REG - Roebuck Food Group - CHAIRMAN'S STATEMENT - FINAL RESULTS
28/03/2024 10:30
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RNS Number : 7065I Roebuck Food Group PLC 28 March 2024
Chairman's Statement
Roebuck Food Group plc (AIM: RFG), is pleased to announce its results for the
year ended 31 December 2023.
Group Financial Highlights - Continuing Operations
· Group revenue decreased by 15% to £26.7m (2022: £31.4m)
· Operating profit from continuing operations declined from £336,000
to a loss of £1,660,000 in the period under review.
· The loss for the financial year from continuing operations amounted
to £1,851,000. This compared to a profit of £156,000 in the prior year.
· Earnings per share of (5.8)p on continuing operations (2022: 0.5p).
· Significantly, net debt has decreased 71% from £3.44m in 2022 to
£1m in 2023. Excluding IFRS 16, which reflects the lease obligations on
Cantwellscourt Farm and Moorhead McGavin Limited to be classifed as debt, net
debt at end 2023 was zero.
· Strategic acquisition on 30 November 2023 of Moorhead and McGavin
Limited, a specialty supplier of pules, cereals, pasta and rice to the food
service industry.
Divisional Highlights - Continuing Operations
£'000 Sourcing Dairy Plant Protein
2023 2022 2023 2022 2023 2022
Revenue 24.8 29.9 1.4 1.5 0.5 -
EBITDA (0.2) 0.4 (0.1) 0.5 0.2 -
Operating Profit/(loss) (0.3) 0.4 (0.4) 0.3 -
0.1
Operating Margin (1.21)% 1.3% (29)% 20%
20% -
Sourcing Division
Post Brexit, Townview Foods (which forms the main part of our sourcing
division) had to reset. Management delivered a more diversified business,
trading across 41 countries internationally. We are now evolving the business
further. We are in the process of revising the business model, which will
involve changing our sales model and broadening the product offering, which in
turn will give us access to new customers and new markets. We believe this
will provide the basis of a more durable business model. This transition
has required a significant investment in people which has more than offset the
net profit growth to date.
Sales at our sourcing division decreased by 17% in 2023, compared with the
same period in 2022, from £29.9m to £24.8m. The board decided to reduce
trade to South Africa due to receivable recovery risks. Sales to South Africa
decreased £4.3m from £5.1m in 2022 to £0.8m in 2023. Operating profit
decreased from £0.4m to a loss of £0.3m.
Chairman's Statement (Continued)
Dairy Division
Notwithstanding a precipitous decline in dairy product prices, particularly in
the second half of 2023, Cantwellscourt Farm managed to generate a small
positive EBITDA before accounting for losses on biological assets. Reflecting
the changes in nitrates rules, stock had to be sold into a very weak market
resulting in an overall loss of £0.4m in the Diary Division.
Plant Protein And Ingredients Division
Moorhead & McGavin Limited (M&M) a business that was acquired 30
November 2023 specialises in supplying pulses, cereals, pasta and rice to the
food service industry. The business delivered sales of £0.54m and an EBITDA
of £0.1m in the first trading month since acquisition.
Outlook
We have largely now reset our key remaining business from Norish Plc; Townview
Foods, Townview Sourcing and Cantwellscourt Farm. We expect to see improvement
in all businesses as we move through 2024.
Moorhead & McGavin Limited (M&M), which was acquired 30 November 2023,
continues to grow strongly. We look forward to continue working with the team
at M&M to grow the business both organically and by acquisition. I would
like to thank all at M&M for their commitment and loyalty to M&M and
subsequently Roebuck Food Group, in the period during and post-acquisition.
Management at Roebuck Food Group have spent a lot of time looking at
acquisition opportunities in the space defined by the need to feed a growing
world population, with less land, water and with a lower carbon footprint. The
inevitable disruption which will be caused by these seemingly differing needs
will create opportunity. At this juncture we believe that we can build a
business of significant size and scale over the next number of years in the
best interest of all of the stakeholders of the company. Inevitably this will
likely involve further issuance of equity. It goes without saying that 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 2023.
Ted O'Neill
28 March 2024
Chairman's Statement (Continued)
Financial Review
Sales
Total Group revenue from continuing operations decreased by 15% to £26.7m
(2022: £31.4m). Revenues in the Product Sourcing division (Townview Foods Ltd
and Townview Sourcing Ltd) decreased by 17% to £24.8m (2022: £29.9m).
Revenues in the Agri division (Cantwellscourt Farm Ltd) decreased by 6.67% to
£1.4m (2022: £1.5m). The newly acquired Plant Protein and Ingredients
division contributed £0.54m to revenues following the acquisition of Moorhead
& McGavin Limited on 30 November 2023.
Gross (loss)/profit
Gross (loss)/profit from continuing activities £32k (2022: profit £883k).
Operating loss/(profit)
Operating loss from continuing activities increased to £1.66m (2022: profit
£0.3m).
Finance expense (net)
Net Finance expense increased to £0.14m (2022: £0.12m).
Loss from discontinued operations
Loss from discontinued operations £Nil (2022: £1.4m).
Earnings per share
The basic adjusted earnings per share from continuing operations decreased to
(5.8)p (2022: 0.5p).
Net Debt
The net debt position is £0.98m (2022: £3.44m).
