 Financial instruments (continued)

 

(c) Currency risk (continued)

 

27 March 2015

 

     Sterling     Euro     US Dollar     AUD     Other      Total  
     £000     £000     £000     £000     £000      £000  

Cash and cash equivalents

     2,511        3,159        171        342        199         6,382   

Trade receivables

     13,610        864        696        40        78         15,288   

Secured bank loans

     (31,565     —          —          —          —           (31,565

Unsecured loans

     (81,215     —          —          —          —           (81,215

Trade payables

     (9,096     (609     (25     (6     —           (9,736
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net balance sheet exposure

     (105,755     3,414        842        376        277         (100,846
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

The following significant exchange rates applied:

 

     Average rate      Reporting date spot rate  
    

53 week period
ended

1 April

2016

    

52 week period
ended

27 March

2015

    

1 April

2016

    

27 March

2015

 
     £000      £000      £000      £000  

USD

     1.505         1.591         1.435         1.480   

EUR

     1.364         1.263         1.260         1.359   

AUD

     2.042         1.865         1.873         1.900   

Sensitivity analysis

A 5% percent weakening of the following currencies against the pound sterling at 1 April 2016 would have increased (decreased) equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date.

This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant.

The analysis is performed on the same basis for 27 March 2015.

 

2016    EUR     USD     AUD     CAD     Total  

Cash and equivalents

     1,405        15        11        410        1,841   

Trade receivables

     2,199        579        85        133        2,996   

Secured bank loans

     (6,599     —          —          —          (6,599

Unsecured loans

     —          —          —          —          —     

Trade payables

     (1,661     (112     (19     (2     (1,794
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     (4,656     482        77        541        (3,555
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Change in rate

     -5.0     -5.0     -5.0     -5.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Change in profit/(loss)

     (233     24        4        27        (178
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

33


Notes (continued)

 

17 Financial instruments (continued)

 

(c) Currency risk (continued)

 

2015    EUR     USD     AUD     CAD     Total  

Cash and equivalents

     3,159        4        342        199        3,704   

Trade receivables

     864        622        41        78        1,605   

Secured bank loans

     —          —          —          —          —     

Unsecured loans

     —          —          —          —          —     

Trade payables

     (609     (3     (7     —          (619
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     3,414        623        376        277        4,690   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Change in rate

     -5.0     -5.0     -5.0     -5.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Change in profit/(loss)

     171        31        19        14        235   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

A 5% percent strengthening of the above currencies against the pound sterling at 1 April 2016 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

 

(d) Interest rate risk

Interest rate risk exposure

At the balance sheet date the interest rate profile of the Group’s interest-bearing financial instruments was as follows:

 

     1 April 2016      27 March 2015  
     £000      £000  

Fixed rate instruments

     

Financial liabilities

     (95,262      (81,265 ) 
  

 

 

    

 

 

 
     (95,262      (81,265
  

 

 

    

 

 

 

Variable rate instruments

     

Financial assets

     2,178         2,118   

Financial liabilities

     (59,221      (33,898
  

 

 

    

 

 

 
     (57,043      (31,780
  

 

 

    

 

 

 

 

34


Notes (continued)

 

17 Financial instruments (continued)

 

Interest risk management

The Group is exposed to interest rate risk as entities in the Group borrow funds at both floating and fixed interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts.

Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating interest rate amounts calculated on agreed notional principal amounts. The fair value of interest rate swaps at the reporting date is determined by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract, and is disclosed below. The average interest rate is based on the outstanding balances at the end of the financial period.

The following table details the notional principal amounts and remaining terms of interest rate swap contracts at the reporting date:

Interest rate swap contracts:

 

     Average contract rate      Notional principal amount      Fair value  
    

53 week
period
ended

1 April

2016

    

52 week
period

ended

1 April

2015

    

1 April

2016

    

27 March

2015

    

1 April

2016

   

27 March

2015

 
     %      %      £      £      £     £  

Within 1 years

     1.34         —           20,630         —           (80     —     

1-2 years

     —           1.34         —           20,630         —          (213

Sensitivity analysis

An increase of 25 basis points in interest rates throughout the reporting period would have decreased equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the prior balance sheet date and had been applied to risk exposures existing at that date.

