Roebuck Food Group PlcLSE: RFG

Half-year Report

Aug 20, 2020 at 9:30 AM UTC

RNS Number : 7099W

Norish PLC

20 August 2020

Norish plc

Interim results 2020

Results

Norish plc (AIM: NSH), is pleased to announce its interim results for the six months ended 30 June 2020.

Financial Highlights

· During the period the Group's balance sheet continued to strengthen

· Sales fell 9% from £17.5m to £15.9m

· Fully diluted adjusted EPS fell by 34%, year on year, from 3.1p to 2.06p

· Pre-IFRS 16 net debt reduced by £2m from £4.7m to £2.7m. Net debt after IFRS 16 adjustments reduced from Stg £9.7m at Dec-19 to Stg £7.7m at Jun-20. Cash availability amounts to £3m at June 2020.

· Interest cover pre IFRS 16 was 14.9 times.

Divisional Highlights

£'m	Cold Store			Sourcing			Dairy
	Jun-20	Jun-19	% Growth	Jun-20	Jun-19	% Growth	Jun-20	Jun-19	% Growth
Revenue	7.1	7.3	(2.7%)	7.4	9.8	(24.5%)	0.4	0.4	Nil
Operating Profit	1.3	1.6	(19%)	0.1	0.2	(50%)	(0.1)	(0.1)	Nil
Operating Margin	18.3%	21.9%		1.4%	2.0%		(25%)	(25%)

Cold Stores

Sales in the temperature-controlled division declined 2.7%, a creditable performance given the considerable disruption to trade in both our cold store divisions, arising as a result of the Covid 19 pandemic. Overall profits declined by 19% reflecting the high fixed cost nature of the business.

Pallets into our cold stores, the life blood of our business, were particularly impacted as our end user market (China and foodservice) was neutered by covid 19, down 24%, year on year, in the period. Blast freezing volumes saw a reduction in activity from 65,220 pallets blast frozen to 59,351 pallets blast frozen. A second key metric, that of stock turn, again reflected the state of flux in the market, with average stock holding moving out from 6.6 weeks to 8.2 weeks. Pricing action offset these headwinds in significant part.

Like for like operational costs were cut to reflect lower activity levels but some new additional costs were incurred to minimise the risk of an outbreak of Covid 19 at our sites. Cold store profits declined by 6.4% in the South East, in the period under review, while profits declined by 22% in the North West.

Sourcing Division

Sales at our sourcing division declined by 14% in the first half of 2020, compared with the same period in 2019, from £9.8m to £8.4m. Operating profit declined by a corresponding 50%, year on year, from £0.2m to £0.1m, reflecting the impact of Covid 19 and tighter margins.

Dairy Division

Our investment in dairy is moving from the development to commercial phase.

Our subsidiary, Grass to Milk Company, continues to execute to plan with its first A2 protein-based product in the final stages of development and an expected launch of this product, in high value export markets by the year end. The business has built considerable technical and commercial expertise to support a successful product launch and is engaging with a strong in-market commercial partner. We believe the business is well placed to add value to our unique grass-fed A2-protein milk supply.

Cantwell's Court Farm's operating performance in the first half of 2020 was consistent with our expectations. Milk revenue was 3% ahead year on year, reflecting a 6% increase in volume driven by better production per cow and a 3% decline in pricing. Operating costs were ahead year-on-year reflecting lower than average pasture growth in the first half, initially due to a wet Spring followed by drought conditions in May and June. Our farming enterprise continues to improve incrementally across key operating KPIs, and our herd is now fully converted to A2 which will form the basis for our future A2-protein milk supply.

The dairy divisions performance was impacted by incurring £0.1m in converting to an A2 herd.

Outlook

Our cold store business customer base substantially covers the UK Food Service and Chinese pork markets. Both markets were severely disrupted by Covid 19, resulting in customers converting stock to cash, in the first instance, in order to generate liquidity. This dynamic resulted in greater outflows of product, something we believe is necessarily transitory in nature.

