Woodlark Farming Limited (in administration)

Transcription

1 /woodlark from 5 December 2016 to 4 June 2017 Woodlark Farming Limited (in administration) High Court of Justice, Chancery Division, Companies Court Case no. 738 of June 2017

2 Contents Abbreviations and definitions 4 Key messages 5 6 Progress since we last reported 8 Appendix A: Receipts and payments 13 Appendix B: Expenses 15 Appendix C: Remuneration update 17 Appendix D: Other Information 28 3

3 Abbreviations and definitions The following table shows the abbreviations and insolvency terms that may be used during this report: Abbreviation or definition Meaning Administrators/we/our Stephen Oldfield from 30 June 2015 to present and David Chubb from 27 May 2016 to present. AD plant Anaerobic Digester plant AD purchaser Addleshaw Goddard the Bank Anaerobic Digester purchaser (an independent third party) Addleshaw Goddard LLP National Westminster Bank Plc Bidwells Bidwells LLP agent for the sale of the business Company Woodlark Farming Limited in administration EA EBITDA FCA FOS GRG HMRC The Environment Agency Earnings before interest, tax, depreciation and amortisation Financial Conduct Authority Financial Ombudsman Service Global Restructuring Group HM Revenue & Customs IR16 Insolvency (England and Wales) Rules 2016 IA86 Insolvency Act 1986 IRHP January 2017 Report preferential creditors the Proposals RPA secured creditors SPA unsecured creditors Interest Rate Hedging Products Administrators progress report for the period ended 4 December 2016 issued on 4 January 2017 Claims for unpaid wages earned in the four months before the insolvency up to 800, holiday pay and unpaid pension contributions in certain circumstances Rural Payments Agency Creditors with security in respect of their debt, in accordance with section 248 IA86 Sale and purchase agreement Creditors who are neither secured nor preferential 4

4 Key messages port We are writing to update you on the progress of the administration of Woodlark Farming Limited in the six months since our January 2017 report (which covered the six month period from 5 June 2016 to 4 December 2016) gy of a rescue/refinance of the Company or a sale of its business and assets. You can still view our earlier reports on our website at /woodlark. Please contact Andy Lilley on or at andy.lilley@pwc.com if you need any of the passwords to access the reports. How much creditors may receive The following table summarises the possible outcome for creditors*, based on what we currently know. Class of creditor Current estimate (p in ) Previous estimate (p in ) Secured creditors Preferential creditors N/A N/A Unsecured creditors Uncertain Uncertain *Please note this guidance on dividends is only an indication and should not be used as the main basis of any bad debt provision or debt trading. We think the secured creditor will be fully repaid its lending under its The statement of affairs produced by the directors shows potential preferential claims of 44,000. As stated in our last report, we confirm there are no preferential creditors. dividend. The quantum and timing of any dividend are dependent on finalisation of the trading position, taxation position, any IRHP claim recovery and costs of the administration. What you need to do All creditor claims received have now been reviewed and either agreed or rejected. Therefore this report is for 5

5 Overview of Strategy of the administration When we last reported, the key outstanding matters in the administration were as follows: To consult with creditors and /or shareholders in respect of the consequential loss claim in relation to the IRHP mis-selling and thereafter consider its progression or sale; Progress the sales of various assets consistent with ; Monitor ; Finalise the agreement of the creditor claims in case there is a dividend; Monitor the likelihood of a distribution to the creditors. For further information please refer to our January 2017 report and our 22 March 2017 letter. Rescue/Refinance Following dialogue throughout the Administration regarding a potential rescue/refinance the shareholders, in the event, did not provide any such proposals. As we stated in our last report, in the absence of an injection of new money from the IRHP claim, we concluded that no rescue was possible by a third party. Sale of the Business and Assets Consequently, consistent with our strategy outlined in our last report and 22 March 2017 letter, we have continued with the sale of the business and assets of the Company. The sale included open market advertising via the Farmers Weekly, and targeted marketing by both Bidwells (selected following a beauty parade of shortlisted agents) and our own Corporate Finance colleagues. In addition, we asked all creditors, both in our January 2017 report and 22 March 2017 letter to encourage any interested parties to contact us. Finally, whilst continuing to encourage the shareholders to rescue/refinance the Company, we also invited them in the alternate, to participate in the sale process. As a result of the above promotion of the sale we received significant interest and shortlisted four parties for final due diligence and confirmed fully funded final offers. Due to competitive tension and flexing our original timetable the final offers significantly improved on indicative offers and we have recently (20 June 2017) exchanged contracts for the sale of the business and assets at a gross sum of 5.8m plus ingoing valuation and stock valued at completion. This compares favourably to the valuations we received prior to commencing the sales process. IRHP Claim Meanwhile, as creditors are aware from our January 2017 report, we invited offers of funding and/or contingent lawyer recommendations for continuance of the IRHP claim (which had been r independent reviewer in November 2016). As confirmed in our 22 March 2017 letter, no such offers of funding or lawyers names were forthcoming save for a continuing indication of interest from the shareholders. In response to our request in that letter, no creditors have registered interest in taking an assignment of the claim. Additionally, whilst Messrs. Thrings, our solicitors, prepared and forwarded documents to their legal advisors, Messrs. Berg, on 28 March 2017, no subsequent offer for funding or, in the alternate, purchase of the claim has been received from the shareholders. 6

