River Cottage Bond Holders are thrown a life line

River Cottage has a new owner. Which is a good thing for the Crowdcube bondholders who want their money back next July.

We have written a few pieces on Hugh Fearnley Wittingstall's empire. It has not been plain sailing. In 2015 they raised £993k via a Crowdcube bond - to bring his style of eateries and philosophy to a greater audience. We said at the time that the projections were fantasy. Since then, the number of restaurants has gone up a little and down a little more. They currently run 3 and have 3 new inhouse tearooms in well selected tourist hubs. The company filed a £1m loss last year and was £1.2m in the red.

Now the company that has used the £993k, has been bought by River Cottage Holdings - set up at the end of 2017. This is a company majority owned by Guy Baring. RCH are now the sole owners of River Cottage Stores and River Cottage Bonds plc. The latest accounts for the latter give comfort to bond holders, stating that the directors intend to be able to repay the bond principle when the time comes; even if profits wont cover this - which they wont. 

It has amazed me that this brand has struggled to make it. There must have been some seriously idiotic decisions made and money wasted but hopefully, now under new control and with lessons learnt, the HFW eateries can get back into profit and promote the sort of eating life style we would all do well to adopt. 

Happy peelings.  

River Cottage change direction. But will it be enough to pay back the £1m Crowdcube Bond?

I suppose you could call this a pivot. River Cottage are no longer opening their own restaurants - now they cuckooing in our nation's best loved tourist spots.

When you have spent all your money and the results are poor, then this is not a bad option. River Cottage raised £1m in a bond on Crowdcube for the express purpose of increasing its restaurants. This was 3 years ago. Since then the number 4 has been reduced to the number 3 - Plymouth, a flagship venue, crashed.

Now RC have 3 more 'venues' on their website. However these are not restaurants or even theirs. They are JVs with various high footfall tourist centres - cafes really. Not quite what they told investors would be happening.

Glyndebourne, Hatfield House and Whipsnade Zoo all have RC eateries - all converted from existing set ups. So low capex. But then again low margins and we have no idea currently what sort of deal they struck. The brand is ideally suited to these places so it may just be a stroke of genius. In any case its has to better than nothing.  

We wrote a few pieces about this when their Plymouth unit closed down and they filed a £1m loss - here. 

Just how safe are Crowdcube Bond Holders?

Bonds sold on the Crowdcube platform were supposed to be a safer way to earn income than investing in equity. But recent results from 4 of the platform's bond campaigns beg the question - REALLY?

These bonds or mini bonds, are usually for 4 years and offer an annual return of between 7% and 11%. They have been offered by what the platform has described as more established and therefore lower risk companies. 

Well that may be so but results from both River Cottage and The Eden Project show they are way off the course the set with the bond sale documents. Two more recent examples, Daisy Green Foods and Grind and Co are even worse.

Daisy Green Foods had projected profits of £350k but brought in losses of £480,000. A difference of £830k.

Grind and Co had projected profits of £353k and reported losses of £1.4m. They have new growth plans so we will have to wait and see.

Both of these two had missed targets in previous years resulting in a cumulative gap far too wide to be put down to bad luck.

It looks like both will need to raise new cash to continue in 2018. To repay their bond in 2019, they will need a considerable change in fortune and to raise more cash yet again. Grind and Co had raised another £2.4m at the back end of 2017.

What is more alarming generally, is the wilful misrepresentation of projections by all 4 of these companies. To be so far out in terms of their plans suggests either crass management or some dodgy dealing. Take your pick - neither inspire much faith in their abilities to run a successful company.

All is not so well down on the Riverbank

River Cottage Stores has filed a £1m loss, just 12 months before it is due to repay a Crowdcube bond for £993k.

We wrote a while ago about how River Cottage were struggling. One of their flagship restaurants, the Plymouth one, closed suddenly a few months ago and is now in liquidation. Of the various River companies we could find, none of them make anything other than delicious food - money is off the menu it appears.

When they raised the 5 year 7% bond on Crowdcube, plans were for another 3-5 units to be open by the summer of 2019 - the redemption date. So far they have opened none and lost one.

