REG - Norish Plc - Half-year Report

Roebuck FoodAnnouncement

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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