REG - Norish Plc - Half-year Report

Roebuck FoodAnnouncement

20/09/2018 07:05

RNS Number : 2979B
Norish PLC
20 September 2018
 


 
 
Norish plc
Interim results 2018
Results
 
Norish plc (AIM: NSH), is pleased to announce its interim results for the six months ended 30 June 2018.
 
Financial Highlights
·    Fully diluted adjusted EPS ahead by 16%, year on year, from 1.9p to 2.2p
·    Balance sheet in excellent shape. Net debt reduced from Stg £5.4m at Dec 17 to Stg £5m at June 2018.
·    Interest cover at 10.9 times, up from 7.2 times last year
·    Operating profit ahead by 15%, from Stg £0.83m to Stg £0.95m
·    Profit before tax ahead by 21%, from Stg £0.71m to Stg £0.86m
 
Operational Highlights
 
Cold Store division
 
Cold Stores are our largest business activity, accounting for circa 86% of the non-current assets in the business. This division saw operating profits grow by 17% in the first six months of the year, from Stg £1m to Stg £1.2m. Divisional operating margins expanded from 14.3% to 17.7%, year on year.
 
Within the cold store division, sales at a headline level were down 4%, from £7m to £6.7m. We experienced lower blast freezing activity, reflecting a down cycle in the pork market, particularly to China. As a consequence, the first half was characterised by a greater percentage of lower remunerative storage type business, within the overall sales mix. Occupancy increased from 90% in the first half of 2017, to 92% in the first half of 2018.
 
Costs in the cold store division were significantly reduced; labour (our largest cost) was down 6%, year on year while power expense (our second largest cost) was reduced by 16%, against the same period last year. Labour and power combined were lowered by 10% or Stg £0.3m. Power units consumed were lower by 12%. This reflects the aforementioned reduction in blast freezing activity, together with benefits coming through from the implementation of energy saving initiatives.
 
Within the division, the South East business performed particularly well, with sales ahead by 6%, year on year, to Stg £3.4m and contribution ahead by 32%, year on year. The North West business saw sales reduce by 14% to stg £3.3m and contribution by 2%, reflecting specific customer issues together with the down cycle in the pork export market. 
 
Sourcing Division
 
Sales at our sourcing division fell by 13% in the first half of 2018, compared with the same period in 2017, from £11.5m to £9.7m. Contribution declined by a corresponding 14%, year on year, from £0.32m to £0.3m. A reduction in protein supply has impacted the results. Town View Foods sources protein products mainly beef, pork, lamb and chicken. Sales from pork and chicken decreased by £1m during the period, while sales from beef and lamb decreased by £0.7m.
 
 
Town View Foods, the largest business within the Sourcing division, has repaid its investment within five years of its acquisition. A new deal has been agreed with management to cover an additional five year period.
 
 
Dairy Division
 
In our dairy business, we continue to make progress. At Cantwellscourt Farm, milk production was 3.2%, ahead year on year, despite a late start to the grazing season and lower than normal grass growth, later in the period, arising from the onset of drought conditions. Encouragingly, in the context of a difficult period, our operating costs declined 16% year on year, as we continue to focus on improving operating performance.
 
We are reinvesting the cash from our farming business into rearing replacements with circa 400 heifers coming into production over the next two years.
 
Discontinued
 
During the period the group decided to exit the Juice business for the ready to drinks market. A loss of £0.29m was incurred, compared to £0.07m last year.
 
Outlook
 
The Temperature Controlled market would appear to be operating close to capacity, as we head into the seasonally important final months of the year. Increasing demand could well be a driver for improving rates in relation to the services we provide. A lack of investment in new capacity over a long number of years, together with regulation forcing older plants to shut down and market displacement due to Brexit related issues, have all combined to tighten available cold storage capacity.
 
Our cold store business continues to focus on improving revenue and by reducing our operating costs. The second half should see further benefits from initiatives undertaken in the latter half of 2017 and the first half of 2018. We expect to make further progress in our cold store business over the remainder of 2018 and into 2019.
 
