TIDMPIL
RNS Number : 0300S
Produce Investments PLC
28 September 2017
28 September 2017
PRODUCE INVESTMENTS PLC
("Produce," "Company" or the "Group")
FINAL RESULTS
A Year of two halves
Produce Investments plc, (AIM:PIL) ("Produce," "Company" or the
"Group"), a leading operator in the fresh potato and daffodil
sectors, is pleased to announce its final results for the year
ended 1 July 2017.
Key Operational Highlights:
- Revenue increased 8.1% to GBP200.1m (2016: GBP185.1m) driven by:
o High priced potato driven by lower yield
o New retail business win during the year
- More robust business model:
o Longer term commitments with key customers
o Improved visibility of volume and margin
- Improving operations:
o Strong performance in Jersey
o Expanded customer base in the Daffodil sector
o Continued recovery at Swancote
Key Financial Points:
- Operating profit before exceptional items for the year
decreased 9.1% to GBP8.4m (2016: GBP9.2m) in line with the Board's
expectation
- Profit before tax is GBP6.6m, up 88% vs the prior year (2016: GBP3.5m)
- Increase in full year dividend to 7.466p (2016: 7.32p)
reflecting the Board's confidence in the outlook
- Net debt increased to GBP28.0m (2016: GBP18.1m) at year end
(includes the purchase of Jersey packing facility)
Angus Armstrong, Chief Executive, commented:
"Following a very tough first half year I am pleased to report a
significant improvement during the second half as we recovered
higher raw material costs in our core potato business. Operating
profit was lower by 9.1% from 2016 although the EBITDA* decrease
was reduced to 2%. By working with core and new customers to create
a more collaborative supply chain model, the core potato business
has benefited from a new business win as well as increasing volume
with an established customer.
Work to improve operational efficiencies has continued and the
benefit from investment in a new ERP system is now being realised.
The focus on, and continued investment in, improved systems and
processes is ongoing.
The Rowe Farming Daffodil business had a slightly more
challenging season with rapid crop development compromising sales
opportunities, however new business wins in this sector should see
an improvement for next year. The recovery at Swancote continues
with an expanded product portfolio helping win new business. Jersey
had a good season with favourable growing conditions and excellent
demand.
While the market will remain challenging, the Board remains very
confident about the company's ability to deal with such pressures.
The Board remains confident that Produce Investments is in a strong
position to grow and take advantage of any acquisition
opportunities which may arrive."
* EBITDA means Group operating profit before exceptional items,
depreciation, and amortisation.
A presentation for analysts will be held at 09.00am this morning
at Powerscourt's offices, 1 Tudor Street, EC4Y 0AH.
- End -
For further information contact:
Produce Investments plc
Jonathan Lamont 01890 819503
Numis Securities Limited
(Nomad)
Oliver Cardigan 020 7260 1000
Powerscourt
Nick Dibden / Samantha
Trillwood
produce@powerscourt-group.com 020 7250 1446
Notes to Editors
The Group is a vertically integrated potato and daffodil company
supplying blue chip customers including Tesco, Sainsbury, Asda,
Coop, Waitrose and Marks & Spencer.
Website: www.produceinvestments.co.uk
CHAIRMAN'S STATEMENT
The Group ended on a high in a year of two halves.
I am pleased to report a strong performance in the second half
of our financial year, confirming the effectiveness of our
strategic approach and the success of the diversified business
model we have developed in our established produce operations.
Results
As we anticipated in the interim report, the second half saw a
much improved trading result as we began to recover higher raw
material costs in our core Greenvale potato business, enjoyed a
strong season for Jersey Royals, and started to realise the
benefits of our new ERP system. This has delivered a Group
operating profit before exceptional items for the year of GBP8.4m
(2016: GBP9.2m), in line with our expectations, and a profit before
tax of GBP6.6m (2016: GBP3.5m) despite the increased loss before
tax of GBP1.0m (2016: loss GBP0.2m) reported in the first half.
Dividend
The Board recommends an increased final dividend of 5.026 pence
per share (2016: 4.88 pence). Together with the interim dividend of
2.44 pence per share (2016: 2.44 pence) paid in April, this makes a
total dividend for the year of 7.466 pence (2016: 7.32 pence), a
rise of 2.0%. Subject to the approval of shareholders at the AGM,
the final dividend will be paid on 5 December 2017 to ordinary
shareholders on the register at the close of business on 5 November
2017.