This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect of financial instruments with variable interest rates, financial instrument at fair value through profit or loss or available for sale with fixed interest rates and the fixed rate element of interest rate swaps. The analysis is performed on the same basis for period ended 27 March 2015.

 

    

1 April

2016

    

27 March

2015

 
     £000      £000  

Equity

     

Decrease

     26         15   
    

53 week period
ended

1 April

2016

    

52 week period
ended

27 March

2015

 
     £000      £000  

Profit or loss

     

Decrease

     11         15   

 

35


Notes (continued)

 

17 Financial instruments (continued)

 

(e) Capital management

The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to optimise returns to its Shareholders. The Board’s policy is to retain a strong capital base so as to maintain investor, creditor, and market confidence and to sustain future growth. The Directors regularly monitor the level of capital in the Group to ensure that this can be achieved. There were no changes in the Group’s approach to capital management during the period.

The Group’s net debt to adjusted equity ratio at the reporting date was as follows.

 

     1 April 2016      27 March 2015  
     £000      £000  

Net debt

     148,372         108,568   

Total equity

     (12,089      (8,881

Gearing ratio

     (12.27      (12.22

 

(f) Fair value of financial instruments

Fair value disclosures

The fair value of each class of financial assets and liabilities is the carrying amount, based on the following assumptions:

 

Trade receivables, trade payables,

short term deposits and borrowings

   The fair value approximates to the carrying value because of the short maturity of these instruments.
Long term borrowings    The fair value of bank loans and other loans approximates to the carrying value reported in the statement of financial position.
Interest rate swaps    The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date
Contingent consideration    The expected payment reflects the calculated cash out flows under possible earn out scenarios and is discounted using a risk-adjusted discount rate

Fair value hierarchy

 

  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

 

  Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

 

  Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

All financial instruments carried at fair value have been measured using a Level 2 valuation method.

 

36


Notes (continued)

 

17 Financial instruments (continued)

 

(f) Fair value of financial instruments (continued)

 

The fair values of all financial assets and financial liabilities by class together with their carrying amounts shown in the balance sheet are as follows:

 

     1 April 2016      27 March 2015  
    

Carrying

value

    

Fair

value

    

Carrying

value

    

Fair

value

 
     £000      £000      £000      £000  

Cash and cash equivalents

     6,031         6,031         6,382         6,382   

Trade and other receivables

     24,572         24,572         20,359         20,359   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

     30,603         30,603         26,741         26,741   
  

 

 

    

 

 

    

 

 

    

 

 

 

Trade and other payables

     (26,509      (26,509      (15,501      (15,501

Borrowings at amortised costs

     (154,403      (154,403      (114,950      (114,950

Interest rate swaps used for hedging

     (80      (80      (213      (213
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

     (180,992      (180,992      (130,664      (130,664
  

 

 

    

 

 

    

 

 

    

 

 

 

 

18 Operating leases

Non-cancellable operating lease rentals are payable as follows:    

 

     1 April 2016      27 March 2015  
     £000      £000  

Less than one year

     432         215   

Between one and five years

     953         809   

More than five years

     408         552   
  

 

 

    

 

 

 
     1,793         1,576   
  

 

 

    

 

 

 

During the 53 week period £300,000 was recognised as an expense in the income statement in respect of operating leases (52 week period ended 27 March 2015: £161,000).

 

19 Commitments

Capital commitments

During the 53 week period ended 1 April 2016, the Group entered into contracts to purchase property, plant and equipment for £2,941,000 of which £Nil was held in other debtors as deposits (27 March 2015: Capital commitments amounted to £656,000 for new machinery of which £272,000 was held in other debtors as deposits).

 

20 Contingencies

On 1 August 2013, a subsidiary of Crisps Topco Limited, Crisps Midco 1 Limited and its subsidiaries entered into a joint and several guarantee in respect of the bank borrowings.

At 1 April 2016, the contingent liability in respect of this arrangement amount to £57,500,000 (27 March 2015: £33,930,000).

