REG - Roebuck Food Group - Chairman's Statement - Final Results
31/03/2023 14:15
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RNS Number : 9960U Roebuck Food Group PLC 31 March 2023
Chairman's Statement
Roebuck Food Group plc (AIM: RFG), is pleased to announce its results for the
year ended 31 December 2022.
Group Financial Highlights - Continuing Operations
· Group revenue increased by 29% to £31.4m (2021: £24.3m)
· Earnings per share of 0.5p on continuing operations (2021 : loss of
3.5p)
· Profit after tax from continuing operation of £0.2m ( 2021 : loss
£1.1m)
· EBITDA of £0.5m from the Dairy division (2021 : £0.1m)
· EBITDA of £0.4m from the Sourcing division (2021: £0.3m)
Divisional Highlights- Continuing Operations
£'000 Sourcing Dairy
2022 2021 2022 2021
Revenue 29.9 23.3 1.5 1.0
EBITDA 0.4 0.3 0.5 0.1
Operating Profit/(loss) 0.4 0.3 0.3 (0.8)
Operating Margin 1.3% 1.3% 20% (80%)
Sourcing Division
Sales at our sourcing division increased by 28% in 2022, compared with the
same period in 2021, from £23.3m to £29.9m. Operating profit improved from
£0.3m to £0.4m.
Townview Foods Ltd, continues to execute its commercial strategy which centres
on diversification of products and end-markets. Our core animal proteins
business continues to deliver consistent revenue and profits with a low-risk
trading model and diversification of product sourcing and end-markets. From a
standing start in March 2022, we have grown our dairy ingredients trading
business into a significant operation both in terms of revenues and profits
and we are confident about its prospects in 2023. We are also developing
capability in plant-based ingredients which will allow us to offer a full
portfolio of ingredient solutions to our customers. Operating margins declined
slightly in the period, mainly due to the investment in talent, ICT and
marketing. Overall, we are confident that our commercial strategy will
continue to deliver profitable growth in 2023.
As part of a strategic alignment with Townview Foods Ltd, Foro International
Connections Ltd was rebranded to Townview Sourcing Ltd in May 2022.
Townview Sourcing sales increased by 57% from £2.1m in 2021 to £3.3m in
2022.
The strategic alignment between Townview Foods Ltd and Townview Sourcing Ltd
companies will create cost saving efficiencies and allow Roebuck Food Group
Plc to have continuing ease of access to the UK, Republic of Ireland and
European markets.
Chairman's Statement (Continued)
Dairy Division
Our primary dairy operation, Cantwellscourt Farm Ltd, exceeded expectations in
2022 in revenue and profit terms, driven by record dairy prices and good
delivery across its management KPIs. Milk production was down 3% whilst
revenue from milk sales was up 43% year on year. This was partially offset by
input cost inflation, particularly in feed and fertiliser; our pasture-based
system gives us some protection from rising input prices.
We expect the average farmgate milk price in 2023 to weaken versus last year
but to remain at a level which delivers above average returns.
Discontinued
Our subsidiary, Grass to Milk Company Ltd, exited the Chinese market in H1
2022 due to ongoing lockdowns, supply chain disruptions and cost inflation.
China has proven a difficult market for a majority of overseas dairy companies
over the past 24-months with an unprecedented shift toward domestic supply.
Opportunities for A2 protein ingredients in other export markets have failed
to materialise, due to high dairy commodity prices making it difficult to
achieve firm commitments from customers and a lack of interest from processors
to dedicate capacity towards A2 during the scale-up phase. At this juncture,
we do not have any immediate commercial prospects, so we have reclassified the
business as a discontinued activity. Accordingly, we have impaired the
intangible asset of £0.7m. The total loss from discontinued operations
recogonised during the year is £1.1m.
During the year we also incurred an additional amount of £0.3m in respect of
the sale of the cold store business that was sold in 2021.
Strategic Review
Following the successful sale of the Cold Stores business, Roebuck Food Group
PLC (RFG), formerly known as Norish PLC, returned £49.92m to shareholders at
the end of 2021. Overall, we believe our core sourcing and dairy businesses
are well placed to deliver profitable growth in 2023, notwithstanding an
expected reversal of some pricing tailwinds from 2022. We continue to examine
M&A opportunities, which can complement our existing businesses, which
fulfil our criteria in terms of growth prospects, margins and returns. We
remain focused on delivering shareholder value through efficient capital
allocation.
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 2022.
Ted O'Neill
31 March 2023
Financial Review
Sales
Total Group revenue from continuing operations increased by 29% to £31.4m
(2021: £24.3m). Revenues in the sourcing division increased by 28% to £29.9m
(2021: £23.3m). Revenues in the dairy division increased by 50% to £1.5m
(2021: £1m)
Gross profit
Gross profit from continuing activities increased to £571k (2021: £199k).
Operating profit/(loss)
Operating profit from continuing activities increased to £0.3m (2021: loss
£1m), after an impairment charge of £Nil (2021: £0.9m relating to fixed
assets).
Finance expense (net)
Net Finance expense increased to £0.12m (2021: £0.06m).
Loss from discontinued operations
Loss from discontinued operations £1.4m (2021: profit £39.1m). Current year
loss is made up of £0.3m relating to residual cold store sale transaction
costs and £1.1m from the discontinued operations of Grass to Milk.
Earnings per share
The basic adjusted earnings per share from continuing operations increased to
0.5p (2021: loss per share 3.5p).