Board changes
I will be retiring at the AGM on 29 November 2017, as will
Non-Executive Director (NED) Sean Christie. Having served two full
three year terms Senior independent NED Sir David Naish will also
be retiring by rotation. Barrie Clapham will resume the position of
Chairman on an interim basis as the Group commences a recruitment
process to find a more permanent successor. Liz Kynoch will
continue in her role as NED as will Robert Johnston, the principal
representative of the Jerry Zucker Revocable Trust, the largest
shareholder in the Group, who joined the Board as NED on 9 June
2017. The Board will continue to work in a sustainable way to
deliver incremental shareholder value over the longer term.
Strategy
Following the restatement of Strategy at the interims in March
the board has decided to revert to the original strategy of growing
the business through strategic acquisitions of quality businesses
that offer synergies and product or customer diversification. At
the same time we will continue to explore and fund the organic
growth opportunities of the subsidiary companies.
People
On behalf of the Board, I would like to express sincere thanks
to all our employees for their hard work in delivering these
results, and for their continuing commitment to ensuring that we
provide our customers with products and service of the highest
quality. Maintaining and improving these high standards is key to
our future success.
Outlook
Looking to the year ahead, harvest is now progressing although
with the majority of the potato crop still in the ground,
favourable weather is required during October to see the harvest
safely secured. Assuming harvest proceeds as it should, an increase
in the planted area will see a gross crop yield that will exceed
demand and therefore deflate raw material prices. A solid start to
the year sees trading in-line with forecast and the new business
gains, and new contractual arrangements with established customers,
give us much enhanced visibility on both volume and margins in our
core retail potato business. We are achieving improved efficiencies
in our two fresh potato processing sites, and anticipate further
significant efficiency benefits from the implementation of our new
ERP system. All this allows us to feel confident in the Group's
ability to achieve good progress during the current year.
As a business predominantly growing and selling produce in the
UK, our principal concern about Britain's withdrawal from the EU is
ensuring the continued availability of high quality seasonal
labour. While we have encountered no difficulties in recruitment to
date, and return rates of seasonal staff remain high, clear
direction from the Government is required to ensure a Brexit
agreement that maintains access to this essential resource.
The Group continues to generate cash and we are well placed to
continue our well-established and proven strategy of widening both
our product range and customer base within our existing produce
operations, and to exploit other opportunities for profitable
acquisitions as these arise.
Neil Davidson
Chairman
CHIEF EXECUTIVE'S REPORT
Diversification, investment, new business gains and strengthened
customer relationships have all helped us to overcome the
significant challenges posed by rising raw material costs and
continuing intense price competition in the UK retail market
place.
Fresh
Our core potato business, accounting for circa 78% of Group
revenues during the year (2016: circa 78%), traded successfully
through a less stable year, characterised by lower crop yields,
resulting in higher raw material costs, and retail price deflation.
Although the planted area for UK potatoes increased by just over 4%
in the 2016 harvest, below average yields resulted in a 4%
reduction in the total crop to 5.22m tonnes (2015 harvest: 5.43m
tonnes). With demand outstripping supply throughout the year, input
costs remained consistently high. However, Kantar World panel data
for the fresh retail potato market showed a decline in market value
of 3.5% during the year, on relatively static volumes, reflecting
the continuation of intense competition in the supermarket
sector.
We have benefited from our strategic approach in this
challenging market, securing increased volumes with a major retail
customer for a fixed period of three years through the adoption of
a more collaborative and transparent approach to supply chain
management. This has delivered improved efficiencies for both
parties. We are also pleased to announce that we have won a third
mainstream retail account, again for an initial fixed period of
three years. Sales into the non-retail sectors of foodservice and
wholesale also showed good growth during the year, and the launch
of Linwood Crops at the start of the year as a subsidiary trading
division will support further growth in these sectors.
Following completion of our packing site rationalisation
programme in 2015, we now operate two efficient facilities in
Scotland and Cambridgeshire, which are very well placed for both
the major UK potato growing areas and distribution channels. We
have continued to drive productivity through investment in these
sites, which accounted for a significant proportion of the Group's
operational capital expenditure during the year of GBP4.8m (Net of
the Jersey Peacock farm packing facility) (2016: GBP3.7m).
We have also continued our investment in IT, following the
successful transition in 2015 from in-house servers to a
cloud-based external provider, thereby reducing the risk of
business disruption and improving our contingency planning and
disaster recovery capability. The focus this year has been on the
installation of our new ERP system which, as noted in the interim
report, resulted in some additional costs during a longer than
expected implementation process. The roll-out across both our UK
packing sites has now been completed and we are pleased to report
that it has bedded in well, and that the expected planning and
process efficiencies are starting to be realised.
