29 Sep 2009 07:00
The Real Good Food Company plc (AIM: RGD)
Interim Results for the six months ended 30 June 2009
The Real Good Food Company plc ("the Group"), the sugars, ingredients and bakery company, today announces Interim Results for six months ended 30 June 2009
Highlights
Trading conditions stabilizing in core sugar business
Improved Operating Profitability in Bakery Ingredients and Bakery Division
Total Group sales from continuing operations down 2.2% to £101.7m (2008: £104.0m) reflecting the price and volume pressures in the Sugar Division as a result of regime change
Loss from Continuing Operations of £0.889m (2008: loss of £1.159m)
Loss per share (basic and diluted) of 1.3p (2008: loss per share of 1.8p)
Net Cash from Operating activities £0.504m versus (£1.467m) deficit in 2008
Pieter Totté, Chairman of The Real Good Food Company plc, comments:
"The group continues to trade in line with its plan and with its commitments associated with its banking arrangements. We are currently benefiting from the consolidation of Renshaw Napier business with underlying overheads reducing with a full year impact flowing through 2010. The business is focussed on cash generation by further reducing Working Capital levels and focusing on EBITDA performance.
"With further stability expected in the sugar market, improved profitability in both ingredients and bakery, we remain quietly confident regarding the remainder of the year as we move into our busiest seasonal period."
29 September 2009
ENQUIRIES:
| The Real Good Food Company plc | Tel: 0151 706 8200 |
| Stephen Heslop, Chief Executive Officer | |
| Mike McDonough, Chief Financial Officer | |
| Shore Capital | Tel: 020 7408 4090 |
| Guy Peters | |
| College Hill | Tel: 020 7457 2020 |
| Gareth David |
CHAIRMAN'S STATEMENT
Overview
As I indicated in my comments at the time of our Annual General Meeting in July, the first six months of the current year have seen welcome signs of stability returning to our markets, after lengthy period in which we have had to cope with the combination of changes to the EU sugar regime, high raw materials and fuel prices and a fiercely competitive market-place.
Total Group turnover for this period was down slightly at £101.7m (2008: £104.0m), with sales improvements at our Bakery Ingredients and Bakery Divisions, which both improved their operating performance year-on-year, driven by increased margins and lower overheads. This was offset by a 4.3% reduction in sales at our Sugar Division to £78.1m (2008: £81.7m).
The loss from continuing operations of £0.889m represents an improvement from the comparable figure of £1.159m.
For the purposes of clarity, we will continue to report our results under the three previous segmental headings: Sugar, Bakery Ingredients and Bakery.
Within Renshawnapier, where our core sugar trading business has experienced three years of difficult trading, I can report that overall we feel that our group is starting to turn the corner and we look with more confidence towards the future. EU Sugar regime changes are in their last phase, with the final adjustment of the reference price on 1 October 2009.
Having seen some restoration of stability this year in the sugar market, with the European sugar market more or less in balance as far as offer and demand is concerned, we now expect it to strengthen as we go forward. We do expect still further rationalisation in the EU marketplace, but the biggest adjustments have been made.
Our Bakery Ingredients Division has had a good start to the year with sales up 1.4% driving increased profitability in what is its "off season".
Our Bakery Division has also had a good first half of the year, with sales up 12% year on year and the business trading ahead of budget. We have enjoyed considerable success in new product development, achieving more product launches with all our customers for Quarter Four and early next year than ever during our ownership. We are looking forward to second half 2009 and believe that the business is well placed to grow both sales and profitability in 2010.
SUGAR DIVISION
Napier Brown Foods supplies a range of sugar and dry ingredients to food manufacturers and packs sugar for retail grocery and foodservice customers from its facilities at Normanton, near Leeds.
| £'000s | 2009 Six Months | 2008 Six Months |
| Sales EBITDA | 78,145 520 | 81,653 2,126 |
| Operating Profit* | 218 | 1,838 |
The Board is pleased to be able to confirm we have since seen some stability during 2009 with our trading in line with budget and latest estimates both in terms of Operating Profits and Cash generation following the margin pressures encountered in the second half of last year. Operating Profits however are down for the period as the six months to June 2008 was unaffected.
