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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(END) Dow Jones Newswires

March 28, 2022 04:27 ET (08:27 GMT)

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