Our growing arm had a successful year, benefiting from higher
raw material prices. The increased order book in our fresh packing
business also drove higher demand for seed, delivering a strong
performance by our seed division. Our varietal development
programme in this division continues apace, and we have a strong
pipeline of new potato varieties coming through to market.
Our Cornish business of Rowe has had an average year growing,
picking and marketing daffodils in a season that extends from late
December to late April. Unfortunately rapid crop development
resulted in an early harvest which compromised sales opportunities.
Expansion of our production area has given us the opportunity to
serve an extended customer base, enabling us to secure a number of
new business wins during the year. In addition to daffodils, Rowe
Farming also grows and supplies early potatoes from Cornwall, and
made a successful start to the 2017 season.
Following a good and uninterrupted planting season, and
subsequent favourable growing conditions, Jersey produced an
excellent crop of new potatoes in 2017. Strong UK demand from the
launch of the crop in late April through into June ensured an
equally successful sales season, and the performance of the
business was further enhanced by our continued focus on cost
control and efficiency gains.
Processing
Our potato processing business has continued its recovery,
benefiting from a new management structure and an ongoing focus on
improved processes and efficiencies. We have invested in new
cooking equipment and detection technology, extended our product
range into the raw peel sector, and gained new business as a
result. The performance of the business was much improved in the
closing months of the year and we are about to install a third
production line in the factory to keep pace with growing
demand.
Other
Our storage and ripening technology business enjoyed a better
year, with recovery in two core markets. In addition, new member
state chemical approvals within the EU have enabled Restrain to
achieve a significant increase in its territorial reach within the
last few months, giving solid grounds for optimism about its
prospects in the year ahead.
Finances
The business remains cash generative. An increase in net debt to
GBP28.0m (2016: GBP18.1m) at the year-end principally reflects our
purchase during the year of a packing facility (Land and Buildings)
in Jersey for GBP6.1m (cash), as well as higher stock valuations
and increased trade receivables. Following the closure of
Greenvale's Kent packing facility in December 2015 we have removed
all plant and machinery from the buildings and are confident that
the sale of the site is now nearing completion.
Prospects
The indications are that the planted area of potatoes in the UK
has increased by approximately 4% for the second successive year. A
timely planting season has been followed by variable growing
conditions, and current predictions are for a 2017 crop that is of
average yield and quality. If this proves to be accurate, it could
deliver a gross yield as much as 9% greater than in 2016 at around
5.7m tonnes. This would usually indicate that we will have a season
with more moderate raw material pricing compared with the season
2016/2017.
The diversity of our core business has delivered real benefits
during the year under review. This proven model, the new retail
business we have secured, and the more transparent arrangements we
have agreed with established customers, all give us increased
confidence in our ability to achieve profitable growth in our
established produce operations in the years ahead.
Angus Armstrong
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
For the 53 weeks ended 1 July 2017
2017 2016
GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 200,130 185,102
Cost of sales (128,681) (115,036)
----------- -----------
Gross profit 71,449 70,066
Administrative and other
operating expenses (63,076) (60,852)
Operating profit before
interest, tax, exceptional
items and dividends 8,373 9,214
Exceptional Items (1,007) (4,635)
----------- -----------
Operating profit 7,366 4,579
Finance costs (867) (1,107)
Finance income 17 13
Share of profit of associate 62 11
Profit before tax 6,578 3,496
Income tax expense (483) (181)
----------- -----------
Profit for the period 6,095 3,315
----------- -----------
Attributable to:
Equity holders of the parent 6,046 3,211
Non-controlling interests 49 104
6,095 3,315
----------- -----------
Earnings per share attributable
to owners of the parent
during the year:
Basic earnings per share
(pence) 22.43 11.97
Diluted earnings per share
(pence) 21.42 11.60
