REG - Norish Plc - Half-year Report

Roebuck FoodAnnouncement

20/09/2019 07:05

RNS Number : 0337N
Norish PLC
20 September 2019
 


 
Norish plc
Interim results 2019
Results
 
Norish plc (AIM: NSH), is pleased to announce its interim results for the six months ended 30 June 2019.
 
Financial Highlights
·    Operating profit ahead by 37%, from £1.0m to £1.4m.
·    Profit before tax ahead by 43%, from £0.9m to £1.3m
·    Fully diluted adjusted EPS ahead by 41%, year on year, from 2.2p to 3.1p
·    Net debt after IFRS 16 adjustments reduced from Stg £10.1m at Dec-18 to Stg £9.6m at Jun-19. (Pre-IFRS 16 it reduced from £4.9m to £4.7m).
 
Divisional Highlights
 
 



£'m


Cold Store


Sourcing


Dairy








Jun-19


Jun-18


% Growth


Jun-19


Jun-18


% Growth


Jun-19


Jun-18


% Growth




Revenue


7.3


6.7


10.4%


9.8


11.6


(15.5%)


0.4


0.2


100%




Operating Profit


1.6


1.3


23%


0.2


0.3


(33.3%)


(0.1)


(0.2)


50%




Operating Margin


21.6%


17.9%






2.0%


2.6%






(25%)


(100%)







 
 
Cold Store division
 
Cold Stores are our largest business activity, accounting for circa 75% of the non-current assets in the business. Sales in cold stores increased by 9% or £0.6m, from £6.7m to £7.3m. This growth in revenue, combined with tight cost control, saw divisional profits grow by 23% or £0.3m.
 
The drivers of the growth in revenue, which was predominantly North West based, comprised a 13% increase in pallets handled, a 13% increase in blast frozen throughput, an improved stock turn (from 7.0 weeks to 6.6 weeks) and a slightly higher occupancy level. Occupancy increased from 93% in the first half of 2018, to 95% in the first half of 2019.
 
Labour and energy, our two largest costs were up 2%, year on year. Power units consumed were lower by 2%, a creditable performance in the context of 13% growth in blast freezing volumes.
Operating margins expanded from 17.9% to 21.6%, year on year.
 
Sourcing Division
 
Sales at our sourcing division declined by 15.5% in the first half of 2019, compared with the same period in 2018, from £11.4m to £9.8m. Operating profit declined by a corresponding 33.3%, year on year, from £0.3m to £0.2m, reflecting trading uncertainty and currency fluctuations arising from the ongoing Brexit process.
 
 
Dairy Division
 
In our dairy business, we continue to make progress.
 
At Cantwellscourt Farm, milk production was 68% ahead year on year, reflecting a very good grass growing period, improved management, increased stock numbers and a maturing herd. Our partnership with Captal Farms has resulted in a more robust operating model with sourcing economies, benchmarking with other Captal Farms across key KPIs and support from a highly skilled operations team.   
 
Our subsidiary, Grass to Milk Company, is developing an A2-protein milk supply and combining this with novel dairy processing IP, to develop an early-life stage milk-based beverage targeting high-value export markets. Grass to Milk Company is targeting commercial production in the second half of 2020.
 
Discontinued
 
During the period the group decided to exit the Juice business for the ready to drinks market. A loss of £Nil was incurred, compared to £0.3m last year.
 
Outlook
 
Our cold store business continues to focus on improved revenue generation (in particular sales mix) by working collaboratively with customers, in the context of the resources available to the business. We continue to pursue initiatives to offset underlying cost growth pressures. In a general sense, the Temperature Controlled market appears to be operating close to capacity, as we head into the important final months of the year.
 
We expect to make further progress in our cold store business over the remainder of the year and beyond.
 
Within the sourcing division we have recently added fish to our protein supply and are implementing other initiatives to return to a growth trajectory.
 
With respect to the dairy division, it has been a very good year for grass production and this together with renewed focus on cost control should see the farm generate a much-improved result.
 
Next year should see an opportunity to further increase stock numbers and transition to an A2 protein dairy herd. We expect Grass to Milk Company to achieve commercial sales in the second half of 2020; a major milestone in the development of this niche, value-add dairy business.
 
Dividend
 
The board does not recommend the payment of an interim dividend, unchanged from last year.
 
The final dividend of 1.80 €cent per share announced earlier in the year will be paid on 18 October 2019 to those shareholders on the register on the 27 September 2019.
 
