Monday 17 October 2016 04:10 PM
Hansells Food relies on support of lender, major shareholders as losses widen
By Jonathan Underhill
Oct. 17 (BusinessDesk) - Hansells Food Group says it has letters of support from two of its biggest shareholders and assumes continued funding from its lender that gives it confidence it can continue as a going concern despite losses widening.
The Auckland-based company owns brands including Hansells cooking ingredients, Thriftee drink concentrate, WeightWatchers foods, Alfa One rice bran oil, Vitafresh and Vitasport drinks.
The food and drink manufacturer reported a loss of $9.4 million for the 12 months ended March 31, up from a loss of $8.6 million a year earlier, according to its financial statements. Revenue fell to $122 million from $125 million, although the cost of sales fell more, to $90.9 million from $97.6 million, which saw gross profit rise 14 percent to $31.5 million.
Higher finance costs and a year-earlier gain from the sale of brands that wasn't repeated in the latest year contributed to the wider loss.
Notes to its 2016 accounts show the company received an advance from Thailand's Kasisuri Co of $1.9 million secured against Hansells' fixed assets, in April after balance date, which is being used for working capital. Kasisuri is its third-largest shareholder with a 5.2 percent stake and is associated with controlling shareholder Varapong Supachok, with a 64 percent holding.
But also subsequent to balance date, Hansells' renegotiated its loan facility with Scottish Pacific, which stood at $10.8 million at balance date and was set to mature this year. The loan was subject to various covenants including an invoice discounting agreement and is secured by first mortgages over the company's assets, validity guarantees from Supachok and Ross MacKenzie, the second-largest shareholder with 21.8 percent of the company, and various cross guarantees from other companies in the group.
In July this year, Hansells entered a deed of surrender of a lease for a warehouse in Sydney used by its Australian subsidiary which includes a surrender amount of $2.2 million payable over five years, the notes show.
The company says that as at March 31 it had negative working capital of $31 million and negative net assets of $1.57 million.
"The directors acknowledge there are material uncertainties" in its assumptions, which cast "significant doubt" on its ability to continue as a going concern. Should those uncertainties transpire, the directors " have a reasonable expectation that the group will receive continued support in the form of extended credit and loan facilities from its cornerstone shareholder Supachok or Kasisuri."
But if Hansells is unable to continue as a going concern, assets may be realised at less than book value, further liabilities may have to be provisioned and certain non-current assets and liabilities may have to be reclassified as current, it said.
Current liabilities stood at $65 million at March 31, including $18 million of interest-bearing debt and $45 million of trade and other payables. Non-current liabilities were finance leases of $3.59 million. Current assets were about $34 million and non-current assets were $33 million.