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 53 weeks ended 1 July 2017
2017 2016
GBP'000 GBP'000
------------------------------ --------- ---------
Profit for the period 6,095 3,315
========= =========
Other comprehensive income:
Actuarial (loss) in respect
of pension scheme (2,011) (1,531)
Deferred tax movement on
actuarial loss 180 196
Current income tax credit
on actuarial loss 64 65
Deferred tax movement on
share based payments 357 (302)
Other comprehensive income
for the period (1,410) (1,572)
Total comprehensive income
for the period 4,685 1,743
========= =========
Attributable to:
Equity holders of the parent 4,636 1,639
Non-controlling interests 49 104
--------- ---------
4,685 1,743
========= =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 1 July 2017
2017 2016
GBP'000 GBP'000
--------------------------------- --------- ---------
ASSETS
Non-current assets:
Property, plant and equipment 39,902 34,084
Intangible assets 15,589 16,136
Investment in associates 190 172
Other investments 122 529
55,803 50,921
--------- ---------
Current assets:
Inventories 9,663 8,860
Biological assets 21,006 19,792
Trade and other receivables 34,469 30,438
Prepayments 2,355 1,640
Cash and short-term deposits 7,749 742
--------- ---------
75,242 61,472
--------- ---------
Assets held for sale 1,250 1,250
Total assets 132,295 113,643
--------- ---------
EQUITY AND LIABILITIES
Equity:
Issued capital 271 268
Share premium 21,842 21,670
Other capital reserves 10,228 10,228
Retained earnings 21,349 18,559
--------- ---------
Equity attributable to equity
holders of the parent 53,690 50, 725
Non-controlling interests 719 530
--------- ---------
Total equity 54,409 51,255
--------- ---------
Non-current liabilities:
Interest-bearing loans and 16,875 -
borrowings
Other non-current financial
liabilities 544 849
Deferred revenue 47 70
Pensions and other post
employment benefit obligations 8,954 7,268
Deferred tax liability (net) 1,977 2,838
28,397 11,025
--------- ---------
Current liabilities:
Trade and other payables 29,624 31,075
Interest-bearing loans and
borrowings 18,912 18,871
Deferred revenue 53 88
Income tax payable 900 1,329
49,489 51,363
--------- ---------
Total liabilities 77,886 62,388
--------- ---------
Total equity and liabilities 132,295 113,643
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 53 weeks ended 1 July 2017
Other
Issued Share capital Retained Non-controlling Total
Capital premium reserves earnings Total interest Equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 27
June 2015 267 21,598 10,228 18,855 50,948 452 51,400
--------- --------- ---------- ---------- -------- ---------------- --------
Profit for
the period - - - 3,211 3,211 104 3,315
Actuarial
loss on post-employment
benefit obligations - - - (1,531) (1,531) - (1,531)
Deferred
tax on actuarial
loss - - - 196 196 - 196
Current year
tax taken
to equity - - - 65 65 - 65
Deferred
tax taken
directly
to equity - - - (302) (302) - (302)
--------- --------- ---------- ---------- -------- ---------------- --------
Total comprehensive
income - - - 1,639 1,639 104 1,743
--------- --------- ---------- ---------- -------- ---------------- --------
New shares
issued during
period 1 72 - - 73 - 73
Equity dividends
paid - - - (1,935) (1,935) (26) (1,961)
--------- --------- ---------- ---------- -------- ---------------- --------
As at 25 51,
June 2016 268 21,670 10,228 18,559 50,725 530 255
--------- --------- ---------- ---------- -------- ---------------- --------
Profit for
the period - - - 6,046 6,046 49 6,095
Actuarial
loss on post-employment
benefit obligations - - - (2,011) (2,011) - (2,011)
Deferred
tax on actuarial
loss - - - 180 180 - 180
Current year
tax taken
to equity - - - 64 64 - 64
Deferred
tax taken
directly
to equity - - - 357 357 - 357
--------- --------- ---------- ---------- -------- ---------------- --------
Total comprehensive
income - - - 4,636 4,636 49 4,685
--------- --------- ---------- ---------- -------- ---------------- --------
New shares
issued during
period 3 172 - - 175 - 175
Minority
interest
acquisition - - - (155) (155) 155 -
Share-based
payment transactions - - - 280 280 - 280
Equity dividends
paid - - - (1,971) (1,971) (15) (1,986)
--------- --------- ---------- ---------- -------- ---------------- --------
As at 1 July
2017 271 21,842 10,228 21,349 53,690 719 54,409
--------- --------- ---------- ---------- -------- ---------------- --------
CONSOLIDATED CASH FLOW STATEMENT
For the 53 weeks ended 1 July 2017
2017 2016
GBP'000 GBP'000
------------------------------------ ---- ---- ---------- ----------
OPERATING ACTIVITIES
Profit before tax from continuing
operations 6,578 3,496
---------- ----------
Adjustments to reconcile