 



 
Norish plc




















Consolidated income statement




















For the six months ended 30 June 2019


















































Six months


Six months


Year












ended


ended


ended












30 June


30 June


31 December












2019


2018


2018












(Unaudited)


(Restated)


(Restated)


































£'000


£'000


£'000


























Continuing operations




















Revenue






17,512


18,454


36,802




Cost of sales






(15,775)


(17,054)


(33,658)




Gross profit






1,737


1,400


3,144


























Other income






70


24


43




Administrative expenses






(381)


(383)


(851)




 
Operating profit from continuing operations






1,426


1,041


2,336


























Finance income - interest receivable






-


-


3




Finance expenses - interest paid






(167)


(163)


(363)


























Profit on continuing activities before taxation






1,259


878


1,976


























Income taxes - Corporation tax






(311)


(216)


(393)




Income taxes - Deferred tax






-


-


(46)


























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






948


662


1,537


























Loss from discontinued activities






(16)


(289)


(379)


























Profit for the period






932


373


1,158


























Other comprehensive income






-


-


-


























Total comprehensive income for the year






932


373


1,158




 
Profit for the period attributable to owners of parent






932


373


1,158




Loss for the financial year attributable to non-controlling interest






-


-


-




Earnings per share expressed in pence per share:




















From continuing operations
- basic






3.1p


2.2p


5.1p




- diluted






3.1p


2.2p


5.1p




From discontinued operations
- basic






0p


(1.0)p


(1.3)p




- diluted






0p


(1.0)p


(1.3)p




 
 










































Norish plc














 




Interim balance sheet














 




As at 30 June 2019














 








As at


As at


As at


 








30 June


30 June


31 December


 








2019


2018


2018


 








(Unaudited)


(Restated)


(Restated)


 




















 








£'000


£'000


£'000


 




ASSETS














 




Non-current assets














 




Goodwill


2,338


2,338


2,338


 




Intangible assets


332


54


166


 




Biological assets


674


658


639


 




Property, plant and equipment


22,644


21,559


22,871


 








25,988


24,609


26,014


 




Current assets














 




Trade and other receivables


6,230


6,721


6,250


 




Inventories


993


480


624


 




Cash and cash equivalents


973


1,167


1,543


 




Assets of disposal group classified as held for sale


284


363


324


 








8,480


8,731


8,741


 




















 




TOTAL ASSETS


34,468


33,340


34,755


 




















 




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


103


103


103


 




Treasury shares


(563)


(563)


(563)


 




Retained earnings


4,682


3,374


3,719


 




TOTAL EQUITY


17,183


15,875


16,220


 




 
Non-current liabilities














 




Borrowings


6,119


5,673


6,222


 




Deferred tax


999


953


999


 








7,118


6,626


7,221


 




















 




Current liabilities














 




Trade and other payables


4,993


5,699


5,446


 




Current tax liabilities


747


583


390


 




Borrowings


4,427


4,494


5,433


 




Liabilities of disposal group classified as held for sale


-


63


15


 








10,167


10,839


11,284


 




















 




TOTAL EQUITY AND LIABILITIES


34,468


33,340


34,755


 




















 




 
 
 














 




Norish plc




Consolidated statement of changes in equity
For the six months ended 30 June 2019






































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 2018


5,616


7,281


103


(563)


3,516


15,953


-


15,953


 








































 




Transition impact of IFRS 16


















(512)


(512)






(512)


 




At 1 January 2018 Restated


5,616


7,281


103


(563)


3,004


15,441






15,441


 




Net profit for the financial period


-


-


-






373


373


 
-


 
373


 




Total comprehensive income for the period


-


-


-


-


373


373


-


373


 




Issue of share capital


24


40


-


-


-


64


-


64


 




Equity dividends paid (recognised directly in equity)


-


-


-


-


-


-


-


-


 




Treasury shares acquired


-


-


-


-


-


-


-


-


 




Transactions with owners


24


40


-


-


373


437


-


437


 




At 30 June 2018


5,640


7,321


103


(563)


3,377


15,878


-


15,878


 








































 




Net profit/(loss) for the financial period


-


-


-






785


785


-


785


 




Total comprehensive income for the period


-


-


-






785


785


-


785


 




Issue of share capital


-


-


-






-


-


-


-


 




Equity dividends paid (recognised directly in equity)


-


-


-






(413)


(413)


-


(413)


 




Foreign Exchange gain


-


-


-


-


-


-


-


-


 




Transactions with owners


-


-


-


-


372


372


-


372


 




At 31 December 2018


5,640


7,321


103


 
(563)


3,749


16,250


-


16,250


 






















 



Net profit for the financial period


-


-


-






932


932


-


932




Total comprehensive income for the period


-


-


-






932


932


-


932




Issue of share capital


-


-


-






-


-


-


-




Equity dividends paid (recognised directly in equity)


-


-


-






-


-


-


-




Foreign Exchange gain


-


-


-


-


-


-


-


-




Transactions with owners


-


-


-


-


932


932


-


932




At 30 June 2019


5,640


7,321


103


 
(563)


4,682


17,183


-


17,183



 
 
 
 
 
 



 
 
Norish plc










 
 




Consolidated cash flow statement
















For the six months ended 30 June 2019




















Six months


Six months


Year








Ended


ended


Ended








30 June


30 June


31 December








2019


2018


2018








(Unaudited)


(Restated)


(Restated)








£'000


£'000


£'000




Profit on continuing activities before taxation


1,259


878


1,976




Gain on biological assets


(70)


(24)


(43)




Amortisation of intangible assets


-


141


141




Foreign exchange gain


-


-


(23)




