28 Sep 2011 07:00
28 September 2011
Produce Investments plc
Preliminary results for year ended 25 June 2011
Produce Investments plc ("Produce Investments" or the "Group") (AIM:PIL), a leading operator in the fresh potato sector with vertically integrated activities covering seed production, own growing, processing and packing and supply to the major retailers, is pleased to announce its results for the year ended 25 June 2011.
Financial highlights | 2011 | 2010 |
Revenue | £171.4m | £156.3m |
Operating profit before exceptional costs | £6.4m | £7.8m |
Profit before tax and exceptional costs | £5.3m | £5.6m |
Exceptional costs relating to flotation | £2.8m | - |
Profit before tax | £2.6m | £5.6m |
Basic earnings per share | 8.78p | 20.15p |
Adjusted earnings per share (1) | 21.10p | 20.15p |
Dividend per share | 5.46p | - |
Net debt | £8.1m | £25.2m |
(1) Before exceptional costs associated with equity raising and listing
Operational Highlights
·; Successful IPO on AIM in November 2010, raising £15.6m before expenses
·; Continued investment in innovative water treatment with installation at Floods Ferry
·; New business gains in food service sector
·; Continued operational efficiency gains
For further information contact:
Produce Investments plc
Brian Macdonald, Finance Director 01890 819503
Investec Bank plc (Nomad and Broker)
Clifford Halvorsen or Patrick Robb 0207 597 5970
Hudson Sandler
Nick Lyon 0207 796 4133
Note to Editors
The Group is a vertically integrated company supplying blue chip customers such as Tesco, Sainsbury, Bakkavor and Compass Group with fresh and processed potatoes.
Website: www.produceinvestments.co.uk
CHAIRMAN'S STATEMENT
I am pleased to report to shareholders that the Group has performed well in the year ended 25 June 2011. It has been an eventful year which has seen the Group list on the London Stock Exchange AIM on the 18 November 2010. The Company placed 8.54m new ordinary shares and raised gross proceeds of £15.6m. The initial public offering significantly strengthened the balance sheet and ensures that the Company is well placed to grow organically and to take advantage of any acquisition opportunities as and when they may arise.
Total Group turnover increased by over 9.6% and pre-tax profits before exceptional charges amounted to £5.3m (2010: £5.6m). The Directors are therefore pleased to recommend a final dividend of 3.64 pence per share, which combined with the interim dividend of 1.82 pence per share (2010: nil) results in a total dividend for the year of 5.46 pence per share. The final dividend will be paid on 28 October 2011 to ordinary shareholders on the register at close of business on 7 October 2011.
I would also like to express my sincere thanks to all the employees of the Group who have helped to contribute to these excellent results.
Barrie Clapham
Non-Executive Chairman
CHIEF EXECUTIVE'S REPORT
During last year, we saw a particularly high priced potato season, primarily as a consequence of crop shortages across Europe which helped push up the free buy price of potatoes here in the UK. The Group's procurement model, which is based on sustainable fixed price procurement contracts with its grower base, means that the Group is part protected against such price fluctuations. However, a certain element is still linked to market prices and the Group experienced an increase in the cost of potatoes which it endeavoured to pass on to its customers where possible during the year. Improvements in operational efficiency and raw material yields also helped mitigate such increases in the cost of potatoes.
New business gained in the food service and processing sectors, along with increased trading revenues on the back of the high priced season, increased total revenue by 9.6% against last year to £171.4m. As anticipated, total retail volumes sold were below last year's and this, coupled with the high priced season, resulted in operating profit before exceptional charges being below that of last year by £1.3m. However, lower interest and tax charges for the year helped to compensate for this reduction, resulting in adjusted earnings per share for the year of 21.10 pence, a 4.7% gain on the prior year (2010: 20.15 pence).
The Group has continued to invest in new technology and a number of awards were gained for our new innovative washing process which was completed at our Tern Hill site in Shropshire and is now being installed at our Floods Ferry site in Cambridgeshire.