profit before tax for the
year to net cash inflow
from operating activities:
Depreciation , amortisation
and impairment of assets 5,628 7,737
Share-based payment transaction 280 -
expense
Exceptional non cash write 547 -
offs
Loss / (Gain) on disposal
of property, plant and equipment (389) 38
Finance costs 867 1,107
Share of net profit of associate (62) (11)
Difference between pension
contributions paid and amounts
recognised in the income
statement (552) (552)
Working capital adjustments:
(Increase) in trade and
other receivables and prepayments (4,746) (1,561)
(Increase) in inventories
and biological assets (2,017) (1,590)
(Decrease) / increase in
trade and other payables (1,501) 1,994
(Decrease) in deferred revenue (58) (67)
Income tax paid (1,168) (957)
---------- ----------
Net cash flows from operating
activities 3,407 9,634
---------- ----------
INVESTING ACTIVITIES
Proceeds from sale of property, 430 -
plant and equipment
Purchase of property, plant
and equipment (10,953) (3,743)
Purchase of intangible assets (41) (82)
Cash flows arising from
purchase of subsidiary (301) (451)
Net cash flows used in investing
activities (10,865) (4,276)
---------- ----------
FINANCING ACTIVITIES
Bank loans repaid during
period (750) (3,000)
Invoice finance movement
during the period 9,916 (1,609)
New bank loans during period 7,750 -
Interest paid (640) (881)
Dividends paid (1,986) (1,961)
Proceeds from share issues 175 73
Net cash flows generated
from / (used in) financing
activities 14,465 (7,378)
---------- ----------
Net increase / (decrease)
in cash and cash equivalents 7,007 (2,020)
Cash and cash equivalents
at beginning of period 742 2,762
---------- ----------
Cash and cash equivalents
at end of period 7,749 742
========== ==========
Statement of compliance
The financial information set out above does not constitute the
Company's statutory report and accounts for the year ended 1 July
2017 or the year ended 25 June 2016, but is derived from those
accounts. Statutory accounts for 2016 have been delivered to the
registrar of companies, and those for 2017 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
The annual report and accounts for the year ended 1 July 2017 will
be posted to shareholders by 27 October 2017. The results for the
year ended 1 July 2017 were approved by the Board of Directors on
27 September 2017 and are audited.
The information contained in this preliminary announcement has
been approved by the Board of Directors.
Basis of preparation
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union as they apply to the
financial statements of the Group for the period ended 1 July 2017
and applied in accordance with the Companies Act 2006.
These consolidated financial statements have been prepared on a
historical cost basis, except for derivative financial instruments
and biological assets, which have both been measured at fair value
in line with applicable accounting standards.
Earnings per share
2017 2016
-------------------------------------------- ----------- -----------
Profit attributable to equity shareholders
(GBP'000) 6,046 3,211
Weighted average number of ordinary
shares in issue 26,946,218 26,815,963
Weighted average number of options
with dilutive effect 1,281,042 858,278
----------- -----------
Total number of shares - fully
diluted 28,227,260 27,674,241
Basic earnings per share - pence 22.43 11.97
Diluted earnings per share - pence 21.42 11.60
Adjusted earnings per share
Operating profit (GBP'000) 7,366 4,579
Exceptional Items 1,007 4,635
Finance costs and income (GBP'000) (850) (1,094)
Income from associate 62 11
----------- -----------
Adjusted profit before tax (GBP'000) 7,585 8,131
Tax on adjusted profit at effective
rate (GBP'000) (557) (421)
----------- -----------
Adjusted profit after tax (GBP'000) 7,028 7,710
Adjusted profit attributable to
ordinary shareholders (GBP'000) 6,979 7,606
Adjusted basic earnings per share
- pence 25.90 28.36
Adjusted diluted earnings per share
- pence 24.72 27.48
============================================ =========== ===========
Report distribution
Copies of the annual report and financial statements will be
sent to shareholders on or before 27 October 2017 and will be
available for a period of one month from that date to the public at
the offices of Produce Investments plc, Floods Ferry, Floods Ferry
Road, Doddington, March, Cambridge, PE15 OUW, and at the Company's
website.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKODKCBKDNCB
(END) Dow Jones Newswires
September 28, 2017 02:01 ET (06:01 GMT)
Produce (LSE:PIL)
Historical Stock Chart
From Apr 2024 to May 2024
Produce (LSE:PIL)
Historical Stock Chart
From May 2023 to May 2024