Mr. Whitehead's Cider Company Ltd

Other

Funds Requested

£72,000.00

Offered so far

£0.00

Loan term

60 MONTHS

Auction Closed

2014-04-20

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About the Business

Company Name: Mr. Whitehead's Cider Company Ltd Company Number: 04927333
Business Type: Other Years Trading: more than 10 years
Business Location: Alton

About the Risk

Risk rating

C

Default rate

13.30%

Bad debt rate

5.47%

About the Security

Security Offered:

All Assets Debenture - Fixed and floating charge created over all assets of applicant company

Est. Equity: 0.00

Personal Guarantee - PG from alexander whitehead

Est. Equity: 0.00

Risk Indicators Identified:

Important Files

Who are we?

We produce cider and apple juice from locally grown fruit, which includes sales to many pubs & shops including JD Wetherspoon nationally, Tesco (locally) and a dozen independent wholesalers around the country. I started the company 10 years ago with £10k in my pocket (and some help from a couple of friends), and now have 8 employees and a turnover currently at £850k per year, rising annually.

As well as our own products, we also contract pack cider, beer and juices for many local breweries and supply bottles for giftpacks to supermarkets for Christmas (Tesco, M&S, Morrison’s, Asda, Lidl etc). Our apple juice is predominantly sold to the schools in Hampshire (circa 15,000 items per week), and have been awarded the contract for the next five years. With lots of equipment invested in recently, we are poised to commence orange juice for Hampshire schools, potentially doubling our juice sales. We have SALSA accreditation, which is inspected to a rigorous standard, which demonstrates safe and efficient working practices, procedures, traceability, cleanliness and staff training etc). We also have Soil Association Accreditation (so we can produce and pack Organic products), and also supply our products, and those which we contract pack (beer for example) to retailers such as Co-Op, Tesco and Waitrose.

This gives us a distinct competitive advantage over other small and medium size drinks producers and packers, and gives our breweries and other producers a better "foot in the door" for the national supermarkets.

Read more

Loan Offers

What is the loan for?

The loan is to help finance the completion of our move from 3 small premises on 3 different addresses into one larger site, which has a much reduced rent p.a. and is significantly larger, with a long term option to purchase the property.

We need money to pay for the installation of machinery which we own within the business already, but have not been able to get set up (for example a carbonator for kegged cider and carbonation of bottled products, and a new fully automatic pasteuriser which will allow us to treble juice production). Then we can offer carbonated cider, beer and juice. We need to buy some ancillary equipment to complete the installation work (for example air and water filters, refrigeration equipment, conveyors etc). Savings by moving to one site should be at least £10k pa in transport and time alone, £20k saved in rent, not to mention general working efficiency savings (minimal double handling etc). The new premises is much more suited to drinks production than our previous sites, giving a progressive flow through the site from goods in to dispatch. The orchard we have recently planted has the bonus factor of making us a primary producer, which will give us a significant drop in business rates, so more cash for the business.

Why consider investing?

(Mr Whiteheads Cider)

We’ve had average annual growth of approx 30% pa since starting to trade in 2003, and have built up a strong business in 3 different parts of the drinks market, namely: Production of fruit drinks (cider, juice), contract bottling (beer, cider, wine, soft drinks) and sales/distribution (we have approx 700 customers on our database, and approx 1/3 of our sales are draught ciders). Our order book for the summer already includes the JD Wetherspoon summer cider festival (£60k value of existing stock), and Christmas giftpack orders of £120k, expected to rise to £200k by June.

Any previous loan has been paid off with no issues, and we are an asset rich company, owning a significant amount of modern equipment (3 bottling lines, modern fruit press, pasteuriser). Our staff have many years experience and are a dynamic hard working team. The business is well known for its quality products, and we have good links with our customers and suppliers, and the school juice contract which we’ve already had for 4 years (worth around £125k p.a. currently) will give confidence to other local authorities when we are in a position to offer our juice to them - once the equipment is installed.

Further Information

I have also added some notes below relating to how a loan will help move the business forward, and how the limitations (or non existence) of bank loans has drastically slowed the business down over the last year. As an example of the unwillingness of banks to lend money, in 2012 I ended up having to re-finance some of our machinery in order to get a loan of £25k over a 2 year period. The money I have had to pay back on that loan is £44k, which is clearly a waste of good money. This has also reflected in the figures for the last financial year.