6 In the event, and as a result of both the lack of interest as above and the Bank not agreeing to a meeting to discuss its reasons for the rejection (contrary to what is contemplated in the IRHP protocol), our legal advisors recommended we promote a complaint to the Financial Ombudsman Service FOS. Despite the lack of funding from creditors (or shareholders) we concluded that for the increased cost of filing a complaint (c 2k) it regarding the mis-sale and as a precursor to attempting any sale of any claim external to the creditors or the shareholders. FOS has received a comprehensive file from Messrs. Thrings, including details of the c 4m consequential loss claim and intervening correspondence. FOS has confirmed receipt and have commenced their investigation with enquiries of the Bank. The maximum compensation that the Bank can be compelled to pay if the complaint is upheld by the FOS is 150,000 but its enquiries may result in reappraisal by the Bank on the rejection decision and/or a renewed willingness by a creditor/shareholder or third party to buy (or fund) further prosecution of potential claims related to the consequential loss claim. Meanwhile, consistent with our January 2017 report, it remains prudent to assume no further recovery to the creditors from this source. Dividend Prospects The financial outcome of the administration remains dependent on: Completion of the sale of the business and assets targeted within 13 weeks of exchange (20 June 2017) i.e. 19 September 2017 the only matters preventing completion are: - the transfer of the Environmental Permits by the Environment Agency from the Company to the successful buyer. The national guideline for permit transfer is 13 weeks; and - agreeing the ingoing valuation and stock as at completion (in addition to the 5.8m purchase price) which will determine the final administration trading outcome. The Administrators remain in control and responsible for all trading between exchange (20 June 2017) and completion. Final tax computations for corporation tax which will include a large sum for the capital gains tax on the sale of the business and assets. The latter is a complicated calculation but its quantum is material to the outcome for unsecured creditors as it ranks as an expense of the administration falling after professional fees but before any payment of a dividend to the unsecured creditors. Agreement of the final amount due to the Bank as mortgage holder. Creditors should note that with the agreement of the FCA under the RBS Complaints Process and Refund of Complex Fees for SME customers in GRG announced by the Bank in November 2016, will be refunded and we are liaising with the Bank in that regard. Final professional fees for maintaining trading through to completion of the business and asset sale as above, obtaining agreed permit transfer and ingoing valuation and any residual fees in dealing with the IRHP claim. Further fees for concluding the administration, including an application to court for a further extension of the Administration to accommodate the recent sale and associated closure formalities. In addition, one shareholder continues dialogue with us via solicitors challenging the actions of the Administrators. We are strongly disputing these allegations. 7

