Typhoo Tea made a loss of almost £40m during its latest financial year after trespassers caused “extensive damage” to its Merseyside factory.
The company, which recently relocated its registered office from Birkenhead, Merseyside, to Bristol, incurred one-off costs of more than £20m after its Moreton factory was broken into and occupied for several days during August 2023.
As a result, Typhoo Tea has reported a pre-tax loss of £37.9m for the year to September 30, 2023, compared to a loss of £9.6m in the prior 12 months.
Newly-filed accounts with Companies House also show that its revenue fell from £33.6m to £25.3m over the same period.
The last time Typhoo Tea made a pre-tax profit was the £220,000 it posted in the year to March 31, 2017. Since then, the company has made over £100m in pre-tax losses.
In March 2023 it was revealed that the firm was to shut down its site in Moreton in June that year with the loss of up to 90 jobs.
Year ‘dominated’ by exceptional costs
A statement signed off by the board said: “Whilst trading was broadly in line with expectations given the effects of the transformation of the business during the period, 2023’s results are dominated by exceptional costs of £24m.
“A portion was the one-off costs of executing a major transformation plan, necessary to address the significant legacy and structural issues faced by the company but fundamental to providing a pathway to sustained profitability. Significant progress was made in the plan’s delivery during the year.
“However, a significant portion also came from one-off events, outside of the company’s control, which could not have been foreseen but negatively impeded progress and had additional material adverse effects on the company’s results.”
Transformation plan
Typhoo Tea’s transformation plan included the discontinuation of unprofitable lines, the closure of its Moreton factory and transfer of operations which led to the loss of almost 100 jobs.
The company said the factory was “inefficient and unsuitable to the revised rationalised product portfolio and beyond economic refurbishment”.
Typhoo Tea’s products and operations was also restructured “to focus more efficiently on value accretive and profitable lines”.
The production of marginal or loss-making lines, particularly own label products for UK and international customers, were ceased.
It added that stock availability was also negatively impacted by general tea paper shortages in the UK during the year “which meant despite robust demand from customers, we were not able to fulfil all their orders”.
Read more
Rising costs fail to keep Brits from their cups of tea as Clipper owner posts record sales
‘Organised trespassers’
Typhoo Tea said that in August 2023, a group pf “organised trespassers” broke into the Moreton site and occupied it for several days.
The business said they caused “extensive damage to its fabric and contents, making the site inaccessible”.
The company said the “abrupt closure” of the site necessitated the relocation of production to third parties “faster than anticipated”.
Typhoo Tea said that this led to “significantly higher direct expenses, impairment of assets and inefficiencies on production as our co-packing partners ramped up their production”.
As a result Typhoo Tea’s exceptional costs jumped from £452,000 to £24m.
After the end of its financial year Typhoo Tea recovered £4.3m in an insurance claim.
Typhoon Tea’s future
The company said that, having “radically rationalised operations” in 2023, the directors are “excited” for the 2024 financial year.
It added: “Legacy issues have been largely dealt with and the results of this operational transformation should become evident during this period.
“The company is now set up for growth, will add value to our customers and consumers and expects to further increase and improve its product range.
“The company will also garner incremental distribution in new channels and improve penetration and operations to achieve higher efficiency and profitability.”
During the year the avenue number of people employed by the company was cut from 198 to 116.
Typhoo Tea was taken over by Zetland Capital Partners in July 2021.