As a result of the listing and injection of new funds, net debt at the year end stands at £8.1m compared with £25.2m last year.
The market remains fiercely competitive and difficulties facing the UK consumer are well documented. Despite this, the Board is confident that the Group is well positioned to develop and expand the business as new opportunities arise with both existing and new customers.
Angus Armstrong
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
For the 52 weeks ended 25 June 2011
2011 £'000 | 2010 £'000 | |
CONTINUING OPERATIONS | ||
Revenue | 171,428 | 156,346 |
Cost of sales | (130,102) | (114,470) |
Gross profit | 41,326 | 41,876 |
Administrative and other operating expenses | (34,893) | (34,103) |
Operating profit, being profit before interest and tax | 6,433 | 7,773 |
Exceptional costs relating to flotation | (2,768) | - |
Finance costs | (1,123) | (2,212) |
Finance income | 18 | 22 |
Share of profit of an associate | 7 | 2 |
Profit on disposal of an associate | - | 15 |
Profit before tax from continuing operations | 2,567 | 5,600 |
Income tax expense | (854) | (1,610) |
Profit for the 52 weeks | 1,713 | 3,990 |
Attributable to: | ||
Equity holders of the parent | 1,734 | 3,978 |
Non- controlling interests | (21) | 12 |
1,713 | 3,990 | |
Earnings per share attributable to owners of the parent during the year: | ||
Basic earnings per share (pence) | 8.78 | 20.15 |
Diluted earnings per share (pence) | 8.27 | 19.35 |
Adjusted basic earnings per share (pence) | 21.10 | 20.15 |
Adjusted diluted earnings per share (pence) | 19.89 | 19.35 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 25 June 2011
2011 £'000 | 2010 £'000 | |
Profit for the 52 weeks | 1,713 | 3,990 |
Other comprehensive income: | ||
Actuarial gain / (loss) in respect of pension scheme | 2,557 | (3,691) |
Income tax effect on actuarial gain / (loss) | (810) | 1,033 |
Effect of change in tax rate on historic equity tax postings | (112) | - |
Current income tax credit recognised through equity | 145 | - |
Deferred tax assets recognised directly through equity | 82 | - |
Other comprehensive income for the 52 weeks, net of tax | 1,862 | (2,658) |
Total comprehensive income for the 52 weeks, net of tax | 3,575 | 1,332 |
Attributable to: | ||
Equity holders of the parent | 3,596 | 1,320 |
Non- controlling interests | (21) | 12 |
3,575 | 1,332 | |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 25 June 2011
2011 £'000 | 2010 £'000 | |
ASSETS | ||
Non-current assets: | ||
Property, plant and equipment | 24,166 | 24,120 |
Intangible assets | 11,482 | 12,096 |
Investment in associates | 169 | 162 |
Other non-current financial assets | - | 309 |
Deferred tax assets | 1,719 | 2,260 |
37,536 | 38,947 | |
Current assets: | ||
Inventories | 5,454 | 5,461 |
Biological assets | 4,096 | 3,710 |
Trade and other receivables | 18,360 | 15,440 |
Prepayments | 1,022 | 956 |
Cash and short-term deposits | 5,271 | 204 |
34,203 | 25,771 | |
Non current assets classified as held for sale | 500 | 500 |
Total assets | 72,239 | 65,218 |
EQUITY AND LIABILITIES | ||
Equity: | ||
Issued capital | 198 | - |
Share premium | 15,536 | 70 |
Other capital reserves | 3,500 | 4,121 |
Retained earnings | 4,032 | (1,183) |
Equity attributable to equity holders of the parent | 23,266 | 3,008 |
Non-controlling interests | 18 | 39 |
Total equity | 23,284 | 3,047 |
Non-current liabilities: | ||
Interest-bearing loans and borrowings | 12,089 | 13,579 |
Other non-current financial liabilities | 1,637 | 1,949 |
Deferred revenue | 139 | 88 |
Pensions and other post employment benefit obligations | 2,535 | 5,579 |
Deferred tax liability | 5,193 | 5,730 |