7 The outcome of the FOS investigation into the IRHP claim and any subsequent action on that claim which could include a sale or settlement of that claim. As a result of the above it is still not possible to estimate the dividend prospects for unsecured creditors and consequently the dividend prospects remain uncertain. Progress since we last reported Overview Since our last report and updating 22 March 2017 letter to creditors, it became apparent that the rescue of the Company was not forthcoming from the shareholders and therefore, consistent with our dual track strategy, we have continued to trade the Company whilst progressing the sale of its business and assets. Sale of business and assets Over the past six months (alongside Bidwells) we have been actively engaged in the marketing and associated sale processes with regard to the business and assets of the Company. This included considering any structuring which could mitigate the likely capital gains tax expense. Based upon the advice received, we decided to transact this deal by way of a business and assets sale out of the Company. Due to the period of time that the Company has been in administration and as a result of the successful restructuring which derisked the trading activities and supplemented them with the AD feedstock agreement, we positioned this acquisition opportunity as a "good book" transaction. In order to maximise the value that we were able to achieve in a competitive sale process and to support the view that this was an attractive business, we prepared a detailed transaction data room, collating data already maintained during the administration and developing this out further to provide a suite of robust documentary evidence that would be able to stand up to the rigorous scrutiny and due diligence that we expected of a "good book" investor. The sale process proved successful and generated a good level of interest both in the UK and abroad, resulting in a number of offers being received. Based upon our review of these offers, four indicative bids were considered further and reviewed in detail. The indicative bids received were a combination of offers for the business and assets as a whole, as well as offers for discrete parts of the business and assets. Following receipt of bids, and to ensure that sufficient competitive tension was maintained, we decided to take four offers forward to the negotiation stage. This phase of the transaction was quite involved and time consuming, however due to our close management of this process, the level of interest and the competitive tension developed, we were able to significantly increase the value of the offers over the course of the negotiation phase. At this point, there was one offer that stood out as the front-runner and we decided, in order to maintain traction and competitive tension, to provide this interested party the opportunity to expedite the process and exchange contracts within a very tight time frame. Following the end of this statutory reporting period (4 June 2017) and with Addleshaw Goddard and Bidwells, our team worked hard to finalise the SPA negotiation and successfully exchanged contracts with JMW Farms Limited, an unconnected party, on 20 June 2017 with a view to completion in 13 weeks time, once the Environment Agency permits have been transferred to the buyer get permit transfer timeline). JMW Farms Limited is a Group of companies concentrating on pig production within Northern Ireland, Republic of Ireland and mainland UK. 8

8 Trading During the period we have continued to trade the Company whilst preparing the business for sale. The business remains on budget to deliver a healthy profit in its first year (2017) of normalised trading from the feedstock agreement. The overall result for the year will only become clear when the ingoing valuation is performed on the completion of the sale (as above). The attached receipts and payments account reflects only the cash transactions in the period to date and these include 2017 cropping licences and the costs of establishing the 2017 maize crop. Financial performance during the period has been pleasing mainly due to the increase in straw and muck income both of which exceeded budget for all months but May. In May there were technical issues in the AD plant which resulted in a shortfall in that one month alone but we expect to continue to provide the current muck quantities throughout the year, providing the potential for upside from this profit centre. The rental properties continue to provide a stable and consistent source of income with there being no outstanding rent owed over 30 days. We expect to continue on the existing tenanted business model for the remainder of the administration trading period. There have been higher labour costs than initially budgeted in the period. This is because management has made use of the prolonged dry spell to prepare the land (with digestate from the AD plant and slurry) for the maize. The sale process has also taken up management time which has been compensated through overtime and thus increased the staff costs. As at the end of the period, 96% of the maize has been planted in line with All cropping licences have now been entered into; 19 as tenants and 2 as a landlord. From these contracts we are growing 643ha of maize for the FY17/18 harvest, of which 614ha are rented. We have increased the maize crop this year by 70ha (11%) to provide comfort to an incoming purchaser that the targeted feedstock contract quantities will be fulfilled. At this early stage we are forecasting the yields to be between 22,000 and 32,000 tonnes which should exceed the budgeted revenue. As we have been able to get ahead with the planting of maize due to the weather, we expect to be ahead of schedule with the maize crop and hope therefore, that the benefits of this will be seen in the harvest. As expected the digestate from the AD plant has proved useful and has eliminated the associated costs of fertiliser (FY16/17 49k) which should be translated into increased EBITDA this year. Other work completed in the period has been renewing the Glebe Farm lease and additionally, in order to comply with new legislation, a pension scheme has been started for the employees. Various meetings with Warren Energy have been conducted to ensure the customer due diligence process ran smoothly. There were also numerous operational matters which needed to be addressed including a lagoon pipeline to increase efficiencies. Cash flow forecasts have been completed and due to the additional land rented this period cash is being managed carefully. We expect this to be the case until completion of the sale process or the next maize instalment from Warren Energy. 9

