Produce Investments Regulatory News (PIL)

22 May 2018

PRODUCE INVESTMENTS PLC

Trading Update

Produce Investments plc, (AIM:PIL) ("Produce," "Company" or the "Group"), a leading operator in the fresh potato and daffodil sectors, is today providing an update on current trading.

In our Interim Results announcement on 22 March 2018, the Board highlighted the potential impact of the unseasonal spring weather, particularly on the businesses of Jersey and Rowe. The adverse weather presented significant challenges both to planting of our early season potato crops in Cornwall and Jersey and also to the harvesting of our daffodil crop. On Jersey, the rainfall recorded during the four months from December 2017 to March 2018 saw an increase of 46% over the long term average with the number of dry days reduced significantly. Mean temperatures during the critical growing months of February and March were also negatively impacted by c. 20% versus the long term average.  

As a result of these factors, as well as the previously flagged lower margins on 2017 UK potato crops and reduced seed volumes and margins due to an oversupplied UK market, the Board now expect the Group's profit for the year ending 30th June 2018 to be substantially below current market expectations.

Rowe and Swancote are subject to annual intangible asset impairment testing and the results and assumptions relating to the last tests were disclosed in the 2017 Annual Report. Due to the challenging trading conditions described above the Group' s current trading performance is below some of the assumptions made in the 2017 impairment tests. Accordingly, we have already commenced work on the 2018 year-end testing which will be based on board approved budgets and forecasts and will be subject to audit in due course. It is too early to quantify the results of the impairment testing, but the Board would expect the tests to result in a significant "non cash" impairment which will reduce "unadjusted" reported profits for the year.  

Finally, in light of the timing of the potato harvest on Jersey, which can straddle our current year end, and makes our full year outturn heavily dependent on the final months of the financial year, the Board has decided that going forward it would make sense to move the Group's year end to the end of August. This will greatly assist with the Group's internal budgeting process and will enable the Board to provide more certainty on full year expectations. This change, which is subject to regulatory approval, would not come into effect until the beginning of the next financial year at the earliest. A further update on the implementation of this move will be provided in due course.

The Group remains cash generative and is committed to its long term strategy of widening both its product base and customer base, creating a more diverse business model for the future.

For further information contact:

Notes to Editors

The Group is a vertically integrated company supplying blue chip retail customers with potatoes and daffodils.