TIDMRFG
RNS Number : 2144G
Roebuck Food Group PLC
28 March 2022
Chairman's Statement
Roebuck Food Group plc (AIM: RFG), is pleased to announce its
results for the year ended 31 December 2021.
Group Financial Highlights - Continuing Operations
-- Group revenue increased by 30% to GBP24.5m (2020: GBP18.8m)
-- Cold store business sold for GBP55.2m. Profit on sale GBP40m
-- Capital return delivered to Shareholders of GBP49.9m (GBP1.66 per share)
-- Net debt of GBP8.7m eliminated in Oct 21. Net cash at year end GBP1.4m.
-- EBITDA of GBP0.2m at the Dairy division (2020 : GBPNil)
-- Group costs reduced to GBP0.5m for the year (2020 : GBP0.86m)
Diluted adjusted EPS is calculated using loss for the financial
year from continuing operations as the measure of earnings.
Financial information above, including comparative information, is
from continuing operations only.
Divisional Highlights
GBP'm Sourcing Dairy
2021 2020 2021 2020
----- ----- ------ ------
Revenue 23.3 17.8 1.2 1.0
----- ----- ------ ------
EBITDA 0.3 0.3 0.2 0.0
----- ----- ------ ------
Operating
Profit/(loss) 0.3 0.3 (2.4) (0.1)
----- ----- ------ ------
Operating
Margin 1.3% 1.8% 0%
----- ----- ------ ------
Sourcing Division
Sales at our sourcing division increased by 31% in 2021,
compared with the same period in 2020, from GBP17.8m to GBP23.3m.
Operating profit remained unchanged at GBP0.3m.
The sourcing division has commenced its strategy of diversifying
into sourcing and suppling proteins in new markets outside of the
UK and Ireland. South Africa and South America have become
significant emerging markets for Townview ("TVF") whilst also
introducing TVF to new sourcing capabilities on a global scale. The
integration and growth within these markets has initially come at
lower margins but will allow the business to push on in 2022 into
further international markets with increased margins. Our product
sales at TVF increased by 47% to 15,600 tons compared to 10,600 in
2020
T he Group's original investment in the main Sourcing
subsidiary, TVF, has been fully recouped and the structures are in
place to continue development of this business.
Chairman's Statement (Continued)
Dairy Division
Our subsidiary, Grass to Milk Company Ltd (G2M), continues to
make progress; commercialising A2 protein, grass-fed, dairy
products. Notwithstanding supply chain delays, we launched two new
premium, A2-protein, grass-fed products in China in the second half
of 2021. We also commenced work on A2-protein based nutrition
ingredients which we hope to launch in the second half of 2022. We
continue to work on building a high standard supply chain and
quality system which will underpin our future growth. Our
Commercial Strategy focuses on Business to Business (B2B) customers
in China, leveraging partnerships with established players
in-market. We had also carried out some Business to consumer (B2C)
trials to better understand consumer preferences and market
dynamics.
We currently source all of our A2-protein milk from
Cantwellscourt Farm Ltd which continues to outperform across key
operating KPI's around pasture production, milk quality and animal
welfare. Milk production was 15% ahead year on year; milk solids
per cow improved by 6% and pasture grown per hectare improved 12%
versus 2020. EBITDA improved from Nil to GBP0.2m at the dairy
division.
Discontinued
On the 28(th) October 2021, we sold the Cold Store business,
resulting in a profit on disposal of GBP40m. Following the sale, we
made a capital return to Shareholders of GBP1.66 per share
totalling GBP49.9m in November 2021.
During 2020, the group decided to discontinue the ambient
warehousing in Ireland. A loss in the current year of GBP0.6m was
incurred, compared to GBP0.07m last year.
Outlook
Following the successful sale of its Cold Stores business, the
Group returned GBP49.9m to shareholders at the end of 2021. The
group is now seeking to develop a diversified nutrition business
spanning multiple ingredients, technologies and end- markets. To
that end, the Group is currently mapping out its growth strategy;
leveraging a highly experienced and capable team and its financial
flexibility to create shareholder value in the coming years.
The Group's existing business comprises two complementary
business units; A2 dairy protein (G2M) and protein sourcing (TVF).
G2M is a value-add functional nutrition business focused on A2
dairy protein with global market potential. TVF is a protein
sourcing business with a sales footprint across Ireland, UK, and
increasingly into Emerging Markets; expanding its geographic reach
and product portfolio.
In order to reflect the strategic shift in the underlying
business and future growth strategy, including a move to B2B and
away from B2C, the board believes it is appropriate to impair
GBP1.5m of development expenditure to profit or loss in the current
year, related to the initial development phase of G2M which
included the establishment of Ireland's first certified A2 herd and
the initial NPD phase of A2 dairy products at G2M. The board
expects the remaining assets of GBP665k to provide a solid
foundation for future development of the dairy division, through
the B2B commercialisation of A2 protein and functional nutrition
products.