Our cold store assets are well invested. It is worth noting that of the 408,000 sq. foot of temperature-controlled facilities which we operate (on 30 acres), we actually own circa 328,000 sq. foot (on 25 acres). This gives us flexibility to work with our customers in order to meet their needs in this evolving temperature-controlled marketplace. To date, it would appear that Brexit, if anything, has been positive for our cold store business. The concern with possible disruption towards the end of March 2019, should see further demand for frozen and ambient space in the short term. Longer term, supply lines will likely change for some protein sources underpinning the need for greater traceability and existing cold storage capacity within the food chain. Increasingly cold stores are being viewed as integral to the traceability requirements of the marketplace.
 
Within the sourcing division we have recently added fish to our protein supply and are implementing other initiatives to get back on a growth trajectory.
 
In the dairy business, drought has impacted pasture growth over the summer months, with less than 25% of normal rainfall in the main growing period of May to August. Thankfully we have not had to use any of our winter reserves, harvested earlier in 2018.  We have sown forage crops to augment our winter feed requirements. We expect the operating performance in the second half to show continued improvement, year on year, following on a similar trend to the first half of 2018.
 
Elsewhere, we are at the early stages of an exciting collaboration with a successful large-scale dairy farming business that will leverage our collective resources to develop a differentiated business model with significant potential for value creation in the coming years.
 
Over the past number of years, the Group's decision to invest significantly in both cold storage assets, and protein sourcing businesses, has proved to be the correct strategy. This strategy, combined with the investment in a highly motivated executive management team, which has brought a new energy and dynamic to the business, leaves the Group very well placed, for further growth and development, in the years ahead.
 
Dividend
 
The board does not recommend the payment of an interim dividend, unchanged from last year.
 
The final dividend of 1.65€cent per share announced earlier in the year will be paid on 19 October 2018 to those shareholders on the register on the 28 September 2018.
  
 
 
 




Norish plc


 


 


 


 




Consolidated income statement


 


 


 


 




For the six months ended 30 June 2018


 


 


 


 




 


 


 


 


 




 


 


Six months


Six months


Year




 


 


ended


ended


ended




 


 


30 June


30 June


31 December




 


 


2018


2017


2017




 


 


(Unaudited)


(Unaudited)


(Audited)




 


 


 


 


 




 


 


£'000


£'000


£'000




 


 


 


 


 




Continuing operations


 


 


 


 




Revenue


 


18,454


20,545


42,012




Cost of sales


 


(17,145)


(19,351)


(39,160)




Gross profit


 


1,309


1,194


2,852




 


 


 


 


 




Other income


 


24


49


66




Deferred Consideration


 


-


-


(100)




Administrative expenses


 


(383)


(414)


(889)




 
Operating profit from continuing operations


 


950


829


1,929




 


 


 


 


 




Finance income- fair value gain on swaps


 


-


10


10




Finance income - interest receivable


 


-


-


1




Finance expenses - interest paid


 


(87)


(113)


(201)




Finance expenses - notional interest


 


-


(12)


(13)




 


 


 


 


 




Profit on continuing activities before taxation


 


863


714


1,726




 


 


 


 


 




Income taxes - Corporation tax


 


(216)


(141)


(413)




Income taxes - Deferred tax


 


 


 


(28)




 


 


 


 


 




Profit for the period attributable to owners of the parent from continuing operations


 


647


573


1,285




 


 


 


 


 




Loss from discontinued activities


 


(289)


(75)


(292)




 


 


 


 


 




Profit for the period


 


358


498


993




 


 


 


 


 




Other comprehensive income


 


-


-


-




 


 


 


 


 




Total comprehensive income for the year


 


358


498


993




 
Profit for the period attributable to owners of parent


 


358


514


993




Loss for the financial year attributable to non-controlling interest


 


-


(16)


-




Earnings per share expressed in pence per share:


 


 