 

37


Notes (continued)

 

21 Related parties

Transactions with key management personnel

Directors of the Company and their immediate relatives control 10.3% of the voting shares of the Company.

i. Loans to directors

At 1 April 2016, the principal amount of unsecured loans advanced to directors was £2,250,000 (27 March 2015: £2,250,000) being made up of two tranches of £2,000,000 (‘2013 tranche’) and £250,000 (‘2015 tranche’) respectively.

On the 2013 tranche, interest is payable at the ‘official rate of interest’ for the purposes of part 3, chapter 7 of the Incomes Tax (Earnings and Pensions) Act 2003, being 3% during the 53 week period ended 1 April 2016 (52 week period ended 27 March 2015: 3.25%). The loans are repayable in cash in full at the earlier of 4 August 2023, or when the directors cease to be shareholders of the Company, or receipt by the directors of consideration due to the borrower on the sale of the Company. At 1 April 2016, the balance outstanding was £2,179,000 (27 March 2015: £2,118,000) and is included in ‘trade and other receivables’ (see Note 11).

On the 2015 tranche, interest is payable at the higher of 4%, or the ‘official rate of interest’ for the purposes of part 3, chapter 7 of the Incomes Tax (Earnings and Pensions) Act 2003, being 3% during the 53 week period ended 1 April 2016 (52 week period ended 27 March 2015: 3.25%). The loans are repayable in cash in full at the earlier of 16 March 2020, or when the directors cease to be shareholders of the Company, or receipt by the directors of consideration due to the borrower on the sale of the Company. At 1 April 2016, the balance outstanding was £258,000 (27 March 2015: £250,000) and is included in ‘trade and other receivables’ (see Note 11).

ii. Loan notes held by key management personnel

At 1 April 2016, the principal amount of unsecured loan notes in Crisps Midco 2 Limited (a wholly owned subsidiary of the Group) held by key management personnel totalled £5,688,000 (27 March 2015: £1,923,000). Interest is payable at 12%, and the loans are repayable in cash in full on 4 August 2023. At 1 April 2016, the balance outstanding was £6,496,000 (27 March 2015: £2,294,000) and is included in ‘loans and borrowings’ (see Note 13).

iii. Key management personnel compensation

The compensation of key management personnel (including the directors) is as follows:

 

    

53 week period
ended

1 April 2016

    

52 week period
ended

27 March 2015

 
     £000      £000  

Key management remuneration including social security costs

     1,758         1,585   

Company contributions to money purchase pension schemes

     2         1   

Compensation for loss of office

     43         163   
  

 

 

    

 

 

 
     1,803         1,749   
  

 

 

    

 

 

 

 

38


Notes (continued)

 

21 Related parties (continued)

 

Other related party transactions

 

     Transaction values      Balance outstanding as at  
    

53 week period
ended

1 April 2016

    

52 week period
ended

27 March 2015

    

1 April

2016

    

27 March

2015

 
     £000      £000      £000      £000  

Management recharges payable

           

Other related parties

     (100      (103      (67      (167

Loan notes payable

           

Ultimate parent of the Group

     (9,827      (8,762      (93,298      (83,558

Loans receivable

           

Ultimate parent of the Group

     102         —           102         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

The ultimate parent and controlling party is Crisps Holdings Limited.

 

22 Subsequent events

The entire share capital of Crisps Topco Limited and all of its subsidiary companies was sold to Thunderball Bidco Limited, a wholly-owned subsidiary of Amplify Snack Brands, Inc. on 2 September 2016.

Subsequent events have been evaluated through to 14 November 2016.

 

23 Explanation of transition to Adopted IFRSs

As stated in note 1, these are the Group’s first consolidated financial statements prepared in accordance with Adopted IFRSs.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the 53 week period ended 1 April 2016, the comparative information presented in these financial statements for the 52 week period ended 27 March 2015 and in the preparation of an opening IFRS balance sheet at 29 March 2014 (the Group’s date of transition).

In preparing its opening IFRS balance sheet, the Group has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP to Adopted IFRSs has affected the Group’s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.

