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Norish plc announces an increase of 23% in profit before taxation to £1.13m for the six months to 30 June 2000. Basic earnings per share increased by 31% to Stg10.1p, while adjusted earnings per share, which excludes the effect of goodwill amortisation and exceptional items, increased by 4% to Stg8.2p. Earnings were depressed by the drop in contribution from the Group's Irish associated undertaking, which was disposed of during the period. In the six months to 30 June 1999 the associated undertaking contributed Stg1.3p to earnings per share, compared with a negligible contribution in 2000.
Group turnover for the period increased by 41% to £6.84m, reflecting a full six months contribution from BWA, which was acquired on 7 May 1999. The net interest charge increased from £0.06m to £0.20m, mainly due to the financing costs of the BWA acquisition.
The Group as a whole traded satisfactorily in the first half although over-capacity in the cold storage industry continues to depress demand for our services. Low occupancy levels and decreased throughput in our Irish associate were reflected in its materially reduced contribution to profits. While UK cocoa consumption is relatively static, import volumes can vary from year to year with a consequent impact on handling revenue. The current year is seeing reduced cocoa imports, and BWA's trading activity in this commodity has decreased accordingly. UK cocoa stock levels could be expected to be replenished in due course, although it is not yet clear whether this process will commence later in the current year or perhaps be delayed until 2001. In either case we would expect BWA's activity and stock levels to benefit from the recovery in imports. A strong performance from BWA's growing general warehousing business and from coffee storage has helped to offset the reduction in cocoa activity.
Shareholders' funds at 30 June 2000 were £8.63m compared with £7.84m at 31 December 1999. Net debt at 30 June 2000 was £4.85m, giving a debt/equity ratio of 56% (31 December 1999: £5.04m, 64%).
The Board has decided to pay an interim dividend of IR1.0p per share (1999: IR1.0p). The Company operates a twin share scheme, whereby shareholders receive dividends in Irish pounds unless they elect to be paid in pounds sterling. The dividend will be paid on 19 October 2000 to shareholders on the register at 29 September 2000.
Acquisition and capital expenditure amounted to £0.80m. Acquisition expenditure related to the purchase for £0.45m in March of East Kent Cold Storage Company Ltd. Since the period end the Group's BWA subsidiary purchased the goodwill and ambient warehousing business carried on at Beningbrough, York by RSH Flowers (Distribution) Ltd, for a cash consideration of £0.35m.
Shareholders will recall that the associated undertaking was acquired in 1996 when Norish withdrew from direct participation in the Irish cold storage market with the sale of the Castleblayney cold store. At that time the Board stated that retention of a minority share in the Castleblayney business would enable the Group to retain 'some participation in the short term benefits of intervention based demand.' The Board has decided that it is no longer appropriate to hold this investment in the light of current and predicted Irish market conditions. Accordingly the Group's interest was sold to the majority shareholder in June, for a consideration of £0.3m. The contribution of the associated undertaking to the Group, when combined with the sale proceeds, has amounted to more than £1.2m since 1996.
Management has initiated a programme of systems upgrading intended to enhance significantly the quality of its service offering to customers. When the programme is complete customers will be offered interactive Internet access to the Group's warehouse management system.
The Group's newly designed website is now operational and can be accessed at www.norish.com.
With effect from 21 July 2000 the FTSE Global Classification Committee agreed to reclassify Norish plc's shares from 'Transport' to 'Support Services.' This reclassification more accurately reflects the nature of Norish's current business, which is focused on the provision of warehousing and allied services to the food and non-food sectors. Norish adds value in a temperature-controlled environment through its cold storage division, Norish Food Care, and through ambient warehouses operated by BWA. Norish Food Care and BWA have built strong positions in their respective markets in the UK.
The Group's programme designed to address the impact of Year 2000 issues on our business was successfully concluded in 1999 and we were satisfied that an acceptable state of readiness was achieved. No Year 2000 problems have been encountered to the date of this Report. The Board and management continue to monitor the situation and the Board will provide the necessary resources to deal with any matters that may arise.
Excess capacity continues to be a feature of the cold storage market, making trading conditions more competitive. The reduction in current year imports of cocoa will have a short-term impact on the ambient warehousing division although we expect that this will be partly offset by growth which we are generating in general warehousing.
Norish plc adopted a twin share scheme in May 1994. This scheme entitles shareholders to elect to receive dividends from a UK subsidiary of Norish plc, Norish (UK) plc, or from Norish plc itself, subject to certain limitations. Full details of the scheme were contained in the Notice of Extraordinary General Meeting and Explanatory Materials which were posted to all shareholders on 22 April 1994.
Those shareholders who completed a Form of Election to have future dividends paid on the "A" Ordinary shares of Norish (UK) plc will receive their dividends in sterling currency from that company. Such election will remain in force until revoked or until the shareholder has disposed of his shares.
The Company's share register and related records are now maintained by Computershare Services (Ireland) Ltd., to whom shareholder enquiries should be addressed. Their address is Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland. Telephone +353 (0)1 2163100