Chairman's Statement (Continued)
Directors
As we embark on a new journey, following the sale of the Cold
Stores business, we have appointed two new Executive Directors with
effect from 1 January 2022.
Declan Morrissey who has previously headed up the Dairy Division
is appointed Group Managing Director. He previously worked as an
equity analyst in Davy, covering the European food sector with a
particular focus on dairy, ingredients and supply chain.
Gerard Murphy as Finance Director who has held the role of
Company Secretary since 2018. He has worked for the Group since
2012 as Financial Controller for the Sourcing and Dairy
divisions.
Dividend
The board does not recommend the payment of a dividend.
On behalf of the board, I would like to thank the management
team and staff for their commitment and contribution in 2021.
Ted O'Neill
25 March 2022
Financial Review
Sales
Total Group revenue from continuing operations increased by 30%
to GBP24.5m (2019: GBP18.8m). Revenues in the sourcing division
increased by 31% to GBP23.3m (2020: GBP17.8m). Revenues in the
dairy division increased by 20% to GBP1.2m (2020: GBP1m)
Gross profit
Gross profit from continuing activities increased to GBP110k
(2020: GBPNil).
Operating loss
Operating loss from continuing activities increased to GBP2.6m
(2020: loss GBP0.7m), after an impairment charge on intangible
assets of GBP1.5m (2020: GBPNil) and GBP0.9m (2020: GBPNil) of an
impairment charge relating to fixed assets.
Finance expense (net )
Finance expense remained unchanged at GBP0.06m (2020:
GBP0.06m).
Profit from discontinued operations
On the 28 October 2020, we sold the Cold Stores business,
resulting in a profit on disposal of GBP40m. Following the sale, we
made a capital return to Shareholders of GBP1.66 per share
totalling GBP49.9m in November 2021.
During 2020, the group decided to discontinue the ambient
warehousing in Ireland. A loss in the current year of GBP0.6m was
incurred, compared to GBP0.07m last year.
Earnings per share
The basic adjusted loss per share from continuing operations
increased by 314% to 8.8p (2020: 2.8p).
Capital
During the period we invested GBP2.8m (2020: GBP2.2m). GBP1.7m
was invested in plant and equipment in the cold storage division
(discontinued) which was sold on 28 October 2021.We also invested
GBP1m in respect of the commercialisation of our A2 protein milk
business.
Cash Position
During the year we sold the Cold Stores business and made a
Capital Return to shareholders. At December 2021 Net cash was
GBP1.4m (2020: net debt GBP8.7m).
Financial Review (Continued)
Dividend
The board does not recommend a payment of a dividend.
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, 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, liquidity risk, credit risk and foreign
exchange 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 GBP0.13m
at a floating rate of 3.75%.
Liquidity risk
Following the sale of the Cold Stores business, and the capital
return to shareholders, the Group is in a net cash position of
GBP1.4m. This is made up of cash of GBP4.5m, Invoice financing of
GBP2.1m, term loans of GBP0.2m and leases of GBP0.8m.
Credit risk
The Group's policy is to minimise exposure to credit risk by
performing the appropriate customer due diligence and monitoring
the exposure to credit risk.
Foreign exchange risk
The Group's policy is to manage foreign exchange risk which
arises principally in the product sourcing division. The Group does
this by mainly purchasing euros at a fixed rate forward and using
this rate in establishing a selling price for its goods in order to
maintain an acceptable margin.
Gerard Murphy
Finance Director
Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2021
Notes 2021 2020
GBP'000 GBP'000
Continuing operations
Revenue 24,452 18,756
Cost of sales (24,342) (18,800)
Gross profit (loss) 110 (44)
-------- --------
Other income 161 182
Administrative expenses (502) (865)
Impairment of intangible assets (1,519) -
Impairment of fixed assets (860)
Operating loss from continuing operations (2,610) (727)
-------- --------
Finance income - interest receivable - -
Finance expenses - lease interest (26) (30)
Finance expenses - interest on bank
loans (36) (32)
Loss on continuing activities before
taxation (2,672) (789)
-------- --------
Income taxes - Corporation tax 5 (34)
Income taxes - Deferred tax 33 (28)
Loss for the financial year from
continuing operations (2,634) (851)
Profit for the financial year from
discontinued operations 40,701 2,288
Profit for the financial year attributable
to
owners of the parent 38,067 1,437
Other comprehensive (expense) /
income (355) 162
-------- --------
Total comprehensive income for the
financial year attributable to owners
of the parent 37,712 1,599
======== ========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
----------------------------------------------------------------
for the financial year ended 31 December 2021 (continued)
2021 2020
Earnings per share expressed in pence
per share:
From continuing operations
- basic (8.8)p (2.8)p
- diluted (8.8)p (2.8)p
From discontinued operations
- basic 126.6p 7.6p
- diluted 126.6p 7.6p
Consolidated Statement of financial position
