Norish : Preliminary results 2016

Thursday 23rd March 2017

Results

Norish plc (AIM: NSH), is pleased to announce its preliminary results for the year ended 31 December 2016.

Financial Highlights

• Total revenue increased by 27.9% to £32.1m (2015: £25.1m).
• Revenue from commodity trading increased by 46.6% to £19.5m (2015: £13.3m).
• Revenue from our continuing temperature controlled divisions increased by 6.8% to £12.6m (2015: £11.8m).
• Operating profit increased by 3.6% to £0.87m (2015: £0.84m).
• Net assets unchanged at £15.3m (2015: £15.3m).
• Net debt increased to £5.2m (2015: £3.2m).

Operational Highlights

• The performance of the cold store division was ahead of 2015 by 9.4%
• The performance of the commodity division was ahead of 2015 by 48%
• We invested £1.7m of the funds raised in December 2015 by the end of December 2016.We invested £0.8m in our temperature controlled division, £0.6m in dairy infrastructure along with £0.3m in the herd for the dairy farm in Kilkenny
• We continue to invest in projects which provide short term payback and in the build out of our dairy business.

North West Division

The North West cold store division which comprises the freehold sites at Wrexham and Birmingham performed well in 2016. This was mainly as a result of a buoyant market in China for most of 2016.

China is the U.K.'s biggest export market for fifth quarter pig meat. Exports of pig meat to China have increased more than fourfold since the UK started to export there in 2011. Two of the three licensed cold stores in the U.K. are the Norish plc owned properties at Wrexham, North Wales and Brierley Hill, Birmingham.

South East Division

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 below the same period last year. Contribution was mainly impacted by a refurbishment programme at the Bury St Edmunds site, which we completed in December 2016.

Commodity Trading

Our commodity trading division which consists of Townview Foods Limited and Foro International Connections Limited ('Foro') contributed £0.5m for the period, up from £0.4m for the same period last year.

Townview Foods Limited trades in protein products, mainly beef, pork, lamb and chicken. Sales from pork increased by £3m during the year, sales from beef increased by £1.9m, and sales from lamb increased by £0.6m. Townview Foods Limited generated a contribution of £0.6m for the period, against £0.4m for the same period last year, and sales of £18.5m, against £12.3m for the same period last year.

Foro accounted for £1m of the sales, unchanged from 2015. Foro broke even, unchanged from last year. Foro trades mainly in fish, dairy and its currently developing a product to sell to the ready to drinks market.

We are continually investing in people to grow this division.

Dairy

Our low cost grass based dairy farm was successfully converted from a tillage/suckler farm in the second half of 2016.

Discontinued

During 2015 the Group agreed the sale of the Leeds site for £0.4m net. The sale completed in March 2016. This site was not part of the future plans for the business. Losses in respect of this property are included in discontinued activities.

During 2016, Foro discontinued trading in the FMCG market due to high working capital requirements, currency fluctuations, and unacceptable margins. The 2015 comparative figures have been adjusted to reflect the reclassification.

Outlook

2016 was a year of considerable progress for the group. Commercial decisions made in previous years, combined with a new, focused, management approach and a strengthening of the Group's Balance Sheet, has ensured that Norish is now in a position to develop its business in ways that were previously unavailable to the group.

We have been very encouraged by the excellent start made in the first two months of 2017 by our two main Trading Divisions - Temperature Controlled Storage and Protein Trading (Town View Foods).

The dairy division is in the early stages of developing its business model and is putting in place an experienced senior executive team to manage and grow this business.

Through our subsidiary, Foro International Connections Limited, we are developing retail and food service markets, both in Ireland and the U.K. in conjunction with three significant European manufacturers of fruit drinks, health smoothies and RTD (ready to drink) coffee. This development fits in well with our existing U.K. cold store locations.

At this juncture, our cold stores comprise the greatest proportion of our property, plant and equipment (97%). The cold store division also represents the most immediate opportunity to improve profitability and returns for the group, something the Board is acutely aware of. Through active management of our cold store division, we are looking at every facet of our cost base, implementing changes and building an ever better, more balanced, more diversified business.

At this juncture we consider it appropriate to increase guidance for 2017 to a range of 2.75p to 3p (fully diluted adjusted eps).

Financial Review

Total equity at 31 December 2016 stood at £15.3m (2015: £15.3m). Net debt at 31 December 2016 was £5.2m compared to £3.2m at 31 December 2015.

Dividend

The board recommends the payment of a final dividend of 1.50 €cent per share. This will be paid on 20 October 2017 to those shareholders on the register on the 29 September 2017. It will bring the total dividend in respect of the financial year to 1.50 €cent per share, unchanged from last year.

Brexit

The United Kingdom voted to leave the EU on the 23rd of June, last year. As of now we have not seen any appreciable change to our business, as a result of that vote.

On behalf of the board, I would like to thank the management team and staff for their commitment and contribution in 2016.

Ted O'Neill

Chairman