21,593 | 26,925 | |
Current liabilities: | ||
Trade and other payables | 24,651 | 21,471 |
Interest-bearing loans and borrowings | 1,301 | 12,110 |
Deferred revenue | 95 | 151 |
Income tax payable | 1,299 | 1,410 |
Provisions | 16 | 104 |
27,362 | 35,246 | |
Total liabilities | 48,955 | 62,171 |
Total equity and liabilities | 72,239 | 65,218 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the 52 weeks ended 25 June 2011
Issued capital | Share premium | Other capital reserves | Retained earnings | Total | Non-controlling interest | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
As at 27 June 2009 | - | 70 | 4,018 | (2,503) | 1,585 | 27 | 1,612 |
Profit for the period | - | - | - | 3,978 | 3,978 | 12 | 3,990 |
Actuarial loss on post employment benefit obligations | - | - | - | (3,691) | (3,691) | - | (3,691) |
Deferred tax on actuarial loss | - | - | - | 1,033 | 1,033 | - | 1,033 |
Total comprehensive income | - | - | - | 1,320 | 1,320 | 12 | 1,332 |
Share-based payment transactions | - | - | 103 | - | 103 | - | 103 |
As at 26 June 2010 | - | 70 | 4,121 | (1,183) | 3,008 | 39 | 3,047 |
Profit for the period | - | - | - | 1,734 | 1,734 | (21) | 1,713 |
Actuarial gain on post employment benefit obligations | - | - | - | 2,557 | 2,557 | - | 2,557 |
Deferred tax on actuarial gain | - | - | - | (810) | (810) | - | (810) |
Tax rate change on balances taken to equity | - | - | - | (112) | (112) | - | (112) |
Current year tax taken to equity | - | - | - | 145 | 145 | - | 145 |
Deferred tax taken directly to equity | - | - | - | 82 | 82 | - | 82 |
Total comprehensive income | - | - | - | 3,596 | 3,596 | (21) | 3,575 |
Reserves transfer | - | - | (621) | 621 | - | - | - |
Reserves movements on bonus share issue | 112 | (70) | - | (42) | - | - | - |
New shares issued during period | 86 | 15,536 | - | - | 15,622 | - | 15,622 |
Share-based payment transactions | - | - | - | 1,399 | 1,399 | - | 1,399 |
Equity dividends paid | - | - | - | (359) | (359) | - | (359) |
As at 25 June 2011 | 198 | 15,536 | 3,500 | 4,032 | 23,266 | 18 | 23,284 |
CONSOLIDATED CASH FLOW STATEMENT
For the 52 weeks ended 25 June 2011
2011 £'000 | 2010 £'000 | |
OPERATING ACTIVITIES | ||
Profit before tax from continuing operations | 2,567 | 5,600 |
Adjustments to reconcile profit before tax for the year to net cash inflow from operating activities: | ||
Depreciation and amortisation | 3,732 | 3,687 |
Share-based payment transaction expense | 1,399 | 103 |
Gain on disposal of property, plant and equipment | (40) | - |
Finance income | (18) | (22) |
Finance costs | 1,123 | 2,212 |
Share or net profit of associate | (7) | (2) |
Gain on disposal of investment in associated company | - | (15) |
Fair value movement on biological assets | (108) | (96) |
Movement in provisions | (88) | (258) |
Difference between pension contributions paid and amounts recognised in the income statement | (556) | (552) |
Working capital adjustments: | ||
(Increase) / decrease in trade and other receivables and prepayments | (2,986) | 665 |
(Increase) / decrease in inventories and biological assets | (271) | 891 |
Increase in trade and other payables | 3,163 | 109 |
(Decrease) / increase in deferred revenue | (5) | 133 |
Interest received | 18 | 22 |
Income tax paid | (1,656) | (1,971) |
Net cash flows from operating activities | 6,267 | 10,506 |
INVESTING ACTIVITIES | ||
Proceeds from sale of property, plant and equipment | 122 | 93 |
Purchase of property, plant and equipment | (3,225) | (2,693) |
Purchase of intangible assets | (21) | (104) |
Proceeds from sale of investment in associate | - | 37 |
Net cash flows used in investing activities | (3,124) | (2,667) |
