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Norish Plc (NSH)

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Friday 13 March, 2020

Norish Plc

Preliminary Results

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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