REG - Norish Plc - Preliminary Results

Roebuck FoodAnnouncement

13/03/2020 07:00

RNS Number : 9731F
  
Norish PLC
  
13 March 2020
  
 

 
Norish plc
Preliminary results 2019
 
Norish plc (AIM: NSH), is pleased to announce its results for the year ended 31 December 2019.
 
Financial Highlights
·   Profit before tax increased by 20% to £2.4m (2018: £2m)
·   Diluted adjusted Eps increased by 28% to 6.57p (2018: 5.13p)
·   Group revenue decreased by 0.8% to £36.5m (2018: £36.8m)
·   Operating margins increased to 7.5% (2018: 6.5%)
·   Dividend increased by 5.6% to 1.90 €cent (2018: 1.80 €cent)
·   Net debt was reduced from Stg£10.5m at start of year to Stg£9.7m at year end.
·   Interest cover has increased to 7.9 times (2018: 6.1 times)
 
Diluted adjusted EPS is calculated using profit for the financial year from continuing operations as the measure of earnings. Comparative financial information has been restated following the adoption of IFRS 16 Leases. 
 
 
Divisional Highlights
 




£'m


Cold Stores


Sourcing


Dairy




 


2019


2018


% Growth


2019


2018


% Growth


2019


2018


% Growth




Revenue


15.1


13.7


10.2%


20.6


22.5


(8.4%)


0.9


0.5


80%




EBITDA


4.7


4.1


14.6%


0.5


0.7


(28.6%)


0.0


(0.2)


 




Operating Profit


3.3


2.9


13.8%


0.4


0.6


(33.3%)


(0.1)


(0.3)


66.7%




Operating Margin


21.9%


21.2%


 


1.9%


2.7%


 


(11%)


(60%)


 




 
 
Cold Store division
 
Cold Stores, which comprise by far our largest business activity saw sales increase by 10.2% or £1.4m, from £13.7m to £15.1m. This growth in revenue, saw divisional profits grow by 13.8%, from £2.9m to £3.3m.
 
The drivers of the growth in revenue, comprise a 6% increase in pallets handled, a 14% 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 94% in 2018, to 95% in 2019.
 
Power units consumed were higher by 1%, a creditable performance in the context of 14% growth in blast freezing volumes. 
 
 
Sourcing Division 
 
Sales at our sourcing division declined by 8.4% in 2019, compared with the same period in 2018, from £22.5m to £20.6m. Operating profit declined by a corresponding 33.3%, from £0.6m to £0.4m, reflecting trading uncertainty and currency fluctuations arising from the ongoing Brexit process. 
 
The Group's original investment in the main Sourcing subsidiary, Townview Foods, has been fully recouped and the structures are in place to continue to develop this business.
 
 
Dairy Division
 
Our investment in dairy, whilst still in the development stage, is progressing well.
Cantwellscourt Farm's operating performance in 2019 was much improved on the prior year. Milk production was 56% ahead year on year, reflecting underlying improvement across the key operating metrics; production per cow, pasture grown and herd fertility. In the second half of the year, we also completed the conversion of the herd to 100% A2-protein - the result of an intensive program of genetic testing. The cost of conversion has been expensed through the income statement of the dairy division.
 
Discontinued
 
During 2018 the group decided to exit the Juice business for the ready to drinks market. A loss in the current year of £0.13m was incurred, compared to £0.39m last year.
 
Outlook
 
Despite the uncertainty surrounding COVID-19 we remain optimistic for the year ahead.
 
Notwithstanding disruption in shipments to China year to date, we believe that activity in our cold store division will return to anticipated levels over the balance of the year. The fundamental market opportunity of facilitating exports of protein to China remains intact. Within our cold store business, our investment in robotics in the North West division is starting to deliver results.
 
Within our sourcing division we have added fish as a protein, and we expect to increase sales and improve on profitability.
 
Our subsidiary, Grass to Milk Company, remains on track to launch A2-protein based dairy products in targeted export markets in the second half of 2020. The business has allocated resources across technical, regulatory & nutrition workstreams along with investment in-market in order to successfully execute its commercial strategy. We believe the business is well placed to add value to our unique A2-protein milk supply. 
  
 
Dividend
 
The board recommends the payment of a final dividend of 1.90 €cent per share. This will be paid on 16 October 2020 to those shareholders on the register on the 25 September 2020. It will bring the total dividend in respect of the financial year to 1.90 €cent per share, against 1.80 €cent per share last year, an increase of 5.6%.
 
 
On behalf of the board, I would like to thank the management team and staff for their commitment and contribution in 2019.
 
 
 
 
 
Ted O'Neill
Chairman
 
  
 
 
 

Financial Review

 
The average cold store occupancy increased from 94% to 95%, pallets received increased 6% and blast freezing throughput increased 14%. The significant feature of the year was the improvement of the profitability and returns at our cold stores.
 
