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I am pleased to present the Annual Report of Norish Plc for 2004.
This was a difficult year for the business following the earlier than expected loss of our last major cocoa contract which was announced in last year´s report. This loss adversely affected the results of our Felixstowe and Belvedere operations. Action has been taken to improve these sites´ contribution with a combination of new business, better mix and reduced warehouse capacity.
We announced on 6 September that we had received an approach to acquire the entire ordinary share capital of the Group. We terminated discussions on 23 November as the Board were not satisfied that the other party were in a position to complete the transaction on the terms proposed. Such unsuccessful approaches result in both increased costs and disruption of management time.
The Group announces pre-tax profits of £0.3m. This compares with pre-tax losses of £0.4m (after exceptional items of £0.6m) for last year. Turnover fell by £0.2m to £12.2m. The profit per share is 2.7p compared with a loss of 3.6p last year. Net debt at the year-end reduced by £0.7m, to £2.0m.
Our cold stores performed slightly better than last year in a market still suffering from overcapacity and pressure on rates. Earlier in the year we suffered a reduction in throughput and occupancy at a number of sites due to the outbreak of Asian bird flu which affected one of our major poultry customers. Results improved in the second half year as a result of business wins combined with seasonal uplift, growth in blast freezing and higher stock throughputs.
We are encouraged by positive developments in our Wrexham and Braintree stores and continuing strong performance in Bury St Edmunds.
Our ambient store at York performed well. We are in the process of increasing the storage capacity by altering the racking configuration at a cost of £0.2m.
At Belvedere the loss of the cocoa bean cleaning operation has hit the store badly. Our coffee storage operation there has grown in the last 12 months and we are endeavouring to increase the rates to more economical levels.
Felixstowe is a difficult location for the company. We have surplus warehouse facilities resulting from the loss of the cocoa storage associated with the loss already mentioned above. Every effort has been made to attract new business and at the same time we have successfully sub-let a significant amount of our available space, effective from January 2005. This site still needs attention but the signs in early 2005 are encouraging.
We announced in the Interim Report in September that as a consequence of the approach mentioned above that an interim dividend was not being paid. The directors are recommending a final dividend of €2.0c, subject to shareholders approval. This compares with a total dividend last year of €2.54c.
The Board again would like to thank the staff for their contribution in a difficult trading environment in 2004.
We have started the year with higher than expected occupancy levels. However, as is being experienced throughout industry, we are expecting a substantial increase in our power costs in April when we renew contracts. Power is a significant operating cost in our cold stores.
Over the last 3 years we have substantially reduced our cost base in order to accommodate the various changes and challenges to our business. With this reduced cost base and business wins during 2004 we look forward to 2005 with more confidence than 12 months ago. However it should be remembered that our business can change very quickly based on customer supply chain decisions. Replacing lost business takes time and substantial effort.
After careful consideration the Board has decided that the Alternative Investment Market of the London Stock Exchange (AIM) is the most appropriate market for the Company´s shares. The Board intends to take advantage of the new fast track admission procedures available in the United Kingdom to move from the Official List of the United Kingdom Listing Authority (UKLA) to AIM. These admission procedures allow eligible companies gain admission to AIM by giving 20 business days notice but without the need to publish an Admission Document. We are in the process of cancelling the listing of the issued ordinary capital of the Company on the Official Lists of the Irish Stock Exchange (ISE) and the UKLA. It is expected that the listings will be cancelled and the admission to AIM will become effective by the end of March.
Overall the regulatory regime attaching to AIM companies is better suited to companies of our size giving us the ability to undertake transactions, subject to the AIM rules, more quickly and cost effectively than being on the Official Lists of the ISE and UKLA.
AIM companies enjoy wide investor support. AIM is gradually attracting an increasing number of international companies and is, the Board believes, well placed to become the European market of choice for successful growth companies. The inclusion of Norish on the FTSE AIM index may of itself encourage significant additional interest in the Company.
We are also reviewing the corporate and tax structures of the Group and we hope to simplify these during 2005.
Ted O´Neill
Executive Chairman
2 March 2005
Executive Chairman´s Statement