Ian Vickers and Chris Stevens, partners at FRP Advisory, have been appointed as joint administrators to Southern Salads Ltd, which has ceased trading with immediate effect with all but a handful of its approximately 260 staff made redundant
The business is a Tonbridge-based fresh salads supplier to supermarkets, restaurant and travel chains across the UK, producing over 50 tonnes of salad per day. However, it faced severe pressure on cashflow in the immediate aftermath of last summer’s EU referendum vote.
The administrators said the company invested heavily in 2014 to expand its production capability which put pressure on working capital and the expected increase in turnover never materialised. Turnover in 2016 reached over £30m.
The sudden decline in sterling following the vote for Brexit was not foreseen by the company, leaving the business grappling with an immediate fall of between 10% and 20% in its purchasing power for overseas-grown salads required for the winter and early spring UK market which in turn put a severe strain on cashflow.
With insufficient protection from its currency hedging arrangements, pressure increased on cash-flow as the business traded through to this spring. The company was unsuccessful in negotiating any significant changes to its pricing terms with its suppliers in mainland Europe, while also being unable to pass on its cost increases to supermarkets and its other customers. The business relies on European suppliers for fresh vegetables and fruit from the Netherlands and Poland in the north to France, Italy and Spain in the south.
Ian Vickers, joint administrator and partner at FRP Advisory, said: ‘Southern Salads, a family run Kent-based business, had traded for around 30 years, and managed over the years to deal with the increasingly competitive pricing pressures from supermarkets and other retail chains faced by all food supply businesses.’
Southern Salads engaged with advisers from FRP Advisory earlier this summer as it sought to restructure the business, including seeking new investment for the company and engaging in detailed sales talks with interested parties. Once both investment and sales negotiations came to an end, the pressure on cashflow proved unsustainable, leaving the company with no viable alternative other than to seek the protection of administration and begin the process of realising assets.