For example, we have a carbonator for bottled and kegged cider, bought in 2012 which still remains un-installed, despite the fact that for the 2013 Christmas period we bottled 50% more than in 2012 (465,000 bottles in 2013). Without any surplus money to be able to install machinery by the start of June '13, we had no opportunity to save any money during the summer to be able to put towards this part of the project, as I had to hire additional staff to do the very large amount of bottling we had to do by the end of the year. If we could have installed the machines prior to June, we would have been able to bottle 50% faster, and rather than having 4 members of staff on the bottling line, would have only needed 2 people. We will be starting the Christmas bottling again in June, and it would be a real shame to have to do it "the slow way" again whilst I already own the machinery to do it faster! Cider sales after Christmas are always slower, so January to March cashflow is much reduced. Having said that, schools still take the apple juice and we are packing an bottling for other breweries, but not as much as we do from April onwards.

At the start of 2013 we were operating from 3 separate sites. By June 2013 we had moved out of one completely, and by the end of May 2014 we will have moved from a 2nd one. Therefore we will have reduced our rental figure by approx 60% from May 2014 onwards to approx 25k per annum. The same therefore goes for Business Rates for these dates. Moving into just 1 site has allowed us to work much more efficiently than before, so we are beginning to see good savings from this alone.

Below is a summary of the historical accounts of the business turnover profit or loss?

  • year 1 Sept 2003 - Dec 2004 £55k approx
  • year 2 1/1/05 to 31/12/05 £80k approx
  • year 3 1/1/06 - 31/12/06 £110k approx
  • year 4 1/1/07 - 31/12/07 £204,983.00 £20,558.00
  • year 5 1/1/08 - 31/12/08 £183,962.00 £23,573.00
  • year 6 1/1/09 - 31/12/09 £234,387.00 (£27,974)
  • year 7 1/1/10 - 31/12/10 £380,570.00 £88,324.00 This profit level was wrong, hence the loss in the following year to correct the errors of 2009/10 figures.
  • year 8 1/1/11 - 30/6/12 £958,978.00 (£19,787) 18 month long accounting period.
  • year 9 1/7/12 - 30/6/13 £850,632.00 (£37,298)
  • year 10 1/7/13 - present

Prior to the 2011/12 accounts, we were running accounts from 01/Jan until 31/Dec. However this was changed to run from 1/July to 30/June from 2011 , hence the 2011/12 period is for 18 months.

This was done because we would always have a very large amount of stock at the end of December (due to us pressing all the apples between September and Christmas, as that is when the apple season is). As my fruit suppliers gave me good payment terms (3-9 months), the majority of this would not get paid for until Jan / Feb, therefore we would always show very high stock level as and very high amount of unpaid invoices.

If the figures historically are looked at, you will see a year on year growth of the business with the exception of one year. (2008)

In late 2010 my original accountant died, so I hired a new company. Unfortunately the previous accountant had made some errors in the 2009 and 2010 figures, but the new accountant was not able to go back through all the old accounts in time, hence we made a large profit in 2010 which had to be adjusted as a loss in the 18 month long 2011-2012 period

NOTES ON ACCOUNTS YEAR ENDED 30th JUNE 2013 SUMMARY:

Fixed Assets / Tangible Assets - Depreciated at a fairly steep rate (Plant and machinery etc - 33% on cost, and 25% on reducing balance ("in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter"). In practice this rapid depreciation has pushed our profit down each year, but the equipment is all still in very good working order. Machinery in the business includes:

Goodnature Fruit Juice Press (2008 purchase price of $50,000 (around £28k at the time), resale value today in the UK/EU estimated at £15k)

Actini Fully automatic pasteuriser (2011 purchase price of £72,000 (essentially a brand new machine, as it was fully refurbished with 90% brand new parts, with the equivalent new machine value of £110k). Resale value today in the UK/EU estimated at £40k to £50k).

GAI glass automatic bottling machine - resale value circa £10k

Fogg dairy filling machine and associated bottling line - average auction value typically £35 - £50k)

Filmatic bottling machine - resale value of £6k - £10k)

2 x 40' refrigerated shipping containers (resale value £4k each)

Not to mention a host of other smaller machines, pumps, 2 x forklifts etc.

