REG - Norish Plc - Preliminary Results <Origin Href="QuoteRef">NSH_u.L</Origin>

Roebuck FoodAnnouncement

23/03/2017 12:26

RNS Number : 3449A
Norish PLC
23 March 2017
Norish plc
Preliminary Results 2016
Results
Norish plc (AIM: NSH), is pleased to announce its preliminary results for the year ended 31 December 2016. 
Financial Highlights
 Total revenue increased by 27.9% to 32.1m (2015: 25.1m).
 Revenue from commodity trading increased by 46.6% to 19.5m (2015: 13.3m).
 Revenue from our continuing temperature controlled divisions increased by 6.8% to 12.6m (2015: 11.8m).
 Operating profit increased by 3.6% to 0.87m (2015: 0.84m).
 Net assets unchanged at 15.3m (2015: 15.3m). 
 Net debt increased to 5.2m (2015: 3.2m).
Operational Highlights
 The performance of the cold store division was ahead of 2015 by 9.4%
 The performance of the commodity division was ahead of 2015 by 48%
 We invested 1.7m of the funds raised in December 2015 by the end of December 2016.We invested 0.8m in our temperature controlled division, 0.6m in dairy infrastructure along with 0.3m in the herd for the dairy farm in Kilkenny 
 We continue to invest in projects which provide short term payback and in the build out of our dairy business. 
North West Division
The North West cold store division which comprises the freehold sites at Wrexham and Birmingham performed well in 2016. This was mainly as a result of a buoyant market in China for most of 2016.
China is the U.K.'s biggest export market for fifth quarter pig meat. Exports of pig meat to China have increased more than fourfold since the UK started to export there in 2011. Two of the three licensed cold stores in the U.K. are the Norish plc owned properties at Wrexham, North Wales and Brierley Hill, Birmingham.
South East Division
The South East division, which comprises the sites at Bury St. Edmunds (freehold), Braintree (leasehold), Gillingham (long term leasehold at a peppercorn rent) and East Kent (leasehold) performed below the same period last year. Contribution was mainly impacted by a refurbishment programme at the Bury St Edmunds site, which we completed in December 2016.
Commodity Trading
Our commodity trading division which consists of Townview Foods Limited and Foro International Connections Limited ("Foro") contributed 0.5m for the period, up from 0.4m for the same period last year.
Townview Foods Limited trades in protein products, mainly beef, pork, lamb and chicken. Sales from pork increased by 3m during the year, sales from beef increased by 1.9m, and sales from lamb increased by 0.6m. Townview Foods Limited generated a contribution of 0.6m for the period, against 0.4m for the same period last year, and sales of 18.5m, against 12.3m for the same period last year. 
Foro accounted for 1m of the sales, unchanged from 2015. Foro broke even, unchanged from last year. Foro trades mainly in fish, dairy and its currently developing a product to sell to the ready to drinks market.
We are continually investing in people to grow this division.
Dairy
Our low cost grass based dairy farm was successfully converted from a tillage/suckler farm in the second half of 2016.
Discontinued
During 2015 the Group agreed the sale of the Leeds site for 0.4m net. The sale completed in March 2016. This site was not part of the future plans for the business. Losses in respect of this property are included in discontinued activities. 
During 2016, Foro discontinued trading in the FMCG market due to high working capital requirements, currency fluctuations, and unacceptable margins. The 2015 comparative figures have been adjusted to reflect the reclassification.
Outlook
2016 was a year of considerable progress for the group. Commercial decisions made in previous years, combined with a new, focused, management approach and a strengthening of the Group's Balance Sheet, has ensured that Norish is now in a position to develop its business in ways that were previously unavailable to the group.
We have been very encouraged by the excellent start made in the first two months of 2017 by our two main Trading Divisions - Temperature Controlled Storage and Protein Trading (Town View Foods).
The dairy division is in the early stages of developing its business model and is putting in place an experienced senior executive team to manage and grow this business.
Through our subsidiary, Foro International Connections Limited, we are developing retail and food service markets, both in Ireland and the U.K. in conjunction with three significant European manufacturers of fruit drinks, health smoothies and RTD (ready to drink) coffee. This development fits in well with our existing U.K. cold store locations.
At this juncture, our cold stores comprise the greatest proportion of our property, plant and equipment (97%). The cold store division also represents the most immediate opportunity to improve profitability and returns for the group, something the Board is acutely aware of. Through active management of our cold store division, we are looking at every facet of our cost base, implementing changes and building an ever better, more balanced, more diversified business.
At this juncture we consider it appropriate to increase guidance for 2017 to a range of 2.75p to 3p (fully diluted adjusted eps).
Financial Review
