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Listed honey and spirits producer British Honey Co has launched a formal sales process amid the need for cash by the end of November.
The AQUIS-listed company has launched a strategic review as it explores financing options available to it amid a squeeze on cashflow.
The group has not posted annual accounts for the year to 31 December 2021 or interim results for the six months to 30 June.
During this period it said it has maintained “strict cost and investment discipline”, reducing labour costs over the last 12 months by £1.2m. At 10 October 2022 it had £0.18m of cash on hand.
However, it said it is mindful that the company is exposed to consumer discretionary spend as well as having to finance certain costs in production runs upfront including duty payments.
Therefore, the Company is currently exploring financing options to support its near-term working capital requirements and “will require this additional funding by the end of November 2022, based on current management forecasts”.
In addition to further external investment in the business, these options may include a potential sale of the company as a whole or its business and assets.
It said it has has not yet received any expressions of interest and “wishes to be clear that there can be no certainty that any offer will be forthcoming”.
BHC has appointed FRP Advisory Trading as its financial adviser during this strategic review and Stanford Capital Partners in their capacity as joint broker to the company.
The group said it maintains a positive outlook for the business beyond its “near-term working capital pinch-point”, highlighting a solid first half performance in the current financial year with ‘white label’ business continuing to drive sales, including a number of recent tender awards with a large low cost European supermarket.
“The company sees clear potential for the next financial year to show considerable improvement on recent years and notes its healthy stockholding position and current debt free position,” it said.
The company’s shares are currently suspended due to the late accounts.
Morning update
Ingredients supplier Treatt has posted a trading update for the year ended 30 September 2022, with double-digit revenue growth and profits on course to hit expectations.
Revenue for the year is anticipated to be around £140m up from £124.3m last year, an increase of 13% (9% in constant currency).
Revenue growth was broad-based, across all categories, except for tea, which declined on the back of an exceptional 2021 performance and lower than expected demand in hard tea in the US
Overall performance was driven in particular by its citrus, synthetic aroma and health & wellness categories.
Citrus, which contributed 48% of group revenue, grew by over 20%, while margins were broadly in line as it implemented selected price increases to offset higher commodity prices.
Health & wellness category (including sugar reduction) had another strong year, growing by 15%, with strong consumer demand for ‘better for you’ products driving sales in specialist solutions, such as the reduction of calorific content in beverages.
In line with revised guidance announced in August 2022, the Board expects to report profit before tax and exceptional items of between £15.0m and £15.3m.
The Group ended the year with net debt of £23m up from £9.1m as it spent £6m on its new UK facility and invested in holding prudent levels of inventory to mitigate supply chain risks for customers.
After a “challenging year”, it said the group enters the new financial year with confidence in its proposition and its ability to deliver top line growth, supported by positive market dynamics.
“After substantial investment in our people and production facilities to support the group’s next phase of expansion, we do not anticipate any significant increase in administrative expenses in the short to medium term, above the normal rate of inflation,” it stated.
CEO Daemmon Reeve commented: “We delivered continued positive growth in sales for the year, reflecting a good performance across the vast majority of our categories, however, we were impacted by some specific factors in the second half which ultimately led to a disappointing outcome for the full year.
“We have taken a number of immediate actions in recent weeks to ensure the business has the right systems in place, whilst also confirming that the substantial investment in our team and facilities is adequate to meet our ambitious goals.
“Whilst the macro environment remains uncertain, we are encouraged by prevailing consumer trends, particularly in the beverage market, which play into our specialist expertise in flavour. As such, we are confident the business can revert to its trajectory of growth.”
Elsewhere, spirits player Distil, owner of drinks brands RedLeg Spiced Rum and Blackwoods Gin and Vodka, suffered a dramatic slump in revneues in the first half as it restructured its distribution.
Total revenues fell 68% to £0.46m against the prior period, with UK sales adversely impacted by the removal of inventory from the distributor supply chain as it transitioned away from its previous UK distributor and to direct sales during Q2.
The one-off negative impact on first half sales of this change amounted to £0.67m inventories depletions and £0.3m reduced promotional activity in the period leading to distributor contract termination.
The transition to direct sales was complete at the end of September and the group said it does no anticipate any further significant impact on sales in the second half of the current financial year.
This shift meant the company sustained an operating loss (after adjusting for share-based payment expense) of £602k compared to a £58k profit last year.
It said it is seeking to return to sales growth in seasonally stronger second half and continue that growth into the next financial year and beyond as the new business model delivers additional stockists, new markets, and our marketing focus delivers strong campaigns and new products.
“Rebuilding distribution across our brands is a key priority,” it said. “And we have seen encouraging early results, having recently added new on-trade listings, including a major pub group, as well as new export markets, both of which will come through from October onwards.”
The general spirits market continues to perform well in the UK, with value up 14% against three years ago, with rum in particularly strong growth.
“The current political and economic uncertainties are likely to see consumers shopping for true value in both on and off trade outlets, especially over the peak Christmas trading period and through Spring next year,” it said.
“Our brands are well positioned in this regard, and we aim to maintain a strong promotional support programme across all trade sectors.”
It anticipates full year performance for the year ending 31 March 2023 to be in line with current market expectations.
Exec chairman Don Goulding commented: “The first six months of this financial year have seen major changes to our business model and the creation of a stronger platform for accelerated future growth.
“While the remodel has seen a one-off hit to the half year figures as we transition, we are confident that this move will put Distil in a stronger position from which to accelerate future growth”
On the markets this morning, the FTSE 100 has opened down 0.5% to 6,789.4pts.
Risers include Science in Sport, up 6.3% to 17p, McBride, up 3% to 23.7p and Just Eat Takeaway.com, up 2.5% to 1,131p.
Fallers include Bakkavor, down 2.5% to 92.1p, Reckitt Benckiser, down 2.2% to 5,780p and Tesco, down 1.9% to 195.4p.
Yesterday in the City
The FTSE 100 closed yesterday down 0.9% to 6,826.2pts.
Risers included THG, up 4.5% to 34.2p, Virgin Wines, up 4% to 52p, Glanbia, up 2.9% to €12.12, Coca-Cola Europacific Partners, up 2.3% to €46.95, Bakkavor up 1.5% to 94.4p and British American Tobacco, up 1.3% to 3,320p.
The day’s fallers included McBride, down 6.3% to 23p, Just Eat Takeaway.com, down 5.5% to 1,103.6p, B&M European Value Retail, down 5.2% to 296.9p, Ocado Group, down 5.2% to 393.1p, Naked Wines, down 4.9% to 75.5p, Domino’s Pizza Group, down 4.4% to 215.2p and SSP Group, down 4.2% to 184.8p.
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