 


 




From continuing operations
- basic


 


2.2p


1.9p


4.4p




- diluted


 


2.2p


1.9p


4.4p




From discontinued operations
- basic


 


(1.0)p


(0.2)p


(1.0)p




- diluted


 


(1.0)p


(0.2)p


(1.0)p




 


 


 


 


 




Norish plc


 


 


 


 




Interim balance sheet


 


 


 


 




As at 30 June 2018


 


 


 


 




 


As at


As at


As at


 




 


30 June


30 June


31 December


 




 


2018


2017


2017


 




 


(Unaudited)


(Unaudited)


(Audited)


 




 


 


 


 


 




 


£'000


£'000


£'000


 




ASSETS


 


 


 


 




Non-current assets


 


 


 


 




Goodwill


2,338


2,338


2,338


 




Intangible assets


54


147


141


 




Biological assets


658


618


624


 




Property, plant and equipment


18,046


17,449


17,759


 




 


21,096


20,552


20,862


 




Current assets


 


 


 


 




Trade and other receivables


6,721


7,327


7,537


 




Inventories


480


505


709


 




Cash and cash equivalents


1,167


1,279


1,558


 




Assets of disposal group classified as held for sale


363


284


279


 




 


8,731


9,395


10,083


 




 


 


 


 


 




TOTAL ASSETS


29,827


29,947


30,945


 




 


 


 


 


 




Equity attributable to equity holders of the parent
And non-controlling interest


 


 


 


 




Share capital


5,640


5,616


5,616


 




Share premium account


7,321


7,281


7,281


 




Other reserves


103


23


103


 




Treasury shares


(563)


(563)


(563)


 




Retained earnings


3,874


3,440


3,516


 




Equity attributable to equity holders of the parent


16,375


15,797


15,953


 




Non-controlling Interest


-


(38)


-


 




TOTAL EQUITY


16,375


15,759


15,953


 




Non-current liabilities


 


 


 


 




Borrowings


2,159


2,485


2,390


 




Financial Liabilities at fair value through profit or loss


-


-


-


 




Deferred tax


953


925


953


 




 


3,112


3,410


3,343


 




 


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


5,699


6,067


6,680


 




Financial Liabilities at fair value through profit or loss


-


167


29


 




Current tax liabilities


583


346


367


 




Borrowings


3,995


4,192


4,555


 




Liabilities of disposal group classified as held for sale


63


6


18


 




 


10,340


10,778


11,649


 




 


 


 


 


 




TOTAL EQUITY AND LIABILITIES


29,827


29,947


30,945


 




 


 


 


 


 




 


 


 


 


 




Norish plc




Consolidated statement of changes in equity
For the six months ended 30 June 2018




 




 


 


 


 


 


 


 


Non-


 


 




 


Share


Share


Other


Treasury


Retained


 


Controlling


Total


 




 


capital


premium


Reserves


shares


earnings


Total


interest


Equity


 




 


£'000


£'000


£'000


£'000


£'000


£'000


£'000


£'000


 




 


 


 


 


 


 


 


 


 


 




At 1 January 2017


5,616


7,281


23


(563)


2,926


15,283


(22)


15,261


 




 


 


 


 


 


 


 


 


 


 




Net profit/(loss) for the financial year


-


-


-


 


-


-


 
-


 
-


 




Total comprehensive income for the period


-


-


-


-


514


514


(16)


498


 




Issue of share capital


-


-


-


-


-


-


-


-


 




Equity dividends paid (recognised directly in equity)


-


-


-


-


-


-


-


-


 




Treasury shares acquired


-


-


-


-


-


-


-


-


 




Transactions with owners


-


-


-


-


514


514


(16)


498


 




At 30 June 2017


5,616


7,281


23


(563)


3,440


15,797


(38)


15,759


 




 


 


 


 


 


 


 


 


 


 




Net profit/(loss) for the financial period


-


-


-


 


479


479


16


495


 




Total comprehensive income for the period


-


-


-


 