Total equity at 31 December 2016 stood at 15.3m (2015: 15.3m). Net debt at 31 December 2016 was 5.2m compared to 3.2m at 31 December 2015.
Dividend
The board recommends the payment of a final dividend of 1.50 cent per share. This will be paid on 20 October 2017 to those shareholders on the register on the 29 September 2017. It will bring the total dividend in respect of the financial year to 1.50 cent per share, unchanged from last year.
Brexit
The United Kingdom voted to leave the EU on the 23rd of June, last year. As of now we have not seen any appreciable change to our business, as a result of that vote.
On behalf of the board, I would like to thank the management team and staff for their commitment and 
contribution in 2016. 
Ted O'Neill
Chairman
Financial Review
The number of pallets handled in increased by 9%, and we handled 18% additional pallets for blast freezing in 2016. This will allow the Group to positively position for future growth. Norish plc is one of only two companies in Britain who can presently provide blast freezing services for pig meat for China. 
The significant feature of the year is the investment in the dairy farming business in Kilkenny.
Sales
Total Group revenue increased by 27.9% to 32.1m (2015: 25.1m). Temperature controlled revenues increased by 6.8% to 12.6m (2015: 11.8m). Revenues were up mainly as a result of an increase in blast freezing volumes. Revenues in the commodity division increased by 46.6% to 19.5m (2015: 13.3m). Townview Foods mainly accounted for the increased sales.
Gross profit
Gross profit unchanged at 1.3m (2015: 1.3m). 
Operating profit
Operating profit increased to 0.9m (2015: 0.8m). 
Finance expense (net)
Finance expense decreased to 0.27m (2015: 0.30m). The decrease is mainly attributable to the cash generated from the fund raise in December 2015.
Loss from discontinued operations
As part of the Group's strategy to exit the ambient sector we recorded a loss of 0.1m (2015: 0.3m). 
In 2016, The Group has exited the FMCG market and recorded a loss of 0.1m (2015: Nil). 
Earnings per share
The basic earnings per share fell to 1.5p (2015: 2.8p). The earning per share was impacted by the additional shares issued in December 2015.
Capital 
During the year we invested 1.7m (2015: 0.5m), 0.6m in capital outlay along with 0.3m in the herd for the dairy farm in Kilkenny and 0.8m in routine capital expenditure in the temperature controlled division.
Cash Position
Net debt increased to 5.2m (2015: 3.2m). Operating activities generated 0.3m (2015: absorbed 0.2m) and financing activities absorbed 0.9m (2015 generated: 4.7m). Investment in assets was made of 1.7m (2015: 0.5m). Investment of 0.3m was made in the dairy herd.
Dividend
The board recommends the payment of a final dividend of 1.50 cent per share. This will be paid on the 20 October 2017 to those shareholders on the register on the 29 September 2017. It will bring the total dividend in respect of the financial year to 1.50 cent per share unchanged from last year.
Treasury policy and management
The treasury function, which is managed centrally, handles all Group funding, debt, cash, working capital and foreign exchange exposures. Group treasury policy concentrates on the minimisation of risk in all of the above areas and is overseenand approved by the Board. Speculative positions are not taken.
Financial risk management
The Group's financial instruments comprise borrowings, cash, derivatives, and various items, such as trade receivables, trade payables etc., that arise directly from its operations. The main purpose of the financial instruments not arising directly from operations is to raise finance for the Group's operations. 
The Group may enter into derivative transactions such as interest rate swaps, caps or forward foreign currency transactions in order to minimise its risks. The purpose of such transactions is to manage the interest rate and currency risks arising from the Group's operations and its sources of finance. 
The main risks arising from the Group's financial instruments are interest rate risk and, liquidity risk. The Group's policies for managing each of these risks are summarised below.
Interest rate risk
The Group finances its operations through a mixture of retained profits, bank and other borrowings at both fixed and floating rates of interest, and working capital. The Group determines the level of borrowings at fixed rates of interest having regard to current market rates and future trends. At the year-end, 3.47m term loans of which, 0.9m are at floating base rate plus a bank margin of 1.2% and 0.83m are at floating base rate plus a bank margin of 1.75% and 0.5m are floating at bank base rate plus a bank margin of 2.75% and 1.24m are floating at bank base rate plus a margin of 3%. The Group holds an interest rate swap on 3m at 1.03% against Bank of England base rate which expires in June 2017. 
Liquidity risk
The Group's policy is that, in order to ensure continuity of funding, a significant portion of its borrowings should mature in more than one year. At the year-end, 59% of the Group's borrowings were due to mature in more than one year. The Group achieves short-term flexibility by means of invoice finance and overdraft facilities. 
Aidan Hughes
Finance Director
Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2016



