TIDMNSH
RNS Number : 1142J
Norish PLC
28 March 2018
Norish plc
Preliminary results 2017
Results
Norish plc (AIM: NSH), is pleased to announce its preliminary
results for the year ended 31 December 2017.
Financial Highlights
-- Total revenue increased by 31.5% to GBP42.3m (2016: GBP32.1m)
-- Revenue from the Cold Store division increased by 13.3% to GBP14.3m (2016: GBP12.6m)
-- Revenue from the Sourcing division increased by 41% to GBP27.4m (2016: GBP19.5m)
-- Operating profit for the Group increased by 96% to GBP1.71m (2016: GBP0.87m)
-- Profit before tax increased by 138% to GBP1.5m (2016 : GBP0.6m)
-- Diluted adjusted Eps increased by 140% to 3.6p (2016 : 1.5p)
-- Dividend increased by 10% to 1.65 EURcent (2016: 1.50 EURcent)
-- Net debt was GBP5.4m at year end (2016: GBP5.2m)
Operational Highlights
-- Cold stores comprise, by far the greatest proportion of our
capital employed. This division recorded sales growth of 13.3%,
when compared with 2016. Divisional contribution increased from
GBP2.1m to GBP3.3m
-- The North West Cold store division recorded sales growth of
15.9% and contribution growth of 85% in 2017, compared to the prior
year. The South East Cold store division recorded sales growth of
10.8% and contribution growth of 28.5% on the same basis. This
growth, at both divisions, is the result of a combination of
increased volumes, improved profile of work and improved
pricing.
-- The contribution of Town View Foods which is a Protein
Sourcing business, was ahead of the last year, with sales growth of
29% and contribution ahead by 12%.
-- Our start-up businesses, including dairy and Foro
International Connections Limited generated a combined loss of
GBP0.3m in 2017. We expect both businesses to be profitable in
2018.
Operations
Cold Store Division
The North West cold store division which comprises the freehold
sites at Wrexham and Birmingham performed strongly in 2017,
reflecting a combination of increased intakes, greater blast
freezing volumes, improved pricing with an increasing focus on
costs, particularly towards the back end of the year.
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
ahead of the same period last year. Within the mix Bury saw strong
growth in profitability, albeit from a low base, which helped
overall divisional performance. Sales in the South East increased
by 10.8%, reflecting higher intakes and greater blast freezing
volumes.
Sourcing Division
Our Sourcing division which was previously known as the
Commodity division consists of Town View Foods Limited and Foro
International Connections Limited. Sales for the division accounted
for GBP27.4m and GBP19.5m last year. The division contributed
GBP0.53m for the period unchanged from the same period last
year.
Town View Foods Limited accounted for sales of GBP23.8m, against
GBP18.5m last year. It contributed GBP0.62m for the period, up from
GBP0.56m for the same period last year. Town View Foods sources
protein products mainly beef, pork, lamb and chicken. Sales from
pork and chicken increased by GBP3.7m during the period, while
sales from beef and lamb increased by GBP1.6m.
Foro International Connections Limited trades in the sale of
juice to the ready to drinks market along with other retail goods.
Sales increased to GBP3.5m from GBP1m. It recorded a loss of
GBP0.1m against a breakeven in 2016.
Dairy
The dairy division continues to make progress. We have completed
our capital investment phase in the business - we now have a high
quality leased asset which should deliver attractive returns on
capital out over the next decade and beyond. Our asset utilization
and operational efficiency will continue to improve as we build our
dairy herd at Cantwellscourt Farm, through 2018. Our 2018 Spring
calving experience has been very good with all key KPI's delivered
on.
Capital
During the period we invested GBP1.8m (2016: GBP1.7m), GBP1.3m
in the dairy farm in Kilkenny and GBP0.5m in routine capital
expenditure in the cold store division.
Outlook
We anticipate another strong year of profit growth in 2018,
underpinned by the initiation of a continuous improvement programme
across the business.
In our Cold Store Divisions , both our North West and South East
Divisions have delivered profit growth in the first two months of
2018. We are actively engaged in programmes to both control and,
where appropriate reduce costs.
Despite the current volatility in its underlying markets, our
protein sourcing division had a good start to the year. We are
confident that its low risk operating model can continue to deliver
in line with expectation.
Our dairy farming division is expected to increase asset
utilisation and operational efficiency in 2018 as we build our herd
at Cantwellscourt Farm. Our Spring calving experience in 2018 has
been very good with all key KPIs delivered on. We believe our dairy
business has significant scope to grow from its existing asset base
but also via adjacent opportunities along the value chain in the
years ahead.
We expect the group's cash conversion metrics to continue to
improve through 2018, driven by an improved operating performance,
lower tax rate and reduced capital expenditures.
