REG - Roebuck Food Group - Chairman's Statement - Final Results
28/03/2022 09:30
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RNS Number : 2144G Roebuck Food Group PLC 28 March 2022
Chairman's Statement
Roebuck Food Group plc (AIM: RFG), is pleased to announce its results for the
year ended 31 December 2021.
Group Financial Highlights - Continuing Operations
· Group revenue increased by 30% to £24.5m (2020: £18.8m)
· Cold store business sold for £55.2m. Profit on sale £40m
· Capital return delivered to Shareholders of £49.9m (£1.66 per
share)
· Net debt of £8.7m eliminated in Oct 21. Net cash at year end £1.4m.
· EBITDA of £0.2m at the Dairy division (2020 : £Nil)
· Group costs reduced to £0.5m for the year (2020 : £0.86m)
Diluted adjusted EPS is calculated using loss for the financial year from
continuing operations as the measure of earnings. Financial information above,
including comparative information, is from continuing operations only.
Divisional Highlights
£'m Sourcing Dairy
2021 2020 2021 2020
Revenue 23.3 17.8 1.2 1.0
EBITDA 0.3 0.3 0.2 0.0
Operating Profit/(loss) 0.3 0.3 (2.4) (0.1)
Operating Margin 1.3% 1.8% 0%
Sourcing Division
Sales at our sourcing division increased by 31% in 2021, compared with the
same period in 2020, from £17.8m to £23.3m. Operating profit remained
unchanged at £0.3m.
The sourcing division has commenced its strategy of diversifying into sourcing
and suppling proteins in new markets outside of the UK and Ireland. South
Africa and South America have become significant emerging markets for Townview
("TVF") whilst also introducing TVF to new sourcing capabilities on a global
scale. The integration and growth within these markets has initially come at
lower margins but will allow the business to push on in 2022 into further
international markets with increased margins. Our product sales at TVF
increased by 47% to 15,600 tons compared to 10,600 in 2020
The Group's original investment in the main Sourcing subsidiary, TVF, has been
fully recouped and the structures are in place to continue development of this
business.
Chairman's Statement (Continued)
Dairy Division
Our subsidiary, Grass to Milk Company Ltd (G2M), continues to make progress;
commercialising A2 protein, grass-fed, dairy products. Notwithstanding supply
chain delays, we launched two new premium, A2-protein, grass-fed products in
China in the second half of 2021. We also commenced work on A2-protein based
nutrition ingredients which we hope to launch in the second half of 2022. We
continue to work on building a high standard supply chain and quality system
which will underpin our future growth. Our Commercial Strategy focuses on
Business to Business (B2B) customers in China, leveraging partnerships with
established players in-market. We had also carried out some Business to
consumer (B2C) trials to better understand consumer preferences and market
dynamics.
We currently source all of our A2-protein milk from Cantwellscourt Farm Ltd
which continues to outperform across key operating KPI's around pasture
production, milk quality and animal welfare. Milk production was 15% ahead
year on year; milk solids per cow improved by 6% and pasture grown per hectare
improved 12% versus 2020. EBITDA improved from Nil to £0.2m at the dairy
division.
Discontinued
On the 28(th) October 2021, we sold the Cold Store business, resulting in a
profit on disposal of £40m. Following the sale, we made a capital return to
Shareholders of £1.66 per share totalling £49.9m in November 2021.
During 2020, the group decided to discontinue the ambient warehousing in
Ireland. A loss in the current year of £0.6m was incurred, compared to
£0.07m last year.
Outlook
Following the successful sale of its Cold Stores business, the Group returned
£49.9m to shareholders at the end of 2021. The group is now seeking to
develop a diversified nutrition business spanning multiple ingredients,
technologies and end- markets. To that end, the Group is currently mapping out
its growth strategy; leveraging a highly experienced and capable team and its
financial flexibility to create shareholder value in the coming years.
The Group's existing business comprises two complementary business units; A2
dairy protein (G2M) and protein sourcing (TVF). G2M is a value-add functional
nutrition business focused on A2 dairy protein with global market potential.
TVF is a protein sourcing business with a sales footprint across Ireland, UK,
and increasingly into Emerging Markets; expanding its geographic reach and
product portfolio.
In order to reflect the strategic shift in the underlying business and future
growth strategy, including a move to B2B and away from B2C, the board believes
it is appropriate to impair £1.5m of development expenditure to profit or
loss in the current year, related to the initial development phase of G2M
which included the establishment of Ireland's first certified A2 herd and the
initial NPD phase of A2 dairy products at G2M. The board expects the remaining
assets of £665k to provide a solid foundation for future development of the
dairy division, through the B2B commercialisation of A2 protein and functional
nutrition products.
