Pie Face was a company under external administration specialising in:
Manufacture and distribution of pastry based products across Australia. These included frozen and fresh products. With a centralised manufacturing facility, the business was capable of producing a broad range of products and included an R&D facility for development of future lines.
Retail chain of approx. 80 outlets being both company owned and Franchisee operated stores.
The business came under significant financial pressure in 2014 and sought to restructure the business through the appointment of Voluntary Administrators.
Provide a valuation and Work Health & Safety Report “WH&S” of bakery plant & equipment, shop fittings, leasehold improvements and motor vehicles at various locations across Australia. The project involved coordination, valuing & WH&S for approx. 80 sites across Australia over 5 days at an effective date in December 2014.
These reports needed to be conducted urgently without disturbing the ongoing day to day operations. Simultaneously approx. 20 sites in 4 states had to be secured and/or closed/relocated within the Administrator’s rent free period. Tradesmen including plumbers, electricians, refrigeration mechanics, removalists, etc. were all provided and project managed by O’Maras. Most sites required the submissions of Safe Work Method Statements “SWMS”, respective insurance for Professional Indemnity, Public Liability and Workers Compensation Certificates of Currency together with site inductions which was coordinated and reviewed by O’Maras.
The WH&S reports covered risk assessments for trading purposes, which highlighted any noncompliance issues with the ongoing operational sites that needed attention to meet best practice and risk assessments for realisation purposes which were tailored to terminate any future liability to the Administrator and/or owners in the event of a sale of the assets.
As O’Maras have WH&S inspectors qualified up to Certificate 4 levels we were able to conduct these reports simultaneously to the valuation further streamlining the reporting for the Administrators.
The valuations were requested on the following bases:
- Fair Market Value in continued use basis is the estimated amount, expressed in terms of money, which may reasonably be expected for a property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, including installation, as of a specific date and assuming that the business earnings support the value reported. This amount includes all normal direct and indirect costs, such as installation and other assemblage costs to make the property fully operational.^
- Orderly Liquidation Value basis is the estimated gross amount, expressed in terms of money, that could be typically realized from a liquidation sale, given a reasonable period of time to find a purchaser (or purchasers), with the seller being compelled to sell on as as-is, where-is basis, as of a specific date.^
For details on the O’Maras valuation approach see http://omaras.org/valuations/valuation-process.
Benefits of a valuation
- Enable the Administrator with accurate quick information as to value.
- Enlighten the Administrator as to the operational risk around WH&S compliance.
- Empower the Administrator’s management team to make decisions based on Fair Market Value and Forced Liquidation Value.
- Establish an accurate asset listing for any future asset sales.
- Update the asset register, allowing for R&M monitoring and CAPEX forecasts.
- Ensure all insurance covers are adequate. A valuation report enables a review of insurances to reduce the risk of underinsurance, co-insurance or conversely over insuring your business assets.
- Assess the Quality of the Asset Management Plan: Where a company has followed good asset management principles & maintains its assets in good condition you would expect to see the fair market value being quite high compared to the written down value of the company assets. The mapping of the ratio movement over 5 years would provide a powerful insight into the quality of the asset management plan & maintenance schedule.
- Compliance with Australian & international accounting standards: including but not limited to ensuring a company’s assets are carried at no more than their recoverable amount
- AASB 13/ IFRS 13 Fair Value Measurement
- AASB 102/ IAS 2 Inventories
- AASB 116 Property, Plant & Equipment/ IAS 16 Presentation of Financial Statements
- AASB 136 / IAS 36 Impairment of Assets
The Administrators instructed O’Maras immediately upon their appointment. Of major importance to us was their ability to start working straight away and carry out the myriad of tasks required in the relatively short period of time afforded to the Voluntary Administration process. This was especially the case in relation to the Pie Face business where one was having to deal with the trade on over 70 company owned and franchised outlets, make tough decisions and assist in the restructure of the business. What we needed was for our appointed agents to work diligently and efficiently without help to allow us to focus on the restructure. We are pleased to say that O’Maras met these requirements in an expert and professional manner and that we would have no hesitation in instructing them again on a case of this size.