Financial Review
Total equity at 31 December 2017 stood at GBP16m (2016:
GBP15.3m). Net debt at 31 December 2017 was GBP5.4m compared to
GBP5.2m at 31 December 2016.
Dividend
The board recommends the payment of a final dividend of
1.65EURcent per share. This will be paid on 19 October 2018 to
those shareholders on the register on the 28 September 2018. It
will bring the total dividend in respect of the financial year to
1.65 EURcent per share, against 1.50EURcent per share last year, an
increase of 10%.
Brexit
The United Kingdom is due to leave the EU on the 29 March 2019.
It is difficult to pin point any direct impacts from the ongoing
Brexit discussions other than to say they are hardly positive for
business generally. However, our balance sheet is in good shape and
leaves us well positioned to benefit from any disruption and
consequent opportunity which may arise.
On behalf of the board, I would like to thank the management
team and staff for their commitment and
contribution in 2017.
Ted O'Neill
Chairman
Financial Review
The number of pallets handled in increased by 8%, and we handled
15% additional pallets for blast freezing in 2017. The average
occupancy increased from 85% to 92%.
The significant feature of the year was the improvement of the
profitability and returns at our cold stores.
Sales
Total Group revenue increased by 31.5% to GBP42.2m (2016:
GBP32.1m). Cold store revenues increased by 13.3% to GBP14.3m
(2015: GBP12.6m). Revenues were up mainly as a result of an
increase in blast freezing volumes. Revenues in the sourcing
division increased by 41% to GBP27.4m (2016: GBP19.5m). Townview
Foods mainly accounted for the increased sales.
Gross profit
Gross profit increased to GBP2.6m (2016: GBP1.3m).
Deferred consideration
During the year we provided GBP0.1m (2016 : nil) in respect of
the additional payments required in respect of the acquisition of
Townview Foods.
Operating profit
Operating profit increased to GBP1.7m (2016: GBP0.9m).
Finance expense (net)
Finance expense decreased to GBP0.21m (2016: GBP0.27m).
Loss from discontinued operations
As part of the Group's strategy to exit the ambient sector we
recorded a loss of Nil (2016: GBP0.1m).
In 2016, the Group exited the FMCG market and recorded a loss of
GBP0.1m during 2017 (2016: GBP0.1m).
Earnings per share
The basic adjusted earnings per share increased to 3.6p (2016:
1.5p).
Capital
During the year we invested GBP1.9m (2016: GBP1.7m): GBP1.3 in
capital outlay in the dairy farm in Kilkenny and GBP0.6m in routine
capital expenditure in the cold store division.
Cash Position
Net debt increased to GBP5.4m (2016: GBP5.2m). Operating
activities generated GBP2.5m (2016: used GBP0.3m) and financing
activities absorbed GBP1.1m (2016: absorbed GBP0.9m). Investment in
assets was made of GBP1.9m (2016: GBP1.7m).
Dividend
The board recommends the payment of a final dividend of 1.65
EURcent per share. This will be paid on 19 October 2018 to those
shareholders on the register on the 28 September 2018. It will
bring the total dividend in respect of the financial year to 1.65
EURcent per share, against 1.50 EURcent per share last year, an
increase of 10%.
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
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, GBP2.9m term loans
of which, GBP0.4m are at floating base rate plus a bank margin of
1.2% and GBP0.7m are at floating base rate plus a bank margin of
1.75% and GBP0.41m are floating at bank base rate plus a bank
margin of 2.75% and GBP1.12m are floating at bank base rate plus a
margin of 3% and GBP0.27m are at a floating rate of 3.75%.
In February 2018 the Group renegotiated its terms loans and have
refinanced GBP2.2m of the above term loans at floating base rate
plus a 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, 66% 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.