 

39


Notes (continued)

 

23 Explanation of transition to Adopted IFRSs (continued)

 

Reconciliation of equity

 

            29 March 2014     27 March 2015  
            UK GAAP    

Effect of

transition to
Adopted
IFRSs

    Adopted
IFRSs
    UK GAAP     Effect of
transition to
Adopted
IFRSs and
other
adjustments
    Adopted
IFRSs
 
     Note      £000     £000     £000     £000     £000     £000  

Non-current assets

               

Property, plant and equipment

     a         11,769        (135     11,634        13,698        (300     13,398   

Intangible assets

     a,d         77,561        135        77,696        73,599        4,312        77,911   

Other financial assets

        2,053        —          2,053        2,368        —          2,368   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
        91,383        —          91,383        89,665        4,012        93,677   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current assets

               

Inventories

        3,234        —          3,234        4,010        —          4,010   

Tax receivable

        296        —          296        —          —          —     

Other financial assets

        3,803        —          3,803        3,118        —          3,118   

Trade and other receivables

     f         12,086        —          12,086        15,288        (415     14,873   

Cash and cash equivalents

        3,868        —          3,868        6,382        —          6,382   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
        23,287        —          23,287        28,798        (415     28,383   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

        114,670        —          114,670        118,463        3,597        122,060   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current liabilities

               

Bank loans

        827        —          827        2,123        —          2,123   

Obligations under finance leases

        39        —          39        34        —          34   

Trade and other payables

        8,505        —          8,505        9,736        —          9,736   

Other tax and social security

        997        —          997        993        —          993   

Deferred government grants

        10        —          10        10        —          10   

Tax payable

        —          —          —          36        —          36   

Accruals and deferred income

     f         2,862        —          2,862        4,994        (415     4,579   

Other financial liabilities

        64        —          64        167        —          167   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
        13,304        —          13,304        18,093        (415     17,678   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities

               

Bank loans

        30,539        —          30,539        29,443        —          29,443   

Other interest-bearing loans and borrowings

     b         74,674        (96     74,578        83,497        (163     83,334   

Deferred government grants

        34        —          34        16        —          16   

Deferred tax

     b,c,e         121        (1     120        941        (700     241   

Derivative financial instruments

     c         —          97        97        —          213        213   

Obligations under finance leases

        26        —          26        16        —          16   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
        105,394        —          105,394        113,913        (650     113,263   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

        118,698        —          118,698        132,006        (1,065     130,941   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net assets

        (4,028     —          (4,028     (13,543     4,662        8,881   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity

               

Share capital

        11        —          11        11        —          11   

Share premium

        3,500        —          3,500        3,512        —          3,512   

Translation reserve

        —          —          —          (25     —          (25

Retained earnings

     b,c,d,e         (7,539     —          (7,539     (17,041     4,662        12,379   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deficit

        (4,028     —          (4,028     (13,543     4,662        8,881   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

40


Notes (continued)

 

23 Explanation of transition to Adopted IFRSs (continued)

 

Reconciliation of loss for 52 week period ended 27 March 2015

 

            52 week period ended 27 March 2015  
     Note      UK GAAP     

Effect of

transition to

Adopted IFRSs
and other
adjustments

     Adopted IFRSs  
            £000      £000      £000  

Revenue

        56,578         —           56,578   

Cost of sales

     g         (31,780      (7,282      (39,062
     

 

 

    

 

 

    

 

 

 

Gross profit

        24,798         (7,282      17,516   

Administrative expenses

     d,g         (20,721      11,294         (9,427
     

 

 

    

 

 

    

 

 

 

Operating profit before net financing costs

        4,077         4,012         8,089   

Financial income

        65         —           65   

Financial expenses

     b,c         (12,327      (49      (12,376
     

 

 

    

 

 

    

 

 

 

Net financing expense

        (12,262      (49      (12,311
     

 

 

    

 

 

    

 

 

 

Loss before tax

        (8,185      3,963         (4,222

Taxation

     b,c,e         (1,317      699         (618
     

 

 

    

 

 

    

 

 

 

Loss for the period

        (9,502      4,662         (4,840
     

 

 

    

 

 

    

 

 

 

Notes to the reconciliation of equity and loss

a - Software

Software assets presented as tangible fixed assets under old UK GAAP are presented as intangible assets under IFRS.