479


479


16


495


 




Issue of share capital


-


-


-


 


-


-


-


-


 




Equity dividends paid (recognised directly in equity)


-


-


-


 


(381)


(381)


-


(381)


 




Foreign Exchange gain


-


-


80


-


-


80


-


80


 




Minority Interest acquired


-


-


-


-


(22)


(22)


22


-


 




Transactions with owners


-


-


80


-


76


156


22


194


 




At 31 December 2017


5,616


7,281


103


 
(563)


3,516


15,953


-


15,953


 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 




Net profit/(loss) for the financial period


-


-


-


 


358


358


-


358




Total comprehensive income for the period


-


-


-


 


358


358


-


358




Issue of share capital


24


40


-


 


-


64


-


64




Equity dividends paid (recognised directly in equity)


-


-


-


 


-


-


-


-




Foreign Exchange gain


-


-


-


-


-


-


-


-




Minority Interest acquired


-


-


-


-


-


-


-


-




Transactions with owners


24


40


-


-


358


422


-


422




At 30 June 2018


5,640


7,321


103


 
(563)


3,874


16,375


-


16,375




 
 
 
 
 




Norish plc


 


 


 




Consolidated cash flow statement


 


 


 




For the six months ended 30 June 2018


 


 


 




 


Six months


Six months


Year




 


Ended


ended


Ended




 


30 June


30 June


31 December




 


2018


2017


2017




 


(Unaudited)


(Unaudited)


(Audited)




 


£'000


£'000


£'000




Profit on continuing activities before taxation


863


714


1,726




Gain on biological assets


(24)


(49)


(66)




Amortisation of intangible assets


141


-


6




Foreign exchange gain


-


-


63




Loss on discontinued activities


(289)


(75)


(292)




Deferred Consideration


-


-


100




Finance expenses


87


125


214




Finance income


-


(10)


(11)




Depreciation - property, plant and equipment


400


360


709




 


1,178


1,066


2,449




Changes in working capital:


 


 


 




Decrease /(increase) in inventories


229


(22)


(226)




Decrease/(increase) in trade and other receivables


732


(649)


(854)




Increase/(decrease) in current liabilities held for sale


45


(1)


11




(Decrease)/increase in payables


(981)


983


1,598




Cash generated from operations


1,203


1,377


2,978




 


 


 


 




Interest paid


(87)


(113)


(201)




Interest received


-


-


1




Taxation paid


-


-


(251)




Net cash from operating activities


1,116


1,264


2,527




Investing activities


 


 


 




Investment in intangible assets


(54)


(82)


(82)




Purchase of biological assets


-


(29)


(19)




Purchase of property, plant and equipment


(687)


(1,175)


(1,816)




Net cash used in investing activities


(741)


(1,286)


(1,917)




Financing activities


 


 


 




Dividends paid to shareholders


-


-


(381)




Deferred consideration payments


(29)


(133)


(372)




Share issue proceeds


64


-


-




Invoice finance (payments)/receipts


(325)


(74)


487




Overdraft receipts


-


-


(94)




Finance lease capital repayments


(81)


(118)


(189)




Finance lease advance


-


-


24




Term loan advance


-


-


266




Term loan repayments


(395)


(418)


(837)




Net cash used in financing activities


(766)


(743)


(1,096)




 


 


 


 




Net decrease in cash and cash equivalents


(391)


(765)


(486)




 


 


 


 




Cash and cash equivalents, at beginning of period


1,558


2,044


2,044




Cash and cash equivalents end of period


1,167


1,279


1,558




 
Note: The accounting policies applied throughout the period are consistent with those applied for the year ended 31 December 2017, as set out in the 2017 Annual Report.
 
Enquiries:




Norish


 




Aidan Hughes, Finance Director


Telephone: + 44 1293 862 498




 


 




 
Davy


 




Anthony Farrell


Telephone: + 353 1 679 6363




 




This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
IR BXGDCGDBBGIC