Aidan Hughes
Finance Director
Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2017
2017 2016
GBP'000 GBP'000
Continuing operations
Revenue 42,183 32,098
Cost of sales (39,550) (30,757)
Gross profit 2,633 1,341
------------- --------
Other income 66 238
Deferred Consideration (100) -
Administrative expenses (889) (707)
Operating profit from continuing
operations 1,710 872
------------- --------
Finance income - fair value
gain on swaps 10 20
Finance income - interest
receivable 1 10
Finance expenses - interest
paid (201) (240)
Finance expenses - notional
interest (13) (29)
Profit on continuing activities
before taxation 1,507 633
------------- --------
Income taxes - Corporation
tax (413) (210)
Income taxes - Deferred tax (28) 18
Profit for the financial
year from continuing operations 1,066 441
Loss from discontinued operations (73) (161)
Profit for the financial
year 993 280
Other comprehensive income - -
Total comprehensive income
for the year 993 280
------------- --------
Profit for the financial
year attributable to owners
of the parent 993 291
Loss for the financial year
attributable to non-controlling
interest - (11)
============= ========
Total comprehensive income
for the financial year attributable
to owners of the parent 993 291
Total comprehensive expense
for the financial year attributable
to non-controlling interest - (11)
============= ========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2017
2017 2016
Earnings per share expressed
in pence per share:
From continuing operations
- basic 3.6p 1.5p
- diluted 3.6p 1.5p
From discontinued operations
- basic (0.2)p (0.6)p
- diluted (0.2)p (0.6)p
Consolidated Statement of financial position
at 31 December 2017
2017 2016
GBP'000 GBP'000
Non current assets
Goodwill 2,338 2,338
Intangible assets 141 65
Property, plant and equipment 17,759 16,635
Biological assets 624 540
20,862 19,578
------- -------
Current assets
Trade and other receivables 7,537 6,264
Inventories 709 483
Cash and cash equivalents 1,558 2,044
Assets of disposal group classified
as held for sale 279 698
10,083 9,489
------- -------
TOTAL ASSETS 30,945 29,067
------- -------
Equity attributable to equity
holders of the patent and
non-controlling interest
Share capital 5,616 5,616
Share premium account 7,281 7,281
Other reserves 103 23
Treasury shares (563) (563)
Retained earnings 3,516 2,926
------- -------
Equity attributable to equity
holders of the parent 15,953 15,283
Non controlling Interest - (22)
------- -------
TOTAL EQUITY 15,953 15,261
------- -------
Non-current liabilities
Borrowings 2,390 3,006
Financial liabilities at fair
value through profit or loss - 44
Deferred tax 953 925
3,343 3,975
------- -------
Current liabilities
Trade and other payables 6,680 5,082
Financial liabilities at fair
value through profit or loss 29 255
Current tax liabilities 367 205
Borrowings 4,555 4,282
Liabilities of disposal group
classified as held for sale 18 7
11,649 9,831
------- -------
TOTAL EQUITY AND LIABILITIES 30,945 29,067
------- -------
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2017
l Non-
Share Share Other Treasury Retained Controlling Total
capital premium Reserves shares earnings Total interest Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2016 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
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
------- ------- -------- -------- -------- ------- ----------- -------
Net profit/(loss)
for the financial
year - - - 993 993 - 993
------- ------- -------- -------- -------- ------- ----------- -------
Total comprehensive
income for the
financial year - - - 993 993 - 993
Issue of share
capital - - - - - - -
Equity dividends
paid (recognised
directly in equity) - - - (381) (381) - (381)
Foreign Exchange
gain - - 80 - - 80 - 80
Minority Interest
acquired - - - - (22) (22) 22 -
Transactions
with owners - - 80 - 590 670 22 692
At 31 December
2017 5,616 7,281 103 (563) 3,516 15,953 - 15,953
======= ======= ======== ======== ======== ======= =========== =======
Consolidated Cash Flow Statement
for the financial year ended
31 December 2017 2017 2016
GBP'000 GBP'000
Profit on continuing activities
before taxation 1,507 633
Gain on biological assets (66) (238)
Amortisation of intangible
assets 6 -
Foreign exchange gain 63 -
Loss on discontinued activities (73) (161)
Deferred Consideration 100 -
Finance expenses 214 269
Finance income (11) (30)
Depreciation - property, plant
and equipment-net 709 625
2,449 1,098
Changes in working capital
and provisions:
Increase in inventories (226) (97)
Increase in trade and other
receivables (854) (1,130)
Increase/(decrease) in current
liabilities held for sale 11 (200)
Increase in payables 1,598 885
Cash generated from operations 2,978 556
Interest paid (201) (240)
Interest received 1 10
Taxation paid (251) (49)
------- -------
Net cash generated from operating
activities 2,527 277
------- -------
Investing activities
Investment in Intangible assets (82) (65)
Purchase of property, plant
and equipment (1,816) (1,375)
Purchase of biological assets (19) (302)
------- -------
Net cash used in investing
activities (1,917) (1,742)
------- -------
Financing activities
Dividends paid to shareholders (381) (346)
Deferred consideration payments (372) (220)
Invoice finance receipts 487 440
Overdraft receipt (94) 304
Finance lease capital repayments (189) (147)
Term loan advance 266 -
Finance lease advance 24 218
Term loan repayments (837) (1,123)
------- -------
Net cash outflow from financing
activities (1,096) (874)
------- -------
Net decrease in cash and cash
equivalents (486) (2,339)
------- -------
Cash and cash equivalents
and bank overdrafts,
Beginning of period 2,044 4,383
Cash and cash equivalents
end of period 1,558 2,044
------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
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