BAKERY INGREDIENTS DIVISION
Renshaw supplies a range of high quality food ingredients primarily to the bakery sector, comprising craft bakers and major cake manufacturers and also to grocery retailers. It operates two facilities, one in Liverpool and the other in Carluke, south-east of Glasgow.
| £'000s | 2009 Six Months | 2008 Six Months |
| Sales EBITDA | 13,977 552 | 13,784 428 |
| Operating Profit* | 188 | 78 |
Sales in the period were in line with last year overall, with operating profit benefiting from reduced overheads and reduced material costs in some commodities. Industrial volumes are lower but there has been growth in the Retail and Export sectors. Being a seasonal business, with the majority of the profitability in the second half of the year, the Board is pleased to be able to report the business is robust and well placed in delivering expectations for the remainder of the year
BAKERY DIVISION
Hayden's Bakeries produces chilled and ambient premium patisserie and dessert products to retail grocery customers. It operates from a site in Devizes, Wiltshire.
| £'000s | 2009 Six Months | 2008 Six Months |
| Sales EBITDA | 9,575 144 | 8,535 22 |
| Operating Loss* | (198) | (275) |
The 12% increase in sales was driven by continued development of our Foodservice offering into the coffee shop sector, new product launches, range extensions and promotional activity with leading customers. Overall, profitability has improved on the prior period and is now making a positive contribution. Operationally, the team continues to refine production methodologies, which has seen an improvement in material variances, which has offset the labour necessary to affect the improvements.
SIGNIFICANT ITEMS
During the period under review, the Group incurred a number of significant items. The principal cost relating to the restructuring of the Groups operations to form Renshawnapier.
CASH FLOW AND DEBT
Net cashflow from operating activities was £0.5m, up £1.971m on prior year reflecting the focus on working capital. Overall borrowings at £31.163m are at a similar level to last year and in line with expectations.
PENSIONS
The £1.771m deterioration in the IAS 19 pension valuation is the result of two factors, reduction in plan asset values as a result of changes in the financial markets during the interim period, together with an increased long term outlook for inflation which has increased the scheme liabilities. The scheme has been closed to new entrants since April 2004
CURRENT TRADING
The Group continues to trade in line with its plan and with its commitments associated with its banking arrangements.
We are currently benefiting from the consolidation of the Renshaw and Napier businesses with underlying overheads reduced and expect these to continue to flow through into 2010. With further stability expected in the sugar market, improved profitability in both ingredients and bakery, we remain quietly confident regarding the remainder of the year as we move into our busiest seasonal period.
PIETER TOTTÉ
Chairman
29 September 2009
REPORT OF THE AUDITORS
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009, which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cashflows and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company, as a body, in accordance with our instructions. Our review has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.