Net Debt
The net debt position is £3.4m (2021: Net cash £1.4m). During the year we
discharged £1.5m in respect of liabilities due in respect of the disposal of
the cold store division in 2021.
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 £0.1m at a floating rate of 5.44%.
Liquidity risk
The Group is in a net debt position of £3.4m. This is made up of cash of
£1.5m, Invoice financing of £3.7m, term loans of £0.1m and leases of
£1.1m.
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 and US dollars at a fixed rate forward for cross currency transactions
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 2022
Restated
2022 2021
£'000 £'000
Continuing operations
Revenue 31,351 24,313
Cost of sales (30,780) (24,114)
Gross profit 571 199
Fair value gain on biological assets 182 161
Administrative expenses (417) (502)
Property, plant and equipment impairment - (862)
Operating profit/(loss)from continuing operations 336 (1,004)
Interest received 9 -
Finance expenses - lease interest (28) (26)
Finance expenses - interest on bank loans (100) (36)
Profit/(loss) on continuing activities before taxation 217 (1,066)
Income taxes - Corporation tax (40) (20)
Income taxes - Deferred tax (21) 33
Profit/(loss) for the financial year from continuing operations 156 (1,053)
(Loss)/profit for the financial year from discontinued operations (1,404) 39,120
(Loss)/profit for the financial year attributable to (1,248) 38,067
owners of the parent
Other comprehensive income/(expense) 169 (355)
Total comprehensive income for the financial year attributable to owners of (1,079) 37,712
the parent
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2022 (continued)
2022 2021
Earnings/(loss) per share expressed in pence per share:
From continuing operations 0.5p (3.5)p
- basic
- diluted 0.5p (3.5)p
From discontinued operations (4.7)p 130.1p
- basic
- diluted (4.7)p 130.1p
Consolidated Statement of financial position
at 31 December 2022
2022 2021
£'000 £'000
Non-current assets
Goodwill 2,338 2,338
Intangible assets - 665
Property, plant and equipment 2,162 2,014
Biological assets 884 762
5,384 5,779
Current assets
Trade and other receivables 7,223 3,988
Inventories 316 97
Cash and cash equivalents 1,491 4,543
9,030 8,628
TOTAL ASSETS 14,414 14,407
Equity attributable to owners of the parent
Share capital 564 564
Share premium account - -
Other reserves (68) (237)
Retained earnings 5,204 6,452
TOTAL EQUITY 5,700 6,779
Non-current liabilities
Borrowings 1,016 794
Deferred tax 58 35
1,074 829
Current liabilities
Trade and other payables 3,427 2,579
Liabilities - discontinued operations 298 1,869
Borrowings 3,915 2,351
7,640 6,799
TOTAL EQUITY AND LIABILITIES 14,414 14,407
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2022
Share Share Other Other Retained
Distributable
capital premium Reserves Reserve Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 5,640 7,321 141 - 5,750 18,852
Profit for the financial year - - - 38,067 38,067
-
Foreign exchange loss - - (355) - - (355)
- - (355) 38,067 37,712
Total comprehensive income for the financial year
-
Equity dividends paid - - - (510) (510)
Capital redemption - - - - (37,497) (49,917)
Gain on capital redemption in JSOP - - - (12,420) 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
Loss for the financial year - - - - (1,248) (1,248)
Foreign exchange gain - - 169 - - 169
Total comprehensive income for the financial year - - 169 - (1,248) (1,079)
Equity dividends paid - - - - - -
Transactions with owners - - - - - -
At 31 December 2022 564 - (68) - 5,204 5,700
Consolidated Cash Flow Statement
for the financial year ended 31 December 2022 2022 Restated
2021
£'000 £'000
Cash flow from operating activities
Profit/(loss) on continuing activities before taxation 217 (1,066)
Gain on biological assets (182) (161)
Loss on sale of biological assets 117 -
Foreign exchange gain (201) (50)
Loss on discontinued activities (1,404) (270)
Finance expenses 128 62
Finance income (9) -
Bad debt expense 41 13
Taxation charge (40) (5)
Impairment - Intangible asset 665 860
Impairment - property, plant and equipment - 1,519
Depreciation - property, plant and equipment 191 1,699
Operating cash flows before changes in working capital (477) 2,601
Changes in working capital and provisions:
(Increase) in inventories (218) (39)
(Increase)/ decrease in trade and other receivables (3,223) 10
Decrease in current assets held for sale - 381
(Decrease)/ increase in current liabilities held for sale (1,571) 1,869
Increase/ (decrease) in payables 848 (554)
Taxation paid (25) (205)
Net cash (used)/ generated from operating activities (4,189) 1,462
Cash flow from investing activities
Investment in intangible assets - (986)
Purchase of property, plant and equipment (62) (1,840)
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 149 127
Purchase of biological assets - (9)
Net cash generated from investing activities 87 48,847
- (510)
Cash flows from financing activities
Dividends paid to shareholders
Invoice finance utilised 1,649 1,016
Finance lease capital repayments (91) (1,390)
JSOP capital redemption - 642
Share Capital Redemption - (49,917)
Finance Lease advance - 616
Term loan repayments (31) (374)
Net cash generated/ (used) from financing activities 1,527 (49,917)
Net (decrease)/ increase in cash and cash equivalents (3,052) 2,993
4,543 1,550
Cash and cash equivalents beginning of the financial year
Cash and cash equivalents end of the financial year 1,491 4,543
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