Continuing losses, putting River Cottage Stores in to a negative position of over £1m for YE March 2017, are not encouraging. 2016 promises of new equity funding for 2017 have failed to show so far. River Cottage Ltd, another Whittingstall starter, which is connected to the farm, owes over £600k which is due for repayment in a couple of months. Its accounts have been filed a with a massive typo giving them 434m issued shares instead of the correct 43m. HFW Interactive, which makes the Hugh Films, is also still loss making. The debt all the companies are swimming in is deadly deep. 

The bond itself was set up under River Cottage Bonds plc, a non trading company (that still made a loss!) which loaned it to River Cottage Stores. River Cottage Bonds plc are now 3 months late filing their accounts and have already had a First Gazette posted and cancelled. UPDATE - the accounts for the plc have now been filed. Notes from the statutory auditors, include a warning that the plc relies on RC Stores for its working capital and that RC Stores is in the red to the tune £1m plus - which may be a concern!

As if all of this wasnt bad enough, it appears Ratty and his mates are jumping ship just as fast as they can. 

Good luck to all you Bond holders. After all, you only live once.

River Cottage closes its Plymouth restaurant and now has only 3 units.

Hugh Fernley Whittingstall's River Cottage brand, raised £1m on Crowdcube by way of a mini bond in 2014. The money was to open new restaurants. 3 years later, they have fewer restaurants than they did then.

In the pitch for £1m, River Cottage made it quite clear that this £1m was to open new units over the next 5 years - taking then from 4 to 7. It already had 4 units (one was opening in conjunction with the raise).

In May of this year, this appeared in The Caterer - 

Hugh Fearnley-Whittingstall’s River Cottage Canteen and Deli in Plymouth has closed suddenly, according to the Plymouth Herald.

After six years in business, “lorries were seen hauling away furniture and parts of the kitchen” from the restaurant at the Royal William Yard and the unit was “left deserted”, reports the paper.

A spokesperson for River Cottage told The Herald the site had “struggled” and the decision has been made to close the restaurant 

So this Plymouth unit had struggled? It opened in 2011, 3 years before they raised the CC bond. According to the pitch, Plymouth was a great success. It was RC's largest unit so closure will have had a major impact on revenues - see here for the piece we wrote on RC in Jan 17. The company as at March 2016, was already making large losses, with revenues stagnant at £4.4m. Plymouth accounted for at least £1.5m of the 2014 £4m t/o.  

285 Crowdcube punters must now wait another 18 months to see if their principle sum will be repaid. One thing is for sure; it wont be taken out of revenues from new restaurants. They raised another £396k in equity in 2016. Accounts for YE March 17 due out before Christmas. 

Sad Tales from the Riverbank. What is happening down at River Cottage?

Crevated away amongst the dingley dells of the glorious South West, Hugh Fearnley Wittingstall's business has caught a bit of a cold.

Achoo!

River Cottage will be known to most UK readers. Hugh FerWitt, the old Etonian, crusty loafed, food foraging founder, is a TV star and leading light in efforts to get us to pay more attention to what we eat and where it comes from. A highly commendable cause in our opinion.

Back in 2014, he went on Crowdcube to raise a £1m bond, which is due for repayment in 2019. 

Recent accounts to YE March 2016 report sizeable losses of over £600k. Operational losses of £557k are heading rapidly in the wrong direction . Accumulated losses are now just below the £2m mark. These losses were certainly not part of the prospectus put out by the company and Crowdcube in 2014. In fact the company was talking large numbers for its roll out of River Cottage canteens. 

Annual sales in 2014, we are told by the prospectus, had hit £4m in 2014, rising from £1.1m in just 3 years. The latest accounts have the revenues at only £4.4m - more than 2 years later. According to this document, existing canteens turned over an average of £1.3m pa. If this were the case for 15/16 then turnover would have been £5.2m. The stated plans were to open one new unit a year from the existing 2014 base of 3. Today they have just four open with an average turnover of just 1.1m. 

So something hasnt worked.

The last accounts show a negative balance sheet. No new money has been raised.

Now its very possible that they have turned this all around since April 2016. Although the lack of new openings suggest that maybe they havent?

No need for the 285 Crowdcube investors to worry though. Hugh has guaranteed to pay you back and he's old school - one of the oldest actually. Old E's are renowned for keeping their word - remember that recent has been, delicious Dave, for example.

Pip pip.