Share Capital
£2.5m (before expenses) was raised during the year by the issue of 18,518,514
new ordinary shares to fund the acquisition of Moorhead & McGavin Limited.
A further £150,000 (before expenses) representing 1,071,428 new ordinary
shares was issued as part of the purchase consideration for Moorhead &
McGavin Limited.
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. No such material transactions were entered into in either 2023 or
2022.
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 7.59% and £1.1m at a fixed
rate of 7.3%.
Liquidity risk
The Group is in a net debt position of £1m. This is made up of cash of
£1.2m, Invoice financing of £1.1m, term loans of £0.1m and leases of £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
28th March 2024
Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2023
2022
2023
£'000 £'000
Continuing operations
Revenue 26,737 31,351
Cost of sales (26,769) (30,468)
Gross (loss)/profit (32) 883
Fair value gain on biological assets 139 182
Administrative expenses (1,189) (729)
Acquisition and related costs (578) -
Operating (loss)/profit from continuing operations (1,660) 336
Interest received 25 9
Finance expenses - lease interest (28) (28)
Finance expenses - interest on bank loans (138) (100)
(Loss)/profit on continuing activities before taxation (1,801) 217
Income taxes - Corporation tax (12) (40)
Income taxes - Deferred tax (38) (21)
(Loss)/profit for the financial year from continuing operations (1,851) 156
Loss for the financial year from discontinued operations - (1,404)
Loss for the financial year attributable to (1,851) (1,248)
owners of the parent
Other comprehensive (expense)/ income (26) 169
Total comprehensive loss for the financial year attributable to owners of the (1,877) (1,079)
parent
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2023 (continued)
2023 2022
(Loss)/earnings per share expressed in pence per share:
From continuing operations (5.8)p 0.5p
- basic
- diluted (5.8)p 0.5p
From discontinued operations -p (4.7)p
- basic
- diluted -p (4.7)p
Consolidated Statement of financial position
at 31 December 2023
2023 2022
£'000 £'000
Non-current assets
Goodwill 2,338 2,338
Intangible assets 600 -
Property, plant and equipment 3,048 2,162
Biological assets 642 884
6,628 5,384
Current assets
Trade and other receivables 3,649 7,223
Inventories 1,044 316
Cash and cash equivalents 1,186 1,491
5,879 9,030
TOTAL ASSETS 12,507 14,414
Equity attributable to owners of the parent
Share capital 990 564
Share premium 2,094 -
Other reserves (94) (68)
Retained earnings 3,353 5,204
TOTAL EQUITY 6,343 5,700
Non-current liabilities
Borrowings 932 1,016
Deferred tax 168 58
1,100 1,074
Current liabilities
Trade and other payables 3,826 3,427
Liabilities - discontinued operations - 298
Borrowings 1,238 3,915
5,064 7,640
TOTAL EQUITY AND LIABILITIES 12,507 14,414
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2023
Share Share Other Retained
capital Premium Reserves Earnings Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2022 564 - (237) 6,452 6,779
Loss for the financial year - - (1,248) (1,248)
-
Foreign exchange gain - - 169 - 169
- - 169 (1,248) (1,079)
Total comprehensive income for the financial year
Equity dividends paid - - - - -
Transactions with owners - - - - -
At 31 December 2022 564 - (68) 5,204 5,700
Loss for the financial year - - - (1,851) (1,851)
Foreign exchange loss - - (26) (26)
Total comprehensive income for the financial year - - (26) (1,851) (1,877)
Issue of share capital 426 2,224 - - 2,650
Share issue costs - (130) - - (130)
Transactions with owners 2,094 (26) (1,851) 643
426
At 31 December 2023 990 2,094 (94) 6,343
3,353
Consolidated Cash Flow Statement
for the financial year ended 31 December 2023 2023
2022
£'000 £'000
Cash flow from operating activities
(Loss)/profit on continuing activities before taxation (1,801) 217
Gain on change in fair value of biological assets (139) (182)
Biological assets disposal 91 117
Foreign exchange gain (382) (201)
Loss on discontinued activities - (1,404)
Finance expenses 166 128
Finance income - (9)
Bad debt expense 15 41
Taxation charge (12) (40)
Impairment - Intangible asset - 665
Depreciation - property, plant and equipment 187 191
Operating cash flows before changes in working capital (1,875) (477)
Changes in working capital and provisions:
Increase/ (decrease) in inventories 66 (218)
Increase/ (decrease) in trade and other receivables 4,826 (3,223)
Decrease in current liabilities held for sale - (1,571)
(Decrease)/ increase in payables (1,212) 848
Taxation paid (3) (25)
Net cash from/(used in) from operating activities 3,677 (4,189)
Cash flow from investing activities
Payments to acquire subsidiary undertaking (2,075) -
Cash acquired as part of acquisition 299 -
Purchase of property, plant and equipment (63) (62)
Proceeds from sale of biological assets 272 149
Net cash used/generated from investing activities (1,567) 87
(2,805) 1,649
Invoice finance utilised
Finance lease capital repayments (69) (91)
Term loan repayments (36) (31)
Net proceeds from issue of share capital 2,370 -
Net cash used/generated from financing activities (540) 1,527
Net decrease in cash and cash equivalents (305) (3,052)
1,491 4,543
Cash and cash equivalents beginning of the financial year
Cash and cash equivalents end of the financial year 1,186 1,491
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