 
Sales
 
Total Group revenue decreased by 0.8% to £36.5m (2018: £36.8m). Cold store revenues increased by 10.2% to £15.1m (2018: £13.7m).  Revenues were mainly up on the increase in pallets received and blast freezing volumes. Revenues in the sourcing division decreased by 8.4% to £20.6m (2018: £22.5m). Townview Foods mainly accounted for the decreased sales.
 
Gross profit
 
Gross profit increased by 8% to £3.44m (2018: £3.20m). 
 
Operating profit
 
Operating profit increased by 15% to £2.74m (2018: £2.39m). 
 
Finance expense (net)
 
Finance expense decreased to £0.35m (2018: £0.39m). 
 
Loss from discontinued operations
 
During 2018 the group decided to exit the Juice business for the ready to drink market. A loss in the current year of £0.13m was incurred (2018: loss £0.39m).
 
 
Earnings per share
 
The basic adjusted earnings per share increased by 28% to 6.57p (2018: 5.13p). 
 
Capital 
 
During the period we invested £1.73m (2018: £2.74m) in capital assets, £0.58m was invested in robotics at the North West cold store division and the balance of £1.15m in other capital expenditure for the cold store division.
 
Cash Position
 
Net debt decreased to £9.7m (2018: £10.5m). Cash generated from operations amount to £3.5m (2018: £2.8m) and financing activities absorbed £1.8m (2018: £Nil). Investment in assets was made of £2.3m (2018: £2.9m). 
 
Dividend
 
The board recommends the payment of a final dividend of 1.90 €cent per share. This will be paid on 16 October 2020 to those shareholders on the register on the 25 September 2020. It will bring the total dividend in respect of the financial year to 1.90 €cent per share, against 1.80 €cent per share last year, an increase of 5.6%.


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 overseen and 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 purposes 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 there are £2.1m term loans of which £1.64m are at floating base rate plus a bank margin of 1.85% and £0.19m are at a floating rate of 3.75% and £0.25m are at Euribor plus a bank margin of 1.85%.
 
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, 73% of the Group's term loan borrowings were due to mature in more than one year. The Group achieves short-term flexibility by means of invoice finance and overdraft.
 
 
 
 
 
 
Aidan Hughes
Finance Director
 
 
 
 
 
 
Consolidated STATEMENT OF COMPREHENSIVE INCOME
 
for the financial year ended 31 December 2019




 


 
 


 


 
2019


2018




 


 


 


£'000


£'000 (Restated) 




 


 


 


 


 




Continuing operations


 


 


 


 




Revenue


 


 


36,500


36,802




Cost of sales


 


 


(33,060)


(33,601)




 


 


 


 


 




Gross profit


 


 


3,440


3,201




 


 


 


 


 




Other income


 


 


107


43




Administrative expenses


 


 


(811)


(851)




Operating profit from continuing operations 


 


 


2,736


2,393




 


 


 


 


 




Finance income - interest receivable


 


 


1


3




Finance expenses - interest on bank loans


 


 


(120)


(187)




Finance expenses - lease interest


 


 


(229)


(209)




 


 


 


 


 




Profit on continuing activities before taxation


 


 


2,388


2,000




 


 


 


 


 




Income taxes - Corporation tax 


 


 


(247)


(393)




Income taxes - Deferred tax


 


 


(165)


(63)




 


 


 


 


 




Profit for the financial year from continuing operations


 


 


1,976


1,544




 


 


 


 


 




Loss from discontinued operations


 


 


(135)


(379)




 


 


 


 


 




Profit for the financial year attributable to
owners of the parent


 


 


1,841


1,165




 


 


 


 


 




Other comprehensive income 


 


 


            -


-




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


 


 


1,841


1,165




 


 


 


 


 




 
 




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 
for the financial year ended 31 December 2019(continued)
 




 


 


 


2019


2018




 


 


 


 


 




Earnings per share expressed in pence per share:


 


 


 


 




From continuing operations 
- basic 


 


 


6.57p


5.13p




- diluted


 


 


6.57p


5.13p




 


 


 


 


 




 


 


 


 


 




From discontinued operations 
- basic 


 


 


(0.45)p


(1.26)p




- diluted


 


 


(0.45)p


(1.26)p




 


 


 


 


 




 
  
 
 

Consolidated Statement of financial position

at 31 December 2019




 


 


 


2019


2018




 


 


 


£'000


£'000
(Restated)




Non current assets


 


 


 


 




Goodwill


 


 


2,338


2,338




Intangible assets


 


 


564


166




Property, plant and equipment


 


 


22,777


22,857




Biological assets


 


 


824


639




 


 


 


26,503


26,000




Current assets


 


 


 


 




Trade and other receivables


 


 


6,857


6,250




Inventories


 


 


1,105


624




Cash and cash equivalents


 


 


1,054


1,543




Assets of disposal group classified as held for sale


 


 


277


324




 


 


 


9,293


8,741




 


 


 


 


 




TOTAL ASSETS


 


 