9 Other issues Tax and VAT finalised in this period. As in previous years, we employed the services of Messrs Albert Goodman LLP to prepare the computations with our internal tax specialists conducting an overview. In the period we have completed two VAT returns to comply with our statutory obligations. Investigations and actions Nothing has come to our attention during the period under review to suggest that we need to do any more work Practice No.2. Our receipts and payments account We set out in Appendix A an account of our receipts and payments in the administration from 5 December 2016 to 4 June Our expenses for the period covered by this report. Importantly the statement excludes any potential tax liabilities that we may need to pay as an administration expense in due course because amounts due will depend on the position at the end of the tax accounting period, any available tax losses and any chargeable gains tax due on sale. Any tax charge for capital gain will rank ahead of any dividend payable to the unsecured creditors. Our fees We set out in Appendix C an update on our remuneration which covers our fees, disbursements and other related matters in this case. Creditors will note: We were appointed on 1 February 2011 as a result of the Company and its shareholders being unable to ition which would have placed the Company into Compulsory Winding Up (Liquidation) - this is now over 6 years ago. The costs for this period include c 327k for conducting the sale of the business and assets. The costs include c 98k of time spent liaising with the shareholders, their agents and lawyers in the period 5 December 2016 to 4 June Pre-administration costs We have decided not to seek approval for payment of the unpaid pre-appointment costs. 10

10 Creditors have the right to ask for more information within 21 days of receiving this report as set out in Rule 18.9 IR16. Any request must be in writing. Creditors can also challenge fees and expenses within eight weeks of receiving this report as set out in Rule IR16. This information can also be found in the guide to fees at: You can also get a copy free of charge by telephoning Andy Lilley on What we still need to do Obtain permission from the court to extend the administration to allow time to complete the sale of the business, complete other outstanding matters and wind down the administration in an orderly manner; Continue the trading of the Company between exchange of contracts (20 June 2017) and completion of the business and assets sale (targeted for 13 weeks i.e. 19 September 2017 driven by the EA permit transfer as above); Calculate and agree the ingoing valuation for stock and work in progress to be paid by the Purchaser which in turn will determine the overall trading outcome of the administration; Transfer the business and assets to the Purchaser in an orderly manner following completion of the sale; Settle the amount outstanding to the secured creditor including finalising any refund of complex fees under the GRG scheme; Liaise with FOS and based on the feedback received and matters arising, finalise the IRHP claim; Finalise statutory and compliance matters such as VAT returns and tax returns including in particular the capital gains computations on the sale and the tax arising; Settle all outstanding expenses from the Administrators trading period plus other costs of the administration including, where there are residual funds, capital gains tax; and Make a distribution dividend to the creditors if there are sufficient funds to do so. The quantum and timing of any dividend to unsecured creditors will be subject to: The final amount agreed for the ingoing valuation and stock at business and asset sale completion; Any recovery from the IRHP claim (net of costs) following the FOS complaint; The performance of the business between now and date of sale; The quantum of the capital gains tax charge on the sale which ranks for payment ahead of any dividend to unsecured creditors; and The final amount of Administrators and those of their legal and property advisors (a summary of those incurred to date and those anticipated are discussed later in this report). Next steps The administration is currently due to end on 31 July 2017 and we are therefore making a further application to court to extend the administration to allow us time to transfer the EA permits and thereupon complete the sale of the business and assets, the FOS review on IRHP and complete the practical and statutory closure tasks, including calculating and obtaining tax clearance. In addition, we will be se our discharge once the administration is complete and we have vacated office. 11

11 We are currently considering the best strategy for ending the administration, given the uncertainty regarding any potential dividend for unsecured creditors. We expect to send our next report to creditors within or upon six months time. Yours faithfully For and on behalf of the Company th Andy Lilley, on Stephen Oldfield Joint administrator Stephen Oldfield and David Chubb have been appointed as joint administrators of the Company to manage its affairs, business and property as its agents without personal liability. Both are licensed in the United Kingdom to act as Insolvency Practitioners by the Institute of Chartered Accountants in England and Wales. The joint administrators are bound by the Insolvency Code of Ethics which can be found at: The joint administrators are Data Controllers of personal data as defined by the Data Protection Act PricewaterhouseCoopers LLP will act as Data Processor on their instructions. Personal data will be kept secure and processed only for matters relating to the administration. 12