Horwath Clark Whitehill LLP
Chartered Accountants10 Palace AvenueMaidstone
Kent
ME15 6NF
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDING 30 JUNE 2009 (UNAUDITED)
| | Notes | Period ended 30 June 2009 | Period Ended 30 June 2008 | ||||
| | | Before Significant Items | Significant Items | Total | Before Significant Items | Significant Items | Total |
| | | £’000s | £’000s | £’000s | £’000s | £’000s | £’000s |
| CONTINUING OPERATIONS | | | | | | | |
| REVENUE | | 101,697 | - | 101,697 | 103,972 | - | 103,972 |
| Cost of sales | | (92,043) | - | (92,043) | (92,821) | - | (92,821) |
| | | | | | | | |
| GROSS PROFIT | | 9,654 | - | 9,654 | 11,151 | - | 11,151 |
| Distribution costs | | (4,113) | - | (4,113) | (4,371) | - | (4,371) |
| Administration expenses | | (5,962) | (84) | (6,046) | (5,859) | (1,365) | (7,224) |
| | | | | | | | |
| OPERATING (LOSS)/PROFIT | | (421) | (84) | (505) | 921 | (1,365) | (444) |
| | | | | | | | |
| Finance income | | 264 | - | 264 | 106 | - | 106 |
| Finance costs | | (944) | - | (944) | (1,407) | - | (1,407) |
| Net Pension finance (cost)/income | | (9) | - | (9) | 157 | - | 157 |
| | | | | | | | |
| LOSS BEFORE TAXATION | | (1,110) | (84) | (1,194) | (223) | (1,365) | (1,588) |
| | | | | | | | |
| Taxation | | 281 | 24 | 305 | 19 | 410 | 429 |
| | | | | | | | |
| LOSS FROM CONTINUING OPERATIONS | | (829) | (60) | (889) | (204) | (955) | (1,159) |
| | | | | | | | |
| LOSS FROM DISCONTINUED OPERATIONS | | - | - | - | - | - | - |
| LOSS FOR THE PERIOD | | (829) | (60) | (889) | (204) | (955) | (1,159) |
| | | | | | | | |
| Other comprehensive income | | | | | | | |
| Actuarial losses on defined benefit plans | | (1,771) | - | (1,771) | (201) | - | (201) |
| Income tax relating to components of other comprehensive income | | 482 | - | 482 | 56 | - | 56 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | | (2,118) | (60) | (2,178) | (349) | (955) | (1,304) |
| Basic Loss per share | 5 | (1.3) | | (1.4) | (0.3) | | (1.8) |
| Diluted Loss per share | 5 | (1.3) | | (1.4) | (0.3) | | (1.8) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2009 (UNAUDITED)
| GROUP FINANCIAL POSITION As at 30 June 2009 | |||
| 30 June 2009 | 30 June 2008 | 31 Dec 2008 | |
| £'000s | £'000s | £'000s | |
| ASSETS Non Current Assets | |||
| Goodwill | 75,796 | 75,796 | 75,796 |
| Intangibles | 485 | 587 | 513 |
| Property, plant and equipment | 15,644 | 16,770 | 16,408 |
| Deferred tax asset | 1,600 | - | 853 |
| 93,525 | 93,153 | 93,570 | |
| Current Assets | |||
| Inventory | 10,291 | 11,970 | 10,963 |
| Trade and other receivables | 23,913 | 24,749 | 24,763 |
| Financial instruments at fair value | 25 | 1 | 117 |
| Corporation tax | 574 | 556 | 839 |
| Cash and cash equivalents | 2,208 | 7,769 | 1,464 |
| 37,011 | 45,045 | 38,146 | |
| Total Assets | 130,536 | 138,198 | 131,716 |
| LIABILITIES Current Liabilities | |||
| Borrowings | 20,642 | 22,223 | 19,258 |
| Trade and other payables | 16,189 | 19,580 | 16,787 |
| Financial instruments at fair value | 160 | 37 | 524 |
| 36,991 | 41,840 | 36,569 | |
| Non Current Liabilities | |||
| Borrowings | 12,729 | 16,921 | 13,652 |
| Deferred tax | 2,963 | 982 | 2,973 |
| Provisions | 452 | 545 | 684 |
| Retirement benefit obligations | 1,995 | - | 264 |
| 18,139 | 18,448 | 17,573 | |
| Net Assets | 75,406 | 77,910 | 77,574 |
| SHAREHOLDERS' EQUITY | |||
| Called up share capital | 1,300 | 1,300 | 1,300 |
| Share premium account | 68,870 | 68,870 | 68,870 |
| Other reserves | 83 | 79 | 73 |
| Profit and loss account | 5,153 | 7,661 | 7,331 |
| Total Equity | 75,406 | 77,910 | 77,574 |
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDING 30 JUNE 2009 (UNAUDITED)
| Issued Share Capital | Share Premium Account | IFRS 2 Share Option reserve | Retained Earnings | Total | |