at 31 December 2021
2021 2020
GBP'000 GBP'000
Non-current assets
Goodwill 2,338 2,338
Intangible assets 665 1,269
Property, plant and equipment 2,014 22,898
Biological assets 762 770
5,779 27,275
------- -------
Current assets
Trade and other receivables 3,988 7,526
Inventories 97 58
Cash and cash equivalents 4,543 1,550
Assets of disposal group classified
as held for sale - 381
8,628 9,515
------- -------
TOTAL ASSETS 14,407 36,790
------- -------
Equity attributable to owners of the
parent
Share capital 564 5,640
Share premium account - 7,321
Other reserves (237) 141
Retained earnings 6,452 5,750
------- -------
TOTAL EQUITY 6,779 18,852
------- -------
Non-current liabilities
Borrowings 794 5,514
Deferred tax 35 1,244
829 6,758
------- -------
Current liabilities
Trade and other payables 2,579 6,288
Current tax liabilities - 151
Liabilities held for sale 1,869 -
Borrowings 2,351 4,741
6,799 11,180
------- -------
TOTAL EQUITY AND LIABILITIES 14,407 36,790
------- -------
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2021
Other
Share Share Other Distributable Retained
capital premium Reserves Reserve Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- ------- -------- -------------- -------- --------
At 1 January 2020 5,640 7,321 (21) - 4,313 17,253
------- ------- -------- -------------- -------- --------
Profit for the financial
year - - - - 1,437 1,437
Foreign exchange gain - - 162 - - 162
------- ------- -------- -------------- -------- --------
Total comprehensive
income for the financial
year - - 162 - 1,437 1,599
Equity dividends paid - - - - - -
Transactions with -
owners - - - - -
At 31 December 2020 5,640 7,321 141 - 5,750 18,852
------- ------- -------- -------------- -------- --------
Profit for the financial
year - - - - 38,067 38,067
Foreign exchange loss - - (355) - - (355)
------- ------- -------- -------------- -------- --------
Total comprehensive
income for the financial
year - - (355) - 38,067 37,712
Equity dividends paid - - - - (510) (510)
Capital redemption - - - (12,420) (37,497) (49,917)
Gain on capital redemption
in JSOP - - - - 642 642
Reduction in capital - - - - - (5,076) (7,321) (23) 12,420 - -
Transactions with
owners (5,076) (7,321) (23) - (37,365) (49,785)
At 31 December 2021 564 - (237) - 6,452 6,779
======= ======= ======== ============== ======== ========
Note:
The reduction in capital is pursuant to the confirmation on 14
December 2021 by the Irish High Court of the reduction of:
- share premium of GBP7,321,155 (being the entire amount of the
share premium account);
- other undistributable reserves of EUR33,350.23 (being the
entire amount of the capital conversion reserve fund);
- other undenominated capital of EUR6,765,835.05 (created on the
redemption of the Redeemable Ordinary Shares of 22.5EURc and being
the entire amount of other undenominated capital), and the
crediting of those amounts to other distributable reserves to
enable the capital redemption.
Consolidated Cash Flow Statement
for the financial year ended 31 December Notes
2021 2021 2020
GBP'000 GBP'000
Cash flow from operating activities
Loss on continuing activities before
taxation (2,634) (789)
Gain on biological assets (161) (182)
Foreign exchange (gain)/loss (50) (55)
Profit on discontinued activities 1,298 2,288
Finance expense 62 62
Bad debt expense 13 -
Taxation charge (5) -
Impairment - Intangible assets 860 -
Impairment - property, plant and equipment 1,519 -
Depreciation - property, plant and equipment-net 1,699 2,196
Operating cash flows before changes
in working capital 2,601 3,520
Changes in working capital and provisions:
(Increase)/decrease in inventories (39) 1,047
Decrease /(increase) in trade and other
receivables 10 (669)
(Increase)/decrease in current assets
held for sale 381 (104)
Increase in current liabilities held
for sale 1,869 -
Decrease in payables (554) (338)
Net cash inflow from operations 4,268 3,456
Taxation paid (205) (304)
-------- -------
Net cash generated from operating activities 4,063 3,152
-------- -------
Cash flow from investing activities
Investment in intangible assets (986) (705)
Purchase of property, plant and equipment (1,840) (1,741)
Proceeds on disposal of subsidiary 55,160 -
Costs incurred on disposal of subsidiary (3,533) -
Cash included in subsidiary disposed (72) -
Sale of biological assets 127 346
Purchase of biological assets (9) (65)
-------- -------
Net cash generated from (used) in investing
activities 48,847 (2,165)
Cash flow from financing activities
Dividends paid to shareholders (510) -
Invoice financing utilised / (payments) 1,016 (150)
Finance lease capital repayments (1,390) (845)
Share capital redemption (49,917) -
Capital redemption JSOP 642 -
Finance lease advance 616 882
Term loan repayments (374) (378)
-------- -------
Net cash inflow in financing activities (49,917) (491)
-------- -------
Net increase in cash and cash equivalents 2,993 496
-------- -------
Cash and cash equivalents beginning
of the financial year 1,550 1,054
Cash and cash equivalents end of the
financial year 4,543 1,550
-------- -------
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END
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