Chairman's Statement (Continued)
Directors
As we embark on a new journey, following the sale of the Cold Stores business,
we have appointed two new Executive Directors with effect from 1 January 2022.
Declan Morrissey who has previously headed up the Dairy Division is appointed
Group Managing Director. He previously worked as an equity analyst in Davy,
covering the European food sector with a particular focus on dairy,
ingredients and supply chain.
Gerard Murphy as Finance Director who has held the role of Company Secretary
since 2018. He has worked for the Group since 2012 as Financial Controller for
the Sourcing and Dairy divisions.
Dividend
The board does not recommend the payment of a dividend.
On behalf of the board, I would like to thank the management team and staff
for their commitment and contribution in 2021.
Ted O'Neill
25 March 2022
Financial Review
Sales
Total Group revenue from continuing operations increased by 30% to £24.5m
(2019: £18.8m). Revenues in the sourcing division increased by 31% to £23.3m
(2020: £17.8m). Revenues in the dairy division increased by 20% to £1.2m
(2020: £1m)
Gross profit
Gross profit from continuing activities increased to £110k (2020: £Nil).
Operating loss
Operating loss from continuing activities increased to £2.6m (2020: loss
£0.7m), after an impairment charge on intangible assets of £1.5m (2020:
£Nil) and £0.9m (2020: £Nil) of an impairment charge relating to fixed
assets.
Finance expense (net)
Finance expense remained unchanged at £0.06m (2020: £0.06m).
Profit from discontinued operations
On the 28 October 2020, we sold the Cold Stores business, resulting in a
profit on disposal of £40m. Following the sale, we made a capital return to
Shareholders of £1.66 per share totalling £49.9m in November 2021.
During 2020, the group decided to discontinue the ambient warehousing in
Ireland. A loss in the current year of £0.6m was incurred, compared to
£0.07m last year.
Earnings per share
The basic adjusted loss per share from continuing operations increased by 314%
to 8.8p (2020: 2.8p).
Capital
During the period we invested £2.8m (2020: £2.2m). £1.7m was invested in
plant and equipment in the cold storage division (discontinued) which was sold
on 28 October 2021.We also invested £1m in respect of the commercialisation
of our A2 protein milk business.
Cash Position
During the year we sold the Cold Stores business and made a Capital Return to
shareholders. At December 2021 Net cash was £1.4m (2020: net debt £8.7m).
Financial Review (Continued)
Dividend
The board does not recommend a payment of a dividend.
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, 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, liquidity risk, credit risk and foreign exchange 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 £0.13m at a floating rate of 3.75%.
Liquidity risk
Following the sale of the Cold Stores business, and the capital return to
shareholders, the Group is in a net cash position of £1.4m. This is made up
of cash of £4.5m, Invoice financing of £2.1m, term loans of £0.2m and
leases of £0.8m.
Credit risk
The Group's policy is to minimise exposure to credit risk by performing the
appropriate customer due diligence and monitoring the exposure to credit risk.
Foreign exchange risk
The Group's policy is to manage foreign exchange risk which arises principally
in the product sourcing division. The Group does this by mainly purchasing
euros at a fixed rate forward and using this rate in establishing a selling
price for its goods in order to maintain an acceptable margin.
Gerard Murphy
Finance Director
Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2021
2020
Notes 2021
£'000 £'000
Continuing operations
Revenue 24,452 18,756
Cost of sales (24,342) (18,800)
Gross profit (loss) 110 (44)
Other income 161 182
Administrative expenses (502) (865)
Impairment of intangible assets (1,519) -
Impairment of fixed assets (860)
Operating loss from continuing operations (2,610) (727)
Finance income - interest receivable - -
Finance expenses - lease interest (26) (30)
Finance expenses - interest on bank loans (36) (32)
Loss on continuing activities before taxation (2,672) (789)
Income taxes - Corporation tax 5 (34)
Income taxes - Deferred tax 33 (28)
Loss for the financial year from continuing operations (2,634) (851)
Profit for the financial year from discontinued operations 40,701 2,288
Profit for the financial year attributable to 38,067 1,437
owners of the parent
Other comprehensive (expense) / income (355) 162
Total comprehensive income for the financial year attributable to owners of 37,712 1,599
the parent
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2021 (continued)
2021 2020
Earnings per share expressed in pence per share:
From continuing operations (8.8)p (2.8)p
- basic