| £'000s | £'000s | £'000s | £'000s | £'000s | |
| Balance at 1 January 2008 | 1,300 | 68,870 | 66 | 8,965 | 79,201 |
| Shares to be issued - Options | - | - | 13 | - | 13 |
| Total comprehensive income for the period | - | - | - | (1,304) | (1,304) |
| Balances as at 30 June 2008 | 1,300 | 68,870 | 79 | 7,661 | 77,910 |
| Balance at 1 January 2009 | 1,300 | 68,870 | 73 | 7,331 | 77,574 |
| Shares to be issued - Options | - | - | 10 | - | 10 |
| Total comprehensive income for the period | - | - | - | (2,178) | (2,178) |
| Balances as at 30 June 2009 | 1,300 | 68,870 | 83 | 5,153 | 75,406 |
STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDING 30 JUNE 2009 (UNAUDITIED)
| 6 months to 30 June 2009 | 6 months to 30 June 2008 | |||||
| £'000s | £'000s | |||||
| CASH FLOW FROM OPERATING ACTIVITIES | ||||||
| Loss for the period before taxation | (1,194) | (1,588) | ||||
| Adjusted for: | ||||||
| Finance costs | 944 | 1,407 | ||||
| Finance income | (264) | (106) | ||||
| IAS 19 cost/(income) | 9 | (157) | ||||
| Depreciation of property, plant & equipment | 963 | 895 | ||||
| Amortisation of intangibles | 49 | 47 | ||||
| Share based payment expense | 10 | 13 | ||||
| Release of provision | (188) | - | ||||
| Operating Cash Flow | 329 | 511 | ||||
| Decrease/(Increase) in inventories | 667 | (2,617) | ||||
| Decrease in receivables | 850 | 35 | ||||
| (Decrease)/Increase in payables | (592) | 2,430 | ||||
| Cash generated from operations | 1,254 | 359 | ||||
| Income taxes received/(paid) | 295 | (696) | ||||
| Interest paid | (1,045) | (1,130) | ||||
| Net cash from operating activities | 504 | (1,467) | ||||
| CASH FLOW FROM INVESTING ACTIVITIES | ||||||
| Interest received | - | 100 | ||||
| Income tax paid on disposal of division | - | (2,919) | ||||
| Purchase of intangible assets | - | (87) | ||||
| Purchase of property, plant & equipment | (222) | (944) | ||||
| Net cash used in investing activities | (222) | (3,850) | ||||
| CASH FLOW USED IN FINANCING ACTIVITIES | ||||||
| Drawdown/(Repayment) of borrowings | 604 | (812) | ||||
| Repayment of obligations under finance leases | (142) | (129) | ||||
| Net cash used in financing activities | 462 | (941) | ||||
| NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 744 | (6,258) | ||||
| CASH AND CASH EQUIVALENTS | ||||||
| Cash and cash equivalents at beginning of year | 1,464 | 10,785 | ||||
| Net movement in cash and cash equivalents | 744 | (6,258) | ||||
| Cash and cash equivalents at balance sheet date | 2,208 | 4,527 | ||||
| Cash and cash equivalents comprise: | ||||||
| Cash | 2,208 | 7,769 | ||||
| Overdrafts | - | (3,242) | ||||
| 2,208 | 4,527 | |||||
NOTES TO THE INTERIM RESULTS
1. GENERAL INFORMATION
The Real Good Food Company Plc is a public limited company ("company") incorporated in the United Kingdom under the Companies Act 1985 (registration number 4666282). The Company is domiciled in the United Kingdom and its registered address is 229 Crown Street Liverpool Merseyside L8 7RF. The Company's shares are traded on the Alternative Investment Market ("AIM").
The principal activities of the Group are the sourcing, manufacture, marketing and distribution of food and industrial ingredients.
Copies of the interim report are being sent to shareholders. Further copies of the interim report and Annual Report and Accounts may be obtained from the address above.
2. BASIS OF PREPARATION
These consolidated financial statements are presented on the basis of International Financial Reporting Standards (IFRS) as adopted by the European Union and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) and have been prepared in accordance with AIM rules and the Companies Act 1985, as applicable to companies reporting under IFRS.
