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RNS
Produce Investments PLC  -  PIL   

Final Results - Replacement

Released 18:17 28-Sep-2017

RNS Number : 1657S
Produce Investments PLC
28 September 2017
 

 

28 September 2017

 

 

The Final Results announcement issued on 28/09/17 at 7am under RNS No 0300S has been re-released to correct a change in the dividend record date.

 

All other details remain unchanged.

 

The full amended text is shown below.

 

 

 

 

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 £200.1m (2016: £185.1m) driven by:

High priced potato driven by lower yield

New retail business win during the year

-       More robust business model:

Longer term commitments with key customers

Improved visibility of volume and margin

-       Improving operations:

Strong performance in Jersey

Expanded customer base in the Daffodil sector

Continued recovery at Swancote

 

Key Financial Points:

 

-    Operating profit before exceptional items for the year decreased 9.1% to £8.4m (2016: £9.2m) in line with the Board's expectation

-       Profit before tax is £6.6m, up 88% vs the prior year (2016: £3.5m)

-       Increase in full year dividend to 7.466p (2016: 7.32p) reflecting the Board's confidence in the outlook

-       Net debt increased to £28.0m (2016: £18.1m) 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 £8.4m (2016: £9.2m), in line with our expectations, and a profit before tax of £6.6m (2016: £3.5m) despite the increased loss before tax of £1.0m (2016: loss £0.2m) 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 3 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 £4.8m (Net of the Jersey Peacock farm packing facility) (2016: £3.7m).

 

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 £28.0m (2016: £18.1m) at the year-end principally reflects our purchase during the year of a packing facility (Land and Buildings) in Jersey for £6.1m (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

£'000

2016

£'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

£'000

2016

£'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

£'000

2016

£'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 borrowings

 

 

16,875

-

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

 

 

Notes

 

 

 

 

 

 

 

 

 

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 June 2016

 

268

21,670

10,228

18,559

50,725

530

51, 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

£'000

2016

£'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 expense

 

 

280

-

Exceptional non cash write offs

 

 

547

-

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, plant and equipment

 

 

430

-

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

Invoice finance movement during the period

 

 

 

(750)

9,916

 

(3,000)

(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 (£'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 (£'000)

7,366

4,579

Exceptional Items

1,007

4,635

Finance costs and income (£'000)

(850)

(1,094)

Income from associate

62

11

Adjusted profit before tax (£'000)

7,585

8,131

Tax on adjusted profit at effective rate (£'000)

(557)

(421)

 

 

 

Adjusted profit after tax (£'000)

7,028

7,710

Adjusted profit attributable to ordinary shareholders (£'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
 
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Final Results - Replacement - RNS