Half-year Report

Roebuck Food

20/08/2020 10:30

RNS Number : 7099W

Norish PLC

20 August 2020

 

 

Norish plc

Interim results 2020

Results

 

Norish plc (AIM: NSH), is pleased to announce its interim results for the six months ended 30 June 2020.

 

Financial Highlights

·    During the period the Group's balance sheet continued to strengthen

·    Sales fell 9% from £17.5m to £15.9m

·    Fully diluted adjusted EPS fell by 34%, year on year, from 3.1p to 2.06p

·    Pre-IFRS 16 net debt reduced by £2m from £4.7m to £2.7m. Net debt after IFRS 16 adjustments reduced from Stg £9.7m at Dec-19 to Stg £7.7m at Jun-20. Cash availability amounts to £3m at June 2020.

·    Interest cover pre IFRS 16 was 14.9 times.

 

 

Divisional Highlights

 

 

£'m
Cold Store
Sourcing
Dairy
Jun-20
Jun-19
% Growth
Jun-20
Jun-19
% Growth
Jun-20
Jun-19
% Growth
Revenue
7.1
7.3
(2.7%)
7.4
9.8
(24.5%)
0.4
0.4
Nil
Operating Profit
1.3
1.6
(19%)
0.1
0.2
(50%)
(0.1)
(0.1)
Nil
Operating Margin
18.3%
21.9%
1.4%
2.0%
(25%)
(25%)


 

 

Cold Stores

 

Sales in the temperature-controlled division declined 2.7%, a creditable performance given the considerable disruption to trade in both our cold store divisions, arising as a result of the Covid 19 pandemic. Overall profits declined by 19% reflecting the high fixed cost nature of the business.

 

Pallets into our cold stores, the life blood of our business, were particularly impacted as our end user market (China and foodservice) was neutered by covid 19, down 24%, year on year, in the period. Blast freezing volumes saw a reduction in activity from 65,220 pallets blast frozen to 59,351 pallets blast frozen. A second key metric, that of stock turn, again reflected the state of flux in the market, with average stock holding moving out from 6.6 weeks to 8.2 weeks. Pricing action offset these headwinds in significant part.

 

Like for like operational costs were cut to reflect lower activity levels but some new additional costs were incurred to minimise the risk of an outbreak of Covid 19 at our sites. Cold store profits declined by 6.4% in the South East, in the period under review, while profits declined by 22% in the North West.

 

 

 

Sourcing Division

 

Sales at our sourcing division declined by 14% in the first half of 2020, compared with the same period in 2019, from £9.8m to £8.4m. Operating profit declined by a corresponding 50%, year on year, from £0.2m to £0.1m, reflecting the impact of Covid 19 and tighter margins.

 

 

Dairy Division

 

Our investment in dairy is moving from the development to commercial phase. 

Our subsidiary, Grass to Milk Company, continues to execute to plan with its first A2 protein-based product in the final stages of development and an expected launch of this product, in high value export markets by the year end. The business has built considerable technical and commercial expertise to support a successful product launch and is engaging with a strong in-market commercial partner. We believe the business is well placed to add value to our unique grass-fed A2-protein milk supply. 

 

Cantwell's Court Farm's operating performance in the first half of 2020 was consistent with our expectations. Milk revenue was 3% ahead year on year, reflecting a 6% increase in volume driven by better production per cow and a 3% decline in pricing. Operating costs were ahead year-on-year reflecting lower than average pasture growth in the first half, initially due to a wet Spring followed by drought conditions in May and June. Our farming enterprise continues to improve incrementally across key operating KPIs, and our herd is now fully converted to A2 which will form the basis for our future A2-protein milk supply. 

 

The dairy divisions performance was impacted by incurring £0.1m in converting to an A2 herd.

 

Outlook

 

Our cold store business customer base substantially covers the UK Food Service and Chinese pork markets. Both markets were severely disrupted by Covid 19, resulting in customers converting stock to cash, in the first instance, in order to generate liquidity. This dynamic resulted in greater outflows of product, something we believe is necessarily transitory in nature.