2016
2015



'000
'000
Continuing operations




Revenue


32,098
25,145
Cost of sales


(30,757)
(23,859)





Gross profit


1,341
1,286





Other income


238
-
Administrative expenses


(707)
(447)
Operating profit from continuing operations 


872
839





Finance income - fair value gain on swaps


20
26
Finance income - interest receivable


10
-
Finance expenses - interest paid


(240)
(272)
Finance expenses - notional interest


(29)
(33)





Profit on continuing activities before taxation


633
560





Income taxes - Corporation tax


(210)
(60)
Income taxes - Deferred tax


18
12





Profit for the financial year from continuing operations


441
512





Loss from discontinued operations


(161)
(223)





Profit for the financial year


280
289





Other comprehensive income 


 -
-
Total comprehensive income for the year 


280
289





Profit for the financial year attributable to owners of the parent


291
291
Loss for the financial year attributable to non-controlling interest


(11)
(2)





Total comprehensive income for the financial year attributable to owners of the parent


291
291
Total comprehensive expense for the financial year attributable to non-controlling interest


(11)
(2)




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2016



2016
2015





Earnings per share expressed in pence per share:




From continuing operations 
- basic 


1.5p
2.8p
- diluted


1.5p
2.8p










From discontinued operations 
- basic 


(0.6)p
(1.2)p
- diluted


(0.6)p
(1.2)p







Consolidated Statement of financial position
at 31 December 2016



2016
2015



'000
'000
Non current assets




Intangible assets


2,403
2,338
Property, plant and equipment


16,635
15,885
Biological assets


540
-



19,578
18,223
Current assets




Trade and other receivables


6,264
4,815
Inventories


483
386
Cash and cash equivalents


2,044
4,383
Assets of disposal group classified as held for sale


698
1,017



9,489
10,601





TOTAL ASSETS


29,067
28,824





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




Share capital


5,616
5,344
Share premium account


7,281
6,990
Capital conversion reserve fund


23
23
Treasury shares


(563)
-
Retained earnings


2,926
2,981
Equity attributable to equity holders of the parent


15,283
15,338





Non controlling interest


(22)
(11)





TOTAL EQUITY


15,261
15,327





Non-current liabilities




Borrowings


3,006
4,123
Financial liabilities at fair value through profit or loss


44
199
Deferred tax


925
942



3,975
5,264
Current liabilities




Trade and other payables


5,082
4,198
Financial liabilities at fair value through profit or loss


255
311
Current tax liabilities


205
44
Borrowings


4,282
3,473
Liabilities of disposal group classified as held for sale


7
207



9,831
8,233





TOTAL EQUITY AND LIABILITIES


29,067
28,824





Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2016



Capital



Non-


Share
Share 
Conversion
Treasury
Retained 

Controlling
Total

capital
premium
Reserve
shares
earnings
Total
interest
Equity

'000
'000
'000
'000
'000
'000
'000
'000









At 1 January 2015
3,280
4,198
23
-
2,878
10,379
(9)
10,370









Net profit/(loss) for the financial year
-
-
-

291
291
(2)
289
Total comprehensive income for the financial year
-
-
-
-
291
291
(2)
289
Issue of share capital
2,064
3,078
-
-
-
5,142
-
5,142
Share issue costs
-
(286)
-
-
-
(286)
-
(286)
Equity dividends paid (recognised directly in equity)
-
-
-
-
(188)
(188)
-
(188)
Transactions with owners
2,064
2,792
-
-
(188)
4,668
-
4,668
At 31 December 2015
5,344
6,990
23
-
2,981
15,338
(11)
15,327









Net profit/(loss) for the financial year
-
-
-

291
291
(11)
280
Total comprehensive income for the financial year
-
-
-

291
291
(11)
280
Issue of share capital
272
291
-

-
563
-
563
Share issue costs
-
-
-

-
-
-
-
Equity dividends paid (recognised directly in equity)
-
-
-

(346)
(346)
-
(346)
Treasury shares acquired
-
-
-
(563)
-
(563)
-
(563)
Transactions with owners
272
291
-
(563)
(55)
(55)
(11)
(66)
At 31 December 2016
5,616
7,281
23
(563)
2,926
15,283
(22)
15,261


Consolidated Cash Flow Statement

For the financial year ended 31 December 2016



2016
2015



'000
'000





Profit on continuing activities before taxation


633
560
Gain on biological assets


(238)
-
Loss on discontinued activities


(161)
(223)
Finance expenses


269
305
Finance income 


(30)
(26)
Depreciation - property, plant and equipment-net


625
615



1,098
1,231
Changes in working capital and provisions:




Increase in inventories


(97)
(334)
Increase in trade and other receivables 


(1,130)
(1,320)
Decrease in current liabilities held for sale


(200)
(418)
Increase in payables


885
1,029
Cash generated from operations


556
188





Interest paid 


(240)
(272)
Interest received


10
-
Taxation paid 


(49)
(95)
Net cash generated/(used in) from operating activities


277
(179)





Investing activities




Investment in intangible assets


(65)
-
Purchase of property, plant and equipment


(1,375)
(502)
Purchase of biological assets


(302)
-
Net cash used in investing activities


(1,742)
(502)
Financing activities




Dividends paid to shareholders


(346)
(188)
Deferred consideration payments


(220)
(185)
Share issue proceeds


-
5,142
Share issue costs


-
(286)
Invoice finance receipts/(payments)


747
1,141
Overdraft payments


-
-
Finance lease capital repayments


(152)
(124)
Finance lease advance


219
-
Term loan advance


-
-
Term loan repayments


(1,122)
(821)
Net cash (used)/ generated from financing activities


(874)
4,679





Net (decrease)/increase in cash and cash equivalents 


(2,339)
3,998





Cash and cash equivalents
Beginning of period


4,383
385





Cash and cash equivalents end of period


2,044
4,383






This information is provided by RNS
The company news service from the London Stock Exchange
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