b - Loans and borrowings

In accordance with IFRS, the Group now recognises all loans and borrowings at amortised cost using the effective interest method. Deferred tax in relation to the recalculated loan balances has been recognised.

c - Derivative financial instruments

Under old UK GAAP, interest rate swap contracts were not recognised on the balance sheet. In accordance with IFRS, the Group now recognises all derivative transactions, measuring them at fair value. Hedge accounting is not applied and therefore all related gains or losses are recognised through the profit and loss. Deferred tax in relation to the financial instrument has also been recognised.

d - Goodwill

Under old UK GAAP, goodwill was amortised over an estimated useful life of 20 years. In accordance with IFRS, goodwill is now held at cost and reviewed for indicators of impairment on an annual basis. Goodwill in existence prior to the transition date has been held at its amortised cost at the date of transition.

e – Deferred tax

Deferred tax liabilities and taxation expense contain corrections that reduce the related balance and expense by £690,000 from the amounts in the previously issued UK GAAP financial statements at 27 March 2015.

f – Accruals and other receivables

Accruals and other receivables contain corrections that reduce the related balance in the amount of £415,000 from the amounts in the previously issued UK GAAP financial statements at 27 March 2015.

g – Administrative expense and cost of sales

Certain expenses previously classified as administrative expenses under old UK GAAP have been reclassified to cost of sales upon adoption of IFRS.

 

41

(Back To Top)

Section 4: EX-99.3 (EX-99.3)

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On September 2, 2016, Amplify Snack Brands, Inc. (the “Company” or “Amplify”) completed its previously announced acquisition of Crisps Topco Limited (“Tyrrells”), a company incorporated under the laws of England and Wales, which owns the Tyrrells international portfolio of premium snack brands, through Thunderball Bidco Limited (the “Purchaser”), a direct, wholly-owned subsidiary of the Company (the “Transaction”). The Transaction was completed pursuant to a Share Purchase Agreement (the “Purchase Agreement”) with SkinnyPop Popcorn LLC, a direct wholly-owned subsidiary of the Company (the “Purchaser Guarantor”), Crisps Holdings Limited, a company incorporated under the laws of the Cayman Islands (the “Institutional Seller”) and individual selling equityholders (the “Management Sellers”).

In connection with the Transaction, the Company entered into a Credit Agreement on September 2, 2016 (the “New Credit Facility”), which provided for term loans in the aggregate principal amount of $600 million and a $50 million revolving credit facility. The Company borrowed from the term loans in full to finance the Transaction and pay down all outstanding indebtedness under its old credit facility (collectively referred to as the “Refinancing”).

The following unaudited pro forma condensed combined statements of operations for the year ended December 31, 2015 and nine months ended September 30, 2016 combine the historical results of operations of Amplify and Tyrrells, giving effect to the Transaction and Refinancing as if they occurred on January 1, 2015. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2015, utilizes the consolidated historical results of Amplify for the year ended December 31, 2015 and the consolidated historical results of Tyrrells for the fiscal year ended April 1, 2016. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2016, utilizes the consolidated historical results of Amplify for the nine months ended September 30, 2016 and the consolidated historical results of Tyrrells from December 25, 2015 to September 1, 2016 (the day prior to acquisition date).

The pro forma adjustments do not reflect any operating efficiencies or inefficiencies which may result from the Transaction. Therefore, the unaudited pro forma condensed combined financial information is not necessarily indicative of results that would have been achieved had the business been combined during the periods presented and should not be taken as representative of future consolidated operating results. In addition, the preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of revenues and expenses during the reporting periods. These estimates and assumptions are preliminary and have been made solely for purposes of developing this pro forma information. Actual results could differ, perhaps materially, from these estimates and assumptions.