 

Pricing in the Chinese pork market has recovered to a level which should sustain a strong export trade over the balance of the year, which will be positive for our North West division. In the South East, management have adapted our offering to reflect the current state of the British Food Service market, which is recovering in any event. We expect the profitability of our South Eastern division to be ahead of last year.

 

We are happy with the significant progress made with the development of our A2 protein milk supply via Cantwell's Court Farm. Grass to Milk Company remains on track to launch its first A2 protein-based product before year end, using our unique milk source.

 

The fallout in the UK Food Service market has afforded Town View Foods, our protein trading subsidiary, the opportunity to increase our trading network and rebuild our business. With an eye to opportunities post Brexit, we are now extending our footprint to South America on a minimal cost basis.

 

We believe our balance sheet strength affords us opportunity in the current environment, vis a vis many of our competitors in the sector.

 

Dividend

 

The board does not recommend the payment of an interim dividend, unchanged from last year.

 

 

 

 

Norish plc
Consolidated income statement
For the six months ended 30 June 2020
Six months
Six months
Year
ended
ended
ended
30 June
30 June
31 December
2020
2019
2019
(Unaudited)
(Unaudited)
(Audited
£'000
£'000
£'000
Continuing operations
Revenue
15,895
17,512
36,500
Cost of sales
(14,659)
(15,775)
(33,060)
Gross profit
1,236
1,737
3,440
Other income
88
70
107
Administrative expenses
(388)
(381)
(811)
Operating profit from continuing operations
936
1,426
2,736
Finance income - interest receivable
-
-
1
Finance expenses - interest on bank loans
(63)
(79)
(120)
Finance expenses - interest
(94)
(88)
(228)
Profit on continuing activities before taxation
779
1,259
2,388
Income taxes - Corporation tax
(160)
(311)
(247)
Income taxes - Deferred tax
-
-
(165)
Profit for the period attributable to owners of the parent from continuing operations
619
948
1,976
Loss from discontinued activities
-
(16)
(135)
Profit for the period
619
932
1,841
Other comprehensive income
-
-
-
Total comprehensive income for the year
619
932
1,841
Earnings per share expressed in pence per share:
From continuing operations
- basic
2.06p
3.1p
6.57p
- diluted
2.06p
3.1p
6.57p
From discontinued operations
- basic
0p
0p
(0.45)p
- diluted
0p
0p
(0.45)p
Norish plc
Interim balance sheet
As at 30 June 2020
As at
As at
As at
30 June
30 June
31 December
2020
2019
2019
(Unaudited)
(Restated)
(Audited)
£'000
£'000
£'000
ASSETS
Non-current assets
Goodwill
2,338
2,338
2,338
Intangible assets
807
332
564
Biological assets
700
674
824
Property, plant and equipment
22,592
22,436
22,777
26,437
25,780
26,503
Current assets
Trade and other receivables
4,838
6,230
6,857
Inventories
1,025
993
1,105
Cash and cash equivalents
1,501
973
1,054
Assets of disposal group classified as held for sale
277
284
277
7,641
8,480
9,293
TOTAL ASSETS
34,078
34,260
35,796
Equity attributable to equity holders of the parent
And non-controlling interest
Share capital
5,640
5,640
5,640
Share premium account
7,321
7,321
7,321
Other reserves
(21)
103
(21)
Treasury shares
-
(563)
-
Retained earnings
4,932
4,417
4,313
TOTAL EQUITY
17,872
16,918
17,253
Non-current liabilities
Borrowings
5,757
6,359
6,100
Deferred tax
1,002
816
1,002
6,759
7,175
7,102
Current liabilities
Trade and other payables
5,526
4,993
6,564
Current tax liabilities
442
747
231
Borrowings
3,479
4,427
4,646
9,447
10,167
11,441
TOTAL EQUITY AND LIABILITIES
34,078
34,260
35,796
Norish plc
Consolidated statement of changes in equity
For the six months ended 30 June 2020
Share
Share
Other
Treasury
Retained
capital
premium
Reserves
shares
earnings
Total
£'000
£'000
£'000
£'000
£'000
£'000
At 1 January 2019
5,640
7,321
103
(563)
3,485
15,986
Net profit for the financial period
-
-
-
932
932
Total comprehensive income for the period
-
-
-
-
932
932
Issue of share capital
-
-
-
-
-
-
Equity dividends paid (recognised directly in equity)
-
-
-
-
-
-
Treasury shares acquired
-
-
-
-
-
-
Transactions with owners
-
-
-
-
932
932
At 30 June 2019
5,640
7,321
103
(563)
4,417
16,918
Net profit/(loss) for the financial period
-
-
-
909
909
Total comprehensive income for the period
-
-
-
909
909
Issue of share capital
-
-
-
563
(563)
-
Equity dividends paid (recognised directly in equity)
-
-
-
(450)
(450)
Foreign Exchange gain
-
-
(124)
-
-
(124)
Transactions with owners
-
-
(124)
563
(104)
(335)
At 31 December 2019
5,640
7,321
(21)
-
4,313
17,253