12 Appendix A: Receipts and payments 13

13 Total from Total from 5 1 February 2011 December 2016 to 4 to 4 December June Total TRADING RECEIPTS Post appointment trading sales 1,655, , ,927, Service charges/reclaims 479, , Other income - including Utilities and RPA 160, , , Landlord's improvements 131, , Rental income - post appointment 2,278, , ,471, Third Party/unallocated funds Sundry receipts 6, , ,712, , ,217, TRADING PAYMENTS Duress payments (15,277.48) - (15,277.48) Cropping licence (248,676.49) (281,570.40) (530,246.89) Employee-related costs (18,294.35) (1,232.65) (19,527.00) Farm purchases (719,788.02) (94,620.78) (814,408.80) General expenses (29,973.74) (780.00) (30,753.74) Landlord's improvements (98,542.59) (7,002.00) (105,544.59) Interest on landlord's improvements (1,391.00) (511.00) (1,902.00) General rates (999.24) - (999.24) Insurance (181,667.33) (17,826.40) (199,493.73) Irrecoverable VAT (62,848.20) (7.40) (62,855.60) Lease and hire charges (399,284.48) (83,462.50) (482,746.98) Licenses and trademarks (77,173.86) (12,804.31) (89,978.17) Motor and travel expenses (139,492.48) (1,882.01) (141,374.49) Motor vehicles (5,002.50) - (5,002.50) Office costs including postage/it etc. (19,736.66) (1,460.35) (21,197.01) PAYE/NIC (457,980.91) (22,179.45) (480,160.36) Pension deductions (45,137.95) (916.45) (46,054.40) Subcontractors (223,235.67) (10,444.24) (233,679.91) Agents fees and disbursements (21,013.37) - (21,013.37) Rent (300,698.40) - (300,698.40) Professional fees (76,409.03) (5,238.00) (81,647.03) Professional fees - legal fees (5,206.50) - (5,206.50) Repairs and maintenance (472,072.29) (24,515.67) (496,587.96) Telephone/faxes (28,661.32) (1,489.54) (30,150.86) Utilities (130,529.09) (1,156.43) (131,685.52) Wages (939,034.01) (62,069.83) (1,001,103.84) (4,718,126.96) (631,169.41) (5,349,296.37) TRADING ACCOUNT BALANCE (5,471.84) (125,850.44) (131,322.28) 14

14 Appendix B: Expenses The following table provides details of our expenses. Expenses are amounts properly payable by us as administrators from the estate and includes our fees, but excludes distributions to creditors. The table also excludes any potential tax liabilities that we may need to pay as an administration expense because amounts becoming due will depend on the position at the end of the tax accounting period. The table should be read in conjunction with the receipts and payments account at Appendix A, which shows expenses actually paid during the period and the total paid to date. Total expenses Total expenses incurred brought forward from 4 December 2016 Total expenses paid to 4 June 2017 Expenses outstanding at 4 June 2017 Expenses incurred in this period Fixed charge expenses - Overage settlement agreement 223, , Agents fees and disbursements 31, , Late completion penalty Legal fees and disbursements 74, , Total of fixed charge expenses 328, , Floating charge expenses - Bank charges 6, , Plant and machinery 67, , , Agents fees and disbursements 28, , , , Legal fees and disbursements 305, , , , Other interest paid 4, , Statutory advertising Office holders disbursements 13, , , , Office holders fees 1,739, , ,141, , Total of floating charge expenses 2,166, , ,586, , Trading expenses (see separate breakdown) 5,427, ,349, , , Total 7,922, ,966, ,526, ,537,