Loss on discontinued activities


(16)


(289)


(379)




Finance expenses


167


163


363




Finance income


-


-


(3)




Depreciation - property, plant and equipment


826


652


1,427








2,166


1,521


3,459




Changes in working capital:
















Decrease /(increase) in inventories


(369)


229


85




Decrease in trade and other receivables


20


732


1,287




Increase/(decrease) in trade and other receivables for disposal


40


-


(45)




Increase/(decrease) in current liabilities held for sale


(15)


45


(3)




(Decrease)/increase in payables


(453)


(981)


(1,234)




Cash generated from operations


1,389


1,546


3,549






















Interest paid


(167)


(163)


(363)




Interest received


-


-


3




Taxation refund/(paid)


46


-


(370)




Net cash from operating activities


1,268


1,383


2,819




Investing activities
















Investment in intangible assets


(166)


(54)


(166)




Purchase of biological assets


(4)


-


(35)




Sale of biological assets


39






68




Purchase of property, plant and equipment


(599)


(687)


(2,756)




Net cash used in investing activities


(730)


(741)


(2,889)




Financing activities
















Dividends paid to shareholders


-


-


(413)




Deferred consideration payments


-


(29)


(29)




Share issue proceeds


-


64


64




Invoice finance (payments)/receipts


(799)


(325)


551




Overdraft receipts


-


-


(210)




Finance lease capital repayments


(514)


(348)


(868)




Finance lease advance


51


-


1,669




Term loan advance


314


-


2,200




Term loan repayments


(160)


(395)


(2,909)




Net cash used in financing activities


(1,108)


(1,033)


(55)






















Net decrease in cash and cash equivalents


(570)


(391)


(15)




Cash and cash equivalents, at beginning of period


1,543


1,558


1,558




Cash and cash equivalents end of period


973


1,167


1,543



 
Note: The accounting policies applied throughout the period are consistent with those applied for the year ended 31 December 2018, as set out in the 2018 Annual Report.
 
 
Transition to IFRS 16 Leases
 
The accounting policies adopted in the preparation of the interim statement for the six-month period ending 30 June 2019 are consistent with those adopted in the annual report for the year ended 31 December 2018 with the exception of transition to IFRS 16 Leases.
 
IFRS 16 has been endorsed by the EU and is effective from 1 January 2019. For lessees, the standard removes the distinction between finance leases (on balance sheet) and operating leases (off balance sheet) and introduces a single lessee accounting model where almost all leases are recognised on balance sheet as both assets and liabilities.
 
The Group has applied the standard using the full retrospective approach. Accordingly, the 2018 financial information included in these interim financial statements has been restated for the effects of transition to IFRS 16. A cumulative transitional adjustment has been recorded on 1 January 2018, the date of initial application. The Group only applies IFRS 16 to leases which were previously identified as leases under IAS 17 and IFRIC 4 in accordance with the practical expedient allowed under IFRS 16.
 
The Group's loan covenants are on a 'frozen-GAAP' basis and, accordingly, the transition to IFRS 16 has had no impact.
 
Impact of Consolidated Statement of Comprehensive Income
 
For the six-month period ended 30 June 2018, cost of sales reduced by a net £91,000 and finance expense increased by a net £76,000 resulting in an overall £15,000 increase in the profit for the period. Cost of sales reduced as the expense (fixed fees only) relating to operating leases has been replaced by a lesser amount of depreciation expense relating to the right to use asset resulting in a net reduction in cost of sales in the period.
 
For the six-month period ended 30 June 2018, finance expense increased as a result of the recognition of interest on the additional lease liabilities recognised under IFRS16's single lessee accounting model.
 
Overall, a net gain arose in the six-month period ended 30 June 2018 as the reduction in cost of sales exceeded the increase in finance expense as a result of the differing pattern of recognition between depreciation expense and finance expense.
 
Impact on Consolidated Statement of Financial Position
 
At 30 June 2018, the right to use asset recognised under IFRS's single lessee accounting model increased property, plant and equipment by £3,513,000 (31 December 2018: £4,746,000, 1 January 2018: £3,766,000).
 
At 30 June 2018, the additional lease liability recognised under IFRS's single lessee accounting model increased borrowings by £4,013,000 (31 December 2018: £5,221,000, 1 January 2018: £4,280,000).
 
At 30 June 2018, the combined adjustments to both property, plant and equipment and borrowings resulted in a reduction in equity of £500,000 (31 December 2018: £475,000, 1 January 2018: £512,000).
 
Impact on Consolidated Statement of Cash Flows
 
For the six-month period ended 30 June 2018 cash flow generated by operating activities increased by £186,000 and cash flow used in financing activities increased by a similar amount as a result of payments in relation to previously recognised operating leases being classified as finance expenses as opposed to lease expenses.
 
The amounts stated above are subject to audit and, as a result, may be subject to change.
 
 
 
 
Enquiries:



Norish








Aidan Hughes, Finance Director


Telephone: + 44 1293 862 498














 
Davy








Anthony Farrell


Telephone: + 353 1 679 6363



 




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