 

Net profit for the financial period
-
-
-
-
619
619
Total comprehensive income for the period
-
-
-
-
619
619
Issue of share capital
-
-
-
-
-
-
Equity dividends paid (recognised directly in equity)
-
-
-
-
-
-
Foreign Exchange gain
-
-
-
-
-
-
Transactions with owners
-
-
-
-
619
619
At 30 June 2020
5,640
7,321
(21)
-
4,932
17,872


 

 

 

 

Norish plc
Consolidated cash flow statement
For the six months ended 30 June 2020
Six months
Six months
Year
Ended
ended
Ended
30 June
30 June
31 December
2020
2019
2019
(Unaudited)
(Restated)
(Restated)
£'000
£'000
£'000
Profit on continuing activities before taxation
779
1,259
2,388
Gain on biological assets
(88)
(70)
(107)
Foreign exchange gain/(loss)
(51)
-
97
Loss on discontinued activities
-
(16)
(135)
Finance expenses
157
167
349
Finance income
-
-
(1)
Depreciation - property, plant and equipment
887
826
1,649
1,684
2,166
4,240
Changes in working capital:
Decrease /(increase) in inventories
80
(369)
(481)
Decrease/(increase) in trade and other receivables
2,019
20
(607)
Increase/(decrease) in trade and other receivables for disposal
-
40
47
Increase/(decrease) in current liabilities held for sale
-
(15)
(15)
(Decrease)/increase in payables
(1,038)
(453)
1,118
Cash generated from operations
2,745
1,389
4,302
Interest paid
(157)
(167)
(349)
Interest received
-
-
1
Taxation refund/(paid)
51
46
(406)
Net cash from operating activities
2,639
1,268
3,548
Investing activities
Investment in intangible assets
(243)
(166)
(419)
Purchase of biological assets
(5)
(4)
(1,734)
Sale of biological assets
268
39
209
Purchase of property, plant and equipment
(634)
(599)
(324)
Net cash used in investing activities
(614)
(730)
(2,268)
Financing activities
Dividends paid to shareholders
-
-
(449)
Invoice finance (payments)/receipts
(1,225)
(799)
(502)
Finance lease capital repayments
(405)
(514)
(979)
Finance lease advance
215
51
271
Term loan advance
-
314
300
Term loan repayments
(163)
(160)
(410)
Net cash used in financing activities
(1,578)
(1,108)
(1,769)
Net increase /(decrease) in cash and cash equivalents
447
(570)
(489)
Cash and cash equivalents, at beginning of period
1,054
1,543
1,543
Cash and cash equivalents end of period
1,501
973
1,054

 

Note: The accounting policies applied throughout the period are consistent with those applied for the year ended 31 December 2019, as set out in the 2019 Annual Report.

 

 

 

 

Enquiries:

Norish
Aidan Hughes, Finance Director
Telephone: + 44 1293 862 498
Davy
Anthony Farrell
Telephone: + 353 1 679 6363

 

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