15 Trading expenses Total expenses incurred brought forward from 4 December 2016 Total expenses paid to 4 June 2017 Expenses outstanding at 4 June 2017 Expenses incurred in this period Duress payments 15, , Cropping licence 248, , , , Employee-related costs 18, , , Farm related purchases 719, , , , General expenses 29, , Landlord's improvements 98, , , Interest on landlord's improvements 1, , General rates Insurance 181, , , Irrecoverable VAT 62, , Lease and hire charges 399, , , , Licences and trademarks 77, , , Motor and travel expenses 139, , , , Motor vehicles 5, , Office costs including postage/it etc 19, , , Office holders trading fees 709, , , PAY E/NIC 457, , , Pension deductions 45, , Subcontractors 223, , , , Agents fees and disbursements 21, , Rent 300, , Professional fees 76, , , Professional fees - legal fees 5, , Repairs and maintenance 472, , , , Telephone/faxes 28, , , Utilities 130, , , , Wages 939, ,001, , Total of trading expenses 5,427, ,349, , ,

16 Appendix C: Remuneration update Our fees were approved on a time cost basis by the Court. To date we have drawn fees of 109, in line with the approval given, as shown on the enclosed receipts and payments account. The time cost charges incurred in the period covered by this report are 596, This amount does not necessarily reflect how much we will eventually draw as fees for this period. We set out later in this Appendix details of our work to date, anticipated future work, disbursements, subcontracted work and payments to associates. 17

17 Our time charging policy and hourly rates We and our team charge our time for the work we need to do in the administration. We delegate tasks to suitable grades of staff, taking into account their experience and any specialist knowledge that is needed and we supervise them properly to maximise the cost effectiveness of the work done. Anything complex or important matters of exceptional responsibility are handled by our senior staff or us. All of our staff who work on the administration (including our cashiers, support and secretarial staff) charge time directly to the case and are included in any analysis of time charged. Each grade of staff has an hourly charge out rate which is reviewed from time to time. Work carried out by our cashiers, support and secretarial ged by partners or other staff members. charge general or overhead costs. We set out below the maximum charge-out rates per hour for the grades of our staff who already or who are likely to work on the administration. Grade Up to 30 June 2017 Partner 600 Director 500 Senior manager 435 Manager 345 Senior associate qualified 260 Senior associate unqualified 190 Associate 170 Support staff 89 We call on colleagues in our Tax, VAT, Real Estate and Pensions departments where we need their expert advice. Their specialist charge-out rates vary but the following are the maximum rates by grade per hour. Grade Senior manager 835 Manager 605 Senior Associate / consultant 445 Associate / assistant consultant 240 Support staff 140 In common with many professional firms, our scale rates may rise to cover annual inflationary cost increases. 18

18 Our work in the period Earlier in this section we have included an analysis of the time spent by the various grades of staff. Whilst this is not an exhaustive list, in the following table we provide more detail on the key areas of work done: Area of work Work undertaken Why the work was necessary What, if any, financial benefit the work provided to creditors OR whether it was required by statute Strategy & planning Internal case strategy review and progression meetings. Consultation with advisors on the status of the administration and the exit options available. Overview of the business plan updates and actual progress against plan. Regular meetings/calls with senior management to discuss ongoing trading and commercial strategy. Budgets and cost monitoring. For the proper management of the case. Controls efficiencies, time costs and ensures continued case progression. Secured & unsecured creditors Ad hoc communications with the Bank with updates by and telephone. Liaising with unsecured creditors regarding further information required to assess their claims. Finalising received claims. Dealing with creditor correspondence and requests for updates. Trading Supporting Company management with- suppliers; tenants; and AD purchaser and operating company. Reviewing and approving purchase orders and Ensuring the secured creditor is kept apprised of the administration strategy, the preservation and maintenance of its secured assets (property) and its likely repayment route linked to the options for the exit of the administration. To agree claims and keep creditors informed on the progress of the case To control and monitor trading to ensure both ongoing profitability and cash generation. Work is required by statute and for the proper administration of the case. To establish a low risk profitable and cash generative trading business that provides one of the key elements for the 19