The financial information set out in this document does not comprise of the statutory accounts of the Company within the meaning of section 240(5) of the Companies Act 1985.
New IFRS standards and interpretations not adopted
The following IFRS standards, amendments and interpretations are not yet effective and have not been adopted early by the Group:
Revised IAS 27 Consolidated and Separate Financial Statements (effective 1 July 2009)
IFRS 3 (revised) Business Combinations (effective 1 July 2009)
IAS 32 Financial Instruments - Presentation (Amendments)
IAS 23 Borrowing Costs
IAS 27 Consolidated and Separate Financial Statements (effective 1 July 2009)
IAS 39 Financial Instruments: Recognition and Measurement (Amendment): Eligible Hedged Items
The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group's loss for the period or equity. The adoptions may affect disclosures in the Group's financial statements.
3. SIGNIFICANT ITEMS
It is the company's policy to show items that it considers being of a significant nature seperately on the face of the Consolidated Statement of Comprehensive Income in order to assist the reader to understand the accounts. The company defines the term significant as items that are material in respect to their size and nature. For example a major restructuring of the activities of the Group. Summary details of significant items are shown in the Chairman's statement which forms part of this half yearly financial report.
4. SEGMENT ANALYSIS
Business segments
The Group's operating segments are Sugar, Bakery Ingredients and Bakery as the Group's management and reporting structure is set out along these lines.
The following table shows the Group's revenue and results for the period under review analysed by operating segment. Segment profit represents the trading profit after depreciation but before any interest and significant items.
| Six months to 30 June 2009 | Bakery Ingredients | Bakery | Total Before Significant Items | Significant Items | Total After Significant Items | |
| | Sugar | |||||
| | £’000s | £’000s | £’000s | £’000s | £’000s | |
| | | | | | | |
| Total revenue | 82,113 | 14,837 | 9,575 | 106,525 | - | 106,525 |
| Revenue - internal | (3,968) | (860) | - | (4,828) | - | (4,828) |
| | | | | | | |
| External Revenue | 78,145 | 13,977 | 9,575 | 101,697 | - | 101,697 |
| | | | | | | |
| Operating Profit/(Loss) | 218 | 188 | (198) | 208 | (84) | 124 |
| | | | | | | |
| Finance costs (net of interest received) | | | (680) | - | (680) | |
| Pension finance costs | | | (9) | - | (9) | |
| Head office and consolidated adjustments | | | (629) | - | (629) | |
| Loss before tax | | (1,110) | (84) | (1,194) | ||
| Tax | | | | 281 | 24 | 305 |
| | | | | | | |
| Loss after tax as per income statement | | (829) | (60) | (889) | ||
Inter-segment sales are charged at prevailing market rates.
The Group operates a central function; therefore finance costs cannot be meaningfully allocated to individual operating segment.
5. SEGMENT REPORTING (continued)
| As At 30 June 2009 | Sugar | Bakery Ingredients | Bakery | Unallocated | Total Group |
| £'000s | £'000s | £'000s | £'000s | £'000s | |
| Segment assets | 27,916 | 18,841 | 5,114 | 51,871 | |
| Unallocated assets | |||||
| Goodwill | 75,796 | ||||
| Other intangible assets | 3 | ||||
| Property, plant and equipment | 13 | ||||
| Deferred tax assets | 1,600 | ||||
| Inventory | (26) | ||||
| Trade and other receivables | 515 | ||||
| Derived financial assets | 25 | ||||
| Current tax assets | 574 | ||||
| Cash and cash equivalents | 165 | ||||
| Total assets | 130,536 | ||||
| Segment liabilities | (26,919) | (7,539) | (3,156) | (37,614) | |
| Unallocated liabilities | |||||
| Trade and other payables | (489) | ||||
| Borrowings | (14,294) | ||||
| Derived financial instruments | (160) | ||||
| Current tax liabilities | (188) | ||||
| Deferred tax liabilities | (2,209) | ||||
| Provisions | (176) | ||||
| Total liabilities | (55,130) | ||||
| Net operating assets | 997 | 11,302 | 1,958 | 75,406 | |
| Non current asset additions | 31 | 158 | 33 | - | 222 |
| Depreciation | 308 | 327 | 325 | 3 | 963 |
| Amortisation | (6) | 37 | 17 | 1 | 49 |
Geographical segments
The Group earns revenue from countries outside the United Kingdom, but as these only represent 2.6% of the total revenue of the Group, segmental reporting of a geographical nature is not considered relevant.