- diluted (8.8)p (2.8)p
From discontinued operations 126.6p 7.6p
- basic
- diluted 126.6p 7.6p
Consolidated Statement of financial position
at 31 December 2021
2021 2020
£'000 £'000
Non-current assets
Goodwill 2,338 2,338
Intangible assets 665 1,269
Property, plant and equipment 2,014 22,898
Biological assets 762 770
5,779 27,275
Current assets
Trade and other receivables 3,988 7,526
Inventories 97 58
Cash and cash equivalents 4,543 1,550
Assets of disposal group classified as held for sale - 381
8,628 9,515
TOTAL ASSETS 14,407 36,790
Equity attributable to owners of the parent
Share capital 564 5,640
Share premium account - 7,321
Other reserves (237) 141
Retained earnings 6,452 5,750
TOTAL EQUITY 6,779 18,852
Non-current liabilities
Borrowings 794 5,514
Deferred tax 35 1,244
829 6,758
Current liabilities
Trade and other payables 2,579 6,288
Current tax liabilities - 151
Liabilities held for sale 1,869 -
Borrowings 2,351 4,741
6,799 11,180
TOTAL EQUITY AND LIABILITIES 14,407 36,790
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2021
Share Share Other Other Retained
Distributable
capital premium Reserves Reserve Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2020 5,640 7,321 (21) - 4,313 17,253
Profit for the financial year - - - 1,437 1,437
-
Foreign exchange gain - - 162 - - 162
- - 162 1,437 1,599
Total comprehensive income for the financial year
-
Equity dividends paid - - - - - -
Transactions with owners - - - - - -
At 31 December 2020 5,640 7,321 141 - 5,750 18,852
Profit for the financial year - - - - 38,067 38,067
Foreign exchange loss - - (355) - - (355)
Total comprehensive income for the financial year - - (355) - 38,067 37,712
Equity dividends paid - - - - (510) (510)
Capital redemption - - - (12,420) (37,497) (49,917)
Gain on capital redemption in JSOP - - - - 642 642
Reduction in capital - - - - - (5,076) (7,321) (23) 12,420 - -
Transactions with owners (5,076) (7,321) (23) - (37,365) (49,785)
At 31 December 2021 564 - (237) - 6,452 6,779
(5,076)
(7,321)
(23)
12,420
-
-
Transactions with owners
(5,076)
(7,321)
(23)
-
(37,365)
(49,785)
At 31 December 2021
564
-
(237)
-
6,452
6,779
Note:
The reduction in capital is pursuant to the confirmation on 14 December 2021
by the Irish High Court of the reduction of:
- share premium of £7,321,155 (being the entire amount of the share premium
account);
- other undistributable reserves of €33,350.23 (being the entire amount of
the capital conversion reserve fund);
- other undenominated capital of €6,765,835.05 (created on the redemption
of the Redeemable Ordinary Shares of 22.5€c and being the entire amount of
other undenominated capital), and the crediting of those amounts to other
distributable reserves to enable the capital redemption.
Consolidated Cash Flow Statement
for the financial year ended 31 December 2021 Notes 2021 2020
£'000 £'000
Cash flow from operating activities
Loss on continuing activities before taxation (2,634) (789)
Gain on biological assets (161) (182)
Foreign exchange (gain)/loss (50) (55)
Profit on discontinued activities 1,298 2,288
Finance expense 62 62
Bad debt expense 13 -
Taxation charge (5) -
Impairment - Intangible assets 860 -
Impairment - property, plant and equipment 1,519 -
Depreciation - property, plant and equipment-net 1,699 2,196
Operating cash flows before changes in working capital 2,601 3,520
Changes in working capital and provisions:
(Increase)/decrease in inventories (39) 1,047
Decrease /(increase) in trade and other receivables 10 (669)
(Increase)/decrease in current assets held for sale 381 (104)
Increase in current liabilities held for sale 1,869 -
Decrease in payables (554) (338)
Net cash inflow from operations 4,268 3,456
Taxation paid (205) (304)
Net cash generated from operating activities 4,063 3,152
Cash flow from investing activities
Investment in intangible assets (986) (705)
Purchase of property, plant and equipment (1,840) (1,741)
Proceeds on disposal of subsidiary 55,160 -
Costs incurred on disposal of subsidiary (3,533) -
Cash included in subsidiary disposed (72) -
Sale of biological assets 127 346
Purchase of biological assets (9) (65)
Net cash generated from (used) in investing activities 48,847 (2,165)
Cash flow from financing activities (510) -
Dividends paid to shareholders
Invoice financing utilised / (payments) 1,016 (150)
Finance lease capital repayments (1,390) (845)
Share capital redemption (49,917) -
Capital redemption JSOP 642 -
Finance lease advance 616 882
Term loan repayments (374) (378)
Net cash inflow in financing activities (49,917) (491)
Net increase in cash and cash equivalents 2,993 496
1,550 1,054
Cash and cash equivalents beginning of the financial year
Cash and cash equivalents end of the financial year 4,543 1,550
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