19 Area of work Work undertaken Why the work was necessary What, if any, financial benefit the work provided to creditors OR whether it was required by statute Sale of business and assets arranging credit terms/payment of suppliers. Reviewing receivables to ensure arrears collected and amounts due are paid on time. Preparing and processing trading receipts. Reviewing property maintenance requests and operational equipment needs. Ongoing review of trading performance against the business plan both in terms of profitability and cash. Liaising with insurers re updates and renewals. Dealing with employee payroll, pension, expenses, HMRC. Set up of employee pension scheme. Discussion on the merits of the claim with creditors and shareholders. Selection of agents and agreeing the joint agency agreement. Preparing an information memorandum. Issuing non-disclosure agreements. Liaising with interested parties. Preparing information for and providing access to data room. Inviting bids and assessing offers. Liaising with potential purchasers and solicitors. Purchaser credit scoring. Due diligence. Reviewing cash flow and anticipating cash needs. Support but also performance manage senior management. To avoid undue trading risk. To comply with new legislation introduced in the UK on pensions. To reflect the dual track administration strategy to achieve the statutory purpose. exit of the administration. To achieve a realisation of the business and assets in the absence of a rescue of the company 20

20 Area of work Work undertaken Why the work was necessary What, if any, financial benefit the work provided to creditors OR whether it was required by statute Negotiations with interested parties. Holding internal meetings to discuss/review offers received and structure of sale including tax issues. Accounting & treasury Regular bank reconciliations. Account postings for income received processing non trading payments Verifying new payee bank account details. To manage the accounts. To ensure receipts and payments are fully and accurately recorded. Ensures proper financial control of cash and profitability. Required by statute and regulations. Statutory & compliance Preparation, appointee review and sending out previous progress report in January To comply with our statutory obligations. Required by statute/regulations. Providing a further progress update to creditors in March Liaising with lawyers on the conduct of the administration, potential exit options. Drafting this progress report. Review of insurance position and existing cover. Case data maintenance and filing. Internal compliance procedures. Shareholders Communication with the shareholders and their professional advisors on the strategy and conduct of the administration. IRHP/GRG Liaison with Messrs Thrings on the options arising from Liaison with the shareholders was required due to the nature of the case and their continuing efforts to construct a rescue of the Company. To explore any remaining recovery Potential recovery to the 21

21 Area of work Work undertaken the rejection of the IRHP claim. Communications with both the shareholders and the creditors on those options arising including requests for funding and /or alternate legal advisors on a no win no fee basis. Liaising with the Banks IRHP team requesting a meeting to explain the rejection Submitting a complaint to FOS Liasion with the Bank under the GRG scheme for the refund of complex fees Why the work was necessary from the IRHP claim of 4m for consequential loss What, if any, financial benefit the work provided to creditors OR whether it was required by statute Administration and testing the IRHP rejection decision in a cost effecient manner Our future work We still need to do the following work to achieve the purpose of administration. Area of work Work we need to do Estimated cost Strategy & planning Budgets and cost monitoring. Appointee and senior staff strategy overview. Planning for the end of the administration. Whether or not the work will provide a financial benefit to creditors 10,000 Controls efficiencies, time costs and ensures continued case progression towards closure. Secured & unsecured creditors Liaising with secured creditor regarding claim finalisation, including PPFA and equity close out 12,500 Distribution of funds to respective category of creditor as required by 22

22 and final distribution. Applying to court for an extension. Calculating the outcome of the administration so as to determine the availability of any dividend and announcing any declaration to creditors. Preparing and distributing any available funds to unsecured creditors. Dealing with ad hoc creditor enquiries. Trading Ongoing support of Company management with o suppliers; o tenants; and o AD purchaser and operating company. Reviewing and approving purchase orders and arranging credit terms/payment of suppliers. Reviewing receivables to ensure arrears collected and amounts due are paid on time. Preparing and processing trading receipts. Reviewing property maintenance requests and operational equipment needs. Liaising with senior management on staffing needs. Ongoing review of trading performance against the business plan both in terms of profitability and cash. Dealing with employee payroll, expenses, statute. 37,000 Finalising the trading position is essential to enable a smooth transition of contracts to the Purchaser. 23

23 Sale of business and assets HMRC payments. Transfer of contracts and processes to the Purchaser. Closing of PwC systems relating to the case Liaising with Purchaser and their solicitors to complete the sale and ensure a smooth handover of the business Negotiating on final ingoing valuation and stock Dealing with any postsale issues arising. Accounting & treasury Bank reconciliations. Accounting for receipts Dealing with payments of final expenses and journals. Dividend payment. Payment of Administrators fees. Dealing with unclaimed dividend cheques. Account closure procedures. Statutory & compliance Internal compliance procedures. Periodic manager and appointee reviews as required by regulatory body. Making application to court for further extension. Creditors and Court reporting and liaising with solicitors in relation to the exit of the administration. Obtaining necessary agreement to the Administrat Drafting and sending out this progress report to creditors. Drafting and sending out the final report to 35,000 Essential for the progress of the case. 7,500 Ensures proper financial control of cash and profitability. Required by statute and regulations. 25,000 Required by statute. 24