Amplify Snack Brands, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2015 (1)

(Amounts in thousands, except share and per share data)

 

     (A)             Tyrrells     (B)     (C)     (A) + (B) + (C)  
     Historical
Amplify
     Historical
IFRS
(in GBP)
    Accounting
Policies and
Reclassifications
(in GBP)
(Note 2)
    Historical
US GAAP
(in USD) (2)
    Pro Forma
Adjustments
(Note 3)
    New Amplify
Pro Forma
Condensed
Combined
 

Net sales

   $ 183,915       £ 77,843      £ —        $ 117,431      $ —        $ 301,346   

Cost of goods sold

     80,972         54,147        —          81,684        691 (a)      163,347   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     102,943         23,696        —          35,747        (691     137,999   

Operating expenses:

             

Sales and marketing

     18,527         —          5,826        8,789        —          27,316   

General and administrative

     46,261         14,463        (5,826     13,029        6,515 (b)(c)(e)      65,805   

Loss on change in fair value of contingent consideration

     1,521         —          —          —          —          1,521   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     66,309         14,463        —          21,818        6,515        94,642   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     36,634         9,233        —          13,929        (7,206     43,357   

Interest expense

     12,428         —          13,537        20,421        10,343 (f)      43,192   

Loss on extinguishment of debt

     —           —          2,229        3,363        (3,363 )(f)      —     

Other income

     —           —          (3,366     (5,078     —          (5,078

Financial income

     —           (3,366     3,366        —          —          —     

Financial expenses

     —           15,766        (15,766     —          —          —     
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     24,206         (3,167     —          (4,777     (14,186     5,243   

Income tax expense (benefit)

     14,321         706        —          1,065        (2,979 )(g)      12,407   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 9,885       £ (3,873   £ —        $ (5,842   $ (11,207   $ (7,164
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

             

Basic and diluted

   $ 0.13               $ (0.09
  

 

 

            

 

 

 

Weighted average common shares outstanding:

             

Basic and diluted (3)

     74,747,605               2,083,689 (h)      76,831,294   
  

 

 

          

 

 

   

 

 

 

 

(1)  The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2015 includes the historical results of Tyrrells’ fiscal year ended April 1, 2016. We did not recast Tyrrells’ (acquiree) fiscal year-end because it differs by 93 days or less than the Company’s (acquirer) fiscal year-end.
(2)  Tyrells’ statement of operations for the fiscal year ended April 1, 2016, converted from British pound sterling to U.S. dollars using an average exchange rate for the period presented of $1.50856 per pound.
(3)  1,186,000 restricted stock unit (RSU) awards granted to certain Tyrrells’ employees in connection with the Transaction have been excluded from the denominator because their inclusion would have an antidilutive effect on earnings per share due to the loss position for the period presented.

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Information


Amplify Snack Brands, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Nine Months Ended September 30, 2016 (1)

(Amounts in thousands, except share and per share data)

 

     (A)            Tyrrells     (B)     (C)     (A) + (B) + (C)  
     Historical
Amplify
    Historical
IFRS
(in GBP)
    Accounting
Policies and
Reclassifications
(Note 2)
    Historical
US GAAP
(in USD) (2)
    Pro Forma
Adjustments
(Note 3)
    New Amplify
Pro Forma
Condensed
Combined
 

Net sales

   $ 182,193      £ 62,376      £ —        $ 87,588      $ —        $ 269,781   

Cost of goods sold

     88,891        45,330        —          63,652        217 (a)      152,760   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     93,302        17,046        —          23,936        (217     117,021   

Operating expenses:

            

Sales and marketing

     22,551        —          6,745        9,471        —          32,022   

General and administrative

     27,688        20,750        (6,745     19,666        (11,317 )(b)(c)(d)(e)      36,037   

Gain on change in fair value of contingent consideration

     (505     —          —          —          —          (505
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     49,734        20,750        —          29,137        (11,317     67,554   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     43,568        (3,704     —          (5,201     11,000        49,467   

Interest expense

     11,788        —          15,528        21,804        (1,247 )(f)      32,345   

Loss on extinguishment of debt

     1,100        —          —          —          —          1,100   

Other income

     (4,221     —          (3,546     (4,979     —          (9,200

Financial income

     —          (3,546     3,546        —          —          —     

Financial expenses

     —          15,528        (15,528     —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     34,901        (15,686     —          (22,026     12,347        25,222   

Income tax expense (benefit)

     16,086        (48     —          (67     2,593 (g)      18,612