Pricing in the Chinese pork market has recovered to a level which should sustain a strong export trade over the balance of the year, which will be positive for our North West division. In the South East, management have adapted our offering to reflect the current state of the British Food Service market, which is recovering in any event. We expect the profitability of our South Eastern division to be ahead of last year.

We are happy with the significant progress made with the development of our A2 protein milk supply via Cantwell's Court Farm. Grass to Milk Company remains on track to launch its first A2 protein-based product before year end, using our unique milk source.

The fallout in the UK Food Service market has afforded Town View Foods, our protein trading subsidiary, the opportunity to increase our trading network and rebuild our business. With an eye to opportunities post Brexit, we are now extending our footprint to South America on a minimal cost basis.

We believe our balance sheet strength affords us opportunity in the current environment, vis a vis many of our competitors in the sector.

Dividend

The board does not recommend the payment of an interim dividend, unchanged from last year.

Norish plc
Consolidated income statement
For the six months ended 30 June 2020

							Six months		Six months			Year
							ended		ended			ended
							30 June		30 June			31 December
							2020		2019			2019
							(Unaudited)		(Unaudited)			(Audited

							£'000		£'000			£'000

Continuing operations
Revenue							15,895		17,512			36,500
Cost of sales							(14,659)		(15,775)			(33,060)
Gross profit							1,236		1,737			3,440

Other income							88		70			107
Administrative expenses							(388)		(381)			(811)
Operating profit from continuing operations							936		1,426			2,736

Finance income - interest receivable							-		-			1
Finance expenses - interest on bank loans							(63)		(79)			(120)
Finance expenses - interest							(94)		(88)			(228)

Profit on continuing activities before taxation							779		1,259			2,388

Income taxes - Corporation tax							(160)		(311)			(247)
Income taxes - Deferred tax							-		-			(165)

Profit for the period attributable to owners of the parent from continuing operations							619		948			1,976

Loss from discontinued activities							-		(16)			(135)

Profit for the period							619		932			1,841

Other comprehensive income							-		-			-

Total comprehensive income for the year							619		932			1,841
Earnings per share expressed in pence per share:
From continuing operations - basic							2.06p		3.1p			6.57p
- diluted							2.06p		3.1p			6.57p
From discontinued operations - basic							0p		0p			(0.45)p
- diluted							0p		0p			(0.45)p


Norish plc
Interim balance sheet
As at 30 June 2020
				As at		As at				As at
				30 June		30 June				31 December
				2020		2019				2019
				(Unaudited)		(Restated)				(Audited)

				£'000		£'000				£'000
ASSETS
Non-current assets
Goodwill				2,338		2,338				2,338
Intangible assets				807		332				564
Biological assets				700		674				824
Property, plant and equipment				22,592		22,436				22,777
				26,437		25,780				26,503
Current assets
Trade and other receivables				4,838		6,230				6,857
Inventories				1,025		993				1,105
Cash and cash equivalents				1,501		973				1,054
Assets of disposal group classified as held for sale				277		284				277
				7,641		8,480				9,293

TOTAL ASSETS				34,078		34,260				35,796

Equity attributable to equity holders of the parent And non-controlling interest
Share capital				5,640		5,640				5,640
Share premium account				7,321		7,321				7,321
Other reserves				(21)		103				(21)
Treasury shares				-		(563)				-
Retained earnings				4,932		4,417				4,313
TOTAL EQUITY				17,872		16,918				17,253
Non-current liabilities
Borrowings				5,757		6,359				6,100
Deferred tax				1,002		816				1,002
				6,759		7,175				7,102

Current liabilities
Trade and other payables				5,526		4,993				6,564
Current tax liabilities				442		747				231
Borrowings				3,479		4,427				4,646
				9,447		10,167				11,441

TOTAL EQUITY AND LIABILITIES				34,078		34,260				35,796


Norish plc
Consolidated statement of changes in equity For the six months ended 30 June 2020