FINANCING ACTIVITIES | ||
Payment of finance lease liabilities | (135) | (129) |
Long term bank deposits converted to cash | 309 | - |
Bank loans repaid during period | (2,332) | (2,124) |
Settlement of loan notes | (5,162) | - |
Interest paid Dividends paid to equity shareholders of parent Proceeds from share issues | (1,264) (359) 15,622 | (1,433) - - |
Net cash flows used in financing activities | 6,679 | (3,686) |
Net increase in cash and cash equivalents | 9,822 | 4,153 |
Cash and cash equivalents at beginning of 52 week period | (4,551) | (8,704) |
Cash and cash equivalents at end of 52 week period | 5,271 | (4,551) |
Notes
1. Statement of compliance
The Group's financial statement 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 25 June 2011 and applied in accordance with the Companies Act 2006. The financial information set out above does not constitute the Company's statutory report and accounts for the years ended 25 June 2011 or the year ended 26 June 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the registrar of companies, and those for 2011 will be delivered in due course. The annual report and accounts for the year ended 25 June 2011 will be posted to shareholders on 29 September 2011. The results for the year ended 25 June 2011 were approved by the Board of Directors on 26 September 2011 and are audited.
The information contained in this preliminary announcement has been approved by the Board of Directors.
2. Basis of preparation
The 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.
3. Earnings Per Share
2011 | 2010 | |
Profit attributable to equity shareholders (£'000) | 1,734 | 3,978 |
Weighted average number of ordinary shares in issue | 19,759,583 | 19,744,548 |
Weighted average number of options with dilutive effect | 1,200,409 | 809,629 |
Total number of shares - fully diluted | 20,959,992 | 20,554,177 |
Basic earnings per share - pence | 8.78 | 20.15 |
Diluted earnings per share - pence | 8.27 | 19.35 |
Adjusted earnings per share | ||
Operating profit as per income statement (£'000) | 3,665 | 7,773 |
Add back exceptional costs associated with equity raising (£'000) | 1,232 | - |
Add back exceptional costs arising on share options vesting on listing (£'000) | 1,536 | - |
Operating profit pre exceptional (£'000) | 6,433 | 7,773 |
Finance costs and income (£'000) | (1,105) | (2,190) |
Income from associate | 7 | 17 |
Adjusted profit before tax (£'000) | 5,335 | 5,600 |
Tax on adjusted profit at underlying effective rate (£'000) | (1,187) | (1,610) |
Adjusted profit after tax (£'000) | 4,148 | 3,990 |
Adjusted profit attributable to ordinary shareholders (£'000) | 4,169 | 3,978 |
Adjusted basic earnings per share - pence | 21.10 | 20.15 |
Adjusted diluted earnings per share - pence | 19.89 | 19.35 |
In line with the guidance in IAS 33 regarding retrospective adjustments, the number of ordinary shares and potential ordinary shares existing at 26 June 2010 have been adjusted retrospectively to provide a better comparison between the two periods.
Adjusted earnings per share is included to enable earnings to be produced on a directly comparable basis. To achieve this comparison, the operating profit for the 52 weeks to 25 June 2011 is reflected as if the exceptional items had not been included in the income statement. This increases underlying profit by £2,768,000. An underlying effective tax rate of 22% has then been applied to the adjusted profit.
4. Report distribution
Copies of the annual report and financial statements will be sent to shareholders shortly and will be available for a period of one month 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 www.produceinvestments.co.uk