35,796


34,741




 


 


 


 


 




Equity attributable to equity holders of the parent


 


 


 


 




Share capital


 


 


5,640


5,640




Share premium account


 


 


7,321


7,321




Other reserves


 


 


(21)


103




Treasury shares


 


 


-


(563)




Retained earnings


 


 


4,313


3,484




TOTAL EQUITY


 


 


17,253


15,985




 


 


 


 


 




Non-current liabilities


 


 


 


 




Borrowings


 


 


6,100


6,654




Deferred tax


 


 


1,002


839




 


 


 


7,102


7,493




Current liabilities


 


 


 


 




Trade and other payables


 


 


6,564


5,446




Current tax liabilities


 


 


231


390




Borrowings


 


 


4,646


5,412




Liabilities of disposal group classified as held for sale


 


 


-


15




 


 


 


11,441


11,263




 


 


 


 


 




TOTAL EQUITY AND LIABILITIES


 


 


35,796


34,741




 


 


 


 


 




 
Consolidated Statement of Changes in Equity
 
For the financial year ended 31 December 2019
 
 




 


 


 


 


 


 


 




 


Share


Share 


Other


Treasury


Retained 


 




 


capital


premium


Reserves


shares


Earnings


Total




 


£'000


£'000


£'000


£'000


£'000
(Restated) 


£'000




At 1 January 2018


5,616


7,281


103


(563)


3,516


15,953




IFRS 16 adjustments 


-


-


-


-


(783)


(783)




At 1 January 2018 - Restated


5,616


7,281


103


(563)


2,733


15,170




Net profit for the financial year


-


-


-


 


1,165


1,165




Total comprehensive income for the financial year - Restated


-


-


-


-


1,165


1,165




Issue of share capital


24


40


-


-


-


64




Equity dividends paid (recognised directly in equity)


-


-


-


-


(413)


(413)




Foreign exchange gain


-


-


-


-


-


-




Transactions with owners


24


40


-


-


(413)


(349)




At 31 December 2018


5,640


7,321


103


(563)


3,485


15,986




 


 


 


 


 


 


 




Net profit for the financial year


-


-


-


-


1,841


1,841




Total comprehensive income for the financial year


-


-


-


-


1,841


1,841




Transfer of treasury shares


-


-


-


563


(563)


-




Equity dividends paid (recognised directly in equity)


-


-


-


-


(450)


(450)




Foreign exchange gain


-


-


(124)


-


-


(124)




 


 


 


 


 


 


 




Transactions with owners


-


-


(124)


563


(1,013)


(574)




At 31 December 2019


5,640


7,321


(21)


 
-


4,313


17,253




 
 
 
 

Consolidated Cash Flow Statement 





 for the financial year ended 31 December 2019


 


2019


2018




 


 


£'000


£'000
(restated)




 


 


 


 




Profit on continuing activities before taxation


 


2,388


2,000




Gain on biological assets


 


(107)


(43)




Amortisation of intangible assets


 


-


141




Foreign exchange loss/(gain) 


 


97


(23)




Loss on discontinued activities


 


(135)


(379)




Finance expenses


 


349


396




Finance income 


 


(1)


(3)




Depreciation - property, plant and equipment-net


 


1,649


1,396




Net cashflows from operating activities


 


4,240


3,485




 
Changes in working capital and provisions:


 


 


 




(Increase)/decrease in inventories


 


(481)


85




(Increase)/decrease in trade and other receivables 


 


(607)


1,287




Decrease/(increase) in current assets held for sale


 


47


(45)




Decrease in current liabilities held for sale


 


(15)


(3)




Increase /(decrease) in payables


 


1,118


(1,234)




Cash generated from operations


 


4,302


3,575




 


 


 


 




Interest paid 


 


(349)


(396)




Interest received


 


1


3




Taxation paid 


 


(406)


(370)




Net cash generated from operating activities


 


3,548


2,812




 


 


 


 




Investing activities


 


 


 




Investment in intangible assets


 


(419)


(166)




Purchase of property, plant and equipment


 


(1,734)


(2,744)




Sale of biological assets


 


209


68




Purchase of biological assets


 


(324)


(35)




Net cash used in investing activities


 


(2,268)


(2,877)




 
Financing
Dividends paid to shareholders


 


(449)


(413)




Deferred consideration payments


 


-


(29)




Share issue proceeds


 


-


64




Invoice finance receipts


 


(502)


551




Overdraft repayment


 


-


(210)




Finance lease capital repayments


 


(979)


(861)




Term loan advance


 


300


2,200




Finance lease advance


 


271


1,657




Term loan repayments


 


(410)


(2,909)




Net cash (outflow)/inflow from financing activities


 


(1,769)


50




 


 


 


 




Net decrease in cash and cash equivalents 


 


(489)


(15)




Cash and cash equivalents beginning of period


 


1,543


1,558




 


 


 


 




Cash and cash equivalents end of period


 


1,054


1,543




 


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