24 creditors. Updating case records. Internal case progression reviews. Case closure e.g. systems/files. bonding. Tax & VAT Completion of statutory VAT returns. Complying with the 15,000 Required by statute. obligations. Liaising with the and submission of the corporation tax return for the financial year January Liaising with C re final tax return Final reconciliation of VAT control account. Employees & pensions Dealing with employee related matters. Shareholders No further costs are anticipated. IRHP/GRG Minimal costs responding to any additional FOS information requests 2,500 Required by statute. 1,000 To investigate potential for further recovery from this source Disbursements shared or allocated services provided by our own firm, including room hire, document storage, photocopying, communication the case, subject to a reasonable method of calculation and allocation and approved by the same party who approves our fees. Our expenses policy allows for all properly incurred expenses to be recharged to the administration but has not yet been approved by the Court. 25

25 The following disbursements arose in the period of this report. Category 2 2 Policy Photocopying - at 5 pence per sheet copied, only charged for circulars to creditors and other bulk copying. Mileage - At a maximum of 71 pence per mile (up to 2,000cc) or 90 pence per mile (over 2,000cc) Costs incurred , FIDES Bank charges All other disbursements reimbursed at cost: Rail fares Taxi fares Subsistence allowance Postage Car Parking Courier Mobile phone charges Total , Our relationships We have no business or personal relationships with the parties who approve our fees or who provide services to the administration where the relationship could give rise to a conflict of interest. Legal and other professional firms Service provided Name of firm / organisation Reason selected Basis of fees Legal services Addleshaw Goddard LLP Tax advice Albert Goodman LLP Legal services Birketts Solicitors Legal expertise Time costs Expertise and historical knowledge Set fee Legal expertise. Time costs 26

26 Chartered Surveyors Insurance brokers (liaison with insurance providers) Bidwells LLP Expertise and industry knowledge. JLT Speciality Limited Expertise and industry knowledge Commission basis as a percentage of asset realisations. Set fee 27

27 Appendix D: Other information Court details for the administration: Royal Courts of Justice, Chancery Division, Companies Court 738 of 2011 Woodlark Farming Limited Trading name: Woodlark Farming Limited Registered number: Registered address: appointment: Central Square (8 th floor), 29 Wellington Street, Leeds, LS1 4DL 1 February 2011 Stephen Mark Oldfield of PricewaterhouseCoopers LLP, Abacus House, Castle Park, Cambridge, CB3 0AN, United Kingdom from 1 February 2011 to 19 August 2013 and from 30 June 2015 to present. David Christian Chubb of PricewaterhouseCoopers LLP, 7 More London, Riverside, London, SE1 2RT from 27 May 2016 to present. Christopher William Pillar of PricewaterhouseCoopers 9 Greyfriars Road, Reading, Berkshire, RG1 1JG from 1 February 2011 to 27 May Stuart David Maddison of PricewaterhouseCoopers 9 Greyfriars Road, Reading, Berkshire, RG1 1JG from 19 August 2013 to 29 June Extension(s) to the initial period of appointment: The administration of the Company was due to end automatically on 31 January An extension of twelve months to 31 January 2013 was granted by the Court on 6 January The administration was then extended for a further period of twelve months to 31 January 2014 by order of the Court on 21 January An extension of six months to 31 July 2014 was granted by the Court on 6 January 2014 followed by an extension of 12 months to 31 July 2015, granted on 11 July A further extension of 12 months to 31 July 2016 was granted by the Court on 27 July A further extension of 12 months to 31 July 2017 was granted by the Court on 28 July address: responsibilities: National Westminster Bank Plc, 135 Bishopsgate, London, EC2M 3UR. In relation to paragraph 100(2) Sch.B1 IA86, during the period for which the administration is in force, any act required or authorised under any enactment to be done by the Joint Administrators may be done by all or one or more persons for the time being holding that office. 28