	Share	Share	Other		Treasury			Retained
	capital	premium	Reserves		shares			earnings			Total
	£'000	£'000	£'000		£'000			£'000			£'000

At 1 January 2019	5,640	7,321	103		(563)			3,485			15,986

Net profit for the financial period	-	-	-					932			932
Total comprehensive income for the period	-	-	-		-			932			932
Issue of share capital	-	-	-		-			-			-
Equity dividends paid (recognised directly in equity)	-	-	-		-			-			-
Treasury shares acquired	-	-	-		-			-			-
Transactions with owners	-	-	-		-			932			932
At 30 June 2019	5,640	7,321	103		(563)			4,417			16,918

Net profit/(loss) for the financial period	-	-	-					909			909
Total comprehensive income for the period	-	-	-					909			909
Issue of share capital	-	-	-		563			(563)			-
Equity dividends paid (recognised directly in equity)	-	-	-					(450)			(450)
Foreign Exchange gain	-	-	(124)		-			-			(124)
Transactions with owners	-	-	(124)		563			(104)			(335)
At 31 December 2019	5,640	7,321	(21)		-			4,313			17,253

Net profit for the financial period	-	-	-	-	619	619
Total comprehensive income for the period	-	-	-	-	619	619
Issue of share capital	-	-	-	-	-	-
Equity dividends paid (recognised directly in equity)	-	-	-	-	-	-
Foreign Exchange gain	-	-	-	-	-	-
Transactions with owners	-	-	-	-	619	619
At 30 June 2020	5,640	7,321	(21)	-	4,932	17,872

Norish plc
Consolidated cash flow statement
For the six months ended 30 June 2020
	Six months	Six months	Year
	Ended	ended	Ended
	30 June	30 June	31 December
	2020	2019	2019
	(Unaudited)	(Restated)	(Restated)
	£'000	£'000	£'000
Profit on continuing activities before taxation	779	1,259	2,388
Gain on biological assets	(88)	(70)	(107)
Foreign exchange gain/(loss)	(51)	-	97
Loss on discontinued activities	-	(16)	(135)
Finance expenses	157	167	349
Finance income	-	-	(1)
Depreciation - property, plant and equipment	887	826	1,649
	1,684	2,166	4,240
Changes in working capital:
Decrease /(increase) in inventories	80	(369)	(481)
Decrease/(increase) in trade and other receivables	2,019	20	(607)
Increase/(decrease) in trade and other receivables for disposal	-	40	47
Increase/(decrease) in current liabilities held for sale	-	(15)	(15)
(Decrease)/increase in payables	(1,038)	(453)	1,118
Cash generated from operations	2,745	1,389	4,302

Interest paid	(157)	(167)	(349)
Interest received	-	-	1
Taxation refund/(paid)	51	46	(406)
Net cash from operating activities	2,639	1,268	3,548
Investing activities
Investment in intangible assets	(243)	(166)	(419)
Purchase of biological assets	(5)	(4)	(1,734)
Sale of biological assets	268	39	209
Purchase of property, plant and equipment	(634)	(599)	(324)
Net cash used in investing activities	(614)	(730)	(2,268)
Financing activities
Dividends paid to shareholders	-	-	(449)
Invoice finance (payments)/receipts	(1,225)	(799)	(502)
Finance lease capital repayments	(405)	(514)	(979)
Finance lease advance	215	51	271
Term loan advance	-	314	300
Term loan repayments	(163)	(160)	(410)
Net cash used in financing activities	(1,578)	(1,108)	(1,769)

Net increase /(decrease) in cash and cash equivalents	447	(570)	(489)
Cash and cash equivalents, at beginning of period	1,054	1,543	1,543

Cash and cash equivalents end of period	1,501	973	1,054

Note : The accounting policies applied throughout the period are consistent with those applied for the year ended 31 December 2019, as set out in the 2019 Annual Report.

Enquiries:

Norish
Aidan Hughes, Finance Director	Telephone: + 44 1293 862 498

Davy
Anthony Farrell	Telephone: + 353 1 679 6363

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