6. EARNINGS PER ORDINARY SHARE
Earnings per share is calculated on the basis of the loss for the period after tax, divided by the weighted average number of shares in issue for 2009 of 65,014,348 (2008: 65,014,348).
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potential dilutive ordinary shares. Potential dilutive ordinary shares arise from share options and warrants. For these, a calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the exercise price attached to outstanding share options. Thus the dilutive weighted average number of shares considers the number of shares that would have been issued assuming the exercise of the share options.
An adjusted loss per share and a diluted adjusted loss per share, which exclude significant items, has also been calculated as in the opinion of the Board this will allow shareholders to gain a clearer understanding of the trading performance of the Group.
| Six months to 30 June 2009 | Six months to 30 June 2008 | ||||||||
| Earnings £'000s | Weighted Average No. of shares | Per share amount pence | Earnings £'000s | Weighted Average No. of shares | Per share amount pence | ||||
| Loss attributable to ordinary shareholders | (889) | 65,014,348 | (1.4) | (1,159) | 65,014,348 | (1.8) | |||
| Significant items | 60 | - | - | 955 | - | - | |||
| Adjusted Loss per share | (829) | 65,014,348 | (1.3) | (204) | 65,014,348 | (0.3) | |||
| Dilutive effect of options | - | - | - | - | - | - | |||
| Dilutive effect of warrants | - | - | - | - | - | - | |||
| Diluted loss per share | (889) | 65,014,348 | (1.4) | (1,159) | 65,014,348 | (1.8) | |||
| Diluted adjusted loss per share | (829) | 65,014,348 | (1.3) | (204) | 65,014,348 | (0.3) | |||
7. DIVIDENDS
No dividend is proposed for the six months ended 30 June 2009 (2008 Nil).
8. TAXATION
The charge for taxation is based on the results for the period and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes.
Provision is made in full for taxation deferred in respect of timing differences that have originated but not reversed by the balance sheet date, except for gains on disposal of fixed assets which will be rolled over into replacement assets. No provision is made for taxation on permanent differences. Deferred tax is not discounted.
Deferred tax assets are recognised to the extent that it is more likely than not that they will be recovered.
9. PENSION ARRANGEMENTS
A subsidiary of the Group, Napier Brown & Company Limited, operates a defined benefit pension scheme, the Napier Brown Retirement Benefits Scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The contributions made by the employer over the six-month period have been £48,870.
Assumptions
The assets of the scheme have been taken at market value and the liabilities have been calculated using the following principal actuarial assumptions:
| 30 June 2009 % per annum | 31 December 2008 % per annum | |
| Rate of increase in pensions in payment | 3.60 | 3.10 |
| Discount rate | 6.10 | 6.30 |
| Inflation assumption | 3.60 | 3.10 |
| Revaluation rate for deferred pensions | 3.60 | 3.10 |
The fair value of the assets in the scheme, the present value of the liabilities in the scheme and the expected rate of return at each balance sheet date were:
| 30 June 2008 % | 31 December 2008 % | |
| Equities | 6.90 | 6.90 |
| Bonds | 5.64 | 5.64 |
| Property | 5.90 | 5.90 |
| Cash | 3.50 | 3.50 |
| 30 June 2009 £'000s | 31 December 2008 £'000s | |
| Total fair value of assets | 14,068 | 14,830 |
| Present value of scheme liabilities | (16,063) | (15,094) |
| Deficit in the scheme | (1,995) | (264) |
The scheme is a closed scheme and therefore under the projected unit method the current service cost would be expected to increase as the members of the scheme approach retirement.