All of the above perfectly good and still fully serviceable, and I can't see any of them needing to be replaced for a good few years. And yet in a couple of years will show as £0.00 in our assets.

page 8, sect 5: Trade Debtors

- Bearing in mind this is a snapshot of the business on 30th June 2013, coming into the peak of our summer sales. We have about 10 wholesale distributors around the country, with an average monthly spend of £3k each, (all on 45-60 day terms as is the norm for the drinks trade). Also between Easter and the October Half Term, the sales of apple juice supplied to Hampshire County Council schools almost trebles from the winter months (due to the juice being put as a standard lunchbox menu item), so by this time of the year they tend to owe about £25k - and are on 25 day payment terms. Also in 2013 the Wetherspoons cider festival delivery was at the end of June, so £60k of that can be apportioned to them (paid by early August). Fathers Day beer and cider bottling would be due for payment at the start of July (60 days terms and £10k value in 2013). Also we bottle for 3 or 4 breweries throughout the year, all of whom have quite a lot of bottling done between April and June for the summer period., which would account for about £10k of this.

Security

The loan will be secured by an All Assets Debenture and a Directors Guarantee. Proceeds of this loan will go towards clearing the debenture currently held against the business, allowing lenders on this loan priority over the assets

Please not that the Director's Guarantee alone is not sufficient to cover the loan amount

DateAmountCapitalInterestReceived
17/05/2014£1,849.15£737.35£1,111.80
17/06/2014£1,849.15£748.73£1,100.42
17/07/2014£1,849.15£760.30£1,088.85
17/08/2014£1,849.15£772.04£1,077.11
17/09/2014£1,849.15£783.96£1,065.19
17/10/2014£1,849.15£796.06£1,053.09
17/11/2014£1,849.15£808.36£1,040.79
17/12/2014£1,849.15£820.84£1,028.31
17/01/2015£1,849.15£833.51£1,015.64
17/02/2015£1,849.15£846.38£1,002.77
17/03/2015£1,849.15£859.45£989.70
17/04/2015£1,849.15£872.73£976.42
17/05/2015£1,849.15£886.20£962.95
17/06/2015£1,849.15£899.89£949.26
17/07/2015£1,849.15£913.78£935.37
17/08/2015£1,849.15£927.89£921.26
17/09/2015£1,849.15£942.22£906.93
17/10/2015£1,849.15£956.77£892.38
17/11/2015£1,849.15£971.54£877.61
17/12/2015£1,849.15£986.55£862.60
17/01/2016£1,849.15£1,001.78£847.37
17/02/2016£1,849.15£1,017.25£831.90
17/03/2016£1,849.15£1,032.96£816.19
17/04/2016£1,849.15£1,048.91£800.24
17/05/2016£1,849.15£1,065.11£784.04
17/06/2016£1,849.15£1,081.55£767.60
17/07/2016£1,849.15£1,098.25£750.90
17/08/2016£1,849.15£1,115.21£733.94
17/09/2016£1,849.15£1,132.43£716.72
17/10/2016£1,849.15£1,149.92£699.23
17/11/2016£1,849.15£1,167.68£681.47
17/12/2016£1,849.15£1,185.71£663.44
17/01/2017£1,849.15£1,204.02£645.13
17/02/2017£1,849.15£1,222.61£626.54
17/03/2017£1,849.15£1,241.49£607.66
17/04/2017£1,849.15£1,260.66£588.49
17/05/2017£1,849.15£1,280.13£569.02
17/06/2017£1,849.15£1,299.89£549.26
17/07/2017£1,849.15£1,319.96£529.19
17/08/2017£1,849.15£1,340.35£508.80
17/09/2017£1,849.15£1,361.04£488.11
17/10/2017£1,849.15£1,382.06£467.09
17/11/2017£1,849.15£1,403.40£445.75
17/12/2017£1,849.15£1,425.07£424.08
17/01/2018£1,849.15£1,447.08£402.07
17/02/2018£1,849.15£1,469.42£379.73
17/03/2018£1,849.15£1,492.11£357.04
17/04/2018£1,849.15£1,515.16£333.99
17/05/2018£1,849.15£1,538.55£310.60
17/06/2018£1,849.15£1,562.31£286.84
17/07/2018£1,849.15£1,586.43£262.72
17/08/2018£1,849.15£1,610.93£238.22
17/09/2018£1,849.15£1,635.81£213.34
17/10/2018£1,849.15£1,661.07£188.08
17/11/2018£1,849.15£1,686.72£162.43
17/12/2018£1,849.15£1,712.76£136.39
17/01/2019£1,849.15£1,739.21£109.94
17/02/2019£1,849.15£1,766.07£83.08
17/03/2019£1,849.15£1,793.34£55.81
17/04/2019£1,849.15£1,821.03£28.12
Total:£71,999.99£38,949.01